SES AI Corp (SES) - Q3 2024 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2024. SES AI Corp is a pre-commercialization stage company developing high-performance Lithium-Metal (Li-Metal) rechargeable battery technologies for electric vehicles (EVs), Urban Air Mobility (UAM), and drones. The company utilizes artificial intelligence (AI) across engineering, manufacturing, and safety monitoring. As of the reporting date, the company has not generated revenue from its principal business activities.
Key Financial Metrics
| Metric | Q3 2024 (3 Months) | Q3 2023 (3 Months) | YTD 2024 (9 Months) | YTD 2023 (9 Months) |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Net Loss | $(30.2) million | $(13.5) million | $(65.6) million | $(42.6) million |
| Net Loss Per Share (Basic/Diluted) | $(0.09) | $(0.04) | $(0.20) | $(0.14) |
| Operating Expenses | $34.2 million | $19.4 million | $80.1 million | $60.2 million |
| Cash & Cash Equivalents | $66.7 million (as of Sept 30, 2024) | |||
| Short-Term Investments | ||||
| Total Liquidity (Cash + Investments) | $273.7 million | |||
| Net Cash Used in Operating Activities (YTD) | $(53.8) million | $(43.9) million |
Material Changes vs. Prior Period
- Increased R&D Spend: Research and development expenses increased by 188% ($16.0 million) in Q3 2024 compared to Q3 2023. This was driven by a $10.7 million equipment purchase for Joint Development Agreements (JDAs), a $4.9 million increase in stock-based compensation (partially due to an out-of-period adjustment correcting a prior year error), and higher personnel costs.
- Decreased G&A: General and administrative expenses decreased by 10% in Q3 2024, primarily due to lower stock-based compensation following the conclusion of amortization periods for certain awards and reduced headcount.
- Accounting Correction: The company corrected a $2.0 million error from Q3 2023 regarding Earn-Out Restricted Shares, resulting in an overstatement of R&D expense in the current period to rectify the prior period understatement.
- Investment Activity: Net cash provided by investing activities turned positive ($34.2 million YTD 2024) compared to a net use of cash in the prior year, driven by net proceeds from the maturities of short-term investments exceeding new purchases.
Guidance, Outlook, and Risks
- Outlook: Management expects to continue incurring losses for the foreseeable future. The company believes its current cash and marketable securities are sufficient to fund operations for at least 12 months. Focus remains on EV B-sample development, UAM cell production, and AI integration.
- NYSE Listing Risk: On September 26, 2024, SES received a notice from the NYSE regarding non-compliance with the minimum share price requirement (average closing price below $1.00 for 30 consecutive trading days). The company has a six-month cure period to regain compliance; failure to do so could result in delisting.
- Strategic Partnerships: The company has extended its JDA with Hyundai through December 2025 and concluded its JDA with GM on September 30, 2024. It has a remaining commitment to spend up to $24.3 million under a specific JDA.
- Internal Controls: The company has remediated previously reported material weaknesses related to IT general controls and the accounting for forfeitures of Earn-Out Restricted Shares.
Investor Verification Checklist
- Delisting Status: Monitor the company's progress in meeting the NYSE minimum share price requirement ($1.00 average) within the six-month cure period.
- Burn Rate: Verify the sustainability of the current cash position (~$274 million) against the accelerating R&D burn rate (net loss of $65.6 million YTD).
- Commercialization Timeline: Assess the progress of B-sample battery development and the transition from JDA reimbursements to actual product revenue.
- Accounting Adjustments: Review the impact of the $2.0 million out-of-period adjustment on current and future expense recognition.
- Partnership Renewals: Track the status of new strategic alliances following the conclusion of the GM JDA and the extension of the Hyundai agreement.