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spk07: Hi, we're about to begin. Good day and welcome to the Velodyne fourth quarter fiscal year 2020 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kirsten Chapman of LHA Investor Relations. Please go ahead, ma'am.
spk01: Good afternoon, and thank you for joining us on today's conference call to discuss Valadyne Lidar's fourth quarter and full year 2020 financial results. With us on the call are Dr. Anand Gopalan, Velodyne's Chief Executive Officer, and Drew Hamer, the company's Chief Financial Officer. Before we begin, I would like to remind you that shortly after the close of market today, Velodyne issued a press release announcing its fourth quarter and full year 2020 financial results. Velodyne also published an investor presentation. You may access this press release and presentation in the investor relations section of VelodyneLidar.com. Today's discussion includes forward-looking statements. Please refer to our press release for a discussion of factors that could cause the company's actual results to differ materially from those forward-looking statements. I would also like to remind you that during the call, we will discuss some non-gap 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 yourselves to one initial question and one follow-up question. Then you may re-enter the queue. Now I'd like to turn the call over to Dr. Anand Gopalan, CEO of Velodyne. Please go ahead, sir.
spk06: Thank you, Kirsten, and thank you to everyone for joining us this afternoon. I'm Anand Gopalan, CEO of Velodyne. Our fourth quarter and full year 2020 results demonstrate that we continue to expand our leadership position in the LIDAR market. Velodyne is the only LiDAR company today with both the breadth of product portfolio and the manufacturing capability to deliver low-priced LiDAR with multiple specifications at scale for many real-world applications. We shipped a record 4,237 sensor units in the fourth quarter and 11,710 for the full year. This included 718 solid-state LiDAR units in Q4. We are manufacturing and shipping more LiDAR units than all our competitors have reported. In fact, we ship more products in a week than all the other players have reported shipping in a whole year. In addition, we have expanded our offerings and now provide full solutions of hardware plus software through our acquisition of mapper.ai. This is an exciting new part of the story. In terms of manufacturing, we have fully automated wafer scale like LiDAR manufacturing processes in place today and operating with our contract manufacturers. We can produce at scale and we are far along the path to mass production and continue to execute on our strategy of transferring manufacturing of mature products to contract manufacturing partners. Despite COVID-19, we have not slowed down. We continue to set production records and are making significant progress on our growth plans. This uniquely positions us to meet the rapidly growing volume requirements of our customers in the coming years. Thanks to its broad rotational and solid-state LiDAR portfolio, Valadine's ability to address many segments is a key competitive strength, and we continue to de-risk our business model by being the leader in multiple markets, with multiple customers in each. Velodyne supplies over 300-plus customers, including major OEMs and leading tech companies, such as Caterpillar, Ford Autosan, GM, Honda, Hyundai Mobis, Toyota, Volkswagen, Zoox, Didi, Easy Mile, Gaddick, Google, and Leica Geosystems. We announced agreements in the fourth quarter of 2020 covering industries from autonomous vehicles and trucking to robotics and mapping. As of today, we now have 26 active multi-year agreements, up almost nine-fold from three in the first quarter of 2020. Over the past few months, we announced that we signed a multi-year agreement with Motional, a Hyundai and Aptiv combination to be the exclusive provider of long-range surround-view LiDAR sensors for Motional's SAE Level 4 driverless vehicles. We executed an agreement with May Mobility for its entire fleet of self-driving shuttles. Signed an agreement with Local Motors to use our sensors to enable safe, reliable operation of OLLI, the company's 3D-printed electric and self-driving shuttle. We signed a five-year sales agreement with ThorDrive, who will be using our LiDAR sensors to power its cargo and baggage ground support tractors in a groundbreaking AV program at the Cincinnati Northern Kentucky International Airport. And we entered into a strategic partnership with Beijing Trunk Technologies or Trunk Tech with whom we will collaborate in developing next generation autonomous heavy trucks to accelerate the commercialization of driverless trucks in China's logistics market. In mapping, we signed a multi-year sales agreement with Emerson a world leader in drone autonomy, LiDAR mapping, and data analytics who will use our sensors for mapping hazardous and GPS-denied environments. Our pipeline, which is the most robust in the LiDAR industry, now stands at 194 projects. This is up from 183 reported for the fourth quarter of 2020 and 131 projects reported at the beginning of the year on January 