Velodyne Lidar, Inc. (VLDR) Q3 2021 Earnings Call Transcript

Velodyne Lidar, Inc. (VLDR)
Q3 2021 Earnings Call
Nov 04, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to Velodyne Lidar third quarter 2021 financial results conference call. [Operator instructions] I'd like to call the conference over Mr. Andrew Chan, head of investor relations. Please go ahead.

Andrew Chan -- Head of Investor Relations

Good afternoon, and thank you for joining us on today's conference call to discuss Velodyne Lidar's third quarter 2021 financial results. Drew Hamer, the company's chief financial officer, will run through the call's prepared remarks. Then Ted Tewksbury, the incoming chief executive officer; Drew; and Jim Barnhart, the chief operating officer, will be 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 third 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. Please refer to our press release and our SEC filings, including our most recent 10-K and 10-Q 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. [Operator instructions] Now I'd like to turn the call over to Drew.

Drew Hamer -- Chief Financial Officer

Thank you, Andrew, and welcome to Velodyne. Ladies and gentlemen, as most of you saw, on November 10th, we will have a new CEO, Ted Tewksbury, leading our company. Ted is a seasoned technology executive who brings to Velodyne, a proven track record and more than three decades of experience leading innovative businesses. A true visionary.

I am looking forward to working with him to expand our lead in the global Lidar industry, execute on our strategic growth plan and drive long-term value for all shareholders. I also would like to welcome our new board member, Virginia Boulet. She is a renowned corporate governance expert, whose expertise and deep experience will further strengthen our board of directors. Since our last earnings call in August, we have done a number of things.

We signed one additional multi-year agreement for a total of 35 on track for our goal of 38 by year-end. We've grown our pipeline to 220 projects with an increasing concentration in the industrial and robotics market, which make up a third of the pipeline projects and has grown nearly 50% when compared to last year at this time. We believe the industrial and robotics market is one of Lidar market's closest to commercialization, and we expect our activity with customers in this market will only accelerate. We shipped more than 4,400 sensors in the third quarter, continuing our market leadership.

Our customers today are giving us purchase orders for larger volumes as they move into the first wave of mass commercialization. We are the global Lidar leader, shipping more sensors in the third quarter than the aggregate of all our peers combined that have reported shipping sensors year to date. We expect to ship more than 15,000 sensors in 2021, up at least 28% over 2020 and significantly more than our peers. The interest for our new solid-state products continues to grow.

We shipped over 630 solid-state sensors in the third quarter, more than double the prior quarter. We are excited about the potential for these next-generation products and anticipate long-term growth in the linear fashion, smoothing out what could be volatility from quarter to quarter. Velabit projects continue to grow. We now have 33 opportunities, including solid-state Velabits, up from 25 in the prior quarter.

We anticipate shipping Velabit samples for revenue late in 2022. Overall, the use of Lidar today in our served markets continues to gain momentum. In automotive, we continue to make progress in our relationships with both emerging and major high-volume OEM customers for the use of our Lidar in ADAS systems. In AV, we are working with new customers and existing customers who are looking to extend their current agreements with us to include additional products within our portfolio.

In robotics and industrial, we announced a multi-year agreement with Renu robotics to use our puck sensors and their vegetation management for solar energy facilities. In mapping, we have new customers such as TOPODRONE, which is based in Switzerland and develops affordable, high-precision solutions for aerial surveys. They signed a multi-year agreement for our sensors to be used for high-precision mapping and 3D modeling in demanding environments, including farms, force, and infrastructure to support development that advances economic and sustainability goals. We are also collaborating with move.ai to provide robot manufacturers with enterprise-grade automation solutions, including mapping, navigation, obstacle avoidance, and risk avoidance.

We also expanded our relationships with existing customers, such as AGM systems, who has deployed our alpha prime Lidar sensor on the AGM-MS5.Prime, their latest high-performance mobile scanning solution. This is the second sensor type AGM Systems has purchased from Velodyne. Last but not least, our smart cities. Our Intelligent Infrastructure Solution, or IIS, was selected for a major deployment in the University of California Irvine Smart Cities initiative, where it will be used at 25 intersections as part of a $6 million road network project in Irvine.

We continue to expand our IIS proof-of-concept deployments across North America. Now for our financials. I will first review our third quarter and nine months results and then provide our full-year 2021 guidance and business outlook. Total revenue for the quarter was $13.1 million, compared to $13.6 million in the second quarter of 2021.

