AEye - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 revenue was $0.022M, with GAAP EPS of $(0.48) and non-GAAP EPS of $(0.35); adjusted EBITDA was $(6.9)M, reflecting modest top-line but strengthening commercial traction and disciplined cost control.
• Management highlighted a commercial inflection: Apollo fully certified on NVIDIA DRIVE AGX, tripling new business wins to 6, and securing a potential $30M transportation OEM program expected to begin contributing revenue in 2025.
• Guidance maintained for FY 2025 cash burn at $27–$29M, with CFO now expecting the high end; quarterly burn is expected to trend lower in H2 2025, and total potential liquidity increased to ~$126M with runway extended into 2027.
• Key stock-reaction catalysts: NVIDIA certification (ecosystem channel and Hyperion path), visibility to thousands of non-automotive units, and a signed $30M transportation OEM opportunity under active deployment.

What Went Well and What Went Wrong

What Went Well

• Apollo fully integrated and certified on NVIDIA DRIVE AGX Orin, “paving the way for Hyperion integration” and accelerating OEM engagement channels.
• Commercial momentum: “Tripled new business wins from 2 to 6,” active engagement with “more than 100” prospects, and “30” in advanced negotiations across smart infrastructure, aviation, rail, defense, and security.
• Signed a potential $30M transportation OEM program expected to start contributing revenue this year; “we have people on the ground, and it’s ramping today”.

What Went Wrong

• Revenue softness: Q2 revenue fell to $0.022M, down q/q from $0.064M and y/y from $0.032M; gross loss widened to $(0.086)M as cost of revenue outpaced sales.
• Operating expenses increased sequentially (GAAP opex $8.6M vs. $6.8M in Q1), lifting GAAP net loss to $(9.3)M vs. $(8.0)M in Q1, driven by higher engineering, business development, and personnel costs.
• Consensus estimates were unavailable from S&P Global for EPS and revenue, limiting beat/miss analysis; investors must focus on qualitative catalysts and liquidity runway until coverage normalizes (S&P Global data unavailable).*

Transcript

Speaker 3

Good day and thank you for standing by. Welcome to the AEye Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press *11 on your telephone. You will then hear an automated message advising you your hand is raised. To retry your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Jeremy Apple. Please go ahead.

Speaker 5

Good afternoon, and thank you for joining AEye's Second Quarter 2025 Earnings Call. With me today are Matt Fisch, Chief Executive Officer and Chairman, and Gunnar Juergens, Chief Financial and Business Officer. Earlier today, AEye announced its financial results for the second quarter. A copy of this press release can be found on the Investor Relations section of the company's website. Before we begin, I would like to remind participants that today's discussion may include forward-looking statements as defined in the securities laws and regulations of the U.S. with reference to future events, operating results, or financial performance. Such forward-looking statements are based on our current expectations and assumptions regarding our business, the industry, and other conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult or impossible to predict. Our actual results may differ materially from those contemplated by these forward-looking statements.

We caution you, therefore, against placing undue reliance on any of these forward-looking statements. You can find more information about the risks, uncertainties, and other factors in the reports AEye files from time to time with the Securities and Exchange Commission, including in the most recent periodic report. The statements to be made are as of today only, and AEye does not intend to update any forward-looking statements regardless of any new information, future developments, or otherwise, except as may be required by law. In addition, we will be discussing non-GAAP financial measures on this call, which we believe are relevant in assessing the financial performance of the business. These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance with GAAP. You can find reconciliations of these metrics to the most directly comparable GAAP measures within the press release.

Now, I'll pass the call over to Matt.

Speaker 4

Thanks, Jeremy, and thank you all for joining our Second Quarter 2025 Earnings Call. It's an exciting time for AI. Over the past few weeks, we've delivered a wave of new wins that signal an inflection point for our company. First, we were certified as an NVIDIA Drive AGX partner and selected for the GM-backed WinTor project, both of which could open the door to major new commercial channels. Second, a top global transportation OEM chose Apollo for a critical autonomous safety program, providing us with a potential $30 million opportunity, which we expect to begin contributing to revenue this year. Third, we launched Optus, our next-generation platform that has now been deployed to multiple customers. Optus is a clear proof point of our ability to scale efficiently into a range of high-value markets with its open architecture, AI-driven analytics, and adaptability across use cases.

