Aeva Technologies Inc (AEVA) 2021 Q1 法說會逐字稿

Good day. My name is Hilary, and I will be your conference facilitator. I would like to welcome everyone to Aeva Technologies First Quarter 2021 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, Director of Investor Relations. Andrew, please go ahead.

Thank you, and welcome, everyone, to Aeva's First Quarter 2021 Earnings Conference Call. Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO; and Saurabh Sinha, Aeva's CFO. Soroush will provide an overview of Aeva as well as share developments over the quarter, and objectives for 2021. Followed by Saurabh, who will discuss the first quarter financial performance and 2021 financial outlook.

Ahead of this call, we issued our first quarter press release and presentation, which we will refer to today and can be found on our Investor Relations website at investors@aeva.ai.

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

For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our Form 8-K filed on March 18, 2021, and the risk factors found in the section entitled Risk Factors, risks related to Aeva's business and industry in the proxy statement dated February 12, 2021, filed by InterPrivate Acquisition Corp.

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.

With that, let me turn the call over to Soroush.

Thank you, Andrew, and good afternoon, everyone. I am very excited for our first conference call. I would like to start out by thanking our employees for their outstanding contribution to the completion of the transaction. I would also like to thank our shareholders for their commitment and support.

Now let me highlight a few of our accomplishments in this quarter. As you can see on Slide 5, it has been a strong start to 2021 here at Aeva, and I would like to highlight a few key accomplishments achieved in the first quarter.

As mentioned earlier, we successfully closed the business combination transaction with InterPrivate Acquisition Corp., on March 12. With an upside PIPE we received over $0.5 billion in net proceed that we expect to support Aeva through our planned start of production. We also continue to build on our commercial traction with the announcement of collaborations with a self-driving trucking company, TuSimple, to deploy Aeva 4D LiDAR and with DENSO, one of the world's largest Tier 1s.

On technology, our team continues to push the boundaries of what's possible towards creating the best perception solution built on Aeva's breakthrough FMCW LiDAR technology. Our system is now capable to take the objects at an industry-leading 500 meter range, nearly doubling our previous systems by software updates on Aeva's existing hardware. We also bolstered our leadership team with industry veteran executives who have deep expertise in engineering, manufacturing and scaling of advanced technologies. This includes Tim Willis as our VP of Supply, manufacturing and strategy, having most recently been Waymo's Chief Manufacturing and Global Supply Officer.

In addition, as announced yesterday, we have established an advisory board with the addition of veteran execs from Apple and Volkswagen who bring tremendous experience across automotive and consumer electronics.

Now let's turn to Slide 7. As this is our inaugural earnings call, I think it will be helpful to provide a brief introduction to the company and its unique 4D LiDAR technology that's driving our traction in the industry. We are sensing and perception systems company with a singular vision to bring the next wave of perception for all devices. Today, mass adoption of LiDAR has been limited by the performance and scalability of available sensors. Since starting Aeva about 4 years ago, we have developed a breakthrough 4D LiDAR on chip technology, that we believe can achieve the holy grail of sensing for perception. A high-performance, yet scalable and affordable products built from the ground up at silicon chip scale.

We believe this can unlock the massive market opportunities across automotive and assisted driving and autonomous driving applications as well as nonautomotive applications, such as industrial automation and consumer electronics. We have already earned the endorsement of a number of feeders in automotive and advanced technology, including Porsche SE, the majority shareholder of Volkswagen, ZF, DENSO, TuSimple, and as we announced today, an undisclosed large company, among others.

Now turning to Slide 8. I'd like to share a bit more about our approach to achieving Aeva's mission to bring the next wave of perception for all devices. While the goal is wide reaching, we believe it takes a singular focus on designing the best perception solutions to make this possible. It also requires something that is more than just slightly better than what's available today, a solution that fundamentally changes the sensing and perception paradigm. At Aeva, our team of multidisciplinary engineers have built from the ground up, a breakthrough FMCW technology informed by a long-term view of where we see the end state of LiDAR, not what's best today. We've done this through learnings from years of year world testing on the road as well as a clear focus on simplifying design to enable mass capability at affordable costs.

The resulting performance of our industry first 4D LiDAR has been validated by our partners who are leaders in the industry. More specifically, on our approach to partnerships, it is not to win the customer count, our focus is on aligning with companies that have a shared determination and the ability to deploy LiDAR at mass scale. And we believe strongly that working in tandem with highly capable and well-positioned partners is critical to addressing issues that have historically challenged the industry and enable Aeva to bring 4D LiDAR to mass adoption.

