In a recent earnings call, Luminar Technologies (ticker: LAZR), a leading provider of automotive LiDAR technology, announced strategic financial and operational moves aimed at long-term growth.
CEO Austin Russell unveiled the company's restructuring of $422 million in debt, with a conversion to $274 million and an extension of maturity from 2026 to 2030, alongside securing $100 million in new non-dilutive capital. Despite facing production ramp challenges, Luminar is focusing on operational efficiency and the development of its distinctive LiDAR technology, which boasts a detection range significantly beyond that of competitors.
The company is also progressing with its Sentinel software suite and expects to ship it to major automakers by the end of the year. With a focus on Level 3 autonomous driving features, Luminar anticipates mainstream adoption by 2030 and is working to raise an additional $100 million to reach profitability, aiming to extend its liquidity runway to the end of 2026.
Key Takeaways
- Luminar has restructured its debt, reducing $422 million notes to $274 million and extending maturity from 2026 to 2030.
- The company has secured $100 million in new non-dilutive debt capital and aims to raise another $100 million to reach profitability.
- LiDAR technology is a standout feature, detecting objects up to 600 meters away, far surpassing competitors' 100-meter range.
- Luminar is focusing on operational efficiency, reducing its workforce by about 20%, and streamlining product development.
- Partnerships with major automakers and tech companies like Volvo (OTC:VLVLY), Mercedes, and Nvidia (NASDAQ:NVDA) are in progress, with product deliveries expected soon.
- Q2 revenue was reported at $16.5 million, with a gross loss on a GAAP basis and an expectation of modest revenue growth in Q3.
- The company is actively engaged in cost reduction efforts and aims to achieve positive gross margin next year.
Company Outlook
- Luminar is poised for widespread adoption of its technology by 2030, with a focus on Level 3 autonomous driving features.
- The company is making strategic moves to improve its balance sheet and extend debt maturities, providing more time to achieve growth.
- Luminar's global expansion, particularly in China, is expected to accelerate volumes and the path to profitability.
Bearish Highlights
- Luminar faces near-term headwinds due to timing and production ramp challenges for new platforms.
- The renegotiation of a non-series production contract may pose revenue headwinds in the coming quarters.
Bullish Highlights
- Luminar's unique LiDAR technology and software suite place it at a competitive advantage in the market.
- Positive feedback from OEMs on Luminar's products, particularly regarding safety and autonomous driving opportunities.
- The company's global supply chain capabilities allow it to serve different markets effectively, including China.
Misses
- Q2 revenue saw a 22% sequential decrease, and the company reported a gross loss on a GAAP basis, including a $10 million contract loss.
Q&A Highlights
- Luminar discussed its Halo product development, expressing confidence in its progress and its potential to be a game-changer.
- The company is monitoring the geopolitical situation with China but does not anticipate issues with delivering commitments to Volvo in China.
Luminar Technologies' earnings call reflected a company in transition, strategically restructuring its finances and honing its operational efficiency to secure its position in the competitive autonomous vehicle technology market. With a clear focus on its advanced LiDAR technology and software capabilities, Luminar is steering towards a future where its contributions to autonomous driving could become integral to the automotive industry.
InvestingPro Insights
As Luminar Technologies (ticker: LAZR) navigates through its strategic growth plans, the financial metrics and analyst insights from InvestingPro provide a broader context for investors. With a market capitalization of $626.1 million, the company's valuation reflects its potential in the burgeoning LiDAR market, despite current financial challenges. Analysts anticipate sales growth in the current year, aligning with the company's own expectations for increased revenue as it continues to ship its technology to major automakers.
InvestingPro Tips reveal that Luminar may have difficulty making interest payments on its debt, which underscores the significance of the company's recent moves to restructure and extend its debt maturities. Additionally, the company's stock has experienced high volatility recently, taking a hit over the last week and demonstrating a significant price drop over the previous year. This could be indicative of the market's reaction to both the opportunities and risks associated with the company's financial position and growth strategy.
InvestingPro Data indicates that Luminar has a negative P/E ratio of -1.03, reflecting its current lack of profitability. The revenue growth for the last twelve months stood at 40.05%, showcasing a strong year-over-year increase that may excite investors about the company's growth trajectory. However, the gross profit margin for the same period was -83.49%, indicating that while revenue is growing, profitability remains a challenge.
For those interested in a deeper analysis, InvestingPro offers additional tips that can help investors better understand Luminar's financial health and market position. Visit https://www.investing.com/pro/LAZR for a comprehensive list of tips, including insights into the company's cash burn rate, gross profit margins, and valuation multiples. With these InvestingPro Insights, investors can make more informed decisions about Luminar Technologies' potential as it aims to redefine the automotive LiDAR landscape.
Full transcript - Luminar Technologies (LAZR) Q2 2024:
Aileen Smith: Welcome, everyone, to Luminar's Second Quarter of 2024 Business Update Call. My name is Aileen Smith, and I’m Luminar's Head of Investor Relations. With me today are Austin Russell, Luminar's Founder and Chief Executive Officer; and Tom Fenimore, our Chief Financial Officer. As a quick reminder, this call is being recorded and you can find the press release, and presentation that accompany this call at investors.luminartech.com. In the interest of providing the most informative experience for our stakeholders, we're making the following changes to our reporting and discussion this quarter. In a moment, you'll hear some remarks from Austin focused on providing our shareholders an update of our vision and strategy, what differentiates us from others, as well as our progress over the past few years and this past quarter. This will be followed by remarks from Tom, focused on our recent capital structure actions, quarterly financials, and financial outlook. Following these remarks, we will open up the call to Q&A. Our Q&A session will primarily consist of questions from the institutional analyst community. To ensure we're addressing as many as possible, we would ask the analysts limit their questions to one with one follow up. Before we begin the prepared remarks and Q&A, let me remind everyone that during the call we may refer to GAAP and non-GAAP financial measures. Today's discussion also includes forward-looking statements based on the environment as we currently see it and as such, does include risks and uncertainties. Please refer to our press release and our presentation for more information on the specific risk factors that could cause actual results to differ materially. With that, I'd like to introduce Luminar's Founder and CEO, Austin Russell.
Austin Russell: All right. Hey, guys. Can you hear me okay?
Aileen Smith: All good, Austin.
