Q4 2021 Aeye Inc Earnings Call

today. At this time I would like to welcome everyone to AI's fourth quarter and full year 2021 earnings conference call and wealth care.

At this time I would like to welcome everyone to eat ice fourth quarter and full year 2021 earnings conference call ends up.

All participant lines have been placed in a listen-only mode. Should the need assistance please signal a conference specialist by pressing the star key followed by zero.

All participant lines have been placed in a listen only mode.

You need assistance. Please signal a conference specialist by pressing the Star T followed by Seattle.

Speaker Change: Joining us on the call today will be Blair Lakot, Chief Executive Officer and Bob Brown, Chief Financial Officer.

Joining us on the call today will be Blair that Cook, Chief Executive Officer, and Bob Brown, Chief Financial Officer.

Speaker Change: Opening remarks by AI management will be followed by a question and answer session. To ask a question, you may press star then one on a touchdown phone. To withdraw your question, please press star then two. Please note this event is being recorded. I'll now turn the call over to AI.

Opening remarks by management will be followed by a question and answer session.

To ask a question you May press Star then one on a touchtone phone to withdraw your question. Please press Star then two please.

Please note this event is being recorded.

I'll now turn the call over to Ed.

Speaker Change: Thanks and welcome everyone to AI's fourth quarter and full year 2021 earnings call. With me today are Blair LeCourt, our Chief Executive Officer, and Bob Brown, our Chief Financial Officer.

Thanks, and welcome everyone to Aig's fourth quarter and full year 2021 earnings call with me today are Blair Law Court, our Chief Executive Officer, and Bob Brown, Our Chief Financial Officer.

Speaker Change: Earlier today, we announced our financial results for the fourth quarter and full year 2021. A copy of our press release can be found on our website at investors.ai.ai.

Earlier today, we announced our financial results for the fourth quarter and full year 2021.

A copy of our press release can be found on our website at investors Dot H E Y E Dot AI.

Speaker Change: 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.

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.

Speaker Change: Forward-looking statements are based on our current expectations and assumptions regarding our business, the industry and other conditions.

Forward looking statements are based on our current expectations and assumptions regarding our business. The industry. Another conditions. These forward looking statements are subject to inherent risks uncertainties and changes in circumstances that are difficult or impossible to predict our actual results may differ materially from those contemplated by the forward looking.

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

Speaker Change: Our actual results may differ materially from those contemplated by the forward-looking statement.

Speaker Change: We caution you, therefore, against placing undue reliance on any of these forward-looking statements. You can find more information about the risks, uncertainties, and other factors in our reports filed from time to time for the Securities and Exchange Commission, including in our annual report on Form 10K for the year ended December 31, 2021.

We caution you therefore against placing undue reliance on any of these forward looking statements you can find more information about the risks uncertainties and other factors in our reports filed from time to time by the Securities and Exchange Commission, including in our annual report on Form 10-K for the year ended December 31 20.

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Speaker Change: All information discussed today is as of March 28, 2022, and we do not intend and undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law.

All information discussed today is as of March 28th 2022 and we do not intend and undertake no obligation to update any forward looking statements, whether as a result of new information future developments or otherwise, except as may be required by law.

Speaker Change: In addition, today's discussion will include references to certain non- GAAP financial measures.

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

Speaker Change: These non- GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAP.

Speaker Change: A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release, and you should refer to our reconciliation of non- GAAP financial measures to the most directly comparable gap measure in our earnings release. With that, pass it over to Blair.

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 measure in our earnings release with that I'll pass it over to Blair.

Speaker Change: Thank you for joining us today for AI's quarterly investor up.

Thank you for joining us today for <unk> quarterly Investor update for those of you I have not met before my name is Blair Law Court and I am the CEO of <unk>. Joining me here today is my CFO Bob Brown.

This is our second public earnings call and our first full year report, we are very excited to share our progress here today.

First we're going to provide some perspective on how the lidar market has developed and where we believe we are in the cycle of commercialization.

Speaker Change: I will then touch on our progress in 2021, our key investment themes and highlight AI's business model and product difference.

I will then touch on our progress in 2020 , one our key investment themes and highlight a guy's business model and product differentiation.

Speaker Change: Bob will then take us through our Q4 in full year 2021 financials. He will share a more in-depth review of 2021 accomplishments as well as our financial projections for 2021.

Bob will then take us through our Q4 and full year 2021 financials. He will share a more in depth review of 2021 accomplishments as well as our financial projections for 2022.

Speaker Change: I will finish by highlighting two key culture initiatives and this year's strategic objectives. We will then

I will finish by highlighting two key cultural initiatives and this year's strategic objectives.

We will then transition to questions.

Speaker Change: As some of you may know, LiDAR is not a new technology. It was invented in the 1960s for specialized applications because of its deterministic capabilities in measuring the exact distance to an object with higher resolution, especially where other existing interpretive sensors like radars and cameras may be at a disadvantage.

As some of you may know lidar is not a new technology.

Was invented in the 19 sixties her specialized applications because of its deterministic capabilities and measuring the exact distance to an object with higher resolution, especially where other existing interpretive sensors like radars and cameras may be at a disadvantage.

Speaker Change: For the next 40 years, Ladder was used to collect and transfer information in complex spatial environment.

For the next 40 years later was used to collect and transfer information and complex spatial environments.

Speaker Change: In the early 2000s, governments around the world began to look for ways to transition this technology into broader commercial markets.

In the early two thousands governments around the world began to look for ways to transition this technology into broader commercial markets.

Speaker Change: For example, the DARPA Grand Challenge was extremely successful in spawning over 85 LiDAR companies to implement sensors into automotive and the wider industrial market

For example, the DARPA Grand Challenge was extremely successful and spawning over 85, lidar companies to implement sensors into automotive and the wider industrial marketplace.

Speaker Change: Fast forward to 2021 and as with most foundational technology transitions, not only have the markets expanded, but the original 85 plus privately financed companies led to eight IPOs in 2021, which raised a significant

Fast forward to 2020 , one and as with most foundational technology transitions not only have the market's expanded.

But the original 85, plus privately financed companies led to eight ipos in 2021.

Which raised a significant amount of public capital.

Speaker Change: We believe AI is now one of two companies with the capabilities to scale from simple to ultra high performance application.

We believe AI is now one of two companies with the capabilities to scale from simple to ultra high performance applications. We also believe we are the only company with an adaptive software based sensor platform that can be customized across markets.

Speaker Change: We also believe we are the only company with an adaptive software-based sensor platform that can be customized across market.

Speaker Change: Most importantly, AI software-defined platform is well positioned to benefit from the trends and high demand for smart assets and software-defined vehicles. 2021 was a

Most importantly, AI software defined platform is well positioned to benefit from the trends and high demand for smart assets and software definable vehicles.

2021 was a very productive year at AI.

Speaker Change: dedication and high-level execution of our team allowed us to deliver on-plan with strong performance on many

The dedication and high level execution of our team allowed us to deliver on plan with strong performance on many fronts.

Speaker Change: AI's focus was on productization, as well as building and enhancing the company's infrastructure and human capital to enable scalability. We finalized the

Hey, guys focus was on product position as well as building and enhancing the companys infrastructure and human capital to enable scalability.

We finalized the next generation of our products.

Speaker Change: which are designed for manufacturability. We also began the transition to volume production with the announcement of collaborations in both industrial and automotive manufacturers.

Which our design for manufacture ability.

We also began the transition to volume production with the announcement of collaborations in both industrial and automotive manufacturing.

We secured world class partners to help us bring this technology to market and we engaged in key pilots and all of our strategic segments.

