Good day. My name is Hillary, and I will be your conference facilitator. I would like to welcome everyone to AVA Technologies' Quarter 2021 Earnings Conference Call. Session. As a reminder, today's conference call is being recorded and simultaneously webcast.
I would now like to turn the call over to Andrew Fung, Director of Investor Relations. Andrew, Please go ahead.
Thank you, and welcome everyone to AIVA's Q1 2021 earnings conference call. Joining on the call today are Suraj Salahyan, AIVA's Co Founder and CEO and Saurabh Sinha, AIVA's CFO. 3rd quarter. Suraj will provide an overview of EVA as well as share developments over the quarter and objectives for 2021, followed by Saurabh, who will discuss the Q1 financial performance and 2021 financial outlook. Ahead of this call, we issued our Q1 press release and presentation, group, which we will refer to today and can be found on our Investor Relations website at investors.
Ava.ai. Earnings release. 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. Group. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.
3rd question. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. Presentation. 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, earnings call, including our Form 8 ks filed on March 18, 2021, and the risk factors found in the section entitled 3rd question and answer session. Please go ahead.
Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve.
Thank you, Steve.
Thank you, Steve. Thank you, Steve.
Thank you, Steve. Thank you, Steve.
Thank you, Steve. Thank you, Steve. Thank you, Steve. Good morning, everyone. 3rd conference call filed by Inter Private Acquisition Corp.
In addition, during today's call, we will discuss non GAAP financial measures, search, which we believe are useful as supplemental measures of AIVA's performance. These non GAAP measures should be considered in addition to and not as a substitute presentation. The webcast replay of this call will be available on our company website under the Investor Relations link. 3rd call. Thank you, Andrew, and good afternoon, everyone.
I am very excited for our first conference call. I would like to start out by thanking our employees for their outstanding contribution to the completion of the transaction. I would also like to thank our shareholders for their commitment and support. Now let
me highlight a few of our accomplishments in this quarter. As you
can see on Slide 5, it has been a strong start 3rd quarter and I would like to highlight a few key accomplishments achieved in the Q1. Presentation. As mentioned earlier, we successfully closed the business combination transaction with Henna Private Acquisition Corp. On March 12. With an upsized pipe, group.
We received over $500,000,000 in net proceeds that we expect to support AIVA through our planned start of production. We also continue to build on our commercial traction with the announcement of collaborations with a self driving trucking company, 2 3rd call. On technology, our team continued to push the boundaries of what's possible toward creating the best perception solution built on AIVA's breakthrough FMCW LiDAR technology. Our system is now capable of detecting objects 3rd quarter. At an industry leading 500 meter range, nearly doubling our previous distance by software updates on AIVA's existing hardware.
3rd quarter. This includes Tim Lewis as our VP of Supply, Manufacturing and Strategy, having most recently been Waymo's Chief Manufacturing and Global Supply Officer. In addition, as announced yesterday, we have established an advisory board 3rd consecutive quarter with the addition of veteran execs from Apple and Volkswagen who bring tremendous experience across automotive and consumer electronics. Now let's turn to Slide 7. As this is our inaugural earnings call, I think it would be helpful to provide a brief introduction to the and its unique Forti LiDAR technology that's driving our traction in the industry.
We are a sensing perception systems company with a singular vision to bring the next wave of perception for all devices. Today, mass adoption of LiDAR has been limited by the performance and scalability of available sensors. Since starting EVA about 4 years ago, we have developed a break 3rd 4th LIDAR on chip technology that we believe can achieve the Holy Grail of sensing for perception. The high performance yet scalable and affordable products built from the ground up at silicon chip scale. We believe this can unlock the massive market opportunities across automotive service in assisted driving and autonomous driving applications, as well as nonautomotive applications such as industrial automation and consumer electronics.
We have already earned the endorsement of a number of leaders in automotive and advanced technology, including Porsche SE, the majority shareholder of Volkswagen, 3rd quarter results. ZF, Denso, 2 Simple and as we announced today, an undisclosed large company among others. Now turning to Slide 8, I'd like to share a bit more about our approach to achieving AIVA's mission to bring the next wave of perception for all devices. While the goal is wide reaching, we believe it takes a singular focus on designing the best perception solutions to make this possible. It also requires something that is more than just slightly better than what's available today, a solution that 3rd question.
