indie Semiconductor, Inc. (INDI) Q4 2022 Earnings Call Transcript

indie Semiconductor, Inc. (NASDAQ:INDI) Q4 2022 Earnings Conference Call February 16, 2023 5:00 PM ET

Company Participants

Ashish Gupta - IR

Donald McClymont - Co-Founder and CEO

Tom Schiller - CFO and EVP, Strategy

Conference Call Participants

Suji Desilva - ROTH

Anthony Stoss - Craig-Hallum

Ross Seymore - Deutsche Bank

Craig Ellis - B. Riley Securities

Cody Acree - Benchmark

Operator

Good day and invited to indie Semiconductor's Fourth Quarter and Year End 2022 Earnings Call. [Operator Instructions] As a reminder, this convention telephone is being recorded.

I will now move nan telephone complete to Ashish Gupta, Investor Relations. Mr. Gupta, please spell ahead.

Ashish Gupta

Thank you, Operator. Good day and invited to indie Semiconductor's 4th fourth and twelvemonth extremity 2022 net call. Joining maine coming are Donald McClymont, indie's Co-Founder and CEO; and Tom Schiller, indie's CFO and EVP of Strategy. Donald will supply opening remarks and talk business highlights followed by Tom's reappraisal of indie's Q4 and first 4th outlook.

Please statement that we will beryllium making forward-looking statements based connected existent expectations and assumptions, which are taxable to risks and uncertainties. These statements bespeak our views only arsenic of coming and should not beryllium relied upon arsenic typical views of immoderate consequent date. These statements are taxable to a assortment of risks and uncertainties that could origin existent results to disagree materially from expectations.

For a chat of nan strategical backlog formulation methodology, please mention to our safe harbor connection connected our Q3 net property release. For worldly risks and different important factors that could impact our financial results, please reappraisal our consequence factors successful our Annual Report connected Form 10-K for nan fiscal twelvemonth ended December 31, 2021, arsenic good arsenic different nationalist reports revenge pinch nan SEC. Finally, nan results and guidance discussed coming are based connected definite non-GAAP financial measures. For a complete reconciliation to GAAP, please spot our Q4 net property release, which was issued successful beforehand of this telephone and tin beryllium recovered connected our website astatine www.indisemi.com.

I'll now move nan telephone complete to Donald.

Donald McClymont

Thanks, Ashish and welcome everybody.

indie delivered different 4th of grounds gross and gross separator capacity successful Q4. Once again up of expectations and capping disconnected a 2nd consecutive twelvemonth successful which we much than doubled our topline. Our sustained outperformance reflects nan spot of our highly innovative Autotech products, backed by an extended world patent portfolio developed by indie's squad of complete 600 dedicated labor astir nan world.

Specifically, during nan 4th quarter, we importantly outpaced our addressable markets and grew gross 74% year-over-year and 10% sequentially to conscionable complete $33 million. We expanded gross separator to 52% and gained further creation triumph momentum spanning ADAS, personification acquisition and electrification applications.

Of note, during nan period, we ramped our personification acquisition portfolio crossed starring North American automotive OEMs exceeded 200 cardinal portion cumulative shipments, closed a convertible indebtedness offering of $160 cardinal successful support of our acquisition plans, launched a Board authorized $50 cardinal stock and warrant repurchase program.

And much precocious we captured a centrifugal controller creation for E-vehicle artillery cooling systems. Entered a cardinal business pinch Seeing Machines targeting driver and conveyance caretaker monitoring. Demonstrated innovative powerfulness delivery, wireless charging, lighting and ADAS solutions astatine CES, including our Surya coherent LiDAR SoC. And announced our intent to get GEO Semiconductor.

On a afloat twelvemonth 2022 basis, we delivered $111 cardinal successful gross and improved gross separator to astir 50%. While substantially expanding our strategical backlog to $4.3 cardinal arsenic of November 2022, up from $2.6 cardinal successful 2021 and $2 cardinal astatine nan clip of our motorboat successful 2020, mounting nan shape for sustained, outsized maturation done nan equilibrium of this decade arsenic creation wins construe into programme ramps and yet gross and free rate travel generation.

Within ADAS, we are approaching a caller era of sensor fusion merging aggregate disparate technologies together and process information, employing RADARs, LiDARs, ultrasound and machine vision. We judge that pursuing our sensor agnostic approach, indie is nan best-positioned Autotech semiconductor and package pure-play to capitalize connected this strategical megatrend.

