Innoviz (INVZ) Q2 2026 Earnings Call Transcript
Innoviz (INVZ) Q2 2026 Earnings Call Transcript
Motley Fool Transcribing, The Motley FoolThu, August 6, 2026 at 3:57 AM UTC
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Wednesday, Aug. 5, 2026 at 9:00 a.m. ET
CALL PARTICIPANTS -
Head of Investor Relations - Ada Menaker
Chief Executive Officer - Omer Keilaf
Chief Financial Officer - Eldar Cegla
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TAKEAWAYS -
Revenue -- $18.1 million in the second quarter, representing an all-time record and an increase from $9.7 million in the prior-year period.
Revenue Guidance -- $67 million to $73 million for full-year 2026, with the bulk of second-half revenue expected in the fourth quarter.
Nonautomotive Revenue Targets -- 10% of total revenue in 2026, increasing to a range of 20% to 30% in 2027, as the company expands into defense and security sectors.
Defense Order -- $3.5 million for several hundred LiDAR units, representing the first large defense contract for the new Perciz brand.
Non-Recurring Engineering (NRE) Guidance -- $20 million to $30 million in new payment plans for the full year, in addition to existing plans.
Cash Position -- $48.5 million in cash, cash equivalents, short-term deposits, and marketable securities as of June 30, 2026.
Capital Raising -- $30 million in gross proceeds from a registered direct offering closed on July 29, 2026, with participation from institutional investors including Neuberger.
Operational Runway -- Into 2028, according to management estimates following the recent capital transaction.
Gross Margin -- 3.9% in the second quarter, reflecting a return to positive levels due to higher NRE recognitions and shipments to defense customers.
Operating Expenses -- $19.1 million in the second quarter, a 3% increase compared to $18.5 million in the prior-year period.
R&D Reallocation -- Research and development costs decreased sequentially to $11.7 million due to the technical reallocation of costs toward cost of goods sold following NRE recognition.
Robotaxi Opportunity -- 150,000 units incremental to existing programs, following Mobileye's announcement of its vertically integrated robotaxi business on the Drive platform.
New Program Targets -- two to three new program wins for full-year 2026, with active participation in multiple OEM processes.
Top 10 OEM Partnership -- Development of a LiDAR-based perception stack using InnovizTwo and NVIDIA hardware for a top 10 global automotive manufacturer.
Drive Group Partnership -- $20 million sales opportunity targeted by the end of 2027 through the integration of LiDAR into border security and drone localization.
Net Loss -- $18.5 million for the quarter, or $0.08 per basic and diluted share, compared to a net loss of $18.5 million in the second quarter of 2025.
Testing Footprint -- six cities (Los Angeles, Orlando, Austin, Hamburg, Munich, and Oslo) currently testing the Volkswagen ID. Buzz platform featuring nine Innoviz LiDARs per vehicle.
Defense ASPs -- An order of magnitude higher than in the automotive space, which management expects will drive future gross margin expansion.
Headcount -- 372 employees as of the current reporting period.
Management reported record quarterly revenue of $18.1 million for Innoviz Technologies Ltd.(NASDAQ:INVZ), driven by a surge in NRE recognitions and initial entries into the defense market. The company launched Perciz, a dedicated brand for defense and homeland security, securing a $3.5 million initial order for Counter-UAS and perimeter security applications. Management reiterated full-year 2026 revenue guidance and confirmed that its automotive programs with Volkswagen, Mobileye, and Daimler Truck remain on track. A new development agreement with a top 10 global automaker for a LiDAR-based perception stack was also highlighted as a key strategic milestone for the quarter.
CEO Keilaf stated, "The recent months have been transformative for Innoviz as we enter the defense and homeland security markets," noting the establishment of a dedicated brand to capture a multibillion-dollar addressable market.
Management expects the defense segment to provide significant gross margin uplift due to shorter cycle times and average selling prices that are "an order of magnitude higher than in the auto space."
CFO Cegla indicated that the July 2026 capital raise of $30 million strengthens the balance sheet and provides "operational runway into 2028."
