Q2 2026 Aeye Inc Earnings Call

August 6, 2026

Speaker #1: Ladies and gentlemen, welcome to AI Q2 2026 conference call. Call lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

Operator: Ladies and gentlemen, welcome to AEye Q2 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, just press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please note that this call is being recorded. I would now like to turn the call over to Keaton Olsen. You may begin.

Speaker #1: If you would like to ask a question during this time, just press star followed by the number 1 on your telephone keypad. And if you would like to withdraw your question, press star 1 again.

Speaker #1: And please note that this call is being recorded. I would now like to turn the call over to Keaton Olson. You may begin.

Speaker #2: Good afternoon, and thank you for joining AI Q2 2026 earnings call. I'm Keaton Olson, investor relations manager for AI, and with me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer.

Keaton Olsen: Good afternoon, thank you for joining AEye's Q2 2026 earnings call. I'm Keaton Olsen, Investor Relations Manager for AEye, and with me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer. Earlier today, AEye announced its financial results for the Q2 ended 30 June 2026. A copy of the press release is available in the investor relations section of the company's website. Before we begin, 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 performance, and are based on our current expectations and assumptions. Any forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances. Our actual results may differ materially from those contemplated by these forward-looking statements.

Speaker #2: Earlier today, AEye announced its financial results for Q2, ended June 30, 2026. A copy of the press release is available in the Investor Relations section of the company's website.

Speaker #2: Before we begin, 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 performance, and are based on our current expectations and assumptions.

Speaker #2: Any forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances. Our actual results may differ materially from those contemplated by these forward-looking statements.

Speaker #2: 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 our most recent periodic report.

Keaton Olsen: 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 our most recent periodic report. The statements to be made are as of today only, 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. In addition, we will be discussing non-GAAP financial measures on this call, which we believe are relevant in assessing the financial performance of the business. These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance with GAAP. You can find reconciliations of these metrics to the most directly comparable GAAP measures within the press release. With that, I'll hand the call over to Matt.

Speaker #2: 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.

Speaker #2: In addition, we will be discussing non-GAAP financial measures on this call, which we believe are relevant in assessing the financial performance of the business.

Speaker #2: These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance with GAAP. You can find reconciliations of these metrics to the most directly comparable GAAP measures within the press release.

Speaker #2: With that, I'll hand the call over to Matt.

Speaker #3: Thank you, Keaton, and thank you all for joining us. I'm excited to report that our overall momentum continued in the Q2. Including the ongoing development of our sales pipeline, having grown to our highest level of engagement yet.

Matt Fisch: Thank you, Keaton, thank you all for joining us. I'm excited to report that our overall momentum continued in the second quarter, including the ongoing development of our sales pipeline, having grown to our highest level of engagement yet. Most importantly, I'm pleased to announce that we have been selected as the preferred lidar vendor for a groundbreaking sports analytics provider. As a company, we're hitting our stride, we extended AEye's reach into an entirely new market category. Q2 revenue grew approximately nine times year-over-year and roughly 100% quarter-over-quarter, marking our fourth consecutive quarter of growth, further evidence of the accelerating commercial interest in our technology.

Speaker #3: And most importantly, I'm pleased to announce that we have been selected as the preferred LIDAR vendor for groundbreaking sports analytics provider. As a company, we're hitting our stride.

Speaker #3: And we extended AI's reach into an entirely new market category. Q2 revenue grew approximately 9 times year over year, and roughly 100% quarter over quarter.

Speaker #3: Marking our fourth consecutive quarter of growth. Further evidence of the accelerating commercial interest in our technology. Beyond revenue, our sales funnel continues to be the best barometer of our progress.

Matt Fisch: Beyond revenue, our sales funnel continues to be the best barometer of our progress. Proof of concept programs from revenue-generating customers grew to 25 from 21 since our last earnings call, and both engagements and quote activity increased approximately 25% and 40% quarter over quarter, respectively. Commercial momentum is accelerating across the board. New accounts continue to enter and move through the funnel, and existing customers are scaling up the scope of their engagement. AEye sits at the center of the Physical AI opportunity, a market Barclays sizes at up to $1 trillion by 2035. LiDAR is what gives machines sight, and our software-defined architecture positions Apollo and STRATOS as core perception platforms across Automotive, Trucking, Aerospace and Defense, Rail, Infrastructure, ITS, and now sports analytics. Defense continues to be our most active vertical, with engagements doubling quarter over quarter.

Speaker #3: Proof of concept programs from revenue-generating customers, grew to 25 from 21 since our last earnings call, and both engagements in quote activity increased approximately 25 and 40 percent quarter over quarter respectively.

Speaker #3: Commercial momentum is accelerating across the board. New accounts continue to enter and move through the funnel, and existing customers are scaling up the scope of their engagements.

Speaker #3: AI sits at the center of the physical AI opportunity, a market markedly sizes at up to $1 trillion by 2035. LIDAR is what gives machine sight, and our software-defined architecture positions Apollo and Stratos as core perception platforms across automotive, trucking, aerospace, and defense, rail, infrastructure, ITS, and now sports analytics.

Speaker #3: Defense continues to be our most active vertical, with engagements doubling quarter over quarter. Our lead defense customer placed its third consecutive paid order this quarter.

Matt Fisch: Our lead defense customer placed its third consecutive paid order this quarter, and repeat business is emerging as Apollo is evaluated across UAV, UGV, and counter UAS applications. Additionally, our partnership with SynTech, a leading international defense systems company, continues to actively promote and ship Apollo to its customers, expanding our addressable pipeline into global markets where Apollo's configurability and long-range performance make it purpose-built for mission-critical and unmanned systems. Increasingly, our customers are finding us rather than the reverse, and often for novel applications that continue to expand our TAM. What makes this possible is our software-defined architecture. Because Apollo's behavior is defined in software rather than fixed in hardware, we can quickly reconfigure it to meet a new application without redesigning the sensor. Customers come to us with a problem. We can adapt the same platform to solve it. Sports analytics this quarter is a great example.

