Greetings, and welcome to Joby Aviation’s Second Quarter 2023 Conference Call and Webcast. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Teresa Thuruthiyil.

Thank you, and thanks, everyone, for joining us today for a discussion of Joby Aviation’s second quarter 2023 financial results. My name is Teresa Thuruthiyil, and I'm Joby's Head of Investor Relations. On the call today, we have JoeBen Bevirt, Founder and Chief Executive Officer; Paul Sciarra, Executive Chairman; Didier Papadopoulos, Head of Aircraft OEM, and Matt Field, Chief Financial Officer. After management's prepared remarks, we will open up the call for questions. Please note that 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. Also, during the call, we will refer both to GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our Q2 2023 Shareholder Letter, which you can find on our Investor Relations website along with the replay of this call. And with all of that said, I'll now turn the call over to, JoeBen.

Thank you, Teresa, and thank you, everyone, for joining us today. I'm pleased to say that we had an incredible second quarter. I often talk about the commitment our team has to delivering on our goals, but this quarter, the team really knocked it out of the park, consistently on time and in every area of our business. Back in our fourth quarter call, we outlined goals for the first half of 2023. We said we would submit all of our Certification Plans to the FAA and we did. We said we would rollout our first production prototype and fly it and we have. I'm pleased to confirm, that the aircraft flew for the first time last week following an extensive ground testing. It performed as expected and we're looking forward to expanding our flight test program with the aircraft before delivering it to Edwards Air Force Base in decourse. We also said, we would select a site for our scaled manufacturing facility. While we could have made a decision in the first half of the year, we've had a remarkable amount of interest in hosting this facility, and so we've taken the opportunity to spend some additional time evaluating various sites to ensure we secure the very best long-term solution and incentive package. Each of these goals is a huge milestone for Joby and reflects our relentless commitment to execution. It's a real team effort, and I'd like to thank each and every member of the Joby team for their hard work in achieving these goals. The rollout of our production prototype was particularly special, because it's the culmination of more than a decade of hard work. We have been building and flying full scale aircraft since 2017, but to be able to build with this level of rigor…

Thank you, JoeBen. I would like to start by focusing on our certification progress. As we mentioned at the top of the call, we have now submitted all of our Certification Plans to the FAA. And importantly, we already have two-thirds of these accepted. These submissions include 13 area-specific cert plans, hardware and software cert plans for every system on board, as well as certification plans covering areas such as aircraft cybersecurity and system safety. Taken together, they formed a third of five stages of the certification process. And I'm very proud of our team for getting us to this point and for submitting these plans on time just as we promised we would in our fourth quarter call. I can't stress how important this progress is. Every time we take a step forward on defining our certification basis, we take risk off the table and solidify our path towards type certification. Looking at the progress chart that we include in our Shareholder Letter each quarter, you will see that we made progress across stages two, three and four. And that is because certification is not a linear process. For systems accepted at stage three, we’re able to proceed formally into stage four. Similarly, some plans are submitted and then resubmitted following dialogue with the FAA. That iteration and dialogue is reflected in the minor fluctuations you will see in the numbers. What matters most when you look at these numbers, is that the vast majority of our certification basis is now in-place, which means the vast majority of our effort is now focused on the implementation stage of our certification which starts with stage four. In stage four, we write and then execute test plans that demonstrate the compliance of every individual part, subsystem and system in the aircraft.…

Thanks, Didier. As JoeBen mentioned, at the end of the first quarter, we have $1.2 billion in cash and short-term marketable securities. This includes the investment from Baillie Gifford of $180 million received in May, and the investment from SK Telecom of $100 million received in June. In our call last quarter, we talked about Baillie Gifford and their long-term investment horizon and their support for Joby. Our relationship with SK Telecom is very similar. The investment made last quarter builds upon a partnership that was first established in early 2022, and like our partnerships with Delta and Uber is focused on building long-term enduring value through aligning our goals with the value we expect to build together by bringing our air taxi service to customers around the globe. In the second quarter of 2023, we incurred a net loss of $286 million, reflecting negative other income of about $170 million, and a loss from operations of nearly $116 million. Other income from the quarter primarily reflected $181 million unfavorable revaluation from our derivative liabilities, as the price of our shares rose significantly during the quarter, partly offset by net interest income of $11 million. Adjusted EBITDA, a non-GAAP metric that we reconciled to our net loss in our Shareholder Letter, was a loss of$ 83 million. This was about $9 million higher than the second quarter of 2022, reflecting increased staffing and cost to support certification, partly offset by increased payments from government contract deliverables. Our adjusted EBITDA loss was about $8 million higher than the first quarter, reflecting the growth in our organization, expenses to support manufacturing and certification and the non-recurring specific DoD contract deliverables achieved in the first quarter. Our global staffing with more than 1,500 employees continues to grow to support our company’s certification and…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andres Sheppard with Cantor Fitzgerald. Please proceed with your question.

