Q4 2023 Luminar Technologies Inc Earnings Call - Q&A

Aileen Elizabeth Smith: This update call. My name is Aileen Smith, and I am Luminar's head of investor relations. With me today are Austin Russell, founder and chief executive officer, and Tom Fenimore, chief financial officer.

And I am luminaries head of Investor Relations with me today are often Russell founder and Chief Executive Officer, and Tom Fenimore, Chief Financial Officer. As a reminder, this call is being recorded and you can find in the shareholder letter that accompanies this call at investors got luminaire type dotcom.

Aileen Elizabeth Smith: As a reminder, this call is being recorded, and you can find the shareholder letter that accompanies this call at investors.luminartech.com. Hopefully, most folks have had a chance to review our shareholder letter as we continue with our new earnings format this quarter. As with last quarter, we will spend the majority of the call addressing questions from our stakeholders, including retail investor questions posted on the SAFE platform, institutional investor questions emailed to our investors' inbox, and live questions from our analyst community. We will be checking these platforms intermittently throughout the duration of the call to address any questions that come in real time.

Speaker Change: Most folks have had a chance to review our shareholder letter as we are continuing with our new earnings format. This quarter as with last quarter, we will spend the majority of the call addressing questions from our stakeholders, including the retail investor questions posted on the same platform institutional investor questions emailed to our investors Inbox and live questions from our analyst community.

Speaker Change: We will be tracking these platforms intermittently throughout the duration of the call to address any questions that come in real time also wanted to begin our call with some walking remarks, including a look back on 23 and a look ahead into 2024 before I pass the call over to him I wanted to remind everyone that during the call. We may refer to GAAP and non-GAAP financial measures.

Aileen Elizabeth Smith: Austin wanted to begin our call with some welcome remarks, including a look back on 2023 and a look ahead into 2024. Before I pass the call over to him, I wanted to remind everyone that during the call, we may refer to GAAP and non-GAAP financial measures. Today's discussion also contains forward-looking statements based on the environment as we currently see it, and as such, they include risks and uncertainties. Please refer to our shareholder letter for more information on the specific risk factors that could cause actual results to differ materially. With that said, I'd like to introduce Luminar's founder and CEO, Austin Russell. All right. Well, thanks, Aileen.

Speaker Change: Today's discussion also contains forward looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our shareholder letter for more information on the specific risk factors that could cause actual results to differ materially with that I'd like to introduce women or its founder and CEO Austin Russell.

Speaker Change: Alright, well thanks Aileen.

Austin Russell: You know, and great to see all you guys here. So, you know, maybe just a quick opener before we jump into Q&A, if you've had a chance to take a look at that letter, that informational package. You know, my team and I have been really quietly heads down, focused on execution, the core execution for our business with all eyes on the industry's first production vehicle launch, you know, with Luminar and Volvo as standard on the new EX90. And it's funny as I think this is going to be, well, one of the, maybe even the last earnings calls where we're a pre-production, you know, R&D company before we And I'd say it's become abundantly clear that we've all seen all the challenges that the autonomy industry has faced historically in being able to develop, you know, industrialize, and enable this whole next generation of capabilities, you know, on vehicles and bring them out into the commercial world and into consumers' hands. And really, all of this has been laid bare to the public and in recent history in the media and whatnot.

Speaker Change: Great.

Speaker Change: Guys here. So maybe just a quick open up before we jump into Q&A, if you've had a chance to be able to take.

Speaker Change: Take a look at it.

Speaker Change: Is that a letter or kind of informational package. The team of I have been really quietly heads down focused on execution in the core excuse for our business with all eyes on the industry's first production vehicle launch with a with Lumina and Volvo as a standard on the new <unk> 90, and it's funny is I think theres going to be.

Speaker Change: Well one of the maybe in the last earning calls that where were preproduction R&D company before we truly enter our growth stage and I'd say, it's become abundantly clear that we've all seen all the challenges that the economy industry has faced historically in being able to develop.

Speaker Change: Industrialize and enable this next generation of capabilities on vehicles.

Speaker Change: And bring it out into <unk> into the commercial world and into consumers' hands and really all of us have been laid bare to the publican in recent history in the media and whatnot.

Austin Russell: A lot of this just comes down to the ambition of what most have been in the industry have been trying to do of replacing the driver altogether, you know, with robo taxis. And this is where from Luminar from the beginning, we've taken a strategy of enhancing the driver and really focusing in on production vehicles. And that's where Luminar is succeeding, where the rest of the industry. In the last 10 years of what we've done at Luminar, I've really been leading up to this global launch on production vehicles right around the corner with Volvo, and we'll be covering this at Luminar. You know, to date, you know, we've invested, what, over a billion dollars to develop a technology foundation product, you know, industrialization capabilities, and this year, it's showtime, and it's true that, you know, there are, you know, incremental costs, like maybe what you saw this quarter that, you know, was more than the target, and we don't control all the timing, you know, for the vehicle launches, and we've learned a lot through the years on how we can even be more efficient, but now that's in our rearview mirror.

Speaker Change: A lot of this just comes down to the ambition of what most have been in the industry have been trying to do of replacing the driver altogether with Robo taxis and this is where from illumina or from the beginning we've taken a strategy of enhancing the driver and really focusing in on production vehicles, and that's where illumina are succeeding where the rest of the industry Hasnt.

Speaker Change: And the last 10 years of what we've done at luminaire.

Speaker Change: Really been leading up to this global launch on production vehicles right around the corner with Volvo and we'll be covering this at luminary.

Speaker Change: To date, we've invested but over.

Speaker Change: $1 billion to develop the technology foundation product industrialization and capabilities and this year at Showtime and it's true that there are incremental costs like.

Speaker Change: Maybe what you saw this quarter that was more than the target and we don't control the timing for the vehicle launches and we've learned a lot through the years on how we can even be more efficient, but now that's in our rearview mirror.

Austin Russell: And for the first time, our multibillion-dollar order book is going to be converting to revenue this year. For the first time, we're going to start seeing the benefits around the world in consumers' hands. And, you know, of course, automakers are going to be, well, maybe I shouldn't say of course, but in the case of Luminar, automakers are going to be beginning to directly market our technology to their consumers. And this initial EX-90 launch is going to be preceded by a flurry of additional mass-produced vehicle launches by automakers around the world over the coming 36 months. So, yeah, it's a very exciting time, and certainly going to be enabling a lot of additional operational and economic efficiencies and exponential economic growth as we start realizing the benefits of the economies of scale with this program. So, very excited, everyone.

Speaker Change: And for the first time, our multibillion dollar order book is going to be converting to revenue. This year for the first time, we're going to start seeing the benefits around the world into consumers' hands and of course, the automakers are going to be good.

Speaker Change: Well, maybe I Shouldnt say of course, but in the case of Illumina automakers are going to be getting to directly market our technology to their consumers.

Speaker Change: This initial E X 90 launch is going to be preceded by a flurry of additional mass produced vehicle launches with automakers around the world over the coming 36 months following us.

Speaker Change: So yes.

Speaker Change: Yes.

Speaker Change: Very exciting time, certainly going to be enabling a lot of additional operational and economic efficiencies an exponential economic growth as we start realizing these benefits of the economies of scale.

Speaker Change: With this program. So very excited everyone stay tuned for a special Luminaire day on April 23rd and happy to be able to jump in with a with Tom here.

Austin Russell: Stay tuned for a special Luminar Day on April 23rd, and happy to be able to jump in with Tom here, to be able to talk through the business, what's ahead, and Yeah, well, sort of what we've had as it relates, of course, to this year. We were able to hit the majority of the overall milestones that we had throughout 2023. And we can give a little bit more commentary and questions on all of that. Again, the critical part is all around the core execution leading up to this launch. But, you know, we have also, in addition to that, been able to continue to scale our business, adding additional vehicle model commercial programs, you know, overall to our business plans. But again, the critical part is all about execution.

Speaker Change: To be able to talk through the business what's ahead and.

Tom: Yes, well sort of what we've had as it relates of course to.

Tom: To this year, we were able to hit the majority of the overall milestones that we added throughout 2023.

Tom: And we can give a little bit more commentary and questions on all of that though again, a critical part of the wall around the core execution, leading up to this launch.

Tom: But we have also in addition to that.

Tom: <unk> been able to continue to scale our business, adding additional.

Tom: Vehicle model of commercial programs overall to our business plans, but the again the critical part is all about execution and that's what the industry hasn't done historically to be able to successfully launch and that's what we're excited to be able to make happen for the first time.

Aileen Elizabeth Smith: That's what the industry hasn't done historically to be able to successfully launch, and that's what we're excited to be able to make happen for the first time. I think we're ready for Q&A, Aileen, if you want to start us off. Great, thanks, Austin. So we are going to begin with a couple questions from our state platform.

Tom: Okay.

Tom: We're ready for Q&A Aileen, if you want to start us off.

Aileen: Great. Thanks, and then so we are going to begin with a couple of questions on our state platform and our first question was reiterated in a couple of different capacities.

Austin Russell: Our first question was reiterated in a couple different capacities. But as such, I think there exists an information gap between the performance of the company and how it's being evaluated by Wall Street. Are there any plans to bridge this divide and bring new investment into the company and stock? Yeah, I mean, I think, you know, Tom knows this just as well as I do.

Aileen: But as such I think there exist an information gap between the performance of the company and how it is being evaluated by Wall Street are there any plans to bridge this divide and bring new investment into the company and stock.

Speaker Change: Yes, I mean I think.

Speaker Change: Tom Gnosis, just as well as I do and you obviously, we all have but very much shared in our in the frustration from some of these kind of market dislocations and whatnot and.

Austin Russell: And, you know, obviously, we all have very much shared in the frustration from some of these kind of market dislocations and whatnot. And, the reality is, there has been a disconnect in value over the last few years relative to what we've been able to accomplish. I mean, everything from, again, scaling from technology to product to going into now, you know, series production going from, like, an order book of less than $100 million to $4 billion, you know, from being able to actually successfully invest, develop, and deliver on these kinds of capabilities. And that's not to say that there's a lot more to do.

Speaker Change: The reality is is that there has been a disconnect in value over the last few years relative to what we've been able to accomplish I mean everything from again scaling from technology to products are going into now.

Speaker Change: Series production going from what like a.

Speaker Change: Order book of.

Speaker Change: Less than $100 million.

Speaker Change: $4 billion from being able to actually successfully.

Speaker Change: Develop and deliver on these kinds of capabilities and that's not to say that there is a lot more to do.

Austin Russell: We've got a lot to prove out, but there are also a lot of other factors that come into play and certain technical factors that I've had, for better or worse, to learn about along the way. The important part is, I think, you know, when you talk about value. Luminar as a company is operating in a way to be able to deliver that long-term value, you know, overall, to our shareholders. And that's our North Star on that.

Speaker Change: We've got a lot to prove out but there's also a lot of other factors that come into play in certain technical factors that.

Speaker Change: I've had for better or worse to all learned about through the way the important parties I think when you talk about value.

Speaker Change: Luminaire.

Speaker Change: As a company.

Speaker Change: Is operating in a way to be able to deliver that long term value overall to our shareholders and that's that our north star in that and that's exactly what we're doing to be able to use I would say also comparable companies historically to what.

Austin Russell: And that's exactly what we're doing to be able to use, I would say, also comparable companies historically to what, you know, NVIDIA, the Teslas, the Mobilize of the world have done at equivalent stages as benchmarks towards our journey to success. And as we execute, we have the opportunity to be able to become exactly that. Okay, our second question from the same platform. In its 10k filed on February 23rd, Mobileye noted that it's no longer actively working with Intel on its FMCW LiDAR development. Furthermore, they noted that Mobileye is pursuing a different LiDAR technology. Can you please elaborate on how this affects Luminar?

Speaker Change: And video is a tough was the mobilized the world I've done at equivalent stages as benchmarks.

Speaker Change: Towards our journey to success and as we execute.

Speaker Change: We have the opportunity to be able to come exactly like that.