Speaker #3: And repeat business is emerging, as Apollo is evaluated across UAV, UGV, and counter-UAS applications. Additionally, our partnership with FinTech, a leading international defense systems company, continues to actively promote and ship Apollo to its customers.

Speaker #3: Expanding our addressable pipeline into global markets, where Apollo's configurability and long-range performance make it purpose-built for mission-critical and unmanned systems. Increasingly, our customers are finding us, rather than the reverse.

Speaker #3: And often for novel applications that continue to expand our TAM. What makes this possible is our software-defined architecture. Because Apollo's behavior is defined in software, rather than fixed in hardware, we can quickly reconfigure it to meet a new application without redesigning the sensor.

Speaker #3: Customers come to us with a problem, and we can adapt the same platform to solve it. Sports analytics this quarter is a great example.

Speaker #3: A new use case addressed with our same underlying product. For our customers, that flexibility is what turns LIDAR-based perception into a practical tool for improving safety, lowering total cost of ownership, and opening new revenue streams.

Matt Fisch: A new use case addressed with our same underlying product. For our customers, that flexibility is what turns LiDAR-based perception into a practical tool for improving safety, lowering total cost of ownership, and opening new revenue streams. For AEye, it means each new application expands our addressable market without the need to make physical changes to our hardware. Alive3D recently selected Apollo as its LiDAR solution for next-generation sports analytics. Apollo's software-defined technology will enable Alive3D to deliver 3D spatial sports visualization, precise measurement, and advanced data analytics. We are able to attune Apollo to meet the needs of our customers, in this case, elite sports. This is another clear example of where our software-defined architecture allows us to tailor our solution to deliver for our customers.

Speaker #3: And for AI, it means each new application expands our addressable market without the need to make physical changes to our hardware. A live 3D recently selected Apollo as its LIDAR solution for next-generation sports analytics.

Speaker #3: Apollo's software-defined technology will enable a live 3D to deliver 3D spatial sports visualization. Precise measurement, and advanced data analytics. We are able to attune Apollo to meet the needs of our customers, in this case, elite sports.

Speaker #3: This is another clear example of where our software-defined architecture allows us to tailor our solution to deliver for our customers. And Apollo has recently validated on NVIDIA DRIVE AGX Thor, NVIDIA's next-generation automotive and physical AI compute platform.

Matt Fisch: Apollo was recently validated on NVIDIA DRIVE AGX Orin, NVIDIA's next-generation automotive and Physical AI compute platform, deepening a relationship that spans our participation in the NVIDIA Halos AI Systems Inspection Lab and our existing validation on NVIDIA DRIVE AGX Orin. With sensor-to-compute interoperability confirmed against NVIDIA DriveOS, placing AEye as a sensor partner in the NVIDIA DRIVE Hyperion ecosystem, OEMs and tier 1 suppliers building on the NVIDIA DRIVE platform can source Apollo as a pre-qualified sensor, reducing integration risk and shortening the path from system design to deployment. Automotive and trucking OEMs continue to treat long-range LiDAR as essential, not optional, for highway ADAS and autonomy. We remain active in multiple OEM level 3 and level 4 evaluation projects. In parallel, we signed an MOU to explore combining Apollo's long-range 3D object detection with Movin' Wheel's acoustic road surface friction sensing.

Speaker #3: Deepening our relationship that spans our participation in the NVIDIA Halo's AI systems inspection lab, and our existing validation on NVIDIA DRIVE AGX Aura. With sensor-to-compute interoperability confirmed against NVIDIA DRIVE OS, placing AI as a sensor partner in the NVIDIA DRIVE Hyperion ecosystem OEMs and Tier 1 suppliers building on the NVIDIA DRIVE platform can source Apollo as a pre-qualified sensor.

Speaker #3: Reducing integration risk, and shortening the path from system design to deployment. Automotive and trucking OEMs continue to treat long-range LIDAR as essential, not optional.

Speaker #3: For highway ADAS and autonomy. We remain active in multiple OEM level 3 and level 4 evaluation projects. In parallel, we signed an MOU to explore combining Apollo's long-range 3D object detection with movable wheels acoustic road surface friction sensing.

Speaker #3: This partnership seeks to provide real-time predictive friction coefficients of road surfaces to improve ADAS and autonomous driving in adverse weather. Evaluations are underway across select geographies, and we are already having discussions with automotive OEMs about potential applications.

Matt Fisch: This partnership seeks to provide real-time predictive friction coefficients of road surfaces to improve ADAS and autonomous driving in adverse weather. Evaluations are underway across select geographies, we are already having discussions with automotive OEMs about potential applications. In other markets, our OPTIS platform continues to move into deployment. Our live smart intersection in the Bay Area remains operational, as do our multiple OPTIS installations in and around Detroit. In APAC, Apollo received the Smart Sensing Technology Innovation Award at the EAC 2026 Zhiyao Awards in Shanghai, validating its role in intelligent sensing for ADAS, autonomous driving, and Physical AI applications. Additionally, we are now shipping units to an ITS customer we met during our Q1 roadshow in Korea. Our China partnership with ATI remains actively quoting today. Our manufacturing footprint and capital-light model underpin all of this.

Speaker #3: In other markets, our optics platform continues to move into deployment. Our live smart intersection in the Bay Area remains operational, as do our multiple optics installations in and around Detroit.

