SAN JOSE – November 8, 2022 – Velodyne Lidar, Inc. (NASDAQ: VLDR, VLDRW), a leading lidar company known worldwide for its broad portfolio of breakthrough lidar technologies, today announced financial results for its third quarter, which ended September 30, 2022.
“We delivered another solid quarter, experiencing strong demand while making significant progress on initiatives to improve our gross margin and lower our cost structure,” said Dr. Ted Tewksbury, CEO of Velodyne Lidar. “Our growing customer traction across multiple markets, as evidenced by the agreements we have recently announced, further validates Velodyne’s position as a go-to supplier of affordable lidar solutions that deliver the performance needed to navigate complex indoor and outdoor industrial and factory settings. The acquisition of Bluecity further bolsters our ability to deliver end-to-end system solutions by integrating software and hardware, providing us with a competitive advantage in multiple end markets.
“A critical element of our previously announced gross margin improvement plan was the transition of Velodyne’s production to our contract manufacturer in Thailand, which is progressing on schedule,” continued Dr. Tewksbury. “We also implemented a cost rationalization plan in the third quarter to better align our operating expense structure with revenue expectations. We saw an initial benefit from these actions in the third quarter and expect further improvements in the coming quarters.
“In addition, yesterday we announced a proposed all-stock merger with Ouster to accelerate the adoption of lidar in fast-growing global markets while strengthening our financial position,” continued Dr. Tewksbury. “The transaction is expected to be completed in the first half of 2023, at which time I will serve as Executive Chairman of the Board and Ouster’s CEO Angus Pacala will serve as CEO. As one combined company, we expect to unlock significant synergies in order to scale and deliver industry-leading solutions for customers while accelerating time to profitability and enhancing value for shareholders.”
A reconciliation between GAAP and non-GAAP information is provided in the tables below.
Demand remains robust across our entire business. We expect billings for the fourth quarter to be between $13 million and $15 million and revenue to be between $12 million and $14 million. The difference is due to estimated non-cash contra revenue of up to $1 million related to the Amazon warrants.
“Our gross margin improvement plans are in full motion and, when combined with the company-wide cost rationalization efforts, we are reducing cash usage and driving toward breakeven,” said Dr. Tewksbury.
Velodyne will host a conference call and live webcast for analysts and investors at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time today, November 8, 2022. Participants in the United States and Canada can access the call by dialing 844-890-1797 or 412-317-5487. The live and recorded webcast will be accessible on Velodyne’s investor relations website here. A telephonic replay of the conference call will be available through November 22, 2022. To access the replay, parties in the United States should call 1-877-344-7529, in Canada 855-669-9658 and internationally 412-317-0088 and enter the passcode 8759187.
The third quarter of 2022 includes the accounting for the warrants associated with the Amazon agreement that was announced on February 4, 2022. The primary impact for the accounting of the Amazon warrants is that reported revenues will diverge from cash flow.
As a result, Velodyne is expanding the financial information provided by including a billings metric. Billings represents the dollar value of products and services provided during the current period and invoiced to the customer. Management uses this metric to track commercial growth, establish performance targets and make budgetary and operating decisions. Billings excludes the effect of the contra revenue recognized in connection with the Amazon warrants.
In addition to our results determined in accordance with generally accepted accounting principles in the United States (GAAP), we believe the non‑GAAP measures of non-GAAP gross profit (loss), non-GAAP gross margin, non-GAAP operating expenses, non‑GAAP operating loss, non-GAAP net loss and non‑GAAP net loss per share are useful in evaluating our operating performance. Certain of these non-GAAP measures exclude a discontinued product line, inventory reserves and losses related to a product transition, terminated contract expense, stock-based compensation and related employer payroll taxes, litigation settlements and amortization of acquisition-related intangibles assets. We believe that non‑GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non‑GAAP information to supplement their GAAP results. The non‑GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non‑GAAP measures used by other companies. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures are used in this press release.
