Mobileye Global Inc. Price & Performance (MBLY)

Thanks, and now I'll turn the call over to Amnon. Hello, everyone, and thanks for joining our earnings call.

Starting with the results, Q1 was closely aligned with our expectations. Revenue was up 83% year over year compared to the unusually low Q1 of last year. These are the meaningfully that drove kind of inventory in Q1 twenty twenty. Operating margins recovered sharply on a year over year basis due to the higher revenue. Operating expense growth 14% in Q1, should moderate to middle single digits on average in the balance of the year as the current R and D infrastructure is sufficient to execute all the advanced products and programs that will come online over the next set of years. Operating cash flow was again a highlight at $109,000,000 in Q1. Business trends for our core single chip front camera driving assistance systems were fundamentally strong in Q1. Both in terms of current supply demand and design wins for future programs. Volume in Q1 was 8,500,000 units, and we expect Q2 volume to be about 7% higher and for Q2 revenue to be up approximately 7% year over year. After a volatile 2024, Q1 volumes and Q2 orders have been quite stable. With some upward variance from China OEMs compared to our original expectation. Turning to the macro environment, clearly global light vehicle production in 2025 has become significantly more uncertain as the industry grapples with new trade friction, the change for We are fortunate that the simplicity of our supply chain, in which our customers are the importers of our product, means that we should not directly incur any material tariff cost.

Nevertheless, we'll be affected by any negative impact to global production volumes and consumer spending resulting from these trade What we know today is that Q1 results were solid, Q2 order order flow is above original expectation, and consistent for the last couple of months. And we have seen no deterioration in forward production schedules from our customers. We also know that our original outlook included the level of conservatism that was intended to reflect the risk of macro deterioration in the second half of twenty twenty Given expected first half volumes, our own analysis of the direct impact of current tariffs on our customers and analysis by third parties like S and P Global, we continue to see a strong potential to perform within the guiding range for full year 2020 Of course, there is potential for price elasticity and other economic effects, on auto consumers. But this is beyond our ability to analyze at this time. Turning to the longer term, design win activity was very brisk. In this quarter. This trend this tends to be bumpy, but if we compare it to the projected future volumes at from design wins in all of 2024, the design wins in Q1 are already at around 85% of what achieved last year.

Additionally, we are seeing potential for an inflection point in the value per unit of mass market driving [indiscernible] is now included in in Ford BlueCruise, and this cloud enhanced functionality will also be adopted by a Korean OEM in future programs based on a large program we won in q one. A potentially bigger tailwind for Mobileye is the trend towards multi camera setup. Going mainstream in the coming years due to more stringent future safety requirements also the need to provide highway hands free driving on mass market vehicles for OEMs to remain competitive. BYD boosted [indiscernible] with their God's Eye announcement which was a clear message to the industry that Highway Huntsman will likely feature on mainstream vehicles in the coming Mobileye surround ADAS through the IQ six high, is the perfect solution for that space we announced our first design win with Volkswagen during the quarter. Technology functionality and efficiency are just as important as [indiscernible] And we have only and we have the only offering that can support all perception, mapping, driving policy, and driving function from a single SOC on a single ECU fully upgradable over the air. And this shares a common technology backbone with our more advanced product which supports cost efficient modular product portfolio for OEMs across all legal segments.

Mobileye is a true one stop shop, and this really aligns with OEM's software defined vehicle and architecture consolidation goal. We're also seeing substantial opportunities from new customers. During the quarter, we achieved our first design win in about eight years with a particular European OEM. We're also seeing traction from our imaging radar product, where the first design went outside of the drive product line is imminent with another European OE This OEM is expected to choose our imaging radar as an enabler of high speed highway level three solution which is a testament to the differentiation of this sensor and a big vote of confidence to our and drive products in general. OEM decision making for supervision and chauffeur remains slower than we would like, but we continue to make progress with a number of OEMs, including two top two new top 10 global OEMs prospects in the past few months. Execution on the Porsche and Audi programs remain on track, and we're looking forward to provide first prototype demos of these systems in the second half of twenty twenty five. That will be the first opportunity for external audiences to the new I2six high based software, software and hardware, and a production intensive Our Mobileye drive self driving system for robot active business continues to accelerate, We announced the next step with Lyft, during the quarter, announcing data sets as a geography for initial operation, [indiscernible] as the owner operator, and Lyft as the demand platform.

