QuantumScape Corp Q4 FY2022 Earnings Call

Good afternoon, and thank you for attending today's QuantumScape Corporation's Fourth Quarter 2022 Earnings Conference Call. My name is Jason, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to our host, John Saager.

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape’s fourth quarter 2022 earnings call. To supplement today’s discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape’s Co-Founder, CEO and Chairman, Jagdeep Singh; and our CFO, Kevin Hettrich. Jagdeep will provide a strategic update on the business, and then Kevin will cover the financial results and our outlook in more detail. With that, I’d like to turn the call over to Jagdeep.

Thank you, John. In 2022, we made significant advances in our technology, encountered and overcame obstacles, and ultimately achieved our major goal for the year. I'd like to briefly recap our key results in 2022 and provide an overview of our plans for 2023. Our most important goal for 2022 was to ship our first 24-layer A0 prototype battery cells to customers. To achieve this, we needed to incorporate several improvements into our system, from separator film and cathode production to cell assembly, focused on quality, consistency, and throughput of our designs and processes. We are pleased that the team successfully incorporated these improvements and rallied to meet our target of shipping 24-layer A0 cells to customers by year-end. We see this as a demonstration of the team’s ability to overcome adversity and deliver on our goals. While specific customer testing protocols and results can’t be disclosed, we can report that generally, most cells have performed well on initial testing, including fast charge and early-cycle capacity retention; however, we need to continue to improve cell reliability as we move from prototype to product. This is a key focus area for 2023, and we expect that as we make progress on the quality and consistency of our materials and processes, reliability will continue its upward trajectory. We believe this 24-layer A0 milestone represents a significant step forward, though more work remains to turn our technology into a commercial product. I’ll discuss some of these remaining steps when I lay out our 2023 goals. The A0 prototypes also incorporate our proprietary cell architecture, a hybrid between pouch and prismatic cell formats, designed to accommodate the volume expansion and contraction that occurs during the charge and discharge of lithium-metal cells. We shared the first images of this new architecture in our shareholder letter and intend to share more details on this architecture later in the year. In addition to our cell development progress, in 2022, we also focused on scaling up cell production. One goal was to continue the build-out of our QS-0 pre-pilot production line by taking delivery of a majority of the necessary equipment. We've merged our Phase 2 engineering line with QS-0 and have now received a majority of the tools necessary for initial lower volume production on this consolidated QS-0 line. Our final key goal for the year was to scale up production of our ceramic solid-electrolyte separator to a peak level of 8,000 weekly film starts. We achieved this goal, which demonstrates progress in process development, equipment qualification, and manufacturing capability. Next, I'd like to briefly discuss our customer engagement. Over 2022, we continued to see strong interest in next-generation batteries for EVs from a variety of automotive OEMs. And as we previously reported, this culminated in sampling agreements with three more automakers, including a top 10 automotive OEM by global revenue and a pure-play EV OEM. For the consumer electronics industry, we shipped dozens of single-layer pouch cells for customer testing with zero externally applied pressure. We're pleased to report that the sister cells from the sampling campaign we reported in our last quarter have now surpassed 800 cycles. We believe this exceeds the requirements for many consumer electronics applications. Now I'd like to lay out our goals for 2023. Beyond A0 prototype shipments, we plan to focus on subsequent generations of prototype samples, incorporating advances in cell functionality, process reliability, and bringing online the manufacturing capability of our consolidated QS-0 line. Our goals for the year are focused on these four items. Our first goal is to increase cathode capacity loading to approximately 5 mAh/cm². As in conventional lithium-ion batteries, our cathode can be optimized either for better energy density or higher rates of power. We believe our current loading of approximately 3 mAh/cm² would be in the range required for a power cell, but to optimize for energy density, we're targeting a capacity loading in the range of approximately 5 mAh/cm². This goal requires addressing several technical challenges, including coating thicker cathode electrodes while maintaining quality, calendaring the cathodes to the necessary thickness, optimizing cathode microstructure, and ensuring a good catholyte interface with active material. Our second goal is to improve the efficiency of our cell packaging. While the active materials of the battery set a ceiling on how energy dense the battery could be, the ratio between active materials and inactive materials, the packaging efficiency determines the final energy density. So we're targeting improvements on that front this year on our path to commercialization. Our third goal for 2023, as we move from prototypes to commercial products, is to improve the quality and consistency of materials and processes. Some core drivers of quality and consistency in our manufacturing process include increased precision through automation and control, quality of input materials, and particle reduction across our process flow. We plan to implement such process improvements and controls, which we believe will ultimately lead to higher reliability. Finally, and most exciting, our fourth goal is to deploy a new fast separator production process that's significantly faster than our current baseline. In its initial implementation, we expect it can support up to three times more throughput using similar equipment to our current process. When this new process comes online, we expect our consolidated QS-0 line will be ready to begin initial lower-volume production. We believe that deploying this fast process in 2023 is an important step on our path to mass production in the coming years. With the focus on these four key goals, we aim to make substantial progress in 2023 towards our ultimate target of product commercialization. On that note, I'd like to say a word about our strategic outlook. In our letter to shareholders last year, we laid out four key premises that underlie our commercial opportunity. First, battery electric powertrains represent the future of transportation. Second, anode-free lithium-metal batteries have the potential to deliver compelling improvements over current lithium-ion batteries. Third, we can scale up our cells to many layers. And fourth, we can mass manufacture our cells. We continue to believe that the first two points are well established, and our work in 2022 was focused on the latter two propositions. Beginning shipments of 24-layer A0 cells demonstrated that it's possible to scale up our cell layer count to the multi-amp-hour scale, a range we believe is relevant for a variety of applications. By hitting our weekly film starts goal and taking delivery of equipment for our consolidated QS-0 line, we have made progress toward our scale-up goals. Much more remains to be done. However, our results over the past two years have demonstrated that when difficult problems need solving, our team consistently rises to the occasion. In the months and years ahead, new and difficult problems are sure to arise. When that happens, we're confident that we'll tackle these new challenges in the same way we solved the previous ones, with teamwork, stubborn determination, and grit. Thank you for your continued support, and we look forward to sharing more of our progress over the year ahead. With that, I'll hand you over to Kevin.