Now let's move to Slide 9, which provides more detail on Aeva's differentiated 4D LiDAR. As I mentioned, our core technology is a frequency modulated continuous wave or FMCW 4D LiDAR that is integrated on a silicon photonic chip. Unlike Legacy 3D LiDAR, based on Time-of-Flight, Aeva's 4D LiDAR transmits the continuous low power laser beam that is embedded with a unique signature in its frequency. And then measures the change in frequency as the beam reflects off the object. This provides several critical advantages compared to Legacy Time-of-Flight LiDARs that are available.

First, the ability to measure a fourth dimension of instant velocity for every pixel. Second, immunity to interference from other LiDARs and the sunlight. Third, the capability to detect long ranges with 100x higher sensitivity compared to legacy, Time-of-Flight technology. And lastly, by integrating all of this onto a LiDAR chip module that is built on proven silicon photonic processes, we can provide a lower power system at mass scale with affordable costs.

Now given the advantages of FMCW, why are other LiDAR companies still using Time of Flight? Well, this is because we believe that all non Aeva approaches to FMCW have inherent challenges limiting their market adoption, but Aeva is not a traditional FMCW company. As you see on Slide 11, Aeva's unique approach and IP has enabled us to solve further limitation of traditional FMCW. First, leveraging our unique photonic design and proprietary algorithms, Aeva's 4D LiDAR achieves millions of points per second per beam. Enabling our system to have a low number of themes and a low number of transceiver counts while simultaneously capable of long-range and high resolution.

Second, through our silicon chip integration, we are able to significantly lower total system component counts, which drive a material relative cost advantage to other LiDARs. In short, Aeva's differentiated approach to FMCW provides a significant advantage to both legacy Time of Flight and traditional FMCW.

Now switching gears to our business update for this quarter, I am excited to share several important achievements. First, on Slide 13, Aeries our LiDAR platform has been progressing ahead of schedule. And over the past quarter, we have made improvements in a number of key areas. First, building on our unique FMCW technology, which enables high-resolution without compromising any detection range, we have significantly improved our previous resolution and now can exceed over 350 points per square degree.

Second, we continue to miniaturize our packaging towards production, which is now 30% smaller than our previous design. And third, we completed the reliability and compliance testing that need the necessary temperature, vibration and ingress protection requirements for passenger vehicle applications.

Moving to Slide 15. We completed the third-generation of our LiDAR chip, which integrates all elements of LiDAR sensing and optics into a single chip module. And we have done this about 3 months ahead of schedule. To our knowledge, Aeva remains the only company to have successfully developed and integrated this breakthrough LiDAR on chip technology. This LiDAR chip module is the final architecture that we plan to use for series production programs launching in 2024. This already provides us with a clear path to our final cost structure and enables our final form factor.

We have also removed all fiberoptics from our system with this LiDAR chip generation, which is a game changer for reliability and durability of any LiDAR system. And notably, this is already being produced at our production intent factory. In addition, our chip module is fully integrated, and we have completed key preliminary reliability testing for automotive.

Turning to the next slide. Our LiDAR integrates all core components onto a chip module, which solves the challenges limiting the scalability of LiDARs to the market. Specifically, we replaced a fiber-based laser with a semiconductor laser. Doing so, we deliver a solution that is more reliable, lower cost and uses less power, all of which are critical factors to enable mass adoption. Similarly, we use common PIN diode detectors, which are manufactured in millions of units today and/or a fraction of the cost of more expensive detectors such as Avalanche Photodetectors, which have low yields.

Also, we utilize small aperture optics, which significantly reduce the size and the cost of our system. And by integrating all core components onto a silicon chip platform, we dramatically simplified the assembly process. By removing the need for active alignment, we significantly reduced manual assembly and bring down the overall complexity and cost for manufacturing. The end result is a high-performing LiDAR system that is more reliable and truly scalable at an affordable cost using proven semiconductor manufacturing processes.

Turning to Slide 18. We continue to expand our technology and performance leadership. Aeva's unique 4D LiDAR now achieved beyond 500 meters of range, nearly doubling our previous performance by software update on existing hardware. To our knowledge, Aeva is the only perception company that can detect vehicles beyond 500 meters and pedestrians beyond 350 meters.

But perhaps most importantly, an industry first capability is to detect growth drivable surface beyond 200 meters. This is a step change in capability from others highlighting max range, and we're not aware of other system providers being able to see the drivable surface at such long distances. Reliable detection at these businesses provides the crucial ability to enhance the factor of safety for automated driving, especially in applications where sufficient braking distance is safety critical. And challenges to achieve with existing technologies, including highway driving.

