Q1 2022 Aeva Technologies Inc Earnings Call

Seeing higher levels of autonomy to variety of perception applications, including automotive and industrial markets.

Ares to incorporate the worlds first for the Lidar on chip solution that delivers direct philosophy to measurement for every pixel together with 500 meters of range camera level resolution and is designed for automotive grade reliability.

As we expand on our commercial engagements and begin deliveries of areas. Two units, we expect to meet the demand for our core perception platform leveraging our lighter on chip module as well as the areas to product.

In terms of the work that remains ahead, we are focused on the bring up of the automated assembly for our letter on chip module over the next few months and calibration for our scale deployments and to meet the strong demand for areas too.

Moving to slide nine as we announced earlier Eva is now the first and only FMC W. 40, Lidar on Nvidia drive platform, which we believe will help to continue expanding our momentum in automotive.

And Nvidia drive is an end to end platform that enables Oems and automotive players to develop and validate safe self driving technology at scale.

Based on our engagements with Oems they are increasingly looking to implement FMC that'd be light or into their next generation programs Avon integration on the Nvidia drive platform brings our unique 40 perception to a broader group of automotive customers.

And with Oems the ability to build their autonomy stack using existing Nvidia development and software tools. We believe this will enable Oems to accelerate the adoption of Avon Mcw technology.

Now switching gears to non automotive on slide 10.

We are proud to have NASA use Eva 40, lidar to create a mobile terrain mapping and navigation system to support the next generation of lunar and planetary exploration.

This system will help astronauts and Rovers navigate and map the lunar surface leveraging our proprietary capabilities that uniquely solve critical challenges on the moon.

One of those key challenges and navigation and a GPS free environment because April FMT W. Technology can directly measure intends velocity for every pixel. It can also estimate its own motion effectively serving as an independent navigation solution that provides precise positioning even in.

Environments, where GPS is on available or unreliable, so she hasn't tunnels or parking garages for automated vehicles or in the case on the surface of the moon, where it's completely unavailable.

In addition, Avon FMC W technology is immune to optical interference, which is particularly needed on the surface of the moon, where the Sun never appears more than three degrees above the horizon in certain regions such as the lunar South pole.

This exposure cameras and legacy Lidar sensors to significant optical interference that prevents that are an effective use for sensing a perception.

This region of the Moon also has areas that are permanently shadowed or have long persistent shadows that prohibit photogrammetry based navigation.

Eva immunity to optical interference from the Sun and ability to operate in a dark will allow astronauts and brokers to safely explore and map the lunar surface anytime day or night.

These are also critical capabilities for enabling the next generation of autonomous vehicles, which need to operate safely during periods of optical interference with the sun directly shining onto the sensors.

We have always believed in the potential for FMC W. On chip technology to be a platform that can enable the next wave of reception for a wide range of applications beyond automotive.

Central to our technology is a common core lidar chip module that has the same architecture, we use in the Aries platform for automotive but.

Tuned to deliver different performance requirements for different use cases, and NASA provides a glimpse of the broad use cases, and the significant opportunities for <unk> perception platform.

Let's move to slide 11, which highlights our progress in industrial automation, where there is growing demand across a wide range of application to utilize a lot of our own chip module.

In particular, our ability to achieve high precision and a small chip module form factor unlocks a number of unique new opportunities such as applications, requiring precise measurement of a centimeter for less which to our knowledge cannot be achieved with current <unk> time of flight <unk> our solutions.

To meet this growing demand and enable faster adoption, we are developing a common platform for industrial automation based on the same lighter on chip architecture used for automotive applications.

And building off of the micron level precision already achieved last year, we are making good progress and target completing a lot of on chip module development for industrial automation by Q4 of this year.

This timeline also aligns with our collaboration with Nikon, where we remain on track for our first product launch in 2024.

Our plant common platform for industrial automation is an example of how our strategic decision announced last quarter to accelerate our shift from <unk> towards scaled deployment of common platforms for commercial programs is enabling us to pursue opportunities with a higher level of efficiency and agility.

