Welcome everyone to Luminar's third quarter of 2023 business update call. My name is Aileen Smith, and I am Luminar's Head of Investor Relations. With me today are Austin Russell, Founder and Chief Executive Officer, and Tom Fennimore, Chief Financial Officer. As a quick reminder, this call is being recorded, and you can find the press release and shareholder letter that accompany this call at investors.luminartech.com. We ran into some hiccups with Business Wire in getting our press release out on time, but hopefully, most of you both were able to have a chance to review our inaugural letter to shareholders and our press release that were issued via an 8-K, as well as uploaded to our IR website. As we've communicated, we are piloting a new format for our call on this earnings. The shareholder letter was meant to replace our historical earnings deck and prepared remarks, so that we can dedicate more time to addressing questions from our investor community, including retail investor questions posted to the Say platform, institutional investor questions emailed to our investors' inbox, and live questions from our analyst community. We will be checking each of these platforms intermittently throughout the duration of our call to address any that come in real time. Before we begin the Q&A, let me remind everyone that during the call, we may refer to GAAP and non-GAAP financial measures. Today's discussion also contains forward-looking statements based on the environment as we currently see it, and as such, does include risks and uncertainties. Please refer to our press release and business update shareholder letter for more information on the specific risk factors that could cause actual results to differ materially. We plan to alternate questions asked on our Say platform or via email with questions asked from our live research analyst community. With that said, let's jump right into Q&A and start with some of the top questions from our Say platform. Austin, the first question is for you. Recently, the- Can you hear us okay? Yep, everything's good. Great. Thanks. So recently, the successful Run-at- Rate test with Volvo was a major milestone accomplishment for Luminar. What else is left to do with Celestica and Volvo before the green light is given to start production? And when do we expect series production orders? Yeah. So, it's been great collaborating with Volvo and leading up to this huge culmination and milestone that we have for as it relates to Run- at- Rate. So this was sort of the key and fundamental milestone when it comes to testing the capacity and quality, you know, for product leading up to start of production. So that's something that obviously we're proud to have passed, you know, and an incredible effort, and thank you to the team and as well as Volvo's team in helping push that across the line with the Mexico factory with Celestica. So that's been great. There's obviously still work to do from a finalization of industrialization, you know, standpoint, in conjunction with Volvo, leading up to the start of production next year and getting everything queued up for what they have launched. But that was really the big major push in terms of demonstrating the capacity. So that really starts and shows that you can scale well into the tens of thousands and then setting the stage up for hundreds of thousands thereafter. And I think we said that the Mexico facility would support up to 250,000 sensors or corresponding vehicles per year. So that's. It's been a great start with that. And then, we'll have ultimately a, you know, a similar test, you know, with TPK and Mercedes and everything, down the line, as that, that all plays out accordingly. Yeah, we're excited for the future, and it's really all systems go with Volvo. It's gonna be a huge game changer as they launch and scale with the EX90 next year. Great. Our second question from the retail shareholders: Can you add some color to your relationships with Mobileye and NVIDIA? How does Luminar benefit from the relationship? What kind of future revenues do you expect from them as they launch various products with your LiDAR, in particular, Mobileye's Chauffeur program and Polestar? Yep. Yeah, absolutely. So when it comes to NVIDIA and Mobileye, they're incredible technology partners that we have, that we've been collaborating with, well, I guess each now for years. So that they really selected us as their respective, partner when it comes to LiDAR systems and, associated technologies and even due to some components of software as well, that we've been, collaborating with, with them as OEMs. So that's something that we really see as a, a clear, integrated partnership and springboard as well, to be able to address the respective OEM opportunities that are out there. We know Mobileye's been an incredible leader when it comes to assisted driving systems, and that's continuing to extend into further advanced capabilities. And NVIDIA's really been establishing themselves in the industry as well. And like I said, just incredible success that we've seen. So to be a part of that and be selected to be their partners with respect to, you know, these next generation automotive technologies, as automakers really strive to be able to adopt this, is very, very meaningful to us. And like I said, we couldn't ask for better partnerships in the industry to be able to help successfully realize that. So we're all in, they're all in, and we're, I think, really now starting to see the fruits of the labor of the collaboration that we've had for years. So that's, I think, probably yet another inflection point that we're at, where you can start seeing that transition from, you know, development work that we've been doing with these guys, you know, into the automotive industry, into production vehicles. You know, you take a look at, like, the Mercedes program, for example, you know, and the collaboration that we have with them on that. You know, with NVIDIA, you know, that's something that's, that's obviously been public. You know, again, it goes to show what you can do when you combine the respective leading technology companies together to create an incredible solution. ... All right, our next question is going to be for Tom, and that is: Is Luminar in danger of bankruptcy? Aileen, the short answer is no. Yeah, I understand why some shareholders would ask that question, given the recent stock price performance. But when you actually look at our most recent results for Q3, we cut our non-GAAP gross loss almost in half, which puts us on trajectory to get it to positive by the end of the year, as those launch-related costs continue to wind down as we successfully industrialize Iris. We cut our free cash spend by nearly $20 million during the quarter, which puts us on track to kind of get it into that $35 million-$40 million range for Q4. We had over $320 million of cash and liquidity as of quarter end. We're on track to have over $300 million of cash and liquidity at the end of the year. So when you kind of look at where our targets for ending the year, we're gonna have over two years of runway. We believe that that's gonna be enough to get us to profitability. We have the book of business in place that will drive strong revenue growth once we reach that high volume SOP next year. So that gives us a credible way to start growing our revenues and profits to help reduce our cash spend even more. And so, you know, once again, I understand the source of the question, but that's clearly not the case. We have the most cash and liquidity of any publicly traded LiDAR company, and