Cepton (CPTN) 7 Aug 232023 Q2 Earnings call transcript

Greetings, and welcome to the Q2 2023 Cepton, Inc. Business Update and Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Hull Xu, CFO. Thank you, Hull, you may begin.

to quarter welcome and earnings and update. business you, Cepton's XXXX second call Thank are Co-Founder Business Jun Officer; today me With Pei, Hourtienne, Vice and and Senior President of Development. Mitch Executive Chief

measures may refer our in measures be included of to in The are considered During the a release. for with call, to unaudited GAAP. for non-GAAP earnings should GAAP measures financial earnings prepared the substitute our financial accordance release. our Reconciliations non-GAAP as performance measures and not non-GAAP in superior we or

are I earnings this made for would statements, Harbor Company's may release accompany statements that current call. statements our like the subject expected to to contained remind that relating in and on periods. the future and in include statements to everyone comments based the regarding performance slides call this Company's are conference Safe financial the forward-looking These operational and the forward-looking expectation

or Actual earnings results SEC. described these including filings during periods materially our due may discussed forward-looking other differ for call, and those today's U.S future or in with a the of in or risks, implied those the statements factors, uncertainties by release to number those expressed from

update to of by statements law. We undertaking any except as are not commitment as result events a these future required

of that a reminder, this replay as at accompany call slides the call is Webcast this release being call earnings recorded, as investors.cepton.com. As and quick this find and you can well a

Jun. Now I'd turn over like to call the to

call. joining second and Thank quarter afternoon, for XXXX good earnings you, Cepton's everyone. you Thank Hull,

you. quarter business financial We our with review a second will provide update and results

to the product new proud revenue announce and we that Starting a for margin. have quarterly company gross record off, delivered I'm

inception. the LiDAR and both highest shipped our our end infrastructure units we automotive to customers of since quarter, This the smart of number

the production shipment to end the contract largest OEM quarter the this the our holding to year. multimillion startup dollar year we be LiDARs is each of Automotive, of we're our deployment application. expect tolling the remainder launch to our customers double than for for Infrastructure, look commercial our at for largest In more executing this our volumes This from sequential of On as Smart customer. date

with past This this will for expected growth themselves. discussed few the have you quarters. results the let time, over year We I our speak

Our work dedication current record forth our our executing programs. quarters setting reflects the and hard put teams by

We as as volumes for this unit production, the year, of we series for infrastructure continue trend to remainder for the well as to continue automotive smarter expect projects. ramp

track this our start on fulfill the quarter of shipped On units of end this program, continued to OEM support our OEM number efforts commercialization resulting the production of from at series capacity. remain increase execution, orders for pre-production production in production lead to of we year. our We highest

contract deployed developed partners to equipment internally in automated quarter, and This to volumes. series order meet we manufacturing our manufacturing production order

manufacturing teams Automation is our and for volume increasing a priority hardware processes to increase. as of unit continued our software

and maintain LiDAR scalable that across manufacturing expertise development the our our production manufacturing engineering steps custom solutions required our expanded efforts maximizing by testing instrument sensors and minimizing efficiency equipment. quarter, to sophisticated of are and our resources, the all calibration This teams require are into different in of time precision physical level highly footprint. products investing have

that for specifically announced remainder confident milestones ASIC Last of we in in-house developed our the the for we our processing our point production LiDARs. cloud remain We year. meeting quarter,

Nova engineering completed ASIC This validation near our quarter, product. we into of this the range

B began ASIC our into customer. new shipping our have OEM units Nova successfully integrated samples, ground autonomous to lead We and vehicle

year. by the shipping start end of XXX expect new our with We product ASIC this to line this

vary proven smart in stack. seeing developing many broader our by created LiDAR software Across that sensors automotive perception software solutions, This need to density. from play leveraging software ADAS OEM we're plug has for interest we a and dimensions, are the point increasing and different solution automotive scanning our patterns the customers, solutions. into can perception integrate cloud in infrastructure easily

addition, challenge sensor have the unique synchronizing of types. OEMs multiple automotive In

proud the to core lives. input to our building for of stay data are one blocks, We valuable further be Please save providing progress. tuned help

this certainly of are accomplishments Our quarter record worth the highlighting. this the But like just beginning company. are one quarters our

our our for us year, will additional year. number there experience scale win long remainder awards. continue to throughout and the up believe This production to of extensive short, automotive executing automotive medium LiDAR our in production range are positions program in combination portfolio grabs. the We with a of We business of programs LiDARs series

