Q1 2025 Aeye Inc Earnings Call

Operator: Good day and thank you for standing by. Welcome to the AI Q1 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the Q1 2025 earnings Conference call.

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Operator: Please be advised that today's conference is being recorded.

Please be advised that today's conference is being recorded.

Operator: I would now like to hand the conference over to your speaker today, Jeremy Apple. Please go ahead.

Speaker Change: I would now like to turn the conference over to your Speaker today, Jeremy Apple. Please go ahead.

Jeremy Apple: Good afternoon, and thank you for joining AI's first quarter 2025 earnings With me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer. Earlier today, AI announced its financial results for the first quarter. A copy of this press release can be found on the investor relations section of the company's website.

Jeremy Apple: Good afternoon, and thank you for joining <unk> first quarter 2025 earnings call.

Speaker Change: With me today are Matt fish, Chief Executive Officer, and kind of journey Chief Financial Officer.

Jeremy Apple: Earlier today <unk>.

Jeremy Apple: Its financial results for the first quarter a copy of this press release can be found on the Investor Relations section of the company's website.

Jeremy Apple: 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, operating results, or financial performance, and 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.

and Leigh Bannister.

Jeremy Apple: These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult or impossible to predict.

Jeremy Apple: Our actual results may differ materially from those contemplated by these forward-looking We caution you, therefore, against placing undue reliance on any of these forward-looking 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 .

Jeremy Apple: Our actual results may differ materially from those contemplated by these forward-looking statements. We caution you, therefore, again placing undue reliance on any of these forward-looking statements.

Jeremy Apple: You can find more information about the risks, uncertainties, and other factors in the reports Aeye files from time to time with the Securities and Exchange Commission, including in the most recent periodic report.

Jeremy Apple: 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.

Jeremy Apple: The statements to be made are as of today only, and Aeye 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.

Jeremy Apple: In addition, we will be discussing non-GAAP financial measures. which we believe are relevant in assessing the financial performance of the business.

Jeremy Apple: In addition, we will be discussing non-GAAP financial measures on this call.

Jeremy Apple: which we believe are relevant in assessing the financial performance of the business.

Jeremy Apple: These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance You can find reconciliations of these metrics to the most directly comparable gap measures within the press release.

Jeremy Apple: These measures are presented as supplemental information only, and should not be considered a substitute for financial information presented in accordance with GAD.

Jeremy Apple: You can find reconciliation of these metrics to the most directly comparable GAAP measures within the press release.

Operator: Now I'll pass the call over to.

Now I'll pet the call over to Matt.

Matt: Thanks Jeremy, and thank you all for joining our first quarter 2025 earnings call. We appreciate your continued support and interest in Aeye.

Matt Fisch: Thanks, Jeremy.

Matt Fisch: And thank you all for joining our first quarter 2025 earnings call. We appreciate your continued support and interest in AI. Q1 was a quarter of significant momentum for AI. We reached a critical milestone with the first units of our Apollo LiDAR solution coming off the manufacturing line of our Tier 1 supplier partner, LiDAR. A key achievement that demonstrates the maturity of Apollo and ultimately the path to mass production. I'll provide more detail on Apollo's progress shortly. Separately, we are in the final test and validation stage of our integration to NVIDIA DRIVE. We're also gaining traction with new customers and have continued to manage our firm rate well.

Matt: Q1 was a quarter of significant momentum for Aeye. We reached a critical milestone with the first units of our Apollo LiDAR solution coming off the manufacturing line of our Q1 supplier partner right on.

Matt: A key achievement that demonstrates the maturity of Apollo and ultimately the path to mass production.

I'll provide more detail on Apollo's progress shortly.

Matt: Separately, we are in the final test and validation stage of our integration to NVIDIA Drive.

Matt: We're also gaining traction with new customers and have continued to manage our phone rate well.

Matt Fisch: At the same time, we're well positioned to navigate global market dynamics, especially as it relates to tariffs, by continuing to prioritize supply chain flexibility and resilience.

Matt: At the same time, we're well positioned to navigate global market dynamics, especially as it relates to terrorists by continuing to prioritize supply chain flexibility and resilience.

Matt: Before I dive into more detail, I want to acknowledge the remarkable progress or management team has made over the last 18 months to get us to where we are today.

Matt Fisch: Before I dive into more detail, I want to acknowledge the remarkable progress our management team has made over the last 18 months to get us to where we are today. When I stepped into the CEO role in early 2023, AI was a company with world class technology, but facing real challenges. We were pursuing too many markets and weren't fully committed to our capital light strategy, leading to a high burn rate and hindering our product maturity. This, combined with delays in the automotive industry and declining access to institutional capital as the spec boom faded, had the company on course for bankruptcy.

Speaker Change: When I stepped into the CEO world in early 2023, Aeye was a company with world-class technology but facing real challenges.

Speaker Change: We're pursuing too many markets and weren't fully committed to our capital-like strategy, leading to a high burn rate and hindering our product maturity.

Speaker Change: This, combined with the lays in the automotive industry, and declining access to institutional capital as the spectrum faded, had the company on course for bankruptcy.

Matt Fisch: We acted quickly and decisively to stabilize the business and set a clear path forward for sustainable growth. We first made a strategic pivot, focusing our resources on the automotive sector to develop a single high quality product for ADAS applications with the flexibility to serve adjacent markets. We also fully committed to the capital light model and began prioritizing strategic partnerships as a more efficient path to growth. Our new strategy has revitalized AI, positioning the company for commercialization and long-term stockholder value creation. We then restructured the business around our updated strategy by significantly cutting operating expenses by 75%.

Speaker Change: We acted quickly and decisively to stabilize the business and set a clear path forward for sustainable growth.

Speaker Change: We then restructured the business around our updated strategy by significantly cutting operating expenses by 75%.

Matt Fisch: This included a nearly 60% reduction in headcount across all levels of the organization and a right-sized executive team better aligned with our needs. We also renewed our focus by investing in engineering and product development, exited multiple unfavorable real estate and supply chain agreements, and consolidated our footprint around our Silicon Valley headquarters.

