Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to the Cyngn Third Quarter 2022 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Carolyne Sohn, Investor Relations for Cyngn. Thank you, Carolyne.

begin. may You

Carolyne Sohn

available and this The operator, conclusion third Thank for available investors.cyngn.com. website XXXX you and the the section Thank website on will company's release hello, this also announcing of us. at is XX, September press months replay the the the Cyngn's joining call. Investors X of of you, A ended everyone. at broadcast results after quarter made for be

plan, everyone the started, components, that accompanying and provision get would terms Autonomy focus. the and Litigation the I of These regarding of as Securities to and other contains to expect, remind Reform safe Private include, conference continued the to we and any by ability its outlook XXXX. Enterprise our this such anticipate, the regarding Before sustainable growth forward-looking information believe, ability certain will changing like call respond and operational among expectations forward-looking meaning harbor herein company's environment EAS can and discussed statements to the statements identified things, Act statements of deliver strategy, long-term development value, revenues, within of sales Suite or future, be

an to which assurance be its you is included the in Exchange Securities actual encourage review no with reflected risks can before decision. that to Although are There of Information Cyngn we the those statements today, that differ company in will investing associated subject uncertainties expectations projected. in those dramatically prove those be to to that the Commission, with the results correct. the are believes cause investment expectations filings could statements forward-looking from making its about and reasonable as risks and

required of discuss Tal, assume not as highlights. events, third before Don information, recent first future to for or law. Chief result Financial opening of the company's months CEO, over follow in new any remarks any turn Lior On will Officer, does and XXXX. will a Chairman otherwise, floor review Please call, company market obligation of except the conditions by today's statements and changes quarter update as forward-looking I to with The for return financials go Lior. Alvarez, X that, will ahead. will few the a the floor to make a With questions. concluding operating the company's Lior

Lior Tal

brought Good everyone. the afternoon, Thank time our third announced the we go-to-market of and closer ahead a Carolyne. of scale company since our November, line you, commercialization that of software quarter public end us Toward several to major offering. ending further developments becoming

automation key first to of its a The development forklift. that The has DriveMod chosen as to partner was a the multiphase customer new apply electric Cyngn signing electric forklift with contract significant technology its and strategy. geared will commercialization. embarks vehicle partnership customer's to of as Cyngn's vehicle it autonomous the on electrification expansion be This that DriveMod towards is second marks its first platform

to understand global residential have to We're their Autonomy which our differentiated excited the business. for create to work customers' commercial properties. us the work dollar opportunity allow to materials operation, building propositions We closely to team apply in used this a a manufacturer, multimillion variety customer, and Suite with value of with will the Enterprise

and allow in key a forward proposition prove opportunities versus a AV customer fleets for larger we deployment represents fit. for autonomous unique us The to other future the Cyngn quickly differentiator putting to that major our to lower DriveMod ability retrofit a This development value cost. look scale more significant base production Kits and kits and Cyngn for we opportunity installation look to at manufacturer companies, technology with vehicle of to continues The heterogeneous customers vehicles a our Kit's and of was hands ease second operate U.S.-based to scale be of contracting additional customers. of will DriveMod leverage to stockchasers, as the the

manufacturer vehicle HEVI, announced vehicle In the with electric tracking of we HEVI. be industrial contract supplier under systems Greenland whereby a to exclusive October, of a Cyngn Holding will Corporation,

tracking heavy item vehicle purchased Our will device, a customers. installed be on their Infinitracker, to asset each value-added as

We data Cyngn are recognized extra triangulation This pleased value the using this be features of the validation key and industry incumbent contract to value battery for of tracking such EAS a cell offered as offer. life. as for tower brought by the Infinitracker, Infinitracker serves by location and by location long

on efficient circumstances, for went that we ago had difficult forth XXXX the major we Cyngn surpassed for set a of focus year execution macroeconomic Through we milestones when and some despite the public.

