Q3 2023 Aeva Technologies Inc Earnings Call
Good day My name is Andre and I will be your conference facilitator I would like to welcome everyone to Ava technologies third quarter 2023 earnings Conference call.
During the opening remarks, all participants will be in listen only mode.
Following the opening remarks, we will conduct a question and answer session. As a reminder, today's conference call is being recorded and simultaneously webcast.
I would now like to turn the call over to Andrew Fung Director of Investor Relations. Andrew. Please go ahead.
Thank you and welcome everyone to <unk> third quarter 2023 earnings conference call joining.
Joining me on the call today are <unk> <unk>.
<unk> co founder and CEO and <unk> <unk> CFO.
Ahead of this call we issued our third quarter 2023 press release and presentation.
We referred to today and can be found on our Investor Relations website at investors <unk> Dot com.
Please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
For further discussion of the material risks and other important factors that could affect our financial results.
Please refer to our filings with the SEC, including our most recent Form 10-Q and Form 10-K.
In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of performance.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.
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 search.
Thank you Andrew and good afternoon, everyone.
It's been an incredibly exciting time at Eva.
Adoption of Mcw Lidar continues to build a world leading this trend delivering production win in both automotive and industrial and.
And with growing interest for Ava is unique 40 via our own chip technology and continued advancement of a number of large opportunities. We are strategically positioned eva to be in a strongest position us for success and to secure additional wins.
I would like to highlight key accomplishments, which are summarized on slide four.
First I am thrilled to share that Eva was selected by main mobility to be the exclusive production supplier of long range Lidar for their autonomous vehicles.
This is a multiyear production agreements, we're able to 40 by Dart will replace conventional time of flight long range Lidar and was selected to help main mobility further scaled by enabling a broader operational design domain.
Secondly, Eva was also awarded a multiyear production program with Nikon for their high precision industrial inspection products.
We have been working with Nikon for some time now and we're excited to leverage our lighter off chip technology with micron level of precision to advance to the production phase and open new opportunities can be established and growing industrial automation market.
Third we continue to make strong progress with the top 10 Oems and are now in the final phase with this OEM.
This quarter, we received the Oems highest available rating for manufacturing readiness.
Paved the way to be a potential direct supplier to the Oems and is a clear indication of <unk> ability to support major global automotive program.
We expect OEM to make the production program award decision over the next quarter.
And fourth we further strengthen Ava is positioned for success.
We are pleased to welcome Dr. Stefan Sommer, former CEO of <unk> Group and board member at the Volkswagen Group responsible for procurement to Avon Board to help further advance our automotive OEM opportunity.
And last as you move to the production phase on the heels of our two multiyear production wins in automotive and industrial and our continued momentum with top global Oems, including a top 10 Oems, we're making a strategic decision to further bolster our already strong balance sheet with the rate of new capital of 140 <unk>.
$5 million through an approximately $20 million private placement and $125 million.
Preferred shares facility with existing long term stockholders.
This strengthens <unk> position to win additional OEM programs and support them beyond their start up production in a way that minimize this near term dilution.
I would now like to provide more color on our recent business developments, which began on slide six.
Let's start with our production win in auto with main mobility, a leader in the development and deployment of <unk> technology.
The company has strategic partnerships with some of the largest automotive and transportation companies in the world, including with Toyota where they currently provide paid autonomous ride on the Toyota Sienna autonomous vehicle platform.
Through long term contracts with transit agencies municipalities and other businesses May mobility operates Panther services across a growing number of markets in the U S, including Michigan, Texas, Minnesota, Arizona kind of coming in California.
To date May mobility has provided more than 350000 rides using its proprietary multi policy decision, making autonomous vehicle technology with additional deployment plans to begin until the 'twenty four.
To further scale may mobility has been looking for next generation sensors that can enable expansion of the operational design domain.
They selected Eva 40, Lidar, because they believe in the unique capabilities of <unk>.
Mcw technology and want to leverage Eva to scale their operations.
Compared to the time of flight Lidar.
