Aeva(AEVA) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Aeva Technologies, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2024, including balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue disaggregation, financial instruments, and other financial details Condensed Consolidated Balance Sheets The company's total assets decreased from $257.4 million at December 31, 2023, to $224.8 million at March 31, 2024, primarily driven by a reduction in cash, cash equivalents, and marketable securities. Total liabilities also decreased, while total stockholders' equity saw a decline from $228.4 million to $198.2 million | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Cash and cash equivalents | $29,605 | $38,547 | $(8,942) | | Marketable securities | $159,723 | $182,481 | $(22,758) | | Total current assets | $197,351 | $229,225 | $(31,874) | | Total assets | $224,809 | $257,385 | $(32,576) | | Total current liabilities | $16,593 | $18,404 | $(1,811) | | Total liabilities | $26,609 | $28,943 | $(2,334) | | Total stockholders' equity | $198,200 | $228,442 | $(30,242) | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2024, Aeva reported a significant increase in revenue but continued to incur a gross loss and net loss. The net loss remained relatively stable year-over-year, while net loss per share improved due to an increase in weighted-average shares outstanding | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | YoY Change (%) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Revenue | $2,107 | $1,148 | 83.5% | | Cost of revenue | $3,499 | $2,529 | 38.3% | | Gross loss | $(1,392) | $(1,381) | (0.8)% | | Operating loss | $(37,344) | $(37,266) | (0.2)% | | Net loss | $(35,326) | $(35,174) | (0.4)% | | Net loss per share, basic and diluted | $(0.67) | $(0.80) | 16.25% | | Weighted-average shares | 52,742,725 | 43,925,565 | 20.07% | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $228.4 million at December 31, 2023, to $198.2 million at March 31, 2024, primarily due to a net loss of $35.3 million and an unrealized loss on available-for-sale securities, partially offset by share-based compensation | Metric | December 31, 2023 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | :-------------------- | | Total stockholders' equity | $228,442 | $198,200 | $(30,242) | | Share-based compensation | N/A | $5,261 | $5,261 | | Unrealized loss on AFS securities | N/A | $(161) | $(161) | | Net loss | N/A | $(35,326) | $(35,326) | Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2024, net cash used in operating activities decreased compared to the prior year, while net cash provided by investing activities significantly increased, primarily due to maturities of available-for-sale securities. Financing activities resulted in a minor net cash outflow | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | YoY Change (in thousands) | | :----------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------ | | Operating activities | $(30,962) | $(36,012) | $5,050 | | Investing activities | $22,036 | $419 | $21,617 | | Financing activities | $(16) | $37 | $(53) | | Net decrease in cash | $(8,942) | $(35,556) | $26,614 | | Ending cash and cash equivalents | $29,605 | $31,864 | $(2,259) | Notes to the Condensed Financial Statements (Unaudited) These notes provide detailed disclosures supporting the condensed consolidated financial statements, covering the company's business, accounting policies, revenue breakdown, financial instrument valuations, asset compositions, financing activities, capital structure, stock-based compensation, income taxes, and commitments and contingencies Note 1. Description of Business and Summary of Significant Accounting Policies Aeva Technologies, Inc. designs 4D LiDAR-on-chip technology for various applications. The company retroactively adjusted financial statements for a 1-for-5 reverse stock split effective March 18, 2024. Aeva has an accumulated deficit of $494.9 million as of March 31, 2024, but believes existing liquidity of $189.3 million will fund operations for at least 12 months - Aeva designs 4D LiDAR-on-chip using FMCW sensing technology for automated driving, consumer electronics, industrial automation, and security applications[26] - A 1-for-5 reverse stock split was effected on March 18, 2024, retroactively adjusting all per share data and share counts[31] - As of March 31, 2024, the Company had $189.3 million in cash, cash equivalents, and marketable securities. It has an accumulated deficit of $494.9 million and expects continued operating losses but believes current liquidity is sufficient for at least 12 months[34] Note 2. Revenue Total revenue for the three months ended March 31, 2024, was $2.1 