Joby Aviation(JOBY) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Q1 2022 show a net loss of $62.3 million, up from $41.5 million in Q1 2021, driven by increased operating expenses, with $1.22 billion in liquidity Condensed Consolidated Balance Sheets As of March 31, 2022, total assets were $1.42 billion, slightly down from $1.49 billion, with strong liquidity of $1.22 billion and reduced total liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Total cash, cash equivalents and short-term investments | $1,220,828 | $1,298,811 | | Total current assets | $1,242,605 | $1,318,542 | | Total assets | $1,423,295 | $1,488,355 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $18,163 | $13,848 | | Warrant liability | $47,493 | $44,902 | | Earnout shares liability | $90,440 | $109,844 | | Total liabilities | $158,861 | $171,596 | | Total stockholders' equity | $1,264,434 | $1,316,759 | Condensed Consolidated Statements of Operations For Q1 2022, net loss increased to $62.3 million from $41.5 million in Q1 2021, driven by a 106% rise in operating expenses, partially offset by $32.0 million in other income Condensed Consolidated Statements of Operations (in thousands) | Account | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $72,071 | $34,184 | | Selling, general and administrative | $22,272 | $11,644 | | Total operating expenses | $94,343 | $45,828 | | Loss from operations | ($94,343) | ($45,828) | | Gain from change in fair value of warrants and earnout shares | $16,814 | $— | | Income from equity method investment | $14,458 | $4,710 | | Net loss | ($62,319) | ($41,505) | | Net loss per share, basic and diluted | ($0.11) | ($0.37) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities more than doubled to $61.4 million in Q1 2022, while investing activities used $476.1 million, resulting in a $537.5 million net decrease in cash Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($61,426) | ($29,665) | | Net cash used in investing activities | ($476,132) | ($5,879) | | Net cash provided by financing activities | $80 | $74,989 | | Net change in cash, cash equivalents and restricted cash | ($537,478) | $39,445 | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail Joby's eVTOL business, the August 2021 SPAC merger, equity method investment in SummerBio, a March 2022 acquisition, and the fair value accounting for warrant and earnout share liabilities - Joby Aviation is a vertically integrated air mobility company developing an electric vertical takeoff and landing (eVTOL) aircraft for an air transportation service[29] - The company acquired an aerospace composite manufacturing company on March 9, 2022, for $1.5 million in cash and $0.1 million in restricted stock units[60] - The company recognized $14.5 million in income from its equity method investment in SummerBio, LLC for the three months ended March 31, 2022[40] - A gain of $19.4 million was recognized in Q1 2022 from the change in fair value of the Earnout Shares Liability, which is measured using a Monte Carlo simulation model[55][79] - Stock-based compensation expense for Q1 2022 was $19.4 million, a significant increase from $4.8 million in Q1 2021[88] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the development of its eVTOL aircraft for a 2024 commercial launch, highlighting progress in test flights and FAA certification, while noting increased operating expenses and a strong liquidity position Overview and Business Model Joby's business model involves manufacturing, owning, and operating its eVTOL aircraft to provide an app-based aerial ridesharing service, targeting a 2024 commercial launch - The company's business model is to manufacture, own, and operate its eVTOL aircraft to provide a vertically integrated, app-based aerial ridesharing service[98] - The aircraft is designed for a pilot and four passengers, with speeds up to 200 mph and a range of 150 miles[97] - The company has completed over 1,000 test flights and aims for commercial passenger service to begin in 2024[97][98] Key Factors Affecting Operating Results Key factors affecting operating results include the nascent Urban Air Mobility market development, competition, FAA certification under 'powered lift' classification, and the U.S. Air Force Agility Prime program - Future revenue is directly tied to the development of the Urban Air Mobility (UAM) market, which remains unproven[105] - In May 2022, the FAA indicated it may certify eVTOLs under the 'powered lift' classification, a change from the previous Part 23 approach, but stated it did not expect this to affect certification timelines[109] - The company's participation in the U.S. Air Force's Agility Prime program provides operational experience and contracts worth over $40 million through 2024[111] Comparison of Results of Operations For Q1 2022, net loss increased by 50% to $62.3 million, driven by a 111% rise in R&D and 91% in SG&A expenses, partially offset by a 640% increase in other income Comparison of Operations (in thousands) | Account | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $72,071 | $34,184 | $37,887 | 111% | | Selling, general and administrative | $22,272 | $11,644 | $10,628 | 91% | | Loss from operations | ($94,343) | ($45,828) | ($48,515) | 106% | | Total other income, net | $32,029 | $4,327 | $27,702 | 640% | | Net loss | ($62,319) | ($41,505) | ($20,814) | 50% | - The increase in R&D expenses was primarily due to increased personnel for aircraft engineering, software development, and manufacturing, as well as more materials for prototyping and testing[129] - The increase in SG&A expenses was driven by higher headcount in support functions (IT, legal, HR, finance) and increased costs for insurance and professional services[130] Liquidity and Capital Resources As of March 31, 2022, the company held $1.22 billion in cash and short-term investments, deemed sufficient for the next twelve months, despite a 107% increase in net cash used in operating activities - As of March 31, 2022, the company had cash, cash equivalents, and restricted cash of $418.8 million and short-term investments of $803.7 million[132] - Management believes current cash on hand is sufficient to satisfy working capital and capital requirements for at least the next twelve months[132] - Net cash used in operating activities increased by 107% to $61.4 million in Q1 2022, while net cash used in investing activities increased by 7,999% to $476.1 million, primarily for purchasing marketable securities[137] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on its $1.22 billion short-term investment portfolio, managed for capital preservation, with foreign currency risk deemed immaterial - The company is exposed to interest rate risk on its $1.22 billion portfolio of cash, cash equivalents, and short-term investments[150] - The investment policy focuses on capital preservation, investing in highly rated securities; a hypothetical 10% change in interest rates is not expected to have a material impact[150] - Foreign currency risk is not significant as foreign operations are not material to the financial statements[151] Controls and Procedures Management identified a persistent material weakness in internal control over financial reporting due to insufficient technical accounting personnel, despite ongoing remediation efforts - A material weakness in internal control over financial reporting was identified, relating to a lack of sufficient full-time accounting personnel with deep technical accounting knowledge[153] - The company is implementing remediation measures, including hiring additional accounting and finance staff and engaging external experts[154] - Despite the material weakness, management believes the financial statements in the report are fairly presented in all material respects[155] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[159] Risk Factors The company refers to its Annual Report on Form 10-K for a comprehensive discussion of numerous business and financial risk factors - For a comprehensive discussion of risks, the report refers to the 'Risk Factors' section of the company's annual report on Form 10-K for the year ended December 31, 2021[160] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[161] Exhibits This section lists exhibits filed with the Form 10-Q, including an agreement with the U.S. Air Force and required CEO/CFO certifications - Exhibits filed include an agreement with the United States Air Force dated March 3, 2022, and certifications by the Principal Executive Officer and Principal Financial Officer[167]