Luminar Technologies, Inc. Price & Performance (LAZR)

Yep.

Oh, perfect. Perfect. Alright. Well, good afternoon, everyone. I'm calling in from, just outside of NVIDIA's GTC in Silicon Valley where we're showcasing some of our LIDAR and Sentinel software on and with NVIDIA's automotive platform to, to OEMs. So good traction there. And, as a recap of today's news, you know, excited to be able to get out by with the outperformance. This quarter. A strong finish to your end from a sales standpoint, commercial momentum perspective, and achieving the product unification around Luminar Halo. Excited to jump in with regards to not just what this year was, but also what 2025 has to offer and also as we look to scale up our wider shipments by more than 200% this year. But first, I wanna start today off with a little bit of a refresher of the state of union around LiDAR and Luminar.

We get into some of our achievements, for this past year and what's ahead. So at the beginning of this last year, I described how Luminar had stand at stood at the crossroads of two different realities. The core of our business had never been stronger. With our technology proven and Iris successfully industrialized for a global production vehicle, Yet at the same time, we all knew the broader automotive market was challenged. On timely launches of new vehicle platforms. Of course, today, you know, we stand having successfully launched in the first global production vehicle, with the Volvo e x 90 being shipped with leading class technologies for the first time at global scale like Luminar and NVIDIA, to show the world what's possible. Of course, later on last year, you know, after the kickoff of the beginning, we unveiled Halo, during Luminar day, be able to show how we're gonna scale it global stage. We'll talk a little bit more about that. So those in the automotive industry know and fair to say that it's undergoing a seismic shift with the introduction of new technologies, you know, ranging from powertrains to advanced compute to LIDAR on new vehicle platforms.

And introducing any one of those kinds of technologies to future vehicles is a major undertaking much less multiple at the same time. Into what automakers are calling software defined vehicles. This is a monumental undertaking with complexity that cannot be under or that cannot be overstated. While also driving significant disruption up and down value chains. And it's no secret that this result such that many automakers had taken longer than their initial targets a few years ago to launch these new vehicle platforms as they collaborate with a differentiated supply base and develop centralized vehicle software systems from scratch. With that said, one thing is very clear. Compared to a few years ago or even recent history, more automakers than ever are planning to integrate things like LIDAR, AI, and advanced computing into their next generation vehicle lineups. The majority of them expecting to do so by the end of the decade. The question is no longer if LIDAR is a relevant technology for the industry. But rather when it will become standardized across vehicles. Just like other safety enhancing technologies in the past, like radars, cameras, airbags, seat belts, or even today, new technologies like GPUs. In vehicles.

And unlike the electronics industry, you know, with quick paced roll ins and outs of products, The automotive industry is one of those very high barrier to entry, but also very high barrier to exit industries.

It takes a substantially more conservative and decisive approach to integrating and rolling out new technologies. Time and time again, it's generally a ten to twenty year adoption cycle to when the first new technologies are introduced, to when they start to become standardized or even eventually mandated on vehicles. We witnessed it with everything from mobilized vision technologies to what's happening with, you know, the recent compute integrations to, say, for example, automatic emergency braking capabilities. So the automotive industry is not like that in the sense that your next generation phone or tablet or VR headset is introduced in consumer hands year after year. These technologies take years to be able to be developed, much less to automotive grade qualifications, validated, and integrated into platforms, and especially when those technologies are safety critical like LIDAR. This is a highly complex process, and people's lives are at stake the industry, so it moves at a very deliberate pace. And I truly believe that just like those other technologies introduced to that you described before, LiDAR in every vehicle is inevitable. It's just a matter of development progress and time. This sentiment has been echoed by industry leaders you know, that we've seen both privately, to us as well as [indiscernible] On a number of occasions.

And with a a recent example, being, for example, Nissan just on their most recent earnings call. They specifically spoke around revolutionizing autonomous driving technologies next generation collision avoidance features utilizing LiDAR for widespread standardization first with them and then the broader industry. And I'm frequently asked the comparison is made of of what's the difference differentiation specifically for Luminar and Luminar's technology and LiDAR. And, you know, it's it starts off with I would say, what we see in the industry is a little bit of a bifurcation to what you call kind of a premium segment for the market and then a more lower cost commodity segment for the market. That particularly we've seen gains in traction notably in China. And you know, as a reminder, one of the things that makes Luminar's LIDAR unique is the fact that we built our own technology from the chip level up at a different kind of wavelength of light versus using more commodity off the shelf. Components at nine zero five nanometers. We use them at fifteen fifty nanometers. That allows us to output orders of magnitude more pulse energy into the environment than nine zero five nanometers while maintaining eye safety.

