Good morning. I would like to welcome you to our Q2 2024 Earnings Conference Call. Joining us today are Omer Keilaf, Chief Executive Officer; and Eldar Cegla, Chief Financial Officer. Following the opening remarks, we will open the call to your questions. I would like to remind everyone that this call is being recorded and will be available on the Investor Relations section of our website at ir.innoviz.tech. Before we begin, I would like to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of Innoviz. Actual results could differ materially from those anticipated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today, and we undertake no obligation to publicly update or revise them. For discussion of some important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the Risk Factors section of our Form 20-F filed with the SEC on March 12, 2024. Omer, please go ahead.

Thank you, Maya, and good morning, everyone. Thank you for joining us. In the second quarter, we continued our strong performance on all fronts. Revenues were $6.7 million, above the guidance range of $4 million to $5 million we provided last quarter. These strong revenues, in tandem with our ability to operate efficiently, contributed to another quarter of decreased cash burn on both a sequential and year-to-year basis. This morning, we reached an important agreement with a major platform partner to supply our set of short- and long-range LiDARs to their Level 4 autonomous driving platform, which has already been selected by several OEM programs. You can imagine the effort that went into making this happen. We are all very excited and look forward to sharing more information about the partner and associated OEM programs in the coming months. Yesterday, we announced an agreement with The Indoor Lab, a world leader in our automotive LiDAR analytics, to supply InnovizTwo LiDARs within their airport portfolio, beginning with Denver, Nashville and Tampa International airports, with more airports expected to be added to the program. Beyond these announcements, we are busy meeting with existing and potential customers across the globe. A few weeks ago, I was traveling throughout the U.S., and we've spent significant time in Korea, Japan and Europe as well. And I'm planning to be back in the U.S. next week to meet with additional customers. Importantly, we continue to progress our pipeline of existing RFIs and RFQs, having bolstered our relationships with new and existing customers through the addition of new programs while engaging with prospective customers to pursue additional opportunities to provide them with our solutions. Meanwhile, we further matured the InnovizTwo platform and upgraded our Advanced AI Perception Software during the quarter. First, I'll discuss the announcement we…

Thank you, Omer, and good morning, everyone. Starting with cash. We ended Q2 2024 with approximately $106.4 million in cash, cash equivalents, bank deposit marketable securities and short-term restricted cash on the balance sheet. Cash used in operations and capital expenditure came in at $21.6 million compared to $27.6 million in Q2 2023 and compared to $23 million last quarter. This decrease in our burn, both on a quarter-over-quarter basis as well as on a year-over-year basis, demonstrates the effective implementation and efficient execution of our operational realignment, focusing the company around 1 platform, InnovizTwo, while meeting and overachieving on our revenue targets. We expect that this trend will continue, and we will keep our cash used in operations and capital expenditure under tight control. Annually, we are expecting this year to be an improvement over last year, and we are confident in our ability to maintain decreased levels of cash burn in the future. In terms of our gross margins, while we have seen significant improvement, we expect this will continue to be lumpy as we mature the InnovizTwo platform, unit volumes fluctuate and NRE revenues continue to vary from quarter-to-quarter. Now turning to the income statement. Revenues for Q2 were $6.7 million compared to $1.5 million in Q2 of 2023 and surpassing our guidance range of $4 million to $5 million. This represents another quarter which we have over delivered on the top line, further reinforcing Innoviz's track record of financial execution. Our operating expenses for Q2 2024 were $23.3 million, a decrease of 23% from $30.4 million in Q2 2023. This quarter's operating expenses included $3.8 million of share-based compensation compared to $5 million in Q2 2023. Research and development expenses for Q2 2024 were $16.8 million, a decrease from $23.8 million in Q2 2023. The quarter's R&D expenses included $2.6 million attributable to share-based compensation compared to $3.4 million in Q2 2023. Overall, we are pleased by Innoviz's continued positive financial trajectory, driven by the strength's of our top line performance, coupled with our disciplined approach to expense management. Looking ahead, we will maintain operational efficiency while taking the necessary steps to bolster our market position and meet customers' immediate and long-range needs. And with that, I'll turn the call back to Omer.

