Good morning. My name is Kirby and I will be your conference operator today. At this time I would like to welcome everyone to AEye's Third Quarter 2021 earnings conference call and webcast. All participant lines have been placed in a listen-only mode. And opening remarks by AEye management will be followed by a question-and-answer session. I will turn the call over to Stephen Lambright, Chief Marketing Officer. Please go ahead.

Thanks, Kirby, and welcome everyone to AEye's third quarter 2021 earnings call. With me today are Blair LaCorte, our Chief Executive Officer and Bob Brown, our Chief Financial Officer. Earlier today, we announced our financial results for the third quarter 2021. A copy of the press release can be found on our website at investor.aye.ai. Before we start, I'd like to remind participants that during this call management may make forward-looking statements including without limitation, statements regarding our future performance, growth strategy and financial outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the industry and other conditions. These forward-looking statements are subject to inherent risks, uncertainty and changes in circumstances that are difficult or impossible to predict. You can find more information about these risks uncertainties and other factors in our reports filed from time-to-time with the Securities and Exchange Commission including the registration statement on Form S-4. That includes a definitive proxy statement that AEye formerly known as CF Finance Acquisition Corp. III filed with the SEC. Additional information will be set forth in our quarterly report on Form 10-Q for the quarter ending September 30, 2021. Our actual results may differ materially from those contemplated by these forward-looking statements. We caution you therefore against placing undue reliance on any of these forward-looking statements. All information discussed today will be as of November 11, 2021. And we do not intend and undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise, except as may be required by law. In addition, today's discussion will include references to certain non-GAAP financial measures. These non-GAAP measures are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release. And you should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures in our earnings release. So, let's start by quickly revisiting the day that brought us here. [Video Presentation]

Well everyone, my name is Blair LaCorte, and I am the CEO of AEye. I'm joined by my colleague, Bob Brown, our CFO and Treasurer. I want to thank you for joining our first earnings call as a public company. We understand that as an investor you invest both with your time and money. We realize both are limited and appreciate you prioritizing AEye. We are grateful to have completed our [indiscernible], as this was an important milestone and will help us accelerate adoption of AEye's high performance adaptive LiDAR system and fulfill our mission to make vehicle safer, more efficient, and to enable the next generation of autonomous mobility. Today and on each quarterly earnings call going forward, we intend to follow a standard framework. First, we will provide you with an overview of key themes influencing the LiDAR market, following that, we will provide an update on the business including product, customer and partner highlights. And finally, Bob will outline progress on strategic milestones, financial performance and/or outlook when appropriate. In conclusion, we will turn the floor over to you for your questions. With that said, let's get started. AEye's next generation system is designed to leverage AEye's and edge processing to move the complexity from the hardware to the software, giving industrial customers and automotive OEMs the ability to add new and compelling features. This approach also enables a unique business model, with one platform addressing all markets, accelerating hardware cost reduction, and the use of partnerships to manufacture and sell in a more flexible manner. AEye also has a great track record of innovation and leadership over the last eight years. Most recently, in 2020, we released our third generation of products, the Foresight series. We launched the Foresight A for ADAS and the Foresight M…

Thanks, Blair. I appreciate the opportunity to be here today. For those who aren't familiar with Continental, Continental is 150-year-old company that today is one of the largest automotive technology companies in the world with currently more than 192,000 employees, and an annual revenue of over €37 billion in 2020. We have a wide range of products in automotive, starting with mission critical parts like tires, and brakes, up to high technology ones like the high performance computers, or ADAS sensors. Continental has been one of the world's leading suppliers of ADAS technology over the last decades, recently shipping our 100th million radar unit. In addition to radar, our 5000 strong ADAS engineering team is working on the full ADAS system stack, including cameras, LiDAR, automated driving control units, ADAS software, as well as data management. What many people may not be aware is that we also have delivered more than 20 million LiDAR systems to more than 50 different vehicle months. We have a large ADAS market footprint with over 25 OEMs and 50 brands in our installed customer base. So with a history of more than 20 years in delivering LiDAR solutions to the automotive market, Continental is already uniquely positioned in the industry. But the next high priority for OEMs is to offer integrated ADAS systems that include a high performance long range LiDAR to address specific requirements for applications such as highway outer pilot, and help to have autonomous tracking. So we searched for the ideal technology partner to jointly develop such a new high performance long range LiDAR. We found AEye, and we learned about our compatibility with regards to technology, and market vision. We share common subsystems, suppliers and design elements. And although the applications for our existing short-range flash LiDAR, and the new…

