Aeva Technologies, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unaudited U.S. GAAP financial statements. Aeva develops FMCW-based 4D LiDAR-on-chip systems and software; customer activity primarily involved prototype products and engineering services for research and development programs.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0.8m | $1.4m | $2.7m | $4.0m |
| Gross loss | $1.7m | $1.4m | $5.0m | $1.1m |
| Operating expenses | $33.8m | $36.4m | $105.9m | $106.4m |
| Operating loss | $35.5m | $37.8m | $110.9m | $107.6m |
| Net loss | $33.2m | $36.5m | $104.4m | $104.6m |
| Net loss per share | $0.15 | $0.17 | $0.47 | $0.48 |
- Gross margin remained negative: approximately -212% in Q3 and -186% for the first nine months of 2023. Revenue did not cover cost of revenue.
- At September 30, cash and cash equivalents were $40.6m and marketable securities were $193.1m, totaling $233.7m, down from $323.8m at December 31, 2022. Total assets were $265.7m; stockholders’ equity was $246.4m.
- Operating cash outflow was $91.5m for the first nine months, versus $83.1m in 2022. Investing activities provided $64.5m, primarily from securities maturities; capital expenditures were $3.4m. Cash and cash equivalents declined $26.9m to $40.6m.
- No conventional borrowings were reported. Lease liabilities totaled $7.8m; total liabilities were $19.3m. Current assets were $242.8m and current liabilities $14.7m.
- Stock-based compensation was $18.2m for the first nine months. Accumulated deficit was $414.6m.
Material changes and operating trends
- Q3 revenue fell 41% year over year, and nine-month revenue fell 33%, mainly because of lower non-recurring engineering activity; prototype sales partly offset the decline.
- Nine-month cost of revenue rose 50% despite lower revenue, reflecting higher manufacturing overhead as third-party manufacturing scaled and prototype sales increased. The nine-month gross loss widened to $5.0m from $1.1m.
- Nine-month operating expenses were nearly flat year over year. R&D was $76.3m, down 1%; G&A was $24.0m, up 2%; and selling and marketing was $5.6m, up 3%. Operating loss increased 3%.
- Higher interest income ($6.5m versus $2.0m for nine months) helped keep nine-month net loss approximately level year over year, despite the larger operating loss.
- Revenue was concentrated: two customers contributed 40% and 11% of Q3 revenue. For the first nine months, two customers contributed 27% and 13%.
Outlook, risks and subsequent financing
- Management expects continued operating losses as it invests in product development and said available cash and marketable securities should fund operating and capital expenditure needs for at least 12 months from issuance of the financial statements. It also said additional capital will be needed unless revenue can cover expected spending.
- No specific revenue or earnings guidance was provided. Management expects R&D, G&A, and selling and marketing expenses to remain around fiscal 2022 levels or increase slightly in the foreseeable future. Results may fluctuate with customer development and commercialization schedules.
- Management identified commercialization delays, achieving production volumes and cost targets, competition, pricing and margin pressure, and access to future financing as important risks. The filing reported no material changes to the risk factors in the 2022 Form 10-K.
- After quarter-end: A November 2023 private placement issued 36.8m common shares at $0.58 per share for $21.4m gross proceeds. A separate agreement gives Aeva the option, subject to conditions, to sell up to $125m of preferred stock to Sylebra through November 2026. Conditions include obtaining a qualifying OEM program award; the preferred shares carry a 7% annual dividend and $12,000 initial liquidation preference per $10,000 issue price. The agreement also includes fees and potential warrant issuance, creating potential cost and dilution.
- The company reported ordinary-course legal matters but no specific material proceeding or quantified contingency. It reported effective disclosure controls and no material change in internal control over financial reporting.
Investor facts to verify
- Whether customers advance development programs into production, and the timing, volumes, and economics of any OEM awards.
- Cash burn, securities liquidity, and whether management’s stated 12-month funding outlook remains achievable.
- Terms, fees, conditions, and potential dilution from the November common-stock placement and preferred-stock facility, including any future warrant or share issuance.
- Drivers of negative gross margins and whether manufacturing costs can fall as production scales.
- Customer concentration, revenue timing, and the outstanding equity awards and warrants that may dilute common shareholders.