Velodyne Lidar, Inc.

Good day and welcome to the Velodyne LIDAR 3Q-FY 2020 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Lana Adair from the Blue Shirt Group. Please go ahead, ma'am.

Good afternoon and thank you for joining us on today's conference call to discuss Velodyne LIDAR being third quarter of 2020 financial results. What that's on today's call are Dr. Anand Gopalan, Belladine's Chief Executive Officer, and Drew Hamer, Belladine's Chief Financial Officer. Before we begin, I'd like to remind you that shortly after the market closed today, Belladine issued a press release announcing its third quarter of 2020 financial results. Belladine also published an investor presentation. You may access the press release and the presentation in the investor relations section of VelodyneLIDAR.com. Today's discussion includes forward-looking statements. Please refer to our form 8K, dated October 5, 2020, filed with the Securities and Exchange Commission for a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements. I would also like to remind you that during the call, we will discuss some non-GAAP measures related to Velodyne's performance. You can find the reconciliation of those measures to the nearest comparable gap measures in the press release. To ensure that we address as many analyst questions as possible during the call, we request that you please limit to one initial question and one follow-up question. Now, I'd like to turn the call over to Dr. Anand Gopalan, CEO of Velodyne.

Thank you, Lana, and thank you to everyone for joining us this afternoon. I'm Anand Gopalan, CEO of Velodyne LiDAR. Following a successful business combination with Grass Industrial Corp that closed on September 29th, Belladise is now a publicly traded company. And I'm tremendously excited about this opportunity to present our quarterly results for the first time. On behalf of management, we extend a strong appreciation to our dedicated internal team, our customers, and our new public shareholders. You brought us to where we are today. We are also grateful for the pioneering work of our founder, David Hall, who launched the LiDAR industry. David's vision and expertise have fueled Veridine's commercial success, as evidenced by our shipment of 47,500 sensors to date for a cumulative revenue of over $650 million. Following the completion of our business combination with Graf Industrial Corp., we have a public currency, a healthy balance sheet, and an exciting opportunity to extend our market leadership for both automotive and non-automotive applications while further accelerating product development and opportunistically evaluating potential acquisitions. Our strong performance in Q3 met or exceeded our targets. Revenue in the third quarter grew 137% year-over-year to $32.1 million. We added six new agreements across all three of our broad markets in the third quarter, bringing our total multi-year agreements to 24. At the end of our quarter, we were tracking 175 projects in our pipeline, which represents a 34% increase over the 131 projects at the end of 2019, and further illustrates the demand for LIDAR and Velodyne's ability to match LiDAR solutions to very different applications and price points. Our balance sheet was meaningfully strengthened post-business combination, and we believe we have more than enough cash today to fund us until we turn cash flow positive. Because some of you are just getting to know Velodyne during this call, I will spend a few minutes upfront to share with you why Velodyne is the LiDAR leader in the global autonomous revolution. Next, I will share recent developments before turning over the call to Drew Hamer, who will walk us through the third quarter 2020 financial results. Globally, we are on the brink of a LiDAR-powered autonomous revolution. The applications for LiDAR are endless and continue to grow well beyond auto. LiDAR enables broad secular trends for moving goods, moving people, smart cities, and security. Melodyne is the only LiDAR company today with both the breadth of product portfolio and the manufacturing capability to deliver lower-priced LiDAR with multiple specifications at scale for real-world applications. These include consumer vehicles for ADAS systems, industrial robotics, delivery systems, smart cities, shuttles, and many more. As many of you know, LiDAR is short for Light Detection and Ranging. LiDAR-based perception systems are advancing the development of safe, automated systems with multi-dimensional object detection, depth, distance, and classification with a very high level of precision. Velodyne is the first mover in LiDAR with a broad patent portfolio, a global customer base, and a valuable history of working across industries to help define applications and solutions that enhance the safety of autonomous vehicles and systems, and are priced so that those vehicles and systems come to market quicker. We have the largest market share of all LiDAR companies today. In the automotive sector, our products improve roadway safety with perception data for reliable object avoidance and safe path planning in various atmospheric conditions. LiDAR has a dramatically lower margin of error relative to radar or traditional cameras. We sell to the majority of OEMs and Tier 1 suppliers, and we work closely with nearly every major autonomous vehicle development program in the world. Velodyne is partnered with leading companies like Ford, Baidu, Nikon, and Hyundai Mobitz. Velodyne supplies over 300-plus customers, including major OEMs and leading tech companies, without a singular customer focus or concentration. We have inherently reduced the risk in our model by serving multiple customers in multiple industries, and