Velodyne Lidar: Drama Hasn’t Helped Stock (NASDAQ:VLDR)

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From patent applications to a high-profile fight with the founder, Velodyne Lidar (NASDAQ: VLDR) has seen nothing but drama since it was made public. Shares could not even stay green after announcing a new multi-year deal with Boston Dynamics. My investment thesis remains bullish on stocks with this focus on non-automotive Lidar contracts.

It is not a complete disaster

This week, founding CEO David Hall sold 1.5 million more shares for $ 1.85 million. Mr. Hall has regularly sold shares this year after disagreements with other executives led to his departure. The founder who sells shares so aggressively has now lowered shares to $ 1.

Insider table

Source: FINVIZ

Although the company hired Dr. Ted Tewksbury as the new CEO, Mr. Hall still doesn’t look happy with Velodyne Lidar. The new CEO is making good progress and developing business functions outside of a company focused exclusively on engineering.

For the first quarter of 2022, the company recorded reserves of $ 11.5 million. The reported revenue figure was only $ 6.2 million due to a related adjustment Amazon (AMZN) warranty agreement. Velodyne Lidar plans to use this number of bookings as a sales figure in the future.

The company sold 2,350 sensor units compared to 2,684 units in the first quarter of last quarter, but the amount was severely affected by supply chain constraints. Velodyne Lidar ended up increasing ASPs by 48% to account for higher supply costs and lower inventory.

Either way, the picture of the quarterly report was much better than market views. The company now has a substantial share of product manufacturing in Thailand and only lacks FPGA to increase sales focused on industrial and robotic spaces.

The reported figures seem like a far more disaster than reality, as the reported $ 6.2 million figure painted a terrible picture for a company leading the Lidar industry in sales after the closure of all SPAC offerings. Velodyne Lidar guided Q2’22 reserves from $ 12.0 million to $ 14.0 million for a sequential increase of $ 0.5 million to $ 2.5 million. The company is now using the reserve metric to better reflect actual sales during the period due to the accounting impact of Amazon’s warranty.

From perspective, industry valuation leader Luminar Technologies (LAZR) reported only first-quarter revenue of $ 22.9 million. Velodyne Lidar has a sales book of about twice the company with a market capitalization of $ 2.5 billion.

Big picture

Weak quarterly revenue and drama with the founding CEO left investors with the vision of a company collapsing. At the end of the first quarter, Velodyne Lidar still has more revenue than most Lidar sensor companies that went public together.

The company has just announced a multi-year deal with Boston Dynamics and generated about a third of the revenue from automotive deals with companies like Motional. Velodyne Lidar does not receive the same attention as other companies due to the lack of focus in the automotive sectors with large offers announced in future orders.

The new CEO left out the previous presentation highlighting a strong order book and an order book that caused a more negative sentiment from investors that these offers disappeared. In fact, Velodyne Lidar continues to build on this customer base and previous projects.

The most recent numbers had the company with an order book of up to $ 800 million by 2025 based on more than 35 multi-year agreements signed and awarded. Velodyne Lidar was projected to reach $ 400 million in revenue this year based on a project portfolio of 220 bids and 4.2 billion potential orders.

Many in the industry have boosted revenue estimates Covid and now fears of recession have delayed projects. As the new CEO commented, the original projections provided competitors with too many details about the main contracts, while the figures did not accurately reflect actual contracted orders.

Velodyne Lidar is looking for another way to accurately reflect the contract delay. Investors should not exaggerate the elimination of filing figures, as any indication that the order book will not increase as industrial and robotics projects for Boston Dynamics and Knightscope (KSCP) is expanding in the short term, while automotive offerings are unlikely to reach production until 2025 and beyond. The company still expects a market size of ~ $ 5.7 billion in 2026 for a business with only $ 11.5 million in reserves in the first quarter of the 22nd.

TAM slide

Source: presentation of Velodyne Lidar Q1’22

Sensor company Lidar has a cash balance of $ 256 million after burning $ 38 million last quarter. The company that focuses on more short-term revenue opportunities in industrial, robotic and smart infrastructure offers a better path to profitability and cash flow reduction before cash balances are exhausted. effective.

Take away

The key for investors is that the drama surrounding the founding CEO has distracted the market from a promising technology business. Velodyne Lidar continues to advance in the Lidar space, but shares have seen market capitalization shrink to $ 200 million. Once Mr. Hall stop pouring irrationally, Velodyne Lidar should go back to much higher levels.

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