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Financial Statement Components
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Financial Statement Components Financial Statement Components
Cash and Cash Equivalents
Cash and cash equivalents consisted of the following (in thousands):
 September 30, 2024December 31, 2023
Cash$33,036 $35,659 
Money market funds60,792 101,842 
U.S. treasury securities15,199 — 
Commercial paper5,182 497 
Corporate bonds— 1,097 
Total cash and cash equivalents$114,209 $139,095 
Inventory
Inventory comprised of the following (in thousands):
 September 30, 2024December 31, 2023
Raw materials$5,772 $5,614 
Work-in-process3,004 2,521 
Finished goods8,860 4,061 
Total inventories, net$17,636 $12,196 
The Company’s inventory write-downs were $2.9 million and $20.7 million for the three and nine months ended September 30, 2024 and $3.9 million and $17.3 million for the three and nine months ended September 30, 2023, respectively. The write-downs were primarily due to obsolescence charges as a result of change in product design, lower of cost or market assessment, yield losses, and other adjustments.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
 September 30, 2024December 31, 2023
Prepaid expenses$12,989 $12,434 
Contract assets10,720 14,132 
Advance payments to vendors259 3,038 
Other receivables6,481 3,346 
Total prepaid expenses and other current assets$30,449 $32,950 
Property and Equipment
Property and equipment consisted of the following (in thousands):
 September 30, 2024December 31, 2023
Machinery and equipment$61,910 $58,815 
Computer hardware and software8,143 7,025 
Land1,001 1,001 
Leasehold improvements22,620 22,531 
Vehicles, including demonstration fleet2,141 2,207 
Furniture and fixtures930 900 
Construction in progress2,150 2,256 
Total property and equipment98,895 94,735 
Accumulated depreciation
(43,675)(28,435)
Total property and equipment, net$55,220 $66,300 
Property and equipment capitalized under finance lease were not material.
Depreciation expense associated with property and equipment was $4.7 million and $17.1 million for the three and nine months ended September 30, 2024 and $10.8 million and $16.2 million for the three and nine months ended September 30, 2023, respectively.
The Company continually evaluates opportunities for optimizing its manufacturing processes and product design. In 2023, the Company finalized and committed to a plan to change its sourcing of certain sub-assemblies and components from one supplier to another, which requires the Company to abandon certain equipment located at the legacy supplier. As a result, the Company has reduced the useful lives of the long-lived assets within the impacted asset group in line with when these assets are expected to be abandoned. The Company expects the transition to the new supplier to be essentially completed in 2024. The reduction in the estimated useful lives of the impacted assets resulted in the Company recording $0.9 million and $4.4 million of incremental accelerated depreciation charges in the three and nine months ended September 30, 2024, respectively.
Intangible Assets
The following table summarizes the activity in the Company’s intangible assets (in thousands):
September 30, 2024December 31, 2023
Beginning of the period$22,994 $22,077 
Additions— 8,240 
Amortization
(3,032)(4,323)
Impairment
(3,250)(3,000)
End of the period$16,712 $22,994 
Intangible assets were acquired in connection with the Company’s acquisition of Optogration in August 2021, Freedom Photonics in April 2022 and Solfice in June 2022. The components of intangible assets were as follows (in thousands):
September 30, 2024December 31, 2023
Gross
Carrying
 Amount		Accumulated
Amortization
Impairment
(1)
Net
Carrying
Amount		Weighted Average
Remaining Period
(Years)		Gross
Carrying
 Amount		Accumulated
Amortization
Impairment
(1)
Net
Carrying
Amount		Weighted
Average
Remaining
Period
(Years)
Customer relationships$3,730 $(2,092)$— $1,638 3.2$3,730 $(1,479)$— $2,251 3.7
Customer backlog650 (650)— — —650 (650)— — —
Tradename620 (432)— 188 1.5620 (339)— 281 2.3
Assembled workforce
130 (130)— — —130 (130)— — —
Developed technology21,400 (6,514)— 14,886 5.220,150 (4,188)— 15,962 5.5
IPR&D3,250 — (3,250)— —7,500 — (3,000)4,500 —
Total intangible assets$29,780 $(9,818)$(3,250)$16,712 5.0$32,780 $(6,786)$(3,000)$22,994 5.2
(1) See below for discussions related to impairment charges.
