Innoviz Technologies Ltd. (NASDAQ:INVZ) Q4 2022 Earnings Conference Call March 1, 2023 9:00 AM ET
Rob Moffatt – Vice President-Business Development and Investor Relations
Omer Keilaf – Chief Executive Officer
Eldar Cegla – Chief Financial Officer
Steven Schondorf – Chief Engineer-ADAS systems-Ford
Conference Call Participants
Mark Delaney – Goldman Sachs
Jared Maymon – Berenberg
Andres Sheppard – Cantor
Kevin Cassidy – Rosenblatt Securities
Welcome to Innoviz Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this call is being recorded.
It is now my pleasure to introduce your host, Rob Moffatt, VP Business Development and IR of Innoviz. Rob, you may begin.
Good morning. This is Rob Moffatt, Vice President of Corporate Development and Investor Relations at Innoviz. And I want to welcome you to our earnings conference call. Joining us today are Omer Keilaf, Chief Executive Officer; and Eldar Cegla, Chief Financial Officer. Following their opening 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, I would like to remind you that our discussion 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 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 20-F filed with the SEC on March 30, 2022.
I will now turn the call over to Omer. Please go ahead.
Thank you, Rob. And good morning, everyone and thank you for joining us. I’m excited to provide another update on the progress we’ve been making at Innoviz. This has been a fast-moving quarter with our steady march towards 2023 production, new additions to our pipeline, expanding our order book with existing customers, and something I am particularly excited about is our special guest today, Steven Schondorf, the former Chief Engineer of ADAS systems at Ford who has recently joined us as a senior strategic advisor to the company. And that’s just on the automotive side. On the non-automotive side, we hit important milestones with the unveiling of the Innoviz 360 at CES in January and the addition of non-automotive distributors since our Distributor Summit last November.
With that said, let’s start things off with a quick update on our march towards 2023 SOP. This continues to be a key focus of our company right now. It is something we’ve been working towards for over five years, and we are excited to be so close to achieving it. Both of our 2023 launches, the BMW program and the Shuttle program, are on track, and we are making solid progress towards their volume ramp, which should come in the back half of the year. You can even see a nice photo here of one of our test vehicles doing some final winter testing, getting ready for the launch.
And while we are discussing our existing customers, I wanted to let you know that we are currently under discussions to expand our existing commercial agreement with Volkswagen, to design-in InnovizTwo on additional platforms beyond the one that has already been communicated. Our initial production win with Volkswagen was awarded in 2022 and was for one meaningful platform with multiple brands and multiple models within the Volkswagen Group. The expansion that is currently being discussed would be in addition to the earlier award and would potentially bring our InnovizTwo LIDAR to one to two new ADAS and autonomy platforms with multiple vehicle models that were not initially designed to include a LIDAR.
Overall, we are on track for a mid-decade launch. Expanding our order book with one of our largest customers will validate a key component of our long-term investment thesis. We believe that once you are on the shelf with an OEM, it becomes easier and easier for them to select you for additional programs, as LIDAR becomes more widely utilized and adopted across their entire vehicle footprint. This therefore has the potential to set the stage for years, if not a decade or more of growth with each new OEM we win.
This is why we view the world through the lens of OEM share. We believe that winning a first platform reduces the friction and makes it much easier to win additional business. And as those of you who are close to the automotive industry know, OEMs like Volkswagen have many platforms for us to potentially be added to. And with that opportunity for growth ahead of us, we announced earlier this week that we are expanding our Munich office and growing our footprint in Germany. We are doing this because we believe there is a long pathway for additional growth for us in Germany and Europe beyond the customers we already have.
For investors that are interested in learning more about our relationship with the Volkswagen group, I want to highlight a very important industry event coming up soon. EcoMotion is one of the most important platforms in the smart mobility space, and the much-anticipated EcoMotion Week conference will be held in Tel Aviv in May. As part of that event, I invited Gero Kempf, the Executive Vice President of ADAS and autonomous driving at Audi to come by our headquarters for a visit and to join me for a fireside chat at the EcoMotion conference. In that conversation we will talk about our partnership and will give listeners a better anticipation for where our engineering and joint effort is going.
