Joby Aviation, Inc.

Good afternoon and thank you for holding. My name is Joe and I will be your conference operator today. Welcome to Joby Aviation's third quarter 2022 conference call. At this time, all participants are in a listen-only mode. As a reminder, today's call is being recorded and a replay of the call will be available on the investor relations section of the company's website. Please note that some of the company's discussion today will include statements regarding future events and financial performance and 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 the company's 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. This call will also include references to the company's adjusted EBITDA, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's shareholder letter, which is posted in the investor relations section of the company's website. On the call for management today are Joe Ben Bevert, Founder and Chief Executive Officer, Paul Sciarra, Executive Chairman, Didier Papadopoulos, Head of Aircraft OEM, and Matt Field, Chief Financial Officer. After the prepared remarks, we will open up the call up for questions. I will now hand the call over to Mr. Provert.

Good afternoon, and thank you for joining us. It's already been a full year since we started reporting our financial results, and I'm grateful for your continued dedication to learning about our progress. In that first call, we talked about our intention to deliver on transparency for our shareholders. And I believe we've lived up to that goal over the past 12 months, providing you with deep insight into each area of our business. And for the first time last quarter, providing a detailed stage-by-stage look at our progress on certification, which we've updated in today's shareholder letter. During this quarter, and consistent with that goal, We opened up the doors to our marina production facility as part of our inaugural field trip, which I'll talk more about later. A couple of days before that event, we unveiled our living lab terminal, which guests were able to experience at the field trip. The lab was developed in partnership with Skyports and is going to serve as a base for us to design the experience our customers will have when they arrive for one of our flights. This was just one of several steps we took this quarter to lay the foundation for our future commercial service. We also expanded our longstanding partnership with Uber. Back in 2020, we announced a groundbreaking deal to integrate our service into each other's apps in the U.S. We've now taken that agreement global, and with more than 100 million passengers traveling with Uber each year, we've opened the door to delivering seamless, multimodal journeys in international markets around the world. In October, we applied to the Japanese authorities for the validation of our FAA certification, building on a similar path we are taking in the UK. As with the UK, we can take advantage of the same certification work we will do with the FAA to streamline our certification in Japan. This marks another important step toward the international rollout of our commercial service. We also announced a groundbreaking partnership with Delta. We're incredibly excited to be working with the world's leading airline to deliver a service like no other. Alongside our standard airport to city operation, we'll be working with Delta to develop an elevated and seamless home to seat experience for their customers, fully integrated into the Delta ticket buying platform. Tens of millions of Delta customers fly through markets we're targeting each year. From New York and L.A. to the San Francisco Bay Area, South Florida, and London, our partnership presents a unique opportunity to anchor our service in those markets and grow out aerial ride-sharing networks from those cornerstone city to airport routes. We also see a great opportunity to work together on delivering the infrastructure required to bring our service to life. We share a vision of delivering a service where the distance from our aircraft to a Delta aircraft can be measured in steps rather than miles. And we're looking forward to bringing that to life by building on the incredible investments Delta has made in their airport terminals over the past few years. For example, in LAX, JFK, and LaGuardia, as well as by leveraging the deep relationships they maintain with local stakeholders. But sitting behind that service is of course our aircraft. So let me turn to the progress we're making on certification and manufacturing. These are really our core areas of focus right now and will continue to be for some time. As I mentioned at the top of the call, you can find the latest version of our type certification progress chart in our shareholder letter. But in brief, on stage two of the process, that means of compliance, We moved from 74% accepted by the FAA to 84%, which puts us in a strong position to be substantially complete with Stage 2 by the end of the year. In Stage 3, we submitted one additional area-specific certification plan during the quarter, bringing the total number to four. We also submitted our first equipment-level qualification test plan to the FAA during the quarter. This was a really significant moment for us and I'm pleased to say the plan has been accepted by the FAA. The qualification plan covers the flight control computer and serves as a blueprint for all of the other electronic componentry that will go through this process in due course. The acceptance of the plan contributed to the progress you can see on stage four and enables us to proceed with four credit qualification testing. I'm genuinely thrilled with the progress we're making and the momentum our team has on certification. But I don't want to understate the amount of work ahead of us and the impact of the changes the FAA announced earlier this year. We now anticipate starting commercial passenger service in 2025, following the publication of the final SFAR regulations by the FAA in late 2024. And in parallel, we're striving to complete