Q1 2024 Luminar Technologies Inc Earnings Call
Yeah.
[music].
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 does include restaurants 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 we can get into some of the questions have been on folks' minds preliminary day and some of the developments over the past few weeks. So we will jump right in with number one when will you start mass production of your Lidar.
And what future plans do you have for growth.
Alright, Hey, guys. Thanks.
Thanks, hopefully tariffs okay.
Okay Awesome awesome.
Hey, Thanks, Lillian will then draw and not so good.
I'll jump straight in and some of the questions and thanks for taking a look.
Although it was I'll call it or no.
The presentation with all the friction block stuff going on we thought it was gonna be something more more simple.
Just had one on R&D.
Within regulations everything in the meantime, it's a yes.
Got quite a whirlwind.
But yes the peak.
Washington.
You know one that were really come out we did officially hit our startup production models.
Volvo So that's something that we're past data of luminaire has been leading up to and.
Fortunately I forget.
Congratulations.
Your book to the industry that have been waiting for this moment quite environment of course.
With everyone.
Our other.
What they are trying to automate parts of C. This success is very meaningful all the way, even though our own supply base you know that.
You know with the vast majority of our programs not ultimately make it to production in the broader autonomous vehicle World. This is something that I think a standalone funding begin showing what is possible.
And people are very much taken notice.
Alright.
Our second question what are the implications to.
The rolling impact that's had on Walmart can you meet.
Our economy without lidar.
Like Tesla beliefs.
Yes, so we're not aware of any system that comes even close to meeting without a lighter and what was actually shown is that with our long range lidar across all the different tufting protocols, including specifically to them the ones that Nitza has outlined that we are able to successfully.
Those different protocols and this is all firms as well by the Swiss re is done independently. We showed it off at Luminaire day, where they're able to show a massive double digit improvement in terms of the implications as well as a reduction of vehicle accidents or assets.
But.
Still significantly a reduction in the speed.
Speed at which the accident of course corresponding to.
Improved mitigating our sort of call it from from that and what all means.
Is that.
We believe that long range Lidar is required to be able to meet those kinds of new standards that knits is mandating across the board and a massive tailwind overall for the adoption.
It was.
I was I was pretty I was pretty impressed by by how far how far they went on these on these regulations I mean, we know.
It's been coming for some time.
You know what.
In the meeting in the U S is really stepping it up and I think will serve as the benchmark worldwide. We saw similar trends.
Why does it go with everything from discovery to airbags.
To even.
And the concept of AEP in the first place that camera radar.
We're able to solve for but as we know.
The majority of AD instead of today still occurred despite some of these advanced skin.
Taking the technology and it need a fundamental step function improvement and that's not to say that there is still room left to be able.
Do improvements to be made.
With existing systems, absolutely that's the case, but we're talking a totally different world in particular.
They're a massive increase in the speed, which required to be able to do this as well as <unk>.
The requirement for that trend.
And bringing during his time at night time.
And.
You know what we've seen is.
Across the automaker landscape is I think also a lot of surprises that this is now pushing forward so quickly.
<unk> expectations in the.
Literary outlined that I think this is pretty clear in terms of you know.
Brian standardization as much as a decade earlier than what would've otherwise again.
Taxing our opportunity for what we have ahead.
And this is all happening like I said literally in automotive uses like right around the corner in 2029. So I think this is probably.
Although the bank has to happen to maybe the best thing to happen to luminaries in order in our history. So very excited for that.
Great next question is around the announcement last Friday would it be accurate to say that the restructuring is done.
Much or most of the manufacturing.
Capital need and really it as.
As well as from a ramp up.
Wow.
Sure why don't I handle.
That question. So we urge all reached S&P a few weeks ago Volvo.
And that was really intended to four year plus period to industrialize, our first product Iris.
During the last few years, we've tripled the size of the company put in a lot of blood sweat and tears to get there and we learned a lot about ourselves as an organization and upon reaching S&P and actually a little bit in advance.
We really took a long hard look at ourselves and trying to decide.
What did you do better than anybody else out there and a lot of that is related to our technology. Our R&D, our semi cap business et cetera, and then what are some of the industrial activities.
Activities, where quite frankly, some of our existing partners like TK do just as well if not better than us.
So the primary.
Focus of the actions that we took last week.
It was to put in a position where we can.
More quickly and more efficiently.
Actively to develop an industrialized our future products.
I'm going to say it wasn't it wasn't.
A cost exercise it was more of efficiency and speed exercise.
Fortunately that resulted in having to us to make some.
Tough decisions on a personal level.
It was.
Thing that we have to do.
When you kind of look at the magnitude of the savings. They result in about $8 million of savings.
Substantially all of them.
It should be.
Realized on a run rate basis by the end of year, a little more than half of those are going to be cash savings and a little less pass pass.
A little less than half is going to be stopped savings in terms of stock issued.
Please enter bartenders.
Not included in that.
We're going to be some of the benefits we have of being able to move faster on the industrialization.
As well as more efficiently and let me try to quantify that.
If I look at.
It costs too.
But the Cadillac brand building and.
And the automation equipment for our Mexico plant that totals to about.
Nearly $60 million.
What we expect to be able to launch our second facility in China <unk> is going to be.
About 20 now not 20.
1% less but 20% of that amount from has tripled its capacity.
The other thing if you look over the last three years.
I would say you look at the.
Industrialization costs caused by inefficiencies from.
Industrializing our product for the first time over the last three years between cost overruns on some of our budget inventory write downs.
It has things within August subnormal linear industrialize it.
For the first time, we wanted to focus on getting more efficient the next time.
Greetings alone over the last three years total nearly $1 million and we think we're going to be able to substantially reduce that amount.
Going forward for our Halo product from.
The lessons, we've learned to do it more efficiently and then finally we.
Our first tayloe and we'll talk about more of that embed I'm sure.
But.
S&P now for Halo is going to be in 2026, and we wouldn't be able to move that fast without industrializing, our first product and nims placed this new structure with tech. So yes, there are cost benefits of it but more importantly, the reason we took the actions. We did was to make us more efficient and leaner and meaner and move quickly in our industrialization process process.
Speaker Change: Well said and I think Tom describes all of that in.
It's been a whole journey for us the past the past decade, and I think if you really zoom out overall, what we've invested you know on the order of around $1 $8 billion to be able to dial up the platform people are firm and the industrialization muscle to be able to dwindle as possible and that's where now you look at.
What is the incremental cost to develop a new product what is the incremental cost to be able to scale and that that has come down.
Speaker Change: <unk> you know from relative to the total.
But we have to do in the first place to get to this stage to get to this leadership position.
We've been so now what.
