Mobileye Global Inc. (NASDAQ:MBLY) Q2 2025 Earnings Call Transcript

Mobileye Global Inc. (NASDAQ:MBLY) Q2 2025 Earnings Call Transcript July 24, 2025

Mobileye Global Inc. beats earnings expectations. Reported EPS is $0.13, expectations were $0.11.

Operator: Greetings, and welcome to the Mobileye Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Daniel Galves, Chief Communications Officer. Thank you. Mr. Galves, you may begin.

Daniel V. Galves: Thanks, Maria. Hello, everyone, and welcome to Mobileye’s Second Quarter 2025 Earnings Conference Call for the period ending June 28, 2025. Please note that today’s discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially. Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today are Professor Amnon Shashua, Mobileye’s CEO and President; and Nimrod Nehushtan, Mobileye’s EVP of Business Development and Strategy.

Unfortunately, our CFO, Moran Shemesh recently experienced a death in her family and will not be joining the call today. I’m sure everyone listening joins me in wishing the best to Moran and her family. For today’s earnings call, I will essentially take on Moran’s role. Thanks. And now I’ll turn the call over to Amnon.

Amnon Shashua: Hello, everyone, and thanks for joining our earnings call. Starting with the results. Q2 revenue was up 15% year-over-year as demand for the IT was strong across regions and OEMs. Adjusted operating income was up 34% and adjusted operating margin rose 3 points to 21%. Q2 was a good display of the strong operating leverage created by our business model. On a year-over-year basis, more than 40% of the revenue growth converted to operating income compared to Q1, nearly 70% of the higher revenue dropped to operating income. Operating cash flow was again a highlight over $200 million for the quarter and over $300 million for the first half, about 33% of revenue. Our ADAS business is highly cash generative, and we are maintaining strong working capital discipline.

The core ADAS business is performing well, with volumes at or above $8.5 million per quarter for the last 4 periods, and we are raising our full year revenue outlook by 4%, and our adjusted operating income outlook by 14% at the midpoint. Our core ADAS business truly illustrates that mobilizes an execution machine. EyeQ light will be the future high-volume chip for this segment and the ramp-up of that new system has been seamless. Only 1 year after the first SOP, we already have EyeQ6 light-based systems on the road in North America, Europe, China, Japan and India. On the advanced product side, we are the only OEM neutral platform that is cost-efficient and scalable and has a credible technology path to eyes of autonomy in both privately owned vehicles and robotaxis.

All four of our advanced products surround ADAS, supervision, Chauffeur and drive share common elements, including the EyeQ6 high inference chip, major portions of the perception and policy AI stack, REM crowdsourced driving intelligence, our safety frameworks and the company’s data and validation infrastructure. This common backbone creates many synergies for us and our customers, enables us to develop and execute all 4 solutions simultaneously, and leaves us agnostic to whether the market moves faster in one way or another, whereas a couple of years ago, OEMs were primarily focused on supervision. We are now seeing broad momentum across our portfolio from next-generation ADAS to full pojnt A to point B eyes on hands-free to Level 3 systems and to robotaxi.

The EyeQ6 high-based surround ADAS system continues to develop as the next generation of standardized riding assist on high- volume vehicles platforms. This system addresses multiple objectives in a cost-efficient package. It’s designed to meet stricter late- decade safety standards, enabled highway hands-free performance for a lower cost than current systems and supports OEM goals to consolidate ECUs and to integrate technology on a single SoC. In recent months, we have seen growing demand from OEMs to shift away from already sourced single camera programs toward our multi-cameras around ADAS Mando. Overall, opportunities to substantially grow content per vehicle in the ADAS space have improved over the last 6 months. Supervision activity remains robust, but lack of competitive pressure is enabling OEMs to continue to take their time with decision-making.

Meanwhile, Chauffeur has generated multiple new OEM prospects that sees eyes off on highway as a breakthrough feature that allows drivers to reclaim their time during commutes. The central question around eyes off consumer AV programs is simply technological maturity. How likely is it for a technology provider like Mobileye to execute a system with human label safety and an expansive ODD. In this context, our 4 production programs with Volkswagen Group are significant strategic assets. They showcased our rapid progress in transforming our core technologies into scalable products. Our ability to demonstrate these products to other customers, including production level hardware and software associated KPIs is an important proof point that our competitors do not have and will drive increasing competitive pressure as we approach launch.

