Greetings, and welcome to Joby Aviation's First Quarter 2024 Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Teresa Thuruthiyil, Joby's Head of Investor Relations. Please go ahead.

Thank you. Good afternoon and evening, everyone. Welcome to the Joby Aviation conference call to discuss the company's financial results for the first quarter of 2024. We announced our results earlier today, both our Q1 2024 shareholder letter and a webcast of this call are available online at the Investor Relations page of our website at ir.jobyaviation.com. 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. Please note that today's call will include results reported on a non-GAAP basis. Our Q1 2024 shareholder letter provides a reconciliation between GAAP and non-GAAP measures. On the call today, we have JoeBen Bevirt, Founder and Chief Executive Officer; Paul Sciarra, Executive Chairman; Didier Papadopoulos, President of Aircraft OEM; Matt Field, Chief Financial Officer; and also joining us today is Bonny Simi, President of Operations. After management's prepared remarks, we will open the call for questions. And with all of that said, I'll turn the call over to JoeBen.

Thank you, Teresa, and thank you all for joining us this afternoon. I'm pleased to say that we had a remarkable first quarter of 2024, packed with sector-leading progress across all 3 of our focus areas: certification, manufacturing and commercialization, keeping us on track to start commercial operations next year. I hope those who follow our results are starting to see a pattern. The Joby team and the Joby approach continued to deliver quarter-over-quarter, year-over-year with dependable results and credible time lines. Didier is going to unpack our progress on certification in a minute, but I'd like to draw particular attention to the fact that we've started submitting our first system-level test plans. These are a key part of the fourth stage of the type certification process and demonstrate the maturity of our certification program. Joby was the first air taxi company to complete the first, the second and the third stages of the FAA type certification process. And this quarter, we became the first and so far only air taxi company to have our final airworthiness criteria or G1 certification basis published in the Federal Register. The progress we've made, particularly in completing Stage 3 is central to allowing us to proceed with full confidence in our design and approach. Supporting our certification program is a tremendous amount of testing as thousands of individual parts, subsystems and full assemblies are put through their paces. At Joby, the vast majority of this takes place in-house. As Didier will explain, this approach allows us to move with significant pace and agility, particularly through the fourth stage of certification, which is focused on testing. Our engineers are able to get real-time feedback on the performance of the parts they're working on by literally walking up to their colleagues and chatting with them…

Thank you, JoeBen. It is such a pleasure to be part of building this next-generation aviation company. In my 15 years at Garmin, I saw repeatedly how vertical integration leads to superior products and a durable advantage in the market. But joining Joby 3 years ago, completely blew me away. The amount of cross-functional design, manufacturing and testing that we're completing under one roof is truly unique, not just in aerospace, but to all hardware, software, development and production. Every day, I see our approach paying off, saving us kilograms of weight, weeks of schedule and thousands of dollars on our bill of material. I truly believe there is no other aviation company on the planet with as much depth and breadth of in-house engineering knowledge and capabilities as we have here at Joby. And that's an investment that we believe will have compounding returns over time. This is no coincidence. It is a result of carefully weighing the decision to in-source or outsource each component across the aircraft. We do have a number of strategic supplier partners, including Garmin, Toray and Toyota, where we're able to identify partners with the right values and long-term view, we have invested in deep relationships that are key to our success, but we won't compromise on agility, cost, performance or quality. And our approach continues to result in a leadership position across our industry. As JoeBen mentioned, this quarter, we became the first and remain the only electric air taxi manufacturer with finalized airworthiness criteria from the FAA. As we stated last quarter, the final G1 resulted in no design changes and allows us to move ahead in Stage 4 with confidence. It's also the foundation of the progress we're making for all 3 of our path to market, commercial launch in the…