year, for the site EAS communicated investors customer type. at this with vehicle X a was Our original deploy single with IPO, during goal as to

executed multiple begun deployment multiple has DriveMod our expanding second at to type. have sites We vehicle data and

includes our review financial and results. our vehicle to closing forward we look over test In this personal do headquarters, facility. key few team addition, the development the expect XXXX out need coming achievements a to I'll having that, our we turn make progress it and to months. an recently recruiting operational are in said, we note. being to the have perspective, hires Don commercialization a with completed That We're year which of From Park get made expansion and And to close at scale. significant an on Menlo in autonomous to strong to excited us by we

Donald Alvarez

Thanks, make ended and Lior. highlights go covering I'll for R&D XXXX, quarter financial both quickly our September total which and months expenses, XX, the OpEx. over G&A up X third the

can well the with the details that which filing week. in XX-Q, earlier found Additional anticipate we this our as in SEC financial release press Form be was issued as today

R&D-related compared and costs travel to to incurred ended the third million of XXXX R&D to was quarter $X.X in allocated staff same the September primarily quarter Total for were and compensation, costs. in the year. increase for expenses a additional stock-based $X.X contractors, increase XX, The expenses million noncash operating prior related costs $X.X engineering million due occupancy

our further our as to We to in to R&D expect these to building team efforts. continue increase costs invest engineering we continue

G&A to as personnel services We support by noncash related incurred which public also status company. million increased expense was professional expenses for increased reported and our compensation, to $X.X largely stock-based additional a the the a a a net net to loss million the $X.X quarter as increased $X.X of in result million for total expenditures. loss of of third quarter year XXXX of prior compared

net loss quarter. XXXX. basis average on prior outstanding per XX, based XX.X the diluted approximately million per Net quarter a compares weighted average $X.XX X share outstanding a ended basic to shares weighted basic basis and and million for share based of was on on year September approximately $X.XX on a the diluted loss This in shares

XXXX, R&D ended period. were the in expenses compared This increase million operating and to $X.X million X $X.X total to $X.X million months September due $XX.X million the G&A in expense. a in expense was For a increase XX, prior year

loss based to Net the loss compared weighted a on outstanding $X.XX, outstanding, basis period. compared a the average $XX.X net diluted share million in XX, million share period. was approximately was approximately of million million per and $X.XX average on in per shares to prior Net loss loss XXXX year the basis of prior based basic $X.X on X for basic months ended net X XX.X weighted on September and year a diluted

million in $XX.X to XXXX. and sheet. at balance short-term end September We XXXX, of which at investments cash the XX, million had Turning the $XX to compares

XXXX, total to Lior. compared million equity million $XX.X now million $XX.X to million $XX.X and at like capital end XX, working the was stockholders' Our back at XXXX. was to Lior? turn to $XX.X December it of I'd compared over

Lior Tal

get via XXXX are Cyngn leveraging for partners we model year commercialization It far. Thank robotics-as-a-service scale us open customers, to space for and for to forward and setting a AV stage an look so been with has scale. the the and answers. it let's exciting reach beyond. a developments that, in be eventful to relationships you, our the closely work very are Don. these recurring revenue streams questions With and first operator, continuing hard and up we commercialization in Software-as-a-Service, and at expanding And working with announced our to recent to The unique position industrial autonomy technology. company We're

Operator

Instructions]. [Operator

Our is Litchfield Theodore Research. O'Neill first from question with

Theodore O'Neill

us in wondering, the give either and other if electric monetary recent that of production X any the they're aspects phases expect remarks contracts I was milestones the and And DriveMod we I XX cited forward beginning, terms to important you through months. market could these of in to related you HEVI. that the the could might going the to was what it next wondering of or or your production prepared with see over we here in look scaling contract aspects forklift at developments

Lior Tal

This is Lior.

time to also these to on technology the the manufacturing deploy one we customers explore so applicability throughout X our are in able line took Columbia DriveMod, facility EAS be them With been the Stockchasers, to were different of order the go-to-market taking end-to-end the topics. the of deployment. to sort to in hands of as several in to to And opportunity We partners and in applied it's them to focus separate actually regards applications. accelerated had stockchasers additions the the support the we XPL planning has far the So but original the and sites. the with

slightly the of The some to and initial to next beyond with larger these pilot. commercial at deployments contract look are moving those start

channel. a distribution on is application. distribution the that's the first stockchaser So through The HEVI of Infinitracker partner

the going Infinitracker to So HEVI to BXB your At vehicles over to to company. HEVI sales off as attached. time -- few the else be on selling working question? we're and with expand beginning, trackers customers, those the services to a their direct at going factory Anything the and that dozen channels additional are that's going it's come starts

Theodore O'Neill

forklift side? about the What

Lior Tal

Yes.