Speaker Change: This included a nearly 60% reduction in head count across all levels of the organization and a right size executive team better aligned with our needs.

Speaker Change: We also renewed our focus by investing in engineering and product development exited multiple unfavorable real estate and supply chain agreements and consolidated our footprint around our Silicon Valley headquarters.

Matt Fisch: These were difficult but necessary steps to ensure the long-term sustainability of the company. Together, these actions reshaped AI into a leaner, more product focused organization, one that is better equipped to navigate macroeconomic uncertainty and adapt to industry change with a culture grounded in operational discipline, innovation, and high performance.

Speaker Change: These were difficult, but necessary steps to ensure the long term sustainability of the company.

Speaker Change: Together these actions reshaped AI into a leaner more product focused organization, one that is better equipped to navigate macroeconomic uncertainty and adapt to industry change with a culture grounded in operational discipline innovation and high performance.

Speaker Change: <unk>.

Matt Fisch: In the past 18 months, AI has achieved many significant strategic milestones. Most notably, successfully launching our Apollo sensor in under a year. That timeline is virtually unheard of in this industry and speaks volumes to the outstanding expertise and execution of our engineering and operations team. Not only did we bring Apollo to market at incredible speed, but our teams have continued to innovate and deliver industry-leading breakthroughs. Apollo has already demonstrated sensing performance at distances of up to one kilometer, an unparalleled capability that puts us well ahead of the curve. At the same time, we position AI to capitalize on the immense market opportunity in ADAS and autonomous driving.

Speaker Change: In the past 18 months AI has achieved many significant strategic milestones.

Speaker Change: Most notably successfully launching our Apollo sensor in under a year.

Speaker Change: That timeline is virtually unheard of in this industry and speaks volumes to the outstanding expertise and execution of our engineering and operations teams.

Speaker Change: Not only did we bring Apollo to market at incredible speed, but our teams have continued to innovate and deliver industry leading breakthroughs.

Speaker Change: Apollo has already demonstrated sensing performance at distances of up to one kilometer and unparalleled capability that puts us well ahead of the curve.

Speaker Change: At the same time, we positioned <unk> to capitalize on the immense market opportunity in Adas and autonomous driving.

Matt Fisch: We evolved our partnership model to take direct ownership of customer relationships and deepen engagement with OEMs and key players in the automotive industry. We're now working closely with industry leaders like NVIDIA and our major OEM investor to support the platform shaping the future of mobility. Further, we are setting the pace by partnering with an automotive tier one supplier to manufacture Apollo, the only real path to scale for LiDAR in the automotive We are excited that Apollo is attracting the attention of OEMs, which strengthens our ability to access growth capital and execute our long-term strategy. This growing interest in our technology is opening doors to expansion into key international markets and new sectors such as security, rail, and intelligent transportation systems. A key step in this global expansion has been our partnership with ATI, providing us access to the Chinese market, a leader in wider innovation and adoption.

Speaker Change: We evolved our partnership model to take direct ownership of customer relationships and deepen engagement with the Oems and key players in the automotive industry.

Speaker Change: We're now working closely with industry leaders like Nvidia and our major OEM investor to support the platform's shaping the future of mobility.

Speaker Change: Further we are setting the pace by partnering with an automotive tier one supplier to manufacture Apollo the only real path to scale for lidar in the automotive space.

Speaker Change: We are excited that Apollo is attracting the attention of Oems, which strengthens our ability to access growth capital and execute our long term strategy.

Speaker Change: This growing interest in our technology is opening doors to expansion into key international markets and new sectors such as security.

Speaker Change: <unk> and intelligent transportation systems.

Speaker Change: A key step in this global expansion has been our partnership with ATI, providing us access to the Chinese market a leader in light of our innovation and adoption.

Matt Fisch: These are important value creating milestones that underpin our ability to attract additional growth capital, as evidenced by the $24 million we've successfully raised over the past 14 years.

Speaker Change: These are important value, creating milestones that underpin our ability to attract additional growth capital as evidenced by the $24 million. We've successfully raised over the past 14 months.

Matt Fisch: The future for AI has never been brighter. With the right technology, strategy and team, I'm confident in our ability to lead our business forward and continue building our track record of execution.

Speaker Change: The future for AI has never been brighter with the right technology strategy and team I am confident in our ability to lead our business forward and continue building our track record of execution.

Matt Fisch: I'll now share some of our operational highlights for the course. As mentioned at the start of the call, the first Apollo units are now being produced by Lideon, marking a critical step toward high volume production. We believe partnering with a Tier 1 manufacturer is the only path automotive OEMs will ultimately accept, as they demand the highest levels of product quality and consistency that we believe can only be delivered at scale by an experienced supplier such as Lighton. This alliance not only proves our ability to meet those standards, but also sets us apart in the LIDAR industry.

Speaker Change: I'll now share some of our operational highlights for the quarter.

Speaker Change: As mentioned at the start of the call. The first Apollo units are now being produced by light on marking a critical step toward high volume production.

Speaker Change: We believe partnering with a tier one manufacturer is the only path automotive Oems will ultimately accept as they demand the highest levels of product quality and consistency that we believe can only be delivered at scale by an experienced suppliers such as lidar.

Speaker Change: This alliance not only improves our ability to meet those standards, but also sets us apart in the lidar industry.

Matt Fisch: Our success hasn't gone unnoticed. Competitors are beginning to realign their strategies to follow this automotive tier one partnership model. Through our manufacturing collaboration, we successfully completed Apollo's first B samples, which represent a level of maturity essential to the automotive OEM quoting process. These units are targeted for production deployment in non automotive markets as well. Reaching this stage in just a few months highlights our ability to execute and scale with speed and precision.

Speaker Change: Our success Hasnt gone unnoticed competitors are beginning to realign their strategies to follow this automotive tier one partnership model.

Speaker Change: Through our manufacturing collaboration we successfully completed a policy first be samples, which represent a level of maturity are essential to the automotive OEM quoting process.