Speaker Change: We secured world-class partners to help us bring this technology to market, and we engaged in key pilots in all of our strategic systems.

Speaker Change: We intend to take this momentum and continue to execute on our path to scale and profitability.

We intend to take this momentum and continue to execute on our path to scale and profitability.

Let's now walk through our investment themes.

Speaker Change: First and foremost, we are an automation company. Our technology acquires and processes high quality spatial information.

First and foremost, we arent automation company, our technology acquirers and processors high quality spatial information.

Speaker Change: to allow assets or vehicles to make better decisions when a human is not engaged.

To allow assets more vehicles to make better decisions when a human is not engaged in short we enable automation on demand across many markets.

Speaker Change: In short, we enable automation on demand across many markets.

Speaker Change: Second, we have a unique business model that leverages the existing global value chains to increase innovation and drive the velocity of adoption.

Second we have a unique business model that leverages, the existing global value chains to increase innovation and drive the velocity of adoption.

Speaker Change: In the industrial markets, we sell software-configured solutions, both the REC to customers and in partnership with Systems Integrated.

In the industrial markets, we sell software configured solutions, both direct to customers and in partnership with systems integrators.

Speaker Change: In the high volume automotive eight-ass markets, we license our intelligence software platform to global Tier 1 automotive suppliers for scalability.

And the high volume automotive Adas markets, we license, our intelligent software platform to global tier one automotive suppliers for scalability.

Speaker Change: Third, we have built our products and business model on top of a disruptive software platform that resides on the sensor. This platform allows our LIDAR sensors to adapt to their environment or use cases and to deliver the right information at the right time to enable autonomous features and function.

Third we have built our products and business model on top of a disruptive software platform that resides on the sensor. This platform allows our lidar sensors to adapt to their environment or use cases and to deliver the right information at the right time to enable autonomous features and functions.

Speaker Change: by enabling smart assets and software to findable cars to be more intelligent in how they collect and integrate it for making sure.

By enabling smart assets and software definable cars to be more intelligent and how they collect and integrate information.

Speaker Change: AI is enabling new business models for our customers.

AI is enabling new business models for our customers.

Speaker Change: Fourth, AI utilizes capital-light manufacturing and the existing global automotive supply chain for cost optimization and scalability.

Fourth AI utilizes capital light manufacturing and the existing global automotive supply chain for cost optimization and scalability.

Speaker Change: We believe we're the only company that has multiple global manufacturers investing in building out high-volume production facilities.

We believe we're the only company that has multiple global manufacturers investing and building out high volume production facilities.

Speaker Change: Finally, you can bet on a plan, but what you're ultimately betting on is a team with integrity and discipline that is a long track record of

Finally, you can bet on a plan, but what you're ultimately betting on as a team with integrity and discipline that has a long track record of success now we're going to shift gears excuse the pun and take a quick dive into our first three investment themes.

Speaker Change: Now, we're going to shift gears, excuse the pun, and take a quick dive into our first three investments.

Speaker Change: First, high quality information, where I will give you a preview of our new 4-SIDE M product.

First high quality information, where I will give you a preview of our new fore sight M product.

Speaker Change: Second, our unique business model, where we will hear from one of our partners and one of our customers on how they evaluated the Light Our Marketplace and why they chose AI over our partners.

Second our unique business model, where we will hear from one of our partners and one of our customers on how they evaluated the lidar marketplace and why they chose AI over our peers and.

Speaker Change: third, an overview of our disruptive software platform where we will share several videos of some remarkable new capabilities that have never been shown.

And third an overview of our disruptive software platform, where we will share several videos of some remarkable new capabilities that have never been shown before.

Speaker Change: Then I will transition to Bob Brown, our CFO , to review the finance.

Then I will transition to Bob Brown, our CFO to review the financials.

Bob Brown: So now let's expand on our first theme by explaining what we mean by delivering the highest quality spatial information.

So now let's expand on our first theme by explaining what we mean by delivering the highest quality spatial information by.

Bob Brown: by sharing with you for the first time the remarkable performance from our latest four-site M platform. As many of you know,

By sharing with you for the first time the remarkable performance from our latest foresight EM platform.

As many of you know lidar as a deterministic sensor that provides resolution at range to accurately C and navigate around small obstacles at speed.

Bob Brown: that provides resolution at range to accurately see and navigate around small obstacles at speed.

Even in poor conditions.

Bob Brown: We believe, while many sensors can assist a driver, only high performance light hour in conjunction with other sensors can replace the driver and power autonomy on demand or full autonomy.

We believe while many sensors can assist the driver only high performance Lidar in conjunction with other sensors can replace the driver and power autonomy on demand or full autonomy.

Bob Brown: As you can see, AI's 50 and 50 nanometer light hour gets a significant amount more resolution than 40 radars.

As you can see Ai's $50 50 nanometer Lidar gets a significant amount more resolution than 40 radar.

Bob Brown: And it also detects pedestrians, even when a high-end HD camera may not have the appropriate lighting conditions.

And it also detects pedestrians, even when our high end HD camera may not have the appropriate lighting conditions.

Bob Brown: Later in this presentation, we will also show these 4-SIDAM capabilities at industry leading range of over 500 meters.

Later in this presentation. We will also show these foresight am capabilities at industry, leading range of over 500 meters.

Bob Brown: When architecting our solution, we took some cues from human bio mimics.

When architect our solution, we took some cues from human biomimicry.

Bob Brown: We believe the quality of information is always heightened by the integration of multiple centers.

We believe the quality of information is always heightened by the integration of multiple sensors.

Bob Brown: So while we do believe LiDAR offers a unique value, our platform was designed, when appropriate, to also seamlessly integrate with onboard radars and cameras.

So while we do believe Lidar offers a unique value our platform was designed when appropriate to also seamlessly integrate with onboard radars and cameras.

Bob Brown: Later in the presentation, you will also hear how continental not only intends to sell our LiDAR technology as a standalone product, but also has recently integrated it into a system with their radar cameras and ADC units.

Later in the presentation you will also hear how continental not only intends to sell our lidar technology as a standalone product, but also has recently integrated it into our system with their radar cameras and ADC use.

Bob Brown: To demonstrate the value of our systems design and flexibility, we took a quick fly through of our office and one of our employees, sorry Joel, to illustrate the power of our architecture and how the integration of multiple data sources together creates higher quality information for autonomous decisions.

To demonstrate the value of our systems design and flexibility we took a quick fly through of our office and one of our employees sorry, Joel to illustrate the power of our architecture and how the integration of multiple data sources together creates higher quality information for autonomous decision, making.

Bob Brown: While this may look like a video, it is actually a 3D LiDAR image that has RGB data fused at the point of acquisition.

While this may look like a video it is actually a three D. Lidar image that is RGB data fused at the point of acquisition.

Bob Brown: This is the further illustrate our point that is all about information and a network of sensors that increases the quality of that information.

This is the further illustrate our point that is all about information and a network of sensors that increases the quality of that information.

Bob Brown: In this example, the LIDAR provides absolute deterministic resolution at range through its point cloud.

In this example, the Lidar provides absolute deterministic resolution at range through its point cloud.

Bob Brown: but also uses the platform to integrate color information which can be extremely helpful when navigating through environments that were designed for humans who use embedded color

It also uses the platform to integrate color information, which can be extremely helpful. When navigating two environments that were designed for humans, who use embedded color cues for example is.

Bob Brown: For example, is it a white line or a yellow line?

Is it a white line or yellow line.

Bob Brown: Let's transition to how our business model and how our partners are leveraging this platform to drive the adoption of LiDAR.

