Q3 2024 Aeva Technologies Inc Earnings Call
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Speaker Change: Two off-site song hold, we appreciate your patience and please continue to stand by.
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Chloe: Good day, my name is Chloe and I will be your conference facilitator. I would like to welcome everyone to the Ava Technologies 3rd Quarter 2020 for earnings conference call.
Chloe: During the opening remarks, all participants will be in a listen-only mode. Following the opening remarks, we will conduct a question and answer session.
Chloe: As a reminder, today's conference call is being recorded and simultaneously webcast.
Chloe: Thank you and welcome everyone to Ava's third quarter, 2024, or an AX conference call.
Joining on the call today are Sru Sala Hian, Aves Cole founder and CEO and Saurabh Sinha, Aves CFO.
ahead of this call we issued our third quarter 2020 for press release and presentation.
Chloe: which we refer to today and can be found on our Investor Relations website at investors.av.com.
Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions.
Chloe: which are subject to risks and uncertainties.
Chloe: 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.
Chloe: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
Chloe: 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.
Chloe: In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of AVA's performance.
Chloe: These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.
Chloe: The webcast replay of this call will be available on our company website under the Investor Relations link.
Speaker Change: And with that, let me turn the call over to Souresh.
Souresh: Thank you Andrew and good afternoon everyone. AVA and Q3 continue to gain momentum across multiple fronts as more customer programs and industries look to adopt AVA's unique 40 LiDAR technology to enable next-generation solutions.
Speaker Change: From new production awards to key milestones achieved towards production with existing partners and progress on securing additional wins, Ava achieved major accomplishments this quarter, and I'm excited to highlight a few of them.
Speaker Change: First, we secured a major industrial production win for security applications with the Indoor Lab in a multi-year supply agreement with the opportunity to deploy AVA-4D LiDAR at multiple large locations across the U.S., starting with JFK and SFO airports, followed by plans to grow additional deployments on other applications.
Speaker Change: This is an exciting expansion for AVA that offers meaningful revenue potential and builds on our first win in security earlier this year.
Speaker Change: In automotive, our production partners Torque and Diamond Truck achieved an important milestone toward safe and scalable commercialization with the successful validation of fully driverless operations at highway speeds.
Speaker Change: Of course, TORX Autonomous Trucks are equipped with EVA-40 LiDAR as the exclusive long and ultra-long range LiDAR supplier.
Chloe: It is incredibly rewarding to be a part of such tangible progress towards bringing Dynamitrux Autonomous Truck Program to production.
Chloe: AVA was also selected for a major European passenger OEM's automated vehicle validation program because of our FMCW advantages like direct velocity measurement which will be used to help validate the OEM's next generation vehicle automation systems.
Chloe: And lastly, AVA remains on track with multiple RFQs for passenger vehicle production programs.
Chloe: In particular, we continue to advance further towards the finalization of the RFQ for a Global Top 10 Passenger OEMs Production Program.
Chloe: Let's now discuss in more detail our recent business developments.
Chloe: We are excited to be awarded a multi-year production supply agreement with the Indoor Lab.
Chloe: With over 15 years of experience, the company is a leader in AI-powered analytic solutions used to improve safety, security, and operational efficiency at major U.S. airports, mass transit, agriculture, and smart infrastructure.
Chloe: This production wind represents a major expansion in security applications for AVA and is also our first industrial production wind for Atlas, our next generation 4D LiDAR designed for mass production.
Chloe: Under the agreement, ATLAS sensors will be integrated into the Indoor Labs LIDAR Overwatch Perception Platform and enable the Enterprise Analytics Suite for critical infrastructure to perform around-the-clock AI-powered analytics and to monitor and manage indoor and outdoor environments.
Chloe: The Indoor Lab is transitioning to AVA 40 LiDAR for production deployments in order to leverage our superior capability such as direct velocity measurements and immunity to interference, but also, importantly, because of our product scalability and the maturity of our Atlas product.
Chloe: starting with a new terminal at JFK in New York and multiple terminals at San Francisco International Airport.
Chloe: In addition, the Indoor Lab is planning to expand deployment opportunities of 40 LiDAR to other applications at scale for other airports, as well as mass transit, agriculture, and smart infrastructure applications across the United States.