Whereas nine zero five nanometers is substantially limited. That allows us to detect even some of the hardest to see objects at distances past 250 meters in all kinds of lighting conditions, and stands as dark contrast to our competitors' technologies which can generally only see those kinds of difficult to see objects at a fraction of the distances limiting the kind of speeds the vehicles can operate, as well as, not maximizing the safety capabilities that can be achieved. And while some of those sort of perception distances can be helpful for lower speed driving applications, they're insufficient to ultimately safely maneuver at higher speed. And that's the fundamental difference that our LIDAR enables and what is required to ultimately unlock level three autonomy going beyond just the basis of design and capabilities. Of course, it still significantly and further enhances with the extra performance, the capabilities you can expect from a safety standpoint for level two and beyond.

Now happening, right now in the market is that automakers and some of these platform providers, other companies, are so initially using the LIDAR for these assisted driving capabilities while they develop those autonomous level three capabilities ultimately be able to enable drivers to take their hands off eyes off, and, you know, use your phone, work on your laptop, watch a movie, take a nap. You know, whatever it may be. In your vehicle. And we're starting to see some of those, you know, in global markets as well as the the the China market in particular, excited to see that you know, there's some significant adoption there. As the all those OEMs moving very quickly. You know? But that said, on one hand, the low performance LIDAR is okay now for some of those vehicles, particularly in China. That can support level two applications know, when drivers remain actively engaged and the cost is fairly low. But it'd not be sufficient to ultimately unlock a higher level of performance and capabilities, higher levels of safety, and higher speeds. And that's really where Luminar comes into play. We're ultimately building LiDARs that you can have those capabilities to be fully realized.

And you know, this is where we get to see significant adoption know, from the Western world OEMs, representing you know, on the order of 90% of the global volume, to establish these kinds of cases. And something we're very excited about. So, of course, think it's important to say that as software for level three, the and higher capabilities is solved, for and lidar's full value is continue to be realized. We believe that that premium segment around LiDAR will ultimately be you know, a a critical part of the ecosystem in a winner here. And that's further supported, I would say, by beyond just the performance capabilities, substantial cost reductions with what we have, like, with Luminar Halo, to be able to enable even broader widespread adoptions that, ultimately surpass the other segments. Now at at Luminar, we firmly position as a leader within this high category with our fifteen fifty nanometer technology. And we believe that it's really the only viable solution for looking ahead, what the requirements are for level three and beyond. And at the same time, only solution is gonna maximize the safety capabilities for the vehicle. So this leadership position that we have in the industry is underscored by traction we continue to see with our automaker partners.

And particularly with our next generation LiDAR, Luminar Halo. Our Iris product was there to be able to show what was possible as we developed it and successfully launched it with Volvo. And now Luminar Halo is poised to lead the industry in performance, size, and cost. Its performance is multiples better than those of our previous generation of products and size a fraction thereof. It's a multiple of the efficiency. And it's all in a highly efficient package seamless integration. And in working with our numerous automaker partners over the past several years, we've not only learned and developed the performance specifications and requirements for the products in LiDAR more generally, We've also gained an incredible amount of design and manufacturing know how in IP and have learned the distinct advantages, disadvantages of every single iteration of at the component level up you know, from the five different generations of Liner products that we've gone through. So, again, ultimately, Luminar Halo Gonna Be The Key Enabler What We Believe To Be A Widespread Mass Adoption Of LiDAR. Certainly In The Western world. We're making solid progress with our OEM partners. We demonstrated, you know, Luminar's halo's, performance now to several OEMs, are actively engaged in coordinated development efforts.

And this is something that, we highlighted in presentation of now. We actually have fully integrated samples of Luminar Halo, to be able to to showcase, you know, with, you know, more mature point clouds that we're continuing to develop. And today, we're also beginning to see green shoots in the industry. You know, we've seen a first shift to the left by an automaker, to pull forward the LIDAR rollout relative to their LIDAR, relative to their prior LIDAR plan. With an earlier vehicle platform. And we've been working with this automaker for several years and are excited about what's ahead. So the thing is what makes this possible is all around the accelerated development timeline for Luminar Halo. As well as our decision to simplify our overall product portfolio. Historically, we developed a number of different lidar related products simultaneously. You know, between the Iris family of products as well as what we have been working on in the background with Halo. With Iris initially there to be able to primarily serve Volvo and the requirements there before it's forked off to, you know, dozens of other companies that we're able to provide it to. And then, subsequently, also, Iris Plus.

