Luminar reports revenue growth tied to new automaker partnerships

Luminar (LAZR) shares are sliding this morning after reporting a mixed earnings report, coming in short with revenue of $16.2 million — missing estimates by $20,000 — but narrowly beating on earnings by narrowing losses of $0.21 per share. The lidar and autonomous driving developer highlighted year-over-year revenue growth while managing new partnerships with automakers like Polestar and Nissan.

"We made a big bet on [semiconductors] between some advanced semiconductor capabilities, AI capabilities about six years ago, so this is really starting in 2017," Luminar CEO Austin Russell tells Yahoo Finance Live. Russell hints at Luminar's revenue and growth outlooks to deploy its technologies with partnered automakers in the years to come, tied to bolstering interest in the AI and semiconductor industries.

Video Transcript

JULIE HYMAN: Luminar shares are on the move this morning after the company posted a 63% jump in revenue year-over-year as a doubles down on partnership opportunities, including a new trucking deal with Plus. The company specializes in LiDAR technology that creates or uses lasers that help enable autonomous driving.

Luminar CEO Austin Russell is joining us now. Austin, it's good to see you. It's interesting. Last I checked, the stock was not dropping. But now, we're seeing it drop in normal trading. I mean, a lot of what goes into investor interest in the company has to do with the future. It's not what you guys reported in this earnings report. It's the partnerships, it's the promise of future revenue and eventual profitability. What are you most excited about around some of the partnerships that you guys are announcing?

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Austin, we're not hearing you right now. I don't know if it's on your end or our end.

AUSTIN RUSSELL: You got it. So we had a great quarter-- exactly. We absolutely meet or beat all of our various expectations when it came down to it between revenue earnings, and et cetera. But in terms of the full-year guidance, I think the key is, we're continuing to execute. Obviously, when it comes to market dynamics, the day-to-day stuff is very, very noisy. But obviously, we're taking a long-term outlook of what we're able to do and we're pulling it off very successfully.

So when it comes down to the business across, as you were pointing out, multiple partnerships between advancements in major commercial wins across like mobile. I have some new advancements this past quarter with a new OEM partnership that we're working with. Polestar is now offering our system available on their vehicles, which you can officially order. Now, the third vehicle model that you can have with Luminar.

Nissan is showcasing additional capabilities with Luminar, including now intersection collision avoidance. And very exciting one, their CEO has stated that they ultimately want to have our technology as we execute standardized across all their vehicles and the vehicle lineups by the end of the decade.

And then, of course, Plus, which is a great new partner of ours, working with some of the largest logistics companies like the Amazons of this world that we're able to see our technology deployed into. So really firing on all cylinders and all of our subsidiaries taking off as well. But it's a good time. Got to stay focused on execution. That's what we're doing.

BRAD SMITH: Austin, across some of the AI ambitions that companies like yourself and even as we think more broadly, whether it's some of the larger tech companies like a Microsoft or even some of the other major automotive manufacturers like Tesla or Ford, GM, many of them have said that we need more semiconductors, we need more chips in order for artificial intelligence to really be-- to come to fruition within the mobility experience here.

What type of investment is Luminar making in that? And how much-- what type of profile or volume do we need in order for the amount of semiconductors to actually meet and get us to that reality?

AUSTIN RUSSELL: Well, the cool part is that, we actually started investing in this stuff very early on. We made a big bet on this between some advanced semiconductor capabilities and AI capabilities about six years ago. So this is really starting in 2017 and went into full swing.

So between those two things, you won't see a single car equipped with Luminar deployed without being powered-- they're all powered by AI and powered by Luminar semiconductors as well that are embedded within the LiDAR system.

So this is something that we're very excited to be able to get out there on the road. And this is where we've also had-- established new partnerships, including with Scale AI that's now exclusively to Luminar, providing some key technologies as part of powering the Luminar AI engine that we're continuing to be able to advance.

And at the same time, we actually already have active wins. In fact, people have found our technology so interesting from a semiconductor side. Even outside of automotive, in terms of people using our same semiconductor and chips, including organizations like NASA that recently gave us an award for some breakthrough laser semiconductor technology. So very exciting time, and we're making it happen altogether on those fronts as well.

JULIE HYMAN: Austin, I know you guys have targeted at least $1 billion in your order book by year end. Talk to me about where you are with getting to that goal.

AUSTIN RUSSELL: So we're on track to meet or beat that, just as the other goals that we have at the table, including the industrialization goals and getting the high volume factory up and running live for start a production readiness for our automakers before the end of the year. So that's a key inflection point and game changer for us. As well as our other business goals more holistically and economic goals, which were all on track to meet or beat every single one of them.

So like I said, we're firing on all cylinders to be able to make this happen. And this is how you ultimately take the opportunity to see some massive market penetration and can build $100 billion company at the end of the day or even $1 trillion company at the end of the day as we're able to actually successfully scale-- penetrate the technology throughout the market and get deployed on more and more vehicles.

We already have-- was over 20 vehicles under contract with us across the various automakers now. So we're exponentially expanding. Like I said, Polestar just made available our third to be able to launch. So we're just running through that. And we really start to see that multi-billion order book that we have start converting into revenue, really starting next year and then coming into full swing in 2025.

JULIE HYMAN: So just for the, well, for the investors, there's that window. I also am curious from the consumer perspective, from the driver perspective. And we've talked about this before. By the end of '23, '24, '25, give me a feel for how many cars on the road are-- actually, on the road, not just in development, are going to be deploying and employing your technology?