Austin Russell: Awesome. Well, thanks, everyone for joining our second quarter business update conference call. So today, we're actually in Boston at our newest office for specialized chip subsidiary Luminar Semiconductor, Inc., which is just 10 minutes down the road from our current receiver R&D and fab location we've owned since 2021. So, we shared this news a little bit last week regarding the acquisition of EM4. We do a small one, (ph) but we since integrated the business and we've helped grow our semiconductor business overall to break even status on our overall path to profitability. But that's not what we're here to talk about today. Today, we've signed a definitive deal with our bond investors for Luminar to be able to reduce and restructure our outstanding debt, exchanging around $422 million in notes for $274 million and pushing out their maturity for 2026 to 2030. We've heard feedback and know-how important this debt topic was for some investors to derisk the business, so we can realize our full upside and this is our solution. Additionally, the investor agreed to provide Luminar with $100 million of new non-dilutive debt capital. Combined, this gives us the resources and runway to be able to execute the opportunity to realize our full potential. It's a huge vote of confidence that Luminar is not only here to stay as a cornerstone of our industry, but that we can thrive throughout the decade. And we'll let Tom provide more details on the deal in his reports. So, for today, we're going to try something a little bit different. I've heard a lot of questions around the fundamentals of Luminar and that people could use a reminder as to why we're all here and going back to basics. So, I'd like to take a few moments to talk through some of the industry dynamics and the thesis of Luminar, including some specifics on our business, technology and what makes us so unique and best-positioned to be able to capitalize on this new era of assisted and autonomous driving. Going back to basic may normally be out of character for myself, but I think it's important that we level set as to where Luminar and the broader industry is currently at. So, to kick it off, I'd first like to say that it's an incredibly exciting time here at Luminar, and we are at the forefront of this new era of safety and autonomy for drivers around the world being ushered in. And over the course of the past decade, the opportunity around the autonomous vehicle industry has led nearly every major technology company and automaker blocking to this industry. And autonomous driving is one of, if not, the most significant applications of AI into the real world to be able to enact positive change. With that said, of course, realizing the benefits of autonomy has been one of the greatest technical challenges mankind has faced since the U.S. delivered on the Apollo space program in 1969, best analogy you can think of. So, realizing the full potential require radical innovations in many areas like LiDAR to AI to become a reality. So, we can separate this challenge into the different levels of autonomy. And two distinctive trends emerge. One is, enhancing drivers and the other is replacing drivers. So, while most autonomous vehicle companies have generally been focused around replacing drivers, Luminar's thesis and corresponding products and technology have always been focused around enhancing drivers through autonomous and safety features on existing production vehicles, rather than going all out for driverless robo-taxis. You probably know about the different levels of autonomy, but as a refresher, we'll briefly cover them. Level 0 through 2 is what the majority of automakers are shipping today as assisted driving features. This includes both basic active safety features like automatic emergency braking all the way to lane keep assist features. At these levels, the driver must remain attentive at all times and is ultimately responsible for driving the vehicle. And this is generally enabled by existing camera radar technologies that have become widely standardized by the industry over the course of the past decade. There's a strong desire for automakers to begin to realize some of the benefits of autonomy before the higher levels become widespread and establish the next generation of assisted driving technologies, which is where LiDAR comes into play. This is a fundamental driver behind many of the existing partnerships as well as automaker dialogues we're having. Our companies recognize that consumers are asking for the most advanced safety and technology features, while regulators, at the same time at NHTSA, have recently announced the mandate for all new vehicles sold, at least in the U.S., to begin meeting these dramatically heightened safety standards starting in 2029. In automotive years, by the way, that's basically right around the corner. And we've successfully demonstrated how we're uniquely able to meet these new requirements at speed and at night, and are not aware of any other technology that has been able to demonstrate these capabilities. Our claims are supported by third-party studies, including one from Swiss Re (OTC:SSREY), the world's largest secondary insurer that we presented at Luminar. As a reminder, LiDAR is able to uniquely measure the exact distance to objects in 3D using laser pulses between the sensor and the object of the road. And in our case, we're able to do this millions of times every second. Knowing these exact distances to objects is what makes LiDAR so special, as compared to legacy camera based technologies, which effectively have to guess where objects are in 3D by extrapolating it from 2D images. Sometimes cameras are right, and sometimes they're wrong. And when it comes to a safety critical application, that's why, when you're using camera-based technologies for L2 applications or in that range, the driver has to always be paying constant attention, ready to take over at any given moment. From an active safety standpoint, it's also part of the reason why we still lose over a million lives every year to vehicle accidents at a global scale, which camera radars alone have not been able to prevent. The enhancements of LiDAR also become even more apparent at night. Since the LiDAR image looks exactly the same in all kinds of conditions, the camera based technologies experience significant performance degradation at night and in other kinds of incremental weather conditions. So, moving on from the basics of LiDAR and more fundamental assisted driving features, the next phase of evolution in the industry is to begin to introduce Level 3 autonomous driving features. While LiDAR is something that can enhance Level 0 through 2, it's widely understood by virtually all industry experts and automakers that long range LiDAR is a fundamental requirement for operating autonomously, where the driver is no longer in control and responsible for the instantaneous supervision of the vehicle, at least in constrained scenarios. This leaves little to no room for error, and hence why we agree that -- and why most industry experts agree that there's effectively a one-to-one correlation between Level 3 equipped vehicles and LiDAR shipments. We believe the widespread adoption of Level 3 is inevitable, but also much more achievable in the nearer term compared to Level 4 and 5, which are generally focused around robo-taxis. We can talk a little bit more about it if you have questions in the Q&A. While there have been sparse deployments of Level 3 systems today with lower performance LiDAR, they have all operated at both low speed and in highly constrained operating domains. Our customers in the broader industry generally agrees with us that the real boom for these kinds of Level 3 systems comes as they're able to perform full speed highway driving without requiring the humans to constantly intervene. This is how the driver can ultimately save time, and whether it's using your phone, work on your laptop, taking a nap to be able to recover that time during your drive is something that is a target of the level of features that people want to get to. And when you're at high speed, this is where the importance of our long range capabilities come into play. In a few moments, I'll talk about why this is important for us and also what makes Luminar truly different. So overall, this trend has already started with some of the higher end automakers who have upgraded higher low range LiDAR to our technology for higher speed Level 3 driving as an application. And then, of course, it's also the same hardware that you have that can enhance the ADAS capabilities for the Level 0 through 2 application. As we get to 2030 and beyond, we expect Level 3 to become mainstream by nearly all automakers ultimately begin to be standardized. It's nevertheless important to note that adoption cycles in the automotive industry take time, from seat belts to airbags, to camera and radar. It's historically been around two decades, from the first time of introduction to when they ultimately became standardized throughout the broader industry. In this case, we believe all signs point to the LiDAR adoption cycle being substantially faster and generally looking forward to being introduced even more widely on next generation automaker platforms, the ones that we've already discussed, as well as ones that we will have in the future. So, when it comes to the accelerating market and ultimate inevitability, the big question turns to why Luminar? What's our special sauce, so to say. And of course, there are many differentiators here across the board, including the fact that we have a uniquely vertically integrated strategy from the chip level up through the LiDAR, through software. But first, let's talk about the thing that makes our LiDAR so unique. The