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Aeva Technologies Inc (AEVA) Q3 2021 Earnings Call Transcript – Motley Fool

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Aeva Technologies Inc (NYSE:AEVA)
Q3 2021 Earnings Call
Nov 10, 2021, 5:00 p.m. ET
Operator
Good day. My name is Betsy. And I will be your conference facilitator. I would like to welcome everyone to Aeva Technologies Third Quarter 2021 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. 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.

Andrew FungInvestor Relations
Thank you. And welcome everyone to Aeva’s third 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. Ahead of this call, we issued our third 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 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 Form 10-Q for the quarter ended June 30, 2021.
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. A 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.
Soroush SalehianChief Executive Officer
Thank you, Andrew. And good afternoon everyone. Q3 was an exceptional quarter and Aeva as we achieved a number of important milestones that solidify our path toward commercialization. I would like to highlight a few of our accomplishments, which are summarized on slide five.
First, today, we announced a key production when was the automated trucking company Plus, to implement Aevas breakthrough 4D LiDAR composite driver on PlusDriver and fully autonomous trucks at volume scale. This win is significant because it further confirms the industry’s increasing transition to FMCW LiDAR to enable safe automated driving, as well as the leading performance and scalability of Aevas automotive grade LiDAR on chip solution. We also remain on track with key development milestones across our other automotive and non-automotive collaborations.
Second, we continue to strengthen our supply chain to bring a bus 4D LiDAR to market. We have announced our agreements with Fabrinet and leader in advanced precision optical and electronic manufacturing to produce our 4D LiDAR chip module, which accelerate our manufacturing capabilities and automotive grade certified production line. And third, Aeva achieved the important milestone of completing the design release of our B Samples which finalizes the architecture and provides the path to our final cost structure.
Turning now to slide eight, I would like to provide more color on our key business updates. We are incredibly excited to share that Plus, a leader in self driving truck technology has selected Aeva 4D LiDAR for long range perception on their production autonomous trucks. This multiyear production program includes Pluss intention to deploy trucks globally, starting in late-2022. With Pluss driver in solution, followed by their fully autonomous system. And Plus plan to deploy over 100,000 trucks by the end of 2025.
We have been working with Plus since 2019 to test and validate Aevas 4D LiDAR. Plus selected Aeva for its unique combination of ultra-long range and instantaneous velocity measurement, which enhances Plus long range perception system and provide faster response time in safety critical situations. The combination of Aevas 4D LiDAR and Pluss proprietary autonomy stack also addresses many critical edge cases, such as previously unseen obstacles that may confound the networks in the perception stack.
Adequate response time is crucial to enabling safe automated driving, particularly for heavy duty trucks since they take much longer to stop than passenger vehicles. This has been a challenge to reliably achieve with legacy time applied LiDARs. While the industry has for some time understood the potential for FMCW to significantly improve perception, with his unique advantages over legacy time applied LiDAR, such as direct velocity measurements, and lack of interference, the trade-off between range and resolution with conventional approaches has held back the adoption of conventional FMCW technology.
However, Aevas 4D LiDAR breaks that dependency. Enabled by our proprietary signal processing algorithms that leverage the strength of FMCW to sense precise velocity and position has more than 500 meters of range, while simultaneously achieving millions of points per second. This enables Aevas solution to reliably measure and classify objects with higher confidence and at longer distances than legacy LiDAR solutions, and already does so today.
And because FMCW uses a continuous beam to constantly transmit data, we can use our same core LiDAR chip and scale performance through software. This flexibility provides our customers including Plus with the ability to not only leverage Aevas 4D LiDAR for their Driver-in solution, but also enable them next level capabilities as they bring their fully driverless solutions to market utilizing the same 4D LiDAR hardware.
Plus share the similar focus with us to deploy their self-driving technology to volume scale. The company’s customers include some of the largest freight carriers and OEMs, including Amazon, and FAW the largest heavy-duty truck OEM in the world. We are excited to be selected for production and look forward to supporting Pluss volume ramp.
Let’s now move to slide nine, which highlights a key development and solidifying the path to bringing Aevas 40 LiDAR to market. Earlier this week, we announced that Aeva has selected Fabrinet to produce our 4D LiDAR chip module as the engine of Aevas unique FMCW LiDAR technology, the chip module is the critical element that integrates all core sensing components onto a single silicon photonics platform.
