Aeva Technologies Inc. Q1 2023 Earnings Call
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Speaker 2: Good day ladies and gentlemen and welcome. My name is Judith and I will be your conference facilitator.
Speaker 2: I would like to welcome everyone to AVer technology's first quarter of 2023 earnings conference call.
Speaker 2: During the opening remarks, all participants will be in listen-only mode.
Speaker 2: Following the opening remarks, we will conduct a question and answer session. As a reminder, today's conference is being recorded and simultaneously mid-cast.
Speaker 2: I would now like to turn the call over to Andrew Fung, Director of Invest Relations. Andrew, please go ahead.
Speaker 3: Salah Yount, Ava's co-founder and CEO , and Sarab Sinha, Ava's CFO .
Speaker 3: ahead of this call, we issued our first quarter 2023 press release and presentation.
Speaker 3: which we will refer to today and can be found on our Investor Relations website at investors.ava.com. Please note that on this call, we will be making foreign-looking statements.
Speaker 3: will refer to today and can be found on our Investor Relations website at investors.aeva.com. Please note that on this call we will be making forward-looking statements based on current expectations and assumptions.
Speaker 3: any subsequent date.
Speaker 3: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
Speaker 3: For further discussion of the material risks and other important factors that could affect our financial results, please contact our financial advisor.
Speaker 3: Please refer to our filings with the SEC.
Speaker 3: including our most recent Form 10Q and Form 10K. In addition, during today's call, we will discuss non-GAAP financial measures.
Speaker 3: which we believe are useful as supplemental measures of aivest performance.
Speaker 3: These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.
Speaker 3: The webcast replay of this call will be available on our company website under the investor relations link. And with that, let me turn the call over to Soroush. Thank you, Andrew, and good afternoon, everyone. In Q1, the ABA team was focused on advancing the commercial momentum for ABA's unique four def Blessed Novice.
Speaker 3: We recently received feedback that AVA 40-LAR is enabling a key safety use case that was previously unattainable by the OEM. I am excited to share that we are also in discussion to deepen our relationship to include joint perception software development, leveraging AVA's unique combination of high resolution, long range, and instant velocity. We are also in discussion to deepen our relationship to include joint perception software development,
Speaker 3: This includes a joint development engagement with a passenger vehicle OEM, looking to switch from 3D time of flight light as well as advancing to a growing number of RF cues.
Speaker 3: And third, perception for our perception platform for precision distance measurement has been quite positive. We are engaged with multiple leaders in industrial sensing to use ABU's perception platform and hope to share more later this year.
Speaker 3: I would now like to provide more color on recent business developments, starting on slide 6.
Speaker 3: As mentioned earlier, we are off to a strong start with the Top 10 OEM on providing a perception solution that meets their high standards of performance, safety, and scalability. The first vehicles integrating ABUF 4D LIDAR have been built, and we have already achieved important development milestones.
Speaker 3: including feedback from the OEM that we successfully enabled a key safety use case for highway driving that was previously unachievable with 3D Tama flybite R for this customer.
Speaker 3: long range and instant velocity capability.
Speaker 3: Together with our perception software, Ava's 40-Light Art reliably detected and classified critical objects on the road far away.
Speaker 3: This is a particularly important capability in use cases such as highway automation, where faster speeds require greater reaction time and higher sensing fidelity.
Speaker 3: I am excited to share that we are also in discussion with the OEM around the use of Ava's perception software and looking at ways to help accelerate the autonomous stacked developments.
Speaker 3: This gives us further confidence around our perception software capabilities and highlights the importance of leveraging direct velocity measurements in an automated driving system.
Speaker 3: Let's move now to slide 7. As we have shared, we have been making significant progress on our engagements and wanted to provide more color on our ongoing opportunities.
Speaker 3: Our focus remains on programs for large-scale deployment, and we are seeing strong interest from leading automotive and industrial companies looking to bring next-generation perception to market.