Speaker Change: Okay and your second question from the same pad one and its 10-K filed on February 23rd Mobile and noted that it is no longer actively working with Intel on its FMC any light or development. Further they noted that <unk> is pursuing a different lidar technology can you. Please elaborate.

Speaker Change: And how this affects the monarch.

Austin Russell: So, you know, when it comes to mobile, I probably can't, you know, comment on our partners' internal business. But when it comes down to it, I will say that that's probably just yet another validating point that this stuff is hard, like it's not easy to be able to take things from. People dramatically underestimate what it takes to go from, you know, PowerPoints to, you know, technologies to industrialized, you know, products at scale. And I would just say that that's not even specific to any individual company but also, more generally, the industry at large. And obviously, as more and more people realize this, Aileen Smith, Mark Delaney, Joseph Cardoso, Lazr, reading the tea leaves, you know, in the industry to find that map, because, And it costs real money to keep running these programs.

Speaker Change: Yeah. So when it comes to mobile I probably can't.

Speaker Change: Comment.

Speaker Change: Our partners internal business, but when it comes down to I will say that that's probably just yet another validating point that this stuff is hard like it's not easy to be able to.

Speaker Change: Take things from.

Speaker Change: People will dramatically underestimate what it takes to go from you know.

Speaker Change: Powerpoints too.

Speaker Change: You know technologies to industrialized.

Speaker Change: Products for scale and I would just say that's not even specific to any individual as a company, but also more generally the industry at large and obviously.

Speaker Change: As more and more people.

Speaker Change: Realize this is ultimately more and more beneficial to limit our where we have done that and I think that this is again all the more important to be able to show how we can successfully.

Speaker Change: Launch as well people are.

Aileen Elizabeth Smith: Okay, with that, we're going to switch gears and take a couple of questions from our analyst community. I would remind our analyst community that we will allow one initial question as well as a couple of follow-ups. Our first question is going to come from John Babcock at Bank of America. Hey, good afternoon, guys.

Speaker Change: Reading the tea leaves you know in the industry too for that matter. Because you know this is it a cost real money to keep running these programs too.

Speaker Change: Okay with that.

Speaker Change: We're going to switch gears and take a couple of questions from our analyst community I would remind our analyst community that we will allow one initial question as well as a couple of follow ups.

First question is going to come from John Babcock Bank of America.

John Babcock: Hey, good afternoon guys.

John Babcock: Um, I guess just the first question I had on the order book. I noticed there was a change in the way that you're calculating that. And, you know, last quarter, you provided guidance that you expected to have this year at around a billion plus an additional order book. I think you mentioned it was around 800 million.

John Babcock: That's the first question I had on order book I noticed there was a change in the way that youre calculating that and.

John Babcock: Last quarter, you provided guidance that you expect it to have this year at around $1 billion plus an additional order book I think you mentioned it was around $800 million. We're just wondering how much of the impact.

John Babcock: We're just wondering how much of the impact, you know, or the gap there, you know, was from the change in the calculation. And also, if you could just provide specifically how much that calculation overall impacted 2023. That would be great. Sure. And John, it's Tom.

John Babcock: Are the gap there was from the change in the calculation and also if you could just provide specifically how much that calculation overall impact in 2023 that would be great.

John Babcock: Sure and John It's Tom Let me start off with that and first let me talk about how we've done it differently.

Tom Fenimore: Let me start off with that, and first, let me talk about how we've done it differently. We ended up with 23 with about 25 awarded vehicle lines or commercial programs.

Tristan Gerra: We ended 2003 with about 25 awarded vehicle lines or commercial programs.

Tom Fenimore: And what we've done this year that is different from what we did last year, and this is just part of us, you know, being on that verge of the SOP and continuing to mature, is we listed each of those vehicle lines. We then went to IHS as, I would say, the ground truth for the volumes to use in calculating our order book, as well as our internal forecasting. So we used IHS as the source of those volumes for SOP dates and EOP dates for the vehicle lines that we have awarded.

Tristan Gerra: And what we've done this year that is different than what we've done last year and this is just part of us being on that versus the ESOP and continuing to mature.

Tristan Gerra: Is we listed each of those vehicle lines. We then went to IHS as I would say the ground truth for the volumes to use in calculating our order book as well as our internal forecasting. So we used IHS as the source of those volumes for <unk> data.

Tristan Gerra: In ERP dates.

Tristan Gerra: For the vehicle lines that we have awarded.

Tom Fenimore: If we're standard, like on the Volvo EX90, you just take 100% of that. If you are not standard, what we've done is we've assumed a blanket 25% take rate. You know, we looked at market data. We looked at what our customers were telling us. It typically ranged between 5% and 50%. We kind of used 25%, which is a little less than the midpoint, and put a pin in that.

Tristan Gerra: If were standard like on the Volvo <unk> 90, that's you just take 100% of that if you are not standard what we've done is we've assumed a blank at 25% take rate.

Tristan Gerra: Looked at market data, we looked at what our customers are telling us it typically range between 5% and 50%.

Tristan Gerra: Use 25%, which is a little less than the midpoint.

Tom Fenimore: We'll talk about sensitivity analysis in a sec. And then we rolled up the order book that way. You know, that resulted, I would say, if you kind of look at on an apple-to-apple basis relative to the business we already won, about a $400 million decrease. Because, I would say, on average, ISS has more conservative volume estimates than I would say, you know, the more customer-derived ones that we've used historically. If you look at what our total gross wins were during 2023, it was about 800 million.

Tristan Gerra: Depending on that we'll talk about a sensitivity analysis and in effect and then we wrote up the order book that way.

That resulted.

Tristan Gerra: I'd say, if you kind of look at on an apples to apples basis relative to the business. We already won about a $400 million decrease because I would say on average.

Tristan Gerra: ISS has more conservative volume estimates then I would say.

Tristan Gerra: More of the customer derived ones that we've used historically if you look at what our total gross wins were during 2023.

Tom Fenimore: It was still a little bit shy of the billion that we forecast because some decisions we were expecting to make in 23 had been deferred into 24. We really didn't lose anything that we wanted to win, but I would say that, you know, the more conservative forecast there kind of was about a $400 million headwind in terms of the order book size that we've reported. Now, going back to the take rate of 25%, if you want that to be 5% higher to 30% or 5% lower to 20% or whatever number you want to choose, a 5% change in that assumption impacts the size of our order book by about $400 million. So, we wanted to give that additional disclosure so that people can, you know, make their own estimates of the order book size there.

Tristan Gerra: It was about $800 million was still a little bit shy than the 1 billion that we forecast because some decisions we were expecting to make in 'twenty three had been deferred in the 'twenty four we really didn't lose anything that we wanted to win but I would say that.

Tristan Gerra: More conservative.

Tristan Gerra: Forecast there kind of what.

Tristan Gerra: About a $400 million of headwind in terms of the order book size that we've reported now going back to the take rate of 25%. If you want that to be 5% higher to 30% or 5% lowered to 20% of whatever number you want to choose.

Tristan Gerra: 5% change in that assumption impacts decided that our order book by about $400 million. So we wanted to give that additional disclosure. So that people can make their own estimates of the order book size, there, but I would say, it's a more analytical bottoms up based on more third party sources for volumes as opposed to kind of using what our customers have provided us.

Tom Fenimore: But I would say it's a more analytical bottom-up based on more third-party sources for volumes as opposed to kind of using what our customers have provided. And on that note, I think what's great is we want to help set the standard in the industry when it comes to order book type of calculations because, you know, we seem to have, I would say, radically different views of what those can amount to. And that's why it's like, you know, it's like, Oh, if you use the same kind of calculation, then our order book would be 100 billion, you know, or something at this point. Which is that, at that point, it just becomes irrelevant.

Speaker Change: And on that note.

Speaker Change: What's great is we want to help set the standard in the industry. When it comes to order book type of calculations, because we've seen.

Sort of I would say radically different.

Speaker Change: Views of.

Speaker Change: What those can amount to and that's why it's like it's like Oh, if you use the same kind of calculation. That's in our order book would be 100 billion or something at this point, which is that at that point.

Tom Fenimore: You know, we're probably not even probably still getting a fraction or not much credit at all today for even the order book that we have. So that's where I think what is cool is that now, whereas when we were first um doing this, even before you know Tom was on board some years ago, IHS volumes didn't exist for any of these things, but now, okay, like this, these these models are uh starting to come to fruition, and that's, at least exciting to me, starting what? month, and the count. That's very helpful. Thanks for all the color.

Speaker Change: Becomes irrelevant.

Speaker Change: We're probably not even Robert so getting a fraction or not much credit at all today for even the order book that we have so that's where.

Speaker Change: I think what is cool is that now, whereas I think when we reversed.

Speaker Change: Doing this even even before.

Speaker Change: Tom was on board some years ago, there weren't like IHS volumes didn't exist for any of these things are now okay. Like this. These these models are starting to come to fruition and that's that's what's at least excited.

Speaker Change: Uh huh.

Speaker Change: In months and they come down.

Speaker Change: Got it that's very helpful. Thanks for all the color I guess, just a last question before I turn it over.

John Babcock: I guess just a last question before I turn it over. You know, I think one of the, you know, difficult aspects of certainly your industry is trying to, you know, kind of gauge like how much adoption is for the different companies and how they're kind of thinking about that. I'm just kind of curious, is there any change, you know, in how companies are anticipating the adoption of autonomy? It seems like it's getting pushed off broadly.

Speaker Change: I think one of the.

Speaker Change: Difficult aspects of certainly your industry is trying to.

Speaker Change: Kind of gauge like how that how the adoption is for the different companies and how they are kind of thinking about that.

Speaker Change: Just kind of curious is there any change.

Speaker Change: And how companies are anticipating the adoption of autonomy. It it seems like it's getting pushed off broadly, but just wondering if there has been any material change over the last quarter. So we've read about is falling and that does have some natural flow through given the technology adoption in evs relative to currently for ice vehicles anyway, but just overall, if you could kind of talk about.

Austin Russell: But, you know, just wondering if there has been any material change over the last quarter. So we've read about EVs falling in and that that does have some natural flow through given the technology adoption in EVs relative to ICE vehicles, anyway. But just overall, if you could kind of talk about, you know, how that cadence has changed, if it has changed at all from last quarter, that'd be useful. Do you want to go, or do you want me to do it?

Speaker Change: How that cadence has changed if it has changed at all from last quarter that useful.

Speaker Change: And whenever you want me to do.

Austin Russell: Well, yeah, maybe we'll start off that way. I would say when it comes to the overall industry, we actually have the lead on this. Now the majority, and actually around 80% of the top 20 automakers are planning on integrating either our LIDAR or just long-range LIDAR generally by 2030 and have it on their roadmap to be able to do that into their production vehicles. So there definitely is.

Speaker Change: Well, maybe I'll start off that.

Speaker Change: I would say when it comes to the overall industry.

Speaker Change: We actually.

Speaker Change: We have the roll up on this.

Speaker Change: Now the majority and actually around 80% of the top 20 automakers are planning on integrating <unk>.

Speaker Change: Either or lidar or long range Lidar generally by 2030 and have on our roadmap to be able to do that into their production vehicles. So there definitely is a.

Austin Russell: And for the remaining portion, I think it's like the remaining 15% is, you know, they're figuring things out, and 5% isn't, but so there's no shortage of interest and demand and everything in terms of what. Ultimately, the ability for these technologies to get integrated across vehicles is the whole job of what. What we have to do is how do we find ways to further accelerate that adoption curve? I mean, naturally, to the point of, like, 1 thing that I think a lot of people in the tech industry. Don't appreciate as much since, you know, we're kind of this weird mix of both a technology company and an automotive company at the same time is that automotive design cycles are very long. Um, as I know, you know, of course, and this is where you take a look, historically, at the adoption cycles for new kinds of technologies in the automotive industry. And you're talking about like 20 years from the time that something is first introduced to when it is standardized, ultimately on.

Speaker Change: And for the remaining portion I think it's like the remaining 15% is figuring out in 5% isn't but so theres no theres no shortage of interest and demand and everything in terms of what.

