Good day, and welcome to the Velodyne Fourth Quarter Fiscal Year 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kirsten Chapman of LHA Investor Relations. Please go ahead, ma'am.

Good afternoon, and thank you for joining us on today's conference call to discuss Velodyne Lidar's fourth quarter and full year 2020 financial results. With us on the call are Dr. Anand Gopalan, Velodyne's Chief Executive Officer; and Drew Hamer, the company's Chief Financial Officer. Before we begin, I would like to remind you that shortly after the close of market today, Velodyne issued a press release announcing its fourth quarter and full year 2020 financial results. Velodyne also published an investor presentation. You may access this press release and presentation in the Investor Relations section of velodynelidar.com. Today's discussion includes forward-looking statements. Please refer to our press release for a discussion of factors that could cause the company's actual results to differ materially from those forward-looking statements. I would also like to remind you that during the call, we will discuss some non-GAAP measures related to Velodyne's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the press release. To ensure that we address as many analyst questions as possible during the call, we request that you please limit yourselves to one initial question and one follow-up question, then you may reenter the queue. Now, I'd like to turn the call over to Dr. Anand Gopalan, CEO of Velodyne. Please go ahead, sir.

Thank you, Kirsten, and thank you to everyone for joining us this afternoon. I'm Anand Gopalan, CEO of Velodyne. Our fourth quarter and full year 2020 results demonstrate that we continue to expand our leadership position in the lidar market. Velodyne is the only lidar company today with both the breadth of product portfolio and the manufacturing capability to deliver low-priced lidar with multiple specifications at scale for many real-world applications. We shipped a record 4,237 sensor units in the fourth quarter and 11,710 for the full year. This included 718 solid-state lidar units in Q4. We are manufacturing and shipping more lidar units than all our competitors have reported. In fact, we shipped more products in a week than all the other players have reported shipping in a whole year. In addition, we have expanded our offerings and now provide full solutions of hardware plus software through our acquisition of Mapper.ai. This is an exciting new part of the story. In terms of manufacturing, we have fully automated wafer scale-like lidar manufacturing processes in place today and operating with our contract manufacturers. We can produce at scale, and we are far along the path to mass production and continue to execute on our strategy of transferring manufacturing of mature products to contract manufacturing partners. Despite COVID-19, we have not slowed down. We continue to set production records and are making significant progress on our growth plans. This uniquely positions us to meet the rapidly growing volume requirements of our customers in the coming years. Thanks to its broad rotational and solid-state lidar portfolio, Velodyne's ability to address many segments is a key competitive strength. And we continue to derisk our business model by being the leader in multiple markets with multiple customers in each. Velodyne supplies over 300-plus customers, including major OEMs and leading tech companies such as Caterpillar, Ford Otosan, GM, Honda, Hyundai Mobis, Toyota, Volkswagen, Zoox, Didi, EasyMile, Gatik, Google, and Leica Geosystems. We announced agreements in the fourth quarter of 2020, covering industries from autonomous vehicles and trucking to robotics and mapping. As of today, we now have 26 active multiyear agreements, up almost ninefold from three in the first quarter of 2020. Over the past few months, we announced that we signed a multiyear agreement with Motional, a Hyundai and Aptiv combination to be the exclusive provider of long-range surround-view lidar sensors for Motional's SAE Level 4 driverless vehicles. We executed an agreement with May Mobility for its entire fleet of self-driving shuttles. Signed an agreement with Local Motors to use our sensors to enable safe, reliable operation of Olli, the company's 3D printed electric and self-driving shuttle. We signed a five-year sales agreement with ThorDrive, who will be using our lidar sensors to power its cargo and baggage ground support tractors in a groundbreaking AV program at the Cincinnati/Northern Kentucky International Airport. And we entered into a strategic partnership with Beijing Trunk Technologies, or TrunkTech, with whom we will collaborate in developing next-generation autonomous heavy trucks to accelerate the commercialization of driverless trucks in China's logistics market. In mapping, we signed a multi-year sales agreement with Emesent, a world leader in drone autonomy, lidar mapping, and data analytics, who will use our sensors for mapping hazardous and GPS-denied environments. Our pipeline, which is the most robust in the lidar industry, now stands at 194 projects. This is up from 183 reported for the fourth quarter of 2020 and 131 projects reported at the beginning of the year on January 1, 2020. There is