Good afternoon, and welcome to indie Semiconductor's Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the call over to Ashish Gupta, Investor Relations. Mr. Gupta, please.

Thank you, operator. Good afternoon, everyone, and welcome to indie Semiconductor's second quarter 2022 earnings call. Joining me today are Donald McClymont, indie's Co-Founder and CEO; and Tom Schiller, indie's CFO and EVP of Strategy. Don will provide opening remarks and discuss business highlights, followed by Tom's review of indie's second quarter 2022 results as well as third quarter outlook. Please note that we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our risk factors in our recent annual report on Form 10-K for fiscal year ended December 31, 2021 and other public reports filed with the SEC. Additionally, the results and guidance discussed today are based on certain non-GAAP financial measures. For a complete reconciliation to GAAP, please see our Q2 earnings press release, which was issued in advance of this call and can be found on our website at indiesemi.com. With that, I'll turn the call over to Donald.

Thanks, Ashish, and welcome, everyone. I'm pleased to report that indie exceeded top and bottom line expectations and delivered another record quarter in Q2, driven by robust broad-based demand for our highly innovative Autotech solutions. Our outperformance versus the automotive industry reflects the strength of indie's key Tier 1 and OEM partnerships, our differentiated product portfolio, underlying intellectual property and our world-class organization. I'm especially proud of our team's operational resiliency and ability to scale above our commitments amid persistent global supply chain headwinds. Specifically, during the second quarter, we once again substantially outpaced our addressable markets, and grew revenue 181% year-over-year and 17% sequentially to a record $25.8 million, while expanding gross margin to be nearly 49%. As we'll outline, our design win momentum is accelerating across ADAS, user experience and electrification applications, setting the stage for the establishment of indie Semiconductor as an Autotech powerhouse. On the LiDAR front, we extended our Surya SoC development program and added additional customers during the quarter. In fact, we are now working closely with four partners for this design phase as we absorb their inputs and implement their suggestions. Surya is a truly unparalleled LiDAR solution, given the degree of system integration encompassing DSP, Analog, mixed signal and firmware functionality, augmented by TeraXion world-class lasers and associated technology. Leveraging all of these capabilities, we are uniquely enabling a complete $200 BOM, 80% less than current discrete architectures. As a result, we believe indie can catalyze this key three-dimensional imaging technology, which is pivotal to enabling the future of autonomous driving. At the same time, RADAR is gaining widespread market deployment for ADAS, ranging from adaptive cruise control, to blind spot detection, to lane monitoring, to pedestrian detection applications. According to IHS, the semiconductor total addressable market opportunity for automotive radar is…

Thanks, Donald. indie delivered strong second quarter results, once again achieving the top end of our forecast range, exceeding analyst expectations. In fact, Q2 represents our fifth consecutive quarter of outperformance versus plan post indie's IPO last summer. Revenue for the period was up 181% year-over-year and 17% sequentially to a record $25.8 million. Gross profit was $12.5 million, translating into a 48.6% gross margin, up 650 basis points year-over-year and 120 basis points sequentially and above our 48% guidance. Operating expenses were $29.5 million against our outlook for $30 million. R&D investments were $22 million as we accelerated product development, while SG&A of $7.5 million supported our expanded sales reach and the last elements of public company infrastructure including a global ERP system for enhanced scalability. As a result, our operating loss was $17 million. Interest and other expenses yielded $100,000 and taxes were negligible. In turn, our net loss was $16.9 million, with a loss per share of $0.11 on a base of 148.7 million shares, $0.01 better than consensus estimates. Turning to the balance sheet. During the quarter, we invested $4.9 million in working capital, including $2.2 million for inventory, to ensure supply in support of our stronger second half growth plan. And we licensed a key IP block for another $2.2 million. Our capital expenditures were $1.3 million for additional lab equipment and expanded IT infrastructure. Finally, we made $6 million in deferred acquisition-related payments to onsemi and Citi semiconductor exiting the period with $164.1 million in cash. Looking forward, based on our strong order visibility from new products and customer ramps, we expect to continue to substantially outpace indie's addressable markets. Specifically, for the third quarter of 2022, we anticipate top line growth on the order of 140% to 150% year-over-year. At the midpoint of this range, indie will be on a roughly $120 million annualized revenue run rate. And for the first time, we plan to deliver gross margin in the 50% range. We are planning to moderate operating expenses with $23 million in R&D and $8 million of SG&A. Below the line, we anticipate a pickup of $300,000 of net interest income and no taxes. Assuming 149 million shares outstanding, we expect a net loss of $0.11 per share, once again, $0.01 better than consensus expectations. More importantly, given the depth of our design win pipeline, demonstrated scalability and planned operating leverage as our revenue growth and gross margin expansion far outpace our cost structure, we are on track to reach profitability in the second half of next year, marking another key step towards achieving our target model of 60% gross and 30% operating margins by 2025. On that note, I'll turn the call back to Donald for his closing comments.

