Luminar Technologies, Inc. (LAZRQ) Earnings Call Transcript & Summary

We are going to kick off track 2 up here, which I will call the lidar track, since we will have a slew of lidar companies, including Luminar, headed up here. So our first session on this track is going to be Luminar. Luminar is an inventor of lidar technology. The company's next-generation technology is a high-performance, long-range lidar sensor that will enable Level 3, 4 highway autonomy and Level 2+ proactive safety systems on production vehicles. The company's full-stack hardware/software solution for production cars and trucks, including its Sentinel suite that was introduced with Zenseact last year, have garnered numerous partners across the industry and major commercial program wins, including with Mercedes, NVIDIA, SAIC and Volvo, where its next-generation SUV is going to come equipped as standard with Luminar's Iris sensor and perception software from the Sentinel solution for Proactive Safety. From Luminar, we are very happy to have Tom Fennimore, the company's Chief Financial Officer. He joined Luminar in 2020 after a pretty tenured career in investment banking. As a reminder today, for the corporates that did us a real favor in attending this conference, despite tough timing and quiet periods, and we do have general counsel over there to remind me of that, we are going to refrain from asking detailed questions around near-term financials. But for companies like Luminar, it's a little bit less important than the longer-term strategy, go-to-market and commercialization effort, where we really want to focus our attention. Additionally, before we begin, Luminar wanted me to read a risk factor statement. So in today's presentation, the company may refer to GAAP and non-GAAP measures. Today's discussion also contains forward-looking statements, based on the environment as they currently see it, and as such, does include risks and uncertainties. Please refer to the company's latest earnings release and business update presentation for more information on the specific risk factors that could cause actual results to differ materially. So with that, Tom, thank you so much for joining us today.

Thank you for having us.

Absolutely. I think the best place to kick off the fireside chat is maybe to pass it over to you to walk through some of the major developments of the company over the course of the past year since going public, some of the operational milestones. And then, how do you see 2022 shaping up in terms of operational milestones to come as well as the 2022 financial outlook?

Sure. And thank you for having us here today. And as you highlighted here, at Luminar, we're really focused on creating long-term value for our shareholders and focusing on maximizing value over the long term. And so while short-term results are always important for a company like us, what we've done instead is, we've set a few milestones that we're focusing on. And this is really the scorecard that we hold ourselves accountable internally as well as how we want to communicate to our external shareholders that are important to us. So last year in 2021, we had 5 milestones, the first 2 really related to execution, which is, we wanted to reach the C-sample phase for our Iris hardware, which we did, and we wanted to release an alpha version of our Sentinel software product, which we did. The third and fourth one were related to commercial growth, and we wanted to have a certain number of major commercial wins. We started off the year at 3. We ended at 6. And then we also wanted to grow what we call our forward-looking order book, which is our estimate of the revenue over the lifetime of the programs that we've won. And so we wanted to grow that originally by 40%, and we ended up growing it at 60%. And then the last one is, we wanted to be very disciplined in our cash spend and effectively end the year with more cash than we started the year, and we ended up achieving those as well. And so for us, it was really -- if I were going to summarize those milestones, it was continue to execute on our hardware and software development and then continue to grow our business in terms of winning new customers and expanding our forward-looking order book. For this year, for 2022, a lot of the milestones are similar. So this year, we want to get the series production readiness for our Iris hardware. We are expected to reach SOP with a number of our customers around the end of this year. And so it's very important for us to be ready not only with the Iris hardware but also on the software side as well. We want to take our Sentinel software to a beta version by the end of the year. And so continuing to execute and really getting to series production around the end of this year. And then we also want to continue to grow our business. We ended the year -- or 2021 with 9 major commercial wins. We expect to grow that number by 40% this year, so call it an incremental 4. We already have one of those under our belt with the Mercedes-Benz announcement we had earlier this year. And then we want to continue to grow our forward-looking order book. We ended 2021 with $2.1 billion, and we want to grow that number by at least 40% this year. And so focusing on executing and getting to series production. And we really expect 2023, once we are in series production, where we expect our revenue to significantly grow in terms of some of the financial metrics for this year. Once again, because we are still in that development stage, we expect our revenue to grow incrementally this year. And so we ended last year with about $32 million of revenue. We expect about 25% growth this year to, let's call it, $40 million plus. And as we talked about on our earnings call in late February, early March, is -- we've recently completed the development work on our first win. And so the NRE revenue from that contract, we fully recognized that in Q4 of last year. We're ramping up on some new development contracts as we speak. So we expect our Q1 revenue for this year to be down sequentially from where we were in Q4 as a result. And then we also expect it up -- to be up incrementally from where it was year-over-year of Q1 in 2021. In terms of the financial -- in terms of our cash spend, we burned about $155 million of cash last year, and we expect that number to be moderately higher this year. And so we're continuing to be very disciplined in our spend. The reason why our cash spend isn't growing significantly is, we are trying to keep, and we've been successful so far, the same Iris that we're selling to each customer, is substantially the same across customers. If you actually look at other parts within the automotive ecosystem, take seats, for example, Matt Simoncini is on our Board of Directors, used to be the CEO of Lear. The seats that go into a Ford pickup truck are not only different than the seats that go into a GM pickup truck. But within GM, the seats in the pickup truck are different than what are in the Camaro, that are within the Corvette, that are in the Malibu. And so having that product standardization allows us to ramp up revenue without necessarily ramping up expenses or engineering our CapEx spend in the same manner.

