Q1 2025 Luminar Technologies Inc Earnings Call
Unknown Attendee: at investors.luminartech.com.
Speaker Change: Dot com.
Unknown Attendee: In a moment, you will hear remarks from Tom, followed by a Q&A session. Before we begin the prepared remarks and then the Q&A, let me remind everyone that during the call, we may refer to GAAP and non-GAAP financial measures.
Tom Fenimore: In a moment, you'll hear remarks from Tom followed by a Q&A session.
Tom Fenimore: Before we begin the prepared remarks, and then the Q&A, let me remind everyone that during the call. We may refer to 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 risks and uncertainties. Please refer to our press release and our presentation for more information.
Unknown Attendee: Today's discussion also contains forward-looking statements based on the environment as we currently see it, and as such, does include risks and uncertainties. Please refer to our press release and our presentation for more information on the specific risk factors that could cause actual results to differ materially.
Speaker Change: On the specific risk factors that could cause actual results to differ materially with that I'd like to introduce limit our CFO Tom Fenimore.
Thomas Fennimore: With that, I'd like to introduce Luminar CFO, Tom Fennimore. Thank you, Aileen.
Speaker Change: Thank you Lee lean.
Thomas Fennimore: This afternoon, before we dive into the quarterly financial results for the company, I want to take a moment to share some important updates from our board of directors regarding our leadership at Luminar. Some of you have likely seen the press release we issued, but in the event you missed it, I want to recap it now.
Speaker Change: This afternoon before we dive into the quarterly financial results for the company I wanted to take a moment to share some important updates from our board of directors regarding our leadership of aluminum or some of you have likely seen the press release, we issued but in the event you missed it I'm going to recap it now.
Thomas Fennimore: Founder Austin Russell, the president and CEO of the company and chairperson of the board, will resign effective immediately following a code of business conduct inquiry by the board of directors. This matter does not impact any of the company's financial results. Mr. Russell will remain on the board and be available to the incoming chief executive officer on transition and technology matters. This decision was not made lightly. The board recognizes the weight of this action and the impact it may have. However, the board takes seriously its duties of oversight, accountability, and commitment to Luminor's values, culture, and long-term success.
Speaker Change: Founder Austin Russell, the President and CEO of the company and chairperson of the Board will resigned effective immediately following our code of business conduct inquiry by the board of directors. This matter does not impact any of the company's financial results. Mr. Russell will remain on the board and be available to the incoming chief Executive officer on transition and.
Speaker Change: Technology matters.
Speaker Change: This decision was not made lightly the board recognizes the weight of this action and the impact. It may have however, the board takes seriously its duties of oversight accountability and commitment to luminaries values culture and long term success in light of this transition. We are pleased to announce that Paul Ritchie has been appointed as our new CEO to be effective on.
Thomas Fennimore: In light of this transition, we are pleased to announce that Paul Ricci has been appointed as our new CEO to be effective on or about May 21, 2025. Paul brings a wealth of experience, having previously served as chairman and CEO of Nuance for nearly two decades. His visionary leadership and deep understanding of technology make him the ideal person to guide us in our next chapter of growth.
Speaker Change: And are about May 21, 2025.
Speaker Change: Paul brings a wealth of experience, having previously served as chairman and CEO of nuance for nearly two decades, his visionary leadership and deep understanding of technology make him the ideal person to guide us in our next chapter of growth.
Thomas Fennimore: We understand that this news may come as a surprise. We want to assure you that the board of directors and the leadership team is fully committed to ensuring a smooth and successful transit.
We understand that this news may come as a surprise, we want to assure you that the board of directors and the leadership team is fully committed to ensuring a smooth and successful transition.
Thomas Fennimore: Finally, while I suspect you have a number of questions about this, we plan to let the press release speak for itself.
Speaker Change: While I suspect you have a number of questions about this we plan to let the press release speak for itself and now let's move on to our Q1 financial and business update.
Thomas Fennimore: And now let's move on to our Q1 Financial and Business Update.
Speaker Change: As you noted as you noticed from our presentation today, we wanted to use this quarterly business update to not only run through our quarterly financial results, but also take a step back and provide a broader vision for where <unk> is headed over the next few years one of the things that makes <unk>. So unique is that our technology uses the $15 51.
Thomas Fennimore: As you noticed from our presentation today, we wanted to use this quarterly business update to not only run through our quarterly financial results, but also take a step back and provide a broader vision for where Luminar is headed over the next few years. One of the things that makes Luminar so unique is that our technology uses the 1550 wavelength. As compared to our competitors who use the more traditional 905 wavelength, we're able to put on average up to 17 times more photons into the environment. This gives our customers the ability to not only significantly improve the safety of their vehicles, but also operate autonomously at all speeds, including high speeds.
Speaker Change: <unk> link as compared to our competitors, who use the more traditional 905 wavelength, we're able to put on average up to 17 times more photons into the environment.
Speaker Change: This gives our customers the ability to not only significantly improve the safety of their vehicles, but also operate autonomously at all speeds, including high speeds. This is something truly unique.
Thomas Fennimore: This is something truly unique. This is also the primary reason why our OEM partners have chosen to work. In doing so, however, each OEM has historically asked us to use our core Lidar technology and develop unique OEM-specific product architectures around it.
Speaker Change: This is also the primary reason why our OEM partners have chosen to work with us in doing. So however, each OEM has historically asked us to use our core lidar technology and develop unique OEM specific product architectures around it Iris and Iris plus are just two example of these highly customize.
Thomas Fennimore: Iris and Iris Plus are just two examples of these highly customized design programs. Last quarter, we introduced the idea of consolidating our product portfolio and customers into a singular Luminar Halo platform in order to improve our development time and significantly reduce our development costs. This decision to move to a unified product architecture has been extremely well received by our OEM partners. Going forward, the core technology of our Halo platform will be largely standardized across all our customers with modest customizations, and we have a page in the slide deck to highlight four that have kind of signed on to this approach so far.
Speaker Change: Design programs.
