What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-07-24 compared with 2025-04-24 · 159 added, 80 removed, 328 unchanged (42% of the section changed)

8 unchanged sentences

These technologies can be harnessed to deliver mission-critical capabilities at the edge and in the cloud, advancing the safety of road users, and revolutionizing the driving experience and the movement of people and goods globally.

As of March 29, 2025, our solutions had been installed in approximately 1,200 vehicle models (including local country, year, and other vehicle model variations), and our System-on-Chips (“SoCs”) had been deployed in over 210 million vehicles.

As of June 28, 2025, our solutions had been installed in approximately 1,200 vehicle models (including local country, year, and other vehicle model variations), and our System-on-Chips (“SoCs”) had been deployed in approximately 220 million vehicles.

We are actively working with more than 50 Original Equipment Manufacturers (“OEMs”) worldwide on the implementation of our ADAS solutions.

In the three months ended March 29, 2025, we shipped approximately 8.5 million of our systems, the substantial majority of which were EyeQ TM SoCs.

This represents an increase from the approximately 3.6 million of our systems that we shipped in the first three months of 2024, primarily due to the normalization of excess inventory at our Tier 1 customers that was previously used to satisfy demand during 2024.

In the six months ended June 28, 2025, we shipped approximately 18.1 million of our systems, the substantial majority of which were EyeQ TM SoCs.

This represents an increase from the approximately 11.2 million of our systems that we shipped in the six months ended June 29, 2024, primarily due to the normalization of excess inventory at our Tier 1 customers that was previously used to satisfy demand during 2024.

We were founded in Israel in 1999.

8 unchanged sentences

Further, on April 13, 2024 and October 1, 2024, Iran launched a series of drone and missile strikes against Israel, to which Israel has responded.

How long and how severe the current conflict in Gaza, Northern Israel, Lebanon or the broader region becomes is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate in the future into a greater regional conflict.

To date, our operations have not been materially affected, although as of April 15, 2025 approximately 3.8% of our employees have been called to reserve duty in the Israel Defense Forces.

We expect that the current conflict in the Gaza Strip, Lebanon and the broader region as well as the security escalation in Israel will not have a material impact on our business results in the short term.

However, since this is an event beyond our control, its continuation or cessation may affect our expectations.

Most recently, on June 13, 2025, Israel launched a preemptive attack on Iran, to which Iran responded with ballistic missile and drone attacks.

On June 23, 2025, Israel and Iran agreed to a ceasefire, although there is no assurance that the ceasefire will continue.

How long and how severe the current conflicts in Gaza, Northern Israel, Lebanon, Iran or the broader region become is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate in the future into a greater regional conflict.

To date, our operations have not been materially affected, although as of July 15, 2025 approximately 6.7% of our employees have been called to reserve duty in the Israel Defense Forces.

We expect that the current conflict in the Gaza Strip, Lebanon, Iran and the broader region as well as the security escalation in Israel will not have a material impact on our business results in the short term.

However, since these are events beyond our control, their continuation or cessation may affect our expectations.

We continue to monitor political and military developments closely and examine the consequences for our operations and assets.

Secondary Offering, Share Repurchase, Option and Conversion

On July 9, 2025, the Company announced the pricing of a public secondary offering of 50,000,000 shares of Class A common stock (which shares were received upon the conversion of 50,000,000 shares of Class B common stock into Class A common stock) by Intel at a public offering price of $16.50 per share (the “Secondary Offering”), with Intel granting the underwriters a 30-day option to purchase up to an additional 7,500,000 shares of Class A common stock (the “Option”).

The Secondary Offering closed on July 11, 2025.

In connection with and conditional upon the closing of the Secondary Offering, on July 11, 2025 the Company purchased from Intel 6,231,985 shares of Class A common stock (which shares were received upon the conversion of 6,231,985 shares of Class B common stock into Class A common stock) at a price of $16.04625 share, which is equal to the per share purchase price paid by the underwriters in the Secondary Offering pursuant to a share repurchase agreement with Intel (the “Share Repurchase”).

The aggregate consideration paid by the Company for the Share Repurchase was $100 million.

Upon closing of the Share Repurchase, the Company cancelled and retired the 6,231,985 shares of Class A common stock acquired pursuant to the Share Repurchase.

Following the closing of the Share Repurchase, the underwriters exercised the Option (which shares were received upon the conversion of 7,500,000 shares of Class B common stock into Class A common stock), which closed on July 11, 2025.

The Company did not sell any shares of Class A common stock in the Secondary Offering or in respect of the exercise of the Option, and did not receive any proceeds from the sale of shares offered by Intel in each instance.

In addition to and conditional upon the closing of the Secondary Offering, Intel voluntarily converted pursuant to the Company’s Amended and Restated Certificate of Incorporation an additional 50,000,000 shares of Class B common stock to Class A common stock (the “Conversion”).

