Good morning, and welcome to Innoviz First Quarter 2022 Earnings Conference Call. Joining us today are Omer Keilaf, Chief Executive Officer; and Eldar Cegla, Chief Financial Officer. Following the formal remarks, we will open the call for 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, we would like to remind you that our discussions 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 a discussion of some of the 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 30, 2022. I will now turn the call over to Omer. Please go ahead.

…our recent announcement. I want to -- can you hear me? Okay. I want to use the opportunity to thank people that reached out during the last week just to congratulate us. Definitely, we went through a very long process to make this happen and we are very, very excited. Obviously, adding another $4 billion to our order book is a major achievement and would allow the company to do many more things. But one of the most meaningful impacts of this recent announcement of our design win and award by one of the largest car makers is not only through the fact that we won additional business, it's actually a big part of it that makes us very happy is our ability to secure this business as a dark supplier of tier one. Becoming a tier one in the automotive market is a huge, huge step for us that will help us to run the sector and secure many more of this. This is one of the things that we've been working for a very long time. It's very difficult to become a tier one in this space, but we are sure that this will allow us to run faster and succeed in many more. With that, I will please go to the presentation and elaborate more. Thank you. Can you go to the next page? Thank you. So following two years of working closely with one of the world's three largest vehicle groups, as part of their extensive RFQ process, we were happily -- we were happy to finally announce last week that we were selected to be their direct and only largest supplier for the L2 to L3 multitier series production program. Selection of InnovizTwo out of any other lighter solution is a big vote of confidence…

Thank you, Omer and good morning, everyone. Our confidence in our future growth opportunity is supported by our robust cash position, which gives us both the flexibility to execute our 2022 strategy and additional runway to invest in new and innovative technology. These are exciting time for Innoviz as we are at the starting point of another major project. We maintain a high liquidity level of $275 million in cash, short-term deposit and marketable security. Our operating cash flow during the first quarter of 2022 was well within planned budget and Innoviz debt free cash assets enable us to continue to execute our 2022 plan. Revenues for Q1 2022 were $1.8 million compared to Q1 2021 revenues of $0.7 million. All of our revenues in Q1 this year were InnovizOne related. The company expects InnovizOne sales to continue to increase, and we are also targeting to sell the first samples of InnovizTwo later this year. Operating expenses for the first quarter of 2022 were $31.1 million an increase from $19.7 million in the first quarter of 2021. Operating expenses in Q1 2022 included $4.7 million of share-based compensation compared to $1.8 million of share-based compensation in Q1 2021. The increase in operating expenses in Q1 2022, compared to Q1 2021 was primarily due to the increase in the number of employees and the share-based compensation. Research and development expenses for Q1 2022 were $22.8 million an increase from $16.7 million in Q1 2021. Research and development expenses in Q1 2022 included $2.7 million achievable to share-based compensation compared to $1.3 million attributable to share-based compensation in Q1 2021. To conclude, we gained a strong position in the marketplace with a recent win, and we believe that this win strengthens our position to gain additional market shares during this year and the years to come. As a direct supplier for the industry, we will continue to leverage our strong cash positions to develop branch breaking technology and products for the automotive market and beyond. And with that, I will turn the call back to Omer.

Thank you, Eldar. I hope you can tell from our call today, how excited we are about Innoviz future. Years of blood sweat and tears have gotten into achieving the agreement we just announced. I'm incredibly proud of what our team has accomplished and know that the best is yet to come. We are eager to execute -- to exceed our customer's expectation and we deliver value -- as we deliver value to our shareholders. I will now open the goals for your questions. Thank you.

[Operator instructions] Our first question today comes from the line of Michael Pilato from Berenberg. Please go ahead.

Hey guys, can you hear me?

We can hear you.

Great. Well first of all, congrats on the big win. I'm sure a lot of hard work went into that. So, well done. So I just want to ask for maybe a bit more detail on that win, right. You talked about multiple brands being in the win or being part of the win. So I was wondering if you could talk maybe how many brands are included and maybe how many models within each of those respective brands, you might have said it earlier, and I might have missed it, but if you could just provide any more color on that, that would be helpful. Thanks.