expanding adoption of lidar across a wide variety of industries, some of which are accelerating in a post-COVID world such as last-mile delivery. Our pipeline of opportunities in industries such as robotics grew 220% from 873,000 units in February of 2020 to 1.9 million units today. I'd like to take a moment to comment on our pipeline, which is very fluid and will vary with customers' changing needs and expectations as it continues along its long-term growth trajectory. A recent example of this is an AV project that we had with an OEM customer. While we are on this customer’s first and second-generation autonomous vehicle platforms, the customer made a choice to use a different technology for their next-generation platform. However, we continue to be actively engaged with them on multiple other opportunities which, if successful, could more than offset any financial impact of this project. We have also seen an ADAS customer select an older technology for their first-generation rollout while they continue to move forward with us on projects for next-generation platforms. On the other hand, recently, we had a major OEM customer reengage with us and renew our long-term relationship through a follow-on multiyear agreement. Our product portfolio also includes the complex algorithms and software solutions to complement our sensor products. Software is only possible with a robust preexisting hardware installed base like Velodyne has today. A higher-margin software subscription model is a natural adjacency for us. We have made significant progress on executing new software contracts and now have 18 opportunities in our pipeline with the software component, three times the number than in the third quarter of 2020. Velodyne is innovating on the cutting edge, and in 2020, we launched, industry-first, our new Velarray solid-state sensor product line and Velabit lidar, our smallest sensor, which are designed to be manufactured at scale and at price points targeted at broad-based lidar adoption. Velodyne's Velabit lidar sensor was named a winner in the Best of What's New awards by Popular Science and won the 2020 Innovation Award by Silicon Valley Robotics. Last but certainly not the least, we have 28 Velabit projects in our pipeline today. We are the most innovative lidar company as evidenced by our track record, and you will see additional new lidar architectures and technologies introduced by us in the near future. Velodyne transforms lives and communities by advancing safer mobility for all. In the fourth quarter, we joined the Qualcomm Smart Cities Accelerator program to promote using lidar technology in smart city solutions. By becoming part of the Qualcomm Smart Cities ecosystem, we are now working with private industry, government and solution providers to create smart city applications that improve public services and enhance safety and the quality of life. Earlier this year, we issued a white paper in conjunction with the University of Nevada, Reno Center Applied Research. That outlined how roadside lidar is the key to building smart and safe transportation infrastructure. The past few months have seen a few more lidar companies look to go public on the backs of our success. The information in their public filings validates our substantial leadership position, and also showcases the massive opportunity for Velodyne due to our dominance in each of their industries. In summary, it is an incredibly exciting time for lidar and for Velodyne. As we work towards democratizing lidar for many applications, we believe we have hit an inflection point in the lidar industry, which is evidenced by our expanding pipeline and by shipping more units than ever before in the fourth quarter of 2020. In many applications, lidar's status as a critical sensor is giving us the opportunity to add higher value to our customers by providing full solutions, not just hardware. Before I turn the call over to Drew, I wanted to take a moment to touch upon our recent Board and leadership transition. As you saw, our Board has named Brad Culkin as Chairman to succeed David Hall. Brad co-founded Velodyne Lidar’s predecessor company, Velodyne Acoustics and has been involved in Velodyne Lidar throughout its history, including serving on Velodyne Lidar's Board since September 2016. We look forward to continuing to benefit from his invaluable guidance on technology and business strategy. I'm also excited to see Sally Frykman take over the role of Chief Marketing Officer, her expertise in managing public relations and digital marketing will prove invaluable as we continue to execute on our strategic plans. And finally, it's my pleasure to welcome Hamid Zarringhalam to our Board of Directors. In his role as Corporate Vice President at Nikon Corporation, Hamid is responsible for the external investments, strategic alliances and the private equity strategy of Nikon Corporation, leveraging their core competencies to enable and scale growth in new markets. He is responsible for Nikon's strategic partnership activities in semiconductor lithography in the United States. With his appointment, we are further deepening our relationship with our valued manufacturing partner, Nikon. I'd now like to turn over the call to Drew for a discussion of our financials.

