Q2 2022 Cepton Inc Earnings Call
Good day and welcome to the second quarter 2022 stepped on ink business update and earnings conference call. All participants will be in a listen only mode should you need assistance. Please take it all conference specialist by pressing the star Keith followed by zero.
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I would now like to turn the conference over to Horseshoe Chief Financial Officer Oh. Please go ahead.
Thank you and welcome everyone to step down in second quarter of 2022 earnings call and business update with me today is Jim <unk>, our co founder and CEO and Mitch Fortini Senior Vice President of business development.
During the call we may refer to our unaudited GAAP nationals and non-GAAP measures in our earnings release.
The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.
Reconciliations for non-GAAP measures are included in our earnings release I'd like to remind everyone that comments made in this conference call May include forward looking statements regarding the company's expected operational and financial performance for future periods.
These statements are based on the company's current expectations and are subject to the safe Harbor statements relating to forward looking statements containing our earnings release and the slides that accompany this call.
Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks uncertainties or other factors, including those discussed in the earnings release or during today's call and those described in our filings with the U S. S E C.
We're not undertaking any commitment to update these statements as a result of future events, except as required by law.
As a reminder, this call is being recorded and you can find the earnings release and slides that accompany this call as well as the webcast replay of this call at investors doorstep town Dot com.
Now I would like to turn the call over to Jim.
Thank you Paul and good afternoon, everyone.
Thank you for joining us kept on second quarter earnings call. We will provide a business update and review of second quarter 2022 financial results with you.
Joining us today, it's also Mitch fortini SVP of business development, who will share updates on our exciting projects underway with automotive and the smart infrastructure customers.
I'll start off with an update on our OEM serious production execution.
We continue to run the sample shipments cocoa Ito for final Assembly calibration test and delivery to multiple vehicle manufacturing plants across multiple states in the U S.
As a reminder, the sample represents the final stage in hardware validation with production intent.
In the second quarter multiple shutdown teams visit.
Visited quito's manufacturing facility in Japan in support of production readiness.
So you know the automated production line Quito inaction was truly a significant milestone for us.
This represents our company's journey to Lidar commercialization and how close we are to achieving our goal of making <unk> available in everyday consumer vehicles.
As we recently announced.
Our expanding collaboration efforts with Koito to extend beyond our current OEM series production program.
This will cover both long range annual range Lidar products and both companies will jointly undertake go to market activities initially targeting Japanese automotive Oems.
Colorado has been a key partner in the commercialization and manufacturing of sometimes Lidar technology.
And we anticipate the extended partnership will bolster production capabilities and accelerate time to market.
This expanded partnership further demonstrates that lidar is an integral part of automotive safety and that we are well on our way to transform <unk> technological innovations into commercially viable and scalable products.
We also recently announced the selection of February not as a supplier of key sub modules for our flagship OEM serious production program.
Traveling that will also be our supplier for full turnkey lidar solutions targeting the non automotive end markets as well as select the automotive applications.
So I've kind of lost our initial production of our <unk> X 90, Lidar at February not Thailand facility back in September 20th when you want.
And we are excited to see our partnership advantaged to be ready for scale production.
Securing manufacturing capabilities and capacity remains our top priority in tight supply environment and our recent partnership activity reflects the progress towards being production ready by the end of the year.
More broadly on automotive, we expanded our office in Detroit to serve as our company's Automotives hub in North America.
This also is well accommodate the team's rapid growth and support existing active engagement with OEM customers.
Our expanding presence in Detroit deepens, our relationship with OEM customers and our field engineers are actively involved in deploying lidar as a standard automotive components for safety.
Our lidar as a unique balance of performance cost and reliability continues to drive progress was cop 10, automotive Oh, yes.
One question many followers of the Lidar market have continued to ask is when will we see light our unassailable vehicles.
While we can't provide specific names a couple of our awarded vehicle models started taking orders recently and consumer demand for those vehicles were extremely strong.
Our unique ability to create sub con lidar behind the windshield as a result of a light our small form factor and low power consumption.
Continues to be a point of differentiation separating <unk> from its competitors.