Our dedicated focus on business development is delivering results. Our sales funnel has grown exponentially, leading to 30 new, potentially high-value customer engagements. We've signed six revenue-generating contracts and have a clear line of sight into additional orders totaling thousands of units. Further, our supply chain is ready today, and our manufacturing line with LITEON is primed to scale production to meet growing customer demand. Now, I'd like to take a moment to share how thrilled we are that Apollo is now officially certified as an NVIDIA Drive AGX partner. NVIDIA Drive AGX is positioned to become one of the most widely adopted compute platforms in the automotive industry, and certification is viewed by OEMs as a critical validation of Apollo's performance, as well as its readiness for integration into OEM vehicle programs.

This milestone takes our partnership with NVIDIA to the next level, potentially unlocking new OEM engagements and creating a powerful channel to expand our presence across the automotive market. Most importantly, it paves the way for Apollo's integration into Hyperion, NVIDIA's full-stack ADAS platform, which would put AI at the center of next-generation autonomous driving product development. I'm excited to announce that this milestone has also helped us to take a significant step forward in our engagement with a top five global OEM. As a next-generation LiDAR sensor, Apollo is also leading the charge to break through one of the toughest barriers to full autonomy: performance in adverse weather. In June, we were selected as the LiDAR partner for WinTor, a GM-backed project led by the University of Toronto that is focused on enabling safe and effective autonomous driving in rain and snow.

This is a strong endorsement of AEye's leadership in expanding the reach of autonomy beyond the Sun Belt region. Our involvement with WinTor supports AEye's position as a leader in defining future OEM ADAS specifications, creating the potential for a significant sourcing advantage for future OEM programs. As you may recall, we began shipping Apollo B samples last quarter, and since then, we've spent much of the summer showcasing Apollo in live test drives with top automotive OEMs across the U.S. and Europe. The response from OEMs cemented Apollo's clear differentiation and unique ability to fit within existing vehicle packaging, which we believe is a key enabler to broader LiDAR adoption across vehicle lines that will in turn unlock industry-leading scale for our company.

Beyond the automotive market, we are deploying Apollo with a growing number of customers around the globe, including China, and in markets spanning intelligent transportation systems, security, defense, rail, and aviation. We are winning in these verticals due to Apollo's unparalleled 1-kilometer high-resolution detection capability and incredibly competitive product cost. Furthermore, Apollo's SmartScan software-defined architecture enables us to rapidly adapt our single-sensor hardware to many use cases. Our customers and software partners love the resulting speed and low deployment cost, generating scale for AEye that we believe will be unmatched in the industry. To keep pace with growing customer demand, we've also opened our platform to third parties, which allows us to collaborate with the global AI developer community.

By combining Apollo's advanced sensing with the power of AI analytics and decision-making, we are now delivering end-to-end integrated turnkey solutions to our customers, which should enable them to reduce bottlenecks and rapidly unlock new revenue streams. These third-party collaborations have also led to the formation of a global innovation network that culminated in the development of Optus. Optus is a full-stack, flexible LiDAR solution that enables intelligent decision-making in complex and often hazardous environments. Powered by the world's most ubiquitous AI platform, NVIDIA's Jetson Orin, Optus couples open architecture and low-friction integration with a broad set of third-party AI sensing, analytics, and decision-making software to deliver unique solutions that meet our customers' needs. We are proud that we were able to achieve all of this while operating within AEye's capital-light financial strategy, which allows us to maintain the lowest cost envelope in the industry while driving tremendous scale.

We recently secured contracts for multiple Optus deployments in the markets I just mentioned, with a high confidence path to several more wins this year. AEye has definitively transitioned from product development into active sales and deployment. We're seeing strong market validation through a surge in customer engagement, growing product shipments, and a major win with a leading global transportation OEM. Perhaps most importantly, AEye is emerging as the clear leader in next-generation LiDAR and is poised for broader customer deployments in the automotive industry, as well as other verticals at the forefront of physical AI. Our leadership is reinforced by elevated relationships with industry giants, such as NVIDIA, as well as through Apollo's selection for the GM-backed WinTor project, which is forging new frontiers in autonomous driving. With the launch of Optus, we're extending our reach into physical AI and intelligent systems.

