Q4 2023 AEye Inc Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the AI Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in the listen-only mode.
Operator: After the speaker's presentation, there will be a question and answer Q&A Session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.
Operator: To start your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Lee Bannister.
Lee Bannister: Good afternoon, and thank you for joining AEI's fourth quarter 2023 earnings call. With me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer. Earlier today, we announced our financial results for the fourth quarter of 2023. A copy of our press release can be found on our website at investors.ai.ai. Before we begin, I would like to remind participants that today's discussion may include forward-looking statements as defined in the securities laws and regulations of the United States with reference to future events, future operating results, or financial performance. Such forward-looking statements are based on our current expectations and assumptions regarding our business, the industry, and other conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult or impossible to predict. Our actual results may differ materially from those contemplated by these forward-looking statements. We caution you, therefore, against placing undue reliance on any of these forward-looking statements.
Lee Bannister: You can find more information about the risks, uncertainties, and other factors in our reports filed from time to time with the Securities and Exchange Commission, including in our most recent periodic report. All information discussed today is as of March 26, 2024, and we do not intend and undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law. In addition, today's discussion will include references to certain non-GAAP financial measures. These non-GAAP measures are presented for supplemental information purposes only and should not be considered as a substitute for financial information presented in accordance with GAAP.
Good day, and thank you for standing by.
Welcome to the <unk> fourth quarter 2023 earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer.
A question and answer session to ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is right to withdraw your question. Please press star one again.
Matthew Fisch: A reconciliation of the measures to the most directly comparable GAAP measures is available in our press release, and you should refer to our reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures in our earnings release. Now, let me pass the call over to Matt. Thanks, Lee. And thank you all for joining us for the AI fourth quarter in 2023 year-end conference call. On today's call, I will provide a high-level review of 2023 and also speak to the trends we are seeing in the lighter market. Before diving into our review of 2023, I'm pleased to share that we have recently signed a letter of intent with a global Tier 1 automotive ADAS sensor supplier to begin a collaboration focused on OEM ADAS opportunities. These opportunities have already begun to materialize.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker for today Leigh Banister. Please go ahead.
Leigh Banister: Good afternoon, and thank you for joining Ani's fourth quarter 2023 earnings call with me today are Matt Fish, Chief Executive Officer, and Conor journey, Chief Financial Officer.
Leigh Banister: Earlier today, we announced our financial results for the fourth quarter 2023, a copy of our press release can be found on our website at investors Dot AI AI before we begin I would like to remind participants that today's discussion may include forward looking statements as defined in the securities laws and regulations of the United States with reference to future events future operating Roe.
Leigh Banister: Our financial performance.
Leigh Banister: Forward looking statements are based on our current expectations and assumptions regarding our business the industry and other conditions. These forward looking statements are subject to inherent risks uncertainties and changes in circumstances that are difficult or impossible to predict.
Leigh Banister: Our actual results may differ materially from those contemplated by these forward looking statements. We caution you therefore against placing undue reliance on any of these forward looking statements.
Leigh Banister: You can find more information about the risks uncertainties and other factors in our reports filed from time to time with the Securities and Exchange Commission, including in our most recent periodic report.
Leigh Banister: All information discussed today is as of March 'twenty, six 'twenty 'twenty, four and we do not intend and undertake no obligation to update any forward looking statements, whether as a result of new information future developments or otherwise, except as may be required by law.
Leigh Banister: In addition, today's discussion will include references to certain non-GAAP financial measures.
Matthew Fisch: The LOI aligns with the heightened OEM engagement we are observing, as evidenced by a recent influx of RFI and RFQ activity. Additionally, we are excited to announce the inaugural member of our ForesightFlex family, which we call Apollo. You may recall that we announced the ForesightFlex automotive reference design in November of last year. With Apollo, we present OEMs with a compact, ultra-long range LiDAR sensor that also facilitates diverse mounting options, including unparalleled performance when mounted behind the windshield. Apollo demonstrates the power of 1550 nanometer LiDAR technology and is capable of a 50% range improvement and a 10 times resolution increase compared to our first generation product.
Leigh Banister: These non-GAAP measures are presented for supplemental information purposes, only and should not be considered as a substitute for financial information presented in accordance with GAAP. A reconciliation of the measures to the most directly comparable GAAP measures is available in our press release.
Leigh Banister: And you should refer to our reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures in our earnings release.
Leigh Banister: Now, let me pass the call over to Matt.
