Arbe Robotics Ltd. (ARBE) on Q4 2024 Results - Earnings Call Transcript

Operator: Good morning, everyone, and welcome to the Arbe Robotics Fourth Quarter and Full Year 2024 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Miri Segal, CEO of MS-IR. Please go ahead. Miri Segal: Thank you, operator and everyone, for joining us today. Welcome to Arbe’s conference call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please view it in the Investor Relations section of the company's website. Today, we are joined by Kobi Marenko, Arbe's Co-Founder and CEO, who will begin the call with a business update. Then we will turn the call over to Karine Pinto-Flomenboim, CFO, who will review the financials. Finally, we will open the call for the question-and-answer session. With that, I'd like to turn it over to Kobi Marenko. Kobi, please go ahead. Kobi Marenko: Good morning, everyone, and thank you for joining us. I will begin by reviewing some of our recent business highlights. Throughout the year, we focused on driving a radar evolution by innovating and delivering cutting edge solutions that set new industry standards. Our commitment to pushing the boundaries of radar technology with our industry-leading solutions remains strong. We take pride in the progress we have made in both product development and customer relationships, expanding and enhancing our offerings. Many top car manufacturers are actively selecting the radar suppliers this year, and we are confident that our chipset will play a key role in those discussions. In 2024, one of the top 10 global auto OEMs selected our chipset for its next-generation imaging radar. Zenseact, the Swedish AI and software company and Arbe's tier 1 Sensrad have announced a joint exploration of 4D high-resolution imaging radar to enhance safety in automated driving. We were thrilled to announce the collaboration with NVIDIA, where together, we are revolutionalizing vehicle safety and autonomy. We were proud to showcase this groundbreaking technology as the CES exhibition in Las Vegas in January. Our high-resolution radar integrates with NVIDIA's in-vehicle computing platform to transform radar-based free-space mapping. These technologies combined to redefine vehicle perception and decision-making, paving the way for what we believe will be safer and smarter mobility solutions. We look forward to future collaboration with NVIDIA. In September, HiRain technologies, one of our key tier 1s announced that it is in fast tracking of the development of an ADAS system for a Chinese auto manufacturer using our chipset, effectively replacing LiDAR from the current system. The ADAS system is anticipated to enter serial production by Q4 2025, pending final approval from the OEM. Additionally, in 2024, we announced a collaboration with a leading European truck manufacturer to integrate our automotive-grade imaging radar technology into its next-generation sensor suite. This marks a significant milestone in the manufacturer transition to an advanced implementation stage. It is important to mention that our radar technology addresses the unique challenges of the trucking market such as larger size of trucks, longer braking distances and higher impact potential. Moving on, Sensrad announced that it signed a framework agreement worth an estimated $7.3 million to supply 4D imaging radar powered by Arbe's technology to Tianyi Transportation Technology in China for vehicle-road-cloud integration technology. This framework agreement follows an extensive year long revaluation of our advanced chipset technology. We believe that there are significant opportunities for growth in the nonautomotive market, and we are happy to support Sensrad in delivering unparalleled radar solutions and driving innovation forward in such key markets. While the decision-making process and development time lines are longer than initially expected, we have not received negative responses or missed any opportunities and the total addressable market continues to expand. Based on our current engagement and our ability to secure and execute contracts with leading OEMs, we estimate that by 2030, we can ship around 5 million imaging radar chipsets to our customers. I'd like to elaborate on our successful fundraising initiatives, which resulted in a total amount of nearly $17 million. This includes $33 million raised through an underwriting registered direct offering, which included the exercise of a $4 million over-allotment option by the underwriters closed in January 2025 led by Canaccord Genuity. $21.5 million released to the company in January 2025 from the escrow account following the conversion of convertible bonds issued on Tel Aviv Stock Exchange in 2024. $50 million raised in underwriting public offering that closed in November 2024, led by Canaccord along with $0.5 million raised in January 2025 from the exercise of warrants issued as part of the November 2024 offering. We are delighted to share that AWM Special Situations Fund, one of our largest shareholders, has invested in our recent fundraising round for the third time. In addition, we are happy to welcome the new investors who participated and believe in the future of Arbe. This funding provides the financial support needed to accelerate our growth, enhance the development of the next generation of our radar solutions and reinforce our market leadership. With a strong balance sheet that helps ensure our financial stability, we believe we are in a great position to grow our global presence and gain more OEM and Tier 1 relationships. In conclusion, we are pleased with the progress we've made over the past year, along with the achievements of our Tier 1 partners and recent collaborations with key players like NVIDIA. We look forward to sharing more as we continue to move forward. Now I'd like to turn it over to our CFO, Karine to go over the financials. Karine Pinto-Flomenboim: Thank you Kobi, and hello, everyone. Let me review our financial results for the fourth quarter and full year 2024 in more detail. Total revenue in the fourth quarter was $0.1 million compared to $0.35 million in the fourth quarter of 2023. For the full year of 2024, total revenue was $0.8 million compared to $1.5 million in 2023. Backlog as of December 31, 2024 is $0.3 million. Gross margin loss for Q4 2024 was similar to the gross margin loss in Q4 2023 at a level of $0.2 million loss. Gross margin for the full year of 2024 was $0.8 million loss compared to a zero dollar $0 gross margin in 2023. Year-over-year gross margin reduction is mainly related to a low level of revenue and to the increase in labor costs. Moving on to expenses. In Q4 2024, we reported total operating expenses of $12.6 million compared to $11.9 million in Q4 2023. Operating expenses for the full year of 2024 totaled $48.9 million compared to $46.8 million in 2023. The operating expenses increase was primarily a result of non-cash share-based compensation expenses. In addition, the increase in production ramp-up related costs, the doubtful debt provision and to a lesser extent, the increase in labor costs were offset by a decrease due to the finalization of costs related to our advanced production stage and the savings in our D&O insurance. The company maintains a strong focus on research and development, ensuring continuous innovation and technological advancements with R&D expenses totaling $9 million for Q4 2024 compared to $8.4 million in Q4 2023. R&D expenses for the full year of 2024 were $35.1 million compared to $34.1 million in 2023. Operating loss for the fourth quarter of 2024 was $12.8 million compared to a loss of $12.1 million in the fourth quarter of 2023. Operating loss for the full year of 2024 totaled $49.7 million compared to $46.9 million in 2023. Looking at adjusted EBITDA, a non-GAAP measurement, which excludes expenses for non-cash share-based compensation and for non-recurring items in Q4 of 2024 was a loss of $9 million compared to a loss of $8.2 million in the fourth quarter of 2023. Adjusted EBITDA for the full year of 2024 amounted to a loss of $33.3 million slightly below 2023 adjusted EBITDA with a loss of $32.5 million. Net loss in the fourth quarter of 2024 was $12.2 million compared to a net loss of $9.3 million in the fourth quarter of 2023. Net loss for the full year of 2024 was $49.3 million compared to a loss of $43.5 million in 2023. Net loss in 2024 included financial income of $0.3 million compared to a financial income of $3.4 million in 2023. 2024 full year financial income resulted from interest deposits and warrants revaluation income, partially offset by bond financing expenses. Moving to our balance sheet. As of December 31, 2024, Arbe had $24.6 million in cash, cash equivalents and short-term bank deposits. During January 2025, we raised gross proceeds of $54.5 million, $33 million of which related to underwritten public offering and $21.5 million were related to the portion released from escrow due to the conversion of our convertible bonds, thus providing us with a robust balance sheet. With respect to our guidance, Arbe's leading radar technology remains a top priority for key decision-makers in the automotive industry. Recent cash infusion totaling $17 million further underscore investors' confidence in our market potential and growth trajectory. While broader economic shifts have led to short-term delay in automakers' rollout of advanced driver assist systems, decision time lines have been extended. As a result, Arbe continues to engage closely with industry leaders, advancing through RFQ stages and strengthening its position for adoption. We continue with our goal to pursue four design-ins with automakers in 2025. 2025 annual revenue are expected to be in the range of $2 million to $5 million and will be weighted towards the end of the year. Adjusted EBITDA for 2025 is projected to be in the range of $29 million loss to $35 million loss. Now we will be happy to take your questions. Operator: [Operator Instructions] And our first question today comes from Suji Desilva from Roth Capital. Please go ahead with your questions. Suji Desilva: Thanks Kobi. Thanks Karine. Congrats on the funding's and the position here. As we look at the 2025 revenue forecast, toward the end of the year, which [technical difficulty] the $1 million-plus revenue quarters that you're expecting as you go into the 2026 ramp? Karine Pinto-Flomenboim: Sorry, Suji, you were breaking. Can you repeat? Suji Desilva: So which programs, Karine, are you expecting to help drive $1 million-plus revenue quarters towards the end of the year? Kobi Marenko: Well, as we said, there is two or three leading projects that are in the final stages of maturing. One is Tianyi, the non-automotive. One is the trucks in Europe, and the third and most important one is with HiRain with the car manufacturer – with the Chinese car manufacturer. All of them, we expect to start shipping chips as soon as we will have full production. Suji Desilva: Okay. That helps. Great. And the update on the – I guess, as opposed to the end of 4Q, the current cash balance and the share count? Karine Pinto-Flomenboim: Yes. So what was the question Suji? What is the current, you mean now post the raising? Suji Desilva: Correct. Post the raise, yes. Karine Pinto-Flomenboim: So currently, it's above $70 million, about $73 million, and the current cash count is the 85.7 million... Kobi Marenko: Shares count. Karine Pinto-Flomenboim: ...shares count. Suji Desilva: 85.7 million. Okay. Got it. And then lastly, maybe, Kobi, the China EV market, can you update us on the opportunity there? We know that market is doing well. Where might you see initial traction there? Thanks. Kobi Marenko: So I think, as you said the Chinese market is – especially on the EV is doing well. And I think all of the Chinese car manufacturers that were focusing on launching first generation of self-driving services, which is more or less advanced adaptive cruise control are now looking into achieving kind of hands-free eyes of driving. And for that, they are looking for radar like an imaging radar together with the camera to solve the problem. Suji Desilva: Okay. All right. Thanks. Operator: Our next question comes from George Gianarikas from Canaccord Genuity. Please go ahead with your question. George Gianarikas: Hi, everyone. Thank you for taking my questions. Kobi, could you just sort of describe to us a little bit of the – what's happening within the OEMs that you're having discussions with? To what extent are they evaluating other offerings from OEMs? Or do you feel like you're already on the strong path to converting these discussions into wins over the next, call it, 12 months? Thank you. Kobi Marenko: I think – so let's divide it between China and the rest of the world. On the rest of the world, all of the evaluations are in the final stages. We are short listed in most of them with one competitor and some of them with two competitors. Again, it's not us, of course, it's Magna our Tier 1. And the other chipsets that are available in the market is NXP that the radar is done by Continental and Valeo that the chipset is done by Mobileye. We know that we have advantage on both of them in terms of performance or price. So with Continental, we have a better performance and more or less same price. With Mobileye, we have same performance more or less and much – and a huge advantage on price. George Gianarikas: And maybe for Karine, you've obviously given your 2025 EBITDA outlook. Can you just help us understand the glide path for OpEx to the extent you can over the next couple of few years? Thank you. Karine Pinto-Flomenboim: So as we mentioned, it's between $29 million to $35 million guidance, which is middle range is about $32 million, $33 million of OpEx. We expect this to be quite similar for the next couple of years. And maybe just to add the additional investments, which we carry in our next generation and related costs associated with it. So additional increase in investment between $5 million to $15 million over those two to three years coming in addition to our ongoing OpEx expenses. George Gianarikas: Thank you very much. Operator: And ladies and gentlemen, at this time and showing no additional questions, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Arbe's CEO, Kobi Marenko for closing remarks. Kobi Marenko: We were so pleased to have you join us today. To our employees and partners, your continued dedication is deeply appreciated. We look forward to updating you further on Arbe's progress in the coming months. Look out for updates as we prepare for several investor events, including the ROTH Conference in Dana Point, California on March 17. We'd love to meet you in person for further discussions. Please contact us at investor@arberobotics.com or visit our site to schedule a meeting. Thank you all. Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.
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Arbe Robotics Ltd. Earnings Report Highlights

