Tom Fenimore: Yes, absolutely. And we’ll also say, take a look at the Luminar Day speech that TPK gave, their CEO was on stage. And I think, they described it, as the relationship of kind of everything, all the work that they did, back with Apple and the iPhone for its introduction, you know, in 2007, they really see this moment with, that we’ve had with Volvo and part of the broader industry as a little bit that iPhone moment, to kick-off the broader autonomy world. And in particular, you asked the question on exclusivity. And I was kind of leading up to that is that they have agreed and signed a deal to only work with Luminar in the world of, LiDAR and AV more broadly, having the extreme amount of conviction that we’ll be a winner or the winner.
Aileen Smith: Okay. We’ll take another question from our shareholder community. Now that Luminar has introduced Halo to the market, what has been the response from your existing and prospective customers? Do you expect Halo to drive new customers like Nissan and other large OEMs to make decisions sooner, as it will be available in 2026?
Austin Russell: Yes, I think it’s been a great reception. Of course, as you figured, there’s been some level of work behind the scenes, with automakers on this, leading up to this. We’ve been working on the Halo design for, oh man, like six years in terms of some of the technologies that have been going into this. I mean, this all goes back to this, nearly $2 billion technology foundation and IT foundation that we’ve been able to develop to make this possible. That’s how we get to ride all of those tailwinds and do so very, very efficiently this time. And of course, this is really taking into account the things that automakers are most excited about. And that’s what allowed us to move so quickly to a point of where we can announce today, you know, our first OEM win with Halo.
So very excited about that. And that’s a start, there’ll certainly be a lot more to come. And I would say for major automakers, I mean, the key thing is, is that, as you said before, people were really looking for, two things. One was the validation that Luminar could successfully make it to series production in a world where the vast majority of programs do not successfully achieve that. The vast majority of companies aren’t successfully able to make it. Luminar has proven that it is very much possible and executing to that. The second part was, is the product to be able to enable mainstream adoption. And that’s something that it’s clear, there needs to be a step up, from Iris to be able to do that at the kind of scale that we’re talking about.
And with, it’s about a third of the size, double the overall efficiency, a fraction of the way, less than half the cost, all the other benefits associated with Halo. And I think that is, something that starts to get people really, really excited. So the other thing is, is that we, of course understood some of these new regulatory requirements at a time where I think, I don’t want to say folks were maybe asleep at the wheel on that, but there’s definitely, like I said, it came as a surprise to some. And this is designed to be able to make sure that automakers, can meet those new regulatory requirements as well. Of course, we exceed beyond those requirements, but that said, that is something that is meaningful and powerful to be able to do. And this is the kind of product that really can be standardized on mainstream vehicles.
So it makes total sense. And the reception across the board couldn’t be more positive.
Aileen Smith: All right. We’ve got a little less than 10 minutes. So we’re going to get through as many analyst questions as we can. Our next question comes from Kevin Cassidy from Rosenblatt.
Austin Russell: Hi, Kevin.
Kevin Cassidy: Hi, thanks for taking my question. Yes my question is, Halo seems like a real game changer. And as the industry has evolved, can you tell me about more what’s happening in the bidding content for your competitors? We’ll say, what’s the competitive landscape? How has that changed? And also, what are the priorities that your customers are looking for now? Has that changed since when you first got into this bidding process?
Austin Russell: Yes, I mean, I would say that overall, one thing that I think is significant, in the case of Luminar specifically, is that for most of the kinds of deals that we strike, we rarely so like a specific kind of bidding process, so to say, the goal of what we like to do is that when we start working with someone, really go all in, you only have so much capacity and you have to have so much focus with different automakers. And what we’ll do is we’ll try and strike a more call it company-wide, you know, deal for something that covers all the different kinds of scopes, products and technology, other things that they’re enabling, rather than maybe say for like one specific point in time or one specific vehicle model for, some arbitrarily low volume or not.
I think that the way that you make this work is you have to have the big economies of scale. And of course, everyone can talk about opportunity all you want, but I think we’ve tried to set a really, a credible benchmark for the way that you define order book, in terms of what’s actually included in, associated take rates and everything, not just saying, hi, magically you’re going to win everything from even a given automaker. So long story short, of course, there are, plenty of RFQs and everything that we’re all a part of. And, the finalists, so to say for the processes that are there. But, every automaker probably always has some kind of RFQ outstanding for something. The question is like, what’s real, what’s not real. And the reality is, is that I think historically what we’ve seen every automaker, or like, sorry, not everyone, the majority of, the call the top 20 automakers have, as I mentioned, the long range light are into the roadmap at some point, throughout the decade.
