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DATE
Thursday, Nov. 13, 2025 at 5 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Paul A. Ricci
- Chief Financial Officer — Thomas J. Fennimore
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Risks
- The suspension of financial guidance and dependence on forbearance agreements highlight ongoing capital structure and liquidity uncertainty acknowledged by management.
- CEO Ricci stated, "the uncertain status of that relationship will reduce or perhaps eliminate the expected volume and revenues from the EX90 and ES90 programs," with unfavorable economics on Iris sales previously contributing to loss.
- Gross loss for the quarter was negative $8.1 million (GAAP), continued from prior periods, despite some improvement sequentially.
- Quarterly free cash flow remained negative at $48.5 million, underscoring persistent cash burn and operational challenges.
Takeaways
- Revenue -- $18.7 million, up 20% sequentially and 21% year over year, driven primarily by higher Iris sensor shipments, increased non-recurring engineering (NRE) revenue, and growth in LSI revenue related to defense and aerospace.
- Iris shipments -- Shipped approximately 5,400 Iris sensors, up from 4,800 in the prior quarter, with the majority delivered to Volvo.
- Gross loss -- Reported a GAAP gross loss of $8.1 million and a non-GAAP gross loss of $7.3 million for the quarter; sequential improvement primarily due to higher NRE mix, lower inventory purchases after pausing the Volvo program, and reduced warranty expense, partially offset by unfavorable unit economics.
- Operating expenses -- GAAP OpEx at $66.6 million and non-GAAP at $43 million for the quarter; non-GAAP OpEx declined 9% sequentially and 29% year over year, reflecting lower R&D spend and ongoing cost-cutting.
- Cash balance -- Ended the quarter with $74 million in cash and marketable securities, unchanged from preliminary disclosures.
- Free cash flow -- Roughly negative $48.5 million, an improvement versus negative $53.8 million in the prior quarter and down from negative $588.4 million a year ago.
- Capital structure actions -- Entered into forbearance agreements with secured noteholders, paused usage of equity finance and preferred stock programs, and is in active negotiations for both financing and potential company or asset sales.
- Workforce reduction -- Announced the reduction of approximately 25% of the workforce by year-end as part of ongoing organizational realignment efforts.
- LSI Photonics segment -- Year-to-date revenue near $18 million; now comprising about one-third of total company annual revenue, with a significant portion of backlog tied to multiyear customer orders.
- Automotive relationships -- Volvo relationship uncertain, resulting in paused new production commitments and potential elimination of EX90 and ES90 program revenue; no current development activity with Mercedes under the HALO contract; active hardware and software milestone progress with Nissan.
- Non-automotive growth -- Expanded commercial traction in off-road autonomy (e.g., Caterpillar, Forterra), aerospace (Lake Fusion Technologies), and marine autonomy, attributed to differentiated 1550nm lidar technology.
- Board and leadership changes -- Appointed Patricia Ferrari and Elizabeth Abrams as independent directors with restructuring backgrounds; CFO transition from Thomas J. Fennimore to Tom Boden, effective after the quarter.
- Product development -- CEO Ricci stated, "We've maintained critical engineering and related resources necessary to pursue the HALO architecture, which we've."
Summary
Luminar Technologies (LAZR 8.62%) highlighted a material shift in its operational focus away from automotive lidar and toward higher-margin, non-automotive markets following persistent challenges with core OEM relationships. Management confirmed that the LSI Photonics segment is emerging as an increasingly significant and stable revenue contributor, driven by multi-year defense and industrial contracts. The company is actively exploring strategic alternatives, including full or partial sale, while pausing major financing initiatives and reducing headcount by 25% to address continued negative gross margins and substantial cash outflows.
- Suspension of 2025 financial guidance reflects elevated uncertainty and management's inability to provide reliable forward visibility amid ongoing operational restructuring.
- Multiple non-binding proposals for acquisition of the company or discrete business lines are under review, reinforcing market interest in both Luminar Technologies' assets and technology.
- Pausing new Volvo production commitments, terminating current Mercedes development activities, and focusing on advancing relationships such as Nissan and Caterpillar signal a substantive realignment of strategic customer priorities.
Industry glossary
- Iris: The company's proprietary lidar sensor platform used in automotive and off-road autonomy applications.
- NRE (Non-Recurring Engineering): One-time revenue earned from customer-funded engineering and development work rather than recurring sales.
- LSI Photonics: The company's photonics component and subsystem business targeting defense, aerospace, industrial, and medical sectors.
- HALO architecture: The next-generation sensor and software platform designed for advanced driver-assistance and autonomous vehicle applications.
- 1550nm: Refers to the wavelength (nanometers) used in the company's lidar systems, supporting high-resolution, long-range sensing with improved safety and performance in challenging environments.
Full Conference Call Transcript
Paul A. Ricci: This has been a pivotal and challenging quarter for Luminar Technologies, Inc., including the developments we disclosed in our 8-Ks a few weeks ago. We are now taking deliberate action to reposition the company, and I want to begin by addressing a few items directly. First, on our capital structure, we have entered into forbearance agreements with the majority of our secured noteholders, which run through November 2024. We anticipate further extensions as we continue to negotiate with our secured noteholders towards a longer-term solution to our capital structure and liquidity needs. During this period, our 2025 financial guidance remains suspended.
