Q3 2022 Joby Aviation Inc Earnings Call
Yeah.
Good afternoon, and thank you for holding my name is Joe and I will be your conference operator today.
Welcome to JV Aviation's third quarter 2022 conference call at this time, all participants are in a listen only mode.
As a reminder, today's call is being recorded and a replay of the call will be available on the Investor Relations section of the company's website.
Please note that some of the company's discussion may.
Today will include statements regarding future events and financial performance and statements of belief expectation and in fact.
These forward looking statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied.
For a more detailed discussion of these risks and uncertainties. Please refer to the company's filings with the SEC and our safe Harbor disclaimer contained in today's shareholder letter.
The forward looking statements included in this call are made only as of the date of this call and the company does not assume any obligation to update or revise them.
Call will also include references to the company's adjusted EBITDA, which is a non-GAAP financial measure.
A reconciliation of this non-GAAP financial measure to the most directly directly comparable GAAP measure is included in today's shareholder letter, which is posted in the Investor Relations section of the company's website.
On the call from management today are Joe Ben divert founder and Chief Executive Officer, Paul C. R.
Chairman.
Papadopoulos head of aircraft OEM and Matfield Chief Financial Officer. After the prepared remarks, we will open up the call up for questions.
I'll now hand, the call over to Mr. Burke.
Good afternoon, and thank you for joining us its already been a full year since we started reporting our financial results and I'm Grateful for your continued dedication to learning about our progress.
And that first call, we talked about our intention to deliver on transparency for our shareholders.
And I believe we've lived up to that goal over the past 12 months, providing you with deep insight into each area of our business and for the first time last quarter, providing a detailed stage by stage look at our progress on certification, which we've updated in today's shareholder letter.
During this quarter and consistent with that goal, we opened up the doors to our Marina production facility as part of our inaugural field trip, which I'll talk more about later.
A couple of days before that a bet, we unveiled our living lab terminal, which guests were able to experience at the field trip.
The lab was developed in partnership with Sky Port and is going to serve as a base for us to design the experience our customers will have when they arrive for one of our flight.
This was just one of several steps we took this quarter to lay the foundation for our future commercial service.
We also expanded our long standing partnership with Uber.
Back in 2020, we announced a groundbreaking deal to integrate our service into each other's apps in the U S.
We've now taken that agreement global and with more than 100 million passengers traveling with Uber each year, we've opened the door to delivering seamless multimodal journey in the international markets around the world.
In October we applied to the Japanese authorities for the validation of our FAA certification.
Building on a similar path, we are taking in the U K.
As with the U K, we can take advantage of the same certification work, we will do with the FAA to streamline our certification in Japan.
This marks another important step towards the international rollout of our commercial service.
We also announced a groundbreaking partnership with Delta where.
We're incredibly excited to be working with the world's leading airlines to deliver a service like no other.
Alongside our standard airport to city operation will be working with Delta to develop an elevated and seamless home to seat experience for their customers fully integrated into the delta ticket buying platform.
Tens of millions of Delta customers fly through markets, we're targeting each year from New York and La <unk>.
The San Francisco Bay area, South, Florida, and London.
Our partnership presents a unique opportunity to anchor our service in those markets and grow out aerial ridesharing networks from those cornerstone city to airport routes.
We also see a great opportunity to work together on delivering the infrastructure required to bring our service to life.
We share a vision of delivering a service where the distance from our aircraft to a delta aircraft can be measured in steps rather than miles.
And we're looking forward to bringing that to life by building on the incredible investments Delta has made in their airport terminals over the past few years.
For example in <unk>.
I'll ask JFK and Laguardia as well as by leveraging the deep relationships they maintain with local stakeholders.
But sitting behind that service is of course, our aircrafts. So let me turn to the progress, we're making on certification and manufacturing.
These are really our core areas of focus right now and will continue to be for some time.
As I mentioned at the top of the call you can find the latest version of our type certification progress chart in our shareholder letter.
But in brief on stage two of the process that means a compliance.