Speaker Change: Ultimately the ability for these technologies to get integrated across our vehicles is the whole job of what we have is how do we find ways to further accelerate that that adoption curve I mean naturally to the point of like one thing that I think a lot of people in the tech industry don't appreciate.

Speaker Change: As much.

Speaker Change: We're kind of this.

Speaker Change: Weird mix of both a technology company and an automotive company at the same time as the automotive design cycles are very long.

Speaker Change: I know you know of course.

Speaker Change: And this is where you take a look like historically at the adoption cycles for new technologies in the automotive industry and you are talking about like 20 years from the time that its something Thats first introduced him when he was standardized ultimately on every vehicle.

Austin Russell: And I think for LiDAR generally, I think we're actually seeing a faster adoption curve than probably any other technology in automotive history, or even just the overall concepts of, what like battery electric vehicles are still like only a single digit percentage, you know, a vehicle sold after after 20 years. This stuff takes time. But the economics are massive, you know, when you're able to realize that. And that's why it's just so powerful to have real market penetration into this. And that's where I'd also say it kind of goes back to, and one of the things I put in the letter is, quality over quantity.

Speaker Change: And I think for Lidar generally.

Speaker Change: I think we're actually seeing a faster adoption curve than probably any other technology, maybe in automotive history or even just the overall concept of like.

Speaker Change: I think what like battery electric vehicles are still like only a single digit percentage.

Speaker Change: April sold after after 20 years like this stuff takes time.

Speaker Change: But the economics are massive when you were able to realize that and that's why it is so powerful to have real market penetration into this and Thats why I don't see it.

Speaker Change: It goes back to one of the things I put in the letter is.

Speaker Change: Quality over quantity.

Austin Russell: Because you could have a dozen different OEMs that you're working with, but if it's just on a single low-volume vehicle that may or may not happen, that's only so meaningful. If you are able to successfully come to fruition and realize the value and benefits of the partnerships that you have, I mean, you're talking about tens of billions of dollars in value that you can successfully realize, even from, for example So that's where it's going to be important. I think to the overall point, though, on EVs, and the last point that I want to address, there is, to your point, that is very real in terms of the, you know, growth headwinds that I think a lot of EV companies are facing. And I mean, ultimately, yeah, you're the analyst on that, not me, but from our conversations with some of the, like, pure EV companies, that's always the I think, though, that what is important, and this is also a misconception, I think, about Luminar generally, is the idea that we are only for EVs.

Speaker Change: Because.

Speaker Change: You can have a dozen different Oems that youre working with but if it's like.

Speaker Change: Just on a single low volume vehicle that may or may not.

Speaker Change: It happened, it's like only so meaningful if you are able to successfully come to fruition and realize the value and benefits of the partnerships that you have I mean, youre talking about tens of billions of dollars in value that you can successfully realized from for example, it just northeast you'll see existing customers that we're working with so that's where.

Speaker Change: It's going to be important I think to the overall point, though on Evs and the last one I did want to address that there is to.

Speaker Change: To your point that is very real in terms of the.

Speaker Change: Growth headwinds that I think a lot of other companies are facing.

Speaker Change: Ultimately yes.

Speaker Change: Who are the analysts on that on that not me, but from our conversations with some of their like pure EV companies. That's that's always the case I think though that.

Speaker Change: What is important and this is very much also a misconception I think about luminaire generally is that is the idea.

Austin Russell: The amount of companies, the amount of people that I've actually had that have literally, like, gone out and called Luminar, like an EV company or like, you know, an EV tech company, is surprising, you know. So, I think what is actually probably very surprising to many is that for the majority of vehicle platforms that we're on, they're actually, that they do include combustion vehicle models or variants. And that's where I think that there is going to be a lot of value growth. And the reality is that it is true that combustion engine vehicles aren't likely to disappear overnight. But our technology, and the safety benefits of this technology, and the time-saving benefits of this technology, are independent of power, so it's independent whether it runs on dinosaur juice or lithium ion. So that's sort of the perspective that we have, and I think, you know, doesn't sort of materially affect the value or value proposition of what we're doing overall. But yeah, that's the perspective I take.

Speaker Change: That we are only for evs.

Speaker Change: The amount of company the amount of people that I've actually had the that have literally like on other call luminary like an easy company or life.

Speaker Change: Company is surprising.

Speaker Change: So I think what is actually.

Speaker Change: Very surprising to many is that for the majority of vehicle platforms that were on there actually that actually do include combustion.

Speaker Change: Vehicle models or variants and that's where.

Speaker Change: I think that there is going to be a lot of value growth and the reality is is that it is true as the combustion engine vehicles aren't white, just disappearing overnight, but our technology and the safety benefits of this technology and the time saving benefits of this technology is independent of powertrain.

Speaker Change: So its independent whether it.

Speaker Change: The dinosaur Drusa lithium ion so that's that.

Speaker Change: That's sort of the perspective that we have and I think.

Speaker Change: Doesn't sort of materially affect the.

Speaker Change: Value or value proposition of what we're doing overall so but.

Speaker Change: But yes, that's the perspective.

Josh Bacalter: Okay, thank you. Our next question comes from Josh Bacalter at TD Cowen. Hey guys, thanks for taking my questions. To start, I'll follow up on the sort of John's first one. Unless I missed it in the shareholder letter, you didn't provide an order book target for this year. I was wondering if you could maybe speak to the rationale behind why you're not providing one this year. And, you know, maybe if you're not going to quantify, are there any sort of qualitative commentary you can give on upcoming RFPs and RFQs that can help us better understand sort of the business funnel? Thank you.

Okay. Thank you.

Our next question comes from Joshua Culture at TD, Canada.

Joshua Culture: Hey, guys. Thanks for taking my questions just following up on the sort of John's first one.

Joshua Culture: Unless I missed it in the shareholder letter you didn't provide an order book target for this year I was wondering if you could maybe.

Joshua Culture: Speak to the rationale behind why Youre, not providing that this year and maybe if youre not going to quantify it or any sort of qualitative commentary you can give on upcoming rfps.

Joshua Culture: So you can help us better understand sort of the business model.

Tom Fenimore: Yeah, look, Josh, I think it's fair to say we're going to significantly grow our order book this year. And now 2024 is when we're going to be actually transitioning the order book from potential revenue into actual revenue. And so, what we're going to be talking a lot more about this year is what our revenue is going to look like, particularly from series production revenue. We gave some guidance for what we expect that to be on a quarterly run rate in the latter half of this year, particularly in the mid-30 range. We're confident that Volvo is going to start production on the EX90 in Q2.

Speaker Change: Yes, Jonathan I think it's fair to say, we're going to significantly grow our order book. This year. We're now at 2024 is where we're going to be actually transitioning in the order book from potential revenue into actual revenue and so we're going to be talking a lot more about this year is what our revenue is going to look like procuring firms, particularly from series production.

Speaker Change: <unk> revenue.

Speaker Change: Gave some guidance for what we expect that to be on a quarterly run rate in the latter half of this year, particularly in the mid 30 range.

Speaker Change: We're confident that although it's going to start production on the <unk> 90.

Tom Fenimore: I think the ramp up and the exact pace, as we get more confidence and clarity on what that exactly is going to be, we're going to refresh that as well. The order book is going to go up significantly. And what I would say is in the conversations we're having with customers, both newer customers and existing customers, there are some macro headwinds that we talked about before, like EB headwinds and how that impacts our product planning, as well as, I would say, some of the software complexity around getting these systems right. But I would say when it comes to Luminar, they want to actually see us get high volume production, which we will in the coming weeks And I think they want more clarity on what our next generation ladder is going to look like, and we'll talk more about that at Luminar Day.

Speaker Change: In Q2, I think the ramp up in the exact pace as we get more confidence in.

Speaker Change: And clarity on what that exactly is going to be we're going to refresh that as well. The order book is going to go up significantly and what I would say is.

Speaker Change: In the conversations we're having with customers, both new customers and existing customers.

Speaker Change: There are some macro headwinds that we talked about before like E b headwinds and how that impacts our product planning as well as you know I would say some of the software complexity around getting the systems that rate, but I would say when it comes to alumina or they want to actually see us get to high volume production, which we will in the coming weeks.

Speaker Change: And I think they want more clarity around our next generation later, it's going to look like and we'll talk more about that.

Tom Fenimore: Once we get those two things, that's going to unlock a lot more business, and as we win it, we'll set more specific targets. Understandable. Thank you for all the color there, Tom.

Speaker Change: <unk> our day once we get those two things that's going to unlock a lot more business.

Speaker Change: And as we win it will set more specific targets.

Speaker Change: Understood. Thank you for all the color there Tom actually another one for you.

Josh Bacalter: Actually, another one for you. You called out the goal, I think, of $150 million in liquidity exiting the year. Any more details you can provide on sort of how we bridge that number? And maybe you can give us details on your expectations for the OPEX trajectory, because you're in the ramp phase, but you also mentioned that industrialization costs should be coming down. And it sounds like there's also some belt tightening.

Speaker Change: You called out the goal I think of $150 million in liquidity exiting the year any more details you can provide on sort of how we bridge that number and maybe you can give us details on your expectations for Opex trajectory ramp those but you're also making debt provision costs will be coming down and it sounds like Theres also some belt tightening.

Tom Fenimore: So it would be great to hear some more color on how you expect to get to the $150 million number. Thank you. Yep. And so, you know, the starting point we're using there is the 340, which is 290 million in cash and the 50 million in credit facility that we recently put in place. You know, our prime objective has always been to get to Volvo SOP. And if we have to spend a little bit more to get there at the sacrifice of our near-term results, like what we did in Q4, we're going to do that. But now that we're getting, you know, really into Volvo SOP, we're really going to start the belt tightening. We're going to start aggressively attacking our unit economic costs, particularly the BOM and the manufacturing conversion costs. And then we're going to look to streamline Luminar and really assess what is core to us, and then you know, what are some things that can be done better in other ways.

Speaker Change: Great to hear some more color on how you expect to get to the 150 million number. Thank you.

Speaker Change: And so we are kind of the starting point, we're using there is the $3 40, which is a $2 90, a catch in the $50 million of.

Speaker Change: Credit facility that we recently put in place.

Speaker Change: Our primary objective has always been get the ball, though paint if we have to spend a little bit more to get there at the sacrifice of our near term results like what we did in Q4, we're going to make that but.

Speaker Change: Now that we're getting really are at <unk>.

Speaker Change: Are we going to start to belt tightening, we're going to start aggressively attacking our unit economic costs, particularly the bomb and the manufacturing conversion costs and then we're going to look to streamline luminaire and really assess what is core to us and then what are some things that.

Speaker Change: It can be done better in other ways and we're going to start really looking at how we can streamline the organization.

Tom Fenimore: And we're going to start, you know, really looking at how we can streamline the organization. That, as well as the wind-down of some of the IRAS industrial costs, are going to continue to keep our net cash spend in the right direction. It started that way in Q4.

Speaker Change: As well as the wind down of some of the Iris industrial and costs are going to continue to have our net cash spend in the right direction. It started that way in Q4, we were hoping it will be a little bit better, but it was still a big improvement from what the first half of the year look like there.

Tom Fenimore: You know, we were hoping it would be a little bit better, but it was still, you know, a big improvement from what the first half of the year looked like there. You know, I would say our internal targets are a lot more aggressive than the 150 we have here. But I think, once again, we want to get a little bit more clarity on exactly what that Volvo ramp-up is going to look like and then what the corresponding cost ramp-down looks like. And then we'll provide more clarity on some of the actions we're taking here in a little bit. Thank you all for the book.

Speaker Change: I would say our internal targets are a lot more aggressive than the $1 50, we have here, but I think once again, we want to get a little bit more clarity on exactly what that Volvo ramp up it's going to look like and then what the corresponding costs ramped down looks like and then we'll provide more clarity on some of the actions we're taking here in a little bit.

Speaker Change: Thank you I'll cede the floor.

