Luminar Technologies - Earnings Call - Q1 2025

Executive Summary

• Q1’25 revenue was $18.9M (−16% QoQ, −10% YoY) with GAAP gross loss of $(8.1)M and non-GAAP gross loss of $(6.4)M; non-GAAP OpEx fell to $45.2M, reflecting cost actions as the company transitions to a unified Halo platform.
• Shipments rose ~50% QoQ to ~6,000 sensors (majority to Volvo), but unit economics on Iris remain unfavorable; management reiterated FY’25 revenue growth of 10%–20% and gross loss guidance, while lowering year-end quarterly non-GAAP OpEx target from mid/high-$30Ms to low-$30Ms.
• Q2’25 revenue is guided down sequentially on lower non-series production sales; cash and liquidity ended Q1 at $188.2M, free cash flow improved to $(44.3)M, and 2026 converts outstanding reduced to $185M face with a goal of < $100M by June 2026.
• Leadership transition: Founder/CEO Austin Russell resigned after a Code of Conduct inquiry; Paul Ricci (ex-Nuance CEO) appointed CEO effective ~May 21; management emphasized no financial impact to Q1 results and continuity of the technology team—this is a key near-term stock narrative alongside Halo standardization and OpEx reduction cadence.

What Went Well and What Went Wrong

• What Went Well

  • Unified platform strategy gaining traction: all major customers migrating toward Halo, enabling focus on a single product, faster time-to-market and lower costs; “we’re kind of focusing on one product, Halo… move faster, more efficiently, more cost effectively”.
  • Execution on cost reductions: non-GAAP OpEx fell to $45.2M (down ~$10M QoQ), and year-end quarterly non-GAAP OpEx target lowered to low-$30Ms, reinforcing improved cash burn trajectory.
  • Volume ramp proof point: ~6k LiDARs shipped in Q1 (up ~50% QoQ) driven by automotive series production, supporting FY’25 shipment plan (30k–33k vs. ~9k in FY’24).

• What Went Wrong

  • Top-line softness and ongoing gross loss: revenue fell to $18.9M (−16% QoQ, −10% YoY) with GAAP gross loss $(8.1)M and continued negative unit economics on Iris despite series volume gains.
  • Tariff headwind emerged: ~$1M tariff expense in Q1 COGS; while management expects to mitigate most of the impact for the remainder of the year, Q2 revenue is guided down QoQ.
  • Leadership turnover risk: abrupt CEO transition (no financial impact) creates governance/strategy overhang until new CEO communicates a detailed plan; near-term investor focus will be on stability and customer continuity.

Transcript

Speaker 0

Welcome, everyone, to Luminar's first quarter of 2025 business update call. My name is Aileen McAdams, and I am Luminar's Head of Investor Relations. With me today is Tom Fenimore, Luminar's Chief Financial Officer. As a reminder, this call is being recorded. You can find the press release and the presentation that accompanied this call at investors.luminartech.com. In a moment, you will hear remarks from Tom, followed by a Q&A session. Before we begin the prepared remarks and then the Q&A, let me remind everyone that during the call, we may refer to GAAP and non-GAAP financial measures. Today's discussion also contains 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 CFO Tom Fenimore.

Speaker 1

Thank you, Aileen. This afternoon, before we dive into the quarterly financial results for the company, I want to take a moment to share some important updates from our board of directors regarding our leadership at Luminar. Some of you have likely seen the press release we issued, but in the event you missed it, I want to recap it now. Founder Austin Russell, the President and CEO of the company and Chairperson of the Board, will resign effective immediately following a code of business conduct inquiry by the board of directors. This matter does not impact any of the company's financial results. Mr. Russell will remain on the board and be available to the incoming Chief Executive Officer on transition and technology matters. This decision was not made lightly. The board recognizes the weight of this action and the impact it may have.