Yeah. So, Michael, I'll start this. We start with three brands, which are the more premium brands of this program. And later on we expect that this program will be trickle down to other brands and other car models. So we are starting with certain OE brand and models and slowly exceeding over the time of this project. Part of the reason that this program was delayed, we were expecting the decision already last September was part of the problem that this is a big group and there are multiple brands and being a company with so many car companies -- so many cars and designs, and each one has its own constraints, required a lot of iterations of design, working with the team, trying to help them in finding the right fit eventually in order to kick off the program, because they didn't want to delay the launch of those cars that are targeting to be launched earlier, the nomination was made today, but there are discussions yet, with the other brands to be included and we didn't count them in, into our order book, but once that decision will be done later, we will update the market. We expect to have more brands included in this platform.

Okay. Understood. That's really helpful. So just to clarify that the order book number, then it's just for those three brands that you mentioned those assumptions.

Right? Yes.

Yeah. Okay. Got it. Perfect. So just another follow up question here. I see in the press release that InnovizOne start production is targeted for next year when you plan on launching with your first customer BMW, I assume. I thought the start production was supposed to be, you're ready for production by the end of this year. Is that still the case or is there any change to the production strategy for InnovizOne?

No. Our readiness is by end of this year. Customers launch is next year. There are two customers that we expect to launch next year. Both of them are relying on InnovizOne.

Okay. Yeah. Understood. And one last one for me, and then I'll hop back in the queue, just in regards to the programs you're currently competing on in the RFI/RFQ stage, those that are maybe higher volume series production customers. What's your expected sort of timing on the decisions for those programs? Are there any that you think could be decided this year? I know you don't want to get ahead of yourself, but just curious if you have any thoughts on timings.

I would say yes, there are three customers that based on the discussions could make a decision this year. Having that we've come through this process, seeing that sometimes these decisions take longer than we would've wished. I can't really predict that it'll really happen, but yes, there are three programs that we expect to be decided this year, but again we can't say how it will develop. I think that we are in a very good position having, I can say that, since this nomination award and having the fact that we became a tier one has really searched the discussions around several customers and even new ones that before, Innoviz we tried to approach many car makers as a dark supplier, not all of them, even initially thought that it's possible. Now we are kicking off those discussions. I'm feeling very comfortable saying that we are in a very good position on those programs that we're completing in the short term.

Excellent. Thanks very much. I'll hop back into queue.

Thank you. Our next question today comes from the line of Mark Delaney from Goldman Sachs. Go ahead.

Yes. Thank you very much for taking the questions and let me add my congratulations on the series production win. I was hoping to also ask more on that and for this newest production win, when do you expect to begin shipments for series production and maybe you could talk about what needs to happen between now and then in order to get ready in terms of sampling, testing, getting the manufacturing ready and things like that?

Sure. So as any automotive program, the nomination was just made a week ago and basically as any program, there is a very standard process of providing A sample, B sample, C sample, D sample, in which we are committed to the timeline. It will be in the next three years and three and a half years and beyond that expecting the SOP. Next step is delivering the A sample, which is basically integration. That's also basically pending for the joint announcement integration into the car of our first samples. As possibly discussed earlier, we're not only providing lighter for this program. We're also providing the perceptions software. In this opportunity, the perception software is, is embedded in a new platform. It's different than the platform that we use for the first program we have with BMW. But it's a very strong platform that will allow us to leverage on other programs.

That's helpful. And then maybe you can talk about what some of the financial implications are in that intermediate term period between now and that start of series production. Can you talk to some of the puts and takes in terms of maybe there's some revenue from these samples that you could have, but also I imagine there's some OpEx and how should we think about some of those puts and takes netting out in terms of the profitability impact? Thank you.

Sure. So there is an agreed pricing for the different samples and actually those are with very good, I would say pricing points for us. We are expecting InnovizTwo, we are working right now to ramp up the capacity of InnovizTwo. We are very eager also to penetrate the non-automotive market and get ready with our production line of InnovizTwo. Part of that capacity will serve this new customer, which is now a lead customer and so for the following years Innoviz is going to be producing these units. We're going to have our own production line in our new facilitate. It's a production line that will have quite a large capacity, and there's not going to be a problem to serve them and many others. Beyond that, there is an NRE portion that is related to development of the platform and development also related to our activity right now with the other brands in order to bring them to the desired, I would say configuration that's part of our work right now. Beyond that there is the C sample and D sample. Again there is an agreed pricing on the different stages of the product stage, and we made sure that those -- in those stages that we will have also good margins. I hope this answers your question.

Yeah. Sorry. Maybe want to just quick clarification in terms of manufacturing yeah, as you get to high volume manufacturing, even as the tier one supplier, would you still envision using contract manufacturing partner to help you with that, or do you plan to do all of that on your own? And then I'll leave it there and turn it over. Thank you.