What sort of becomes at what starts out as a headwind now we get to ride in terms of the respective tailwind to that and of course Teekay is.
Speaker Change: One of the first steps of the evolution of the business transformation and there's going to be more to come this is something that.
Speaker Change: Certainly we're looking forward to and when you take a look at you know at the same time.
Speaker Change: Million dollars you know what it takes to have the first kinds of technologies products, you know Iris family.
Speaker Change: You know now what we're talking on the order of closer to like on the order of $100 million for Halo, because we already have this investment we have the technology.
Speaker Change: Now, we're just iterating on each generation of chip on each generation of sub component that makes that possible. So yeah.
Speaker Change: Had doing so very efficiently and of course you guys. Please look.
Speaker Change: Uh huh.
Shareholder.
Speaker Change: As well as the alumina our day, if you haven't seen it to see some of that breakthrough is that halo is enabling and beyond.
Speaker Change: Thank you Ken.
Speaker Change: Scares and taken most community as a reminder for our analysts.
Ken: Want to get as many questions in as possible. So we're going to allow an initial questions follow ups. Our first question is going to come from Ken Paragon Atlas our cattle.
Ken: Hey, Kevin.
Ken Atlas: Yeah, Thanks, Hey, Austin, Hey, Tom Thanks for letting me ask a question.
Speaker Change: Wondering if you can expand on where in the process. The two non <unk> production customer rightly noted in the guide is in this next phase kind of the final stage for series production win and our.
Speaker Change: These contract upon yours to lose or it is facing some competition with you soon.
Speaker Change: Hi.
Speaker Change: <unk> is an <unk>.
Speaker Change: Automotive customer and I would say to the tail end of the development phase.
Speaker Change: Once again, I don't I don't like to predict when our customers are going to make specific decisions that we want them to make because that timing is.
Speaker Change: Out of our control and it's been taking a little longer than anybody else.
Speaker Change: But I think we're getting to the tail end of that process with them. The others are nonautomotive customers, where we've been working with them for several quarters now and we're kind of transitioning into the next stage and testing the size of the contract. So that one is exclusive theres less competition. The first one we've been working with them for <unk>.
Speaker Change: While.
Speaker Change: And while we're not too worried about competition.
Speaker Change: Your business until you win it.
Speaker Change: Okay perfect.
Speaker Change: And then just a quick quick clarification your warrants with Bob over you had noted during our call as Contra revenue.
Speaker Change: Although I didn't see any other specific warrants with customers in the order book in any no.
Speaker Change: Yes. This is something that date back to 2020, when we assigned the initial framework agreement with Volvo It was compensation for them to help us to industrialize our product for the first time.
Speaker Change: It's a little over 4 million more than say price of about $3 and for accounting reasons. Once we reach series production, we need to amortize the value of those warrants, which was about $3 million at a time over the first 22000 and change ladders that we make and so that's going to put a little bit of a thought.
Speaker Change: Of headwinds on the revenue because for the Contra revenue reasons as well as to the margin.
Speaker Change: We achieve on the sensors as well.
Speaker Change: No there is no other customers, where we have.
Speaker Change: Warrants like that are contra revenue issue in the state back to something as I said, we did it over four years ago at this point.
Speaker Change: Okay awesome, Thanks got it and that doesn't that doesn't affect the cash flow above what we get in of course or anything with them.
Speaker Change: With the customers the incrementals.
Speaker Change: Got it that makes sense, okay perfect. Thank you.
Speaker Change: Our next question is going to come from Joshua culture at TD Cowen.
Joshua Louis Buchalter: Hey, Josh.
Joshua Louis Buchalter: Thanks for taking my question.
Joshua Louis Buchalter: To start I wanted to ask about your cost basis, and any change that might or might be coming from the.
Joshua Louis Buchalter: Restructuring.
Speaker Change: The inaugural alumina you walked us through.
Joshua Louis Buchalter: 650, <unk> hundred $50 milestones of your unit cost economics has anything changed regarding that trajectory as you've undertaken.
Speaker Change: The restructuring efforts moving more to outsourcing and in particular have been with Halo on the roadmap. Thank you, yes. So all the actions we took.
Speaker Change: Hi.
Speaker Change: Most of those are.
Speaker Change: All of them are unrelated to sensor cost and.
Speaker Change: Sensor economics.
Speaker Change: One of the things we're doing now our engineering team has almost been solely focused on getting to S&P, because you've got to get there and now that they are there. They are freeing up and we're going to start aggressively attacking the sand cost.
Speaker Change: There is still work that needs to be done there, but the actions we took in that $8 million.
Speaker Change: That's unrelated to the sensor cost.
Speaker Change: The targets that we talked about last year.
Speaker Change: All of your alumina day as you talk as you mentioned.
Speaker Change: Those were always conditioned on us kind of having our first full year run rate of production and so.
Speaker Change: You need to get the economies of scale.
Speaker Change: We need to get the credibility and the contracts in place with your supply base.
Speaker Change: You need to work through the manufacturing teams and you need to do some amount of kind of <unk> to get there and so we're in the early innings.
Speaker Change: Sure.
Speaker Change: We're not at those targets today, we're going to be.
Speaker Change: Much closer and we still have a path.
Speaker Change: To get very close to that $6 50 level L Tech and the industrialization, that's all going to be for low and so there may be some resources that we put there on the cost downs for for Iris and Iris plus but the vast majority of those resources as well as the benefits we're going to see on that is going to be for the industrialization.
Speaker Change: <unk>.
Speaker Change: No.
Speaker Change: Thank you for all the color there and then for my follow up I was been only.
Speaker Change: In a week or a few days since the automatic emergency braking regulations were announced I think had been rumored for some time and you guys have been talking about it publicly coming per day I mean, do you expect or have you seen potential customers preparing for this.
Speaker Change: Does it change any expectations for when you would get be able to bring things into your order book and I guess.
Speaker Change: To qualify for the new regulation that hit <unk>.
Speaker Change: <unk> potential from an equal sign a deal we need to hit that 2009 timeframe. Thank you.
Speaker Change: So I think it's a great question on all of that out.
Speaker Change: I think.
Speaker Change: Right.
Speaker Change: This definitely took a lot of the industry by surprise.
Speaker Change: The level that it was I think there was a lot of anticipation that it was going to be heavily.
Speaker Change: Watered down so to say the requirement.
Speaker Change: So for example in particular.
Speaker Change: The majority of the automakers have been part of actually.
Speaker Change: And alliance has been lobbying to be able to significantly reduce the requirement there such that it would not.
Speaker Change: Mandated so to say to align with something that would have.
Speaker Change: This kind of level of capability on everybody because remember it's not just high end People's is literally even though lewis and possible like any like every single vehicle.