Let's transition to how our business model and how our partners are leveraging this platform to drive the adoption of Lidar.

Bob Brown: We looked at autonomy across multiple markets and realized that if information is needed to be integrated to make decisions, we should evaluate how to work with the leaders who integrate information in each market. You can see here some of our announced partners, including Intetra, Kamatsu, Hatachi, Mitsubishi, two simple and continental.

We looked at autonomy across multiple markets and realize that if information is needed to be integrated to make decisions. We should evaluate how to work with the leaders who integrate information in each market.

Can see here some of our announced partners, including in Tetra Komatsu Hitachi.

Touchy, Mitsubishi two simple and continental.

Bob Brown: Our partners are able to leverage AI's intelligence sensing platform to deliver specific applications to their customers.

Our partners are able to leverage AI is intelligent sensing platform to deliver specific applications to their customers.

Bob Brown: Why is this important? Because it shows the power of software that we can customize our sensing platform to meet the unique needs of our customers.

Why is this important because it shows the power of software that we can customize our sensing platform to meet the unique needs of our customers.

Bob Brown: Our partners have the ability to use their domain expertise to build impactful solutions fast

Our partners have the ability to use their domain expertise to build in tactful solutions faster.

Speaker Change: As an example, an industrial, Han Bin Lee, CEO of Soul Robotics, will talk to us from Korea about how his company is leveraging our foresight and product.

As an example, and industrial <unk> Li CEO of sole robotics will talk to us from Korea about how his company is leveraging our foresight and product.

Lee: He will explain how our software defined ability and high performance capabilities truly differentiate AI.

He will explain how our software defined ability and high performance capabilities truly differentiate AI.

And then.

Speaker Change: Thanks there. Hi, I am Hamden Lee, founder and CEO of Soul Robot.

Thanks, Blair, Hi, I am Huntington, Li founder and CEO of solid robotics, I'm happy to be able to tell you a little about how AI and solve robotics has developed a strong and mutually beneficial partnership.

K: I'm happy to be able to tell you a little about how AI and soil robotics have developed a strong and mutually beneficial partner.

K: We started working on LIDAR perception software in 2017, and since then, we have successfully developed and deployed N2N solutions at factories, airports, intersections, and many other

We started working on Lidar suggests softer in 2017 and.

Since then.

If successfully developed and deployed end to end solutions accessories airports intersections and many other debates.

K: Over these five years, we've gotten a chance to work with every major lighter company in the world.

Over these five years, we've gotten the chance to work with every major line of company in the World and we have never seen the fidelity of data that we're seeing from a state.

K: and we have never seen the fidelity of data that we're seeing from a

K: By optimizing performance modes and AI, software, designable, four-site architecture, we can take a customer-centric approach and change the field of view, as well as scanning behavior to always maintain very high point density or specific use

By optimizing performance in those and AI software definable foresight architecture, we can take a customer centric approach and change the field of view as well as scanning behavior to always maintain very high point density or specific use cases. This makes the data much more medium.

K: This makes the data much more meaningful in terms of perception capabilities and today we are showing something that's never been done before using a mode up to

Paul in terms of perception capabilities and today, they are showing something that's never been done before.

Using a mode optimized for high monitoring.

K: AI and solar robotics are tracking all vehicles, including small cars and large trucks up to 500 meters, enabling a paradigm shift for the world of smart infrastructure to tackle interstays all around the

And so quality are checking all vehicles, including small cars and large trucks up to 500 meters, enabling a paradigm shift for the world of smart infrastructure to tackle interstates all around the world.

K: We will be improving incident detection, optimize traffic flow, and reduce downtime, caught by lane obstruction for all municipalities. So we are very excited to pursue future opportunities together with AI. Back to you guys.

We will be improving incident detection optimize traffic flow and reduced downtime caused by lane of structure for all municipalities. So we are very excited to pursue future opportunities together with a debt.

Back to you Blair.

Speaker Change: Thanks, Hanbin. I would also like to publicly state I did not require him to wear a Boston Red Sox hat, but I do appreciate the gesture.

Thanks, Han Van I would also like to publicly state I did not require him to wear a Boston Red Sox hat.

But I do appreciate the gesture.

Speaker Change: Now let's talk about our business model with one of our customers in the highly regulated, high volume automotive ADAS and autonomous driving.

Now, let's talk about our business model with one of our customers in the highly regulated high volume automotive Adas and autonomous driving markets note again, we use the same sensing platform as we do for industrial markets, but we license it to tier one automotive suppliers, who build manufacture and distribute their.

Speaker Change: Note again, we use the same sensing platform as we do for industrial markets, but we license it to Tier 1 automotive suppliers who build, manufacture, and distribute their own products based on our architecture for their large installed base of OEM customers. This model delivers AI a high-margin licensing stream

One products based on our architecture for their large installed base of OEM customers.

This model delivers AI, a high margin licensing stream with considerable scalability.

Speaker Change: Gernius from Continental, one of the largest automotive companies in the world.

Joining us from continental.

One of the largest automotive companies in the world.

Speaker Change: who is licensing our software platform to make their own product, is my good friend, Gunar Yurgens, to give us an update on how our joint product is progressing.

Who is licensing our software platform to make their own product is my good friend Qunar Juergens to give us an update on how our joint product is progressing.

Sooner.

Gunar Yurgens: Thank you, Blair. Thank you for the opportunity to say a few words on your quality updates.

Thank you Blair. Thank you for the opportunity to say a few words on your quarterly update call.

Gunar Yurgens: Actually, the collaboration between continental and AI is really gaining momentum.

Actually the collaboration between Continental and AI is really gaining momentum.

Gunar Yurgens: We are making significant progress both on the industrialization of the product and in building the business.

We are making significant progress both on the industrialization of the product and then building the business pipeline.

Gunar Yurgens: With the history of more than 20 years and selling more than 20 million lighter sensors to the automotive market, Continental is actually uniquely positioned to anticipate the lighter needs of the market.

With a history of more than 20 years, and selling more than 20 million lidar sensors to the automotive market.

So this actually uniquely positioned to anticipate the lighter needs of the markets.

Gunar Yurgens: And what we believe is that a long range high performance lighter is really the missing piece of the puzzle to enable safe, hands-free eyes off autonomous driving, both on the highways as well as an urban scenario.

And what we believe is.

That long range high performance liner is really the missing piece of the puzzle to enable safe hands free is off the autonomous driving both on the highways as well as an urban scenarios.

Gunar Yurgens: And this technology is what we are selling together with AI both as a standalone center, as well as part of a full stack solution together with our short range lighters, radar, camera, ADCU, and software.

And this technology is what we are selling together with AI, both as a stand alone center as well as part of a full stack solution together with our short range Lidar radar camera ADC U and software.

Let me show you.

Gunar Yurgens: This is actually the product called HRL131 that we are delivering to the markets together with AL.

This is actually the product called HR around 131 that we are delivering to the market together with AI.

Gunar Yurgens: This is currently being produced as a B sample in our continental facilities. And on the business side we already engaged with numerous customer acquisition processes.

This is currently being produced as a b sample in our continental facilities on the business side, we already engaged with numerous customer acquisition processes.

Gunar Yurgens: And we have actually shown this B sample in a live demonstration in a private customer event in our facilities in Auburn Hills and Michigan two weeks ago. On the collaboration side, I must say we're very happy and it feels like it's a seamless collaboration between the teams of AI and continent.

And we have actually shown this fee simple in a live demonstration in a private customer event in our facilities in Auburn Hills, Michigan two weeks ago on the collaboration side I must say, we are very happy and it feels like it's a seamless collaboration between the teams to say I and continental.

