Cepton Inc. Q1 2023 Earnings Call
Skull and business update at this time all lies are in a listen only mode. Following the presentation, we will conduct a question and answer session.
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I'd like to turn the conference over to haul shoe Chief Financial Officer. Please.
Please go ahead.
Thank you and welcome to the first quarter of 2023 earnings call and business update with me today aren't you and pay co founder and Chief Executive Officer.
<unk> senior Vice President of business development.
During the call we may refer to our unaudited gap and now I've got measures and 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.
Gap.
Reconciliation for non-GAAP measures are included in our earnings release, I would like to remind everyone that comment made in this conference call May include forward looking statements regarding the company is expected operational and financial performance.
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These statements are based on the company's current expectation and are subject to.
Safe Harbor statements relating to forward looking statements contained in our earnings release and 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.
Was discussed in the earnings release or during today's call and goes described in filings with the U S. S E C.
We are not undertaking any commitments to update these statements as a result of future events, except as required by law.
As a quick reminder, this call is being recorded and you can find the earnings release.
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<unk> that accompany this call as well as a webcast replay for this call at <unk> Dot com.
No I'd like to turn up call over to Karen.
Thank you <unk> and good afternoon, everyone.
Thank you for joining <unk> first quarter of 2023 earnings call.
We will provide a business update and review our first quarter financial results with you.
I will start with an update on our series production execution.
On the product site, we continued to ship pre production units to call you told throughout the quarter.
While the exact date of vehicle production launch is for the OEM to decide or Lidar remains on track to receive final validation from our OEM customer for production in saleable vehicles.
Our products are being evaluated across multiple vehicle models under our existing production award.
As a result of our continued performance at our OEM customer and the versatility of our flagship Vista X 90 light our product out for vehicle integration, we expect to receive additional vehicle models in the next couple of months to expand the coverage of our existing series production Award.
Very encouraged by the commitment to our technology from our customer.
Reflective of our efforts and dedication to enabling light ours is a critical component of automotive safety.
In addition to hardware are embedded software allows us to meet the strangest automotive OEM requirement such as cyber security over the air updates.
And functional safety.
It also allows us to deliver additional custom features we delivered for our customers.
Customers. These.
These capabilities well developed by our in House software teams and is a tremendous value at four hour OEM customers.
Software is subject to the same standard as hardware and our customer has some of the highest of standards in the industry. When it comes to the reliability and safe operation of their vehicles.
We believe having the ability to deliver a combine the hardware and software solution to our customer under a series production environment positions us beyond a simple light or hardware provider it actually positions us as a total of light our solution provider and as a leader in driving market adoption to it.
Enable lidar for everyday vehicles.
As our products and you are the final stages towards the production validation. We're also working on increasing production capacity at our contract manufacturers and tier one partner facilities.
We have mentioned in previous quarters that we work closely with our tier one partner koito to enable the future skills full production of our light our product.
Or continue the efforts in skating production include the securing Walmart cereals at scale and implementing production processes in both hardware and software.
Sure, we can deliver consistent quality at volume.
For example in this past quarter, we were able to increase the throughput by five times one of the critical manufacturing steps and we feel confident in meeting production milestones as we move towards S. O P.
Following the announcement of our visa X 120, plus product earlier this year FCS, we unveil with the Vista X 90, plus this quarter.
X 90, plus carries over the same slim form factor improvements to our current X Nike.
The product that is launching with our lead OEM program.
These improvements enhance our advantages in vehicle integration place to behind the windshield and unlocks the placement in other areas of the vehicles, such as the headlines and facia.
R X 90 product is a direct result of working closely with our deed OEM customer to drive light or adoption across the majority of the OEM customers feet.
<unk> is the first and only known light our company to launch a high performance Lidar in passenger vehicles behind the windshield.
It is not a trivial task and increase a huge competitive mode for the distant future.
Our new X 90, plus will also feature our recently announced the coin cloud processor 86, the Komodo.
Develop the in house.
