Joby Aviation, Inc. (NYSE:JOBY) Q1 2024 Earnings Call Transcript

Joby Aviation, Inc. (NYSE:JOBY) Q1 2024 Earnings Call Transcript May 7, 2024

Joby Aviation, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to Joby Aviation’s First Quarter 2024 Conference Call and Webcast. At this time, all participants are in a listen-only mode. [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.

Teresa Thuruthiyil: 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.

JoeBen Bevirt: 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 three 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 continue to deliver quarter-over-quarter, year-over-year with dependable results and credible timelines. 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 face-to-face, instead of relying on distant third parties. We have developed these testing facilities over several years and believe they are central to achieving our goal of starting commercial operations next year. Our flight test campaign also plays an important role in achieving those goals, and I’m pleased to say that after more than four years of flying full-scale pre-production aircraft, we’ve accomplished everything we set out to do with these aircraft and more, as our focus shifts to flying our production prototype aircraft. Our second pre-production aircraft will now transition over to its next life as an R&D asset, having flown more than 25,000 miles across more than 750 flights, including more than 100 with a pilot on board.

It was the first air taxi to fly in New York City, and it completed testing that has benefited the wider industry, including precision landing tests with the FA and acoustic testing with NASA. I’m incredibly proud of the team that looked after and flew our two pre-production aircraft, and we look forward to focusing our resources on our increasing fleet of production prototype aircraft. As we continue to make sector-leading progress on certification, we’re matching it with equal progress on manufacturing. Our second production prototype aircraft rolled off the line last week and will now enter our test program. And by the time of our second quarter call, we expect yet another aircraft will have rolled off the line, meaning, we’ll have four full-scale aircraft in our test fleet.

To support our ramp-up in production, we acquired an existing facility in Dayton, Ohio, and broke ground on the expansion of our pilot production line in Marina, California. The new building in Marina will more than double our existing footprint, providing space for us to deliver up to 25 aircraft per year. The facility in Ohio will initially support our operations in Marina and is the first step on our journey to develop facilities capable of delivering up to 500 aircraft per year. We believe this stepwise approach to expansion is the smartest way to deploy capital, and we’re grateful for the continued support of Toyota as we plan our approach to scaled manufacturing. As well as working side-by-side with the Toyota team on a daily basis, we were pleased to welcome a number of executive-level visits from Toyota during the quarter, including Shiga-san, EVP of Production Engineering and Manufacturing at Toyota North America; Kaita-san, President of the Advanced Engineering Development Center at TMC; Ohara-San, President, Powertrain Company at TMC; and Maeda-San, President, Commercial Vehicle Company at TMC.

And what I love about these visits is that they really speak to the spirit of the Toyota team. Toyota is a company led by engineers who want to be out on the production line looking at every detail, every process and every part just like us. I’m incredibly grateful for their support and as we grow our production, the value of our relationship will only increase. Turning to our third area of focus, commercialization, we again made great progress in the quarter. On the domestic side, we continue to work on securing infrastructure in our key target markets of Los Angeles and New York. While on the international side, we signed a multilateral agreement with three Abu Dhabi government departments; the Department of Municipalities and Transport, the Department of Economic Development, and the Department of Culture and Tourism.

This agreement identifies government support for establishing and scaling air taxi service in the Emirate and builds on last quarter’s announcement that we have secured the exclusive right to operate air taxi services across the Emirate of Dubai for six years. The agreement also opens the door to inter-Emirate services and flights across the wider UAE. We also widened our partnership with the U.S. Air Force, announcing that we plan to deliver two aircraft to MacDill Air Force Base in 2025, as part of our $131 million contract with AFWERX. MacDill is home to the U.S. Special Operations Command, U.S. Central Command and units from the Air Mobility Command, and this deployment will mark our first opportunity to work directly with operational units from the DoD.

