Welcome to the AIVA Third Quarter 2022 Earnings Call. At this time, all participants will be in a listen only mode. Later, we will conduct a question and answer session. I will now turn the call over to your host, Andrew Fung, Investor Relations. Mr.
Fung, you may begin.
Thank you, and welcome everyone to Avis' Q3 2022 earnings conference call. Joining on the call today are Suresh Salahyan, Ava's Co Founder and CEO and Saurabh Sidha, Ava's CFO. Ahead of this call, we issued our Q3 press release and presentation, which we will refer to today and can be found on our Investor Relations website at investors. Ava.com. Please note that on this call, we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
These statements reflect our views only as of today and should not be relied upon as representative of our These statements are subject to a variety of risks and uncertainties that could cause Actual results could differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our financial results, Please refer to our filings with the SEC, including our Form 10 Q for the quarter ended June 30, 2022. In addition, during today's call, we will discuss non GAAP financial measures, which we believe are useful as supplemental measures of Avis' performance. These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. The webcast replay of this call will be available on our company website under the Investor Relations link.
And with that, let me turn the call over to Sudesh.
Thank you, Andrew, and good afternoon, everyone. Over the past quarter, a major focus for us In ramping deployment of ARIES II, the world's first commercially available FMCW IR offering high performance and reliability. This is resulting in rapidly growing commercial momentum as more customers experience firsthand how the unique capabilities and scalability AIVA's 4 d LiDAR can enable next generation automation across automotive, industrial and beyond. I would like to highlight some of our key accomplishments in Q3, starting with Slide 5. First, we made meaningful progress in Bringing up our manufacturing and shift ARIES II to more than 25 customers across automotive, industrial and other applications.
Interest for AVOD's unique FMCW LiDAR continues to surprise to the upside and we are working diligently to further scale manufacturing. 2nd, we have significantly grown the number of engagements we are involved in and they are across an expanded list of applications, reflecting the unique flexibility of our technology that is attracting more inbound interest. Importantly, ARIES2's And with our integration on leading development platforms such as NVIDIA SIM and Intempora, more OEMs now have the ability to validate and implement A Bus differentiated capabilities. 3rd, we are on track with our industrial collaborations and continue to target launch in 2024. With Nikon, we signed a joint development agreement in the past quarter for our first high precision industrial products.
This important milestone solidifies the plan through production. Elsewhere, we are off to a strong start with our SIG AG collaboration and continue to pursue additional opportunities with industrial automation. 4th, we continue to Strategically built a leading team to bring AIVA 40 LIDAR to mass production. In particular, we are pleased to welcome 3 new leaders to AIVA's Board of Directors, We'll offer invaluable expertise in product commercialization, strategy and public company experience. In addition, we continued our expansion globally into Germany, India and Thailand with sales, development and manufacturing teams to support our growing commercial momentum.
And 5th, we further cemented our leadership in FMCW Technology. With more than 130 granted patents, We expanded our industry leading portfolio of FMCW Technology IP built on years of development and on road deployment that has resulted in our proprietary 40 LiDAR on chip solution. Turning now to Slide 7, I would like to provide more color on key business developments over the past quarter. Since announcing Ares II earlier this year, we have seen a sharp rise and interest in AIVO's FMCW technology. The unique combination of high performance, product maturity and scalability of our solution is a first for the industry and drawing inbounds from a broad range of customers looking to implement our 4 divider for passenger vehicles, commercial trucks, mobility and industrial automation.
A key priority this past quarter was bringing up manufacturing in order to support qualification with our partners and meet the growing demand from new customers. Commercializing a new product is not trivial and Aeo team made good progress in the 1st full quarter of Ares II deployments, enabling us to increase the production output by 300% and shift to more than 25 customers globally in the 3rd quarter. While we don't intend to provide an update every quarter, we plan to build on this as we continue to bring up manufacturing. Because our proprietary silicon photonics platform integrates all key optical elements of LiDAR sensing onto the chip module, It allows us to significantly simplify and further automate the manufacturing process. We also continue to work closely with our supply chain, including securing materials needed to support the planned growth and volume.