The early positive reception for these models and <unk> growing presence with Oems creates a favorable outlook for our products.
On the technology side.
We achieved the ISO 26262, <unk> certification on our first basic.
Our in house ASIC development capabilities remain as an important piece of our technology roadmap as we taped out our seven days a week towards the end of the year to drive further performance enhancements and cost reductions.
Our software development team continues to make progress on our open source software development kit and we look forward to share more exciting news in the future quarters.
As you can see <unk> has expanded its capabilities beyond light our design and development. Our Lidar solutions are designed and refined based on continuous OEM inputs, while working with our tier one partners to ensure scaled production readiness.
We expect to be one of the first to commercialize lidar technology in everyday consumer cars.
Now I'll turn it over to Mitch.
Thank you June .
On our automotive programs, we received our first firm production order from Quito for our OEM series production program.
This is a major commercial milestone on our path to production deliveries next year.
During several trips to Japan, our engineering teams implemented production software on Kudos manufacturing line in preparation for this OEM series production and completed the initial OEM site audit of Quito's manufacturing facility is June said, we remain committed and on track to being production.
Ready by the end of this year.
Additionally, we reviewed our technology roadmap with other top automotive Oems in Japan, and we received very positive feedback our efforts to reduce size focus on vehicle integration behind the windshield and ability to tailor performance to application specific needs are key.
<unk> factors for stepped on.
Recently, we hosted three top 10 Oems for technical reviews here at our San Jose headquarters to progress ongoing RFP projects consensus feedback was that <unk> has clearly been heads down executing our real automotive lidar product the past few years and we are very well.
<unk> for additional OEM programs.
I'm, a smart infrastructure side projects continue to mature beyond the proof of concept phase into lidar deployment.
To name a few examples of projects, we're working on our products are being implemented for smart tolling stations in the Midwest obstacle detection for railway applications, both domestically and abroad in China, as well as security and monitoring at domestic airports.
The smart infrastructure market is much more fragmented than automotive and we've begun to see some customers push out their deployment timelines as a result of the recent economic conditions. Despite this our products are still favored in their target applications and we're confident the long term demand remains strong.
Next I will turn it back over to haul.
Thank you Mitch.
Starting with our second quarter results total revenue for the quarter was $2 6 million up 186% year over year, and 72% sequentially and consists of $1 4 million product revenue and $1 1 million in development revenue.
The increasing revenue for the quarter was driven primarily by development revenue as we achieved incremental milestones on outstanding projects.
Our gross profit was slightly negative for the quarter, primarily driven by the effects of supply chain shortages and a mix shift between automotive and smart infrastructure revenue, resulting in a lower overall asps.
Excluding the supply chain effects of gross profit would have been positive.
Yeah.
GAAP net income was 0.8 million or <unk> <unk> per share basic and diluted non-GAAP net loss was $14 5 million or <unk> <unk> per share basic and diluted.
Weighted average basic shares outstanding for the first quarter was $154 1 million and $161 8 million shares on a diluted basis.
non-GAAP adjustments include a $15 6 million gain on re measurement of earn out shares of liability.
Stock based compensation of $2 2 million and a $1 9 billion gain on remeasurement of our warrant liabilities.
Adjusted EBITDA was negative $13 7 million.
As of June 32022, we had available liquidity of approximately $146 million.
Total available liquidity consists of approximately $31 million in cash and short term investments.
$15 million remaining on the Trinity lung facility and a commitment to purchase up to $100 million in equity from Lincoln Park capital.
Turning to full year guidance, we are revising our revenue guidance for full year 2022 to between seven and $9 million.
Most of the decline is driven by smart infrastructure projects being pushed out.
And our desire to focus on automotive program execution, instead of incurring substantial cost overrun in order to meet smart infrastructure demands.
In automotive we remain on track as we continue to focus on OEM series production execution and winning additional programs.
On the operating cost side, we continue to expect our full year operating expenses to be between 55 million and $65 million.
Our focus remains on executing the programs in front of us in automotive we continue to ship production samples and support other ongoing programs for the remainder of the year.
