NASDAQ:CPTN Cepton Q2 2023 Earnings Report Earnings HistoryForecast Cepton EPS ResultsActual EPS-$0.80Consensus EPS -$0.70Beat/MissMissed by -$0.10One Year Ago EPSN/ACepton Revenue ResultsActual Revenue$2.79 millionExpected Revenue$3.30 millionBeat/MissMissed by -$510.00 thousandYoY Revenue GrowthN/ACepton Announcement DetailsQuarterQ2 2023Date8/7/2023TimeN/AConference Call DateMonday, August 7, 2023Conference Call Time5:30PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Cepton Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 7, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00And welcome to the Q2 2023 Septon Inc. Business Update and Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:25It is now my pleasure to introduce your host, Huil Hsu, CFO. Thank you, Huw. You may begin. Speaker 100:00:32Thank you, and welcome to Septon's Q2 2023 Earnings Call and Business Update. With me today are Junpei, Co Founder and Chief Executive Officer and Mitch Shortini, Senior Vice President of Business Development. During the call, we may refer to our unaudited GAAP and non GAAP measures in our earnings release. The non GAAP financial measures should now be considered as a substitute 4 are superior to the measures of financial performance prepared in accordance with GAAP. Reconciliations for non GAAP measures are included in our earnings release. Speaker 100:01:07I would like to remind everyone that comments made in this conference call may include forward looking statements regarding the company's expected, operational and financial performance for future periods. These statements are based on the company's current expectations and are subject to the Safe Harbor statement relating to the forward looking statement contained in our earnings release and the slides that accompany this call. Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks, call, we are not undertaking any commitments to update these statements as a result of future events, except as required by law. As a quick reminder, this call is being recorded and you can find the earnings release and slides that accompany this call as well as the webcast replay of this call at investors.cepton.com. Now I'd like to turn the call over to Jun. Speaker 200:02:13Thank you, Ho, and good afternoon, everyone. Thank you for joining Septon's Q2 2023 earnings call. We will provide a business update and review our Q2 financial results with you. Starting off, I'm proud to announce that we have delivered a new company record for the quarterly product revenue and gross margin. This quarter, we shipped the highest number of LiDAR units call, we have reached the end of the call to both of our automotive and the smart infrastructure end customers since our inception. Speaker 200:02:50Same time, we expect our shipment volumes to be more than double for each sequential quarter for the remainder of this year as our OEM customers look to launch the start of production at the end of this year. On Smart Infrastructure, We are executing our multimillion dollar contract from our largest tolling customer. This is the largest commercial deployment of our LiDARs date for the tolling application. We have discussed with you our expected growth this year over the past few quarters. This time, I will let the results speak for themselves. Speaker 200:03:30Our record setting quarters reflects the hard work and dedication put forth by our teams executing our current programs. We expect this trend time, we will continue for the remainder of the year as we continue to ramp unit volumes for automotive series production as well as for smart infrastructure projects. On Series production execution, call, we remain on track to fulfill orders for OEM start of production at the end of this year. We shipped the highest number of preproduction units this quarter, in support of our lead OEM program, resulting from our continued commercialization efforts This quarter, we internally developed segment, automation of our manufacturing processes is an increasing priority for our hardware and software teams as unit volume continue to increase. This quarter, our development efforts have expanded into testing and calibration equipment. Speaker 200:04:48LiDAR sensors are highly sophisticated instruments that require the expertise of our engineering teams to maintain the required level of precision in all manufacturing steps, by investing our time and resources, call, our custom manufacturing solutions are scalable across different products, maximizing production efficiency and minimizing physical footprint. We remain confident in meeting our production milestones for the remainder of the year. Last quarter, we announced our point cloud processing ASIC that we developed in house Specifically for our LiDARs, this quarter we completed engineering validation of this ASIC into our near range Nova product. Time, we have successfully integrated new ASIC into our Nova B samples and began shipping units to our lead autonomous ground vehicle OEM customer. Time, we expect our new X90 product line to start shipping with this ASIC by the end of this year. Speaker 200:05:56Across our automotive OEM customers, we're seeing increasing interest in perception solutions, And we are developing automotive perception software by leveraging our proven smart infrastructure software solutions. LiDAR sensors vary in many different dimensions from scanning patterns to point cloud density. This has created the need for a plug and play solution that can easily integrate into the broader ADAS software stack. Same time, automotive OEMs have the unique challenge of synchronizing multiple sensor types. Call, we're proud to be one of the core building blocks providing valuable input data to help save lives. Speaker 200:06:39Please stay tuned for our further progress. We will continue to scale our business