Turning to robotaxi. Waymo’s achievement of 25% market share in San Francisco, despite offering now time or cost advantage of our human-driven alternatives is very encouraging and has reignited industry enthusiasm. When you look at the robotaxi opportunity, two pillars are critical, safety and scalability. On safety, this means reaching the mean time between failures that exceeds human statistics as well as other critical safety standards. Safety has long been a strength of Mobileye, supported by foundational innovations like our RSS model, which we developed in 2017 and the PGF, our recently published framework for using multiple subsystems. Once safety goals have been reached, the second pillar is scalability. The name of the game here is how fast can you scale.

This should be evaluated across three different vectors. The first scalability vector is geographic. How fast can you expand from city to city. REM is a huge asset here. The second is cost. What are the all-in operating cost of the system. Our in-house design compute, imaging radar, efficient AI supply chain synergies. These all combined to create significant cost efficiency advantages relative to the competition. Finally, scalability also entails production capacity and business model. The fact that we work in partnership with OEMs that produce vehicles where our system is integrated during the mass production line, rather than being uplifted in a different facility after the vehicle has been produced is very important. This approach allows us to be capital light, but it’s not just about capital light.

It also allows us to scale fast. Even if we had all the capital to go and purchase 100,000 vehicles, and then build production plans that would uplift the self-driving technology, it would have slowed us down. We are working with Volkswagen, of course, but also Holland, which has a production facility underway and have advanced engagements with other high-scale OEMs. On the operations and distribution side, we have arrangements with Volkswagen’s Mobility arm MOIA and Japanese fleet manager Marubeni, to provide operations and the customer- facing technology. Finally, we have announced reengagement with demand generators, Uber and Lyft in the U.S. and public transport operators in Europe to provide the demand platform. All of these actors have skin in the game, which is also important to drive scale.

So Mobileye with the kind of partnerships that we are building is in a very good position to scale rapidly once we start commercial deployment in 2026. In terms of a technology update on robotaxi, we recently successfully transitioned into our full production hardware inside the ID buzz test vehicle. The mean time between failure performance is tracking well to the KPIs that were laid out at the start of the program. We expect to reach our KPI goals by the end of 2025, then start adding tele-operations and then remove the driver in 2026. So it’s all on track. In summary, the opportunities set in front of us today is larger, broader, deeper and more urgent than it was when we went public in 2022. OEMs are indicating increased clarity in planning and decision-making.

Near-term volumes are strong. The demand for both higher performance and lower cost is intensifying, and eyes of performance, whether for personal cars or robotaxi is no longer seen as a science experiment, but as an achievable and commercially viable product. This is exactly where Mobileye thrives. I’ll turn the call over to Dan to cover the finance section.

Daniel V. Galves: Thank you, Amnon. Before I begin, please be aware that all my comments on profitability will refer to non-GAAP measurements. The primary exclusion in mobilized non-GAAP numbers is amortization of intangible assets, which is mainly related to Intel’s acquisition of Mobileye in 2017. We also exclude stock-based compensation. Our Q2 results significantly exceeded the color we provided on the Q1 2025 earnings call in April, and were slightly better than our pre-release numbers from earlier this month. Revenue was up 15% year-over-year versus the outlook of plus 7%. The strength was due to several factors. Multiple OEMs, including China OEMs, showed modest outperformance, which taken together, contributed to significant overall gains.

Supervision volume was also a bit stronger than expected as production of the vehicles we are on is running better than expected year-to-date. I’ll spend a minute on inventory as we continue to monitor it closely. Based on our discussions with customers, inventory was relatively tight entering the year, and there was some direction from certain OEMs to increase safety stocks due to the volatile macro environment. Even so, a variety of analyses we run on a regular basis indicates that shipments were relatively consistent with demand on a year-to-date basis. To frame it, EyeQ volumes in the second half of 2024 were 17.8 million units and inventory ended the year at a low level. Volumes in the first half of 2025 were $18.1 million in what we believe was a comparable demand environment to the second half of last year.

We continue to believe that inventory at our customers remains well aligned with underlying demand. Turning to gross margin. It was down slightly year-over-year and versus Q1. Gross margins are stable by product and by region. The exact results, however, depend on mix of China volumes in the ADAS business and supervision. Each of those segments carries gross margins somewhat lower than the corporate average. Supervision in particular, was a higher percentage of revenue in Q2 versus Q1, causing a bit of a gross margin reduction. Operating expenses were up 7% year-over-year and flat compared to Q1, versus the prior outlook that indicated Q2 OpEx would be slightly higher than Q1. As Amnon mentioned, operating cash flow was over $300 million in the first half.

