Innoviz today announced that a major existing global automotive customer aims to expand its use of the InnovizTwo LiDAR to a new light commercial vehicle program. With a mid-decade SOP target, development of the program is on an accelerated track, pending finalizing of technical requirements and commercial terms. Potential financial contributions from this program are anticipated to begin this year and played an important role in the decision to update previously communicated 2023 commercial and financial targets.
In addition, this collaboration includes an important integration with a major compute platform that we believe could lead to additional expansion opportunities in the future. Innoviz believes that working with the top autonomy platform partners should enable a faster time to market, accelerate the customer evaluation process, allow more seamless integration with other parts of the software stack, and position Innoviz well in its new customer acquisition efforts.
"It was another fast-moving quarter at Innoviz, and today's news marks a critical milestone in validating our strategy and highlighting the value of our technology," said Omer Keilaf, Innoviz Co-Founder and CEO. "An important part of our long-term business plan has been to show that we can gain a foothold with a large customer and earn the right to become their LiDAR vendor for multiple vehicles in their lineup. This expected expansion of business with one of our largest customers could achieve that, while also offering a meaningful financial contribution for 2023 and beyond."
Keilaf further added, "We are extremely excited by the momentum we have seen in our pipeline year-to-date and are encouraged by a noticeable step-up in customer activity that further reinforces our belief that LiDAR deployments are starting to accelerate."
Commercial and Strategic Updates
- Additional late-stage discussions with major existing customers – In addition to the significant progress on the new light commercial vehicle program, the Company is in late-stage conversations for two additional program expansions with existing major customers.
- Record levels of activity in the Company's pipeline – Innoviz added an additional program to its pipeline, this time bypassing the RFI stage and moving directly to the RFQ stage. The Company also saw multiple programs advance from the RFI to the RFQ stage during the quarter and has a record level of activity in the RFQ stage, with more than five RFQ's currently in process.
- Potential displacement of a competitor – The Company believes that part of the reason the Company's new light commercial vehicle program is on an accelerated timeline is because it is potentially displacing a development-stage competitor. Furthermore, two of the Company's advancing RFQs would possibly also displace the same development-stage competitor. Innoviz believes its 905nm solution is structurally advantaged, both in terms of technology and cost compared to 1550nm solutions.
- In discussions with NVIDIA for Hyperion platform – Innoviz is in discussions with NVIDIA about integrating into series production programs leveraging the Hyperion platform. The conversations are running in parallel with several of the RFIs and RFQs in the Company's pipeline and have the potential to bring additional programs into the process.
- Innoviz is well-positioned towards 2023 Start of Production (SOP) – The Company believes that it is well-positioned for production launches of Innoviz's BMW and shuttle programs, with volumes expected to increase in the second half of 2023.
- Innoviz moving up the software stack, quoting new Minimum Risk Maneuver (MRM) system – MRM software and hardware acts as a failsafe to the primary autonomy system within a vehicle. In the event of a complication with the primary system and a failure of the driver to take over steering control during a transition period, the MRM system can assume control of the vehicle and deliver it to safety, typically by exiting the road. Historically, these have been camera-based systems. The Company is quoting both the hardware and the software for the system, offering a higher revenue and profit potential for vehicles that ultimately could include the technology. The Company also believes that the systems could be accretive to gross margins.
- Working with 8 of the top 10 global automakers – When combined with Innoviz's existing customer order book, the Company has existing awards or is in an active sourcing process with eight out of the top ten global automakers.
First Quarter 2023 Financial Results
Revenues in Q1 2023 were $1.0 million, down 43% compared to revenues of $1.8 million in Q1 2022. The year-over-year decline in revenues was driven primarily by the progress in the BMW program as it approaches volume production at Magna, the Tier-1 on the program. The transition includes a shift from selling full LiDAR units to selling components to Magna at lower production average sales prices.
The decline of BMW program revenues was partially offset by meaningful growth in the volume of sales of InnovizTwo sample units, which we expect will to continue to grow in the coming quarters.
Operating expenses in Q1 2023 were $33.3 million, an increase of 7% compared to operating expenses of $31.1 million in Q1 2022. Operating expenses for Q1 2023 included $5.3 million of share-based compensation compared to $4.7 million of share-based compensation in Q1 2022. The year-over-year increase in operating expense was driven primarily by higher R&D expense, which increased to $26.1 million in Q1 2023 versus $22.8 million in Q1 2022 and was partially offset by lower Sales and Marketing and General and Administrative costs. The increase in R&D expense was driven primarily by a year-over-year increase in headcount, leading to higher personnel expenses and share-based compensation, with Q1 2023 share-based compensation of $3.5 million compared to $2.7 million in Q1 2022.
Liquidity in Q1 2023 was approximately $156.5 million in cash and cash equivalents, short term deposits, short term restricted cash and marketable securities as of March 31, 2023.
Updating 2023 Targets
The Company is providing the following updated commercial targets for full year 2023:
- An additional one to three programs with existing customers, increasing the Company's previously announced expectations of one to two programs.
- Two series production awards with new customers.
- The new light commercial vehicle program coupled with progress on other automotive programs and new RFQs offers increased visibility into 2023 potential NRE bookings.