We have also paused usage of our equity finance credit and preferred stock programs while we work toward a comprehensive solution. We may decide to resume use of these programs in the future depending on developments. As previously disclosed, we have also received and are evaluating multiple preliminary proposals and indications of interest to purchase the entire company as well as certain of its assets and business lines. We have added Patricia Ferrari and Elizabeth Abrams as independent directors to support our efforts. Together, Ms. Ferrari and Ms. Abrams bring extensive experience in banking, finance, and restructuring advisory work. In addition, this will be Thomas J. Fennimore's final quarter with Luminar Technologies, Inc. as CFO.
Tom has worked tirelessly with me over the past six months, and I am appreciative of all the contributions he has made during his time here and wish him the best in his next chapter. I also want to take a moment to welcome our new CFO, Tom Boden. Tom brings more than four decades of financial and operational experience across both public and private technology companies. Tom and I worked side by side for many years in building Nuance, and I am delighted to be working again with him here at Luminar Technologies, Inc. On the business front, we are managing continued challenges in our automotive lidar business.
As disclosed, the future course of our relationship with Volvo will depend on the outcome of ongoing processes. We have made a claim for damages and paused further production commitments of Iris units pending resolution. We remain in dialogue with Volvo and are hopeful that we can reach an agreement on a path forward. At the same time, we have advanced the strategic shift we outlined last quarter. We are pursuing non-automotive markets more deliberately and elevating the role of our LSI Photonics business where we seek continued progress.
Over the past several months, momentum has continued to build across both Luminar Technologies, Inc. and LSI, especially in aerospace and defense, where our technology addresses mission-critical sensing and national photonics needs. These developments reinforce our belief that this strategic direction better positions Luminar Technologies, Inc. for the years ahead. I'll speak more to that progress in a moment, but first, let me turn to customer updates. Starting with Volvo, the uncertain status of that relationship will reduce or perhaps eliminate the expected volume and revenues from the EX90 and ES90 programs. But given the unfavorable economics of Iris sales to Volvo at these depressed volume levels, this change also will help our cash flow and gross losses.
We are continuing a dialogue with Volvo and will provide updates when there's more to share. Regarding Mercedes, we do not have further development activity under the current HALO development contract, although our technology remains under evaluation for future programs. Finally, our relationship with Nissan continues to advance as we remain focused on meeting their hardware and software program milestones and delivering the quality and performance they require. Taken together, the developments with Volvo and Mercedes reflect broader industry conditions, including extended timelines for L3 ADAS program readiness and award decisions.
These dynamics reinforce the direction we outlined last quarter to move more deliberately to pursue commercial markets outside of automotive where engagement and near-term opportunities continue to grow, in particular, in aerospace and defense applications. Luminar Technologies, Inc. now works with nearly all major developments in terrestrial off-road autonomy, including Caterpillar, where we recently shipped the first design validation units as we progress towards the start of production. We are also expanding into defense and industrial use cases. For example, Forterra, a leading autonomous mission systems company, is currently using Iris on its off-road autonomy platforms. Our 1550 nanometer approach supports operations in conditions where stealth, detail, and reliability are important.
It captures a highly accurate 3D view of unstructured terrain and allows safe navigation without GPS, which is increasingly important as GPS jamming becomes more common. Beyond ground systems, we are seeing similar interest in aerial and marine applications. Our work with Lake Fusion Technologies is an early example where Iris sensors are being used to help helicopter pilots identify power lines and other hazards. We are also supporting partners in marine autonomy for obstacle avoidance and precision positioning. Ultimately, these commercial, defense, and industrial markets represent growing high-margin opportunities that validate the scalability of our technology. This connects directly to the progress we are seeing at LSI.
As a reminder, LSI supplies photonics components, subsystems, and systems across aerospace, defense, industrial, and medical markets, combining defense-grade reliability with chip-scale innovation from concept to deployment. As a trusted US supplier in export-controlled domains, such as missile defense, quantum sensing, directed energy, and optical communications, LSI is well-positioned to benefit from strong tailwinds driven by rising defense budgets, reshoring mandates, and national security priorities. Given that LSI currently represents about one-third of Luminar Technologies, Inc.'s annual revenue, we believe it is an under-recognized element of our business. Year to date, LSI has generated roughly $18 million in revenue, and we see a path for strong growth from here.
Unlike the automotive business, which has proven to be a more unpredictable business, LSI benefits from stronger revenue visibility with a significant portion of its backlog tied to multiyear customer orders. With strong secular tailwinds, we believe LSI stands to build on this momentum over the next several years. Before turning it over to Tom to discuss Q3 results, I'd like to discuss our organization briefly, where we are taking steps to align our cost base with our long-term goals. As previously discussed, as part of our ongoing realignment, we will reduce roughly 25% of our workforce by year-end. This was a difficult but necessary step to give the company the stability it requires.
We expect a meaningful reduction in operating expenses as a result of these actions beginning in 2026. Regarding the supply chain, we are currently reviewing our arrangements with our contract manufacturing partners. This is consistent with our broader effort to rightsize our cost structure and align our supply chain strategy with a lower volume environment in the near term. And with that, I'll hand it off to Tom to discuss Q3 results.
Thomas J. Fennimore: Thank you, Paul. Revenue for the quarter came in at $18.7 million, up about 20% sequentially and 21% year over year. The increase in revenue during the quarter was primarily driven by three factors. First, we shipped roughly 5,400 Iris sensors in Q3, compared to 4,800 in Q2, with the vast majority of these shipments going to Volvo. Second, higher NRE revenue related to development work we are currently performing for our customers. And finally, a sequential increase in LSI revenue as we've seen continued growth in defense and aerospace-related spending. For the quarter, we reported a gross loss of negative $8.1 million on a GAAP basis and negative $7.3 million on a non-GAAP basis.
Q3 gross loss improved sequentially driven by a higher mix of NRE revenue, lower inventory purchases following the previously discussed Volvo program pause, as well as a lower warranty expense. This was partially offset by higher shipment of series production sensors and unfavorable economics. OpEx came in at $66.6 million on a GAAP basis, and $43 million on a non-GAAP basis. Non-GAAP OpEx declined roughly 9% and $4 million relative to the prior quarter, and 29% or $18 million relative to Q3 of last year. This decrease was driven primarily by lower R&D spend and continued progress on our cost actions.
We ended the quarter with $74 million in cash and marketable securities, in line with the preliminary results shared a few weeks ago. As Paul noted, we have paused usage of our equity financing and preferred stock programs while we work towards a longer-term solution for our capital structure and liquidity needs. We may decide to resume use of these programs in the future depending upon developments. We are also actively evaluating multiple nonbinding preliminary proposals and indications of interest to purchase parts of or the entirety of the company. We will share updates on this when appropriate. Our change in Q3 was negative $34 million above the $31 million level from Q1.
This was driven by lower proceeds from our equity financing program. Free cash flow for the quarter was roughly negative $48.5 million, lower than the $53.8 million in Q2 and significantly below the $588.4 million from a year ago. I'll now turn it back to Paul for closing remarks.
Paul A. Ricci: While this is undoubtedly a challenging period, we are approaching it with discipline, transparency, and focus. We are deeply grateful to our employees, customers, and partners for their continued commitment and trust as we navigate this transition. We will now take your questions.
Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. One moment for questions. Our first question comes from Winnie Dong with Deutsche Bank. You may proceed.
Winnie Dong: Hi, thank you for taking the questions. I was wondering if you can provide maybe a preliminary on, you know, the direction of the strategic actions going forward. In the prepared remarks, it was mentioned that, you know, you're evaluating potential sale or partial sale of the company. Just wondering if there is any preliminary indication of interest, and what you guys might be leaning toward. Thank you.
Paul A. Ricci: Yes. As I did comment moments ago, we have had interest in assets, business lines, and in fact, the entire company. And we are in the process of evaluating those as well as other financing interests in the company.
Winnie Dong: Okay. That's helpful. And then maybe in the meantime, in terms of your next-gen, you know, product development, is that put on hold, or is that still behind the scene, like, still progressing?
Paul A. Ricci: No. It has not been put on hold. We've maintained critical engineering and related resources necessary to pursue the HALO architecture, which we've talked about in some detail in previous quarters. And that work continues unabated.
Winnie Dong: Okay. Got it. Thank you.
Operator: Thank you. And as a reminder, to ask a question, please press 11 on your telephone. Our next question comes from Jash Patwa with JPMorgan Chase. You may proceed.
Jash Patwa: Hi. Good evening, and thanks for taking my questions. I wanted to start with LSI. Can you maybe give us a sense of the size of the business, the intellectual property portfolio, and the current momentum you're seeing with customers? I understand that LSI is the result of a series of acquisitions over the years. So I'd appreciate your perspective on how you think about the intrinsic value of that segment. And I have a follow-up.
Paul A. Ricci: Well, I earlier in my comments gave a little bit of indication of revenues year to date in LSI. Other than that, I can't comment too much on the size. It is a growing business. It has deep technologies in various areas of photonics that I mentioned in my comments. Those range from medical applications to industrial applications to military and defense applications. As I've indicated previously and again today, we think it's an under-recognized asset and business line in our company. And we are doing the things necessary to accelerate growth in that business, and there has been, as I've mentioned, strategic interest in that business as well.
Jash Patwa: Appreciate it. As a follow-up, you know, while we appreciate all the detail on your automaker partnerships, I was hoping you could also share any updates on your relationships with platform partners like NVIDIA. Is there continued engagement on that front, especially in light of several major automakers recently announcing their L4 platforms in collaboration with these platform players? Thank you.
Paul A. Ricci: The company does continue to work with platform players. I don't have any updates on partnerships in that area today.
Jash Patwa: Alright. Thank you, and good luck.
Paul A. Ricci: Thank you.
Operator: This concludes the conference. Thank you for your participation. You may now disconnect.