Arbe Robotics shows improved financial metrics and strategic OEM partnerships, eyeing four design wins by early 2026 amid challenging market conditions.

OPERATOR - (00:03:35)

Good day everyone and welcome to the RBA Robotics third quarter 2025 results conference call. All participants will be in a listen only mode following management's formal presentation. Instructions will be given for the question and answer session. For operator assistance, please press star and zero As a reminder, this conference is being recorded and you should have all received by now the Company's press release. If you have not, please check with the company's website at www.arberobotics.com or call EK Global Investor Relations team. I would now like to turn the floor over to Mr. Kenny Green from EK Global Investor Relations team. Mr. Green, would you like to begin?

Kenny Green - Investor Relations Representative - (00:04:19)

Thank you Operator. Good day to all of you and welcome to Arbe's conference call to discuss the results of 3Q20. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward looking statements and the safe harbor statements outlined in today's press release also pertain to this call. If you have not received a copy of the release, please view it in the Investor Relations section of the Company's website. Today we are joined by Kobi Marenko, Arbe Robotics's co founder and CEO, who will begin the call with a business update and then we will turn the call over to Karim Pinto Flumenbaum, cfo who will review the financials. Finally, we'll open the call to our listeners for the question and answer session and with that I'd like to turn the call over to Kobi Marenko. Kobi, please go ahead.

Kobi Marenko - Co-Founder and CEO - (00:05:09)

Thank you Kenny Good morning everyone and thank you for joining us to discuss our results and recent business development. I'll begin with an update on the most important aspect of our current activities, Our strategic progress with OEMs. We are pleased with the solid strategic progress made in the third quarter. As you know, our main goal is to secure Design wins with OEMs and become the radar technology provider and core enabler of their ADAS and autonomous driving programs. While it is a long process, we are moving forward and making solid progress each and every quarter. We believe that we are well positioned and in the lead to be selected as the key enabler for an eyes off hands off automated driving program for serial production retail vehicle by one of the major European OEMs in the near future and we hope to share further information as soon as we hear. In addition, another premium European OEM is conducting data collection for a Level 3 program using radars based on R based chipset. We continue to make strong progress with other OEMs as well. A top Japanese OEM ordered our radar kit for its Level 4 development activities and approved the expansion of the project it initiated last year based on our chipset including pre development activities. I also want to add that that in terms of our highly strategic non OEM collaborations, a global leader in artificial intelligence computing has ordered radar development kits for its full stack autonomous driving software development, making a strong validation from one of the most influential players shaping the future of autonomous driving technology as well as AI in general. Global economic shifts are causing some OEMs to postpone new model launches and lengthen their decision timeline for autonomous driving solutions. Despite this, arbe's market position continue to grow stronger. We remain encouraged by the steady progress we have achieved throughout 2025 and as the year comes to a close. Based on what we see now, we believe we are well positioned to secure the key European OEM program I discussed earlier in the short term and additional three program wins within the next three quarters. Our initiatives are aligned with the path to OEM selection and we continue to expect that ARBES radar technology will serve as a key enabler for 2028 passenger vehicle platforms. We expect the initial revenues will begin in 2027 which ramp up in 2028 as our chipsets are used in high volume production. Thanks to our strong balance sheet with over $52 million in net cash, we have the Runway to support all programs as our revenue reach the ramp up stage. With regard to our focus on non automotive projects, we are seeing increasing global demand in the defense sector. We are currently supplying radar systems for defense pilot programs and evaluation projects and last quarter we announced a new defense client. In addition, in the third quarter we expanded into the maritime domain than our Tier one supplier for non automotive applications announced an order from Wärtsilä for radar systems powered by our chipset. These systems will support collision preventing for boats and in all weather and lighting conditions. Boating represents another promising new vertical for our radar technology. During the quarter we won two prestigious automotive technology industry awards, the Just Auto Excellence Award for Leading Technology in the Perception Systems category and the Autotech Breakthrough Awards for Sensor Technology Solution of the Year 2025. Both awards are a proof of Arbe Robotics' contribution to the automotive industry and leading technological advantages which are bringing unparalleled safety for drivers and advancing ADAs and autonomous driving. Before closing, I want to welcome Chris Van Den Elsen to our Board of Directors. Chris brings over 30 years of experience in the automotive industry working with both OEMs and Tier 1 size. He has former Vice President of Magna International and Executive Vice President of Bayoneer and brings us strong business experience and deep technological expertise and I'm sure he will be a very valuable asset. In closing, Arbe Robotics is well positioned to benefit from current industry trends as the market transition to high resolution radar. Now I would like to turn it over to our CFO Karim to go over the financials.