throughout the remainder of the year. This year, call, there are a number of automotive programs up for grabs. We believe our extensive LiDAR portfolio of short, medium and long range LiDARs in combination with our experience in executing automotive production program positions us to win additional series production awards. Time, I'll turn it over to Mitch for details on our efforts with our customer programs. Speaker 200:07:25Call, I will now turn the call over to Jim. Speaker 300:07:26Thank you, June. This quarter, our lead OEM production customer revealed the 3rd contracted vehicle model planned to incorporate our LiDAR And you'll see a few more details in a few days. Recent announcements such as this one has led to accelerated interest for major car OEMs competing in the U. S. Market. Speaker 300:07:46The rates for safe autonomy is really front and center now, especially here in the U. S. Market. Outside of China, the U. S. Speaker 300:07:54Market continues to be the biggest for the Level 2 Plus and Level 3 ADAS feature set. This quarter, we received an RFI from 1 of the largest automotive OEMs in the world. This RFI was specifically driven by the U. S. Arm of this OEM. Speaker 300:08:11Another strong indication that the U. S. Market competition is pressuring international automakers to consider their U. S. Offerings To include lidar for their next gen level 2 plus and level 3 ADAS systems. Speaker 300:08:28Time, we completed multiple on-site technical reviews this quarter with several top 10 OEMs. Specifically, we are in the final round discussions with what we believe to be the largest open automotive OEM series production award this year. Echoing June's comments earlier, we are uniquely positioned to win because of our experience launching at a North American OEM, General Motors, And our strong partnership with Kuwaito Manufacturing. Our industry leading form factor for Behind the Windshield integration, stage, coupled with our multiyear journey down the cost walk path affords us the opportunity to really be in the final sourcing conversations across multiple OEMs. When we get to this final point in major sourcings, I remain confident that we really have built everything From our technical prowess to our commercial strategy to our Tier 1 partnership, the strongest in this industry, call, we will now begin to recognize what these customers are striving for and result in positive outcomes for Septon, for the OEMs, And ultimately for the consumers that will become safer and more comfortable by these Septon LiDAR enabled features. Speaker 300:09:47Call, I'm very hopeful that in the near future, we will be announcing our LiDAR will be used on even more American cars and trucks. On the smart infrastructure side, we had record level shipments to our largest commercial contract in the tolling application, which we believe to be the largest for this type of LiDAR application. In tolling, our LiDAR sensors enable free flow tolling Without the need for human assisted tolling lanes. Our sensors are also used to measure traffic data and incorporate time, we will be conducting a few key questions for the Q4 of 2019. Time, the biggest advantage of why lidars work better than cameras is that traffic data can be measured at night and during inclement weather conditions. Speaker 300:10:37Time, we will be conducting a few more questions. Further, our LiDAR has the ability to detect the number of axles of vehicles passing through, as well as taking detailed height measurements. These features help systems integrators improve on billing and improve safety in areas where there are high clearance requirements such as bridges and tunnels. Time, our LiDARs are currently being deployed across the U. S. Speaker 300:10:59And we're in discussions to expand into additional states CPT and countries over the next 6 to 12 months. Finally, I'm happy to report that we recently received our first production order call, we will be conducting a few more questions for LIDAR installations across multiple airports in the U. S. This is an emerging application for our products and we look to share more information with you in future announcements. Next, I'll turn it over to Hal. Speaker 100:11:27Thank you, Mitch. Starting with our Q2 results. Total revenue for the quarter was $2,800,000 An increase of 9% compared to the prior year period and 88% compared to our previous quarter. Product revenue was $2,800,000 a new record for the company, an increase of 92% compared to the prior year period and 123% compared to our previous quarter. Our strong product revenue growth was driven by an increase in our average selling price There was minimal development revenue, which is based on timing of completion on outstanding projects. Speaker 100:12:15We achieved record gross margin of positive 15.6 percent on a GAAP basis, call, primarily driven by revenue mix shift between automotive and smart infrastructure customers and fixed cost leverage on a record level of unit shipments. As our sales volume shift in favor of automotive OEM customers for the remainder of the year, our ASP is expected call, we expect gross margin to decrease as incremental production milestones are met and we begin to sell at production volume prices. As a result, we expect gross margin to decrease in the short term followed by a rebound as unit volumes grow call, or $0.09 per share basic and diluted. Non GAAP net loss was $11,800,000 or $0.08 per share basic and diluted. 