Speaker Change: These units are targeted for production deployment in nonautomotive markets as well.

Speaker Change: Reaching this stage in just a few months highlights our ability to execute and scale with speed and precision.

Matt Fisch: We expect to begin delivering the first bee samples to customers in the coming Moving on to our commercial update.

Speaker Change: We expect to begin delivering the first <unk> samples to customers in the coming weeks.

Speaker Change: Moving onto our commercial updates.

Matt Fisch: In February, we launched an Apollo customer outreach campaign. And since then, we've entered into technical engagements with over 20 potential customers. In this final evaluation phase, we are working with these customers to determine Apollo's use case to fit their needs. As the next step, we will deliver proof of concept Apollo samples to these customers for in-application testing, which will inform larger purchasing decisions with meaningful near-term revenue potential. Several proof-of-concept contracts are already in negotiation, with the process taking about six months to move from proof-of-concept to the start of scaled customer deployment. These engagements are extending beyond automotive, and we are reaching potential customers in traffic management, airport safety, rail safety, and other sectors that demand precision sensing over long distances.

Speaker Change: In February we launched an Apollo customer outreach campaign and since then we've entered into technical engagements with over 20 potential customers.

Speaker Change: In this final evaluation phase we are working with these customers to determine apollo's use case to fit their needs.

Speaker Change: As the next step we will deliver a proof of concept Apollo samples to these customers for in application testing, which will inform larger purchasing decisions with meaningful near term revenue potential.

Speaker Change: Several proof of concept contracts are already in negotiation with the process, taking about six months to move from proof of concept to the start of scale customer deployment.

Speaker Change: These engagements are extending beyond automotive and we are reaching potential customers in traffic management Airport safety rail safety and other sectors that demand precision sensing over long distances.

Matt Fisch: The key of managed lies in our software defined LIDAR, which allows us to address a wide variety of use cases with minimal effort. Apollo's flexibility enables us to engage dozens of customers across different markets without increasing overall spending. Apollo can be modified in a matter of days, not weeks or months, making it a singular solution that can seamlessly fit into various applications. This capability significantly accelerates our customers development timelines, offering a clear edge in both speed and cost efficiency. Our progress with NVIDIA and integration into their ADAS ecosystem is proceeding well, and Apollo has entered their final independent testing phase.

Speaker Change: The key advantage lies in our software defined lidar, which allows us to address a wide variety of use cases with minimal effort.

Speaker Change: Apollo's flexibility enables us to engage dozens of customers across different markets without increasing overall spending.

Speaker Change: Apollo can be modified in a matter of days not weeks or months, making it a singular solution that can seamlessly fit into various applications.

Speaker Change: This capability significantly accelerates, our customers' development timelines offering a clear edge in both speed and cost efficiency.

Speaker Change: Our progress with Nvidia and integration into their Adas ecosystem is proceeding well and Apollo has entered their final independent testing phase.

Matt Fisch: We look forward to announcing more details later this quarter. Furthermore, we are excited to hear about NVIDIA's recent announcement of a major new OEM partnership, driving increased momentum for AI and industry interest in ADAS overall.

Speaker Change: We look forward to announcing more details later this quarter.

Speaker Change: Furthermore, we are excited to hear about his videos recent announcement of a major new OEM partnership.

Speaker Change: <unk> increased momentum for AI and industry interest in <unk> overall.

Matt Fisch: Now I'd like to address the resilience of our supply chain and how we are positioned to withstand the impacts from potential tariffs. Thanks in large part to our Tier 1 partnership, as well as our collaboration with ATI, we've established a highly adaptable and globally diversified supply chain that can navigate an evolving geopolitical landscape. With manufacturing capabilities in the US, Mexico, Western Europe, and Asia, we can strategically position production to help mitigate the impact of tariffs, giving us a key advantage in supporting our long-term stability.

Speaker Change: Now I'd like to address the resilience of our supply chain and how we are positioned to withstand the impacts from potential tariffs.

Speaker Change: Thanks in large part to a tier one partnership as well as our collaboration with ATI, we've established a highly adaptable and globally diversified supply chain that can navigate an evolving geopolitical landscape.

Speaker Change: With manufacturing capabilities in the U S, Mexico, Western Europe, and Asia, we can strategically position production to help mitigate the impact of tariffs, giving us a key advantage and supporting our long term stability.

Matt Fisch: In closing, we're accelerating the execution of our strategic priorities to drive commercial success for Apollo as we capitalize on growing demand for LiDAR from Global OEM. With a solid cash position, a capital light model, and effective cost management, we've built a strong foundation for the year ahead. Additionally, a resilient supply chain helps ensure that we can navigate the current landscape and continue to meet customer needs effectively.

Speaker Change: In closing we are accelerating the execution of our strategic priorities to drive commercial success for Apollo as we capitalize on growing demand for Lidar from global Oems.

Speaker Change: With a solid cash position, our capital light model and effective cost management, we've built a strong foundation for the year ahead.

Speaker Change: Additionally, a resilient supply chain helps to ensure that we can navigate the current landscape and continue to meet customer needs effectively.

Matt Fisch: We're excited to share more updates, including new industry partnerships and the first Apollo LIDAR deployment later this year.

Speaker Change: We're excited to share more updates, including new industry partnerships and the first Apollo wider deployment later this year.

Conor Tierney: With that, I will turn the call over to Conor to provide more color on our financial performance. Thanks, Matt. I'd like to begin by adding to Matt's comments on the progress that AI has made since early 2020.

Speaker Change: With that I will turn the call over to Conor to provide more color on our financial performance.

Conor: Thanks, Matt I'd like to begin by adding to Matt's comments on the progress that AI has made since early 2023.

Conor Tierney: It's not an exaggeration to say that the company has undergone a financial transformation in the past 18 months. We addressed unfavorable cost dynamics by simplifying our supply chain. Reducing Overhead, and Streamlining Manufacturing to Unify Around Single Product, Apollo. Through our capital light model, we have built the lowest cost structure in the world. Since AI went public, putting us on a path towards sustainable growth. We've continued to leverage market enthusiasm for our technology to access growth. raising an additional $13 million in the first quarter, bringing our total capital. $24 million over the past 14 months.

