Luminar Technologies Q2 2024 Earnings Report

Luminar Technologies EPS Results

• Actual EPS: -$2.70
• Consensus EPS: -$3.30
• Beat/Miss: Beat by +$0.60
• One Year Ago EPS: -$5.55

Luminar Technologies Revenue Results

• Actual Revenue: $16.50 million
• Expected Revenue: $20.36 million
• Beat/Miss: Missed by -$3.86 million
• YoY Revenue Growth: +1.90%

Luminar Technologies Announcement Details

• Quarter: Q2 2024
• Date: 8/6/2024
• Time: After Market Closes
• Conference Call Date: Tuesday, August 6, 2024
• Conference Call Time: 5:00PM ET

Luminar Technologies (NASDAQ:LAZR) is a technology company focused on developing advanced sensor and perception solutions for the automotive market. The company designs and manufactures proprietary LiDAR hardware paired with machine perception software to enable advanced driver assistance systems (ADAS) and future autonomous driving applications. Luminar’s platform is engineered to deliver long-range, high-resolution 3D mapping capabilities that help vehicles detect and react to obstacles and road conditions in real time.

Founded in 2012 by CEO Austin Russell, Luminar began as a research effort to overcome the limitations of existing LiDAR systems, such as cost, range and resolution. Headquartered in Palo Alto, California, the company went public in December 2020 via a special purpose acquisition company (SPAC) transaction. Since then, Luminar has expanded its engineering and manufacturing operations, with additional facilities in the United States and Europe to support growing demand.

Luminar’s product lineup includes the Iris LiDAR sensor, which offers a compact form factor suitable for series production, as well as supporting software modules that interpret raw point-cloud data for obstacle detection, classification and tracking. The Iris sensor is complemented by a suite of software tools that automotive OEMs and tier-one suppliers can integrate directly into their vehicle platforms for functions such as highway pilot, automated emergency braking and self-parking features.

The company collaborates with leading automakers and suppliers across North America, Europe and Asia, supplying both prototype systems and production-ready components. Under the leadership of Austin Russell and a management team drawn from automotive and semiconductor industries, Luminar continues to advance its roadmap toward scalable, mass-market deployment of LiDAR-enabled safety and autonomy solutions.

Luminar Technologies Q2 2024 Earnings Call Transcript

Key Takeaways

• Restructured debt and raised non-dilutive capital by exchanging $422 M of notes for $274 M maturing in 2030 and securing $100 M of new debt, extending runway to late 2026.
• Aggressive cost cuts include a 20% workforce reduction, outsourcing industrialization, and unifying the Iris product family to capture $80 M in annualized savings by year-end.
• Volvo ramp delay drove Q2 revenue of $16.5 M (down 22% sequentially) and pushed the mid-$30 M quarterly run-rate target into 2025 due to moderated production schedules.
• Sentinel software rollout shipped its first AI-powered LiDAR kits in Q2, with major automaker deployments expected before year-end to boost ADAS and autonomy performance.
• Halo next-gen LiDAR sampling is underway, with dimensionally reduced, lower-cost units slated for automaker evaluation by year-end to drive future volume growth.

Presentation

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Welcome everyone to Luminar's Second Quarter of 2024 Business Update Call. My name is Aileen Smith, and I'm Luminar's Head of Investor Relations. With me today are Austin Russell, Luminar's Founder and Chief Executive Officer, and Tom Fennimore, our Chief Financial Officer. As a quick reminder, this call is being recorded, and you can find the press release and presentation that accompanied this call at investors.luminartech.com. In the interest of providing the most informative experience for our stakeholders, we're making the following changes to our reporting and discussion this quarter. In a moment, you'll hear some remarks from Austin, focused on providing our shareholders an update of our vision and strategy, what differentiates us from others, as well as our progress over the past few years and this past quarter.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

This will be followed by remarks from Tom, focused on our recent capital structure actions, quarterly financials, and financial outlook. Following these remarks, we will open up the call to Q&A. Our Q&A session will primarily consist of questions from the institutional analyst community. To ensure we're addressing as many as possible, we would ask the analysts limit their questions to one, with one follow-up. Before we begin the prepared remarks and Q&A, let me remind everyone that during the call, we may refer to GAAP and non-GAAP financial measures. Today's discussion also includes 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, risk factors that could cause actual results to differ materially.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

With that, I'd like to introduce Luminar's Founder and CEO, Austin Russell.

[Austin Russell, CEO at Luminar Technologies]

All right. Hey, guys, can you hear me okay?

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

All good, Austin.

[Austin Russell, CEO at Luminar Technologies]

Awesome. Well, thanks, everyone, for joining our Q2 Business Update Conference Call. So, today we're actually in Boston at our newest office for a specialized chip subsidiary, Luminar Semiconductor Inc., which is just 10 minutes down the road from our current receiver, R&D, and fab location we've owned since 2021. So, we shared this news a little bit last week regarding the acquisition of EM4. A bit of a small one, but we've since integrated the business and, you know, we've helped grow our semiconductor business overall to break even status on our overall path to profitability. But, that's not what we're here to talk about today.

[Austin Russell, CEO at Luminar Technologies]

Today, we've signed a definitive deal with our bond investors for Luminar to be able to reduce and restructure our outstanding debt, exchanging around $422 million in notes for $274 million and pushing out their maturity from 2026 to 2030. We've heard feedback and know how important this debt topic was for some investors to de-risk the business so we can realize our full upside, and this is our solution. Additionally, the investors agreed to provide Luminar with $100 million of new non-dilutive debt capital. Combined, this gives us the resources and runway to be able to execute and the opportunity to realize our full potential.

[Austin Russell, CEO at Luminar Technologies]

It's a huge vote of confidence that Luminar is not only here to stay as a cornerstone of our industry, but that we can thrive throughout the decade, and we'll let Tom provide more details on the deal in his remarks. So for today, we're gonna try something a little bit different. I've heard a lot of questions, you know, around the fundamentals of Luminar, and that people could use a reminder as to why we're all here and kind of going back to basics. So I'd like to take a few moments to talk through some of the industry dynamics and the thesis of Luminar, including some specifics on our business, technology, and what makes us so unique and best positioned to be able to capitalize on this new era of assisted and autonomous driving.

[Austin Russell, CEO at Luminar Technologies]

Going back to basics may normally be out of character for myself, but I think it's important that we level set as to where Luminar and the broader industry is currently at. So to kick it off, I'd first like to say that it's an incredibly exciting time here at Luminar, and we are at the forefront of this new era of safety and autonomy for drivers around the world being ushered in. Over the course of the past decade, the opportunity around the autonomous vehicle industry has led nearly every major technology company and automaker flocking, you know, to this industry. Autonomous driving is one of, if not, the most significant applications of AI into the real world to be able to enact positive change.

[Austin Russell, CEO at Luminar Technologies]

With that said, of course, realizing the benefits of autonomy has been one of the greatest technical challenges mankind has faced since the U.S. delivered on the Apollo space program in 1969. Best analogy I could think of. So realizing the full potential required radical innovations in many areas, ranging from LiDAR to AI, to become a reality. So we can separate this challenge into the different levels of autonomy and two distinct trends emerge. One is enhancing drivers and the other is replacing drivers. So while most autonomous vehicle companies have generally been focused around replacing drivers, Luminar's thesis and corresponding products and technology have always been focused around enhancing drivers through autonomous and safety features on existing production vehicles, rather than going all out for driverless robotaxis. You probably know about the different levels of autonomy, but as a refresher, we'll briefly cover them.

