indie Semiconductor (INDI) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Investor Relations - Ashish Gupta
• CEO and cofounder - Donald McClymont
• CFO - Naixi Wu
• EVP of Corporate Development and Investor Relations - Mark Tyndall

TAKEAWAYS

• Revenue -- $70.2 million, exceeding the midpoint of guidance and growing 31% year over year.
• Core Business Revenue -- $40.7 million, growing 14% sequentially driven by momentum in the ADAS portfolio.
• Non-GAAP Operating Loss -- $7.2 million, narrowing by more than one third compared to $11.3 million in the prior year quarter.
• Non-GAAP Net Loss Per Share -- $0.05, representing an improvement of $0.02 from the third quarter of 2025 based on 233 million shares.
• Cash and Cash Equivalents -- $144.3 million, reflecting a decrease of $4.7 million from the second quarter of 2026.
• Fourth Quarter Revenue Guidance -- $73 million to $81 million, representing approximately 33% year-over-year growth at the midpoint.
• Core Business Fourth Quarter Outlook -- $47 million, reflecting management expectations for continued expansion in sensing and perception products.
• Wuxi Subsidiary Fourth Quarter Outlook -- $30 million, assuming the segment is not divested before the end of the year.
• Non-GAAP Operating Expense Guidance -- $37.5 million for the fourth quarter, increasing slightly from $36.4 million in the third quarter.
• Fourth Quarter Net Loss Per Share Guidance -- $0.04, based on a projected weighted average share count of 240 million shares.
• Strategic Backlog -- $6.2 billion, which excludes recent design wins in the physical AI sector to maintain a conservative estimate.
• Wuxi Divestiture Proceeds -- $135 million in gross cash, which management expects to receive upon the closing of the equity sale to United Faith Auto-Engineering Co., Ltd.
• Physical AI Content -- $100 or more per platform, based on estimated content opportunities for humanoid robot applications.
• Radar Unit Volume Targets -- 50 million to 70 million units per year at peak ramp, according to management projections.
• Radar Average Selling Price -- $5 to $6, for the company's automotive radar chipset now in high-volume production.
• Quantum Bookings Growth -- 17% sequentially, contributing to record quarterly revenue for the quantum business unit.
• Software Royalties -- $4 to $8 per unit, for royalties generated by in-cabin sensing and perception software.
• Vision Design Wins -- Over 40 in 2026 to date, spanning automotive, drone, and humanoid robot applications.
• Profitability Timeline -- Second quarter of 2027, the period in which management expects to reach non-GAAP operating profitability.
• Wuxi Segment Revenue -- $29.5 million, representing a 5% sequential increase during the third quarter.
• Net Interest Expense -- $3.1 million in the third quarter, with an expected increase to $3.4 million for the fourth quarter.
• Non-GAAP Operating Expense Variance -- $600,000 below the company's internal outlook of $37 million for the third quarter.

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RISKS

• McClymont noted that the automotive market in China showed softness during the third quarter, which impacted the local demand environment.
• McClymont stated that the Wuxi business has faced "fairly severe margin pressure over the course of the last I mean, 9 to 12 months or so," which contributed to a sequential decline in consolidated gross margins to 41.6%.

SUMMARY

indie Semiconductor, Inc. (NASDAQ:INDI) reported 31% year-over-year revenue growth and transitioned its automotive radar chipset into high-volume production. Management reported that core business revenue grew 14% sequentially, driven by share gains and new program ramps within the ADAS portfolio. The company expanded its target addressable market by redirecting a significant portion of its 2027 research and development budget toward Physical AI, specifically targeting humanoid robots and autonomous mobile robots. Management stated that the company expects to close the acquisition of AMS OSRAM's CMOS image sensor business by the end of 2026 while awaiting final regulatory approval for the $135 million divestiture of its Wuxi subsidiary.

