Joby Aviation, Inc. (NYSE:JOBY) Q3 2024 Earnings Call Transcript

Joby Aviation, Inc. (NYSE:JOBY) Q3 2024 Earnings Call Transcript November 6, 2024

Joby Aviation, Inc. misses on earnings expectations. Reported EPS is $-0.21 EPS, expectations were $-0.19.

Operator: Greetings and welcome to Joby Aviation Third Quarter 2024 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Teresa Thuruthiyil, Joby Aviation’s Head of Investor Relations. Thank you, you may begin.

Teresa Thuruthiyil: Hi everyone and welcome to the Joby Aviation’s third quarter 2024 financial results conference call. I’m Teresa Thuruthiyil, 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, President of Aircraft OEM; Eric Allison, Chief Product Officer; and Matt Field, Chief Financial Officer. After management’s prepared remarks, we will open 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’ll refer both to GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our Q3 2024 shareholder letter, which you can find on our Investor Relations’ website, along with the replay of this call. With all of that said, I’ll now turn the call over to JoeBen.

JoeBen Bevirt: Thanks, Theresa and thanks everyone for joining us today. This has been another excellent quarter at Joby. We’ve seen exceptional lean-in from regulators across the globe. We’ve continued our great momentum on certification. We’ve significantly strengthened our fortress balance sheet, which was already the strongest in the sector. We’ve successfully built our first FAA conforming tail. We’ve reinforced our partnerships with Toyota, Uber, and Delta through landmark events, and our team has just arrived back from Japan after completing our first international demonstration flights. Those flights were completed using our third production prototype, an aircraft that rolled off our manufacturing line in California just three months ago.

The flights were more than just a demonstration of our capabilities. They were a celebration of our strategic partnership with Toyota and everything we’ve achieved in nearly seven years of collaboration. We completed the flights at Toyota’s Higashi Fuji Technical Center just a few miles from Mount Fuji, where we were honored to welcome visits from Toyota Chairman, Akio Toyoda; Toyota CTO, Hiroki Nakajima; and Toyota North America CEO and Joby Board member, Ted Ogawa; along with representatives from JCAB, Japan’s aviation regulator. Our relationship with Toyota is the strongest it’s ever been, and we’re incredibly grateful for their continued support. For many years, Toyota has worked shoulder-to-shoulder with us on the production line. They’ve helped us design tools.

They’ve helped lay out our factories. They’ve provided parts that go on our aircraft, and they’ve been the very best partners we could wish for. Last month, we took the next step on our journey together, one that is expected to see Toyota increase their position in Joby through two equal investments totaling $500 million. This investment, along with the strategic manufacturing alliance that will accompany it speaks to our shared vision for the future of mobility, and we look forward to sharing more on that topic next year. Our aircraft is now on its way to Korea, where it will be flying as part of the Korean government’s K-UAM Grand Challenge, a demonstration program launched by the Ministry of Land, Infrastructure & Transport to support the commercialization of air taxis in the Korean market.

As well as celebrating our relationship with Toyota, this quarter, we also had the opportunity to highlight our strong partnerships with Delta Airlines and Uber through events in Los Angeles and New York City. Across 14 days of public events at the Santa Monica Airport, the Grove Shopping Center in Los Angeles, and at New York’s Grand Central Terminal, we were able to share the future of transportation with more than 75,000 community members and other stakeholders, including local policymakers, mayors, real estate partners, transport authorities, and our future customers. These events go a long way to building the foundation required on the local level to deliver the infrastructure for our service. And on that front, we were pleased to welcome news of Atlantic Aviation beginning work to electrify East 34th Street Heliport in New York City, building on last year’s announcement that the Downtown Manhattan Heliport will also be electrified.