God forbid, if we find ourselves in a scenario where we need more, I have plan A, B, C, D, E, F, and many more ways ready to go. You know, always have contingency plans built to put those in place way before you need them. You know, we're doing that if, you know, God forbid, we end up needing to do something on that end. Great. All right, we are going to transition to some questions from our retail, or sorry, research analysts. Because we are trying to offer more time for Q&A, we would ask that our research analysts ask one question, and we will allow for another two, three follow-ups. Our first question is going to come from Josh Buchalter at TD Cowen. Hey, guys. Thanks for taking my question, and thanks for letting me go after the bankruptcy question. It's a nice way to warm up the room. I want to follow up on the Mobileye comments from earlier. You know, it's been our... We've observed that Luminar's been the LiDAR of choice on Mobileye's Chauffeur platform while they work on their internally developed product. There have been some recently announced design wins for Chauffeur. I mean, can you guess is it safe to assume that Luminar has a very decent shot on goal? Can you maybe expand on that relationship, and what Chauffeur wins mean for your business? You want me to take that, or you wanna take it? Yeah, no, I mean, I think it's fair to say, like, it's hard to comment, you know, specifically, you know, further at this time as it relates to, you know, the ongoing work and collaboration. But I could say it's been as successful as we could have hoped for. And, you know, again, everything that we set out when we originally announced partnership with Mobileye, that we wanted to ultimately achieve, you know, we've been pushing that full speed ahead, and that's been absolutely fantastic since, you know what, it was nearly I think it was, like, three years ago, when, yeah, I think probably to the month, you know, three years ago, when we were out there with it. At the same time, you know, same with NVIDIA, in terms of, you know, what we can hope to achieve. So, I then, I think, we wish all of the best possible success to, these respective companies, and I think if in any scenario, a key component of it, you know, we, we don't make the compute systems and modules, right? You know, so that, that's something that, I think will be an important part of that, of that collaboration. Now, obviously, you know, the, the internal effort I think was, was unique to, Mobileye rather than NVIDIA, you know, specifically, but, there, there obviously hasn't been any change as it relates to, realizing and using us, when it comes to that from a platform standpoint. So, you know, building LiDARs is, and creating new breakthrough technologies is really, really hard. And as we know, it takes a lot of time, effort, you know, a decade, and a lot of capital along the way to be able to make that happen, assuming you have the right technology path and roadmap in the first place. But that's why we spent all these years building it from the chip level up, to have these level of capabilities, you know, performance, economies of scale, and at the same time, doing what's needed to be able to achieve these automaker requirements and getting out there. So that's been good, and I think they are, you know, ultimately will also help drive the, you know, the long-term aspects, you know, of our order book and, contracts as well, respectively, with automakers there. You know, we said by the end of the decade, you know, ultimately the target would be to get towards, you know, $60 billion, you know, contracts, you know, for the order book. You know, which is, in terms of, the respective opportunity that we have ahead of ourselves by, you know, capturing what that was like 3%-4% market penetration. So that's something that, you know, those companies are gonna be very helpful to us to be able to, help hopefully achieve beyond that. Thanks for that, Austin. And for my follow-up, you know, in the shareholder letter, I think you mentioned you're on track to achieve $1 billion of order book growth this year, but some of the contracts might slip into next year. Maybe you could elaborate on how much has already been won, I guess, how much of that is new versus existing customers, and what's driving... You know, $1 billion was roughly, I believe, what you added last year, which is, you know, what's driving, I guess, the bit of a slowdown in the amount of business that you're signing this year versus last year? Thank you. Yeah, Josh, look, we're as we said in the letter, we're still on track to add $1 billion. We do the formal tally at the end of the year. We kind of don't do it along the way, but we already have a few wins in there, some from existing customers, some from new customers. You know, we'll talk about stuff once our customers are ready to talk about them. So we remain confident that we're gonna get to that $1 billion. You know, we're sitting here on November 8th, so, you know, we have a lot of things already in the year. There's a few things that we're hoping to wrap up here, in the few weeks left in the year. Whenever you get to that, you know, there's always a risk that some things slip, you know, into, into Q1. But, you know, there's also a little bit of a cushion in there, so we remain confident in it. Look, these things that, you know, the longer term opportunity continues to remain and exist. You know, I would say, almost every major automaker is now having serious conversations about implementing, you know, LiDAR technology on their vehicles. It's a question of when, not if, and the timing of them kind of making these formal awards can be a little lumpy. And so, you know, I, I wouldn't read anything in particular to kind of, I would say, an overall, you know, industry slowdown. But I would say we still remain satisfied with the pace of our commercial activity and discussions, both with new and existing customers. Okay, thank you. I'll hop back in the queue. Oh, sorry, Austin, please. Yeah, I was just gonna say, one other thing, just as a reminder, and I'm sure, as you know, Josh, but just as a general reminder, the way that we calculate our order book is also generally a substantially more conservative standard than some of what we've seen out there in the broader industry. It's probably like a, you know, would be a multiple of this, you know, it was a significant multiple of this, if we did that. But, you know, we wanna do it right, and we wanna show really what's actually there, you know, in the bag, and what we can have that clear, you know, one-to-one conversion with in revenue over the, you know, relative near term here in terms of opportunity that we have, that we'll obviously start to see. Starting to realize with these Volvo vehicle launches here soon. Got it. Thank you, Austin, Tom, and Aileen, appreciate it. Thank you. Next up in our queue from the analysts will be Winnie Dong at Deutsche Bank. Thank you so much. I was wondering if you can provide a current update on the TPK facility ramp in China, where that might stand, and then can you just remind us on the target volume and timeline? Thanks. Sure. So, you know, I was actually over in China last week, spending some time with the TPK team, as well as some other customers over there. I would say that things are proceeding very well so far with TPK. You know, we're starting, you know, right now for Iris+. We're making those B samples internally at our Orlando manufacturing facility, and sometime next year, we'll actually transfer production of the C samples to them. And so, you