Q2 2021 Aeva Technologies Inc Earnings Call

August 12, 2021

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Operator: Good day. My name is Alex, and I will be your conference facilitator. I would like to welcome everyone to Aeva Technologies Q2 2021 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. Following the opening remarks, we will conduct a question-and-answer session. As a reminder, today's conference call is being recorded and simultaneously webcast. I would now like to turn the call over to Andrew Fung, Director of Investor Relations. Andrew, please go ahead.

Good day My name is Alex and I will be your conference facilitator.

I'd like to welcome everyone to Ava technologies second quarter 2021 earnings Conference call.

During the opening remarks, all participants will be in a listen only mode.

Following the opening remarks, we will conduct a question and answer session. As a reminder, today's conference call is being recorded and simultaneously webcast I would now let's turn the call over to Andrew Huang Director of Investor Relations. Andrew. Please go ahead.

Andrew Fung: Thank you, and welcome everyone to Aeva's Q2 2021 Earnings Conference Call. Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO, and Saurabh Sinha, Aeva's CFO. Ahead of this call, we issued our Q2 press release and presentation, which we will refer to today and can be found on our investor relations website at investors.aeva.com. Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

Thank you and welcome everyone to <unk> second quarter 2021 earnings Conference call.

Joining on the call today are Jewish solid Yang <unk> co founder and CEO and so Rob Sinha <unk>.

CFO.

Ahead of this call we issued our second quarter press release and presentation.

We will refer to today and can be found our on our Investor Relations website at investors that Teva got AI.

Please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These.

These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

Andrew Fung: For a further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our Form 10-Q for the quarter ended March 31, 2021. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Aeva's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for or in isolation from, GAAP results. The webcast replay of this call will be available on our company website under the Investor Relations link. With that, let me turn the call over to Soroush.

For a further discussion with the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC.

<unk> our Form 10-Q for the quarter ended March 31.2021.

In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of <unk> performance.

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

The webcast replay of this call will be available on our company website under the Investor Relations link.

With that let me turn the call over to <unk>.

Soroush Salehian: Thank you, Andrew, and good afternoon, everyone. Q2 was an important quarter at Aeva, where we already achieved a number of the goals we set out for 2021 and made significant strides towards our mission to bring perception to all devices. I would like to highlight a few of our accomplishments as summarized on slide 5. First, our strategic collaboration with Nikon is a transformative milestone for the perception industry and marks Aeva's first announced expansion beyond automotive. It's an incredible opportunity to work with a global leader in optics and precision technology like Nikon, where we can leverage their market expertise with Aeva's breakthrough technology to accelerate adoption of 4D LiDAR in the $10 billion industrial automation and metrology markets.

Thank you Andrew and good afternoon, everyone Q2 was an important quarter at Ava, where we already achieved a number of the goals. We set out for 2021 and made significant strides towards our mission to bring perception to all devices.

I'd like to highlight a few of our accomplishments as summarized on slide five.

First our strategic collaboration with Nikon as a transformative milestone for the perception of industry that Marc gave US first announced expansion beyond automotive, it's an incredible opportunity to work with a global leader in optics and precision technology like Nikon, where we can leverage their market expertise with Eva breakthrough.

Technology to accelerate adoption of 40, <unk> in the $10 billion industrial automation and metrology markets.

Soroush Salehian: Second, we're not standing still in automotive and continued to make significant progress in our automotive programs towards production, including expanding our collaboration with TuSimple and continuing to deliver on our milestones with the undisclosed customer that we announced last quarter. Third, in product development, we continue to make good progress on the final design and remain on schedule to complete B-sample development by year-end. Fourth, we are seeing incredibly strong interest for key talent to join Aeva and help bring our industry-leading technology to market. Since the start of the year, we have grown our team by over 100%, which will enable us to continue to support our customers' development towards production, as well as pursue additional growth opportunities.

Second we're not standing still on automotive and continued to make significant progress in our automotive program towards production includes.

Including expanding our collaboration with two simple and continuing to deliver on our milestones with the undisclosed customer that we announced last quarter.

Third in product development, we continue to make good progress on the final design and remain on schedule to complete sample development by year end.

And fourth we are seeing incredibly strong interest for key talent to join Eva and helped bring our industry leading technology to market.

Since the start of the year, we have grown our team by over 100%, which will enable us to continue to support our customers' development towards production as well as pursue additional growth opportunities.

Soroush Salehian: Within this, we have made a number of notable leadership hires from leading companies in the technology and automotive sectors who bring deep expertise in product design, development, and validation. Now let's dive deeper into key business updates for this quarter, starting on slide seven. Earlier this week, we announced Aeva's first expansion beyond automotive, a strategic collaboration with Nikon to bring next-generation high-precision solutions to the industrial automation and the metrology markets. We are thrilled to collaborate with Nikon, a leader in precision optics and industrial metrology technologies. Their products are used today for automated inspection of high-volume manufacturing by leading global automotive OEMs such as BMW and Stellantis, which is the parent company of FCA and PSA brands, as well as top aerospace manufacturers, among others. As we have detailed before, Aeva's mission is to bring perception to all devices.

Within this we have made a number of notable leadership hires from leading company in the technology and automotive sectors, who bring deep expertise in product design development and validation.

Now, let's dive deeper into key business updates for this quarter starting on slide seven.

Earlier this week, we announced <unk> first expansion beyond automotive the strategic collaboration with Nikon to bring next generation high precision solutions to the industrial automation and the metrology markets.

