Aeva Technologies, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; comparisons are with the corresponding 2020 periods. Aeva develops FMCW 4D LiDAR-on-chip and software. It remained a development-stage business, with sales primarily from prototype products and non-recurring engineering services for customer research and development programs.
Financial performance
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $2.6m | $1.6m | $2.9m | $2.2m |
| Gross profit / margin | $1.2m / 45% | $0.7m / 43% | $1.3m / 45% | $1.0m / 44% |
| Operating loss | $(24.7)m | $(5.0)m | $(44.9)m | $(12.0)m |
| Net loss | $(24.1)m | $(5.0)m | $(43.5)m | $(11.8)m |
| Net loss per share | $(0.11) | $(0.04) | $(0.23) | $(0.09) |
- Q2 revenue rose 59%, mainly from a $1.1m increase in non-recurring engineering services. First-half revenue rose 34%, primarily from a $0.7m increase in those services.
- Operating expenses increased substantially: Q2 R&D was $18.7m and general and administrative expense was $6.7m. Management attributed increases mainly to product-development spending, higher headcount, stock compensation, professional fees and public-company costs.
- Six-month operating cash use was $34.0m, versus $10.1m in 2020. Investing activities used $347.3m, largely reflecting purchases of marketable securities; financing provided $513.7m, principally from the business combination and PIPE.
- At June 30, cash and cash equivalents were $157.0m and marketable securities were $345.5m, totaling $502.5m. Total assets were $521.3m; stockholders’ equity was $502.2m. No conventional borrowings were reported; lease liabilities totaled $5.9m, and warrant liabilities were $1.8m.
Material changes and unusual items
- The March 12, 2021 business combination was accounted for as a reverse recapitalization. It generated $560.8m gross proceeds, offset by approximately $47.7m of transaction costs; net cash proceeds were approximately $513.1m. The transaction materially increased liquidity and shares outstanding.
- Stock-based compensation was $8.5m in the first half, compared with $1.8m in 2020. The business-combination closing also triggered approximately $2.7m of incremental RSU expense in the first half.
- Other income included a $1.2m first-half gain from the decline in the fair value of private placement warrant liabilities. The liability is remeasured each reporting period using significant unobservable inputs.
- Revenue was concentrated: one customer represented 90% of Q2 revenue and 81% of first-half 2021 revenue. One customer accounted for 78% of receivables at June 30.
Outlook, risks and controls
- Management expects continued operating losses as it invests in product development and says existing cash and marketable securities should fund operating and capital needs for at least 12 months from issuance of the financial statements. The filing gives no revenue or earnings guidance.
- Commercial deliveries were not expected to begin until 2024 and could occur later or not at all. Aeva’s prospects depend on customers completing and commercializing their programs, achieving design wins, scaling outsourced manufacturing and securing market adoption of LiDAR.
- Management expects quarterly results to fluctuate. Key risks include customer and revenue concentration, long development cycles and program cancellations, competition and alternative sensing technologies, manufacturing and component-supply constraints, pricing pressure, and uncertainty related to COVID-19.
- Disclosure controls were deemed ineffective at quarter-end due to material weaknesses in warrant accounting and the financial close/reporting process, including inadequate accounting processes and qualified personnel. Management was developing remediation actions; the weaknesses were not yet considered remediated.
- The company reported ordinary-course legal claims may arise but did not identify a specific material contingency or quantify a loss. COVID-19 had not materially disrupted component or service supply to date, but its future impact remained uncertain.
Investor verification priorities
- Track customer concentration, prototype and engineering revenue, and evidence that customer programs progress toward production.
- Assess the pace of operating cash burn against the stated liquidity runway, including investment spending and any need for additional capital.
- Monitor R&D and public-company expense growth, stock-based compensation and potential dilution from options, RSUs and warrants.
- Check progress and testing of remediation for the disclosed material weaknesses and whether disclosure controls become effective.
- Verify manufacturing scale-up, supply availability, production economics and whether the expected 2024 commercial-delivery timeline remains achievable.