Speaker Change: It's not an exaggeration to say that the company has undergone financial transformation in the past 18 months.

Speaker Change: We addressed unfavorable cost dynamics by simplifying our supply chain.

Speaker Change: Reducing overhead and streamlining manufacturing to unify around a single product.

Speaker Change: Hello.

Speaker Change: Through our capital light model, we have the lowest cost structure.

Speaker Change: AI went public putting us on a path towards sustainable growth.

Speaker Change: We've continued to leverage market and CMT hasnt for our technology to access growth capital.

Speaker Change: <unk>, an additional $13 million in the first quarter, bringing.

Speaker Change: Bringing our total capital raised to $24 million over the past 14 months.

Conor Tierney: This is a particularly impressive feat to have accomplished in one of the most challenging capital markets in decades. We ended the quarter with $25.9 million. Cash, Cash Equivalents and Marketable Securities. securing our cash runway into mid 2020.

Speaker Change: This is particularly impressive feat accomplished and one of the most challenging capital markets in decades.

Speaker Change: We ended the quarter with $25 9 million.

Speaker Change: And cash cash equivalents and marketable securities.

Speaker Change: Securing our cash runway into mid 2026.

Conor Tierney: We're pleased to announce that we've resolved our lease dispute, which arose in 2024 as a result of our exit from an unfavorable real estate Through this resolution, we successfully mitigated our potential cash liability exposure. from $6.4 million to $1.4 million.

Speaker Change: We're pleased to announce that we have resolved our leases.

Speaker Change: Which arose in 2024 as a result of our exit from an unfavorable re lets take agreement.

Speaker Change: Through this resolution, we successfully mitigated our potential cash liability exposure from.

Speaker Change: From $6 4 million to $1 4 billion.

Conor Tierney: Now that Apollo is ready for private. We kicked off our new customer funnel process. Leading to a targeted outreach to a diverse set of potential. As Matt mentioned earlier, we are currently in advanced negotiations on several proof of concept contracts. Marking an important step forward towards commercialization. Software definability and adaptability are our secret sauce. making the Apollo sensor highly reconfigurable for different scenarios and offering unmatched flexibility well beyond traditional radar, camera and LiDAR. We're seeing intelligent transportation systems and security as early standout opportunities where Apollo has a clear with reliable detection up to one kilometer.

Speaker Change: Now with that Apollo is ready for prime time, we kicked off our new customer funnel process.

Speaker Change: Leading to a targeted outreach to a diverse set of potential customers.

Speaker Change: Matt mentioned earlier, we are currently in advanced negotiations on several proof of concept contracts, marking an important step forward towards commercialization.

Speaker Change: Software define ability and adaptability are our secret sauce, making.

Speaker Change: Making the Apollo sensor highly reconfigurable for different scenarios and offering unmatched flexibility well beyond traditional radar camera and lidar systems.

Speaker Change: Seeing intelligent transportation systems and security at early standout opportunities, where Apollo has a clear edge.

Speaker Change: With reliable detection up to one kilometer it requires fewer sensors, which should reduce installation maintenance and operational costs.

Conor Tierney: It requires fewer which should reduce installation, maintenance and operational costs. And Apollo consistently delivers superior performance in low light and adverse weather. providing a cost effective alternative to traditional night vision. aren't capable of achieving Apollo's level of performance. In addition, we're expanding the market by displacing applications that use radar and camera. As it's increasingly clear that these traditional sensors cannot meet the evolving and more complex of End Use.

Speaker Change: And Apollo consistently deliver superior performance and low light and adverse weather conditions, providing a cost effective alternative to traditional night vision systems.

Speaker Change: To put this in perspective for new markets and applications and the non automotive space.

Speaker Change: See ourselves competing directly with traditional lidar given that other lidar implementations aren't capable of achieving apollo's level of performance.

Speaker Change: In addition, we're expanding the market by displacing applications that use radar and camera systems as it is increasingly clear that these traditional sensors cannot meet the evolving and more complex needs of end users.

Conor Tierney: I'll now move on to slide eight to address our cash burn and capital light model. Smith, Leighton Lee, Jesse Sobel, Cal Exec, www.cpannet.org, canoler.org, First quarter cash burn was $8 million, which includes $3.1 million of one-time payroll. Due to seasonality, we typically see higher cash burn in the first quarter and expect it to come down in subsequent quarters. Our nimble cost structure remains a key difference. with both GAAP operating expenses. will burn significantly lower. In fact, some competitors incur as much as 12 times higher annual operating This efficient model gives us a clear advantage. enabling us to navigate the current macroeconomic environment with greater resilience than the competition.

Speaker Change: I'll now move on to slide eight to address our cash burn and capital light model.

Speaker Change: Excluding financing costs first quarter cash burn was $8 million, which includes $3 1 million of onetime payroll spend.

Speaker Change: Due to seasonality, we typically see higher cash burn in the first quarter I would expect it to come down in subsequent quarters.

Speaker Change: Our nimble cost structure remains a key differentiator with both GAAP operating expenses and free cash flow burn significantly lower than our peers.

Speaker Change: In fact, some competitors incur as much as 12 times higher annual operating expenses.

Speaker Change: This efficient model gives us a clear advantage, enabling us to navigate the current macroeconomic environment with greater resilience than the competition.

Conor Tierney: Now turning to our first quarter's financial results on slide nine. First Quarters Gap Operating 6.8 million dollars. Down sequentially from $9 million in the fourth quarter of 2024. This was primarily due to lower compensation expenses. and a favorable non-cash adjustment related to the reduction in our lease liabilities following the resolution of our lease. First quarter's non-GAAP operating expenses were $6 million, an $800,000 decrease from the prior quarter, due primarily to lower personnel expenses. partially offset by increased professional fees and R&D. We reported a gap net loss of $8 million or 46 cents per share in the first quarter versus a gap net loss of $8.5 million.