This is primarily due to strong cash flow from the core business, However, we’ve also managed tight control over the working capital accounts, particularly balance sheet inventory, which came down by about $90 million in the first half. We’re now well aligned with our 6-month target on balance sheet inventory, and we expect working capital to be more cash neutral in the back half. Turning to the full year guidance. We are increasing the revenue midpoint by 4% and the adjusted operating income midpoint by 14%. On the last call, we noted that the implied step-down in second half 2025 revenue versus the first half did not reflect any specific indication of production weakness, but rather a cautious stance given the elevated uncertainty around automotive tariffs at the time.

Since then, while tariffs remain in place, the actual impact on production and consumer demand appears rather limited and third-party forecasts have risen since April. Our current outlook releases some of the conservatism in Q3 as visibility is high at this point. That said, visibility into Q4 remains more limited as is always the case in July, and we believe it’s prudent to maintain a cautious stance and a wider-than-usual range for that Q4 period. To be 100% clear, the business is performing very well. We are not seeing any tangible headwinds and we’ve not received any indications from customers that Q4 volumes will weaken. We are simply choosing to remain conservative beyond the very near term. Our full year outlook is based on EyeQ volumes of $33.5 million to $35.5 million, up from $32 million to $34 million previously.

As noted above, supervision volumes are running better than expected, and we’re modestly raising the outlook to about 40,000 units at the midpoint versus the prior outlook in the low 20,000. We expect gross margins to be up about 0.5 point year-over-year in 2025. This is slightly worse than our prior outlook, but this is simply due to supervision and China EyeQ being a bit of a higher percentage of revenue. Adjusted operating expenses do not typically flex according to revenue and remain in line with our prior expectations. We continue to expect an increase of about 7% year-over-year to slightly below $1 billion. Looking at the balance of the year, we would expect Q3 to be somewhat higher than Q4, consistent with historical seasonality. Turning to Q3.

We expect to deliver approximately $8.7 million to 9.3 million EyeQ units and for our revenue to be roughly flat on a year-over-year basis. We expect gross margins to be slightly below the Q2 levels and for operating expenses to be seasonally higher in Q3 versus Q2, aligned with previous expectations. Thank you, and we will now take your questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Chris McNally with Evercore ISI.

Christopher Patrick McNally: Maybe we could just double click Amnon your comment around sort of the higher momentum at Chauffeur, maybe a little bit of slow momentum on supervision decision-making. How much do you think this is sort of OEMs having more of a question around their own pricing ability to pass through sort of a Level 2 plus product versus something else. Because I think we’ve all seen this sort of delay in implementation, and there is some fear that we’re seeing these products given away almost for free in China, a lack of clarity, let’s say, for how OEMs would price such a product? I would love your thoughts on that.

Amnon Shashua: I think there is lack of competitive pressure for these systems in Europe and the U.S. You see these systems a lot in China. And in the — outside of China, it’s only the Tesla FSD, and the OEMs have seen the Tesla FSD for more than a decade. So we need more competitive pressure to kind of bring OEMs to a sense of urgency. I think the last news about penetration rates of Tesla FSD are encouraging. It’s more than 25% take rate, and it looks like it’s climbing. So I think the news are good in terms of public interest in these kinds of features and willing to pay for them. But regardless, OEMs are still in planning stage because it’s not only the Level 2 plus, the supervision, there is a Chauffeur. They want to be part.

They want to have skin in the game in robotaxi, not just produced cars, and just sell them to the likes of Waymo and others. They want skin in the game in the robotaxi domain. So it’s all part of planning. There is around ADAS, whether they should — it should take over the front-facing camera or just be a premium product. There’s a lot of planning to do. But the more we deep dive into it. I think that planning phase is coming to a close. So we see a lot of activity by OEMs talking about supervision, but in addition, also surround ADAS and Chauffeur, and with a number of high scalers OEMs also about robotaxi.

Nimrod Nehushtan: If I may add to this I just may add 1 comment. We recently started inviting OEMs to see our Generation 2 supervision system. — which is now operational in various locations and shows our EyeQ6 platform with new technologies, and we’ve seen increased interest and pretty much a lot of excitement by OEMs to see the demonstrations and it’s kind of — it’s another positive momentum around supervision. So it’s not just the competitive pressure is also seeing kind of more evidence to our Generation 2 system and how it performs in the field that now is available, and it’s been some in the past few days and so far, it’s been very successful.

Christopher Patrick McNally: That’s really helpful. And just my quick just follow-up. Is it fair to characterize or power phrase as sort of the flag slide that you showed at December is more of a an implementation delay rather than a full pause on supervision and that you still see supervision as essentially the stepping stone for a lot of these OEM programs into Chauffeur given the software overlap and just obviously additional hardware needed for Chauffeur.

