Aeva Technologies Q2 2024 Earnings Call Transcript

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August 7, 2024

There are 7 speakers on the call.

Operator

Good day. My name is Chloe, and I will be your conference facilitator. I would like to welcome everyone to the AVA Technologies Second Quarter 2024 Earnings Conference Call. During the opening remarks, all participants will be in a listen only mode. Following the opening remarks, we will conduct a question and answer session.

Operator

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.

Speaker 1

Thank you, and welcome, everyone, to AIVRA's 2nd quarter 2024 earnings conference call. Joining on the call today are Suresh Salahyan, AIVA's Co Founder and CEO and Saurabh Sinha, AIVA's CFO. Ahead of this call, we issued our Q2 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.

Speaker 1

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 ks. In addition, during today's call, we will discuss non GAAP financial measures, which we believe are useful as supplemental measures of Avis' performance. These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

Speaker 1

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 Suraj.

Speaker 2

Thank you, Andrew, and good afternoon, everyone. In Q2, we achieved key milestones on our existing production programs, while also meaningfully advancing on a number of additional opportunities. Importantly, we secured wins with new customers, highlighting the broadening interest for Aeva's unique four d VIR. I also would like to share our key accomplishments in Q2. We continue to strengthen our partnership with Diamond Truck.

Speaker 2

We remain on track with Diamond Truck's program milestones, including continued sensor shipments to build out the OEM's fleet of on road vehicles. Dummitruck also publicly unveiled the autonomous Freightliner Vehicle and Technology Demonstrator, which incorporates AVOS 4 d LIDAR as the exclusive long range and ultra long range LIDAR and highlights the OEM's progress and commitment to deploying autonomous vehicles at scale. In automotive, we have made significant progress on opportunities with multiple global top 10 passenger vehicle OEMs. With 1 top passenger OEM, we continue to expect their award decision later this year. And with another top passenger OEM, we began a new collaboration around 40 LiDAR vehicle integration.

Speaker 2

In industrial, we completed the final validation of our lidar on chip and Nikon's product ahead of our first industrial launch in Q4 this year. And lastly, Aeva continued to broaden the reach of FortiLidar with our expansion into security. We are proud that a top U. S. National Defense Security Organization selected AVA 40 LIDAR as a primary detection sensor to help protect some of the nation's critical energy infrastructure.

Speaker 2

Let's now discuss in more detail about our recent business developments. With Diamond Truck, we continue to work closely together and remain on track with the OEMs milestones and the start of production timeline. In Q2, we continued scaling sensor shipments to Diamond Truck and Torque for deployment on additional vehicles for on road data collection and development. The Abo team is working very closely together with Torque and Diamond Truck on important use cases for safe operation of trucks at highway speeds. In the last quarter, Daimler Truck also publicly unveiled its battery electric autonomous Freightliner eCascadia technology demonstrator, which incorporates multiple ABA-forty lidars as the exclusive long range and ultra long range lidars.

Speaker 2

This vehicle highlights the significant progress Diamond Truck is making to commercialize autonomous trucks on U. S. Highways and as part of the OEM's broader strategy to deploy a propulsion agnostic autonomous truck platform for scaling automated trucks to significant volume. Looking ahead, our focus is on supporting the rollout of additional Dynatruck vehicles and related on road development as well as preparing for AVOD's start up production in 2026 in time for Dynatruck's market entry. Beyond Diamond Truck, our engagements for additional automotive programs continue to solidify in Q2 as we advance on a number of opportunities expected to be decided in the coming months and expanded other ones.

Speaker 2

In particular, we made significant strides with multiple global top 10 passenger OEMs. This includes one we have discussed in the last quarter. The AVA team continues to advance in close collaboration with this OEM and we continue to expect the OEM to make an award decision for this production program later this year. With another global top 10 passenger OEM, we have started on a collaboration for 40 Lidar vehicle integration. This OEM is experienced with time of flight Lidar and increasingly appreciates the benefits of FMCW for next generation capabilities.