You with our our lead OEM customer in that respect. So would say this is that from a development standpoint, now with the work on Iris largely complete, And Iris Plus as as as I mentioned, before, you know, and from the announcement and as we're talking about here, is transitioning to be Halo from our lead customer with Iris Plus we now have a unified platform together that is a superset of all the different OEM requirements for what's needed in the [indiscernible] And that allows us to have a singular product as opposed to a bunch of different variations of the same kinds of, of product. To be able to simplify our development efforts significantly. Saving our cost, enhancing efficiency, enhancing speed, among other things there. This also gives us an opportunity to transition customers with Iris into series production to Luminar Halo on mid cycle refreshes. So as a result of all of those factors, we're really all in on Halo and excited to be moving full speed ahead. So I would say this, is that from a broader perspective, you know, we had historically built Luminar to be able to have the capability to develop multiple products simultaneously around the lidar side.

We know as of last from some of the different restructuring actions that we take to streamline the organization, We've implemented it. They've been largely effective. And, you know, haven't materially affected the, the overall development timeline for what we've had. In fact, it's actually streamlined and sped things up in many respects. And when it comes down to it this year, as we shift towards from developing, all these different kinds of Lidar products that one unified LiDAR platform we think there's gonna be some opportunities for dramatic efficiency improvements that we're gonna get to realize this year.

And again, why make this move now in terms of a a a broader shift in our business model? It's all because we're able to our customers and our key customers on board with the Halo platform you know, moving full speed ahead in the same direction with shared requirements. And that's something that we've been working for frankly, many years on, to be able to do and align those requirements and expectations. So we're gonna be talking a little bit more about that, and they'll have more to share over the coming weeks months. About, you know, how we will reinvent Luminar know, more radically as an organization this new kind of business model of less around custom developments for and more with that shared unified platform. And, really, this becomes possible because we had invested nearly $2,000,000,000 over the past decade to be able to create, industrialize, and launch an entire technology platform ecosystem [indiscernible] all the way up to the LIDAR, up to the software levels. Have some of the best engineering and technical talent in the industry as well as technology on the shelf because of those invest So we're now on the other side of that investment curve, which allows us to be able to realign the business without materially affecting near term deliverables.

Revenues, etcetera. So in concert with our board of directors, we're in the throes of developing that that new strategic plan for Luminar under this new business model. Of that unified platform and look forward to sharing more. Lastly, before I turn it over to Tom, wanna take a moment to review some of our key achievements from a business milestone standpoint and highlight some of the impressive work from the Luminar team in 2020 At the beginning of last year, we outlined four business milestones to achieve by year end. Number one was passing the final run rate production audit to achieve a global start of production with Volvo. And ramp accordingly. Second was launching a TBK facility for additional capacity and improved cost. Number three was to unveil our next generation LiDAR. We later unveiled this halo. Deliver samples to customers. Four was to expand ecosystem around our Lidar. And I'm happy to say that we've delivered across all four of these key business milestones at a company level. Achieved the start of production for Volvo with EX 90 this past year, and we're also awarded the Volvo e s 90, which is the sedan, so to say, equivalent of the e x 90, will go into production this year.

We also launched an expanded industrialization partnership with TPK in our transition to an asset light model for industrialization. We hosted a very successful Luminar day where we unveiled this next generation LiDAR, Luminar Halo, and generated the first point cloud from Luminar Halo since while demonstrating its capabilities to customers Feedback has been tremendously positive. All of this while aggressively, you know, working to restructure costs, you know, as part of the business. And, of course, while not without its challenges, I'm immensely proud of the Luminar team for all that we've achieved last year under the kind of broader macro circumstances. Have the utmost confidence in our ability to execute for 2025, And today, we're gonna be outlining a few of those key milestones achieved by the end the year. So you can be able to to take a look. The the first and foremost is to be able to continue to ramp the production delivery of the Iris related sensor for series production customers. And achieve those economies of scale. You know, with over 200% growth associated with our deliveries. Into the market. The second one was meeting the key requirements for Halo. For our customer contracts and execution.

And number three was to be able to streamline the business with the new business and operating model that we described as we have that unified product portfolio going from [indiscernible] developing five different variants, you know, of of products at the same time to one. With Luminar Halo. And that's gonna help accelerate our efficiency, as a business and path to profitability as well. So we remain very confident in our strategy and execution, Our technology leadership remains unparalleled in the high performance LIDAR space. Our customer relationships are progressing well, and we're while we're pragmatic about the near term industry challenges, we're very optimistic about the market's long term expansion. And as the industry continues to shift towards safer vehicles and towards Level three autonomous driving capabilities, we firmly believe Luminar is exceptionally well positioned to capitalize on this enormous opportunity ahead.

