Q4 2023 Cepton Inc Earnings Call
Greetings and welcome to beat Q4, and full year 2023 sept on business update and earnings call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce.
Use your host Dennis chunk interim CFO. Thank you Dennis you may begin.
Thank you and welcome to step towards fourth quarter, and full year 23 earnings call and business update.
With me today are Jim <unk>, co founder and Chief Executive Officer.
And niche fortini, Chief commercial officer.
During the call we may refer to our unaudited GAAP and non-GAAP measures.
The earnings release.
non-GAAP financial measures should not be considered instead.
Substitute for or superior to the measures so of financial performance prepared in accordance with you got it Scott.
Reconciliations for non-GAAP measures are included in our earnings release.
I would like to remind everyone that comments made in this conference call.
They include forward looking statements regarding the company's expected operational and financial performance for future periods.
These statements are based on the company's country expectation.
And not subject to the safe Harbor statements relating to forward looking statements contained in our earnings release.
And the presentation slides that accompany this call.
Actual results for future periods may differ materially from those expressed or implied.
These forward looking statements due to a number of risks uncertainties or other factors.
Including those discussed in the earnings release.
During today's call.
<unk> described.
Filings with the U S Securities and Exchange Commission.
We're not undertaking any commitment to update these statements as a result of future events.
Except as required by law.
That's a quick reminder, this call is being recorded.
And you can find the earnings release and presentation slides that accompany this call as well as the web cast replay of this call.
W. W Dot investors thought satcom dot com.
Now I would like to turn the call over to Jim.
Yeah.
Thank you Dennis and good afternoon, everyone.
Thank you for joining us up towards the fourth quarter and full year 2023 earnings call.
Jim: We will provide a business update and review our financial results with you.
There's quite a bit of a news, though within the industry. These past few months and specifically regarding scepter.
First.
I'd like to congratulate our team on exceeding our FY2023 revenue guidance with a record $13 $1 million in recorded revenue and.
Preparing us for growth with the launch of our new Lidar product subtype ultra at CES 2024.
Jim: These are two major accomplishments that keeps us at the forefront of this industry.
First on our latest the long range Lidar product, except our ultra demonstrated at CES plenty of 24.
Somehow ultra or ultra represents a pinnacle in lidar technology boasting a remarkable long detection a range of up to 300 meters at 10% reflective of T O.
Altra high resolution with software definable regions of interest.
And the distinction of being the world's slimmest adaptive long range Lidar.
This design enables seamless integration into various vehicle locations, maintaining aesthetic appeal and reducing aerodynamic impact.
At its core septal Ultra Leverages, our next generation imaging technology Magno sphere.
Long side with a proprietary chipset S O C to significantly enhance point cloud quality, while minimizing cost footprint and power consumption.
This is a strategic plan to also advanced features is designed to deliver an optimal balance of performance cost and reliability.
Jim: Making ultra not just a technological Marvel, but also a viable solution for mass market adoption across automotive.
Smart infrastructure and various other applications.
Moving onto a piece of industry news that that creates significant opportunity a competitive edge for satcom.
And a significant development that has a considerable implications for the global light our industry a prominent Chinese Lidar company on January 25th the 'twenty 'twenty four what's added to the 12 68 list of Chinese military company somebody in the U S government.
Jim: This designation, which highlights entity is believed to be affiliated with the Chinese military and defense sectors.
Under scored the complexities and risks associated with American business engaging in partnerships or transactions with firms. So listed under such a category.
This development has prompted many U S corporations to reassess their supply chain strategies and partnerships aiming to mitigate risks associated with compliance geopolitical tensions and national security concerns.
We believe this event is a significant opportunity and a catalyst for growth for our company as the stakeholders and partners in the industry seek alternatives to navigate away from the potential risks posed by sourcing from entities on the 12 60, H list Satcom as a U S company.
Has emerged as a viable and secure a partner and supplier for lidar.
This shift not only highlights our commitment to adhering to international regulations and safeguarding our operations from geopolitical uncertainties, but also reinforces our position as a trusted leader in the light our technology sector.