First of all, RADAR represents a basal ADAS building artifact technology. Today RADAR is wide deployed for automatic emergency braking, adaptive cruise control, lane alteration assistance and unsighted spot discovery applications.

In nan adjacent future, it will besides alteration nan precocious measurement cross-traffic discovery application, making it an highly captious sensor. Recall, we importantly scaled our radar inaugural done soul investments and nan acquisitions of Analog Devices radar section and Onsemi's RADAR team. The successful integration of these assets was captious to accelerating our merchandise development, starring to our largest creation win-to-date for nan apical 4 automotive radar strategy supplier.

Secondly, fixed LiDARs awesome solution scope and extent cognition capabilities, we tin present this quickly emerging sensor exertion to heighten information systems wrong mass-market vehicles acold sooner than nan anticipated rollout of afloat autonomous driving usage cases. To date, addressing nan analyzable and compute-intensive demands of coherent LiDARs systems has been achieved by utilizing very high-end Field Programmable Gate Arrays.

FPGAs are perfect for prototyping and connection precocious levels of elasticity and versatility, particularly beneficial for nascent applications. But FPGAs are besides expensive, powerfulness hungry, they require analyzable PCBs and further discrete components that adhd important cost, size, they make thermal problems and excess of powerfulness consumption.

This makes immoderate migration to wide marketplace LiDAR successful applicable for automakers are seeking a sub $500 value constituent pinch little than 30 Watts of powerfulness dissipation for agelong scope LiDAR. Enter indie Surya LiDAR SoC, nan world's first merchant marketplace coherent LiDAR solution, allowing our customers to instrumentality nan highly integrated, high-performance, software-defined information acquisition and awesome processing system.

Surya integrates each nan basal multichannel high-speed analog to integer converters, hardware and package integer awesome processing, together pinch nan strategy power interfaces needed for an businesslike and cost-effective LiDAR system. When coupled pinch our differentiated TeraXion lasers, Surya tin perfectly catalyze nan LiDAR market. Third, Ultrasound is progressively deployed to supply practical, debased spatial solution and short-range sensing usage cases up to a fewer meters specified arsenic park-assist systems.

A cardinal use of ultrasonic sensors is that they are peculiarly effective owed to their resilience and astir upwind conditions and are comparatively debased cost. We are still successful nan early innings of our ain ultrasound merchandise ramp supporting Hyundai's Smart Park characteristic group amongst others.

And last, and acold from least, machine vision. Image processing systems supply nan main sensing usability successful some ADAS and autonomous applications requiring up to 20 cameras successful next-generation vehicles. Many different functions are enabled by machine vision, ranging from elemental backup cameras, mirrors and situation position systems, done entity and lane detection, nighttime imagination and driver and caretaker monitoring. Collectively, these functions tin recognize usage cases specified arsenic lane alteration assist, road pilot, postulation jam pilot, caretaker safety, automated parking and different levels of driver automation.

In fact, fixed nan expanding connect complaint of cameras astir nan vehicle, IHS is forecasting 265 cardinal camera ECUs will beryllium needed to support nan world automotive marketplace successful 2023, increasing to 430 cardinal units by 2028. And frankincense creating an $8.5 cardinal full addressable semiconductor market.

To accelerate our marketplace introduction and capitalize connected this opportunity, past week, we announced our intent to get GEO semiconductor. It's uncommon that an acquisition target is simply a cleanable fit, but this is so nan lawsuit pinch GEO. Underpinned by 100 world patents, GEOs industry-leading camera-based sensing and viewing capabilities are shipping coming to immoderate of nan world's largest automotive OEMs, including Honda, Hyundai, Kia, Nissan and Toyota.

With creation wins crossed much than 20 Tier-1s, GEO has programs pinch each awesome image sensor supplier successful nan world and is engaged successful aggregate cardinal conveyance programs. GEOs products comprised 3 generations of application-specific camera video processors including those focused connected viewing, wherever video is projected connected nan show and viewed by nan driver and sensing wherever video is processed utilizing precocious machine imagination and instrumentality learning algorithms to assistance nan driver. The unsocial expertise to support some of these cardinal categories will let indie to present short-term solutions for today's usage cases, some providing a exertion level to supply afloat autonomous features for nan vehicles of tomorrow.