Matthew Fisch: Thanks, Lee and thank you all for joining us for the fourth quarter and 2023 yearend conference call.
Matthew Fisch: On today's call I will provide a high level review of 2023 and also speak to the trends we are seeing in the wider market place.
Matthew Fisch: Before delving into our review of 2023.
Pleased to share that we have recently signed a letter of intent with a global tier one automotive sensor supplier to begin a collaboration focused on OEM Adas opportunities.
Matthew Fisch: These opportunities have already begun to materialize.
Matthew Fisch: The LOI aligns with the heightened OEM engagement, we are observing as evidenced by a recent influx of RFID in RFP activity.
Matthew Fisch: Additionally, we are excited to announce the inaugural member of our foresight flex family, which we called Apollo.
Matthew Fisch: Our plan is to unveil the first samples of Apollo to automotive OEMs in Q2. These achievements underscore the scalability of our software-defined architecture. Overall, 2023 was a year of product maturation and strategic realignment for AI. Emerging from the consumer electronics show and the interest we saw in our technology, it is evident that LiDAR remains a cornerstone for enhancing safety and autonomy in the future of mobility.
Matthew Fisch: You may recall that we announced the foresight flex automotive reference design in November of last year.
Matthew Fisch: With Apollo we present Oems with our compact ultra long range Lidar sensor that also facilitates diverse mounting options, including unparalleled performance when mounted behind the windshield.
Matthew Fisch: Apollo demonstrates the power of 15 50 nanometer Lidar technology.
Matthew Fisch: And is capable of a 50% range improvement and a 10 times resolution increase compared to a first generation product.
Matthew Fisch: Our plan is to unveil the first samples of Apollo to automotive Oems in Q2.
Matthew Fisch: Despite its undeniable potential, broader market conditions have precipitated delays for LIDAR adoption within OEM vehicle programs. However, we remain optimistic and are encouraged by the increased interest in the ongoing discussions we are having with OEMs. Our collaboration with NVIDIA resulted in significant advances in high-speed, long-range detection performance, and we believe we are ultimately on track for future integration with their Hyperion platform.
Matthew Fisch: These achievements underscore the scalability of our software defined architecture.
Matthew Fisch: Overall, 2023 was a year of product maturation and strategic realignment for AI.
Matthew Fisch: Emerging from the consumer electronics show and the interest we saw in her technology. It is evident that lidar remains a cornerstone for enhancing safety and autonomy in the future of mobility.
Matthew Fisch: Despite its undeniable potential.
Matthew Fisch: Broader market conditions have precipitated delays for lidar adoption within OEM vehicle programs.
Matthew Fisch: However, we remain optimistic and are encouraged by the increased interest and ongoing discussions we are having with Oems.
Matthew Fisch: At the conclusion of our work with Continental in the fourth quarter, we significantly hardened our HRL 131 product and supply chain, which enabled HRL 131 to be quoted to a major OEM by Continental last year. Most notably, as we end our collaboration, we anticipate obtaining from Continental a full set of design collateral and any remaining intellectual property rights to the HRL 131 product, and we appreciate the ongoing support we are receiving. The current task at hand is to establish a last mile with our next Tier 1 partner in quoting this year's RFQs with OEMs. In tandem with our technological advancements, we have also made significant strides in fortifying our financial foundation. We continue to focus on our capital-light business model in 2023, which is not only expected to extend our cash runway well into 2025 but also enables us to weather current industry headwinds. Our capital light model has been an underpinning of our tier one partnership model.
Matthew Fisch: Our collaboration with Nvidia resulted in significant advances in high speed long range detection performance and we believe we are ultimately on track for future integration with their high Purion platform.
Matthew Fisch: At the conclusion of our work with continental in the fourth quarter, we significantly heartened, our HR L $1 31 product and supply chain.
Matthew Fisch: Which enabled HR L $1 31 to be quoted to our major OEM by Continental last year.
Matthew Fisch: Most notably as we and our collaboration.
Matthew Fisch: We anticipate obtaining from continental a full set of design collateral and any of the remaining intellectual property rights to the HR L $1 31 products and.
Matthew Fisch: And appreciate the ongoing support we are receiving.
The current task at hand is to establish a last mile with our next tier one partner and quoting this year's or Skus with Oems.
Matthew Fisch: In tandem with our technological advancements we also made significant strides in fortifying our financial Foundation.
Matthew Fisch: We continued to focus on our capital light business model in 2023.
Matthew Fisch: Which is not only expected to extend our cash runway well into 2025, but also enables us to weather current industry headwinds.