Speaker 3: This includes progressing from the RFI to RFQ stage with some of the top global passenger vehicles and commercial vehicle OEMs. And in industrial automation, we are currently in multiple discussions to deploy our perception platform for precision distance measurement applications.
Speaker 3: Many of our opportunities are with companies who have experience with LIDAR or even selected 3D time-of-flight LIDAR for initial pilot deployments in the past, and are now increasingly interested in ABA for the next generation due to the advantages of our FMCW approach.
Speaker 3: While we may not win every opportunity, each program offers meaningful revenue potential. As an example, the passenger vehicle program opportunities we are working on target volumes will over 100,000 units per year at city state production. These programs have targets for our production between 2025 and 2027.
Speaker 3: and we expect award decisions approximately over the next six to 12 months.
Speaker 3: Turning now to slide 8. Following the successful bring up of our new final assembly manufacturing of mine, we are working with Fabranette to similarly expand our lighter on chip module manufacturing.
Speaker 3: by year end.
Speaker 3: With that, let me turn the call over to Sarab, who will discuss the financials in more detail.
Speaker 4: Thank you, Sarush and good afternoon everyone. Let's turn to slide 10 to discuss our Q1 2023 financial results. Revenue for the first quarter was 1.1 million.
Speaker 4: driven by Ares II deliveries to existing partners as well as to new customers for our unique 4D LiDAR capabilities.
Speaker 4: Non-GAP operating loss was 31.3 million as we continue to strategically invest in product and other research and development initiatives consistent with our plan.
Speaker 4: Gross cash use, which we define as operating cash flow, less capital expenditure, was 37.3 reflecting operating expenses and timing of working capital.
Speaker 4: As such, we ended Q1 with $288.4 million in cash, cash equivalents and marketable securities.
Speaker 4: million in Q1. To sum it up, Ava is in a solid financial position to support our commercial momentum.
Speaker 4: We are making good progress on the key objectives we laid out for 2023 and we will continue to take a disciplined and strategic approach to execute on our plan.
Speaker 4: I will now turn the call back to Suruj for closing remarks.
Speaker 3: In summary, I am excited by the progress and feedback from both existing and prospective customers on AVA's 40 LiDAR. Our differentiated FMCW technology is increasingly resonating with leaders in the markets we are pursuing, and our priority remains on converting more of our commercial traction to program wins. Mary
Speaker 3: I want to especially acknowledge the dedication of the ABA team that is making all of this possible, as well as the ongoing support of all of our stakeholders.
Speaker 3: EVA is laser focused on delivering on our objectives and is well positioned with our unique technology and our balance sheet to continue to execute on our mission to bring 4D LiDAR to market. With that, we will now open the lineup for questions.
Speaker 2: Thank you, sir. Ladies and gentlemen, we are now be conducting the question and answer session.
Speaker 2: If you would like half the question please spread star then one on your telephone keypad.
Speaker 2: A confirmation turn will indicate that Yvonne is in the question queue. You may press star 2 to leave the question queue.
Speaker 2: We ask that it please limited questions to one question each. For participants making use of state equipment, it may be necessary to pick up a handsuit before pressing the star keys.
Speaker 2: Our first question comes from Colin Roche of Oppenheimer.
Speaker 5: a little bit about what your sampling capacity is right now and how it's going to change over the balance of the year and what you think the impact might be with some of these customer relationships.
Speaker 3: Yeah, Colin, happy to answer the question. Look, we're obviously working closely now with FabriNet to build up our further automation on the line. This is important, of course, because we're going to be working to automate 100% of the assembly steps, as I mentioned, inside the LIDAR chip.
Speaker 3: This has a couple of different effects. First of all, this line is going to help us to support our series production ramp. This also allows us to further really simplify the system assembly process as we have talked about before. And at the end of the day, it gives us the ability to...