Speaker Change: <unk> sold and.
Speaker Change: Dave said, it will take up to $4000 in additional.
Speaker Change: Hardware and software costs per vehicle, which is obviously great from a content standpoint.
Speaker Change: But the lobbying has been basically to try and reduce requirements for example.
Speaker Change: The sentiment was that you should be able to hit the pedestrian at 225 kilometers per hour instead of stop for pedestrians slowly.
Speaker Change: <unk> has been the big the big switch.
Speaker Change: As you figure in.
Speaker Change: Negotiations with Nitza.
Nitza: So it says no it should be.
Nitza: Zero.
Speaker Change: And they split the difference right in the middle at zero.
Speaker Change: You've taken <unk> taken a hard line on this and you know we kind of laugh about it but it is it is very very serious safety implications and the reality is is that.
Speaker Change: To date, you should not let you run over they should not.
Speaker Change: Render things in front of you and.
Speaker Change: We're talking about the most simple basic safety functionality on the vehicle and the current kinds of camera and radar technologies cannot enabled us across the board and needs for our scenarios for what's needed to prevent the vast majority of accidents and we.
Speaker Change: We've shown what's possible Swiss re in particular luminaire day has somewhat as possible and we have also.
Speaker Change: Now starting to even see hey, what are the insurance applications, especially you know.
Speaker Change: That was like one of the points of inspiration as well.
Speaker Change: Fernando is that hey, as this happens the insurance industry is going to be reformed you're able to.
Speaker Change: From a total cost of ownership perspective reduce the cost.
Speaker Change: Lot of different factors at play but.
Speaker Change: I would say this is that I think from a timing standpoint to answer that.
Speaker Change: Pacific part of the question.
Speaker Change: I think there is probably going to be a scramble over the next couple of years really.
Speaker Change: Getting complaints into place the beautiful thing with this is that this aligns perfectly with the timing.
Speaker Change: For Halo, whereas this would it be difficult to try and fulfilling accomplished with Iris and Iris.
Speaker Change: Performance for higher end vehicles, a halo is designed to be able to be mainstream. So this couldnt have come and will be a more perfect time between you know the Swiss re.
Speaker Change: Report and the safety report for what they've put out.
Speaker Change: Most importantly halo product.
Speaker Change: To take advantage of it so part of the whole concept is you know if there was a concern around cost paid or you know something.
Speaker Change: Not in the thousands of dollars, but in the hundreds of dollars you're able to have a product they can to fill all these requirements and not only that.
Speaker Change: In terms of meeting and exceeding it as we've shown and we hope.
Speaker Change: For example specific examples in the requirements in that letter.
Speaker Change: Okay.
Speaker Change: It is also able to enable.
Speaker Change: Software you know.
Speaker Change: Upgrading an additional software so at the same hardware.
Speaker Change: Autonomous capabilities start to those as well, which part of the way. We already know has already happened majority of automakers. This stage are now planning to have long range Lidar.
Speaker Change: Illumina or in their roadmaps already by the end of the decade. So this wasn't like crazy.
Speaker Change: Crazy, it's just that the crazy part is the sheer scope of what it is and the fact that this is not hey, you need to do this to get a five star safety rating on your car you need to do to really make a call.
Speaker Change: Thank you Austin.
Speaker Change: Our seller, sorry, sorry to sell a car.
Speaker Change: And I should say in the U S. Obviously U S is hopefully if it takes a leadership position in kind of proliferate throughout.
Speaker Change: And we're going to transfer them back to a few questions from our investors next.
Speaker Change: Next question how is the delay in the Volvo launch from last year, and the macroeconomic environment affecting your capital situation well you have to raise an additional $1 billion in 2025.
Speaker Change: And what kind of dilution should your shareholders.
Speaker Change: Yes.
Speaker Change: Look I would say the $1 billion is nowhere near what we think we need additional capital we need to do.
Speaker Change: Get to profitability.
Speaker Change: <unk> now that we've taken some of the restructuring actions that we've taken.
Speaker Change: Phil finalizing our analysis on what the additional capital needs going to be and we're looking at a variety of scenarios.
Speaker Change: Including downside scenarios and unit are extreme downside scenario, we get nowhere around $1 billion.
Speaker Change: The number that we're sending around on is somewhere around a couple of hundred million dollars of incremental capital plus or minus and we kind of look at where our balance sheet is today, we have enough cash to get us to a lease at the end of 2025. So we don't have a gun to our head to do anytime any anything soon and we still we built.
Speaker Change: Leave.
Speaker Change: Two multiple forms of capital. So we can go get that.
Speaker Change: Additional capital when the timing and the situation is right now and let me also would rather address the two balance sheet issues that we perhaps sooner rather than later the first being the additional capital, which I just talked about and then the second is when you kind of look at our convertible debt that's trading at deep dish.
Speaker Change: And as I mentioned before we're kind of looking at are there.
Speaker Change: W.
Speaker Change: Do given that dynamic so.
Speaker Change: Now that we've reached ESOP now that we've taken the actions that we've done.
Speaker Change: We are actively looking to fix those two balance sheet overhangs that we have but we want to do it at the right time.
Speaker Change: Minimize dilution get the best terms that we can but also address it sooner rather than later.
Speaker Change: That makes it makes total sense or not.
Speaker Change: I will say this is that obviously, we're very sensitive around around all these things are particularly.
Speaker Change: When you don't have a lower share price 30 that you'd want to be really really contest for dilution, mostly the over the.
Speaker Change: Figures when we were I think in aggregate over all the financings of the raise for.
Speaker Change: Hundreds of millions of dollars, we got diluted a company.
Speaker Change: What on the order of like 50% over.
Speaker Change: 1000 different rounds and going through that that's how we have Florida ownership.
Speaker Change: And in the company more generally so we take the super seriously.
Speaker Change: Really thoughtful are onboard is also.
Speaker Change: Taking a very seriously in terms of that.
Speaker Change: That aspect of it so.
Speaker Change: But.
Speaker Change: We're in a strong position here, we know exactly what needs to be done and most importantly.
Speaker Change: We want to show and continue to prove out the aspects of the business.
Speaker Change: That show how significant this industry is and how much value, we're able to real produced cannot realization and we've been in a stronger position than ever but the fundamentals of our business from technology product commercialization and.
Speaker Change: Now with <unk> being the first company and global scale to be able to go down.
Speaker Change: So yes.
Speaker Change: Yes.
Speaker Change: We haven't had.
Speaker Change: Great next question please.
Speaker Change: Good morning, gentlemen.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes, I think we're going to do in the second half of the year.
