AEye Inc (LIDR) 2022 Q2 法說會逐字稿

Thank you and welcome everyone to AEye's second-quarter 2022 earnings call. With me today are Blair LaCorte, our Chief Executive Officer; and Bob Brown, our Chief Financial Officer. Earlier today, we announced our financial results for the second-quarter 2022. A copy of our press release can be found on our website at investors.aeye.ai.

Before we begin, I would like to remind participants that, during this call, management may make forward-looking statements, including, without limitation, statements regarding our future operating results, future performance, growth strategy, and financial outlook.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the industry, and other conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult or impossible to predict.

Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against placing undue reliance on any of these forward-looking statements. You can find more information about the risks, uncertainties, and other factors in our reports filed from time to time with the Securities and Exchange Commission, including in our quarterly report on Form 10-Q for the period ended June 30, 2022.

All information discussed today is as of August 15, 2022, and we do not intend and undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law.

In addition, today's discussion will include references to certain non-GAAP financial measures. These non-GAAP measures are presented for supplemental informational purposes only, and should not be considered as a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available on our press release, and you should refer to our Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Measures in our earnings release. With that, I'll pass it over to Blair.

Thank you, Clyde. And thank you for joining us and investing your time to participate in our quarterly update. As you have seen in our earnings release today, we had a solid finish to our second quarter, meeting our revenue expectations and significantly outperforming our expense and cash plan.

Our main investor themes and objectives for 2022 remain unchanged. We see strong evidence that customer demand for adaptive LiDAR will continue to accelerate as we prepare to launch the AEye 4Sight platform in Q3.

As always, our focus on execution remains paramount. Given the present global market and macro business environment instability, you will see that we have proactively taken actions in Q2 to optimize schedules and modulate our spend. As a result, we ended the quarter with a cash balance that was $11 million higher than our plan.

Today, we'll be highlighting four of our key 2022 objectives, and we'll update you on our progress in Q2. First and paramount is the release of both the AEye and Continental products on our next generation 4Sight platform.

In Q2, we made the initial transfer of our platform to our contract manufacturing partner, Sanmina, on schedule. Sanmina will be manufacturing our AEye 4Sight product line for the industrial markets. While we are not experiencing a reduction in demand, the disruption in global supply chains has delayed the start of production to late Q3.

In Q2, we also transferred to our lead customer, Continental, their B sample on schedule. Continental will be manufacturing their HRL131 ADAS product in their state-of-the-art Ingolstadt, Germany facility. We believe we're the only LiDAR company that expects to have the capability to manufacture completed LiDAR units in high-volume production lines with two industry-leading global partners in 2023.

Second, since our hardware design freeze earlier this year, we have been advancing our ability to utilize our sensor-based operating system to configure hardware performance dynamically as a key differentiator from our peers. These software-definable sensors allow AEye to continually innovate between hardware cycles. And today, we'll show you several new groundbreaking capabilities we added in Q2.

Third, we have been engaging with all of our key end-user markets as we prepare to roll out our new products. For example, we will share with you how quickly we have extended our reach into aerospace and defense with several new strategic engagements.

Fourth, we continue to build out a world-class team, public company infrastructure, and optimize our liquidity and the currently volatile financial markets. In short, today we will show you material progress across all four of our stated objectives.

I will focus today on our product, our manufacturing progress, and customer traction. Bob will discuss financial results and metrics that support these efforts. I will then conclude by sharing a few closing remarks. The call will then be open for Q&A.

As I've outlined in our executive summary, we have made significant progress on our path to productization, both on our AEye product with our partner Sanmina and our first AEye ADAS license product with our customer, Continental. For our AEye product, you can see Sanmina is ramping up our initial sensor production line. Our precision optical components are sourced from top-tier suppliers worldwide for final sensor assembly in this Sanmina facility.

We also jointly developed and deployed an automated state-of-the-art calibration and end-of-line testing and validation facility where each sensor is put through its paces to ensure that it reliably delivers AEye's renowned superior performance. As we head towards large-scale distribution, we are also testing our new ruggedized, lower-cost, environmentally-friendly packaging.

For our automotive ADAS product, we are excited to publicly share for the first time a major milestone for AEye. We have transferred manufacturing of the B sample Continental HRL131 high-performance LiDAR to Continental's world-class manufacturing facility in Ingolstadt, Germany. It is our belief that this is the first time that a major Tier 1 has transferred into production a licensed long-range LiDAR technology with the intention to delivering it to their installed customer base. This is a validation of our unique capital-light business model in automotive.

Now let's switch gears. Excuse the pun. Today, we would like to share something remarkable. In the next two minutes, we will demonstrate how we utilize our sensor-based OS to instantaneously transform our LiDAR hardware into a completely new system, reconfiguring all of the individual components entirely through our software operating system.

