QuantumScape(QS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for QuantumScape Corporation as of June 30, 2025, report a net loss of $114.7 million for the second quarter and $229.1 million for the first six months, with total assets decreasing to $1.17 billion from $1.32 billion due to a decrease in marketable securities, as the company remains in a development stage with no revenue from its principal business activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $172,451 | $140,866 | | Marketable securities | $625,042 | $769,901 | | Total current assets | $806,239 | $922,286 | | Total assets | $1,168,388 | $1,322,395 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $49,172 | $64,884 | | Total liabilities | $143,592 | $164,548 | | Total stockholders' equity | $1,024,796 | $1,157,847 | | Total liabilities and stockholders' equity | $1,168,388 | $1,322,395 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Research and development | $101,177 | $196,766 | | General and administrative | $22,409 | $50,395 | | Loss from operations | ($123,586) | ($247,161) | | Net loss | ($114,698) | ($229,121) | | Basic and Diluted net loss per share | ($0.20) | ($0.41) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($122,589) | ($123,096) | | Net cash provided by investing activities | $139,289 | $171,810 | | Net cash provided by financing activities | $14,885 | $5,150 | | Net increase in cash, cash equivalents and restricted cash | $31,585 | $53,864 | - The company is in the development stage and has not yet generated revenue from its main business activities as of June 30, 2025[26] Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail the company's accounting policies, financial instrument valuations, balance sheet components, lease obligations, legal contingencies, and equity structure, highlighting the relationship with Volkswagen, stock-based compensation plans, ongoing litigations, and subsequent events including a lease termination and an amended collaboration agreement with PowerCo involving up to $130.7 million in project contributions over two years - Volkswagen is a related party stockholder with an approximate 26.0% voting interest as of June 30, 2025[28] - The company recorded impairment charges of approximately $14.9 million in the first six months of 2025 for assets no longer in use, a significant increase from $1.3 million in the same period of 2024[40] - As of June 30, 2025, the company has accrued approximately $3.0 million for legal matters, a decrease from $12.0 million at the end of 2024[89] - Subsequent to the quarter end, on July 17, 2025, the company amended its collaboration agreement with PowerCo SE. PowerCo agreed to contribute up to $130.7 million for the joint project over the next two years, subject to technical milestones[116] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a pre-revenue, development-stage entity focused on next-generation solid-state batteries, with key trends in product development (QSE-5 B-samples), process development (anode-free architecture), and commercialization through a licensing model, highlighted by the PowerCo collaboration, reporting a net loss of $229.1 million for the first half of 2025, with G&A expenses decreasing due to lower legal settlement costs, and believing its cash resources of approximately $797.5 million are sufficient to fund operations into 2029 - The company is a development-stage entity with no revenue to date, incurring a net loss from operations of $247.2 million for the six months ended June 30, 2025, and an accumulated deficit of approximately $3.6 billion since inception[120] - In 2024, the company began producing and shipping B-samples of its first targeted commercial product, QSE-5, to automotive customers for testing. QSE-5 has an energy density of over 800 Wh/L and supports fast charging (<15 minutes from 10% to 80%)[122] - The collaboration with PowerCo (Volkswagen's battery company) aims to industrialize the QSE-5 technology. This shifts the company's model towards licensing, which is expected to result in less revenue but also lower costs and capital requirements compared to a joint venture[133] - Based on the current business plan and transition to a licensing model, the company believes its cash resources will last into 2029[136][161] Results of Operations For the six months ended June 30, 2025, total operating expenses decreased by 7% to $247.2 million, while Research and development expenses increased by 8% to $196.8 million due to asset write-offs and higher depreciation, and General and administrative expenses decreased by 41% to $50.4 million primarily from lower legal settlement costs, resulting in a net loss of $229.1 million, a 6% improvement from the $243.6 million loss in the first half of 2024 Comparison of Operating Results (in thousands) | | Six Months Ended June 30, | | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | | | | Research and development | $196,766 | $181,593 | $15,173 | 8% | | General and administrative | $50,395 | $84,765 | ($34,370) | (41)% | | Total operating expenses | $247,161 | $266,358 | ($19,197) | (7)% | | Loss from operations | ($247,161) | ($266,358) | $19,197 | (7)% | | Net loss | ($229,121) | ($243,581) | $14,460 | (6)% | - The increase in R&D expense for H1 2025 was primarily due to a $13.7 