type certification to support this timeline. I'd like to spend a few moments unpacking this new date. At a high level, you can think about it in two buckets, external and internal. Starting with the external, we originally believed we would certify our aircraft with the FAA under Part 2117A. That path would not have required any new or modified rulemaking on the operational side, rules which are known as SFARs, or Special Federal Aviation Regulation. But as we have discussed in previous calls, the FAA has advised the sector that we will be certifying our aircraft under the 2117B path instead. This means that to operate our aircraft, we will need SFARs in place, and the FAA has advised that they don't expect these to be finalized until late 2024. We therefore don't expect commercial passenger service to start until 2025. We're very grateful for the FAA's leadership in this nascent sector, and we're in close contact with them on the process for drafting and finalizing the SBAR requirements. We have good visibility on it, and we're preparing to quickly incorporate any new requirements that come out of it into the aircraft. There are also internal reasons for the shift. First, there's the challenge of having the right team in the right place at the right time. We've done a lot of work to anticipate the growth required in our team, adding a number of key members and groups as necessary. For example, adding the avionics team earlier this year, which gave us the additional velocity on software verification. But there are still areas where we have gaps to fill. Another critical part of the certification is translating prototype designs into certifiable parts. We've made significant investments in this capability in terms of people, equipment, and processes, which many of you got a chance to see firsthand at our field trip. While these have been critical investments that are producing great results, the learning curve on manufacturing processes has been steeper than originally anticipated. Certifying novel technologies like ours is a complex process, and we're under no illusion that these will be the last challenges we face. But I do believe that Joby is uniquely positioned to navigate these challenges, whether internal or external. We're now on the firmest foundation we've ever had, and we understand the certification path with the FAA more clearly than ever. We have the right teams in the right places, as well as plans to fill remaining gaps, particularly as we move into a busy testing phase. And we're working through the design to production growing pains that every manufacturing business experiences. Also, it's important to note that we are in active discussions to begin initial service operations in 2024 with the Department of Defense. We see that work as an important opportunity to learn about operations, maintenance, and the performance of our aircraft in a real-world environment. We also think that operating on base will play an important role in building public awareness of and acceptance for commercial passenger operations. Last, but by no means least, it has the potential to provide a significant revenue stream in its own right ahead of FAA type certification. And on that note, our flight test campaign, which supports our work with the Agility Prime program, has been making great strides this quarter, regularly flying several times a day, In September, we flew more hours and more miles than in any previous month, only to break that record again in October. We've now flown more than 10,000 nautical miles with pre-production prototype aircraft since 2019. The flight data generated from these tests is critical to tuning our test facilities and ensuring our production aircraft is well placed to meet those certification and program goals. Some of you had the chance to see our aircraft in action as part of our inaugural field trip last month. It was a real pleasure to open our doors for the first time in this way and let people visit our pilot production plant. Attendees were able to see the progress we've made across all the major aerostructures for our first production intent aircraft, as well as the additional composite structures we've made that will be used for our second and third production intent aircraft, as well as for testing. Attendees also witnessed the low noise profile of our aircraft compared to the helicopter and chase plane that accompanied it. During the tours, guests were able to see numerous production intent actuation, energy management, and flight electronics assemblies that have been built at our San Carlos facility, including a complete integrated propulsion system. Many of these assemblies are now undergoing testing as we prepare to integrate them into our production intent aircraft later this year. And although it wasn't on display, we also built and tested our first landing gear assembly for our production intent aircraft during the third quarter. Apart from the experience of hearing our aircraft, which is also highlighted in many of the videos we have posted, the message we wanted people to take away from that event was the remarkable benefit we see from vertical integration. It really is Joby's superpower. From our composite structures to propulsion and actuation system, we've developed the vast majority of our aircraft in-house. By owning the design, manufacture, and testing of these systems and structures, we're able to prototype much more rapidly and continually increase our technology lead. It also allows us to engage in systems-level optimization of our aircraft in a way that is not possible when each system comes from a different supplier and is designed to the lowest common denominator across multiple customers. It's fair to assume that there are times when this approach is harder work, when it requires longer hours and a greater investment, but we're confident that the hard miles are worth it for the more performant aircraft, a better customer experience, and over the long arc, a more durable competitive advantage. And on that note, Matt, over to you.