Amnon Shashua: Nimrod start, and I’ll complement if necessary.

Nimrod Nehushtan: No, I don’t think that necessarily we have suggested that supervision is a prerequisite for Chauffeur. I think that what remains true is that, there is a consensus at least from our perspective, amongst OEMs that Chauffeur is a very compelling value proposition for consumers. And as Amnon said in his opening comments, it’s a question of whether or not the technology is mature and at what price and which timeline. And we are making consistent progress not just in Chauffeur directly but also through robotaxi, which is showing a lot more about our robustness and the maturity of our technologies for ISO for no driver, which requires very high precision levels. And the more we’re making progress, the more we are convincing OEMs that this is a technology that is for here and now and not for the next 5 years.

And therefore, we see some OEMs that are considering going straight to Chauffeur. For the, let’s say, 2027, ’28 time frames. So I think what we have learned is that the OEMs are a spectrum of needs and interests and planning strategies. And our strategy is that our products are playing on the complete spectrum of solutions. And so we can offer the entire product portfolio like we with Volkswagen. We can offer parts of it. But what’s important is that we’re progressing towards SOPs towards launching these products in the market, regardless of how OEMs are kind of thinking about their planning. And the more we make progress, the more we can convince them that the technologies are mature, which product makes the most sense for their segments and so on.

Amnon Shashua: Yes, I’ll mention that we have a start of production 2027 with Audi on Chauffeur and it’s on track, and there’s also a number of homologation steps that also we have passed. So as time goes by, the maturity level of this system is now becoming more and more evident and that should bring OEMs to the table and get convinced that the maturity level is good enough to start thinking about the production program for Chauffeur.

Operator: Our next question comes from James Picariello with BNP Paribas.

James Albert Picariello: Just starting with supervision, the guide for 40,000 units, a near doubling of the expectation for the full year. Can you just speak to what’s driving that, how the relationship is trending with ZEEKR? And then just looking ahead, any thoughts on the timing for next year concerning the portionality launches for supervision and Chauffeur.

Amnon Shashua: Yes, we took a conservative stance on supervision volumes for this year. Since then, what we’ve seen is ZEEKR 009 for export markets has been selling more vehicles than we probably expected. Polestar 4 production and end demand has been pretty good as well. I think key here is that any ZEEKR vehicles that are being shipped outside of China are still using the supervision system, which kind of indicates the maturity of our system for kind of non-China markets. But yes, I think it’s just a reflection of kind of conservative start of the year and kind of production of these vehicles running better than expected.

Nimrod Nehushtan: Yes. As for the portion Audi, the standard production is the end of 2026. So the effect on revenue should be seen in 2027. We see 2027 as really an inflection year in terms of revenue, where supervision by Porsche and Audi, and we believe more would come out. Robotaxi will start generating revenue as well, because we are removing the driver mid of 2026, and we have a very strong plan of scalability. So in 2027 is really the inflection year in terms of revenue.

Amnon Shashua: Yes. And if we look at the kind of the consensus expectations for Supervision in ’26, it can be almost exclusively covered by the current vehicles in production.

James Albert Picariello: Got it. That’s helpful. And just my follow-up. In regard to the recent secondary offering, tied in tail stake, how should we think about any future intentions there and the potential time frame?

Amnon Shashua: Dan, do you want to take this and I’ll complement?

Daniel V. Galves: Yes. No, I think Intel shown quite a bit of patience with their stake in Mobileye. They hadn’t sold any shares for 2 years. They still maintain more than 80% ownership. I think they’ve made public comments that they have kind of a very strong view of the kind of the potential of Mobileye and want to participate in that upside. So we weren’t really surprised that they’d want to sell some shares after the next couple of years, but we can’t really speak to any future plans that they have.

Operator: Our next question comes from George Gianarikas with Canaccord Genuity.

George Gianarikas: I’d like to concentrate a little bit on robotaxi. I think you sort of characterized the interest as accelerating from OEMs and deploying your solution. Can you just help us understand a little bit about what you’re seeing in the marketplace, the potential for new wins? And what the competitive set looks like when you’re offering your solution to OEMs?

Amnon Shashua: Well, we have a relationship with the Volkswagen on the ID buzz where MOIA is operator and customer facing. There’s also deals with the Uber regarding this platform. The volume expectation towards the end of the — until the end of the decade is very substantial. There is a hold on with a platform called Mover. We already have prototypes equipped with our system and testing. It should come out 6 months later, also volume productions — projections are very high. In addition, we have relationship with Marubeni. We are working with additional OEMs to supply vehicles both from MOIA and also for Marubeni and hopefully, we’ll be able to update the market soon about additional OEMs. But Volkswagen alone is a very high volume opportunity for robotaxis.

