View, Inc. (NASDAQ:VIEW) Q3 2023 Earnings Call Transcript November 14, 2023
View, Inc. misses on earnings expectations. Reported EPS is $-8.17 EPS, expectations were $-6.41.
Operator: Greetings, and welcome to View Inc.’s Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Samuel Meehan, Head of Investor Relations at View. Thank you, Samuel. You may begin.
Samuel Meehan: Good afternoon, everyone and welcome to View’s third quarter 2023 earnings call. I’m Samuel Meehan, Head of Investor Relations at View. I’m here with Dr. Raul Mulpuri, our CEO; and Amy Reeves, our CFO. Before we begin, I’d like to remind you that after market closed today, View issued a press release announcing its third quarter 2023 financial results which you may access in the Investor Relations section of view.com. As today’s discussion includes forward-looking statements, please refer to our press release for a discussion of factors that could cause the company’s actual performance to differ materially from those forward-looking statements. These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations.
These forward-looking statements apply as of today, and we undertake no obligation to update these statements after our call. For a more detailed description of certain factors that could cause actual results to differ, please refer to our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings, including quarterly reports on Form 10-Q. I’d also like to remind you that during the call, we will discuss certain non-GAAP measures related to View’s performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the press release. Unless otherwise stated, our comments during the call refer to non-GAAP results of operations. Now I will turn the call over to our CEO, Dr. Rao Mulpuri.
Rao, over to you.
Rao Mulpuri: Thank you, Samuel, and thank you all for joining us this afternoon. During the call, we will address the results in the quarter, but also up level the conversation to provide context around where we are and where we’re going. Over the past year, with the dual realities of challenges in the real estate industry and the capital markets will continuously evolve our product, our operations and our market approach to sustain our business, serve our customers and importantly continue to build long-term value at View. I’m grateful for the support and belief from our customers and capital partners and I’m proud of the View team for focusing on the mission, being learning oriented, being nimble and resilient, and delivering key outcomes for our customers and the company.
See also 20 Youngest Billionaires In The World and 12 Stocks from Companies Generating High Cash Flow.
Q&A Session
Follow View Inc.
Follow View Inc.
The Q3 results are a testament to that. Now let me provide a quick recap of the key announcements and results we reported today. First, in the third quarter, we showed continued progress on our path to profitability, and significantly improved gross margin. We grew revenue 61% year-over-year in the quarter. Gross margin was positive without the impact of the future production outlook adjustments that Amy will describe in detail. Second, we are executing on our plan to reduce structural fixed costs, and to lower the required revenue breakeven points [technical difficulty] business. The third quarter results show a steep decline year-over-year in both our factory fixed costs as well as our operating expenses. Combining the improved gross margins and lower structural fixed costs, we’re making significant progress in reducing our quarterly cash burn.
Going forward, we remain laser focused on cash management and growing the business to achieve profitability. Third, in October, we were pleased to announce a senior secured credit facility from an investor consortium comprised of strategic real estate investors, Cantor Fitzgerald RXR, Anson and Affinius. These strategic investors are leaders in the real estate industry, and we’re excited to partner with them to unlock the next stage of View’s growth. Let’s discuss our journey to gross margin in a little more detail. We made significant improvement to our gross margins year-over-year. This was a result of View team’s focus, hard work and continuous improvements made in several key aspects of our business. Anyone who knows a manufacturing oriented hardware business with a new product category knows that this is a major inflection point in the business and proves out the unit economics, which in turn forms a basis for profitable growth in the future.
For this milestone to materialize, several things needed to be delivered. First, continuous improvements in product architecture and material selection. Our fourth generation product has all the key characteristics needed to scale to a high volume mainstream product. Second, delivering on the key factory metrics, while optimizing production and delivery costs and meticulously managing the supply chain. Third, continuing to scale the business with high-quality profitable projects. And forth, unlocking value for both our customers and View with our fully integrated smart building platform and the investment tax credit. This journey is never a straight line to success, given all the inputs and moving parts, but the trend line is clear. Our financial performance continues to improve with scale, and this provides confidence towards the path to profitability.
As we zoom out and look at the cost structure of the entire business, we’re committed to reducing quarterly cash burn and getting the business to cash flow positive. We took additional actions in October to further lower our structural fixed costs, including reductions in factory fixed costs and operating expenses. These actions are expected to reduce our cost structure below the already realized year-over-year savings that we reported in our Q3 2023 results. We are able to make these cost improvements because we have made great progress to date on the product, our market approach and the factory operations. On the product, as I’ve mentioned before, we completed the release of our mainstream Gen4 product. We recently completed the upgrade of View Net and the software and we fully released our multifamily offering.
The maturity of the product means we’re able to reduce R&D spend substantially. On the factory side, we are performing well across key operating metrics which allow us to reduce overhead and production costs. We are delivering exceptional products to our customers with on time shipments to large flagship projects across the country. As part of our focus on reducing quarterly cash burn, we made the strategic decision to rationalize our capacity ramp until we are cash flow positive. Consistent with this rationalized capacity plan and greater focus on our strategic accounts, and given the current demand dynamics, we are updating our full year revenue outlook to be in the range of $110 million to $120 million, representing 13% year-over-year growth for 2023.
Now turning to our customers and the market. While the real estate industry continued — continues to deal with the headwinds of office segment challenges and high interest rates, we see multifamily residential development being a bit more resilient at the macro level. Our dual value proposition of sustainability and delighted users combined with the affordability of smart windows with the investment tax credit plays well to the needs of the real estate developers in this segment. With these benefits, we continue to make progress in product evolution, awareness and growth in the multifamily market. Just today, we announced that View has been selected for 89 Dekalb Avenue in Brooklyn, New York, developed by RXR. Likewise, developers nationwide are showing interest in View to differentiate their portfolios in a crowded market.
As we continue to grow in this market, we expect that the multifamily residential segment will be a key driver of demand, enabling View to reach profitability. With that, I’ll hand it over to Amy to cover the financials. Amy, over to you.
Amy Reeves: Thank you, Rao, and good afternoon, everyone. I will be covering the financial results for the third quarter of 2023. As we get started, please note that unless otherwise stated, my comments refer to non-GAAP results of operations as described by Samuel at the beginning of the call. Please refer to the non-GAAP reconciliations in our press release. For the quarter, we reported revenue of $38 million, which represents a of 61% year-over-year increase from Q3 2022, primarily due to growth in our smart building platform revenues driven by a continued and strategic shift to this line of business. Smart building platform is our fully integrated smart window platform and given the customer reception and inherent advantages to this product offering, we expect this to be our primary product offering on a go-forward basis.