Speaker 2

We look forward to further demonstrating the perception and integration capabilities of our differentiated 40 LiDAR technology. More broadly, we are highly encouraged by the industry's growing recognition that FMCW can help enable more advanced capabilities, including automated driving at highway speeds. Following our production program win with Baimler Truck, ABU is experiencing this in exciting and tangible ways across a broad range of applications from passenger vehicles, commercial vehicles to mobility. Our focus is on meeting the growing interest for AIVA Fortiliter and the multiple opportunities to convert production wins in the near term. Turning now to industrial, Aeva is on schedule for our 1st industrial launch in the 4th quarter.

Speaker 2

Over the quarter, we successfully completed the final validation of our LiDAR on chip module in Nikon's product and are now preparing for our deliveries to Nikon in Q4. In support of this, we have also successfully scaled up our dedicated LiDAR chip manufacturing line at Fabrinet. This first collaboration with Nikon is for industrial metrology applications where Nikon's existing customers across automotive, aerospace and renewable energy already use Nikon's high precision inspection products in the manufacturing processes, including some of the leading OEMs and automotive players in the space. With AIVA's LiDAR on chip module, we will together offer micron level accuracy in a faster, smaller and lower cost solution that we believe will open new opportunities. This upcoming launch will mark a pivotal milestone for AVOD as we progress from the development stage to commercialization for the first time in industrial automation.

Speaker 2

While we plan to scale our dedicated manufacturing production line at Fabrinet over time, we believe this transition has the potential to accelerate our other ongoing engagements. We continue to engage with industrial leaders on expanding into additional opportunities where we can leverage the same AIVA LiDAR on chip module and our perception platform software for industrial metrology and automation across a broad range of applications. Now speaking of new applications, we recently announced ABA's first expansion into security. Our 4 d LiDAR was selected by top U. S.

Speaker 2

National Defense Security Organization to help protect critical U. S. Energy infrastructure. AIVA sensors are expected to be a primary detection sensor to protect sensitive locations in various facilities from intrusion, such as water entries and exits and at perimeter fences. We expect to deliver the first set of sensors later this year.

Speaker 2

This selection comes after evaluation of other technologies, including 3 d time of flight LiDAR. Because of our instant velocity data, immediate interference and ultra long range, AIVA 40 LIDAR was selected to enable faster and more reliable detection. Aeva's mission is to bring the next wave of perception to a broad range of applications and this one is another example of the increasing interest to adopt our technology across a diverse mix of end markets, including for some of the most demanding and high stakes physical security applications. We look forward to supporting this important application and helping to protect some of our nation's critical infrastructure. Lastly, I would like to share a bit more about our new collaboration in rail.

Speaker 2

AVA 40 LIDAR was selected for Germany's automated train program. This program is funded by the Germany Federal Ministry of Economic Affairs and Climate Action and managed by Germany's national rail operator, Deutsche Bahn, in collaboration with other industry leaders such as Bosch and Siemens. The group is developing driverless fully automated passenger train dispatch and parking functionality by 2026. AVUS 40 LIDAR was selected after evaluation of other sensors, including 3 d time of flight LIDAR. Our ability to instantly detect velocity enables faster and more reliable detection of hazards, which can add critical reaction time to avoid obstacles surrounding train tracks.

Speaker 2

In addition, Aeva's unique ability to offer precise real time location state estimation without the use of GPS means we can provide accurate positioning even where GPS can be compromised, such as tunnels, urban canyons and other areas where trains regularly operate. We are excited to work with some of the rail industry leaders on this project and leverage Fortiliter's perception to bring new levels of automation to this end market. With that, let me turn the call over to Saurabh to discuss the financials.

Speaker 3

Thank you, Suraj, and good afternoon, everyone. Let us now turn to Aeva's Q2 financial results. Revenue in Q2 was $2,000,000 driven by sensor shipments to multiple customers and NRE from Daimler Truck. Non GAAP operating loss was $32,000,000 as we maintained a deliberate and disciplined approach to spend. In Q2, gross cash use, which we define as operating cash flow less capital expenditure was $29,900,000 At the end of the quarter, our total liquidity stood at $285,200,000 of which $160,200,000 was in cash, cash equivalents and marketable securities and $125,000,000 in an undrawn facility.

Speaker 3

We believe this capital position will continue to enable us to support our existing production partners and together with our unique 4 d LiDAR technology convert more of our commercial momentum to additional production program wins in the coming months. With that, let me turn the call back to Suraj for closing remarks.