Speaker Change: Last quarter, we introduced the idea of consolidating our product portfolio and customers into a singular luminar halo platform in order to improve our development time and significantly reduce our development costs. This decision to move to a unified product architecture has been extremely well received by our OEM partners.
Speaker Change: Going forward the core technology of our Halo platform will be largely standardized across all our customers with modest customization and we have a page in the slide deck. The highlight for that kind of signed on to this approach so far.
Thomas Fennimore: This will enable us to streamline our product development efforts, improve our time to market, and further reduce our cost.
Speaker Change: This will enable us to streamline our product development efforts improve our time to market and further reduce our costs.
Thomas Fennimore: As it relates to our business model beyond Lumen or Halo for our next generation products, we'll be narrowing our development efforts around our core technologies, such as the transceiver, which includes the laser, the receiver, and the ASIC, the embedded software, and other core components. Simultaneously, we will also be outsourcing more of the commodity components of our LiDAR, for example, like a top housing or chassis or other components, to some of our key partners. This will allow us to further streamline the company and reduce costs and get our products to the market faster. This is a continuation of efforts to re-scope our company focus and right-size our cost structure.
Speaker Change: As it relates to our business model beyond the luminaire Halo for our next generation products will be narrowing our development efforts around our core technologies, such as the transceiver, which includes the lease or the receiver in the AC the embedded software and other core components simultaneously. We will also be outsourcing more of the commodity components of.
Speaker Change: <unk> Lidar for example, like a top housing our chassis are other components to some of our key partners. This will allow us to further streamline the company and reduce cost and get our products to the market faster.
Speaker Change: This is a continuation of efforts to re scope our company focus and right size our cost structure, we've had to make a number of tough decisions over the past year to better position our company for the future and we will continue to do so in the coming quarters, we will look forward to providing incremental updates on our progress with this initiative, including new and <unk>.
Thomas Fennimore: We've had to make a number of tough decisions over the past year to better position our company for the future, and we will continue to do so. In the coming quarters, we will look forward to providing incremental updates on our progress with this initiative, including new and existing customer wins using the Halo platform.
Speaker Change: Existing customer wins, using the Halo platform now, let's turn to an update on our restructuring actions in our financials.
Thomas Fennimore: Now let's turn to an update on restructuring actions and our financial Last year, we announced two major restructurings, one in April and one in September. That allowed us to significantly improve our cost structure. The key catalysts for these cost actions were the successful achievement of our Volvo launch last year and our expanded industrialization partnership with TPC. In aggregate, these actions were expected to save $120 million in cash and another $40 million in stock via stock-based compensation. We have achieved these cost-saving targets. Specifically, versus a year ago, if you look at our non-GAAP OPEX, a good proxy to measure the cash savings from our restructuring actions, those have declined by about $115 million on an annualized basis.
Speaker Change: Last year, we announced two major restructurings one in April and one in September that allowed us to significantly improve our cost structure. The key catalysts for these cost actions were the successful achievement of our global launch last year, and our expanded industrialization partnership with TDK.
Speaker Change: In aggregate these actions were expected to save $120 million in cash and another $40 million in stock the stock based compensation. We had achieved these cost saving targets specifically versus a year ago. If you look at our non-GAAP Opex a good proxy to measure the cash savings from our restructuring actions those have declined by.
Speaker Change: About $115 million on an annualized basis.
Thomas Fennimore: Our quarterly stock-based compensation, a good proxy for the stock savings, has declined by almost $100 million on an annualized basis. Overall, I'm proud that we're executing on what we set out to do in reducing costs in our business and extending our financial runway.
Speaker Change: Our quarterly stock based compensation a good proxy for the stock savings has declined by almost $100 million on an annualized basis.
Speaker Change: Overall I'm proud that we are executing on what we set out to do in reducing costs in our business and extending our financial runway.
Thomas Fennimore: This brings me to the next topic of our capital structure. I'll start with an update on our debt profile. As a reminder, our secured debt maturing in 2028 and 2030 includes a springing maturity that requires us to reduce the outstanding face value amount of our 2026 unsecured debt below $100 million by June of next year. I'm happy to report that as a result of the actions we have taken over the past several months, we now have a line of sight of reaching that goal. We have reduced the balance on the 2026 debt from $625 million in August of last year to $185 million outstanding as of today.
Speaker Change: This brings me to the next topic of our capital structure I'll start with an update on our debt profile.
Speaker Change: As a reminder, our secured debt maturing in 2028 and 2030 includes the springing maturity that requires us to reduce the outstanding face value of amount of our 2026th unsecured debt below $100 million.
Speaker Change: By June of next year.
Speaker Change: Happy to report that as a result of the actions we have taken over the past several months. We now have a line of sight of reaching that goal we have reduced the balance on the 2026 debt from $625 million in August of last year to $185 million outstanding as of today.
Thomas Fennimore: Accordingly, we plan to continue working towards reducing this balance in the near term and doing so in a disciplined manner that does not materially impact our cash balance.
Speaker Change: Accordingly, we plan to continue working towards reducing this balance in the near term and doing so in a disciplined manner that does not materially impact our cash balance.
Thomas Fennimore: Let's now return to, let's now turn to our Q1 financial. Revenue for the quarter came in at $18.9 million, which was down 10% year over year and 16% sequentially. This was consistent with the guidance we gave that revenue this quarter would be lower than Q4. On a quarter-over-quarter basis, Q1 saw growth in series production sensor sales and NRE revenue, which is offset by lower sensor sales to adjacent market customers. More specifically, we shipped almost 6,000 sensors to customers in Q1, up approximately 50% from Q4 sequentially. The vast majority of these sensors were shipped to both.
Speaker Change: Let's now return to let's now turn to our Q1 financials.
Speaker Change: Revenue for the quarter came in at $18 9 million, which was down 10% year over year and 16% sequentially. This was consistent with the guidance. We gave that revenue this quarter would be lower than Q4 on a quarter over quarter basis Q1 saw growth in series production sensor sales and an array revenue, which is offset by lower sensor.
