Innoviz Technologies Ltd. Q1 FY2026 earnings call

New Market Expansion: Defense and Homeland Security

• Officially entered the defense and homeland security market in Q1 2026, offering the InnovizSMART and newly launched InnovizTwo ultra-long range (ULR) LiDARs for this segment. The market is characterized by rapid growth, premium pricing, and higher margins than automotive, with unaddressed gaps in detection range, weather resilience, and reliability for existing sensing solutions.
• Already secured early traction: Israeli defense firm Kela has announced intent to use Innoviz LiDARs in its unified situational operations platform (for drone detection and perimeter security), with expectations for scaling in coming years. A second large holding group customer has also signed an agreement, with a prepayment received and installation completed, and a public announcement is upcoming.
• Key use cases include perimeter and border surveillance, terrain mapping and situational awareness, small drone detection, and navigation for autonomous defense systems, all of which benefit from Innoviz's long-range 3D detection and all-weather performance.

Automotive Business Progress

• Existing development programs are progressing on track towards SOP with key customers including Volkswagen, Mobileye, Audi, and Daimler Truck (in partnership with Torc). MOIA will deploy Volkswagen ID Buzz robotaxis with Uber (Los Angeles) and Beep (Orlando) by the end of 2026, each equipped with 9 InnovizTwo LiDARs (3 long-range, 6 short-to-mid range), with expansion to multiple global cities planned.
• New agreements signed: a development program with a leading autonomous driving technology company to evaluate on-sensor LiDAR perception capabilities, and a letter of intent (LOI) with autonomous last-mile delivery firm LOXO to nominate Innoviz as LiDAR supplier (potentially replacing an existing FMCW LiDAR) following successful testing.
• Multiple RFQs are open globally for Level 3 and Level 4 automation programs, with supplier decisions expected in H2 2026 for programs targeting pre-2028 SOP (served by InnovizTwo) and later SOPs (served by Innoviz3, which adds integrated color imaging to 3D data to enable behind-the-windshield installation).

Technology and Production Updates

• Launched InnovizTwo ULR, which delivers up to 1-kilometer sensing range with higher point cloud density and resolution, addressing unmet needs across automotive, defense, and infrastructure applications. First customer samples have been delivered.
• Production ramp at manufacturing partner Fabrinet is progressing well. Q1 2026 unit shipments hit a record high, equal to half of total 2025 full-year shipments, with further acceleration expected in H2 2026.

Financial Performance

• Q1 2026 ended with $60.1 million in cash, cash equivalents, short-term deposits, and marketable securities, with no long-term debt. Cash used in operations and capital expenditures was $15.8 million, with the quarterly increase driven by higher working capital needs for the production ramp and shifted NRE milestone timing.
• Q1 2026 gross margin was -22%, driven by the current revenue mix and lower fixed cost absorption at current production volumes. Management expects fixed cost absorption and gross margins to improve significantly later in 2026 as production volumes ramp.

Innoviz reports two primary revenue categories: non-recurring engineering (NRE) and LiDAR unit sales. In Q1 2026, total company revenue was $7.1 million, with record high unit shipments contributing a significant portion of this total. In 2025, NRE revenue made up approximately 70% of total company revenue, while non-automotive physical AI applications contributed approximately 1% of total revenue. For full year 2026, the company projects non-automotive physical AI applications will increase to up to 10% of total revenue, with an expected long-term shift in revenue mix away from NRE and towards higher-volume LiDAR unit sales as existing development programs reach start of production (SOP).

• Full year 2026 revenue guidance is maintained at $67 to $73 million, representing approximately 27% year-over-year revenue growth, despite Q1 2026 revenue coming in below expectations due to shifted NRE milestones. • Non-automotive physical AI revenue is expected to grow to up to 10% of total 2026 revenue, up from approximately 1% in 2025, with this growth trend expected to accelerate in future years. • Management expects $20 to $30 million in new NRE payments in 2026, and expects to add 2 to 3 new programs over the course of the year. • All delayed Q1 2026 NRE revenue already has approved purchase orders in place, and management expects to recognize all of this delayed revenue within 2026, keeping full year targets on track. • Long-term company outlook remains unchanged, with management expecting a significant step-up in LiDAR unit revenue and gross margins as current development programs reach SOP, driven by increasing adoption of LiDAR for automotive automation and new non-automotive end markets.

• Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, with detailed risk factors disclosed in the company's Form 20-F filed with the SEC on March 4, 2026. • Gross margins are currently under pressure due to low production volume and fixed cost absorption, with improvement dependent on successfully ramping production volumes later in 2026. • Program awards and SOP timelines for new automotive and non-automotive programs are subject to customer decision-making and testing milestones that can shift timing of revenue recognition. • The competitive LiDAR market is still evolving, and market consolidation and changing customer preferences could impact the company's ability to win new program awards.

Q: What is the expected revenue ramp and profitability for new non-automotive defense and security programs? / A: ASPs for non-automotive defense programs are significantly higher than for automotive applications. Many defense use cases, particularly drone detection, have a high degree of market urgency, which could drive much faster adoption and revenue growth than initially expected. There is currently strong unmet demand for viable drone detection solutions, with frequent inbound customer inquiries for this capability.

Q: How is the competitive landscape in automotive LiDAR evolving, and what is Innoviz's position for upcoming program awards? / A: The number of active competing LiDAR solutions has shrunk in recent years, and geopolitical factors are also impacting customer supplier selection. Innoviz holds a clear leading position for behind-the-windshield integrated programs with its Innoviz3, and is strongly positioned for robotaxi platforms moving away from spinning mechanical sensors to directional sensors with the full InnovizTwo product portfolio. No update is available on the previously disclosed top 5 OEM program that completed SODW, but multiple other programs are progressing well, with Level 4 programs generally moving faster than Level 3. Overall, Innoviz is in a strong competitive position for all open programs it is pursuing.

Q: What caused the Q1 NRE revenue delay, and will all delayed revenue be recognized in 2026? / A: The delay was caused by the OEM customer requesting to pull in later planned activities to the current quarter due to program urgency, adding new extra tasks that extended milestone work beyond the end of Q1. All delayed revenue already has approved purchase orders in place, milestones have already been delivered, and management expects to recognize all delayed revenue within 2026, keeping full year targets on track.

Q: How much cost reduction can Innoviz deliver as production scales across product generations? / A: Innoviz delivered approximately 70% cost reduction from InnovizOne to InnovizTwo, and expects an additional 35-40% cost reduction from InnovizTwo to Innoviz3. Fundamentally, LiDARs do not rely on expensive core components: Innoviz uses cost-effective silicon-based 905nm emitters and its own custom ASIC processors. Further cost reductions will come as volumes increase and production industrialization matures.