Chloe: As we deliver on the initial deployments, we expect to scale our supply to significant volumes to support the deployments and other industrial security applications.
Chloe: resulting in estimated revenue opportunity in the multiple tens of millions of dollars over the next two to three years.
Chloe: We have already begun shipments to the indoor lab last month and plan to scale volumes in 2025.
Chloe: Moving now to the latest on the Diamond Truck production program.
Chloe: Torque Dynatrux subsidiary that is developing the OEM's autonomous driving technology achieved a significant step towards a safe and scalable commercialization of autonomous trucks.
Chloe: In a comprehensive validation milestone, TORC trucks equipped with AVA 40 LiDAR with 360 degrees field of view coverage successfully completed fully driverless runs at highway speeds of 65 miles per hour.
Chloe: This is a major accomplishment that clearly illustrates the tremendous progress and dedication Diamond Truck and Torque and partners are making to commercialize autonomous trucks on the U.S. highways by 2027.
Chloe: As the exclusive long-range and ultra-long-range LiDAR supplier for Diamond Truck's Autonomous Truck Production Program, multiple EVA40 LiDARs are being integrated into each truck for operation with Torque's Virtual Driver technology to enable highway speed autonomy starting with the Freightliner Cascadia platform.
Chloe: We remain on track with our startup production in 2026 to support Diamond Trucks' planned market entry by 2027.
Chloe: In passenger vehicle, AVA was selected for a major European passenger OEM's automated vehicle validation program.
Chloe: in collaboration with the leading simulation and validation technology provider.
Chloe: AVA-40 LiDAR will gather ground truth data, which will serve as the benchmark for validating its next-generation vehicle automation systems, including sensing, perception, decision-making, and control systems.
Chloe: The OEM's decision to use AVA 4D LiDAR for this project
Chloe: is another example of the growing interest to leverage FMCW technology due to its ability to natively provide the additional dimension of instant velocity data.
Chloe: along with other advantages.
Chloe: that are missing in conventional LiDAR sensors.
Chloe: We look forward to supporting the validation work and providing the OEM real-world experience with the differentiated capabilities of AVA 40 LiDAR.
Chloe: Now, moving on to additional opportunities that we are engaged on.
Chloe: We are highly encouraged by the growing interest in our unique FMCW technology, and Q3 made strong progress on multiple automotive RFQs and engagements with leading OEMs.
Chloe: in particular with a global top 10 passenger OEM that we have discussed over the course of this year
Chloe: We have advanced through multiple phases of their RFQ now, having worked jointly on spec alignment on thousands of technical requirements and passing extensive manufacturing and quality audits to be their potential Tier 1 supplier.
Chloe: AVA has been downselected to the final stage of the RFQ and will remain in close collaboration with OEM across the technical and commercial teams as they work through the finalization of the RFQ for the production program.
Chloe: To support our ongoing engagement and growing number of production wins, such as with the Indoor Lab, I am pleased to share that we have made the strategic decision and superb execution to pull forward the first shipment of Atlas by almost six months to this quarter.
Chloe: This was a massive team effort across the AVA organization that meaningfully changes our ability to support recent production wins, pull forward scaling of our adless deliveries, and capitalize on additional interest for our unique technology.
Chloe: Atlas is a production intent product that was designed from the ground up to be automotive grade and scalable to mass volume.
Chloe: Based on our engagements, customers are increasingly looking for solutions that can be deployed at significantly greater scale than today's solutions.
Chloe: With that, let me turn the call over to Saurabh to discuss the financials.
Saurabh Sinha: Thanks Soroush and good afternoon everyone. Now let's review our Q3 financial results.
Chloe: Revenue in Q3 was $2.3 million, representing scaling of our sensor shipments to automotive and industrial customers, as well as our Daimler truck program.
Chloe: In line with our expectations, our non-GAAP operating loss was $31.4 million for the quarter.
Chloe: Growth cash use was Rs. 26.4 million in the third quarter.
Chloe: which is defined as operating cash use of 25.9 million and capital expenditure of 0.5 million.