Thank you, Eldar. As we close, I'd like to say how honored we were to host the EcoMotion Annual Assembly at our headquarters on June 4. The turnout was incredible, and we were pleased to welcome visitors from across the global industry, including leading OEMs, to Innoviz headquarters. During the quarter, we were also released -- we also released our first Impact report, highlighting Innoviz's commitment to social impact, sustainable operations and responsible business practices. I encourage you all to read the report on our Investor Relations website. To conclude, Q2 was a momentous quarter for Innoviz in which we maintained strong performance on the top and bottom lines and further advanced our pipeline. We continued this momentum with our recent announcements of important new programs and partnerships. The announcements we've made this morning is an important 1 for Innoviz, which we expect will lead to further opportunities as more OEMs adopt the platform. Our selection for this platform is a vote of confidence in our products and technology and has the potential to accelerate the growth of our business. We are taking advantage of new opportunities that are arising in the market to provide existing and potential customers with both our short- and long-range LiDARs while expanding our pipeline to new customers. Meanwhile, we are working hard to convert various pipeline opportunities into design wins in the near future. And we expect the second half to be meaningful in terms of further progressing these opportunities. The upcoming OEM decisions will be very decisive in determining the competitive landscape of the LiDAR market. Our next few wins will continue to build the strong momentum we already have to converge additional opportunities. We're receiving great feedback from customers about our differentiated technology, and we are confident in our ability to solidify our ambition of becoming the leading Tier 1 LiDAR supplier as the market capture phase we are in continues to play out. And with that, operator, please open up the call for Q&A.

Thank you. [Operator Instructions] Our first question today comes from the line of Mark Delaney of Goldman Sachs. Please go ahead.

Yes. With the L4 platform award announced today for both short- and long-range LiDAR, can you help us better understand if there are new firm series production awards that you're planning to add to your backlog? Given some of the design wins, it sounds like your platform partner may already have? And if so, maybe you can help us better understand the magnitude of what this might mean for your backlog or what it might mean in terms of annual vehicle unit volumes as these programs ramp up?

Sure. And I'll start by saying today was pretty hectic for us. This was actually just done today. And we were very anxious whether we can bring it in before the call or not, you can imagine, the last 2 days were pretty crazy. This is very meaningful. All of the programs that are awarded to the platform are going to use our set of LiDARs. There are multiple. There are several customers already opt into this. There are several that we know our partner is in discussion with. It's a high multiple also of number of LiDARs, short range and long range. And as we discussed over the presentation, the number of LiDARs can vary between 6 to 12. So you can get a grasp of what are we talking about. In terms of the order book, that's actually a very meaningful award. I would say, possibly a very -- I mean, in terms of trying to quantify it, I think I'm looking at it as something that is very similar to what we had with the VW announcement. Super important, a huge boost in front of other customers that are looking to deploy short-range and long-range LiDARs. We're stepping from here forward, I would say, very confident and satisfied.

That's great. Congratulations on getting that across the finish line and certainly looking forward to seeing how that progresses going forward. A follow-up on this award that you announced today. In June, you had announced an expanded collaboration with an OEM for L4 using short- and long-range LiDAR. I'm hoping to understand, is the news today with the platform partners, is that at all connected with the OEM award you had in -- in June? And as you talk about what the backlog is, are you talking about the new backlog from what you get today? Or are you maybe counting what you perhaps already booked previously in the L4 space?

Sure. So the announcement we made in June is about a partner, a customer who is going to use our short-range LiDAR. That's a partner. That's a customer that is within the different customers that are using the platform. Following that award, we were working with the partner on doing the same with the rest of their customers, reaching to the commercial agreement that we got to today in order to allow the same to other customers.

Got it. Maybe just 1 last quick clarification for me and then I'll turn it over. I'm sorry, go ahead.

It's incremental.

Just -- Mark, it's incremental. This program adds in addition to what we announced previously.

Got it. And just to confirm, you guys are exclusive with this platform partner as they're going to market?

We are the only LiDAR provider to this platform. We are actually displacing 2 other LiDAR companies.

Our next question comes from the line of Andres Sheppard of Cantor.