Speaker Change: We're getting better visibility into the although ramp up where.
Speaker Change: We're getting more visibility into.
Speaker Change: When we're going to start to realize some of the cost saving actions that we built both on the restructuring we did on Friday as well as turning to aggressively attack.
Speaker Change: The sensor cost and so once we get into the second half of the year, we're going to provide more visibility.
Speaker Change: On what our quarterly.
Speaker Change: Financial performance is going to be.
Speaker Change: Two things that we talked about during our last call that we reiterate is we're going to get to.
Speaker Change: Quarterly revenue run rate in the mid <unk> by the end of the year and.
Speaker Change: And that will end the year with $150 million plus of liquidity. Those are two things that we still remain confident in.
Speaker Change: The path to getting from where we are today to those points by the end of the year.
Speaker Change: Still going to have some bumps in the road.
Speaker Change: During that journey.
Speaker Change: And just sort of the context 35 call it per quarter, if youre amortizing that we're talking about $140 million.
Speaker Change: Run rate per year or so.
Speaker Change: On an annualized basis.
Speaker Change: Pretty pretty significant growth, but did you guys hold.
Speaker Change: Those numbers and everything but the key is that all kicks in.
Speaker Change: And the second half of the year. So let me talk about Sop.
Speaker Change: For the revenue per visit.
Speaker Change: It will be next quarter.
Speaker Change: There have been no serious production revenues quarter small bird for next quarter, but that's really where.
Speaker Change: In the second half when you start to see that kicking in and that exponential growth.
Speaker Change: Really taking off and that's what we highlighted is that we have $3 8 billion in <unk>.
Speaker Change: Our order book, that's now thought that conversion into revenue and that's what's going to be the main driver behind all of this.
Speaker Change: Exponential growth for us historically, it's been developed.
Speaker Change: Development systems that we've been working with automakers on of course level as the first but that's sort of.
Speaker Change: A plethora of additional subsequent vehicle model launches.
Speaker Change: We've shown how we have 25 of them expand across combustion engine vehicles electric vehicles hybrid vehicles.
Speaker Change: All of those kinds, which is also unique governor in terms of the diversity of what kinds of vehicles. We're on so side.
Speaker Change: Sided to make that happen and then.
Speaker Change: Yes.
Speaker Change: Tom was saying there.
Speaker Change: Kind of scale and value is going to be huge and the other thing is is that.
Speaker Change: Most significantly really with well we're getting out there is also around data collection.
Speaker Change: Right now if theres been a very I mean, we're talking a very very small fleets.
Speaker Change: Well as you know on the order of hundreds usually theyre going out collecting data.
Speaker Change: Can you talk about something with Volvo and it's tens of thousands of vehicles.
Speaker Change: Just even starting.
Speaker Change: These are loans scaling to hundreds of thousands of vehicles and then ultimately millions.
Speaker Change: But at a scale of data that no one in the industry has ever seen at global level and that allows the AI systems to really train on that data to be able to.
Speaker Change: Understand the world I mean, we're talking about.
Speaker Change: Creating a more accurate understanding of the world than it has ever been seen before by this precise III data.
Speaker Change: More than what you have.
Speaker Change: Largest economists out there today is.
Speaker Change: Like many about like what.
Speaker Change: Lesson.
Speaker Change: A couple of thousand vehicles up some of that effect. So you take a look at that and the scope and scale of what we're talking about it than.
Speaker Change: Every global drivers driver, we don't pay them to drive.
Speaker Change: <unk> themselves. So it's a it's going to be pretty.
Speaker Change: Pretty transformational as all of this happen.
Speaker Change: And let's switch gears and doctrinal sidekick analyst community. Our next question.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hey, Jay.
Jay: Hi, everybody.
Jay: Thanks for taking my question just I was hoping you could just remind us.
Jay: The number to focus now is a little ramp.
Speaker Change: How do we think about it.
Speaker Change: Of the 25 plus programs that you have maybe maybe if you could talk about roughly how many launches you are expecting.
Speaker Change: In 2025 that would be helpful.
Speaker Change: The next big one that we have which would be somewhere around into this year is going to start right.
Speaker Change: There may be one or two.
Speaker Change: Smaller programs.
Speaker Change: Yeah.
Speaker Change: Next year between.
Speaker Change: Our current customers and then I think the next wave.
Speaker Change: It's really going to come around late 'twenty early 'twenty six with Mercedes.
Speaker Change: Multiple platforms that will probably then launch.
Speaker Change: Starting in 2006 over the next two to three years or so.
Speaker Change: Is.
Speaker Change: This is the big one pulse start to reach the next one in a couple of other smaller ones and then the wave of Mercedes.
Speaker Change: The only other thing I'd point out that.
Speaker Change: There are also being considered.
Speaker Change: We didn't launch at different times and locations and so for example, this is the launch for.
Speaker Change: For the next 90 out of North America. So you know.
Speaker Change: Mexico.
Speaker Change: North America.
Speaker Change: Unique globally diversified footprint here.
Speaker Change: Which is special and so we're talking about the launch there.
Speaker Change: Then you talked about launches in China.
Speaker Change: They're already David.
Speaker Change: The <unk> as well as the X 90 trying to variance.
Speaker Change: There is.
Speaker Change: More opportunity and upside you know beyond these things as well.
Speaker Change: Of course, we know if we all know about the.
Speaker Change: On the pole Star three.
Speaker Change: Different model very well of some of these things can help.
Speaker Change: Further driving the.
Speaker Change: The growth of this but this is.
Speaker Change: So thats why youre going to see it as kind of a flywheel effect right in terms of the compounding so theirs.
Speaker Change: Curve in terms of the ramp and the economies of scale for each one and then comp.
Speaker Change: On top of each other.
Speaker Change: Then you end up in this fight.
Speaker Change: Very good pile up.
Speaker Change: Of all these things, but it's in there.
Speaker Change: It's where we've been smart about it interesting thing of like I think if we tried to launch for like five years.
Speaker Change: Yeah. It was all the time, we would be.
Speaker Change: Drowned.
Speaker Change: So it's good.
Speaker Change: Good methodical.
Speaker Change: Spacing between the different.
Speaker Change: Did launch it and everybody, but it's definitely action path that's for sure and the Bureau part of it is the same hardware setup that we have the people to watch obviously the difference.
Speaker Change: The specific rate mode.
Speaker Change: Kind of incremental.
Speaker Change: Patients by the way part of 95% at the same time.
Speaker Change: Terrific.
Speaker Change: Follow up often you mentioned data collected and I kind of want to go back to that a little bit here.
Speaker Change: How much data are you getting from the railroad.
Speaker Change: We did have some customers and really getting data from Volvo.
