Greetings, and welcome to Joby Aviation’s Second Quarter 2023 Conference Call and Webcast. At this time, all participants are in listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Teresa Thuruthiyil.

Thank you, and thanks, everyone, for joining us today for a discussion of Joby Aviation’s second quarter 2023 financial results. My name is Teresa Thuruthiyil, and I'm Joby's Head of Investor Relations. On the call today, we have JoeBen Bevirt, Founder and Chief Executive Officer; Paul Sciarra, Executive Chairman; Didier Papadopoulos, Head of Aircraft OEM, and Matt Field, Chief Financial Officer. After management's prepared remarks, we will open up the call for questions. Please note that our discussion today will include statements regarding future events and financial performance, as well as statements of belief, expectation and intent. These forward-looking statements are based on management's current expectations, and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a more detailed discussion of these risks and uncertainties, please refer to our filings with the SEC and the Safe Harbor disclaimer contained in today's Shareholder Letter. The forward-looking statements included in this call are made only as of the date of this call, and the company does not assume any obligation to update or revise them. Also, during the call, we will refer both to GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our Q2 2023 Shareholder Letter, which you can find on our Investor Relations website along with the replay of this call. And with all of that said, I'll now turn the call over to JoeBen.

Thank you, Teresa, and thank you, everyone, for joining us today. I'm pleased to say that we had an incredible second quarter. I often talk about the commitment our team has to delivering on our goals, but this quarter, the team really knocked it out of the park, consistently on time and in every area of our business. Back in our fourth quarter call, we outlined goals for the first half of 2023. We said we would submit all of our Certification Plans to the FAA, and we did. We said we would roll out our first production prototype and fly it, and we have. I'm pleased to confirm that the aircraft flew for the first time last week following extensive ground testing. It performed as expected, and we're looking forward to expanding our flight test program with the aircraft before delivering it to Edwards Air Force Base in due course. We also said we would select a site for our scaled manufacturing facility. While we could have made a decision in the first half of the year, we've had a remarkable amount of interest in hosting this facility, and so we've taken the opportunity to spend some additional time evaluating various sites to ensure we secure the very best long-term solution and incentive package. Each of these goals is a huge milestone for Joby and reflects our relentless commitment to execution. It's a real team effort, and I'd like to thank each and every member of the Joby team for their hard work in achieving these goals. The rollout of our production prototype was particularly special because it's the culmination of more than a decade of hard work. We have been building and flying full-scale aircraft since 2017, but to be able to build with this level of rigor is a huge step forward, and we're incredibly proud of the performance our aircraft delivers. Our motors each provide 236 kilowatts of peak power, with six propulsion units on the aircraft, that's nearly twice the power of a Model S Plaid, the most powerful Tesla variants, and yet the entire aircraft weighs less than the car. Our motors play an important role in keeping that weight down; the dual-wound motor and inverter weigh 28 kilograms together, and we've been able to combine the coolant pump, radiator, fan, hub, propeller, and pitch servo actuation into the same package. But it's not just the power and the weight that make the motor special, it's the way in which that power gets delivered. We've designed motors that are incredibly torque-dense, offering as much torque as the engine of a heavy-duty Ford F-350 pickup truck. And we've done this without a gearbox. Gearboxes come with a multitude of rolling element bearings and dozens of gear teeth that are constantly running through fatigue cycles. Each one of these parts has to be tracked, inspected, lubricated, and replaced throughout the lifetime of the motor. They also create excess vibration. Instead, we've designed the Joby Direct Drive. Our motors deliver all of the power and torque that we need with only one moving part, a single bearing. Our story is similar when it comes to batteries. We didn't want to compromise. We wanted to find the best possible solution, even if it took more work on our part. Over the last six years, we've tested 100 different cells in our own testing lab. The obvious choice would have been a cylindrical cell. They're widely used in automotive and consumer electronics, but even the best cylindrical cells presented two major challenges. They didn't offer the level of specific energy we need for maximum performance, and we found their capacity deteriorated after just a few thousand trip cycles. That would mean more frequent battery pack replacements and higher operating costs. So, we chose a pouch cell, one that delivered on every metric that mattered to designing a highly efficient and safe eVTOL aircraft. The cells we're using in our production plane come from the automotive supply chain and deliver 288 watt-hours per kilogram at the cell level. And we've demonstrated in our lab that they're capable of more than 10,000 representative flight cycles. At the pack level, we're delivering 235 watt-hours per kilogram, which is a higher specific energy than many of the cells we've tested on the bench. And, with all of our area-specific certification plans now submitted, we have a clear path to certify our battery packs. Our approach of custom designing key parts allows us to deliver the highest possible performance without carrying excess weight or compromising functionality, and it has allowed us to deliver on one of our core company goals: having the right aircraft for the market. Our production aircraft is set to be the lightest, quietest, and fastest passenger eVTOL in the skies. We'll be able to carry 1,000 pounds of payload, and we'll be deploying our aircraft on trips of up to 100 miles, making it perfectly suited for operations in urban areas. As we begin to ramp manufacturing, Toyota's support has been invaluable, whether it's the design of specific tools and processes or the layout of the facility itself. And to recognize that support, we were honored to have Ted Ogawa, President and CEO of Toyota North America, speak at our production launch event in June. Ted joined the Joby Board of Directors on July 1, and we're looking forward to working together. During that same week, we had two other important visits that demonstrate the wide-ranging support we're seeing for aerial mobility in the U.S. California Governor Gavin Newsom joined us to celebrate the launch of production here, and more than 70 representatives from President Biden's AAM Interagency Working Group visited us to hear about the Joby aircraft and witnessed a flight test. The government's commitment to ensuring U.S. leadership in this sector was also reinforced by the publication of the FAA's AAM roadmap in July. This document outlined how existing rules, existing infrastructure, and the planned publication of the SFAR document in 2024 will enable meaningful commercial operations to start in 2025. The document also talks about the work the FAA is doing to bring forward upgrades to air traffic control and operating rules that would enable the U.S. to deliver world-leading capacity for eVTOL aircraft by 2028. This is a remarkably positive step, with the FAA effectively pulling forward the date it is planning to support scaled operations from the 2030s to 2028, in time for the LA Olympics. As I said at the outset, this has been an incredible quarter; on top of all of the progress we've made, we've also been able to strengthen our balance sheet, and we now have $1.2 billion of funds available to us. Having such a strong balance sheet won't change our thoughtful approach to spending, but it does allow us to accelerate early production and ensure we're best positioned to start commercial operations in the U.S. in 2025 as planned by the FAA. It also puts us in an excellent position to achieve the kind of scale the FAA is planning for by 2028. And on that note, Didier, over to you.

