Arbe Announces Q1 2024 Financial Results

Rhea-AI Summary

Arbe Robotics (NASDAQ: ARBE) announced its Q1 2024 financial results. Revenues dropped to $0.1 million from $0.4 million in Q1 2023. The company reported a negative gross margin of 194%, down from a positive 11% last year. Operating expenses increased to $12.5 million, leading to an operating loss of $12.8 million and a net loss of $12.8 million. The company ended Q1 2024 with $5.4 million in cash and $30.3 million in short-term deposits. Major highlights include collaboration with leading OEMs, integration with NVIDIA's Omniverse Cloud APIs, and progress towards dual listing on the Tel Aviv Stock Exchange.

The company expects 2024 revenues to be similar to 2023, with growth anticipated in 2025 as they ramp up production. The adjusted EBITDA loss for 2024 is projected to be between $30 million and $36 million.

Positive

• Collaboration with leading OEMs and integration with NVIDIA's Omniverse Cloud APIs.
• Nearing full automotive qualification for chipsets and advancing towards volume production.
• Progress towards dual listing on the Tel Aviv Stock Exchange to enhance trading volume.
• Arbe remains debt-free with $5.4 million in cash and $30.3 million in short-term deposits.
• Projections indicate revenue growth in 2025 with a ramp-up in production.

Negative

• Revenues dropped significantly from $0.4 million in Q1 2023 to $0.1 million in Q1 2024.
• Negative gross margin of 194% compared to a positive margin of 11% in the previous year.
• Operating expenses rose from $10.7 million in Q1 2023 to $12.5 million in Q1 2024.
• Operating loss increased to $12.8 million from $10.6 million in Q1 2023.
• Net loss surged to $12.8 million compared to $9.9 million in Q1 2023.
• Adjusted EBITDA indicates a projected loss of $30 to $36 million for 2024.

Financial Analyst

The financial performance for Q1 2024 reflects critical challenges for Arbe Robotics. Revenues dropped to $0.1 million from $0.4 million in Q1 2023, showcasing a significant decline. The negative gross margin of -194% compared to a positive 11% margin in the previous year underlines severe operational inefficiencies. These inefficiencies seem to be compounded by increased operating expenses, which rose to $12.5 million from $10.7 million primarily due to non-cash share-based compensation.

The operating loss surged to $12.8 million from $10.6 million in Q1 2023, reflecting not only higher expenses but also a minimal revenue stream. This extended to an increased net loss of $12.8 million compared to $9.9 million the prior year. While the cash and cash equivalents of $5.4 million and short-term deposits of $30.3 million provide some liquidity cushion, the absence of debt doesn't entirely mitigate the financial strains suggested by these quarterly results.

For retail investors, the immediate financial outlook appears bleak, with projected EBITDA losses between $30 million and $36 million. However, the company's goal to ramp up production by the latter half of 2024 and anticipated revenue growth in 2025 offers a silver lining. Investors need to weigh potential short-term struggles against these future growth prospects.

Tech Expert

Arbe Robotics is pushing forward with advanced radar technology, critical for autonomous driving and ADAS systems. Their chipset, integrated into the HiRain LRR610 radar, positions Arbe at the forefront of high-definition radar solutions. Noteworthy is NVIDIA's inclusion of Arbe's Perception Radar in its ecosystem for autonomous systems, highlighting the technology's relevance and potential industry impact.

The radar’s capability of tracking pedestrians and vehicles in adverse conditions aligns well with the new NHTSA safety standards. Moreover, the integration efforts with Horizon Robotics' AI processor reflect a strategic move to enhance their technological footprint in the autonomous driving landscape.

While the technical milestones are promising, the path from development to widespread adoption and revenue realization is complex. Investors should consider the timeframes for mass production and the substantial financial investments required to bring these solutions to market.

Market Research Analyst

Arbe Robotics is strategically positioning itself within the high-growth market for autonomous driving solutions. The selection of their technology by a global leader for a robotaxi fleet, scheduled for 2025, underscores the long-term potential. Additionally, their involvement with top-tier OEMs and key players like Magna and Sensrad indicates strong industry recognition.

The dual listing on the Tel Aviv Stock Exchange (TASE) aims to enhance trading volume and liquidity, which could positively impact investor sentiment. However, the significant decline in Q1 revenues and the adverse gross margin might delay the expected market traction. The need for consistent revenue generation and prudent cash management will be critical as they advance towards full production in 2024's latter half.

For retail investors, while the mid-to-long-term prospects look robust given the market trends and technological advancements, immediate financial risks and uncertainties necessitate cautious optimism.

TEL AVIV, Israel, May 22, 2024 /PRNewswire/ -- Arbe Robotics Ltd. (NASDAQ: ARBE) ("Arbe"), a global leader in Perception Radar Solutions, today announced financial results for its first quarter, which ended March 31, 2024.