Later in the call, we’re going to be joined by Eric Allison, our Chief Product Officer, to talk a little bit more about those events and to provide some texture on the ElevateOS operating system we introduced recently. Eric is one of a small handful of folks who has shaped this industry from its earliest days through his work at Xero and his leadership of the Uber Elevate division, and we’re lucky to have him at Joby. But before I hand it over to the team, I’d like to call out the remarkable momentum we’re seeing from regulators in each of our core markets. In the U.S., the publication of the SFAR, or Special Federal Aviation Regulation, was a key moment for our industry and another great demonstration of U.S. leadership in our sector. Delivered ahead of schedule and with bipartisan support, it lays the final piece of the regulatory puzzle, the commercial operations and pilot qualification requirements for our aircraft.

We’re particularly grateful to the FAA team members that worked with industry to pull this together in record time. We’re also grateful for the leadership of FAA administrator, Mike Whitaker, and the support of the House Aviation Subcommittee led by representatives Sam Graves and Rick Larson. Looking further afield, we also saw great progress in the UAE with the local regulator accepting the full set of qualification plans for our aircraft. And last month, we were honored to welcome representatives from the British, Australian, and Japanese regulatory teams, along with members from the FAA to Marina for a week-long tech familiarization session, a key part of the regulatory process. To talk more about regulatory progress and the great momentum we have going into the final quarter of the year, I’d like to hand it over to Didier.

Didier?

Didier Papadopoulos: Thanks, JoeBen. In my 20-plus years working in aerospace, I cannot think of a more impactful moment than the FAA’s publication of the powered lift SFAR last month. This is the first time since the 1940s that the FAA has created operational rules allowing a new class of civil aircraft to enter service. This is a huge step forward for our industry, and I share JoeBen’s gratitude to the FAA for delivering ahead of schedule. The rule includes provisions that confirm we have taken the right approach to the design of our aircraft and in our work to prepare for operations. On pilot training, the SFAR includes a clear pathway for us to train pilots using the high-fidelity flight simulators we are qualifying alongside CAE and a single set of pilot controls.

The rule also confirms our expectation that the energy reserves required in service will be equivalent to helicopter operations under VFR rules today. Most importantly, the SFAR includes flexible pathways for us to work with the FAA and optimize our approach to operations as we continue working towards commercial launch in the U.S. The FAA’s continued leadership results in a smoother path to international operations in many of our key markets as evidenced during the week-long technology familiarization session we hosted in Marina with aviation regulators from the U.K., Japan, and Australia alongside staff from the FAA. Over the course of the week, dozens of regulatory representatives from these countries witnessed flight test, observed our system-level testing, and discussed the approach that Joby and the FAA are taking to certify our aircraft, particularly in novel technology areas.

This is a formal part of the process to validate our FAA type certificate once received into each of these markets to enable commercial operations. It’s an important step as we continue to support the harmonization of international certification approaches to aircraft like ours. This, in turn, expedites our path to operations around the world. As JoeBen mentioned, we also made important progress this quarter with regulators in Korea and in the UAE, where the GCAA accepted all of our qualification plans. These plans cover not only approval of the design of our aircraft, but also the approach we will take to the pilot training, maintenance and commercial operations in Dubai. This is a big win for the team as we work towards starting commercial service in Dubai as soon as the end of 2025.

In the U.S., we continue to make great progress on our tax certification program with the FAA. On the Joby side, we submitted more Stage 4 documents than in any prior quarter and in more unique system areas. These include key test and qualification plans related to the propeller system, electric motor, flight controls, batteries, and the main airframe structure. We also reached closure with the FAA on key issue papers related to the batteries and electrical systems on our aircraft, cementing for us and the broader industry, the certification path for some of the unique aspects of battery electric aircraft. On the FAA side, we had more of our test plans accepted than during any prior quarter, moving us from 14% to 21% complete on Stage 4, reflecting a continued lean in by the FAA.

These figures also reflect an updated and more streamlined path to certification that aligns with our latest FAA discussions for test plans, which we’ll continue to iterate on as we proceed through Stage 4. Hand-in-hand with certification is our increasing focus on building conforming parts. We have now reached a point where 35% of the composite components being manufactured today at Joby are for FAA conforming builds intended for use on TIA aircraft and in for credit testing and related activities. And on that note, I am very excited to share that the team has completed the build of our first major subassembly intended to be used in for credit testing. The tail assembly in question is now in the process of FAA conformity inspection preparation and will begin the testing regime laid out in our approved static tail test plan shortly thereafter.