Our work with the DoD is just one of three distinct pillars that make up our go-to-market strategy, alongside our work with Delta in the U.S. market and with a range of partners in international markets, including Dubai. As I said at the outset, the Joby team continues to deliver sector-leading progress across certification, manufacturing, and commercialization. There is another important piece of the puzzle, however, that hasn’t received much attention to date, and where Joby is also leading the way. That’s the work we’re doing to prepare for operations. To put it bluntly, you can certify an aircraft and you can build a production line for the aircraft, but without the backbone of the operations work, you won’t be able to operate your aircraft effectively, if at all.

And to be clear, this is work that has to be done, whether you intend to operate the aircraft yourself or sell it to a third party. We’ve been working on this topic for several years now, from writing a pilot training curriculum and running a Part 135 operation to maturing the software stack we brought across from Uber Elevate when we acquired that division and welcomed their incredible team. And I’m glad, Bonny is joining us today to highlight some of that work. Bonny has a remarkable amount of experience in airline operations and has been working with Joby since 2017, first as an investor and more recently as our President of Operations. And like Didier and Matt, she is the longest-standing executive in her position across all of the publicly traded companies in the sector, which speaks volumes about the strength of our team and our commitment to delivery.

Last quarter, we set out our goals for 2024, and I’m pleased to say we’re on track to deliver them. It’s Joby’s unique vertically integrated approach that ensures we continue to deliver on these goals at pace. There is a trend amongst the companies in our sector to highlight how they’re taking risk off the table by relying on the traditional aerospace supply chain. But at Joby, we believe the opposite is true. We don’t outsource 80% of our parts. We don’t outsource the majority of our testing. We don’t rely on others to build an operational software stack. We do these things ourselves, not because we’re perfectionists, but because we’re pragmatists. If you outsource 80% of your supply chain, you give up control of 80% of your product. You can only be as fast as your slowest supplier, and your product is only as reliable as your least reliable supplier.

As we see other traditional aerospace companies reintegrating suppliers to address current issues, it’s clear that in a new sector like ours, where the certification basis has only just come together, where we’re building aircraft that has never existed before, using parts that have never been combined before, we need a level of responsiveness, of agility, of responsibility that you just cannot get when you outsource everything. That approach won’t be cheaper, it won’t be faster, and it won’t be better. It obscures risks and results in evolutionary change, instead of the revolutionary change we’re looking for. At Joby, we’re building a different sort of aviation company. One where we’re in control of the quality and speed of manufacturing, where we benefit from shared learnings amongst our team, and where we’re able to prioritize the best possible performance and best possible experience for our customers.

We are building a next-generation aviation company. And to talk more about our progress on that front, I’m going to hand it over to Didier.

Didier Papadopoulos: 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 three 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 insource 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 three of our path to market commercial launch in the U.S., deployment with the DoD, and launch in Dubai, while we’re working with the UAE’s General Civil Aviation Authority to leverage the documentation and testing we’re doing for the FAA. Having our finalized airworthiness criteria is a really fundamental step. As we said before, it does mean that both we and the FAA have additional paperwork to do as we work through refinements to our means of compliance and certification plans. We believe we’re on track to close all these by next quarter and expect our progress in Stage 4 to accelerate in the back half of this year.

While we complete that work this quarter, we continue to progress at pace on Stage 4, building on the learnings from our Pathfinder testing and test plan submittals at the end of last year. We submitted to the FAA equipment-level test plans covering the control surface actuators, pilot inceptors, mission display computer and vehicle navigation computer, plus many structural elements of the aircraft. We’re now preparing to perform for credit testing on many of these test articles. Also part of Stage 4, we submitted two qualification plans related to the aircraft’s energy storage, covering the charge port and pump and battery control and distribution. And in a huge win for the team, we continue to move up the aircraft testing pyramid tiers with a submittal of our first system-level test plan.