technology starts with a special wavelength of light that we use at 1,550 nanometers versus the industry standard 905 nanometers. One of the most fundamental limitations of lasers is eye safety, both in regulation and in practice, which is the limiting factor on how much power can be put out from a LiDAR's laser and correspondingly, the performance. We operate at a much longer wavelength than others in the industry, which enables us to put up to 17 times the average energy into the environment. Because we use this 1,550 nanometers wavelength that's safe for the human eye, the increased pulse energy delivered translates directly to a dramatically better performance at longer range for the 3D point cloud sort of picture, you can call it, of the environment. This is required for cars to be able to operate safely in higher speed Level 3 autonomy mode, as well as enable reliable high speed active safety features. Specifically, and because of our technology stack, we're able to see and even detect some of the hardest to see objects at distances past 250 meters in all ambient light conditions. And our performance is able to be maintained even when looking for hard to see dark objects, such as a spare tire on the road at night. Our maximum range can even be extended out to as much as 600 meters. This stands in stark contrast to our competitor's technologies, which generally can only reliably see objects required for safe driving at distances up to 100 meters. While these shorter perception distances are suitable for low speed autonomous driving applications, it's insufficient to safely maneuver at highway speeds, and a 100 meters is only a couple seconds ahead at those speeds, which is not nearly enough time to be able to come to a safe stop. We're able to reliably see them full 7.5 seconds ahead down the road, which is enough time to be able to come to a safe stop in nearly any kind of vehicle. The performance can also directly translate to lives saved, and the majority of accident fatalities actually occur at speed, making it all the more important. Getting to this stage in technology advantage was anything but easy, but nevertheless begs the question of why hasn't everyone followed in the footsteps over the years? I think it's well understood that the performance advantages of 1,550 nm versus 905 nanometers, but the simple answer is that 905 nanometers components have generally been available off the shelf from commodity suppliers, which has enabled the least path of resistance and the lowest initial R&D investment to develop a LiDAR. In contrast, Luminar uniquely developed our 1,550 nanometer technology from the chip level up, where we had to create multiple fundamental innovations to make 1,550 nanometer possible from both a technical supply chain and economic perspective. This is where some of the magic happens of having a truly integrated ecosystem with semiconductor and software capabilities that come into play, which further deepens our competitive mode. In aggregate we've invested roughly $1.8 billion over the years to develop this unique technology platform, and now hop the opportunity to ride that investment curve off of its code tips (ph). I'd like to dig into each of these factors, starting first with the semiconductor. Luminar has been developing its own semiconductor technologies to act as the core technology engine of our LiDAR for the better part of a decade. Whereas 905 nanometer lasers require normal silicon photo receivers to detect the light. 1,550, on the other hand, requires some custom specialized indium gallium arsenide materials to be able to operate. Given how specialized in gas development is, or the indium gallium arsenide and the fabrication expertise is, it was imperative for us to be able to find the relevant teams and companies that can design to our specification, fab the components. And in these cases, some of them are the only ones in the world that know-how to do it to meet the required specifications for what we need. Over time, we started vertically integrating and consolidating some of these specialized companies that we were working with, starting with Black Forest Engineering with a central processing ASIC in 2017, OptoGration with the indium gallium arsenide receiver chip in 2021, and Freedom Photonics for the laser chip in 2022. This ultimately formed the foundation for Luminar Semiconductor Inc. And, of course, with the recent addition of the chip packaging operation, we're here right now as LSI's latest edition, which continues the vertical integration trend. As a result, our product development and architecture approach drives a structural technology advantage with a chip level up, whereas our competitors are essentially built off-the-shelf LiDAR that have inherent performance limitations. And in doing this, we've also ensured the technological sustainability of our mode by vertically integrating all these products. As a further proof-point to some of our foundational technology breakthroughs, we've actually been quite successful in capitalizing on the IBM (NYSE:IBM) technology we've developed for our LiDAR, even for other customers and application with our semiconductors as well. Luminar Semiconductor Inc., which what it was calling LSI, now has over 100 unique customers, including top technology companies, defense contractors, aerospace businesses, among others, with our chip technologies live everywhere from satellites to GPUs right now. As a result of this success, we've now achieved an estimated external lifetime commercial program value in the nine figures from our internal forecast and breakeven status on the business. This is the first major step in our path to profitability, with the next major milestone being at the LiDAR level as we ramp up series production over the coming quarters with Volvo. Zooming back out, I'd like to talk also about software for a moment. So, on the software and AI front, we think it's clearer than ever that the artificial intelligence capabilities are there to be able to help unlock the next levels of autonomy. And with AI, it's really all about the data and the quality of data. So for each of our dozens of customer deployments of LiDAR, it's generally paired with a matching software and AI system that is trained on Luminar's 3D data. AI models developed on a LiDAR are a big leap forward when compared to traditional models that are powered from 2D data because it's true ground true 3D data. So, it's eliminating the guesswork as to where the objects are and achieves an accurate, true to life model. So, at an industry level, some of the most advanced vehicle OEMs do have their own extensive software developments. But attracting the best software talent or traditional automakers can be quite difficult, and most automakers do not have an in-house solution in development to achieve the advanced software capabilities and higher levels of autonomy. So, we predicted this would be the case quite early on in Luminar. And in 2017, I kickstarted our AI and software initiatives centered around the required LiDAR related software in order to help assist automakers in their developments. Our software technologies have been primarily developed in our Silicon Valley offices as well as Munich in Germany, and we work closely with our Silicon Valley technology development partners, software development partners ranging from stale AI to applied intuition. So, our work with a few of the more technologically advanced automakers had started earlier on including companies like Volvo, Mercedes, and Nissan (OTC:NSANY), with some software, although, they do much of their software in-house, being some of the leading players. That said, again, the vast majority of the automakers in the industry don't have a viable solution, and preferring to the fast follower approach as they've done in other kinds of advanced technology adoption cycles. So, this embedded software capability for Luminar not only helps expand our addressable market from a LiDAR standpoint, content value and margins for vehicle, but also importantly enables our LiDAR to be able to reach the majority of the automotive market that otherwise wouldn't be possible without software. It also further expands the stickiness of a product and moat, and we've really seen and developed fantastic partnerships over the years with top ecosystem companies ranging from Nvidia to Mobileye, which allows us to collectively advance this industry as a whole. These software capabilities make Luminar unique in this respect, and I'm proud to say that after five years of development, we recently launched our Sentinel software suite, shipping the first kit in Q2. We expect the initial shipments to major automakers to begin shortly and to be in their hands before year end. In recent history, we've also seen an increased demand for direct engineering collaborations with automakers, as well as RFQs for software capabilities from us. So our software and ecosystem strategy is not too dissimilar from strategy that Apple (NASDAQ:AAPL) had in the early days and what Steve Jobs plan was for the initial iPhone launch. It was all about getting the disruptive products to market at a global scale and then in subsequent years building out the ecosystem around them. The first product didn't even come, as you remember, with the first iPhone with an app store. But importantly, as consumers increasingly realize the value that it was able to deliver with both software and hardware enhancements working in tandem, it ultimately kicked off one of the greatest technology revolutions of the century and really, we've taken a similar approach. And I truly believe that with the Volvo launch, for our industry, this is truly the iPhone moment, as the technology becomes widespread on a global basis for the first time and kicks