Q1 2021 Velodyne Lidar Inc Earnings Call
[music].
Hello amongst of the Vela and Lidar first quarter 'twenty to 'twenty, One earnings conference call.
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And I tried the conference over to Ryan Michelle <unk>. Please go ahead.
Good afternoon, and thank you for joining us and today's conference call to discuss the Teledyne, Inc. First quarter 2021 financial results.
With us on today's call our Doctor on and go pollen filled and Chief Executive Officer, and drew Hamer, the Companys Chief Financial Officer.
Before we begin I would like to remind you that shortly after the market closed today.
And I and issued a press release announcing its first quarter 2021 financial results.
Bill and I, and also published and Investor presentation.
You may access the press release, and the presentation and the Investor Relations section of Celadon Lidar Dot com.
This discussion includes forward looking statements.
Please refer to our press release for a discussion of factors that could cause the company's actual results to differ materially from those forward looking statements.
I would also like to remind you that during the call.
We will discuss some non-GAAP measures related to validate the performance.
You can find the reconciliation of those measures to the nearest comparable GAAP measures and bellwood and quarterly financial press releases.
To ensure that we address as many for analyst questions as possible during the call. We request that you. Please limit to one initial question and one follow up question.
Now I'd like to turn the call over to Doctor on and go pollen CEO of validated.
Thank you Matt and.
Thank you for everyone for joining us this afternoon.
One of the Apollo for you all Saturday and Lidar.
As the leading lidar producer in the World and the one that is clearly defining the lidar market.
We continued to make great progress in the first quarter of 2021.
Once again, let a nine ship of market, leading 2684 sensors and the quarter and continued our leadership position in solid state sensor sales with more than 600 sensor suite.
We shipped 65% of our sensors to customers that sparked by which we used to seed the global Lidar market and 35 per cent of our sensors for customers under our multiyear agreements with them.
Our strategy of leveraging the manufacturing scale to seed the global Lidar market. We got products is evidenced both by the strong sparked by business as well as the continued conversion of these customers into multiyear agreements, which number 29 as of May 1st.
And up from 26 as of February 19th.
We are also seeing increased pipeline strength.
But a nice pipeline of projects grew to 198 projects.
As of May 1st up from 194 projects reported on February 19 2021.
When you look at where we were one year ago. At this time, we are seeing significant growth in the robotics and industrial segment, which is one of the lidar segments closer to commercialization in.
In addition, 23 of our projects now include software as a component we continued to build all of that aspect of our business by providing complete hardware and software solutions to other end customers.
And the first quarter.
Also boost out of executive team with seasoned and technology and business veterans, we appointed Sinclair Vas as Chief Commercial Officer, James Barnhart, as Chief operating Officer, and Mike Jelen was promoted to Chief strategy Officer.
We strengthened our board of directors with the appointment of Hamid Saar and column corporate Vice President of Nikon cooperation and.
And Deborah Hersman, former chair of the National Transportation Safety Board and P. S B.
Other board.
The other day and Lidar is the market leader with a broad portfolio of products at the necessary price points to drive mass market adoption of Lidar.
We have been working with companies of course, the various lidar segments on R&D projects for more than 10 years, and Lidar technology and matured to the inflection point, we're at today with the first wave of mass commercialization of ramping across several segments.
All of the ability to manufacture and ship at skew will be crucial in this new phase.
All of the lighter technologies are the ice for autonomous machines, which operate in many diverse markets each of which having different time to revenue different than different sales pipeline and different margin profiles.
For example, the mapping and E D markets considered the traditional market for the other day and continue to be strong and have good long term viability as the dam at the linear piece.
All of the additional products are in high demand in these markets and continue to be the deep the reference architecture.
For the industry at large.
The breakout auto more finely.
Interest and the Adas market is growing robustly with commercial revenue of dumping of few years out.
And the Adas market that is significant and growing interest and a solid state solutions, which are targeted at large volume applications.
For the Lidar and consumer vehicles is being accelerated by new E V. Players in the space, who are adopting lidar and advanced safety technology and the REIT that is far outpacing the traditional automotive Oems.
Companies in the industrial robotics segment of automating everything from heavy construction machinery for the airborne drones that could deliver packages to your door.
Safety and potential cost savings, plus operating and Geo fenced and vitamins.
All of the dynamics driving automation of construction machinery and it is.
Italy, the automation of the supply chain is being driven by the significant growth and e-commerce.
We are receiving revenues today from sales of our products for industrial robotics applications across a variety of different segments relating to getting goods from the port to your doorstep and all using lidar to do so.
We are heading towards the future that involved the autonomy not just and mobile systems, but and the infrastructure that helps these machines and navigate through the wood.
There is a renewed effort by governments.
Cost of the world the update aging infrastructure.
Adding lidar sensors and intelligence to the infrastructure.
Can make cities safer and more productive without violating personal privacy and.
And both smart cities and industrial robotics, we see opportunities to sell not just hardware, but complete solution of hardware plus software and increasing the value we bring to customers.
All of this combines to make a robust business for a paradigm with a very robust cohort of customers.
We are the category of define of and several of those categories are now ramping to mass commercialization with xeloda and playing an important role.
It's incredible to see the technology products and solutions that we develop touch every day of life in so many meaningful ways.
He had heard of few examples for.
First delivery.
We announced and the first quarter of multiyear agreements with getting the industry leader in automating on road transportation networks for B to B middle of mine logistics.
Got it because using validated lidar sensors as a key part of our fully redundant and center suite to deliver goods safely and efficiently between micro fulfillment centers dark stores and retail locations and logistics flow knowing that the middle of miles.
That is and expansion of supply chain and robotics.
GAAP fulfills the revenue generating a ton of MS orders daily for multiple fortune 500 customers and the U S and Canada, including Walmart did you think customer costs and keeping the everytime shocked.
Got it solution helps retailers meet consumer demand for rapid delivery of goods driven by sorting ecommerce growth.
Increase the road safety for all of the road users and help consumers and customers meet and unprecedented expectation for contactless delivery.
It may surprise, you to learn that GATX EV, using validate and sensors would likely involved and delivering some of the goods that you were using and your home today.
We have previously talked about other projects and the space around forklift applications.
The logistics and last mile delivery.
In the mapping in the first quarter, we announced a multiyear agreement with ADM systems, who provides state of the art hardware and software technology for the collection processing and analysis of air and mobile the mapping data.
Some of the largest companies and the wood the lie on the AGM solutions and.
Grouped with other ultra buck to achieve precise mapping.
AGM systems products, and an example of how validate and sensors enable serving the real time assessment and monitoring applications of valuable energy resources.
In April we jointly announced with night school, one of our robotics customers with whom we have been working for seven years that they had selected of Lidar technology to power the future fifth generation of autonomous security robots.
Ninth scopes of robots have been patrolling across the country for well over 1 million hours and operate across five different time zones.
We are seeing and increased interest from potential customers for complete solutions that go beyond just sense of hardware.
And you may have seen earlier today, we have introduced our first hardware software solution the intelligent infrastructure solution I E S.
Which is used in the smart city segment.
When implemented Ias will enable everything from safe intersections to the.
Bust data for city planners.
And our cities the cost of congestion is estimated to be $350 billion annually and on Ias will help reduce this burden.
There is a growing commitment by governments worldwide to rebuild our data transportation infrastructure systems in the U S. The bite of the administration has proposed to invest 2.25 trillion dollars the modernized vehicles, the roads and transit systems and.
We look at the world with connected and autonomous vehicles, we know that infrastructure would play a critical role and moving this industry forward.
And also announced this morning, we signed our first <unk> sales agreement with Rutgers Center for advanced infrastructure and transportation to.
And to deploy our Ais equipped also prime lidar sensors, and multiple intersections and New Brunswick, New Jersey.
As part of the Middlesex County, Smart mobility testing ground project.
In collaboration with the New Jersey Department of Transportation.
The same technology can be used to monitor public and retail spaces, providing valuable real time data and analytics without violating individual's privacy, giving it a clear edge over camera solutions.
Now, let's turn to the automotive market first and that's.
It is becoming clear as we work with our customers on Lidar for mass adoption that the winning solution needs to have the right performance and cost combination to ultimately win.
A great proof point is evidenced by Saturday future selected selection of validate and to be the exclusive lidar supplier for the flagship F 91 luxury E V, bringing adas and advanced safety to the.
The <unk> 91.
Our solid state Valerie H 800, Lidar sensors will all of the Fas 91 synonymous driving system that aims to deliver a comprehensive suite of highway urban and parking autonomy features.