It's good question. Okay. a

that them time electric So second forward vehicle. and taking really commercial with of ahead something is was on to our that's the the a the plan stockchasers get in really sense move deployment to its before forklift

a a opportunity forklift R&D, engagement. NRE phase, This then project over company However, bring a new is more the for of will their This pilot the to And the and we've EAS improve presents specific needed we discuss project. the of for commercial continued that's operation, completed an very DriveMod purposes. successfully is up specifically us. applicability once vehicle the interesting

on moment, disclosure of these we at milestones, was going project. more go update status published. once start and back of going we're the that the So clearing to And to already keep to the we're what

Theodore O'Neill

significantly didn't any operating expense? the on really to had employees the it the there R&D grow in to call year, go sort under of much. which expense a there Is QX this to number was expected R&D before that that impression end up I and And been change the that in QX, going I the large Okay. increase is very significantly QX the of expectation number

Donald Alvarez

we they will of a that as did are that The QX Don. but dramatically increase, for good specific materialize anticipate QX. R&D is that definitely given might did positions is they up. QX into to QX, split had think our couple and this actually, between will probably QX, we market. going continue paying we that maybe had Theo, it's and thing thing a And increase not But I high will that that expenses even be not planned the and fairly as

Operator

Our next with Rommel Capital. from Aegis Dionisio is question

Rommel Dionisio

on. that tell the any of is early ease yet? labor pressure that a of touched we're Or layoffs -- the seen just any sort market of you've for too that the years? sector. labor Is in on to about just Sort in significant headlines here maybe pretty question that cost tech it seeing couple last R&D, big Don, you which Obviously, providing to

Lior Tal

to that and and it worked are especially have on of experienced robotics flood on people in So creates relevant that that us, candidates AI that are people have definitely developing self-driving. a companies

there's easier be what to floor compensation quarter until take X people and probably we change the need. selective hire structure. much However, candidate a we're in to already is it's compensation of a to and right a Immediately, really seeing going be or going and bigger ability

conservative the Don And as So other we're much as in said, that consider the not going like time. position think aware as already we to layoffs the of trying and we to take that, I to environment. a can we're starting We're of real benefits to some see be will later. to need companies course, is but impact

the revenues in customers critical then So commercial we rather grow seeing and bringing and slow the function as start and down really traction roles, grow. come we of recruiting

Rommel Dionisio

maybe just follow could. up, I And if Okay. a

this bit bringing success the there. on this off but the meaningful if obviously Lior, with you the company. you touched bat, the $X talk But the signs, some time your here, wonder just think comments, bringing opportunities X you the you've of customers mean, little to strong them forklift. I a product of them with over that alone with maybe ecosystem, there's initial opportunity the But getting -- others. had just a pretty evolution billion the more obviously, client that's about just could on I in could significant into also them and I once initial X some I very ecosystem. talk obviously, just if product right line customer, your building but with DriveMod wonder in and with they're about

Lior Tal

Okay.