The shares issued to Intel pursuant to the Conversion were issued pursuant to an exemption from registration pursuant to Section 3(a)(9) of the U.S.

Securities Act of 1933.

The Company received no proceeds from issuance of shares in the Conversion.

The Company paid the costs associated with the registration of shares in connection with the Secondary Offering and the Option, other than underwriting discounts, fees and commissions.

Upon completion of the Secondary Offering, Share Repurchase, Option and Conversion, Intel continues to directly or indirectly hold all of the Class B common stock of Mobileye as well as 50,000,000 shares of Class A common stock, which together represent approximately 79.6% of our outstanding common stock and 97.3% of the voting power of our common stock.

Our Business Model

We currently derive substantially all of our revenue from our commercially deployed ADAS solutions, including our Premium ADAS solutions.

In the future, propelled by our next generation of EyeQ TM SoCs, including our EyeQ TM 6 SoC, our Compound AI system architecture, including True Redundancy™, our surround computer vision Mobileye SuperVision™ solution, and our software-defined imaging radars, we believe that we will be positioned to deliver an autonomous driving solution that can enable the mass adoption of AV.

In the future, propelled by our next generation of EyeQ TM SoCs, including our EyeQ TM 6 SoC, our Compound AI system architecture, including True Redundancy TM , our surround computer vision Mobileye SuperVision TM solution, and our software-defined imaging radars, we believe that we will be positioned to deliver an autonomous driving solution that can enable the mass adoption of AV.

We generate the majority of our revenue from the sale of our EyeQ TM SoCs to OEMs through sales to Tier 1 automotive suppliers.

5 unchanged sentences

We have co-developed six generations of our automotive grade SoC, EyeQ TM , with STMicroelectronics, including EyeQ TM 5 and EyeQ TM 6.

We have also established relationships with several suppliers, such as Quanta Computer, to develop and assemble our ECUs, including the design for our Mobileye SuperVision™, which includes our EyeQ TM 5 SoCs manufactured by STMicroelectronics.

We have also established relationships with several suppliers, such as Quanta Computer, to develop and assemble our ECUs, including the design for our Mobileye SuperVision TM , which includes our EyeQ TM 5 SoCs manufactured by STMicroelectronics.

As part of an effort to establish redundancy and better control of our supply chain, we have sought additional qualified suppliers, and we have recently entered into an agreement with TSMC (Taiwan Semiconductor Manufacturing Company Ltd.) pursuant to which it will manufacture components of our imaging radar and some of our future generations of our EyeQ TM product, and potentially other future products.

Our close partnership with Intel exists on multiple fronts.

19 unchanged sentences

ADAS volumes have grown faster in recent years than the overall automotive market as ADAS penetration rates have increased, and we believe that we will continue to benefit from that trend.

Our revenue of $438 million in the three months ended March 29, 2025 was up 83% year-over-year, primarily due to the unusually low volume caused by the usage of meaningful excess inventory at our Tier 1 customers to satisfy demand in the first quarter of 2024.

Our revenue of $944 million in the six months ended June 28, 2025 was up 39% year-over-year, primarily due to the unusually low volume caused by the usage of meaningful excess inventory at our Tier 1 customers to satisfy demand in the first half of 2024.

Continued or future constraints on global automotive production resulting from the effects of economic uncertainty, both global and in specific markets in which we operate, may be a limiting factor on our ability to increase revenue.

1 unchanged sentence

Trade policies, sanctions and import and export controls.

Trade policies and international disputes at times result in increased tariffs, trade barriers and other restrictions, which can increase our manufacturing costs, make our solutions less competitive, reduce demand for our solutions, limit our ability to sell to certain customers, limit our ability to procure raw components or raw materials or impede or slow the movement of our goods across borders.

1 unchanged sentence

On March 26, 2025, the United States imposed an additional 25% tariff on all imports of passenger vehicles, light vehicles, and certain automotive parts, such as engines, transmissions, powertrain parts and electrical components.

The tariff on finished vehicles went into effect on April 3, 2025 and the tariffs on automobile parts will enter into effect by May 3, 2025.

The tariff on finished vehicles went into effect on April 3, 2025 and the tariffs on automobile parts entered into effect on May 3, 2025.

Further, on April 2, 2025, the United States announced a 10% tariff on all countries effective on April 5, 2025 as well as individualized higher tariff rates on countries with which the United States has proportionately large trade deficits in goods.

The United States has paused these "reciprocal tariffs" on certain countries as individual bilateral trade deals are negotiated, while increasing reciprocal tariff rates and other restrictions on countries that have responded with increased tariffs of their own, including the People's Republic of China.