million increase in write-offs of fixed assets and a $12.8 million increase in depreciation and amortization[152] - The decrease in G&A expense for H1 2025 was mainly driven by a $24.5 million reduction in costs associated with the settlement of class action lawsuits that were present in the 2024 period[154] Liquidity and Capital Resources As of June 30, 2025, QuantumScape's principal sources of liquidity were $797.5 million in cash, cash equivalents, and marketable securities, with operations funded primarily through equity offerings, and management believes current cash reserves are sufficient to fund operations into 2029, aided by the less capital-intensive licensing model with PowerCo, while net cash used in operating activities for the first six months of 2025 was $122.6 million, nearly flat compared to the prior year - As of June 30, 2025, the company's principal sources of liquidity were approximately $797.5 million in cash, cash equivalents, and marketable securities, down from $910.8 million at year-end 2024[158] - The company believes its current cash on hand is sufficient to meet working capital and capital expenditure requirements for at least twelve months and will last into 2029 under the current business plan[161] Summary of Cash Flows (in thousands) | | For the Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash used in operating activities | ($122,589) | ($123,096) | | Net cash provided by investing activities | $139,289 | $171,810 | | Net cash provided by financing activities | $14,885 | $5,150 | Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk exposure during the three months ended June 30, 2025, referring to the more detailed discussion in its Annual Report on Form 10-K - There have been no material changes to the Company's market risk during the three months ended June 30, 2025[176] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2025, with no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls - Based on an evaluation by management, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[178] - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the internal controls[179] PART II. OTHER INFORMATION Legal Proceedings This section refers to Note 7 of the condensed consolidated financial statements for detailed information regarding the company's ongoing legal proceedings - Information regarding legal proceedings is detailed in Note 7, Commitments and Contingencies, within the financial statements section of the report[182] Risk Factors This section outlines significant risks to the company's business, including challenges in developing and scaling up its solid-state battery technology, reliance on third-party suppliers, and the ability to control costs, highlighting risks associated with its collaboration with Volkswagen/PowerCo, intellectual property risks, intense market competition, dependence on EV market adoption, financial risks including a history of losses, the need for future capital, and stock price volatility, as well as regulatory risks from trade policies and environmental laws - The company faces significant challenges in developing its solid-state battery and producing it at high volumes with acceptable performance, quality, cost, and safety[192] - The relationship with Volkswagen and PowerCo is critical but carries risks, including the need to meet technical milestones to secure the licensing agreement and potential over-reliance on a single partner[215][217] - The battery market is highly competitive, with threats from established lithium-ion manufacturers and other companies developing alternative battery technologies, which may affect pricing and market share[239][240] - The company's dual-class stock structure concentrates voting power with executive officers, directors, and major shareholders like Volkswagen, which may prevent other stockholders from influencing significant corporate decisions[299] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[331] Other Information This section discloses the adoption of Rule 10b5-1 trading plans by several directors and executive officers during the last fiscal quarter, specifically by Dr. Timothy Holme (CTO), Kevin Hettrich (CFO), and JB Straubel (Director), each establishing trading arrangements for the sale of company stock with specified share amounts and durations - On June 5, 2025, CTO Dr. Timothy Holme adopted a Rule 10b5-1 trading plan for the sale of up to 2,714,753 shares of Class A Common Stock, effective until August 21, 2026[333] - On June 11, 2025, CFO Kevin Hettrich adopted a Rule 10b5-1 trading plan for the sale of up to 117,600 shares of Class A Common Stock, effective until August 26, 2026[334] - On June 13, 2025, Director JB Straubel adopted a Rule 10b5-1 trading plan for the sale of up to 791,329 shares of Class A Common Stock, effective until June 15, 2026[335] Exhibits This section lists the exhibits filed with the Form 10-Q, including agreements incorporated by reference and certifications from the Principal Executive Officer and Principal Financial Officer, with newly filed exhibits including a Lease Termination Agreement and an offer letter to an executive - The report includes a list of exhibits, such as the Business Combination Agreement, Amended and Restated Certificate of Incorporation, and various certifications[339]