We also continue to work with major of high volume OEM customers, such as our ongoing collaboration with time, they've all of us for mass production of level three lidar system.
In a V. We continue to bring new technologies to market supported by the strength of our core foundational IP.
Of a product today that already hit 265 meters of 10% reflective of the but we are certainly not stopping there. We are building. The next generation that we'll see farther and can be manufactured at lower cost and higher volume, which will be the key for mass adoption and commercialization of light out of the segment.
We believe that Lidar will be the primary sensing modality for fully autonomous vehicles.
And that validates the technology will be front and center has a V. The rollout in the coming years.
The other day and has been able to create the broadest lidar product portfolio on the backs of its common core technology platform called the microlight entity.
This technology forms the common engine that allows us to scale down cost and increase the manufacturer ability without compromising on performance.
This approach continues to be unique and the industry and gives us the strongest opportunity to capture new applications in the broad emerging space.
Develop at our smallest sense of brings new levels of versatility and affordability the treaty Lidar perception.
It is the cornerstone solution and our.
Our mission to democratize, Lidar based safety and autonomy.
And the shoe of this incredible technology to our major customers and we're getting tremendous positive feedback with over 25 pipeline projects that include of elevate sensitive.
The versatility of our develop the enables customers to use it and multiple applications such as for the sidewalk or last mile delivery and industrial warehouse obstacle detection and path planning.
Our for pedestrian and traffic monitoring for the efficiency and safety improvements.
To assist with blind spot monitoring the real cross traffic detection and open P E D.
Speaking of the beat in the.
The first quarter, we demonstrated how validate and affordable Lidar based P. E. B solution delivers superior performance and all conditions of decisive advantage over the radar camera based systems, which can significantly improve by the SG and safety.
With our sensors price for mass adoption, we truly are democratizing the usage of Lidar based safety and level two plus across as many cars as possible.
All of the past few months the.
The World has continued to grapple with incredible challenges.
And we have faced them.
By coming together and focusing on real problem solving.
The Valentine is a microcosm of this and I am incredibly proud of what we have achieved as of business building real products and working with incredible customers and ultimately by continuing to live up to our mission of bringing Lidar technology to many applications that can touch everyday lives.
Meaningfully.
The other day and continues to be the pioneer and leader that it has always been and defining the exciting space and.
Forging a path to a safer future for all.
Now I'd like to turn the conversation over to my colleague drew him or her to go over our financials.
And you.
Thank you on it before I begin my quarterly financial review and provide our outlook I want to spend a moment discussing the sales cycle driving our multi year production agreements.
The sales cycle begins with the customer discussion around the need for a solution that would benefit from incorporating lidar technology, including potential of software requirements.
Based on these discussions potential sensors that align with the use case are identified along with the anticipated start of production date for S. O P.
Customers, then generally do what we referred to of spot buys or book and turn orders to purchase sensors as part of their research and development process related to the solution.
When they are ready to put in place and industrial production agreement that includes at least three years of volume and pricing forecasts and share of this information with US. The project has added to our multiyear project pipeline.
Completion of this cycle comes with the design award or signed multi year agreement.
And as mentioned earlier of the 2000 and 680 for sensors, we shift and the first quarter of 2021, 65% of the sensors for spot buys the <unk> 35 per cent of the sensors were shipped to customers with multi year agreements.
Now I would like to begin my quarterly financial review.
Total revenue was $17 7 million compared to $17 $8 million and the fourth quarter of 2020.
Product revenue was $10 6 million compared to $14 $4 million and the fourth quarter of 2020 the.
The company's weighted average selling price per sensor was $3887 compared to $3381 per sensor and the fourth quarter of 2020.
The overall product revenue reduction reflects a previously discussed decline and unit sales due to COVID-19, and ongoing evolution of the product mix.
License and services revenue of $7 $1 million included a $5 5 million licensing fee.
Total license and services revenue was $3 $7 million higher than the fourth quarter of 2020.
GAAP gross profit was $1 9 million and non-GAAP gross profit was $2 7 million.
Compared to our fourth quarter 2020, GAAP gross loss of $5 3 million and non-GAAP gross profit of $2 1 million.
GAAP gross profit was reduced by $800000 of stock based compensation expense compared to fourth quarter 2020, GAAP gross loss, reflecting $7 $4 million of stock based compensation expense.
GAAP operating expenses were $42 5 million and non-GAAP operating expenses were $28 6 million.
Compared to fourth quarter, 2020, GAAP operating expenses of $106 1 million and non-GAAP operating expenses of $22 1 million.
GAAP operating expenses included $13 3 million of stock based compensation expense, including employer taxes compared to fourth quarter, 2020, GAAP operating expenses, including $83 $8 million of stock based compensation expense.
GAAP and non-GAAP operating expenses included increased spending and research and development that is in response to the visibility provided by our multi year agreement pipeline.
GAAP net loss was $40 8 million and included $14 2 million of stock based compensation expense.
Non-GAAP net loss was 26 point.
$1 million GAAP.
GAAP net loss per share was 22.
And non-GAAP net loss per share was <unk> 14.
This compared to a fourth quarter of 2020, GAAP net loss of $111 $5 million included $91 3 million of stock based compensation expense.
Non-GAAP net loss was $20 $1 million fourth quarter of 2020, GAAP net loss per share was <unk> 64 cents and non-GAAP net loss per share was <unk> 12.
EPS for the first quarter of 2021 is calculated using weighted average shares outstanding of $189 2 million.
And as of March 31.
Actual shares outstanding order of $198 million.
Celadon and completed the quarter with $383 6 million and cash and short term investments on its balance sheet, which included $89 3 million and proceeds from the exercise of publicly traded warrants.
Now I would like to review of our business outlook.
At the end of the first quarter of 2021, we estimate we could have the opportunity for over $1 billion of revenue from signed and word of projects through 2025, plus a pipeline of projects that are not yet signed and award of $4 5 billion.
In addition to continues to be our top priority to invest and scalable lidar architectures vast manufacturing technology and software solutions.
This underpins the company's long term business outlook of a total gross margin percentage ranging in the mid to high Fifty's and EBITDA margin of more than 20%.
We also anticipate our multiyear agreements increasing to at least 30 for by December 31 2021.
Now for our full year 2021 financial statement guidance.
Revenue is expected to range between 77 and $94 million our revenue comes from our global customer base to whom we are actively shipping product.
And we're seeing parts of our market come back and meet the expectations for the second half such as the U S and China.
Other geographies, we serve such as Europe, the rest of Asia, and India are impacted more negatively by the continued total of COVID-19, and are struggling to keep programs on track for spot buys and multi year agreements.
These remain macro headwinds and other reason, we are providing the broad revenue range.
This compares to full year 2020 revenue of $95 4 million, which included unique one time items of $11 million and product revenue from of restocking fee and $17 $5 million and license and services revenue that came from lump sum licensing activity.
When we account for these non periodic elements, we expect to see product based revenues grow year over year, despite various macroeconomic uncertainties.
Non-GAAP gross margins are expected to be between 16% to 24%.
This reflects fewer units sold to cover remaining fixed overhead costs of our factory and San Jose on.
On a GAAP basis gross margins will include approximately $2 million of stock based compensation expense.
On the non-GAAP basis operating expenses are expected to range between 125 and $129 million.
Based upon the visibility provided by our multiyear agreement pipeline.
We are increasing our spend and new product development by approximately 50% and 2021.
General and administrative expenses will increase by approximately 30% and 2021, the increased public company and legal expenses.
On a GAAP basis operating expense will include approximately $84 million of stock based compensation expense that reflects approximately $52 million to be charged against sales and marketing and the second quarter related to our 2020 merger with graph industrial.
On a GAAP basis income tax expenses are anticipated to be approximately $600000.
Weighted average shares outstanding for the year are estimated to be $193 5 million.
Now I would like to turn the call over to the operator for questions operator.
Yes. Thank you we will now begin the question and answer session to ask the question you May Press Star then one on your Touchtone phone.
If you're already a speakerphone please pick up your handset before pressing the keys to the try your question. Please press Star then true and this time, we will pause momentarily to assemble the roster.
And the first question comes from Colin Rusch with Oppenheimer.
Thanks, so much guys.
And as you're looking at your over the road customers and.
And the cycle times and cadence for the move towards level for loans five eight.
Can you speak to sort of the Timeframes on those development programs are the restaurant.
As you expected or.
And.
Are we starting to see some slippage on those times.