It's a really good overview. There's a lot of places we could go with the conversation, based on that. I think the best place to start, in terms of one of the major developments, in our view, out of 2021, was the standardization contract with Volvo. Can you talk a little bit about how important of a validation step that is for you as a company, in terms of being quoted on a standard platform rather than as an option on a higher trim-level model?

Yes. And there's 3 things on way that standardization is important. One is, it gives us a lot more certainty around the volume. And so originally, back in 2020, when we initially won Volvo, we were going to be an option on their successor platform to the Volvo XC90, which is their flagship SUV. The issue with being an option is, you have to rely on the consumer making an active decision, when they buy that car that they're going to have that technology on it. And that creates some uncertainty in terms of what your volume is ultimately going to be because you have to make estimates around what that consumer take rate is going to be. By making it standardized, that means you're going to be on every one that is being sold. The consumer does not need to make that active decision. And so it gives you not only higher volume but more certainty around that volume. And what that allows us to do, it gives us more confidence as we are investing in our industrialization or manufacturing to that ramp-up, and it also gives us more economies of scale faster as we're able to get bulk discounts from our suppliers. So first one is more volume certainty, good thing. The second one is, it really is a vote of confidence of Volvo in our execution so far. If we weren't doing a good job, Volvo wouldn't be giving us their incremental business. And so I think it's a sign of confidence in how we've been performing so far. And then the third thing really is, how are other OEM customers viewing this? If they start seeing Volvo making this standardized on their flagship SUV, they take notice. It's one thing to have it as an option, but then to start standardizing this technology, as you can imagine, a lot of other OEMs were very interested in that announcement.

Got it. And I mean, you are bringing up a really good point because Volvo is often perceived as kind of like a beacon for safety in the industry. So can you comment a little bit or elucidate in a little bit more detail around how the customer discussions have changed maybe over the past 6 months since the announcement was made?

Yes. And I would say it's been almost 9 months now, but what we've really seen is, if you start back when I joined Luminar almost 2 years ago, we were not public, we were definitely in that Silicon Valley startup category, the Volvo announcement just came out. And so we would be one of many companies that were beating down the OEM doors, trying to explain to them what a lidar was and what this technology can do, how we're differentiated. Where we are now, where not only do we have Volvo, Polestar, Shanghai Auto, Mercedes-Benz, NVIDIA, Mobileye and a few others that are -- actually actively selected our technology and are working to commercialize it and start putting on in their vehicles around the end of this year. We are a public company with a several-billion-dollar market cap. We ended the year with close to $800 million of cash. It's a much different conversation. Our technology has been vetted by very smart people in the industry, not only OEMs, some of the leading ones like Mercedes-Benz and Volvo, but also some of the technology leaders out there like NVIDIA and Mobileye. We have the balance sheet to say that we're going to be around for a while, right? And when the lifespan of a supplier OEM relationship is very long, after you win the business, it typically takes 2 to 3 years of the development stage before you reach series production and then that series production, depending on the platform, come in the last 5 to 10 years. And then you need to be around several years thereafter for aftermarket support. So it is a decade-plus-long relationship just for one piece of business. And the OEMs want to make sure, when they're dealing with these startups, that these companies are going to be around for a while and have the financial and human resources necessary to execute on the business that they're going to award to you. So from that stage, not only is it the Volvo standardization, but I think it's a combination of a much stronger balance sheet. The equity markets in signing us this multimillion-dollar balance sheet, the technology validation from these other awards, all of that is combining to us having a much -- not only higher quality -- quantity but higher quality dialogue with our customers.