The United States paused these “reciprocal tariffs” on certain countries as individual bilateral trade deals were negotiated, and increased reciprocal tariff rates and other restrictions on countries that responded with increased tariffs of their own.

Subsequently, the United States announced trade deals with certain countries, such as Indonesia, and interim trade deals with others, including China, as negotiations with such countries for definitive trade deals continued.

In July 2025, the United States announced tariffs on certain countries and other entities, including Mexico, Canada and the European Union, that failed to make substantial progress on trade negotiations with the United States following the pause on reciprocal tariffs;

such tariffs are scheduled to become effective on August 1, 2025.

Further, the United States announced on July 8, 2025 additional sector tariffs, including on copper imports.

As of the date of this report, there remains a high degree of uncertainty surrounding U.S.

trade policy, how it will be implemented, how other countries will react, and how it will ultimately impact our industry and business.

For example, our customers may shift orders for components and parts, including our solutions, prior to the automotive tariffs going into effect on May 3, 2025, thereby shifting demand for our solutions and corresponding revenue to earlier periods.

While we continually evaluate changes in U.S, trade policy and global reactions thereto, as well as our ability to mitigate their impact, these recent changes may negatively impact our customers and our business.

For additional information, see "Item IA - Risk Factors - We are subject to risk related to trade policies, sanctions, and import and export controls" in our 2024 Form 10-K.

For example, our customers may have shifted or will shift orders for components and parts, including our solutions, prior to the automotive tariffs going into effect on May 3, 2025 or certain country or regional tariffs going into effect on August 1, 2025, thereby shifting demand for our solutions and corresponding revenue to earlier periods.

While we continually evaluate changes in U.S.

trade policy and global reactions thereto, as well as our ability to mitigate their impact, these recent changes may negatively impact our customers and our business.

For additional information, see “Item IA - Risk Factors - We are subject to risk related to trade policies, sanctions, and import and export controls” in our 2024 Form 10-K, as filed with the SEC on February 13, 2024 (the “2024 Form 10-K”).

Design wins with new and existing customers.

4 unchanged sentences

Together with Tier 1 automotive suppliers, we work closely with OEMs to understand their solution requirements and have built close long-term relationships with them extending across multiple generations of EyeQ TM products, though there is no guarantee that our customers will purchase our solutions in any certain quantity or at any certain price even after we achieve design wins.

For example, in the third quarter of 2024 Zeekr announced their decision to utilize their in-house system instead of SuperVision TM for at least a major portion of product for their 001 model going forward.

For example, in the third quarter of 2024 Zeekr announced their decision to utilize their in-house system instead of SuperVision TM for at least a major portion of production for their 001 model going forward.

Investment in technology leadership and product development.

2 unchanged sentences

The EyeQ TM family design further enables scalable ECU architectures, from supporting a variety of ADAS solution architectures to hosting the full workload of autonomous driving, while meeting stringent cost and power efficiency requirements.

We expect that our development of software-defined imaging radar will provide a significant cost advantage by eliminating the need for multiple high-cost lidars around the vehicle and require only a single front-facing lidar, significantly lowering the overall cost of the required sensors compared to solutions that use lidar centric or lidar-only systems.

We expect that our software-defined imaging radar will provide a significant cost advantage by eliminating the need for multiple high-cost lidars around the vehicle and require only a single front-facing lidar, significantly lowering the overall cost of the required sensors compared to solutions that use lidar centric or lidar-only systems.

Regulation for ADAS and autonomous driving solutions.

18 unchanged sentences

Over time we expect autonomous driving solutions to contribute meaningfully to our revenue growth.

As a result, consumers’ demand for, and willingness to adopt, ADAS and autonomous driving technologies will significantly impact our financial performance.

As a result, consumers’ demand for, and willingness to adopt, ADAS and autonomous driving technologies , including robotaxi services, will significantly impact our financial performance.

We believe that our leadership position in ADAS positions us to continue to set the standard for advanced autonomous solutions and will help us benefit from increasing consumer confidence in and demand for autonomous technology over time.

26 unchanged sentences

Starting in late 2022 and early 2023, such supply chain disruptions, raw material shortages, and manufacturing limitations abated and during 2023, we successfully increased levels of EyeQ TM SoC inventory on hand, mitigating the potential for future supply constraints to cause a shortfall of chips.

However, in the event of a reoccurence of supply chain constraints, and subject to the duration and severity thereof, we may be required to operate with minimal or no inventory of EyeQ TM SoCs or SuperVision TM ECUs on hand.

As a result, we are substantially reliant on timely shipments of EyeQ TM SoCs from STMicroelectronics and ECUs from Quanta Computer (or other suppliers) to fulfill customer orders and if such a shortfall of chips or ECUs were to occur, we may be unable to offset future supply constraints through the use of inventory on hand.

