Luminar Technologies Q1 2025 Earnings Call Transcript

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May 14, 2025

There are 7 speakers on the call.

Operator

Welcome everyone to Luminar's First Quarter of twenty twenty five Business Update Call. My name is Aileen McAdams, and I am Luminar's Head of Investor Relations. With me today is Tom Fenimore, Luminar's Chief Financial Officer. As a reminder, this call is being recorded. You can find the press release and the presentation that accompany this call at investors.luminartech.com.

Operator

In a moment, you will hear remarks from Tom, followed by a Q and A session. Before we begin the prepared remarks and then the Q and A, let me remind everyone that during the call, we may refer to GAAP and non GAAP financial measures. Today's discussion also contains forward looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our press release and our presentation for more information on the specific risk factors that could cause actual results to differ materially. With that, I'd like to introduce Luminar's CFO, Tom Fenimore.

Speaker 1

Thank you, Aileen. This afternoon, before we dive into the quarterly financial results for the company, I want to take a moment to share some important updates from our Board of Directors regarding our leadership at Luminar. Some of you have likely seen the press release we issued, but in the event you missed it, I want to recap it now. Founder Austin Russell, the President and CEO of the company and Chairperson of the Board will resign effective immediately following a code of business conduct inquiry by the Board of Directors. This matter does not impact any of the company's financial results.

Speaker 1

Mr. Russell will remain on the Board and be available to the incoming Chief Executive Officer on transition and technology matters. This decision was not made lightly. The Board recognizes the weight of this action and the impact it may have. However, the Board takes seriously its duties of oversight, accountability and commitment to Luminor's values, culture and long term success.

Speaker 1

In light of this transition, we are pleased to announce that Paul Ritchie has been appointed as our new CEO to be effective on or about 05/21/2025. Paul brings a wealth of experience, having previously served as chairman and CEO of Nuance for nearly two decades. His visionary leadership and deep understanding of technology make him the ideal person to guide us in our next chapter of growth. We understand that this news may come as a surprise. We wanna assure you that the board of directors and the leadership team is fully committed to ensuring a smooth and successful transition.

Speaker 1

Finally, while I suspect you have a number of questions about this, we plan to let the press release speak for itself. And now let's move on to our Q1 financial and business update. As you noticed from our presentation today, we wanted to use this quarterly update to not only run through our quarterly financial results, but also take a step back and provide a broader vision for where Luminar is headed over the next few years. One of the things that makes Luminar so unique is that our technology uses the fifteen fifty wavelength. As compared to our competitors who use the more traditional nine zero five wavelength, we're able to put on average up to 17 times more photons into the environment.

Speaker 1

This gives our customers the ability to not only significantly improve the safety of their vehicles, but also operate autonomously at all speeds, including high speeds. This is something truly unique. This is the also the primary reason why our OEM partners have chosen to work with us. In doing so, however, each OEM has historically asked us to use our core LiDAR technology and develop unique OEM specific product architectures around it. Iris and Iris Plus are just two example of these highly customized design programs.

Speaker 1

Last quarter, we introduced the idea of consolidating our product portfolio and customers into a singular Luminar Halo platform in order to improve our development time and significantly reduce our development cost. This decision to move to a unified product architecture has been extremely well received by our OEM partners. Going forward, the core technology of our Halo platform will be largely standardized across all our customers with modest customizations. And we have a page in the slide deck to highlight four that have kind of signed on to this approach so far. This will enable us to streamline our product development efforts, improve our time to market, and further reduce our cost.

Speaker 1

As it relates to our business model beyond Luminor HALO for our next generation products, we'll be narrowing our development efforts around our core technologies, such as the transceiver, which includes the laser, the receiver and the ASIC, the embedded software, and other core components. Simultaneously, we will also be outsourcing more of the commodity components of our LiDAR, you know, for example, like a top housing or chassis or other components to some of our key partners. This will allow us to further streamline the company and reduce cost and get our products to the market faster. This is a continuation of efforts to rescope our company focus and rightsize our cost structure. We've had to make a number of tough decisions over the past year to better position our company for the future, and we will continue to do so.

