In a recent earnings call, Cepton Technologies, Inc. (NASDAQ: CPTN) reported a significant increase in its annual revenue, surpassing the forecast for Fiscal Year 2023. The company's revenue reached a record $13.1 million, marking a 76% increase compared to the previous year. Cepton also introduced its latest innovation, the Cepton Ultra LiDAR, at CES 2024, targeting mass market adoption with its long-range detection capabilities. Despite not providing financial guidance for 2024, the company ended the year with a strong cash position and anticipates sharing updates in the upcoming Q1 earnings call.
Key Takeaways
- Cepton's FY '23 revenue soared to $13.1 million, with Q4 revenue at $5.0 million, a 214% year-over-year increase.
- The company launched Cepton Ultra, a new long-range LiDAR product, at CES 2024.
- A Chinese competitor's addition to the U.S. restricted entities list is seen as an opportunity for Cepton.
- Cepton's full-year adjusted EBITDA was reported at -$41.2 million.
- The company concluded the year with around $56.4 million in cash and investments.
- Cepton did not provide 2024 guidance but will update during the Q1 earnings call.
Company Outlook
- Cepton anticipates giving 2024 guidance in the Q1 earnings call.
- The company remains optimistic about the upcoming year, with new products, projects, and technology on the horizon.
Bearish Highlights
- A major OEM canceled a series production award with Cepton.
- The company's adjusted EBITDA for the full year stood at -$41.2 million.
Bullish Highlights
- Cepton Ultra's launch positions the company to capture a larger share of the automotive and other application markets.
- The addition of a Chinese LiDAR competitor to the U.S. restricted list may reduce competition and benefit Cepton.
- Significant shipments for the smart tolling project were made in Q4.
Misses
- Cepton did not provide specific financial guidance for 2024 during the call.
Q&A Highlights
- The final sourcing round with a top 10 OEM remains competitive, and the company is vying for the contract.
- Rescope with GM is ongoing, with efforts to recover the investment.
- The company confirmed stable operating expenses, likely lower than in 2023.
- The CEO and CFO expressed confidence in the company's direction and growth potential.
In summary, Cepton Technologies has demonstrated robust revenue growth and strategic product development with the introduction of Cepton Ultra. While facing some setbacks, such as the rescinded OEM award, the company's optimistic outlook and stable financial footing suggest a positive trajectory. Investors and stakeholders are advised to look forward to the Q1 earnings call for further guidance and updates on the company's performance and strategic initiatives.
InvestingPro Insights
Cepton Technologies, Inc. (NASDAQ: CPTN) has shown impressive revenue growth over the past year, with the latest data indicating a 76% year-over-year increase. This upward trend is further highlighted by a quarterly revenue jump of 214% in Q4 2023. While these figures are promising, it's important to consider additional financial metrics and analyst insights to gain a fuller picture of Cepton's financial health and market position.
InvestingPro Data metrics for Cepton Technologies reveal a market capitalization of $44.09 million, suggesting a relatively small player in the tech industry. Despite the company's revenue growth, the P/E Ratio (Adjusted) for the last twelve months as of Q4 2023 stands at -0.91, indicating that the company is not currently profitable. This is further supported by a negative price/book ratio of -1.15, pointing to challenges in generating shareholder value in relation to the company's net assets.
One of the InvestingPro Tips for Cepton is that analysts anticipate sales growth in the current year, which aligns with the company's recent revenue increase and introduction of new products like the Cepton Ultra LiDAR. This tip suggests that the company's growth trajectory may continue, which could be appealing to investors looking for expanding companies. However, another tip to consider is that Cepton is quickly burning through cash, which could raise concerns about the company's long-term sustainability and its ability to fund ongoing operations and growth initiatives without additional financing.
For those interested in a deeper analysis, there are more InvestingPro Tips available on the platform that can provide further insights into Cepton's valuation, profitability, and stock performance. To access these tips and make the most informed investment decisions, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With these tools at your disposal, you'll be better equipped to understand Cepton's market potential and investment risks.