We are thrilled to collaborate with Nikon a leader in precision optics and industrial metrology technologies. Their products are used today for automated inspection of high volume manufacturing by a leading global automotive Oems such as BMW and the Atlantic, which is the parent company of FDA and PSA brands.

As well as top aerospace manufacturers among others.

As we have detailed before <unk> mission is to bring perception to all devices. We have always believed in a significant opportunity beyond autonomous driving that could be unlocked by leveraging our common core 40, Lidar chip technology.

Soroush Salehian: We have always believed in a significant opportunity beyond autonomous driving that could be unlocked by leveraging our common core 4D LiDAR chip technology. By utilizing the same unique 4D LiDAR technology, we aim to offer an unprecedented level of accuracy to measure objects at the micron level at a distance and without contact. A level of performance we believe is achievable only with FMCW technology, which is core to Aeva. Aeva is taking this to the next level with our LiDAR on silicon photonics, where we aim to significantly reduce the cost and size of these industrial automation solutions. Through this collaboration, we'll have a direct opportunity to pursue a broad range of industrial programs and applications, leveraging Nikon's best-in-class quality and distribution channel to reach customers globally. This gives us a clear and broad path to bring 4D LiDAR to industrial applications by 2025.

By utilizing the same unique 40 vital technology, we aim to offer an unprecedented level of accuracy to measure object at the micron level at a distance and without contact and level of performance. We believe achievable only with SMT W technology, which is core to Eva.

And Teva is taking this to the next level with our lidar on Silicon Photonics, where we aim to significantly reduce the cost and size of these industrial automation solutions.

Through this collaboration we will have a direct opportunity to pursue a broad range of industrial programs and applications leveraging Nikon as best in class quality and distribution channel to reach customers globally.

This gives us a clear and broad path to bring 40 lidar to industrial applications by 2025.

Soroush Salehian: Now for those new to industrial metrology and automation, the next slide summarizes what industrial metrology is and the many uses for it. Industrial metrology is a large established market today, and is the process of precise measurements of parts manufactured in volume production to ensure manufacturing process control, improve product quality, and increase throughput. It requires micron-level accuracy, which for context, is a thousand times more than typical Time-of-Flight 3D LiDAR precision. Industrial metrology is needed across a large and diverse number of applications, including automotive and aerospace manufacturing, and generally in volume manufacturing, where there's a need for precise measurement during the production process. However, achieving such superb accuracy in an affordable and compact package remains the key challenge for the industry.

Now for those new industrial metrology at automation. The next slide summarizes what industrial metrology is and the many uses for it.

Industrial metrology is a large established market today and in the process of precise measurement of parts manufactured in volume production to ensure manufacturing process control improve product quality and increased throughput.

It requires micron level accuracy, which for context is a thousand times more than typical time of flight <unk> our position.

Industrial metrology it needed across a large and diverse number of applications, including automotive and aerospace manufacturer and generally in volume manufacturing, where theres a need for precise measurement during the production process.

However, achieving such superb accuracy.

Portable and compact package remains a key challenge for the industry.

Soroush Salehian: This has limited mass adoption of these solutions in the market, with many in the industry continuing to rely on slower or less accurate legacy solutions that result in lower throughput and higher costs. Turning to slide 9. Aeva's breakthrough 4D LiDAR chip technology solves these challenges, delivering high precision in a compact form factor and at significantly lower costs. Aeva's FMCW technology uses a continuous beam to constantly transmit data, and we can use our same core LiDAR chip for automotive applications, but adjust our proprietary Sigma processing algorithm to process that data for different performance metrics. For example, micron-level accuracy versus 500-meter range. To our knowledge, Aeva's 4D LiDAR is the only solution that has the potential to achieve this incredible level of performance scalability utilizing the same foundational technology.

It has limited mass adoption of these solutions in the market with many in the industry continuing to rely on slower or less accurate legacy solution that result in lower throughput and higher costs.

Turning to slide nine <unk> breakthrough 40, led our chip technology solves these challenges delivering high precision and a compact form factor and at significantly lower costs.

FMT EW technology uses a continuous beam to constantly transmit data and we can use our same cord blood or CIT for automotive applications.

But adjust our proprietary signal processing algorithm to process that data for different performance metrics for example, micron level accuracy versus 500 meter range.

So our knowledge gave US 40 <unk> is the only solution that has the potential to achieve this incredible level of performance capability utilizing the same foundational technology.

Soroush Salehian: With all core components integrated onto a silicon chip platform, we can deliver a compact, high-performing LiDAR system that is more reliable and truly scalable at an affordable cost for industrial automation applications. We expect our solutions will be comprehensive, including hardware and software that provide precision measurement capabilities. The end result is next-generation solutions that we hope will establish a new standard in precision measurements to fundamentally improve manufacturing quality and productivity across industrial applications. Turning to the next slide, I want to highlight the broad and large opportunities in the industrial automation and metrology markets. By incorporating our game-changing solution that delivers high precision at an unmatched cost, we believe Aeva's 4D LiDAR can meaningfully accelerate adoption across existing applications. We also believe this only scratches the surface of what's possible in industrial automation beyond metrology alone.

And with all core components integrated onto a silicon chip platform, we can deliver a compact high performing about our system that is more revival and truly scalable at an affordable cost for industrial automation applications.

We expect our solutions will be comprehensive, including hardware and software that provide precision measurement capabilities.

The end result is next generation solutions that we hope will establish a new standard in precision measurement to fundamentally improve manufacturing quality and productivity across industrial applications.