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and market positioning. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including: the impact on our operations and financial condition from the effects of the current COVID-19 pandemic both on Velodyne’s business and those of its customers and suppliers; supply chain issues in the semiconductor market; Velodyne’s ability to execute its business plan; the timing of revenue from existing customers, including uncertainties related to the ability of Velodyne’s customers to commercialize their products and the ultimate market acceptance of these products; uncertainties related to Velodyne Lidar’s estimates of the size of the markets for its products and future revenue opportunities, including projects that are not yet signed or awarded; charges related to the vesting of the Amazon Warrant; the rate and degree of market acceptance of Velodyne Lidar’s products in a variety of industries; the success of other competing lidar and sensor-related products and services that exist or may become available; rising costs adversely affecting Velodyne’s profitability; uncertainties related to Velodyne Lidar’s current litigation and potential litigation involving Velodyne Lidar or the validity or enforceability of Velodyne Lidar’s intellectual property; the risk that the proposed merger with Ouster may be delayed or not occur at all for a variety of reasons, including the failure of either party to obtain a shareholder vote or delays in obtaining such vote, or termination of the agreement by either party under customary termination rights; disruptions to our business during the pendency of the proposed merger, including management distraction as well as the response of business partners and employees; the risk of negative publicity and litigation as a result of the proposed merger; the diversion of management time in connection with the proposed merger; customary operating covenants in the merger agreement that limit Velodyne Lidar’s ability to engage in certain actions without the consent of Ouster (which shall not be unreasonably withheld); the risk that the combined company may fail to realize the anticipated benefits and cost savings from the merger; Velodyne Lidar’s ability to partner with and rely on third party manufacturers; general economic and market conditions impacting demand for Velodyne Lidar’s products and services; and changes in applicable laws or regulations.
Given these factors, as well as other variables that may affect Velodyne Lidar’s operating results, you should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, or use historical trends to anticipate results or trends in future periods. The forward-looking statements included in this press release relate only to events as of the date hereof. Velodyne Lidar undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Darrow Associates, Inc.
Velodyne Lidar
Jane Maynard
VELODYNE LIDAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| September 30, | December 31, | ||
| 2022 | 2021 | ||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $ 51,487 | $ 24,064 | |
| Short-term investments | 168,570 | 270,357 | |
| Accounts receivable, net | 6,129 | 8,881 | |
| Inventories, net | 11,498 | 9,299 | |
| Prepaid and other current assets | 8,201 | 14,822 | |
| Total current assets | 245,885 | 327,423 | |
| Property, plant and equipment, net | 11,684 | 14,710 | |
| Operating lease right-of-use (ROU) assets | 16,727 | 16,891 | |
| Goodwill | 1,189 | 1,189 | |
| Intangible assets, net | 402 | 724 | |
| Contract assets | 9,182 | 12,962 | |
