Q3 2024 Aeye Inc Earnings Call
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Janine: Thank you for standing by. My name is Janine and I will be your conference operator for today.
Janine: At this time, I would like to welcome everyone to the AIQ3 2024 Earnings Conference Call.
Janine: All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star followed by the number one on your touchtone phone. And to withdraw your question, please press star followed by the number one again. I would now like to turn the conference over to Betsy Patterson. Please go ahead.
Betsy Patterson: Good afternoon, and thank you for joining AI's third quarter 2024 earnings call.
Betsy Patterson: With me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer.
Betsy Patterson: Earlier today, AI announced its financial results for the third quarter of 2024.
Betsy Patterson: A copy of this press release can be found on the investor relations section of the company's website.
and are based on our current expectations and assumptions.
Betsy Patterson: Any forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances.
Betsy Patterson: Our actual results may differ materially from those contemplated by these forward-looking statements.
Betsy Patterson: You can find more information about the risks, uncertainties, and other factors in the report's AI files from time to time with the Securities and Exchange Commission.
including in the most recent periodic report.
Betsy Patterson: The statements to be made are as of today only, and AI does not intend to update any forward-looking statements, regardless of any new information, future developments, or otherwise, except as may be required by law.
John Roy, Unknown Executive,
Betsy Patterson: In addition, we will be discussing non-GAAP financial measures on this call, which we believe are relevant in assessing the financial performance of the business.
Betsy Patterson: These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance with GAAP.
Betsy Patterson: You can find reconciliations of these metrics to the most directly comparable gap measures within the press release.
Now, let me pass the call over to Matt.
Matt Fisch: Thanks, Betsy, and thank you all for joining us today on our third quarter 2024 earnings call.
Matt Fisch: If there was an underlying theme for today's call, it would be progress.
Matt Fisch: Our team made significant strides this quarter in advancing product and partnership milestones and putting the financial tools in place to move us closer to our production goals.
Matt Fisch: On the product front, we announced that Apollo set a new mark in terms of performance with high-resolution object detection at distances of one kilometer.
Matt Fisch: Our advanced technology, coupled with superior design, delivers what customers want. Apollo demonstrations have also driven a significant spike in customer interest across the board.
Matt Fisch: I'm also pleased to announce that we have now delivered the first Apollo samples to our partners.
Matt Fisch: Where major configuration changes, such as vehicle packaging, vehicle line variance, and skew options are delivered in days instead of weeks or months.
Matt Fisch: Notably, we demonstrated that Apollo meets the NVIDIA Hyperion specifications, which demand an incredibly challenging combination of high-resolution detection at very long distances.
Matt Fisch: We are not aware of any other LiDAR solution that has met this milestone.
Matt Fisch: This is a significant step forward in what we expect will be the integration of our technology into the NVIDIA Hyperion platform.
Matt Fisch: This achievement further validates the strengths of our technology and paves the way for deeper integration with the NVIDIA ecosystem.
Matt Fisch: We continue to deepen our relationship with our Tier 1 partner, Light-On.
Matt Fisch: Together, we are engaged in multiple global OEM quoting activities and expect to ramp the first Apollo manufacturing line later this quarter.
Matt Fisch: We recently showcased Apollo together with Lighton at the IZB International Suppliers Fair in Wolfsburg, Germany.
Matt Fisch: IZB is held every two years and is one of the world's leading trade shows for automotive suppliers, attracting over 40,000 visitors from around the globe.
Matt Fisch: I want to turn now to China, where we continue to make excellent progress with our partners, ATI and Light Tecton.
ATI is currently demonstrating Apollo to potential customers.
Matt Fisch: We've also been invited to demonstrate Apollo to multiple Chinese automotive OEMs in response to the Apollo launch at the LiDAR show in Suzhou in June. We view China as a leading indicator for the future of LiDAR and its eventual global adoption.
Matt Fisch: The Chinese market is expected to ship 1 million LiDAR sensors this year, and double that number in 2025, according to recent industry reports.
Matt Fisch: Apollo has caught the attention of investors, which has enabled us to build the financial tools and liquidity to support the multi-year runway that's required by the automotive production pipeline.
Matt Fisch: We believe that AI continues to have the most efficient business model in the industry and our capital light approach has positioned us well to navigate the evolving light art landscape.
Matt Fisch: Our accomplishments this year are made even more impressive by the fact that we have done it with a remarkably lean team and overall structure.
