Mobileye | SEC Filing

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 001-41541

Mobileye Global Inc.

(Exact name of registrant as specified in its charter)

Delaware		88-0666433
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
c/o Mobileye B.V. Har Hotzvim, 13 Hartom Street P.O. Box 45157 Jerusalem 9777513, Israel		+972-2-541-7333
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
Class A common stock, par value $0.01		MBLY		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 94,647,954 shares of Class A common stock, $0.01 par value, outstanding at November 2, 2023.

Table of Contents

MOBILEYE GLOBAL INC.

FORM 10-Q

For the quarterly period ended September 30, 2023

TABLE OF CONTENTS

		Page
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Changes in Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41
Part II.	OTHER INFORMATION	42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
	Signatures	44

Table of Contents

In this report, references to “we,” “us,” “our,” our “company,” “Mobileye,” the “Company,” and similar terms refer to Mobileye Global Inc. and, unless the context requires otherwise, its consolidated subsidiaries, except with respect to our historical business, operations, financial performance, and financial condition prior to our initial public offering, where such terms refer to Mobileye Group, which combines the operations of Cyclops Holdings Corporation, Mobileye B.V., GG Acquisition Ltd., Moovit App Global Ltd., and their respective subsidiaries, along with certain Intel employees mainly in research and development. References to “Moovit” refer to GG Acquisition Ltd., Moovit App Global Ltd., and their consolidated subsidiaries.

We have a 52 or 53-week fiscal year that ends on the last Saturday in December. Fiscal year 2022 was a 53-week fiscal year; fiscal year 2023 is a 52-week fiscal year. The additional week in fiscal year 2022 was added in the first quarter, which consisted of 14 weeks. Certain amounts, percentages, and other figures presented in this report have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars, or percentage amounts of changes may not represent the arithmetic summation or calculation of the figures that precede them.

Table of Contents

Part 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOBILEYE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30,		December 31,
U.S. dollars in millions	2023		2022
Assets
Current assets
Cash and cash equivalents	$	1,193	$	1,024
Trade accounts receivable, net		281		269
Inventories		354		113
Other current assets		80		110
Total current assets	$	1,908	$	1,516
Non-current assets
Property and equipment, net		426		384
Intangible assets, net		2,165		2,527
Goodwill		10,895		10,895
Other long-term assets		111		119
Total non-current assets		13,597		13,925
TOTAL ASSETS	$	15,505	$	15,441
Liabilities and Equity
Current liabilities
Accounts payable and accrued expenses		221		189
Employee related accrued expenses		79		88
Related party payable		44		73
Other current liabilities		47		34
Total current liabilities		391		384
Non-current liabilities
Long-term employee benefits		53		56
Deferred tax liabilities		149		162
Other long-term liabilities		39		45
Total non-current liabilities		241		263
TOTAL LIABILITIES	$	632	$	647
Equity
Class A common stock: $0.01 par value; 4,000,000,000 shares authorized; shares issued and outstanding: 94,164,300 as of September 30, 2023 and 51,911,905 as of December 31, 2022		1		1
Class B common stock: $0.01 par value; 1,500,000,000 shares authorized; shares issued and outstanding: 711,500,000 as of September 30, 2023 and 750,000,000 as of December 31, 2022		7		8
Additional paid-in capital		14,898		14,737
Accumulated other comprehensive income (loss)		—		(9)
Retained earnings (accumulated deficit)		(33)		57
TOTAL EQUITY		14,873		14,794
TOTAL LIABILITIES AND EQUITY	$	15,505	$	15,441