Speaker 3: really provide the scale that's needed to support the customers. And it's important because increasingly, both on the automotive, as we have talked about with the top 10 OEM, the advancements from our FI to our FQ.
Speaker 3: as well as on the industrial side with the multiple engagements we have. We are seeing this demand and we are now responding to it so that we can build up the additional capacity. This final also increases our throughput. So what I can say is we'll sufficiently satisfy our
Speaker 3: demand quantity needs as we go towards production. And also gives us for the confidence and our ability to really keep us on track towards achieving our targets for the cost.
Speaker 5: All right, that's super helpful. And then just shifting gears around the software development, can you talk a little bit about the level of activity that you've got in terms of building up the ecosystem and the different software pieces that you're going to need to develop for each of the different end markets? And I'll take the rest of it offline after that. Thanks guys.
Speaker 3: Sure, yeah, look, first of all, as I mentioned on the call, we're excited that we're seeing increasingly OEMs such as the top 10 OEM start to see significant value and not just our 40-letter but also the perception software. And as our software gets embedded into the AV stack or the ADAS stack, as well as some of the industrial applications.
Speaker 3: creating the fly wheel effect for deeper engagement of the use of our capabilities.
Speaker 3: And that's why, for example, the top 10 OEM were talking further to strengthen our relationship there and they're looking to leverage our perception software to help them accelerate the AV-SAC. And this is important because for us, obviously, we have the added...
Speaker 3: dimension of velocity, the unique data products that we have, and the OEM is able to use those and working with us together jointly to really tune it, building effectively a system that consists of the hardware and the software on top of that that's really tuned for their specific applications. And what we are hearing is that this is going to also help them differentiate some of their capabilities compared to...
Speaker 3: their competition. So we are really encouraged by that. I think over time we're going to start seeing more of these types of engagements hopefully that we can continue to engage on a deeper level with the Perception Software Sign.
Speaker 2: Thank you. The next question comes from Joseph Moore of Morgan Stanley .
Speaker 6: Great. Thank you. I wonder if you could talk about when you start going to production. There's a mention in the slide deck of 2025 through 2027. I thought there was some industrial stuff going into production in 2024. Is that still the case? Yes.
Speaker 3: Yeah, Joe, happy to answer that. Yeah, as we have talked about, we're on track with our customers on the industrial and automotive side. We continue to be engaging multiple customers on the industrial side in addition to automotive. We talked about on the call today, 2025 and 2027 are really...
Speaker 3: some of those opportunities, especially on the automotive side, that are new opportunities that we are targeting and opportunities that we are advancing from RFI to further stages including RFQ. So you know we are on track with the engagements that we have.
Speaker 6: Obviously, we brought some more color around these opportunities. Great. That's helpful. Thank you for clarifying. In terms of the cash balance, obviously, you have a pretty healthy balance sheet, but the burn rate of 37 million in Q1, I guess what over the next, say, eight quarters or so before you start to really ramp revenue, can you just give us a guide?
Speaker 4: FY 2023 guidance and what we mentioned at the last call that we expect our OPEX, non-GAAP OPEX to be similar to 2022 levels which was around 124 million. We are on track for that and non-GAAP OPEX is
Speaker 4: A good indicator of the cash done for the year.
Speaker 4: indicator of the cash bond for the year.
Speaker 7: Thank you.
Speaker 2: The next question comes from Pierre Ferragu of New Street Research. Hey guys, thanks for taking my question. A quick follow up on your outlook for cash burn.
Speaker 2: So if you have an Outback burn rate around 120, in the low 120s today for Outbacks.
Speaker 2: What happens when you start ramping production? Is there like an additional element of cash consumption because Starting production means additional capex like you need bad initial yield that could drive like cash burn, additional cash burn on top of your back Or should we expect actually an almost instant immediate at a slowly ramping company.
Speaker 4: CAPEX needs will be light given that we are leveraging the CM's.