As a reminder, we conduct testing at every level of the aircraft, from individual components to full vehicle, and we’re making progress at multiple levels of the pyramid simultaneously. This test plan covers the functions of our unique low-workload, flight controls and vector thrust propulsion system, and it’s a perfect example of why vertical integration is key to our success. With the design and development of the software and hardware for both flight controls and propulsion completed in-house, we’ve been able to optimize and efficiently manage all of this as one integrated system, making progress much faster than an integrator between a whole host of partners. This has proven to be true across our entire aircraft. The more pieces of the puzzle we have direct control over, the faster we can identify elements of our hardware or software that need improvement, and we can deploy solutions that are optimized for our needs.

That’s precisely why this quarter we completed several upgrades to our in-house testing capabilities that are critical to our certification campaign. We developed and installed new tilt, variable pitch, and control surface actuation load test stands in support of test plans covering our actuators, as well as our integrated flight and propulsion system. In support of the battery qualification plans submitted this quarter, we brought online a state-of-the-art battery test building that can safely house routine thermal runaway testing for showing FAA compliance. And in the next few weeks, we expect to submit our second system-level test plan covering the endurance of our propulsion system, which is why we have upgraded our propulsion system test stand or Whirly, a remarkable test asset unique to Joby that you can see in action in our shareholder letter.

We’ve enhanced Whirly to operate at higher speeds and tests across a wider spectrum of the flight envelope, thereby recording even more data for use with the FAA. Testing is a muscle, much like manufacturing and operations, and it’s a critical part of the safe development and certification of new aviation technology. It is the only way to completely understand all safety and performance parameters of a design. And by doing the majority of our testing in-house, we’re not only able to provide faster feedback to our design and manufacturing teams, but also have perfected our testing facilities and processes alongside our aircraft. I am proud of the team for delivering on these mature test assets that we know will accurately and efficiently give us the data we need to demonstrate the safety and performance of our aircraft, including for FAA credit.

Of course, the ultimate test for any aircraft program is flight testing with a full-scale representative aircraft. This quarter, we successfully completed our pre-production prototype flight test campaign after logging more than 1,500 flights in 33,000 miles with our two aircraft. I want to provide a little more details on what we’ve learned from our four years of constant flight on full-scale representative aircraft, because this comprehensive flight testing uniquely positions us for success across certification, manufacturing, and preparing for operations. First, we have developed a world-class flight test team. Our pilots, flight test engineers, and maintainers are now highly experienced at safely and efficiently executing the different types of flight tests that will be needed for certification.

This is critical as we move to the next phase of our program, where we will use our production prototypes to dry run all of the flight testing we will then perform for FAA credit. Second, we have validated our design, including elements such as human factors and handling characteristics, by flying at high speeds and altitude, different states of charge, and a range of weather conditions. We collected all these learnings into our models, components, and systems. The resulting improvements have already been designed into the parts we’re producing now. Third, we gathered extensive testing data that informs the Stage 4 test plans we are writing and submitting to the FAA, which we believe sets us up to have those documents accepted in short order.

Fourth, we have fed learnings into our operations and maintenance program, both for type certification requirements like manuals, and to inform our airline operations that Bonny will speak to more in a moment. 10 pilots have flown at Joby aircraft through transition, including the four U.S. Air Force pilots, who trained with us in Marina last year. We have fine-tuned our pilot training course to safely prepare commercial pilots to fly the Joby aircraft in about six weeks. We’re developing tools that continuously monitor the health of the aircraft systems based on operational flight data, which will be key to efficient operations at scale. And finally, we’ve been able to uniquely contribute to and shape the formation of our industry by providing regulators with real, practical data on aircraft characteristics like outwash and precision landing, that will inform standards being developed for the broader industry on infrastructure and operations.

I want to thank and congratulate the entire team on four years of incredibly successful flight. In closing, I want to touch on the remarkable progress our team continues to make on ramping up our manufacturing capacity. We’ve always taken a pragmatic approach to scaling manufacturing and that approach is already paying off. Last week, we rolled our second production prototype off the line in Marina and we have two more aircraft close behind in final assembly. As we go through each build cycle, we’re learning and improving many parts of our manufacturing processes to shorten build time, improve quality, and reduce waste. These are key ingredients for successful economical production at scale, and we’re building them into our processes now, rather than when we have already made much more significant capital investments.

