The News: Luminar Technologies announced third quarter (Q3) 2023 earnings earlier this week, reporting Q3 2023 revenue of $17 million, up 33% compared with Q3 2022’s quarterly revenue figure of $12.8 million. However, the company’s Q3 2023 financials fell short of analysts’ consensus estimates of $19.6 million in revenue, largely due to higher-than-expected development costs and Q3 deals that were expected to close during the quarter being pushed to fourth quarter (Q4) 2023.
The company’s non-generally accepted accounting principles (non-GAAP) loss -$0.21 per share was flat versus Q2 2023 and came in within the company’s guidance of an earnings per share (EPS) loss of -$0.18 to -$0.22.
Luminar Posts Rising Revenue in Q3 2023, But Misses Expectations
Analyst Take: Luminar Technologies is a provider of light detection and ranging (LiDAR)-based tools and software that support driver-assistance features for autonomous and semi-autonomous vehicles. The company announced its Q3 2023 earnings, which featured rising revenue growth of 33%, compared with Q3 2022 but missed analysts’ consensus estimates for both quarterly revenue and EPS. Analysts had expected revenue to reach consensus targets of -$0.19 per share (non-GAAP) and revenue of $19.6 million.
CEO Austin Russell attributed the revenue target miss to contracts that were expected to be signed during Q3 slipping into Q4 and an incremental increase in Iris+ development labor and related costs slowed the timing of revenue recognition for associated development contracts.
By the numbers:
- Q3 2023 revenue was $17 million, up 33% compared with Q2 2022 revenue of $12.8 million
- Q3 2023 earnings showed a non-GAAP loss of -$0.21 per share, or -$84.1 million
- Maintained strong cash position, including marketable securities, of $321 million as of September 30
- Q3 operating cash flow was -$56.5 million and free cash flow -$60.8 million
2023 guidance:
- Revenue Growth: Luminar expects at least 85% revenue growth in 2023.
- Gross Margin: The company expects to reach positive gross margin on a non-GAAP basis by Q4 2023.
- Cash, Cash Equivalents, and Marketable Securities (including Liquidity): Luminar expects to end the year with at least $300 million in cash and liquidity, including marketable securities.
Luminar’s Current Situation
Over the past quarter, Luminar’s stock price has taken a hit, trending downward from about $8 per share in August to its current value of around $3.14 per share, as of November 9. In the company’s Q3 2023 Shareholder Letter, the company noted that it is not getting credit for the company’s achievements, which include an order book consisting of $3.4 billion in contracts from some of the largest automakers in the world, such as Volvo, Mercedes-Benz, and Nissan, along with an additional $1 billion in orders expected by the end of this year.
The company says the planned 2024 launch of Volvo’s EX90 should result in contract value beginning to convert into rising revenue growth and associated profit. CEO Russell highlighted a significant milestone – the company passed the Run at Rate production audit, which serves as proof that Luminar can execute its vision as being a capable supplier to major automotive OEMs.
Improving Performance Through Cost Reductions
In Q3 2023, the company made progress around improving its cost structure and cash flow. The company cut its non-GAAP loss nearly in half and reduced its free cash flow spending by nearly $20 million, compared with Q2 2023. These improvements were achieved by reducing the launch and other costs associated with the Iris industrialization as the company ramps up to high volume production.
The company also noted that it expects rising revenue in Q4, as production in its Mexico facility ramps up and new contracts kick in. In addition, Luminar sees additional opportunities to save on costs through its partnership with TPK as it builds and operates its high-volume production facility in Asia.
Strong Demand Predicted from a Massive Market for ADAS and Semi-Autonomous and Autonomous Vehicles
Automotive OEMs are continuing to incorporate both advanced driver-assistance (ADAS) technology and semi-autonomous features into both luxury and mass-market vehicles, driven by regulatory safety mandates and the demand from customers and the insurance industry to implement advanced safety systems. LiDAR is used to not only help autonomous vehicles navigate their surroundings but also support ADAS features, which have become commonplace on vehicles.
These systems, which can include adaptive cruise control, hands-free driving, and blind spot monitoring, often rely on LiDAR (in conjunction with other sensing technologies). As a result, Luminar’s market opportunity remains strong, with a strong potential for rising revenue.
In fact, CEO Russell noted on Luminar’s Q3 2023 analyst earnings call even a 3%-4% market penetration – which is Luminar’s goal by the end of the decade – can result in massive revenue generation of billions of dollars. For Q4 2023, the company expects to post a non-GAAP EPS loss in the range of -$0.17 to -$0.21, with FY 2023 revenue of about $75 million and positive growth margin. The company also expects to end FY 2023 with a share count of 410 million to 420 million, a bit higher than originally expected due to higher strategic activity and a lower stock price.
Despite Challenges, Lots of Highway Ahead for Luminar
Clearly, Luminar is facing challenges with convincing investors that its approach and future prospects are solid, which is reflected in the company’s share price. However, we believe Luminar still has a significant upside in the market, based on the company’s strong partnerships with major OEMs, as well as the expected tailwind from the coming safety regulations and the eventual adoption of ADAS and semi-autonomous features across a wide range of vehicle types.
The company says it will focus on achieving three key milestones over the next 12 months, which it believes will fundamentally further shareholder value. Luminar is planning to achieve high volume start-of-production (SOP) for Volvo Cars next year, along with a continued focus on reducing costs, improving margins, and reducing its free cash flow spend. The company is also planning to grow its order book by executing on its existing business and winning new contracts.
We believe that Luminar remains well positioned to take advantage of the strong industry demand for advanced automotive technology and feel the company’s focus on controlling costs and the successful launch of the Volvo EX90 should help Luminar’s story resonate with investors over the next 12 months.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
Luminar Q2 Earnings Beat Expectations, Revenue Grows to $16.2 Million
Luminar Opens New LiDAR Sensor Manufacturing Factory in Mexico
Luminar Technologies Q1 2023 Revenue Rises to $14 million, up 112% YoY
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