[Austin Russell, CEO at Luminar Technologies]

Level zero through two is what the majority of automakers are shipping today as assisted driving features. This includes both basic active safety features, like automatic emergency braking, all the way to lane keep assist features. At these levels, the driver must remain attentive at all times and is ultimately responsible for driving the vehicle. This is generally enabled by existing camera and radar technologies that have become widely standardized by the industry over the course of the past decade. There's a strong desire for automakers to begin to realize some of the benefits of autonomy before the higher levels become widespread and establish the next generation of assisted driving technologies, which is where LiDAR comes into play. This is a fundamental driver behind many of the existing partnerships, as well as automaker dialogues we're having.

[Austin Russell, CEO at Luminar Technologies]

Car companies recognize that consumers are asking for the most advanced safety and technology features, while regulators at the same time at NHTSA have recently announced a mandate for all new vehicles sold, at least in the U.S., to begin meeting these dramatically heightened safety standards starting in 2029. In automotive years, by the way, that's basically right around the corner. And we've successfully demonstrated how we're uniquely able to meet these new requirements at speed and at night, and are not aware of any other technology that has been able to demonstrate these capabilities. Our claims are supported by third-party studies, including one from Swiss Re, the world's largest secondary insurer, that we presented at Luminar Day. As a reminder, you know, LiDAR is able to uniquely measure the exact distance to objects in 3D using laser pulses between the sensor and the object of the road.

[Austin Russell, CEO at Luminar Technologies]

In our case, we're able to do this millions of times every second. Knowing these exact distances to objects is what makes LiDAR so special as compared to legacy camera-based technologies, which effectively have to guess where objects are in 3D by extrapolating it from 2D images. Sometimes cameras are right, and sometimes they're wrong. And when it comes to a safety-critical application, that's why, you know, when you're using camera-based technologies for L2 applications or in that range, the driver has to always be paying constant attention, ready to take over at any given moment. From an active safety standpoint, it's also part of the reason why we still lose over a million lives every year to vehicle accidents at a global scale, which camera and radars alone have not been able to prevent.

[Austin Russell, CEO at Luminar Technologies]

The enhancements of LiDAR also become even more apparent at night, since the LiDAR image looks exactly the same in all kinds of conditions. The camera-based technologies experience significant performance degradation at night and in other kinds of inclement weather conditions. So moving on from the basics of LiDAR and more fundamental assisted driving features, the next phase of evolution in the industry is to begin to introduce Level 3 autonomous driving features. While LiDAR is something that can enhance Level zero through two, it's widely understood by virtually all industry experts and automakers that long-range LiDAR is a fundamental requirement for operating autonomously, where the driver is no longer in control and responsible for the instantaneous supervision of the vehicle, at least in constrained scenarios.

[Austin Russell, CEO at Luminar Technologies]

This leaves little to no room for error, and hence why we agree that, and why most industry experts agree that there's effectively a one-to-one correlation between Level Three equipped vehicles and LiDAR shipments. We believe the widespread adoption of Level Three is inevitable, but also much more achievable in the nearer term compared to Level Four and Five, which are generally focused around robotaxis. We can talk a little bit more about if people have questions in the Q&A. While there have been sparse deployments of Level Three systems to date with lower performance LiDAR, they have all operated at both low speed and in highly constrained operating domains. Our customers in the broader industry generally agrees with us that the real boom, you know, for these kinds of Level Three systems comes as they're able to perform full-speed highway driving without requiring the humans to constantly intervene.

[Austin Russell, CEO at Luminar Technologies]

This is how the driver can ultimately save time, you know, and whether it's, you know, using your phone, work on your laptop, taking a nap, you know, to be able to recover that time during your drive is something that is a target of the level of feature that people want to get to. And when you're at high speed, this is where the importance of our long-range capabilities come into play. In a few moments, I'll touch on why this is important for us and also what makes Luminar truly different. So overall, this trend has already started with some of the higher-end automakers who have upgraded our low-range LiDARs to our technology for higher speed Level Three driving as an application.

[Austin Russell, CEO at Luminar Technologies]

And then, of course, it's also the same hardware that we have that can enhance the ADAS capabilities for the Level 0 through 2 application. As we get to 2030 and beyond, we expect Level 3 to become mainstream by nearly all automakers and will ultimately begin to be standardized. It's nevertheless important to note that adoption cycles in the automotive industry take time. From seat belts to airbags to camera to radar, it's historically been around 2 decades from the first time of introduction to when they ultimately became standardized throughout the broader industry. In this case, we believe all signs point to the LiDAR adoption cycle being substantially faster and generally looking forward to being introduced even more widely on next-generation automaker platforms, the ones that we've already discussed, as well as ones that we'll have in the future.

[Austin Russell, CEO at Luminar Technologies]

So when it comes to the accelerating market and ultimate inevitability, the big question turns to: Why Luminar? You know, what's our special sauce, so to say. And of course, there are many differentiators here across the board, including the fact that we have a uniquely vertically integrated strategy from the chip level up through the LiDAR, through software. But first, let's talk about the thing that makes our LiDAR so unique. The technology starts with a special wavelength of light that we use at 1550 nanometers versus the industry standard, 905 nanometers. One of the most fundamental limitations of lasers is eye safety, both in regulation and in practice, which is the limiting factor on how much power can be put out from a LiDAR's laser and correspondingly, the performance.

[Austin Russell, CEO at Luminar Technologies]

We operate at a much longer wavelength than others in the industry, which enables us to put up to 17 times the average energy into the environment. Because we use this 1550-nanometer wavelength that's safe for the human eye, the increased pulse energy delivered translates directly to a dramatically better performance at longer range for the 3D point cloud sort of picture, you could call it, of the environment. This is required for cars to be able to operate safely in higher speed Level 3 autonomy mode, as well as enable reliable, high-speed active safety features.

[Austin Russell, CEO at Luminar Technologies]

Specifically, and because of our technology stack, we're able to see and even detect some of the hardest-to-see objects at distances past 250 meters in all ambient light conditions, and our performance is able to be maintained even when looking for hard-to-see dark objects, such as a spare tire on the road at night. Our maximum range can even be extended out to as much as 600 meters. This stands in stark contrast to our competitors' technologies, which generally can only reliably see objects required for safe driving at distances up to 100 meters. While these shorter perception distances are suitable for low-speed autonomous driving applications, it's insufficient to safely maneuver at highway speeds, and 100 meters is only a couple seconds ahead at those speeds, which is not nearly enough time to be able to come to a safe stop.

[Austin Russell, CEO at Luminar Technologies]

We're able to reliably see a full 7.5 seconds ahead down the road, which is enough time to be able to come to a safe stop in nearly any kind of view. The performance can also directly translate to lives saved, and the majority of accident fatalities actually occur at speed, making it all the more important. Getting to this stage in technology advantage was anything but easy, but nevertheless begs the question of: why hasn't everyone followed in the footsteps over the years? I think it's well understood that, you know, the performance advantages of 1,550 nanometers versus 905 nanometers, but the simple answer is that 905 nanometer components have generally been available off the shelf from commodity suppliers, which has enabled the least path of resistance and the lowest initial R&D investment to develop a LiDAR.