Matt Fisch: I could not be more proud of our highly talented team and look forward to continuing to work together to reach our goal of seeing AI products transforming the automotive landscape.
Matt Fisch: With that, I will turn the call over to Conor to provide more color on our financial performance.
Conor Tierney: Thanks Matt. In the third quarter we made solid progress across multiple fronts.
Conor Tierney: Where we advance product development, strengthen partner collaborations and expanded OEM engagements while maintaining disciplined cost management practices.
Conor Tierney: Additionally, we took proactive funding measures that strengthened our liquidity to support the runway needed to continue to achieve key milestones.
Conor Tierney: These accomplishments have prepared us to fully benefit from the opportunities evolving in our market.
Conor Tierney: Most notably, we are in a stronger position to capitalize on the incredible global opportunities which include China, where local OEMs are aggressively integrating LiDAR into their vehicles.
Conor Tierney: We continue to have productive engagements with other OEMs and are encouraged to see them leaning in on adopting LiDAR technologies as potential solutions for autonomous driving and ADAS.
Conor Tierney: As you can see on slide 8, our unique capital light model is a key differentiator in the LiDAR industry. As you can see on slide 8, our unique capital light model is a key differentiator in the
and is well received when we engage OEMs.
Conor Tierney: Not only does it allow us to maintain a balance sheet with very little debt compared to some of our peers.
It gives us the lowest cost structure in the industry.
Conor Tierney: This leads to greater efficiencies as we can do more with less and is a powerful selling point as it enables us to offer a superior product at a competitive price point.
Conor Tierney: As I mentioned earlier, the financial tools we've secured should provide us with the liquidity needed to continue developing our technology, bring Apollo to market, and pursue multiple design wins.
Conor Tierney: These tools include the ability to raise up to an additional $50 million through our equity line of credit facility.
Conor Tierney: and access up to $2.6 million of new capital through our at-the-market facility.
Conor Tierney: Now turning to our third quarter financial results on slide nine. I am pleased to say that we have reduced our net cash burn for the sixth consecutive quarter.
Conor Tierney: Excluding new financing, our cash firm for the third quarter was $5.6 million, down from $6.2 million in the second quarter, beating our guidance of $5.9 million.
Conor Tierney: Total revenue was $104,000, which is in line with consensus expectations.
Conor Tierney: Revenue was driven by non-automotive product sales to an existing customer.
Conor Tierney: Third quarter GAAP operating expenses were $7.6 million, down sequentially from $8.1 million in the second quarter of 2024.
Due primarily to payroll and facility related savings.
Conor Tierney: which includes a non-cast adjustment associated with downsizing our office space.
Partially offset by higher stock-based compensation expense.
Conor Tierney: Non-GAAP operating expenses were $6.1 million, down sequentially from $6.4 million in the second quarter of 2024, due primarily to payroll and facility-related statements.
Conor Tierney: We reported a third quarter gap net loss of $8.7 million, or $1.01 per share, versus a gap net loss of $8 million, or $1.16 per share, in the second quarter of 2024.
Conor Tierney: The increase in gap net loss was mainly due to financing-related costs, which were partially offset by payroll and facility-related savings, as noted above.
Conor Tierney: On a non-GAAP basis, our net loss was $6 million, or $0.70 per share, in the third quarter, compared to a non-GAAP net loss of $6.2 million, or $0.91 per share, in the second quarter of 2024.
Conor Tierney: This, with the 11th consecutive quarter where AI has either met or beat bottom line expectations.
which we believe demonstrates our ability to consistently execute.
Conor Tierney: Net cash used for operating activities decreased to $5.4 million in the third quarter from $6.4 million in the second quarter.
Conor Tierney: We close the third quarter with $22.4 million of cash, cash equivalents, and marketable securities.
Conor Tierney: Our potential liquidity, which includes cash on hand, our ELOC and ATM facilities, is approximately $75 million.
Turning to 2024 Guidance, slide 10.
Conor Tierney: And we are still trending towards outperforming our 2024 cash firm guidance of $25 million through continued payroll and facility-related savings.
Conor Tierney: We are excited by the progress that we made in the third quarter on multiple fronts, and our team continues to execute our long-term growth strategies.
AI has a recipe for success.
Conor Tierney: a sustainable business model, the necessary capital raising tools in place, and Apollo, the best product in the marketplace.
Matt Fisch: We look forward to reporting on the progress we continue to make in 2024 and are excited for what we will accomplish in 2025 and beyond. With that, I'll pass it back to Matt to wrap things up.