As [Samina] pointed out in our last earnings call, we can quickly add capabilities to enter new markets, enhance features within existing markets, and customize performance for evolving use cases, all without retooling the manufacturing line. You can think of this software configurability similar to how smartphones utilize an OS to add capabilities to the same phone using apps and completely transforming the same hardware into a different product, such as a pedometer, a document scanner, or even a Geiger counter.

Today, we're demonstrating what we believe are two industry-first capabilities that could power new applications: our 4Sight platform's new zoom and stabilization. Let's start with ZoomCam. Similar to how cameras change between wide-angle and telephoto modes, 4Sight can dynamically zoom in on objects on the fly to add resolution at extremely long distances.

Remember, passive LiDAR systems are limited as they scan with fixed patterns at fixed distances. This new capability not only opens up new markets, but improves confidence in object tracking for existing customers.

In this automotive example on the highway, we received 3 points on an SUV at 300 meters. With ZoomCam enabled, we improve resolution on distant objects ahead and now receive 19 points from the same SUV beyond 400 meters. This six-times increase in resolution is a game changer in autonomous decision-making.

In rail, trains equipped with 4Sight could have one mode designed for scanning a station or platform, and can use ZoomCam while in transit to detect track obstructions at extremely long ranges to allow adequate train stopping distance. In aerospace and defense, helicopters could utilize ZoomCam for longer ranges to detect wires or birds in their path and switch to a wider field of view to locate the ground during landing maneuvers.

Now let's show you SteadiCam. Similar to what a gimbal does in hardware to help cameras compensate for unsteady movement, 4Sight can dynamically adjust the software for any vehicle or use case. All roads aren't flat, smooth, or straight. ADAS and autonomous vehicles require this capability to enable horizon tracking to compensate for less than optimal road conditions. This becomes even more important for off-road, high-speed, or weather-impaired scenarios.

In this video, we're using our automated testing rig to move the sensor pitch to simulate varying road conditions. You'll notice with SteadiCam disabled, the dense region of interest moves up and down with the sensor pitch, which we know is a problem when a vehicle is going over speed bumps, potholes, or sloped roads.

If we look at the same scene with SteadiCam enabled, you'll see 4Sight automatically adapting to the change in pitch dynamically by repositioning its laser scan pattern to keep the region of interest where it needs to be, right on the horizon. When you look at the two outputs side by side, the importance of software-enabled SteadiCam becomes apparent as the AEye sensor is able to put more density where you need it.

This patented horizon-tracking capability, we believe, is a key to adoption of highway autopilot, a popular feature consumers have been requesting from automotive OEMs. This is a game changer not only in automotive, but also for off-highway applications such as mining, construction, and agriculture. SteadiCam allows these autonomous industrial vehicles to easily navigate a constantly changing ground elevation which impacts vehicle pitch.

As we prepare to launch our new AEye and Continental licensed products in Q3, we already have significant traction across several key markets. Again, in automotive and trucking, we use a licensing model. Our lead customer is Continental, who is building their next-generation high-performance long-range LiDAR on the AEye 4Sight Intelligence Sensing Platform.

We are jointly engaged on multiple opportunities with major global automotive and trucking OEMs. Continental's B sample of their high-performance HRL131 LiDAR has been well received. The performance of this product combined with Continental's ability to scale production quickly puts us on track to move to C sample phase in 2023.

In the smart infrastructure market, AEye's 4Sight sensors are being installed by top-tier system integration partners for applications such as automatic incident detection, smart tolling, wrong-way driver detection, and smart intersections.

The implementations have been worldwide, from intersections in California and Florida, to pedestrian and bicycle detection systems in Ireland, to highway incident detection in Virginia, and automated tolling applications across Europe. We will be showcasing solutions from many of these partners at the upcoming ITS World Congress event in Los Angeles this September.

Today, however, we want to highlight our progress in a market that is well known to AEye's executive team: aerospace and defense. Our collective defense industry experience is encapsulated in our systems approach.

AEye's 4Sight sensors are uniquely capable of long-range detection, exceeding 3 kilometers with custom optics; are flexible enough to track a bullet at greater than 20,000 frames per second; and can either cue off of other sensors or self-cue, adapting to place high-density regions of interest of up to 1,600 points per square degree around targets.

These capabilities, enabled by 4Sight's in-sensor perception, greatly expand the utility of AEye and machine learning for defense applications. Add in additional capabilities like ZoomCam and SteadiCam, and you can see why these customers are so excited.

I would be remiss if I also did not mention at this point capabilities enabled by a recently granted AEye patent on optical communications that directly expands our ability to extend our solution envelope for aerospace and defense. With this capability, the same sensor can not only navigate and acquire targets, but could allow the LiDAR to optically communicate between assets in theater, enabling the ability to coordinate and swarm where Wi-Fi and other communication systems aren't available.

Most importantly today, we are announcing a cornerstone partnership with Booz Allen Hamilton, one of the Department of Defense's premier digital systems integrators, and a leader in data-driven artificial intelligence. In addition, we will be integrating AEye's 4Sight LiDAR platform to enhance Booz Allen's real-time embedded processor perception stack with high-quality spatial information, and ultimately to enable their digital battlespace vision.