Speaker Change: Now turning to our first quarter's financial results on slide nine.

Speaker Change: First quarter GAAP operating expenses were $6 8 million.

Speaker Change: Down sequentially from $9 million in.

Speaker Change: In the fourth quarter of 2024.

Speaker Change: This was primarily due to lower compensation expenses and a favorable non cash adjustment related to the reduction in our lease liabilities. Following the resolution of our least disputes.

Speaker Change: First quarter's non-GAAP operating expenses were $6 million and 800000 decrease from the prior quarter due primarily to lower personnel expenses, partially offset by increased professional fees and R&D spend.

Speaker Change: Okay.

Speaker Change: We reported a GAAP net loss of $8 million.

Speaker Change: Our <unk> 46 per share in the first quarter versus a GAAP net loss of $8 5 million or 93 per share in the fourth quarter 2024.

Conor Tierney: are $0.93 per share in the fourth quarter of 2024. The decrease in gap net loss was primarily due to the lease liability non-cash adjustment discussed above, which was partially offset by increased financing costs. Associated with a convertible note of which a large portion were non-cash transactions. On a non-GAAP basis, our net loss was $5.8 million. per share in the first quarter compared to a non-gap net loss of $6.3 million or $0.69 per share in the prior quarter. and Jeff Kasuse for operating a… increased to $7.8 million in the first quarter from $4.8 million in the fourth quarter of 2024.

Speaker Change: The decrease in GAAP net loss was primarily due to the lease liability noncash adjustments discussed above which was partially offset by increased financing costs associated with our convertible note of which a large portion for noncash transaction costs.

Speaker Change: On a non-GAAP basis, our net loss was $5 $8 million 33 per share in the first quarter compared to a non-GAAP net loss of $6 3 million or <unk> 69 per share in the prior quarter.

Speaker Change: Net cash used for operating activities increased to $7 8 million in the first quarter from $4 8 million.

Speaker Change: In the fourth quarter of 2024.

Conor Tierney: As we mentioned on our last call, this expected sequential increase was attributable to seasonal factors, such as one time payroll related. Again, we close the first quarter with $25.9 million of cash, cash equivalents and marketable security. Total Potential Liquidity, which includes cash on hand and our ELOC and ATM facilities, is now a process.

Speaker Change: As we mentioned on our last call.

Speaker Change: That did see quite show increase was attributable to seasonal factors such as one time payroll related costs.

Speaker Change: Again, we closed the first quarter with $25 9 million of.

Speaker Change: Cash cash equivalents and marketable securities.

Speaker Change: Our total potential liquidity, which includes cash on hand, and our <unk> and ATM facilities is now approximately $74 million.

Conor Tierney: Lee, Greeting seventy-four million dollars Moving on to our cash burn outlook on slight We now expect full year 2025. to be in the range of $27 million to $29 million, up from our prior estimate of $25 million. The increase reflects costs related to the resolution of our lease. and if we elect to repay certain obligations in cash. Importantly, our underlying operational cash burn remains Saluting litigation related Our cash burn is consistent with previous expectations.

Speaker Change: Moving on to our cash burn outlook on slide 10.

Speaker Change: We now expect full year 2025 cash burn to be in the range of 27 million to $29 million up from our prior estimate of $25 million.

Speaker Change: The increase reflects costs related to the resolution of our lease dispute and if we elect to repay certain obligations at cash.

Speaker Change: Importantly.

Speaker Change: Our underlying operational cash burn remains unchanged.

Speaker Change: Excluding litigation related expenses, our cash burn is consistent with previous expectations.

Conor Tierney: Overall, we started 2025 with strong momentum. and are excited to continue our significant progress throughout. Our relentless efforts to raise capital and rapidly develop Apollo have provided us with a robust platform to attract We remain laser focused on utilizing Apollo's superior performance to pursue new customer opportunities and continue expanding our market.

Speaker Change: Overall, we started 2025 with strong momentum and are excited to continue our significant progress throughout the year.

Speaker Change: Relentless efforts to raise capital and rapidly develop Apollo have provided us with a robust platform to attract customers.

Speaker Change: We remain laser focused on utilizing apollo's superior performance to pursue new customer opportunities and continue expanding our market share.

Matt Fisch: With that, I'll pass it back to Matt to wrap. Thanks, Conor. In closing, Q1 was all about execution. We achieved key product development milestones, started the first Apollo manufacturing line, and engaged new customers to bring us closer to capturing significant revenue opportunities. With Apollo ready for market, we are well positioned to drive growth, not only in automotive, but also across industries where performance, programmability and reliability are critical.

Speaker Change: With that I'll pass.

Speaker Change: Got it back to Matt to wrap things up.

Matt: Thanks, Connor in closing Q1 was all about execution.

Matt: We achieved key product development milestones started the first Apollo manufacturing line and engage new customers to bring us closer to capturing significant revenue opportunities.

Matt: With Apollo ready for market, we are well positioned to drive growth not only in automotive, but also across industries, where performance programmability and reliability are critical.

Operator: Thanks for your time today. We'll now open the line for questions. Thank you. As a reminder, to ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. to withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Thank you.

Matt: Thanks for your time today, we'll now open the line for questions.

Matt: Thank you.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone.

Matt: Wait till name to be announced.

Matt: To withdraw your question. Please press star one one again please.

Matt: Standby, while we compile the Q&A roster.

Matt: Thank you.

Operator: We will take our first question.

Speaker Change: We will take our first question. Your first question comes from the line of Paul Front from Alliance Global Partners. Please go ahead. Your line is open.

PoFrat: Your first question comes from the line of POFRAT from Alliance Global Partners. Please go ahead. Your line is open. Hi, good afternoon. Just to clarify on the litigation, you know, the real estate litigation, was that a first quarter event? Is that going to be a second quarter event? And then also the timing on the convert potential cash pay on the convert? Will that be, you know, when when do you think that'll be decided?

Paul Front: Hi, good afternoon.

