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Velodyne Lidar, Inc. (VLDR) Q2 2021 Earnings Call Transcript

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VLDR earnings call for the period ending June 30, 2021.

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Velodyne Lidar, Inc. (VLDR)
Q2 2021 Earnings Call
Aug 05, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the Velodyne Lidar second-quarter 2021 financial results conference call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, this event is being recorded.

I would now like to turn over to Ms. Moriah Shilton. Please go ahead. 

Moriah Shilton -- Investor Relations

Good afternoon, and thank you all for joining us on today's conference call to discuss Velodyne Lidar's second-quarter 2021 financial results. With us on today's call are Drew Hamer, the company's chief financial officer; and members of Velodyne's Office of the Chief Executive, or OCE. Jim Barnhart, the company's chief operating officer; and Sinclair Vass, the company's chief commercial officer. Drew will run through the call's prepared remarks and Jim and Sinclair are available for Q&A.

Before we begin, I would like to remind you that shortly after the market closed today, Velodyne issued a press release announcing its second-quarter 2021 financial results. Velodyne also published an investor presentation. You may access the press release and the presentation in the investor relations section of velodynelidar.com. Today's discussion includes forward-looking statements.

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Please refer to the press release for a discussion of factors that could cause the company's actual results to differ materially from these 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 to one initial question and one follow-up question.

Now I'd like to turn the call over to Drew Hamer, CFO of Velodyne, and one of the members of Velodyne OCE.

Drew Hamer -- Chief Financial Officer

Thank you, Moriah. Good afternoon, and thank you for joining us today. As Moriah mentioned, I am one of the four members of our OCE, and together, we are executing on the company's growth strategy as developed by members of our executive team and former CEO, Dr. Anand Gopalan.

As many of you know, Anand now serves and in an advisory capacity, and our Board is undertaking a search to find a full-time CEO. The OCE has decades of collective business experience, including operations, general management, supply chain, services, manufacturing, engineering, employee engagement, financial strategy, and execution in industries ranging from telecommunications to consumer electronics, automotive, and industrial laser markets. Speaking of markets, the use of lidar today in our served markets and emerging target markets like gaming continues to gain momentum. We are executing against this trend by closing deals with customers across a variety of markets, supported by a broad lidar product portfolio that we are manufacturing today.

Velodyne is the only lidar company that has an off-the-shelf, full software and hardware solution that can be put into vehicles and infrastructure. We are the global lidar leader, shipping more units in the second quarter than the aggregate of all our peers when combined have reported shipping year to date. We shipped more than 3,800 sensor units in Q2, up from more than 2,600 in Q1 as we increased the breadth of market adoption for our lidar, across multiple industries and applications. Of those units, 260 were solid-state units.

We expect roughly 30% of our sales to be solid-state for the full year. Not only did we ship more sensors in the prior quarter, we also shipped them to a larger group of customers as 72% of our sensors sold were through spot buys, indicating the broader market interest for our solution. The number of inquiries from customers is increasing. We believe we are now going through the other side of the COVID-19 pandemic.

We expect unit volumes to start averaging more than 3,800 sensors a quarter for the rest of the year. We are listening to our customers and moving people and goods closer to them. We've placed inventories in China and Europe. We are strengthening in-country technical support in all the regions we serve, including South Korea.

We also established a design center of excellence in India. We continue to deepen our relationships with existing customers and building relationships in new markets. We signed five more multiyear agreements, bringing our total to 34 and meeting our prior stated goal for the year, well before the end of the year. We now expect to sign four additional multiyear agreements by the year-end, which will bring our total to 38.

Our pipeline continues to grow. We had 213 projects at August 1st, up from 198 projects at May 1st. Twenty-five of these opportunities include solid-state Velabit, included in the signed and awarded pipeline are new ADAS multiyear agreements, which we expect will begin to ramp starting in 2026. We have an additional $4.5 billion of opportunity for projects that are not yet signed and awarded that go through 2025.

Turning to our served markets. I would like to run through both how Lidar sensors and software are being used in the various applications of the various markets, as well as provide an update on our progress with customers. We have 300-plus customers over the past decade have bought product and most continue to buy product from Velodyne. We are seeing many of these customers move from a long research and development phase with Lidar to the first wave of mass adoption.

First, automotive. In ADAS, you will find our solid-state Velarray H800 long-range sensor, Velarray M1600, a mid-range sensor, and Velabit from ultra-short-range to mid-range sensing. All of our sensors can enable advanced blind-spot monitoring, parking assist, lane keep assist, adaptive cruise control, automatic emergency braking, including for pedestrians, and more. Faraday future was our first publicly unveiled automotive program using the Velarray H800, and we are currently making progress in our relationships with major high-volume OEM customers as well.