Thank you, JoeBen. I would like to start by focusing on our certification progress. As we mentioned at the top of the call, we have now submitted all of our Certification Plans to the FAA. And importantly, we already have two-thirds of these accepted. These submissions include 13 area-specific certification plans, hardware, and software certification plans for every system on board, as well as certification plans covering areas such as aircraft cybersecurity and system safety. Taken together, they form a third of five stages of the certification process. And I'm very proud of our team for getting us to this point and for submitting these plans on time just as we promised we would in our fourth quarter call. I can't stress how important this progress is. Every time we take a step forward in defining our certification basis, we take risk off the table and solidify our path towards type certification. Looking at the progress chart that we include in our Shareholder Letter each quarter, you will see that we made progress across stages two, three and four. And that is because certification is not a linear process. For systems accepted at stage three, we're able to proceed formally into stage four. Similarly, some plans are submitted and then resubmitted following dialogue with the FAA. That iteration and dialogue are reflected in the minor fluctuations you will see in the numbers. What matters most when you look at these numbers is that the vast majority of our certification basis is now in place, which means the vast majority of our effort is now focused on the implementation stage of our certification, which starts with stage four. In stage four, we write and then execute test plans that demonstrate the compliance of every individual part, subsystem, and system in the aircraft. We do that through a combination of engineering analysis and real-life physical testing, either in the lab or eventually on the aircraft. For each of the thousands of tests we'll do, there will be thousands, we complete internal company verification first before performing the tests for FAA credit, which they will verify as part of stage five. Essentially, that means we drive on each and every test to ensure we're ready. We think about this testing regime as a pyramid with individual parts forming the bottom step of the pyramid and the full aircraft at the top. We start at the base of the pyramid, writing test plans and completing tests on individual parts. We then work our way up the pyramid, building those individual parts into subsystems that also get tested. The further up the pyramid we go, the more systems and parts we build together until we get to the top, where we will test the full aircraft as one coherent system. Here, our production prototype will play an important role in supporting aircraft-level development testing. We are hard at work developing several test plans, test setups, and multiple parts as we increase focus on this phase. As our progress chart shows, we've already made inroads in stage four, and during the quarter, we submitted test plans for our flight control computer, which is one of the individual parts at the base of the pyramid. We then went on to successfully complete internal company verification on the flight control computer, meaning we're now ready to start FAA credit testing on that part. We will be working on stage four right up to the end of the certification process, and I'm looking forward to sharing updates on our progress each quarter. But now, I'd like to add a few words to what JoeBen said about our production prototype aircraft. It's not often in your career that you get the opportunity to roll an aircraft off a brand new production line, particularly not an aircraft as revolutionary as ours. It was a proud moment to join more than 1,000 guests, including many of our team members, at our production line in Marina to celebrate this achievement. Designing and building a full-scale demonstrator takes a huge amount of work. We know because we did that in 2017, and again in 2019. But moving from those first full-scale prototypes to a production system where we have a repeatable process for building aircraft is a big step. It's building the machine that builds the machine. And I’m pleased to say our next aircraft is already working its way down our production line, with parts for the aircraft after that being manufactured already. Creating an aerospace production system means utilizing engineering drawings that have been verified and released to our manufacturing team with a system for configuration management. It means having full traceability of material and components from start to finish, including every fastener and every strip of carbon fiber. It means delivering manufacturing processes that are repeatable, with quality control systems to test and validate the structure and function of everything on the aircraft. It's a meaningful step forward for Joby and one that lays the groundwork for us to ramp up and scale our production efficiently. And with that, I'll hand it over to Matt.

