Joby Aviation Inc. Q1 2023 Earnings Call
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Speaker 2: Greetings and welcome to the JoBee Aviation's first quarter 2023 conference call and webcast. At this time all parts is events on a listen only mode. If anyone should require operator assistance during a conference please press star zero on your telephone keypad. As a reminder this conference is being recorded. It is now my pleasure to introduce your host Theresa through with you.
Speaker 3: Thank you. You may begin. Thank you. Welcome to Joby Aviation's first quarter, 2023 Financial Results Conference call and webcast. I'm Teresa Ferrefield, Joby's head of investor relations. On the call today we have Joven Beber, founder and chief executive officer, Paul Chiara, executive chairman, Gda Papadopoulos, head of aircraft OEM, and Matthew, chief financial officer.
Speaker 3: After management, prepare and remark, we will open up a call for questions. Please note that our discussion today will include statements regarding future events and financial performance, as well as statements of belief, expectation and intent. 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 more details, discussion of these risks and uncertainties, please refer to our filings with the SEC and the State Harbor Displanner contained in today's shareholder letter.
Speaker 3: 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 advise them.
Speaker 4: Before we get into the details and our recent news announcements, I wanted to give you a sense of the remarkable energy there is that you'll be right now. For example, at our site in Marina, California, on one side of the airport, the team at our pilot production line is knocking it out of the park as we prepare our first company conforming aircraft to be rolled out, as planned in the first half of this year. While on the other side of the airport, we have members of the United States Marine Corps working with our flight test team. Today, assessing how our aircraft might be used for logistics and personnel movement. This is on top of the incredible work being done by our manufacturing team.
Speaker 4: our extended partnership with the Department of Defense. Our relationship with the DEED stems back to 2016, and at several points along the way, we've had the opportunity to extend our relationship based on our track record of delivery. What began as a $970,000 project award from the Defense Innovation Unit in 2017, has over the course of six years turned into a range of contracts and expression across multiple government agencies worth more than $150 million in total.
Speaker 4: to which are set to be stationed at Edward's Air Force Base in California by early 2024.
Speaker 4: Those aircraft will not only be the first of our aircraft to go into service, but they expect them also to be the first EP tall aircraft to be operated for a customer anywhere in the world.
Speaker 4: There will be the first EVTOL aircraft to be stationed at a US military base, and we believe they will become the first EVTOL aircraft to generate revenue in the US and perhaps the world. With these and subsequent aircraft, we aim to provide the Air Force and other federal agencies with firsthand experience of our technology and its potential application, opening the door to its being used in a wide range of missions.
Speaker 4: And while the aircraft will be performing the UD operation, those operations will also provide the opportunity for us to generate invaluable learning for our future commercial service.
Speaker 4: Just as the Department of Defense has been leaning in, so too have the U.S. Government policy makers.
Speaker 4: In March, the White House issued its National Aeronautics Science and Technology's prior read document, which outlined the activities it recommend to, quote, maintain the nation's edge in the global aeronautics industry.
Speaker 4: That's a vision we can absolutely get behind. And it was humbling to see that of the three priorities identified by the White House in this document.
Speaker 4: two of that relate directly to the work we're doing.
Speaker 4: achieving sustainability aviation through a 2050 net zero commitment.
Speaker 4: and disintegration of modern and emerging technology, including advanced air mobility aircraft into the national air space system.
Speaker 4: Congress has also been playing its part in pushing positive messaging around AAM, including during a recent session of the House Transportation and Infrastructure Subcommittee on Aviation, at which I was honored to testify.
Speaker 4: In addition to the progress we are seeing on the policy front, we were honored to host Secretary of Transportation Pete Buttigieg at our offices in Washington, D.C. last month. As well as speaking with our board members, the Secretary had the opportunity to fly the JOBY simulator and experience what it might be like to fly with us. The positivity we're seeing in Washington is unique, though. Through the last quarter, I've experienced firsthand the wave of belief in our technology that it's building at the city and state level across the U.S. and in cities worldwide.
Speaker 4: That belief is driving a lot of exciting conversations around the infrastructure. And during the quarter, I was able to visit New York, where we're working hand in hand with Delta to identify exactly where and how we will deliver our service. I would like to think that belief also played a role in Michael Bertha's decision to join the Jovi Board. As a current Delta Board member and a former FAA administrator, he brings a wealth of experience and insight to the table and we're honored to have him on our team. That belief was further underscored by the announcement we made earlier today that Bailey Gim...