Nimrod Nehushtan: And if I may add to this — sorry. I just wanted to add maybe a little bit more color on what we’re seeing in the market and the competitive environment. I think that there is a — we need to distinguish between the U.S. and Europe in that regard, which are our two primary markets for the first launches. In the U.S., of course, there is Waymo and Tesla that has been making statements about this. Beyond these two, as a technology provider that can provide the full self-driving system, which includes the hardware, the software, AI technologies and so on in a scalable way in a cost-efficient way that we’ll leave enough room for all players involved to generate a profit. We’re seeing Mobileye as kind of a unique company at this stage.

So Waymo and Tesla, of course, have their own business model being vertically integrated at this stage. And for the OEMs that want to basically build a business of producing robotaxis in a serious production fashion, and then sign a business model with the demand generators. We’re the primary, if not the only candidate at this stage at least from what we’re seeing. And in Europe, we are — I think that we are in the pole position in the way. And just recently, the German chancellor took a test drive with the ID buzz vehicles mobilize technology in Germany, which is kind of putting a lot more public attention and some — let’s say, political attention into enabling robotaxis in Europe. In that sense, being partnering with Volkswagen is hugely beneficial for our interest.

George Gianarikas: Okay. Just as a follow-up, can you just — on the robotaxi does help us maybe understand a little bit more about the business model opportunity, the price per system and also particularly the potential for you to participate in the revenue per mile as you deploy these systems and if that can be replicated across OEMs.

Amnon Shashua: Yes. So we receive revenue for the system and we received also recurring revenue or the cost per mile. We have both. Maybe in the future, we could reduce the cost of the system and add more in terms of the contribution of per mile, but even the current setup is very good in terms of the revenue potential, the recurring revenue potential over time.

Operator: Our next question comes from Dan Levy with Barclays.

Dan Meir Levy: Wanted to just first start with a question on the near-term EyeQ shipments. And maybe you could just give a bit more color on where the strength is coming in from, and specifically, the trends within China, which had obviously been quite weak in 2H. But it seems like the last couple of quarters has been pretty good. What’s the right run rate to think of now from China, both from the domestics and from the multinationals there?

Amnon Shashua: I can start on that. So I mean, I think from a kind of from an overall comment, it was difficult to analyze the EyeQ volume growth the last year or, so because of some disruptions on inventory in China, now you’re starting to really be able to analyze it. So in Q2, if we adjust for inventory digestion last year, volume grew around 13% year-over-year in Q2 for EyeQ volume. And our top 10 customers were minus 3%. So significant growth over market. If you look at the Q3 outlook, it’s for growth around 5% year-over-year. Our top 10 customers are minus 2. So this kind of comparison to our top 10 customers, it’s starting to show up as kind of very favorable for us. On China, the China business has been running better.

We did slightly over 1 million units in the back half of last year. We did — we thought we would do around 1 million in the first half. That was the outlook. We did more like 1.5 million. So there was some upside there. We’re not assuming that type of volume for the back half, just because we don’t have as much visibility and we want to stay conservative. but it does look like that’s a fairly stable run rate for us. But yes, I think overall, the revenue outperformance has been pretty broad-based. If you look at kind of all of our top 10 customers, for most of them, there was at least a bit of outperformance. It added up to a bigger number. There was outperformance in China, there was outperformance in supervision. So it’s all pretty broad-based.

Dan Meir Levy: Okay. Great. The second question is, as you’re ramping on your efforts in Drive, I wanted to get a sense of the type of resource allocation. And I go back to the CMD you had last year where I think you gave the pie chart of your spend, 11% of your spend is on Drive. It seems like your efforts are accelerating here. Can you just give us a sense of how extensive the resource requirement is on Drive and what this could do on the OpEx in the next couple of years?

Amnon Shashua: Well, our OpEx grew substantially in 2023, also grew in 2024. We see the OpEx as more or less flattish in the coming years. That means all the growth to prepare for Drive and Chauffeur and supervision to the transition from Tier 2 to Tier 1 on some of the programs like with the Porsche and Audi. All of that account for the growth that we have already experienced. So we don’t see a substantial growth in the near future in terms of OpEx growth.

Operator: Our next question comes from Samik Chatterjee with JPMorgan Chase.

Unidentified Analyst: This is MP on for Samik Chatterjee. So I just wanted to double click on the Imaging RADAR deal, which you did during the quarter. And like how should we think about the size of that particular business? And like will you be open to doing more similar deals in the future where you will be selling individual components other than full systems? And I have a follow-up.