Turning to the next slide I want to highlight the broad and large opportunities in the industrial automation and metrology markets.

By incorporating our game changing solution that delivers high provision at an unmatched cost. We believe gave US 40, lidar can meaningfully accelerate adoption across existing applications.

We also believe this only scratches the surface of what's possible and industrial automation beyond metrology alone as the trifecta of high precision small form factor and low cost opens up a number of new applications, where performance size and costs have been limiting factors such as machine tooling.

Soroush Salehian: As the trifecta of high precision, small form factor, and low cost opens up a number of new applications where performance, size, and cost have been limiting factors, such as machine tooling, infrastructure, and other volume manufacturing. We are excited to pursue these large opportunities where we believe Aeva can provide unique differentiation as we continue our work towards our mission of bringing perception to all devices. Now, switching gears to automotive. We continue to make good progress across our automotive programs, including continuing to deliver on our milestones with the undisclosed customer that we announced last quarter. In addition, I want to provide an update on our work with trucking partner TuSimple on slide 11. We have expanded our collaboration with TuSimple over the 4D LiDAR as the only long-range LiDAR on TuSimple's currently operating on the road.

Victor and other volume NFL.

We are excited to pursue these large opportunities.

Entities, where we believe Ava can provide unique differentiation as we continue our work towards our mission.

Of bringing perception to all devices.

Now switching gears to automotive.

We continue to make good progress across our automotive programs, including.

I think continuing to deliver on our milestones with the undisclosed customer that we announced last quarter.

In addition, I want to provide an update on our work with trucking partner too simple on slide 11.

We have expanded.

<unk> a collaboration with two simple over the <unk> 40, Lidar as the only long range Lidar on two simple current fleet operating on the road.

Soroush Salehian: As part of this, TuSimple is also incorporating Aeva's unique and continuous velocity data into its perception stack, which helps classify hazardous objects instantly with greater confidence and at long ranges, enabling a critical factor of safety needed for autonomous trucks. Turning to slide 13, I would like to share our progress on the priorities we set for 2021, which are focused on investing in developing a world-class perception stack. We achieved a number of the goals we set out for this year. Based on our strong progress, we are well on with our final design and remain on schedule to complete our B-sample development by year-end. Importantly, this iteration will represent our final product architecture and puts us well on track towards production. Second, with our goals for additional programs towards production, our strategic collaboration with Nikon represents one more of those programs.

As part of this too simple as also incorporating <unk> unique and continuous velocity data into this perception stack, which helped classify hazardous objects.

Instantly with greater confidence in our long ranges, enabling a critical factor of safety needed for autonomous trucks.

Turning on slide 13, I would like to share our progress on the priorities. We set for 2021, which are focused on investing and developing a world class perceptions achieved a number of the goals we set out for this year.

And based on our strong progress we are.

Well with our final design.

We remain on schedule to complete our beef ample development.

By year end.

Importantly, this iteration will represent our final product architecture and puts us well on track towards production.

Second with our goals for additional programs towards production, our strategic collaboration with Nikon represents one.

More of those programs and given our progress with ongoing engagements, we feel confident and one additional program this year.

Soroush Salehian: Given our progress with ongoing engagements, we feel confident in one additional program this year. As we continue to see strong commercial traction, Aeva's approach to partnership has not changed. The aim is not to win the customer accounts, but instead our focus is on aligning with leading companies that have a shared determination and ability to deploy LiDAR at scale, working closely to build the world's best perception engagement in non-automotive applications. As we discussed earlier, we expect the Nikon collaboration to accelerate Aeva's non-auto opportunity in the large and growing industrial automation and metrology markets. We also continue to see strong inbound interest across the board, and with our growing team, have the ability to support our customers' ongoing developments and pursue additional opportunities that align with our strategy. Fourth, on strengthening our supply chain for production.

As we continue to see strong commercial traction <unk> approach to partnership has not changed the aim is not to win the customer counts, but instead are focused on aligning with leading companies that have a shared determination and ability to deploy via our at scale working closely to build them.

World Best pathetic.

Engagement and non automotive applications.

As we discussed earlier, we expect the 92nd collaboration to accelerate <unk> non auto opportunity in the large and growing industrial automation and metrology markets.

We also continued to see strong inbound interest across the board and with our growing team has the ability to support our customers' ongoing developments and pursue additional opportunities that align with our strategy.

And fourth on strengthening our supply chain for production.

Soroush Salehian: Over the past quarter, we finalized a key supply chain for our silicon photonics chip. With that, I will turn the call over to Saurabh to discuss the financials.

Over the past quarter, we finalized the key supply chain for our silicon processing chip.

And with that I will turn the call over to Rob to discuss the financials.

Saurabh Sinha: Thank you, Soroush. Turning to slide 15, which highlights our results. Revenues in Q2 was $2.6 million, which reflects significant advancements on our customer development milestones and strong ongoing progress towards production. Non-GAAP operating loss was $20.7 million, which is primarily comprised of R&D expenses related to product development and G&A expenses. Gross cash use, which we define as operating cash flow, was $19.7 million. Turning to our balance sheet, our cash equivalents, and marketable securities at the end of Q2 was a strong $503 million. Finally, our weighted average shares outstanding in Q2 was 211.6 million.

Thank you solution.

Turning to slide 15, which highlights our results.

Revenues in the second quarter was $2.6 million, which reflect significant advancements on our customer development milestone and strong ongoing progress towards production.

Non-GAAP operating loss was $27 million, which is primarily comprised of R&D expenses related to product development and G&A expenses.