Moving to our RFI and RFQ pipeline, we had some exciting new growth in our pipeline during the quarter, including the addition of what I can describe as a multi-million unit RFI from a brand you will be very excited, and potentially surprised about. That’s all I can say about the customer at this point, but we are obviously excited for the addition, and the entire team will be working hard on it over the next year.
One of the trends that’s worth pointing out is the fact that RFI and RFQ order sizes, even for small- and mid-sized car companies appear to be trending higher over time, with RFI’s increasingly coming in at the millions of units level instead of tens- or hundreds- of thousands of units. We believe this reflects planned install rates moving higher, and some OEMs increasingly exploring LIDAR as standard equipment, especially on higher-end vehicles.
The second trend that we are seeing is that there is also a little bit of an uplift with some OEM’s exploring true Level 4 programs, utilizing multiple LIDARs per vehicle, as opposed to a single forwardfacing LIDAR in the Level 2+ and Level 3 programs. It’s still very early in both of these trends, but I believe that the developments in our pipeline give a decent look into where this industry is ultimately going to go.
Looking at the pipeline in total, we are disclosing it in the 10-15 program range. Since we described it as 11 on the last call and just mentioned a few additions, you can infer that our RFI and RFQ program count is currently at the higher end of that range. Most of these programs are for Level 2 to Level 3 light vehicle programs, though there are a few that are Level 4. There are also several that are commercial truck programs and shuttle or Robotaxi programs as well. But the majority of programs are for light vehicle automotive, especially when looking at things from the volume perspective.
The majority of the programs are also with new customers. In fact, only two of the programs are expansions with existing customers on the left-hand side of this graph. So, the majority of these RFI and RFQs could represent entirely new footholds with new customers for us to grow our long-term penetration.
To help put out the opportunity into context, we are providing additional information to size the scope of the pipeline. We took the customer information on requested volumes and our expectations for anticipated ASP’s and added a layer of conservatism on top of those numbers.
If you sum the total of the proposals, it is over 20 million LIDAR units. In fact, the high end has the potential to be well north of that. And we anticipate that the value of the pipeline is multiple times larger than the current forward-looking order book.
Another important factor is now that we became a Tier 1, we have the opportunity to quote for more meaningful NRE’s. And many of you have heard us talk about this a lot. For those who may be newer to the Innoviz story, NRE stands for non-recurring engineering. It is cash that we receive before production begins for engineering, design and other services that we provide. Sometimes it is recognized as revenue, and sometimes it is recognized as a contra item to costs, but either way it is a cash payment that can be meaningfully finance our business. In the automotive world we are typically designed-in roughly three to four years before the vehicle launches, and during that period the project gets funded primarily through NREs.
These services are mostly performed by our existing staff. This means that they have the potential to offset our existing costs meaningfully, offering a very high flow-through from a profit and cash perspective, and they come on earlier, before the start of production. So, NRE’s can be an important part of funding the company ahead of the production volume inflection. And that’s why securing NRE’s is such an important part of our overall strategy.
For the majority of the programs in our pipeline, we are seeking potentially meaningful NRE’s. Summed across the current pipeline, the total NRE’s that we are negotiating for is in the $150 to $250 million range over the next three to four years. If we can achieve this, it will be an important part of our financial trajectory and our long-term path towards breakeven. We’ll talk more about our near-term projections for NRE when we get to our 2023 outlook shortly.
But to summarize, and as you can see from this slide, there is a lot of deal activity going on right now, particularly in the automotive space. We continue to believe that the majority of OEM market share is likely to be awarded in this year and our goal is to exit 2023 as the clear leader in automotive LIDAR.