Gunar Yurgens: Together, I feel we are progressing to our shared vision of delivering cost effective, reliable, and a safe solution both to aid us into autonomous driving.

And together I feel we are progressing to our shared vision of delivering cost effective reliable and safe solution, both to aid us in to autonomous driving.

Speaker Change: Thanks, Gunar. So let's talk about our third investment team, our differentiated technology, and how our adaptive software platform adds unique value to our partners and customers.

Thanks Qunar.

So let's talk about our third investment theme, our differentiated technology and how our adaptive software platform adds unique value to our partners and customers.

Speaker Change: I would like to start with a simple diagram and then show you three videos demonstrating some of the remarkable capabilities that have never been shown.

I would like to start with a simple diagram and then show you three videos demonstrating some of the remarkable capabilities that have never been shown before.

Speaker Change: On the left of your screen, you can see an illustration of how many traditional pass of LiDARs were there.

On the left of your screen you can see an illustration of how many traditional passive light hours work.

Speaker Change: They collect data in a fixed serial manner, which they then pass this detection data to a perception engine. It's a one-way flow of data from a sensor into an application software lake.

Collect data in a fixed serial manner, which they then passed this detection data to a perception engine. It's a one way flow of data from a sensor into an application software layer the.

Speaker Change: The idea being, collect as much raw data as possible, and turn it into information later.

The idea of being collect as much raw data as possible and turn it into information later.

Speaker Change: in high speed or complex environments, this can be a challenge.

In high speed or complex environments. This can be a challenge.

Speaker Change: On the right, you will see that we took a very different path by building a software platform on the sensor, which gives us several unique capabilities.

On the right you will see that we took a very different path by building a software platform on the sensor, which gives us several unique capabilities.

Speaker Change: The first advantage is that we can now control hardware individually using software to change the way the sensor works, depending on different environments.

So first advantage is that we can now control hardware individually using software to change the way the sensor works.

Depending on different environments <unk> use cases.

Speaker Change: Second, we've added feedback loops between our perception and application software and the sensor software platform.

Second we've added feedback loops between our perception and application software and the sensor software platform. This two way communication capability.

Speaker Change: This two-way communication capability allows the applications to ask the sensor for the information they need and ultimately enhances the quality of the information.

Allows the applications to ask the sensor for the information they need and ultimately enhances the quality of the information.

Speaker Change: Third, on the right side of the illustration, you can see how foresight M doesn't silo itself from other senses.

Third on the right side of this illustration you can see how foresight am doesn't silo itself from other sensors, we can use maps cameras radars and.

Speaker Change: We can use maps, cameras, radars, and IAMUs to trigger the LiDAR so we can be more intelligent and efficient when collecting critical information.

And I am used to trigger the lidar, so we could be more intelligent and efficient when collecting critical information.

Speaker Change: Finally, this software-defined architecture is natively compatible to enable OTA, so we can change the way the hardware works through software updates.

Finally, this software defined architecture is natively compatible to enable O. Ta. So we can change the way the hardware works through software updates, allowing our customers in the future the capability to upgrade to completely new features and functionality.

Speaker Change: allowing our customers in the future the capability to upgrade to completely new features and functionality.

Speaker Change: In this first video, I promise we would show you something remarkable.

In this first video I promised we would show you something remarkable.

Speaker Change: Our adaptive LiDAR will use multiple performance modes to allow the vehicle to be situationally aware and to adjust depending on the application, environmental conditions, or the maneuver the vehicle is trying to perform.

Our adaptive Lidar will use multiple performance modes to allow the vehicle to be situationally aware and to adjust depending on the application environmental conditions or the maneuver. The vehicle is trying to perform.

Speaker Change: I would like you to focus your attention on the icons in the middle of the screen.

I would like you to focus your attention on the icons in the middle of the screen. This will show you how the car is changing the scan patterns to support different driving scenarios when an urban mode ranges reduced as resolution has increased on the sides to detect lateral entry of pedestrians or other vehicles.

Speaker Change: This will show you how the car is changing the scan patterns to support different driving scenarios.

Speaker Change: When in urban mode, ranges reduced as resolution is increased on the sides to detect lateral entry of pedestrians or other vehicles entering your path.

During your path.

Speaker Change: During lane changing mode, it puts more resolution on the adjacent lane.

Turning lane changing mode. It puts more resolution on the adjacent lanes.

Speaker Change: Finally, as we shift into highway mode, where speed is increased, the lighter extends the range and the density on the road surface to look for small objects to potentially avoid.

Finally, as we shift into highway mode, where speed is increase the lighter extends the range and the density on the road surface to look for small objects to potentially avoid.

Speaker Change: What you see at the bottom of the screen is the traditional point cloud that a computer uses.

What you see at the bottom of the screen.

It's the traditional point clouds that a computer users.

Speaker Change: I hope this was helpful to understand how our adaptive sensing system differs from many paths of

I Hope this was helpful to understand how our adaptive sensing system differs from many passive systems, how it can provide higher quality information to allow a vehicle to interpret the world and make better decisions in.

Speaker Change: how we can provide higher quality information to allow a vehicle to interpret the world and make better decisions.

Speaker Change: In the second video, we're going to show you how adaptive light arc can capture either radial or lateral velocity, depending on its defined use

And the second video.

We're going to show you, how adaptive lidar can capture either radio or lateral velocity, depending on its defined use case.

Speaker Change: If you focus your attention on the top right of the screen, you can see how radio velocity information is used to feed a traffic flow application. The view on the left side of the screen is demonstrating how the system can modulate performance modes depending on use cases such as short range tolling versus long range traffic congestion and monitoring.

You focus your attention on the top right of the screen you can see how radio velocity information is used to feed a traffic flow application. The view on the left side of the screen is demonstrating how the system can modulate performance modes, depending on use cases, such as short range tolling versus long range traffic congestion and monitoring.

Finally at the bottom of the screen. The system provides both lighter intensity and camera data per object classification.

Speaker Change: Finally, at the bottom of the screen, the system provides both lighter intensity and camera data for object classification.

Speaker Change: In this third and final video, we demonstrate how feedback loops between the perception engine and the adaptive platform can distribute extra density on key objects.

In this third and final video, we demonstrate how feedback loops between the perception engine and the adaptive platform can distribute extra density on key objects.

Speaker Change: I would like you to focus on the crosswalk when the light is red and how the system will apply more focus to those areas to ensure pedestrian safety.

I would like you to focus on the crosswalk when the light is red and how the system will apply more focus to those areas to ensure pedestrian safety.

Speaker Change: Note, when the light is green, more density is also applied to cars passing through the intersection.

When the light is green more density is also applied to cars passing through the intersection.

Speaker Change: This demonstrates how we can improve pedestrian safety and congested urban and suburban areas. As many of you know, pedestrian deaths have grown dramatically over the past two years, given drivers dependence on passive safety.

This demonstrates how we can improve pedestrian safety and congested urban and suburban areas. As many of you know pedestrian deaths have grown dramatically over the past two years given drivers dependence on passive safety systems.

Speaker Change: Now let's move on from technology to finances. I am going to hand it over to our CFO Bob Brown, and then I will come back to wrap up our presentation with an update on some of our governance and cultural initiatives.

Now, let's move on from technology to finances, I'm going to hand, it over to our CFO , Bob Brown, and then I will come back to wrap up our presentation with an update on some of our governance and cultural initiatives.

Bob.

Bob Brown: Thanks, Blair, and good afternoon, everyone. As Blair mentioned, 2021 was an exciting year for our team. We achieved several significant milestones both in the fourth quarter and over the full year.