The leading detection range is only possible by utilizing Aeva's unique FMCW 4D LiDAR architecture that has severe sensitivity. And by leveraging our instant velocity information, we can measure such objects with higher confidence than legacy Time-of-Flight LiDAR at hundreds of meters away.

Now moving to commercial development on Slide 20. Today, we are excited to share a foundational agreement with an undisclosed large company to deploy a best-in-class LiDAR for their autonomous program. This is a landmark validation of Aeva's unique approach. The decision by this company to utilize Aeva's 4D LiDAR was driven by our proprietary FMCW capabilities that offer superior performance and/or breakthroughs to integrate LiDAR onto a chip module at scale.

Going forward, we will be working closely together through development and validation leading up to production. We are thrilled to collaborate together to bring Aeva's 4D LiDAR to the market.

Now turning to Slide 25. I would like to share our priorities for 2021. This year, our focus is to continue investing in developing a world-class perception solution and supporting our key customers on their development milestones to bring our 4D LiDAR to market. First, we are working to bring our Aeries system, our LiDAR platform, towards production and are on schedule to complete our B sample development by year-end. And this iteration locks our final production architecture.

Second, we will build on our strong commercial momentum, with 2 additional programs towards production. This is on top of prior announcements made already in 2021, including our foundational agreement with the undisclosed company that we just announced. Third, we will accelerate our engagement in nonautomotive applications, including industrial automation and beyond. We are seeing increased inbound interest in this area, and we plan to do this by leveraging our already developed LiDAR chip architecture. And fourth, we are laser-focused on building a clear pathway to commercialization, well ahead of our targeted 2024 launch, we already have agreements with our key suppliers and partners including world-class foundries and contract manufacturers. This year, we will continue to strengthen our supply chain, including securing capacity and defining our dual source strategy.

And with that, I will turn the call over to Saurabh to discuss the financials.

Thank you, Soroush. As Soroush mentioned, our focus this year is on development and working closely with our key customers to create a best-in-class perfection system that meets our customers' expectations. And that is aligned with the time line of their development milestones, which we expect to ramp up through the year. This includes completing our B sample development by year-end and we are already ahead of schedule with our third-generation LiDAR chip.

Now let me provide some commentary on our first quarter financial results and 2021 outlook. Turning to Slide 27, which highlights our first quarter financial results. Revenues in the first quarter was $0.3 million. Non-GAAP operating loss was $15.6 million, which is primarily comprised of R&D expenses related to product development. Gross cash use, which we define as operating cash flow less capital expenditure was $15.5 million and primarily reflects the operating loss in the quarter.

Turning to our balance sheet. Our cash, cash equivalents and marketable securities at the end of the first quarter was a strong 523 million. Finally, our shares outstanding at the end of the first quarter was 211.5 million.

Now on the outlook for 2021. We are comfortable that our full year revenues will be consistent with what we discussed in the go public process. As we anticipated, our revenues this year will be second half weighted, in line with the timing of our customer development milestone. We are increasingly confident in the progress we have made on our technology, enabling us to accelerate our investments to bring forward our expansion beyond automotive.

Therefore, we expect gross cash use, which is operating cash flow, less capital expenditure to be approximately $85 million to $95 million in 2021. Within this, we anticipate CapEx to be around $5 million.

Lastly, I would like to provide a short update on the warrant accounting matter related to SPAC. We are evaluating the impact of the SEC's statement on accounting and reporting considerations for warrants. We are omitting certain financial tables at this time until our evaluation is complete. However, we do not expect the financial information presented here or in the press release to change. So in summary, we are well positioned financially with a strong balance sheet that will enable us to continue development of our innovative technology or through strategic opportunities and bring our 4D LiDAR to the market. With that, I will turn it over to Soroush for closing remarks.

Thank you, Saurabh. I'd like to wrap up with 3 reasons why we're excited about Aeva for 2021 and beyond. First, we have developed a breakthrough 4D LiDAR on chip technology as we believe, achieve the holy grail of sensing for perception. A high-performance yet scalable and low-cost product built from the ground up at silicon chip scale. We believe this can effectively unlock the massive market opportunities across automotive and assisted driving and autonomous driving applications as well as nonautomotive applications, such as industrial and consumer electronics.

Second, we have established world-class strategic partnerships and earned the endorsement of the leaders in the industry. We are working closely with our partners to build the world's best perception solution for mass scale. And third, our strong financial position will enable us to continue to expand our technology leadership and execute on our plan to commercialize Aeva's differentiated 4D LiDAR and bring the next wave of perception for all devices.

Thank you for your time today. Now we'll open up the line for some questions.