For example, our project with a major Tier 1 ADAS provider in Asia for mass production of Level 3 lidar systems continues to move forward. As part of this project, we are adding headcount in-country to support this effort and to build further relationships with customers in South Korea. AV can use both solid-state and rotational Lidar. An application could include the full suite of rotational surround-view product family, including our Pucks, Ultra Puck and Alpha Prime mid- to long-range sensors, plus our solid-state Velarray mid-and long-range sensors and Velabit, which are ultra-short-range to mid-range sensors, or it can start with rotational and move to solid-state is needed.

As one example, Trunk.Tech, the first company in China to independently develop Level 4 driverless trucks, will use our ultra-puck in Velarray H800 sensors as core sensor hardware in its autonomous trucks. Trunk.Tech recently became one of the first companies to obtain Beijing's permit that allows road tests for self-driving commercial vehicles. As I mentioned earlier in the call, we are increasing our in-country support, as well as moving inventories closer to customers. We are already seeing these efforts result in new customer wins.

We have signed another large company in China, who will use our current and next-generation rotational Lidar sensors to support their logistics with precise, reliable navigation for real-time autonomous vehicle operation. We are working with existing customers to extend their current agreements with us to include additional products within our portfolio. Some of these opportunities came to us as a result of the customer's concern that their current Lidar supplier cannot manufacture the scale they need. In robotics and industrial, you will find our surround-view product family, including our ultra-puck and alpha prime, plus our solid-state Velarray in Velvet.

We recently signed an agreement with an undisclosed North American large company to provide our sensors and solutions for use in warehouses. This builds upon our existing agreement for relationship with this customer for last-mile delivery. It's another example of our success in deepening our relationships with our customers due to our broad product portfolio. As announced earlier this week, antibiotics is equipping its autonomous mobile robots with our puck sensors.

By using our puck sensors, the antibiotics robotic inspection solution is able to map industrial environments to detect obstacles and allow an email to avoid any collisions while navigating harsh environments with a higher level of accuracy. We also signed a five-year sales agreement with a leading defense and security company who have selected our sensors to provide mapping and autonomy capabilities for their robots, the large-scale manufacturing production of which is scheduled to begin in 2024. The quality of our lidar sensors plus our ability to mass manufacture continues to set Velodyne apart from its competitors and are driving additional customer wins for us. In addition, you will also find our surround-view product family.

Seabed B.V., which specializes in high-quality equipment for offshore surveying and dredging has selected our puck sensors for its lidar mobile mapping system. The seabed system is a turnkey mobile lidar solution for hydrographic surveys that helps companies transform their businesses with offshore 3D mapping solutions, which can deliver highly accurate, detailed data collection to support safe navigation and protection of marine environments. Last but not least, our smart city solutions, which is our first offering to combine software and hardware. Our intelligent infrastructure solution, or IIS, combines our award-winning lidar sensors and powerful AI software to monitor traffic networks and public spaces.

In May, IIS was named a winner of the 2021 Smart 50 award, which honors the 50 most transformative smart cities projects in the world. IIS is deployed in multiple North America cities, including in Quebec and British Columbia, Boca Raton, Florida, with upcoming installations at the Rutgers campus in New Jersey and Austin, Texas, and moving forward with a significant project in the Bay Area. In July, we announced we joined the NVIDIA Metropolis program, which is designed to nurture and bring to market a new generation of applications and solutions that make the world's most important spaces and operations safer and more efficient with advancements in AI's vision. At Velodyne, we continue to advance our industry-leading technology.

On the hardware side, in June, we launched the next generation of Velabit sensor, which delivers on what our customers are asking for, an ultrawide field of view FOV and higher resolution. Our next-generation Velabit was launched in under a year, highlighting our commitment to meeting our customers' demand. We have developed a demo day for key customers in June. Seventeen companies attended, including five OEMs and other customers evaluating or using our solutions in industrial robotics, delivery, AV, and ADAS applications.

Across the board, companies told us they are looking forward to incorporating the product in their solutions. Importantly, development is equipped with our breakthrough proprietary Micro-Lidar Array architecture for MLA. The MLA brings together the core elements that make lidar work, the optical chip and our ASIC or application-specific integrated circuit technology. The miniaturization, combined with Velodyne's proprietary fully automated manufacturing process enables cost-effective, high-quality mass production.

