Cepton, Inc. (CPTN)·Q4 2023 Earnings Summary

Executive Summary

• Q4 2023 revenue was $4.95M, up 214% YoY and up 29% QoQ; gross margin expanded to 54% as development revenue returned (vs minimal in Q3) and mix shifted, while GAAP net loss narrowed to $8.3M ($0.52) and adjusted EBITDA improved to $(7.1)M .
• Auto pipeline advanced: final-round sourcing with a Top 10 OEM, new RFQ from a Top 3 OEM, and management referenced a recently filed 8-K disclosing notification of an OEM series-production award; Koito’s non‑binding indication of interest to acquire Cepton is under evaluation and was viewed positively by OEMs in late-stage talks .
• GM program was rescoped in December (all related POs canceled); Cepton is pursuing investment cost recovery and remains engaged with the OEM on next‑gen ADAS architecture .
• 2024 guidance was not provided; management will update at Q1. FY23 revenue of $13.1M came in above Q3-issued guidance ($9–$11M), signaling better-than-expected 2H execution despite the GM change .

What Went Well and What Went Wrong

• What Went Well
  • Revenue acceleration and mix-driven margin recovery: Q4 revenue rose to $4.95M (+29% QoQ) with gross margin improving to 54% as development revenue returned to $2.5M after being minimal in Q3 .
  • Commercial traction and product innovation: Launch of Cepton Ultra (long‑range lidar) with MagnoSteer imaging and smallest-in-class form factor; increased OEM engagement including a final‑round Top 10 OEM sourcing and new RFQ from a Top 3 OEM .
  • Strategic positioning: Chinese competitor added to the U.S. 1260H list drove OEMs to reassess suppliers; Cepton emphasized the advantage of a U.S. supplier and deeper Koito partnership as a differentiator .
• What Went Wrong
  • GM program rescope: In December, Koito informed Cepton that the OEM rescoped ADAS offerings; all purchase orders to Cepton under the series award were canceled. Cepton is pursuing cost recovery (magnitude not disclosed) .
  • Product revenue sequential decline: Q4 product revenue fell 35% QoQ as the mix shifted toward development revenue; total revenue still rose due to development milestone timing .
  • No 2024 guidance: Management deferred 2024 outlook to Q1, adding near-term visibility risk despite improved pipeline commentary .

Financial Results

Income statement summary (USD millions, except per-share and percentages)

Note: Q2 2023 per-share figures predate the 1-for-10 reverse split effected September 21, 2023; subsequent releases adjusted historical figures for comparability where noted by the company .

Revenue mix (USD millions)

Operating expenses by quarter (USD millions)

Liquidity snapshot (period-end, USD millions)

Context and comps:

• Q4 revenue +214% YoY (to $5.0M per call) and +29% QoQ; non‑GAAP net loss and adjusted EBITDA both improved sequentially alongside mix-driven margin recovery .
• Full-year 2023 revenue of $13.1M was +76% YoY and exceeded the FY23 revenue guidance given in Q3 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are building upon our extensive OEM project experience... to pursue sourcing wins with global OEMs... we showcased our next generation product, Cepton Ultra, demonstrating our leadership in lidar innovation.” — Jun Pei, CEO
• “Cepton Ultra... boasting a remarkable long detection range of up to 300 meters at 10% reflectivity... and the distinction of being the world's slimmest adaptive long‑range LiDAR.” — Jun Pei
• “A prominent Chinese LiDAR company... was added to the 1260H list... We believe this event is a significant opportunity and a catalyst for growth for our company.” — Jun Pei
• “We have made significant strides with a top 10 global automotive OEM... demonstrations of the B samples of our Ultra product have been a game changer.” — Mitch Hourtienne, CCO
• “As of December 31, 2023, we had approximately $56.4 million in cash, cash equivalents and short‑term investments... we're not offering 2024 guidance at this time.” — Dong (Dennis) Chang

Q&A Highlights

• OEM sourcing dynamics: Final rounds remain competitive; OEM decisions for passenger vehicles typically target SOP in 2026–2028; trucking and passenger programs are separate but active .
• Koito IOI impact: Seen as positive by OEMs concerned about lidar vendors’ longevity; accelerates late-stage discussions .
• GM rescope cost recovery: Cepton is seeking recovery of a portion of its multi‑year OpEx related to the program; magnitude not disclosed .
• Smart tolling runway: Continued Q4 shipments and broader operator engagements domestically and internationally .
• Expense trajectory: Directionally lower than 2023 over the near term; detailed outlook pending Q1 results .

Estimates Context

• S&P Global consensus estimates for Q4 2023 (revenue/EPS) were not available for CPTN in our data pull; therefore, vs‑consensus comparisons are not provided (S&P Global data unavailable via mapping at time of request).
• Implication: With no published consensus, we anchor assessment to sequential and YoY performance, margin trajectory, and qualitative pipeline/guidance commentary .

Key Takeaways for Investors

• Mix-driven margin reset is meaningful: Q4 gross margin rebounded to 54% as development revenue returned, while adjusted EBITDA improved for the third straight quarter — a constructive setup if development activity persists and product margins scale with volume .
• Auto pipeline de‑risked by product and partner: Ultra’s performance and Koito’s Tier 1 heft are resonating with OEMs; the Koito IOI further addresses supplier durability concerns raised by OEMs .
• Program reset but not retreat: GM’s rescope is a setback to near‑term visibility, but Cepton is seeking cost recovery and remains engaged on next‑gen ADAS; near‑term execution hinges on converting late‑stage RFQs .
• Regulatory tailwind: The addition of a Chinese competitor to the 1260H list is prompting U.S. customers to reassess supply chains, potentially benefiting Cepton as a U.S. supplier .
• Watchlist catalysts: Any 8‑K detailing the referenced series‑production notification, new OEM awards, or further Koito M&A developments could be stock‑moving .
• Risk factors: Lack of FY24 guidance, program rescope risk at OEMs, and timing of RFQ decisions (often 2026–2028 SOP) extend revenue realization timelines .

Appendix: Additional Context and Cross-References

• Q4 revenue mix: product $2.46M (−35% QoQ) and development $2.49M (vs minimal in Q3), explaining the strong margin despite lower product revenue .
• Smart infrastructure momentum: Continued tolling deployments and expanding airport footprint corroborate non‑auto revenue durability .
• Balance sheet: Year‑end cash and STI of ~$56.4M supports runway while pursuing OEM awards and cost recovery .