Amnon Shashua: Yes. So the imaging radar for us is a strategic sensor. The deal we had with that particular OEM is just for the sensor. It’s a very reputable OEM, and we thought that this would drive credibility, because the RFQ phase was very lengthy and all competitors of imaging radars participated and our radar was shining through. So we sold it as a separate sensor, but we do not expect to do that in the future. It’s part of the bundle of eyes off systems on Chauffeur and Drive, for example, the ID bus has 5 of our imaging radars as a front-facing imaging grade and corner imaging radars. And we believe that all future Chauffeur programs will have our imaging radar, because it allows you to get the speed that you need in terms of highway driving.

You need to see hazards very far away, more than 150 meters away and the sensor that we have can do that in a very high resolution and high dynamic range and it’s simply an enabler for eyes off systems at scale. So it’s part of a bundle. We don’t see it as another source of business as a sensor business.

Unidentified Analyst: Okay. Got it. And another question which I had was regarding the 2027 ramp. So you will be ramping on supervision Chauffeur and Drive in that year. Any way to understand like which will be the biggest driver of those? And how will you rank out of those opportunities in ’27?

Amnon Shashua: So we have the 2027, the Chauffeur and supervision. We mentioned in the past as more than 19 car models coming out with those systems. We’re not yet ready to make a guidance for 2027. In terms of Drive there is a significant plan of expansion to multiple cities starting from end of 2026, both in Europe and in the U.S. So it should drive substantial growth. We’re not at a position to put a dollar number to it right now.

Daniel V. Galves: Exactly. But I think what’s new here is that we do now expect Drive to be a significant contributor in 2027, and that’s a reflection of the confidence we have in commercial deployment during — sometime during 2026…

Operator: Our next question comes from Vijay Rakesh with Mizuho Securities.

Vijay Raghavan Rakesh: Just a quick question on supervision. Obviously, a nice upside here. You raised 40,000 from ZEEKR Europe. And sort of how Calendar ’26 should shape up in terms of units for supervision, especially some of the newer ramps, and I have a follow-up.

Amnon Shashua: We’re not really ready to talk about specific expectations for 2026. Like I said, we’re essentially kind of marking to market the end production of the vehicles that have supervision today. This still doesn’t include any U.S. volume for Polestar 4. They did start producing that vehicle in Korea. So there’s a tariff in Korea from vehicles produced in Korea, but it’s not 100% like it is from China. So they should be able to launch in the U.S., and we think that, that will create some growth for next year as well. The export volume of ZEEKR has been probably a little bit better than expected this year. We would expect that to grow a bit next year as well. So it should be some growth in ’26 from the existing vehicles, and we’ll have more to say about kind of the overall supervision volumes like when we get to 2026.

Vijay Raghavan Rakesh: Got it. And then on the — just a quick housekeeping question on the inventory side. I know EyeQ, you raised from like midpoint of $33 million to like $34 million here. So definitely seeing some improvement. But if you were to look at the inventory level, just to — I know it’s tough because every OEM has a different inventory level. But if you normalize that, how does that inventory level compare now towards last quarter or last year, just to get some idea of where the levels are.

Amnon Shashua: Do you want to start Nimrod?

Nimrod Nehushtan: Yes. So I don’t think that we can disclose like the inventory levels that the OEMs are keeping themselves as like the safety stock. But in general, we’ve been in line with what is a — we can consider modest compared to historic periods. So the way we are kind of analyzing this is in multiple ways, we have direct information coming from our Tier 1 customers, that they get direct information from their OEMs. We also cross-reference this with third-party analysis on the vehicle — the overall industry vehicle production compared to our sales. And so we keep a very close track of this. And we are — we’ll keep our eyes on this on a weekly basis.

Amnon Shashua: Yes. No, I think that’s right. We — the finance and sales teams have done a great job of kind of developing tools to as well as kind of direct feedback from the Tier 1s and everything looks like it was pretty flattish from the end of 2024 until now.

Operator: Our next question comes from Adam Jonas with Morgan Stanley.

Adam Michael Jonas: Thanks, everybody. So Amnon I’m just looking at your CapEx here, $28 million for the first half of the year. If I annualize that, that’s obviously down substantially year-on-year. But even if it’s flat, and I think consensus has you guys spending around $100 million, maybe $110 million this year. Your CapEx is basically not moved. It’s declined over a number of years, and it really makes Mobileye stand out as for a physical AI hard tech company really in the thick of so many exciting programs, collecting data, growing the fleet, how do you do it? Like where is your CapEx spending on compute? How much compute do you have? Because it would strike me that your compute needs and therefore, your AI CapEx needs would somehow scale, at least proportionate to the amount of data that you’re feeding into your simulation and data centers.