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MOBILEYE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three months ended				Nine months ended
	September 30,		October 1,		September 30,		October 1,
U.S. dollars in millions, except per share amounts	2023		2022		2023		2022
Revenue	$	530	$	450	$	1,442	$	1,304
Cost of revenue		258		233		739		682
Gross profit		272		217		703		622
Research and development, net		218		206		664		565
Sales and marketing		28		27		90		91
General and administrative		18		9		55		27
Total operating expenses		264		242		809		683
Operating income (loss)		8		(25)		(106)		(61)
Interest income with related party		—		5		—		9
Interest expense with related party		—		(11)		—		(20)
Other financial income (expense), net		15		1		38		6
Income (loss) before income taxes		23		(30)		(68)		(66)
Benefit (provision) for income taxes		(6)		(15)		(22)		(46)
Net income (loss)	$	17	$	(45)	$	(90)	$	(112)
Earnings (loss) per share attributed to Class A and Class B stockholders:
Basic	$	0.02	$	(0.06)	$	(0.11)	$	(0.15)
Diluted	$	0.02	$	(0.06)	$	(0.11)	$	(0.15)
Weighted-average number of shares used in computation of earnings (loss) per share attributed to Class A and Class B stockholders (in millions):
Basic		806		750		804		750
Diluted		810		750		804		750
Net income (loss)		17		(45)		(90)		(112)
Other comprehensive income (loss), net of tax		—		6		9		(23)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	17	$	(39)	$	(81)	$	(135)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MOBILEYE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


										Retained
	Common Stock			Additional				Accumulated Other		Earnings		Total
	Number of			paid-in		Parent Net		Comprehensive		(Accumulated		Shareholders’
U.S. dollars in millions, except per share amounts	shares	Amount		capital		Investment		Income (Loss)		deficit)		Equity
Three Months Ended
Balance as of July 1, 2023	806	$	8	$	14,842	$	—	$	—	$	(50)	$	14,800
Net income (loss)	—		—		—		—		—		17		17
Share-based compensation expense	—		—		63		—		—		—		63
Recharge to Parent for Share-based compensation	—		—		(7)		—		—		—		(7)
Balance as of September 30, 2023	806		8		14,898		—		—		(33)		14,873

Balance as of July 2, 2022	—	$	—	$	—	$	11,223	$	(24)	$	—	$	11,199
Net income (loss)	—		—		—		(45)		—		—		(45)
Other comprehensive income (loss), net	—		—		—		—		6		—		6
Tax sharing agreement with Parent	—		—		—		(9)		—		—		(9)
Net transfer from (to) Parent	—		—		—		9		—		—		9
Balance as of October 1, 2022	—	$	—	$	—	$	11,178	$	(18)	$	—	$	11,160

Nine Months Ended
Balance as of December 31, 2022	802	$	9	$	14,737	$	—	$	(9)	$	57	$	14,794
Net income (loss)	—		—		—		—		—		(90)		(90)
Other comprehensive income (loss), net	—		—		—		—		9		—		9
Share-based compensation expense	—		—		190		—		—		—		190
Recharge to Parent for Share-based compensation	—		—		(29)		—		—		—		(29)
Issuance of common stock under employee share-based compensation plans	4		—		—		—		—		—		—
Secondary offering	—		*		—		—		—		—		*
Balance as of September 30, 2023	806	$	8	$	14,898	$	—	$	—	$	(33)	$	14,873

Balance as of December 25, 2021	—	$	—	$	—	$	15,884	$	5	$	—	$	15,889
Net income (loss)	—		—		—		(112)		—		—		(112)
Other comprehensive income (loss), net	—		—		—		—		(23)		—		(23)
Equity transaction in connection with the legal purchase of Moovit entities	—		—		—		(900)		—		—		(900)
Dividend Note with related party	—		—		—		(3,500)		—		—		(3,500)
Dividend distribution	—		—		—		(336)		—		—		(336)
Tax sharing agreement with Parent	—		—		—		(16)		—		—		(16)
Net transfer from (to) Parent	—		—		—		158		—		—		158
Balance as of October 1, 2022	—	$	—	$	—	$	11,178	$	(18)	$	—	$	11,160