2nd quarter non GAAP adjusted EBITDA was negative $12,600,000 As of June 30, 2023, we had available liquidity of approximately $168,000,000 Total available liquidity consists call, we have approximately $70,000,000 in cash and short term investments and a commitment to purchase up to $98,000,000 And with that, I'd like to open the call for questions. Operator00:14:48Thank you. Our first question comes from Matthew deal, I think with Maximum Group. Please proceed with your question. Speaker 400:14:58Hey, thanks for taking my question. I wanted to touch on, you talked about Kind of the gross margin dynamics we should expect through the balance of this year. In terms of gross margin scaling back up as automotive volumes Ramp, are you sort of able to get there on your existing OEM relationship Or do you expect you need more volume from additional wins to sort of get to Sort of high volume expecting gross margin. And to the extent that you could say, what kind of margin range can we expect at maturity? Speaker 500:15:51Yes. Hey Matt, thanks for the question. The short answer is that yes, we can get there From our existing Speaker 100:16:00contract with GM, obviously more units will be helpful. Time, we do expect to get to mid-40s gross margin somewhere around 20, 25 ish, Depends on volume obviously. Speaker 400:16:20Got it. Okay. That's helpful. And then In terms of the outstanding decisions that you're expecting to be made, I guess, through the balance of this year, Can you give us some sense of Do you feel you have a leading position in some or a number of them? How many are you working towards? Speaker 400:16:49Just any more call, you could provide on what you're working on today. Speaker 300:16:57Yes, Matt, this is Mitch Huertini. So I made some comments on that earlier, so we're in the final round at what we believe to be the biggest automotive opportunity to be sourced this year. Yes, of course, we are hopeful we're in a leading position because of our experience on the General Motors project, I'm working with Detroit OEMs and our partnership with Quito. So we're in good shape. And then, yes, we are in final rounds at multiple OEMs is what I mentioned. Speaker 300:17:34And I think the comments are the same there. Everyone values the relationship with Cahuito, The technology evolution from our lead program at GM and we're going to be one of the leaders in this space the next few years. Speaker 400:17:57Got it. That's helpful. And maybe last question for me on the smart tolling contract that I think we've talked about over the last quarter. I think we talked about there being potential for expanded scope within that contract. It sounds like it's progressing Well from your comments, but just curious if there's opportunity for expanding that scope In 2024 or how we should be thinking about timing of that? Speaker 300:18:32Yes, good question. We did recently meet with the executives from this lead customer. We only have a small fraction of their available market share even in the U. S. So we did talk about those expansion opportunities both in the U. Speaker 300:18:47S. And abroad. There's Some opportunities in Eastern Europe and Southeast Asia that should be coming in early 2024 as well. So We think that business can be 4 or 5 fold, the current contract in the short term. Operator00:19:13Thank you. At this time, there are no more questions. I would like to turn the floor back over to Huwil Zhu for closing comments. Speaker 100:19:23Actually, it looks like there's a question in the queue. Operator00:19:28Apologies, they just joined in. All right. Our next question is Richard Shannon with Craig Hallum Capital. Please proceed with your question. Speaker 600:19:38Well, thanks guys for taking my questions. I guess you have to signal a few times to get one in, but I guess I just needed one. So glad I could get it. Hi, George. Hi. Speaker 600:19:47Let's see here. A couple of questions from me. I may have missed the comments and I can't remember if it came from you, Hill or Mitch, but I I think you talked about units doubling here in the next couple of quarters. So that's specific to the automotive TAM or to the total business? Speaker 300:20:06Yes, I believe it was hey Richard, this is Mitch. I think it was in June's commentary about doubling our automotive volume shipments each sequential quarter the rest of the year. So that's specific to the automotive OEM business that we have. Speaker 600:20:21Okay. And you've talked about in the past related to your early first major automotive win here. You talked about kind of having 10,000 plus units in the order book here. Would you update that number? Does that sound like it's going to be more like 20,000 or do you want to How we should think about that number? Speaker 500:20:42No, we're going to keep that number for now. Speaker 700:20:46Okay. Fair enough. Speaker 600:20:48So you did update us on the yearly guidance number, which I'm assuming you're still want to I want to keep in place, I think, 15 to 20. So with a fairly good number for the 2nd quarter in automotive doubling, what does that say about The Smart Infrastructure business, was this a large order you're filling in the Q2 and then waiting for some of these new orders to come in airports or tolling? Or how do we Speaker 500:21:19So we're not changing any guidance for the year, First of all, the smart infrastructure shipments, that is largely from the tolling contract, which we had since the very end of last year, Speaker 100:21:35so most of that contract will be shipped this year. I think Speaker 500:21:402 third of it will So the automotive units are going to increase in Q3 and Q4 As we ramp up the current program. Speaker 400:21:57Okay. Speaker 300:21:57All Speaker 600:21:58right. Fair enough. And then you Speaker 400:21:59talked about I think this is the Speaker 600:22:01first time you talked about an airport opportunity, which I think I have some familiarity with there. But if you think And especially, Mitch, relative to your comments about the tolling opportunity having a 4x to 5x multiplier effect, if you can get more share or get more international business there, How do we think about the total airport opportunity over a couple of years period of