indie Semiconductor, Inc. Q4 FY2024 earnings call

Business Performance in Market Context

• Fourth quarter revenue at midpoint of guidance, second quarter of sequential growth, outperforming industry and gaining market share.
• Market uncertainty persisted, but long-term megatrends like ADAS, in-cabin user experience, and electrification remain strong.

Notable Business Progress in Q4

• Vision products: iND880 selected for front sensing and occupant monitoring by Korean OEM, design wins in China; major driver monitoring design wins for GM, Toyota, Ford on track.
• Radar program: Lead customer progressing to production launch in late 2025; 120 GHz Radar engineering samples received and tested, positive feedback from customers.
• In-cabin user experience: Major win for vehicle intrusion detection system with German OEM, commencing full production ramp in H2 2025.
• Electrification: First product independently certified to ASIL-D automotive functional safety level.
• Photonics business: Announced in-house optical component integration capability and proprietary technology innovation for single frequency lasers.

M&A Strategy

• Appraising multiple opportunities focusing on core business areas with strong balance sheet.

In the fourth quarter of 2024, indie achieved total revenue of $58 million, marking the second quarter of sequential revenue growth. Non-GAAP gross profit was $29.2 million (50.4% gross margin), R&D expense was $31.5 million, SG&A was $11.9 million, resulting in a non-GAAP operating loss of $14.2 million. Net loss was $15.4 million and loss per share was $0.07 on a base of 205.7 million shares. There is no detailed breakdown of product segments by revenue contribution percentage provided in the transcript.

Q1 2025 Outlook

• Revenue expected in range of $52.5 million to $57.5 million (midpoint $55 million), down 5% sequentially but up 5% vs prior year.
• Q1 gross margins expected in 49% to 50% range.
• OpEx expected at $42 million (R&D $31.5M, SG&A $10.5M).
• Net loss per share expected $0.08 (midpoint revenue, 211 million shares outstanding).

OpEx Review

• OpEx review resulted in $2 million reduction in run rate quarterly non-GAAP operating expenses from Q3 2024 ($44M) to Q1 2025 outlook ($42M), with more reductions expected in H2 2025.

• Market uncertainty around inventory levels, tariffs, and broader macroeconomic environment impacting production ramps.
• Tariffs exacerbating challenging market situation, with potential impact on traditional manufacturers and supply chains, though currently seen as short-term impact.

Q: Talk about the second half 2025 ramp of new products. Which products will have the most impact on incremental growth?

A: Donald mentioned Vision products (high ASP, relatively small volume impact revenue), Radar product expected to contribute, and multiple products in user experience space contributing. Has a nice pipeline ramping or already ramping.

Q: Specifically on the Corner Radar program with $1 billion lifetime value, shape of initial years of ramp?

A: Donald said ramp over extended period through 2026, 2027, even 2028 and 2029, with long window of new design wins, and $1 billion lifetime value maybe conservative.

Q: OpEx management program, bulk of reductions already happened or more to come?

A: Raja said more to come, Q4 OpEx $43.4M, Q1 guidance $42M ($1.4M sequential improvement), expect $1M to $2M run rate reductions in H2 2025.

Q: Impact of geopolitics/tariffs, short-term or long-term? Impact on design-ins?

A: Donald said turbulence short-term, tariffs threat causing short-term uncertainty, OEMs pausing planning, but long-term implications not 100% sure yet, but currently not directly affecting.

Q: ADI's comments on improving macro, any comments?

A: Donald said feedback from peers mixed, own perspective: inventory levels improved, but macro environment still choppy, tariffs adding uncertainty, expected muted automotive market Saar in 2025.

Q: Geography/inventory, any areas with better inventory trends? Uncertainty in Europe?

A: Donald said U.S. macro events significant, need mitigation plans, from own perspective inventory reduced, some isolated pockets still exist, Europe disruption due to European manufacturers losing share to Chinese, but no specific area with worse inventory for indie.

Q: Contract revenue impact on gross margin, expectations for 2025/1Q?

A: Donald said contract revenue relatively flat, trend of coming down as focus shifts to standard products from custom ASICs. Raja said Q1 gross margin guidance reflects product mix and contract revenue ticking down, but year progresses, ADAS revenue contributions will be accretive to gross margins.

Q: Radar launch delay from mid to late 2025, anything changed?

A: Donald said nothing changed, still on track with same schedule as quarter ago, seeing positive momentum with constant design wins on per model basis.

Q: How to mitigate impact of potential tariffs?

A: Donald said tariffs not directly impacting products as they go to Tier 1s, but cause knock-on effect on OEM planning capability due to anticipation of tariffs on raw materials/geographies, so mitigation plans in place as U.S. is home field market.