Karim Pinto Flumenbaum - Chief Financial Officer - (00:10:20)

Thank you Kobi and hello everyone. Let me review our financial Results for the third quarter of 2025 in more detail. Revenue for the third quarter of 2025 totaled $0.3 million compared to $0.1 million in Q3 2024. As of September 30, 2025 backlog stood at $0.2 million. Gross profit for Q3 2025 was negative $0.2 million compared to negative $0.3 million in the same period last year. The improved change in profitability related to revenue mix Turning to operating expenses, total operating expenses for Q3 2025 were $11.3 million, down from $12.2 million in Q3 2024. The decrease in operating expenses was primarily due to lower share based compensation expenses resulting from the full vesting of prior grants and to the reduced volume of new grants which was the result of new grants being in the form of bonus liability. The decrease in operating expenses was partially offset by an unfavorable foreign exchange impact and higher labor cost. Operating loss for the third quarter of 2025 was $11.5 million compared to a $12.4 million loss in the third quarter of 2024. Adjusted EBITDA, a non GAAP measurement which excludes expenses for non cash share based compensation and for nonreoccurring items, was a loss of $9.2 million in Q3 of 2025 compared to a loss of $8.2 million in the third quarter of 2024. We believe that this non GAAP measurement is important in management's evaluation of our use of cash and in planning and evaluating our cash requirements for the coming period. Net loss in the third quarter of 2025 was $11 million compared to a net loss of $12.6 million in the third quarter of 2024. As of September 30, 2025, Arbe held $52.6 million in cash and cash equivalent and short term bank deposits. Turning to our outlook, While global economic shifts are leading some OEMs to delay new model launches and extend decision timelines for advanced driver assistance systems, Arbe's market position continues to strengthen. We are actively expanding engagements with leading OEMs progressing through advanced RFQ stages and building a solid foundation for large scale adoption. Our goal remains to secure four design wins with OEMs in the coming three quarters. For 2025, revenues are expected to be in the range of $1 million to $2 million. The change to our revenue expectation reflects the timing shifts of certain NRE programs. However, adjusted EBITDA expectations remains unchanged at a loss of $29 million to $35 million. I want to stress that our BAE enters 2026 with a significantly strengthened balance sheet with over $52 million in net cash supporting continued execution of our long term strategic and growth plan. Now, we will be happy to take your questions Operator.

OPERATOR - (00:14:22)

Ladies and gentlemen, at this time we'll begin the question and answer session. If you'd like to ask a question, please press Star and then one Using a touch tone telephone to withdraw your questions you may press Star and two if you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is Star and then one to join the question queue. Our first question today comes from Suji Dasilva from Roth Capital. Please go ahead with your question.

Suji Dasilva - Equity Analyst - (00:14:56)

Hi Kobe. Hi Karine. First question on the guidance for four design wins. I'm curious if that's four separate OEMs and second of all the specific guidance of the next three quarters. I'm curious what's driving the near term visibility there.

Kobi Marenko - Co-Founder and CEO - (00:15:15)

So yes it's four different OEMs and basically we know that for sure there is decisions that should be taken in the next three quarters of at least five OEMs and we believe that we will be able to win at least four.

Suji Dasilva - Equity Analyst - (00:15:39)

Okay, Kobe, very helpful.

Kobi Marenko - Co-Founder and CEO - (00:15:40)

Thanks.

Suji Dasilva - Equity Analyst - (00:15:41)

You said at least five. Okay. And then the customer programs, do you have a sense whether these model wins or opportunities are for certain premium models or across the board platforms or mainstream or any color on the penetration you would expect if you secure these wins would be helpful.

Kobi Marenko - Co-Founder and CEO - (00:16:00)

We believe that all of the programs will start with premium cars but with the volumes as time goes by and the years go by, this will go to non premium models as well. We see it from the numbers. So it's starting of course in very high end and it's going to.

Suji Dasilva - Equity Analyst - (00:16:25)

Still.

Kobi Marenko - Co-Founder and CEO - (00:16:26)

You know, it won't be in entry level vehicle but it will be in high end and say the top class.

