The News: Luminar Technologies announced fourth quarter (Q4) and full year (FY) 2023 earnings earlier this week, reporting Q4 2023 revenue of $22.1 million, up 99% year-over-year (YoY) compared with the Q4 2022 quarterly revenue figure of $11.1 million, but missing analysts’ estimates of $27.34 million. The provider of LiDAR technology reported a Q4 2023 earnings per share (EPS) figure of $(0.20), which also missed analysts’ estimates of $(0.19). For FY 2023, the company posted total revenue of $69.8 million, up 71% from the $40.7 million reported the previous year.
By the numbers:
- Q4 2023 Revenue: $22.1 million, up 99%, compared with Q4 2022 revenue of $11.1 million
- Q4 2023 Earnings: Q4 non-GAAP net loss was $-83.6 million, resulting in an EPS of $(0.20). Luminar’s non-GAAP loss per share was within its guidance range of $(0.17)-$(0.21) provided at Q3 reporting
- Cash Position: Maintained strong cash position, including marketable securities, of $289.8 million as of December 31, 2023, and announced an additional $50 million new credit facility
- Order Book: Stands at approximately $3.8 billion and increased by ~$800 million this year for new vehicle lines and commercial programs awarded
- Q4 Operating Cash Flow: $(52.8) million, and free cash flow of $(53.6) million, as of December 31, 2023
2024 Guidance
- Revenue Growth: Luminar expects to achieve a quarterly run rate of revenue in the mid-$30 million range following its expected start of production (SOP) and ramp with Volvo in 2H 2024, equating to an annualized run rate of ~$140 million in revenue.
- Cash, Cash Equivalents, and Marketable Securities (including Liquidity): Luminar expects to end 2024 with at least $150 million in cash and liquidity, including marketable securities.
See the complete Q4 and FY 2023 earnings release and the Q4 2023 shareholder letter on the Luminar website.
Luminar Technologies Misses Guidance Despite Revenue Growth
Analyst Take: Luminar Technologies is a provider of LiDAR technology that is used to support driver-assistance features, autonomous and semi-autonomous vehicles. The company’s stock price has been under pressure over the past year, largely due to the company’s financial and operational focus on bringing its Iris and Iris+ LiDAR systems to market.
In particular, in the most recent quarter, the company’s revenue and EPS numbers failed to meet analysts’ expectations, which the company attributed to higher than expected resources and cash costs around the commercialization of its technology in advance of the Volvo EX90 launch, which will incorporate the company’s LiDAR technology.
In addition, the company said its gross loss was “higher than our expectations, primarily due to the lumpiness in our industrialization costs and their ramp down. These industrialization costs included fixed cost leverage on lower sensor sales, an increase in estimated development costs for Iris+, and costs associated with improving our Iris production yield and unit costs.”
Luminar’s Current Challenges and Opportunities
Luminar’s current revenue position is largely constrained in the market; its systems are not sold as standalone units; they must be integrated into vehicles at the time of production. To date, the company has focused on the expected launch of the Volvo EX90, which will incorporate Luminar’s LiDAR technology and represents a massive revenue opportunity for the company.
In the quarterly earnings call with investors and analysts, Luminar CEO Austin Russell highlighted 2024 as being the inflection point for the company. Although Luminar still has a relatively strong cash position of about $290 million, and recently secured an additional $50 million credit facility, Russell said that “for the first time, our multibillion-dollar order book is going to be converting to revenue this year,” followed by “a flurry of additional mass-produced vehicle launches with automakers around the world over the coming 36 months.”
The challenge, of course is that the company’s financial results are directly tied to the timing of Volvo’s production schedule, which the company acknowledges. In the company’s letter to shareholders, Luminar indicated that it is “being conservative in our guidance and limiting formal guidance to what we believe are the most important metrics: quarterly revenue run-rate by 2024 year-end and 2024 ear-end cash and liquidity. After we have successfully launched and ramped with Volvo Cars, we plan to provide more detail around our financial outlook, likely towards H2’24.”
Despite the company’s conservative outlook, the sheer potential market opportunity for LiDAR systems in the market is massive. The keys to opening up that opportunity is based on two aspects:
- Establishing the value in auto buyers, manufacturers, and insurers that LiDAR technology is integral to vehicle safety, much like airbags or ABS brakes, to drive mass adoption
- Demonstrating that Luminar’s technology, which is based on an uncompromising approach to quality and performance, is the right choice for OEMs
Three Keys for Luminar in 2024
Luminar is still seeing continued pressure on the company’s share price. In a sense, Luminar is analogous to a top-tier medical student or athlete that is on the verge of embarking on a lucrative career. The fruits of their hard work are just ahead on the horizon, but significant resources have been expended on that journey, and their future long-term success will be determined largely by how well they execute in the first phase of their career.
However, patient investors likely will be rewarded, assuming the company can execute on the following items:
- Successfully pass the final run at rate production audit ahead of Volvo SOP, and then achieve global SOP and ramp with Volvo. If the company is able to meet the production needs and schedule for the Volvo EX90, Luminar will begin to realize the forecast order revenue. It will also help to demonstrate to other OEMs that the company is capable of industrializing its products at scale.
- Successfully expand its marketing and mindshare campaign to establish the safety and financial benefits of LiDAR technology among stakeholders (consumers, manufacturers, and auto insurance carriers) to drive future demand for LiDAR as a critical safety-enabling technology for ADAS, not just autonomous vehicles.
- Continually ramp up and refine manufacturing processes to reduce manufacturing and production costs, enabling the company to continue to focus on innovating and bringing next-generation technologies to market.
We applaud Luminar for acknowledging these challenges and for having a stepwise plan in place for executing over the next several years. Like a parent of a student or athlete with lots of future potential, investors just need to exercise a little more patience, as the rewards are likely just around the bend.
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 Posts Rising Revenue in Q3 2023, But Misses Expectations
Luminar Q2 Earnings Beat Expectations, Revenue Grows to $16.2 Million
Luminar Opens New LiDAR Sensor Manufacturing Factory in Mexico
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 Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. 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.