Given how deep our focus is on the automotive industry and the unique opportunity that we have to capture the market leading position in LIDAR, I am excited to share that we added a pre-eminent industry executive as a senior strategic advisor. Steven Schondorf recently retired from his role as the Chief Engineer of ADAS systems at Ford.
In that position, he served as Ford’s internal subject matter expert on everything ADAS-related. He was responsible for evaluating many early-stage technologies, and he built the company’s system architecture and overall product strategy, including features like Ford’s BlueCruise hands-free driving system, which has reached millions of customers. Importantly, Steven isn’t just an Engineer with 30 years of automotive experience and 60 patents under his belt, but he has a tremendous ability to also think strategically and drill down on a business case centered around profitability and growth. We are excited to be able to bring his experience, expertise and deep industry relationships into Innoviz.
I’ll hand it to Steven for a quick introduction and some thoughts on the LIDAR industry from an OEM’s perspective.
Thank you, Omer and to the whole Innoviz team. I’m really excited to be working with Innoviz, a clear early market leader in an industry that has significant exponential growth ahead of it. Omer asked me to say a couple of words on the importance of LIDAR in Level 3 systems from an OEM’s perspective, and talk about the things we’ve done together since I’ve begun working in my advisory role.
Autonomous driving is an incredibly complex problem to solve. Human eyes and brains are much more sophisticated than any camera and compute system available for cars. The world’s driving infrastructure has been designed with these capabilities in mind. It hasn’t been designed for computers and robots to succeed.
Most people trying to design autonomous systems want as many sensing capabilities as possible to deal with the trickiest edge and corner cases. These are expensive endeavors that autonomous teams are engaged in, and time is of the essence. It doesn’t make sense to over constrain your team and jeopardize the ultimate success of your system by limiting the amount of sensory input. Of course, they have to consider the overall system cost, but most people I’ve talked to and read about are focused on using cameras, radar and LIDAR to attack the problem. I’ve been working with Innoviz for three months now and I’ve just returned from my first onsite visit in Israel.
My mission is to help evolve Innoviz’s strategy and to accelerate their path towards being the best Tier 1 direct supplier in the LIDAR space. I already had a positive view of Innoviz’s technology and expertise before I started working with the company, otherwise I wouldn’t be here. But my recent trip to their facilities in Israel expanded and confirmed those impressions.
In the last 15 years I’ve met many suppliers working on amazing technologies, some mature and some cutting-edge. Success depends on good technology, strong leadership, a highly skilled team and the right mindset. Innoviz has all of those. The team is top notch with amazing potential. I’ve had the opportunity to get a much closer look behind the curtain, and I feel strongly that the company is at the head of the pack from a design and technology perspective.
The design is robust, the manufacturing process is well-considered, and the strategies they have in place will take them far. So, thank you for the opportunity to work with you and the team Omer, and for giving me a chance to speak with your investors as well.
I look forward to working together. I’ll hand it back to you.
Thank you, Steven. Having someone who can bring the mindset of an OEM more directly into the company will be a valuable asset for Innoviz going forward. Now, moving from the automotive side to a product that’s aimed more at the non-automotive world, I’m very proud of the work that our innovation team has done over the past year to turn the Innoviz 360 from an idea into a reality.
We first announced the intention to develop the Innoviz 360 at the 2022 consumer electronics show, setting an ambitious goal to launch it the following year in 2023. It’s hard to explain how ambitious of a goal this was, going from a concept to a working sample with such exceptional performance and such a compact design in only one year. And honestly, the final month before the show involved a lot of late nights making final tweaks ahead of its unveiling to the world. But as always, the Innoviz team put in the work and came through to meet the deadline.
This product is aimed largely on the non-automotive side of the industry, with very strong use cases across commercial trucks, heavy machinery, shuttles, rail, smart cities, logistics, and maritime industries.
We have heard directly from customers in these industries that there is a major opportunity for disruption here for new solutions with automotive grade specs and automotive scale price points. We are still in the product’s early days, but we believe there is an opportunity to become a meaningful disruptor in the 360 space.