Austin Russell: Absolutely. And I'll also say that, you know, obviously, when it comes to the overall business and environment, I think, I just want to make sure there's kind of brought up where, you know, we're not oblivious to the overall change in macro environment, which, you know, we know, there has been a significant change, there's been changes in industries, changes, other stuff, not all of it is, you know, explained, you know, a market standpoint, but just more generally, you know, I think it's totally fair to say that the kinds of investments that we're going to be doing going forward are going to be done on a much more conservative basis. Like, and sometimes to be honest, it's painful, because it's like, oh, like, we know this is good.

Speaker Change: Absolutely.

Speaker Change: I'll also say that you know obviously when it comes to just the overall business and environment I think.

Speaker Change: Just want to make sure there's kind of brought up where we're not oblivious to the overall change in macro environment, which we know there has been a significant change there's been changes in interest rates changes other stuff not all of it is.

Speaker Change: You know explain like I said from a market standpoint, but just more generally.

Speaker Change: I think it's totally fair to say that <expletive>.

Speaker Change: The kinds of investments that we're going to be doing going forward are going to be done on a much more conservative basis, like and sometimes to be honest, it's painful because it's like all of us.

Austin Russell: This is absolutely going to have a great five to 10 year payout if we do X, Y, and Z. But like, that's the kind of thing that maybe brings you from like a 10 billion company to like a 20 billion company. Like, like, I think that the point is that we should focus on the core of what's driving and validating the value of what we have. Let's focus on validating the order book. That's the same reason why, like, honestly, it's not, it's not like, We could continue to add billions of dollars to the order book for everything. That's fantastic, but we're not actually even getting credit for even a fraction of what we have today. So that's why I think focus on the floor, focus on validation.

Speaker Change: No. This is good this is absolutely going to have like a great five to 10 year payout, if we do X y and Z.

Speaker Change: Like that's the kind of thing that maybe brings you from like a $10 billion company into like <unk>.

Speaker Change: $20 billion company like I think the point is is that let's focus on the pour of whats driving and validating the value of what we have lets focus on validating the order book that's the same reason why like.

Speaker Change: Honestly, it's not it's not.

Speaker Change: We can continue to add billions of dollars to the order book for everything that's fantastic but.

Speaker Change: We're not actually even really getting credit for even a fraction of what we have today. So that's why I think.

Speaker Change: Focus on the floor focus on validation and I think just to be to be Frank there definitely are.

Itay Michaeli: And I think just to be frank, there definitely are greater efficiency opportunities in particular given this over a billion investment that we've made historically. We're past that peak of cash spend. And we're riding that tailwind from that big investment that we've made to be able to realize the full benefits for the next decade to come from that technology foundation, product foundation, and industrial capabilities. Our next question comes from Itay Michaeli at Citibank. Okay. Thanks, Aileen. Hey, everyone.

Speaker Change: Greater efficiency opportunities in particular, given this over 1 billion investment that we've made historically.

Speaker Change: We're we're past that peak of cash spend and we're riding that tailwind from that big investment that we've made to be able to realize the full benefit for the next decade to come from that Technology Foundation product Foundation industrial capabilities that we built.

Speaker Change: Thank you. Our next question. Our next question comes from ethane to Kelly.

Speaker Change: Okay.

Kelly: Great. Thanks, Hey, everyone. Just a couple of thoughts from me first.

Itay Michaeli: Just a couple of thoughts for me. First, on gross margins. I know in the past you have provided some targets there. If you do hit kind of when you hit the mid $30 million target, any call you can share, Tom, around how we should be thinking about kind of gross margin for the company at that point? Yeah, look, we're hoping to see some improvements in Q4. It took a little bit more effort to get ready for the Volvo SOP, which, as I mentioned before, was the prime Directive and the right priority here at Luminar. It's all going to be dependent, Itay, on how quickly that volume ramps up and how quickly we can ramp down the cost, both the unit economics as well as some of the fixed costs that we have embedded in our COGS, which is a fair amount.

Kelly: On gross margins I know in the past you have provided some targets there.

Kelly: If you do hit kind of what when you hit that in the mid $30 million target any color you can share come around how we should be thinking about kind of gross margin for the company at that point.

Kelly: Yes.

Kelly: We're hoping to see some improvements in Q4, it took a little bit more effort to get ready for the <unk>, which as I mentioned before was the prime directive and the right priority here at Luminar.

Kelly: It's all going to be dependent on.

Kelly: On how quickly that volume ramps up and how quickly we can ramp down costs, both the unit economics.

Kelly: As well as some of the fixed costs that we have embedded in our Cogs, which is a fair amount.

Itay Michaeli: And so we are actively, you know, working on a plan to make that happen as fast as possible. And as we get more clarity on the ramp-up at Volvo and the corresponding ramp-down in the cost, which is going to be the biggest driver of that, we'll get more clarity there. But, you know, I think it's very safe to say that you're going to see a fair amount of improvement as we get into the latter half of the year. Absolutely.

Kelly: So we are actively.

Kelly: Working on a plan to make that happen as fast as possible and as we get more clarity on the ramp up at Volvo and the corresponding ramp down and the cost which is going to be the biggest driver on that we'll give more clarity there, but I think it's very safe to say that youre going to see a fair amount of improvement as we get into the latter half of the year.

Kelly: Absolutely the other thing that I noted more generally is that.

Kelly: There is really.

Kelly: This overall notion of Cogs is like.

Kelly: Extremely confusing to a point where.

Kelly: Like I have been sort of have to dissect it of like what are all the different components that go into this in turns out that's actually like them.

Kelly: Rising amount of components that go into this particularly from the industrialization signed as well.

Austin Russell: The other thing that I note more generally is that there's really, this overall notion of COGS is like Aileen Smith, Tristan Gerra, Samik Chatterjee, Aileen Smith, Joseph Cardoso, Lazr Aileen Smith, Tristan Gerra, Samik Chatterjee, Aileen Smith, Joseph Cardoso, Lazr, you know, it is an increment like from a variable cost perspective So that's what is positive, and obviously, not what is immediately obvious. But I think that's where we're gonna also have to figure out how we can, you know, better break out some of the industrialization costs. And most importantly, make sure that cost is still cost, you know, and we want to be able to realize the economy is a scale of Volvo and drive that down by, you know, the time that happens comes, you know, within the first half of the year. I got it. That's all very helpful. Thanks for the detail.

Kelly: Talking to everything from like literally consultant costs, all the way through life.

Kelly: Are there other one off costs that you have to be able to accomplish and I think that that's the part that we're really focused on driving of course, we're also focused on driving.

Kelly: Further the unit economics, but even today I mean it is.

Kelly: Uh huh.

Kelly: Yeah.

Kelly: It is incremental from a variable cost perspective, it is incrementally positive already which was how we originally underwrote some of their thinking around <unk>.

Kelly: Gross margin more generally on a product basis.

Kelly: Across the board for the difference.

Kelly: A product capabilities that we have so that's that's what is positive and obviously not what is <unk>.

Kelly: Immediately obvious, but I think that's where we're going to also have to figure out how we can be.

Kelly: Break out some of the industrialization costs, but most importantly.

Kelly: <unk>.

Kelly: Make sure that.

Kelly: Cost of steel cost.

Kelly: And.

Kelly: We want to be able to.

Kelly: Realize the economies of scale of Volvo and drive that down by.

Kelly: At the time that happens to come.

Kelly: Within the first half of the year.

Speaker Change: Got it that's all very helpful. Thanks for the detailed maybe just a quick follow up going back to the.

Itay Michaeli: Maybe just a quick follow-up going back to the order book. To what extent was the shortfall in 23 tied to the timing of the next generation LiDAR? And if it was, you know, how should we think about when your customers can kind of make decisions, sourcing decisions around that next generation LiDAR? Yeah, look, we'll talk more about that. I think that's a very good question and observation there, Itay.

Kelly: The order book to what extent was the shortfall in 'twenty three tied to the timing of the next generation Lidar and if it and if it was how should we think about when your customers can kind of make decision sourcing decisions around that next generation Lidar.

Speaker Change: Yes look I will talk more about that I think thats a very good question and observation there you take what I would say is.

Tom Fenimore: What I would say is, you know, I've always described our next-gen LiDAR as kind of like a smaller, better, cheaper version. And we're looking to accelerate that in terms of, you know, some of the commentary, streamlining, making sure that we can industrialize our products faster, applying the lessons we've learned after, you know, over the last three years going through what we went through on iRIS to make sure that we can get it to the market as fast as possible. Because our customers really like that product. They really want it,

Kelly: <unk> always described our Nextgen lidar is kind of like.

Kelly: Smaller better cheaper and we're looking to accelerate that in terms of some of the commentary streamlining making sure that we can industrialize our products faster applying the lessons we've learned after over the last three years going through what we went with an iris to make sure that we can get it to the market as fast as possible because our our.

Kelly: <unk> really like that product they really want it.

Tom Fenimore: And I would say, you know, the timelines that we're working on for that are starting to align with, you know, their product planning cycle. It's not exactly there yet, but it will be there pretty soon. And, you know, I would say, you know, waiting a few months to get that next better product, you know, as opposed to kind of taking iRIS, which is a great product today, but, you know, taking that for, you know, six, 12 months and then transitioning to the next-generation one when there's a natural slowing, you know, as people revisit their product planning because of the EV headwinds, some That wasn't the reason for the order bookments. It was all just decision-making that was supposed to happen by 23 being deferred until the 24th.

Kelly: And I would say.

Kelly: The timelines that we're working on for that are starting to align with.

Kelly: There.

Kelly: Product planning cycle, it's not exactly there yet, but it's going to be there pretty soon.

Kelly: And I would say waiting a few months to get that next better product.

Kelly: Those are the kind of taking hours, which is a great product today, but.

Kelly: But.

Kelly: <unk> that for.

Kelly: Six to 12 months and then transitioning to next generation one when there is a natural.

Kelly: Slowing.

Kelly: As people revisit their product planning because of the EV headwind some of the software struggled sort of face and that is kind of aligning in I would say.

Kelly: We didn't lose anything that we wanted to win that was and the reason for the order book minutes or its all just decision, making that was supposed to happen by 'twenty three being deferred in the 'twenty four.

Austin Russell: Terrific. Very, very helpful. Thank you. Yeah, absolutely. And I will say that when it comes to product planning cycles, you know, in programs, part of the whole point is that there's a relatively limited number of automakers that are like our early adopters of something. Um, you know, that's part of the reason why a lot of this stuff is super lumpy as well.

Speaker Change: Terrific very very helpful. Thank you.

Speaker Change: Yes.

Speaker Change: Absolutely and I will say that when it comes to product planning cycles and programs.

Speaker Change: Part of the whole point is is that Theres a relatively limited.

Speaker Change: Like.

Kelly: Theres only so many automakers that like our early adopters of something.

Kelly: You know.

Kelly: That's part of the reason why a lot of this stuff is super lumpy as well.

Austin Russell: Along the way, you know, and I think, like I said, we're, as you said, we want everything we wanted to win this past year. The thing is that when it comes to product cycles for this, The way that we're kind of thinking about the roadmap side of it is, you know, a new kind of step function improvement in product every sort of three to four years. You know, I know a lot of times in certain industries will have like one to two year product cycles, but that's not particularly useful in the automotive industry because you have like seven year long program spans, and even then, you really want to be able to best leverage the economies of scale and supply chain.

Kelly: Along the way and.

Kelly: I think like I said, we're as you said, we want everything we wanted to win this past year.

Kelly: The thing is is that.

Kelly: When it comes to.

Kelly: Product cycles for this the way that we're kind of thinking about the roadmap side of it is.

Kelly: A new kind of step function improvement in product every three to four years I know a lot of times Im just certain industries will have like one to two year product cycles, but like it's not particularly useful in automotive.

Kelly: You have like seven year long.

Kelly: Program spans and even then you really want to be able to.

Kelly: Best leverage the economies of scale and supply chain.