We've done this through learnings from years of real world testing on the road as well as a clear focus on simplifying 3rd quarter results. The resulting performance of our industry first 40 LIDAR has been validated by our partners who are leaders in the industry. More specifically, our approach to partnerships, it is not to win the customer count. And we believe strongly that working in tandem with highly capable and well positioned partners is critical to addressing issues that have historically challenged the industry differentiated 4 d LiDAR. As I mentioned, our core technology is a frequency modulated continuous wave or FMCW 4 d LIDAR that is integrated on a silicon photonics chip.
Unlike legacy 3 d LIDAR based on time of flight, 3rd quarter. AIVA's 4 d LiDAR transmits a continuous low power laser beam that is embedded with a unique signature in its 2 legacy time of flight lidars that are available. 1st, the ability to measure a 4th dimension 3rd, the capability to detect long ranges with 100 times higher sensitivity compared to legacy time of flight technology. And lastly, by integrating all of this onto a LiDAR chip module that is built on proven silicon photonics processes, we can provide a lower power system at mass scale with affordable costs. Now given the advantages of FMCW, why are other LiDAR companies still using time of flight?
Well, this is because we believe that all non AIVA approaches to FMCW have inherent challenges limiting their market adoption. But AIVA is not a traditional FMCW company. As you see on Slide 11, AIVA's unique approach Leveraging our unique photonics design and proprietary algorithms, AIVA's 40 daughter achieves millions of points per second per beam, simultaneously capable of long range and high resolution. 2nd, through our silicon chip integration, we are able to significantly lower total system component count, which drives a material relative cost advantage to other liners. In short, AIVA's differentiated approach to FMCW Now switching gears to our business update for this quarter, I am excited to share several important achievements.
First, on Slide 13, Ares, our LiDAR platform has been progressing ahead of schedule. And over the past quarter, we have made improvements in a number of key areas. 3rd. 1st, building on our unique FMCW technology, which enables high resolution without compromising any detection range, We have significantly improved our previous resolution and now can exceed over 3 50 points per square degree. 2nd, we continue to miniaturize our packaging towards production, which is now 30% smaller than our previous design.
And third, we completed the reliability and compliance testing that meet the necessary temperature, vibration and ingress protection requirements 3rd To our knowledge, AIVA remains the only company to have successfully developed and integrated this breakthrough LiDAR on chip technology. This ladder chip module is the final architecture that we plan to use for series production programs launching in 24. This already provides us with a clear path to our final cost structure and enables our final form factor. We have also removed all fiber optics from our system with this LiDAR chip generation, which is a game changer for reliability and durability of for any LiDAR system. And notably, this is already being produced at our production and test factory.
In addition, our chip module is fully integrated and we have completed key preliminary reliability testing for automotive. 3rd. Turning to the next slide, our LiDAR integrates all core components onto a chip module, which solves the challenges limiting the scalability of LiDARs to the market. 3rd question. Specifically, we replaced a fiber based laser with a semiconductor laser.
Doing so, we deliver a solution that is more reliable, lower cost and uses less power, through our system. And by integrating all core components onto a silicon chip platform, 3rd quarter. We dramatically simplified the assembly process. By removing the need for active alignment, we significantly reduced manual assembly and bring down the overall complexity cost for manufacturing. The end result is a high performing LIDAR system that is more reliable and truly scalable at an affordable cost using proven semiconductor manufacturing processes.
Turning to Slide 18, we continue to expand our technology and performance leadership. AIVA's unique 40 LiDAR now achieves beyond 500 meters of range, nearly doubling our previous performance by software updates on existing hardware. But perhaps most importantly, an industry first capability is to detect road drivable surface beyond 200 meters. This is a step change in capability from others highlighting Max Range, and we're not aware of other system providers Safety for automated driving, especially in applications where sufficient braking distance is safety critical and challenging to achieve with existing technologies, including highway driving. The leading detection range is only possible by utilizing AIVA's unique FMCW 40 LIDAR architecture that has superior sensitivity.