Thank you, Jagdeep. In the fourth quarter, our GAAP operating expenses were $113 million and for the full year 2022 was $421 million. Our GAAP net loss for the quarter was $109 million and for the full year 2022 was $412 million. This level of spend was in line with our expectations entering the quarter. Cash operating expenses, defined as operating expenses less stock-based compensation and depreciation, were $70 million for the quarter and $266 million for the year, in line with previous guidance of $225 million to $275 million. CapEx in the fourth quarter was approximately $38 million and for the full year 2022 was $159 million, below the guidance range of $175 million to $225 million. Drivers of the variance to guidance include deliberate postponement to further develop process and hardware specifications, cancellation of certain intermediate-stage separator production equipment to focus on our new fast separator production process, and savings captured through the incorporation of Phase 2 engineering line equipment into our consolidated pre-production QS-0 line. Q4 CapEx was primarily directed towards facility investments and our medium-scale continuous film and cell imaging equipment. As we enter 2023, we continue to try to maximize capital efficiency in our ongoing build-out of the consolidated QS-0 line as well as to reduce our operating expenses. For the full year 2023, we see capital expenditures of between $100 million and $150 million, the majority of which will be spent on our consolidated QS-0 line. On the operating expenses side, we've reduced spending where possible across the organization. Reductions came primarily through optimizing non-personnel resources such as services, materials, and utility spending, as well as rebalancing personnel. For 2023, we see cash operating expenses between $225 million and $275 million, the midpoint of which is approximately 10% below our Q4 2022 cash operating expenses run rate. As a result of these cost savings initiatives, we believe our cash runway now extends into the second half of 2025, an increase from prior guidance through the end of 2024. Historically, we focused on maintaining a strong balance sheet, and we intend to continue this, by identifying new opportunities to reduce spending and by being strategic about opportunities to raise capital to further extend our cash runway. With respect to cash, we spent $101 million on operations and CapEx in the fourth quarter and ended 2022 with $1.08 billion in liquidity, above previous guidance of over $1 billion. With that, I'll pass it over to you, John.

Thanks, Kevin. We'll begin today's Q&A portion of with a few questions we've received from investors on the sale where I believe investors would otherwise be interested. Our first two questions are for Jagdeep. I'm summarizing several similar questions from investors here. But can you give more context on the A0 delivery? Primarily, what's the significance of that milestone and what additional work needs to be done from here?

