Aeva Technologies, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; filed May 9, 2022. Amounts below are in U.S. dollars. Financial statement figures are unaudited.
Business context and reporting period
Aeva develops FMCW-based 4D LiDAR-on-chip sensing technology and related software for automotive and other applications. It describes itself as a development-stage company: customers primarily bought prototype products and engineering services for research, development, evaluation, pilot, or testing. The 2021 comparison follows the March 2021 business combination and is presented on a reverse-recapitalization basis.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / prior balance-sheet date |
|---|---|---|
| Revenue | $1.137 million | $0.308 million |
| Gross profit (loss) | $(0.238) million; gross margin approximately -21% | $0.128 million; gross margin approximately 42% |
| Operating expenses | $33.835 million | $20.255 million |
| Operating loss | $(34.073) million | $(20.127) million |
| Net loss | $(33.157) million | $(19.458) million |
| Net loss per share, basic and diluted | $(0.15) | $(0.12) |
| Cash used in operating activities | $(26.538) million | $(14.797) million |
| Cash and cash equivalents | $62.499 million | $66.810 million at Dec. 31, 2021 |
| Marketable securities | $351.988 million | $378.200 million at Dec. 31, 2021 |
| Total assets / total liabilities | $447.207 million / $20.716 million | $479.188 million / $22.812 million at Dec. 31, 2021 |
Cash, cash equivalents, and marketable securities totaled $414.487 million at quarter-end, down from $445.010 million at December 31, 2021. The filing reports no borrowings; lease liabilities totaled $9.631 million, including current and noncurrent portions. Current assets were $425.291 million against current liabilities of $13.588 million. Stock-based compensation was $5.784 million. An inventory impairment of $0.767 million was recorded.
Material changes versus the prior comparable period
- Revenue rose 269% year over year, but remained low in absolute terms. Product revenue declined 28% to $0.211 million; professional-services revenue increased to $0.926 million from $0.015 million.
- One customer accounted for 81% of Q1 2022 revenue. Four customers represented 83% of accounts receivable at March 31, 2022.
- Cost of revenue exceeded revenue, producing a gross loss, compared with positive gross profit in Q1 2021. Product costs included the inventory impairment; service costs primarily reflected employee costs.
- Research and development expense increased 122% to $25.315 million, primarily due to higher payroll, materials, software licenses, services, and stock-based compensation. Selling and marketing expense rose 150% to $1.648 million. General and administrative expense declined 16% to $6.872 million.
- Operating cash use increased to $26.538 million from $14.797 million. Investing cash flow was positive $22.040 million, primarily reflecting security maturities, partly offset by purchases of securities and $1.283 million of property and equipment. Financing cash flow was $0.187 million; Q1 2021 included business-combination and PIPE proceeds.
- Unrealized losses on available-for-sale securities were $2.455 million in other comprehensive loss, compared with $0.029 million in Q1 2021. The warrant liability declined to $0.426 million from $1.060 million at year-end, with the fair-value change recorded as other income.
Outlook, commentary, risks, and unusual items
Management expects continued operating losses as it invests in product development and states that cash and marketable securities should fund operating and capital expenditure needs for at least 12 months from issuance of the statements. The filing gives no quantified revenue, margin, or earnings guidance. Management expects R&D, sales and marketing, and public-company costs to rise. It says commercialization, customer program timing, sales volumes, pricing, manufacturing costs, and achieving economies of scale will affect future results and profitability.
The company expects COVID-19 to adversely affect revenue and operating results but cannot estimate the size or duration. It also identifies supply-chain disruption, competition, customer program delays, product commercialization and adoption, and potential future financing needs as risks. Market risk is primarily interest-rate exposure; management reported no material change from the prior annual report. Routine-course legal claims are described, but no specific material proceeding or quantified loss is disclosed. Non-cancelable purchase commitments were approximately $0.7 million. Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether customer development programs progress to production, and how the 81% revenue concentration changes.
- Whether revenue growth becomes recurring product sales rather than predominantly engineering services, and whether gross margins turn positive.
- Operating cash burn and investment spending relative to the $414.5 million liquidity balance and management’s stated runway.
- Drivers and persistence of rising R&D expense, stock-based compensation, and inventory impairment.
- Customer and vendor concentration, supply-chain exposure, and the effect of interest-rate changes on the marketable-securities portfolio.
- Potential dilution: 19.6 million options and restricted stock units were excluded from diluted loss per share as anti-dilutive; 12.1 million public and 0.384 million private warrants were outstanding, exercisable at $11.50 per share.