Mobileye Global Inc. Class A Common Stock 2026 Q3 Earnings Call

Thanks, Sam. Hello, everyone, and welcome to Mobileye's Third Quarter 2026 Earnings Conference Call for the period ending September 26, 2026. Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it, including regarding our future financial outlook. 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 CEO and President, Moran Shemesh, Mobileye CFO, and Nimrod Nehushtan, Mobileye's EVP of Corporate Strategy. Thanks, and now I'll turn the call over to Amnon.

Thank you everyone for joining. Mobileye delivered a strong third quarter with results driven by high demand for our EyeQ solution. Looking at year-to-date trends, revenue was up 8% year-over-year, adjusted operating income up 42%, and operating cash flow was over $300 million. We once again raised our full-year guidance. The revenue outlook is now 3.5% above original expectation, and adjusted operating income is about double the original outlook, supported by good cost discipline and the R&D incentive we discussed in detail last quarter. The driving force on the revenue side is EyeQ shipment volume, which has exceeded expectations all year and is significantly outpacing global production trends. While global automotive production through Q3 has declined slightly on a year-on-year basis, our shipments are up 11%. We expect full year 2026 EyeQ shipments to grow about 10% at the midpoint versus 2025.

We're doing very well with our top 10 customers, with volume expected to grow 7%, even as those OEMs aggregate vehicle production declines 5%. Chinese OEMs are also choosing Mobileye to support their rapid emerging market expansion, adding more than 1 million units and four percentage points to our overall growth rate. We expect emerging markets ADAS penetration to be a key tailwind over the next few years. One relatively new tailwind is that Chinese OEMs expansion into Latin America and South Asia with vehicles that come standard with ADAS is driving legacy OEMs to increase ADAS fitment rates in these markets as well. Additionally, India remains a high volume growth market in the near future, given new regulations and strong consumer demand for safety, as we have discussed in the past. Looking toward 2027 through 2030, our growth opportunity within ADAS has two reinforcing drivers.

ADAS reaching more vehicles and Mobileye delivering more value in each vehicle. Rising fitment rates support unit growth, while broader adoption of our software and systems capabilities create the path to higher content per vehicle. That is the multi-year opportunity beyond this year's shipment performance. In the next generation of high-volume ADAS systems launching over the next few years, technology product features trends support higher Mobileye ASPs and a greater share of system costs as our core customers grow their reliance on Mobileye for intelligence, safety, and scale. Our customers appear to be pursuing higher function ADAS along two parallel paths. First, low-cost highway hands-free functionality targeted at high-volume mass market vehicle platforms. Mobileye technology is part of the most first-generation L2+ systems on the road today.

We actually have content on the majority of vehicles produced in North America and Europe in 2026, but often just as a front camera perception supplier. As OEMs target lower cost and better hands-free availability in the second generation, Mobileye's role is expanding to include components like surround camera vision, crowd-sourced intelligence through REM, driving functions, driving monitoring, and automated parking. Three OEMs have chosen our Surround ADAS solution based on EyeQ6 High, including Volkswagen, Mahindra, and a large U.S. OEM. A faster to market alternative to Surround ADAS is adding REM to an existing EyeQ6 Lite program to support Level 2+ functionality. We announced the first instance of this with Stellantis early in Q3. Since then, two additional OEMs have chosen this solution, including one top 5 automaker from Asia and another top 10 OEM from Japan. The Stellantis program has expanded to include European platforms.

Taken together, these Surround ADAS and REM selections demonstrate adoption of our platform beyond front-facing camera perception. They show two routes to greater content per vehicle, supplying a broader system or adding software and mapping capabilities to an existing EyeQ program. As these programs enter production, that expanded role creates a path to higher ASP. The second path is the development of higher functionality point-to-point systems similar to Tesla FSD that go beyond highways and arterial roads and support hands-free driving on diverse road types, either supervised or unsupervised. Our main thrust into this market is with the EyeQ6H-based SuperVision and Chauffeur product expected to be launched with VW Group in 2027 and 2028. While SuperVision is nearer term and an important proof point, Chauffeur is particularly notable as there are few, if any, high-volume consumer Level 3 vehicles on the road today.