Thanks, Blair and good afternoon, everyone. As Blair mentioned 2021 was an exciting year for our team.

We achieved several significant milestones both in the fourth quarter and over the full year.

Bob Brown: I want to echo the feeling of encouragement with the progress we made during the year, both from an operations and execution stamp.

I want to echo the feeling of encouragement with the progress we made during the year, both from an operations and execution standpoint.

Bob Brown: We successfully completed the process of becoming a public company in August by listing on NASDAQ as LIDR and raising over $200 million net of fees.

We successfully completed the process of becoming a public company in August by listing on NASDAQ is L. I D R and raising over $200 million net of fees.

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

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

Bob Brown: In addition, we announced a $125 million common stock purchase agreement in December providing us with access to additional liquidity.

In addition, we announced a $125 million common stock purchase agreement in December providing us with access to additional liquidity.

Bob Brown: Turning to our products, prior to our IPO, we established a goal to clearly and measurably demonstrate the performance advantages of AI's LIDAR technology in 2021. I'm pleased to share that we successfully achieved that target and established LIDAR performance standards for range, speed and resolution in third party test.

Turning to our products prior to our IPO, we established a goal to clearly and measurably demonstrate the performance advantages of AI is lidar technology in 2021.

I am pleased to share that we successfully achieved that target and established lidar performance standards for range speed and resolution and third party tests.

Bob Brown: Importantly, we also validated our superior weather performance.

Importantly, we also validated our superior weather performance.

Bob Brown: We received initial automotive bee samples from the continental line and remain on schedule for start of production in 2024.

We received initial automotive be samples from the Continental line and remain on schedule for startup production in 2024.

Bob Brown: Meanwhile, we began initial production of our Foresight-M LiDAR sensor at Sanmina, our contract manufacturing partner. The Foresight-M will be sold in...

Meanwhile, we began initial production of our foresight am lidar sensor at Sanmina, our contract manufacturing partner.

Foresight and will be sold into industrial markets.

Bob Brown: In the area of customers and partners, we demonstrated strong commercial traction with leading players in the market.

In the area of customers and partners, we demonstrated strong commercial traction with leading players in the market.

Bob Brown: We're pleased to have developed important relationships with key ecosystem players, including with continental innate as two simple and trucking, Nvidia in mobility, Kamatsu in construction, Hitachi in rail, and Mitsubishi, Akana Light, Intetra, and Soul Robotics, all in support of our recent ITS launch.

We're pleased to have developed important relationships with key ecosystem players, including with continental in Adas, two simple and trucking Nvidia in mobility, Komatsu and construction Hitachi in rail and Mitsubishi are kind of light in Tetra and sole robotics all in support of our recent <unk>.

S launch.

Bob Brown: With respect to governance, our goal was to establish a strong board of directors to represent our shareholders.

With respect to governance, our goal was to establish a strong board of directors to represent our shareholders.

Bob Brown: Each of the individuals that were recently elected to our board contribute significant knowledge and industry expertise that will allow us to drive future shareholder value.

Each of the individuals that were recently elected to our board contribute significant knowledge and industry expertise that will allow us to drive future shareholder value.

Bob Brown: During 2021, a key focus for our management team was to scale the company.

During 2021 key focus for our management team was to scale the company.

Bob Brown: We succeeded in those efforts and doubled our employee base, and we expanded internationally in Germany, Japan, and South Korea.

We succeeded in those efforts and doubled our employee base, and we expanded internationally and Germany, Japan and South Korea.

Bob Brown: Finally, we had a strong year in innovation, including reaching a milestone of over 100 total patents filed.

Finally, we had a strong year of innovation, including reaching a milestone of over 100 total patents filed.

Bob Brown: Now let me turn to our financial performance during 2021. Revenue for the fourth quarter of $1.8 million was up by over 1320% compared to the third quarter of 2021.

Now, let me turn to our financial performance during 2021.

Revenue for the fourth quarter of $1 $8 million was up by over 320% compared to the third quarter of 2021.

Revenue for the full year of $3 million was up 90% compared to the prior year.

The growth in revenue for the quarter and full year was driven by higher prototype sales and an increase in revenue from development contracts.

Bob Brown: Now turning to more information on the fourth quarter, net loss was $25 million on a gap basis and gap EPS was a loss of 16 cents.

Now turning to more information on the fourth quarter net loss was $25 million on a GAAP basis, and GAAP EPS was a loss of <unk> 16.

Bob Brown: The loss for the quarter was driven by operating expenses of $23 million on a gap.

The loss for the quarter was driven by operating expenses of $23 million on a GAAP basis.

Bob Brown: Operating expenses increased from $17 million on a gap basis in the prior quarter due to increases in headcount as we scale our business, a full quarter of public company costs, and a bonus accrual for 2021 that was approved in the fourth quarter.

Operating expenses increased from $17 million on a GAAP basis in the prior quarter due to increases in head count as we scale our business a full quarter of public company costs.

The bonus accrual for 2021 that was approved in the fourth quarter.

Bob Brown: We continue to invest in advancing our disruptive technology and building out our team to support the growth opportunities that we see in front of us.

We continue to invest in advancing our disruptive technology and building out our team to support the growth opportunities that we see in front of us.

Bob Brown: Net loss for the fourth quarter was $20 million on a non-gap basis and non-gap EPS was a loss of 13 cents.

Net loss for the fourth quarter was $20 million on a non-GAAP basis, and non-GAAP EPS was a loss of <unk> 13.

Bob Brown: We had access to total cash and available liquidity of $289 million at year end, 2021, which includes $164 million cash, cash equivalence and marketable securities on our balance sheet and access to up to $125 million of cash through the common stock purchase agreement that we announced in December .

We had access to total cash and available liquidity of $289 million at year end 2021, which includes $164 million of cash cash equivalents and marketable securities on our balance sheet and access to up to $125 million of cash through the common stock.

<unk> agreement that we announced in December .

Bob Brown: Looking at the full year in more detail, we generated revenue of $3 million during 2021 up 90% compared to $1.6 million in fiscal 2020.

Looking at the full year in more detail, we generated revenue of $3 million during 2021 up 90% compared to $1 $6 million in fiscal 2020.

Bob Brown: Net loss for 2021 was $65 million on a GAAP basis and GAAP EPS was a loss of $0.60.

Net loss for 2021 was $65 million on a GAAP basis, and GAAP EPS was a loss of <unk> 60.

Bob Brown: Net loss for 2021 was $54 million on a non-gap basis, and non-gap EPS was a loss of $0.49. Now, let me discuss.

Net loss for 2021 was $54 million on a non-GAAP basis, and non-GAAP EPS was a loss of 49.

Now, let me discuss our guidance for 2022.

Bob Brown: We're targeting a revenue range of $4 million to $6 million this year.

We are targeting a revenue range of 4 million to $6 million. This year, we expect revenue growth to come from development contract revenue primarily related to our automotive business and product sales in our industrial business. Following the production ramp of our fore sight M Lidar starting mid year.

Bob Brown: We expect revenue growth to come from development contract revenue primarily related to our automotive business and product sales in our industrial business following the production ramp of our foresight and light our starting mid year.

Bob Brown: We expect that revenue in the first half of 2022 will be lighter prior to that mid-year production ramp, so the majority of our 2022 revenue is targeted for the second half of the year.

We expect that revenue in the first half of 2022 will be lighter prior to that mid year production ramp. So the majority of our 2022 revenue is targeted for the second half of the year.

Bob Brown: non-GAAP net loss for 2022, which excludes stock-based compensation expense, is expected to be approximately $100 million.

non-GAAP net loss for 2022, which excludes stock based compensation expense is expected to be approximately $100 million.