Speaker 1

In the coming quarters, we will look forward to providing incremental updates on our progress with this initiative, including new and existing customer wins using the Halo platform. Now let's turn to an update on restructuring actions and our financials. Last year, we announced two major restructurings, one in April and one in September. That allowed us to significantly improve our cost structure. The key catalyst for these cost actions were the successful achievement of our Volvo launch last year and our expanded industrialization partnership with TPK.

Speaker 1

In aggregate, these actions were expected to save $120,000,000 in cash and another $40,000,000 in stock via stock based compensation. We achieved these cost saving targets. Specifically, versus a year ago, if you look at our non GAAP OpEx, a good proxy to measure the cash savings from our restructuring actions, those have declined by about $115,000,000 on an annualized basis. Our quarterly stock based compensation, a good proxy for the stock savings, has declined by almost $100,000,000 on an annualized basis. Overall, I'm proud that we're executing on what we set out to do in reducing costs in our business and extending our financial runway.

Speaker 1

This brings me to the next topic of our capital structure. I'll start with an update on our debt profile. As a reminder, our secured debt maturing in 2028 and 02/1930 includes a springing maturity that requires us to reduce the outstanding face value amount of our 2026 unsecured debt below $100,000,000 by June of next year. I'm happy to report that as a result of the actions we have taken over the past several months, we now have a line of sight of reaching that goal. We have reduced the balance on the 2026 debt from $625,000,000 in August of last year to $185,000,000 outstanding as of today.

Speaker 1

Accordingly, we plan to continue working towards reducing this balance in the near term and doing so in a disciplined manner that does not materially impact our cash balance. Let's now return to let's now turn to our Q1 financials. Revenue for the quarter came in at $18,900,000 which was down 10 year over year sequentially. This was consistent with the guidance we gave that revenue this quarter would be lower than Q4. On a quarter over quarter basis, Q1 saw growth in series production sensor sales and NRE revenue, which is offset by lower sensor sales to adjacent market customers.

Speaker 1

More specifically, we shipped almost 6,000 sensors to customers in Q1, up approximately 50% from Q4 sequentially. The vast majority of these sensors were shipped to Volvo. For the quarter, we reported a gross loss of negative $8,000,000 on a GAAP basis and negative 6,400,000 on a non GAAP basis, which again was in line with our guidance. This was driven by continued growth in series production center sales at unfavorable unit economics, which was partially offset by returns from some of our cost saving actions. We also incurred approximately $1,000,000 of tariff charges in our COGS during Q1, and we are very close to resolution with our key customers to mitigate our tariff exposure for the rest of the year.

Speaker 1

OpEx came in at $64,000,000 on a GAAP basis and $45,000,000 on a non GAAP basis. On a non GAAP basis, OpEx was down nearly $10,000,000 quarter over quarter, a direct result of the cost reduction actions we announced last year. Moving on to our cash and balance sheet. We ended Q1 with $188,000,000 in cash flow and liquidity, which includes $138,000,000 in cash and marketable securities and our undrawn $50,000,000 line of credit, Including $2.00 $9,000,000 available in our equity financing program, our total access to liquidity stands at nearly $400,000,000 Our change in cash in Q4 was negative $44,000,000 which was higher than the negative $16,000,000 level in Q4. This was entirely driven by activity in our equity financing program, specifically raising $48,000,000 in Q4 of last year versus a negligible amount in Q1.

Speaker 1

Since we didn't file our 10 ks until late March, we had limited time in q one to utilize our ATM facility and instead opted to equitize a portion of our 2026 convertible notes during the open period. Ultimately, while we guided to an average of of issuing about $30,000,000 and on average per quarter under this ATM program through the remainder of this year, we also indicated that this activity would be lumpy quarter to quarter. Free cash flow for this quarter was roughly $44,000,000, representing an $18,000,000 improvement from the $62,000,000 used in Q4. Driven by our cost reduction actions and working capital swings, this marks the lowest level of quarterly cash burn since 2022 as the benefits of our ongoing cost reduction actions continue to manifest. Moving on to 2025 guidance.