Matthew Fisch: Our capital Light model has been an underpinning of our tier one partnership model.
Matthew Fisch: And we believe it gives us the flexibility we'll need to reach the production stage in the automotive space.
Matthew Fisch: As we venture into 2024, our primary focus remains on market, leading product performance and go to market via tier one partners.
Matthew Fisch: By leveraging the maturity of our products and pre existing supply chain infrastructure, we expect that the integration of new partners will be low friction.
Matthew Fisch: AI has effectively created a plug and play model for tier one partnerships, which will enable an efficient transition for new commercial relationships.
Matthew Fisch: And we believe it gives us the flexibility we'll need to reach the production stage in the automotive industry. As we venture into 2024, our primary focus remains on market-leading product performance and go-to-market via Tier 1 partners. By leveraging the maturity of our products and pre-existing supply chain infrastructure, we expect that the integration of new partners will be low friction.
Matthew Fisch: Now I'll turn the call over to Conor to discuss our financial performance.
Conor B. Tierney: Thanks, Matt and welcome everyone.
Conor B. Tierney: I'd like to reiterate that despite the recent continental announcements AI remains firmly committed to its capital light partnership model with established tier ones.
Conor B. Tierney: We believe that the recipe for success in this industry is to leverage the established manufacturing infrastructure of tier one partners to scale production and key cost flow, which allows us to focus on design and great technology.
Conor B. Tierney: The road safety crisis continues to worsen worldwide in the U S alone pedestrian fatalities increased by nearly 80% from 2010 to 2021 to reach a 40 year height. According to the Governor's Highway Safety Association.
Conor B. Tierney: AI has effectively created a plug-and-play model for tier one partnerships, which will enable an efficient transition for new commercial relations. Now, I'll turn the call over to Conor to discuss our financial performance. Thanks, Matt.
Conor B. Tierney: The current technology does not appear to be working which is why light or needs to be deployed quickly and upscale <unk>.
Conor B. Tierney: Welcome, everyone. I would like to reiterate that, despite the recent continental announcement, AI remains firmly committed to its capital light partnership model with established tier one. We believe that the recipe for success in this industry is to leverage the established manufacturing infrastructure of tier one partners to scale production and keep costs low, which allows us to focus on designing great technology. The road safety crisis continues to worsen worldwide. In the U.S. alone, pedestrian fatalities increased by nearly 80% from 2010 to 2021 to reach a 40-year high, according to the Governor's Highway Safety Association.
Conor B. Tierney: Established tier ones have the capabilities to do this and have done this in the past with radar cameras and other Adas components in turn AI technology is differentiated in terms of size reliability ultra long range and software defined performance at a highly competitive price point.
Conor B. Tierney: I'll repeat again, we believe commercializing lidar at scale requires an established tier one plus AI technology.
Conor B. Tierney: And the current tough macro environment with high cost of capital.
Conor B. Tierney: This capital light model positions us to weather the storm.
Our cash burn is expected to be up to 10 times lower than our peers, who will require tremendous amounts of capital to industrialize, there products and cover product warranty obligations. Despite.
Conor B. Tierney: Despite all the bluster out there to date, we are aware of no high volume Lidar program awards that ramp to mass production. The industry is still arguably in the research and development phase. The next one to two years will be a challenging time for the industry given the scarcity of capital and resources needed to bridge to commercialization.
Conor B. Tierney: This is where AI has the advantage before we address our financial results I would like to highlight that in December 2023, the company effected a reverse stock split and that all the financial information to be presented has been adjusted to account for the revised share count numbers.
Conor B. Tierney: The current technology does not appear to be working, which is why LiDAR needs to be deployed quickly and at scale. Established Tier Ones have the capabilities to do this and have done so in the past with radar, cameras, and other ADAS components. In turn, Aeye's technology is differentiated in terms of size, reliability, ultra-long range, and software-defined performance at a highly competitive price. I'll repeat again, we believe commercializing LiDAR at scale requires an established tier one plus AI technology. In the current tough macro environment with high costs of capital, AI's capital-light model positions us to weather the storm. Our cash burn is expected to be up to 10 times lower than our peers, who will require tremendous amounts of capital to industrialize their products and cover product warranty obligations. Despite all the bluster out there, to date, we are aware of no high-volume LiDAR program awards that have ramped up to mass production.
Conor B. Tierney: Now turning to our fourth quarter financial results first and most importantly, I am pleased to report that we reduced our net cash burn by an additional $3 4 million to.