And with that, I'll turn it over to Tom to discuss financials.

Thank you. Great.

Thank you, Austin. Let's start by reviewing q four financial results.

Revenue for the quarter came in better than expected at $22,500,000 up 45% quarter over quarter and 2% year over year. The primary driver of this revenue growth was higher sensor sales. Both to Volvo and non series production or adjacent market customers. During q four, our sensor sales to adjacent market customers increased substantially mainly due to a large order from one of our customers. While we expect this customer will continue to generate significant revenue in the longer term, we expect the shipments during the most recent quarter satiated their near term demand. During q four, we shipped over 4,000 Iris sensors to our customers and over 9,000 for the calendar year. The vast majority of these sensors were shipped to Volvo. Moving on to gross margin. For the quarter, we reported positive gross profit of $12,500,000 on a GAAP basis and $14,000,000 on a non GAAP basis. Three factors drove our positive gross margin: First, we reversed $10,000,000 of NRE losses accrued in prior quarters related to our Iris Plus development work. As Austin mentioned, in Q4, we transitioned our lead Iris Plus customer to Luminar Halo development. Allowing us to terminate this Iris Plus development work and reverse that contract loss accrual.

The second factor that drove pro positive gross margin was planned production down at our Mexico facility to align our production with our customers' demand. Allowed us to ship sensors from inventory that were already marked down to ASP levels. Estimate this was an approximately $4,000,000 benefit to gross profit during the quarter. The third factor was the previously mentioned large censorship into an adjacent market customer, which was done at, you know, significantly higher ASPs than what we sell for at in series production. We estimate that this was about another $4,000,000 benefit. Some of these factors like production downtime, will not repeat going forward, and others, sensor sales to non series production con customers will repeat but will be choppy on a quarter to quarter basis. However, we are encouraged that we generated a positive gross profit during the quarter. While reaching gross profit positive is an important milestone for us, we are guiding to be modestly gross margin negative for each quarter in 2025, and I'll discuss more of that later. Now to discuss and give an update on our cost option, actions as well as our OpEx. Last year, we announced two major restructurings, one in April and one in September, that allowed us to significantly improve our cost structure.

The April actions were expected to achieve $80,000,000 in total cost savings, about half in cash, half in stocks, by the end of 2024. And the September actions were expected to achieve an 80 an additional $80,000,000 almost entirely in cash by the end of twenty twenty five, when fully implemented. These actions have started to yield demonstrable results in our financial performance. Relative to q one before our cost actions were were implemented, our non GAAP OpEx, a good proxy to measure these cash savings declined by $72,000,000 on an annualized basis. Our quarterly stock based compensation approximately for the stock savings declined by about $80,000,000 on an annual basis over the same time period. Moving on to cash and our balance sheet. We ended the year with $233,000,000 in cash and liquidity, which includes $183,000,000 in cash and marketable securities and $50,000,000 on an r an undrawn line of credit. This year end actual numbers were in line with our guidance. Including the 209 available on our equity finance program, which reflects a $75,000,000 upsize we're gonna do shortly after earnings, This amounts to total access to liquidity of $442,000,000. Our change in cash during the quarter was $16,000,000 $1.06, well below the $52,000,000 from Q3.

This improvement was primarily driven by proceeds from our equity financing program, which amounted to $48,000,000 to the quarter and was partially a function of timing as we only did 6,000,000 in q three. The proceeds generated, under this program during the quarter continue to demonstrate our access to the capital markets and remain an avenue we can pursue to bolster our liquidity if and when needed. Free cash flow for the quarter was negative $62,000,000 slightly higher than the negative 58 in q three. The increase was, you know, almost entirely driven by $8,000,000 of higher cash interest during the quarter from our August debt transaction. We expect to file an amended s three and prospectus supplement associated with the extension of our equity finance program and stock to be granted to one of our strategic suppliers over the next few days. Wanted to touch base on our order book. In the past, we disclosed forward looking order book as an alternative financial metric that we updated annually as a means by which the investment community can measure our commercial progress and opportunity. Now that we have achieved series production, we are no longer gonna update this on an annual basis and instead replace it by disclosing, our sensor shipped.

Which we believe is a better metric to measure our progress. This is consistent with what other lighter companies that have reached the series production stage have done.

