Q3 2021 Aeye Inc Earnings Call

November 11, 2021

Good morning, My name is Kirby and that will be your conference operator today.

This time I would like to welcome everyone to a third quarter 2021 earnings conference call and webcast.

Participants lines have been placed in a listen only mode.

The opening remarks by AI management will follow will be followed by a question and answer session I.

I will turn the call over to Steve brake Chief Marketing Officer. Please go ahead.

Thanks, Gary and welcome everyone to <unk> third quarter 2021 earnings call with me today are blurring the court, our Chief Executive Officer, and Bob Brown, Our Chief Financial Officer.

Earlier today, we announced our financial results for the third quarter 2021, a copy of the press release can be found on our website at investors Dot AI AI before.

Before we start I'd like to remind participants that during this call management may make forward looking statements, including without limitation statements regarding our future performance growth strategy and financial outlook.

Forward looking statements are based on our current expectations and assumptions regarding our business the industry and other conditions.

These forward looking statements are subject to inherent risks uncertainties and changes in circumstances that are difficult or impossible to predict.

You can find more information about these risks uncertainties and other factors in our reports filed from time to time with the Securities and Exchange Commission, including the registration statement on form S. Four that includes a definitive proxy statement that AI, formerly known as CFO Natural acquisition Corp, three filed with the SEC.

Additional information will be set forth in our quarterly report on Form 10-Q for the quarter ending September 32021.

Our actual results may differ materially from those contemplated by these forward looking statements. We caution you therefore against placing undue reliance on any of these forward looking statements.

All information discussed today will be as of November 11th 2021, and we do not intend and undertake no obligation to update any forward looking statements, whether as whether as a result of new information future developments or otherwise, except as may be required by law.

In addition, today's discussion will include references to certain non-GAAP financial measures. These non-GAAP measures are presented for supplemental information purposes, only and should not be considered a substitute for financial information presented in accordance with GAAP.

A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release and you should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures in our earnings release.

So let's start by quickly revisiting the day that brought us here.

Yeah.

We are here today to celebrate a great milestone.

Testament to the vision and dedication of our team.

Yeah. It was founded eight years ago based on a very simple concept to create a computer vision platform that could make vehicles safer more efficient and enable true hands off eyes off the autonomous features on demand.

We uniquely set out to build that platform that leverages neuroscience, biomimicry and 80 years of military Lidar knowledge to create the first commercial adaptive Lidar platform. Today. We're pleased to say that these systems are in evaluation and deployed globally across numerous industries.

That is a grand granted achievement and just the beginning of what we believe will be a transformative era and the way we make vehicles smarter.

I would like to thank my teammates who are not able to be here today. They are the engine that propels us provides us innovation and creativity and we are sustained by their dedication and commitment.

Uh huh.

AI is now L. I D and we are dedicated to bringing positive returns to our investors and positive change to the world.

Yes.

Okay.

Hello, everyone. My name is Blair Laporte and I'm, the CEO of AI I'm joined by my colleague, Bob Brown, our CFO and treasurer.

Want to thank you for joining our first earnings call as a public company, we understand that as an investor you invest both with your time and money. We realize both are limited and appreciate you prioritizing AI.

We are grateful to have completed our dis back as this was an important milestone and will help us accelerate adoption of AI high performance adaptive Lidar system and fulfill our mission to make vehicles safer more efficient and to enable the next generation of autonomous mobility.

Today and on each quarterly earnings call going forward, we intend to follow a standard framework first we will provide you with an overview of key themes influencing the lidar market. Following that we will provide an update on the business, including product customer and partner highlights and finally, Bob will outline progress on strategic milestones financial.

<unk> <unk> outlook when appropriate and.

In conclusion, we will turn the floor over to you for your questions.

With that said lets get started.

Hey, guys next generation system is designed to leverage AI and edge processing to move the complexity from the hardware to the software, giving industrial customers in automotive Oems the ability to add new and compelling features.

This approach also enables a unique business model with one platform addressing all markets accelerating hardware cost reduction and the use of partnerships to manufacture and sell in a more flexible manner.

Also has a great track record of innovation and leadership over the last eight years.

Most recently in 'twenty 'twenty, we released our third generation of products. The fore sight series, we launched the foresight a for Adas and the foresight M for industrial applications to a very positive response.

2021 has also been an exciting year we.

We completed our merger with Seatback and became a public company, we hit a milestone of filing more than 100 patents supporting our unique technology and we continue to secure customer and third party validation of our industry, leading performance with a 1000 meter range and whether scanning speeds of more than 20000, Hertz and Super high resolution of <unk>.

<unk> hundred points per degree squared four times that of any of our competition.

As this is our first call we thought it was important to take a few minutes to articulate the technology vision AI was founded on in 2013.

Which was to build an AI driven sensing platform that would perform better than the human visual cortex <unk>.

Not to simply build a standalone passive lidar sensor.

We use lessons from biomimicry as well as lessons from the military's use of targeting and surveillance systems over the past 30 years.

We do love three key technical principles to guide our base technology architecture, partnering strategy and commercial model.

First we needed to rethink lidar hardware, we understood from our experience with radar and cameras that to really drive lidar adoption it needed to be an intelligent upgradable and ultimately have a very steep cost reduction curve. We started with a transformational patented by static design, which is at the core of our adaptive capabilities.

This allows us to parallel process information, increasing speed and accuracy similar to human eyes use at the visual cortex. We also knew that the ability to scale hardware production, while reducing costs would require that our components to be modular and be produced to standard high volume processes by world class automotive grade.

Tier twos.

Second we understood you need to have an intelligence software at the sensor level, which is a departure from the common approach of transferring Roger tax to a separate perception software engine.

Lidar needs to enable functionality that cameras and radar could not such as tracking fast moving environments with small objects and lateral entries. This requires intelligence software on the sensor that substantially increases situational awareness and the probability of detection, while reducing false positives without impacting.

Swap C.

Third with these new hardware and software capabilities, we had to rethink the role of perception software within the autonomous vehicle stack, we understood that sending a perception engine more data wasn't the answer perception systems need the right information traditional passive lidar systems always oversample and under sample with Everest.

Seen, especially in high speeds or variable weather by delivering better quality information, we enable any perception engine to be faster and more accurate whether it's AI is perception software.

Or an in house or third party system.

Our conclusion was that the world is dynamic.

The way your vehicle sensors should be as well.

So why are our customers so excited.

This adaptive sensing platform enables them to use our software to optimize a sensor for any placement in a vehicle from the grill headlight windshield or roof.

And to optimize the scan pattern for any use case or market requirement from Super long range requirements of trucking and rail to more general scanning requirements for construction applications to very highly specialized scanning requirements for aerospace our intelligent traffic systems.

Our partnership model combined with our embedded SDK uniquely enables tier ones and systems integrators to assist and users and this process. If needed. We also intend to offer customers the ability to upgrade their software for different application needs.

The intelligent sensor software platform can be broken down into four simple levels. Each designed to meet the needs of specific use cases or applications. The first level. We call design. It enables users to create a single deterministic scan pattern to deliver optimal information for any specific use case.

To address use cases, such as highway autopilot or pedestrian detection in the city.

The second level triggered.

Has a set of scan patterns each one addressing a specific use case for example, a user can create a different scan pattern for highway urban and suburban driving in addition users can create scan patterns for those same driving environments, but optimized for bad weather.