However, the board takes seriously its duties of oversight, accountability, and commitment to Luminar's values, culture, and long-term success. In light of this transition, we are pleased to announce that Paul Ricci has been appointed as our new CEO to be effective on or about May 21, 2025. Paul brings a wealth of experience, having previously served as Chairman and CEO of Nuance for nearly two decades. His visionary leadership and deep understanding of technology make him the ideal person to guide us in our next chapter of growth. We understand that this news may come as a surprise. We want to assure you that the board of directors and the leadership team is fully committed to ensuring a smooth and successful transition. Finally, while I suspect you have a number of questions about this, we plan to let the press release speak for itself.

Now let's move on to our Q1 financial and business update. As you noticed from our presentation today, we wanted to use this quarterly business update to not only run through our quarterly financial results, but also take a step back and provide a broader vision for where Luminar is headed over the next few years. One of the things that makes Luminar so unique is that our technology uses the 1550 wavelength. As compared to our competitors who use the more traditional 905 wavelength, we're able to put, on average, up to 17 times more photons into the environment. This gives our customers the ability to not only significantly improve the safety of their vehicles, but also operate autonomously at all speeds, including high speeds. This is something truly unique. This is also the primary reason why our OEM partners have chosen to work with us.

In doing so, however, each OEM has historically asked us to use our core LiDAR technology and develop unique OEM-specific product architectures around it. Iris and Iris Plus are just two examples of these highly customized design programs. Last quarter, we introduced the idea of consolidating our product portfolio and customers into a singular Luminar Halo platform in order to improve our development time and significantly reduce our development costs. This decision to move to a unified product architecture has been extremely well received by our OEM partners. Going forward, the core technology of our Halo platform will be largely standardized across all our customers with modest customizations. We have a page in the slide deck to highlight four that have kind of signed on to this approach so far.

This will enable us to streamline our product development efforts, improve our time to market, and further reduce our cost. As it relates to our business model beyond Luminar Halo for our next generation products, we'll be narrowing our development efforts around our core technologies, such as the transceiver, which includes the laser, the receiver, and the ASIC, the embedded software, and other core components. Simultaneously, we will also be outsourcing more of the commodity components of our LiDAR, for example, like a top housing or chassis or other components, to some of our key partners. This will allow us to further streamline the company and reduce costs and get our products to the market faster. This is a continuation of efforts to re-scope our company focus and right-size our cost structure.

We've had to make a number of tough decisions over the past year to better position our company for the future, and we will continue to do so. In the coming quarters, we will look forward to providing incremental updates on our progress with this initiative, including new and existing customer wins using the Halo platform. Now, let's turn to an update on restructuring actions in our financials. Last year, we announced two major restructurings, one in April and one in September. That allowed us to significantly improve our cost structure. The key catalysts for these cost actions were the successful achievement of our Volvo launch last year and our expanded industrialization partnership with TPK. In aggregate, these actions were expected to save $120 million in cash and another $40 million in stock via stock-based compensation. We had achieved these cost-saving targets.

Specifically, versus a year ago, if you look at our non-GAAP OPEX, a good proxy to measure the cash savings from our restructuring actions, those have declined by about $115 million on an annualized basis. Our quarterly stock-based compensation, a good proxy for the stock savings, has declined by almost $100 million on an annualized basis. Overall, I'm proud that we're executing on what we set out to do in reducing costs in our business and extending our financial runway. This brings me to the next topic of our capital structure. I'll start with an update on our debt profile. As a reminder, our secured debt maturing in 2028 and 2030 includes a springing maturity that requires us to reduce the outstanding face value amount of our 2026 unsecured debt below $100 million by June of next year.

I'm happy to report that as a result of the actions we have taken over the past several months, we now have a line of sight of reaching that goal. We have reduced the balance on the 2026 debt from $625 million in August of last year to $185 million outstanding as of today. Accordingly, we plan to continue working towards reducing this balance in the near term and doing so in a disciplined manner that does not materially impact our cash balance. Let's now return to our Q1 financials. Revenue for the quarter came in at $18.9 million, which was down 10% year over year and 16% sequentially. This was consistent with the guidance we gave that revenue this quarter would be lower than Q4.

