Executive Summary / Key Takeaways

• Innoviz Technologies is rapidly transitioning from a LiDAR innovator to a mass-scale Tier 1 supplier, capitalizing on the accelerating "gold rush" in autonomous driving and expanding into high-margin non-automotive segments.
• The company's technologically superior InnovizTwo platform, featuring advanced capabilities like 300-meter range, uniform high resolution, in-LiDAR IR imaging, and unparalleled blockage resilience, forms a robust competitive moat, particularly with its automotive-grade functional safety.
• Strategic partnerships with industry giants like Mobileye , Volkswagen , and NVIDIA , alongside a new Statement of Work (SOW) agreement with a top 5 automotive OEM, are driving significant design wins and NRE payments, underpinning future revenue growth.
• Innoviz demonstrated strong financial momentum in the first half of 2025, with revenues of $27.1 million surpassing all of 2024, and significantly reduced cash burn to $7.3 million in Q2 2025, supported by expanding NRE payment plans and a new $75 million At-The-Market (ATM) program for liquidity management.
• The company projects a more than twofold increase in 2025 revenues to $50 million-$60 million and has raised its NRE booking guidance to $30 million-$60 million, signaling confidence in its ability to scale production through its Fabrinet partnership and secure additional programs across automotive and non-automotive markets.

The Dawn of Autonomy: Innoviz's Strategic Ascent in a Transformative Market

Innoviz Technologies Ltd. ($INVZW) stands at the forefront of a transformative era, positioning itself as a pivotal enabler of safe autonomous driving. Founded with the mission to create best-in-class LiDAR solutions, Innoviz has evolved from a pioneering innovator to a critical Tier 1 supplier for major automotive OEMs. The industry is experiencing a "gold rush" in autonomous driving, with LiDAR technology increasingly recognized as a necessity for true safety and advanced capabilities in both Level 3 (conditional automation) and Level 4 (high automation) vehicles. Innoviz's overarching strategy is to become the world's premier large-scale provider of these essential LiDAR solutions, extending its reach beyond traditional automotive applications.

The company's journey began with InnovizOne, which enabled Volkswagen's i7 series vehicles to offer safe autonomous driving. This foundational experience paved the way for InnovizTwo, a next-generation platform designed for significantly improved performance and cost-effectiveness. Innoviz's strategic pivot around 2021 to work directly with automotive OEMs as a Tier 1 supplier has been successfully achieved, solidifying its position within the competitive landscape. This direct engagement is crucial in an industry where deep integration and trust are paramount.

Technological Leadership: The InnovizTwo Advantage

Innoviz's core competitive advantage is rooted in its differentiated InnovizTwo LiDAR platform, encompassing both long-range and short-to-mid-range sensors. This technology is not merely incremental; it delivers tangible, quantifiable benefits that set it apart in the demanding autonomous driving market. The InnovizTwo boasts an impressive detection range of 300 meters at 10% reflectivity under full sun conditions, a critical metric for high-speed autonomous operation. Furthermore, its new configuration offers a uniform resolution of 0.05 by 0.05 degrees across the field of view, generating approximately 12 megapixels per second, which translates into exceptionally detailed 3D point cloud data.

A significant technological breakthrough is the InnovizTwo's in-LiDAR IR imaging capability. This feature allows the LiDAR to capture camera-like images alongside its 3D point cloud data at the same resolution, enabling an improved low-level fusion perception stack. This integrated approach offers lower power usage and higher performance at a reduced cost, providing critical redundancy and enhanced object detection, even in challenging lighting conditions where traditional cameras might struggle. For investors, this means a more robust and reliable sensor, reducing the need for multiple discrete components and simplifying integration for OEMs.

Crucially for Level 4 autonomous driving, InnovizTwo demonstrates unparalleled blockage resilience against environmental factors such as mud, dust, water, stone chipping, and insects. This capability ensures continuous availability and reliable object detection, minimizing disengagements and enhancing safety. The company emphasizes that its LiDAR meets ISO 26262 functional safety standards, a critical differentiator in both automotive and non-automotive sectors where safety around people is paramount. This functional safety compliance is a key "so what" for investors, as it addresses a significant pain point in the market and opens doors to applications requiring the highest safety integrity.

Looking ahead, Innoviz is already developing InnovizThree, its next-generation slim design, which is expected to be unveiled by the end of 2025. This new product aims for further improvements in cost, size, and performance, demonstrating Innoviz's commitment to continuous innovation and maintaining its technological lead.