As recently announced, we continue our expansion globally And we have established a local team in Thailand that will enable us to work alongside our partner Fabrinet in manufacturing and LiDAR chip module. As such, we are on track to continue increasing our volumes quarter over quarter in Q4 and look forward to meeting more of the growing demand for our products. Now on to Slide 8. Ares II is growing our number of commercial engagements and importantly moving them forward to our production. Since announcing Ares II back in February, Eva has progressed to advance or are a few stages on multiple automotive and industrial programs.
In automotive, we continue to see a growing appreciation among OEMs for FMCW's fundamental perception advantages that are enabled with direct velocity measurements and how they can address many of the challenges affecting time of flight or 3 d LiDAR solutions. This is the case for passenger vehicles for ADAS all the way to autonomous driving for commercial trucks and mobility applications. As OEMs look to achieve more reliable performance, especially in corner cases across all levels of automation as well as the ability to increase automation over time. As such, OEMs have been eager to evaluate ABUS 40 wide ARP and our advancement to more RFQs is a testament to the OEM recognition of ABUS' unique ability to offer high performance and a scalable solution designed for automotive reliability. We expect decisions for some of the programs to be made in the coming months.
While we do not anticipate winning every opportunity, we believe we are well positioned to convert additional programs towards production. Let's turn to Slide 9. We are excited to be the 1st FMCW LiDAR integrated with NVIDIA DRIVE SIM and Intempora RTMaps, 2 leading autonomy software development tools that we believe will enable OEMs to accelerate development and adoption of FMCW LiDAR. Our customers utilize these platforms to simulate scenarios and validate performance of AVUS-forty LIDAR alongside other modalities as part of their multi sensor autonomous deck. And because some OEMs require compatibility with platforms such as Intempora for development, Our integration broadens ABA's reach, introducing additional OEMs to ABA's unique performance and capabilities that they can now directly implement into their vehicle stack.
Switching gears to our industrial progress on Slide 10, I'm happy to share that we have entered the next phase towards commercialization with Nikon. In Q3, we signed a joint development agreement with Nikon, a critical next step that defines the development and validation milestone for our first high precision industrial product through to the start of production in 2024. Within this, we are also on track to complete by the year end The development of our LiDAR on chip perception platform for industrial automation. Reflecting the performance flexibility of APO technology, We are leveraging our same lighter launches for automated driving, but with different software to achieve Micron level precision. To our knowledge, this level of precision is uniquely made possible by AVA FMCW Technology and enables us and Nikon To jointly bring to market a high precision product that is more accurate, yet smaller and lower cost than Mega C solutions.
Beyond the first product with Nikon, we continue to see opportunity to expand into additional applications to our high performance and small chip based Moving to Slide 11, Aeva's proprietary FMCW technology is the driving force behind our commercial traction, And we continue to extend our technology leadership with our granted patents now surpassing 130 globally and with over additional 135 patents pending. And this further solidifies our mode in the sensing industry. Our industry leading portfolio of FMCW IP reflects breakthrough innovation in numerous areas, including silicon photonics, algorithms, system design and 4 d perception. Our IP is how we are able to solve the challenges facing traditional FMCW approaches, Such as our ability to simultaneously deliver millions of points per second on a per beam basis at 500 meters of range. Together with the correct velocity measurements, this differentiated capability enables classification of objects and road hazards at long ranges with greater confidence, providing critical response time needed for the safe operation of automated vehicles.
