Q1 2022 View Inc Earnings Call
Speaker 2: Greetings and welcome to view hanks's first quarter 2022 earnings call.
Speaker 2: At this time, all parts of Ants, journalists and only mode.
Speaker 2: A question-and-answer session will follow the formal presentation.
Speaker 2: If anyone should require operator assistance during the conference, please press Star zero and your telephone keyad as a reminder this conference is being recorded.
Speaker 2: It is now my pleasure to introduce your host, Samuel me, Head of Investor Relations, at view. Thank you, he may begin.
Speaker 3: Good morning everyone and welcome to views Q1 2022 earnings call I'm Samuel MAN Head of Investor Relations. At view I'm here with DR RA mpi our CEO and Amy reeves our CFO .
Speaker 5: Before we begin, I'd like to remind you that, ahead of the market open today, you issued a press release announcing its Q1 2022 financial results.
Speaker 4: You may access this press release in the Investor Relations section of U com.
Speaker 4: As today's discussion includes forward-looking statements, Please refer to our press release for a discussion of factors that could cause the company's actual performance to differ materially from those forward-looking statements.
Speaker 4: I would also like to remind you that during the call, we will discuss certain non-GAAP measures related to use's performance.
Speaker 5: You can find the reconciliation of these measures to the nearest comparable GAAP measures in the press release.
Speaker 4: Row over to you.
Speaker 6: Thank you Samuel, and thank you all for joining us for view's earnings call this morning.
Speaker 6: A couple weeks ago, we reported our full year 2021 financial results.
Speaker 6: Which included strong year-over-year revenue growth of 125%.
Speaker 6: On that earnings call. We mentioned that we would conclude the company's financial restatement with the completion of our filings.
Speaker 6: I'm pleased to say that the financial restatement is done and that chapter is closed.
Speaker 6: When the filed Q1 2022 10 -q following today's earnings release.
Speaker 6: We will be current with our financials and view will regain compliance with NASDAQ listing requirements.
Speaker 6: For Q1 2022, we're pleased to report revenues of $17 million, which represents more than 70% year-over-year growth.
Speaker 6: I'm extremely proud of our team and their focus on continuing to build the business over the past year.
Speaker 6: This team's ability to execute is demonstrated by 125% year-over-year growth in 2021 followed by more than 70% year-over-year growth in Q1 2020. Two.
Speaker 6: What's more notable is not just the growth in revenue, but the customers and the type of market-making projects that we've acquired. Let me cover a few notable examples.
Speaker 6: srento gateway is San Diego life science project under development by health peak properties in conjunction with project management Advisors.
Speaker 6: This is our third life science development with healthpeak properties, following campus wide installations at the boardwalk and upcoming installations at calendridge in Tory clients.
Speaker 6: He was also selected to be featured in the eightth a 25 -story commercial office hour in belgiie, Washington.
Speaker 6: The a is being built and developed by sansa, a global construction and development firm committed to sustainable buildings.
Speaker 6: In the quarter we announced a second major win in bele Washington, with view smart windows being selected for the RTS.
Speaker 6: A six thousand square foot office building that has been preleased to Amazon.
Speaker 6: The RT is a sniter West, siter West third project with view following Denver, the current River North and silvica cher Creek.
Speaker 6: In multifamily. We announced a partnership with Neighbor and view was selected to be installed in their first buildings. Sofa one in San Jose.
Speaker 6: Neighbor is a consumer-first housing company co-founded by world-renowned architect baca ingles.
Speaker 6: All Neighbor homes will feature views smart windows and the Neighbor developments will utilize views cloud connected and smart building network.
Speaker 6: Finally in multifamily, we completed the installation of use smart windows at swan, a 67 story luxury skyscraper in long Island city, by the dorsed organization.
Speaker 6: Sw is the tallest residential building in North America to feature smart windows.
Speaker 6: To summarize, Q1 2022 was a great quarter with strong top line growth, notable new wins, including major buildings with repeat customers, and some notable wins for the first time with new customers.