However, in the event of a reoccurrence of supply chain constraints, and subject to the duration and severity thereof, we may be required to operate with minimal or no inventory of EyeQ TM SoCs or SuperVision TM ECUs on hand.

As a result, we are substantially reliant on timely shipments of EyeQ TM SoCs from STMicroelectronics and ECUs from Quanta Computer (or other suppliers) and may in the future become reliant on additional suppliers such as TSMC, to fulfill customer orders and if such a shortfall of chips or ECUs were to occur, we may be unable to offset future supply constraints through the use of inventory on hand.

Our reliance on single or limited suppliers and vendors for certain components, equipment, and services and the aforementioned shortages of substrates and other components have led to increased supply chain risks and continue to stress our ability to meet the supply demands of our customers.

3 unchanged sentences

In connection with the Mobileye IPO, we established an equity incentive plan for purposes of granting share-based compensation awards to certain members of our senior management, to our non-employee directors and to employees, to incentivize their performance and align their interests with ours.

Historically, grants of share-based compensation to our employees were made pursuant to Intel’s employee equity incentive plans, and such historical grants will continue based on their original vesting schedules.

Historically, grants of share-based compensation to our employees were made pursuant to Intel’s employee equity incentive plans, and such historical grants will continue to be based on their original vesting schedules.

Equity compensation has been, and will continue to be, an important part of our future compensation strategy and a significant component of our future expenses, which we expect to increase over time.

6 unchanged sentences

Because of the complex nature of our products and the need to customize and validate a product and to integrate it into the OEM’s overall ADAS system, we also have strong direct relationships with the OEMs.

EyeQ TM SoC sales represented approximately 94% and 72% of our revenue for the three months ended March 29, 2025 and March 30, 2024, respectively.

Revenue from the sale of our EyeQ TM products is recognized at the time of product shipment from our facilities, as determined by the agreed-upon shipping terms.

EyeQ TM SoC sales represented approximately 92% and 86% of our revenue for the three months ended June 28, 2025 and June 29, 2024, respectively, and 93% and 81% of our revenue in the six months ended June 28, 2025 and June 29, 2024, respectively.

Sales of our SuperVision™ product represented less than half of the remainder of our revenue for the three and six months ended June 28, 2025 and the majority of the remainder of our revenue for the three and six months ended June 29, 2024.

Revenue from the sale of our EyeQ TM products and SuperVision™ products is recognized at the time of product shipment from our facilities, as determined by the agreed-upon shipping terms.

Our sales to any single Tier 1 automotive supplier typically cover more than one OEM and more than one production program from any OEM.

26 unchanged sentences

We are eligible for certain tax benefits in Israel under the Investment Law, at a reduced tax rate, subject to specified terms.

In addition, the OECD announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax in 2021, which calls for the taxation of large multinational corporations at a minimum rate of 15%.

In 2021, the OECD announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%.

Subsequently, multiple sets of administrative guidance have been issued.

Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 (including the European Union Member States), with the adoption of additional components in later years, or announced their plans to enact legislation in future years.

We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions in which we operate.

Many non-U.S.

tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 (including the European Union Member States), with the adoption of additional components in later years, or announced their plans to enact legislation in future years.

We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-U.S.

tax jurisdictions in which we operate.

The Company is a constituent entity of its Parent for Pillar Two purposes.

In July 2025, the United States enacted tax reform through the One Big Beautiful Bill Act (“OBBBA”).

Included in this legislation are provisions that allow for the immediate expensing of research and development conducted in the United States, immediate expensing of certain capital expenditures, and other changes to the U.S.

taxation of profits derived from foreign operations.

The Company is assessing the impact of this new legislation on its future consolidated financial statements.

During the periods presented in our condensed consolidated financial statements, certain components of our business operations were included in the consolidated U.S.

7 unchanged sentences

As a result, these operations are taxed both in the United States and Israel.

tax purposes, there are favorable future tax deductions that we have not benefited due to a valuation allowance position.

tax purposes, there are favorable future tax deductions that we have not benefited from due to a valuation allowance position.

If warranted, based on the assessment of verifiable evidence in support of the realization of deferred tax assets, the valuation allowances may be released, resulting in a tax benefit.

3 unchanged sentences

Certain net operating losses and tax credit carry-forward tax attributes generated by the Company that have been utilized as part of Intel’s consolidated income tax return filings, but have not been utilized by the Company under the separate return method approach, have been reflected in these condensed consolidated financial statements because the Company will recognize a benefit based on the separate return method when determined to be realizable.

As a result of the Secondary Offering, Share Repurchase, Option and Conversion, the Company anticipates that from a U.S.

income tax perspective, Intel may no longer hold a sufficient percentage of the Company’s issued and outstanding common stock, which may result in the deconsolidation of the Company from Intel’s U.S.

domestic income tax return.

