Arbe Robotics Ltd.

Arbe Robotics Ltd. is an Israeli company incorporated in November 2015 that commenced operations in January 2016. Its head office is at 107 HaHashmonaim Street, Tel Aviv-Yafo, and it has two subsidiaries: Arbe Robotics US Inc. (Delaware, 2017) and Shanghai Arbe Technologies Co., Ltd. (China, 2024). The ordinary shares are listed on Nasdaq and on the Tel Aviv Stock Exchange under the symbol ARBE, the publicly traded warrants are listed on Nasdaq under ARBEW, and the convertible bonds are listed in Tel Aviv.

The company develops a 4D imaging radar chipset comprising three components: a transmitter chip, a receiver chip, and a dedicated radar processing chip containing a Radar Processing Unit (RPU) alongside general-purpose processing and control cores. The Phoenix radar system built on that chipset reaches 2,304 virtual channels, obtained by combining up to two transmitters (24 channels each) and up to four receivers (12 channels each).

In the private automotive market Arbe operates as a Tier 2 supplier — it sells the chipset to module manufacturers (Tier 1), who build radar systems from it and sell them to vehicle manufacturers (OEMs). The company has no fabrication facility of its own; manufacturing and testing of the chipset are performed by GlobalFoundries, and note 1(d) to the interim statements identifies dependence on that single supplier as an explicit risk factor.

From 2026 the company broadened its sales model: alongside chipsets it began selling complete radar systems from a dedicated production line, primarily for defense, homeland security, perimeter security and what the company terms "physical AI" applications. Its principal reported Tier 1 partners are HiRain in China and Sensrad in Sweden, whose radar systems are based on Arbe's chipset and which serves customers including Watchit, Forterra and Tianyi.

As at 31 December 2025 the company had 145 employees and consultants, nine of them engaged under consulting agreements, with 135 based in Israel. It holds 15 patent families granted in the United States, Europe, Israel, Japan and China. Research and development was partly financed through royalty-bearing grants from the Israel Innovation Authority, which create a royalty obligation of up to 100% of the grant amount and restrictions on transferring the know-how outside Israel.

The last three reported years show a stable expense base and volatile revenue. Revenue in 2025 ($1,026 thousand) was lower than in 2023 ($1,470 thousand), while operating expenses moved within a narrow band of $46.8–48.9 million in each of the three years.

The distinction between the reported line and the cash line

Net loss for H1 2026 narrowed by $5,460 thousand against the comparable half. A line-by-line breakdown shows that $5,421 thousand of the change — 99.3% of it — originated outside operating activity: a $3,351 thousand decline in share-based compensation, a $273 thousand decline in warrants to service providers, and a $1,797 thousand increase in net financial income.

The measure unaffected by those items is Adjusted EBITDA, which the company itself reports in note 12 to the interim statements: $(18,622) thousand in H1 2026 against $(18,637) thousand in H1 2025 — no material change.

Operating expenses: reported versus cash

In its Q1 report management stated that it had implemented cost-reduction measures expected to result in an approximate 15% decrease in ongoing expenses. Reported operating expenses did fall by 13.6% (from $24,358 to $21,045 thousand). Note 10(c) sets out share-based compensation by line item, which allows the non-cash component to be isolated:

Sequentially within 2026 the picture differs: cash operating expenses fell from $9,957 thousand in Q1 to $8,806 thousand in Q2 — a decline of 11.6% — and against the comparable quarter ($8,923 thousand) they are 1.3% lower. According to company management, the full effect of the cost reduction is expected to be reflected in the third quarter of 2026.

The cash operating expense figures were computed by us on the basis of note 10(c) and are not presented as such in the filing.

Total capital raised into paid-in capital since inception stands at $358.4 million, against an accumulated deficit of $317.9 million. Shareholders' equity at the balance sheet date is $40.5 million.

The convertible bonds and the funds held in escrow

In June 2024 the company issued convertible bonds with a principal amount of NIS 110 million, and in December 2025 it expanded the series by a further NIS 57.6 million through a private placement on the same terms. The conversion price is NIS 9.53 per share, and the interest rate was reduced from 6.5% to 4.35% effective 1 January 2026. The trustee is Mishmeret Trust Company Ltd.

The proceeds of both issuances were placed in an escrow account pledged in favour of the bondholders, with signature rights vested in the trustee alone. The funds are released to the company only upon satisfaction of a condition precedent, which section 7.2 of the deed of trust defines as an aggregate of three cumulative conditions:

The deadline for satisfying the conditions has been extended twice and currently stands at 31 December 2026. Section 7.3.2 requires the company to deliver to the trustee the tender particulars including expected volumes, and section 7.3.10 provides that if the confirmations are not delivered by the deadline, a mandatory full early redemption of principal, accrued interest and linkage differentials will be effected.

The financial covenants in the deed require shareholders' equity of not less than $5 million as at the last day of two consecutive quarters, and cash and deposits of not less than $5 million as at the last day of at least one quarter. At the balance sheet date the company complies with both — equity of $40.5 million and cash and deposits of $41.9 million.