The customer continues to see this product as an industry first and a critical unique selling point for their launch of a flagship vehicle in 2028. REM, our road intelligence engine, crowdsourced from about 8 million vehicles, is worth a specific call-out as market traction has really accelerated in the last two quarters, even into some of the multi-supplier point-to-point development programs announced recently. Two points to make here. As OEMs begin to realize the challenge of building a good demo into a vehicle system that can be validated across millions of miles of road types and environments, they are realizing the value of data-driven road intelligence like REM. They are also realizing that REM can substantially improve availability of hands-free systems on various road types. Secondly, Tesla recently called out their own efforts to use crowdsourced data to serve the same purpose as REM, something previously they claimed not to.

Road intelligent databases like this cannot be duplicated without tremendous scale, which is why automakers are coming to Mobileye for that function. Turning to robotaxi, our self-driving system integration with various partners made meaningful progress this quarter, with several milestones noted in the press release. It is encouraging to see these efforts move to a pre-scaling milestone on our path to driver-out performance. Beyond our capital-light self-driving system supply efforts, we continue to see value in building the capability to participate across the entire robotaxi value chain. Our rationale for broader participation through our own vertically integrated solution is to accelerate the deployment of our self-driving system and capture more of the value it enables, not to pursue fleet ownership for its own sake. We have made significant progress in multiple areas. We have integrated Moovit's rider experience and fleet orchestration stack, and initial testing is underway in Tel Aviv.

We have multiple options for a vehicle platform and are currently negotiating an option that allows for rapid scaling after initial commercialization. Roles and responsibilities of the vehicle builder, the upfitter, Mobileye, and operations are complex and need to be planned in parallel. We expect vehicle build to kick off at the beginning of 2026. We see advantages in an expanded role in the value chain as it can lead to more rapid validation and software update cycles and enable us to make fast decisions on the hardware stack. For example, our own stack will rely heavily on our imaging radars as a redundancy to cameras, enabling us to reduce lidar content in anticipation of the next cost reduction wave that can drive scale into the future. Turning to Mentee Robotics, version 3.2 of the robot is now operational and performing well.

The next version, V4, is in the final stages of design with a production-ready architecture shaped by continuous feedback between AI development and hardware design. Mentee's differentiated approach combines a simulation-first development pipeline and advanced AI. Synthetic data, imitation learning, and reinforcement learning enable the robot to develop agile, human-like movement and sophisticated perception and manipulation capabilities. Our simulation environment continuously generates challenging scenarios, allowing the team to train and improve the robot in situations that are difficult to reproduce using real-world data alone. At the task level, an agentic AI architecture combines vision language models with specialized robot policies to break down complex tasks, execute them as sequences of skills, and verify successful completion. Overall, Mobileye's foundation remains solid. Demand for our technology is outpacing production at our top 10 customers, while Chinese OEMs continue to choose our solutions for export markets.

Over the course of 2026, we have seen a meaningful uptick in traction for advanced Level 2+ systems that indicate higher ADAS content per vehicle in the future. I now turn the call over to Moran.

Thanks, Amnon. Before I begin, please be aware that all my comments on profitability will refer to non-GAAP measurements. The exclusions in Mobileye non-GAAP numbers are typically amortization of intangible assets, which is mainly related to Intel's acquisition of Mobileye in 2017, and stock-based compensation, including the partial offsetting impact of the R&D incentive law we introduced with our second quarter results in July. For 2026, as discussed previously, we are also excluding the goodwill impairment loss that occurred in the first quarter and transaction costs associated with closing the Mentee acquisition, which was also a Q1 event. Third quarter revenue of $492 million compared to $504 million in Q3 2025. This decline of approximately 2% was better than the 5%-2% decline we had guided to.

Volume was up 3% year-over-year in Q3, but with a higher mix of Chinese OEM shipments, which carry less software content and therefore lower pricing. Chinese OEM mix alone drove year-over-year ASP down about $1. Two factors drove these modestly better results. The first was volume. At 9.5 million EyeQ units, we landed at the high end of our 9.3 to 9.5 million unit outlook, extending a trend we've seen all year of EyeQ demand running a bit ahead of what we expected coming into 2026. Three things are behind this. One, our technology is being adopted faster than our top 10 customers are growing their production. Two, Chinese automakers are preferring Mobileye to support their push into export markets, especially non-Western markets like Latin America, South Asia, and Eastern Europe.