Speaker Change: Sales to adjacent market customers more specifically, we shipped almost 6000 sensors to customers in Q1 up approximately 50% from Q4 sequentially. The vast majority of these sensors were shipped to Volvo.
Thomas Fennimore: For the quarter, we reported a gross loss of negative $8 million on a gap basis and negative $6.4 million on a non-gap basis, which again, was in line with our guidance. This was driven by continued growth in series production sensor sales at unfavorable unit economics, which was partially offset by returns from some of our cost-saving action. We also incurred approximately 1 million of tariff charges in our COGS during Q1. And we are very close to resolution with our key customers to mitigate our tariff exposure for the rest of the year.
Speaker Change: For the quarter, we reported a gross loss of negative $8 million on a GAAP basis and negative $6 4 million on a non-GAAP basis, which again was in line with our guidance. This was driven by continued growth in series production sensor sales at unfavorable unit economics, which was partially offset by returns from some of our cost saving actions.
Speaker Change: We also incurred approximately $1 million of tariff charges in our Cogs during Q1.
Speaker Change: And we are very close to resolution with our key customers to mitigate our tariff exposure for the rest of the year.
Thomas Fennimore: OPEX came in at $64 million on a gap basis and $45 million on a non-gap basis. On a non-gap basis, OPEX was down nearly $10 million over a quarter, a direct result of the cost reduction actions we announced last year.
Speaker Change: Opex came in at $64 million on a GAAP basis, and $45 million on a non-GAAP basis on a non-GAAP basis, Opex was down nearly $10 million quarter over quarter. A direct result of the cost reduction actions, we announced last year.
Thomas Fennimore: Moving on to our cash and balance sheet. We ended Q1 with $188 million in cash and liquidity, which includes $138 million in cash and marketable securities and our undrawn $50 million line of credit. Including $209 million available in our equity financing program, our total access to liquidity stands at nearly $400 million. Our change in cash in Q4 was negative $44 million, which was higher than the negative $16 million level in Q4. This was entirely driven by activity in our equity financing program, specifically raising $48 million in Q4 of last year versus a negligible amount in Q1.
Speaker Change: Moving onto our cash and balance sheet, we ended Q1 with $188 million in cash and liquidity, which includes $108 million to $138 million in cash and Marco marketable securities and our Undrawn $50 million line of credit, including $209 million available in our equity financing program. Our total access to liquidity stands at nearly 400.
Speaker Change: Million.
Speaker Change: Our change in cash in Q4 was negative $44 million, which was higher than the negative $16 million level. In Q4. This was entirely driven by activity in our equity financing program, specifically raising $48 million in Q4 of last year versus a negligible amount in Q1 since we didn't file our 10-K until late March.
Thomas Fennimore: Since we didn't file our 10K until late March, we had limited time in Q1 to utilize our ATM facility and instead opted to equitize a portion of our 2026 convertible NARTs during the open period. Ultimately, while we got it to an average of issuing about $30 million and on average per quarter under this ATM program through the remainder of this year, we also indicated that this activity would be lumpy quarter to quarter.
Speaker Change: We have limited time in Q1 to utilize our ATM facility and instead opted to advertise a portion of our 2026 convertible notes during the open period.
Speaker Change: Ultimately why we guided to an average of issuing about $30 million on average per quarter under this ATM program through the remainder of this year. We also indicated that this activity would be lumpy quarter to quarter three.
Thomas Fennimore: Pre-cash flow for this quarter was roughly $44 million, representing an $18 million improvement from the $62 million used in Q4. Driven by our cost reduction actions and working capital swings, this marks the lowest level of quarterly cash burns since 2022, as the benefits of our ongoing cost reduction actions continue to manifest.
Free cash flow for this quarter was roughly $44 million, representing an $18 million improvement from the 62 million used in Q4 driven.
Speaker Change: Driven by our cost reduction actions and working capital swings. This marks the lowest level of quarterly cash burn since 2022 is.
Speaker Change: As the benefits of our ongoing cost reduction actions continue to manifest move.
Thomas Fennimore: Moving on to 2025 guidance. Despite all of the macro uncertainty, we are reiterating our 2025 revenue and other guidance and improving our year-end OPEX target. For 2025, we continue to expect full-year revenue growth in the range of 10 to 20%. As a reminder, our revenue and censorship guidance for this year incorporated a more conservative production outlook relative to our customers and third-party guidance, specifically a 50% haircut to IHS forecasts at the time. So while the volatile geopolitical and macro environment presents risk, we believe that our conservative approach provides a sufficient buffer to reiterate our guidance at this time, but this buffer is less than what it was at the beginning of the year.
Speaker Change: Moving on to 2025 guidance. Despite all of the macro uncertainty we are reiterating our 2025% revenue and other guidance and improving our year end Opex target for 2025, we continue to expect full year revenue growth in the range of 10% to 20% as a reminder, our revenue and censorship guidance for this.
Speaker Change: Year incorporated a more conservative production outlook relative to our customers and third party guidance, specifically, a 50% haircut to IHS forecasts at the time, so while the volatile geopolitical and macro environment presents risks, we believe that our conservative approach provides a sufficient buffer to rate.
To reiterate our guidance at this time, but this buffer is less than what it was at the beginning of the year.
Thomas Fennimore: For Q2, we expect revenue will decline slightly per quarter driven by lower sequential censor sales to non-series production. We continue to expect to generate a non-gap gross loss of negative five to negative ten million dollars per quarter on average through the remainder of this year.
Speaker Change: For Q2, we expect revenue will decline slightly cobra quarter, driven by lower sequential sensor sales to non series production customers. We continue to expect to generate a non-GAAP gross loss of negative five to negative $10 million per quarter on average through the remainder of this year.
Thomas Fennimore: One element of our guidance that we are revising positively is OPEX. Given the progress we demonstrated on non-GaPAC OPEX in Q1, as well as actions to be implemented as part of our unified product architecture strategy discussed earlier, we're revising our year-end quarterly OPEX outlook from the mid to high $30 million range to now the low $30 million. We can continue to expect the end of the year with greater than $150 million of cash and liquidity, which includes cash and marketable securities and our $50 million under online credit. As I communicated in prior quarters, we believe our current cash and liquidity position, as well as access to additional liquidity, provides us with sufficient runway through at least the end of next year.