On a quarter-over-quarter basis, Q1 saw growth in series production sensor sales and NRE revenue, which is offset by lower sensor sales to adjacent market customers. More specifically, we shipped almost 6,000 sensors to customers in Q1, up approximately 50% from Q4 sequentially. The vast majority of these sensors were shipped to Volvo. For the quarter, we reported a gross loss of negative $8 million on a GAAP basis and negative $6.4 million on a non-GAAP basis, which again was in line with our guidance. This was driven by continued growth in series production sensor sales at unfavorable unit economics, which was partially offset by returns from some of our cost-saving actions. We also incurred approximately $1 million of tariff charges in our COGS during Q1, and we are very close to resolution with our key customers to mitigate our tariff exposure for the rest of the year.

OPEX came in at $64 million on a GAAP basis and $45 million on a non-GAAP basis. On a non-GAAP basis, OPEX was down nearly $10 million quarter over quarter, a direct result of the cost reduction actions we announced last year. Moving on to our cash and balance sheet, we ended Q1 with $188 million in cash and liquidity, which includes $138 million in cash and marketable securities and our undrawn $50 million line of credit. Including $209 million available in our equity financing program, our total access to liquidity stands at nearly $400 million. Our change in cash in Q1 was negative $44 million, which was higher than the negative $16 million level in Q4. This was entirely driven by activity in our equity financing program, specifically raising $48 million in Q4 of last year versus a negligible amount in Q1.

Since we did not file our 10-K until late March, we had limited time in Q1 to utilize our ATM facility and instead opted to equitize a portion of our 2026 convertible notes during the open period. Ultimately, while we got it to an average of issuing about $30 million on average per quarter under this ATM program through the remainder of this year, we also indicated that this activity would be lumpy quarter to quarter. Free cash flow for this quarter was roughly $44 million, representing an $18 million improvement from the $62 million used in Q4. Driven by our cost reduction actions and working capital swings, this marks the lowest level of quarterly cash burn since 2022 as the benefits of our ongoing cost reduction actions continue to manifest.

Moving on to 2025 guidance, despite all of the macro uncertainty, we are reiterating our 2025 revenue and other guidance and improving our year-end OPEX target. For 2025, we continue to expect full-year revenue growth in the range of 10-20%. As a reminder, our revenue and sensor shipment guidance for this year incorporated a more conservative production outlook relative to our customers and third-party guidance, specifically a 50% haircut to IHS forecasts at the time. While the volatile geopolitical and macro environment presents risk, we believe that our conservative approach provides a sufficient buffer to reiterate our guidance at this time. This buffer is less than what it was at the beginning of the year. For Q2, we expect revenue will decline slightly quarter over quarter, driven by lower sequential sensor sales to non-series production customers.

We continue to expect to generate a non-GAAP gross loss of negative $5 million to negative $10 million per quarter on average through the remainder of this year. One element of our guidance that we are revising positively is OPEX. Given the progress we demonstrated on non-GAAP OPEX in Q1, as well as actions to be implemented as part of our unified product architecture strategy discussed earlier, we're revising our year-end quarterly OPEX outlook from the mid to high $30 million range to now the low $30 million range. We can continue to expect the end of the year with greater than $150 million of cash and liquidity, which includes cash and marketable securities and our $50 million undrawn line of credit.

As I communicated in prior quarters, we believe our current cash and liquidity position, as well as access to additional liquidity, provides us with sufficient runway through at least the end of next year. I've also mentioned in the past we may require approximately up to $100 million in additional capital to reach profitability, and we remain focused on aggressively executing our cost reduction plan and streamlining our business to lower any additional funding requirement. Finally, I wanted to make everyone aware that we are going to file an extension for our 10-Q for the quarter. This concludes our prepared remarks, and I will hand it back over to Aileen for Q&A on the business and financial update.

