AEye, Inc. Q3 FY2025 earnings call

• Apollo is gaining traction with 12 customer contracts signed year-to-date, doubling the customer base since Q2. A global defense contractor is using Apollo on UAVs for wire detection. - Expanded manufacturing capacity with an agreement with LITEON and investment from an institutional investor to fund a new dedicated production line for Apollo with capacity to produce up to 60,000 units annually. - Strong engagement with the automotive industry, with active discussions with about 2/3 of major Western OEMs, attracted by Apollo's compact design. - Forged critical software partnerships like with Black Sesame, Blue-Band, and Flasheye, translating into sales across multiple sectors. - Nonautomotive funnel grew from 100 to 600, technical engagements up 50%, quotes tripled, and contracts doubled.

The company's key product Apollo is driving momentum. The nonautomotive funnel has grown sixfold from fewer than 100 prospects earlier this year to nearly 600. Quarter-over-quarter technical engagements increased by nearly 50%. Quotes issued tripled and signed contracts doubled to 12 since Q2. Apollo's unique value proposition combines powerful lidar capabilities, flexible software control, and a compact design. It sits behind the windshield for automotive integration and is applicable in various sectors like defense, rail, aerospace, and smart infrastructure. Revenue contribution from Apollo is growing as it secures new contracts across target markets.

• Full year 2025 cash burn is expected to be at the high end of the previously communicated range of $27 million to $29 million, reflecting planned investments to scale Apollo production and support commercial expansion. - Phase 2, where acceleration is expected, with the inflection point next year, focusing on infrastructure, supply chain, manufacturing expansion, and deployment readiness to meet anticipated demand.

• Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult or impossible to predict. Actual results may differ materially from forward-looking statements. - Market adoption risks, including competition and challenges in scaling production and partnerships to meet growing demand.

Q: Congratulations on the progress. Would you expand on your confidence in the capital-light model, especially in the context of recent industry events?

A: Matt Fisch discussed that the capital-light model relies on a partnership with LITEON for manufacturing flexibility, allowing just-in-time delivery and low upfront costs, and also extends to software where they rely on partners for perception software to avoid upfront investment.

Q: You doubled your customer base to 12. Can you just talk more about that pipeline of customers? And within the 12 customers now, can you talk about the mix between auto and non-auto?

A: Conor Tierney mentioned the funnel has grown from 100 to 600 prospects, technical engagements up 50%, quotes tripled, and contracts doubled. Apollo's value prop of long-range sensing, flexible software, and compact design resonates with customers, with a mix of auto (interested in behind-windshield integration) and non-auto (defense, rail, aerospace) customers.

Q: You used the term UAV as the defense opportunity. Is it fair to say that covers all drone applications potentially within defense? But then my question is, have you also seen an uptick or more interest from commercial drone manufacturers?

A: Conor Tierney said they are seeing interest in UAV and manned aerial vehicles, and are actively pursuing commercial drone applications as the same attributes attract DoD customers to them.

Q: On the auto OEM side for mass market, where do you sense the focus is? Are OEMs building for Level 3 and Level 4?

A: Matt Fisch said there's a significant shift into L3 and L4 states in the last 6 months as seen in RFIs from OEMs.

Q: Would you mind just giving us a little more detail or a little more color on the institutional investor that you've lined up. Can you frame maybe the potential size of their investment and also the timing of the investment?

A: Conor Tierney said it's a well-known institutional investor, investment was made after quarter end, part of the $10 million raised post quarter end, and they feel they have enough capital for the immediate strategy.

Q: The 6 new wins you talked about in the quarter here. Can you describe the applications and volume opportunity that you're looking at here?

A: Conor Tierney said they are for high-performance use cases like aviation, rail, and are part of Phase 1 laying foundations for volume ramp with positive indications from customers for higher volumes.

Q: What are we talking about in terms of the investments you're going to be making here with LITEON?

A: Conor Tierney said they don't expect a dramatic increase in burn rate next year, baseline burn for this year is around $25 million, and they are working with LITEON with flexibility and gating spending to guaranteed demand.