Thank you, Anand, and thank you again to everyone for joining us today. I’m Drew Hamer, the CFO for Velodyne Lidar. I'll begin with an overview of the company's fourth quarter and full year 2020 results before moving on to a discussion of our target business model, supporting our positive long-term outlook. Total revenue was $17.8 million for Q4 2020, compared to $19 million in Q4 2019. Product revenue was $14.4 million in the quarter compared to $18.2 million in Q4 2019. As we disclosed in January, we reduced production capabilities at our manufacturing sites late in the fourth quarter of 2020 due to COVID-19, which impaired our ability to fulfill certain customer's orders in December and negatively impacted product revenue. As our strategies to accelerate the adoption of Lidar by lowering ASPs and driving higher volumes reduced ASPs also had a negative impact on revenue year-over-year. We are extremely pleased to see our strategy working as demonstrated by the fact that units sold went up year-over-year to record levels. As we predicted, the product mix continued to transition to more efficient solid state units. We are anticipating the sales of solid state Lidar units will be 30% in 2021. On reviewing our current pipeline, we expect that this could increase to 60% of revenues by 2024. When combined with the increasing pipeline for 2020, we continue to see that this strategy will drive long-term growth for Velodyne. License and services revenue was $3.4 million, up from $780,000 in Q4 2019 due to cross-license agreements recognized during the quarter. GAAP gross loss was $5.3 million, and non-GAAP gross profit totaled $2.1 million compared to a fourth quarter 2019 gross profit of $224,000 on both a GAAP and non-GAAP basis. GAAP operating loss was $111.5 million and included $91.3 million of stock-based compensation. Non-GAAP operating loss was $20.1 million compared to Q4 2019 GAAP operating loss of $29.8 million and the non-GAAP operating loss of $27.2 million. GAAP net loss was $111.5 million and non-GAAP net loss was $20.1 million. GAAP loss per share was $0.64 and non-GAAP loss per share was $0.04. Loss per share for the fourth quarter is calculated using weighted average shares outstanding of 173.9 million. As of December 31, actual shares outstanding were 175.9 million. We had $350.3 million in cash and cash equivalents on our balance sheet at December 31, 2020, which included $73.7 million of proceeds from the exercise of public warrants. We received an additional $89.3 million in proceeds as of February 19, 2021. I will now turn to the full year 2020 results. Total revenue was $95.4 million, compared to $101.4 million in 2019. Product revenue was $68.4 million. This compared to $81.4 million in 2019. With the year 2020, we sold roughly the same number of units as 2019. Part of our strategy is to drive widespread adoption of Lidar with sensors designed to enter the market at lower price points. As a result, the average selling price was lower in 2020, which impacted revenue. License and services revenue was $27 million, up from $20 million in 2019. The $7 million increase in license and services revenue primarily reflects recent cross-license agreements, partially offset by decreases in repair services and engineering fees. GAAP gross profit of $25.1 million or 26% gross margin, and non-GAAP gross profit of $32.5 million or 34% non-GAAP gross margin, exceeded our guidance and compared to 2019 GAAP and non-GAAP gross profit of $29.8 million. The decrease in GAAP gross margin was primarily due to $7.6 million of stock-based compensation expense. GAAP operating loss was $153.9 million, exceeding our full year guidance. Included in the GAAP operating loss figure was $91.5 million of stock-based compensation. Non-GAAP operating loss was $62.4 million also exceeding our full year guidance. GAAP net loss was $149.9 million and non-GAAP net loss was $65.1 million. Accordingly, GAAP loss per share was $1.01 and non-GAAP loss per share was $0.44. We continue to monitor COVID-19’s impact on our near-term business and we’ll review our guidance practices when we have greater visibility of its impact on our business. Our target is to provide financial guidance starting in the second half of 2021. We saw strong growth in signed and awarded projects in 2020 going from three to 26 as of February 19. In 2020, we also saw strong growth in our project pipeline as it went from 131 to 194 as of February 19 and anticipate this growth will continue to 2021 and beyond. We are further encouraged by the diversity of our customer base as demonstrated by the pipeline, having multiple customers in multiple industries. As we saw in 2020, having a pipeline that isn’t dependent on a concentrated number of projects in one industry derisks our business model. This progress provides support for our long-term growth plans and business opportunities. As of February 19, 2021, we estimate that we could have the opportunity for over $1 billion from our signed and awarded projects for the period 2021 through 2025. When we combine this with a pipeline of projects that are not yet signed and awarded of $4.4 billion, we remain confident in our ability to achieve our long-term financial plans. In addition, our manufacturing strategy of outsourcing production to our contract manufacturing partners, with the objective of reducing the per unit cost of revenue together with our plan to increase in licensing and software underpins our long-term business outlook of total gross margins ranging in the mid to high 50% and EBITDA margins of more than 20%. Please refer to our investor presentation for more detailed target business model. We remain focused on delivering disciplined growth for all our stakeholders. In closing, our long-term optimism remains strong. Recent high-profile wins, our significant pipeline of contract opportunities and our commitment to new product development position us well for the future. We look forward to sharing the results to reflect our progress in the quarters ahead. Anand and I are ready to address your questions. As a reminder, we kindly ask the questions are focused on our business and operations in the fourth quarter and full year 2020 earnings results.