1, 2020. There is expanding adoption of LiDAR across a wide variety of industries, some of which are accelerating in a post-COVID world, such as last-mile delivery. Our pipeline of opportunities in industries such as robotics grew 220% from 873,000 units in February of 2020 to 1.9 million units today. I'd like to take a moment to comment on our pipelines. which is very fluid and will vary with customers' changing needs and expectations as it continues along its long-term growth trajectory. A recent example of this is an AV project that we had with an OEM customer. While we are on this customer's first and second generation autonomous vehicle platforms, the customer made a choice to use a different technology for their next generation platform. However, we continue to be actively engaged with them on multiple other opportunities, which, if successful, could more than offset any financial impact of this project. We have also seen an ADAS customer select an older technology for their first-generation rollout while they continue to move forward with us on projects for next-generation platforms. On the other hand, recently we had a major OEM customer re-engage with us and renew our long-term relationship through a follow-on multi-year agreement. Our product portfolio includes also includes the complex algorithms and software solutions 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 a natural adjacency for us. We have made significant progress on executing new software contracts and now have 18 opportunities in our pipeline with the software component. three times the number than in the third quarter of 2020. Velodyne is innovating on the cutting edge, and in 2020, we launched industry first. Our new Velleray solid-state sensor product line and Vellerbit LiDAR, our smallest sensor, which are designed to be manufactured at scale and at price points targeted at broad-based LiDAR adoption. Velodyne's Vellerbit LiDAR sensor was named a winner in the Best of What's New Awards by Popular Science and won the 2020 Innovation Award by Silicon Valley Robotics. Last but certainly not the least, we have 28 VeloBit projects in our pipeline today. We are the most innovative LiDAR company as evidenced by our track record, and you will see additional new LiDAR architectures and technologies introduced by us in the near future. Velodyne transforms lives and communities by advancing safer mobility for all. In the fourth quarter, we joined the Qualcomm Smart Cities Accelerator Program to promote using LiDAR technology in smart city solutions. By becoming part of the Qualcomm Smart Cities ecosystem, we are now working with private industry, governments, and solution providers to create smart city applications that improve public services and enhance safety and the quality of life. Earlier this year, we issued a white paper in conjunction with the University of Nevada Reno Center of Applied Research that outlined how roadside LIDAR is the key to building smart and safe transportation infrastructure. The past few months have seen a few more LIDAR companies look to go public on the backs of our success. The information in their public filings validates our substantial leadership position and also showcases the massive opportunity for Velodyne due to our dominance in each of their industries. In summary, it is an incredibly exciting time for LiDAR and for Velodyne as we work towards democratizing LiDAR for many applications. We believe we have hit an inflection point in the LiDAR industry, which is evidencing itself in our expanding pipeline, and by shipping more units than ever before in the fourth quarter of 2020. In many applications, LiDAR status as a critical sensor is giving us the opportunity to add higher value to our customers by providing full solutions, not just hardware. Before I turn the call over to Drew, I wanted to take a moment to touch upon our recent board and leadership transition. As you saw, our board has named Brad Culkin as chairman to succeed David Hall. Brad co-founded Velodyne LiDAR's predecessor company, Velodyne Acoustics, and has been involved in Velodyne LiDAR throughout its history, including serving on Velodyne LiDAR's board since September 2016. We look forward to continuing to benefit from his invaluable guidance on technology and business strategy. I'm also excited to see Sally Frickman take over the role of chief marketing officer. Her expertise in managing public relations and digital marketing will prove invaluable as we continue to execute on our strategic plans. And finally, it's my pleasure to welcome Hameed Zaringalam to our board of directors. In his role as corporate vice president at Nikon Corporation, Hameed is responsible for the external investments, strategic alliances, and the private equity strategy of Nikon Corporation, leveraging their core competencies to enable and scale growth in new markets. And he is responsible for Nikon's strategic partnership activities in semiconductor lithography in the United States. With his appointment, we are further deepening our relationship with our valued manufacturing partner, Nikon. I'd now like to turn over the call to Drew for a discussion of our financials.