• McClymont reported that the company's radar technology was selected by one of the top three North American automotive manufacturers.
• The company reported that the iND880 vision processor is gaining adoption due to industry-wide DRAM scarcity. McClymont stated, "given the escalating issues with DRAM availability and pricing, our differentiated DRAM less solution, particularly for e mirror application is proving to be the perfect fit."
• Management reported securing the largest product order to date for continuous variable quantum key distribution within the quantum business.
• The company expects its core business to more than replace the revenue lost from the Wuxi divestiture in 2027 through organic growth in radar and vision products.
• CFO Wu indicated that existing cash provides sufficient liquidity to fund operations until the company reaches its target of being cash-flow positive in the third quarter of 2027.
• The photonics business expanded into high-reliability space markets, including the Chime space satellite program and a $2 million supply contract for space communications.

INDUSTRY GLOSSARY

• ADAS: Advanced Driver Assistance Systems, technologies designed to increase vehicle safety and automate driving tasks.
• CVQKD: Continuous Variable Quantum Key Distribution, a method for secure communication that leverages quantum mechanics for encryption.
• LiDAR: Light Detection and Ranging, a sensing method that uses pulsed laser light to measure ranges and create high-resolution maps.
• Physical AI: The application of artificial intelligence to physical systems such as robotics and autonomous vehicles to enable perception and interaction with the real world.
• PPAP: Production Part Approval Process, a standardized process in the automotive industry that ensures suppliers meet quality and production requirements.
• SLED: Superluminescent Light Emitting Diode, a light source that combines the high power and brightness of laser diodes with the low coherence of LEDs.
• SoC: System on Chip, an integrated circuit that incorporates all or most components of a computer or electronic system on a single substrate.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to Indy's Third Quarter 26 Earnings Call. Currently, all participants are in listen only mode. As a reminder, this conference call is being recorded. I will now turn the call over to Ashish Gupta, Investor Relations. Mr. Gupta, please go ahead.

Ashish Gupta: Thank you, operator. Good afternoon, and welcome to Indy's Third Quarter 26 Earnings Call. Joining me today are Donald McClymont, Indy's CEO and cofounder Naixi Wu, Indy's CFO and Mark Tyndall, EVP of Corporate Development and Investor Relations. Donald will provide opening remarks and discuss business highlights. Naixi will then review Indy's Q3 results and business outlook. Please note that we will be making forward-looking statements based on current expectations and assumptions which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For material risks and other important factors that could affect our financial results, please review our risk factors in our annual report on Form 10 k for the fiscal year ended 12/31/2025, as supplemented by our quarterly reports on Form 10 Q as well as other public reports filed with the SEC. Finally, the results and guidance discussed today are based on consolidated non GAAP financial measures such as non GAAP operating loss, non GAAP net loss, and non GAAP net loss per share.

A complete reconciliation to GAAP and the definitions of the non GAAP reconciling items, please see our Q3 earnings press release and the accompanying presentation which provides more detail on our non GAAP measures. Both were posted on our website in advance of this call at www.indi.inc. I will now turn the call over to Donald.

Donald McClymont: Thanks, Ashish, and welcome, everyone. I am pleased to report that Indi delivered a solid third quarter Revenue was $70.2 million above the midpoint of our guidance, up 31% year over year and 10% sequentially. Our core business led the way, growing approximately 14% quarter over quarter. Before turning to our business achievements, let me provide some context on the market environment. The automotive environment in the third quarter was mixed. Demand was strong in Europe and The United States, but was weaker in China. In Europe, new car registrations in the EU rose 9.3% year over year in September, and are up 5.7% year to date.

According to the European Automobile Manufacturers Association, with electrified vehicles continuing to gain share In The United States, demand was resilient. September new vehicle sales rose more than 4% year over year according to Mark Lines, and Cox Automotive raised its full year 2026 sales forecast to 16.1 million units. China, the world's largest vehicle market, showed some softness. Even so, the shift towards electrified technology rich vehicles with advanced features such as radar continues to support content growth for Indy with export from China a particular area of strength. Beyond automotive, physical AI is also gaining rapid momentum. According to Counterpoint research, global humanoid robot shipments rose nearly 300% year over year in the first half of 26.