Conor B. Tierney: To $9 4 million from the prior quarter's cash burn of $12 8 million.
Conor B. Tierney: This is our third consecutive quarter of cash burn reductions.
Conor B. Tierney: Fourth quarter revenues were $69000 compared to $188000 in the prior quarter.
Conor B. Tierney: The reduction was expected as our team continues to focus our efforts on key automotive milestones under our automotive first strategy.
Conor B. Tierney: Quarter over quarter gross margins have decreased because of lower revenue as well as increased noncash inventory write downs of $2 $2 million over the prior quarter, primarily due to the wind down of our current industrial product line as discussed on last quarter's earnings call fourth quarter GAAP operating expenses were.
Conor B. Tierney: $21 8 million.
Conor B. Tierney: Up 69% from the prior quarter due primarily to cash restructuring charges of $1 9 million.
Conor B. Tierney: Resulting from this quarter's reduction in force and noncash impairment charges of $9 9 million on our long lived assets. The majority of these are related to the right of use assets and related leasehold improvements for our Dublin headquarters and our property and equipment.
Conor B. Tierney: non-GAAP operating expenses were $6 $5 million down sequentially from $8 5 million last quarter due primarily to our continued cost reduction initiatives.
Conor B. Tierney: We reported a fourth quarter GAAP net loss of $27 8 million or $4 44 per share versus a GAAP net loss of $17 million or $2 78 per share last quarter.
Conor B. Tierney: The industry is still arguably in the research and development phase. The next one to two years will be a challenging time for the industry, given the scarcity of capital and resources needed to bridge the commercialization gap. This is where AI has the advantage.
Conor B. Tierney: The increase in GAAP net loss was mainly due to the impairment of long lived assets inventory write downs and associated reduction enforced initiatives discussed previously.
Conor B. Tierney: Before we address our financial results, I would like to highlight that, in December 2023, the company arranged for a reverse stock split, and all the financial information to be presented has been adjusted to account for the revised share count number. Now turning to our fourth quarter financial results. First and most importantly, I am pleased to report that we reduced our net cash burn by an additional $3.4 million to $9.4 million from the prior quarter's cash burn of $12.8 million. This is our third consecutive quarter of cash burn reduction. Fourth quarter revenues were $69,000, compared to $188,000 in the prior quarter.
Conor B. Tierney: On a non-GAAP basis, our net loss was $6 9 million or $1 10 per share in the fourth quarter compared.
Conor B. Tierney: Compared to a non-GAAP net loss of $9 5 million or $1 55 per share in the prior quarter.
Conor B. Tierney: The expense reductions we made in the third quarter and further realized in the fourth quarter have set us up for success in the future, which is why we beat our non-GAAP EPS guidance, we provided last quarter by <unk> 10.
Conor B. Tierney: Despite this we did fall short of meeting our GAAP EPS guidance of $3 provided last quarter Duke.
Conor B. Tierney: Due primarily to the impairment of long lived assets discussed previously.
Conor B. Tierney: We continue to manage our cash carefully and net cash used for operating activities decreased to $9 2 million in the fourth quarter from $11 2 million in the third quarter, we closed the fourth quarter with $36 5 million.
Conor B. Tierney: Cash cash equivalents and marketable securities and no debt as an additional source of liquidity, we have access to our equity line of credit facility and our shelf registration statement, which allows us to raise up to $200 million.
Conor B. Tierney: The reduction was expected as our team continues to focus its efforts on key automotive milestones under our Automotive First strategy. Quarter over quarter, gross margins have decreased because of lower revenue as well as increased non-cash inventory write-downs of $2.2 million over the prior quarter, primarily due to the wind-down of our current industrial product line, as discussed in last quarter's earnings. Fourth quarter GAAP operating expenses were $21.8 million, up 69% from the prior quarter, due primarily to cash restructuring charges of $1.9 million, resulting from this quarter's reduction in force The majority of these are related to the right-of-use assets and related leasehold improvements for our Dublin headquarters and our property and equipment.
Conor B. Tierney: Over the next two and a half years.
Now turning to our guidance for 2024, thanks to our various cost reduction initiatives, we expect cash burn to be in the range of $20 million to $25 million for the full year 2020 for.
Conor B. Tierney: This puts us on track to a 75% reduction in our cash burn rate when compared to Q1 2023.
