Executive Summary / Key Takeaways

• Arbe Robotics is strategically positioned as a pure-play leader in 4D imaging radar, a critical enabler for Level 3 and higher autonomous driving, with its technology offering superior resolution and all-weather performance at a competitive cost compared to rivals and LiDAR.
• Despite current pre-revenue losses reflecting significant R&D and fixed costs, the company boasts a robust balance sheet with over $70 million in cash, providing ample runway to fund its operations through the anticipated revenue ramp-up.
• Arbe is actively engaged in "final few" OEM selection processes, targeting four design-ins in the coming year, with initial high-volume automotive revenues expected to begin in China by late 2025 and in Europe/US by 2027-2028.
• The non-automotive segment, particularly through its partnership with Sensrad in defense, smart infrastructure, and industrial applications, is emerging as a strategic leg, expected to generate earlier revenues and potentially higher margins.
• Key risks include extended OEM decision timelines due to broader economic shifts and geopolitical factors, but the long-term outlook remains strong, driven by regulatory pushes for advanced ADAS and the industry's shift towards comprehensive sensor fusion.

The Dawn of Autonomous Driving: Arbe's Foundational Role

The automotive industry stands at the precipice of a transformative era, moving rapidly towards advanced driver-assistance systems (ADAS) and fully autonomous vehicles (AVs). At the heart of this evolution is the critical need for robust, all-weather perception, a domain where Arbe Robotics Ltd., an Israeli semiconductor company founded in 2015, is establishing itself as a pivotal player. Arbe's core business revolves around its proprietary 4D imaging radar solutions, designed to overcome the limitations of traditional sensors and enable safe, hands-free, and eyes-off driving capabilities (Level 3 and beyond). The company's strategy is clear: secure design wins with leading global OEMs through its Tier-1 partners and expand into lucrative non-automotive verticals, leveraging its technological superiority to capture a significant share of this burgeoning market.

The broader industry trend unequivocally points towards a departure from vision-only approaches, favoring comprehensive sensor fusion where high-resolution radar fills critical perception gaps. This shift, coupled with emerging regulations mandating advanced ADAS testing, particularly in markets like China, creates a compelling demand for Arbe's technology. The company's historical journey, marked by deep OEM engagements, strategic partnerships, and substantial R&D investments, has positioned it to capitalize on this fundamental industry transformation.

Technological Edge: The Heart of Arbe's Moat

Arbe's competitive advantage is fundamentally rooted in its differentiated 4D imaging radar technology. The company offers a sophisticated radar chipset, comprising transmitter (Tx), receiver (Rx), and processor chips, alongside perception radar systems like Phoenix for free space mapping and Lynx for corner and back installation. This technology delivers ultra-high resolution and reliable performance across all weather and lighting conditions, a critical differentiator where camera-based systems struggle and LiDAR faces cost and environmental limitations.

The tangible benefits of Arbe's technology are significant and, in some aspects, quantifiable. Its radar boasts "at least more than 1,000 channels" and provides "on-chip super resolution processing and real-time performance at 20 frames per second". This level of detail is crucial for accurately detecting stationary objects and vulnerable road users, which is essential for Level 3 autonomy. Management highlights that a "real safe ADAS system" requires a long-range radar with a "minimum channels of 32x32 channels," a benchmark met by Arbe's solution. Furthermore, Arbe's technology offers "highly detailed perception at a significantly lower cost and better quality of service" compared to LiDAR, making it an attractive and scalable alternative for mass market adoption. The company's radar also addresses the "unique challenges of the trucking market such as larger size of trucks, longer braking distances and higher impact potential". Arbe continues to invest in R&D to "enhance the development of the next generation of our radar solutions," ensuring its technology remains at the forefront of innovation. This technological leadership forms a strong competitive moat, positioning Arbe as a key enabler for the next generation of autonomous systems.

Strategic Partnerships and Market Penetration

Arbe's market penetration strategy relies heavily on its robust ecosystem of Tier-1 partners and strategic collaborations. The company does not sell directly to OEMs but rather supplies its chipsets to Tier-1s like Magna , HiRain Technologies, and Sensrad, who then integrate them into complete radar systems. This "three-way cooperation" ensures deep involvement in the automotive sourcing process.