Thanks, Joven. Good afternoon, everyone, and thanks for joining us today. I'd like to take the opportunity to share our general approach to financial and resource planning at Joby. Our plan has always been built to be adaptable, something that we have talked about consistently over the past year. We adjust our pace and phasing of initiatives to optimize our spending across the organization. This is one of the many benefits of our vertical integration, as we can modify our spending and resource plans dynamically because we have a full understanding of all elements of our business and how they fit together. Our early investments, much like our approach to aircraft development, remain modest as we iterate rapidly and incorporate learnings before accelerating. Visitors to our first ever field trip saw our pilot production plant, for instance, where we are building a production line at low volume to validate and certify our manufacturing processes in partnership with the experts at Toyota. This lower investment approach enables us to prove out scalable technologies prior to the sizable investments required for higher volume production. We take this approach in all parts of our business, enabling us to make timely and appropriately sequenced progress towards our goals across certification, manufacturing, and commercialization. We are well capitalized with $1.1 billion in cash and short-term marketable securities at the end of the third quarter. This cash balance excludes the upfront investment of $60 million from Delta, which was received on October 7th through the issuance of common stock. The Delta partnership is unique in the industry not only for the depth and quality of the operating engagement, but also for the financial arrangements, which are outlined in our filed 8K, whereby Delta has the opportunity to invest further, up to $140 million through warrants, tied to meaningful operating milestones and with exercise prices that reflect the value we aim to create together for our customers and, in turn, our shareholders. This arrangement provides us the opportunity to further strengthen our balance sheet in the future. In addition to our business progress, I should also mention that we were pleased to see the Advanced Air Mobility Coordination and Leadership Act signed by the White House this quarter. We have been working with key congressional leaders and other aviation stakeholders to bring this law to life. It supports the expansion of commercial eVTOL service by establishing a broad government group to take learnings from early operations and use them to proactively identify opportunities to accelerate future growth. And it's another great demonstration of the U.S. government leaning in on this new technology. This support, in combination with the support of the Department of Defense, gives us the right foundation for the U.S. to continue to lead in this sector. Turning to our results in the third quarter of 2022, We incurred a net loss of $79.2 million, or 14 cents per share, reflecting a loss from operations of $97.1 million, offset by other income of $17.9 million. The loss from operations was below the second quarter, reflecting a lower stock-based compensation expense of $13 million and higher payments from the Department of Defense as part of our Agility Prime contract. The favorable results in other income reflected the revaluation of our derivative liabilities worth $12.6 million and interest in other income, which rose to $5.4 million, reflecting increased interest income on our invested funds. Total other income was also below the prior quarter, primarily reflecting the smaller favorable revaluation of our derivative liabilities. Adjusted EBITDA, which as a reminder is a non-GAAP financial measure that we've reconciled to net income in our shareholder letter, was negative 77.7 million. This was 21.8 million higher than the third quarter of 2021 and 3.6 million above the prior quarter, primarily reflecting the continued growth in personnel to support our operations and R&D costs associated with building parts both for our testing and for our production intent aircraft. As of September 30, we had nearly 1,400 employees globally. Cash used in operating activities and purchases of property and equipment totaled $73.7 million for the quarter. Spending increased compared with the prior quarter, reflecting the additional pay period in September and increased staffing, partly offset by the non-recurrence of purchasing avionics in May. For the first nine months of 2022, our net cash used in operating activities and purchase of property and equipment totaled $207.2 million. As a reminder from the last quarter, our cash flow for the nine months, as referenced in our shareholder letter and will also be included in our 10-Q, excludes cash held in short-term investments. In the first quarter, we invested a substantial sum of the proceeds from our merger with reInvent Technology Partners. Therefore, our statement of cash flow will show a more sizable cash outflow reflecting this investment. As I mentioned at the outset, we remain disciplined in our use of cash. Our key priorities are certification, early manufacturing operations, and initial service operations, including supporting our Department of Defense partners. We continue to manage the pace and timing of our efforts to judiciously manage our cash outflow and we will continue to pursue opportunities where we may receive payments for work performed. For example, we are working with the DoD to put our aircraft into service prior to receiving FAA-type certification. This not only provides cash to our business, but it allows us to build operational experience in areas like training, maintenance, and scheduling that are critical to our future success and would be impossible to test otherwise. This concludes our prepared remarks, and I'm pleased to say that I'm also joined here by Paul Sciarra, our executive chairman, and Didier Papadopoulos, our head of aircraft OEM, to also address any questions you may have. Operator, would you please instruct participants on how to ask questions?