Strategic Alliances and Market Penetration: Fueling Growth

Innoviz's growth trajectory is heavily influenced by its strategic alliances and successful market penetration across multiple fronts. The company has secured significant partnerships that are translating into substantial revenue opportunities. A cornerstone of its automotive strategy is the deep engagement with Mobileye , where Innoviz LiDARs are a key feature of the Mobileye Drive AV Level 4 platform. Vehicles utilizing this platform, such as the Volkswagen (VWAGY) ID. Buzz shuttle, Holon "People Mover," and Verne's luxury Robotaxi, are planned to incorporate nine InnovizTwo LiDARs each (three long-range and six short-to-mid-range). This multi-LiDAR configuration per vehicle is expected to drive volumes to hundreds of thousands of LiDARs per year, representing a substantial revenue stream for Innoviz. The ID. Buzz, for instance, is slated for a mid-2026 Start of Production (SOP), with hundreds of units already being shipped in 2025 for fleet launches.

Further solidifying its position, Innoviz announced a Statement of Work (SOW) agreement in Q2 2025 with a new top 5 passenger automotive OEM for a Level 3 global production passenger vehicle program targeting a 2027 SOP. This marks an entry into a new geographical market and signifies that Innoviz is now working with two out of the top five global OEMs. The initial program for this OEM is expected to be a standard fit, indicating high volume potential. Innoviz is also integrated into the NVIDIA Hyperion 8.1 platform, with its perception software optimized for the NVIDIA DRIVE AGX Orin Platform, enabling it to serve OEMs across all major AV platforms.

To meet the escalating demand, Innoviz has strategically partnered with Fabrinet for the mass production of its InnovizTwo platform. This collaboration, which began shipping units from Fabrinet's high-volume production line in Q2 2025, is projected to increase manufacturing capacity by an order of magnitude in 2025, with a full ramp-up expected in 2026. Fabrinet's facilities have passed rigorous OEM audits, including the German automotive VDA 6.3 standard, providing critical assurance to customers regarding production quality and scalability.

Beyond automotive, Innoviz launched InnovizSMART in Q2 2025, adapting its automotive-grade LiDAR for industrial and other non-automotive applications such as security, mobility, robotics, and traffic management. This segment presents a compelling opportunity with significantly shorter design cycles and much higher Average Selling Prices (ASPs) compared to automotive, often in the order of several thousands of dollars per unit versus several hundreds. InnovizSMART leverages the same core LiDAR technology, requiring limited incremental spending while offering substantial incremental revenue potential. Early collaborations with companies like Cogniteam, Sparsh CCTV, and Cron AI, along with compatibility with the NVIDIA Jetson AGX Orin platform, underscore the rapid traction in this new market.

Financial Performance and Strengthening Liquidity

Innoviz's financial performance in the first half of 2025 demonstrates a clear acceleration towards its long-term goals. The company reported record revenues in Q1 2025 of $17.4 million, representing an approximate threefold sequential increase and a 2.5x year-over-year jump. This strong momentum continued into Q2 2025, with revenues of $9.7 million, bringing the first-half total to $27.1 million, which impressively surpassed the total revenue for all of 2024. This growth is primarily driven by a combination of LiDAR unit sales and Non-Recurring Engineering (NRE) payments from key customers.

Profitability metrics are also showing positive trends. Innoviz achieved a gross margin of approximately 40% in Q1 2025, a record for the company, and 16% in Q2 2025, resulting in a 31% gross margin for the first half of the year. Management notes that gross margins will continue to vary due to product ramp timing and the lumpiness of NRE payment recognition based on customer milestones.

Operating expenses have seen significant reductions, decreasing by 34% year-over-year in Q1 2025 to $21 million and by 20% in Q2 2025 to $18.5 million. This is largely attributed to the allocation of direct costs to Cost of Goods Sold (COGS) under the NRE payment plan and the benefits of an operational realignment in Q1 2024, which consolidated R&D efforts and focused solely on the InnovizTwo platform.
Liquidity and cash management remain a critical focus. Innoviz ended Q2 2025 with $79.4 million in cash and cash equivalents. The company dramatically reduced its cash burn in Q2 2025 to $7.3 million, aligning with its guidance for a single-digit burn and a significant improvement from $20.7 million in Q1 2025. This reduction is supported by strong cash inflows from NRE payments and the realization of operational efficiencies.

The NRE payment plan, initially $80 million, expanded to $95 million in Q1 2025, and further beyond $95 million in Q2 2025 with the new top 5 OEM, with the bulk of cash payments expected in 2025 and 2026. To further bolster its financial position and manage the inherent lumpiness of NRE payments, Innoviz completed a $40 million registered direct offering in February 2025 and launched a $75 million At-The-Market (ATM) program in Q2 2025. This ATM program is not just for capital, but also serves to signal financial strength and stability to customers, a vital aspect for a Tier 1 automotive supplier.