Now to our key objectives for 2022, which are highlighted on slide 13.

We have made good progress so far this year and believe we are well positioned to achieve our key objectives for 2022 I.

I would like to share a bit more on each one.

First on areas to deployment in a qualification with customers.

Mentioned earlier, we continue our focus on manufacturing and supply chain, which includes the bring up of automated assembly equipment for our lighter on chip module in order to keep us on schedule for deliveries to begin in late Q2.

And given the strong demand for Aries do we are laser focused on our preparation to achieve this milestone.

Second on converting two additional programs towards production, we continue to progress on a number of engagements for multiple applications, including passenger vehicle trucking and mobility as well as non automotive such as industrial automation. We believe we are on track to win programs in both automotive and nonautomotive. This.

Year and see opportunity to further expand our commercial momentum as we begin to Aries too and Lidar chip module deployment.

Third on accelerating the release of our first non automotive applications.

We continue to progress on our first industrial precision product with Nikon and remain confident in achieving our accelerated 224 timeline for production launch.

And that inbound interest continues to grow and we are developing a common perception platform that utilizes our core lighter on chip module to meet demand and accelerate adoption in the growing industrial automation market.

And fourth on preparing the supply chain and processes for commercial deployments. We continue to work closely with our supply chain partners to prepare for commercial deployment efforts also continue on working towards certification and automotive Spice and information security.

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

Thank you <unk> and good afternoon, everyone.

Let's turn to slide 15, which summarizes our first quarter financial results.

Revenue in the first quarter was $1 1 million in line with our expectations.

During the quarter, we continued to make good progress with our customers on their development milestones ahead of Ares to deployment.

non-GAAP operating loss in the fourth quarter was $28 3 million, which primarily reflects our R&D expenses related to product development.

Our gross cash you defined as operating cash flow less capex was $27 8 million for the fourth quarter.

As such we ended the quarter with a strong $414 5 million in cash cash equivalents and marketable securities.

Our weighted average shares outstanding in the first quarter was $216 million.

In a nutshell Q1 was consistent with our plan based on our progress so far and strong balance sheet. We believe we are well positioned to accomplish our 2022 objectives.

<unk> execute on our mission.

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

Thank you Rob before we start with Q&A I would like to thank the Ava team again for their contributions that enabled us to continue making significant progress on our milestones. This quarter I would also like to express my appreciation to all of our stakeholders for their continued support.

Since introducing areas do earlier this year, it's been incredibly exciting to see the growing commercial momentum to utilize <unk> unique 40 via our own chip technology. We are on track for first deliveries are very astute in late Q2, and look forward to supporting our partners on the path to production and realizing <unk> mission to enable perception.

For everything.

Thank you everyone for your time today now, let's open up the line for questions.

Thank you we will now begin the question and answer session to ask a question Star then one.

Tom did you are using a speakerphone please pick up.

Thank you.

So I think anytime you have questions have been that you would like to withdraw your question. Please press Star then two.

In the interest of time, please limit yourself to one question at this time, we will pause a moment.

Okay.

Our first question comes from Antoine.

Scott.

<unk> Street research. Please go ahead.

Hello, and thanks for the question.

You highlighted the integration of <unk>.

For July one drove autonomous vehicle platform.

Could you provide a bit of color on when you'd be doing validation gross loss.

Which I mentioned were most important to them well beyond just supporting them maybe.

Quick follow up looking back at the last 12 months.

Would you say autonomy adoption timeline has accelerated or slowed.

Okay.

Yeah sure. Thanks for the question happy to answer so first of all as I mentioned, so as you know obviously Nvidia is a leader in bringing new technology to the market I think being the first and the only FMC EW platform on the Nvidia drive is important.

And I think a lot of the process. So far has been around <unk> driven by the fact of our unique differentiation from a performance standpoint. In addition to of course, the enzyme velocity dimension that we have talked about before as well as some of the new features that we announced as part of the areas to launch, including Ultra resolution, which I think have been important and the validation process and the war.

That that.

That we're doing with them.