For full disclosure, our forward looking order book as of 2024 would be lower relative to 2023. We believe this is a temporary phenomenon due to the halo transition our key customers from the Iris family. As a reminder, we established a very high order book for what was included in the order book and not, specifically only serious production awards or equivalent were included, and we exclude customer contracts that are only in the development stage. While reception for Luminar Halo has been significant, the product still remains in the development phase with a number of series production award opportunities pending completion of certain technical milestones. To be absolutely clear, we continue to work with all of our customers from last year have not lost any customers, and we expect the decline in the order book in 2024 to be temporary as we complete the outline development milestones for Luminar Halo, and hopefully with anticipated better economics. Our commercial opportunity for Halo remains strong. We have entered in the Luminar Halo development contracts with two major automakers since our last earning calls and have secured a series production equivalent contract with a major construction and off highway machinery manufacturer.

More details to come here shortly on those. Moving on to 2025 guidance. For 2025, we expect a full year our full year revenue growth to be in the range of 10 to 20%. This grows will be almost entirely driven by a greater than three times forecasted increase in our sensors from approximately nine in 2024 to a range that we're currently forecasting of, call it, 30 to 33,000 this year. This growth in sensor shift will be offset by the lower revenue from the non automotive customer we discussed on our Q3 call and basically the full year of that renegotiated contract. We are being conservative in our revenue guidance and are basing our 2025 sensor shift at a rather significant call it about a 50% haircut to the latest IHS latest forecast. We wanna, you know, we're we wanna be conservative until we see, you know, a a more proof point of a ramp in our customers' production volume. For the first quarter, we expect revenue will decline quarter over quarter and be closer to 'twenty four than Q4 levels. This is by basically the lower, sequential sensor sales to that non series production customer we discussed earlier.

In the past, we talked about reaching a mid 30,000,000 revenue run rate on a quarterly basis. Given the recalibrated contracts as well as lower, you know, assumed volume for series productions, We don't think that that is gonna happen this year. We expect to generate a negative non GAAP gross margin on a quarterly basis throughout this year, driven by the lower sensor sales to non series production customers as well as resumption of our series production, facility in and some modest tariff headwinds. More specifically, we expect negative quarterly gross loss to average about 5 to $10,000,000 per quarter. While we made progress on improving our sensor economics and COGS overhead through various cost reduction efforts, the unfortunate reality is that the lower than expected production volume remains a major hurdle hurdle for us in achieving the necessary economies and scales to achieve sustainable positive gross margin. We may generate positive gross margin from time to time like we did this most recent quarter, but this will be highly dependent on censorship to non series production customers which remain lumpy. Briefly wanna address the current tariff environment. Geopolitical tensions are creating significant uncertain for companies with global supply chains.

Like Luminar. At this point in time, we have determined that our LiDAR sensors we ship from Mexico to The US are likely subject to the most to the recently implemented tariffs. That said, even if we take no op actions to mitigate this exposure, we expect the impact on our gross profit to remain relatively modest. However, it is important to note that we we remain one of the only LiDAR suppliers with a global footprint across North America and Asia, and we are actively exploring alternatives to, modify our production footprint accordingly. For 2025, we expect non GAAP OpEx will decline from the mid-fifty million dollars range in Q1 to the mid-nine high 30 main million range in, by the end of the year. As we continue to, make, progress on our cost reduction efforts. We expect to end fiscal year twenty five with greater than a hundred and 50,000,000 of cash and liquidity, which includes cash and marketable securities and our $50,000,000 line of credit We expect to issue on average about $30,000,000 per quarter. It'll be a little bit higher, a little bit lower depending upon the quarter. Under our equity financing program. For fiscal year twenty five, we expect our free cash flow to improve driven by our cost reduction efforts.

This brings me to my final topic, of our capital structure and cash runway. I'll start with an update on our debt profile. In August of last year, we executed an exchange transaction which reduced our convertible debt by nearly a hundred and $50,000,000 while also raising a hundred million dollars of new debt capital. Since August, our convertible debt declined by $38,000,000 through early conversions of our twenty thirty convertible bonds leaving about 237,000,000 outstanding on our convertible debt that matures in 2030. In total, our debts now stands at approximately 540,000,000 versus 625,000,000 a year ago. We plan to start chipping away in a disciplined manner at the remaining $2.00 $3,000,000 of convertible debt maturing in 2026 and doing in a way that we don't think is gonna materially impact our cash or liquidity profile. We believe our current cash and liquidity position and equity financing program provides us with sufficient runway through at least 2026. I mentioned in the past that we may require an approximately an hundred million dollars of additional capital to reach profitability beyond that. We continue to execute aggressively in our cost reduction plan to lower that potential funding requirement. While we're in no rush to execute a transaction in the near term, we are also evaluating our options for raising additional capital, and we'll continue to actively monitor the markets.

That concludes our prepared remarks. I'd once again like to thank the entire Luminar team for a great 2024 and continued execution progress. With that, I'll hand it back over to Aileen to start our q and a session.