Speaker 6: With that, I'll hand it over to Amy to cover the financials. Amy over to you.
Speaker 7: Thank you rowal and good morning. Everyone I main read and I will cover the financial results for Q1 2020. Two.
Speaker 7: As raal mentioned, we are pleased to have completed our financial restatement with the filings of our 2021 anddo report in 10 -q.
Speaker 7: This was a process in which we dedicated a significant amount of time and attention, including the use of outside resources, to review our prior period financial statements in order to be conftident in the accuracy of our financial reports.
Speaker 8: Upon the filing of our Q1 2022 10 -q, which we expect will be done in the coming days. We will be current with our financials and regain compliance with NASDAQ listing requirements.
Speaker 7: Now let's turn to our Q1 2022 results, which demonstrated continued momentum following our strong top line growth in 2021.
Speaker 8: We reported revenues of $17 million, representing 74% year-over-year growth.
Speaker 8: This growth was primarily driven by a shift to our new smart building platform offering that was introduced in the second quarter of 2021.
Speaker 8: And sales of our new smart building technologies products.
Speaker 8: As we explained in the last call, the smartbuilding platform is a full solution that incorporates smartglass as a component.
Speaker 8: Growth in the quarter is primarily driven by our ability to have our customers adopt the smart building platform offering.
Speaker 8: Which provides end-to-end design and deployment services and also enables next-generation smart building technologies.
Speaker 7: Total cost of revenues of $41 million represents a 12% year-over-year increase from Q1 2021.
Speaker 8: We grew revenues more than five X faster than our cost of revenues grew and, as a result, growth margin as a percent of sales significantly improved year-over-year.
Speaker 8: The increase in cost of revenues was impacted by the following factors.
Speaker 7: Increased factory operating costs as we scaled our factory capacity in the second half of 2021.
Speaker 7: Our costs associated with the delivery of our smart building platform and inventory provisions.
Speaker 7: These factors were partially offset by declines in post-installation support costs.
Speaker 8: And the release of a portion of the contract loss accrual previously recorded with progression of our smart building platform projects.
Speaker 8: Now turning to operating expenses. View incurred $2 million in research and development costs in Q1 2020 -two.
Speaker 8: An increase of $3 million or 19% from Q1 2021.
Speaker 8: This increase is attributable to our continued investment in our smart window products, including the panel and industrial network, as well as our next-generation smart building technologies to accelerate the digital transformation of building.
Speaker 8: We incurred $43 million in selling general and administrative expenses.
Speaker 8: An increase of $21 million or 98% from Q1 2021.
Speaker 8: This increase is primarily attributable to an incremental $8 million of noncash spot-based compensation as a result of grants that were provided in connection with these business combination completed in March 2021.
Speaker 8: The SDA increase was also driven by consulting, legal and accounting expenses associated with the financial restatement in related work.
Speaker 8: This accumulates to a Q1 2022 GAAP loss- some operations- of $86 million, compared to a loss of $65 million in Q1 2021.
Speaker 7: Our GAAP net and comprehensive loss in Q1 2022 was $82 million. Our current shares outstanding 219 million shares.
Speaker 8: Net cash used and operating activities of $71 million compares to $7 million in Q1 2021, reflecting higher costs associated with expanded product offering and increased factory capacity, as well as expenses incurred as a result of the financial restatement and related work.
Speaker 7: Offset by favorable working capital net cash outflows as compared to Q1 2021.
Speaker 7: With that, I'll turn the call back to Ralph.
Speaker 6: Thank you, Emmy.
Speaker 9: We're pleased to report continued strong year-over-year growth in the first quarter of this year.
Speaker 9: This puts us on track with our plan to achieve our full year 2022 revenue guidance of 100 to 100 and ten million.
Speaker 9: Looking ahead, we have four pillars of growth: that propeller business.
Speaker 9: First we have market leading and transformative products. We have 1250 patents issued and applied and are now on our fourth generation panel.