And we'll go ahead and take our first question from Itay Michaeii with Citi. Please go ahead.

Great. Thank you. Hi everybody. Just two questions the first, maybe just on the business development it looks like I think non-auto now accounts for maybe, or at least over 50% perhaps of your total projects, but I just hope you can really talk about what you're seeing in the non-auto versus first kind of ADAS AUV side. And perhaps also talk about the latest interest in the competitive environment, particularly on the ADAS side of things with Velarray and Velabit.

So as far as the pipeline goes, we continue to see strong growth in the non-automotive segment, while the automotive segment also continues to grow, especially in the ADAS space. And so I think that broad split of half-auto and half-non-auto still remains mostly irrelevant for Velodyne. Definitely in the non-automotive segment, especially in industrial robotics, we have seen explosive growth in the number of projects in that space driven by all the changes that we are seeing in our world, in this post-COVID world to our supply chain and the enormous investments that e-commerce and logistics customers are making in that space. Could you repeat your second question, Itay?

So maybe just on the ADAS side, just talk about the competitive environment there. And just the traction you're seeing with Velarray and Velabit?

Sure. We have as of now about 194 projects in our pipeline with about 61 of them being ADAS projects, and we are seeing a significant portion of those being demand for the Velarray. So the Velarray product has continued to mature. And as we talked about in the earnings calls we did – we manufactured and shipped over 700 of these products just in the last quarter. So we are seeing tremendous demand and excitement around the Velarray project. We are also really excited by the fact that Velabit product has now entered our pipeline as well. And we have over 20 projects in our pipeline that are around the Velabit. So both Velarray and Velabit continue to garner significant attention in the automotive space and we see lots of projects around them developing.

That's helpful. Let me just second one quick question, just on a financial, thank you for the update on the forward of business outlook through 2025. I think back in September, you had mentioned that I think maybe roughly like 56% of your prior 2024 revenue outlook was signed and awarded. I don't think you'd be in position to update that today, or you're going to talk about roughly kind of where you are relative to that for 2024. I believe the number was maybe like $380 million at a time that was signed orders back in September.

Yes. So we aren't providing any guidance that far out at this point. However, we do feel very confident with the signing and awarding of contracts that we have currently plus the pipeline that we have that we should be able to achieve our financial goals as we get out into 2023, 2024 and 2025.

Hi, guys. This is Tristan with Baird. Can you hear me?

Yes, we can. Thank you for dialing in.

Hi. Could you provide a bit more color on the Velabit design wins? Is that L2 plus applications? And if not, can you talk about the prospects for L2 and whether you have already design wins in that segment and presumably what the timeframe will be for a ramp?

Yes. We are seeing significant interest and discussion around the prospects of using lidar for Level 2, especially around products like Velabit products. We don’t have that converted into a design win just yet. However, as we have talked about, the fact is that lidar is capable of providing far more robust functionality even in the context of a Level 2 application such as pedestrian automatic emergency braking, lane keeping and lane centering, than some of the existing technologies because of its ability to work across all lighting conditions. And because of that, we are continuing to see significant interest from our automotive customers around the usage of lidar in conjunction with our software for Level 2. So those conversations are still continuing and we believe that lidar will be adopted in Level 2 applications in the future.

