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Luminar stock is 'substantially undervalued,' CEO says

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Luminar Founder & CEO Austin Russell joins Yahoo Finance Live to discuss company earnings, a partnership with Nissan, and the outlook for growth in the autonomous driving space.

Video transcript

BRIAN SOZZI: Luminar shares are on the move following its latest earnings report. The auto technology player reiterated its full year sales guidance as it looks ahead to key partnerships with companies like Nissan and Mercedes. We're joined now by Luminar founder and CEO Austin Russell. Austin, always great to see you here. Let's talk production. Are you still on track with your production for your products?

AUSTIN RUSSELL: Yeah, so I think one thing that we outlined at the beginning of the year that was great was these four key business milestones that we had to be able to track the progress throughout the year. So everything from IRS industrialization for series production to software, commercial programs, or forward-looking order book, and we're on track to meet or beat each of those four key milestones, as well as the overall financial guidance that we gave at the beginning of the year for everything that we set out.

So, you know, we're really all in to make this happen. You know, we're just hot off the heels of establishing this new partnership with Nissan as well, which we're very excited to be able to have that aligned vision, and really, the first time this kind of technology being able to make its way to a mass market automaker. So it's great to be able to see that happen. They have a vision to be able to ultimately see this kind of technology standardized on, you know, virtually every vehicle they've produced by 2030. So I think the signs are there. And it's really coming together and continuing to happen.

See, you got a cool graphic up with some of the other partners that we have as well. So we're focused, heads down, execution like no tomorrow, and it's enabling us to actually now even-- and what we're doing now is we're actually going to be even increasing our series production capacity planning and some of the work that we're doing to be able to make sure that we can have that expanded capacity from just increased volume indications, everything that we have. So it's obviously, it's a tough market, but with everything with Luminar and everything we got going on, it's as great as it could be, and I've never had greater conviction for us and the company.

BRIAN SOZZI: Yeah, we pull out all the stops from you. This ain't no bucket shot, my man. But look, let me follow up on this. You mentioned something that caught my attention on the earnings call. I want to make sure I have it right. Did I get it right that you are not receiving compensation until your stock price reaches $50 a share?

AUSTIN RUSSELL: That is correct. That's 100% there. That's how much conviction I have. We're truly putting our money where the mouth is, so to say on this.

BRIAN SOZZI: So you're not getting a salary? You're not getting a salary?

AUSTIN RUSSELL: Nope, forgoing any normal CEO salary, pay package, whatever it is in favor of this, which would kick in at $50 per share.

JULIE HYMAN: Forgive me, Austin. What are you living on? Sorry.

AUSTIN RUSSELL: I'm doing OK.

JULIE HYMAN: OK, OK, we won't delve too deeply in that. You know, speaking of which, your stock is down again today following these results, right? And it looks like that the Street is focused on the revenue miss in particular. What do you think happened there? Do you think it was a question of maybe you could have managed expectations a little bit better, or were there some unexpected things that cropped up in the quarter?

AUSTIN RUSSELL: So I think we don't give quarterly guidance as part of all of this. So all the numbers that we have are actually ahead of all the internal expectations. We only give annual guidance because trying to pinpoint things down to cents level on a quarterly basis there, too, is probably not a great exercise for us at this stage. You know, we probably will at some point there. But when it comes down to it, this is where, you know, obviously, it's-- I think it was one of the worst days for tech companies in quite a long time with this. And, you know, we've talked before, I think kind of getting dragged down with the SPAC pack that was there.

But in a world of companies that overpromise and under-deliver, we want to be the company that we are hopefully being able to take the right steps to prove the track record of being the company that will under-promise and overdeliver. And that will be absolutely critical, we think, to being able to build this out, build out this company, and to be able to realize the amount of value that's there.

So I think so you can speak to the conviction that's there. But I think it's fair to say that, obviously, we believe it's substantially undervalued at this stage and probably some misperception there. So I think it's also fair to say that we're going to be buying back a heck of a lot more stock at this point here, too, at these levels. It's, I mean, better for us.

BRAD SMITH: How much stock do you think you'll be buying back?

AUSTIN RUSSELL: Our own.

BRAD SMITH: What's that?

JULIE HYMAN: He doesn't know, I think is what--

AUSTIN RUSSELL: Oh, yeah. So I was saying, for in terms of buying back, we'll be buying back our own stock as part of this. So we actually had-- so we actually had something that we announced at the end of last year as part of a convertible transaction that would be able to enable us to reproduce as much as $300 million worth of stock as part of this. And I think we've been doing that. And we're going to continue actually doing more. Particularly, it makes it, obviously, very attractive at these levels.

BRIAN SOZZI: Austin, I might need a car within the next year and a half, two years. And I'm eyeing a Mercedes. I've been working hard over the past decade. When might I see your technology in a Mercedes?

AUSTIN RUSSELL: So when it comes to vehicles, I think you're ultimately going to have to ask the OEM for the specific details on their launch timelines for all of the-- everything that goes into it. But I think it's fair to say that when it comes to this kind of tech being realized on vehicles in the series production into consumers' hands, you know, and being able to be launched with this, this is not something that's a long-term trajectory anymore. This is something that's starting to be measured in months rather than years.

And so this is something that we couldn't be more excited about to be able to see through the initial launch with this with Iris. And as you can see, the programs keep piling on and piling on and piling on. We're now working with, as noted, the majority of major automakers, you know, from at some stage of development or even serious production for this. So but really look forward to the introduction of the first capability of its kind out in consumer vehicles into consumers' hands in the relatively near future.

BRAD SMITH: Long-term goal, $100 bill of materials target. What does that timeline look like?

AUSTIN RUSSELL: Yeah, so the timeline for that, I mean, this is what we outlined as kind of a multi-year type journey for this of when you really get into the millions of units quantity and scale for this. And that's something that we actually now with that-- we recently acquired this company, Freedom Photonics, which was the last pillar of all these core LiDAR components. So we own the laser, the receiver, the processing electronics, everything across the board, from the chip level up, as part of these core and proprietary designs that we have.

And this vertical integration allows us to be able to-- I mean, it's really three things. Obviously, one of them is the cost side of things that it can enable us to hit that $100 bill of materials. But there's also, it widens the competitive moat and enables us to secure capacity for greater scale and ability to have our control over the roadmap and actually even accelerates the roadmap to that extent. So all those things are a benefit, but we ultimately don't need to hit the $100 bill of material to have a great business as part of it. But it certainly doesn't hurt to be able to drive those costs down sooner than later to be able to get even more margins.

BRAD SMITH: When you put it out there, you're got to do it now, Austin, obviously, so [INAUDIBLE].

AUSTIN RUSSELL: We're making it happen. We're making it happen.

BRAD SMITH: Definitely. Thanks so much for the time here and breaking down some of the results for us, Austin, and, yeah, we hope you get to that $50 per share price because, ultimately, that looks pretty good for you and for the investors, too. Austin Russell, Luminar founder CEO, joining us here.

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