Austin Russell: So that's, of course, you know, for the next-gen stuff, that's what I'm really excited to be able to unveil at Luminar Day given that the work that we've done for, like, five years now on the back end for this next generation technology development, and that's where the transformation can happen where whereas Iris, like an Iris plus, like it's great for what's there is, Scaled up to 25, you know, vehicle models and programs, you know, with that, but, um, that, you know, that, that, that's something that goes like a hundred thousand, you know, millions or whatever with the next generation. That's where you could, you could ultimately see this being on, you know, mainstream vehicles. It's capable of being on tens of millions of vehicles and scaling accordingly. So that's, that's really the breakthrough objective that we have ahead, but we'll share the details that we have in our deck. Thank you; I appreciate all the detail.

Kelly: So that's a key.

Kelly: Course.

Kelly: For the next Gen stuff, that's what I'm really excited to be able to unveil at <unk> day, given that the work that we've done for five years now on the back end for this next generation technology development and Thats where the.

Kelly: The transformation can happen, where whereas iris, but can I was plus like it's great for whats there as Tom mentioned like what now.

Kelly: Scaled up to 25 vehicle models and programs with that but.

Kelly: That's something that goes like hundreds of thousands millions or whatever.

Kelly: The next generation.

Kelly: That's where you can you could ultimately see this being an <unk>.

Kelly: Mainstream vehicles, it's capable of being on tens of millions of vehicles.

Kelly: Scaling accordingly, so that's really the <unk>.

Kelly: Breakthrough objective that we have ahead, but well sure.

Kelly: Sales of aluminum.

Tom Fenimore: All right, we're going to take a few questions from the FAY community. First one, how will the company offset the loss of business for autonomous vehicles as the need for them appears to be shrinking and not growing? Are you planning for growth or planning for sustainability? Look, we're planning for both. When you look at the order book and what we've calculated that, and you kind of look at autonomous robo taxis, I think there are a few million dollars, you know, so less than 1% in our order book. And that's simply from, you know, POs that we have in hand for this year. And so our order book is almost in the passenger vehicle and consumer space. That is a bet that Austin made several years ago to focus on that.

Kelly: Thank you Richard will detail.

Richard: All right, we're going to take a few questions from me first one how will the company offset the loss of business for autonomous vehicles, and the need appears to be shrinking and not growing and you're planning for growth are planning for sustainability.

Richard: We're we're planning for both when you look at the order book and what we've calculated that and you kind of look at autonomous Robo taxis.

Richard: I think there is a few million dollars.

Richard: So less than 1% and our order book and that simply from.

Richard: That we have in hand for this year and so.

Richard: Our order book is almost in the passenger vehicle and consumer space.

Richard: That is a bet that Austin made several years ago to focus on that.

Austin Russell: If, you know, if and when robo taxis get here in the near future, that's great. That is all upside to our order book, as well as our near and medium-term growth. Absolutely. And I would say not only that, but the kind of stuff that is oftentimes very much confused with Luminar, and obviously part of the frustration as it relates to the broader industry is that sometimes we get painted with the same brush.

Kelly: If.

Kelly: If and when Robo taxis.

Kelly: Here in the near future that's great that is all upside to our order book.

Kelly: As well as our near and medium term growth.

Speaker Change: Absolutely and I would say not only that is that.

Speaker Change: The kind of stuff that and this is oftentimes very much confused with luminaire and obviously part of the frustration of.

Speaker Change: As it relates to the broader industry is sometimes we get painted with the same brush but.

Austin Russell: But not only is some of this floundering they've had, you know, not that doesn't affect any portion of the business because we didn't have any of that, but we've had the focus on production vehicles the whole time. It actually is further validation of our thesis that we made the right moves on this. That's why we're also able to lead the charge. A relatively small company like Luminar shouldn't have won out over the Waymos and Cruzes and Argo, Auroras, and Apples and other stuff in the world to be able to be first to a global production vehicle with this kind of technology because it doesn't make sense.

Speaker Change: Not only are.

Speaker Change: Some of this floundering they've had.

Speaker Change: Not.

Speaker Change: That doesn't affect any portion of the business because we didn't have any of that but we've had to focus from.

Speaker Change: For production vehicles, the whole time it actually is further validating our thesis that we made the right moves in this and that's why also we're able to lead the charge a relatively small company like luminaire shouldnt.

Speaker Change: One out over them.

Kelly: Weibo's cruises and cargo <unk>, and Apple and others other stuff for the world to be able to.

Kelly: First of all global production vehicle with this kind of technology because it does it doesn't make sense. So the reason why it just comes down to the right technology. The right strategy. The right. That's the right capabilities that we're building from a full stock standpoints.

Aileen Elizabeth Smith: So the reason why it just comes down to the right technology, the right strategy, the right bets, and the right capabilities that we're building from a full-stack standpoint. Obviously, the goal is to have that validated so we can get separated from that pack of Autonomous Vehicles companies that, you know, maybe haven't been as successful and really show how we can be more like those other kinds of growth tech comparable companies I mentioned earlier. What do we have next, Aileen?

Kelly: Obviously the goal is to have that validated where we can get separated from that pack of.

Kelly: Autonomous vehicles companies that.

Kelly: Maybe.

Kelly: I haven't been as successful.

Kelly: And really show, how we can be more like those other kinds of.

Kelly: Growth comparable companies that I mentioned earlier.

Kelly: When we got next daily.

Tom Fenimore: Our second question is, is the higher cost of implementing LiDAR the reason why car companies are holding back on LiDAR? If so, do you see this technology becoming cost-effective in the future to be widely considered by most car manufacturers? Yeah, look, I think we're there today, particularly with our next-gen product, where, as I mentioned, we're going to be taking the cost down. And so, you know, look, our customers are always going to ask for lower pricing, but we've been able to commercialize and industrialize our initial product with Iris to get it on, you know, vehicles starting here imminently. Now, albeit it tends to be at a higher price point, which is very consistent with the introduction of any new technology. But I would say, you know, while our OEM customers are always going to beat up on cost, that is not really what I would say is an obstacle for us winning more business, particularly with our next-gen product. Absolutely not.

Kelly: Our second question is is the higher cost of implementing lidar. The reason behind as to why car companies are holding back on later, if so do you see this technology the funding cost effective in the future to be widely considered by most car manufacturers.

Speaker Change: Yes look I think where they are today, particularly with our next gen product.

Speaker Change: Whereas I mentioned, we're going to be taking the costs down and so.

Kelly: Look our customers are always going to ask for lower pricing, but we've been able to commercialize and industrialize.

Kelly: Our initial product with iris to get it on.

Kelly: Vehicles, starting here imminently now, albeit it tends to be at the higher price point, which is very consistent with the introduction of any new technology, but I would say, while our Oems customers are always going to beat up on cost that is not really what I would say is an obstacle.

Kelly: For us winning more business, particularly with our next gen product.

Austin Russell: And yeah, I would say that, you know, the biggest barrier is just the natural adoption cycles that we talked about earlier. It just takes time for new platform, new vehicle platforms to come out and get adopted. And the reality is that folks like, particularly, in particular Volvo, you know, are always the first to introduce new kinds of safety technologies. You know, Mercedes is generally the first to introduce new kinds of other advanced technologies.

Kelly: Absolutely.

Kelly: And I would say the biggest barrier is just the natural adoption cycles that.

Kelly: We talked about earlier it just it takes.

Kelly: It takes time for new platform, new vehicle platforms to come out and to get adopted and the reality is is that folks like particularly in particular.

Kelly: Although you know.

Kelly: As always the first to introduce new kind of safety technologies. Mercedes is generally the first to introduce new kinds of other advanced technologies.

Aileen Elizabeth Smith: We're working with both of those companies, you know, to be able to make that happen in production, show the industry what's possible, and then it trickles down from there. Okay, we're going to switch back to our analyst community. Our next question is going to come from Kevin Cassidy at Rosenblatt, taking my question. And it was right along the same lines, Austin and Tom, what you were just saying. Well, I want to understand more about the next-gen product and the market that you're addressing with that. How much larger is it?

Kelly: We're working with both of those companies to be able to make that happen to production show the industry of what's possible and then it trickles down from there.

Speaker Change: We're going to put back to our analyst community. Our next question is back on from Kevin Cassidy at reservoir.

Kevin Edward Cassidy: Yes, thanks for taking my question.

Kevin Edward Cassidy: It was really along the same lines us and Tom what you were just saying I want to understand more about the nexgen product.

Kevin Edward Cassidy: The market that youre addressing with that how much larger is it how many more bids are you looking at then compared to the early adopters.

Kevin Edward Cassidy: How many more bids are you looking at than compared to the early adopters? You know, I just want to see where the momentum is. I would say that. So if you take a look at our opportunity on this, Like, like I said, I think we're kind of within this. The same realm and world with Iris and Iris Plus, the next gen product that unlocks.

Kevin Edward Cassidy: Just wanted to see where the momentum is.

Speaker Change: I would say that.

Speaker Change: So if you take a look at our opportunity on this.

Speaker Change: Like I said I think we're kind of within this.

Speaker Change: Same realm and world with Iris Iris plus the nexgen product that unlocks I would say probably at.

Austin Russell: I would say probably at least another order of magnitude of, you know, volume opportunity, maybe more. I mean, arguably, there's actually already an order of magnitude additional volume opportunity, even with just our existing customers on LIDAR alone, much less, you know, new customers. So I think this is where we see this as a big opportunity to drive further adoption throughout the industry. I think also, though, that the most critical part of all this is going to be about recognition of value. You know, right now, I think you know. LIDAR is cool, it's seen as important, but it doesn't yet have the status of what Volvo is called the 21st century seatbelt, you know, and that's where we want to be able to get to so that this is truly a standardized technology across the industry. And there's frankly no reason why that can't happen.

Speaker Change: At least another order of magnitude of <unk>.

Speaker Change: Volume opportunity, maybe more I mean, arguably there is actually already in.

Speaker Change: In order of magnitude additional volume opportunity, even with just our existing customers on lidar alone much less.

Speaker Change: New customers. So I think this is where we see this as a big opportunity to drive further adoption throughout the industry. I think also though that the most critical part of all this is all going to be about recognition of value.

Speaker Change: Right now I think.

Speaker Change: No.

Speaker Change: Lidar is cool, it's seen as important but.

Speaker Change: <unk>.

Speaker Change: It's not it doesn't.

Speaker Change: Yet have the status of.

Speaker Change: What.

Speaker Change: Volvo is called out as kind of the 20, <unk> century, seatbelt, and Thats, where we want to be able to get to so that this is truly a standardized technology across the industry and there's frankly no reason why that can't happen. The key is just showing also the safety benefits and that's why.

Austin Russell: The key is just showing also the safety benefits. And that's why, um, you know, I, I had mentioned that we're, we're, uh, we've been collaborating with, um third parties to provide our technology to them for testing that's being independently run to be able to quantify the safety benefits of what can be had on vehicles. And we have a host of different automakers that are actually extremely interested in the results of this comprehensively as it relates to their product planning and, for that matter, insurance companies too, for that matter, when it comes to the safety benefits and improvements which directly affects And that's why, you know, when you talk about the long-term benefits of of this, you know, you're talking about thousands of dollars of value and savings being added for every LIDAR, put onto a vehicle, you know, assuming any kind of material safety improvement and savings when you take a look at a total cost of ownership perspective.

Speaker Change: I had mentioned that we are.

Speaker Change: We have been collaborating with these.

Speaker Change: Third parties to provide our technology to them for.

Speaker Change: Testing thats being independently run to be able to quantify the safety benefits of what can be had on vehicles and we have a host of different automakers that are actually extremely interested in the results of this comprehensively as it relates to their product planning and for that matter insurance companies too for that matter when it comes to safety benefits and improvements, which directly affects us and thats why.

Speaker Change: <unk>.

Speaker Change: When you talk about the long term.

Speaker Change: Benefits of.

Speaker Change: All of this.

Speaker Change: You are talking about.

Speaker Change: The dollars are.

Speaker Change: Value and savings being added for every lidar.

Speaker Change: Put onto a vehicle, assuming any kind of material safety improvement and savings when you take a look at a total cost of ownership perspective, So that's where we need to get to your just needs to be brought a recognition of value as well.

Austin Russell: So that's where we need to get to; you just need to be brought recognition of value as well. But it doesn't, But it also takes, of course, the product to be scalable to do that. And that's where one of the milestones that we have for this year, in addition to scaling up the factory that we have down in Mexico, we're also getting our next high-capacity factory online as well to support additional production. Let there be light.