This vision combines technologies like high-performance LiDAR, artificial intelligence, machine learning, and edge computing, providing an information-driven, fully integrated conflict space to realize information superiority and achieve overmatch across all warfighting domains. This partnership with Booz Allen Hamilton significantly accelerates our time to market in the aerospace and defense domain.

In addition to our strategic partnership with Booz Allen, we are also excited to announce another highly respected partner in the aerospace market, LAKE FUSION Technologies, a company with a proven history of delivering LiDAR-based perception and software applications. We will be working with LAKE FUSION to create airborne applications for deployment in 2023.

To support these expanded engagements, we have opened a new office on the Space Coast of Florida that will be the focal point of our efforts in this area. Our new Florida office will be led by industry-veteran Steve Frey, who has extensive aerospace and defense experience at companies like L3Harris and Lockheed Martin.

Now let's turn to our financial update with our CFO, Bob Brown.

Thanks, Blair. And good afternoon, everyone. I would like to discuss our Q2 financial performance, our strategic cash management, and then speak briefly on our outlook for the balance of the year. Revenue in the second quarter was $706,000, which was consistent with our guidance of $700,000 of revenue for the quarter.

We have been managing our spending carefully over the last quarter, given the slowing economy and market volatility. We are continuing to grow our team and advance our technology, but we are doing so in a very thoughtful way.

GAAP operating expenses were $25.9 million in the second quarter, an increase of $1.4 million from the prior quarter, which relates to strategic investments to scale our team and advance our R&D, and sales and marketing efforts. Conversely, our G&A expenses declined by $1.5 million quarter over quarter.

In addition, our non-GAAP operating expenses were $19.1 million in the second quarter, down slightly relative to Q1. Net loss was $26.5 million on a GAAP basis, and GAAP EPS was a loss of $0.17. Net loss on a non-GAAP basis was $19.8 million, and non-GAAP EPS was a loss of $0.13, or $0.02 better than the consensus estimate for Q2.

We continue to manage our cash carefully. Net cash used in operating activities for the quarter was $17.1 million, which increased by $1.1 million from the prior quarter. Our capital expenditures in the quarter were nominal, under $1 million.

We exited the second quarter with $125.8 million of cash, cash equivalents, and marketable securities on our balance sheet. That includes $1.4 million in proceeds during the quarter from issuing shares under our $125 million common stock purchase agreement, which now has up to $123.6 million of potential proceeds remaining.

So when you consider our cash, cash equivalents, and marketable securities, together with the potential proceeds from our remaining common stock purchase agreement, we have total available liquidity of approximately $250 million. We believe that provides us with a solid financial base to support our growing business. We expect to make modest use of our common stock purchase agreement in the third quarter.

We continue to make improvements as an organization, and have grown from an R&D-focused entity into a scalable, product-focused commercial operation. We believe that our capital-light business model will allow us to optimize our resources in order to mitigate risks and take advantage of market shifts faster and more effectively than our peers. By focusing on our core competencies, we intend to continue to extend our industry-leading position.

Let me turn now to our near-term outlook. We expect to see modest revenue growth over the next few quarters as manufacturing of our commercial product begins to ramp up at Sanmina, setting up our ability to scale volumes in 2023.

As Blair mentioned, our initial ramp is getting underway in Q3. However, we have not been immune to the impact of supply chain challenges, which has had a direct impact on our ability to build product at expected volumes requested by our customers. Because of these industry-wide constraints, we're taking a more cautious view on revenue for the second half overall.

We expect our revenue for the third quarter to be in the range of $700,000 to $900,000. While we have not seen a reduction in demand, we expect that these global supply chain challenges are going to be with us for a while longer. For the full year 2022, we now expect our revenue to be in the range of $3 million to $4 million.

In response to this uncertain environment, as we noted earlier, we've been managing our spending carefully without compromising our expected growth in 2023. As a result, even at the lower end of our revenue guidance, we expect our full-year net loss on a non-GAAP basis, excluding stock-based compensation expense, to be in the range of $90 million to $95 million, improving from the $100 million non-GAAP net loss we guided to at the beginning of the year.

We do expect our capital expenditures to grow modestly in the second half as we work with our contract manufacturing partners on the production ramp. While we anticipate slower growth in the broader economy and supply chain challenges to persist in the near term, we have an experienced team to manage through that, and we're confident in both the superiority of our product and the market opportunity in front of us.

With that, I'll turn the call back to Blair to wrap things up before the Q&A. Blair?

Thank you, Bob. I want to close by thanking each AEye team member for their impactful contributions for this successful quarter, where we made great strides in product development, customer engagement, and enhancing our financial strength. We look forward to continued progress in the second half of 2022 and believe we are well positioned to scale in 2023. Now, let's open the call for questions. (call ends abruptly)