spk12: Thank you, Anand, and thank you again to everyone for joining us today. I'm Drew Hamer, the CFO for Valodyne Lidar. I'll begin with an overview of the company's fourth quarter and full year 2020 results before moving on to a discussion of our target business model supporting our positive long-term outlook. Total revenue was $17.8 million for Q4 2020, compared to $19 million in Q4 2019. Product revenue was $14.4 million in the quarter compared to $18.2 million in Q4 2019. As we disclosed in January, we reduced production capabilities at our manufacturing sites late in the fourth quarter of 2020 due to COVID-19, which impaired our ability to fulfill certain customers' orders in December and negatively impacting product revenue. As our strategy is to accelerate the adoption of LIDAR by lowering ASPs and driving higher volumes, reduced ASPs also had a negative impact on revenue year over year. We are extremely pleased to see our strategy working as demonstrated by the fact that units sold went up year over year to record levels. As we predicted, the products mix continues to transition to more efficient solid-state units. We are anticipating the sales of solid-state LIDAR units will be 30% in 2021. On reviewing our current pipeline, we expect that this could increase to 60% of revenues by 2024. When combined with the increasing pipeline for 2020, we continue to see that this strategy will drive long-term growth for Velodyne. License and services revenue was $3.4 million, up from $780,000 in Q4 2019, due to cross-license agreements recognized during the quarter. GAAP gross loss was $5.3 million, and non-GAAP gross profit totaled $2.1 million, compared to a fourth quarter 2019 gross profit of $224,000 on both a GAAP and non-GAAP basis. Gap operating loss was $111.5 million and included $91.3 million of stock-based compensation. Non-gap operating loss was $20.1 million compared to a Q4 2019 gap operating loss of $29.8 million and a non-gap operating loss of $27.2 million. Gap net loss was $111.5 million and non-gap net loss was $20.1 million. Gap loss per share was $0.64 and non-gap loss per share was $0.04. Loss per share for the fourth quarter is calculated using weighted average shares outstanding of $173.9 million. As of December 31st, actual shares outstanding were $175.9 million. We had $350.3 million in cash and cash equivalents on our balance sheet at December 31st, 2020, which included $73.7 million of proceeds from the exercise of public warrants. We received an additional $89.3 million in proceeds as of February 19th, 2021. I will now turn to the full year 2020 results. Total revenue was $95.4 million compared to $101.4 million in 2019. Product revenue was $68.4 million. This compared to $81.4 million in 2019. For the year 2020, we sold roughly the same number of units as 2019. Part of our strategy is to drive widespread adoption of LIDAR with sensors designed to enter the market at lower price points. As a result, the average selling price was lower in 2020, which impacted revenue. License and services revenue was $27 million, up from $20 million in 2019. The $7 million increase in license and services revenue primarily reflects recent cross-license agreements partially offset by a decrease in repair services and engineering fees. Gap gross profit of $25.1 million, or 26% gross margin, and non-gap gross profit of $32.5 million, or 34% non-gap gross margin, exceeded our guidance and compared to 2019 gap and non-gap gross profit of $29.8 million. The decrease in gap gross margin was primarily due to $7.6 million of stock-based compensation expense. Gap operating loss was $153.9 million, exceeding our full-year guidance. Included in the gap operating loss figure was $91.5 million of stock-based compensation. Non-gap operating loss was $62.4 million, also exceeding our full-year guidance. Gap net loss was $149.9 million, and non-gap net loss was $65.1 million. Accordingly, GAAP loss per share was $1.01, and non-GAAP loss per share was 44 cents. We continue to monitor COVID-19's impact on our near-return business, and we'll review our guidance practices when we have greater visibility of its impact on our business. Our target is to provide financial guidance starting in the second half of 2021. We saw strong growth in signed and awarded projects in 2020 going from 3 to 26 as of February 19th. In 2020, we also saw strong growth in our project pipeline as it went from 131 to 194 as of February 19th and anticipate this growth will continue in 2021 and beyond. We are further encouraged by the diversity of our customer base as demonstrated by the pipeline having multiple customers in multiple industries. As we saw in 2020, having a pipeline that isn't dependent on a concentrated number of projects in one industry de-risks our business model. This progress provides support for our long-term growth plans and business opportunities. As of February 19th, 2021, we estimate that we could have the opportunity for over $1 billion from our signed and awarded projects for the period 2021 through 2025. When we combine this with a pipeline of projects that are not yet signed and awarded of $4.4 billion, we remain confident in our ability to achieve our long-term financial plans. In addition, our manufacturing strategy of outsourcing production to our contract manufacturing partners with the objective of reducing the per unit cost of revenue, together with our planned increase in licensing and software, underpins our long-term business outlook of total gross margins ranging in the mid to high 50% and EBITDA margins of more than 20%. Please refer to our investor presentation for a more detailed target business model. We remain focused on delivering disciplined growth for all our stakeholders. In closing, our long-term optimism remains strong. Recent high-profile wins, our significant pipeline of contract opportunities, and our commitment to new product development positions us well for the future. We look forward to sharing your results to reflect our progress in the quarters ahead. Anand and I are ready to address your questions. As a reminder, we kindly ask that questions are focused on our business and operations in fourth quarter and full year 2020 earnings results. Operator, we are now open for questions.
