Innoviz Technologies Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone Q4 filing. Financial statements are prepared under U.S. GAAP and report amounts in U.S. dollars.
Business context
Innoviz develops automotive-grade LiDAR sensors and perception software for advanced driver assistance and autonomous vehicles. It sells sensors, components and application engineering services, and is transitioning toward direct Tier-1 supply. Magna began series-production manufacturing for the BMW Level 3 program in 2023. Innoviz also cites programs with Volkswagen and an Asia-based OEM; design wins do not guarantee future production volumes or revenue.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $20.9 million | $6.0 million |
| Gross loss / gross margin | $(11.6) million / (56)% | $(8.8) million / (145)% |
| Operating expenses | $121.0 million | $124.6 million |
| Operating loss | $(132.6) million | $(133.3) million |
| Net loss | $(123.5) million | $(126.9) million |
| Net loss per ordinary share | $(0.84) | $(0.94) |
| Cash used in operating activities | $(93.1) million | $(93.4) million |
- Revenue rose 246%, primarily because the company recognized $15.2 million of application engineering (NRE) revenue, compared with none in 2022. Sensor and component sales also contributed; the filing does not clearly quantify their separate totals here.
- Cost of revenue increased 120% to $32.5 million. Management cited InnovizOne production inefficiencies, excess and obsolete inventory, NRE costs and machinery depreciation. Gross margin improved year over year but remained substantially negative.
- R&D spending was $92.7 million, down 3%; sales and marketing was $8.8 million, down 15%; general and administrative expense was $19.5 million, up 2%. Share-based compensation was $22.3 million.
- Net loss narrowed 3% year over year. Net financial income increased to $9.8 million, mainly reflecting interest on deposits and a gain on marketable securities, partly offset by foreign-exchange effects and warrant remeasurement.
- At year-end, cash and cash equivalents were $26.3 million. Cash, short-term deposits, short-term restricted cash and marketable securities together totaled approximately $150.2 million. Current assets were $160.5 million and current liabilities $37.2 million.
- The balance sheet reports no borrowings; operating lease liabilities totaled $32.5 million, including $4.0 million current. Net cash from financing was $61.9 million, primarily from the 2023 share offering. The company issued 26.4 million shares and reported approximately $61.4 million in net offering proceeds.
- Management said available funds were expected to support the business plan for at least 12 months from the financial-statement issuance date. This is not a guarantee that additional financing will not be needed.
Material changes and developments
- Revenue mix shifted toward application engineering services: NRE revenue was $15.2 million in 2023 versus zero in 2022. Customer acceptance is required for certain services before revenue is recognized.
- Customer concentration remained high: two customers represented 48% and 47% of 2023 revenue. One customer accounted for approximately 91% of year-end trade receivables.
- Shares outstanding increased to 165.4 million at year-end from 136.2 million a year earlier, reflecting the offering and other share activity.
- After year-end, on January 31, 2024, Innoviz announced an operational realignment, including an approximately 13% workforce reduction during Q1 2024. It planned to reduce duplicative InnovizOne development spending and focus bids on InnovizTwo. Development of Innoviz360 was postponed.
- In February 2024, Avishay Moscovici became Chief R&D Officer, succeeding Oren Buskila.
Outlook, risks and unusual items
- Management expects continued significant losses as it funds R&D, manufacturing capacity, testing and validation, inventory, commercialization, sales and distribution. It says profitability is not expected in the near term.
- Key execution risks include long automotive development cycles, program cancellation or delay, mass-production quality and yield, pricing pressure, and dependence on a limited number of OEM customers and suppliers. Innoviz warns that design wins may not translate into material sales or profitable production.
- The company expects its first vehicles using its LiDAR technology and software to become commercially available to end users in 2024. Product defects could lead to warranty, product-liability, recall, reputational and regulatory costs.
- The Israel war could disrupt employees, suppliers, shipping and operating costs. The company said it identified no material adverse impact on its 2023 financial statements, but the duration and future effects remain uncertain; commercial insurance does not cover war-related losses.
- Supply constraints, component price increases, foreign-exchange exposure and evolving automotive, privacy and cybersecurity regulations could affect delivery, costs and results. The filing also notes the company has no formal disaster recovery plan in place, though it was being developed.
- Private placement warrants are measured at fair value through earnings; changes can create non-cash quarterly gains or losses. The 2023 filing reports a $0.5 million gain from remeasurement.
- Innoviz believes it was a passive foreign investment company (PFIC) for U.S. tax purposes in 2023; status for later years is uncertain and may have adverse U.S. tax consequences for U.S. investors.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective as of year-end; the auditor did not attest to internal-control effectiveness because Innoviz qualified for an exemption.
Important investor verification points
- Verify the composition, timing and repeatability of 2023 revenue, particularly the $15.2 million NRE contribution, and whether customer programs are progressing toward production volumes.
- Reconcile the filing’s remaining-performance-obligation disclosures: MD&A states $1.2 million, while the financial-statement note states $7.339 million, including $6.145 million of short-term deferred revenue.
- Assess cash burn and runway after the 2024 realignment, including whether management’s at-least-12-month liquidity assessment remains current and whether further capital raising may be needed.
- Track gross-margin improvement, production yields, inventory write-offs and the economics of Magna-manufactured BMW units. Inventory write-offs were $6.9 million in 2023.
- Monitor customer concentration, accounts-receivable collections, program cancellation rights, and the status of Volkswagen and Asia-based OEM production commitments.
- Review potential dilution from outstanding warrants, options, RSUs and future equity issuance; year-end shares outstanding were 165.4 million and the filing reports 16.2 million warrants.