Alongside our progress on certification and testing, we’ve continued to mature and develop our flight testing. Over the last month, we’ve been flying nearly simultaneously on two different continents. In California, we’ve been flying regularly in support of our certification program, including flying our second production prototype through transition, accumulating valuable data on handling qualities and system performance and maturing or will become FAA flight test plans. And at the same time, we completed a number of exhibition flights in Japan. We’re now looking forward to doing the same in Korea, showcasing our aircraft’s revolutionary capabilities and strengthening our relationships in key markets. We’re seeing the same increasing maturity in our manufacturing.

Our fleet has continued to grow with our fourth aircraft nearing completion and set to join our flight test program soon. With each completed aircraft, we continue to improve our efficiency and production cycle-time across many aspects of the process. These learnings are only possible because we’re building aircraft and going through improvement cycles across every aspect of production, assembly, and integration. For this aircraft, the fourth to come off our production line and through a continuous improvement culture, we introduced new processes for final integration that sell many subassemblies built in stand-alone work cells and then installed onto the aircraft as completed systems. This approach has improved the efficiency of final integration by more than 30%.

And by the way, the fixtures for these new processes were designed and provided to us by our incredible partner at Toyota, just one of many examples of their invaluable support of our mission. Since we first formed our manufacturing partnership with Toyota in 2019, we have worked side-by-side on projects like the design of our manufacturing facility in Marina, including the expansion that will double our manufacturing space at the airport and the facility we’re bringing online in Ohio. Toyota has also helped us to implement aspects of the Toyota production system and the mindset of Kaizen or continuous improvement through our manufacturing lines and our manufacturing culture. Our Toyota colleagues, embedded across Joby’s manufacturing teams and supporting from Japan, provide us with the resources and the knowledge to more quickly mature our production process.

As just one example, we have doubled our battery module production rate and significantly increased our yield in the past six months on key processes through a joint effort with Toyota in identifying bottlenecks and improving line layout and efficiency. The deep partnership between Joby and Toyota is all about building on each other’s strength through continuous reviews of areas of new opportunities. During our recent visit to Japan, I was honored to tour Toyota’s motor and powertrain test site and spent several hours discussing new areas for potential collaboration with Hiroki Nakajima, their group CTO. I am looking forward to working ever more closely with the Toyota team as we move through certification, scale up our manufacturing and prepare for commercial service.

And on that note, Eric, over to you.

Eric Allison: Thanks, Didier. I joined Joby from Uber, where I built out the Elevate team, championed Uber’s $125 million strategic investment in Joby, and laid out a vision for aerial mobility that continues to be embraced by the entire sector. In 2019, my team at Elevate built and ran Uber Copter, which was the first ever multimodal air taxi service in New York City. It was an incredibly valuable learning experience, but it also taught us that the sort of software we would require to deliver high-tempo on-demand services just didn’t exist even amongst the most sophisticated helicopter operators. As Chief Product Officer at Joby, I’ve been working with many members of the original Elevate team alongside new team members to distill the learnings from Uber Copter into a set of tools ready to support commercial operations.

The ElevateOS operating system we announced earlier this year delivers tools like a rider app, a flight planning tool, a pilot app and a matching engine, all of which work seamlessly together to maximize the efficiency of our service and deliver true time savings to our customers. Because we’re confident that while some of our customers might book well in advance, the majority of them are likely to treat flying with Joby like ordering an Uber today as a relatively last minute thought, and we need the capabilities to offer that kind of on-demand multimodal service. Getting a head start on this work is critically important because it needs to be ready when the aircraft is ready. It’s simply not viable to drop a novel aircraft like the ones being designed in our sector into one of today’s existing airline or helicopter operations and expect them to be successful.