spk07: Thank you. If you would like to ask a question on today's call, please press star 1 on your telephone keypad. If you're listening today using a speakerphone, please pick up your handset before pressing the corresponding digits. A voice prompt on the phone line will indicate when your line is open. Once again, please press star 1 at this time to ask a question. We'll pause briefly to allow everyone an opportunity to signal for questions. And we'll go ahead and take our first question from Itay McKelly with Citi. Please go ahead.
spk04: Great. Thank you. Hi, everybody. Hi, Itay. Hi, Itay. Just two questions. The first may be just on the business development. It looks like, you know, I think non-auto now accounts for maybe over 50% perhaps of your total projects. I was hoping you could really talk about what you're seeing in the non-autoverse versus kind of ADAS, AV side, and perhaps also talk about the latest in the competitive environment, particularly on the ADAS side of things with VelaRay and VelaBit.
spk06: So, as far as the pipeline goes, we continue to see this strong trend of growth in the non-automotive segment, while the automotive segment also continues to grow, especially in the ADAS space. So, I think that broad split of half-auto and half-non-auto still remains mostly relevant for Melodyne. Definitely in the non-automotive segment, especially in industrial robotics, we have seen explosive growth in the number of projects in that space, driven by all the changes that we are seeing in our world, in this post-COVID world, to our supply chain and the enormous investments that our big e-commerce and logistics customers are making in that space. Could you repeat your second question, Peter? Yes.
spk04: So maybe just on the ADAS side, just talk about the competitive environment there and just the traction you're seeing with VelaRay and VelaBit.
spk06: Sure. You know, we have, as of now, about 194 projects in our pipeline, with about 61 of them being ADAS projects. And we are seeing a significant portion of those being demand for the Velleray. So the Velleray product has continued to mature. And as we talked about in the earnings call, we manufactured and shipped over 700 of these products just in the last quarter. So we are seeing tremendous demand and excitement around the Velleray project. We're also really excited by the fact that the VeloBit product has now entered our pipeline as well, and we have over 20 projects in our pipeline that are around the VeloBit. So both the VeloBit and the VeloBit continue to garner significant attention in the automotive space, and we see lots of projects around them developing.
spk04: That's helpful. Let me just ask a quick question just on a financial. Thank you for the update on the forward question. business outlook through 2025. I think back in September, you'd mentioned that I think maybe roughly like 56% of your prior 2024 revenue outlook was signed and awarded. I don't think you'd be in a position to update that today or talk about roughly kind of where you are relative to that for 2024. I believe the number was maybe like $380 million at the time that was signed and awarded back in September.
spk12: Yeah, so we aren't providing any guidance that far out at this point. However, we do feel very confident, you know, with the sign-in award contracts that we have currently plus the pipeline that we have, that we should be able to achieve our financial goals as we get out into 23, 24, and 25. Perfect.
spk11: That's very helpful. Thanks, guys.
spk09: We'll take our next question. Caller, please go ahead.
spk11: Hi, guys. This is Tristan at Baird.
spk05: Can you hear me?
spk12: Hi, Tristan. Yes, we can. Thank you for dialing in.
spk05: Hi. Could you provide a little bit more color on the development design wins? Is that L2 plus applications? And if not, can you talk about the prospect, you know, for L2 and whether you have already designed wins in that segment and presumably what the timeframe would be for a ramp?
spk06: Yeah, we are seeing significant interest and discussion around the prospects of using LiDAR for Level 2, especially around products like our VelaBit product. We don't have that converted into a design win just yet. However, as we have talked about before, Tristan, the fact is that LiDAR is capable of providing far more robust functionality, even in the context of a Level 2 application such as pedestrian automatic emergency braking, lane keeping, and lane centering. than some of the existing technologies because of its ability to work across all lighting conditions. And because of that, we are continuing to see significant interest from our automotive customers around the usage of LiDAR in conjunction with our software for Level 2. So those conversations are still continuing, and we believe that LiDAR will be adopted in Level 2 applications in the future.
spk05: Okay, great. And then I know that you're not going to provide a guidance until the second half of the year. How should I look at the unit growth this year relative to the expected price declines? And ultimately, does that translate into actual revenue growth for this year, year over year?