million, an 83.5% increase year-over-year. North America remains the largest market, contributing 79% of revenue, with most revenue recognized at a point in time. Two customers accounted for 75% of revenue in Q1 2024 | Revenue Category | Three Months Ended March 31, 2024 (in thousands) | % of Revenue 2024 | Three Months Ended March 31, 2023 (in thousands) | % of Revenue 2023 | | :----------------------------- | :--------------------------------------------- | :---------------- | :--------------------------------------------- | :---------------- | | Total Revenue | $2,107 | 100% | $1,148 | 100% | | North America | $1,674 | 79% | $730 | 64% | | EMEA | $229 | 11% | $244 | 21% | | Asia | $204 | 10% | $174 | 15% | | Recognized at a point in time | $1,714 | 81% | $947 | 82% | | Recognized over time | $393 | 19% | $201 | 18% | - For Q1 2024, two customers accounted for 39% and 36% of total revenue, respectively[41] Note 3. Financial Instruments The company's financial assets primarily consist of cash, cash equivalents, and marketable securities, with fair values largely determined using Level 1 and Level 2 inputs. Warrant liabilities are classified as Level 3, with their fair value determined using the Black-Scholes option-pricing model | Financial Instrument (March 31, 2024) | Fair Value (in thousands) | Level | | :------------------------------------ | :------------------------ | :---- | | Cash | $17,668 | Level 1 | | Money market funds | $264 | Level 1 | | U.S. agency securities | $27,561 | Level 2 | | U.S. Treasury securities | $30,214 | Level 2 | | Commercial paper | $42,552 | Level 2 | | Corporate bonds | $71,069 | Level 2 | | Warrant liabilities | $7,209 | Level 3 | - The fair value of warrant liabilities increased from $6.772 million at December 31, 2023, to $7.209 million at March 31, 2024, primarily due to a $0.450 million change in the fair value of Series A warrants[46] Note 4. Acquisition of Intangible Assets The company recorded $0.2 million in amortization expense for acquired intangible assets for the three months ended March 31, 2024, with total future amortization expected to be $2.4 million | Period | Expected Amortization Expense (in thousands) | | :---------------- | :------------------------------------------- | | Remainder of 2024 | $675 | | 2025 | $900 | | 2026 | $825 | | Total | $2,400 | Note 5. Inventories Total inventories decreased from $2.374 million at December 31, 2023, to $2.163 million at March 31, 2024, mainly driven by a reduction in raw materials | Inventory Component | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------ | :---------------------------- | :------------------------------- | | Raw materials | $1,583 | $2,178 | | Work-in-progress | $60 | $136 | | Finished goods | $520 | $60 | | Total inventories | $2,163 | $2,374 | Note 6. Property, Plant and Equipment Net property, plant, and equipment increased to $12.552 million at March 31, 2024, from $12.114 million at December 31, 2023, with manufacturing equipment showing a notable increase. Depreciation expense for Q1 2024 was $1.1 million | PP&E Component | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------- | :---------------------------- | :------------------------------- | | Manufacturing equipment | $5,743 | $4,269 | | Total PP&E, net | $12,552 | $12,114 | - Depreciation expense was $1.1 million for the three months ended March 31, 2024, up from $0.7 million in the prior year period[49] Note 7. Other current assets Total other current assets decreased slightly from $5.195 million at December 31, 2023, to $4.882 million at March 31, 2024 | Other Current Asset | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------ | :---------------------------- | :------------------------------- | | Prepaid expenses | $2,222 | $2,228 | | Vendor deposits | $975 | $1,104 | | Other current assets | $1,574 | $1,723 | | Total | $4,882 | $5,195 | Note 8. Other non-current assets Other non-current assets remained stable at $6.062 million, primarily consisting of a $5.0 million non-marketable equity investment made in November 2023 | Other Non-Current Asset | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------- | :---------------------------- | :------------------------------- | | Non marketable equity investments | $5,000 | $5,000 | | Security deposit | $1,062 | $1,116 | | Total | $6,062 | $6,132 | Note 9. Financing transaction In November 2023, Aeva completed a private placement of common stock for $21.4 million and entered into a Standby Equity Purchase Agreement (Facility Agreement) with Sylebra, allowing the company to sell up to $125 million in preferred stock by November 2026, subject to certain conditions. The company also issued 3 million Series A Warrants