Aeva Technologies, Inc. (AEVA) Earnings Call Transcript & Summary

Good Day. My name is Stephanie and I'll be your conference facilitator. I would like to welcome everyone to today's Aeva Technologies second quarter 2026 earnings conference call. [Operator Instructions] As a reminder, today's conference is being recorded and simultaneously webcast. I would like to now turn the call over to Andrew Fung, Senior Director of Investor Relations and Corporate Development. Andrew, please go ahead.

Thank you, and welcome everyone to Aeva's second quarter 2026 earnings conference call. Joining on the call today are Soroush Salehian, Aeva's Co-Founder and CEO, and Saurabh Sinha, Aeva's CFO. Ahead of this call, we issued our second quarter 2026 press release and presentation, which we will refer to today and can be found on our Investor Relations website at investors.aeva.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 views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For 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 most recent Form 10-Q and Form 10-K. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Aeva's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from GAAP results. A 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 Soroush.

Thanks, Andrew, and good afternoon, everyone. Q2 was another strong quarter at Aeva. We continue to build on our leadership position with more milestones delivered to our customers and partners and important expansion into new areas leveraging our same core technology developed in the last decade. In particular, we announced today our entrance into a very exciting new market beyond sensing applications that I will talk more about in a bit. Reflecting our commercial momentum, we achieved another strong revenue quarter with continued strong sensor shipments and NRE higher than the previous year. With demand for Aeva's technology continuing to grow, we are progressing on the targets we set this year to scale our manufacturing. And we are working on ramping across our supply chain from our CM partners to foundries and component suppliers to support higher volumes to meet demand. We also strengthened our balance sheet in June with a follow-on equity offering that brought our total available liquidity to over $300 million at the end of Q2. We believe this further differentiates and positions Aeva to support our current customers to commercial deployment and expand our commercial traction across the board. I would now like to highlight recent achievements and business developments. First, we are excited to announce the launch of the Aeva Optical Connectivity business, which is our expansion to a new market that leverages Aeva's high optical power source and silicon photonics technology to enable next-generation AI data centers. Aeva has spent the past decade developing and proving out our proprietary laser-based technology for the automotive and industrial applications. Because our technology is built on the same foundational technology used in the telecom industry, it uniquely positions Aeva to repurpose it without significant development to pursue the massive data center market opportunity as the major AI compute companies like NVIDIA, AMD, and hyperscalers, such as Amazon, Microsoft, Google, transition addition to optical connectivity, where we believe Aeva can provide differentiated solutions to achieve the increasing performance, power efficiency, and scalability requirements for AI data centers. Earlier this year, we published a paper detailing the industry-leading performance of Aeva's high-power optical source technology. Since then, we have moved quickly to meet growing interest from leaders in AI infrastructure in Aeva's capabilities. In just a few short months, we have been working with a number of AI chip companies and optical solution providers to hyperscalers to validate some of those capabilities, and the results so far have been very encouraging. We have been able to demonstrate how Aeva's technology can deliver across stringent key metrics that require high optical power, low noise, reliability, and power efficiency in a scalable solution to address the rapidly growing bandwidth and power demands of multiple next-generation AI data center architectures, including Near-Packaged Optics and Co-Packaged Optics, or CPO. And I am thrilled to share today that we have just signed a key joint development agreement with a leading provider of high-speed optical engines to integrate Aeva's technology into a near-packaged optic solution for a major hyperscaler with planned commercial deployments as soon as feasible, with the potential to start initial volumes in 2027 and ramping in 2028. This is a significant validation of the performance, maturity, and scalability of Aeva's technology, and we believe it will advance the business we are launching today, including our other ongoing engagements across the industry. The potential scale for this market is large, and we believe a deployment like with this deal, once qualified at the hyperscaler, has the potential to exceed multiple millions of units annually with revenues in the multiple hundreds of millions of dollars per year. To support the significant potential for optical connectivity, we plan to leverage Aeva's existing manufacturing and foundry supply chain for volume production. We've also established a dedicated team with Pradeep Srinivasan, Aeva's VP of Photonics, taking an expanded role as Senior VP of