Cepton, Inc. (CPTN)·Q3 2024 Earnings Summary

Executive Summary

• Q3 revenue collapsed to $0.55M from $10.43M in Q2 and $3.83M in Q3’23, driven by a sharp drop in lidar product sales and the absence of the one-time development revenue step-up that boosted Q2; gross margin swung to -15.0% (gross loss of $0.08M) from 60.9% in Q2 .
• GAAP EPS was $(0.73) vs $(0.06) in Q2 and $(0.78) in Q3’23; non‑GAAP EPS was $(0.53) vs $0.03 in Q2, reflecting the revenue drop and higher non‑recurring transaction costs tied to the pending Koito acquisition .
• Management highlighted continued progress on a long‑range lidar RFQ with a Top‑10 global OEM (in “final phase”) and milestones in near‑range automotive and industrial lidar, but did not hold a call due to the merger process; no guidance update was provided .
• Liquidity remains solid with $47.7M cash and equivalents at quarter‑end (down from $56.0M in Q2), and YTD operating cash outflow of $8.7M through Q3 .
• Near‑term stock catalysts: shareholder vote and regulatory (including CFIUS) approvals for the $3.17/share all‑cash acquisition by Koito, targeted to close in Q1’25 if conditions are met .

What Went Well and What Went Wrong

• What Went Well

  • Advanced late‑stage commercial pipeline: “RFQ with a Top 10 global automotive OEM for our long‑range lidar in its final stages,” with OEM awarded near‑range program and progress in industrial vehicles milestones .
  • Strategic validation and resources: all‑cash acquisition by Koito at $3.17/share underscores “shared vision for long‑term growth and innovation,” providing scale and customer access once closed (expected Q1’25, subject to approvals) .
  • Cost structure vs. prior year: operating expenses fell year over year (Q3 op‑ex $10.86M vs $12.84M in Q3’23), reflecting R&D and SG&A reductions versus 2023 levels .

• What Went Wrong

  • Severe revenue contraction: Q3 total revenue $0.55M vs $10.43M in Q2 and $3.83M in Q3’23; lidar sensor/prototype revenue fell to $0.47M vs $3.80M in Q3’23; development revenue was only $0.08M vs $10.05M in Q2 (timing/absence of large engineering services revenue) .
  • Margin compression and losses: gross margin turned negative (gross loss $0.08M) and operating loss widened to $10.94M vs $0.59M in Q2; adjusted EBITDA declined to $(8.0)M vs $1.1M in Q2 .
  • Limited investor communication: no earnings call this quarter due to the pending merger, reducing near‑term transparency and guidance updates .

Financial Results

Segment/Revenue-type breakdown:

KPIs and balance sheet/cash metrics:

Notes: Gross margin calculated from reported revenue and gross profit. Q2 revenue mix was dominated by development revenue from engineering services; Q3 lacked similar contribution .

Guidance Changes

Note: Company did not host a Q3 call and did not update guidance due to the pending Koito transaction .

Earnings Call Themes & Trends

Note: No Q3 earnings call was held due to the pending merger .

Management Commentary

• “As we enter the fourth and final quarter of 2024, we are making significant strides in the commercialization of our lidar technology… With an RFQ with a Top 10 global automotive OEM… in its final stages and a growing pipeline of opportunities, we are well‑positioned to further strengthen our leadership in the automotive lidar market.” – Jun Pei, Co‑Founder & CEO .
• “The recently announced acquisition by Koito underscores our shared vision for long‑term growth and innovation… our focus remains on executing our strategy, deepening OEM partnerships, and driving the adoption of our advanced lidar solutions across key industries.” – Jun Pei .
• Prior quarter context: “We are in the final stage of RFQ with a Top 10 global automotive OEM for our long‑range lidar, and we anticipate final decision in the second half of this year.” – Jun Pei (Q2 release) .

Q&A Highlights

• No conference call or Q&A was held this quarter due to the pending Koito transaction; management canceled the call and provided summary financials and business updates via press release .
• Similarly, the Q2 call was not held (canceled) following the merger announcement .

Estimates Context

• Wall Street consensus (S&P Global) for Q3’24 EPS and revenue could not be retrieved due to a missing S&P Capital IQ mapping for CPTN; we will update this section once the mapping is available. Actual results: revenue $0.55M and GAAP EPS $(0.73) .
• Given the magnitude of the sequential revenue decline vs. Q2’s development‑driven spike, we expect estimates for out‑quarters (if maintained) to focus on program timing rather than linear extrapolation.

Key Takeaways for Investors

• Q3 showed extreme revenue volatility and negative margin absent large engineering services revenue; the quarter underscores dependence on program timing ahead of potential Koito close .
• Despite weak P&L in Q3, liquidity of $47.7M provides runway through the merger timeline; YTD operating cash outflow of $8.7M through Q3 highlights continued burn but at a manageable level vs cash on hand .
• Commercially, the long‑range lidar Top‑10 OEM RFQ is in its final phase—an approval could be a material validator; near‑range automotive award execution and industrial milestones broaden the revenue path post‑close .
• No guidance update and no call reflect the M&A context; trading will likely hinge on deal milestones (shareholder vote, regulatory/CIFIUS, closing timing) rather than fundamentals until close .
• If the Koito acquisition closes as guided (Q1’25), investors should recalibrate around Koito’s strategic integration plans and potential acceleration of OEM programs leveraging Koito’s scale and customer base .
• Watch for any RFQ outcomes (Top‑10 and Top‑3 OEMs) and visibility on production awards as the principal non‑deal catalysts for the standalone business .

Appendix: Q3 YoY Context (selected lines)

• Revenue: $0.547M (Q3’24) vs $3.833M (Q3’23); decline driven by lidar sensor/prototype revenue falling to $0.466M vs $3.802M YoY .
• GAAP EPS: $(0.73) (Q3’24) vs $(0.78) (Q3’23) .
• Op‑ex: $10.86M (Q3’24) vs $12.84M (Q3’23), reflecting year‑over‑year reductions .