Q3 2021 Aeva Technologies Inc Earnings Call

2020 one.

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 Serge.

Thank you Andrew and good afternoon, everyone Q3 was an exceptional quarter at Eva as we achieved a number of important milestones that solidify our path towards commercialization.

I would like to highlight a few of our accomplishments which are summarized on slide five.

First today, we announced a key production win was the automotive trucking company plus two and implements Eva breakthrough 40, Lidar on pluses driver and and fully autonomous trucks at volume scale.

This win is significant because it further confirms the industry's increasing transition to FMC W. Lidar to enable safe automated driving as well as the leading performance and scalability of <unk> automotive grade Lidar on chip solution.

We also remain on track with key development milestones across our other automotive.

And non automotive collaborations.

Second we continue to strengthen our supply chain to bring <unk> 40 lidar to market.

We have announced our agreement with <unk>, a leader in advanced precision optical and electronic manufacturing to produce our 40, Lidar chip module, which accelerates our manufacturing capabilities and automotive grade certified production line.

And third.

However, achieved the important milestone of completing the design release of our B sample, which finalizes the architecture and provides the path to our final cost structure.

Turning now to slide eight I would like to provide more color on our key business updates.

We are incredibly excited to share that plus a leader in self driving truck technology has selected Eva 40, Lidar for long range perception on their production autonomous trucks.

This multiyear production program includes pluses intention to deploy trucks globally, starting in late 2022 with pluses driver in solution followed by their fully autonomous system.

And plus plans to deploy over 100000 trucks by the end of 2025.

We have been working with plus since 2019 to test and validate a bus 40 lidar.

Plus selected Eva for its unique combination of ultra long range, and instantaneous velocity measurement, which enhances pluses long range perception system and provide faster response time and safety critical situations.

The combination of <unk> 40, Lidar and pluses proprietary autonomy stag also addresses many critical edge cases, such as previously unseen obstacles that may confound deep neural networks and the perception stack.

Adequate response time is crucial to enabling safe automated driving particularly for heavy duty trucks since they take much longer to stop and passenger vehicles.

This has been a challenge to reliably achieved with legacy time of flight <unk>.

While the industry has for some time understood the potential for FMC W to significantly improve perception with its unique advantages over legacy time of flight lidar, such as direct velocity measurement and lack of interference the tradeoff between range and resolution with conventional approaches has held back the.

<unk> of conventional SMT W technology.

However, <unk> 40 by our brakes that dependency.

Enabled by our proprietary signal processing algorithms that leverage the strength of FMC W to precise velocity and position at more than 500 meters of range, while simultaneously achieving millions of points per second.

This enables able solution to reliably measure and classified object with higher confidence and add longer distances than legacy laser solutions and already does so today.

And because mcw uses a continuous beam to constantly transmit data we can use our same core lidar chip and scale performance through software.

This flexibility provides our customers, including plus with the ability to not only leverage <unk> 40 of <unk> for their driver and solution.

But also enabling next level capabilities as they bring their fully driver less solutions to market utilizing the same Eva 40 about our hardware.

<unk> shared a similar focus with us to deploy their self driving technology to volume scale the company's.

Customers include some of the largest freight carriers and Oems, including Amazon and a W. The largest heavy duty truck Oems in the world.

We are excited to be selected for production and look forward to supporting pluses volume ramp.

Let's now move to slide nine, which highlights a key development and solidifying the path to bringing <unk> 40 lidar to market.

Earlier this week, we announced that Eva has selected <unk> to produce our 40 Lidar chip module.

The engine of <unk> unique FMC there'll be lidar technology that chip module is the critical element that integrates all core sensing components onto a single silicon photonics platform.

We are pleased to work with Fabry <unk>, a leading manufacturer of silicon photonics integrated devices and advanced precision optical systems and equally important a trusted automotive qualified supplier to many global Oems and tier ones.

As part of the agreement we are bringing online an advanced production line at <unk> that accelerates Eva production manufacturing capabilities.

The new line will produce our third generation chip module and scale for series production.

By securing capacity with a leading manufacturer now we feel confident in our ability to supply the expected volume at automotive grade quality for our customers programs.

Ahead of that we are working with fiber net to increase automation and process efficiency as well as establishing a local engineering team in Thailand to support the manufacturing ramp up well before the startup series production.

I would now like to update everyone on our 2021 objectives, which are detailed on slide 11.

We have already achieved three of the four goals set for 2021, and we are confident in delivering on the final remaining goal to finish B sample development. This year based on the significant progress already made to date.

First we have reached our goal for two additional programs towards production with plus and Nikon two leaders in their respective markets with opportunity to scale to large volumes.

Importantly, we also continue to deliver on development milestones for our other partners.

With our growing team. We believe we are well positioned to support ongoing work across all of our programs.