Of course work there continues and we hope that this partnership continues to expand our momentum and engagements with Oems due to the fact that and videos platform is an end to end platform and already they have customers both in automotive passenger and commercial vehicle space.

And to your follow up question on general kind of adoption timelines and.

That's extra limit or slow down I think.

What I can say is since our announcement of course of the areas too we are seeing a growing interest.

Across the board both in automotive and non automotive for adoption of new technologies, and especially I think.

Lidar being a key factor of that is is what we are saying.

Great. Thanks.

Okay.

Our next question comes from Tom <unk>.

Catherine Please go ahead.

Hi, guys. Thanks for taking my question I wanted to ask one on trucking it sounds like Youre seeing progress.

Sure.

Just your different engagements there I did want to ask too simple.

You guys have talked about working with closely in the past they mentioned on their earnings call today's kind of move their production timelines for commercial launch back a year from 24% to 25.

I'm excited a couple supply chain factors is kind of not being ready and that being part of the reason im sorry of the lidar industry as a whole a couple of times you guys are talking about.

<unk> two this year.

And presumably ready for commercial deployment.

Within that timeframe. So I guess my question is how does that relationship stand.

With two simple and just wanted to ask which I'll say, Boston New York Your timeline for automotive commercial readiness.

Yes sure. Thanks for the question so first of all.

We're working on all of it is with our Irish do and we will have that so we feel confident with that AD.

Add on two simple specifically, we continue to work with them closely I think we are progressing well as a matter of fact as few months' of course as you are aware, we supported them on their driver out program, enabling through simple to be the first company in this space to provide a fully driver.

<unk> autonomous truck in the world.

Using Avon our technology right and two so far of course in addition to that either using our lidar as the only long way butter on their on their trucks.

And these are actually previous generation technology that we have been working with them for quite some time also.

And to your other point I know, we plan to begin scale deployment with <unk> towards the end of this year, including with us and others and overall, we feel confident about some of the adoption rate of commercial vehicle players in the space.

Thanks, guys.

Okay.

The next question comes from the program.

Roth capital. Please go ahead.

Hi, Suraj I said, Rob congratulations on the progress here.

I'm curious you just opened an office in the Asia region, you already had traction intensive, but I'm curious about the China market.

Is the competitive landscape and the the opportunity they are different in some ways are there.

Can you can you talk about the opportunity for you there and perhaps does Nvidia partnership announced does that give you some.

Opportunity to penetrate that market any color on the operating there.

Does your current traction, which seems to be outside of China would be very helpful to understand thanks.

Sure. So as you. So first of all as I mentioned APAC is absolutely an important region for us we're pretty excited about expanding and opening up our office there.

Including China, and so first of all we already have partners there and we're seeing growing interest to really use next gen technology, and I think thats, where trade when this becomes interesting because at the end of the day. If you also look at Oems and customers General automotive specifically, but also in automotive are looking to differentiate from the competition.

And if you look at it today FMC W technology simply doesn't exist through the year and APAC.

So we're looking forward to bring that up to the market and continue to establish relationships and partnerships. There obviously not auto you know, we're already a partner with Nikon and well on track there and I expect to.

For the industrial automation market in general as well too.

For production timeline.

But I think one thing I also want to highlight is.

With the fact that we're building is one lidar chip platform really a perception platform.

And we are able to.

Go down too.

Sensing measurement capabilities that are the lowest centimeter, providing a unique opportunity for Avon because currently.

And we see a growing demand in an existing business opportunity for <unk>.

Inspection, especially in volume manufacturing.

And for a bunch of different variety of applications and those are either done by camera type solutions that are not very robust or with laser based solutions cannot really achieve under a centimeter. So now that we are going after that.

Perception platform with under a centimeter, we see this an opportunity to be unique for Eva because we believe only FMC W. Can achieve that in a robust way and so that we expect that also to continue to grow.

Beyond some of the automotive applications.

In the APAC region as well.

Okay very interesting thanks, guys.

Okay.

At a reminder, if you have a question. Please press Star then one Jabil Johnson.

The next question comes from.

