Q2 2023 Aeva Technologies Inc Earnings Call

August 8, 2023

<unk> second quarter 2023 earnings conference call.

During the opening remarks, all participants will be in a listen only mode.

Following the opening remarks, we will conduct a question and answer session.

As a reminder, today's conference call is being recorded and simultaneously webcast.

I'd now like to turn the call over to Andrew Fung Director of Investor Relations. Andrew. Please go ahead.

Thank you and welcome everyone to <unk> second quarter 2023 earnings Conference call.

Joining on the call today are <unk> Yang.

<unk> co founder and CEO and <unk> <unk> CFO .

Ahead of this call we issued our second quarter 2023 press release and presentation.

We will refer to today and can be found on our Investor relations website at investors that Eva Dot com.

Please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For a further discussion of the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC, including our most recent Form 10-Q and Form 10-K.

In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Avis performance.

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

The webcast replay of this call will be available on our company website under the Investor Relations link.

And with that let me turn the call over to Serge.

Thank you Andrew and good afternoon, everyone. However, in Q2 continued to make good progress on the path towards commercializing our unique 40 later on chip technology.

I am excited by developments with existing collaborations as well as new opportunities and we'd like to highlight our key accomplishments, which are summarized on slide four.

First our collaboration with a top 10 OEM is going very well, we are deepening our engagement and integrating further into their stack.

In Q2, we signed a strategic collaboration agreement, where Eva will provide our perception stack as well as joined the work with the OEM on neural network based machine learning models in order to optimize the Oems a stack and achieved important use cases that previously challenged.

<unk> time of flight Lidar.

In addition, the OEM has decided to expand its on growth deployment with Eva 40, Lidar on the back of the milestones that we have delivered.

Second I'm happy to share that Eva secured our first win in rail with <unk>.

A leading supplier of railway automation solutions, including to Europe's largest freight carrier.

It was 40 Lidar was selected due to our unique velocity data that delivers superior perception capabilities compared to the conventional three D. Lidar supplier, we will replace.

And third we reached critical milestones with our industrial automation partners that keep us on track for 2020 for Sop.

Including the validation of the lighter on chip module for the first industrial product by Nikon and progressing on track with our development milestones with <unk> AG.

I would now like to provide more color on our recent business developments, which begin on slide six.

This past quarter, we significantly deepened our collaboration with a top 10 OEM on a number of fronts.

First is around perception software we.

We signed a strategic collaboration agreements to provide Eva perception stack built around our unique velocity data to help the OEM safely operate under important use cases.

We will also join the work on neural network based machine learning models, incorporating data from US 40, lidar to optimize the performance of the overall stack.

As mentioned last quarter <unk> FMC W. Technology successfully enabled a key safety use case for highway driving that this OEM was unable to achieve previously with <unk> time of flight Lidar.

Through our ongoing work, we have been able to demonstrate additional ways.

Mcw's advantages over time of flight such as direct velocity measurement and long range without the need to push high optical power enables new levels of perception that can help the OEM more reliably achieve their high standards for performance and safety.

And capabilities compared to the conventional three D. Lidar supplier, we will replace.

And third we reached critical milestones with our industrial automation partners that keep us on track for 2020 for Sop.

To provide an example by leveraging velocity for every pixel <unk> ultra resolution differentiate stationary from dynamic points and brings camera level of resolution that can be up to 20 times that of a conventional resolution.

Including the validation of the liner on chip module for the first industrial product by Nikon and progressing on track with our development milestones with six AG.

I would now like to provide more color on our recent business developments, which begin on slide six.

As a result, our lidar can detect small hazardous objects like a tire fragment at upwards of 50% greater range.

This past quarter, we significantly deepen our collaboration with a top 10 OEM on a number of fronts.

And because we can instantly measure the velocity for every pixel Teva can more quickly and confidently classify objects as compared to three time of flight <unk> that require multiple frames and points to infer velocity.

The first is around perception software.

We signed a strategic collaboration agreement to provide <unk> perception stack built around our unique velocity data to help the Oems safely operate under important use cases.

We will also join the work on neural network based machine learning models.

Perception capability like this is critical to safety operating applications such as highway automation.

Incorporating data from <unk> 40, lidar to optimize the performance of the overall stack.

We're thrilled that the OEM has decided to further leverage Eva to accelerate development of perception software to enable its highway speed autonomy used cases.

As mentioned last quarter <unk> F. M. CW technology successfully enabled a key safety use case for highway driving that this OEM was unable to achieve previously with <unk> time of flight Lidar.

The second is that as we continue to achieve perception and development milestones. The OEM has decided to expand on growth deployment with our lidar further into 2024.

Through our ongoing work, we have been able to demonstrate additional ways how F. Mcw's advantages over time of flight such as direct velocity measurement and long range without the need to push high optical power enables new levels of perception that can help the Oems more reliably.

This includes plans for additional vehicles equipped with 840 <unk> there will be used to validate our protection software and overall AB stack in order to bring it to market.

Overall, we are very encouraged by our progress with the OEM. Our focus will continue to be on supporting this OEM to achieve their requirements and positioning Eva to be selected for their production vehicle program.

Cheese their high standards for performance and safety.