over Let me to that. hand this who answer Ben, can

Ben Landen

you're Rommel, yes, There's vehicle-agnostic preached what we disclose to the early is can approach that's much But have. I that great exactly alluding a we so what only question. that about given have stages. the

of new of that strategy. it that So being are this we not been alluded to customer forklifts only what vehicles the automated vehicles and we to rollout vehicle though electric electric their first and most which is and have electric prominent wants preaching, their representative is And automate of fleet. in forklifts in an electrify the

about So ultimately see for customer for what it being our in for then a repeated the forklift. this does part that fruition vehicle their a the is substantial footprint we and first have vision grow being other bringing as really do across is we vehicle we electric fleet opportunity reason form vehicle that global that the impactful been sensibility touting it and which within of customer factors and that And fleet, long-term success to most the within growing a grows the really the that this a with de out the built a meaningful into selection vehicle is a the as gates from really see of way opposed technology, as different supplier. we've third that to second that vehicle facto vehicle, solution which automating with becomes Cyngn that automation that with

that as customer. successful, what first So is long with see step being, very meaningful larger we in we vehicles to a it continue really it rollout multiple is -- as be a meaningful into

Rommel Dionisio

And then, become can that a -- customer to become most just as well that to then you to with that many extent that following what does others? do up the extent as on barrier that, successfully entry

Ben Landen

mean for competitors? you our Do

Rommel Dionisio

right, Yes. The competitors, obviously. Right, exactly.

Ben Landen

operation, them, understand reduce, any customer's we've additional is for once our that expectation rolling a we costs marginal beyond That whereas we those process and are that come would would types to of reducing. vehicles try marginal already that out vehicles to incur the done our first and incurred new the are bid competitor for of -- automate costs vehicle that higher the in that

ability this that those the the competitors. becomes selection winning incrementally agnostic difficult capture us, more winning of most to next and and easier becomes that really more and easier to iteratively pitching by software-centric, and we a being that for the vehicle firsthand one means first seeing we're for which strategy on us vehicle our types and So difficult fruition side, the have been more trying of coming flip automate is different factors more software-defined to form vehicle vehicle being about getting and by

Operator

[Operator Instructions].

is from next [indiscernible]. Our question

Unidentified Analyst

to to on all, quarter. I'm have on your through really successful a you happy question is I see Infinitracker. congratulations in that The of following plan. regards First

who seems or have MVNOs right general, already et like sort providers to about primary doing in-house other own and you you're or So partnerships of their with providers Have you like reaching teams? cetera. -- some service now, HEVI, out sales sales perhaps it in maybe thought have

what a million, outsource that is and space could with RaaS million lot that you're well, very $X like maybe the like, sort and SaaS the million, first just generation? And SaaS difficult. I'm to then companies, maybe $X sales the revenue as of do SaaS accelerate $X of question doing broaden you to asking, all maybe that and

question. growth, So jump-start maybe I revenue think you got just to that my

Ben Landen

Yes. The simple answer is yes.

an lean we We traditional that team us doing value-add sales, leveraged sales on and familiarization of Infinitracker which cycle. go our and will, our sales ticket channels but EAS by product, to the Infinitracker. does earlier longer And through allow the to but distribution are extension in are BXB opportunities, a enough that a you onboarding for and target it beyond and whether larger tools price, revenues very efforts also combination with reach spend that other resellers if is much of be own than organic in grow introduction go is and order looking a of in-house, other different and channels,

So create engagement customer Infinitracker sort both onboarding in certainly revenue from and perspective. from try to of springboard a a does a that regard, and

Unidentified Analyst

should internationally. this, and very through just have space U.S. are and And not service going XX-year the go I have that industrial in in maybe I out with you fare providers reaching battery Verizon competitors. like think deal but out life, ask, you appreciate I there in -- doesn't your that them directly actually obviously like but you because -- mean, that. the against What deal I competitively to about specs, to I'm reached all

So what about that?

Ben Landen

the Again, telecoms partner answer most consideration. it's that meaningful our of providers for as simple in the one do Infinitracker. the is opportunities is see one We yes. Yes. And certainly

Operator

There are no at Lior time. turn this comments. back floor like over the Tal I to questions for closing would further to

Lior Tal

to Please us investors with all your you questions. today. for in with much. you welcome the visit witness us feel technology newly-renovated at any vehicle, you Silicon always you Valley free looking conversation Thank our in very the reach office where with time to additional teams Thank then. out We're and and to

Operator

This concludes today's conference.

lines Thank this at you time. disconnect participation. your may your for You

Cyngn (CYN) 9 Nov 222022 Q3 Earnings call transcript