time relative to the opportunities you have in tolling? Are they commensurate or one much larger than the other? Speaker 300:22:26Yes, good question. I think at the beginning they're commensurate with the tolling application. There's probably 1 to 2 dozen major airports that are strongly considering adopting LiDAR technology, but then there's probably also A dozen applications within the airport itself. So it's going to start off in the few thousand unit range here at the beginning. Speaker 600:22:52Okay. Fair enough then. One last big picture question for me just related to your large automotive customer GM, I think there's a well known contract out there with another smaller OEM with a public lidar company that's had a delay in Deploying its LiDAR due to some software somewhere in the system there. Wonder if you can make some comments about how you See General Motors dealing with the software and integration of all the other sensors you can make up with the cohesive system. And to what degree are you seeing any issues that they may be having or seem to avoiding? Speaker 600:23:31I think that'd be great to hear, please. Speaker 300:23:35Sure. Yes, I think there's a couple of different approaches out there amongst the OEMs. One is they do all the sensor fusion and perception software in house, Which is the case for General Motors, some smaller OEMs opt to buy pieces of the perception software from the sensor providers, I think that's what we've witnessed in that case that you're talking about. In regards to General Motors, again, they do all of the sensor Fusion and Perception Software in house, so they have a lot more control, a tighter grip on the end results. And so I think that's Maybe why you haven't seen, similar issues publicly from General Motors. Speaker 200:24:33Okay. Fair Operator00:24:41Thank you. Our next question comes from Gus Richard with Northland. Please proceed with your question. Speaker 700:24:48Yes. Thanks for taking my questions. Could you give us the mix between infrastructure and auto in the quarter in terms of revenue? Speaker 500:24:58Yes. Hi, Gus. This is Hall. Speaker 100:25:00The unit mix, it's about 2 third, 1 third, 2 third Automotive, 1 third, smart in front. Speaker 700:25:10Okay, got it. And then You had a couple of site visits. I know your potential customers are going through their process. Can you give us a little bit of a sense of sort of what they need to do to sort of come to a conclusion and sort of what do you think the timing of Speaker 300:25:34Yes. It's a good question, Gus. This is Mitch. So the timing for the biggest opportunity is probably the quickest. I would say within the next couple of months, there will be a decision. Speaker 300:25:48It's Quite a lengthy process inside the OEMs. There's nothing unusual this time around. I think we experienced a similar timeline with our initial contract, So we kind of know the process. And again, Koweto is part of this process as well as our preferred Tier 1 partner. Some of the other opportunities could be closer to the end of the year for their decisions. Speaker 300:26:14And again, nothing out of the ordinary on the processes. These typically take 6 to 12 months. Speaker 700:26:24Got it. And then in terms of your ability to ramp Output, do you see any constraints in the near term? Or are you getting everything your ducks in a row to ramp As your volume Speaker 300:26:42increases? Yes. I think we of course, we've had challenges. That's The fortunate position we're in is we have Cuyto helping us with the supply chain. So they're really helping us put everything in order. Speaker 300:26:55We've met all the deliveries to the OEM at this point and we're not very high on their concerns list. If you look at things like Ultium battery I think those are a lot higher concern than anything like Septon LiDAR. Speaker 200:27:10Yes. And Kasujun here, just To supplement what Mitch said, I did mention that a lot of the engineering effort within the company It's slowly but surely emphasizing the production efficiency, production tooling, manufacturing automation. All of these efforts are actually ongoing and will continue to grow as the volume cranks up. So all of those are Very fortunately for us, it will be taken care of. Speaker 700:27:41Got it. Thank you. That's very helpful. I think that's it for me. Speaker 500:27:46Thanks, Operator00:27:48Gus. Thank you. Now I believe that there are no further questions at this time. Time, I would like to turn the floor back over to Joon Pee for closing comments. Speaker 200:28:00Yes. Again, thank you everyone for attending this call. It's quite a meaningful quarter for us and an exciting time for Septon. Though as I said, this is just the beginning. There will be more, A lot more to come. Speaker 200:28:13So have a great day everyone. Thank you. Operator00:28:16Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for yourRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallCepton Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Cepton Earnings HeadlinesKoito Manufacturing Completes Acquisition of LiDAR Innovator Cepton, Inc.January 7, 2025 | tipranks.comCEPTON INVESTOR ALERT by the Former Attorney General of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of Cepton, Inc. - CPTNDecember 6, 2024 | businesswire.comCrypto’s crashing…but we’re still profitingMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…April 27, 2025 | Crypto Swap Profits (Ad)Cepton (NASDAQ: CPTN) Advances Lidar Commercialization Amid Acquisition by Koito, OEM PartnershipsNovember 12, 2024 | theglobeandmail.comCepton Inc. Faces Operational Challenges Amid Koito Merger ConstraintsNovember 10, 2024 | markets.businessinsider.comCepton reports Q3 results, moves forward on merger with KoitoNovember 8, 2024 | proactiveinvestors.comSee More Cepton Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Cepton? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Cepton and other key companies, straight to your email. Email Address About CeptonCepton (NASDAQ:CPTN) provides lidar-based solutions for automotive, smart cities, smart spaces, and smart industrial applications in the United States, Japan, China, and internationally. The company offers autograde lidar sensors, including Cepton Ultra, a slimmest lidar with MagnoSteer technology and proprietary ASIC chipset, enabling a combination of 300-meter range at 10% reflectivity and 0.05° resolution; Vista-X, a compact lidar solution with a range of up to 200m for long-range applications in ADAS L2+/L3, AV L4/L5, and suitable for smart infrastructure applications; and Nova, an extremely-small form factor lidar solution with a range of up to 30m for near-range applications in ADAS L2+/L3, AV L4/L5, and suitable for smart infrastructure applications. It also provides industrial grade lidar sensors, such as Vista-P, a compact lidar solution with a range of up to 200m for long-range applications in ADAS L2+/L3, AV L4/L5, and smart infrastructure applications; and Sora-P, an ultra-high scan rate, compact, and quasi line-scanning lidar solution that delivers high-fidelity profiling of objects moving at high speeds for free flow tolling and other industrial applications. The company was founded in 2016 and is headquartered in San Jose, California.View Cepton ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 8 speakers on the call. Operator00:00:00And welcome to the Q2 2023 Septon Inc. Business Update and Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:25It is now my pleasure to introduce your host, Huil Hsu, CFO. Thank you, Huw. You may begin. Speaker 100:00:32Thank you, and welcome to Septon's Q2 2023 Earnings Call and Business Update. With me today are Junpei, Co Founder and Chief Executive Officer and Mitch Shortini, Senior Vice President of Business Development. During the call, we may refer to our unaudited GAAP and non GAAP measures in our earnings release. The non GAAP financial measures should now be considered as a substitute 4 are superior to the measures of financial performance prepared in accordance with GAAP. Reconciliations for non GAAP measures are included in our earnings release. Speaker 100:01:07I would like to remind everyone that comments made in this conference call may include forward looking statements regarding the company's expected, operational and financial performance for future periods. These statements are based on the company's current expectations and are subject to the Safe Harbor statement relating to the forward looking statement contained in our earnings release and the slides that accompany this call. Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks, call, we are not undertaking any commitments to update these statements as a result of future events, except as required by law. As a quick reminder, this call is being recorded and you can find the earnings release and slides that accompany this call as well as the webcast replay of this call at investors.cepton.com. Now I'd like to turn the call over to Jun. Speaker 200:02:13Thank you, Ho, and good afternoon, everyone. Thank you for joining Septon's Q2 2023 earnings call. We will provide a business update and review our Q2 financial results with you. Starting off, I'm proud to announce that we have delivered a new company record for the quarterly product revenue and gross margin. This quarter, we shipped the highest number of LiDAR units call, we have reached the end of the call to both of our automotive and the smart infrastructure end customers since our inception. Speaker 200:02:50Same time, we expect our shipment volumes to be more than double for each sequential quarter for the remainder of this year as our OEM customers look to launch the start of production at the end of this year. On Smart Infrastructure, We are executing our multimillion dollar contract from our largest tolling customer. This is the largest commercial deployment of our LiDARs date for the tolling application. We have discussed with you our expected growth this year over the past few quarters. This time, I will let the results speak for themselves. Speaker 200:03:30Our record setting quarters reflects the hard work and dedication put forth by our teams executing our current programs. We expect this trend time, we will continue for the remainder of the year as we continue to ramp unit volumes for automotive series production as well as for smart infrastructure projects. On Series production execution, call, we remain on track to fulfill orders for OEM start of production at the end of this year. We shipped the highest number of preproduction units this quarter, in support of our lead OEM program, resulting from our continued commercialization efforts This quarter, we internally developed segment, automation of our manufacturing processes is an increasing priority for our hardware and software teams as unit volume continue to increase. This quarter, our development efforts have expanded into testing and calibration equipment. Speaker 200:04:48LiDAR sensors are highly sophisticated instruments that require the expertise of our engineering teams to maintain the required level of precision in all manufacturing steps, by investing our time and resources, call, our custom manufacturing solutions are scalable across different products, maximizing production efficiency and minimizing physical footprint. We remain confident in meeting our production milestones for the remainder of the year. Last quarter, we announced our point cloud processing ASIC that we developed in house Specifically for our LiDARs, this quarter we completed engineering validation of this ASIC into our near range Nova product. Time, we have successfully integrated new ASIC into our