Speaker 4: We already have available to CS through the certification process.
Speaker 4: It's a great vote of confidence in what our team is delivering day in and day out.
Speaker 4: and we're excited to maintain that momentum and build on that belief as we look ahead at just starting commercial operations in 2025. I'll now get it over to DDA to talk in more detail about the progress we made and what comes next. DDA? DDA?
Speaker 5: Thank you very much.
Speaker 5: As you mentioned at the top of it called, the progress we've made with our company conforming aircraft has been a real highlight of the quarter. If you take a look at the photos in our shareholder letter, you will see that we now have the three main arrow structures, the fuselage, tail, end wing, painted end ensemble. The vast majority of the flight electronics have also been installed in the aircraft.
Speaker 5: The landing gear is ready to be installed. And we have completed all the components for our six electronic propulsion units and a full set of battery modules built and interesting.
Speaker 5: Otherwise, we're making great progress in our integrated test lab, where we're now completing full system verification testing on our software, electronics, and powertrain systems ahead of flight testing. In other words, we're right on track.
Speaker 5: At this point, I'd like to say a big thank you to the JVT and also to the theoretical team for helping us maintain this awesome momentum.
Speaker 5: We're working as one synchronized team and I'm really pleased with the speed at which we're making progress together.
Speaker 5: While our strategic relationship with Toyota has been in place for many years, it continues to grow organically. In April , we signed a long-term supply agreement with them that covers key powertrain and actuator components for our aircraft.
Speaker 5: These components, designed by JOBY, leverage Toyota's deep manufacturing knowledge and expertise in delivering reliable, high-quality vehicles at high volumes.
Speaker 5: It also means that we're now integrating Toyota manufacturer parts into an aircraft that assembles in a product production line that they are held as design. We're incredibly grateful for their support and look forward to celebrating the roll-out of this aircraft together.
Speaker 5: Part of our success in developing the Joby aircraft has been about making the right decision between making a part and buying a part.
Speaker 5: In some instances, like the flight deck we used from Garmin, it's clear that there are items on the market that can fit our needs.
Speaker 5: So very often, buying generic components which are designed to fit many different aircraft means accepting critical trade-offs in capabilities or masks or many both.
Speaker 5: That's why we've invested our time and effort in developing a range of critical parts, either with partners like Turo or Inhouse.
Speaker 5: And we continue to see the strategy paying off.
Speaker 5: A great example is our flight electronics. By designing, building, and testing our flight electronics and our wiring systems in-house, we have been able to reduce math while increasing redundancy and integrating multiple functions into fewer devices.
Speaker 5: This has helped improve the performance of our aircraft while reducing the assembly time and maintenance profile of our systems with fewer parts to install.
Speaker 5: Our network switch, for example, is now smaller than a standard sheet of paper, even though it integrates additional functionality that would typically require an entire separate device.
Speaker 5: This in-house network switch design and system architecture has allowed us to benefit from kilograms of mass savings compared to alternative options.
Speaker 5: It is the same story with our flight computer. The flight computer receives pilot inputs and sensor data from around the aircraft, translating it into instructions for the propulsion unit and control surfaces. We have been able to integrate all this functionality into a robust device that was less than an iPhone.
Speaker 5: By the developing systems ourselves, we also benefit from having a common software architecture. With all of our hardware sharing common interfaces, meaning there are no layers of conversion or translation required in each connection.
Speaker 5: We will also be able to verify and deploy software updates more easily over the life of the fleet, thanks to only the majority of the tech stack.
Speaker 5: There are just a couple of examples of incredible work the Joby team has done to optimize our aircraft.
Speaker 5: and we expect these efforts to pay dividends as we enter high-rate manufacturing and commercial service. Turning now to our progress on certification, I'm pleased to say that we've made great progress across the corridor. On our last call, we highlighted that we had effectively completed the second of five pages required to achieve type certification.
Speaker 5: I am pleased to report that we have now completed the vast majority of the work required on the JOBE side of Stage 3, having submitted a further three area-specific certification plans to the FAA during this quarter.
Speaker 5: Taking our total from 8 to 11 with only two largely completed plans remaining to be submitted.
Speaker 5: These documents describe the tests we need to perform to certify our aircraft. And with 11 of 13 submitted, we're on track to complete our state of goal of having all ESCPs so they agree to means the compliance submitted within the first half of this year.