Our competitive advantage to offer reliable lidar supply amidst these challenging times has further solidified our market presence and opened a new avenues for growth and collaboration.
Lastly, I want to briefly touch upon some recent news on the G. M series production cancellation and a letter of indications from our tier one partner and shareholder Koito manufacturing, which were both are disclosed in more details in our form eight Ks.
On December 11th 2023.
He told me informed us that the original equipment manufacturer that awarded co. He told the series production Award has decided to re scope, it's eight us product offerings and as a result, all outstanding purchase orders from Covid hold to the company that relate to the series production award had been canceled.
As is customary when an automotive program changes satcom initiated actions to secure project investment cost recovery related to any delay or cancellation of an existing program.
On December 21st plenty of 23, we announced that we have received a non binding proposal from koito to acquire 100% of the outstanding shares of SAP talk not currently owned by Koito.
Sometimes board of Directors' Special Committee is currently evaluating the indication of interest among other strategic options with assistance from financial and legal advisors.
No assurance can be given that a definitive transaction with respect to core ethos indication of interest or any other potential transaction will eventually be consummated.
As we have discussed in prior quarters, we are continuing to build our business and delivered yet another record setting quarter for revenue.
We remain steadfast in pursuing opportunities in automotive and remains in good position to win additional series production award with sourcing decision on the horizon.
With that I'll turn it over to Mitch for details on our efforts with customer programs.
Thank you Jim.
Our last earnings call <unk> has received a dramatic increase of attention from the automotive industry in part due to the macro events against Chinese Lidar companies mentioned previously, but more importantly, the launch and demonstration of our new ultra product.
Specifically, we have made significant strides with a top 10 global automotive OEM.
Previously mentioned as one of the industry's top open RF skus.
Our recent demonstrations of the beef samples of our ultra product had been a game changer in advancing this particular automotive RF Q as well as accelerating discussions with other top automotive Oems.
Furthermore, our in depth collaboration with Quito as an automotive supplier Titan has become one of the top driving factors for automotive Oems to consider the subtype koito solution over other competing solutions.
Jim: The go to market strategy, except on with Koito as our tier one partner is starting to become an obvious and sustainable winning combination for customers as they solidify their first mass production launches using lidar technology.
Jim: Of course, we have seen some false starts delays and re scoping as car companies refine their adoption of this new technology.
But it is clear that lidar is not going away. It's just a matter of time before several Oems safely launch new Adas systems, incorporating the tremendous advantages that lidar provides having.
Having a supplier which can sustain this launch learning curve is becoming paramount to OEM sourcing decisions.
Next <unk> recently filed an 8-K disclosing the notification of an OEM series production Award.
Today, we're not able to disclose any more details on this project outside of those disclosed in the 8-K, but they will be forthcoming soon as we worked together with the OEM and Quito public announcements.
In addition to our recent automotive developments I'm pleased to highlight significant progress we made with our major autonomous industrial vehicles OEM using our near range Lidar, Nova in Q4 of 2023.
During the quarter stepped on past a significant gate review with this early adopter of our near range Lidar technology.
And we've advanced to the final preproduction phase of this project in 2024 with expected mass production launch in 2025.
With this milestone in hand and in partnership with Quito, We now have several other Oems, including shuttle Oems heavy equipment manufacturers and smart infrastructure customers with greater interest and higher demand for our near range Lidar product in 2024.
2024 will be a decisive year for continued lighter adoption across the automotive landscape.
With our new product ultra and our deepened partnership with Quito, we're poised to capture market share in this key inflection point of adoption.
Now I'll turn it back over to Dennis.
Thank you Mitch.
Darksome without fourth quarter.
Total revenue for the quarter it was $5.0 million.
An increase of 214%.
Compared to the prior year period, and up 29% compared to our previous quarter.
The increase for the quarter was evenly contributed.
Product revenue and development revenue.
Fourth quarter 'twenty to 'twenty three.
GAAP net loss was $8 $3 million.
<unk> 52 cents loss per share basic and diluted.