Speaker 1

Despite all of the macro uncertainty, we are reiterating our 2025 revenue and other guidance and improving our year end OpEx target. For 2025, we continue to expect full year revenue growth in the range of 10% to 20%. As a reminder, our revenue and censorship guidance for this year incorporated a more conservative production outlook relative to our customers and third party guidance, specifically a 50% haircut to IHS four cuts at the time. So while the volatile geopolitical and macro environment presents risk, we believe that our conservative approach provides a sufficient buffer to reiterate our guidance at this time, but this buffer is less than what it was at the beginning of the year. For Q2, we expect revenue will decline slightly quarter over quarter, driven by lower sequential sensor sales to nonseries production customers.

Speaker 1

We continue to expect to generate a non GAAP gross loss of negative 5,000,000 to negative $10,000,000 per quarter on average through the remainder of this year. One element of our guidance that we are revising positively is OpEx. Given the progress we demonstrated on non GAAP OpEx in Q1 as well as actions to be implemented as part of our unified product architecture strategy discussed earlier, we are revising our year end quarterly OpEx outlook from the mid to high $30,000,000 range to now the low 30 million dollars range. We continue to expect to end the year with greater than $150,000,000 of cash and liquidity, which includes cash and marketable securities and our $50,000,000 undrawn line of credit. As I communicated in prior quarters, we believe our current cash and liquidity position as well as access to additional liquidity provides us with sufficient runway through at least the end of next year.

Speaker 1

I've also mentioned in the past, we may require approximately up to $100,000,000 in additional capital to reach profitability, and we remain focused on aggressively executing our cost reduction plan and streamlining our business to lower any additional funding requirement. Finally, I wanted to make everyone aware that we are going to file an extension for our 10 q for the quarter. This concludes our prepared remarks, and I will hand it back over to Aileen for q and a on the business and financial update. While I understand there's interest in the leadership transition, and I appreciate the question, We won't be discussing that topic further on today's call other than what was disclosed in the press release and 10 in eight k. For today, we're focused on the q one financial results and business update and happy to take questions on those topics.

Speaker 1

In the near future, we hope to have another business update call with Paul Ritchie to go into more detail on some of the actions we talked about today. Over to you, Aileen, for q and a.

Operator

Thanks, Tom. We're going to hand it over to our analyst community now. I'd ask that analysts limit their question to one initial question and one follow-up. Our first question is going to come from Josh Patwa at JPMorgan.

Speaker 2

Hi, Josh. Hi, Tom. Good evening, and thanks for taking my questions. Maybe just starting off with the unified product architecture. Curious if collaborating on a unified product architecture with select OEMs limits your ability to secure business with other automakers in any way.

Speaker 2

You know, would other automakers be willing to adopt and align with this unified standard? And just along those lines, if you could draw parallels to another vehicle component or technology that has evolved in a similar manner, that would be very helpful. Thank you, and I have a follow-up.

Speaker 1

Sure. You know, the the, you know, the short answer to your question is we don't believe so. You know, we've been, you know, working with our current customers as well as most of the major leading automakers over the last several years. We understand their spec requirements. One of the benefits of operating a fifteen fifty and having a lot more photons you can distribute, we really designed Halo to meet what we believe are gonna be, you know, practically all the specs of the automotive companies.

Speaker 1

Now look. If there does become, I would say, some, you know, modification more than we would want that we need to make at the time, we'll assess it at that time. We'll look at the ROI of what that business is relative to the incremental investment. We've kinda shown in the past that if that equation doesn't make sense, we will walk away. And so I would say for the business we want, we think Halo will be good enough and meet almost all the specs.

Speaker 1

And, you know, if there are modifications required, we'll do an assessment at that time, but we kinda design in a way where we don't think there's gonna be a lot of those exceptions.

Speaker 2

Understood. That's very helpful. And, you know, I appreciate you want to keep the discussion limited to the q one financials and business performance. But maybe just asking in a different way, I was just hoping if you could provide some insights into the bench strength of the operational leadership team, particularly from a technology standpoint. Who is expected to take the lead on the organization's technology road map?

Speaker 2

And do they have a different perspective compared to the prior leadership? Thank you.

Speaker 1

Austin did a great job of building an amazing team at Luminar. That team is not changing as a result of the announcements today. Paul will be coming in here next week and take over as CEO. I'm very confident that between Luminar's team, our technology, and our relationships that we can execute on a smooth transition.

Speaker 2

Great. Thanks, Tom, and good

Speaker 1

luck. Thanks, Josh. Alright. Who do have next, Aileen?