CEO Keilaf highlighted a unique safety capability, stating that Innoviz is currently the only LiDAR company offering a solution for use cases where both LiDAR and camera sensors are obstructed by mud or debris.
The company reported that its defense and security backlog for 2026 is currently halfway toward its stated target of 10% of total annual revenue.
Management noted that automakers are increasingly assessing the regulatory risks of utilizing Chinese-made LiDAR sensors, which is driving interest in Innoviz's technology from Western OEMs.
CEO Keilaf attributed the success of the new top 10 OEM partnership to the company's ability to meet automotive requirements for both hardware and functional safety perception software.
INDUSTRY GLOSSARY -
LiDAR: Light Detection and Ranging, a sensing method that uses pulsed laser light to measure distances and create precise 3D maps.
Counter-UAS: Systems and technologies designed to detect, track, and neutralize Unmanned Aircraft Systems (drones).
NRE: Non-Recurring Engineering, payments for services such as application engineering, testing, and validation as part of a program design win.
SOP: Start of Production, the date when a product begins its commercial manufacturing cycle for a specific customer program.
UGV: Unmanned Ground Vehicle, a vehicle that operates while in contact with the ground without an onboard human presence.
ASIL B(D): Automotive Safety Integrity Level, a risk classification scheme defined by the ISO 26262 standard for the functional safety of road vehicles.
Perciz: The dedicated brand established by Innoviz to market its LiDAR technology to the defense and homeland security sectors.
Full Conference Call Transcript
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Innoviz's Second Quarter 2026 Earnings Call. [Operator Instructions] I must advise you that this call is being recorded. I would now like to hand over the call to our first speaker, Ada Menaker, Head of Investor Relations. Ada, please go ahead.
Ada Menaker: Good morning. I would like to welcome you to the Innoviz Technologies Second Quarter 2026 Earnings Conference Call. Joining us today are Omer Keilaf, Chief Executive Officer; and Eldar Cegla, Chief Financial Officer. I would like to remind everyone that this call is being recorded and will be available on the Investor Relations section of our website at ir.innoviz.tech. Before we begin, I would like to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of Innoviz. Actual results could differ materially from those anticipated in the forward-looking statements.
Forward-looking statements made today speak only to our expectations as of today, and we undertake no obligation to publicly update or revise them. For a discussion of some important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the Risk Factors section of our Form 20-F filed with the SEC on March 4, 2026. Omer, please go ahead.
Omer Keilaf: Thank you, Ada, and good morning to everyone joining us for our second quarter earnings call. The recent months have been transformative for Innoviz as we enter the defense and homeland security markets. For the past decade, we built our LiDARs to the toughest bar in the industry, automotive functional safety and automotive qualification. That work established a strong technological moat and a leading position in LiDAR for the auto market, a high-volume, long-term business. And those same capabilities now let us take our proven LiDAR platform into defense and homeland security, which is a market with faster growth and much higher margins.
Governments are allocating tens of billions of dollars in Israel, the U.S., Europe and elsewhere to counter emerging threats, establishing what could be a multibillion-dollar TAM. We are serving this market under a dedicated new brand, Perciz, with our existing sensors expected to be going into Counter-UAS, perimeter security and unmanned ground vehicle UGV applications. We've also appointed retired major general Yoav Har-Even, the former President and CEO of Rafael to our Board of Directors to advance our efforts in this market. So far, 6 companies have publicly announced that they are engaging with us to adopt LiDARs in defense and security applications, and we are in active conversations with dozens more.
We've received our first multimillion dollar defense order for Counter-UAS and perimeter security, and our LiDAR solutions have been installed and are fully operational in several locations. We believe the Defense and Security business will be complementary to our automotive business, driving revenue growth and gross margin improvement with ASPs that are in order of magnitude higher than in the auto space. In automotive, growth continues. We announced the development of a LiDAR-based perception stack with a top 10 global OEM for highway driving. Mobileye announced its own robotaxi on the drive platform with 9 Innoviz LiDARs in every vehicle. The same platform powers the ID. Buzz soon to be operating in 6 cities.