Conor B. Tierney: I am excited about the opportunities in front of us in particular, the signed letter of intent with a global tier one automotive Adas sensor supplier, which opens a path to stay competitive on upcoming RFG nominations.
Conor B. Tierney: As Matt mentioned, we continue to bring innovative products to the market such as Apollo, which not only delivers ultra long range performance, but we believe is also the most compact sensor available.
Conor B. Tierney: I am pleased with our continued financial discipline, including further reductions to fixed operating costs, which we expect will extend our cash runway well into 2025.
Conor B. Tierney: We are bullish about the future and are well positioned to optimize the significant opportunity, we see with our OEM partners.
Conor B. Tierney: With that I'll pass it back to Matt to wrap things up.
Matthew Fisch: Since joining AI I continue to be impressed with the technical depth and relentless commitment of our employees and remain confident that our technology and products provide meaningful differentiation for the automotive industry.
Conor B. Tierney: Non-GAAP operating expenses were $6.5 million, down sequentially from $8.5 million last quarter, due primarily to our continued cost reduction initiatives. We reported a fourth quarter gap net loss of $27.8 million, or $4.44 per share, versus a gap net loss of $17 million, or $2.78 per share last quarter. The increase in GAP net loss was mainly due to the impairment of long-lived assets, inventory write-downs, and associated reduction-in-force initiatives discussed previously. On a non-GAAP basis, our net loss was $6.9 million, our $1.10 per share in the fourth quarter, compared to a non-GAAP net loss of $9.5 million, our $1.55 per share in the prior quarter.
Matthew Fisch: Together, we were able to evolve AI from a research focused company to a product driven organization.
Matthew Fisch: While the road ahead will present its share of challenges, we approach the future with confidence and our commitment to driving our product entry into the automotive industry. We look forward to continuing to update you as we progress with our go to market efforts.
Speaker Change: I would like to thank the whole AI team.
Speaker Change: And our board of directors for their continued support.
Speaker Change: With that we'll open up the call for questions operator.
Speaker Change: Okay.
Thank you.
Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your telephone.
Speaker Change: We also assets and wait for your name and your company to be announced before you proceed with your question one moment, while we compile the Q&A roster.
Speaker Change: Our first question will be coming from John Roy of Watertown Research. Your line is open.
Conor B. Tierney: The expense reductions we made in the third quarter and further realized in the fourth quarter have set us up for success in the future, which is why we beat our non-GAAP EPS guidance provided by Alaska Water by 10. Despite this, we did fall short of meeting our GAAP EPS guidance of $3 provided by last, due primarily to the impairment of long-lived assets discussed. We continue to manage our cash carefully, and net cash used for operating activities decreased to $9.2 million in the fourth quarter from $11.2 million in the third quarter. We closed the fourth quarter with $36.5 million of cash, cash equivalents, and marketable securities and no debt. As an additional source of liquidity, we have access to our equity line of credit facility and our shelf registration statement, which allows us to raise up to $200 million over the next two and a half years. Now, we turn to our guidance for 2024. Thanks to our various cost-reduction initiatives, we expect cash burn to be in the range of $20 to $25 million for the full year 2024.
John Marc Andre Roy: Thank you so Matt as curious you announced.
John Marc Andre Roy: Or site flex back in November it's been four months.
John Marc Andre Roy: Can you walk us through how you guys were able to turn that around into a product and just four months.
Matthew Fisch: Hey, John welcome back Yeah, absolutely I think really there's a couple of key points here first and foremost.
John Marc Andre Roy: So power of our software defined Lidar architecture.
John Marc Andre Roy: When you are mostly focused on making software updates and changes things feel very quickly.
Speaker Change: And of course, we can't do that.
John Marc Andre Roy: Without an incredibly strong technical engineering product and operations teams. These guys have been outstanding.
John Marc Andre Roy: And driving hard and committed since back then in November.
John Marc Andre Roy: So what we have at the end of the day is what we believe to be.
John Marc Andre Roy: The most compact design now.
John Marc Andre Roy: In this ultra long.
John Marc Andre Roy: Range performance category.
John Marc Andre Roy: Which allows us to do things like seamlessly integrate.
John Marc Andre Roy: Into.
John Marc Andre Roy: Behind the windshield type designs get the bump out of the roof, you had a nice quiet and compact solution inside the cabin.
John Marc Andre Roy: And the performance.
John Marc Andre Roy: Delivered by our 15 50 technology in this case is incredible.
Speaker Change: Interesting so on a second element I mean, obviously the tier one announcement is key for all of us here.
