Innoviz secures $80M in development funding as cash reserves run thin
Innoviz secures $80M in development funding as cash reserves run thin
The automotive sensor company will receive critical non-recurring engineering payments through 2027 amid revenue struggles.
LiDAR developer Innoviz announced on Monday a multi-year NRE (Non-Recurring Engineering services) payment plan of approximately $80 million with key existing customers. NREs are expected to be paid between 2025 and 2027, of which over $40 million are expected to be paid in 2025 with further amounts expected in 2026 and 2027.
Shares of Innoviz, which are traded on the Nasdaq stock exchange, surged 10% on Friday and gained an additional 17% in pre-market trading on Monday. This announcement followed a tweet by CEO Omer Keilaf on the X social network on Sunday: "While we are aware this week is busy with preparations towards the holiday, we wanted to give you heads up towards a big announcement we are going to share tomorrow pre-market.”
The funding Innoviz will receive is part of a common arrangement in the automotive industry, where component suppliers are compensated for development work carried out for specific car manufacturers. For example, Innoviz has agreements with Germany's Volkswagen and Israel's Mobileye, though neither has yet generated revenue from sales.
These payments, referred to as Non-Recurring Engineering (NRE) fees, are recognized as income but are not advances on product sales or equity fundraising.
Innoviz explained that the relatively high amounts reflect several significant new contracts secured over the past year, under which automotive manufacturers have committed to covering a portion of the Israeli company’s development costs.
For Innoviz, this is a pivotal development, as the company has been facing cash flow challenges due to delays in securing orders and adapting its products to customer requirements. Currently, Innoviz generates minimal revenue from product sales, with most of its income derived from NRE payments. In the third quarter, NRE revenues totaled $4.5 million, while the company burned through $17.5 million in cash. As of the end of September, Innoviz had $87 million in cash reserves, prompting concerns among investors about its ability to complete ongoing developments without raising additional funds.
A year and a half ago, Innoviz raised $65 million, but the fundraising drew backlash from investors due to its 20% discount on the share price at the time, which caused significant dilution.
Innoviz, the first Israeli company to go public via SPAC at a valuation of $1.4 billion, is now trading at a market cap of just $200 million.