And I think the thanks for the question Paul.
And so we look at 11 for those type of programs.
We are seeing a couple of different things happen. We are seeing major customers continue to stay on track and.
And lastly of programs.
And as we expected and are in a methodical linear fashion you will see these systems rollout in a couple of cities and one year and then followed with most of the DS and <unk> and so on so that line is on track and the other thing of course, we are seeing is we are seeing consolidation and the space with many of the smaller.
Players getting consolidated into the the large customers that'd be shocks, but broadly our outlook for Lidar technology, our lidar technology being designed into the systems and being deployed and mass volume continues to be the same and as is the major customers rollout.
Hello test systems over the next three to five years.
But the Super helpful.
And then just looking on the cost side you know as you guys have started working with the automated lines a little bit more clearly are you seeing meaningful opportunities for designing cost out and are you seeing additional component suppliers come on line and that can support the gist.
Just help us understand the the cost.
Sure and the cadence of the the lowering their cost structure as we go forward here.
Yeah I think this is really an important part of what will make line lidar adopted across all of these applications and why we'd feel strongly in the choices we have made the call.
To start the currently architecture level and some of the try and since we have made from an architectural perspective really holding us in good stead as we move towards mass production and the other thing that we've talked about is the common core technology platform, but because of the Microlite. Other day that started off with a solid state of Florida, but now it's making its way of cross.
Right.
Product portfolio, including the products that are used and the <unk> segment and as the result of that we expect to see an EBIT not just to continue to push the performance further and further but do that at a lower cost point and much improved scalability.
So for that reason you will see.
And cost of Lidar technologies across the embedded Avi mapping segment as well come down as we rollout the next generation of products.
Okay. Thanks, so much guys.
Okay. Thank you.
Thank you and the next question comes from Richard <unk> with Needham and company.
Oh, Hi, this is Dennis taking a question on behalf of Rajiv Gill and <unk>.
And I don't want increased a little bit more about the the full year guidance and maybe provide a bit more color about the.
Basically the spread and the revenue and kind of the gross margin downgrade just thinking about kind of some of the key drivers of this change.
Yes, so the so the key things versus just the revenue that's really kind of two questions. There. So the spread of the revenue is.
Its a bit backend loaded year we.
The good line of side to kind of of the low end of the range, but as we get out into the year, we're looking for.
Other markets to open up and so as we start to see Europe come back online and.
Other regions of the world become a little bit more successful and other deployment of vaccinations, we anticipate that they could.
You will start to ramp back up and their purchases of spot buys and executing against the most of your agreements we have with them.
In addition for the upside we also have a number of larger projects and are also kind of targeted it could come in here and the second and third and fourth quarter of the year and it will also provide potential upside revenues that we could see come in with the.
Will allow us to hit the upper range of the revenue guidance, which you're targeting so it's really just time and will pass here and we'll get and opportunities to close these opportunities close these deals.
But for now this is a higher company's revenue ratio we can provide.
On the gross margin.
Just.
As it relates to the first quarter and that affects the whole year, we had the lower margin lower unit sales and we're still of the transition of our manufacturing offshore to our contract manufacturers.
We had higher kind of overhead cost. So we had to absorb here in Q1 and potentially Q2 as we get further out into the European kind of continue those transfers of the to the contract manufacturers or.
And we're anticipating continuing that transfer of the contract manufacturers and their.
There is the risk there is I think we're all well aware of countries like Thailand, and Japan are also increase of seeing increased COVID-19 cases, and so it makes it a little bit more challenging to get these transfers completed because people can't travel to those countries and accelerate the doesn't mean, we won't get them done, but it might take a little bit longer than we originally expected.
Gotcha. Thank you and then for my follow up could you speak a little bit about the kind of non auto design of pipeline with regard to maybe what.
And what parts of the pipeline that we could see you kind of hit the top line first and of what true which aspects of the pipeline make you most excited.
Alright, I can start and roofing for you to jump in as well.
And the fastest growing part of the pipeline definitely around the industrial segment of.
We see tremendous growth in robotics and general.
The accelerated in the post COVID-19 World that we live in and we see this across the entire supply chain of delivering goods to two.
To your doorstep, we also see it and other applications such as for cliffs and smart agriculture, and so on and we are seeing light and adoption literally pick up at the fast clip.
And this is a very exciting part of our pipeline because time to revenue and charter and we see our ability to provide the products.
As of today and for the many parts of the pipeline also involved the software opportunity would be kind of the ability to add more value to the and applications of our customers not just by providing hardware, but they also of the lighting sources hardware solutions and that's that's actually a really exciting growth opportunity for the.
Company.
Great. Thank you I'll jump back into the queue. Thanks.
Thank you. Thank you and the naturals current retaining accounts from city.
Great. Thanks, and good afternoon everybody.
Alright.
First question on the on going back to the the gross margin.
Any color you can share just given the delay and the transfer on where you think you might exit the year, let's say in the fourth quarter of just trying to think about the trajectory of gross margin for the next couple of years see if anything has changed.
Yes, so we're expecting to be.
Kind of coming out of the year.
And kind of.
Protein those range is where we originally discussed probably.
I think he was gonna excuse me of linear trajectory coming through the year. So we're kind of starting low and go and at high. So that you can hit to the average as we gave you for the full year.
Got it Okay. That's helpful and just secondly on the height of R&D.
Based on the the visibility from the the more.
Of your agreements I hope you could elaborate a bit more about kind of what youre seeing there is that is that sort of new product development because of greater revenue opportunities or an acceleration and in launch and just kind of curious sort of.
More detail about around the product spending there.
Sure I mean, I would say that there's a couple of areas that are really exciting and this has really just off the book we're seeing tremendous.
Tremendous uptick and opportunities to not just for delayed hardware, but for wired hardware software solutions.
And that's definitely.
Moving to drive some additional R&D investment on our part of the develop and deliver the solutions to market that is definitely happening and it's happening at a faster rate.
And then further I would say that we are seeing on the backs of technology like the Vela bit you are seeing and incredible expansion and the number of applications that use lidar and there is opportunity for the innovation of our new Lidar architectures and technologies as well.
So that's driving.
The increased investment on our part.
And then we can capture the the huge upside opportunities that are coming into the pipeline.
That's helpful and just.
One quick one in.
Five of additional awards, you expect by year round of any color of kind of which end markets of the Ddos is it non auto robotics.
In terms of what you expect out of those additional wins.
Yeah, we're actually expecting the deal there'll be a spread across all of those markets. You just described honestly.
And we're going to see something we anticipate we have some and the pipeline that are larger than others.
I think it's very relevant.
There are some very strong conversations going on around some of the deaths opportunities. We're also has the strong conversations going on with the couple of people for robotic solutions that are all going to be coming to market and.
And then.
It's going to be a nice spread I think of different opportunities across different markets that are forming to use lidar now that we have something thats sort of price point that people can incorporate it and their solutions.
Excellent that's very helpful. Thank you.
Thank you.
Thank you and the next question comes from interest and Gara with Baird.
Hi, good afternoon.
Thank you had mentioned on the last call about your expectations for pricing to decline of about 20% this year.
With the revenue forecast for the year.
Is that implying a low teens increase in units is that in the ballpark of what's embedded in your guidance.
And.
Yes, I think I think that is that it is we're definitely seeing the guidance again and it'll be a linear thing. So you have for example last quarter was lower Asp's and we saw this quarter, but the trend is that they will continue to go down at those levels.
Okay. So if we look at.
The gross and the unit standpoint.
Given the increasing adoption rates that Keith described in the past for competitor of beds, which are.
Is the lower price and the 360 lidar.
How do I reconcile the two I mean is it fair to assume that the 360 units are actually coming down year over year, but then you have a double digit increase and the solid state Lidar for this year you know as you've been.
Targeting.
Non age.
And of H exiting.
And yeah exiting this year you know how how should we look at that and.
And should we see an acceleration.
And unit growth next year.
Yes, so we are expecting the.
The solid state sensors, the volumes to at least double this year.
They are sold and lower ASP.
So the Delta is the volume start to pick up the as people continue to come down because of it.
We can volume price.
Accordingly.
And so as we get out into this year, we do see that representing a larger portion of that overall revenue, which will affect product matrix, which affects the weighted average asp's.
Yes, I think the equivalent of that.
The only color and I would add to that is yes.
Oh, yeah as to the claims that are several and op.
<unk> net.
And on the solid state Lidar.
Technology, both the validated and developed with so we definitely continue we'll continue to see and acceleration of adoption of that technology across many different applications. So I think thats and definitely happening.
