Q1 2024 Aeva Technologies Inc Earnings Call

Participants

Andrew Fung; Director of Investor Relations; Aeva Technologies Inc

Soroush Dardashti; Chief Executive Officer, Director; Aeva Technologies Inc

Saurabh Sinha; Chief Financial Officer; Aeva Technologies Inc

Shadi Mitwalli; Analyst; Craig-Hallum Capital Group

Colin Rusch; Analyst; Oppenheimer & Co., Inc.

Kevin Kerrigan; Analyst; WestPark Capital

Suji Desilva; Analyst; Roth MKM

Presentation

Operator

Good day. My name is Deborah, 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)
I would now like to turn the call over to Andrew Fung, Senior Director of Investor Relations and Corporate Development. Andrew, please go ahead.

Andrew Fung

Thank you, and welcome, everyone to Aeva's first Quarter 2024 our earnings conference call. Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO; and Saurabh Sinha, our CFO, head of this call, we issued our first quarter 2024 a press release and presentation, which we will refer to today and can be found on our Investor Relations website at investors dot iff.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 AMS 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.

Soroush Dardashti

Thank you, Andrew, and good afternoon, everyone. In Q1, Eva 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 two Daimler Trucks as a result that first Daimler truck vehicles equipped with EVA 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, AVA 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 EVA for the lighter to support our commercial momentum.
We established a new Automotive Center of Excellence located in Germany, which positions Eva to collaborate directly and more closely with our existing and new partners in Europe. We believe this team further positions Eva 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 and are in close collaboration to integrate Eva'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 torque validate their stack on routes. They intend to deploy for commercial use in series production. Overall, we are progressing well. And on the trucks milestones on our 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 joined the on track for a but sort of production in 2026 to support Daimler Trucks, market entry in 2027, which they recently reiterated in their post Q1 investor update
As highlighted in the Q1 update, Daimler Trucks 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 at torque 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 von Schmidt, the CEO of torque. And later this month, we will be at Advanced Clean Transportation Expo or ACT. with John Butler, head of autonomous technology group at Daimler Truck and other key management of torque. 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 Eva unique fortified. Our continues to increase following the production program win with Daimler Truck. This is across a wide 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 programs as well as webOS growing number of RFQs in particular, we mentioned last quarter our engagement with a new global top 10 passenger OE.
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 U.S. to have standard automatic emergency braking systems by 2029 has the potential to accelerate OEM adoption of LiDAR. And we believe FMC EW LiDAR is an enabler for achieving the more stringent requirements.
The new standard will require OEN.s 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 AVA 40 LiDAR is particularly well positioned to help OEMs achieve automation at higher speeds. We have a unique ability to simultaneously deliver long range at high resolutions. And instead, 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 we 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. Airbus 40 LiDAR further improves perception with EnSite 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 Ava 40 LiDAR and converting our current RFQs production went as part of this, EVA announced a new automotive center of excellence with a local engineering team in Europe out of Germany, dispositions, EVA 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 paid s 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 Eva for divide our on new opportunities.
With that, let me turn the call over to Saurabh to discuss the financials.

Saurabh Sinha

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 to 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 solution 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.

Soroush Dardashti

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 Micron, I want to thank the ABF team for enabling these accomplishments and for their continued commitment to EVA, 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 AVA 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.

Question and Answer Session

Operator

(Operator Instructions) Shadi Mitwalli, Craig Hallum.

Shadi Mitwalli

Saying this is Shimon Wally on for Richard Shannon, thanks for taking my questions. Starting off with the dominant one is EVA experiencing any halo effects after this win to show other customers and you are ready for start production wins? I'm sorry, you had a surge of data that.

Soroush Dardashti

Yes, absolutely. Actually, overall, we are seeing a growing interest for our technology, specifically for FMCW., especially on the back on the heels of the DT. Daimler Truck went and he held a number of imbalance as we have announced at CES 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 wind production wind, what we had with Daimler Truck really helps derisk the OEM's decision as we are as they're moving to the next generation platforms out. There are no cleaning this pilot initial deployments can their decision to move to FMC W-2 frequency, modular technology, disciplined really helps de-risk that.
So all in all, though, the concerns of potential comments around, hey, wood and wood, FMC W. would 40 wide are happen is that it is it's no longer and I mentioned this on last call was no longer really a matter of if. And now it's really a matter of the execution and the timing of how we've made 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 for navigation, multiple automotive RFQs, as I mentioned earlier, since it's been about two months on the right, since we had 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, though, that we're doing that. And we have now also been a finalist on as with the top 10 passenger OEM for the RFQ for the for the final production and four. So this is a significant opportunity that we're on track with the timing of this happening the next few months this year as we talked about that.
So and on 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 in 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 and 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 pest side as well.