Speaker 9: We've deployed our converg secure network infrastructure and we are continuously rolling out new smart building technologies on top of that platform.
Speaker 9: Second our customers love our products and are excited about the future we're creating for the built environment.
Speaker 9: Our products are deployed with market-leading customers and we continue to win strong repeat business in addition to new customers.
Speaker 9: Third our operations are in place and ready to scale.
Speaker 9: With over four million doll invested in capital equipment in the factory, we are well positioned to handle growing demand and scale to a billion dollars in annual revenues within the existing footprint.
Speaker 9: We've also built sales, customer service and field support in all of the major markets we operate in. Finally, let's talk about capital.
Speaker 9: We recorded $2 million of cash on the balance sheet at the end of Q1 2022, with no substantial debt.
Speaker 9: While we did not pursue raising additional capital during the restatement period.
Speaker 9: We intend to begin that process now and we look forward to showing up our balance sheet in the coming months.
Speaker 9: As we discussed. We have the products committed, customer base and the operational footprint to continue to drive strong growth.
Speaker 9: We have an exciting journey ahead and we look forward to getting back in front of you shortly with a media update.
Speaker 9: Operator we're happy to open up the call and take any questions.
Speaker 2: Thank you, Ladies and gentlemen, at this time, we will be conducting a question-and-answer session.
Speaker 2: ifbe D like to ask a question, you may press Star one on your telephone key pad. A confirmation total indicator line is in a question Q.
Speaker 2: You may press Star two if you would like to remove your question from the queue.
Speaker 2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keade.
Speaker 2: Our first question comes from the line of cavul moun channels with Raymond James. Please rece with your questionions.
Speaker 10: Thanks Laura, for taking the questions. Let me start with the cash burn.
Speaker 11: You mentioned two hundredand million dollars at the end of March.
Speaker 11: Down eight million during the quarter. Do you have a sense of?
Speaker 11: How much the cash usage.
Speaker 11: Should be reduced between now and the end of the year, in other words, eight million of the baseline. Will it be saty Ty 40? How much can you narrow that down?
Speaker 9: Yes TAL, thanks for the question and thanks for joining. We're not disclosing the exact amounts of burn reduction, but we did say that we do see a substantial reduction.
Speaker 6: In the second half of this year, based on primarily two factors for our business, with the fixed cost in place.
Speaker 6: The bad news is we have all the fixed cost. The good news is every incremental revenue dollar we bring in is accretive and we are able to amortize that fixed cost over more units. So with the volume increase in the second half of the year we do anticipate that net burn going down.
Speaker 6: The second factor is we are just completing our restatement And so we had a significant increase in SGNA expense related to the restatement expenses, and that will go away in the second half. So between those two it will be a substantial reduction. I think today we're not prepared to talk about the exact numbers.
Speaker 10: Yes of of thesgna on a GAAP basis. That was recorded in.
Speaker 11: The March quarter. How much was specifically attributable to the restatement process?
Speaker 12: hyperofvlle. This is Amy. I can take that question we had about.
Speaker 7: $6 million that was attributable to the restatement process, amongst the accounting and legal costs that we incurred.
Speaker 13: Okay okay, that's very helpful.
Speaker 10: umlast time what?
Speaker 7: gu But I LL just clearifbut you would Q1 expenses that we incurred that much SH. Yes very, very clear. Last time you you host to the call- I guess it was about four weeks ago- you talked about getting to gross margin positive in the second half of 2023. what revenue run rate does that assume? In other words, when you TAL about getting to.
Speaker 13: Positive positive margins. There is presumably some level of capacity utilization that you are modeling within that, So how much higher from today's levels?
Speaker 6: Yes without getting into 2023 guidance and precision therepa L. it definitely assumes a continued growth in our business. That's not a surprise.
Speaker 6: And we did plan our business to be able to grow somewhere around 100% annually, and that's really a rate at which we can responsibly bring capacity. As you know, the world that we operate in and the markets we serve are vast right. We're not even 1% market share in any segment we participate in today and we're continuing to get traction in new segments like multifamily.