Thanks, Tom. Now gonna get into our q and a with our analyst community. First question is going to come from Josh Patwa at JPMorgan.

Thank for taking my questions. Austin, great to see you at the GDC. In that vein, I'm wondering if there's any new the reference architecture for NVIDIA's Hyperion platform and if Luminar is expected to continue as the reference LiDAR sensor as it was on earlier NVIDIA platforms? Thanks and I have a follow-up. Absolutely.

And, I think as as we mentioned earlier is that, you know, we're in progress right now of shifting the broader customer base that we've had across the board, which is, you know, what like, over a dozen different partners from the Iris family of products over to Luminar Halo. And so I I think we certainly expect to be able to you know, be in the lead be driving this when it comes to, you know, a Hyperion platform or kinds of partners that we've been working with accordingly. For the Halo transition as well. Ultimately, Halo's gonna be driving you know, significantly better, economics. And as opportunity for I would say, more widespread and mainstream adoption, whereas Iris was really sort of moving out what was possible. But, key is that it you know, it's not these aren't some theoretical efforts there too. We're very excited to be showcasing some of these capabilities already as it stands today. And, if any of you guys are at GTC, we encourage you guys to come by and see it live with us and NVIDIA, at our booth there.

Great. That that's very helpful. Just as a follow-up, historically, we've heard from Luminar and some of your industry peers about a metaphorical barrier preventing Chinese suppliers from securing global OEM contracts you know, due to escalating geopolitical tension. A recent success by one of your Chinese counterparts suggest that competitive landscape might be more complex than we would have previously anticipated. Curious if you could just discuss the competitive dynamics particularly regarding which competitors you encounter most frequently during the sourcing processes? And it would also be helpful if you could highlight areas where Luminar excels and where it face challenges compared to the competition. Thank you.

Yeah. Absolutely. And as it relates to the China market in particular, I think that, to the credit of, of China, there has been significant and rapid development you know, within that market, for lidar adoption where, you know, what, there's now millions of vehicles, you know, being shipped. Accordingly even with some of the more lower performance LiDAR technologies that are equipped those. I I think that's a a little bit of a foreshadow for what happens in the Western world. But I would say more broadly, I think the Western and Eastern ecosystems around it have different kinds of product requirements, when it comes to an OEM different kinds of performance requirements. Kinds of safety requirements, and different kinds of capabilities they ultimately wanna be able to deploy. I also think that, really, the the the Eastern world has been moving more quickly. You know, for the initial adoption than the Western world. The Western world is gonna be the thing that ultimately delivers most of the volume being responsible for on the order of 90% of the global volume. Our goal is to sort of position ourselves as the Western world leader, and we see is there is sort of a dividing ecosystems there.

I think over the last three years, it's actually become probably significantly more divided. And isolated. And I think this is largely what OEMs are preparing for in a divided world. There's a lot of conversation around hey. We don't want anything with a single line of Chinese code in it, you know, for example, where they're saying that it could be at risk of well, their entire vehicle platform if they start doing other kinds of development engineering work in China. With that said, I I think that there's obviously some kind of speculation of if there there really haven't historically been any production wins, you know, for companies within China. You know, outside of that in a material capacity, [indiscernible] there there there aren't today either as far as we're aware.

But, but then you know? So maybe I heard a lot of different things I've don't always believe. Everything that's that you read But, but that said, when it comes down to it, I think to the credit of the Chinese ecosystem there, it starts to show what is possible We're gonna continue to position ourselves as the premium player in the market. And I think that's gonna really continue to resonate from for the greatest level of safety application and the biggest level widespread adoption for the Western world, and, that's what we're doubling down on.

Understood. That that's great color. Thanks. Austin, and good luck.

Thank you.

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

Hey, Winnie.

Hi. Thanks for taking my question. Question the first one is on the Luminar milestones that you're looking for this year. I was wondering if you can elaborate on maybe some sort of specific customer development you might be looking for. Is there any specific number of contracts that you might be hoping to get for SOP during year?

Yeah. And I and I'd say between all of our key, you know, OEM customers, you know, everything from you know, Volvo to Nissan to Mercedes to you know, beyond you know, for all the other ones that we've we've talked about and the technology customers. There there's generally more detailed milestones, you know, from a product standpoint that are included in those in terms of what's needed to ultimately successfully launch with them. And the the key is of what we've been doing is basically now with a lot of the work being done from the Iris family of products, transitioning that over to Halo and establishing those milestones. So we already have those, for, you know, some of those key OEMs and contracts in place today. And, you know, that's where we're getting the rest of them over. You know, that really I would say, the focus right now is around maturing the different, component level subassemblies. You know, for it, some of which we already have production intent subassemblies. Other ones, we're still developing to be able to get to that stage. So, we also ultimately will want to have [indiscernible] product samples in the hands of our various key customers.

