The Six Five team discusses Luminar’s latest earnings.

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Transcript:

Patrick Moorhead: Speaking of automotive, Luminar had their earnings. Luminar high-flying lidar company, growing a 100% plus a year. Dan, how’d they do?

Daniel Newman: Yeah, so I mean, look, they did, they doubled revenue. They shrunk their loss. I think they lost a little more than what was expected. But this is a story about design, and this is a story about adoption. I want to be very clear. Luminar, they’re doing $14 million in revenue. Which again, not small, but most of these companies we talk about when we talk about earnings, we’re talking about billions of dollars in revenue. So why is this so relevant? This is really more about a massive shift in adoption of new lidar or new sensing technology that’s going to exist in vehicles. So while you have a company that did 14.5 million in revenue this quarter and grew significantly, you’re talking about a tiny number of volume in these automotive deals. But you’re talking about design win, this is a company that won a design agreement with Mercedes. This is a company that won a design agreement with Volvo. This is a company that’s won a design with the new Polestar. This is a company that’s got a number of different vehicles in China that are committing to using its technology and lidar is patent.

And we’ve shown the demonstration many times, just more capable of offering the sensing technology that’s going to be required for true driverless and next generation ADAS capabilities. So what I keep saying is if you’re really an investor in a company like Luminar, looking at the quarter to quarter to quarter revenue growth is one indicator.But looking at the designs and the number of design wins and when those design wins are most likely to come to fruition, much like what we’ve seen with Qualcomm, their revenues in the hundreds of millions, but they’re design win pipelines. In the billions, you’re going to see a similar trajectory. Well, this right now is Luminar’s core focus area. When these new designs get ramped up and come to market, you’re going to see scale of revenue, scale of volume and scale of the company’s growth. So the fact they’re being picked, chosen, and even at this size to me was the most important thing. And that’s what I look for in every earnings report.

Patrick Moorhead: Good breakdown, Daniel, some of the adders that I think it’s important to reinforce that this is a startup with massive growth that happens to be public. What’s unique about the company? Well, it’s actually shipping. And if I look at other companies being able to ship compact, high performance lidar, they just don’t exist. And therefore, when the company does not just break ground on a facility but open it and start producing, that is a big deal. And the company is already set up globally to create a ton of these devices for their Western and Chinese customers. So that’s a 100%. And this is why their competitors are clawing all over them and complaining and sometimes making up information about the company. Volvo and Mercedes would not choose the company if it weren’t the safest, most credible, accurate technology out there. And they’re long-term agreements. So you’re going to be able to take advantage of the being first price, which is always higher margin than the trail.

And if you’re Mercedes, any car company that has a decent brand, you want to save five bucks and take a risk to kill passengers or have recalls, it’s just not worth it. You kind of go with the best, particularly in the beginning. And then what you see as markets mature, they get cheaper and move down the cost curve and then the people who deliver premium technology around to the next premium thing.