To provide an example by leveraging velocity for every pixel.

Moving now to slide seven where I would like to share more about our first win in rail.

Oh resolution differentiate stationary from dynamic points and brings camera level resolution that can be up to 20 times that of a conventional resolution.

<unk> hundred 40, <unk> has been selected by <unk> to enable their autonomous train solutions.

As a result, our lidar can detect small hazardous objects like a tire fragment at upwards of 50% greater range.

Notably, we believe avid replaces a conventional <unk> time of flight lidar supplier, because our velocity data ultra resolution and other benefits of Mcw enabled <unk> to accurately and reliably identify obstacles on and around the rails.

And because we can instantly measure the velocity for every pixel.

Can more quickly and confidently classify objects as compared to three time of flight <unk> that require multiple frames and points to infer velocity.

Critical use case requirements that could not be achieved with <unk>.

The first application with <unk> is for the largest freight operator in Europe to automate shunting activity.

Perception capability like this is critical to safety operating applications such as highway automation.

Which is when trains are separated moved and linked together with new cars.

We're thrilled that the OEM has decided to further leverage Eva to accelerate development of perception software to enable its highway speed autonomy use cases.

<unk> solution is intending to incorporate multiple Ava lidar heard locomotive to safely enable these actions autonomously.

The second is that as we continue to achieve perception and development milestones. The OEM has decided to expand on growth deployment with our lidar further into 2024.

We are excited to work with the allergy and see opportunities broaden deployment to <unk> other customers, which include other major rail operators.

This includes plans for additional vehicles equipped with 840 <unk> there will be used to validate our protection software and overall AB stack in order to bring it to market.

And as the rail industry and regulators look to bring safer and more efficient transport. We are beginning to explore opportunities for different types of applications with leaders throughout the rail ecosystem, including locomotive OEM technology innovators and operators.

From our engagements it is clear that <unk> combination of long range instant velocity and immunity to interference can offer unique advantages for rail automation applications and.

Moving now to slide seven where I would like to share more about our first win in rail.

And we look forward to pursuing these opportunities to bring scale deployment of 40, Lidar and rail.

Eva 40, Lidar has been selected by <unk> to enable their autonomous train solutions.

Let's now turn to slide eight.

Notably, we believe Ava replaces a conventional <unk> time of flight line, our supplier because our velocity data ultra resolution and other benefits of FMC W enabled <unk> to accurately and reliably identify obstacles on and around the rails.

I am happy to share that we are on track to begin startup production for our industrial automation programs in 2024, and I would like to provide some color on our recent progress with Nikon.

This past quarter, we completed development and validation of a lighter on chip module for the first product with Nikon.

Critical use case requirements that could not be achieved with <unk>.

The first application with Realogy is for the largest freight operator in Europe to automate Shontayne activity, which is when trains are separated moved and linked together with new cars.

As previously mentioned this first product is an industrial metrology solution that enables automated inspection during high volume manufacturing.

It requires micron level precision, where we will leverage our same core for the Lidar chip.

<unk> solution is intending to incorporate multiple Ava lidar heard locomotive to safely enable these actions autonomously.

Used for automotive applications, but with different algorithms to achieve ultra high precision.

We are excited to work with the allergy and see opportunities to broaden deployment to <unk> other customers, which include other major rail operators.

Due to our unique later on chip module, we are able to offer these capabilities at a lower cost and a much smaller size compared to the current solutions utilized today.

With all performance specifications confirmed this paves the way for us to progress to the next stage, where we will work on the production qualification of our first industrial product together with Nikon ahead of Sop in late 2024.

Switching gears now to the opportunities we are pursuing let's turn to slide nine.

<unk> it is clear that Eva combination of long range instant velocity and immunity to interference can offer unique advantages for rail automation applications.

<unk> represents a new win this year and we're making progress on further expanding our number of program wins.

And we look forward to pursuing these opportunities to bring scale deployment of 40, Lidar and rail.

In automotive we continue to advance on large series production programs with a number of leading vehicle Oems.

Let's now turn to slide eight.

Feedback has been consistent and encouraging as more Oems, including especially ones who have previously selected time of flight for initial pilot deployments are appreciating that Eva differentiated mcw technology can help safely enable their next generation broader scale deployments.

I am happy to share that we are on track to begin startup production for our industrial automation programs in 2024, and I would like to provide some color on our recent progress with Nikon.

This past quarter, we completed development and validation of our lighter on chip module for the first product with Nikon.

In industrial automation, we have multiple ongoing engagements with large industrial sensing companies to leverage our perception platform for industrial measurement applications.

As previously mentioned this first product is an industrial metrology solution that enables automated inspection during high volume manufacturing.

Our focus as a company remains on programs for large scale deployment with <unk> in the mid decade, where each of these opportunities offer significant revenue potential for Ava.

It requires micron level precision, where we will leverage our same core for the lidar chip used for automotive applications, but with different algorithms to achieve ultra high precision.

And we continue to expect additional award decisions over the next six to 12 months with that I'll turn it over to Sarah.

Due to our unique later on chip module, we are able to offer these capabilities at a lower cost and a much smaller size compared to the current solutions utilized today.

Thank you <unk> and good afternoon, everyone.

