Jash Patwa

Inquired about the potential impact of U.S. tariffs on Innoviz's LiDAR shipments and asked for more details on the partnership with NVIDIA's Hyperion platform, including Innoviz's role and any remaining challenges.

Answer

Innoviz believes its products, as automotive components, do not fall under the 25% tariff and expects the impact to be minimal to none, also noting their manufacturing flexibility with Fabrinet's global sites. On the NVIDIA partnership, Innoviz is the reference LiDAR for the Hyperion full-stack platform for customers outside of China, which is a distinct and deeper relationship than partnerships on the open-source NVIDIA Drive platform.

Jash Patwa from JPMorgan asked about the potential direct and indirect impacts of tariffs on Innoviz's business and sought insights into the functional role of LiDAR in driving decisions on Mobileye Drive platform test vehicles.

Answer

CEO Omer Keilaf explained that Innoviz does not anticipate a direct impact from tariffs as its production partner is not in China. He added that the geopolitical situation could be favorable, increasing interest from U.S. manufacturers. On LiDAR's role, Keilaf deferred to Mobileye for specifics but noted that for complex scenarios on other platforms, LiDAR can carry over 90% of the decision-making weight.

Inquired about the potential impact of tariffs on the business and asked for insights into the role and importance of LiDAR in the decision-making process of vehicles using the Mobileye Drive platform.

Answer

Innoviz does not anticipate a direct impact from tariffs as its production partner is not in China, and sees the situation as a potential advantage due to its geopolitical neutrality. Regarding LiDAR's role, the company stated that while specific data is up to Mobileye, experience with other customers shows LiDAR can have over 90% weight in driving decisions in complex scenarios.

Inquired about the NRE revenue opportunity from the two new L4 programs, the revenue and gross profit outlook for 2025, and details about the new in-LiDAR infrared feature, including OEM feedback and its competitive advantages.

Answer

NRE and sample sales from the new L4 programs are expected to be meaningful in 2025 due to the high content per vehicle (9 lidars). The company declined to give specific 2025 guidance but expects revenue to grow from new programs, with a significant ramp in 2026. The new in-LiDAR IR feature is a key differentiator, enabling superior low-level fusion and perception performance, which has been received with excitement by customers.

Jash Patwa asked about the NRE revenue opportunity from the two new L4 program wins ahead of their 2026 SOP and requested any early guidance for the 2025 revenue and gross profit trajectory. He also asked for more details on the new in-LiDAR infrared imaging feature, including OEM feedback and its potential to bridge performance gaps with traditional cameras.

Answer

Executive Omer Keilaf explained that pre-SOP revenue from NREs and samples would be significant due to the nine-LiDAR-per-vehicle model but declined to give specific 2025 guidance, noting revenue streams will aggregate. Regarding the new IR feature, he detailed its benefits for low-level fusion and providing data redundancy, such as detecting brake lights, and confirmed that initial feedback from customers has been very positive.

Jash Patwa inquired about the current market structure of the U.S. salvage auction industry, Copart's share with large insurance carriers, and opportunities for incremental share growth. He also asked about the strategy behind combining select auction and bank repo auctions and the future evolution of the wholesale platform, and a follow-up on the BP&E sale.

Answer

CEO Jeff Liaw described Copart's opportunities expansively, competing with repair shops and other intermediaries, emphasizing excellent auction returns and service. He clarified that combining auctions was a tactical experiment to enhance shared liquidity and match buyers to products, not a broad strategic shift. CFO Leah Stearns added that the BP&E sale was a small, non-recurring equipment sale with a slight gain, not material to the quarter.

Jash Patwa asked about the flat sequential G&A spend, the channels capturing uninsured motorist vehicles outside of direct insurance claims, and the potential impact of state-level legislation on storage fees and total loss thresholds.

Answer

CFO Leah Stearns attributed G&A changes to investments in Purple Wave and advised against seeing the current level as a new run rate. Executive Jeffrey Liaw clarified that vehicles from uninsured motorists can still be acquired through channels like 'Cash for Cars' and dealer services, though less directly. He also opined that legislative caps on storage fees would benefit insurers, while changes to total loss thresholds are unlikely to significantly impact business as economic factors are the primary driver for totaling a vehicle.