The momentum is real, and we look forward to sharing updates on Optus deployments and new customer wins in the quarters ahead. I'll now turn the call over to Gunnar to review our financial performance.

Speaker 2

Thanks, Matt. I'll start by addressing the commercial momentum we've achieved this quarter. As Matt mentioned, this quarter marks a clear inflection point in our shift towards sustained revenue generation. Apollo's unmatched range, resolution, and adaptability are driving increased customer engagements and contract wins across a diverse set of global markets. We believe that Apollo is the only long-range solution capable of behind-the-windshield deployment, further extending our competitive edge. While our roots are in automotive, Apollo's versatility is rapidly unlocking opportunities in new verticals. We're seeing strong traction in defense, smart infrastructure, rail, trucking, aviation, and security, each presenting challenges that our technology is uniquely positioned to solve. This flexibility is a key differentiator, enabling us to quickly scale across industries and geographies. Advancing our partnership with NVIDIA is another major milestone.

By integrating with their Drive AGX ecosystem, we're opening the door to OEM collaborations at scale, accelerating our path to commercialization and expanding our reach into embedded platforms. Finally, with the launch of Optus, we're moving beyond sensing to deliver actionable intelligence to our customers. Optus opens our platform to software partners, allowing them to build tailored AI solutions that extend our technology into new use cases, enhance our ecosystem, and grow our market opportunity. I'm pleased to report that our pipeline is stronger than ever, with over 100 potential customers actively engaged and 30 of those already in advanced negotiations, as Matt mentioned. This momentum is translating into real results. We tripled our contract wins this quarter, growing from two to six, and have visibility to non-automotive orders totaling thousands of units, driven by strong customer engagement and POCs already underway.

The strength of our pipeline, combined with a proven manufacturing partnership, gives us confidence in our ability to quickly scale with rising demand. While top-line revenue growth may remain modest through the rest of the year, we are delivering what truly matters at this stage: accelerating the pace of new customer engagements and widening the breadth of our use cases. We'd like to note that many of our customer contracts begin with smaller initial scopes as we co-develop tailored solutions for their unique needs. While this early phase takes time, it lays the groundwork for larger follow-on orders as customers see results and look to scale adoption. We're incredibly energized by the road ahead. The diversity of industries we're entering, from automotive and defense to smart infrastructure, aviation, and beyond, underscores the transformative potential of our technology. This is just the beginning.

I'll now move on to slide seven to address our cash burn and capital-light model. Excluding net financing proceeds, second quarter cash burn decreased by approximately $1 million to $7.1 million. We reduced our quarterly cash burn rate despite several one-time expenses, including a $1.4 million lease settlement from exiting an unfavorable agreement, effectively mitigating $6.4 million in potential cash liability. Our capital-light model is at the core of our growth strategy, enabling us to scale through building partnerships instead of making costly investments in infrastructure like manufacturing and software development. As you can see on this slide, our disciplined approach results in significantly lower operating expenses compared to peers, giving us a clear advantage in capital efficiency as we grow our business. Now turning to our second quarter financial results on slide eight.

Second quarter GAAP operating expenses were $8.6 million, up from $6.8 million in the first quarter of 2025. This was primarily due to the favorable adjustment recorded in the prior quarter related to the lease settlement and higher engineering, business development, and personnel costs, which were partially offset by lower stock-based compensation expense. Second quarter non-GAAP operating expenses were $6.8 million, an increase of $1.2 million compared to the prior quarter. We reported a GAAP net loss of $9.3 million, or $0.48 per share, in the second quarter, an increase of $1.3 million compared to a GAAP net loss of $8 million, or $0.46 per share, in the first quarter of 2025. The increase was primarily due to the operating expense increases discussed above, partially offset by lower financing costs.

On a non-GAAP basis, our net loss was $6.7 million, or $0.35 per share, in the second quarter, compared to a non-GAAP net loss of $5.5 million, or $0.31 per share, in the prior quarter, driven primarily by the increases in personnel, engineering, and business development expenses. Net cash used for operating activities decreased to $6.4 million in the second quarter, from $7.8 million in the first quarter of 2025. We ended the quarter with cash, cash equivalents, and marketable securities of $19.2 million. Since quarter end, we've more than tripled this balance, extending our cash runway into 2027. Our total potential liquidity, which includes cash on hand and our ELOC and ATM facilities, is now approximately $126 million.