Product revenue was $11.8 million, slightly down from $12 million in the second quarter of 2021 due to a combination of the lower weighted average ASP than the prior quarter, reflecting the ongoing evolution of our product mix toward consumer affordable solid-state sensors and ensuring consistent performance across and within our product lines, crucial for our customers as they ramp toward massive commercialization. The weighted average selling price per sensor was $2,622, compared to $3,106 per sensor in the second quarter. License and services revenue was $1.3 million, compared to $1.6 million in the prior quarter. GAAP gross loss was $4.7 million, and non-GAAP gross loss was $4.2 million, compared to a second quarter GAAP gross loss of $5.8 million and non-GAAP gross loss of $5.3 million.

GAAP operating expenses were $50 million, and non-GAAP operating expenses were $33.4 million, compared to the second quarter GAAP operating expenses of $83.3 million and non-GAAP operating expenses of $28.8 million. Third quarter GAAP operating expenses included $16.3 million of stock-based compensation expense, including employer taxes. This compares to the second quarter GAAP operating expenses that included $53.6 million of stock-based compensation expense, including employer taxes, of which $41.6 million was charged against sales and marketing, the majority of which was accelerated vesting of stock-based compensation related to our 2020 merger with Graf Industrial. Included in general and administrative expenses are $1.3 million in legal and professional expenses in connection with our audit committee's investigations and to conduct by David Hall, the company's former Chairman; and Marta Hall, the company's former Chief Marketing Officer and the current Director of the company.

For the nine months ending September 30, 2021, this figure was $4.7 million. GAAP net loss was $54.7 million and non-GAAP net loss was $37.5 million. GAAP net loss per share was $0.28, and non-GAAP loss per share was $0.19. This compared to a second quarter of 2021 GAAP net loss of $79.2 million, non-GAAP net loss was $34.4 million.

Second quarter 2021 GAAP net loss per share was $0.41, and non-GAAP net loss per share was $0.18. EPS for the third quarter of 2021 is calculated using weighted average shares outstanding of 196.2 million. As of September 30, actual shares outstanding were 195.9 million. We completed the quarter with $324.5 million in cash and short-term investments on our balance sheet.

For the nine months ending September 30, 2021, total revenue was $44.4 million, comprised of $34.3 million in product revenue and $10 million in license and services revenue. This compares to $77.5 million in the nine months ended September 30, 2020, of which $53.9 million was product revenue, including a one-time $11.1 million stocking fee and $23.6 million was license and services revenue. GAAP net loss for the nine months ended September 30, 2021, was $174.8 million, and non-GAAP net loss was $98 million. This compares to a GAAP net loss of $38.4 million for the nine months ended September 30, 2020, and $45 million in non-GAAP net loss.

Now for our full-year 2021 guidance. We expect to ship over 15,000 units in 2021, a growth of at least 28% as compared to 2020. Revenue is expected to range between $60 million and $63 million. As I mentioned earlier in my remarks, we are moving into the first wave of mass commercialization with customers who are now expecting consistency of performance within our various product lines.

This is a natural evolution from the R&D purchases our customers had done with us historically where test samples were acceptable. We are refining our engineering and production processes to meet customer delivery and performance expectations. As a result of this focus on customer satisfaction, approximately $4.3 million of product sales shifted out of the third quarter into the fourth quarter of 2021 and first quarter 2022. Our revenue forecast also reflects the removal of any contribution from nonrecurring engineering fees that aren't already signed.

Non-GAAP gross margins are expected to be between negative 8% to 10%. This reflects volume in weighted ASP mix and ongoing delays in moving manufacturing offshore due to COVID-19. On a GAAP basis, gross margins are expected to include approximately $2.3 million of stock-based compensation expense. On a non-GAAP basis, operating expenses are expected to range between $125 million and $129 million.

We expect general and administrative expenses will increase by approximately 55% in 2021 when compared to 2020, primarily due to increased legal expenses and other related public company expenses. On a GAAP basis, operating expense will include approximately $89 million of stock-based compensation expense. 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 193.7 million.

Finally, I would like to review our business outlook. At the end of the third quarter of 2021, we estimate we could have the opportunity for approximately $800 million of revenue from signed and awarded projects through 2025, plus a pipeline of projects that are not yet signed and awarded with an opportunity for approximately $4.2 billion. As certain of our customers are progressing with their Lidar solution rollouts, we are seeing variability in their rollout schedules. As they get into their projects, some have reduced their initial ramp rates while maintaining their ramp rates in outlying years.

This is reflected in these aggregated business outlook numbers. We anticipate providing updated project pipeline data through 2026 plus 2022 financial guidance in our fourth quarter 2021 earnings call. This will allow our new CEO, Ted Tewksbury, the opportunity to address these metrics. This concludes my formal remarks.

Operator, Ted, Jim, and I are now ready to take questions.

Questions & Answers:

Operator

[Operator instructions] First question is from Colin Rusch of Oppenheimer. Please go ahead.