And on the price side, the Innooviz360 design leverages many hardware advances from InnovizTwo, including a single laser, single detector, and ASIC, and will benefit from the economies of scale, as the products will share many of the same components – particularly the highest cost components. This means that as InnovizTwo is produced at automotive volumes in the coming years, the 360 could be very rapidly become both a performance and price leader in the non-automotive space.
And while we are on the non-automotive space, I wanted to give a quick recap of the distributor
summit that we hosted in November and previewed on our third quarter earnings call. This was our first-ever, four-day long summit focused on industrial and non-automotive distribution channels.
The event was a big success, with nine distributors joining us at our headquarters in Israel, coming from across Asia, Europe and North America. We educated them on our technology, armed them with our marketing tools, and introduced them to our ordering and logistics platform.
We’ve prepared a short video to highlight the event.
As you can see from the video, leveraging distributors is an important part of our go-to-market strategy. It’s a lower-cost way to amplify the efforts of our sales staff, expanding our reach in non-automotive quickly and without meaningful increases to our headcount and fixed costs. The event was also a catalyst for additional meetings at CES and one-on-one interactions with additional distributors afterwards. These engagements are the first step in building out our distribution channel.
As we’ve said before, 2023 will be an important year for our growth in the non-automotive market, and we are making progress in building the partnerships and the overall foundation for success in the coming years.
Now, before moving to our 2023 targets, I wanted to offer a recap of our original 2022 goals and
remind you where things shook out for the year. In the bubbles on this slide, you can see where we finished the year versus the original goals that we have set for ourselves at the onset.
In terms of pre-production programs, we came into the year targeting 10, and we finished the year at 14. In terms of automotive design wins, we came into the year targeting one, and we finished the year with two including Volkswagen and the Asian EV-focused OEM we announced in September.
And in terms of the forward-looking order book, we originally targeted a 30% increase, and we blew that number away with a 165% increase, thanks in large part to our Volkswagen win. Wins like that offer a good reminder of how much large automotive contracts can move the needle for a company our size.
Looking at this slide, you can see that we set ambitious targets, and we over delivered on what we said we would do.
With that said, let’s take a look at our 2023 goals. Our top goal for the year is to bring in at least two new series production awards with all-new customers. As we said earlier in the call, and as we hope to prove by expanding our relationships with Volkswagen, we believe that winning a new OEM gives us a foothold for a relationship that we can expand with a customer for years to come as LiDAR-based Level 2+ and Level 3 and eventually even Level 4 become increasingly common.
We are also targeting at least one to two additional program awards from existing customers. If we can secure additional platforms, we believe we can offer firm evidence that validates this key aspect of our long-term investment thesis. For the full year 2023, we are targeting $12 million to $15 million of revenue, more than double the 2022 base.
In addition to that, and related to these goals, is our target to achieve $20 million to $40 million of new NRE bookings in 2023. Internally, this is how we are running the business. With our primary focus on winning additional programs and securing substantial NREs, in order to help drive revenue growth going forward.
We see tremendous opportunity for growth in both the near and the long-term. As we noted when reviewing the pipeline, we believe there’s a total pool of roughly $150 million to $250 million of NREs across the 10 to 15 programs that are already in the pipeline, with most of those deals offering NREs in the $10 million to $50 million dollar range each.
NRE’s are an important indicator of our performance because each deal we take across the finish line would offer meaningful growth for our top-line from the 2023 base and could rapidly accelerate the rate at which we compound our top line once the new programs enter the production phase. Securing the NREs could also play a major role in funding our business. Many of the services within the NREs will be performed by our existing engineering headcount. The revenues would largely go to offset existing fixed costs, offering a very high flow-through that could materially extend our cash runway.
And lastly, every deal that we win is a deal that’s no longer available for a competitor. When we look at our pipeline, we can see that the bulk of early OEM share in the LiDAR space is going to be decided in 2023, with nearly every major global OEM likely to have given an award by 2024.