We expect to choose and announce the vehicle OEM in the coming months. In a completely fresh development, simultaneous to the beginning of this earning call, Volkswagen and Uber issued a joint release announcing the two companies have agreed to integrate Mobileye DRIVE enabled ID Buzz robotaxis, onto the Uberride hailing network in Los Angeles starting in 2026. This is an excellent example of the ecosystem approach we are taking in this business, which we believe has significant scale benefit. As we have discussed before, we are working with Volkswagen to integrate the Mobileye Drive self driving system into Volkswagen ID. Produced on the same assembly line as normal vehicles, and that's able to be scaled up or down rapidly. In this agreement, Volkswagen's mobility arm Moya will act as the fleet management system provider of the vehicles, and Uber the Uber network will be the demand generating platform. Our ecosystem approach is capital light for us, it puts the responsibility for each layer of this business into actors that have relevant competencies, and the ability to add value. On the technology front, our low cost set low cost sensor set efficient compute, and generalizable AI software is expected to enable rapid scaling across geographies, and that's a compelling price point for the goal.

Finally, we congratulate another of our global taxi production partners, Holland, for booking an order from Jacksonville Transit Authority We purchased the Holland Urban Autonomous Shuttle which is enabled by Mobileye's Ride. Thanks, and I will turn the call over to Moran.

You, Amnon, and thanks for joining the call, everyone.

Before I begin, please be aware that all my comments on profitability will refer to non GAAP measurements. The primary exclusion in mobilized non GAAP numbers is amortization of intangible assets which is mainly related to Intel's acquisition of Mobileye in 2017 We also exclude stomach compensation. Our Q1 results slightly exceeded the color we provided on the Q4 twenty twenty four earnings call in January. Primarily due to modestly higher volume from Chinese OEMs and lower than expected operating expenses due to efficiencies in facilities and operation along with some timing related items. Revenue was up 83% year over year with a high level of growth due to normalized volume in Q1 twenty twenty five compared to Q1 of twenty twenty four which was impacted by meaningful inventory digestion by our Tier one customer. Year over year comparisons will be more relevant going forward as we believe supply and demand will well align in the back half of twenty twenty four. On a sequential basis, Q1 gross margin was up slightly versus Q4 twenty twenty four on a lower percentage of supervision revenue. While IQ gross margin were largely unchanged Operating expenses were up some out versus Q4 as expected.

This is related to some higher payroll expenses due to lower reserve duty refunds in Q1 and slight headcount growth. Higher spending on Robotexi projects higher marketing spend due to participation in industry events and other items that are largely timing related. We continue to expect approximately 7% year over year growth in adjusted operating expenses in 2025 compared to $926,000,000 in 2024. We'd expect Q2 to be slightly higher than Q1 and for Q3 likely be the highest quarter of the year. We don't expect global macro issues to impact our operating expenses materially as the majority is focused on development of technology that supports our advanced product. We will continue to look for opportunities for efficiency as we always do. As it relates to tariffs, we are fortunate that our chain is very simple. IQ chips for vehicle production in The US are imported by our customers, not by Mobileye. Therefore, we should experience no direct P and L impact from tariff payments. We also have no material currency exposure on our revenue and our cost exposure to the new Israeli shekel is largely hedged at this point. A bit more detail on our geographic exposure We believe a very significant portion of our CHIPS apply to Europe and Asia Pacific are used for local consumption rather than for export to The US.

Approximately 25% of our chips are shipped by our customers directly to The to The US. And are currently exempt from import tariffs. And 20% to China where we believe it is used local production. Although tariffs on auto components are not directly favored by us. We will fully cooperate with our customers in the next few months to optimize their production needs and potentially make minor changes to logistics [indiscernible] to mitigate the overall cost. While there is no direct impact, we, of course, will be exposed to any negative impact to vehicle production volumes, driven by supply impacts related to tariff costs on vehicles and components imported to The U. S. As well as potential consumer demand impact from higher vehicle pricing, or general weakening in economic conditions. S and P IHS published a new forecast last week that implies global production deterioration of around 2% in the balance of 2025. [indiscernible] specific customer exposures, this would translate to a bit below 1,000,000 lower IQ units in the balance of 2025. But this is just one data. Point. We have independently been reviewing the sector tariffs that apply to the automotive industry vehicles and auto parts, to map the potential risk.

Our baseline view is that a scenario incorporating production shutdowns of imported vehicles that are unprofitable under the new tariff regime in combination with demand related impact from higher vehicle pricing in general could potentially drive 3% to 7% reduction in the volumes of our top 10 customers. Which translates to about 1.1 to 2,200,000 units annualized. This is of course, very difficult to predict as the mix of sales in terms of OEMs and brands might change dramatically because of tariffs. And the potential for shifting production sites and regions could mitigate the initial impact. Bottom line, is that prior to recent tariff related development, our regional outlook already assumed a more conservative view of 2025 production and customers then than our customers and S and P Global. Even after the most recent forecast reduction by S and P to reflect the current tariff regime, or our own somewhat more negative analysis. Our original [indiscernible] We will continue to monitor the situation closely given the current complete vehicle tariffs vehicle component tariff scheduled to begin on May 3, and potential for reciprocal tariffs after the ninety day Turning to Q2, we expect to deliver approximately $8,700,000 to 9,300,000 IQ units and for our revenue to be up approximately 7% year over year at the midpoint of the [indiscernible] With gross margin to be at or slightly below the Q1 level and for operating expenses, to be seasonally higher in Q2 versus Q1.