[Austin Russell, CEO at Luminar Technologies]

In contrast, Luminar uniquely developed our 1550 nanometer technology from the chip level up, where we had to create multiple fundamental innovations to make 1550 nanometers possible from both a technical, supply chain, and economic perspective. This is where some of the magic happens of having a truly integrated ecosystem with semiconductor and software capabilities that come into play, which further deepens our competitive moat. In aggregate, we've invested roughly $1.8 billion over the years to develop this unique technology platform and now have the opportunity to ride that investment curve off of its coattails. I'd like to dig into each of these factors, starting first with the semiconductor. Luminar has been developing its own semiconductor technologies to act as the core technology engine of our LiDAR for the better part of a decade.

[Austin Russell, CEO at Luminar Technologies]

Whereas 905-nanometer lasers require normal silicon photoreceivers to detect the light, 1550, on the other hand, requires some custom specialized indium gallium arsenide materials to be able to operate. Given how specialized InGaAs development is, or the indium gallium arsenide, and the fabrication expertise is, it was imperative for us to be able to find the relevant teams and companies that could design to our specification, fab the components, and in these cases, some of them are the only ones in the world that know how to do it to meet the required specifications for what we need.

[Austin Russell, CEO at Luminar Technologies]

Over time, we started vertically integrating and consolidating some of these specialized companies that we were working with, starting with Black Forest Engineering, with the central processing ASIC in 2017, OptoGration with the indium gallium arsenide receiver chip in 2021, and Freedom Photonics for the laser chip in 2022. This ultimately formed the foundation for Luminar Semiconductor, Inc. And of course, with the recent addition of the chip packaging operation, we're here right now is LSI's latest addition, which continues the vertical integration trend. As a result, our product development and architecture approach drives a structural technology advantage with a chip level up. Whereas our competitors are essentially built off-the-shelf LiDARs that have inherent performance limitations, and in doing this, we've also ensured the technological sustainability of our moat by vertically integrating all these components.

[Austin Russell, CEO at Luminar Technologies]

As a further proof point to some of our foundational technology breakthroughs, we've actually been quite successful in capitalizing on the IP and technology we've developed for our LiDAR, even for other customers and applications with their semiconductors as well. Luminar Semiconductor, Inc., which is what I was calling LSI, now has over 100 unique customers, including top technology companies, defense contractors, aerospace businesses, among others. You know, with our chip technologies live everywhere from satellites to GPUs right now. As a result of this success, we've now achieved an estimated external lifetime commercial program value in the nine figures from our internal forecast and break-even status on the business. This is a first major step in our path to profitability, with the next major milestone being at the LiDAR level as we ramp up series production over the coming quarters with Volvo.

[Austin Russell, CEO at Luminar Technologies]

Zooming back out, I'd like to talk also about software for a moment. So on the software and AI front, we think it's clearer than ever that the artificial intelligence capabilities are there to be able to help unlock the next levels of autonomy. And with AI, it's really all about the data and the quality of data. So for each of our dozens of customer deployments of LiDAR, it's generally paired with a matching software and AI system that is trained on Luminar's 3D data. AI models developed on our LiDAR are a big leap forward compared to traditional models that are powered from 2D data, because it's true ground truth 3D data, so it's eliminating the guesswork as to where the objects are and achieves an accurate, true-to-life model.

[Austin Russell, CEO at Luminar Technologies]

So at an industry level, some of the most advanced vehicle OEMs do have their own extensive software deployments, but attracting the best software talent to traditional automakers can be quite difficult, and most automakers do not have an in-house solution in development to achieve the advanced software capabilities and higher levels of autonomy. So we predicted this would be the case quite early on in Luminar, and in 2017, I kickstarted our AI and software initiative centered around the required LiDAR-related software in order to help assist automakers in their developments. Our software technologies have been primarily developed in our Silicon Valley offices, as well as Munich, Germany, and we work closely with our Silicon Valley technology development partners, software development partners, ranging from Scale AI to Applied Intuition.

[Austin Russell, CEO at Luminar Technologies]

So our work with a few of the more technologically advanced automakers had started earlier on, including companies like Volvo, Mercedes, and Nissan with some software, although they do much of their software in-house, being some of the leading players. That said, again, the vast majority of the automakers in the industry don't have a viable solution and prefer the fast follower approach, as they've done in other kinds of advanced technology adoption cycles. So this embedded software capability for Luminar not only helps expand our addressable market by, from a lidar standpoint, you know, content value and margins per vehicle, but also importantly enables our lidar to be able to reach the majority of the automotive market that otherwise wouldn't be possible without software. It also further expands the stickiness of our product and more.

[Austin Russell, CEO at Luminar Technologies]

We've really seen and developed fantastic partnerships over the years with top ecosystem companies, ranging from NVIDIA to Mobileye, which allows us to collectively advance this industry as a whole. These software capabilities make Luminar unique in this respect, and I'm proud to say that after five years of development, we recently launched our Sentinel software suite, shipping the first kit in Q2. We expect the initial shipments to major automakers to begin shortly and to be in their hands before year-end. In recent history, we've also seen an increased demand for direct engineering collaborations with automakers, as well as RFQs for software capabilities from us. Our software and ecosystem strategy is not too dissimilar from the strategy that Apple had in the early days and what Steve Jobs' plan was for the initial iPhone launch.

[Austin Russell, CEO at Luminar Technologies]

You know, it was all about getting the disruptive products to market at a global scale, and in the subsequent years, building out the ecosystem around them. You know, and the first product didn't even come, as you remember, with the first iPhone, you know, with an app store. But importantly, as consumers increasingly realized the value that it was able to deliver with both software and hardware enhancements working in tandem, it ultimately kicked off one of the greatest technology revolutions of the century. And really, we've taken a similar approach, and I truly believe that with the Volvo launch, for our industry, this is truly the iPhone moment. You know, as the technology becomes widespread on a global basis for the first time and kicks off a plethora of subsequent vehicle launches for us over the course of the next 24 months.

[Austin Russell, CEO at Luminar Technologies]

Now, with all of these tailwinds, technology advantages, and industry success, you can see why we continue to be so excited here at Luminar. But nevertheless, I think it's important to take a step back and recognize, despite this positive outlook for LiDAR being arguably greater than ever over the long term, as it evolves to become a more foundational part of the broader automotive technology industry. In the near term, there are headwinds where automakers have faced timing and production ramp challenges for some new platforms. While this is not related to Luminar or LiDAR specifically, it's widely understood that new automotive platforms, the industry, which would be used to introduce new kinds of technologies like this, have generally been shifted out by around 1 year-2 years.

[Austin Russell, CEO at Luminar Technologies]

The reality is that these new vehicle platforms are incredibly complex from a supply chain, software, and engineering standpoint, and require more time than some of the automakers were originally targeting to begin with, and to ramp and deliver at scale. We've seen the effects of some of these delays across the industry, and the downstream implication for Luminar has not been unique. The most important prominent, or the most prominent example of this is in the EV space, but it's also very important to note that when it comes to Luminar's technology, we are agnostic to the underlying powertrain in the car. While people oftentimes try to bucket these technologies together, whether LiDAR and EVs, there's actually no underlying technical correlation. In fact, the majority of new vehicle platforms Luminar has planned into actually offer combustion engine vehicle variants.