Thank you, Didier. It's a pleasure to be here to introduce our work on operations. As JoeBen said at the outset, there's a significant amount of work that needs to be completed before anyone can operate this new type of aircraft. You can achieve type certification and build a fleet of aircraft. But without items like FAA certified full-motion simulators, FAA maintenance and operating certificates, FAA approved pilot training programs and safety management systems. You won't be able to run a commercial aviation service. Some of those items like maintenance procedures and manuals are actually a prerequisite for type certification. And to be clear, these requirements don't go away if you intend to sell the aircraft. Any operator will need every one of these systems in place in order to launch even a basic operation. In 2020, when I joined Joby full time, we sat down and mapped out the full set of requirements to start operations, and we've been working on them ever since because we realized that many of them like simulators have a long lead time, more like pilot training programs could not be bought off the shelf. Now that we have a clear line of sight to start of commercial operations, we thought it would be valuable to touch on the work that we've already completed and the milestones that lie ahead. Next month, we plan to host a teach-in session, where we will cover this topic in more detail. But for now, I'd like to introduce the broad themes. Our work to repair for early operations can be divided into 3 categories: FAA authorizations, infrastructure and software, with safety as a common thread underpinning all 3. When we say infrastructure, we mean the development of standards for landing sites and the landing sites themselves, the…

Thanks, Bonny, and good afternoon, everybody. As you've heard from the team today, we continue to lead the industry across all elements of our business: certification, manufacturing and commercialization. We also continue to lead the industry in having the strongest balance sheet. We ended the first quarter of 2024 with cash and short-term investments totaling $924 million, right in line with the guidance we shared for the year. This represents a use of cash totaling $108 million, reflecting our measured pace of growth and investments. Also as a reminder, we had an extra pay period in Q1, which results in a higher cash outlay for the quarter. We incurred a Q1 net loss of $95 million, reflecting a loss from operations of about $146 million, offset by interest and other income of $51 million. Our net loss was lower by $21 million compared to the prior quarter, reflecting a higher favorable revaluation of our warrants and earn-out shares, partly offset by a higher net loss from operations. Increased operating expenses in the first quarter reflected a continued measured pace of investment in our certification and manufacturing personnel and operations, lower sequential payments from government contract deliverables and higher stock-based compensation expenses at the start of the fiscal year. In terms of revenue, we mentioned last quarter that we would expect it to be somewhat lumpy as our work gets underway with the DoD, and we expect revenue to grow along with our flight hours throughout the year, especially as we look ahead to the delivery of our second aircraft to Edwards Air Force Base. Adjusted EBITDA, a non-GAAP metric that we reconciled to our net income in our shareholder letter was a loss of $110 million in the first quarter. This was about $14 million higher than in the prior…

[Operator Instructions] And our first question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Congratulations on the quarter. JoeBen, I want to maybe start with the UAE. Obviously, a lot of movement and partnerships there. Curious to get your thoughts, it almost seems fundamentally that the industry is perhaps moving more and more to ramp up commercialization there faster than in the U.S. Now obviously, this is still contingent on certification. But just curious, your thoughts on how you see the marketing developing and particularly in the near term. I get the sense that it's becoming maybe more and more scalable faster. Just curious to get your thoughts.

Thank you, Andres. Great to hear from you. So we are seeing fantastic lean in from all the different government agencies in the UAE, and we're very grateful for the support across the regulatory side, the infrastructure side and yes, very excited about the momentum. I would say that all of the work that we're doing there is built upon the foundation of the work we've been doing for the last 6 years plus with the FAA and leverages everything that we're doing on Stage 4 of the certification basis. So this is really a box plus 1 opportunity for us. In addition to the fantastic work we're doing with the DoD as we prepare to take 2 aircraft to MacDill Air Force Base in Florida.

Maybe just a quick follow-up. Curious if we have a time line as to when you would expect to roll out the -- maybe the first conforming aircraft and how close are we to transitioning that conforming aircraft with a pilot on board?

Andres, thanks for the question. On that front, aligned with what we communicated in the previous quarter in terms of our road map on that front, maybe I reiterate, there are 3 key things that are required to make progress on conformity. One, making sure that we have our design released and submitted and accepted by the FAA. 2, is developing our conforming manufacturing line so that we can build to those designs. And then 3, progressing towards Stage 4, where you actually have the test plans against what you're going to execute with your test assets. As a reminder, there's no way around those 3 things. And that's been our focus. And as you can see, we've been able to make progress on all these fronts and pretty happy with that. Now on you execute on these in 3 tiers, right? One, if we think about the pyramid we've talked about before, the components, the systems and then you move into the aircraft. We've talked about a lot of the component development and execution last year and how we're building on that this year, having submitted additional test plans on more components. But also now we're moving into the system level tier of that pyramid and again, making progress on that. So you should expect us to see -- continue to progress along that tier towards the tip of the pyramid, which is the aircraft in short order. We're well on track that we discussed in our road map last year.