Speaker Change: AWA's liquidity totaled $259.8 million at the end of Q3, comprised of $134.8 million in cash, cash equivalents, and marketable securities, and $125 million of available undrawn equity facility.
Speaker Change: We believe this places AVA in a strong position to support our current production partners for their SOP launches as well as securing additional production program wins that our team is engaged on.
Saurabh Sinha: As Soroush shared, AVA continues to see growing interest for a unique 4D LiDAR.
Chloe: We are focused on meeting this increasing demand and securing additional production wind.
Speaker Change: Now, I would like to turn it back to Soroush for closing remarks.
Soroush: Thank you, Saurabh. Over the course of 2024, Ava has seen a sharp uptick in our commercial momentum.
Soroush: Starting with the Diamond Truck production award announced at the beginning of this year, to more recently our major expansion into security applications with multiple wins.
Soroush: We are converting more of our engagements to production wins, as well as converting the one programs to growing product shipments and revenues.
Soroush: I would like to thank the ABA team for delivering these wonderful achievements.
Soroush: Looking ahead, we see opportunities to further build on our growing momentum.
Soroush: and our focus on executing on the multiple passenger RFQs and engagements, such as the global top 10 passenger OEM that we spoke about, as well as responding to the growing interest for our perception solutions in industrial automation, security, and other applications.
Soroush: With an expanding list of industries looking to leverage FMCW advantages for automation and perception solutions, AVA is in a strong position to drive the adoption of 40 LiDAR in automotive, industrial, security, and beyond.
Soroush: With that, we will now open the line up for questions.
Speaker Change: At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star 2. And once more, for your questions, that is star and 1.
Speaker Change: We do ask that you limit yourself to one question, so there is time for everyone to ask their question.
Speaker Change: And we'll move first to Colin Rush with Oppenheimer. Your line is open.
Colin Rush: Thanks so much. Now that you've got a couple of wins on the security side,
Colin Rush: with the ground truth. Can you talk a little bit about what's going on with the potential
Colin Rush: Hi Colin, happy to answer that. This is Soroush. So obviously as you've seen now in the past number of quarters, we have continued to really build up and capitalize on the momentum that we've seen.
Colin Rush: Saurabh Sinha, Andrew Fung
Speaker Change: Yeah, I started off the year, of course, with the main production wind with Diamond Truck.
Colin Rush: Sourash Dardashti, Sourash Singh, Andrew Fung, Saurabh Sinha, Andrew Fung, Sourash Sinha,
Colin Rush: Soroush Dardashti, Saurabh Sinha, Andrew Fung
Colin Rush: with the Industrial Production Win.
Colin Rush: IndoorLabs is a leader in the space, you know, around LIDAR-based AI analytics.
Colin Rush: across applications of airports.
Colin Rush: JFK, as well as in San Francisco Airport, which we're excited about, and I think over time I'm going to expand this additional locations.
Colin Rush: over time. So we see now, you know, this plus the National Security Organization win that we had earlier is significant opportunity. So with ENDOR as well as these other industrial security applications.
Colin Rush: To get to the bottom of your question, we estimate the revenue potential here to be approximately up to about $50 million in the next few years.
Colin Rush: We see the revenue potential today could grow over time. So in a nutshell, we're really excited about that the progress we've made, it's not just in automotive, which we're really working well and progressing well, but also industrial and other applications.
Speaker Change: Excellent. And then, as you work towards production with torque, can you talk about the remaining key manufacturing hurdles that you guys are looking at and will be able to talk about with the public markets over the next couple of years?
Speaker Change: Yeah, sure. So, you know, so far we've been really well on track and really well aligned with Domino Truck and TORQ, our partners for production here. We have hit, you know, all the milestones, everything we've been planning on with Domino Truck and TORQ towards their SLP milestones. And importantly, TORQ and Domino also have been continuing hitting their milestones, right? So, with what we've seen and talked about...
Speaker Change: and TORQ made a release about in the past few days, this validation of their driverless operations at highway speeds without a driver in the cab is a critical milestone, not just for TORQ and Dynatrux, but also for the industry.