[Austin Russell, CEO at Luminar Technologies]

In light of this, our focus has become not just in the long term, but also in the near term, and we've taken two major actions and directions as a result. On the operational side, one on the operational side and the other is on the finance and balance sheet side. So from an operational standpoint, start off with the first one, the focus was to start increasing the efficiency of our OpEx overhead now that we've already made the required technology investments and achieved the series production launch that we've all were waiting for, for years, and excited to succeed with that. And in, as part of that, we were moving towards an outsourced model towards certain parts of our business for partners who were willing to dedicate the appropriate resources, an action we took last quarter and included a reduction in our internal workforce by around 20%.

[Austin Russell, CEO at Luminar Technologies]

Additionally, we are actively tackling variable cost and fixed COGS overhead in order to ensure that we can maximize our success as we ramp and the volume starts to really matter post-SOP. The next step in streamlining, and I say the next step beyond that is also streamlining our product development processes, among other things that we'll do in over the course of the coming quarters. One major action that we took this quarter to save tens of billions of dollars, as an example of this, on product development costs, is to better unify the Iris product family by increasing the percentage of shared components from a technical and supply chain standpoint between products and customers. This is reflected in a one-time charge in our financials that has some downstream non-cash accounting implications for the quarter that Tom will discuss in more detail.

[Austin Russell, CEO at Luminar Technologies]

We'll look to continue advancing our operational efficiencies as we achieve economies of scale over the coming quarters and bring down both overhead and variable costs, making it easier to ultimately achieve profitability on our journey. So critically, today, I'm proud to say that we've been directly tackling the second topic as it relates to the balance sheet. As I mentioned at the beginning of the call, today, we signed a definitive agreement with a consortium of these bond investors to restructure the debt, provide new capital, and push out the maturity of these bonds for 2026 to 2030. Importantly, this gives us the sufficient freedom to operate and thrive in a world we described earlier as being characterized by 1- to 2-year delays in the ramp of new automotive production platforms and programs.

[Austin Russell, CEO at Luminar Technologies]

While this is a major step and vote of confidence that enables us to responsibly invest and grow, it is not the last step that we will take to support our capital structure. Importantly, Tom can get into a few more details on the details of the deal and the capital structure in his section. I'd like to round out my comments with a few updates on some of our extensive industry partnerships as well, and some new developments ahead. Closing the loop on Volvo, as you know, they began their start of production this past quarter for their new platform and the flagship EX90, following our previous announcement at Luminar Day that we had started our series production, our SOP for them.

[Austin Russell, CEO at Luminar Technologies]

We've since successfully ramped up production to meet all key Volvo deliverables, and we're looking forward to seeing them continue to scale. In their last earnings call, they provided some commentary that the initial ramp will be a little more moderated than their initial target, but nevertheless, is still growing exponentially. We expect to ship more sensors in the second half of this year than in all of our prior years as a public company combined. As noted in commentary, series production ASPs are a bit lower than our sample ASPs. So with that moderated ramp, as would be expected, it will really take until next year when you start seriously seeing the big step up in revenue from this ramp. So as we scale, we've already started to see some of the benefits, that said, of the economies of scale and the production deployment.

[Austin Russell, CEO at Luminar Technologies]

Imminently, you'll start to see our technology on the road in a more widespread capacity for the first time at a global scale, which is driving a virtuous cycle for us across multiple domains. As we scale up, you know, we've been realizing substantially higher yields, lower supply chain costs, improved overhead absorption, and of course, the marketing benefit that comes when Luminar gets exposure to consumers for the first time, as they'll see our technology prominently featured on the EX90's roofline across the globe. We're proud to be enabling this first global production consumer vehicle with LiDAR and as standard on all vehicles, and are looking forward to an additional upcoming SOP in China by year-end, which will further drive vehicle volumes for them and product sales for us.

[Austin Russell, CEO at Luminar Technologies]

So moving on to Mercedes, we're moving full speed ahead and recently have made some improvements into our product roadmap. As I mentioned, we'll be unifying our Iris platform with a greater percentage of components and content value shared, which we should expect to substantially reduce development costs and the time frame for bringing these programs online. So we're excited about what the future holds for the partnership and look forward to updating you further as we achieve further milestones ahead. Our partnership with Polestar also continues to progress well, and they remain on track to launch their first vehicle with our LiDAR, the Polestar 3, next year, and have additional models slated to incorporate Luminar technology for release after that.

[Austin Russell, CEO at Luminar Technologies]

Excited, just got a note of being able to do a test drive to go check it out, so excited to be able to do that also soon, next month. So with Nissan, we've also recently completed the most recent phase of our technical collaboration and are scoping out the next phase of our work together. They've continued to impress me with their assisted and autonomous driving team's capabilities, and I'm as excited as ever about their vision to standardize this, the technology across all vehicles they produce to realize the benefits of improved safety and autonomy. Meanwhile, our partnerships with companies like NVIDIA and Mobileye continue to be as strong as ever as we make forward movement in our joint systems development.

[Austin Russell, CEO at Luminar Technologies]

These ecosystem partnerships and collaborations are highly complementary and will drive further acceleration of our long-term success as we design new vehicle platforms together and win together. As it relates to other automakers, it's meaningful to note that the majority of them already have long-range LiDAR as a requirement planned into the roadmaps. Keep in mind, the vehicle program cycles can last as long as a decade, so this is not like the consumer industry or smartphones, where new technologies are introduced every year. You know, these vehicle platforms and the automotive technologies and certification that goes into it is highly complex. People's lives are at stake in this industry, so it moves at a very deliberate pace. Very high barrier to entry, but also very high barrier to exit.

[Austin Russell, CEO at Luminar Technologies]

So we're actively engaged with these various automakers and the majority of major automakers at this stage, and we look forward to updating with more specifics on new customer awards into the future. Before I close out my comments, I'd also like to add that we're making great progress on the development of the Halo product, which, as we discussed at Luminar Day, makes drastic improvements to performance, size, you know, as well as cost, and is enabled to be seamlessly integrated into the vehicle. Whereas the Iris product family was created to show the industry what was really possible, Halo is what will enable this technology to become widespread throughout the industry, and we expect quite profitably. As we accelerate the program, we'll also be delivering samples now to select automakers by year-end. So that's the big update there.

[Austin Russell, CEO at Luminar Technologies]

With that, happy to be able to turn the call over to Tom to give more details on some financials. With that, go ahead, Tom. Thank you.

[Tom Fennimore, CFO at Luminar Technologies]

Great. Thank you, Austin. Great update on where we are at Luminar. Let me start by reviewing our Q2 financial results. Revenue for the quarter was $16.5 million, up 2% year-over-year, but down 22% sequentially. As we previewed during our Q1 earnings call, we expected Q2 revenue to potentially be lower. Let me provide a bit more color on this. We saw an expected moderate ramp in series production sensor sales during the quarter. We are continuously meeting Volvo's weekly production schedule and are prepared to ramp up our production as Volvo ramps up theirs.