As we look ahead to the next phase of growth, driven by increasing customer demand and continued pipeline expansion, our top priority is to ensure we have the resources to scale while also maintaining a disciplined approach to capital allocation. With that in mind, we took steps recently to further solidify our liquidity position and to provide us with the operating capital needed to execute our production plans and strategic priorities. Moving on to our cash burn outlook on slide nine, we now expect full-year 2025 cash burn to come in at the high end of our previously communicated range of $27 million to $29 million. This updated outlook reflects several key factors: the positive impact of a recent lease settlement if we continue paying down the convertible note in cash, one-time professional service fees, and anticipated investments in product development to support upcoming customer programs.

While these are near-term costs, they are aligned with our broader strategy to scale efficiently and position the company for long-term growth. We remain disciplined in our capital allocation and confident in our ability to execute within this revised framework. In summary, we're excited about the progress we're making in translating innovation into commercial wins, delivering truly differentiated products that are gaining real market traction, all while operating with one of the leanest, most efficient cost structures in the industry. Looking ahead, we will remain focused on financial discipline as we efficiently scale our business to meet global demand for advanced LiDAR sensing and drive sustainable long-term growth for our shareholders. With that, I'll pass it back to Matt to wrap things up.

Speaker 4

Thanks, Gunnar. In closing, we're incredibly proud of the breakthroughs the AI team has made so far in 2025. Our technology is proving itself in the field, and our entire team is excited and aligned around our path forward. We look forward to building on our momentum and sharing updates on our continued progress in the quarters ahead. We will now open the call for questions.

Speaker 3

Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Poe Fratt with Alliance Global Partners. Your line is open. Please go ahead.

Speaker 1

Great. Good afternoon, Matt. Good afternoon, Gunnar. Really solid progress. Would you tell me more about the NVIDIA integration?

Speaker 4

Sure. Hey, Poe, thanks for joining us this quarter. I'm happy this is Matt. I'll take that one. Just a couple of key points here. First of all, if you go to NVIDIA's website today, the developer website for NVIDIA Drive, you'll see that AI Apollo LiDAR is at the top of the list when it comes to performance. That's detection range and resolution. One of the things that this really does, look, NVIDIA has been great at defining objective standards and benchmarks for various things out there in the world of autonomous driving, and they're certainly doing that for LiDAR.

We're happy to see we've risen to the top of that list in terms of capability, and it makes the conversation with OEMs, for example, very simple because now we have that objective stamp of approval that, wow, this device really performs, and it's mature, and it's ready for integration. I think the second piece that's really important about this partnership is, look, we have a special status here now with NVIDIA, and it's not just about being included in the ecosystem that has that credibility, but now we have support from their sales and marketing channels. This accelerates our conversation and expands our conversation to a greater pool of OEMs. It paves a path internally inside NVIDIA for direct integration of our sensor into their Hyperion platform. That's the brain behind the autonomous driving and really gets us connected through proactive resource assignment from NVIDIA.

By the way, we also mentioned on the call about Optus. Because we are integrated into that NVIDIA ecosystem, we're also getting that same world-class support from marketing and sales channels from NVIDIA outside of the automotive space.

Speaker 1

That's great. You sort of answered the second question I had. Could you give us a little more details on Optus and how does it fit into your broader strategy? If there's any color you could add there, that'd be helpful, Matt.

Speaker 4

Sure, I'm happy to do that. Look, as we hinted at during the last call, automotive is doing its thing and taking a bit of time, at least in the western part of the world. We felt that due to the strong demand that we had for Apollo and its applicability outside of the automotive space, we're driving more aggressively outside of automotive today due to the fact that Apollo is a great fit. Think about this. As automotive is ramping up more slowly, we're filling in the short term with a pretty aggressive ramp of non-automotive business. In order to hunt appropriately in the non-automotive space, you need to provide what I'm going to call a complete solution. It's not just the sensor, but the sensor and the thinking and the brain part. Optus is about the combination of those two things.