to Sylebra - On November 8, 2023, Aeva sold 7,360,460 shares of common stock at $2.90 per share, raising approximately $21.4 million[52] - Entered into a Standby Equity Purchase Agreement with Sylebra, allowing Aeva to sell up to $125 million of preferred stock by November 8, 2026, in tranches of $25-$50 million, contingent on achieving a minimum of one new OEM program award with at least 50,000 unit volume and common stock trading below $15[54][57] - Issued 3,000,000 Series A Warrants to Sylebra with an exercise price of $5.00 per share, exercisable until December 2027[62][63] Note 10. Capital Structure As of March 31, 2024, Aeva had 422 million authorized common shares and 10 million authorized preferred shares (none outstanding). The company had 2,414,975 public, 76,800 private, and 3,000,000 Series A warrants outstanding - 422,000,000 common stock shares and 10,000,000 preferred stock shares authorized[67][68] Outstanding Warrants (March 31, 2024) | Warrant Type | Number Outstanding | | :-------------- | :----------------- | | Public warrants | 2,414,975 | | Private warrants| 76,800 | | Series A Warrants| 3,000,000 | Note 11. Earnings (Loss) Per Share The basic and diluted net loss per share for the three months ended March 31, 2024, was $(0.67), an improvement from $(0.80) in the prior year, despite a similar net loss, due to an increase in weighted-average shares outstanding | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss per share, basic and diluted | $(0.67) | $(0.80) | | Weighted average shares | 52,742,725 | 43,925,565 | - As of March 31, 2024, 15,274,441 potential common shares were excluded from diluted EPS calculation as they were anti-dilutive, including stock options, RSUs, PBRSUs, and warrants[70] Note 12. Stock-based Compensation Total stock-based compensation expense decreased to $5.261 million for Q1 2024 from $5.963 million in Q1 2023. The company has $39.6 million in unrecognized RSU compensation expense, expected to be amortized over 2.90 years | Compensation Type | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :---------------- | :--------------------------------------------- | :--------------------------------------------- | | Cost of revenue | $102 | $330 | | R&D expenses | $3,989 | $4,410 | | G&A expenses | $907 | $1,119 | | S&M expenses | $263 | $104 | | Total | $5,261 | $5,963 | - Unrecognized RSU expense of $39.6 million as of March 31, 2024, to be recognized over a weighted-average period of 2.90 years[78] - 1,911,765 performance-based restricted stock units (PBRSUs) were outstanding as of March 31, 2024, with $1.3 million in unrecognized compensation expense[74][78] Note 13. Income Taxes Aeva recognized no income tax provision for the three months ended March 31, 2024 and 2023, due to historical operating losses and a full valuation allowance against net deferred tax assets - No federal or state income tax provision due to operating losses and a full valuation allowance[80] - Federal and state net operating loss carryforwards may be subject to limitations, but the company does not expect them to expire due to limitations as of December 31, 2022[81] Note 14. Commitments and Contingencies The company's weighted-average remaining lease term is 1.9 years, with total minimum lease payments of $6.860 million. Aeva is involved in ordinary course litigation, including a class action lawsuit against former directors of its predecessor, but neither Aeva nor its current directors are named defendants Operating Leases (March 31, 2024) | Metric | Value | | :----------------------------------- | :---------- | | Weighted-average remaining lease term| 1.9 years | | Weighted-average discount rate | 6.32% | | Operating lease cost (Q1 2024) | $1.0 million| | Total minimum lease payments | $6,860 thousand| - A putative class action lawsuit was filed on March 7, 2024, against former directors and officers of InterPrivate Acquisition Corp (IPV), Aeva's predecessor. Aeva and its current directors/officers are not named defendants[85] Note 15. Segment Information Aeva operates as a single operating segment, with its chief operating decision-makers evaluating financial information on a consolidated basis. Long-lived assets are primarily located in North America and Asia - The company operates as one operating segment, with financial information evaluated on a consolidated basis[88] Long-Lived Assets by Geographic Region (in thousands) | Region | March 31, 2024 | December 31, 2023 | | :------------ | :------------- | :---------------- | | North America | $8,580 | $8,675 | | Asia | $3,657 | $3,154 | | Others | $315 | $285 | | Total | $12,552 | $12,114 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Aeva's financial condition