Aeva Technologies Inc (AEVA) 2024 Q1 法說會逐字稿

Good day.

My name is Dezra, and I will be your conference facilitator.

I would like to welcome everyone to the Aeva Technologies first-quarter 2024 earnings conference call.

(Operator Instructions) As a reminder, today's conference call is being recorded and simultaneously webcast.

I would now like to turn the call over to Andrew Fung, Senior Director of Investor Relations and Corporate Development.

Andrew, please go ahead.

Thank you, and welcome, everyone to Aeva's first-quarter 2024 earnings conference call.

Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO; and Saurabh Sinha, Aevo's CFO.

Ahead of this call, we issued our first quarter 2024 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-K.

In addition, during today's call, we 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, Aeva continued to build on our strong start to 2024, as we executed to our customers milestone, as well as further our commercial traction on new opportunities.

I would like to highlight our key accomplishments in Q1.

We shipped a record number of sensors to customers in the first quarter, including to Daimler Truck.

As a result, the first Daimler truck vehicles equipped with Aeva sensors are now on the road for real world operation in order for Daimler Truck to continue to ready their stack for commercial operations.

We are excited to enter this next phase and are overall on track with the OEM's development milestones and start-up production time line.

We also made significant progress on multiple automotive RFQs.

In particular, Aeva completed a comprehensive audit for a global top 10 passenger OEM and advance on multiple other automotive engagements, which reflect the growing interest and maturity of Aeva 4D LiDAR.

To support our commercial momentum, we established a new automotive center of excellence located in Germany, which positioned Aeva to collaborate directly and more closely with our existing and new partners in Europe.

We believe this team further positions Aeva to expand our automotive momentum.

Let's now discuss in more detail our recent business developments.

With Daimler Truck, we have successfully kicked off the next phase as their exclusive Tier one production supplier for long-range and ultra long-range LiDAR.

In Q1, we delivered a significant number of sensors to Daimler, which have been integrated into the trucks and are now on the road collecting data.

As part of this, our team are in close collaboration to integrate Aeva's unique velocity data into their perception stack and continue addressing key use cases needed for safe operation at highway speeds.

This work and the real world data will help Daimler Truck and Torc validate their stack on routes they intend to deploy for commercial use in series production.

Overall, we are progressing well on Daimler Truck's milestones on their path to production.

We will continue supporting the rollout of additional trucks over the course of this year as Daimler Truck expanded fleet for on road deployment.

As partners, we are jointly on track for Aeva's start up production in 2026 to support Daimler Truck's market entry in 2027, which they recently reiterated in their post Q1 investor update

As highlighted in their Q1 update, Daimler Truck is making great strides on their path to vehicle launch, where they highlighted the start of testing with the industry first vehicle platform and finalization of the production intent hardware for commercial launch.

Finally, before moving to the next topic, we will have some additional updates to share together with Daimler Truck and Torc at upcoming events.

The first will be a fireside chat at Financial Times future of the car later this week, where I will be joined by Peter Vaughn Schmidt, the CEO of Torc.

And later this month, we will be at Advanced Clean Transportation Expo or ACT with Joanna Butler, Head of Autonomous Technology Group at Daimler Truck and other key management of Torc.

We hope to see you there.

Now I would like to provide an update on additional opportunities that we're working on in automotive.

Interest for Aeva's unique 4D LiDAR continues to increase following the production program when with Daimler Truck.

This is across a range of applications, including for both passenger and commercial vehicle programs.

Based on our engagements and inbound interest, we are excited to see that the industry is advancing on its trend towards FMCW technology to enable new capabilities, including automation at highway speeds.

While the adoption of FMCW has begun first in commercial vehicles, there continues to be signs of similar trends emerging in passenger vehicles with an increasing number of industry participants publicly announcing FMCW initiatives for next generation program, as well as Aeva's growing number of RFQs.

In particular, we mentioned last quarter our engagement with a new global top 10 passenger OEM.

I am pleased to share that we have advanced as a finalist on this OEM's RFQ, having completed the comprehensive audit and final assessment ahead of their award decisions.

In Q1, we also progressed on other ongoing automotive RFQs and advanced from the RFI to RFQ stage on additional opportunities.

We continue to expect a number of these RFQs to be awarded this year.

In addition, the recent rulemaking from the National Highway Traffic Safety Administration requiring passenger vehicles in the US to have standard automatic emergency braking systems by 2029 has the potential to accelerate OEM adoption of LiDAR.

And we believe FMCW LiDAR is an enabler for achieving the more stringent requirements.