know, we're starting to ramp that up, you know, buying the necessary equipment, putting in place the necessary clean rooms, and the TPK team is doing a very good job on that. You know, we've been pleased so far with the TPK relationship and, you know, I wouldn't be surprised if that's something that continues to expand over time. You know, with regards to timeline, they're planning to, as I said, start C sample production for us in the first part of next year. And then the plan is to have that facility ready for start of production by the end of 2025. The initial capacity that we're planning that out for is about 600,000 units or LiDARs. And, you know, we also have the ability to grow that as we continue to win more business over there. Thank you for the, for the very detailed, response. And then I was wondering if you can elaborate a little bit more on, the growth margin improvement headwind that was stated in the shareholder letter. Obviously, still targeting, you know, gross margin positive in, in Q4, but I was wondering if you can just elaborate a little bit on, you know, the costs and efforts associated with, Iris+ and how that might impact, the improvement there. Thanks. Yeah, sure. And you know, as a reminder, we're kind of you know, launching two you know, two major products at once. One is Iris, where our lead customer is Volvo. That's what we're building out our new facility down in Mexico to produce. That's what we're you know, preparing for high volume SOP next year. And I would say we're kind of in the tail end of those initial industrialization of that product. And so, as we kind of reach that SOP, there's gonna be a fair amount of launch and other related costs that start to come out of the system when we're doing that. For Iris+, we're in that B sample phase, right? So we're making those LiDARs at our advanced manufacturing facility down in Orlando. And what you're doing during the B phase is you're kind of you know building those LiDARs, and then you do a fair amount of testing on them, and then you kind of have to modify the design as you do that testing and you know identify issues. That's very typical during the B and C sample phase. You know the issues you encounter you know it's difficult to predict until you actually get them in there. And so you know they were a little higher than we were expecting. You know I think the good news is that the team has done a good job of identifying you know the necessary modifications we need to make to fix them. And so, you know, I think we've kind of made those, but the cost for that was a little bit higher than we were forecasting. That flows through our COGS line, and so while the Iris industrialization costs are starting to come down, the Iris+ industrialization costs continue to remain high and will do so until we reach the, you know, the SOP for that, you know, a little bit behind the Iris, for the initial Iris launch. And so, you know, as you're kind of industrializing a product, the issues you encounter and the cost to kind of fix those are a little bit unpredictable, and that's what we've found on Iris+. Once again, nothing significant there. The teams has identified and made the necessary design changes. You know, we need to go through the necessary testing and validation to prove it out. But that's what kind of happened on the Iris+ side during Q3. So basically, what you see is that, you know, because you have sort of a cost variance, you know, there of call it, you know, it's very hard to predict the exact like, what it is to the exact like, you know, so it'll be like ±10%, you know, when it comes to that. But because the way that this happens, you know, with the contracts that we have with the automakers and like the revenue recognition, pre-production, it's percentage of completion as opposed to the relative cost. So that when things go up or down by, you know, 5% here or there, plus 5% there, it adjusts the timing of the revenue recognition, and then that's kind of as we go through. And, you know, obviously, we have the same kind of questions, you know, it's like, "Oh, well, why, why does this, why does this input affect this?" You know, or whatever it may be. But, from a business management standpoint, you know, we're on track to our, our key milestones and what we've laid out, including, you know, to the important part for start of production. And that lines up with both, with both Iris and ultimately, Iris+ as well, that comes thereafter for the respective additional programs for SOP. Thank you both. Thanks. It's going to come from John Babcock from Bank of America. Hey, good evening -- good afternoon. I guess just my question, you know, the performance that, you know, you've seen this quarter, and then, you know, what you're expecting through the rest of the year, is there anything we should take from that and how that impacts your, your longer term outlook? I know you guys reiterated it, but just wanted to, you know, see if this poses any risk or if there are, you know, any other factors that we should keep in mind as we're thinking about that. You know, the answer to that question is, John, we don't see anything. You know, while these are bumps on the road and the revenue came in a little bit lighter than expected, and we talked about some of the gross margin headwinds, as you kind of industrialize your product and, you know, kind of go from the B sample to C sample phase, you freeze the design, you know, and actually reach series production, a lot of those launch-related costs wind down. And so as you successfully industrialize, you know, those kind of bumps on the road costs that were, you know, higher costs that we're seeing in COGS, those should dissipate. We're seeing it on Iris, where, you know, we're a year plus or minus ahead in terms of development line there. You know, Iris+ is just a little bit behind that. You know, as you're going through that industrializing process, you know, the cost can be a little bit unpredictable. On the revenue side, you know, once again, so, Oh, yeah, ± like 5% or 10%, like we're not talking much- Yeah. You know, I mean, because then basically, that, that again, feeds into the respective revenue line that's, you know, okay, ±5% or 10% or whatever it is. So if anything, that, that then gets offset respectively to... Like, it's not like a loss, it's just, it's just based on the economy that it gets offset to respectively the next year. So it doesn't actually affect, you know, the long term outlook of what we got. So John, it doesn't change the size of the order book. You know, we're still on track for the SOP target dates that our customers wanna be on. And so you just need to make it to there and then, you know, start converting the order book into real annual revenue. And so these bumps on the roads that we're hitting there don't impact that. And some of the revenue lightness we experienced in Q3 is related to, I would say, you know, a couple things, particularly with these issues. One, we had to move some of our LSI engineers off revenue for external projects to help, you know, implement some of these design changes. And so, you know, that's revenue where, you know, didn't come in during this quarter, when those engineers free up and work on it, you'll get that in the future. And then, you know, the way that we account for the revenue we receive for the development work, it's based upon percentage completion. And so, we're still gonna recognize the same amount of revenue. You just, because of percentage completion methods, have to recognize less in this specific quarter. You know, as your