Optical Connectivity. Pradeep has been instrumental in developing and industrializing Aeva's silicon photonics IP, and together with the team will enable Aeva to accelerate the development, deployment, and adoption of optical connectivity. With our technology team and the growing commercial interest, we are very excited about the future of optical connectivity and plan to share more updates on this as we progress. Now, moving to automotive. We also made really good progress across our key automotive programs this past quarter. On Daimler Truck, we continue to scale shipments of production intent Atlas sensors to the OEM for their AV stack validation ahead of series production. Importantly, we have begun manufacturing at our fully automated assembly line at Jabil in North America, a major milestone towards Aeva's readiness and ability to scale manufacturing for automotive and others, including Daimler Truck's production program. In passenger vehicles, we've also progressed on milestones with the delivery of our Atlas Ultra systems and continued integration work for joint stack development with a top 10 European passenger OEM production program, as well as with NVIDIA on the DRIVE Hyperion platform. Our collaboration with Bendix has also progressed to a critical next stage. Bendix has selected to use Aeva's 4D LiDAR and perception software and integrate them into its next-generation ADAS series production system for key added safety functionality for trucks, such as collision mitigation across a broader range of scenarios and nighttime driving. Bendix is the leader in commercial vehicle ADAS. Its current Bendix Fusion, which is a vision and radar-based system, is the market-leading collision mitigation and active safety solution in North America. It is available on most of the 300,000 Class 8 trucks that are sold annually in North America alone. And with Bendix having the goal to make its next-generation ADAS system a standard feature for the flagship models of their major OEMs, names like PACCAR or International, this selection not only highlights how the industry continues to adopt LiDAR to improve performance, but it's also a strong validation of the manufacturability and the cost-effectiveness of Aeva's solutions in Level 2+ ADAS applications, where LiDAR has traditionally not penetrated yet. Now turning to factory automation, we reached an important milestone with another customer launch of Aeva product, our Eve sensor. This quarter, SICK AG, one of the largest industrial sensor providers globally, commercially launched its first industrial sensor using Aeva's Eve precision sensing system. This is part of our long-term strategic collaboration with SICK to leverage Aeva's advantages, such as immunity to ambient light and sensor-to-sensor interference, to deliver more precise and reliable measurements across a broader range of environments at scale. In addition to SICK, we continue to see strong interest for our precision technology from leaders in manufacturing and factory automation and are working towards converting these engagements to commercial awards in the near term. Separately, in defense, we continue to support Forterra's Autonomous Ground Vehicle, or AGV programs as they transition from time-of-flight to Aeva's 4D LiDAR for long-range and velocity detection, as well as for vehicle positioning and stealth operational capability in GPS-denied environments. This quarter, we also progressed on other opportunities with major defense companies and organizations beyond ground applications, including, for example, on aerial autonomy. We look forward to sharing more on these in the coming months. And last but not least, in smart infrastructure, we continue to see good traction with the recently introduced Aeva CityOS, our AI-powered platform for real-time intelligent traffic management. Following our first large-scale deployment in the Atlanta, Georgia area, the City of Fargo in North Dakota selected us to deploy CityOS to improve roadway safety and traffic management, leveraging 4D LiDAR's ability to operate in inclement weather such as snow, fog, and rain, and all lighting conditions. Aeva's ITS team is also active with other DOTs and municipalities, and we believe that our differentiated solution will continue to penetrate for additional deployments. So in summary, we achieved a lot this past quarter, and our differentiated technology and balance sheet positions us to further solidify a leadership position in the industry as we execute on our commercial momentum. Now, before I turn the call to Saurabh to walk through our Q2 financial results, I wanted to say a few words on the CFO transition we announced today. Saurabh, who joined Aeva 6 years ago as our CFO, will be moving on in September to pursue a new opportunity outside the sensing industry. I want to personally thank him for his many contributions to Aeva, including his role in helping to take the company from early public stage to where we are today. And we wish him all the best on his next role. We have already initiated a search for a permanent successor, which will be announced separately once complete. In the interim, Rupesh Maheshwari, our VP Corporate Controller, will step in as interim CFO. Rupesh brings more than 20 years of accounting and finance leadership experience at large and growing technology companies and will work alongside Saurabh to ensure a successful and seamless transition. With that, let me now turn the call over to Saurabh.