The new standard will require OEMs to prevent forward collisions at speeds up to 100 kilometers per hour or 62 miles per hour, as well as prevent collision with pedestrian at up to 45 miles per hour, both of which are at higher speeds than what solutions on the road today, how reliably capable of preventing.

Building on the work that we have done with Daimler Truck, we believe Aeva 4D LiDAR is particularly well positioned to help OEM achieve automation at higher speeds.

Aeva's unique ability to simultaneously deliver long range at high resolutions and instant velocity measurement enables our LiDAR to more accurately detect and classify objects as farther distances, even in challenging conditions such as inclement weather.

The new standard also requires for the first time that testing for pedestrian automatic braking to be conducted in the dark without overhead lighting.

With more than three quarters of pedestrian fatalities occurring and condition, other than daylight, this is another important test scenario where we see LiDAR with its ability to function in complete darkness has the potential to meaningfully improve safety for vulnerable road users by pedestrian and cyclist.

Aeva's 4D LiDAR further improves perception with instant velocity for every pixel that can enable faster and more accurate object segmentation and greater ability to filter out noise resulting in more confidence in avoiding hazards on the road.

So overall, we are highly encouraged by these industry developments.

Our focus is on meeting the growing interest for Aeva 4D LiDAR and converting our current RFQs to production wins.

As part of this, Aeva announced a new automotive center of excellence with a local engineering team in Europe out of Germany.

This positions Aeva to collaborate more directly and closely with OEMs that we are engaged with in the region, and will also allow us to accelerate the validation testing and, as well as providing direct OEM support for their programs.

We have assembled a team of industry veterans with extensive experience spanning ADAS, autonomous and software technologies at top OEMs and suppliers such as Mercedes Benz, Daimler Truck and Valeo.

We believe this new center of excellence will not only enable us to support our existing engagements, but also better meet the growing interest for Aeva 4D LidAR on new opportunities.

With that, let me turn the call over to Saurabh to discuss the financials.

Thanks, Soroush, and good afternoon to everyone on this call today.

I would like to review our Q1 financial results.

Revenue in Q1 was $2.1 million, driven by scaling of ARIES II shipments and NRE revenue.

Non-GAAP operating loss was $32.1 million which is near flat year-over-year as we maintained our disciplined approach to capital allocation.

Gross cash use, which we have defined as operating cash flow, less capital expenditure was $32.6 million in the quarter.

We finished Q1 with a total liquidity of $314.3 million, which includes $189.3 million of cash, cash equivalents and marketable securities and a $125 million of available facility.

As a result, we remain in a good position to continue executing with our existing production partners and to build on our growing commercial momentum with additional production program wins.

As Soroush mentioned earlier, we are engaged on a number of RFQs, which are expected to be decided during this year.

We believe that the combination of our differentiated technology and a strong balance sheet positions us well to execute on our existing programs and win additional programs.

With that, let me turn the call back to Soroush for closing remarks.

Thank you, Saurabh.

Aeva has off to a great start in 2024.

In automotive, we executed to Daimler Trucks milestone and realized strong progress with multiple automotive RFQs.

And in industrial, we are on track with our first industrial SOP later this year with Nikon.

I want to thank the Aeva team for enabling these accomplishments and for their continued commitment to Aeva's mission and partners.

Looking ahead, we continue to see strong and growing momentum for the adoption of FMCW technology to bring new levels of capabilities to market in both automotive and industrial.

We continue to position Aeva for greater success, having added leaders in their respective field and maintaining a solid financial position.

Together with our strong progress on multiple RFQs, we remain confident in executing on our existing programs and securing additional production wins.

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

(Operator Instructions) Shadi Mitwalli, Craig Hallum.

Hey, this is Shadi Mitwalli on for Richard Shannon.

Thanks for taking my question.

Starting off with the Daimler win, is Aeva experiencing any halo effects after this win to show other customers that you are ready for start production wins?

Hey, Shadi, this is Souroush.

Happy to answer that.

Yeah, absolutely.

Actually, overall, we are seeing a growing interest for our technology, specifically for FMCW, especially on the back and the heels of the DT Daimler Truck win and a number of imbalance since we have announced at CS earlier this year.

I think one of the things that's very important is, we're also seeing this feedback from the OEMs that the win, production win, what we had with Daimler Truck really helps de-risk the OEM's decision as we are, as they're moving to the next generation platforms, as they are completing this pilot initial deployments and their decision to move to FMCW to Frequency Modular Technology.