We are currently working on our next-generation rotational sensors that will use proprietary ASICs and our MLA technology to provide ultra-long-range, high-resolution auto-grade performance at scale. Overall, for all hardware technology choices we have made, we are marrying the high-performance that is needed with scalability and the ability to manufacture these technologies at the right cost point to enable mass-market adoption. On the software side, last week, we launched a new software development kit that allows customers to utilize the advanced capabilities of our Vella lidar perception software in their autonomous solution. The Vella development kit, or VDK, enables companies to accelerate time to market for bringing cutting-edge lidar capabilities to autonomous vehicles, ADAS, mobile delivery services, industrial robotics, drones, and more.

Technology innovations such as these advance our mission to democratize lidar-based safety and autonomy. The role lidar can play in improving safety and autonomy continues to gain recognition by the larger public sphere as well. Recent news from the NHTSA on reporting crashes, involving autonomous vehicles in ADAS, shows that the federal government is taking a hard look at crashes and near misses for vulnerable road users such as pedestrians. We have a solution available now that enables automatic emergency braking for a wide variety of objects, including pedestrian.

On the commercial vehicle side, we developed our Velarray for a windshield implementation and the federal motor carrier safety administration recently published a notice of proposed rulemaking concerning vehicle safety technology installed on the interior of commercial motor vehicle windshields, which, if adopted, will provide a blanket exemption for lidar and therefore, should lower the threshold to its adoption. On the infrastructure side, the smart cities and communities Act would provide technical and financial resources to local governments to implement smart city technology, especially suburban and rural communities. Smart city is a proxy for technology that enhances and deploys safety in the infrastructure. At Velodyne, we have technology for both infrastructure and vehicles and are the only lighter company as a result, providing a full circle of safety and autonomy.

Now, I'd like to discuss our financials. I will review first our second quarter and first-half results and then provide our full-year 2021 guidance and business outlook. Total revenue was $13.6 million compared to $17.7 million in the first quarter of 2021, which included a $5.5 million licensing fee. Product revenue was $12 million, up nearly 30% from $10.6 million in the first quarter of 2021 as we were getting renewed demand for our lidar sensors from customers with delayed purchases due to the uncertainty caused by the COVID-19 pandemic.

The company's weighted average selling price per sensor was $3,106 compared to $3,887 per sensor in the first quarter of 2021. License and services revenue was $1.6 million, compared to $7.1 million in the prior quarter that included a $5.5 million licensing fee, I previously mentioned. GAAP gross loss was $5.8 million and non-GAAP gross loss was $5.3 million, compared to our first-quarter 2021 GAAP gross profit of $1.9 million and non-GAAP gross profit of $2.7 million. GAAP gross loss in Q2 did not benefit from the licensing fee in Q1.

GAAP operating expenses were $84.8 million and non-GAAP operating expenses were $28.8 million, compared to first-quarter 2021 GAAP operating expenses of $42.5 million and non-GAAP operating expenses of $28.6 million. GAAP operating expenses included $53.2 million in stock-based compensation expense and including employer taxes. Included in stock-based compensation expense was approximately $42 million charged against sales and marketing-related to our 2020 merger with Graf Industrial. This compared to first-quarter 2021 GAAP operating expenses, including $13.3 million of stock-based compensation expense, including employer taxes.

Included in general and administrative expenses are $1.4 million in legal and professional expenses in connection with our audit committee's investigation announced in the first quarter of 2021 and to conduct by David Hall, the company's former chairman; and Marta Hall, the company's former chief marketing officer and a current director of the company. For the first half of 2021, this figure was $3.7 million. GAAP and non-GAAP operating expenses included increased spending in research and development that is in response to the visibility provided by our multiyear agreement pipeline. GAAP net loss was $80.7 million and non-GAAP net loss was $34.4 million.

GAAP net loss per share was $0.42 and non-GAAP loss per share was $0.18. This compared to a first quarter of 2021 GAAP net loss of $40.8 million. Non-GAAP net loss was $26.1 million. First quarter of 2021, GAAP net loss per share was $0.22, and non-GAAP net loss per share was $0.14.

EPS for the second quarter of 2021 is calculated using weighted average shares outstanding of 193.0 million. As of June 30, actual shares outstanding were 195.2 million. Velodyne completed the quarter with $353.6 million in cash and short-term investments on its balance sheet. Now, for the first half of 2021.