Speaker Change: Sourash Dardashti, Saurabh Sinha, Andrew Fung
Speaker Change: First of all, this year, at this point, we have now, you know, we've continued to scale on sensor shipments to Daimler Truck and Torque. We've actually completed all of the sensor shipment deliveries that we needed to do for our Ares II platform with Daimler and Torque this year on time.
Speaker Change: or ahead of time a little bit. And we're now of course focused on deliveries with Atlas into next year. So that's kind of where the key focus is. And the key milestone is gonna be the...
Speaker Change: Soroush Dardashti, Saurabh Sinha, Andrew Fung
Speaker Change: up to the levels that need it to for mass SOP throughout next year. So that's kind of the focus that we see.
Speaker Change: Soroush Dardashti, Sourabh Sinha, Andrew Fung
Speaker Change: Thanks so much, guys.
Speaker Change: Once more for your questions, that is star and one. We'll pause just another moment to allow questions to queue.
Speaker Change: Soroush Dardashti, Saurabh Sinha, Andrew Fung
Speaker Change: And we do have another question. We'll move next to Suji D'Silva with Roth Capital. Your line is open.
Suji D'Silva: Hi Soroush, hi Saurabh, congrats on the progress here. Question on the Tier 1 OEM win that you have here, can you give us an update on the progress there and the remaining milestones for that global Tier 1 program? It sounds like it's coming close to a decision point or a volume ramp, any color that'd be helpful.
Speaker Change: Yes, we'd be happy to answer that.
Speaker Change: Obviously, you know, we have been talking about our traction in the passenger car vehicle space in the past couple of quarters. Following our production with the Diamond Truck, we have seen an uptick in interest for HAVA and for FMCW technology.
Suji D'Silva: with The Passenger Vehicle and Automotive Market.
Suji D'Silva: I think with our ability to actually pull forward our Atlas deployments and really hitting all the milestones for our ISO audits and certifications We have continued over the course of this year across our engagements with multiple top Azure vehicle OEMs
Suji D'Silva: specifically for the top 10 OEM that you're I think you're referring to over the course of the year we have worked extensively with this OEM and we continue to do so and we're on track on that.
Suji D'Silva: in a little bit more context.
Suji D'Silva: We've been obviously working from evaluation of the technology earlier in the year throughout You know really going through all the extensive testing together with this top 10 OEM We have you know completed and passed all the critical manufacturing quality audits
Suji D'Silva: that helps us to build maturity as a tier one supplier and gotten the approvals for that, you know, leading to our ability to manufacture for them. We have jointly also worked together
Suji D'Silva: through the technical teams aligning on all the requirements. Thousands of technical requirements have been aligned in the past number of months and very close engagement there that we have done. And then more recently, you know, we've been now down selected the final stages here and are now discussing commercial terms.
Suji D'Silva: So that's what I can share. Obviously we are gaining continued confidence in the OEM as they move towards finalization of the RFQ for this vehicle program.
Speaker Change: as you mentioned.
Speaker Change: And, you know, obviously there's many factors that go into the decision and, you know, but we are feeling overall good about the progress that we have had with this OEM. And this is, lastly, the second time that we've done this now. First, we've done the truck, and now with this OEM in the passenger car space.
Speaker Change: Yeah so what I can say obviously is we are at the final stages of the RFQ and have been multiple downselects, right, in that and we think we're in a good position with this passenger way in.
Suji D'Silva: And then switching over to the Innovation Labs partnership, I'm wondering how does the financial opportunity for that play out as you start to develop, I guess, customers together or a pipeline together?
Speaker Change: Yeah, absolutely. So,
Speaker Change: You know, we spoke a little bit about this earlier, but in general, obviously the Indoor Labs partnership is a multi-year production deal that we have with committed volumes.
Speaker Change: And, you know, we're starting together, really, to deploy our technology with FortiByteR, as well as their analytic solution across Number Earth.
Speaker Change: Airports, large venues, and...
Speaker Change: We're looking at transit, mass transit applications. We're starting with J.S.K. Airports and San Francisco Airports, and the overall progress of Finder Labs is really to go after a number of different application installments
Speaker Change: With the opportunity here that we're talking about with Endor as well as some of our other industrial security applications, we estimate that the revenue potential for this to be approximately in the $50 million range over the next few years.