Speaker 9: So given the vast market, given the secular trends, we think the growth rate for this company is limited by, in the long term, our ability to bring capacity, but in the short term, it's our customers absorption by way of awareness and adopting our change into their portfolios.
Speaker 9: We've announced a number of these key customers. As you can see, they what we call market-making customers.
Speaker 9: And the big trends favor us. So yes, it involves continued growth, and the other thing I want to share with you is that can be done within the capital equipment we already have running in the factory right there- I'm tweaking here and there- and improvements.
Speaker 9: But that first plasma quarter we have online will get us to gross margin positive in the second half of next year.
Speaker 10: And maybe I'll conclude with kind of a higher level question iing everybody.
Speaker 11: Sees the headlines about recessionary headwinds.
Speaker 11: And in that context, how?
Speaker 10: Much how much visibility do you have, for example, into the second half of this year, if we were to go into a recession in the United States?
Speaker 11: Are those revenues, to get to your guidance, already locked in at this point?
Speaker 9: Yes I mean. Let me first talk about recession relative to infrastructure and specifically real estate and construction.
Speaker 9: I think the biggest drop the industry has experienced in the last 100 years- and that was in the last the Oh eight downturn, I believe, was a 50% reduction.
Speaker 9: Right So think about that, given what a secular trend low market share products that are secular trends blow right through recessions in their growth rate.
Speaker 9: Then remember if you're not building new buildings in offices if you look if you look at the trend.
Speaker 9: Biotech, or life sciences, is picking up some of that slack. The footprint of bioscience a biotech buildings is expected to double in the next seven to 10 years.
Speaker 9: Renovations are picking up quite a bit. When you're not adding capacity and you've got an empty or a near EMP building, you're forced to renovate to bring it up to the market So you can have a chance of getting at least.
Speaker 9: And then, of course, infrastructure spending. You've got multifamily that continues to build several hundred thousand units a year. So we're well positioned from a vertical diversity, geographic diversity and, of course, single customer logo concentration risks as well.
Speaker 9: So with that as a backdrop, on overall talking about the recession, the second half of 2022 is much easier to talk about for view because, as you can imagine, we're already almost halfway into the year and a lot of these projects are already well underway, broken ground or being renovated with contracts in place.
Speaker 9: So the rest of this year we feel very, very comfortable with our projections and, as we look into into next year, we have a very strong pipeline, strong bottom-up relationships and a significant repeat business. So, independent of the macro, we feel very good about our secular trends.
Speaker 9: Just to remind you and everyone on the call, the big secular trends in real estate right that are going to be not just one or two years but the next five to 10 years and beyond. Our sustainability number 1: you CAn't build our renovated building today without paying attention to the near-term energy performance and if you re a big portfolio owner you CAn't not pay attention in that zero coming up very quickly.
Speaker 9: The second is user experience. In, in addition to buildings being monuments, there's a very, very strong focus around the user: be at the office, be at a home and certainly be it places like airports and hospitals, where today there's a lot more emphasis on passenger experience, patient experience and, of course, employee experience.
Speaker 9: The third big trend is heped. This is a big emerging area- and real estate where people are learning that the quality of space you consume really matters to your long-term heped by way of physiology, biochemistry and psychology.
Speaker 9: And then finally, digital transformation. I mean, this is an industry that set out all these decades of change that happen in other industries and there's a huge opportunity to improve buildings, to be smart and connected. So, with those trends in place, the macro is really not the big relevant factors factor. For us, the key is about awareness and, adoption and we feel very, very good about our position with our customers.
Speaker 10: Got it. Thank you very much, Thank.
Speaker 2: Thank you. There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.
Speaker 1: Address.
Speaker 9: All right. Thank you all very much for joining us. With the restatement behind us, with the products, the customer base and operations in place, we're very excited to continue to build our company in the public markets and look forward to speaking with you at our second quarter call. Thank you.
Speaker 2: Ladies and gentlemen, this doesconclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.