Absolutely. And you bring up a really good point of the additional customer partnerships because another very important development for you last year was being selected to be part of the [ sensor suite ] and the NVIDIA DRIVE Hyperion platform, and they are perceived as a technology leader in the ADAS, AV effort. Can you remind us -- obviously, it's a great endorsement from a technology perspective, but can you remind the audience what it means to be on a reference platform as it's getting quoted at the automaker level and the visibility that you have to future contracts?

Yes. And just a point of clarification here. We're on the Hyperion reference platform for NVIDIA. They selected us as the only lidar company that is going to be on that. There's a few other sensors that are going to be on that as well. And so when NVIDIA goes in markets, their autonomous system, to OEMs, the reference platform that they're going with, has our lidar on it. And so they're designing their system around us. They're starting to do the development work around us. And there are extremely high switching costs for an OEM to swap out the lidars there. It's -- basically, you have to go back and recertify and revalidate the system, whenever you do a swap out of a sensor. And so it's a great partnership that we have. So effectively, when NVIDIA is out there pitching their autonomous software or their autonomous system to OEMs, they're effectively pitching Luminar lidar, as a result, to the OEM. There's other sensor providers that are involved in the NVIDIA ecosystem, where they're basically running on NVIDIA's chip. But in terms of the Hyperion platform that they have, there's only one lidar company.

Got it. And maybe talk about the customer response to being on the reference platform, if you have any at all. You mentioned the stickiness of being on that platform, it would take a lot customer to ultimately replace a Luminar sensor. As NVIDIA goes to market, how involved are you in that discussion process with the automaker? Is it primarily NVIDIA pitching Luminar technology? Is it you going with NVIDIA to pick -- pitch Luminar technology and maybe the responsiveness of the customer to say, "Luminar does have the technology, we want to go with them"?

Yes. Look, it varies with each OEM, in terms of how they want to do it. I mean if you take Mercedes-Benz, for example, that's one where we're working together on that. I think we each independently won the business, but that's one where we're actively working together. Some OEMs decide to go in a different direction than NVIDIA. Take Volvo, for example, Volvo has its own autonomous software system in-house Zenseact. And so in that specific example, we're working with Zenseact on it. SAIC has its own in-house system as well. And so there -- they are going to be customers that want to use NVIDIA, and then there's going to be customers that want to go a different approach. And so we have the flexibility of working with NVIDIA, when that makes sense. If the OEM wants to do it themselves, we can work with them as a lidar provider. Sometimes we provide our perception software. We also have a relationship with Mobileye. And so if an OEM wants to use Mobileye, well, we're already designed into the Mobileye autonomous system as well. And so from our perspective, we're very proud of our relationship with NVIDIA, and that's going to be a very successful partnership for both our companies. But we also have the flexibility to work with the ultimate OEM customer in the way that they want to see it because each OEM is probably going to go its own route here in the near term to make that work.

You bring up a good point around the NVIDIA and the Mobileye partnership, in that you're primarily providing hardware to them. It's their software that they are ultimately selling in to the automaker customer. Austin in the past has described, Luminar is shifting from like a lidar hardware supplier to an autonomous company and including a focus on software. And the Sentinel solution that you have with Zenseact is a really important development on this front. Maybe can you talk about the commercialization effort around the Sentinel solution, the traction that you've seen from the automaker customers, really to get your incremental perception software or decision-making software. How has that been developing since it's been on there?