In line with our previous expectation. Thank you, and we will now take your questions.

Thank you. We will now be conducting conducting a question and answer session. If you would like to ask a question, please press You may press 2, [indiscernible] comes from Joe Spak with UBS. Please go ahead.

Thank you. Good morning, everyone. I guess a couple of things. Maybe just to start with, the VW Uber announcement. I know it's early days, but how do you envision that working? Is that you sort of selling it system? Do you think you is there sort of like an ongoing potential payment from you for rides? Or how should we think about that evolving?

So the business model is such that Mobileye is delivering the self driving system which includes the ECU, the hardware, the software for the self driving software and the radar sensors. So there's a one time payment per car on this on these components. And in addition, there is a recurring license fee that is a derivative of the overall utilization of the fleet, so the more the fleet is driving, the more revenue we're generating. In addition to the one time payment for the system. The Volkswagen role is to provide reduced self driving cars with Mobileye's Drive system installed in the manufacturing line. And Uber are the demand generator that offer self driving service through their application to the consumer audience. Basically, the advantages that we have in this business model is the fact that we have a very geographically scalable technology well as economically scalable technology. We come from a very cost efficient design to begin with, that can be easily not just within Los Angeles, which is the first market mentioned in this announcement, but also course afterwards continued expansion to additional locations. And Volkswagen who are a very high volume vehicle manufacturer can quickly scale the amount of robotaxis they're in the manufacturing line as demand, you know, increases over overall, we think that there and of course, Uber is a very well renowned demand generator probably the leading one in The US and globally.

So, we think the key ingredients necessary to become a very competitive and leading driving service in the U. In the next couple of years.

Great. Thanks. And then just maybe one more near term, just on the the 2Q outlook and the units you just indicated I think it's stronger certainly than where the street was. It's think it's above 1Q levels as well. Do you I know you sort of talked about some of your own checks and work to sort of get comfortable with with where orders are and production and inventory. But do you get the sense that there's a little bit of ordering ahead of maybe some uncertainty and that there's they're willing to to carry a little bit more inventory in the channel.

Yeah. So I I must say we cannot indicate it anything specific for Q2 of sense of urgency, and disorders have been pretty stable. As of February. And even at the beginning of this year, we kind of our forecast [indiscernible] around eight point five in Q1 So it's eight point five until 9,000,000 units per quarter. That's what we are also seeing in the last three quarters. So also in the second half of twenty twenty four, was between 8.59, So this is something pretty normal for now. When we started the year, we kind of based our focus again on demand. Which and that indicates no inventory or excess inventory at our customers. So we see orders aligned with that. We haven't more visibility maybe towards the end of the quarter there's nothing specific we can we can indicate.

Yes, so just to summarize, you know, if there is any pull ahead in this number, hasn't really nothing's really changed since February, and it wouldn't be very material versus kind of what we're seeing in kind of end user demand. Thanks for that. Appreciate it. Thanks, Joe. Next question, please.

Joshua Buchelter with TD Cowen. Please go ahead.

Hey, guys. Thank you for taking my question and congrats on the stellar results. I wanted to maybe follow-up on that previous one. I mean, the back half guide implies a pretty sub seasonal end of the year. I guess, any way you could walk us through how much of that is conservatism on units versus share loss by your engaged customers and maybe any sort of [indiscernible] that you guys are doing to account for the uncertainty? Thank you.

Thanks Josh. This is Dan. I can take that one. So, yeah, I mean, kind of the way our business works is we have kind of full visibility three months ahead, something like that. And then we [indiscernible] the couple of quarters beyond that, that can really change at any time. We haven't seen any change in the back half. But, you know, obviously kind of uncertainty has has risen, so we don't want to get ahead of our skis. But yeah, the fact that we're going to do kind of more than 50% of the guide the full year guide in the first half is certainly a good sign and we have no reason to think necessarily that demand is going to fall in the back half. But just given the current environment, we didn't really want to get ahead of ourselves.

Totally, took provisions that we took provisions that demand will go down. Because we started our guide in the beginning of the year, in a very conservative manner. So even if demand falls, so far we feel that we meet the range of the guidance.