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Andres Shepherd with Cantor Fitzgerald. Please proceed.

Hey, good afternoon, guys. Congrats on another quarter. And congrats again on the first public test flight a few weeks back. It was great. We got a chance to attend. That was very well organized. So congrats again. I guess my question is just around certification. I just want to be sure I'm understanding this correctly. So it looks like the FAA full certification got pushed to 2025. But it looks like you also anticipate working with the Department of Defense in 2024. So I guess, could you maybe just elaborate on how and why that's the case? So certification is now 2025, but still get a chance to work with the DOD in 2024? Thanks.

Thanks, Andre. I really appreciate you coming out and coming to the field trip. And, you know, again, What I hope you have seen is how hard we're working to bring up both the pilot manufacturing facility, but also all of our processes to be able to build conforming components. And that really is all in service of both of these goals that you laid out, both the service for the DOD in 24 and our commercial passenger service in 2025. With regard to your question on type certification, Certification on the timeline there. The key piece is to bring the passenger service online, we need the SBAR given the change that the FAA made from Part 2117A to Part 2117B. And so we need that SBAR completed. That's a work in progress. We will see or we expect to see a draft of that in the coming months. and that will increase the certainty that we have. Today we have more certainty than we've ever had and this will increase it further. We also have internal pieces that we're driving on in order to deliver on type certification either concurrently or in the same timeframe And, again, our ambition is to launch our commercial passenger service in 2025. Got it.

Okay. No, that's very helpful. And maybe as a quick follow-up, if I may, just in regards to your capital needs, right? So, obviously, you remain well capitalized, $1.1 billion in cash and equivalents. Um, you also have that shelf out for up to, uh, I believe it's up to a billion. Um, so I'm just wondering, you know, how are you thinking about your capital needs now that the certification timeline got, got, uh, pushed? Do you anticipate those needs changing? Do you anticipate potentially using that shelf sooner than, than initially we're targeting? Just any sort of color there would be helpful. Thanks.

It's not so. As you say, it's a strong balance sheet that we have, and we're in a fortunate position to lead the industry with that with $1.1 billion in the bank. There's no meaningful change to our cash flow and projections that we've seen because we have all the levers we can pull because of the vertical integration around the pace and timing of our spend, especially on those commercialization elements. The other piece that's important to highlight is the DOD operations in 2024. And so you really see those early planes potentially going into DOD service pending the outcome of the contracts that are underway. So we're really focused on being judicious with our spending and making sure our expenses align with our priorities around certification and manufacturing. So we don't have any plans in the immediate future to access the shelf. but really took the opportunity to put that in place because it does cover over the next three years, and it was just a prudent action to take to be opportunistic should the occasion arise.

