Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mobileye Global Inc (MBLY, Financial) reported an 11% sequential increase in revenue from Q2 to Q3, indicating normalized inventory levels at customers.
- The company achieved follow-on ADAS design wins from all top 10 automakers, securing business into the early 2030s.
- Mobileye Global Inc (MBLY) successfully launched its SuperVision system in China, which was a catalyst for design wins with Volkswagen Group and interest from other global customers.
- The regulatory environment is creating additional tailwinds, with new testing protocols expected to require more advanced ADAS systems, benefiting Mobileye Global Inc (MBLY) as a technology leader.
- Operating cash flow was strong at $126 million in Q3, with expectations for similar performance in Q4, indicating robust financial health.
Negative Points
- Mobileye Global Inc (MBLY) experienced an 8% year-over-year decline in revenue for Q3, primarily due to a significant drop in volume to China OEMs.
- Gross margin decreased by 1 point, mainly due to lower EyeQ ASPs and higher EyeQ-related COGS per unit.
- Operating expenses were high, driven by increased headcount, program development expenses, and restructuring costs associated with the LiDAR unit closure.
- The company faces challenges in China, with EyeQ volumes to domestic China OEMs down around 50%, impacting overall revenue.
- There is uncertainty regarding 2025 SuperVision and Chauffeur volumes, particularly due to volatility in the Chinese market.
Q & A Highlights
Q: Can you provide insights on 2025 SuperVision and Chauffeur volumes, considering the uncertainties, especially in China?
A: Daniel Galves, Chief Communications Officer, mentioned it's too early to specify 2025 volumes. However, they expect 2025 to benefit from the resolution of inventory issues from early 2024. They anticipate outperforming production growth of top customers by mid-single digits due to ADAS adoption and growing share. SuperVision volumes remain volatile, and more details will be shared in January or at the Investor Day in December.
Q: How are customer engagements progressing with advanced solutions like SuperVision and Chauffeur?
A: Daniel Galves stated there have been no decisions against Mobileye in the past 90 days, and progress continues with all engagements. OEMs are securing necessary components for advanced solutions, and some are in final negotiation stages. No material delays into 2025 have been observed.
Q: What is the outlook for the cyclical inventory environment, and is there a risk of inventory buildup at customers?
A: Moran Rojansky, CFO, noted that inventory issues from the first half of 2024 seem resolved, with significant increases from Q1 to Q3. Q3 and Q4 are expected to reflect normalized inventory levels. Changes in OEM mix have occurred, but overall, expectations align with forecasts.
Q: How confident are you about the timing and take rates for major programs launching in 2026?
A: Daniel Galves expressed confidence in meeting project milestones for 2026 launches. While OEM considerations could cause delays, current plans are intact, and progress is being made. More details will be shared at the Capital Market Day in December.
Q: How do you view the competitive environment as autonomy levels increase, and does it become less competitive?
A: Amnon Shashua, CEO, explained that higher autonomy levels require high precision and safety, making it complex and reducing competition. Mobileye is well-positioned to meet these demands with cost-optimized solutions. As autonomy levels rise, competition should decrease due to the complexity involved.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