This one really helps de-risk that.

So all the concerns of potential comments around, hey, would FMCW, would 4D LiDAR happen?

Is that, yes, it's no longer and I mentioned this on last call was no longer really a matter of (inaudible) and now it's really a matter of the execution and the timing of how we make this happen.

And we're seeing that feedback directly from the OEM, which is which we're really excited about.

As I mentioned on the call, this also is not just limited to commercial vehicles, especially on the passenger vehicle side.

We're now engaged in multiple automotive RFQs, as I mentioned earlier, since it's been about two months only, right?

Since we introduced this new top 10 passenger vehicle OEM, we have now made significant progress on that side on this RFQ as well.

We in the past few months, we have completed a comprehensive manufacturing and quality audit, which is now the second time that we're doing that.

And we have now also been a finalist on with the top 10 passenger OEM for the RFQ for the final production award.

So this is a significant opportunity.

We're on track with the timing of this happening the next few months this year as we talked about that.

So on the back of this momentum, we are seeing growing interest across both passenger and commercial vehicle.

And that's also why we talked about earlier that we have decided to establish this new Automotive Center of Excellence out of Europe and Germany to really help us expand our engineering team to work directly with the OEMs to be able to provide direct support and really shortcut some of those interactions and timing of the discussions with folks, both in Europe as well as globally.

So overall, I would say that we are seeing definitely these tailwinds help us advance on automotive, especially on the passenger side as well.

Awesome.

That's great to hear and it makes sense.

And then just one more follow-up question.

I know you have currently one top 10 OEM.

I will quantify, if any of your other RFQs or RFIs are with top 10 OEMs?

Yes.

Look, we obviously haven't talked about X number of 10 and X number of top 5 or whatever it is.

But I can tell you that at this point, we are engaged on pretty much multiple significant scale and top OEM RFQs.

We know there is, both, there is a folks in different regions.

There's passenger vehicles, as well as commercial vehicles.

But obviously, as we provided the update in this quarter, we are making progress on multiple fronts, but we have been also giving some clear updates on our progress with this specific top 10 passenger OEM.

So it's not just one OEM and we're working on that.

There is multiple across passenger and commercial vehicles and decisions are happening, multiple of those decisions throughout this year.

So that's also the other thing that we're seeing and overall from a start of production timing, we also see those to be aligned around the same timeframe with Daimler Truck, maybe a little bit later, but around that time frame.

Awesome.

Thanks for the color on that, and that's all for me.

Colin Rusch, Oppenheimer.

Thanks so much, guys.

Now that you've got a number of units testing this out and you've run your own system on the software side.

Can you talk about how much compute efficiency you're seeing for customers because of the real-time velocity data?

And then also how important the lower power consumption is and some of the decisions that you may end up seeing later this year from customers?

Yeah, thanks, Colin.

Happy to answer.

I think one of the things that we are seeing from customers is that first of all, there is this significant focus on advancing automation towards the highway, on highway, at highway speeds, right?

So the current solutions are getting on a highway, but they're not quite achieving highway speed.

As we have seen and we talked about earlier as well the new ruling by NHTSA to further expand automatic braking with higher speeds.

I think it's very important is that I think this is going to be a tailwind for LiDAR industry as well.

We see that for our technology, for FMCW, a key driving point because, with our technology, we have the ability to see further with velocity and the perception enabled by that allows some of those compute and calculations and inferences to be reduced and minimized at the system at the vehicle OEM side, because of the fact that we effectively are able to bypass a number of inferences and directly measure those things such as the velocity of dynamic objects and that helps tremendously, both from a satisfactory safety standpoint from a high confidence of object detection standpoint and classification, but also on the company side, as you mentioned.

So this is something that then we see allows OEMs to do two things.

One, increase their functionality, right?

without having to keep adding on significant costs, right?

So that's that important, which means we can actually reduce, maybe some of the cost on super advanced processing high power or high cost processing nodes, especially important as you go into mass market.

And two, it could also allow them to potentially reduce maybe some of the other sensing modalities that are out there.

Obviously, with our technology because, it's having a measured distance and velocity.

We see potential opportunity that in some of the mass market opportunities that this could potentially replace some of the other sensor modalities, for example, maybe you still have a radar sensor, but you can plug in the 4D LiDAR and reduce the need for an advanced radar or completely replace that.

So that's something that we see potential as you go into higher volumes were performance over power and performance over cost becomes super critical that this technology is already showing that roadmap for the OEMs.