Speaker Change: The ramp and as Youre getting this data back and Iterating the software and AI how much improvement are you seeing in safety and automated driving functionalities such as that.
Speaker Change: When maybe the Skus come in for Nitzel related awards to later in the decade, how much better do the.
Speaker Change: The tiny.
Speaker Change: How do you get to that point.
Speaker Change: Yes.
Speaker Change: Couple of things on that obviously, the big step function.
Speaker Change: When he is with Halo so thats.
Speaker Change: We're very excited about.
Speaker Change: But I would just say from data perspective, more generally just to FX. So one is from a customer standpoint.
Speaker Change: You need the data.
Speaker Change: In terms of being able to be lumpy.
Speaker Change: So optimize institute C checks on it and then ultimately the features and that's where you're going to see.
Speaker Change: You know what.
Speaker Change: <unk>.
Speaker Change: More and more new blocks.
Speaker Change: Time.
Speaker Change: For these additional.
Speaker Change: C features and ultimately autonomous driving features and other things that can it be able to enable.
Speaker Change: Maps to the world doing all those things and.
Speaker Change: So I think from a customer standpoint, you need to build there and train their AI.
Speaker Change: And then when it comes to.
Speaker Change: Our systems Accordingly.
Speaker Change: Is that.
Speaker Change: Data is critical to say here.
Speaker Change: On behalf of Illumina, our AI engine.
Speaker Change: Berlin vehicles that sort of got started and.
Speaker Change: We're excited to be able to do.
Speaker Change: The opportunity to start getting in.
Speaker Change: Customer data. So you know for some of our customers, we actually specifically have data plazas. There are a lot of.
Speaker Change: Data from customers.
Speaker Change: When that happens that would be.
Speaker Change: Very accretive.
Speaker Change: Two the overall software at scale.
Speaker Change: And we're going to have more.
Speaker Change: More to talk about on the.
Speaker Change: Software front over the coming months.
Speaker Change: Perfect. Thank you.
Speaker Change: Our next question is from.
Speaker Change: John Babcock from Bank of America.
John Plimpton Babcock: Hey, John.
Speaker Change: Alright.
John Plimpton Babcock: Thanks, Scott forgive me I'm trying to ask a couple of questions here.
John Plimpton Babcock: I guess, just starting out you Didnt mentioned.
Speaker Change: <unk> seen that Tesla is using your products buying sensors I was just wondering if you could talk a bit more about that.
Speaker Change: To which they are doing that or they just buy and part of the centers are they installing a Hawaiian <unk>.
Speaker Change: And also are there growing business with you and then if you could also just generally talk about how that relationship cars with that other OEM.
Speaker Change: As well.
Speaker Change: Yes.
Speaker Change: Let's say is I am not going to.
Speaker Change: I don't think we are in the best position to talk about what they're doing with our lidar.
Speaker Change: This isn't.
Speaker Change: Got it.
Speaker Change: <unk> that they ordered.
Speaker Change: But I would say, it's been more lumpy than recurring.
Speaker Change: The reason we're talking about this is because they are greater than 10% in the quarter, we disclosed with its customers.
Speaker Change: But.
Speaker Change: Look they.
Speaker Change: On the ladder for us what exactly they are doing we can only speculate.
Speaker Change: Okay.
Speaker Change: China NDA.
Speaker Change: [laughter] alright.
Speaker Change: No surprise.
Speaker Change: But I appreciate the color.
Speaker Change: And then just on the cost savings program I think you mentioned a bit more than half is.
Speaker Change: Can be cost savings could you just confirm that and also.
Speaker Change: I wonder if the whole call hopefully going to take to get to that $80 million in annual run rate savings.
Speaker Change: Confirm the statement that you said, we kind of mentioned in the letter.
Speaker Change: We disclose where the cash costs are going to be there.
Speaker Change: On your magnitude of $6 million to $8 million.
Speaker Change: Six two.
Speaker Change: That's helpful.
Speaker Change: <unk> $10 million.
Speaker Change: Gotcha, Okay great.
Speaker Change: And then might you be able to detail the contractor reduction piece of social with that and provide any additional color on the.
Speaker Change: Alright, that's driving that.
Speaker Change: Yes.
Speaker Change: Say vast majority of that $80 million is coming from from head count both our employees and then.
Speaker Change: Also contractors ramping down as you ramp following industrial is our first product.
Speaker Change: Reach SLP Theres, a lot of I would say no.
Speaker Change: Non recurring work that needs to get done whether that's setting up the plant working with our suppliers can ramp up.
Speaker Change: Doing.
Speaker Change: Testing of the products that are required to do to.
Speaker Change: To meet our.
Speaker Change: Our automotive customer standards, and what we try to do.
Speaker Change: The work occurring to fulfill those needs with <unk>.
Speaker Change: Contractors, if it's going to be over a finite period of time and then as that work is done and as the.
Speaker Change: Sop in industrial process.
Speaker Change: Process for that product draws to a close you can start ramping down those contractors and then as we can.
Speaker Change: Rely more on <unk> and <unk>.
Speaker Change: <unk>.
Speaker Change: For our Halo, which is our next generation product you don't need those resources to recur and so that is what I would say no driving.
Speaker Change: The vast majority of.
Speaker Change: The restructuring actions that we took last week.
Speaker Change: And I'd say in particular when it comes to contracting partners, we had what over over 100 contracting partners in aggregate to help us in one way or another the majority of which were assigned to help us reach.
Speaker Change: Now that that happened, we're able to roll off the.
Speaker Change: The majority of those contracting partners to be which altra.
Speaker Change: Helps reduce costs, but it is something that.
Speaker Change: So we have planned anyway as part of us and frankly overall the majority of the alumina cost structure, there is to be able to help advance.
Speaker Change: The future of what we're doing it's relatively dynamic structure.
Speaker Change: Structure that we're able to have so.
Speaker Change: Of course now post SLP.
Speaker Change: So I think the dynamic changes in the needs change and.
Speaker Change: Mass skin can evolve accordingly as well.
Speaker Change: Okay. Thank you and then if you don't mind just one quick question there.
Speaker Change: There wasn't a seat and as part of the recently comment about CTX 90 being delayed due to software issues can you just talk about whatnot, some incremental delay relative to what you've discussed.
Speaker Change: Something that have been announced previously.
Speaker Change: Thats I think Thats old news John from.
Speaker Change: Yourself.
John Plimpton Babcock: That's that's correct and on top of that as I mentioned I think there was a minimum wage and all of that.
John Plimpton Babcock: There was some delay that was caused by illumina as well which was also.
