Q4 2023 Cepton Inc Earnings Call
Participants
Dennis Chang; Interim Chief Financial Officer; Cepton Inc
Jun Pei; Chairman of the Board, President, Chief Executive Officer; Cepton Inc
Mitch Hourtienne; Chief Commercial Officer; Cepton Inc
Shadi Mitwalli; Analyst; Craig Hallum
Kevin Garrigan; Senior Research Analyst - Automotive & Semiconductors; WestPark Capital Inc
Gus Richard; Analyst; Northland Capital
Matthew Galinko; Analyst; Maxim Group
Presentation
Operator
Greetings and welcome to the Q4 and full year 2023 Satcom Business Update and Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dennis Chong, Interim CFO. Thank you, Denis.
You may begin.
Dennis Chang
Thank you, and welcome to subtitles Fourth Quarter and Full Year 2023 earnings call and business update. With me today are Jim, a Co-Founder and Chief Executive Officer, and Mitch 14, Chief Commercial Officer.
During the call, we may refer to our unaudited GAAP and non-GAAP measures in our earnings release. The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with U.S. GAAP. Reconciliations for non-GAAP measures are included in our earnings release.
I would like to remind everyone that comments made in this conference call may include forward-looking statements regarding the Company's expected operational and financial performance for future periods. These statements are based on the Company's current expectations and are subject to the Safe Harbor statements relating to forward-looking statements contained in our earnings release and the presentation slides.
So I conclude this call. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks, uncertainties or other factors, including those discussed in the earnings release or during today's call, and those described in our filings with the US Securities and Exchange Commission. We are not undertaking any commitment to update these statements as a result of future events except as required by law.
As a quick reminder, this call is being recorded and you can find the earnings release and presentation slides that accompany this call as well as the webcast replay of this call at w. w. w. dot investors dot gladstone.com.
Now I would like to turn the call over to Jim.
Jun Pei
Thank you, Dennis, and good afternoon, everyone. Thank you for joining SAP council Fourth Quarter and Full Year 2023 earnings call. We will provide a business update and review our financial results with you. There's quite a bit of news. So within the industry these past few months and specifically regarding set-top first, I'd like to congratulate our team on exceeding our FY 23 revenue guidance with a record 13.1 million in recorded revenue and are preparing us for growth with the launch of our new light, our product set on Ultra at CES. 2024. These are two major accomplishments that keeps us at the forefront of this industry.
First, on our latest long-range LiDAR product that are ultra demonstrated at CES 2024 separate Ultra or ultra represents a pinnacle in light, our technology posting a remarkable long detection range of up to 300 meters at 10%, reflective of the Ultra resolution with software, definable regions of interest and the distinction of being the world's slimmest adaptive long-range LiDAR. This design enables seamless integration into various vehicle locations, maintaining aesthetic appeal and reducing aerodynamic impact at its core stepped on Ultra leverages our next-generation imaging technology, Magna Steyr, alongside all with a proprietary chipset SOC to significantly enhance point cloud quality while minimizing cost footprint and power consumption. This strategic plan of advanced features is designed to deliver an optimal balance of performance cost and reliability making Ultra not just a technological marvel, but also a viable solution for mass market adoption across automotive, smart infrastructure and various other applications.
Moving on to a piece of industry news that creates significant opportunity and competitive edge for Sarepta in a significant development that has considerable implications are for the global light, our industry, a prominent Chinese lidar company on January 25th, 2024 was added to the 1268 list of Chinese military companies by the U.S. government. This designation, which highlights entities believed to be affiliated with the Chinese military and defense sectors. It under scored the complexities and risks associated with American business, engaging in partnerships or transactions with firms listed under such a category. This development has prompted many U.S. corporations to reassess their supply chain strategies and partnerships aiming to mitigate risks associated with compliance, geopolitical tensions and national security concerns. We believe this event is a significant opportunity and a catalyst for growth for our company as stakeholders and partners in the industry seek alternatives to navigate away from the potential risks posed by sourcing from entities on a 1268 list. Samsung as a US company has emerged as a viable and secure partner and a supplier for LiDAR. This shift not only highlights our commitment to adhering to international regulations and safeguarding our operations from geopolitical uncertainties, but also reinforces our position as a trusted leader in the LiDAR technology sector, our competitive advantage to offer reliable light our supply amidst these challenging times has further solidified our market presence and opens new avenues for growth and collaboration.