Total revenue for the first half of 2021 was $31.3 million, comprised of $22.6 million in product revenue and $8.8 million in license and service revenue. This compares to $45.4 million in the first half of 2020, of which $27.9 million was product revenue and $17.6 million was license and service revenue. GAAP net loss for the first half of 2021 was $121.5 million and non-GAAP net loss was $60.5 million. This compares to a GAAP net loss of $33.1 million for the first half of 2020 and $35.9 million in non-GAAP net loss.

Now, for our full-year 2021 financial statement guidance. Revenue is expected to range between $77 million and $94 million. We are seeing parts of our global markets such as the U.S. and China recover, while other geographies is still negatively impacted by the continuing toll of COVID-19.

We believe we have good line of sight to the low end of our guidance range and see a number of larger projects that would provide upside revenue should they come in. Many of the upside projects would generate nonrecurring engineering revenue in 2021. Non-GAAP gross margins are expected to be between 13% to 24%. This reflects fewer units sold to cover remaining fixed overhead costs of our factory in San Jose, while we experienced ongoing delays in moving this manufacturing offshore due to COVID-19.

Gross margins at the higher end of our revenue guidance would benefit from increased nonrecurring engineering. On a GAAP basis, gross margins are expected to include approximately $2 million of stock-based compensation expense. On a non-GAAP basis, operating expenses are expected to range between $125 million and $129 million. Based upon our expectations regarding our multiyear agreement pipeline, we are increasing our spend in new product development by approximately 40% in 2021 compared to 2020.

We expect general and administrative expenses will increase by approximately 35% in 2021 compared to 2020, primarily due to increased legal expenses and public company expenses. On a GAAP basis, operating expenses would include approximately $87 million of stock-based compensation expense that reflects approximately $42 million to be charged against sales and marketing in the second quarter related to our 2020 merger with Graf Industrial and $8 million related to the recent departure of our CEO. On a GAAP basis, income tax expenses are anticipated to be approximately $800,000. Weighted average shares outstanding for the year are estimated to be 193.5 million.

Finally, I would like to review our business outlook. At the end of the second quarter of 2021, we estimate we can have the opportunity for over $1 billion of revenue from signed and awarded projects through 2025, plus a pipeline of projects that are not yet signed and awarded of $4.5 billion. As I mentioned earlier, included in our multiyear agreements are new ADAS agreements, which are expected to begin to ramp starting in 2026 and the years beyond. This concludes my formal remarks.

Operator, we are now ready to take questions.

Questions & Answers:


Operator

We will now begin the question-and-answer session. [Operator instructions] And it appears our first question comes from Itay Michaeli of Citi. Please go ahead.

Itay Michaeli -- Citi -- Analyst

Great. Thanks. Good afternoon, everyone.

Drew Hamer -- Chief Financial Officer

Hi, Itay.

Itay Michaeli -- Citi -- Analyst

Hi. Just hoping we can just go through the kind of second-half gross margin bridge again. Just want to understand the key puts and takes to kind of drive the implied second-half exit rate?

Drew Hamer -- Chief Financial Officer

Yeah. So, as we're looking at the second half of the year for gross margins, we've given you a sense of what we see for sensor counts. And we -- so that will contribute to the gross margins as we -- we're still a little bit delayed in getting the manufacturing moved offshore. So that -- and just in the sensors, creates a little bit of a drag on where those gross margins will go.

But as you get out toward the higher end of the range of the guidance we provided, there is a pretty solid pipeline of newer contracts that will come along with some non-recurring engineering, which is a significant gross margin contribution upwards of 100%. So as we have a kind of clear pipeline to bottom end of the range, but more confidence as we get out into the middle, the additional NREs will bring that gross margin number up. So as we look out toward the end of the year, we expect that the gross margins start to move up from there as those NRE deals come in. 

Itay Michaeli -- Citi -- Analyst

Got it. That's helpful. And then just on the ADAS award that begins in 2026. Can you give a little bit more color maybe in terms of the region and perhaps even the prospective volume of that award going forward?

Drew Hamer -- Chief Financial Officer

So, without getting into too many specifics because of the -- what's that phrase, is it confidential?

Unknown speaker

Confidential.

Drew Hamer -- Chief Financial Officer

Confidential nature of the agreement. The -- that is a large OEM, and it's project we're working with them closely on. They have actually -- I think there are two projects underneath there, but we're just going one for now. And it starts moving into what would be a normal OEM scale kind of volume, and it would be in the ADAS space.

Itay Michaeli -- Citi -- Analyst

Got it. OK. That's very helpful. Thank you.

Drew Hamer -- Chief Financial Officer

OK.

Operator

Our next question comes from Colin Rusch from Oppenheimer. Please go ahead.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Thanks so much, guys.