Speaker 5: We have also added further two AFTPs accepted by the FAA, bringing the total accepted to seventh and moving the percentage progress on the FAA side of stage three forward significantly from 53% to 63%, marking an important step towards completing the third stage.
Speaker 5: The majority of our teams is now head down, focused on stage four, where we design, develop, and dry around the testing we describe in stage three, ahead of entering into formal or correct testing with the FAA.
Speaker 5: This preparation work is absolutely critical to achieving a smooth certification process. And while it means we may not see the bars on our certification chart move as dramatically as they have recently, our team will be working as hard as ever.
Speaker 5: As one example of the progress we're making in Stage 4 in areas like our flight computer, we're already at the point where we're simulating FAA inspection visits with a team member playing the role of an FAA inspector.
Speaker 5: We may not necessarily give ourselves for credit for that on our certification tracker, but it's incredibly important work that will ensure we are able to move forward as fast as possible when we're ready to begin for credit testing.
Speaker 5: Stage 4 has by far the highest number of elements to it of any stage, but it's much more black and white than the earlier stages.
Speaker 5: To put it in a different way, we've moved from talking about how we would do something to actually executing on it.
Speaker 5: And why are we on the topic of VFA? I'd like to reiterate my thanks for their hard work.
Speaker 5: They also do a huge amount of work in the background to support applications like ours, spending hundreds if not thousands of hours reviewing the documents and plans we create, and we're grateful as ever for their commitment to making sure the right environment exists for advanced air mobility companies like ours to thrive.
Speaker 5: Turning to the operations front, I am pleased to report on behalf of our operations and safety team that we also successfully completed in a spade audit during the quarter.
Speaker 5: The audit performed by the International Business Aviation Council is part of a voluntary standards program that includes hundreds of audits and is confirmed that we are able to operate at the same high level of state that is required for business aviation operations.
Speaker 5: This is an important step towards developing our operational muscle, and I'd like to say a big congratulations to our teams who were involved in this process.
Speaker 5: I'd also like to thank the FAA and Acting Administrator Nolan for their proactive approach to integrating new types of aircraft into the national airspace, both in the near term and at scale as evidenced by today's announcement.
Speaker 5: I'll now cut it over to Matt to provide an update on our financials.
Speaker 5: Thanks, Gideon. As of the end of the first quarter, we have $978 million in cash and short-term marketable securities, providing a solid foundation for our operations.
Speaker 5: This strong balance sheet will be further strengthened by the investment we announced today, led by Bayley Gifford, totaling approximately $180 million, which we expect to close within the coming days.
Speaker 5: Before jumping into this quarter's financial results, I'd just like to quickly touch on this investment. As we have said in prior calls, we are very comfortable with the robustness of our balance sheet, and we were not looking to raise capital at this time. However, when Bailey Gifford, an existing long-term investor in JOBY since 2020, reached out, looking to increase their investment on behalf of their clients.
Speaker 5: We agreed that further strengthening our balance sheet was the right thing to do with an investor that is so closely aligned with our mission and shares our long-term perspective. Turning now to our financial results for the first quarter of 2023, we incurred a net loss of $113 million.
Speaker 5: reflecting a loss from operations of nearly 100 million and negative underage comes of about 14 million.
Speaker 5: Other income from the quarter primarily reflected the $22 million unfavorable revaluation from our derivative liabilities as the price of our shares and warrants rose during the quarter, partly offset by net interest income of $89. A Justin E. Meda was a loss of $75 million. This was about $6 million higher than the first quarter of 2022.
Speaker 5: reflecting increased staffing and cost to support certification, partly offset by increased payments from government contractor deliverables.
Speaker 5: Our adjusted EBITDA loss was 2 million less than the fourth quarter, reflecting primarily increased contract deliverables completed in the first quarter. Our global staffing at about 1,460 employees continues to grow to support our company's certification and manufacturing efforts. Loss used in operating activities and purchases of property and equipment is a major concern.
Speaker 2: a minute this time we'll be conducting a question and answer session. If you'd like to ask a question you may press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Christine Luig with more.
Speaker 6: lows versus historical highs. So why raise capital now and why not wait until more certification milestones are achieved and potentially you know your stock could be at a higher place when you don't need liquidity today? Hi Christine, this is Paul Shira, happy to answer your question.