Hello, everyone. Good afternoon. Congratulations on another quarter and, thanks for taking our questions. Wanted to maybe start off, was curious to get some of your thoughts around the FAA implement guide that we saw come in a few weeks ago. I know there was some confusion about what scale was, and then the 2028 timeline versus 2025. Just curious to get maybe your thoughts on it. What’s stood out? And, perhaps what do you think is perhaps confusing some investors? Thank you.

Hi, Andres, great to catch up. So, we were really pleased with the work that the FAA did. Again, as I said in my prepared remarks, really pulling forward, the timeline for significant operations to 2028 in time for the Olympics, as well as, committing to the ability for us to and others in the industry, to deliver meaningful operations in the period of time between 2025 and 2028.

Got it. Thanks, JoeBen. And, maybe to follow-up, I was wondering if you could maybe get a little more clarity on the DoD contract, that's coming up soon. We know what the contract is worth, just trying to wrap our head around, what it'll mean in terms of revenue when might that show up, just is there any more visibility around that as of today? Thank you.

Hi, Andres, this is Paul. Happy to cover sort of the DoD work. I mean, just to put to give you guys a little bit of color, we're obviously very much focused on delivering on the aircraft that are required for that contract and really beginning to prepare ourselves for the operations on base down at Edwards. So, we mentioned that the aircraft that we rolled off the production line is going to be the first aircraft that is delivered on that contract. But we've also, already put a number of Air Force pilots through our pilot training program. They went through both the, sit down, portion of the training, the simulator training, actually did remote piloted flights of our aircraft at our facility. So, that was a really great trial run of the same sort of pilot training program that we are eventually going to have to roll out on the consumer side. So, we were happy to check that box. And then lastly, we've even started work down on Edwards, in terms of setting up the charging infrastructure, that's going to be required for operations. So, on the Joby side, we're full steam ahead in terms of being able to deliver on the contract, as soon as possible. A number of the aircraft that are sort of sitting behind the aircraft that we rolled off the line are also designated for Edwards. So getting to those milestones is something that we are squarely focused on. And I think the reason is really twofold. One, is obviously the opportunity to generate revenue, in support -- across that contract. But second, and even more importantly, it's really the first opportunity for us to deliver a product to a customer, and have it operate in the real world as opposed to on our test facility. And there are tons of learnings that come from that, already things like the pilot training, the maintenance profile. We want to make sure that we get all of those learnings, as soon as possible with the largest number of aircraft. And that's the way that we're sort of directing our efforts here.

Got it. Thank you for that. Oh, go ahead, sorry.

I’m just following up on your revenue question. So, the teams are still working through the accounting pieces, but we would expect that to start early 2024 when the vehicles go on base as well, but that's our present timing, but no specifics that we're going to guide towards at this point.

Got it. Thanks, Paul. Thanks, Matt. Maybe just one last quick one, if I may, and apologies if I missed this on the prepared remarks, but are there any changes to the expected, annual cash burn for this year? And I know last quarter was $360 million to $380 million. Not sure if I missed that, are there any changes to that for this year? Thanks, Matt.

No. Yes. No problem. No, changes this year, first half, $164 million right on-track. And, we're holding with our guidance of $360 million to $380 million. Thanks.

Wonderful. Appreciate it. Thanks so much guys and congrats on the quarter. I'll pass it on.

Our next question comes from the line of Austin Moeller with Canaccord Genuity. Please proceed with your question.

Hi. Good afternoon. Just my first question here. The FAA is expected to issue their final rule on band stair mobility by the end of 2024. So, how do you think the timing of that might impact the delivery and receipt of the type certificates once all the flight date has been collected and analyzed.

Thank you, Austin. So, these are these are two separate pieces of our path to certification. The SFAR per pertains to the operations of the aircraft, and as the FAA has been repeatedly confirming that they are on-track to deliver that in 2024. A second piece of that is of our path to certification or say commercial operations is our type certification of the aircraft. And that work as, Didier, outlined is proceeding really, really well. We have submitted the last of the area specific certification plans, as we plan to do on schedule.

Okay. That's helpful. And just, on the AFWERX Agility Prime program, as that progresses now that you've got Archer also receiving an AFWERX’s contract to deliver vehicles, Do you expect that the DoD will ultimately have multiple EV toll vendors on a future program of record? Do you think they might down select to one vehicle?