We moved from 74% accepted by the FAA to 84%, which puts us in a strong position to be substantially complete with stage two by the end of the year.
And stage three we submitted one additional area specific certification plan during the quarter, bringing the total number to four.
We also submitted our first equipment level qualification test plan to the FAA during the quarter.
This was a really significant moment for us and I am pleased to say the plan has been accepted by the FAA.
The qualification plan covers the flight control computer and serves as a blueprint for all of the other electronic componentry that will go through this process in due course.
The acceptance of the planned contributed to the progress you can see on stage four and enables US to proceed with Ford credit qualification testing.
I'm genuinely thrilled with the progress, we're making and the momentum our team has on certification.
But I don't want to understate the amount of work ahead of us and the impact of the changes the FAA announced earlier this year.
We now anticipate starting commercial passenger service in 2025 following the publication of the final S far regulations by the FAA in late 2024.
And in parallel we're striving to complete type certification to support this timeline.
I'd like to spend a few moments unpacking this new date.
At a high level, you can think about it in two buckets external and internal.
Starting with the external we originally believed we would certify our aircraft with the FAA under part 21 <unk>.
That path would not have required any new or modified rulemaking on the operational side rules, which are known as <unk> or special Federal aviation regulations.
But as we have discussed in previous calls the FAA has advised the sector that we will be certifying our aircraft under the 21 17 be path instead.
Means that to operate our aircraft, we will need as far as in place and the FAA has advised that they don't expect these to be finalized until late 2024.
We therefore don't expect commercial passenger service to start until 2025.
We're very grateful for the Faa's leadership in this nascent sector and we're in close contact with them on the process for drafting and finalizing the <unk> requirement.
We have good visibility on it and we're preparing to quickly incorporate any new requirements that come out of it into the aircraft.
There are also internal reasons for the shift.
First there is the challenge of having the right team in the right place at the right time.
We've done a lot of work to anticipate the growth required in our team, adding a number of key members in groups as necessary.
For example, adding the avionics team earlier, this year, which gave us the additional velocity on software verification.
But there are still areas, where we have gaps to fill.
Another critical part of the certification is translating prototype design into certifiable parts.
We've made significant investments in this capability and.
In terms of people equipment and processes.
Many of you got a chance to see firsthand at our field trip.
While these have been critical investments that are producing great results.
Learning curve on manufacturing processes has been steeper than originally anticipated.
Certifying novel technologies like ours is a complex process and we're under no illusion that these will be the last challenges we face.
But I do believe that <unk> is uniquely positioned to navigate these challenges whether internal or external.
We're now on the Firmest Foundation, we've ever had and we understand the certification path with the FAA more clearly than ever.
We have the right teams in the right places as well as plans to fill remaining gaps, particularly as we move into our busy testing phase.
And we're working through the design to production growing pain that every manufacturing business experiences.
Also it's important to note that we are in active discussions to begin initial service operations in 2024 with the department of defense.
We see that work as an important opportunity to learn about operation maintenance and the performance of our aircraft in a real world environment.
We also think that operating on base will play an important role in building public awareness of an acceptance for commercial passenger operation.
Last but by no means least it has the potential to provide a significant revenue stream in its own right ahead of FAA type certification.
And on that note our flight test campaign, which supports our work with the agility Prime program has been making great strides this quarter regularly flying several times a day and.
In September we flew more hours and more miles than in any previous months only to break that record again in October .
We've now flown more than 10000 nautical miles with preproduction prototype aircrafts since 2019.
The flight data generated from these tests is critical to tuning our test facility and ensuring our production aircraft is well placed to meet those certification and program goals.
Some of you had the chance to see our aircrafts action as part of our inaugural field trip last month. It was a real pleasure to open our doors for the first time in this way and let people visit our pilot production plant.
Attendees were able to see the progress we've made across all the major aerostructures.
For our first production intend to aircraft as well as the additional composite structures. We've made that will be used for our second and third production intent aircraft as well as for testing.