We are pleased to work with Fabrinet, a leading manufacturer of silicon photonics integrated devices and advanced precision optical systems and equally important, a trusted automotive qualified supplier to many global OEMs and Tier 1s. As part of the agreements, we are bringing online and advanced production line at Fabrinet that accelerates Aevas production manufacturing capabilities. The new line will produce our third-generation chip module and scale for serious production.
By securing capacity with a leading manufacturer now, we feel confident in our ability to supply the expected volume at automotive grade quality for our customers programs. Ahead of that we are working with Fabrinet to increase automation and process efficiency as well as establishing a local engineering team in Thailand to support the manufacturer and ramp up well before the start of series production.
I would now like to update everyone on our 2021 objectives, which are detailed on slide 11. We have already achieved three of the four goals set for 2021. And we are confident in delivering on the final remaining goal to finish the sample development this year. Based on the significant progress already made to date.
First, we have reached our goal for two additional programs toward production with Plus and Nikon, two leaders in their respective markets with opportunity to scale to large volumes. Importantly, we also continue to deliver on development milestones for our other partners. With our growing team, we believe we are well positioned to support ongoing work across all of our programs.
Second, on accelerating engagements and non-automotive applications. This goal was met with our Nikon collaboration announced last quarter, which we expect to accelerate Aevas non-auto opportunity in the $10 billion and growing industrial automation and metrology markets. As I mentioned earlier, there is growing interest in Aevas unique 4D LiDAR for both automotive and non-automotive applications. We will continue to put our focus and resources toward opportunities that align with our mission to bring Aeva 4D LiDAR to mass scale.
Third, we have significantly strengthened our supply chain for production with a number of key developments throughout this year, including finalizing the key supply chain for our silicon processing chip and most recently, selecting Fabrinet to produce Aevas 4D LiDAR chip module, which accelerates our manufacturing capabilities toward start-up production. And forth on our B Sample developments.
This quarter, we completed the product design release, which is a key milestone to finalizing the product architecture and provides us a path toward the final cost structure. As mentioned earlier, we expect to complete development this year and are planning to deliver B Sample units to our partners for qualification starting in 2022. This leaves us well on track with our timeline to commercialization.
And with that, I will turn the call over to Saurabh to discuss the financials.
Saurabh SinhaChief Financial Officer
Thank you, Soroush. Let’s turn to Slide 13, which summarizes our financial results. Revenue in the third quarter was $3.5 million reflecting substantial progress we continue to make our customer development milestone and our path toward production.
Our non-GAAP operating loss was $19.9 million comprising of R&D expenses related to product development, and to a lesser extent G&A and sales and marketing expenses. Growth cash used, which we define as operating cash flow less capital expenditure was $24.2 million for the third quarter. Our balance sheet remains strong, with cash, cash equivalents and marketable securities totaling $478 million at the end of third quarter, demonstrating continued discipline in how we spend and invest for growth. Finally, our weighted average shares outstanding in the third quarter was 212.6 million.
In summary, our results reflects the great progress we have realized with a growing list of customers. And as we continue to advance toward commercialization, we are in a strong financial position to execute on a program and bring Aevas 4D LiDAR to mass scale.
With that, I’ll turn the call back over to Soroush for closing remarks.
Soroush SalehianChief Executive Officer
Thank you, Saurabh. Before taking questions, I would like to first thank the Aeva team for the relentless dedication to our mission, which is resulting in our growing commercial traction. And to all of our stakeholders. We appreciate the commitment and confidence in Aevas breakthrough 4D LiDAR technology, which we hope will enable the next wave of perception.
I am incredibly excited by Aeva’s accelerating momentum, to production win with Plus marks an important milestone for us. And with all of our progress toward commercialization in the last quarter I have great confidence in the increasing demand for our unique technology and the upcoming opportunities that lay ahead. We remain laser-focused on supporting our customers on the path to production and Aevas mission to bring perception to all devices.
Thanks everyone for your time today. We will now open the line for questions.
Operator
We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Colin Rusch with Oppenheimer. Please go ahead.