Speaker #3: In APAC, Apollo received the Smart Sensing Technology Innovation Award at the EAC 2026 Jiao Awards in Shanghai. Validating its role in intelligent sensing for ADAS, autonomous driving, and physical AI applications.

Speaker #3: Additionally, we are now shipping units to an ITS customer we met during our Q1 roadshow in Korea. And our China partnership with ATI remains actively quoting today.

Speaker #3: Our manufacturing footprint and capital-light model underpin all of this. As an American company with a globally diversified supply chain, we're positioned to navigate geopolitical risk and shifting trade policy better than our peers.

Matt Fisch: As an American company with a globally diversified supply chain, we're positioned to navigate geopolitical risk and shifting trade policy better than peers. Through LITEON, we have a dedicated production line capable of up to 60,000 Apollo units annually, derived from off-the-shelf telecom components for mass manufacturability at competitive cost. We have begun ramping our output to match our forecast of increased customer demand in the H2. Finally, for those customers that require end-to-end perception solutions, our OPTIS system is underpinned by a partner-led model spanning NVIDIA, Flasheye, Blue-Band, Black Sesame, ViewRan, and now moveero. This lets us deliver those solutions across market segments without absorbing the cost and balance sheet impact of building every capability in-house. A structural advantage peers with internally developed software stacks can't easily scale.

Speaker #3: Through LIDON, we have a dedicated production line capable of up to 60,000 Apollo units annually. Derived from off-the-shelf telecom components for mass manufacturability, at competitive cost.

Speaker #3: We have begun ramping our output to match our forecast of increased customer demand in the second half of the year. Finally, for those customers that require end-to-end perception solutions, our optics system is underpinned by a partner-led model.

Speaker #3: Spanning NVIDIA, FlashEye, Blueband, Black Sesame, Viewron, and now MovaWheel. This lets us deliver those solutions across market segments, without absorbing the cost, and balancing impact of building every capability in-house.

Speaker #3: A structural advantage peers with internally developed software stacks can't easily scale. With that, I'll turn the call over to Conor to walk through our financial results and the conversion metrics behind this momentum.

Matt Fisch: With that, I'll turn the call over to Conor to walk through our financial results and the conversion metrics behind this momentum.

Speaker #1: Thank you, Matt. Our active customer base reached a new level of diversification this quarter. I'd repeat business is now a pattern, rather than an exception.

Conor Tierney: Thank you, Matt. Our active customer base reached a new level of diversification this quarter. Repeat business is now a pattern rather than an exception, which is the strongest indicator we have of product market fit and a direct validation of the performance advantages of our software-defined architecture. Before I turn to the numbers, it is worth framing what we believe is happening in our market because it explains where our revenue is now coming from. The first wave of LiDAR adoption competed largely on cost and packaging. A second wave is now forming, it is being decided on something different. Performance and sophistication are the gates to winning the deal. The customers driving this wave and creating novel demand in the Physical AI space were absent from the first one because their use cases were simply too demanding for first-generation sensors.

Speaker #1: Which is the strongest indicator we have of product-market fit, and a direct validation of the performance advantages of our software-defined architecture. Before I turn to the numbers, it is worth framing what we believe is happening in our market.

Speaker #1: Because it explains where our revenue is now coming from. The first wave of LIDAR adoption competed largely on cost and packaging. A second wave is now forming, and it has been decided on something different.

Speaker #1: Performance and sophistication are the gates to winning the deal. The customers driving this wave and creating novel demand in the physical AI space were absent from the first one.

Speaker #1: Because their use cases were simply too demanding for first-generation sensors. Detection at extreme range, maximum ruggedness, centimeter-level capture, across an entire playing field. Apollo's ultra-long-range performance and software configurability paired with our highly scalable partnership and production models put us in a uniquely strong position to capitalize on precisely this class of physical AI customer.

Conor Tierney: Detection at extreme range, maximum ruggedness, centimeter-level capture across an entire playing field. Apollo's ultra-long-range performance and software configurability, paired with our highly scalable partnerships and production models, put us in a uniquely strong position to capitalize on precisely this class of Physical AI customer. We now have commercial proof that this is more than a thesis. During the quarter, we secured a commercial program with Alive3D in a new vertical that was not contemplated a year ago. Won on capability rather than price. Behind this program, a growing number of engagements are moving out of proof of concept and into commercial closure. Turning to the financials. Q2 revenue was $202,000, roughly double the $101,000 we reported in Q1, at approximately nine times the $22,000 in Q2 2025. H1 revenue of $303,000 already exceeds our full year 2025 revenue of $233,000.

Speaker #1: We now have commercial proof that this is more than a thesis. During the quarter, we secured a commercial program with a live 3D and a new vertical that was not contemplated a year ago.

Speaker #1: One on capability rather than price. Behind this program, a growing number of engagements are moving out of proof of concept and into commercial closure.

Speaker #1: Turning to the financials, second quarter revenue was $202,000, roughly double the $101,000 we reported in the first quarter, and approximately nine times the $22,000 in the second quarter of 2025.

Speaker #1: First half revenue of $303,000 already exceeds our full year 2025 revenue of $233,000. Two components drove the quarter. The first is product revenue, with an increasing share coming from repeat orders rather than first-time evaluations.

Conor Tierney: Two components drove the quarter. The first is product revenue, with an increasing share coming from repeat orders rather than first-time evaluations. Repeat orders from our lead defense customer continued to grow in size quarter-over-quarter, and we started shipping units to Alive3D. The second component, new this quarter, is $30,000 of contract development revenue from customer-funded engineering work. That line matters more than its size suggests. It is a second distinct source of revenue that did not exist for us six months ago, and we expect it to become a more regular contributor in subsequent quarters as programs advance into their engineering phases. GAAP operating expenses were $10.6 million versus $8.9 million in Q1. More than half of that increase was non-cash stock-based compensation, primarily from performance-based equity awards.