Speaker 2

Thank you, Saurabh. To wrap up, in Q2, we continued to deliver on key milestones for our production partners, including Diamond Truck and Nikon and secured additional customers in new applications such as security and railway. I'd like to thank the Abo team for their determination to advance our commercial momentum in tangible ways in just 3 months. And I also like to express our appreciation to all of our stakeholders for their ongoing support. Our increasing list of wins and the significant progress on new opportunities are further indications of the growing demand for our products across a diverse mix of markets and AIVA's leadership position to drive this adoption with our 4 d LiDAR technology.

Speaker 2

AIVA is in the final stages on a number of key opportunities and continue to advance on other engagements across automotive and beyond. We believe we remain in a strong position to continue converting a portion of these opportunities to WEN this year and continue to further ABAUD's mission to bring the next wave of perception to a broad range of applications from automotive to industrial automation and beyond. With that, we will now open the line up for questions.

Operator

We'll move to Colin Rusch with Oppenheimer. Your line is open.

Speaker 4

Thanks so much guys. It's great to see you move into the security space. And I'm curious how leverageable that opportunity is for you. It seems like that's potentially relatively robust pricing and getting through the vetting process there could mean that there's other doors open. Just want to get a sense of total scope of that and the cadence in which you might be able to attack it.

Speaker 2

Hey, Colin. Sure. This is Suraj. Happy to answer that. Look, you're absolutely, we are actually very excited about this.

Speaker 2

This is our first expansion in security. We're excited to grow in the market here. First of all, a little background, this top national security defense organization selected us as really going through a whole gamut of testing for a number of different technologies, including evaluating other type of light hours. And really, I think what they realize, which we have been talking about for some time now is this additional capability that 40 LiDAR and FMCW technology brings to the table, do apply beyond automotive to other applications, including basically longer range section, better resolution, enabling faster and really comes down to faster and more reliable section. So I think overall, as you mentioned, this is significantly higher ASPs than automotive.

Speaker 2

We're talking about around a quarter of magnitude higher. It is obviously near term. It's part of our plan we've always talked about diversifying, bringing applications, including not just progressing automotive, which we really showed this quarter, not just the solid progress solidifying with our the one top 10 OEM, adding another top 10 OEM in the engagements process, but also now expanded the new application. I think importantly, we think it's just a start of AIVA and security. We are actually engaged in a number of other opportunities in defense security where we see that expanding.

Speaker 2

This win, I think importantly provides a vote of confidence in our technology for others to also start adopting that. And we really hope to capitalize on this and work with additional opportunities that we can convert over time. And again, applications. And the key focus here is being able to do so means we are really using the same investment we have made on our Fortiliter on chip module and technology in automotive and then taking that expanding it maybe with different algorithms, but the same core technology without having to now then make significant additional investments or spend to go tackle those other applications. And I think as we are going towards production, as we scale, we see our ability to expand these opportunities to I think meaningfully further increase as well.

Speaker 4

Great. And then with the scale up of the dedicated line and getting full validation for the Nikon products, can you talk about any sort of surprises whether positive or negative in terms of performance, efficiency of that production and anything within that validation process that maybe we want to be thinking about as a tailwind or headwind here for you guys? Yes.

Speaker 2

I think we have been working obviously with our manufacturing line at Farmina for some time out of Farland. And I think we said at the beginning of the year that we're going to be working on creating this dedicated manufacturing line for our LiDAR on chip module. I think this is one of the advantages of having everything integrated at the chip level, right? We're not using any fiber, reducing the BOM cost, making the process as automated as possible. And so what we see here now is actually we were able to deliver on getting the dedicated line up and running a bit ahead of schedule.

Speaker 2

So that's actually important. We're planning for this around Q3 ahead of Q4 timeframe. Now our Q2 already have completed this, which means really things have been going actually pretty smoothly. So we are starting to turn up the production on here with the dedicated line. This is going to of course support all of our production programs.

Speaker 2

We are already scaling shipments for the Amatruck in which their on road vehicle is ongoing. We're going to be using that also for Nikon shipments starting Q4 and then hopefully others as go along that we talk about. But I think having that is obviously a critical milestone for us. So that allows us to have this production readiness on time. I think beyond manufacturing also we have been able to in the past quarter continue our Automotive Tier 1 readiness as a direct supplier.