Drew Hamer -- Chief Financial Officer

Hi, Colin.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

You know, with your non-auto customers, can you talk about the level of activity versus a year ago in terms of customer quotation sales cycle, close -- like so what's going on in that segment of the opportunity?

Drew Hamer -- Chief Financial Officer

Yeah. So, you know, it's interesting to us. Even when we look at our -- the project pipeline that we share with people in our investor presentation, we're seeing significant uptick. I think the initial adoption for lidar is going to be coming more from our kind of robotics and industrial customers.

And so when you look at this space, adoption will be -- come a little bit faster. The sales cycles come a little bit more quickly, and the implementation and use of the sensors has happened much more rapidly. So, as we're looking at -- even as we look out a couple of years into our forecast, we're expecting that the linearity of revenue will actually start with these industrial, maybe in robotic sensors, some of the smart city and other kind of nonautomotive applications. And then as automotive comes into play in the later years, '23, '24, '25, '26.

This relative -- this side of customers will start to generate revenues. And the other automotive space will start to generate volumes of sales as well that will kind of gather up and catch up. So we are seeing a much shorter sales cycle, much quicker implementation to -- from when you get the design win to start a production with the industrial customers. And so that was resulting in quicker revenues for us.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Perfect. And then, within the guidance, how much of that guide is constituted by NRE?

Drew Hamer -- Chief Financial Officer

So the -- you know, we have -- we're pretty comfortable that a smaller portion of the low end of our guidance is NRE. So, it's mostly made up of sensors. But as we get out further into the range of the guidance, it becomes more and more NRE at this point because the volumes to catch up would be -- would require having those fixed contracts in place today and the manufacturing up and running. So that is going to be a little bit more at the higher end of the guidance.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

OK. Thank you so much, guys.

Drew Hamer -- Chief Financial Officer

Thank you.

Operator

Next question comes from Rajvindra Gill of Needham and Company. Please go ahead.

Drew Hamer -- Chief Financial Officer

Hi, Rajvi.

Unknown speaker

Hi. Yeah. Hi, guys. This is actually Denis asking a question on behalf of Rajiv.

So, first question is just regarding the solid-state transition. Do you guys mind talking just a little bit about like kind of maybe the mix of solid-state versus regular sensors and maybe kind of who the top adopters are right now for your solid-state sensors?

Drew Hamer -- Chief Financial Officer

Sure. So, I can take this one. Yes. So for us, the initial solid-state sensors are actually going out to people in the industrial space.

We have a lot of kind of R&D buys. There's certainly a lot of that. We mentioned how, with our Velabit days that we had here, we had a lot of activity, but those aren't necessarily turning up in revenue. So, those will be more production in the coming years.

The Velarrays, which are producing the solid-state sensors today, in terms of kind of moving into production are more in the industrial spaces. This would be kind of the delivery space. We're seeing a little bit more of the activity for industrial contracts for multiyear agreement kinds, as well as discussions in the smart cities or the IIS solutions and what's another space, I think it's three of the mine. So yes, I think we covered most of it there.

Unknown speaker

Could you guys provide any color on how many of the solid states you shipped this quarter?

Drew Hamer -- Chief Financial Officer

We put in there, it's about 234, something like that. We're anticipating that it will increase as we get into Q3 as well. So there's going to be a balancing. I think it's like a lot of things that even like our ASPs are one of those things, where you need to be careful not to take this quarter's ASP and assume that that's going to be next quarter or that there's some kind of a steady decline trend there.

I think people need to use multiple quarters and look for a linear line trend, it will be a little bit more gradual. So, as it relates to the sale of the solid-state versus the rotational, there's a balancing act going on where the mix will change from quarter to quarter. But gradually, more and more, we're going to see more of the solid-state sensors moving in there.

Unknown speaker

And well, my follow-up was actually related right to that. Is there anything you can tell us about what kind of ASPs, either for the rotational units or for solid-state kind of how you're trending either sequentially or year over year? Is there any kind of color you can provide either on the high-end units or some of the lower-end units in detail would be great?

Drew Hamer -- Chief Financial Officer

Without -- you know, I'm not going to get into much more detail and tell you that we have a weighted average ASP that we share with everybody. However, we have seen the prices of all the sensors coming down. And as we get out into next year and the years beyond that, as our MLA and ASIC chips become incorporated in the rotational sensors, we'll be able to manufacture them at a lower cost, which will also allow us to -- while still maintaining our gross margin targets, be able to sell them at lower price points and achieve broader market adoption, which is sticking with the strategy that the company has had in place for about five years now.