Great. Thank you very much.
Okay.
Thank you and the next question comes from Richard Shannon with Craig Hallum.
Oh, Hey, guys. Thanks for taking my questions as well I think my first question is on Ada says as you provide and your investor presentation, and we see the number of projects by quarter here and the number of projects come down the last couple of quarters. If I caught the numbers right for 70 down two of 56 here can you discuss what's going on there do you see the says the retrench.
You mentioned and use of of Lidar and Ddos or interest rates just higher quality of projects are still around here and could you kind of help us understand the.
Situation there.
Yeah, I think what you are seeing is really the quality of the projects and getting defined.
Much better as the customers are further along in the revaluation of Lidar and other.
The key technology for the that so.
So broadly we don't see the retrenchment and the Adas market, we see actually a very robust set of opportunities.
And just getting more and better and better defined.
Further I would say that clearly we are seeing the adas opportunities settling the two buckets, what I would call the fast adopters, where players like Friday of future looking to come in and leapfrog existing.
The traditional players by adopting both electrification and Lidar technology.
Part of the idea that's offerings and you'll see these players.
The fast and adopt lidar.
<unk>.
Fast rate.
Combined with that you are seeing the traditional Oems also continued to make good progress, especially the leaders and the pack.
Around creating.
Sophisticated 11, three Adas systems that incorporate laid out and then so you are seeing both of those buckets more forward. So broadly I would say, we don't see the dollars of the attachment.
For the usage of flight out of the data market.
Okay helpful protective on the thanks for that second question is on software if I caught the numbers right here and increasing the number of projects that are.
And that are looking at that can you give us a sense of of how far down some of the the more advanced discussions are going can we see some agreement signed in the next.
Quarter or by the end of the year part.
Part of these all automotive are you seeing any other opportunities.
Opportunities outside of automotive.
Yes, we are seeing a broad base for the opportunities for software both in automotive and nonautomotive, but as I said before the really exciting part for US is in the industrial segment, where the time to revenue is much faster we are seeing opportunities for us to provide.
Both hardware and software. So certainly we believe that we will see some of these opportunities materialize into signed with the signed multiyear agreements and the and the near future.
And in addition to that and today, we announced.
The.
Intelligent infrastructure solution, which is auto for.
And hardware and software solution that they have publicly talked about.
And really this is a focus on the smarts of these segment, but again, we see the our ability to work across different scale of Vod City.
Organizations and commercial companies, we have the made up the line.
Not just the the lidar hardware and that makes this possible, but also the entire solution, including the data analytics platform that these companies can use severely mine the valuable data that exists and that it's the city intersection or whether it's the retail public space and so so that's so we are pushing for.
The fast.
And creating products around the different segments that incorporate both of the other games hardware compute and software.
Okay and.
Could you specifically comment on the on the progression of the software within the auto space too.
Yeah, I mean, I think the provision of software in the auto space as we've always talked about is on the backs of the hardware installed base. So as we as.
As we continue to see cracks.
Traction and get installed into these adas.
Systems, we see opportunities for software day, one of the things that we we shored up in the first quarter of this year and Lidar based the automatic emergency braking system comparing it with the state of VR camera and radar system, which you could see significant advantages, especially and the nighttime.
For the Lidar system over the commentary other Bae systems and you can imagine this and this has led to some very deep conversations not just in unlevered free but on level two level two plus <unk>.
Sorts of applications, where we could provide not just again, the lighter hardware, but RPE software solution as part of the Ostomy.
So lots of great progress, there, but I do mentally make time to revenue for software and in.
<unk> will be combined with when the hardware and gets installed on the vehicles.
And so that continues to be the the critical path.
Got it okay. Thanks for the help the detail on that and that's all for me.
Thank you. Thank you and once again. Please press Star then one of you would like to ask the question.
And the last tranche of customer line Smith with Bank of America.
Good afternoon guys for.
The first question when we look at the 2020 one revenue outlook, it's a pretty notable shortfall versus what I think was the $150 million plus that you outlined upon going public in September of last year, but it also and the lowest annual rather now that you've reported since 2016 I think we can all appreciate that there's some near term headwinds.
Associated with semiconductor shortages and supply chain disruptions and the.
And the 2021 looks like it could be more of a structural are GAAP as you try to make the shift from R&D project base of Lidar to commercial and multi year contract later and.
So why or why not would that be a fair characterization for 2020, one and what gives you confidence that some of the out your financial targets you've outlined are still valid.
And so the key thing for us.
This is the fact that we are still having deep conversations with customers across the broad base of contracts there about these discussions where.
They are actively interested and looking forward and moving forward with the.
These different production agreements that were talking to them about and they provide a baseline.
As the world starts to accelerate again, hopefully here in the second half of the year, we will be able to see that pick up and we'll be able to get back on pace for the expectations of the <unk>.
<unk> forecast for 2022.
So it's really.
Is there anything in the aircraft and we really feel it's more kind of of macro headwind and it's really should start to take shape here and the second half of the year as the.
The vaccinations and other things start to take hold and the market start to come back and why do we why did we just to add some color for that I mean, we should keep in mind, while we talk about that that price.
As we sit here today.
Still have the highest revenue of all of the Lidar companies and the market. We have the maximum number of units produced and shipped across the broadest set of application and the broadest product portfolio the law.
The pipeline of projects and the space. So I think this is what gives us confidence that we can we can hit the numbers that we outlined and the in the future and as we signed these multiyear agreements and building deep relationships with our customers and manufactured and scale and deliver these products at scale.
Okay. That's helpful. And then I wanted to ask another question around the gross margin. Some of the comments today are a little bit counterintuitive versus how you describe the company upon going public of shifting more towards that type of model and manufacturing partners and then all of us on relative to some of the factors that you outlined is driving margin expansion line.
And my car Lidar raise and low cost countries sort of thing.
And I think we can understand COVID-19 delayed the manufacturing transition a little bit and it's going to be a pressure point. The here, but if you think about the business going forward is there a certain volume or revenue level that we should be thinking about above what you can leverage fixed cost and what I'm trying to get out what that says you know and we think about bridging that 16% to 24 per cent gross margin.
And this year versus 50% plus and the long term is it something that can be achieved and the next year or so as you complete the shift towards standard toggle manufacturing or are your targets based on certain volume levels that may have been pushed out along with COVID-19.
So.
And I think started and roofing suite of jump and as well again keep in mind that the build and ship real volumes of products and as we've made these transitions these transitions and artist of function. So you have the transition starting from the subsystems and work your way to billing and entire lidar. So yes, the transitions really driving the the.
Our ability to switch.
The the gross margin that we have talked about and as those transitions get completed we will be able to move towards those targets that you had talked about in terms of the micro laid out at eight of the Asics and these things on in production both in our factories as well as a partner of factories and as the product stock and.
And the product mix evolves more and more of the products of using the micro light on it and you will see that part of the the.
And the rewards also being being transferred into the gross margin. So I think it is it is more complicated.
Because we again moved and we have a broad portfolio of many different products that we build and ship and at the same time. The plans that we laid out actually absolutely valid the transition for the micro light already and the asics across the product line is happening as we talked about before by end of 2020, one and you have the the entire product line.
We have the benefit of microlight out of it is and the transition to overseas manufacturing is happening and we continue to make progress on that despite COVID-19.
And we share that price by giving you kind of the the direction of the the gross margins as we come out of the year. So that will be linear train trend and should continue upward as we go out of 2021 of the next 2022 of the art.
Okay, great. Thanks for taking the question.
Okay.
Thank you and welcome.
Most of our question and answer session I would like to turn the conference back over to management for any closing comments.
Thank you.
And as I started off saying the other day later is the leading producer of light out into the world and we are clearly the ones of defining the lidar market.
And this happens to be because we had the highest revenue in the space.
Build and ship more units and all of the other players put together combined and multiple product categories. We have.
The broad portfolio of products, we have a robust pipeline of products across many different applications. We have the manufacturing leadership and ability to scale up to meet the demand and whether the inevitable uncertainties that exist in the marketplace and finally, we are moving forward and fast and include.
<unk> software as part of an offering.
For a software product that we announced today with all of this we have very high confidence and our ability to continue to grow continue to execute as we have done so consistently and continue to be the pioneer and bringing lighter be of safety across all of these different applications for all of our customers.
Very much for your time and your questions. Thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Yes.
Goodbye.
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Hello, and most of the Valentine and Lidar first quarter 2021 earnings conference call.