You have to do the hard miles in the software, and you have to do those miles in time for the start of operations. At Joby, we’re already using these software tools in real life through our Part 135 operating certificate, allowing us to constantly improve, test and iterate our software. In fact, some of these tools are already on their third iteration. We’re also working with our partners like Uber and Delta to integrate our software so that passengers are able to book seamless journeys in one process, connecting their ground transportation to their air taxi and perhaps on to their Delta flight. The partnership we enjoy with Delta and Uber is incredibly strong as evidenced by our recent joint event at New York City’s Grand Central Station. At that event, as well as in our showcase events in L.A., we were able to bring our air taxi to the public for the first time, letting them sit inside it and experience what it might be like to fly with Joby.

We were also able to highlight our commitment to fostering local connections as we plan for commercialization. In L.A., we are proud to highlight our partnership with the Fly Competence [ph] Foundation, a non-profit organization focused on training the next generation of pilots. We are working with them to deliver free pilot ground school for their students, similar to the work we are doing with the Bay Area Urban Eagles in Northern California. In New York, we were joined by students from Aviation High School, who we are working with to prepare the next generation of aircraft maintenance technicians and aerospace leaders. What I took away from these events is that the incredible excitement around what we are doing in this sector that we first began to harness at Uber Elevate is now stronger than ever.

And that was true in Japan, too, where our aircraft was met with great enthusiasm, and we look forward to continuing our work with Toyota and our airline partner, ANA, Japan’s leading airline. I’m confident that we have the best team in the industry working on this, and we’re looking forward to bringing our service to life. Matt, over to you.

Matt Field: Thanks Eric and good afternoon everybody, and thanks for joining us today. As you’ve heard from the team, we’ve had an exciting quarter where we made meaningful headway on multiple strategic initiatives, including certification progress, strengthening our balance sheet, deepening our premier partnerships, and building community engagement. We ended the third quarter of 2024 with cash and short-term investments totaling $710 million. Our use of cash totaled $115 million, which was higher than our second quarter spending as we had additional operating expenses arising from increased staffing and one additional pay period in the quarter. This spending also included about $10 million on property and equipment. As you know, we are in the process of expanding our testing capabilities and our facility in Marina, California, which explains the sequential increase.

We remain on track with our full year 2024 cash spending outlook of $440 million to $470 million and anticipate that we will come in towards the bottom end of this range. We incurred a Q3 net loss of $144 million, reflecting a loss from operations of about $157 million, partly offset by interest and other income of $13 million. Our net loss was $21 million higher when compared with the prior quarter, reflecting a higher loss from operations and a lower favorable revaluation of our warrants and earn-out shares. Higher operating expenses for the quarter reflected increased personnel expenses, which included a full quarter of employees from our Xwing acquisition and lower R&D contract payments from fewer Agility Prime deliverables per our contracts.

Revenue was largely consistent with prior quarters. Our net loss in the quarter compares with the net gain in the same period of 2023, reflecting the non-recurrence of the sizable favorable revaluation of our warrants and earn-out shares last year and higher expenses this year, reflecting the growth in our operations. Adjusted EBITDA, a non-GAAP metric that we reconcile to our net income in our shareholder letter, was a loss of $120 million in the third quarter. This was about $13 million higher than in the prior quarter, reflecting the higher operating expenses noted previously and $27 million higher than the same period last year, reflecting the growth in our operations. Lastly, I’d like to provide some color around the steps we took in October to further strengthen our balance sheet.

When combined with the $710 million in cash and short-term investments as of the end of the third quarter, the additional approximately $222 million we raised in October and the expected additional $500 million investment from Toyota would bring our total available balances to approximately $1.4 billion. The $500 million Toyota investment will come in two equal tranches as we’ve outlined in our filings with the SEC. The work streams to support the first tranche are well underway, and we hope to complete them by year-end or potentially early next year, depending on the timing of regulatory approvals. With the second tranche of the Toyota investment, we are already starting discussions to scope the manufacturing strategic alliance for our commercial production, and we’ll have more to share on this in due course.