The design and triggered levels are ideal for Adas applications. There are however, two additional levels designed for industrial and mobility applications that are intended to be unlocked on demand. The first of these is responsive with response of the entire platform of situationally aware adjusting in real time, how it scans the seat.

And this level system feedback loops and other sensors, such as camera and radar informed the lidar.

The highest level is predictive.

Predictive understands the motion of everything and CS, which enables the system to deliver more information with less data focusing his energy on the most important objects in a scene, while paying attention to everything else and its periphery.

Now before we talk about specific customer highlights, let's step back and take one final look at how we uniquely approach the market in comparison to our peers.

The combination of our unique hardware and software creates a high performance Lidar system that allows us to address multiple markets with the same platform.

This creates a unique advantage against competitors, who are unable to reconfigure the capabilities of the product to address the specific needs of each market.

Another advantage of our model is that we can approach each market with an appropriate selling model. We can sell direct as we do in several industrial markets or through a licensing model with tier ones in the Adas market. This gives us the flexibility as the markets mature to drive adoption of Lidar.

Now, let's highlight a few of our partners and customers as.

As you may be aware continental one of the world's largest automotive suppliers has selected a is lighter as their high performance Adas sensor to be implemented into its installed base of customers.

This validation by Continental is critically important because <unk> has been one of the leading global suppliers of Adas solutions over the past 25 years.

After an exhaustive two year review of Lidar technologies Continental selected AI as its partner together, we announced the country will be shipping a long range Lidar product based on AI technology to its automotive and trucking customers with volume production starting in 2024 I would like to mention this relationship goes.

Well beyond licensing and manufacturing, we jointly and recently exhibited with continental at the I E. A conference in Munich and traveled thousands of miles on a roadshow across six countries, where we reinforce key relationships with major Oems with current or impending RF queues.

For more on our work with Continental let's hear from Qunar Jurgens, Continental's, Vice president of lighter Qunar.

Thanks Blair.

I appreciate the opportunity to be here today.

For those who aren't familiar with continental Continental is the 150 year old company that today is one of the largest automotive technology companies in the world with currently more than 192000 employees and an annual revenue of over 37 billion euros in 2020.

We have a wide range of products in automotive starting with mission critical parts like tires and brakes up to a high technology ones like the high performance computer or a Dutch tender.

Continental has been one of the world's leading supplier of Adas technology over the last decade recently shipping our 100 million radar units.

In addition to radar our 5000 strong Adas engineering team is working on the full Adas system stack, including camera Lidar.

Automated driving control units Adas software as well as data management.

What many people may not be aware is that we also have delivered more than 20 million light our systems to more than 50 different vehicle model.

We have a large eight us market footprint with over 25, Oems and 50 brands in our installed customer base.

So with a history of more than 20 years, and delivering lighter solutions to the automotive market.

Continental is already uniquely positioned in the industry.

But the next high priority for OEM is to offer integrated Adas systems that include our high performance low range lighter to address specific requirements for applications, such as highway out of pilot and hub to hub autonomous trucking.

So we searched for the ideas technology partner to jointly develop such a new high performance long range Lidar.

We found AI and we learned about our compatibility with regards to technology and market vision.

We share common sub system suppliers and design elements and although the applications for our existing short range flash lighter and the new long range Mems space Lyda with AI are different they are complementary offerings that help us deliver our ultimate vision of a full stack autonomous solution.

Equally critical it has been a ice willingness to license its platform. So that we can utilize our manufacturing processes and purchasing power to create a truly differentiated continental product.

We believe we are unique in our ability to bring an automotive grade high performance long range lidar product to market at a competitive price and a large scale production.

Our teams are deeply integrated from my engineering processes through our joint marketing materials and customer engagement.

We have daily alignment meetings, we have quarterly executive all sides <expletive> apt's structure and also resident engineers.

We have successfully implemented all of the mechanics necessary to bring a continental product to market based on a ice reference design.

And today, we are on schedule for delivering our product for S&P 2024, and.

And we are producing be samples of our production line.

Currently we are jointly participating in numerous RFP processes with major Oems around the globe.

The strong relationship between Continental and AI accelerators, and Derisked development of our high performance long range Lidar product.

This product also extends and complete continental integrated Adas system.

As a standalone high performance long range Continental lighter.

Or is it part of our Adas system, we are creating a compelling market position and a unique competitive advantage that strengthened our OEM relationships.

Oems value Aia's unique high performance technology in combination with continental proven ability to industrialize manufacture and deliver automotive grade products in high volume.

Thanks schooner, let's switch gears excuse the pun and talk about the industrial markets earlier. This year, we announced the development partnership with global self driving technology company too simple to simple is working with numerous truck Oems on hub to hub and Adas applications as well as level four self driving trucks targeting production in <unk>.

24, two simple chose AI because of our systems extreme long range performance impressive whether capabilities and the ability to address the most challenging autonomous trucking situations. It's widely believed that the trucking industry will be one of the early adopters of autonomous vehicles as a solution for driver shortages fleet logistics.

<unk> and safety concerns. We're also working with horizontal technology providers, our partnership with Nvidia is a great example of our efforts here and videos drive system is being used by many Oems mobility providers and industrial companies as the foundation for their full stack autonomous solutions in July AI Nvidia.

<unk> announced that AI will bring intelligent sensing to the drive platform with this integration autonomous vehicle developers will have access to next generation sensing capabilities as they build and deploy state of the art autonomous applications with adaptive lighter.

In 2021, we've also kicked off engagements with leaders in other industrial markets to develop solutions that address their specific needs. This includes komatsu and construction and mining equipment and Hitachi rail to name a few I would like to specifically highlight that in the third quarter, we launched a ice fore sight am into the intelligent transportation.

Asian system market at the I T S World Congress in Hamburg, and the Ats market working with the right partners is critical in addition to our previously announced relationships with the kind of light and Mitsubishi Electric we announced a new and exciting partnership with sole robotics, a leading three D perception company used an I T S applications and then tetra.

Our Pan European ITM solution provider specializing in automated tolling solutions.

Now, let's look at how our capital light model works with manufacturing our products and leveraging our global value chain to drive innovation.

As we heard from Qunar, we have transitioned manufacturing of our Adas product to continental.

They have begun producing automotive grade b samples of their HR, all 131 Lidar system.

For the industrial markets. We have also begun to move our manufacturing from our advanced development Center in Dublin.

To our contract manufacturing partner Semina. In addition, we are expanding our advanced development Center at our Dublin, California headquarters and recently opened our partner innovation center by bringing together the resources and the talent that exists within our partner ecosystem, we expect to facilitate communication and collaboration and to accelerate.

Great innovation.

Finally, together with our partner Sanmina, we're building an industry, leading test facility, which will be available to our team and partners. This is expected to be operational in Q1 of 2022.

We will continue to formalize these testing programs and share our results as we believe this transparency will help our customers better understand and appreciate the unique capabilities of our technology and our products with that I'll now turn the call over to Bob Brown, our CFO to review, our key business and financial milestones and third quarter financial results.

Bob.

Thanks, Blur I'll begin with a summary of our progress in executing on our strategic milestones during the quarter, then I'll discuss our third quarter results.

Start with our primary financial milestone, which was to complete our dis back transaction in the third quarter.