cost goes up, your percentage of completion goes down. Okay, thanks for that. And then just one quick follow-up here. You know, as it, you know, pertains to the next generation LiDAR, how much of that investment has already been made versus how much is still left to be done? And then also, how aware have you made OEMs of this product, its capabilities, et cetera, and has this flowed through into your order book at this point? Yeah, so I think we're really just starting to successfully get that off the ground of where we've spent years worth of work on the back end from a technology development standpoint creating the fundamentals of what's there. So, you know, I would say I mean, the majority of the time and investment for what's required to create the fundamentals of the technology for the next-gen LiDAR is already done. The real question at this point is, you know, being able to progress throughout this coming year to get to a stage of where we can really set this up to be a LiDAR system that can fundamentally be on every vehicle produced. You know, and that's really the goal, is that, you know, we talk about standardizing and democratizing safety and autonomy. You know, I think we recognize that as fantastic as the products are today, you know, that it's meant for millions of sensor scale, not, you know, tens of millions, you know, of sensors in terms of respective scale that we can be able to get out there with. And this is exactly what this is designed for, so we can really capture the larger automotive industry and also not just, you know, the initial vehicle launches that some of these automakers have, but also when you start going towards, you know, even very mainstream vehicle models as well, this will be particularly helpful. So that's really what we're seeing. And then when it comes to-... that investment standpoint, I mean, you take a look at, like, most of the investment is actually goes into these, into the infrastructure that's required for both development, as well as, you know, the, call it, the manufacturing infrastructure and getting those set up, getting that set up right, to be able to successfully produce this. And that's really what we've been doing, in partnership, of course, with Celestica and TPK, respectively. So setting that groundwork is very, very helpful. The level of efficiency, I'd say just from a development cost perspective is, you know, dramatically higher, for each iterative product, thereafter. It's and that's something that's also particularly helpful when we have the economies of scale and the supply chain to be able to support it. If you didn't have that, with, like, billions of dollars of business and you know shipping, being able to have a you know 1,000,000-unit supply chain along the way, then that's a very different scenario and outcome than if we did, and that's what we're able to leverage successfully. So with that said, there's more work to do, obviously, on this, but we're very excited to have an opportunity to unveil details respectively next year about the next generation product. Then, John, while we haven't been talking a lot publicly about the details of our next generation product, we have been talking about it with some of our customers. With your question about order book, there was nothing for our next generation product in the order book at the end of last year. I'm pretty confident some of the positive growth you'll see in the order book this year will include you know some portion of it from our next generation product. As Austin said, we'll talk about that in the future and hopefully near future here. Yeah. Thank you. Appreciate it. Our next question is going to come from Natalia Winkler at Jefferies. Hi, thank you for taking my question. So the one I just wanted to clarify, Tom, on those two contracts that you highlighted in the, in the letter that had been pushed up, could you explain a little bit more, how do these work? And also maybe part of that, like, how should we think about that sequential growth that you guys are seeing, you know, in the revenues in the fourth quarter? Yeah. So Natalia, there were two contracts in particular that were supposed to get done in Q3. You know, they, you know, one of them is actually done, you know, it got done in October instead of September. The other one is, you know, gonna be get done here, I would say, in the coming days. And so, you know, once again, that's just revenue that we'll start to recognize in Q4 as opposed to Q3. When you kind of look at where we ended up in Q3 from a revenue perspective, and then you look at kind of what the implied Q4 revenue is, it's about $10 million of additional revenue. Of that $10 million of additional revenue, about 70% of that is, I would say, coming from contracts that we've already executed. And so we feel pretty good about that strong sequential growth from Q3 to Q4. And most of that revenue, we kind of already have locked and loaded in contracts that we've executed. Understood. Thank you. That would be like, what? I mean, over 50% growth from Q3 to Q4. Yeah, I would say 10/17, I think it's somewhere around 60%, but, you know, don't have my calculator with me. That's very helpful. Then the second question I had was kind of a little bit longer term strategic. Just wondering if you guys could provide some more color on the China market, right? Like, what kind of competition are you seeing there, and how do you think, you know, how do you consider those dynamics of Chinese OEMs maybe getting incrementally more successful in Southeast Asia and Europe? Does that basically kind of change your view on the opportunity going forward? Yeah, look, we are, you know, the China market, I would say, is moving very fast, both in terms of, the automakers there adopting, LiDAR technology, particularly some of these new, EV companies, I would say, as well as, as the pace, at which Chinese companies move. And so, from a Luminar perspective, one of the things that's very important to us is to kind of be able to move at that China speed, to make sure, you know, that we can continue to win in that market. You know, we've so far been, you know, really the only Western LiDAR company that's had success in China, and, you know, we think that that success is gonna continue. You know, we need to, you know, make sure that we operate in China in the right way to make sure that we can appropriately serve the local Chinese customers, both in China, but as they start to serve their, you know, as they start to expand globally. That's why the second manufacturing plant we opened up is in China with TPK, and I think you're gonna continue to see us, you know, increase our business in China as well as our presence in China. Thank you. And if I may, well, just one follow-up on this. How do you guys think about ASPs longer term, you know, for, for China market and, and outside of China market? And also, like, how should we think about the ASPs that you guys are considering for the order, for the order book, the, the $1 billion order? Whatever's in the order book is already at, you know, pricing agreed to with our customers. And so that's kind of, you know, already contractually put in place. You know, look, we're always gonna get pressure from our, from our customers, and automakers, whether they're in China or globally, to lower our prices. But the one thing that we continue to impress upon with our customers is you gotta look at the value that our LiDAR provides. And that's both in, you know, in terms of unique technology to enable this next generation ADAS system, as well as Highway Autonomy. You