off a plethora of subsequent vehicle launches for us over the course of the next 24 months. Now, with all of these tailwinds, technology advantages and industry success, you can see why we continue to be so excited here at Luminar. But, nevertheless, I think it's important to take a step back and recognize, despite this positive outlook for LiDAR being arguably greater than ever over the long term, as it evolves to become a more foundational part of the broader automotive technology industry. In the near term, there are headwinds where automakers have faced timing and production ramp challenges for some new platforms. And while this is not related to Luminar or LiDAR specifically, it's widely understood that new automotive platforms in the industry, which would be used to introduce new kinds of technologies like this, have generally been shifted out by around one to two years. And the reality is that these new vehicle platforms are incredibly complex from a supply chain, software and engineering standpoint, and require more time than some of the automakers were originally targeting to begin with and to ramp and deliver at scale. We've seen the effects of some of these delays across the industry, and the downstream implication of Luminar has not been unique. The most important prominent or the most prominent example of this is in the EV space. But it's also very important to note that when it comes to Luminar's technology, we are agnostic to the underlying powertrain in the car. And while people oftentimes try to bucket these technologies together with our LiDAR and EV's, there's actually no underlying technical correlation. In fact, the majority of new vehicle platforms Luminar has planned into actually offer combustion engine vehicle variant. In light of this, our focus has become not just in the long term, but also in the near term. And we've taken two major actions and directions as a result. On the operation -- one on the operational side and the other is on the finance and balance sheet side. So, from an operational standpoint, start off with the first one, the focus was to start increasing the efficiency of our OpEx overhead, now that we've already made the required technology investments and achieved the series production launch that we've all were waiting for years and excited to succeed with that. And as part of that, we were moving towards an outsourced model towards certain parts of our business for partners who were willing to dedicate the appropriate resources, an action we took last quarter and included a reduction in our internal workforce by around 20%. Additionally, we are actively tackling variable cost, fixed cost overhead in order to ensure that we can maximize our success as we ramp and the volume starts to really matter post SOP. The next step in streamlining, well, and I say the next step beyond that is also streamlining our product development processes, among other things that we'll do over the course of the coming quarters. One major action that we took this quarter to save tens of millions of dollars. As an example of this, on product development cost, is to better unify the auto in Iris product family by increasing the percentage of shared components from a technical and supply chain standpoint between products and customers. This is reflected in a one-time charge in our financials that has some downstream non-cash accounting implications for the quarter that Tom will discuss in more detail. We will look to continue advancing our operational efficiencies as we achieve economies of scale over the coming quarters and bring down both overhead and variable costs making it easier to ultimately achieve profitability on our journey. So, critically, today, I'm proud to say that we're directly tackling the second topic as it relates to the balance sheet. As I mentioned at the beginning of the call, today, we signed a definitive agreement with a consortium of these bond investors to restructure the debt, provide new capital, and push out the maturity of these bonds for 2026 to 2030. Importantly, this gives us the sufficient freedom to operate and thrive in a world where we've described earlier as being characterized by one to two year delays in the ramp of new automotive production platforms and programs. While this is a major step in vote of confidence that enables us to responsibly invest and grow, is not the last step that we'll take to support our capital structure. And, importantly, Tom can get into a few more details -- on the details of the deal and the capital structure in his section. So, I'd like to round out my comments with a few updates on some of our extensive industry partnerships as well and some new developments ahead. So, closing the loop on Volvo, as you know, they began their startup production this past quarter for the new platform and the flagship EM (ph) signing following our previous announcement at Luminar Day that we had started our series production, our SOP for them. We've since successfully ramped our production to meet all key mobile deliverables, and we're looking forward to seeing them continue to scale. In their last earnings call, they provided some commentary that the initial ramp will be a little more moderated than their initial target, but nevertheless is still growing exponentially. We expect to ship more sensors in the second half of this year than all of our prior years as a public company combined. As noted in commentary, series production ASPs are a bit lower than our sample ASPs, so with that moderated ramp, as would be expected, it will really take until next year when you start seriously seeing the big step up in revenue from this ramp. So, as we scale, we've already started to see some of the benefits that said, of the economies of scale and the production deployment. And imminently, you'll start to see our technology on the road in a more widespread capacity for the first time at a global scale, which is driving a virtuous cycle for us across multiple domains. So, as we scale up, we've been realizing substantially higher yields, lower supply chain costs, improve overhead absorption, and of course, the marketing benefit that comes when Luminar gets exposure to consumers for the first time as they'll see all technology prominently featured on the EX90 roofline across the globe. We're proud to be enabling this first global production consumer vehicle with LiDAR and a standard on all vehicles, and are looking forward to an additional upcoming SOP in China by year end which will further drive vehicle volumes for them and product sales for us. So, moving on to Mercedes, we're moving full speed ahead and recently made some improvements into our product roadmap. As I mentioned, we'll be unifying our Iris platform with a greater percentage of components and content value shared, which we should expect to substantially reduce development costs in the timeframe for bringing these programs online. So, we're excited about what the future holds for the partnership and look forward to updating you further as we achieve further milestones ahead. Our partnership with Polestar (NASDAQ:PSNY) also continues to progress well. They remain on track to launch their first vehicle with our LiDAR, the Polestar 3, next year, and have additional models slated to incorporate Luminar technology for release after that. Just got a note of being able to do a test drive to go check it out. So, excited to be able to do that also soon, next month. So, with Nissan, we've also recently completed the most recent phase of our technical collaboration and are scoping out the next phase of our work together. They've continued to impress me with their assisted and autonomous driving teams capabilities, and I'm as excited as ever about their vision to standardize this or the technology across all vehicles they produce to realize the benefits of improved safety and autonomy. Meanwhile, our partnerships with companies like Nvidia and Mobileye continue to be as strong as ever as we make forward movement in our joint systems development. These ecosystem partnerships and collaborations are highly complementary and will drive further acceleration of our long term success as we design a new vehicle platforms together and win together. As it relates to other automakers, it's meaningful to note that the majority of them already have long range LiDAR as a requirement planned into the roadmap. Keep in mind, vehicle program cycles can last as long as a decade. So, this is not like the consumer industry or smartphones, where new technologies are introduced every year. These vehicle platforms and the automotive technologies and certification that goes into it is highly complex. People's lives are at stake in this industry, so it moves at a very deliberate pace, very high barrier to entry, but also very high barrier to exit. So, we're actively engaged with these various automakers and the majority of major automakers at this stage, and we look forward to updating with more specifics on new customer awards into the future. Before I close out my comments, I'd also like to add that we're making great progress on the development of the Halo product, which as we discussed at Luminar Day, makes drastic improvements to performance, size, as well as cost, and is enabled to be seamlessly integrated into the vehicle. Whereas the Iris product family was created to show the industry what was really possible, Halo is what will enable this technology to become widespread throughout the industry, and we expect quite profitably. As we accelerate the program, we'll also be delivering samples now to select automakers by year end. So that's the big update there. And with that, happy to be able to turn the call over to Tom to give more details on financials. With that, go ahead, Tom. Thank you.
