Innoviz Technologies Ltd. — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide separate Q4 results. Financial statement amounts below are in U.S. dollars, generally thousands unless noted.
Business context
Innoviz develops solid-state LiDAR sensors and perception software for automotive advanced driver-assistance and autonomous-driving systems, as well as other markets. Its principal commercial program is the BMW Level 3 platform, supplied through Magna. The company was early-stage and pre-scale in 2020, with 197 of 279 employees in research and development as of year-end.
The business combination with Collective Growth closed on April 5, 2021, after the reporting period. The company’s ordinary shares and warrants began trading on Nasdaq on April 6, 2021.
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Reported revenue | $(9.364) million | $1.575 million |
| Revenue before $14.8 million customer-share consideration reduction | $5.436 million | $1.575 million |
| Cost of revenue | $6.407 million | $1.986 million |
| Reported gross loss | $15.771 million | $0.411 million |
| Operating expenses | $66.212 million | $69.047 million |
| Operating loss | $81.983 million | $69.458 million |
| Net loss | $81.511 million | $67.301 million |
| Net loss per ordinary share | $5.99 | $5.22 |
| Net cash used in operating activities | $61.941 million | $69.225 million |
The reported revenue figure includes a $14.8 million reduction for preferred shares issued to Magna, treated as customer consideration rather than payment for a distinct service. Excluding that reduction, revenue rose about 245% year over year, to $5.436 million. FY2020 cost of revenue included approximately $2.1 million in inventory write-offs and a production-machinery write-off; management stated gross margin was 26% excluding the revenue reduction and inventory and machinery write-offs.
- Research and development expense was $57.029 million, down 4% from 2019; selling and marketing was $5.430 million, down 16%; general and administrative expense was $3.753 million, up 18%.
- Year-end cash and cash equivalents were $49.950 million, compared with $72.792 million in 2019. Current assets were $57.915 million and current liabilities $17.794 million.
- Cash used in investing activities was $29.591 million net provided, primarily because $34.720 million of short-term deposits were withdrawn; capital expenditures were $5.120 million. Financing activities provided $8.941 million, mainly from Series C-1 preferred shares.
- Debt included a loan with $2.224 million long-term and $0.275 million current maturities at year-end. The filing reports no other off-balance-sheet arrangements.
- Following the April 2021 business combination, the company reported approximately $371 million in net transaction proceeds. Management expected those proceeds, together with existing cash, to fund the business plan for two years; this is a post-period estimate, not FY2020 cash.
Material changes and significant items
- Underlying revenue increased from $1.575 million to $5.436 million, but reported revenue turned negative because of the $14.8 million Magna share issuance recorded as a revenue reduction.
- Net loss widened by $14.210 million, while operating cash use declined by $7.284 million. Operating expenses fell 4.1%, but the gross loss and revenue accounting adjustment drove the larger reported loss.
- Sales to Magna were approximately $2.8 million in 2020 versus $1.0 million in 2019 and represented more than half of revenue in both years, according to the risk disclosure. Separately, the filing says three customers represented 51%, 22% and 10% of 2020 revenue excluding the preferred-share reduction.
- The Magna arrangement included an October 2020 manufacturing MOU and a December 2020 strategic share issuance. A performance-based warrant for up to 7,023,865 ordinary shares at $10 per share was subject to commercial milestones and had not been recognized as probable at year-end.
- In April 2021, the business combination included a separate $230 million gross private investment in public equity (PIPE), in addition to the stated approximately $371 million net business-combination proceeds. The filing also describes post-closing share and warrant issuances, earnout interests and preferred-share conversion.
Outlook, risks and contingencies
- Management expected losses to increase as it invests in R&D, commercialization, manufacturing capacity, inventory, sales and marketing, and public-company costs. It did not provide numerical revenue or earnings guidance.
- InnovizTwo, announced in Q4 2020, was still in development and testing. The company intended to pursue design wins beginning in 2021; timing and commercialization were uncertain.
- The BMW program and Magna relationship are material dependencies. Automotive design-to-production cycles can take five to seven years, and customer programs may be delayed, repriced, re-sourced or cancelled.
- COVID-19 affected operations, travel and customer activity; management expected disruptions to continue into 2021 but could not quantify the financial impact. The company also disclosed component shortages, higher prices and longer lead times, while stating it had sufficient near-term inventory.
- The auditor’s 2019 report included a going-concern explanatory paragraph citing recurring losses and the need for additional funding. By the 2020 filing, management expected post-combination funding to cover the next two years, but continued losses and cash burn remain central risks.
- The company reported no material pending legal proceedings. It disclosed ongoing Israeli income-tax audits for 2016–2018, with tax returns for the company and main subsidiaries still subject to examination for 2016–2020.
- U.S. investors face a stated significant risk that Innoviz may be classified as a passive foreign investment company (PFIC) for 2021 or later years. The company also cautioned about dilution from equity incentives, warrants and future capital raises.
Most important facts for investors to verify
- Reconcile the $5.436 million underlying revenue, negative $9.364 million reported revenue and $14.8 million Magna share-based customer consideration, including the appropriate treatment of related gross-margin comparisons.
- Confirm customer concentration, Magna/BMW program purchase commitments, termination rights, production timing and the status of the manufacturing MOU; the filing notes serial-production volumes depend on purchase orders.
- Check actual cash, burn rate, financing proceeds and runway after the April 2021 combination, including the distinction between approximately $371 million net proceeds and the $230 million PIPE gross proceeds.
- Assess InnovizTwo development, production readiness, customer design wins, component availability and the company’s ability to scale manufacturing while improving unit economics.
- Review post-combination share count, warrants, earnout conditions, preferred-share conversions and incentive-plan capacity for potential dilution; outstanding shares rose from 16,948,226 at December 31, 2020 to 129,820,963 at April 5, 2021.
- Evaluate PFIC exposure and related U.S. tax reporting consequences with a tax adviser, and monitor the disclosed tax audits and any change in liquidity outlook.