It is also how we are able to introduce new levels of perception leveraging 4th dimension of velocity, such as our proprietary 40 perception and localization software. This capability provides real time 6 degrees of freedom vehicle motion estimation to enable accurate centimeter level vehicle positioning And navigation without additional sensors by costly high performance IMUs or less robust methods like visual FLAM, even in future deficient environments such as tunnels. This provides OEMs the ability to meet ASOS D redundancy Requirements for positioning solutions. Our technology is built on multiple generations of development and years of on road deployment. We believe this gives us a material lead over others who have attempted to develop FMCW technology or are at earlier stages of FMCW deployment and look forward to expanding our mode as we continue to innovate.
Let's now turn to slide 13, which summarizes the strong progress we have made on our key objectives for 2022. With 1 quarter remaining this year, we have completed the majority of the goals we laid out for 2022 and are focused on accomplishing the remaining. I would like to share a bit more on each one. First, on Ares II deployment and qualification with customers. We have made meaningful progress bringing up manufacturing, enabling us to deliver Ares II to more customers and work on qualification with existing strategic partners.
Looking ahead, we continue to scale up manufacturing and meet more of the growing demand for AVAR-forty LIDAR. 2nd, on converting 2 additional programs towards production. 1 of the 2 programs was met with SiC AG collaboration, and we are encouraged by the progress we're making on our advanced engagements towards an additional program towards production. 3rd, on accelerating the release of our first non automotive application. Our signed joint development agreement with Nikon is an important next step that moves us Forward towards the 2024 SOP.
And as previously announced, the SICK AG collaboration further solidified our expansion into industrial automation with SOP also targeting 2024. And 4th, on preparing the supply chain and processes for commercial deployments. We continue to work closely with our supply chain partners to continue increasing our production and scale up manufacturing. In addition, efforts also continue on track to our certification in automotive space ahead of production. With that, let me turn the call over to Saurabh, who will discuss the financials.
Thank you, Soroush, and good afternoon, everyone. Let's turn to Slide 15, which summarizes our Q3 financial results. Revenue in the Q3 was $1,400,000 driven by progress scaling of Ares II deployment. Non GAAP operating loss was $31,700,000 in the 3rd quarter, which was largely driven by R and D expenses for Gross cash use, which we define as operating cash flow less capital expenditure, was $27,200,000 in the 3rd quarter. Reflecting our ongoing discipline to capital allocation, We ended the Q3 with $350,800,000 in cash, cash equivalents and marketable securities.
And lastly, our weighted average shares outstanding in the 3rd quarter was 217,900,000. Overall, our Q3 results reflect the ongoing execution of our plan. We continue to be deliberate in our ramp of Ares II and believe we are on track to further scale manufacturing, And with that, I will hand the call back to Suraj for closing remarks.
Thank you, Saurabh. In summary, are making significant strides in commercializing ABA's unique FMCW technology already with our rapid pace of increased production. And the customer feedback leaves me even more excited and convinced of the opportunities ahead. I want to thank the Abo team for their tireless focus and delivering every day. I am confident that with the strong team we have assembled, the growing demand from our customers In our progress to meet the demand, we will continue to execute on our objectives.
To our customers and stakeholders, we appreciate our ongoing partnership and look forward to continuing the work to bring perception to everything. Thank you everyone for your time today. We will now open up the line for questions.
And you will be placed in the queue when you are And our first question comes from Colin Rusch from Oppenheimer. Please go ahead, Colin.
Thanks so much guys. It's great to see all of the customer engagement here. And I'm curious What sort of feedback you're getting in terms of the design of the product so far and any sort of changes that you might make to the form factor or any other elements from that process.
Sure. Yes. Thanks, Tony. Thanks for the question. So first of all, I think the feedback so far has been quite positive.
Actually, we're seeing interest from folks to implement a number of our sensors on their platforms so that they can leverage our unique capabilities, right, such as the anti velocity, which is important especially for detecting hazards before they become an issue, right, as well as some of the unique 4 d perception features such as virtual resolution, Right. And to your question about the form factor actually, so with ARIES II since we are dramatically reducing the size of the units since our ARIES I System, it's actually still the first time that I think the customers are realizing, oh, wow, the maturity and the size in addition to the performance for an FMCW technology, Which was never possible before is now possible with what AIVA is driving and delivering. So that other thing is I believe some of the feedback and the surprise, the positive side for what we have seen so far. And this is also again across automotive and ADAS, all the way through to high levels of automation As about some of the industrial applications, right? So that's what I can say.