And so tell me where I’m wrong there. Why — how are you able to do it? Or is your message, we just don’t need compute like others and that guys like Elon and Jensen are wrong? And then I have a follow-up.

Amnon Shashua: Well, we need compute. We have compute both on-prem and also on the cloud. Our cloud spending has slightly reduced in — and I cannot reveal those numbers, but it’s in the tens of millions, a large number of tens of millions. And in favor of on-prem, more GPUs. But we have a different philosophy on how to spend money on compute than what you hear from our competitors. And — we have very good systems, very good performance. Our EyeQ6 generation, our generation 2 supervision and Chauffeur and Drive is really top-notch. If you look at our drive vehicle, there are more than 100 ID. Buzz. There has been a lot a lot of demonstrations to journalists, both in Europe and also in the U.S., as [indiscernible] mentioned just last week, the Chancellor of Germany drove the ID Buzz. Performance is very, very good. And we know how to train the models in a way that is more efficient.

Adam Michael Jonas: Okay. Appreciate that. As a follow-up, what is your simulation stack? What does it look like? How much synthetic data are you using to reduce costs for training on edge cases, because that also seems to be for the problem that you’re solving, and we talked about humanoid, but even in autonomous cars, very, very important. Love to hear your views there.

Amnon Shashua: Yes, it’s a very good question. When we think about simulation, there are two types of simulation. There is a photorealistic simulation. We used photorealistic simulation in order to simulate age cases, for example, putting a car on the road.

Nimrod Nehushtan: Amnon, you went on mute.

Adam Michael Jonas: Just when it was getting good.

Nimrod Nehushtan: Were trying to reconnect them. I think you dropped out. So we just need to reconnect him.

Amnon Shashua: There are two types of simulation. One is photorealistic in order to emulate edge cases. Say you have a cart falling off from a truck on the road, right? These things — you don’t need to wait until you find them in the physical world. You can put them in a photorealistic simulator, and we have very powerful photorealistic simulators. Another type of simulation is to simulate the driving policy. This is a piece of technology. Maybe we’ll talk about it more at next year’s CS that we developed, it’s kind of, we call it ACI, artificial community intelligence, where we have a simulator, not a photorealistic, a synthetic simulator simulating hundreds of road users over billions of miles of simulation. We run billions of miles overnight.

And we use that in order to train the driving policy. So that amount of compute that you need there is way below the amount of compute if you would train it on photo realistic simulations. And it’s much more efficient. So those are the two types of simulations we use.

Operator: Our next question comes from Shreyas Patil with Wolfe Research.

Shreyas Patil: Maybe could you guys talk about the typical lead time between securing awards and surround ADAS and launching programs? I believe it’s typically 2 to 3 years. So given the timing of the new ADAS standards in Europe, which I think is 2028, that would suggest OEMs need to secure contracts in the next 12 to 18 months. So is that the kind of time line we should be thinking about, in terms of potential awards?

Daniel V. Galves: Yes. So when we’re talking about Western OEMs, a time line is typical 2 years — 2 to 2.5 years from nomination to startup production.

Shreyas Patil: Okay. That’s helpful. So if the standards are coming on in 2028, it would suggest they would be needed to secure these awards in 2026, something like that?

Daniel V. Galves: Yes. Nimrod, do you want to add?

Nimrod Nehushtan: Yes. I think the majority of the RFQs that we have and we have RFQs with multiple OEMs, and the majority of our customers are engaging with us in this solution. These are things aimed for ’27, ’28 SOPs. So that’s the current plans that we’re seeing.

Shreyas Patil: Okay. And then on robotaxis, there are a large number of AV developers in the space and some of the rideshare operators such as Uber are striking agreements with multiple players for their platforms. So curious how you gain confidence in the number of vehicles that Mobileye will be supporting either on an Uber or a Lyft type of platform.

Amnon Shashua: Nimrod, do you want to take this?

Nimrod Nehushtan: Yes. I think that — first of all, it makes sense for companies like Uber, who face pressure and questions from investors about their strategy for robotaxis as a potential threat for their business to maximize their chances of being one of the winners in this space. I think that we’re at the beginning of the adoption curve. And longer term, we believe that winning solutions will be the most cost efficient, geographically scalable with the highest performance, highest availability rates and we believe that our products are inherently with the pole position in the axis. And so today, there might be some announcements and statements with pretty much everything that can be a potential contender but we think that within not a lot of time, it will — there will be a separation between a very selected few companies that will have advantages in these economic scalability, geographic callability, the availability of the service and the others.