Competitive Landscape and Differentiators

The LiDAR market is intensely competitive, with players like Velodyne Lidar (VLDR), Luminar Technologies , and Ouster vying for market share. Innoviz differentiates itself through a combination of technological superiority, strategic partnerships, and a strong focus on automotive-grade reliability. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Innoviz's strong performance in securing major OEM wins suggests a growing presence.

Innoviz's core technology, particularly the InnovizTwo, offers distinct advantages. Its unparalleled blockage resilience and in-LiDAR IR imaging capabilities are critical for mission-critical Level 3 and Level 4 applications, where competitors may struggle with continuous availability in adverse conditions. The company's adherence to ISO 26262 functional safety standards provides a significant edge, especially in non-automotive applications where functionally safe LiDARs are scarce. This allows Innoviz to command higher Average Selling Prices (ASPs) and margins in these segments, as it displaces less robust or more expensive existing solutions. For instance, Innoviz has demonstrated that a single Innoviz LiDAR can fulfill application requirements where competitors might require multiple units.

In comparison to competitors, Innoviz's strategic alliances with Mobileye and NVIDIA provide extensive market access and integration opportunities, potentially accelerating its design wins and scaling capabilities. While competitors like Luminar (LAZR) focus on high-resolution, premium solutions, and Ouster (OUST) on cost-effective digital LiDAR, Innoviz aims for a balance of performance, cost-effectiveness, and robust automotive-grade reliability across its long-range and short-to-mid-range offerings. The company's ability to serve OEMs across all major AV platforms (Mobileye (MBLY), NVIDIA (NVDA)) makes it platform-agnostic, a critical value proposition. Innoviz acknowledges that while it may be smaller in scale than some established rivals, its focused product strategy and operational efficiencies are designed to drive profitability and cash flow. The company also benefits from being a geopolitically neutral LiDAR supplier, which is becoming increasingly important for OEMs, particularly in the U.S. market.

Outlook and Risks

Innoviz's outlook for 2025 is marked by ambitious growth targets and a clear path to increased revenue. The company expects more than a twofold increase in revenues year-over-year, targeting a range of $50 million to $60 million for the full year. This projection is underpinned by continued NRE payments and a significant ramp-up in LiDAR unit sales. Management has raised its NRE booking guidance for 2025 to $30 million to $60 million, reflecting strong progress and confidence in securing additional development contracts. Operationally, Innoviz aims to secure 1 to 3 new programs in 2025, building on its robust pipeline of RFIs and RFQs.

The company anticipates full-year revenues to be back-end loaded, with quarterly gross margins fluctuating due to the lumpiness of NRE milestones and product ramp timing. However, Innoviz maintains its expectation for positive gross margins for the full year. The strategic partnership with Fabrinet is crucial for efficiently scaling production to meet anticipated demand, with a projected tenfold increase in unit shipments in Q3 2025 compared to Q2 2025.

Despite the positive outlook, investors should consider several risks. The lumpiness of NRE payments and customer timelines can introduce quarterly variability in financial results. The intense competitive landscape necessitates continuous innovation and efficient execution to maintain market share. While U.S. tariff impacts are currently assessed as minimal due to Innoviz's product classification and Fabrinet's diversified manufacturing footprint, geopolitical shifts could introduce unforeseen challenges. Furthermore, the pace of autonomous driving adoption, while accelerating, remains subject to regulatory approvals and consumer acceptance, which could affect the timing and volume of large-scale deployments.

Conclusion

Innoviz Technologies is at a pivotal juncture, transforming from a cutting-edge LiDAR developer into a scalable Tier 1 supplier poised to capture significant market share in the burgeoning autonomous driving and industrial sectors. Its core investment thesis is firmly anchored in the technological superiority of the InnovizTwo platform, which delivers unparalleled performance, functional safety, and resilience—qualities increasingly demanded by OEMs for mission-critical Level 3 and Level 4 applications. Strategic partnerships with automotive giants and platform providers, coupled with a disciplined approach to financial management and production scaling through Fabrinet (FN), are translating into accelerating revenue growth and a clear path to reduced cash burn.

As Innoviz progresses towards critical Start of Production milestones in 2026 and 2027 and expands its high-margin InnovizSMART offerings, its ability to consistently execute on its guidance and secure additional design wins will be paramount. The company's technological leadership and strategic positioning in a market recognizing LiDAR as indispensable for safe autonomy underscore its potential for long-term value creation, making it a compelling consideration for discerning investors.