XOS

Xos, Inc. (XOS) - Q3 2025 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended September 30, 2025. Xos, Inc. is an early-stage growth company designing and manufacturing battery-electric commercial vehicles (Classes 5-8) and charging infrastructure. The company operates as a single segment focused on fleet electrification solutions, including the X-Platform chassis, Xos Hub chargers, and Xosphere fleet management software.

Key Financial Metrics

Note: Q3 2025 Net Income includes a non-recurring gain of $9.4M from operating lease termination.

Material Changes vs. Prior Period

• Revenue: Q3 revenue increased 4% year-over-year due to higher unit sales (98 vehicles vs. 78), partially offset by a decrease in average selling price. YTD revenue decreased 8% due to product mix shifts.
• Profitability: The company reported a net income of $2.1M in Q3 2025 compared to a loss of $10.5M in Q3 2024. This turnaround is primarily driven by a $9.4M gain on the termination of the Mesa, Arizona manufacturing lease. Excluding this gain, the company would have reported a net loss.
• Operating Expenses: Total operating expenses decreased 24% in Q3 and 26% YTD, driven by significant reductions in headcount and personnel costs across G&A, R&D, and Sales & Marketing.
• Debt Restructuring: The $20.0M Convertible Note to Aljomaih Automotive Co., originally due August 11, 2025, was amended. Accrued interest of ~$6.0M was converted into 1.8M shares of common stock. Principal repayment is now spread over ten quarterly installments from November 2025 to February 2028.
• Inventory: Inventory levels decreased from $36.6M (Dec 2024) to $25.2M (Sep 2025), contributing to positive working capital changes in operating cash flow.

Outlook, Risks, and Contingencies

• Going Concern: Management has concluded there is substantial doubt about the company's ability to continue as a going concern for the next 12 months. Current cash of $14.1M is insufficient to fund operations without additional capital.
• Liquidity Strategy: The company plans to raise capital via an At-The-Market (ATM) offering (up to $20M total, $5.4M currently registered) and a Standby Equity Purchase Agreement (SEPA) with Yorkville (up to $125M). However, access to the SEPA is currently unavailable pending a post-effective amendment to a registration statement.
• Internal Controls: The company identified material weaknesses in internal controls over financial reporting related to inventory management, revenue recognition, and IT general controls. Management is implementing remediation steps but controls remain ineffective as of September 30, 2025.
• Supply Chain & Tariffs: The company faces ongoing supply chain disruptions and cost volatility due to tariffs on power electronics and battery components. Management is diversifying suppliers and stockpiling high-risk components.
• Customer Concentration: Revenue is highly concentrated; one customer accounted for 72% of Q3 2025 revenue and 61% of YTD 2025 revenue.

Investor Verification Checklist

• Going Concern Status: Verify the timeline and probability of securing the necessary capital to avoid bankruptcy or liquidation.
• SEPA Availability: Confirm the status of the post-effective amendment required to access the $119.4M remaining commitment under the Yorkville SEPA.
• Debt Service: Monitor the ability to meet the first quarterly principal payment of $1.5M due November 11, 2025.
• Internal Control Remediation: Assess progress in fixing material weaknesses in inventory and revenue recognition controls to ensure future financial reporting reliability.
• Customer Dependency: Evaluate the risk associated with the single customer representing the majority of revenue and receivables.