Luminar Technologies, Inc. (NASDAQ:LAZR) reported its second-quarter financial results after the closing bell on Tuesday.
Below are the transcripts from the second quarter earnings call.
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OPERATOR
Good day and thank you for standing by. Welcome to the Luminar Technologies Second Quarter Financial Update Call. At this time all participants are in a listen only mode. Please be advised that today’s conference is being recorded. After the speaker’s presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Yarden Amsalem, Head of Investor Relations.
Yarden Amsalem (Head of Investor Relations)
Thank you Josh and welcome everyone. With me today are Paul Ricci, Luminar’s Chief Executive Officer and Tom Fennimore, our Chief Financial Officer. As a quick reminder, you can find the press release and presentation that accompanied this call at investors.luminartech.com in a moment you will hear remarks from Paul and Tom followed by a Q and A session. Before we begin the prepared remarks and Q and A, let me remind everyone that during the call we may refer to GAAP and non GAAP financial measures. Today’s discussion also contains forward looking statements based on the environment as we currently see today. As such, it does include risks and uncertainties. Please refer to our press release and presentation for more information on the specific risk factors that could cause actual results to differ materially. With that, I’d like to introduce Luminar CEO Paul Ricci.
Paul Ricci (Chief Executive Officer)
Good afternoon everyone and thank you for joining us. Since stepping into this role two months ago, it has become clear to me that Luminar has leading technology and exceptional talent. But in order to realize our full potential, we must also operate with greater focus and discipline. We’ve taken steps to align our strategy, resources and execution so that we enable sustainable progress toward our long term goals. Our job now is to ensure that Luminar is not just leading on technology, but also on execution. As we look ahead, there are four key messages I want to leave with you. First, Luminar has unsurpassed technology and a significant opportunity ahead in the Automotive Market as OEMs move to incorporate autonomous driving technologies and advanced safety features more comprehensively. Nearly every global automaker recognizes LIDAR as an essential technology, especially to unlock level three and beyond. And Luminar is already working with some of the leading OEMs, including Volvo, Nissan and Mercedes. We remain focused on meeting their program milestones and delivering the quality and performance they expect. We believe this performance will position us well to secure additional production awards. Accordingly, in Q2 we achieved a major technical milestone with the key OEM successfully demonstrating our ability to detect objects as small as 8 cm at distances of over 175 meters. This is a critical requirement on the path to production readiness and to our knowledge in industry best, this capability now moving from control validation to public road testing underscores why high performance LIDAR is essential to enabling safe and reliable autonomy. In parallel, we continue to consolidate efforts around Halo. Halo is designed to take our LIDAR technology mainstream, delivering industry leading range point density, size, cost and a form factor optimized for seamless integration and scalable production. We see Halo as the key to broader LIDAR adoption, enabling Safer, more capable L3 solutions and significantly expanding our addressable market. We continue to work closely with our OEM partners on our joint Halo development programs in an effort to bring Halo to market as quickly as possible. With that said, widespread adoption of L3 and higher autonomy is progressing more slowly than expected, which leads to my second point. While we remain committed to our OEM customers in the long term automotive use case, we’re placing a sharper focus on near term revenue and profit opportunities in commercial markets such as trucking, security and defense. We’re seeing momentum in these sectors where autonomy and physical space analytics are advancing quickly. The unit economics are more attractive. So rather than waiting for the L3 automotive market to further materialize, we’re acting now to pursue these commercial opportunities in defense. For example, we’ve already built a good foundation both technologically and commercially. Our 1550 nanometer lidar technology was originally developed for military applications due to its long range performance in adverse weather and stealth capabilities. Unlike 905 nanometer lidar, our sensors remain invisible to traditional silicon based cameras, a crucial capability for covert operations. In fact, today we’re already working with customers on autonomous ground based military vehicle programs. We believe that these engagements not only validate our differentiated technology but but also lay the groundwork for broader adoption across the defense sector. We’re also seeing growing momentum across aerial and marine applications. Air and sea drones have historically relied upon camera and GPS for navigation. But with GPS jamming becoming more prevalent, the industry is looking to LIDAR for positioning and situational awareness. These are just two of the examples of the opportunities we’re pursuing. My third point is that we are rigorously reviewing the business to increase operational discipline and reduce operating expenses and cash burn. Specifically, we are exiting non core initiatives like our data and insurance businesses, areas that are not aligned with our near term priorities or paths to scale. These actions are expected to reduce operating expenses by nearly $23 million in gross rate run annual savings in 2026. We anticipate seeing the initial impact of these savings in Q4 with the full benefit reflected in our 2026 financials. We’re also restructuring our supply chain to improve unit economics and support our customer programs more cost efficiently. As Ceres production forecasts declined significantly over the last year, we’ve determined that our existing Mexico based manufacturing is no longer the best fit. As a result, we’re transitioning production to Thailand where we already produce our sub component assembly. This move enables us to streamline operations and consolidate production under one roof. We expect no disruption to customer deliveries and anticipate a benefit of a few hundred dollars per sensor to our unit economics once the transition is complete. Fourth, I’d like to highlight the meaningful progress we made this quarter to strengthen our balance sheet. This has been and will remain a top priority to ensure we have the financial flexibility we need to execute our strategy. In fact, since August of last year, we’ve reduced the face value of our 2026 convertible notes by approximately $442 million. This quarter has been no different as we continue taking steps to further enhance our financial position and to reduce our debt burden, which Tom will cover in more detail shortly. Now I’d like to briefly comment on our financial performance this quarter and our revised 2025 guidance which is affected by two primary factors. Number one, we’ve seen a continued reduction in production volume estimates, particularly for the AX90 program. This has negatively affected both our Q2 revenue and our outlook for 2025. For context, IHS forecasts for the AX90 have declined by approximately 15,000 units since the beginning of the year, which roughly aligns with the reduction of our 2025 shipment expectations. And number two, as I previously mentioned, we’ve made the strategic decision to exit non core areas of the business, including winding down the data contracts. While this will help lower our operating expenses, it also negatively impacts our near term revenue. Together, these factors explain the sequential decline in revenue as well as the adjustment to our full year outlook. Tom will cover these topics in greater detail. With that, I’d like to finish by discussing our operating milestones. In the past, we outlined a set of high level milestones to guide our long term vision. While those still inform our core priorities, we’ve introduced a new set of four specific actionable milestones. These better reflect where the business stands today and give our stakeholders a more tangible way to track our progress. First, we plan to complete the initial tape out of our next generation ASIC by the end of this year. Our custom ASIC is a foundational component of our long term product roadmap and is critical to unlocking Halo’s higher performance and cost reduction. Second, we expect to launch a high volume production line in Thailand before the end of this year. As I mentioned earlier, this transition will better align our manufacturing footprint with our near term expected production volumes and support our sensor economics. Third, we plan to launch our Halo low volume prototype production line in the first quarter of 2026. This line will serve as a foundation for scaling to high volume …