Mobileye Global - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 was a solid beat: revenue $506M, up 15% YoY, and Adjusted EPS $0.13; management raised FY25 revenue guidance by ~4% at the midpoint to $1.765B–$1.885B and lifted Adjusted Operating Income to $210M–$286M.
• Strength was broad-based (EyeQ volumes +28% YoY), with inventory alignment at customers and better-than-expected SuperVision production; margins were stable on an adjusted basis and GAAP operating loss improved to -15% margin.
• Outlook catalyst: increasing traction across Surround ADAS, SuperVision, Chauffeur, and Drive; VW-Uber robotaxi deployment in Los Angeles and Lyft/Marubeni progress support a 2026 commercial launch and 2027 growth inflection.
• Risks/headwinds: mix pressure from China EyeQ and SuperVision reduces gross margin vs corporate average; EBITDA remained negative vs positive Street expectations, and management maintained caution for Q4 visibility amid tariff uncertainty.

What Went Well and What Went Wrong

What Went Well

• Broad-based demand and operational leverage: 15% YoY revenue growth and adjusted operating margin rose to 21% with strong cash generation ($322M H1 operating cash flow).
• Program momentum and technology milestones: “EyeQ6 Lite ramp-up has been seamless” and advanced programs with VW progressing toward eyes-off autonomy; “we are on-track to begin fully driverless deployments in the US in 2026”.
• Strategic ecosystem progress: VW announced a partnership with Uber for LA robotaxis; Lyft/Marubeni ecosystem completion advancing; first imaging radar design win accelerates L3 prospects.

Specific quotes:

• “Q2 was a good display of the strong operating leverage created by our business model.” — Prof. Amnon Shashua.
• “We are on-track to begin fully driverless deployments in the US in 2026.” — Press release.
• “SuperVision volume was… stronger than expected… production of the vehicles we are on is running better than expected year to date.” — Dan Galves.

What Went Wrong

• Mix headwinds to gross margin: “SuperVision… was a higher percentage of revenue in Q2 versus Q1, causing a bit of a gross margin reduction,” and China EyeQ mix carries margins below corporate average.
• GAAP profitability still negative: GAAP net loss of $(67)M and GAAP operating margin -15% despite YoY improvement.
• Street EBITDA miss: EBITDA printed negative vs positive consensus; management maintained caution on Q4 visibility given tariffs and seasonality.

Transcript

Speaker 3

Greetings, and welcome to the Mobileye Second Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone pad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Galves, Chief Communications Officer. Thank you, Mr. Galves. You may begin.

Speaker 0

Thanks, Maria. Hello, everyone, and welcome to Mobileye Second Quarter 2025 earnings conference call for the period ending June 28, 2025. Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially. Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today are Professor Amnon Shashua, Mobileye CEO and President, and Nimrod Nehushtan, Mobileye's EVP of Business Development and Strategy. Unfortunately, our CFO, Moran Shemesh, recently experienced a death in her family and will not be joining the call today.

I'm sure everyone listening joins me in wishing the best to Moran and her family. For today's earnings call, I will essentially take on Moran's role. Thanks, and now I'll turn the call over to Amnon.

Speaker 1

Hello, everyone, and thanks for joining our earnings call. Starting with the results, Q2 revenue was up 15% year over year as demand for the EyeQ was strong across regions and OEMs. Adjusted operating income was up 34%, and adjusted operating margin rose 3 percentage points to 21%. Q2 was a good display of the strong operating leverage created by our business model. On a year-over-year basis, more than 40% of the revenue growth converted to operating income. Compared to Q1, nearly 70% of the higher revenue dropped to operating income. Operating cash flow was again a highlight: over $200 million for the quarter and over $300 million for the first half, about 33% of revenue. Our ADAS business is highly cash-generative, and we are maintaining strong working capital discipline.

The core ADAS business is performing well, with volumes at or above 8.5 million per quarter for the last four periods, and we are raising our full-year revenue outlook by 4% and our adjusted operating income outlook by 14% at the midpoint. Our core ADAS business truly illustrates that Mobileye is an execution machine. EyeQ6 Lite will be the future high-volume chip for this segment, and the ramp-up of that new system has been seamless. Only one year after the first SOP, we already have EyeQ6 Lite-based systems on the road in North America, Europe, China, Japan, and India. On the advanced product side, we are the only OEM-neutral platform that is cost-efficient and scalable and has a credible technology path to eyes-off autonomy in both privately owned vehicles and robotaxis.

All four of our advanced products—Surround ADAS, SuperVision, Chauffeur, and Drive—share common elements, including the EyeQ6 high-inference chip, major portions of the perception and policy AI stacks, REM crowdsourced driving intelligence, our safety frameworks, and the company's data and validation infrastructure. This common backbone creates many synergies for us and our customers, enables us to develop and execute all four solutions simultaneously, and leaves us agnostic to whether the market moves faster in one way or another. Whereas a couple of years ago, OEMs were primarily focused on SuperVision, we are now seeing broad momentum across our portfolio from next-generation ADAS to full point A to point B, eyes-on hands-free to Level 3 systems, and to robotaxi. The EyeQ6-based Surround ADAS system continues to develop as the next generation of standardized driving assist on high-volume vehicle platforms. This system addresses multiple objectives in a cost-efficient package.