And our next question comes from the line of Kristine Liwag with Morgan Stanley.

So look, it sounds like from your prepared remarks, things are progressing towards commercialization. Thank you for all the details you provided regarding your progress with the UAE. So I guess, for your first commercial mission, is this going to be an international route or with a country like the UAE? Or is this going to be U.S. based? Any color on that would be helpful.

Kristine, yes, we do see -- we do continue to see 2 really exciting paths forward, both here in the U.S., in New York and L.A. in partnership with Delta, as well as the path in the UAE and the really significant lean in from the GCAA to bring the opportunity for us to begin commercial service next year. So very excited about that. And again, on the DoD front, very pleased with the progress on that third pillar as well.

And then when we look at other routes like I'm sure as the aircraft is nearing certification, you're studying some of these routes a little closer. Do you have any updated view regarding price that you're going to charge for some of these routes? And then as you're evaluating U.S. and international opportunities, like what city pairs or within which cities and stops are you really looking at? What are the economics of that? Any additional detail about actual operations would be helpful.

Thanks a lot for the question, Kristine. This is Paul. We're obviously very much deep in the evaluation of routes to understand price elasticity and understand demand across them. And that goes for the geographies that we're looking at here in the U.S. and now more recently, both in Dubai and then more broadly across the UAE given the recent announcement. We don't have any updates to our broad thinking around economics, except to say both in the U.S. as we think about New York and L.A. And obviously, as we think about Dubai and the broader UAE, all of those are areas that have relatively high propensity to pay. They've got difficult, in many cases, very difficult infrastructure to navigate on the ground. So they're really sort of tailor-made locations as we think about the first few locations for launch. I mean, I think we're very much deep on the UAE side. So there are 14 million tourists there. There is a large number of sites across the various Emirates that are not so easy to access. And I think that, that demand profile is going to look very favorable, but we're not yet at a point where we're going to kind of talk about the specifics around what that's going to look like, although the work is ongoing, and we hope to have updates on that soon.

And the next question comes from the line of Savi Syth with Raymond James.

Just on the flight campaign. Can you talk about the type of flying that's been done on the preproduction aircraft versus the production aircraft including what are the differences between the 2, any notable differences between the 2 as you operate them?

Yes. Savi thanks for the great question. So the campaign that we just completed on the earlier airplane was obviously extremely successful, right, 1,500 flights, 33,000 miles, and it covered a lot of aspects in terms of aircraft performance, maintainability and so on that we talked about earlier. And one of the key things that it identified is that the fundamental design of the airplane is solid and it delivers on the mission that it has. The difference between that aircraft and the aircraft that we're producing right now from the manufacturing line, is that the airplanes coming out of the line right now are effectively being built under our production manufacturing line, following our quality management system, which really drives us and progresses us towards the production certificate, right? So as a reminder, we need a type certificate, a production certificate and operational certificates, right, that Bonny talked about. That production certificate element is one of the unique things and really exciting things to be exercising right now with the airplanes that are rolling out the line right now.

And then the type of flying is just kind of progressing the same way as you did with the first one?

Absolutely. Very similar type of flying between all these airplanes.

I was just wondering, we've gone from starving last year to feast this year on pilot availability for the mainline and cargo airlines. But generally, I think pilot supply is going to kind of remain tight over a longer period of time. So I don't know, Bonny, do you have any thoughts if Joby can be the solution for the Part 121 operators? And also just as you look to stand up operations, just how long before you launch operations, do you need to start building your own pilot supply?

