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Innoviz: Autonomous Driving Leader

Innoviz is a small Israeli company in the autonomous driving space.

  • It has developed sophisticated Lidar(Light detection and radar) products.

  • It is supplying its product for BMW in its self driving models starting in 2022.

  • The stock is a "fallen SPAC" trading t $6.40 below the $10 ipo price. Goldman Sachs recently raised its price target to $9.

Innoviz is a small Israeli startup founded in in January 2016 by Omer Keilaf, Oren Rosenzweig, Oren Buskila, and Amit Steinberg alumni from the Israeli army unit 81 known for developing sophisticated technologies.

Innoviz is a leading supplier of Lidar which provides 3D imaging for use in autonomous driving and other applications. Lidar, which stands for light detection and ranging, uses pulsed laser waves to map the distance to surrounding objects. Its advantages include amazingly accurate depth perception, which allows lidar to know the distance to an object to within a few centimeters, up almost 200 feet away. It’s also well suited to 3D mapping, which allows self-driving cars to navigate the environment predictably. ....

..It's not hard to imagine that some of these techniques were developed during the team's military service.

A Lidar vs. Camere image

With the exception of TSLA which believes it can create autonomous driving solely through the use of cameras others all other auto manufacturers use LIDAR technology. Innoviz distinguishes itself with its sophisticated and low cost technology. Although it has virtually no revenue at present it has a significant order backlog including a close relationship with BMW group.

Here is a video from Innoviz showing the difference between camera and Lidar

Innoviz is working with Magna as a tier 1 supplier to BMW. Tier 1 means that the supplier takes full ownership of the process: work directly with the car maker, integrating the product, designing the tools, designing the manufacturing, producing the samples and basically doing everything in the program .

Magna's video explaining the magna/innoviz produuct

Innoviz has been working since 2018 in developing LIDAR with BMW. BMW will incorporate level 3 autonomous in some of its 2022 models. Mercedes is the only other manufacturer to currently offer level 3. Tesla is a level 2 or level 2+. autonomous This site from BMW explains the levels of autonomous.

BMW's VP of automated driving executive participated in the Innoviz conference call with its earnings release I have never heard of a senior officer of a multinational corporations participating in the earnings conference. Reports indicate BMW 7 series will have Level 3 capabilities in 2022

Innoviz has 2 products, InnovizOne which is on the market now, and InnovizTwo is scheduled for launch early in 2022 . They are solid-state LiDAR sensors specifically designed for automotive applications. They are notable for their small size and low price. Innoviz products have applications in a range of applications from trucking to robotaxis to consumer vehicles, and even in industrial drones, sidewalk delivery tech, and heavy machinery. For example it has contracts for use in management of port and a smart city traffic application in China Innoviz has gottent the price of their units down to the $500 range clearing the way to wide adoption.

Third Quarter 2021 Financial Results

Innoviz released earnings on November 9 Revenues for Q3 2021 were $2.1 million, an increase of 106% compared to Q2 2021, and an increase of 13% compared to Q3 2020. InnovizOne-related revenues in Q3 2021 were $1.6 million, or 79% of the total quarterly revenues, an increase of 36% compared to $1.2 million, or 66% of the total quarterly revenues, in Q3 2020. The company continues to see strong interest for its products and expects the positive momentum to continue.

  • Operating expenses for Q3 2021 were $30.0 million, an increase from $16.8 million in Q3 2020. operating expenses included $8.2 million of stock-based compensation.

Obviously the earnings and revenue numbers are minimal. The important information news about Innoviz comes in forward forecasts:

Forward-Looking Guidance

from the earnings report:

  • Innoviz management reaffirmed its forward-looking order book guidance of $2.4 billion, representing the cumulative projected future sales of hardware and perception software through 2030 based on current estimates of volumes and pricing.

  • Innoviz currently has 56 prospective customers in the late stages of technical evaluation, RFIs and RFQs. Of the 56 prospective customers, nine are in the RFQ or final commercial negotiations stage. These nine prospects represent more than $3.4 billion in future potential order book volume. Innoviz expects some of these projects to materialize into contractual relationships by mid-2022.

Conference Call

Key to Innoviz's long term strategy is becoming a becoming a Tier 1 supplier nmeaning it is fully integrated with automobile manufacturers.

From the conference call:

Tier 1 is when a Company -- a technology Company provides a certa5in technology, a reference design, a prototype, and eventually sells the components. while the Tier 2 only sells its technology. In our case, since we have been able to work very closely with both Magna and BMW, we were able to absorb a lot of knowledge. In this program we are also responsible for the manufacturing of global samples, we were responsible for the design for manufacturing, we were responsible for the design of the manufacturing tools.

Innoviz has been striking partnerships around the world of late. It recently announced that its sensors are supported on the NVIDIA DRIVE platform which is an an open, scalable, software-defined, end-to-end AI platform for the transportation industry to build upon.

Other relationships Innoviz has announded recently are with Korea's Springcloud,Delphi automotive, China's Sensargate a supplier of smart city applications that enable real-time traffic, pedestrian and cyclist safety on roadways,

Stock performance. Innoviz is in the category of "busted SPACs " as it is trading below its' $10 IPO price. That is not hard to explain given the very low current revenue stream. The stock is only followed by three analysts with the consensus forecast of $10 (current price $6.40).

After the conference call Goldman Sachs Goldman Sachs analyst Mark Delaney upgraded Innoviz Technologies to Buy from Neutral with a price target of $9, up from $7, implying 52% upside. The analyst sees Innoviz as a potential leader in a lidar hardware total addressable market could reach over $5B by 2025 and could be $15B or higher by 2030,

All in all, Innoviz has a unanimous Strong Buy consensus rating based on 3 positive analyst reviews. The shares are priced at $6.8 and the $10.33 average price target suggests ~52% upside from that level.

With minimal revenue at present the stock is an investment on the future order book of business and new partnerships. One could almost view it as an option on its future book of business, purchasing a $3bln + earnings stream for its current market cap of $850 milion

Interview with Innoviz CEO here.

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