Speaker Change: One element of our guidance that we are revising positively is opex given the progress we demonstrated on non-GAAP opex in Q1, as well as actions to be implemented as part of our unified product architecture strategy discussed earlier, we are revising our year end quarterly opex outlook from the mid to high $30 million range.
Speaker Change: Now below $30 million range.
Speaker Change: We continue to expect to end the year with greater than a $150 million of cash and liquidity, which includes cash and marketable securities and our $50 million.
Speaker Change: Undrawn line of credit.
As I communicated in prior quarters, we believe our current cash and liquidity position as well as access to additional liquidity provides us with sufficient runway through at least the end of next year. I've also mentioned in the past we may require approximately up to $100 million in additional capital to reach profitability and we remain focused on aggressively executing on our cost.
Thomas Fennimore: I've also mentioned in the past, we may require approximately up to $100 million in additional capital to reach profitability, and we remain focused on aggressively executing our cost reduction plan and streamlining our business to lower any additional funding requirements.
Speaker Change: <unk> plan and streamlining our business to lower any additional funding retirement.
Thomas Fennimore: Finally, I wanted to make everyone aware that we are going to file an extension for our 10Q for the quarter.
Speaker Change: Finally, I wanted to make everyone aware that we are going to file an extension for our 10-Q for the quarter.
Unknown Attendee: This concludes our prepared remarks and I will hand it back over to Aileen for Q&A on the business and financial update.
Speaker Change: This concludes our prepared remarks, and I will hand, it back over to Ilene for Q&A on the business and financial update while I understand there is interest in the leadership transition and I appreciate the question.
Thomas Fennimore: While I understand there's interest in the leadership transition and I appreciate the question, We won't be discussing that topic further on today's call, other than what was disclosed in the press release and 10 and 8K. For today, we're focused on the Q1 financial results and business update and happy to take questions on those topics in the near future.
Speaker Change: We won't be discussing that topic further onto <unk> call other than what was disclosed in the press release and 8-K for today, we're focused on the Q1 financial results and business update and happy to take questions on those topics.
Speaker Change: In the near future, we hope to have a.
Thomas Fennimore: We hope to have a another business update call with Paul Ritchie to go into more detail on some of the actions we talked about today.
Speaker Change: <unk> and other business update call with Paul Ritchie to go into more detail on some of the actions we talked about today over to you Aileen for Q&A.
Unknown Attendee: Over to you, Aileen, for Q&A. Thanks, Tom.
Thanks, Tom.
Unknown Attendee: We're going to hand it over to our analyst community now. I'd ask that analysts limit their question to one initial question and one follow up.
Speaker Change: To hand, it over to our analyst community now I would ask that analysts limit their questions to one initial question and one follow up my first question is going to come from Josh Patois at J P. Morgan.
Jash Patwa: Our first question is going to come from Josh Patwa at JP Morgan. Hi, John. Hi, Tom. Good evening, and thanks for taking my questions.
Speaker Change: Hi, Judy.
Speaker Change: Hi, good.
Speaker Change: Good evening and thanks for taking my questions.
Thomas Fennimore: Maybe just starting off with the unified product architecture. Curious if collaborating on a unified product architecture with select OEMs limits your ability to secure business with other automakers in any way. Would other automakers be willing to adopt and align with this unified standard?
Speaker Change: Maybe just starting off with <unk>.
Speaker Change: <unk> product architecture.
Speaker Change: Curious of collaborating on a unified product architecture with select Oems.
Speaker Change: Limits your ability to secure business with other automakers in any way.
Speaker Change: But other automakers be willing to adopt and align with this unified standards and just along those lines. If you could drop out elements to another vehicle component our technology that has evolved in a similar manner that would be very helpful. Thank you and I have a follow up.
Thomas Fennimore: And just along those lines, if you could draw parallels to another vehicle component or technology that has evolved in a similar manner, that would be very helpful. Thank you, and have a follow-up. Sure, the short answer to your question is we don't believe so. We've been working with our current customers as well as most of the major leading automakers over the last several years. We understand their spec requirements. One of the benefits of operating a 1550 and having a lot more photons you can distribute, we really designed Halo to meet what we believe are gonna be practically all the specs of the automotive companies.
Speaker Change: Sure.
Speaker Change: The short answer to your question is we don't believe so.
Speaker Change: We've been working with.
Speaker Change: Our current customers as well as most of the major leading automakers over the last several years, we understand their spec requirements. One of the benefits of operating a $15 50, and having a lot more photons you can distribute we really design halo to meet what we believe are going to be practically all of the specs of the automotive companies.
Speaker Change: Now look if there does become I would say some.
Thomas Fennimore: Now, look, if there does become, I would say, some modification more than we would want that we need to make at the time, we'll assess it at that time. We'll look at the ROI of what that business is relative to the incremental investment. We've kind of shown in the past that if that equation doesn't make sense, we will walk away. And so I would say for the business we want, we think Halo will be good enough and meet almost all the specs. And if there are modifications required, we'll do an assessment at that time, but we kind of design in a way where we don't think there's gonna be a lot of those exceptions.
Speaker Change: Modification more than we would want that we need to make at the time, we'll assess it at that time, we will look at the ROI of what that business is relative to the incremental investment.
Speaker Change: We've kind of shown in the past that if that equation doesn't make sense, we will walk away and so I would say for the business. We want we think halo.
Speaker Change: We will be good enough and.
Speaker Change: And meet almost all of the specs and if there are modifications required we'll do an assessment at that time, but we kind of designed in a way where we don't think there's going to be a lot of those exceptions.
Speaker Change: Understood that's very helpful.
Unknown Attendee: Understood. That's very helpful.
Jash Patwa: And, you know, I appreciate you want to keep the discussion limited to the Q1 financials and business performance, but maybe just asking in a different way.