AUSTIN RUSSELL: So when it comes to technology, this is actually the first time this level of technology is being deployed on real production consumer vehicles. You oftentimes will see for the autonomous vehicle landscape this huge roof racks full of sensors and a supercomputer in the trunk that's required to run the thing, that's like hundreds of thousands of dollars in total.

Part of the whole magic is that we've been able to compress all of that down to $1,000 system and sensor that can be cleanly integrated into the roof line of the vehicle. And that's something that's allowed it to actually get into consumers' hands.

So you're really starting to see-- next year, you'll actually have a significant number of consumer vehicles out on the road. It's impossible to say exactly how many, but we've given our growth trajectory of at least 100% revenue growth year-on-year in terms of our forecast from what we can see. So you can extrapolate P on that.

But when it comes down to it, for the vehicles, you'll actually see between folks like Volvo and Polestar next year. These are really the first high volume launches, particularly Volvo with their EX90 of getting this out on the road. Because it's not just something that's an option on the car either in the EX90. It's actually standard on every vehicle they produce for Volvo's next gen flagship as part of the vehicle lineup.

And then ultimately, just like with the Mercedes of this world of how-- as we're working with and deploying the technology over the coming couple of years, you start to see proliferation throughout the rest of the vehicle lineup. So starts with that initial vehicle model, which is great.

But it's even more exciting once you start to see it go across the rest of the lineup. And then that's where it's not just on the high-end models that's deployed first, but then also across the mainstream models. And you're talking in total in the millions of vehicles that we have under contract that get deployed over these terms. So it's a pretty exciting time.

JULIE HYMAN: You talked about this a little bit on the call, and I just wanted to clarify. You talked about some reports that one of the Volvo vehicles, the EX90, had been delayed in part because of the integration of your tech. But you said that's not really the case. Can you explain to us a little bit further what exactly was going on there?

AUSTIN RUSSELL: Yeah. It just seemed like there was some confusion or some reports earlier of like-- it was Luminar that had something to do with that. And that's actually not the case there at all. Is that when you talk about vehicle software and other things, it's really unrelated to our LiDAR deliverables or even our software deliverables there.

So it takes time to be able to-- for companies to be able to get their EV lineups up and running and rolling off the line, so to say. But that was already actually embedded in our forecast for what it's worth. So we generally are very conservative when it comes down to that, and how we're modeling these things out. So that wasn't necessarily a surprise.

But when it comes down to it, I think the critical part is, we're continuing to be able to deliver across our milestones and we've been able to do so consistently. We have obviously a diverse array of commercial wins. We have now more than a dozen major commercial wins across the board. So it's really more than the entire rest of the industry and landscape combined for major commercial partners in these kinds of deals.

So we're excited to be able to deliver across the board and meeting the milestones for all these various programs. And exciting to see, like I said, some of the new advancements as well for this quarter, which we've had from a commercial standpoint, including also, by the way, a new mapping deal as well. So seeing some of Luminar subsidiaries also like in AI and semiconductors, but now, in mapping as well start to take off.

BRAD SMITH: Austin, when we think about your revenue growth and the financial outlook that was provided for this quarter, you expect at least 100% revenue growth in 2023. And I bring that up because some companies tending to sandbag or at least lower some of the expectations so they don't risk missing on the guidance and the forecasts that they're putting out. You're being very aggressive here.

What type of margin profile would you expect to achieve? And further down that same thought, how should people be thinking about your company as you do move towards some of these targets? Are you an AI company? Are you a semiconductor company? Are you strictly radar LiDAR company? What is the annexation that you think investors should be thinking about your company as and thus annexing a similar type of multiple evaluation?

AUSTIN RUSSELL: Exactly. And by the way, totally fair question. Like, wait a minute. Like 100% growth? That's got to be one of the maybe even the fastest growing company on the Nasdaq for this size of business or something to that effect.

I think the reality is, and part of the whole beauty of this business and I think something that's very underappreciated is that we've already baked in a lot of that when it comes to-- or even the majority of that when it comes to our contracts and how we're able to deliver against those for automotive series production. I mean, we're talking as of last year, I think we reported around 30.4 billion in our forward-looking order book.

So that basically ends up converting to revenue one-to-one, plus or minus, as we continue to execute, as people deliver and other stuff, which by the way, is independent ultimately of the specifics of the timing.

But I'm generally-- and if you actually look at the history, I try and have a philosophy of, in a world of companies that overpromise and under-deliver, to try and be the company that will under-promise and overdeliver for this industry. And I think we'll be able to do exactly that when it comes to not just the business milestones, but also the economics.

And we are also on track with the trajectory not just for that exponential growth when it comes to the business side and how that's scaling and ramping up from a revenue standpoint and top line. But then also from a product standpoint, we have three key profitability goals that are taking place.

So by the end of this year, into the fourth quarter, we expect to be gross margin positive, to actually reduce our free cash flow spend by about 50% as the one-time launch costs start to roll off. And then at the same time, for the core business, we actually expect to be profitable by the end of next year. And even the overall business for everything that we have by the end of the following year.

Obviously, We want to continue to make the key investments for the additional growth initiatives that we have that, I think, hopefully people can see are already starting to pay off pretty substantially. So we're not crazy on that. But when it comes down to it, we're making it happen. And yeah, we're executing to a T.

JULIE HYMAN: Austin, good again to catch up with you as always. Austin Russell is the CEO of Luminar. Thank you.

AUSTIN RUSSELL: Thank you.