More SOPs are on track to follow, including VW's Level 3 and Daimler Trucks Level 4 platform. Combined, our automotive programs and our new security and defense wins drove all-time record revenues of $18.1 million in the quarter. We also strengthened our balance sheet through our recent registered direct offering with a participation from well-known institutional investors, including Neuberger, which grew its existing position. Other investors included some of the largest funds in the world. We believe that the transaction will enhance long-term value and allow us to unlock large defense agreements while supporting our automotive ramp ahead of upcoming SOPs.
Looking ahead, we expect non-automotive sales to grow from 1% of revenues in 2025 to 10% in '26 and to 20% to 30% in 2027, expanding further after that. Including the Counter-UAS orders we just received, our Defense and Security backlog for 2026 is approximately halfway to our 2026 target. For 2027 and beyond, we believe that the automotive end market will drive substantial revenue growth through unit scale and multiple programs are likely to ramp quickly starting late next year. We expect NRE to remain at their current levels. The defense and security end market will drive gross margin uplift aided by shorter cycle times with ASPs that are in order of magnitude higher than in the auto space.
Together, we believe they can create a flywheel effect, which strengthening the other and adding the potential for additional end market expansion. For now -- and now let's jump into the details. The security threat landscape around the world is changing profoundly. Traditional sensing and security architectures can't keep up with autonomous systems and asymmetric tactics. Our LiDAR-based solutions change the equation in 3 specific areas: Counter-UAS, perimeter security and unmanned ground vehicle and robotics. Drone warfare has become one of the most pressing security challenges facing the world today from Ukraine to Israel and beyond. The FBI Deputy Director, Chris Raia, recently said that it's only a matter of time before Battlefield-style drone attacks reach the U.S.
Small drones fly below radar and fiber optic or autonomous control defeat jamming and RF-based detection. Swarms and erratic flight paths overwhelm tracking systems, while birds and vegetation drive false positives. And these inexpensive drones often require expensive and comparatively slow interceptors to neutralize them. On the perimeter security side, current detection systems based on cameras and radar have inherent technological limitations. Weather, difficult terrain and slow or irregular movement make it hard for them to locate and identify threats. Bad actors know these weaknesses and know how to exploit them. This is the soft underbelly of perimeter defense. LiDAR-based solutions are expected to close these gaps.
They can precisely localize small drones and therefore, have the ability to support better protection of borders and critical infrastructures like airports and energy facilities. Finally, in UGVs or robots, we can combine all of our capabilities in one deployment, enabling a functionally safe drone-aware autonomous vehicle. As governments around the world address these threats and build new capabilities, the robust 3D perception layer we enable is gaining attention quickly here in Israel and abroad. Our new brand, Perciz, brings the sensing, perception and AI expertise we built for autonomous driving to the defense and security market.
A dedicated brand under the Innoviz name lets us offer our proven LiDAR solutions with centimeter level 3D localization to government agencies, defense contractors, system integrators and security technology partners. From our customers' experience, the traditional camera and radar-based solutions for counter-UAS applications will only tell you that there is a drone presence. This is not sufficient to protect an area or a critical installation, and many systems are either too large or too expensive to be relevant, especially in a moving platform. Systems supported by our LiDARs can reliably locate the threat in real time, even at low altitude and in cluttered urban environments at close range, allowing those systems to accurately react while minimizing collateral damage.
In perimeter security applications, we have the ability to support intrusion detection for critical infrastructure and border security at distances of up to 1 kilometer. By integrating LiDAR camera and AI, such systems will be able to detect and classify humans and vehicles in very complex environments. This includes behind trees and fences, under power lines and in many other conditions where radar camera fusion solutions fall short. When it comes to solutions in the defense and security space, our customers are looking for 4 major KPIs: outdoor performance with range and resolution, resilience to occlusions such as dirt, water, bugs, et cetera, production readiness and geopolitically secure. Our LiDARs offer all of the above.
