0001628280-22-013021 | 10-Q | XBRL Viewer

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Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2022	Apr. 29, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-38703
Entity Registrant Name	VELODYNE LIDAR, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-1138508
Entity Address, Address Line One	5521 Hellyer Avenue
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95138
City Area Code	669
Local Phone Number	275-2251
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		207,956,625
Document Fiscal Period Focus	Q1
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Entity Central Index Key	0001745317
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	VLDR
Security Exchange Name	NASDAQ
Warrant
Document Information [Line Items]
Title of 12(b) Security	Warrants, each exercisable for three-quarters of one share of common stock
Trading Symbol	VLDRW
Security Exchange Name	NASDAQ

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 31,119	$ 24,064
Short-term investments	225,326	270,357
Accounts receivable, net	7,534	8,881
Inventories, net	12,498	9,299
Prepaid and other current assets	13,090	14,822
Total current assets	289,567	327,423
Property, plant and equipment, net	14,572	14,710
Goodwill	1,189	1,189
Intangible assets, net	586	724
Contract assets	9,182	12,962
Other assets	17,754	18,413
Total assets	332,850	375,421
Current liabilities:
Accounts payable	7,130	5,105
Accrued expense and other current liabilities	32,564	35,651
Contract liabilities	5,656	6,348
Total current liabilities	45,350	47,104
Long-term tax liabilities	445	443
Other long-term liabilities	27,401	28,611
Total liabilities	73,196	76,158
Commitments and contingencies
Stockholders’ equity:
Preferred stock	0	0
Common stock	20	20
Additional paid-in capital	836,229	825,988
Accumulated other comprehensive loss	(1,141)	(412)
Accumulated deficit	(575,454)	(526,333)
Total stockholders’ equity	259,654	299,263
Total liabilities and stockholders’ equity	$ 332,850	$ 375,421

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue	$ 6,180	$ 17,726
Cost of revenue	15,463	15,808
Gross profit (loss)	(9,283)	1,918
Operating expenses:
Research and development	21,297	18,378
Sales and marketing	6,005	7,075
General and administrative	12,317	17,036
Total operating expenses	39,619	42,489
Operating loss	(48,902)	(40,571)
Interest income	227	103
Interest expense	(3)	(36)
Other income (expense), net	4	(17)
Loss before income taxes	(48,674)	(40,521)
Provision for income taxes	447	296
Net loss	$ (49,121)	$ (40,817)
Net loss per share:
Basic (in USD per share)	$ (0.25)	$ (0.22)
Diluted (in USD per share)	$ (0.25)	$ (0.22)
Weighted-average shares used in computing net loss per share:
Basic (in shares)	198,166,060	189,222,807
Diluted (in shares)	198,166,060	189,222,807
Product
Revenue	$ 4,362	$ 10,593
Cost of revenue	15,196	15,629
License and services
Revenue	1,818	7,133
Cost of revenue	$ 267	$ 179

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (49,121)	$ (40,817)
Other comprehensive loss, net of tax:
Changes in unrealized loss on available for sale securities	(712)	(11)
Foreign currency translation adjustments	(17)	(11)
Total other comprehensive loss, net of tax	(729)	(22)
Comprehensive loss	$ (49,850)	$ (40,839)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Total	Prior Year Adjustment of Warrants	Common Stock	Additional Paid in Capital	Additional Paid in Capital Prior Year Adjustment of Warrants	Accumulated Other Comprehensive Loss	Accumulated Deficit	Accumulated Deficit Prior Year Adjustment of Warrants
Balance (in shares) at Dec. 31, 2020			175,912,194
Balance at Dec. 31, 2020	$ 340,823	$ 0	$ 18	$ 656,717	$ (1,585)	$ (230)	$ (315,682)	$ 1,585
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under warrant exercises (in shares)			6,973,882
Issuance of common stock under warrant exercises	80,200		$ 1	80,199
Issuance of common stock under employee stock award plans, net of taxes (in shares)			6,798,504
Issuance of common stock under employee stock award plans, net of taxes	(37)			(37)
Share-based compensation	11,530			11,530
Other comprehensive income (loss), net of tax	(22)					(22)
Net loss	(40,817)						(40,817)
Balance (in shares) at Mar. 31, 2021			189,684,580
Balance at Mar. 31, 2021	391,677		$ 19	746,824		(252)	(354,914)
Balance (in shares) at Dec. 31, 2021			197,346,675
Balance at Dec. 31, 2021	299,263		$ 20	825,988		(412)	(526,333)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under warrant exercises	5,303			5,303
Issuance of common stock under employee stock award plans, net of taxes (in shares)			916,819
Share-based compensation	4,938			4,938
Other comprehensive income (loss), net of tax	(729)					(729)
Net loss	(49,121)						(49,121)
Balance (in shares) at Mar. 31, 2022			198,263,494
Balance at Mar. 31, 2022	$ 259,654		$ 20	$ 836,229	$ (1,600)	$ (1,141)	$ (575,454)	$ 1,600

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net loss	$ (49,121)	$ (40,817)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	2,172	2,053
Reduction of operating lease right-of-use (“ROU”) assets	670	787
Stock-based compensation	4,938	11,530
Reduction of revenue related to stock warrant granted to a customer	5,303	0
Provision for doubtful accounts	0	1,682
Amortization of investment premium or discount, net	427	0
Other	(1)	161
Changes in operating assets and liabilities:
Accounts receivable, net	1,347	(1,172)
Inventories, net	(3,199)	(2,762)
Prepaid and other current assets	2,249	1,702
Contract assets	3,262	(2,438)
Other assets	41	(2)
Accounts payable	2,114	(3,856)
Accrued expenses and other liabilities	(3,832)	(3,867)
Contract liabilities	(1,677)	1,892
Net cash used in operating activities	(35,307)	(35,107)
Cash flows from investing activities:
Purchase of property, plant and equipment and intangibles	(1,545)	(601)
Proceeds from sales of short-term investments	14,499	2,000
Proceeds from maturities of short-term investments	64,750	7,000
Purchase of short-term investments	(35,358)	(91,932)
Net cash provided by (used in) investing activities	42,346	(83,533)
Cash flows from financing activities:
Payment of transaction costs related to Business Combination	0	(20,006)
Proceeds from warrant exercises, net of issuance costs	0	89,222
Tax withholding payment for vested equity awards	0	(37)
Net cash provided by financing activities	0	69,179
Effect of exchange rate fluctuations on cash and cash equivalents	16	18
Net increase (decrease) in cash and cash equivalents	7,055	(49,443)
Beginning cash and cash equivalents	24,064	204,648
Ending cash and cash equivalents	31,119	155,205
Supplemental disclosures of cash flow information:
Cash paid for interest	3	36
Cash paid for income taxes, net	407	333
Cash paid for operating leases	883	1,119
Supplemental disclosure of noncash investing and financing activities:
Changes in accrued purchases of property, plant and equipment, and intangibles	791	105
ROU assets obtained in exchange for new operating lease liabilities	55	340
Transaction costs included in accrued liabilities	$ 0	$ 5,000

Description of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

Description of Business, Background and Nature of Operations

Velodyne Lidar, Inc. (the “Company”, “Velodyne” or “Velodyne Lidar”) provides smart vision solutions that are advancing the development of safe automated systems throughout the world. The Company’s technology, which is used in various automotive and non-automotive applications, is empowering the autonomous revolution by allowing machines to see their surroundings in real-time and in 3D.

The Company’s predecessor, Graf Industrial Corp. (“Graf”), was originally incorporated in Delaware as a special purpose acquisition company (“SPAC”). On September 29, 2020 (the “Closing Date”), Graf consummated a business combination (the “Business Combination”) with Velodyne Lidar, Inc. (the “pre-combination Velodyne”). Immediately upon the consummation of the Business Combination, Graf merged into the pre-combination Velodyne, with the pre-combination Velodyne surviving as a wholly-owned subsidiary of the Company. Graf changed its name to Velodyne Lidar, Inc. and the pre-combination Velodyne changed its name to Velodyne Lidar USA, Inc. Refer to Note 2. Business Combination for further discussion of the Business Combination.