It's designed to meet stricter late-decade safety standards, enables highway hands-free performance for a lower cost than current systems, and supports OEM goals to consolidate ECUs and to integrate technology on a single SoC. In recent months, we have seen growing demand from OEMs to shift away from already sourced single-camera programs toward our multi-camera Surround ADAS bundle. Overall, opportunities to substantially grow content per vehicle in the ADAS space have improved over the last six months. SuperVision activity remains robust, but lack of competitive pressure is enabling OEMs to continue to take their time with decision-making. Meanwhile, Chauffeur has generated multiple new OEM prospects that see eyes-off on highway as a breakthrough feature that allows drivers to reclaim their time during commutes. The central question around eyes-off consumer AV programs is simply technological maturity.

How likely is it for a technology provider like Mobileye to execute a system with human-level safety and an expansive ODD? In this context, our four production programs with Volkswagen Group are significant strategic assets. They showcase our rapid progress in transforming our core technologies into scalable products. Our ability to demonstrate these products to other customers, including production-level hardware and software-associated KPIs, is an important proof point that our competitors do not have and will drive increasing competitive pressure as we approach launch. Turning to robotaxi, Waymo's achievement of 25% market share in San Francisco, despite offering no time or cost advantage over human-driven alternatives, is very encouraging and has reignited industry enthusiasm. When you look at the robotaxi opportunity, two pillars are critical: safety and scalability. On safety, this means reaching the mean time between failures that exceeds human statistics, as well as other critical safety standards.

Safety has long been a strength of Mobileye, supported by foundational innovations like our RSS model, which we developed in 2017, and the PGF, our recently published framework for fusing multiple subsystems. Once safety goals have been reached, the second pillar is scalability. The name of the game here is how fast can you scale. This should be evaluated across three different vectors. The first scalability vector is geographic. How fast can you expand from city to city? REM is a huge asset here. The second is cost. What are all the all-in operating costs of the system? Our in-house designed compute, imaging radar, efficient AI, supply chain synergies—these all combine to create significant cost-efficiency advantages relative to the competition. Finally, scalability also entails production capacity and business model.

The fact that we work in partnership with OEMs that produce vehicles where our system is integrated during the mass production line, rather than being uplifted in a different facility after the vehicle has been produced, is very important. This approach allows us to be capital-light, but it's not just about capital-light. It also allows us to scale fast. Even if we had all the capital to go and purchase 100,000 vehicles and then build production plants that would uplift the self-driving technology, it would have slowed us down. We are working with Volkswagen, of course, but also Holon, which has a production facility underway, and have advanced engagements with other high-scale OEMs. On the operations and distribution side, we have arrangements with Volkswagen's mobility arm, MOIA, and Japanese fleet manager, Marubeni, to provide the operations and the customer-facing technology.

Finally, we have announced real engagements with demand generators, Uber and Lyft in the U.S., and public transport operators in Europe to provide the demand platform. All of these actors have skin in the game, which is also important to drive scale. Mobileye, with the kind of partnerships that we are building, is in a very good position to scale rapidly once we start commercial deployment in 2026. In terms of a technology update on robotaxi, we recently successfully transitioned into our full production hardware inside the ID. Buzz test vehicle. The mean time between failure performance is tracking well to the KPIs that were laid out at the start of the program. We expect to reach our KPI goals by the end of 2025, then start adding teleoperations, and then remove the driver in 2026. It is all on track.

In summary, the opportunity set in front of us today is larger, broader, deeper, and more urgent than it was when we went public in 2022. OEMs are indicating increased clarity in planning and decision-making. Near-term volumes are strong. The demand for both higher performance and lower cost is intensifying. Eyes-off performance, whether for personal cars or robotaxi, is no longer seen as a science experiment but as an achievable and commercially viable product. This is exactly where Mobileye thrives. I will turn the call over to Dan to cover the finance section.

Speaker 0

Thank you, Amnon. Before I begin, please be aware that all my comments on profitability will refer to non-GAAP measurements. The primary exclusion in Mobileye's non-GAAP numbers is amortization of intangible assets, which is mainly related to Intel's acquisition of Mobileye in 2017. We also exclude stock-based compensation. Our Q2 results significantly exceeded the color we provided on the Q1 2025 earnings call in April and were slightly better than our pre-release numbers from earlier this month. Revenue was up 15% year over year versus the outlook of plus 7%. The strength was due to several factors. Multiple OEMs, including China OEMs, showed modest outperformance, which, taken together, contributed to significant overall gains. SuperVision volume was also a bit stronger than expected as production of the vehicles we are on is running better than expected year to date.