Sure, John. So the significance of these first A0 deliveries is that they demonstrate the core functionality of our technology and our ability to make multi-amp-hour cells. We've previously shared some compelling data on the performance of our technology at smaller scales, but we think the multi-amp-hour scale is a significant milestone because capacity in this range is commercially relevant for a variety of applications, including both automotive and consumer electronics. In terms of what's left to do, as we reported in our letter, we're now focused on two important areas. One is a set of activities relating to increasing energy density, including thicker cathodes and improved packaging efficiency. The other is continued work on production quality and efficiency, leading to improved reliability. Finally, we're also excited about and plan to work on deploying our new fast separator production process, about which we'll share more information at a later date.

Okay. Great. How does the delivery of the A0 affect your timeline to commercialization?

Regarding the commercialization timeline, we haven't provided any updated communications on this front since our last earnings call. The main point I'd like to emphasize here is that the path to all subsequent samples, including BMC samples, runs through our 2023 goal. In other words, those samples all require the increased cathode electrode thickness, improved packaging efficiency, incorporate the faster-driven production process and improve quality consistency, leading to improved reliability.

Okay. Our next question is for Kevin. Turning our attention to the finances for a moment now. You mentioned the extension of our cash runway into the second half of 2025. Can you help explain in more detail what the drivers of these cost savings are?

Yes, John. We found savings in a number of areas, optimization of non-personnel operating expenses including services, materials, and utility spending. CapEx savings resulted predominantly from the merger of the Phase 2 engineering line into a consolidated QS-0 preproduction line, as well as savings associated with the new fast separator process described in the letter. As an organization, we have and always will want to be as lean and efficient as possible while keeping in mind our development timeline, which is, of course, our highest priority. And this lean and efficient focus by the team contributed to our year-end liquidity of about $1.08 billion, which was in excess of the $1 billion guidance. So, as you mentioned, forecasting runway now into the second half of 2025, an improvement from the end of 2024. That's something that we're pretty encouraged with.

Okay. Thanks, Kevin. Turning back to you, Jagdeep. Can you talk more about the new separator process that you disclosed in the shareholder letter?

Sure, John. So we've been working on this for some time now as an advanced development project, one that we saw as high risk but high return has worked. We've seen some very encouraging data from this process on small-scale equipment and believe this will allow us to produce significantly faster and with a higher level of quality and consistency. So based on this data, we've chosen to focus on this faster process as our primary scale pathway. We believe that this process can allow us to scale over an order of magnitude greater throughput than our current process. However, we also believe that we can use this new process with a modified version of our current film production equipment and get about a 3x improvement in throughput in the near term as well. Deployment of this near-term version of the process is one of our key 2023 goals. We look forward to sharing progress on future calls.

Okay. Great. We also received a couple of questions from Jose Asumendi of JPMorgan. Jose's first question is a little bit longer-term in nature. He asks, with a three to five-year view, can you remind us of the different gates and stages that you plan to go through from the current 24-layer A0 prototype to final prototypes with the OEMs?

Sure. As we've said before, the typical automotive stage gates include A-samples, which are typically demonstrations of the core capabilities of the product, followed by B and C-samples, which typically focus on increasing manufacturing maturity. As I said earlier, the important point I'd emphasize is that the road to all the subsequent milestones leads through our 2023 goal. Adding functionality that improves cell level energy density, such as bigger cathodes, more efficient packaging, as well as improved reliability through better quality and consistency as well as the new fast separator process that I mentioned earlier. Those things form the foundation for both more advanced A-samples as well as subsequent B- and C-samples and, of course, commercial products.

Okay. Jose's second question is for you, Kevin. Can you elaborate around the topic of protecting the balance sheet, remaining cash-focused, and protecting the balance sheet until 2025?

As I mentioned earlier, we want to be as lean and efficient as possible while keeping in mind our development timeline, which is, of course, our highest priority. And I believe we struck the right balance in our 2023 plan shared today. We're able to resource the 2023 goals laid out in the letter while also forecasting an extension in cash runway. Our prior guidance was through the end of 2024, and we're now forecasting cash runway into the second half of 2025. Regarding the question on the protection of our balance sheet, we intend to continue this by identifying new opportunities to reduce spending and by being strategic about opportunities to raise capital to further extend our cash runway.