John Plimpton Babcock: Not the case there they're either so we're very excited for the <unk> you had and that's going to be a huge driver of growth here for us over the course of the second half of the year, that's going to take us to new Heights.
Speaker Change: Alright, Thanks Yan appreciate all the detail.
Speaker Change: Our next question is going to come from Mark Delaney from Goldman Sachs.
Mark Trevor Delaney: Hey, Mark.
Mark Trevor Delaney: Yeah.
Mark Trevor Delaney: Good afternoon, guys. Thank you very much for taking the question.
Mark Trevor Delaney: One on gross margins your gross margin came in better than expected in the first quarter. Although in a letter you spoke about some production came some lower asps as potential headwinds over the next few quarters I'm, hoping you can help investors to better understand the magnitude of those headwinds and perhaps more importantly, what might be needed to reach a positive gross profit.
Speaker Change: Yeah. So.
John Plimpton Babcock: Mark.
John Plimpton Babcock: The improvement we saw during the one that was largely driven by the industrialization costs.
John Plimpton Babcock: Coming out of <unk>.
John Plimpton Babcock: Turning to come out of the system and get jobs that are open that happened in Q4.
John Plimpton Babcock: <unk> been in starting in Q1.
John Plimpton Babcock: As I said the ability to kind of predict when you kind of do what needs to be done to answer your first product. There is some variability there.
John Plimpton Babcock: And so that kind of drove the profit there what's happening now is there is a once we start selling Volvo serious.
John Plimpton Babcock: Set of prototypes there isn't a step function in immediate decline in the ASP.
John Plimpton Babcock: We can't wait magic wand and have our sensor cost decline at the same rate.
John Plimpton Babcock: It's going to take us a few quarters to start.
John Plimpton Babcock: Witnessing the benefits of the actions.
John Plimpton Babcock: We have taken and are again accelerate taking now to get those costs lower.
John Plimpton Babcock: Also in the economies of scale.
John Plimpton Babcock: Things aren't going to go smoothly and you start increasingly ramping up we're expecting some unexpected surprises.
John Plimpton Babcock: No.
John Plimpton Babcock: I would expect that.
John Plimpton Babcock: Yes.
John Plimpton Babcock: To get a little worse before it starts to get better.
John Plimpton Babcock: I don't want to predict exactly what that curve is going to look like and when exactly they're going to get there, but reiterating what I said earlier on the call it's going to take us.
John Plimpton Babcock: Our full year series production to get plus some of the targets that we talked about a year ago for Iris.
John Plimpton Babcock: I'd say overall when it comes to the cost structure here you know you have the industrialization.
John Plimpton Babcock: Launch costs that you have.
John Plimpton Babcock: That's bucket and separately from the actual product.
John Plimpton Babcock: In terms of what it cost to be able to deliver each day. The thing that we've done well on is that we've now been really starting to aggressively roll off those industrialization costs. So that's what's driven that that improvement and.
John Plimpton Babcock: Actually we would have been positive this quarter barring a couple of points.
John Plimpton Babcock: On things that are unrelated to the actual product itself.
John Plimpton Babcock: But when it comes to that next wave now the focus is going to be as that scales up to get realize those economies of scale and the key thing here you know.
John Plimpton Babcock: Is that from a supply chain perspective and supply chain basis.
John Plimpton Babcock: Is being able to now.
John Plimpton Babcock: Do you have that clear visibility into our volume perspective, there's a very big difference between when you're ordering components in the.
John Plimpton Babcock: Thousands versus.
John Plimpton Babcock: 101000.
John Plimpton Babcock: And that's the key distinction was applied.
John Plimpton Babcock: We see we believe we'll be able to see those benefits up when youre not talking prototype pricing when youre talking.
John Plimpton Babcock: Scaled serious production pricing, so that's kind of that next.
John Plimpton Babcock: That next Canadian drive if you look at the overall direct cost for example, even for this quarter is only around $16 million off of the 20.
John Plimpton Babcock: $21 million in revenue in aggregate.
John Plimpton Babcock: No.
John Plimpton Babcock: Theres some things there that have shown that we've seen those realizations, but now.
John Plimpton Babcock: They were doing that.
John Plimpton Babcock: Not resting on our laurels by any means and now we're focused on this next wave.
John Plimpton Babcock: It will drive that.
John Plimpton Babcock: We're going to give some more insight as well into specific parts of our of our business in terms of the profitability opex like our semiconductor business.
John Plimpton Babcock: That's a preview over the over the coming months.
Speaker Change: Does this all very helpful. Thanks. My other question was on the Teekay agreement you spoke around an expanded relationship there I think in the bulk purchases.
Speaker Change: Boston you called it an exclusive relationships I'm, hoping to better understand what exactly that might entail.
Speaker Change: Partnership in and work with your PK may differ compared to your current arrangement with I believe celestica.
Speaker Change: And then also in production with you pick out yes.
Speaker Change: Yes.
Speaker Change: <unk> the relationship we haven't done that as more of a pure contract manufacturer, which is as we make product.
Speaker Change: Series production.
Speaker Change: The guys, making them they made some stage prototypes just to make sure that they are.
Speaker Change: Manufacturing system work the way it showed up but they are basically a series production manufacturing partner with us.
Speaker Change: Tpa the deal, we announced with them last year, whereas the Celestica is for us at our Mexico plant in the China plant.
Speaker Change: This new relationship with TDK expands that's more of an industrialization, particularly related to Halo. Our next generation products. So all of the prototype manufacturing is going to be done by them.
Speaker Change: I would say a lot of the.
Speaker Change: Design validation and production validation testing.
Speaker Change: Most of that which we did ourselves as well.
Speaker Change: We're expecting them to kind of do most of that going forward, we're going to be sitting there verifying and doing some of the results.
Speaker Change: Supply chain management.
Speaker Change: A lot of working out the manufacturing teams.
Speaker Change: A lot of that the inventory management.
Speaker Change: Going to be done by them as opposed to us that's going to allow us to move faster more efficiently I shared with you.
Speaker Change: The.
Speaker Change: <unk> costs that we experienced industrializing I don't know how much savings we're going to have for a next generation product relative direst, but I'm expecting to be substantial and none of that is in the $80 million number that we've kind of talked about with the direct actions.
Speaker Change: Absolutely well so they are.
Speaker Change: Take a look at the aluminum de featured the TDK gave you know their CEO was on stage and I think Tom.
Speaker Change: Okay.
Speaker Change: Described it as a relationship of kind of everything all the work that they did back with our with Apple on the iPhone for its introduction you know in 2007, they really see this moment with that we've had with Volvo part of the broader industry as well, but that iPhone moment to kick off the broader autonomy world.
Speaker Change: And in particular.
