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01/11 13:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The overall sentiment is positive due to raised revenue and operating income outlooks, strong EyeQ and Supervision volume forecasts, and a promising robotaxi deployment plan. Despite some margin declines and higher operating expenses, the positive guidance and strategic partnerships, such as the Lyft robotaxi program, outweigh these concerns. The Q&A session provided additional confidence with expectations of faster growth than top OEMs and advancements in ADAS technology, supporting a positive stock price movement.
Q3 Revenue $504 million, up 4% year-over-year. The increase was driven by 8% EyeQ volume growth, which significantly outpaced the 1% growth in overall vehicle production among the top 10 customers.
Operating Cash Flow $167 million in Q3, well above net income. Year-to-date operating cash flow is nearly $500 million, up around 150% year-over-year. This reflects the cash generative nature of the business and disciplined working capital management.
EyeQ Volume 9.2 million units in Q3, compared to the outlook of 8.7 million to 9.3 million. This represents a significant contribution to revenue growth.
SuperVision Volume Higher than 20,000 units in Q3, with a full-year expectation of around 50,000 units. This is significantly higher than original expectations and reflects a sustainable run rate for the current first-generation programs.
Gross Margin Declined by just over 100 basis points year-over-year. EyeQ ASP was down about $0.50 year-over-year due to higher volume of Chinese OEMs and higher volume of ADAS programs based on EyeQ5, which carry lower gross margins.
Operating Expenses Up 4% year-over-year in Q3, slightly higher than expected due to timing of engineering reimbursement. Full-year operating expenses are expected to be up about 7% to just below $1 billion.
Balance Sheet Inventory Came down by about $100 million year-to-date, aligning with the 6-month target for balance sheet inventory. This reflects tight control over working capital accounts.
EyeQ6 light: Generating ADAS program wins at a high rate, with future expected volumes well above full year 2025 volume.
EyeQ7 high: First silicon sample received, initial tests successful. Designed for upgrading eyes-off autonomy to minds-off autonomy, targeting 2029 and beyond.
Robotaxi technology: Outfitting more ID.Buzz test fleet with EyeQ6 high-based production hardware. Successfully completed first closed-loop testing with Holon production vehicle.
China market: Better-than-expected results from shipments to Chinese OEMs and performance of top 10 Western OEM customers in China.
India market: Growth potential becoming clear due to strengthening adoption trends and supportive regulatory environment.
Robotaxi expansion: Engagements expanding through Volkswagen and Holon. Plans for geographic expansion in the U.S. and Europe after removing safety drivers in 2026.
Revenue growth: Q3 revenue of $504 million, up 4% year-over-year. Full-year revenue midpoint raised by 2%.
Operating cash flow: Generated $167 million in Q3, nearly $500 million year-to-date, up 150% year-over-year.
Inventory management: Balance sheet inventory reduced by $100 million year-to-date, aligning with 6-month target.
OEM partnerships: Added Volvo as a new customer. Received confirmation from a leading Western OEM for a high-volume EyeQ6 high-based surround ADAS program.
SuperVision and Chauffeur programs: Focusing on execution with Volkswagen Group, including major software updates in coming months.
Future autonomy systems: Transitioning from eyes-off to minds-off systems by 2029, leveraging EyeQ7 and EyeQ8.
Gross Margin Pressure: Gross margin declined by over 100 basis points year-over-year due to lower pricing in the Chinese market and higher volume of ADAS programs based on EyeQ5, which carry lower gross margins. This trend is expected to continue until 2027.
Pricing Pressure in China: Pricing remains a significant headwind in the Chinese market, impacting overall profitability.
SuperVision Volume Fluctuations: SuperVision volumes are higher than prior quarters but are not expected to establish a new higher run rate, indicating potential volatility in this segment.
Operating Expense Increase: Operating expenses increased by 4% year-over-year, slightly higher than expected, due to timing of engineering reimbursements.
OEM Production Constraints: Potential year-end logistical issues or OEM production constraints could impact Q4 volumes.
ADAS Program Margin Pressure: EyeQ5-based ADAS programs, which currently represent about 10% of volume, are less profitable and expected to peak at 15% next year, creating continued margin pressure.
Q4 2025 Guidance: The core ADAS business is expected to maintain healthy volumes in Q4 based on updated guidance. Full-year revenue midpoint raised by 2% and adjusted operating income midpoint raised by 11%. EyeQ volumes for the full year are expected to be 35 million to 35.5 million units, with Q4 volumes projected at 7.7 million to 8.2 million units.
2025 Full-Year Guidance: Revenue midpoint increased by 2% and adjusted operating income midpoint increased by 11% compared to prior guidance. EyeQ volumes are expected to outperform the production of top 10 OEM customers globally by about 5 percentage points. SuperVision volumes are expected to reach around 50,000 units, significantly higher than original expectations.
Future Product Development: EyeQ6 Lite is expected to ramp up significantly in 2027, providing a tailwind to margins as EyeQ5 share decreases. EyeQ7 high and EyeQ8 are in development, targeting 'minds-off' autonomy by 2029 and beyond. Eyes-off systems are planned for production in early 2027.
Robotaxi Expansion: Safety drivers are expected to be removed in the first U.S. city in 2026, with geographic expansion planned for Volkswagen and Holon vehicles. Commercialization initiatives are expected in Dallas and other cities, with ongoing testing and development of production hardware.
Market Trends and Growth: Stronger-than-expected launch activity, ADAS adoption growth, and better-than-expected results in China are driving outperformance. Growth potential in India is becoming increasingly clear due to strengthening adoption trends and a supportive regulatory environment.
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The overall sentiment is positive due to raised revenue and operating income outlooks, strong EyeQ and Supervision volume forecasts, and a promising robotaxi deployment plan. Despite some margin declines and higher operating expenses, the positive guidance and strategic partnerships, such as the Lyft robotaxi program, outweigh these concerns. The Q&A session provided additional confidence with expectations of faster growth than top OEMs and advancements in ADAS technology, supporting a positive stock price movement.
The earnings call summary and Q&A highlight strong progress in design wins, technology integration, and strategic partnerships, particularly with Volkswagen and Lyft. Despite some uncertainties in management responses, the increased guidance for supervision units and strong EyeQ shipments indicate robust demand. Additionally, the strategic Imaging RADAR deal and unique business model for robotaxi systems position Mobileye well for future growth. While operating expenses are rising, the long-term outlook remains positive, with significant contributions expected from new product launches by 2027.
The earnings call presents a mixed picture. Strong revenue growth (83% YoY) and improved operating margins are positive, but stagnant EPS and a lack of a share buyback program are concerns. The Q&A highlights conservative guidance due to uncertainties, with stable orders but no clear growth catalysts. While there is optimism around new partnerships and projects, the absence of a share buyback and unchanged EPS tempers expectations. Given these mixed signals, a neutral stock price movement is likely over the next two weeks.
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