Speaker #1: Repeat orders from our lead defense customer continue to grow in size quarter over quarter, and we started shipping units to a live 3D. The second component and new this quarter is $30,000 of contract development revenue from customer-funded engineering work.

Speaker #1: That line matters more than its size suggests. It is a second distinct source of revenue that did not exist for us six months ago.

Speaker #1: And we expect it to become a more regular contributor in subsequent quarters, as programs advance into their engineering phases. GAAP operating expenses were $10.6 million versus $8.9 million in the first quarter.

Speaker #1: More than half of that increase was non-cash stock-based compensation. Primarily from performance-based equity awards. The balance was non-recurring engineering tooling and test costs, as we ramped production capacity ahead of anticipated demand.

Conor Tierney: The balance was non-recurring engineering, tooling, and test costs as we ramped production capacity ahead of anticipated demand. non-GAAP operating expenses, which exclude stock-based compensation, were $8.2 million compared to $7.4 million. I would characterize this step-up as investment ahead of volume rather than an increase in our underlying run rate cost structure. We reported a GAAP net loss of $10 million, or $0.22 per share, compared to $8.3 million, or $0.18 per share in Q1. On a non-GAAP basis, our net loss was $7.6 million, or $0.17 per share, versus $6.7 million, or $0.15 per share in Q1. Q2 cash consumption was $7.5 million compared to $9.2 million in Q1, reflecting a decrease from one-time payroll costs in Q1, partially offset by payments for professional fees, non-recurring engineering costs, and inventory purchases in the current quarter.

Speaker #1: Non-GAAP operating expenses which exclude stock-based compensation were $8.2 million compared to $7.4 million. I would characterize this step-up as investment ahead of volume rather than an increase in our underlying run rate cost structure.

Speaker #1: We reported a GAAP net loss of $10 million or $22 cents per share compared to $8.3 million, or 18 cents per share in the first quarter.

Speaker #1: On a non-GAAP basis, our net loss was $7.6 million, or $0.17 per share, versus $6.7 million, or $0.15 per share in the first quarter.

Speaker #1: Second quarter cash consumption was $7.5 million, compared to $9.2 million in first quarter, reflecting a decrease from one-time payroll costs in the first quarter.

Speaker #1: Partially offset by payments for professional fees, non-recurring engineering costs, and inventory purchases and the current quarter. We ended the quarter with cash, cash equivalents, and marketable securities of approximately $71.5 million compared to $77.2 million at the end of the first quarter of 2026.

Conor Tierney: We ended the quarter with cash equivalents, and marketable securities of approximately $71.5 million compared to $77.2 million at the end of Q1 2026. We're reaffirming our 2026 full year cash use outlook of $30 to $35 million, inclusive of approximately $5 million in working capital. I would note that we expect H2 consumption to run higher than H1 as we start to ramp the manufacturing build. This outlook reflects continued investment in commercial execution, the sales coverage, partner support, and deployment infrastructure required to convert our pipeline into a meaningful and durable revenue ramp. Our capital structure also remains simplified and strong, with AEye virtually debt-free. That matters directly to the OEMs and industrial customers we're targeting, where multi-year program confidence is a prerequisite for selection. The architectural advantage of our sensors Matt described earlier compounds at the financial level.

Speaker #1: We're reaffirming our 2026 full-year cash use outlook of 30 to 35 million dollars. Inclusive of approximately $5 million in working capital. I would note that we expect second half consumption to run higher than the first half, as we start to ramp the manufacturing build.

Speaker #1: This outlook reflects continued investment in commercial execution. The sales coverage partner support and deployment infrastructure required to convert our pipeline into a meaningful and durable revenue ramp.

Speaker #1: Our capital structure also remains simplified and strong. With AEye virtually debt-free, that matters directly to the OEMs and industrial customers we're targeting, where multi-year program confidence is a prerequisite for selection.

Speaker #1: The architectural advantage of our sensors Matt described earlier, compounds at the financial level. The same software-defined platform that lets us tune Apollo and Strata to customer-specific requirements is what lets us enter new markets and solve new customer problems.

Conor Tierney: The same software-defined platform that lets us tune Apollo and STRATOS to customer-specific requirements is what lets us enter new markets and solve new customer problems, from defense to automotive to sports analytics, without rebuilding our stack each time. STRATOS extends performance into new tiers without a proportional increase in development costs. Peers with fixed function sensors and eternally owned software stacks can't replicate that flexibility without absorbing significant development and integration expense. Our expectation for 2026 remains unchanged. As engagements convert into program commitments, we're building the foundation for a meaningful revenue inflection, and we believe we can reach it without outspending competitors. The difference this quarter is that conversion is no longer theoretical. I'll now turn the call back to Matt for closing remarks.

Speaker #1: From defense to automotive to sports analytics, without rebuilding our stack each time, and Strata's extends performance into new tiers without a proportional increase in development costs.

Speaker #1: Peers with fixed function sensors and internally owned software stacks can't replicate that flexibility without absorbing significant development and integration expense. Our expectation for 2026 remains unchanged.

Speaker #1: As engagements convert into program commitments, we're building the foundation for a meaningful revenue inflection. And we believe we can reach it without outspending competitors.

Speaker #1: The difference this quarter is that conversion is no longer theoretical. I'll now turn the call back to Matt for closing remarks.

Speaker #2: Thank you, Conor. As we enter the back half of 2026, our focus doesn't change. Convert engagements into deployments and continue to turn the physical AI tailwinds we're seeing into a durable revenue ramp.