It brings those two things together in such a way that we're doing something that we believe is very unique here, which is opening Optus and opening the platform to a host of third-party developers. The integration with NVIDIA is helping us to do that because people know the platform. They feel comfortable. Developers feel comfortable integrating their software on top of NVIDIA. This is driving tremendous scale, right? We have this complete solution that's necessary to hunt, which is necessary to ramp our revenue and our business more aggressively in the short term. We're taking a very unique approach to this where we have basically a global network of developers that are allowing us to deploy Optus in different parts of the world at a very, very favorable investment cost for us. We are in the market with Optus today.

This is just not, you know, we're not talking about a future product, but a product that's here today and is already deployed in multiple parts of the world because of this very fast scaling capability that's afforded by our global networks of developers.

Speaker 1

If I may, Matt, if I could ask, could you give us a little more color on your customer pipeline, both on the OEM side and also on the non-automotive? You talked about 30, over 100 contact points or potential contact points, 30 at advanced negotiations. Can you just give us a little more detail on the customer pipeline beyond those two metrics?

Speaker 4

I'm going to turn that one over to Gunnar.

Speaker 2

Hey, Paul. Yeah, I'll address this one. You sort of just alluded to it. We're feeling very confident about the pipeline, and you just got to bear in mind that we've really only had a product to sell since February. The traction that we've made there is amazing. We've got over 100 plus customers that we're engaged with. 30 of those are in advanced negotiation phase. We've tripled the number of wins from two to six. I think what we're seeing is really the versatility of Apollo as a sensor, right? A lot of these opportunities are in a diverse set of industries. We talked about it on the script. This is everything from defense to aviation to rail. There are lots of opportunities that we're pursuing and global opportunities too. This isn't just restricted to the North American market. These are opportunities in Asia and Europe.

I think what really gives us a distinct advantage is the performance of the sensor itself. It's a high-performance system. Part of the reason for that is it's 1550 nanometers. That gives you more power. With more power, you get more range, you get more resolution. The other thing to take into consideration is the software definability, reconfigurability of the sensor. We can optimize the sensor for the end customer's use case. If they want to optimize for range, we can optimize for range. If they want to optimize for resolution, we can optimize for resolution. That's why we talked about it earlier, that initial phase where we're working with the customer and we're exploring that initial use case is critical. That's where we spend some time, and it's a very hands-on phase. We're working through those deployments right now.

I think the other thing that gives us an advantage there is just the design of the system. We have a bistatic system with a separate transmit and receiver, and that really allows us to see far, but also to see with a high degree of precision. You take all those things, you take the performance, and then you match that with a very competitive price point. We have a distinct advantage in the marketplace, and we're seeing that. Customers are energized, engaged to work with us. Now, we're bringing Optus to the market. We're expanding our portfolio. We're using NVIDIA to power the system and also opening it up to developers to enhance the functionality so we can offer more to the end customer. All in all, very excited about the potential here, and this is just the beginning.

Speaker 4

I just wanted to add one other point to that. One of the things you see happening in the market, in particular on the LiDAR side, is a lot of what I'll call variants, hardware variants of products that are coming out in order to optimize for these particular markets. We don't need to do that. We drop in a software upgrade, and we have a configuration of Apollo that's optimized for a particular use case. In that case, we're a lot faster, and our capital expenditure is a lot lower when you're just talking about a software upgrade versus having to build and release and announce a new hardware version of your product.

Speaker 1

Great. Congratulations. I'll turn it back. I have a couple other ones, but I'll turn it back and see if anyone else is in the queue.

Speaker 3

Thank you. One moment for our next question. Our next question is going to come from the line of Scott Buck with Ladenburg Thalmann & Co. Inc. Your line is open. Please go ahead.

Speaker 6

Hi, good afternoon, guys. Thanks for taking my questions. Matt, I'm curious, the $30 million opportunity with the transportation OEM, are there additional deliverables, or is there anything the customer is waiting on you guys for between now and the end of the year, or are you on their timeline at this point?

Speaker 4

Scott, I think the simple answer is we're on the timeline, right? This is with many larger deployments. It takes time to take the sensor, to integrate it, and ramp that deployment across, you know, repeatedly across a growing fleet of vehicles. It's happening right now. We're on the customer timeline. In fact, we're on the ground today doing that integration and deployment. We'll be ready to talk about a bit more details on that particular OEM contract here in the coming weeks. Right now, it's live. We have people on the ground, and it's ramping today.