Ross with Oppenheimer. Please go ahead.

Thanks, So much guys. That's all of our checks are pointing to reliability and before any lidar.

This is actually.

With better than expected can you guys talk a little bit about the feedback from your customers as they go through testing samples.

Yes, sure Colin So I think really the proof is in the pudding, obviously with the.

The systems, we have on the road today are based on the 80 samples with Aries do our B sample.

We are on track and looking to start deliveries really at the end of this quarter and.

I think as a clear example, even one of our earlier a samples from a few years ago continued to be used for actual enrollment and.

Autonomous capability, including some commercial deployments with our partners and this includes on the on the commercial vehicle side, you are talking about that with two central and others.

<unk> continued to use that technology.

Of course, those were a samples.

Were not designed for mass manufacturing, but with the sample we're continuing to improve the reliability and that's really.

Being one of the key factors to go after is to get that matures Asian, and and automotive grade and this I think this is the last piece that we're working on to fall in place and.

We're laser focused on that is critical for us too.

To deliver on our first apples at the end of this quarter and from there working on the supply base to to scale up our.

Our volumes.

In the second half of the year so.

But with every student to answer your direct question. We also already see that reliability to be improved and as I mentioned on the call, especially on temperature in the U S, which has been a challenge for any technology, but especially on conventional CW, so thats, where we discretion.

Okay. That's super helpful. And then a lot of these systems are not really prepared to use.

So you guys can provide.

Obviously, you guys have been doing some development.

Most often.

Supplement some of those other efforts can you talk a little bit about progress you've got.

With that philosophy philosophy about it.

Translating that into.

Streamline decision, making for some of your customers.

Yes, I think it really whats interesting actually with any new capabilities that actually the value is different across different applications right and that's what's we're just scratching the surface here on what the new domestic and do it as Ive always mentioned, it's like when you go from black and white cameras.

The confirmation is a whole new world of information and there is so much.

Possibility with it so with velocity of a similar situation here in automotive specifically, we see that velocity points simply bringing high level of confidence for our automation.

Automation and the global economy, right being able to know something thats dynamic as a supercritical topic and challenge and for any moving vehicle and without technology. Those end vehicles. The customers can can do that faster, which really enables a a.

Faster reaction time, and being able to make decisions quickly on non automotive there is number of things that come into play of course, but I'm not going to go into all the details of that but at a high level.

Even for similar topics, where you want to be able to.

Provide the specific safety mechanism to protect for example, humans in the industrial.

Second our obligation or being able to.

See how.

Things are moving.

Warehouse to be able to make certain decisions based off of that all of that is actually coming to play with with the velocity of dementia. So as our customers continue to use it we continue to define new examples and be able to leverage them.

Across applications, so who are we.

We continue to focus our efforts on also.

<unk> <unk>.

Capability on top of the loss of the dimension to be able to showcase that to customers and help them solve challenges as they haven't really been able to do so before.

Our next question comes from.

So I'll wrap up on that margin.

Go ahead.

Hi, great. Thanks for taking my question.

So it's great to hear about the momentum in industrial auto autumn.

And other areas like <unk> mapping with that recent NASA announcement in robotics like you just mentioned, but I'm. Just wondering if you could give us a relative breakdown of how much of your engagement pipeline is currently automotive related versus non automotive and either on a dollar opportunity level or simply around the number of conversations that are happy.

Thanks.

Yes, sure so we're not providing.

Specifics on the breakdown of customer opportunities, but I can tell you is that.

From a general interest as we see in the space, we're seeing growing demand, both automotive and non automotive, especially because of the lighter or chip module.

Module of the platform, we're designing it in a way that can be applied to multiple applications I think as I mentioned, we are engaged in multiple opportunities currently.

In the span of passenger car trucking and mobility and automotive side as well as on industrial automation really which includes robotics and.

And then inspection side.

And with those we expect to be on track and we feel confident with the two wins that we talked about for this year, So and of course, as we progress and able to share more disclose more about the specific opportunities we will do so in the near future.

Great. Thank you.

This concludes our question and answer session.

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