[Tom Fennimore, CFO at Luminar Technologies]

As discussed on their most recent earnings calls, Volvo expects to ramp EX90 production in their U.S. facility in the back end of this year and early into next year, while production in their China facility will commence more towards the end of this year or early next. This represents a more moderated ramp than we were initially anticipating, but we remain confident in reaching targeted production levels next year. During the quarter, we revised the product design and project scope for Iris+ with our lead customer to increase utilization of Iris in the product architecture, as Austin discussed earlier. This move should improve operational scale and efficiency, as well as de-risk execution. This revision resulted in largely non-cash accounting adjustments this quarter to both revenue and COGS, gross loss.

[Tom Fennimore, CFO at Luminar Technologies]

Specifically, it resulted in $4 million sequential decline in revenue, and our revenue would be roughly flat if not for this, and a $10 million contract loss to COGS. For the quarter, we reported a gross loss of close to negative $14 million on a GAAP basis and about negative $12 million on a non-GAAP basis. Our gross loss this quarter included about a $10 million contract loss that I just mentioned. So excluding this contract loss, we would have been close to breakeven and a little less than a $2 million loss, to be precise, on a gross basis. This quarter-over-quarter improvement was helped by lower inventory charges, scrap, and other launch-related charges from ongoing process improvement, including our manufacturing yield.

[Tom Fennimore, CFO at Luminar Technologies]

Our change in cash during the quarter was -$57 million, an improvement from almost -$72 million the last quarter. We ended the quarter with $211 million in cash and liquidity, which includes marketable securities and our $50 million undrawn line of credit. It excludes the actions which I'm about to discuss in more detail that we announced today. During the quarter, we raised $19 million under our equity capital finance program. Now, let me talk about the balance sheet actions we announced earlier today. We announced that we entered into a private, separately negotiated exchange transaction with certain holders of our existing convertible notes.

[Tom Fennimore, CFO at Luminar Technologies]

These note holders will exchange at a 35% discount, $422 million of convertible debt due in 2026 into $274 million of new convertible senior secured notes maturing in January 2030. Additionally, as a sign of their confidence in Luminar's future, these investors are also providing $100 million of new capital in the form of non-convertible, non-dilutive senior secured notes. This transaction will reduce our total convertible debt by nearly $150 million, while raising $100 million of new capital. We filed an 8-K after it closed with further details on this transaction. This transaction is the first and most important step in improving our balance sheet.

[Tom Fennimore, CFO at Luminar Technologies]

Over two-thirds of our convertible debt maturing in 2026 has now been extended into the next decade, while capturing a 35% discount and reducing our overall debt. Over the next two years, we will continue to chip away at the remaining $200 million or so of convertible debt that is maturing in 2026. During last quarter's call, we estimated what we need approximately $200 million of additional capital to reach profitability. Half of this additional capital has been raised as part of this transaction. We have multiple alternatives to re-raise the remaining $100 million, and we will do so in a thoughtful way that minimizes the ultimate, ultimate dilution and economic impact to our company.

[Tom Fennimore, CFO at Luminar Technologies]

In the meantime, we expect the additional capital raised in connection with this transaction to extend our liquidity runway from the end of 2025 to at least the end of 2026. Let's talk now about our cost reduction efforts and path to profitability. In May, we announced shortly after we reached Volvo SOP, a major cost restructuring effort that will include outsourcing more of our industrialization efforts to existing partners like TPK. This will allow us to move faster with our product and industrialization efforts, streamline operations, and most importantly, increase our path to or the speed of our path to profitability. As a result, we had to make some tough decisions, including reducing our workforce by approximately 20%, as well as other cost reduction efforts.

[Tom Fennimore, CFO at Luminar Technologies]

In total, we estimated approximately $80 million run rate savings to be achieved with these actions, and we are on track to achieve this target by the end of this year. We have largely completed our headcount reduction plan and continue to complete other actions like contractor reductions and facility subleasing. Our current top priority is to improve our sensor unit economics and reduce our COGS overheads to reach positive gross margin. As discussed earlier, we expect our gross loss, excluding the contract loss we announced earlier, to increase over the next couple quarters since our series production sensor ASP is lower now, and we need a bit more time and production scale to reduce our sensor costs to match. We expect to achieve positive sensor economics and gross margin sometime next year after we ramp series production.

[Tom Fennimore, CFO at Luminar Technologies]

Further, to achieve this, we are actively engaged in real-time negotiations with key partners to improve contractual economic terms, and we're making good progress in this effort. We plan to update investors soon with more precise timing of when we expect to achieve positive gross margin. Now, let's close it out with guidance for the remainder of this year as well as the next quarter. Due to more moderated ramp-up in series production, we are pushing out our prior guidance to reach a quarterly revenue run rate in the mid-$30 million range from the second half of this year to next year. For Q3, we expect revenue to be in line to modestly higher versus Q2. This reflects a sequential increase in series production revenue, offset by a potential decrease from a non-series production customer contract we're currently renegotiating.

[Tom Fennimore, CFO at Luminar Technologies]

We expect our Q3 loss to increase versus Q2 levels of $2 million, excluding the contract loss I referenced earlier. A slower production ramp-up over the next couple of quarters, while negative for revenue, is actually helpful for our gross loss and net cash spend levels given our current pre-scale sensor economics. Consistent with our prior guidance, we expect to end the year with greater than $250 million in cash and liquidity. This includes both marketable securities as well as our $50 million line of credit. This increased guidance reflects $100 million in new capital that is coming in as part of this transaction I announced earlier, net of fees, OID, and the higher interest expense. I would also note that we have $131 million remaining on our equity finance program.

[Tom Fennimore, CFO at Luminar Technologies]

In the coming days, we expect to file another supplement to increase this to fund the incremental interest expense as part of this convertible debt transaction we just announced. We are also evaluating, under various stress case scenarios, whether we need to hold a special shareholder meeting in the near term to increase our authorized share account, given our recent and contemplated balance sheet actions. To conclude, I want to thank the broader Luminar team. I just celebrated my fourth anniversary at the company and been amazed at how much we've accomplished in my short time here.... We've achieved a lot as an organization, and we have a lot more to improve with continued successful execution. I have no doubt that the product talent and work ethic to succeed exists at this company, and we will all capture it.

[Tom Fennimore, CFO at Luminar Technologies]

Rest assured, we at Luminar are laser-focused on making this company a success. I also wanted to thank my wife and family for, you know, moving out with me in the middle of COVID to join this job over four years ago, and putting up with a suboptimal version of myself, as we kind of got earnings and this balance sheet restructuring over the finish line here in the near term. With that, Aileen, I think we're ready for Q&A.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Fantastic. Thanks, Tom. All right, we're gonna hand it over to our analyst community. Our first question is going to come from Josh Buchalter at TD Cowen.

[Joshua Buchalter, Senior Equity Research Analyst at TD Cowen]

Hey, guys. Good afternoon. Thank you for taking my questions. I wanted to ask about the Volvo ramp. You know, the slower ramp than expected, was that related to anything with the software issues that, you know, have been pretty public, regarding some of the features not being turned on at the initial launch? Maybe you could just provide some background, because I think that's an area of concern for investors, given some of the comments that were made last year, and then sort of the bumpy rollout of some of the software issues, with the initial launch of the car. Thank you.