And I think separately also, we are also talking to Some of the OEMs who initially actually had decided to go with some of the time of flight or 3 d solutions for some of the pilot programs, but now are looking for better capabilities in both performance, reliability as well as ability to deliver. So hopefully that answers your question.
Our next question comes from Antoine Jaivan from New Street Research. Please go ahead, Antoine.
Hi, Suresh. Hi, Surabha. Thanks for the question. Can you maybe comment a bit on the production ramp? It's really great to see that you increased production by 300% versus the end of last quarter.
And so, yes, I was wondering is everything playing out as planned? How do you think compared to your original expectations and both in terms of volume and costs. Thank you.
Yes, sure. Thanks for the question. So I think overall, actually, we are progressing As we planned on the shipments of the units, as I mentioned, the initial shipments really started at the end of Q2 and we started this ramp up processing in Q3. So overall, we are pleased with the ability to really ramp that up so far by the 300% over 300% that I mentioned At the beginning of the quarter, and at the same time, of course, we're nowhere near done, right? So we are continuing to make progress, ramping up that output With our supply chain and working closely with our manufacturing partners and the operations teams are really focused on driving all of that.
And at the same time, we're actively working on securing additional capacity to meet the growing demand that we have seen, and this is across automotive But also some of the stuff on the industrial stuff that is coming into picture more and more now. So that's overall, we feel Pleased and also confident with the progress we have made and continue to work on increasing that output quarter over quarter moving forward.
And our next question comes from Suji Desilva from ROTH Capital Partners. Please go ahead, Suji.
Hi, Suraj. Hi, Suraj. So congrats on the progress. So as Suraj, as these customers make decisions in the coming months, as you said, and Potentially select AIVA. Would you be able to clarify which customers have selected you?
How will that communication take place? And as you ramp up this production, the 300 Prashant, I presume there's some visibility into the units that would be expected from those wins. So how would you communicate That would be a pipeline or some metric that annually or some so forth that helps us understand how you have commitments to that production? Thanks.
Yes, sure Suji. So a couple of questions there. So overall, as you pointed out, yes, we are seeing an increased number of engagements. We're now in multiple At Cross Automotive, in late stages, including RFQ. So I think we are seeing an interest around Adopting our technology, what we're looking at here is programs that are generally from 2025 and onwards from SOP target.
And in terms of who these kind of some of these customers are to your question, Obviously, the customers working with here are amongst really the top players in their respective fields. This is both in automotive as well as in industrial. So and as I mentioned, you noted, we expect some of these decisions to happen in the coming months. And as we secure those wins, of course, we'll be communicating those and the details that to the extent that we can. And to your point about metrics, of course, we are validating a number of metrics as we progress forward and We'll decide on what makes the most sense to share with the broader community as well.
And our next question comes from Arvind Ramnani from Piper Sandler. Please go ahead, Arvind.
Hi. Thanks for taking my question. So, yes, I just had Question, certainly 2 years back, the competitive environment was quite active With the number of players and certainly kind of the chatter in the space has kind of died down over the last 6 months or so. Can you just give us and we're just kind of looking at it externally as investors, But if we were to sit into the rooms of decision makers who are buying LiDAR technology, Okay. Can you just give us a sense of how some of those conversations are involved as it pertains to the competitive environment?
Yes, Arvind. So I mean, overall, we're having a number of conversations across the Board with both OEMs and passenger commercial vehicles and mobility and some of the partnerships also that we've had that we have talked about for example with Nikon, SICK and others continue to make good progress and we hope to actually continue to strengthen those. But overall, the decisions are really around The discussion is really around our progress that we've made with the OEMs in terms of delivering ARIES II. And at this point, of course, the biggest factor has been around, hey, can you deliver a technology of such a performance? And our answer with Ariese so far has been yes.