Nova B samples and began shipping units to our lead autonomous ground vehicle OEM customer. Time, we expect our new X90 product line to start shipping with this ASIC by the end of this year. Speaker 200:05:56Across our automotive OEM customers, we're seeing increasing interest in perception solutions, And we are developing automotive perception software by leveraging our proven smart infrastructure software solutions. LiDAR sensors vary in many different dimensions from scanning patterns to point cloud density. This has created the need for a plug and play solution that can easily integrate into the broader ADAS software stack. Same time, automotive OEMs have the unique challenge of synchronizing multiple sensor types. Call, we're proud to be one of the core building blocks providing valuable input data to help save lives. Speaker 200:06:39Please stay tuned for our further progress. We will continue to scale our business throughout the remainder of the year. This year, call, there are a number of automotive programs up for grabs. We believe our extensive LiDAR portfolio of short, medium and long range LiDARs in combination with our experience in executing automotive production program positions us to win additional series production awards. Time, I'll turn it over to Mitch for details on our efforts with our customer programs. Speaker 200:07:25Call, I will now turn the call over to Jim. Speaker 300:07:26Thank you, June. This quarter, our lead OEM production customer revealed the 3rd contracted vehicle model planned to incorporate our LiDAR And you'll see a few more details in a few days. Recent announcements such as this one has led to accelerated interest for major car OEMs competing in the U. S. Market. Speaker 300:07:46The rates for safe autonomy is really front and center now, especially here in the U. S. Market. Outside of China, the U. S. Speaker 300:07:54Market continues to be the biggest for the Level 2 Plus and Level 3 ADAS feature set. This quarter, we received an RFI from 1 of the largest automotive OEMs in the world. This RFI was specifically driven by the U. S. Arm of this OEM. Speaker 300:08:11Another strong indication that the U. S. Market competition is pressuring international automakers to consider their U. S. Offerings To include lidar for their next gen level 2 plus and level 3 ADAS systems. Speaker 300:08:28Time, we completed multiple on-site technical reviews this quarter with several top 10 OEMs. Specifically, we are in the final round discussions with what we believe to be the largest open automotive OEM series production award this year. Echoing June's comments earlier, we are uniquely positioned to win because of our experience launching at a North American OEM, General Motors, And our strong partnership with Kuwaito Manufacturing. Our industry leading form factor for Behind the Windshield integration, stage, coupled with our multiyear journey down the cost walk path affords us the opportunity to really be in the final sourcing conversations across multiple OEMs. When we get to this final point in major sourcings, I remain confident that we really have built everything From our technical prowess to our commercial strategy to our Tier 1 partnership, the strongest in this industry, call, we will now begin to recognize what these customers are striving for and result in positive outcomes for Septon, for the OEMs, And ultimately for the consumers that will become safer and more comfortable by these Septon LiDAR enabled features. Speaker 300:09:47Call, I'm very hopeful that in the near future, we will be announcing our LiDAR will be used on even more American cars and trucks. On the smart infrastructure side, we had record level shipments to our largest commercial contract in the tolling application, which we believe to be the largest for this type of LiDAR application. In tolling, our LiDAR sensors enable free flow tolling Without the need for human assisted tolling lanes. Our sensors are also used to measure traffic data and incorporate time, we will be conducting a few key questions for the Q4 of 2019. Time, the biggest advantage of why lidars work better than cameras is that traffic data can be measured at night and during inclement weather conditions. Speaker 300:10:37Time, we will be conducting a few more questions. Further, our LiDAR has the ability to detect the number of axles of vehicles passing through, as well as taking detailed height measurements. These features help systems integrators improve on billing and improve safety in areas where there are high clearance requirements such as bridges and tunnels. Time, our LiDARs are currently being deployed across the U. S. Speaker 300:10:59And we're in discussions to expand into additional states CPT and countries over the next 6 to 12 months. Finally, I'm happy to report that we recently received our first production order call, we will be conducting a few more questions for LIDAR installations across multiple airports in the U. S. This is an emerging application for our products and we look to share more information with you in future announcements. Next, I'll turn it over to Hal. Speaker 100:11:27Thank you, Mitch. Starting with our Q2 results. Total revenue for the quarter was $2,800,000 An increase of 9% compared to the prior year period and 88% compared to our previous quarter. Product revenue was $2,800,000 a new record for the company, an increase of 92% compared to the prior year period and 123% compared to our previous quarter. Our strong product revenue growth was driven by an increase in our average selling price There was minimal development revenue, which is based on timing of completion on outstanding projects. Speaker 100:12:15We achieved record gross margin of positive 15.6 percent on a GAAP basis, call, primarily driven by revenue mix shift between automotive and smart infrastructure customers and fixed cost leverage on a record level of unit shipments. As our sales volume shift in favor of automotive OEM customers for the remainder of the year, our ASP is expected call, we expect gross margin to decrease as incremental production milestones are met and we begin to sell at production volume prices. As a result, we expect gross margin to decrease in the short term followed by a rebound as unit volumes grow call, or $0.09 per share basic and diluted. Non GAAP net loss was $11,800,000 or $0.08 per share basic and diluted. 