I would like to discuss our Q2 2023 financial results, which are summarized on slide 11.

Revenue for Q2 was zero point $7 million on account of continued deliveries of Aries due to existing and new customers.

Switching gears now to the opportunities we are pursuing let's turn to slide nine.

non-GAAP operating loss was $31 1 million.

Selecting our ongoing disciplined and strategic approach to R&D and other operating spend.

<unk> represents a new win this year and we're making progress on further expanding our number of program wins.

Gross cash used which we define as operating cash flow less capital expenditure was 28 5 million.

In automotive we continue to advance on large series production programs with a number of leading vehicle Oems.

Which primarily consists of use of cash for operating expenses.

We finished the quarter with cash cash equivalents and marketable securities totaling 261 2 million.

And weighted average shares outstanding was $225 million in Q2.

In industrial automation, we have multiple ongoing engagements with large industrial sensing companies to leverage our perception platform for industrial measurement applications.

In summary, <unk> continues to maintain a solid financial position as we progress on our objectives.

Our focus as a company remains on programs for large scale deployment with <unk> in the mid decade, where each of these opportunities offer significant revenue potential for Ava.

We are very encouraged by the commercial momentum in Q2, and looking ahead, we will continue to execute with a strategic approach to allocate resources and optimize spend to further our existing programs and new opportunities.

And we continue to expect additional award decisions over the next six to 12 months with that I'll turn it over to Rob.

I will now turn the call back to solution for closing remarks.

Thank you <unk> and good afternoon, everyone.

I would like to discuss our Q2 'twenty two 'twenty three financial results, which are summarized on slide 11.

Thanks, Rob.

Waiting to Tony 33, we have made strong progress on our objectives for the year and I am extremely excited about where we stand on a number of our advanced stage opportunities. They.

Revenue for Q2 was zero point $7 million on account of continued deliveries of Aries due to existing and new customers.

The entire Ava team is incredibly focused on converting these engagements into additional wins.

As I conclude.

non-GAAP operating loss was $31 1 million.

I want to thank each member of the <unk> team for their ongoing dedication.

Selecting our ongoing disciplined and strategic approach to R&D and other operating spend.

As well as our stakeholders for their continued support with that we will now open the lineup for questions.

Thank you if you would like to ask a question. Please press star one on your telephone keypad now you'll be placed into the queue in the order received please.

Gross cash used which we define as operating cash flow less capital expenditure was 28 5 million.

Please be prepared to ask your question when prompted.

Which primarily consists of use of cash for operating expenses.

In the interest of time, please limit yourself to one question and one follow up question.

We finished the quarter with cash cash equivalents and marketable securities totaling 261 2 million.

Once again, if you have a question. Please press star one on your phone now.

And our first question today will come from Antoine.

Shaban with New Street research.

And weighted average shares outstanding was $225 million in Q2.

Hi, guys. Thanks, a lot for taking my question.

Can you maybe provide more details on the strategic collaboration with <unk>.

In summary, <unk> continues to maintain a solid financial position as we progress on our objectives.

The two just announced.

Any indication on where you.

Are there any other light our vendors in the pipeline for this specific project.

And maybe also when in 2024 do you expect to expand.

<unk> deployment, and what milestones do you need to achieve to get there.

Yes happy to answer the question. So first of all we are very encouraged.

I will now turn the call back to <unk> for closing remarks.

The Oems the auto.

A lot of space and especially with the top 10 Oems are seeing continued value and significance and our perception is all right. So let me first.

Thanks, Rob.

Waiting to Tony 33, we have made strong progress on our objectives for the year and I am extremely excited about where we stand on a number of our advanced stage opportunities. They.

To answer that question at a high level, how we got here so first.

The entire <unk> team is incredibly focused on converting these engagements into additional wins.

We first start on the hardware side delivering errors to hardware.

To this OEM and then integrating in their vehicles and from there starting to ongoing deployment of a task order. So that you have mentioned.

As I conclude I'd.

I want to thank each member of the <unk> team for their ongoing dedication.

As well as our stakeholders for their continued support with that we will now open the lineup for questions.

And from there with additional units on additional vehicles, Phil we continue to hit our milestones for the hardware and.

Thank you if you would like to ask a question. Please press star one on your telephone keypad now you'll be placed into the queue in the order received please.

<unk> been able to really address some of the most challenging use cases.

<unk> are 40 of our technology and with previously this OEM.

Please be prepared to ask you a question when prompted.

Was having challenges to address with.

In the interest of time, please limit yourself to one question and one follow up question.

<unk>.

And now we are further deepening our relationship and Consol and with that we have signed a strategic collaboration agreement to include Eva perception software really build around our velocity data to achieve some of those peak driving scenarios.

Once again, if you have a question. Please press star one on your phone now.

And our first question today will come from Antoine.

Shaban with New Street research.

Hi, guys. Thanks, a lot for taking my question.

Can you maybe provide more details on the strategic collaboration with <unk>.

That have been quite difficult to achieve this includes for example.

The two just announced.

Any indication on where you.

Driving scenarios at highway speeds, we're talking here.

Are there any other lidar vendors in the pipeline for this specific project.

Not 30, or 40 miles per hour, but and over the highway 60 plus miles per hour.