[Tom Fennimore, CFO at Luminar Technologies]

Yeah, no, Josh, you know, once again, it's, it's unrelated to the software. Any automotive launch that you have, there's always gonna be bumps in the road, and it's not, you know, it's not gonna go as smooth as like everybody would hope. It's taking a little bit longer, but they're ultimately gonna reach those production levels. It may take just a quarter or two longer. From our perspective, we're meeting their weekly production targets, and as they ramp up, we're ready to ramp up. So there's certain things we can control, certain things we can't, but we're ready to go. And, you know, Volvo remains optimistic that they're gonna get to ultimately where they want to be from a production level.

[Austin Russell, CEO at Luminar Technologies]

It's all supply chain stuff.

[Joshua Buchalter, Senior Equity Research Analyst at TD Cowen]

Got it. Thank you. And then, I wanted to ask about some of the component changes it sounds like in Iris+. Could you provide some background on, on why those changes are being made? Any performance or commercial implications of, of the change roadmap with Iris+? And then bigger picture, how have been the initial engagements with Halo, probably more importantly. Thank you.

[Austin Russell, CEO at Luminar Technologies]

Yeah. So, basically, what we're doing is we're utilizing more of the Iris architecture for Iris+. That's gonna allow us to capture more efficiencies, both on the industrialization process, as well as ultimately once we get to series production for that product. I think as Iris came together, it's performing better than expected and allow us to borrow more of that technology to kind of de-risk the Iris+. Accounting-wise, this is very complicated. It's multi-year engineering work that we're doing, and as part of that re-scoping, you know, we had to take the, you know, accounting charges for this quarter that we've talked about. But the underlying economics of the contract have not changed materially, and we actually believe that it's gonna allow us to move more efficiently going forward, as well as de-risk overall execution.

[Joshua Buchalter, Senior Equity Research Analyst at TD Cowen]

All right. Appreciate it, Tom. Austin and Aileen, I'll hop back in the queue. Thank you.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Great! We will take our next question from John Babcock at Bank of America.

[Tom Fennimore, CFO at Luminar Technologies]

Hey, John.

[John Babcock, Analyst at Bank of America]

Hey, guys. Thanks for taking my questions. I guess, you know, just start out, could you bridge the new target for cash and liquidity, you know, to your old target?

[Tom Fennimore, CFO at Luminar Technologies]

$150. There's $100 million in new capital coming in. When you actually look at some of the OID, as well as transaction fees, it's closer to $95, and then the incremental interest expense brings it to $90. $150 plus $90 equals $240.

[John Babcock, Analyst at Bank of America]

Okay, gotcha. Pretty simple there, then. Okay. Thanks. And then, you know, I guess just generally, I mean, it does seem like, you know, the adoption of autonomous driving technology in cars has been slower than expected, you know, particularly in North American and European markets. You know, can you just talk about, you know, how, you know, what your plans are to drive growth from here? You know, in light of that, you know, obviously, we've seen a number of, you know, vehicle models, I mean, both EVs, but also even non-EVs get, you know, pushed out. So if you could, you know, I don't know whether it entails maybe looking at opportunities in, you know, OEMs in China and perhaps trying to penetrate that market more, or maybe looking into other sectors.

[John Babcock, Analyst at Bank of America]

You know, any sort of, you know, kind of discussions you've had internally that, you know, might help to drive volumes, you know, in light of what's kind of occurring, from a macro level?

[Austin Russell, CEO at Luminar Technologies]

No, it's a great question around that, and when it comes down to it, I think it's all just about the automotive platform timings of this. You know, as we had said during the call, I think it's well understood, and as you see with many of the EV companies that, you know, the timelines for the new platform launches, which are generally used to introduce these new kinds of technologies, have been pushed out on the order of about a year or two, you know, versus earlier in the 2020s here. As you sort through, as you said, supply chain, software, all those other kinds of things that have to come into play.

[Austin Russell, CEO at Luminar Technologies]

So I think in this case, it's actually less about the capabilities that are being deployed and rather more about how they can get to market as quickly as possible with these new platforms. So that growth curve is still very much intact and arguably even greater than ever in when it comes to the midterm and longer term. It's really just the near-term headwinds that we're talking about here, that as people try to get these to SOP, that makes a difference. So that's the focus there. Of course, from a customer standpoint, you know, an overall order book, that's really where you start seeing in the latter half of this decade that to really exponentially accelerate and take off.

[Austin Russell, CEO at Luminar Technologies]

You know, even with our existing customers, you know, there's $ tens of billions of value opportunity for us to be able to achieve, you know, with them alone, much less with new customers. So at this point, it's really all about execution and how we're able to do that, how we're able to successfully scale with that. So, and I would just say in from a product standpoint, Halo is really the product that's gonna be able to enable that to be possible, and that's where, we've received an incredible amount of excitement and interest, from automakers with regards to the next generation technology. In particular, in light of also some of the new safety and ADAS regulations, as well as, you know, just the overall notion of being able to have increased performance, lower cost, and even better integration across the platforms.

[Tom Fennimore, CFO at Luminar Technologies]

John, we're focusing on the things we can control. You know, the steps we took today with the balance sheet in terms of extending the maturities, bringing in more capital, which gives us more time and more capital to kind of recognize that longer term growth, which is as strong as ever. And then we're also looking to aggressively reduce our costs, both the fixed costs as well as our sensor economics, to kind of get to profitability faster, even with less volume in the near term.

[John Babcock, Analyst at Bank of America]

Okay. Thank you. I got back in too.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Thanks, John. Our next question is going to come from Jesus Gonzalez at J.P. Morgan.

[Jesus Gonzalez, Senior Equity Research at J.P. Morgan]

Hey, guys. Thanks for taking my question. Congrats on shipping out some Sentinel units this quarter. Just wanted to hear, you know, what the early feedback from OEMs has been on this product, and maybe what the per-vehicle revenue opportunity for Sentinel looks like on a run rate basis.

[Austin Russell, CEO at Luminar Technologies]

Yeah, I mean, the feedback has been incredibly positive all around there. And, and that's where obviously, you know, going into this, there was a lot of skepticism of, "Hey, like, is Luminar gonna be able to make it to series production? Are they gonna be able to achieve these milestones? Are they gonna be able to, you know, get their production facilities online? Are they gonna develop this, you know, global complex supply chain?" And we were able to successfully make that happen. And, you know, that from an execution standpoint, we've knocked it out of the park when it comes to those topics.

[Austin Russell, CEO at Luminar Technologies]

But there's still a lot more work to do, and that's really where it comes to the operational efficiency and the cost when it comes to scaling that production, as well as being able to continue to advance the overall product roadmap that we have, you know, beyond the initial Iris product. So that's the big focus now, and the customer feedback continues to be that great technology, it's making a huge difference in terms of what the safety opportunity is and the autonomous driving opportunity is, and they're happy to see us continue to hit those milestones and de-risk things overall. I think in particular, the fact that we were able to hit series production and the SOP with Volvo sent some shockwaves throughout the industry that was quite positive.

[Austin Russell, CEO at Luminar Technologies]

When combined with the overall notion of, as we mentioned, some of the new safety regulations and the other kinds of tailwinds that are coming into play, that's really helping drive some of the, the feedback that we're getting, that it's also not just relevant for the ultimate autonomy use cases, but also the ADAS and safety use cases they want to plan for.