So not only do we have multiple series production wins or major commercial wins on the hardware side. we also have it on the software side. As you mentioned, we're working with Volvo and Zenseact to develop that full-stack software system that Volvo is going to start to deploy next year. And as part of that, we have the ability to then take that system and license it and modify it and sell it to other OEMs. I think Zenseact and Volvo realized that they're spending a lot of money to develop this system. It's -- and it makes a lot -- the more that you can amortize that cost over vehicle makers, the better cost effective it is, but also the more data that you get from the vehicles on the road that makes that system more robust. The issue is that, will other automakers actually want to work with Volvo and Zenseact? I think that there's going to be some obvious challenges in that. And so having Luminar as kind of the -- taking that license and being able to market it to other OEMs makes a lot of sense. And so we have that relationship. We have just as many software engineers on our team today as we do hardware engineers. And when you look at some of those proactive safety demos that we've unveiled, that was developed fully in-house with our team. About 18 months ago, we did an acquihire, the Samsung autonomous software team, which was the foundation of our Munich office as well. And so we've seen real success on the software side, both in terms of the demos we [ provided ], as well as major commercial wins. And we're confident that, that's going to be a business that we're going to continue to evolve and grow as well.

You mentioned -- you bring up a good point around will the automakers be receptive to ultimately using technology that comes from another automaker. From your perspective, I mean, it makes a lot of sense that Luminar is the bridge of the go-to-market as they go out to other customers. How does the go-to-market strategy for you and for your team differ for maybe the base Iris hardware and software versus the Sentinel solution?

Yes. Look, our lidar is the one that gets us in the door. I think you've seen from the track record that we've had before is, a lot of OEMs want to talk to us because of our lidar. And each OEM is going to have different software capabilities. I think we've seen some of the larger ones, they've invested, in some cases, billions of dollars, hire thousands of software engineers, and they want to do it themselves. And we're fine with that approach. They're still going to need our lidar. For some of the smaller and medium-sized players or for some of these upstart EV companies, they don't have those resources. They want to move fast. And if they start to see folks like Volvo and Mercedes-Benz and others start deploying this type of technology over the next few years, they don't want to be in a position where they're not going to have the cutting-edge technology to offer on their vehicles. And so if they don't have the resources and they want to get to the market in a relatively quickly -- in a relatively quick manner the -- one of the easiest paths that they will have, is to come to us and work with us not only with our lidar but also our software package that work for Volvo, to get to the market very fast. And so it's going to depend on each OEM, depending upon their capabilities, their willingness and what they've spent already. But we're going to go to them with a -- not only the lidar but a comprehensive solution to deploy proactive safety and highway autonomy on their vehicles.

Is there a potential for Sentinel to be sold into Tier 1 suppliers? Or is it primarily automakers? Because Tier 1 suppliers are often the source for democratization of technology across the industry. Is the automaker partner and the automaker customers the sole focus in terms of go-to-market for Sentinel or are Tier 1 players also on the table?

Yes, it could go either way. I think right now, the conversations that we've had so far and all our conversations with the OEMs, it's been Luminar interacting directly with the OEM. If an OEM came to us and wanted us to work with a Tier 1 to do this together, that's something we're open to. We don't have any preexisting partnerships with a Tier 1 that tie our hands. And so from our perspective, we're flexible, in terms of how we work with our OEMs, but we're building a business where we can be our own Tier 1 and interact with the OEM directly. And so what I would say is, our first move to the hoop is always going to be to act as our own Tier 1 in interacting with the OEMs, but we maintain that strategic flexibility, where if the customers want us to use a Tier 1, we can do that.

Yes, I do want to go down that path because there has been another successful player, in terms of automotive sensing technology, that has created or maybe perhaps redefined with the Tier 1 or the Tier 2 position, looks like. And it seems like you are trying to go about it in a perhaps similar way. What is the competitive advantage or disadvantage of using a Tier 1 automaker in the go-to-market and the bidding process as a system integrator versus going to market directly with the automaker customer?