Thank you, Soroush, for your kind words, and good afternoon, everyone. Now on to Aeva's Q2 results. As demand for our unique technology continues to grow, Aeva's financials also reflect the building momentum of the business, our expansion to an exciting new market opportunity, and the continued financial discipline as we execute on our plan. Revenue was $6.1 million in Q2, driven by continued strong product shipments and contribution from NRE as we delivered sensors and achieved milestones with a growing group of customers. Non-GAAP operating loss was $26 million this quarter, which is close to prior year levels and reflects our target to maintain operating expenses at similar levels to up slightly year-over-year, while continuing to scale the business. Q2 gross cash use, which we define as operating cash flow less capital expenditure, was $31.4 million. In June, we raised gross proceeds of $115 million in a follow-on equity offering. This brought our total available liquidity at the end of Q2 to $302.9 million. With this liquidity position and our differentiated technology, we believe Aeva is uniquely positioned in the industry to continue building our momentum, including into exciting new markets such as optical connectivity, and meet more of the growing demand for Aeva's technology. And finally, as this will be my last earnings call at Aeva, I wanted to say that it has truly been an honor to serve as Aeva's CFO over the past 6 years. I am very proud of what we have built as a team, and I look forward to following the growing momentum and continued success of the company. Let me now turn it back to Soroush for his closing remarks.

Thank you, Saurabh. In closing, I'd like to thank the Aeva team for delivering on our key achievements in Q2. Aeva's unified perception platform continues to gain the trust of a growing list of leaders across multiple markets and our ability to launch optical connectivity and realize commercial traction so quickly is another indication of the scalability of our technology and the execution of our team. As we continue to expand, we remain laser-focused on the objectives we set out at the beginning of this year: achieve milestones on existing programs while adding new wins, scaling manufacturing to support increasing demand, and maintaining financial discipline as we grow. We have made strong progress on the first half of the year and are well-positioned to deliver on these objectives in 2026. And with that, let's now turn to Q&A.

[Operator Instructions] And we'll take our first question from Colin Rusch with Oppenheimer & Company.

Saurabh, congratulations on the transition. Guys, can you talk about with this development agreement, what the key technical hurdles are that you're going to be addressing here over the next 12 to 18 months to really get ready for commercial ramp?

Yes, Colin, this is Soroush. Happy to answer that. So obviously, this is, you know, I would say a major customer win for us here and, you know, rapid progress. I would call it lightning speed in the past few months for us to get to here. So I think the key focus has been for us first showing that we have the capability and working and validating that with the actual end customers, including the chip companies as well as hyperscalers that I mentioned on the call. And we have been engaged with the key players in this period as well. So key for us is we see a massive opportunity using the same core technology in terms of what we call high-power optical sources, using our laser-based solutions, as well as our silicon photonics technology, but we have spent the past 10 years, past decade developing and really proving it out for automotive, industrial, and those applications. So now we're leveraging this to launch this new business of optical connectivity for an integration of the solution into the hyperscaler and data center environment. And key focus for us is, you know, we've seen the feedback really very encouraging because the validation is there. We have a ton of data on reliability in field testing. And importantly, we have a different approach, and I can get into this a little bit more later, but the approach allows us to effectively provide and meet the very strict requirements, providing high optical power, low noise, reliability, efficiency, and importantly, scalability to really meet what needs to be done. So the key focus, what I'm trying to get to is, the technology is proven. Obviously, we have to do some development to make sure, for example, with this customer and this joint development, that the solution and our high-power sources and photonic solution integrate properly, so some joint development integration work together on that. And we're doing that as fast as possible because the hyperscaler wants to deploy this immediately, right? And with that, we go into the qualification, and once qualified, then this is going to go into scale. And the timing here, I mean, I mentioned on the call briefly, is in the next number of months, next few months here, we're doing these activities, this joint integration, then we'll do the qualification. But the goal and what the hyperscaler wants to do is as early as second half next year, '27, to start the initial deployments and then from there scale up into production for '28. So that's kind of the short answer. And the potential obviously here is massive because this is a very top 3 or 4 hyperscaler with millions of millions units that they're deploying.

And can I just pick up on that last comment there? You know, certainly, that volume of units is substantially more than you would have been able to produce in your other end markets. And I'm just curious about the potential impact on cost structure for you guys in terms of being able to reduce cost and pass that on or drive market share in some of your other applications, and the capacity of your partners to help you scale up to those volumes.