Okay, great. And then I know that you’re not going to provide guidance until the second half of the year. How should I look at the unit growth this year? What is the expected price declines and ultimately that translating to actual revenue growth for this year, year-over-year.

Yes. So we can’t provide guidance on the year and year-over-year, but our thinking is that we should see a jump in our unit growth this year, because we’ll be selling more Velarray so we expect the Velabit to also enter the market here in the second half of the year actually starting in Q2, I believe. So with those introductions that will bring the ASP down a bit. So even with the increasing volumes, we may see an impact on revenues overall. But we’re very focused, mostly around getting the unit buyers to expand because we believe that’s where the success of the company lies in the future, which of course is also backed up by all of the work that we’ve done by getting our units. So that we are in production on a number of our products in our manufacturing operations off-shore and mass production and also in the process of getting all these units up and running in the offshore operations with our contract manufacturer. So we really feel that we should be able to drive a lot more volume, which will ultimately in the years to come drive significant growth in revenues.

Great. Thank you.

Thanks so much, guys. It’s Colin Rusch from Oppenheimer. Can you talk about the pipeline and the activity around the software that you guys can monetize with this hardware? Are you seeing real active agreements around the recurring revenue potential software upgrades? And how should we think about that as a percentage of revenue over the next couple of years?

Yes. So we are seeing a very busy pipeline, as Anand mentioned, we have a lot of projects currently focused on the software products. And that is expanding on a regular basis, almost daily at this point. And the types of products we’re expecting to have out there are going to be products that will allow us to get to a revenue model of a kind of SaaS nature, where they will have recurring revenue streams that’ll be on a monthly or annual basis. We’re expecting the data growth will really start to kick in out in 2023 and 2024 and then should represent a larger portion of our revenues targeting right now. That’d be around 20% of revenues, as we get to say 2024. So, those are the key drivers for the software revenues.

Great. And then just in terms of system design, we’re working in a variety of different messages around the portion of the sensor suite that gets assigned to Lidar and this ability to take some of the functionality away from Lidar and then off the sensors. Can you talk a little bit about that in terms of what you’re seeing in with the customers as you look at – out years on the revenue model?

Yes. I mean, I think all of the sensor technologies will continue to progress and grow and we see that investment in all the different sensor technologies continue. but Lidar is now by no means left behind, with significant investments being placed with public companies like Velodyne being able to make significant R&D investments in the improvement and scalability of Lidar. So as that happens, we see that all of these sensor technologies will start to approach their physics limitations and Lidar by virtue of being able to really work across many different lighting conditions and provide a much higher resolution than radar does is assuming sort of a prime position in advanced safety systems, as well as advanced robotics and autonomous systems. And we believe that trend will continue with all of the exciting technology work that is happening in this space, and as well as the fact that you have significant investments in software development around the usage of Lidar and Lidar-based point clouds. So, we definitely see that reflected in the growth in our pipeline and in our conversations with our customers.

Great. Thanks so much, guys.

Hi, Richard Shannon here from Craig-Hallum, guys. How are you?

Good, Richard. thank you for dialing in.

Good, Richard. Thank you for dialing in.

You bet. I’m going to make this quick, because I got to jump on a couple of other calls here, but which you talked about in your early January press release about seeing some reduced visibility and Anand, I think you referred to a couple of scenarios, which I think is identified in the public realm. I think we’ve mentioned those to you. Are those things that are actually affecting this year, or checks that may have been for the out years there. So, are those correlated or those different situations there?

I think we’re seeing COVID-19 being more of an expected short term kind of impact where people are just kind of waiting to get back into their offices and get busy. We’ve had a lot of – continue to get good responses around wanting to do multi-year agreements and honoring the multi-year agreements. However, they’re just – their hands are tied, like all of ours where they can’t get into the office and start moving the industry to customers, because your customers are also at home like the rest of us. So, there’s a lot of excitement amongst our customer base to get back on plan and get back on track to all of the agreements we have, as well as the contracts you’re talking about entering into, which are in our pipeline. However, there’s just always that uncertainty around, when are they going to be able to start doing that, because of the speed at which the vaccinations are rolled out geographically, each geography tends to have its own impacts right now. But people are very much interested in getting back on track.