Omer, Eldar, congratulations on another quarter. I want to touch on maybe The Indoor Lab LLC program. Wondering if you can maybe help quantify some of the details of this agreement? When might you expect deliveries to ramp up? And can you give us a sense of some of the volumes you might be expecting from this?

So what I can share at this point that we are starting to deliver units to equip the airports that I mentioned already by the end of this year. And our partner, The Indoor Labs, are working with new airports to expand their offering. In terms of number of LiDARs per airport, I would actually let that to Indoor Lab to elaborate, if I can. That was not sharing.

Got it. Okay. That's helpful. And then maybe coming back to the short-term and long-term LiDAR bundle announcements. Sorry, sorry, short term and long term, yes. I realize you're not disclosing the name of the partner, but just wondering if maybe you can give us a little bit more color on the type of client or the specifics of the agreement? How should we be thinking about this from a modeling perspective?

It's a very meaningful partner. We refer to it as a major platform player. They have -- they are already, I would say, they are working with several OEMs that were already sourced and selected and actually already operating with several OEMs using their Level 4 platform. And the agreement would now replace the set of LiDARs they were using with our set of short range and long range. There is -- I gave a range of how many LiDARs, per vehicle, so you can imagine the multiples are very meaningful. And having that is -- we are referring to multiple -- already several customers that are within this platform, and we are expecting more to come. We are very much, I would say, this is a very meaningful program -- platform win for us.

Okay. Super helpful. Maybe if I could squeeze 1 more really quick.

Wait, I'll just say -- sorry, Andres. It is launching in 2026.

Okay. For production is 2026. Yes. Got it. Maybe 1 last 1 for Eldar. There was significant improvement in gross margins this quarter. I'm wondering if you can maybe help break this down for us? How much of this was related to NREs and what type of margins might you expect for later this year, particularly with BMW ramping up in the second half?

Sure. So most of our revenues today come from NREs. NREs, as I said in the past, have a very positive contribution to our gross margins. I also mentioned during the call that since the construction of our top line is consistent of both NRE samples and SOP units we ship mainly to BMW. It's still very lumpy. So you can see in 1 quarter more as higher sample rates, lower NRE, the other 1, then another raise in NRE, as you can see. So this will continue to be lumpy. But as long as the NRE factor is growing up to SOP, I think this will have a positive contribution to the margins.

Thank you. [Operator Instructions] Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities. Please go ahead.

Yes. Thanks for letting me ask a question. Congratulations on the progress on some of the new wins. For the Robotaxi and even for your Level 4 that you've announced, using more LiDAR, I guess, it seems Robotaxis have been using rotating LiDAR -- 360-degree LiDAR. Is the concept going forward will be just to use more of your types of radar -- LiDAR, rather than the rotating?

The answer is yes. But maybe I want to add, we're not referring only to Robotaxis applications. We're also referring to trucks, shuttles, buses. There are many kinds of Level 4 applications that can benefit from such a platform. And maybe going back to the question. So the answer is yes. We are in discussion with several OEMs that are looking -- all platform players that are looking to industrialize their platform towards their launch. Everyone is aware that once you commercialize your product, you need to meet automotive grade, you need to meet the requirements. It's not enough or any longer to work based on a solution that was possibly used for an R&D purposes. They are looking for a product that is already mature, meeting automotive grade, has industrialization plan. And that's why many of them are now reaching out to us to see how they can benefit from our solution, as we see here today, but also we talked about the trucking opportunity that we are working on, a similar situation there.

Okay. Great. And the Indoor Labs win is -- seems pretty significant and a step into other markets that -- in your pipeline of opportunities, are there other smart city-type of applications like this is what I would call it, or even industrial?

So our pipeline that we are referring to in our presentation for quarter-over-quarter, we are only referring to either Level 3 or Level 4. But of course, there are a handful of applications. There is a, call it, an endless shelf of opportunities that can benefit from the 3D sensor. Innoviz is 99.9% focused on automotive. This is where we feel we stand out. The major deals in terms of volume and NREs come from there. Our advantage today is there. Of course, we always enjoy benefiting from good teams like The Indoor Labs that can penetrate different types of markets. I am very positive about The Indoor Lab team, which I met just a couple of weeks ago. I was quite amazed by their product and what they can offer to different customers. And I'm pretty sure that corporation can also grow to maybe additional platforms, I mean not just airports. So of course, we do look for ways where we can scale through the work of good teams, such as The Indoor Lab. But in terms of Innoviz focus, we are developing LIDARs for mass production for automotive grade with our Perception Software.