Thanks, Didier. As JoeBen mentioned, at the end of the first quarter, we have $1.2 billion in cash and short-term marketable securities. This includes the investment from Baillie Gifford of $180 million received in May and the investment from SK Telecom of $100 million received in June. In our call last quarter, we talked about Baillie Gifford and their long-term investment horizon and their support for Joby. Our relationship with SK Telecom is very similar. The investment made last quarter builds upon a partnership that was first established in early 2022, and like our partnerships with Delta and Uber, is focused on building long-term enduring value through aligning our goals with the value we expect to build together by bringing our air taxi service to customers around the globe. In the second quarter of 2023, we incurred a net loss of $286 million, reflecting negative other income of about $170 million and a loss from operations of nearly $116 million. Other income from the quarter primarily reflected a $181 million unfavorable revaluation from our derivative liabilities, as the price of our shares rose significantly during the quarter, partly offset by net interest income of $11 million. Adjusted EBITDA, a non-GAAP metric that we reconciled to our net loss in our Shareholder Letter, was a loss of $83 million. This was about $9 million higher than the second quarter of 2022, reflecting increased staffing and costs to support certification, partly offset by increased payments from government contract deliverables. Our adjusted EBITDA loss was about $8 million higher than the first quarter, reflecting the growth in our organization, expenses to support manufacturing and certification and the non-recurring specific DoD contract deliverables achieved in the first quarter. Our global staffing with more than 1,500 employees continues to grow to support our company’s certification and manufacturing efforts. Cash used in operating activities and purchases of property and equipment totaled $77 million in the second quarter of 2023. The reduction compared with the first quarter reflects positive changes in working capital, two pay periods in June compared with three in March, and lower capital expenditures reflecting higher investments made in the first quarter. In the third quarter, we expect to have an additional pay-period consistent with the first quarter and last year. Through the first six months of 2023, our cash used in operating activities and the purchase of property and equipment totaled $164 million, and we remain on track with our spending guidance of $360 million to $380 million for the full year. Before we finish our prepared remarks, I'd like to draw your attention to the ESG report that we published this quarter. While it’s a first step for Joby and for the wider industry, we believe it's important as it supports our goal of having a positive impact on every aspect of our work. Like our certification progress chart, which we started publishing a year ago, we believe it provides our stakeholders with important transparency on our progress, and that of the wider industry. This concludes our prepared remarks. Operator, would you please instruct participants on how to ask questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Andres Sheppard with Cantor Fitzgerald. Please proceed with your question.