Attendees also witness the low noise profile of our aircraft compared to the helicopter and chase plane that accompanied it.
During the tour's guests were able to see numerous production intent actuation energy management and flight electronics assemblies that have been built at our San Carlos facility, including a complete integrated propulsion system.
Customers.
It's better to assume that there are times. When this approach it's harder work with a requires longer hours and a greater investment, but we're confident that the hard miles are worth it for the more performance aircraft, a better customer experience and over the long arm of more durable competitive advantage.
And on that note that over to you.
Extra than good afternoon, everyone and thanks for joining us today I'd.
I'd like to take the opportunity to share our general approach to financial and resource planning it Jodie.
Our plan has always been built to be adaptable something that we've talked about consistently over the past year, we adjust our pace and phasing of initiatives to optimize our spending across the organization. This is one of the many benefits of our vertical integration as we can modify our spending and resource plans dynamically because we have a full.
Understanding of all elements of our business and how they fit together.
Early investments much like our approach to aircraft development remain modest as we iterate rapidly and incorporate learnings before accelerating.
Visitors to our first ever field trips are a pilot production plant for instance, where we are building a production line at low volume to validate and certify our manufacturing processes in partnership with the experts at Toyota.
This lower investment approach enables us to prove out scalable technologies prior to the sizable investments required for higher volume production.
We take this approach in all parts of our business.
Enabling us to make timely and appropriately sequenced progress towards our goals across certification manufacturing and commercialization.
We are well capitalised with $1.1 billion in cash and short term marketable securities at the end of the third quarter.
This cash balance excludes the upfront investment of $60 million from Delta, which was received on October seven through the issuance of common stock.
The Delta partnership is unique in the industry not only for the depth and quality of the operating engagement, but also for the financial arrangements, which are outlined in our files 8-K, whereby delta has the opportunity to invest further up to $140 million through warrants tied to meaningful operating milestones.
And with exercise prices that reflect the value we aim to create together for our customers and in turn our shareholders.
This arrangement provides us the opportunity to further strengthen our balance sheet in the future.
In addition to our business progress I should also mentioned that we were pleased to see the advanced Air mobility coordination and leadership Act signed by the White House this quarter.
We have been working with key congressional leaders and other aviation stakeholders to bring this lot of life.
Is supports the expansion of commercial <unk> service by establishing a broad government group to take learnings from early operations and use them to proactively identify opportunities to accelerate future growth.
And it's another great demonstration of the U S government leaning in on this new technology.
This support in combination with the support of the Department of Defense gives us the right Foundation for the us to continue to lead in this sector.
Turning to our results in the third quarter of 2022.
We incurred a net loss of $79.2 million for 14 cents per share, reflecting a loss from operations of $97.1 million offset by other income of 17.9 months.
The loss from operations was below the second quarter, reflecting a lower stock based compensation expense of $13 million and higher payments from the department of defense is part of our agility prime contract.
The favorable results and other income reflected the reevaluation of or derivative liabilities worth $12.6 million in interest and other income, which rose to five $4 million, reflecting increased interest income on our invested funds.
Total other income was also below the prior quarter, primarily reflecting the smaller favorable revaluation of or derivative liabilities.
Adjusted EBITDA, which as a reminder is a non-GAAP financial measures that we've reconciled to net income in our shareholder letter with negative 77 $7 million.
This was $21.8 million higher than the third quarter of 2021 and $3.6 million above the prior quarter, primarily reflecting the continued growth and personnel to support our operations and R&D costs associated with building parks, both for our testing and for our production intent aircraft.
As of September 30th we had nearly 1400 employees globally.
Cash used an operating activities and purchases of property and equipment totaled 73 7 million for the quarter.
Spending increased compared with the prior quarter, reflecting the additional pay period in September and increased staffing, partly offset by the non-recurring purchasing avionics in may.
For the first nine months of 2022 are net cash used an operating activities and purchase a property and equipment totaled $207.2 million.