All participants will be in listen only mode should you need assistance. Please the Doe conference specialist by pressing the star can you followed by zero.
After todays presentation, there will be an opportunity of the last questions to ask the question you May Press Star then one and you touched on for.
To withdraw your question. Please press Star then two.
Please note today's event is being recorded.
The trial the conference over to Raj on the.
Please go ahead.
Okay.
Good afternoon, and thank you for joining us on today's conference call to discuss the Teledyne, Inc. First quarter 2021 financial results.
With us on today's call our Doctor on uncle pollen filled I'm, the Chief Executive Officer, and drew Hammer, the company's Chief Financial Officer.
Before we begin I would like to remind you that shortly after the market close today.
All of that and issued a press release announcing its first quarter 2021 financial results.
So and I'd also published and Investor presentation.
You may access the press release, and the presentation and the Investor Relations section of Bellowed on Lidar dotcom.
Today's discussion includes forward looking statements.
Please refer to our press release for a discussion of factors that could cause the company's actual results to differ materially from those forward looking statements.
I would also like to remind you that during the call.
We will discuss some non-GAAP measures, where they did the validates the performance.
You can find the reconciliation of those measures to the nearest comparable GAAP measures and other times quarterly financial press releases.
To ensure that we address as many for analyst questions as possible during the call free request that you. Please limit to one initial question and one follow up question.
Now I'd like to turn the call over to Doctor on and go pollen CEO of other died.
Thank you Maria.
And thank you for everyone for joining us this afternoon.
And one of the pilot for you all Saturday and Lidar.
As the leading lidar producer in the World and the one that is clearly defining the lidar market. We continued to make great progress in the fourth quarter of 2021.
Once again by the Guy and shipped a market, leading 2684 sensors and the quarter and continued our leadership position and solid state sensor sales with more than 600 sensors sold.
We shipped 65% of our sensors to customers that sparked by which we used to seed the global lidar market and 35% of our sensors for customers under our multiyear agreements with them.
Our strategy of leveraging our manufacturing scale to seed the global Lidar market. We got products is evidenced both by the strong sparked by the business as well as the continued conversion of these customers into multiyear agreements, which number 29 as of May 1st.
And up from 26 as of February 19th.
We are also seeing increased pipeline strength.
But a nice pipeline of projects group of 198 projects.
As of May 1st up from 194 projects reported on February 19 2021.
When you look at where we were one year ago. At this time, we are seeing significant growth in the robotics and industrial segment, which is one of the lidar segments of closer to commercialization.
In addition, 23 of our projects now include software as a component we continue to build out that aspect of our business by providing complete hardware and software solutions to other end customers.
In the first quarter.
He also built all of that executive team with seasoned technology and business veterans and we are.
Appointed Sinclair Vas as Chief Commercial Officer, James Barnhart, as Chief operating Officer, and Mike Jelen was promoted to Chief strategy Officer.
We strengthened our board of directors with the appointment of Hamid zone, and gallon cockpit, Vice President of <unk> Corporation and.
Deborah Hersman former chair of the National Transportation Safety Board and DSP to our board.
The other day and Lidar is the market leader with a broad portfolio of products at the necessary price points to drive mass market adoption of Lidar vs.
<unk> been working with companies of course of various Lidar segment on R&D projects for more than 10 years, and Lidar technology and matured to the inflection point, we're at today with the first wave of mass commercialization of ramping across several segments.
All of the ability to manufacture and ship at skew will be crucial in this new phase.
All of the lighter technologies are the ice for the autonomous machines, which operate in many diverse markets each of which having different time to revenue different than different sales pipelines and different margin profiles.
For example, the mapping and EV markets considered the traditional markets for the other day and continue to be strong and have good long term viability as the land at a linear pace.
All of the additional products are in high demand in these markets and continue to be the deep <unk>.
Current architecture.
For the industry at large.
The breakout auto more finally interest and the Adas market is growing robustly with commercial revenue of dumping a few years out.
And the Adas market that is significant and growing interest and a solid state solutions, which are targeted at large volume applications.
For the Lidar and consumer vehicles is being accelerated by new EV players in the space, who are adopting lidar and advanced safety technology and the rate that is far outpacing the traditional automotive Oems.
Companies in the industrial robotics segment of automating everything from heavy construction machinery for the airborne drones that could deliver packages to your door.
Safety and potential cost savings.
Lots of operating and Geofence environments.
And all of the dynamics driving automation of construction machinery.
Additionally, the automation of the supply chain is being driven by the significant growth and e-commerce.
We are receiving revenue today from sales of our products for industrial robotics applications across the variety of different segments relating to getting goods from the port to your doorstep and all using lidar to do so.
We are heading towards the future that involved the autonomy not just and mobile systems.
And the infrastructure that helps these machines navigate through the wood.
There is a renewed effort by governments across the world the update aging infrastructure.
Adding lidar sensors and intelligence to the infrastructure.
And make cities safer and more productive without violating personal privacy.
And both smart cities and industrial robotics, we see opportunities to sell not just hardware, but complete solution of hardware plus software and increasing the value we bring to customers.
All of this combines to make a robust business for the other day and with a very robust cohort of customers.
We are the category of the final <unk>.
And several of those categories are now ramping to mass commercialization with Xeloda and playing an important role.
It's incredible to see the technology products and solutions that we develop such everyday life and <unk>.
And so many meaningful ways here.
He had heard of a few examples.
First delivery.
We announced and the first quarter of multiyear agreements with getting the industry leader and automating on road transportation networks for B to B middle of my logistics.
Got it because using validates lidar sensors as a key part of our fully redundant and center suite to deliver goods safely and efficiently between micro fulfillment centers dark stores and retail locations and logistics flow no. One asked the middle mile and that is an expansion of supply chain and robotics.
GAAP fulfills the revenue generating autonomous orders daily for multiple fortune 500 customers and the U S and Canada, including Walmart.
Where do you think customer costs and keeping the everytime shocked.
Got it solution helps retailers meet consumer demand for a rapid delivery of goods driven by Saudi and E Commerce growth.
Increase the road safety for all of the road users and help consumers and customers meet and unprecedented expectation for contactless delivery.
It may surprise, you to learn that getting savvy, using validate and sensors would likely involved and delivering some of the goods that you are using and you're at home today.
We have previously talked about other projects and the space around forklift applications warehouse logistics and last mile delivery.
In the mapping in the first quarter, we announced a multiyear agreement with ADM systems, who provides state of the art hardware and software technology for the collection processing and analysis of and and mobile the mapping data.
Some of the largest companies and the wood the lie on the AGM solutions equipped with ultra Buck to achieve precise and mapping.
And systems products out and example of holiday and sensors enable serving the real time assessment and monitoring applications of valuable energy resources.
In April we jointly announced with night school, one of our robotics customers with whom we have been working for seven years that they had selected of Lidar technology to power the future fifth generation of autonomous security and robots.
And nice scopes of robots have been patrolling across the country for well over 1 million hours and operate across five different time zones.
We are seeing and increased interest from potential customers for complete solutions that go beyond just sense of hardware.
As you may have seen earlier today, we have introduced our first hardware software solution the intelligent infrastructure solution of I S.
Which is used in the smart city segment.
When implemented.
This will enable everything from safe intersections.
Bust data for city planners.
And our cities the cost of congestion is estimated to be $350 billion annually and Ias will help reduce the burden.
There is a growing commitment by governments worldwide.
Build out data transportation infrastructure systems in the U S. The bite of the administration has proposed to invest 2.25 trillion dollars to modernize the vehicles, the roads and transit systems and.
As we look at the world with connected and autonomous vehicles, we know that infrastructure would play a critical role in moving this industry forward.
Also announced this morning, we signed our first <unk> sales agreement with Rutgers Center for advanced infrastructure and transportation to the.
The flight our Ais equipped also prime lidar sensors at multiple intersections and New Brunswick, New Jersey.
As part of the Middlesex County, Smart mobility testing ground project in collaboration with the New Jersey Department of Transportation.
The same technology can be used to monitor public and retail spaces, providing valuable real time data and analytics without violating individual's privacy, giving it a cleared edge of a camera solutions.
Now, let's turn to the automotive market first aid us.
It is becoming clear as we work with our customers on lidar for mass adoption that the.
The winning solution needs to have the right performance and cost combination to ultimately win.
A great proof point is evidenced by Saturday future selected selection of validate and to be the exclusive lidar supplier for the flagship F 91 luxury E V, bringing adas and advanced safety to the S. S 91.