Speaker Change: But it doesn't see.

Speaker Change: But it also takes of course, the product to be scalable to do that and that's where one of the.

Speaker Change: Stones that we have for this year in addition to.

Speaker Change: Scaling up the factory that we have down in Mexico. We're also getting our next.

Speaker Change: Also high capacity battery online as well as support additional production.

Speaker Change: Okay.

Austin Russell: Great. Maybe just as a follow-up, but you hit on a couple points there, but right now, when the buyer is buying the Volvo car, is it an option for him to put in a Luminar, LiDAR, or is it standard?

Speaker Change: Great and maybe just as a follow up.

Speaker Change: You hit on a couple of points, there, but right now the <unk>.

Speaker Change: Higher when he is buying the global card as an option for them to put in alumina, our lidar or is it standard.

Kevin Edward Cassidy: Okay. That's great. Okay. Thank you. Our next question will come from Kevin Garrigan at West Park, and Kevin. Hey, Tom.

Speaker Change: Okay.

Speaker Change: That's great Okay. Thank you.

Speaker Change: Our next question will come from Kevin Garrigan at Westar.

Kevin Edward Cassidy: Hey Austin, how's it going? Let me ask you a question. Um, so I guess I'm just kind of wondering if you could talk about the progress that you've made with civil maps. I mean, one of the US automotive OEMs recently talked about continuing to use LiDAR for mapping. So I'm wondering if that's becoming more of a talking point in your discussions with OEMs than maybe it was six months ago. And does that, you know, kind of put you at an advantage compared to others that are fighting for the same RFI or RFQ?

Speaker Change: Kevin.

Kevin Edward Cassidy: Hey, Tom Hey, Austin, How's it going.

Kevin Edward Cassidy: Good.

Kevin Edward Cassidy: I wanted to ask a question. So I guess I'm just kind of wondering if you can talk about the progress that you've made with simple math I mean, one of the U S. Automotive Oems recently talked about continuing to use lidar for mapping so kind of wondering if that's becoming more of a talking point in your discussions with Oems and maybe it was six months ago and is that kind of put you at an advantage compared to other.

Kevin Edward Cassidy: Or is that are fighting for the same <unk>.

Tom Fenimore: Absolutely, it is. Like, look, it's just, I like to describe it as value created in the ecosystem by our LIDAR. Austin just mentioned the safety improvements, which manifests itself in insurance savings. You know, the other thing, Kevin, before you just asked if we're an option or a standard, but, you know, for a lot of the customers we're talking to, it's an option for, you know, L3 or certain levels of autonomy, which the consumer has demonstrated a willingness and ability to pay for. And for here, you're going to have a lot of vehicles that are going to be driving around collecting 3D data, which is a very useful tool to map the environment around you. And so we're, you know, we want to work with our OEMs, and we're having conversations with them about how we can capture that and monetize it.

Speaker Change: Absolutely. It is like look it's just I'd like to describe it as value created and the ecosystem by our Lidar Austin just mentioned the safety improvements, which manifests itself in the insurance savings.

Kevin Edward Cassidy: The other Kevin before you just asked if were an option or a standard but.

Speaker Change: There is.

Speaker Change: For a lot of the customers, we're talking to it's an option for.

Speaker Change: L three or certain levels of autonomy, which the consumer has demonstrated in.

Speaker Change: Willingness and ability to pay for and for here Youre going to have a lot of vehicles that are going to be driving around collecting <unk> data.

Speaker Change: Which is a very useful tool to map the environment around you and so we get where we want to work with our Oems and we're having conversations with them about how you can capture that and monetize it because ultimately the more value we can create with our lidar the more willingness that they are to buy it and as I mentioned earlier.

Tom Fenimore: Because ultimately, the more value we can create with our LIDAR, you know, the more willing they are to buy it. And, you know, as I mentioned earlier, this is a less about price because they're going to look at the value created in an ecosystem. And the more tools we provide them to do that, the better it's going to be. So I'm not going to go into much more detail now, but yes, you know, we are getting good commercial traction on the mapping side, and it's another tool in the arsenal when we go in and have those strategic and commercial conversations with our customers. We'll share more on Illuminar Day. Okay. Got it. Got it.

Speaker Change: <unk>.

Speaker Change: It's up on price because they are going to look at the value, creating an ecosystem in the more tools, we provide them to do that.

Speaker Change: Better it's going to be so I'm not going to go into much more detail now, but yes, we are.

Speaker Change: We're getting good commercial traction on the mapping side.

Speaker Change: And it's another tool in the Arsenal when we go in and have those are strategic and commercial conversations with our customers.

Speaker Change: We will share more illuminating.

Kevin Edward Cassidy: Okay. Perfect. Thank you for that.

Speaker Change: Okay got it got it okay perfect. Thank you for that.

Tom Fenimore: Um, I mean, just as a follow-up, can you talk a little bit about how things are going with Nissan? I mean, are things on track with what you've, you know, you've been expecting, are things taking longer? Or is Nissan kind of waiting for the next generation LiDAR? Any, any update there would be great.

Speaker Change: As a follow up can you talk a little bit about how things are going with Nissan I mean are things on track with what <unk> been expecting are things taking longer or is this like kind of waiting for the next gen. Lidar any any update there would be great lift they're continuing to move forward as a reminder.

Tom Fenimore: No, look, they're, they're continuing to move forward. As a reminder, um, you know, Nissan, we're at a development contract that, at some point in the future, is going to convert into series production. We're very confident of that. And, you know, we're continuing to move forward, um, on the development side. As I mentioned during the last earnings call, that kind of moved into the next stage of the development contract, as a reminder. Right now, we have zero in the order book for Nissan.

Speaker Change: Nissan where at a development contract.

Speaker Change: That at some point in the future is going to convert into series production. We're very confident that we're continuing to move forward on the development side as I mentioned during the last earnings call that kind of moved into the next stage of the development contract. As a reminder, right now we have zero in the order book for Nissan and the reason for that is they really haven't converted debt.

Kevin Edward Cassidy: And the reason for that is they really haven't, you know, converted that from a development contract to a series production contract. Uh, you know, and, uh, you know, that's one of those things that is ultimately out of our control. It's, it's, it's going to be dictated by Nisex product planning. And when they're ultimately ready to start, um, you know, uh, putting that on series production awards, I think that is going to happen, you know, soon. It's, uh, you know, they're working with a version of Iris, they're not waiting for the next gen, u And, you know, I would say they're also, we're in discussions with them about, you know, how we can grow within the Luminar ecosystem in addition to just a lot that's there. So that's, you know, move, continue to move forward. That's going well, but it hasn't converted into that series production award yet, which is a trigger where we put it in the order. Yep, I got it.

Speaker Change: From a development contract with series production contract.

Speaker Change: And that's one of those things that is ultimately out of our control, it's going to be dictated by <unk> product planning and when they are ultimately ready to start.

Speaker Change: Putting that on series production awards I think that is going to happen soon.

Speaker Change: Soon.

Speaker Change: It's.

Speaker Change: They are working with a version of virus they are not waiting for the nexgen.

Speaker Change: Product, although as you can imagine I think they're very excited about it.

Speaker Change: I would say there are also we're in discussions with them about how we can grow within the luminary ecosystem. In addition to just lighter there. So that's.

Speaker Change: Continuing to move forward, that's going well, but hasnt converted into that series production award, yet, which is the trigger where we put it in the order book.

Mark Trevor Delaney: Okay, perfect. Thanks guys. Our next question will come from Mark Delaney at Goldman Sachs. Mark, good afternoon.

Speaker Change: Yes got it okay perfect. Thanks, guys.

Speaker Change: Our next question will come from Mark Delaney Goldman Sachs.

Mark Trevor Delaney: Hey, Mark.

Tom Fenimore: Thank you very much for taking the questions. The company noted that a double-digit percent of revenue is coming from non-LIDAR hardware sales already. Can you detail where Luminar has had the most success so far, and how do you see these efforts progressing in areas like insurance, software, and semiconductors? And then, to what extent are these business adjacencies the ones you want to pursue if you are trying to be more cost-optimized

Mark Trevor Delaney: Good afternoon, and thank you very much for taking the questions. The company noted that a double digit percent of revenue is coming from non lidar hardware sales already can you detail, where illumina has had the most success so far and how do you see these efforts progressing in areas like insurance software in semiconductors, and then to what extent are these business adjacencies to.

Mark Trevor Delaney: Why did you want to pursue if you are trying to be more cost optimized.

Tom Fenimore: Look, it's a very good question. I think you kind of answered your own question where it's kind of like all of the above, right? We do have sales from Luminar Semiconductor, which actually provides some of the critical components to our LiDAR. There are sales from that. You know, I would say there are some sales not big in there for software, but it's more development work we're doing as opposed to actually selling it at, you know, a series production scale. So it's more development work that we're looking to do. There isn't, I would say, anything material in there for insurance yet.

Speaker Change: Look it's very good question.

Speaker Change: You kind of answered your own question, where it's kind of like all of the above right. We do have sales from women are semiconductor, which actually provides some of the critical components to our lidar.

Speaker Change: There are sales from that.

Speaker Change: I'd say there are some sales not big in there.

Speaker Change: Our software, but its more development work, we're doing as opposed to actually selling it.

Speaker Change: In series production scale, so it's more for development work there.

Speaker Change: We're looking to do there isn't I would say anything material in there for insurance yet.

Tom Fenimore: And then, you know, we're looking to, you know, there are some sales in there in terms of, you know, monetizing some of the information we gather, and we kind of use mapping like that as well. And so we are making progress on that. It is, you know, I would say, a material part of our revenue.

Speaker Change: And then we're looking to.

Speaker Change: There are some sales in there in terms of.

Speaker Change: Monetizing some of the information, we gather and we've kind of used mapping like that as well and so we are making progress on that it is I would say a material part.

Tom Fenimore: But, you know, I just, in the near term, Mark, what's really going to drive our revenue growth this year is getting into series production with Volvo and selling our LiDAR to them. You know, one of the things we are, you know, hoping to do, and it's one of the business milestones we set out here, is to expand, I would say, that ecosystem around our LiDAR even more and manifest that into the equivalent of series production. Another question on the topic there too, in particular, for the Luminar AI engine that we announced at Luminar Day last year. You know, that's been a huge driver as well, and being able to, you know, realize success with the ecosystem, so that's a critical part of that.

Speaker Change: Our of our revenue, but in the near term Mark Whats really going to drive our revenue growth. This year is getting the series production with Volvo and selling our lidar to them.

Speaker Change: One of the things we are.

Speaker Change: Hoping to do and it's one of the business milestones. We set out year is is to expand I would say that that ecosystem around our lidar, even more and manifesting that into the equivalent of series production wins.

Speaker Change: Yes.

Speaker Change: And my other question.

Speaker Change: Also on the.

Speaker Change: On the topic there are two in particular for.

Speaker Change: The alumina, our AI engine that we have.

Speaker Change: Luminaire day last year, that's been a huge driver as well.

Speaker Change: And being able to realize success of the ecosystem.

Tom Fenimore: I think, like I said, we're going to outline more of the details around the ecosystem at Luminar Day, you know, in particular, but to Tom's point, I think we think the big, the most, we actually haven't counted any, like, like, a lot of that stuff, even as well, like in the, in the order book, like, for example, there's no semiconductors in an order book, none of that, none of that stuff, because, you know, it's, I think I think there's a lot of nuance to it.

Speaker Change: So that's a critical part of that I think.

Speaker Change: Like I said, we're going to outline more of the details around the ecosystem at Luminaire day.

Speaker Change: In particular, but to Tom's point I.

Speaker Change: I think if we think the big the most.

Speaker Change: We actually haven't counted any like.

Speaker Change: Like a lot of that stuff EBIT as well like in the in the order book away. For example, there's no semiconductors in order book not none of that none of that stuff because it's.

Speaker Change: I indicated.