We successfully completed that in August by listing on NASDAQ as L. I D R and raising over $200 million net of fees.

We also eliminated over $50 million of outstanding debt at the closing of the transaction.

With respect to product we had a goal this year to clearly and measurably demonstrate the performance of AI is lidar.

We succeeded in establishing Lidar performance standards for range speed and resolution in third party tests and we also validated our superior weather performance.

Manufacturing is another key milestone for us and we made considerable progress there in the third quarter initial.

Initial automotive V samples from the Continental line are and bring up and we are on schedule for automotive series production in 2024, where.

We are also on track to begin production this quarter of our foresight M. Lidar sensor at Sanmina, our contract manufacturing partner to foresight and will be used in our industrial and mobility applications.

In the area of customers and partners demonstrating commercial traction with leading players in the market is another key milestone for us in 2021.

We're pleased to have advanced key relationships in the third quarter, including with Continental and aid as two simple and trucking Nvidia in mobility, Komatsu and construction Hitachi in rail and Mitsubishi Carnallite in Tetra and sole robotics all in support of our recent <unk> launch.

With respect to governance, our goal was to establish a strong public company board to represent our stockholders. We're pleased to have elected a new board of directors comprised of numerous highly respected board members and led by Carol Dpt's as chair.

Scaling the company has been a key goal of AI for 2020 one.

We substantially increased our key employee hires in engineering operations and sales and marketing to support our product rollout is.

As Blair will share later, our new hires include several key executive leaders across the company.

In a competitive labor market, we are pleased to be attracting such high caliber talent from across the lighter and automotive industries that will help us to execute on our growth plan innovation.

Is critical to our success and we have now filed over 100 patents for several groundbreaking concepts that should meaningfully expand aig's competitive position and protect our IP.

So we've made a lot of progress against our strategic milestones for 2021, and we think that builds a strong foundation for us heading into 2022.

Now, let me touch on our third quarter financial results third quarter revenue of 0.1 million was down from the prior quarter, which included significant development contract revenue that did not reoccur in the third quarter.

We expect to continue to see significant variability in our revenue quarter to quarter at this stage of a ice growth.

Our GAAP net loss was $17 $4 million for the quarter or a loss of <unk> 15 per share.

Non-GAAP net loss was $13 $7 million or a loss of <unk> 12 per share and our adjusted EBITDA was a loss of $12 $5 million.

We raised approximately $200 million of net proceeds from our spec transaction in the third quarter, which we intend to use to fund investments in product development increased scale and support a growing customer base. We also eliminated over $50 million of debt as a result of closing the transaction, including repayment of our bank loans and the conversion of our convertible.

Notes to equity.

We closed the third quarter with a strong balance sheet, including $182 million of cash cash equivalents in marketable securities.

For the third quarter, our weighted average share count was $114 9 million.

As a result of the completion of Rod's back transaction, we now have approximately 155 million shares outstanding.

For modeling purposes, as you think about our outlook, it's important to consider the following factors, we expect revenue from our industrial and mobility business to begin ramping over the course of 2022 but quarterly visibility is limited. We may also have additional development contract revenue in the future, but the amount and timing of that revenue was uncertain.

Therefore, we plan to provide annual rather than quarterly guidance and we will begin offering our 2022 outlook on our fourth quarter conference call in March.

As a reminder, automotive lidar production by Continental using AI technology is expected to start in 2024.

It's also important to remember that our high margin technology licensing model in the automotive market and contract manufacturing relationships in the industrial and mobility markets should minimize our capital expenditures and our working capital requirements.

Finally, we expect that our operating expenses in the near term will continue to grow significantly as we make investments that support our goal of accelerating lidar with our high performance intelligent Lidar system.

Our team executed well against our strategic milestones in the third quarter and we look forward to reporting additional progress in the coming quarters.

With that I'll pass it back to Blair to share a short video and introduce some of our new executives.

Thanks, Bob.

I'd like to wrap up with a look at AI is greatest asset our people we're building an amazing talented passionate team.

As my Dad would say you have to bet on the people during.

During 2021, we made significant strides in attracting the top talent in the lidar market to AI in March we announced the appointment of Rick tool as our Chief operating Officer. Rick was previously the COO at Delta Rick has a demonstrated record of leadership and success in building and operating enterprise scale.

Technology businesses in June we announced the addition of hard Finkelstein as our Chief R&D Officer previously hardwood CTO at sense Photonics now a subsidiary of Buster HUD has led several organizations in the design and product position of disruptive technologies in July we announced the appointment of auto veteran.

Right heart to the role of senior Vice President of Adas burned previously served as the global Vice President for a das and Lidar, Ed Vallejo, having built their adas business over the past seven years and just today, we announced the addition of TR Ramachandran and a newly created position as Chief product Officer Tier was most recently the head of product management and <unk>.

Marketing at Sep tonne and formally was the vice president of product management at Delta.

People, who know light our best are choosing AI.

The number of exceptional individuals who have joined US this year from other lidar companies stands as a testimony to how we are received in the market to.

To conclude we thought it would be inspiring for you to hear from some of our newest hires and the reasons for joining AI.

Light is the mandatory things up or I N E.

He doesn't know Adenomas slaving, and it's very simple AI has the best technology and performance to meet the market needs and.

Wasn't aware of any other product on the market that was so adaptable as determined scan pattern and then also that range, how they're able to achieve that range, but also have this flexible system for multiple situations.

Daniel the software not hardware.

So hardwood six.

Soft here.

Can change very quickly.

Vantage.

Development.

Progress AI was the only company with a unique.

Model to leverage partners and licensing our technology out to those partners to then penetrate perfect type of products into each of those verticals. The strength of the business model is the fact that we're able to leverage.

Our automotive supply chain with our partner continental into our industrial mobility markets and it is unique to AI and I think it's a tremendous strength that we have and as collaboration with continental where customers get AI technology, with continental's manufacturing quality and reliability and support infrastructure.

It means that there is one of a very small number of companies who don't just talk the talk but can really walk the walk I joined AI because of the people a lot of solid.

Key people with knowledge of how to bring a product like lidar to the market.

Anybody like us that they love working with each other and you can just scale.

And it's a collaborative work environment, it's wireless family Walmart everybody that works here is incredibly smart incredibly driven and enthusiastic really about.

Enabling our customers to change the world, It's a really amazing place to be.

Im confident that Ai's team, along with a world class Board assembled as part of our public listing will help us achieve our goal of driving lidar adoption across the automotive industrial and mobility markets.

Now, let's open it up for questions operator.

If you have any questions at this time. Please press Star then the number one on your attach stone telephone.

And if your question has been answered or you wish to remove yourself from the queue. You May press the pound key.

And first question comes from the line of Joseph Osha.

If Guggenheim partners Joseph Your line is now open.

Hello, everyone. Thanks for the detailed presentation that was that was really interesting.

A couple of questions I wanted to start with this issue of procurement in particular, if you look at what your main 15 50 competitor has done.

And wide band gap.

Detectors versus your strategy of saying, what the what the market sort it out.

Explain to us a little bit how how you see your strategy.

Being an advantage versus that sort of backward integration that.

You guys are pursuing.

Sure. So thanks for the question Joe when every market theres different strategies and I think this one is.

Clear.