Amortization expense related to intangible assets was $1.0 million and $3.0 million for the three and nine months ended September 30, 2024 and $1.1 million and $3.3 million for the three and nine months ended September 30, 2023, respectively.
As of September 30, 2024, the expected future amortization expense for intangible assets was as follows (in thousands):
PeriodExpected Future
Amortization Expense
2024 (remaining three months)
$1,031 
20254,126 
20263,479 
20273,263 
20281,771 
Thereafter3,042 
Total$16,712 
Goodwill
The carrying amount of goodwill allocated to the Company’s reportable segments was as follows (in thousands):
 Autonomy SolutionsATSTotal
Balance as of December 31, 2022
$687 $18,129 $18,816 
Goodwill related to acquisition of Seagate’s lidar business
1,063 — 1,063 
Impairment of goodwill related to Freedom Photonics
— (12,489)(12,489)
Balance as of December 31, 2023
$1,750 $5,640 $7,390 
Impairment of goodwill related to Freedom Photonics
$— $(3,396)$(3,396)
Balance as of September 30, 2024
$1,750 $2,244 $3,994 
During the year ended December 31, 2023, the Company recognized impairment charges of $12.5 million and $3.0 million related to goodwill and IPR&D related to Freedom Photonics. These impairment charges were due to events that occurred during the fourth quarter of 2023, including a decision to delay development activities on certain new products resulting from an increasing focus on supporting the product roadmap of the Autonomy Solutions segment, and a lowering of the growth outlook for the business due to less than anticipated traction in sales of new products. During the third quarter of 2024 the Company recognized additional impairment charges of $3.4 million and $3.3 million related to goodwill and IPR&D, related to Freedom Photonics driven by a slower industry lidar adoption rate in the near-term as well as a reduction in the Freedom Photonics workforce assigned to perform development work for external customers.
Total life-to-date goodwill impairment charge recorded by the ATS reportable segment was $15.9 million and no impairment charge has been recorded by the Autonomy Solutions reportable segment.
In relation to the goodwill, the Company engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management. The Company assessed the fair value of the Freedom Photonics reporting during the fourth quarter of 2023 and the third quarter of 2024, using the discounted cash flow method under the income approach, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows. The significant assumptions used in the assessment of the reporting unit included revenue growth rates, profit margins, operating expenses, capital expenditures, terminal value and a discount rate. As a result of this assessment, the Company determined in the fourth quarter of 2023 that the carrying value of the Freedom Photonics reporting unit exceeded its estimated fair value by $12.5 million. This resulted in an impairment charge to goodwill, with the remaining goodwill associated with Freedom Photonics being fully impaired in the third quarter of 2024.
Other Non-Current Assets
Other non-current assets consisted of the following (in thousands):
 September 30, 2024December 31, 2023
Security deposits$2,315 $2,410 
Non-marketable equity investment
10,000 14,000 
Prepaid expenses non-current
4,169 3,471 
Contract assets5,248 2,471 
Other non-current assets834 4 
Total other non-current assets$22,566 $22,356 
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following (in thousands): 
 September 30, 2024December 31, 2023
Accrued compensation and benefits$14,075 $20,658 
Accrued expenses10,817 14,723 
Contract losses11,294 8,790 
Warranty reserves754 4,154 
Contract liabilities2,366 3,127 
Accrued interest payable
6,904 359 
Insurance reserve and other liabilities
1,744 794 
Total accrued and other current liabilities$47,954 $52,605 
During the three and nine months ended September 30, 2024, the Company recorded $3.2 million and $15.7 million, respectively, and $3.9 million and $11.0 million for the three and nine months ended September 30, 2023, respectively, in cost of sales (services) with respect to estimated losses expected to be incurred on NRE projects with certain customers. The estimated contract losses were primarily driven by delays in achievement of certain milestones and changes in scope of project deliverables agreed upon with a customer.