GEO is complementary successful position of products, customers, and world income channels, while astatine nan aforesaid clip highly synergistic operationally pinch monolithic cross-selling opportunities. Upcoming regulations and OEMs request for differentiation will require a important summation successful camera solution and nan number of image processors per car. These requirements will request some sensing and viewing features.

GEO's camera processing exertion will let nan tailored processing of image for show and instrumentality imagination applications, resulting successful a precocious fidelity image transportation to nan show and nan opposition enhanced image going to nan instrumentality imagination strategy for entity detection, little latency and superior time-to-collision capacity astatine ultra-low power.

Indie's differentiated sensing technologies mixed pinch GEO's camera processing know-how and IP will uniquely position america to accelerate nan adjustment of camera-based sensing exertion crossed nan conveyance spectrum. More importantly, GEO is enabling indie to complete our sensor mosaic spanning RADAR, LiDAR, ultrasound and machine imagination pinch standard crossed each now underpinned by a full of 370 patents and applications. Our adjacent measurement will beryllium to fuse each sensing methods into integrated platforms to supply our customers pinch nan astir optimized and highest performing systems Baron.

Switching gears, during nan 4th quarter, we besides proceed to ramp our personification acquisition portfolio crossed starring world automakers arsenic OEMs prioritize nan best-in-class compartment acquisition much than ever. This attraction towards creating a unsocial cockpit situation wherever communication, intermezo and accusation sharing has go paramount and so is simply a overmuch greater customer differentiation than accepted torque, horsepower and 0 to 60 metrics.

Providing nan eventual personification acquisition passim nan full compartment is nan caller standard. In particular, seamless mobile instrumentality integration wrong nan automotive situation is progressively a measurement OEMs are differentiating their cars, which intends implementing systems specified arsenic Apple CarPlay and Android Auto that alteration drivers to safely make calls, nonstop and person messages and bask their favourite euphony without taking their eyes disconnected nan road. This cardinal characteristic is group is everything for teen drivers and moreover much important for their tense parents.

Similarly, conveyance lighting is gaining an value arsenic it is simply a beardown generator of marque recognition. Illuminating a car's interior and exterior creates an affectional ambiance that drives nan unsocial connection. Car manufacturers understand nan value of this move and are striving to cleanable nan integration of lighting conditions for a much harmonious driving experience.

Finally, successful nan EV area, we're seeing nan commencement of a semipermanent secular tailwind arsenic OEMs led by user request displacement towards electrification. According to Cox Automotive, EV income were up 66% versus nan anterior twelvemonth successful nan US and nan EV stock of nan full marketplace astir doubled to astir 6%.

While penetration of EVs has accrued considerably, location still lies an tremendous blue-sky opportunity ahead. And indie remains particularly good positioned here, fixed our beardown relationships pinch an expanding number of starring OEMs astir nan world, who are seeking much highly integrated and power-efficient semiconductors to continually shortened charging times and widen conveyance range.

I will now move nan telephone complete to Tom for chat of our Q4 results and Q1 outlook.

Tom Schiller

Thanks, Donald.

indie delivered a coagulated 4th fourth erstwhile again outpacing apical statement and gross separator expectations. In truth Q4 represents our seventh consecutive 4th of beating aliases astatine slightest gathering our gross and gross separator targets station indie's IPO. Revenue for nan play was up 74% year-over-year and up 10% sequentially to $33 million, gross profit was $17.2 cardinal translating into a 52.2% gross margin, up 590 ground points year-over-year and 180 ground points sequentially, amended than our 51% guidance.

To put this capacity successful context. At nan clip of our IPO announcement successful nan 4th fourth of 2020 indie was a quarterly gross of conscionable $6.7 cardinal pinch a gross separator of 35.4%. In nan 2 years since and contempt nan challenging proviso concatenation environment, we've efficaciously 5X our gross base, while expanding gross separator by astir 1,700 ground points.

Turning backmost to our Q4 results. R&D was $24.9 cardinal successful support of accelerated merchandise improvement pinch SG&A of $7.4 million, reflecting continued investments to widen indie's income reach, positive nan implementation of a highly scalable ERP system. In turn, our Q4 operating nonaccomplishment was $15.1 million, somewhat amended than our guidance.

Below nan line, liking income was $0.7 cardinal versus our guidance for $0.8 million, stemming from incremental convertible indebtedness liking we hadn't contemplated successful our original forecast 90 days ago. We besides bought backmost 1.1 cardinal shares past quarter, ending nan play astatine 151.1 cardinal shares against our guidance for 152 cardinal shares.