It was a combination of long range and direct velocity measurement for every pixel detector classify small hazardous objects faster and more accurately and provide the necessary reaction time across a broader range of conditions.
Together with Avon Ultra resolution, which utilizes our proprietary velocity data differentiate stationery from dynamic points, we offer near camera level resolution brings.
Bringing more revival perception that provides the confidence to expand.
We believe other inherent benefit of SMT W. Also bring value to name a belief a D stack to provide some real world. Examples retroreflector blooming in real time, and then if there are some other sorts of light such as the Sun can challenge them to find better performance.
CW is inherently immune to retroreflector blooming ambient light tabling abled lidar the deck critical objects with no degradation in these scenarios and with clearly defined object segmentation.
These are just some of the differentiated capabilities, we hope to bring to our partner neighborhood as well.
One of our production program win.
40, <unk> will be the exclusive long range Lidar on main mobility autonomous vehicles globally and replaces the conventional time of flight long range Lidar.
The agreement includes a five year volume commitments through 2028 with deliveries already starting this quarter and production ramping into 'twenty five.
Moving now to slide seven.
We achieved an important milestone in industrial automation with the award of our first production program with Nikon. They used a lot lighter on chip technology to power. The next generation high precision industrial inspection products.
This suite of product is useful industrial metrology and quality control during high volume manufacturing and Nikon current generation is already deployed to customers across the automotive aerospace and renewable energy industry.
Including some of the largest Oems such as BMW, the Atlantis and other automakers.
Being the same silicon photonics chip architecture used for our automotive applications, but with different algorithms to achieve micron level precision.
<unk> technology will enable nikon to offer a faster and smaller solution than is currently available.
Bringing added value to Nikon current customers as well as opening new opportunities for additional applications.
The production award comes after two years of close collaboration with Nikon develop and validate our lighter on chip technology meet Nikon stringent performance requirements.
Eva sort of production is on track to the targets. We set two years ago and is planned for late 2024.
This production agreement includes minimum volume commitments from the icon.
Over the multi year program.
Beyond this we continue to be engaged on additional opportunities in the industrial space.
As we have previously discussed the industrial automation market is an established and growing multibillion dollar opportunity and high precision measurement and a growing field within industrial automation, what we are seeing strong interest for <unk> unique capability.
Because of this pull from the market, we developed a perception platform for high precision measurement and utilize our software to adapt performance for different requirements across multiple non automotive applications.
Nikon will be the first to use this perception platform and we look forward to bringing additional applications to the market.
Let's turn to slide eight to discuss the latest in our collaboration with a top 10 OEM.
This quarter, we continued to make strong progress with the Oems, most notably the approval of eva's manufacturing processes and ability for Eva to be a potential direct supplier to the Oems.
I'm incredibly proud to say that Eva received Oems highest rating category for manufacturing readiness, which the Oems indicated is only given to a small percentage of their supplier base.
The rating is based on a comprehensive audit of Eva manufacturing team and processes and in onsite assessment of Avon manufacturing partners automated production facility.
This is a clear validation of cables maturity and ability to operate as a direct tier one supplier for large global automotive programs.
Over the quarter. This OEM continues to expand their vehicle fleet with Eva 40, Lidar to support their milestones and overall <unk> stack.
Remain highly encouraged by our progress and ability to help the OEM achieved their stringent requirements and use cases.
This has resulted in Eva being further down selected to the final phase with this OEM.
We expect OEM to award the production program in the next quarter and hope to have more to share soon.
Moving now to slide nine.
We are excited to have doctors Stefan Sommer joined <unk> Board of directors.
The fallen bring an extraordinary breadth of experience as an automotive industry veteran with a history leadership career in automotive.
The false past leadership roles include some of the largest global automotive car makers, including member of the board of Volkswagen Group and head of components and procurement at the VW group.
As well as leading some of the most are not automotive tier one suppliers.
He has a CEO of <unk> group, where he led and executed the strategy that helped <unk> to become one of the worlds largest tier one suppliers.