Full transcript - Growth Capital Acquisition (CPTN) Q4 2023:
Operator: Greetings, and welcome to the Q4 and Full Year 2023 Cepton Business Update and Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dennis Chang, Interim CFO. Thank you, Dennis. You may begin.
Dennis Chang: Thank you, and welcome to Cepton's fourth quarter and full year 2023 earnings call and business update. With me today are Jun Pei, Co-Founder and Chief Executive Officer; and Mitch Hourtienne, Chief Commercial Officer. During the call, we may refer to our unaudited GAAP and non-GAAP measures in our earnings release. The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with U.S. GAAP. Reconciliations for non-GAAP measures are included in our earnings release. I would like to remind everyone that comments made in this conference call may include forward-looking statements regarding the company's expected operational and financial performance for future periods. These statements are based on the company's current expectations and are subject to the safe harbor statements relating to forward-looking statements contained in our earnings release and the presentation slides that accompany this call. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks, uncertainties or other factors, including those discussed in the earnings release or during today's call and those described in our filings with the U.S. Securities and Exchange Commission. We are not undertaking any commitment to update these statements as a result of future events, except as required by law. As a quick reminder, this call is being recorded, and you can find the earnings release and presentation slides that accompany this call as well as the webcast replay of this call at www.investors.cepton.com. Now I would like to turn the call over to Jun.
Jun Pei: Thank you, Dennis, and good afternoon, everyone. Thank you for joining Cepton's fourth quarter and full year 2023 earnings call. We will provide a business update and review our financial results with you. There's quite a bit of news though within the industry these past few months, and specifically regarding Cepton. First, I'd like to congratulate our team on exceeding our FY '23 revenue guidance with a record $13.1 million in recorded revenue and preparing us for growth with the launch of our new LiDAR product, Cepton Ultra at CES 2024. These are two major accomplishments that keeps us at the forefront of this industry. First, on our latest long-range LiDAR product, Cepton Ultra demonstrated at CES 2024. Cepton Ultra or Ultra represents a Pinnacle in LiDAR technology, boasting a remarkable long detection range of up to 300 meters at 10% reflectivity. Ultra-high-resolution with software definable regions of interest and the distinction of being the world's slimmest adaptive long-range LiDAR. This design enables seamless integration into various vehicle locations, maintaining aesthetic appeal and reducing aerodynamic impact. At its core, Cepton Ultra leverages our next-generation imaging technology, MagnoSteer, alongside with a proprietary chipset SoC to significantly enhance point cloud quality while minimizing cost, footprint and power consumption. This strategic blend of advanced features is designed to deliver an optimal balance of performance, cost and reliability, making Ultra not just a technological marvel, but also a viable solution for mass market adoption across automotive, smart infrastructure and various other applications. Moving on to a piece of industry news that creates significant opportunity and competitive edge for Cepton. In a significant development that has considerable implications for the global LiDAR industry, a prominent Chinese LiDAR company on January 25, 2024, was added to the 1260H list of Chinese military companies by the U.S. government. This designation, which highlights entities believed to be affiliated with the Chinese military and defense sectors has underscored the complexities and risks associated with American business engaging in partnerships or transactions with firms listed under such a category. This development has prompted many U.S. corporations to reassess their supply chain strategies and partnerships aiming to mitigate risks associated with compliance, geopolitical tensions and national security concerns. We believe this event is a significant opportunity and a catalyst for growth for our company. As the stakeholders and partners in the industry seek alternatives to navigate away from the potential risks posed by sourcing from entities on the 1260H list. Cepton as a U.S. company has emerged as a viable and secure partner and a supplier for LiDAR. This shift not only highlights our commitment to adhering to international regulations and safeguarding our operations