Our solid state Valerie H 800, Lidar sensors will all of the Fas 91, pseudonymous driving system that aims to deliver a comprehensive suite of highway urban and parking autonomy features.
We also continue to work with major and high volume OEM customers such as the ongoing collaboration with Hyundai Vobis for mass production of level three lidar system.
In a V. We continue to bring new technologies to market supported by the strength of our core foundational IP we have.
Of a product today that already hit 265 meters of 10% reflective of the but we are certainly not stopping there. We are building. The next generation that we'll see farther and can be manufactured at lower cost and higher volume, which will be the key for mass adoption and commercialization of laid out in the segment.
We believe that Lidar will be the primary stenting modality for fully autonomous vehicles and.
And that validates the technology will be front and center as Avi the rollout in the coming years.
The other day and has been able to create the broadest lidar product portfolio on the backs of its common core technology platform called the microlight entity.
This technology for the common engine that allows us to scale down cost and increase the manufacturer ability without compromising on performance.
The approach continues to be unique and the industry and gives us the strongest opportunity to capture new applications in the broad emerging space.
Developing our smallest sense of brings new levels of versatility and affordability the three D Lidar perception.
It is the cornerstone solution and our.
Our mission to democratize, Lidar based safety and autonomy.
And be sure of this incredible technology to our major customers and we're getting tremendous positive feedback with over 25 pipeline projects that include of element sensitive.
The versatility of our develop the enables customers to use it and multiple applications such as for the sidewalk or last mile delivery and industrial warehouse obstacle detection and path planning.
Our for pedestrian and traffic monitoring for the efficiency and safety improvements.
To assist with blind spot monitoring the real cross traffic detection and open ped.
Speaking of the a b in the first quarter, we demonstrated how validates affordable Lidar based P. E B solution deliver superior performance and all the conditions of decisive advantage over the radar camera based systems, which can significantly improve by the SD and safety.
With our sensors price for mass adoption.
We truly are democratizing the usage of Lidar based safety and level two plus across as many cars as possible.
All of the past few months the World has continued to grapple with incredible challenges and we have faced them by coming together and focusing on real problem solving.
The other dime is a microcosm of this and I am incredibly proud of what we have achieved as of business building real products and working with incredible customers and ultimately by continuing to live up to our mission of bringing Lidar technology to many applications that can touch everyday lives.
Felipe.
The other day and continues to be the pioneer and leader of that it has always been and defining the exciting space and forging a path to a safer future for all.
Now I'd like to turn the conversation over to my colleague drew him or her to go over our financials. Thank.
Thank you.
Thank you on it before I begin my quarterly financial review and provide our outlook I want to spend a moment discussing the sales cycle driving our multiyear production agreements.
The sales cycle begins with the customer discussion around the need for a solution that would benefit from incorporating lidar technology, including potential software requirements.
Based on these discussions potential sensors that aligned with the use case are identified along with the anticipated start of production date or S. O P.
Customers, then generally do what we referred to of spot buys or book and turn orders to purchase sensors as part of their research and development process related to the solution.
When they are ready to put in place and industrial production agreement and that includes at least three years of volume and pricing forecasts and share. This information with US. The project is added to our multiyear project pipeline.
Completion of the cycle comes with the design award or signed multi year agreement.
And as long as mentioned earlier of the 2000 and 680 for sensors, we shift and the first quarter of 2021, 65% of the sensors for spot buys and 35 per cent of the sensors were shipped to customers with multi year agreements.
Now I would like to begin my quarterly financial review.
Total revenue was $17 7 million compared to $17 $8 million and the fourth quarter of 2020.
Product revenue was $10 $6 million compared to $14 $4 million and the fourth quarter of 2020.
The company's weighted average selling price per sensor was $3887 compared to 3003 hundred $81 per sensor and the fourth quarter of 2020.
The overall product revenue reduction reflects a previously discussed decline and unit sales due to COVID-19, and the ongoing evolution of the product mix.
License and services revenue of $7 $1 million included a $5 5 million licensing fee.
Total license and services revenue was $3 $7 million higher than the fourth quarter of 2020.
GAAP gross profit was $1 $9 million and non-GAAP gross profit was $2 $7 million compared to our fourth quarter 2020, GAAP gross loss of $5 3 million and non-GAAP gross profit of $2 1 million.
GAAP gross profit was reduced by $800000 of stock based compensation expense compared to fourth quarter 2020, GAAP gross loss, reflecting $7 4 million stock based compensation expense.
GAAP operating expenses were $42 5 million and non-GAAP operating expenses were $28 $6 million compared to fourth quarter 2020, GAAP operating expenses of $106 $1 million and non-GAAP operating expenses of $22 $1 million.
GAAP operating expenses included $13 3 million for stock based compensation expense, including employer taxes compared to fourth quarter, 2020, GAAP operating expenses, including $83 $8 million of stock based compensation expense.
GAAP and non-GAAP operating expenses included increased spending and research and development that is in response to the visibility provided by our multi year agreement and pipeline.
GAAP net loss was $40 8 million and included $14 $2 million of stock based compensation expense.
Non-GAAP net loss was $26.
And $1 million GAAP.
<unk> net loss per share was 22.
And non-GAAP net loss per share was <unk> 14.
This compared to our fourth quarter of 2020, GAAP net loss of $111 $5 million included $91 $3 million of stock based compensation expense.
Non-GAAP net loss was $20 $1 million fourth quarter of 2020, GAAP net loss per share was <unk> 64, and non-GAAP net loss per share was <unk> 12 cents.
EPS for the first quarter of 2021 is calculated using weighted average shares outstanding of $189 2 million.
As of March 31.
Actual shares outstanding were $198 million.
The only non completed the quarter with $383 6 million and cash and short term investments on its balance sheet, which included $89 $3 million and proceeds from the exercise of publicly traded warrants.
Now I would like to review of our business outlook.
At the end of the first quarter of 2021, we estimate we could have the opportunity for over $1 billion of revenue from signed and word of projects through 2025, plus a pipeline of projects that are not yet signed and award of $4 5 billion.
In addition, it continues to be our top priority to invest and scalable Lidar architectures advanced manufacturing technology and software solutions.
This underpins the company's long term business outlook of a total gross margin percentage ranging in the mid to high <unk> and the EBITDA margin of more than 20%.
We also anticipate our multiyear agreements increasing to at least 30 for by December 31 2021.
Now for our full year 2021 financial statement guidance.
Revenue is expected to range between 77% and $94 million. Our revenue comes from our global customer base to whom we are actively shipping product.
We're seeing parts of our market come back and meet the expectations for the second half such as the U S and China.
Other geographies, we serve such as Europe, the rest of Asia, and India are impacted more negatively by the continued toll of COVID-19, and are struggling to keep programs on track for spot buys and multi year agreements.
These remain macro headwinds and other reason, we are providing the broad revenue range.
This compares to full year 2020 revenue of $95 4 million, which included unique one time items of $11 million and product revenue from a restocking fee and $17 $5 million and license and services revenue that came from lump sum licensing activity.
When we account for these non periodic elements, we expect to see product based revenues grow year over year, despite various macroeconomic uncertainties.
Non-GAAP gross margins are expected to be between 16% to 24%.
This reflects fewer units sold to cover remaining fixed overhead costs of our factory and San Jose on.
On a GAAP basis gross margins will include approximately $2 million of stock based compensation expense.
On the non-GAAP basis operating expenses are expected to range between 125 and $129 million.
Based upon the visibility provided by our multi year agreement pipeline.
We are increasing our spend and new product development by approximately 50% and 2021.
General and administrative expenses will increase by approximately 30% in 2020, one the increased public company and legal expenses.
On a GAAP basis operating expense will include approximately $84 million of stock based compensation expense that reflect approximately $52 million to be charged against sales and marketing and the second quarter related to our 2020 merger with graph industrial.
On a GAAP basis income tax expenses are anticipated to be approximately $600000.
Weighted average shares outstanding for the year are estimated to be $193 5 million.
Now I would like to turn the call over to the operator for questions operator.
Yes. Thank you we will now begin the question and answer session crossing. The question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to the try your question. Please press Star then two and this time, we will pause momentarily to assemble the roster.
And the first question comes from Colin Rusch with Oppenheimer.
Thanks, so much guys.
And as you're looking at your over the road customers and the.
And the cycle times and cadence for their move towards level for low five eight.
Can you speak to sort of the Timeframes and those development programs are the progressing.
As you expected or.
And we're starting to see some slippage on those times.