In particular, our resilience is a true unique proposition. As in automotive, a LiDAR in defense applications cannot be derailed by environmental factors or obstructions. The video you've been watching showcases our LiDAR ability to withstand occlusions and demonstrates our readiness to serve this market today. We believe these are significant differentiators. Our work in defense and security is already starting to pay off. Last week, we announced our first large orders from a prominent defense customer, $3.5 million for several hundred LiDAR units that will be deployed in Counter-UAS and perimeter security. This program is in its early days, and there is potential for more significant volumes following the successful completion of the first deployment.
We are in active conversations with dozens of potential customers, many of whom have already purchased LiDAR units for testing, development and integration. We believe that some of these programs could drive partnerships and large-scale orders. Just in the past 3 months, 6 customers have announced engagement with us. Drive Group said that they intend to integrate our LiDAR into applications such as drone localization, border security and critical infrastructure protection. This collaboration is a foundation for potentially building meaningful revenue with Drive Group targeting $20 million sales opportunity by the end of 2027. We are also working with Regulus and Givon Defense to improve Counter-UAS performance in complex operational awareness environments.
We expanded our engagement with Cogniteam and are powering their new Counter-UAS model for advanced security platforms. AeroNous, part of Israel Shipyards Industry Group, announced a collaboration to integrate our technology into their open architecture command and control platform for Counter-UAS operations. Finally, prior to our May call, Kela has announced that they will be building Innoviz LiDARs across their unified platform. As defense contractors and system integrators build out real Counter-UAS perimeter security and UGV capability, we believe Innoviz is well positioned to serve these applications. Our LiDARs are already operational in several locations, supporting potentially life-saving solutions. Customers in the defense space need a sensor they can trust.
And through synergies with our automotive business, we deliver a production-ready product that can support their mission. Perciz is off to a strong start as our teams focus on additional engagements in Israel and beyond. We believe that we are in the early stages of this business and the programs and traction we see already are very encouraging as we address what we think is a multibillion-dollar TAM. Let me now update you on our automotive business. Our programs with our existing customers are on track. The Volkswagen ID. Buzz is progressing on multiple fronts. It's being tested in L.A., Orlando, Austin, Hamburg, Munich and Oslo with partners such as MOIA , Uber and Beep.
MOIA has started the next phases of its autonomous mobility program with the ID. Buzz in Hamburg as part of the ALIKE project. Passengers can already book rides. During the quarter, Mobileye announced its vertically integrated robotaxi business, which has a potential of opportunity of 150,000 units to our pre-existing programs with Mobileye, Volkswagen, Daimler Trucks and others. For our Level 4 Daimler Truck program in collaboration with Torc, we are delivering units to support milestones through SOP. We are continuing our development work with LOXO on their Level 4 autonomous delivery platform. And on Level 3, we are advancing on our SOPs with Mobilize Software and programs such as Audi.
Globally, automakers are targeting deployment of life-saving autonomous capability in Level 3 for passenger vehicles and Level 4 for commercial vehicles. Importantly, given the increased level of regulatory scrutiny, OEMs have been carefully assessing the risk of selecting or continuing to use Chinese LiDARs. There is robust interest in our technology from both platform providers and OEMs. Just yesterday, we announced the development of a LiDAR-based perception stack with a top 10 global OEM. The project includes our InnovizTwo LiDAR and perception capabilities powered by NVIDIA hardware. We are actively participating in multiple processes with OEMs with decisions expected to be made in the coming quarters. For programs prior to 2028 SOP, we are offering our suite of InnovizTwo products.
For programs of later SOPs, we are also offering the InnovizThree, which was designed with a smaller form factor and reduced power consumption, making it ideally suited for deployment behind the windshield. The customer reception of the InnovizThree has been very encouraging. Now let's talk about our outlook for 2026. We are reiterating the '26 targets we set earlier this year. We expect revenues of $67 million to $73 million, driven by the ramp of LiDAR shipments and NRE payments. Given the timing of customer milestones and SOPs, we expect the bulk of our second half revenues to come in the fourth quarter.
