Mobileye Q3 2024 Earnings Overview

Mobileye (MBLY), a leader in Advanced Driver Assistance Systems (ADAS), reported its third quarter earnings on October 30, 2024, showing mixed results. The company experienced an 11% sequential revenue increase from Q2 but an 8% year-over-year decline, primarily due to a 9% drop in EyeQ volumes. Nonetheless, Mobileye remains optimistic about its future, particularly regarding upcoming products and strategic objectives.

Key Takeaways

• Mobileye's Q3 revenue increased by 11% from Q2 but declined by 8% year-over-year.
• EyeQ volumes fell by 9%, with shipments to top 10 customers down by 4%.
• Non-top 10 customer shipments in China dropped by approximately 50%.
• Operating expenses were annualized at over $1 billion; reductions are planned for 2025.
• Operating cash flow was a strong $126 million, with a robust forecast.
• Mobileye aims to solidify its ADAS market position and expects significant growth starting in 2026.
• Revenue guidance for 2024 remains unchanged, with EyeQ volumes projected between 28.4 million and 28.8 million units.
• SuperVision sales in China are expected to decrease to 2% of total revenue in Q4.
• The non-GAAP effective tax rate for 2024 is estimated at 18% to 20%.

Company Outlook

• Mobileye anticipates growth starting in 2026, driven by major OEM design wins and expanding regulatory requirements for ADAS.
• The company continues to project its 2024 revenue guidance, predicting growth outpacing production rates among top 10 customers by mid-single digits.
• No adverse decisions have been made by OEM partners, and progress on advanced solutions is ongoing.

Bearish Highlights

• Year-over-year revenue declined due to reduced EyeQ volumes.
• Shipments to non-top 10 automakers, particularly in China, saw a significant reduction.

Bullish Highlights

• Mobileye is confident in meeting product launch milestones for late 2026.
• The company is advancing lower-cost chipsets for emerging markets and aims to lead in the Indian automotive market.
• Interest in Robotaxi initiatives is resurging, with collaborations ongoing with OEMs like Volkswagen.

Misses

• The average selling price (ASP) of EyeQ feature bundles dropped, with few significant changes expected soon.

Q&A Highlights

• Executives discussed future volumes and market conditions during the Q&A session.
• The complexities of measuring intervention rates in autonomous driving were addressed.
• Mobileye confirmed $1 billion in operating expenditures for 2023 to meet growth targets.
• Optimism surrounds imaging radar technology, expected to start production next year.

Mobileye's third-quarter earnings call reflected a company grappling with current challenges while remaining poised for future opportunities. The decline in revenue and EyeQ volumes highlights market pressures; however, Mobileye's strategic initiatives, cost optimization, and focus on new product development underscore its commitment to leading the automotive technology industry.

InvestingPro Insights

Mobileye's recent earnings report and future outlook can be further contextualized with real-time data from InvestingPro. Despite gloomy projections for growth, current financial metrics reveal challenges.

• Mobileye's market capitalization is $10.07 billion, with a P/E ratio of -53.84, indicating lack of profitability.
• It holds more cash than debt, providing a strong liquidity position amidst strong operating cash flow of $126 million in Q3.
• Analysts forecast a sales decline this year, consistent with the 8% year-over-year revenue drop in Q3.
• However, net income might grow this year, signaling potential improved profitability despite revenue challenges.
• As of Q2 2024, revenue for the last twelve months was $1.845 billion, growing at -4.26%.
• Investors should note that Mobileye's stock price fell significantly over the last year, with a price total return of -65.18%. This may present opportunities for investors believing in the company's long-term potential, especially considering new product launches.

Full Transcript

The earnings call included discussions from Mobileye executives, emphasizing the strategic direction and technological advancements the company is pursuing carefully. They addressed both the challenges and the optimistic outlook for the future, particularly focusing on upcoming product launches and the expected growth in the ADAS market framed by regulatory demands. Overall, the call highlighted Mobileye’s readiness to navigate future market dynamics and challenges in autonomous vehicle technology and ADAS integration.

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