Unknown speaker

Got it. All right. That's it for me. Thank you very much.

Drew Hamer -- Chief Financial Officer

Thank you for joining. Have a good day.

Operator

Our next question comes from Richard Shannon of Craig-Hallum. Please go ahead.

Drew Hamer -- Chief Financial Officer

Hi, Richard.

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

Hello, guys. Hi, Drew. Just a clarification, Drew. Did I hear something in your prepared comments about something like 30% of your sales are coming from solid-state sensors this year expected? I know I got that wrong, so please clarify what that was.

Drew Hamer -- Chief Financial Officer

Yeah. We believe that overall sensor sales, we're going to see a bit of a pickup in the solid-state sensors here in the second half of the year, and they could be upwards of 30% of our total sensors sold. So looking at our current kind of visibility that we're getting from customers and expected buys from them, as well as the work that we've got with multi agreements, we see that as a very real possibility. And that's steady.

I believe we shared that with you last quarter as well.

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

OK. Maybe I missed that one. And is that especially for the year or for the second half?

Drew Hamer -- Chief Financial Officer

For the full year. 

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

So clear. OK. Perfect. Thank you for that.

Let's see here. My first question was, obviously, when you -- in your process to coming public, you talked about a large last-mile delivery customer. And I think you just mentioned the, you know, potentially new opportunities with that customer. Specific to the last-mile delivery engagement, is that one still on track in terms of timing and scale?

Drew Hamer -- Chief Financial Officer

So, of course, due to confidentiality obligations, I can't be too specific about that, but we are seeing nice pickup on the delivery solutions, yes, we are. And then, we're also seeing some nice activity with a similar type of customer in China, who's also going to be using that our sensors or similar applications. So, that is a -- we're really seeing nice activity across kind of the space that includes some of these e-commerce, large e-commerce customers.

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

OK. Perfect. And my follow-on question was following up on the topic of gross margins here. Just trying to get the -- again, the bridge to the second half of the year to fit the full-year range, even if getting to the low end with gesture looking at gross margins in kind of the 30% range for the second half of the year.

Is that a fair number? And since that wouldn't include much NRE, would that be, you know, a range to think about going into next year?

Drew Hamer -- Chief Financial Officer

Yeah. So, the low end of our guide, the low end of our gross margin -- gross margins would be at the low end of our revenue range. But it would be, you know, kind of escalating a bit as we come out of the year here as we start seeing unit volumes continue to pace as they are.

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

OK. Fair enough. That's all for me. Thanks.

Drew Hamer -- Chief Financial Officer

Thank you.

Operator

[Operator instructions] Our next question comes from Aileen Smith of Bank of America. Please go ahead.

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon, everyone.

Drew Hamer -- Chief Financial Officer

Hey.

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

I wanted to follow up on the commentary -- hi. I wanted to follow up on the commentary that a lot of the traction you're seeing on the solid-state centers is actually coming from industrial end markets. I think most of us would characterize Velabit, or I think you've characterized Velabit in the past as really the Level 1, 2 plus ADAS-oriented sensor. So, is your customer traction on the automotive side consistent with your expectations? Or what's your thought process on what is a sustainable mix of solid-state sensors between automotive and nonautomotive end markets over time?

Drew Hamer -- Chief Financial Officer

Yeah. So, that's a really important question because the last part of your statement is really -- you know, it's the over time part. So, you know, we live in a unique world where you guys kind of measure us on how we're doing this year and this quarter in terms of our P&L. But where are we expecting things to go in the coming years.

So, for the current period, you know, we're seeing -- so, the solid-state sensors being picked up in industrial spaces, where those markets are really kind of the early adopters of this technology, and it's rolling out a little more quickly. We are getting a lot of activity in the ADAS space, very much so around the Velabit, as well as some of our Velarray products, what we're working with. And some of our Asia customers is strictly along the Velarray family line. And then, the 2026 solution that we talked about is also solid-state, primarily around the Velarray space.

So, in time, we're expecting that the automotive space will probably -- not so much the robotics, so I should say, the Robotaxi space. Robotaxi is not as concerned about aesthetics, and they're more likely be using rotational sensors on their cars because they're more efficient and provide more data to ensure the safety of the vehicle driving. But as you get into cars that are more focused on the aesthetics, then the Velabits and the Velarrays become more important because they can embed them in the car and doesn't, you know, detract from the nature of the vehicle. So, we are seeing a lot of activity.