With <unk> commercial momentum in automotive Dr. Somers experience will be invaluable as we work together to bring automotive programs S O P and work toward winning additional opportunity.
Given his deep knowledge of the automotive industry, Dr. Someone's interest to join <unk> Board points, the significant potential of Teva is differentiated technology.
We look forward to working together to accelerate adoption of over 40 later.
And with that let me turn the call over to Sarath to discuss the financials.
Thank you so Ruth and good afternoon, everyone, let's turn to slide 11, which summarizes gave US the financial result for Q3 2023.
Revenue for Q3 was 0.8 million.
<unk> continued to be driven by growing deliveries of theories do.
non-GAAP operating loss was $33 million as we maintained our deliberate and strategic approach to R&D and other operating spend.
Reflecting on our cash spend for the quarter gross cash used which we define as operating cash flow less capital expenditure was 29.1 million.
Our balance sheet remains strong with $233 7 million of cash cash equivalents and marketable securities at the end of Q3.
And weighted average shares outstanding in the quarter was $222 million.
To sum it up everybody is maintaining strong financial discipline, while making significant progress on our commercial momentum.
As we move to the important stage of preparing for startup production, we will continue to be thoughtful in managing our capital with a focus on positioning Avon to support our existing customers as well as winning additional programs.
As part of this focus we made a strategic decision to further bolster our already strong balance sheet with additional capital.
As summarized on slide 13.
I would like to share more about what drove this decision.
This year, we have been making significant progress on our objectives.
Multiple production programs wins to advancing on other engagements such as the top 10 Oems.
And demonstrating the maturity of <unk> manufacturing and ability to support production program.
Because of this we continue to see growing interest brought out four D Lidar and near the final decision stage on a number of opportunities.
We believe the additional capital strategically put you in a stronger position to win additional programs.
By building OEM confidence in our ability to support multiple program.
Including with other major automotive Oems looking to select few suppliers, who can support their high volume production programs beyond <unk>.
In total we reached agreements for additional capital of $145 million with some of our largest and longest stockholders.
Added and celebrate.
Demonstrating their continued strong conviction in gave us unique technology and potential.
Importantly, the financing structure minimizing near term dilution with approximately $20 million of the total through a private placement of common stock.
The remaining $125 million is a nonvoting preferred shares facility that is currently undrawn and can be drawn at <unk> discretion.
On a new automotive OEM production ramp.
This flexibility will enable us to be strategic in how and when we may utilize the additional capital.
Demonstrating our continued focus on taking a prudent approach to capital deployment.
And with that I will hand, the call back to <unk> for closing remarks.
Thank you Rob.
When we started Eva we set out to bring a unique perception solution to a broad range of applications from automated driving the industrial automation and beyond.
While the macro environment has been challenging.
I can't say that I've never been more convinced enables potential and future outlook.
Our transition from development to production phase is gaining momentum with our latest production program wins with named mobility and Nikon highlighting both the broad applications for <unk> and us being on track for production deployments by 2025.
And we believe this is only the beginning.
We continue to advance on a number of other large near term opportunities such as with the top 10 Oems.
Spanning our board with leading automotive executive experience.
And strategically bolstered our balance sheet to put Eva and its further position of strength to secure additional production.
And support Oems beyond their startup production.
I would like to thank our talented and dedicated team at Eva.
Our enabling us to achieve these milestones.
Together with our stakeholders I am excited to continue executing on our mission and bring 40 lidar to market.
With that we will now open the lineup for questions.
Thank you do ask a question you May Press Star then one on your telephone keypad.
Youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two please limit yourself to one question.
At this time, we will pause momentarily to assemble our roster.
Today's first question comes from Joe Moore with Morgan Stanley. Please go ahead.
Great. Thank you.
I Wonder if you could talk about the progress with.
The tier one win that you talked about I guess, if you are going to be able to make the announcement in the next quarter or does that mean that the business is already one in at the announcement as kind of more of a formality I guess.
Were you able to disclose who the customer is it that in this next quarter timeframe.