Jash Patwa of JPMorgan Chase & Co. questioned the recent trend in G&A spending, how vehicles from uninsured motorists find their way to auction, and the potential impact of state-level legislation on storage fees and total loss thresholds.

Answer

CFO Leah Stearns explained that G&A spending changes are driven by strategic investments, such as in the Purple Wave sales force, and that the current level is not a fixed run rate. Executive Jeffrey Liaw clarified that vehicles from uninsured drivers are acquired through non-insurance channels like Cash for Cars and Dealer Services. He also noted that while storage fee caps benefit insurers, changes to total loss thresholds are unlikely to materially impact Copart's business model.

Jash Patwa asked about the drivers behind the strong purchased vehicle gross margins, questioning if it was due to market dynamics or a specific company focus. He also inquired about the sequential decrease in G&A spending and whether the Q2 level should be considered a normalized run rate.

Answer

Executive Leah Stearns attributed the strong purchased vehicle gross margin to several factors, including a major customer in Germany and other sellers in the U.K. transitioning to consignment models, as well as margins on vehicles purchased directly from consumers. Executive Jeffrey Liaw added that he views the purchased model as a transitional step towards a consignment relationship with sellers. Regarding G&A, Liaw advised against reading into a single quarter, stating that the company does not manage for smoothness and that investors should look at multi-quarter trends to understand costs, which can have variability due to seasonality or specific projects.

Jash Patwa inquired about the shift toward consignment models in Germany, asking if it represented a turning point in that market. He also asked about the recent uptick in CapEx and whether that spending rate should be expected to continue.

Answer

Executive Jeffrey Liaw explained that the shift from a principal to a consignment model in Germany is part of a gradual, standard progression for Copart in new markets as it proves the value of its auction platform. Regarding CapEx, he stated that spending is primarily for land, development, and technology, and that quarter-to-quarter figures can be volatile due to the long and unpredictable timing of real estate transactions.

Jash Patwa asked for an update on the non-insurance business mix and customer demographics, and also inquired about the company's historical framework for fee increases and whether the competitive environment has altered that approach.

Answer

Executive Jeffrey Liaw detailed the key non-insurance seller segments and stressed the importance of an integrated 'crossover buyer' base rather than a dedicated one, with international buyers being particularly relevant. On the topic of fees, Liaw declined to discuss specific schedules or frameworks, stating that the company's primary focus is on delivering long-term value to its buyers and sellers, and that such pricing details are not discussed publicly.

Jash Patwa requested a breakdown of the full-year revenue guidance reduction, asked about Luminar's competitive advantage in the smart infrastructure market, and sought an update on the partnership with Mercedes-Benz.

Answer

CFO Tom Fenimore attributed roughly two-thirds of the $15M revenue guidance reduction to lower sensor shipments and one-third to the wind-down of a non-core data contract. CEO Paul Ricci highlighted existing revenues, technological advantages, and lower price points as differentiators in the infrastructure market. Regarding Mercedes, Ricci confirmed they have a development agreement and are working to convert it into a production agreement.

Jash Patwa asked if Luminar's unified 'Halo' product architecture could limit its ability to win business with new automakers and inquired about the leadership team's technological bench strength following the CEO's departure.

Answer

Chief Financial Officer Tom Fennimore explained that the Halo platform was designed to meet the specifications of nearly all automakers and they do not believe it will hinder new business acquisition. He also expressed confidence in the existing technology team, stating it was well-built by the founder and will ensure a smooth transition under the new CEO.

Jash Patwa inquired about Luminar's status as the reference LiDAR for NVIDIA's Hyperion platform with the new Halo product and asked about the competitive landscape, particularly concerning Chinese suppliers and Luminar's differentiation.

Answer

CEO Austin Russell confirmed Luminar's intent to be the lead LiDAR for platforms like Hyperion with the transition to Halo, which offers better economics. He emphasized that while China's LiDAR market is developing rapidly, Western and Eastern OEMs have different requirements. Russell stated that Luminar is positioned as the premium, Western-world leader, noting that OEMs are wary of Chinese technology integration and that, to his knowledge, there are no material production wins for Chinese LiDAR companies outside of China.

Jash Patwa asked about the current stage of the LiDAR market share capture window and the expected timing for new platform announcements. He also inquired about Luminar's relationships with platform partners like Mobileye and NVIDIA. His follow-up concerned early consumer feedback on LiDAR, safety data insights, and the go-to-market strategy for the insurance business.

