QuantumScape Corporation

Thank you, Operator. Good afternoon and thank you to everyone for joining QuantumScape's third quarter 2025 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 and 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 statement 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 CEO, Dr. Siva Sivaram, and our CFO, Kevin Hetrick. With that, I'd like to turn in the call over to Siva. Thank you, Dan.

I'd like to begin with one of the highlights of the year. On September 8th, at IAA Mobility in Munich, Germany, we unveiled our launch program with the Volkswagen Group, the Ducati V21L race motorcycle. developed as a collaboration among Ducati, Audi, Powerco, and QS. The Ducati V21L is the first of its kind vehicle demonstration, planned as a showcase for the exceptional performance of our no-compromise next-generation battery technology. As a launch program, the Ducati V21L is ideal. It is a low-volume, but high visibility demonstration that allows us to put the QSC5 technology into a demanding real-world application. The next step for the Ducati program is field testing. Turning to our annual goals, we are pleased to report that during Q3, we began shipping Cobra-based QSC5 B1 samples. completing another of our key annual goals for 2025. These cells are part of the Ducati launch program and were featured on stage at the IAA Mobility Conference. Our remaining operational goal for the year is to install higher volume cell production equipment for our highly automated pilot line in San Jose named the Eagle Line. Equipment for certain key assembly steps has already been installed on the Eagle Line, and this goal remains on track. Another important goal for 2025 has been to expand our commercial engagement, including deepening relationships with existing customers, engaging new customers, and bringing additional partners into our growing QoS technology ecosystem. In Q3, we made substantial progress on all three aspects, With respect to existing customers, the successful launch event with Ducati, Audi, and Powerco at IAA Mobility was a major milestone in our long collaboration with the Volkswagen Group. Last quarter, we also announced a new joint development agreement with an existing customer, and we are continuing to work closely with them as we progress through the first phase of the development and commercialization engagement. We are also in an active engagement with a new top 10 global automotive OEM in addition to our existing customers. With regard to QoS ecosystem development, we continue to add world-class partners. On September 30th, we announced an agreement with Corning to jointly develop ceramic separator manufacturing capabilities based on our Cobra process. Corning is a global leader in advanced materials, and they bring deep expertise in ceramics processing and proven manufacturing excellence to the QS ecosystem. In parallel, we successfully completed the initial phase of our collaboration with Murata Manufacturing, have signed a subsequent contract, and progressed to the next phase of that relationship. Our goal is to make QoS technology the clear choice by providing our customers with a turnkey ecosystem to serve the global demand for better batteries. With Murata and Corning, we have two of the most world-renowned technical ceramics manufacturers as ecosystem partners, and we will continue to grow our ecosystem further. With our achievements this quarter, our vision for commercialization of our next generation battery technology is beginning to take shape. We are executing consistently towards our key annual goals, demonstrating our technology, engaging with partners, and building out our capital light development and licensing business model. Everything starts with execution, and we are proud of our team's performance. This year, we have already accomplished two of our key operational goals, baselining our COBRA process and beginning shipment of the COBRA-based QSC5 cells, continuing our track record of consistent execution against our goals. Q3 also saw our first public technology demonstration with the Volkswagen Group, the Ducati V21L. We are expanding our collaboration with existing customers and adding new customers, and we have also expanded our global ecosystem of world-class partners. The third quarter also makes another exciting milestone. We are beginning to show returns from our capital development and licensing business model, driving over $12 million in customer billings in Q3. Our ambitious targets naturally present many challenges to overcome, and there is much work left to do. Our objective is clear. revolutionize energy storage, capitalize on our enormous market opportunity, and create exceptional value for our shareholders. With this aim in mind, we are excited to update shareholders on our continued progress over the months and years to come. With that, let me hand things over to Kevin for a word on our financial outlook.

Thank you, Siva. Gap operating expenses and gap net loss in Q3 were 115 million and 105.8 million respectively. Adjusted EBITDA loss was 61.4 million in Q3 in line with expectations. A table reconciling gap net loss and adjusted EBITDA is available in the financial statement at the end of our shareholder letter. We continue to drive operational efficiency consistent with our capital life licensing focus. We revise and improve our full year guidance for adjusted EBITDA loss to $245 million to $260 million. Capital expenditures in the third quarter were $9.6 million. Q3 CAPEX primarily supported facilities and equipment purchases for the Eagle Line. As a result of efficiency gains and process improvements, including from the COBRA process, as well as a change in timing of certain equipment ordering, We revised the range of our full year guidance for CapEx to $30 million to $40 million. In Q3, we bolstered our balance sheet and completed our at-the-market equity program, raising $263.5 million of net proceeds in advance of the August 10th expiration of our shelf registration. We ended the quarter with $1.0 billion in liquidity. We now project our cash runway extends through the end of the decade. a 12-month extension from our previous guidance of INTO 2029. Going forward, we plan to move away from providing updates on cash runway and will begin providing updates on customer billings. Customer billings represent the total value of all invoices issued by QS to our customers and partners in the period, regardless of accounting treatment. Customer billings is a key operational metric meant to give insight into customer activity and future cash inflows. The metric is not a substitute for revenue under U.S. GAAP. Customer billings in Q3 were $12.8 million. In Q3, we invoiced VW PowerCo under the upgraded deal announced in July. The resulting cash inflows benefit QS shareholders. They will be directly reflected on the balance sheet as cash when we receive payments. During the collaboration phase of this particular deal, because of the related party relationship with VW, in accordance with U.S. GAAP, a liability of equivalent value will also be created. QS has no repayment obligation with respect to these liabilities. Once relieved, rather than impacting the P&L, this value will accrue directly to shareholders' equity. Payments from other customers or partners, we expect, will be accounted for differently due to the lack of equity ownership or significant related party ties.