Speaker 6

That's helpful. On the tripling of the new business wins from two to six, can you give any kind of incremental color on those additional four? Maybe size them versus the initial two or give us a little more info on what industry they're in or any kind of additional color would be helpful, I suppose.

Speaker 4

All right. You got that one, Gunnar?

Speaker 2

Yeah, I'll start with the industry first. We're seeing a lot of traction in the smart infrastructure space, and I think that's because of the performance of the sensor itself, right? We've got a wide field of view, but also we can see long range as well. That definitely seems to be an area where we're playing quite well in. We are seeing opportunities beyond that in the security side, also in the defense sector as well. It's difficult to talk about specific volumes at this point just because we have confidentiality agreements in place with those customers. What I can say is we see line of sight to thousands of orders. Obviously, as I mentioned, there's a ramping phase there, right? Right now, we're focused on building the solution for those customers.

Over time, we start deploying that solution out on the field, and we expect to see things ramp up probably over the next 6 to 12 months.

Speaker 6

Great. That's exciting. One more. Sales and marketing expense stepped up this quarter. Could you give us a little information on maybe where those incremental dollars are being spent and how we should think about sales and marketing expenses here moving forward?

Speaker 2

Obviously, we live and breathe this capital-light business model, and we've talked about it quite a lot. A lot of that spend isn't incremental spend. It's just reallocation, reallocating dollars from G&A and from R&D. This is like FEE time on some of these deployments, some of my time on the biz dev side. Really, it's just a reallocation, I would say, of expenses from the G&A bucket and R&D buckets. There is a little bit of incremental spend there, but not a whole lot.

Speaker 6

Okay. Perfect. I appreciate the time, guys. Thank you very much.

Speaker 4

Thank you, Scott.

Speaker 3

Thank you. One moment for our next question. Our next question is going to come from the line of Glenn George Mattson with Ladenburg Thalmann & Co. Inc. Your line is open. Please go ahead.

Speaker 0

Oh, hi. Yeah, thanks for taking the question and congrats on all the progress lately. Just building on a lot of my questions have been asked already, but building on some of the stuff that was just talked about, pipeline, that 100 actively engaged customers, that, you know, that's growing nicely. Do you have a sense that you've hit an inflection point in terms of momentum where you got to start closing multiple deals a quarter, kind of like you did this quarter? Maybe a little bit more about the maturity of that pipeline of those 100 customers. Is there any of them that are like outsized contracts that could be similar to the $30 million one you announced last quarter?

Speaker 2

You want me to take that one, Matt?

Speaker 4

Sounds great, Gunnar. Why don't you get us started?

Speaker 2

I'll let you chime in if you want to add some color too. What I would say, we have 100. Thirty of those are in the advanced negotiation stage. I think there's definitely an opportunity to move those 30 into wins. At this point, we're in advanced technical conversations with these customers. We're on site doing demos. Like I said earlier, it's basically a vast array of industries that we're targeting, right? It's not just one industry. That said, we're seeing a lot of pull on the smart infrastructure side, and that definitely seems to be an easier lift for us. There are opportunities on the aviation side that we're pursuing, defense, security, rail, you name it. Like I said earlier, that goes back to the versatility of the sensor.

What I would say is, yes, there are a few opportunities that are similar to that $30 million opportunity that we talked about. There definitely is the opportunity to scale some of these contracts into high-volume awards. What I'm pleased about is, I'll give you one example. We've just started working with a customer, and we worked on a very specific use case, and we're now working on that use case, building it out, and pretty soon we'll be deploying it across multiple sites. As we've been doing that, they've brought an entirely new use case to us. We're not even done with the initial deployment, and they're also bringing us other work as well. I think that's an indication that they're pleased with the results. They're pleased with the product that we're obviously delivering. It's good to see that kind of traction with individual customers.

Speaker 4

I'd just add a couple of things to that, just to maybe give some insight to what's happening inside the company right now. Gunnar and I run this deal desk where when one of these discussions, the 30, for example, that we talked about earlier, gets to the point where the customer says, "Okay, give me a proposal." These are filling up my calendar and Gunnar's calendar, multiple per week. If you look at by the numbers and the conversion rate we've seen with the first six, we're definitely going to see more coming in the short term.