*Rounding of Class A and Class B share amounts due to Secondary offering.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MOBILEYE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine months ended
	September 30,		October 1,
U.S. dollars in millions	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(90)	$	(112)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property and equipment		24		17
Share-based compensation		190		112
Amortization of intangible assets		362		413
Exchange rate differences on cash and cash equivalents		9		6
Deferred income taxes		(13)		(8)
Interest on Dividend Note to related party, net		—		20
Interest with related party, net		16		20
Other		(1)		(3)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable		6		(67)
Decrease (increase) in other current assets		16		28
Decrease (increase) in inventories		(241)		(8)
Increase (decrease) in accounts payable, accrued expenses and related party payable		21		22
Increase (decrease) in employee-related accrued expenses and long term benefits		(12)		(67)
Increase (decrease) in other current liabilities		(5)		10
Decrease (increase) in other long term assets		3		15
Increase (decrease) in long term liabilities		—		(3)
Net cash provided by operating activities		285		395
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(75)		(79)
Repayment of loan due from related party		—		734
Issuance of loan to related party		—		(336)
Net cash provided by (used in) investing activities		(75)		319
CASH FLOWS FROM FINANCING ACTIVITIES
Net transfers from Parent		—		99
Dividend paid		—		(336)
Share-based compensation recharge		(29)		(200)
Deferred offering costs		—		(14)
Net cash provided by (used in) financing activities		(29)		(451)
Effect of foreign exchange rate changes on cash and cash equivalents		(9)		(6)
Increase in cash, cash equivalents and restricted cash		172		257
Balance of cash, cash equivalents and restricted cash, at beginning of year		1,035		625
Balance of cash, cash equivalents and restricted cash, at end of period	$	1,207	$	882
Supplementary non-cash investing and financing activities:
Non-cash purchase of property and equipment	$	5	$	9
Non-cash share based compensation recharge		—		9
Equity transaction in connection with the legal purchase of Moovit entities		—		900
Dividend Note with related party		—		3,500
Non cash deferred offering costs		—		1
Tax sharing agreement with Parent		—		16
Supplemental cash flow information:
Cash received (paid) for income taxes, net of refunds	$	(45)	$	(40)
Interest received from related party		16		29

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - GENERAL

Background

Mobileye Global Inc. (“Mobileye”, “the Company” or “we”) is a leader in the development and deployment of advanced driver assistance systems (“ADAS”) and autonomous driving technologies and solutions, aimed to provide the capabilities required for the future of autonomous driving, leveraging a comprehensive suite of purpose-built software and hardware technologies. Mobileye combines the operations of its consolidated subsidiaries, which include the Mobileye Group, as defined below.

Mobileye operates as a subsidiary of Intel Corporation (“Intel” or the “Parent”), which acquired a majority stake in Mobileye in August 2017 (the “Mobileye Acquisition”). The remaining issued and outstanding shares of Mobileye were acquired by Intel in 2018.

Before the completion of the Mobileye IPO and the Reorganization (both as defined below) in October 2022, the Company consisted of the “Mobileye Group”, which combined the operations of Cyclops Holdings LLC (“Cyclops”), Mobileye B.V. and its subsidiaries, GG Acquisition Ltd. and Moovit App Global Ltd. and its subsidiaries (“Moovit”) and certain Intel employees mainly in research and development (the “Intel Aligned Groups”).

The Mobileye IPO

In December 2021, Intel announced plans to pursue an initial public offering of the Mobileye Group. In January 2022, Intel incorporated a new legal entity, Mobileye Global Inc., with the intent to contribute the Mobileye Group to Mobileye Global Inc. and to have Mobileye Global Inc. offer newly issued shares of common stock of Mobileye Global Inc. in an initial public offering.

On October 28, 2022, the initial public offering of Mobileye (the “Mobileye IPO”) was completed and we issued 41,000,000 shares of our Class A common stock, at $21 per share, before underwriting discounts and commissions. Concurrently with the closing of the Mobileye IPO, the Company issued an additional 4,761,905 shares of its Class A common stock to General Atlantic (ME), L.P., a Delaware limited partnership, at $21 per share, pursuant to a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, for gross proceeds of $100 million (the “Concurrent Private Placement”). On November 1, 2022, we closed the sale of an additional 6,150,000 Class A shares pursuant to the exercise of the underwriters’ over-allotment option.

The Mobileye IPO generated proceeds to the Company of approximately $1.0 billion, including the proceeds from the underwriters exercise of their option and the Concurrent Private Placement, net of underwriting discounts and commissions in the amount of $41 million and offering costs in the amount of $18 million.