So here's what I would say, when -- for a few of the conversations we have with OEMs, one of the first questions we get is, "You guys are a young company. You haven't reached series production yet. We would feel a lot more comfortable, if you used a Tier 1 that has done this before." It's a natural question we get. It derisks -- the initial OEM's reaction is derisks them. And our response is, "We're open to that. Which of your Tier 1s has deep experience in industrializing complicated optoelectronics devices with high-tech lasers and ingress receivers and very complicated ASIC chips?" And the answer is there -- if that Tier 1 exists, we haven't found them. And we'd love to partner with somebody like that. But the short answer is that we are industrializing complicated technology that really nobody has done before in this type of scale. And a Tier 1 is going to add an extra level of cost. And is that cost worth the expertise that they bring to the table. Having said that, for areas like the roofline integration, we are partnering with folks like Webasto and Inalfa, who are two of the biggest roofline integrators, because our expertise is making the lidar in terms of how you fit that into the roof, right? That's not really a big area of expertise and Inalfa, Webasto do that a lot better than we do. We're partnering with some manufacturing partners like Fabrinet on the receiver side that does actually have that experience in manufacturing complicated optoelectronic devices. And then Celestica, which is a leading contract manufacturer that is very good at assembling this. So we do have the right partnerships. But in terms of interacting with the OEM directly, that is us. And the other benefit of that, that we're realizing, is that we're in there having that direct strategic dialogue with the OEM customer. We don't have a Tier 1 intermediary. And so in terms of helping them formulate their autonomous strategy as well as the ability to upsell them over time to some of these additional Sentinel softwares, that's a lot easier to do, if you're doing it directly, as opposed to having a Tier 1 intermediary.

Does it become somewhat of a move point in that discussion as you successfully commercialize the products? Meaning, obviously, the customer feedback right now is, we feel a lot more comfortable if you work with Tier 1. You're going into series production readiness, and we'll ask a ton of questions around the industrialization process. But if you do that successfully in the next year to 2 years thereafter, does that open the door to a lot of customers, right now, that may be waiting on the sidelines until you prove that you can get commercialization up and running?

So it's a very good point. And my personal opinion is, until we actually reach series production and prove, we can do it, we are going to get the question, if we're capable of doing it. We've been successful so far, convincing our customers that we can do it on our own, and that we're on track to do that. I think once we actually reach series production next year and demonstrate that we're actually doing it, a lot of those questions will go away.

Got it. So now we can switch gears into industrialization. You brought up series production. And I asked this question on the 4Q earnings call, but I think it's worth kind of clarifying this point. Series production readiness versus actual series production, and I want to understand the semantics around this a little bit. Now, to be clear, what part of the supply chain or production are you protecting for, in terms of defining Luminar as being series production readiness by the end of this year? Is it, "We're doing everything we can internally, but we can't promise how the supply chain is going to look, whether it's semiconductors or neon gas or anything else"? Or "We're doing everything we can. We are getting series production ready, but everything that's going on from an automaker and a vehicle production perspective, we have no real clarity on. And so we will be ready at these other parts of the value chain that may not"?

It's less the supply chain. So our goal -- just to explain what the difference -- why we have the word "readiness" in there. Our goal is, by the end of this year, we want to be in a position where we are producing our Iris hardware at autograde qualifications in scale and set -- being able to sell that product to OEM customers for them to put on vehicles that they're going to sell to the consumer. That's our goal. Why do we have the word "ready" in this? Well, we can control that. We can control our supply chain. We're lining up everybody to do it. We're ramping up our manufacturing footprint. We're doing all the validation that we need to do. The thing we can't control is, are our customers going to be ready to go then? Now the good news is that we have 3 customers that are all going to be aiming for SOP around the end of the year, Volvo and Polestar. And they -- none of them have changed their planned SOP. But we're also living in a world where, are they going to be able to get wire harnesses out of Ukraine? Are they going to be able to get chips? Is there going to be another geopolitical tension? Our goal is to make sure that we're ready to go on that date. That's what we can control, and that's the readiness.

No, it seems like a very important definition because nowadays, and we've heard from companies yesterday in numerous tracks, there's a lot that they can't control for. So I think it's a prudent way of going about it. I do want to open it up to the audience, if you have any questions. If not, I've got several more that we can go through. All right. Got a quiet room. So I do want to get into the competitive landscape and more so talk about the M&A perspective. You recently made an acquisition of Freedom Photonics. Can you talk a little bit about the industrial logic there? What is the technology or the IP that you were really acquiring? And why is it critical to Luminar to vertically integrate that?

Sure. So as we've talked about in the past is, we didn't design our lidar with off-the-shelf components, particularly the important ones, which are the laser, the receiver and the ASIC. Those were all custom designed by us and are probably -- well, we have a lot of secret sauces at Luminar, there are probably more of the important ones. In 2017, we bought our ASIC supplier, a company by the name of Black Forest Engineering. It's about 30 engineers, based out in Colorado. They do this complicated ASIC chips, designed better than anybody in the world. And there's only several engineers that can do that in the world, and they're now all Luminar employees. Last year, we bought the -- our chip company, including -- we own our own foundry, Luminar-based upside -- outside of Boston. We're actually able to produce our own InGaAs chips for our receivers. And we still buy the silicon chips from third parties. But this is, once again, these chips are very specialized for what we need to do. The optegration team, it's about 10 people. And we now have in place the ability to produce our own InGaAs chips for the foreseeable future. And then the missing component was the laser side. And we bought Freedom Photonics. We announced that transaction last month. It's a team out in Santa Barbara, and these guys have some very important laser technology that you can't buy anywhere else. And so bringing all that in-house, not only -- and we work with these companies to custom design these components to put in our lidar, bring them in-house and vertically integrating not only helps expand our competitive moat, but as we ramp up in series production, it allows -- it derisks us by working -- we now control that and can help them ramp up in the necessary scale and at the necessary quality that is needed for the automotive industry.

Got it. Are there any other pieces of the technology or the product portfolio that you may look to further vertically integrate over time? Obviously, you've got the receiver of the chip and the ASIC and the laser. So what else is there?

Yes, I would say, the most important ones, we now own. But we're not done continuing to innovate and continuing to try to do what we can to improve our technology. And so I don't want to say, "We're done and never going to do anything again." But I would say, the 3 most important ones, well we now own Luminar.

Okay. And obviously, there's no shortage of lidar companies that are out there, some of which that are public, some of which that are commercializing products, but there's probably a litany of others in the private markets as well that may or may not have technology, that may or may not get off the ground. How do you look at the total lidar space, maybe in new technologies, where you don't play right now? And what could be potentially on the table, in terms of acquisitions, there, if anything?

So when you look at our acquisition strategy, historically, it's really been in two categories. One, the vertical integration, which we talked about. And then the second has been on the software side. And I mentioned earlier, that we bought the -- we kind of did an acquisition -- acquihire of autonomous software business out of Samsung. I don't ever want to rule anything out, but I would say, I would expect our M&A strategy, going forward, to be consistent with those two themes, software, vertical integration, using stock, not cash, small- and medium-sized deals. The bar for any large acquisition is going to be extremely high for us. And outside of an acquihire, where we could bring on some good engineering talent from another lidar company, the bar for us acquiring another lidar company is very high as well.

Okay. So when we think about the competitive landscape and companies that may make it and are in commercialization or will be in commercialization soon versus ultimately may not, and you think about the competitive landscape 5 to 10 years from now, would you say Luminar would probably take a somewhat more passive approach of letting less-competitive players dissipate over time, maybe not so much an active role in terms of consolidation of the lidar market?

Yes. Look, I would say, what we're focusing on is going out there and winning the business that we want to win and executing upon it. And the competitive landscape, if we're successful doing that, will work itself out.

Got it. And I do want to focus in on those business wins and where the focus is as a company. You cited that the 40% growth in major commercial wins is the target for this year. That means, I think, at least 3 to 4 wins versus the 9 commercial wins that you already have secured. Of those expected incremental commercial programs, do you have a thought process around where they come from, in terms of the customer base? And I think I've asked this question in some form or fashion before, but you have certain customer program wins that don't qualify as a major commercial program wins. So is there the possibility that you convert some of those program wins over to "major" as you get closer to commercialization or do those wins come more from new customers that we haven't heard of yet?

So I would expect at least for 2022, it's probably not going to be converting some of the ones that we had last year in the major commercial wins. When I kind of look at what we're focused on, it's across the 3 major regions, Asia, Americas, Europe. And the way that we kind of bifurcate the market, we look at the passenger vehicle market, which are kind of your OEMs that sell cars to consumers, commercial trucks and then some of the robo-taxi companies. And so we have great ongoing dialogue across those 3 major regions as well as those 3 customer categories. If you kind of look at the wins that we've had so far, particularly on the passenger vehicle side, when you look at kind of like Mercedes-Benz, Volvo, the specific brand that were going on the site, they tend to be the high-end, luxury, premium segment, which makes a lot of sense. New technology tends to start off on the most expensive in the luxury segment and then work itself down as you start to achieve economies of scale and the value proposition becomes more compelling to putting on some of the mass market brands. At CES earlier this year, Austin kind of laid out his longer-term vision. And one of the things that he was focusing on, was the democratization of our technology, particularly the safety aspect of it. We have a point of view that not only rich people should be driving safe cars, but everybody should have access to that. And so I think one of the things that is important to us is to try to get our technology into some of the more mass market brands and democratizing our technology to make it available to everybody.