Indy's deep automotive heritage gives us a strong foundation to capitalize on this emerging opportunity. Our proven expertise in multicamera vision processing, radar sensing, LIDAR and sensor fusion enables us to deliver reliable perception at scale. These capabilities apply directly to humanoid robots and other physical AI including drones, collaborative robots, and autonomous mobile robots. Or AMR. We are rapidly increasing our focus on physical AI, a substantial percentage of our 2027 R&D budget will be redirected to customizing our next generation SoCs for this market. As reported in prior quarters, have already secured design wins at leading humanoid robotics customers, including Agibot, Unitree, and Figure AI. As well as several emerging players.

Agibot and Unitree ranked first and second globally in humanoid robot shipments in the first half of 26. Additionally, during the quarter, our Lidar technology was adopted for a warehouse robot application by a major global logistics company. These early wins show that our automotive ADAS technologies transfer to humanoid robotics with estimated content of more than $100 on some humanoid platforms. As humanoid robots move from pilot deployments to broader commercial adoption, Indi is well positioned to benefit significantly as 1 of the broadest sensor suppliers to the physical AI market. Let me now turn to our key achievements during the quarter.

Starting with RADAR, I am pleased to share that we have progressed into high volume production of our automotive RADAR chipset with material shipments to our Tier 1 partner ongoing. The chipset is fully automotive qualified, having completed the production part approval process or PPAP This rigorous process confirms that both the product and our manufacturing meet the stringent quality requirements of our automotive customers, The move to large volume production is a significant inflection point for our radar business, and sets the stage for our RADAR revenue ramp through 2027 and beyond. We also continue to broaden our RADAR customer engagement jointly with Tier 1 partner, particularly in China.

And additionally, I am happy to note that our radar technology has now been selected by 1 of the top 3 North American OEMs. We are also extending both our radar and Lidar technology into physical AI. Autonomous machines such as robots and drones need robust all weather perception to sense and safely navigate the world around them. In robotics, radar complements cameras by providing reliable detection in low light dust and poor visibility, whilst Lidar can map a scene with sub millimeter precision.

In vision, given the escalating issues with DRAM availability and pricing, our differentiated DRAM less solution, particularly for e mirror application is proving to be the perfect fit, for example, we have secured new eMirror inside view mirror design wins with 2 OEMs, 1 Korean and the other Indian. These wins extend our camera based mirror replacement business in 2 of the world's fastest growing automotive markets. Our iND880 vision processor also continues to expand beyond automotive. During the quarter, we secured 2 new design wins, 1 in a drone application and the other in a humanoid robot.

The iND880's DRAM less architecture reduces system latency, and compute load for faster, more efficient perception, This makes the iND880 ideal for the robotics ecosystem. In commercial vehicles, the iND880 was featured at the IAA, a demonstration of Stoneridge's next generation ECU architecture. This showcase reinforces our partnership with a leading commercial vehicle supplier, and our position in centralized vision architectures. Also builds momentum towards further production engagements with truck and bus OEMs. Our in cabin perception software from the emotion3D acquisition continues to gain traction, both as a standalone offering and as part of our pre integrated hardware plus software platform.

We were awarded an OEM production program on a vehicle model for the Australian market, with production starting in 2027. Additionally, our combined SoC and perception solution for advanced driver and occupant monitoring was named in cabin solution of the year by AutoTech Breakthrough, recognizing the strength of our integrated approach. Turning to photonics, our quantum business delivered record revenue and record bookings in the third quarter, with bookings up 17% sequentially. Highlights include our largest product order to date, for continuous variable quantum key distribution or CVQKD. We also secured 2 new NRE contracts for the first phase of development an integrated laser source for quantum computing.