Tom Fennimore: Thank you, Austin. Great update on where we are at Luminar. Let me start by reviewing our Q2 financial results. Revenue for the quarter was $16.5 million, up 2% year-over-year, but down 22% sequentially. As we previewed during our Q1 earnings call, we expected Q2 revenue to potentially be lower, let me provide a bit more color on this. We saw an expected moderate ramp in series production sensor sales during the quarter. We are continuously meeting Volvo's weekly production schedule and are prepared to ramp up our production as Volvo ramps up theirs. As discussed on their most recent earning calls, Volvo expects to ramp EX90 production in their U.S. facility in the back end of this year and early into next year, while production in their China facility will commence more towards the end of this year or early next. This represents more moderated ramp than we were initially anticipating, but we remain confident reaching targeted production levels next year. During the quarter, we revised the product design and project scope for Iris plus with our lead customer to increase utilization of Iris in the product architecture as Austin discussed earlier. This move should improve operational scale and efficiency as well as derisk execution. This revision resulted in largely non-cash accounting adjustments this quarter to both revenue and growth gross loss. Specifically, it resulted in $4 million sequential decline in revenue, and our revenue would be roughly flat if not for this, and a $10 million contract lost the cost. For the quarter, we reported a gross loss of close to negative $14 million on a GAAP basis and about negative $12 million on a non-GAAP basis. Our gross loss this quarter included about a $10 million contract loss that I just mentioned. So, excluding this contract loss, we would have been close to breakeven and a little less than a $2 million loss, to be precise on a gross basis. This quarter-over-quarter improvement was helped by lower inventory charges scrap and other launch related charges from ongoing process improvement, including our manufacturing yield. Our change in cash during the quarter was negative $57 million, an improvement from almost negative $72 million the last quarter. We ended the quarter with $211 million in cash and liquidity, which includes marketable securities and our $50 million undrawn line of credit. It excludes the action to which I'm about to discuss more detail that we announced today. During the quarter we raised $19 million under our equity capital finance program. Now, let me talk about the balance sheet actions we announced earlier today. We announced that we entered into private separately negotiated exchange transaction with certain holders of our existing convertible notes. These note holders will exchange at a 35% discount, $422 million of convertible debt due in 2026 into $274 million of new convertible senior secured notes maturing in January of 2030. Additionally, as a sign of their confidence in Luminar's future, these investors are also providing $100 million of new capital in the form of non-convertible, non-dilutive senior secured notes. This transaction will reduce our total convertible debt by nearly $150 million while raising $100 million of new capital. We filed an 8-K after the close with further details on this transaction. This transaction is the first and most important step in improving our balance sheet. Over two-thirds of our convertible debt maturing in 2026 has now been extended into the next decade while capturing a 35% discount and reducing our overall debt. Over the next two years, we will continue to chip away at the remaining $200 million or so of convertible debt that is maturing in 2026. During last quarter's call, we estimated we would need approximately $200 million of additional capital to reach profitability. Half of this additional capital has been raised as part of this transaction. We have multiple alternatives to raise remaining $100 million, and we will do so in a thoughtful way that minimizes the ultimate dilution and economic impact to our company. In the meantime, we expect the additional capital raised in connection with this transaction to extend our liquidity runway from the end of 2025 to at least the end of 2026. Let's talk now about our cost reduction efforts and path to profitability. In May, we announced shortly after we reached Volvo SOP, a major cost restructuring effort that will include outsourcing more of our industrialization efforts to existing partners like TPK. This will allow us to move faster with our product and industrialization efforts, streamline operations, and most importantly increase our path or the speed of our path to profitability. As a result, we have to make some tough decisions, including reducing our workforce by approximately 20%, as well as other cost reduction efforts. In total, we estimated approximately $80 million in run rate savings to be achieved with these actions, and we are on track to achieve this target by the end of this year. We have largely completed our headcount reduction plan and continue to complete other actions like contractor reductions and facility subleasing. Our current top priority is to improve our sensor unit economics and reduce our cogs overheads to reach positive gross margin. As discussed earlier, we expect our gross loss, excluding the contract loss we announced earlier, to increase over the next couple quarters since our series production sensor ASP is lower now, and we need a bit more time and production scale to reduce our sensor costs match. We expect to achieve positive sensor economics and gross margin sometime next year after we ramp series production. Further to achieve this, we are actively engaged in real-time negotiations with key partners to improve contractual economic terms, and we're making good progress in this effort. We plan to update investors soon with more precise timing of when we expect to achieve positive gross margin. Now, let's close it out with guidance for the remainder of this year as well as the next quarter. Due to more moderated ramp up in series production, we are pushing out our prior guidance to reach a quarterly revenue run rate in the mid-$30 million range from the second half of this year to next year. For Q3, we expect revenue to be in line to modestly higher versus Q2. This reflects a sequential increase in series production revenue offset by a potential decrease from a non-series production customer contract we are currently renegotiated. We expect our Q3 loss to increase versus Q2 levels of $2 million, excluding the contracts loss I referenced earlier. A slower production ramp up over the next couple quarters, while negative for revenue is actually helpful for our gross loss and net cash spend levels given our current pre-scale sensor economics. Consistent with our prior guidance, we expect to end the year with greater than $250 million in cash and liquidity. This includes both marketable securities as well as our $50 million line of credit. This increased guidance reflects $100 million in new capital that is coming in as part of this transaction I announced earlier, net of fees, OID, and the higher interest expense. I would also note that we have $131 million remaining on our equity finance program. In the coming days, we expect to file another supplement to increase this to fund the incremental interest expense as part of this convertible debt transaction we just announced. We are also evaluating under various stress case scenarios whether we need to hold a special shareholder meeting in the near term to increase our authorized share account, given our recent and contemplated balance sheet actions. To conclude, I want to thank the broader Luminar team. I just celebrated my fourth anniversary at the company and been amazed at how much we've accomplished in my short time here. We've achieved a lot as an organization, and we have a lot more to improve with continued successful execution. I have no doubt that the product, talent, and work ethic to succeed exists at this company and we will all capture it. Rest assured, we at Luminar are laser-focused on making this company a success. I also wanted to thank my wife and family for moving out with me in the middle of COVID to join this job over four years ago and putting up with a suboptimal version myself as we kind of got earnings in this balance sheet restructuring over the finish line here in the near term. With that, Aileen, I think we're ready for Q and A.