from geopolitical uncertainties, but also reinforces our position as a trusted leader in the LiDAR technology sector. Our competitive advantage to offer reliable LiDAR supply amidst these challenging times has further solidified our market presence and opened new avenues for growth and collaboration. Lastly, I want to briefly touch upon some recent news on the GM series production cancellation and a letter of indication from our Tier 1 partner and shareholder, Koito manufacturing, which were both disclosed in more details in our Form 8-K. On December 11, 2023, Koito informed us that the original equipment manufacturer that awarded Koito, the Series production award has decided to rescope its ADAS product offerings. And as a result, all outstanding purchase orders from Koito to the company that relate to the series production award have been canceled. As is customary, when an automotive program changes, Cepton initiated actions to secure project investment cost recovery related to any delay or cancellation of an existing program. On December 21, 2023, we announced that we have received a nonbinding proposal from Koito to acquire 100% of the outstanding shares of Cepton not currently owned by Koito. Cepton's Board of Directors via a special committee is currently evaluating the indication of interest among other strategic options with assistance from financial and legal advisers. No assurance can be given that a definitive transaction with respect to Koito's indication of interest or any other potential transaction will eventually be consummated. As we have discussed in prior quarters, we are continuing to build our business and delivered yet another record setting quarter for revenue. Cepton remains steadfast in pursuing opportunities in automotive and remains in a good position to win additional series production award with sourcing decisions on the horizon. With that, I'll turn it over to Mitch for details on our efforts with customer programs.
Mitch Hourtienne: Thank you, Jun. Since our last earnings call, Cepton has received a dramatic increase of attention from the automotive industry. In part due to the macro events against Chinese LiDAR companies mentioned previously, but more importantly, the launch and demonstration of our new Ultra product. Specifically, we have made significant strides with a Top 10 global automotive OEM. Previously mentioned is one of the industry's top open RFQs. Our recent demonstrations of the B samples of our Ultra product have been a game changer in advancing this particular automotive RFQ as well as accelerating discussions with other top automotive OEMs. Furthermore, our in-depth collaboration with Koito as an automotive supply titan has become one of the top driving factors for automotive OEMs to consider the Cepton-Koito solution over other competing solutions. The go-to-market strategy of Seton with Koito as our Tier 1 partner is starting to become an obvious and sustainable winning combination for customers as they solidify their first mass production launches using LiDAR technology. Of course, we have seen some false starts, delays and rescoping as car companies refine their adoption of this new technology. But it is clear that LiDAR is not going away. It's just a matter of time before several OEMs safely launch new ADAS systems, incorporating the tremendous advantages that LiDAR provides. Having a supplier, which can sustain this launch learning curve is becoming paramount to OEM sourcing decisions. Next, Cepton recently filed an 8-K disclosing the notification of an OEM series production award. Today, we're not able to disclose any more details on this project outside of those disclosed in the 8-K, but they will be forthcoming soon as we work together with the OEM and Koito public announcements. In addition to our recent automotive developments, I'm pleased to highlight significant progress we made with a major autonomous industrial vehicles OEM using our near-range LiDAR, Nova in Q4 of 2023. During the quarter, Cepton passed a significant gate review with this early adopter of our near-range LiDAR technology, and we've advanced to the final preproduction phase of this project in 2024 with expected mass production launch in 2025. With this milestone in hand and in partnership with Koito, we now have several other OEMs, including shuttle OEMs, heavy equipment manufacturers and smart infrastructure customers with greater interest and higher demand for our near-range LiDAR product in 2024. 2024 will be a decisive year for continued LiDAR adoption across the automotive landscape. With our new product, Ultra and our deepens partnership with Koito, we are poised to capture market share in this key inflection point of adoption. Now I'll turn it back over to Dennis.