  • Arbe Robotics Ltd. reported a significant miss in both earnings per share (EPS) and revenue for Q1 2024.
  • The company's revenue and EPS fell short of analysts' expectations, indicating a challenging quarter.
  • Despite financial challenges, ARBE's strong balance sheet metrics suggest financial stability.

On Wednesday, May 22, 2024, Arbe Robotics Ltd. (NASDAQ:ARBE), a company specializing in Perception Radar Solutions, reported its earnings before the market opened. The earnings per share (EPS) was -$0.16, missing the estimated EPS of -$0.07 by a significant margin. Additionally, the company's revenue for the quarter was reported at $137,000, which was considerably below the expected $330,000. This financial performance indicates a challenging quarter for Arbe Robotics, as it navigates the complexities of the radar technology market.

Arbe Robotics Ltd. conducted its first quarter 2024 earnings conference call on the same day, featuring key company participants including CEO Miri Segal-Scharia and Co-Founder/Director Kobi Marenko. The call, as highlighted by a Seeking Alpha article, was attended by several analysts, demonstrating the investment community's keen interest in the company's financial health and future direction. Despite the anticipation, Arbe's reported quarterly loss of $0.14 per share did not meet the expectations set by analysts, marking a decline from the previous year's loss of $0.13 per share after adjustments for non-recurring items.

The revenue figures for the quarter ending March 2024 were also disappointing, with Arbe posting $0.14 million, falling short of the Zacks Consensus Estimate by 54.33%. This represents a decrease from the $0.36 million reported in the same period a year ago, underscoring the company's ongoing struggles to meet consensus revenue estimates over the last four quarters. Such performance highlights the challenges Arbe faces in achieving its growth targets amid a competitive radar technology landscape.

Arbe's focus on high-definition radar systems for leading OEMs underscores the critical nature of its technology for enhancing automotive safety. CEO Kobi Marenko emphasized the company's role in enabling OEMs to meet the latest NHTSA safety standards, crucial for Automated Emergency Braking (AEB) functionalities and advanced safety features. However, the financial results for Q1 2024, with a negative gross margin of 194%, contrast sharply with the positive gross margin in the corresponding quarter of 2023, indicating significant financial challenges.

Despite these challenges, ARBE's financial metrics such as the price-to-sales ratio (TTM) of approximately 105.59 and an EV to sales ratio (TTM) of around 103.01, along with a minimal debt to equity ratio (TTM) of 0.016, suggest a company with a strong balance sheet. The current ratio (TTM) of about 6.15 further indicates Arbe's robust ability to cover its short-term liabilities with its short-term assets, providing a glimmer of financial stability amidst its revenue and earnings struggles.