Does the democratization of that technology require substantially reducing the price point at which you're selling it to the customers? Or is it more so a demonstration of how compelling the technology is, the safety value add that you can provide to the customer? And as you think about penetrating the mass market, it's another way of asking, does that necessitate your ASP declining or is there a way to hold on to it?

It's the value proposition. Clearly, one way you can solve that is by reducing your cost, which we have a longer-term plan to do and we've been publicly talking about that. The other one is to really communicate to the OEM and the consumer the value of making the car safety. I think the highway autonomy element of it is more obvious because when you look at what Tesla is charging for its FSD system and some of the other autonomous packages out there, and if you can get several thousand dollars or $10,000 like Tesla is, the value proposition is compelling. It's the proactive safety, that safety element of it, which I think you need to do a little bit more explaining to it. And one of the things that we're focusing on, that we've talked about in the past, and we'll talk about more in the future is, is there a way that we can capture the insurance savings from improving the safety of the vehicle and using that to subsidize the cost of the technology? And so it's -- cost is important, but it's really the value proposition of convincing the OEM and the consumer that the cost of this technology is worth it.

Got it. That's really interesting. I want to check that we have no questions in the audience. I've got one or two more that we can close with. All right. So when you went public at the end of 2020, you gave some financial targets, I believe, out to 2025. At the time, they were based on 4 commercial program wins. I believe you've got 9 now, including a major standardization contract with Volvo, which as you cited, that's real visibility as to volume. So theoretically, perhaps upside in the model. So how do you think about maybe some of the financial targets that you provided to the Street a year or so ago? Should -- is it obvious that we have been incorporating upside or maybe perhaps not?

So we're going through the process of updating our longer-term forecast. We're planning to have an Investor Analyst Day later this year, where we're going to revisit it. The one thing I would say is, you are right. We've said publicly that the commercial momentum that we've -- that we're having now and that we've experienced, it's better than expected. Our 2021 revenue exceeded what we kind of put in our forecast, at the time we went public. I think it was -- we forecasted $26 million. We came in at $32 million. For 2022, our forecast at the time of IPO was $35 million, and we're now forecasting $40 million plus. And so you can see that so far, we have been exceeding plan, and we'll be able to go in a little bit more detail in terms of what our renewed outlook is, later this year, after we have an opportunity of kind of going through and updating everything.

Awesome. Well, we look forward to that. Last one that I'm getting there is, you were pretty prescient in tapping into the capital markets. Last year before a lot of the volatility that we've all experienced. Can you talk a little bit about the thought process around allocating -- I think you allocated half of those proceeds towards share repurchases. And you've kept some dry powder on the balance sheet. Where does the capital allocation focus from now?

Yes. And so our capital allocation is focused on continuing to invest in the business and execute on the business we've won and make the necessary investments for the longer term. We did a $625 million convert in the middle of December. Part of the reason we did the -- the reason we did the share repurchase is, we did a convert. Our stock is relatively volatile. And so that volatility allowed us with a call spread overlay to effectively sell stock at 100% premium. And so one of the ways to offset the dilution from the convert, if you sell a convert at 100% premium, is to take half the proceeds to buy back stock. And so that's effectively the reason for the share repurchase, was to offset the dilution from the convert, and that left us with about $225 million left over to invest in our business, and we're paying a little over 1% on that convert. So we were able to get it out before interest rates started to rise. Now all that makes sense, if you're confident that you can double your stock price over 5 years. We issued the convert when our stock price was around $15. But it was at a value that we think doesn't reflect the longer-term intrinsic value of the company. And so we have a lot of confidence, both at the Board and the management team, of being able to double our stock price from the $15 level over the next 5 years, which will allow us to avoid the dilution from the convert by buying back half the shares.

Fantastic. Well, we look forward to that. All right. With that, thank you so much for joining us.

Thanks for having us.

Thanks, everyone, for joining. And we'll kick off the next session soon.