We expect to close on the second tranche next year. We are tremendously grateful for Toyota’s support to-date and look forward to working together even more closely in the years ahead. Following the Toyota investment and the formal release of the FAA SAR for operational procedures, we saw an opportunity to further strengthen our balance sheet and executed a follow-on offering of 46 million shares of our common stock. This capital raise closed on October 28th and was, we believe, an important opportunity to ensure that we continue to benefit from having the strongest balance sheet in the sector. As we have said from the outset, this is a capital-intensive industry as demonstrated by certain recent developments within our sector. but our judicious approach to spending, effective planning and coordination across initiatives, and a fortress balance sheet puts us in the best possible position to succeed and deliver long-term value for our shareholders.

Thanks again for joining us today. Operator, would you please instruct participants on how to ask questions?

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Austin Moeller with Canaccord Genuity. Please proceed with your question.

Austin Moeller: Hi, good afternoon JoeBen and Matt. Just my first question here. This might be a bit premature, but given the strong regulatory process momentum you have, have you started thinking about how long it would take to deploy a first small fleet of aircraft, software and FBO personnel to a site after getting the TC and the manufacturing certificate?

JoeBen Bevirt: Hey Austin, thanks so much for your question. Yes, we are absolutely doing that planning work. And Bonnie would probably be the best person to answer that in detail, but she’s been laying out a very detailed plan, including the plans for the commercialization work in Dubai.

Austin Moeller: Okay. And just a follow-up. Given the change in administration, do you view there being budget risk to Agility Prime funding? Or do you think DoD is still very supportive of fostering new aviation technology?

Paul Sciarra: Thanks a lot for the question, Austin. It’s Paul here. Look, historically, we have worked very well with folks on both sides of the aisle. And in point of fact, I mean, you can take our work in Ohio as sort of demonstrative of that. We were able to kind of successfully navigate both. And generally speaking, the North Star has been ensuring that this new age of technology basically happens in America, and that’s been appreciated by both sides of the aisle. With respect to Agility Prime, it’s still quite early, so it’s hard to know whether or not there’s going to be any changes on that front. But as I mentioned on previous calls, we have by design sort of steadily expanded the scope of potential branches that we’ve been working with and even government agencies. So, I think that gives us a pretty rich set of potential customers to continue to work through regardless of administration.

Austin Moeller: Excellent. Thanks for all the color.

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

Savi Syth: Hey, good afternoon everyone. Can I clarify just kind of the current preproduction prototypes that you’ve been flying remotely? Is that the same kind of 5,300 pound maximum gross takeoff rate that you plan on kind of certifying? And just as you think about kind of launching operations in the UAE, would you be able to launch those operations with this kind of preproduction prototype? Or would you need kind of the certification conforming aircraft that you’re building currently to be completed?

Didier Papadopoulos: Hey Savi, this is Didier. Thanks for the question. So two parts to this. The preproduction airplanes that we have flying right now are very representative of the intended takeoff weight of those airplanes. Some of them vary a bit, but that is really more of a — each airplane has a specific purpose and different set of configuration. But for the intended purpose of the physics we’re going after, they’re very similar. In terms of operation in Dubai, there is a possibility where we would be able to take some of these airplanes and start operating in Dubai. Those airplanes are by design, intended to be inhabited. And as you saw, some of them have also room for passenger carrying operations, but that’s an option we are not decided on at this time.

Savi Syth: That’s super helpful. And if I might, just on the Dubai operations, are there any kind of particular milestones that we should be looking for to kind of get comfortable that it’s progressing? And what all needs to be done before you can kind of start kind of operations there?

Eric Allison: Thanks. This is Eric. I think that one of the things that we were excited to see is that one of the milestones that we’ve accomplished this quarter is the acceptance of all of our qualification plans for the operations in Dubai. And we’re working pretty closely with the RTA on laying out a series of stages that we’ll be going through over the next months and quarters ahead as we march toward that launch as early as the end of next year.

Savi Syth: Any kind of major milestones that we should be looking for or gating factors of spend?

Matt Field: Hey Savi, it’s Matt. Just to add a little bit of more texture. One of them will be, and we talked about this on last quarter’s call, is groundbreaking on the first takeoff landing location. We expect that later this year. The other thing is we talked about is bringing an aircraft into Dubai to do some testing. And so that will be next year. And so those will be the two major milestones leading up to service.