Speaker Change: Just a question on exclusivity and those kind of leading up to that is that they have agreed and signed a deal to only work.
Speaker Change: With with Illumina in the World.
Speaker Change: Or maybe more broadly halving the extreme amount of conviction that you.
Speaker Change: You know, we'll be a winner or the winner.
Speaker Change: Okay.
Speaker Change: Okay well.
Speaker Change: Shareholder community.
Speaker Change: Now that luminary introduce tailored to the market what has been a response from your existing and prospective customers.
Speaker Change: The Halo to drive new customers like Nissan and other large Oems maintenance sooner as it will be finishing steps.
Speaker Change: Yes, I think it's been a great reception.
Speaker Change: Of course as you've figured gets.
Speaker Change: At some level.
Speaker Change: Work behind the scenes with automakers on them.
Speaker Change: Leading up to this.
Speaker Change: We've been working on the Halo design for.
Speaker Change: Oh man like.
Speaker Change: So like six years in terms of some of the technologies that have been going into this I mean, it's almost back to that.
Speaker Change: Nearly $2 billion found it technology Foundation, and IP Foundation that we've been able to develop to make this possible.
Speaker Change: That's how we can provide all of those sales and do so very good sufficiently this time.
Speaker Change: And.
Speaker Change: <unk>.
Speaker Change: Of course, this is really taking into account the things that automakers are most excited about and that's what allowed us to move so quickly Dwayne where we can announce tonight.
Speaker Change: Our OEM win with now with Halo, So very excited about that and.
Speaker Change: That's a start there certainly would be a lot more to come and I'd say for major automakers I mean, the key thing is isn't it.
Speaker Change: I said before.
Speaker Change: People were really looking for two things.
Speaker Change: The validation that luminaire could successfully make it a series production in a world where the vast majority of the programs do not successfully achieved the vast majority of companies are successful eagle tickets.
Speaker Change: Alumina has proven that it is very much possible.
Speaker Change: The second part was the product to be able to enable adoption and that's something that.
Speaker Change: It's clear there needs to be installed.
Speaker Change: To be able to do that.
Speaker Change: At the kind of scale that we're talking about.
Speaker Change: With its about a third of the size.
Speaker Change: Double the overall efficiency.
Speaker Change: And that will be.
Les: Hi, Les.
Les: All the other benefits associated with the.
Les: And.
Speaker Change: I think that is something that starts to get people.
Speaker Change: Really really excited so the other thing is is that.
Speaker Change: Hi.
Speaker Change: We of course understood some.
Speaker Change: Some of these new regulatory requirements at a time, where I think I.
Speaker Change: I don't see folks, where maybe asleep at the wheel on that but theres definitely makes it came as a surprise to some and.
Speaker Change: This is designed to be able to make sure that ought to.
Speaker Change: Meet those new regulatory requirements as well of course be exceed beyond those requirements.
Speaker Change: But that said that is something that is meaningful.
Speaker Change: To be able to do in this kind of product that really can be standardized on mainstream vehicles. So it makes.
Speaker Change: It makes total sense and the reception across the board.
Speaker Change: Couldn't be more positive.
Speaker Change: We've got a little less than 10 minutes. So we're going to get through as many questions. As we can our next question comes from Kevin Cassidy from reservoir.
Kevin Edward Cassidy: Hey, Kevin.
Speaker Change: Alright.
Kevin Edward Cassidy: Thanks for taking the question.
Speaker Change: Yes.
Kevin Edward Cassidy: Hello seems like it.
Kevin Edward Cassidy: And as.
Kevin Edward Cassidy: As the industry has evolved can you tell me about more.
Kevin Edward Cassidy: Happening in the bidding.
Kevin Edward Cassidy: From your competitors.
Kevin Edward Cassidy: Say, what the competitive landscape has that changed.
Kevin Edward Cassidy: Also what are the priorities that your customers are looking for now.
Kevin Edward Cassidy: Okay.
Kevin Edward Cassidy: Okay.
Kevin Edward Cassidy: Process.
Speaker Change: Yes, I would say that overall, one thing that I think is significant.
Speaker Change: Specifically.
Speaker Change: For.
Speaker Change: Most of the kinds of deals that we strike.
Speaker Change: Rarely so like a specific kind of.
Speaker Change: Bidding process, so to say of that the goal of what we like to do is that when we start working with somewhat really go all when you only have so much capacity. So I guess, what's different automakers and what we'll do is we'll try and cycle.
Speaker Change: Call. It company wide deal for something that covers all the different kinds of scopes approx.
Speaker Change: Knowledge things that they are enabling rather and maybe save.
Speaker Change: Typically in Taiwan specific vehicle model for.
Speaker Change: Some are currently call volume or not I think that the.
Speaker Change: The way that you can get to work or do you have to have the big economies of scale and <unk>.
Speaker Change: Of course, everyone in Hong Kong.
Speaker Change: Opportunity on one, but I think we've tried to really.
Speaker Change: Credible benchmark related define order book in terms of what's actually included.
Speaker Change: [noise] associated take rates and everything not just saying, Hey, magic point, Bruno whenever everything from even a given homemaker.
Speaker Change: So.
Speaker Change: Long short of course our.
Speaker Change: He was in everything that.
Speaker Change: They were all a part of it.
Speaker Change: And the final is so to say for the processes.
Speaker Change: So are there but.
Speaker Change: Omega probably always have.
Speaker Change: Thanks for taking the questions like what is real.
Speaker Change: The reality is.
Speaker Change: I think I.
Speaker Change: Historically, what we do every automaker.
Speaker Change: Yeah.
Speaker Change: So not every one of them the majority of what we call the top when the automakers have.
Speaker Change: The wider end of the road map at some point throughout the decade, obviously those are different production points I think the question of the dynamic that we're excited to see is how.
Speaker Change: The tiny roadmap of balls and also gaps radically accelerated.
Speaker Change: With these new regulations and that was something that.
Speaker Change: It's a 300 page report automakers are digesting it now there really.
Speaker Change:
Speaker Change: Probably your next next year, we're going to be putting their.
Speaker Change: Updated roadmaps together and I think we're.
Speaker Change: When we're talking about kind of volume opportunity.
Speaker Change: It's.
Speaker Change: Whatever is there.
Speaker Change: It can be a tiny tiny fraction.
Speaker Change: Uh huh.
Speaker Change: What's going to be running in parallel so that's what we're excited about if people can take that to kind of model.
Speaker Change: Hi.
Speaker Change: Around showing safety should be for everyone not just.
Speaker Change: <unk> as a standard product not just study optional feature.
Speaker Change: Then you really win the game.
Speaker Change: That's where we are.
Speaker Change: Could you imagine this letter even just a small fraction of our capacity.