Gross cash, which we define as operating cash flow.

Was $19.7 million.

Turning to our balance sheet our cash.

Cash cash equivalence and marketable securities at the end of second quarter was a strong $503 million.

Finally, our weighted average shares outstanding in the second quarter.

211 million.

Milligan.

Saurabh Sinha: For the remainder of 2021, we continue to be comfortable that our full year revenues will be consistent with what we discussed last quarter, and that full year gross cash use will be approximately $85 to 95 million. In summary, we are furthering our partnerships in automotive and, consistent with our mission, are also expanding into significant non-automotive opportunities. With our strong balance sheet, we are well positioned financially to continue our progress and execute on our plan to bring Aeva 4D LiDAR to market. With that, I will turn it over to Soroush for closing remarks.

For the remainder of 2021.

Continue to be comfortable back our full year revenue is going to be consistent with what we discussed last quarter.

And that full year growth cash yield will be approximately $85 million to $95 million.

In summary.

Furthering our partnership and automotive.

And consistent with our mission.

Also expanding into significant non automotive opportunities.

With our strong balance sheet, we are well positioned financially to continue our progress and execute on our plan to bring <unk> to market.

With that I will turn it over to <unk> for closing remarks.

Soroush Salehian: Thank you, Saurabh. I'd like to wrap up by thanking the Aeva team for their tremendous work and contribution that produced the strong results in our Q2 as a public company. I'd also like to thank our shareholders and partners for their great ongoing support. We are progressing in 2021 with strong momentum on multiple fronts, and I have never been more excited about what lies ahead for Aeva. As we continue on our automotive program and expand beyond automotive, we remain singularly focused on supporting our customers and pursuing only those additional opportunities that strategically align with our core mission. In just the past quarter, we have already demonstrated our ability to meet multiple of our 2021 objectives and are well on our way to completing our 2021 goals as we work to realize our mission to bring perception to all devices.

Thank you to Rob I'd like to wrap up by thanking the <unk> team for their tremendous work and contribution that produced strong results in our second quarter as a public company.

I'd also like to thank our shareholders and partners for their great ongoing support.

We are progressing in 2021 with strong momentum on multiple fronts and have never been more excited about what lies ahead for Eva as.

As we continue on our automotive program and expand beyond automotive.

We remain singularly focused on supporting our customers and pursuing only those additional opportunities that strategically aligned with our core mission in just the past quarter, we have already demonstrated our ability to meet multiple of our 2021 objectives and are well on our way to completing our 2031 gold.

As we work to realize our mission to bring perception to all devices. Thanks, everyone for your time today now, let's open up the line for questions.

Soroush Salehian: Thanks everyone for your time today. Now let's open up the line for questions.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please limit to one question. Our first question comes from Suji Desilva with Roth Capital. Please proceed with your question.

Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment may be necessary to pick up your handset before pressing the star can you. Please.

Please limit to one question.

Our first question comes from Sujit de Silva with Roth Capital. Please proceed with your question.

Suji Desilva: Hi, Soroush. Hi, Saurabh. Congratulations on the progress here. A bunch of questions, but I'll just stick to this one. The announcement with Nikon, very impressive, particularly in the sense that you can do micron level precision along with 300 meters. Very, very impressive range here. Can you talk about the technology differentiation of Aeva that allows you to do that kind of range, and do all the LiDAR competitors have a similar capability? Does this bring more or different competitors into your market opportunity versus others? Just lastly, I'll add, does this industrial sort of success you have better validate your opportunity in consumer and health away from auto? Thanks.

Hi, Rob congratulations on the progress here.

So.

Two questions, but I'll just stick to this one the announced.

Announcement of Nikon very impressive, particularly in the sense that you can do micron level precision along with <unk>.

300.

Very impressive range here can you talk about the technology differentiation of Eva that allows you to do that kind of range and do all the light our competitors have a similar capability and does this bring more or different competitors into Europe.

Market opportunity versus others, and then lastly, I'll add does this industrial sort of success you have.

Better validate your opportunity in consumer and health away from auto.

Soroush Salehian: Sure. Thanks, Suji. I have to answer that. First of all, you're right. Absolutely. To our knowledge, one of the differentiations, I think, for Aeva that's very unique is our ability to actually have this incredible level of performance scalability, which is really utilizing the same foundational technology, and using different algorithms to achieve very different performance levels. For example, achieving over 500 meters versus micrometer precision. With micrometer, obviously that's about 1,000 times more, as I mentioned on the call, than what a typical legacy 3D LiDAR or Time-of-Flight LiDAR can do. That, I think, is an important example of our ability to kind of extend our performance, for the applications that it opens up.

Sure. Thanks, <unk>, so first of all Youre right absolutely to our knowledge.

Differentiations I think for Ava that's very unique is our ability to actually have this incredible level of performance scalability, which is really utilizing the same foundational technology.

So using different algorithms to achieve because there are different performance levels for example, achieving over 500 meters versus micrometer precision so.

Micrometer, obviously, that's about 1000 times more as I mentioned on the call than what a typical legacy three light our time of flight <unk> can do in and that I think is an important.

Important example of our ability to extend our performance.

For the applications that it opened up I think applications. There is opened up and which where we see industrial automation industrial metrology being with a critical to have the ability to have this kind of micro meter level function and overall I would say that youre right. We look at it from a foundation.