Can vertically integrate if you believe that the solution that you need has already been innovated on and it's in a mature phase and all you're trying to do is actually to reduce costs with the same components or you may actually believed at your an earlier market and you'd like to take advantage of an open supply chain modular tier two hardware.

Supply chain, that's doing a lot of R&D, we felt that our intelligence sensor system.

Was better suited to a supply chain, where we can actually at any given time as new technology starts to arrive either from new materials or from a cost reduction standpoint that we can integrate into our product seamlessly. So I think it's just a different strategy you could vertically integrate your dependent on.

Your own team or you could have an open supply chain or you have proprietary designs with standard processes and take advantage of the <unk>.

Innovation and size of the global automotive supply chain and we pick the.

The second.

Yeah.

That makes great great sense could you.

Talk a little bit about how you perceive the current opportunities in time of flight versus some of the early rhetoric out there about FMC W.

Sure and first I'd like to say that we are not religious.

About technology itself, what we are religious about is delivering a system to our customers that provide value if we can't make our customers money.

They can't provide value to their customers. Then there is no market. So one of the premises as you heard at the beginning of this presentation. We came to was that we would actually look at every technology out there. We will continue to evaluate as we went along and so lighter it's been around since 1962 FMC W has been around since 1963.

Coherence in general is a very well known concepts. We picked what we believed was the most appropriate auto grade technology today and we also have.

Very very different architecture, as we set a <unk> architecture, where we're separating the send and receive fast. So we actually can do things with our intelligent sensing platform.

At many other technologies can't FMC is is a continuous wave we actually.

Pulse and change and create different patterns.

And collect different information using a time of flight system, whereas most passive time of flight systems can't do that they work very much like a camera. They get the same density in the same distance everywhere in the scene. So I think this again was just a technology choice, we believe that if youre going to be in cars.

In 2024 that you need a technology that is reliable predictable and that actually can be produced through our automotive grade supply chain and we just we didn't see the value of added coherence.

The system today again that said, we evaluate every year and our system is modular if we decided we want to add some functions and we'll roll out a minute.

Great. Thank you and then one more for me and I'll walk equipped monopolizing the call obviously the relationship with <unk> is very exciting.

Might we see kaki you start talking about who some of their end customers are for this product.

And if so what.

What might be expected.

To hear a bit more about that thanks.

Sure.

As you know because you've been in the auto business for a while most.

Tier ones don't talk about who they are Oems Saar, because the Oems until they get into volume production see no value in actually talking about who the vendors are at that point in time. So what continental has done is they've talked about their installed base of 25 Oems 50 brands. They work with they have also talked about how many people were engaged.

With in.

In our accused today.

At the end of the day Continental is our customer and it will be their decision on when they actually decide to articulate who the specific Oems are it's a lot easier and smaller volume projects or in smaller brands too.

To actually talk about things and take and take a risk on it a lot of the projects. We're working on right now are very very large and I would expect to continental wood.

I would wait until everything was tied up before they are they articulate them.

Okay, but just to follow on that before I go way here today.

It would be logical to assume that on the other part of the business, where you're just you're working with contract manufacturers in selling selling.

Selling completed units to your to your industrial.

Your industrial customers that we would hear from you when would.

Were destroyed.

Yes, absolutely.

Our customers are the tier ones on the high volume business that will let them talk about their end user but on the other side of the business where were producing the hardware and the software ourselves and selling into the vertical markets with the caveat that we would always respect our customers and make sure that we got their permission we have a lot more flexibility to talk about pilots and rollouts.

In those markets.

Okay, Alright, thank you very much.

Next question comes from the line of Sujit de Silva of Roth Capital <unk>. Your line is now open Hi, Blair Hi, Bob So congrats on the spec merger close obviously so.

A few more questions on continental.

Since they already have done high volume.

Lighter manufacturing I'm wondering if they kind of have a life line built out that you would leverage as you go forward or do they have to build out a line in support of Europe be sample they need to see sample to do that line build out just some color there on the remaining steps for continental would be helpful to understand.

Sure and as you alluded to they have produced a tremendous amount of hardware products, including lidar in the past their process is to basically build out the sample line and then to actually build out the full line leveraging on that on that sample line and that's what they've said publicly.

<unk>.

And they are already producing the <unk> samples.

As we speak today as Qunar referenced in the project.

One of the reasons that we partnered with them is because of their pragmatism and their reliability and their process is quite quite honestly.

While we are building product through contract manufacturers.

<unk> standard scatter continental will have given that it's selling into a regulated market with high volumes in warranty and liability falls back to them.

Is much more sophisticated.

And so they will be building out a custom line.

For these products that.

Sure they've announced how big it is so I won't.

I want to step on their toes, but.

As.

They are committed to not only building that line, but selling the volume off it.

And Blair just a follow there typically that those lines are built to size to committed customer volumes, giving you visibility is that a fair way to think about it.

Yes, but there is a minimum optimal line.

That you would you would build out again I'm going to defer back to our partner out of respect, but what I would.

Expect us in the industry is when you build out a line you built out a high volume line.

Okay.

It's a large line.

I appreciate the sensitivity of the partnering of it and then the HR L. Once everyone product to talk about here and then also you're talking about.

Level, two automation with the software stack and integration when you have to.

We provide products that are capable of L. Three and beyond is that a software upgrade or do you need to have a reconfigured hardware module.

Right. So in the Adas market when we go to market and eight ashwin theres level, two or level three through our tier ones.

Continental we will supply the software that allows them not only to decide how much they want to unlock but it also is an open platform, where it allows them to drop their algorithms and a lot of their IP onto our platform. That's why we call it a platform.

That they can customize it for their product and per OEM, given whatever the use cases are the specifications that theyre trying to they're trying to meet so the embedded software license will sit on the sensor.

And the hardware will stay the same and we control.

By the different software.

Permutations that they decide so from one.

OEM to another they may have the exact same hardware, which gives us scale, we just as cost increases reliability.

But they will adjust the edge based.

Intelligent sensor software and they have the capability, which I believe that they announced I'm pretty sure that they not only have the ability to now sell our product as a standalone highway autopilot or hub to hub trucking, but they've already done the integration into their.

System with their cameras their radars and their control units. So when they go to a customer.

They actually will ask the customer would you like to buy an individual unit or would you like to have it integrated and part of a bigger system. We think that that was one of the reasons. We thought other than the fact that manufacturing in industrialization and warranty and liability. We also felt like that was really a value to Oems to be able to have a person come.

Because at the end of the day, our cars are smart asset, it's becoming much more of a system.

And.

Continental has the capability to actually optimize that system per OEM.

Okay. That's very helpful color I appreciate that and then just switching over to the non automotive side I know you have.

Rail and industrial coming online, but also mobility and you mentioned in videos and mobility partner, which I hadn't seen before as kind of that was a channel for that.

Do you have mobility wins or have you announced any yet or what is the likelihood that comes in relatively soon because I know that market pretty active for other lidar vendors I'm wondering if you have a position there or whether we should not expect that near term.

No.

It's actually something we've been working on for several years.

We actually have just.

And our in process, obviously with the transfer of a Bcf <unk>.

<unk> released the next generation of our product. So we will actually get that into production before we start to externalized.

Movement of pilots into our into bigger opportunities. So.

As Bob said.

You will see a 2022 that will be taking that contract manufacturer product into.

