Please go ahead..

Thank you, Ralph [ph], and welcome to the team. Good morning everyone and thank you for joining us. I am excited to provide another update on the meaningful progress we have been making at Innoviz.

This has been another fast-moving quarter with new design wins, new technology partnerships, significant upgrades to our manufacturing throughput and a big step forward in our move into the non-automotive market. Let’s start things off with a look at our most recent new customer win.

After our Volkswagen announcement last quarter, we said that we had two to three additional OEMs that could make a decision in the next six months. Proving true to our word, we announced in September that we secured yet another production award with a new Asia-based customer.

Not only is this our fourth production win and our second win as a Tier 1, it also signals an exciting acceleration in our momentum, delivering back to back production wins just one quarter out. We will dig a little deeper into our pipeline later in the call, but let’s first take a look at this most recent deal.

The new contract is with an Asian OEM who we cannot name yet, but is on a fast track to becoming an emerging global EV leader. There are some very important parts of the deal that I want to touch on. First and foremost, this is an extremely tech forward OEM.

They took a close look at our technology and the platform -- platform partners that we can integrate with and decisively chose our solution over any other competition, and in that process, they also concluded that we are well-positioned as a Tier 1 direct supplier.

Additionally, they are currently targeting a fast ramp-up of LiDAR installation on two models, with a quick turnaround to SOP, with production revenues expected already to begin in 2024. And this deal articulates our long-term strategy extremely well.

Very large deals like the Volkswagen deal we announced last quarter are going to bring the volumes that will rapidly drive our unit cost economics lower, and lower volume deals will bring our higher contribution margins.

And with each new deal we win, we are growing our pre-production NRE revenues and securing increased funding of production machinery and toolings. Over time, each deal will move us closer and closer to our long-term margin targets.

From a global standpoint, this is our first automotive win in Asia, expanding Innoviz’s geographic reach and production footprint. This is an important step in our platform expansion efforts and highlights the incredible progress we have been making on this front.

Combined with recent progress on the non-automotive side, Asia is evolving into an increasingly important geography for Innoviz and we hope to have additional news to share in the coming quarters as this market is rapidly developing for us.

Last but not least, there is one more very important part of this deal and it has to do with the technology partner that we are working with for this customer.

As many of you know, there are three leading autonomous driving platforms in the auto industry that operate -- that have operate the hardware and the software stack that integrates the sensing and perception inputs from the various ADAS components such as LiDAR and radars and cameras.

With this deal announcement, we are excited to share that now we have production awards, not demos or partnerships, but actual production awards with two out of three main platforms in the industry. Integrating with these platforms can be an important barrier to entry.

We believe that once you are on the platform and you have the working relationship with the partner, you can gain deep domain experience together and it could accelerate future business deals for both parties.

I want to encourage investors to not underestimate this aspect of the deal, several of the RFQs that we are currently competing on have already decided to use this platform. We believe that having this working relationship can increase our odds of winning additional business in the near-term.

Needless to say, we are very excited about this development. Now let’s spend a little time on why we are winning in the automotive market.

I have picked up from some of my conversations with investors that there is a belief that the success in the LiDAR industry is going to come down to one thing, like range or resolution, but that is obviously not enough. In our experience with customers, you cannot simply win by checking one or two boxes. You have to check all of them.

You have to be strong on each of these categories, price, performance, automotive grade, manufacturing and company maturity. And the feedback that we have gotten from customer is that we aren’t winning these deals by one or two points. We are winning across the board on multiple fronts.

But don’t just take it from us, we wanted to share quick video from the event we hosted in September, celebrating the opening of our new headquarters with a large group of investors and customers from all over the world. [Video Presentation] Nothing is better than hearing from our customers and partners themselves.

One of the other points that I want to make about our strategy is that we are deeply focused on Level 2+ to Level 3, sweet spot of the automotive industry. There has been an increase in headlines recently highlighting that the progress with Level 5 full autonomous driving is moving slower than hoped.

It is increasingly more -- looking more like 2025 or even later.

We wanted to take the opportunity to remind investors that it has been long our view that full Level 5 autonomy was going to take many years, and this is why from day one, we built the company strategy around focusing on the Level 2+, Level 3 to Level 4 categories in the autonomy spectrum, The recent developments of OEMs either deemphasizing or even fully cancelling the Level 5 effort, is happening at the same time that they are realizing that many customers have grown frustrated with Level 1 and Level 2 active safety solutions like forward collision warning and lane-keeping assist, with some drivers turning the features off entirely.