We are on track to achieve an annual production rate of 12 airplanes worth of components by the end of this year. To reiterate, some of these will be complete aircraft and others will be parts used for development and certification testing, which requires us to shake, bake, and break many parts as we demonstrate they meet the requirements. To get to the next step, we’ve begun work on a significant facility expansion in Marina. The new building will more than double our manufacturing space at the airport, allowing us to target 25 aircraft per year as we continue to develop facilities in Dayton, Ohio that will support us in our goal of producing up to 500 airplanes a year. At the same time, we’re expanding our conforming production to support for credit testing in addition to ramping production of conforming flight electronics.

This quarter, we began assembly of our first FAA conforming tail, which will be used as a structural test asset in for credit testing later this year. This progress is underpinned by the maturity of our quality management system, which continues to evolve towards meeting all FAA requirements for us to receive a production certificate. From testing to certification and manufacturing, the Joby team continues to knock it out of the park, and I am so, so proud to be part of the team that’s doing the hard work to bring to market the right aircraft for our mission. I’ll now hand it off to Bonny to discuss how we’re preparing for what comes next.

Bonny Simi: 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 or like pilot training programs, could not be bought off the shelf. Now that we have a clear line of sight to the 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 prepare for early operations can be divided into three categories; FAA authorizations, infrastructure and software, with safety as a common thread underpinning all three.

When we say infrastructure, we mean the development of standards for landing sites and the landing sites themselves, the development of charging solutions of ground handling processes and decisions about aircraft storage and shipping, as well as the location and build-out of maintenance and simulator facilities. And by software, we mean, scheduling tools, the pilot flight planning tools, the customer interface, the maintenance tracking, the data links to the aircraft, and so much more. Just like for Didier, on the certification side of the business, for operations, the long pole in the tent is FAA approvals and certifications. And this is where we are focused in the near term. By pulling ahead our work on operations, we’re able to de-risk our go-to-market strategy and ensure we have the right foundation in place to scale.

In order to fly an aircraft for commercial passenger use, there’s an extensive list of requirements and federal certifications that you need, including a Part 135 operating certificate that allows you to carry passengers for revenue, a Part 145 maintenance certificate that allows you to efficiently maintain and repair the aircraft as approved under its type certificate. Simulators that are certified under Part 60 to be used to train pilots for commercial operation and FAA-approved pilot and maintenance training programs. These are all in-depth processes that require years of work to get across the line, and we’ve made excellent progress on each. In May of 2022, we were awarded our Part 135 operating certificate, enabling us to use conventional aircraft to simulate, test, and iterate on our future airline service even before we have the Joby aircraft ready to take passengers.

We received our Part 145 maintenance certificate earlier this year, another item we’ve been able to tick off the list in advance. We’ve been working for years with our partner, CAE, which we announced in March of 2022 to develop Part 60 full motion simulators, and we’re developing the certification plan to submit to the FAA. As Didier mentioned, we’re developing our pilot training program and testing it with the U.S. Air Force. This will form the foundation of our commercial pilot training program. With both our 135 and 145 certificates, as well as the simulators in place, we’ll be able to get the Joby aircraft into service more quickly. Last, but certainly not least, safety is at the core of everything we do at Joby. Just last month, the FAA announced a requirement for safety management systems, or SMS, for all 135 operators, and our SMS has already been accepted by the FAA into their voluntary SMS program.

We’re also the first and only in our industry to pass the Stage 1 international standard for business aircraft operators is BAO audit, an important external validation of the preparation we’ve done to operate safely. While these FAA authorizations may seem like a number soup, I hope that you’ll take away is the significant amount of work that’s well underway at Joby to ensure that we’re ready for operations on Day 1. Last week’s announcement regarding the expansion of our operations in Marina is also a key part of this work, as this building will host our expanded pilot training and flight simulation center, as well as aircraft maintenance facilities that are designed to support the scaling of Joby’s commercial operations. We’re always looking ahead and making sure that we’re taking the most efficient route to starting commercial operations, while putting safety at the center of everything we do.