Suji Dasilva - Equity Analyst - (00:16:36)

Okay, that's helpful Kobi. And then last question maybe Kareem the calendar 25 full year guide Kareen implies a wide 4Q range here. I'm Wondering what the factors are to swing it from the high to the low end to the high end. Thanks.

Karim Pinto Flumenbaum - Chief Financial Officer - (00:16:50)

Sorry, can you repeat the question?

Suji Dasilva - Equity Analyst - (00:16:53)

Oh, sure. Your full 25 revenue guidance of 1 to 2 million implies a fairly wide 4Q range of outcomes. I'm wondering what might swing it to the high versus low end. Is that product shipments or license revenue coming in or any color there would be helpful.

Karim Pinto Flumenbaum - Chief Financial Officer - (00:17:06)

Understood. So as we mentioned, we have some NRE shifts based on our customers' decisions. The sooner the decision is made, the sooner in Q4 then we will be able to push those NRE revenues other than push them outside to 2026. So this is what's driving mainly the tweak between the low to the high end.

Suji Dasilva - Equity Analyst - (00:17:44)

Okay. All right. Thanks Kobi.

Karim Pinto Flumenbaum - Chief Financial Officer - (00:17:45)

Thanks, Kareen.

Suji Dasilva - Equity Analyst - (00:17:47)

Thank you, Suji.

OPERATOR - (00:17:49)

And our next question comes from George Gianarakis from canaccorp. Please go ahead with your question.

George Gianarakis - Equity Analyst - (00:17:58)

Hi everyone. Thank you for taking my questions. Maybe just give us a little bit more insight into how these conversations are going with the OEMs and the puts and takes, the things that are happening that you see as positive and maybe some of the reasons you're seeing for the push out in decision making. Thank you.

Kobi Marenko - Co-Founder and CEO - (00:18:20)

So I think first of all, I think that the dialogues are going well and we see more and more OEMs buying radars and using them in order to collect data and to train their algorithms for full self driving. What we see now, I think with all of the OEMs there was at the beginning of the year there was, I believe decisions were postponed because they were uncertain about tariffs and what influence it will have. And this is what caused I think at least two quarters of delay right now. There is a clear path to decisions and I think that from now on we will see decisions are taken, will be taken. There is price pressure from the OEMs on every component in the system. And I think as of that we have a huge advantage because our high end radar is almost in the price of a low end radar today in the car. And we will be able from the beginning designed our system for a price that is affordable and now we see the benefit of it.

George Gianarakis - Equity Analyst - (00:19:52)

Thank you. And maybe just I know it's early, but I'd like to understand how you think we should think about 2026 and 2027 maybe and just sort of the way we should model the ramp in your revenue opex, you know, cash burn just so we can have sort of a, a sense of A new model over the next couple of years. Thank you.

Kobi Marenko - Co-Founder and CEO - (00:20:20)

So I think 26. Most of our revenues will come from non automotive which we see right now. Great ramp up from this business. As I mentioned, from every, almost every vertical that we are touching we see orders and repeated orders from defense, from yachts, from small cities. All of that are bringing us more and more orders. And we believe that next year we should expect a nice amount of revenues from non automotive. The second part of it is ramp up of revenues from China from HiRain. We still don't have the final visibility on the exact month that it will start, but we believe that we will see some revenues from common textiles in China as well.

Karim Pinto Flumenbaum - Chief Financial Officer - (00:21:34)

Just to complete your question of the opex. So as Kobi mentioned, next year will be non automotive. Our current OPEX structure supports those revenues and also going towards 27. So we assume stable level of OPEX not increasing too much. And towards the ramp up of the automotive industry we will see ramp up of course in headcount, mainly customer base to support this ramp up.

OPERATOR - (00:22:11)

Thank you. And ladies and gentlemen, with that we'll be ending today's question and answer session. I'd like to turn the floor back over to Mr. Marinko for any closing remarks.

Kobi Marenko - Co-Founder and CEO - (00:22:27)

On behalf of the management of Arbe Robotics, I would like to thank you, our shareholders, for your continued interest and long term support of our business to our employees and partners. Your continued dedication is deeply appreciated. In the coming months we will be meeting with investors and presenting at various investor conferences which we have announced and we hope to see some of you there. If you are interested in meeting or speaking with us, feel free to reach out to our investor relations team. You can contact us@investors@arberobotics.com to schedule a meeting. And with that we end our call. Have a good day.

OPERATOR - (00:23:08)

And ladies and gentlemen, that concludes today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.