Speaker Change: We'd model reinforce that.
Speaker Change: So, Brian just kind of business, because I mean into.
Speaker Change: Into the single digit billions in revenue growing rapidly.
Speaker Change: Done in outlet Tenex, you know where I.
Speaker Change: Maybe just the game as you pointed out and we have products, but.
Speaker Change: Okay.
Speaker Change: No.
Speaker Change: Save time for other people.
Speaker Change: Thanks.
Speaker Change: And we have an X gene.
Speaker Change: Sorry, I was on mute.
Speaker Change: Question is can come from hedges.
Speaker Change: <unk> from Jpmorgan.
Speaker Change: Asus.
Jpmorgan: Thanks for taking my call.
Jpmorgan: Just wanted to ask about the $50 million run rate cost savings you guys called out.
Asus: How should we think about that split between Opex and Capex and then what's kind of like the ramp up timeline for those things to come online.
Asus: Are you talking about $80 million.
Speaker Change: Yeah, sorry, yeah, so the $80 million.
Speaker Change: I would say very little of that is capex.
Speaker Change: Most of that of that $80 million a little over.
Speaker Change: <unk> cash a little less than half of it is saving and docs, we issued to employees and vendors as I mentioned earlier.
Speaker Change: And I would say that.
Speaker Change: Substantially all of that $80 million is.
Speaker Change: Is that going to flow through the P&L, either cogs or opex.
Speaker Change: Gotcha and then so on the timeline should we expect that to start coming online in the back half of the year and then really ramp up in 'twenty five or should get on a run rate basis, I would say very close if not the full 80 by the end of the year, you'll start seeing it showing in Q2, and then really start to ramp up in Q3 and Q4.
Speaker Change: Gotcha Okay.
Speaker Change: For my follow up just kind of wanted to switch gears and talking about the order book I know you guys. Just the first product win Halo, but so should we think about some of those wins that you already have in your order book converting to the Halo system.
Speaker Change: Whats kind of the cadence of the product mix that we should see over the coming years, yes. The vast majority of our order book today as it stands as the Iris and Iris plus we have had our first major win with with Alo and what I would say is we're in discussions real time with our customers.
Speaker Change: To transition in the Halo sooner rather than later now looked at it works through their production cycle Mitsui fresh is making sure that you.
Speaker Change: No.
Speaker Change: Reduce as much as possible any additional software.
Speaker Change: Training or validation that they need to do and so it is something you can do overnight, but I think it's in the interest of both parties both to them because it's going to be a cheaper product and to us where we expect it to be a better market, perhaps do it sooner rather than later and so I would expect at some point in the future of the order.
Speaker Change: To start converting.
Speaker Change: Very brisk pace.
Speaker Change: Hello.
Speaker Change: Got it thanks.
Speaker Change: Okay.
Speaker Change: Tom in Austin, you want to take another question, yes, let's do one more okay.
Tom: Final question is going to come from Richard Shannon from Craig Hallum, Hey, Richard.
Speaker Change: Okay.
Richard Shannon: Hi, guys, sorry, I got on the call late here and I'm not really sure I have a question at this time I'm, sorry, I didn't hit any button. So apologies for that I'll have to I'll follow up later, when that's got a more full.
Unknown Executive: Consumption of your entire call. So sorry about that Richard that's easiest question you ever asked.
Speaker Change: We'll talk to you soon.
Speaker Change: Let's do one more if we have it alright.
Speaker Change: I think in that case, we will take our final question from the phone, which is what is the outlook for the next five years.
Speaker Change: A lot road.
Speaker Change: Yes.
Speaker Change: World domination.
Speaker Change: Bye.
Speaker Change: And also here I think next five years, we got a lot ahead of us here.
Speaker Change: I mean literally five years from now 29, when the new regulation.
Speaker Change: So that's going to be a quite the show.
Speaker Change: There's a lot that we have had to be able to do of course, you know like I said, we're realizing.
Speaker Change: Okay.
Speaker Change: Massive amount of growth that's going to happen.
Speaker Change: Really in the second half this year when the order starts converting realize those economies of scale, we're going to really start time.
Speaker Change: I've been a slight like no tomorrow and.
Speaker Change: I mentioned in the letter in the beginning.
Speaker Change: In terms of the strength of our business fundamentals of what we're doing could never be stronger and the reality is is that if we're able to achieve even a fraction of what we think we can over the next five years.
Speaker Change: Huge win in a whole block and the key is just being able to make sure that we can continue to differentiate ourselves.
Speaker Change: Obviously in.
Speaker Change: And.
Speaker Change: For this world and type of company and a world of.
Speaker Change: EV start ups and other kinds of autonomous fully autonomous vehicle companies the other thing that.
Speaker Change: Haven't been able to deliver.
Speaker Change: Rocks.
Speaker Change: And the way that they wanted or <unk>.
Speaker Change: Are there wasn't able to make the technology work et cetera, where we're in a world of.
Speaker Change: Companies that are challenged and that's where I think being able to show how we can.
Speaker Change: To succeed how you know from where we've come from from when we were first out you know IPO and building a critical technology concept into industrialized product to being the first to launch in series production in shale gone from one to a dozen major commercial customers and wins to now.
Speaker Change: Having a clear path towards broader standardization.
Speaker Change: Peter couldn't be brighter for us. He is we know what we have to do and thats not to say that there arent there arent headwinds we know the macro headwinds that are in a broader scale that have.
Speaker Change: Come into place that's clear to everyone and.
Speaker Change: You know, it's not a not lost on us by any means on and where the.
Speaker Change: Tackling them head on and I think that's where you guys saw.
Speaker Change: Some of the restructuring.
Speaker Change: Actions that we took place on Friday it seemed like there was some surprise to.
Speaker Change: To some probably shouldn't be.
Speaker Change: A huge surprise given we've kind of signaled that and the reality is is that as we're talking here today over the course of the next five years theres going to be other drivers of efficiency that we're taking and not even going to take that one I mean, we're talking to literally over the next 12 months. This is the first phase of what were doing.
Speaker Change: Theres a lot more opportunity we have ahead.
Speaker Change: And we're gonna be fully capitalize and whatnot. So I'm very excited for what we had for <unk>.
Speaker Change: That timeframe and.
Speaker Change: Thank you everyone for being on the journey with us as we make that happen.
Speaker Change: Alright.
Speaker Change: Okay. Thanks, everyone that Martin that marks the end of our question session I'd like to thank everyone for sticking around and participating in the call to the analysts to ask questions and investors and as I start to join US we look forward to talking to you guys next quarter.
Speaker Change: Thanks again guys.
Speaker Change: Okay.