Fourth quarter 2023, non-GAAP net.
Net loss was $6 $4 million.
Or 41 cents loss per share basic and diluted.
First quarter 2023 adjusted EBITDA was a negative.
Seven $1 million.
Now until a full year 2023 results.
Political revenue for 10, 23 was $13 $1 million.
Jim: An increase of 76% compared to the prior year and above the full year 2023 revenue guidance provided in our third quarter 'twenty to 'twenty three earnings release.
We achieved full year gross margin of 27%.
Our full year GAAP operating expenses were $54.3 million.
Excluding stock based compensation expenses, and non recurring loss on impairment of property and equipment or.
Our non-GAAP operating expenses were well below the $50 million, we communicated it.
Third quarter 'twenty, two 'twenty three earnings release.
Full year GAAP net loss was $48 5 million or $3 and cents loss per share basic and diluted.
Full year, non-GAAP net loss was $38 $9 million or $2.47 loss per share basic and diluted.
And our full year adjusted EBITDA was a negative $41.2 million.
As of December 31st Tim can you three we had approximately $56 $4 million in cash cash equivalents and short term investments.
Lastly, we're not offering 'twenty 'twenty four guidance at this time, we expect to provide an update on our full year guidance at our Q1 earnings call.
And with that I love.
Like to open up the call for questions.
Thank you we will now be conducting a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad.
None: The confirmation tone will indicate your line is in the question queue.
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For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Thank you.
Our first question comes from the line of Shoddy Macquarie <unk> with Craig Hallum. Please proceed with your question.
Hey, this is shouting that Wally on for Richard Shannon. Thanks.
Thanks for taking my question guys I have a question regarding the final round of sourcing with the top 10 Oems can you give any details whether this is an exclusive or a competitive process.
Yes, Sean this is Mitch <unk> Chief commercial officer.
Basically you're asking okay is it exclusive or competitive.
Mitch: It's still competitive process at this point.
For that particular opportunity.
Okay.
Did that did that OEM to give you guys any indication of how many other companies are left in that process.
No no they they didn't give us any particular number.
Okay makes sense.
And then just one more question.
What's the timeline for a decision and a shipment with the top three OEM.
And then just an OEM that has announced a lot of our suppliers in the past.
Okay.
The timeline, we can't disclose the commercials of the RF SKU we received.
But just in general a lot of the Rfps coming out in the automotive industry right now are.
Have the start of series production in the second half the decade, you know in the 2026 to 2028 timeframe.
Hum.
And then the second part of your question have they already announced a light our suppliers, though a lot of Oems to have.
Had various projects with our other light our suppliers the past several years.
Yes. This this OEM was previously working with another light our supplier.
Yeah.
Thanks for the color on that and that's all for me.
None: Thank you.
Our next question comes from the line of Kevin Garrigan with West Park Capital. Please proceed with your question.
Yeah, Hey, guys. Thanks for letting me ask a few questions and congrats on the progress just for the first one just a quick clarification the RF skus.
You mentioned and then the final sourcing those are both for passenger vehicles correct not not any trucking.
That's correct.
Okay perfect.
And then has the I V I O I from Koido caused any of your discussions with Oems to kind of change at all and then you now have some.
So they now be waiting on the sidelines until a final decision is made or some may actually like the idea of a bigger tier one kind of players sourcing the lidar and accelerated some discussions.
None: Yes definitely Kevin this is Mitch again, yes.
Yes, it's an obvious topic that comes up especially in deep final discussions with the Oems I think overall, it's a it's a positive it's seen as a positive for sept on and four koito.
You know there are concerns in the industry about the longevity of Lidar companies and I think that's coming to the surface for for many Oems.
And so this proposed letter that we received is definitely a positive in front of the customers.
Okay perfect. Thanks, guys.
Mhm.
None: Thank you. Our next question comes from the line of Gus Richard with Northland Capital. Please proceed with your question.
Yes, Thanks for letting me ask a couple of questions.
Just you know when the industry goes through a re.
So can you talk about.