Understood. That's great. Thanks, Matt. That's it for me. I'll pass it on, and congrats again on another quarter.

Thank you.

Our next question comes from the line of Savi Sith with Raymond James. Please proceed.

Hey, good afternoon, everybody. This is actually Matt on for savvy. My first question would be for Joe, Ben, Kevin, you spoke of filling gaps and translating the prototype design into a certifiable aircraft. Can you maybe elaborate on whether you know that's still a team that needs to be built out? Or is it in regard to aircraft design? And when do you think you'll be comfortable to share some of the additional design specifics for that production aircraft, such as payload capacity or anything else?

Thanks, Matt. And thanks again for joining us both today and at both of our facilities. One of the things that I think you got to see was the remarkable progress that we're making building our production intent uh aircraft and you know both the powertrain components and also the airframe uh that really demonstrates the the confidence we have and the maturity of um the aircraft we're building as as you as you also saw we've been and heard uh when with the flight test uh That aircraft has been flying since 2019 and, again, really demonstrates the maturity of our design. And so we do feel really good. In terms of your question around the gaps on our aircraft, I would point to the acquisition of the avionics team as an area where we really leaned forward and brought in software verification capabilities, which we believe will be crucial for us. And then the other element is on testing. As we scale up and testing really moves into focus, the stage four of our certification process, the The key area to focus on there is that we've just received approval from the FAA on our first certification plan for the flight control computer. And this allows us to go and begin four credit conformity testing, which is a huge milestone that lays the blueprint for all of the electrical systems on the aircraft.

and uh that's going to be really the focus for us uh as we look to uh the the coming uh quarters okay very good thank you for that and thank you for hosting um if i might add i will say i didn't hear much though when i was there from the aircraft as it was very quiet so so uh that was pretty special um if i may well my next question from matt um Could you provide some timelines on when you're thinking about the higher volume phase one production facility, and maybe once that is decided, how long it would take to stand up, and are there any financing options you're considering at this point in regard to that facility? Thanks again for taking the questions.

Yeah, sure. As you said, we're really focused right now on our pilot plant, which is 10 aircraft per year. I'm really pleased with how that's coming together. Really dialing in now is all those production processes for production cert that's required for scaling. What we're looking for is what's that right time to bring that higher volume online. So the way we think of that is really that needs to be in service of commercial service. And so making sure we dial that in right. We have really good line of sight into all of our lead times for both equipment and the plant itself. So I'm not concerned about us managing that effectively at all. In terms of financing, there are a number of opportunities for us to finance that scalability. We're really pleased with how the U.S. government leaned into programs like Title 17 and actually added additional funding to the Inflation Reduction Act for advanced technologies such as ours. So really encouraged by the support the U.S.

government's providing for this sector. Great, thank you all again. Thanks, Matt.

Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. And our next question comes from the line of David Zazula with Barclays. Please proceed.

Hey, good afternoon, and thanks again for taking the question and hosting me a couple weeks ago. Just my question is, first, maybe hopefully I'm not too wordsmithing here, but it sounded like the words you used for means of compliance were substantially complete this year. And I think that might be different than how you had described it in the past. Does that represent any incremental uncertainty around the means of compliance in 2022?

Yeah, this is DDA David. Thanks for the question. In terms of the needs of compliance, we're, like you said, for the most part, complete with these. We're right on track exactly where we want it to be at this point in the program, really focusing more on transitioning towards the certification plan and then moving into the testing area. Like we said earlier, we're pretty excited to have submitted and gotten acceptance from the FAA on our first electronic component flight test, sorry, qualification test. And that's really more of an outcome of having completed the relevant means of compliance and then a cert plan associated with it. So we're exactly where we need to be at this point.

Great. And then digging in relatedly, you have been talking at least for a couple calls now about the area-specific certification plans. Just give us a little more color on how many you're intending to submit right now and what the pace we should be expecting on that moving forward?