As a reminder, from the last quarter or cash flow for the nine months as referenced in our shareholder letter will also be included in our 10-Q excludes cash held in short term investments in the first quarter, we invested a substantial some of the proceeds from our merger with rain that technology partners.
Therefore, our statement of cash flow will show more sizable cash outflow, reflecting this investments.
As I mentioned at the outset, we remain discipline and our use of cash or.
Key priorities are certification early manufacturing operations and initial service operations, including supporting our Department of Defense partners. We continue to manage the pace and timing of our efforts to judiciously manage our cash outflows and we will continue to pursue opportunities where we may receive payments for work.
Form.
For example, we are working with the D O D to put our aircraft into service prior to receiving FAA type certification.
Not only provides cash to our business, but it allows us to build operational experience in areas like training maintenance and scheduling that are critical to our future success and would be impossible to test otherwise.
This concludes our prepared remarks, and I'm pleased to say that I'm also joined here by Paul Shera, Our executive Chairman and DDA Papadopoulos, our head of aircraft Oems to also address any questions you may have.
Operator would you please instruct participants on how to ask questions.
Thank you.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation until indicate that your lines in the queue.
Press Star too if you would like to remove your question from the queue.
Participants using speaker equipment and may be necessary to pick up your handset before pressing his darkies.
One moment, please while we pull for questions.
Our first question comes from the line of Andress Shepherd with Cantor Fitzgerald. Please proceed.
Hey, good afternoon, guys. Congrats on another quarter and congrats again on the the first public test flight a few weeks back. It was great. We got a chance to attend I was very well organized so congrats again.
I guess my my question is just around certification.
I just want to make sure I'm understanding this correctly so it looks like the the F. A a.
Full certification got pushed to 2025, but it looks like you also anticipate.
Working with the department of Defense in 2024, So I guess.
Could you maybe just elaborate on how and why that's the case. So certification is now 2025, but still get a chance to work with a D O D in 2024.
Thanks.
Thanks, a lot I really appreciate you coming out and.
Field trip and.
But again.
Well I hope you have seen is how hard we are working to bring up both the pilot manufacturing facility, but I'll spell so all of our processes to be able to build conforming components.
That really is all in service of of both of these goals that you laid out.
The the service for the D V D in 24, and our commercial passenger service in 2025.
With regards to your question on tight certification certification on the timeline there.
It.
The key piece is.
To bring the passenger service online we need the <unk>.
<unk> bar given that the changes will be made from part 21, 17, 21 17 B.
And.
So we need that eschar completed that's a work in progress we will see are we expect to see a drafted that.
Coming months and that will.
The the certainty that we have.
Today, we have more certainty than we've ever had.
This will increase it further we also have internal.
The pieces that were driving on in order to.
Deliver on tight certification.
Either.
Concurrently or the.
The same timeframe.
Yeah, and again, our ambition is to launch the.
Commercial passenger service in 2025.
Got it Okay now that's very helpful and maybe as a quick follow up if I may just.
In regards to your capital needs right. So obviously, you remain well capitalized $1.1 billion in cash and equivalents.
You also have that shelf out for up to I believe it's up to a billion.
I'm just wondering how are you thinking about your capital needs now that the certification timeline got got pushed.
You anticipate those needs changing do you anticipate potentially using that shelf sooner than than initially we are targeting just any sort of color there would it would be helpful. Thanks.
600.
As you say strong balance sheet do we have a new unfortunate position to <unk> with that with $1.1 billion in the bank.
There is no meaningful change to our customer and projections that we've seen because we have all the numbers, we can pool because of the vertical integration around the pace and timing of our spin and especially on those commercial commercialization elements.
It's.
Important to highlight.
Operations in 2024.
So you really see those early planes.
Potentially going into Deogee service pending the outcome of the contracts that are under way. So we're really focused on being judicious with our spending and making sure and expenses in line with our priorities around certification and manufacturing. So we don't have any plans in the immediate future to access to sell the show.