Make no mistake, this is a land grab, and given that these contracts can last for 8 to 10 years, like our Volkswagen and BMW contracts, we believe this is an opportunity to lock up early automotive LiDAR market share not only for years to come, but possibly the next decade or more.
And that is why we are so deeply focused on winning new deals and securing additional NREs. One more point that I will make before moving on is that NRE’s are typically only available in large amounts to Tier 1. This was a huge part of our logic to shift from a Tier 2 to a Tier 1. Not only does this move give us more direct control in the bidding process, it also gives us the opportunity to secure more meaningful pre-production revenues, which can be an important part of our medium-term financial trajectory.
With that, I’ll turn it over to Eldar to go over the financials.
Thank you, Omer, and good morning, everyone. Before going too deep into the financials, I first wanted to take a moment to give an update on our unit sales from the fourth quarter. As you remember, our third quarter revenue was impacted by the move of our company headquarters and the associated downtime of our calibration and testing lines.
At the time of our third quarter call, we communicated the volumes were recovering nicely into Q4. I am pleased to announce that units sold were up an impressive 170% from 3Q and 164% versus the fourth quarter of last year. And when looked at on the full year basis, units were just shy of doubling, coming in at growth of 99%. These numbers highlight the impressive progress we have made over the last year on the manufacturing side as we ramp up our capabilities ahead of our SOP launches later this year.
Moving to the 2022 financials. Starting with cash, we ended 2022 with approximately $186.2 million in cash, short-term deposits, short-term restricted cash and marketable securities on the balance sheet. Our largely matured cost structure and our operating cash outlays remained mostly stable during the quarter and were in-line with our 2022 budget.
Moving to the income statement, revenues in 2022 came in at $6 million, compared to 2021 revenues of $5.5 million, representing a growth of 10.2% year-over-year. The difference between the unit volume growth of 99% and revenue growth of over 10% comes from the non-repeat of 2021 machinery and other revenues, coupled with the natural decline in ASPs as we pivot from sample unit pricing to production-level pricing for our largest customers.
This phenomenon is likely to continue into 2023 as we move towards full production with the BMW program and our shuttle program. For the BMW program specifically, we will transition from selling full LIDAR sample units to selling components to Magna, who will in turn manufacture the components into LIDARs for BMW. To help put this into context in very broad strokes. A sample unit can often sell in the $5,000 to $10,000 range, whereas at production-level volumes components are sold below $1,000.
Naturally, these lower ASPs should be offset by higher unit volumes, which should begin in the back half of 2023 as volumes ramp. That said, trough revenues should occur in the first quarter of 2023, with each consecutive quarter thereafter looking stronger as those volumes come on, with the bigger inflection expected in the back half of the year.
While there are a lot of moving parts here, it’s important to look at the overall picture. Even with the headwinds from ASPs, we expect the step-up in volume growth to be a meaningful net positive with revenues more than doubling to the $12 million to $15 million range for the year.
Moving further down the income statement. On the cost side, operating expenses for 2022 were $124.6 million, a decrease from $152.6 million in 2021. 2022 operating expenses included $19.3 million of share-based compensation compared to $64.7 million in 2021. The year-over-year decrease in operating expenses was primarily due to lower levels of share-based compensation, partially offset by an increase in headcount, InnovizTwo development costs, depreciation and amortization costs, and facilities costs.
Research and development expenses for 2022 were $95.1 million, an increase from $93.3 million in 2021. The year included $12 million attributable to share-based compensation compared to $25.5 million in 2021. In conclusion, we grew our revenues, delivered a record number of units to our clients, improved our manufacturing throughput and made meaningful progress on the march towards SOP with the BMW and shuttle programs launching later this year. We believe there is a strong momentum in the automotive space we can leverage on. And with mature products at hand, we can generate additional revenues from Non-Automotive segment.