With turn with programs. to over customer Mitch it that, details efforts for our our I'll on

Jun. you, Thank

this lead vehicle our few to safe OEM few third such contracted autonomy to incorporate market. more see and customer OEMs especially the a quarter, U.S as revealed front now, LiDAR here our center led the one has plan race the The for accelerated in model days. really announcements is production major market. from you'll competing a This U.S interest and Recent car in details in

continues of plus ADAS set. X for be Outside feature market biggest Level U.S to the and the China, X the Level

by we an automotive this OEM. world. the U.S was This received the one RFI quarter in specifically RFI This largest from arm OEMs of the driven of

plus LiDAR U.S to Level to include market that consider for Another next-gen X Level pressuring competition automakers the is their U.S ADAS international X and their offerings systems. strong indication

this with existing and XX completed onsite top reviews quarter OEMs. RFQs, our several RFIs For we technical multiple

we in we open discussions this what the OEM award to automotive be round are Specifically, series production largest with the final believe year.

launching of General and Koito manufacturing. positioned partnership OEM, with strong uniquely earlier, our Echoing Motors to Jun's American because comments experienced we North win at a our are

windshield the down be leading year with conversations the behind sourcing our factor cost us path really Our final OEMs. integration, industry form walk the affords in multi across to journey coupled multiple the for opportunity

Cepton commercial partnership, what in these prowess, industry are to and When have we strongest I things, strategy and our to to result really for and more Tier our everything, major the striving and match comfortable announcing that be outcomes will to X the future, Cepton by will OEMs final become remain customers features. this near from get and we in this trucks. will we source confident our even safer for, ultimately, on point very American more that be the in LiDAR our cars that positive I'm LiDAR for enabled hopeful built the technical used for the consumers

human commercial On free sensors flow we this the application. we largest tolling to lanes. which type Smart had tolling shipments our application, for Infrastructure for LiDAR without the in tolling level the record the enable our side, be largest believe LiDAR of to tolling, In contract assisted need

traffic are measure road usage used data optimization. also data, like and to maintenance applications, incorporate predictive for sensors analytic Our road

their months. requirements over and discussions and help our be systems well as The of countries and is number of axles detailed integrators improve features measured measurements. as currently tunnels, the LiDARs biggest work that through, data weather X LiDAR at on traffic expand height cameras night deployed bridges areas being inclement across Further, are billing, height than additional states and to during in the and XX passing has the detect our LiDARs vehicles why we're next can in as conditions. into These clearance advantage U.S improve to such ability the where better safety to the taking

installations to an we our U.S. airports announcements. emerging more This Finally, recently report you across with and in in multiple future we look products, is first for share received I'm happy for application LiDAR that the order information our to production

it I'll Hull. Next, turn over to

revenue the compared and Mitch. to an Starting revenue year previous an the prior our Thank increase period, to compared XX% to $X.X for XXX%. was results. new and quarter company, you, $X.X was prior a XX% with of compared the second our compared record X% increase quarter. of million, our million, Quarter to Total the previous quarter year for period, quarter.

revenue on product favor price record by costs commercial record We our was minimal customers, product increase an primarily growth Smart margin strong revenue timing the based was positive completion leverage projects. a of basis, in a There average in shift GAAP and development mix on Our revenue Infrastructure. XX.X% fixed between and on is shift and by automotive level for deployments shipments. of of infrastructure on driven mix which driven of all selling smart unit outstanding gross achieved more

shift OEM our ASP the milestones to expected as at sell of is to incremental volume year, we decrease for sales production customers the As production volume remainder prices. automotive our of favor begin are in met and

As as rebound we in to expect decrease unit volumes margin of scale a a economies result, followed gross the by and is achieved. grow short-term

Non-GAAP $X.XX share and per was Second diluted. or and loss million net basic share basic quarter $X.XX million was per diluted. $XX.X net GAAP $XX.X or loss

Second quarter EBITDA was million. non-GAAP $XX.X negative adjusted

commitment Capital. approximately cash to Available $XX in available XX, of of and equity liquidity investments had up and short-term Lincoln a XXXX, consists Park June XX approximately liquidity to As in for million of million $XXX million. purchase Total we

with for I'd the open questions. like that, And to call

[Operator Instructions] Thank you.