Savi Syth: Appreciate that. Thank you.

Matt Field: Thanks Savi.

Operator: Thank you. Our next question comes from the line of Edison Yu with Deutsche Bank. Please proceed with your question.

Edison Yu: Hey, thank you for taking our question and congrats on the progress during the quarter. So, my question is about with this new like $700 million new capital raise, I mean, how much capital runway do we think we have now?

Matt Field: Yes. So, really pleased to take the opportunity to build on the momentum on both the Toyota investment, but also the derisking of some of our certification elements around the publication of the SFAR to further bolster the balance sheet. So, clearly, this extends our runway considerably. We’re not providing specific guidance as to how far that goes, but really pleased to have such a strong fortress balance sheet.

Edison Yu: Okay. Thank you. I have a second question about our recent — we recently flew the latest version of aircraft in Japan. And could you elaborate a little bit more about what the improvements were made on this one compared to like electric aircraft at [Indiscernible] Air Force base? And could you give more color on that?

Didier Papadopoulos: Yes. So, the airplane that was flown in Japan is the third one to come off our manufacturing line. One of the things we talked about is as we’re building these airplanes, we’re making manufacturing improvements as well as improvement to some of the performance of these airplanes that we’re bringing into those aircraft. But for the most intended purposes, all of these airplanes are capable of the same thing really. Some of them have additional payload capabilities, other have a bit less because of the instrumentation that has in them. But for all intended purposes, the airplanes are all capable of similar missions.

Edison Yu: Okay. Thank you very much for that.

Operator: Thank you. [Operator Instructions] Our next questions come from the line of Mahima Kakani with JPMorgan. Please proceed with your question.

Mahima Kakani: Hi, good afternoon. In the prepared remarks, it was mentioned that service in Dubai could begin as soon as late 2025. Is there a chance that this could slip into 2026? And does it imply any kind of delay relative to prior expectations?

JoeBen Bevirt: So, we are working closely with the RTA in Dubai and very pleased with the engagement there. They have been on site with significant teams multiple times. I was also in Montreal with the RTA leadership and also — sorry, the GCA leadership, and they are very engaged and providing incredible support. That said, there is a significant amount of work that we’re also doing on our end. As a reminder, this is certification work that is the same certification work we’re doing for the FAA. And so as we execute those tests, that will give us the clearance to begin passenger service in the UAE. But we still have significant work to do, and we’re putting points on the board each and every day.

Mahima Kakani: Okay. Appreciate that color. Can you also provide any guidance sort of around the expected time line to convert all of your subassemblies to conforming assets and what the requirements to do so would be? And is any of this contingent upon Joby submitting additional test plans to the FAA?

Didier Papadopoulos: Yes. Great questions. So, the — so we talked about as we’re making progress all along sort of the certification pyramid where the basis is the components, then you move into major subsystems and substructures and then all the way up to the aircraft. As we progress through the design, the test plans and the test setup, so those are sort of the three things we talked about we want to focus on. Once you complete those three and you execute the test, that’s how you collect points. So, in terms of thinking about the conversion, everything we are doing right now all along is trying to execute on those three areas; building conforming parts, delivering test plans, and then setting up the test setups to mature.

As you were able to see in our report, we’re making great progress on test plans, better than ever before, both in terms of submittals and acceptance on the FAA. So, that’s progressing well. In terms of conformity, we also continue to make progress at all these levels. One of the most exciting things to talk about here is the fact that 35% of all of our composite structures are now intended to go into FAA conforming builds, both for test assets as well as for real airplanes. And culminating out of that is the fact that we were able to complete a complete tail that’s going to go for FAA conformity. So what you should expect from us is, again, a continuation of all that from components to systems to airplanes, particularly here as we progress into next year.

Mahima Kakani: Thank you so much. Appreciate the color.

Operator: Thank you. Our next question comes from the line of David Zazula with Barclays. Please proceed with your question.