And with that, I will turn the call back to Omer. Thank you very much.
Thank you, Eldar. I have just one housekeeping item before we transition over to Q&A. As we’ve indicated in the past, we’ve had some customer pushback on communicating changes to the forward-looking order book in real time as deals are announced, as this can be a source of competitive intelligence. So, going forward in 2023, we are going to transition to communicating the total new order amounts, including NRE awards, annually, on our year-end call.
I just wanted to flag that change in advance. As you’ve already heard today, 2023 is going to be a big year for Innoviz with multiple milestones. The entire team is excited for the year ahead and we have our heads down, focusing on our SOP launch and converting as many customers from the pipeline into the order book as possible.
With that, I’ll turn the call over to the operator to take us into the Q&A.
Thank you. [Operator Instructions] Our first question today comes from the line of Mark Delaney with Goldman Sachs. Please go ahead.
Yes. Thank you for the updates and appreciate you taking my questions. I was hoping to start first with the NRE commentary. You spoke about a target of $20 million to $40 million of NRE bookings in 2023. If the company were to achieve that, is that bookings something that will be recognized over several years or mostly in 2023? And should we think of that mostly as coming in as revenue or [indiscernible] cars you said it could vary.
Sure. I’ll start and let Eldar continue. Generally, every program, which when we are quoting, we’re not only quoting for this price or the tooling cost we also include a big part of NRE, which is fund activity. This is traditionally paid across the program, from denomination time to the SOP. So, we expect it to be paid in the course of the program, which is roughly three years to four years related to the recognition of the knowledge.
So the recognition goes based on the milestones that we meet. So, if we potentially win a program this year with NREs, and there is a certain milestone that will converge this year, it means we will recognize this part of the NRE and this will be – if it will be recognized and revenues, it’ll be on top of the target that we mentioned.
Maybe the fact, I do want to add fact that we’re now talking about the NRE. We realized that we overlooked this part, which is quite meaningful to our business. Having this we are now still one importing one programs, that NREs become very meaningful and as you can imagine $20 million to $40 million report those, I would say the target from those $10 million to $15 million could be eventually on a recurrent year-over-year, could be a very meaningful base to our funding.
That’s good. And maybe to round that discussion out, I mean, trying to think through gross margin in 2023, you talked about shifting from selling some full samples to providing components. Perhaps there’s some NREs coming in that are contract COGS. So, when you think about some of those factors, what are some of the implications for gross margin? I realize you’re not giving specific gross margin guidance, but do you think you can cross into positive gross margins at some point in 2023, and perhaps maybe be positive even on growth margin for the full year?
I think we should see improvements in gross margins. I don’t want to give guidance on whether or not we become positive, but we do expect better gross margins on the overall year outlook.
Okay. And then one last one for me, on the last call you spoke about one to three OEM decisions taking place over the next six months. Maybe you can just update us on how those have been progressing? Have any of them been decided and how do you think this is doing? Thanks.
No, we’re still pending for several decisions. It’s very difficult to really give an accurate estimate of when things happen. So this time I’m trying to refrain from doing that. But we are working toward several decisions and we hope that and we’ll feel positive about them and that will strengthen our order books and NRE.
Thank you, Mark.
Our next question today comes from the Jared Maymon from Berenberg. Please go ahead.
Hey, good morning guys. Thanks for the update, Omer, Eldar, and Steven, good to meet you. Happy to hear you’re taking the expertise from Ford, and going to help out the guys at Innoviz. That’s great. I guess just, so two questions for me, kind of high level stuff. First one’s on China. So there’s obviously been a few Chinese competitors in the news recently, one for, IPO footprint expansion, and then the other one for production ward with a subsidiary of a global OEM. So, I guess maybe for Omer, just wondering if your view has kind of changed on the threat of Chinese competitors at this point, especially in the mass market segment. So maybe the right way to frame this question up is, have you seen these guys more often in procurement with the ADAS and purchasing teams of global OEMs? And then is there anything you think Innoviz can do or is already planning to do to better you’re out in the Asian market, or take the fight to China beyond the recent production award with the Asian based OEM?