(Operator Instructions)

Our first question is from Suji Desilva of ROTH Capital Partners.

Congratulations on the merger and the first quarter out of the gate. So I'm trying to get a handle on the customer just commentary you made. The foundational agreement, just to understand what that might mean? And is this the first for Aeva? And just corollary to that, the 2 customers you had momentum with, would that take the 4 strategic customers to 6? Is that the way to think about that?

So, yes, sure. Happy to answer. First of all, this, as I described earlier, we see as a landmark deal with this large company, and we have agreed with this company to deploy our 4D LiDAR for their autonomous program. We will be working closely together with them from now leading up to production to really develop and bring our product to scale.

And in terms of the other 2 additional programs, as I mentioned, these are incremental to what we have described so far. So we are already, of course, excited by the traction that we have in this space, and we'll be continuing to deliver on the progress we've made so far.

Okay. That's great progress out of the gate here. And then on the manufacturing side, I feel -- I have to ask, the supply chain readiness, you described some very positive commentary. But I just want to understand if there's any impact in your strategic efforts here based on recent industry-wide tightness in semiconductors in the automotive supply chain, whether you've had to adjust to that or whether you had planned for some of the things you're already hearing? Any commentary there would be helpful.

Sure, absolutely. So first of all, currently, we do not see an impact and -- on supply shortage issues. In the near term, we are seeing longer lead times for certain silicon components. But we're not currently impacted. And that's because, of course, we have already secured those critical components. And in long term, as I mentioned, we are focused on strengthening our supply chain as I mentioned, which includes securing capacity for production and also working through our dual source strategy for a specific component. So that -- these are all, of course, critical activities. And of course, we are doing all of this work well ahead of production, and we feel very confident, especially with the addition of the executive team that we've had, including Tim on the supply chain side.

Our next question is from Colin Rusch of Oppenheimer.

Guys, the ability to extend the range with a software firmware upgrade is a perfect deal. Can you speak to the capacity for the signal processing capability within the solution to continue evolving and what the change is really for that innovation?

Sure. So first of all, I think this is one of the critical advantages that we have discussed before about FMCW and specifically Aeva's unique approach to FMCW. Obviously, because we are very highly developing signal processing algorithms that are unique to us. We have the ability to continue improving the performance and doing that in the same hardware. And as you mentioned, we do that already, as we described earlier, in the current existing hardware, using same hardware with processing algorithms and improvements to the processing to help to do that. And we foresee that, we are able to continue to do that on our existing hardware, especially with the [3rd generation] of LiDAR chip that we have developed to be able to leverage the unique asset of software because of the FMCW approach to make further improvement. So that's, I think, an important differentiation that we see for Aeva compare to kind of more hardware frozen devices.

Okay. That's helpful. And then just given the comments on some of these customers moving through the process. Previously, you had talked about 26 programs that you're tracking. But can you give us a sense of how many programs you're tracking and how they're progressing along their time frame? Are they tracking in line with what you had expected? I think there's awful lot of, I think, learning and decision making happen -- going on within this program. So I just want to get a sense from you guys in terms of overall number and (inaudible).

Sure. Absolutely. So first, as also described earlier, with the announcements that we have assured, we are seeing strong traction in the market. And obviously, our go-public process is accelerating our momentum. And as evident also by the announcement we made today about the foundational agreement with the undisclosed customer. And I think these are all proof points and validation points to the advantages of our technology and the traction that we're gaining even since the closure of our transaction. We are continuing to expand our engagements. We are seeing an increased finance reversion and a number of opportunities to pursue, and we will continue, as I mentioned, to focus on those partners that are highly capable, well positioned and highly importantly, have the scale to help bring our products to the market.

So -- and again, lastly, we are working to convert additional programs. And again, as I mentioned earlier, our goal this year is to convert 2 more programs. In addition to what we have described so far, we have talked about so far that we'll be working closely with for -- towards production.

Our next question is from Tristan Gerra of Baird.

And congratulations on your first quarter as a public company. Just circling back on the landmark design win that you announced today. Could you give us a sense of the potential size of that win relative to what you have announced previously and what's already signed? And then also, any idea in terms of the timing of the ramp?

Sure. So first of all, Tristan, we've been working closely with this customer for some time. And as I said, we look forward to a close collaboration between now and leading production. Unfortunately, I can't provide exact time line on the production year for obvious reasons. But maybe just give you a little bit of sense for the potential opportunity here. To our knowledge, we see the potential opportunity from this company and this deal to be amongst the most largest in the industry based on what we know so far.