In the automotive sector, Arbe is making significant strides. The company is currently in "imaging radar selection programs with several of the world's leading OEMs". By the third quarter of 2024, Arbe was working with 16 OEMs, with 12 in the bid stage and 8 in advanced perception projects, demonstrating substantial investment in algorithm development and sensor data processing. Arbe's goal is to achieve "4 OEM bid wins within the coming year". These design wins are anticipated to serve as key enablers for 2028 passenger vehicle platforms, with revenues projected to begin in 2027 and ramp up significantly in 2028. In China, HiRain Technologies launched its LRR615, a production-intent long-range imaging radar system powered by Arbe's chipset, with mass production expected to ramp up by the fourth quarter of 2025. This timeline is further bolstered by proposed Chinese regulations mandating advanced ADAS testing, creating a significant market opportunity for Arbe's technology as early as 2026. Arbe is also collaborating with a leading European truck manufacturer and expects US revenues to commence in 2028.

Beyond automotive, the non-automotive segment is rapidly gaining traction and is considered a "strategic leg to the company". Arbe is scaling chip deliveries to Sensrad, which is deploying radars in diverse applications, including "defense applications, a growing radar applications market". Sensrad also secured a framework agreement worth an estimated $7.3 million with Tianyi Transportation Technology in China for vehicle-road-cloud integration. While non-automotive volumes are not expected to match automotive, they offer "nice revenues shorter than in automotive," with revenues expected in 2025 and 2026, and potentially "dramatically earlier" in defense and other verticals. Arbe also benefits from a recurring support and maintenance agreement with Sensrad. The collaboration with NVIDIA (NVDA), integrating Arbe's high-resolution imaging radar with the NVIDIA DRIVE AGX platform, further validates Arbe's technology and expands its role in the software-defined vehicle ecosystem.

Competitive Arena: A Two-Horse Race

The market for high-end imaging radar, particularly for Level 3 autonomous driving, is highly concentrated. Management describes it as a "two horse race" between Arbe's chipset (via Tier-1s like Magna (MGA) and HiRain) and Mobileye's (MBLY) chipset (via Valeo (VLEEY)). Other competitors include NXP (NXPI), whose radar solutions are implemented by Continental (CTTAY). Arbe asserts a distinct competitive advantage: against Continental (NXP), Arbe offers "better performance and more or less same price," while against Mobileye (Valeo), it provides "same performance more or less and much – and a huge advantage on price".

This competitive positioning is critical as OEMs are narrowing their selections to a "final few radar technologies". The extensive data collection and algorithm training required for L3 applications make it unlikely for an OEM to select multiple radar vendors for the same application. Arbe's ability to offer a high-performance, cost-effective alternative to LiDAR, as demonstrated by HiRain's system "effectively replacing LiDAR from the current system," further strengthens its competitive stance. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Arbe's strong performance in securing advanced OEM engagements suggests a growing competitive edge in this specialized segment.

Financial Performance: Investing in Future Growth

Arbe Robotics is currently in a pre-revenue ramp-up phase, characterized by significant investments in R&D and operational infrastructure. For the second quarter of 2025, the company reported revenue of $0.3 million, a decrease from $0.4 million in Q2 2024. Gross profit for Q2 2025 was negative $0.2 million, primarily reflecting the impact of fixed cost components given reduced revenue. Total operating expenses for Q2 2025 were $11.3 million, down from $11.6 million in Q2 2024, mainly due to lower share-based compensation, partially offset by increased bonus accruals and labor costs. The operating loss for Q2 2025 was $11.5 million, leading to a net loss of $10.2 million. Adjusted EBITDA, a non-GAAP measure, showed a loss of $8.9 million in Q2 2025.

Looking at the full year 2024, total revenue was $0.8 million, down from $1.5 million in 2023, resulting in a gross margin loss of $0.8 million. Operating expenses for 2024 totaled $48.9 million, driven by non-cash share-based compensation and production ramp-up related costs. The net loss for 2024 was $49.3 million. These figures underscore Arbe's current stage as a growth company heavily investing in its future, with current losses reflecting the foundational expenditures necessary to bring its advanced technology to mass production.