 

Key Q1 and Recent Company Highlights:

• A global leader in autonomous driving selected the HiRain LRR610 radar, powered by the Arbe chipset for its robotaxi fleet scheduled for mass production in 2025.
• Arbe's finalized chipsets, which are nearing full automotive qualification, are advancing to volume production, with our Tier 1s actively completing the radar hardware and software for design validation tests and preparation for serial production.
• During the first quarter, we actively supported leading OEMs in their evaluation and RFP/RFQ processes in collaboration with our Tier 1s: Magna, HiRain, Weifu, and Sensrad. We believe the demand for high-channel count solutions is widespread across the board, and the Arbe solution is recognized as the radar with the largest channel array by leading OEMs.
• A large Japanese automotive client is working to complete a massive data collection initiative with Arbe radar solution this year, as part of the development of an advanced ADAS/AD architecture.
• NVIDIA has brought together a select group of advanced digital sensors from industry leaders, including Arbe's Perception Radar, to create a rich ecosystem of simulation tools and applications as part of the Omniverse Cloud APIs, designed to accelerate the path to autonomy.
• Horizon Robotics, the premier provider of computing solutions for ADAS and AD, presented the integration of Weifu's 4D Imaging Radar, powered by the Arbe chipset, with Horizon's Journey 6 Automotive AI processor, as part of their partner ecosystem at the 2024 Beijing International Automotive Exhibition.
• Arbe's technology provides the leading solution for tracking pedestrians and vehicles in challenging weather and lighting conditions. We believe this capability is crucial for meeting the requirements of the NHTSA's new federal safety standard, which mandates automatic emergency braking (AEB), including pedestrian AEB, for all passenger cars and light trucks by September 2029.
• HiRain achieved a significant milestone by successfully developing state-of-the-art post-point cloud algorithms, including clustering, tracking, classification, and free space analysis, for its LRR610 radar powered by the Arbe chipset. These innovations have been piloted with leading OEMs, showcasing their potential impact on automotive safety.
• Arbe is in the process of dual listing on the Tel Aviv Stock Exchange (TASE) to enhance trading volume. Concurrently, the company is advancing towards a convertible bonds issuance on the TASE, to secure sufficient working capital and to support Tier 1s, customers, and anticipated production ramp up in 2025.

"In the first quarter, most leading OEMs progressed towards selecting high-definition radar systems leveraging a high channel count chipset. This validates the indispensability of our technology for safe, hands-free driving," stated Kobi Marenko, Chief Executive Officer. "We are proud to offer a pivotal sensor that empowers OEMs to adhere to the latest NHTSA safety standards, enabling crucial AEB functionalities and advanced safety features such as night-time pedestrian and vehicle detection."

First Quarter 2024 Financial Highlights

Revenues for Q1 2024 were $0.1 million, a decrease from $0.4 million in Q1 2023. Backlog as of March 31, 2024, was $1.0 million.

Negative gross margin for Q1 2024 was 194%, compared to positive gross margin of 11% in Q1 2023, mainly related to a reduction in revenue as well as an increase in our workforce.

Operating expenses in Q1 2024 were $12.5 million, compared to $10.7 million in Q1 2023. The increase in operating expenses was primarily driven by an increase in non-cash shared-based compensation expenses. Research and Development increased, from $8.1 million in Q1 2023 to $9.4 million in Q1 2024, mainly related to non-cash shared based compensation expenses. Sales and Marketing expenses increased from $0.9 million in Q1 2023 to $1.5 million in Q1 2024, related to the share-based compensation increase and an increase in labor cost. General and Administrative expenses remained at the same level in both Q1 2023 and Q1 2024 at $1.6 million.

As a result, our operating loss in Q1 2024 was $12.8 million compared to $10.6 million loss in Q1 2023.

Net loss in Q1 2024 increased to $12.8 million, compared to a net loss of $9.9 million in Q1 2023. Net loss in Q1 2024 included $45 thousand of financial expenses, compared to $0.7 million of financial income in Q1 2023. Financial expenses in Q1 2024 included exchange rate revaluation expenses partially offset by interest from deposits and warrants revaluations. Financial income in Q1 2023 mainly related to favorable exchange rates and interest from deposits.

Adjusted EBITDA, a non-GAAP measurement which excludes expenses for non-cash share-based compensation and for non-recurring items, for Q1 2024, yielded a loss of $8.5 million, similar to a loss of $8.4 million in Q1 2023.

Balance Sheet and Liquidity

As of March 31, 2024, Arbe had $5.4 million in cash and cash equivalents and $30.3 million in short term bank deposits with no debt.