Prior to the completion of the Mobileye IPO, we were a wholly-owned business of Intel Corporation. Upon the closing of the Mobileye IPO (after giving effect to the exercise of the underwriters’ over-allotment option), Intel continues to directly or indirectly hold all of the Class B common stock of Mobileye. Upon completion of the Mobileye IPO, we completed the legal entity reorganization (“Reorganization”) of the operations comprising the Mobileye Group business so that they are all under the single parent entity, Mobileye Global Inc., and the filing and effectiveness of our amended and restated certificate of incorporation. The Reorganization was accomplished through a series of transactions and agreements with Intel, including the legal purchase of 100% of the issued and outstanding equity interests of the Moovit entities from Intel.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Secondary Offering

On June 7, 2023, the Company announced the pricing of a public secondary offering of 38,500,000 shares of its Class A common stock (which shares were received upon the conversion of 38,500,000 shares of Class B common stock into Class A common stock) by Intel at a public offering price of $42.00 per share, which closed on June 12, 2023 (the “Secondary Offering”). The Company did not receive any proceeds from this offering. The Company paid the costs associated with the registration of shares in connection with the Secondary Offering in the amount of $1 million, other than underwriting discounts, fees and commissions. These costs were expensed as incurred within general and administrative expenses. Upon the completion of the Secondary Offering, Intel continues to directly or indirectly hold all of the Class B common stock of Mobileye, which represents approximately 88.3% of our outstanding common stock and 98.7% of the voting power of our common stock.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information.

We have a 52- or 53-week fiscal year that ends on the last Saturday in December. Fiscal year 2022 was a 53-week fiscal year; fiscal year 2023 is a 52-week fiscal year. The additional week in fiscal year 2022 was added in the first quarter, which consisted of 14 weeks.

The results of operations for the three and nine months ended September 30, 2023 shown in this report are not necessarily indicative of the results to be expected for the full year ending 2023. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2022.

The financial statements and accompanying notes that include periods ending or as of dates prior to the completion of the Mobileye IPO have been derived from the consolidated financial statements and accounting records of Intel and are presented as if the Company had been operating as a stand-alone company. The assets, liabilities, revenue, and expenses directly attributable to the Company’s operations, including the acquired goodwill and intangible assets, have been reflected in these condensed consolidated financial statements on a historical cost basis, as included in the consolidated financial statements of Intel.

As Mobileye Group was not historically held by a single legal entity, total parent net investment is shown in lieu of equity in the periods prior to the completion of the Mobileye IPO and represents Intel’s total interest in the recorded net assets of Mobileye Group. All intercompany transactions within the previously combined businesses of the Company have been eliminated. Transactions between the Company and Intel, arising from arrangements with Intel and other similar related-party transactions, were considered to be effectively settled at the time the transactions were recorded, unless otherwise noted. The total net effect of the settlement of these transactions was reflected within parent net investment as a component of equity and within net transfers from Parent as a financing activity in the periods prior to the completion of the Mobileye IPO, unless otherwise noted.

Following the completion of the Mobileye IPO, the condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the fiscal year ended December 31, 2022. For further detail, see Note 2 in the audited consolidated financial statements for the fiscal year ended December 31, 2022.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts and events reported and disclosed in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions and factors, including the current economic environment, that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

On an on-going basis, management evaluates its estimates, judgments, and assumptions. The most significant estimates and assumptions relate to useful lives of intangible assets, impairment assessment of goodwill and income taxes.

Cash, cash equivalents and restricted cash

The following is a reconciliation of the cash, cash equivalents and restricted cash as of each period end:


	As of
U.S. dollars in millions	September 30, 2023		December 31, 2022
Cash	$	60	$	188
Short term deposits		115		285
Money market funds		1,018		551
Restricted cash (within other current and other long-term assets)		14		11
Cash, cash equivalents and restricted cash	$	1,207	$	1,035

Fair value measurement

The carrying value of short term deposits classified as cash equivalents approximates their fair value due to the short maturity of these items.

The Company’s investment in money market funds is measured at fair value and consists of financial assets for which quoted prices are available in an active market. Interest income related to money market funds for the three and nine months ended September 30, 2023 amounted to $15 million and $35 million, respectively.

The carrying amounts of trade accounts receivable and accounts payable approximate fair value because of their generally short maturities.

Research and development, net

Research and development expenses are expensed as incurred, and consist primarily of personnel, facilities, equipment, and supplies for research and development activities.