Sort of.
What it means to you guys financially how do they size any.
Okay.
<unk>.
Associated with that kind of thing not specific numbers just how do you how does one think about that.
Are you asking about the G unreached scoping.
Yes, I am I'm, so when Theres, a re scoped, usually the vendors get our money back from money spent.
Just wondering you know <unk>.
Street practices.
What's the magnitude what does it look like is it proportional to your what you've spent on development et cetera.
Yeah, we're certainly.
Trying to recover all the money. We have spent are invested in the program.
But there are a lot of intricacies in the process unless you wanted to add something you know, it's a it's not something.
Concrete number we can't give out at this point, but it's certainly a non trivial number yes, it's not public information, but but you know I think I think you can think of it as some proportion of our opex the past three or four years since we announced that project that was a pretty significant work stream for our company. So.
There were significant investments and that's what's being asked for.
Got it.
And then in terms of the.
Nomination.
None: Trucking company.
So when when.
When would you expect that to go into production.
Yeah, just to refer back to my answer to the first question most of the RF Queues and awards right now are starting production in the 26 to 28 timeframe.
So it would fall somewhere in that timeframe, yeah, but again I refer back to our 8-K filing.
None: Filing you know that's as much as information as we can publish right now and we will follow up with more press releases as we're allowed to release more information.
Okay Fair enough last one for me.
This Chinese entity that has.
Because on the.
Entities list, if you will.
None: You know where you're going up against this company at any any of them.
Top 10.
<unk>.
Companies Oems that you've been working with this significant reduction in.
You know the competitive environment.
What are you seeing that these folks yeah I'll start first on the Mexican can add more.
There are as you can see in this slide our landscape of quite a number of lidar companies in competition for any program out there. So you can expect I E.
This Chinese satellite our company as well as us and many others are always competing with each other in any of the Lidar program and so that's that's active so it is a fair assumption that we've been competing in a number of projects.
And yeah, you know the current situation is there.
I put on this 12 60 H list and they are you know there's one fewer in many of these competitions at many places so Mitch you want to add some more.
Thank you have anything to add yeah, yeah, that's right.
Yeah.
Okay very good that's it for me thanks, so much.
Thank you.
Next question comes from the line of Matthew <unk> with Maxim Group. Please proceed with your question.
Hey, Thank you for taking my questions I guess first one is on the.
Smart tolling project you've talked about.
Yes, I think it pretty significantly over the last couple of quarters I didn't hear I think much about it today, but just hoping you could update us on.
You know where the rollout stands on potential for.
Permian scope and expansion of the smart tolling practice in general for your vessels.
Yeah. Thanks, Matt This is Mitch.
Good question.
We didn't necessarily highlight that today, but but we did continue significant shipments in Q4 that shows up in our product revenue numbers for the tolling application.
And we continue to support those big tolling operators in the U S market as they expand both in the U S and also.
Bid on some international opportunities. So that's very much an active market.
Market that we're supporting.
Got it thank you and I know youre, not specifically providing and.
An outlook, particularly on revenue, but I was wondering if you could give us some sense of.
You know your thoughts around spending at least over the next two quarters or so.
Year just directionally.
Directionally, what we should be expecting on Opex. I think you had you know kind of declines the last three quarters at least on GAAP. So should we expect kind of the same trajectory given you know so the re scoping of GM or is it just subject to whether you.
Sort of.
Get to the final decision.
None: OEM selections.
Hi spend his time here for.
For the Opex at this stage.
We're not expecting any increase so it's probably less than our 'twenty to 'twenty three numbers.
I I guess, our with our Q1 <unk>.
<unk> will be providing some update.
Okay. Thank you.
Thank you there are no further questions at this time I'd like to turn the floor back over to June pay for closing comments.
Thank you very much.
It's been a exciting year 2023.
So we look forward to another even more productive a year of 2024 with our new products, our new projects and new technology of course, so stay tuned for further updates from <unk>. Thank you very much.
This concludes today's teleconference.
May disconnect your lines at this time, thank you for your participation.
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