These programs demonstrate the differentiation of our photonic light source platform as quantum applications progress toward commercialization. We are also expanding our photonics business into high reliability markets beyond automotive, During the quarter, our SLED photonics products completed final qualification and were selected for the Chime space satellite program validating the strength of our portfolio and supporting our diversification strategy. We also advanced our LXM laser program for a space communications application and secured a $2 million supply contract. Together, these milestones demonstrate growing traction for our photonics technologies across multiple attractive end markets. Earlier this week, we received the final FDA regulatory approval for our acquisition of AMS OSRAM's CMOS image sensor business.

We now expect the transaction to close at the end of the year subject to the satisfaction of the remaining customary closing conditions. Before we move to our financials, I want to say a word about how we report our forward visibility in the form of our strategic backlog, which we report in November each year. Over the past year, our strategic backlog trended slightly up to $6.2 billion excluding our China Wuxi business. Importantly, this figure does not include our recent physical AI design wins. In physical AI from drones to humanoid robots, our vision portfolio alone has secured more than 40 design wins in 2026.

These are exciting fast moving markets and could be expected to contribute considerably to our strategic backlog and future revenue as these markets mature, However, today is just too early to predict with precision the size, the initial ramp, the winners for this market. We have therefore taken a conservative approach and excluded them from our strategic backlog this year. Let me be clear, the underlying momentum in our business is strong and continues to build with major discussions ongoing, which potentially will result in significant increase in our strategic backlog when it is next reviewed and these discussions have in turn transitioned into design win commitments.

As Naixi will detail, our fourth quarter outlook implies approximately 33% year over year growth at the midpoint, We will continue to report design wins and growth metrics that reflect how the business is performing quarter by quarter. I also want to note that based on our current visibility, our 2027 revenue outlook is in line with current analyst estimates. With that, I will turn the call over to Naixi to review our financial results and our outlook in more detail.

Naixi Wu: Thank you, Donald, and good afternoon, everyone. Indy's third quarter revenue was $70.2 million above the midpoint of our outlook. Revenue increased 10% quarter over quarter and 31% year over year. Core business revenue was approximately $40.7 million ahead of the midpoint of our outlook and up approximately 14% sequentially. Reflecting continued momentum in our ADAS portfolio. Revenue from our Wuxi subsidiary increased approximately 5% sequentially to $29.5 million Non GAAP operating expenses for the quarter were $36.4 million approximately $600 thousand below our outlook of $37 million As a result, while leveraging our top line growth, our non GAAP operating loss narrowed significantly to $7.2 million from $11.3 million in the third quarter of 2025.

A reduction of more than a third and a clear demonstration of our continued progress towards profitability. Including net interest expense of $3.1 million our non GAAP net loss was $10.3 million after excluding the non controlling interest in Wuxi the non GAAP net loss attributable to Indy was $11.6 million or $0.05 per share on a base of 233 million shares. An improvement of $0.02 from the third quarter of 25. Please refer to the presentation on our website for a more detailed breakdown of our non GAAP measures. Turning to the Wuxi divestiture, which still remains under review by the regulators in China.

As a reminder, in the fourth quarter of 25, we entered into a definitive agreement with United Faith Auto-Engineering Co., Ltd. or USA. A publicly listed company in China. Under the agreement, we will sell our entire equity interest in Wuxi in Wuxi for gross proceeds of approximately $135 million in cash at closing before applicable taxes and fees. The discussions with the regulators and UFA are constructive. We are optimistic that a transaction can still close by the end of the year. Upon closing, we expect to use the net proceeds to further strengthen our balance sheet and optimize our capital structure, including addressing our convertible debt. Turning to the balance sheet.