Okay. Thanks so much, guys. We're now ready to begin the Q&A portion of today's call. So operator, please open the line up for questions.

Our first question is from Jordan Levy with Truist Securities. Your line is now open.

Afternoon all, and thanks for taking my question. I appreciate the update. I wanted to just see if I could start asking the extent that you can talk about it on your thoughts in the consumer electronics space and process knowing that it's probably sort of a shorter cycle sector than the auto sector and how you're thinking about approaching that space?

Yeah. No, we think that's a very interesting space for us. Obviously, we've been very focused on automotive. There's a longer cycle with automotive product development, so it was important for us to engage there early. We feel good about our engagements in that space. And as we mentioned on previous calls, we are seeing a fair bit of interest from the consumer sector. We also mentioned in this letter as well as previous letters that we've provided single-layer cells to the consumer electronics sector to be tested under zero applied pressure. We mentioned in the letter that those cells are performing well. We've published data from the sister cells that show they've exceeded 800 cycles now at zero applied pressure, which we're really excited about. We keep talking about zero applied pressure because that is really important in the consumer sector. If you have a battery that requires pressure application apparatus, that's going to take up volume, space in the phone or in the consumer device, which there isn't that much. So just having a high energy density cell is not enough; you really want to have that cell operate without a lot of external pressure. The lower specialty you get to is, of course, no applied pressure. So you only have the one ambient atmospheric pressure on the cell and to our knowledge, we are the only non-LIPON-based, non-micro battery style lithium-metal cell that has been shown to operate with zero applied pressure. So we're excited about those results. Our consumer partners that we're engaged with share that excitement. And as you point out, it's a shorter cycle to get to market, so we expect to continue to move those engagements forward, and we'll report progress as we have progress to report.

Great. Thanks for that. And then just a quick follow-up. Any commentary you could give as it relates to the stationary storage side of things? It seems like you're working kind of on the power cell side of it, but that sort of goes to kind of the other side of it?

Yeah. I think we mentioned last year that we have seen interest in stationary storage. We announced one early agreement in that space. The feedback we're hearing from that space is that the performance and specifications for cells that meet the requirements of the automotive sector are good for that sector as well for stationary storage. So as we get further along in terms of our production capacities, we fully intend to explore that market opportunity as well. The main point that I think comes out of your questions, which is a really good one, is that if you have a better battery that has better characteristics in terms of energy density, in terms of power capability, perhaps safety, these are all things that resonate across the full spectrum of applications from automotive to consumer to stationary storage. The question of which ones we go after is going to be more based on what makes the most business sense for us rather than the fundamental applicability of our technology.

Thanks so much.

Of course.

Our next question comes from Gabe Daoud with Cowen. Your line is now open.

Hey, afternoon, guys. Thanks for all the prepared remarks. Jagdeep maybe hoping to, to the extent you could share get a bit more color on the initial A-sample, the A0. So, is there an update on cycle-like performance? I think as of last quarter, you disclosed it achieved about 100 cycles or so? And then similarly, your comments around your OEM partners being pleased, I guess, with early cycle capacity retention. So, maybe could you define early cycle capacity retention and then provide an update on cycle if there is one.

Yes. We didn't see anything on customer-specific testing; we obviously can't comment on customer-specific tests. What we did say is that really, the purpose of the A0 samples is to demonstrate the core functionality of the technology and our ability to make multi-amp-hour cells. These samples did that, and we've actually been pleased with the performance. We don't expect these first-day efforts to have the same level of reliability as a commercial product. But we've seen, as I mentioned, good performance on both fast charge and early capacity retention. So, when we say early capacity retention, what we mean is the shape of the capacity retention curve. Remember that one of the ways that batteries hit end of life is that with every charge-discharge cycle, you lose a little bit of lithium to side reactions. So the capacity that remains in the battery decreases with every charge in this short cycle, and eventually when it gets to 80% of the original capacity, the cell is deemed to be at end of life. What we were referring to on the letter is that the shape of that capacity retention curve or capacity degradation curve was quite good. In fact, it was similar to what we've seen in previous results that we published. So that's what we meant by early capacity retention. What we tried to do is, as I mentioned in the letter as well and on the call, coming this coming year is add a few key functionality that we think are going to be very important. One set of features is related to energy density. So, we mentioned the thicker cathode. We mentioned the more efficient packaging. Those are all things that will allow the energy density of the actual prototype cell to approach the energy density that we believe the system is capable of. The other parallel track of that is good reliability. Our path to improved reliability is very simple: it comes down to basically improving the quality and consistency of our materials and processes in our system. We believe that as we get higher quality in our materials and processes that directly translates to better reliability. So, that's a quick summary of both the testing and our plans going forward this year.