Based on initial production orders. We've received we expect our next year's unit volume contribution from automotive to more than double this just total volume.
Now I'd like to open up the call for questions.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys they've.
They've had anytime you question Thats been addressed and you would like to withdraw your question. Please press Star then two in the interest of time. Please limit yourself to one question and one follow up at this time, we will pause momentarily to assemble our roster.
And our first question will come from Joseph Spak with RBC capital markets. Please go ahead.
Thanks, so much.
A couple of questions here.
First.
I think previously you know you mentioned you you thought there was an expectation that you'd be gross margin positive in the back half given some of the shifts you just talked about what's what's sort of the current outlook here for the rest of the year.
For the year, we are still expecting a positive gross margin.
Although not hugely positive but.
Mid single digit range.
Okay.
And then.
I was wondering if you could help us out with with some units and Asps because you've mentioned a couple of things here.
One you mentioned that the mix between auto and infrastructure sort of weighed on it. So it would be helpful to tap some sort of context there in terms of how many units maybe between each of those two.
End markets and then you went on to say you know 23 auto more than two X totaled 22, but.
I think having a.
Now a some sort of base to help ground beef ground people would be helpful.
Yeah first question is Oh I S. P. So we generally have slightly lower asps on automotive and smart infra can think of it as you know automotive.
In the near term being maybe two third of E. S. P of smart in front.
And second question was automotive volume for next year, we're not providing obviously a full year guidance for next year by us some color on you know based on the production order. So we do expect our unit volume from automotive.
For next year to more than double this year as total volume.
Right can you just can you tell us how many total units you shipped in this quarter alone.
Total units shipped in the quarter.
We're about a four.
400.
Okay.
Maybe one last one if I could.
You mentioned a couple of.
Talks with with customers and it sounds encouraging.
If if you.
Could you know obviously you know the first.
G M Ultra cruise vehicles was sort of a big win and any progress on commercial talks with a with a sort of a second wave of ultra cruise and and you know sort of confidence in being sole source for such a program.
Yeah.
Yeah definitely Joe this is Mitch <unk> I can take that one.
Yes were still there.
Still very much engaged with GM is our lead OEM customer.
You know the discussions are all.
Have a positive trend to them extension of the duration additional models additional applications for Lidar, we can't get into specifics here, but it's all in the positive direction.
I'll just say.
Other Oems are progressing just as we have expected despite the macroeconomic environment.
We're traditionally working with top 10 global Oems here in North America and Japan.
Their strategies are still very much intact. So the progress has been really good with the top 10 Oems.
And specifically with GM.
Thank you.
Yeah.
Our next question will come from Matthew <unk> with Maxim Group. Please go ahead.
Hi, good afternoon, and thank you for taking my questions.
Maybe if we could.
Go into the.
And the delays in smart infra.
Is there any flavor to the types of projects that are getting pushed out.
Or any.
Differences between regions, where you're seeing delays or is it pretty broad based.
And I guess, what gives you confidence that you will.
Continue to have that business.
It comes back.
Yeah. Thanks, Matt This is Mitch <unk> again, I'll take that one too. So I did mention a few specific applications domestic airports here in the U S. So.
We're finding that while our solution is favored there.
There's more of more time being spent in the POC phase and the actual deployment afterwards is taking a bit longer.
Similarly, another application is electronic tolling stations in different states here in the U S starting out in the Midwest.
But theres additional states coming online.
Anytime you're dealing with.
A government entity or the large infrastructure like airports.
Projects can take a bit longer.
But we do say that.
The end demand remains the same we're still positive on the end demand.
But you know from POC to mass deployment is taking a bit longer than what we expected.
Got it thanks, and I mean.
Is there.
Is there visibility I know you said, it's pretty opaque.
But.
<unk>.
No.
Are there any factors or do you have any visibility at all as to when that might move into 2023 event or is it something that could get pushed out multiple years.
I don't think it's a multiple year pushout.
It's a bit difficult to predict the phases of the deployment.
We have good visibility in the application all the way down to what they are using our lidar for and the tooling stations airports. These these applications. We know how many they are using per site.