Operator

Our next question is going to come from Mark Delaney at Goldman Sachs.

Speaker 1

Hey, Mark.

Speaker 3

Hi, Tom. Thank you very much for taking the question. I guess, first on the Halo road map. On some of the prior earnings calls, you spoke about the benefits of Halo and and one of them being the streamlined approach. With what you spoke about today, I'm hoping to better understand what may be changing.

Speaker 3

Is there incremental standardization that you're now planning? Or is this just a continuation of what you've spoken and sharing some of the feedback you've now had from some of the auto OEMs?

Speaker 1

Yeah. I would say, know, we when we unveiled HALO about a year ago, nothing has changed in the underlying design of HALO. We designed it with that specs in in in mind. What's what's really happened over the past few quarters is we talked about moving all our customers to HALO. We we we've successfully done that, and now we're kind of modifying our our organization around that unified product architecture.

Speaker 1

If you go back a year ago, we were working on Halo, we're working on Iris, we're working on Iris Plus. We now have that, you know, I would say there's still some, you know, finalization work we need to do on Iris, that should be completed by the end of the year or substantially completed by the end of the year. So we're gonna be in a position here very soon where we're kind of focusing on one product Halo. So that allows us to align our organization around that unified product architecture. That's gonna allow us to move faster, more efficiently, you know, more cost effectively.

Speaker 1

And then if you combine that with kind of the lessons that we've learned, right, you know, as I've said in the past, when we developed Iris, we didn't do it perfectly. We've learned a lot. We're applying those lessons to Halo. And then I think once you you know, we're now at the stage of what comes next after Halo. We're in the early stages of that, and what we're continually looking at is what do we, Luminar, do better than anybody else.

Speaker 1

And that's the transceiver and the core components of that, you know, built around our LSI technology, like the laser, the ASIC, the APD, that's core. Doing a lot of the embedded software, that's core. There's, you know, a few other core components. Then there's stuff where, you know, like, the the top housing, you know, the the the chassis that kinda surrounds the ladder. There's there's other stuff that I would say is, you know, we can do it, but some of our partners can do it just as well or maybe even better.

Speaker 1

And so we're constantly looking at, you know, I would say narrowing our focus at Luminar about what we do well, do fewer things better, and rely on our partners. It was very successful with what we did to EPK last year on the industrialization front. That allowed us to take a ton of cost out of the business, and it also allowed us to move to move faster.

Speaker 3

Understood. My my follow-up question was also on on Halo, but but as it respects to potential new business wins, as you're having discussions with OEMs and sampling the product with them, talking about the streamlined approach, can you help us better understand where you think you may stand about converting on potential new business awards for in terms of Sirius production? And I guess just you guys you having those discussions with these customers, can you just help us understand who is managing that? Was that Austin? Was that other people?

Speaker 3

And any kind of business implications with Halo that we should be thinking of with the transition? Thanks.

Speaker 1

Yeah. I I yeah. No. As I mentioned before, Mark, we we have a deep and great team here at Luminar. We cover our customers up and down the organization, you know, from the engineering teams that work, you know, on on on the business at our customers on a day to day basis all the way to the top at the c level exact.

Speaker 1

You know, we are confident that we're gonna be able to, you know, you know, manage our customers through this transition, and ultimately, the quality of our team and our technology and our products will speak for itself. So I'm not personally worried about that there. What I would say on Halo, we have multiple development contracts on Halo now with multiple customers. We are, you know, getting to the point now where we're gonna be start delivering advanced prototypes, you know, and at, you know, at once those advanced prototypes do what they're supposed to do, we're confident that those are gonna be converted into series production contracts, you know, hopefully, sometime here in the near future. Thank you.

Operator

Thanks, Mark. Our next question is going to come from John Babcock at Bank of America.

Speaker 1

Hey, John.

Speaker 4

Hey, good evening. Thanks for taking my questions. I guess, first of all, I was wondering if there are any changes to discuss in terms of developments with customers, anything new to announce there? And then also, just back quickly to that Halo development, if you could also just talk about you know, when you expect most investment in the product development to be completed, you know, with Halo.