Because if you think about this, we’re still not at the stage of even thinking about, for example, how many charges they need to do per day for the vehicle. It doesn’t play any factor. And our system is roughly 20% in power consumption compared to Waymo’s. So these are just small things that today don’t play a role, because it’s still a question of can you do it or can’t you do it? We’re at the cusp of getting to how well can you do it, how efficiently can you do it? And our system is designed to be excelling in these parameters. So that’s where we get the confidence that ultimately, we will be 1 of these 2, 3 companies that will see the highest volume of robotaxi services.

Operator: Our next question comes from Joe Spak with UBS.

Joseph Robert Spak: Maybe just sticking on Drive and robotaxi line. If you could — you give us some things here on sort of what commercial deployment looks like you have to finalize the vehicle, then there’s [indiscernible] and there’s the remove the driver in ’26. So I was wondering if you could add any more color in terms of maybe where you first see that happening, in U.S. or Europe? And then — and also like maybe how much input do you really have here in terms of things such as the size of the geofence, the number of vehicles, like when the drivers actually moved? Like what — how does that relationship with your partners work?

Amnon Shashua: The leading partner is Volkswagen ADMT division. And we have a very tight cooperation. We work very well together. The driver would be removed in the first city, it will be in the U.S., I’m not at liberty to say the name of the city. but it’s — there is very concrete plans in terms of how the driver would be removed, the design of the tele operators. We have a very unique design of tele operators that allows for scale. So going from, say, 1 teleoperator per vehicle to quickly going to 1 to X, 1 operator for X vehicles to scale that very fast using technology, certain cloud computing technology that will enable us to scale it. And it’ll start in middle 2026 with that first city in the U.S.

Joseph Robert Spak: Okay. And then the second question is, there was a report this morning that Volkswagen is looking for capital at their autonomous unit and offering a minority stake in the subsidiary that they’re searching for strategic or financial investors. Like, I’m not asking you to comment specifically on that potential offering. But is a strategic investment in a partner something Mobileye would consider here as you look to scale drive.

Amnon Shashua: Yes. I think it’s a very good development. I think also, Google did that for Waymo, even though Google has deep pockets and confront Waymo without any external funding. I think it’s a very good development we supported, and we will seriously consider also participating as an investor. Maria, this will be our last question, the next one coming up.

Operator: Okay. Our next question — our last question then is from Colin Rusch with Oppenheimer.

Colin William Rusch: Given the leverage that you’re seeing off of the compound platform. Can you talk a little bit about the cadence of learning that you’re seeing, put some metrics around it, potentially talk about the reduction in hallucinations that you’re seeing in the system at this point?

Amnon Shashua: Yes. We don’t have hallucinations. Hallucinations is a metric for large language models. What — our KPI is mid time between failure. and that is very important in Drive because that’s the only way to remove the driver that you reach an which corresponds to very strict KPIs, and we are on track. All the indications are that by the end of this year will be at the [indiscernible] that will enable to remove the driver. And then for the next 6 months until we actually remove the driver, would be working on the teleoperation technology and then start removing the driver. But all our KPIs for MTBF and other safety measures are all on track.

Colin William Rusch: And just the last one here is around potential for reduction on cost of the perception suite. As you look at not only your own internal reduction in cost, but sourcing other elements. Can you talk about how quickly you can start driving some cost out of the system as you get into ’27, ’28 and start seeing some incremental volumes ramp up?

Amnon Shashua: Well, the cost of our system, we are talking about Drive. The cost of our system is already very lean. We have cameras, which doesn’t cost much. We have our ECO with 4 EyeQ6 high, it doesn’t cost much. We have imaging radars, which we produce, it’s hundreds of dollars overall. We have LADARs that are supplied by Innovis, also very reasonable cost. If you look towards the end of the decade, there is a possibility with just having 2 layers of redundancy cameras and the imaging radars and reducing the number of LADARs or reducing LADARs altogether. But this is something that’s too early to say. That could be another cost reduction. Another cost reduction towards the end of the decade is moving from EyeQ6 to EyeQ7 — that will be another element of cost reduction, but it’s not really a very meaningful cost reduction. But we are already starting with a very lean cost platform.

Operator: We have reached the end of our question-and-answer session, and I would now like to turn the floor back over to Mr. Galves for closing comments.

Daniel V. Galves: Thanks, Maria, and thanks for everyone — thanks to everyone for joining the call. We will see you again at the Q3 earnings call in October. Thank you very much.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.