Aeva Technologies, Inc. (AEVA) on Q2 2022 Results - Earnings Call Transcript
Operator: Good day. My name is Stacy, and I will be your conference facilitator. I would like to welcome everyone to Aeva Technologies Second Quarter 2022 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 turn the call over to Andrew Fung, Director of Investor Relations. Andrew, please go ahead.
Andrew Fung: Thank you, and welcome, everyone, to Aeva's second quarter 2022 earnings conference call. Joining me 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 second quarter press release and presentation which we will refer to today and can be found on our Investor Relations website at investors.aeva.com. Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our Form 10-Q for the quarter ended March 31, 2022. 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.
Soroush Salehian: Thank you, Andrew, and good afternoon, everyone. Q2 was a pivotal quarter at Aeva, as we achieved a major milestone on the path towards the production of our next-generation 4D LiDAR Technology. I'm excited to highlight that and a few of our other accomplishments, starting with slide five. First, we began delivering Aeries II two units to our strategic customers on time and according to the objectives we set out at the beginning of this year. This is a significant milestone, not only for Aeva but also for the industry, as this is the first time an FMCW 4D LiDAR with the combination of high performance and automotive reliability is commercially available. Second, with the commercial launch of Aeries II, we are seeing stronger traction in the market. We believe Aeries II offers a combination of performance and level of maturity that OEMs have been looking for, enabling us to advance to the next phase of development with our strategic customers and progress forward on a number of other engagements across automotive and industrial automation. Third, we are excited to announce a multiyear strategic collaboration with SICK AG, a leader in sensing solutions for industrial automation to deploy 4D LiDAR for a broad range of industrial sensing applications. SICK selected Aevaâs 4D LiDAR due to the unique performance capabilities enabled by our FMCW technology that address specific challenges limiting 3D LiDAR and cameras today. This collaboration is a first indication of the market demand for Aeries II and further solidified our expansion into industrial automation with a start of production targeted in 2024. And fourth, we continue to apply a strategic and deliberate approach to how we invest our capital and resources, which has enabled us to reach crucial milestone towards production and expand our commercial momentum, while maintaining strong discipline on capital allocation. Moving now to slide seven. I would like to provide more color on key business development over the past quarter. Let's start with Aeries II. The start-up Aeries II delivery is a significant achievement that represents five years of development of Aevaâs FMCW technology, with up to 500 meters of range, instant velocity detection and camera level resolution, we are excited to demonstrate to more customers, how Aeries II can unlock new levels of automation and machine perception across automotive and industrial applications. Encouraged by the strong demand for Aeries II, we are focused on scaling up manufacturing. Along with this, we continue to work towards our ultimate goal to bring 4D LiDAR production. Aeries II defines its final architecture for our first production programs, and we anticipate completing the next phase of qualification work with strategic customers over the next nine to 12 months. Turning to slide nine. I want to provide an update on the substantial progress we have made towards our cost targets. From the very beginning at Aeva, we took a different approach to perception with our FMCW LiDAR on chip technologies, with the understanding that achieving low cost and scalability are just as critical as delivering high performance to enabling wide adoption. This is why we have designed a proprietary silicon photonic chip module, which integrates all of the key optical elements of LiDAR sensing onto the single chip module and significantly reduces the number of components within the system. To our knowledge, LiDAR remains the only company to have successfully achieved this level of integration and performance to date. Aeries II utilizes our third-generation LiDAR arched module, which has helped us drive over 55% reduction in total system costs from our A-Sample. It reflects our focus on scalability and cost that goes deeply into the individual component LiDAR. For example, high-performance LiDARs on the market today often use costly fiber base lasers that are prone to lower yields and core durability. In contracts, Aeva approach removed all fiber optics from our system due to our proprietary CFMCW approach, which lowers cost and we believe that the game changer for reliability and the durability of any LiDAR system, Integration of the core components onto a silicon chip platform results in a much simplified and highly automated assembly process. This removes the need for active alignment at the system level, reducing the overall complexity and cost for manufacturing. From here, our focus will be on the integration of our final component and to bring up of production processes to achieve our cost our targets. Moving to Slide 10. We have spoken before about the growing consensus among customers that FMCW LiDAR differentiated capabilities can enable new levels of automation, not achievable with legacy technologies. With Aeries II, our engagements are simultaneously solidifying and broadening. We are engaged on a number of programs that span across applications in passenger and mobility vehicles, commercial vehicles, as well as industrial automation targeting between the 2024 to 2026 time frame. Based on our progress, we anticipate Aeries II evaluation to drive a growing number of additional programs towards production over the next 12 months. Now let's move to Slide 11, which highlights a new strategic collaboration that solidifies Aeva's expansion into industrial automation. We are thrilled that SICK decided to partner with Aeva to bring 4D LiDAR to the industrial sensing applications. Headquartered in Germany, SICK is a global leader in logistics, factory and process automation technology with major global accounts across a diverse mix of industries, driving around â¬2 billion in annual revenues. Our multiyear collaboration will start with Aeries II for application within SICKs logistics automation and factory automation businesses, which together totaled around â¬1.6 billion in segment revenues. A number of applications within those segments currently use 2D and 3D LiDAR, but after working with Aeva for the past two years, SICK will expand to leveraging Aeva 4D LiDAR and our unique FMCW technology to deliver superior performance in automation applications that limit the use of camera and 3D LiDARs. For Aeva, this collaboration will enable us to leverage SICK leading market positions and large sales force to efficiently scale the 4D LiDAR across a wide range of industrial sensing applications for SICK numerous customers worldwide. We look forward to work closely with SICK toward our target start of production in 2024. Turning to slide 12. You can see some examples of our target applications with SICK. this includes a variety of outdoor sensing for logistics automation, including ports, grains, airports and mining for a long-range instant velocity detection and immunity to the sun and retroreflector blooming are critical advantages Aeva 4D LiDAR offers that can enable a safer operation, as compared to our negative solutions can achieve today. Importantly, we plan to use the same foundational LiDAR on chip architectures that we have developed for automotive with adaptable software to deliver the specific performance requirements required by SICKs diverse mix of customers worldwide. Let's now turn to slide 14, where I will provide an update on our key objectives for 2022. We have made great progress in the first half of the year and have completed a number of critical steps, that we believe lays the foundation to achieve our key objectives for 2022. I would like to share a bit more on each one. First, on Aeries II deployment and qualification with customers. We began shipping units to our strategic customers in late Q2 on plan and consistent with the time line that we provided at the beginning of the year. Moving forward, we will be working closely on qualification in the second half of 2022, as well as bringing up manufacturing. Second, on converting two additional programs towards production, one of the two programs was met with the SICK collaboration. Beyond that, we are progressing with multiple other engagements, as well as receiving new inbound interests in both automotive and non