Soroush Salehian: I think the applications there has opened up in which we see industrial automation, industrial metrology being really critical to have that ability to have this kind of micrometer-level function. Overall, I would say that you're right. We look at this from a foundational standpoint, meaning what micrometer precision would allow us to do is just scratching the surface of what's possible in industrial applications. I think with Nikon, our work starts in industrial metrology applications, where we look at automated inspection of high-volume manufacturing to make better parts, better vehicles, high quality, increased throughput. But also from there, we're looking to actually expand to other industrial applications, where the trifecta of size, cost, and performance really becomes critical.

Standpoint, meaning one micrometer precision.

Allow us to do is just scratching the surface of what's possible in industrial applications and I think with Nikon work starts industrial metrology applications, where we look at automated inspection of high volume manufacturing to make better part better vehicles high quality increased throughput, but also from there.

Looking at actually expanding to other industrial applications.

We're at a size the trifecta of size.

Cost and performance really becomes critical and I think <unk> has a unique advantage there.

Soroush Salehian: I think Aeva has a unique advantage there, unlike others in this space, so.

Others in this space so.

Suji Desilva: Okay. I don't know if I can get a quick follow-up in here, but the employee base growing very strongly, Soroush. What are the areas in your business that you're most aggressively putting headcount, incremental headcount towards? Thanks.

I don't know if I can a quick follow up in here, but the employee base growing very strongly to Rouge. What are the areas in your business that you are most aggressively putting that incremental headcount towards thanks.

Soroush Salehian: Overall, of course, you know, our focus on the headcount is across the company, but there's primary expansion also in the R&D efforts. Obviously, as we see strong interest and traction in market in automotive, but also with expansion into other applications, not automotive, we need to continue to grow and be able to support our customers. We feel very confident now with our ability to, you know, double our headcounts since the beginning of the year. We'll continue to build that foundation to reach critical mass with that focus of primarily R&D to make sure that we can continue to support our customers develop their milestones as we expand.

So overall of course.

Our focus on the head count as is across the company, but there is primary expansion also on the R&D efforts. So obviously as we see strong interest and traction market and automotive, but also with expansion into other applications not automotive we need to continue to grow and be able to support our customers and we feel very confident now with our ability to.

Double our headcounts and since the beginning of the year.

So we will continue to build that foundation to reach critical mass with that focus of primarily R&D to make sure that we can continue to support our customers' development milestones that we expect.

Suji Desilva: Okay. Again, Soroush, Saurabh, congratulations on the progress. Thanks.

Okay against Rob Congratulations on the progress thanks.

Operator: Thank you. Our next question comes from Colin Rusch with Oppenheimer. Please proceed with your question.

Thank you. Our next question comes from Colin <unk> with Oppenheimer. Please proceed with your question.

Colin Rusch: Thanks so much. Guys, you know, on the trucking opportunity with TuSimple, and you may not be able to comment in too much detail. You know, as they move towards finalizing their designs for production, you know, to ramp up in 2024, can you speak about, you know, your relative position, obviously, you know, being on all of the existing trucks that they've retrofitted is a meaningful accomplishment. As you work through the development time frames with those guys and the cost structure they're gonna need to reach for those production volumes, I'd just love to get a better sense of how that's tracking for you.

Thanks, so much guidance.

On the trucking opportunity with two simple and you may not be able to comment in too.

Too much detail, but they.

They move towards finalizing the designs for production.

To wrap up in 2024 can you speak about your relative position obviously.

Dean on all three existing trucks.

Okay.

Meaningful accomplishment or external development timeframes with those guys in our cost structure.

To reach those production volumes.

But essentially how that's tracking tool.

Soroush Salehian: Sure. Happy to answer, Colin. First, as I mentioned on the call, at this point, Aeva actually is implemented as the only long-range LiDAR onto TuSimple's current fleet of trucks on the road, that are operating. We're getting a lot of validation data from that, and that's encouraging. We're also expanding our collaboration and development efforts together with TuSimple. That's one. Two, I think, you know, TuSimple is actually integrating our velocity data into their perception stack, which is obviously unique to Aeva. I think it's also a strong indication of the value that we believe TuSimple sees in our technology.

Sure happy to answer Colin so.

First as I mentioned on the call. So at this point able actually is implemented as the only long range lidar onto suppose current fleet of trucks on the road that are operating so we're getting a lot of validation data from that and Thats encouraging and we're also expanding our collaboration and development efforts together with two simple so.

That's one and two I think.

Two simple is actually integrating our velocity data into their perception stack, which is obviously unique to Eva and I think it's also a strong indication of the value that we.

We believe two simple sees in our technology so.

Soroush Salehian: In summary, we're continuing to expand our efforts there, both in the, you know, in the current fleets as we deploy on the road, get that validation with implementation of our unique differentiation, but also continue to expand our development efforts together as we work together towards supporting their efforts to expand their autonomous freight network globally.

In summary, we are continuing to expand our efforts there both in the handling of the current states as we deploy on the road get that validation with implementation of our unique differentiation.

But also.

Continuing to expand our development efforts together as we work together towards supporting their efforts to expand.

They are.

Autonomous rail network globally.

Colin Rusch: That's actually very helpful. With the metrology opportunity, well, you know, clearly you have to find a timeframe here, but curious about how you're planning to go to market with Nikon, to get integrated into some of the machine designs and integrated into the software, so that that really gets used effectively. Curious how you're gonna get that process started and kind of individual end markets that you're targeting to start with.

That's actually very helpful.

And then just the metrology opportunity.

Clearly you have to find the timeframe here, but curious about how youre planning to go to market with Nikon.