The Company is evaluating the potential impact that such a deconsolidation may have on its future Consolidated Financial Statements, as well as in respect of the Tax Sharing Agreement.

Results of Operations

1 unchanged sentence

Three months Ended

March 29, 2025

March 30, 2024

Six months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

dollars in millions

12 unchanged sentences

Three months ended

Six months ended

dollars in millions

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

Cost of revenue

3 unchanged sentences

Three months ended

Six months ended

dollars in millions

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

Cost of revenue

Research and development, net

2 unchanged sentences

Total share-based compensation

Comparison of the Three Months ended March 29, 2025 and March 30, 2024

In the three months ended March 29, 2025, revenue increased by $199 million, or 83%, compared to the three months ended March 30, 2024, due to an increase of $239 million, or 139%, in EyeQ TM SoC revenue, primarily attributable to a 139% increase in volume resulting from the unusually low volume caused by the usage of meaningful excess inventory at our Tier 1 customers to satisfy demand in the first quarter of 2024.

Comparison of the three and six months ended June 28, 2025 and June 29, 2024

In the three months ended June 28, 2025, revenue increased by $67 million, or 15%, compared to the three months ended June 29, 2024.

This increase in revenue was primarily due to an increase of $91 million or 24% in EyeQ TM SoC revenue mostly attributable to a 28% increase in volume, resulting from higher customer demand and from the normalization of excess inventory by our Tier 1 customers that was previously used to satisfy demand during the first half of 2024.

This was partially offset by a decrease of $23 million in SuperVision TM related revenue.

Average System Price, calculated as the sum of revenue related to EyeQ TM and SuperVision TM systems divided by the number of systems delivered, decreased by approximately 20%, primarily due to the lower percentage of SuperVision TM related revenue as compared to the first quarter of 2024.

Average System Price, calculated as the sum of revenue related to EyeQ TM and SuperVision TM systems divided by the number of systems delivered, decreased by approximately 9%, primarily due to the lower percentage of SuperVision TM related revenue as compared to the second quarter of 2024.

In the six months ended June 28, 2025, revenue increased by $266 million, or 39%, compared to the six months ended June 29, 2024.

This increase was primarily due to an increase of $330 million, or 60%, in EyeQ TM SoC revenue attributable mainly to a 63% increase in volume, resulting mainly from the normalization of excess inventory by our Tier 1 customers that was previously used to satisfy demand during the first half of 2024.

This was partially offset by a decrease of $66 million in SuperVision TM related revenue.

Average System Price, calculated as the sum of revenue related to EyeQ TM and SuperVision TM systems divided by the number of systems delivered, decreased by 13%, due to lower percentage of SuperVision TM related revenue as compared to the six months ended June 29, 2024.

Cost of Revenue

In the three months ended March 29, 2025, our cost of revenue increased by $46 million, or 25%, compared to the three months ended March 30, 2024, primarily due to an increase of $47 million in manufacturing costs, mainly resulting from the increase in sales of EyeQ TM systems, partially offset by the decrease in sales of SuperVision TM systems.

In the three months ended June 28, 2025, our cost of revenue increased by $24 million, or 10% compared to the three months ended June 29, 2024.

In the six months ended June 28, 2025, our cost of revenue increased by $70 million, or 17%, compared to the six months ended June 29, 2024.

In both periods, the increase is attributed to manufacturing costs, mainly resulting from the growth in sales of EyeQ TM SoC, which was partially offset by the decrease in sales of SuperVision TM systems.

Gross Profit and Margin

In the three months ended March 29, 2025, our gross profit increased by $153 million, or 283%, compared to the three months ended March 30, 2024.

This increase was mainly driven by the increase in sales of EyeQ TM systems, attributable to the usage of meaningful inventory at our Tier 1 customers to satisfy demand which took place in the first quarter of 2024.

This was slightly offset by the decrease in sales of SuperVision TM systems.

Our gross margin increased from 23% for the three months ended March 30, 2024, to 47% for the three months ended March 29, 2025.

This increase was primarily due to the lower impact of amortization of intangible assets as a percentage of revenue as well as the decrease in the percentage of revenue attributable to SuperVision TM .

In the three months ended June 28 2025, our gross profit increased by $43 million, or 21% compared to the three months ended June 29, 2024.

In the six months ended June 28 2025, our gross profit increased by $196 million, or 75%, compared to the six months ended June 29, 2024.

The increase in both periods was primarily due to the increase in sales of EyeQ TM systems, which was slightly offset by the decrease in sales of SuperVision TM systems.

In the three months ended June 28 2025, our gross margin increased to 50% compared to 48% in the three months ended June 29, 2024.

In the six months ended June 28, 2025, our gross margin increased to 49% compared to 39% in the six months ended June 29, 2024.