Speaker Change: I appreciate you want to keep the discussion limited to the Q1 financial and business performance, but maybe just asking in a different way.
Thomas Fennimore: I was just hoping if you could provide some insights into the bench strength of the operational leadership team, particularly from a technology standpoint. Who is expected to take the lead on the organization's technology roadmap? And do they have a different perspective compared to the prior leadership? Thank you. Austin did a great job of building an amazing team at Luminar. That team is not changing as a result of the announcements today.
Speaker Change: I was just hoping if you could provide some insights into the bench strength of the operational leadership team, particularly from a technology standpoint.
Speaker Change: Who is expected to take the lead on the organization technology roadmap and do they have a different perspective compared to the prior leadership.
Speaker Change: <unk>.
Speaker Change: Boston did a great job of building an amazing team of alumina that team is not changing as a result of the announcements today.
Thomas Fennimore: Paul will be coming in here next week and take over as CEO. I'm very confident that between Luminar's team, our technology, and our relationships that we can execute on a smooth transition. Great. Thanks, Tom, and good luck. Thanks, Josh.
Speaker Change: Paul will be coming in here next week.
Speaker Change: And take over as CEO I'm very confident that between luminaries team, our technology and our relationships that we can execute on a smooth transition.
Speaker Change: Great.
Speaker Change: Thanks, Tom and good luck. Thanks.
Speaker Change: Thanks, Josh.
Unknown Attendee: All right, who do we have next, Aileen?
Speaker Change: All right, who we are and exiting our next question is going to come from Mark Delaney with Goldman Sachs.
Mark Delaney: Our next question is going to come from Mark Delaney at Goldman Sachs. Hey Mark. Hi, Tom. Thank you very much for taking the question. I guess first on the HALO roadmap on some of the prior earnings calls, you spoke about the benefits of HALO and one of them being the streamlined approach. With what you spoke about today, I'm hoping to better understand what may be changing. Is there incremental standardization that you're now planning, or is this just a continuation of what you've spoken and sharing some of the feedback you've now had from some of the auto OEMs?
Mark Delaney: Hey, Mark.
Mark Delaney: Hey, Tom Thank you very much for taking the question I guess first on the Halo roadmap on some of the prior earnings calls you spoke about the benefits of Halo and one of them being the streamlined approach with what you spoke about today I'm, hoping to better understand what may be changing is there incremental.
Mark Delaney: Standardization that you're now planning or is this just a continuation of what you've spoken and sharing some of the feedback you've had from some of the auto Oems.
Thomas Fennimore: Yeah, I would say, you know, when we unveiled Halo about a year ago, nothing has changed in the underlying design of Halo. We designed it with that specs in mind. What's really happened over the past few quarters is we talked about moving all our customers to Halo. We've successfully done that, and now we're kind of modifying our organization around that unified product architecture. If you go back a year ago, we were working on Halo, we're working on Iris, we're working on Iris Plus. We now have that, you know, I could say there's still some, you know, finalization work we need to do on Iris that should be completed by the end of the year or substantially completed by the end of the year.
Mark Delaney: I would say.
When we unveiled the halo about a year ago nothing has changed in the underlying design a halo, we designed it with that specs in mind.
Speaker Change: What's really happened over the past few quarters as we talked about moving all of our customers stay low.
Speaker Change: We've successfully done that and now we're kind of modifying our organization.
Speaker Change: Around that unified product architecture. If you go back a year ago, we were working on Halo work on Iris, we're working on Iris plus we now have that I would say there's still some.
Speaker Change: Finalization work, we need to do on Iris.
Speaker Change: That should be completed by the end of the year are substantially completed by the end of the year. So we're going to be in a position here very soon where we're kind of focusing on one product halo. So that allows us to align our organization around that unified product architecture, that's going to allow us to move faster more efficiently more cost effectively and then if you combine that with kind of the lessons that we have.
Thomas Fennimore: So we're gonna be in a position here very soon where we're kind of focusing on one product, Halo. So that allows us to align our organization around that unified product architecture. That's gonna allow us to move faster, more efficiently, you know, more cost-effectively. And then if you combine that with kind of the lessons that we've learned, right, you know, as I said in the past, when we developed Iris, we didn't do it perfectly. We've learned a lot. We're applying those lessons to Halo.
Speaker Change: Learned right as I've said in the past when we develop the Iris we didn't do a perfectly we've learned a lot. We're applying those lessons to Halo and then I think once you were now at the stage of what comes next after Halo. We're in the early stages of that and what we are continually looking at is what do we lumina or do better than anybody else and thats, the transceiver and the core components of that.
Thomas Fennimore: And then I think once you, you know, we're now at the stage of what comes next after Halo, we're in the early stages of that. And what we're continually looking at is what do we, Luminar, do better than anybody else? And that's the transceiver and the core components of that, you know, built around our LSI technology, like the laser, the ASIC, the APD. That's core. Doing a lot of the embedded software, that's core. There's, you know, a few other core components. Then there's stuff where, you know, like the top housing, you know, the chassis that kind of surrounds the ladder.
Speaker Change: Built around our LSI technology like delays or the <unk>, that's core doing a lot of the embedded software that's quarter Theres a few other core components than their software like the top housing.
Speaker Change: The chassis that kind of surrounds the lighter theres theres other stuff that I would say is we can do it but some of our <unk> can do it just as well or maybe even better and so we're constantly looking at.
Thomas Fennimore: There's other stuff that I would say is, you know, we can do it, but some of our compartners can do it just as well or maybe even better.
Thomas Fennimore: And so we're constantly looking at, you know, I would say narrowing our focus at Luminar about what we do well, do fewer things better, and rely on our partners. It was very successful with what we did TPK last year on the industrialization front. That allowed us to take a ton of costs out of the business, and it also allowed us to move faster.
Speaker Change: I'd say narrowing our focus at Luminar about what we do well do fewer things better and rely on our partners. It was very successful with what we did see PK last year on the industrialization front that allowed us to take a ton of cost out of the business and it also allowed us to move to move faster.