Speaker 1

We're we're in the middle innings, I would say, of the investment in Halo. We've already made a good chunk. You know, we have some more to do. And so, you know, middle innings, I think it was the best way where we described on And, like, look, we're continuing to make you know, move the ball down the field with our customers on Halo and doing that development work.

Speaker 1

And, you know, those are gonna convert to series production contracts if we continue to execute at some point in the future here. I've kinda given up guessing, you know, when those dates are exactly gonna be. But as I say, we're we're making good progress in moving the ball down the field.

Speaker 4

Gotcha. And launch remains launch timing remains largely unchanged at this point?

Speaker 1

We, you know, we're we're looking to launch this, you know, somewhere around end of twenty six, early '20 '7. You know, we've actually had a customer that pulled in one of their timelines there, and the team's working around the clock to accommodate that.

Speaker 4

Thank you. And then just last question, if you could just talk about what's driving the improvement in your operating expense guidance? And that's all I have for you.

Speaker 1

It's the actions we talked about last year being fully reflected in the P and L.

Speaker 4

Thank you.

Operator

Thanks, John. Our next question is going to come from Winnie Dong at Deutsche Bank.

Speaker 1

Hey, Winnie. I like how you have a, like, hand raise icon up there.

Speaker 5

Yeah. Thanks so much for for taking my question. Just maybe a quick follow-up to that last question. Do you see that the OpEx guide is lower? Just curious if there, if there is any sort of additional cost reduction actions that, taken place to to achieve this versus the previous guide.

Speaker 5

And then as we look beyond, you know, this year, just curious how you think about cost as you expand, you know, the Halo Unified architecture and then grow customer base from there, maybe, you know, beyond this year.

Speaker 1

Sure. Yes. So, know, our our quarterly OpEx on a non GAAP basis for this past quarter was $45,000,000. Our target for the end of the year is in low thirties. We, you know, we have yeah.

Speaker 1

You know, clearly, we're gonna need to take some actions. We have all of them identified, and we've already started to implement them to get them there. So, yes, there will be additional cost actions identified executing upon them. In terms of, you know, incremental investments in in Halo, I think the good thing in there is the invest yes. We're as I mentioned before, we're kinda through the middle innings of of Halo investment, you know, that so there are some additional investments that we continue to make.

Speaker 1

But at the same time, you know, we've kinda stopped work on Iris Plus. That will start, you know, help over the next few quarters, and then, you know, we're kinda ramping down, you know, the work that needs to be done on Iris. And so any, I would say, incremental investments we need to make in halo relative to the current run rate for q one isn't gonna be as big as kind of, like, the wind down of, you know, the work on Iris, Iris Plus, as well as the other cost actions that we've identified.

Speaker 5

Got it. Thank you. And then my follow-up is on just one particular customer. Right? I think Nissan, you may have heard, you know, through media that it's going through some of this, you know, own challenges.

Speaker 5

We saw some headlines on, you reducing workforce with the recent, you know, manage management change there. I'm just curious to hear if this impacts your conversation with them, if at all, in terms of, you know, their conversion to Halo future business opportunities. Thank you.

Speaker 1

No. You know, the short answer is no. I would say everybody in the automotive industry is kinda going through what Nissan's going through, what Luminar's going through. Right? It's it's kinda tough times with, you know, the current macroeconomic environment as well as the geopolitical uncertainty.

Speaker 1

You know, the good thing about a company like Nissan is they're committed to new technologies and making their vehicles safer. And that commitment, you know, is at the peak of the cycle and at the trough of the cycle. So we haven't seen, you know, any change there in, you know you know, Nissan's development efforts around Halo.

Speaker 5

I have a long quick follow-up, if that's okay. Just on tariffs, I I know you mentioned, you know, you're talking to customers on, you know, recoveries. Can you just maybe help us size the impact? And then if there's any

Speaker 1

side or It didn't say recoveries. I mean, if you kinda you know, look. I I I said we for q one, we had about a million dollar a month or or million dollar tariff impact, and then tariffs went in in March. So you can kind of extrapolate from there. You know, it isn't know, you one solution is recovery.

Speaker 1

I think as, you know, like a a lot of the rest of the world, as we become tariff experts over the last thirty, sixty days, we've we've found some clever ways working real time with our customers to mitigate the tariff expense for, you know, I would say, you know, all parties. And so, you know, we're in the process of of implementing that solution. And once that solution's implement, I don't expect to pay, you know, a material amount of tariffs for the remainder of the year, you know, barring any changes, which, you know, have happened frequently over the last, you know, couple months.