Okay. That's great feedback. And then it was good to hear you guys reiterate the revenue guidance for the year. And you've mentioned it's going to be second half loaded. Obviously, it's going to take a pretty significant acceleration from the current quality of revenue run rate. So could you maybe give us a little bit of color as to when do you expect that acceleration of your quarterly revenue, is that going to be second half? Or is it going to be earlier? And what's going to be driving it? Is it a specific customer or across all the engagements you have? Any color as to what will drive that inflection points of this year and the level of confidence you have, this is going to happen this year?

Yes, Tristan, this is Saurabh. That's a great question. So as I indicated in my prepared remarks, it is second half weighted, in line with the customers' development timeline, and we have fully anticipated that. Q2, Q3, Q4, we see increased activity as we go and develop and execute.

Our next question is from James Michael of Piper Sandler.

This is James Michael. Just a quick question for me. How should we think about incremental updates to your technology affecting your production forecast? Are these kind of expected to drive share gains over time? Or are they just advancements consistent with your previous expectations for product innovation?

Yes, sure. That's a good question. So first of all, as I mentioned, we've always believed in the advantages of FMCW as its differentiation and capability to -- especially for Aeva, to bring that to the market. And we are highly encouraged by the developments that we have made so far with a third-generation LiDAR chip ahead of schedule 1 quarter. We are going to continue making improvements on the existing hardware, leveraging our IT that we have developed.

And in general, we see the technology advantages that we have made and continue to improve on to enable us to gain additional commercial momentum, and we believe that this will help us with an increased market share over time.

Yes, that's helpful. And then just kind of on the same point, right, with incremental updates to the technology, do you expect greater pricing power over time, particularly as you get manufacturing ready, where could that end state for pricing margins for your chip land?

Yes. So first, I think we do expect as we improve our technology and products, obviously, in terms of performance, as we continue to do so, especially in software and signal processing algorithms that we're able to provide increased value to our customers. Of course, we're also going to be leveraging that to be able to gain additional pricing power, if we can. So that's going to be part of it. But generally speaking, I think overall, we see that a reduction in our overall system price is enabled by the fact that we are able to continually improve our LiDAR chip technology over time. And then we are investing heavily in this field, and we expect to make further improvements over the generations from the sort of production leading into future years.

Our next question is from Richard Shannon of Craig-Hallum.

Maybe a couple for me. First of all, on the foundational agreement. Can you maybe describe the nature of this agreement, especially relative to the other ones that you have in place here? Are they more different types or closer collaboration? And I assume that these are collaborations, which you're not directly competitive with other things that they have going on. Maybe you can help us understand the broader dynamics there, that would be great, please.

Sure. So I can't provide too much details, obviously, on the specifics of the programs. But I can tell you, yes, we are working closely through development plans, including development and validation between now and leading up to production. I think this, in general, as I mentioned, we do see a foundational agreement because it does involve a close collaboration between the 2 companies from now all the way up to production.

Okay. So you didn't mention anyone -- any competitors they may be working with? Are you certain that there's no one else involved, at least with LiDAR, the similar capability as your long-range front-facing or any dynamics you can understand there and share?

Yes. We're not aware of any such things.

Okay. Excellent. Second question for me. Regarding your recent software update that gave you 500 meters of range here. Kind of -- love to understand, at least within the auto environment, what other dynamics of improvements you're looking to do here. Looks like range should be about as long as you need to do. Resolution looks to be very strong. Where else are you going to inflect in terms of improvements here? Is this more of a cost size, power dynamic here? And to what degree do those help you in the other markets like you mentioned accelerating into the consumer and non -- and other non-automotive areas.

Yes, sure. So we are singularly focused on creating the best-in-class perception solution that we can on the planet. Our focus is in both hardware and software, as I mentioned. And we actually see those tightly coupled together, right? For Aeva, having the LiDAR chip is a big piece of the puzzle, but it's not the only piece. Without the algorithms or the unique IP we have there, the value to the end customer is not as much. So we see ourselves, that's what we say as a perception systems company.

So to that note, we will continually improve on performance via the improvement software, additionally, form factor costs and hardware with continued investment in the business and a LiDAR chip activity. And as I mentioned, we are pretty thrilled about our ability to execute ahead of schedule on the LiDAR chip especially because to our knowledge, Aeva is the only company that has been able to provide this LiDAR chip technology in this third generation all integrate into this 1 platform without the use of any fibers, and this gives us increased confidence to enable our final cost structure and final form factor already. And that, I think, is an important milestone, and we want to share that, of course, with everyone.

Ladies and gentlemen, we have reached the end of the question-and-answer session. This also concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great evening.