and results of operations, highlighting the company's vision for 4D LiDAR-on-chip technology, key factors affecting performance, and a detailed comparison of Q1 2024 and Q1 2023 financial results. It also discusses liquidity, capital resources, and critical accounting policies Overview Aeva aims to bring 4D LiDAR-on-chip perception technology to broad applications, leveraging its proprietary FMCW technology for superior velocity measurement, interference immunity, and long-range performance compared to traditional 3D LiDAR. The company is in a development stage, working with customers on prototypes and expanding manufacturing capacity - Aeva's vision is to bring 4D LiDAR-on-chip perception to broad applications, utilizing proprietary FMCW sensing technology for precise instant velocity measurements and long-range performance up to 500 meters[94][97] - Aeva's FMCW technology offers advantages over Time-of-Flight (ToF) based solutions by measuring instant velocity for every pixel, being free from interference, and enabling superior performance at scale[97][98] - The company is in a development stage, selling prototype products and engineering services to customers for R&D, and is expanding manufacturing capacity through third-party manufacturers[96] Key Factors Affecting Aeva's Operating Results Aeva's future performance is highly dependent on its ability to manage pricing, product costs, and margins, achieve economies of scale, and successfully commercialize LiDAR-based applications. Sales volumes and the progression of customer programs to production are critical for achieving profitability, with delays potentially necessitating additional capital - Future performance depends on competitive pricing, efficient production, and achieving economies of scale, with macroeconomic conditions and competition potentially impacting margins[99][100][101] - Operating results will fluctuate as customers progress from R&D to commercialization of LiDAR solutions, with market maturity expected to reduce these fluctuations[104] - Profitability hinges on progressing existing customer relationships to production, meeting volume and cost targets, and achieving gross margins. Delays in customer programs could impact revenue and necessitate further capital raises[105] Components of Results of Operations This section defines the key components of Aeva's financial statements, including revenue from LiDAR sensing systems and engineering services, cost of revenue, and operating expenses (R&D, G&A, S&M). It also covers interest income and other income/expense - Revenue consists of sales of perception solutions/sensing systems (typically prototypes for R&D) and non-recurring engineering services[107][108] - Cost of revenue includes direct material, direct labor, manufacturing overhead, inbound freight, depreciation, and direct costs for engineering services[109] - Operating expenses include personnel-related expenses, materials, software licenses, supplies, and third-party services for Research and Development; personnel-related expenses and professional fees for General and Administrative; and personnel-related expenses, advertising, and marketing for Selling and Marketing[110][111][112] - Interest income primarily consists of income earned on cash equivalents and marketable securities, varying with balances and interest rates[114] - Other income and expense primarily consist of changes in the fair value of private placement and Series A warrants, foreign currency transactions, and realized gains/losses on marketable securities[115] Results of Operations (Comparison of the Three Months Ended March 31, 2024 and 2023) Aeva's revenue increased by 84% year-over-year to $2.1 million, driven by higher prototype unit sales and engineering services. Despite this, the company reported a gross loss of $(1.392) million and a net loss of $(35.326) million, which remained relatively stable compared to the prior year. Operating expenses were flat, while interest income increased | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :--------- | :--------- | | Revenue | $2,107 | $1,148 | $959 | 84% | | Cost of revenue | $3,499 | $2,529 | $970 | 38% | | Gross loss | $(1,392) | $(1,381) | $(11) | 1% | | Research and development expenses | $25,012 | $25,454 | $(442) | (2)% | | General and administrative expenses | $8,411 | $7,833 | $578 | 7% | | Selling and marketing expenses | $2,529 | $2,598 | $(69) | (3)% | | Total operating expenses | $35,952 | $35,885 | $67 | 0% | | Operating loss | $(37,344) | $(37,266) | $(78) | 0% | | Interest income | $2,458 | $2,064 | $394 | 19% | | Other income (expense), net | $(439) | $28 | $(467) | (1669)% | | Net loss | $(35,326) | $(35,174) | $(152) | 0% | - Revenue