2nd quarter non GAAP adjusted EBITDA was negative $12,600,000 As of June 30, 2023, we had available liquidity of approximately $168,000,000 Total available liquidity consists call, we have approximately $70,000,000 in cash and short term investments and a commitment to purchase up to $98,000,000 And with that, I'd like to open the call for questions. Operator00:14:48Thank you. Our first question comes from Matthew deal, I think with Maximum Group. Please proceed with your question. Speaker 400:14:58Hey, thanks for taking my question. I wanted to touch on, you talked about Kind of the gross margin dynamics we should expect through the balance of this year. In terms of gross margin scaling back up as automotive volumes Ramp, are you sort of able to get there on your existing OEM relationship Or do you expect you need more volume from additional wins to sort of get to Sort of high volume expecting gross margin. And to the extent that you could say, what kind of margin range can we expect at maturity? Speaker 500:15:51Yes. Hey Matt, thanks for the question. The short answer is that yes, we can get there From our existing Speaker 100:16:00contract with GM, obviously more units will be helpful. Time, we do expect to get to mid-40s gross margin somewhere around 20, 25 ish, Depends on volume obviously. Speaker 400:16:20Got it. Okay. That's helpful. And then In terms of the outstanding decisions that you're expecting to be made, I guess, through the balance of this year, Can you give us some sense of Do you feel you have a leading position in some or a number of them? How many are you working towards? Speaker 400:16:49Just any more call, you could provide on what you're working on today. Speaker 300:16:57Yes, Matt, this is Mitch Huertini. So I made some comments on that earlier, so we're in the final round at what we believe to be the biggest automotive opportunity to be sourced this year. Yes, of course, we are hopeful we're in a leading position because of our experience on the General Motors project, I'm working with Detroit OEMs and our partnership with Quito. So we're in good shape. And then, yes, we are in final rounds at multiple OEMs is what I mentioned. Speaker 300:17:34And I think the comments are the same there. Everyone values the relationship with Cahuito, The technology evolution from our lead program at GM and we're going to be one of the leaders in this space the next few years. Speaker 400:17:57Got it. That's helpful. And maybe last question for me on the smart tolling contract that I think we've talked about over the last quarter. I think we talked about there being potential for expanded scope within that contract. It sounds like it's progressing Well from your comments, but just curious if there's opportunity for expanding that scope In 2024 or how we should be thinking about timing of that? Speaker 300:18:32Yes, good question. We did recently meet with the executives from this lead customer. We only have a small fraction of their available market share even in the U. S. So we did talk about those expansion opportunities both in the U. Speaker 300:18:47S. And abroad. There's Some opportunities in Eastern Europe and Southeast Asia that should be coming in early 2024 as well. So We think that business can be 4 or 5 fold, the current contract in the short term. Operator00:19:13Thank you. At this time, there are no more questions. I would like to turn the floor back over to Huwil Zhu for closing comments. Speaker 100:19:23Actually, it looks like there's a question in the queue. Operator00:19:28Apologies, they just joined in. All right. Our next question is Richard Shannon with Craig Hallum Capital. Please proceed with your question. Speaker 600:19:38Well, thanks guys for taking my questions. I guess you have to signal a few times to get one in, but I guess I just needed one. So glad I could get it. Hi, George. Hi. Speaker 600:19:47Let's see here. A couple of questions from me. I may have missed the comments and I can't remember if it came from you, Hill or Mitch, but I I think you talked about units doubling here in the next couple of quarters. So that's specific to the automotive TAM or to the total business? Speaker 300:20:06Yes, I believe it was hey Richard, this is Mitch. I think it was in June's commentary about doubling our automotive volume shipments each sequential quarter the rest of the year. So that's specific to the automotive OEM business that we have. Speaker 600:20:21Okay. And you've talked about in the past related to your early first major automotive win here. You talked about kind of having 10,000 plus units in the order book here. Would you update that number? Does that sound like it's going to be more like 20,000 or do you want to How we should think about that number? Speaker 500:20:42No, we're going to keep that number for now. Speaker 700:20:46Okay. Fair enough. Speaker 600:20:48So you did update us on the yearly guidance number, which I'm assuming you're still want to I want to keep in place, I think, 15 to 20. So with a fairly good number for the 2nd quarter in automotive doubling, what does that say about The Smart Infrastructure business, was this a large order you're filling in the Q2 and then waiting for some of these new orders to come in airports or tolling? Or how do we Speaker 500:21:19So we're