And by leveraging our intense velocity information, we can measure such objects with higher confidence than a legacy time of 5 LiDAR at 100 of meters away. Now moving to commercial developments on Slide 20. Today, we are excited to share a foundational agreement 3rd party companies to deploy a best in class LiDAR for their autonomous program. 3rd question. This is a landmark validation of AIVA's unique approach.
The decision by this company to utilize AIVA's 4 d LiDAR was driven by our proprietary FMCW capabilities that offer superior performance and our breakthroughs to integrate LiDAR onto a chip module at scale. Going forward, we will be working closely together through development and validation leading up to production. We are thrilled to collaborate together to bring AIVA's 4 d LiDAR to the market. Now turning to Slide 25, I would like to share priorities for 2021. This year, our focus is to continue investing in developing a world class perception solution and supporting our key customers on their development 3rd milestone to bring our fully LiDAR to market.
First, we are working to bring our ARIES system, our LiDAR platform, towards production Group, including our foundational agreement with the undisclosed company that we just announced. 3rd, we will accelerate our engagement in non automotive for the Q4, including industrial automation and beyond. We are seeing increased inbound interest in this area and we plan to do this by leveraging our already 3rd, we are laser focused on building a clear pathway 3rd quarter. Well ahead of our targeted 2024 launch, we already have agreements with our key suppliers and partners, 3rd quarter, including world class foundries and contract manufacturers. This year, we will continue to strengthen our supply chain, including securing capacity and defining our dual source strategy.
3rd. And with that, I will turn the call over to Saurabh to discuss the financials.
Thank you, Suraj. As Suraj mentioned, 3rd quarter. Our focus this year is on development and working closely with our key customers to create a best in class perfection system to ramp up through the year. This includes completing our B Sample development by year end, and we are already ahead of schedule 3rd generation LiDAR chip. Now let me provide some commentary on our Q1 financial results and 2021 outlook.
Turning to Slide 27, which highlights our Q1 financial results. Revenues in the first 3rd question related to product development. Gross cash used, which we define as operating cash flow less capital expenditure, 3rd quarter was $15,500,000 and primarily reflects the operating loss in the quarter. Turning to our balance sheet. Our cash, cash equivalents and marketable securities at the end of the Q1 was a strong 523,000,000 Finally, our shares outstanding at the end of the Q1 was 211,500,000.
3rd quarter. Now on the outlook for 2021. We are comfortable that our full year revenues will be consistent with what we discussed in the go public process. As we anticipated, our revenues this year will be second half weighted, in line with the timing of our customers' development milestone. We are increasingly confident in the progress we have made on our technology, Enabling us to accelerate our investments to bring forward our expansion beyond automotive.
Therefore, we expect gross cash use, 3rd, which is operating cash flow less capital expenditures to be approximately $85,000,000 to $95,000,000 in 2021. Group. Within this, we anticipate CapEx to be around $5,000,000 Lastly, I would like to provide short update on the warrant accounting matter related to SPACs. We are evaluating the impact of the SEC's statement on Accounting and Reporting Considerations for Warrants. We are omitting certain financial tables at this time until our evaluation is complete.
However, we do not expect the financial information presented here or in the press release to change. So in summary, we are well positioned financially with a strong balance sheet that will enable us to continue development of our innovative technology strategic opportunities and bring our 4 d LiDAR to the market. With that, I will turn it over to Suraj for closing remarks.
Thank you, Saurabh. I'd like to wrap up with three reasons why we're excited about AIVA for 2021 and beyond. First, 3rd quarter. We have developed a breakthrough 40 LIDAR on chip technology that we believe achieved the Holy Grail of sensing for perception, Group, a high performance yet scalable and low cost product built from the ground up at silicon chip scale. We believe this can effectively unlock the massive market opportunities across automotive and assisted driving and autonomous driving applications, as well as nonautomotive applications such search engine optimization and software solutions.
2nd, we have established world class strategic partnerships and earned the endorsement of the leaders in the industry. Through the call. We are working closely with our partners to build the world's best perception solution for mass scale. And third, our strong financial position will enable us
time, we will be conducting a question and answer session. For a bit before pressing the star key. Please note, we ask that you limit your questions to one initial question and one follow-up per person. One moment please while we poll for questions. Our first question is from Suji Desilva of ROTH Capital Partners.