Looking at both of these trends together, OEMs are quickly realizing that Level 2+ and Level 3 autonomous systems are likely going to be the biggest differentiating factor in the automotive industry over the next decade. You can see this in our pipeline in our next slide.

One of the major milestones that we tracked -- that we track for our business is our OEM share. Since we believe that once you are on the shelf and validated with an OEM and integrated into their software stack, it becomes easier for them to pull you into more and more product lines.

Once you are embedded, you should be able to grow with the OEM, as LiDAR -based L2+ and L3 systems are rapidly democratized and moved up the S-curve over the next decade. On that basis, our OEM share as it stands today is roughly 15% of the global automotive market.

And if you look at our pipeline to the right, we have 11 OEMs that are in either RFI or RFQ process. Collectively, these 11 OEMs would produce approximately 40 million vehicles per year, representing an additional 42% of the global market.

When combined with 15% share currently in Innoviz order book, it means that the company either has business or is actively competing for new business with OEMs that hold roughly 57% of the global automotive market. This pipeline includes many of the world’s largest OEMs and is full of plans, if you are familiar with.

In fact, six of the OEMs have annual production levels of 4 million units or more and the average production within the pipeline is about 4.2 million per year. What’s even more important here is that we believe that nearly all of the pipeline decisions will be made by the end of 2024 with most of these decision likely to close in 2023.

When I meet with investor, I am often asked, why should I care now? Let’s look again when production starts. But the question that’s missing is that there is a sizable land grab taking place right now and the bulk of the early market share is going to be awarded in the next six months to 12 months.

Ultimately, we think this is going to be a winner takes most market with us in the lead and this market share will be very sticky for the next decade or more. Now let’s transition from the long-term to the past quarter. We had some very exciting developments in the third quarter that I want to spend some time on.

First, I am excited to share that during the quarter, we began shipping D-Samples, units originating from the Holly, Michigan production line. As a reminder, the D-Sample is the version that ultimately is going to go to full production. It needs to be produced by the final production tools and processes.

Its design is already automotive grade and this is the last stage of the process is used by the OEM for the final manufacturing validation before moving to series production. You can see in the photos how excited we are to be this close to the start of the production of our customers.

One of the other exciting development this quarter relates to the upgrades we have made to the production processes, which were required as part of reaching the D-Sample milestone.

The production process upgrades were made in parallel with our planned downtime from our headquarters move, which included the movement of the calibration and testing lines within our buildings.

I don’t want to understate the scope of this effort, I personally spent many, many late nights with our engineers implementing and re-engineering the process so we could maximize the yields and minimize the downtime of our yield -- of our lines.

This was a crucial step in our plans for the next stage of our strategy, as it removed a key bottleneck in our production. This development achieves two important things. Number one, it helps prepare us for mass production with BMW and the shorter programs launching next year.

And number two, it will unlock more units for sale in the non-automotive market beginning this quarter and ramping into 2023. In the past, the majority of our production needed to be prioritized for larger volume automotive customers, but now with this upgrade, we will be increasingly able to pursue both markets simultaneously in more equal measure.

While we haven’t been as vocal about our progress in the non-automotive market as we have been in automotive, it has the potential to become an important part of our business and we have made some early success, including the deals and partnerships from the third quarter listed on this slide.

One important takeaway here for investors is that every time a customer chooses to work with our LiDAR solution, it’s a validation of both our hardware and software.

Of course, not every deal is at the size of Volkswagen and BMW, but each announcement we make here is a situation where a customer takes a close look at our technology, compares it to competitive environment and chooses to go with Innoviz.

This validation and early momentum in non-automotive markets coupled with our increased ability to ship units is an important development. When you combine all of the various TAMs from the non-automotive market, it can approximate the TAM on the automotive side.

And the product design cycles are shorter, so the revenue can come on faster and they tend to be at higher gross margins. It’s a perfect complement to the automotive market where volumes can be in the millions of units, allowing you to reach market-leading unit cost economics once those volumes come on.

If you take a step back, there is a -- these are both $30 billion TAMs that we are showing great progress in. And to accelerate our success in the non-automotive market, we are planning to increasingly work with distributors -- distribution partners.

In fact, next week we are launching our first ever three-day long Global Distributors Summit here at headquarters in Israel.

We will be hosting nine industrial and technology distributors from across Asia, Europe and North America to educate them on our technology, arm them with our marketing tools and introduce them to our ordering and logistics platforms. Engaging distributors is an important evolution in our go-to-market strategy.

It’s a lower cost way to amplify the efforts of our sales, expanding our reach in non-automotive quickly and without meaningful increases to our headcount and fixed costs.

As we have said before, 2023 will be an important year for our growth in the non-automotive market and we are making progress in building the partnerships and the overall foundation for success in the coming years. With that, I will turn it over to Eldar to go over the financials..

Thank you, Omer, and good morning, everyone. Starting with cash, we continue to maintain a high liquidity level with approximately $218 million in cash, short-term deposits, restricted cash and marketable security on balance sheet as of quarter end. And as we have said in the past, our cost structure has already largely matured.

So our operating cash outlays remained mostly stable during the quarter and were in line with our 2022 budget. Moving to income statement, revenues in the quarter came in at $0.9 million, compared to Q3 2021 revenues of $2.1 million.

Sales in the quarters were impacted by the upgrades we made to our calibration and test lines during the move of our company headquarters, as Omer previously discussed. While the timing for the upgrade took slightly longer than expected, the investment was well worth it, giving the meaningful improvement in throughput.

With these changes behind us, we expect our revenue cadence to normalize going forward, with an uplift to InnovizOne unit deliveries in the coming quarters. In fact, our current unit delivery in Q4 2022 have already surpassed Q3 2022 deliveries.

On the cost side, operating expenses for the third quarter of 2022 were $31.3 million, an increase from $30 million in the third quarter of 2021. This included $4.9 million of share-based compensation, compared to $8.2 million in Q3 2021.

The year-over-year increase in operating expenses was primarily due to an increase in headcount during the quarter, partially offset by the lower level of share-based compensation. Research and development expenses for Q3 2022 were $24.2 million, an increase from $20.6 million in Q3 2021.

The quarter included $3.2 million attributable to share-based compensation, compared to $3.7 million in Q3 2021.

In conclusion, while the setback in our unit delivery this quarter was slightly larger than expected, the volume should be recovered in the following quarters and the long-term benefits that we expect it to unlock are meaningful and a step in the right direction for the company, as we move to full series production of the BMW and shuttle programs next year.

This progress further strengthens our position in the marketplace and improves our ability to gain additional market share going forward in both the automotive and non-automotive segments. And with that, I will turn the call back to Omer..

Thank you, Eldar. Before turning it over to the Q&A, I wanted to wrap up our prepared remarks with a quick review of where we stand today versus our original 2022 goals. On the right-hand side of this slide, you can see the goals that we have set ourselves at the beginning of the year and where we stand now.

In terms of pre-production programs, we came into the year targeting 10 and today we are at 14. We targeted one design win and we are already delivered two, with two more months left in the year.

And in terms of the order book, we originally targeted 30% increase and thanks in particular to the VW deal and now our most recent win, we have blown through that goal with a 165% gain, moving to $6.9 billion, and again, the year is not over yet.

In terms of our pipeline, we previously disclosed 12 programs in the RFI or RFQ process, with two to three expected to make a decision in the next six months. With the announcement of our new Asian OEM deal, the 12 goes to 11 and now we have one to three customers who could make a decision in the upcoming six months.

When I talk about the momentum that we have at Innoviz, you can see from this slide, we have already delivered on the things we promised to deliver for 2022 and we believe there is a lot more to come in 2023 and 2024. Okay. With that said, I will turn over the call to the Operator to take us into the Q&A..

Thank you. [Operator Instructions] Our first call today comes from Mark Delaney from Goldman Sachs..

Yes. Thank you very much for taking the questions.

The first one is, I am wondering if you can give any preliminary input on how well Innoviz is doing with the one to three OEM decisions that could be made in the next six months and can you elaborate a bit on how impactful being qualified with two of the key platforms has been with those decisions?.

Okay. So I would say that with those opportunities and we are already at the shortlist, meaning that the last stage of the RFQ, and generally, I would say that we are in a very strong position.

We have heard several times that our award with VW is very meaningful and one of them is -- so one of them is using one of the platforms, the other one is using the other and the third, actually, I am not sure which platform they are using.

But I would definitely say that from the first two I mentioned, the fact that we are already integrated into those platforms is a key advantage..

That’s helpful.

My second question was hoping you can give more of an update on how the D-Sample process is going and any more clarity you can provide on when you think the company will be in series production, you said next year for a couple of programs, but is there more granularity you can share, is it more first half or second half weighted? Thanks..

Sure. So maybe I will explain a little bit about what we have done in the last quarter. Moving from C-sample and D-Sample means that the product, in C-sample, the product needs to finalize all of the design validation for automotive grade. The D-Sample is related to the production validation.

So you need to start the D-Sample when all the production processes are done. So we had to -- before starting the D-Sample, we had to go through all of the needed changes from the open issues we had in our production processes in order to meet that milestone.

So we started shipping already the D-Sample and now we are doing D-Sample production validation. And basically it means that next year, hopefully by the beginning of the year, we will be already able to meet the start of production of our customers..

Thank you..

Okay. Our next call comes from Jared Maymon from Berenberg. Please go ahead..

Hey. Good morning, guys. First of all, great to see my colleague Michael on the video referencing our channel checks and there’s no doubt the feedback from those customers and prospective customers show you guys are in a great position.

First question for me, you guys talked about it on the press release and on the call as well, but on that new platform partner. So given your existing partnership with Qualcomm, as you guys pointed out, that that kind of leaves Nvidia or Mobileye, either one of those, obviously, great to kind of hit yourselves to.

So I guess the question is can you expand a bit on what the mechanics of that relationship are and then given a key competitor has called out past partnerships with those platform partners, can you explain how your competitive positioning and the procurement process changes for you?.

Sure. So the way it works with these platforms or maybe specifically with this one, the way that they work with the different customers is that, eventually it’s the customer decision on which sensor they would like to source.

But eventually, there is a lot of value and once they are already using your sensor, collecting data, practicing their algorithms, it removes a lot of overhead on doing that again, and eventually, although, it’s the customer decision on which sensor they want to use, there is a certain, I would say, overhead they might need to pay if they want the platform to support the differences.

So in general, I would say, the fact that we were awarded to a program with this new platform is giving us a huge benefit or maybe the customer, the future customer a huge benefit, because leverages on the existing effort going on and wouldn’t need to -- I mean, overall program cost would be lower. I hope it’s clear..

Yeah. No. Definitely. Thanks, Omer..

Yeah..

And then….

Great..

… second question, so great to hear the update on the forward looking order book, just on the order book in general, we have been trying to get a better sense of how the kind of top LiDAR players are approaching those calculations alongside the customer.

So can you help us better understand how estimates on things like take rates are arrived at and then if any unconfirmed wins are considered in there like what some of your peers are doing?.

No. We are only referring to design wins we have and those are based on volumes that were provided as part of the RFQ. We give some weight -- weighted measure to the different scenarios that are given to us and based on the number of vehicles that are expected to be included across the several years of the program.

We are assuming a moderate take rate, which is starting from 1% to 14%. It’s actually different between the different programs, because for passenger vehicle there is more clarity on the number of vehicles per customer.

Specifically on the shuttle program, this is based on just the volumes that we got from the customer itself, because there are no volumes out there already..

Got it. That’s it for me. Thanks, Omer..

Sure..

Okay. Our next question comes from Andres Sheppard from Cantor. Please go ahead..

Hey, Omer. Hey, Eldar. Thanks for taking my question and congrats on another quarter. A few quick questions from me. In regards to the revenue numbers, Eldar….

Yeah..

… so that was a little bit lower than Q3 in 2021, looks like the primary reason was, it says here downtime from the company’s headquarters move. I am just wondering can you explain a little bit on that and I know you are not guiding in Q4, but should we expect a stronger Q4 to finish the year? Thanks..

Okay. So it was very important for us this move, it was -- the setback is primarily due to the upgrade that we did and in relation to the D-Sample, a stage that we transitioned to, which means currently the throughput is much better than we had before.

And as I said already, now with the deliveries that we made to this point in Q4 is larger exceeds the deliveries that we did last quarter. So, definitely, I expect the momentum to pick up on that. Maybe one important change from last quarter is the fact that we won another program, which has some NREs to it, some considerable NREs..

Essentially..

Yeah. Which will impact us next -- already next year, so this is something very important that we won a very nice program that will contribute to our revenues next year as well..

I want to maybe add to that, if I may. As a company pursuing automotive, our commitment to our customers such as BMW to follow their quality requirements, moving to the D-Sample required us to modify our production processes to meet with their requirements.

So it’s not only the product that needs to be automotive grade, also a lot of production tools and processes need to meet certain requirements and we had -- so we had those open issues to cover in order to move to the D-Sample. In a way, we had to sacrifice the short-term in order to do those necessary changes, so we can move to the D-Sample.

So the downtime was, I would say, unavoidable. But in general, it is to support our customers that we are expecting to launch next year. And maybe to add to the recent design wins, so as Eldar said. This recent design win, there are two very important elements here related to the revenues.

One, as Eldar said, is significant NREs, but also the production tools, so the customer is funding cost of the production. Another element which is super critical is the fact that this program out of the different RFQs that we were completing was the one to launch the earliest and with quite substantial volume already in 2024.

So for us, it was very strategic to win this program, because it allows us to see growth of our revenues in a -- I would say in a good way already in 2024..

Wonderful. Thank you both. That’s very, very thorough, I appreciate it. Quick follow-up, earlier this week we saw some consolidation in the LiDAR sector with the merger between Ouster and Velodyne, which I am sure you are aware of.

I am just wondering, maybe Omer, in regards to strategy, is this something that you and Innoviz might be considering, obviously, you guys have great partnerships with BMW, CARIAD, the Asian OEM, so in some ways you are ahead of the competition. I am just wondering, are you exploring or contemplating any M&A activities? Thank you..

No. It’s a good question. So I can share with you that in the last, probably, year, we came across with different ideas coming from banks, et cetera, to consider that kind of path.

I have to say that in my point of view, the only thing that matters for us is whether this acquisition will help us to gain momentum in the automotive space and whether the technology that we might need in order to better -- have a better offering into the market will help us to do that.

From that point of view, we didn’t see and we don’t see a good reason to look at that point to look at that approach..

Got it. Fair enough.

And maybe one last one if I could, Eldar, maybe for you, can you just remind us on your capital needs, how are you thinking about capital raising needs as we go -- as we approach 2023 and beyond?.

Yeah. So basically we are looking at next year in terms of what are the expected revenue or inflow sources. And as I said before, we expect both the launch of the BMW program, which will both generate the final NRE that we are expecting there and revenues we expect, the shuttle programs to launch.

We have additional revenues coming from the new client in Asia. So we have some expected inflows. So in addition to that, we have a strong cash position. So I think we are in a good position, and of course, there might be certain opportunities depending on what we do in the market, but currently this is our plan..

Maybe I will add to that as well, if I may. We are pursuing additional programs right now and with program that we are competing with, there is substantial NRE requirement that will also support our efforts, which is quite meaningful. So in that manner, it supports our needs.

We are also -- I would say that, the company organizational structure is very, I would say, efficient.

The way the company is able to support different programs is based on the fact that the technology is highly flexible and it actually makes the order requirements we have seen less, as such it doesn’t require a large or meaningful need to grow the company to support additional customers.

Basically, with every company that we need to support, the headcount is not -- that’s not required to increase meaningfully..

Wonderful. Thank you very, very much. Again, thanks for taking our questions. Congrats on another good quarter and I will pass it on. Thanks guys..

Thank you..

Thank you..

Our next call comes from Samik Chatterjee from JPMorgan. Please go ahead..

Hi. Thanks for taking my question and hope you can hear me. I guess a couple from my side and I will ask them together as one.

Firstly, in terms of your pipeline, can you talk about the sort of geographic diversity or sort of how the pipeline looks like in terms of the split between the GOs or the OEMs there and are there any geographies where you feel you are sort of underrepresented today and even in terms of your pipeline you need to focus more and invest more towards -- over these sort of next 12 months or so? And the second one the question I had was around this new win that you have where the customer is trying to rush to LiDAR sort of series production in 2024, with the Asian OEM that you referenced.