We ended the quarter with total cash and cash equivalents including restricted cash of $144.3 million a decrease of $4.7 million from the prior quarter. We expect to reach non GAAP profitability in the second quarter of 27 and to turn cash flow positive the following quarter. After funding the closing consideration for the AMS OSRAM acquisition, and independent of any proceeds from the Wuxi divestiture, we believe our existing cash provides ample liquidity to fund our operations through that path to profitability. Moving to our outlook. For the fourth quarter of 26, we expect total revenue of between $73 million and $81 million or $77 million at the midpoint.

We expect our core business to contribute approximately $47 million and our Wuxi subsidiary at approximately $30 million at the midpoint. We expect non GAAP operating expense of $37.5 million in the fourth quarter, up slightly from $36.4 million in the third quarter. With a net interest expense of approximately $3.4 million and no tax expense, we expect net loss per share to decrease to approximately $0.04 assuming the midpoint of revenue range and the base of 240 million shares. To summarize, the third quarter was another quarter of solid execution. Revenue grew 10% sequentially and 31% year over year. Led by approximately 14% sequential growth in our core business as our ADAS portfolio continues to ramp.

We reduced our non GAAP operating loss by approximately $4 million from the prior period and our loss per share improved by $0.02 Our balance sheet remains solid, with over $144 million in cash, and we expect approximately $135 million in gross proceeds from the Wuxi divestiture to strengthen it further. Looking ahead, our fourth quarter outlook implies 33% year over year growth and full year revenue growth of more than 20%. With RADAR now in volume production, we remain focused on disciplined spending and continue to progress towards profitability. With that, I will turn the call back to Donald for closing remarks.

Donald McClymont: In closing, Q3 was a strong quarter for Indy. We delivered double digit revenue growth both sequentially and year over year, and are on track for a full year revenue growth of more than 20% in the mixed automotive market. Just as importantly, we are executing on the milestones that will drive our next phase of growth. Our automotive radar chipset is in high volume production, setting the stage for our continued radar revenue ramp. Our vision portfolio has secured more than 40 design wins so far this year and our technology is moving rapidly into physical AI across humanoid robots, drones, and other autonomous machines.

Our photonics business delivered record quantum revenue and bookings while expanding into new high margin markets. With a growing design win pipeline and a broadening customer base, we believe Indy is exceptionally well positioned to deliver sustained growth and long term value for our shareholders. That concludes our prepared remarks. Operator, please open the line for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1. You may press star 2 if you would like to remove your question from the queue. Before pressing the star keys. Our first question is from Cody Grant Acree with Stonex. Please proceed with your question.

Cody Grant Acree: Congrats on the progress. it is nice to hear Donald that our street models are not far off for 2027. that is definitely encouraging. We are at least on the right path. You opened the call with a talk about the auto industry softer in China, stronger in The U. S. And Europe. Can you maybe talk about how India is leveraged against the broader auto cycle? Obviously, you are in the early stages of radar and machine vision ramp, and I would think that would really insulate you from cyclical swings we are hearing better things about the overall auto cycle. Just curious on your thoughts there.

Donald McClymont: Yes. I mean, the primary thing that defines our revenue profile is our own share gain. And that is beginning to accelerate as you can see from the numbers right now. And we expect it will continue to do such as we progress through the next weeks and months and quarters. So, yes, you are 100% correct. I mean, we are somewhat insulated from the cycle. Generally speaking, it is it is been reasonably positive actually worldwide. There has been some softness domestically in China that we saw, but the China export market, you know, models being designed, manufactured in China for export to whatever Central Europe. And so have shown some strength.

So at this point, we do not view macro as a huge driver at least not compared to our own our own share gain.

Cody Grant Acree: Thanks for that and you mentioned China. A bit better in export. Can you maybe just talk about your DRAM less vision engagements there? Help us frame maybe the size of the opportunity there. And the pace at contribution you expect over the next few quarters Are those engagements starting to generate revenue?