Paul Front: Just to clarify on the litigation the real estate litigation was that a first quarter band or is that going to be a second quarter event.

Paul Front: And then also the timing on the convert potential cash pay on the convert.

Paul Front: A.

Paul Front: When do you think that'll be decided.

Conor Tierney: Hey, Po, how's it going? I can answer those questions. This is Conor here. So I'll answer the first question first. On the leash We actually trued up the liability in Q1. So that was a gap true up that you'll see coming through, coming through the financial statements, you'll see we took the liability down. But the actual cash payout itself will hit in Q2. So you'll see that come through in the Q2 cash burn numbers. In terms of the convertible notes payable over 15 months. And so the first payment became due in April. And so we have the ability to sell the note in cash or equity.

Speaker Change: Hey, How's it going I can answer those questions because Chicago here.

Speaker Change: So I'll ask I'll answer the first question first.

Speaker Change: On the lease.

Speaker Change: We actually crude up the liability in Q1.

Speaker Change: So that was a GAAP true up that you'll see coming through is coming through the financial statements. You'll see he took the liability down but the actual cash payout itself.

Speaker Change: In Q2 sales to see that come through.

Speaker Change: And the Q2 cash burn numbers and.

Speaker Change: In terms of the convertible notes payable.

Speaker Change: Payable over 15 months.

Speaker Change: So the first at payments that came due in April and so we have the ability.

Speaker Change: <unk> to sell the note and cash or equity.

Conor Tierney: that's at our discretion. And so we've now paid the first two payments in cash. Now there is an acceleration as well, that can can do at least one acceleration per month, which they've chosen to do as well. So the short short answer is we basically paid two months in cash, and there has been some acceleration in the form of equity as well.

Speaker Change: That's at our discretion and so we've now paid the first two payments in cash now there is an acceleration as well.

Speaker Change: Can can do at least one acceleration per month, which they've chosen to do as well. So the short short answer is we basically take two months and cash on there has been some acceleration in the form of equity as well.

PoFrat: Great Connor. And then when you look at your cash burn over the rest of the year, you're saying it's going to trend down. You know, can you give me an appreciation for how it trends down? Is it like a half million a quarter? Half million to a million and a quarter is for so that you exit the year closer to six and a half million on a cash burn run rate. Yeah, like a normalized run rate for us is about 5 million per quarter. Now we're expecting Q2 to be slightly higher because we do have that lease settlement liability that we need to take care of.

Speaker Change: Great.

Speaker Change: And then when you look at your cash burn over the rest of the year, you're saying, it's going to trend down.

Speaker Change: Can you give me an appreciation for how it trends down is it like a half million dollars a quarter.

Speaker Change: 5 million to 1 million a quarter or so that you exit the year closer to $6 5 million on a cash burn run rate.

Speaker Change: Yes, like a normalized run rate for us is about $5 million per quarter now, we're expecting Q2 to be slightly higher because we do have that lease settlement liability that we need to take care of so thats, probably going to be about 6 million ish.

Conor Tierney: So that's probably going to be about 6 million ish. But then we should start trending down to about about a 5 million run rate there in Q3 and into Q4.

Speaker Change: But then we should start trending down to around about a $5 million run rate there in Q3 and into Q4.

PoFrat: Great. And then Sorry. Oh, you know, we're, we think we've baked in, you know, everything on the demand side for Apollo. But obviously, if volume starts to ramp, then there might be more investment needed in supply chain and also in manufacturing, but that's obviously a high class problem. Yeah, and you sort of hit the next question from a, you know, 40,000 foot level. You're in the final stages of, you know, of getting, you know, through the integration issue or, you know, integration tests with NVIDIA. When do you anticipate that? You said by the end of the second quarter.

Speaker Change: Great.

Speaker Change: Alright.

Speaker Change: No.

Speaker Change: We think we baked in.

Speaker Change: Everything on the demand side for Apollo.

Speaker Change: But obviously if volumes start to ramp then there might be more investment needed in supply chain and also in manufacturing, but that's obviously a high class problem that.

Speaker Change: Yeah, and you sort of hit the next question from a 40000 foot level.

Speaker Change: You are in the final stages of.

Speaker Change: Of getting.

Speaker Change: Through the integration issue or.

Speaker Change: Integration test with NIMBY idea when do you.

Speaker Change: As to payback you said by the ended the second quarter and then can you help me appreciate what that actually means for the.

Matt Fisch: And then can you help me appreciate what that actually means for the scaling of manufacturing?

Speaker Change: The scaling.

Speaker Change: Manufacturing.

Matt Fisch: So I'm going to turn that over to Matt. Unknown Executive, Jesse Sobelson, Matthew Fisch, Kevin Garrigan, Casey Ryan, Leigh Bannister, Aeye Then they go through what we call an independent test phase, right? view them as an independent body to validate the performance of our sensor before making particular recommendations to their OEM ecosystem.

Speaker Change: So I'm going to turn that over to Matt.

Speaker Change: Yes.

Speaker Change: I had a close relationship.

Speaker Change: So I think he's probably best.

Speaker Change: We will attempt to address that.

Carter: Yes, Thanks, Carter absolutely take that.

Speaker Change: There is two steps in the process of Nvidia. The first is to get all the software communicating between our sensor and their ecosystem medstar.

Speaker Change: Then they go through what we call an independent test based rate too.

Speaker Change: View them as an independent body to validate the performance.

Speaker Change: Of our sensor before making particular recommendations to their OEM ecosystem.

Matt Fisch: I think you should look at that as the sales part of the pipeline, right? So what completion of this integration process does? It opens up NVIDIA's ecosystem and allows us to scale our conversations into. More OEMs. It's not directly connected to the manufacturing process, right? Step one is Vidya pitches us based on the results of the testing. And then we work on the contract end with the OEM side. And those contracts will determine How much we need to dial up for manufacturing. Where we think we stand today, we have enough inventory. to deal with our anticipated short-term demand.

Speaker Change: You should look at that as the sales part of the pipeline rights of what completion of this integration process does it opens up the video ecosystem.