not changing any guidance for the year, First of all, the smart infrastructure shipments, that is largely from the tolling contract, which we had since the very end of last year, Speaker 100:21:35so most of that contract will be shipped this year. I think Speaker 500:21:402 third of it will So the automotive units are going to increase in Q3 and Q4 As we ramp up the current program. Speaker 400:21:57Okay. Speaker 300:21:57All Speaker 600:21:58right. Fair enough. And then you Speaker 400:21:59talked about I think this is the Speaker 600:22:01first time you talked about an airport opportunity, which I think I have some familiarity with there. But if you think And especially, Mitch, relative to your comments about the tolling opportunity having a 4x to 5x multiplier effect, if you can get more share or get more international business there, How do we think about the total airport opportunity over a couple of years period of time relative to the opportunities you have in tolling? Are they commensurate or one much larger than the other? Speaker 300:22:26Yes, good question. I think at the beginning they're commensurate with the tolling application. There's probably 1 to 2 dozen major airports that are strongly considering adopting LiDAR technology, but then there's probably also A dozen applications within the airport itself. So it's going to start off in the few thousand unit range here at the beginning. Speaker 600:22:52Okay. Fair enough then. One last big picture question for me just related to your large automotive customer GM, I think there's a well known contract out there with another smaller OEM with a public lidar company that's had a delay in Deploying its LiDAR due to some software somewhere in the system there. Wonder if you can make some comments about how you See General Motors dealing with the software and integration of all the other sensors you can make up with the cohesive system. And to what degree are you seeing any issues that they may be having or seem to avoiding? Speaker 600:23:31I think that'd be great to hear, please. Speaker 300:23:35Sure. Yes, I think there's a couple of different approaches out there amongst the OEMs. One is they do all the sensor fusion and perception software in house, Which is the case for General Motors, some smaller OEMs opt to buy pieces of the perception software from the sensor providers, I think that's what we've witnessed in that case that you're talking about. In regards to General Motors, again, they do all of the sensor Fusion and Perception Software in house, so they have a lot more control, a tighter grip on the end results. And so I think that's Maybe why you haven't seen, similar issues publicly from General Motors. Speaker 200:24:33Okay. Fair Operator00:24:41Thank you. Our next question comes from Gus Richard with Northland. Please proceed with your question. Speaker 700:24:48Yes. Thanks for taking my questions. Could you give us the mix between infrastructure and auto in the quarter in terms of revenue? Speaker 500:24:58Yes. Hi, Gus. This is Hall. Speaker 100:25:00The unit mix, it's about 2 third, 1 third, 2 third Automotive, 1 third, smart in front. Speaker 700:25:10Okay, got it. And then You had a couple of site visits. I know your potential customers are going through their process. Can you give us a little bit of a sense of sort of what they need to do to sort of come to a conclusion and sort of what do you think the timing of Speaker 300:25:34Yes. It's a good question, Gus. This is Mitch. So the timing for the biggest opportunity is probably the quickest. I would say within the next couple of months, there will be a decision. Speaker 300:25:48It's Quite a lengthy process inside the OEMs. There's nothing unusual this time around. I think we experienced a similar timeline with our initial contract, So we kind of know the process. And again, Koweto is part of this process as well as our preferred Tier 1 partner. Some of the other opportunities could be closer to the end of the year for their decisions. Speaker 300:26:14And again, nothing out of the ordinary on the processes. These typically take 6 to 12 months. Speaker 700:26:24Got it. And then in terms of your ability to ramp Output, do you see any constraints in the near term? Or are you getting everything your ducks in a row to ramp As your volume Speaker 300:26:42increases? Yes. I think we of course, we've had challenges. That's The fortunate position we're in is we have Cuyto helping us with the supply chain. So they're really helping us put everything in order. Speaker 300:26:55We've met all the deliveries to the OEM at this point and we're not very high on their concerns list. If you look at things like Ultium battery I think those are a lot higher concern than anything like Septon LiDAR. Speaker 200:27:10Yes. And Kasujun here, just To supplement what Mitch said, I did mention that a lot of the engineering effort within the company It's slowly but surely emphasizing the production efficiency, production tooling, manufacturing automation. All of these efforts are actually ongoing and will continue to grow as the volume cranks up. So all of those are Very fortunately for us, it will be taken care of. Speaker 700:27:41Got it. Thank you. That's very helpful. I think that's it for me. Speaker 500:27:46Thanks, Operator00:27:48Gus. Thank you. Now I believe that there are no further questions at this time. Time, I would like to turn the floor back over to Joon Pee for closing comments. Speaker 200:28:00Yes. Again, thank you everyone for attending this call. It's quite a meaningful quarter for us and an exciting time for Septon. Though as I said, this is just the beginning. There will be more, A lot more to come. Speaker 200:28:13So have a great day everyone. Thank you. Operator00:28:16Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for yourRead morePowered by