Obviously those are different introduction points. I think the question and the dynamic that we’re excited to see is, how the autonomy roadmap evolves, and also gets radically accelerated with these new regulations. And that was something that, it’s a 300 page report. Automakers are digesting it now. They’re really, it’s probably over the next year are going, to be putting their updated roadmaps together. And I think that’s where, when we’re talking about the kind of volume opportunity, it’s whatever’s there now is a, it’s going to be a tiny, tiny fraction of what’s going to be running in parallel. So that’s what we’re excited about. If people can take that same kind of model, the Volvo has, around showing that safety should be for everyone, not just as a standard product, not just as a optional feature, like a seatbelt, then you really win the game.
And that’s where we also showed that, and I think I mentioned this in the letter, even just a small fraction of market penetration, like, we’d model 3% to 4%, you know, that’s like a home run for this kind of business, because that means, into the single-digit billions, in revenue growing rapidly, other stuff if we can do that in LS10X, I mean, that’s where I think it kind of changes the game, as you pointed out, and we have the perfect product to do it.
Kevin Cassidy: Okay. I don’t have a follow-up. I’ll save time for other people.
Austin Russell: Thank you.
Austin Russell: Who do we have next, Aileen?
Aileen Smith: Sorry, folks. I was on mute. Our next question is going to come from Jesus Gonzalez-Lopez from JPMorgan.
Austin Russell: Hi, Jesus.
Jesus Gonzalez-Lopez: Hi, guys. Thanks for taking my call. Just wanted to ask about the $15 million in run rate cost savings. You guys called out, how should we think about that split between OpEx and CapEx? And then what’s kind of like the ramp up timeline for those things to come online?
Tom Fenimore: Are you talking about the $80 million?
Jesus Gonzalez-Lopez: Yes. Sorry.
Tom Fenimore: Oh, yes. Yes. So the $80 million, I would say very little of that is CapEx. Most of that, of that $80 million, a little over half of it is cash, a little less than half of it is saving in stocks we issued to our employees and vendors, as I mentioned earlier. And I would say, you know, substantially all of that $80 million is stuff that’s going to flow through the P&L, either as COGS or OpEx.
Jesus Gonzalez-Lopez: Got you. And then so on the timeline, should we expect that to like start coming online in the back half of the year and then really ramp up in ’25 or..?
Tom Fenimore: You should get on a run rate basis, I would say very close, if not the full 80 by the end of the year. You’ll start seeing it show up in Q2 and then really start to ramp up in Q3 and Q4.
Jesus Gonzalez-Lopez: Got you. Okay. And for my follow-up, just kind of wanted to switch gears and talk about the order book. I know you guys just called out the first product when it’s Halo, but so should we think about some of those wins that you already have in the order book converting to the Halo system? Or what’s kind of like the cadence of like the product mix that we should see over the coming years?
Tom Fenimore: Yes, the vast majority of our order book today as it stands is Iris and Iris+. We have had our first major win with Halo. And what I would say is, we’re in discussions real time with our customers to transition into Halo sooner rather than later. Now, look, you got to work through their production cycle, mid cycle refreshes, making sure that you, reduce as much as possible any additional software algorithm training, or validation that they need to do. And so it isn’t something that you can do overnight, but I think it’s in the interest of both parties, both to them, because it’s going to be, a cheaper product and to us where we expect it to be a better market product to do it sooner rather than later. And so I would expect at some point in the future, the order book to start converting and hopefully at a very brisk pace to Halo.
Jesus Gonzalez-Lopez: Got you. That it’s.
Aileen Smith: Okay. Tom and Austin, you want to take another question?
Austin Russell: Yes, let’s do one more, Aileen.
Aileen Smith: Okay. Our final question is going to come from Richard Shannon from Craig-Hallum.
Austin Russell: Hi, Richard.
Richard Shannon: Hi, guys. Sorry, I got on the call late here and I’m not really sure I have a question this time. I’m sorry, I didn’t hit any buttons. Apologies for that. I’ll have to follow-up later when I’ve got a more full consumption of your entire call. So sorry about that.
Austin Russell: Richard, that’s the easiest question you ever asked.
Tom Fenimore: We’ll talk to you soon, buddy. Thanks.