And I think that's the thanks for the question Paul.
And so you look at 11th for those five programs.
We are seeing a couple of different things happened, we are seeing a major customers continue to stay on track and.
And lastly of programs.
As we expected in a methodical linear fashion you will see these systems rollout and a couple of cities and one year and then followed with most of the DS and experience the along that line stays on track. The other thing of course, we are seeing is we are seeing consolidation and the space with many of the smaller players.
Good and consolidated into the the large customers that we have Mike broadly our outlook for Lidar technology all of the Lidar technology being designed into the systems and being deployed and mass volume continues to be the same and as the major customers rollout.
Hello der systems over the next three to five years.
But the super helpful and.
And then just looking on the cost side as you guys have started working with the automated lines a little bit more clearly are you seeing meaningful opportunities for designing cost out and already.
And the additional.
Current suppliers come on line that can support the gist.
Just help us understand the the cost structure and the cadence of of the.
Lowering our cost structure as we go forward here.
Yeah I think this is really an important part of what will make line lidar adopted across all of these applications and why we feel strongly in the choices. We have made and the cost starts to kind of the architecture of level and some of the choices. We have made from and architecture perspective really.
Holding us in good stead as we move towards mass production and the other thing that we've talked about is the common core technology platform, but because of the microlight at I day that started off with a solid state of Florida, but now it's making its way across the rest of that.
For our portfolio, including the products that are used and the <unk> segment and as a result of that we expect to see our ability not just to continue to push the performance further and further but do that at a.
A lower cost point and much improved scalability.
So for that reason you will see of <unk>.
And cost of Lidar technologies across the embedded Avi mapping segment as well come down as we rollout the next generation of products.
Okay. Thanks, so much guys.
Okay. Thank you.
Thank you and the next question comes from a range of Gill with Needham and company.
Oh, Hi, this is Dennis taking a question on behalf of Rajiv Gill.
And sometimes the wind could you just talk a little bit more about the the full year guidance and maybe provide a bit more color about the.
Basically the spread and the revenue and kind of the gross margin downgrade and can you speak about some of the key drivers of this change.
Yes, so the so the key things first is just the revenue that's really kind of two questions. There. So the spread of the revenue is.
Its a bit backend loaded year we.
The good line of sight to kind of at the low end of the range, but as we get out into the year, we're looking for.
Other markets to open up and so as we start to see Europe come back online and.
Other regions of the world become a little bit more successful and their deployment of vaccinations, we anticipate the taken.
You will start to ramp back up and their purchases of spot buys and executing against the most of your agreements we have with them.
In addition for the upside we also have a number of larger projects that are also kind of targeted it could come in here and the second and third and fourth quarter of the year. It will also provide potential upside revenues that we could see come in with the.
Will allow us to hit the upper range of the revenue guidance that you are targeting so it's really just time and will pass here and we will get an opportunity to close these opportunities closed these deals.
But for now this is a higher company's revenue range. So he can provide.
On the gross margin.
Just as.
As it relates to the first quarter and that affects the whole year, we had the lower margin lower unit sales and we're still of the transition of our manufacturing offshore to our contract manufacturers. So.
So we had higher kind of overhead cost. So we had to absorb here in Q1 and potentially Q2 as we get further out into the European going to continue those transfers of the contract manufacturers.
Anticipate and continuing that transfer of the contract manufacturers and there is the risk there.
We're all well aware of countries like Thailand, and Japan are also increase of seeing increased COVID-19 cases, and so it makes it a little bit more challenging to get these transfers completed because people can't travel to those countries and accelerate the doesn't mean, we won't get them done, but it may take a little bit longer than we originally expected.
Gotcha. Thank you and then for my follow up Al could you speak a little bit about the kind of non auto design of pipeline with regard to maybe what.
And what parts of the pipeline that we could see kind of hit the top line first and of what true which aspects of the pipeline make you most excited.
Alright, I can start and roofing for you to jump in as well.
And with the fastest growing part of the pipeline definitely and around the industrial segment of <unk>.
We see tremendous growth in robotics and Andrew.
The accelerated in the post COVID-19 World that we live in and we see this across the entire supply chain of delivering goods to.
To your doorstep, we also see it and other applications.
Such as for cliffs, and smart agriculture, and so on and we are seeing light out of adoption literally pick up at the fast clip.
And this is a very exciting part of our.
Pipeline, because time to revenue with charter and we see our ability to provide the products and.
And this is today and for the many parts of the pipeline also involve the software opportunity, where we have the ability to add more value to the and applications of our customers not just for providing hardware.
So of the lighting sources hardware solutions.
And that's actually a really exciting growth opportunity for the company.
Great. Thank you I'll jump back into the queue. Thanks.
Thank you.
And of the natural kind of retaining and Kelly from Citi.
Great. Thanks, and good afternoon everybody.
Just the first question on the on going back to the gross margin.
And any color you can share just given the delay and the transfer on where you think you might exit the year, let's say in the fourth quarter of to try and think about the other trajectory.
Gross margin for the next couple of years see if anything has changed.
Yes, so we're expecting to be kind.
Kind of coming out of the year.
It's kind of the.
Approaching those range is where we originally discussed probably.
I think he is going to be of linear trajectory coming through the year. So we're kind of starting low and go and at high. So that you can hit to the average as we gave you for the full year.
Got it Okay. That's helpful and just secondly on the height of R&D.
Based on the the visibility from the the multiyear agreements hope you could elaborate a bit more about kind of what youre seeing there is that is that sort of new product development because of greater revenue opportunities or an acceleration and in launch and just kind of curious sort of.
More detail about around the public spending there.
Sure I mean, I would say the Dave a couple of the areas that is really exciting and we just talked about we are seeing.
And this uptick and opportunities to not just the delayed hardware, but for Y and hardware and software solutions.
And that's definitely going to drive some additional R&D investment on our part of the develop and deliver the solutions to market that is definitely happening and it's happening at a faster rate and then further I would say that we are seeing on the backs of technology like the vela bit we are seeing and ink.
Global expansion of the number of applications that use lidar and theres opportunities for innovation and our new line of architectures and technologies as well.
So that's driving.
The increased investment on our part.
So that we can capture the huge upside opportunities that the.
Coming into the pipeline.
Okay. That's helpful. Just to sneak one quick one and the five additional awards you expect by year round of any color of kind of which end market of the ethos of is it non auto robotics.
The terms of what you expect out of those additional wins.
Yeah, we're actually expecting the tail there'll be a spread across all of those markets you described honestly.
And we're going to see something we anticipate we have some and the pipeline that are larger than others.
So I think it's very relevant.
And if there are some very strong and conversations going on around some of the das opportunities.
We're also has the strong conversations going on with the couple of people for robotic solutions that are all going to be coming to market.
And then.
It's going to be a nice spread I think of different opportunities across different markets that are forming to use lidar and now that we have something thats sort of price point that people can incorporate it and their solutions.
Excellent that's all of that's very helpful. Thank you.
Thank you.
Thank you and the last question on cost of interest on girl with Baird.
Hi, good afternoon.
Thank you you had mentioned on the last call about your expectation for pricing to decline about 20% this year.
With the revenue forecast for the year.
Is that implying a low teens increase in units is that in the ballpark of what's embedded in your guidance.
Yes, I think I think that it is we're definitely seeing the guidance again and it'll be a linear thing. So you have for example last quarter was lower Asp's and we saw this quarter, but the trend is that they will continue to go down at those levels.
Okay. So if we look at the.
The gross in the unit standpoint.
Given the increasing adoption rates that Keith described in the past for comparator of beds, which.
Is the lower price and the 360 lidar.
How do I reconcile the two I mean is it fair to assume that the 360 units are actually coming down year over year, but then you have a double digit increase and the solid state lidar for this year as you've been kind.
And we're getting a percentage adoption of H exiting.
Exiting this year you know how how should we look at that and.
And should we see an acceleration.
The net growth next year.
Yes, so we are expecting the.
The solid state sensors, the volume to at least double this year and they are sold out of it.
Lower ASP.
So the sales done.
The volume start to pick up the ASP will continue to come down because we can volume price accordingly.
Accordingly.
So as we get out into this year, we do see that representing a larger portion of that overall revenue, which will affect the product metrics, which affects the weighted average asp's.
Yes, I think the and equally.
The only color I would add to that is yes.
Oh, yeah as true.
The claims that are several and all.
Opportunities that we have.
Being around the solid state Lidar.