And we are seeing that feedback from the customers. Of course, as I mentioned also To call in earlier, we are also having discussions with some of the folks that had made some of the initial decisions around Pilot launches with Thomas Flight Solutions to really upgrade for the next generation sensor technology. And I think this in general is really increasing the recognition for the industry for the fact that what is out there today is not quite sufficient and To achieve higher level of automation, to continue improving the safety and increase overall volumes across the vehicles, need to move on to next generation technologies such as FMCW. And with the progress we've made with a number of innovations, the patents And also now our ability to deliver on manufacturing, we're further establishing and solidifying our position as a leader in FMCW Technology and we continue to do that.
And our next question comes from Joe Moore from Morgan Stanley. Please go ahead, Joe.
Great. Thank you. I want to ask about, you mentioned in the slide deck, the LiDAR on chip platform for industrial automation Next quarter, can you talk about the applications for that? Is that for the existing couple of customers you've talked about in industrial? Or does that open up new opportunities for you?
Yes. Hey, thanks Joe for the question. So actually this is quite interesting. We see this LiDAR on chip technology platform As really a foundational perception platform that can go into many different applications in industrial and some of the others. So obviously, for example, this is the approach we're taking in our partnership with Nikon in which we have now solidified that path The milestones all the way through production, we are making good progress on that.
There, the application will be around inspection and And metrology for automotive manufacturing, aerospace manufacturing and some of the others. But the same core chip technology, with obviously tuned algorithms Those applications can achieve micron level precision, which is not really possible to our knowledge with any time of flight or 3 d solutions, right? And we continue to see also interest from folks around other applications, both around manufacturing, for example, Volume, electronics, things like that, as well as some of the players that are looking to deploy that in some of the other applications in the industrial field. So, at the end of this year, we're on track to finish that development of the Buy our Archer platform for the industrial applications and we expect to continue expect that completion to continue to drive Additional inbound and potential new businesses for us that we can use leverage to expand across the industrial fields.
And our next question comes from Sam Peterman from Craig Hallum Capital Group. Please go ahead, Sam.
Hi, guys. Thanks for taking my question. I wanted to ask on the Nikon JDA that you talked about. Can you describe in a little more detail just how this differs from, I guess kind of the previous announcement you made about your work with them and kind of why you took the path of JDA versus maybe other options that were available?
Yes, sure, Sam. I can take that one. So, obviously, yes, we announced an initial kind of collaboration framework with Nikon. With this joint development agreement, we have now Further, solidified our milestones all the way through the production, right? So we've continued to make good progress with Nikon Since the announcement of the initial collaboration, the JDA really defines important next steps for development milestones, including sample development, validation all the way through the production.
And that's the solidification that now we have done. This also gives us added confidence that we are tracking well to our target of the accelerated SOP from 2025 now to 2024 with this JV and the progress we're making. That's number 1. Number 2 is, with the LiDAR chip module development completion by the end of this year, Again, we expect to leverage that to both for the Niacom program and as well as expanding
And our next question comes from Kevin Garrigan from Westpark Capital. Please go ahead, Kevin.
Yes. Hey, good afternoon, guys. Just to ask One part of Suji's questions a different way. The 25 plus customers that you ship ARIES II to already, You mentioned broad applications, but are majority of customers kind of more industrial customers or is the customer base kind of split evenly between industrial and automotive?
Yes, that's a good question, Kevin. So overall, actually this is obviously this is the 25 customers we can need to ship beyond that, but This actually is more automotive rather than industrial because we had a strong backlog and demand from the automotive customers that we're now fulfilling and continue to fulfill. And but at the same time, as I said, there is an additional inbound interest From industrial applications that we will continue to also fulfill, now that some of the initial deliveries have been made. But initially, it was more automotive. That's right.