As a result, our nett nonaccomplishment was $14.4 cardinal and we posted a $0.10 nonaccomplishment per stock successful nan 4th fourth pinch nan delta betwixt our guidance and results tied to nan somewhat little level of liking income and reduced stock base.

Turning to nan equilibrium sheet. We exited nan twelvemonth pinch $321.9 cardinal of cash, up $171.1 cardinal from Q3, including $154.7 cardinal of nett proceeds from our convertible indebtedness offering and $41.9 cardinal from our Wuxi subsidiaries superior raise. These increases were partially offset by $14.9 cardinal of nett rate utilized successful operating activities, $4.3 cardinal successful CapEx for expanded laboratory and IT equipment, arsenic good arsenic $7.4 cardinal successful stock repurchases.

Looking forward, based connected nan extent of our caller merchandise pipeline, aggregate programme ramps and nan planned summation of GEO later this quarter, we scheme to present accelerating top-line maturation passim 2023. For nan first quarter, we scheme to standard to $160 cardinal annualized gross tally rate, including nan stub information of GEO gross pinch non-GAAP gross separator successful nan 52% range. We are besides readying $29 cardinal successful R&D, an $8 cardinal of SG&A connected a consolidated ground for nan quarter.

Below nan line, we expect $0.4 cardinal of nett liking income and nary taxes. Assuming 156 cardinal shares outstanding, including astir 4 cardinal shares for GEO connected a weighted mean basis, we expect a $0.10 nett nonaccomplishment per share.

Further, and possibly astir importantly, we judge nan operation of indie's steeper maturation trajectory, prolong gross separator description , peculiarly post-GEO synergies and planned operating disbursal leverage will alteration america to scope profitability successful nan backmost half of this year, representing different cardinal milestone towards realizing our 60% gross and 30% operating separator target model.

On that note, I'll move nan telephone backmost to Donald for his closing comments.

Donald McClymont

Thanks, Tom.

In conclusion, we posted coagulated Q4 and 2022 results and are executing to our eager maturation plans. And though we've made important advancement since our IPO and extending our support of nan car brands for illustration Audi, BMW, BYD, Daimler, Ford, General Motors, Hyundai, Nissan, Porsche, Stellantis and Volkswagen, indie is now conscionable getting started.

Our acquisition of GEO instantly rounds retired our sensor offering by accelerating our machine imagination merchandise portfolio pinch field-proven differentiated solutions, enabling america to capitalize connected nan accelerated proliferation of automotive image processors astir nan vehicle. This acquisition efficaciously accelerated forwards our expertise to supply a highly differentiated and existent sensor fusion level to our customers.

In this way, we will vastly simplify sensing architectures and frankincense democratize entree to higher-level autonomous and ADAS features bringing arsenic a monolithic measurement towards realizing our strategical imagination of enabling nan uncrashable car becoming an Autotech powerhouse and successful nan process of creating bonzer shareholder value.

That concludes our prepared remarks. Operator, let's unfastened nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility comes from nan statement of Suji Desilva pinch ROTH. Please proceed pinch your questions.

Suji Desilva

Hi. Donald. Hi, Tom. Congratulations connected a beardown decorativeness to '22 and moreover really, it sounds for illustration a amended outlook for '23. So awesome job, guys.

Tom Schiller

Thank you.

Suji Desilva

Yes, nary problem. So possibly a financial mobility first connected nan backlog growth, very beardown maturation there, very impressive, nan $4.3 billion. Can you springiness america immoderate measurement of knowing really overmuch of that mightiness screen for nan adjacent 12 to 24 months near-term versus longer word and what's nan realistic anticipation for really that backlog grows complete nan adjacent fewer years, because it's having really beardown maturation here. Is that benignant of maturation sustainable aliases conscionable really to deliberation astir that. Thanks.

Donald McClymont

Well, benignant of going successful reverse order. I mean, for sure, we're still accelerating into nan market. We've only been a nationalist institution for a small complete 18 months. And still nan affirmative effect that, that has pinch their customers hasn't really been afloat harvested yet. So, no, I do expect that we'll beryllium capable to propulsion successful immoderate very ample projects and those will beryllium added to nan strategical backlog successful owed course, arsenic you know, Suji, connected an yearly basis.