<unk> into some of the machine designs and integrated into the software.

That really gets us effectively.

How youre going to get that process started and kind of.

And then it'll end markets you are targeting to start with.

Soroush Salehian: Sure. Yeah. We're starting a collaboration with Nikon to jointly bring to market, as you mentioned, products in the industrial metrology and automation, which we expect will drive design win on automotive and aerospace applications initially. We currently plan to start with these applications, where Aeva will provide our 4D LiDAR chip and software into Nikon's products. But also we're gonna be looking together as we progress on this collaboration into how we can expand our product into the number of different product lines across Nikon, but also further beyond that, into the industrial automation markets at large. As I mentioned on the call, we see those applications as quite interesting.

Sure, Yes, so we're starting to collaboration with Nikon to jointly bring to market as I mentioned in our products in the industrial metrology and automation.

Which we expect will drive design wins, our millennium and aerospace applications actually.

We currently plan to start with.

These applications, where Eva will provide.

By our chip and software.

Into Nikon.

But.

Also we're going to be looking together as we progressed on this collaboration into how we can expand.

Our product into the number of different product lines.

Across Nikon, but also further beyond that into the industrial automation market that large and as I mentioned on the call. We see those obligations is quite interesting wherever you need the ability to measure at the at the high position microbial level, which we think.

Soroush Salehian: Wherever you need the ability to measure at the high precision, that micrometer level, which we think, doing so at a distance, you know, from a distance, non-contact way is only possible by FMCW technology, which is core to Aeva. We're gonna be tackling those opportunities head on, and we see a really unique opportunity set for Aeva to go into that. As I mentioned on the call, this includes opportunities such as machine tooling, infrastructure applications, and that's what we're gonna be aligning our focus on as we expand broadly into those applications.

Doing so at a distance from a distance Nelson non contact way, it's only possible life MPW technology, which is core to Asia, we're going to be tackling those opportunities head on and we see a really unique opportunity set for any of us to go into that as I mentioned on the call. This includes opportunities such as machine tooling.

Infrastructure applications, and that's where we're going to be aligning R. R.

Our focus on.

As we expand broadly in those applications.

Colin Rusch: Great. Thanks so much, Kas.

Great. Thanks, so much guidance.

Operator: Thank you. Our next question comes from Pierre Ferragu with New Street Research. Please proceed with your question.

Thank you. Our next question comes from Pierre <unk> with New Street Research. Please proceed with your question.

Pierre Ferragu: Hi, guys. Thanks for taking my question. I have a quick follow-up on the previous question on Nikon. If I understand correctly, step one of the collaboration is really integrating Aeva's technologies into Nikon's metrology systems. Can you describe, you know, give us a sense of how you want to tackle beyond that the broader industrial opportunity? I imagine Nikon, like, just getting into Nikon's product is a very narrow window into the industrial opportunity. Beyond that, are you going to go directly after that opportunity? Do you want to expand the partnership with Nikon beyond their existing product lines and co-develop, like, additional products with them? Are you going to develop your own industrial products by yourself in the long run?

Hi, guys. Thanks for taking my question.

I have a quick follow up on the previous question on <unk>. So if I understand correctly step one of the collaboration is really integrating <unk> technology.

NYCHA.

Maybe a quarter or two systems.

But.

Can you can you describe.

Give us a sense of how how you want to tackle it beyond that.

The broader industry of opportunity Nikon chose getting to know you couldnt product can vary.

Narrow window into the industry of opportunities beyond that that you're going to go directly after that's what opportunities do you want to.

Spanned departments are cheaper now.

Beyond the existing product lines and co developed additional products with them.

Are you going to give up your own industrial products by yourself in the long run and if you can do it.

Pierre Ferragu: If you can give us kind of a timeframe for these things, like getting into Nikon and on the market and beyond the existing reach that the product portfolio of Nikon gives you today.

Kind of a timeframe for these things like <unk>.

Getting tonight and on the market.

The existing reach.

Product portfolio, if Mike I can give you two things.

Soroush Salehian: Sure, Pierre. Happy to answer that. First of all, you're right. Our first applications there with Nikon that we're looking at as we start the collaboration really is around industrial metrology, automotive, and aerospace manufacturing. Even as I mentioned, we're gonna be looking at closely where we can actually apply this fundamental capability across other product lines within Nikon Corporation as well. Generally, just to give you context here, as I said, we're looking at actually developing a fundamental capability here, right?

Sure. If you are happy to answer that so first of all Youre right our first.

The applications there would knock on we're looking at as we started the collaboration really it's around industrial metrology.

In automotive and aerospace manufacturing, but even as I mentioned.

We're going to be looking at closely where we can actually apply this fundamental capability.

Across other product lines within.

Nikon Corporation as well.

But generally just to give you.

Context here as I said, we're looking at actually developing.

The fundamental capability here right, so with the ability to measure at the micro meter position level with the ability to integrate everything onto the silicon photonics chip and bring the size down and have the ability to significantly reduce the cost we actually see that Eva can bring unique depreciation.

Soroush Salehian: With the ability to measure at the micrometer precision level, with the ability to integrate everything onto the silicon photonics chip and bring the size down and have the ability to significantly reduce the costs, we actually see that Aeva can bring unique differentiation into the industrial automation markets at large in general. You know, I'm of course not gonna comment on the specifics of how we go from each of these steps in the next number of years, but it's a bit early to do that. I think the foundational capability that we're building here is gonna allow us, from what we believe, to expand into those applications fairly quickly after that.