Speaker 2

We achieved this ISO 27,001 certification, which is the information security, that builds further confidence for not just our existing production customers, but others to work with us on additional programs. One more thing I want to highlight on Nikon specifically, this is just beginning of our collaboration with Nikon. Obviously, this is a multiyear program. Again, as you mentioned, similar to security, this is a program where ASPs are higher, similar maybe over or nice and higher in automotive. It's also near term.

Speaker 2

And we're working together with Nikon that over time as we ramp up for potential to grow in additional new opportunities. And more broadly in Industrial Automation, we also see that the ability for sensing technology really to use the same core chip module with different algorithms, different software achieve micron level accuracy and precision. That is something that's not really possible really with any other LiDAR technology. So this is a market that we see is in some ways pretty interesting and ripe for AIVA to go after. We have been executing on this.

Speaker 2

And the fact that we have been able to now complete this validation, the final Icon product gives us that further confidence to then go after expanding in this market as well. So we're doing all of this, just to be clear, while we are making significant progress and not letting up on the traction that we see in automotive and actually increasing that as well.

Speaker 4

Great. Thanks so much.

Operator

We'll move next to Joe Moore with Morgan Stanley. Your line is open.

Speaker 5

Great. Thank you. I wonder in terms of the top 10 passenger OEM that you're talking about, do you know if the opportunity there is kind of an OEM option? Is it more standard? And then you mentioned other progress with other top 10 OEMs.

Speaker 5

Maybe if you could talk about how much energy you're putting into customers beyond the sort of big, 2 that you've sort of talked about the Daimler as well as the big passenger opportunity?

Speaker 2

Yes. Sure, Joe. Happy to answer that. So obviously, as you know, we've been focused on, of course, delivering on Daimler for first OEM SOP and automotive. We're, of course, working with Nikon as mentioned.

Speaker 2

I think with this top 10 OEM that we talked about in last quarter, we have continued to solidify our position and our progress together. We've completed of course, that completed evaluation of our product. We completed the audit, which contributed to continuous maturity gain of our company as a Tier 1 status. We finished our 20 7,001 information security as well, further commitment to our readiness. I think at this point, I would say, it's important because we have continued in close collaboration with them, aligning on the technical perception requirements.

Speaker 2

We're actually starting commercial discussions and negotiations as well. And this is kind of the second time that we've been doing this, right? So first time we've done the truck and now I'm passing the car with this OEM. To your question about the option or not, what I can say is that, this is an OEM that has experience already with some of the flight lidar. They have done that and understand what they can and importantly what they cannot do.

Speaker 2

And they're looking at a mass production volume across multiple vehicle lines, which we see as significant production volume opportunities for enabling highway speed automation. So the way you think about this is not that it's like some very niche full only level 4 autonomy that is on some portion of vehicles. It is that next generation ADAS capability, assisted driving capability where it extends it to highway autonomy for higher speed. And we're really encouraged in our collaboration that we see their interest around using FMCW to enable that higher speed automation, which they're also seeing that's not quite really that quite there yet with the Aisin technology they're working with. So that's what I can say.

Speaker 2

So we're encouraged with that and their appreciation of our technology and continue to obviously work with them with the expectation that the decision will be made later this year.

Speaker 5

Great. Thank you.

Operator

We'll move next to Richard Shannon with Craig Hallum. Your line is open.

Speaker 6

Hi, guys. Thanks for taking my questions. This year, maybe touching on Nikon here. Obviously, interesting to see the first customer getting just a nice volume here. I wonder if you can kind of discuss what you have from them, whether it's forecast or even orders so far here?

Speaker 6

And how do we think about a kind of revenue run rate as you get into production presumably sometime next year? I'm not sure if we have a good way of understanding the scale here. Clearly, it's smaller than what you might look for a larger automotive program. But not really sure I have a good sense of scale here. So maybe you can kind of couch that in some terms, I think that'd be helpful.

Speaker 2

Sure. Let me answer that question and of course, yes, Ron can add. So obviously, this is a multiyear program with long commitments with Nikon. As I mentioned, strong ASPs, the way you think about that is multiples order of magnitude higher than automotive. From a volume standpoint, obviously, what we can share and be careful there, but think of it as similar to maybe a mobility program, right?