The increase in both periods was primarily due to the lower impact of amortization of intangible assets as a percentage of revenue.

Research and Development Expenses, net

Research and development expenses, net, in the three months ended March 29, 2025, increased by $32 million, or 13%, compared to the three months ended March 30, 2024.

This increase was primarily due to an increase in payroll and related expenses caused by average research and development headcount increase of 140 employees including higher stock based compensation and lower military duty reserve refunds from the state of Israel, lower NRE reimbursements caused by projects timing and higher depreciation expenses.

Research and development expenses, net, in the three months ended June 28, 2025, increased by $26 million, or 10%, compared to the three months ended June 29, 2024.

This increase was primarily due to an increase in payroll and related expenses, resulting mainly from an increase in average research and development headcount of 131 employees, as well as higher share-based compensation expenses.

This was partially offset by an increase in NRE reimbursements influenced by the projects’ progress and timing.

Research and development expenses, net, in the six months ended June 28, 2025 increased by $58 million, or 12%, compared to the six months ended June 29, 2024.

This increase was mainly due to an increase in payroll and related expenses, resulting from an increase in average research and development headcount of 135 employees, as well as an increase in share-based compensation.

Additionally, there was an increase in depreciation costs associated with additional sites.

Sales and Marketing Expenses

Sales and marketing expenses in the three months ended March 29, 2025, decreased by $3 million, or 9%, compared to the three months ended March 30, 2024.

Sales and marketing expenses in the three months ended June 28, 2025, decreased by $3 million or 11% compared to the three months ended June 29, 2024, mainly due to lower marketing expenses.

Sales and marketing expenses in the six months ended June 28, 2025, decreased by $6 million or 10% compared to the six months ended June 29, 2024.

This decrease is mainly associated with a decrease in payroll and related expenses due to the wind down of the after market division that took place in 2024.

General and Administrative Expenses

General and administrative expenses in the three months ended March 29, 2025, increased by $3 million, or 20%, compared to the three months ended March 30, 2024.

General and administrative expenses remained flat in the three months ended June 28, 2025 compared to the three months ended June 29, 2024.

General and administrative expenses in the six months ended June 28, 2025 increased by $3 million or 9%, compared to the six months ended June 29, 2024.

This increase was primarily due to an increase in legal and corporate expenses.

Financial Income (expense), net

Financial income, net, in the three months ended March 29, 2025, was $18 million compared to $17 million in the three months ended March 30, 2024.

This increase was mainly due to an increase in interest earned on short term bank deposits, as well as an increase derived from the impact of fluctuations in foreign exchange rates, offset by a decrease in interest earned on investment in money market funds.

Financial income, net, remained flat in the three months ended June 28, 2025 compared to the three months ended June 29, 2024.

Financial income, net, in the six months ended June 28, 2025 increased by $1 million, or 3%, compared to the six months ended June 29, 2024, due to an increase in interest income, which was partially offset by the impact of fluctuations in foreign exchange rates.

Benefit (Provision) for Income Tax

Provision for income tax in the three months ended March 29, 2025, was $(3) million compared to a benefit for income tax of $3 million in the three months ended March 30, 2024, mainly due to a decrease in loss before income taxes in the three months ended March 29, 2025 compared to prior year period.

In the three months ended June 28, 2025 provision for income tax was $6 million, compared to a $5 million provision for income tax in the three months ended June 29, 2024.

In the six months ended June 28, 2025, provision for income tax was $9 million, compared to a $2 million provision for income tax in the six months ended June 29, 2024.

In both periods, the change is mainly related to a lower loss before income taxes compared to prior-year period.

Liquidity and Capital Resources

2 unchanged sentences

Our primary uses of funds have been for funding increases in headcount in our research and development departments, investments attributable to new product development, as well as for funding our capital expenditures.

Our capital expenditures have related mainly to data storage and other computer related equipment, expenditure related to research and development projects and to the construction of new sites and were $14 million and $22 million for the three months ended March 29, 2025 and March 30, 2024, respectively.

Our capital expenditures have related mainly to data storage and other computer related equipment, expenditure related to research and development projects and to the construction of new sites, and were $28 million and $46 million for the six months ended June 28, 2025 and June 29, 2024, respectively.

To fund our cash requirements in the ordinary course of business, we anticipate that we will continue to primarily rely on operating cash flows, supplemented by our total cash and cash equivalents.

We expect our total capital expenditures for 2025 to be higher compared to our total capital expenditures in 2024.

We expect our total capital expenditures for 2025 to be similar compared to our total capital expenditures in 2024.

We continue to invest in equipment related to the development of our next generation products.