We're in discussions with different contract manufacturers and also a few ones, in regards to being taking the ownership on the manufacturing and managing the supplier of the contract manufacturing. There's no plan right now to build our own manufacturing site. And so it's -- our productions line is only for the B sample. That's a production line. I mean, Innoviz is not only designing the lighter. We are also designing the manufacturing tools. All of the automation of the production is automated. In order to get to high volume production in such a product, you need to design eventually a machine that builds LiDAR. That's part of what we do. Part of the reason that the new customers felt comfortable with Innoviz becoming their direct suppliers, because we show them how much experience we have in developing production tools and being responsible for such a design for manufacturing. And we are exercising right now, and we are developing the production tools as we speak, and that production tools will later serve anyone who will produce our LiDAR. It will use, the production tools that we are developing and they will lead only to operator.

Thank you. Our next question today comes from the line of Andres Sheppard from Cantor. Please go ahead.

Hey guys, can, can you hear me okay?

Yes.

Wonderful. Hey Omer, Hey, Eldar, congrats on the quarter and congrats on the hard win through two years of a lot of work, very well deserved. And thanks for taking my questions. Just to maybe build on some of the questions that have been asked, help me understand, so when can we see revenue recognition from the increase in the order book right. I understand it takes a few years, but maybe can you give us a sense of when we can kind of start seeing those hit on the income state?

Sure. So as I tried to explain earlier on how we see our path to profitability, basically we're expecting next year to have a growth in our revenues coming from the non-automotive and of course start of the automotive programs that we were already awarded. And those will grow over the cost of the years, both of them, and three and a half years from today, we expect to start generating revenues from the first order book and the growth rate would be, as we said 1% to 14%, over the course of the 8% to 10%.

Got it. That's very good.

Sorry. And of course our assumption right now that in a similar timeline to that launch, there are other car makers that are due to make a decision. My expectation eventually is that it's -- the order book would not come only from a single customer, even if it's multiple brands. We do expect that other car makers that are planning to launch at a similar timetable is something that we can leverage on and add to our team.

Got it, thanks Omer. And then, I think we can all kind of deduce who the partner is, but when do you anticipate, I guess to disclose the name formally?

Sure. Of course we are eager to share it, it has, this customer is a very prestigious customer and of course extending the name would be building a lot of confidence to everyone. And I think the industry knows well about this deal. I can tell you that many car makers and tier ones have reached out to congratulate us on this huge deal. We've been competing on this for a long time, and of course, meanwhile, we were nominated, there were other parts of the vehicle that were nominated. It's a very important program for the whole industry. Right now, there is an agreement between us and the customers to do joint press release announcement following the first delivery. Right now, it's expanding the first delivery of the A sample and integrating our product into the vehicles, including our perception software and following that, we will do this joint process. I think that there is a lot of eagerness from our side, but also from their side. We are working closely with their teams for really two years, and there is a good relationship. Today I'm having dinner with the team. It's really a start of a new relationship, which I believe will take us now for many years.

Got it. No, that's very helpful. Thanks again. And maybe one last one, if I may. I know you didn't provide 2022 guidance in terms of revenue. But you did say that you kind of expect revenues to I guess increase or start ramping up throughout the year. So I'm just wondering, can you give us maybe a little bit more color on kind of what that means and how do you see revenue shipping up for the rest of the year?

Sure. Maybe I'll just start by saying, when we started, when we went public where the assumption that this car maker decision would be at a certain timeline and there decision window of the automotive market would be at a set timeline. That has been pushed by about nine months and our focus was always to leverage on that decision critical time and basically making sure that we're not missing the opportunity to lock as many customers as possible, knowing that we're sacrificing the short term opportunities of making more revenues from selling up to the non-automotive. And for that reason, because we identify that the decision window has shifted, but it's actually as we speak and I think that now we're expected to accelerate; 2022 focus was really not about those sales of non-automotive. I will let Eldar to refer to the expected revenue store at the end of the year, but really our focus right now is automotive. But next year, we know that we will have securing our pockets, several design wins and then focuse on the non-automotive and starting generating and growing revenue to catch up with the revenue expectations that we have. And I believe that with the really promising products that we have, the InnovizTwo and 360, we will be able to capture a very nice portion of the market to generate revenues for the new terms until of course the growth of the automotive.