Kristen Owen -- Oppenheimer and Company -- Analyst

Hi. good afternoon. This is Kristen on for Colin. Thank you so much for taking the question.

I wanted to follow-up on some of the final remarks that you made about just sort of the variability and rollout schedules. Really wanted to ask about your customers have been operating in this hand-to-hand combat environment for the last year now. How are you seeing the pace of innovation and design cycle times right now with your customers? And if you could provide just some context around the end markets and how that differs among those end markets, that would be helpful. Thank you.

Drew Hamer -- Chief Financial Officer

Fair enough. I think I'm going to start with the final question first, I guess, then, because each of the different markets -- I'm sorry, this is Drew. Each of the different markets certainly has its own pace. And what we're seeing in the industrial markets and the last mile delivery markets, as well as some of the mapping and other industrial sectors, the pace of design is increasing.

We see that in our pipeline, the number of projects that have entered our multi-year agreement pipeline has increased substantially in that space very nicely, in fact. And the time to market for a lot of their solutions tends to be about a year, maybe two years at the most. When we start talking about the automotive manufacturing solutions, those solutions tend to be further out. They could be four or five years away from the design win to the design completion and the start of production.

So they tend to take a much longer and require a much larger investment by Velodyne Lidar. And so really, the shift we're seeing right now is there is a more rapid movement in the industrial space to commercialization and revenues for Velodyne Lidar. And for the automotive space, we're feeling like that still feels any real rapid movement there is still going to be four or five years out.

Kristen Owen -- Oppenheimer and Company -- Analyst

That's really helpful. And then wondering if you can touch on any changes in the competitive environment? We're certainly seeing some indications of industry consolidation. But also, as you're focusing on this customer engagement and quality, are you seeing any customers come back after working with other platforms?

Drew Hamer -- Chief Financial Officer

Yeah. It's our belief that now that we're getting into more of a higher volume production, our focus is on the higher quality on a consistent basis in what we deliver. The sensors that are going out to customers, they want sensors to be the same kind of performance every time when they open up the box and they take it out. Being the one company that's doing that on a regular basis, has created opportunities where customers have come back and let us know that the reason they want to go with Velodyne is because those sensors are consistent when they receive them.

We've also, during this quarter, with the assistance of Jim Barnhart, spent a lot of effort in really closing our relationships with the existing customers who are buying some of those sensors and making sure that we're meeting that requirement, which has allowed us to -- or put us in a position where we had to move some of this revenue out to Q3 as we've ensured that the quality of the products was -- and the performance was consistent from sensor to sensor. They opened each box. The impact of that is definitely something that customers have given us a lot of feedback is much appreciated. It's something that they're counting on and they're looking forward to.

And then our continued evolution along those lines is something that they expect. And the fact that we're the leader in that space should lead to additional deals coming not only going forward, but also, I'm sure, in the current quarter, I should say, but out into 2022 and beyond.

Kristen Owen -- Oppenheimer and Company -- Analyst

Thanks. And if I could fit one more in. I do just want to ask, as we're looking at that first wave of mass commercialization, how are you feeling about component availability and your confidence in ramping production? Thank you.

Drew Hamer -- Chief Financial Officer

Jim, do you want to take that one?

Jim Barnhart -- Chief Operating Officer

Sure. Yeah. This is Jim. Excellent question there, Kristen, and we are seeing increased lead times, of course.

We're working with our suppliers, giving them advanced forecast on a rolling 12-month availability right now. We are having some near-term surprises here and there, but nothing that has gated our production yet, and we're working daily with customers -- excuse me, with suppliers to make sure we're getting the components in. And the constraint is there, as everyone is seeing, but we are overcoming that on a regular basis. And as we see the pre shortages as we're looking out at least a quarter in advance for our production needs with our contract manufacturers, as well as the direct recatch to our suppliers, we're addressing these shortages as we see them.

And so far, we've been able to mitigate all of them. And we're continuing to do that, like I say, on a regular basis. It is rather tactical at this point. But we -- I'd say, working with customers to make sure we have the clear demand from them and sending those signals to our supply chain, we've been able to keep the supply continuity and anticipate being able to continue doing that.

Kristen Owen -- Oppenheimer and Company -- Analyst

Great. Thank you so much. I'll turn it over.

Operator

Thank you. Next question is Michael Filatov of Berenberg. Please go ahead.

Michael Filatov -- Berenberg Bank -- Analyst

Hi. Thanks for taking my question, guys. I guess this is going to be a pretty straightforward one. Do you anticipate revenue increasing next year?

Drew Hamer -- Chief Financial Officer

Yes. 

Michael Filatov -- Berenberg Bank -- Analyst

OK. Great.