Donald McClymont: Yes. I mean, they are absolutely. And, you know, I would not single out China necessarily only. They were kind of the vanguard of the of the adoption of the of the product, but we are now beginning to see it worldwide in certain applications within the car. Particularly in The United States. We have had some very significant uptick in adoption over the course of the last quarter. And, you know, we expect that will continue. It, you know, has been a very challenging area for supply chain given the scarcity of memory and the pricing increase of 3x or 4x over the course of the last period.

And, you know, that has driven many significant manufacturers to adopt us, and, even 1 or 2 are beginning to talk about it publicly. Thanks for that, Donald.

Cody Grant Acree: And then lastly, and not to bring up a sore point, but your equity has obviously suffered along with the rest of the group. But you know, you particularly suffered. Has that prompted any supplier conversations, any partner any OEM or tier 1 partner conversations, You know, the auto industry is particularly sensitive about their supplier health. Just if you can help us with those discussions.

Donald McClymont: Well, I mean, I think generally speaking, the automotive is used to a bit of suffering. But, you know, the bottom line is our cash position is still strong, and that is really where the rubber hits the road, you know, again, using an automotive analogy there for you. So I think at this point, everybody's cool. We have not had any explicit discussions at all actually around that. it is been a tough take for the last month or so. But I mean, at this point, you know, there is there is nothing structurally that is changed for us. And you know, we are somewhat confused by the market at this point. But we. We will drive through it.

We will execute through it. We run our own race. Drive our products into production, and drive them into heavy growth and then I think we will get rewarded for it in the fullness of time. Excellent. Thank you guys for the help, and thanks for the questions. Thanks, Cody.

Operator: Our next question is from Anthony Stoss with Craig Hallum. Please proceed with your question.

Anthony Stoss: Good morning, team or good afternoon, team. Donald, I wanted to go through gross margins for the gross margins in the quarter ticked down. Sequentially to 41.6. Why did it happen? And can you give us a sense what you expect Q4 and maybe for 2027? And then I have a follow-up.

Donald McClymont: So it is largely driven by mix in particularly in our Wuxi business. that is had some fairly severe margin pressure over the course of the last I mean, 9 to 12 months or so and that has continued. Although we do see light at the end of the tunnel, in that supply chain tightness may allow us to leverage prices back up as we go forward. And as we have highlighted before, once WuXi has divested, then our blended gross margin should tick up into the low fifties.

Anthony Stoss: Q4, do you think it is kind of in that same 41% range? Is it move up a little bit?

Donald McClymont: I think we will see it go up a little bit as some of these measures begin to take effect.

Anthony Stoss: Got it. And then your top 3 North American win for RADAR, can you discuss timing and perhaps number of models you might expect out of the gate?

Donald McClymont: We do see fairly broad adoption of that in terms of the number of models that we will we will see And timing is not public yet, but it is it is a relatively near term opportunity for us.

Anthony Stoss: Got it. And then lastly, you talk about the AMS, do you expect it to close in the next month or so? What do you expect revenue wise, gross margin wise, etcetera? You mind?

Donald McClymont: Yeah. I mean, it is. This quarter is slated to close. It will not contribute significantly in either revenue or OpEx. Through the end of the quarter. And at this point, we, you know, we believe it should be commensurate with our average gross margins, maybe a little on the low side. Before we before we are able to tune it up and get our arms around it and make sure that we optimize the manufacturing in that in that group. Thank you, Donald.

Operator: Our next question is from Sujeeva De Silva with ROTH Capital. Please proceed with your question.

Sujeeva De Silva: Hi, Donald. Hi, Naixi. Donald, appreciate all the automotive puns in your replies. So tier 1 radar program, staying on that, talked about large OEM. How many OEMs are helping contribute to revenue today and maybe do you expect in 12 months? And you talked about it being a billion lifetime opportunity, $100 million a year at peak. How far away are we from that kind of ramp up? Is it-- just give us some idea. Maybe time frame would be helpful.

