Rivian Automotive, Inc.

Good afternoon, and thank you for joining us for Rivian's second quarter 2026 earnings call. Today I'm joined by RJ Scaringe, our CEO and founder, Claire McDonough, our chief financial officer, and Javier Varela, our chief operations officer. Before we begin, matters discussed on this call, including comments and responses to questions, reflects management's views as of today. We will also be making statements related to our business operations and financial performance that may be considered forward-looking statements under federal securities law. Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filings and the earnings presentation we filed with the SEC today. During this call, we will discuss both gap and non-gap financial measures. A reconciliation of historical non-gap to gap financial measures is provided in our earnings presentation and press release. Just before the earnings call, we posted our earnings presentation, which includes an overview of our progress over the recent months. I encourage you to read it for additional details around some of the items we will cover on today's call. Following our prepared remarks, we will be taking questions from sell-side analysts. In the interest of keeping the call to one hour, we would ask these analysts to limit any follow-on questions to one. With that, I'll turn the call over to RJ.

Thanks, Chip, and good afternoon, everyone. Thanks for joining us for today's call. In the second quarter, we began deliveries of R2 vehicles to external customers. We expect R2 to be a game-changer for our customers and a driver of Rivian's long-term growth and profitability. Importantly, in a U.S. automotive marketplace starred for a high-quality EV choice, I strongly believe R2 is an attractively priced option for everyday ventures that will resonate with a broad set of consumers. Many reviews of R2 are outstanding. One journalist wrote, quote, R2 is one of the best new cars I've driven in years. Another praised R2 as among the finest vehicle designs in the world. Early customer feedback of R2 is positive, and I have to say I love it as my daily driver. Strong R2 reviews and increasing brand awareness are directly translating into accelerating customer touchpoints with our products. In the second quarter, we hosted over 57,000 demo drives, a Rivian record. While it's early in our ramp, we are pleased with the reservation conversion we've seen to date for launch edition R2s. Turning to our manufacturing footprint, our team in normal is focused on the production ramp of R2. As a reminder, R2 production started with a single shift and we expect to scale to two shifts by the end of the third quarter. We are seeing good progress in new team member training and process improvements for the ramp of the first R2 shift. Additionally, members of our supply chain team are spending time on site with suppliers as we look towards supporting the ramp in the back half of the year and into next year. Thank you for joining us. Thank you for watching. In this second quarter, we surpassed 1 billion miles driven on the Rivian commercial van platform. Turning to our technology roadmap, autonomy remains one of the most important areas of investment at Rivian. In the not-too-distant future, we believe advanced assisted driving capabilities will be a key differentiator for customers and a substantial driver of market share. Our autonomy development is on track and we expect to begin rolling out point-to-point capabilities by the end of this year. We believe our rapidly expanding car park with R2 will accelerate our data flywheel to enable delivering hands-off, eyes-off capabilities in 2027 and ultimately level 4 capabilities in consumer and robotaxi variants of R2. Since we began monetizing Autonomy Plus in April, take rates are trending positively for the service and we believe further future releases will drive continued increased uptake of Autonomy Plus. Later this year, we will host another Autonomy and AI Day where we'll provide more updates around our exciting autonomy and AI progress. At the end of 2026, we are targeting the launch of our third-generation autonomy hardware. This includes RAP1, our first in-house designed silicon, and the addition of LiDAR. The development of our RAP1 chip is on track, and we've begun final testing phases of production silicon. Finally in May, we rolled out our Rivian Assistant on all R1 vehicles and plan to launch the feature on R2 with an over-the-air update later this year. Rivian Assistant is our new AI-powered voice assistant that is built to be a digital co-pilot with integration into the vehicle ecosystem and other external apps. Customers love this new feature and its intuitive functionality across applications like Spotify and Google. I couldn't be more excited about the opportunity ahead. With that, I'll pass the call over to Claire to discuss our financial results.