It's just predicting the phases of that rollout again, youre going across multiple states youre going across multiple airports that have different strategies themselves. So.
It's more around the order of quarters versus versus years.
Got it thank you I'll jump back in the queue.
Our next question will come from Richard Shannon with Craig Hallum. Please go ahead.
Hi, guys. Thanks for taking my questions also apologize I've I've had a spotty cell reception here. So I've missed out on some blocks of comments here, but I guess the first question I had was regarding the guidance for the year.
Down to the $7 million to $9 million range here.
If I understood correctly, a lot of it or most of that's coming from smart infrastructure wizardry impact from automotive in that in any way.
Hey, Richard.
Thanks for the question.
So youre right that most of the decline is from spot in front, we're not seeing any significant impact on automotive.
Okay. Unfortunately, they just went out and half of your answer there. So I didn't I didn't catch that I don't know how to fix this so I apologize I'll ask another question and probably get a line of transcription over here, but no worries. There just said there there is no significant impact from automotive primarily from Arden front.
Okay, I didnt catch all that thanks, Tom.
My second question here is on the comments I think this is part of the one of the earlier questions regarding your comment about next year in automotive.
Volumes doubling I haven't seen that means.
Basis wondering if you can kind of characterize what you what you mean, what you mean, there I guess I would expect.
And early stage ramp here to be able to do well more than double so I wonder if you could give us any context or is there any upside.
Any sort of limit that you could see next year like tripling or some way you could characterize that please sure sure.
So that comment is primarily based on the initial production order that we received from from Colorado that there is definitely upside.
To that and as you know in automotive, we have a little bit longer visibility.
And then we do in smart and fraud.
And probably have maybe around a couple of quarters in automotive will have a little bit longer.
Okay.
Okay.
Fair enough then.
And then just in terms of of cash burn here in the second half of the year hold what should we expect your I'd, probably not able to do the math real quick on your revenue and Opex numbers.
For the second half can you just give us a sense of what you're expecting there. Please.
Sure our total opex for the year remains anywhere between 55% to 65 million for the year and for no gross profit over the over a year is essentially.
Roughly zero all right. So there's not a lot of growth gross profit contribution to profitability.
So you know we were done with half a year. So the second half, it's essentially half of Opex.
Got it okay.
Alright, that's all for me then thank you.
Again, if you have a question. Please press Star then one our next question will come from Gus Richard with Northland. Please go ahead.
Yes, thanks for taking my question.
Just you mentioned early in the call that you were shipping decent apples to multiple Oems. So I was just wondering if you could give.
How many and potentially how many programs that might address.
Yes, just to clarify we said multiple OEM vehicle factories.
Across all states, yes, so it's all the same OEM.
Okay got it got it and then.
You also.
Moving some production over to fiber net and will serve as some of your markets is that mostly.
Infrastructure and you mentioned some.
Vehicle types of applications I was just wondering if you could provide any color into.
What's going on there.
Yes, just so fan Burnett will supply our key sub module as part of our automotive OEM program, so supplying that to koito.
Quito remains the tier one for the OEM.
But in addition to that work stream. We're also working with Fabry net on other applications, including smart infrastructure customers and potentially other automotive applications outside of the initial OEM series production win.
And I'll just add that point those other applications fabric that we'll be doing a full turnkey.
Units as opposed to supplying us not module.
Okay, and the other auto motive applications I'm, assuming those wouldn't be a mainstream.
Type of program, but something more unique like autonomous golf cart or something.
That's a safe assumption for today.
Got it alright, that's it for me thank you.
Yes.
This concludes our question and answer session I would like to turn the conference back over to Jim Payne for any closing remarks.
Okay. Thanks, everyone for spending time with us today as you have heard.
From a ramping up these on both sides to a production line readiness that koito, we're getting closer and closer to having light hours into everyday vehicles, and sometimes it's going to be a big part of it and we're certainly excited and looking forward to giving you guys more updates in the coming quarters. Thank you very much.
Yeah.
The conference has now concluded. Thank you for attending today's presentation, you may now disk.