On September 30, 2020, Velodyne Lidar’s common stock and warrants began trading on the Nasdaq Global Select Market under the symbol “VLDR” and “VLDRW,” respectively.

The Company has evaluated how it is organized and managed and has identified only one operating segment.

Basis of Presentation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Liquidity

The Company has funded its operations primarily through the Business Combination, PIPE offering, public warrant exercises, private placements of the pre-combination Velodyne preferred stock, employee stock option exercises and ESPP share purchases, and sales to customers. As of March 31, 2022, the Company’s existing sources of liquidity included cash, cash equivalents and short-term investments of $256.4 million and available borrowing capacity of $25.0 million under a revolving credit facility. The Company has incurred losses and negative cash flows from operations. If the Company incurs additional losses in the future, it may need to raise additional capital through issuances of equity and debt. There can be no assurance that the Company would be able to raise such capital. However, management believes that the Company’s existing sources of liquidity are adequate to fund its operations for at least twelve months from the date the unaudited condensed consolidated financial statements for the quarter ended March 31, 2022 were available for issuance.

Concentration of Risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. The Company maintains its cash and cash equivalents, and short-term investments with high-quality financial institutes with investment-grade ratings. A majority of the cash balances are with U.S. banks and are insured to the extent defined by the Federal Deposit Insurance Corporation.

The Company’s accounts receivable are derived from customers located both inside and outside the U.S. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions and requires customer advance payments in certain circumstances. The Company does not require collateral.

The Company’s concentration of risk related to accounts receivable and accounts payable was as follows:


	March 31,	December 31,
	2022	2021

Number of customers accounted for 10% or more of accounts receivable	2	3
Number of vendors accounted for 10% or more of accounts payable	4	1

Two customers accounted for a total of 25% and 30%, respectively, of the Company’s accounts receivable as of March 31, 2022 and December 31, 2021. Two vendors accounted for a total of 31% of accounts payable as of March 31, 2022. One vendor accounted for 28% of accounts payable as of December 31, 2021.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include standalone selling price (“SSP”) for each distinct performance obligation in its customer contracts, total estimated future patents and their corresponding estimated development costs, total estimated costs and related progress towards complete satisfaction of performance obligation in certain services arrangements, allowances for doubtful accounts, inventory reserves, warranty reserves, valuation allowance for deferred tax assets, stock-based compensation, common stock warrant valuation, useful lives of property, plant, and equipment and intangible assets, income tax uncertainties, and other loss contingencies. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable. Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial condition and results of operations.

Significant Accounting Policies

Except for the change in certain policies described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Description of Business and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2021.

Amazon Warrant

The Amazon Warrant (as defined in Note 9) is accounted for as an equity instrument and measured in accordance with Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation. To determine the fair value of the Amazon Warrant, the Company used the Black-Scholes option pricing model, which is based in part on assumptions that require management to use judgment.

For awards granted to a customer, which are not in exchange for distinct goods or services, the fair value of the awards earned based on service or performance conditions is recorded as a reduction of the transaction price in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, when Amazon makes payments, and vesting conditions become probable of being achieved, the Company will record a non-cash stock-based reduction to revenue associated with the Amazon Warrant, that is calculated based on the grant date fair value of the Amazon Warrant shares.

Recently Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, which has subsequently been amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-11, ASU 2020-02 and ASU 2020-03 to provide additional guidance on the credit losses standard. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. For smaller reporting companies, the standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company expects to adopt the new standard in the first quarter of 2023 and is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. ASU 2020-10 is effective for public companies, other than smaller reporting companies, for fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-10 is effective for fiscal years beginning after December 15, 2021, and interim periods beginning after December 15, 2022. The Company adopted ASU 2020-10 on January 1, 2022. The adoption of this new standard did not have a significant impact on the Company’s consolidated financial statements and related footnote disclosures.

Business Combination and Related Transactions	3 Months Ended
Business Combination and Related Transactions	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Business Combination and Related Transactions	Business Combination and Related Transactions On September 29, 2020, the Company consummated a business combination with the pre-combination Velodyne. Pursuant to ASC 805, for financial accounting and reporting purposes, the pre-combination Velodyne was deemed the accounting acquirer and the Company was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Accordingly, the Business Combination was treated as the equivalent of the pre-combination Velodyne issuing stock for the net assets of Graf, accompanied by a recapitalization. Under this method of accounting, the consolidated financial statements of the Company are the historical financial statements of the pre-combination Velodyne. The net assets of Graf were stated at historical costs, with no goodwill or other intangible assets recorded, and are consolidated with the pre-combination Velodyne's financial statements on the Closing date. The shares and net loss per share for periods prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement. The aggregate consideration for the Business Combination and related transactions was approximately $1.8 billion, consisting of (i) $222.1 million in cash at the closing of the Business Combination, net of transaction expenses, and (ii) 150,277,532 shares of common stock valued at $10.25 per share, totaling approximately $1.5 billion. The Company used approximately $1.8 million of the proceeds to repurchase and retire 175,744 shares of Company common stock from certain stockholders in the pre-closing tender offer. In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $29.1 million related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds. As of March 31, 2022, the Company had $5.0 million of accrued transaction costs, consisting primarily of investment banking fees, in accrued expenses on the condensed consolidated balance sheet.

Revenue

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Disaggregation of Revenues

The Company disaggregates its revenue from contracts with customers by geographic region based on the shipping location of the customer, type of good or service and timing of transfer of goods or services to customers (point-in-time or over time), as it believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

Total revenue based on the disaggregation criteria described above is as follows (dollar in thousands, percentage may not foot due to rounding difference):


	Three Months Ended March 31,
	2022				2021
			% of Revenue				% of Revenue
	Revenue				Revenue
Revenue by geography:
North America(1)	$	(1,304)	(21	%)	$	5,044	28	%
Asia Pacific(2)	4,906		79	%	9,506		54	%
Europe, Middle East and Africa	2,578		42	%	3,176		18	%
Total	$	6,180	100	%	$	17,726	100	%
Revenue by products and services:
Products(1)	$	4,362	71	%	$	10,593	60	%
License and services(2)	1,818		29	%	7,133		40	%
Total	$	6,180	100	%	$	17,726	100	%
Revenue by timing of recognition:
Goods transferred at a point in time(1)	$	4,758	77	%	$	16,670	94	%
Goods and services transferred over time(2)	1,422		23	%	1,056		6	%
Total	$	6,180	100	%	$	17,726	100	%

(1) Includes a non-cash stock-based reduction of revenue of $5.3 million for the three months ended March 31 2022 associated with the Amazon Warrant agreement entered into in February 2022. See Note 9 for more information.

(2) Includes license revenue of $0.9 million and $6.4 million, respectively, related to patent cross-license agreements for the three months ended March 31, 2022 and 2021. In June 2020, the Company entered into a patent cross-license agreement related to its litigation settlement with a customer in Asia Pacific. Under the terms of the arrangement, the customer agreed to make a one-time license payment upon settlement, will make annual fixed royalty payments through 2024, and thereafter, will make product sales royalty payments through February 2030. In September 2020, Velodyne entered into another patent cross-license agreement related to its litigation with a different customer in Asia Pacific. As of March 31, 2022 and December 31, 2021, the Company had $3.8 million and $3.8 million, respectively, of current deferred revenue, and $11.1 million and $11.9 million, respectively, of long-term deferred revenue associated with the rights granted as part of these patent cross-license agreements to receive future patents as they represent stand ready obligations. As of March 31, 2022 and December 31, 2021, the Company also had $13.0 million and $16.3 million, respectively, of contract assets related to these patent cross-license agreements.

Contract Assets and Contract Liabilities

Contract assets primarily relate to unbilled accounts receivable. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when revenue is recognized on guaranteed minimums at the inception of the contract when there is not yet a right to invoice in accordance with contract terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and reclassified to accounts receivable when billed in accordance with the terms of the contract.

Contract liabilities consist of deferred revenue, customer advanced payments and customer deposits. Deferred revenue includes billings in excess of revenue recognized related to product sales, licenses, extended warranty and other services revenue, and is recognized as revenue when the Company performs under the contract. The long-term portion of deferred revenue, mostly related to obligations under license arrangements and extended warranty, is classified as non-current contract liabilities and is included in other long-term liabilities in the Company’s consolidated balance sheets. Customer advanced payments represent required customer payments in advance of product shipments according to customer’s payment term. Customer advance payments are recognized as revenue when control of the performance obligation is transferred to the customer. Customer deposits represent consideration received from a customer which can be applied to future product or service purchases, or refunded.

Contract assets and contract liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31,		December 31,
	2022		2021
Contract assets, current
Unbilled accounts receivable	$	3,830	$	3,313
Contract assets, long-term
Unbilled accounts receivable	9,182		12,962
Total contract assets	$	13,012	$	16,275

Contract liabilities, current
Deferred revenue, current	$	5,452	$	6,209
Customer advance payment	204		139

Total	5,656		6,348
Contract liabilities, long-term
Deferred revenue, long-term	11,755		12,740
Total contract liabilities	$	17,411	$	19,088

The following table shows the significant changes in contract assets and contract liabilities balances (in thousands):


	Three Months Ended March 31,
	2022		2021
Contract assets:
Beginning balance	$	16,275	$	11,253
Transferred to receivables from contract assets recognized at the beginning of the period	(3,313)		(2,813)
Increase due to unbilled and recognized as revenue in excess of billings during the period, net of amounts transferred to receivables	50		5,251
Ending balance	$	13,012	$	13,691
Contract liabilities:
Beginning balance	$	19,088	$	22,055
Revenue recognized that was included in the contract liabilities beginning balance	(2,374)		(1,434)
Increase due to cash received and not recognized as revenue and billings in excess of revenue recognized during the period	697		3,327

Ending balance	$	17,411	$	23,948

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Fair Value Measurement

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurement

The Company categorizes assets and liabilities recorded at fair value on the consolidated balance sheet based on the level of judgment associated with inputs used to measure their fair value. For assets and liabilities measured at fair value, fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and the Company considers assumptions that market participants would use when pricing the asset or liability.

The three levels of inputs that may be used to measure fair value are:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities in active markets or quoted prices in less active market. All significant inputs used in the valuations are observable or can be directly or indirectly through market corroboration, for substantially the full term of the assets or liabilities.

•Level 3 — Unobservable inputs are based on assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. The Company monitors and review the inputs to ensure the fair value measurements are reasonable and consistent with market experience in similar asset classes.

The following table summarize the Company’s assets measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands):


	March 31, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	6,826	$	—	$	—	$	6,826

Total cash equivalents	6,826		—		—		6,826
Short-term investments:
Money market fund	7		—		—		7
Commercial paper	—		92,774		—		92,774
Corporate debt securities	—		132,545		—		132,545

Total short-term investments	7		225,319		—		225,326



Total assets measured at fair value	$	6,833	$	225,319	$	—	$	232,152


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	391	$	—	$	—	$	391

Total cash equivalents	391		—		—		391
Short-term investments:
Money market fund	7		—		—		7
Commercial paper	—		130,983		—		130,983
Corporate debt securities	—		139,367		—		139,367

Total short-term investments	7		270,350		—		270,357



Total assets measured at fair value	$	398	$	270,350	$	—	$	270,748

Cash equivalents consist primarily of money market funds with original maturities of three months or less at the time of purchase, and the carrying amount is a reasonable estimate of fair value. Short-term investments represent highly liquid commercial paper and corporate debt securities with maturities greater than 90 days at the date of purchase. Marketable securities with maturities greater than one year are classified as current assets and were not significant for all periods presented. Unrealized gains and losses on the Company’s short-term investments were not significant as of March 31, 2022 and 2021 and therefore, the amortized cost of the Company’s short-term investments approximated their fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Balance Sheet Components

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Accounts Receivables, Net

Accounts receivables, net consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accounts receivable	$	10,741	$	12,088
Allowance for doubtful accounts	(3,207)		(3,207)
Accounts receivable, net	$	7,534	$	8,881

Inventories, Net

Inventories, net of reserve, consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Raw materials	$	7,640	$	6,585
Work-in-process	2,893		1,883
Finished goods	1,965		831
Total inventories	$	12,498	$	9,299

The raw materials inventory included consigned inventory of $1.8 million and $1.5 million, respectively, as of March 31, 2022 and December 31, 2021.

Prepaid and Other Current Assets

Prepaid and other current assets consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Prepaid expenses and deposits	$	5,458	$	7,883
Due from contract manufacturers and vendors	1,132		1,302
Prepaid taxes	1,012		1,223
Contract assets	3,830		3,313

Other	1,658		1,101
Total prepaid and other current assets	$	13,090	$	14,822

Property, Plant and Equipment, Net

Property, plant and equipment, at cost, consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Machinery and equipment	$	37,699	$	36,264
Leasehold improvements	6,887		6,752
Furniture and fixtures	1,500		1,497
Vehicles	359		359
Software	1,945		1,337
Assets under construction	1,613		1,900
	50,003		48,109
Less: accumulated depreciation and amortization	(35,431)		(33,399)
Property, plant and equipment, net	$	14,572	$	14,710

Finance lease equipment (included in machinery and equipment)	$	888	$	888
Less: accumulated depreciation	(603)		(559)
Finance lease equipment, net	$	285	$	329

The aggregate depreciation and amortization related to property, plant and equipment was as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Depreciation and amortization on property, plant and equipment	$	2,034	$	1,957
Depreciation on finance lease equipment (included in machinery and equipment)	44		44

Intangible Assets, Net

Intangible assets, net, consist of the following (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Book Value
As of March 31, 2022:
Developed technology	$	1,696	$	1,110	$	586
As of December 31, 2021:
Developed technology	$	1,696	$	972	$	724

Amortization of intangible assets is as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Amortization of intangible assets	$	138	$	96

Other Assets

Other assets, non-current, consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Operating lease ROU assets	$	16,274	$	16,891
Notes receivable	750		750
Deposits and other	730		772
Total other assets	$	17,754	$	18,413

In May 2021, the Company entered into a convertible note receivable agreement (the “Note”) with a borrower wherein Velodyne agreed to lend $750,000 at an interest rate of 0% per annum as a nonrecourse investment. The Note is convertible into equity at the election of the borrower or the Company upon occurrence of certain new financing or corporate transactions. The maturity date of the Note is May 11, 2024.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accrued payroll expenses	$	8,383	$	13,550
Accrued manufacturing costs	5,963		3,925
Accrued transaction costs	5,000		5,000
Accrued professional and consulting fees	4,474		3,411
Accrued warranty costs	2,152		1,934
Accrued taxes	1,062		1,017
Lease liabilities	2,601		2,623
Legal proceedings accrual	825		825
Other	2,104		3,366
Total accrued expense and other current liabilities	$	32,564	$	35,651

Long-Term Liabilities

Long-term liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2022		2021

Contract liabilities, long-term	$	11,755	$	12,740
Lease liabilities, long-term	14,624		15,210
Other	1,022		661
Total long-term liabilities	$	27,401	$	28,611

Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

The Company leases real estate, equipment and automobiles in the U.S. and internationally. The Company leases office facilities under non-cancelable operating leases that expire on various dates through December 2027, including office and manufacturing space in San Jose, California used as its corporate headquarters. The leases do not contain any material residual value guarantees or restrictive covenants.

Lease cost, which consisted primarily of operating lease cost, was $0.9 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively.

Other information related to leases were as follows (in thousands, except years and percentages):


	Three Months Ended March 31,
	2022			2021
Supplemental cash flow information:
Cash paid for operating leases included in operating cash flows	$	883		$	1,119
ROU assets obtained in exchange for new operating lease liabilities	$	55		$	340

	March 31, 2022			December 31, 2021
Supplemental balance sheet information:
Other assets	$	16,274		$	16,891
Total operating ROU assets	$	16,274		$	16,891

Other current liabilities	$	2,601		$	2,623
Other long-term liabilities	14,624			15,210
Total lease liabilities	$	17,225		$	17,833

Weighted average remaining lease term (years)	5.67			5.91
Weighted average discount rate	6.38		%	6.37		%

As of March 31, 2022, maturities of lease liabilities were as follows, which excludes $1.1 million of legally binding minimum lease payments for leases that have been signed but not yet commenced:


Years Ending December 31,	Operating Leases
2022 (remaining nine months)	$	2,666
2023	3,417
2024	3,479
2025	3,565
2026	3,670
Thereafter	3,779
Total lease payments	$	20,576
Less amount representing interest	(3,351)
Present value of lease liabilities	$	17,225

Leases

Lease cost, which consisted primarily of operating lease cost, was $0.9 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively.

Other information related to leases were as follows (in thousands, except years and percentages):


	Three Months Ended March 31,
	2022			2021
Supplemental cash flow information:
Cash paid for operating leases included in operating cash flows	$	883		$	1,119
ROU assets obtained in exchange for new operating lease liabilities	$	55		$	340

	March 31, 2022			December 31, 2021
Supplemental balance sheet information:
Other assets	$	16,274		$	16,891
Total operating ROU assets	$	16,274		$	16,891

Other current liabilities	$	2,601		$	2,623
Other long-term liabilities	14,624			15,210
Total lease liabilities	$	17,225		$	17,833

Weighted average remaining lease term (years)	5.67			5.91
Weighted average discount rate	6.38		%	6.37		%

As of March 31, 2022, maturities of lease liabilities were as follows, which excludes $1.1 million of legally binding minimum lease payments for leases that have been signed but not yet commenced:


Years Ending December 31,	Operating Leases
2022 (remaining nine months)	$	2,666
2023	3,417
2024	3,479
2025	3,565
2026	3,670
Thereafter	3,779
Total lease payments	$	20,576
Less amount representing interest	(3,351)
Present value of lease liabilities	$	17,225

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss was comprised of the following (in thousands):


	March 31,		December 31,
	2022		2021
Foreign currency translation loss	$	(201)	$	(184)
Unrealized loss on investments	(940)		(228)
Total accumulated other comprehensive loss	$	(1,141)	$	(412)

During the three months ended March 31, 2022 and 2021, there were no significant amounts related to foreign currency translation loss or realized gains or loss on investments reclassified to net loss from accumulated other comprehensive loss.

Stockholders’ Equity

Common Stock

On September 29, 2020, the Company consummated a business combination with the pre-combination Velodyne. On September 30, 2020, Velodyne Lidar’s common stock and warrants began trading on the Nasdaq Global Select Market under the symbol “VLDR” and “VLDRW,” respectively. In connection with the Business Combination, outstanding common stock and preferred stock of the pre-combination Velodyne were converted into common stock of the Company. As discussed in Note 2, Business Combination, the Company has retroactively adjusted the pre-combination common and preferred shares issued and outstanding prior to September 29, 2020 to give effect to the exchange ratio established in the Merger Agreement to determine the number of shares of common stock into which they were converted.

The Company is authorized to issue up to 2,250,000,000 shares of common stock, each with a par value of $0.0001 per share. The following summarizes the Company’s common stock outstanding as of March 31, 2022 and December 31, 2021:


	March 31,	December 31,
	2022	2021
Converted pre-combination Velodyne common stock outstanding	23,788,619	82,024,874
Converted pre-combination Velodyne preferred stock outstanding	24,772,759	24,772,759
Graf Founder shares	142,800	157,800
Other stockholders	149,559,316	90,391,242
Total common stock issued and outstanding	198,263,494	197,346,675

Preferred Stock

The Company is authorized to issue up to 25,000,000 shares of preferred stock, each with a par value of $0.0001 per share. As of March 31, 2022, no shares of preferred stock were issued and outstanding.

Dividends

The Company has not paid any cash dividends on the common stock to date. The Company may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, the Company’s results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant. In addition, the Company’s ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness the Company or its subsidiaries incur.

Public Warrants

Upon the closing of the Business Combination, there were 24,876,512 outstanding warrants to purchase shares of the Company’s common stock that were issued by Graf prior to the Business Combination. Each whole warrant entitles the holder to purchase three-quarters of one share of the Company’s common stock at a price of $11.50 per share, subject to adjustments. The warrants are exercisable at any time commencing 30 days after the completion of the Business Combination and expire five years after the completion of the Business Combination. The Company may redeem the outstanding warrants in whole and not in part at a price of $0.01 per warrant at any time after they become exercisable, provided that the last sale price of the Company’s common stock equals or exceeds $18.00 per share, subject to adjustments, for any 20-trading days within a 30-trading day period ending three business days prior to the date on which the Company sends the notice of redemption to the warrant holders.

In connection with the Business Combination, on October 19, 2020, the Company registered the issuance of an aggregate of up to 18,657,384 shares of its common stock that are issuable upon the exercise of its warrants, including up to 375,000 shares of its common stock issuable upon exercise of its working capital warrants issued to Graf LLC. The following summarizes the Company’s outstanding warrants and common stock issuance related to the warrant exercises:


	March 31,	December 31,
	2022	2021
Warrants outstanding upon Closing	24,876,512	24,876,512
Warrants exercised to date	18,902,642	18,902,642
Warrants outstanding	5,973,870	5,973,870

Aggregated common shares issuable upon exercise of warrants	18,657,384	18,657,384
Common shares issued upon exercise of warrants	14,176,959	14,176,959
Remaining common shares issuable upon exercise of warrants	4,480,425	4,480,425

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission (the “SEC”) issued a statement regarding accounting and reporting considerations for warrants issued by SPACs. In light of the issues raised by the SEC, the Company re-evaluated its accounting position for the warrants and concluded that certain warrants should have been classified as a liability measured at fair value for the 30-day period from September 29, 2020 to October 29, 2020. Accounting for these warrants as a liability instead of equity would have reduced non-operating expense and net loss by $1.6 million for 2020. Additionally, a corresponding $1.6 million adjustment would have been made to reduce its accumulated deficit with an offsetting adjustment to additional paid in capital in its equity accounts at December 31, 2020. The Company has concluded that the effects of accounting for the warrants as a liability instead of equity were immaterial to its previously issued financial statements and, accordingly, made an adjustment to its equity accounts for the effects of the accounting for the warrants in its consolidated statement of stockholders’ equity and balance sheet at December 31, 2021 by decreasing its accumulated deficit by $1.6 million with an offsetting decrease to its additional paid in capital.

Amazon Warrant

In February 2022, the Company and Amazon.com (“Amazon”) entered into a warrant agreement and a transaction agreement, pursuant to which Velodyne agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly-owned subsidiary of Amazon, a warrant (“Amazon Warrant”) to acquire up to an aggregate of 39,594,032 shares of the Company’s common stock at an exercise price of $4.18 per share. The exercise price and the warrant shares issuable upon exercise of the warrant are subject to customary antidilution adjustments. The right to exercise the warrants and receive the warrant shares that have vested expires February 4, 2030. The warrant agreement also contains customary change-in-control provisions.

The Amazon Warrant shares vest in multiple tranches over time based on payments of up to $200 million by Amazon or its affiliates (directly or indirectly through third parties) to the Company in connection with Amazon’s purchase of goods and services from the Company. Upon entry into additional commercial agreement, certain warrant shares will vest, and the number of shares that vest in connection with future payments by Amazon to Velodyne will be reduced pro rata. As of March 31, 2022, zero of the Amazon Warrant shares are vested.