There was a lot of, you know, very, very good feedback from the OEMs when they hear for our Velabit days a few -- you know, a month or so ago. And we're having a lot of extended conversations with them at this point around that.

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

OK. That's helpful color. And then, I wanted to touch base a bit, I think on Slide 12 and to kind of compare it versus last quarter. Is there anything to read into the billion-dollar revenue number, and signed and awarded contracts despite what is an increase, I think, of 15% to 20% in the number of those signed and awarded contracts themselves? I think it was 29 in May 2021 and 34 as of this quarter.

Yet the, you know, estimated revenue number is similar. Are some of the contracts that you're winning smaller in scope or revenue size? Or have there been adjustments to perhaps assumptions in the previous pipeline?

Drew Hamer -- Chief Financial Officer

Yeah. So, this is -- it's a very important conversation because the reason why we kind of talked about 2026 activities because we aren't forecasting or providing any information on that yet, which we'll probably do starting next quarter. But -- so, the billion-dollars is, you know, with these additional customers. Some of the industrial contracts are slightly smaller than the MYAs.

It's just the very nature of their businesses, where others of the more recent MYA agreements continue to be larger and will expand in the coming years. But as you start looking out past 2025, we're seeing the potential for those numbers to continue to expand rather substantially with some automotive activity. So, you know, for right now, we're confident that these numbers, you know, become a little bit more reliable, and we're working toward ensuring they're, you know, turning into the P&L. And adding additional contracts is something we anticipate.

As time comes to pass, these numbers will continue to grow.

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

OK. And one more, if I may. Can you provide a little bit more color on what specifically is the delay in the industrialization process and moving some of your production offshore, particularly, as it sounds? You referenced it last quarter. And it sounds as if it's incrementally worse this quarter than maybe you, perhaps, had anticipated.

So, as you think about that resolving itself through the remainder of the year, you know, what's still outstanding that needs to be completed that the industrialization process will get back on track?

Drew Hamer -- Chief Financial Officer

You know, if you don't mind, I'm going to introduce Jim Barnhart. He's our new COO. He's had a month here evaluating this. He's seasoned COO with many -- this is in his first rodeo as COO.

He's evaluated it. He's got some feedback. And then, I'll add some additional color at the end if there's any other questions for a follow-up. Jim?

Jim Barnhart -- Chief Operating Officer

Thanks. Good question, Aileen. And certainly, you know, the Pucks have been with our contract manufacturers for years. The strategy was to have the Pucks assembled.

And so -- then sent back to our facility here in San Jose for final testing. And we're moving toward having really the full work being done at the contract manufacturer. So, that's in process. And what's frankly delayed it is, again, the resurgence of COVID, both with our contract manufacturers facility in Thailand, as well as in Japan.

They, unfortunately, have been hit fairly hard with the Delta variant. So that has delayed not getting the equipment in the facilities but allowing our engineers to travel to help make sure that things are properly set up, calibrated, aligned, etc. There's been some delay there. But certainly, with the Ultra Pucks, it's already, you know, completely with the contract manufacturer in Japan.

And we're in process with the Alpha Prime transition that is moving forward as well. But again, it has been somewhat delayed just due to the unfortunate timing of the resurgence of the COVID pandemic. I guess, just to comment also -- sorry, but the Velarray, the M1600 and H800, those transitions are in progress as well, even as we're finalizing, you know, the various phases of designs of the product. So, already, these subassemblies, the modules, if you will, that go into the full lidar module, those are in process of being transitioned to the contract manufacturers as well.

So, to your point, it's slowed a little bit to the right, but it's really due to the resurgence of COVID that have slowed things down for us a bit here.

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

OK. Great. That's very helpful commentary. Thanks for taking the question.

Drew Hamer -- Chief Financial Officer

OK. Thank you.

Operator

And our next question comes from Michael Filatov of Berenberg. Please go ahead.

Michael Filatov -- Berenberg Capital Markets -- Analyst

Oh yes, thanks for taking my question. I guess, I just want to follow up on a question that was asked by one of my fellow analysts earlier about that last-mile delivery customer. I believe in an earlier presentation you put out a while ago, you know, there had been some numbers put out that said, you know, 100,000 units related to that customer for 2022 and ramping to 250,000 in 2023 and 2024. So rather important, I think the projections.

So, I'm just wondering -- I mean, obviously, you don't have to say who the customer is, but I mean, are those volumes still in play? Is that customer still in your, you know, multiyear agreement backlog? You know, just any other additional comments?