Speaker Change: Can you give us any more color around the announcement are they going to use Apollo.
Speaker Change: Any any kind of information would be helpful.
Speaker Change: Absolutely well hit the last part first I think that our partners committed to entire product range and the key thing here is what we've been doing is looking outside what I'll call the traditional monolithic.
Speaker Change: Very large tier one space and instead, turning our attention to more focused tier one partners and in this case, we really found great synergy with.
Conor B. Tierney: This puts us on track to a 75% reduction in our cash burn rate when compared to Q1 2020. I'm excited about the opportunities in front of us, in particular, the signed letter of intent with a global Tier One automotive ADAS sensor supplier, which opens a path to stay competitive on upcoming RFQ nominations. As Matt mentioned, we continue to bring innovative products to the market, such as Apollo, which not only delivers ultra-long range performance but, we believe, is also the most compact sensor available.
Speaker Change: With a partner that is focused on delivering Adas solutions.
Speaker Change: Okay and the other part of their charter is to leverage heavily into innovation and new technology to grow their business is actually where we're seeing quite a few guys out there like that now that are hungry and moving ahead well.
Speaker Change: We're already working with this particular partner on inbound RFID and RF skews SaaS, we're already jumped in and working together on that.
Speaker Change: I hope to have.
Speaker Change: A bit more information and we expect they will be sharing more information and details on that soon.
Speaker Change: Other thing I wanted to point out is that we do have multiple engagements in this space is this I'll call it.
Technology driven more focus.
Speaker Change: And growing their business through technology and innovation, we have multiple of these engagements ongoing right now and hope to talk more about those also in the not too distant future.
Conor B. Tierney: I'm pleased with our continued financial performance, including further reductions to fixed operating costs, which we expect will extend our cash runway well into 2025. We are bullish about the future and are well-positioned to optimize the significant opportunity we see with our OEM partners. With that, I'll pass it back to Matt to wrap things up.
Speaker Change: Yeah.
Speaker Change: Great well definitely and listening for those thanks, so much.
Speaker Change: Thank you one moment, while we proceed with the next question.
Speaker Change: Okay.
Speaker Change: Yes.
And our next question will be coming from Kevin Garrigan of Westport Capital. Your line is open.
Matthew Fisch: Since joining AI, I continue to be impressed with the technical depth and relentless commitment of our employees and remain confident that our technology and products provide meaningful differentiation for the automotive industry. Together, we were able to evolve AI from a research-focused company to a product-driven organization. While the road ahead will present its share of challenges, we approach the future with confidence and a commitment to driving our product entry into the automotive industry.
Kevin Garrigan: Yeah, Hey, good afternoon bank culinary congrats on the LOI.
Kevin Garrigan: A two part question have you have you structured the LOI with the tier one similar to continental where youre going to get royalties and youll receive collateral if they decide to.
Kevin Garrigan: Continue the program and then for the second part can you just explain a little bit the timeline. So you know how that commitment with a tier one what tests need to be done at the tier one facility, how long has that kind of things like that.
Speaker Change: Alright so.
Speaker Change: A couple of things here on that just maybe it will kind of taken in reverse.
Speaker Change: Order, but.
Speaker Change: And sort of and sort of testing and integration those type of tasks.
Speaker Change: We actually did a lot.
Speaker Change: Through our work with continental.
Speaker Change: Hey.
Speaker Change: <unk> been even though they are the relationship has ended effectively they've really been great at transitioning collateral and information over.
Speaker Change: So this thing.
Operator: We look forward to continuing to update you as we progress with our go-to-market efforts. I would like to thank the whole AI team and our board of directors for their continued support. With that, we'll open up the call for questions. Operator.
Speaker Change: This aspect of things.
Speaker Change: It takes a lot of the start from ground zero.
Speaker Change: Type work over again.
Speaker Change: Already jump in working very deeply together, we expect testing that happened very quickly and again, we're using the work that we did with continental as a baseline.
Speaker Change: So again, we expect that to happen very quickly here I am sorry, what was the first part of the question again.
Speaker Change: Yeah.
Speaker Change: I mean, it was just whether you're the first one was just whether you structured the LOI dissimilar continental where youre going to get royalties and north sea collateral would you pretty much answered.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone. We also ask that you wait for your name and your company to be announced before you proceed with your question. One moment while we compile the Q&A roster. Our first question will be from John Roy of Watertower Research. Your line is open.
Speaker Change: Yes, and yes to the second.
Speaker Change: Yes.