spk12: Yeah, so we can't provide guidance on the year and year over year, but we are thinking that we should see a jump in our unit growth this year because we'll be selling more Velorays and we expect the Velobits to also enter the market here in the second half of the year. actually starting in Q2, I believe. So with those introductions, that will bring the ASPs down a bit. So even with the increasing volumes, we may see an impact on revenues overall. But we're very focused mostly around getting unit volumes to expand because we believe that's where the success of the company lies in the future, which, of course, is also backed up by all of the work that we've done by getting our units so that we are in production on a number of our products, in our manufacturing operations offshore and mass production, and also in the process of getting all these units up and running in the offshore operations with our contract manufacturers. So really feel that we should be able to drive a lot more volume, which will ultimately in the years to come drive significant growth in revenues.
spk11: Great. Thank you. Thank you, Tristan.
spk10: We'll take our next question. Caller, please, go ahead.
spk11: Thanks so much, guys. It's Colin Rush from Oppenheimer.
spk14: Could you talk about the pipeline and the activity around the software that you guys can monetize with this hardware? Are you seeing real active agreements around the recurring revenue potential for some of the software upgrades? And how should we think about that as a percentage of revenue over the next couple of years?
spk12: Yeah, so we are seeing the very busy pipeline. As Anand mentioned, we have a lot of projects currently focused on software products. And that is expanding on a regular basis, almost daily at this point. And the types of products we're expecting to have out there are going to be products that will allow us to get to a revenue model of kind of a SaaS nature where we'll have recurring revenue streams that will be on a monthly, annual basis. We're expecting the data growth will really start to kick in out in 2023, 2024, and should represent a larger portion of our revenues. Targeting right now, I'd be at around 20% in revenues as we get to, say, 2024. So those are the key drivers for the software revenues.
spk14: Great. And then just in terms of system design, we're hearing a variety of different messages around a portion of the sensors that gets assigned to LiDAR and the ability to take some of the functionality away from LiDAR and ultrasonic sensors. Can you talk a little bit about that in terms of what you're seeing with the customers as you look out into the out years on the revenue model?
spk06: Sure. Yeah. I mean, you know, I think, you know, all the sensor technologies will continue to progress and grow. And we see that, you know, investments in all the different sensor technologies continue. But LiDAR is now by no means left behind with significant investments being placed with, you know, public companies like Valadyne being able to make significant R&D investments in the improvement and scalability of LiDAR. So as that happens, we see that all of these sensor technologies will asymptote towards their physics limitations. And LiDAR, by virtue of being able to really work across many different lighting conditions and provide a much higher resolution than radar does, is assuming sort of a prime position in advanced safety systems as well as advanced robotics and autonomous systems and we believe that trend will continue with all of the exciting technology work that is happening in the space and as well as the fact that you have significant investments in software development around the usage of lidar and lidar based point clouds so we definitely see that reflected in the growth in our pipeline and in our conversations with our customers
spk11: Great. Thanks so much, guys. Thank you. Thank you, Colin.
spk10: We'll take our next question. Caller, please, go ahead.
spk11: Hi. Richard Shannon here from Craig Ellum. Guys, how are you? Good, Richard.
spk02: Thanks for dialing in.
spk06: Thank you for dialing in.
spk02: Yvette, I'm going to make this quick because I've got to jump on a couple other calls here, but let's see. You talked about in your early January press release about seeing some reduced visibility And then on, I think you referred to a couple of scenarios, which I think you've identified in the public realm. I think we've mentioned those to you. Are those things that are actually affecting this year? Because our checks indicate they may have been for the out years there. So are those correlated or are those different situations there?
spk12: I think, you know, we're seeing COVID-19 being more of expecting it to be a short-term kind of an impact where People are just kind of waiting to get back into their offices and get busy. We've had a lot of continue to get good responses around wanting to do multi-year agreements and honoring the multi-year agreements. you know, they're just, their hands are tied, like all of ours, where they can't get into the office and start moving units through to customers because their customers are also at home like the rest of us. So there's a lot of excitement amongst our customer base to, you know, get back on plan and get back on track with all of the agreements we have, as well as the contracts we're talking about entering into, which are in our pipeline. However, you know, there's just always that uncertainty around when are they going to be able to start doing that because of the speed at which the vaccinations are rolled out geographically. Each geography tends to have its own impacts right now. But people are very much interested in getting back on track.
spk02: Okay. So would it be fair to say that your decision to provide some guidance for this year starting in the second half based on hopefully the COVID dynamics you're getting over with and getting better visibility to that? Is that fair, Drew?
spk12: Exactly. That's what we're expecting. That's right.