The Company occasionally enters into best-efforts nonrefundable, non-recurring engineering (“NRE”) arrangements pursuant to which the Company is reimbursed for a portion of the research and development expenses attributable to specific development programs. The Company does not receive any additional compensation or royalties upon completion of such projects and the potential customer does not commit to purchase the resulting product in the future. The participation reimbursement received by the Company does not depend on whether there are future benefits from the project. All intellectual property generated from these arrangements is exclusively owned by the Company.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Participation in expenses for research and development projects are recognized on the basis of the costs incurred and are netted against research and development expenses in the condensed consolidated statements of operations and comprehensive income (loss). Research and development reimbursements of $24 million and $15 million were offset against research and development costs in the three months ended September 30, 2023 and October 1, 2022, respectively; and $57 million and $40 million were offset in the nine months ended September 30, 2023 and October 1, 2022, respectively.

Derivatives and hedging

Beginning in 2021, as part of Intel’s corporate hedging program, Intel hedges forecasted cash flows denominated in Israel Shekels (“ILS”) related to the Company. ILS is the largest operating expense currency of the Company. Intel combines all of its ILS exposures, and as part of Intel’s hedging program enters into hedging contracts to hedge Intel’s combined ILS exposure. Derivative gains and losses attributed to these condensed consolidated financial statements are recorded under accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects the statement of operations.

During the fourth quarter of 2022, the Company de-designated its remaining cash flow hedges for forecasted operating expenses denominated in ILS. As the hedged transactions and cash flows related to the outstanding instruments were expected to occur as originally forecasted, the associated gains and losses deferred in accumulated other comprehensive income (loss) on the Company’s consolidated balance sheet were reclassified into earnings in the same period or periods during which the originally hedged transactions affect earnings. Any subsequent changes in the fair value of the outstanding derivative instruments after the de-designation and termination of hedge accounting were immediately reflected in operating expenses. As of September 30, 2023, there are no outstanding hedging instruments and all of the related accumulated other comprehensive income (loss) was reclassified into the statement of operations and comprehensive income (loss).

The notional amount and fair value of derivatives outstanding at Intel on behalf of Mobileye were:


	As of
U.S. dollars in millions	September 30, 2023		December 31, 2022
Notional amount of derivatives	$	—	$	93
Fair value of derivatives receivable from (payable to) Intel	$	—	$	(9)

The change in accumulated other comprehensive income (loss) relating to gains (losses) on derivatives used for hedging was as follows:


	Three Months Ended				Nine Months Ended
U.S. dollars in millions	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Other comprehensive income (loss) before reclassifications	$	—	$	1	$	—	$	(30)
Amounts reclassified out of accumulated other comprehensive income (loss)		—		6		10		6
Tax effects		—		(1)		(1)		1
Other comprehensive income (loss), net	$	—	$	6	$	9	$	(23)

Income Tax

The provision for income tax consists of income taxes in the various jurisdictions where the Company is subject to taxation, primarily the United States and Israel. For interim periods, the Company recognizes an income tax benefit (provision) based on the estimated annual effective tax rate, calculated on a worldwide consolidated basis, expected for the entire year. The Company applies this rate to the year-to-date pre-tax income. The overall effective tax rate is influenced by valuation allowances on tax assets for which no benefit can be recognized due to the Company’s recent history of pretax losses sustained. Tax jurisdictions with forecasted pretax losses for the year for which no benefit can be recognized are excluded from the calculation of the worldwide estimated annual effective tax rate, and any associated tax expense or benefit for those jurisdictions is recorded separately.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the periods presented in the condensed consolidated financial statements, certain components of the Company’s business operations were included in the consolidated U.S. domestic income tax return filed by the Company’s Parent. The Company also files various foreign income tax returns on a separate basis, distinct from its Parent. The income tax provision included in the Company’s condensed consolidated financial statements has been calculated using the separate return method, as if the Company had filed its own tax returns.

The Company has entered into a Tax Sharing Agreement with its Parent that establishes the amount of cash payable for the Company’s share of the tax liability owed on consolidated tax return filings with its Parent. Any differences between taxes payable to the Company’s Parent under the Tax Sharing Agreement and the current tax provision computed on a separate return basis, is reflected as adjustments to additional paid-in capital in the condensed consolidated statement of changes in equity and financing activities within the condensed consolidated statement of cash flows.