So successful position of what our anticipation is for nan adjacent 12 months. I mean, we've been very clear, our absolute target, our absolute mandate, my instruction to nan full squad is that we deed profitability successful nan 2nd half of this year. And you tin benignant of tie a statement betwixt that from wherever we are now and wherever we person to get to successful gross successful bid to recognize that.

And I deliberation complete time, if you see conscionable making an easy math, a 10-year tally for immoderate of these projects. And you tin astir disagreement by 10 to get to nan tally complaint astatine nan midpoint of that area. So successful position of wherever we are, we're very overmuch connected way to meet nan scheme that we primitively group retired erstwhile we came to nan marketplace and IPO. We're very assured astir that. And we delivered connected it successful nan first 18 months aliases truthful and we'll proceed to do such.

Suji Desilva

That's great. It's very adjuvant colour and position there, Donald. And past 1 mobility possibly connected nan GEO Semi acquisition. Noticing intelligibly that location is beardown occurrence location geographically successful nan Japan, Korea region. I'm wondering if that came done a peculiar business aliases conscionable a attraction location and really would you return that and grow that occurrence geographically done nan mixed GEO imagination queue effort? Is location thing you request to do further partnerships? Thanks.

Donald McClymont

Well, arsenic we've discussed before, we decided to participate peculiarly nan Japan marketplace latest aliases past successful our evolution, conscionable simply because nan marketplace is rather blimpish complete location and takes a agelong time.

And truthful 1 of nan things that attracted america to GEO was successful truth that they had a awesome beingness successful nan Japanese market, reasonably beardown practice there, without nan sanction brand, OEMs pinch a bunch of nan Tier 1s. They person a very bully proviso concatenation done into that market. So that was fundamentally conscionable a immense opportunity for america to alteration cross-selling into a caller marketplace for our products.

And conversely besides wherever they are little beardown successful nan different parts of nan world, wherever we've built up a awesome estimation and a awesome footprint, we person nan ability, really successful nan short word to deploy their products into our customers. And we really expect that there'll beryllium very bully short word cross-selling opportunity, which will bespeak itself successful nan apical statement beautiful quickly.

How they did that, it was mostly focused immoderate cardinal relationships, but conscionable much than anything, a testament to their awesome IP, their awesome products and they are exceptionally difficult activity successful executing that.

Suji Desilva

Thanks, Donald. Thanks, Tom.

Operator

[Operator Instructions] Our adjacent mobility comes from nan statement of Anthony Stoss pinch Craig-Hallum. Please proceed pinch your question.

Anthony Stoss

Hi guys. My congrats arsenic good arsenic connected nan GEO acquisition. And I besides wanted to travel up connected that a small bit, Donald. Help america understand possibly nan creation timeframe, nan magnitude of it for what GEO does and nether your institution now, nan scale, nan rate you have, really quickly tin you accelerate that growth? Maybe springiness america a consciousness besides what GEO maturation rates had been successful nan past. Then I had a follow-up.

Donald McClymont

Sure. So I mean efficaciously arsenic we said successful nan prepared remarks, they service precisely nan aforesaid marketplace arsenic we do, truthful it's prototypical identical arsenic to really we spell to market. Certain geographies are small faster, definite Asian geographies a small faster to market, starting small slower mostly Europe and possibly Japan are really you could include.

But, of course, location are opportunities wherever fixed that nan truth that their products are mature successful galore cases we tin deploy into definite areas wherever location are opportunities that we could spot up of nan acquisition. So efficaciously portion of our study was that we knew we could make hay pinch this.

And past successful position of their maturation from nan past, you want to...

Tom Schiller

Yes. Historically, they've been connected a beautiful bully maturation path. A mates of years agone they were successful nan $20 cardinal neighborhood, they efficaciously doubled past year. And truthful we're looking to of people return that business now to nan adjacent level. They've been hindered successful nan past by their ain equilibrium expanse successful immoderate ways nan measurement indie was. And so, I think, that's 1 of nan immense synergies present to detonate retired their business.

Donald McClymont

Yes, exactly, I mean they are successful a akin business to what we were earlier we became public. And I deliberation nan truth that location nary portion of america will scope a batch of imaginable successful their merchandise deployment and you should spot a akin maturation curve for nan 1 that we were capable to recognize since we came out.

Anthony Stoss

Perfect. Then arsenic a follow-up I wanted to circle backmost to your radar triumph from immoderate clip ago. I cognize it's your biggest nan company's history pinch nan apical four, what's nan feedback from different imaginable customers? Are you shipping samples, trialing? I mean conscionable springiness america a consciousness of what nan opportunities mightiness still look for illustration extracurricular of your first large win.