we don't also have a geographical concentration. We also target 25-plus market segments beyond automotive. Many high-margin non-automotive industries are incorporating LiDAR or considering LiDAR seriously for adoption. We project that in the future, more than half of our revenue will be from outside of the auto space. E-commerce is one example. The demand for contactless last mile delivery solutions accelerated during COVID-19. Last year, the projected bill for last mile delivery was two years out, but now we see contracts more quickly than anticipated. On the regulatory front, Robotic delivery systems are approved already in 11 states, including Florida and Texas, and several cities, such as Palo Alto and San Francisco. In one last-mile application, our customer's analysis shows that transitioning from human to LiDAR-equipped robotic delivery yields a 96% cost savings by reducing an expense of $1.60 per package down to $0.06 per package. In addition to e-commerce, our LiDAR technology is also at the forefront of improving urban security and functionality. The city of Reno, Nevada, recently integrated our LiDAR sensors into the city infrastructure. The groundbreaking project between the University of Nevada and Nevada Governor's Office of Economic Development analyzes precise traffic and pedestrian data at intersections via smart traffic lights. We are engaged with many other state DOTs and even internationally for similar programs. The Velodyne LiDAR sensors collect anonymous traffic data in any weather conditions, be it daytime or nighttime. Our LiDAR technology's revolutionary application represents a seismic shift in the transportation industry, ushering in a new level of safety. Our business approach fosters entrenched customer relationships with high switching costs. Our stickiness factor increases as we move closer to launch. Once we have a design win with the customer, they initiate the integration of our technology into their components. These customers then build, validate, and test Validant technology in their systems that are then not easily transferable due to the underlying software. In effect, our relationship security grows as our customers move further into the program. Cost is no longer a barrier to the adoption of LiDAR. As we are seeing, approachable pricing expands the demand for the application of LiDAR technology to many industries. We have a direct, near-term line of sight for further lowering the ASP of our base sensors. New use cases are evolving. and we believe our TAM will only grow. In my prior role at Velodyne, I was our company's chief technology officer. Our team has built a broad product portfolio in rotational and solid-state LiDAR to avoid reliance on just one product or technology. As said earlier, Velodyne has an unmatched breadth of products architected for a wide range of applications. We manufacture surround view, directional solid state and blind spot lidar. To give you an example of one of our popular sensors, the Alpha Prime VLS128 offers surround rotational view with 300 meters of high resolution vision. Our lower pricing and miniaturization increase installation options for many applications. Today I can hold a velabit in the palm of my hand. I would note that we have designed our product portfolio with interchangeable components across the product lines, which gives customers' engineering teams economies of scale. We have fully automated wafer-scale LIDAR manufacturing processes in place today and operating with our contract manufacturers. We can produce at scale and we are the furthest along the path to mass production. With systems already in place and built, our capex spending over the next several years will be tens of millions and not hundreds of millions of dollars. We have developed complex algorithms and software systems to complement our sensor products. Software is only possible with a robust pre-existing hardware install base like Valodyne has today. A higher margin software subscription model is therefore a natural adjacency for us. And we are on the cusp of winning new software contracts which are incremental to our pipeline. We are accumulating data sets and building off of these data sets and applying our AI across our product install base. Now I'd like to highlight recent business developments. First, we have 24 signed and awarded multi-year contract agreements with six added in the third quarter of 2020. Our total number of pipeline projects is 175. We continue to experience a high conversion from the RFI and RFQ stages to contracts. Based on our long history of selling our LiDAR solutions, we understand the need to plan for an in-depth engineering-led sales cycle and the barrier that this represents to entry for a less established manufacturer to secure quality contracts at volume. Velodyne transforms lives and communities by advancing safer mobility for all. We issued a recent white paper comparing LIDAR-centric ADAS to the current camera and radar-based technology in nighttime conditions. Proprietary testing indicated the superiority of our LIDAR-based solution where the camera and radar systems failed. Finally, in late October, we hosted our third annual World Safety Summit. Our policy work brings people together. Smart vision technology ultimately translates to a vast reduction of fatality among operators, drivers, and pedestrians. In closing, Velodyne is far from a one technology or one customer type company. We manufacture a broad portfolio of exceptional LIDAR products and technologies, and the diversity of customers and industries are key strengths of Velodyne. Now I will turn our call over to my colleague, Drew, to walk you through our third quarter financials. Thank you.