Hey, Joe Yeah happy to answer the question.
What I can say is that.
As we talked on the call and as we have talked throughout the past few months, we have continued to make step by step.
Progress in our strong restaurant away with this OEM.
Past few months the past quarter, they have deployed additional vehicles using our lidar.
With with our technology on the road and then what we are now is really in the final phase of.
Discussions negotiations and commercial topics as it goes towards.
The production of oil.
It has not been awarded yet.
But as mentioned.
Feeling strong about that and we intend to.
Received.
The nomination award decision from the OEM in the next quarter and of course, we fully hope that we can also talk about our named OEM at that time so.
And you know obviously this is the top 10 Oems. So we think that is that.
Definitely a very important program to be working towards for some time in and on the heels of some of these things and all of the analysis, we talked about today, we continued to make progress with this OEM, but also other.
Top global Oems that we're progressing and advancing with across automotive.
As well as industrial applications.
Yeah, I wanted to add.
Ask them about that I mean to the extent that you are as close to making an announcement.
You know with one top 10 Oems.
When you look at the kind of capability or technology brings I would think that would start to create that enthusiasm you know what what kind of timeframe. How long should we expect it to take if you get interest from other Oems how long would it.
They kind of move that something that could drive revenue down the road.
Yeah. So yeah. So as we've talked about the programs that we're talking about here first of all the two wins that we actually announced this week are both for Medicaid is a piece right. So maybe ability until 'twenty five Nikon and going 25 different industries, we have been talking about this for some time, we said we're going to go to production 25 now we are.
Showing a validation of these are I think two big points that are showing that additionally, this other OEM programs, including top 10 OEM also has similar mid decade type of so we have not shared that yet in the lifetime loss. We can talk about it we will but that's when things are going to also start transitioning as we go along as we are moving now.
Now from this kind of development phase towards the production phase.
This is going to start to travelling tourism, increasing revenues and also growth.
Actual shipments and sales.
With multiple of these customers. So that's what I can say right now but.
I think from a timing standpoint, those timelines remain as we have discussed before.
Great. Thank you very much.
Thank you. The next question is from Colin Rusch with Oppenheimer. Please go ahead.
Thanks, so much guys.
As you've gotten Oems trying to work with some of those velocity data a little bit more detail can you talk about what youre seeing in terms of how they are using it and what it's allowing them to do in terms of differentiating between different types of opex as well as simplicity navigation systems.
Yeah, Colin are happy to answer that so look I think we have been talking about kind of the general transition from perception and sensing standpoint over time, which is not overnight, but over time from more time of flight, especially in long rates sensing towards the CW <unk>.
And this is in automotive, but also in other applications industrial. That's also we're seeing I think with it out as we have been talking about this week with validation that we see with the production deal was named mobility for example, and with Nikon.
We are seeing some.
Some of those actually form and really closely but in automotive for example.
There is.
You know a number of reasons that Oems go and look at actually switching over to Eva for really expanding what we don't want the associate always about switching it's actually also more about being able to do what they can only do this or which has really enabled some of it is enabling how they actually can expand their offerings.
Domains. So as you go from lower speeds to higher speeds. The highway speed as you were able to.
To do that there are a number of the use cases that need to be met and especially in <unk>.
Working with a number of the Oems and customers we have so far.
They have always had challenges and address those who goes to the technology they use before and when they started using Eva and our CW approach. That's when it starts to quickly using the velocity dimension, having the advantages of no no.
One appearance.
Long range sensing adult dilution features it starts to actually it's not about the specs and to seize the source to actually help them solve actual real world use cases.
Two at its always safe.
Highway autonomy type applications, and that's where I think as you know.
From what is very exciting for US is is seeing that actually happened on the road with critical testing so and that's the case for example, with a top 10 OEM.
And may mobility space.
We briefly mentioned.
They are looking to also scales are operating design domain right.
<unk>.
With.
The existing solutions, they had that was challenging our position with our approach.
