Q3 2025 QuantumScape Corp Earnings Call

The conference. Thank you operator, good afternoon, and thank you to everyone for joining quantum <unk> third quarter 2025 earnings call to supplement today's discussion. Please go to our IR website at IR Dot quantum state dot com to view our shareholder letter.

Before we begin I want to call your attention to the safe Harbor provision for forward looking statements that is posted on our website as part of our quarterly update.

Forward looking statements generally relate to future events future technology progress, our future financial or operating performance.

Our expectations and beliefs regarding these matters may not materialize.

All results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

There are risk factors that may cause actual results to differ materially from the contents of our forward looking statements for the reasons that we cited in our shareholder letter.

<unk> Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes.

Joining us today will be quantum scape CEO, Dr <unk>, and our CFO, Kevin Hetrick with that I'd like to turn the call over to silver.

Thank you Dan.

I think to begin with one of the highlights of the year.

On September eight.

I E mobility in Munich, Germany.

Unnamed other launch prevent with Volkswagen.

Ducati the 'twenty ones.

<unk> motorcycles.

Developed as a collaboration among the khadi.

Political and kiosks.

The Ducati week 21 and.

Is the first of its kind aitken demonstration.

And as a showcase for the.

The exceptional performance offer no compromise next generation battery technology.

At the launch program.

<unk> 21 is IBM.

It is a low volume, but high visibility demonstration that now allows us to put that USD five technology into a demanding at the end of the world application.

The next step for the new cognizant of them its field testing.

Turning to our annual goals.

We are pleased to report that during Q3, we began shipping Cobra.

USD five B one campus.

Completing another of our key annual goals for 2025.

These cells.

Our board of the Ducati lines drove them animated feature it on stage I E mobility content.

Our remaining operational goal for the year is to install at higher volumes and production equipment quite of a highly automated pilot client incentive eight named that EBIT line.

It could have been for certain key assemblies steps have already been installed on legal line and this is going to remain on track.

Another important goal for 2025 has been to expand our collection of engagement, including deepening relationships with existing customers.

Engaging new customers.

And bringing additional partners into out of grilling technology ecosystem.

In Q3, we made substantial progress on all three yes.

With respect to existing customers.

The successful launch event with Ducati Ob and political E mobility with a major milestone in our long collaboration with the Volkswagen Group.

Last quarter we.

We also announced a new joint development agreement with an existing customer.

And we are continuing to work closely with them as we progress through the first phase of the development and commercialization engagement.

We are also in an active engagement with a new top 10 global automotive OEM in addition to our existing customers.

With regard to <unk> ecosystem development.

Continue to add World class partners.

On September 30th we announced an agreement with Corning.

<unk> developed ceramic stepping into the manufacturing capabilities based on our Cobra profit.

Corning is a global leader in advanced materials, and they bring deep expertise in ceramics processing and proven manufacturing excellence.

Ecosystem.

In parallel.

We successfully completed the initial phase of our collaboration with what outcome on the proxy.

Have signed a subsequent contract.

And progress through the next phase of that relationship.

Our goal is to make he was technology the clear choice.

Providing our customers with a turnkey ecosystem.

The global demand quite better the batteries.

With Murata and Corning, we have two of the most well known technical ceramics manufacturers as ecosystem partners.

And we will continue to grow our ecosystem partners.

With our achievements this quarter.

Our vision for the commercialization of our next generation battery technology is beginning to take shape.

We are executing consistently towards our key annual goals.

Demonstrating our technology <unk>.

Engaging with partners and building out our capital light development and licensing business model.

Everything starts with execution.

And we are proud of our team's performance.

This year, we have already accomplished two of our key operational goals based planning of the Cobra process and beginning shipment in the call, but I've been at <unk>.

Continuing our track record of consistent execution against our goals.

Q3 also saw our first public technology demonstration with the Volkswagen group that the coffee <unk>.

We are expanding our collaboration with existing customers and adding new customers and we have also expanded our global ecosystem of World Class partners.

The third quarter also makes another exciting milestone we are beginning to show returns from other catheter late development and licensing business model.

Driving over $12 million in customer billings in Q3.

Our ambitious targets naturally present, many challenges to overcome and there is much work left to do.

Our objective is clear.

Revolutionize energy storage.

I for the life on the enormous market opportunity and create exceptional value for our shareholders.

With this aim in mind.

We are excited to update shareholders on our continued progress over the months and years to come.

With that let me hand things over to Kevin put a word on our financial outlook.

Thank you Susan.

GAAP operating expenses and GAAP net loss in Q3 were $115 million and $105 8 million respectively.

Adjusted EBITDA loss was $61 4 million in Q3 in line with expectations.

A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statement at the end of our shareholder letter.

Speaker #1: Our ambitious targets naturally present many challenges to overcome , and there is much work left to do . Our objective is clear revolutionize energy storage .

We continue to drive operational efficiency consistent with our capital light licensing focus.

Speaker #1: Capitalize on our enormous market opportunity and create exceptional value for our shareholders. With this aim in mind, we are excited to update shareholders on our continued progress over the months and years to come.

We revise and improve our full year guidance for adjusted EBITDA loss to $245 million to $260 million.

Capital expenditures in the third quarter were $9 6 million Q3, Capex, primarily supported facilities and equipment purchases for the Eagle life.

As a result of efficiency gains and process improvements, including from the Cobra process as well as a change in timing of certain equipment ordering we revised the range of our full year guidance for capex to $30 million to $40 million.

Speaker #1: With that , let me hand things over to Kevin for a word on our financial outlook .

Speaker #2: Thank you . Siva . GAAP operating expenses and GAAP net loss in Q3 were 115 million and 105.8 million , respectively . Adjusted EBITDA loss was 61.4 million in Q3 , in line with expectations .

In Q3, we bolstered our balance sheet and completed our aftermarket equity program raising $263 5 million of net proceeds in advance of the August 10th exploration of our shelf registration.

We ended the quarter with 1.1 billion in liquidity.

Speaker #2: A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statement . At the end of our shareholder letter . We continue to drive operational efficiency , consistent with our capital light licensing focus .

We now project our cash runway extends through the end of the decade, a 12 month extension from our previous guidance of into 2029.

Going forward, we plan to move away from providing updates on cash runway and will begin providing updates on customer billings.

Speaker #2: We revise and improve our full-year guidance for adjusted EBITDA loss to $245 million to $260 million. Capital expenditures in the third quarter were $9.6 million.

Customer billings represent the total value of all invoices issued by <unk> to our customers and partners in the period, regardless of accounting treatment.

Speaker #2: Q3 CapEx primarily supported facilities and equipment purchases for the Eagle Line . As a result of efficiency gains in process improvements , including from the Cobra process , as well as a change in timing of certain equipment ordering .

Customer billings as a key operational metrics meant to get insight into customer activity and future cash inflows domestic is not a substitute for revenue under U S. GAAP.

Speaker #2: We revised the range of our full year guidance for CapEx to 30 million to 40 million . In Q3 . We bolstered our balance sheet and completed our at the market equity program , raising 263.5 million of net proceeds in advance of the August 10th expiration of our shelf registration .

Customer billings in Q3 were $12 8 million.

In Q3, we invoice VW power co under the upgraded deal announced in July.

The resulting cash inflows benefit <unk> shareholders, they will be directly reflected on the balance sheet as cash when we receive payment.

Speaker #2: We ended the quarter with 1.0 billion in liquidity . We now project our cash runway extends through the end of the decade . A 12 month extension from our previous guidance of into 2029 .

During the collaboration phase of this particular deal because of the related party relationship with VW in accordance with U S. GAAP liability of equivalent value will also be created.