Matt Fisch: Thank you, Conor. As we enter the back half of 2026, our focus doesn't change. Convert engagements into deployments and continue to turn the Physical AI tailwinds we're seeing into a durable revenue ramp. We're entering that period with new proof points. Apollo validated on NVIDIA DRIVE AGX Orin, and Alive3D selecting Apollo for elite sports analytics, extending our footprint into transportation and stadiums, all from one software-defined architecture. Our technology continues to differentiate. Our balance sheet provides the stability to execute, and the partnerships we've built from NVIDIA and LITEON to Alive3D lay the foundation for scale across multiple sectors. Operator, we're now ready to open the line for questions.

Speaker #2: We're entering that period with new proof points, Apollo-validated on NVIDIA drive AGX4, and a live 3D selecting Apollo for elite sports analytics. Extending our footprint into transportation and stadiums, all from one software-defined architecture.

Speaker #2: Our technology continues to differentiate, our balance sheet provides the stability to execute, and the partnerships we've built from NVIDIA and LightOn to a live 3D lay the foundation for scale across multiple sectors.

Speaker #2: Operator, we're now ready to open the line for questions.

Speaker #3: We will now begin the question-and-answer session. If you would like to ask a question at this time, just press star followed by the number one on your telephone keypad.

Operator: We will now begin the question and answer session. If you would like to ask a question at this time, just press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. Your first question comes from the line of Richard Shannon with Craig-Hallum. Richard, please go ahead.

Speaker #3: And if you would like to withdraw your question, press star one again. Thank you. And your first question comes from the line of Richard Shannon with Craig Helum.

Speaker #3: Richard, please go ahead.

Speaker #4: Well, hi, Matt and Conor. Thanks for letting me ask a few questions and congrats on a really nice quarter with some good growth here.

Richard Shannon: Well, hi, Matt and Conor. Thanks for letting me ask a few questions, and congrats on a really nice quarter with some good growth here. Got a few questions for you. The first comment I'm going to touch on here was a very interesting one about ramping output here in the H2 of the year. Obviously, everyone, since you didn't give any sort of revenue guidance, everyone would like to get a sense of what kind of ramp we're talking about. Any way to quantify or at least characterize that would be helpful here. Maybe any details on any end markets or specific customers you have in mind here for a lot of this ramp.

Speaker #4: I've got a few questions for you and the first comment I'm going to touch on here was a very interesting one about ramping output here in the second half of the year.

Speaker #4: Obviously, everyone, since you didn't give any sort of revenue guidance, everyone would like to get a sense of what kind of ramp we're talking about, any way to quantify, or at least characterize that would be helpful here.

Speaker #4: And maybe any details on any end markets, or specific customers you have in mind here for a lot of this ramp?

Speaker #2: Hey, Richard, hey. I'll start it off here and let Conor jump in. Hope you're having a great summer and thanks for joining us today.

Matt Fisch: Hey, Richard. Hey, I'll start it off here, and we'll let Conor jump in. Hope you're having a great summer, and thanks for joining us today. Look, take a look at the company a year ago. We're running around the halls, finishing product and working on product. Today, we're fully loaded with 25 different customer programs. These are all customers who bought sensors and other things from us, such a different place. One of the main things we see here is that we talked about pipeline a lot. Here we are at this record pipeline level, it takes time, I'll say measured in months, to march things through the pipeline and get things working the way the customer likes. Alive3D is the first one that we are happy to talk about to come out of that pipeline. The pipeline's pretty deep.

Speaker #2: Look, we're take a look at the company a year ago, we're running around the halls finishing product and working on product and today we're fully loaded with 25 different customer programs.

Speaker #2: These are all customers who bought sensors and other things from us. And such a different place. One of the main things we see here is that we talked about pipeline a lot.

Speaker #2: So here we are at this record pipeline level. But it takes time and I'll say measured in months to march things through the pipeline and get things working the way the customer likes.

Speaker #2: And a live 3D is the first one that we're happy to talk about to come out of that pipeline and the pipeline is pretty deep.

Speaker #2: We've got stuff coming in, as we mentioned earlier. So we expect that to continue. Through the back half of the year and the way I'll sum it up before I hand it off to Conor here is we're just focused maniacally on quarter-on-quarter growth with the revenue output.

Matt Fisch: We've got stuff coming in, as we mentioned earlier. We expect that to continue through the back half of the year. The way I'll sum it up before I hand it off to Conor here is we're just focused maniacally on quarter-on-quarter growth. With the revenue out, we expect that to continue. You've seen that we've managed to run that playbook the last four quarters. We've doubled quarter on quarter consistently, we aim to continue down that path here in the back half of the year, that's what we believe we can achieve. Conor, anything like to add on that?

Speaker #2: We expect that to continue you've seen that we've managed that to run that playbook the last four quarters. We've doubled quarter-on-quarter consistently. We aim to continue down that path here in the back half of the year.

Speaker #2: And that's what we believe we can achieve. And Conor, anything you'd like to add on that?

Speaker #4: Yeah, maybe I'll just say, look, we've said in the past that we would be very cautious about ramping production and we would make sure that that's gated to customer demand.

Conor Tierney: Yeah. Maybe I'd just say, look, we've said in the past that we would be very cautious about ramping production, we would make sure that that's gated to customer demand. I think that's an indication that we're confident in the pipeline, we're confident in the opportunities here that are kind of moving further down the funnel. Obviously, we have 25 customers in play here. We announced one commercial win. We think we're on the one-yard line here with a few other customer announcements. We expect to probably getting some news out here in the next few months or so. I think that's what's really driving That ramp in production, we want to make sure that we have our house in order ahead of that.

Speaker #4: So I think that's an indication that we're confident in the pipeline and we're confident in the opportunities here that are kind of moving further down the funnel.