Donald McClymont

Well, I mean, we're not giving a batch of item astir that merchandise improvement astatine nan moment. And typically we don't mostly successful immoderate of our merchandise developments. We're connected way pinch it, it's successful a bully spot to meet nan clip scheme that we group out. But mostly speaking, having really a one-stop shop sensor technologies successful nan marketplace is going to make each sorts of opportunities for america pinch each sorts of customers. And we'll study connected those opportunities turning into reality arsenic nan clip becomes appropriate.

Anthony Stoss

Great. Thanks, Donald.

Operator

Our adjacent mobility comes from nan statement of Ross Seymore pinch Deutsche Bank. Please proceed pinch your question.

Ross Seymore

Hi guys, acknowledgment for letting maine inquire nan question. Two connected GEO, 1 exertion and past nan follow-up will beryllium connected nan financial side. So first connected nan exertion side, Donald. You talked a small spot astir it successful your preamble, but I conscionable wanted to amended understand really this business is complementary to aliases perchance immoderate substitution for your pre-existing imagination portfolio. How do we look astatine what they bring versus section queue you guys had beforehand?

Donald McClymont

Well, I mean, conscionable nan truth that GEO was they had worldly products successful definite areas wherever location were definite pieces of IP that we mightiness person had to reinvent successful bid to entree nan market, truthful really nan cardinal successful this was accelerating our clip to marketplace pinch nan imagination queue activities that we person ongoing.

The measurement that our roadmaps work, location will beryllium a batch of opportunity for america to return their IP and our IP and subordinate them into thing moreover amended arsenic a measurement beyond nan parts that they person disposable today. Also successful that respect, location are immoderate synergies successful nan roadmap, which will return advantage of and will ripple done our P&L arsenic we mature that.

Ultimately, wherever we spot nan cardinal use successful what they bring comparative to our full portfolio is bringing sensor fusion together. It's nan adjacent taxable that we're going to trim into. We spot monolithic opportunities for that successful nan market, combining nan different sensor modalities, and nan processing thereof into azygous platforms. And really that's wherever we're going to spot it person nan astir traction successful nan portfolio arsenic we hindrance them in.

Ross Seymore

Got it. Thanks for that. And I conjecture this 1 mightiness beryllium much for Tom. On nan GEO side, you said location was a stub successful your first 4th guide, immoderate sizing connected that and conscionable benignant of nan linearity of really that $40 cardinal you guys talked astir successful nan first announcement folds in.

Tom Schiller

Yes, sure. So, we're expecting to adjacent this quarter. We're conscionable modeling successful a mates of cardinal from GEO successful position of contribution. And past from location it's akin to what we guided for indie overall, it's accelerating growth, sequential maturation passim nan year.

Ross Seymore

And that erstwhile you said accelerating, you mean year-over-year accelerating aliases nan sequentials quarter-over-quarter are accelerating aliases possibly both.

Donald McClymont

Actually coincidentally, it's both.

Ross Seymore

Great. Thank you.

Donald McClymont

Okay.

Operator

Our adjacent mobility comes from nan statement of Craig Ellis pinch B. Riley Securities. Please proceed pinch your question.

Craig Ellis

Yes, acknowledgment for taking nan question. I will subordinate nan agelong deed parade and inquire a GEO-related mobility to start. Donald, if you look astatine GEO and this really does look for illustration 1 of those 1 successful 100 deals from a gross synergy standpoint. But if we're looking astatine a business, it's $40 cardinal now. If you look retired 2 to 3 years, and deliberation astir what's imaginable pinch cross-selling and pinch your imagination of wherever sensor fusion goes, really large do you deliberation this business tin beryllium successful nan 2 to three-year timeframe?

Donald McClymont

Well, successful nan short term, arsenic I've said before, I expect it to return nan aforesaid floor plan arsenic so it and we came retired to nan market. Basically, it's benignant of small subset of america now, if you tin position it that way. In position of possibly nan longer term, we're seeing highly precocious dollar opportunities and highly precocious measurement increasing arsenic a semipermanent consequence pinch that, which will consequence successful creation wins successful nan early of akin size to nan radar creation triumph that we've talked truthful overmuch astir complete nan past fewer quarters.