Into mobility, and industrial and I would expect that you would see some things later in 2022, but we are already engaged with.

Part of being in a small industry in a very specialized industry like lidar.

Look on the Adas side, Theres 25, Oems and 15 commercial truck companies and another 20.

Up up and coming companies, there's not that many people and when you talk about mobility, it's a very discrete market. So we've been working as our as our peers have we've all been working with these companies for a number of years.

Okay very helpful color blur. Thanks.

Yeah.

Again, if you've got any questions. Please press star one on your telephone.

And I think that may be deferred.

For our call so.

Listen thank you everyone for dialing in and it's a very exciting time in our marketplace and the fact that we actually have such a robust set of companies here together, we believe we're all going to make each other better so thank.

Thank you for tuning into our first of all.

Thanks, everybody.

Have a great day.

Yeah.

Thank you so much to our presenters and to everyone who participated this concludes today's conference call. You may now disconnect have a great day.

Yes.

Yeah.

Yes.

Yeah.

[music].

No.

Okay.

Yeah.

Yes.

[music].

Yeah.

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Okay.

Yeah.

[music].

Okay.

Yeah.

Okay.

Yes.

So.

Mhm.

Okay.

Yes.

Thanks.

<unk>.

[music].

Yes.

[music].

Sure.

Yes.

Yeah.

Yes.

Okay.

Sure.

[music].

Yes.

Okay.

[music].

Yeah.

[music].

Yes.

Uh huh.

Okay.

Yes.

Sure.

[music].

Sure.

Yes.

Uh huh.

[music].

Yes.

Okay.

[music].

Thanks.

Okay.

Yes.

[music].

Okay.

Yes.

Okay.

[music].

<unk>.

Yeah.

[music].

Yes.

Okay.

Yes.

[music].

Yeah.

[music].

Yeah.

Okay.

Yes.

Thanks.

Okay.

[music].

Okay.

[music].

Okay.

Yes.

Sure.

[music].

Yeah.

[music] EBIT.

Okay.

Sure.

Yes.

Okay.

[music].

Yes.

Sure.

Yeah.

Yes.

Okay.

[music].

Thank you.

Yeah.

[music].

Okay.

[music].

Thank you.

Sure.

Okay.

[music].

Okay.

Yes.

Sure.

Okay.

[music].

Great.

Okay.

Yes.

[music].

Okay.

[music].

Uh huh.

Yeah.

Yes.

Okay.

Yes.

Yeah.

Yes.

[music].

Okay.

Sure.

Okay.

Thanks.

Sure.

Okay.

Yes.

[music].

Good morning, My name is Kirby and that will be your conference operator today.

At this time I would like to welcome everyone to <unk> third quarter 2021 earnings conference call and webcast. All participant lines have been placed in a listen only mode. In the opening remarks by AI management will follow will be followed by a question and answer session.

I will turn the call over to steep Lane Bryant Chief Marketing Officer. Please go ahead.

Thanks, Gary and welcome everyone to Aig's third quarter 2021 earnings call with me today are blur the court, our Chief Executive Officer, and Bob Brown, Our Chief Financial Officer.

Earlier today, we announced our financial results for the third quarter 2021, a copy of the press release can be found on our website at investors Dot AI AI.

Before we start I would like to remind participants that during this call management may make forward looking statements, including without limitation statements regarding our future performance growth strategy and financial outlook.

Forward looking statements are based on our current expectations and assumptions regarding our business the industry and other conditions. These forward looking statements are subject to inherent risks uncertainties and changes in circumstances that are difficult or impossible to predict.

You can find more information about these risks uncertainties and other factors in our reports filed from time to time with the Securities and Exchange Commission, including the registration statement on form S. Four that includes a definitive proxy statement that AIG, formerly known as CEO of financial acquisition Corp, three filed with the SEC.

All information will be set forth in our quarterly report on Form 10-Q for the quarter ending September 32021.

As may be required by law.

So let's start by quickly revisiting the data that brought us here.

Yeah.

We are here today to celebrate a great milestone.

Testament to the vision and dedication of our team.

Right.

Yes.

And I was founded eight years ago based on a very simple concept to create a computer vision platform that could make vehicles safer more efficient and enable true hands off is off autonomous features on demand we.

We uniquely set out to build that platform that leverages neuroscience, biomimicry and 80 years of military light our knowledge to create the first commercial adaptive Lidar platform. Today. We're pleased to say that these systems are in evaluation and deployed globally across numerous industries.

That is a grand granted shipments and just the beginning of what we believe will be a transformative era and the way we make vehicles smarter.

I'd like to thank my teammates who are not able to be here today. They are the engine that propels us provides us innovation and creativity and we are sustained by their dedication and commitment.

Okay.

AI is now <unk> and we are dedicated to bringing positive returns to our investors and positive change to the world.

Yes.

Okay.

Yes.

Hello, everyone.

My name is Blair Laporte and I'm, the CEO of AI I'm joined by my colleague, Bob Brown, our CFO and treasurer.

I want to thank you for joining our first earnings call as a public company, we understand that as an investor you invest both with your time and money. We realize both are limited and appreciate you prioritizing AI.

Today and on each quarterly earnings call going forward, we intend to follow a standard framework first we will provide you with an overview of key themes influencing the lighter market. Following that we will provide an update on the business, including product customer and partner highlights and finally, Bob will outline progress on strategic milestones financial.

<unk> <unk> outlook when appropriate and.

In conclusion, we will turn the floor over to you for your questions.

With that said lets get started.

He also has a great track record of innovation and leadership over the last eight years.

Most recently in 2020, we released our third generation of products. The fore sight series, we launched the foresight a for Adas and the foresight M for industrial applications to a very positive response.

2021 has also been an exciting year we.

We completed our merger with <unk> and became a public company, we hit a milestone of filing more than 100 patents supporting our unique technology and we continue to secure customer and third party validation of our industry, leading performance with a thousand meter range and whether scanning speeds of more than 20000, Hertz and Super high resolution of <unk>.

<unk> hundred points per degree squared four times that of any of our competition.

As this is our first call we thought it was important to take a few minutes to articulate the technology vision AI was founded on in 2013.

Which was to build an AI driven sensing platform that would perform better than the human visual cortex <unk>.

Not to simply build a standalone passive lidar sensor.

We use the lessons from biomimicry as well as lessons from the military's use of targeting and surveillance systems over the past 30 years.

We do have three key technical principles to guide our base technology architecture partnering strategy and commercial model first we needed to rethink lidar hardware, we understood from our experience.

So the radar and cameras that to really drive lidar adoption it needed to be at an intelligent upgradable and ultimately have a very steep cost reduction curve. We started with a transformational patented by static design, which is at the core of our adaptive capabilities.

This allows us to parallel process information, increasing speed and accuracy similar to human eyes use at the visual cortex. We also knew that the ability to scale hardware production, while reducing costs would require that our components to be modular and we produce to standard high volume processes by world class automotive grade tier.

<unk>.

Second we understood you need to have an intelligence software at the sensor level, which is a departure from the common approach of transferring Roger tax to a separate perception software engine.

Lidar needs to enable functionality that cameras and radar could not.

Such as tracking fast moving environments with small objects and lateral entries. This requires intelligence software on the sensor that substantially increases situational awareness and the probability of detection, while reducing false positives without impacting swap C.