Second on accelerating engagements and non automotive applications. This goal was met with our Nikon collaboration announced last quarter, which we expect to accelerate Eva non auto opportunity in the $10 billion and growing industrial automation and metrology markets as I mentioned <unk>.

Earlier, there is growing interest enables unique 40 lidar for both automotive and nonautomotive applications. We will continue to put our focus and resources towards opportunities that align with our mission to bring Ava 40, lidar to mass scale.

Third we have significantly strengthened our supply chain for production with a number of key development throughout this year, including finalizing the key supply chain for our silicon processing chip and most recently selecting fabric to produce <unk> 40 about our chip module, which.

<unk>, our manufacturing capabilities towards startup production.

And fourth an RV sample developments this quarter, we completed the product design release, which is a key milestone to finalizing the product architecture and provides us a path toward the final cost structure.

As mentioned earlier, we expect to complete development. This year and are planning to deliver b sample units to our partners for qualification starting in 2022.

This leaves us well on track with our timeline to commercialization.

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

Tanker solution, let's turn to slide 13, which summarizes our financial results.

Revenue in the third quarter was $3 5 million, reflecting substantial progress we continue to make on customer development milestones and our fast towards production.

Our non-GAAP operating loss was $19 9 million comprising of R&D expenses related to product development and to a lesser extent G&A and sales and marketing expenses.

Gross cash yield, which we define as operating cash flow less capital expenditure was $24 2 million for the third quarter.

Our balance sheet remains strong with cash cash equivalents and marketable securities totaling $478 million at the end of third quarter.

Demonstrating continued discipline in how we spend and invest for growth.

Finally, our weighted average shares outstanding in the third quarter was $212 6 million.

In summary, our results reflect the great progress, we have realized with a growing list of customers.

And as we continue to advance towards commercialization, we are in a strong financial position to execute on our program and bring gave US 40 lidar to market.

With that I'll turn the call back over to solution for closing remarks.

Thank you Rob before taking questions I would like to first thank the <unk> team for their relentless dedication to our mission, which is resulting in our growing commercial traction and to all of our stakeholders. We appreciate the commitment and confidence enables breakthrough 40 layer technology, which we hope will enable the next wave of <unk>.

Section.

I am incredibly excited by Eva is accelerating momentum the production Wynwood plus marks an important milestone for us and with all of our progress towards commercialization in the last quarter I have great confidence and the increasing demand for our unique technology and the upcoming opportunities that lay ahead.

We remain laser focused on supporting our customers on the path to production and <unk> mission to bring perception to all devices.

Thanks, everyone for your time today, we will now open the line for questions.

We will now begin the question and answer session.

I'll ask a question you May press Star then one on your Touchtone phone.

Youre using a speakerphone please pick up your handset before pressing that.

Keith.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

In the interest of time, please limit yourself to one question and one follow up.

At this time, we will pause momentarily to assemble our roster.

The first question today comes from Colin Rusch with Oppenheimer. Please go ahead.

Thanks, So much guys, yeah can we start with <unk>.

Get a little bit better understanding of what sort of the value added engineering and specialized procurement expertise.

To the table formulations environment.

Yes.

Sure Colin Thanks for the question.

Obviously covenant is a leader in silicon Photonics integration and manufacturing we have been working with them for quite some time already and what they really bring to the table is the capability to manufacture automotive grade Lidar chip modules that chip module is at the heart of our system.

And to be clear the expertise isn't as Lauder chip module manufacturing and Theyre already automotive certified and a supplier to both Oems and tier ones.

No.

Today <unk> is already manufacturing hundreds of thousands of silicon photonics integrated modules. So they are really capable experts at what they do which is one of the reasons that we actually decided to to work with them.

And the other thing I think is interesting about about arguments that Vernon is they're already manufacturing a lot of chip module add their auto grade facilities, and we do plan to intend to continue using them for production as we scaled our volumes in those same facilities.

Perfect.

A couple of other questions occur on that relationship offline, but then yes. It does.

As you enter into production agreements now.

And you look at your pricing model.

Lots of data and capabilities.

So the table put significant im curious, how youre thinking about pricing and how that conversation is going.

The customers that Youre working on right now.

And then as production agreements.

Sure Yeah look obviously I can provide details on <unk>, but we are seeing strong traction in the market. We are really encouraged by the increased momentum as evidenced by the number of engagements and the windows had and talked about in past quarters with as possible and obviously as an example for automate trucking.

Also laid the foundation for us to.

Scale up into automate trucking space at.

As far as the pricing goes of course.

For each customer we work closely with them to make sure that we have the ability to support them all the way through to volume production and in.

In general we are in line with what we have discussed before in terms of that.

The next question comes from Tristan <unk> with Baird. Please go ahead.