Speaker 5: importantly related to the announcement that we made last week.
Speaker 5: the announcement that we made last week about the next phases of our work with the Department of Defense.
Speaker 4: The folks at Bailey Gifford, who we've already said, we've known for quite a while and were investors in the company, both as a private company and in turn as a public transaction, came to us a few weeks ago and said they wanted to build their position. They could do that either through open market investments or directly onto our balance sheet through the shelf that we had outstanding.
Speaker 5: In light of what we think is a growing opportunity to deliver aircraft and potentially generate revenue with the DoD, we felt it prudent to add to our already strong balance sheet through this investment. This gives us an opportunity to scale pilot production sooner, build more aircraft, deliver those to this first set of customers.
Speaker 5: And we thought that and to do that without necessarily sacrificing the revenue that we need to get to and through certification. So we thought like it was the right call to make with an investor that knows us and has a track record of investing for the long term.
Speaker 6: Thanks, Paul. And you know, it's really encouraging to see that there is progress with your relationship with the Department of Defense and seeing the AFWARKS program. Bear fruit for you is really encouraging. But historically, when you look at other defense programs, generally the DOD would give funding to companies.
Speaker 6: and help with working capital requirements. Is that an option through this contract, or would you have to fund all that growth for the Department of Defense using internal cash?
Speaker 4: This is Paul again, Christine. So through earlier iterations of this contract, we've had an opportunity to offset significant amounts of R&D already. I think what this phase of the contract is about is about shifting gears from Probably start from about 20% Some were early.
Speaker 5: research and development and observation to actually putting these aircraft directly into the service with a customer. And that's an important shift for both us as a company and we think for the industry as a whole. This may be the first set of aircraft that are delivered to a customer certainly here in the US.
Speaker 5: and the first set of aircraft that can potentially generate revenue over the long term.
Speaker 5: Now, one of the things that distinguishes the way that we've approached our defense contract and maybe others.
Speaker 5: is that, you know, as you may know, there's a real push inside of the DOD to shift to dual-use technology, technology that's developed for the consumer sector, but has application in the defense department.
Speaker 4: Our work with the duty is firmly under that lens. So we have an opportunity to commercialize earlier through this alternative means, but the relationship looks different. When we think about this contract, it's about...
Speaker 4: There's really three pieces. One is an activation fee on delivery of aircraft. The second is an annual lease fee. And the third is a cost per flight hour. So that's the way that we structured our relationship. And we think it's a win-win, but for us as a company and for our customers what the department protects. Great, thank you. Thank you very much guys.
Speaker 2: Our next question comes on the line of Andre Shepard with Cantor Fitzgerald. Please pursue with your question.
Speaker 7: Hey, good afternoon, everyone. Thank you for joining us on the quarter and thanks for taking our questions.
Speaker 7: I want to just maybe just start to follow up with Christine's first question. I agree, the timing of the equity offering seems a bit peculiar since we're getting closer and closer to certification and commercialization and those could be meaningful catalysts that would bring the stock price up and therefore could be perhaps a...
Speaker 7: could have been a better opportunity. I'm just wondering is, and I'm trying to ask this question maybe a little bit differently, is there a thought process that perhaps the certification or the commercialization might be more expensive or perhaps lengthier than initially anticipated and hence the equity offering I'm just trying to better on.
Speaker 5: added to our already strong balance sheet so that we would have the ability to steepen early production ramp.
Speaker 4: build more aircraft sooner and deliver those to first customer sooner without sacrificing the revenue, the runway that we need to get to and through sort of broader commercialization.
Speaker 4: and deliver those to first customer sooner, without sacrificing the runway that we need to get to and through sort of broader commercialization. Um.
Speaker 5: You know, I think our approach, and this is true for the company going way back, you know, we can't predict kind of market dynamics. We can't predict timing for that. What we want to make sure that we do is we make the right prudent decisions for the opportunity set that presents itself. Huber Financial Services, LLC.
Speaker 7: This isn't about the short term. This is about maximizing our ability to execute over the long term. Thanks, Paul. And maybe as a follow-up, wanted to get a sense of in regards to the contract with the DOD that was extended.
Speaker 7: of revenue. I realize there's different use cases for it and it's an ongoing relationship.
Speaker 7: and you're looking to monetize this relationship prior to certification.
Speaker 7: you're looking to monetize this relationship prior to certification.
