Rivian Automotive, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Financial statements are unaudited. Rivian designs, manufactures, and sells electric vehicles, including R1T and R1S consumer vehicles and Electric Delivery Vans (EDVs).
Key financial metrics
| Metric | Q3 2022 | Nine months 2022 |
|---|---|---|
| Revenue | $536 million | $995 million |
| Gross loss | $917 million | $2.123 billion |
| Gross margin | Approximately -171% | Approximately -213% |
| Operating loss | $1.774 billion | $5.061 billion |
| Net loss | $1.724 billion | $5.029 billion |
| Net loss per share, basic and diluted | $1.88 | $5.53 |
| Cash used in operating activities | Not separately stated for the quarter | $3.606 billion |
| Capital expenditures | Not separately stated for the quarter | $1.075 billion |
At September 30, cash and cash equivalents were $13.272 billion, and total reported liquidity was $13.7 billion, including $353 million available under the ABL facility. The company had $1.25 billion principal amount of 2026 Notes outstanding, no ABL borrowings, and $395 million of letters of credit outstanding. Total liabilities were $3.686 billion; accumulated deficit was $11.403 billion.
Material changes versus the prior comparable period
- Revenue rose from $1 million to $536 million in Q3 and from $1 million to $995 million for the nine-month period, reflecting vehicle deliveries: 6,584 in Q3 and 12,278 year to date. Rivian produced 7,363 vehicles in Q3 and 14,317 year to date.
- Gross losses widened as production and deliveries ramped. A $696 million charge for inventory valuation and firm purchase commitment losses was recorded in cost of revenues; management said these items would continue to weigh on near-term results.
- Nine-month operating cash use increased from $1.536 billion to $3.606 billion. Investing cash use declined from $1.338 billion to $1.075 billion, while financing cash provided fell from $5.068 billion to $62 million.
- Q3 2021 included a $458 million loss on convertible notes; the notes converted into common stock upon the November 2021 IPO. Q3 2022 instead included $69 million of interest income and $24 million of interest expense.
Outlook, commentary, risks, and unusual items
- Management said existing cash and ABL availability should cover operating expenses, working capital, and capital expenditures for at least the next 12 months. It expects continued operating losses and significant investment, and says future investment may require debt and/or equity financing. The filing provides no quantified production or financial guidance.
- Management expects near-term production to be constrained by supply-chain factors. It cited semiconductor and component shortages, volatile input costs, expedited freight, and low-volume labor and overhead costs as pressures on margins.
- Amazon is a significant commercial customer and related-party connection: Rivian recorded $133 million of Amazon revenue in the first nine months, with $68 million receivable at September 30. The initial EDV order is for 100,000 vehicles, subject to modification; the agreement has no minimum purchase requirement and permits Amazon to determine purchase volumes and timing.
- Rivian recorded approximately $38 million of restructuring charges in Q3 following a workforce reduction. Stock-based compensation was $293 million in Q3 and $852 million for the nine months.
- In October 2022, Rivian initiated a voluntary recall of approximately 12,000 vehicles over a fastener that may not have been sufficiently torqued.
- Georgia bond validation for incentives connected to the planned manufacturing site was denied; the State appealed. A separate October 2022 lawsuit could affect the timing or construction of the planned plant.
- Disclosure controls were deemed ineffective at September 30 because previously reported material weaknesses in segregation of duties and IT general controls remained. The filing says these weaknesses had not caused a material misstatement of the financial statements.
- Key risks include scaling production and quality, reliance on single- or limited-source suppliers, continuing losses and cash needs, dependence on Amazon for a portion of initial revenue, cancellable consumer preorders, and regulatory, litigation, and execution risks.
Most important facts for investors to verify
- Whether production and deliveries are increasing fast enough to reduce per-vehicle losses, and how the $696 million inventory and purchase-commitment charge affects subsequent periods.
- Cash burn, capital spending, and liquidity runway relative to management’s stated 12-month sufficiency assessment and expected financing needs.
- Amazon EDV purchase volumes and timing, and Rivian’s ability to grow revenue beyond this customer relationship.
- Progress in remediating material weaknesses in internal controls and any updates on the Georgia plant’s legal and permitting status.
- Recall-related costs and any further quality, warranty, or field-action developments.