Velodyne Lidar, Inc.

Hello, and welcome to the Velodyne LiDAR first quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Mariah Shilton. Ms. Shilton, please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss Velodyne, Inc.' 's first quarter 2021 financial results. With us on today's 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 market closed today, Velodyne issued a press release announcing its first quarter 2021 financial results. Velodyne 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 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-GAAP measures related to Velodyne's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in Velodyne's quarterly financial press releases. 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, Mariah, and thank you to everyone for joining us this afternoon. I'm Anand Gopalan, CEO of Veradyne LiDAR. As the leading LiDAR producer in the world and the one that is clearly defining the LiDAR market, we continue to make great progress in the first quarter of 2021. Once again, Veradyne shipped a market-leading 2,684 sensors in the quarter, and continued our leadership position in solid-state sensor sales with more than 600 sensors sold. We shipped 65% of our sensors to customers as spot buys, which we used to seed the global LiDAR market, and 35% of our sensors to customers under our multi-year agreements with them. Our strategy of leveraging our manufacturing scale to seed the global LiDAR market with our products is evidenced both by the strong spot by business, as well as the continued conversion of these customers into multi-year agreements, which number 29 as of May 1st, up from 26 as of February 19th. We are also seeing increased pipeline strength. Varadine's pipeline of projects grew to 198 projects as of May 1st, up from 194 projects reported on February 19th, 2021. When you look at where we were one year ago at this time, we are seeing significant growth in the robotics and industrial segment, which is one of the LIDAR segments closer to commercialization. In addition, 23 of our projects now include software as a component. We continue to build out that aspect of our business by providing complete hardware software solutions to our end customers. In the first quarter, we also built out our executive team with seasoned technology and business veterans. We appointed Sinclair Vass as chief commercial officer, James Barnhart as chief operating officer, and Mike Jelen was promoted to chief strategy officer. We strengthened our board of directors with the appointment of Hamid Zaringalam, corporate vice president of Nikon Corporation, and Deborah Hirschman, former chair of the National Transportation Safety Board, NTSB, to our board. Velodyne LiDAR is the market leader with a broad portfolio of products at the necessary price points to drive mass market adoption of LiDAR. We have been working with companies across various LiDAR segments on R&D projects for more than 10 years. as LiDAR technology matured to the inflection point we are at today, with the first wave of mass commercialization ramping across several segments. Our ability to manufacture and ship at scale will be crucial in this new phase. Our LiDAR technologies are the eyes for autonomous machines, which operate in many diverse markets, each of which having different time-to-revenue, different TAMs, different sales pipelines, and different margin profiles. For example, the mapping and AV markets considered the traditional markets for Velodyne continue to be strong and have good long-term viability as they ramp at a linear pace. Our rotational products are in high demand in these markets and continue to be the de facto reference architecture for the industry at large. To break out auto more finely, interest in the ADAS market is growing robustly, with commercial revenue ramping a few years out. In the ADAS market, there is significant and growing interest in our solid-state solutions, which are targeted at large volume applications. Further, LiDAR in consumer vehicles is being accelerated by new EV players in the space who are adopting LIDAR and advanced safety technology at a rate that is far outpacing the traditional automotive OEMs. Companies in the industrial robotics segment are automating everything from heavy construction machinery to the airborne drones that could deliver packages to your door. Safety and potential cost savings plus operating in geofenced environments are the dynamics driving automation of construction machinery. Additionally, the automation of the supply chain is being driven by the significant growth in e-commerce. We are receiving revenue today from sales of our products for industrial robotics applications across a variety of different segments relating to getting goods from the port to your doorstep and all using LIDAR to do so. We are heading towards a future that involves autonomy, not just in mobile systems, but in the infrastructure that helps these machines navigate through the world. There is a renewed effort by governments across the world to update aging infrastructure. Adding LIDAR sensors and intelligence to the infrastructure can make cities safer and more productive without violating personal privacy. In both smart cities and industrial robotics, we see opportunities to sell not just hardware, but complete solutions of hardware plus software, increasing the value we bring to customers. All of this combines to make a robust business for Velodyne with a very robust cohort of customers. We are the category definer, and several of those categories are now ramping to mass commercialization, with Velodyne playing an important role. It's incredible to see the technology, products, and solutions that we develop touch everyday life in so many meaningful ways. Here are a few examples. First, delivery. We announced in the first quarter a multi-year agreement with GADIC, the industry leader in automating on-road transportation networks for B2B middle-mile logistics. GARIC is using Velodyne's LiDAR sensors as a key part of a fully redundant sensor suite to deliver goods safely and efficiently between micro-fulfillment centers, dock stores, and retail locations, a logistics flow known as the middle-mile that is an expansion of supply chain robotics. GATT fulfills revenue-generating autonomous orders daily for multiple Fortune 500 customers in the US and Canada, including Walmart, reducing customer costs and keeping delivery times short. GATT solution helps retailers meet consumer demand for rapid delivery