While I understand there's interest in the leadership transition, and I appreciate the question, we won't be discussing that topic further on today's call other than what was disclosed in the press release and AK. For today, we're focused on the Q1 financial results and business update and happy to take questions on those topics. In the near future, we hope to have another business update call with Paul Ricci to go into more detail on some of the actions we talked about today. Over to you, Aileen, for Q&A. Thanks, Tom. We're going to hand it over to our analyst community now. I'd ask that analysts limit their question to one initial question and one follow-up. Our first question is going to come from Josh Patwa at JP Morgan. Hi, good evening. Hi, Tom. Good evening, and thanks for taking my questions.

Maybe just starting off with the unified product architecture, curious if collaborating on a unified product architecture with select OEMs limits your ability to secure business with other automakers in any way. Would other automakers be willing to adopt and align with this unified standard? Just along those lines, if you could draw parallels to another vehicle component or technology that has evolved in a similar manner, that would be very helpful. Thank you and have a follow-up. Sure. You know, the short answer to your question is we do not believe so. We have been working with our current customers as well as most of the major leading automakers over the last several years. We understand their spec requirements.

One of the benefits of operating a 1550 and having a lot more photons you can distribute, we really designed Halo to meet what we believe are going to be practically all the specs of the automotive companies. Now, look, if there does become, I would say, some modification more than we would want that we need to make at the time, we'll assess it at that time. We'll look at the ROI of what that business is relative to the incremental investment. We've kind of shown in the past that if that equation doesn't make sense, we will walk away. I would say for the business we want, we think Halo will be good enough and meet almost all the specs.

If there are modifications required, we'll do an assessment at that time, but we kind of design it in a way where we do not think there is going to be a lot of those exceptions. Understood. That is very helpful. I appreciate you want to keep the discussion limited to the Q1 financials and business performance, but maybe just asking in a different way. I was just hoping if you could provide some insights into the bench strength of the operational leadership team, particularly from a technology standpoint. Who is expected to take the lead on the organization's technology roadmap, and do they have a different perspective compared to the prior leadership? Thank you. Austin did a great job of building an amazing team at Luminar. That team is not changing as a result of the announcements today.

Paul will be coming in here next week and take over as CEO. I'm very confident that between Luminar's team, our technology, and our relationships that we can execute on a smooth transition. Great. Thanks, Tom, and good luck. Thanks, Josh. All right, who do we have next, Aileen? Our next question is going to come from Mark Delaney at Goldman Sachs. Hey, Mark. Hi, Tom. Thank you very much for taking the question. I guess first on the Halo roadmap, on some of the prior earnings calls, you spoke about the benefits of Halo and one of them being the streamlined approach. With what you spoke about today, I'm hoping to better understand what may be changing.

Is there incremental standardization that you're now planning, or is this just a continuation of what you've spoken and sharing some of the feedback you've now had from some of the auto OEMs? Yeah, I would say when we unveiled Halo about a year ago, nothing has changed in the underlying design of Halo. We designed it with that specs in mind. What's really happened over the past few quarters is we talked about moving all our customers to Halo. We've successfully done that, and now we're kind of modifying our organization around that unified product architecture. If you go back a year ago, we were working on Halo, we were working on Iris, we were working on Iris Plus. We now have that.

I would say there's still some finalization work we need to do on Iris that should be completed by the end of the year or substantially completed by the end of the year. We're going to be in a position here very soon where we're kind of focusing on one product, Halo. That allows us to align our organization around that unified product architecture. That's going to allow us to move faster, more efficiently, more cost-effectively. If you combine that with kind of the lessons that we've learned, as I've said in the past, when we developed Iris, we didn't do it perfectly. We've learned a lot. We're applying those lessons to Halo. I think once you're now at the stage of what comes next after Halo, we're in the early stages of that.