Speaker 5: Yeah, I have a rest and thanks for joining us out for that. So when we look at DOD contract, we extended its $55 million extension over roughly three years. We expect, as we said on the call, the first of aircraft to go into service in early 2024.
Speaker 5: We're still going through the contract with the accounts, so we'll determine exactly how much of that would flow into revenue versus like contra-R&D, which we've seen today. And as we get closer to that time, we should be able to provide more explicit guidance and then certainly as it comes together, how that materializes. As Paul mentioned, there's an upfront piece, a fixed piece and a variable piece.
Speaker 2: And so as that comes together for 244, we will be excited about that. Got it. Okay. Thanks, Matt. Thanks for all the congrats again on the quarter. I'll pass it on. Our next question comes on the line of Bill Peterson with JP Morgan. Please receive with your question. Thank you. Thank you.
Speaker 7: You're close to a billion on your balance sheet prior to this capital raise. Are you trying to signal that there is a big step up in spend next year? And you kind of alluded to I guess maybe accelerating some programs. Can you give us some sort of idea how we should think about use of cash as we think about 2024? Michael Yeah, hey Bill. I'm sorry to always catch you at an airport. So there's really a couple of pieces behind this investment. Paul put it well.
Speaker 5: This investment gives us more options that we wouldn't have otherwise with the capital stack that we have in place. And so, we thought it was the right time to take the investment from a high quality investor with a very straightforward structure. It's a very simple capital fundraise with a long-term investor. So, it really gives us greater degrees of freedom.
Speaker 5: tailwinds like the DOD contract and some of the engagement there and then additional headwinds from as we grow our business, build more planes and start moving into more volume manufacturing but also early early stage commercialization. We are singularly focused on certification manufacturing and DOD.
Speaker 7: And now continue to 24 as well. Okay, I read that as directional increases, Mr. Cash. But my second question, related to Toyota, in the press release last week in the commentators, they're involved with power train actuators that help you design the pilot facility.
Speaker 7: How should we think about their involvement looking ahead? Do they get specifically other dismay areas if you look at the leverage or manufacture next for peace or maybe even potentially capital?
Speaker 7: involvement looking ahead. Being in specifically other additional areas will be looking to leverage our manufacturer expertise or maybe even potentially capital. OK, so I.
Speaker 8: Yeah, thanks for the question. This is DJ really sad about the Toyota partnership for sure. As you mentioned, it, the Toyota partnership started a wide back initially on the partnership and investment from and throughout the past.
Speaker 8: what really been a great engagement on the manufacturing front across all of our manufacturing organizations Not just on the powertrain and actuation but also on the airframe side all of our sites here. It's really helped us optimize how we're manufacturing this aircraft and we're seeing here with the first performing aircraft soon to be rolling out of the line.
Speaker 8: really helping us understand design for manufacturer, manufacturer ability. And as we were doing that with them, we saw an opportunity for Toyota to also participate in supplying some of the critical components for these two products. Obviously, Toyota is very knowledgeable in producing high quality products.
Speaker 8: at high manufacturing rates. And we hope to continue to get their support as we talk about how we scale into the future with our production ramp up. OK, so I'm going to discuss this. OK, thanks a lot, Tasselon.
Speaker 8: And we hope to continue to get their support as we talk about how we scale into the future with our production ramp-up. Okay, so ongoing discussions. Okay, thanks, Al. I'll pass it on.
Speaker 2: As a reminder, it is Star 1 to ask a question. Our next question comes from the line of Edison U, with Deutsche Bank. Please proceed with your question. Thank you, everyone. Thanks for taking the questions. I hate to come back to the cap raise, but wanted to maybe phrase it even in a different way.
Speaker 4: Should we interpret sort of the 180 million as something incrementally more that you need to kind of win, or not win but to follow through on the DoD contract? Or how should we think about those comments in terms of having to spend more because you
Speaker 4: in the context of having almost a billion, I would have thought you would have been spending a pretty decent amount anyway. So is there any way to reconcile those numbers or is it just not the right way to think about it?
Speaker 7: Hi, Edison. This is Paul. I'm happy to try to take us out of this one.
Speaker 7: Look, we have to ramp production, build aircraft, and then we have opportunities to generate revenue from those aircrafts. So as we think about kind of steepening that earlier production curve, building more aircraft than we might otherwise, delivering those to the new customer.