But we're not getting any clear indication that it will fall. That's kind of the point. Got it. No, thank you. That's a big pragmatic and makes a lot of sense. Guess a follow-up, I guess how would you characterize your customers engagements and design activity? I mean, you mentioned, I think, you had 85% of last year's design wins in the first half. I mean, you're OEM customers have been, I think, slower than we all expected to move in particular with advanced ADAS products. Like, how do you see the current environment impacting their appetite to invest in new technology? Because I can see it going either way. And any more color you could provide within the 8085% that your design wins year to date Any sort of directional indicators across [indiscernible] Thank you.

Yeah, I can take that. So what we're seeing so far is a very strong, continued strong demand from our customers to source our products for future generations. That comprises the majority of the 85% or the volumes that we won during Q1 And it's a mixture of surrounding ADAS and basic ADAS. Product. We are pretty much in a position of solidifying our position with our top 10 customers for years to come. After these design wins. When it comes to sourcing advanced product, I think it makes sense that the previous couple of months have created maybe somewhat of a delay in some of the decision making because of urgent matters that they need to address regarding tariff. And I think it makes sense. What did not change is that their understanding of necessity of having advanced products in the future. And competition is moving forward for each OEM and just recently Tesla continued to double down on their commitment to long term autonomous driving in their product and again stressing the significance of self driving technologies in the future, in the near future And that of course continues to apply a lot of pressure on OEMs to move forward.

During this quarter, have had two engagements with two of our top 10 customers, that started with Serran Data and now we're expanding to Level three and Level two plus plus for supervision evaluation. That are that have kind of moved through the pipeline to more advanced stages of evaluation. And we're reaching convergence with a couple of other opportunities. So we still see movement in the right direction and we're seeing also more and more interest in specifically Level three eyes off driving targeting end of twenty twenty seven, roughly speaking. With big OEMs. So, that is also an encouraging sign that even though uncertain times, they are still committed to the long term [indiscernible] energy driving in the future for them and they are working with us to make progress in that that front.

Thank you.

Next question, Luke Schuch with Baird.

Morning. Thanks for taking the questions. First, maybe if we could just talk about what's going on in China right now and, the fact that things have been trending relatively better the last couple of quarters. I know you haven't read into that too much today, but now it's just an accumulation of data points. Are you better able to tease out what's going on with those customers?

I think that our focus now in China is supporting our Chinese OEMs on the global exports and also on the local on the local market. And we are outperforming our initial expectation. So roughly 20% to 30% market share is quite is quite stable. On the advanced product we see opportunities after we start rebuilding our second generation product, which is going to be based on IQ six So this is sometimes closer to the end of the year and not now. So our business development on our advanced product is more focused on the Western customers and not in China. China, are focused on ADAS and also supporting our Western OEMs, Porsche and Audi, in their launch of Supervision Chauffeur also in China end of twenty twenty six and 2020 Just to give some sense on the numbers for China, so we started 2024 with relatively low numbers, so we sold approximately 400,000 units. And then from the second half of twenty twenty four, we're seeing increased volume. So in the 1,200,000 units. We were still conservative the beginning of the year with the guidance. So we were aiming approximately 500,000 units a quarter. And we are seeing demand more than that in the first and also the second quarter.

So in terms of the guidance versus the beginning of the year, it's some source of upset.

All very helpful. Thank you. And then just a quick one. The, imaging radar award, the you believe is imminent, are you implying that that is a potential chauffeur award as well?

No, this particular award is just for the sensor itself. We have additional opportunities of the imaging radar bundled with the [indiscernible] But that is separate.

Understood. Thank you. [indiscernible] Question, Shreya Spatil with Wolfe Research. Please go ahead.

Hey, thanks so much for taking the question. Maybe just back on the 2025 guidance. I think previously you had talked about an expectation of of share gains or ADAS penetration increase embedded in the '25 guide. And I'm wondering, if that if you're still seeing that at the moment I understand that overall the production expectations that you've embedded are still consistent with what we're seeing in production. But I'm just wondering if you're also seeing ADAS penetration increases or share gains as well? [indiscernible] Yeah. So as you mentioned, about the global production, at the midpoint of our guidance, we kind of now aligned with party forecast. Forecasts of approximately 7% [indiscernible] As for the incremental units from new lounges, and Mobileye share gains within our top customers, I I in in January, so we are expecting 1,400,000 units That looks in line with expectation and maybe even ramping up a bit faster than expected. So we're still we this is still a source of addition unit. And also the China expectations which were more conservative at the beginning of the year and we're seeing an upside also for China OEMs.

Okay. Great.