What we're continually looking at is what do we at Luminar do better than anybody else? That's the transceiver and the core components of that built around our LSI technology, like the laser, the ASIC, the APD. That's core. Doing a lot of the embedded software, that's core. There are a few other core components. There is stuff where, like the top housing, the chassis that kind of surrounds the LiDAR. There is other stuff that I would say we can do, but some of our partners can do it just as well or maybe even better. We are constantly looking at, I would say, narrowing our focus at Luminar about what we do well, do fewer things better, and rely on our partners. It was very successful with what we did to TPK last year on the industrialization front.

That allowed us to take a ton of cost out of the business, and it also allowed us to move faster. I understood. My follow-up question was also on Halo, but as it respects to potential new business wins, as you're having discussions with OEMs and sampling the product with them, talking about the streamlined approach, can you help us better understand where you think you may stand about converting on potential new business awards in terms of series production? I guess just as you're having those discussions with these customers, can you just help us understand who is managing that? Was that Austin? Was that other people and any kind of business implications with Halo that we should be thinking of with the transition? Thanks. Yeah, yeah, no. As I mentioned before, Mark, we have a deep and great team here at Luminar.

We cover our customers up and down the organization from the engineering teams that work on the business at our customers on a day-to-day basis all the way to the top at the C-level exec. We are confident that we're going to be able to manage our customers through this transition, and ultimately, the quality of our team and our technology and our products will speak for itself. I'm not personally worried about that there. What I would say on Halo, we have multiple development contracts on Halo now with multiple customers. We are getting to the point now where we're going to start delivering advanced prototypes. Once those advanced prototypes do what they're supposed to do, we're confident that those are going to be converted into series production contracts, hopefully sometime here in the near future. Thank you. Thanks, Mark.

Our next question is going to come from John Babcock at Bank of America. Hey, John. Hey, good evening, and thanks for taking my questions. I guess, first of all, I was wondering if there are any changes to discuss in terms of developments with customers, anything new to announce there. Also, just back quickly to that Halo development, if you could also just talk about when you expect most investment in the product development to be completed with Halo. We're in the middle innings, I would say, of the investment in Halo. We've already made a good chunk. We have some more to do. Middle innings, I think, is the best way we described on Halo development. Look, we're continuing to move the ball down the field with our customers on Halo and doing that development work.

Those are going to convert to series production contracts if we continue to execute at some point in the future here. I have kind of given up guessing when those dates are exactly going to be, but as I say, we are making good progress and moving the ball down the field. Gotcha. Launch timing remains largely unchanged at this point? We are looking to launch this somewhere around end of 2026, early 2027. We have actually had a customer that pulled in one of their timelines there, and the team's working around the clock to accommodate that. Thank you. Just last question, if you could just talk about what is driving the improvement in your operating expense guidance, and that is all I have for you. It is the actions we talked about last year being fully reflected in the P&L. Thank you. Thanks, John.

Our next question is going to come from Winnie Dong at Deutsche Bank. Hey, Winnie. I like how you have the little hand raise icon up there. Yeah. Thanks so much for taking my question. Just maybe a quick follow-up to that last question. I do see that the OpEx guide is lower. Just curious if there is any sort of additional cost reduction actions that have taken place to achieve this versus the previous guide. As we look beyond this year, just curious how you think about costs as you expand the Halo unified architecture and then grow customer base from there, maybe beyond this year. Sure. Yeah. Our quarterly OpEx on a non-GAAP basis for this past quarter was $45 million. Our target for the end of the year is in the low $30 million range. We have clearly, we're going to need to take some actions.

We have all of them identified, and we've already started to implement them to get them there. Yes, there will be additional cost actions identified, executing upon them. In terms of incremental investments in Halo, I think the good thing in there is the invest, yes, as I mentioned before, we're kind of through the middle innings of Halo investment. There are some additional investments that we continue to make, but at the same time, we've kind of stopped work on Iris Plus. That will start to help over the next few quarters, and then we're kind of ramping down the work that needs to be done on Iris.