Austin Russell: So I think we can provide more detail on that. But it's also important, like, when you talk about the incremental cost, a lot of stuff that we're talking about in terms of the long term, you know, work. I would say even as it relates to like LIDAR and industrialization, historically, we may have been a lot more open to doing product customizations for certain types of customers and like autonomous vehicle companies and robo truck companies, you know, companies, you know, out there, And these have, those do have a real cost.

Speaker Change: There's a lot of nuance to it so.

Speaker Change: I think we can we can provide more detail on that but it's also important when you talk about the incremental cost a lot of stuff that we're talking about in terms of like the long term.

Speaker Change: Work like.

Speaker Change: I would say even as it relates to like Lidar and industrialization historically, we may have been a lot more open to.

Speaker Change: Good product customization for certain types of customers and like autonomous vehicle companies and.

Speaker Change: <unk> truck companies.

Speaker Change: Out there for example, and these have those do have a real cost and.

Austin Russell: And like when the revenue opportunity is, like, probably in the same vicinity as the cost of what it takes to actually do that and execute that at best, you know, then you obviously have to have to question those things. And obviously, you're making it up front. So I think there's, there's a lot of lower-hanging fruit as well that we can do where I would say probably 80 to 90% of the value is in the top, probably still more than 90% of the values in the top like 50% of the initiatives that we have. So that's where we can just, you know, we can work the dial on that as well to be more conservative, more aggressive, depending on how much we want to spend. And obviously, we're, we're starting this year, and we're going to, as I mentioned earlier, we're going to lean much more toward the conservative end of that. Very helpful, thanks.

Speaker Change: Hi.

Speaker Change: Like when the revenue opportunity is.

Speaker Change: Like probably in the same vicinity as the cost of what it takes to actually do that and execute that at best.

Speaker Change: And then obviously I have to ask the question those things in.

Speaker Change: And obviously, you're making it upfront so I think there's a lot of lower hanging fruit as well that we can do where I would say probably like 80% to 90% of the value is in.

Speaker Change: No.

Speaker Change: The top.

Speaker Change: Probably yet and looking at more than 90% of the values in the top 50% of the initiatives that we have so that's where we can just.

Speaker Change: We can work the dial on that as well to be more conservative or more aggressive depending on how much we want to spend and obviously we're.

Speaker Change: Starting this year, we're going to as I mentioned earlier, we're going to lean.

Speaker Change: Much more towards the conservative end of that.

Tom Fenimore: And my other question was just about one of your objectives for this year, which is to pass the final run-at-rate test for the EX-90. Maybe you could talk about what steps Luminar still needs to achieve in order to be ready to pass that final run-at-rate test and what it is different from the run-at-rate test you had talked about passing on the last quarterly call. Thank you. That final test is, I would say, at a higher rate, which kind of reflects the, I would say, phase two of where they want us to be able to produce that. And it has more strict standards for measuring the quality and the yield that comes out of that.

Speaker Change: Very helpful. Thanks, and my other question was just about one of your objectives for this year, which is to pass a final run at rate tests for the Es 90, maybe you can talk about what steps limit are still needs to achieve in order to be ready to pass that final run at rate tests on what's different from the right array test you had talked about passing on the last.

Speaker Change: Quarterly call. Thank you.

Speaker Change: Okay.

Speaker Change: The final test.

Speaker Change: Is.

Speaker Change: Is I would say at a higher at a higher rate.

Speaker Change: And which kind of reflects the I would say phase.

Speaker Change: Phase two.

Speaker Change: Do they want us to be able to produce that and it has more strict standards in measuring the quality and the yield that comes off of that and so.

Tom Fenimore: And so I think we're going to have the results of that test very soon. And based on the work that the team has achieved to date, we're very confident that the results of that test are going to be positive. But, you know, when we have official results, then we'll share them more broadly. But that's not something we're losing a lot of sleep over at night.

Speaker Change: I think we're going to have the results of that test very soon and based.

Speaker Change: Based upon the work that the team has achieved to date, we're very confident that the results of that test they're going to be positive.

Speaker Change: But when we have official results then we'll share more broadly but.

Speaker Change: That's not something we're losing a lot of sleep better at night.

Austin Russell: That's basically the final green light for launch, are we good? Okay, we'll take a few more questions from the SAFE platform and from our institutional investors. A question for Austin: It seems like there are examples of LIDAR being used in agriculture, industrial, and military segments.

Speaker Change: Basically the final green light for launch.

Speaker Change: Sure so yes.

Speaker Change: We get.

Speaker Change: Okay, we'll take a few more questions from the same platform.

Speaker Change: From our institutional investors.

Speaker Change: Question for Austin. It seems like there are examples of that are being used in agriculture, industrial and military segments is illumina actively targeting.

Austin Russell: Is Luminar actively targeting new businesses? Yeah, no, it's a good question. And I think to the point, the answer is that yes, we are providing technology and products into those kinds of respective industries. But the important part here, though, and this goes back to, you know, being more conservative on like investment spend, what we're not doing at this stage is like investing incremental resources that would be required to pursue those industries aggressively, or like, yeah, product modifications, anything like, you know, I think there are certain programs that are like, And the reality is that we're not going to spend a bunch of time on that when we have the 4 billion to prove for ourselves that people are discounting peps to nothingness today.

Austin Russell: Yeah, no. It's a good question and I think the point.

Austin Russell: The answer is is that yes, we are providing technology and product into those kinds of respective industries.

Speaker Change: [noise] part here, though and this goes back to being more conservative on like investment and spend what we're not doing at this stage is like investing incremental resources that would be required to pursue.

Austin Russell: Aggressively or like yes product modifications anything like.

Austin Russell: You know I think there are certain programs that is like Oh. Okay. These are literally costing like 10 20 $30 million.

Austin Russell: It adds up you have to get the value respectively like what's the opportunity in the other end and the reality is is that we're not going to spend a bunch of time on that when we have the $4 billion to proofs for ourselves that people are discounting picks.

Austin Russell: So it's like, okay, you know, we got it, we got to adapt to the environment. But that said, I don't, I don't want to discount the fact that there are many real applications outside of just the core automotive business that we're already starting to realize. And not just with the LiDAR, even literally going down to the semiconductor level.

Austin Russell: Nothing thats today, so it's like Okay. We got it we got to adapt to the environment, but that said.

Austin Russell: I don't want I don't want to just kind of like there are <unk>.

Austin Russell: Very much real applications outside of just the core automotive business that we're already starting to realize and not just with the light or even literally going down to the semiconductor levels. So the same kinds of breakthrough lidar semiconductor chips that we've developed we've actually already been able to.

Tom Fenimore: So the same kinds of, you know, breakthrough LiDAR semiconductor chips that we've developed, we've actually already been able to start selling into other industries as well. And this is where, you know, that's a contributor to that double-digit percentage revenue that was mentioned earlier. This is going to be a key initiative for us in 2024, particularly as we've industrialized Iris and we get the manufacturing plant up and running. That is going to give us the supply to sell more into this market. We had our business development team spend more of their time in this segment. And so, you know, it's nowhere near as big of a volume as there is in the passenger vehicle space.

Austin Russell: Start selling into other industries as well and this is ware.

Austin Russell:

Austin Russell: That's a contributor to that double digit percentage revenue.

Austin Russell: As mentioned earlier.

Austin Russell: This is going to be a key initiative for us in 2024, particularly as.

Austin Russell: We have industrial lifestyle risks and we got the manufacturing plant up and running that is going to give us the supply to sell more into this market.

Austin Russell: We had our business development team.

Austin Russell: Spend more of their time.

Austin Russell: In this segment.

Austin Russell: And so well.

Austin Russell: We're near as big of a volume.

Austin Russell: As there is in the passenger vehicle space, you can actually get better pricing in this segment, which helps the margins.

Tom Fenimore: You can actually get better pricing in this segment, which helps the margins. But now that we've kind of industrialized the product, this is going to be more of a focus area for us. But the priority by far is still going to be on the passenger vehicle side.

Austin Russell: But now that we've kind of industrialize. The product. This is going to be more of a focus area for us, but the priority by far is still going to be on the passenger vehicle side and that's what we're going to have.

Tom Fenimore: And that's where we're going to have, you know, our team spend the incremental portion of their time. And another question for our question for Tom: when are we expecting Luminar to be profitable? Yeah, look, right now we're focused on getting to the Volvo SOP. And, you know, as we get there, we're going to start aggressively attacking our unit economic costs and streamlining the business. I want to see how that plays out, call it in over the next couple of quarters before, you know, giving an updated guidance on when exactly that's going to be.

Austin Russell: Our teams spend the incremental portion of their time on.

Speaker Change: And another question for a question for Tom when are we expecting luminaire actually profitable.

Tristan Gerra: Look right now we're focused on getting to the <unk> S&P and as we're getting there we're going to start aggressively attacking our unit economic costs and streamlining the business.

Tristan Gerra: I wanted to see how that plays out call. It over the next couple of quarters before giving an updated guidance on when exactly thats going to be.

Tom Fenimore: Okay, and a follow-up to that, will Luminar need to sell more stock to fund operations? Yeah, look, I think a similar question there, you know, we have $340 million of pro forma liquidity, as we mentioned earlier, you know, what we want to do is, as again, get to that Volvo SOP, you know, assess what that ramp-up is going to look like, assess, you know, how we can kind of streamline our unit economics, as well as our operations, and then look at the balance sheet and figure out what, Getting to the Volvo SOP is step one.

Tristan Gerra: And a follow up to that will limit our need to sell more stock to fund operations.

Speaker Change: Yes look I think a similar question there we have $340 million.

Speaker Change: Our pro forma liquidity as we mentioned earlier.

Austin Russell: We want to do is again get to that Volvo.

Austin Russell: Bob.

Austin Russell: That's what that ramp up is going to look like.

Austin Russell: Yes.

Austin Russell: How we can kind of streamline our unit economics as well as our operations and then look at the balance sheet and figure out what if any actions we want to make getting to Bob OSP is step one.

Tom Fenimore: And then, you know, from there, we'll figure out what, if anything, we need to do to address the balance. Great. We're going to take a few remaining questions from the analyst community. Our next question is going to come from Winnie Long. I'd also say, just generally, there too. We're, of course, always thinking about it, and we do understand the importance and, you know, it's not lost on us when it comes to operational efficiency, you know, overall. And that's where I think that whole wartime mentality comes into play when it comes to costing from a costing standpoint and realizing the economy at scale and realizing that billion dollar investment.

Austin Russell: And then from there we'll figure out what if anything we need to do to to address the balance sheet.

Speaker Change: All right, we're going to take.

Speaker Change: A few remaining questions from the analyst community. Our next question is going to come from what I would also say just generally there too I mean, we're of course.

Speaker Change: Always thinking about and we do understand the importance and not not lost on us when it comes to.

Speaker Change: Operational efficiency overall, and that's where I think.

Speaker Change: That whole war time mentality comes into play when it comes to like a costing standpoint, and realizing the economy of scale and realizing that $1 billion investment in.

Austin Russell: And, you know, we've obviously, you know, obviously, a great interest when it comes to, you know, from a private side, you know, and, and, and, back in those days, you know, and now, obviously, as a, as a public business, you know, it's a, it's a very, it's a different world. But I think our mentality is definitely shifting around that balance, and that's where you start to see, like I said, with the cost down from this quarter, and that's where we're going to spend more time on that. But step 1, you got to prove you can make them on scale.

Speaker Change: We've obviously always a green.

Speaker Change: Interest when it comes to from a from a private side.

Speaker Change: Back back in those days.

Speaker Change: And now obviously as a public business.

Speaker Change: It's a different world, but I think our mentality is definitely.

Speaker Change: Shifting around.

Speaker Change: That balance and that's where you start to see like I said with the.

Speaker Change: Cost downs from from this quarter, and that's where we're going to <unk>.

Speaker Change: Spend more time on that but.

Tom Fenimore: Step 2 is then you aggressively attack the cost to make them as profitable as possible. And we're now transitioning to step 2. Okay, our next question from the analyst community is going to come from Winnie Dong at Deutsche Bank. Thanks so much.