Speaker 6: Okay, that makes sense. Thanks for that. Thank you. The next question comes from Sujith De Solver of Roth MKM. Hi, Sujith, so Roth on the progress here. Question on the top 10 OEM. I'm just trying to understand, you know, a lot of our company's competitors have announced.
Speaker 6: I just want to understand how this one feels different to you guys so you can differentiate. It sounds like a deeper relationship, but I just want to really kind of get that nuance so we should be good. And just, you know, what was the key safety feature that 3DOF couldn't handle? It sounds like identifying a low lying object in the road that's at a distance, but if you can clarify that'd be great. You're
Speaker 3: Sure, so Gisemia asks you your second one first. So obviously with this OEM we've been working actually for quite some time, right? And so I can't go into specifics of the use case, but they obviously have multiple multiple tip use cases, including those on the highway driving application.
Speaker 3: velocity to really help us consistently dissect objects at cross ranges. So as I mentioned before, for example, when you have at long distances
Speaker 3: with, let's say, 3D time applied light are only a few points. Let's say you get a few points, five points on an object. When you look at that object and you only have the dimension of distance......
Speaker 3: you have to, you're not sure exactly what you're looking at at those really far distances. So all you can do is keep looking and over time at highway speeds that is a critical time is a critical aspect. But then if you add that to the mission of velocity those same five points and you know start to have now velocity contribution. So if you they have all the same velocity they're all moving towards you.
Speaker 3: at 75 miles per hour, you better know that that's a vehicle and it's not a flying object or something like that on the road. So that's something that is I think unique provided by us. And I think for this OEM contributed also in a significant way this added dimension of velocity to help them achieve this near level of confidence.
Speaker 3: to address this safety use case. And also just to be clear to your point from before, OEM has worked in the past with other 3D lidars before. And from the OEM feedback and us continuing to deepen this relationship, we're now the first provider that can actually enable the safety use cases.
Speaker 3: So that's, I think, is really encouraging for us. At your point, we are working to further strengthen our relationship, to add in the capabilities of our perception software and collaborate there around the use of our perception software there. So that's what I can say for now. And of course, as we have able to, where we have
Speaker 3: over the past couple years here and even months. I think that's our ability to scale and provide our IoT product in a way that works out of the box for the OEMs and our ability to support the OEMs directly where we put our attention and focus, I think has been a direct contributor to enabling the OEM to move quickly.
Speaker 3: And this is kind of our model, right? We're looking to help them to accelerate their development. So with that, obviously they have also experience working with hardware stack and implementing sensors on the road. So we've been working pretty closely to support this and looking forward to continue supporting them as they...
Speaker 6: build up the rest. Okay, thanks Serge. Thank you. The next question comes from Christian Guerra of Baird. Hi, good afternoon. Just a follow-up question on the customer engagement that you've for which you provided an update. What are the pending thresholds for existing engagements?
Speaker 6: to ramp in volume production with the timing of those thresholds. And how many engagement, if any, are actual assigned deals with the OEM for a volume ramp?
Speaker 3: Yeah, so Tristan, happy to answer that. So obviously we're on these specific programs we're talking about that we're advancing through our cues. There's multiple programs that cross each end market, includes passenger and commercial vehicle application. The programs are for level three and high automation. Thank you.
Speaker 3: You talked about scale and timing. So as I mentioned on the call, these are programs that we see there as meaningful scale. And for example, on the passenger car side, we see some of the target volumes to be over 100,000 vehicles per year. So this is something that is important.
Speaker 3: And also, from a timing standpoint, where we see the decisions happening is in the next 6 to 12 months. That's what we see and timing of production really is around this 25 to 27 timeframe. So that's what we've been working on.
Speaker 3: And especially in some of these engagements, as I mentioned before, a number of these OEMs have had experience with time of flight or previously selected, maybe time of flight for initial deployment, but are continuing to now engage with us because they increasingly see FMCW as that potential end state and a scalable solution to really enable their next generation capability. So we're encouraged by that. We're going to continue our activities with them.