know, we'll continue to be able to bring our costs down with our next generation LiDAR, but really, the value that we create in the ecosystems where we'd like to, you know, focus the conversations on. You know, we tend not to compete on, you know, business where it's, you know, who can provide the cheapest cost LiDAR. We like to compete on business where who can provide the best value to the system that our customers are trying to build in. ... I think it's also very important to note that, and again, this is, we're obviously the foundation business has been alive, but we've really been focused on how we continue to monetize the ecosystem around this through, you know, our software and AI developments that we've had, you know, seen some success with, through, you know, for example, these mapping products that, you know, we've now been able to be out there with, through all the different parts of the entire supply chain. These are all the way down to the semiconductor level, you know, the LiDAR and how we've been able to successfully sell those products even just outside of what we do with the core business. So, you know, I think that, that's important as part of this. Ultimately, insurance will play a significant role, in I think supporting very significant long-term ASPs associated with safety improvements, where the safety improvements will ultimately be king when it comes to the kinds of value proposition that you can be able to provide. And this is where we are also, and, and are successfully launching, a new test protocol and system. This is actually, Swiss Re is going through an independent third-party test. They're our, you know, exclusive insurance partner. So to be able to quantify the benefits, and safety improvements, what the LiDAR can have, to be able to basically correlate that into respective insurance savings and costs. And, you know, I've said, you know, multiple occasions before that the respective savings and value that's being provided, from that alone, from a safety savings standpoint, you know, it expected to be significantly more than even just the entire cost of the LiDAR, in and of itself. So I think this will be, you know, certainly on premium vehicles and even mainstream vehicles. So, accidents are expensive, vehicle collisions are expensive, and even if you average over time and probability weight, it's extremely expensive. So preventing that makes a huge difference. And that's why I think, it's very clear that over the long term, from a value proposition, the ASP standpoint, it all comes down to the technology of the product in terms of, you know, what can be supported. That's why we're obviously proud to be the leading technology company in that respect and have the performance capabilities for why we're seeing all this leading adoption, you know, from the top automakers out there. Thank you for alluding to. Thanks, Natalia. We're gonna transition back to some questions from our investors. The next one is going to be for Austin. Going by three-year design cycles, 2024 RFQs will be for the 2027 model year. Will these RFQs be pitched with the next-gen LiDAR? Yeah. So I would say that, you know, when we're talking about the second half of the decade here, absolutely, that, you know, that will incorporate our next generation LiDAR as well. You know, we have Iris and we have Iris+, that are, you know, continuing to scale accordingly, you know, with automakers as well, so that's not stopping. But when it comes to the next generation systems and models, you know, that'll ultimately streamline in, into the respective roadmaps of the customers. For both existing customers and new customers, we're also making sure that the sensors are, so to say, you know, backwards compatible, as it relates to this respective automakers as well, to make sure that, you know, ultimately, when as they launch new models and whatnot, they can have an easy and straightforward transition with both the hardware and software, respectively, to the new sensor technologies that we have. So that's, yeah, will be great to be able to see that realized. And, you know, I would just say as well, you know, there's obviously, you know, RFQ processes and, and, and whatever it may be, that's there. But I think what's our RFQs are cheap, you know, to be able to send out. What's important is that the automakers that are investing, you know, billions of dollars with us to be able to develop these kinds of new holistic systems and deployments that can go out onto their production vehicles and sort of show what's possible when it comes to the implementation of this technology. And that's really what we're seeing and gonna continue to emphasize on. So it should be a smooth transition, ultimately, as people scale, and that will unlock, as I was alluding to before, even wider spread, you know, adoption of these kinds of capabilities. A follow-up question for Tom from one that was asked earlier, what specific risks are present given Luminar's participation in the China market and the U.S. crackdown on sensitive technology? Yeah. So, you know, I already talked about how important China is to us as a market, as well as some of the success we've had over there. And, you know, we acknowledge that the world is becoming a more dynamic and complicated place from a geopolitical tensions and relationships perspective. And so, you know, as we continue to build and expand globally, you know, we need to keep that in mind, you know, as we grow. Having said all that, for our core LiDAR business in our core automotive market, there are no limitations on us to operate anywhere in the world. And we don't see that changing anytime in the near future. You know, there are, I would say, obstacles, more on the software data collection mapping side, depending upon, on, on the specific region, you know, and, and where we do face those, you know, limitations in a certain geography, we look to partner with the right people. But on our core, LiDAR business and our core automotive market, you know, our goal is to be a major automotive player. And, you know, in order to achieve our goal of saving 100 million lives over the next 100 years, we need to be in every major region, with our LiDAR technology. I think the risk is actually more the other way around in terms of not, you know, it would be less so the U.S. not allowing technologies into China or China not allowing U.S. technologies into China, it would be the U.S. not allowing Chinese technologies into the Western market. I think that's those are some of the dynamics that we're actually, you know, that I think those are the questions that are being posed, and I'm sure everybody has seen. So that's the relevant factors I think at play right now. Next one from retail shareholders before we switch back to the sell-side analysts. LiDAR technology is evolving to a place where competitors are making similar products for cheaper. Based on your current assets, what's the long-term plan to deal with saturation in the LiDAR market? And are there plans to broaden R&D into other related technologies? Yeah. So, you know, I mean, and so you're saying is that sat-- What, what about the saturation for the LiDAR market? Or you're saying are- I think- There's, like, a lot of LiDAR companies, you know, a lot of them are racing to the bottom, like, you know- Yeah. Here's what I would say. You know, when it comes to, you know, getting our LiDAR price, you know, getting our LiDAR to a price point where it accelerates mass market adoption, you know, that's a core tenet of our, of our next generation LiDAR, and making