of goods driven by soaring e-commerce growth, increase road safety for all road users, and help consumers and customers meet an unprecedented expectation for contactless delivery. It may surprise you to learn that Gaddix AV, using Velodyne sensors, were likely involved in delivering some of the goods that you are using in your home today. We have previously talked about other projects in this space around forklift applications, warehouse logistics, and last mile delivery. In mapping, In the first quarter, we announced a multi-year agreement with AGM Systems, who provides state-of-the-art hardware and software technology for the collection, processing, and analysis of air and mobile mapping data. Some of the largest companies in the world rely on AGM solutions equipped with our UltraPuck to achieve precise mapping. AGM Systems products are an example of how Velodyne sensors enable surveying, real-time assessment, and monitoring applications of valuable energy resources. In April, we jointly announced with Nightscope, one of our robotics customers, with whom we have been working for seven years, that they had selected our LiDAR technology to power their future fifth-generation autonomous security robots. Nightscope's robots have been patrolling across the country for well over 1 million hours and operate across five different time zones. We are seeing an increased interest from potential customers for complete solutions that go beyond just sensor hardware. As you may have seen earlier today, we have introduced our first hardware software solution, the Intelligent Infrastructure Solution, or IIS, which is used in the smart city segment. When implemented, IIS will enable everything from safe intersections to robust data for city planners. In our cities, the cost of congestion is estimated to be $350 billion annually, and our IIS will help reduce this burden. There is a growing commitment by governments worldwide to rebuild outdated transportation infrastructure systems. In the US, the Biden administration has proposed to invest $2.25 trillion to modernize vehicles, roads, and transit systems. As we look at a world with connected and autonomous vehicles, we know that infrastructure will play a critical role in moving this industry forward. Also announced this morning, we signed our first IIS sales agreement with Rutgers Center for Advanced Infrastructure and Transportation. to deploy our IIS-equipped Alpha Prime LiDAR sensors at multiple intersections in New Brunswick, New Jersey, as part of the Middlesex County Smart Mobility Testing Ground Project in collaboration with the New Jersey Department of Transportation. The same technology can be used to monitor public and retail spaces, providing valuable real-time data and analytics without violating individual privacy giving it a clear edge over camera solutions. Now let's turn to the automotive market. First, ADAS. It is becoming clear as we work with our customers on LiDAR for mass adoption that the winning solution needs to have the right performance and cost combination to ultimately win. A great proof point is evidenced by Faraday Futures' selection of Valadyne to be the exclusive LiDAR supplier for their flagship FF91 luxury EV, bringing ADAS and advanced safety to the FF91. Our solid-state Velleray H800 LiDAR sensors will power the FF91's autonomous driving system that aims to deliver a comprehensive suite of highway, urban, and parking autonomy features. We also continue to work with major high-volume OEM customers, such as our ongoing collaboration with Hyundai Mobis, for mass production of a Level 3 LiDAR system. In AV, we continue to bring new technologies to market, supported by the strength of our core foundational IP. We have a product today that already hits 265 meters at 10% reflectivity, but we are certainly not stopping there. We are building the next generation that will see farther and can be manufactured at lower cost and higher volume, which will be the key for mass adoption and commercialization of LiDAR in this segment. We believe that LiDAR will be the primary sensing modality for fully autonomous vehicles and that Velodyne's technology will be front and center as AVs roll out in the coming years. Velodyne has been able to create the broadest LiDAR product portfolio on the backs of its common core technology platform called the Micro LiDAR array. This technology forms the common engine that allows us to scale down cost and increase manufacturability without compromising on performance. This approach continues to be unique in the industry and gives us the strongest opportunity to capture new applications in this broad emerging space. The VeloBit, our smallest sensor, brings new levels of versatility and affordability to 3D LiDAR perception. It is a cornerstone solution in our mission to democratize LiDAR-based safety and autonomy. As we show off this incredible technology to our major customers, we are getting tremendous positive feedback with over 25 pipeline projects that include a VeloBit sensor. The versatility of our VeloBit enables customers to use it in multiple applications, such as for sidewalk or last mile delivery and industrial warehouse obstacle detection and path planning, or for pedestrian and traffic monitoring for efficiency and safety improvements, or to assist with blind spot monitoring, rear cross traffic detection, and urban PAB. Speaking of PAEB, in the first quarter, we demonstrated how Valadyne's affordable LiDAR-based PAEB solution delivers superior performance in all conditions, a decisive advantage over radar camera-based systems, which can significantly improve pedestrian safety. With our sensors prized for mass adoption, we truly are democratizing the usage of LiDAR-based safety in Level 2+, across as many cars as possible. Over the past few months, the world has continued to grapple with incredible challenges, and we have faced them by coming together and focusing on real problem solving. Velodyne is a microcosm of this, and I am incredibly proud of what we have achieved as a business, building real products, working with incredible customers, and ultimately by continuing to live up to our mission of bringing LiDAR technology to many applications that can touch everyday lives meaningfully. Velodyne continues to be the pioneer and leader that it has always been in defining this exciting space and forging a path to a safer future for all. Now, I'd like to turn the conversation over to my colleague, Drew Hamer, to go over our financials. Thank you.