Hi, Austin. This is Paul. Thanks for the question. I really can't speak to, what the DoD may be planning nor can I speak to the specifics of the contract that, that was sort of previously announced by, Archer. I mean, I think what I can say is that I think it speaks to the depth of the market opportunity on the DoD side of things. And I should say that at least from our perspective, that expands well beyond just AFWERX. As we already announced AFWERX, we actually started our work with DIU, almost six years ago, we progressed that to a project with AFWERX and then we even added the Marines as well to that contract late last year, early this year. And we're in active discussion with other branches of the military and other agencies and the government. Around what additional aircraft would look like. So, we really see some of these events as positive in terms of what the overall market opportunity may be for us and others in the category.

Okay. Great. Thank you for all the details.

Our next question comes from the line of [Savi Sid] (ph) with Raymond James. Please proceed with your question. Q – Unidentified Analyst: Hey. Good afternoon. I was curious, what factors internally, but probably more important that the FAA Do you need finalization before you start kind of building the actual certification conforming aircraft?

Hey, Savi. Thanks for the question. This is Didier. Yeah, great question. So, I think if we step back and think about the five stages of certification. Really need to be thinking about that, both at the aircraft level, but also at the building blocks, sort of the pyramid that I talked about earlier. The three stages that we have, achieved to-date was submittal of the area specific certification plans, really target all of these systems that, make out, an aircraft. So, think of an aircraft as being built out of systems. The key area of focus right now for us is to start the conforming, testing, which is stage four. Of those components and systems that go into an aircraft. And that's why we talked about how we're focusing on getting into four credit testing with the flight control computer right now. You'll be seeing us progressing into some of the larger systems here, moving into the airframe as an example. And some other areas building into the airplane. What's more critical also is the fact that we have built an aircraft and delivered on that just, here recently with the rollout. This aircraft will be effectively, the validation that feeds into all of the other conforming testing that we're doing and drive us into delivering the conforming airplane on time. And all of this is for the plan, expect to have a conforming airplane soon. really, the focus now needs to be on those building blocks that go into that pyramid. Q – Unidentified Analyst: Just to clarify, so do you need acceptance of all the certifications that you've submitted to be able to go forward, or is there any kind of further specifications that you need to hear from the FAA? Just curious.

Yeah. That's a good question. When you think about a conforming air frame, the aircraft is also intended for a specific purpose, right? And the conforming aircraft could be dedicated for, for example, for flight control purposes, right? So, if you think about the flight control, the performance swim lane as an example, then you would need the certification plans and the certification test associated with that area accepted by the FAA. So it's swim lanes. That means we can continue to proceed even at the aircraft level with specific areas, even though some other areas may be still under discussions with the FAA. So really tranches is how we should think about that. Q – Unidentified Analyst: That's helpful. Appreciate it. And if I might, with some of the capital that was raised recently, I think it was noted that, capital enables the acceleration of certain events. And I was wondering if you could provide a little bit more color on what those might be.

Hi, Savi. This is Paul. thanks for the question. Yeah, when we made the announcement around the additional investment from the folks at Bailey a few months ago, That to us was an opportunity to, accelerate and sort of forward invest in areas of pilot production to make sure that we can support the brand new opportunities that presented themselves with the new DOD contract that we announced at the time. So, a lot of the work that, some folks were able to see when we, they came down to the rollout of it, around the scale up of that pilot production facility, the number of aircraft that we're starting to roll off the line there all of that is really some of that forward investment applied. Q – Unidentified Analyst: Got it. Helpful. Thank you. Our next question comes from the line of Bill Peterson with JPMorgan. Please proceed with your question.

Hi. Good afternoon. This is Mahima Kakhani on for Bill. We really appreciate the disclosure around the aircrafts motors and batteries. I think we've heard it's generally viewed that pouch fell as well higher performance and other advantages could also have more areas of failure, especially when it comes to thermal runaway. Could you provide some color on what Joby is doing on the module and pack side to mitigate some of that safety risk?

Thank you, Mahima. This is JoeBen. Appreciate the question. So, we've been very thoughtful about the selection of ourselves. We began, testing cells in our lab many years ago and, have tested lots of different formats of cells And we when we think about self-selection, we're thinking about many different dimensions including and foremost the safety. We have done some ground-breaking innovation on at the pack level, the module level, to ensure that we conform with the standards that we've agreed to with the FAA. And again, you know, as Didier spoke about, having submitted all of our area specific certification plans is a huge milestone. We've been working with the FAA, on all of these requirements for many years since back before 2018 when we first applied for type certification. And so this is a monumental achievement for the Joby team, to be able to now be moving into the stage where we can do four credit testing. Of course, we've been doing testing in our labs, on cells, on thermal runaway, on dropping packs, proving to ourselves that we have the safety and the performance across all the different dimension and across all of the systems. And so we’re really really pleased with the progress that we are making and with the performance that we've demonstrated in the lab.