increased primarily due to a $0.8 million increase in prototype unit sales and a $0.2 million increase in non-recurring engineering services, partially offset by a decrease in average selling price per unit[117] - Research and development expenses decreased by $0.4 million, primarily due to a $2.1 million decrease in research material expenses, partially offset by increases in payroll, service costs, and depreciation/amortization[119] - Other income decreased by $0.5 million primarily due to the change in the fair value of Series A warrant liability[123] Liquidity and Capital Resources Aeva had $189.3 million in cash, cash equivalents, and marketable securities as of March 31, 2024. The company expects this to be sufficient for at least 12 months, despite an accumulated deficit of $494.9 million and anticipated continued operating losses. Recent financing activities include a $20.6 million private placement and a $125 million Standby Equity Purchase Agreement - Current liquidity: $189.3 million in cash, cash equivalents, and marketable securities as of March 31, 2024[124] - Expects current liquidity to fund operations for at least 12 months, but will need to raise additional capital or draw on the Facility Agreement if sufficient revenue is not generated to cover operating expenses and capital expenditures[126][127] - Financing activities in November 2023 included $20.6 million net proceeds from a private placement of common stock and a Standby Equity Purchase Agreement for up to $125 million in preferred stock from Sylebra by November 2026, along with the issuance of 3,000,000 Series A Warrants[125] Cash Flow Summary (Three Months Ended March 31, 2024) | Cash Flow Activity | Amount (in thousands) | | :----------------------------- | :-------------------- | | Net cash used in operating activities | $(30,962) | | Net cash provided by investing activities | $22,036 | | Net cash used in financing activities | $(16) | Critical Accounting Policies and Estimates There were no significant changes to Aeva's critical accounting policies and estimates for the three months ended March 31, 2024 - No material changes to critical accounting policies and estimates during the period[136] Recent Accounting Pronouncements This section refers to Note 1 for details on recently adopted and recently issued accounting pronouncements not yet adopted - Refer to Note 1 for information on recent accounting pronouncements[137] Item 3. Quantitative and Qualitative Disclosures About Market Risk Aeva's primary market risk exposure is from fluctuations in interest rates, with no material change in exposure since the 2023 Form 10-K - The company's primary market risk exposure is from fluctuations in interest rates[139] - There has been no material change in market risk exposure since the 2023 Form 10-K[139] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that Aeva's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2024[140] - No material changes in internal control over financial reporting were identified during the quarter[141] - Management acknowledges that control systems provide reasonable, not absolute, assurance and have inherent limitations[142] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is provided in Note 14 of the condensed consolidated financial statements - Refer to Note 14 for details on legal proceedings[145] Item 1A. Risk Factors There have been no material changes to the company's risk factors since the 2023 Form 10-K - No material changes to risk factors since the 2023 Form 10-K[146] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds occurred during the period - No unregistered sales of equity securities or use of proceeds[147] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - No defaults upon senior securities[148] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable[149] Item 5. Other Information No Section 16 director or officer adopted, modified, or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2024 - No Section 16 director or officer adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024[150] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certificates of incorporation, by-laws, stock unit agreements, and certifications from executive officers - The exhibit list includes Second Amended and Restated Certificate of Incorporation, Amended and Restated By-laws, Performance-Based Restricted Stock Unit Agreement, and various certifications (31.1, 31.2, 32.1, 32.2)[152] Signatures Signatures The report was duly signed on May 8, 2024, by Soroush Salehian Dardashti, Chief Executive Officer, and Saurabh Sinha, Chief Financial Officer - Soroush Salehian Dardashti (CEO) and Saurabh Sinha (CFO) signed the report on May 8, 2024[155]