The Company reflects tax loss and tax credit carry-forward attributes under the separate return method approach. Such tax attributes may not be benefited in the same period as the Company’s Parent on a consolidated tax return.

Loss contingencies

Management believes that there are no current matters that would have a material effect on the Company’s condensed consolidated balance sheets, statements of operations or cash flows. Legal fees are expensed as incurred.

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, which include short-term deposits and money market funds, and also trade accounts receivable.

The majority of the Company’s cash and cash equivalents are invested in banks domiciled in the U.S. and Europe, as well as in Israel. Generally, these cash equivalents may be redeemed upon demand. Short term bank deposits are held in the aforementioned banks. The money market funds consist of institutional investors money market funds and are readily redeemable to cash. Accordingly, management believes that these bank deposits and money market funds, have minimal credit risk.

The Company’s accounts receivables are derived primarily from sales to Tier 1 suppliers to the automotive manufacturing industry located mainly in the U.S., Europe, and China. Concentration of credit risk with respect to accounts receivables is mitigated by credit limits, ongoing credit evaluation, and account monitoring procedures. Credit is granted based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Trade accounts receivable are typically due from customers within 30 to 60 days. The Company performs ongoing credit evaluations of its customers and has not experienced any material losses in the periods presented. The Company establishes credit losses for accounts receivable by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history from such customers, and the customers’ current ability to pay its obligation to the Company. As of September 30, 2023 and December 31, 2022, the credit losses for accounts receivable were not material. The Company writes off accounts receivable when they are deemed uncollectible. For the three and nine months ended September 30, 2023 and October 1, 2022, the charge-offs and recoveries in relation to the credit losses accounts were not material.

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Customer concentration risk

The Company’s business, results of operations, and financial condition for the foreseeable future will likely continue to depend on sales to a relatively small number of customers. In the future, these customers may decide not to purchase the Company’s products, may purchase fewer products than in previous years, or may alter their purchasing patterns. Further, the amount of revenue attributable to any single customer or customer concentration generally may fluctuate in any given period. In addition, a decline in the production levels of one or more of the Company’s major customers, particularly with respect to vehicle models for which the Company is a significant supplier, could reduce revenue. The loss of one or more key customers, a reduction in sales to any key customer or the Company’s inability to attract new significant customers could negatively impact revenue and adversely affect the Company’s business, results of operations, and financial condition. See Note 9 related to customers that accounted for more than 10% of the Company’s total revenue and more than 10% of the total accounts receivable balance for each of the periods presented in these condensed consolidated financial statements.

Dependence on a single supplier risk

The Company purchases all its System on Chip (“EyeQ® SoC”) from a single supplier. Any issues that occur and persist in connection with the manufacture, delivery, quality, or cost of the assembly and testing of inventory could have a material adverse effect on the Company’s business, results of operations and financial condition. See below regarding a shortage in EyeQ® SoCs that the Company experienced during 2022 and may experience in the future, including in ECUs for SuperVision™ and other components for our products.

Supply chain risk

During the fiscal year ended December 31, 2022, due to global supply chain constraints and shortage of semiconductors, the Company’s sole supplier was not able to meet demand of the Company for EyeQ® SoCs, causing a significant reduction in the Company’s inventory levels. We may experience a shortfall of EyeQ® SoCs, ECUs for SuperVision™ and other components for our products. The reoccurrence of shortages and supply chain constraints in EyeQ® SoCs and ECUs for SuperVision™ and in components of our other products, may impair the Company’s ability to meet its customers’ requirements in a timely manner and may adversely affect the Company’s business, results of operations and financial condition. Moreover, to the extent that a global semiconductor shortage results in reduced production or production delays by automakers, those delays could result in reduced or delayed demand for the Company’s products. In addition, issues relating to the COVID-19 pandemic led to port congestion and intermittent supplier shutdowns and delays in the delivery of critical components, which resulted in additional expenses to expedite delivery of critical parts. Sustaining the Company’s production trajectory requires the readiness and solvency of its suppliers and vendors, a stable and motivated production workforce and ongoing government cooperation, including for travel and visa allowances, which governments may restrict. Although we cannot fully predict the length and the severity of the impact these pressures would have on a long-term basis, we do not anticipate that short-term supply chain constraints would materially adversely affect our results of operations, capital resources, sales, profits, and liquidity.