Outlook

• Our goal of achieving 4 design-ins with automakers remains unchanged, as we observe continued strong interest in our market-leading offering.
• We have strengthened our position in all our RFQ engagements, even though the OEMs shifted their decision timelines from late 2023 to 2024.
• The 2024 annual revenues are expected to be in line with those of 2023, followed by revenue growth in 2025. These revenue projections are based on the intention to be in full production in the second half of 2024, as well as our decision to exclusively focus on getting our chipset into production.
• We are committed to maintaining a strong and well-managed balance sheet, focusing on cost-effectiveness and the ability to fund our revenue growth. Adjusted EBITDA for 2024 is projected to be in the range of ($30) million to ($36) million.

Conference Call & Webcast Details

Arbe will host a conference call and webcast today at 8:30 am ET. Speakers will include Kobi Marenko, Chief Executive Officer, Co-Founder and Director, and Karine Pinto-Flomenboim, Chief Financial Officer. The Company encourages participants to pre-register for the conference call here. Callers will receive a unique dial-in upon registration, which enables immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.

The live call may be accessed via:

U.S. Toll Free: (844) 481-3015
International: (412) 317-1880
Israel Toll Free: (80) 921-2373

A telephonic replay of the conference call will be available until June 5, 2024, following the end of the conference call. To listen to the replay, please dial:

U.S. Toll Free: (877) 344-7529
International: (412) 317-0088
Access ID: 4712793

A live webcast of the call can be accessed here or from Arbe's Investor Relations website at https://ir.arberobotics.com/news/ir-calendar. An archived webcast of the conference call will also be made available on the website following the call.

About Arbe

Arbe (Nasdaq: ARBE), a global leader in Perception Radar Solutions, is spearheading a radar revolution, enabling truly safe driver-assist systems today while paving the way to full autonomous-driving. Arbe's radar technology is 100 times more detailed than any other radar on the market and is a critical sensor for L2+ and higher autonomy. The company is empowering automakers, Tier-1 suppliers, autonomous ground vehicles, commercial and industrial vehicles, and a wide array of safety applications with advanced sensing and paradigm changing perception. Arbe, a leader in the fast-growing automotive radar market, is based in Tel Aviv, Israel, and has offices in China, Germany, and the United States.

Cautionary Note Regarding Forward-Looking Statements

This press release and any statements made at the conference call and webcast referred to in this press release, contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The words "expect," "believe," "estimate," "intend," "plan," "anticipate," "may," "should," "strategy," "future," "will," "project," "potential" and similar expressions indicate forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to effect on the Israeli economy generally and on Arbe's business resulting from the terrorism and the hostilities in Israel and with its neighboring countries including the effects of the continuing war with Hamas and any further intensification of hostilities with others, including Iran and Hezbollah and the effect of the call-up of a significant portion of its working population, including Arbe's employees; the effect of any potential boycott of Israeli products and business; the effect of any downgrading of the Israeli economy and the effect of changes in the exchange ratio between the US dollar and the Israeli shekel; Arbe's ability to generate firm orders from the Tier-1s who are incorporating its chipset in the radar products they are marketing to automobile manufacturers; the success of Arbe's Tier-1s to market and sell product that are based on its chipset; Arbe's ability to raise funds on terms that are acceptable and do not have a negative impact on the stock price; and the risk and uncertainties described in "Cautionary Note Regarding Forward-Looking Statements," "Item 3. Key Information – D. Risk Factors" and "Item 5. Operating and Financial Review and Prospects" in Arbe's Annual Report on Form 20-F for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (the "SEC") on March 28, 2024, as well as other documents filed by Arbe with the SEC. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements relate only to the date they were made, and Arbe does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.

Information contained on, or that can be accessed through, Arbe's website or any other website or any social media is expressly not incorporated by reference into and is not a part of this press release.

 

CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
	March 31, 2024	December 31, 2023
Current Assets:	(Unaudited)	(Unaudited)
Cash and cash equivalents	5,131	28,587
Restricted cash	260	163
Short term Bank deposits	30,304	15,402
Trade receivable	856	1,258
Prepaid expenses and other receivables	2,198	2,026
Total current assets	38,749	47,436
Non-Current Assets
Operating lease right-of-use assets	2,034	1,740
Property and equipment, net	1,263	1,309
Total non-current assets	3,297	3,049
Total assets	42,046	50,485
Current liabilities:
Trade payables	1,681	1,149
Operating lease liabilities	543	436
Employees and payroll accruals	3,061	2,916
Accrued expenses and other payables	1,015	1,710
Total current liabilities	6,300	6,211
Total current liabilities
Long term liabilities
Operating lease liabilities	1,622	1,306
Warrant liabilities	763	875
Total long-term liabilities	2,385	2,181
SHAREHOLDERS' EQUITY:
Ordinary Shares	*)	*)
Additional paid-in capital	249,807	245,733
Accumulated Deficit	(216,446)	(203,640)
Total shareholders' equity	33,361	42,093
Total liabilities and shareholders' equity	42,046	50,485
*) Represents less than $1.