I'll spend a minute on inventory as we continue to monitor it closely. Based on our discussions with customers, inventory was relatively tight entering the year, and there was some direction from certain OEMs to increase safety stocks due to the volatile macro environment. Even so, a variety of analyses we run on a regular basis indicates that shipments were relatively consistent with demand on a year-to-date basis. To frame it, EyeQ volumes in the second half of 2024 were 17.8 million units, and inventory ended the year at a low level. Volumes in the first half of 2025 were 18.1 million in what we believe was a comparable demand environment to the second half of last year. We continue to believe that inventory at our customers remains well aligned with underlying demand. Turning to gross margin, it was down slightly year over year versus Q1.

Gross margins are stable by product and by region. The exact results, however, depend on the mix of China volumes in the ADAS business and SuperVision. Each of those segments carries gross margins somewhat lower than the corporate average. SuperVision, in particular, was a higher percentage of revenue in Q2 versus Q1, causing a bit of a gross margin reduction. Operating expenses were up 7% year over year and flat compared to Q1 versus the prior outlook that indicated Q2 operating expenses would be slightly higher than Q1. As Amnon mentioned, operating cash flow was over $300 million in the first half. This is primarily due to strong cash flow from the core business. However, we've also managed tight control over the working capital accounts, particularly balance sheet inventory, which came down by about $90 million in the first half.

We're now well aligned with our six-month target on balance sheet inventory, and we expect working capital to be more cash-neutral in the back half. Turning to the full-year guidance, we are increasing the revenue midpoint by 4% and the adjusted operating income midpoint by 14%. On the last call, we noted that the implied step down in second-half 2025 revenue versus the first half did not reflect any specific indication of production weakness, but rather a cautious stance given the elevated uncertainty around automotive tariffs at the time. Since then, while tariffs remain in place, the actual impact on production and consumer demand appears rather limited, and third-party forecasts have risen since April. Our current outlook releases some of the conservatism in Q3 as visibility is high at this point.

That said, visibility into Q4 remains more limited, as is always the case in July, and we believe it's prudent to maintain a cautious stance and a wider-than-usual range for that Q4 period. To be 100% clear, the business is performing very well. We are not seeing any tangible headwinds, and we've not received any indications from customers that Q4 volumes will weaken. We are simply choosing to remain conservative beyond the very near term. Our full-year outlook is based on EyeQ volumes of 33.5 million-35.5 million, up from 32-34 million previously. As noted above, SuperVision volumes are running better than expected, and we're modestly raising the outlook to about 40,000 units at the midpoint versus the prior outlook in the low 20,000s. We expect gross margins to be up about half a percentage point year over year in 2025.

This is slightly worse than our prior outlook, but this is simply due to SuperVision and China EyeQ being a bit of a higher percentage of revenue. Adjusted operating expenses do not typically flex according to revenue and remain in line with our prior expectations. We continue to expect an increase of about 7% year over year to slightly below $1 billion. Looking at the balance of the year, we would expect Q3 to be somewhat higher than Q4, consistent with historical seasonality. Turning to Q3, we expect to deliver approximately 8.7 million-9.3 million EyeQ units and for our revenue to be roughly flat on a year-over-year basis. We expect gross margins to be slightly below the Q2 levels and for operating expenses to be seasonally higher in Q3 versus Q2, aligned with previous expectations. Thank you, and we will now take your questions.

Operator, can you please turn the mic to generate the queue?

Speaker 1

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. We ask analysts to limit themselves to one question and a follow-up to ensure that others have the same opportunity to do so. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we poll for questions. Our first question comes from Chris McNally with Evercore ISI. Please proceed with your question.

Speaker 0

Thanks so much, team. Maybe we could just double-click, Amnon, into your comment around sort of the higher momentum at Chauffeur, maybe a little bit of slower momentum on SuperVision decision-making. How much do you think this is sort of OEMs having more of a question around their own pricing ability to pass through sort of a Level 2+ product versus something else? Because I think we've all seen this sort of delay in implementation, and there is some fear that we're seeing these products given away almost for free in China. So a lack of clarity, let's say, for how OEMs would price such a product. We'd love your thoughts on that.

Speaker 1

I think there is a lack of competitive pressure for these systems in Europe and the U.S. You see these systems a lot in China, and outside of China, it's only the Tesla FSD. OEMs have seen the Tesla FSD for more than a decade. We need more competitive pressure to kind of bring OEMs to a sense of urgency. I think the last news about penetration rates of Tesla FSD are encouraging. It's more than 25% take rate, and it looks like it's climbing. I think the news are good in terms of public interest in these kinds of features and willing to pay for them. Regardless, OEMs are still in the planning stage because it's not only the Level 2+, it's SuperVision, there is a Chauffeur.

They want to be part, they want to have skin in the game in robotaxi, not just produce cars and just sell them to the likes of Waymo and others. They want skin in the game in the robotaxi domain. It's all part of planning. There's around ADAS, whether it should take over the front-facing camera or just be a premium product. There's lots of planning to do. The more we deep dive into it, I think that planning phase is coming to a close. We see a lot of activity by OEMs talking about SuperVision, but in addition, also Surround ADAS and Chauffeur, and with a number of high-scalers OEMs also about the robotaxi.

Speaker 4

If I may add this. Sorry, I just may add one comment. We recently started inviting OEMs to see our Generation 2 SuperVision system, which is now operational in various locations and shows our EyeQ6 platform with new technologies. We've seen increased interest and pretty much a lot of excitement by OEMs to see these demonstrations, and it's kind of another positive momentum around SuperVision. It's not just the competitive pressure, it's also seeing kind of more evidence to our Generation 2 system and how it performs in the field that now is available. It's been so in the past few weeks, and so far, it's been very successful.

Speaker 0

That's really helpful. Just my quick follow-up. Is it fair to characterize or paraphrase as sort of the flag slide that you showed in December is more of an implementation delay rather than a full pause on SuperVision, and that you still see SuperVision as essentially the stepping stone for a lot of these OEM programs into Chauffeur, given the software overlap and just obviously additional hardware needed for Chauffeur?

Speaker 1

Nimrod, start, and I'll complement if necessary.

Speaker 4

I don't think that necessarily we have suggested that SuperVision is a prerequisite for Chauffeur. I think that what remains true is that there is a consensus, at least from our perspective amongst OEMs, that Chauffeur is a very compelling value proposition for consumers. As Amnon said in his opening comments, it's a question of whether or not the technology is mature and at what price and in which timeline. We are making consistent progress not just in Chauffeur directly, but also through robotaxi, which is showing a lot more about our robustness and the maturity of our technologies for ISO, for no driver, which requires very high precision levels. The more we're making progress, the more we are convincing OEMs that this is a technology that is for here and now and not for the next five years.

Therefore, we see some OEMs that are considering going straight to Chauffeur for the, let's say, 2027-2028 timeframes. I think what we have learned is that the OEMs are a spectrum of needs and interests and planning strategies. Our strategy is that our products are playing on the complete spectrum of solutions. We can offer the entire product portfolio, like we're with Volkswagen. We can offer parts of it, but what's important is that we're progressing towards SOPs, towards launching these products in the market, regardless of how OEMs are kind of thinking about their planning. The more we make progress, the more we can convince them that the technologies are mature, which product makes the most sense for their segments, and so on.

Speaker 1

Yeah, I'll mention that we have a start of production 2027 with Audi on Chauffeur, and it's on track. There's also a number of homologation steps that we have passed. As time goes by, the maturity level of this system is now becoming more and more evident, and that should bring OEMs to the table and get convinced that the maturity level is good enough to start thinking about the production program for Chauffeur.

Speaker 0

Thank you, Chris.

Speaker 1

Our next question comes from James Pearce with BNP Paribas. Please proceed with your question.

Hi, everyone. Just starting with SuperVision, the guide for 40,000 units, a near doubling of the expectation for the full year. Can you just speak to what's driving that, how the relationship is trending with Zeekr, and then just looking ahead, any thoughts on the timing for next year concerning the portionality launches for SuperVision and Chauffeur? Thanks.

Speaker 0

We took a conservative—

Yeah, go ahead, Dan.

Okay, thanks. Yeah, we took a conservative stance on SuperVision volumes for this year. Since then, what we've seen is Zeekr 009 for export markets has been selling more vehicles than we probably expected. Polestar 4 production and end demand has been pretty good as well. I think key here is that any Zeekr vehicles that are being shipped outside of China are still using the SuperVision system, which kind of indicates the maturity of our system for kind of non-China markets. Yeah, I think it's just a reflection of kind of conservative start of the year and kind of production of these vehicles running better than expected.

Speaker 1

As for the portionality, the start of production is end of 2026, so the effect on revenue should be seen in 2027. We see 2027 as really an inflection year in terms of revenue where SuperVision by Porsche, Audi, and we believe more would come out. Robotaxi will start generating revenue as well because we are removing the driver mid of 2026, and we have a very strong plan of scalability. In 2027 is really the inflection year in terms of revenue.

Speaker 0

Yeah, and if we look at the kind of consensus expectations for SuperVision in 2026, it can be almost exclusively covered by the current vehicles in production.

Got it. That's helpful. Just my follow-up in regard to the recent secondary offering tied to Intel's stake, how should we think about any future intentions there and the potential timeframe? Thanks.

Speaker 1

Dan, you want to take this, and I'll complement?

Speaker 0

Yeah, no, I think Intel's shown quite a bit of patience with their stake in Mobileye. They hadn't sold any shares for two years. They still maintain more than 80% ownership. I think they've made public comments that they have kind of a very strong view of kind of the potential of Mobileye and want to participate in that upside. We weren't really surprised that they'd want to sell some shares after the next couple of years, but we can't really speak to any future plans that they have.