Yeah. So, in terms of revenues, so we do expect that we will see a continuous growth in the revenues over the year and the coming years. Of course, as we stated, the InnovizOne is the primarily product that we'll be selling this year, but even more importantly, there is a push to bring InnovizTwo bring such a production state that we can start shipping it this year in order to see additional growth next year. So this year there was a focus, as we said, there was a focus on winning the market and there will be -- continue to be the focus for next year. We do expect to see some revenues, not only from the automotive space, but also from other application and other market verticals. The team are spending a lot of time now. We are knocking on kind of like the opportunity right now since we have this award. I'm traveling to this next week with my team to the US to the East Coast and the West Coast meeting with different customers. We're coming with the InnovizTwo and those I would say discussions would obviously would provide us more and more business to allow us to generate our revenues.

Wonderful. Thank you so much, guys. Congrats again. I'll pass it on. Thank you.

[Operator instructions] Our next question today comes from the line of Kevin Cassidy from Rosenblatt Securities. Go ahead.

Hi, congratulations. I'll add that too. I was just wondering about the competitive landscape or maybe the break-off you went through over the last two years, the way you describe, what is the key attributes that InnovizTwo had that no one else could do?

Good question. So, let's say that through the last two years, it was a very -- it was a very long process. I think during the first year we were probably turned down about five times and I told the team of the customer that through their negative results each time, we improved the product each time, eventually reaching to the 30 times improvement. So much credit for them. Eventually once we were able to reach their performance target and gave indication for pricing, it was clear that in order for us to win the program, we need to be nominated, we need to be qualified as a tier one. This kind of car maker, but because it was really high volume program, it couldn't allow to be able to work, to nominate just a company, they need to have a tier one, which is meeting all of the group. We were going through a process of about three to four months, different workshops that eventually concluded with our recognition as a tier one signature of becoming a tier one. And eventually we're competing against another tier one. Towards the end of the year, it was us versus another tier one, which came with a technology that from our understanding was actually inferior in terms of performance and through the different requirements that came from the group in order to support different configurations mostly related to use of lighters and different locations and difference that actually push for even higher performance than initially us. The other comparison couldn't live to the expectations and or to the performance department, and eventually towards the end of the process, we were under the assumption that we were no longer competing with anyone. It felt like that. And of course I can -- I possibly don't have the full visibility. The kind of the discussions that went through between January to April was mostly related to internal discussions at the group level related to some changes of the configuration. And we worked with the customer probably redesigned the life of 10 times again which, part of it was related to the change in the height of the light, which was super critical. But eventually it felt that the level of engagement, the level of discussions with all of the teams in the group made us feel that we are very likely to be nominated and we were happy that it eventually happened. But I think that until the last kind of time that we felt that we were really negotiating versus another competitor it was versus another tier one, a traditional tier one and yeah, that's what we know.

Great. Thanks for that detail. And, this is why, I guess, in the prepared remarks, you had said that you think the process will move quicker. Now you learned a lot on this and so the next bid you're on you'll have removed some of those obstacles already. Is that the way we should think of that?

Look, one of the challenges of becoming to be selected as a Libor for carmaker is the fact that car makers wants to select a tier one that meets all of their group standout. They can't work. They have thousands of components in the car and they need to make sure that the tier one eventually all of the components are sourced through tier ones that can manage multiple components. And eventually they have a small group of companies that meet up to their expectation. Several car makers are more technical and I would say more advanced and are allowing to, I would say, absorb some risk and going into new technologies. Most of the car makers don't. They need to rely on selection and due diligence made by other car makers and the fact that we, approached them with a very exciting technology was actually not enough. They wanted to work with tier one. They asked us to come with the tier ones. Our preference was to be working directly. And once we were able to show them that we were certified as a tier one that was actually done several months ago allowed them to feel comfortable to start the process with that. And having this nomination is another step forward, which not -- which means that this was a very -- that we are credible to become a tier one. Becoming a tier one also allows you to be more flexible. I think one of our advantages as a tier one is that Innoviz, is a very flexible company. We are very technical. One of the things that the customer was awarded for, I would say had a preference for Innoviz was due to our agility. They've said multiple times that we were the most professional in…

All right. Great. Thank you very much. Congratulations again.

Our next question comes the line of Michael Pilato - Berenberg. Please go ahead.

I'm still here. So just two clarification questions. First one, you mentioned that you wouldn't be producing the InnovizTwo for this program yourselves and your own manufacturing line, right? Like you wouldn't the initial samples, but you said you might work either through a tier one or a contract manufacturer. So I just -- I'm just trying to understand, when you say you're a direct tier one supplier, how that sort of ties with manufacturing through a tier one right. I guess try and clarify that for me.