Shadi Mitwalli

And that's great to hear and it makes sense. And then just one more follow-up question. I know you have currently one for yes, one top 10 OEM, I will quantify. And if any of your other RFQs or RFIs are with our top 10 OEMs?

Soroush Dardashti

Yes. Look, we do we obviously haven't talked about X number of top 10 and X number of top five or whatever it is. But I can tell you that at this point, we are engaged on pretty much had multiple significant scale and top OEM RFQs. And we know there is and both there is a folks in different regions. There's passenger vehicles as well as commercial vehicles.
But obviously, as we provided that the update and this quarter, we are making progress on on multiple fronts, but we have been also giving some clear updates on our progress with this for this specific top-10 passenger OEM. So it's not just one OEM and you know, we're working on that.
There is multiple across passenger and commercial vehicles and decisions are happening and multiple does Cision's throughout this year. So that's also the other thing that we're seeing in overall from a start of production timing. We also see those to be aligned around the same timeframe with Diamond drug may maybe a little bit later, but it's around that time frame.

Shadi Mitwalli

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

Operator

Colin Rusch, Oppenheimer.

Colin Rusch

Thanks so much, guys. I know you did 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?

Soroush Dardashti

Yes. 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 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 on earlier as well the new ruling by mid-summer to further expand our PO automatic braking with higher speeds.
And I think is very important is that I think this is going to be a tailwind for a lot our 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, which velocity and the perception enabled by that allows some of those from a compute and calculations and assurances to be reduced and minimized at the system of the vehicle OEM side because of the fact that we effectively are able to to come bypass a number of inferences and directly measure those things such as the velocity of dynamic objects.
And that helps tremendously both from a secular 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, and they increase their TAM functionality, right without them 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 advance and processing power of 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 either the committed designs 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 now it's time to plug into for the radar and reduce the need for an advanced radar are completely completely replace that.
So that's something that we see potential as you go into higher volumes were performance of our power and performance over cost become super critical that this technology is already showing that roadmap for for the OEMs. And I think at the end of the day, the biggest thing is Williams alluded to what we hear from really future-proof their stack and now they're moving past this pilot stage, right deferred. And now we're moving from a pilot stage with there's lower volumes to really mass scale.
And Colin, we think in the next few years as our kind of ramp up with Daimler Truck and market entry in the '26, '27 time frame heads on the road, that's where does have a higher volume opportunities are going to kick in and having this capability and then that transition towards SMC W is where we see happening around this timeframe, which brings clear, bring all this data together. If that makes sense.

Colin Rusch

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 a eye in the physical world on and sensors are an incredibly important part of that. Can you talk a little bit about your 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?

Soroush Dardashti

Yes. You mean on the on the nonautomotive side, Hilary see the.

Colin Rusch

Exactly right?

Soroush Dardashti

Yes. Yes. So absolutely. So first of all, yes, we have significant interest and 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 on their dose.
As a matter fact, we are fully on track with our Nycomed program later this year where that's going to start ramping up. And we are seeing because of the fact that core innovation of our technology being everything integrated on the lighter optical front into the silicon photonics modules, we are utilizing that off the same technology, different software to be able to achieve them very different performances like metrology and precision on other applications.
So we are and engaged with a number of other folks in the industrial, say, industrial side to also expand on the on this, you know, the backbone of what we're doing with my car doesn't make sense. So 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 in and how we are able to use this in the economies of scale with our production scale for automotive.
We think that's going to become a pretty interesting attractive product for Com is nonautomotive customers to be able to reduce costs while improve efficiency and automation at the factory level especially on the manufacturing side and and kind of robotics side.

Colin Rusch

That makes sense.
Perfect. Thanks so much, guys.

Operator

[Kevin Kerrigan, WestPark Capital].

Kevin Kerrigan

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?

Soroush Dardashti

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 does that stem Daimler Truck when really helps de-risk the 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 FMC W. technology.
So and that is across the past passenger as well as commercial vehicles. So we are seeing interest in both of that obviously, Daimler being the marquee brand and Keynote key customer for this space. And we are seeing others really interested to be able to tap into our technology for their application, both in kind of some and high ADAS. as well as automated highway applications.