And I think at the end of the day, the biggest thing is OEMs are looking to what we hear, really future proof their stack and now they're moving past this pilot stage, right?

Now we're moving from a pilot stage with there's lower volumes to really mass scale.

And we think in the next few years as our ramp up with Daimler Truck and market entry in the '26, '27 time frame hits on the road, that's where those higher volume opportunities are going to kick in and having this capability and then that transition towards FMCW is where we see happening around this timeframe, which bring all this back together, if that makes sense.

That's incredibly helpful.

And then just outside the automotive space and the transportation space, there's obviously a move towards trying to understand and monetize AI in the physical world and sensors are an incredibly important part of that.

Can you talk a little bit about, not just with the metrology opportunity, but other opportunities that you guys are seeing coming your way now that there's incremental validation on the technology?

Yes.

You mean on the non-automotive side, did I hear that right?

Exactly right.

Yes.

So absolutely.

So first of all, we have significant interest and growing momentum on the automotive side, as you can see in here from us.

But that doesn't mean that we are not doing anything on the industrial side.

As a matter of fact, we are fully on track with our Nikon program later this year, where that's going to start ramping up.

And we are seeing because of the fact the core innovation of our technology being everything integrated on the LiDAR optical front into the silicon photonics module.

We are utilizing that off the same technology, different software to be able to achieve very different performances like metrology and precision on other applications.

So we are engaged with a number of other folks in the industrial, say, industrial side to also expand on this, the backbone of what we're doing with Nikon, if that make sense.

So, and as we have more, of course, we'll talk about that.

But I think with what we're seeing is with obviously advancements on robotics, manufacturing advances or the use of AI for both vision based, as well as now point cloud based solutions that's an area where we think our technology could also play a role.

And as we are able to use this, the economies of scale with our production scale for automotive, we think that's going to become a pretty interesting attractive product for these non-automotive customers to be able to reduce costs while improve efficiency and automation at the factory level, especially on the manufacturing side and kind of robotics side, if that makes sense.

Perfect.

Thanks so much, guys.

Kevin Garrigan, WestPark Capital.

Yes.

Hey, guys.

Thanks for letting me ask a question.

I apologize if I missed this.

I know you said you were making progress with more passenger vehicles.

Have you gotten more interest from other trucking OEMs as well?

Yes.

Kevin, happy to answer that.

Absolutely.

Yes.

We are at this point, engaged in multiple RFQs.

This includes both passenger, as well as commercial vehicles programs.

And as I was mentioning earlier, it's always the first win that sets the foundation for others to follow, right?

So what we are hearing and we're seeing from the OEMs is that Daimler Truck when really helps de-risk their decisions of the OEMs, as they move from pilot to kind of production deployments and as they make decisions to go to the next generation, especially transitioning to FMCW technology.

So and that is across passenger, as well as commercial vehicles.

So we are seeing interest in both of that.

Obviously, Daimler being the marquee brand and key customer for this space.

We are seeing others really interested to be able to tap into our technology for their application, both in kind of high ADAS, as well as automated highway applications.

Okay, perfect.

And then kind of going off that, can you give us some color on the processes for both trucking and passenger cars, kind of pertaining to, not only the RFI and RFQ processes, but also the milestones to get to SOP, are, I would imagine that passenger vehicle OEMs and I may be wrong about this, but they'd be much more kind of stringent on certain tests or validation processes?

Yes, happy to.

So overall actually in automotive, there is number of activities, there is number of standards or there is number of qualifications.

When you deal with some of these top brands, it doesn't actually matter I think in terms of where exactly the exact application, there is a certain level of super stringent requirements on qualification needed.

For example, Daimler, we had to go through significant qualification steps across our manufacturing process, quality and development teams, and we were audited, right?

and did that.

On the trucking side, commercial vehicles side, actually some of the requirements on performance and reliability and shock and vibe and lifetime actually is much more stringent on the passenger car side.

So that's why we see that enabling our technology to be really, I would say think of it as mass market OEM tested and proven, and in some ways that makes it easier to also then deploy that into it mass market consumer passenger vehicle application.

So, but just remember that at this point I mentioned, at this point, we have done this now twice.

We have completed last year, early in the year, we introduced the first time the concept of a top 10 OEM, right?

And throughout the year we provided updates within a few months after within a quarter or so after we were able to pass a comprehensive audit by the top 10 OEM and we completed manufacturing and quality auditor.

And then within six months, we won the program, production went and became Daimler, and that's when we announced that, right?