Okay. Maybe just I'll clarify. The first B samples, we are going to manufacture. We are manufacturing today. Now actually next to us, there is the production. One of the -- one parts of production line. InnovizTwo production design is done by us. So we're designing the product, but we're also designing the production line and we are going to utilize the production line for the first time until we get it stable until it gets to the C sample. So the B sample of next year is going to be done by us, is going to be in our new facility and that will get to quite a large capacity. Eventually, when it goes to high volume and of course, when we were I would say qualified to become a tier one, we had to point to the customer they expected location of the production line. So we worked with the contract manufacturer. We worked with the customer, which audited the automotive grade. They wanted to make sure that this facility is meeting all of the automotive grade group standards, the logistics, the shipping, everything has to be audited. Eventually, when we get to the C sample and then to the D sample, it has to be -- it has to be an automotive grade facility. Not only that the design is automotive and that's the B sample stage. At the C sample, it will be also needs to be an automotive grade facility, which is not in. At that point, we will work with a contract manufacturer, which will produce the Libor for us. But again, trying to important for me to say they are going to use the production tools that we develop. So they -- if I need to try to give you an impression of how a production line looks like, eventually it's a machine that places the optics and InnovizTwo, it became significantly simpler because there is one laser and one detector. So the full active alignment process is two steps compared to eight steps with InnovizOne. The cycle time is dramatically lower. The testing is dramatically lower and everything is going to be designed by us, tested by us. And once we will see the production line is up and running, we will shift the production line, the production tool to our quantum receptor, which will basically use it. They don't need to know anything about the Libor. The operators don't need to understand anything about the Libor. They just need to follow the operations of running a certified production line for automotive in terms of inventory and quality testing, but that's not going to be done by us.

Sorry. Just one more clarification on that, right. Is that not what you're doing with Magna right now, is shipping them the production tools as well as the components for the sensor?

Yeah, it is. The production line that is now at Magna was designed by us. And that's why it was quite easy for us when we worked with the new customer. It was easy for us to show them that our experience as a tier two is actually more than just tier two. We were more like a tier one and a half and already being able to show them that we have experience in producing tools for production line for automotive. And that's what basically started the engagement and their interest. So today Magna, wholly is the production line that Magna is managing and we sold them the production line that we designed. We are supporting them, there are people from our side there to work with the team and eventually Libor at Magna are produced at Magna wholly, tested in Magna wholly and shipped to BMW.

Michael, just to add to that, that the business model is different. When we are working today with Magna, they are selling the full system to BMW. We are selling to them only the component. So the revenue line is from the component while, once you are a direct supplier and you have a contract manufacturer at the end of the day, we will be selling the whole system and the software. So it has some impact also on the revenues and on the top line.

Understood. Understood. Thank you for that clarification. And just one more question, you mentioned NREs is not part of the order book for this program, but will you -- do you expect to see NREs this year from the program or when should you expect to see that?

Yes, there is NRE also this year we expect.

Okay, great. And one last one, given that you're now going to essentially being a tier one, is there any sort of change in your cash needs to support this program, or do you feel comfortable with the cash you have on balance sheet right now?

The cash on our balance sheet enables us to execute this program. We raised sufficient amount of cash during our going public process. And we have all our needs. Even to add to it, part of the qualifications to become a tier one was to show the customer, our financial robustness. So of course, when we went public and we raised money for the company, we didn't have to buy companies, we didn't have to buy technologies. We are using this amount in order to show the robustness the company has in securing our effort in the coming years and basically reaching the SOP.

Understood. All right. Thanks a lot, guys.

You have no further questions. Please proceed.

Okay. So really exciting times. I can tell you that the atmosphere in the office is very, very good. We all are getting a lot of our sleeping pressure off. It was a very challenging time. We've been competing on this program for a long time, super important for us. We knew how meaningful it will be to us. I don’t know if it's -- we managed to express how impactful this is going to be for us. But I think that just from the amount of engagement we had in the last week and a half from different customers and seeing how seriously they're seeing this event and I have very high confidence in our ability to be very successful and we're looking forward for a bright future. So next week I'm traveling through New York and San Francisco, meeting with investors and customers and I'm happy to be reached out for any interesting opportunity. Thank you very much. Thank you.

Good bye.