Drew Hamer -- Chief Financial Officer

Based on the contracts that we have in place, some of the POs that we've already received from customers, we are expecting in the conversations we've had with a number of customers we do, as we go through this next two, three months, we talk to all of the 300-plus people that we sell sensors to, and we get some feedback from them on what they expect their needs to be and what they're expecting. What we have changed here in the forecast that we've provided for the rest of this year, so we've taken out the NRE portion. So in the past, we've had customers tell us about they'll have a contract, and it will have a piece of NRE. We're finding that those tend to take a little bit longer to close, and then they're going to be lumpy.

So what we're really looking at right now, if you look at our kind of revenues from last year and you take out the kind of the one-time items, we had the one-time restocking fee in Q3, and we had some other license revenues that came in from somebody who is now a license customer of ours, we're expecting you're going to see some nice growth in our product revenues this year and what we anticipate as we go forward in '22 and beyond is that these product revenues will continue to maintain a growth. And then to the extent that the NRE types of relationships do come in, we're going to leave those to be kind of an upside and instead focus on product, product quality, and delivery of sensors to customers, and then we will take those things as they opportunistically present themselves.

Michael Filatov -- Berenberg Bank -- Analyst

Got it. Thank you for that thorough answer. Just following up on that, I mean, you guys have lowered the non-GAAP gross margin guidance again. And I'm kind of curious, do you have sort of a target revenue level in mind for when you expect to reach maybe breakeven on the operating income line or EBITDA level? Is there a target revenue threshold you're expecting or a time frame that you're expecting to reach breakeven?

Drew Hamer -- Chief Financial Officer

Yeah. So at the avoidance of not getting 2022 guidance, it's our belief that with some of the work that we're doing, it does have something to do with the mix of products. We're continuing the work of getting our production done offshore, which will also contribute to that. But it will be the increase in the product volume.

So we should expect that as we come out of next year, we should be getting to that breakeven and maybe even better as we go out into '23, '24. But again, that's subject to our review of everything that we're going to be providing for the 2022 plan. Now that we have Ted on board, we're giving everything for our overview.

Michael Filatov -- Berenberg Bank -- Analyst

Got it. All right. I'll leave it there. Thank you.

Drew Hamer -- Chief Financial Officer

Thank you, Michael.

Operator

Thank you. The next question, Mark Delaney of Goldman Sachs. Please go ahead.

Mark Delaney -- Goldman Sachs -- Analyst

Hi, guys. Good afternoon, and thanks for taking the questions. I believe you said Ted's on as well. And so I was hoping to start with a question for Ted, and maybe talk about your experience with Velodyne so far, what led you take the job and any initial views you may be able to share with us?

Ted Tewksbury -- Chief Executive Officer

Sure, sure. So first of all, let me thank Drew for the generous introduction and just say how excited I am to be a member of the Velodyne team. It truly is an honor to have been unanimously selected for this position by the Velodyne board, and I'm really looking forward to rolling up my sleeves and working with the team to do a deep dive across the company and all the business areas. I was attracted to Velodyne for a very simple reason, which is, as you all know, the company is the undisputed Lidar technology pioneer and market leader.

The company has the broadest product portfolio, has shipped more sensor units than all the other competitors in the industry combined. And very importantly, Velodyne is really the only company that's demonstrated the ability to manufacture at scale. And so I looked at that and just saw an enormous opportunity to build on that strong foundation. For those of you who are familiar with my background, you'll know that I have a proven track record of building and scaling innovative technology businesses and driving revenue growth, profitability, and shareholder value, which, in my view, is exactly what Velodyne needs today.

So this was a perfect fit. And as I said before, I look forward to working with the Velodyne team to unlock the company's potential and make that a reality.

Mark Delaney -- Goldman Sachs -- Analyst

Thank you. And if I could ask a second question, I'm hoping to better understand the consistency issue with the product that was mentioned in the prepared remarks. If you could talk about it from a few different dimensions. I mean, maybe first, how did you identify the issue? Do you have a good handle now on what's causing it? Have you come up with a fix and a timeline to fully remediate the consistency issue with the other products? Thanks.

Jim Barnhart -- Chief Operating Officer

Sure. Yeah. Good question. This is Jim.

We found during the quarter that customers, in some cases, were actually using sensors in applications beyond the original intent. For example, Ultra Puck's originally were released with the anticipation of being for more automotive use, and customers are starting to use them for mapping and surveying type applications where there are concerns for tighter accuracy in some cases. In other cases, a different sensor -- we're seeing -- on the Puck, the VLP-16, as we call it, we're seeing both high-temperature requests, as well as even back to the Ultra Puck for a freezing temperature request. So we're taking all that feedback in, and we actually did pause shipment while we made sure on the individual sensors, the product families, I should say, make sure we understood really well what the customers were looking for.

We, in some cases, modified firmware to enable us to go to the freezing temperature type operations. Other cases, we changed the components to enable some of the higher temperature operations. And just bottom line is, as Drew mentioned, we have received very positive feedback from customers on that. They appreciated the fact that we kept them informed of what we were doing.

We did delay some shipments to them, but made sure that what we were shipping was going to be conforming to their actual use case requirements. And again, the feedback has been quite positive from the customers on that. And I will say it's actually been positive among the employees as well. They appreciate the fact that we're making sure that what we're shipping now to customers are -- is really more conscious of what their use case needs are and conforming to their needs and Drew mentioned it in the prepared remarks that we've been refining both the engineering practices for how we actually release the products, as well as the production processes for producing them.

So it's really coming all together, the holistic approach to quality. We really doubled down in Q3, the third quarter, and we're continuing that going forward. So, so far, the momentum is quite positive there.

Mark Delaney -- Goldman Sachs -- Analyst

Thank you.

Operator

Thank you. Next question will come from Aileen Smith, Bank of America. Please go ahead.

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

Good afternoon, everyone. Thanks for taking the questions. First one on the number of projects and the theoretical units that you have in the pipeline. I just wanted to square this away with the presentation last quarter.

I think you had 213 projects that you were citing for 9 million possible units versus this quarter, you're pointing to 220 projects with 7.5 million units. I think we can understand that some of the more incremental projects you're winning are coming from nonautomotive end markets, and those are more spot buy than the multi-year high-volume programs. But how do you explain the change in the 1.5 million sensors that are so-called missing from quarter to quarter? And are the contract terms really changing that much as you are in RFI or RFQ or other stages?

Drew Hamer -- Chief Financial Officer

So this is over -- first of all, I just want to be careful. There's nothing missing. We are gathering this information from the customers. It comes from them specifically, and we provide to you our pipeline.

So this isn't a -- this is a pipeline of the business that we're currently tracking and the opportunities that are presented. And when I share with you a pipeline, you're seeing the dynamics of any normal business, where it goes in and out based upon customer needs. So the change that we saw this quarter is a result of direct conversations with a number of our customers about where they're saying -- they're seeing changes in the priorities of their business. A big chunk of this change actually came from the pre RFI category, where a customer has indicated that a big business that they're planning on entering into as they've continued to evaluate their business and restructure their business model and focuses for the future, they've decided to spend less in one of those segments, and they'll be -- so they anticipate volume of purchases would be declining.

There are other areas where, as with a number of customers who are moving forward with their projects, but as they've gotten into the projects and they better understand their capabilities of launching, they've reduced the amount of sensors that they might be buying on the front end, even though they're still expecting to achieve the total volumes, year two, three, four, or out, which have also impacted those numbers as, again, we're talking to them on a regular basis. And as these customers are launching, they're very close contact with us about what their needs are so that we can set up the production lines and meet their needs. So that has also affected what we're seeing in the pipeline. So this is a living, breathing pipeline.

This is a normal business. It's a lot of disclosure, but we think it's right so that people understand the opportunity and the potential for Lidar in the future. That's why we continue to provide it.

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

OK. Great. Understood. That's helpful.

And then I wanted to ask a question around the average selling price and specifically in comparison to the first quarter. And apologies, I think these numbers are right, but when I'm looking at the mix of units sold that are solid-state and some of your lower price sensors, your absolute units from the first quarter to the third quarter, we're about comparable, but the percentage of the total was much lower, and yet your weighted average selling price was also much lower in 3Q versus 1Q. So that would lead us to conclude that you're dropping price potentially substantially across some of your older and more legacy products. Is that a fair interpretation? Or are we missing something?

Drew Hamer -- Chief Financial Officer

Well, first of all, in the first quarter, we had almost 2,700 units that we shipped. In this quarter, we shipped over 4,400. So the volumes are up substantially. It's affected a bit because we are seeing an increase in the number of solid-state sensors that we're shipping.

And those are shipped at a lower price. So when you're doing a weighted average ASP, of course, that's going to have an impact. And then as it relates to the traditional role -- the rotational sensors, there are some contracts we have with customers that are certain volumes. We do normal unit volume commitments with those people or -- sorry volume price commitments with those customers, and so there are some that may be sold at lower prices versus some that are sold to others.

It's really not an isolated thing. But as we go forward, we're expecting that on a linear basis, we try not to take it one quarter at a time or sequential quarters. We do expect that we're going to see ASPs coming down on a linear basis, we'll also see movement inside the number of units that are shipped. And as we get further out in the mix between solid-state and rotational and the higher price and lower price sensors starts to come into play, we'll see this dynamic continuing as we go forward that volumes will go up.

As volumes increase, they'll offset some of the decreases that are coming from the ASPs, and that will give us the appropriate contributions we need to the business.

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

OK. But as a clarification, I was referencing the solid-state units from 1Q versus 3Q, which I think were both around 600 units. That 600 units in the first quarter out of a base of 2,700 versus out of a base of 4,400 in the third quarter on a mix basis, that's actually accretive for you guys in the third quarter. So I'm also trying to square away, that average selling price would imply that across your other products, some of those rotational products that you were taking down price on those units.

Drew Hamer -- Chief Financial Officer

There have been some price reductions on those units because customers have increased the volumes that they're purchasing. So on a unit volume versus price agreement, there will be some of those happening, but I think it will be -- it will -- like I said, it's not going to be something we could look at on a sequential basis. We should see things like this happening on a more linear basis, but we could also see those rotational sensors go up and up in price as well on an ASP basis in future quarters.

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

OK. Great. That's helpful. Thanks for taking the questions.

Drew Hamer -- Chief Financial Officer

Thank you for joining the call.

Operator

Thank you. The next question comes from Sam Peterman, Craig-Hallum Capital Group. Please go ahead. Thank you, sir.

Sam Peterman -- Craig-Hallum Capital Group -- Analyst

Hi, Drew. Thanks for taking my questions. My first one is going to be on that same slide in your investor deck that shows your pipeline, not on the $7.5 million versus 9 million units. But if you look at kind of the -- just as a percent of the whole graph, where ADAS is at, it looks pretty similar to prior quarters where it's trending up pretty strongly in later years.

And it doesn't look like there's a huge change to kind of what you're expecting from ADAS and yet your ADAS projects in that pipeline are down quarter over quarter and year over year, quite a bit year over year. So I'm just curious how you reconcile that? And if you can give us any color into what is going into your thinking on ADAS there and what you're seeing from customers?

Drew Hamer -- Chief Financial Officer

Yeah. So on the ADAS customers, we are seeing those projects aren't moving as quickly as we've indicated. They could take three to four, five years. And customer priorities are shifting on a pretty regular basis, and it's an area where we're very carefully evaluating the ADAS space, while we're getting tremendous activity from the industrial space.

So we are seeing that some of those projects are -- they're shifting. The OEM's priorities are changing and their commitment to incorporating Lidar into their solutions. We'll have varying priorities as we go forward.

Sam Peterman -- Craig-Hallum Capital Group -- Analyst

OK. And then one more on ADAS is you talked last quarter about your 2026 agreement with an OEM, I believe, in Asia for -- around your solid-state product. I'm curious if you could provide any update on that and how that's looking and then. I'm not sure this is clarified for then -- in an RFI or a key stage? Or just any color around that would be great.

Drew Hamer -- Chief Financial Officer

Yeah. That's actually -- we're focusing on the RFI, RFQ stage with that. It's a very close partner, one of the OEMs in Asia. And we work with them.

We've set up an operation close to them, and we work with them on a regular basis and have daily calls with them on that project and getting to that point where we can have those sensors move to the signed and awarded category.

Sam Peterman -- Craig-Hallum Capital Group -- Analyst

OK. Thanks. Then quick last one for me on Velabit. Pipeline went up here for a substantial bit.

I'm curious if you could give any color on the markets that you're seeing some activity and where those additional eight wins or eight projects into your pipeline are coming from?

Drew Hamer -- Chief Financial Officer

Yeah. So we are seeing enormous demand for us to get the Velabits to market. It's a product that we really don't have planned for production, commercial availability until about 2023. And the amount of interest from customers has made it a top priority for us to keep that moving along.

We are seeing across the board demand for that solution. A lot of activity in the OEM shops. There's a lot of activity in all of our industrial customers. And then -- and it's interesting, there's even as we break down the industrial customers between the last mile deliveries, the kind of the robotics and even in newer spaces like delivery using drones and things like that, it's a really tremendous response from the market for us to get that product out and to them.

So it's really widely spread that we're seeing it across all the markets, the interest in buying that, and we're very aggressively moving to get that to beat their standards.

Sam Peterman -- Craig-Hallum Capital Group -- Analyst

OK. Thanks, Drew.

Drew Hamer -- Chief Financial Officer

Thank you.

Operator

Thank you. Next question will be from Tristan Gerra of Baird. Please go ahead.

Unknown speaker

Hi. This is Tyler on for Tristan. Maybe first off, can you talk about what efforts you're putting into the software platform that maybe extends beyond just object recognition and into car actualization?