In 2026, we expect up to 10% of our revenues to come from nonautomotive physical AI applications, largely in defense and security, and we expect defense and security to make up a growing portion of revenue thereafter. We target new NRE payment plans of $20 million to $30 million in addition to our existing plans. We expect to add 2 to 3 new programs this year, and now I will turn it over to Eldar to discuss our financials.
Eldar Cegla: Thank you, Omer. In the second quarter, revenues were an all-time record of $18.1 million. They reflect a significant uplift in customers' NRE recognitions as we meet key milestones for programs approaching SOP. Consequently, gross margins in the quarter returned to positive levels, and we believe gross margins will be positive for the full year, supported by an increasing numbers of units being shipped to defense and security customers, continued NRE payments and the ramp of volume production for automotive. For the quarter, cash used in operation and capital expenditure was approximately $15.2 million. For the full details of our operating expenses and stock-based compensation, please see the tables in our press release.
We continue to have no long-term debt, and we ended the quarter with approximately $48.5 million in cash, cash equivalents, short-term deposits and marketable securities on the balance sheet. This does not include the additional of $30 million gross proceeds of the transaction we closed on July 29, significantly strengthening our balance sheet. The use of the proceeds will include supporting the commercialization of Perciz, our Defense and Security brand. We expect that the Defense and Security business will become a meaningful segment for us, driving revenues growth with a quicker cycle as well as improving profitability. In 2027, we expect to see significant growth from LiDAR unit sales into both our focus segments, which will further accelerate into 2028.
We believe the transaction we just closed will provide us with operational runway into 2028, allowing us to realize this expansion in 2027 and beyond. Our recent performance reflects our ongoing commitment to our automotive customers. I'm also very proud of what we have been able to achieve in the defense and security sector in just the past few months. Our efforts are already bearing fruit, and I'm excited about the opportunity ahead. And with that, I'll turn the call back to Omer for his closing remarks.
Omer Keilaf: Thank you, Eldar. Before I wrap up the call and open for Q&A, I want to recap our recent accomplishments. We are seeing strong traction in defense and security with our new Perciz brand as governments face new and urgent challenges and are allocating significant funds to address these threats. Our customers in this end market appreciate our automotive expertise. They understand how our commitment to functional safety directly translates to their need for a reliable product that can withstand harsh conditions. Just last week, we announced our first multimillion dollar defense orders for Counter-UAS and perimeter security applications, and this engagement has the potential to grow substantially.
There have been 6 partner announcements in just the past 3 months across a variety of applications, and we are in conversations with dozens of additional potential customers in Israel and beyond. Our automotive business is progressing well, and we have products launching this year to support programs set for SOP with our existing customers. We have several development projects underway and are actively competing on Level 3 and Level 4 RFIs and RFQs. The outlook for the full year remains unchanged, and we are pleased with the operational and business momentum we've seen so far this year.
Longer term, we view the automotive business and the Perciz business as highly synergistic, driving key elements of our long-term growth and profitability. And with that, operator, let's begin the Q&A.
Operator: First question will be from Mark Delaney with Goldman Sachs.
Mark Delaney: I was hoping you could start with more context on what the Defense and Security bookings mean for sales from here, including how much annual revenue has now been booked when these awards fully ramp? And if you can speak more on your visibility and confidence at securing the rest of the awards needed for Innoviz to meet its goal for non-auto revenue to be about 10% of the total in 2026.
Omer Keilaf: Yes. So I think that the more we are working in this field, we're getting higher and higher confidence about this market to be a very promising opportunity for us, not only for this year, but also for the coming years. Specifically on your question about the bookings. So as we said, we've already booked halfway our target for the year. And in terms of the opportunities that we are currently in discussion with several customers, we have high confidence we will be able to meet our 10% target. We also said that we are expecting next year that the contribution of the defense platform would be roughly between 20% and 30%.