Really took the opportunity to put that in place because it does cover over the next three years and it was just a prudent action to take to be opportunistic should the applications.
Understood that's great. Thanks, Matt that's it for me I will pass it on and congrats again on another quarter. Thank you.
Our next question comes from the lineup savvy.
Raymond James Please proceed.
Hey, good afternoon, everybody. This is actually not on first savvy.
My first question would be sure Joe been driven.
Driven you spoke of filling gaps in translating the prototype design into a certifiable aircraft could you maybe elaborate on weather is that still a team that needs to be billed out or is it in regard to aircraft design and when do you think you'll be comfortable to share. Some some of the additional design specifics for that production air.
Which is payload capacity or anything else.
Thanks for that and.
Thanks again for joining us today.
Today and and.
And both of our facilities.
What are the things that I think you you got to see was the remarkable progress that we're making building our production internment.
Aircraft and both the powertrain components and also the airframe.
That really demonstrates the confidence we have and the maturity of the.
The aircraft for building.
U as you also saw we've been and heard when was the flight test.
That aircraft have been flying since since 2019, and again really really demonstrates the the maturity of of our design.
And so.
We do feel really good and.
In terms of your crusted around the.
The gaps of.
On our.
I would.
To the acquisition of the.
Avionics team as an area, where we really leaned forward and brought in software verification capabilities, which we believe will be crucial for us and then the other element is on testing.
As we as we scale up the the.
And testing really moves into focus the stage for our of our certification process. The.
The key area to to focus on there is that we just received.
Approval from the FAA on our.
Our first.
Certification plan for the.
Flight control computer and this allows us to go and begin for credit conformity testing, which is a huge milestone that laid the blueprint for for all of the electrical systems on the aircraft.
And.
That's going to be really the focus for us as we look to the the coming.
<unk>.
Okay very good. Thank thank you for that and thank you for hosting.
My Dad, I will say I didn't hear much. So when I was there from the aircraft that is it is it was very quiet so.
It's pretty special.
Well My next question for Matt could you provide some timelines on when you're thinking about the higher volume phase one production facility.
And maybe once that is decided how long it would take to stand up and are there any financing options. You are considering at this point in regard to that facility. Thanks again for taking your questions.
Yeah sure as you said, we're really focused right now on our pilot plan you choose.
Really pleased with how that's coming together.
We're really dialing and now is all those production processes for types or.
Reproduction, which required for stealing.
What we're looking for is what's the right time to bring that higher volume online. So the way. We think of that is really that needs to be in service of commercial service into making sure. We die on that in right. We have really good line of sight in the all of our lead times for both equipment and the plant itself.
So I'm not concerned about us us managing that effectively at all in terms of financing there are a number of opportunities for us to finance that skill ability.
We're really pleased with how the U S government.
Programs like titled 17, and actually add any additional funding.
Inflation reduction.
For advanced technologies, such as ours, so really encouraged by the support the U S government providing for this sector.
Great May Gilligan.
Thanks Man.
Thank you, ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
And our next question comes from the line of David is Azula with Barclays. Please proceed.
Good afternoon, and thanks again for taking the questionnaire and hurting me a couple of weeks ago.
Just.
My question is first maybe hopefully not two words nothing here, but it sounded like the word you used for needs of compliance was substantially complete this year.
And I think that might be different than how you would have.
Described the policies does that represented incremental uncertainty around the means of compliance of 2022.
Yeah, Hi, this is <unk>. Thanks for the question in terms of music compliance were you.
Like you said for the <unk>.
Most part compete with these we're right on track exactly where we want it to be at this point in the program.
Really focusing more on transitioning towards the certification plan and then moving into the testing area. Like we said earlier, we are pretty excited to have submitted and got an acceptance from USA on our first electronic component.
Component disliked us sorry.
<unk> and that's really more of an outcome of having completed the relevant means of compliance and the new plan associated with it. So we're exactly where we need to be at this point.
Great.
And then <unk>.
Relatedly you have been talking at least for a couple of calls now about the area specific certification plans and just give us a little more color on how many you are intending to submit right now and what does the pace, we should expect to move forward.