Thank you, Jagdeep. That's very helpful. On that note, regarding cathode loading reaching 5 milliamp hours, in one of your earlier slides, you illustrated the QS-0 power cell and the QS energy cell, both of which demonstrated appealing fast charge capabilities. My question pertains to the energy cell and the 5 milliamp hour target to enhance energy density. Do you still anticipate achieving around 50 minutes for the 10% to 80% charge window? Is it reasonable to expect that the target energy density of approximately 950 watt hours per liter for the energy cell remains valid?

Yes. So I think the long-term numbers that we've shared in the slide that you're referring to are still our targets. We expect the energy cell to be somewhere in the vicinity of 900 to 1,000 watt hours per liter, as we've mentioned before. We do think that cell should still be able to charge more quickly than conventional lithium-ion batteries. So yes, we think getting something in the 15-ish-minute range is not unrealistic for that cell. The reason that we mentioned before is that this cell does not have an anode, so there's no extra distance for the lithium-ions to have to traverse in the anode. We can basically use the ion transport length of a conventional lithium-ion battery, which includes both anode and cathode distance, and apply that purely to the cathode, so that we can get thicker cathodes, more to cathode than conventional cells or have those cathodes be able to charge faster than conventional cells. And then the power cell, we believe, could potentially get even faster than that. But of course, at the extent of somewhat lower energy density, because as you point out to get the power cathode you have, somewhat thinner cathode with somewhat higher amounts of electrolytes. So, basically lower cathode mass loading, which gives you both higher power and lower energy density. The short answer to your question is, yes, we do believe that our energy cell should still be compelling on the power front, and our power cell will also have an interesting level of energy density.

Great. Thanks, Jagdeep.

Absolutely.

Our next question is from Winnie Dong with Deutsche Bank. Your line is now open.

Hi. Thank you so much for taking my question. I wanted to elaborate a little bit more on the cathode capacity loading improvement. How does that change your in-process A-sample testing right now with customers, or do you then anticipate that as an improvement that will be beyond? I just want to clarify that. That's my first question. Thanks.

Yes. Yes. So as we've said before, we see the A-sample as really being a phase. There's a series of deliveries we'll make under the A-sample umbrella. Subsequent versions of that sample will have this new higher mass loading, higher capacity loading cathode as well as the more efficient packaging. That will lead to B and C-samples subsequently.

Got it. And then in terms of the series of A-sample prototypes that you’ll be continuing to deliver this year. How long do you anticipate this sort to last? I think previous quarters, you've alluded to B-sample and C-sample, around 18 months or so, which puts us into perhaps the timeframe of 2026 or so. So with A-sample rolling out this year as well, keeping a picture for us in terms of the timeline for ultimate commercialization?

Yes. So we haven't provided any new communications relative to timeline other than what we said on the last earnings call. The main thing that we're pointing out on this call is that when you look at the B and C-samples and even the commercial product, some of the key requirements for those subsequent samples and products are the key things we're focused on in 2023. Whether it's the B or the C sample or more advanced versions of A or the product, they all need more efficient packaging, increased cathode thickness, improved quality consistency, and the new fast separator process that we've also alluded to on this call. We think those are all key parts of our goals for this year, which is why this is an important year for us. We want to execute on these key goals as they form the foundation for all subsequent milestones.

Thank you. If I could ask one more question about improving quality and consistency, could you provide more details on the steps you're taking to achieve that goal this year? Are you focusing on more material vertical integration, increased automation of equipment, or something else? Thank you.

