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| Statement |
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| We’re building an absolute Autotech powerhouse with innovative ADAS, user experience, and electric vehicle solutions, positioning us to effectively navigate current market conditions, capitalize on the $48 billion serviceable opportunity, which is just ahead of us and, most importantly, to create great shareholder value |
| At the same time, and just as importantly, I’m pleased to report that we have successfully sampled our radar baseband and MMIC to our lead customer, one of the largest contributors to our strategic backlog, and are on track for a 2025 program ramp |
| In conclusion, we posted record Q4 and 2023 results, demonstrating the strength of our business model through a challenging operating environment |
| And while incremental investments hamper profitability in the immediate term, they will enable us to maintain our steep growth trajectory over the long run, furthering indie’s technology leadership and adding to our strategic backlog |
| I’m proud of the indie team’s absolute relentlessness and the substantial progress we’ve made to date towards our financial goals in the face of these headwinds |
| Once again, massively outpacing our peer group and earning the unique distinction of being the fastest-growing semiconductor company in the world based on our last 2 years of revenue performance, per Morgan Stanley |
| But as you have seen in the past, we have done a very good job sequentially expanding margin, and that just comes from improving mix and lowering costs, improving yields, etcetera, and that’s going to continue |
| We also continue to gain design win traction by securing major in-cabin monitoring programs at leading automotive OEMs, including BMW, Ford, General Motors, and Toyota |
| Leveraging Ficosa’s near decade-long expertise as a high-volume vision solution supplier and our field-proven differentiated vision processing technology, together, we can deliver breakthrough imaging and in-camera object detection, particularly for challenging edge sensing applications |
| Despite the challenging macro backdrop, in Q4, we achieved record revenue delivering sales growth of 112% year-over-year and 16% sequentially to just over $70 million, with 50 basis points of gross margin expansion on a year-over-year basis to 52.7% |
| But we do expect that with the recovery that we are seeing, coupled with the conservatism that we have built in, we feel pretty confident about where we can get to in the second half and in Q2 indeed |
| The indie team delivered another quarter of solid revenue and gross margin performance, capping off a third consecutive year in which we’ve more than doubled our top-line |
| Finally, in the electric vehicle area, we have extended our footprint of the leading North American e-vehicle OEM, securing two significant design wins in support of their future model years |
| Revenue for the fourth quarter was up 112% year-over-year and up 16% sequentially to a record $70.1 million at the lower end of our guidance band and indicative of the weak market environment, though still up more than tenfold within just 3 years |
| And as a net result, we are pretty confident about a recovery in Q2 and a return to the plan in Q3, Q4 |
| So, we expect gross margin expansion from here |
| Again, according to S&P Global, shipments of automotive electronic control units incorporating vision-based processing are expected to grow from 232 million units in 2022 to nearly 400 million units by 2027 |
| In turn, our Q4 operating loss narrowed to $2.4 million versus a loss of $15.1 million in the year-ago period, driven by higher revenue, improving gross margin, and operating expense leverage |
| To that end, during the quarter, we expanded our automotive camera video processor portfolio with the launch of a highly integrated system-on-chip that enables precision performance sensing capability at the vehicle’s edge, while supporting driver viewing |
| Q4 gross profit was $37 million, translating into a 52.7% gross margin, up 50 basis points year-over-year and consistent with our guidance |
| So, we are pretty happy where that program is right now, and we do expect some material revenue from that to come on the schedule that we originally outlined |
| So, we expect off the Q1 trough to begin to expand gross margin again towards 60% |
| Based on our new program and design-win pipeline, we expect Q1 to represent a trough quarter, a top-line recovery in Q2, and a resumption of outsized revenue growth in Q3 and Q4, yielding a profitability baseline on an EBITDA basis in the second half of this year, ahead of our significant 2025 radar and vision ramps |
| Moreover, we’ve won substantial subsequent business with this OEM, leveraging the same indie vision product line, which will more than offset this loss in the medium-term |
| While we navigate automotive industry weakness in the short-term, stemming from rising interest rates, slowing in-market car sales, decelerating consumer transition to semiconductor content-rich electric vehicles, and inventory rebalancing across the automotive industry, our design win momentum has continued unabated and reinforces our confidence in indie’s business model |
| Similarly, OEMs are increasingly focusing on interior and exterior lighting solutions as it transcends just functionality within the modern vehicle, becoming a pivotal element of the user experience that shapes the cabin’s ambiance and enhances visibility and safety |
| In summary, despite the tactical market challenges, we’re willing new programs and setting the stage for the next wave of above-market growth towards sustained profitability |
| So while we are seeing this air pocket in broader industry demand, the strategic opportunity for indie remains unchanged and is enormous, particularly as indie is at the unique intersection of vehicle safety systems, sensor fusion, and with our newest product developments, artificial intelligence, towards realizing our vision of the uncrashable car |
| And of course, we just exited with north of $150 million in cash, so that leaves us with ample cushion |
| Entering 2024, we expect these dynamics to persist, dampening Q1, but with a recovery in Q2 and a return to strong growth by Q3 and Q4 of this year |
| Statement |
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| In particular, we are seeing real-time weakness across the China e-vehicle market as their luxury vehicle SAAR, or the seasonally adjusted annual rate, came in at 20.6 million for January, down versus 21.7 million reported in December, marking the fifth consecutive month of declines |
| While the fundamental landscape for EVs over the medium and longer-term remains robust, shorter-term, e-vehicle industry trends have certainly deteriorated, given reduced buyer incentives, concern over charging infrastructure, and the saturation of early adopters |
| The shift in our near-term outlook reflects the softness compounded by the cancellation of a high-profile North American OEM ADAS program, which you may recall was pushed out from last year through no fault of indie |
| I mean this has been a fairly – in certain segments, a fairly violent disturbance in the market |
| As context, automotive markets are forecasted to slow after experiencing a strong 2023 |
| For the first quarter of 2024, we expect indie’s revenue to be up 38% year-over-year, but down 20% sequentially, reflecting seasonality and current industry softness, with gross margin in the 52% range |
| With net interest expense of $200,000, our net loss was $2.6 million, and we posted a $0.01 loss per share on a base of 181.6 million shares, again, in-line with our guidance and consensus estimates |
| Despite this setback, it won’t result in a permanent loss of revenue, as we fully expect to participate in their next equivalent project |
| We also substantially narrowed our operating loss to less than $1 million on an EBITDA basis |
| Adding back $1.4 million of depreciation, our EBITDA loss was less than $1 million |
| Whilst we can’t control the weather, our strategic focus remains unwavering |
| Operating expenses were $39.4 million, with R&D sequentially lower to $29.4 million, reflecting a pause and tapeout activity, while SG&A was down slightly quarter-over-quarter to $10 million |
| Assuming 186 million shares outstanding, including the full 7.7 million shares related to the retirement of 27 million warrants that we closed in November, we expect an $0.08 net loss per share |
| But generally speaking, it’s really a broad inventory correction that we’re seeing |
| These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations |
| And it just happened to be a program where there was an ambitious goal set for it, and engineering execution on the customer side didn’t pan out for their business goals |
| And even with us, with a relatively smaller customer base, it’s still an extremely rare thing |
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