3 unchanged sentences

The following table sets forth certain consolidated statements of cash flow data:

Three months Ended

Six months ended

dollars in millions

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

Net cash provided by operating activities

2 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents

Increase in cash, cash equivalents and restricted cash

Increase (decrease) in cash, cash equivalents and restricted cash

Operating activities

For the three months ended March 29, 2025 compared to the three months ended March 30, 2024, the $69 million increase in cash provided by operating activities was mainly due to a decrease in net loss, a decrease in inventory and in other current assets compared to prior year period, largely offset by an increase in trade accounts receivable due to the increase in revenue.

For the six months ended June 28, 2025 compared to the six months ended June 29, 2024, the $252 million increase in cash provided by operating activities was mainly due to a decrease in net loss and a decrease in inventories compared to an increase in prior year period, partially offset by a slight increase in trade accounts receivable compared to a decrease in prior year period.

Investing activities

Net cash used in investing activities in the three months ended March 29, 2025 and the three months ended March 30, 2024 was $25 million and $22 million, respectively, consisting of capital expenditures and debt investments.

Net cash used in investing activities in the six months ended June 28, 2025 and June 29, 2024 was $39 million and $64 million, respectively, consisting of capital expenditures and debt investments.

Financing activities

Net cash provided by (used in) financing activities in the three months ended March 29, 2025 and the three months ended March 30, 2024 was $3 million and ($4) million, respectively, consisting of share-based compensation recharge with Intel.

Net cash provided by (used in) financing activities in the six months ended June 28, 2025 and June 29, 2024 was $0 million and $11 million, respectively, consisting of share-based compensation recharge payments made to Intel.

Liability in respect of employee rights upon retirement

8 unchanged sentences

As a result, we do not recognize any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as assets on the consolidated balance sheets.

Severance pay liability increased from $62 million as of December 28, 2024, to $63 million as of March 29, 2025.

Severance pay liability increased from $62 million as of December 28, 2024, to $69 million as of June 28, 2025, mainly due to the impact of fluctuations in foreign exchange rates.

Lease liabilities

2 unchanged sentences

All leases are operating leases with fixed payment terms where some of the leases include annual increases to lease payments based on an index or a rate.

Lease liabilities, representing the present value of future lease payments, have increased from $50 million as of December 28, 2024 to $53 million as of March 29, 2025, reflecting mainly new lease contracts, partially offset by the progress in lease payments for existing arrangements.

We have several bank guarantees aggregating approximately $14 million as of March 29, 2025 (denominated in New Israeli Shekels) mainly in connection with lease agreements and import of vehicles.

Lease liabilities, representing the present value of future lease payments, have increased from $50 million as of December 28, 2024 to $56 million as of June 28, 2025, reflecting mainly new lease contracts and foreign currency exchange effects, partially offset by the progress in lease payments for existing arrangements.

We have several bank guarantees aggregating approximately $19 million as of June 28, 2025 (denominated in New Israeli Shekels) mainly in connection with lease agreements and import of vehicles.

Non-GAAP Financial Measures

19 unchanged sentences

Three months Ended

March 29, 2025

March 30, 2024

Six months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

dollars in millions

4 unchanged sentences

Our Gross Margin (gross profit as a percentage of revenue) and Adjusted Gross Margin (Adjusted Gross Profit as a percentage of revenue) reflect the high value-added nature of our solutions.

As we develop and sell full systems that include hardware beyond EyeQ TM SoCs, we expect that our Gross Margin and Adjusted Gross Margin will decrease because of the greater hardware content included in our solutions.

As we develop and sell full systems that include hardware beyond EyeQ TM SoCs, we expect that our Gross Margin and Adjusted Gross Margin will decrease over time because of the greater hardware content included in our solutions.

However, as a result of a higher expected selling price for such systems, we expect our gross profit per unit will increase on a dollar basis.

Our Adjusted Gross Margin increased from 62% for the three months ended March 30, 2024 to 69% for the three months ended March 29, 2025.

The increase was primarily due to the increase in percentage of revenue attributable to EyeQ SoC.

Our Adjusted Gross Margin remained flat in the three months ended June 29, 2024 compared to the three months ended June 28, 2025, primarily due to an increase in the percentage of revenue attributable to EyeQ TM SoCs which was offset by a slight reduction in EyeQ TM ASP, mainly due to higher volumes in China.

Our Adjusted Gross Margin increased from 67% for the six months ended June 29, 2024 to 69% for the six months ended June 28, 2025.

This increase was primarily due to an increase in the percentage of revenue attributable to EyeQ TM SoCs which was offset by a slight reduction in EyeQ TM ASP, mainly due to higher volumes in China.

Adjusted Operating Income (Loss) and Margin

We define Adjusted Operating Income (Loss) as operating income (loss) presented in accordance with GAAP, adjusted to exclude amortization of acquisition related intangibles and share-based compensation expense.