A - Aileen Smith: Fantastic. Thanks, Tom. All right, we're going to hand it over to our analyst community. Our first question is going to come from Josh Buchalter at TD (TSX:TD) Cowen.
Joshua Buchalter: Hey, guys. Good afternoon. Thank you for taking my questions. I want to ask about the Volvo ramp, the slower ramp than expected, was that related to anything with the software issues that have been pretty public regarding some of the features not being turned on at the initial launch? And maybe you could just provide some background because I think that's an area of concern for investors given some of the comments that were made last year and then sort of the bumpy rollout of some of the software issues with the initial launch of the car. Thank you.
Austin Russell: Yeah, Josh. Once again, it's unrelated to the software. Any automotive launch that you have, there's always going to be bumps on the road and it's not going to go as smooth as everybody was hoped. It's taking a little bit longer, but they're ultimately going to reach those production levels and may take just a quarter or two longer. From our perspective, we're meeting their weekly production targets. And as they ramp up, we're ready to ramp up. So, there's certain things we can control, certain things we can't, but we're ready to go. And Volvo remains optimistic that they're going to get to ultimately where they want to be from a production level. It's all supply chain stuff.
Joshua Buchalter: Got it. Thank you. And then I wanted to ask about some of the component changes. It sounds like an Iris plus. Could you provide some background on why those changes are being made? Any performance or commercial implications of the change roadmap with Iris plus? And in bigger picture, how have been the initial engagements with Halo, probably more importantly? Thank you.
Austin Russell: Yeah. So, basically, what we're doing is we're utilizing more of the Iris architecture for Iris plus. That's going to allow us to capture more efficiencies both on the industrialization process as well as ultimately once we get to series production for that product. I think as Iris came together, it's performing better than expected and allow us to borrow more of that technology to kind of de-risk the Iris plus. The accounting wise, this is very complicated. It's multi-year engineering work that we're doing. And as part of that re-scoping, we had to take the, accounting charges for this quarter that we talked about. But the underlying economics of the contract have not changed materially. And we actually believe that it's going to allow us to move more efficiently going forward as well as derisk overall execution.
Joshua Buchalter: All right, appreciate it, Tom, Austin, and Aileen, I'll hop back in the queue. Thank you.
Aileen Smith: Great. We will take our next question from John Babcock at Bank of America (NYSE:BAC).
Austin Russell: Hey, John.
John Babcock: Hey, guys. Thanks for taking my questions. I guess, just start out, could you bridge the new target for cash and liquidity, to your old target?
Tom Fennimore: $150. There's $100 million in new capital coming in. When you actually look at some of the OID as well as transaction fees, it's closer to $95. And then the incremental interest expense brings it $90, $150 plus $90 equals $240.
John Babcock: Okay. Got it. Pretty simple there, then. Okay. Thanks. And then I guess, just generally, I mean, it does seem like the adoption of autonomous driving technology in cars has been sort of unexpected particularly in North American and European markets. Can you just talk about how you -- what your plans are to drive growth from here in light of that? Obviously, we've seen a number of vehicle models, both EV's, but also even non-EV's, get pushed out. So, if you could -- I don't know whether it entails maybe looking at opportunities in OEMs in China and perhaps trying to penetrate that market more or maybe looking at other sectors, any sort of discussions you've had internally that might help to drive volumes in light of what's kind of occurring from a macro level.
Austin Russell: It's a great question around that. And when it comes down to it, I think it's all just about the automotive platform timings on this. As we had said during the call, I think it's well understood. And as you see with many of the EV companies, that the timelines, the new platform launches, which are generally used to introduce these new kinds of technologies, have pushed out on the order of about a year or two versus earlier in the 2020s here, as you sort through, as you said, supply chain software, all those other kinds of things that have to come into play. So, I think in this case, it's actually less about the capabilities that are being deployed and rather more about how they can get to market as quickly as possible with these new platforms. So, that growth curve is still very much intact and arguably even greater than ever and when it comes to the midterm and longer term, it's really just the near term headwinds that we're talking about here that as people try to get these to SOP, that makes a difference. So, that's the focus there. Of course, from a customer standpoint, an overall order book, that's really where you start seeing in the latter half of this decade that should really exponentially accelerate and take off. And even with our existing customers, there's tens of billions of dollars of value opportunity for us to be able to achieve with them alone, much less with new customers. So, at this point, it's really all about execution and how we're able to do that, how we're able to successfully scale with that. And I would just say from a product standpoint, Halo is really the product that's going to be able to enable that to be possible. And that's where we received an incredible amount of excitement and interest from automakers with regards to the next generation technology, in particular in light of also some of the new safety and ADAS regulations, as well as just the overall notion of being able to have increased performance, lower cost, and even better integration across the platforms.
Tom Fennimore: And, John, we're focusing on the things we can control. The steps we took today with the balance sheet in terms of extending the maturities, bringing in more capital. It gives us more time and more capital to kind of recognize that longer-term growth, which is as strong as ever. And then we're also looking to aggressively reduce our cost, both the fixed costs as well as our sets or economics to kind of get the profitability faster even with less volume in the near term.