The funds held in escrow (US$25,051 thousand) are a separate balance sheet line and are not included in total cash and deposits (US$41,918 thousand).

Liquidity and cash movement

Cash and deposits declined from $53.6 million at 31.3.2026 to $41.9 million at 30.6.2026. Net cash used in operating activities for the half was $20,568 thousand, against $17,998 thousand in the comparable half. Changes in working capital for the half totalled $(2,266) thousand — of which $(1,841) thousand arose in "accrued expenses and other payables", which fell from $2,950 to $1,109 thousand — against a positive contribution of $1,231 thousand in the comparable half.

The separation of working capital movements was computed by us from the statement of cash flows and is not presented as such in the filing.

Note 1(e) to the interim statements states: "Based on its current operating plans, the Company believes that its existing cash and cash equivalents together with anticipated cash generated from operations will be sufficient to meet the Company's working capital requirements for at least one year from the date of the issuance of these condensed consolidated financial statements." The statements were issued on 3 September 2026. The auditor's report for 2025 contains no going-concern paragraph.

Note 12 to the interim statements states that the company operates as a single operating and reportable segment and is managed on a consolidated basis, and that the chief operating decision maker is the Chief Executive Officer. The only disaggregation the company provides is by geography and by product type.

Revenue by geography — annual

China and Hong Kong together accounted for $905 thousand (61.6%) of 2023 revenue, fell to $254 thousand (33.1%) in 2024, and to $22 thousand (2.1%) in 2025.

Revenue by geography — half-year

The $850 thousand increase in the half is fully explained, and more than fully, by two markets that recorded no revenue in the comparable half: Israel (+$464 thousand) and China (+$400 thousand). Sweden and the United States together moved from $298 thousand to $300 thousand.

By product mix in H1 2026: chipsets 74%, professional services 26%.

Customer concentration

From the financial statements, page F-18: "No other customer accounted for 10% or more of revenues in 2025, 2024 or 2023. The 10% customers were different customers in each of 2025, 2024 and 2023."

Remaining performance obligations stood at $290 thousand at 31.12.2024, $257 thousand at 31.12.2025, and $1,000 thousand at 30.6.2026 — unchanged from 31.3.2026.

The only measurable parameter on which the solutions in this market can be compared directly is the number of virtual channels, which determines angular resolution and the rate of false alarms. The picture as presented in Arbe's annual report:

Two further Chinese participants are named in the filing without channel figures: Huawei and Calterah.

The company's position, as set out in the annual report, rests on six arguments: the technology itself; competitive cost and power consumption; global coverage; interest from leading industry participants; automotive-grade development and production in joint work with Tier 1 suppliers since 2018; and relationships with multiple Tier 1 suppliers enabling market penetration.

The filing also states two structural features working against the company. First: Mobileye plans to play some of the roles of a Tier 1 supplier, thereby competing with Arbe's own customers. Second, arising from Arbe's position in the chain — as a Tier 2 supplier it does not control the adoption decision; that decision is taken by the vehicle manufacturer, through the Tier 1 supplier.

The industry timetable as the company describes it: mass-production programs for Level 3 and Level 4 consumer vehicles are targeted for 2028–2030, and the decisions on them are being taken in 2026–2027. Solutions that are to be candidates for those programs must pass automotive-grade manufacturing and audit processes with the OEMs and the Tier 1 suppliers.

Fixed dates

Matters under monitoring

• Concentration and customer turnover — no customer accounting for more than 10% of revenue recurred across the three years 2023–2025. This figure is disclosed only in the notes to the annual report.
• The gap between reported expense and cash expense — according to company management, the full effect of the cost reduction is expected to appear in the third quarter of 2026.
• The relationship between guidance and run-rate — on 6.8.2026 the company reaffirmed guidance of revenue in the range of $4–6 million and an adjusted EBITDA loss of $28–31 million for 2026. Revenue in the first half was $1.16 million, and the contracted backlog at 30.6.2026 stood at $1.0 million.
• Single manufacturing supplier dependency — note 1(d): the company depends on one supplier for the development and productization of its products.
• Position in the chain — as a Tier 2 supplier, revenue passes through Tier 1 suppliers and the adoption decision belongs to the vehicle manufacturer. The company has stated that it is no longer providing guidance on the timing of future OEM design wins, given adoption cycles longer than previously anticipated.
• Geographic exposure — 34.3% of half-year revenue originated in China, against the backdrop of United States–China tariff and trade policy. 135 of 145 employees are based in Israel; the notes address the effects of hostilities, reserve call-ups and ceasefire violations.
• Management turnover — the CEO was replaced (Kobi Marenko moved to the role of President, Ram Machness was appointed CEO); the CFO gave notice in June 2026 and a successor took office on 30.8.2026.
• Dilution — 43,496,008 dilutive instruments at 30.6.2026 (convertible bonds 9,265,580; warrants 26,268,168; options and restricted stock units 7,962,260), against approximately 128.6 million shares.
• Reverse share split — the agenda of the general meeting convened for 2.9.2026 included authorising the board to effect a reverse share split at a ratio to be determined. The voting results had not been located as at the date of this review.