Mobileye recognizes $2.7b goodwill loss

Israeli advanced driving assistance systems (ADAS) company Mobileye Global Inc. (Nasdaq: MBLY) recognized a $2.7 billion goodwill impairment loss in the third quarter of 2024. The company explained that this is a non-cash impairment loss related to the goodwill asset on its balance sheet. Mobileye added, “This asset, which is significant in the context of Mobileye’s total assets, originally resulted from the Intel acquisition of Mobileye in 2017 and was pushed down to our balance sheet in connection with the IPO in 2022 and separation from Intel. During the quarter, due to our market capitalization falling below our book equity value, an interim impairment test was triggered.”

In effect when Intel acquired Mobileye for $15 billion, its main asset was its goodwill and when the company held its IPO the goodwill was put onto its balance sheet. After the recent heavy fall in the company’s share price, a situation arose in which Mobileye’s equity was higher than its market cap, which required the company to conduct an examination of goodwill impairment according to accounting rules.

Since the start of the year Mobileye’s share prices has fallen 71%

Since the start of the year Mobileye’s share prices has fallen 71% to $12.40, giving a market cap of $10.1 billion, compared with a market cap of $17 billion at the time of its IPO two years ago. Despite all this the share price is 7.89% higher in premarket trading after publication of its financial results.

Revenue in the third quarter was $486 billion, down 8.3% from the corresponding quarter of 2023, with non-GAAP net profit of $77 million or earnings per share of $0.10 – higher than analysts’ expectations. Since the start of 2024, Mobileye’s revenue has totaled $1.16 billion, down 19.3% from the corresponding period of 2023.

The write down in goodwill led to a sharp fall in GAAP operating profit with an operating loss of $2.8 billion in the third quarter and $3.6 billion since the start of 2024, compared with operating profit of $8 million in the corresponding quarter of 2023 and a loss of $106 million in the corresponding period of 2023. GAAP net loss was $2.7 billion in the third quarter of 2024 compared with a net profit of $17 million in the corresponding quarter of 2023. In the first nine months of 2024, GAAP net loss was $3.1 billion compared with a $68 million net loss in the corresponding period of 2023.

Mobileye has also narrowed its guidance range but has not changed its mid-point forecast. Mobileye expects 2024 revenue of $1.62-1.66 billion, compared with $1.6-1.68 billion in its previous guidance. The company expects non-GAAP operating profit of $163-190 million, compared with $152-201 million in the previous guidance. Due to the write off in goodwill in the third quarter, GAAP operating loss will be $3.23-3.26 billion in 2023 compared with the previous guidance of a GAAP operating loss of $531-580 million.

Mobileye founder and CEO Prof. Amnon Shashua said, “We continue to focus on our core strategic objectives for the next two years, which include maintaining and growing our ADAS position outside of domestic China, deepening the relationship with our top 10 customers through advanced product design wins, and executing our EyeQTM6-based set of advanced products that leverage historic Mobileye competitive advantages augmented by novel AI approaches. While the near-term growth environment remains challenging, our objectives are focused on medium- and long-term opportunities and we expect those to become more evident in the coming months.”

Published by Globes, Israel business news – en.globes.co.il – on October 31, 2024.

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