Thanks, Tom. To summarize, Q2 was another solid quarter of performance for the indie team. Even with leading automakers in the US, Europe and Asia reporting down unit volumes during the first half of this year, we are delivering exceptional results and guidance, far outpacing industry peers, which we expect to continue over the planning horizon. Indeed, the next generation of automobiles are showcasing technologies focused on enhanced safety capabilities, better in-cabin features as well as more environmentally friendly powertrains with extended range, our differentiated portfolio of semiconductor and software solutions are positioning indie to gain a disproportionate share of what is fast becoming close to a $50 billion serviceable market opportunity for indie. We look forward to updating you along the way. That concludes our prepared remarks. Operator, let's open the call for questions.

Hello, Donald. Hello, Tom. Congratulations on the progress here.

Thanks.

So I just want to kind of ask a general question. I know you covered it on the call, but the auto supply chain availability, where are you seeing your updated situation easing and just or not? And just what the impact on indie is or if indie is kind of immune to that dynamic just some extent?

Well, I mean, generally speaking, our progress is really defined by share gains and content increases in the automobile space. So, I mean, it's no secret that the unit volume is down, but I mean we've been able to write that out and meet our planned numbers as we set out in front of us. We do see some spot areas in our supply chain, so the input to our business, if you like, certainly easier than it was a year ago. And the output from our business, the supply chain of our end customers, there's still some disruption also the so-called golden screw phenomenon, which is really the key thing, which is slowing the unit shipments from the OEMs. But as far as we can tell, there's still no shortage of demand. So nobody is immune to it, but I think we've written the bonds pretty well.

Okay. No demand impact, great. And then I'm hearing from various sensor companies, some of our competitors, perhaps. Is it a focus on model year 2026, which is L2+ L3, which if you pull it back would be decisions being made in the second half of this year or next year -- first half next year and ramping in 2024. What position -- what are you seeing for indie’s positioning among increasing sensing that would go into the L2+, L3 models? What should we expect in terms of your traction and penetration there?

I mean, you can assume it's extremely strong. We've made heavy investments in all sensor modalities, which will be required for the various levels of autonomy and ADAS features. We take a view that we rightsize our products for each individual applications. So you'll find us in high-end cars, and also you'll find us in high-volume cars where the features are deployed and sort of mid and lower tier to your models, indeed. We've gone through a lot of the selection processes already in the business that we've talked about publicly. So we are on track to see those things deploy in the time frames that we specified when we came out with the announcements.

Excellent. And then maybe a question just -- I know you put a press release on the chips side. Can you just kind of summarize what you think that might mean for indie versus the world pre -- the chips that being signed at on the government…?

I mean it's a good tailwind for the whole industry and especially -- and also for ourselves. But our carve-out to our -- of course, the focus is manufacturing, but there are carve-outs, which are focused on design also. And we expect that given that our focus is very heavily center-owned one of the US's key industries, we should be a good candidate to benefit from that. So yeah, I mean, for us, we view it as a positive.

Thank you. The next question comes from Ross Seymore from Deutsche Bank. Please go ahead, Ross.

Hi guys. Thanks for letting me ask the question. Congrats on the strong results. Donald, I want to talk just about the comfort you have with getting to the breakeven/profitability in the back half of next year. You guys have long set that as your target. You've executed very, very strongly to it. I just want to see what are the primary bridges between here and there from the revenue side, it looks like the revenue has to basically double from your third quarter this year to your third quarter next year to get you in that ballpark range. What are some of the key drivers and your comfort behind those drivers to attain that growth?

Yeah. I mean, the results speak for themselves. We're still executing to our plan. And every quarter, we've made the correct amount of progress that we expected as we went. And we have strong belief that that will continue to happen. We have very good visibility of our backlog and our outlook into 2023. And you're right. I mean, we have to double one more time. We've done it twice already. And so there's nothing that I can see in front of us that would inhibit that happening for us. In terms of the products, it's very well diversified across basically the whole gamut of product portfolio that we brought to market. So – within that environment, we're pretty well diversified. We're not depending on one customer or one product. And with that in mind, the risk is pretty well mitigated. So, we feel pretty good about it.

Great. Thanks for those details. I guess, as my one follow-up, one for you, Tom. The gross margin just keeps marching higher. I know that's part of the plan. But as we think about the ability to grow going forward, what's the pace we should think about there?