sure that it is at a cost point, where it can, you know, penetrate the, the mass market at a rate. So in terms of, you know, you know, keeping the same technology and then not better at a lower price point, we achieve that strategy with our next generation. You know, we are confident, that we are gonna be a winner, if not the winner, in, in, in the LiDAR landscape. You know, what we're investing in outside of our LiDAR business is not to create a hedge, you know, in case we're not successful. It's actually to build those tools to monetize the value that we create. That's why we're getting in the software. That's why we're getting into mapping. That's why we're getting into insurance. And that's why we're, you know, selling the components that we make in our LSI business for our LiDAR into the non-automotive markets. And so, you know, we're confident that our next generation LiDAR is gonna have the price point to accelerate the mass adoption, and we're confident we're gonna be a winner. We're confident that the tools that we're investing in are gonna allow ourselves and our customers to monetize the value of the ecosystem that we create. And I think the important part here is, like, when we say saturation for everything, like, the relevant factor here... And again, we have to take a step back, although, like, the numbers in this automotive and in this industry, and just the sheer scale is absolutely massive. That's why, you know, as we talked about, it's like, okay, just, you know, 3%-4% market penetration can be game changing in terms of, like, increasing the value and business value by, like, orders of magnitude. Because, like, the point is that right now it's not like, you know, 75% of cars are shipped with this, like, new technology on it, and it's a $1 trillion industry right now. You know, it's something that, well, less than, like, only a fraction of 1%, you know, of cars and even, like, what the number, the percentage of the market of cars that LiDAR is officially being actively integrated into, you know, in terms of the vehicle models right now, is still, you know, what, like a couple percent. So, you know, and most of it is probably captured by us. So I think the thing is that when you take a look at the overall market opportunity, it's not a matter of oversaturation at this point. There is an oversaturation of R&D efforts that in terms of people trying to create different systems and technologies to be able to get into the market, at which obviously the substantial and vast majority of which all have not been successful in that, which is maybe no surprise and consistent with the methods that we've given for years. That's in terms of the challenges and difficulties associated with this, much less meeting the performance requirements and specifications, safety requirements, and being able to scale a business accordingly to do this. But when it comes down to it, I think it's less about the slice of the pie, you know, at this point, about how big can we make this pie and how much adoption can we get as an industry, how quickly? I think that's the most important metric. Now, when it comes down to it, the other relevant factor is you have to survive, to see this through. And that's where—like, 'cause, like, obviously, if you don't, if you don't survive, then, you know, there's, there's no market penetration on, on anything. But this is where I think that consolidation factor obviously serves as an advantage, you know, to us, in, in that respect, you know, in terms of the long-term outlook for what we can do. But, you know, we're building Luminar to last for decades, you know, and hopefully, well over that 100 year... I mean, there's a reason why we have a 100-year goal. The goal is to have it be a long-term company that outlives ultimately all of us and do towards realizing that life-saving objective and being on all of these, you know, vehicles for decades or centuries to come. So I think that's really what we're doing. In the immediate term, the focus is to continue to meet those respective goals, those milestones, you know, survive it through, and, you know, that's exactly what we've been set up for success and deliver on what we promised that we would do from the beginning. Next question comes from Jaime Perez at R.F. Lafferty. Hey, everybody. How's everything going? Thanks for taking my question. I know you've spoken a lot about Volvo and Mercedes. How about one of the other customers, Polestar? I think a couple of months it was announced that a Polestar was gonna be equipped with LiDAR, Luminar LiDAR. But, I mean, Polestar has a pretty aggressive series of models coming out from the Polestar 5, 4, 5, and 6 coming out. So could you tell me... Give a little bit color on the relationship between you guys and Polestar and the outlook for that, you know, relationship? Yeah. So Polestar is great, and, they're, like, a fantastic company. They've been producing some, you know, very real product and starting to really scale that up successfully. And, you know, first with tens of thousands of deliveries, now going into hundreds of thousands of deliveries. You know, very impressed, as a, as a company in terms of what they're able to do in, in that quote-unquote "new new world EV company." You know, obviously there's, like, the Lucids and the Rivians and everything out there. You know, we had to sort of pick one up to be able to start out with. You know, again, in terms of just focusing our resources, I think Polestar was the best partner to be able to do that and gives us the biggest kind of revenue and order book opportunity associated with the business and contracts there. So, so I think it's, it's, should be public out there with the following announcement that we had with the Polestar 3 and the Polestar 5, in terms of what they're, what they're planning with us. And again, just incredible partner, incredible team on this. I, I would suggest and, you know, everyone here should, you know, tune in for, for Polestar Day as well. They actually, they have it out, what's going on tomorrow. So it'll be, it'll be great. All right, thanks for the question. Absolutely. Thank you. Thank you. Our next question is gonna come from Mark Delaney from Goldman Sachs. Yes, good afternoon. Thank you very much for taking my questions. I'm hoping you can give some more color on the path to being gross margin positive next quarter. Maybe, Tom, you can help us better understand how much of the COGS in 3Q were launch-related costs and where those launch costs may go to in the fourth quarter, and then what the other factors are sequentially to bridge to being at positive gross margin in 4Q. Yeah, we had about a $9 million gross loss during Q3. Of that, about $17 million was launch-related costs. That was down from about $24 million in Q2. And so the path there is to really continue to bring those launch-related costs down so that we reach a gross gross margin positive in Q4. That, that's helpful color. My second question was just trying to better understand, is there any work Luminar still needs to do in order to help Volvo get ready for the launch of the EX90? Or is everything you guys need to do now ready after having successfully done the Run-at-Rate test? And then maybe just more broadly, you know, operationally, what does Luminar need to do in order to be flexible, depending on when that vehicle may launch, just, you know, in light of some of the delays Volvo encountered on their side, but hopefully will be resolved soon? Yeah. So I mean, we're working with them obviously hand in hand to be able to ensure a successful launch