The work done by our operations team is central to this and is another area where Joby is leading in the sector. All of these preparations are well underway as we target operations in Dubai in late 2025. I look forward to unpacking these topics next month in more detail at our teaching session on operations. And now I’ll hand it over to Matt to cover financials.

Matt Field: 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 quarter, reflecting the higher operating expenses mentioned earlier. Our adjusted EBITDA loss was $35 million higher than in the same period last year, reflecting the growth in our organization, expenses to support manufacturing and certification, lower DoD contract deliverables, and higher production volumes as we ramp up manufacturing on our way to an equivalent of 12 aircraft per year as we exit 2024. As mentioned at the outset, we ended the quarter with $924 million in cash, cash equivalents, and short-term investments. Our primary use of cash in the quarter was to support our operations, where we continue to invest in our certification efforts, manufacturing and early go-to-market initiatives, which Bonny highlighted.

We spent about $7 million on property and equipment, which includes investments in test equipment assets that Didier mentioned earlier, and the acquisition of our facility in Ohio. We continue to maintain a disciplined approach to our spending and to the growth of our company as we supplement our certification work with measured go-to-market initiatives in advance of commercialization next year. As always, you can expect us to continue to align our investments with the growth of the business. Accordingly, we remain on track with our full-year cash spending outlook of $440 million to $470 million. This concludes our prepared remarks, and we look forward to having you join us for the teach-in on operational requirements with Bonny in June. Operator, would you please instruct participants on how to ask questions?

Operator, would you please instruct participants on how to ask questions?

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Q&A Session

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

Andres Sheppard: Hi. Good morning, everyone. Congratulations on the quarter and thanks for taking our questions. 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 that 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.

JoeBen Bevirt: 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 six 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 one opportunity for us in addition to the fantastic work we’re doing with the DoD as we prepare to take two aircraft to MacDill Air Force Base in Florida.

Andres Sheppard: Got it. Okay. That’s super helpful. Thank you for that context. Maybe just a quick follow-up. I’m curious if we have a timeline 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? Thank you.

Didier Papadopoulos: Yes, Andres. Thanks for the question. On that front, aligned with what we communicated in the previous quarter in terms of our roadmap on that front, maybe reiterate, there’s three 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. Two, is developing our conforming manufacturing line so that we can build to those designs. And then three, progressing towards Stage 4, where you actually have the test plans against which you’re going to execute with your test assets. As a reminder, there’s no way around those three 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 three 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 pyramid year towards the tip of the pyramid, which is the aircraft in short order. We’re well on track, like we discussed in our roadmap last year.

Operator: And our next question comes from the line of Kristine Liwag with Morgan Stanley. Please proceed.

Kristine Liwag: Hi, good afternoon, everyone.

Didier Papadopoulos: Hi, Kristine.

JoeBen Bevirt: Hi, Kristine. Thanks for joining.

Kristine Liwag: Yes. So, you know, 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.

JoeBen Bevirt: Hi, Kristine. Yes, we do see – we do continue to see two really exciting paths forward, both here in the U.S. in New York and LA in partnership with Delta, as well as the path in the UAE and the really significant lean-in from the GCA 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.

Kristine Liwag: Great. 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 looking at? What are the economics of that? Any additional detail about actual operations would be helpful.

Paul Sciarra: 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 LA, 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.

Kristine Liwag: Great. Thank you. And looking forward to seeing that progress.

Operator: And the next question comes from the line of Savi Syth with Raymond James. Please proceed.

Savi Syth: Hi, good afternoon, everyone. Just on the flight campaign, can you talk about the type of flying that’s been done on the pre-production aircraft versus the production aircraft and including what are the differences between the two? Any notable differences between the two as you operate them?