Yeah, I think what's best to do in order to answer this one is to go back to the charts where we have been presenting. And instead of thinking about them in terms of numbers, think about the percentage itself because the numbers could sometimes mislead and vary. So as we shared in the charts earlier and in the update, we have just recently submitted one more area-specific certification plan, and we expect to make really good progress on those towards the end of the year. So the percentage is there to focus on for the most part.

Awesome. And then I guess if I could just tack in a real quick one. One of the reasons cited for the potential change in timeline was the need to hire personnel. I guess, you know, for Matt or Joe, are you having difficulty hiring personnel or any areas that you're running into challenges hiring that you weren't expecting?

So we are continuing to hire at pace. There are a few areas that we highlighted specifically in test and software where we are aggressively recruiting. But we're very pleased with the caliber of the talent that we're bringing in, but are extremely focused on continuing to add in a few core areas. And also, again, highlighting the acquisition of the avionics team to really accelerate the software verification work.

One of the great things about it. The agonist acquisition is to your question about hiring. It's really been a great addition to the team, though originally focused around verification activities. We've also learned that we are able to augment that to leverage their expertise in areas such as the software development. So in my mind, that's definitely paying double dividends and really excited about the breadth of opportunities that it presents on that front.

Great. Much appreciated. Thanks again.

Our next question comes from the line of Jason Holcomb with Morgan Stanley. Please proceed.

Hey, guys. This is Jason. I'm for Christine today. In regards to the Delta partnership, are you able to provide any additional context on sort of what some of the key milestones are that must be met to potentially receive the additional investment from Delta?

Sure.

Jason, this is Paul. I'm happy to take the question on Delta. As we said in the sort of prepared remarks, we're very excited to be adding Delta to our list of partners, one that includes obviously folks like Uber and Toyota as well. One of the things that made us so excited about this partnership was that it really brought two things to the table. First, as Matt referenced in the prepared remarks, it brings capital and potentially more capital to an already strong balance sheet. And then second, it gives us an opportunity to lean into the investments that Delta has already made in terminals and with regulators in some of the cities that we're targeting. Each of those are going to be important pieces to this opportunity. And with respect to your question on the additional investment, I think we can say that there are two additional joint milestones that we're going to be focused on to sort of unlock the potential for that investment. The first is around a demo or sort of trial of this integrated home-to-seat service. And we already have our team and in turn the Delta team working hard on that. The second is locating takeoff and landing infrastructure at two of the airports in the markets that we highlighted. And our teams and in turn the Delta teams are already working on that as well. So we're very excited about what this Delta opportunity can provide over time. And I can say that our teams and in turn the Delta teams are working pretty aggressively against the milestones that should unlock those pieces.

Thanks, Paul. Appreciate that. And then maybe just one last quick one for Didier. So in terms of means and compliance, so as you sort of noted in your chart, Joby's sort of 96% through, while the FAA is right around like 84%. What is the sort of the delta there? And I guess what is it that the FAA is sort of still working through that sort of Joby has completed on their end or on your end?

Yeah, so there's no, maybe first let me try and explain the top line and the bottom, the 96 and the 84. Really those are in general what we might be submitting. For example, the difference of these is what we are ready with or submitted versus what the FAA has responded. So there's more of a timing cycle to that. And so one is typically always trying to catch up with the other one. And in terms of what is left It's not really a specific area of focus that's left versus others. It really is a combination of small spots here and there. So for the most part, really pretty good progress on that front. Really couldn't be happier than where we are right now.

Thank you, DJ.

I'll leave it there.

Thanks, guys. Thank you.

Thank you. Ladies and gentlemen, again, if you'd like to ask a question, please press star 1 on your telephone keypad. And our next question comes from the line of Edison Yu with Deutsche Bank. Please proceed.