on that. I'm sure, you know, probably maybe more appropriate to ask them in terms of the details there, but, you know, we're supporting with everything that we had. We also... There's the hardware side, you know, that we have for the Run-at-Rate, that we successfully did with them, and then there's also the software side, which I think we also said that we completed the successful integration of the software with the Zenseact system and middleware, associated on the vehicle. And then on top of that, you know, you, we actually now successfully implemented everything that it takes to be able to actually, when you have the sensor then on the vehicle, on the production line, in this case, it started out in Charleston, South Carolina. The full end-of-line calibration, all the, you know, intrinsic and extrinsic metrics and auto calibration associated with that specific factory and line, that will, you know, then scale from there on out. So, we're in a great position to be able to support, you know, as they, as they successfully launch. You know, obviously, Iris, as a product, is independent of just Volvo alone, like Volvo is the first kind of global large scale launch that we have with this, that we think is that very clear inflection point. And this Run-at-Rate was really that fundamental milestone of what's needed to support. So, you know, we're excited for this. You know, obviously we've already we have, you know, dozens of customers that, you know, use Iris, but this is where it starts to get in the big leagues when you, you know, you have hundreds of, you know, hundreds and thousands of Luminar-equipped cars driving around, and then ultimately, you know, scaling to millions and beyond, you know, with for Mercedes and everything they're out. That's great. Thank you. All right, we'll transition back to a few from our investors. The next one is: How does Luminar think about accountability in terms of recent business performance and financial losses? Are there any review processes for unsatisfactory performance? I assume these are the same questions for the retail platform? Yes. Great. Thank you. Yeah, so, you know, I would say from an accountability standpoint, you know, we have a high performance culture and, you know, management within that culture. I think that's something that, you know, we've structured Luminar very much as a meritocracy on this. You know, and, I think it's, it's a sink or swim type of approach as people come in and certainly can attest to it in terms of what what needs to be done or what you should do to be able to make that happen. But when it comes to the overall goal, like, when talking about accountability and the overall goals and everything, I mean, I think we've in terms of the business goals, for what we set out in terms of key corporate company level milestones that we had for 2020, 2021, 2022, and 2023, I mean, we've effectively achieved all of those respective milestones that we've laid out. You know, plus or minus, we actually beat, you know, many of them along the way in terms of, you know, what we laid out from the beginning, and overall have set up as a business to put us on a great trajectory there. So like, you know, obviously overall from a performance standpoint, that's been fantastic. You know, we all know the frustrations with respect to the capital markets on that and reflecting that execution and success. But when it comes to the actual core business performance there, you know, we have the relevant KPIs, you know, that each respective leader in OKRs that we have, and that cascades down throughout the entire company that rolls up to that. And like I said, we've largely met those along the way. So, I think nevertheless, again, I have the saying internally, it's gonna never stop at good enough, and that's something where we always keep pushing the bar and keep pushing the boundary of what's possible and what's achievable in this company, and we'll continue to do so with everything that we got into the foreseeable future. All right, and our next question from one of our investors: There's been some rumors and some talk about some management turnover within the company, including Taner Ozcelik and Jason Eichenholz. Can you provide some color or comment? Yeah, the Jason Eichenholz, that's fake news. Jason, he's been a key part of Luminar as our co-founder since the beginning. He has been, is, and, you know, in my mind, always will be a critical part of our team. You know, Jason, I don't know where that rumor came from. You know, he's at Luminar. He's chair- No, no, I think I know. It's probably because, you know, people like this, you know, they wear different hats in the business along the way, in terms of the business cycle and journey and all this. So, you know, we recently appointed him as the Chairman of the Luminar Semiconductor. So, you know, he, he's basically overseeing that side of it. When it comes to, you know, the operational aspects of the business, you guys may be aware, we recently hired, you know, Kevin Hinz, who's been taking charge of the respective operations and scaling of some of the core aspects of the business. And, you know, he's been already off to the races for an incredible start. So that's been fantastic. We actually have as well, I think at the same time that we announced him, we also announced Emily, who's here, who you know came from leading our marketing and, you know, was doing so leading the respective marketing at SpaceX before. But as it relates to Taner, yeah, he's no longer with the company. So, that's where, you know, we're thankful to have Kevin to be able to come on and take the reins of some of those responsibilities. Okay. Our next question we are gonna take from Kevin Cassidy at Rosenblatt. Okay, thanks. You know, maybe if you could remind us or maybe tell us, so what the strategy is for expanding your footprint in other models that your current customers say at Volvo and Mercedes and Nissan, you know, how do you get into more models, and what would be the timeline for that? You know, Kevin, we've already started to do it, you know, at you know Volvo. We did it at Mercedes. You know, we've done it at Volvo, we initially had the three, and then we went to the five earlier this year. And so, as you get in with that initial win with the customer and continue to execute, it kind of happens naturally. Now, look, they're always gonna make sure that you know, you're being honest and competitive on pricing, and so they'll run RFQs to kind of test the market and keep you honest. But as you execute, as you deliver, as you build the relationship, as they kind of design their software and autonomous systems around you, you execute, you have a, you know, a real good shot at the next business. The, you know, that business comes as they renew certain vehicle lines or, you know, renew the platforms. And so the, you know, the timing of that is more driven by kind of their product launch cycle. But I think you're gonna see us, you know, we've done it already, and I think you're gonna continue to see us expand our business with our existing customers. And, you know, I think the timeline on that's gonna vary depending upon the customer and what their internal timelines are for each of their different products. Yeah, like, the perfect example of that is, like, Mercedes, right? You know, where we start off, like, you know, with one, one vehicle line, you know, and one vehicle model, you know, it's like an S-Class. Okay, this is a high-end thing, it's always, you know, it, it's real volume, but, you know, it's only, it's only so much, you