spk02: Okay. Second follow-up question here is on the topic of ADAS. calling on a couple other ones earlier here. Just kind of big picture here. What do you see as potential for a tax rate of LiDAR to ADAS where the cost sensitivity is fairly high? Do you see this as mostly a replacement of other technologies or in conjunction with?
spk06: Yeah, I think when you talk about ADAS, there's really, in our mind, two possible applications. There is Level 3 ADAS, which, you know, going from like a traffic jam assist functionality to a highway autopilot, and then there's Level 2 ADAS, as the previous question alluded to. And we believe LiDAR has an incredibly strong role to play in both. Of course, really, the high volume attach rates for LiDAR in automotive really open up with level 2 ADAS, where you have the ability to really see high penetration and attach rates for LiDAR. And on the backs of really cost-efficient, scalable technologies, like our VeloBit, we believe that that opportunity set will open up and really drive volumes, while the attach rates for level three remain quite modest and low, because they start at the high-end way it goes.
spk02: Okay, appreciate the thoughts, Anand. That's all for me. Thank you. Thank you.
spk10: We'll take our next question. Caller, please go ahead.
spk11: Yeah, hi, thank you for taking my questions. This is Rajeev Gill from Needham.
spk13: Hi, Rajeev. Hi, how are you? So, Drew, you had mentioned that you expect to see kind of a jump in unit growth this year, kind of following the significant unit growth in 2020, but ASB is coming down as you try to proliferate this into the industry. which may impact revenue. And it did impact revenue in 2020 in terms of that offset between unit and ASP. Just wondering, what is the kind of the right mix of ASP versus unit growth? Do you think that you need to hit where you start to see kind of revenue growth? Just curious how to think about that, those competing dynamics.
spk12: Yeah, so this is a, you know, it's very important because it's been part of the company's strategy to introduce, you know, we have a broad portfolio of products that are all designed to entry, you know, meet different customer needs and also included in those needs are coming into the market at the right price point so that we can allow the proliferation of LIDAR products. in multiple applications. The impact of that, of course, is that it's going to be, you know, bringing down the ASPs as what we have available at $100. We have the other sensors at a couple thousand eventually. So, we really think that as we get further out into, say, 2022, 2023, you'll start seeing hundreds of thousands of sensors being sold but they'll be at that lower ASP. And I want to caution people to think of it, you know, in a quarter, it's very hard to make any judgments. You have to look at it kind of on a linear kind of basis because products sold mixed in a given quarter could, you know, not necessarily represent the overall impact for it. So maybe annual basis is a better way to look at it. And we're expecting that as we get out into, you know, 22, 23, and the unit volumes start moving up towards 100,000 and Maybe out as we get closer to 24, we may be even approaching million sensors that these ASPs are going to be coming down to the $600 range. So it's really going to be a transition from where we are today in the ASPs. We're seeing it, and we'll anticipate those will continue to come down. But the volumes will start to increase significantly as we get out into 23 and 24.
spk11: Are you still there?
spk12: Sorry, I only heard that. Can you repeat the question?
spk13: Sure. Could you provide what the blended ASP was for 2020 versus 2019? For 2020, the weighted average ASP was approximately $3,800.
spk12: 2019, I'm sorry, off the cuff, I don't remember. I'll have to get back to you on that. Okay, no problem. And the last question is,
spk13: I saw that you're getting a lot of adoption in solid state. I think you talked about the goal is to get to 30% in 2021 and then 60% in 2024. Just correct me if that's not right. Just wondering if you could elaborate in terms of your traction on solid state, what the adoption has been with your customers. Thank you.
spk06: Yeah, I mean, you know, I think we see definitely that, as I said before, there's more than one LiDAR technology needed to serve all of these different marketplaces. And I think we have really served very well by having both the rotational product line, which continues to actually, you know, work very well for AV as well as shuttles and some smart city applications, but then we are seeing the solid state LiDAR family really get a lot of traction obviously in the ADAS space as well as in some of the robotics applications. So really in applications where you have small form factor systems or systems where design aesthetics are really important, the solid state directional LiDAR portfolio is really seeing a lot of traction and growth and demand in those sorts of applications.
spk11: including robotics and ADAS.
spk09: Did that address your question?
spk07: We'll just move on to our next question. Caller, please go ahead.
spk12: Actually, if you don't mind, I'd like to just make a correction there to Raji's question about the ASPs. In fiscal year 2020, the weighted average ASP was about $4,800. And just on 2019, it was approximately $7,100. Sorry. Thank you. Please go ahead.