Hi, good afternoon.

Any color that you could pull.

In terms of the potential volume and the timing of plants.

Design wins that you've announced today and is the functionality pretty much the same as.

Previously announced win with two simple.

Sure. Thanks, Ross to answer your question so first of all.

Look we are very excited to be selected by plus with its key production program.

I'll give you a little bit of color about this so this is a multi year supply agreement.

For global deployment it is actually beginning in late 2022.

And plus selected Eva because they believe in our unique capabilities, including anthem velocities.

And ultra long range capability, which really enhances longish perception for plus it helps us to bring safe automate driving to scale that is why they see significant value as you mentioned and not just incorporating Eva and fully autonomous solutions, but also on their drivers and solutions. So thats, how theyre, starting with driver and a bit earlier, but <unk>.

Continued.

Continue and implement the same Eva 40 ladder hardware into.

A fully autonomous or driver less.

Solution and I think that really show the importance of <unk> unique value add and flexibility for both assisted driving as well as autonomous driving and with our work on the <unk> sample.

Trying to really see that traction pick up.

And in general from giving you a bit of context as to the scale. So as I mentioned on the call plus plan to deploy over 100000.

The units by 2025 and.

What's interesting I think for that is we have the right to supply majority of the truck volumes with the long range Lidar in this timeframe and so that should give you a sense of the scale that we're talking about here.

Thanks, Thats very useful and then for my follow up you've talked about.

Getting the design win on your range velocity.

I know that in the past some people have talked about.

<unk> EBIT.

For a N kw than other lighter of technologies. So the question will be given.

Given you see the design win traction that you have.

And he has an issue is that because of the algorithms that you have that allow you to enhance.

Latency you wanted to to perhaps other at kw.

Our suppliers.

Sure look at.

And I think it is interesting is the traditional way what we call. The traditional conventional way that FMC W has done actually has a number of challenges in terms of.

Meeting the both high resolution and the long range simultaneously.

Not sure exactly what you mean by the latency, but that is part of.

The thing that I think Eva has really figured out to break and Teva is not the traditional conventional as mcw system and Thats why we are starting to see now a continued momentum with the wins under our belt because of us having solved some of those key challenges.

And.

That I think is important and as evidenced by now are seeing attraction in trucking, but also we're starting to see that also across other automotive and nonautomotive applications.

The next question comes from Suzhou Souza with Roth Capital. Please go ahead.

Hi, Suraj I say, Rob congrats on the progress here.

And the plus announcements and trucking and <unk> been working with them for a while but it seems like that market might come to volume sooner than say passenger cars is that because of the business case or because it's a kind of more controlled environment any color there.

That is the case would be helpful.

Yes look I mean, I think it's no secret that there's always a shortage of a number of drugs.

Truck drivers today on the market.

And.

The business case for commercial trucking is pretty clear right. So we are starting to see kind of an acceleration in the market adoption for autonomous trucking on the roads.

And also more importantly, we're starting to see some consensus forming about the type of perception capability you need to enable such as autonomous trucking on the road and we see that going towards FMC W. Based technology I think thats.

No.

David and also by the partnership in the window, we announced today with plus alfalfa past partnerships, including two simple as well so I think thats thats.

The key driving factors.

That enable commercial trucking to make sense in terms of a.

A bit earlier timeline of adoption.

Okay, I just want to get some color on the B sample that you're planning to ship to qual to customers at the end of the year I just want understand the implications for the schedule and maybe the C sample that comes after that and whether the tier one production line is needed before you go to production or whether a partner like Fibernet obviates the need for the sea sample production line build by the tier ones any color there would be helpful.

Sure.

It looks as if and when it actually makes our lighter chip module. They don't assembled a full system, but that's at the heart of our system. We are working obviously with our partners to manufacturer the B sample as I mentioned on the call. Today. We recently just crossed a key milestone in our product design release of the <unk> sample, which set the final architecture.

And we sample of course is critical because it provides also with the final cost structure of <unk>.

Path to that for that for US is to pass this on our cost structure and so in 2022, our partners will be validating our b sample with those learnings will continue to refine our system towards production.

And in.

In parallel we're going to continue our work on the supply chain to make sure that we have all the capacity well ahead of production and I think with all the work we have done on the supply chain side, including securing.

Our key suppliers for the silicon processing chip as well as the sovereign announcement with our leadership module, we have great confidence in our ability to not just meet the timeline, but also meet the demand of the customers with the capacity and the quantities that are needed.

The next question comes from Pierre shared with New Street. Please go ahead.

Hey, Thanks, guys.

Taking my question and congrats on the new newly.

I have two quick questions on <unk>.

We noted that overall.

<unk> now we all use.

So I'm not sure how you can talk about the market three names we presented some tricky.

Yes.