Okay. So, would it be fair to say your decision to provide some guidance for this year starting in the second half based on hopefully the COVID dynamics are getting over with – and getting better visibility to that? Is that a fair group?

Exactly. That’s what we’re expecting. That’s right.

Okay. A second follow-up question here is on the topic of ADAS, following on a couple other ones earlier here. just kind of big picture here, what do you see as potential for the attach rate of Lidar to ADAS, where the cost center to be is fairly high? Do you see this as mostly replacement of other technologies or in conjunction with?

yes. I think when you talk about the ADAS, there’s really in our mind two possible applications that is Level 3 ADAS, which goes from like a traffic jam assist functionality to a highway autopilot as well as and then the level 2 ADAS as the previous question alluded to, and we believe Lidar has an incredibly strong role to play in both. of course, really, the high volume attach rate for Lidar in automotive really opened up with Level 2 ADAS, where you had the ability to really see high penetration and attach rates for Lidar and on the backs of really cost-efficient scalable technologies like our Velabit, we believe that opportunity set will open up and really drive volumes while the tech space for level 3 remain quite modest and low, because they started the high-end wakeups.

Okay. Appreciate the thoughts and that’s all for me. Thank you.

Thank you.

Thank you.

Yes. Hi, thank you for taking my questions. It’s Rajvi Gill from Needham.

Hi, Rajvi.

Hi, how are you? So Drew, you had mentioned that you expect to see kind of a jump in unit growth this year, kind of following the significant new growth in 2020. But ASP is coming down as we try to proliferate this into the industry, which may impact revenue and it did impact revenue in 2020, in terms of that offset between unit and ASP. Just wondering, what is the kind of the right mix of ASP versus unit growth? Do you think that you need to hit where you start to see kind of revenue growth? Just state how to think about that those competing dynamics?

Yes. So this is – it’s very important, because it’s been part of the company strategy to introduce, as we have a broad portfolio of products that are all designed to entry, meet different customer needs, and also included in those needs are coming into the market at the right price point, so that we can allow the proliferation of Lidar in multiple applications. The impact of that of course, is that it’s going to be bringing down the ASPs as what we have elevated to $100, and we have the other sensors at a couple of thousand eventually. So, we really think that as we get further out into say 2022, 2023, you’ll start seeing hundreds of thousands of sensors being sold, but there’ll be – at that lower ASP. And I wanted to caution people to think of it in a quarter, it’s very hard to make any judgements. You have to look at it kind of on a linear basis because product sold mix in a given quarter could not necessarily represent the overall impact for. So maybe, on an annual basis, this is a better way to look at it. And we’re expecting that as we get out into 2022, 2023, and the unit volumes start moving up towards 100,000 and maybe, out as we get closer to 2024, we may be even approaching 1 million sensors that these ASPs are going to be coming down into the $600 range. So it's really going to be a transition from where we are today and the ASPs we're seeing it, and we anticipate those will continue to come down. But the volumes will start to increase significantly as we get out into 2023 and 2024.

Hello?

Sorry, I only heard that. Can you repeat the question?

Sure. Could you provide what the blended ASP was for 2020 versus 2019?

For 2020, the weighted average ASP was approximately $3,800. For 2019, sorry, off the cuff, I don't remember. I'll have to get back to you on that.

Okay. No problem. And the last question, I mean, I saw that you're getting a lot of adoption in solid-state. I think you talked about the goal is to get to 30% in 2021 and then 60% in 2024. Just correct me if that's not right. Just wondering if you can elaborate in terms of your traction on solid-state, what the adoption has been with your customers? Thank you.

Yes. I mean, you know, I think we see definitely that as I said before, there's more than one lidar technology needed to serve all of these different marketplaces. And I think we are really served very well by having both the rotational product line, which continues to actually work very well for AV, as well as shuttle and some smart city applications. But then we are seeing the solid-state lidar family really get a lot of traction, obviously, in the ADAS space, as well as in some of the robotics applications. So really, in applications where you have small form factor systems or systems where design aesthetics are really important, the solid-state directional lidar portfolio is really seeing a lot of traction and growth and demand in those sorts of applications, including robotics and ADAS.