Kevin Kerrigan

Okay, perfect. And then kind of going off that, can you can you give us some color on the processes for both trucking and passenger cars, kind of pertaining to not only the RFIRQ. 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.

Soroush Dardashti

Yes, happy to. So overall actually in automotive, there is number of activities that number stand or the 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 of commercial vehicles that actually some of the some of the requirements on performance and reliability. Ashar combined and lifetime actually is much more stringent on the vascular side.
So that's why we see that some of enabling our technology to be really from MBO. would take think of it as mass market where we have tested and proven and in some ways that makes it easier to also then deploy that into it of mass-market consumer passenger vehicle application.
So at, but just remember that at this point I mentioned at this point, we have done this now twice we, um, we have completed last year 10 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, you know, I have a few months after within a quarter or so after, we were able to pass a comprehensive audit by that top 10 OEM. and it being a we completed contract manufacturing and quality auditor.
And then within six months, we which we won the program was the production when it 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 and manufacturing and quality audit by this customer OEM is now faster than what we talked about last time.
So we are we're using the miniaturization 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 are huge.

Kevin Kerrigan

And the net number, yes, that makes a ton of sense.
Okay, perfect. Thank you for that.

Operator

Suji Desilva, Roth MKM.

Suji Desilva

Hi, its Suji on for Rob. So on for Daimler. Could you maybe handicap the opportunity to expand beyond I guess, trucking, which is mainly North America and my from what I can tell sell 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?

Soroush Dardashti

Yes, sure. So as you have cash, so obviously with Fiat Daimler Truck were first and laser focused on delivering on our first program launch SOP by 2026, right? And we actually were at to have Tier one has and the exclusive supplier for long-range and ultra long-range LiDAR for the series production program.
And we are obviously working across the board on providing sensors and some of the source that perception software assets that we talked about. And for that program, we're also closely engaged with the Toro 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 on other regions, other applications. And the whole point is that we're building a foundation of a technology stack, which is really enabling Highway Autonomy at highway speeds, and this can be applied to a number of applications.
As I mentioned earlier, you can see that, um, you know, and not just commercial vehicle. But now also passenger vehicle OEMs are increasingly looking to expand their operational design domain to higher speeds and with and it's a ruling that requires more than 60 miles per hour on automatic emergency braking bidding that's going to be important and kind of requirements for OEMs, including passenger cars light.
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 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 because I mentioned also that and obviously, we had a couple of exciting events and later this month on both with the CEO of torque robotics later this week in London actually where we're going to be on stage talking about.
And there is progress with our program on the production side as well as later this month at the end of the month with us at Daimler Trucks. I'm head of autonomous group and at ACT Expo in Vegas, we'll have some more signing up. Let's talk about So feel free to join that.

Suji Desilva

No, that's great. Great exposure for you guys. Obviously, I'm going to step back and ask a question about the Yum. Kind of the process that you went through to win Daimler Truck, maybe if 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 of 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.

Soroush Dardashti

And sir, the question, so I can give you at a high level. Obviously, there's a number of number of steps and typically that's the process could take a number of months to know, 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 which is critical, and that is where the and the final commercial bids as well as the key step, which is manufacturing quality, manufacturing quality audits happen past RFQ stage and there is kind of a down selection phase, maybe sometimes happening during our HE phase in which the finalists are. Our picture.
There is kind of two three main, but two checkpoints have with RFQs. Those are vital RFQ and then two more checkpoints with audit as well as a down selection. And with Daimler Truck, of course, have gone through all those. And we were able to since we introduced it early in the year last year, and that's prior to the RFQ stage.
And then from there within a quarter or a few months after that, we talked about passing the the manufacturing audit. And then from there, we began the finalist and we wanted just a quarter after that. So within two quarters from our Q2 manufacturing audits finalists.
That award we're now talking about, okay, a number of other programs as multiple others, as I mentioned, including passenger commercial vehicles and FeNO, we have advanced on a number of doses 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 assays, and we have now crossed the finalists being a finalist on that and 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.

Suji Desilva

Appreciate that very detailed. Thank you.

Operator

There are no further questions.
Ladies and gentlemen, this concludes the call for today. Thank you for calling and Please go ahead, connect your line.