Speaker Change: Sourash Dardashti, Sourash Sinha, Andrew Fung
Speaker Change: No, understood. Thanks, Soroush.
Speaker Change: We'll take our
Speaker Change: Thank you. Thank you.
Speaker Change: from Richard Shannon with Craig Hallam, your line is open.
Speaker Change: Hi everyone, this is Tyler Anderson on for Richard Shannon. Thank you for taking my questions. I was wondering if there was any qualitative...
Speaker Change: differences between all of the places that you're looking to get into for indoor and outdoor and also what would be pulled forward for the shipment about is that something that was a technical or a manufacturing
Speaker Change: matter what could you describe that a bit for us?
Speaker Change: Sure, yeah, so obviously with, you know, with our growing interest for our technology with 40 LiDAR and FMCW.
Speaker Change: Sourash Dardashti, Sourash Sinha, Andrew Fung
Speaker Change: that we have advanced on besides this European OEM validation program that we won.
Speaker Change: We have secured production one with...
Speaker Change: with Indoor Labs on the industrial side. But this actually is for indoor and outdoor applications, so it's not just indoor applications.
Speaker Change: but...
Speaker Change: The key there for them actually has been that they've been looking obviously at different technologies in space, they have valid types of technologies, and decided that 40 lidars is where they are going to go with it.
Speaker Change: and Andrew Fung, as well as, I think importantly, our ability to show not just superior capability but also maturity of our Atlas product.
Speaker Change: These were some of the key drivers, especially when you talk about monitoring analytics of different behavior people in different settings inside the airports as well as outside.
Speaker Change: Sourash Dardashti, Sourash Sinha, Andrew Fung
Speaker Change: We saw a sharp uptick in the interest in the market for our products.
Speaker Change: Our team has been working together for the past number of months across
Speaker Change: Engineering, as well as Manufacturing Operations.
Speaker Change: to really pull forward this Atlas deliveries by about six months or so.
Speaker Change: So that's something that we, you know, has taken a significant amount of effort.
Speaker Change: from the team, but in general, of course,
Speaker Change: with non-automotive applications, we see the ability to...
Speaker Change: Saurabh Sinha, Andrew Fung, Saurabh Sinha, Andrew Fung, Saurabh Sinha, Andrew Fung, Saurabh
Speaker Change: continue on capitalizing on this momentum, not just executing on our existing programs, but also converting those additional opportunities to production wins, and then those wins to growing shipments and revenues. So that's.
Speaker Change: of kind of how we've been operating.
Speaker Change: And then, are there commonalities between the indoor and outdoor opportunities that you're looking at? Is there a population or a geographical situation that you're looking for when you're entering into a space?
Speaker Change: You're talking about specific to the industrial sensing, right?
Speaker Change: Industrial or mass transit and smart infrastructure? Sure. Yeah. So, first of all, in what we are seeing, the growing interest there in industrial security, there is
Speaker Change: You know in across different regions our first deployment starting in the US obviously with our you know this first National Security Organization program that we have and now with Indoor Lab
Speaker Change: And these are actually both indoor facing. So some of these, for example, in the terminals with SSO and JFK are looking at inside the terminal, looking for monitoring of people, wrong behavior or bad behavior, tracking analytics.
Speaker Change: Sourash Dardashti, Sourash Sinha, Andrew Fung
Speaker Change: but also there are other applications outdoor for just security monitoring around the fences and perimeters.
Speaker Change: which are you know some of the different customers. So though from a commonality you're talking about it's all the same Atlas product.
Speaker Change: that we have been working on, that is for automotive, that we're providing here for these industrial security applications.
Speaker Change: be it indoor, be it outdoor, be it for a perimeter or mass transit applications. That's some of the, I guess, beauty of kind of the platform that we have built that is highly software configured, configurable, and flexible in those applications.
Speaker Change: Thank you. We appreciate your time.
Speaker Change: There are no further questions at this time. This does conclude today's program. We thank you for your participation. You may disconnect at any time and have a wonderful afternoon.
Speaker Change: Soroush Dardashti, Saurabh Sinha, Andrew Fung