And then maybe on just just trying to think through the opportunity that you see here and in Mobileye Drive the deal that that announced announced today with Uber just comes off the heels of a similar program with Lyft So I'm wondering if we should see this as an indication of momentum accelerating in robotaxi deployment broadly and if that's the case, obviously, and Lyft are the two largest players in The U. S. But I'm wondering if there are other opportunities in the pipeline as well maybe in other markets.

Yeah, so definitely we're seeing accelerated momentum and increased interest [indiscernible] is a broader realization in the industry that robotaxi and self driving services are [indiscernible] It's not a question of if it's a question of when and how much. And we are we are a very attractive partner in the sense that our products are scalable, cost efficient, can be deployed globally in all major markets, in the near future. So, Volkswagen is our kind of leading partner strategic partner for producing robo taxi cars from assembly line in scale that can be quickly ramped up according to demand. Partnering with Lyft and Uber, the two biggest mobility operators in The US is very, very important to quickly reach the pockets of millions of consumers as [indiscernible] [indiscernible] probably you can imagine. But in addition to this, we're also working on launching in Europe beyond just The U. S. In similar timeframes. Again, with Volkswagen, a very strong European OEM allows us to be very one of the earliest, if not the first to launch in Europe. Partnering with Holland gives us another angle of transportation in different, maybe slightly different use cases. And beyond all of those, we're still we're also working with additional OEMs that are very interested in this business model car manufacturers, to produce level four cars their manufacturing lines, partnering with Mobileye self driving technology with Mobileye Drive, And then once Mobileye bring to the table the mobility operators, it really opens the door for more OEMs that are interested in a similar model.

And if we think about making a revolution of robotaxis, it's about scale. That's the next big thing. And the scale is not just a few hundreds of cars, thousands and tens of thousands, hundreds of thousands of cars in Europe and The US, and to get there we are partnering with the most scalable OEMs on the planet. So that's kind of our strategy and we do see very, very accelerated momentum in the past three to six months, I would say.

Say.

Great. Thanks. I might have to get on the call for second real quick.

Next question, Adam Jonas with Morgan Stanley.

Hey, everybody. Just a couple questions. First is a bit of a maybe this might sound oddball. Quirky technical, but we're hearing from some that the Gen AI has helped possibly increase the value of dashcam video capture that could be really relevant to the ability for, like, an Uber and list leader or other fleets to capture data Obviously, it's not the same fidelity and and in the same sensor modality and connected to the computers the way your systems is very sophisticated way are. But I was I was curious if if you really if you subscribe to that, that at least at some level, the coefficient of value that you might apply this aftermarket dashcam video capturing footage from around the vehicle who's driving around might might have some improved value given given the AI, Gen AI revolution going on. The first question, thanks.

In terms of data collection from vehicles, we have what we call REM one point zero, which sending images to the cloud, sending condensed data to the cloud. We have been developing a new generation of [indiscernible] supreme REM, which is based on sending pictures still very low bandwidth, but sending pictures to the cloud. And we'll have much to talk about in in in the coming months or year about this new about this new technology. So that there's quite a lot of progress in terms of what kind of data, at what frequency of data, volume of data you can start extracting from vehicles and still meet also regulatory approvals. There's privacy concerns, there's all sorts of issues there. And we're really on it with the new technologies, and the new approaches and all of that will meet our twenty twenty seven launches of [indiscernible] on.

Okay.

So I'm not just basically, it's not a bullshit question is what you're saying?

No.

No. No.

You never have those questions. No.

No. I disagree. Okay. And a follow-up.

I'm just curious.

Given given so much other activity in other sectors outside of automotive, in terms of data capture data capture And I think you'd agree with the with the belief that anything that any machine that can be automated will be automated. And cars are just one modality of of many many thousands potentially of other modalities. I'm just I'd be interested if Mobileye is allocating or there's any change to allocation even even if it's a small level, of your r and d and advanced development work on markets outside of automotive at this time?

Thank you.

Yes.

I'll say yes, but I cannot expand further. We exploring but we're still at the exploration stage of looking at additional growth engines in the physical AI space.

Thank you, Adam.

Next question, Anton Cheyban with New Research. Please go ahead.

Hi, good afternoon. Thanks for taking my question.

I'd like to follow-up on the announcement with Lyft to debit Mobileye Power Drotactis in Dallas in 2026. I was wondering how do you expect the rollout to play out? It seems that the goal is eventually deploy thousands of vehicles across multiple cities So any color you can provide on economics of the deal and the pace of deployment the shape of the ramp would be very helpful. Thank you.