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
	3 Months Ended	3 Months Ended
	March 31, 2024	March 31, 2023
	(Unaudited)	(Unaudited)
Revenues	137	355
Cost of revenues	403	316
Gross loss (profit)	(266)	39
Operating Expenses:
Research and development, net	9,397	8,124
Sales and marketing	1,453	924
General and administrative	1,644	1,630
Total operating expenses	12,494	10,678
Operating loss	(12,760)	(10,639)
financing expenses (loss), net	45	(732)
Net loss	(12,805)	(9,907)
Basic net loss per ordinary share	-0.16	-0.15
Weighted-average number of shares used in computing basic net loss per ordinary share	78,176,210	64,671,688
Diluted net loss per ordinary share	-0.21	-0.17
Weighted-average number of shares used in computing diluted net loss per ordinary share	62,573,715	58,969,265

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
	3 Months Ended	3 Months Ended
	March 31, 2024	March 31, 2023
Cash flows from operating activities:	(Unaudited)	(Unaudited)
Net Loss	(12,805)	(9,907)
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation	142	137
Stock-based compensation	3,726	2,008
Warrants to service providers	348	97
Revaluation of warrants and accretion	(112)	131
Change in operating assets and liabilities:
Decrease in trade receivable	402	114
Decrease (increase) in prepaid expenses and other receivables	(172)	174
Operating lease ROU assets and liabilities, net	129	8
Increase in trade payables	517	853
Increase (decrease) in employees and payroll accruals	145	(593)
Decrease in accrued expenses and other payables	(695)	(3,207)
Net cash used in operating activities	(8,376)	(10,185)
Cash flows from investing activities:
Change in bank deposits	(14,902)	400
Purchase of property and equipment	(81)	(53)
Net cash provided by (used in) investing activities	(14,983)	347
Cash flows from financing activities:
Proceeds from exercise of options	-	561
Net cash provided by financing activities	-	561
Effect of exchange rate fluctuations on cash and cash equivalent	256	509
Decrease in cash, cash equivalents and restricted cash	(23,615)	(9,786)
Cash, cash equivalents and restricted cash at the beginning of period	28,750	54,315
Cash, cash equivalents and restricted cash at the end of period	5,391	45,038

 

 

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(U.S. dollars in thousands, except share and per share data)
	3 Months Ended	3 Months Ended
	March 31, 2024	March 31, 2023
GAAP net loss attributable to ordinary shareholders	(12,805)	(9,907)
Add:
Stock-based compensation	3,726	2,008
Warrants to service providers	348	97
Revaluation of warrants and accretion	(112)	131
Non-GAAP net loss	(8,842)	(7,671)
Basic Non-GAAP net loss per ordinary share	-0.11	-0.12
Weighted-average number of shares used in computing basic Non-GAAP net loss per ordinary share	78,176,210	64,671,688
Diluted Non-GAAP net loss per ordinary share	-0.14	-0.13
Weighted-average number of shares used in computing diluted Non-GAAP net loss per ordinary share	62,573,715	58,969,265
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(U.S. dollars in thousands)
	3 Months Ended	3 Months Ended
	March 31, 2024	March 31, 2023
GAAP net loss attributable to ordinary shareholders	(12,805)	(9,907)
Add:
Financial expenses (income), net	45	(732)
Depreciation	142	137
Stock-based compensation	3,726	2,008
Warrants to service providers	348	97
Adjusted EBITDA	(8,544)	(8,397)

 

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SOURCE Arbe

FAQ

What were Arbe's Q1 2024 revenues?

Arbe reported revenues of $0.1 million for Q1 2024, down from $0.4 million in Q1 2023.

What was Arbe's gross margin in Q1 2024?

Arbe's gross margin was negative 194% in Q1 2024, compared to a positive 11% in Q1 2023.

How much did Arbe's operating expenses increase in Q1 2024?

Arbe's operating expenses rose to $12.5 million in Q1 2024 from $10.7 million in Q1 2023.

What was Arbe's net loss in Q1 2024?

Arbe's net loss in Q1 2024 was $12.8 million, compared to a net loss of $9.9 million in Q1 2023.

What cash position did Arbe hold at the end of Q1 2024?

As of March 31, 2024, Arbe had $5.4 million in cash and cash equivalents and $30.3 million in short-term bank deposits.

What is the projected adjusted EBITDA for Arbe in 2024?

Arbe projects an adjusted EBITDA loss between $30 million and $36 million for 2024.

When does Arbe expect to see revenue growth?

Arbe anticipates revenue growth in 2025 as they ramp up production.

What significant collaborations has Arbe announced recently?

Arbe has announced collaborations with leading OEMs and integration into NVIDIA's Omniverse Cloud APIs.