Balance Sheet Strength and Runway

Despite current losses, Arbe possesses a robust balance sheet, providing a substantial financial runway to support its ambitious programs. As of June 30, 2025, Arbe held $26.3 million in cash and cash equivalents and short-term bank deposits, alongside $35.7 million in long-term bank deposits, totaling approximately $62 million. This strong liquidity position was significantly bolstered by recent fundraising efforts, including $33 million from an underwriting registered direct offering and $21.5 million from the conversion of convertible bonds in January 2025, bringing the total cash infusion to approximately $70 million. Management explicitly states that this "strong balance sheet" provides the "runway to support all programs as our revenues reach the ramp-up stage".

The company projects its OpEx burn for 2025 to be in the range of $32 million to $34 million, with R&D accounting for approximately $25 million annually. OpEx is expected to remain "quite similar for the next couple of years," with additional investments of $5 million to $15 million over two to three years for next-generation radar solutions. This disciplined financial management, combined with substantial cash reserves, positions Arbe to execute its strategic initiatives without immediate capital constraints.

Outlook and Path to Profitability

Arbe's outlook is characterized by an anticipated inflection point in revenue growth, driven by its design wins and production ramp-ups. For 2025, the company expects annual revenue in the range of $2 million to $5 million, weighted towards the end of the year. Adjusted EBITDA for 2025 is projected to be a loss between $29 million and $35 million.

The revenue ramp is expected to accelerate significantly from late 2025. Mass production in China with HiRain is anticipated to begin by the fourth quarter of 2025, generating "revenues for real final production of chips". For Europe, Arbe's technology is expected to be a key enabler for 2028 passenger vehicle platforms, with revenues beginning in 2027 and ramping up in 2028. US revenues are also projected to start in 2028. The non-automotive segment is expected to contribute earlier, with "nice revenues shorter than in automotive" in 2025 and 2026, particularly from defense and other verticals. Looking further ahead, Arbe estimates it can ship "around 5 million imaging radar chipsets to our customers" by 2030. During the initial ramp-up, gross margins are expected to be in the range of 50% to 60%, though the first 100,000 to 200,000 units will see margins reduced to 30% to 35% due to extra testing. The company's long-term financial goal is to achieve cash flow positivity by 2027, aligning with the high-volume production ramp of its automotive solutions.

Key Risks and Headwinds

While Arbe's long-term prospects appear promising, several risks and challenges warrant investor attention. Broader economic shifts have led to "delays in automakers' rollout of advanced driver assist systems," extending decision timelines for OEMs. These delays are not attributed to Arbe's technology but rather to external factors such as supply chain issues, a focus on electric vehicles, and tariff uncertainties. The timing of OEM selection processes remains "not under our control".

Geopolitical factors also present a risk, particularly the "terrorism and the hostilities in Israel and with its neighboring countries," including the ongoing conflict in Gaza. This could affect the Israeli economy, potentially impacting Arbe's business through the call-up of employees, a potential boycott of Israeli products, or changes in the USD/ILS exchange rate. While Arbe has not reported any direct negative responses or missed opportunities due to these delays, the extended timelines could impact the pace of revenue recognition and the achievement of its financial targets.

Conclusion

Arbe Robotics stands at a critical juncture, poised to transition from a pre-revenue, R&D-intensive phase to a high-growth production company. Its core investment thesis is anchored in its technologically superior 4D imaging radar, which is becoming an indispensable component for the next generation of safe and reliable autonomous driving systems. The company's strategic partnerships, successful OEM engagements, and expansion into diverse non-automotive verticals underscore its strong market positioning.

Despite current financial losses, Arbe's robust balance sheet provides the necessary capital to fund its operations through the anticipated revenue ramp-up, with a clear path towards cash flow positivity by 2027. While external factors like extended OEM decision timelines and geopolitical risks present headwinds, the fundamental industry shift towards advanced sensor fusion and the regulatory push for enhanced ADAS capabilities create a powerful tailwind for Arbe. For discerning investors, Arbe Robotics represents a compelling opportunity to invest in a technological leader at the forefront of the autonomous revolution, with its innovative radar technology serving as a foundational pillar for the future of mobility.