This is coming from the second row of some of the activities that we are working on, which are expected to grow.
Mark Delaney: Helpful. And then on the award environment in the auto area, including personal vehicles as well as EVs. You mentioned that's ongoing. I don't know if you could share a little bit more context on how those engagements are progressing. I think you said you're most active at the moment on L4 awards, but any incremental color you can share both on the consumer vehicle front as well as commercial robotaxi type applications?
Omer Keilaf: Sure. Yes. There are several activities in terms of collaboration with different OEMs, both on Level 3 and Level 4. When it comes to Level 3, primarily, this is with InnovizThree for behind the windshield. There are a few OEMs that are evaluating InnovizThree. I believe that one of them would probably also turn into a development project quite soon. And there are a few programs that I expect that at least some of them would turn into serious awards. In terms of Level 4, I think InnovizTwo has already been proven as a product that has a very high fit for the automotive market, especially when it comes to durability.
As I try to express every time because I think this is, I think, a hidden gem or I would say it's a topic that is not discussed enough. When it comes to autonomous driving, the LiDAR acts as redundancy to the camera. And as you saw from the video we showed earlier, the LiDAR and the camera should never fail simultaneously. If that's the case, then the LiDAR is not really providing redundancy. A very obvious use case for failure mode for a camera is dirt. And when a car drives over a puddle of mud, both the LiDAR and the camera fails, they can fail together. If they are both covered with mud, you will not have redundancy.
And it means that the system becomes completely blind. As far as we know, Innoviz is currently the only LiDAR company that is capable of offering a solution for this use case. Many companies talk about functional safety for autonomous driving. And if their LiDAR is unable to fulfill redundancy for the camera, it's not the case. You cannot be functionally safe without the capability to operate in these environments. For this reason, any OEM that is interested and desires to have real functional safety, it needs to use a LiDAR that does not fail under those conditions.
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For that reason, I believe that Innoviz's ability to succeed in the Level 4 with this very distinctive and very important capability, our ability to sustain and get more awards is high. Our product is mature. It is ready to production and several OEMs that have been using LiDARs that are coming from China in the U.S. are aware about the risk that they are taking and are looking for alternatives.
Innoviz's set of LiDARs, which are combining of short, mid-range, long range and now ultra-long range is a one-stop shop that we are able to offer, including our ability to close some of the gaps related to perception software or MRM systems as we are showing more and more activity with OEMs that are looking for partners that can offer everything. For that reason, I believe that we will be able to extend our market share and have additional awards.
Mark Delaney: Very helpful. Just lastly for me was on OpEx. R&D fell meaningfully sequentially in the second quarter. Can you share a bit more on what the driver of the reduced R&D expense was in 2Q? And any guidance on how to think about R&D going forward?
Eldar Cegla: It's strongly related to reallocation of costs towards COGS once we recognize NRE. So the NREs are served by the R&D team and then there is some reallocation. So it's more technical than substantive. The R&D team is practically the same R&D team as it was.
Operator: Our next question is from Jash Patwa from JPMorgan.
Jash Patwa: Maybe just to start on the automotive side. Could you give us more color on what developing a LiDAR perception stack with the top 10 automaker actually means? What are you solving for them? And is there any way to size the revenue tied to that contract? And just as a quick follow-up on that, does a development of a LiDAR perception stack typically sits right at the start of an automaker's program? Just wondering if you could give us more color on that. And I have a quick follow-up.
Omer Keilaf: Sure. So first, I want to make sure it's clear. We're talking about a new OEM relationship. It's not an OEM that we've been working with so far. It's a top 10 OEM and therefore, opens a new opportunity with the engagement of working together. towards possible opportunity for series production. The development work that we are doing with the OEM is -- maybe I would add here, this OEM is developing platforms that are targeting both Level 3 and Level 4. The work that we are doing right now with the OEM is dedicated on Level 3, where while on Level 4 right now, the engagement is related to the LiDARs.