Yes. Maybe I would address the general roll up of our robotaxis leads without addressing the specific project. There is only so much we can expand on this on this project at this stage. Generally, we're [indiscernible] Start with the development and testing stages in which we deploy dozens of vehicles driving around the designated area. Repeatedly. And of course, there's a combination of offline and online validation processes [indiscernible] That are necessary to make sure that the quality of service is at the right the highest level possible, of course, making sure that we can meet the safety standards, the meet between interventions, in this designated area. Afterwards, is a certain stage of pilot programs in which we're using the safety drivers at the start but still opening the doors for users to experience the service and getting feedback from that. That's still the magnitude is still in the dozens. Then it gradually expands to maybe small hundreds of vehicles. After that there is an early stage of driverless [indiscernible] And then it becomes a full commercial service. And this process can take a few months or it can take maybe a year or so of [indiscernible] through the different stages.

Of this activity. We are already we have been working on the in the US in certain cities in the past two years, for early testing. And 2025 is a really important year for us in the global tech development because we are expanding the scale significantly of Mobileye drive systems driving in The U. S. In different cities, and really becoming seeing more statistic data for more statistic analysis of our performance and [indiscernible] very impressive results and improvement towards the goal and getting to these launches.

Let me talk about the economics. [indiscernible] Yeah. And then when it comes to the economics, again, just to make sure it's clear, Mobileye's product is the ECU, and the ECU is the hardware and the software. We get a payment one time for that per car. And then there is a recurring license fee for the operation of each and every Robotaxi vehicle according to its availability and usage. So the more you can think of it as a percentage of every dollar per mile that consumers pay for self driving system with mobilized that is enabled by Mobileye Drive.

Great.

Thanks. A lot for the detailed answer. Maybe as a quick follow-up, so on the the cloud enhanced ADAS announcement with the Korean OEM, can you maybe provide some color on the volumes this could represent, the timing and shape of the ramp? Maybe remind us the overall design win status for Cloud Enhanced?

Yes, so normally, Cloud enhanced ADAS is a a integrated within high volume projects. So, it's a front camera based system that is now uploading data and downloading data from our RAN database. And that is very important for us because RAN database is using us not just to improve the quality of our base data's products, but also to it's kind of the backbone for our advanced product. So supervision surrounded by chauffeur and drive. So our strategy is to have an ecosystem of OEMs that are contributing data and benefiting from the data of multiple OEMs and then having a very good coverage and refresh rate globally, that's of the OEMs that are in this ecosystem can enjoy. For the different product. So adding more high volume OEMs to this ecosystem is essential, of course, to these purposes. And the rollout is within the near future. Let's say. You know, to go beyond that.

Thank you, Antoine.

Next question, Mark Delaney, Goldman Sachs.

Yes. Thank you very much for taking my questions.

For Mobileye Drive, I think both the Uber and Lyft agreements target operations beginning in 2026. Can you speak to how development is going to meet that time [indiscernible] And taking a step back and thinking about Drive more holistically, it's been a small contributor to the company's revenue. But as you think out to 2026 and 2027, do you think Mobileye Drive revenue is going to become a meaningful part of Mobileye's overall financials?

Yes. In terms of development, we are we have shifted all the hardware to I. 65. A few months ago or the ECU called the drive 64. And at the meeting, all our target for end of twenty twenty six. Launch of driverless robotaxis. So we are on target there. With the statistics, with driving. We have been driving in Europe and in Austin, Texas, and we are gradually expanding testing and with many dozens of vehicles. In in in multiple in multiple sites. In terms of revenue, the contract we have talk about tens of thousands of vehicles. [indiscernible] spread over till the end of the decade. So we are talking about a meaningful revenue coming out of this business, And in the last few months, the potential for more than what we have contracted. So it could be somewhere around 5 figure or 6 figure in terms of volume of cars till the end of decade. So it could be very meaningful in terms of revenue the company. Given the upfront pricing. Yes, and also the license fee for for your Just to clarify that we expecting the meaningful revenue per year to start from '27 onwards and not in '26.

And when we think about the potential so today there is only a small fraction of the percent of miles driven by people in The US that is autonomous. And although it becomes more and more pervasive in more cities, and others that are [indiscernible] We're still scratching the surface. As we envision the next few years towards the end of the decade, we believe this number will significantly grow and we believe that will be one of the maybe two or three enablers for that, but it's realistic to have only two or three and not 20 or 30. In that stage and the volumes to facilitate for the demand in The US and Europe for mobility services is the tens of thousands, hundreds of thousands, potentially millions of vehicles This is why partnering with OEMs at SkinClear is so important.

Very helpful. Thanks. My other question was on the consumer vehicle part of the business. You mentioned in the prepared that potential new awards with Supervision and Chauffeur, I think you said are going somewhat slower than you'd liked. Why do you think that is? And maybe help us better understand as you think about the opportunity set with Supervision and Shafir, you talked about five OEMs being in more advanced stages of evaluation at your last Investor Day. Those five all still active? Or have there been any changes there? Thank you.