Operating Margin is calculated as operating income (loss) divided by total revenue, and Adjusted Operating Margin is calculated as Adjusted Operating Income (Loss) divided by total revenue.

1 unchanged sentence

Three months Ended

March 29, 2025

March 30, 2024

Six months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

dollars in millions

2 unchanged sentences

Share-based compensation expense

Adjusted operating income (loss) and margin

Our Operating Loss decreased by $121 million in the three months ended March 29, 2025 compared to the three months ended March 30, 2024, mainly due the increase in gross profit, partially offset by a an increase in operating expenses.

We had an Adjusted Operating Income of $59 million in the three months ended March 29, 2025 compared to an Adjusted Operating Loss of $(65) in the three months ended March 30, 2024, mainly due to higher Adjusted Gross Profit, partially offset by an increase in operating expenses.

Our Adjusted Operating Margin increased from (27)% for the three months ended March 30, 2024 to 13% for the three months ended March 29, 2025, due to higher Adjusted Gross Margin and lower operating expenses as a percentage of revenue, given the unusually low revenue base in the first quarter of 2024.

Adjusted Operating Income and Margin

Operating loss decreased from $(94) million in the three months ended June 29, 2024 to $(74) in three months ended June 28, 2025, mainly due to an increase in gross profit, partially offset by higher operating expenses.

Operating loss decreased from $(332) in the six months ended June 29, 2024 to $(191) in the six months ended June 28, 2025, mainly due to the increase in revenue, partially offset by higher operating expenses.

Our Adjusted Operating Income increased by $27 million in the three months ended June 28, 2025 compared to the three months ended June 29, 2024, and by $151 million in the six months ended June 28, 2025 compared to the six months ended June 29, 2024.

The increase in both periods was mainly due to the increase in revenue partially offset by an increase in operating expenses.

Our Adjusted Operating Margin increased from 18% for the three months ended June 29, 2024 to 21% for the three months ended June 28, 2025.

Our Adjusted Operating Margin increased from 2% for the six months ended June 29, 2024 to 17% for the six months ended June 28, 2025.

The increase in both periods is mainly due to lower operating expenses as a percentage of revenue.

Adjusted Net Income (Loss)

4 unchanged sentences

Three months Ended

March 29, 2025

March 30, 2024

Six months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

dollars in millions

3 unchanged sentences

Income tax effects

Adjusted net income (loss)

Our net loss decreased by $116 million in the three months ended March 29, 2025, compared the three months ended March 30, 2024, primarily due to the increase in gross profit, partially offset by a an increase in operating expenses.

We had an Adjusted Net Income of $63 in the three months ended March 29, 2025 compared to an Adjusted Net Loss of $(55) in the three months ended March 30, 2024, primarily due to the increase in Adjusted Gross Profit, partially offset by an increase in operating expenses.

Adjusted Net Income

The three months ended June 28, 2025 ended with a net loss of $(67) million compared to a $(86) million net loss in the three months ended June 29, 2024.

Our net loss decreased by $135 million in the six months ended June 28, 2025, compared to the six months ended June 29, 2024.

The decrease in net loss in both periods is mainly due to an increase in gross profit partially offset by higher operating expenses.

Our Adjusted Net Income increased by $26 million in the three months ended June 28, 2025, compared to the three months ended June 29, 2024.

Our Adjusted Net Income increased by $144 million in the six months ended June 28, 2025, compared to the six months ended June 29, 2024.

The increase in both periods is primarily due to the increase in Adjusted Gross Profit, partially offset by an increase in operating expenses.

Critical Accounting Policies and Estimates

3 unchanged sentences

We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time the estimate was made.

Note 2, “Significant Accounting Policies” of the Notes to the condensed consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the 2024 Annual Report on Form 10-K, as filed with the SEC on February 13, 2025 (the "2024 Form 10-K") describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements.

Note 2, “Significant Accounting Policies” of the Notes to the condensed consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the 2024 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements.

There have been no material changes to the Company’s critical accounting estimates since the 2024 Form 10-K.

9 unchanged sentences

Forward-looking statements contained in this report may include, but are not limited to, statements about:

● further deterioration of macroeconomic conditions due to ongoing global economic and political uncertainty (as our current guidance assumes the estimated production and/or demand impact of current tariff conditions);

● future business, social and environmental performance, goals and measures;

14 unchanged sentences

● tax- and accounting-related expectations;

● adverse conditions in Israel, including in connection with the Israeli military operations in response to the October 7, 2023 terrorist attacks, which may affect our operations and may limit our ability to produce and sell our solutions;

● adverse conditions in Israel, including in connection with the Israeli military operations in response to the October 7, 2023 terrorist attacks or the conflict between Israel and Iran, which may affect our operations and may limit our ability to produce and sell our solutions;

● any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel;

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis