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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________to ___________________

Commission file number: 001-38703

VELODYNE LIDAR, INC.
(Exact name of registrant as specified in its charter)

Delaware
83-1138508
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification Number)
5521 Hellyer Avenue
San Jose, CA
95138
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (669) 275-2251
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareVLDR
The Nasdaq Stock Market LLC
Warrants, each exercisable for three-quarters of one share of common stockVLDRW
The Nasdaq Stock Market LLC
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of April 29, 2022, the registrant had 207,956,625 shares of common stock, $0.0001 par value per share, outstanding.







VELODYNE LIDAR, INC. AND SUBSIDIARIES

Table of Contents

Page
Item 3.
Item 6.

1


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and particularly in Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These statements are based on the expectations and beliefs of management of Velodyne Lidar, Inc. (“Velodyne”, “Velodyne Lidar” or the “Company”) in light of historical results and trends, current conditions and potential future developments, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from forward-looking statements. These forward-looking statements include statements about the future performance and opportunities of Velodyne; statements of the plans, strategies and objectives of management for future operations of Velodyne; and statements regarding future market opportunities, economic conditions or performance. Forward-looking statements may contain words such as “will be,” “will,” “expect,” “anticipate,” “continue,” “project,” “believe,” “plan,” “could,” “estimate,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “pursue,” “should,” “target,” “likely” or similar expressions, and include the assumptions that underlie such statements.

The following factors, among others, could cause actual results to differ materially from forward-looking statements:

Velodyne’s future performance, including Velodyne’s revenue, costs of revenue, gross profit or gross margin, and operating expenses;
the sufficiency of Velodyne’s cash and cash equivalents to meet its operating requirements;
Velodyne’s ability to sell its products to new customers;
supply chain constraints in the semiconductor industry;
the success of Velodyne’s customers in developing and commercializing products using Velodyne’s solutions, and the market acceptance of those products;
the amount and timing of future sales;
Velodyne’s ability to meet technical and quality specifications;
Velodyne’s future market share;
competition from existing or future businesses and technologies;
the impact of the COVID-19 pandemic on Velodyne’s business and the business of its customers;
the market for and adoption of lidar and related technology;
Velodyne’s ability to effectively manage its growth and future expenses;
Velodyne’s ability to compete in a market that is rapidly evolving and subject to technological developments;
Velodyne’s ability to maintain, protect, and enhance its intellectual property;
Velodyne’s ability to comply with modified or new laws and regulations applying to its business;
the attraction and retention of qualified employees and key personnel;
Velodyne’s ability to introduce new products that meet its customers’ requirements and to continue successfully transitioning the manufacturing of its products to third-party manufacturers;
Velodyne’s anticipated investments in and results from sales and marketing and research and development; and
the increased expenses associated with Velodyne being a public company.
The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other risk factors herein discussed under Item 1A: “Risk Factors.” Forward-looking statements reflect current views about Velodyne’s plans, strategies and prospects, which are based on information available as of the date of this Quarterly Report on Form 10-Q. Except to the extent required by applicable law, Velodyne undertakes no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

2


Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not place undue reliance on those statements, which speak only as of the date of this Quarterly Report on Form 10-Q.


PART I. Financial Information

Item 1. Condensed Consolidated Financial Statements


3


VELODYNE LIDAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31,December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$31,119 $24,064 
Short-term investments225,326 270,357 
Accounts receivable, net7,534 8,881 
Inventories, net12,498 9,299 
Prepaid and other current assets13,090 14,822 
Total current assets289,567 327,423 
Property, plant and equipment, net14,572 14,710 
Goodwill1,189 1,189 
Intangible assets, net586 724 
Contract assets9,182 12,962 
Other assets17,754 18,413 
Total assets$332,850 $375,421 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$7,130 $5,105 
Accrued expense and other current liabilities32,564 35,651 
Contract liabilities5,656 6,348 
Total current liabilities45,350 47,104 
Long-term tax liabilities445 443 
Other long-term liabilities27,401 28,611 
Total liabilities73,196 76,158 
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock  
Common stock
20 20 
Additional paid-in capital836,229 825,988 
Accumulated other comprehensive loss(1,141)(412)
Accumulated deficit(575,454)(526,333)
Total stockholders’ equity259,654 299,263 
Total liabilities and stockholders’ equity$332,850 $375,421 





See accompanying notes to condensed consolidated financial statements.
4


VELODYNE LIDAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

Three Months Ended March 31,
20222021
Revenue:
Product
$4,362 $10,593 
License and services1,818 7,133 
Total revenue6,180 17,726 
Cost of revenue:
Product15,196 15,629 
License and services267 179 
Total cost of revenue15,463 15,808 
Gross profit (loss)(9,283)1,918 
Operating expenses:
Research and development21,297 18,378 
Sales and marketing6,005 7,075 
General and administrative12,317 17,036 
Total operating expenses39,619 42,489 
Operating loss(48,902)(40,571)
Interest income227 103 
Interest expense(3)(36)
Other income (expense), net 4 (17)
Loss before income taxes(48,674)(40,521)
Provision for income taxes447 296 
Net loss$(49,121)$(40,817)
Net loss per share:
Basic and diluted$(0.25)$(0.22)
Weighted-average shares used in computing net loss per share:
Basic and diluted198,166,060 189,222,807 






See accompanying notes to condensed consolidated financial statements.
5


VELODYNE LIDAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)


Three Months Ended March 31,
20222021
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)



















































See accompanying notes to condensed consolidated financial statements.
6


VELODYNE LIDAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share data)
(Unaudited)

Common StockAdditional Paid in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at December 31, 2021197,346,675 $20 $825,988 $(412)$(526,333)$299,263 
Common stock warrants— — 5,303 — — 5,303 
Issuance of common stock under employee stock award plans, net of taxes916,819 — — — — — 
Share-based compensation— — 4,938 — — 4,938 
Other comprehensive loss, net of tax— — — (729)— (729)
Net loss— — — — (49,121)(49,121)
Balance at March 31, 2022198,263,494 $20 $836,229 $(1,141)$(575,454)$259,654 
Balance at December 31, 2020175,912,194 $18 $656,717 $(230)$(315,682)$340,823 
Issuance of common stock under warrant exercises6,973,882 1 80,199 — — 80,200 
Issuance of common stock under employee stock award plans, net of taxes6,798,504 — (37)— — (37)
Share-based compensation— — 11,530 — — 11,530 
Other comprehensive loss, net of tax— — — (22)— (22)
Prior year adjustment on warrant liability (Note 9)— — (1,585)— 1,585  
Net loss— — — — (40,817)(40,817)
Balance at March 31, 2021189,684,580 $19 $746,824 $(252)$(354,914)$391,677 


See accompanying notes to condensed consolidated financial statements.
7


VELODYNE LIDAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net loss
$(49,121)$(40,817)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization2,172 2,053 
Reduction of operating lease right-of-use (“ROU”) assets670 787 
Stock-based compensation4,938 11,530 
Reduction of revenue related to stock warrant granted to a customer5,303  
Provision for doubtful accounts 1,682 
Amortization of investment premium or discount, net427  
Other(1)161 
Changes in operating assets and liabilities:
Accounts receivable, net1,347 (1,172)
Inventories, net(3,199)(2,762)
Prepaid and other current assets2,249 1,702 
Contract assets3,262 (2,438)
Other assets41 (2)
Accounts payable2,114 (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 investments14,499 2,000 
Proceeds from maturities of short-term investments64,750 7,000 
Purchase of short-term investments(35,358)(91,932)
Net cash provided by (used in) investing activities42,346 (83,533)
Cash flows from financing activities:
Payment of transaction costs related to Business Combination (20,006)
Proceeds from warrant exercises, net of issuance costs 89,222 
Tax withholding payment for vested equity awards (37)
Net cash provided by financing activities
 69,179 
Effect of exchange rate fluctuations on cash and cash equivalents16 18 
Net increase (decrease) in cash and cash equivalents7,055 (49,443)
Beginning cash and cash equivalents24,064 204,648 
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, net407 333 
Cash paid for operating leases883 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 operating lease liabilities55 340 
Transaction costs included in accrued liabilities 5,000 



See accompanying notes to condensed consolidated financial statements.
8


VELODYNE LIDAR, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1. 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:

9



March 31,December 31,
20222021
Number of customers accounted for 10% or more of accounts receivable
23
Number of vendors accounted for 10% or more of accounts payable
41

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.

10


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.

Note 2. 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.


Note 3. 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):


11


Three Months Ended March 31,
20222021
% of Revenue% of Revenue
RevenueRevenue
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 Africa2,578 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):

12


March 31,December 31,
20222021
Contract assets, current
Unbilled accounts receivable$3,830 $3,313 
Contract assets, long-term
Unbilled accounts receivable9,182 12,962 
Total contract assets$13,012 $16,275 
Contract liabilities, current
Deferred revenue, current$5,452 $6,209 
Customer advance payment204 139 
Total5,656 6,348 
Contract liabilities, long-term
Deferred revenue, long-term11,755 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,
20222021
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 receivables50 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 period697 3,327 
Ending balance$17,411 $23,948 

Note 4. 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.

13


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 1Level 2Level 3Total
Cash equivalents:
Money market fund$6,826 $ $ $6,826 
Total cash equivalents6,826   6,826 
Short-term investments:
Money market fund7   7 
Commercial paper 92,774  92,774 
Corporate debt securities 132,545  132,545 
Total short-term investments7 225,319  225,326 
Total assets measured at fair value$6,833 $225,319 $ $232,152 

December 31, 2021
Level 1Level 2Level 3Total
Cash equivalents:
Money market fund$391 $ $ $391 
Total cash equivalents391   391 
Short-term investments:
Money market fund7   7 
Commercial paper 130,983  130,983 
Corporate debt securities 139,367  139,367 
Total short-term investments7 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.


Note 5. Balance Sheet Components
Accounts Receivables, Net
Accounts receivables, net consist of the following (in thousands):
March 31,December 31,
20222021
Accounts receivable$10,741 $12,088 
Allowance for doubtful accounts(3,207)(3,207)
Accounts receivable, net$7,534 $8,881 


14


Inventories, Net
Inventories, net of reserve, consist of the following (in thousands):
March 31,December 31,
20222021
Raw materials$7,640 $6,585 
Work-in-process2,893 1,883 
Finished goods1,965 831 
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,
20222021
Prepaid expenses and deposits$5,458 $7,883 
Due from contract manufacturers and vendors1,132 1,302 
Prepaid taxes1,012 1,223 
Contract assets3,830 3,313 
Other1,658 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,
20222021
Machinery and equipment$37,699 $36,264 
Leasehold improvements6,887 6,752 
Furniture and fixtures1,500 1,497 
Vehicles359 359 
Software1,945 1,337 
Assets under construction1,613 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,
20222021
Depreciation and amortization on property, plant and equipment$2,034 $1,957 
Depreciation on finance lease equipment (included in machinery and equipment)44 44 


15


Intangible Assets, Net
Intangible assets, net, consist of the following (in thousands):
Gross Carrying AmountAccumulated AmortizationNet 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,
20222021
Amortization of intangible assets$138 $96 

Other Assets
Other assets, non-current, consist of the following (in thousands):
March 31,December 31,
20222021
Operating lease ROU assets$16,274 $16,891 
Notes receivable750 750 
Deposits and other730 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,
20222021
Accrued payroll expenses$8,383 $13,550 
Accrued manufacturing costs5,963 3,925 
Accrued transaction costs5,000 5,000 
Accrued professional and consulting fees4,474 3,411 
Accrued warranty costs2,152 1,934 
Accrued taxes1,062 1,017 
Lease liabilities2,601 2,623 
Legal proceedings accrual825 825 
Other2,104 3,366 
Total accrued expense and other current liabilities$32,564 $35,651 


16


Long-Term Liabilities
Long-term liabilities consisted of the following (in thousands):
March 31,December 31,
20222021
Contract liabilities, long-term$11,755 $12,740 
Lease liabilities, long-term14,624 15,210 
Other1,022 661 
Total long-term liabilities$27,401 $28,611 


Note 6. 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,
20222021
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, 2022December 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 liabilities14,624 15,210 
Total lease liabilities$17,225 $17,833 
Weighted average remaining lease term (years)5.675.91
Weighted average discount rate 6.38 %6.37 %


17


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 
20233,417 
20243,479 
20253,565 
20263,670 
Thereafter3,779 
Total lease payments$20,576 
Less amount representing interest(3,351)
Present value of lease liabilities$17,225 



Note 7. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss was comprised of the following (in thousands):
March 31,December 31,
20222021
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.


Note 8. 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.



18


Note 9. 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,
20222021
Converted pre-combination Velodyne common stock outstanding23,788,61982,024,874
Converted pre-combination Velodyne preferred stock outstanding24,772,75924,772,759
Graf Founder shares142,800157,800
Other stockholders149,559,316 90,391,242 
Total common stock issued and outstanding 198,263,494197,346,675


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:


19


March 31,December 31,
20222021
Warrants outstanding upon Closing24,876,512 24,876,512
Warrants exercised to date18,902,642