And maybe also when in 2024 do you expect to expand.

Yeah.

Being able to have the vehicle content safe staff, especially in those arent cases in which it's difficult to perhaps detect objects that are small or very low activity on the roadmap such as tire fragmented. So that's I think where for a while.

Road deployment, and what key milestones used to need to achieve to get there.

Yes happy to answer the question. So first of all we are very encouraged.

The Oems the auto.

Emotive space, especially with desktop that Oems are seeing continued value and significance and our perception is all right. So let me first.

While really shines and have been able to.

Provide us stability.

To answer that question at a high level, how we got here so first.

And.

We're now working with them on neural network base machinery models as I mentioned really addressed all of those pieces that are not ultimately bore.

We first start on the hardware side delivering errors to hardware.

To this OEM and then integrating in their vehicles and from there starting to on road deployment of a task order. So that you have mentioned.

Looking ahead as I mentioned, we plan to expand our development suite.

With our technology with this OEM inventory or on the road with multiple vehicles.

And from there with additional units and additional vehicles, Phil we continued to hit our milestones for the hardware and they've been able to really address some of the most challenging use cases.

Sorry for.

Forward looking at going forward.

And industrial really deepening our engagement with this OEM moves us from hardware into software stack, which we believe create a flywheel effect further embedding precession.

<unk> are 40 of our technology and with previously this OEM.

Was having challenges to address with time of flight.

Base lighter Jan now we are further deepening our relationship management staff and with that we have signed a strategic collaboration agreement.

The recession back and velocity of data into the heart of the <unk>.

<unk> software stack with Oems.

Hi.

Include Eva perception software really build around our velocity data to achieve some of those peak driving scenarios.

Okay. Thanks, a lot for the color and maybe as a quick follow up can you maybe update us on how you didn't get that.

That have been quite difficult to achieve this includes for example.

And taking costs down is playing out how things trended as you expected over the next 90 days.

Driving scenarios at highway speeds, we're talking here.

Not 30, or 40 miles per hour, but already highway 60, plus miles per hour.

Yes happy to so we have continued to progress on delivering off hours two products with multiple customers.

And.

Being able to have the vehicle come to save staff, especially in those corner cases.

And including of course in automotive as well as industrial space in case in point is really our ability to.

It's difficult to perhaps detect objects that are small or very low activity on the roadmap such as tire fragmented. So that's I think where portola.

Do that has led us to make meaningful advances in progress with a number of customers. For example, the top 10, OEM with us being able to get into this software stack and.

Really shines and have been able to.

We provide those capability and.

The collaboration in place on that Brian .

We're now working with them on neural network base machinery models as I mentioned really addressed all of those pieces that are not ultimately for.

Example of us being able to secure our first loan in rail with <unk>.

Which we're pretty excited about as well.

Looking ahead as I mentioned, we plan to expand our development.

And others, So I think.

Our ability to continue on deploying their issue is critical to our progress with customers across both automotive and industrial application.

With our technology with this OEM inventory from the board on the road with multiple vehicles.

Sorry.

Before we get going forward.

As well as <unk>.

Around the metrology applications as I mentioned on the call. We have also completed the development milestones for <unk>.

And.

And industrial really deepening our engagement with this OEM moves us from hardware into software stack, which we believe create a flywheel effect or further embedding precession.

Nikon our customer for the first.

Target deployment in 'twenty four.

On the floor with the metrology so are we.

We feel pretty good about that.

Precession back and the velocity need I think to the heart of the <unk> software stack with this OEM.

And obviously, we're working towards.

Sophie targets.

Hi.

Some of these customers.

Okay. Thanks, a lot for the color and maybe as a quick follow up can you maybe update us on how you didn't get that.

Thank you very much.

And our next question will come from Colin Rusch with Oppenheimer.

And taking good.

<unk> is playing out how things trended as you expected over the next 90 days.

Thanks, so much guys.

<unk>.

The relationship with Nikon.

The ability to pull the time Tom from forward can you talk a little bit of time.

Yes happy to so we have continued to progress on delivering off hours two products with multiple customers.

How that happened and what elements are going well.

Okay.

Yes happy to answer that.

And including of course in automotive as well as industrial space in case in point is really our ability to do that has led us to make meaningful advances in progress with number of customers.

We have said before.

Yeah.

I guess, maybe at the end of the year.

We had planned to.

Buying opportunities and will begin full board.

Sure.

Automation launches with Nikon, we have really been able to deliver on milestones on or ahead of them.

All the top 10, OEM with us being able to.

Get into this software stack and.

And really focus on our ability to actually.

The collaboration in place on that front for.

For example for us being able to secure our first loan in rail with <unk>.

Achieved the micron level precision that's one unique advantages that mcw with that we can we can do.

And which we're pretty excited about as well.

June the software with the same core chip module, a lidar that we have in automotive but disciplined.

And in others, So I think.

Our ability to continue on deploying their issue is critical to our progress with customers across both automotive and industrial application.

This application software instead of maybe going hundreds of meters of range, we can trend that down to a lower.

And achieve ultra.

As well as <unk>.

Ultra precise.

Around the metrology applications as I mentioned on the call. We have also completed the development milestones for <unk>.