I mean as a company -- as a LiDAR company that’s been providing safety, how are you trying to mitigate some of the rest of the OEM trying to rush this to series production? What is allowing the customer to rush this or compress the timeline, is it that the software stack is much more developed or they are more confident about the software stack? How do you as a company then mitigate some of the challenges in trying to balance sort of safety versus compressing the timeline to production? Thank you..

Okay. So, first of all, thank you, Samik, for the questions. Starting with the first question, geographically we are spread now. I mean, we started with German -- Germany because we saw it as the base of the automotive market.

I would say that even some of our -- I would say, even our Asian new customer, R&D team, most of there is a big team there also in Germany, which is also helpful us. But other than that, we are currently in discussion, within those 11 OEMs, I would say that, probably, it’s everywhere, Japan, U.S. and other areas of Europe.

I don’t think that we have a blind spot, but blind spot by definition is probably something I don’t know about. But I think that we -- I don’t think there is a car maker that is pursuing LiDAR now when we are not engaged.

So I hope that answer your first question because it’s -- I think that maybe just I will add, I think that there is good progress in Japan now, moving faster and also in the U.S. maybe a little bit following that.

Other than that, the second question about safety, so, look, the second program -- the new program that I mentioned, the partner that is responsible for the overall driving decision and testing is a very credible player and I believe that eventually they would manage to do -- I mean, eventually, they are responsible for all of the driving testing and safety.

We are responsible for the LiDAR and the perception software. But eventually, I believe this is a -- this is with a very credible team behind it, so I am not concerned..

Thank you. Best of luck..

Okay. I would like to pass over the next question to McClain Culver from Rosenblatt Securities. Please go ahead..

Hi. This is McClain on for Kevin Cassidy. Thank you for let me ask the question. I had a few questions around the Innoviz360 RFQs. Have you already started accumulating RFQs and is the process different than the automotive market and I had a few follow ups. Thanks..

Sure. So the short answer is, no. The Innoviz360 was designed based on discussion with the specific customer. But generally speaking, I would say that, the Innoviz360 would be delivered as samples to different customers. The 360, maybe there’s one RFQ.

But I would say that generally speaking, the automotive market is not yet at the stage for Level 4, is making meaningful progress in terms of making decisions on the product, but we do see the trend going there.

So I believe that with -- in terms -- I mean, basically we started to develop the 360 knowing that that stage would come and I believe that next year that’s the time that we will start to see it more meaningfully.

Right now, the discussions are more on the, I would say, the technical aspects to see that we designed the system that meets all of their needs. But no, I would say, RFQs in the automotive market. There are discussions with non-automotive customers.

I would say that one of the changes we have made to the product is related to discussions about the industrial design. Many customers that we have showed the product, they have made their comment about having a more seamless integration just by having a product that is more similar in terms of shape.

And therefore, we did change the product, the way it looks and connects and we hope to show this product by the end of this year. I think it would be a very disruptive technology, because it introduces a very significant improvement of the price performance that is offered today by others..

Okay. Thank you. That’s helpful.

And for those RFQs, about how many competitors do you have, is it kind of the same about two or three as before?.

So I would say that, different geographies sometimes introduce different competitors. In general, we mostly complete with Tier 1s. Some that are -- the Tier 1s that you are probably familiar with that have their own LiDAR. And I would say that, in journal we don’t really see a lot of LiDAR -- other LiDAR ‘s compete directly..

Okay. Thank you again and that’s all from me..

Thank you..

You are welcome. Thank you..

Thank you very much. That shall conclude our Q&A session for today and I would like to pass the call back over to Omer. Thank you..

Okay. Okay. Thank you everyone for joining us today. I just want to take a minute to give you a quick advertising for CS. We are excited to meet with both customers and investors in January at the conference.

Without saying too much before the event, we plan to highlight, not just our technology, but some of our actual products that we are integrated on and we will showcase some of the capabilities of our new Innoviz360 LiDAR, which is going to be an exciting new addition to our product suite, an important part of our continued growth in both the automotive and non-automotive market.

For investors that look to -- that are looking to connect that event please free to reach out to our IR Department directly through the email address on this slide or in the press release, we will help you find the time to visit the booth and meet the team. Okay.

With that said, I am excited with where Innoviz stands today and the progress we have made over this quarter. Thank you for joining us. And with that, we can end the call. Thank you very much..