They see the potential with the velocity and <unk> approach to be able to actually do that and scale. Their operations group. So that's been that's automotive and industrial separately.
We also see the opportunity, which really highlights the flexibility of the technology.
To continue to expand and industrial applications, where performance size and cost all has to be continuously improved and that's where we see some of that potential and the momentum. We are gaining for example, Nikon now validating it and really moving towards.
Production so it's.
It's about enabling new use cases, it's about helping our customers solve what they not before and thats.
I think what we're all about so that I hope that answers your question.
Yes, it's incredibly helpful and then on the.
On the manufacturing side as you ramp up and.
With fiber that can you talk about what are the real meaningful challenges on for you guys right now between now and when you have to start delivering an icon.
It would seem that you guys have to be getting awfully close but want to understand what sort of hurdles are remain before you feel really confident about scaling up.
Yeah. So so as we said so maybe just talking briefly about.
The opportunity in iconic.
And the answer to your question in that so.
So we've been working to knock off course for now.
Couple of years, now and even about two years ago, we set out a target to go to production by 225. This week, we announced that we are not only on track we have completed the validation and meeting the stringent requirements from Nikon to the micron level precision, which by the way is also unique feature to have MPW to our understanding versus time of flight.
I think from a timing standpoint, obviously as we said that means that we need to go start our production ramping for an icon late next year. So that night construct availability can happen by 2025.
We have been working on this for some time, so as we said earlier in the year.
We set out to <unk>.
And our manufacturing.
On the systems side, we are continuing now to bring in additional automation on the manufacturing of our lighter on chip module, which is really the core of the heart of the product that goes that we supply to two Nikon edition without processing. So.
That is.
The focus for Us I think.
In the next number of months as we get closer we'll be talking about updates on this on the sluggish for this but we have been working with Avnet and team we have on site there to really prepare.
We continue.
Expanding the outputs and throughput.
And focusing on the yields and our.
Automated manufacturing line over there.
Tours.
Thanks, so much appreciate it.
Thank you. The next question comes from Susan the Silver with Roth Capital. Please go ahead.
Suraj I so Rob a question on the the top 10 OEM as well for me I just want to be clear. The one you were talking about here is that the same one with the award win you announced and the perception stack I just want to clarify that.
Yes. This is the same this is the same as all the same okay yep same ones that.
We've been talking about great.
It's not the only one that is obviously I understood the message.
Multiple Oems that are on it.
And then so for the OEM have you specified whether this.
Engagement is for a broad platform win for the OEM that'll be multiple models and across a whether it's a target sort of vehicle just to understand if you have kind of clarified the breadth of your opportunity here.
Yeah, No we have not discussed that I think that will be I think the right.
Opportunity in the future as we as we go towards the.
The final.
Decision coming up but what I can tell you is obviously the opportunity is from a top 10 OEM with large volumes.
And.
With production and <unk>.
Middle of the decade as we've talked about so this is not some sort of a pilot program or something like that that we're talking about here.
Okay that color definitely helps.
And then lastly on the OEM.
Well just in general the auto OEM waterfall of wins is there anything that gets quote unquote easier. After you secure this first one publicly it started kind of delivering to them in terms of the second third and fourth one just want to understand how that might be or whether they're each kind of.
Fresh starts.
Yeah, well first of all I think.
Hopefully you can see some of that kind of already happening right. So.
We've been talking about our progress and momentum in this space.
And.
Hurting additional programs to win this week, we announced not one but two in each sector.
And we're really excited about that.
These are folks that.
For example in this case have been using time of flight before end and are familiar with minor. So I think that's where we see opportunity.
The progress to actually be able to move them.
Faster because folks have experienced they know what they're doing they're doing this for some time and so they can also appreciate the advantages in terms of what they can see that helps them.
Enable them to expand their operations gave up their deployments and all of that so.
And we absolutely believe that with all the work that we're doing here with I think that's really the breakthrough of past few months, we've had on the heels of two <unk>.
OEM wins, expanding our board and automotive experience with Doctor somewhere coming on and his.