Okay. And I guess since it's not an emphasis, but just wanted to ask if the Perception Software would go along with that Indoor Labs opportunity.

The answer is no, meaning that Indoor Labs provides their Artemis perception software, which -- which obviously provides analytics on elements that are not related to the, I would say, on road, highway driving, which we provide to our automotive customers. This is where we benefit from working with different companies, talented companies that are using the 3D data in order to extract the KPIs they are looking for, obviously, tailored for the applications they are trying to develop.

Our next question comes from the line of Kevin Garrigan of WestPark Capital.

So to start, there are estimates out there that short-range LiDAR prices are estimated to be about $250 or below, nonautomotive LiDAR sensors could be in the thousands. Omer, I know you noted in your prepared remarks for the automotive market, you're selling the long range and short range in a bundle potentially. Can you just kind of expand on your pricing strategy as you look at these new markets? Are you planning on selling InnovizTwo for nonautomotive much higher than you would for long range in automotive? And how are you kind of thinking about the pricing -- pricing the bundle or just kind of pricing for the short-range LiDAR?

Sure. I would say -- I have several things to say. InnovizTwo short range is based off -- InnovizTwo -- it's the same platform, and it benefits from all of the cost opportunities, but also our ability to offer more LiDARs now is also helping us to scale. Our ability to set the price is determined by the competitive landscape and the value we generate to our customers. I would say that right now, we sense a huge pull in the short-range space. We find very attractive market available to us in that -- in these times, and we will continue to, I would say, try to bring more deals to the table. Obviously, once for customers outside the automotive market, the prices are also determined by the value that is generated in the application value that we can provide.

Just to emphasize this point, the partnership is for Level 4, mainly for commercial applications, like truck, shuttles, Robotaxis. The price sensitivity there is different.

I would say for many, many years, companies, also Innoviz, we've been very focused on the Level 3, where the volumes are very high because of the number of vehicles on the road. And I would say the challenge there is related to very long range because of the highway and high resolution and very low cost. And you need to take everything, I would say, to the edge, in a way. And the competition there was around that. Level 4 was somehow behind. And now there is an uptick really in different programs that are ready to commercialize, but are looking for automotive-grade solutions. Their sensitivity for pricing is different than the passenger vehicle because of the value they generate in terms of replacing the professional driver. The number of LiDARs is different. So for us, it's like amazing moving from a car that has 1 LiDAR to a car that might have 12 LiDARs. It's just mind-blowing how the multiples and the way that the numbers are growing very fast. This is really -- it's fun. Really, it's -- really refreshing. And we will continue to look on these applications as Level 4. We feel that we have a very strong foot now in this area, which is making fast, I would say, growth.

Got it. Okay. That makes sense. And then just as a follow-up. So I know you needed to make a few tweaks to the end of this 2 to go from long range to short range. Are there any changes you need to make to the InnovizTwo for The Indoor Lab agreement or kind of nonautomotive market? Or can you kind of use it as is?

No, we use it as is. We do not make -- as I said, we're 99.9% focused on automotive. I would say, applications that are nonautomotive will benefit from the capacity of our production line, and we'll use the availability of the systems that we have. There are many, I would say, even within the long range and short range, there are also different variants that are defined by software only, which allow us to be very flexible. So this gives us also different, I would say, with propositions that we can provide to different teams.

It's practically a precondition when we are working outside the automotive market that we don't need to have any extra efforts or different flavors of the product because the focus is somewhere else, and we do not want to have to support it and to add extra expenses around that.

Thank you. You have no further questions. You may proceed.

Thanks again to everyone for joining us this morning. We look forward to updating you next quarter on the continued progress we are making here at Innoviz. Thank you, everyone. I appreciate you joining us. You can see it's a very exciting time for us at Innoviz. We just announced, I don't think my -- I told my team to go on the earnings call to hear the news. Nobody heard. This is -- I'm going to hug the team now. So thank you very much. Bye-bye.