Thank you, RJ, and good afternoon, everyone. As RJ shared, we started external customer deliveries of R2 in June. My family took a road trip in our R2 earlier this summer, and we put the storage capacity to the test by piling in four large suitcases, backpacks, golf clubs, tennis rackets, and groceries. Road tripping with universal hands-free is outstanding, making long car rides relaxing. I'm so looking forward to the launch of point-to-point capabilities later this year. As I discussed previously, delivering a strong 2026 exit rate for R2 production and deliveries is a key focus for our team as we believe it will directly translate into positive automotive gross profit for the business. Turning to the results for the second quarter, our consolidated revenue was $1.66 billion, a 27% increase over the same quarter last year. Consolidated gross profit was $179 million and our gross margin was 11%. Gross profit included $138 million of depreciation and amortization and $31 million of stock-based compensation expense. Adjusted EBITDA losses for the quarter were $379 million, driven by our $179 million of gross profit and increased adjusted operating expenses as we prepare to scale R2 and invest in our autonomy roadmap. In the second quarter, we produced 12,613 vehicles at our plant in Normal, Illinois and delivered 12,194 vehicles. Delivery results topped our 9,000 to 11,000 vehicle expectations due to robust growth quarter over quarter in EDV and R1 coupled with the introduction of R2 deliveries. Our $1.14 billion of automotive revenue, a 23% increase over the same quarter last year, were primarily driven by a 14% increase in vehicle deliveries and a $103 million increase in revenues related to automotive regulatory credits, partially offset by a decline in average selling prices from a higher mix of commercial van and R2 deliveries. Automotive gross profit loss was $36 million compared to a gross profit loss of $335 million for the same quarter last year, a $299 million improvement primarily due to increases in delivery and production volumes, an increase in revenues related to automotive regulatory credits, and an IEPA tariff refund receivable partially offset by the ramp of R2 production. In the quarter, we recognized approximately $100 million in incremental cost of revenue due to the ramp of R2 production as compared to the production at more normalized levels. While current macro and geopolitical factors are creating added complexity, cost, and uncertainty, our team continues to work hard to manage supply chain risks and increasing commodity and memory costs. Our software and services segment reported another strong quarter. During the second quarter, the segment generated $515 million of revenue, a 37% year-over-year increase, primarily due to an increase in vehicle electrical architecture and software development services by the joint venture, repairs and maintenance, and autonomy plus, offset by lower remarketing sales. 308 million dollars or 60 percent of software and services revenue was attributable to our joint venture with Volkswagen Group. Software and services gross profit was 215 million dollars a 42 percent margin due to higher vehicle electrical architecture and software development services by the joint venture. Looking at our balance sheet we ended the quarter with approximately 5.3 billion dollars of cash, cash equivalents, and short-term investments. In July, we sold 86.25 million Class A shares in a follow-on equity offering to raise approximately $1.3 billion for general corporate purposes, including the funding of equity commitments and reserves for our $4.5 billion Department of Energy loan associated with the construction of our Georgia plant. Additionally, later this year, we expect to receive $1 billion in non-recourse debt from Volkswagen Group and an additional $250 million equity investment from Uber, both subject to the completion of certain conditions. Our total available liquidity and targeted future capital is over $14 billion to support Rivian's investments in growth initiatives. This includes current liquidity, the Department of Energy loan, and additional targeted equity investments from Uber and Volkswagen Group, which are all subject to certain conditions. Finally, for our 2026 guidance, in early July we announced we expect to deliver 65,000 to 70,000 total vehicles across R1, R2, and our commercial van, a 3,000 unit increase as compared to our prior guidance. This implies approximately 42,400 to 47,400 deliveries in the second half of the year. We expect deliveries will be weighted towards the fourth quarter as we ramp R2. While we continue to believe our gross profit will increase year over year, we expect the complexity of a new vehicle launch will negatively impact our automotive gross profit in the third quarter, as it did in the second quarter, before becoming a benefit for our overall operations in the fourth quarter as we ramp production and deliveries. As a reminder, we believe this is a transition year for the automotive segment's path towards long-term profitability as we scale our two. For 2026, we expect an adjusted EBITDA loss between $2 billion to $1.8 billion, a $50 million improvement at the midpoint due to better-than-expected revenue related to regulatory credits in the second quarter and increased delivery volumes, which were partially offset by raw material, memory, and logistic cost increases. While economic and geopolitical conditions, including international conflicts, pose risks, we remain steadfast in our plans to invest behind key growth drivers. We continue to progress our autonomy roadmap and the expansion of our sales and service footprint as we scale with our two. We believe these strategic investments will deliver long-term value to our shareholders and customers. Finally, for 2026, we are reducing our capital expenditure guidance by $250 million at the midpoint to $1.7 to $1.8 billion, benefiting from project efficiencies and timing of spend. Our capex spend primarily relates to finalizing construction and tooling for R2 and Normal, the continued build-out of our sales, service, and charging infrastructure, and construction for our Greenfield plant in Georgia. In closing, I'd like to congratulate our team again for the start of external R2 sales in June and the continued strong execution in the second quarter. We continue to believe that R2 and our technology roadmap will be truly transformative for the growth and profitability of our business. I'd like to turn the call back over to the operator to open the line for Q&A.