John Babcock: Okay. Thank you. I'll back in queue.
Aileen Smith: Thanks, John. Our next question is going to come from Jesus Gonzalez-Lopez at JP Morgan (NYSE:JPM).
Jesus Gonzalez-Lopez: Hey, guys. Thanks for taking my question. Congrats on shipping out some Luminar units this quarter. Just wanted to hear what the early feedback from OEMs have been on this product and maybe what the per vehicle revenue opportunity for Luminar looks like on a run rate basis?
Austin Russell: Yeah. I mean, the feedback has been incredibly positive all around there. And that's where obviously, going into this, there was a lot of skepticism of hey, like, is Luminar going to be able to make it to series production? Are they going to be able to achieve these milestones? Are they going to be able to get their production facilities online? Are they going to develop this global, complex supply chain? And we were able to successfully make that happen. And that from an execution standpoint, we've knocked it out of the park when it comes to those topics, but there's still a lot more work to do. And that's really where it comes to the operational efficiency and the cost when it comes to scaling that production, as well as being able to continue to advance the overall product roadmap that we have beyond the initial wireless product. So, that's the big focus now and the customer feedback continues to be that great technology, it's making a huge difference in terms of what the safety opportunity is and the autonomous driving opportunity is. And they're happy to see us continue to hit those milestones and derisk things overall. I think, in particular, the fact that we were able to hit series production and the SOP with Volvo send some shockwaves throughout the industry that was quite positive. And when combined with the overall notion of, as we mention, some of the new safety regulations and the other kinds of tailwinds that are coming into play, that's really helping drive some of the feedback that we're getting that it's also not just relevant for the ultimate autonomy use cases but also the ADAS and safety use cases they want to plan for.
Tom Fenimore: And Jesus, I think, the early reactions from the Sentinel kits we've been shipping has been positive as well, too early to kind of quantify any potential economic impact of that.
Jesus Gonzalez-Lopez: Gotcha. Thank you so much. And then if I can get one more in, do you have any update on your insurance business or any of those other things you announced during the Investor day?
Tom Fennimore: Making great progress there. I hope to talk about it more on our next call, but our goal is to start writing insurance policies by the end of this year.
Austin Russell: Yeah.
Jesus Gonzalez-Lopez: Awesome. Thank you so much.
Austin Russell: By the way, I realized for the content value question, it's what we shared before. It's on the order of about a $1,000, for [indiscernible] so just at the end of stage then we hope to increase that over time.
Jesus Gonzalez-Lopez: Perfect. Thank you so much. Appreciate the time.
Aileen Smith: Our next question will come from Richard Shannon at Craig Hallum.
Richard Shannon: Well, thanks guys for taking my question here. First one, I want to touch on is the sensor economics. I'll hit my video here. Turn on. There we go, sorry. On sensor economics here, you addressed this in the presentation, I did come later in the call, so I'm not sure or your prepared remarks there, but want to get a sense of kind of the cost reductions you're hoping to come up with here over what time period, to what degree this is renegotiated materials cost versus other design effects? And then I assume this is on both Iris plus and hopefully to help out on the next-gen Halo product. But maybe you can give us some perspective on that. That'd be great. Please.
Austin Russell: Yeah. And look, while there are some differences between Iris, Iris plus, and Halo, I think a lot of the success we're having now on bringing the Iris sensor costs down that, those will, a lot of those will translate to Iris plus as well as Halo. There is a lot of overlap in the product architecture as well as the supply base. But I would say, Richard, up until we reached Volvo SOP a few months ago, we've been, I would say the vast majority of our engineering and industrialization resources have been focused on actually getting there. Now that we're there, that resource focus is shifting from proving we can produce these things to producing them in scale and then producing them in profitable scale. From a personal perspective, it's scenario where I'm spending a lot of my time. And so, part of what we need to improve our sensor economics is just getting the scale. And so, a lot of our contracts are volume based. And so, as volume comes up, the calls will naturally come down. The other way that we're doing now that we have a lot more credibility because we actually reach series production. And you see the pipeline not only with our close to $4 billion order book, but the 20 vehicle lines that we're launching over the next few years. We're going and having more, I would say thoughtful and strategic conversations with our partners in terms of how we can be more long-term related and thus bring the cost down sooner as a result. And so, we're off to a very good start with that. And I hope to get more precise timing on when we expect to turn the corner and get to that positive sensor economics and positive gross margin. It will be next year, when precisely next year, I hope to provide more clarity on that here in the near term.
Richard Shannon: Okay. Fair enough. My follow on question here is about the contract renegotiation. Here, again, I missed the prepared remarks. I didn't see anything in the presentation but wondering, characterizing who this might be. I guess I just want to make sure this wasn't someone who was an announced production type of wind.
Austin Russell: No. It's a non-series production customer, non-automotive customer. It's one of our larger customers. And basically what's happening there is this contract with sized a couple of years ago, assuming that we would be at a certain level of, I would say, scale. And as things are taking a little bit longer to get there, we need to recalibrate it in the near term. So, I would say it's just more about recalibration than a renegotiation. But it could provide some revenue headwinds here over the next few quarters.
Richard Shannon: Okay. Thanks for that clarification. That's all from you guys. Thank you.
Austin Russell: I'd also mention just generally when it comes to the broader supply base and going back to the original point is that up until a few months ago, the reality is we didn't have a whole lot of credibility. A lot of these suppliers, small companies, big companies have heard the story about people wanting to get to series production, people wanting to do this for years on end without really any successful global launch. And that's why I think showing that we can actually successfully do that, that we can meet the Volvo deliverables and be able to scale accordingly, has built a lot more credibility with us. That enables us to get the right kinds of tossed down long-term contracts that support not just these current products but also things going into the future. The core cost of what actually goes into the semiconductor components of what we deliver between the laser chip, the photo detector, and the processing ASIC that we have is under $100. It's really the question of how you can actually, now that we've gotten the poor technology cost down, how we can actually get the rest of the more commodity components, CVs mechanicals and other kinds of things, to that lower cost structure. And that's exactly one of the major things that we're focused on.
Richard Shannon: Okay. Appreciate that perspective, Austin. Thank you. That's all for me.
Austin Russell: Thanks, Richard.
Aileen Smith: Thanks, Richard. Our next question will come from Mark Delaney at Goldman Sachs (NYSE:GS).
Austin Russell: Hey, Mark.