Answer

CEO Austin Russell noted that while some OEM platform timelines have been delayed, the overall LiDAR adoption cycle is compressing. He emphasized that successful execution with current partners like Volvo is the immediate focus. On the follow-up, he highlighted strong consumer interest in the EX90 and cited safety data from partner Swiss Re. CFO Tom Fennimore detailed the insurance strategy, which targets a ~20% premium discount in key U.S. states but is not expected to be a material P&L contributor in the near term.

Jash Patwa of JPMorgan asked about the potential impact of 'right to appraisal' legislation on repairable claims, whether suppliers are moving production to Mexico to mitigate tariffs, and for a breakdown of collision versus non-collision growth in North America.

Answer

President & CEO Justin Jude noted it was too soon to see an impact from the new legislation but that LKQ is monitoring it. He also stated there has been no major movement of supplier production from Taiwan to Mexico yet. Senior VP & CFO Rick Galloway declined to provide a specific revenue breakdown but offered color, noting aftermarket parts volume was up while paint sales were down, reflecting delays in the final stages of repair cycles.

Jash Patwa sought more insight into North American market penetration strategies, asking if they were linked to a less aggressive competitive landscape. He also requested clarification on whether aftermarket parts are subject to the 10% universal reciprocal tariff and if a U.S. private label collision parts strategy was viable.

Answer

CFO Rick Galloway clarified that North American market share gains stemmed from superior service and inventory levels, not aggressive pricing. Regarding tariffs, Galloway explained that many automotive parts fall under a 25% Section 232 tariff, which excludes them from the additional 10% reciprocal tariff. CEO Justin Jude added that most of LKQ's U.S. aftermarket collision parts are already sold under its private label, Platinum Plus.

Jash Patwa asked a broader question about the potential impact of lower new vehicle sales from 2022-2023 on the 3-10 year old vehicle sweet spot, and whether potential tariffs could create a competitive advantage for LKQ's differentiated supply chain.

Answer

President and CEO Justin Jude stated that lower new car sales have not yet had a major impact, as the aging vehicle park benefits LKQ's collision and mechanical parts sales. CFO Rick Galloway added that their sweet spot is closer to 3-12 years. Regarding tariffs, Jude noted that less than 5% of U.S. purchases are from China, Mexico, and Canada, and historically, tariff costs have been passed on. He suggested a potential competitive advantage could arise if tariffs impact competitors like OEMs more significantly.

Jash Patwa, on for Ryan Brinkman, asked if current industry headwinds could create M&A opportunities and if LKQ would increase its acquisition activity. He also requested an update on the Elitek diagnostics business and the status of the ongoing lawsuit with Repairify.

Answer

CEO Justin Jude responded that LKQ is prioritizing share repurchases over large acquisitions due to the current stock valuation, but remains open to small, highly synergistic tuck-in deals. Regarding Elitek, he noted that its growth has slowed with the decline in repairable claims but remains a strong, profitable business. He also stated the company has no concerns about the intellectual property issues in the Repairify lawsuit.

Jash Patwa, on for Ryan Brinkman, asked about the potential impact of tariffs on direct operating expenses beyond fleet value, such as vehicle parts, and questioned how the company is balancing share buybacks against deleveraging in its capital allocation strategy.

Answer

CEO Joseph Ferraro acknowledged that tariffs could increase costs for parts but noted that their younger fleet helps mitigate this. He also pointed to technology-driven productivity gains to offset wage inflation. CFO Izilda Martins explained that the capital allocation strategy is balanced and opportunistic, with a current priority on deleveraging while continuing to make strategic capital investments and opportunistically returning capital to shareholders.

Jash Patwa, on for Rajat Gupta, asked for the rationale behind withdrawing guidance despite the business's subscription component and requested the dealer revenue split. He also followed up on TC+, asking about dealer cost savings and potential cultural pushback in stores.

Answer

Jantoon Reigersman (executive) explained that guidance was withdrawn due to the high level of macro uncertainty from tariffs, which could make any forecast unreliable. Oliver Foley (CFO) stated that dealer revenue is about 80% subscription-based and 20% paper-sale. Reigersman then detailed the significant cost savings and efficiencies TC+ offers dealers, such as 24/7 sales and better staff utilization, which creates a strong value proposition.