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QuantumScape(QS) - 2024 Q2 - Earnings Call Transcript
QSQuantumScape(QS)2024-07-24 22:46
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Financial Data and Key Metrics Changes - The company reported capital expenditures of 18.9millioninQ2,primarilyforequipmentpurchasesrelatedtoQSE−5prototypeproductionandtheCobraprocess[24]−GAAPoperatingexpenseswere18.9 million in Q2, primarily for equipment purchases related to QSE-5 prototype production and the Cobra process [24] - GAAP operating expenses were 134.5 million, with a GAAP net loss of 123million,andanadjustedEBITDAlossof123 million, and an adjusted EBITDA loss of 72.5 million for the quarter [25] - The company ended the quarter with 938millioninliquidity,projectingacashrunwayextensioninto2028,an18−monthincreasefrompreviousguidance[26]BusinessLineDataandKeyMetricsChanges−ThelicensingagreementwithPowerCoallowsforaninitialproductionvolumeof40gigawatthoursperyear,withanoptiontoexpandto80gigawatthours,sufficientforapproximately1millionvehiclesannually[17]−ThecompanyhasshippedAlpha2prototypecellstomultiplecustomersintheautomotiveandconsumerelectronicssectors,indicatingrobustcustomerengagement[20]MarketDataandKeyMetricsChanges−ThecollaborationwithPowerCoisexpectedtoleveragetheinvestmentsmadebyautomotiveOEMs,particularlytheVolkswagenGroup,toindustrializethecompany′sbatterytechnology[6]−Thecompanyseesasignificantmarketopportunityinthenext−generationbatterysector,potentiallyworthhundredsofbillionsofdollarsannually[28]CompanyStrategyandDevelopmentDirection−Thelicensingmodelisviewedasacapital−efficientpathtomarket,allowingthecompanytofocusoninnovationwhileutilizingPowerCo′smanufacturingcapabilities[19]−Thecompanyaimstodevelopaglobalmanufacturingecosystemforitssolid−statelithium−metalbatterytechnology,withthePowerCocollaborationservingasatemplateforfuturedeals[30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedexcitementaboutthecollaborationwithPowerCo,viewingitasacriticalstepinrevolutionizingenergystorageandcreatingshareholdervalue[7]−ThecompanyacknowledgesthatsignificantworkremainstoachieveitsambitionsbutisoptimisticaboutthepotentialofitstechnologyintheEVmarket[7]OtherImportantInformation−Thecompanyhasmadeprogressinsafetytesting,demonstratingthermalstabilityofitsprototypebatterycellsupto300degreescentigrade,whichcouldopennewmarkets[22]−Thelicensingagreementincludesa938 million in liquidity, projecting a cash runway extension into 2028, an 18-month increase from previous guidance [26] Business Line Data and Key Metrics Changes - The licensing agreement with PowerCo allows for an initial production volume of 40 gigawatt hours per year, with an option to expand to 80 gigawatt hours, sufficient for approximately 1 million vehicles annually [17] - The company has shipped Alpha2 prototype cells to multiple customers in the automotive and consumer electronics sectors, indicating robust customer engagement [20] Market Data and Key Metrics Changes - The collaboration with PowerCo is expected to leverage the investments made by automotive OEMs, particularly the Volkswagen Group, to industrialize the company's battery technology [6] - The company sees a significant market opportunity in the next-generation battery sector, potentially worth hundreds of billions of dollars annually [28] Company Strategy and Development Direction - The licensing model is viewed as a capital-efficient path to market, allowing the company to focus on innovation while utilizing PowerCo's manufacturing capabilities [19] - The company aims to develop a global manufacturing ecosystem for its solid-state lithium-metal battery technology, with the PowerCo collaboration serving as a template for future deals [30] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the collaboration with PowerCo, viewing it as a critical step in revolutionizing energy storage and creating shareholder value [7] - The company acknowledges that significant work remains to achieve its ambitions but is optimistic about the potential of its technology in the EV market [7] Other Important Information - The company has made progress in safety testing, demonstrating thermal stability of its prototype battery cells up to 300 degrees centigrade, which could open new markets [22] - The licensing agreement includes a 130 million prepayment of royalties contingent upon satisfactory technical progress, which will contribute to the company's cash runway [17][67] Q&A Session Summary Question: Why is the PowerCo deal significant for QuantumScape? - The deal demonstrates the value created for customers and shareholders, allows rapid scaling of technology, is non-exclusive for future deals, and represents an efficient resource allocation [31] Question: How does this agreement benefit investors compared to the previous joint venture? - The capital-light approach frees up previously earmarked funds and reduces expected costs for industrializing technology [32] Question: What is the timeline for the partnership and commercialization? - The timeline for B-sample production and other goals remains unchanged, with immediate collaboration work beginning [38][48] Question: How will the joint collaboration team operate? - A joint scale-up team of around 150 experts will begin collaboration activities, transitioning to a PowerCo facility as production ramps up [45] Question: Will more deals like this follow? - The company expects significant interest in its technology but will be strategic in selecting future partners [50] Question: Can you provide details on the monetization of the PowerCo agreement? - Specific details on the royalty structure are outlined in the contract, but the company will not disclose further details [53] Question: How does the $130 million royalty prepayment affect cash runway? - The prepayment is contingent on technical progress and is factored into the cash runway forecast [56][67] Question: Are there discussions with eVTOL companies? - The company is in conversations with eVTOL companies, but its primary focus remains on the automotive sector [75]