Mark Delaney: Thank you for taking my questions. Good afternoon. The order book, I believe was over $3.8 billion at the end of last year. I'm hoping to better understand where you think that might be tracking into over the course of 2024. When you think about some of the opportunities you articulated, like the new automatic emergency braking regulations that I believe is generating some incremental interest from potential new customers but also perhaps some of the headwinds you've spoken about today, such as the contract being renegotiated. Thank you.
Tom Fennimore: Yeah, Mark. We update our order book at the end of each year, so no update on that. We remain confident that as we continue to execute and launch these 20 vehicle programs over there, we will recognize what we had at the end of the year as well as continue to grow it with new business, both from new customers as well as existing customers. I think the exact timing of that growth and when the automakers make definitive decisions, that's a little bit outside of our control. So, I don't want to speculate on when it's going to grow, but we are confident that it is going to grow.
Austin Russell: And for what it's worth, for that specific renegotiation topic, that was something that we already had heavily discounted in our order book, so it shouldn't materially affect that.
Mark Delaney: Okay. That's very helpful. Second question was trying to better contextualize the change in timing from when you expect to reach quarterly revenue in that mid-$30 million level. You spoke about a couple of different factors, the slower production ramp ups as well as this non-series production award and how you're shipping for that in the near to intermediate term. Can you help us to mention those? What are some of the bigger factors as we think about that?
Austin Russell: The primary driver is kind of when, Volvo kind of gets to that targeted production level for the EX90. They expect to get there with their South Carolina plant, what they said on their call, end of this year, maybe early next year, and then bringing up the China facility along that same time period. So, when those things are accomplished, that's when we will get there. That's why we kind of taken the guidance from, hey, look, we don't want to rule out it's not going to happen this year, but given those factors outside of our control, it's probably going to be next year. And so, that's going to be the biggest driver of it.
Mark Delaney: Thank you.
Aileen Smith: Great. Our next question is going to come from Kevin Garrigan at Westpark Capital.
Austin Russell: Hey, Kevin.
Kevin Garrigan: Yeah. Thanks, Aileen. Hey, Austin. Hey, Tom. How's it going? Thanks for letting me ask a couple questions. So, I guess just first, regarding the Volvo run rate delay, does this delay push out your timeline for overall company profitability at all?
Tom Fennimore: No, look -- no, it doesn't. In fact, while in the near term it's not good for revenue, it actually kind of where we are on sensor economics today actually helps our net cash spend as well as our growth loss. So, the more important thing is kind of Volvo getting to those ultimate levels, which they're confident and we're confident they will.
Kevin Garrigan: Yeah. Got it. Okay. That makes sense. And as a follow up, so I know you guys noted Volvo is expanding to China later this year. Are you guys anticipating any risk, kind of given the U.S. China tensions, or any kind of retaliation from China with the U.S. looking to ban Chinese self-driving software? I just love to get your thoughts on how you view the China market.
Austin Russell: Yeah. Based upon everything we know about today, we don't anticipate any issues with, continuing to deliver to Volvo our commitments on the EX90. Longer term, this is a dynamic that we're monitoring largely outside of our control. But there's both pros and cons of that because, it could hinder our ability in China, but it also hinders some of the, Chinese lidar's ability to compete in the US and other markets. And so look, we're going to do what we can to serve our customers, both in the near and longer term. We're monitoring these events. We're thinking about alternatives to make sure that we can be a longer-term competitor in all important markets to us, including China. And that's where we are today.
Tom Fennimore: One other thing to add on that, too, is that not only are we the first and only company to have this kind of long-range LiDAR and global production vehicle, in standard, but also we're the only company in the industry that is able to build up both western and eastern world supply chains. And that's something that we've really done, first starting off in North America in partnership with Celestica (NYSE:CLS) in Monterrey, Mexico, but also in partnership with TBK in China. And that's where you can ultimately see over the longer term, as that stuff happens is the product that we produce in China will really be for China. And then you have the rest of world coming from, for example, Mexico or elsewhere as we expand. So, that's something that really, we were unique in being able to have these kinds of global scale wins. And in particular, also, wins in China to be able to deliver against. And that's despite, by the way, obviously, there's kind of that inherent bias, but particularly around domestic Chinese OEMs there. But half the volume, even within China, is actually from global OEMs. So, we still have a clear opportunity to be able to deliver against that, and that's exactly what we're doing as -- going to an earlier question for a previous analyst there, that's something that actually should help rapidly accelerate the volumes and ultimately our path to profitability as well.
Kevin Garrigan: Yeah. Got it. Okay, perfect. Thanks, guys.
Aileen Smith: Thanks, Kevin. Our final question is going to come from Kevin Cassidy at Rosenblatt.
Austin Russell: Hey, Kevin.
Kevin Cassidy: Hi. Yeah. Thanks for taking my question. I'm interested in the Halo product, that just seems like a real game changer for me. And you mentioned your sampling. Can you give us any details how many samples and what level would you call it? Is it a beta product? Is it an alpha product or an emulation?
Austin Russell: Yeah. I would say, so as it stands right now, we have some initial, I would say, proof of concepts around showing the performance capabilities, showing the architect system architecture of it. What we're doing now is we're getting sort of the form factor equivalent samples to package it into that final dimensional package, which is obviously one of the benefits of what we're getting in terms of that integration and integrability improvements from a lower, smaller size. So, yeah, it's moving along incredibly well. We're also able to develop it a heck of a lot more efficiently because of the big and technology platform investments that we made in the past that we're able to ride on the coattails of now. So, that's also going to help really drive down development costs [Technical Difficulty] as we do this. But everything's going as well as we could hope for in that dimension. And I think that that's really where for second half of the decade, or at least the latter half of that, that's where a ton of the automotive interest is in getting that, because that's the kind of product that can truly enable the scale that we want to achieve and know we can to enable that extreme success.
Tom Fennimore: Kevin, if you're ever down in Orlando, you're welcome to stop by and we can kind of have you swing by the lab and kind of take a look at it, and you can touch and feel and kind of see real time what the team's been able to achieve, which is amazing.
Kevin Garrigan: Yeah. That sounds great. I've got a good reason to go to Orlando then. Thanks.
Austin Russell: Yeah. Absolutely.
Aileen Smith: Okay. Thanks, Kevin. I think that closes it out with that. I'd like to thank everyone for joining our business update and to the analysts who participated on this call. At this point, I normally give my closing statement of we look forward to seeing everyone next quarter. However, I will be going on maternity leave next month, so you won't see me. So, the team looks forward to updating you next quarter, and I very much look forward to seeing everyone again in the new year. Thanks for joining us today.
Austin Russell: Good luck, Aileen.
Tom Fennimore: Thank you.
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