Speaker #4: And obviously, we have 25 customers in play here we announced one commercial win but we think we're on the one-yard line here with a few other customer announcements and we expect to probably be getting some news out here in the next few months or so.

Speaker #4: And so I think that's what's really driving that ramp in production. And we want to make sure that we have our house in order ahead of that.

Speaker #4: Okay. Appreciate that detail. So my next question is another one of your comments about your first contract development or development contract revenues here. And I think you mentioned you expect this to be a continuing theme going forward here.

Richard Shannon: Okay. Appreciate that detail. My next question is another one of your comments about your first contract development or development contract revenues here, I think you mentioned you expect this to be a continuing theme going forward here. Guess I'd love to get a sense of the end market for this particular one. What's the pipeline look for this, how much revenues would this contribute as a percentage, do you think, over the next couple of years as you ramp this up?

Speaker #4: I guess I'd love to get a sense of the end market for this particular one. What's the pipeline look for this and how much revenues would this contribute as a percentage do you think over the next couple of years as you ramp this up?

Matt Fisch: Hey, Conor, why don't you take that one?

Speaker #2: Hey, Conor, why don't you take that one?

Speaker #4: Yeah. Yeah, yeah, yeah. Sure. So look, this customer was in the aerospace and defense sector and it had been a customer that we had been engaged with for quite some time.

Conor Tierney: Yeah. Sure. Look, this customer was in the aerospace and defense sector. It had been a customer that we had been engaged with for quite some time. I think what's important is just to take a step back and really try and understand the value proposition of our product. We talked about software definability and programmability, and a lot of customers initially take the sensor, they run it through their paces. There's lots of things we can do on the software side to optimize it. There are situations where customers may want to change the hardware or configure it in a certain way. A lot of times that's very easy to do just because the way the sensor is designed is very modular. You can make functional enhancements through changing out the optics lens.

Speaker #4: And so I think what's important is just to take a step back and really try and understand the value proposition of our product and we talked about software definability and programmability and a lot of customers initially take the sensor and run it through their paces.

Speaker #4: There's lots of things we can do on the software side to optimize it. But there are situations where customers may want to change the hardware or configure it in a certain way.

Speaker #4: A lot of times that's very easy to do just because the way the sensor is designed is very modular. You can make functional enhancements through changing out the optics lens.

Speaker #4: And so what we're going to see I think here over the next few years is we're probably going to see contract development revenues become a more meaningful number on our P&L.

Conor Tierney: What we're going to see, I think here over the next few years, is we're probably going to see contract development revenues become a more meaningful number on our P&L. That's just by virtue of the fact that we have multiple different ways to generate revenues in that particular discipline. I think one is just through the software configurability piece that we talked to, but also as customers getting more involved in the product. You've got to imagine as well that we have customers coming to us with very sophisticated needs and different use cases and hardware changes at some point will be part of that. That's what we're kind of flagging there. I think it's early in those stages, but we're seeing enough of the signal that indicates that this is going to become a more meaningful number over time.

Speaker #4: And that's just by virtue of the fact that we have multiple different ways to generate revenues. In that particular discipline, I think one is just through the software configurability piece that we talked to, but also as customers getting more involved in the product you've got to imagine as well that we have customers coming to us with very sophisticated needs and different use cases and hardware changes at some point will be part of that.

Speaker #4: And that's what we're kind of flagging there. I think it's early in those stages, but we're seeing enough of the signal that indicates that this is becoming going to become a more meaningful number over time.

Speaker #4: Okay. That would assume that this customer and in the future as you get more of these, this will be a natural source of some volume of sensors over time here I know that A&D customers tend to take their time.

Richard Shannon: Okay. I would assume that this customer, and in the future as you get more of these, this would be a natural source of some volume of sensors over time here. I know that A&D customers tend to take their time going from the sort of work to volume production. Do you see these guys eventually getting to that point at some point in the next, I don't know, few quarters, a couple of years or something like? Just to kind of get a sense of what you're expecting here.

Speaker #4: Going from the sort of work to volume production, but do you see these guys eventually getting to that point at some point in the next I don't know, few quarters, a couple of years or something like just to kind of get a sense of what you're expecting here?

Speaker #3: I do because the customer is putting skin in the game. And when they're paying for engineering work, they're designing you into their solution, right?

Conor Tierney: I do, because the customer's putting skin in the game. When they're paying for engineering work, they're designing you into their solution, right? That could be an unmanned ground vehicle or an unmanned aerial vehicle or something, right? They're putting skin in the game. They're making a bet on our product. They're investing in us. I think obviously it's going to be a combination of development revenue, but also that comes along with product sales as well. Yeah, I think you're thinking about that the right way.

Speaker #3: And that could be an unmanned ground vehicle or an unmanned aerial vehicle or something, right? But they're putting skin in the game they're making a bet on our product they're investing in us.

Speaker #3: And so I think obviously it's going to be a combination of development revenue, but also that comes along with product sales as well. So yeah, I think you're thinking about that the right way.

Speaker #4: Okay. Perfect. My last question, I'll jump out of line here is just kind of looking at your business by end markets here and you pointed out multiple times today about your success in the defense space, which is great to see here.

Richard Shannon: Okay, perfect. My last question, I'll jump out of line here, is just kind of looking at your business by end markets here. You've pointed out multiple times today about your success in the defense space, which is great to see here. I would assume this is your biggest market, I'd actually love to talk and ask a longer form question to Matt here in the auto space here about the kind of the RFI, RFQ process with ones you've already been in and any future ones you're seeing here coming forward, particularly as I think you called out level 3, level 4 programs. Thank you.

Speaker #4: I would assume this is your biggest market, but I'd actually love to talk and ask a longer-form question to Matt here in the auto space here about the kind of the RFI, RFQ process with ones you've already been in and any future ones you're seeing here coming forward, particularly as I think you called out level three, level four programs.