Colin RuschOppenheimer — Analyst
Thanks so much guys. Can we start with Fabrinet? I wanted to get a little bit better understanding of what sort of value added engineering and specialized procurement expertise they’re bringing to the table formally and the agreement you’ve made with them?
Soroush SalehianChief Executive Officer
Sure, Colin. Yeah, thanks for the question. So Obviously, Fabrinet is a leader in silicon photonics integration and manufacturing. We’ve worked with them for quite some time already. And what they really bring to the table is the capability to manufacture automotive-grade LiDAR chip modules. That chip module is at the heart of our system.
And to be clear their expertise is in LiDAR chip module manufacturing. And they’re already automotive certified, and a supplier to both OEMs and Tier 1s. So today Fabrinet is already manufacturing hundreds of thousands of silicon photonics, integrated modules. So they’re really capable and experts at what they do, which is one of the reason that we actually decided to work with them.
And the other thing I think what’s interesting about Fabrinet is they’re already manufacturing, our LiDAR module at their auto grade facilities. And we do plan to intend to continue using them for production as we scale pour volumes in those same facilities.
Colin RuschOppenheimer — Analyst
Perfect, I’ll take a couple other questions with that relationship offline. But then, as you enter into production agreements now. And you look at your pricing model, the velocity data and capabilities that you bring to the table pretty significant. So I’m curious how you’re thinking about pricing and, and how that conversation is going with the handful of customers that you’re working with right now, particularly as you move into this production agreements?
Soroush SalehianChief Executive Officer
Sure. Yeah. Look, obviously I can’t provide details on exactly speed. But we are seeing strong traction in the market. We are really encouraged by the increase momentum, as evidenced by the number of engagements and wins we’ve had, and talked about the past quarters.
With this Plus plan obviously, as an example for automated trucking. This also laid the foundation for us to scale up into automate trucking space.
And as far as the pricing goes, of course, you know, for each customer, we work closely with them to make sure that we have the ability to support them all the way through to volume production. And in general, we’re in line with what we have discussed before in terms of that.
Tristan GerraBaird — Analyst
Hi, good afternoon. Any quarter that you could provide in terms of potential volume and the timing plan for the Plus design win that you’ve announced today? And is the functionality pretty much the same as previously announced when another with TuSimple?
Soroush SalehianChief Executive Officer
Sure. Thanks for your question. So first of all look, we are very excited to be selected by Plus for this key production program. I’ll give you a little bit of color about this. So this is a multiyear supply agreements for global deployments. It is actually beginning in late-2022. And Plus selected Aeva because they believe in our unique capabilities, including instant velocities, and ultra-long range capability, which really enhance as long as perception for Plus, and helps us to bring safe automated driving to scale.
That is why they see significant value, as you mentioned, and not just incorporating Aeva in fully autonomous solutions, but also in their Driver-in solution. So that’s how they’re starting with Driver-in and a bit earlier, but intend to continue and implement the same Aeva 4D LiDAR hardware into a fully autonomous or driverless solution.
And I think that really shows the importance of Aevas unique value add and flexibility for both assisted driving as well as autonomous driving. And with our work on the B Sample, we’re starting to really see that traction pick up.
And, in general, from giving you a bit of context about though the scale. So as I mentioned on the call Plus planted a total over 100,000 units by 2025. And what’s interesting I think for that is we have the right to supply a majority of the truck volumes with the long-range LiDAR in this timeframe. And so that should give you a sense of the scale that we’re talking about here.
Tristan GerraBaird — Analyst
Thanks. That’s very useful. And then from a follow up, you’ve talked about getting to design win on your range and velocity. I know that in the past, some people have talked about latency being very different for FMCW than other LiDAR technologies. So the question will be given the design win traction that you have, people must not see latency as an issue. Is that because of the algorithms that you have that allow you to enhance latency what it is to perhaps other FMCW LiDAR suppliers?
Soroush SalehianChief Executive Officer
Sure. Look what I think is interesting is the traditional way, what we call a traditional conventional way that FMCW is done actually has a number of challenges in terms of meeting the both high resolution and the long-range simultaneously. And I’m not sure exactly what you mean by the latency. But that is part of the thing that I think cable has really figured out to break.