Accuracy, which is gets us micron level of precision we have now completed that 900 completed also their validation work.

Nikon and our customer for the first.

Target deployment in 'twenty four.

Following the performance specs.

On the floor with the metrology so are we.

And the key metrics that really matter for their industrial metrology manufacturing inspection application and <unk> been pretty pleased.

We feel pretty good about that.

And obviously, we're working towards.

Pleased with that.

Sophie targets.

With them to build further confidence.

Some of these customers.

For us.

Now that that next phase.

Thank you very much.

Oh.

And our next question will come from Colin Rusch with Oppenheimer.

Industrializing and getting the product ready for.

Late next year.

Thanks, so much guys.

Thank you.

<unk>.

Really one of the Tvs as broker deals to do that is because we have been doing this for a while already with our <unk> product. It's the same hardware.

The relationship with Nikon.

The ability to pull the time Tom from forward can you talk a little bit of time.

How that happened and what elements are going well.

Okay.

<unk> added significant experience in developing and releasing new software functionality and validate levels of key customers.

Yes happy to answer that.

We have said before.

Sure.

I guess, maybe at the end of the year.

And that's.

That's one of the key back that up.

We had planned to.

To be able to do that as long as our ability to actually produce those modules and the sufficient quantity that Nikon immediately.

Find opportunities in which we can pull forward.

Sure.

Automation launches with Nikon, we have really been able to deliver on milestones on or ahead of them.

That's super helpful and then with the Oems and congratulations on continuing to move forward with some of these vehicle Oems.

And really focus on our ability to actually.

Achieved the micron level precision that's one unique advantages at mcw with that we can we can.

Certainly seeing some of the other emerging lidar.

Providers struggle with actually delivering on some of their Roadmaps can you talk a little bit about how your conversations are changing with those Oems because I assume that you are at the table with most everybody is talking about.

June the software with the same core chip module and Lidar that we have in automotive but disciplined.

This application different software instead of maybe hundreds.

Proof and some of the platforms.

<unk> meters of range, we can trend that down to a lower.

And how tangible some of those programs are good handle in terms of the potential to move forward in the.

But can achieve.

The site.

Accuracy, which is gets us micron level precision you have now completed that 900 completed also their validation and verifying the performance specs.

On the sales process for you guys.

Yeah sure so.

Look we are generally quite encouraged very pleased with progress, we're making on our call the automotive space Division to industrial I think.

And the key metrics that really matter for their industrial metrology manufacturing inspection application and.

As I mentioned, where we also see a lot of.

Interesting development, especially in areas, where a number of Oems in the past have had experience with time of flight or through the lidar.

Lisa.

With them to build further confidence.

For us.

Now that that next phase.

And whereas.

Our initial deployment, but since engaging with us seeing some of the key.

Industrializing and getting the product ready for.

Unique selling points advantages CW.

Late next year.

Thank you.

And how this is really the next generation, that's coming to market than working with us and measuring our capability absolutely deliver on the milestone requirements over time. These two factors that really helped us.

Really one of the Tvs as broker deal to do that is because we have been doing this for a while already with our <unk> product. It's the same hardware.

<unk> added significant experience in developing and releasing new software functionality and validating them with key customers.

Be able to make meaningful progress with a number.

And that's.

Thats one of the key back though.

Multiple Oems in state and I think.

To be able to do that as well as our ability to actually produce those modules and the sufficient quantities at nikon needed to qualify.

We have always talked about that.

Where we believe the industry is headed.

And some of that.

Yes.

Shape.

That's super helpful and then with the Oems and congratulations on continuing to move forward with some of these vehicle Oems.

With the progress that we're making.

Again as is the case with <unk>, both of which have had experiences with <unk> are now deciding to pay.

Certainly seeing some of the other emerging lidar.

Providers struggle with actually delivering on some of their Roadmaps can you talk a little bit about how your conversations are changing with those Oems because I assume that you were at the table with most everybody is talking about.

Based on the Mega hubs.

As the.

Technology about or so.

That's what I can share.

Okay. That's super helpful. I appreciate it.

Proof and some of the platforms.

And how tangible some of those programs are good handle in terms of the potential to move forward in the.

And your next question comes from Joe Moore with Morgan Stanley .

Yeah.

On the sales process for you guys.

Great. Thank you I Wonder if you could talk a little bit more about the win with with Realogy and particularly.

Yeah sure so.

Look we are generally quite encouraged very pleased with progress, we're making across the automotive space envision industrial I think.

Yeah.

When you think about the train market.

How big is that is it and I think there are there opportunities to expand beyond that into other.

As we mentioned, where we also see Nevada.

Interesting development, especially in areas, where a number of Oems in the past have had experience with time of flight or included Lidar.

During my time as training efforts.

Yeah, Hey, Joe happy to answer that.

No.

First of all yes, we are pretty excited about our first win in rail here again. This is another example of how unique capability in MPW enable.

And whereas.

For initial deployments, but since engaging with us seeing some of the key.

Unique selling points advantages 11 CW.

<unk> for automation that are currently challenged.

And how this is really the next generation technology, that's coming to market than working with us and measuring our capability absolutely to deliver on the milestone on the requirements over time.

On the slide technology.

And this is.

So exciting for us because it's our first expansion into their application and then we really starting to see some of the breath.

Two I think factors that really helped us.

Be able to make meaningful progress with a number.

Apps and applications that.

Uh huh.

FX GW can help.

Motorola and the state and I think.

Customers.

Paul.

We have always talked about that.

I can give you some context on the overall opportunity.

Where we believe the industry is headed.

So the overall opportunity in rail globally is about over $1 billion and the market opportunity.

And some of that.

Shape.

With the progress that we're making.

We're talking about 100000 locomotives globally and all of that.

Hello again.

As is the case with <unk>, both of which have had experiences with <unk> are now deciding to.

About 15000.

Local motives and Europe alone.

Nathan.

What is the.

And we're talking about multiple lidar for locomotives, so the opportunity with great energy.

This technology about our so that's what I can share.

Specifically with.

Okay. That's super helpful. I appreciate it.

With the first deployment.

In Europe with the largest European carrier.

And your next question comes from Joe Moore with Morgan Stanley .

About two to four lidar spread locomotive at ASC multiple higher than an automotive.

Yeah.

Great. Thank you I Wonder if you could talk a little bit more about the win with <unk> in particularly.

<unk>.

Yeah.

We're beginning in kind of 25.

When you think about the train market.

Our lidar.

How big is that is it.

With LG set.

And I think there are there opportunities to expand beyond that into other.

Separately.

We are engaged with some of the leaders in this space.

During my time as treat efforts.

Yeah, Hey, Joe happy to answer that so first of all yes, we are pretty excited about our first win in rail here again. This is another example of how unique capability in MPW enable.

No.

That include train Oems that include technology provider in some of your operators that we see potential to expand further on the route where application and railroads. You alone also is working with other major <unk> offered beyond Europe .

Scenarios for automation that are currently challenged.

Youth on applied technology.

Solution for various applications, including in Europe , and U S and other global markets.

And this is.

So exciting for us because it's our first expansion into their application then we really starting to see some of the debt.

Thank you.

And we'll move next to <unk> de Silva with Roth and Kim.

Apps and applications that.

Sure.

Hi solutions, Rob so.

FX GW can help.

Customers fall.

Just to understand so we received the additional auto customers that could follow this tier one youre working with wood with those engagements take the same form of this in terms of the development engagement and then we are using the software together would they have a different shape and concurrent with that question.

I can give you some context of the overall opportunity in the out years.

So the overall opportunity in rail globally is about over $1 billion and the market opportunity.

Talking about 100000 locomotives globally and all of that.

The ability to handle multiple of these engagements concurrently or kind of focusing resources on one and then have it kind of low forward sequentially be curious to understand how you would waterfall from here.

15000.

Local motives and Europe alone.

And we're talking about multiple lidar for locomotives, so the opportunity with great energy.

Yes, as you have to answer that so look I think we.

Specifically.

We're here building a framework.

With the first deployment.

In Europe with the largest European carrier.

And a platform in which we.

Plan and intend to.

About two to four lidar spread locomotive at ASC.

To deploy in collaboration with multiple OEM over time with a focus on creating a one.

Both higher than in automotive.

And we're beginning in kind of 25.

Core product with FMC W. Arctic LNG, but also our approach to software.

So.

Our lidar.

As being in a modular way in which we can build.

Rail energy.

Separately.

We are engaged with some of the leaders in this space.

The key software features on top of our hardware.

In a way that can be qualified.

No.

That include <unk>.

With let's say the first OEM in according with this top 10 OEM.

Main Oems that include technology provider and a leader operators, but we see potential to expand further on the route where application and LNG alone also is working with other major rail operators beyond Europe to deploy there.

But can also be then from their scale and deployed across multiple other programs and that's something that has always been fun with us and that's only the half year.

So we shifted various applications, including in Europe , and the U S and other of the warrants.

Sure.

So.

I think.

It's very important to start early on with.

Okay. Thank you.

The vehicle manufacturers, so that especially bringing an EBIT knowledgeable.

And we'll move next to <unk> de Silva with Roth and Kim.

Hi, Rob.

Automated driving so that he can ensure timely validation ensure addressing the corner cases.

Just to understand sort of the additional auto customers that could follow this tier one youre working with wood with those engagements take the same form of this in terms of the development engagement and then we are using the software together would they have a different shape and concurrent with that question.

And really making sure works before it.

To go to production in that segment that we have.

And we're hoping that we can leverage this playbook with other other Oems as well of course, each each customers that are different sometimes it may not make sense to provide all of the modules.

The ability to handle multiple of these engagements concurrently or kind of focusing resources on one and then have it kind of look forward sequentially be curious.

Such a softer but that Mazda approach I think is a critical part of our strategy to your second part of the question about.

Ill do a waterfall from here.

Yes, as you have to answer that so look I think we're here building a framework.

Uh huh.

Our ability and resources to support multi.

Multiple Oems today, we have the sufficient.

In a platform in which we.

Fan and intend to.

Yes.

To be able to support all the meetings that we have today as we of course go longer.

To deploy in collaboration with multiple Oems over time with a focus on creating a one.

Adding on the team so that we can support some of those key programs on the Oems, but again our strategy is not to.

Core product with FMC W Harbor technology, but also our approach to software.

As being in a modular way in which we can build.

Goldman spray and pray cost many many opportunities we're focused on a number that is a.

The key software features on top of our hardware.

In a way that can be qualified.

<unk> number of growth opportunities with large scale.

With let's say the first OEM in according with this top 10 OEM.

That each of which can provide meaningful opportunities for us and potential for the company and.

But can also be then from their scale and deployed across multiple other programs and thats something that is always an important with us in F&B half year.

With a focused approach we think that's the right way to go about with our first deployment.

Yes.

Okay, great. Thanks, so much for my other question is on the industrial auto.

So.

I think it's very important to start early on with.

The Nikon engagement startup production sometime calendar 'twenty floor, just curious what the shape of that initial unit ramp might look like or just the size of that opportunity. If you want to talk about it that way from a run rate and just competitively I know there's.

The vehicle manufacturers, so that especially bringing an EBIT knowledgeable.

Automated driving so that he can ensure timely validation ensure addressing the corner cases.

Theres other industrial light our vendors out there with high unit run rates already obviously are less.

And really making sure works before it.

Less featured.

Both the production and that segment within the App.

One than yours, So maybe you could talk about the pricing strategy here versus those guys system.

And we're hoping that we can leverage this playbook with other other Oems as well of course, each each customers that are different from Thomas you may not make sense to provide all of the modules.

<unk>, what's already out there in the market versus what you're going to bring to market.

Yeah, absolutely so.

So look first of all the planned launch.

<unk> software, but that modular approach I think is a critical our strategy to your second part of the question about.

Towards the late 'twenty 'twenty four and then.

Thoughts with volume and scale up from there obviously industrial.

Got it.

Our ability and resources to support.

Volume and pricing is quite different than automotive, but.

Multiple Oems today, we have the sufficient staff.

And just to give you a sense here we're talking about.

To be able to support all the meetings that we have today as we of course go longer.

Orders of magnitude in terms of <unk>.

<unk> ASP between automotive and what is really feasible here.

Adding on the team so that we can support some of those key programs on the Oems, but again our strategy is not to.

And what went wrong there.

Key factors for us is that.

We're using the same core technology that we're developing already to automotive. So we can use our economies of scale.

Goldman spray and pray caused many many opportunities we're focused on a number that is a.

The same manufacturing line of course with some customization.

<unk> number of growth opportunities with large scale.

And things that may not be needed.

For example, one aimed at such and different software.

That each of which can provide meaningful opportunities for us and potential for the company and.

To allow for that.

But from a development perspective.

With a focused approach we think that's the right way to go about with our first deployment.

Okay.

For peers.

Multiple iterations of bought our own chip module and because we have.

Okay, great. Thanks, so much for my other question is on the industrial auto.

Being able to integrate everything down.

The Nikon engagement I just started production sometime calendar 'twenty four just curious what the shape of that initial unit ramp might look like or just the size of that opportunity. If you want to talk about it that way from a run rate and just competitively I know there's.

Silicon Photonics module basis.

We were able to achieve such.

Lower costs at an ability to.

Build these for icon.

Theres other industrial light our vendors out there with high unit run rates already obviously are less.

<unk>.

Also helping us.

The size of the form factor of that product and it.

Less featured.

One than yours. So maybe you can talk about the pricing strategy here versus those guys. Just contrast, what's already out there in the market versus what you're going to bring to market.

To provide additional members and customers so thats, what I can say.

Okay, great. Thanks, Bruce.

Yes, absolutely so.

And our next question will come from Richard Shannon with Craig Hallum.

So look first of all the planned launch.

May 'twenty 'twenty four.

Hi, guys. Thanks for taking my questions.

And then <unk>.

<unk> volume and scale up from there obviously industrial.

I didn't get a chance to listen to prepared remarks, so apologies if I'm.

Volume and pricing is quite different than automotive, but.

Overlapping with some previously ask questions, but I think the first one I wanted to follow up with actually a part of <unk> question, which is how to think about the size of this opportunity with our with Nikon specifically.

And I guess I'd give you a sense here we're talking about.

Orders of magnitude in terms of differences ASP between automotive and what what is feasible.

Timeframe as I think is well understood and obviously the asps are quite a bit higher but it's hard to think about what kind of volumes are here. So maybe if you just want to take it up to the Tam or Sam level here and get a sense of couple of years. After this ramps what kind of opportunities does the software for Eva.

And what went wrong.

Key factors for us is that.

We're using the same core technology that we're developing already automotive so.

Can you the economies of scale.

Same manufacturing line of course with some customization.

Yes, I think.

Look what I can say is.

And things that may not be needed.

Maybe I can give you.

For example, one aimed at a such and different software.

High level figures.

To allow for that.

So nikon itself.

But from a development perspective.

They're doing about 500 $600 million.

For your business.

Okay.

Industrial metrology space.

For peers.

Multiple iterations of bought our own chip module and because we have.

They are one of the leaders in this space.

Mers.

Being able to integrate everything down silicon photonics module basis.

In automotive manufacturing and aerospace and others.

We were able to achieve such.

