Joby Aviation, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021; filed November 12, 2021. Figures below are in U.S. dollars. Joby is developing electric vertical takeoff and landing aircraft and plans to manufacture, own and operate them as an aerial ridesharing service. The filing reports no revenue for the periods presented.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $52.1 million | $30.7 million | $140.3 million | $76.9 million |
| Selling, general and administrative expense | $15.6 million | $5.5 million | $41.6 million | $15.1 million |
| Net loss | $78.9 million | $28.0 million | $185.4 million | $80.3 million |
| Net loss per share, diluted | $0.20 | $0.27 | $0.91 | $0.79 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $147.0 million | $75.6 million |
With no reported revenue, gross profit and operating margin are not applicable. R&D and SG&A increased substantially, reflecting hiring and spending on aircraft engineering, software, manufacturing-process development, certification, prototypes and public-company requirements. SummerBio equity-method income of $10.3 million in Q3 and $19.2 million for the nine months partly offset losses; this is not aircraft-service revenue. Q3 also included $9.0 million of merger-related expense, $11.5 million of losses from fair-value changes in derivative liabilities and a $0.7 million convertible-note extinguishment loss.
At September 30, 2021, cash and cash equivalents were $1,016.5 million and short-term investments were $346.0 million; cash, cash equivalents and restricted cash totaled $1,017.3 million. Current assets were $1,382.5 million and current liabilities $7.6 million. Total liabilities were $227.3 million, including $64.8 million of warrant liabilities and $151.3 million of earnout-share liability. Debt was limited primarily to a $1.0 million tenant-improvement loan; the $75.0 million Uber convertible note plus accrued interest converted to common stock at the merger closing. Stockholders’ equity was $1,304.7 million.
Material changes and notable transactions
- On August 10, 2021, the SPAC merger closed as a reverse recapitalization. The company reported $1,067.9 million of merger proceeds, net of redemptions and specified transaction items; $835.0 million came from the PIPE financing. The merger materially increased liquidity and changed the capital structure.
- Redeemable convertible preferred stock converted to common stock at closing. Common shares outstanding were 604.3 million at September 30; 603.9 million were reported outstanding on November 8.
- Derivative accounting generated significant liabilities and noncash earnings volatility: warrants were recorded as liabilities, and the earnout liability was valued at $151.3 million at quarter-end. No earnout shares had vested by September 30.
- Uber Elevate was acquired in January, adding software, personnel and a commercial collaboration agreement. A separate April asset acquisition included $5.0 million of cash consideration and an immediate write-off of acquired in-process R&D.
- For the nine months, investing cash use was $7.3 million, largely reflecting purchases and maturities of marketable securities and $20.7 million of property and equipment purchases. Financing provided $1,093.5 million, principally from the merger.
Outlook, commentary and risks
- Management expects losses and negative operating cash flows to continue while the company develops its aircraft. It estimated near-term capital expenditures through 2024 of approximately $850–$900 million, primarily for manufacturing, production ramp-up, certification, infrastructure, skyports, pilot training and aircraft production.
- Management said available cash was expected to fund working capital and capital requirements for at least 12 months from the date the financial statements were available to be issued. It anticipated funding through initial commercialization from existing cash and expected future operating cash, while noting potential need for additional equity or debt financing.
- The company targeted initial commercial passenger service in 2024. Management cited more than 1,000 successful test flights and an agreed FAA G-1 certification basis, but certification, production approvals and operating authorizations remain necessary and may not be obtained on the expected timeline.
- Joby described an undeveloped UAM market, uncertain customer acceptance and pricing, competition, uncertain scaled aircraft costs and utilization, weather-related operating limits, supply-chain and certification risks, and possible effects of COVID-19. Government contracts could be modified or terminated; the company cited more than $40 million of potential payments through 2024, subject to full performance.
- Management disclosed a material weakness in internal control over financial reporting related to insufficient full-time accounting personnel with deep technical accounting expertise. Remediation efforts included additional review procedures, hiring, stronger processes and possible use of external experts. Management nevertheless stated the interim financial statements fairly presented the company’s results in all material respects.
- Subsequent to quarter-end, an October 25 reorganization cancelled 98.8 million shares held by Joby Holdings and issued 98.4 million shares to its prior stockholders.
Most important facts for investors to verify
- Progress, schedule and remaining requirements for FAA aircraft certification, production approval and commercial operating authorization.
- Whether the 2024 launch target and estimated $850–$900 million of capital expenditures remain achievable, and how funding needs may change.
- Aircraft manufacturing costs, production scale, utilization, pricing and evidence of customer demand for the planned service.
- Cash burn and investment portfolio composition, and the sensitivity of runway to delays, spending increases or reduced government payments.
- Fair-value assumptions and potential future earnings volatility from warrant and earnout liabilities, plus dilution from warrants, equity awards and share issuances.
- Progress in remediating the disclosed material weakness and the adequacy of public-company financial reporting controls.