We'll take our next question caller. Please go ahead

Actually, if you don't mind, I'd like to just make a correction there to Raji's question about the ASPs. In fiscal-year 2020, the weighted average ASP was about $4,800. And just on 2019, it was approximately $7,100. Sorry. Thank you. Please go ahead.

Thank you. We'll take our next question caller. Please go ahead.

Hi, Anand. It's Ruben Roy from Benchmark Company. Thanks for taking my question. Drew, I wanted to just follow up on the ASP discussion just a little bit more. You guys mentioned, obviously there's other lidar companies coming out. I understand you guys are shipping many, many more sensors than a lot of the competitors. But has anything changed, would you say, in the last 90 days as we've seen more discussion around lidar, et cetera., around the way you were thinking about ASPs maybe back in June when you had your Analyst Day?

Let me start by talking about that. I mean, no, I think we have – as a result of being the first mover and having the ability to sit across the table with our major customers for many years at this point, we have always had a clear-eyed understanding of where the end cost of the technology needs to get to for all of these different applications to enable mass-market adoption. And really, we have been making the investments from an R&D perspective and really driving the technology toward this point. If anything, all of this discussion around lidar over the past few months has really validated everything that we have said, both from our leadership position, as well as really where we think the market needs to go to enable mass-market adoption. And further, as is also evidenced by all of the conversations we are seeing, we believe there is a very strong market for lidar, both in automotive, as well as in nonautomotive industrial applications. And I think that is also being borne out by what all the discussions we're seeing in the marketplace. So no, nothing has really changed in terms of our outlook.

I appreciate that. And I guess as a follow-up, I know you guys aren't providing any explicit guidance here and your visibility should start to improve in the second half. But based on what you just said about ASPs, based on when you typically get purchase orders, which I think you have some lead time and backlog visibility, is it realistic at this point to expect that you're going to grow revenue in 2021 versus 2020?

Again, I can't provide guidance. It's really going to be about the unit volumes and the orders that come in from the customers about being able to grow revenue in 2021 versus 2020. And until we get a better sense of people coming back into the workplace, there's not much I can say about that right now.

Right. Okay. Thanks, guys.

Thank you, Ruben.

We'll take our next question. Caller, please go ahead.

This is Michael Filatov from Berenberg. Thanks for taking my question. I just wondered if you guys could maybe provide a little bit more detail around some of the business, I think you said, was lost to a competitor that's a legacy competitor in this space and why that was in sort of – whether that impacts your business with that customer on additional platforms or other business opportunities with them? Or it's purely sort of the near-term first-production model?

Yes. I mean, obviously, we cannot talk for specific customers and customer contracts. But really, as you described it, we have seen instances where the customer may go with a lower performance competitive product while our technology is going through validation and being put through its paces. We continue to be very actively engaged with both our Tier 1 partners and the OEM customers around next-generation platforms with our Velarray technology, which is clearly capable of far higher performance than any of the older technology products out there.

Which, by the way, they're evaluating for the next generation of various vehicles that they'll be bringing to market. So we're very, very busy in those conversations on various projects that are going to be for the next-gen projects that will be coming up.

Understood. And just following up on that. I guess where do you see yourselves right now in terms of getting the Velarray to sort of desample auto-grade qualifications? Where are you in that process? And what does that timeline look like at the moment?

Yes. I think we are – we have gone through our automotive-grade qualification in the fourth quarter and continue to go through that right now. Our H800 product is in that phase today where I would say it's automotive-qualified and is capable of hitting the environmental, as well as the level of performance for some automotive applications. So I think we have made significant progress in the past six months nearly maturing the product. And we see as a result of that significant opportunities in our pipeline with interests across many different OEMs for that product and for products in the Velodyne family.

Good after, guys. This is Aileen Smith from BoA. Can you elaborate a little on the commentary of the opportunity for over $1 billion in revenue from signed and awarded projects over 2021 to 2025 versus an additional pipeline of projects of $4.4 billion? Specifically, what of the signed and awarded contracts makes that backlog estimation sound a bit less firm as a quoted opportunity versus what we might hear from a standard supplier around their respective backlogs? Is it a function of narrowing down pricing? Is it differences in contract structure of production contracts versus spot buys or something else?