Yeah, I think what's best.
To do in order to answer this one has to go back to the charge, we have been presenting and instead of thinking about them in terms of numbers think about the percentage itself because the numbers could sometimes mislead and very so as we shared in the in the charts.
Earlier in the update.
Update we have just recently submitted one more area specific certification plan and we expect to make a really good progress on those towards the end of the year. So the percentages severe that to focus on for the most part.
Awesome, and then I guess, if I could just taken.
A real quick one.
One of the reasons cited for the potential change in timeline.
The need to hire personnel like us.
For a manager Bender or are you, having difficulty hiring personnel or any areas that you are running into challenges hiring that you weren't expecting.
So so we are continuing to hire at pace.
There are a few areas.
We highlighted specifically intestine software, where we are aggressively recruiting and.
But we're very pleased with the caliber of the Dallas that were that were bringing in but are extremely focused on continuing to add in a few core areas and also again highlighting the.
Acquisition of the avionics team to <unk>.
Really.
Accelerate the software verification work.
One of the great occupied.
B a yawn exactly this is to your question about hiring.
It's really been a great addition to the team originally focus around verification activities. We also learn that we are able to augment that too leveraged expertise in areas such as the software development. So in my mind that's.
Definitely paying double dividends.
Side about.
Opportunities that it presents on that front.
Great much appreciate it thanks for that.
Our next question comes from the line of Jason Holcombe with Morgan Stanley . Please proceed.
Hey, guys. This is Jason on for Christine today in regards to the Delta partnership, but are you able to provide any additional context on sort of what some of the key milestones are that must be met to a potentially received the additional investment from from Delta.
Sure.
Jason This is Paul I'm happy to take your question on Delta.
Having this sort of prepared remarks, we're very excited to be adding delta.
To our list of partners. One that includes obviously folks like Uber and Toyota as well one of the things that made us. So excited about this partnership was that it really brought to things to the table first.
Referenced in the prepared remarks that brings capital and potentially more capital to minority strong balance sheet.
And then second it gives us an opportunity to lean into the investments that Delta has already made an terminals and with regulators and some of the cities that are targeting.
Each of those are going to be important pieces to.
This opportunity and with respect to your question on the additional investment I think we can say that there are two additional jointly joint.
Joint milestones, so we're going to be focused on just sort of unlock.
The potential for that investment the first is around the demo.
Trial of this integrated home to see the service.
And we already have our team and in turn the Delta T mobile hold on that.
Second is located in.
Take off the money infrastructure at two of the airports.
In the markets that we highlighted in our teams and in turn the Delta teams are already working on that as well.
So we're very excited about what this delta opportunity can provide over time and I can say that our teams and in turn the delta teams are working pretty aggressively against the milestones.
Unlock those pieces.
Thanks, Paul.
I appreciate that and then maybe just one last quick one around for <unk>.
In terms of means and compliance so as you sort of noted in your chart it'll be sort of 96 per cent through while the faa's right around like 84%.
What is the sort of the delta there and I guess, what what is it that the faa's, but it's still working through that sort of chubby has completed on their end.
Or on your end.
Yeah. So there's no <unk> first time, you saw an extreme.
Top line and the bottom the 90 684 really those are in general.
Well, we might be submitting for example, the difference of these is what we already with or submitted versus what the F. A a has responded so there's more of a timing cycled through that into one is typically always trying to catch up with the other one.
In terms of what is left.
It's not really a specific area of focus that's left versus others. It really is cause.
Impanation are those small spots here and there so for the most part really.
Pretty good progress on that front of idiots couldn't be happier than where we are right now.
Thank you today I'll I'll leave it thanks, thanks, guys.
<unk>.
Thank you, ladies and gentlemen, again, if you would like to ask a question. Please press star one on your telephone keypad.
And our next question comes from the line of Edison you with Deutsche Bank. Please proceed.
