Business context and reporting period
Mobileye Global develops advanced driver assistance systems (ADAS) and autonomous-driving technologies. This unaudited Form 10-Q covers the three months ended April 1, 2023, compared with the three months ended April 2, 2022. Fiscal 2023’s quarter had 13 weeks; the comparable 2022 quarter had 14 weeks because 2022 was a 53-week fiscal year.
Mobileye shipped approximately 8.1 million systems, primarily EyeQ SoCs, versus 7.4 million a year earlier. It reported approximately 800 vehicle models using its solutions, deployments in over 140 million vehicles, and work with more than 50 OEMs. Intel held all Class B shares, representing approximately 99.3% of voting power.
Financial highlights
| Metric | Q1 2023 | Comparable 2022 |
|---|---|---|
| Revenue | $458 million | $394 million |
| Gross profit / margin | $207 million / 45% | $176 million / 45% |
| Operating income (loss) | $(81) million | $(46) million |
| Net income (loss) | $(79) million; $(0.10) per share | $(60) million; $(0.08) per share |
| Operating cash flow | $171 million | $51 million |
| Capital expenditures | $26 million | $27 million |
Revenue rose 16%, attributed to approximately 10% higher system volume and 6% higher average system price, including increased EyeQ sales and a ramp in SuperVision. Cost of revenue increased 15%, while gross margin remained 45%. Research and development expense rose 31% to $235 million, chiefly due to higher headcount, payroll and share-based compensation. General and administrative expense rose to $20 million from $7 million, partly reflecting public-company costs.
Cash and cash equivalents were $1.161 billion at April 1, 2023; cash, cash equivalents and restricted cash totaled $1.173 billion. Operating cash flow improved mainly due to working-capital timing and lower receivables, partly offset by inventory growth. Inventory increased to $173 million from $113 million, including finished goods of $130 million. Total liabilities were $675 million. The $3.5 billion Dividend Note to Intel had been repaid or contributed by Intel in 2022, leaving no amount outstanding; the filing reports approximately $12 million of bank guarantees.
Non-GAAP adjusted gross margin was 71%, down from 76%; adjusted operating income was $124 million versus $143 million, and adjusted net income was $115 million versus $120 million. These measures exclude specified costs, including acquired-intangible amortization and share-based compensation. GAAP results included $133 million of intangible amortization and $72 million of share-based compensation expense.
Material changes versus the comparable period
- Revenue increased $64 million despite the current quarter being one week shorter; management attributed growth to volume, system pricing and SuperVision sales.
- Operating loss widened by $35 million and net loss by $19 million, as higher R&D and share-based compensation outweighed revenue growth and lower intangible amortization.
- Operating cash flow increased by $120 million, primarily due to working-capital timing. Prior-year investing cash flow included a $200 million loan repayment from Intel; current-period investing cash use was $26 million of capital expenditures.
- Revenue concentration shifted among major customers: Customer A contributed 24% versus 51%, Customer B 30% versus less than 10%, and Customer C 12% versus 17%.
Outlook, commentary and risks
The filing provides no specific full-year revenue or earnings guidance. Management expects 2023 capital expenditures to exceed 2022 levels, principally for facilities and next-generation product development; it estimated $45 million to $55 million of remaining campus construction cost, with completion planned in 2023. Management expects near-term R&D expense to increase compared with 2022 as it develops new EyeQ generations, premium driver-assist products and autonomous-driving solutions.
Key risks include dependence on a sole EyeQ SoC supplier, STMicroelectronics, and semiconductor and component shortages that may delay customer deliveries. Management said Q1 results had not been affected by chip shortfalls and did not expect current constraints to materially harm results, resources, sales, profits or liquidity over the long term, while cautioning that shortages could continue. Automotive production weakness, inflation, customer inventory adjustments and reduced SuperVision orders from its primary customer in China may also affect demand. The company relies on a relatively small number of customers; EyeQ sales represented 88% of revenue.
Other considerations include potential gross-margin pressure as higher-hardware-content systems grow, rising public-company and equity-compensation costs, evolving autonomous-driving regulation, and Intel’s controlling voting interest and ongoing related-party arrangements. Management reported no material legal contingencies or material changes to previously disclosed risk factors. Disclosure controls were assessed as effective, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether customer concentration and the changing contribution of major customers affect future shipments, pricing or collections.
- Whether the sole-supplier semiconductor constraints ease, and whether inventory build-up supports or signals changes in expected demand.
- Whether R&D and share-based compensation growth translates into commercial product launches and revenue, given the widening GAAP operating loss.
- How much of reported performance is comparable after accounting for the extra week in Q1 2022, and how non-GAAP adjustments reconcile to GAAP results.
- Whether planned capital spending, campus completion costs and Intel-related arrangements develop as management expects.