Speaker 7: When it comes to the sort of cash flow, we felt like it made sense to ensure that we had a little bit more buffer so that we had an opportunity to really capitalize on what we think is a big opportunity there. This gives us the flexibility to do some of that forward investment sooner than we might otherwise so that we can seize the opportunity that we think is in front of us.
Speaker 7: in terms of both this version of the contract that we announced this week and subsequent extensions either with the Air Force or other branches over time. Does that help? Yeah, thanks for the color. On the Toyota agreement, I'm curious...
Speaker 4: Was this something that you had sort of decided already a while back because you've been working with Toyota for so long And you just sort of announcing it
Speaker 4: or have you been looking at various other suppliers considering doing house and you sort of arrived at this decision? I'm just curious sort of the process in which this agreement kind of emerged. Thanks for the question. So maybe stepping back here, I think.
Speaker 8: What's important to think is we continue to be consistent in our strategy on focusing our effort on sourcing the parts that Exist out there whenever they meet or need to allow us to focus in areas where
Speaker 8: through vertical integration benefits us in ensuring that we have the best product out there. Our strategy with Toyota really developed organically as they continue to grow their engagement across all of our development, all of our manufacturing and all of our design and that was a really a natural fit.
Speaker 9: Understood. Thank you.
Speaker 2: Our next question comes from the line of Matt Roberts with Raymond James. Please proceed with your question.
Speaker 7: Hey, good afternoon everyone and thank you for the time. Maybe transitioning over to the aircraft itself.
Speaker 7: You know, you discussed that with the company confirming aircraft, a lot of the major aero structures have already been assembled. So maybe you just provide a little color on how these differ from the current S-4 aircraft that you're flight testing in terms of specifications, dimensions, or weight. And then for those, the initial aircraft deliveries to the DOD in 2024.
Speaker 8: of flights and we continue to be flying on a regular basis with the existing aircraft. And across the pyramid of the aircraft, and when I want to talk about pyramid, I'm thinking about components, subsystem systems, and all the way up to the aircraft. We've had a lot of lessons learned with the existing aircraft. Primarily, all of those falls into the majority of these forms of categories of optimization.
Speaker 8: So as you saw, for example, in one of the videos that we launched recently, we learned that we can develop an equally performing Ethernet switch that's half the size, half the size, the way an architect does the system to where we can increase – benefit from that to increase the performance of.
Speaker 8: of the various systems within the aircraft. Overall, from an aerodynamic standpoint, not a lot of changes on that front, so we feel that we've proven the performance of the aircraft and that's been solid and committed to from the very beginning. The real changes will be evolutionary from within the inside of the aircraft.
Speaker 7: important to understand is that
Speaker 7: DOG has a process called military airworthiness, which is related to but importantly different from FAA type certification. You can think about it as a sort of subset for which FAA type certification is a super standard. So the work that we're doing to progress increasingly sort of five-ball components, just increasingly sort of five-ball aircraft.
Speaker 5: we can use the aircraft that we are building now and essentially delivering to DOD to really continue to improve and get closer and closer to what we need to for both type certification and production certification on the FAA side. Does that make sense? Yes, certainly. I appreciate the added color there. I really appreciate it. You may to
Speaker 2: Our next question comes from the line of David Zazula with Barclays. Please proceed with your question. Thanks for taking the time. I apologize for the background. I'm also in an airport like Bill, although I can report that I'm in a Delta lounge. So helping out the team at least a little bit there.
Speaker 10: I guess first on the aircraft question.
Speaker 8: I think what's best is to put, you know, the perspective here is to put this aircraft and testing we're doing in the sense of going back to the five stages of certification. So we talked about stage one, two, and three where really those concludes with the area specific serve plans. Stage four is really a lot about or all about the testing. The testing really is at all levels or layers of the aircraft from the smallest component to the subsystems and subsystems all the way up to the airplane. So when you develop all your test plans.
Speaker 8: each of these test plans will really be targeted towards one of these levels, and then towards specific functions on these levels. This aircraft will effectively serve the test plans that are intended for an airplane, and they will be used as a dry run before we actually have the FAA conforming airplane where we run hopefully those same test plans for credit with the FAA, getting us into stage five, and then the flight certification.
That's very helpful. And then, you know, as a follow-up, I mean, a number of us that went on a field trip, you know, heard a lot about the avionics acquisition and what they're doing with you. But you know, just in the context of having recently raised equity and having, you know, obviously –
and not acquired equity in Avionics. I think it might be helpful if you try to discuss the dividends that that acquisition is paying in any quantification you can provide in terms of why it was the right move to go ahead and put that on your balance sheet.