Everyone, thanks for taking the questions. First one, wanted to understand some of the non-regulatory reasons for the post-moment of 2025. Is there any way to maybe provide some specific examples about the manufacturing aspect? Is it in the context of just kind of normal scaling up, or were there things that you kind of wanted to vertically integrate and those are ending up being much harder to do? Yeah, thank you, Addison.

Appreciate it. This is Jovan. We have, as you know, really focused on vertical integration. And this is a huge asset, but it also means that we're taking on a heavy lift. And we have been investing in next generation manufacturing processes, whether that's on the powertrain components and having a full digital system for our work instruction or on the composite side with our automated fiber placement. Across all of those systems, we have to put the processes and procedures in place, and we are building a next-generation aviation company. This is hard work, but it is going to pay massive dividends over both as we're working through the certification of these components and this aircraft, but also for many years to come. And so we believe those investments are really valuable. They have taken a lot of hard work and have taken a little longer than we had hoped, but we feel like we're coming around the corner and that the dividends are really going to start to pay off.

Understood.

And I guess if I could ask about maybe the financial implications of that, I think last quarter it sounded as if you were sort of being a bit more prudent or dialing back the spend. But I think earlier on the Q&A, you had said this doesn't really impact that. So, I guess, is it just – are you offsetting the kind of incremental spend here with cuts elsewhere? Or how does the math kind of work out that there isn't really any change to the kind of spend path?

You rightly pointed out, we did dial back last quarter, really reflecting external forces. So you look at the macro factors and the headwinds, the industries writ large have seen whether that's inflation, interest rates, commodity prices. We felt it was prudent to make sure our spending is dialed in on certification of manufacturing and really have dialed back elsewhere. You know, that proved prudent as we now look at the timeline and the updates we're sharing today. And that does allow us, obviously, to extend our runway somewhat. In addition, we look ahead to how we think about some of those other big investments, phase one manufacturing, obviously our spending on planes, times with production. And so we time those as our schedule dictates. And so that further extends the runway. And then as we ramp up commercialization, that's a heavy lift. And so as that pushes back, we push those expenses back as well. So again, having that full visibility through the whole stack allows us to dial our spending judiciously.

Thank you. Thank you.

And our last question comes from the line of Bill Peterson with J.P. Morgan. Please proceed.

Yeah. Hi, good afternoon. Thanks for fitting in and just echoing all the other ones.

You said that, you know, it's a great that you guys put on a few weeks back. So thanks for that. I wanted to look at the, this the DoD in more detail, especially in light of commercial services, perhaps starting later, as you guys have talked about, I guess, what does that look like? I mean, can you support all the branches, you know, how close would this aircraft be to your conforming aircraft for commercial applications? How should we think about the revenue opportunity? And specifically, is this kind of more like an OEM and aftermarket model where you could collect upfront cash? Imagine things are not finalized, but how should we consider the opportunity for sort of 2024 and beyond? Hi, Bill. This is Paul. Thanks a lot for the question. You know, we have spent a lot of time, and I think Joby is relatively unique in the category, in having these sort of two paths to market. One, through FAA certification and to broader consumer service. And then two, through our partnership with the DOD to service and revenue opportunities in that sector. And that obviously stands outside of FAA certification. When we think about that opportunity, we've already announced, obviously the Air Force was our sort of lead branch. in terms of evaluating this aircraft for use there. We recently added the Marines last quarter who are going to be following progress and that we're working very closely. And we think there are opportunities to extend to the other branches as well over time. What that looks like, Bill, is we think there are sort of two paths that could take. One is a contractor-owned and contractor-operated model. So folks that are familiar with government contract, I think, should understand what that looks like. And then in turn, another would be a sort of acquisition type model with sort of maintenance sort of on the back end. We don't know yet in the conversations in terms of which way that's going to go, but we think both are viable and they may be different for different branches depending on the use cases that they're evaluating. In terms of kind of sizing that, it's hard to say right now, But look, as we take a look at the number of helicopters that are deployed in the world, the U.S. Army, for example, has the largest helicopter fleet with more than 5,000 vehicles in operation. So that gives you some size, I think, some way to sort of think about the sort of maximal opportunity that's there. And we're very excited about continuing to accelerate that work and get closer and closer to delivering those into service within the branches. Okay. Thanks for that. That's actually terrific color. I wanted to talk about certification. It sounds like you're saying for whatever's remaining, the last sort of 10 to 15% remaining to be agreed upon, because presumably you've made more progress with the quarter ends. It sounds like you said it's, the word you use is combination of small stuff, but I guess any sort of color of what you could say what's remaining, and then maybe for the testing and analysis, what kind of areas are you able to move forward in terms of I guess getting for credit type of certification, if you can provide any additional details on that, that'd be helpful. Thank you.