Hey, Thanks for taking the questions first of all I'd wanted to understand some of the non regulatory reasons for the postponement to 2025.
Is there any way can maybe provide some specific examples about the manufacturing aspect is it in the context of just have normal scaling up or were there things that you kind of wanted to vertically integrate and those are heading up be much harder to do.
Yeah. Thank you I appreciate it this is javan so.
We have as as you know really focused on vertical integration and this is a huge asset but it also means that were taken on a heavy lift.
We have been investing in next generation manufacturing processes, whether that's on the powertrain component and having a full digital system for our work construction or on the composite side with our automated by replacement occur.
Across all of those system, we'd have to put the the processes and procedures in place and we are building a next generation Aviation company, just as hard work, but it is going to pay massive dividend.
Over the bow.
Both of US we're working through the certification.
These components.
Components in this aircraft, but also for many years to come.
So.
Those those investments are really valuable they haven't taken a.
A lot of hard work and I've taken a little longer than we had hoped but we feel like we're coming around the corner and that the dividends are really really going to start to pay off.
Understood.
And I guess, if I could ask about the maybe the financial implications of that I think last quarter. It sounded as if you were sort of.
Being a bit more prudent are dialing back the extent.
But I think earlier Q&A, you had said that doesn't really impact that so I guess it just ah you're offsetting the kind of incremental spending here with cuts elsewhere or or how does how does that.
Kind of workout that there isn't really any any change to the kind of spend path.
Yeah. So.
Directly pointed out.
Dialed back last quarter really reflecting external.
<unk> you look at the the macro factors in the headwinds the industries.
Large <unk> mentioned interest rates.
The prices we felt it was prudent to nature are spending as dialed in on certification in manufacturing.
Have have dialed back elsewhere.
Prove prudent as we now look at the timeline any updates were sharing today and that does allow us obviously to extend their alumnae somewhat. In addition, we look ahead to how we think about some of those other big investments based on manufacturing obviously are spending on planes terms with production and so we.
Time zones, as our schedule dictates and so that further extend the runway and then as we ramp up commercialization. That's that's a heavy lift and so is that pushes back we pushed those expenses back as well so again, having that full visibility due to a whole stack allows us to dialect spending judiciously.
Thank you.
Yeah.
Thank you.
And our last question comes from the line of Bill Peterson with J P. Morgan. Please proceed.
Yeah, Hi, good afternoon, Thanks for sending me add an echo and all the other ones. He said that you know it's great that you guys provide a few weeks back thanks for that.
Can look at the <unk>.
The DVD.
Detail, especially in light of commercial services, perhaps starting later as you guys have talked about I guess, what does that look like I mean can you support all the branches.
Close with this aircraft to your <unk>.
Performing aircraft for commercial applications.
How should we think about the revenue opportunity and specifically is this kind of more like an ODM, an aftermarket model, where you could collect upfront cash.
Things are not finalized obsolete.
The opportunity for sort of 2024 beyond.
Hi, This is Paul Sheryl Thanks, a lot for the question.
We.
We have spent a lot of time and I think Toby is relatively weak in the category and having these sort of two paths to market. One two essays certification in two broader concern to broader consumer service.
And then two through.
Through our partnership with the D O D to service and revenue opportunities in that sector and that obviously stands outside of FAA certification.
Let me think about that opportunity, we've already announced obviously the airforce was sort of the branch.
In terms of evaluating this aircraft for us.
There, we recently added the meridians.
Last quarter.
Going to be following progress in that we're working very very closely and we thank our opportunities to extend to the other branches as well or her time.
What that looks like Bill is.
Do you think are sort of two pounds that could take.
One is a contract around and contractor operated model. So folks that are familiar with government contract I think should understand what that looks like and then in turn another would be a sort of acquisition high model.
With sort of maintenance sort of on the back and we don't know yet and the conversations in terms of which way that's going to go and what.
What we think both are viable and they may be different for different branches, depending on the use cases like our evaluating.
In terms of this kind of sizing that.