Yes. So think there are some macro events that are obviously contributing to the delays or to the longer decision making process than originally expected. The past two to three months have been very turbulent for the industry in general. [indiscernible] that probably served a significant role. In in taking more time to make these decisions. We still have a lot of confidence in the engagements we have. We see progress made. We're moving through the ropes of the different stages and getting to concrete stages. Receiving official RFQs and getting to negotiation statuses. We're getting closer to convergence with several of these opportunities that we mentioned in the IR day. So, I think overall we still have confidence we have in supervision as refer remains as high as it's been. We just need to be patient to make sure that we're doing the right things with the OEMs and you know, many things can happen in the next few weeks. Don't think we should be predicting when will happen, but it's realistic to converge.

And I think in last couple of months, I've been two new engagements that we did not anticipate at the Capital Markets Day. Back in in December. And they are very meaningful in terms of breadth, both supervision and So I think 2025 is going to be a good year. For those advanced [indiscernible] Thank you, Mark.

Next question, Aaron Rakers with Wells Fargo.

Yes. Thanks for taking the question. Kind of building off that last question, you know, thinking about that slide that you'd given at the Analyst Day, you know, thinking about chauffeur and supervision, I think in total there were seven kind of moving possibly to the right. I guess just to be clear, those seven still exist. Maybe it's taking a little bit longer and now you would add two new OEMs to that list. I just kind of thinking about that progression of those OEM opportunities. Is that fair?

Yeah. So I think that what has changed is that nature of the discussion might might change. The flags are still there. So in some cases, it's been expanding the discussion from a single product line to multiple product lines that have in three of these engagements. I think the most consistent trend is that there is a growing interest in Level three eyes off product that are targeting end of twenty seven, early twenty eight SOPs. It seems to be now a very, very strategic [indiscernible] For several big OEMs. That was maybe not as evident in our discussions in the IR day. And in some cases maybe there we have moved from a high flame to low flame discussion. Maybe in one particular case. But in general, we still have the same long term confidence that this business is building. Our focus right now is partnering with OEMs that will allow us to scale our next gen product based on IP6 which we are now developing, and then we have a lot a lot of confidence in our ability to do Perfect. And and then as a quick follow-up, thinking about the Uber and Lyft relationship and the one time payment, I also know back at the Analyst Day you highlighted kind of a chart that showed you know, blended ASP going from $55 to upward to $200 by the end of [indiscernible] How do we kind of you know, cross that relative to the Uber and Lyft opportunity, you know, versus that 200?

Any context of of that one time you know, ASP opportunity with those engagements.

Yeah. I think that chart that you referred to, is does not take into account commercial potential of the Mobileye Drive partnership with Lyft, Uber that we just announced. And we it's pure upside to that. So think that in most of the analysis we showed about future revenue growth, we took an extremely conservative assessment of drive [indiscernible] So in previous numbers that we shared it was not [indiscernible] [indiscernible] This chart was focused on how will a consumer car, passenger car look like. So today it's $55 that is what the chart said. But today, for that OEM, a passenger car is worth $55 for Mobileye and with a gradual adoption of our advanced products that are designed for passenger cars, that number can grow from 55 to roughly 200 plus dollars.

It did not reflect any robot acting business.

What we said about the robotaxi business in the past is kind of the upfront cost is is in the 5 figures. [indiscernible] With healthy margins.

With healthy margins.

So it's a completely different business model because you're talking about generating revenue per mile across hundreds of thousands of miles.

Vehicle.

So that and you're talking about replacing a human driver which can cost $170,000 a year if you think about two shifts of drivers. So it's kind of a different business model and just a completely different revenue per unit. [indiscernible] Thank you.

Thank you, Aaron.

Next question, Gary. Mobley with Loop Capital. Please go ahead.

Thanks for sneaking in my question. The European OEM that you mentioned in your press release that you have done business with since 2016, What drove that reengagement? And is this a a redundant application for their internal chip or just any sort of color you can give on that?

Yeah.

So going as detailed as possible, given the nature of this business, It is not a redundant product, it is to practically source Mobileye solution as their ADAS is their ADAS solution. In future projects. So it's basically going back to a mobile solution after almost nine years of not having mutual design wins. Which we see as another testament of our product advantages and position in the market as a market leader in this segment, and we we don't know all the details, but you know, we can assume that it's mostly about performance versus cost superiority that we have.

That's helpful.

Just a quick follow-up.

Are are you reaffirming your non GAAP gross margin for fiscal year twenty twenty five of 150 basis point improvement over the prior year.