[Tom Fennimore, CFO at Luminar Technologies]

Jesus, I think the early reactions from the Sentinel kits we've been shipping has been positive as well. You know, too early to kind of quantify any potential economic impact of that.

[Jesus Gonzalez, Senior Equity Research at J.P. Morgan]

Gotcha. Thank you so much. And then if I can get one more in, do you have any update on your, insurance business or any of those other things you announced during the Investor Day?

[Tom Fennimore, CFO at Luminar Technologies]

Making great progress there. I hope to talk about it more on our next call, but, you know, our goal is to start writing insurance policies by the end of this year.

[Austin Russell, CEO at Luminar Technologies]

Yeah.

[Jesus Gonzalez, Senior Equity Research at J.P. Morgan]

Awesome. Thank you so much.

[Austin Russell, CEO at Luminar Technologies]

By the way, I realized for the content value question, it's what we shared before. It's on the order of about $1,000, you know, for vehicles at this stage. So just at the initial stage, and then we hope to increase that over time.

[Jesus Gonzalez, Senior Equity Research at J.P. Morgan]

Perfect. Thank you so much. Appreciate the time.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Our next question will come from Richard Shannon at Craig-Hallum.

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

Well, thanks, guys, for taking my question here. First one I want to touch on is the sensor economics. I'll hit my video here. Come on, turn on. There we go. Sorry.

[Austin Russell, CEO at Luminar Technologies]

Yeah.

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

On sensor economics here, you addressed this in the presentation. I did come late into the call, so I'm not sure of your prepared remarks here. But I want to get a sense of kind of the cost reductions you're hoping to come up with here, over what time period, to what degree this is, you know, renegotiated materials cost versus other design effects. And then I assume this is on both Iris, Iris+, and hopefully to help out on the next gen Halo product. But maybe you can give us some perspective on that. That'd be great, please.

[Tom Fennimore, CFO at Luminar Technologies]

Yeah, look, while there are, you know, some differences between Iris, Iris+, and Halo, I think a lot of the success we're having now on bringing the Iris sensor costs down. You know, those will, you know, a lot of those will translate to Iris+ as well as at Halo. There is a lot of overlap in the product architecture as well as the supply base. But I would say, Richard, you know, up until we reached Volvo SOP a few months ago, we've been – I would say, the vast majority of our engineering and industrialization resources have been focused on actually getting there. Now that we're there, though, that resource focus is shifting from proving we can produce these things to producing them in scale and then producing them in profitable scale.

[Tom Fennimore, CFO at Luminar Technologies]

From a personal perspective, it's an area where I'm spending a lot of my time. And so part of what we need to improve our sensor economics is just getting the scale. And so, you know, a lot of our contracts are volume-based, and so as volume comes up, the costs will naturally come down. The other way that we're doing, now that we have a lot more credibility because we actually reached series production, and you see the pipeline, not only with our near, close to $4 billion order book, but the 20 vehicle lines that we're launching over the next few years.

[Tom Fennimore, CFO at Luminar Technologies]

You know, we're going and having more, I would say, thoughtful and strategic conversations with our partners in terms of how we can be, more long-term related and thus, you know, bring the costs down sooner as a result. And so we're off to a very good start with that, and, you know, I hope to give more precise timing on when we expect to turn the corner and kind of get to that positive sensor economics and positive gross margin. It will be next year. When precisely next year? You know, I hope to, you know, provide more clarity on that here in the near term.

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

Okay, fair enough. My follow-on question here is about the contract renegotiation here. Again, I missed the prepared remarks, so I didn't see anything in the presentation. But wondering characterizing who this might be, I guess I just want to make sure this wasn't someone who was an announced-

[Tom Fennimore, CFO at Luminar Technologies]

No

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

... series production type of wind.

[Tom Fennimore, CFO at Luminar Technologies]

No, it's a non-series production customer, non-automotive customer. It's one of our larger customers. And, you know, basically what's happening there is this contract was signed a couple of years ago, you know, assuming that we would be at a certain level of, you know, I would say, scale. And as things are taking a little bit longer to get there, you know, we kind of, you know, need to kind of recalibrate it in the near term. So, I would say it's just more of a recalibration than a renegotiation, but it could provide some revenue headwinds here over the next few quarters.

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

Okay, thanks for that clarification. That's all from me, guys. Thank you.

[Austin Russell, CEO at Luminar Technologies]

I'd also mention just generally when it comes to the broader supply base, you know, and going back to the original point, is that up until a few months ago, the reality is we didn't have a whole lot of credibility. You know, a lot of these suppliers, small companies, big companies, have heard the story about people wanting to get to series production, people wanting to do this for years on end, without really any successful global launch. And that's why I think showing that we can actually successfully do that, that we can meet the Volvo deliverables and be able to scale accordingly, has built a lot more credibility with us that enables us to get the right kinds of cost down long-term contracts, that support, you know, not just these current products, but also things going into the future.

[Austin Russell, CEO at Luminar Technologies]

You know, the core cost of what actually goes into the semiconductor components of what we deliver between the laser chip, the photodetector, you know, and the processing ASICs that we have is under $100. You know, it's really the question of how you can actually, now that we've gotten the core technology cost down, how we can actually get the rest of the more, you know, commodity components, PCBs, mechanicals, and other kinds of things to that lower cost structure, and that's exactly one of the major things that we're focused on.

[Richard Shannon, Senior Research Analyst at Craig-Hallum]

Okay. Appreciate that perspective, Austin. Thank you. That's all for me.

[Tom Fennimore, CFO at Luminar Technologies]

Thanks, Richard.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Thanks, Richard. Our next question will come from Mark Delaney at Goldman Sachs.

[Tom Fennimore, CFO at Luminar Technologies]

Hey, Mark.

[Mark Delaney, Senior Equity Analyst at Goldman Sachs]

Thank you for taking my questions. Good afternoon. The order book, I believe, was over $3.8 billion at the end of last year. I'm hoping to better understand where you think that might be tracking to over the course of 2024. When you think about some of the opportunities you articulated, like the new automatic emergency braking regulations, that I believe is generating some incremental interest from potential new customers, but also perhaps some of the headwinds you've spoken about today, such as the contract being renegotiated. Thank you.

[Tom Fennimore, CFO at Luminar Technologies]

Yeah, Mark, you know, we update our order book at the end of each year, so no update on that. We remain confident that as we continue to execute and launch these 20 vehicle programs over there, we will recognize what we had at the end of the year, as well as continue to grow it with new business, both from new customers as well as existing customers. I think the exact timing of that growth and when the automakers make definitive decisions, that's a little bit outside of our control. So I don't want to speculate on when it's gonna grow, but we are confident that it is gonna grow.

[Austin Russell, CEO at Luminar Technologies]

For what it's worth, for that specific, you know, renegotiation topic, that was something that we already had heavily discounted in our order book, so it shouldn't materially affect that.

[Mark Delaney, Senior Equity Analyst at Goldman Sachs]

Okay. No, that, that's very helpful. Second question, was trying to better contextualize the change in timing from when you expect to reach quarterly revenue in that mid-$30 million level. You, you spoke about a couple of different factors, the, the slower production ramp-ups, as well as this, non-series production award and, and how you're shipping for that in, in the near to intermediate term. Can you help us dimension those? What, what are some of the bigger factors as, as you, as you think about that?

