Financial Performance - Revenue for the three months ended June 30, 2023, decreased by $1.8 million, or 58%, to $1.3 million compared to $3.0 million for the same period in 2022 [120]. - For the six months ended June 30, 2023, total revenue decreased by $0.2 million, or 6%, to $3.6 million compared to $3.8 million for the same period in 2022 [132]. - Product development contract revenue fell by $1.7 million, or 57%, from $3.0 million in Q2 2022 to $1.3 million in Q2 2023, primarily due to the completion of certain contracts [121]. - Other income decreased by $3.0 million, or 69%, for the three months ended June 30, 2023, primarily due to a decrease in unrealized gains on private placement warrants [131]. - Other income decreased by $7.7 million, totaling $3.0 million in the first half of 2023 compared to $10.7 million in the prior year, primarily due to a decrease in unrealized gains on private placement warrants [144]. Expenses - Research and development expenses increased by $4.1 million, or 55%, from $7.6 million in Q2 2022 to $11.7 million in Q2 2023, driven by increased headcount and labor costs [125]. - General and administrative expenses decreased by $9.9 million, or 55%, from $18.1 million in Q2 2022 to $8.3 million in Q2 2023, mainly due to reduced stock-based compensation [126]. - Sales and marketing expenses rose by $1.8 million, or 71%, from $2.6 million in Q2 2022 to $4.4 million in Q2 2023, attributed to increased professional service fees and promotional expenses [127]. - Total operating expenses for the three months ended June 30, 2023, were $31.2 million, a slight decrease of $0.8 million, or 2%, from $32.0 million in Q2 2022 [123]. - Research and development expenses for the six months ended June 30, 2023, increased by $7.7 million, or 57%, to $21.1 million compared to $13.5 million in the same period of 2022 [138]. - General and administrative expenses for the six months ended June 30, 2023, decreased by $18.0 million, or 50%, to $18.0 million compared to $35.9 million in the same period of 2022 [139]. - Sales and marketing expenses increased by $3.4 million, or 70%, from $4.8 million in the first half of 2022 to $8.2 million in the first half of 2023 [140]. - Intangible amortization expense rose by $1.1 million, from $0.6 million in the first half of 2022 to $1.6 million in the first half of 2023, due to the RE2 acquisition [141]. - Asset write-down and restructuring expenses totaled $5.1 million in the first half of 2023, including a $4.4 million inventory write-down [142]. Restructuring and Future Outlook - The company reported a restructuring charge of $5.1 million for the three and six months ended June 30, 2023, related to inventory and fixed asset write-downs [102]. - An additional restructuring expense of approximately $6.0 million is anticipated during Q3 2023, including $1.5 million in cash severance and benefit payments [102]. - The company expects a significant decrease in research and development, general and administrative, and sales and marketing expenses in the latter half of 2023 [103]. - The company expects to need additional capital before becoming cash flow positive, which is not anticipated until at least 2025 [149]. Capital and Cash Flow - The company has sufficient capital to fund operations for at least the next 12 months without seeking additional capital, but expects to need additional capital before becoming cash flow positive, which is not anticipated until at least 2025 [112]. - As of June 30, 2023, the company had $75.1 million in cash, cash equivalents, and marketable securities, expected to support operations for at least the next 12 months [146]. - Net cash used in operating activities increased by $12.1 million to $40.0 million in the first half of 2023, primarily due to a $7.8 million increase in net loss [151]. - Net cash provided by investing activities increased by $140.3 million, mainly due to $31.1 million from maturities of marketable securities [153]. - Net cash used in financing activities decreased by $6.0 million, primarily due to a reduction in funds used for share repurchases [154]. Strategic Focus - The company plans to offer its commercial AI autonomy software through a software-as-a-service (SaaS) revenue model [104]. - The company is focusing on products with the most potential for near-term revenue growth, including the Guardian Sea Class system and certain aviation and solar solutions [101]. - The company has entered into an agreement with a third-party contract manufacturer but does not anticipate high-volume production until after 2023 [115]. - The company has experienced disruptions in its supply chain due to the COVID-19 pandemic, which may continue to affect its operations [107]. - The company believes that its foundational technology and extensive patent portfolio are key competitive strengths as it continues to develop and commercialize its products [100]. Acquisition - The company acquired RE2, Inc. on April 25, 2022, and the results discussed include RE2's activity from the acquisition date through June 30, 2023 [113]. Company Status - The company remains an emerging growth company and has elected to take advantage of the extended transition period for new accounting standards [156].
Sarcos Technology and Robotics (STRC) - 2023 Q2 - Quarterly Report