Absolutely. There are a lot of things that can lead to quality that we want to improve. For example, if you have a large particle sitting between the layers of your cells, that could eventually lead to issues. Similarly, if tabs are not welded properly as you bring together all the different layers in the cell, that could lead to issues. Incoming materials quality is also crucial; if the material has defects, or if the process is not operating within your control limits, that can lead to problems. Automation allows for more precision in how you assemble and align the various layers, so those are all areas that can potentially contribute to quality consistency. We are looking to tighten up processes this year to ensure better and better quality. Other industries have already shown the ability to control those parameters quite well, so we plan on having a disciplined execution process and a disciplined manufacturing team to put in place those controls and processes to ensure quality.

Great. Thank you. Appreciate all the response.

Absolutely.

Our next question comes from Chris Snyder with UBS. Your line is now open.

Thank you. I understand you cannot share specific customer testing protocols and results. But could you provide some general feedback from that you got from customers post delivery of the A0 sample?

I can reiterate what we said earlier, we feel that most of the samples we provided have performed well. We've mentioned some of the specific tests that were done, including fast charge, some of the early capacity retention curves, and so on. I can also point out that one of the areas that we want to keep improving is in fact the reliability of these cells, and that's why we spend a lot of time talking this year to improve quality and consistency, as well as implementing process automation and particle reduction. Other than that, there's not a lot we can say about the specifics. These are customer-specific protocols and results, but from our standpoint, we can say we're actually pleased with where we are, and we think we're well-positioned to go from here to the next phase, which involves adding additional functionality that we talked about earlier today.

Thank you. I appreciate that. And then, I guess, maybe just following up on some of the prior questioning on the pathway from the A0 sample to the B sample. I guess how many generations of the A sample should we expect? And will we get updates on these as the samples progress? And then kind of another one on that same line, are the subsequent generations of A samples customer-specific in that like A sample to customer X would be different than the A sample of customer Y, or is it uniform across all customers?

Yes, that's a good question. First of all, let me talk about the milestones. The C sample is going to be very customer specific because it’s a product that's made on actual production lines designed for serious production, which can only happen once the customer has confirmed usage for that sample in a natural product. The B sample is likely also to be customer-specific but maybe less so than the C sample, due to its purpose of making test vehicles which will also involve customer-specific elements. The A sample is typically more technology-oriented, focused on demonstrating the capabilities of the product. But even there, different customers have different priorities, and thus there will be some variance. Relative to sharing progress, we absolutely will share updates on meaningful customer milestones.

I appreciate all that. Thank you, Jagdeep.

Our next question is from Mark Delaney with Goldman Sachs. Your line is now open.

Yes. Good afternoon, and thank you very much for the questions and thank you for all the details in the shareholder letter. My first question was a follow-up on that same topic. And just trying to better understand in more depth, if I could, please. What's the difference between A0 sample and an A-sample and any sort of idea of how many A-samples we should be expecting?

We outlined in our letter some of the key initiatives we are focusing on this year. The A0 has multi-amp-hour capabilities, consisting of 24 layers, demonstrating the product's core potential. It features a lithium-metal anode solid-state separator, starting with zero lithium in the cell. Customers can test all these aspects, and as mentioned earlier, they have evaluated the fast charging and capacity retention. This year, we are also working on thicker cathodes and more energy-dense packaging, which will be included in future releases. You can expect at least one more generation of A samples, followed by B and C samples that will concentrate on improving manufacturing maturity.

That's helpful. Thank you for the clarification there. My other question was on some of the optimization efforts the company spoke about in the shareholder letter in the prepared remarks. One of the things that was mentioned was rebalancing personnel. I'm hoping perhaps you could elaborate specifically on that and any more color you can share there? Thank you.

Yeah, Mark, that was predominantly the consolidation and transfer of teams within the organization to better focus on the 2023 goals. This did include a small approximately 3% reduction in the team, as part of our planning effort; we eliminated positions not aligned to near-term goals. There wasn't a net reduction in manufacturing operations. In fact, we had a small increase in personnel assigned to manufacturing operations.

There are no further questions. So I'll pass the call back over to the management team for closing remarks.

Yeah. I want to just thank you all for joining today's call. I'd like to thank our investors for their ongoing support of our mission, our customers for their commitment to helping us get this technology to market, and of course, our amazing team for their incredibly dedicated efforts to overcome the hard problems associated with bringing groundbreaking new technology to market. We look forward to reporting on further progress in the coming quarters.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.