Dennis Chang: Thank you, Mitch. Starting with our fourth quarter. Total revenue for the quarter was $5.0 million, an increase of 214% compared to the prior year period and up 29% compared to our previous quarter. The increase for the quarter was evenly contributed by product revenue and development revenue. Fourth quarter 2023, GAAP net loss was $8.3 million or $0.52 loss per share, basic and diluted. Fourth quarter 2023 non-GAAP net loss was $6.4 million or $0.41 loss per share, basic and diluted. Fourth quarter 2023 adjusted EBITDA was a negative $7.1 million. Now on to our full year 2023 results. Total revenue for 2023 was $13.1 million, an increase of 76% compared to the prior year and above the full year 2023 revenue guidance provided in our third quarter 2023 earnings release. We achieved full year gross margin of 27%. Our full year GAAP operating expenses were $54.3 million, excluding stock-based compensation expenses and nonrecurring loss on impairment of property and equipment. Our non-GAAP operating expenses were well below the $50 million we communicated in our third quarter 2023 earnings release. Full year GAAP net loss was $48.5 million or $3.08 loss per share, basic and diluted. Full year non-GAAP net loss was $38.9 million or $2.47 loss per share, basic and diluted. And the full year adjusted EBITDA was a negative $41.2 million. As of December 31, 2023, we had approximately $56.4 million in cash, cash equivalents and short-term investments. Lastly, we're not offering 2024 guidance at this time. We expect to provide an update on the full year guidance at our Q1 earnings call. And with that, I'd like to open up the call for questions.
Operator: [Operator Instructions] Our first question comes from the line of Shadi Mitwalli with Craig-Hallum. Please proceed with your question.
Shadi Mitwalli: This is Shadi Mitwalli on for Richard Shannon. Thanks for taking my question, guys. I have a question regarding the final round of sourcing with the top 10 OEM. Can you give any details whether this is an exclusive or competitive process?
Mitch Hourtienne: Yes, Shadi, this is Mitch Hourtienne, Chief Commercial Officer. Basically, you're asking, okay, is it exclusive or competitive? It's still a competitive process at this point for that particular opportunity?
Shadi Mitwalli: Did that OEM give you guide any indication of how many other companies are what's in that process?
Mitch Hourtienne: No, no. They didn't give us any particular number.
Shadi Mitwalli: Okay. Makes sense. And then just one more question. What's the time line for the decision and a shipment with the top three OEM? And then is this an OEM that has announced later suppliers in the past?
Mitch Hourtienne: The time line, we can't disclose the commercials of the RFQ we received. But just in general, a lot of the RFQs coming out in the automotive industry right now are -- have the start of series production in the second half of the decade in the 2026 to 2028 timeframe. And then the second part of your question, have they already announced LiDAR suppliers? A lot of OEMs have had various projects with other LiDAR suppliers, the past several years. Yes, this OEM was previously working with another LiDAR supplier.
Shadi Mitwalli: Thanks for the color on that, and that's all for me.
Operator: Thank you. Our next question comes from the line of Kevin Garrigan with WestPark Capital. Please proceed with your question.
Kevin Garrigan: Yes. Hi, guys. Thanks for letting me ask a few questions, and congrats on the progress. Just for the first one, just a quick clarification. The RFQs the RFP that you mentioned and then the final sourcing, those are both for passenger vehicles, correct, not any trucking?
Mitch Hourtienne: That's correct.
Kevin Garrigan: Okay. Perfect. And then has the IOI from Koito caused any of your discussions with OEMs to kind of change at all as the have some -- do they now be waiting on the sidelines until a final decision is made or some actually like the idea of a bigger Tier 1 kind of player sourcing the LiDAR and have accelerated some discussions?
Mitch Hourtienne: Yes, definitely, Kevin. This is Mitch again. Yes, it's an obvious topic that comes up, especially in deep final discussions with the OEMs. I think overall, it's a positive. It's seen as a positive for Cepton and for Koito. There are concerns in the industry about the longevity of LiDAR companies, and I think that's coming to the surface for many OEMs. And so this proposed letter that we received is definitely a positive in front of the customers.
Kevin Garrigan: Okay. Perfect. Thanks, Gus. Thank you.
Operator: Our next question comes from the line of Gus Richard with Northland Capital. Please proceed with your question.
Auguste Richard: Thanks for letting me ask a couple of questions. Just when the industry goes through a rescope, can you talk about sort of what it means to you guys financially? How do they size any remunerations associated with that kind of thing, not specific numbers, just how does one think about that?