Speaker 8: that's box.
Speaker 6: Thank you. The next question comes from Richard of Craig
Speaker 3: Well, thanks guys for taking my question. I think my first one is going to be based on slide seven in your deck here talking about your advancing the opportunities in automotive and industrial. Talking about programs starting SOP and 25 to 27. Specifically, are any of these auto programs that you're targeting looking at SOP and 25 or would they be later? That would be five minutes or maybe aslocations.
Speaker 3: Yeah, Richard, absolutely, they are. The AutoSum and AutoPrograms fit in the same timeframe, starting from 25 to 27 timeframe. Yeah. The AutoSum and AutoPrograms fit in the same timeframe, starting from 25 to 27 timeframe.
Speaker 3: Okay. And in any way that you'd kind of count the number in the automotive space specifically?
Speaker 3: Yeah, I can't provide exact numbers, but it's multiple programs, right? It's not one, so that's obvious. And again, as I mentioned, I've crossed the different segments, automotive, passenger, commercial and industrial. We see programs that are offering meaningful potential with...
Speaker 9: of the ones that you're not engaged with, what do you think the reasons are for that? Is it something having to do with specific levels of maturity or any way you can kind of couch wire not with certain ones? And what are the ways that you can lever your way into them?
Speaker 3: Yeah, actually, it's a good question. I think across all the engagements that we've had so far, we actually have enhanced now from RFI to the RFP stages. I'm not aware of any engagement now currently that we are on that we're not advancing on. So that's really encouraging.
Speaker 3: I think you know obviously if you look at our you know if you want to look at way in the past and the time I think it really had been around maturity which we have been working towards building up on our maturization of the product Building up the capabilities in house strengthening the team around manufacturing supply chain
Speaker 3: with the OEMs to qualify our product towards the sea samples and production scale. And also obviously the whole reason that folks that even selected sometimes time of flight or dabbled in time of flight initially are working with us increasingly.
Speaker 3: is that they believe in the fact that what they have today is not quite sufficient and really looking at FMCW as Filling some of those gaps with the potential that it has in terms of technology. So that's what we continue to be encouraged by
Speaker 9: Okay, fair enough. Thanks for taking my questions, guys.
Speaker 6: Thank you. The final question comes from Kevin Carrigan of West Park Capital.
Speaker 3: Yeah, hey guys, thanks for letting me ask a question. So you know, at the beginning of the year, some wider companies were expecting automotive OEM award decisions in the first, you know, three to six months. I think on the last call, you guys had said you were expecting some award decisions in the next number of months, and now it's, you know, six to 12 months. Kind of seems like there might be a little bit of a delay in OEM decisions, but can you kind of give us
Speaker 3: onwards, we see more clarity on the timing of the decisions. Some I think will happen earlier and some is going to happen later. Obviously we do not control the timing of the OEMs making the decisions, right? But based on our experience, based on knowing kind of what the OEM says and there may be some buffer in that, that's how we estimate the expectations on those decisions.
Speaker 6: I think generally though we are seeing actually increasing activity around the OEMs for deploying sensors and products in ADAS. I think it's taken time for some folks to really define what they're going to do, but I think increasingly it's...
Speaker 3: We're feeling that in the next, as I mentioned, yes, six to 12 months, it's going to be critical for some of these folks to, in order for them to hit their timelines, they need to make some of these decisions and that's also a contributing factor to...
Speaker 3: to doing that. And on the other, I think maybe relevant topic, you know, all those all the OEMs that we always engage with are really looking and planning to deploy LiDAR on their vehicles.
Speaker 6: That is something that is also important in terms of the ability. Okay. Got it. That makes sense. I appreciate the color. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. And this also concludes today's conference.
Speaker 10: Thank you for attending and you may now disconnect your lines.