Craig Ellis

Got it. And then, Tom, truthful it sounds for illustration pinch a fewer millions of GEO successful nan outlook. You're conscionable counting connected a mates of weeks astatine astir and past you would spell to a afloat 4th evidently successful 2Q.

Tom Schiller

That's right.

Craig Ellis

And this business do you deliberation it sustains nan pacing that it had past twelvemonth arsenic we spell done 2023 and 2024?

Tom Schiller

We do, we spot -- really successful truth much than thing else, we spot tremendous top-line synergy opportunity here. Donald mentioned nan transverse trading opportunities are reasonably enormous. So those conversations person already started.

So we could spot immoderate use from that moreover successful nan backmost half of this year. That's not contemplated successful nan guidance we put distant past week successful position of expecting to spot astatine slightest $40 cardinal incrementally from GEO this year. And past of people that sets nan shape thereafter for '24 and '25.

Craig Ellis

Yes. Got it. And if I could sneak successful 1 past one. Tom, conscionable immoderate colour connected what drove nan gross separator upside successful nan 4th quarter.

Tom Schiller

It was a bully operation of things. Our operation conscionable continues to improve, caller programme ramps layering in, standard is of people a large move here, and past successful general, nan proviso concatenation is loosening up a small bit. And truthful that was besides helpful. So each of those dynamics are contributing to -- person surely contributed of precocious to nan gross separator description we demonstrated and we spot that continuing -- those very dynamics continuing connected our measurement to 60%.

Craig Ellis

Congratulations connected each nan progress, guys. Great momentum.

Donald McClymont

Thanks, Craig.

Operator

And our adjacent mobility comes from nan statement of Cody Acree pinch Benchmark. Please proceed pinch your question.

Cody Acree

Yes, convey you and fto maine adhd my congratulations to nan Group. Did you talk, Tom, astir your backlog, springiness a number. I had to measurement disconnected nan telephone for conscionable a second, but did you springiness an absolute backlog increase?

Tom Schiller

Not this cycle. Stay tuned connected that. We mostly supply that successful nan November convention call. Well on nan way, of course, we'll supply programme wins and updates and such, but we want to make that an yearly event.

Cody Acree

Did that number summation sequentially?

Tom Schiller

We conscionable haven't -- we've won immoderate programs surely since November, but we conscionable haven't publically size them yet.

Cody Acree

Okay. Great. And past 1 for GEO. What is nan publication separator that you're expecting successful nan adjacent term? And past really does that turn nan contribution?

Tom Schiller

You're saying nan incremental publication margins?

Cody Acree

Yes. What is, what is GEO's a guidelines gross separator summation that additive aliases dilutive to what you've gotten to it.

Tom Schiller

Sure, sure. So initially successful nan existent 4th it somewhat dilutive beneath our average, but will return immoderate steps and reasonably quickly present to get their margins astatine parity pinch our description . And past thereafter, successful fact, I deliberation erstwhile we move to '24 and '25, it's really enhancing our gross margin. And a batch of that candidly is they've conscionable been subscale and we've sewage immoderate proviso concatenation relationships we tin activity location to bring their margins much successful statement pinch us.

This is 1 I was going to add, this is nan 1 4th fixed that betwixt nan announcement and closing, we're not going to person that overmuch clip to really instrumentality nan synergies. Those really travel into attraction successful nan backmost half of this year.

Cody Acree

Okay. And past lastly, conscionable nan folding successful nan instrumentality visioning aliases nan video processing from GEO into your full ADAS offering. When do you expect to beryllium trading those programs arsenic a portfolio of offerings and solutions, and what do you expect that traction to look like?

Tom Schiller

Well, from nan get-go, we'll statesman to incorporated their portfolio into ours. We, I mean, of course, we did our homework earlier nan acquisition and we're very good alert astir nan marketplace request for nan imaginable of nan operation of nan technologies that they person successful that we have. So I mean, yes, I mean, we do expect that nan resonance for this is going to beryllium beautiful immediate.

Cody Acree

Excellent. Thank you, guys, congrats.

Donald McClymont

Thank you, Cody.

Operator

And we person reached nan extremity of nan question-and-answer session. I'll now move nan telephone complete to guidance for closing remarks.

Donald McClymont

Well, acknowledgment for joining america everybody. Look guardant to seeing you astatine nan upcoming investor conferences and spot you adjacent quarter.

Operator

This concludes today's convention and you whitethorn disconnect your lines astatine this time. Thank you for your participation.