And Aeva is not the traditional conventional FMCW system. And that’s why we are starting to see now a continued momentum with the wings and under our belts, because of us having solved some of those key challenges. And that I think is important and as evidenced by now you’re seeing attraction in trucking, but also we started to see that also across other automotive and non-automotive applications.
Operator
The next question comes from Suji Desilva with ROTH Capital. Please go ahead.
Suji DesilvaROTH Capital — Analyst
Hi, Soroush, hi, Saurabh. Congrats on the progress here and the Plus announcement. In trucking, I know youve been working with them for a while, but it seems like that market might come to volume sooner than say faster cars. Is that because of the business case or because it’s a kind of more controlled environment? Any color there? If that is the case would be helpful.
Soroush SalehianChief Executive Officer
Yeah, look, I mean it’s — I think it’s no secret that there’s always a shortage of number of drug truck drivers today on the market. And the business case for commercial trucking is pretty clear. So we are starting to see kind of an acceleration in the market adoption for autonomous trucking on the roads.
And also more importantly, we’re starting to see some consensus forming about the type of perception capability, you need to enable such autonomous trucking on the road. And we see that going toward FMCW-based technology, I think that’s evident also by the partnership and the window we announced today with Plus and for past partnerships including TuSimple as well. So I think that’s the key driving factors that enable commercial trucking to make sense in terms of a bit earlier timeline of adoption.
Suji DesilvaROTH Capital — Analyst
Okay. And I just want to get some color on the B Sample that you planning to shift to quality customers at the end of the year. Just to understand the implications for the schedule, maybe the C Sample that comes after that, and whether the Tier one production line is needed before you go to production, or whether a partner like Fabrinet obviates the need for the C Sample production line build by the Tier 1s? Any color there be helpful.
Soroush SalehianChief Executive Officer
Sure. So Fabrinet actually makes our LiDAR chip module, they don’t assemble the full system but that’s at the heart of our system. We are working obviously with our partners to manufacture the B Sample. As I mentioned in the call today, we recently just crossed the key milestone in our product design release of the B Sample, which sets up an architecture. And B Sample of course, is critical because it provides also with the final cost structure of path to that for the — system path design across structure.
And so in 2022, our partners will be validating our B Sample with those learnings will continue to refine our system toward production. And, in parallel, we’re going to continue our work on the supply chain to make sure that we have all the capacity well into production. And I think with all the work we have done on the supply chain side, including securing our key suppliers for the silicon processing chip, as well as the Fabrinet announcement with our LiDAR chip module we have great confidence or ability to not just meet the timeline, but also meet the demand of the customers with the capacity and the quantities that are needed.
Operator
The next question comes from Pierre Ferragu with New Street. Please go ahead.
Pierre FerraguNew Street Research — Analyst
Hey, thanks, guys for taking my question. And congrats on the new win. I have two particular questions on trucking. So first, related that Aurora, Plus and TuSimple now they all use FMCW. So I’m not sure how you can talk about the market share of those three names represented I guess, I’m tracking the fairly. So is it fair to say that FMCW is remain specifically in tracking? And if that’s the case why is that? And so maybe similar traction in passenger car for instance and it’s just less visible because of the timing of press releases and things like that. And if that’s the case, yes maybe let us know analytically?
Soroush SalehianChief Executive Officer
Hi, Pierre. Sure. Thanks for the question. Look, I think as I mentioned, on your first question, first point. Yes, we do agree. I think there is a general consensus of increasing transition to FMCW for autonomous driving in general. But I think it’s becoming also first evident with the trucking side because of the fact that some of the time it was actually earlier. So that I think is clear.
And as you mentioned with the names there, we see that as critical. And I think the reason is, is really in multiple. And really the key areas of — the key benefits of Aevas unique FMCW approach. Long-range traction capability, their ability to go past 500 meters, ability to take instant velocity immediately is super crucial for trucking is also because you need to see objects that are quite far out. And when you have even a few points or pixels on an object at those kinds of distances, when you add the dimension of velocity, right away well you will know that this is something you should care about. And so you don’t have to keep looking at it and taking effectively frames snapshots, which is typically done with legacy time offline LiDAR to do that. And that’s crucial, because trucks take a long time and a lot of stopping distance. So that’s why you want to be able to see further out.