Yes. So we are still anticipating an increase in gross margin. The mix of supervision and high is different in 2025. So we're still expecting an upside of approximately 100 basis points in 2025 versus 2024.

Yes, think China volumes are a little bit lower margin for us. So as the China volumes kind of outperform a bit, that leads to like a little bit less upside than or, you know, increase than we were expecting. But very very small.

Thank you very much. [indiscernible] Edison Yu with Deutsche Bank. Please go ahead.

Hey, thank you for taking our question.

Wanted to come back on [indiscernible] How do you think about the performance threshold for DRIVE in these U. S. [indiscernible] Obviously, now you have Uber as well.

Is there some level where you need to kind of prove or or they need to peel comfortable with that it will achieve before you can really get these deployments wrapping up.

We have clear metrics with our with our customers. That show superior to human level performance. [indiscernible] we are on track to meeting those metrics.

Yeah. There is a constant mutual evaluation of the performance per mouse in the development stage. And we're seeing let's say, very strong progression towards this target. And this is the basis of having taking the decision to take the next step and go into the commercial deployment stage.

Gotcha. And and is it the same threshold for for both the the two deployments, or are there actually nuances depending on who you're working with? At Uber or Lyft?

No. That's the same threshold. Okay.

And just one quick one. A liability perspective, has that been kind of hashed out? Who is kind of liable if [indiscernible] [indiscernible] yeah, who who is sort of liable of anything kind of if there's an accident or something that that hashed out already, or is that TBD?

So that's these aspects are behind them. Without going into the deep Okay.

Thank you. Thanks, Edison.

Next question, Tom Narayan with RBC. Please go ahead.

Yes. Thanks for taking the question.

The first one has to do with SURROUND ADAS.

Versus supervision. It looks like we have, yes, SUROUND ADAS with the VW mass market brands supervision for the VW's premium brands But obviously, we noticed some of the premium OEMs Mercedes, BMW trying to develop their own autonomy Just how do we think about supervision going forward given this potential headwind? Is it that maybe we should be contemplating Surround ADAS being the kind of bigger category winner for you guys as opposed to supervision. Or do you just see a migration as the mass market players over time kind of migrate towards supervision from surround ADAS?

We see Surround ADAS as the next level of ADAS. So the migration is from front facing camera to Surround ADAS, And this is driven by increased regulatory requirement on future ADAS systems, both in Europe and in and in The U. S. The 2028 and 2029 regimes are very challenging and require multiple cameras, and a front facing camera would not be would not be enough So the surround ADAS is really the new ADAS. Going forward. Supervision shares the same sensor set in terms of cameras with the chauffeur and drive. So supervision is the next step going from eyes on to eyes off, in a hands free driving that can drive everywhere, urban and and highway. Supervision has also added advantage of generating data. So because it's the same sensor set, you can start with a supervision system, use that as a data generator example, uploading events, you write all sorts of probe functions, and you upload the data, and you use that data to go further and develop the level three and level four. So there is a a space for supervision and the holy grail is level three. Chauffeur is really the, if you look at at where things should converge to in terms of consumer cars, it's level three, and then later expanding the LDD to level IV.

Okay, just to clarify, so you're not seeing a change in how you guys see the adoption being maybe more towards around ADAS versus supervision rather it's just the migration No. And the way we analyze this is is by evaluating the vehicle models and different with different price points for for each product category. So practically different segments of the vehicle lines that are targeting SORNADA and supervision or chauffeur.

Okay. And my follow-up has to do with I guess, the commentary on the Tesla earnings call earlier this week. On general AI versus kind of sensor based map mapping know you guys have talked a lot about this. We heard a lot about this at the at the Investor Day. But they referenced specifically their FSD rollout in China and how it has progressed, in their words, very quickly without knowing the country specific dynamics, driving dynamic habits, etcetera. Just curious to how you think about maybe their commentary on the general AI approach camera versus [indiscernible] Thanks.

Well, we're all using AI. Think we should stop all this typing. Everyone is using AI, everyone is using Gen AI, so these hypes I think we should stop But to the point there's a lot that simulators can add. So for example, in our launch in China, [indiscernible] are completely different than what you see in the West. There's a, traffic lights are digital, where you have a at every place, and we cannot send data from China outside of China. But we replicated this in a stimulator. And then we used the simulators in order to train our system. We use stimulators a lot. To compensate, to mitigate the fact that we cannot use data in China. And this is kind of standard technique. Everyone is using it. And and I think we should [indiscernible] Really.

Thank you, Tom.

Thank you. I would like to turn the floor over to Dan for closing remarks.

We've run out of time. Everyone for joining the call and we will talk to you again next quarter. Thanks very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect. Disconnect your lines. At this time.