Speaker Change: But yes, you got to prove you can make it up.

Speaker Change: <unk> then you aggressively attack the cost to make them as calculated phosphate and we are now transitioning into step two yep.

Speaker Change: Okay. Our next question from the analyst community is going to come from Winnie Dong at Deutsche Bank.

Winnie Long: Hello. Thanks so much for taking the time to answer my questions. I was wondering if you could provide an update on the competitive landscape, you know, during RFQs, maybe an update on your win rate, in particular in the U.S. and China, and then also on the audible update. I just wanted to clarify if that's something that you will no longer provide at the beginning of the year, as you have in the past couple of years. Let me just clarify.

Winnie Dong: Thanks, so much hello. Thanks, so much for taking my questions. I was wondering if you can provide an update on competitive landscape.

Speaker Change: <unk>.

Speaker Change: Maybe not.

Winnie Dong: Win rate.

Winnie Dong: And particularly in the Us and China and then also on the update.

Speaker Change: Okay I just wanted to clarify if that's something that you will confirm the beginning of the year.

Speaker Change: Past couple of years, where let.

Tom Fenimore: We're going to continue to give order book updates at the end of the year. You know, right now we're focused on getting to Volvo SOP and getting better clarity on when some of the decisions were conversations when more customers, when those are formally going to be decided, but we're going to continue to update our order book at the end of the year. We just haven't given any guidance yet in terms of how much we expect it to grow this year, but it will grow. And, you know, we are confident that it's going to grow significantly. Look, on the competitive landscape, we're starting to see rationalization come. You're starting to see some of the startups, you know, just, you know, some of that rationalization start to take place. I think it's going to accelerate here as balance sheets start to get tighter and tighter and tighter, and the fundraising environment gets tougher, tougher, tougher.

Speaker Change: Let me just clarify here, we're going to continue to give.

Speaker Change: Order book updates at the end of the year.

Speaker Change: Right now we're focused on getting to Volvo SLP.

Speaker Change: And getting better clarity on when some of the decisions where our conversations with customers. When those are formally going to be decided but we're going to continue to update our order book at the end of the year. We just haven't given any guidance yet in terms of how much we expect it to grow this year.

Speaker Change: But it will grow and we are confident that it's going to grow significantly look on the competitive landscape. We're starting to see the rationalization come youre starting to see some of the startups.

Speaker Change: Just.

Speaker Change: Some of that rationalization start to take place.

Speaker Change: It's going to accelerate here as balance sheet start to get tighter and tighter and tired in the fund raising environment gets tougher and tougher and tougher. We've also seen some of the big companies, whether they are tier ones or other technology companies have been in the Lidar space look to exit I mean, you guys can go over the list of tier one suppliers that either had light our partners or tried to do.

Tom Fenimore: We've also seen some of the big companies, whether they're tier ones or other technology companies that have been in the LIDAR space look to exit. I mean, you guys can go over the list of tier one suppliers that either had LIDAR partners or tried to do it on their own that are no longer doing it. We start off the call with a question about Mobileye and Intel, and it looks like they're going to work together on LIDAR. This is tough, right?

Speaker Change: And on their own that are no longer train. It we start off the call with a question about mobile line intelligent looks like Theyre stopped and work together on Lidar. This is tough right industrializing. This very complicated technology. We've learned this over the last three years and now we've come out successfully on the other end and we've learned a lot and we're going to apply those learnings.

Tom Fenimore: Industrializing this very complicated technology. We've learned this, you know, over the last three years. Now we've come out successfully on the other end, and we've learned a lot, and we're going to apply those learnings to make Luminar leaner and meaner going forward. But the level of competition that we're seeing in these RFQs is declining. And there's really only a handful of LIDAR companies, if that, that we think the automakers are seriously considering to deploy on their vehicles in the coming future. Absolutely. And I think, you know, I mean, like, what do you look at? You look at what?

Speaker Change: <unk> to make lumina, our leaner and meaner going forward, but the level of competition that we're seeing in these are accused is declining and there is really only a handful of lidar companies. If that that we think the automakers are seriously considered to deploy on their vehicles in the coming future.

Speaker Change: Yes.

Speaker Change: Absolutely.

Speaker Change: I think I mean, what was it.

Austin Russell: Five years ago, six years ago, I think we counted a little over 200 different initiatives for LIDAR in terms of different companies and tier ones and automakers and, um, you know, and technology companies. I think now, you know, in the. I mean, I can count on one hand, you know, how many are left over and viable.

Speaker Change: If you look at what.

Speaker Change: Five years ago six years ago.

Speaker Change: I think we kind of go over around 200 different initiatives for lidar in terms of different companies and tier ones and automakers.

Speaker Change: Technology companies I think now.

Speaker Change: And.

Speaker Change: I mean I.

Speaker Change: Can count on one hand.

Speaker Change: Our Oh leftover and viable of course when it comes to.

Austin Russell: Of course, you know, when it comes to, I just want to be super clear though, when it comes to a product performance perspective and the capabilities that it can enable, that's really the thing that Luminar has always been uncompromising on. There are ways to take shortcuts, there are ways to develop lesser capabilities using off-the-shelf components, there are ways to do all of these things. The whole point is that from a safety point of view and at highway speed, like that's the thing where, you know, if you want to be able to do that, you need to implement Luminar.

Speaker Change: I just want to be Super clear, though when it comes to our product performance perspective, and the capabilities that can enable that's really the thing that <unk> always been uncompromising on.

Speaker Change: There are ways take shortcuts there are ways to develop our capabilities using offshore components that are ways to do all of these things like the whole point is is that from a.

Speaker Change: To be able to operate safely and at highway speed like that's the thing where.

Speaker Change: If you want to be able to do that you need to implement it.

Austin Russell: If you want to go for a different product scope, you know, then, you know, you can talk about a different kind of. In theory, it's possible to integrate a different solution. But nevertheless, I think in any scenario, regardless of all of that, this is the first time, of course, in the case of Volvo, where we actually start to see this launch at a global scale and be able to actually get into the hands of consumers, much less, you know, standardized on a production vehicle like that. So, and showing off those full kinds of capabilities. Aileen, I think we have time for one more question, and we're coming up to the top of the hour here. Yep, our last question is going to come from Jaime Perez at RF Lafferty. Hey everybody. Thanks for taking my question. Hey Austin, Um, I know we have a Volvo coming up. Who else is in the lineup?

Speaker Change: You want to go for a different product scope.

Speaker Change: Then you can talk about a different kind of.

Speaker Change: In theory, it's possible.

Speaker Change: To integrate a different solution, but nevertheless.

Speaker Change: I think in any scenario, regardless of all of that this is the first time course in the case of Volvo, where we actually start to see this.

Speaker Change: Launch at global scale and be able to actually get into the enhanced consumer is much less standardized on a production vehicle like that so and showing off those all kinds of capabilities.

Speaker Change: I think we have time for one more question and then we're coming up to the top of the hour here.

Speaker Change: Yes, our last question is going to come from tiny Perez at RF Lafferty.

Tiny Perez: Hey, everybody. Thanks for taking my questions Hey, Austin.

Tiny Perez: I know we have.

Tiny Perez: Volvo coming up who else is in there.

Jaime Perez: I mean, we've talked about Polestar and also an announcement of Geely owning Lotus Technology. I mean, Geely's in a partnership with you, you have a partnership with Geely. So who's next in the lineup?

Tiny Perez: Lineup I mean, we've talked about Pollstar in and also the announcement of <unk> owning noticed technology I mean helix.

Tiny Perez: You have a partnership with GSO Who's next in the lineup.

Tom Fenimore: Yeah, look, I don't think we've announced anything publicly with like Lotus or Geely, so I just wanted to correct that. But, you know, Volvo EX90 is coming. After that, it will be Polestar 3. After that, it will be Mercedes-Benz.

Austin Russell: Yeah look I don't think we've announced anything publicly with like.

Tiny Perez: Our Lotus or GLA.

Speaker Change: Just wanted to correct that but.

Speaker Change: Although <unk> is coming.

Speaker Change: After that we'll be pollstar three.

Speaker Change: After that we'll be Mercedes Benz.

Tom Fenimore: And, you know, after that, there will be some other stuff we'll talk about at the right time. But, as we talked about with our order book, we have 21 or in excess now of 25 awarded vehicle lines and major programs. And I would say, most of them, the vast majority of them, are going to be launching really over the next 36 months. The most difficult one by far is the first one, which we're more or less there on.

Speaker Change: And after that will be some other stuff, we'll talk about at the right time, but as we talked about what their order book, we have we have 21.

Speaker Change: In excess now of 25 awarded vehicle lines.

Speaker Change: <unk> and major programs and I would say most of them.

Speaker Change: The vast majority of them are going to be launching really over the next 36 months.

Speaker Change: The most difficult one by far is the first one which were more or less there on.

Tom Fenimore: You know, we're very proud of the fact that Volvo said publicly that they were going to be launching the EX90 in Q2. If you look at what IHS forecast is for Q2, they are anticipating several thousand production units of the EX90. So we're more or less there. That's the first one.

Speaker Change: We're very proud of the fact that like look Bob has said publicly they're going to be launching Dx 90.

Speaker Change: In Q2, if you look at what IHS forecast is for Q2. They are anticipating several thousand production units of the <unk> 90, So we're more or less there that's the first one.

Tom Fenimore: You know, the next 24 plus should be nowhere near the level of difficulty we've just gone through. And we've learned a lot. And, you know, we're going to be doing things better and more efficiently. But in the next 36 months, we're going to be very busy launching our products on new vehicle lines and getting more vehicles out on the road with our technology. You know, this summer, I think you're probably going to start to see vehicles, like Volvo's on the road with our technology on them. We're very excited about it. Yeah, it seems like you have a deep lineup.

Speaker Change: <unk> 2004, plus should be nowhere near the level of difficulty is as we've just gone through.

Speaker Change: And we've learned a lot and we're going to be doing things better and more efficient but in the next 36 months, we're going to be very busy launching our products on new vehicle lines and getting more vehicles out on the road with our technology.

Speaker Change: This summer I think youre, probably going to start to see vehicles. The bubbles on the road with our technology on it very excited about it yes.

Tom Fenimore: We do, we have a lot of work in front of us. All right. But I think the tough part is behind us, right? Doing it the first time is the hardest. And I would say, you know, most of those vehicle lines are using the same product.

Speaker Change: Yes. It seems like you have a deep lineup we.

Speaker Change: We did we got a lot of work in front of us right.

Speaker Change: I think the tough part is behind US right doing it. The first time is the toughest and I would say most of those vehicle lines are using the same product.

Tom Fenimore: You know, so it's not like launching a new product is tough, taking the same product and putting it on a new vehicle line. There's incremental work, there's incremental costs, but nowhere near what it is for launching it the first time. All right, like Elon says, the prototype is easy, production is hard. Oh, believe me, we've learned that the hard way over the last few years.

Speaker Change: So it's not like launching a new product is tough taking the same product and putting on a new vehicle line. There is incremental work there is incremental cost, but nowhere near what it is of launching the first time.

Speaker Change: Ilan says prototypes of the production is hard.

Speaker Change: We've learned that the hard way over the last few years.

Tom Fenimore: And we've learned a lot, and we're going to become a better company as a result of that. All right, thanks for taking my questions. Have a great night. All right, thank you. All right, Aileen, I think that that must be the end of our analyst queue. I'd like to thank everybody for sticking around and participating in the call, the analysts who asked questions, and for the investors and other folks who sent in questions and joined us. We look forward to talking with you next quarter. Thanks, everyone. All right. Thanks, guys. See you at Lunar Day.

Speaker Change: We've learned a lot and we're going to become a better company as a result of that alright. Thanks for taking my questions have a great night.

Speaker Change: Alright, Thank you alright, I lean I think.

Speaker Change: That must be done.

Speaker Change: I'd like to thank everybody for sticking around and participating in the call for analysts to ask questions and for the investors and other folks.

Speaker Change: And questions and join US we look forward to talking with you next quarter.

Speaker Change: Thanks, everyone alright, thanks, guys.

Speaker Change: Yes.