Strategic Focus and Development - Sarcos Technology and Robotics Corporation announced a strategic pivot to focus on the development of its AI/ML software platform, suspending commercialization efforts on subsea, aviation, and solar hardware products [104]. - The company expects to launch its commercial AI/ML software platform in the first half of 2024 and begin recognizing revenue from sales in the second half of 2024 [111]. - Sarcos' AI/ML software platform aims to reduce robotic training times and enhance the adaptability of industrial robots, potentially addressing a large market opportunity [103][104]. - The company has a significant patent portfolio and over 30 years of experience in robotic systems, which it leverages to develop its AI/ML software [105][114]. - The demand for AI/ML platforms is evolving, and the company acknowledges that market demand for its software products remains unproven [113]. Financial Performance - Revenue for the three months ended September 30, 2023, decreased by $2.8 million, or 61%, to $1.8 million from $4.7 million in the same period of 2022 [118]. - Product Development Contract Revenue fell by $3.4 million, or 77%, from $4.5 million in Q3 2022 to $1.0 million in Q3 2023, primarily due to the completion of certain contracts [119]. - Product Revenue increased by $0.6 million, or 337%, from $0.2 million in Q3 2022 to $0.8 million in Q3 2023, driven by the sale of two Guardian Sea Class systems [120]. - Total operating expenses for Q3 2023 were $32.6 million, a slight increase of $0.7 million, or 2%, compared to $31.9 million in Q3 2022 [121]. - General and administrative expenses decreased by $7.1 million, or 48%, from $14.6 million in Q3 2022 to $7.6 million in Q3 2023, mainly due to reduced stock-based compensation [124]. - For the nine months ended September 30, 2023, revenue decreased by $3.0 million, or 36%, to $5.4 million from $8.4 million in the same period of 2022 [131]. - Research and development expenses increased by $7.2 million, or 30%, from $23.9 million for the nine months ended September 30, 2022, to $31.1 million in 2023 [136]. - General and administrative expenses for the nine months ended September 30, 2023, decreased by $25.0 million, or 50%, to $25.5 million from $50.6 million in 2022 [137]. - Other income decreased by $8.2 million to $4.8 million for the nine months ended September 30, 2023, a 63% decline compared to the prior year, primarily due to a decrease in unrealized gains on private placement warrants [142]. - Interest income increased by 188% to $2.8 million in the nine months ended September 30, 2023, compared to $965,000 in the same period of 2022 [141]. Cost Management and Operational Changes - Sarcos plans to reduce costs through workforce reductions and consolidating operations to a single location in Salt Lake City, Utah, while shutting down its Pittsburgh facility [107]. - The majority of cash payments related to the workforce reductions announced in July 2023 are expected to be completed by the end of 2023, with further reductions from the November 2023 announcement expected to be completed by the end of Q1 2024 [112]. - Asset write-down and restructuring expenses for Q3 2023 amounted to $11.2 million, including $5.2 million related to inventory write-downs [127]. - Asset write-down and restructuring expenses for the nine months ended September 30, 2023, totaled $16.3 million, including a $9.6 million inventory write-down [140]. Liquidity and Financing - The company believes it has sufficient liquidity to operate into 2025 without needing additional capital, but may seek financing to bolster cash reserves [112]. - The company may seek additional financing to support working capital or acquisitions, which could lead to dilution of existing equity holders [148]. - Cash, cash equivalents, and marketable securities totaled $55.1 million as of September 30, 2023, sufficient to support operations for at least the next 12 months [145]. - Net cash used in operating activities increased by 35% to $60.1 million for the nine months ended September 30, 2023, primarily due to a $14.3 million increase in net loss [150]. - Net cash provided by investing activities increased by $209.8 million, driven by $61.4 million from maturities of marketable securities during the nine months ended September 30, 2023 [152]. - Net cash used in financing activities decreased by $7.0 million, mainly due to a reduction in funds used for share repurchases [153]. Backlog and Future Outlook - The company's backlog as of September 30, 2023, was $9.2 million, with $7.4 million funded and $1.8 million unfunded, while the total estimated contract value was $19.1 million [144]. - Geopolitical and macroeconomic factors, including inflation and international conflicts, could impact the demand for Sarcos' software platform and its operational costs [115]. - The company remains an "emerging growth company" and has elected to take advantage of the extended transition period for new accounting standards [155].
Sarcos Technology and Robotics (STRC) - 2023 Q3 - Quarterly Report