Speaker Change: Let me hit that real quick yes, we expect to see a similar infrastructure I'll call. It a revenue sharing based structure it fits right into our capital light model I wouldn't say, we're hitting sort to be exactly the same as <unk>, but it'll be similar.
Speaker Change: Okay perfect perfect.
Speaker Change: And then just as a follow up I'd love to get your thoughts on how you kind of see the lidar market playing out in 2024.
Speaker Change: Sure you've heard a few of your competitors I think this is kind of the year a series production awards, which I know we hear the same thing last year and things keep getting pushed out. So just kind of wondering what your thoughts are on the lidar market serious production agreements for 2024, whether you kind of think.
Speaker Change: Might be the year, where we're a lot get awarded.
Speaker Change: Yes.
Speaker Change: Want to be careful about the crystal ball here as we all know the market has been tricky, but the one thing that I can share with certainty is the activity that we're seeing in Q1.
Was coming out of CES and into the new year.
Speaker Change: Given all the delays that we had from last year was an okay is it going to be required or is it going to be noisy and there has been quite a bit of activity.
John Marc Andre Roy: Thank you. So, Matt, I was curious, you announced Forsythe Plex back in November. It's been four months. Can you walk us through how you guys were able to turn that around into a product in just four months? Hey, John. Welcome back.
Speaker Change: And I think Thats, one thing I can speak to definitively I'm relieved to see through this this activity that lidar is still very important and relevant.
Speaker Change: When it comes to Adas safety first and foremost and then also autonomous driving which we know has been.
Speaker Change: Part of the underpinnings of some of those layers that we've seen I'm not going to say cautiously optimistic at this point based on the larger than expected RFID and <unk> activity, we've already seen in Q1.
Speaker Change: Hey, Kevin just to add to that I think the other thing to mention is just.
The progress we've made in general on the execution side. If you think about everything that we delivered and we alluded to this on the earnings call. If you think about the.
Matthew Fisch: Yeah, absolutely. I think really, there's a couple key points here. First and foremost, it's the power of our software-defined LiDAR architect. When you're mostly focused on making software updates and changes, things go very quickly.
Kevin Garrigan: The progress we've made on Apollo. The fact that we now have an LOI with a tier one and we've all done that at a very cost competitive cost structure.
Kevin Garrigan: And I think we deserve some credit for that the fact that we've been able to go out and execute and we've done that.
Kevin Garrigan: Keeping our costs low.
Kevin Garrigan: Okay.
Speaker Change: Yeah, absolutely that makes a ton of sense.
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Speaker Change: Thanks, guys and congrats again.
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Speaker Change: Thank you at this time there are no more questions in the queue.
Speaker Change: Thank you all for joining the call. This does conclude today's conference call you all have a great evening.
Matthew Fisch: And of course, we can't do that without an incredibly strong technical engineering products and operations team. These guys have been outstanding and driving hard and committed since back then in November. So, what we have at the end of the day is what we believe to be the most compact design now in this ultra-long range, performance category. Which allows us to do things like seamlessly integrate into behind-the-windshield type designs, get the bump out of the roof, and get a nice, quiet, and compact solution inside the cabin and performance.
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Matthew Fisch: Delivered by our 1550 technology, in this case, is incredible and interesting. So on a second element, I mean, obviously, the Tier 1 announcement is key for all of us here. Can you give us any more color around the announcement? Are they going to use Apollo? I mean, any kind of information would be helpful.
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Matthew Fisch: Absolutely. We'll hit the last part first. I think that our partners are committed to the entire product range. And the key thing here is what we've been doing is looking outside what I'll call this traditional monolithic, very large tier one space and instead turning our attention to more focused Tier 1 partners. And in this case, we really found great synergy with a partner that's focused on delivering ADAS solutions. And the other part of their charter is to leverage heavily on innovation and new technology to grow their business. There's actually quite a few guys out there like that now that are hungry and moving ahead.
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Steve.
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Matthew Fisch: We're already working with this particular partner on inbound RFIs and RFQs, so we've already jumped in and working together on that. There's really a hope to have a bit more information, and we expect to be sharing more information and details on that soon. The other thing I wanted to point out is that we do have multiple engagements in the space. There's this, I'll call it... technology driven, more focused on growing their business through technology and innovation.
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John Marc Andre Roy: We have multiple of these engagements ongoing right now and hope to talk more about those also in the not too distant future. Great. Well, we'll definitely be listening for those. Thanks so much.