Speaker 2

So when you look at the net net of it, things balance out from volume versus ASP obviously. So and as mentioned, we're starting at the end of this year with the launch and then ramp up over time. I think the way we think about this is, this is again a first program opportunity with Nikon. We are working across other opportunities and we see that initiative to grow over time. And beyond that industrial automation, this is being vetted as the first product that actually can deploy into industrial automation.

Speaker 2

We see the similar need with a number of other customers and others from industrial automation and metrology standpoint, ability to get to kind of micron level precision that we think can actually further expand on that. So that's kind of what I can share about kind of the size of course and the opportunity. We're pretty excited about that and obviously having dedicated line to help us manufacture for everybody including Nikon down there and others at Fabrinet helps us to expand on this growth and capitalize on it. But that's what I can say.

Speaker 6

Okay. That's helpful. Maybe a quick follow on question here regarding your top 10 OEM that you talked about here for the last few quarters. It seems to have been seeing some delays in terms of decision making on LiDAR and broader autonomy programs here. I know you repeated the language expected a decision sometime this year.

Speaker 6

Has there been any delays there? Is there any risk of that moving into 2025 at all?

Speaker 2

Yes. Good question. I think what's interesting what we see in the market is that in, I would say, an environment where we see some of the maybe others in the space either reducing some of the activities around RFQs or some of the timelines pushing out, we've always maintained and talked about that the industry is transitioning from kind of camouflage towards FMCW and Fort Myers. We think this actually has been helpful for us, as evidenced by the fact that, one, we are on track with Diamond Truck. We talked about our SOV time line remaining in 2026.

Speaker 2

We're continuing to hitting milestones. We're strengthening the partnership there. 2, with this top 10 OEM we talked about last quarter, we are continuing on track as I mentioned with further engagement with the technical team, completion of the audit and now starting the commercial negotiation discussions there and that we've maintained that what we believe is the timing for the decision still remains to be this year. Of course, we don't control the right time line, but this is all the indications and the feedback we have and we're very encouraged by our progress so far. We're continuing working with them around how we actually integrate and our technology also in the vehicle level.

Speaker 2

Now importantly also, we have now added a new engagement from another top 10 passenger OEM. This is another OEM that's working with a time of flight solution and is also looking to potentially transition to 40 Liner. So there's another major program, major volumes globally, time lines are similar in line with the other top 10 passenger OEM. And we are, I think, importantly, very encouraged by the OEMs' desire to only work with AVA on this kind of deep level of vehicle integration concept. So that's something that gives us some indication around where there is maybe some reduction activities.

Speaker 2

We're seeing an increase in activities. And obviously, some of these are transitions from other technologies. And this is consistent with what we have talked about in the past and a broader trend that we're seeing in the industry. Obviously, look, we're not expanding the government everything, but we are seeing increasing interest in our technology. We're progressing on the right track.

Speaker 2

We have maintained our timelines as we have talked about it. And that's something that we see as important. So overall, I would say, while maybe some of those others may have pushed out with what we are involved and active with, we are seeing our current programs on time and other programs coming up, giving us multiple shots on goal that we feel good about securing at least one program with in the next months.

Speaker 6

Okay, great. Thanks, Harish.

Operator

And it does appear there are no further questions at this time. This does conclude today's program. Thank you for your participation. You may disconnect at any time. Have a wonderful evening.

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Key Takeaways

  • In Q2, Aeva strengthened its partnership with Diamond Truck, remaining on track with sensor shipments for the autonomous Freightliner eCascadia demonstrator and preparing for start of production in 2026.
  • Progressed in automotive with multiple global top 10 passenger vehicle OEMs, expecting a production award decision later this year with one and initiating a new collaboration on 4D LiDAR integration with another.
  • Completed final validation of its LiDAR on chip module with Nikon and scaled a dedicated manufacturing line at Fabrinet ahead of its Q4 2024 industrial launch for metrology applications.
  • Expanded into security as a top U.S. National Defense Security Organization selected Aeva 4D LiDAR as a primary detection sensor to protect critical energy infrastructure, with initial deliveries slated for later this year.
  • Reported Q2 revenue of $2.0 million, a non-GAAP operating loss of $32.0 million, and ended the quarter with $285.2 million in total liquidity to support ongoing production and development.
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