We're now in experience in this space is.
And women that Volkswagen has less bolstering our balance sheet. All of this really helps us to position <unk> in a really strong position.
To win additional programs as we go towards production and also give confidence to our customers that are looking at a select few players that can not just win something but also be there beyond their soapies to support them and that's really what we're doing here.
And a multistep approach so that's what I can say and I think.
Obviously, we do believe that.
Yes.
With us delivering on a first large.
OEM.
Program win subsequent ones are going to be that much.
Okay.
More.
More streamlined to get and move on from there.
Very helpful. Thank you.
Thank you. The next question is from Richard Shannon with Craig Hallum. Please go ahead.
Hi, guys. Thanks for taking my questions as well maybe it will hit on the top 10 OEM here.
Sure. So I think your language was you were down selected.
Past quarter here does that mean you are the only supplier remaining that theyre looking at or are there others.
So.
Look at the end of the day, we we never know in terms of what the end customer does and that is not.
Something that necessarily we look at I think where we will be really look at is there's been actually multiple layers of down solution does happen.
At this stage we are in the final phase.
And as I mentioned with the decision coming up in the next quarter.
Also importantly, we havent worked with this OEM for some time and they have already started deploying.
Our sensing technology on their vehicles.
And which actually replaces some time of flight technology as we've talked about in the past. So that is what I can say right now that gives us that additional further.
Information in.
The support that we're looking for so.
Obviously, we're also working on around providing.
Providing some of our perception.
And collaborating with the OEM or the perception to really utilize some CW advantages with greater velocity nature and since the last time, we spoke of course OEM has also.
<unk> deployed with our lidar or is it an additional vehicles.
That they have continued to build so.
A number of things happening, but I think I will stop there.
Information.
Okay.
Okay fair enough I appreciate the color.
My follow on question here is related to May mobility.
How do we think of them in terms of the ultimate scale of opportunity that exist with them through 2028 I don't know if this is something that's even in within alert and magnitude of a typical automotive OEM youre growing list, but any way you could give us some color on how how big that could be relatively speaking.
Sure happy to so let me give you a bit of color about nae and answer your question hopefully there. So obviously, we're very excited about this.
One of the first deployments for us in automotive mobility sector, starting with Arris two deployments already this year.
And then you can go look background on EMEA and kind of give you some context about the size and the comparison you mentioned so so first of all may has been around for a long time been working with a number of players and.
<unk> partnered with some of the largest automotive companies, including Toyota.
Operating paid autonomous rides today across four states with more coming next year and they have done over 350000 rides and are taking a more measured approach when it comes to scaling.
As converted some of the other players really through paid contracts municipalities and cities and.
In terms of the scale and May have caused may have talked about this.
They are scaling the operations by one thousands of vehicles in the next few years here.
And.
Again, what they see and Eva is a unique event CW approach and enabling them really to expand their current odd's or operating design domains.
From where they are now to really enable this scaling.
The continued to expand.
And so.
We're talking about here.
It's a multiyear production deal, which gave us the exclusive long they bought our supplier for May vehicles globally, we have minimum volume commitments starting from this quarter every year through the end of 2028.
And in terms of the size of this opportunity we actually believe this is similar to.
The potential size of some of the initial luxury passenger vehicle programs that are coming to the market.
And that's why we can say again may is probably how about thousands of vehicles, we're talking about multiple litres per vehicle.
And the other thing I think thats interesting here is as compared to the luxury passenger for the initial deployment of luxury fashion hazardous cars does that.
The mobility business model does actually enable us to in a mutual beneficial scenario to have higher asp's than typical passenger vehicle.
That are considerable and so that is why in terms of the overall size, we're actually pretty excited about this and also.
This aligns with the timing of what we have always talked about 2025 with our solid production. So.
We are working hard towards delivering our commitments and really excited to partner with them.
For the year then.
Okay, I appreciate that detail as well I will jump out of line guys. Thank you very much.
Yeah.
Thank you very much. This concludes our question and answer session and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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