So now we are talking about a second time, a new top 10 passenger OEM and the time to, we have done this manufacturing and quality audit by this (inaudible) OEM is now faster than what we talked about last time.

So we're using the maturation of the company, not just the products are of our organization, of our team, of our processes, and we're seeing a significantly across the Board, which gives us added confidence as we go towards some of the finalization of these RFQs in the next number of months.

Yeah, that makes a ton of sense.

Okay, perfect.

Thank you for that.

Suji DeSilva, Roth MKM.

Hi, Soroush.

Hi, Sourabh.

So for Daimler, could you maybe handicap the opportunity to expand beyond, I guess, trucking, which is mainly North America in my, from what I can tell to additional geographies and then passenger, just give us some sense, if you know, work's already done and you know how much those good waterfall in versus what a realistic expectation is?

Yes, sure, Suji, happy to answer that.

So obviously with Daimler Truck were first laser focused on delivering on our first program launch SOP for 2026, right?

We are acting at Tier one as the exclusive supplier for long-range and ultra long-range LiDAR for the series production program.

We are obviously working across the Board on providing sensors and some of the source that perception software assets that we talked about for that program.

We're also closely engaged with the Torc team, which is developing, of course, the autonomy stack.

And overall, obviously, we see opportunities in the future to expand this partnership for potentially other markets, other regions, other applications.

The whole point is that we're building a foundation of a technology stack, which is really enabling Highway Autonomy at highway speeds.

This can be applied to a number of applications.

As I mentioned earlier, you can see that, not just commercial vehicle, but now also passenger vehicle OEMs are increasingly looking to expand their operational design domain to higher speeds and with it's a ruling that requires more than 60 miles per hour automatic emergency braking.

We think that's going to be important and kind of requirements for OEMs, including passenger car side.

So that short answers bottom line.

The developments we're doing is not going to be limited just to a certain use on the commercial vehicle side, we see potential opportunity to expand from there, and as we have more that we can share in the future.

If we were able to do that, we would of course, be talking about it, but we do see opportunity to further expand our partnership here and we'll continue to work together.

I just want to mention also that, obviously, we had a couple of exciting events later this month, both with the CEO of Torc robotics later this week in London actually, where we're going to be on stage talking about the latest progress with our program on the production side, as well as later this month, at the end of the month with Daimler Trucks, Head of Autonomous Group at ACT Expo in Vegas, who will have some more exciting items to talk about.

So feel free to join at that time.

No, that's great.

Great exposure for you guys.

Obviously, I'm going to step back and ask a question about the kind of the process that you went through to win Daimler Truck.

Maybe you could enumerate three or four key steps in that as you look back on it, and I'm asking the question in trying to understand your pipeline a better.

Which of those steps did you, when you passed that you gain the most confidence that you would win this customer.

And in the pipeline how many potential customers are maybe already passed that phase just to get a qualitative sense?

Sure, good question.

So I can give you at a high level.

Obviously, there's a number of steps and typically that process could take a number of months to one or two years, right from the very beginning first conversations.

But at a high level, there is RFI, RFQ and then, of course, the final nomination.

And there's a number of steps in between.

I think one of the key milestones is, first of all, the transition from RFI to RFQ stage, which is critical, and that is where the final commercial bids, as well as the key step, which is manufacturing quality audits happen past RFQ stage, and there is kind of a down selection phase, maybe sometimes happening during the RFQ phase in which the finalists are picked.

So there is kind of two, three main, but two checkpoints after the RFQs.

So there is RFI to RFQ and then two more checkpoints with audit as well as the down selection.

And with Daimler Truck, of course, we have gone through all those and we were able to, since we introduced it early in the year last year advanced to the RFQ stage.

And then from there, within a quarter or a few months after that, we talked about passing the manufacturing audit.

And then from there, we became the finalist and we won it, just a quarter after that.

So within two quarters from our Q2 manufacturing audits finalists and at work.

We're now talking about, okay, a number of other programs as multiple others, as I mentioned, including passenger commercial vehicles and we have advanced on a number of those past this RFQ phase.

As I mentioned, with a top 10 passenger OEM, we have now crossed both the RFQ phase.

We have now crossed the manufacturing auto phase, and we have now crossed the finalists, being a finalist on the final phase of the RFQ to the nomination.

So we're, it's been only a couple of months.

We've made significant progress on this program and we're pretty excited about that.

Appreciate that Soroush.

It's very detailed.

Thank you.

There are no further questions.

Ladies and gentlemen, this concludes the call for today.

Thank you for calling in.

Please go ahead and disconnect your lines.