Drew Hamer -- Chief Financial Officer

So, the customer is still in the multiyear agreement backlog. I think the -- you know, we're not giving any 2022 guidance as of right now, but it's not unreasonable to suggest that the customers' priorities might change where some of the things could move in any direction. But we also believe that with some of the other activity from other projects that are coming in, if anything, move down, others could move up. So that kind of beauty of our business relationship is, you know, we're in multiple industries with multiple products with multiple customers.

So, as it relates to that one customer, there are so many different opportunities in there that even if that did slip, we believe that other solutions would probably fill in.

Michael Filatov -- Berenberg Capital Markets -- Analyst

Got it. Thanks. And then just looking at, you know, license and services revenue. If you back out the lump sum sort of one-time adjustments, I guess, from the prior year, it looks like maybe sort of a baseline coming into this year would be $10 million for the license and services revenue.

But even if you annualize the first half and back out that one-time, you know, number from the first quarter, it looks like maybe license and services could be like, you know, $10 million or less. I don't know. Maybe tell me if I'm wrong there. But on top of that, you know, with ASPs coming down, it seems like your volume growth -- unit growth would have to be pretty robust in the back half.

I mean, we're talking, you know, maybe 50-plus percent unit volume growth in the back half from a step-up in the run rate. So I guess, is that achievable? I mean, is that sort of what you're targeting in terms of unit volume growth? Or is there maybe, you know, a mix impact that's going to drive the ASP back up in the back half of the year? 

Drew Hamer -- Chief Financial Officer

So, I did talk about, you know, the volume of sensors we expect, at least, in the second half of the year by quarter. So you can put that together. We think ASPs -- and like I said, they're probably not going to be -- it's going to be more of a linear trend for ASPs than trying to take one quarter and applying that. So it could be overly conservative if you just use Q2's ASPS.

And then the -- any deltas between what you might get from taking unit volumes and ASPs will probably be made up in NREs. And the NRE opportunity is pretty significant for us right now.

Michael Filatov -- Berenberg Capital Markets -- Analyst

Gotcha. Thanks. And then, one last question just around sort of the ADAS activity recently. I mean, we've seen from other competitors in this space, you know, awards from some several OEMs.

I guess, I'm curious, I mean obviously, you guys have been competing for those awards. I just wanted to get your thoughts as to why you think, you know, Velodyne hasn't been selected for the sort of a near-term award outside of Faraday Future. Just any commentary as to why you think that could be? 

Drew Hamer -- Chief Financial Officer

Yeah. You know, it's an interesting conversation because when we talk about the awards, I'm not sure what your near term is, but, you know, we're not expecting anybody to see anything significant in the next year or so. So, you know, the awards -- most of the words we've heard discussed and we've seen out there a couple of years out, we believe that a lot of those will still be in play. You know, we've had -- we mentioned earlier, we've had some conversations with customers who are coming back to us because the ones who are more near term are finding that the people they selected, or who might have previously announced their relationship, are unable to produce, and they're not confident in the sensors to be able to perform at the level that was expected, where Velodyne Lidar is currently producing sensors and can deliver sensors at the volumes that they need to meet their start-up production targets, and are also going to be capable of providing the levels of, you know, accuracy that they need in order to be able to release their systems.

So, you know, this is -- you know, it's an evolving story, but that's why we've gotten so far. So, we are aware of some of them. We look at them, and we feel like some of them are kind of really still kind of R&D stage, and there's still -- you know, this could change. And we'll see the dynamic we just discussed could play out more so in the coming years.

Michael Filatov -- Berenberg Capital Markets -- Analyst

Understood. Thank you for the color. I appreciate it.

Drew Hamer -- Chief Financial Officer

OK.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Drew Hamer for any closing remarks. 

Drew Hamer -- Chief Financial Officer

Thank you very much, everybody, for joining us today. You know, we're very excited here at Velodyne Lidar for the -- you know, what we're starting to see is the traction of these lidar sensors and their adoption in so many different industries and so many different parts of the world and with so many, you know, different customers. So, you know, as we go forward, we look forward to talking with you more and looking forward to seeing this evolving market take shape and continue to be the major player in the space and leading it as it goes forward. I hope you all have a wonderful afternoon.

Thank you.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Moriah Shilton -- Investor Relations

Drew Hamer -- Chief Financial Officer

Itay Michaeli -- Citi -- Analyst

Unknown speaker

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Richard Shannon -- Craig-Hallum Capital Group -- Analyst

Aileen Smith -- Bank of America Merrill Lynch -- Analyst

Jim Barnhart -- Chief Operating Officer

Michael Filatov -- Berenberg Capital Markets -- Analyst

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