Galinko with Group. Maxim first Our Please from Matthew question with proceed your comes question.

for thanks of my of balance taking on year. wanted dynamics about -- gross questions. I I kind to through the the was talked should touch we this you expect Hey, margin

that from what more In up you we your the range expected additional margin. volume wins you kind that volumes are terms say, gross margin Or high sort of gross on of ramp sort of get able you do automotive expect to sort of could to to, maturity? And relationship? extent need get can of at OEM volume up, margin existing back expect scaling as you to there

Yes. margin, will get with on thanks our the contract expect answer around But for is can XXs yes, to existing somewhere that, Obviously, Matt, XX, get more Hey, GM. be gross helpful. short obviously. XX-ish, the there Yes, depends do we question. volume, mid from to we units

Got it.

Just can expecting of Okay. decisions of on the color you then of could do give what of on be you or have leading outstanding more a this a many provide you're through some number guess, the us made, in terms in That's towards? to today? you're And working working them? I helpful. any sense are year, balance position that feel some you How you you

Matt. Hourtienne. Yes, is This Mitch

earlier. some made So I that on comments

sourced final be of with in what partnership are the and experience hopeful to course, we believe on So Motors we're we our biggest we in year. are Koito. round of leading Detroit Yes, OEMs at our the opportunity position a automotive working to the because with be project, this General

are we shape. good So in

the the values comments GM. yes, in there. our the we're this then, the one what rounds of final And lead relationship to are from few same I is technology And space the Everyone be evolution And think next at with in program the years. I are going leaders Koito, OEMs mentioned. multiple at we in

And helpful. question for last it. Got me. maybe That's

curious I talked that within if timing scope there's relatively about contract. I On the just well quarter, scope or smart progressing about in think of your think how tolling expanding over sounds for for contract we It there about we've it's mid-XXXX expanded thinking that opportunity should the potential talked comments, that we last from being but like be that.

from question. the meet small Good their share a with We Yes. even recently did have executives this only customer. available lead the in market fraction We of U.S.

are expansion There we and Eastern So coming talk U.S. the should did some early in Asia abroad. those well. opportunities opportunities that be in about in XXXX and both as Southeast Europe

that four So we short-term. the be can business in fivefold or contract think the current

you. Thank Great.

Thank you. are like more turn Xu for time, to would no to At this over back closing the questions. there comments. Hull floor I

I'll... Actually,

a queue is looks in coming. it Actually, the like there's question

Apologies. right. went All in. They just

Shannon with your proceed is Please question Capital. question. Richard with next Our Craig-Hallum

one to in, guys get thanks times I guess but I have few questions. for my signal Well, to guys. taking [indiscernible] a

Richard. Hi,

Hi.

quarters. of couple specific and in here may came total to from missed even it's A doubling I it or Mitch, about TAM I talked automotive the here. to think see me. Hull but Let's Is remember next comments, or the if from can't you questions of business? that have couple the I the

was it -- believe is this Mitch. I Yes, Richard,

of it quarter Jun's I shipments doubling in volume about sequential rest our the year. each think automotive was commentary the

So to OEM automotive business have. the that that's we specific

going here. to units win talked us number? major Okay. update you about sound how do the update your And Would to about more it we book here, that of in Or like having talked first past XX,XXX? want be you've order early should like in think kind XX,XXX-plus number? you that Does you related to on the it's automotive about

we No, now. to are for going keep number that

enough. Fair Okay.

the to think, on which us update you assuming want XX. I did you to keep place, number, I'm guidance still in XX yearly So

automotive about fulfilling segment good the fairly for say this in here? what of orders or smart that infrastructure second of in you're Was large And these doubling, new airports that that tolling? does a second a think with progression quarter? the for come business? winning how we then in, about the automotive Or order some quarter do So the number

So we the are not end the contract, year, shipments, largely since the from we last which of year. of first tolling that smart guidance for changing had any is The all. infrastructure

of year. most this that shipped be So contract will

this will I think shipped of be two-third year. one-third and it year will be next

the to and QX as automotive So are up going in the QX increase program. current we units ramp

one opportunities international period get much time effect a of in couple Okay. total you time think first with All multiplier -- I business have think talked comments can opportunity, more they which especially right. more Xx the there, larger an talked a how we having if over opportunity think, about you But airport or some do you tolling to about or other? Mitch, your you Fair if the Are to about familiarity you the think years tolling? the airport share than And about was get then the relative commensurate enough. opportunity have this relative I to I X of there.