Thanks.

Speaker 1

Thank you.

Speaker 0

Thank you, James.

Speaker 1

Our next question comes from George Gianaricas with Canaccord Genuity. Please proceed with your question.

Everyone, thank you for taking my questions. I'd like to concentrate a little bit on robotaxi. I think you sort of characterized the interest as accelerating from OEMs and deploying your solution. Can you just help us understand a little bit about what you're seeing in the marketplace, the potential for new wins, and what the competitive set looks like when you're offering your solution to OEMs? Thank you.

We have a relationship with Volkswagen on the ID. Buzz, where MOIA is the operator and customer-facing. There are also deals with Uber regarding this platform. The volume expectation till the end of the decade is very substantial. There is Holon with a platform called Mover. We already have a prototype equipped with our system and testing. It should come out six months later. Also, volume projections are very high. In addition, we have a relationship with Marubeni. We are working with additional OEMs to supply vehicles both for MOIA and also for Marubeni. Hopefully, we will be able to update the market soon about additional OEMs. Volkswagen alone is a very high-volume opportunity for robotaxis.

Speaker 4

I may add to this. Sorry, sorry, George.

Oh, please go ahead. Sorry.

I just wanted to add maybe a little bit more color on what we're seeing in the market. And the competitive environment, I think that there is a we need to distinguish between the U.S. and Europe in that regard, which are our two primary markets for the first launches. In the U.S., of course, there's Waymo and Tesla that have been making statements about this. Beyond these two, as a technology provider that can provide the full self-driving system, which includes the hardware, the software, AI technologies, and so on in a scalable way, in a cost-efficient way that will leave enough room for all players involved to generate a profit, we're seeing Mobileye as kind of a unique company at this stage. So Waymo and Tesla, of course, have their own business model of being vertically integrated. At this stage.

And for the OEMs that want to basically build a business of producing robotaxis in a serious production fashion and then find a business model with the demand generators, we're the primary, if not the only candidate at this stage, at least from what we're seeing. And in Europe, I think that we are in the pole position in the race. And just recently, the German chancellor took a test drive with the ID. Buzz vehicle with Mobileye's technology in Germany, which is kind of putting a lot more public attention and some, let's say, political attention into enabling robotaxis in Europe. In that sense, being partnering with Volkswagen is hugely beneficial for our interests.

Thank you. Just as a follow-up, can you just, on the robotaxi, just help us maybe understand a little bit more about the business model opportunity, the price per system, and also particularly the potential for you to participate in the revenue per mile as you deploy these systems and if that can be replicated across OEMs? Thank you.

Speaker 1

Yeah. We receive revenue for the system, and we receive also recurring revenue as a cost per mile. We have both. Maybe in the future, we could reduce the cost of the system and add more in terms of the contribution per mile. Even the current setup is very good in terms of the revenue potential, the recurring revenue potential over time.

Thank you.

Speaker 0

Thank you, George.

Speaker 1

Our next question comes from Dan Levy with Barclays. Please proceed with your question.

Hi. Thank you for taking the questions. I wanted to just first start with a question on the near-term EyeQ shipments. Maybe you could just give a bit more color on where the strength is coming from and specifically the trends within China, which had obviously been quite weak in two weeks, but it seems like the last couple of quarters have been pretty good. What's the right run rate to think of now from China, both from the domestics and from the multinationals there?

Speaker 0

I can start on that.

Speaker 1

Okay. Go ahead.

Speaker 0

I mean, I think from kind of an overall comment, it was difficult to analyze the EyeQ volume growth the last year or so because of some disruptions on inventory in China. Now you're starting to really be able to analyze it. In Q2, if we adjust for inventory digestion last year, volume grew around 13% year over year in Q2 for EyeQ volume. Our top 10 customers were minus 3%. Significant growth over market. If you look at the Q3 outlook, it's for growth around 5% year over year. Our top 10 customers are minus 2%. This kind of comparison to our top 10 customers is starting to show up as very favorable for us. On China, the China business has been running better. We did slightly over 1 million units in the back half of last year.

We thought we would do around 1 million in the first half. That was the outlook. We did more like 1.5 million. There was some upside there. We're not assuming that type of volume for the back half just because we don't have as much visibility, and we want to stay conservative. It does look like that's a fairly stable run rate for us. I think overall, the revenue outperformance has been pretty broad-based. If you look at all of our top 10 customers, for most of them, there was at least a bit of outperformance. It added up to a bigger number. There was outperformance in China. There was outperformance in SuperVision. It's all pretty broad-based.

Okay, great. Thank you. The second question is, as you're ramping on your efforts in Drive, I wanted to get a sense of the type of resource allocation. I go back to the CMD you had last year where I think you gave a pie chart of your spend that 11% of your spend is on Drive. It seems like your efforts are accelerating here. Can you just give us a sense of how extensive the resource requirement is on Drive, and what this could do on the OpEx the next couple of years?

