Arbe Robotics Ltd. Ordinary Shares 2026 Q2 Earnings Call

Good day to all of you, and welcome to Arbe's conference call to discuss the results of the second quarter of 2026. Before we begin, I'd like to remind all our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings press release also pertains to this call. If you have not received a copy of the release, please view it in the investor relations section of Arbe's website. Today, we are joined by Ram Machness, Arbe's CEO, co-founder and co-president, and co-founder, and Karine Pinto-Flomenboim, Chief Financial Officer. Following management's formal remarks, we will open the call to the question and answer session. With that, I'd now like to hand the call over to Ram Machness. Ram, please go ahead. Thank you, Kenny.

Good morning, everyone, and thank you for joining us to review Arbe's second quarter 2026 results. I am pleased with the solid progress we made in the second quarter. Our strategy of focusing on broader markets for our radar technology with high demand and more immediate revenue potential is clearly delivering results. We grew our revenue by meeting our customer demand for immediate solutions using our technology, and we started to see the positive impact of our reduced expenses on our bottom line. Today, I will go through the main development of the quarter. Our biggest step forward in this quarter was in the defense and homeland security market. A leading global defense and homeland security integrator selected our technology for three projects. We signed a framework agreement, and as we progress, we expect to add more projects over time.

In a short turnaround time, we shipped complete radar systems from our own production line for their immediate operational needs. Our radars are used to a part of a defense and homeland security markets in many unique ways. They are used in fixed installations and vehicle-mounted systems at both short and long ranges. These multiple use cases demonstrate how our versatile radar platform technology can support different needs. The project of Fortera, a supplier of autonomous systems with the U.S. Department of Defense, continues to progress. Our tier 1, Sensrad, supplies Fortera with high-definition imaging radar built on our chipset, and that radar is integrated into Fortera's auto drive perception suite. It helps the vehicle recognize its surroundings, detect obstacles, and navigate unstructured contested environments where GPS do not work.

More broadly, we see further strong demand for our radar technology with multiple defense and homeland security channels for various applications, we have shipped out systems for further evaluation. Many of these opportunities have significant business potential. Furthermore, since our product is clearly addressing multiple urgent operational needs, we see an effort by our potential customers to reduce cycle times towards full integration and deployment in the field. Beyond defense, we also continue to make progress in other broader radar applications. Sensrad, a Tier 1 supplying imaging radar based on our chipset for defense and commercial applications, announced a new collaboration with VirtuRail. Sensrad announced that VirtuRail is now integrating the radar into its automated service vehicles for underground tunnel construction. We continue to supply chipset to Sensrad, supporting its customers, Forterra, Tianyi, and Rockit.

Arbe is also directly engaged in other non-automotive programs at various stages of evaluation, including a number of potential applications with unmanned ground vehicles and other applications. In those applications of unmanned ground vehicles, the image coming from our high-definition imaging radar is so rich that it is possible to drive based only on the radar output. With regards to our activities in the automotive market, last quarter, we focused follow-on orders from a global robotaxi player for our Phoenix radar systems. Phoenix scales to give full 360 degrees sensing to support Level 4 autonomy. During the second quarter, we showed further progress, and our radar systems were integrated into their vehicles. I'm pleased to say that these vehicles have now started on-road trials. We continue to engage in active bid processes with additional robotaxi players with very positive feedback. Turning to China. HiRain, our Tier 1 in China, is leading supplier in this market and offers a portfolio of radar systems built on our chipset.

In December, we announced that HiRain's radar, built on our chipset, was selected for a Level 4 program with a large Chinese automaker. During the quarter, we continued to ship chipsets to support this customer. HiRain advised us that they are now progressing towards the start of production, which is planned in the next few months. Alongside the high-end 48x48 system, HiRain is developing a second lower spec platform based on our chipset. This platform has 24x12 channels at a lower cost point for a wider range of vehicles. These two platforms give us a direct path into the Chinese market, which is the largest and fastest-moving market for Level 2 class and Level 3 vehicles.

HiRain is also competing and undergoing due diligence in other meaningful RFIs and RFQs for the radar product portfolio based on our technology. This involves evaluation and fit price. We are closely supporting HiRain with all these evaluations as they progress through various stages of selection. We also continue to make steady progress with global OEMs. OEMs are actively testing advanced radar solutions with the goal to update their sensing suite to support higher Level of autonomy. We feel that we are in good position as Arbe is regarded as the leading ultra-high-resolution radar provider for Level 3 autonomy and above, at a lower enough cost that will allow for a proliferation of our technology to high volume programs at various OEMs. Let me take a few words on our revenue growth this quarter before we go into the numbers.

While still modest, this trend is in the right direction. Our sales this quarter grew on three fronts. We sold more chipsets to our tier 1s, we sold radar systems into defense and civilian programs, and we earned revenue from engineering and development work for our customers. This revenue mix shows that our new strategy of end market diversification is gaining traction. Some of the systems that we sold are being used by our integrator partners to compete on various projects. Any wins by them will potentially translate to significant revenue down the road. Previously, Arbe was just an automotive chipset supplier with many years between a design win and a program maturing to full production. Today, we are supplier of both chipsets as well as complete end-to-end radar systems with much shorter cycles.

With our focus on driving end market with urgent need, we sell directly to customers who need our product now. This lets us generate revenue in the near and medium term. We're still competing for the automotive OEM programs with their long-term significant revenue potential. At the end of 2025, we also announced steps to lower expenses and enhance operational efficiencies. Indeed, we have leveraged AI to automate many processes and lower our costs. We have reduced our costs base by about 15% for first quarter level, and we expect to see the full effect by the third quarter, where our cash burn is targeted to fall to below $7 million per quarter due to the expected lower expenses and revenue growth.

We ended the quarter with around $42 million in cash on the balance sheet. Given our expected reduced quarterly burn rate, we believe we have a sufficient runway to fully execute on our strategy. Looking back, our first half of 2026 reflects the early stages of this transition. We expect meaningful growth in the second half of the year into 2027. Karine will share our detailed outlook shortly. With that, I'll hand over the call to our President and Co-Founder, Kobi Marenko. Kobi, please go ahead. Thank you, Ram.

Good morning, everyone. As we announced, this is the last quarter with Arbe for Karine, our Chief Financial Officer. Karine has served in that role for close to five years. During that time, she built our finance organization, led much of our fundraising, and managed our reporting as a public company on two exchanges. On behalf of the board, the management team, and everyone at Arbe, I would like to thank Karine for all that she has done for the company and to wish her much success in her next role. Karine's last day with Arbe is today. During the transition period, I will temporarily oversee our financial functions together with the team. I am also pleased to share that Assaf Pereg will join Arbe as our Incoming Chief Financial Officer, effective August 30, 2026.

Assaf brings close to two decades of financial leadership experience with both Nasdaq-listed public and private technology companies in Israel and internationally. He joined us from Ibex Medical Analytics Ltd., and previously held finance role at Nano Dimension, Aquarius Engines, Become Technological Solutions, and Cyberint. We look forward to welcoming him on the team. With that, let me turn the call over to Karine to review her last financials.

Thank you, Kobi. Hello, everyone. Let me review our financial results for the second quarter of 2026 in more detail. Revenue for the second quarter of 2026 totaled $0.7 million, compared to $0.3 million in Q2 2025. This was our third consecutive quarter of revenue growth. Backlog as of June 30th, 2026, was $1 million. Gross loss for Q2 2026 was around breakeven, compared to a gross loss of $0.2 million in Q2 2025.