It's hard to say right now, but look as we take a look at the number of helicopters that are important in the World U S. Army for example, hyper largest helicopter fleet of more than 5000 vehicles in operation.
So that gives you some size I think some way to sort of think about this sort of maximal opportunities of fur and we're very excited about continuing to accelerate that work and get closer and closer to delivering those into servicewomen practices.
Okay. Thanks for that that's that's actually a terrific color.
Wanted to talk about certification it sounds like you're saying for whatever's remaining the last sort of 10% to 15% remaining can be agreed upon presumably made more progress with the quarter.
Sounds like you said it.
And where do you use is combination of small stuff.
I guess any sort of car when you can save what's remaining and then maybe for the testing and analysis, what what kind of areas are you able to move forward in terms of I guess getting for credit type of certification. If you can provide any additional details on that that'd be helpful. Thank you.
[noise] Yeah. This is <unk>. Thanks for the question.
So.
The remaining parts.
Distinct subsets parts.
She added with various systems like.
Flight control systems propulsion.
Enduring system for example, or acoustics.
<unk>.
No means a representation of areas of.
Risks or lack of product progress per se really just a matter of time on those.
And that's where I can say more on the.
Areas that we can make progress on.
Really are the ones associated with the specific sort of plans we have submitted in the past.
And those that have been accepted this is where if you look at the 37%.
Progress you can see here on stage three all of these are ones, where we can now proceed into the testing phase and start taking for credit points, so to say with.
<unk>.
So the.
<unk> control computer electronics units, which resolved design.
Built in house.
Lot of the a lot of you were able to see during the future visit that's one of those examples where we have got our surplus approved qualification test plan approved.
Hence have got in an okay from the F. A a to start the testing and making progress. So that's one of the many examples on that front.
Really excited about that <unk> was saying.
One of the great benefits of this is it sets the blueprint for the other electronics parts that will follow really shortly after.
That's an amazing exercise and a great demonstration of the capability of the team here, but also the lock in step coordination with the F. A a.
Yeah that's.
Terrific. Thank you if I could just speak one last one and so.
I know you guys are are being prudent for map out and like I said I guess it would be imprudent cash spent but is there anything I guess in terms of the next couple of quarters in the next year terms of Lumpiness, we should think about and timing of building conforming aircraft.
How do you think I would like a trajectory in terms of some of expand whether it be.
Primarily capex program.
Opex, but.
We should sort of contemplate as we look at the next year.
Yeah, obviously won't be providing guidance on 2023.
<unk> fourth quarter earnings call.
You're in the near term, we provided guidance to 320 to 340, <unk> and the last quarter.
Will be.
And if not below that but that will have some lumpy capital expenditures in the fourth quarter. So there's gonna be a lump there.
We're gonna be spending.
As we both of our facilities and so forth and then the next lumps would be really as we look into either aircraft production.
That ramping up for fees one minute sorry.
He was a pilot plant as you guys saw is largely complete we still have some parts of the.
The integration lying to go in a little bit of poetry, but largely the big assets are behind us. So I would say it really isn't about aircraft production.
Entering the phase one will be talking more about that in the future.
Okay. Thanks, Thanks banking.
Thank you.
Thank you.
Elman. This concludes our question and answer session I Dunno I would like to turn the call back to jump and divert for any closing remarks.
And you'll also much really really appreciate your time and I really appreciate all of you were able to join us on a field trip that was fantastic.
Two.
A number of you that had questions on certain certain timing.
Really clear on on what we're driving towards.
First.
We are.
It's important for us to emphasize how important the the service with the D O D. As in 2024, given the fr.
And then second that we are continuing to be laser focus does a company on <unk>.
Delivering type certain as soon as possible.
Still.
Doing everything we can to hold that in 2024.
And so that with that as far we can enter commercial service as soon as possible in 2025.
And again, thank you all so much for joining us really really appreciate.
All of your insights in the industry and looking forward to our next call have a wonderful evening.
This concludes today's conference. Thank you for your participation you may now disconnect.