Yes, absolutely. I think this is a crucial point, right? Because what we have done with the product here is focus on solutions at the chip level that are very cost-effective. As a matter of fact, when you look at kind of what's out there, a lot of the focus has so far been on using -- investing heavily in the laser sources to achieve high power. And without going into too much of the technical details, to do that, there are certain trade-offs you have to make. The size of the dies gets bigger, we need to align multiple of these to get a number of wavelengths or a lot of power out. You know, these things get larger, more alignment is needed. All this impacts at the end of the day the yields, which hits the cost and as well as the repeatable scalability of the solution. Our approach is quite different. That allows us in a way to have smaller size dies and ability to actually provide high-power optical waves without having to have as many, let's say, chips for the solution. And we see that, that allows for much higher yield, much higher repeatability, and reliability as well. So that's, I think, one of the key differentiations for us. Obviously, as we go into millions, the cost structure already set -- we have existing foundries. That's where our focus is next, is on the foundries, on manufacturing partners to scale the volume. And these foundries already are very capable. And we have secured some of the capacity we already need to deploy in the market and are working to increase that given this massive pull in potential with this new deal that we have. So that's going to be the focus. And absolutely, costs already are at a very competitive way, given what I mentioned. But we, of course, are going to be using that economy of scale to also drive down the cost and really help with the next generation of sensing side as well for all of our other products as well.

[Operator Instructions] Our next question will come from Matthew Paciulli with Canaccord Genuity.

Congrats again on a great quarter and best of luck, Saurabh. Maybe just to continue on to Colin's question. Could you just give us a little detail around, you know, what you expect the revenue model to be for the optical connectivity business? How should we think about it from an ASP perspective and some details around that would be appreciated.

Yes, I'm happy to answer that. So at a high level, I would say I mentioned on the call, obviously, we just signed this deal and we were very excited about it. And the key focus here is we see the potential for ramp-up starting in '27, you know, the back half, second half of '27, and then ramping into '28. So I mentioned a little bit on the call, but at a high level, the way we see this, the volume forecast from the hyperscaler is quite massive, right? And, you know, in a short answer, I think whatever supply that we can provide, I think we have an opportunity to sell it. That's what I would say. But what that means is the expectation is this ramping, you know, from the start into '28 with a minimum millions of units that go into production. And we're talking about multiple millions of units. And that would result, translate into multiple hundreds of millions of dollars of revenue. Both of these figures are annually. So multiple millions of units annually and multiple hundreds of millions of dollars annually revenue-wise, opportunity-wise for us. So that's why it's a massive opportunity. I think the key for us is being able to do that without a ton of significant revenue developments or reconfiguration is where we see the ROI as being quite interesting for the company and why we're launching this new business. So that also should give you a rough sense, obviously, on the ASPs, but that's where I would stop in terms of the numbers.

Great. And then maybe just to switch gears, you know, you've made a lot of progress with Bendix. If you could just give us a little more color around, you know, what that program will look like, the content per vehicle, what the ASPs are, to the extent that you can share, I would appreciate that.

Yes, sure. So you're right. I mean, I think the team has been firing on multiple cylinders. I think automotive is progressing really well as well. Not only are we executing our existing programs, trucking, Daimler Truck, top 10 European passenger OEM, but also we are making additional traction with a new opportunity. So Bendix is the market leader for commercial vehicle ADAS technology, right? And we have been working together for some time. We have now advanced into a critical next phase, which effectively they have selected us for leveraging our 4D LiDAR to provide new functionality for Level 2+ ADAS on commercial vehicles. These functionalities will specifically are aimed to enable new types of emergency braking, like passenger emergency braking or nighttime driving and as such. So just better functionality for the end customer. And Bendix is part of a large Tier 1, and it's a market leader in North America for ADAS solutions. There's about 300,000 Class 8 trucks, and with their Bendix Fusion system, which today so far has been vision and radar-based, they have a majority market share on that, and a lot of their customers already use their product on their flagship vehicle models as standard. Any other customers are the likes of PACCAR, Navistar, International, and all that, where they are shipping in volume already for many, many years. So there, I think the opportunity for us is a significant one. It uses the same exact sensing product, [ Atlas 4D LiDAR ] for trucking with Daimler. We're going to be using the same exact automated line in Jabil and just using that capacity and economy of scale to then ship that product in there. And from obviously content per vehicle, I would say this is, think of it as it's somewhere similar between -- It's an ADAS product between a passenger to a commercial vehicle product, so it's not going to be thousands of dollars, but it's also not very, very small. So part of that is because we're helping to augment the system and with the aim to actually replace, not just, you know, add a new sensor, but also replace other modalities between radar and camera. So that's kind of what we see. And I think Bendix, just so you know, also is targeting to make this as a standard feature for the flagship OEMs in terms of the ADAS functionality for the next solution.

We'll take our next question from Joe Moore with Morgan Stanley.