Yes, great. I’m happy you asked question. So actually, when talking about non-Chinese OEMs, we currently do not see the China-based ladder companies competing. My assumption is based on the fact that the requirements that we’re seeing are far, much higher than the solutions that are offered by them. And I assume this is a big part of why we not competing on that.
On the other hand, we just had a visit of our China team from China visiting Innoviz for the first time after three and a half years. It was a good opportunity to catch up and I would say reinstalled our position or strategy in China. InnovizTwo in a way solves many of the difficulties we had in the past. InnovizOne when competing on different programs, we got very good feedback from customers that were actually quite impressed by the product.
But from the competitive landscape in China, it was decided to be too expensive. We think in second part was, the success of our production line is not in China. And those were the two topics that in a way made it a bit more difficult for us to win business in China. Now that InnovizTwo is so significantly cheaper and so significantly better. And also, we are targeting a production line in China with InnovizTwo that opens up that opportunity all over again. So we are revisiting our activity in China with InnovizTwo and we are hoping for a great success there.
Got it. Great. Thanks, Omer. And then second one, actually you are going to open this up nicely with the requirements commentary. But just I guess there’s been some talk recently on kind of the use case of level three both from the silicon guys and then some of your competitors in LiDAR as well. And kind of on the use case of traffic genesis [ph] versus the full level three highly autonomy system and whether or not each is useful in their own right.
That said, one of your competitors recently said publicly and largely unopposed that your technology won’t be able to deliver level three highway autonomy at 130 kilometers per hour. So I’m just wondering, can you kind of talk about the programs that you have with BMW, Volkswagen, [indiscernible] based OEM and what’s being targeted both by the OEMs and the platform partners you’re working with on those contracts?
Well, definitely. Yes, I would say, innovative technology is currently providing really the higher than say requirements in many ways. We are seeing today our size, and our excuses [ph] in a way are copied from our data sheets. And we are happy to set the barrier for the rest of the market. I can go very long and I’m happy that we actually, I did have a session workshop where I introduced level three requirements and explain very well how 80 miles an hour or 130 kilometers an hour are possible through a different certain specification of the LiDAR, which is one to one with the requirements that InnovizTwo is providing.
And actually if you go one by one, you’ll see that all of our parameters are meeting that and exceeding it. The other companies that have mentioned that is actually far below that. And I’m surprised by their comments, and I’m happy that they raise that question. When we are working with car companies and in their target to reach 130 kilometers an hour, they are setting very clearly the requirements they have for the frame rate. We are operating it at 20 frame per second, as I understand they operate at 10.
Frame rate is a very important element in the reaction time that the car would have. And I would say that this is a very huge advantage that Innoviz able to provide. Other than that, the very uniform resolution of 0.05 degree resolution across the field of view with a very wide vertical field of view, which is nearly for different driving scenarios. It’s something that Innoviz is capable, while the other solution is not. So I definitely believe that Innoviz is actually the one that is capable in providing those specifications while the rest are not. And I’m happy to direct anyone for the white paper I wrote on the matter. I’m happy to find any challenge from anyone on that. Very glad.
Thank you. Our next question today comes from the line of Andres Sheppard from Cantor. Please go ahead.
Hey Eldar. Hey Omer. Good morning or good afternoon, I should say. Congrats on the quarter and thanks for taking our questions. I just wanted to maybe get a little more clarity on the revenue guidance for 2023, right, so I see that $12 million to $15 million. So just to maybe understand that is predominantly comprised from and please correct me if I’m mistaken here, but is predominantly comprised of the revenues from the BMW partnership and the shuttle program, both of which will begin ramping up with startup production in the second half of this year. Is that correct?