So is it fair to say that the <unk> remained specially could even shrinking and if thats the case.

Why is that.

And so maybe getting enough traction.

Sure Scott.

Jonathan.

It's just less visible because of the timing of press releases and things like that.

And if thats the case.

And then I think we put out.

Hi, Peter Yes, sure. Thanks for the question.

I think.

As I mentioned.

On your first question on the first point.

Yes, we do agree I think there is a general consensus of increasing transition to FY CW.

For autonomous driving in general, but I think it's becoming also first evident with the trucking side because of the fact that some of the timelines actually earlier, Brian So that I think is clear.

And as you mentioned with the names.

There, we see that as critical and I think the reason is really in multiple.

And really the key areas of the key benefits of <unk> unique mcw approach long range production capability the ability to go past 500 meters and diluted taking some velocity immediately is super crucial for trucking is also because you need to see objects that are quite far out and when you have even a few.

Points or pixels on an object at those kinds of distances. When you add the dimension of velocity right away. While you will know that this is something you should care about and so you don't have to keep looking at it and taken effectively framed snapshots, which is typically done with legacy time, a flatline or to do that and thats crucial because trucks take.

A long time and it <unk> stopping distance. So that's why you want to be able to see further out.

And that's these are the two things that other things of course around the scalability. The fact that we have been able to integrate this now Nevada chip module, and we're making significant progress on on being able to ramp up our supply chain to manufacturers large module I think it is all coming together along with the fact that we have.

No interference as well, which becomes more and more critical as you have more of these on the road. So I think it's kind of a bit of.

The the manifestation of everything we've talked about before and we're starting to see that transition happening.

Thanks.

And then my second question very fragrances.

Okay.

Specifics about how at detour and how.

Yes.

Define where they find the partnership with <unk>.

It is today.

Can you give us like a senior description of where you stand we do Kimberly in terms of visibility on their ramp.

And whether you've already unveiled the <unk> agreement to be bulk of the system.

Through the G&A.

Hi.

Sure. So look I can't obviously comment on the details of other customers on this call today, but we are progressing relative simple across the globe and milestones that we continue to support them with a lot of technology as it continued to expand their fleets and we look forward to do that throughout next year as we continue to build out a robust pattern.

For automate trucking and driver functionality.

The next question comes from Sam Peterman with Craig Hallum. Please go ahead.

Hi, guys. Thanks for taking my question I wanted to ask on automotive as well, but specific to passenger cars rather than trucking.

For the industry right now is that Oems are starting to make decisions on lidar for production.

The 2020 for 2025 years.

Today, and obviously that aligns with your timeframe your timeline for ramping sales in automotive. So I was curious if you could share where are you guys in discussions with all of our customers today and.

Do you have any RFID argues.

Sure Sam Yes. Thanks for the question. So obviously, yes of course, we are involved in.

All.

Our fire a few that we see around not just trucking, but also passenger cars in this space for those Timeframes. We are seeing strong traction in the market in general as I mentioned and encouraged by kind of increase the number of engagements.

And both automotive across passenger trucking in mobility.

But also non automotive applications I think some of the examples we talked about again, we talked about plus today quite a bit.

But also in our financial agreement to deploy our formula for the undisclosed customer that we talked about earlier this year.

And others that we have.

Of course, not discussing about today yet.

Really give us.

A lot of visibility in.

The timeline and the selection and ramp up to our with our customers that's coming up so as I also mentioned before we will continue to align with our partners who are highly capable and have the desire and also importantly, the capability to bring advanced perception technology to mass scale, and that's where we want to focus our efforts.

And so.

That's what I can say so far.

Okay Fair enough. Thanks for that second question I wanted to ask we haven't heard anything on the consumer side.

In a while is there development ongoing scaling the platform down in consumer products like mobile phones, especially now that you've got.

Can this be simple almost locked down any color on.

Kind of development work, that's going on there and when we might see samples there would be great.

Sure Yeah. So in terms of opportunities of course generally we do see significant opportunities in the consumer electronics as well as I've discussed previously we're focused currently on enabling foundational capability right. So that what that means is the wrong level performance needed for our protection solutions. So as we've talked before.

We have so far focused on very long range performance and more recently working also to provide a completely different level of performance with our micron level accuracy, which trades off the range of perception. These levels of performance. This raw fundamental capability is what really allows us to go after the other.

Patients, including consumer because when you measure things at the micro level that changes the game a perception right so and to our knowledge.

FMC W. Technology is the only technology that is capable of doing that from a distance, meaning without a contract and so as we continue to develop this capability and implemented into into sampling level.

We're going to also go after those applications and working with customers to.

Effectively answer that into the market and as we have more updates we'll share those as well.

This concludes our question and answer session and also concludes the conference call.

You for attending today's presentation you may now disconnect.