Third with these new hardware and software capabilities, we had to rethink the role of perception software within the autonomous vehicles stack.

We understood that sending a perception engine more data wasn't the answer perception systems need the right information traditional passive lidar systems always oversample and under sample with every seen especially in high speeds or variable weather.

By delivering better quality information, we enable any perception engine to be faster and more accurate, whether it's AI perception software or an in house or third party system.

Our conclusion was that the world is dynamic.

The way your vehicle census should be as well.

So why are our customers so excited.

This adaptive sensing platform enables them to use our software to optimize a sensor for any placement in a vehicle from the grill headlight windshield or roof and.

Our partnership model combined with our embedded SDK uniquely enables tier ones and systems integrators to assist and users and this process if needed.

We also intend to offer customers the ability to upgrade their software for different application needs. The.

The intelligent sensor software platform can be broken down into four simple levels. Each designed to meet the needs of specific use cases or applications. The first level. We call designed it enables users to create a single deterministic scan pattern to deliver optimal information for any specific use case.

To address use cases, such as highway autopilot or pedestrian detection in the city.

The second level triggered.

Has a set of scan patterns each one addressing a specific use case for example, a user could create a different scan pattern for highway urban and suburban driving in addition users can create scan patterns for those same driving environments, but optimized for bad weather.

The design and triggered levels are ideal for Adas applications. There are however, two additional levels designed for industrial and mobility applications that are intended to be unlocked on demand. The first of these is responsive with responsive the entire platform is situationally aware adjusting in real time, how it scans the seat.

And this level system feedback loops and other sensors, such as camera and radar informed the lidar.

The highest level is predictive.

Now before we talk about specific customer highlights, let's step back and take one final look at how we uniquely approach the market in comparison to our peers the.

The combination of our unique hardware and software creates a high performance Lidar system that allows us to address multiple markets with the same platform.

This creates a unique advantage against competitors, who are unable to reconfigure the capabilities of the product to address the specific needs of each market.

Now, let's highlight a few of our partners and customers as.

As you may be aware continental one of the world's largest automotive suppliers has selected <unk> lidar as their high performance Adas sensor to be implemented into its installed base of customers.

This validation by Continental is critically important because <unk> has been one of the leading global suppliers of Adas solutions over the past 25 years.

After an exhaustive two year review of Lidar technologies Continental selected AI as its partner together, we announced the county will be shipping a long range Lidar product based on AI technology to its automotive and trucking customers with volume production starting in 2024 I would like to mention this relationship goes.

Well beyond licensing and manufacturing, we jointly and recently exhibited with continental at the IAA conference in Munich, and traveled thousands of miles on a roadshow across six countries, where we reinforce key relationships with major Oems with current or impending RF queues.

For more on our work with Continental let's hear from Gunnar Jurgens, Continental's, Vice president of lighter Qunar.

Thanks Blair.

I appreciate the opportunity to be here today.

For those who aren't familiar with continental Continentally as the 150 year old company that today is one of the largest automotive technology companies in the world with currently more than 192000 employees and an annual revenue of over 37 billion euros in 2020.

We have a wide range of products in automotive starting with mission critical parts like tires brakes up too high technology ones like the high performance computers.

Central.

Continental has been one of the world's leading suppliers of Adas technology over the last decades recently shipping our 100 million radar unit.

In addition to radar our 5000 strong Adas engineering team is working on the full Adas system stack, including camera lighter.

Automated driving control units Adas software as well as data management.

But many people may not be aware is that we also have delivered more than 20 million light our systems to more than 50 different vehicle model.

We have a large eight us market footprint with over 25, Oems and 50 brands in our installed customer base.

So with a history of more than 20 years, and delivering lighter solutions to the automotive market.

Continental is already uniquely positioned in the industry.

But the next high priority for Oems is to offer integrated Adas systems that include our high performance low range lighter to address specific requirements.

Acacia such as highway autopilot and hub to hub autonomous trucking.

So we searched for the ideas technology partner to jointly develop such a new high performance long range lighter.

We found AI and we learned about our compatibility with regards to technology and market vision.

We share common sub system suppliers and design elements and although the applications for our existing short range flash lighter and the new long range Mems space light I would pay a different day.

Our complementary offerings that help us deliver our ultimate vision of a full stack autonomous solutions.

Equally critical has been a ice willingness to license its platform. So that we can utilize our manufacturing processes and purchasing power to create a truly differentiated continental product.

We believe we are unique in our ability to bring an automotive grade high performance long range lidar product to market at a competitive price and a large scale production.

Our teams are deeply integrated from my engineering processes through our joint marketing materials and customer engagements.

We have daily alignment meetings, we have quarterly executive off sides <expletive> apt's structures and also resident engineers.

We have successfully implemented all the mechanics necessary to bring in continental product to market based on a ice reference design.

And today, we are on schedule for delivering our product for S&P 2024.

And we are producing <unk> samples of our production lines.

Currently we are jointly participating in numerous RFP processes with major Oems around the globe.

The strong relationship between Continental and AI accelerators, and Derisked development of our high performance long range lineup product.

This product also extend and complete continental integrated Adas system.

As a standalone high performance long range Continental lighter.

Or is it part of our Adas system, we are creating a compelling market position and a unique competitive advantage that strengthened our OEM relationships.

Oems value Aia's unique high performance technology in combination with continental's proven abilities to industrialize manufacture and deliver automotive grade product in high volume.

Thanks, Gunnar let switch gears excuse the pun and talk about the industrial markets earlier. This year, we announced the development partnership with global self driving technology company too simple to simple is working with numerous truck Oems on hub to hub and Adas applications as well as level four self driving trucks targeting production in <unk>.

<unk> 24.

Two simple chose AI because of our systems extreme long range performance impressive whether capabilities and the ability to address the most challenging autonomous trucking situations. It's widely believed that the trucking industry will be one of the early adopters of autonomous vehicles as a solution for driver shortages logistics and safety concerns.

We're also working with horizontal technology providers, our partnership with Nvidia is a great example of our efforts here and videos drive system is being used by many Oems mobility providers and industrial companies as the foundation for their full stack autonomous solutions in July AI, Nvidia announced that AI will bring.

Intelligent sensing to the dry platform with this integration autonomous vehicle developers will have access to next generation sensing capabilities as they build and deploy state of the art autonomous applications with adaptive lighter.

In 2021, we've also kicked off engagements with leaders in other industrial markets to develop solutions that address their specific needs. This includes komatsu and construction and mining equipment and Hitachi rail to name a few I would like to specifically highlight that in the third quarter, we launched ai's fore sight am into the intelligent transportation.

<unk> system market at the I T S World Congress in Hamburg, and the Ats market working with the right partners is critical in addition to our previously announced relationships with the kind of light and Mitsubishi Electric we announced a new and exciting partnership with sole robotics, a leading three perception company used in <unk> applications and in Tetra.

Our Pan European ITM solution provider specializing in automated tolling solutions.

Now, let's look at how our capital light model works with manufacturing our products and leveraging our global value chain to drive innovation.

As we heard from Qunar, we have transitioned manufacturing of our Adas product to continental.

They have begun producing automotive grade b samples of their HR, all 131 Lidar system.

For the industrial markets. We have also begun to move our manufacturing from our advanced development Center in Dublin.