[Tom Fennimore, CFO at Luminar Technologies]

I know, yeah. The primary driver is kind of when, you know, Volvo kind of gets to that, you know, targeted production level for the EX90. They expect to get there with their South Carolina plant, you know, what they said on their call, you know, end of this year, maybe early next year, and then bringing up the China facility along that same time period. So when those things are accomplished, that's when we will get there. That's why we've kind of taken the guidance from, hey, you know, look, we don't want to rule out it's not gonna happen this year, but given those factors outside of our control, it, you know, it's probably gonna be next year. And so that's gonna be the biggest driver of it.

[Mark Delaney, Senior Equity Analyst at Goldman Sachs]

Thank you.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Great. Our next question is going to come from Kevin Garrigan at Westpark Capital.

[Tom Fennimore, CFO at Luminar Technologies]

Hey, Kevin.

[Kevin Garrigan, Senior Research Analyst at Westpark Capital]

Yeah, thanks, Aileen. Hey, Austin and Tom, how's it going? Thanks for letting me ask a couple questions. So I guess just first, you know, regarding the Volvo run rate delay, does this delay push out your timeline for overall company profitability at all?

[Tom Fennimore, CFO at Luminar Technologies]

No, you know, look, it doesn't. In fact, while in the near term it's not good for revenue, it actually, kind of where we are on sensor economics today, actually helps our net cash spend as well as our gross loss. So, the more important thing is kind of Volvo getting to those, you know, ultimate levels, which they're confident, and we're confident they will.

[Kevin Garrigan, Senior Research Analyst at Westpark Capital]

Yep. Got it, got it. Okay, that makes sense. And as a follow-up, so I know you guys noted Volvo is expanding into China later this year. Are you guys anticipating any risk, kind of given the U.S.-China tensions, or any kind of retaliation from China with the U.S. looking to ban Chinese self-driving software? I'd just love to get your thoughts on, on how you view the China market.

[Tom Fennimore, CFO at Luminar Technologies]

Yeah, based upon everything we know about today, we don't anticipate any issues with, you know, continuing to deliver to Volvo our commitments on the EX90. You know, longer term, this is a dynamic that we're monitoring, largely outside of our control. But, you know, there's both pros and cons of that because, you know, it could hinder our ability in China, but it also hinders some of the, you know, Chinese LiDAR's ability to compete in, the U.S. and other markets. And so, you know, look, we're gonna do what we can to serve our customers, both in the near and longer term. You know, we're monitoring these embeds. We're thinking about alternatives to make sure that we can be a longer-term competitor in all important markets to us, including China, you know, and that's where we are today.

[Austin Russell, CEO at Luminar Technologies]

One other thing to add on that, too, is that not only are we the first and only company to have this kind of long-range LiDAR in a global production vehicle, you know, in its standard, but also we're the only company in the industry that is able to build up both Western and Eastern world supply chains. And that's something that we've really done, you know, first starting off in North America, in partnership with Celestica in Monterrey, Mexico, but also in partnership with TPK in China. And that's where you can ultimately see over the longer term, as that stuff happens, is the product that we produce in China will really be for China, and then you have the rest of world, you know, coming from, for example, Mexico or, you know, elsewhere as we expand.

[Austin Russell, CEO at Luminar Technologies]

So that's something that really we were unique in being able to have these kinds of global scale wins, and in particular, also wins in China to be able to deliver against. And that's despite, by the way, you know, obviously there's kind of that inherent bias, but particularly around, you know, domestic Chinese OEMs, you know, there. But half the volume, even within China, is actually from global OEMs. So we still have a clear opportunity to be able to deliver against that, and that's exactly what we're doing as going to an earlier question for a previous analyst there, that's something that actually should help rapidly accelerate the volumes and ultimately our path to profitability as well.

[Kevin Garrigan, Senior Research Analyst at Westpark Capital]

Yep. Got it, got it. Okay, perfect. Thanks, guys.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Thanks, Kevin. Our final question is gonna come from Kevin Cassidy at Rosenblatt.

[Tom Fennimore, CFO at Luminar Technologies]

Hey, Kevin.

[Kevin Cassidy, Senior Research Analyst at Rosenblatt Securities]

Hi. Yeah, thanks for taking my question. You know, I'm interested in the Halo product. That just seems like a real game changer for me. And you know, you mentioned you're sampling it. Can you give us any details? How many samples, and what level would you call it? Is it a beta product? Is it an alpha product, you know, or an emulation?

[Austin Russell, CEO at Luminar Technologies]

Yeah, I would say so as it stands right now, we have some initial, I would say, proof of concepts around showing the performance capabilities, showing the architecture, you know, of it. What we're doing now is we're getting sort of the form factor equivalent samples to package it into, you know, that kinda final dimensional package, which is, you know, obviously one of the benefits of what we're getting in terms of that integration and integrability improvement from a lower, smaller size. So, yeah, it's moving along incredibly well. We're also able to develop it a heck of a lot more efficiently because of the big technology platform investments that we made in the past that we're able to ride on the coattails of now.

[Austin Russell, CEO at Luminar Technologies]

So that's also gonna help really drive down development costs and other kinds of overhead over time as we do this. But everything's going as well as we could hope for in that dimension, and I think that's really where, for the second half of the decade, or at least the latter half of that, that's where a ton of the automotive interest is in getting that, because that's the kind of product that can truly enable the scale that we want to achieve and know we can to enable that extreme success.

[Tom Fennimore, CFO at Luminar Technologies]

Kevin, if you're ever down in Orlando, you're welcome to stop by, and we can kinda have you swing by the, you know, the lab and kinda take a look at it, and you can touch and feel and kinda see real-time what the team's been able to achieve, which is amazing.

[Kevin Cassidy, Senior Research Analyst at Rosenblatt Securities]

Yeah, that sounds great, and I've got a good reason to go to Orlando then.

[Tom Fennimore, CFO at Luminar Technologies]

Yeah.

[Kevin Cassidy, Senior Research Analyst at Rosenblatt Securities]

Thanks.

[Tom Fennimore, CFO at Luminar Technologies]

Absolutely.

[Aileen Smith, Head of Investor Relations at Luminar Technologies]

Okay. Thanks, Kevin. I think that closes it out. With that, with that, I'd like to thank everyone for joining our business update and to the analysts who participated on this call. At this point, I'd normally give my closing statement of, "We look forward to seeing everyone next quarter." However, I will be going on maternity leave next month, so you won't see me. So the team looks forward to updating you next quarter, and I very much look forward to seeing everyone again in the new year. Thanks for joining us today.

[Tom Fennimore, CFO at Luminar Technologies]

Good luck, Aileen.

[Austin Russell, CEO at Luminar Technologies]

Thank you.

Participants

Executives

• Aileen Smith, Head of Investor Relations
• Austin Russell, CEO
• Tom Fennimore, CFO

Analysts

• Jesus Gonzalez, Senior Equity Research at J.P. Morgan
• John Babcock, Analyst at Bank of America
• Joshua Buchalter, Senior Equity Research Analyst at TD Cowen
• Kevin Cassidy, Senior Research Analyst at Rosenblatt Securities
• Kevin Garrigan, Senior Research Analyst at Westpark Capital
• Mark Delaney, Senior Equity Analyst at Goldman Sachs
• Richard Shannon, Senior Research Analyst at Craig-Hallum