Speaker Change: Understood and my follow up question was also on Halo, but as it respects to potential new business wins, as you're having discussions with Oems and sampling the product with them talking about the streamlined approach can you help us better understand where you think you may stand about converting on potential new business awards for in terms of serious production.
Mark Delaney: I understood my follow-up question was also on Halo, but as it respects to potential new business wins, as you're having discussions with OEMs and sampling the product with them, talking about the streamlined approach, can you help us better understand where you think you may stand about converting on potential new business awards in terms of serious production? And I guess just as you're having those discussions with these customers, can you just help us understand who is managing that? Was that Austin? Was that other people?
Speaker Change: And I guess, just you guys you are having those discussions with these customers can you just help us understand who is managing that was that was that Austin was that other people in any any kind of business implications with with Halo that we should be thinking about with the transition.
Thomas Fennimore: And any kind of business implications with Halo that we should be thinking of with the transition?
Thomas Fennimore: Thanks. Yeah, no, as I mentioned before, Mark, we have a deep and great team here at Luminar. We cover our customers up and down the organization, from the engineering teams that work on the business at our customers on a day-to-day basis, all the way to the top at the C-level exec. We are confident that we're going to be able to manage our customers through this transition and ultimately the quality of our team and our technology and our products will speak for itself. So I'm not personally worried about that there. What I would say on Halo, we have multiple development contracts on Halo now with multiple customers.
Mark Delaney: No as I mentioned before Mark we haven't deepened great team here at Luminaire, we cover our customers up and down the organization.
Mark Delaney: From the engineering teams that work on the business at our customers on a day to day basis, all the way to the top at the C level exact.
Mark Delaney: We are confident that we're going to be able to.
Mark Delaney: Manage our customers through this transition and ultimately the quality of our team and our technology and our products will speak for itself.
Mark Delaney: So im not personally worried about that there.
Mark Delaney: What I would say on Halo, we have multiple development contracts on Halo now with multiple customers.
Thomas Fennimore: We are getting to the point now where we're going to start delivering advanced prototypes. And once those advanced prototypes do what they're supposed to do, we're confident that those are going to be converted into serious production contracts, you know, hopefully sometime here in the near future.
Mark Delaney: We are getting to the point now where we're going to be start delivering advanced prototypes.
Mark Delaney: <unk>.
Mark Delaney: Once those advanced prototypes do what they're supposed to do we're confident that those are going to be converted into series production contracts.
Mark Delaney: Sometime here in the near future.
Unknown Attendee: Thank you.
Speaker Change: Thank you.
Mark Delaney: Thanks Mark.
Unknown Attendee: Thanks, Mark.
John Babcock: Our next question is going to come from John Babcock at Banks America. Hey, John. Good evening, thanks for taking my questions.
Speaker Change: Next question is going to come from John Babcock Bank of America.
Speaker Change: Hey, John.
John Babcock: Hi, good evening and thanks for taking my questions.
Thomas Fennimore: Um, I guess first of all, I was wondering if there are any changes to discuss in terms of developments with customers, anything new to announce there? Um, you know, and then also, you know, just back quickly to that halo development. If you could also just talk about, you know, when you expect most investment of the product development to be completed, uh, We're in the middle innings, I would say, of the investment in Halo. We've already made a good chunk. You know, we have some more to do. And so, you know, middle innings, I think it was the best way where we described on Halo development and like, look, we're continuing to make, you know, move the ball down the field with our customers on Halo and doing that development work.
Speaker Change: First of all I was wondering if there are any changes to discuss in terms of developments with customers anything new to announce there.
John Babcock: And then also just back quickly to that that Halo development. If you could also just talk about.
Speaker Change: When do you expect most investment in the product development to be completed.
Speaker Change: Hello.
Speaker Change: We're in the middle innings, I would say of the investment in Halo, we've already made a good chunk, we have some more to do.
Speaker Change: And so middle innings, and I think it was the best way, where we described on Halo development and like look we're continuing to move the ball down.
Speaker Change: The field with our customers on Halo and doing that development work and those are going to convert the series production contracts. If we continue to execute at some point in the future here.
Thomas Fennimore: And, you know, those are going to convert the series production contracts if we continue to execute at some point in the future here. I've kind of given up guessing, you know, when those dates are exactly going to be. But as I say, we're making good progress in moving the ball down the. Gotcha. And launch remains, launch timing remains RG unchanged. We, you know, we're looking to launch this, you know, somewhere around the end of 26, early 27. You know, we've actually had a customer that pulled in one of their timelines there and the team's working around the clock to accommodate.
Speaker Change: I've kind of given up guessing when those dates are exactly going to be but as I say, we're making good progress in moving the ball down the field.
Speaker Change: Gotcha and launch remains launch timing remains largely unchanged at this point.
Speaker Change: We were looking to launch this somewhere around end of 'twenty six early 'twenty seven.
Speaker Change: We've actually had a customer that pulled in one of their timelines there and the team's working around the clock to accommodate that.
Speaker Change: Okay and then just last question if you could just talk about what's driving the improvement in your operating expense guidance and that's all I have for it.
Unknown Attendee: Thank you.
John Babcock: And then just last question, if you could just talk about what's driving the improvement in your operating expense guidance, and that's all I It's the actions we talked about last year, you know, being fully reflected in the P&L. Thanks, John.
Speaker Change: It's the actions, we talked about last year being fully reflected in the P&L.
Speaker Change: Okay.
Speaker Change: Thanks, John.
Winnie Dong: Our next question is going to come from Winnie Dong at Deutsche Bank. Hey, Winnie. I like how you have the little Anne Marie icon up there. Yeah, thanks so much for for taking my question. Um, just maybe a quick follow up to that last question. Did you see that the FX guy is lower? I'm just curious if there if there's any sort of additional reduction, cost reduction actions that have taken place to achieve this versus the previous guy. And then as we look beyond, you know, this year, just curious how you think about cost to expand, you know, the whole unified architecture and then roll customer base from there?
Speaker Change: Our next question is going to come from Winnie Dong at Deutsche Bank.