Hello, everyone. Good afternoon. Congratulations on another quarter and thanks for taking our questions. I wanted to start off by getting some of your thoughts around the FAA implementation guide that we saw come in a few weeks ago. I know there was some confusion about what scale was, and then the 2028 timeline versus 2025. Just curious to get your thoughts on it. What stood out? And perhaps what do you think is confusing some investors? Thank you.

Hi, Andres, great to catch up. So, we were really pleased with the work that the FAA did. Again, as I said in my prepared remarks, really pulling forward the timeline for significant operations to 2028 in time for the Olympics, as well as committing to the ability for us and others in the industry to deliver meaningful operations in the period of time between 2025 and 2028.

Got it. Thanks, JoeBen. And maybe to follow-up, I was wondering if you could provide a little more clarity on the DoD contract that's coming up soon. We know what the contract is worth, I'm just trying to wrap my head around what it'll mean in terms of revenue and when might that show up; just is there any more visibility around that as of today? Thank you.

Hi, Andres, this is Paul. Happy to cover the DoD work. Just to give you some color, we're obviously very much focused on delivering on the aircraft that are required for that contract and really beginning to prepare ourselves for the operations on base down at Edwards. We mentioned that the aircraft that we rolled off the production line is going to be the first aircraft that is delivered on that contract. But we've also already put a number of Air Force pilots through our pilot training program. They went through both the sit-down portion of the training, the simulator training, and actually did remote piloted flights of our aircraft at our facility. So that was a great trial run of the same sort of pilot training program that we are eventually going to have to roll out on the consumer side. So we were happy to check that box. Lastly, we've even started work down at Edwards in terms of setting up the charging infrastructure that's going to be required for operations. On the Joby side, we're full steam ahead in terms of being able to deliver on the contract as soon as possible. A number of the aircraft that are sort of sitting behind the aircraft that we rolled off the line are also designated for Edwards. So getting to those milestones is something that we are squarely focused on. The reason is really twofold. One is obviously the opportunity to generate revenue in support of that contract. But second, and even more importantly, it's the first opportunity for us to deliver a product to a customer and have it operate in the real world as opposed to on our test facility. There are tons of learnings that come from that, already things like the pilot training and the maintenance profile. We want to make sure that we get all of those learnings as soon as possible with the largest number of aircraft. That's the way that we're directing our efforts here.

Got it. Thank you for that. Oh, go ahead, sorry.

I’m just following up on your revenue question. The teams are still working through the accounting pieces, but we would expect that to start early 2024 when the vehicles go on base as well, but that's our present timing, no specifics that we're going to guide towards at this point.

Got it. Thanks, Paul. Thanks, Matt. Maybe just one last quick one, if I may, and apologies if I missed this in the prepared remarks, but are there any changes to the expected annual cash burn for this year? I know last quarter was $360 million to $380 million. Not sure if I missed that; are there any changes to that for this year? Thanks, Matt.

No, yes. No problem. No changes this year; first half, $164 million right on track, and we're holding with our guidance of $360 million to $380 million. Thanks.

Our next question comes from the line of Austin Moeller with Canaccord Genuity. Please proceed with your question.

Hi. Good afternoon. Just my first question here. The FAA is expected to issue their final rule on air mobility by the end of 2024. So, how do you think the timing of that might impact the delivery and receipt of the type certificates once all the flight data has been collected and analyzed?

Thank you, Austin. So, these are two separate pieces of our path to certification. The SFAR pertains to the operations of the aircraft, and as the FAA has been repeatedly confirming that they are on track to deliver that in 2024. A second piece of our path to certification or commercial operations is our type certification of the aircraft. That work, as Didier outlined, is proceeding really, really well. We have submitted the last of the area-specific certification plans as we planned to do on schedule.

Okay. That's helpful. And just, on the AFWERX Agility Prime program, as that progresses now that you've got Archer also receiving an AFWERX contract to deliver vehicles, do you expect that the DoD will ultimately have multiple eVTOL vendors on a future program of record? Do you think they might down-select to one vehicle?