Speaker 1

Our OpEx grew substantially in 2023. Also grew in 2024. We see the OpEx as more or less flattish in the coming year. That means all the growth to prepare for Drive and Chauffeur and SuperVision to the transition from tier two to tier one on some of the programs like with Porsche and Audi. All of that accounts for the growth that we have already experienced. We do not see substantial growth in the near future in terms of OpEx growth.

Great. Thank you.

Speaker 0

Thank you, Dan.

Speaker 1

Our next question comes from Samik Chatterjee with JP Morgan Chase. Please proceed with your question.

Hi. Thanks for taking my question. This is MP Owen for Samik Chatterjee. I just wanted to double-click on the imaging radar deal which you did during the quarter and how should we think about the size of that particular business. Will you be open to doing more similar deals in the future where you will be selling individual components rather than full systems? I have a follow-up.

Yes. The imaging radar for us is a strategic sensor. The deal we had with that particular OEM is just for the sensor. It's a very reputable OEM, and we thought that this would drive credibility because the RFQ phase was very lengthy, and all competitors of imaging radars participated, and our radar was shining through. We sold it as a separate sensor, but we do not expect to do that in the future. It's part of the bundle of Eyes Off systems on Chauffeur and Drive. For example, the ID. Buzz has five of our imaging radars, has front-facing imaging radar and corner imaging radars. We believe that all future Chauffeur programs will have our imaging radar because it allows you to get the speed that you need in terms of highway driving. You need to see hazards very far away, more than 150 meters away.

The sensor that we have can do that in a very high resolution and high dynamic range. It's simply an enabler for Eyes Off systems at scale. It's part of a bundle. We do not see it as another source of business as a sensor business.

Okay. Got it. Another question which I had was regarding the 2027 ramp. You will be ramping on SuperVision, Chauffeur, and Drive in that year. Any way to understand which will be the biggest driver of those and how will you rank out of those opportunities in 2027?

We have the 2027, the Chauffeur and the Chauffeur and the SuperVision. We mentioned in the past there's more than 19 car models coming out with those systems. We're not yet ready to make a guidance for 2027. In terms of Drive, there is a significant plan of expansion to multiple cities starting from the end of 2026, both in Europe and in the U.S. It should drive substantial growth. We're not at a position to put a dollar number to it right now.

Speaker 0

Exactly. I think what's new here is that we do now expect Drive to be a significant contributor in 2027. That's a reflection of the confidence we have in commercial deployment sometime during 2026. Thank you, MP.

Got it. Thank you.

Speaker 1

Our next question comes from Vijay Rakesh with Mizuho Securities. Please proceed with your question.

Yeah. Hi. Just a quick question on SuperVision. Obviously, nice upside here. You raised to 40,000 from vehicle Europe, I believe. Any thoughts on how calendar 2026 should shape up in terms of units for SuperVision, especially with some of the newer ramps? I have a follow-up.

Speaker 0

We're not really ready to talk about specific expectations for 2026. Like I said, we're essentially kind of marking to market the end production of the vehicles that have SuperVision today. This still doesn't include any U.S. volume for Polestar 4. They did start producing that vehicle in Korea. There is a tariff in Korea from vehicles produced in Korea, but it's not 100% like it is from China. They should be able to launch in the U.S., and we think that that'll create some growth for next year as well. The export volume of Zeekr has been probably a little bit better than expected this year. We would expect that to grow a bit next year as well. There should be some growth in 2026 from the existing vehicles. We'll have more to say about the overall SuperVision volumes when we get to 2026.

Got it. And then just a quick housekeeping question on the inventory side. I know EyeQ you raised from midpoint of 33 million to 34 million here. So definitely seeing some improvement. But if you were to look at the inventory level just to. I mean, I know it's tough because every OEM has a different inventory level. But if you normalize that, how does that inventory level compare now versus. Last quarter or last year just to get some idea of where the levels are? Thanks.

Do you want to start, Nimrod?

Speaker 4

Yeah. I do not think that we can disclose to our levels that the OEMs are keeping themselves as the safety stock. In general, we have been in line with what is, we can consider, modest compared to historic periods. The way we are kind of analyzing this is in multiple ways. We have direct information coming from our tier one customers that they get direct information from their OEMs. We also cross-reference this with third-party analysis on the overall industry vehicle production compared to our sales. We keep a very close track of this. We keep our eyes on this on a weekly basis.

Got it. Thank you.

Speaker 0

Yeah. No. I think that's right. The finance and sales teams have done a great job of kind of developing tools to, as well as kind of direct feedback from the tier ones. Everything looks like it was pretty flattish from the end of 2024 until now.

Speaker 1

Our next question comes from Adam Jonas with Morgan Stanley. Please proceed with your question.