By year end.

Yeah. Just just maybe a follow-up to that. You as you're looking to to streamline the operations, I'm just curious how that is going to impact your current series production of Volvo or perhaps not? I'm just curious how that changeover will happen.

Yeah.

So, Winnie, we're doing this in a way where it it shouldn't have any material impact on this. You know, you you rewind to where we were three years ago. We were developing three products at once, Iris, Iris plus Halo. Most of the work on Iris is substantially done by the end of the year. I wouldn't say it's be a % done, but I would say, you know, there's gonna be I would say, more maintenance level type of work on that. Iris Plus, as we talked about, we're no longer working on that. We transition our lead customer there directly to Halo. So as we kinda get towards the end of this year, there's gonna be one product that team's gonna be working on, which is Halo. And so that, is gonna what allow us to free up, I would say, you know, even more resources to streamline the operations more, really narrow our focus, and it shouldn't really impact any of the execution or any of the production on Iris.

Thank you. And then in terms of the the OpEx and and the cost reduction, thanks for providing the the color on outlook. Can you give us a bit more detail in terms of, you know, the incremental actions that know, will be done this year to drive out that cause?

Think it yeah. Yeah. And if if you go back to what we announced in April, that is complete when you look at what we did in September. I I would say we're about halfway done there. And, you know, I would say the the remaining half will be you you'll see that kind of ramp up in terms of the savings and ramp down in the app box through the rest of the year. And then because we're been able to stop the work on Iris Plus, that's gonna kinda be the, you know, the next catalyst to kinda streamline the, organization even further for continuing and even more cost savings than what we've talked about historically.

Got it. Very helpful. Thank you so much. Thanks, Winnie.

Next question is gonna come from Federico Marendi on for John Babcock from JPMorgan or from Bank of America.

Good afternoon, everybody.

So from the press release, I gathered that your free I mean, your cash burn might be around $200,000,000. In 2025 So that leaves you roughly with 100,000,000 at the end of the year excluding the credit facility. So and Tom, I think you said that you will need hand additional million dollar to reach profitability. So does it mean that you will reach profitability sometime at the end of twenty twenty six?

Yeah. I I like, I first of all, I think your your math is is generally, you know, accurate and in line with the guidance that we've given. I think '26 in terms of reaching profitability maybe a little bit too soon. I think we really need to get Halo to the market given the better than expected sensor economics. So I think it, you know, shouldn't be too long after '26 for us to get to that level. That hundred million, you know, we're doing what we can to kinda continue to to, you know, chip away at our cost structure. To reduce that amount. As we've said historically, I don't think we're gonna be able to get it all the way to zero. But we're making good progress there to really minimize our additional capital needs to get to profitability.

Understood. And you mentioned that you're commencing operation with TPK which from understanding is in China. And We've always said Asia.

We haven't necessarily said China.

I think you the 10 k you mentioned that the operations are in China. No?

We purposely said in our press release now, Asian, we purposely [indiscernible] That that we're constantly evaluating, you know, our manufacturing footprint and chain, and, you know, we'll give updates on what that looks like. You know, at some point later this year.

So Also to clarify, d DPK is, Taiwanese. Yes.

No. I I I I hear I know there's a I think from what I remember, your 10 k, you mentioned that previously it was in China. But Mhmm. So my my my end question was, so how are you going to match the tariff risk or potential bans from foreign technology in The United States?

Yes. So the latter that in terms of the ban of technology in The United States, something that we're we're we're, you know, that is, I would say, a materially impact or material risk at this time for us. The tariffs and, like, look, the tariff landscape seems to be changing on a daily basis. So that's something we're looking at. Historically, not to geek out too much from a side, our, product we made in Mexico, you know, has a Mexican country of origin. You know, we're looking at ways to kind of, you know, mitigate that tariff impact in the near term here. If we're unable to mitigate it, you know, it's gonna have a modest impact on our gross profit, not an immaterial one, modest not based upon where everything today is today significant. But we're constantly looking at our munch our manufacturing footprint and how we define our product to minimize that tariff impact. In the near and longer term.

Thank you very much, Guy.

