Aeva Technologies, Inc. — Q1 2023 Form 10-Q
Business context and period. Unaudited results for the three months ended March 31, 2023, compared with Q1 2022. Aeva develops FMCW 4D LiDAR sensing systems and software. It describes itself as a development-stage company; customers primarily purchase prototype products and engineering services for research and development.
Key financial metrics
Amounts below are in millions of dollars unless otherwise noted.
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $1.148 | $1.137 |
| Cost of revenue | $2.529 | $1.375 |
| Gross loss (gross margin) | $(1.381) (-120%) | $(0.238) (-21%) |
| Operating expenses | $35.885 | $33.835 |
| Operating loss | $(37.266) | $(34.073) |
| Interest income | $2.064 | $0.283 |
| Net loss | $(35.174) | $(33.157) |
| Net loss per share | $(0.16) | $(0.15) |
| Cash used in operating activities | $(36.012) | $(26.538) |
Balance sheet and liquidity at March 31, 2023: Cash and cash equivalents were $31.864 million and marketable securities were $256.542 million, totaling $288.406 million. Total assets were $320.049 million; total liabilities were $18.085 million; stockholders’ equity was $301.964 million. The filing reports no interest-bearing borrowings; lease liabilities totaled $6.702 million, and warrant liability was $0.062 million. Cash and cash equivalents declined $35.556 million during the quarter. Capital expenditures were $1.275 million.
Material changes versus Q1 2022
- Revenue was nearly flat, up $0.011 million (1%). Prototype product sales increased, partly offset by lower non-recurring engineering services.
- Cost of revenue rose 84% to $2.529 million, principally from manufacturing overhead as third-party manufacturing scaled and more units were sold. Gross loss widened to $1.381 million.
- Operating expenses increased 6% to $35.885 million. R&D was broadly flat; general and administrative expense rose 14%, and selling and marketing expense rose 58%.
- Net loss increased by $2.017 million (6%). Higher interest income partly offset the increased operating loss.
- Operating cash use increased by $9.474 million. Investing cash flow was $0.419 million provided, versus $22.040 million provided in Q1 2022, largely reflecting lower net proceeds from marketable-security maturities and purchases.
- Revenue recognition mix shifted: 82% was recognized at a point in time, versus 19% in Q1 2022; over-time revenue, mainly engineering services, fell to 18% from 81%.
Outlook, management commentary and risks
- Management believes cash and marketable securities will fund operating and capital expenditure needs for at least 12 months from issuance of the statements. It also says additional capital may be needed unless product revenue becomes sufficient to cover expenses and investment needs.
- No specific revenue, earnings, or production guidance was provided. Management expects continued operating losses and expects R&D, general and administrative, and sales and marketing expenses to remain around fiscal 2022 levels or increase slightly in the foreseeable future.
- Commercial success depends on customers advancing programs from development to production, meeting volume and cost targets, and achieving competitive margins. Customer program delays, market adoption, competition, and manufacturing scale-up could adversely affect results.
- Revenue is concentrated: three customers generated 20%, 19%, and 17% of Q1 2023 revenue; one customer represented 59% of accounts receivable at quarter-end. Marketable securities were $2.397 million below adjusted cost, with unrealized losses reported in accumulated other comprehensive loss.
- The company reported no material changes to risk factors since its 2022 Form 10-K, no off-balance-sheet arrangements, and no material change in internal control over financial reporting. Management concluded disclosure controls were effective at the reasonable-assurance level.
Important facts for investors to verify
- Whether customer programs progress to production, and whether revenue and product volumes grow beyond prototype and engineering activity.
- Whether manufacturing costs and overhead decline sufficiently to improve the sharply negative gross margin.
- Whether the $288.4 million of cash and marketable securities supports the stated runway as operating cash use continues.
- Customer concentration, receivable collection, and the timing and composition of engineering-services versus product revenue.
- Potential dilution: 220.050 million common shares were outstanding at March 31, 2023; 47.376 million potential shares from options, restricted stock units, and warrants were excluded from diluted loss per share as anti-dilutive.