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The push for safer vehicles ‘seeing huge regulatory tailwinds,’ Luminar CEO says

Luminar CEO Austin Russell joins Yahoo Finance Live to discuss company earnings, leading in the automotive space, entering the car insurance business, and the outlook for Luminar.

Video Transcript

- LiDAR, which stands for light, detection, and ranging, uses lasers to allow cars to see effectively other vehicles and potential obstacles. And Luminar has been viewed as a LIDAR darling, largely for being one of the first to go public its early to win high profile production contracts. The company recently reported fourth quarter results, unveiled a new LiDAR sensor that's already begun to ship to its lead customer, along with its other initiatives.

With other automakers adopting LiDAR to make vehicles safer, is Luminar shaping up to be the leader of the automotive revolution? Here to discuss is Luminar Technology CEO Austin Russell. Austin, good to talk to you. I guess we'll know that we've gotten to a different point where we don't have to explain what LiDAR is. But I think a lot of people are still wrapping their heads around it.

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So you guys released earnings. You talked about your new initiatives during your investor day. I guess I'll start with, what are you most excited about for 2023 in terms of what Luminar is planning?

AUSTIN RUSSELL: Yes. So I think we're certainly accelerating at full speed ahead on all fronts. And I would say for this year, I mean, we've sort of announced a flurry of news and from showing that we can holistically execute, while at the same time showing different sort of paths for additional growth and everything you mentioned from kind of the new product for Iris Plus that has even longer range capability, high performance, and is now actually the product that will be shipped as part of this multibillion dollar Mercedes-Benz contract and plan that we have with them for their vehicle lineup.

And at the same time, it's really all about scale. So we're focused on getting this high volume automotive factory that we have in Mexico online. We're doing that ahead of guidance now for Q2 and then focus on the validation of that throughout the rest of the year. And then among other things there too we're making it happen to announce a handful of new partnerships too to be able to accelerate that growth.

- Still, this really requires so much regulatory red tape to still be moved through. And what are you hearing from regulators who are trying to get a better sense of how the technology can be infused in any autopilot or self-driving mechanisms in the future?

AUSTIN RUSSELL: Yeah. I mean, I think you're seeing some huge regulatory tailwinds here too from a push more generally for safer vehicles. And I think this has never been exemplified more when it comes down to it. So I think it's interesting. From a regulatory standpoint, it could actually be a barrier when you're trying to be able to replace drivers on cars. But that's never been our vision. Our vision and plan has always been to enhance drivers, not replace drivers.

And that's exactly what the automakers that we're working with are doing and leveraging our technology for. So when they're scaling it, I think that part of the long-term vision for what we have is we have this 100-year vision to be able to have the opportunity to save as many as 100 million lives and 100 trillion hours out on the road over the next 100 years. And saving lives is what it's all about and can also make massive amounts of money. So I think, yeah, it actually ends up working in our favor.

- Austin, you talked a moment ago about accelerating sales growth. And I'm looking at one estimate for your price to sales ratio at 73, which seems high. The stock has bounced about 70% this year after falling 40% over the last year. When can investors expect-- most investors don't have that 100-year plan, right, to make driving safer. When do you expect to see more of an exponential acceleration in that revenue growth?

AUSTIN RUSSELL: Yeah. Literally starting this year. I mean, we're talking about breakneck triple digit growth that we've given guidance for for the next several years. And when it comes down to it, I think the relevant side of this here is, this is not a traditional kind of business there to where quarterly or even annual revenue is relevant at this stage.

People are generally-- it makes much more sense to be able to look at, for example, a highly credible forward looking order book where that revenue can be realized from that over the course of this decade and beyond. And, for example, we showed how we had over 60% growth in that. And even from a conservative standpoint, that was at around 3.4 billion. So I think we're actually-- that's around what probably the valuation is. It's probably less than 1x the order book or something.

So from that perspective-- I guess it's all about perspective. But, basically, we're showing that from what we have today, there is a very, very clear directory even just using 75% of awarded business that we already have today where you can have a billion dollars in revenue at a run rate by 2026-2027, or at least a billion dollars-- or I would say a million vehicles per year translating to a billion dollars in terms of run rate. So you'll be able to see. And then basically by 2030, you're talking around 5 billion vehicles per year or a 5 billion run rate, with the opportunity for a 60 billion forward looking order book.

So the thing with the auto industry is it's like a flywheel with this. Once you get designed in, these are long-term arrangements. I mean, we're talking about like 15 years in total of how you build and accelerate these programs and platforms with automakers and what you have to support it for. So it's getting very real, very fast. But the key is just about execution. We have everything set up for the greatest possible success and just orders of magnitude growth. But we just got to make that happen.

- At what quarter of this year do you see that translating into profitability?

AUSTIN RUSSELL: Yeah. So, actually, that was part of what we were talking about. So for the first time we're sort of unveiling this path towards profitability and showing that we're going to do this not just in the long term, but, actually, the plan is to do this in the nearer term as well. So we're able to show that we, actually, as soon as next year on a run rate basis by the end of the year can be profitable for our core business.

So this would certainly be a first for the autonomous vehicle space and revenue generated from that, of course, generally. So it's good to be able to push the bounds of that and be able to actually show what's possible by all means from that perspective and cash flow positive for that. And then for the following year on a run rate basis, we have the opportunity to make the business as a whole profitable.

- Austin, it's great to see you. Luminar CEO Austin Russell. We'll catch up again soon and talk more about everything you guys are working on. Thanks.