Bob Brown: This reflects the expansion of our high caliber team and investments to support the growth opportunities driven by our foresight intelligence sensing platform.

This reflects the expansion of our high caliber team and investments to support the growth opportunities driven by our foresight intelligence sensing platform.

Bob Brown: Our licensing model in the automotive market and contract manufacturing relationships in the industrial market helps us minimize capital expenditure.

Our licensee model in the automotive market and contract manufacturing relationships in the industrial market helps us minimize capital expenditures as a result, we're expecting capex to be in the range of $3 million to $4 million for 2022.

Bob Brown: As a result, we're expecting CapEx to be in the range of $3 million to $4 million for 2022.

Bob Brown: I'm pleased with our team's performance during 2021. We executed well against our strategic milestones, and we look forward to sharing further progress against our financial, commercial, and technical objectives in the coming quarter.

I am pleased with our team's performance during 2021, we executed well against our strategic milestones and we look forward to sharing further progress against our financial commercial and technical objectives in the coming quarters.

Bob Brown: With that, I'll pass it back to Blair to wrap things up before we open the line for questions.

With that I'll pass it back to Blair to wrap things up before we open the line for questions.

Blair: Thanks, Bob. I'd like to touch briefly on our people and culture, two things that feed AI success as a company. We've previously discussed the depth and breadth of our management team and board. And we continue to add world-class governance, bringing on industry leaders with deep experience and success building and managing publicly traded companies.

Thanks, Bob I'd like to touch briefly on our people and culture to things that feed AI success as a company. We've previously discussed the depth and breadth of our management team and board and we continue to add world class governance, bringing on industry leaders with deep experience and success building.

And managing publicly traded companies.

Blair: The latest addition to our board is former Apple Global Marketing Executive, Susai.

The latest addition to our board as former Apple Global marketing Executive Sous Eichmann.

Blair: Sue has led global marketing and communications for some of the world's best-known technology and consumer brands.

Suez led global marketing and communications for some of the world's best known technology and consumer brands.

Blair: She has been working with us on our advisory board for the last year and I'd like to welcome her onto AI's board of directors.

She has been working with us on our advisory board for the last year and I'd like to welcome her onto <unk> Board of directors.

Blair: In addition to investing in our people, we are deeply committed to impacting our local and global community for good. With the devastation happening in Ukraine, we felt compelled to act.

In addition to investing in our people we are deeply committed to impacting our local and global community for good with.

With the devastation happening in Ukraine, we felt compelled to act.

Blair: Many people are not aware that there are over 2,000 high school college and graduate students in the United States today from Ukraine who may not have a place to return over summer

Many people are not aware that there are over 2000 High School College and graduate students in the United States today from Ukraine, who may not have a place to return over summer break.

Blair: AI's management team and employees are committed to making a difference by creating internships for these students.

Hey, guys management team and employees are committed to making a difference by creating internships for these students.

We are announcing today that we have launched a formal internship program and partner with UC, Berkeley to provide two students with summer internships, one in business and the other in engineering to ensure their continued education and financial stability, while they are unable to return home.

We will also be challenging other companies to follow our lead and make a difference and students' lives.

In addition, many are not aware as the security level threats have risen in the world today. Many of our special operators had been deployed in both support and defensive positions around the world.

This impacts not only the brave men and women, who serve but also their families who will be without apparent while they are deployed.

Our employees have made a commitment to support the Navy seals and the seal Kids organization, who provide tutoring after school sports activities in emergency medical expenses.

We are proud of our people and culture and as I transition to talking about 2022 objectives.

I would be remiss not to mention the recent recognition we have received for our leadership and innovation by our peers customers and industry analysts in 2022, we've already been recognized by two of the most prestigious organizations the consumer electronics show CES and by fast company <unk>.

<unk> for producing innovative products that will change the world.

I would like to personally thank our employees for their hard work and dedication and congratulate them on this recognition.

In conclusion I want to leave you with a preview of AI focus for 2022.

We will be in addition, giving specific updates on these themes in each of our quarterly earnings calls.

2022 for AI is all about execution into market.

As you have seen with our preview of the fore sight product.

We are completing commercialization of our products for both industrial and automotive segments based on our revolutionary shared architecture in.

In addition, we will be transitioning the production of our fore sight am industrial product to our contract manufacturer Sanmina.

Transferring production of Continental's HR L $1 31 for automotive to their world class manufacturing facility in Germany.

As we launch our newest foresight M products. This year, we also intend to announce our roadmap for our first set of lower price product extensions.

We will also be expanding and accelerating partnerships pilots and programs throughout the year.

As always we intend to perform against our financial targets and continue to invest in our people and in creating a team oriented and winning culture.

Thank you for investing your time today now, let's open it up for questions operator.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

You're using a speakerphone please pick up your handset before pressing the keys.

Good evening, Dan. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble the roster.

Our first question comes from Joseph Osha with Guggenheim Partners. Please go ahead.

Hello. This is actually Hilary on for Joe and I, just wanted to first touch on the mobility and industrial side of the business and we are obviously feeling.

Quite a few exciting announcements there and it was really great to hear from Don Robotics. This evening.

And then if you could provide any comments in regards to conversations youre, having with other players in those markets, perhaps highlight any areas that particular area of interest.

And any guidance in terms of when we might see additional announcements there.

Sure in the industrial and mobility markets you can see from our highlight of harm Ben that the Ics market has picked up in the U S and actually and actually globally.

<unk> cities in Ics applications. In fact, there is a tremendous a record breaking amount of funding actually in the next federal budget the impact of the transportation Bill. So that's one area. We see that's moving very very quickly. Another is trucking where the highway based hub to hub applications.

Our ROI driven.

They're actually accelerating and in time and speed.

Third is an aerospace and defense.

We're now a lot of these technologies that came from.

<unk> aerospace are actually coming back and they are extremely excited to have a commercial off the shelf product that they can buy that they can also adapt and expand on given that the center is actually a platform for <unk>.

Software programs. So those are those are the big areas that we have been doing pilots beyond that but I'd say, that's our emphasis for this year.

Okay great.

Secondly, I just wanted to touch on the equity financing that you got.

And just wondering if you can kind of share strategically how youre thinking about drawing that down and therefore see it kind of evenly.

Given me over the next couple of years.

Or perhaps do you kind of get a cash number and that's it for me. Thank you.

Yes, Hi, Hilary it's Bob.

So as we mentioned in the prepared remarks, we've got about $289 million of total liquidity at 12 31. So that includes about $164 million of cash and marketable securities and then access to $125 million.

As you noted through the common stock purchase agreement, we announced in December .

So we feel like we've got a very strong partner.

That facility was tombstone, which is the counterparty there.

And we have a strategy for accessing that facility at the appropriate time, we don't have specifics that we want to lay out in terms of timing today, but we do have three years to use that facility and we feel comfortable that we'll be able to access when and if we decide to do so.

Great. Thank you.

Our next question comes from Suzy Desilva Roth capital. Please go ahead.

Hi, Blair Hi, Bob Congrats on the progress here, so I wanted to get a sense on the automotive with continental the Beast sample I appreciate having speaker on the call whether that be simple as is customer specific or its continental still and then example, if that comes next goes to more customer specific.

Grams, and what the timing of the transition towards that versus the current visa.

Sure. Thank you Susie.

Actually a great question and it goes to the heart of our business model with tier ones the.

The product the technology that they have a license as you know the foresight.

Platform software platform and hardware designs.

Our specifically.

Combined to be one product for continental so that it can run it on a high volume line for multiple customers to actually drive down both the component cost and manufacturing cost. So they have the capability using the platform to both integrated after the fact, which they've already done with <unk>.