Jun Pei: Are you asking about the GM rescoping.
Auguste Richard: Yes, I am. So when there's a rescope, usually, the vendors get money back from money spent. And I'm just wondering, industry practices, what's the magnitude? What does it look like? Is it proportional to your -- what you've spent on development, et cetera?
Jun Pei: Yes. We're certainly trying to recover all the money we have spent invested in the program, but there are a lot of intricacies in the process. Mitch, you want to add something, it's not something of a concrete number we can give out at this point, but it's certainly a nontrivial number.
Mitch Hourtienne: Yes, it's not public information, but I think you can think of it as some proportion of our OpEx the past three or four years since we announced that project. That was a pretty significant work stream for our company. So there were significant investments and that's what's being asked for.
Auguste Richard: Got it. And then in terms of the combination of the trucking company, when would you expect that to go into production?
Mitch Hourtienne: Yes. I'll just refer back to my answer to the first question. Most of the RFQs and awards right now are starting production in the '26 to '28 timeframe. So it would fall somewhere in that timeframe.
Jun Pei: Yes. But again, I refer back to our 8-K filing, that's as much as information as we can publish right now, and we'll follow up with more press releases as we're allowed to release more information.
Auguste Richard: Okay. Fair enough. Last one for me. This Chinese entity that is sort of on the entities list, if you will. Where are you going up against this company and any of the top 10 companies, OEMs that you've been working with? Is this a significant reduction in the competitive environment? Where are you seeing with these folks?
Jun Pei: Yes, I'll start first and then Mitch can add more. There are -- as you can see in the LiDAR landscape, but quite a number of LiDAR companies in competition for any program out there. So you can expect this Chinese LiDAR company as well as us and many others are always competing with each other in any of the LiDAR programs that's active. So it is a fair assumption that we've been competing in a number of projects. And yes, the current situation is they are put on this 1260H list, and there's one fewer in many of these competitions at many places. So Mitch, do you want to add some more?
Mitch Hourtienne: I don't think I have anything to add.
Jun Pei: Yes. Yes. That's...
Auguste Richard: Okay. Very good. That's it for me. Thanks so much.
Operator: Thank you. Our next question comes from the line of Matthew Galinko with Maxim Group. Please proceed with your question.
Matthew Galinko: Hi, thanks for taking my questions. I guess first one is on the smart tolling project you've talked about. I think a pretty significant length in the -- over the last couple of quarters. I didn't hear, I think much about it today, but just hoping you could update us on where the rollout stands and potential for broadening the scope and expansion of the smart tolling practice in general for your business?
Mitch Hourtienne: Yes. Thanks, Matt. This is Mitch. Good question. Yes, you're right. We didn't necessarily highlight that today. But we did continue significant shipments in the Q4 that shows up in our product revenue numbers for the tolling application. And we continue to support those big tolling operators in the U.S. market as they expand both in the U.S. and also bid on some international opportunities. So that's very much an active market that we're supporting.
Matthew Galinko: Got it. And I know you're not specifically providing an outlook, particularly on revenue. But I was wondering if you could give us some sense of your thoughts around spending at least over the next two quarters or if not for the next year just on directionally, what we should be expecting on OpEx? I think you had kind of declines the last three quarters at least on GAAP. So should we expect kind of the same trajectory given the rescoping at GM? Or is it just subject to whether you sort of get to the final decision on any of these OEM selections?
Dennis Chang: It's Dennis Chang here. For the OpEx at this stage, we're not expecting any increase. So it's probably less than our 2023 numbers. I guess with our Q1 results, we'll be providing some update.
Matthew Galinko: Okay. Thank you.
Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Jun Pei for closing comments.
Jun Pei: Thank you very much. It's been an exciting year 2023. So we look forward to another even more productive year of 2024 with new products, new projects and new technology, of course. Stay tuned for further updates from Cepton. Thank you very much.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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