Speaker Change: Anyway.
Speaker Change: I like how you have some legacy icon out there.
Speaker Change: Yes, thanks, so much for taking my question.
Speaker Change: Just maybe a quick follow up to that last question do you see that the Opex guide lower.
Speaker Change: Just curious if there.
Speaker Change: If there is any sort of additional reduction cost reduction actions that.
Speaker Change: Taking place to achieve this vis vis the previous Guy and then as we look beyond.
Speaker Change: Just curious how you think about expand.
Speaker Change: Our unified architecture, and then rural customer base from there.
Winnie Dong: Maybe, you know, beyond this year?
Speaker Change: Maybe beyond this year.
Thomas Fennimore: Sure. Um, yeah. So, um, you know, our our quarterly outbacks on a non gap basis for this past quarter was $45 million. Our target for the end of the year is in the low 30s. You know, we have, you know, clearly, we're going to need to take some actions, we have all of them identified, and we've already started to implement them to get them there. So yes, there will be additional cost actions identified, executing upon them. In terms of, you know, incremental investments in Halo, I think the good thing in there is the invest, yes, we're, as I mentioned before, we're kind of through the middle innings of Halo investment, you know, that so there are some additional investments that we continue to make.
Speaker Change: Sure.
Speaker Change: So.
Speaker Change: Our quarterly Opex on a non-GAAP basis for this past quarter was $45 million are.
Speaker Change: Our target for the end of the year is in the low <unk> we have.
Speaker Change: Clearly, we're going to need to take some actions we have all of them identified and we've already started to implement them to get them there.
Speaker Change: So yes, there will be additional cost actions identified executing upon them.
Speaker Change: In terms of <unk>.
Incremental investments in Halo that I think the good thing and there is.
Speaker Change: The invest yes, we're as I mentioned before we're kind of through the middle innings of Halo investment.
Speaker Change: There are some additional investments that we continue to make but at the same time.
Thomas Fennimore: But at the same time, you know, we've kind of stopped work on Iris Plus, that will start, help over the next few quarters. And then, you know, we're kind of ramping down, you know, the work that needs to be done on Iris. And so any, I would say, incremental investments we need to make in Halo, relative to the current run rate for Q1, isn't going to be as big as kind of like the wind down of Iris, you know, the work on Iris, Iris Plus, as well as the other cost actions that we've identified.
Speaker Change: We've kind of stopped work on Iris plus that will start help over the next few quarters and then we're kind of ramping down the work that needs to be done on Iris and so any I would say incremental investments we need to make in hella Halo relative to the current run rate for Q1 is going to be as big as kind of like the <unk>.
Wind down of the work on Iris Iris plus as well as the other cost actions that we've identified.
Got it thank you.
Winnie Dong: Got it, thank you.
Winnie Dong: And then my follow up is on this one particular customer, right? I think Nissan, you may have heard, you know, through the media that's going through some of its, you know, own challenges. We saw some headlines on reducing workforce with the recent, you know, management change there.
Speaker Change: And then my follow up is on one particular area.
Speaker Change: Nissan.
Speaker Change: The media that can extend the pit.
Speaker Change: Our own challenges.
Speaker Change: Some headlines.
Speaker Change: Of course with the recent magic.
Speaker Change: Our teams there.
Thomas Fennimore: I'm just curious to hear if this impacts your conversation with them, if at all, in terms of, you know, their conversion to HALO future business. No, you know, the short answer is no, I would say everybody in the automotive industry is kind of going through what Nissan's going through, what Luminor's going through, right? It's, it's kind of tough times with, you know, the current macro economic environment, as well as the geopolitical uncertainty. You know, the good thing about a company like Nissan is they're committed to new technologies and making their vehicles safer. And that commitment, you know, is at the peak of the cycle.
Speaker Change: I'm just curious to hear if there.
It impacts your conversation with them that's not at all.
Speaker Change: That compares to Haynesville future business.
No.
Speaker Change: The short answer is no I would say everybody in the automotive industry is kind of going through what nissan's going through what <unk> is going through right. It's it's kind of tough times with.
Speaker Change: The current macro economic environment as well as the geopolitical uncertainty.
Speaker Change: The good thing about a company like Nissan is they're committed to new technologies and making their vehicle safer.
Speaker Change: And that commitment is at the peak of the cycle and at the trough of the cycle. So we haven't seen.
Thomas Fennimore: So we haven't seen, you know, any change there in, you know, you know, Nissan's development efforts around Halo.
Speaker Change: Any change there.
Nissan's.
Speaker Change: Developments efforts around Halo.
Speaker Change: And on top of one quick follow up if that's okay.
Winnie Dong: I have a long, quick follow-up because that's okay. Just on tariff, I know you mentioned, you know, you're talking to customers on, you know, recoveries. Can you just maybe help us size the impact and then if there's any further...
Speaker Change: Just on <unk> I know you mentioned.
Speaker Change: You're talking to customers.
Speaker Change: Recovery can you just maybe help us size the impact.
Speaker Change: Yeah.
Thomas Fennimore: Yeah, I didn't say recoveries. I mean, if you kind of, you know, look, I said we, for Q1, we had about a million dollar a month, or a million dollar tariff impact, and then tariffs went into March. So you can kind of extrapolate from there. You know, it isn't necessarily, you know, one solution is recovery. I think as, you know, like a lot of the rest of the world, as we become tariff experts over the last 30, 60 days, we found some clever ways working real time with our customers to mitigate the tariff expense for, you know, I would say, you know, all parties.
Speaker Change: You didn't say recoveries I mean, if you kind of look.
Speaker Change: Yeah.
Speaker Change: For Q1, we had about $1 million a month.
Speaker Change: $1 million tariff impact and then tariffs went into March so you can kind of extrapolate from there.
Speaker Change: It isn't.
Speaker Change: One solution is recovery I think is like a lot of the rest of the world as we become tariff experts over the last 30 60 days, we found some clever ways working real time with our customers to.
Speaker Change: To mitigate the tariff expense for I would say all.