Our contract manufacturing partner Semina. In addition, we are expanding our advanced development Center at our Dublin, California headquarters and recently opened our partner innovation center by bringing together the resources and the talent that exists within our partner ecosystem, we expect to facilitate communication and collaboration and to accelerate.

Great innovation.

Finally, together with our partner Semina, we're building an industry, leading test facility, which will be available to our team and partners. This is expected to be operational in Q1 of 2022.

Bob.

Thanks, Blur I'll begin with a summary of our progress in executing on our strategic milestones during the quarter.

Then I'll discuss our third quarter results.

Starting with our primary financial milestone, which was to complete our <unk> transaction in the third quarter.

We successfully completed that in August by listing on NASDAQ as L. I D R and raising over $200 million net of fees.

We also eliminated over $50 million of outstanding debt at the closing of the transaction.

With respect to product we had a goal this year to clearly and measurably demonstrate the performance of AI is lidar.

We succeeded in establishing Lidar performance standards for range speed and resolution in third party tests and we also validated our superior weather performance.

Manufacturing is another key milestone for us and we made considerable progress there in the third quarter initial.

Initial automotive be samples from the Continental line are and bring up and we are on schedule for automotive series production in 2024.

We are also on track to begin production this quarter of our foresight and Lidar sensor at Sanmina, our contract manufacturing partner, the foresight to and will be used in our industrial and mobility applications.

In the area of customers and partners demonstrating commercial traction with leading players in the market is another key milestone for us in 2021.

We're pleased to have advanced key relationships in the third quarter, including with Continental and aid as two simple and trucking Nvidia in mobility, Komatsu and construction Hitachi in rail and Mitsubishi are kind of late in Tetra and sole robotics all in support of our recent <unk> launch.

<unk> the company has been a key goal of AI for 2020 one.

We substantially increased our key employee hires in engineering operations and sales and marketing to support our product rollout.

As Blair will share later, our new hires include several key executive leaders across the company.

In a competitive labor market, we are pleased to be attracting such high caliber talent from across the lighter and automotive industries that will help us to execute on our growth plan innovation.

It is critical to our success and we have now filed over 100 patents for several groundbreaking concepts that should meaningfully expand aig's competitive position and protect our IP.

So we've made a lot of progress against our strategic milestones for 2021, and we think that builds a strong foundation for us heading into 2022.

We expect to continue to see significant variability in our revenue quarter to quarter at this stage of <unk> growth.

Our GAAP net loss was $17 $4 million for the quarter or a loss of <unk> 15 per share.

Non-GAAP net loss was $13 $7 million or a loss of <unk> 12 per share and our adjusted EBITDA was a loss of $12 $5 million.

We also eliminated over $50 million of debt as a result of closing the transaction, including repayment of our bank loans and the conversion of our convertible notes to equity.

We closed the third quarter with a strong balance sheet, including $182 million of cash cash equivalents in marketable securities.

For the third quarter, our weighted average share count was $114 9 million.

As a result of the completion of Rod's back transaction, we now have approximately 155 million shares outstanding.

For modeling purposes, as you think about our outlook. It is important to consider the following factors, we expect revenue from our industrial and mobility business to begin ramping over the course of 2022, but quarterly visibility is limited. We may also have additional development contract revenue in the future, but the amount and timing of that revenue was uncertain.

Therefore, we plan to provide annual rather than quarterly guidance and we will begin offering our 2022 outlook on our fourth quarter conference call in March.

As a reminder, automotive lidar production by Continental using AI technology is expected to start in 2024.

Finally, we expect that our operating expenses in the near term, we will continue to grow significantly as we make investments that support our goal of accelerating lidar with our high performance intelligent Lidar system.

Our team executed well against our strategic milestones in the third quarter and we look forward to reporting additional progress in the coming quarters.

With that I'll pass it back to Blair to share a short video and introduce some of our new executives.

Thanks, Bob.

I'd like to wrap up with a look at AI is greatest asset our people we're building an amazing talented passionate team.

As my Dad would say you have to bet on the people during.

During 2021, we made significant strides in attracting the top talent in the lidar market to AI in March we announced the appointment of Rick tool as our Chief operating Officer. Rick was previously the COO at Delta on Rick has a demonstrated record of leadership and success in building and operating enterprise scale.

<unk> technology businesses and.

In June we announced the addition of hard Finkelstein as our Chief R&D Officer previously hardwood CTO at since Photonics now a subsidiary of Ulster.

Has led several organizations in the design and product position of disruptive technologies in July we announced the appointment of auto veteran burned right heart to the role of senior Vice President of Adas burned previously served as the global Vice President for Aaas, and Lidar, Ed Vallejo, having built their adas business over the past seven years and.

Just today, we announced the addition of TR Ramachandran and a newly created position as Chief product Officer TR was most recently the head of product management and marketing at Sep tonne and formally was the vice president of product management at Delta.

People, who know light our best are choosing AI.

A number of exceptional individuals who have joined US this year from other lidar companies stands as a testimony to how we are received in the market.

To conclude we thought it would be inspiring for you to hear from some of our newest hires and the reasons for joining AI.

Light is the mandatory zafar.

He doesn't know what enormous driving and it's very simple AI has the best technology and performance to meet the market needs.

Isn't aware of any other product on the market that was so adaptable as determined scan pattern and then also that range, how they're able to achieve that range, but also have this flexible system for multiple situations.

Dependable.

<unk> not <unk>.

So hardware software.

So if you.

Can change very quickly.

Really vantage.

Got it.

Progress AI was the only company with a unique.

Our automotive supply chain with our partner continental into our industrial mobility markets and it is unique AI and I think it's a tremendous strength that we have and as collaboration with continental where customers get AI technology, with continental's manufacturing quality and reliability and support infrastructure.

It means that AI is one of a very small number of companies who don't just talk the talk but can really walk the walk.

Joining AI because of the people a lot of solid.

Key people with knowledge of how to bring a product like lidar to the market.

But he slate often working with each other and you can just scale.

And.

Collaborative work environment as wireless Samuel everybody that works here is incredibly smart incredibly driven and enthusiastic really about.

Enabling our customers to change the world, It's a really amazing place to be.

Now, let's open it up for questions operator.

If you have any questions at this time. Please press Star then the number of on your attach tone telephones.

And if your question has been answered or you wish to remove yourself from the queue. You May press the pound key.

And first question comes from the line of Joseph Osha.

If Guggenheim partners Joseph Your line is now open.

Hello, everyone. Thanks for the detailed presentation that was that was really interesting.

A couple of questions I wanted to start with.

Issue of procurement in particular, if you look at what your main $15 50 competitor has done.

In wideband gap detectors versus your strategy of saying, what the what the market sorted out can.

Can you explain to us a little bit how how you see your strategy.

Being an advantage versus that sort of backward integration that the other guys are pursuing.

Sure. So thanks for the question Joe.

Every market Theres different strategies and I think this one is pretty clear you.

You can vertically integrate if you believe that the solution that you need has already been innovated on and it's in a mature phase and all you're trying to do is actually to reduce costs with the same components or you may actually believed at Youre, an earlier market and you'd like to take advantage of an open supply chain a modular tier two hardware.

Our supply chain, that's doing a lot of R&D, we felt that our intelligence sensor system was better suited to a supply chain, where we can actually at any given time as new technology starts to arrive either from new materials or from a cost reduction standpoint that we can integrate into our product.