Donald McClymont: I mean, there are multiple OEMs who are who are signed up to this already. We do expect a fairly broad adoption of this. Through our key tier 1. Expectation is in fact that we will get to a point of somewhere between 50 million to 70 million units shipped per year, at an ASP between $5 and $6. So maybe a little higher than the number you just you just mentioned. In terms of annual run rate. We do expect significant growth from it next year. It will be of the key drivers of our of our growth as we as we go through 2027. Mean, very significant. We will get some material contribution from it. From this quarter.

And on into 2027. 7. And the level of interest in it just given the performance that is simply the best in the business, the best on the market. People who have seen RADAR deployments and presentations for 20 years are saying it is the most significant progress in radar technology in the last 20 years in their in their career time. So you can expect a lot more design wins as we go forward from this.

Sujeeva De Silva: Great. Sounds like sounds like an exciting upside update to what I thought. And then switching over to the video processor, the iND880, it sounds like you have you said 40 design wins. I am curious how many of those, you know, portion of those are you seeing revenue today? It sounds like it is still early, what is the linearity of some of those more pro some more of those 40 design wins coming online in the next several quarters. I know Korea, India are 2 places you mentioned that curious how that is gonna progress from here.

Donald McClymont: Yeah. I mean, we have we have seen some almost alarmingly quick adoption of the of the chip just given the DRAM situation People cannot ship or they cannot ship economically. Even in the. Down to the to the level of 2 or 3 months, from first contact to first shipment for us. So it is kinda hard to call how quickly it is gonna ramp. Certainly, it is been surprising us so far. And has been a material contributor to the ramp that we have gone through this year, and we accept it to accelerate. So I mean, in terms of the number of design wins that I have ramped so far, it is.

I mean, it is probably less than 20% of the total which are even in those guys. Who have begun to ship are still at the slim end of the ramp. So we have a lot of upside to come. Yeah. It sounds great. In the short time implement is great. Thanks for calling on you. Thanks, Vijay.

Operator: Our next question is from Lanny Chiu with TD Cowen. Please proceed with your question.

Lanny Chiu: Hi, everyone. This is Lanny on for Joshua today. Congratulations on the results and great to hear about your design win to date. I wanted to talk about your 3D in-cabin software 1 that you had mentioned. Given that it is going into production next year, how should we think about the revenue ramp through the year and the potential beyond that? I have a follow-up.

Donald McClymont: Well, just. By way of reminder, it is a software business. So we generate license fees and then royalty stream as we ship or as the. As our customer ships product into the field. So the ASP for the software royalty is somewhere between $4 and $8 depending on the feature set that we deploy into the market. And you can assume that it ramps with the same sort of profile as any 1 of our hardware products. We also a while ago, publicly announced our first quarter, our first. Or 1 of our first design wins with Mahindra. Which is now beginning to generate revenue from that flow.

And we are expecting, you know, reasonably significant contribution to our overall revenue profile in 2027 from software. Probably not more than 10% in the first year, but we do see it growing very quickly. And we also see it as sort of following wind for the 1 stop shop product that we have where we supply the hardware with the software also integrated. So we are we are seeing a lot of great traction for that product. Again, we trade on technology as a company. Our radar technology is the best in the planet. Our ISP technology is the best on the planet. Likewise, our perception software is getting the same plaudits from our customers once they see it.

So we are running into open doors. Great. that is great to hear.

Lanny Chiu: And then pivoting from the auto business, really interesting to see your slides chosen for a Chime. I believe the press release had mentioned some satellite scheduled for launch in 2028 and 2030. So focusing more on the 2028 launch, can you talk a little bit about your content opportunity Should we see some revenue maybe end of next year and more materially in 2028? Or how should we think about that layering into your P&L? Thank you.

Donald McClymont: I mean it is relatively small compared to our core business. it is more intended to highlight the diversity of the technologies that we have now available to us. Typically, programs generate some non product based revenue in terms of services or NREs or customization fees that we realize for the development of the programs. And then as the satellites launch, of course, we get the recurring product revenue. At this point, we are we are not really subsegmenting out how much how much revenue that is, but let's say single digit revenue. Thank you.

