Joby Aviation(JOBY) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides Joby Aviation's unaudited financial statements, management's discussion, market risk disclosures, and internal controls for the period ended September 30, 2022 Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Joby Aviation's unaudited financial statements, including balance sheets, statements of operations, and cash flows, reporting a net loss of $79.2 million for Q3 2022 and over $1.07 billion in cash and investments Condensed Consolidated Balance Sheets As of September 30, 2022, total assets decreased to $1.27 billion from $1.49 billion, primarily due to reduced cash, while total liabilities decreased to $113.7 million from $171.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash, cash equivalents and short-term investments | $1,074,506 | $1,298,811 | | Total current assets | $1,104,036 | $1,318,542 | | Total assets | $1,273,809 | $1,488,355 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $28,802 | $13,848 | | Warrant liability | $24,175 | $44,902 | | Earnout shares liability | $58,499 | $109,844 | | Total liabilities | $113,654 | $171,596 | | Total stockholders' equity | $1,160,155 | $1,316,759 | Condensed Consolidated Statements of Operations For Q3 2022, the company reported a net loss of $79.2 million, a slight increase from $78.9 million in Q3 2021, driven by higher operating expenses offset by fair value gains Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Research and development | $73,870 | $52,092 | | Selling, general and administrative | $23,251 | $15,607 | | Loss from operations | $(97,121) | $(67,699) | | Gain (Loss) from change in fair value of warrants and earnout shares | $12,560 | $(11,489) | | Net loss | $(79,206) | $(78,858) | | Net loss per share, basic and diluted | $(0.14) | $(0.20) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2022, net cash used in operating activities increased to $182.8 million, with significant cash used in investing activities for marketable securities Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(182,818) | $(147,006) | | Net cash used in investing activities | $(575,972) | $(7,309) | | Net cash provided by financing activities | $275 | $1,093,543 | | Net change in cash, cash equivalents and restricted cash | $(758,515) | $939,228 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, acquisitions, fair value measurements, and other financial specifics, including an impairment loss on SummerBio and a collaboration agreement with Delta Air Lines - In June 2022, the company's equity method investment, SummerBio, LLC, decided to wind down operations, resulting in a $6.8 million impairment loss for Joby[40] - The company completed the acquisition of an aerospace software engineering company on May 17, 2022, for $7.2 million in cash, with the purchase price allocated to goodwill, intangible assets, and other assets and liabilities[62][65] - The fair value of the Earnout Shares Liability decreased from $109.8 million at the beginning of 2022 to $58.5 million as of September 30, 2022, resulting in a gain of $51.3 million[55][86] - Subsequent to the quarter end, on October 7, 2022, the company entered into a collaboration agreement with Delta Air Lines and issued $60 million worth of common stock to Delta[101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Joby's pre-revenue eVTOL development, operational factors, and financial results, noting a 43% increase in Q3 2022 operating expenses and sufficient liquidity for the next twelve months Overview and Business Model Joby Aviation is developing a piloted, all-electric eVTOL aircraft for an app-based aerial ridesharing service, targeting initial operations with the DoD in 2024 and commercial service in 2025 - Joby's eVTOL aircraft is designed to transport a pilot and four passengers at speeds up to 200 mph with a range of 150 miles[104] - The company plans a vertically integrated model, operating its own aircraft for an aerial ridesharing service rather than selling them to third parties[105] Key Factors Affecting Operating Results Success hinges on UAM market development, competition, and FAA certification, with revised eVTOL classification and delayed operational regulations potentially impacting commercial launch timelines - In May 2022, the FAA revised its certification approach for eVTOLs, requiring certification under the "powered lift" classification instead of Part 23, which could impact timelines[115] - The FAA does not expect to finalize operational regulations (SFARs) for eVTOL aircraft until late 2024, which could delay the launch of commercial passenger service[116] - Contracts with the Department of Defense under the Agility Prime program have a potential value of more than $75 million through 2025[118] Results of Operations Q3 2022 saw a 42% increase in R&D and 49% in SG&A expenses, primarily due to personnel costs, while net loss remained flat at approximately $79 million due to fair value gains Comparison of Operating Results (in thousands) | | Three Months Ended Sep 30, | Change | Nine Months Ended Sep 30, | Change | | :--- | :--- | :--- | :--- | :--- | | | 2022 | 2021 | ($) | (%) | 2022 | 2021 | ($) | (%) | | Research and development | $73,870 | $52,092 | $21,778 | 42% | $220,146 | $140,310 | $79,836 | 57% | | Selling, general and administrative | $23,251 | $15,607 | $7,644 | 49% | $70,700 | $41,587 | $29,113 | 70% | | Loss from operations | $(97,121) | $(67,699) | $(29,422) | 43% | $(290,846) | $(181,897) | $(108,949) | 60% | | Net loss | $(79,206) | $(78,858) | $(348) | —% | $(191,099) | $(185,369) | $(5,730) | 3% | Liquidity and Capital Resources As of September 30, 2022, Joby held approximately $1.08 billion in cash and investments, deemed sufficient for the next twelve months, with near-term focus on manufacturing and certification - As of September 30, 2022, the company had cash, cash equivalents, restricted cash, and short-term investments totaling approximately $1.08 billion[153] - Management believes that current cash and investments will be sufficient to fund operations for at least the next twelve months[153] - Net cash used in operating activities for the nine months ended September 30, 2022, was $182.8 million, a 24% increase from the same period in 2021[158][159] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk on its $1.08 billion in cash and short-term investments, with a 10% rate change not expected to have a material impact - The company's primary market risk is interest rate risk on its $1.08 billion in cash and short-term investments[171] - The investment policy focuses on capital preservation, utilizing highly rated securities and liquid money market funds, with a 10% change in interest rates not expected to have a material impact[172] Item 4. Controls and Procedures Management concluded disclosure controls are effective, but a material weakness in internal control over financial reporting persists due to insufficient accounting personnel, with remediation efforts underway - A material weakness in internal control over financial reporting was identified in a prior period, relating to a lack of sufficient accounting personnel with technical expertise[175] - The company is in the process of remediating the material weakness by hiring additional staff and engaging external accounting experts[176] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered equity sales, and a list of exhibits filed with the quarterly report Item 1. Legal Proceedings The company is subject to ordinary course claims but does not anticipate a material adverse impact on its financial position or results of operations - The company is not involved in any material legal proceedings as of the reporting date[180] Item 1A. Risk Factors This section refers to the comprehensive discussion of risks and uncertainties detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2021, with no new risk factors presented - For a comprehensive discussion of risk factors, the company refers investors to its Annual Report on Form 10-K filed on March 28, 2022[181] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On July 21, 2022, CEO JoeBen Bevirt purchased 35,000 shares of common stock from another executive in a private sale at $5.53 per share - A private sale of 35,000 shares of common stock occurred on July 21, 2022, between two company executives[182] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including an agreement with the U.S. Air Force and an amendment to the collaboration agreement with Uber - Key exhibits filed include an agreement with the U.S. Air Force dated July 28, 2022, and an amendment to the collaboration agreement with Uber Technologies, Inc. dated September 1, 2022[187]