Lastly, I want to briefly touch upon some recent news on the GM series production cancellation and a letter of indication from our Tier one partner and shareholder of Coleto manufacturing, which were both disclosed in more details in our Form eight K on December 11th, 2023, Coleto informed us that the original equipment manufacturer that awarded Coleto the series production award has decided to rescope his eight U.S. product offerings. And as a result, all outstanding purchase orders from cohort to the Company that relate to the series production award had been canceled. As is customary when an automotive program changes, top-down initiated actions to secure product investment cost recovery related to any delay or cancellation of an existing project.
On December 21st, 2023, we announced that we have received a nonbinding proposal from Coleto to acquire 100% of the outstanding shares of Satcom not currently owned by Coleto shutdowns. Board of Directors via a special committee is currently evaluating the indication of interest among other strategic options with assistance from financial and legal advisers. No assurance can be given that a definitive transaction with respect to Coleto indication of interest or any other potential transaction will eventually be consummated. As we have discussed in prior quarters, we are continuing to build our business and delivered yet another record-setting quarter for revenue. Stepdown remains steadfast in pursuing opportunities in automotive and remains in good position to win additional series production award with sourcing decision on the horizon.
With that, I'll turn it over to Mitch for details on our efforts with customer program.
Mitch Hourtienne
Thank you, June. Since our last earnings call that Don has received a dramatic increase of attention from the automotive industry in part due to the macro events against Chinese lidar companies mentioned previously, but more importantly, the launch and demonstration of our new ULTRA product. Specifically, we have made significant strides with a top 10 global automotive OEM previously mentioned as one of the industry's top open RFQs. Our recent demonstrations of the B samples of our Ultra product have been a game changer in advancing this particular automotive RFQ as well as accelerating discussions with other top automotive OEMs. Furthermore, our in-depth collaboration with Guido as an automotive supplier, Titan has become one of the top driving factors for automotive OEMs to consider the subcon Coleto solution over other competing solutions.
The go-to-market strategy of SAP, Dan, with Coleto as our Tier one partner, is starting to become an obvious and sustainable winning combination for customers as they solidify their first mass production launches using LiDAR technology. Of course, we have seen some false starts delays and re-scoping as car companies refine their adoption of this new technology, but it is clear that LiDAR is not going away. It's just a matter of time before several OEM.s safely launch new Edap systems, incorporating the tremendous advantages that light are provide having a supplier which can sustain this launch learning curve is becoming paramount to OEM. sourcing decisions. Next, sometime recently filed an eight K disclosing the notification of an OEM. series production award today. We're not able to disclose any more details on this project outside of those disclosed in the eight K, but they will be forthcoming soon as we work together with the OEM. and Guido on public announcements.
In addition to our recent automotive developments, I'm pleased to highlight significant progress we made with a major autonomous industrial vehicles OEM using our near range. Lidar Nova in Q4 of 2023 during the quarter slipped on path to significant gate review. With this early adopter of our near range LiDAR technology, and we've advanced to the final preproduction phase of this project in 2024 with expected mass production launch in 2025. With this milestone in hand, and in partnership with Coleto, we now have several other OEMs, including shuttle OEM.s, heavy equipment manufacturers and smart infrastructure customers with greater interest and higher demand for our near range lighter product in 2024. 2024 will be a decisive year for continued lidar adoption across the automotive landscape. With our new product Ultra and our deepened partnership with Coleto, we are poised to capture market share in this key inflection point of adoption. Now I'll turn it back over to Dennis.
Dennis Chang
Thank you, Mitch. Starting with our fourth quarter total revenue for the quarter was 5.0 million, an increase of 214% compared to the prior year period and up 29% compared to our previous quarter. The increase for the quarter was evenly contributed by product revenue and development revenue. Fourth quarter 2023 GAAP net loss was 8.3 million for $0.52 loss per share. Basic and diluted Fourth Quarter 2023 non-GAAP net loss was 6.4 million of $0.41 loss per share. Basic and diluted Fourth Quarter 2023, adjusted EBITDA was a negative 7.1 million.