The technology both of the Valerie and develop it. So we definitely continue we'll continue to see and acceleration of adoption of that technology across many different applications. So I think thats definitely happening.
Great. Thank you very much.
Okay.
Thank you and the next question comes from Richard Shannon with Craig Hallum.
Oh, Hey, guys. Thanks for taking my questions as well I think my first question is on Ada says as you provide and your investor presentations, we see the number of projects by quarter here and the number of projects come down the last couple of quarters, if I caught the numbers right from the 70 down two of 56 here can you discuss what's going on there do you see the says the retrench.
<unk> and <unk> and use of of Lidar, Adas or just sort of just higher quality of projects are still around here and could you kind of help us understand the.
Situation there.
Yes, I think what Youre seeing is really the quality of the projects and getting defined.
Much better as the customers are further along in the revaluation of Lidar and.
Other key technology for any of that.
Broadly, we don't see the retrenchment and the Adas market, we see actually a very robust set of opportunities.
And just getting more and better and better defined.
Further I would say that really we are seeing the adas opportunities settle into two buckets, what I would call the fast adopters, where players like Friday of future looking to come in and leapfrog existing.
Traditional players buy and updating both electrification and Lidar technology.
As part of the idea that's offerings and Youll see this thing is moving very fast and adopt lidar.
Fast rate.
Combined with the if you are seeing the traditional Oems also continue to make good progress, especially the leaders and the pack.
Around creating.
Sophisticated level three Adas systems that incorporate laid out and them. So you are seeing both of those buckets more forward. So broadly I would say, we don't see the dollars of the attachment.
And the usage of flight out of the data market.
Okay helpful perspective on the thanks for that second question is on software if I caught the numbers right here and increase in the number of projects that are.
And that are looking at that can you give us a sense of of how far down some of the the more advanced discussions are going can we see some agreements signed and the next.
Quarter or by the end of the year are.
Are these all automotive are you seeing any opportunities.
Opportunities outside of automotive.
Yes, we are seeing a broad based for the opportunities for software both in automotive and nonautomotive, but as I said before the really exciting part for US is in the industrial segment, where time to revenue is much faster we are seeing opportunities, but also for the light.
Both hardware and software. So certainly we believe that we will see some of these opportunities materialize into sign the signed multiyear agreements and the engineers future.
And in addition to that earlier today, we announced.
The.
Intelligent infrastructure solution, which is.
First our hardware and software solution that the publicly talked about.
And really this is a focus on the smartphone segment, where again, we see the our ability to work across different state of Vod City.
Innovation and commercial companies.
And that made up the line not just the the lineup of hardware that makes this possible, but also the entire solution, including the data analytics platform that these companies can use severely mine the valuable data that exists whether it's the city intersection or whether it's the retail public space and so.
And so that's so we are pushing for fast and.
And creating products around the different segments that incorporate both holiday and hardware compute and software.
Okay.
And could you, possibly comment on the on the progression of the software within the auto space too.
Yeah, I mean, I think the provision of software in.
And the auto space as we've always talked about is on the backs of the hardware installed base. So as we.
As we continue to see cracks.
Traction and get installed into the data.
Systems, we see opportunities for software day, one of the things that we.
Sure.
The first quarter of this year is low.
<unk> based automatic emergency braking system, comparing it with the <unk> camera and radar system, which you could see significant advantages, especially and the night time.
For the light of the assistant or the commentary the Bae systems and you can imagine this and this has led to some very deep conversation not just around level three but on level two level two plus.
Sorts of applications, where we could provide not just again the lighter hardware, but at the <unk> software solution as part of the Ostomy.
So lots of great progress, there, but I do mentally the time to revenue for software and in <unk>.
<unk> will be combined with when the hardware gets installed on the vehicles.
And so that continues to be the the critical path.
Got it okay. Thanks for the help the detail now and that's all for me.
Thank you. Thank you and once again. Please press Star then one of you would like to ask the question.
And then last question comes from a line Smith with Bank of America.
Good afternoon guys.
The first question when you look at the 2020, one revenue outlook, it's a pretty notable shortfall versus what I think was $150 million plus that you outlined upon going public in September of last year, but it also and the lowest annual revenue that the Ive reported since 2016 I think we can all appreciate that there's some near term headwinds.
Associated with the semiconductor shortages and supply chain disruptions.
And the 2021 looks like it could be more of a structural are GAAP as you try to make the shift from R&D project base of Lidar to commercial and multi year contract ladder and.
So why or why not would that be a fair characterization for 2020, one and what gives you confidence that some of the out your financial targets. He the outlined are still valid.
And so the key thing for us.
This is the fact that we are still having deep conversations with customers across the across the broad base of contracts there about these discussions where.
And they are actively interested and looking forward and moving forward with.
These different production agreements that were talking to them about and they provide a baseline.
As of the World starts to accelerate again, hopefully here in the second half of the year, we will be able to see that pick up and we'll be able to get back on pace for the expectations of the the forecast for 2022.
And so it's really <unk>.
And there is anything in the aircraft and we really feel it's more kind of of macro headwind and it's really should start to take shape here and the second half of the year as the.
The vaccinations and other things start to take hold and the market starts to come back and why do we why do we just add some color for that I mean, we should keep in mind, while we talk about that that as we sit here today.
Still have the highest revenue of all of the Lidar companies and the market. We have the maximum number of units produced and shipped across the broader set of applications and the broadest product portfolio the largest pipeline of projects and the space. So I think this is what gives us confidence that we can we can hit the numbers that we outlined in the in the future as we.
Scientists multiyear agreements and will these deep relationships with our customers and manufactured and scale and deliver these products at scale.
Okay. That's helpful. And then I wanted to ask another question around the gross margin. Some of the comments today are a little bit counterintuitive versus how you described the company upon going public of shifting more towards that type of model and manufacturing partners and then also some relative to some of the factors that you outlined is driving margin expansion liked them.
The car Lidar raise and low cost countries sort of thing again.
Again, I think we can understand COVID-19 delayed the manufacturing transition a little bit and it's going to be a pressure point. The here, but as you think about the business going forward is there a certain volume or revenue level that we should be thinking about above what you can leverage fixed cost and what I'm trying to get out with that day.
Think about bridging that 16 to 24 per cent gross margin this year versus 50% of class of the long term is it something that can be achieved and the next year or so as you complete the shift towards standard Pavel manufacturing or are your targets based on certain volume levels that may have been pushed out along with COVID-19.
So.
And I can start and the new feel free to jump in as well again keep in mind that the build and ship real volumes of products and as we've made these transitions these transitions and other step function and so you have the transition starting from sub systems and work your way to building and entire Lidar. So yes, the transition really driving the the.
The ability to switch to the the gross margin that we have talked about and as those transitions get competed and we will be able to.
Move towards those targets that you have talked about in terms of the micro laid out at the <unk>. These things and in production both in our factories as well as a partner of factories and as the product stock as the product mix evolves more and more of the products of using the micro light on it and you will see that part of the the the.
And rewards also.
Being transferred into the gross margin. So I think it is it is more complicated.
Because we again believe me of a broad portfolio of many different products that we build and ship and at the same time. The plans that we laid out of Australia, absolutely valid the transition for the micro laid out of Eddie and the Asics across the product line is happening as we talked about before by the end of 'twenty 'twenty. One we have the the end.
<unk> product line, we have the benefit of micro light out of rate and the transition to overseas manufacturing is happening and we continue to make progress on that despite COVID-19.
And we share that price by giving you kind of the direction of the gross margins as we come out of the year. So that will be linear train trend and should continue upward as we go out of 2021 and 2022 of the arc.
Okay, great. Thanks for taking the questions.
Okay.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to management and for any closing comments.
Thank you.
And as I started off saying the other day and Lidar.
And the leading producer of Lidar in the World and we are clearly the ones of defining the lidar market.
And this happens to be because we have the highest revenue and the SP, we build and ship more units and all of the other players put together combined and multiple product categories. We have a broad portfolio of products, we have a robust pipeline of products across many different applications, we have the manufacturing leadership and immediate.
The scale up to meet the demand and whether the inevitable uncertainties that exist in the marketplace and finally, we are moving forward fast and including software as part of us an offering.
First of the startup that we announced today with all of this we have very high confidence and our ability to contribute the group continued to execute as we have done so consistently and continue to be the pioneers and bringing lighter way of safety across all of these different applications for all of our customers. Thank you.
And much for your time and your questions. Thank you.
Thank you the conference.
First of all concluded. Thank you for attending today's presentation. You may now disconnect your lines.