Operator: Our next question is from Rebecca Zamsky with B. Riley Securities. Please proceed with your question.

Rebecca Zamsky: Hello. Thank you for taking my question. This is Rebecca on for Craig Ellis. I think your core business revenue grew about 14% sequentially, and the guide implies about $47 million So could you provide some color of how that is split across the vision and photonics? And how much of the 4 key step up is new program ramps versus share gains on existing platforms? Thank you.

Donald McClymont: Well, I mean, firstly, it is mostly driven by new program ramps. As opposed to let's say, share gain for our tier 1 customer. We are mostly driven by our vision and radar programs. Those are the large movers. The optical group is beginning to contribute It will become significant over time, but it is still smaller than the other 2. Thank you.

Rebecca Zamsky: And on the laser selection at the top 3 North American OEM, when should we start to expect production? And how should we think about the shape of the ramp through 2027 and 2028?

Donald McClymont: So we have not publicized that yet. it is it is a it is a little early to provide specific guidance on specific programs, but it is a large rolling program for us with a high penetration that particular customer. So we do expect it to be significant, and we will we will provide more information as time progresses. Thank you.

Operator: Our next question is from Jonathan Tanwanteng with CJS Securities. Please proceed with your question.

Jonathan Tanwanteng: Hi, thank you for taking my question. I was wondering if you could go over the strategic backlog calculation again and if there is any difference in how you calculate that, number 1. And number 2, how you expect that to layer on into revenue over the next 2 or 3 years or so?

Donald McClymont: No change in the methodology per se other than the part that we highlighted in the script that we did not include the physical AI wins just as it is it is a little too early for us to kinda call how long term revenue profiles have of these guys are gonna roll out. So we did drive a lot of additional business in our core automotive business during the last 12 months. But the way that the model works, I think as you know, John, we have a sort of a rolling 10-year window and some of the designs which are just ramping now or have ramped in the last year or so roll off out of the window.

And in some cases, we have not won the follow on designs for those yet because the cycle is just not there yet. But, I mean, the sales progress in our company has been just phenomenal over the course of the last 12 months. So the fact that it is relatively flat versus the last year is not indicative of how we see our momentum in the in the market. In terms of how we roll that into the following years, As we said in the guide and in the script, in the script, we feel extremely strong about what the perception is of our revenue ramp going out there.

We do expect that we will add multiple $100 million of annual run rate over the course of the next couple of years. Into the equation as that converts into run-rate business.

Jonathan Tanwanteng: Okay. Great. Thank you. And I was wondering if you could quantify how much contribution you might be seeing in 2027 you know, from contracts you have won or like, decision processes that have moved over the finish line because of the DRAM discussion, whether they started there or it was a deciding factor. Just help us understand how much more where DRAM was the deciding factor in a visual processor win. Yeah. Yeah. Oh, yeah. I mean, that much incremental have you seen You know? Next year versus if that DRAM discussion was not there?

Donald McClymont: I mean, the product was good to start with. But I think if anything, it is just speeded the adoption of it. Given the DRAM issues. We do expect, given the divestiture of WuXi impending and that dropping off of our revenue in 2027, we do expect to be able to more than replace that revenue in 2027. From the organic growth of RADAR and vision through that. And the new analyst iND880 is a key cornerstone of that. Okay.

Jonathan Tanwanteng: Great. Thank you. If I could get 1 more in there, how big is your non auto business today, and what is the growth expected next year?

Donald McClymont: I mean, we do not really segment that out actually, John. But it is it is still. I mean, still automotive is still our key business. Okay. Thank you.

Operator: There are no further questions at this time. I would like to turn the floor back over to Donald McClymont, for closing comments.

Donald McClymont: Well, thanks, everybody, for attending, and looking forward to seeing you at the conferences through the course of the remainder of the year. Thanks, everybody.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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