Now onto our full year 2023 results. Total revenue for 2023 was 13.1 million an increase of 76% compared to the prior year and above the full year 2023 revenue guidance provided in our third quarter 2023 earnings release. We achieved full year gross margin of 27%. Our full year GAAP operating expenses were $54.3 million, excluding stock-based compensation expenses and non-recurring loss on impairment of property and equipment. Our non-GAAP operating expenses were well below the 50 million we communicated in our third quarter 2023 earnings release. Full year GAAP net loss was 48.5 million or $3 an $0.08 loss per share. Basic and diluted full year non-GAAP net loss was $38.9 million for $2 and $0.47 loss per share basic and diluted. And the full year adjusted EBITDA was a negative 41.2 million.
As of December 31st, 2023, we had approximately $56.4 million in cash, cash equivalents and short-term investments.
Lastly, we're not offering 2024 guidance at this time. We expect to provide an update on the full year guidance at our Q1 earnings call. And with that, I'd like to open up the call for questions.
Question and Answer Session
Operator
We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two. If you would like to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys One moment, please while we poll for costs.
Yes.
Thank you.
Our first question comes from the line of Saudi Mid-Valley with Craig Hallum. Please proceed with the request.
Shadi Mitwalli
Yes, hey, this is Charlene.
Wally on for Richard Shannon, thanks for taking my question, guys. I have a question regarding the final round of sourcing with the top 10 OEM. Can you give any details whether this is an exclusive or a competitive process?
Mitch Hourtienne
Yes, John, this is Mitch Cortina, Chief Commercial Officer. Basically, you're asking Okay, is that exclusive or competitive?
Shadi Mitwalli
It's still a competitive process at this point and for that particular opportunity, it does not OEM give you guys any indication of how many other companies are in that process?
Mitch Hourtienne
No, no, they didn't give us any particular number.
Shadi Mitwalli
That makes sense. And then just one more question. What's the time line for the decision and shipment with the top three OEM? And then is this an OEM that has announced LiDAR suppliers in the past.
Mitch Hourtienne
On the time line, we can't disclose the commercials of the RFQ we received. But just in general, a lot of the RFQs coming out in the automotive industry right now are have the start of series production in the second half of the decade. You know, in the 2026 to 2028 time frame.
And then the second part of your question, have they already announced LiDAR suppliers or a lot of OEMs. I've had various projects with other light, our suppliers, the past several years.
Yes, that's OEM was previously working with another lighter supplier.
Shadi Mitwalli
Thanks for the color on that, and that's all for me.
Operator
Thank you.
Our next question comes from the line of Kevin Garnett again with WestPark Capital. Please proceed with your quest.
Kevin Garrigan
And yes, hey, guys.
Thanks for letting me ask a few questions and congrats on the progress.
Just for the first one.
Just a quick clarification.
The RFQs, the RFQ that you mentioned and then the final sourcing, those are both for passenger vehicles, correct?
Not not any trucking.
Mitch Hourtienne
That's correct.
Kevin Garrigan
Okay.
Perfect.
And then has the has the IOI from Coleto caused any of your discussions with OEMs to kind of change at all, as you know, have some would they now be waiting on the sidelines until a final decision is made or some actually like the idea of a bigger Tier one kind of player source in the LiDAR and have accelerated some discussions?
Mitch Hourtienne
Yes, definitely, Kevin, this is Mitch again. That's an obvious topic that comes up, especially in the final discussions with the OEMs. I think overall, it's a positive. It's seen as a positive for some time. And for Coleto, you know, there are concerns in the industry about the longevity of LiDAR companies, and I think that's coming to the surface for many OEMs. And so this proposed letter that we received is definitely a positive in front of the customers.
Kevin Garrigan
Okay, perfect.
Thank you.
Yes.
Operator
Thank you.
Our next question comes from the line of Gus Richard with Northland Capital. Please proceed with your question.
Gus Richard
Yes, thanks for letting me ask a couple questions. Just when the industry goes through on a rescope, can you talk about on sort of what it means to you guys financially, how do they size any on remunerations on associated with that kind of thing?