Speaker #2: Going forward , we plan to move away from providing updates on cash Runway and will begin providing updates on customer billings , customer billings represent the total value of all invoices issued by SHS to our customers and partners in the period , regardless of accounting , treatment .

U S has no repayment obligation with respect to these liabilities.

Once relieved rather than impacting the P&L this value will accrue directly to shareholders equity.

Payments from other customers or partners, we expect will be accounted for differently due to the lack of equity ownership or significant related party ties.

Speaker #2: Customer billings is a key operational metric meant to give insight into customer activity and future cash inflows. The metric is not a substitute for revenue under U.S. GAAP. Customer billings in Q3 were $12.8 million.

Thanks, Kevin will begin today's Q&A portion of the few questions. We've received from investors or that I believe investors would be interested in.

Simba the world's first <unk> demonstration of <unk> solid state lithium metal batteries at <unk> 21 in all motorcycle premiered at IAA mobility on September nine.

Speaker #2: In Q3, we invoiced VW Power Co under the upgraded deal announced in July. The resulting cash inflows benefit SHS shareholders. They will be directly reflected on the balance sheet as cash.

Why is this such an important milestone in one of the next steps on your commercialization roadmap.

Then that announcement.

Speaker #2: When we receive payment during the collaboration phase of this particular deal . Because of the related party relationship with VW , in accordance with .

Seeing that might occur.

Across the stage with an emotional moment for all of us at Cumulus.

Speaker #2: US GAAP , a liability of equivalent value will also be created . SHS has no repayment obligation with respect to these liabilities . Once relieved , rather than impacting the PNL .

And with obviously a huge milestone.

But all of our employees and mysterious and partners. This is logging.

Now, we'll be demonstrating what a battery in the field and gathering as much data as possible from Fintech.

Speaker #2: This value will accrue directly to shareholders equity payments from other customers or partners . We expect will be accounted for differently due to the lack of equity , ownership or significant related party ties .

Stepping back a bit this was a major step another strategic moving.

You can think of this.

Speaker #2: Thanks , Kevin . We'll begin today's Q&A portion with a few questions . We've received from investors or that I believe investors would be interested in .

Four tracks that are running in parallel.

Ducati program.

Our political relationship.

Speaker #2: Siva . The world's first .

Other customers.

Speaker #3: Live demonstration of SHS . Solid state lithium metal batteries in a B-21 l motorcycle premiered at IAA Mobility on September 9th . Why is this such an important milestone and what are the next steps on your commercialization roadmap ?

Our ecosystem development.

With an effective powerful more broadly at the analyst day I E mobility.

We are working toward automotive grade standards.

With a goal of the serious production costs with Qs technology before the end of the decade.

Speaker #1: Then that announcement and seeing the bike ride across the stage was an emotional moment for all of us at SHS. It was obviously a huge milestone for all of our employees, investors, and partners.

With respect to other customers, we are working towards commercialization deal with additional automotive Oems and.

And of course.

We are building out our ecosystem with world class partners like without that Corning, So that we can handle a customer Ottawa.

Speaker #1: This was long in the making . Now we'll be demonstrating our battery in the field and gathering as much data as possible from field testing .

Automotive customer I Don T <unk>.

The massive and growing demand for our technology.

Speaker #1: Stepping back a bit , this was a major step in our strategic blueprint . You can think of this as four tracks that are running in parallel .

These are the main area that would be able to execute on.

Thanks, Nova on that note U S continues to advance discussions with key high precision ceramics players. Most recently announcing an agreement with Corning and advancing our partnership with Murata, how does this fit into the Companys overall strategy of building out the kiosks global partner ecosystem.

Speaker #1: The Ducati program , our Powercore relationship , our other customers and our ecosystem development with respect to power . More broadly , as announced at IA mobility , we are working toward automotive grade standards with a goal of a series production car with SHS technology before the end of the decade .

What are the key benefits of this business model and some potential ways <unk> may receive economics for these partnerships.

<unk> proprietary ceramic consolidated hedge separator in our court.

Speaker #1: With respect to other customers , we are working towards commercialization deals with additional automotive OEMs and of course , we are building out our ecosystem with world class partners like Murata and Corning so that we can hand our customer automotive customers a turn supply chain to serve the massive and growing demand for our technology .

It enables our annual pre architecture and performance advantages.

Our strategy involves partnering with specialized heightened position pedantic manufacturers that Tesla knockdown Corning does get upset and into production.

These partners, who are public you have separated the certain manufacturers like political.

Core to handle final telephone.

Speaker #1: These are the main areas that we have to execute on .

Disaggregated model allows QTS to one leverage the manufacturing expertise and balance sheets are partners with strong reputations and manufacturing as well as IP protection.

Speaker #3: Thanks , Eva . On that note , SHS continues to advance discussions with key high precision ceramics players . Most recently announcing an agreement with Corning and advancing our partnership with Murata .

Speaker #3: How does this fit into the company's overall strategy of building out the SHS global Partner ecosystem ? What are the key benefits of this business model and some potential ways SHS may receive economics from these partnerships ?

So that make protection is a highly especially at scale and this allows a set of production partners to focus on their core competency.

And think this accelerates the scale up of our technology by tapping into their manufacturing capability.

Speaker #1: Then , is proprietary ceramic solid state Separator is our core IP . It enables our anode free architecture and its performance advantages . Our strategy involves partnering with specialized , high precision ceramic manufacturers such as Murata and Corning to scale up separator production .

Sharp accordingly.

Part of our complementary and expanding global ecosystem designed to Derisk, Kayla and enabled a capital efficient path to commercialization.

We believe each partner contributes unique things.

Speaker #1: These partners would supply SHS separators to sell manufacturers like Power Co could handle final cell assembly , disaggregated model allows us to one leverage the manufacturing expertise and balance sheets of partners with strong reputations in manufacturing , as well as IP protection to ceramic production .

It helps us efficiently scale I would flip it into production in Taiwan.

As you would expect.

We are continuing to build out the entire U S ecosystems with additional partners.

And just to add onto that in the fullness of time the ecosystem would represent a third source of cash inflow under our capitalized development and licensing business model.

Speaker #1: Is a highly specialized skill set , and this allows our cell production partners to focus on their core competency . And three , this accelerates the scale up of our technology by tapping into their manufacturing capabilities .

The first is monetizing collaboration and customization work with our OEM partners, the second and largest source of inflows would be licensing as our customers produce cells using our technology. The third one would be value sharing from our ecosystem partners.

Speaker #1: In short , Corning and Murata are part of a complementary and expanding global ecosystem designed to de-risk , scale up and enable a capital efficient path to commercialization .

Thanks, Kevin can you expand further on customer billings as a key operational metrics on our customer billings translate into cash in flows.

First to expand on the significance of customer billings.

Speaker #1: We believe each partner contributes unique strengths to help us efficiently scale our separator production into high volumes , as you would expect , we are continuing to build out the entire Qsk ecosystems with additional partners .

Our first ever invoices totaling $12 8 million in Q3 2025 are by themselves and important commercial milestone in the history of our company. It's nice to have arrived at the chapter where we're billing customers.

I'd also highlight to investors the customer billings are evidence of our capital light business model at work.

Speaker #2: And . Just to add on to that , in the fullness of time , the ecosystem would represent a third source of cash inflow under our capital light development and licensing business model .

On the front end, we monetize development activities for our customers to tailor our core technology to meet their specific needs.

Speaker #2: The first is monetizing collaboration and customization work with our OEM partners . The second and largest source of inflows would be licensing . As our customers produce cells using our technology .

Subsequently as the customer ramps production, we realized royalties over the lifetime of the project as we continue to develop further generations of our technology, we will seek to maintain these lines of business to generate consistent and compelling cash flows.