Speaker 0

Great. That's great color. Thank you for that. I should know this, probably everyone else does but me, but the $30 million opportunity, is that in aggregate or is that an annual potential once it gets up and running?

Speaker 4

I'll take this one. No problem. Probably about, if you add up those volumes, again, starting this year, we expect to see revenue come in over the next two to three years. That's the duration of the opportunity. It's not annual. It's the total size where we expect that to play out over the next two to three years.

Speaker 0

Okay. Thank you. Helpful. Thanks again.

Speaker 3

Thank you. One moment for our next question. Our next question is going to come from the line of Casey Ryan with WestPark Capital. Your line is open. Please go ahead.

Speaker 0

Yeah, thanks. Thank you for the update and the opportunity to ask some questions, gentlemen. You guys are using the term physical AI well. I think we're seeing that across the public company sector. Is that sort of euphemistic, or just tell me for framing purposes, does physical AI just mean non-automotive, or how do you think about it? I think there's a lot of spaces to drill down into that. In terms of understanding what you're signaling to us and painting as opportunities, it would be helpful to kind of figure out what you mean by painting things with this physical AI kind of moniker that a lot of people are using, it seems like.

Speaker 4

Right. Hey, that's a really good question. Thanks again for joining us this quarter, Casey. I think, look, physical AI, loosely put, is this artificial intelligence and sensing interacting with the real world, okay? Clearly, autonomous driving is physical in that sense. We refer to that as autonomous driving, automotive, for example. I think for the purposes of our conversation here and interacting with the world, if you will, we're using it most often to refer to interaction outside the scope of autonomous driving.

Speaker 0

Okay. That's actually really helpful. I do want to join. I am drawn to the sort of the Optus product and the opportunities there. I'm curious about two things. It feels like there's a lot of incoming, as well as maybe some outreach on your part around sort of physical AI opportunities. Is NVIDIA specifically helping you with that, or has something happened where maybe the market has shifted? Consumers in defense and security and all these things have suddenly realized that they need LiDAR at a much bigger scale. What has sort of happened to create what feels like a lot more activity around the whole space, and particularly with you guys, but broadly, it feels like the activity has picked up substantially in 2025.

Speaker 4

Yeah, absolutely. There's been a very strong inflection point. To answer your first question, NVIDIA is definitely very active in the physical AI space, as we've just described it. Their Jetson Orin product, for example, NVIDIA has the same kind of marketing channels, business development channels, and resources dedicated to their physical AI products. That includes customer outreach, as well as deployment support and promotion and sales. This is a very significant investment that we're seeing on NVIDIA's part, and they're very proactive with us in that space. At the same time, we are getting inbound requests and outreach simply from the headline that Apollo is capable of doing high-resolution detection at a kilometer. That headline has really brought us also a lot of business independently, and in fact, was instrumental in the large OEM win that we talked about earlier, the high-value one.

That was a matter of connection because nobody else can do the kind of distance that we can. We're definitely seeing some independent outreach and inbound on our own simply because Apollo's capabilities are unmatched out there.

Speaker 0

Right. Okay. That's terrific. My next, my other question around sort of physical AI and these other new opportunities outside automotive is, do you, is it a goal of the company? Do you think you need, like with defense, maybe some kind of defense contractor, which is about access and opportunity set to sort of be allowed to bid on things, or broader corporate integrators? Does the company want to partner with those people? Are you already partnering with them and not announcing them, or how do you think about going to market with people who have access to these purchasers ultimately?

Speaker 4

Yeah, if I'm understanding the question correctly, let's just take defense as an example. Because of the way that the Apollo LiDAR is scanning, we have a unique advantage there, okay? LiDARs that have spinning mirrors, it's kind of like a lighthouse. It's broadcasting a beam of light in a circular pattern out there in the universe. Defense is really picky about that because that's a target in defense language. Apollo does have some unique abilities because of our ability to randomize scanning. It becomes much less visible than, say, a spinning mirror. If we can take Apollo and through our software-defined model, upgrade it or configure it for that type of application, we're all over it. That's what I'd say where we're drawing the line right now to maintain our capital-light focus, which allows us to go fast and work on a lot of things at once.