We also mentioned 60% of our product content you know, comes from Thailand. You know, as opposed to Mexico. So, you know, that's just one one other factor there too that you know, as we kinda think about the broader landscape, we don't wanna make any harsh reaction as things keep changing every every week But, you know, we'll we'll I think as Tom mentioned earlier, really the only company, from a lidar standpoint that has the truly global footprint. You know, ultimately, stuff in China, we believe will be produced for China. You know, stuff outside of that in, you know, Asia or Mexico or as that situation evolves or whatever will to different parts in the Western world. So I think that's gonna be an important part. We have the flexibility to sort of go with the ebbs and flows of the global trade ecosystem to be able to shift according to this crazy web of geopolitics and tariffs that, we have to to deal with and everyone has to deal Thank you, Austin.

Thanks, Federico. Our next question is going to come from Morgan Long on for Mark Delaney from Goldman Sachs.

Hey, Morgan.

Guys. Thanks so much for taking the questions. So well understood on the comments around, order book disclosure. But can you try to help us better understand the implications on the backlog from the change from going, from Iris Plus to now doing the the Halo platform. And how that change changes, like, the quoting process with customers at at all?

It really doesn't change a lot, the quoting process here. You know, what happens here, it's because Halo's in an earlier stage of of product development. And we have, I would say, you know, a more strict than others in the industry definition of what we include in the order book. We only include something in the order book if it's an official series production award or equivalent. Halo has to kinda, you know, meet certain development milestones that are defined in our you know, development contracts with our customers. And, you know, you know, when when you hopefully, when we meet those, then that's when they kind of, you know, reconvert back into the series production award category. So you know, by our technical definition because, you know, Halo, it it hasn't gone through the development process yet to get the series production more. It wouldn't be our order book, but as we can to do that, it should be replenished. The other thing I would highlight there is Halo is, you know, gonna have better unit economics and high or Iris Plus. So as it replenish, it's hopefully replenished at better longer term. Economics for the home team.

Okay. Very helpful. And then I just wanted to double check that there's been no change to the timeline for HALO. Is that still expected end of 2026?

Yeah. Generally, in that time frame. And so I think it's, you know, it's I would say, end of twenty six for, you know, targeted twenty twenty's you know, targeted vehicle lines that have SOPs in 2027.

Got it. Thank you very much.

Thanks, Morgan.

Our last question is gonna come from Tyler Anderson on for Richard Shannon at Craig Hallum.

Everyone. Thanks for taking my questions.

Hey, John.

I I just got here a little bit late.

But for the ramp in development going on for the new Volvo win, how should we think about the ramp like, timeline for that?

Are you are you referring to the to the ES 90?

Yeah.

Yeah. So I you know, what I would say is IHS has a you know, in our opinion, a pretty aggressive volume ramp for the, for the ES 90. In in the guidance we've given, if you look overall, we've assumed about a 50% haircut to IHS. Don't get me wrong. I hope IHS is right and we're wrong, but wanna be more conservative until we see a more sustainable ramp. And so I would say what's embedded in our 2025 guidance, I would say, is is not a significant ramp in in in the s 90. We are prepared to do it.

When we see the customer demand, we have the capacity in place. But we're not forecasting a significant one like IHS's in that for the ES 90. And I would say the EX 90, we've we, you know, that's what started production in in April of last year. We have seen, you know, a ramp up there during q four and then the early parts of '25. There is the potential for an even more higher production volume once the new China facility comes in, but I we've been more conservative on what that ramp would look like as well. Awesome.

You. I appreciate it.

Absolutely.

And and I I think, we're also trying to be super conservative more generally. We've also we've sort of learned from previous years that, you know, we we rather under promise and over deliver, you know, when it comes down to it. So that's why the haircut to volumes. I mean, obviously, it's still pretty significant growth. You know, with, over 200% and more than that that we would expect, that we're kinda guiding to. From a series production center delivery standpoint. That that would be driving the revenue. Obviously, the overall corporate revenue was was was, good and more moderated because of that other [indiscernible] renegotiation of a nonseries contract that that you talked about. From but that's no that's news from know, six months ago or whatever. When it comes to know, the growth there, IHS would be, what, the equivalent of, like, 500% growth. Compared to the 200% growth that we're guiding to. So, I think it's all all upside from here as we know, launch with the ES 90 and we're counting down the the handful of, of months here. And then, Polestar three as well.

Among, other vehicles. So this is kind of the the EX 90 was the vision in the start of the wave, and, now it's coming in and scaling up.

Excited to make it happen.

Awesome. Great to hear it. Thank you, guys. Tyler.

Thanks, Tyler. That marks the end of our q and a session. I'd like everyone or I'd like to thank everyone for sticking around and participating in the call and for the analysts that asked the questions, and investors and other folks who've joined us. We look forward to talking to you guys next quarter.

Thank you.