When it comes to the Level 3 activity, there is similar to what we've done in the past with BMW. As a reminder, BMW vehicles that are operating Level 3 are using not only our LiDAR, we are -- the vehicles are operating by using the LiDAR and the perception software, which means that our perception software has met the automotive requirements and are used for functional safety. As you can imagine, reaching SOP for Level 3 for the LiDAR alone is a very unique, I would say, capability that Innoviz has demonstrated.
As far as I know, we are the only -- we are also the only one we're able to reach SOP with automotive perception along with the LiDAR. The same capabilities that we offer for BMW are now being served to this new OEM. They have several KPIs that they want to assess with the LiDAR, while they are preparing towards the next step where they want to start working on the series production program. This is a development stage where they are going to use the LiDAR alongside with our perception system in order to learn how to prepare the platform for the next stage of their development stage.
In terms of the volume or I would say, the revenue, this is related primarily to NRE and sales of LiDAR. We did not give color on the amount. It's a development program, which we believe would tie the relationship between the teams that we later can translate to the series production.
Jash Patwa: Understood. That's very helpful. And congrats on that contract. Just as a follow-up, any feedback on how the LiDAR units are performing on the test ID. Buzz units? Maybe just what has surprised you to the upside or downside? And relatedly, is there an timing on the SOP for the Mobileye Drive platform? And how are you and your suppliers ramping the supply chain ahead of that?
Omer Keilaf: Sure. So I would start with the first question. The feedbacks are very good. We are getting very good feedback from the customer who is very pleased with the LiDAR. This is obviously very -- we're very happy to hear that. And this is part of -- also in discussions about the next platform, where as far as we see right now, get the feedback from the team that they are planning to use the same 9 LiDAR platform for the next rollout or, say, the next platform or hardware refresh, you might call it.
I know that in the past, there were some discussions about possibly LiDARs would be displaced with imaging radars or so, but it's definitely not the case. They are very satisfied with the LiDAR performance and happy with the relationship as well. We have a very good relationship with Volkswagen. And I think the collaboration is very successful. We are fortunate to work with a good team as well, both from Volkswagen and Mobileye. In terms of the time line, so there is -- there are 6 cities where the ID. Buzz is planned to serve by the end of this year.
We are ramping up our production capacity where we expect to have a meaningful uplift already next year and then even more significant one in '28 and et cetera. So eventually, there are already vehicles on the road in several cities, and we expect to have at least 6 cities by the end of this year that will -- which will unlock the increase that is expected next year.
Operator: Our next question is from Colin Rusch from Oppenheimer.
Colin Rusch: I'm just curious, as you moved into a little bit more diversity of applications with the LiDAR, I'm curious about the pipeline and how many different form factors we should be thinking about the integration of the technology really being able to address. It seems like the near term or the short term or the short-range LiDAR has a lot of applications and that there are a limited number of suppliers that can actually do what you guys do for a number of these new merchant bought form factors.
Omer Keilaf: Sure. Let me add something here. You are right that there are very few Western LiDAR suppliers that can support short-range LiDARs. I think here, it's even more, I would say, differentiated. LiDAR companies have developed a short-range LiDAR, which basically means being able to capture a very wide field of view. In the automotive space, it is only needed for a very short range, 20 to 30 meters. The InnovizTwo short range is called short range because that was the gap that was needed by the OEM. But actually, the LiDAR optical performance is identical to the ultra-long range.
So basically trying to say the short-range LiDAR, which enables a very wide field of view, can allow us to use the same optical performance of the ultra-long range of the 1 kilometer, you can say, in the same field of view. When it comes to the defense market and specifically come to U.S., you can imagine that the KPIs that customers are looking for is very wide field of view because you're looking at a very large scene in the sky, and you want to capture a very small object as several hundreds of meters. To be able to do so, you need to have both very wide field of view, very high resolution and very high sensitivity.