We kind of set the boundary at like, okay, can we address this with a software upgrade? If the answer is yes, chances are we're going to go for it. We're incredibly busy just doing that alone. The answer is yes, we're over.

Speaker 2

I just wanted to add, Casey, I think the points that you were getting about, you talked about integrators. What I would say is our go-to-market strategy is adaptable. Sometimes when you're working with DOTs, they want you to go through an integrator, right? They have those relationships with a set of integrators that they've worked with for 30 or 40 years. We are working with integrators. We have the ability to do that. We're also chatting with the DOTs directly, and we can do that because of Optus, right? We have a solution that's fully bundled, right? That has all the attributes and components that you need to go to market.

Speaker 0

That's helpful. Both answers from both of you are helpful. To Gunnar, on defense, is it similar? Do you guys feel the need to get with an existing defense contractor? Mostly that's about access, not about functionality, right? It's just about being pulled into opportunities, I guess.

Speaker 2

Yeah, I mean, look, obviously, you have the big defense primes, so just landing one of those deals is a tremendous opportunity, right? You don't have to probably worry about volumes ever again. There are also the smaller defense players out there as well that are more receptive to new technologies and emerging technologies. There are two angles there. There is obviously working directly with the DODs themselves, and we've done that. We have a number of SBIRs that are in the works with the DOD that we're pushing through. We have a multipronged approach there.

Speaker 0

Okay. That's very illuminating, and I'll jump back in the queue. I appreciate talking with you.

Speaker 2

Thank you, too, Casey.

Speaker 0

Thanks, Casey.

Speaker 3

Thank you. One moment for our next question. Our next question is going to be a follow-up question from the line of Poe Fratt with Alliance Global Partners. Your line is open. Please go ahead.

Speaker 1

Yeah, thank you. Just two quick ones more on the financial side. Gunnar, you talked about $126 million as sort of your overall liquidity, including cash, your ATM, and your ELOC. Can you break that down between those three different buckets right now, or should we wait until the queue's out?

Speaker 2

I would wait for the queue on that one, Poe. What I would say is I can talk to cash specifically because we discussed that in the script. We finished the quarter with about $19.2 million in cash. I would say thanks to the growth capital that we've raised since then, we've been able to more than triple that number. I think the most important thing about that capital that we raised is that that's really going to help us convert some of those customer opportunities into wins. Like I talked about earlier, we need capital to deploy the sensors across multiple sites, and this is going to help us accelerate that and do that. That is why I think this is perfect timing for us. We're at an inflection point here. The business is about to scale, so this is going to help us scale even faster.

That said, this doesn't mean we're going to change anything in terms of our capital-light strategy. We're still going to do things in a very fiscally prudent and methodical way. That's not going to change. We're pleased to be able to take advantage of the market.

Speaker 1

Okay. Maybe on the contract pipeline, backtrack on that. You talked about, you know, you got the $30 million OEM contract. I thought I heard you said you also have in the contract pipeline a top five OEM that you're in advanced discussions with. Is that accurate, or did I hear that accurately?

Speaker 4

I'll take that one. I did mention as part of the script, because of our work with NVIDIA and the fact that we're now certified with them, this has really enabled us to take a big step forward with a top five global OEM. Absolutely. That's about all I can say.

Speaker 1

Just to clarify, Matt, that's exclusive of the $30 million contract that was signed at the end of the quarter.

Speaker 4

Absolutely. Remember, the context for that one also was we're talking about passenger vehicle OEM, so in addition to the $30 million. Yep.

Speaker 1

Great. That's really helpful. Thank you.

Speaker 0

Thanks, Gunnar.

Speaker 3

Thank you. I'm showing no further questions at this time, and I would like to hand the conference back over to Matt Fisch for closing remarks.

Speaker 4

Thank you all for your time today. We will be attending several investor and industry events during the quarter, including the JPMorgan Automotive Conference in New York, the KPMG Automotive Innovation Summit in Santa Clara, and the IPS World Congress in Atlanta. We look forward to seeing you there, and we appreciate your continued support and confidence in our vision. Have a great day.

Speaker 3

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.