David Zazula: Hey, this is David. Thanks for squeezing me in. In the SFAR, it seems like the industry broadly did not get everything they were looking for in terms of the reserve requirements from the FAA. Just could you speak to the requirements as printed and operational impacts on your aircraft operations?

Didier Papadopoulos: Yes, I won’t speak about the industry per se, but I’ll say we’re extremely excited about both the timing, as Jon mentioned earlier, as well as the content of the SAR. The reserve came out exactly where we wanted to be. So, I’m ecstatic, honestly, about that one. So, really happy with the outcome.

David Zazula: So, I guess that specifically as the reserve requirements, you don’t feel like it will operationally limit you in any way with your operational rollout in plan?

Didier Papadopoulos: No, and particularly referring to the broadly called the 20-minute VFR reserve that definitely is within our design. It’s honestly something that we’ve planned on from the very beginning. So, it’s what we had expected.

David Zazula: Great. Thanks. And then I guess, you had some mention about flexible pathways and the — optimizing your approach with the FAA. I was wondering if you could elaborate a little bit more on what you mean there and how you intend to partner going forward?

Didier Papadopoulos: Yes, I think one of the things that the SFAR left room for in some ways is specific operations and missions that are tailored to each of the eVTOLs. Like not every eVTOL is the same as every other one of them, particularly talking about emission profile, takeoffs, crews, landings, where you’re flying and how you’re intending to fly and operate the airplane. I think the SFAR left enough room for discussions and alignment with the FAA following the SFAR. And I think that’s how it needs to be because you really need to understand the intended use of the aircraft and make sure that the regulation is well rounded around that.

David Zazula: Thanks so much. Appreciate the question.

Operator: Thank you. Our next question comes from the line of Amit Dayal with H.C. Wainwright. Please proceed with your question.

Amit Dayal: Thank you. Good afternoon everyone. Congrats on the progress. With respect to all the certification, et cetera, that’s going on, is there a potential end date within which you think all these certification steps can be completed?

Didier Papadopoulos: Yes, I’ll take that question. So we haven’t communicated a specific date on the TC specifically because it involves a lot of things, both Toby as well as the certain agencies. But what we remain committed to is working with the FAA along their certification path, both on the power lift as well as the TC itself as well as the SFAR. So, the good news now is the cert path is pretty clear, and we’re executing on that. Along the same lines of that, we’re working on a parallel path with operations in Dubai, which effectively mimic the FAA and allows us that optionality to deliver on multiple markets as quickly as possible with each of those.

Amit Dayal: Understood. Thank you. And then with respect to the potential operations coming up in Dubai, what kind of infrastructure do you need to build out over there? Who is responsible for building that out? Any color on that would be helpful.

JoeBen Bevirt: Yes. Thank you for the question. We are working with — so just as a refresher on our agreement in Dubai, we have a six-year exclusive to operate the air taxi service there. This is an agreement with the RTA, which governs air taxi flights within the Emirates. As part of that, there — we have a partnership with Skyports, where they will be building out up to four Vertiports in Dubai. And as Matt highlighted earlier, look for news of the groundbreaking on that first Vertiport. And so that infrastructure and the speed at which they’re able to execute on that infrastructure is really fantastic. And then another element to highlight was what Eric mentioned on the ElevateOS and the ability to really begin to operationalize that and validate all of the features that we’ve been building out as we take and bring that Dubai service live.

And again, this is a follow-on to the work we’ve been doing with the DoD as we build muscle on operating muscle and operating experience, and this will prepare us as we begin — as we start to plan for launches, both here in the U.S. and in other important markets for us around the world.

Amit Dayal: Understood. And then just in relation to that, the launch in Dubai from the Elevate side, will it sync up with the Uber app on launch? Or will that potentially come down the line in the future?

Eric Allison: This is Eric. Thanks for the question on that. We actually think that the way we envision this service working is multimodal. It’s really important to get our future customers from where they are to where they want to go. And to and from the Skyports is a really important piece of that. So, we’re committed to having multimodal solutions as part of our thinking when we roll out our service and more to come on that in the future, but we think it’s a really key part of the experience.