Thanks, Conor.
Matt Fisch: The third quarter reflected the strength of our achievements, strategic advancements, and financial stability as we continue to raise the bar on the product front.
Matt Fisch: From surpassing our own internal product performance goals to the terrific progress coming from our partners.
Matt Fisch: We are well positioned to drive sustained interest and engagement from OEMs.
Matt Fisch: Our financial approach has enabled us to put the tools in place to pursue the next major milestones in our growth. Most importantly, our team remains committed, motivated, and equipped with the expertise needed to secure our success.
Matt Fisch: We are energized by the momentum and opportunities ahead, and we look forward to building value for our stakeholders. Thank you for your continued support.
The End
The End
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. Then, you will hear a prompt that your hand has been raised. Should you wish to withdraw, please press star followed by the number one again. If you are using a speakerphone, please lift the handset before pressing any keys.
One moment, please, for your first question.
Speaker Change: Our first question comes from the line of Brian Kintzlinger from Alliance Global Partners. Please go ahead.
Speaker Change: Great thanks and congratulations on the progress with the high-resolution detection at a kilometer and with such a small form factor it's impressive.
Speaker Change: You've talked in the past about a pipeline of, I believe, four to five RFQs where you are active.
Speaker Change: How have these potential end customers reacted to the advances, both with NVIDIA as well as the high resolution at this long range, and what should investors expect as the next data points on some of these procurements?
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Matt Fisch: Hey, Brian. Hey, thanks. This is Matt, and I do thank you for joining the call.
Speaker Change: This quarter, let me take this in a couple of parts. Number one, as we know, 2024 has been a quiet year.
On the nomination side.
Taking it back to Apollo and our product.
The response has been very, very positive.
Speaker Change: Those engagements that we talked about last quarter continue to be strong.
Speaker Change: And as I mentioned, expecting to come to a head as we get into 2025 here.
Speaker Change: But look here, here's the thing. One of the key challenges in integrating a new sensor into an ADAS system or an autonomy type system is really getting it all integrated into the software.
Speaker Change: And just getting a little bit technical for a second. All the software that's out there today is used to digesting and consuming images of things, for example, that come from cameras. The thing that Apollo does ...
Speaker Change: It makes this interface a lot more seamless and reduces the friction on the OEM because the image, so to speak, coming out of our LiDAR system
Speaker Change: is very wide. It shows a wide field of view, and it shows high resolution very far. And that makes it easier for the OEM software to digest our data, relatively speaking. Of course, the size of the device
Speaker Change: is a bonus, but just look at it as lowering the friction to integrate our device from a software perspective, as we know is a bottleneck for many of those OEMs out there.
Great, that was helpful.
Speaker Change: Can you talk about how you see, I mean, we heard the size and the range. Can you talk about, however, the competitive landscape for these RFQs that you're facing this year?
Speaker Change: So, look, I'm assuming you're somewhat familiar with the automotive industry. Forgive me if, you know, I'm that one. But, but look, the automotive industry always leans toward having choices.
All right.
Speaker Change: And we simply want to be the best choice when it comes to performance, size, and cost.
Speaker Change: And I think, you know, we've talked about performance and size cost is another key differentiator. And one of the main things that differentiates us.
Speaker Change: from the others out there that we are joined at the hip with a Tier 1 supplier who's already got tremendous expertise in optics, which is important for the LiDAR space, so they have the technical experience, and they have the buying power.
Speaker Change: So this gives us, we believe, a very distinct cost advantage during the soft sourcing process, which is another key leg of the stool here.
Speaker Change: Now with the administration change and President Trump talking about increased tariffs on imported vehicles potentially, does this in any way change your plan or your strategy?
Speaker Change: We don't foresee any changes right now per the election. I think the topic that you mentioned and also
Speaker Change: Electric Vehicles versus Combustion Based Power Trains? That's been another question that comes up. First of all, just to cover on that second point, the technology is agnostic to the powertrain, so we're happy to report that whether, you know, if the mix of vehicles between electric and combustion engines changes, it really doesn't impact our plans.
Great, thanks. Looking forward to some good decisions in 2025.
Thanks, Brian.
Thanks, Brian.
Speaker Change: Thank you. Again, should you have a question, kindly press star followed by the number one on your touchtone phone. Thank you.
Unknown Speaker
Speaker Change: There are no questions at this time. That concludes our Q&A session. Thank you for joining the conference call. You may now disconnect.