The industrial automation markets at large in general and so.

Of course, I'm going to comment on the specifics of how we go from.

Each of these steps in the next number of years, but a bit early for to do that but I think.

The foundational capabilities that we're building here is going to allow us from what we believe to expand in those applications.

Soroush Salehian: As I mentioned, I think on the call, our timeline is to launch first product in 2025, and we're gonna be continuing to growing into those other applications that I mentioned, shortly after that.

Fairly quickly after that and as I mentioned I think on the call. Our timeline is to launch <unk> products in 'twenty, five and we're going to continue to growing into those other applications that I mentioned.

Shortly after that.

Pierre Ferragu: Thanks. Maybe a quick follow-up on the automotive front. You've made progress there on your like industrialization plan and you've mentioned also progress with your existing partner that you cannot name. I'm kind of wondering whether you see, you know, like your existing partners and your existing, you know, commercial development in the automotive industry that you have today is really the basis on which you're going to make progress in the next couple of years. Should we expect actually Aeva to announce additional auto partners in the near term, let's say in the next year or two?

Okay.

And then maybe a quick follow up on the on the automotive front.

So you've made progress there on Europe like industry utilization.

Program.

Plan.

You mentioned also progress with you.

We're seeing that.

<unk>.

You cannot name.

And I'm kind of wondering whether you see.

Like your existing partner than your existing commercial development.

Most of the industry.

What you have today is really the basis on which you're going to make progress in the next couple of years or should we expect actually.

I've got to announce additional partners in the near term, let's say in the next year.

Pierre Ferragu: Then, of course, the question I have beyond that is, can you give us some color about where your conversations in the auto industry are today? I think there must be a big like, you know, questioning in the industry, that Time-of-Flight versus FMCW, and the fact that a lot of Time-of-Flight solutions are, have been around, you know, for longer. There is probably a need to educate the industry and to get it, you know, accustomed to the idea that maybe in the long run, FMCW is a solution. How are these conversations progressing, and how do you see them turning into, like, additional commercial momentum in that space in auto?

Through.

And then of course the question I have beyond that is can you give us some color is about.

How are your conversations in the auto industry today, I think that you could be.

There must be a big site.

Questioning an industry, you've got time of flight <unk>.

If I could kind of look at the time of flex solutions.

Okay.

Have been around.

For <unk>.

For longer.

Great.

The industry and to get it.

Accustomed to the idea that maybe in the loan growth.

FMC delivered is a solution. So how these conversations progressing and how do you see them turning into.

Like additional commercial drove momentum in that space.

Pierre Ferragu: I'm more talking like, you know, the passenger car business, like the large volume opportunity for you guys.

I'm also looking like.

The passenger car business like the larger volume of opportunities for your guidance.

Soroush Salehian: Sure. Yeah. I think a few questions in there. Let me take a cut at this. First of all, on the undisclosed customer, as I mentioned, we continue to progress well on delivering our milestones. We have hit a number of them throughout the past quarter with this customer, and we're working and continuing to work very closely together towards production. We're feeling very confident there. I think overall, your question about just expansion and the interest that we see in the market. I think we are seeing strong traction in the market, in automotive specifically, and are encouraged by the increased number of engagements that we see in auto in addition to, of course, non-auto or some of the announcements we made.

Sure, Yes, so I think a few questions in there. So let me take a take a cut of the so.

First of all on the undisclosed customer as I mentioned, we continue to progress well on delivering on our milestones.

We have hit a number of them throughout the past quarter with this customer and we are working and continue to work very closely together towards production. So we're feeling very confident there I think overall your question about.

Just the expansion and the interest that we've seen the market I think we are seeing strong traction in the market in automotive specifically and are encouraged by the increased number of engagements that we see.

In auto in addition to of course, not on or some of the announcements we made.

Soroush Salehian: I think, you know, in our conversations, we already see the industry within automotive recognize some of the crucial advantages of FMCW for future platforms, especially as we move from this phase of, I think, initial pilot launches, as you mentioned that, yes, we do fully expect to become FMCW-based. As they look into kind of future-proof their AD technology and be really looking at larger volume scale, you know, OEMs being keen on next generation technology that is enabled at higher volume scale.

I think.

<unk>.

In our conversations we already see the inside the industry within automotive recognize some of the crucial advantages of FMC W.

For future platforms, especially as we move from the state of I think initial pilot launches as you mentioned that yes, we do fully expect to become a five based but as youre looking to kind of future proof their adas technology and be really looking at larger volume scale.

OEM has been keen on.

Next generation technology that is.

And enable.

Okay.

At higher volume scale, and I think that capabilities that we provide with our technology and combination of long range.

Soroush Salehian: I think the capabilities that we provide with our technology in combination of long range and integration at the chip level, not have interference, all of that, which also then lead to providing, over time, cost-effective solutions, we think, provide a good opportunity for us to scale, expand into those larger volume opportunities after this initial pilot launches.

Integration of the chip level.

Not have interference all of that.

Which also then lead to providing overtime cost effective solutions, we think.

I will provide a good.

Opportunity for us to scale expanded.

Do those larger volume.

<unk> after this initial pilot launches.

Pierre Ferragu: Thanks, Soroush Salehian.

Thanks harsh.

Operator: Thank you. Our next question comes from Joe Moore with Morgan Stanley.

Thank you.

Our next question comes from Joe Moore, with Morgan ask about the $10 billion characterization of the industrial automotive automation market.