Speaker 0

Hi. Thanks, everybody. I'm just looking at your CapEx here, $28 million. For the first half of the year. If I annualize that, that's obviously down substantially year on year. Even if it's flat, and I think consensus has you guys spending around $100 million, maybe $110 million this year, your CapEx has basically not moved. It's declined over a number of years. It really makes Mobileye stand out as for a physical AI hard tech company, really in the thick of so many exciting programs, collecting data, growing a fleet. How do you do it? Where is your CapEx spending on compute? How much compute do you have? Because it would strike me that your compute needs and therefore your AI CapEx needs would somehow scale at least proportionate to the amount of data that you're feeding into your simulation and data centers. Tell me where I'm wrong there.

How are you able to do it? Or is your message, "We just don't need compute like others," and that guys like Elon and Jensen are wrong? I have a follow-up.

Speaker 1

We need compute. We have compute both on-prem and also on the cloud. Our cloud spending has slightly reduced. I cannot reveal those numbers, but it's in the tens of millions. A large number of tens of millions. In favor of on-prem. More GPUs. We have a different philosophy on how to spend money on compute than what you hear from our competitors. We have very good systems, very good performance. Our EyeQ6 generation, our generation two SuperVision and Chauffeur and Drive is really top-notch. If you look at our Drive vehicle, there are more than 100 ID. Buzz vehicles. There has been a lot of demonstrations of journalists, both in Europe and also in the U.S. As Nimrod mentioned just last week, the Chancellor of Germany drove the ID. Buzz. Performance is very, very good. We know how to train the models in a way that is more efficient.

Speaker 0

Okay. Appreciate that. As a follow-up, what is your simulation stack? What does it look like? How much synthetic data are you using to reduce costs for training on edge cases? Because that also seems to be for the problems that you're solving. We talked about humanoids, but even in autonomous cars, very, very important. Love to hear your views there. Thanks, Amnon.

Okay. Yeah. It's a very good question. When you think about the simulation, there are two types of simulation. There is a photorealistic simulation. We use photorealistic simulation in order to simulate edge cases. For example, putting a cow on the road.

Amna?

Amnon, you went on mute.

Speaker 4

Amnon, you went on mute.

Speaker 0

Just when it was getting good. I love simulations.

Speaker 4

You're trying to reconnect him. I think you dropped out, so we just need to reconnect him.

Speaker 0

Okay.

Speaker 1

Oh, okay. One moment.

Speaker 4

We can hear you again, Amnon.

Speaker 0

Amnon, you're back.

We lost you at the simulated cow.

Okay. I'm back.

All right.

Okay. You were saying there's two types of simulation.

Speaker 1

Yeah. Two types of simulation. One is photorealistic in order to emulate edge cases. Say you have a cart falling off from a truck on the road. These things, you do not need to wait until you find them in the physical world. You can put them in a photorealistic simulator, and we have very powerful photorealistic simulators. Another type of simulation is to simulate the driving policy. This is a piece of technology. Maybe we will talk about it more at next year's CES that we developed. Kind of we call it ACI, Artificial Community Intelligence, where we have a simulator, not a photorealistic, a synthetic simulator, simulating hundreds of road users over billions of miles of simulation. We run billions of miles overnight. We use that in order to train the driving policy.

That amount of compute that you need there is way below the amount of compute if you would train it on photorealistic simulations. It is much more efficient. Those are the two types of simulations we use.

Speaker 0

Thank you, Adam.

Speaker 1

Our next question comes from Shreyas Patel with Wolf Research. Please proceed with your question.

Speaker 4

Hey, thanks so much for taking the questions. Amnon and Dan, maybe can you guys talk about the typical lead time between securing awards and surround ADAS and launching programs? I believe it's typically two to three years. Given the timing of the new ADAS standards in Europe, which I think is 2028, that would suggest OEMs need to secure contracts in the next 12 to 18 months. Is that the kind of timeline we should be thinking about in terms of potential awards?

Speaker 1

Yeah. When we're talking about Western OEMs, a timeline is typical, two years. Two to 2.5 years from nomination to start of production.

Okay. All right. Okay. That's helpful. If these standards are coming on in 2028, it would suggest they would be needing to secure these awards in 2026, something like that? Yeah. Nimrod, do you want to add?

Speaker 4

Yeah. I think the majority of the RFQs that we have, and we have RFQs with multiple OEMs, and the majority of our customers are engaging with us in this solution. These RFQs aim for 2027, 2028 SOPs. That is the current plans that we are seeing.

Okay. And then on robotaxis, there are a large number of AV developers in the space. Some of the rideshare operators such as Uber are striking agreements with multiple players for their platforms. Curious how you gain confidence in the number of vehicles that Mobileye will be supporting either on an Uber or a Lyft type of platform.

Speaker 1

Nimrod, do you want to take this?