Any incremental investments we need to make in Halo relative to the current run rate for Q1 are not going to be as big as the wind down of the work on Iris, Iris Plus, as well as the other cost actions that we have identified. Got it. Thank you. My follow-up is on just one particular customer, right? I think Nissan, you may have heard through the media, is going through some of its own challenges. We saw some headlines on reducing workforce with the recent management change there. I am just curious to hear if this impacts your conversation with them, if at all, in terms of their conversion to Halo future business opportunities. Thank you. No, the short answer is no.

I would say everybody in the automotive industry is kind of going through what Nissan's going through, what Luminar's going through, right? It's kind of tough times with the current macroeconomic environment as well as the geopolitical uncertainty. The good thing about a company like Nissan is they're committed to new technologies and making their vehicles safer. That commitment is at the peak of the cycle and at the trough of the cycle. We haven't seen any change there in Nissan's development efforts around Halo. I have one quick follow-up, if that's okay. Just on tariffs, I know you mentioned you're talking to customers on recoveries. Can you just maybe help us size the impact? If there's any sort of. We didn't say recoveries.

I mean, if you kind of look, I said for Q1, we had about $1 million a month, $1 million tariff impact, and then tariffs went in in March. You can kind of extrapolate from there. It isn't necessarily one solution is recovery. I think as a lot of the rest of the world, as we become tariff experts over the last 30-60 days, we've found some clever ways working real-time with our customers to mitigate the tariff expense for, I would say, all parties. We are in the process of implementing that solution. Once that solution's implemented, I don't expect to pay a material amount of tariffs for the remainder of the year, barring any changes which have happened frequently over the last couple of months. Gotcha. Thank you so much. Great. Thanks, Winnie. Do we have next, Aileen?

Our final question is going to come from Richard Shannon at Craig-Hallum. Hey, Richard. Hey, Tom. How are you? Thanks for taking my questions. Coming in hot with some other calls and callbacks here. I am not sure if you have touched on, apologies if you have, but I think I heard some comment from you about gross profit outlook here or being in a gross loss position. I think throughout the rest of the year, maybe you can just discuss briefly the dynamics under which we get that to a positive thing. Is that a result of volumes and/or cost reductions that may occur here? Just help us kind of lay that qualitatively out. Yeah. We talked about this at our year-end call in March. This is not, I would say, new information.

Because the volumes for Iris are lower than expected, I would say we're struggling to kind of get the unit economics into the positive territory where they need to be to, I would say, have recurring positive gross margin. We have been able to get to gross margin on a quarterly basis like we did this past quarter. What we need is a large amount of sales typically to the adjacent markets or non-automotive customers where the ASPs are kind of multiples of where we've seen there. Yes, higher volume will help because that brings down our sensor costs. Getting more adjacent market sales at higher ASPs and thus better sensor economics helps as well. Those tend to be lumpy and more predictable. I don't want to rule out that you're not going to see a quarterly gross profit again with Iris.

I think we're going to need to get to Halo where you kind of see that sustainable and at margin levels where I think people are going to be a lot more happy. Okay. Fair enough. That makes sense. Second question for me is just kind of looking at the auto industry in general here, and obviously, Luminar is targeting mostly Western world OEMs. I want to get the sense of stability in autonomy roadmaps across the top 20-30 OEMs out there, whether they're firming up or even pulling forward. I think I heard you mention in a previous answer about maybe a pull forward with one particular one, but just want to get a general sense of whether we're seeing push-outs and uncertainty or we're seeing stabilization or even schedules firming up. Yeah. It's a great question, Richard.

I would say over the last couple of years, we've seen push-outs almost across the board for a variety of reasons that we talked about in the past. I've seen some early signs, one or two in particular, of push-ins over the last few months, but I would say I haven't seen enough data yet where I would say that that's a trend. I would say it's more light at the end of the tunnel. There are some encouraging signs, but I wouldn't get too excited just yet. Okay. Fair enough. Thanks for that update, Tom. That's all for me. Great. Thanks, Richard. That marks the end of our Q&A session. I'd like to thank everyone for their patience with our webcast this quarter and for the analysts that participated in our Q&A session. We look forward to updating everyone next quarter, if not sooner. Thanks, everyone.