Speaker 5

Gotcha. Thank you so much.

Speaker 1

Great. Thanks, Wenyu. Who do have next, Eamon?

Operator

Our final question is gonna come from Richard Shannon at Craig Hallum.

Speaker 1

Hey, Richard.

Speaker 6

Hey, Tom. How are you? Thanks for taking my questions. Coming in hot with some with some other calls and callbacks here, so I'm not sure if you've touched on apologies if you have. But I think I heard some comment from you about, gross profit outlook here or being in a gross loss position, I think, throughout the rest of the year.

Speaker 6

Maybe you can just discuss briefly the the dynamics under which we get that to a positive thing. Is that a a result of volumes and or cost reductions that may occur here? Just help us kinda lay that qualitatively out.

Speaker 1

Yeah. And and we talked about this at our year end call in March. So this isn't, I would say, new information. Because the volumes for Iris are lower than expected, we're you know, I would say we're struggling to kinda get those the unit economics into the positive territory where they need to be to, I would say, have, you know, recurring positive gross margin. We have been able to get to gross margin on a quarterly basis like we did this past quarter.

Speaker 1

What we need is a large amount of sales typically to the adjacent markets or non automotive customers where the ASPs are kind of multiples of what we've seen there. Yes. Higher volume will help because that brings down our sensor cost, you know, getting, you know, more adjacent market sales, you know, at higher SAPs and, thus, better sensor economics helps as well. Those tend to be lumpy and more predictable. So I don't wanna rule out that you're not gonna see, you know, a, you know, quarterly gross profit again with Iris.

Speaker 1

I think we're gonna need to get the halo where you kinda see that sustainable and at margin levels where I think, you know, people are gonna be a lot more happy.

Speaker 6

Okay. Fair enough. That makes sense. Second question for me is just kind of, looking at the auto industry in general here, obviously, Luminar is targeting mostly Western world OEMs. Wanna get the sense of of, stability in autonomy road maps across the, you know, the the the the top, you know, twenty, thirty OEMs out there, whether they're, you know, firming up or even pulling forward.

Speaker 6

I think I heard you mention in previous answer about maybe a pull forward with one particular one, but just wanna get a general sense of of whether we're seeing push outs and uncertainty or we're seeing stabilization or even, you know, schedules firming up.

Speaker 1

Yeah. It's a great question, Richard. You know, I would say over the last couple years, we've seen pushouts, almost across the board for a variety of reasons that we talked about in the past. I've seen some, you know, early signs, you know, one or two in particular, push ins, over the last few months. But I would say, haven't seen enough data yet where I would say that that's a trend.

Speaker 1

I would say it's more, you know, light at the end of the tunnel. So there are some encouraging signs, but I wouldn't get too excited just yet.

Speaker 6

Okay. Fair enough. Thanks for that update, Tom. That's all for me.

Speaker 1

Great. Thanks, Richard.

Operator

That marks the end of our q and a session. I'd like to thank everyone for their patience with our webcast this quarter and for the analysts that participated in our q and a session. We look forward to updating everyone next quarter, if not sooner. Thanks, everyone.

Speaker 1

Thank you.

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Key Takeaways

  • Austin Russell resigns as CEO after a board inquiry, remains on the board, and Paul Ritchie will take over as CEO around 05/21/2025.
  • Luminar is consolidating its LiDAR products into a unified Halo platform, which is expected to accelerate development and reduce costs across OEM programs.
  • Two major restructurings completed last year achieved about $115 million in annualized OpEx savings and $100 million in stock‐based compensation reductions.
  • Q1 results included $18.9 million in revenue (down 10% YoY), a GAAP gross loss of $8 million, a non‐GAAP gross loss of $6.4 million, and $188 million in liquidity.
  • The company reiterated its 2025 outlook of 10%–20% revenue growth, lowered its non‐GAAP quarterly OpEx target to the low $30 million range, and expects to end the year with over $150 million in cash and liquidity.
AI Generated. May Contain Errors.
Earnings Conference Call
Luminar Technologies Q1 2025
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