Speaker #2: The third one would be value sharing from our ecosystem partners .

Payment for development activities has the benefit of being near term the royalty payments represent the majority of the value capture opportunity through our consistent long term stream of high gross margin revenue.

Speaker #3: Thanks , Kevin . Can you expand further on customer billings as a key operational metric ? How do customer billings translate into cash inflows ?

<unk> sharing from ecosystem partners represents further opportunity for shareholder returns.

Speaker #2: First , to expand on the significance of customer billings , our first ever invoices totaling 12.8 million in Q3 2025 are by themselves an important milestone in the history of our company .

I'd also ask investors to keep four things in mind, when interpreting our customer billings metric.

The metric is not a substitute for revenue under U S. GAAP.

Speaker #2: It's nice to have arrived at the chapter where we're billing customers . I'd also highlight to investors that customer billings are evidence of our capital light business model at work on the front end , we monetize development activities for our customers to tailor our core technology to meet their specific needs .

The accounting for an individual customer billings may differ significantly.

Third the amounts billed to customers may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of an agreed scope of work.

Lastly, it is important to note that future cash inflows can diverge from customer billings. For example, as a result of timing differences payment terms prepaid customer deposits or any adjustments to final payment amounts.

Speaker #2: Subsequently, as the customer ramps production, we realize royalties over the lifetime of the project. As we continue to develop further generations of our technology, we will seek to maintain these lines of business to generate consistent and compelling cash flows.

Okay. Thanks, so much Kevin we're now ready to begin the <unk> portion of today's call. Operator, Please open up the line for questions.

Speaker #2: Payment for development activities has the benefit of being near-term . The royalty payments represent the majority of the value capture opportunity through a consistent long term stream of high gross margin revenue .

Thank you.

You have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one a second time.

Speaker #2: Value sharing from ecosystem partners represents further opportunity for shareholder returns . I'd also ask investors to keep four things in mind when interpreting our customer billings metric .

If you are called upon to ask your question and our listening via Speakerphone on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker #2: First , the metric is not a substitute for revenue under US GAAP . Second , the accounting for individual customer billings may differ significantly .

To be able to take as many questions as possible. We ask that you. Please limit yourself to one question and one follow up.

Speaker #2: Third , the amounts billed to customers may vary from quarter to quarter due to fluctuations in activity . As we progress through various phases of an agreed scope of work .

Again, it is star one if you would like to join the queue.

And our first question comes from the line of Winnie Dong with Deutsche Bank. Your line is open.

Speaker #2: Lastly , it is important to note that future cash inflows can diverge from customer billings . For example , as a result of timing differences , payment terms .

Hi, Thank you guys so much for hosting them.

Speaker #2: Prepaid customer deposits , or any adjustments to final payment amounts .

First question I was hoping you can help me on this one a bit more about the joint development of a bottleneck operators with Corning with you.

Speaker #3: Okay . Thanks so much , Kevin . We're now ready to begin the live portion of today's call . Operator , please open up the line for questions .

Hmm.

If you can help me sort of understand maybe malaria in different places.

Speaker #4: Thank you . If you have dialed in and would like to ask a question , please press Star One on your telephone keypad to raise your hand and join the queue .

Not at all.

Then on Laredo as Paul and you said you successfully completed the initial pain from the collaboration.

Speaker #4: If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute.

And with local China contract.

Was hoping maybe you can also then help me better understand the nature of the agreement.

Speaker #4: When asking your question . To be able to take as many questions as possible , we ask that you please limit yourself to one question and one follow up .

Perhaps some details on the economics.

How in terms of the transfer of it.

Speaker #4: Again , it is star one . If you would like to join the queue and our first question comes from the line of Winnie Dong with Deutsche Bank .

That's my first question. Thank you.

Many thank you thanks for the question.

As you pointed out this is an extremely important aspect of our business model.

Speaker #4: Your line is open .

Speaker #5: Hi. Thank you guys so much for hosting. First question is, I was hoping you can help me understand a bit more about the joint development of the ceramic separators.

<unk>.

Ecosystem together.

<unk>.

And so that makes manufacturing is as <unk> mentioned that you had an extremely.

Speaker #5: With Corning . Would you recently announced if you can help me sort of understand maybe some similarities or differences in comparison to Murata and then Murata itself ?

Specialized skill sets and we wanted to bring people with those who can manufacturing high volume.

Taking our Cobra process.

And ramping into volume and.

Speaker #5: You said you've successfully completed the initial phase of the of the collaboration , and then and then you've also signed a subsequent contract .

Using data and balance sheet.

Applegate in building these factories.

And so when we started out with about.

Speaker #5: We're hoping if you can also there help me better understand the nature of the agreements . Perhaps some details of the economics or the technology .

About at.

Nine months ago.

We both entered into a development agreement, where they came in to evaluate what we need that you're doing what do they need to do is such that they concluded that and we enter into the next system, where you start to go down.

Speaker #5: Knowhow in terms of the transfer of it . That's my first question . Thank you .

Speaker #1: Thank you . Thanks for the question . As you pointed out , this is an extremely important aspect of our business model to bring a ecosystem together for us .

Our relationship into a much higher level.

Sense of volumes.

And they understand walked out the volumes involved and what our customers need that so we are getting to be in that faith, maybe you can take cobra and ramping volume.

Speaker #1: And ceramic manufacturing is , as I mentioned earlier , extremely specialized skill set . And we want to bring people with us who can manufacture in high volume , taking our Cobra process and ramping it into the volume and using their balance sheet to put capital in building these factories up .

We have been working with Corning throughout this time estimate corn.

<unk> had also been under an early development contract with US and then we came into a more detailed relationship as we announced in early September.

And the reason we need to then is as you would think it's pretty obvious the opportunity is so large.

Speaker #1: And so when we started out with Murata about nine months ago, we both entered into a development agreement where they came in to evaluate what we needed to do.

That it is good for us to have two suppliers.

Initially there may be complementary in different aspects of the strategy for us.

But I expect over the long term to have.

Speaker #1: What do they need to do, etc.? They concluded that, and we entered into the next system where we started to ramp our relationship to a much higher level with commitments of volumes, etc.

And much larger motion that each one of the best and so both of them.

Our extraordinarily complicated manufacturing partners and they are excited to be part of this relationship I spent time with both Ceos.

Speaker #1: And they understand what the volumes involved are and what our customers' needs are, etc. So we are getting to be in that phase where we can take Cobra and ramp up in volume.

Ladies and they are very very eager to get launched into high volume production.

Speaker #1: We have been working with Corning throughout this time as well . Corning had also been under an early development contract with us , and then we came into a more detailed relationship as we announced in early September .

Work with our Big OEM partners.

That's very helpful. Thank you.

And then second question.

Do you mean that you're just going to be.

Speaker #1: And the reason we need two of them is, as you would think, pretty obvious. The opportunity is so large that it is good for us to have two suppliers, and initially they'll be complementary in different aspects of the ceramic processing.

From a billing.

Net shaped.

Was wondering if you can give us.

Maybe as well.

Idea on the conversion to <unk>.

The new Entre collection.

Hum.

Speaker #1: But I expect over the long term to have a much larger portion that each one of them does . And so both of them are extraordinarily competent manufacturing partners .

Is that is that sort of like the main metric on you.

You will be providing overtime as opposed to sort of standing out.

Speaker #1: And they are excited to be part of this relationship . I spent time with both CEOs at length , and they are very , very eager for them to get launched into high volume production , to work with our big OEM partners .

Revenue could look like in the next maybe one to two years or so.

Just wanted to understand that dynamic a little bit better and then I think last quarter you mentioned.

On the investigation being done.

Revenue recognition and was hoping maybe you can help hotline.