Please state your question.
Hi, Suraj. Hi, Suraj. Congratulations on the merger in the first So I'm trying to get a handle on the customer Commentary you made, the foundation agreement, just to understand what that might mean and is this the first for AIVA and just color to that, The 2 customers you'd have momentum with, would that take the 4 strategic customers to 6? Is that the way to think about that?
Hi, Suji. Yes, sure. Happy to answer. First of all, this as I described earlier, We see it as a landmark deal with this large company and we have agreed with this company to deploy our Fortiliner for their autonomous program. To scale.
And in terms of the other 2 additional programs, as I mentioned, these are Excited by the traction that we have in the space and we'll be continuing to deliver on the progress we've made so far.
Okay. That's great progress I have to get here. And then on the manufacturing side, I feel
I have to ask,
the supply chain readiness you described some very positive commentary, but Just want to understand if there's any impact in your strategic efforts here based on recent industry wide tightness in semiconductors in the automotive supply chain, whether you had to Adjust to that or whether you have planned for some of the things you're already hearing? Any commentary there would be helpful.
Sure, absolutely. So first of all, currently, we do not see an impact And on supply shortage issues, in the near term, we are seeing longer lead times for certain silicon components, But we're not currently impacted and that's because of course they've already secured those critical components. And in long term, as I mentioned, we are focused on strengthening our supply chain, as I mentioned, which includes securing capacity for production and also working through our dual source strategy for specific components. So that these are all, of course, critical activities. And of course, We are doing all of this work well ahead of production and still very confident, especially with the addition of the executive team that we've had,
Group. Our next question is from Colin Rusch of Oppenheimer. Please state your question.
Thanks so much. Guys,
Sure. So first of all, I think this is one of the critical advantages that we have discussed before about FMCW and specifically AIVA's unique approach to FMCW. Obviously, because we are very highly Developing signal processing algorithms that are unique to us, we have the ability to continue improving the performance to be able to leverage the unique assets of software because of the MCW approach to make further improvements. So that's, I think, an important differentiation that we see for AIVA compared to kind of more hardware frozen devices.
Okay. That's helpful. And then just given the comments on some of these customers moving through the process, Previously, you had talked about 26 programs that you're tracking. But can you give us a sense of how many programs Track in and how they're progressing along their timeframes. Are they tracking in line with what you had expected?
I think There's an awful lot of, I think, learning and decision making happening going on within this program. So just want to get a sense from you guys in terms of overall number and how that can help
Sure, absolutely. So first, as also described earlier, Group. With the announcements that we have shared, we are seeing strong traction in the market. And obviously, our go public process is accelerating our momentum. And as evident also by the announcement we made today about the foundation agreement with the Invisco's customer.
And I think these are all kind of proof points and validation points to the advantages of our technology and the traction that we've been gaining even since the closure We are continuing to expand our engagements. We are seeing an increased transaction in the number of opportunities to pursue. And we will continue, as I mentioned, to focus on those partners that are highly capable, well positioned And really importantly, have the scale to help bring our products to the market. So and again, lastly, We are working to convert additional programs. And again, as I mentioned earlier, our goal this year is to convert 2 more programs In addition to what we have described so far, we have talked about so far, that we'll be working closely with for towards production.
All right.
Thanks so much.
Our next question is from Tristan Gerra of Baird. Please state your question.
Hi, and congratulations on your Q1 as a public company. Just circling back on the landmark design win that you announced today, could you give us a sense of the potential size of That's Wim, what it is to what you have announced previously and what's already signed? And then also, any
Sure. So first of all, Tristan, we've been working closely with this customer for some time. And as I said, we look forward to a close collaboration Between now and leading production, I'm first not going to provide exact timeline on the production year for obvious reasons, but maybe just give you a little bit of sense for the potential opportunity here. To our knowledge, we see the potential opportunity from this company and this deal to be amongst Group, amongst the largest in the industry based on what we know so far.
Okay. That's great feedback. And then it was good to hear you guys reiterate the revenue guidance for the year. And you've mentioned it's going to be 2nd half loaded. Obviously, it's going to take a pretty significant acceleration from The current quality revenue run rate, so could you maybe give us a bit of color as to when do you expect that Acceleration of your quarterly revenue, is that going to be second half or is it going to be earlier And what's going to be driving it?