Yes. It's pretty linear. It's driven by – obviously, our mix just continues to improve. We're seeing better second and third-generation pricing and product margins. And then also, as these newer higher-value programs layer in, we're benefiting from that as well. So, all those dynamics get us there.

Perfect. Thank you.

Thank you. The next question comes from Anthony Stoss from Craig-Hallum. Please proceed with your question, Anthony.

Hey, guys. My congrats, nice execution, particularly on the guide as well for September. Donald, I wanted to follow up on your comments about the new power IC, USB PD controllers. You're lending customers pretty quickly. Can you maybe share or shed some more light on why it's a breakthrough and why you're winning these deals as quickly as you are? And then I had a follow-up after that.

Well, it offers a level of performance, which wasn't previously available in an integrated product. It's a coming together of our digital technology, our digital controllers, our firmware-based controllers and some embedded arm subsystems together with some pretty extreme power management, to go along with that. There's some very tricky problems to solve, when you get to those power levels, to charge up to 100 watts in some cases. And it's been a very successful development for us. Nobody is as integrated as we are, and we're seeing that bear out in the customer reaction and the backlog filling up.

Got it. And then lastly, just in the press release and your – your prepared remarks, you talked about Hyundai, et cetera, on the lighting design and wireless charging. Can you discuss kind of what you expect time-wise and volume related? Is this – I mean, you said there were big contracts just curious what –

I mean, they will contribute in 2022. There'll be a ramp over period, of course. But what we're seeing in the market is, in some cases, some acceleration of the design win flow, perhaps driven a little bit by some of the supply chain constraints. And so yeah, we do see that, but that will be a faster time to revenue than we're typically used to.

Thank you. The next question comes from Cody Acree from Benchmark. Please proceed with your question, Cody.

Yeah. Thank you, guys for taking my questions, and congratulations on the progress. Maybe just a follow-up on the last question, just the size or scale of the design wins that you're talking about, living here and ramping in 2023. Is there any color you can provide to that?

I mean we typically don't release specific numbers, but they are material.

And I guess, also Chinese activity, can you just talk about what's happening there from the year standpoint? And what do you see happening in the overall China market?

I mean, the overall China market is very buoyant. The -- of course, there's the foreign joint ventures, which we serve over there for companies such as Volkswagen, General Motors, et cetera, also the local companies. There's a very buoyant sort of portfolio, if you like, of e-vehicle companies, who are extremely hungry for future ads because in that market, the sort of builds and vessels are the key in order to drive sales for them. So -- we see it as very buoyant at the moment. We see a fair bit of backlog coming from that place across the board for a lot of our products.

And are you looking from a backlog standpoint, constraints limiting your performance?

I mean not as such. I mean the management of our supply chain has been pretty good through as I think you will recall from previous quarters when things were super tight. We've managed to manage through that. It hasn't been an easy task. So we've had to be on top of our game in order to do that. You will have seen that we invested a little in inventory this quarter to mitigate some risk there. But at this point, I think we're doing pretty good.

Thank you. The next question comes from Craig Ellis from B. Riley Securities. Please proceed with your question, Craig.

Yes. Thanks for taking the questions and congratulations on the momentum in the business guys. Donald, I wanted to start following up on your comments that with Surya, you're now engaged with four partners. So the question is this, given the color a quarter ago where you indicated that there was a pretty broad interest in it, how were these four partners selected, can you provide some color around the pace of advancement with each? And what's the company's capacity to take on additional partners beyond these initial four?

Well, I mean, we picked the most probable to provide us revenue, of course. And we did receive a large amount of interest in the product when it was launched, and we had to be selective about who we work with. So basically, we chose what we consider to be the cream of the crop and would give us access to the largest volume design wins in the business, when they come to fruition. We have an excellent team in place. We do like to focus on key execution as opposed to spreading ourselves pretty thin. But we can scale if we need to and if we find opportunities, which are compelling.

Yes. And from what you see so far, and I know it's early days in terms of your engagement with customers, but how does engagement so far leave you feeling with the ability to start shipping for revenue in the 2025 time frame?

Yes. I mean, it's good. I mean, it's a growing market, and it's developing as we go. But at this point, I think -- I mean, really, nothing has changed for us by way of the plan that we set out at the end of 2020. We're marching towards it. We haven't really had a lot of kind of surprises in that sense, at least from a negative perspective that we're really worried about. So we're still marching to the same time, same time plan that we set out two years ago, basically.

Thank you very much, sir. And ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to management for closing remarks. Thank you.

Well, thanks, everyone. Look forward to seeing you at the upcoming investor events this quarter, and see you at the same time, same place in a quarter's time.

Thank you. This concludes today's conference call. You may disconnect your lines at this time, and thank you very much for your participation.