Custom system.

Configurations, like radar and camera and ADC use they also have the capability to open up the software and to make custom.

Adjustments for the Oems, specifically, so what we heard from them is.

Look we want to we want one system, but we need to open the system up so that the hardware manufacturing can be done on one line and with your software definable hardware components. We can go back in after the fact customer by customer and tweak how we want either the hardware to perform or what features are.

<unk>, we want to.

Two actually.

After the fact.

Does that does that answer your question yes.

Yes. It gives me some color insight.

Insight in there. Thank you and then perhaps for Bob on the revenue guidance just to help understand are there production non auto units in the second half is it prototype units versus the NRA any any color on kind of one click down somewhat you gave would be helpful.

Yeah, you bet as we mentioned in the prepared remarks, we're expecting to really get into more of the volume production in midyear with the foresight M, which is targeted at the industrial side of it so.

So we think the development contract revenue will probably be third and maybe a half of the revenue in 2022, and then the rest will be foresight and products that we'd be selling so that's how we're thinking about it right now in terms of the balance between those two.

And so there was a very subtle.

In the presentation.

So the fact that we made.

Very big strategic decision and that was to actually drive the convergence of the industrial platform and the automotive platform faster to actually reduce cost a year and a half faster than we thought we could and what I mean by that is in our original plans we were going to come.

Out with a product from Sanmina com.

Continental was going to come out of a product on there.

Manufacturing line and then we're going to emerge the best of breed from both those products into the hardware design in.

In the next cycle, what we found in working with Continental was that we could accelerate.

Some of the things that we're doing together and actually integrate them into our industrial products, increasing performance and reducing costs because now we're sharing the exact same components supply chains. So for us it did push us back.

On timing about when we get that industrial product out.

We lose a quarter or so but we.

So before we accelerate our cost reduction capabilities by over a year and a half and what we're finding in the marketplace. Today is that the original plan of driving down hardware costs to increase adoption.

<unk> has pushed out even faster than we thought it would you can see it in many of the presentations from our peers.

Ed.

Average ASC is coming down.

Okay I appreciate all the color Blair well thanks, guys.

Thanks, Susie Thanks Susie.

Yes.

Our next question comes from Hans Chung with D. A Davidson. Please go ahead.

Hi, Blaine Bob.

Bob Thank you for taking my question so.

I have a.

A follow up question on the industrial and mobility side of business. So.

I just wanted to know is there any potential risk about the.

The supply chain risk I mean, we have industry wide supply chain semi supply chain constraints right and I don't know if that could be a potential.

Risk about that.

<unk> on our fore sight product or its already embedded into our guidance or it's probably not at all.

And then and then.

And then second question I just wanted to follow up.

The last question about the effort you have down to actually bring that cost reduction.

Wanted to have a year of hits and can you elaborate more maybe from technology.

What have you you down to really a chip that's the milestone. Thank you.

You bet. So this is Bob I'll take the first part of that question then blurton can take the second part so relative to the supply chain risks in the overall geopolitical risks that we're all seeing in the world. Today, Yes, we are taking that into account as we reflect on the ramp of the foresight and production for this year. So you can.

And assume that that has been baked into our guidance. So we think very carefully about that and we've tried to err on the side of caution in this environment basically relative to the guidance that we gave.

So Blair why don't you take care of technology.

Great question so when.

Part of our plan if you've heard us.

Speak in the past, which you have and thank you for your report.

Has been.

Blair: to drive costs down in three specific areas. One is in system design. The second is in innovation and new materials through a large global supply chain. And the third is in converged architecture where we drive volumes up.

To drive costs down in three specific areas. One is in system design. The second is in innovation in new materials to a large global supply chain and the third is in converged architecture, where we drive volumes up.

Blair: by combining the same components that we use in automotive with the industrial components and therefore have bigger runs and lower prices.

By combining the same components that we use in automotive where the industrial components and therefore have bigger runs in lower prices. So the advantage we have in coming to a converged architecture earlier is that the majority of the components and both products are exactly the same are already qualified.

Blair: So the advantage we have in coming to a converged architecture earlier is that the majority of the components in both products are exactly the same are already qualified and will be functionally tested together so that the industrial markets will benefit from the higher volumes and automotive.

And we'll be functionally tested together, so that the industrial markets will benefit from the higher volumes in automotive.

Blair: And the automotive markets will benefit from the fact that there's been more customization done in the software and the other in the industrial market. So we really see.

The automotive markets will benefit from the fact that there has been more customization done into software.

And the other in the industrial market, So we really see.

Blair: We thought this would be done on a serial basis. We'd get one done, we'd get the other done, and we'd pick the best of breed. We're basically bringing the two products together. Although they're produced on different manufacturing lines, they're sourcing from the same components. Does that make sense?

We thought this would be generous serial fact, a serial basis, we'd get one done we get the other denim we pick the best of breed, we're basically bringing the two products together, although they are produced on different manufacturing lines, they're sourcing from the same components does that makes sense.

Speaker Change: Yeah, yeah, that's all that makes sense and that's helpful and one more question if I may just

Yes that totally makes sense and that's helpful and.

One more question if I may just.

Speaker Change: I think you guys have the partnership with Two Simple, and can you give more color about that or what kind of partnership, will that be the?

Okay.

You guys have the partnership with <unk> and.

Can you give more color about that or what kind of balance sheet and all that.

BD.

Speaker Change: in talking business or still in automotive business. And also recently they have a shuffle in the top management team. So that even could be a potential impact to AI business waste.

In the trucking business or still in the automotive business and and and also recently they have.

Shaffer.

Top management team, so well that event could be a potential impact to two AI business wisdom.

Speaker Change: Sure, we have two different initiatives with TuSimple. One is on the development side, which is across everything that they're doing on the base level and base architecture. The second is specifically trucking. Given that our products are high performance, long range, and can see the highest level of density, when you take a look at hub-to-hub trucking, it looks a lot like automotive highway autopilot.

Sure we have two different initiatives with two simple one is on the development side, which is across everything that they're doing on the base level and base architecture. The second is specifically trucking given that our products are.

Our high performance long range.

And could see the highest level of density when you take a look at hub to hub truck trucking. It looks a lot like automotive highway autopilot. So we're very focused with them on that application today.

Speaker Change: So we're very focused with them on that application today. I think that what too simple has said, and I believe from my experience is that they've decided to make some changes in their management team.

I think that what two simple has said.

I believe from my experience is that and they've decided to.

Make some changes and their management team, but they're on track with the exact customer base that they had before and that their production schedules and their engineering teams are have stayed intact. So we don't assume.

Speaker Change: but they're on track with the exact customer base that they had before, and that their production schedules and their engineering teams have stayed intact. So we don't assume, or we haven't seen, any changes from the customer side, the Too Simple customer side, which is we partner with Too Simple to actually provide technology for them to integrate for their OEMs.

We haven't seen any changes from the customer side. The two simple customer side, which is we partner with two simple to actually provide technology for them to integrate for their Oems.

Got it.

All I have thank you.

Speaker Change: The next question comes from John Roy with water tower research. Please go ahead.

Our next question comes from John Roy with Walker Tabori Deutsche. Please go ahead.

John Roy: Thank you. So Blair, you were talking a lot about software-driven cars and things like that, and certainly electric vehicles are definitely making a big push. Is there somehow a special connection between those two, or is it just a type of company that's doing that?

Okay. Thank you. So Blair you were talking a lot about software driven cars and things like that and certainly are electric vehicles, we are definitely making a big push.