know, there. And you see it, you know, an expansion by, like, 20x in terms of the respective volume and across the vehicle models and lineup and everything as they continue to see our successful, you know, technology execution and the details around that, to be able to, to make that decision, six months ago, to be able to really expand it across there. And once they're in, you know, you're in to be able to make that, make that happen. Now, obviously, these vehicles do ultimately have some kind of respective lifetime, as Tom pointed out, you know, but these are like, you know, five-10-year cycles, you know, on the platforms there. So that's really why also we have such confidence around, you know, the respective order book and contracts, that we can scale the company with. Okay, great. Yeah, that was my next question, was around the competition, and even if they change their domain controller, you're in with all the different domain controllers, so it wouldn't matter much to you? Yeah, well, you know, look, we, we try to plant as many seeds in the market as we can, whether it's directly with the automakers or some of the large tech, you know, system companies, whether that's NVIDIA, Mobileye, what have you. And, you know, we think that that's gonna maximize the at bats and, you know, ultimately, the wins we get in the industry. Okay, great. Thanks. Thank you. I think with that, we are through most of our research analyst questions. Before we get to our final question from the investor community, we do wanna make a note that we received many great questions through all of our platforms this quarter. So considering we could not get to all of them within the 60 minutes that we had, we will look to provide answers and commentary through other mediums in the future. But with that, our most popular question coming through the Say platform that's pretty repetitive: The stock has been moving in one direction for much of the last two years. While it's not unusual for a startup, there still seems to be little information on what Luminar is doing, developments, partnerships, or other news. What is management's strategy to raise confidence in the future? ... No, I think it's a great question around all of this and the broader capital markets. You know, this, of course, what's in our control and what we've really been focused on is execution to the key milestones in terms of what we laid out. From those past couple of years, you know, we've largely executed to. You know, we are going to continue to be able to execute along the way with this. When it comes to, you know, current updates, news, everything, we're always welcome to feedback in terms of, like, frequency level and what we can do in terms of further insight into the business. These are also. You know, as we kind of think about some of these things, this is, like, one of the drivers, for example, why, you know, Swiss Re started to help commission this, you know, independent study of the efficacy of the technology in terms of, you know, how you quantify the respective safety benefits associated with this versus, you know, say, the, like, just how much substantially better is it than the existing assistive driving systems? Just how much better is it? You know, how do you sort of force the hands of automakers as well, to be able to ensure that their cars aren't, you know, unnecessarily taking lives out there. So I think this is where it's really important to be able to, you know, obviously continue to share different aspects of it, where, again, we're always open to feedback. When it comes to, the overall business and the key thing that we really have confidence in, is that, you know, we have this long-term view and outlook that I think is as strong as ever. In terms of this, nothing. For example, even just, you know, and I think, Tom noted this in the, in the shareholder letter, there's obviously been an insane amount of volatility. I think it was, like, a 50% difference in the, like, the market trading, where it was this quarter versus literally what it was three months ago. Like, nothing has fundamentally changed in our business, but, like, there's, like, arbitrarily different value, implied valuations there that, you know, are irrational, and it's gotten to a point of where there's just a complete market dislocation in, you know, implied value relative to fundamental value of what we had and what we delivered. I think the point is that at some point, as you continue to execute on this and really prove this out, there's a reversion to rationality and reversion, you know, to the mean on that in terms of what you can do. Obviously, like I said, it's impossible to predict every hedge fund short, so you know, and market dynamic and order flow, and everything that goes along the way. But what is absolutely relevant and what we have the very clear commitment and promise to be able to do, is to be able to execute, to be able to meet these longer term targets, as well as our nearer term targets, too, for that matter, to support that. And that's what we're really all in to be able to make successfully happen. So I think there's really no two questions about this, that we can build this, you know, into, hopefully, one of the most, you know, valuable businesses or technology companies of our generation and, you know, in the industry as we do this and do this right, and I don't think that's a doubt in anyone's mind. Obviously, the key consideration here is having greater credibility around these different aspects and key metrics. For example, I think one thing that we'll take a look at is that how we can get greater confidence in terms of people's view and ability around, like, say, for example, the order book metric. I think, as it stands right now, take, for example, from a capital markets perspective, we're probably getting little to no credit, you know, respectively for our order book, if we're, if we're valued at, even just a fraction of that order book alone, you know, at this point, in terms of implied value. So it, which is, is kind of a joke. So then the question is, is that how can you instill further confidence? Use that one-to-one conversion in terms of what happens in the order book to what ultimately makes its way into the company's revenue? What does that path look like as you continue to execute? How do you continue to scale all these different aspects of the business? And, you know, not just the LiDAR, but beyond the LiDAR itself. And, you know, try and leave little nuggets all along the way, like, for example, this great partnership that we have, you know, with Gatik, you know, that we have that, you know, I, I don't know if anybody asked a question on that, but that's something that's in that, in the shareholder letter that we have in there. You know, we'll be now delivering our product to great customers like, you know, the Walmarts and Krogers and, you know, everything in the world for the next generation vehicles. So, you know, I mean, we're doing stuff, the intermediate steps along the way, but when it comes to long-term outlook, you know, that's where we're gonna continue to emphasize and really just be all in to help support. We're doing everything to be able to make this as big of a success as we all know it can be and will be. All right. With that, I think we are at the top of the hour. We would like to thank everyone for their participation on the call and the great questions submitted. We look forward to seeing everyone at our next quarterly business update, and we thank you for your continued interest in Luminar. Thank you, everyone. Goodbye.