spk07: Thank you. We'll take our next question.
spk10: Caller, please go ahead.
spk11: Hi, Drew and Anand.
spk02: It's Ruben Roy from Benchmark Company. Thanks for taking my question. Drew, I wanted to just follow up on the ASP discussion just a little bit more. You guys mentioned, obviously, there's other LiDAR companies coming out. I understand you guys are shipping many, many more sensors than a lot of the competitors, but has anything changed, would you say, in the last 90 days as we've seen more discussion around LiDAR, et cetera, around the way you were thinking about ASPs maybe back in June when you had your analyst day?
spk06: Let me start by talking about that. I mean, no, I think we have, as a result of being the first mover and having the ability to sit across the table with our major customers for many years at this point, we have always had a clear and clear-eyed understanding of where the end cost of the technology needs to get to for all of these different applications to enable mass market adoption. And really, we have been making the investment from an R&D perspective and really driving the technology towards this point. If anything, all of this discussion around LIDAR over the past few months has really validated everything that we have said, both from our leadership position as well as really where we think the market needs to go to enable mass market adoption. And further, as is also evidenced by all of the conversations we have seen, we believe there is a very strong market for LIDAR, both in automotive as well as in non-automotive industrial applications. And I think that is also being borne out by what all the discussions we're seeing in the marketplace. So, no, nothing has really changed in terms of our output.
spk02: I appreciate that, Anand. I guess as a follow-up, I know you guys aren't providing any explicit guidance here, and your visibility should start to improve in the second half. But, you know, based on what you just said about ASPs, based on when you typically get purchase orders, you know, which – I think you have some lead time and backlog visibility. Is it realistic at this point to expect that you're going to grow revenue in 21 versus 20?
spk12: Again, I can't provide guidance. It's really going to be about the unit volumes and the orders that come in from the customers about being able to grow revenue in 21 versus 20. And until we get a better sense of people coming back into the workplace, there's not much I can say about that right now.
spk02: Right. Okay.
spk11: Thanks, guys. Thank you, Ruben.
spk10: Take our next question. Caller, please go ahead.
spk11: Hey, this is Michael Filatov from Barenburg. Thanks for taking my question.
spk03: I just wondered if you guys could maybe provide a little bit more detail around some of the business I think you said was lost to a competitor that's, you know, a legacy competitor in this space and why that was and sort of, you know, Whether that impacts, you know, your business with that customer, you know, on additional platforms or other, you know, business opportunities with them or if it's purely, you know, sort of the near term, you know, first production model.
spk06: Yeah, I mean, you know, obviously we cannot talk about specific customers and customer contracts, but really, as you described it, you know, we have seen instances where the customer may go with a lower performance competitive product while our technology is going through validation and being put through its phases. we continue to be very actively engaged with both our Tier 1 partners and the OEM customers around next-generation platforms with our Validate technology, which is clearly capable of far higher performance than any of the older technology products out there.
spk12: Which, by the way, they're evaluating for the next generation of various – vehicles that they'll be bringing to market. So we're very, very busy in those conversations on various projects that are going to be for the next-gen projects that will be coming out.
spk03: Understood. And just following up on that, you know, I guess where do you see yourselves right now in terms of, you know, getting the Bella Ray to sort of, you know, de-sample auto-grade qualifications? You know, where are you in that process, and what does that timeline look like at the moment?
spk06: Yeah, I think we have gone through our automotive grade qualification in the fourth quarter and continue to go through that right now. Our H800 product is in that phase today where I would say it's automotive qualified and is capable of hitting the environmental as well as the level of performance for some automotive applications. So I think we have made significant progress in the past six months, really maturing the product. And we see, as a result of that, significant opportunities in our pipeline with interest across many different OEMs for that product and for products in the Valery family.
spk11: Understood. Thank you, guys. Thank you, Mike.
spk07: And as a reminder, that's star one. If you'd like to ask a question on today's call, we'll go ahead and take our next question. Caller, please go ahead.
spk08: Good afternoon, guys. This is Aileen Smith from BFI. Can you elaborate a little on the commentary of the opportunity for over a billion dollars in revenue from signed and awarded projects over 2021 to 2025? versus an additional pipeline of projects of 4.4 billion? Specifically, what of the signed and awarded contracts makes that backlog estimation sound a bit less firm as a quoted opportunity versus what we might hear from a standard supplier around their respective backlogs? Is it a function of nailing down pricing? Is it differences in contract structure of production contracts versus spot buys or something else?