I'm not specific numbers. Just how do you how does one think about that?
Mitch Hourtienne
Are you asking about the GM re-scoping?
Gus Richard
Yes, I am. So when there's a rescope, usually the vendors get out money back from money spent. And I'm just wondering, on industry practices, what's the magnitude?
What does it look like?
Is it proportional to your what you spent on development, et cetera?
Yes.
Jun Pei
We're certainly trying to recover all the money. We have spent invested in the program, but there are a lot of intricacies in the process of maybe you want to add something. It's not something of a concrete number we can give out at this point, but it's certainly a nontrivial number.
Mitch Hourtienne
It's not public information, but but know, I think I think you can think of it as some proportion of our OpEx the past three or four years since we announced that project, that was a pretty significant work stream for our company. So on there were significant investments, and that's what's being asked for.
Gus Richard
Got it. And then in terms of the arm of nomination and so forth, booking of company wins?
Yes.
So one, when would you expect that to go into production?
Mitch Hourtienne
Yes.
Just refer back to my answer to the first question. Most of the RFQs and awards right now are starting production in the 26 to 28 timeframe. So it would fall somewhere in that timeframe.
Jun Pei
Yes.
But again, I refer back to our eight K filing. That's as much as information as we can publish right now and we'll follow up with more press releases as we're allowed to release more information.
Gus Richard
Okay.
Fair enough. Last point for me on this Chinese entity, that is because on the Entities List, if you will, where you going up against this company at any any of the top 10 companies, OEMs that you've been working with this significant reduction in, um, you know, well, the competitive environment, are you seeing that these folks?
Jun Pei
Yes, I'll start first and then maybe Ken can add more. There are, as you can see in this slide, our landscape of quite a number of our companies in competition for any program out there. So you can expect in this Chinese satellite, our company as well as us and many others are always competing with each other in any of the light, our programs that we are less active. So it is a fair assumption that we've been competing in a number of projects. And yes, you know, the current situation is there a put on this 12, 68 list and the IT on there's one fewer in many of these competitions at many places. So Mitch, you want to add some more?
I don't think anything there yet.
Yes.
Okay.
Gus Richard
Very good.
That's it for me. Thanks so much.
Thank you.
Operator
Our next question comes from the line of Matthew Galinko with Maxim Group. Please proceed with your question.
Matthew Galinko
Thanks for taking my questions on. I guess first one is on the the smart tolling project you've talked about Palm to get pretty significant lengthen the proposal last couple of quarters. Tom, I didn't hear much about it today, but just hoping you could update us on where the rollout stands and potential for bromine, the scope and expansion of the smart tolling practice in general for your business?
Mitch Hourtienne
Yes.
Thanks, Matt. This is Mitch. A good good question. Yes, you're right. We didn't necessarily highlight that today, but but we did continue significant shipments in the Q4 that shows up in our product revenue numbers for the tolling application. And we continue to support those big tolling operators in the U.S. market as they expand both in the US and also on bid on some international opportunities. So that's very much an active our market that we're supporting.
Matthew Galinko
Got it.
Thank you. And I know you're not specifically providing on an outlook, particularly on revenue, but I was wondering if you could give us some sense of them, what are your thoughts around spending at least over the next two quarters or if not, for the next year, just on directionally what we should expect expecting on OpEx, I think you had, you know, kind of declines the last three quarters, at least on GAAP. So no, should we expect kind of the same trajectory given, you know, the risk coping at GM?
Or is it just subject to whether you sort of get to the final decision on any of these OEM selections?
Dennis Chang
high standards can here and for the OpEx at this stage, we're not expecting any increase. So it's probably less than our 2023 numbers. And I guess with our Q. one and result, we'll be providing some updates.
Matthew Galinko
Okay.
Thank you.
Operator
Thank you.
There are no further questions at this time. I'd like to turn the floor back over to Joon pay for closing comments.
Jun Pei
Thank you very much. It's been a exciting year 2023. So we look forward to another even more productive year of 2024 with new products, new projects and new technology of course, stay tuned for further updates from September. Thank you very much.
Operator
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