Speaker Change: All parties and so.
Thomas Fennimore: And so, you know, we're in the process of implementing that solution. And once that solution is implement, I don't expect to pay, you know, a material amount of tariffs for the remainder of the year, you know, barring any changes, which, you know, have happened frequently over the last, you know, couple months.
Speaker Change: We're in the process of implementing that solution and what that solutions implement I don't expect to pay.
Speaker Change: Material amount of tariffs for the remainder of the year barring.
Speaker Change: Barring any changes which have.
Speaker Change: They have happened frequently over the last.
Speaker Change: No.
Speaker Change: A couple of months.
Speaker Change: Okay. Thank you so much.
Winnie Dong: Thank you so much.
Speaker Change: Thanks Wendy.
Richard Shannon: Thanks. When you Our final question is going to come from Richard Shannon at Craig Callum. Hey, Richard. Hey, Tom, how are you? Thanks for taking my questions. Coming in hot with some other calls and callbacks here.
Speaker Change: So we are in that statement.
Speaker Change: Our final question is going to come from Richard Shannon at Craig Hallum.
Speaker Change: Hey, Richard.
Richard Shannon: Hey, Tom how are you thanks for taking my questions.
Speaker Change: Coming into <unk> with some other calls and call backs here. So I'm not sure. If you touched on I apologies, if you have but I think I heard some comments from you about gross profit outlook here or being on a gross loss position I think throughout the rest of the year. Maybe can you just discuss briefly the dynamics under which we get that to a positive thing is that.
Thomas Fennimore: So I'm not sure if you've touched on apologies if you have, but I think I heard some comment from you about gross profit outlook here or being in a gross loss position, I think throughout the rest of the year. You can just discuss briefly the dynamics under which we get that to a positive thing. Is that a result of volumes and or cost reductions that may occur here? Just help us kind of lay that qualitatively out.
Speaker Change: A result of volumes and or cost reductions that may occur here, just help us kind of qualitatively.
Speaker Change: Qualitatively out.
Thomas Fennimore: Yeah, and we talked about this at our year-end call in March. So this isn't, I would say, new information. Because the volumes for IRIS are lower than expected, we're, you know, I would say we're struggling to kind of get those, the unit economics into the positive territory where they need to be to, I would say, have, you know, recurring positive gross margin. So I don't want to rule out that you're not going to see, you know, a, you know, quarterly gross profit again with IRIS. I think we're going to need to get to halo where you kind of see that sustainable and that margin levels where I think, you know, people are going to be a lot more happy.
Speaker Change: Yes, and when we talked about this at our year end call in March. So this is I would say new information.
Speaker Change: The volumes for Iras are lower than expected.
Speaker Change: I would say, we're struggling to kind of get those unit economics into the positive territory, where they need to be so I would say.
Speaker Change: Recurring positive gross margin, we have been able to get to gross margin on a quarterly basis like we did this past quarter. What we need is a large amount of sales typically to the adjacent markets or non automotive customers, where the asps are kind of multiples of where we'd seen there. Yes, it's higher volume will help because that brings down our sensor cost.
Speaker Change: Getting.
Speaker Change: More adjacent market sales and higher <unk> and better center economics helps as well those tend to be lumpy and more predictable. So I don't want to rule out that youre not going to see.
Speaker Change: A.
Speaker Change: Quarterly gross profit again with Iris I think we're going to need to get the Halo, where you kind of see that sustainable and at margin levels, where I think people are going to be a lot more happy.
Speaker Change: Okay fair enough that makes sense.
Speaker Change: Question for me is just kind of looking at the auto industry in general here and obviously you eliminate is targeting mostly western world Oems.
Speaker Change: I wanted to get a sense of Av.
Speaker Change: Stability in autonomy roadmaps across the.
The top 2030 Oems out there whether they are firming up or even pulling forward I think I heard you mentioned in previous answer about maybe a pull forward of one particular, one but just wanted to get a general sense of whether we're seeing push outs and uncertainty are you seeing stabilization or even for scheduled firming up.
Richard Shannon: I think I heard you mention in a previous answer about maybe a pull forward with one particular one, but just want to get a general sense of whether we're seeing pushouts and uncertainty or we're seeing stabilization or even, you know, schedules firming up. Yeah, it's a great question, Richard. Um, you know, I would say over the last couple years, we've seen pushouts almost across the board for a variety of reasons that we talked about in the past. I've seen some, you know, early signs, you know, one or two in particular of push ins over the last few months.
Richard Shannon: Yes, it's a great question Richard.
Richard Shannon: Say over the last couple of years, we've seen push outs almost across the board for a variety of reasons that we've talked about in the past.
Richard Shannon: I've seen some.
Richard Shannon: No.
Richard Shannon: Early signs one or two in particular push ins over.
Richard Shannon: Over the last few months, but I would say.
Thomas Fennimore: But I would say, I haven't seen enough data yet, where I would say that that's a trend, I would say it's more, you know, light at the end of the tunnel. So there are some encouraging signs, but I wouldn't get too excited just Okay, fair enough. Thanks for that update, Tom.
Richard Shannon: Haven't seen enough data, yet where I would say that that's a trend I would say it's more.
Richard Shannon: Light at the end of the tunnel. So there are some encouraging signs, but I wouldn't get too excited just yet.
Tom Fenimore: Okay fair enough. Thanks for that Tom that's all for me.
Unknown Attendee: That's all for me.
Richard Shannon: Great. Thanks, Richard.
Richard Shannon: That marks the end of our Q&A session I'd like to thank everyone for their patience with our webcast this quarter and for the analysts that participated in our Q&A session. We look forward to updating everyone next quarter, if not sooner. Thank you.
Unknown Attendee: That marks the end of our Q&A session. I'd like to thank everyone for their patience with our webcast this quarter and for the analysts that participated in our Q&A session. We look forward to updating everyone next quarter, if not sooner. Thanks, everyone.
Richard Shannon: Thank you.
Richard Shannon: Yeah.
Richard Shannon: Goodbye.
Unknown Attendee: Goodbye.