Is there some kind of special connection between those two or is it just the type of company that's doing that.

Blair: No, it's actually a very strong connection. I mean, one of the reasons that many of the car companies in the world are moving to EV, you know, one reason is the environment. The second reason is that when you move to an EV, you limit the number of moving parts.

No. It is actually a very strong connection I mean, one of the reasons that debt.

Many of the car companies in the World are moving to EV. One reason is the environment. The second reason is that when you move to an EV you limit the number of moving parts and you allow rather than try to build intelligence from an existing system, which has many ADC use around the car.

Blair: And you allow rather than try to build intelligence from an existing system, which has many ADC use around the car to a much simpler system. One of the things that Tesla has.

To a much simpler system one of the things that Tesla has.

Blair: benefited from is being able to build top software on top of a system that was designed on top of a battery and was designed to be controlled by software. So the EV trend itself is also a software development suffered a defined car trend.

<unk> benefited from us being able to build top software on top of a system that was designed on top of a battery and was designed to be controlled by software. So the EV trend itself is also a software development suffered defined car trend.

Blair: Given that we have a software-definable sensor, what we've been finding in discussions is that we can accelerate that new set of features.

Given that we have a software definable sensor what we've been finding in discussions is that we can accelerate that new set of features by being able to apply hardware today, but over the period of car is owned to actually add new features using the same hardware using that diagram I showed you where we.

Blair: by being able to apply hardware today, but over the period a car is owned, to actually add new features using the same hardware, using that diagram I showed you where we can change the way the hardware works.

We can change the way the hardware works so I think the.

Blair: So I think the EV cycle is actually very, very correlated with how many new features you're going to actually see in your car. I remember at Autodesk, we were a software company in the CAD business. In the old days, back in the early 90s, we used to do an architectural release, which would take us 18 months, and then we do a feature release.

VEB cycle is actually.

Very very correlated with how many new features youre going to actually see in your car I remember at Autodesk.

We're a software company and.

In the cat business in.

In the old days back in the early nineties, we used to do in architectural release, which would take US 18 months and then we do it feature release, right, which would take US 18 months. So we change the architecture that we'd be able to add new features on top of it what youre seeing today.

Blair: right, which would take a 18 month. So we changed the architecture, then we'd be able to add new features on top of it. What you're seeing today, you know, 20, 30 years later, is the ability to actually do an architectural release that will enable multiple feature releases into these smart assets. That's why we actually use the term smart assets and industrial and software divinable vehicle.

30 years later is the ability to actually do an architectural released that will enable multiple feature releases into the smart assets. That's why we actually use the term smart asset and industrial and software definable vehicle at the end of the day. The analogy could be made when you took a look at your flip phone you would have to buy.

Blair: At the end of the day, the analogy could be made when you took a look at your flip phone. You'd have to buy a new flip phone before you got new features. It was beautiful. I loved it. But when you took a look at your iPhone, in between iPhone hardware upgrades, you can bring down apps anytime you want and use your phone differently. I think we're already, we've already entered that cycle. And I think it's going to be a very exciting cycle for consumers.

New flip phone before you got new features it was beautiful I loved it but when you took a look at your iPhone and between iPhone hardware upgrades you can bring down apps anytime you want and use your phone differently. I think we're already we've already entered that cycle I think it's going to be a very exciting cycle for consumer.

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Speaker Change: Yeah, as a follow-up, your team's experience in writing software for military applications, does that give you a little bit of a leg up on the competition? Because certainly,

Yeah as a follow up your team's experience in writing software for military applications that give you a little bit of a leg up on the competition because certainly.

Speaker Change: You know, the software is pretty critical to the safe operation of the vehicle. So, do you guys go through extra steps? Is there a verification process or certification? Yeah. I would say that, you know, the word software is, means many different things to many different people, which is why we kind of took that simple diagram. I would say that maybe, as my dad would say, where you have been always informs where you will go and how you define the problem defines the solution.

The software is pretty critical to the safe operation of the vehicle. So do you guys go through extra steps is there a verification process certification.

I would say that the word software is.

Yes.

Many different things to many different people, which is why we kind of took that simple diagram I would say that maybe as my dad would say.

Where you have been always informs where you will go and how you define the problem defines the solution and so the way we define the problem having worked on complex fast moving systems was that you had to actually put the complexity and the software because you never knew what the use case you were going to go.

Speaker Change: And so the way we define the problem having worked on complex fast moving systems.

Speaker Change: was that you had to actually put the complex to the end of the stop where because you never knew what the use case you were going to go after was. And as you saw in the lighter industry,

After was and as you saw in the Lidar industry.

Speaker Change: The aerospace telecom and the GIS industries are actually large spatial networks of information.

The aerospace telecom and the Gis industries are actually large spatial networks of information.

Speaker Change: It's really about aggregating, integrating, and transferring information.

It's really about aggregating integrating and transferring information and so I think the advantage that we may have and by the way there'll be a lot of different models and I'm not saying ours is the only one is we looked at making the sensor a software platform.

Speaker Change: And so I think the advantage that we may have, and by the way, there'll be a lot of different models, and I'm not saying ours is the only one, is we looked at making the sensor a software platform, i.e. in BioMimic, where you call that edge processing, you process 80% of your vision in your visual cortex, not in your executive function, right? So we focused on building that software,

I E biomimicry you'd call that edge processing, you process, 80% of your vision and your visual cortex not in your executive function right. So we focused on building that software.

Speaker Change: and then feeding information from that software into, say, perception software or application software. So, when you talk to someone about software, you have to decide, you know, which piece are you talking about?

And then feeding information from that software into say perception software or application software.

So when you talk to someone about software you have to decide which piece are you talking about signal processing embedded software our software platform, that's embedded like ours or youre talking about perception or are you talking about application all of the pieces are important our philosophy and I think what we did gain from our military experience.

Speaker Change: signal processing embedded software, a software platform that's embedded like ours.

Speaker Change: Are you talking about perception or are you talking about application?

Speaker Change: All of the pieces are important, our philosophy, and I think what we did gain from our military experience.

Speaker Change: was that if you can collect information more intelligently.

Is that if you can collect information.

More intelligently you will actually make the decisions happen faster.

Speaker Change: You will actually make the decisions happen faster and with more fidelity and I think that's the difference. I will end with saying that there will be different types of cameras radar and light ours out there.

And with more fidelity and I think thats.

The difference I will end with saying that there will be different types of cameras radar and lidar is out there.

Speaker Change: You know, our focus is on high-performance, high-value LIDAR that can both collect spatial data, but also can integrate with orthogonal data from other sensors. So we really have a point of view that we are in the information business, and that two years from now, you're going to find that the winners in this marketplace build a platform that collects information intelligently, and that's where the value is going to end up.

Our focus is on high performance high value Lidar that can both collect spatial data, but also can integrate.

And our target with our five year data from other centers. So we really have a point of view that we are in the information business and that two years from now youre going to find that the winners in this marketplace built a platform that collects information intelligently and thats, where the value is going to end up.

Great. Thanks Blair.

Speaker Change: Thanks. So Bob was very unhappy with that question because it gave me a chance to be philosophical. But thank you for everyone for jumping on today and investing your time. I know that everyone's very busy and there's also a lot of companies in our peer group. So thank you for making the investment. Thanks, everybody. Operator, that concludes the call.

Thanks, Bob.

Was very unhappy with that question because it gave me a chance to be philosophical, but thank you for.

Everyone for jumping on today and invest in your time I know that everyone's very busy and there is also a lot of companies in it.

In our peer group. So thank you for making the investment thanks, everybody operator that concludes the call.

Thanks, everybody for joining us.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.