Is it specific customer or Across all the engagements you have, any color as to what will drive the inflection point of this year and the level of confidence you have
Yes, Tristan, this is Suraj. That's a great question. So as I indicated in my prepared remarks, it is second half weighted in line with the customer's development time line, And we had fully anticipated that Q2, Q3, Q4, we see to increase activity
Group. Our next question is from James Michael of Piper Sandler. Please state your question.
Hi, there. This is James Michael. Just quick question from me. How should we think about incremental updates to your technology Affecting your production forecast. Are these kind of expected to drive share gains over time or are they just advancements consistent with your previous expectations for product innovation.
Yes, sure. That's a good question. So, first of all, as I mentioned, we've always believed in the advantages of FMCW Group as its differentiation and capability to especially for AIVA to bring that to the market. And We are highly encouraged by the developments that we have made so far with the 3rd generation about our chip ahead of schedule 1 quarter. We are going to continue making improvements On the existing hardware leveraging our IP that we have developed.
And in general, we see the technology advantages that We have made and continue to improve on to enable us to gain additional commercial momentum and we believe that this will help us with an increased market share
Yes, that's helpful. And then just kind of on the same point, right? With incremental updates to the technology, Do you expect greater pricing power over time, particularly as you get manufacturing ready? Where could that end state for pricing and margins for your chip land?
Yes. So, first, I think we do expect that as we improve our technology and products, Obviously, in terms of performance, as we continue to do so, especially in software and signal processing algorithms that we're able to provide I can create value to our customers. Of course, we're also going to be leveraging that to be able to Gain additional pricing power if we can. So that's going to be But generally speaking, I think overall, we see that the reduction And our overall system price is enabled by the fact that we are able to We continue to improve our ladder ship technology over time. And we are investing heavily in this field and we expect to make further improvements for the year.
Over the generations from the start of production leading into future years.
Group. Our next question is from Richard Shannon of Craig Hallum. Please state your question.
Well, Hi, guys. Thanks for taking my question here. Maybe a couple for me. First of all, on the foundational agreement, can you maybe describe the nature of the screen, especially relative to the other ones that you have In place here, are they more different types of or closer collaboration? And I assume that these are collaborations of which you're not
Sure. So I can't provide too much details obviously on the specifics of the programs, I can tell you, yes, we are working closely through development plans, including development and validation between now and leading up to production. I think this in general, as I mentioned, we do see it as a foundational agreement because it does
Okay. So you didn't mention anyone any competitors they may be working with. Are you certain that there's no one else involved at least with LiDAR of a similar capability as yours, long range, front facing or Any dynamics you can understand there and
share? Yes, we're not aware of any such things.
Okay. Excellent. Second question for me regarding your recent software update that gave you 500 meters of range here. We'd love to understand at least within the auto environment here what other dynamics of improvements you're looking to do here. Looks like range should be about as long as you need to do.
Resolution looks to be very strong. Where else are you going to inflect in terms of improvements here? Is this more of a cost And to what degree do those help you in the other markets here like you mentioned accelerating into the consumer and other non automotive areas?
Yes, sure. So we are singularly focused on creating the best in class perception solution that we can on the planet. Our focus is in both hardware and software, as I mentioned, and we actually see those tightly coupled together, right? For AIVA, having the monitor chip It's a big piece of the puzzle, but it's not the only piece. Without the algorithms and the unique IP we have there, the Value to the end customer is not as much.
So we see ourselves that's what we say, it was a perception systems company. So to that note, Group. We will continually improve on performance via the improvement software. Additionally, form factor Group's cost and hardware with continued investments in the business and a lot of our chip And as I mentioned, we are pretty thrilled about our ability to execute ahead of schedule on the LiDAR chip, especially because to our knowledge, AIVA is the only company that has been able to provide this LiDAR chip technology in this 3rd iteration, all integrated into this one platform without the use of any fibers. And this It gives us increased confidence to enable our final cost structure and final form factor already.
And that I think is an important milestone
presentation.
Ladies and gentlemen, we have reached the end of the question and answer session. 3rd conference call.