This new <unk> is designed to improve our coin cloud quality reduce power consumption and at the same time replace FPGA and other merchants silicon devices to drive cost savings.
In the years ahead, where production volume is high and unkind delivery is key we are reducing reliance on the semiconductor supply chain with our own <unk> solutions.
In addition, we expect to continue extending the technology either ship with all proprietary chipset.
The accomplishments we have made to start off the year highlights our continued commitment and dedication to be a lidar market leader.
As our products mature, we continue to make improvements in bed as software and innovate at the chip level two solid by our technology leadership.
Transitioning from product development face to the production face stresses the importance of maintaining step-down standard quality at the volume demanded by our customers.
There are distinct challenges in maintaining the same level of precision and reliability and every light our unit when the volume skills to tens and hundreds of thousands.
Our investment towards production readiness will prove to be the key areas of differentiation in both the time and cost.
With that I'll turn it over to MS for an update on our customer progressive.
Thank you June I'm happy to announce we recently hired a new director of customer program Luis Kanthal, two joined US from General Motors.
He brings over a decade of automotive experience from global Oems, such as G M and Honda and Luis will support our Detroit Oh, you haven't programs.
Is June indicated our existing lead Oem's curious production program is expected to expand in the coming quarter by at least three additional vehicle model.
This is the result of joint collaboration efforts between Sept done Toledo, and general Motors and product maturity customized software development and vehicle integration.
Beyond our current OEM business, we received an R. F Q in the past quarter that we believe to be the top automotive OEM opportunity in terms of program volume this year.
Step down already has a rich history with this automotive Oh, yeah, and as such was selected to respond to this R. A Q directly as a tier one technology supplier.
This is a recognition of our maturity as a lidar company and Leverages all of the collaboration history with Koito manufacturing.
More importantly, the decision to have stepped on respond directly as a tier one technology supplier is made by the OEM in this case and is not a self proclaimed aspiration to become a tier one we.
We believe this is how the light our industry will continue to evolve building trust winning series production programs executing and launching in allowing the OEM to help guide final supply chain for the future.
In addition to this opportunity as a result of general Motors recent sensor suite announcement for their ultra cruise program, where <unk> place behind the windshield exec.
Executives from a global top three European OEM visited our headquarters last month.
We are now in an advanced RFID fades for their future passenger vehicles.
We look forward to sharing more information with you in the coming calls.
To near range Lidar products left.
<unk> is one of very few light our companies with an automotive grade near range Lidar product that has a very large vertical field of view suitable for trucking applications.
Over the past quarter, we have made strong progress with multiple top trucking OEM customers we.
We have progressed to the RFU faith with a global top three trucking OEM or are near range lied our product called Nova.
Lastly, a word on the smart infrastructure segment, we started shipping unit to our tolling customer fulfilling the multi million dollar contract announced at the end of last year.
While our normal product is suitable for trucking applications. It's also an ideal product for smart industrial applications, and we continue to ship or Nova sensors to support autonomous Brown vehicle use cases.
Now I'll turn the call back over to Hall.
Thank you Mitch.
Being with our first quarter results total revenue for the quarter was $1.5 million same as the prior year period, and a slight decrease compared to our previous quarter.
Product revenue was 1.2 million, a slight decrease compared to the prior year period, but 827% increase compared to our previous quarter.
We also have development revenue of zero point $2 million based on the timing of completion of a second projects.
While we are still early achieving volume production.
Automotive programs, we have shipped a record number of light or units per quarter, and a record number of light or units for automotive customers.
We expect this trying to continue as we rent production to fulfil purchase orders for Rd series production program.
Gross margin with native 5% for the quarter, primarily driven by revenue mix shift between automotive and smart infrastructure.
As our sales volume shifts towards pre production units and later production units for automotive where I S. P is slightly lower than that of modern infrastructure, we expect.
Margin to experience some pressure in a short term until component volume pricing kicked in and fixed cost leverage can be realized as a result of increased volume.
<unk> on the spot infrastructure side is expected to remain at similar levels as that of last year and development projects typically have higher margins, which should help with overall gross margin for a year.
First quarter GAAP net loss was $14.7 million or nine cents per share basic and deluded.
non-GAAP net loss was $11.4 million or 70 per share basic ambiguity.
First quarter non-GAAP , adjusted EBITDA with negative 11.6 million.
March 31st 2023, we had approximately $80 million in cash and short term investments and none of that is held and regional banks.
As a reminder, our cash position increased from the closing of the 100 billion preferred stock investment account Koido that closed in January of this year.
We look forward to seeing everyone at our annual meeting scheduled on may 18th and not getting in Pacific time.
And with that I'd like to turn the call over four questions.
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Your first question comes from the line of research Shannon from Craig Callum. Your line is now open.
Oh, Hi, guys. Thanks for taking my question I'll have to apologize for getting on late here at a number of calls aftermarket today I got in late and I didn't hear anything about a change or any of the discussion on the guidance that you gave last quarter about revenues not back should that change hall.
No no changed for a year.
Okay, perfect and that's what I thought I just wanted to make sure here I came in during I think it was Mitch as commentary on on the <unk> on some of these are bullet points and the.
Press release here that I, probably missing some key key detail here, but I guess the first bullet here about executing in our queue response, I think I understand that this is unusual for a component supplier and it's really more for tier ones here I just wanted to make sure that I'm gathering all the all the all the importance of this maybe if you can talk about.
How long you've been engaged with this customer is there something rather newer been working on for awhile.
Yeah. Thanks, Richard This is match so in case you missed my section.
This is in our tier that we've been prepping for for a long time.
I stated this stepped on already has a rich history with this automotive OEM.
We were selected to respond directly as a tier one technology supplier.
Kind of validating our maturity as a lidar company.
And we believe this to be the biggest open automotive opportunity this year to bid on.
Okay. So assuming I think and it says on the last call I expected, one or more awards to be given the shirt I think within six months I assume that this was one of those things that right now.
Correct Yep.
Okay. Okay, maybe it's stepping back a bit here and then we'll have a motive site can you can you tell us where you sit in terms of of how many rfid's and are accused you're currently in process, but.
Yeah, we're always in various stages of the RFID faves with most of the top 10 automotive Oems.
R F Q as we really only talk about or give dedicated airtime to them once they get to a critical milestone like we are today with this this top 10 OEM.
But I would say within the top 10, there's probably two or three rf's cues open and always five to seven Rfid's open.
Okay that is fair enough.
Maybe let's ask about about kind of the visibility with your your primary your first big automotive customer. Thank you mentioned the last call. He has six months of rolling visibility here wondering hall, if you can kind of update us on what that looks like today is that we've seen increases to that.
Or just kind of characterize what your what the changes that since the last call.
Yeah. So thanks, Richard So we do have over 10000 units.
Of purchase orders.
So that's plenty of visibility for us to execute on which we are very focused on.
Oh it is executing unfulfilling.
Those units.
You'll see a higher volume brand towards the second half of this year as we work out.
That was just sticks with with with the fires and contract manufacturers as well as with Quito.
Mmk and with this visibility here said over 10000 years I think that's the number you think you may have used on the last call does this assume I'm. The same number of vehicles your shipping into or has there been an increase in that as well.
This assumes the same number of vehicles, we're shipping into the the vehicles that are that are already planned to have started production.
In 2024 hasn't changed.
From our customer Mitch didn't mention that we have commitment from the Oems to add additional vehicles right now at least three.
Into the overall program.
And those vehicles are not expected to have ESOP in 2024.
Okay Fair enough. That's a good perspective, maybe the last question I'll jump out of line here.
The last call you talked about having a a win with the top 10 global OEM for an autonomous ground vehicle.
And I haven't seen any news out there that suggest to you that might be maybe I have searched hard out here and then your press release, you talked about shipping the samples.
To a ton of us ground vehicle customer is that one of the one of those customers with one of your referred to in the last earnings call and is there any way you can help us think about who that might be.
Yes, that's right I mean, we can't disclose the name yet, but I think in Q4 of this year there'll be some more public disclosures about the project and how certain supporting this OEM customer. It is a level four autonomous ground vehicle use case.
It's been exhibited at a couple of industry shows are starting to be exhibited at a couple of industry shows but exact details are looking like Q for this year.
I mean, it is a top.
Top 10, automotive again that has a.
Significant play in power products.
Okay and is this a customer of his career evolved with with this customer with folk with both with US double four autonomous current vehicle and they're they're higher volume passenger vehicles as well.
Yes, they are.
Okay.
Okay. Good to know I will jump out of line here guys. Thank you.
Thanks for sure.
Your next question comes from the line of <unk> return from Northland. Your line is now open.
Yeah. Thanks for taking my questions just in terms of G M and started production when do you anticipate.
To occur.
Yeah, I think GM publicly stated in their March press release around the ultra crew sensor suite that they're aiming to actually have this available vehicles to the consumers in December of this year.
For the lead slapstick vehicle beyond that the additional vehicle models will continue to launch in first half of 2024 and then the remaining in second half of 2024 first half of 2025.
Okay and then at the end of 2024, you should be in poor vehicles am I doing the math right there at least four yes.
Got it.
And then just turning to the infrastructure business you announced.
With this quarter and I'm just wondering how many states you know how much of that quarter have you shift and you expect to the pollen ones.
Yeah definitely we started shipping against that order in April so there's a regular shipment every month for this too.
Totaling operator, it's going across three states initially, but there there are many more that they are bidding on and we expect to expand.
Through early next year two additional states.
Okay.
Russ numbers, what what percentage of the U S population does that cover.
Roughly.
Oh, Wow I think I'll say, 10% is what we had yeah. I mean, there's there's a populist east coast stay there and I think we lifted the states.
Yeah, the 10% is probably the coverage of what we have with that operator in terms of the quit equipped and the the toll roads with light on it.
So there is still a vast majority of told rose. That's that's that's not going that's not equipped with light on in this in this first phase right.
Got it got it alright Super helpful.
For me thank you.
Thanks Richard.
Okay.
Your next question comes from the line of Matthews The Lintel Maxime Group. Your line is now open.
Hey, guys. Thanks for taking my question just curious about what the pipeline it looks like for the protector business.
This point beyond the thyroid when you discussed previously.
Yeah definitely we're still supporting.
You know dozens of different applications I would say there's increasing.
Increasingly more applications that are starting to ramp now beyond just proof of concept.
Previously we've talked about airports, we expect to those too.
Be officially announced and ramp later this year.
The autonomous Crown vehicle use case.
As a result of our Nova near range light our product.
And we we began collaborating with koito on that because there's a lot of interest in the short range lidar for various applications.
And to just put a little bit more.
Finer details on that for this year.
We expect smart infrastructure in terms of revenue.
Being a single digit millions area.
Towards mid mid single digits, and we do expect next year to be in the double digits area.
Got it thanks, and then maybe just if you could touch on.
What you're seeing into competitive environment.
The.
P as you're responding to on the automotive side and.
The smart infrastructure side as well.
Yeah, My automotive side, it's really stepped on and one.
Competitor at most accounts.
I would say, there's never more than one or two serious competitors and automotive because they have a pretty lengthy vetting process with their rfid's once they get to RF too they have it narrowed down to one or two companies.
On the smart infrastructure side.
We're still we're still seeing where directional light ours.
Replacing spinning light arse and applications.
So in that case, some of the spinning light or companies.
Are being conquesting with directional light ours, I think there's a few more competitors within smart infrastructure is lighter companies.
Try to pivot to that that space, if they didn't get an automotive program.
Got it thank you.
Thanks, Matt.
Once again it is star one.
Want to ask a question.
There are no further questions at this time please continue.
Okay. Thank you for joining us today, we really looking forward to this new year and a lot of excitement in the automotive business will report to your next quarter hopefully with.
A lot more exciting news thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.