spk12: Yeah, so signed and awarded contracts are kind of a standard industrial agreement that we have with many of our customers that are based on a unit and volume agreement. And they have normal price curves, so that also gives us visibility to where we'll be as we get out into the coming years with those particular contracts. And it helps us to gain confidence now. As is normal, these contracts – We'll probably have the firm POs will come in as we get closer to production in a given year so that the respective customers, as they understand what the production levels will be, will give us the more firm contracts as they approach production. And all of these contracts are designed so that they have you know, a component where if the contract isn't, the ultimate order isn't at the level that was originally agreed to in the signed and awarded agreement, the production agreement, then we have an opportunity to increase the price or renegotiate the price that they pay for each unit. Of course, if they come back and they want more units, then they can go back and renegotiate the price as well. So Standard industrial types of contracts for people to get to a kind of commercial production for a component in an application or solution that they'll be producing. And they would lock us in on the front end as kind of a design win. And then they do all their work, you know, putting all the final work designs into the whatever it is that they're going to be manufacturing so that they can be able to make their commitments on the other end and delivering those goods.
spk08: Okay, that's helpful. And then to ask a question on another headline recently being Ford's decision to sell down their Velodyne stake. Can you talk about what this means, if anything, from a customer relationship with Ford and Argo AI and even potentially relatedly with Volkswagen? And separately, many automakers, including GM and others over the past few years, have acquired their own LiDAR technology that they're working to commercialize. How has that impacted your discussions with existing and potentially new customers?
spk12: Yeah, so, you know, we're finding like in the case of Ford, this is a relationship we've really benefited greatly from. They are in the business of making strategic investments in critical suppliers when they need to stand them up and ensure that they'll be financially secure to deliver the components that they need, in our case, LIDAR. When those particular companies that they've invested in are capable of standing on their own two feet, so to speak, then they don't like to stick around as a financial investor. That's not their nature. They'd rather reallocate that capital to a other investment. So, you know, we've benefited greatly from this relationship with Ford, both in terms of what they've done for Velodyne LIDAR in helping it to develop its products as a partner and becoming that critical supplier for them. And then also, you know, from their investment, And then as we go forward, we're, you know, have a number of different projects in the pipeline where we're, you know, on some existing cars in phase one, phase two, and they're continuing to evaluate us, you know, as a technology that would continue to phase three of some of those cars. You know, we are very appreciative of the relationship with Ford. We continue to work with them very closely on both current products that are being used as well as in the development of new technologies. And we expect that to continue for a long time to come.
spk08: Okay. And last question. What specific milestones, whether from a return to work or production, bookings, or other perspectives, do you think you need to see through the first half of this year in order to start establishing the more formal outlook for 2021 onwards towards later this year?
spk12: Yeah, so this is, you know, I keep having steady conversations with our sales organization in the field, and it's really focused around the conversations they're having with customers to start getting them to release their POs. So a lot of the countries like Europe, we thought Europe might be up sooner, and now they could be locked down through 2021. And even some of the Asian countries are seeing similar things, and then they kind of keep telling us they hope. So we have great relationships with our customers. We continue to talk to our contacts on a regular basis. And we're really waiting for them to, you know, get confident that they'll be coming back to the office and win. So to have that visibility, it's really about how does the world start to unfold out there so that our customers who are going to be using our LIDAR and some system that they're building feel confident that their customers are returning to the office and they're going to be able to sell through so that they can have confidence in giving us those POs. So, you know, from who you talk to, it depends. Some people hope that they're going to come back to the office in April. Others are a little less optimistic, so they may be further out. We're just looking for those conversations to firm up so that we can get confidence around when those orders are going to come in and then we can start providing clearer guidance.
spk08: Okay, great. Thanks for taking the questions.
spk12: Thank you. Thank you.
spk07: As there are no further questions at this time, I'd like to turn the call back over to Mr. Gopalan for any additional or closing remarks.
spk06: Thank you. And thank you all for joining us today and for your great questions. It is a very exciting time for LiDAR and for Valadyne. We believe we have hit an inflection point in the LiDAR industry, as demonstrated by our record unit shipments in the fourth quarter and our expanding pipeline, which we believe is the most robust in the industry. In 2020, we significantly enhanced our balance sheet, supporting this robust pipeline. This, together with our leadership in broadly diversified end markets for LIDAR, gives us great confidence in our long-term outlook for growth. We look forward to sharing our continued successes with you and hope everyone has a great rest of the day.
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