Joseph Moore: Ask about the $10 billion characterization of the industrial automation market. Like what are you referring to there? Where is the $10 billion coming from? I guess how much of that do you think that Aeva can address over time?

Like what are you, referring to there, whereas the 10 million coming from and I guess, how much of that do you think that that Eva Ken can address over time.

Soroush Salehian: Sure. If you notice on the slides, I think slide 10. We talked about some of the applications that covers that. Generally it's in industrial metrology and automation, combining automotive manufacturing, aerospace manufacturing, machine tooling, and infrastructure, where we see an opportunity for applications for our technology to be able to provide different levels of precision measurements, and combined with small form factor, high performance, where we can actually tackle those. I think overall, as I mentioned, our focus of course initially is gonna be first expanding into industrial metrology applications, starting with Nikon collaboration, but from there, looking to expand beyond that into some of the applications that I just mentioned.

Sure.

If you notice on the slides that can slide 10, so we talked about some of the applications.

Covers that so generally.

And industrial metrology and automation, combining automotive manufacturing aerospace manufacturing machine tooling and infrastructure, where we see an opportunity.

For applications for our technology to be able to provide a different level of precision measurements and combined with.

Small form factor high performance, where we can actually tackle those.

And I think overall, our as I mentioned, our focus of course initially is going to be first expanding into industrial metrology applications, starting with modern collaboration but from there looking to expand beyond that into some of these applications that I just.

<unk>.

Joseph Moore: Okay, great. Thank you.

Okay, great. Thank you.

Operator: Thank you. Our final question is from Tristan Gerra with Baird. Please proceed with your question.

Thank you. Our final question is from Tristan <unk> with Baird. Please proceed with your question.

Tristan Gerra: Hi, good afternoon. Looking at the Nikon announcement, does that change the end market exposure and mix a few years out to what it is to prior expectations where you were primarily emphasizing automotive and consumer? Or, is it exactly in line with your expectation in terms of where your technology is going to end up once you deploy in volume?

Hi, good afternoon.

Looking at the Nikon announcement does that change.

And market exposure and mix a few years out to wanted to two prior expectations, where you were primary deemphasizing automotive and consumer or is it exactly in line with your expectation in terms of where your technology is going to end up once you deploy it in volume.

Soroush Salehian: Yeah, no, I think, Tristan, that is actually completely in line with our expectations that we have had set from the beginning. I think this is, you know, just this announcement should give us that confidence and ability to continue executing on our non-automotive opportunities. I think, you know, we have, as we have said, of course, automotive is first in terms of launch, but we have always believed in expansion beyond autonomous driving to be enabled by the fact that we have this unique technology with really incredible performance scalability at the chip level. Leveraging the same technology we have developed, now we're gonna be looking at applying that to those other applications in industrial. Overall, it is consistent with our expectations.

Yes, I think.

And that is actually completely in line with our expectations that we have had said from the beginning.

This is just this announcements should give us that confidence in our ability to continue executing on our non automotive opportunities.

And I think.

We have the offset of course automotive is first in terms of launch, but we have always believed and.

Expansion beyond autonomous driving to be enabled by the fact that we have this unique technology.

With <unk>.

Incredible performance scalability and the chip level. So leveraging the same technology. We have developed now are we going to be looking at.

Following that to those other applications in industrial but overall it is consistent with the occupancy.

Tristan Gerra: Okay, great. A quick follow-up. You know, given some automotive OEM or at least one of them, you know, embracing LiDAR as a standard feature, you know, for some next generation cars. Are you seeing automotive OEMs trying to accelerate the ramp of LiDAR-based systems? How does that match, you know, with the time when you expect to be ready in volume production? Do you think that you're still in the sweet spot of that volume ramp opportunity?

Okay, Great and then a quick follow up.

Kevin.

Automotive OEM like each one of them embracing.

Right.

As a standard feature.

So next generation Cogs are you seeing.

Automotive Oems trying to ask anyway.

The Atlanta flight hour based systems and that how does that match with the time when do you expect to be ready in volume production do you think that you're hitting the sweet spot of that volume will wrap up the Q&A.

Soroush Salehian: Yeah, I think so. First of all, we are seeing in certain applications in automotive that the, you know, inflection point and moderate option is starting to really take shape. I think we are encouraged by that, of course. I think with all the milestones we have done so far this year, we have made a lot of progress. We have been ahead of schedule in some of those areas, including the chip development. We have significantly expanded our team over 100%. We're gaining a lot of confidence our ability to continue to hopefully accelerate our overall efforts and development.

Yes, I think so first of all we are seeing in certain.

Applications in automotive that.

The inflection point and moderate auction is starting to really take take shape. I think we're encouraged by that of course and I think with all the milestones that we have done so far this year. We have made a lot of Congress. We have been ahead of schedule in some of those areas, including the chip development, we have <unk>.

<unk> standalone team over 100%, so we're gaining a lot of confidence in our ability to continue to hopefully accelerate our.

Our overall efforts in development and as we're able to do that we're going to be looking at.

Soroush Salehian: As we're able to do that, we're gonna be looking at those where it makes sense to align those with our customers, where we are actually encouraged by the opportunities that are starting to come up more and more in the space.

Add those.

Where it makes sense to align those with our customers, but we are actually encouraged by.

The opportunity sets that are starting to come up more and more in this space.

Tristan Gerra: Great. Thank you very much.

Great. Thank you very much.

Operator: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Thank you ladies and gentlemen, we have reached the end of the question and answer session. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Okay.

Q2 2021 Aeva Technologies Inc Earnings Call

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