Mobileye 2Q16 Earnings Call Notes

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Mobileye’s (MBLY) CEO Ziv Aviram on Q2 2016 Results

Amnon Shashua

level 3 and level 4 autonomous vehicles in volume production on the road by 2021

“Moving to autonomous driving, the second quarter highlights include on July 1, Mobileye, BMW and Intel announced a program to put level 3 and level 4 autonomous vehicles in volume production on the road by 2021 using the full capabilities of EyeQ5.”

Clear commitment to volume production of level 4 autonomy

“We believe this represents a turning point in the auto industry, both in terms of a clear commitment to volume production of level 4 autonomy, but also the start of a paradigm shift where partnerships among OEMs, Mobileye and additional players emerge in order to tackle together as equal partners the ambitious challenge of putting a safe level 4 autonomous vehicle on the road.”

We will not extend our relationship with Tesla

“I have few words to say about our relationship with Tesla. Mobileye’s work with Tesla will not extend beyond EyeQ3. We continue to support and maintain the current Tesla Autopilot product plans. This includes the significant upgrade of several functions that affect both our ability to respond to crash avoidance and to optimize auto-steering in the near-term without any hardware updates. Nevertheless, in our view, moving forward, more advanced autonomy is a paradigm shift both in terms of function complexity and the need to ensure an extremely high level of safety. There is much at stake here to Mobileye’s reputation and to the industry at large. Mobileye believes that achieving this objective requires partnerships that go beyond the typical OEM supplier relationship, such as our recently announced collaboration with BMW and Intel. Mobileye will continue to pursue similar such relationships.”

I don’t want to put too much color around the Tesla statement

“With respect to Tesla, we made a statement, I don’t want to put too much color into it, I don’t want to open the floor to now speculations. I think EyeQ3 shipments to Tesla would continue for the near future and maybe even the longer future. We simply decided where we need to put our resources for the future of autonomous driving and there are all sorts of considerations where you need to put your resources and we decided what we decided.”

Camera only steering is not something you can provide a driver in an unlimited way, otherwise technology can be abused

“The difference between camera-only and camera plus radar is cost. And in this case, Nissan is planning a high volume penetration of these kinds of features. Of course introduced in a way which is safe, now that driver cannot use this technology freely, your hands needs to be on the steering wheel and all sorts of other safety mechanisms are put there. Because again camera only auto steering is not something that you can provide a driver in an unlimited way, otherwise the technology can be abused and create problems. But it is if used properly, it is something that is increases safety, increases the possibility to avoid crashes and having it in high-volume penetration is a good thing and by removing the radar from a cost perspective, you can do that.”

BMW solution will have EyeQ5 running camera information, fusion algorithms run on intel chip

” in the BMW – this is Amnon. So, in the BMW relationship, with respect to fusion, these are algorithms to be developed between Mobileye and BMW and deployed on the Intel chip. So, the EyeQ5 will be processing all the camera information, including radars and LIDARs for redundancy. Fusion algorithms will run on the Intel chip and very possibly also the driving policy algorithms developed by Mobileye in conjunction with BMW would also be deployed on the Intel chip”

Implying that TSLA didn’t use the technology in the way that they expected it to be used

“I think we made public statements following the crash, the May 7 crash that can give some color. I think in a partnership, we need to be there on all aspects of how the technology is being used and not simply providing technology and not being in control on how it is being used. I think that this provides a bit more color to the official statement that we made and it’s based on public statements that we have made following the crash.”

There is a need for standardization

” It’s not tomorrow there is going to be standardization. But I think the need for standardization exists and it will occur naturally because of the complexity of this problem and the need to reach a solution with a high level of safety. This will drive players to consolidate.”

Ofer Maharshak

OEM ASP was $44.05

” Our OEM ASP for the second quarter was $44.05 compared to $43.07 during the same period last year and $44.02 in Q1 of 2016. The increase in ASP this quarter is related to the mix of deliveries, which reflect a higher portion of pedestrians autonomous emergency braking.”

Raising 2016 revenue guidance to $350m

“We are raising our total 2016 revenue guidance range to be between $344 million and $350 million from the prior $336 million to $340 million, representing 44% year-over-year growth at the midpoint. ”