| Other assets | 851 | 1,522 | |
| Total assets | $ 285,920 | $ 375,421 | |
| Liabilities and Stockholders’ Equity | |||
| Current liabilities: | |||
| Accounts payable | $ 5,001 | $ 5,105 | |
| Accrued expense and other current liabilities | 31,074 | 33,028 | |
| Operating lease liabilities, current | 3,062 | 2,623 | |
| Contract liabilities, current | 5,456 | 6,348 | |
| Total current liabilities | 44,593 | 47,104 | |
| Operating lease liabilities, non-current | 14,674 | 15,210 | |
| Contract liabilities, non-current | 9,841 | 12,740 | |
| Long-term tax liabilities | 459 | 443 | |
| Other long-term liabilities | 814 | 661 | |
| Total liabilities | 70,381 | 76,158 | |
| Commitments and contingencies | |||
| Stockholders’ equity: | |||
| Preferred stock | — | — | |
| Common stock | 23 | 20 | |
| Additional paid-in capital | 877,935 | 825,988 | |
| Accumulated other comprehensive loss | (1,103) | (412) | |
| Accumulated deficit | (661,316) | (526,333) | |
| Total stockholders’ equity | 215,539 | 299,263 | |
| Total liabilities and stockholders’ equity | $ 285,920 | $ 375,421 |
VELODYNE LIDAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||
| Revenue: | |||||||||
| Product | $ 7,442 | $ 9,652 | $ 11,782 | $ 21,456 | $ 34,345 | ||||
| License and services | 2,199 | 1,855 | 1,278 | 5,872 | 10,037 | ||||
| Total revenue | 9,641 | 11,507 | 13,060 | 27,328 | 44,382 | ||||
| Cost of revenue: | |||||||||
| Product | 20,353 | 18,347 | 17,716 | 53,896 | 52,555 | ||||
| License and services | 165 | 257 | 84 | 689 | 433 | ||||
| Total cost of revenue | 20,518 | 18,604 | 17,800 | 54,585 | 52,988 | ||||
| Gross loss | (10,877) | (7,097) | (4,740) | (27,257) | (8,606) | ||||
| Operating expenses: | |||||||||
| Research and development | 16,918 | 18,757 | 20,221 | 56,972 | 55,608 | ||||
| Sales and marketing | 4,878 | 5,340 | 6,547 | 16,223 | 60,798 | ||||
| General and administrative | 9,583 | 13,430 | 23,271 | 35,330 | 59,440 | ||||
| Total operating expenses | 31,379 | 37,527 | 50,039 | 108,525 | 175,846 | ||||
| Operating loss | (42,256) | (44,624) | (54,779) | (135,782) | (184,452) | ||||
| Interest income | 732 | 294 | 109 | 1,253 | 321 | ||||
| Interest expense | — | — | (6) | (3) | (83) | ||||
| Other income (expense), net | 2 | (110) | (22) | (104) | 10,097 | ||||
| Loss before income taxes | (41,522) | (44,440) | (54,698) | (134,636) | (174,117) | ||||
| Provision for (benefit from) income taxes | 41 | (141) | 14 | 347 | 649 | ||||
| Net loss | $ (41,563) | $ (44,299) | $ (54,712) | $ (134,983) | $ (174,766) | ||||
| Net loss per share: | |||||||||
| Basic and diluted | $ (0.19) | $ (0.22) | $ (0.28) | $ (0.66) | $ (0.91) | ||||
| Weighted-average shares used in computing net loss per share: | |||||||||
| Basic and diluted | 213,518,699 | 198,947,058 | 196,204,671 | 203,504,556 | 192,835,674 | ||||
VELODYNE LIDAR, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||
| Gross loss on GAAP basis | $ (10,877) | $ (7,097) | $ (4,740) | $ (27,257) | $ (8,606) | ||||
| Gross margin on GAAP basis | (113) % | (62) % | (36) % | (100) % | (19) % | ||||
| Discontinued product line | — | 2,151 | — | 2,151 | — | ||||
| Inventory reserves and losses related to product transition | 4,608 | — | — | 4,608 | — | ||||
| Terminated contract expense | 2,436 | — | — | 2,436 | — | ||||
| Stock-based compensation and related employer payroll taxes | 565 | 767 | 545 | 1,860 | 1,807 | ||||
| Gross loss on non-GAAP basis | $ (3,268) | $ (4,179) | $ (4,195) | $ (16,202) | $ (6,799) | ||||
| Gross margin on non-GAAP basis | (34) % | (36) % | (32) % | (59) % | (15) % | ||||