Yes, good question.

the to major applications There's that adopting technology, strongly think commensurate the with are airport application. also within but probably dozen tolling LiDAR itself. probably considering X they're at the beginning, a I dozen then airports there's X

it's unit here thousand range few So off in beginning. a the start to going at

me, one enough. last customer, automotive big your to picture just Fair question large related for Okay. GM. Then,

deploying the well-known a make sensors integration see great some contract think LiDAR be system how you seeing company delay that's please. I if you wonder a comments the seem smaller may avoiding? there's with its I you what that there. OEM up make any public dealing software, other another you Motors and are could all in some there out to they of in be had the or General And the to with can software somewhere to due about system? I cohesive LiDAR hear, with degree with issues think to it'd having a

out and perception for is there's case there I is OEMs. software Motors. General approaches the all in-house, couple which a amongst Sure. Yes, think do of different they One sensor fusion the the

OEMs issues. the a buy in-house are smaller case the companies. a smaller They competitors. be I like the perception solved from few a do to there opt together that, with supplier that is software Some when bit have solved of can't think by risk creates to pieces software of the providers, sensor of OEM. our They And with these be

they about. General to perception in that I and you're that the that's do sensor what think of witnessed all So software we've in-house. fusion case talking regards In Motors, again,

a end they on more a So have control, lot grip tighter the results.

issues So I think from that's maybe why you haven't General seen publicly similar Motors.

detail. you I Okay. Fair all for all guys. the me enough. much. appreciate very That’s Thank

Thank you.

comes with your Please question next Northland. Our question. proceed with from Gus Richard

taking revenue? mix in questions. quarter for auto infrastructure Could us the Thanks of give the Yes. and you between in terms my

one-third, Gus. smart hey, two-third This X/X The Yes, about mix, and Hull. two-third, automotive unit infra. is it's

they of Okay, through a had sense got I are you come you timing a going of of of us couple do think of people visits. a it. the And to? for little are then customers to site need talking sort you're to your of sort their a And of conclusion? Can you sort give potential decisions what what process. do the bit know to

it's a Gus. Yes, Mitch. is question, This good

unusual quite inside the opportunity There's this nothing a is the It's for There process I the next of timing will lengthy around. decision. within So months. biggest the be quickest. would OEMs. the a probably couple say time

initial experienced preferred know contract, And X the think so line as as Koito we is part a Tier I process similar well this again, with process. of we time of partner. our kind our

X of to their could opportunities for months. typically other XX And the the closer of processes. end nothing on These the ordinary the to of take the out be decisions. Some again, year

your Got are constraints your ramp a then to terms as any output, see row, of in it. do getting ducks ability in the you near-term? in your Or volume And you ramp increases? everything, to

Yes.

supply -- position we have course, in, with That's fortunate helping think the challenges. chain. we I the had of we've we're us as Koito

met deliveries us put the we this not OEM at helping So very We've on they're in high list. all are their and really order. point, everything concerns' to the

think a at higher battery look are OTM LiDAR. a than things concern I anything lot like you packs, those Cepton like If

what Yes. that mention to company emphasizing efficiency, here, the effort supplement And within but engineering manufacturing, automation. the I of surely is Jun said. the Mitch production tooling, Gus, just production lot did slowly, a

efforts All will ongoing up. are go continue and of actually the to these cranks volume as

So all of for those care will of. are us -- very be fortunately taken

Got it. Thank helpful. very you. That’s

I think for me. that’s it

Thanks, Gus.

Thank you.

to no are I believe closing comments. the time. this I turn would questions floor over further back that Now like to Pei there Jun at for

an quite Cepton. and everyone It's Yes. for for time us call. this for you, Again, meaningful exciting thank quarter a attending

So beginning. a to be lot said, the just more, more will as come. I this was There

have day, you. everyone. So Thank a great

Thank concludes you. This today's teleconference.

your this Thank participation. You at you may lines for time. disconnect your