Speaker Change: It allows us to scale our conversations into.

Speaker Change: More Oems, it's not directly connected to.

Speaker Change: To the manufacturing.

Speaker Change: Process right step one is video pitches us based on the results of the testing and then we work on the contract and with the OEM side and those contracts will determine.

Speaker Change: How much we need to dial up our manufacturing but.

Speaker Change: Where we think we stand today, we have enough inventory.

To deal with our anticipated short term demand, but we'll be watching the progress of those contracts closely so that.

Matt Fisch: But we'll be watching the progress of those contracts closely so that we can dial up quickly if we need to. Lidon is very adept at this process. They know they have a tremendous amount of supply chain leverage, and they can dial it up or down very, very rapidly.

Speaker Change: We can dial up quickly if we need to light on is very adept at this process, but they know they have a tremendous amount of supply chain leverage and they can dial it up or down.

Speaker Change: Very very responsibly.

PoFrat: And so Matt, you have enough inventory, would you would you does that imply that, you know, we're probably not going to see anything this year, as far as you know, scaling up manufacturing? Or can can you give me a little more color on sort of the potential timing of that scaling? Yeah, we'd like to see a bit more of the customers run through this pipeline first before we start talking about guidance. And I'll let Conor chime in on that in a bit. But, you know, essentially, we will expect to see some ramp this year for sure.

Speaker Change: And.

Speaker Change: So Matt you have enough inventory would you would you.

Speaker Change: Does that imply that you know, we're probably not going to see anything next year.

Speaker Change: Towards scaling up manufacturing or can you give me a little more color on sort of the potential timing of that scaling.

Speaker Change: Yes, we'd like to see a bit more of a customer's run through this pipeline first before we start talking about guidance and I'll, let <unk> chime in on that in a bit.

Speaker Change: But.

Speaker Change: Essentially we will expect to see some ramp this year for sure.

Matt Fisch: And then the non, sorry. Sorry, just to add there. The great thing about our manufacturing partner is it's extremely flexible relationship. You know, with some CMs, right, there's a minimum order volume that you need to give to them. We don't have the same constraints with the CM. And that gives us a lot of flexibility. So we can dial up down the line or short notice. So that's why we're not overly worried about scaling up because we'd have that flexibility.

Speaker Change: And then the demand.

Speaker Change: Sorry, sorry.

Speaker Change: Just to add there.

Speaker Change: The great thing about our manufacturing.

Speaker Change: Manufacturing partner is it's extremely flexible relationship.

Speaker Change: With some CMS right. There is a minimum order volume that you need to get to them we.

Speaker Change: We don't have the same constraints with the cm and that gives us a lot of flexibility. So we can do.

Speaker Change: Dial up dial it down the line on short notice. So that's why we're not overly worried about scaling up because we have that flexibility.

Conor Tierney: And then just the last thing I want to hit on, I guess I should have mentioned it earlier, on the lease dispute, I just want to go back a second and just make sure it's absolutely clear, right, cash burn is going to go up in the near term. But if you think about it, overall, we've mitigated the exposure from $6.4 million to $1.4 million. So that's monumental for the company, right? If you think about it, when this lease was entered into it was a $20 million commitment. And that's been like a noose around our heads.

Speaker Change: And then just the last thing I want to hit on I guess I should have mentioned it earlier.

Speaker Change: On the lease dispute I just wanted to go back a second and just make sure. It's absolutely clear bright cash burn is going to go up in the near term, but if you think about it overall, we've mitigated the exposure from $6 $4 million to $1 4 million. So that's monumental the company right. If you think about it when lets.

Speaker Change: Lease was entered into with a $20 million commitment and that's been like a noose around our hedge and.

Conor Tierney: And we've worked really diligently since Matt's come on board to get out of that lease, and we've finally been able to do it. And I think that's really going to provide a great foundation for the company. And then obviously, this was a big distraction for the team. We've now put that behind us. So we can obviously focus on the product and customer execution and all those things that we should focus on.

Speaker Change: We've worked really diligently since <unk> come on board.

Speaker Change: To get out of that lease and we finally been able to do it.

Speaker Change: And I think that's really going to provide a great Foundation for the company and then obviously this was a big distraction to the team. We've now put that behind US. So we can obviously focus on product and customer X execution all of those things that we should be focused on.

PoFrat: Hey, Connor, also in no time like the president, but Poe, I appreciate the question.

Speaker Change: Hey, Connor also a no time like the President Kohei hero.

Speaker Change: Appreciate the question and there were also pleased to announce that.

Matt Fisch: And we're also pleased to announce that a couple of these contracts have been closed.

Speaker Change: A couple of days.

Speaker Change: Contracts have been closed.

Speaker Change: So we're already.

Speaker Change: Had a couple of those customers come out of the pipeline.

Speaker Change: And we're really pleased to talk about a couple of statements of work that we sign.

Speaker Change: For two POC proof of concept type deployments one of them is in the intelligent transportation systems and the others in the defense market. So we're looking forward to sharing more details about those in the coming weeks here, but.

Speaker Change: We are ready to talk about the fact that in that pipeline. We have now closed two of those contracts.

PoFrat: Sorry, Matt, are you talking about the pipeline of, you know, roughly in the non-auto business? It sounds like that. That's right. Right. As one of the challenges we've had is the timing on the OEM side. We don't set that timing. The OEMs have. And so I think the way you look at this is we're diversifying a bit. The latency and the amount of time it goes, you know, to start proof of concept and then grant production is shorter than the timeline we're seeing in automotive. So we are diversifying a bit and we're able to do that now because Apollo is our single platform, single product, and we're able to use that same product in both markets.

Speaker Change: Sorry, Matt are you talking about the pipeline of roughly.

Speaker Change: And the non auto business it sounds like that that's right right as one of the challenges we've had.

Speaker Change: Is the timing on the OEM side, we don't set that timing the Oems have and so I think the way you look at this is we're diversifying a bit the latency and the amount of time. It goes to start proof of concept and then ramp production is shorter.