Yes. So signed and awarded contracts are kind of a standard industrial agreement that we have with many of our customers that are based on the unit volume agreement and they have normal price curbs. So that also gives us visibility into where we'll be as we get out into the coming years with those particular contracts. And it helps us to gain confidence now. As is normal, these contracts will probably have – the firm POs will come in as we get closer to production in a given year. So the respective customers, as they understand what the production levels will be, will give us more firm contracts as they approach production. And all of these contracts are designed so that they have a component where if the contract isn't – the ultimate order isn't at the level that was originally agreed to in the signed and awarded agreement, the production agreement, then we have an opportunity to increase the price or renegotiate the price that they pay for each unit. Of course, if they come back and they want more units, then probably, they can go back and renegotiate the price as well. So standard industrial types of contracts for people to get to a kind of commercial production for a component as an application or solution that they'll be producing. And they would lock us in on the front end as kind of a design win. And then they do all their work, putting all the final work designs into whatever it is that they're going to be manufacturing so that they can be able to make their commitments on the other end and delivering those goods.

Okay. That's helpful. And then to ask a question on another headline recently being Ford's decision to sell down their Velodyne stake. Can you talk about what this means, if anything, from a customer relationship with Ford and Argo AI and even potentially relatedly with Volkswagen? And separately, many automakers, including GM and others over the past few years have acquired their own lidar technology that they're working to commercialize. How has that impacted your discussions with existing and potentially new customers?

Yes. So we're finding like, in the case of Ford, this is a relationship we've really benefited greatly from. They are in the business of making strategic investments in critical suppliers, when they need to stand them up and ensure that they'll be financially secure to deliver these components that they need, in our case, lidar. When those particular companies that they've invested in are capable of standing on their two feet, so to speak, then they don't like to stick around as a financial investor. That's not their nature. They'd rather reallocate that capital to other investment. So we've benefited greatly from this relationship with Ford both in terms of what they've done for Velodyne Lidar in helping it to develop its products as a partner and becoming that critical supplier for them, and then also from their investment. And then as we go forward, we have a number of different projects in the pipeline, where we're on some existing cars in Phase 1, Phase 2, and they're continuing to evaluate us as a technology that would continue to Phase 3 of some of those cars. So we are very appreciative of the relationship with Ford, we continue to work with them very closely on both that current products that are being used, as well as the development of new technologies, and we would expect that to continue for a long time to come.

Okay. And last question, what specific milestones whether from a return to work or production bookings, or other perspective, do you think you need to see through the first half of this year in order to start establishing the more formal outlook for 2021 onwards towards later this year?

Yes, so this is – I keep – I'm having steady conversations with our sales organization in the field. And it's really focused on the conversations they're having with customers to start getting them to release their POs. So a lot of the countries like Europe, we thought Europe might be up sooner, now there could be locked down through 2021. And even some of the Asian countries are seeing similar things and then they kind of keep telling us they hope. So we have great relationships with our customers, we continue to talk to our contacts on a regular basis, and we're really waiting for them to get confident that they'll be coming back to the office and when. So to have that visibility, it's really about how does the world start to unfold out there, so that our customers who are going to be using our Lidar in some system that they're building feel confident that their customers are returning to the office and they're going to be able to sell-through, so that they can have confidence to get against those POs. So from who you talk to, it depends some people hope that they're going to return to the office in April, others are a little less optimistic, so they may be further out. We're just looking for those conversations to firm up so that we can get confidence around when those orders are going to come in, and that we can start providing clear guidance. Thank you. Thank you all for joining us today and for your great questions. It is a very exciting time for Lidar and for Velodyne. We believe we have hit an inflection point in the Lidar industry as demonstrated by our record unit shipments in the fourth quarter and an expanding pipeline, which we believe is the most robust in the industry. In 2020, we’ve significantly enhanced our balance sheet, supporting this robust pipeline, this together with our leadership in broadly diversified end markets for Lidar gives us great confidence in our long-term outlook for growth. We look forward to sharing our continued successes with you and hope everyone has a great rest of the day. Thank you.

Thank you.

Once again, that does conclude today's conference. We do appreciate your participation.