Yeah, this is DJ. Thanks for the question. So the remaining parts are really distinct subsets, parts associated with various systems like flight control systems, propulsion, unit endurance system, for example, or acoustics, they're in no means a representation of areas of risks or lack of progress per se, really just a matter of time on those. Not sure I can say more on that. The areas that we can make progress on really are the ones associated with the area-specific surplus we have submitted in the past and those that have been accepted this is where if you look at the 37 percent progress you can see here on stage three all of these are ones where we can now proceed into the testing phase and start taking for credit points so to say with the FAA so the flight control computer electronics unit which was all designed built in-house and a lot of you were able to see during the field trip visit. That's one of those examples where we have got our CERT plan approved, our qualification test plan approved, and hence have gotten an okay from the FAA to start the testing and making progress. So that's one of the many examples on that front. Really excited about that. Like Joven was saying, One of the great benefits of this is it sets the blueprint for the other electronics parts that we'll follow really shortly after. So that's an amazing exercise and a great demonstration of the capability of the team here, but also the lock-in step coordination with the FAA.

Yeah, thanks. That's a terrific call. Thank you.

If I could just speak one last one. So I know you guys are being prudent. This one's for Matt, by the way. So I know you guys are being prudent on cash spend, but Is there anything, I guess, in terms of the next couple of quarters or the next year in terms of lumpiness we should think about and timing of, you know, building conforming aircraft or just how to think of, like, the trajectory in terms of some of the spend, whether it be, you know, I guess, primarily CAPEX or maybe other or even OPEX, but as we should sort of contemplate as we look into next year?

Yeah, obviously, we'll be providing guidance on 2023. At the right time, usually we do get a fourth quarter earnings call. In the near term, we provided guidance to 320 to 340 cash burn, which was lower in the last quarter. We'll be at the low end, if not below that. But that will have some lumpy capital expenditures in the fourth quarter. So there's going to be a lump there that we're going to be spending as we build out our facilities and so forth. And then the next lumps would be really as we look into either aircraft production and that ramping up or phase one, sorry, phase one manufacturing. Because the pilot plant, as you guys saw, is largely complete. We still have some parts of the integration line to go and a little bit of powertrain, but largely the big assets are behind us. So I would say really it's about aircraft production and then when we – to phase one, and we'll be talking more about that in the future.

Okay, thanks, Ben and Tim.

Thank you.

Thank you. Ladies and gentlemen, this concludes our question and answer session, and I would like to turn the call back to Joel Ben Bevert for any closing remarks.

Thank you all so much. Really, really appreciate your time and really appreciate all of you who were able to join us for the field trip. That was fantastic. Wanted to, you know, a number of you that had questions on CERT and CERT timing want to be really clear on what we're driving towards. First, we're It's important for us to emphasize how important the service with the DOD is in 2024, given the SBAR. And then second, that we are continuing to be laser focused as a company on delivering Type Cert as soon as possible. Still doing everything we can to hold that in 2024. so that with that SBAR, we can enter commercial service as soon as possible in 2025. And again, thank you all so much for joining us. Really, really appreciate all of your insights in the industry and looking forward to our next call. Have a wonderful evening.

This concludes today's conference. Thank you for your participation. You may now disconnect.