And these are the two things. And the things of course, around the scalability, the fact that we have been able to innovate this now on the LiDAR chip module. And we’re making significant progress on being able to ramp up our supply chain to manufacture side of chip module, I think is all coming together along with the fact that we have no interference as well, which becomes more and more critical as you have more of these on the road. So I think it’s kind of a bit of the manifestation of — I think we’ve talked about before, and we’re starting to see that transition happening.
Pierre FerraguNew Street Research — Analyst
Thanks, that makes no sense. And then my second question very pragmatically, you’ve given a lot of specifics about how would pure and how define when they find a partnership with Plus is today? Can you give us like a similar description of where you stand with TuSimple in terms of visibility on their ramp? And whether you’ve already entered similar agreement to be part of the system through the January 2025?
Soroush SalehianChief Executive Officer
Sure. So look, I can’t obviously comment on the details of customers on this call today. But we are progressing well with TuSimple across the globe, a milestone that we continue to support them with our LiDAR technology, as it continues to expand their fleet. And we look forward to do that throughout the next years as we continue to build out a robust platform for automate trucking and driver out functionality.
Operator
The next question comes from Sam Peterman with Craig-Hallum. Please go ahead.
Sam PetermanCraig-Hallum — Analyst
Hi, guys. Thanks for taking my question. I wanted to ask on automotive as well, but specific to passenger cars rather than trucking. Our sense of the industry right now is that OEMs are starting to make decisions on LiDAR for production in the 2024-2025 years today. And obviously, that aligns with your time frame — your timeline for ramping sales and automotive. So I was curious if you could share where are you guys in discussions with auto customers today? Do you have any RFI RFQs?
Soroush SalehianChief Executive Officer
Sure, Sam. Yeah, thanks for the question. So obviously, yes, of course. We are involved in almost all RFI RFQ that we see around not just trucking, but also passenger cars in this space for those timeframes. We are seeing strong, strong traction in the market, in general, as I mentioned, and encouraged by kind of the increasing number of engagements in both automotive across passenger trucking mobility, but also non-automotive applications.
I think some of the examples we talked about, here we talked about Plus today quite a bit. But also our foundational agreements to deploy our 4D LiDAR for the undisclosed customer that we talked about earlier this year. And others that we have — we’re of course not discussing about today yet, really give us a lot of visibility in the timeline and the selection and ramp up to our — with our customers that’s coming up.
So as I also mentioned before, we’ll continue to align the partners who are highly capable, and have the desire and also importantly the capability to bring advanced perception technologies to mass scale. And that’s what we want to focus our efforts with. And so that’s what I can say so far.
Sam PetermanCraig-Hallum — Analyst
Okay, fair enough. Thanks for that. Second question I want to ask we haven’t heard anything on the consumer side in a while, is there development ongoing to scale your platform down to consumer products like mobile phones, especially now that you’ve got this B Sample almost locked down? Any color on kind of developer work that’s going on there? And when we might see samples there would be great.
Soroush SalehianChief Executive Officer
Sure. Yeah. So in terms of opportunities, of course generally we do see significant opportunities in the customer electronics as well. As I’ve discussed previously, we’re focused currently on enabling foundational capability. So what that means is that the raw level performance needed for our perception solutions. So, as we have talked before we have so far focused on very long-range performance and more recently working also to provide a completely different level of performance with our micron of accuracy, which trades off the range of perception.
These levels of performance this this raw fundamental capability is what really allows us to go after other applications including consumer. Because when you measure things at the micron level, that changes the game of perception. And to our knowledge, FMCW technology is the only technology that is capable of doing that from a distance meaning without a contact.
And so as we continue to develop this capability, and implemented into sampling level. We’re going to also go after those applications and working with customers to effectively enter that into the market. And as we have more updates, we’ll share those as well.
Operator
[Operator Closing Remarks]
Duration: 31 minutes
Andrew FungInvestor Relations
Soroush SalehianChief Executive Officer
Saurabh SinhaChief Financial Officer
Colin RuschOppenheimer — Analyst
Tristan GerraBaird — Analyst
Suji DesilvaROTH Capital — Analyst
Pierre FerraguNew Street Research — Analyst
Sam PetermanCraig-Hallum — Analyst
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