It’s partially correct. Of course, the shuttle program and the BMW program have a significant part of our revenues for this year, but we have additional expectation from the market that we are operating as well as non-automotive opportunities that we are selling into. So it’ll be a mixture.
Okay. Got it. But I guess what I’m wondering is, it’s probably going to be a little bit more weighted on the second half of the year, right?
That’s correct. That’s correct.
Okay. Thank you. That’s helpful. And maybe just a quick follow up is – just remind us again where things stand with your capital needs, right, so total liquidity is about $186 million. What is the expectation that gets you through? Is that through SOP or is that into 2024? Have you talked about that?
So, of course it’ll allow us to get to SOP and even beyond that. I would also say that our expectation this year is to win additional programs that will actually allow us to subsidize our activity in a meaningful manner. If you add the two launches that we have this year, the sale to an automotive that will grow also over next year and then at least that will going to collect from the different car companies we will – we believe that it will help us into funding the activities in all going forward.
Got it. And sorry, maybe if I could squeeze just one last one. You mentioned today that you are in conversations with Volkswagen to potentially explore additional opportunities from that relationship. So I guess if I ask bluntly, what does that mean, right? Is that for other vehicles? Is that for other another one of your products? Maybe just help me understand what that means exactly?
Sure. We were nominated for a platform where we collaborate with Volkswagen and CARIAD, where this platform is going to sell different brands and different vehicle. This design includes the single LiDAR and different other sensors and the computing platform, et cetera. There are two other platforms that possibly would include more than one LiDAR and possibly a different set of other sensors and computing platform. It’s a different platform that was decided recently to include also the LiDAR to reach the Level 3 – Level 2+ to Level 3. And having follow that decision there are discussions between them and us about the way that Innoviz could possibly supporting parallel these multiple integration platforms and allows them to launch with the LiDAR.
Obviously, if you look at our original older book from the first win, it does not reflect the entire opportunity of Volkswagen. Volkswagen is a very big car company, and eventually the opportunity of that we hold behind this group, potentially bigger than the first platform. And we also see us growing into the Volkswagen in a more meaningful way.
Understood. Very, very helpful. Thanks again and congrats on the quarter. I’ll pass it on.
Thank you, Andres. Our next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Please go ahead.
Yes, thanks for taking my question. And thank you for having this update. Just to expand on those last question see, for moving to a different platform, when you’re saying there are other sensors, are there, is it more LiDARs or you’re moving into other types of sensors?
No. Not a different LiDAR. I’m just saying eventually this platform is designed to serve, it’s a different platform that we were awarded to which is actually launching without the LiDAR initially, and now they want the decision to include LiDAR. Generally, I’m not aware of the other sensors of the today, there’s no LiDAR there. It’s a different platform that we need to integrate into. That’s what it means.
Okay. Great. Thanks. And it looks like 2023 is going to be a critical year as you’re pointing out, there are 15 more bids happening.
That’s what, like that…
Yes. Maybe, as you’re looking at this, that some of your competitors will probably fall off the pace and, what is your view of, as you’re clearly got some major wins and we’ll survive, but would you be interested in acquiring these other companies as they fall off the pace for their technology or even maybe their customer base?
Not necessarily. I mean, obviously we believe that the, our technology is currently winning the market. And we are very; we believe there is a long path for what we’re doing. And as you can see, we continue to develop new technologies such as the Innoviz360. If there will be a technology that we will find as interesting, we might look at it. And right of now we are very much fitting would say content, the right word with the technology that we are building ourselves.
Okay, understood. Thank you.
Thank you. That concludes the question-and-answer session for today. Would you like to add closing remarks?
Well, as Kevin said, it’s a very exciting year for us, like every year and we are excited – to think that will come along. And we know that we can’t also, we always start the year and we find out more opportunities that becoming, that exciting as they although the cost – year that we’re not even aware of. And I’m very pleased of where Innoviz is today and I have very good confidence that we continue to grow and success. Thank you for joining our Innoviz.