Speaker 4

Yeah. I think that. First of all, it makes sense for companies like Uber who face pressure and questions from investors about their strategy for robotaxis as a potential threat for their business to maximize their chances of being one of the winners in this space. I think that we're at the beginning of the adoption curve. Longer term, we believe that winning solutions will be the most cost-efficient, geographically scalable, with the highest performance, highest availability rates. We believe that our products are inherently a pole position in these axes. Today, there might be some announcements and statements with pretty much everything that can be a potential contender. We think that within not a lot of time, there will be a separation between a very selected few companies that will have advantages in these economic scalability, geographic scalability, the availability of the service, and the others.

Because if you think about this, we're still not at a stage of even thinking about, for example, how many charges do you need to do per day for the vehicle. It still doesn't play any factor. Our system is roughly 20% in power consumption compared to Waymo's. These are just small things that today don't play a role because it's still a question of, can you do it or can't you do it? We're at the cusp of getting to how well can you do it, how efficiently can you do it. Our system is designed to be excelling in these parameters. That's where we get the confidence that ultimately we will be one of these two, three companies that will see the highest volume of robotaxi services.

Okay. Great. Thank you.

Speaker 0

Thanks, Shreyas.

Speaker 1

Our next question comes from Joe Spak with UBS. Please proceed with your question.

Speaker 0

Thanks, everyone. Maybe just sticking on Drive and robotaxi, Amnon, if you could. You gave us some things here on sort of what commercial deployment looks like. You have to finalize the vehicle, then there's teleops, and there's the remove of the driver in 2026. I was wondering if you could add any more color in terms of maybe where you first see that happening in the U.S. or Europe. Also, maybe how much input do you really have here in terms of things such as the size of the geofence, the number of vehicles, when the driver is actually removed? How does that relationship with your partners work?

Speaker 1

The leading partner is the Volkswagen ADMT division. We have a very tight cooperation. We work very well together. The driver would be removed in the first city. It will be in the U.S. I'm not at liberty to say the name of the city. There are very concrete plans in terms of how the driver would be removed. The design of the teleoperators. We have a very unique design of teleoperators that allows for scale. Going from, say, one teleoperator per vehicle to quickly going to one to X. One operator for X vehicles to scale that very fast using technology. Certain cloud computing technology that will enable us to scale it. It will all start in the middle of 2026 with that first city in the U.S.

Speaker 0

Okay. The second question is, there was a report this morning that Volkswagen is looking for capital at their autonomous unit and offering a minority stake in the subsidiary, that they're searching for strategic or financial investors. I'm not asking you to comment specifically on that potential offering, but is a strategic investment in a partner something Mobileye would consider here as you look to scale Drive?

Speaker 1

Yeah. I think it's a very good development. I think also Google did that for Waymo, even though Google has deep pockets and can fund Waymo without any external funding. I think it's a very good development. We support it. We will seriously consider also participating as an investor.

Speaker 0

Thank you. Thank you, Joe. Maria, this will be our last question, the next one coming up.

Speaker 1

Okay. Our last question then is from Colin Rusch with Oppenheimer. Please proceed with your question.

Speaker 0

Thanks so much, guys. Given the leverage that you're seeing off of the compound AI platform, can you talk a little bit about the cadence of learning that you're seeing, put some metrics around it, potentially talk about the reduction in hallucinations that you're seeing in the systems at this point?

Speaker 1

Yeah. We don't have hallucinations. Hallucinations is a metric for large language models. Our KPI is mean time between failure. That is very important in Drive because that's the only way to remove the driver, that you reach an MTBF, which corresponds to very strict KPIs. We are on track. All the indications are that by the end of this year, we'll be at the MTBF that will enable to remove the driver. For the next six months until we actually remove the driver, we'll be working on the teleoperation technology and then start removing the driver. All our KPIs for MTBF and other safety measures are all on track.

Speaker 0

Thanks so much. This is the last one here, around potential for reduction on cost of the perception suite. As you look at not only your own internal reduction in cost, but sourcing other elements, can you talk about how quickly you can start driving some cost out of the system as you get into 2027, 2028 and start seeing some incremental volumes ramp up?

Speaker 1

The cost of our system, we're talking about Drive, the cost of our system is already very lean. We have cameras, which doesn't cost much. We have our ECU with the EyeQ6 high. It doesn't cost much. We have imaging radars, which we produce. It's hundreds of dollars overall. We have LiDARs that are supplied by Innoviz, also very reasonable cost. If you look towards the end of the decade, there is a possibility, with just having two layers of redundancy, cameras and the imaging radars, and reducing the number of LiDARs or reducing LiDARs altogether. This is something that's too early to say. That could be another cost reduction. Another cost reduction towards the end of the decade is moving from EyeQ6 to EyeQ7. That will be another element of cost reduction, but it's not really a very meaningful cost reduction.

We are already starting with a very lean cost platform.

Speaker 0

Great. Thanks so much, guys.

Speaker 1

Thank you. We have reached the end of our question and answer session, and I would now like to turn the floor back over to Mr. Galves for closing comments.

Speaker 0

Thanks, Maria, and thanks to everyone for joining the call. We will see you again at the Q3 earnings call in October. Thank you very much.

Speaker 1

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.