Thanks Gunnar. Let's switch gears, excuse the pun and talk about the industrial markets. Earlier this year we announced the development partnership with global self-driving technology company TuSimple. TuSimple is working with numerous truck OEMs on hub-to-hub and ADAS applications, as well as Level 4 self-driving trucks targeting production in 2024. TuSimple chose AEye because of our systems extreme long-range performance, impressive weather capabilities, and the ability to address the most challenging autonomous trucking situations. It's widely believe that the trucking industry will be one of the early adopters of autonomous vehicles as a solution for driver shortages, fleet logistics, and safety concerns. We're also working with horizontal technology providers. Our partnership with Nvidia is a great example of our efforts here. Nvidia's drive system is being used by many OEMs, mobility providers and industrial companies as the foundation for their full stack autonomous solutions. In July, AEye Nvidia announced that AEye will bring intelligent sensing to the drive platform. With this integration. autonomous vehicle developers will have access to next generation sensing capabilities as they build and deploy state-of-the-art autonomous applications with adaptive LiDAR. In 2021, we've also kicked off engagements with leaders in other industrial markets to develop solutions that address their specific needs. This includes Komatsu and construction and mining equipment and Hitachi rail to name a few. I would like to specifically highlight that in the third quarter we launched AEye's 4Sight M into the intelligent transportation system market at the ITS World Congress in Homburg. And the ITS market working with a right partners is critical. In addition to our previously announced relationships with a Connell Light and Mitsubishi Electric, we announced a new and exciting partnership with Seoul Robotics, a leading 3D perception company, using ITS applications and in Tetra, a pan European ITS…

Thanks, Blair. I'll begin with a summary of our progress in executing on our strategic milestones during the quarter. Then I'll discuss our third quarter results. I'll start with our primary financial milestone, which was to complete our de-SPAC transaction in the third quarter. We successfully completed that in August by listing on NASDAQ as LiDAR and raising over $200 million net of fees. We also eliminated over $50 million of outstanding debt at the closing of the transaction. With respect to product. We had a goal this year to clearly and measurably demonstrate the performance of AEye's LiDAR. We succeeded in establishing LiDAR performance standards for range, speed and resolution in third-party tests. And we also validated our superior weather performance. Manufacturing is another key milestone for us and we made considerable progress there in the third quarter. Initial automotive B samples from the continental line are in bring up and we are on schedule for automotive series production in 2024. We are also on track to begin production this quarter of our 4Sight M LiDAR sensor at Sanmina, our contract manufacturing partner. The 4Sight M will be used in our industrial and mobility applications. In the area of customers and partners, demonstrating commercial traction with leading players in the market is another key milestone for us in 2021. We're pleased to have advanced key relationships in the third quarter, including with Continental and ADAS too simple in trucking and Nvidia in mobility, Komatsu in construction, Hitachi in rail, and Mitsubishi Econolite in Tetra and Seoul Robotics, all in support of our recent ITS launch. With respect to governance, our goal was to establish a strong public company Board to represent our stockholders. We're pleased to have elected a new Board of Directors comprised of numerous highly respected Board…

Thanks, Bob. I'd like to wrap up with a look at AEye's greatest asset. Our people we're building an amazing, talented, passionate team. As my dad would say, you have to bet on the people. During 2021, we made significant strides in attracting the top talent in the LiDAR market to AEye. In March we announced the appointment of Rick Tewell as our Chief Operating Officer. Rick was previously the COO at Velodyne. Rick has a demonstrated record of leadership and success in building and operating enterprise scale technology businesses. In June, we announced the addition of Hod Finkelstein team as our Chief R&D Officer. Previously, Hod was CTO at Sense Photonics. Now, a subsidiary of Ouster. Hod has led several organizations in the design and productization of disruptive technologies. In July, we announced the appointment of auto veteran Bernd Reichert to the role of Senior Vice President of ADAS. Bernd previously served as the Global Vice President for ADAS and LiDAR at Valeo, having built their ADAS business over the past seven years. And just today we announced the addition of T.R. Ramachandran in a newly created position as Chief Product Officer. T.R. was most recently the Head of Product Management and Marketing at Cepton and formally was the Vice President of Product Management at Velodyne. People who know LiDAR best are choosing AEye. The number of exceptional individuals who have joined us this year from other LiDAR companies stands as a testimony to how we are received in the market. To conclude, we thought it would be inspiring for you to hear from some of our newest hires, and the reasons for joining AEye. [Video Presentation]

I am confident that AEye's team, along with a world-class board assembled as part of our public listing will help us achieve our goal of driving LiDAR adoption across the automotive, industrial and mobility markets. Now, let's open it up for questions. Operator?

[Operator Instructions] And first question comes from the line of Joseph Osha of Guggenheim Partners. Joseph, your line is now open.

Hello, everyone, thanks for the detailed presentation. That was really interesting. A couple of questions, I wanted to start with this issue of procurement in particular, if you look at what your main 1550 competitor has done in wide band-gap detectors versus your strategy of saying what the market sorted out? Can you explain to us a little bit how you see your strategy being an advantage versus that sort of backward integration that the other guys are pursuing?

Sure, so thanks for the question, Joe. In every market there's different strategies. And I think this one is pretty clear, you can vertically integrate, if you believe that the solution that you need is already been innovated on, and it's in a mature phase. And all you're trying to do is actually to reduce costs with the same components. Or you may actually believe that you're in earlier market, and you'd like to take advantage of an open supply chain, a modular Tier 2 hardware supply chain that's doing a lot of R&D, we felt that our intelligent sensor system was better suited to a supply chain where we can actually at any given time, as new technology starts to arrive, either from new materials or from cost reduction standpoint, that we can integrate into our product seamlessly. So I think it's just a different strategy, you could vertically integrate, you're dependent on your own team, or you could have an open supply chain, or you have proprietary designs with standard processes, and take advantage of the innovation and size of the global automotive supply chain and we pick the second.

That makes great, great sense. Could you talk a little bit about how you perceive the current opportunities and time before versus some of the earlier rhetoric out there about FMCW?

Sure, and at first, I'd like to say that we are not religious about technology itself, what we are religious about is delivering a system to our customers that provide value, if we can't make our customers money, and they can't provide value to their customers, then there is no market. So one of the premises, as you heard at the beginning of this presentation we came to was that we would actually look at every technology out there, and we will continue to evaluate as we went along. And so, LiDAR has been around since 1962. FMCW has been around since 1963. Coherence in general, is a very well-known concept, we picked what we believed was the most appropriate auto grade technology today. And we also have a very, very different architecture, as we said, a bi stack architecture where we're separating the send and receive paths. So we actually can do things with our intelligent sensing platform that many other technologies can, FMCW is a continuous way, we actually can pulse and change and create different patterns, and collect different information using a time of flight system whereas most passive time of flight systems can't do that, they work very much like a camera, they get the same density and the same distance everywhere in the scene. So I think this again was just a technology choice. We believe that if you're going to be in cars, in 2024, that you need a technology that is reliable, predictable, and that actually can be produced to automotive grade supply chain. And we just, we didn't see the value of added coherence into the system today. Again that said we evaluate every year and our system is modular, if we decide we want to add some functions in, we'll add them in.

Great, thank you and then one more for me and I'll quit monopolizing the call. Obviously, the relationship with Conti is very exciting. Might we see Conti start talking about who some of their end customers are for this product here and if so, when might we expect to hear a bit more about that? Thanks.

Sure. Well, as you know, because you've been in the auto business for a while, most Tier 1s don't talk about who their OEMs are, because the OEMs until they get into volume production, see no value and actually talking about who the vendors are at that point in time. So what Continental has done is they've talked about their installed base of 25 OEMs, the 50 brands they work with, they have also talked about how many people were engaged with in RFQs today, but at the end of the day, Continental is our customer. And it will be their decision on when they actually decide to articulate who the specific OEMs are, it's a lot easier in smaller volume projects, or in smaller brands to actually talk about things and take a risk on it. A lot of the projects we're working on right now are very, very large. And I would expect the Continental would wait until everything was tied up before they articulate them.

Okay, but just to follow on that before I go wait here it would be logical to assume that on the other part of the business where you're just, you're working with contract manufacturers and selling completed units to your industrial customers that we would hear from you when you strike?

Absolutely, our customers are the Tier 1s on the high volume business, and we'll let them talk about their end user. But on the other side of the business, we're producing the hardware and software ourselves and selling into the vertical markets. With the caveat that we would always respect our customers and make sure that we got their permission, we have a lot more flexibility to talk about pilots, and rollouts in those markets.

Okay, thank you very much.

Next question comes from the line of Suji Desilva of ROTH Capital. Suji, your line is now open.

Hi, Blair, hi Bob. So congrats on the spec merger close obviously. So a few more questions on Continental, since they already have done high volume LiDAR manufacturing, I'm wondering if they kind of have a line built out that you would leverage as you go forward or do they have to build out a line in support of your B sample, they need a C sample to do that line build out just some color there on the remaining steps for Continental would be helpful to understand.

Sure, and as you alluded to, they have produced a tremendous amount of hardware products, including LiDAR in the past, their process is to basically build out the sample line, and then to actually build out the full line, leveraging on that sample line. And that's what they've said publicly, and they are already producing the B samples as we speak today, as Gunnar referenced in the project, one of the reasons that we partnered with them is because of their pragmatism and the reliability in their processes, quite honestly, while we are building product to contract manufacturers, the standards that Continental will have given that it's selling into a regulated market with high volumes in warranty and liability falls back to them is much more sophisticated. And so they will be building out a custom line for these products that I'm not sure, they've announced how big it is. So I won't step on their toes. But as they are committed to not only building that line, but selling the volume of it.

I'm pleasure to follow, typically those lines are built to size to committed customer volume to giving you visibility, is that a fair way to think about it?

Yes, but there is a minimum optimal line that you would build out again, I'm going to defer back to our partner out of respect, but what I would expect is in the industry is when you build out a line, you build out a high volume line and it's a large line.

Understood, I appreciate the sensitivity of the partnering and then the HRL131 product you talk about here. And then also you talk about Level 2 automation with the software stack and integration, when you have to provide products that are capable of L3 and beyond, is that a software upgrade or do you need to have a reconfigured hardware module?

Right, so in the ADAS market, when we go to market in ADAS where there's Level 2 or Level 3, through our Tier-1s including Continental, we will supply the software that allows them not only to decide how much they want to unlock, but it also is an open platform, where it allows them to drop their algorithms and a lot of their IP onto our platform. That's what we call it a platform, so that they can customize it for their product and per OEM, given whatever the use case is, or the specifications that they're trying to meet. So the embedded software license will sit on the sensor, and the hardware will stay the same and be controlled by the different software permutations that they decide. So from one OEM to another, they may have the exact same hardware, which gives us scale, reduces cost, increases reliability, but they will adjust the edge based intelligent sensor software. And they have the capability which I believe that they announced them, I'm pretty sure that they not only have the ability to now sell our product as a standalone, highway autopilot or hub-to-hub trucking, but they've already done the integration into their system with their cameras, their radars and their control units. So when they go to a customer, they actually will ask the customer, would you like to buy an individual unit? Or would you like to have it integrated and part of a bigger system, we think that was one of the reasons we thought other than the fact of manufacturing and industrialization and warranty and liability, we also felt like that was really a value to OEMs, to be able to have a person come in because at the end of the day, a car is a smart asset. It's becoming much more of a system. And Continental has the capability to actually optimize that system per OEM.

Okay, that's very helpful color, Blair. Appreciate that. And then switching over to the non-automotive side, I know you have rail and industrial coming online, but also mobility. And you mentioned in videos a mobility partner, which I hadn't seen before, it's kind of that was the channel for that. Do you do you have mobility wins or have you announced any yet or what is the likelihood that comes in relatively soon because I know that market is pretty active for other LiDAR vendors, I'm wondering if you have position there, or whether we should not expect that near-term?

No, it's actually something we've been working on for several years, we actually have just and are in process, obviously with the transfer of B Sample to release the next generation of our product. So, we will actually get that into production before we start to externalize the movement of pilots into bigger opportunities. So as Bob said, you will see a 2022 that will be taking that contract manufacturer product into mobility and industrial and I would expect that you would see some things later in 2022. But we are already engaged with, part of being in a small industry in a very specialized industry like LiDAR, look on the ADAS side, there's 25 OEMs and 15 commercial truck companies another 20 up and coming companies, there's not that many people and when you talk about mobility, it's a very discrete market. So we've been working as our peers have, we've all been working with these companies for a number of years.

Okay, very helpful color, Blair. Thanks.

[Operator Instructions]

I think that may be it for our call. Hey listen, thank you everyone for dialing in. And it's a very exciting time in our marketplace and the fact that we actually have such a robust set of companies here together, we believe we're all going to make each other better. So thank you for tuning into our first call.

Thanks everybody. Have a great day.

Thank you so much for presenters and to everyone who participated. This concludes today's conference call. You may now disconnect. Have a great day.