JERUSALEM - Mobileye, a leading provider of autonomous driving and driver-assistance technologies, has announced the closure of its aftermarket solutions division due to declining revenues and profitability. The company, which has been a pioneer in advanced driver assistance systems (ADAS), stated that the rise of integrated ADAS in new vehicles has decreased the market for retrofit solutions.
The aftermarket solutions unit, which was generating roughly $40 million annually, will be wound down as it no longer contributes positively to Mobileye's profitability. The decision is part of a strategic shift to concentrate on more advanced driver-assist technologies and autonomous driving opportunities.
Prof. Amnon Shashua, President and CEO of Mobileye, acknowledged the difficulty of the decision, noting the division's significant role in establishing Mobileye's leadership and promoting the adoption of ADAS technologies. However, the success of integrated ADAS has undercut the retrofit market, rendering the continuation of this activity unviable.
Approximately 130 employees worldwide will be affected by the shutdown, and Mobileye has committed to supporting them over the near-term. The company also plans to continue meeting the needs of existing customers of the aftermarket solutions over the medium-term. Additionally, Mobileye will maintain its offerings and services to commercial vehicle manufacturers through its General Safety Regulation (GSR) solutions.
This move is not anticipated to materially impact Mobileye's financial results for 2024. The company, which was founded in 1999 and became independent from Intel (NASDAQ:INTC) in 2022, has equipped around 170 million vehicles with its technology by the end of 2023.
The information in this article is based on a press release statement from Mobileye.
InvestingPro Insights
As Mobileye navigates the strategic shift away from its aftermarket solutions division, the company's financial health and market valuation remain pivotal to investors. According to recent data from InvestingPro, Mobileye holds a market capitalization of 22.36 billion USD, indicating a significant presence in the autonomous driving industry despite recent changes in its business strategy.
InvestingPro data also reveals a challenging profitability landscape, with Mobileye posting a negative P/E ratio of -828.33 for the last twelve months as of Q4 2023. This metric underscores the company's current lack of profitability, aligning with the decision to discontinue the less profitable aftermarket solutions division. However, with a revenue growth of 11.24% in the same period, there are signs of underlying growth in the company's core operations.
One of the key InvestingPro Tips for Mobileye is the company's strong liquidity position, where liquid assets exceed short-term obligations. This financial stability is crucial as the company transitions its focus to more advanced technologies. Additionally, analysts predict that Mobileye will be profitable this year, suggesting a potential turnaround from the previous year's performance.
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