Hi, Austin. This is Paul. Thanks for the question. I really can't speak to what the DoD may be planning, nor can I speak to the specifics of the contract that was previously announced by Archer. However, I think it speaks to the depth of the market opportunity on the DoD side of things. I should also say that at least from our perspective, that expands well beyond just AFWERX. As we already announced AFWERX, we actually started our work with DIU almost six years ago, we progressed that to a project with AFWERX, and then we even added the Marines as well to that contract late last year, early this year. We're in active discussion with other branches of the military and other agencies and the government about what additional aircraft would look like. So, we really see some of these events as positive in terms of what the overall market opportunity may be for us and others in the category.

Okay. Great. Thank you for all the details.

Our next question comes from Savi Sid with Raymond James. Please go ahead with your question.

Hey. Good afternoon. I was curious, what factors internally, but probably more importantly for the FAA do you need finalization before you start building the actual certification conforming aircraft?

Hey, Savi. Thanks for the question. This is Didier. Great question. If we step back and think about the five stages of certification, we need to consider that both at the aircraft level and also at the building blocks, sort of the pyramid that I talked about earlier. The three stages that we have achieved to date were the submittal of the area-specific certification plans, which really target all of the systems that make up an aircraft. The key area of focus right now for us is to start the conforming testing, which is stage four. Of those components and systems that go into an aircraft. And that's why we talked about how we're focusing on getting into four credit testing with the flight control computer right now. You'll be seeing us progressing into some of the larger systems here, moving into the airframe as an example. What's more critical is the fact that we have built an aircraft and delivered on that just recently with the rollout. This aircraft will effectively be the validation that feeds into all of the other conforming testing that we're doing and drives us into delivering the conforming airplane on time. All of this is for the plan to have a conforming airplane soon; really, the focus now needs to be on those building blocks that go into that pyramid.

Just to clarify, do you need acceptance of all the certifications that you've submitted to move forward, or are there further specifications that you need to hear from the FAA? Just curious.

That's a good question. When you think about a conforming airframe, the aircraft is also intended for a specific purpose. The conforming aircraft could be dedicated for, for example, flight control purposes. If you think about the flight control performance swim lane as an example, then you would need the certification plans and the certification test associated with that area accepted by the FAA. So, it's swim lanes. That means we can proceed even at the aircraft level with specific areas, even though some other areas may still be under discussions with the FAA. So really, tranches is how we should think about that.

That's helpful. Appreciate it. And if I might, with some of the capital that was raised recently, I think it was noted that capital enables the acceleration of certain events. I was wondering if you could provide a little more color on what those might be.

Hi, Savi. This is Paul. Thanks for the question. When we made the announcement around the additional investment from Baillie a few months ago, that to us was an opportunity to accelerate and sort of forward invest in areas of pilot production to make sure that we can support the brand new opportunities that presented themselves with the new DoD contract that we announced at the time. A lot of the work that some folks were able to see when they came down to the rollout of it around the scale-up of that pilot production facility, the number of aircraft that we're starting to roll off the line there, all of that is really some of that forward investment applied.

Got it. Helpful. Thank you.

Our next question comes from the line of Bill Peterson with JPMorgan. Please proceed with your question.

Hi. Good afternoon. This is Mahima Kakani on for Bill. We really appreciate the disclosure around the aircraft's motors and batteries. I think we've heard it's generally viewed that pouch cells have higher performance and other advantages but could also have more areas of failure, especially concerning thermal runaway. Could you provide some color on what Joby is doing on the module and pack side to mitigate some of that safety risk?

Thank you, Mahima. This is JoeBen. Appreciate the question. We've been very thoughtful about the selection of our cells. We began testing cells in our lab many years ago and have tested many different formats of cells. When we think about cell selection, we're considering many different dimensions, including, foremost, safety. We have done groundbreaking innovation at the pack level and module level to ensure that we conform with the standards that we've agreed to with the FAA. Again, as Didier spoke about, having submitted all of our area-specific certification plans is a huge milestone. We've been working with the FAA on all of these requirements for many years since back before 2018 when we first applied for type certification. This is a monumental achievement for the Joby team to be able to now be moving into the stage where we can do four credit testing. Of course, we've been doing testing in our labs on cells, on thermal runaway, on dropping packs, proving to ourselves that we have the safety and performance across all the different dimensions and all of the systems. So we’re really pleased with the progress that we are making and with the performance that we've demonstrated in the lab.