Speaker #5: That's very helpful. Thank you. And then the second question is the new metric that you just introduced: the customer billing metric.

Thank you.

Hi, so just.

<unk>.

Outlined back the question part servers that go into the definition of customer billings and talk about their importance and also on the accounting treatment of GW power cost at all.

Speaker #5: I was wondering if you can give us maybe a rough idea on the conversion time to revenue or to collection of those funds.

Take them in order so just to be on the same page, we defined customer billings as the total value of all invoices issued by <unk> to our customers and partners in the period, regardless of accounting treatment and where we hope is useful to investors as it is a key operational metrics to give you insight into customer activity.

Speaker #5: And then is that is that sort of like the , the main metric then you will be providing over time as opposed to sort of framing out what revenue could look like in the in the next maybe 1 to 2 years or so .

And in <unk> future cash inflows I think you also had a question on how those translate into the timing of cash flow payments.

Speaker #5: So just wanted to understand that dynamic a little bit better . And then I think last quarter , you mentioned there is some investigation being done in terms of revenue recognition .

So there.

I did mention in my remarks that you should see a divergence from billings to future cash inflows for a variety of reasons. Those could include things like timing differences in payment from customers prepaid customer.

Speaker #5: And I was hoping that you can also tie that into into the response . And you .

Speaker #2: So just to outline back the question part , there was a go into the definition of customer billing . Talk about their importance .

Positive adjustments to final payment amounts typical operational considerations there.

You asked about the importance.

Speaker #2: And also on the accounting treatment of UW Power Co . So I'll take them in order . So just to be on the same page , we define customer billings as the total value of all invoices issued by us to our customers .

First of all it is.

It is very nice to be in this in this chapter where we're doing work of values to customers.

And.

Billing them for it such a nice nice moment.

Speaker #2: And partners in the period , regardless of accounting , treatment and where we hope it's useful to investors is it's a key operational metric to give insight into customer activity and into future cash inflows .

For the.

Our our company.

And on the VW power code treatment.

Way that the accounting works is the cash inflows of course at a broader perspective benefit commscope shareholders there'll be reflected on our balance sheet as cash when we receive them.

Speaker #2: I think you also had a question on how those translate into the timing of cash flow payments. So, I did mention in my remarks that you could see a divergence from billings to future cash inflows for a variety of reasons.

The collaboration phase of the VW power co deal because of the related party relationship with VW in accordance with U S. GAAP.

Speaker #2: Those could include things like timing differences in payment from customers , prepaid customer . Deposits , adjustments to final payment amounts , typical operational considerations .

Liability of equivalent value will also be created.

A reminder to shareholders, we do not have a repayment obligation with respect to these liabilities and upon release of the reliability rather than impacting the P&L. This value will accrue directly to shareholders equity. So this accounting treatment is specific to the collaboration phase of BW power co payments.

Speaker #2: There . You asked about the importance . First of all , it is it is very nice to be in this in this chapter where we're doing work of value to customers and billing them for it .

Payments from other customers of our partners, we expect to be accounted for differently due to the lack of equity ownership or significant related already passed.

Speaker #2: So that's a nice a nice moment for the our , our company . And on the VW power code treatment , the way that the accounting works is the cash inflows .

Yeah.

Got it.

Okay helpful. Thank you I'll pass along.

Speaker #2: Of course , at a broader perspective , benefit Quantumscape shareholders . They'll be reflected on the balance sheet as cash . When we receive them during the collaboration phase of the VW power code deal , because of the related party relationship with VW , in accordance with US GAAP .

Okay.

Excuse me. Our next question comes from the line of Jed <unk> with William Blair. Your line is open.

Hi, everybody.

Mark shooter onshore Jed door schirmer.

Speaker #2: A liability of equivalent value will also be created . A reminder to shareholders . We do not have a repayment obligation with respect to these liabilities and upon release of the reliability rather than impacting the PNL , this value will accrue directly to shareholders equity .

Congrats on the <unk> progress and especially the Ducati demo.

It's always there.

There's a lot of learnings and actually creating the packet integration.

Congrats on that.

During the.

GAAP presentation, VW mentioned sells an EV by end of the decade.

Speaker #2: So this accounting treatment is specific to the collaboration phase of VW Power Co . Payments from other customers or partners . We expect to be accounted for differently due to the lack of equity ownership or significant related party ties .

If we were to take us.

<unk> 30 does this track with your development timeline.

We're assuming.

Samples meet all the required sell specs and see sample stage gate is when you're producing those channels at scale.

Four to five years, it seems a bit longer than we expected so.

Speaker #5: Got it . Very helpful . Thank you . I'll pass it on .

What do you think of the remaining technical boxes that need to be checked and is there any opportunity to pull this forward with VW or potentially a little competition with the other two customer engagements you have ongoing.

Speaker #4: Excuse me . Our next question comes from the line of Jed Dorsheimer with William Blair . Your line is open .

Mark Thanks for the question.

Speaker #6: Hi , everybody . You have Mark Tudor on for Jed Dorsheimer . Congrats on the progress and especially the Ducati demo . It's always a there's a lot of learnings in actually creating the pack and integration .

Just to be technically correct and have indicated 2029.

Okay. So just to make sure you don't.

Add an extra yet into the into the into the calendar.

The second thing is actually product innovation belongs to the customer and they announced planned that way.

Speaker #6: So congrats on that . During the that presentation at VW mentioned cells and EVs . By the end of the decade , if we were to take this as 2030 , does this track with your development timeline ?

Our job is to make sure that we are bringing all of redo everything that we can to make sure that Amy go down as fast as they can.

We are working hand in glove vehicles can be visual exciting and political benue exactly the <unk>.

Speaker #6: So if we're assuming that the samples meet all the required cell specs, and a C sample stage gate is when you're producing those cells at scale, 4 to 5 years seems a bit longer than we expected.

This is the industry utilization because we are working closely with them and we will continue to do that now in parallel when we go work with the new customers that we are talking about both with an existing customer and a new customer as a completely independent and facts from what we're doing with Volkswagen.

Speaker #6: So, what do you think? Are there remaining technical boxes that need to be checked, and is there any opportunity to pull this forward with VW or potentially a little competition with the other two customer engagements?

Speaker #6: You have ongoing ?

Speaker #1: Mark , thanks for the question . By the way . Just to be technically correct , end of the decade is 2029 . Okay .

We don't try to book creates competition, but our customers, but we work very very very closely at each customer and that thing.

Speaker #1: So just to make sure we don't add an extra year into into the into the calendar , the second thing is look , actual Productization belongs to the customer and they announce plans the way they say it .

Our technical roadmap.

Their product roadmap.

And that work goes on real time, so that we can get to market as quickly as possible, but as Kevin pointed out.

Speaker #1: Our job is to make sure we are going all out . We do everything that we can to make sure they are able to ramp as fast as they can .

In the meantime, they continued to pass part of that development activity that we do.

Got it.

Yes.

Speaker #1: We are working hand in glove very closely with Volkswagen and Powercor . They know exactly the the status of the industrialization because we are working closely with them and we will continue to do that now in parallel , when we go work with the new customers that we are talking about , both with an existing customer and a new customer , that's a completely independent path from what we are doing with with Volkswagen .

I appreciate the color Thanks, Steve 2020.

I didn't mean to say 2030 there.

Is that better.

111.

Before the end of the decade.

At December 30 <unk>.

Good question.

Yes.

Sure.

Got it loud and clear.

About the VW relationship as well and the last iteration of this.

Speaker #1: We don't try to go create competition for our customers , but we work very , very , very closely with each customer , adapting our technical roadmap to their product roadmap .

There was some space left in.

Or other potential applications with VW could source cells and sell to other markets potentially.

Was this written to give space to the Ducati program or should we be looking at even more adjacent markets or is there any potential there.

Speaker #1: And that work goes on in real time so that we can get to market as quickly as possible. But, as Kevin points out, in the meantime, they continue to pay us for the development activity that we do together.

I actually do not want to again talk about the customer, but you are absolutely right. We are looking at.

Non Volkswagen group applications, as well into that contract and <unk> being part of the oxide in June.

Speaker #6: I appreciate the color . Thanks . Teva 2029 I didn't mean to assume 2030 . There just as a separate track .

Would be EQM and the negative production.

Speaker #7: Here .

Speaker #2: One one engineering .

And we do expect to have.

Speaker #7: Group to another before the end of the decade, December 31st, 2029.

Partnerships in across both independent of Volkswagen move into other new customers and customers working with political.

Speaker #6: Okay , got it loud and clear about the VW relationship as well . In the last iteration of this , there was some space left in for other potential applications where VW could source cells and sell to other markets , potentially .

We both work together.

Great. Thank you.

Yes.

And as a reminder, it is star one if you would like to ask a question.

And our next question comes from the line of Mark Delaney with Goldman Sachs. Your line is open.

Speaker #6: Was this written in to give space to the Ducati program , or should we be looking at even more adjacent markets ? Is there any potential there ?

Hey, guys you have them on for Mark Thanks for taking the questions and congrats on the progress maybe on the other two customers that you mentioned in your prepared remarks, Eva could you maybe help us get a sense of an umbrella J D stands with the customer you announced last quarter and what needs to happen to get that to a more.

Speaker #1: Yeah , I actually do not want to again , talk for the customer , but you're absolutely right . We are looking at non Volkswagen Group applications as well into that contract .

Speaker #1: And Ducati being part of the Volkswagen Group would be included in the regular production . And we do expect to have partnerships in across both independent of Volkswagen Group with other new customers and customers working with with Powercor that that that we both work together .

Have a complete commercial agreement and similarly on the top 10 Global Auto OEM you mentioned, you're in active engagement with what it would take to go from.

Engagement to a licensing or our JV agreement.

Hello, and thanks for the question.

Of course, we are very very excited about these two additional opportunities.

We have been alluding to them over the last couple of quarters.

Speaker #6: Great . Thank you .

SG&A at maturation and we've been already in active engagement with them.

Speaker #4: And as a reminder , it is star one . If you would like to ask a question and our next question comes from the line of Mark Delaney with Goldman Sachs , your line is open .

As always we elect the Oems do that announcement and we followed it you.

Speaker #8: Hey guys , do you have a man on for Mark ? Thanks for taking the questions and congrats on the progress . Maybe on the other two customers that you mentioned in your prepared remarks , could you maybe help us get a sense of on where the JDA stands with the customer ?

You saw that day.

<unk> slogan come out and talk in detail about how they are taking the product.

Into different applications that they have in mind.

The same way, we will be doing that with these two assets as.

Speaker #8: You announced last quarter, and what needs to happen to get that to a, you know, more of a complete commercial agreement?

As much as I would like to talk about it ahead of time it would not be appropriate for me to come and tell you. How they are doing but you will see over time as they ask Dr. <unk> to talk about a modern mode. You would get a clear idea of who they add what theyre doing and how they are doing and.

Speaker #8: And similarly on the top ten global autoimmune mentioned , you're in active engagement with what it would take to go from , you know , the active engagement to a licensing or a JD agreement .

Speaker #8: Thanks , man .

Speaker #1: Thanks for the question . Of course , we are very , very excited about these two additional opportunities . We've been alluding to them over the last couple of quarters as to their maturation .

I am very excited about these prospects.

Thank you for that color and then.

Maybe secondly on this partnership approach.

Recognizing the Corning and in marotta relationships for the ceramic separator I think you mentioned the possibility of expanding the ecosystem to other areas for <unk> can you give us a sense of what areas you might be looking to include for partnerships and and.

Speaker #1: And weve been already in active engagement with them . As always , we let the OEMs do the announcement and we follow them .

Speaker #1: You saw that at the IAA . We had works wagon come out and talk in detail about how they are taking the product in through different applications that they have in mind .

And our structure of these partnerships looks like from a financial standpoint as well. Thank you.

Yes, Scott.

Speaker #1: The same way we will be doing that with these two as well . As much as I would love to talk about it ahead of time , it would not be appropriate for me to come and tell you how they are doing .

With the partnership and then Kevin will give you the financial.

Impact of those.

We are developing a technology ground up is very very different than an export expect initiatives its capabilities Caleb.

Speaker #1: But you will see over time as they start to talk about it more and more , you will get a clearer idea of who they are , what they are doing , and how they are doing and I'm very excited about these prospects .

From a regulated battery technologies, so wherever possible we like to include <unk>.

Confident and reliable partners from.

Speaker #8: Thank you for that , caller . And then maybe secondly , on this partnership approach , you know , recognizing the and Marauder relationships for the ceramic separator , I think you mentioned the possibility of expanding the ecosystem to other areas for us .

The ecosystem can be with us being risk appetite. So we've talked about these two interested because I said having separators.

We have.

The highest pitch changed when we developed this no compromise solution, we wanted to be able to give them.

Speaker #8: You know , can you give us a sense of what areas you might be looking to to include for partnerships and you know , what the kind of structure of these partnerships looks like from , from maybe a financial standpoint as well .

And then it is materials, whether it is equipment related processes, whether it is software whether it is metrology. We wanted to adapt all of this together in a package that they can ramp.

Speaker #8: Thank you .

Speaker #1: Yeah , I'll start with the partnership . And then Kevin will give you the financial impact of those . Look , we are developing a technology ground up that is very , very different than and in its both its potential its capabilities scale up from regular battery technology .

Each of this where we have original IP and where we have unique capabilities we have.

Right.

Partners to come along with US we want to make it as easy as possible, but our OEM customers to ramp production as quickly as possible and so it would behoove us to bringing these <unk> we are.

Speaker #1: So, wherever possible, we like to include competent and reliable partners from the ecosystem to be with us to invest capital. So, we talked about these two with respect to the ceramic separators.

We continue to evaluate additional partners to join the team and you can see the quality of the caliber of the partners that we choose to work with us.

Yeah.

On the finance side as much as the cell is differentiated with our salted lithium metal technologies energy density to church on safety, we think that we're equally proud of the business model as well we think that's good for our shareholders is capitalized it helps us focus on where we think we add value are the most which is an innovation and customer empowerment.

Speaker #1: We have the the high touch transfer when we develop this , no compromise solution , we want to be able to give them , whether it is materials , whether it is equipment , whether it is processes , whether it is software , whether it is metrology .

Speaker #1: We want to wrap all of this together in a package that they can wrap. And in each of these, where we have original IP and where we have unique capabilities, we would like partners to come along with us.

It allows each member of our cell manufacturer customer ecosystem player to play to their strengths, which we think is.

In terms of time and effectiveness.

Just the path to market.

Speaker #1: We want to make it as easy as possible for our OEM customers to ramp production as quickly as possible . And so it would behoove us to bring these partners along .

And in terms of how our quantities shareholders see value from that it really comes from three ways the differentiation of.

The self performance creates value and our shareholders capture it in three ways first would be that monetization of the collaboration work you saw that in this quarter $12 $8 million of customer billings longer term licensing when our customers are producing.

Speaker #1: We are continuing . We continue to evaluate additional partners to join the team , and you can see the quality , the caliber of the partners that we choose to work with us .

Producing ourselves from their factories, we'd get a licensing stream and finally, it would be valued value sharing with our ecosystem partners that together we think.

Speaker #2: On the finance side , as much as the cell is differentiated with our solid state lithium metal technology , the energy density , the charge time and safety , we think .

Each of those is an important is important in itself and also gives a robustness to our.

Speaker #7: That we're .

Speaker #2: Equally proud of the business model as well . We think that's good for shareholders . It's capital light helps us focus on where we think we add value the most , which is in innovation and customer empowerment .

Our approach.

Thank you.

Speaker #2: It allows each member of our cell manufacturer , customer , ecosystem player to play to their strengths , which we think is in terms of time and effectiveness and risk adjusted path to market best .

As a reminder, it is star one if you would like to ask a question.

Operator: Principal Analyst, Investor Relations, you may begin your conference.

Yeah.

Dan Dolev: Thank you, Operator. Good afternoon and thank you to everyone for joining QuantumScape Corporation's third quarter 2025 earnings call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial theories are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Yes.

And with no further questions at this time I will now turn the conference back over to quantum scape management for closing remarks.

Speaker #2: And in terms of how our Quantumscape shareholders see value from that . It really comes from three ways . The differentiation of the cell performance creates value , and our shareholders capture it in three ways .

Thank you operator.

Finally today I.

I'd like to take this opportunity to congratulate the entire <unk> team.

Speaker #2: The first would be the modernization of the collaboration work . You saw that in this quarter , $12.8 million of customer billings , longer term licensing , when our customers are producing our cells from their factories , we'd get a licensing stream .

Debt outstanding performance this quarter and the execution that the excellence in making this IEA announcements so powerful.

Speaker #2: And then finally would be value value sharing with our ecosystem partners that together we think each of those is an important is important in itself .

Well received.

And as always thank you to our shareholders for their continued support we look forward to updating you on further progress in the months ago. Thank you.

Dan Dolev: There are risk factors that may cause actual results to differ materially from the contents of our forward-looking statement for the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape Corporation CEO, Dr. Siva Sivaram, and our CFO, Kevin Hettrich. With that, I'd like to turn the call over to Siva.

Speaker #2: And also gives a robustness to our approach .

Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Speaker #8: Thank you .

Speaker #4: And as a reminder , it is star one . If you would like to ask a question . And with no further questions at this time , I will now turn the conference back over to Quantumscape management for closing remarks .

Siva Sivaram: Thank you, Dan. I'd like to begin with one of the highlights of the year. On September 8, at IAA Mobility in Munich, Germany, we unveiled our launch program with the Volkswagen Group, the Ducati V21L race motorcycle, developed as a collaboration among Ducati, Audi, PowerCo, and QuantumScape. The Ducati V21L is a first-of-its-kind vehicle demonstration planned as a showcase for the exceptional performance of our no-compromise next-generation battery technology. As a launch program, the Ducati V21L is ideal. It is a low-volume but high-visibility demonstration that allows us to put the QSC5 technology into a demanding real-world application. The next step for the Ducati program is field testing. Turning to our annual goals, we are pleased to report that during Q3, we began shipping Cobra-based QSC5 B1 samples, completing another of our key annual goals for 2025.

Speaker #1: Thank you . Operator . Finally , today I would like to take this opportunity to congratulate the entire team on their outstanding performance this quarter and the execution that they have shown in making this IA announcement .

Speaker #1: So powerful and well received . And as always , thank you to our shareholders for their continued support . We look forward to updating you on further progress in the months to come .

Speaker #1: Thank you .

Siva Sivaram: These cells are part of the Ducati launch program and were featured on stage at the IAA Mobility Conference. Our remaining operational goal for the year is to install higher-volume cell production equipment for our highly automated pilot line in San Jose, named the Eagle Line. Equipment for certain key assembly steps has already been installed on the Eagle Line, and this goal remains on track. Another important goal for 2025 has been to expand our commercial engagement, including deepening relationships with existing customers, engaging new customers, and bringing additional partners into our growing QuantumScape technology ecosystem. In Q3, we made substantial progress on this front. With respect to existing customers, the successful launch event with Ducati, Audi, and PowerCo at IAA Mobility was a major milestone in our long collaboration with the Volkswagen Group.

Siva Sivaram: Last quarter, we also announced a new joint development agreement with an existing customer, and we are continuing to work closely with them as we progress through the first phase of the development and commercialization engagement. We are also in an active engagement with a new top 10 global automotive OEM in addition to our existing customers. With regard to QuantumScape ecosystem development, we continue to add world-class partners. On September 30, we announced an agreement with Corning to jointly develop ceramic separator manufacturing capabilities based on our COBRA separator process. Corning is a global leader in advanced materials, and they bring deep expertise in ceramics processing and proven manufacturing excellence to the QuantumScape ecosystem. In parallel, we successfully completed the initial phase of our collaboration with Murata Manufacturing, have signed a subsequent contract, and progress to the next phase of that relationship.

Siva Sivaram: Our goal is to make QS technology the clear choice by providing our customers with a turnkey ecosystem to serve the global demand for better batteries. With Murata and Corning, we have two of the most world-renowned technical ceramics manufacturers as ecosystem partners, and we will continue to grow our ecosystem further. With our achievements this quarter, our vision for commercialization of our next-generation battery technology is beginning to take shape. We are executing consistently towards our key annual goals, demonstrating our technology, engaging with partners, and building out our capital-led development and licensing business model. Everything starts with execution, and we are proud of our team's performance. This year, we have already accomplished two of our key operational goals, baselining our COBRA separator process and beginning shipment of the Cobra-based QSC5 cells, continuing our track record of consistent execution against our goals.

Siva Sivaram: Q3 also saw our first public technology demonstration with the Volkswagen Group, the Ducati V21L race motorcycle. We are expanding our collaboration with existing customers and adding new customers, and we have also expanded our global ecosystem of world-class partners. The third quarter also marks another exciting milestone. We are beginning to show returns from our capital-led development and licensing business model, driving over $12 million in customer billings in Q3. Our ambitious targets naturally present many challenges to overcome, and there is much work left to do. Our objective is clear: revolutionize energy storage, capitalize on our enormous market opportunity, and create exceptional value for our shareholders. With this aim in mind, we are excited to update shareholders on our continued progress over the months and years to come. With that, let me hand things over to Kevin for a word on our financial outlook.

Kevin Hettrich: Thank you, Siva. GAAP operating expenses and GAAP net loss in Q3 were $115 million and $105.8 million, respectively. Adjusted EBITDA loss was $61.4 million in Q3, in line with expectations. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statement at the end of our shareholder letter. We continue to drive operational efficiency consistent with our capital-led licensing focus. We revise and improve our full-year guidance for adjusted EBITDA loss to $245 million to $260 million. Capital expenditures in the third quarter were $9.6 million. Q3 CapEx primarily supported facilities and equipment purchases for the Eagle Line. As a result of efficiency gains and process improvements, including from the COBRA separator process, as well as a change in timing of certain equipment ordering, we revised the range of our full-year guidance for CapEx to $30 million to $40 million.

Kevin Hettrich: In Q3, we bolstered our balance sheet and completed our aftermarket equity program, raising $263.5 million of net proceeds in advance of the August 10th expiration of our shelf registration. We ended the quarter with $1.0 billion in liquidity. We now project our cash runway extends through the end of the decade, a 12-month extension from our previous guidance of into 2029. Going forward, we plan to move away from providing updates on cash runway and will begin providing updates on customer billings. Customer billings represent the total value of all invoices issued by QuantumScape to our customers and partners in the period, regardless of accounting treatment. Customer billings is a key operational metric meant to give insight into customer activity and future cash inflows. The metric is not a substitute for revenue under U.S. GAAP. Customer billings in Q3 were $12.8 million.

Kevin Hettrich: In Q3, we invoiced Volkswagen PowerCo under the upgraded deal announced in July. The resulting cash inflows benefit QuantumScape shareholders. They will be directly reflected on the balance sheet as cash when we receive payment. During the collaboration phase of this particular deal, because of the related party relationship with Volkswagen, in accordance with U.S. GAAP, a liability of equivalent value will also be created. QuantumScape has no repayment obligation with respect to these liabilities. Once relieved, rather than impacting the P&L, this value will accrue directly to shareholders' equity. Payments from other customers or partners we expect will be accounted for differently due to the lack of equity ownership or significant related party ties.

Dan Dolev: Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors or that I believe investors would be interested in. Siva, the world's first live demonstration of QS solid-state lithium metal batteries in a Ducati V21L motorcycle premiered at IAA Mobility on September 9. Why is this such an important milestone, and what are the next steps on your commercialization roadmap?

Siva Sivaram: Dan, that announcement and seeing the bike ride across the stage was an emotional moment for all of us at QS, and it was obviously a huge milestone. For all of our employees, investors, and partners, this was long in the making. Now, we'll be demonstrating our battery in the field and gathering as much data as possible from field testing. Stepping back a bit, this was a major step in our strategic blueprint. You can think of this as four tracks that are running in parallel: the Ducati program, our PowerCo relationship, our other customers, and our ecosystem development. With respect to PowerCo more broadly, as announced at IAA Mobility, we are working towards automotive-grade standards with a goal of a series production car with QS technology before the end of the decade. With respect to other customers, we are working towards commercialization deals with additional automotive OEMs.

Siva Sivaram: Of course, we are building out our ecosystem with world-class partners like Murata Manufacturing and Corning so that we can hand our customers, automotive customers, a turnkey supply chain to serve the massive and growing demand for our technology. These are the main areas that we have to execute on.

Dan Dolev: Thanks, Siva. On that note, QS continues to advance discussions with key high-precision ceramics players, most recently announcing an agreement with Corning and advancing our partnership with Murata. How does this fit into the company's overall strategy of building out the QS global partner ecosystem? What are the key benefits of this business model and some potential ways QS may receive economics from these partnerships?

Siva Sivaram: Dan, QS's proprietary ceramic solid-state separator is our core IP. It enables our anode-free architecture and its performance advantage. Our strategy involves partnering with specialized high-precision ceramic manufacturers such as Murata Manufacturing and Corning to scale up separator production. These partners would supply QS separators to cell manufacturers like PowerCo, who would handle final cell assembly. This aggregated model allows QS to, one, leverage the manufacturing expertise and balance sheets of partners with strong reputations in manufacturing as well as IP protection. Two, ceramic production is a highly specialized skill set, and this allows our cell production partners to focus on their core competency. Three, this accelerates the scale-up of our technology by tapping into their manufacturing capabilities. In short, Corning and Murata Manufacturing are part of a complementary and expanding global ecosystem designed to de-risk, scale up, and enable a capital-efficient path to commercialization.

Siva Sivaram: We believe each partner contributes unique strengths to help us efficiently scale our separator production into high volumes. As you'd expect, we are continuing to build out the entire QS ecosystem with additional partners.

Kevin Hettrich: In the fullness of time, the ecosystem would represent a third source of cash inflow under our capital-led development and licensing business model. The first is monetizing collaboration and customization work with our OEM partners. The second and largest source of inflows would be licensing, as our customers produce cells using our technology. The third one would be value sharing from our ecosystem partners.

Dan Dolev: Thanks, Kevin. Can you expand further on customer billings as a key operational metric? How do customer billings translate into cash inflows?

Kevin Hettrich: First, to expand on the significance of customer billings, our first-ever invoices totaling $12.8 million in Q3 2025 are by themselves an important commercial milestone in the history of our company. It's nice to have arrived at the chapter where we're billing customers. I'd also highlight to investors that customer billings are evidence of our capital-led business model at work. On the front end, we monetize development activities for our customers to tailor our core technology to meet their specific needs. Subsequently, as the customer ramps production, we realize royalties over the lifetime of the project. As we continue to develop further generations of our technology, we'll seek to maintain these lines of business to generate consistent and compelling cash flows. Payment for development activities has the benefit of being near-term.

Kevin Hettrich: The royalty payments represent the majority of the value capture opportunity through a consistent long-term stream of high gross margin revenue. Value sharing from ecosystem partners represents further opportunity for shareholder returns. I'd also ask investors to keep four things in mind when interpreting our customer billings metric. First, the metric is not a substitute for revenue under U.S. GAAP. Second, the accounting for individual customer billings may differ significantly. Third, the amounts billed to customers may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of an agreed scope of work. Lastly, it is important to note that future cash inflows can diverge from customer billings, for example, as a result of timing differences, payment terms, prepaid customer deposits, or any adjustments to final payment amounts.

Dan Dolev: Okay, thanks so much, Kevin. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions.

Operator: Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue. Our first question comes from the line of Winnie Dong with Deutsche Bank. Your line is open.

Winnie Dong: Hi, thank you guys so much for hosting. First question is, I was hoping you can help me understand a bit more about the joint development of the ceramic separators with Corning, which you recently announced. If you can help me sort of understand maybe some similarities and differences in comparison to Murata. On Murata itself, you said you successfully completed the initial phase of the collaboration, and you also signed a subsequent contract. I was hoping if you can also there help me better understand the nature of the agreement, perhaps some details of the economics or the technology know-how in terms of the transfer of it. That's my first question. Thank you.

Siva Sivaram: Winnie, thank you. Thanks for the question. As you pointed out, this is an extremely important aspect of our business model to bring an ecosystem together for QS. Ceramic manufacturing is, as I mentioned earlier, an extremely specialized skill set. We want to bring people with us who can manufacture in high volume, taking our COBRA separator process and ramping it into the volume and using their balance sheet to put capital in building these factories up. When we started out with Murata Manufacturing about nine months ago, we both entered into a development agreement where they came in to evaluate what we needed to do, what do they need to do, etc. They concluded that, and we entered the next system where we start to go ramp our relationship into a much higher level with commitments of volumes, etc.

Siva Sivaram: They understand what are the volumes involved and what our customers' needs are, etc. We are getting to be in that phase where we can take COBRA and ramp in volume. We have been working with Corning throughout this time as well. Corning had also been under an early development contract with us, and then we came into a more detailed relationship as we announced in early September. The reason we need two of them is, as you would think, it's pretty obvious. The opportunity is so large that it is good for us to have two suppliers. Initially, they will be complementary in different aspects of the ceramic processing, but I expect over the long term to have a much larger portion that each one of them does. Both of them are extraordinarily competent manufacturing partners, and they are excited to be part of this relationship.

Siva Sivaram: I spent time with both CEOs at length, and they are very, very eager for them to get launched into high-volume production to work with our big OEM partners.

Winnie Dong: That's very helpful. Thank you. The second question is the new metric that you just introduced, the customer billing metric. I was wondering if you can give us maybe a rough idea on the conversion time to revenue or to collection of those funds. Is that sort of like the main metric you will be providing over time as opposed to springing out what revenue could look like in the next maybe one to two years or so? I just wanted to understand that dynamic a little bit better. I think last quarter you mentioned there is some investigation being done in terms of revenue recognition. I was hoping if you can also tie that into your response. Thank you.

[Analyst 1]: Hi, Winnie. Just to outline back the question parts, there was a go into the definition of customer billings, talk about their importance, and also on the accounting treatment of VW PowerCo. I'll take them in order. Just to be on the same page, we define customer billings as the total value of all invoices issued by QuantumScape to our customers and partners in the period, regardless of accounting treatment. Where we hope it's useful to investors is it's a key operational metric to give insight into customer activity and into future cash inflows. I think you also had a question on how those translate into the timing of cash flow payments. I did mention in my remarks that you could see a divergence from billings to future cash inflows for a variety of reasons.

[Analyst 1]: Those could include things like timing differences in payment from customers, prepaid customer deposits, adjustments to final payment amounts, typical operational considerations there. You asked about the importance. First of all, it is very nice to be in this chapter where we're doing work of value to customers and billing them for it. That's a nice moment for our company. On the VW PowerCo treatment, the way that the accounting works is the cash inflows, of course, at a broader perspective, benefit QuantumScape shareholders. They'll be reflected on the balance sheet as cash when we receive them. During the collaboration phase of the VW PowerCo deal, because of the related party relationship with Volkswagen Group, in accordance with U.S. GAAP, a liability of equivalent value will also be created. A reminder to shareholders, we do not have a repayment obligation with respect to these liabilities.

[Analyst 1]: Upon relief of the liability, rather than impacting the P&L, this value will accrue directly to shareholders' equity. This accounting treatment is specific to the collaboration phase of VW PowerCo. Payments from other customers or partners we expect to be accounted for differently due to the lack of equity ownership or significant related party ties.

Winnie Dong: Got it. That's very helpful. Thank you. I'll pass it on.

Operator: Excuse me. Our next question comes from the line of Jed Dorsheimer with William Blair. Your line is open.

Mark Shooter: Hi, everybody. You have Mark Shooter on for Jed Dorsheimer. Congrats on the B-sample progress and especially the Ducati demo. There's a lot of learning in actually creating the pack and integration. Congrats on that. During the presentation, Volkswagen Group mentioned cells and EVs by the end of the decade. If we were to take this as 2030, does this track with your development timeline? If we're assuming that B samples meet all the required cell specs and a C sample stage gate is when you're producing those cells at scale, I think four to five years seems a bit longer than we expected. What do you think are the remaining technical boxes that need to be checked? Is there any opportunity to pull this forward with Volkswagen Group or potentially a little competition with the other two customer engagements you have ongoing?

Siva Sivaram: Mark, thanks for the question. Anyway, just to be technically correct, end of the decade is 2029. Okay, just to make sure we don't add an extra year into the calendar. The second thing is, look, actual productization belongs to the customer, and they announce plans the way they say it. Our job is to make sure we are going all out. We do everything that we can to make sure they are able to ramp as fast as they can. We are working hand-in-glove very closely with Volkswagen and PowerCo. They know exactly the status of the industrialization because we are working closely with them. We will continue to do that. Now, in parallel, when we go work with the new customers that we are talking about, both with an existing customer and a new customer, that's a completely independent path from what we are doing with Volkswagen.

Siva Sivaram: We don't try to go create competition for our customers, but we work very, very, very closely with each customer, adapting our technical roadmap to their product roadmap. That work goes on real time so that we can get to market as quickly as possible. As Kevin points out, in the meantime, they continue to pay us for the development activity that we do together.

Mark Shooter: Appreciate the comment. Thanks, Siva. 2029 it is. I didn't mean to assume 2030 there.

Dan Dolev: We're on a separate track here.

[Analyst 1]: One engineering group through to another before the end of the decade, December 31, 2029.

Mark Shooter: Got it. Loud and clear. About the Volkswagen Group relationship as well, in the last iteration of this, there was some space left in for other potential applications where Volkswagen Group could source cells and sell to other markets potentially. Was this written in to give space to the Ducati program, or should we be looking at even more adjacent markets? Is there any potential there?

Siva Sivaram: Yeah, I actually do not want to again talk for the customer, but you are absolutely right. We are looking at non-Volkswagen Group applications as well into that contract. Ducati being part of the Volkswagen Group would be included in the regular production. We do expect to have partnerships across both independent of Volkswagen Group with other new customers and customers working with PowerCo that we both work together.

Mark Shooter: Great. Thank you.

Operator: As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Mark Delaney with Goldman Sachs. Your line is open.

[Analyst 1]: Hey, guys. You have Aman on for Mark. Thanks for taking the questions and congrats on the progress. Maybe on the other two customers that you mentioned in your prepared remark, Siva, could you maybe help us get a sense of where the JDA stands with the customer you announced last quarter and what needs to happen to get that to a more complete commercial agreement? Similarly, on the top 10 global auto OEM you mentioned, you're in active engagement with, what it would take to go from the active engagement to a licensing or a JDA agreement. Thanks.

Siva Sivaram: Aman, thanks for the question. Of course, we are very, very excited about these two additional opportunities. We've been alluding to them over the last couple of quarters as to their maturation, and we've been already in active engagement with them. As always, we let the OEMs do the announcement and we follow them. You saw that at the IAA. We had Volkswagen come out and talk in detail about how they are taking the product in through different applications that they have in mind. The same way, we will be doing that with these two as well. As much as I would love to talk about it ahead of time, it would not be appropriate for me to come and tell you how they are doing.

Siva Sivaram: You will see over time, as they start to talk about it more and more, you will get a clearer idea of who they are, what they are doing, and how they are doing. I'm very excited about these prospects.

[Analyst 1]: Thank you for that, Aman. Maybe secondly, on this partnership approach, recognizing the Corning and Murata Manufacturing relationships for the ceramic separator, I think you mentioned the possibility of expanding the ecosystem to other areas for QuantumScape. Can you give us a sense of what areas you might be looking to include for partnerships and what the kind of structure of these partnerships looks like from maybe a financial standpoint as well? Thank you.

Siva Sivaram: Yeah, I'll start with the partnership and then Kevin will give you the financial impact of those. Look, we are developing a technology ground up that is very, very different than, and in both its potential, its capabilities, scale up from regular battery technologies. Wherever possible, we like to include competent and reliable partners from the ecosystem to be with us to invest capital. We talked about these two with respect to the ceramic separators. We have the high-touch transfer. When we develop this no-compromise solution, we want to be able to give them, whether it is materials, whether it is equipment, whether it is processes, whether it is software, whether it is metrology, we want to wrap all of this together in a package that they can ramp.

Siva Sivaram: In each of this, where we have original IP and where we have unique capabilities, we like partners to come along with us. We want to make it as easy as possible for our OEM customers to ramp production as quickly as possible. It would behoove us to bring these partners along. We continue to evaluate additional partners to join the team. You can see the quality, the caliber of the partners that we choose to work with us.

[Analyst 1]: On the finance side, as much as the cell is differentiated, our solid-state lithium metal technologies, the energy density, the charge time, and the safety, we think that we're equally proud of the business model as well. We think that's good for shareholders. It's capital-led. It helps us focus on where we think we add value the most, which is in innovation and customer empowerment. It allows each member of our cell manufacturer customer ecosystem player to play to their strengths, which we think is in terms of time and effectiveness and risk-adjusted path to market best. In terms of how our QuantumScape shareholders see value from that, it really comes from three ways. The differentiation of the cell performance creates value, and our shareholders capture it in three ways. The first would be the monetization of the collaboration work.

[Analyst 1]: You saw that in this quarter, $12.8 million of customer billings. Longer-term licensing, when our customers are producing our cells from their factories, we'd get a licensing stream. Finally, it would be value sharing with our ecosystem partners. That together, we think each of those is important in itself and also gives a robustness to our approach. Thank you.

Operator: As a reminder, it is star one if you would like to ask a question. With no further questions at this time, I will now turn the conference back over to QuantumScape Management for closing remarks.

Siva Sivaram: Thank you, Operator. Finally, today, I would like to take this opportunity to congratulate the entire QS team on their outstanding performance this quarter and the execution that they have shown in making this IAA announcement so powerful and well-received. Thank you to our shareholders for their continued support. We look forward to updating you on further progress in the months to come. Thank you.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.