| Operating expenses on GAAP basis | $ 31,379 | $ 37,527 | $ 50,039 | $ 108,525 | $ 175,846 | ||||
| Terminated contract expense | (1,064) | — | — | (1,064) | — | ||||
| Stock-based compensation and related employer payroll taxes | (4,370) | (5,600) | (16,262) | (14,444) | (83,233) | ||||
| Legal settlements | — | — | (275) | — | (1,520) | ||||
| Amortization of acquisition-related intangible assets | — | (96) | (96) | (192) | (288) | ||||
| Severance | (894) | — | — | (894) | — | ||||
| Operating expenses on non-GAAP basis | $ 25,051 | $ 31,831 | $ 33,406 | $ 91,931 | $ 90,805 | ||||
| Operating loss on GAAP basis | $ (42,256) | $ (44,624) | $ (54,779) | $ (135,782) | $ (184,452) | ||||
| Discontinued product line | — | 2,151 | — | 2,151 | — | ||||
| Inventory reserves and losses related to product transition | 4,608 | — | — | 4,608 | — | ||||
| Terminated contract expense | 3,500 | — | — | 3,500 | — | ||||
| Stock-based compensation and related employer payroll taxes | 4,934 | 6,367 | 16,807 | 16,303 | 85,040 | ||||
| Legal settlements | — | — | 275 | — | 1,520 | ||||
| Amortization of acquisition-related intangible assets | — | 96 | 96 | 192 | 288 | ||||
| Severance | 894 | — | — | 894 | — | ||||
| Operating loss on non-GAAP basis | $ (28,320) | $ (36,010) | $ (37,601) | $ (108,134) | $ (97,604) | ||||
| Other income (expense), net on GAAP basis | $ 2 | $ (110) | $ (22) | $ (104) | $ 10,097 | ||||
| Gain from forgiveness of PPP loan | — | — | — | — | (10,124) | ||||
| Other income (expense), net on non-GAAP basis | $ 2 | $ (110) | $ (22) | $ (104) | $ (27) | ||||
| Net loss on GAAP basis | $ (41,563) | $ (44,299) | $ (54,712) | $ (134,983) | $ (174,766) | ||||
| Discontinued product line | — | 2,151 | — | 2,151 | — | ||||
| Inventory reserves and losses related to product transition | 4,608 | — | — | 4,608 | — | ||||
| Terminated contract expense | 3,500 | — | — | 3,500 | — | ||||
| Stock-based compensation and related employer payroll taxes | 4,934 | 6,367 | 16,807 | 16,303 | 85,040 | ||||
| Legal settlements | — | — | 275 | — | 1,520 | ||||
| Amortization of acquisition-related intangible assets | — | 96 | 96 | 192 | 288 | ||||
| Severance | 894 | — | — | 894 | — | ||||
| Gain from forgiveness of PPP loan | — | — | — | — | (10,124) | ||||
| Net loss on non-GAAP basis | $ (27,627) | $ (35,685) | $ (37,534) | $ (107,335) | $ (98,042) | ||||
| Net loss per share on GAAP basis | |||||||||
| Basic and diluted | $ (0.19) | $ (0.22) | $ (0.28) | $ (0.66) | $ (0.91) | ||||
| Weighted-average shares on GAAP basis | |||||||||
| Basic and diluted | 213,518,699 | 198,947,058 | 196,204,671 | 203,504,556 | 192,835,674 | ||||
| Net loss per share on non-GAAP basis | |||||||||
| Basic and diluted | $ (0.13) | $ (0.18) | $ (0.19) | $ (0.53) | $ (0.51) | ||||
| Weighted-average shares on non-GAAP basis | |||||||||
| Basic and diluted | 213,518,699 | 198,947,058 | 196,204,671 | 203,504,556 | 192,835,674 | ||||
Velodyne Lidar (Nasdaq: VLDR, VLDRW) ushered in a new era of autonomous technology with the invention of real-time surround view lidar sensors. Velodyne, a global leader in lidar, is known for its broad portfolio of breakthrough lidar technologies. Velodyne’s revolutionary sensor and software solutions provide flexibility, quality and performance to meet the needs of a wide range of industries, including robotics, industrial, intelligent infrastructure, autonomous vehicles and advanced driver assistance systems (ADAS). Through continuous innovation, Velodyne strives to transform lives and communities by advancing safer mobility for all.