Okay, so I'll talk to the avionics acquisition here. The avionics acquisition is really important and unique in the sense that software verification is very prescriptive and is a very unique skill set in the aviation industry. It takes a good amount to get up to speed on that.
earlier, right? We talked about the layers. Layers start with software, electronics, equipment, and all the way up to the aircraft. We've been exercising that muscle with them prior to the acquisitions, saw some amazing results from them, and then we continue to grow that here in a timely manner in order to support us going into FAA conforming tests.
Awesome, thanks very much.
Our last question is a follow-up question from the line of Andres Shepherd with Cantor Fitzgerald. Please proceed with your question. Hey guys, sorry, thanks for taking our question again. Just two quick housekeeping for us. Matt, in regards to the CapEx spend for this year, I'm wondering if you could talk about
I think in the past you had mentioned you'd expect it to be slightly below last year. I just wanted to confirm is that still the case? And then finally, how are things progressing with the piloted test flights? Is that still on track for, I guess, it should be any time now, soon, I guess. So just any color there would be great. Thanks.
Sure, so for CapEx what we got was less than last year. Recall last year we acquired the building here in Santa Cruz that serves as an R&D and office location. That was $25.5 million. So we do expect our CapEx to be less than 2022. We are on track. So what we announced on our last call. Okay, good.
was that we plan to complete our build and roll out of this first aircraft off the line in the first half of the year. And I think as we said on that call, that that's on track and that we would have a flight with pilot on board by the end of the year and on track for that as well.
So remain on track with all of our career goals. Wonderful. Thank you so much again and again. Congrats on the quarter. Thank you. We have one last question from Matt Roberts with Raymond James. Please proceed with your question. Hey, thanks for getting me in here again.
We talked a lot about capital and the aircraft itself, but maybe around some of the work that you've done in terms of operations as well as developments there. First maybe what were some of the early learnings and the training exercises that you went through with military pilots and how you envision that for commercial operations? And then
The FAA today came out with the new Skylanes for air taxis. So, what impact do you think that has? I'm sure a positive in the early stages, but any incremental color you could provide there would be great. Thanks. Thanks, Matt. This is Joe Ben. Really appreciate your question. So, I bucket that in a couple of different areas. First, you touched on with the military pilot training. That was an incredibly successful few weeks. We took four of the Air Force pilots and we took them through our full training regimen.
and they came out of that having been sole pilot in command on multiple flights, each of them, and they were glowing. They were so excited about the training programs, they were excited about the training programs, they were excited about the training programs.
our simulator and how accurately our simulator matched with the actual flight of the aircraft and The Unified control and how intuitive is to fly the aircraft So basically our training team and our government
team just really knocked out of the park. Some of those pilots will be flying the aircraft when they're on base at Edwards. Again, the DoD partnership is...
for how the FAA is leaning in to deliver not just our day one operation as we launch the commercial service, but also a plan for how to scale that to something that's going to have a dramatic impact on huge numbers of people's daily lives.
And then third, I'd really touch on Delta and what a game changing partnership that is with us. As I noted, it might appear in the marks. We have the opportunity to spend time with Delta Infrastructure Team in New York. And Delta has invested billions of dollars into the terminals that look already in JFK, as well as other terminals around the country. And...
our partnership with them is just going to be absolutely spectacular. We're going to deliver on that elevated customer experience that both Delta and Jovi are so committed to. And just to close, we remain confident in our ability to...
I'd like to hand the call back to Joe Ben-Bevert for closing remarks.
Yeah, thank you so much. Really, really appreciate everybody joining. One piece that I wanted to touch on, we didn't have a lot of questions on certification, but I just would like to highlight how critically important this is.
We're into this really exciting stage four, which is testing. It is a mountain of hard work, but I think as many of you have seen when you come and visited our facilities, we've really invested heavily in in-house testing infrastructure. And we are going to be doubling down on that work and that team as we...
work our way through stage four and improve out the remarkable capabilities that we built into every component on this aircraft that Didier spoke about. And just in closing, I'm more optimistic than I've ever been before about the prospects that lie before us. And I'm very grateful to all of our partners, whether that's Toyota, Delta, the DOD, Goodlan, code of third-order satellites.