Including BMW.

Others.

Lower costs at an ability to.

So we really see opportunity there starting with automotive in expanding further in high volume manufacturing.

Build these for icon and.

With that obviously will be looking to do it.

Also how can we use.

No.

The size of the form factor of that product that provide additional benefits and customers. So thats, what I can say.

Providing.

It is.

As part of the system, which is the chip module plus the software.

Okay, great. Thanks.

At a high level, if you think about ASP.

And our next question will come from Richard Shannon with Craig Hallum.

Sure.

In this space were full entire solution, we're talking about 100000 plus per unit with some of those ASC. The industrial solutions that can take a portion of that which I cannot comment on specifics, but that should give you up some some of that opportunity in the scale and this is just for.

Hi, guys. Thanks for taking my questions.

I didn't get a chance to listen your prepared remarks, so apologies if I'm.

Overlapping with some previously ask questions, but I think the first one I wanted to follow up was actually a part of <unk> question, which is how to think about the size of this opportunity with with Nikon specifically.

The industrial metrology applications.

During UC opportunities further from there over time and.

Other applications.

Or.

Potential around general volume electronics manufacturing and such wherever it needs actions.

And be precise about that.

Yes, I think look what I can say is.

I can't comment on right now, but thats.

Maybe should give you some general guidelines.

Maybe I can give you yeah hi.

The high level figures.

Okay fair enough.

So nikon itself.

Its a reasonable answer.

They're doing about 500 $600 million.

The following question here was.

Goodness.

Get them more in the industrial space here with with sick and I think your investor presentation says.

<unk>.

Industrial metrology space.

They are one of the leaders in this space.

Let's see it progressing on development milestones with them.

Mers.

In automotive.

With being on track for 2024 does that mean, you're expecting to start generating some revenues with them. If that's not the case. Please correct. The timeframe there and then what are some of these milestones you have to progress through to get to that point.

Automotive manufacturing and aerospace and others customers, including BMW.

The others.

So we really see opportunity there starting with automotive in expanding further in high volume manufacturing.

Yes, yes.

Correct.

Obviously working with them currently underway.

With that obviously, what we're looking to do it.

Hardware and we do expect.

No.

Providing.

Our revenue standpoint.

As part of the systems, right, which is the chip module plus the software.

We need to scale for them that's correct.

I think from a milestone standpoint that we have been working both the.

At a high level, if you think about asps.

With the AG around.

Uh huh.

In this space were full entire solution, we're talking about 100000 plus per unit in terms of some of those <unk>.

Ensuring that.

Performance metrics for the industrial end customers across different configurations, and one of the key things there for us.

Just real solution you can take a portion of that which I cannot comment on specifics, but that should give you up some some of that coverage.

And we're working also with our software configuration I figure ability with.

Let's see.

And the scale and this is just for the industrial charger applications with high vol. A manufacturing UC opportunities further from there over time.

And industrial differences.

There are multiple different types of customers.

Each with different types of requirements and I think longer unique advantages for CWT.

Other applications.

Sure.

Initial around general volume.

All of that.

We can tune those.

Factoring in such wherever it needs actions.

Yeah.

The performance of the system with software.

That'd be precise about that.

I can't comment on right now, but that's that.

We have bigger ability into the actual system without touching the hardware.

Maybe should give you some general guidelines.

And Thats one of the several points rich.

Okay.

Okay fair enough.

And eventually decided to work with us.

Its a reasonable answer.

Follow on question here was.

Goodbye.

Kind of more in the industrial space here with with sick and I think your investor presentation.

Yes.

Product segment.

<unk> says.

So we're working with them around.

Let's see it progressing on development milestones with them.

The.

Ensuring to define validate it qualify those different calculation just for some of the lead customers. There on the industrial sector. That's the work that we're doing now and later in Q4.

Yes.

So far we are progressing.

That's correct.

Obviously working with them currently.

Yeah.

Okay Fair enough. That's that's all from me guys. Thank you.

Hardware.

We do expect.

On a revenue standpoint.

You need to scale differently for them that's correct.

And there are no further questions at this time and we will now conclude today's conference call. Thank you for attending.

I think from a milestone standpoint that we have been working with both feet.

With the AG around.

The host has ended this call goodbye.

Ensuring that.

Performance metrics for the industrial end customers across different configurations, and one of the key things there for us.

And we're working also of our software integration I can figure ability with.

Let's see.

And industrial differences.

There are multiple different types of customers.

Each with different types of requirements.

And I think Marvin unique advantages for <unk>.

Matt.

We can tune those.

Yeah.

And the performance of the system with software.

As bigger ability into the actual system without touching the hardware.

That's one of the several points, which.

Okay.

No it was.

And eventually decided to work with us.

Yes.

For the for this.

Product segment, and so we're working with them around.

Ensuring to define validate and qualify.

Isn't calculation because for some of the lead customers there on the industrial sector. That's the work we're doing now.

And later in 'twenty four.

And so far we're progressing.

Yeah.

Okay fair enough.

All from me guys. Thank you.

And there are no further questions at this time and we will now conclude today's conference call. Thank you for attending.

Hey, guys. Thank you.

There are no further questions at this time and we will now conclude today's.

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