NOTE 3 - OTHER FINANCIAL STATEMENT DETAILS

Inventories:


	As of
U.S. dollars in millions	September 30, 2023		December 31, 2022
Raw materials	$	52	$	41
Work in process		2		—
Finished goods		300		72
Total inventories	$	354	$	113

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Inventory write-downs and write-offs were not material for the periods presented in these condensed consolidated financial statements.

Property and equipment, net:


	As of
U.S. dollars in millions	September 30, 2023		December 31, 2022
Computers, electronic equipment and software	$	148	$	124
Vehicles		14		13
Office furniture and equipment		4		4
Leasehold improvements		42		22
Construction in process		323		302
Total property and equipment, gross	$	531	$	465
Less: accumulated depreciation		(105)		(81)
Total property and equipment, net	$	426	$	384

Depreciation expenses totaled $9 million and $7 million for the three months ended September 30, 2023 and October 1, 2022, respectively; and $24 million and $17 million for the nine months ended September 30, 2023 and October 1, 2022, respectively.

NOTE 4 - EQUITY

A.Share-based compensation plans

Mobileye Plan

Following the Mobileye IPO in October 2022, the Company’s employees are incentivized and rewarded through the grant of the Company’s equity awards under the Mobileye Global Inc. 2022 Equity Incentive Plan (“the 2022 Plan”), which are granted for Class A shares and vest upon the satisfaction of a service-based vesting condition, mostly over service periods of three years.

Restricted Stock Units

The RSUs activity for the nine months ended September 30, 2023 for RSUs granted to Company’s employees under the 2022 Plan was as follows:


			Weighted average grant
	Number of RSUs		date fair value
	In thousands		U.S. dollars
Outstanding as of December 31, 2022		12,564	$	21.0
Granted		6,180		40.2
Vested		(3,752)		21.0
Forfeited		(230)		24.4
Outstanding as of September 30, 2023		14,762	$	29.0

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MOBILEYE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The RSUs activity for the three months ended September 30, 2023 for RSUs granted to Company’s employees under the 2022 Plan was as follows:


		Weighted average grant
	Number of RSUs	date fair value
	In thousands	U.S. dollars
Options outstanding as of July 1, 2023	9,354	$	22.2
Granted	5,524		40.4
Vested	(2)		35.1
Forfeited	(114)		26.7
Outstanding as of September 30, 2023	14,762	$	29.0

As of September 30, 2023, the unrecognized compensation cost related to all unvested RSUs granted under the 2022 Plan, was $327 million, which is expected to be recognized as expense over a weighted-average period of 2.4 years.

Intel Plan

Prior to the Mobileye IPO, since 2017, employees of the Company had been incentivized and rewarded through the grant of Intel equity awards under Intel’s equity incentive plan which contains only a service condition. The equity awards granted generally vest over the course of three years from the grant date.

Options

Outstanding and exercisable options for Intel’s common stock under Intel’s plan as of September 30, 2023 were as follows:


	Outstanding				Exercisable
		Weighted average
	Number of	remaining	Weighted average		Number of	Weighted average
Exercise price	options	contractual life	exercise price		options	exercise price
U.S. dollars	In thousands	In years	U.S. dollars		In thousands	U.S. dollars
$ 4.0 - 21.6	59	2.3	$	6.2	52	$	4.1
$ 22.4 - 24.3	21	0.3		22.9	21		22.9
$55.2	68	5.5		55.2	68		55.2
Total	148	3.5	$	30.9	141	$	31.4

The option activity for the nine months ended September 30, 2023 for options granted to the Company’s employees for Intel’s common stock was as follows:


		Weighted average	Weighted		Aggregated
	Number of	remaining	average		intrinsic
	options	contractual Life	exercise price		value(1)
	In thousands	In years	U.S. dollars		U.S. dollars in millions
Options outstanding as of December 31, 2022	2,270	0.8	$	27.1	$	1
Exercised	(23)	—		22.2		—
Expired	(2,099)	—		26.9		—
Opt