Thank you, and it's great to be joining the team here on the call, and thank you for the question. This is definitely right down my alley. I was a pilot for 30 years, I know that the shortage has been a factor off and on for years. And -- but we're not concerned because for us, in the early years of operations, we're going to utilize what we call an initial cadre of experienced pilots that draw from a demand of 2 focus areas. One, there's a group of pilots, initial cadre who enjoy being part of new aircraft introductions. And so we -- even now, we constantly get outreach from pilots who want to be part of something new. And these are very experienced pilots. And then as a pilot of myself and as a mother, I know a significant number of pilots who really favor solutions of being home every night. Military pilots tired of being away from home and mothers and fathers trying to raise a kid. And so this is a solution for them. So there are many female pilots in particular, who opted out of -- they got their commercial pilots' license, and then they decided that it just wasn't going to work for them. So bringing them back into the fold. And then behind that group of several hundred pilots for our initial cadre, we're already building a pipeline of pilots. So we've got a Joby Aviation Academy, where we're building out a Part 141 program. We're starting with our employees and then ramping that up, so that will sync in time for us to scale the service. And yes, we actually look at, as our solution, as a piece of the solution for the broader 121 because pilots will spend a couple of years with us and some may move on to the airlines and some actually will find the lifestyle very favorable for them.

And the next question comes from the line of David Zazula with Barclays.

First one is for Didier, if I can just get a little more color on the electric storage qualification plans that you've submitted. Any feedback you've gotten from the FAA on that and what the plan is to progress along electric storage and propulsion certification kind of in the near term?

Yes. So in general, the electrical system distribution system has multiple test plans that we submit to the FAA. Some of them are associated with qualification and relating to the environment, for example, others are operational in terms of being able to manage the state of charge of the aircraft. So they vary in multiple areas. I think one thing that's really important relating to your question about the feedback is most of these have been in work with the FAA for multiple years, right? So for the most part, those are not things that we're dropping on the FAA for the first time here. They've been going back and forth with the FDA on multiple occasions. They are the result of not only discussions with the FAA but also more importantly, the result of actual flights that we've executed on the 2 airplanes over the past 4 years. So the results are really -- exchanges already positive with the FAA. In fact, just before this call, we were on a call with FAA discussing that as well as a visit. They're coming to Joby to discuss some of the remaining items. So overall, very, very positive. Maybe one last item on that. And that's what really gives us the ability and the commitment to go and invest in testing facilities like we've talked about a few minutes ago. The investments we have in our battery facilities are really a testament to the confidence we have with those test plans.

And if I could just follow up on an earlier question. Specific to the exclusivity in the UAE agreement, can you just give a little more on the level of exclusivity that you're expecting to see there out of the agreement? And then how that would play into the inter Emirate travel that I think you mentioned in the letter?

Yes. So again, we have a 6-year exclusive for providing air taxi service in the Emirate of Dubai. And that is granted to us by the RTA, which is the authority that has been given the purview to regulate air taxis. And so this is a partnership that we've been working on since 2018 -- 2017, 2018, and it's fantastic to seeing it coming to fruition and very grateful for Bonny and the operations team for leaning in on preparing for operations there. And also very grateful for Didier and the certification team on the work they're doing with the GCAA*8 to begin laying the groundwork for type certification. So again, we're very pleased with the progress in the UAE as we are very pleased with the progress that we're making here in the U.S. with the FAA and the excitement that we're seeing from countries around the world for this really important new technology.

And the next question comes from the line of Edison Yu with Deutsche Bank.

First one on [ SRT ]. I'm wondering if we have some sort of scenario analysis we can maybe share in terms of what kind of time line FAA may be on? I know it's a tough question to respond to, but it just seems things are definitely delayed and moving slower. So could you maybe share kind of some scenarios you could see on maybe when we could get to the finish line? And what would be the gating factors?

Yes. Thanks for the question, Edison. We remain very excited about the engagement on the FAA side and the progress that we're making on all fronts. Like we said earlier, a lot of our focus primarily this quarter has been in 3 key areas as it relates to FAA. One, we're really excited about the G1 being signed and published in the Federal Register. But as we said in the last quarter, this G1 came in with more prescriptive details on the showing compliance elements, which led to additional updates that were needed to the means of compliances and the area specific certification plans. So the FAA had to work with us to support some of these refreshes and we spent quite a bit of time making great progress on that front. Number 2, we continue to make progress on submitting test plans that I talked about earlier, which now covers a broader range of types of test plans we're submitting such as equipment and system level test plans. But third and probably most importantly for me, a lot of the work has been going on, on really upgrading a lot of the test assets that we have here, which is really, really essential. When you think about the level of vertical integration at JOBY, which is really unique to our success story and then our plans and ability to deliver and execute on these in the second half with Stage 4. Those were some amazing achievements and effectively where we spent a lot of our time purposefully this quarter.