Innoviz's products, which are off the shelf, same product that we are currently offering for the ID. Buzz is able to do so. So our ability to serve immediately customers that are looking to localize, find, et cetera, drones is already served by the existing product. In terms of their sensitivity on size, et cetera, of course, there is less sensitivity. But I would say with a caveat, today, one of the biggest programs that we are involved is related to Counter-UAS for vehicles. One of the most challenging problems today in the world is related to drone threats on convoys and vehicles because they have no way to protect themselves.
When you talk about infrastructure, you can possibly invest hundreds of thousands of dollars in infrastructure that can allow you to have some defense capabilities. When it comes to -- you can buy hundreds of thousand dollars of radars that can possibly give you some capabilities. This is a theoretical capability that is obviously very expensive and could be done the same by using our LiDARs. This is a theoretical capability, but for mobility, for convoys, it's completely impossible. You cannot mount 4 huge expensive radars on every vehicle. And therefore, the advantages related for a single LiDAR that can capture -- can solve the problem of Counter-UAS is very unique for LiDARs.
And therefore, it's one of the things that we believe would be very material to our ability to sell in this market.
Colin Rusch: And then as you see kind of the increased number of applications for the hardware, I'm curious about the need or opportunity for you guys to migrate into software in a more robust way and what that might look like from an internal development spending perspective or if there's acquisitions that might make sense for you guys?
Omer Keilaf: So let me start by saying in the automotive space, Innoviz is acting as a Tier 1, where we are responsible end-to-end for the LiDAR integration into the vehicle. In some cases, also for the software. When it comes to defense and homeland security, our motivation is time to market. We are looking for ways to penetrate the market as fast as possible. For that reason, we are acting as a Tier 2, working with different system integrators that are already selling today defense systems to the end customers. This allows us to reach the market faster. And in many cases, by the way, we are already operating in the field operationally.
You can imagine that if we are already installed in villages for perimeter security, it did not require us to go through the RFI and RFQ, et cetera. This was done by a partner that was already awarded and decided to displace the radar that they were using so far with the LiDAR that we are offering. This gave them the opportunity to improve the customer satisfaction and while keeping the same price points. And because of the maturity of the product, it was possible.
They tried -- they believe it was the right thing to do for them because they understood that while showing the capabilities they can achieve with the LiDAR, they will be able to convince many others to do the same and give them the advantages. In those kind of applications, the overall system is not only a LiDAR. It's also a fusion with a camera and control system into the control rooms, et cetera. So our desire was not to be involved in that category. When it comes to the Counter-UAS, the situation is slightly different because Counter-UAS is a new market. And for that reason, any company today that wants to offer Counter-UAS by using a LiDAR.
And basically, Counter-UAS can be split to 2 parts. One is detection. When it comes to detection, you can use a camera or radar, you can possibly detect a drone even at 2 kilometers away. This gives you the ability to become aware that there is drone. The problem with today is that the threat of FPVs and fiber optic or autonomous drones they are undetectable until they reach the last mile. In this category, there are no available solutions. And therefore, the companies that we work with are looking to close the gap. Today, companies that are selling into defense, they provide multiple solutions to deal with different threats.
And they see the need to close the gap when it comes to FPV, which everyone is interested with. So we work with these teams. Alongside, we are providing them not only with the LiDAR, but also with software capabilities, reminding you that we are developing the LiDAR and the SMART and the SMARTer. The SMARTer that we announced beginning of the year, it's a platform which includes processing power, which can run applications on the LiDAR itself. Specifically for the drone market, we are not offering the LiDAR. We are not offering only the LiDAR, we are offering as well the compute and the tracking system that can allow our customers to run faster.
So there are different ways that we can monetize not only from the LiDAR, also from the compute and the software and will continue to evolve over time. But now our focus is time to market.
Operator: There are no further questions. I'm handing the call back to Omer for closing remarks.
Omer Keilaf: Thank you very much. I want to repeat and say we are in a very interesting time for the company. There is -- there are many activities related to the defense market. I'm spending much time with drones, and it's exciting to see that we are able to offer a product that is ready for such an important task. And I hope that we'll be able to show you more and more how that this market will materialize for us. Thank you very much.
Eldar Cegla: Thank you.
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