Drew Hamer -- Chief Financial Officer

Yeah. So we have actually got -- we've already built out a kind of a platform of products that can be incorporated into those systems. We are working very closely to identify additional features and functionality that the customers would want and require so that we can incorporate that into our development plans as we go out to 2022 and beyond. And then we'll work closely with them on any feedback they have as we continue to develop that and work toward some kind of a commercial agreement.

Unknown speaker

OK. Great. And then for my follow-up, do you expect a rebound in 360-degree Lidar shipments? And if so, what would the timing of that inflection be? And then maybe what applications would you see that inflection point in?

Drew Hamer -- Chief Financial Officer

A rebound in rotational sensor. So we actually haven't seen a decline in the demand of the rotational sensors. We are actually in a number of very, very steadily selling our Puck sensors. Our Alpha Puck sensors actually had a nice uptick this quarter, contributing to the unit volumes, as Aileen kindly pointed out earlier.

We are also engaged with a number of customers around the next-generation Lidar sensors, which will use our MLA and our ASIC chips. So we have a number of customers that want to use some of our sensors that will be kind of moving toward that automotive-grade capability, and they're working very closely with us and defining how that should work they're running tests on those sensors today on their vehicles. And so I really don't think it's as much a rebound as we do expect it to continue to be a strong product for Velodyne Lidar, a market-leading product, as well as our Velodyne products. And -- sorry, our solid-state products.

And we do have agreements with customers to incorporate it into solutions. So I think you'll see it in the automotive vehicle solutions, the AV, sorry, autonomous vehicle solutions. And we're also seeing an interesting dynamic where with the robotics, some people want to use rotational because it gives them more data and gives them a full surround view from one sensor where others just want to use a solid-state sensor, whether it's a Velarray, or a Velabit. And then we're also seeing that in the IIS solutions where people use them in an intersection, it gives them, again, it gives them more data so that they can see the whole intersection with one sensor.

So we're really -- and then we also have in mapping. A lot of people use our rotational sensors, our tuck lights, and they'll put them on drones, and they'll use them to do topographical mapping. We also have a customer who's using it for backpacks. So they put them on backpacks and they use them walk around people's neighborhoods and do the mapping in the neighborhoods as well.

So really seeing rotational sensors are still very much a product that people want, as well as giving them that option to be able to go with a solid-state sensor.

Unknown speaker

All right. Great. Thanks for all the color.

Operator

Thank you. Next questions comes from Raj Gill of Needham & Company. Please go ahead.

Denis Pyatchanin -- Needham and Company -- Analyst

Good afternoon, everyone. This is Denis on for Raj. So for my first question, I just want to ask them, can you talk about your current kind of mix of the in-house versus outsourced production? And how much of the guidance reduction that we're seeing here from the previous one was due to supplier component challenges that you're having versus this issue of improving consistency?

Drew Hamer -- Chief Financial Officer

Yeah. So we don't usually speak specifically to the particular components of in-house versus out of house. But what we have shared previously is that a number of our sensors are being produced by our contract manufacturers. So our Pucks, a number of other products, our Ultra Pucks, even our VLS-128s are now being produced by contract manufacturers.

However, as we started looking at our solid-state products, we haven't been able to move as many of those offshore because of the delays we've talked about in previous quarters. Although a number of the components are being produced offshore, and then they come back to the United States for final assembly. And then the newer products as they're being assembled and stood up, those will continue to be done here in the San Jose facility. So the spilt is generally done across the line.

I'm sorry, I think there was a second question there and I missed it. Would you like to repeat it, please?

Denis Pyatchanin -- Needham and Company -- Analyst

Sure. So essentially, and then we had the guidance reduction here versus last quarter, moving to 61.5% from 85% or so how much of this was due to component shortages that are affecting the entire semiconductor industry versus just the ones that are -- versus this issue of you guys trying to improve consistency for volume production?

Drew Hamer -- Chief Financial Officer

It's actually -- none of it has to do with supplier shortages or anything of that nature. It's mostly around the improving production consistency for our customers. But it's also just an expectation that we're finding NRE very difficult to forecast. So we have customers who are talking to us about long-term contracts.

And we had some of that in the pipeline because it felt like they should move forward in Q3 or certainly in Q4, and we're believing that they're taking longer than expected. So that part, we've decided to take out of the forecast, and we're leaving it as an upside unless we have the signed agreement in hand as we go into the guidance.

Denis Pyatchanin -- Needham and Company -- Analyst

Great. And then so with regards to the issues of moving production offshore, so in the current quarter, would you say that the situation is getting worse? Is it the same or is it improving? Can you provide some more color on some of these issues and what's going on as we speak essentially?

Drew Hamer -- Chief Financial Officer

I'll let Jim speak to that.

Jim Barnhart -- Chief Operating Officer

Yeah. It's interesting -- this is Jim. I don't see any issue with moving production offshore. I mean, we're continuing with the state of the strategy as we do our development in-house to the initial prototyping up to pilot in our main center facility.

And then once we have the technical transfer documentation done, what the manufacturing process instructions are, etc., we hand that package off to the contract manufacturers for production. And that's -- actually, that's progressing well.

Denis Pyatchanin -- Needham and Company -- Analyst

All right. That's it for me. Thank you.

Operator

[Operator instructions] Our next question comes from Michael Filatov of Berenberg. Please go ahead.

Michael Filatov -- Berenberg Bank -- Analyst

Hey. Sorry. Just another one for me. I was looking -- just to confirm, the non-GAAP gross margin guidance for the full year.

That negative 8% to positive 10%. Is that correct?

Drew Hamer -- Chief Financial Officer

No, it's negative 8% to negative 10%.

Michael Filatov -- Berenberg Bank -- Analyst

OK. Gotcha. Thanks for clarifying that. Just looking at sort of the full-year revenue guidance again, I mean if you look back at the original stack deck, it was $150-something million for 2021 and now it's in the 60s, and margins are obviously down quite a bit.

I mean what would you characterize as the main driver of that quite significant change in the revenue and margin expectations for this year? And what is the primary driver of that?

Drew Hamer -- Chief Financial Officer

Yeah. For us, the primary driver, now that we're at the end of the year versus when we came into the year or actually, when this -- these numbers were provided during the merger, honestly, so these weren't even guidance for the company for the year. The main thing that we're seeing that's a difference from what we saw back in the beginning of 2020 versus to where we were today is, of course, throughout the year, there was the impact of COVID slowing programs down and creating that dynamic for the first two, three quarters here of not being -- customers just sort of slowing everything down, pushing it out, we locked into some. We've definitely been impacted by that.

And then some of that is resulting in some of the projects that we were expecting to get this year, pushing out to next year. So people are as they come back, they're starting to pick those projects back up again, and we look forward to those coming back into vogue in 2022. And then lastly, I think the key thing for us now, of course, in this forecast is a lot of those pipeline numbers there were consistently that NRE piece, and by taking that out, it's gotten us to where we are with the current forecast that we're sharing with everybody.

Michael Filatov -- Berenberg Bank -- Analyst

So based on what you said, it seems like things have just kind of gotten shifted back. Does that imply that in the next year or two, we could see that $150 million plus revenue become realized?

Drew Hamer -- Chief Financial Officer

It -- we have seen things shift back. And what we want to be really careful of, especially given the benefit of having Ted come on and evaluating all the different components of the business, as we talked about earlier, is that that would be the case. So I can't verify or deny that right now, but we are certainly going through every single project in our pipeline, having deep conversations with those customers to gain better understanding of where they're at with their projects and what their intentions are going forward, so that when we speak to you again, we're giving you a cleaned up deck, if you will, of what we're looking at.

Michael Filatov -- Berenberg Bank -- Analyst

All right. Thanks very much.

Operator

Thank you. That concludes the question-and-answer session. I'll now turn the call back to management for closing remarks.

Drew Hamer -- Chief Financial Officer

OK. Well, everybody, I just want to thank you very much for joining our call today. I want to thank, we're very excited to have Ted join in the company. It's honor to be working with him and looking forward to working with you going forward.

Again, I also just want to reiterate, we are very excited about what we're seeing in our unit volumes increasing. The activity that we're seeing with our industrial customers is really exciting for Velodyne Lidar because we expect it, at least in the near term, that will be the key generator of revenues. As we go forward, it will allow us to build out our products, our ability to produce its scale and consistency, and the level of quality that customers expect. And then as we get out into the future, as other projects get closer to start of production, we're looking forward to being able to satisfy customers' needs in ways that other Lidar companies can't because we'll be that proven technology that has evolved to having all of the various components of their boxes they need to check in order to be able to use a Lidar sensor in one of their solutions.

So thank you very much for your time today. We look forward to talking with you more as we go forward. And hope you all have a good evening. Bye-bye.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

Andrew Chan -- Head of Investor Relations

Drew Hamer -- Chief Financial Officer

Kristen Owen -- Oppenheimer and Company -- Analyst

Jim Barnhart -- Chief Operating Officer

Michael Filatov -- Berenberg Bank -- Analyst

Mark Delaney -- Goldman Sachs -- Analyst

Ted Tewksbury -- Chief Executive Officer

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

Sam Peterman -- Craig-Hallum Capital Group -- Analyst

Unknown speaker

Denis Pyatchanin -- Needham and Company -- Analyst

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