Speaker #4: Thank you.

Speaker #2: Yeah, great. I think it's a great call out, Richard. Defense is certainly making up I can say a majority of our pipeline and certainly most all the growth that's happened over the last quarter but automotive and trucking remains incredibly active.

Matt Fisch: Yeah, great. I think it's a great call-out, Richard. Defense is certainly making up, I can say, a majority of our pipeline. Certainly most all the growth that's happened over the last quarter. Automotive and trucking remains incredibly active. In fact, we had a new evaluation start on that over the quarter even from last time around. We've had an RFQ come in. I would say it's been steady and the automotive programs take a lot longer time to process. We talked about months for some of these other markets. The automotive guys, since they are ramping volumes that require a substantial financial commitment, their evaluation period is quite a bit longer. Everything we've started this year continues at this point. We've seen a new one come in this quarter. Steady as she goes.

Speaker #2: In fact, we had a new evaluation start on that over the quarter, even from last time around. And we've had an RFQ come in.

Speaker #2: So, I would say it's been steady, and the automotive programs take a lot longer time to process. So, we talked about months for some of these other markets, but the automotive guys, since they are ramping volumes that require a substantial financial commitment, their evaluation period is quite a bit longer.

Speaker #2: So everything we've started this year continues. At this point, we've seen a new one come in this quarter. So steady as she goes. So I mean, I think that's the way I'd say it.

Matt Fisch: I think that's the way I'd say it's good to see a new name come into the picture since we had the last call. It does take time. It's a long process, and the process continues.

Speaker #2: And it's good to see a new name come into the picture since we had the last call. But it does take time. It's a long process and the process continues.

Speaker #4: All right. Understood. Thanks for all the detail. I will jump off the line, guys. Thank you.

Richard Shannon: All right. Understood. Thanks for all the detail. I will jump off the line, guys. Thank you.

Speaker #3: Thanks, Richard.

Matt Fisch: Thanks, Richard.

Speaker #1: Again, if you would like to ask a question, just press star followed by the number one on your telephone keypad. And our next question comes from the line of both rap with Alliance Global Partners.

Operator: Again, if you would like to ask a question, just press star, followed by the number one on your telephone keypad. Our next question comes from the line of Brian Frueh with Alliance Global Partners. Bo, please go ahead.

Speaker #1: Bo, please go ahead.

Brian Frueh: Hi, good afternoon, Matt, good afternoon, Conor. Can you expand a little bit more on the benefits of your technology that not only attracts customers but also retains them?

Speaker #5: Hi, good afternoon, Matt. Good afternoon, Conor. Can you expand a little bit more on the benefits of your technology that not only attracts customers, but also retains them?

Speaker #4: Yeah, thank you. I'll take that one. And good to hear your voice again there, folks. Look, there's a very different thing we're seeing that are getting folks in the door.

Matt Fisch: Yeah. Thank you. I'll take that one, and good to hear your voice again there, Brian. Look, there's a very distinct thing we're seeing that are getting folks in the door, and that's the, we'll call it the 1-kilometer sensing range headline. What customers understand is that this kilometer, it's a statement about how much budget they get to spend on performance. Conor alluded to this in the script about the market shifting towards meeting their use cases rather than trying to conform to a sensor use case. The good news, that when we talk about a kilometer, it's a budget. It's a really big budget that the customer gets to spend, and they get to spread it across different technical vectors: detection range, how far they can see, what's the frame rate, what's the resolution, so on and so forth. We give that flexibility through the software client piece.

Speaker #4: And that's the we'll call it the one kilometer sensing range headline. What customers understand is that this kilometer it's a statement about how much budget they get to spend on performance.

Speaker #4: Conor alluded to this in the script—the market is shifting towards meeting their use cases rather than trying to conform to a sensor use case.

Speaker #4: The good news, when we talk about a kilometer, it's a budget. It's a really big budget. That the customer gets to spend and they get to spread it across different technical vectors, detection, range, how far they can see, what's the frame rates, what's the resolution, so on and so forth.

Speaker #4: We give that flexibility through the software client piece. And this was really essential in our collaboration with Alive 3D. They had a use case that stressed a particular portion of performance that we're working with them could spend that budget if you will and really push it towards their very unique and very special use case.

Matt Fisch: This was really essential in our collaboration with Alive3D. They had a use case that stressed a particular portion of performance that we're working with them could spend that budget, if you will, and really push it towards their very unique and very special use case. By the way, there was some fierce competition with other larger players in this space. Because we were able to reallocate that performance in a very unique way, nobody else can do that, as far as we know. That's why we won that project with them, plain and simple. As the world begins to understand Physical AI, the flexibility, we believe, is key to helping them move forward. We don't know all the use cases. We didn't know all the use cases 2 years ago.

Speaker #4: By the way, there are some fierce competition with other large players in this space. And because we were able to reallocate that performance in a very unique way, nobody else can do that as far as we know.

Speaker #4: And that's why we won that project with them playing it simple and so as world begins to understand physical AI, the flexibility we believe is key.

Speaker #4: To helping them move forward because we don't know all the use cases. We didn't know all the use cases two years ago, but we knew that we're going to see things that we didn't think of in advance.

Matt Fisch: We knew that we're going to see things that we didn't think of in advance, and sports analytics is one of those topics. The fact that we're so flexible, we were able to make the sensor meet the customer's use case instead of the other way around, where the customer has to confine their use case to what the sensor can do. That's just one data point, and I'm confident that we'll see other cases like this, a growing number in the H2 of the year where our flexibility and able to allocate that very generous performance budget is going to win us additional deals. Yeah, it's very exciting.