Amit Dayal: Understood. Just last one. These prototypes that are flying around right now, what kind of distances are they covering today? And are they sort of in line with how you think they should be performing from a range perspective?

Didier Papadopoulos: Yes, the airplanes we’re using right now, like I said earlier, representative in terms of what we intend to take to market. Most of the missions we expect to see in the market are around the 20 to 30 miles. That’s about the 90%-plus of the missions we see. Obviously, we’ve been able to demonstrate much more with that, and we fly on a regular basis here to continue to optimize those missions. That really is the focus of what we’re doing right now.

Amit Dayal: Okay guys, thank you so much. Appreciate it.

Matt Field: Thanks Amit.

Didier Papadopoulos: Thank you.

Operator: Thank you. As our last question, we have the line of Andres Sheppard with Cantor Fitzgerald. Please proceed with your question.

Unidentified Analyst: Hi everyone. This is Anand on behalf of Andres. Congrats on the quarter and thanks for taking our questions. My first question is just jumping back on some commentary on the Middle East. I just wanted to confirm if you’re on track to enter into service in the Middle East within the next, say, 12 months? And if so, we’re wondering when you’re expecting to disclose some more unit economics, potentially some pricing or cost breakdown?

JoeBen Bevirt: This is JoeBen. Maybe I’ll take the first part and then hand it to Matt. So, we are continuing to put all the pieces in place. As I mentioned, we did the formal application with the GCA, met with the leadership there recently, and they’ve also had significant presence here at our sites in California. The engagement is very strong. So, on that path, I think we’re making good progress. I think on the build-out of the Vertiport infrastructure, that’s looking promising as well. But again, we’re dependent upon our partnership with Skyports there. And then the relationship with the RTA and with the Emirate of Dubai broadly is very, very strong, and we’re very grateful for their partnership. I would say that region as a whole is very forward leaning on this technology as are a number of our other key markets around the world.

We’re seeing more enthusiasm and momentum than ever before, as Eric highlighted in his remarks. And then with that, I’ll hand it over to Matt.

Matt Field: Yes, hi Anand. Unit economics, we’ll talk about closer to entry into service. I mean it will be an interesting market as a first one because there is so much experience-based activities and so many visitors through that market. So, it’s a great stronger market in our mind. And so we’ll talk more about that closer to service.

Unidentified Analyst: Got you. And to follow-up and to confirm, I was wondering if the aircraft that you’re currently building were the same ones that you’re planning to deliver to the UAE next year? And I guess to follow-up from Savi’s question as well, do you foresee a scenario where you might be able to enter into service without full FAA conforming aircraft?

Didier Papadopoulos: Yes. Thanks for the question. So, I’ll take the first part first. So, like I said in the earlier commentary, the airplanes we’re building right now are an option to potentially go into Dubai. We have not made a decision on which one of these airplanes coming out of the manufacturing line will go there. As discussed, we’ve got the fourth one coming up here, and there’s more to follow after that. We’ll be opportunistic about which airplane we decide to take there. In terms of FAA conformity, so it’s important to recognize that the qualification plan that we have — the GCA accepted aligns very much with the conformity plan with the FAA. It doesn’t necessarily or technically require an FAA conformity. — just it’s a different cert agency. So, I want to be crystal clear on that. But the type of material and supporting documentation and manufacturing build is very similar to what you would expect from that standpoint.

Unidentified Analyst: Thanks. That was very helpful. And finally, regarding the recent Toyota capital raise, we’re wondering if you’re able to share some of the conditions for — from the second tranche and roughly when in 2025 might you expect to receive it?

Matt Field: Yes Anand. So, in terms of the conditions, it’s really a manufacturing strategic alliance. We’re still in discussion on that. The specific timing of that, we’re not going to provide guidance on. But really, it pulls us much closer together, starting basically growing from the basis upon which we have today, where we’re working shoulder-to-shoulder with Toyota on a daily basis.

Unidentified Analyst: Got you. Thank you very much. Appreciate the color. Thanks for taking our questions. I’ll pass it on.

Matt Field: Thanks.

Operator: Thank you. That is all the time we have today. And this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time.