Thank you, JoeBen. Really appreciate that color. Maybe a second one from me, but what is your view on the FAA's proposed reserve requirements for powerless aircraft being consistent with some larger aircraft. I believe it's 30 minutes in the daytime and then 45 minutes at night. are these requirements built into your current expectations and into your certification plans? Just curious there.

Hey, Mahima, this is Didier. I'll take that one. So we were aware of, some of the proposed, reserves here and do understand that, they're really intent. You go to step back and think about this reserve as intended to cover a wide area of range of the market. We are in discussions with, VFA, just like with other applicants on the specificity of the reserves required for our operations. Back to your second questions. The numbers that we have provided do have considerations for reserve, specifically around the areas of the market that we're targeting. And so that's obviously part of our considerations, both in our certification plans and the operations that we're planning around.

Okay. That’s very helpful. Thanks a lot.

Next question comes from the line of Edison Yu with Deutsche Bank. Please proceed with your question.

Hi, thanks for taking the questions. First off, I want to come back on FAA 2028. How do you interpret when they say large deployment? Is that 20, 50, 100? And what's your sort of view on how fast that can ramp? Assuming we do hit off in 2025 with the actual operations?

Thanks, Edison. This is JoeBen. So the numbers that I had heard, informally from the FAA were substantially larger, than the numbers you were just speaking about in terms of their targets for deployments in at least one major metropolitan area in the US, but I would leave it to the FAA to formally state those numbers.

Understood. and then on the DoD, the military opportunity now that we have, I know we cited the contract with Archer, what's your view on sort of the total kind of opportunity there? Is this either in terms of dollar value in terms of number of aircraft? And is there optionality you later on to work with friendly allies, or is this going to be kind of very focused on a US launch?

Hi, Edison. This is Paul. Happy to pick that one up. So I think it's probably premature to sort size the overall market opportunity across DoD and sort of other government customers. But it's fair to say that it's large. I mean, if you take a look at the army, for example, they operate the largest rotorcraft fleet in the world. And that's just one of the number of branches of the DoD. And that doesn't include other areas of government, whether it's customs and border patrol, or other sort of agencies that sort of sit in the broader -- under the broader umbrella. So, I think the thing that we are focused on, right now with respect to DoD is getting aircraft into service. It's very important, I think, both for the customer and for us, to be delivering product, seeing that product perform against the mission types that are valuable to that customer and learning the things that we need to learn about how these operate, how they're maintained, how to sort of produce them at progressively higher volume. So that's the thing that we think is sort of most important about the DoD opportunity for us in the near term. This isn't something that's 2 or 3 or 5 years away. This is something that we're executing on right now, and we've got opportunities to begin to turn over those cards, both on the revenue side and on the learning side very, very quickly. The faster we do that, the faster we have an opportunity to begin to expand those opportunities outside of AFWERX and the Marines to other branches and in turn to other agencies and the government.

Got it. And if I could sneak one more in on that. Have you provided an indication on how much sort of contract R&D -- the contract is provided thus far?

Hey, Edison. It's Matt. No. We've not provided that that data. Once we start getting to revenue and so forth, we'll probably start talking a bit more about that, but we've not provide any specifics about the contract R&D.

Okay. Thank you.

Thanks, Edison.

And we have reached the end of the question-and-answer session. I would now like to turn the conference back over to Joby Aviation CEO, JoeBen Bevirt for closing comments.

Thank you all so much for joining us. we're really, grateful for your participation. As we said at the top of the call, we're laser focused on execution that's on certification, manufacturing, and as we prepare for the launch of our commercial service, we're very pleased with our execution over the first half. And we're just going to continue to deliver. Also very, grateful for the support whether that’s the national state and local level and from international governments, the momentum building in this industry has never been greater. Also, very appreciative of the FAA and the focus that they're putting on this important new industry. Finally, we would love to express my sincere gratitude to everyone on the Joby team. who's been working really, really hard and absolutely knocking it out of the park. Thank you all. And just close with we've got the strongest balance sheet in the business, but that doesn't mean that we're going lose our focus on spending very, very thoughtfully and, delivering, exceptional results. So thank you again for joining us and, we're really looking forward to catching you again soon.

This concludes today's teleconference. You may disconnect your line at this time. Thank you for your participation.