Speaker #4: And sports analytics is one of those topics, and the fact that we're so flexible—we were able to make the sensor meet the customer's use case.

Speaker #4: Instead of the other way around, where the customer has to confine their use case to what the sensor can do. And that's just one data point.

Speaker #4: And I'm confident that we'll see other cases like this a growing number in the back half of the year where our flexibility and able to allocate that very generous performance budget is going to win us additional deals.

Speaker #4: And yeah, it's very exciting.

Speaker #5: That's great. Can you give a little more color about the interest you're seeing in the defense sector? And maybe, are you also seeing a broadening of use cases there?

Brian Frueh: That's great. Can you give a little more color about the interest you're seeing in the defense sector? Maybe just are you also seeing a broadening of use cases there?

Speaker #4: Yes, absolutely. So just to kind of slide back over what we talked about in the script. So number one, I think Richard touched on this a little bit.

Matt Fisch: Just to kind of fly back over what we talked about in the script. Number one, I think Richard touched on this a little bit. It's our largest source of income at this point, our most popular segment, and not only that, but the one that grew the biggest quarter on quarter. What we had been very deeply focused on, I would say over the last quarter, was unmanned aerial vehicle, even manned aerial vehicles. We talked about collision avoidance cases like power line detection. Very important topic is unmanned vehicles, and even manned vehicles like helicopters continue to expand safety needs and autonomy needs. Then similarly on unmanned ground vehicles. Think about it as a subset of what's happening in the robotaxi space. Our LiDAR has some very unique characteristics there.

Speaker #4: It's our largest source of income at this point—our most popular segment. Not only that, but it’s also the one that grew the most, quarter on quarter.

Speaker #4: What we had been very deeply focused on, I would say over the last quarter was unmanned aerial vehicle, even manned area aerial vehicles. We talked about collision avoidance cases like powerline detection.

Speaker #4: Very important topic is unmanned vehicles and even manned vehicles like helicopters. Continue to expand safety needs and autonomy needs. And then similarly, unmanned ground vehicles.

Speaker #4: Think about it as a subset of what's happening in the robotaxi space. Our lighter has some very unique characteristics there. For example, doing a great job at just one example, doing a great job at seeing a chain link fence.

Matt Fisch: For example, doing a great job at, just one example, doing a great job at seeing a chain link fence. Chain link fence is very difficult problem for many sensors. You can imagine military vehicles navigate in very rugged territory. We do a great job there, and that's just one example of where our sensor's capability has attracted both the UGV, unmanned ground vehicle, sector of defense. However, Q2 has been a very large influx of counter UAS, which in plain English, it's counter drone detection. Certainly, and unfortunately, there's a lot of conflict in the world. Drones are becoming a huge factor in that conflict, and LiDAR has some very unique capabilities to bring to the table in that area. It's become very busy in the counter UAS space over the last quarter. By the way, defense demands performance.

Speaker #4: Chain link fence is very difficult problem for many sensors. And you can imagine military vehicle navigate in very rugged territory. We do a great job there.

Speaker #4: And that's just one example for a sensor's capability has attracted part of the UGV unmanned ground vehicle sector defense. However, Q2 has been a very large influx of counter UAS, which is in plain English, it's counter drone.

Speaker #4: Detection is certainly important, and unfortunately, there's a lot of conflict in the world, but drones are becoming a huge factor in that conflict. LiDAR has some very unique capabilities to bring to the table in that area.

Speaker #4: And it's become very busy. In the counter UAS space over the last quarter. And by the way, defense demands performance. It's a fabulous fit for the capabilities of it.

Matt Fisch: It's a fabulous fit for the capabilities of a vector.

Brian Frueh: Great. Thanks for taking my question. Sorry.

Speaker #5: Great. Thanks for taking my question. Sorry.

Speaker #3: Yeah, I was just going to say one thing to what Matt said. We may initially engage with a customer about one particular use case.

Conor Tierney: Yeah, I was just going to say one thing just to add to what Matt said. We may initially engage with a customer about one particular use case, and a lot of times that may lead to opportunities elsewhere. Initially, we may engage based on unmanned ground vehicles. Then as we start to move forward, and they realize the capabilities of the sensor itself, that leads to some other opportunities. We've seen other opportunities expand more broadly into UAV counter-threat detection, as Matt mentioned. I think that's good that initially we start very narrow, and we can go broad. It's a sign that the customer is engaged and excited about the technology.

Speaker #3: And a lot of times that may lead to opportunities elsewhere. So initially we may engage based on unmanned ground vehicles. And then as we start to move forward, and they realize the capabilities of the sensor itself, that leads to some other opportunities.

Speaker #3: And we've seen other opportunities expand more broadly into UAV, counter threat detection as Matt mentioned. So I think that's good that initially we start very narrow and we can go broad and it's a sign that the customer is engaged and excited about the technology.

Speaker #1: There's no further question at this time. I will now turn the call back over to Matt Fish for closing remarks. Matt.

Operator: There is no further question at this time. I will now turn the call back over to Matt Fisch for closing remarks. Matt?

Speaker #4: Hey, great. Thank you. Thanks to everybody for joining the call today. We appreciate the great questions and the dialogue that we've had here. And I'm really excited about what's around the corner in the back half of the year.

Matt Fisch: Hey, great. Thank you. Thanks to everybody for joining the call today. We appreciate the great questions and the dialogue that we've had here. Really excited about what's around the corner in the H2 of the year. We look forward to coming back towards the end of Q3, early Q4, and updating you on our progress. Thank you, and have a great day.

Speaker #4: We look forward to coming back towards the end of Q3, early Q4 and updating you on our progress. Thank you and have a great day.

Operator: This concludes today's call. You may now disconnect.

Q2 2026 Aeye Inc Earnings Call

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