Speaker Change: And then the timeline, we're seeing in automotive. So we have we are diversifying a bit and we're able to do that now because of polo.

Speaker Change: As our single platform single product and we're able to use that same product in both markets.

Conor Tierney: Again, due to that software programmability that we believe is fairly unique with us, we're able to do that without any product changes on the hardware. And just to add to Matt's point, I think the important thing here, Poe, is that we're still keeping true to our capital light business model and our partnerships model. And so if you think about this non-automotive business, it's a little bit different than automotive. and customer expect a fully bundled solution. So they expect the sensor, they expect the perception software, the compute box, and the visualization dashboards, analytics platforms, all of those things.

Speaker Change: Again due to that software Programmability that we believe is fairly unique with us we're able to do that without any <unk>.

Speaker Change: Product changes on the hardware side.

Speaker Change: And just to add to Mary's point, I think the important thing here Po.

Speaker Change: Is that we're still keeping true to our capital light business model and our partnerships model and.

Speaker Change: And so if you think about this non automotive business, but it's a little bit different than automotive and.

Speaker Change: And customer expect.

Speaker Change: Fully bundled solution so they expect the sensor.

Speaker Change: The perception software the compute box and the visualization dashboards analytics platforms all of those things.

Conor Tierney: And so what we're doing is we're partnering with partners for perception, for visualization, dashboards, all of those things. And the great thing about that strategy is that those partners have been around for decades, they already have pre-existing relationships in the market. So we're just tapping into an ecosystem that's already in place. We think that's really going to accelerate our go to market strategy. And so I'd say we're really an enabler from that point of view. So that's what we're really excited about, that we can get into the market, get into the market in an accelerated manner, keeping true to our capital like business model.

Speaker Change: So what we're doing is we're partnering with partners.

Speaker Change: For perception for visualization dashboards all of those things and the great thing about that strategy is that those partners have been around for decades. They already have preexisting relationships in the market. So we're just tapping into an ecosystem that is already in place and we think thats really going to accelerate our go to market strategy.

Speaker Change: And so I'd say, we're really an enabler from that point of view.

Speaker Change: So that's what we're really excited about that we can get into the market and get into the market in an accelerated manner, keeping true to our capital light business model.

Speaker Change: Okay.

Speaker Change: And.

Speaker Change: Could you give me give me appreciation for the scale or the size of the market.

Speaker Change: Auto versus non auto clearly the sales cycle shorter so that you can you don't have as many.

Speaker Change: Hurdles from the validation standpoint to get through.

Speaker Change: The size of the market could be.

Speaker Change: Sure Scott the relative sizes of both markets.

Conor Tierney: Yeah, maybe I could, I could talk, talk to that to a certain extent. Obviously, the automotive market is huge, right? There's 19 million passenger vehicles that are sold every year. So obviously, that's where the volumes are going to come from. But if you think about all these different markets, there's also huge opportunities as well. And Matt listed out a few of them. But even just the ITS sector alone, I think that's a $20 billion TAM opportunity. Not just for LIDAR, obviously, but for all the different sensor modalities. So that's a tremendous opportunity there. I think the key difference is, obviously, automotive, you're going to have higher volumes.

Speaker Change: Yes, maybe I could I could talk talk to that to a certain extent.

Speaker Change: Obviously, the automotive market is huge right there is.

Speaker Change: 19 million passenger vehicles that are sold every year. So obviously, that's where the volumes are going to come from.

Speaker Change: But if you think about all these different markets. There is also huge opportunities as well Matt.

Speaker Change: Not listed out a few of them, but even just the it sector level and I think that's a $20 billion.

Speaker Change: Tammy Trinity.

Speaker Change: Not just for Lidar, obviously, but for all of the different sensor modalities. So that's a tremendous opportunity there I think the key differences, obviously automotive youre going to have higher volumes on the non automotive side.

Conor Tierney: On the non-automotive side, the volumes are going to be a little bit smaller, but at the same time, the price point is going to be higher. And so there's that kind of trade off. And if you think about our model overall, it doesn't take a lot to get us to profitability. And you know, we're talking about a $25 million burn rate. So it doesn't take a lot of wins to get us to profitability. We obviously have two in the bag right now, and we're working on 20 plus more. So that's why we're feeling really confident here in terms of just outlook, our ability to penetrate the market and ultimately get the property profitability at a sooner clip than than everybody else.

Speaker Change: All items are going to be a little bit smaller, but at the same time.

Speaker Change: The price point is going to be higher.

Speaker Change: And so there's that kind of tradeoff.

Speaker Change: And if you think about our model overall, it doesn't take a lot to get us to profitability.

Speaker Change: <unk>.

Speaker Change: We're talking about a $25 million burn rate. So it doesn't take a lot of wins to get us to profitability.

Speaker Change: We obviously have to in the bag right now and we're working on 20 plus more so that's why we're feeling really confident here in terms of just outlook on our ability to penetrate the market and had ultimately.

Speaker Change: The property's profitability at a similar clip than everybody else.

PoFrat: Great. Appreciate that. Thanks for taking my question. Thanks so much, Bill. Appreciate it. Thank you. Once again, if you wish to ask a question, please press star one, one on your telephone. There seems to be no further questions at this time.

Speaker Change: Great I appreciate that and thanks for taking my questions.

Speaker Change: Thanks, so much I appreciate it alright. Thank.

Speaker Change: Thank you once again, if you wish to ask a question. Please press star one on your telephone.

Speaker Change: That seems to be nay further questions at this time I would like to hand back for closing remarks.

Operator: I would like to hand back for closing remarks. Hey, thanks so much, Heidi. And thank you all again for joining our call today.

Speaker Change: Hey, Thanks, so much Heidi and thank you all again for joining our call today, we look forward to providing further updates on our progress in our second quarter call.

Operator: We look forward to providing further updates on our progress in our second quarter call. Thanks and have a great day.

Speaker Change: Thanks, and have a great day.

Operator: This concludes today's conference call. Thank you for participating.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: You may now disconnect.

Speaker Change: Yes.

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