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Operator: Thank you. One moment while we proceed with the next question, and our next question will be coming from Kevin Garrigan of West Point Capital. Your line is open.
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Kevin Garrigan: Yeah, hey, good afternoon, Matt and Conor. And congrats on the LOI. Um, a two part question. Have you structured the LOI with tier one similar to Continental where you're going to get royalties, and you'll receive collateral if they decide to discontinue the program? And then, for the second part, can you just explain a little bit about the timeline? So, you know, how that commitment with a tier one facility, you know, what tests need to be done at that tier one facility? How long does that take for things like that?
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Matthew Fisch: All right. So. A couple things here on that, maybe we'll kind of take it in reverse order, but.. and sort of testing and integration, those type of tasks. Look, we actually did a lot through our work with Continental. And they've been, even though the relationship has ended effectively, they've really been great at transitioning collateral and information over. So this thing, this aspect of things takes a lot of the start from ground zero type of work over again. We're already jumping in, working very deeply together. We expect testing to happen very quickly.
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Matthew Fisch: And again, we're using the work that we did with Continental as a baseline. So again, we expect that to happen very quickly here. I'm sorry, what was the first part of the question again? It was just whether you structured the LOI just similarly to the continental where you're going to get royalties and receive collateral, which you pretty much answered, and then you actually have the second.
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Matthew Fisch: Yeah, yeah, look, let me hit that real quick. Yeah, we expect to see a similar type of structure. I'll call it a revenue sharing based structure. It fits right into our capital light model.
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Matthew Fisch: I wouldn't say we're heading for it to be exactly the same as Conti, but it'll be, Okay, perfect, perfect. Um, and then just as a follow-up, I'd love to get your thoughts on how you kind of see the LIDAR market playing out in 2024. I mean, I'm sure you've heard a few of your competitors think this is kind of the year of series production awards, which I know we heard the same thing last year, and things keep getting pushed out. So just kind of wondering what your thoughts are on the LIDAR market series production agreements for 2024, whether you kind of think this might be the year where a lot get awarded.
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Matthew Fisch: Yeah, look, I want to be careful about the crystal ball here. As we all know, the market's been tricky. But the one thing that I can share with certainty is the activity that we're seeing in Q1. And it came out coming off of CES and into the new year, given all the delays that we had from last year. We're going, OK? Is it going to be real quiet? Is it going to be noisy?
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Matthew Fisch: And there's been quite a bit of activity. And I think that's one thing I can speak to definitively. I'm relieved to see through this activity that LIDAR is still very important and relevant. When it comes to ADAF, safety first and foremost, and then also autonomous driving, which we know has been sort of part of the underpinnings of some of the delays that we've seen.
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Matthew Fisch: And I'm going to stay cautiously optimistic at this point based on the larger than expected RFI and RFQ activity we've already seen. Hey, Kevin, just to add to that, I think the other thing to mention is just the progress we've made in general on the execution side, if you think about everything that we've delivered, and we alluded to this on the earnings call, if you think about the progress we've made on Apollo, the fact that we now have an LOI with a Tier 1, and we've all done that at a very cost-competit And I think, you know, we deserve some credit for that, the fact that we've been able to go out and execute, and we've done that while keeping our costs low. Yeah, absolutely. That makes a ton of sense.
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Conor B. Tierney: Yeah. Okay, great. That was all I had.
Kevin Garrigan: Thanks, guys. And congrats again. Thanks, Kevin. Thank you. At this time, there are no more questions in the queue. Thank you all for joining the call. This does conclude today's conference call. You all have a great evening. ?? [inaudible] ??? , , , , , , , , , , [inaudible] Smith, Kevin Garrigan, Jordan Greene, Jennifer Deitsch, Ayee Smith, Conor Tierney, Norbert Hammerschmidt, Jordan Greene, Jennifer Deitsch, Ayee Smith, Conor Tierney, Jordan Greene, [inaudible] ? ? ? ? ? ? ? ? ? ? ? ? ? , , , , , , , , , , , , , , and John C. Cole.
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Operator: Thank you. Thank you. Thank you. Thank you. Thank you. [inaudible],,,,, Thanks for watching! Smith, Kevin Garrigan, Jordan Greene, Jennifer Deitsch, Ayee Smith, Conor Tierney, Norbert Hammerschmidt, Jordan Greene, Jennifer Deitsch, Ayee Smith, Conor Tierney, Jordan Greene,,,,,,,,,,,,,,,,,,,,,, [inaudible]
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