Thank you, JoeBen. Really appreciate that color. Maybe a second one from me, but what is your view on the FAA's proposed reserve requirements for powerless aircraft being consistent with some larger aircraft? I believe it's 30 minutes in the daytime and then 45 minutes at night. Are these requirements built into your current expectations and into your certification plans? Just curious there.

Hey, Mahima, this is Didier. I'll take that one. So we were aware of some of the proposed reserves and do understand that they’re really intended to cover a wide area of the market. We are in discussions with the FAA, just like with other applicants, regarding the specificity of the reserves required for our operations. The numbers that we have provided do have considerations for reserve, specifically around the areas of the market that we're targeting. That's obviously part of our considerations, both in our certification plans and the operations that we're planning.

Okay. That’s very helpful. Thanks a lot.

Next question comes from the line of Edison Yu with Deutsche Bank. Please proceed with your question.

Hi, thanks for taking the questions. First off, I want to come back to FAA 2028. How do you interpret when they say large deployment? Is that 20, 50, 100? And what's your view on how fast that can ramp, assuming we do hit off in 2025 with the actual operations?

Thanks, Edison. This is JoeBen. The numbers that I had heard informally from the FAA were substantially larger than the numbers you were just speaking about in terms of their targets for deployments in at least one major metropolitan area in the U.S., but I would leave it to the FAA to formally state those numbers.

Understood. and then on the DoD, the military opportunity now that we have, I know we cited the contract with Archer, what's your view on the total kind of opportunity there? Is this either in terms of dollar value in terms of number of aircraft? Is there optionality later on to work with friendly allies, or is this going to be focused on a U.S. launch?

Hi, Edison. This is Paul. Happy to pick that one up. It's probably premature to size the overall market opportunity across DoD and other government customers, but it's fair to say that it's large. If you take a look at the army, for example, they operate the largest rotorcraft fleet in the world. That's just one of the number of branches of the DoD. That doesn't include other areas of government, whether it's customs, border patrol, or other agencies that sit under the broader umbrella. The thing that we are focused on right now with respect to DoD is getting aircraft into service. It's very important, both for the customer and for us, to deliver a product and see that product perform against the mission types that are valuable to that customer and learn what we need to learn about how these aircraft operate, how they're maintained, and how to produce them at progressively higher volumes. That's the thing that we think is most important about the DoD opportunity for us in the near term. This isn't something that's 2 or 3 or 5 years away. This is something that we're executing on right now, and we've got opportunities to begin to turn over those cards, both on the revenue side and on the learning side very, very quickly. The faster we do that, the faster we have an opportunity to begin to expand opportunities outside of AFWERX and the Marines to other branches and, in turn, to other agencies and the government.

Got it. And if I could sneak one more in on that. Have you provided an indication on how much the contract R&D has provided thus far?

Hey, Edison. It's Matt. No, we've not provided that data. Once we start getting to revenue and so forth, we'll probably start talking a bit more about that, but we've not provided any specifics about the contract R&D.

Okay. Thank you.

Thanks, Edison.

We have reached the end of the question-and-answer session. I would now like to turn the conference back over to Joby Aviation CEO, JoeBen Bevirt, for closing comments.

Thank you all so much for joining us. We're really grateful for your participation. As we said at the top of the call, we're laser-focused on execution; that's on certification, manufacturing, and as we prepare for the launch of our commercial service. We're very pleased with our execution over the first half, and we're just going to continue to deliver. Also, very grateful for the support from the national, state and local level and from international governments; the momentum building in this industry has never been greater. Also, very appreciative of the FAA and the focus that they're putting on this important new industry. Finally, I would love to express my sincere gratitude to everyone on the Joby team who has been working really hard and absolutely knocking it out of the park. Thank you all. Just to close with, we've got the strongest balance sheet in the business, but that doesn't mean that we're going to lose our focus on spending very thoughtfully and delivering exceptional results. Thank you again for joining us, and we're really looking forward to catching you again soon.

This concludes today's teleconference. You may disconnect your line at this time. Thank you for your participation.