The News: Luminar Technologies, Inc. announced Q2 2023 earnings earlier this week, which featured a smaller-than-expected loss and rising revenue of $16.2 million, up from $9.9 million one year ago. The company exceeded the midpoint of its revenue guidance and its guidance for non-GAAP earnings per share (EPS), and posted a strong balance sheet that will help the company reach its future business growth and profitability targets. See the complete Q2 2023 earnings release on Luminar Technologies’ website.
Luminar Q2 Earnings Beat Expectations, Revenue Grows to $16.2 Million
Analyst Take: Luminar Technologies, Inc., a provider of LiDAR-based tools and software that are used to support autonomous and semi-autonomous vehicles, announced its Q2 2023 earnings, which featured strong year-over-year (YoY) revenue growth of 63%, and a better-than-expected non-GAAP loss of $0.21 per share.
CEO Austin Russell cited the company’s ability to complete deals for its hardware and software solutions with OEMs and other customers as key factors in the company’s growth, and highlighted strong demand for its products in Asia. Notably, Luminar is one of the only western autonomous technology companies to be awarded substantive business in China, both domestically and from global OEMs. Russell also pointed to ramp-up in orders for Volvo’s EX90 Excellence vehicle in China, which utilizes Luminar’s technology, along with demand from more than a dozen additional commercial partners, as the engine that will drive rising revenue as production begins in 2024 and beyond.
By the Numbers:
- Q2 2023 Earnings: non-GAAP loss of $0.21 per share, or $81.5 million
- Q2 2023 Revenue: $16.2 million, up 63% compared with Q2 2022 revenue of $9.9 million
- Maintained strong cash position, including marketable securities, of $365.8 million as of June 30, 2023.
- Net cash used in operating activities was ($73.3 million)
- Free cash flow (operating cash flow, less capital expenditures) was ($78.5 million)
2023 Guidance:
- Luminar is on track to meet or beat its financial guidance
- Revenue Growth: Luminar expects at least 100% revenue growth in 2023
- Gross Margin: The company expects to reach positive gross margin on a non-GAAP basis by the fourth quarter
- Cash, Cash Equivalents and Marketable Securities (including Liquidity): The company expects to end the year with a balance of greater than $300 million, which is more than required to execute on its current plan for profitability. As Luminar’s business ramps up and launch costs ramp down throughout the year, the company expects to reduce its free cash flow (FCF) spend in Q4 by approximately 50% relative to Q1, and Q2 of ($78.5 million).
The quarterly loss was largely due to the $24 million in launch-related expenses, which were higher than in Q1 due to improvements in the manufacturing process and product quality at higher production rates. We expect that as the company shifts to full production over the next few quarters, Luminar will likely reach breakeven status by 2025 amid rising revenue, in line with management’s projections.
Massive Opportunities From ADAS Systems
The use of LiDAR, which stands for light detection and ranging, is not only used to help autonomous vehicles navigate their surroundings, but is also used to support advanced driver assistance systems (ADAS), which have become commonplace on vehicles today. These systems, which can include systems such as adaptive cruise control, hands-free driving, and blind spot monitoring, often rely on LiDAR (in conjunction with other sensing technologies).
Automotive OEMs are continuing to incorporate both ADAS technology and semi-autonomous features into both luxury and mass-market vehicles, driven by both regulatory safety mandates and increasing customer demand. As a result, Luminar’s market opportunity – even if fully-autonomous cars and trucks do not become ubiquitous within the next several years – remains strong, with a strong potential for rising revenue.
CEO Russell noted on Luminar’s Q2 2023 analyst earnings call that its target market penetration by the end of the decade is only 3% to 4%, but due to the size of the opportunity, Luminar should be able to achieve around $5 billion in revenue, even with a “relatively small amount of market penetration.”
Strong Manufacturing Base and Financial Support
Luminar is also well positioned to generate rising revenue, thanks to a partnership with TPK to build and operate an additional high-volume factory driven that will primarily support vehicles delivered in China and across the Asia Pacific region. TPK also decided to make an additional $10 million cash investment into Luminar stock, which will further solidify the company’s financial position as it looks to scale production to meet additional customer demand.
The TPK announcements follow Luminar’s April 13 announcement regarding the successful ramp-up of a new high-volume factory in Mexico. Currently, Luminar has now established a global manufacturing footprint that spans the United States, Mexico, Thailand, and China, which ensures they have the manufacturing capacity to meet the demand of OEMs around the world.
OEM Customers Ensure a Robust Pipeline for LiDAR Technology
A key reason for optimism is Luminar’s strong roster of technology partners and OEM customers. Luminar technology is incorporated in the Mobileye Drive Self-Driving System, and in June 2023, announced a deal with Plus to be the exclusive third-party provider of AI-based driver assist software in its solution for commercial vehicles.
Further, Luminar is working with OEMs such as Volvo, Mercedes-Benz, Polestar, and Nissan, the last of which has committed to using Luminar’s technology for intersection collision avoidance, which they are introducing in select models by the mid-2020s, with a target of including it on virtually every new vehicle model by 2030. This should help the organization generate rising revenue across a variety of segments and geographies, thereby insulating the company against soft demand in a single segment.
Strong Tailwinds Should Help Luminar in the Near- and Mid-Term
In addition to the strong partnerships and deals Luminar has secured, the company will benefit from regulatory tailwinds, such as the growing requirements for specific systems that need to be included on vehicles to achieve the highest safety ratings, such as automatic emergency braking at higher speeds, or the deployment of more redundant safety features to ensure safe autonomous operation. LiDAR technology will continue to be a key component in the technology stack, and as a key provider of both hardware and software, Luminar should be well positioned to capture rising revenue across multiple market segments.
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 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.