When Amazon makes payments, and vesting conditions become probable of being achieved, the Company will record a non-cash stock-based reduction to revenue associated with the Amazon Warrant, that is calculated based on the grant date fair value of the Amazon Warrant shares. The fair value of the Amazon Warrant shares was measured on the grant date using the Black-Scholes option pricing model with assumptions as follows:


						Three Months Ended
						March 31, 2022
Expected term, in years						6.00
Expected volatility						50.00%
Risk-free interest rate						1.84%
Expected dividend yield						0%

For the three months ended March 31, 2022, the Company recognized a reduction to revenues of $5.3 million associated with a portion of Amazon Warrant shares that are probable of being vested.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Credit Facilities and Notes Payable	3 Months Ended
Credit Facilities and Notes Payable	Mar. 31, 2022
Debt Disclosure [Abstract]
Credit Facilities and Notes Payable	Credit Facilities and Notes Payable The Company has a loan and security agreement with a financial institution that expires on February 24, 2023. The credit agreement, which was entered into in September 2020 and last amended in February 2022, provides a $25.0 million revolving line of credit, with a $5.0 million letter of credit sublimit. The agreement includes an option to increase the credit limit up to an additional $15.0 million with the bank’s approval. The advances under the credit facility bear interest at a rate per annum equal to the prime rate plus an applicable margin of 1.5% for prime rate advances, or the SOFR rate plus an applicable margin of 2.5% for SOFR advances. The unused revolving line facility fee is 0.15% per annum of the average unused portion of the credit facility. The revolving line of credit is secured by certain assets of the Company. As of March 31, 2022, the Company was compliant with all associated covenants in the agreement. No amounts were drawn against this credit facility during any of the periods presented. On April 8, 2020, the Company received loan proceeds of $10.0 million under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Paycheck Protection Program (“PPP”). The principal and accrued interest are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels and that approval is received from the relevant government entity. The unforgiven portion of the PPP loan is payable in two years at an interest rate of 1% per annum, with a deferral of interest payments for ten months after the expiration of the 24-week covered period. The Company filed for the forgiveness of the PPP loan and was approved for forgiveness of such loan and interest on June 30, 2021. The Company recorded a $10.1 million gain from the forgiveness of the PPP loan and related interest in other income for 2021.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Stockholders’ Equity

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders' Equity

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss was comprised of the following (in thousands):


	March 31,		December 31,
	2022		2021
Foreign currency translation loss	$	(201)	$	(184)
Unrealized loss on investments	(940)		(228)
Total accumulated other comprehensive loss	$	(1,141)	$	(412)

Stockholders’ Equity

Common Stock


	March 31,	December 31,
	2022	2021
Converted pre-combination Velodyne common stock outstanding	23,788,619	82,024,874
Converted pre-combination Velodyne preferred stock outstanding	24,772,759	24,772,759
Graf Founder shares	142,800	157,800
Other stockholders	149,559,316	90,391,242
Total common stock issued and outstanding	198,263,494	197,346,675

Preferred Stock

Dividends

Public Warrants


	March 31,	December 31,
	2022	2021
Warrants outstanding upon Closing	24,876,512	24,876,512
Warrants exercised to date	18,902,642	18,902,642
Warrants outstanding	5,973,870	5,973,870

Aggregated common shares issuable upon exercise of warrants	18,657,384	18,657,384
Common shares issued upon exercise of warrants	14,176,959	14,176,959
Remaining common shares issuable upon exercise of warrants	4,480,425	4,480,425

Amazon Warrant


						Three Months Ended
						March 31, 2022
Expected term, in years						6.00
Expected volatility						50.00%
Risk-free interest rate						1.84%
Expected dividend yield						0%

For the three months ended March 31, 2022, the Company recognized a reduction to revenues of $5.3 million associated with a portion of Amazon Warrant shares that are probable of being vested.

- Definition

+ References

+ Details

Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

2020 Equity Incentive Plans

2020 Equity Incentive Plan

In connection with the Business Combination, on September 29, 2020, the Company's stockholders approved the 2020 Equity Incentive Plan (the “2020 Plan”), which provides for the grant of stock options, stock appreciation rights, restricted stock awards and units (“RSAs” and “RSUs”), and other stock or cash-based awards to the Company’s employees, directors and consultants. The Board approved cancelling and converting all outstanding equity-awards granted under the pre-combination Velodyne’s stock plans into equity-based awards under the 2020 Plan effective upon the consummation of the Business Combination, based on exchange ratios established in the Merger Agreement with the same general terms and conditions corresponding to the original awards. The shares under the pre-combination Velodyne’s stock plans have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement.

The Company had an initial authorized reserve of 27,733,888 shares of its common stock for issuance under the 2020 Plan. Beginning on January 1, 2021, an additional number of shares will be reserved annually on the first day of each fiscal year for a period of no more than ten years in an amount equal to the least of (a) 5% of the total number of common shares actually issued and outstanding on the last day of the preceding fiscal year, (b) 10,000,000 common shares, or (c) a number of common shares determined by the Board. This limit is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The number of shares reserved was 46,606,012 and the remaining shares available for issuance under the 2020 Equity Plan was 26,755,012 as of March 31, 2022.

The Company uses primarily the sell-to-cover method as the tax withholding method for stock awards upon settlement, pursuant to which shares with a market value equivalent to the tax withholding obligation are sold on behalf of the holder of the awards to cover the tax withholding liability and the cash proceeds from such sales are remitted by the Company to taxing authorities.

2020 Employee Stock Purchase Plan

On September 29, 2020, the Company's stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”). The Company had an initial authorized reserve of 3,492,097 shares of common stock for issuance under the ESPP. Beginning on January 1, 2021, an additional number of shares will be reserved annually on the first day of each fiscal year for a period of no more than 20 years in an amount equal to the least of (i) 1% of the outstanding shares of the Company’s common stock on such date, (ii) 2,500,000 shares of the Company’s common stock or (iii) a lesser amount determined by the Compensation Committee or the Board. As of March 31, 2022, 220,382 shares have been issued and 7,046,140 shares remained available for future issuance under the ESPP.

The ESPP permits eligible employees to purchase shares of the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning or the end of the applicable purchase period, in an amount not to exceed 15% of their compensation, subject to individual purchase limits of 3,000 shares in any purchase period or $25,000 worth of stock, determined at the fair market value of the shares at the first day of an offering period, in any calendar year. Each offering period has a duration of twelve months beginning on either June 1 or December 1 and consists of two consecutive six-month purchase periods. The ESPP contains a reset provision whereby if the price of the Company’s common stock on the first day of a new offering period is less than the price on the first day of any preceding offering period, all participants in a preceding offering period with a higher first day price will be automatically withdrawn from such offering periods and re-enrolled in the new offering period. The reset feature, when triggered, will be accounted for as a modification to the original offering period, resulting in incremental expense to be recognized over the new offering period.

2020 Phantom Stock Incentive Plan

In March 2021, the Board adopted the 2020 Phantom Stock Incentive Plan (the “2020 Phantom Stock Plan”), which provides for the granting of up to 7,635,000 phantom stock units to certain employees that settle, or are expected to settle, with cash payments upon vesting. Like equity-settled awards, phantom stock units are awarded with vesting conditions and are subject to certain forfeiture provisions prior to vesting. Phantom stock unit activity for the year ended March 31, 2022 was not significant.

Stock Incentive Awards

As of March 31, 2022, the Company has equity incentive awards outstanding, which include stock options, RSUs, RSAs and phantom stock units under its stock incentive plans. Stock options expire in 10 years from the date of grant and typically vest 25 percent upon the one-year anniversary date from the initial vesting date, with the remainder vesting quarterly over the following three years. The RSUs and RSAs typically vest 25 percent upon the one-year anniversary date from initial vesting date, with the remainder vesting quarterly over the following three years. Certain RSUs also contain performance conditions related to the Company’s product development and business performance for the performance periods specified in the RSU agreements. In May 2020, the Company granted market-based performance RSUs (“PRSUs”) that contain service, liquidity event condition and market conditions to vest in the underlying common stock. The PRSUs vest upon the three-year anniversary date from initial vesting date and the number of shares that vests is ultimately dependent on the value of the Company’s stock at the vesting date.

The RSUs and RSAs issued prior to September 29, 2020 are also subject to a liquidity event vesting condition, which is (i) an initial public offering, or (ii) a Company sale event, both of which must be satisfied on or before the 7-year anniversary of the date of the grant in order for the RSUs to be vested and settled for shares of common stock. As a result of the Business Combination, on October 30, 2020 and May 18, 2021, the Board waived the liquidity event vesting condition applicable to approximately 11.8 million and 4.2 million outstanding shares of pre-combination Velodyne's RSUs and RSAs, respectively, held by approximately 330 current and former employees and directors.

A summary of stock option activities during 2022 is as follows:


	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
			(Years)	(In thousands)
Option:







Options outstanding as of December 31, 2021	9,791	$7.04
Exercised	—
Expired	—
Options outstanding as of March 31, 2022	9,791	$7.04	2.19	$	—
Options exercisable as of March 31, 2022	9,791	$7.04	2.19	$	—
Options vested and expected to vest as of March 31, 2022	9,791	$7.04	2.19	$	—

A summary of RSA and RSU activities during 2022 is as follows (in thousands except share and per share amount):


	Shares	Weighted Average Grant Date Fair Value per Share	Fair Value of RSU/RSA Released
RSA:






RSAs outstanding as of December 31, 2021	211,298	$6.63
Granted	124,330	$3.64

RSAs outstanding as of March 31, 2022	335,628	$5.52

RSU:









RSUs outstanding as of December 31, 2021	5,126,896	$10.51
Granted	643,568	$3.77
Released	(461,984)	$12.17	$1,609
Forfeited	(620,128)	$10.94
RSUs outstanding as of March 31, 2022	4,688,352	$9.36

PRSU:


PRSUs outstanding as of December 31, 2021	330,505	$6.72
Released	(330,505)	$6.72	$1,292
PRSUs outstanding as of March 31, 2022	—

Stock-Based Compensation Expense

Stock-based compensation consists of expense related primarily to the Company’s RSUs and RSAs and, to a lesser extent, stock options, ESPP purchase rights and market-based PRSUs. The Company measures stock-based compensation expenses based on grant date fair value of the stock awards. The Company recognizes stock-based compensation expenses for stock options and service-condition awards that are expected to vest on a straight-line basis over the requisite service period. For performance-based awards, expense is recognized when it is probable the performance goal will be achieved. The Company recognizes forfeitures as they occur.

The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations (in thousands):


	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	521	$	536
Research and development	2,356		4,910
Sales and marketing	871		1,986
General and administrative	1,187		4,098
Total stock-based compensation expense	$	4,935	$	11,530

As of March 31, 2022, unrecognized compensation cost related to RSUs, RSAs and ESPP was $37.8 million, $1.7 million and $0.9 million, respectively, which is expected to be recognized over a weighted average period of 2.82 years, 3.68 years and 0.36 years, respectively.

Phantom stock units are recorded as a liability at their current market value and are included in other current liabilities. These grants remain subject to vesting 25% upon the one-year anniversary date from initial vesting date, with the remainder vesting quarterly over the following three years. Based on the trading price of the Company's common stock, the amount of liability recorded related to phantom stock units was not significant at March 31, 2022.

Net Loss Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Pursuant to the Amended and Restated Certificate of Incorporation and as a result of the Business Combination and reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to September 29, 2020 to give effect to the exchange ratio used to determine the number of shares of common stock into which the pre-combination Velodyne common and preferred stock converted.

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. During the periods when there is a net loss, potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.

Warrants to purchase 24,876,512 shares of common stock at $11.50 per share were issued during Graf’s initial public offering. As of March 31, 2022 and March 31 2021, the 5,973,870 and 5,979,442, respectively, outstanding warrants were excluded from the basic and diluted net loss per share as they were anti-dilutive given the Company had a net loss for all periods presented. The Amazon Warrant shares were also excluded from the basic and diluted net loss per share as they were anti-dilutive as of March 31, 2022.

The following common stock equivalents have also been excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive (in thousands):


	Three Months Ended March 31,
	2022	2021
Stock options	10	597
RSAs	336	4,184
RSUs (non-vested)	4,471	6,050
Total	4,817	10,831

Retirement Plan	3 Months Ended
Retirement Plan	Mar. 31, 2022
Retirement Benefits [Abstract]
Retirement Plan	Retirement PlanThe Company has a 401(k) savings and profit-sharing plan (the “401(k) Plan”), which is intended to be a tax-qualified defined contribution plan that covers all eligible employees, as defined in the applicable plan documents. Under the 401(k) Plan, eligible employees may elect salary deferral contributions, not to exceed limitations established annually by the Internal Revenue Service (“IRS”). The Company matches 25% of employees’ eligible contributions up to a maximum amount determined by the Company. The Company’s matching contributions vest 25% per year over the employee’s first four-year period of service. The Company’s matching contributions were $0.3 million and $0.2 million, respectively, for the three months ended March 31, 2022 and 2021.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

The following table summarizes the Company's loss before income taxes and provision for income taxes (in thousands):


	Three Months Ended March 31,
	2022			2021
Loss before income taxes	$	(48,674)		$	(40,521)
Provision for income taxes	447			296
Effective tax rate	(0.9)		%	(0.7)		%

The quarterly income tax provision reflects an estimate of the corresponding year’s annual effective tax rate and includes, when applicable, adjustments for discrete items. The tax provision for the periods presented primarily relates to income taxes of non-U.S. operations as the U.S. operations were in a loss position and the Company maintains a full valuation allowance against its U.S. deferred tax assets.

The Company is subject to income taxes in the United States, China, Germany and India. The Company’s effective tax rate changed from (0.7)% in the three months ended March 31, 2021 to (0.9)% in the three months ended March 31, 2022. This change was primarily due to a combination of permanent tax items, mainly related to the valuation allowance recorded on U.S. deferred tax assets, foreign withholding taxes and state taxes.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Purchase and Other Commitments

The following table summarizes contractual obligations and commitments as of March 31, 2022 (in thousands):


Years Ending December 31,	Purchase Commitments		Other Contractual Commitments
2022 (remaining nine months)	$	65,215	$	518
2023	—		211
2024	—		81
Total	$	65,215	$	810

Purchase commitments represent outstanding purchase orders or commitments for goods or services with contract manufacturers and vendors that range mostly from one month up to a year. The Company uses several contract manufacturers to manufacture components, subassemblies and products. The Company provides these contract manufacturers with demand information and they use this information to acquire components and build products. Contract manufacturer commitments consist of obligations for on-hand inventories and non-cancelable purchase orders with contract manufactures. If the Company cancels all or part of the orders, it may still be liable to the contract manufacturers for the cost of the materials and components purchased by the subcontractors to manufacture the Company’s products. The Company also obtains individual components for its products from a wide variety of individual suppliers. Other contractual commitments represent the Company’s other contractual obligations for goods or services associated with its ordinary course of business.

Product Warranties

The following table summarizes the activity related to product warranty liabilities and their balances as included in other accrued expenses (in thousands):


	Three Months Ended March 31,
	2022		2021
Balance as of the beginning of the period	$	1,934	$	2,204
Warranty provision	1,133		663
Consumption	(195)		(204)
Changes in provision estimates	(720)		(1,071)
Balance as of the end of the period	$	2,152	$	1,592

Legal Proceedings

From time to time, the Company is involved in actions, claims, suits and other proceedings in the ordinary course of business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. The Company is defending all current litigation matters. Although there can be no assurances and the outcome of these matters is currently not determinable (except as specifically described below), the Company currently believes that none of these claims or proceedings are likely to have a material adverse effect on the Company’s financial position.

Arbitration Proceeding Against David Hall

On June 9, 2021, the Company initiated an arbitration proceeding against David Hall, alleging breach of contract and misappropriation of the Company’s confidential, proprietary, and trade secret information. To protect its intellectual property and in aid of the arbitration process, on July 2, 2021 the Company filed an application with the Santa Clara County Superior

Court for a temporary restraining order and preliminary injunction to prohibit Mr. Hall from any further copying, disclosure or use of the Company’s intellectual property and to require him to return all such property to the Company.

On September 7, 2021, the arbitrator issued a preliminary injunction against Mr. Hall, ordering that: 1) Mr. Hall is enjoined from retrieving or accessing three devices to which he copied Velodyne materials and must transfer those devices to a discovery special master, who will review Mr. Hall’s retention and usage of Velodyne information and prepare reports on such retention and use; 2) Mr. Hall must provide an under-oath inventory of any and all of his personal electronic devices in his possession or control upon which Velodyne information currently resides and, upon Velodyne’s request, must provide Velodyne with access to those devices upon request to retrieve, destroy, or ensure the permanent deletion of Velodyne information from those devices; 3) Mr. Hall is enjoined from using anything he created or worked on for Velodyne during the time of his employment; and 4) In light of the preliminary injunctive relief granted under its breach of contract claim, Velodyne’s requests for relief under the California Uniform Trade Secrets Act and for a deposition were denied at this juncture, but the arbitrator expressly held that Velodyne could reinstate those demands following the special master’s report on Mr. Hall’s retention and usage of Velodyne’s materials. Mr. Hall subsequently provided an under-oath inventory pursuant to that order, which identified seventy-one personal devices that may contain Velodyne information. Because Mr. Hall did not consent to the special master conditionally appointed by the arbitrator, Velodyne and Mr. Hall are negotiating on protocol by which to preliminarily review and inspect those personal devices. On October 26, 2021, Mr. Hall filed a motion for a protective order seeking to require the Company to segregate and return his allegedly personal, private, privileged, and confidential information from his Company-issued laptop. On November 30, 2021, the judge denied Mr. Hall’s protective order, noting that Mr. Hall has no expectation of privacy as to the contents of his laptop and that he waived his right to assert privileged over the contents of the laptop. In the same ruling, the judge compelled Mr. Hall to respond to interrogatories issued by Velodyne. On December 16, 2021, the judge ruled that Velodyne sufficiently identified 2,740 allegedly-misappropriated trade secrets. On February 17, 2022, the judge imposed sanctions on Mr. Hall for discovery abuse, and ordered Mr. Hall to pay Velodyne $5,000 as sanctions.

Discrimination Proceedings by Marta Hall

On August 2, 2021, the Company received a Charge of Discrimination dated July 27, 2021 (“Charge”), indicating that former Chief Marketing Officer, Marta Hall, has filed a charge of employment discrimination under Title VII of the Civil Rights Act, alleging sexual discrimination and retaliation. On February 15, 2022, the Equal Employment Opportunity Commission (EEOC) issued a determination that it will not proceed with an investigation of Ms. Hall’s claim. On September 27, 2021, the Occupational Safety and Health Administration (“OSHA”) informed the Company that it dismissed a complaint brought by Ms. Hall alleging retaliation in violation of the Sarbanes-Oxley Act (“SOX”). OSHA found that Ms. Hall failed to show that she engaged in a protected activity under SOX. On October 21, 2021, Ms. Hall submitted an objection to the findings and requested a hearing before an administrative law judge. The Company intends to defend the actions vigorously.

Hall Proceeding against Individuals

On January 18, 2022, David Hall and Marta Hall filed a complaint against various current and former officers and directors of Velodyne and other individuals in the Superior Court of California, Alameda County, entitled Hall v. Vetter, No. 22-cv-005713. The complaint alleges conspiracy to defraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, intentional misrepresentation, negligent misrepresentation, and securities fraud. The complaint alleges David and Marta Hall have suffered damages and seeks, among other things, compensatory and punitive damages. On May 3, 2022, certain defendants filed motions to compel arbitration and other defendants filed motions to dismiss for lack of personal jurisdiction. The Company intends to defend the action vigorously.

Quanergy Litigation

In September 2016, Quanergy Systems, Inc. (“Quanergy”) filed a complaint against the Company and one of its customers in the Northern District of California (the District Court litigation), seeking a declaratory judgment of non-infringement of one of the Company’s patents, U.S. Patent No. 7,969,558 (the “‘558 patent”) and asserting state and federal trade secret misappropriation claims against the Company and its customer and breach of contract and constructive fraud claims against its customer. In November 2016, Quanergy filed an amended complaint, removing its trade secret misappropriation claims against the Company, dropping its customer from the suit and dropping the related claims of breach and constructive fraud. The amended complaint maintained only the declaratory judgment of non-infringement action against

the Company. In December 2016, the Company filed an answer generally denying the allegations and relief requested in Quanergy’s amended complaint. The Company’s answer also included counterclaims against Quanergy asserting direct, indirect, and willful infringement of the ‘558 patent. In January 2017, Quanergy filed an answer generally denying the allegations in the Company’s patent infringement counterclaims and requesting relief. The court held a claim construction hearing on September 13, 2017 and issued a claim construction order on October 4, 2017, which adopted the majority of the Company’s proposed constructions. In June 2018, the district court entered an order granting a joint stipulation to stay the litigation.

Quanergy filed two petitions for inter partes review with the U.S. Patent Office’s Patent Trials and Appeal Board (“PTAB”) in November 2017, challenging all claims of the ‘558 patent that the Company asserted. The Company filed its Patent Owner Preliminary Response to Quanergy’s petitions on March 7, 2018. The PTAB issued an institution decision on May 25, 2018, instituting review of all challenged claims. The Company subsequently filed its Patent Owner Response and a Contingent Motion to amend the claims. The PTAB held oral argument on February 27, 2019. On May 23, 2019, the PTAB issued a Final Written Decision upholding the validity of all the challenged claims, finding that Quanergy did not prove by a preponderance of the evidence that any of the challenged claims of the ‘558 patent were unpatentable, and denying the Company’s contingent motion as moot. In June 2019, Quanergy filed a request for rehearing. On July 21, 2020, Quanergy filed a Notice of Appeal, appealing the PTAB decision to the U.S. Court of Appeals for the Federal Circuit. Quanergy’s opening appeal brief was filed on January 22, 2021. On February 4, 2022, the Federal Circuit of Appeals issued a ruling upholding the validity of the Company’s ‘558 patent. In view of that ruling, on February 18, 2022, the district court lifted the stay. On April 18, 2022, the district court issued an order setting the case scheduling through dispositive motions.

Employment Matters

On June 8, 2020, a former employee filed a class action lawsuit in the Santa Clara County Superior Court of the State of California. The complaint alleges that, among other things, the Company failed to pay minimum and overtime wages, final wages at termination, and other claims based on meal periods and rest breaks. The plaintiff is bringing this lawsuit on behalf of herself and other similarly situated plaintiffs who have not been identified and is seeking to certify the action as a class action. The plaintiff has now filed a First Amended Complaint that adds a claim pursuant to California’s Private Attorneys General Act. The First Amended Complaint does not specify the amount the plaintiff seeks to recover. Velodyne’s response to the First Amended Complaint was filed on November 16, 2020 and the parties are in the process of beginning discovery concerning class certification issues. On August 5, 2021, the parties reached a tentative settlement, subject to court approval, whereby the Company will pay $0.8 million.

Securities Litigation Matters

On March 3, 2021, a purported shareholder of Velodyne filed a complaint for a putative class action against Velodyne, Anand Gopalan and Andrew Hamer in the United States District Court, Northern District of California, entitled Moradpour v. Velodyne Lidar, Inc., et al., No. 3:21-cv-01486-SI. The complaint alleges purported violations of the federal securities laws and that, among other things, the defendants made materially false and/or misleading statements and failed to disclose material facts about the Company’s business, operations and prospects. The complaint alleges that purported class members have suffered losses. The complaint seeks, among other things, an award of compensatory damages on behalf of a putative class of persons who purchased or otherwise acquired the Company’s securities between November 9, 2020 and February 19, 2021. On March 12, 2021, a putative class action entitled Reese v. Velodyne Lidar, Inc., et al., No. 3:21-cv-01736-VC, was filed against the Company, Mr. Gopalan and Mr. Hamer in the United States District Court for the Northern District of California, based on allegations similar to those in the earlier class action and seeking recovery on behalf of the same putative class. On March 19, 2021, another putative class action entitled Nick v. Velodyne Lidar, Inc., et al., No. 4:21-cv-01950-JST, was filed in the United States District Court for the Northern District of California, against the Company, Mr. Gopalan, Mr. Hamer, two current or former directors, and three other entities. The complaint alleges purported violations of the federal securities laws and that, among other things, the defendants made materially false and/or misleading statements and failed to disclose material facts about the Company’s business, operations, controls and prospects and seeks, among other things, an award of compensatory damages on behalf of a putative class of persons who purchased or otherwise acquired the Company’s securities between July 2, 2020 and March 17, 2021. The class actions have been consolidated, lead plaintiffs have been appointed and an amended consolidated complaint was filed on September 1, 2021. The Company filed a motion to dismiss the complaint on November 1, 2021. The plaintiffs filed a first amended complaint on February 11, 2022. The Company filed a motion to dismiss on March 4, 2022. A hearing on the motion to dismiss is scheduled for June 10, 2022. The Company intends to defend the actions vigorously.

On March 12, 2021, a putative shareholder derivative lawsuit entitled D’Arcy v. Gopalan, et al., No. 1:21-cv-00369-MN, was filed in the United States District Court for the District of Delaware against current and former directors and/or officers Anand Gopalan, Andrew Hamer, David S. Hall, Marta Thoma Hall, Joseph B. Culkin, Michael E. Dee, James A. Graf, Barbara Samardzich, and Christopher A. Thomas, and names the Company as a nominal defendant. The complaint asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets against all of the individual defendants, and asserts a contribution claim under the federal securities laws against Mr. Gopalan and Mr. Hamer. On March 16, 2021, a second shareholder derivative lawsuit entitled Kondner, et al. v. Culkin, et al., No. 1:21-cv-00391-MN, was filed in the United States District Court for the District of Delaware against most of the same defendants named in the earlier derivative complaint, and asserts claims against the individual defendants for alleged breaches of fiduciary duty and waste of corporate assets. Both derivative actions are based on allegations similar to those in the class actions discussed above, and have now been consolidated. On January 3, 2022, the plaintiffs filed an amended complaint.

Contingency Assessment

The Company records accruals for outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company evaluated developments in legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. As of March 31, 2022, the Company recorded a total of $0.8 million for loss contingencies associated with the legal claims or litigation discussed above.

Segment, Geographic and Customer Concentration Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment, Geographic and Customer Concentration Information

The Company conducts its business in one operating segment that develops and produces Lidar sensors for use in industrial, 3D mapping, drones and auto applications. The Company’s Chief Executive Officer (“CEO”) is the chief operating decision maker (“CODM”). The CODM allocates resources and makes operating decisions based on financial information presented on a consolidated basis, accompanied by disaggregated information about sales and gross margin by product group. The profitability of the Company’s product group is not a determining factor in allocating resources and the CODM does not evaluate profitability below the level of the consolidated company.

The Company reports revenue by region and country based on the location where its customers accept delivery of its products and services. Revenue by country and number of customers that accounted for more than 10% of revenue was as follows:


	Three Months Ended March 31,
	2022		2021
Countries over 10% of revenue:
U.S.	(23	%)	26	%
China	32	%	45	%
Sweden	24	%	13	%
Korea	20	%	*
Japan	18	%	*
Number of customers that accounted for over 10% of revenue:	5		2

* Less than 10%.

For the three months ended March 31, 2022, revenue in the U.S. included a reduction to product revenues of $5.3 million in respect of the Amazon Warrant. Refer to Note 9 for more information.

The Company’s long-lived assets, consisting primarily of property, plant and equipment, were primarily located in the United States as of March 31, 2022 and December 31, 2021.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions

Certain holders of the pre-combination Velodyne's convertible preferred stock (which converted into common stock of the Company upon the Business Combination) purchased products and services, directly or through a third party, from the Company. Revenue and accounts receivable for these holders were as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Revenue:
Stockholder A	$	295	$	39


	March 31,		December 31,
	2022		2021
Accounts receivable:
Stockholder A	$	535	$	219

In April 2019, the Company entered into a manufacturing agreement with one of its Series B Preferred Stockholders (“Stockholder D”), and the Company has one product that is currently being manufactured by Stockholder D. As of March 31, 2022 and December 31, 2021, the Company had $1.4 million and $0.2 million, respectively, of payable and accrued purchases, and $15.7 million and $15.7 million, respectively, of outstanding purchase commitments for products with this stockholder. The Company procures equipment, materials and components for Stockholder D to build the product. The Company also loaned to Stockholder D manufacturing equipment with a net book value of $0.4 million and $0.5 million, respectively, as of March 31, 2022 and December 31, 2021, which was included in the Company’s balance sheet within property, plant and equipment, net.

The Company rents its corporate headquarters facility in San Jose, California from a company owned by one of its former officers. The lease was executed in January 2017 and expires in December 2027, as amended. In May 2021, the building was sold to a third-party but the lease terms remain unchanged. Lease cost under this lease was $0.8 million for the three months ended March 31, 2021.

Description of Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Concentration of Risk	Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. The Company maintains its cash and cash equivalents, and short-term investments with high-quality financial institutes with investment-grade ratings. A majority of the cash balances are with U.S. banks and are insured to the extent defined by the Federal Deposit Insurance Corporation. The Company’s accounts receivable are derived from customers located both inside and outside the U.S. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions and requires customer advance payments in certain circumstances. The Company does not require collateral.
Use of Estimates	The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include standalone selling price (“SSP”) for each distinct performance obligation in its customer contracts, total estimated future patents and their corresponding estimated development costs, total estimated costs and related progress towards complete satisfaction of performance obligation in certain services arrangements, allowances for doubtful accounts, inventory reserves, warranty reserves, valuation allowance for deferred tax assets, stock-based compensation, common stock warrant valuation, useful lives of property, plant, and equipment and intangible assets, income tax uncertainties, and other loss contingencies. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable. Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial condition and results of operations.
Significant Accounting Policies and Recently Accounting Pronouncements	Significant Accounting Policies Except for the change in certain policies described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Description of Business and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2021. Amazon Warrant The Amazon Warrant (as defined in Note 9) is accounted for as an equity instrument and measured in accordance with Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation. To determine the fair value of the Amazon Warrant, the Company used the Black-Scholes option pricing model, which is based in part on assumptions that require management to use judgment. For awards granted to a customer, which are not in exchange for distinct goods or services, the fair value of the awards earned based on service or performance conditions is recorded as a reduction of the transaction price in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, when Amazon makes payments, and vesting conditions become probable of being achieved, the Company will record a non-cash stock-based reduction to revenue associated with the Amazon Warrant, that is calculated based on the grant date fair value of the Amazon Warrant shares. Recently Accounting Pronouncements Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, which has subsequently been amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-11, ASU 2020-02 and ASU 2020-03 to provide additional guidance on the credit losses standard. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. For smaller reporting companies, the standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company expects to adopt the new standard in the first quarter of 2023 and is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. ASU 2020-10 is effective for public companies, other than smaller reporting companies, for fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-10 is effective for fiscal years beginning after December 15, 2021, and interim periods beginning after December 15, 2022. The Company adopted ASU 2020-10 on January 1, 2022. The adoption of this new standard did not have a significant impact on the Company’s consolidated financial statements and related footnote disclosures.
Fair Value Measurement	The Company categorizes assets and liabilities recorded at fair value on the consolidated balance sheet based on the level of judgment associated with inputs used to measure their fair value. For assets and liabilities measured at fair value, fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and the Company considers assumptions that market participants would use when pricing the asset or liability. The three levels of inputs that may be used to measure fair value are: •Level 1 — Quoted prices in active markets for identical assets or liabilities. •Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities in active markets or quoted prices in less active market. All significant inputs used in the valuations are observable or can be directly or indirectly through market corroboration, for substantially the full term of the assets or liabilities. •Level 3 — Unobservable inputs are based on assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. The Company monitors and review the inputs to ensure the fair value measurements are reasonable and consistent with market experience in similar asset classes.
Net Loss Per Share	Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. During the periods when there is a net loss, potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.

Description of Business and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Concentration of Risk Related to Accounts Receivable and Accounts Payable

The Company’s concentration of risk related to accounts receivable and accounts payable was as follows: