Aeva Technologies Inc (AEVA) 2023 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome. My name is Judith, and I will be your conference facilitator. I would like to welcome everyone to Aeva Technologies First Quarter of 2023 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded and simultaneously webcast. I would now like to turn the call over to Andrew Fung, Director of Investor Relations. Andrew, please go ahead.

Thank you, and welcome, everyone, to Aeva's First Quarter and Full Year 2023 Earnings Conference Call. Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO; and Saurabh Sinha, Aeva's CFO.

Ahead of this call, we issued our fourth quarter and full year 2022 press release and presentation, which we will refer to today and can be found on our Investor Relations website at investors.aeva.com.

Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our most recent Form 10-Q and Form 10-K.

In addition, during today's call will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Aeva's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from GAAP results. The webcast replay of this call will be available on our company website under the Investor Relations link.

And with that, let me turn the call over to Soroush.

Thank you, Andrew, and good afternoon, everyone. In Q1, the Aeva team was focused on advancing the commercial momentum for Aeva's unique 4D LiDAR on chip technology, and I'm happy to share that we made significant progress in a number of notable areas. I would like to highlight our key accomplishments this quarter, which are summarized on Slide 4. First, progress with the top 10 OEM is going well. We recently received feedback that Aeva 4D LiDAR is enabling a key safety use case that was previously unattainable by the OEM. I am excited to share that we are also in discussion to deepen our relationship to include joint perception software development, leveraging Aeva's unique combination of high resolution, long-range and instant velocity.

Second, we are seeing encouraging progress with other opportunities in automotive. This includes a joint development engagement with a passenger vehicle OEM, looking to switch from 3D time-of-flight LiDAR as well as advancing to a growing number of RFPs. And third, reception for our perception platform for precision distance measurement has been quite positive. We are engaged with multiple leaders in industrial sensing to use Aeva's perception platform and hope to share more later this year.

I would now like to provide more color on recent business developments, starting on Slide 6. As mentioned earlier, we are off to a strong start with the top 10 OEM on providing a perception solution that meets their high standards of performance, safety and scalability. The first vehicles integrating Aeva 4D LiDAR have been built, and we have already achieved important development milestones, including feedback from the OEM that we successfully enabled a key safety use case for highway driving that was previously unachievable with 3D time-of-flight LiDAR for this customer. This was possible because of Aeva's unique FMCW technology that simultaneously offers high resolution, long-range and instant velocity capabilities.

Together with our perception software, Aeva's 4D LiDAR reliably detected and classified critical objects on the road far away. This is a particularly important capability in use cases such as highway automation or faster speeds require greater reaction time and higher sensing fidelity. I am excited to share that we're also in discussion with the OEM around the use of Aeva's perception software and looking at ways to help accelerate the autonomous stack developments. This gives us further confidence around our perception software capabilities and highlights the importance of leveraging direct velocity measurements motive and industrial companies looking to bring next-generation perception to market. This includes progressing from the RFI to RFQ stage with some of the top global passenger vehicle and commercial vehicle OEMs.

And in Industrial Automation, we are currently in multiple discussions to deploy our perception platform for precision distance measurement applications. Many of our opportunities are with companies who have experience with LiDAR or even a selected 3D time-of-flight LiDAR for initial pilot deployments in the past and are now increasingly interested in Aeva for the next generation due to the advantages of our FMCW approach. While we may not win every opportunity, each program offers meaningful revenue potential. As an example, the passenger vehicle program opportunities we are working on target volumes of well over 100,000 units per year at steady-state production. These programs have target starter production between 2025 and 2027, and we expect award decisions approximately over the next 6 to 12 months.

Turning now to Slide 8. Following the successful bring up of our new final assembly manufacturing mine, we are working with Fabrinet to similarly expand our LiDAR-on-chip module manufacturing. This expansion will add capacity to support the growing interest in both automotive and our perception platform for industrial automation with the ability to ramp further for mass production. As part of this, we will automate 100% of the LiDAR-on-chip module assembly steps. This will enable higher throughput that will further bring down costs on the path towards production. We expect to complete bring up of the new line by year-end.

With that, let me turn the call over to Saurabh, who will discuss the financials in more detail.

Thank you, Soroush, and good afternoon, everyone. Let's turn to Slide 10 to discuss our Q1 2023 financial results. Revenue for the first quarter was $1.1 million, driven by Aeries II deliveries to existing partners as well as to new customers for our unique 4D LiDAR capabilities. Non-GAAP operating loss was $31.3 million as we continue to strategically invest in product and other research and development initiatives consistent with our plan. Gross cash use, which we define as operating cash flow less capital expenditure, was $37.3 million, reflecting operating expenses and timing of working capital. As such, we ended Q1 with $288.4 million in cash, cash equivalents and marketable securities. Weighted average shares outstanding was 219.6 million in Q1. To sum it up, Aeva is in a solid financial position to support our commercial momentum. We are making good progress on the key objectives we laid out for 2023, and we will continue to take a disciplined and strategic approach to execute on our plan.

I will now turn the call back to Soroush for closing remarks.

In summary, I am excited by the progress and feedback from both existing and prospective customers on Aeva's 4D LiDAR. Our differentiated FMCW technology is increasingly resonating with leaders in the markets we are pursuing and our priority remains on converting more of our commercial traction to program wins. I want to especially acknowledge the dedication of the Aeva team that is making all of this possible as well as the ongoing support of all of our stakeholders. Aeva's LiDAR focused on delivering on our objectives and is well positioned with our unique technology and our balance sheet to continue to execute on our mission to bring 4D LiDAR to markets.

With that, we will now open the line-up for questions.

(Operator Instructions) Our first question comes from Colin Rusch of Oppenheimer.

And appreciate you taking the time today. With the process with Fabrinet and automation, can you talk a little bit about what your sampling capacity is right now and how it's going to change over the balance of the year? And what do you think the impact might be with some of these customer relationships?

Yes, Colin, have to answer the question. Look, we're obviously working closely now with Fabrinet to build up our further automation on the line. This is important, of course, because we're going to be working to automate 100% of the assembly steps, as I mentioned, inside the LiDAR chip. This has a couple of different effects, right? First of all, this line is going to help us to support our series production ramp. This also allows us to further really simplify the system assembly process, as we have talked about before. And at the end of the day, gives us ability to really provide the scale that's needed to support the customers.

And it's important because increasingly, both on the automotive, as we have talked about with the top 10 OEM, the advancements from RFI to RFQ as well as on the industrial side with the multiple engagement we have, we are seeing this demand and we are now responding to it so that we can build up the additional capacity. This line will also increase our throughput. So what I can say is we'll sufficiently satisfy our demand quantity needs as we go towards production and also gives us further confidence in our ability to really keep us on track towards achieving our targets for the cost.

All right. That's helpful. And then just shifting gears around the software development. Can you talk a little bit about the level of activity that you've got in terms of building out the ecosystem and the different software pieces that you're going to need to develop for each of the different end markets? And I'll take the rest of it offline after that.

Sure. Yes. Look, first of all, as I mentioned on the call, we're excited that we're seeing increasingly OEMs, such as the top 10 OEM, start to see significant value and not just our forte, but also the perceptions offer. And as our software gets embedded into the AV stack or the ADAS stack as well as some of the industrial applications. On the automotive side, it provides added value for the OEMs, and we see it to start creating this flywheel effect for deeper engagement and the use of our capabilities. And that's why with, for example, the top 10 OEM, we're talking further to strengthen our relationship there. And we're looking to -- they're looking to leverage our perception software to help them accelerate the AV stack.

And it is important because for us, obviously, we have the added dimension of velocity, the unique data products that we have, and the OEM is able to use those and working with us together jointly to really tune it, building effectively a system that consists of the hardware and the software on top of that, that's really tuned for their specific applications. And what we are hearing is that this is going to also help them differentiate some of their capabilities compared to their competition. So we are really encouraged by that. And I think over time, we're going to start seeing more of these types of engagements, hopefully, that we can continue to engage on a deeper level with the perception software side.

The next question comes from Joseph Moore of Morgan Stanley.

Great. Wonder if you could talk about when you start going to production. There's a mention in the slide deck of '25 through 2027. I thought there were some industrial stuff going into production in 2024. Is that still the case?

Yes, Joe, happy to answer that. Yes, look, as we've talked about, we're on track with our customers on the industrial and automotive side. We continue to be engaging multiple customers on the industrial side in addition to automotive. What we talked about on the call today, 2025 and 2027 are really some of those opportunities, especially on the automotive side, that are new opportunities that we are targeting and opportunities that we're advancing from RFI to further stages, including RFQ. So we are on track with the engagements that we have and obviously provide some more color around these new opportunities.

Okay. That's helpful. And then in terms of the cash balance, obviously, you have a pretty healthy balance sheet, but the burn rate of $37 million in Q1. I guess what -- over the next say, 8 quarters or so before you start to really ramp revenue, can you just kind of give us a guide to what happens to the cash balance?

Joe, this is [Rob]. I can answer that for you. So we have a strong balance sheet, as I mentioned in the prepared remarks, $290 million of cash and marketable securities. That gives us a lot of strength as we execute on our plan. In terms -- we only provide FY 2023 guidance. And what we mentioned at the last call that we expect our OpEx, non-GAAP OpEx to be similar to 2022 levels, which was around $124 million. And we are on track for that. And non-GAAP OpEx is a good indicator of the cash burn for the year.

The next question comes from Pierre Ferragu of New Street Research.

A quick follow-up on your outlook for cash burn. So if you have like an OpEx burn rate around 120 in the low 120s today for OpEx. What happens when you start ramping production? Is there like an additional element of cash consumption because starting production means additional CapEx like a bad initial yield that could drive like cash burn, additional cash burn on top of your OpEx? Or should we expect actually an almost instant immediate slowly ramping contribution like cash contribution?

Pierre, this is [Rob]. Yes, I think your latter is true. We expect that the OpEx as well as the CapEx to be steady and because certain R&D activities are already completed, and there will be CapEx needs will be light given that we are leveraging the CMs.

The next question comes from Suji Desilva of ROTH MKM.

(inaudible) the progress here. Question on the top 10 OEM. I'm just trying to understand, a lot of LiDAR companies, competitors' beers have announced partnerships. I just want to understand how this one feels different to you guys so you can differentiate. It sounds like a deeper relationship, but I just want to really kind of get that nuance so you should be good. And just what was the key safety feature that [ToF] can handle? It sounds like identifying a low-lying object in the road that's at a distance, but if you can clarify that would be great.

Sure, Suji. So let me answer your second one first. So obviously, with this OEM, we've been working actually for quite some time, right? And so I can't go into specifics of the use case, but they obviously have multiple use cases, including those on the highway driving applications to really reliably detect and classify safety-critical objects on the road, especially from a long distance. So what that's apart, right? I set apart is our ability to, one, simultaneously deliver high resolution and long ranges; and 2, I had a definition of velocity to really help us consistently dissect objects across ranges.

So as I mentioned before, for example, when you have at a long distances with, let's say, 3D time all only a few points, let's say, you get a few points, 5 points on an object. When you look at that object and you only have the dimension of distance, you have to -- you're not sure exactly what you're looking at at those really for our businesses. So all you can do is keep looking. And over time, at highway speeds, that is a critical time is a critical aspect. But when you add that to the mission of velocity, those same 5 points start to have now velocity contribution. So if you have all the same velocity, they're all moving towards you at 75 miles per hour. You better know that that's a vehicle outlying up to something like that on the road.

So that's something that is, I think, unique provided by us. And I think for this OEM contributed also in a significant way, this added the mission of velocity to help them achieve this new lower confidence to address the safety use case. And also just to be clear to your point from before, this OEM has worked in the past with other 3 LiDARs before. And from the OEM feedback and also continue to deepen this relationship, we're now the first provider that can actually enable the safety use cases, right? So that's, I think, is really encouraging for us. And to your point, we are working to further strengthen our relationship, right, to add in the capabilities of our perception software and collaborate there around the use of our reception software there. So that's what I can say for now. And of course, as we have able to -- we'll be able to share more, we will do that in the future.

I just had one quick follow-up, and this may be a trivial point. I mean, having a test vehicle mentioned relatively quickly in my mind, is it -- is that because of the Aeries II product that something specific about or can and LiDAR vendor just easily get a test vehicle up and running the way you did?

Yes. Look, I think we have made significant progress around our maturity over the past couple of years here and even months. And I think that's our ability to scale and provide our Aeries II product in a way that works out of the box for the and our ability to support those -- the OEMs directly, where we put our attention and focus, I think, has been a direct contributor to enabling the OEM to move quickly. And this is kind of our model, right? We're looking to help them to accelerate their development. So with that, obviously, they have also experienced working with hardware stack and implementing sensors on the road. So we've been working pretty closely to support this and looking forward to continue supporting them as they build up the rest.

The next question comes from Tristan Gerra of Baird.

Just a follow-up question on the customer engagement that you've -- for which you provided an update. What are the pending thresholds for existing engagements to ramp in volume production? What's the timing of those thresholds? And how many engagements, if any, or actual signed deals with the OEM for a volume ramp?

Yes. So Tristan, happy to answer that. So obviously, we're -- on these specific programs we're talking about that we're advancing to our fuse. There's multiple programs across each end market includes passenger and commercial vehicle application. The programs are for Level 3 and higher automation. You talked about scale and timing. So as I mentioned on the call, these are programs that we see there is meaningful scale. And for example, on the passenger car side, we see some of the target volumes to be over 100,000 vehicles per year. So this is something that is important. And also, from a timing standpoint, where we see the decisions happening is in the next 6 to 12 months, that's what we see and timing of production really is around this '25 to '27 timeframe. So that's what we've been working on.

And especially in some of these engagements, as I mentioned before, a number of these OEMs have had experience with the time of or previously selected maybe how if for initial deployment but are continuing to now engage with us because of the increase in FMCW that potential end state and a scalable solution to really enable their next-generation capabilities. So we're encouraged by that. We're going to continue our activities with those folks.

The next question comes from Richard Shannon of Craig-Hallum.

I think my first one is going to be based on Slide 7 in your deck here, talking about you're advancing the opportunities in automotive and industrial. Talking about programs starting SOP in '25 to '27. Specifically, are any of these auto programs that you're targeting looking at SOP in '25 or would they be later than that?

Yes, Richard, absolutely, yes, they are. The auto programs fit in the same time frame, starting from '25 to '27 timeframe. Yes.

Okay. And any way that you'd kind of count the number in the automotive space specifically?

Yes. I can't provide exact numbers, but it's multiple programs, right? It's not one. So that's obvious. And again, as I mentioned, across the different segments, automotive, passenger, commercial and industrial, we see programs that are offering meaningful potential with production scale once they reach those.

Okay. Fair enough. And my quick follow-up question here is just kind of thinking big picture here. And looking at the landscape of automotive OEMs out there, the one that you're not engaged with, what do you think the reasons are for that? Is it something having to do with the spice levels of maturity or any way you could kind of couch wire not with certain ones? And when -- what are the ways that you can leverage your way into them?

Yes. Actually, it's a good question. I think across all the engagements that we've had so far, we actually have intense now from RFI to the RFQ stages. And now where any engagement now currently that we are on that we're not advancing on. So that's really encouraging. I think, obviously, if you look at our -- if you want to look at the way in the past and the time, I think it really had been around maturity, which we have been working towards building up our maturization of the product, building up the capabilities in-house, strengthening the team around manufacturing, supply chain and also bringing the product to a level of what Aeries II that can be deployed on the road.

So a lot of that work has happened. And from here really focuses around working with the OEMs to qualify our product towards the C samples and the production scale. And also, obviously, the whole reason that folks that even selected sometimes time of flight or dabble time of flight initially are working with us increasingly is that they believe in the fact that what they have today is not quite sufficient and really looking at FMCW, as filling some of those gaps with the potential that it has in terms of technology. So that's what we continue to be encouraged by.

The final question comes from Kevin Garrigan of WestPark Capital.

So at the beginning of the year, some latter companies were expecting automotive OEM award decisions in the first 3 to 6 months. I think on the last call, you guys had said you were expecting some award decisions in the next number of months, and now it's 6 to 12 months. It kind of seems like there might be a little bit of a delay in OEM decisions, but can you kind of give us any color on what's going on there? Is this timeline kind of in line with your expectations? Or is the macro environment kind of playing a role with OEM decisions where they're kind of shifting their focus a little bit?

Yes. I think, Kevin, I can answer that. So I think for us, the timeline is in line with what we were expecting. Now that we have some more clarity from the OEMs as we are advancing from the RFI stages onwards, we see more clarity on the timing of the decisions. Some I think would happen earlier and some is going to happen later. Obviously, we do not control the timing of the OEM is making the decisions, right? But based on our experience and based on knowing kind of what the OEM says and there may be some buffer in that, that's how we estimate the expectations on those decisions. I think generally, though, we are seeing actually increasing activity around the OEMs for deploying sensors and products in ADAS. I think, yes, it's taking time for some folks to really define what they're going to do.

But I think increasingly, we're feeling that in the next as I mentioned, yes, 6 to 12 months is going to be critical for some of these folks to know for them to hit their timelines, they need to make some of these decisions, and that's also a contributing factor to doing that. And on the other, I think, maybe a relevant topic, all the OEM that we always engage with are really looking and planning to deploy LiDAR on their vehicles. And that's something that's also important in terms of the abilities.

Okay. Got it. That makes sense. I appreciate the color.

Ladies and gentlemen, we have reached the end of the question-and-answer session, and this also concludes today's conference. Thank you for attending, and you may now disconnect your lines.