A follow-up on Middle East and actually just one international. I know we're not giving any specifics on the assumptions or the economics. But in terms of the go-to-market or the business model at a high level, is this something -- are you planning to, for example, in the Middle East to operate it, to sell it direct? How do we think about just how the go-to-market will look like or the business model will look like?

Thanks a lot, Edison. This is Paul. So with respect to our planned operations in Dubai, we're going to be doing a lot of the work with respect to both operating those aircraft. That's in line with the agreements that we've made with RTA, and we expect that to extend across the Emirates as we think about expanding that service. So that's going to look really similar to how we think about commercial operations here in the U.S. Now all that said -- and there may have been some sort of misinformation or sort of misconstrual from some folks on this. We've always been very flexible as we think about what is the right way to commercialize. So when we think about customers like the DoD, for example, that is very much going to look like over a long arc something like a sale of aircraft with sort of ongoing maintenance and support that's sort of recurring on the back end. So Joby has 2 different ways that we're thinking about going after the market, some cases where we're likely to be very vertically integrated, we're actually doing the operations ourselves and a set of customers and potentially geographies where our commercialization looks a lot more like aircraft sale. And you've already seen that really play out in the way that we're thinking about, say, the UAE market and in turn, the DoD as a customer, and we're going to maintain that flexibility as we think about continuing to expand our modes of commercialization over the next 12 to 18 months.

And our last question will come from the line of Austin Moeller with Canaccord Genuity.

Just my first question here. Can you differentiate the key hardware differences between your previous viable prototypes and the current production series aircraft that are rolling off the line of Marina now?

Yes. Austin, this is Didier. Great question. So the differences between some of the electronics components, for example, or the actuation systems are primarily, I would say, evolutions between the previous aircraft and the ones coming out of the manufacturing line. The vast majority of these fit in primarily, I would say, 2 categories. One is expanding, for example, the environment or the flight envelope for these pieces of the equipment. So think about temperatures, for example, vibration and so on. And the other set is really associated with learnings that we've collected over time relating to expanding, for example, the reliability aspects of these equipments. So the changes are, again, an evolution based on the 4 years of collected data from those 2 airplanes.

And any updates on your relationship with Toyota and if or how they might become the contract manufacturer over time, while you're running flight operations.

Yes. So as I mentioned -- this is JoeBen. As I mentioned, the partnership with Toyota has been incredibly valuable for us. They've had team members on site with us here in California since 2019, and as well as an incredible team working alongside us back in Japan. And I think, as many of you know, Toyota is one of the most incredible companies in the world when it comes to manufacturing very complex systems at very large scale with just spectacular quality. And so having them working shoulder to shoulder with us as we're -- we planned our manufacturing expansion in Marina as we're looking to the layout of our Phase 1 manufacturing facility and planning for that. And then even looking beyond that, they are the best partner that I could ever imagine. And it was, as I mentioned, incredible to have Shiga-san as well as Kaita-san and Uehara-san, all join us and visit us this last quarter. We couldn't be more pleased with the support that we're receiving and optimistic about the path in the future alongside Toyota as we shift to -- from a development phase into a scaling phase. And I think -- is that our final question? Should I -- so I think just as we -- in closing, I would like to talk about what an incredible opportunity that we see in front of us as a company. We are so proud of the team we're building and the way that we're approaching building this new industry. We think that our vertical integration is our superpower. And that the -- I think of this very into the early days of automotive in the late 1890s and where we were making cars in very small volumes. And I see the decades that lie ahead of us as incredibly exciting as we take to the air as a civilization. And so I'm really, really pleased with the team we're building, the culture we're building and the technologies we've developed and really look forward to talking to you all again next quarter. Thank you all so much.

Thank you. This concludes today's conference. You may now disconnect your lines at this time. Enjoy the rest of your day.