Seamlessly. So I think it's just a different strategy you could vertically integrate youre dependent on your own team or you could have an open supply chain, where you have proprietary designs with standard processes and take advantage of the innovation and size of the global automotive supply chain and we pick the.

The second.

That that makes great great sense could you.

Talk a little bit about how you perceive the current opportunities in time of flight versus some of the early rhetoric out there about FMC W.

Sure and first I'd like to say that we are not religious.

About technology itself, what we are religious about is delivering a system to our customers that provide value if we can't make our customers money.

And they can't provide value to their customers and there is no market. So one of the premises as you heard at the beginning of this presentation. We came to was that we would actually look at every technology out there and we will continue to evaluate as we went along and so lighter it's been around since 1962, F&B CW has been around since $19 63.

Coherence in general is a very well known concepts. We picked what we believed was the most appropriate auto grade technology today, and we also have a very very different architecture as we set up by stack architecture, where we're separating the send and receive fast so we actually can.

Can do things with our intelligent sensing platform.

Many other technologies can't FMC is is a continuous wave we actually.

Can pulse and change and create different patterns.

And collect different information using a time of flight system, whereas most passive time of flight systems can't do that they worked very much like a camera. They get the same density in the same distance everywhere in the scene. So I think this again was just a technology choice, we believe that if youre going to be in cars.

In 2024 that you need a technology that is reliable predictable and that actually can be produced through our automotive grade supply chain and we just we didn't see the value of added coherence.

The system today again that said, we evaluate every year and our system is modular if we decided we want to add some functions and we'll add a minute.

Great. Thank you and then one more for me and I'll walk equipment Napoli call. Obviously the relationship with <unk> is very exciting.

Might we see <unk> start talking about who some.

Their end customers are for this product here and if so what.

One white, we expect.

To hear a bit more about that thanks.

Sure.

As you know because you've been in the auto business for a while.

<unk>.

Tier ones don't talk about who the Oems are because the Oems until they get into volume production see no value in actually talking about who the vendors are at that point in time. So what continental has done is they've talked about their installed base of 25 Oems 50 brands. They work with they have also talked about how many people were engage.

<unk> with.

In our accused today.

But at the end of the day Continental is our customer and it will be their decision on when they actually decide to articulate who the specific Oems are it's a lot easier and smaller volume projects or in smaller brands.

To actually talk about things and take and take a risk on it a lot of the projects. We're working on right now are very very large and I would expect to continental wood.

I would wait until everything was tied up before they are they articulate them.

Okay, but just to follow on that before I go away here today, it would be logical to assume that on the other part of the business, where youre working with contract manufacturers and selling.

Selling completed units to your to your industrial.

Your industrial customers that we would hear from you win.

Were destroyed.

Absolutely our customers are the tier ones on the high volume business that will let them talk about their end user but on the other side of the business where were producing the hardware and the software ourselves and selling into the vertical markets with the caveat that we would always respect our customers and make sure that we got their permission we have a lot more flexibility to <unk>.

About pilots and Rollouts in those markets.

Okay.

You very much.

Next question comes from the line of <unk> Desilva Roth Capital <unk>. Your line is now open Hi, Blair Hi, Bob So congrats on the spectra merger closed obviously so.

A few more questions on continental.

They've since they already have done high volume.

Our manufacturing I'm wondering if they kind of have a life line built out that you would leverage as you go forward or do they have to build out a line in support of Europe be sample they need to see sample to do that <unk> build out just some color there on the remaining steps for continental that would be helpful to understand.

Sure and as you alluded to they have produced a tremendous amount of hardware products, including lidar in the past their process is to basically build out the sample line.

And then to actually build out the full line leveraging on that on that sample line and that's what they've said publicly.

And they are already producing the <unk> samples.

As we speak today as Qunar referenced in the project.

One of the reasons that we partnered with them is because of their pragmatism and their reliability and their process is quite quite honestly.

While we are building products to contract manufacturers.

The standard static continental will have given that it's selling into a regulated market with high volumes in warranty and liability falls back to them.

Is much more sophisticated and so they will be building out a custom line.

For these products that.

Not sure they've announced how big it is so I won't.

I won't step on their toes, but.

As.

They are committed to not only building that line, but selling the volume of it.

And just a follow there typically that those lines are built to size to committed customer volumes, giving you visibility is that a fair way to think about it.

Yes, but there is a minimum optimal line.

That you would you would build out again I'm going to defer back to our partner out of respect, but what I would.

Expect us in the industry is when you build out a line you built out a high volume line.

Okay.

It's a largely.

Good.

I appreciate the sensitivity of the partnering of it and then the HR L.

131 product to talk about here and then also you talked about.

Level, two automation with the software stack and integration when you have to.

We provide products that are capable of L. Three and beyond is that a software upgrade or do you need to have a reconfigured hardware module.

Right. So in the Adas market when we go to market in Adas, where theres level, two or level three through our tier ones.

So that they can customize it for their product and per OEM given whatever the use cases are the specifications that theyre trying to they're trying to meet so the embedded software license will sit on the sensor.

And the hardware will stay the same and we control.

By the different software.

Permutations that they decide so from one.

OEM to another they may have the exact same hardware, which gives us scale, we do see cost increases reliability.

But they will adjust the edge based.

Intelligent sensor software and they have the capability, which I believe that they announced I'm pretty sure that they not only have the ability to now sell our product as a standalone highway autopilot, our hub to hub trucking, but they've already done the integration into their.

System with their cameras their radars and their control units. So when they go to a customer.

Because at the end of the day, our cars and smart asset, it's becoming much more of a system.

And.

Continental has the capability to actually optimize that system per OEM.

Okay. That's very helpful color I appreciate that and then just switching over to the non automotive side I know you have.

Rail and industrial coming online, but also mobility and you mentioned in videos and mobility partner, which I hadn't seen before it's kind of that was a channel for that.

Do you have mobility Windsor have you announced any yet or what is the likelihood that it comes in relatively soon because I know that market is pretty active for other lidar vendors I'm wondering if you have position there or whether we should not expect that near term no.

It's actually something we've been.

Working on for several years.

We actually have just and are in process, obviously with the transfer of a bcf or.

<unk> released the next generation of our product. So we will actually get that into production before we start to externalized.

Movement of pilots into Wow.

Into bigger opportunities.

No.

As Bob said, you will see in 2022 that will be taking that contract manufacturer product into.

Into mobility, and industrial and I would expect that you would see some things later in 2022, but we are already engaged with.

Part of being in a small industry in a very specialized industry like lidar.

Look on the Adas side, Theres 25, Oems and 15 commercial truck companies and another 20.

Up up and coming companies Theres not that many people and when you talk about mobility, it's a very discrete market. So we've been working as you know.

Our peers have we've all been working with these companies for a number of years.

Okay very helpful color blur. Thanks.

Yeah.

Again, if any questions. Please press star one on your telephone.

Or do you think that may be deferred for a call. So.

Thank you for tuning into our first of all.

Thanks, everybody.

Have a great day.

Yeah.

Thank you so much to our presenters and to everyone who participated this concludes today's conference call. You may now disconnect have a great day.

Yeah.

Q3 2021 Aeye Inc Earnings Call

Request a DemoDemo

LIDR

Aeye

Earnings