Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xos Inc (XOS, Financial) reported $15.5 million in revenue for Q2 2024, an 18% increase quarter-over-quarter and a 227% increase year-over-year.
- The company delivered 90 units in Q2 2024, primarily to major fleet customers like UPS and FedEx Ground contractors.
- Xos Inc (XOS) achieved its fourth consecutive quarter of positive gross margin.
- The company announced a new powertrain partnership with Blue Bird, enhancing its reputation in the EV sector.
- Strong sales activity for the Hub, Xos' mobile energy storage and charging product, indicating robust demand for flexible charging solutions.
Negative Points
- GAAP gross margin decreased to 13.1% in Q2 2024 from 21.2% in Q1 2024, impacted by lower average selling prices and inventory adjustments.
- Operating expenses remained high at $13.4 million, consistent with the previous quarter.
- The company reported a non-GAAP operating loss of $9.7 million and a GAAP operating loss of $11.4 million for Q2 2024.
- Cash and cash equivalents decreased significantly to $20.7 million from $47.3 million at the end of Q1 2024.
- Free cash flow was negative $26.1 million for the quarter, a substantial decrease from negative $14.6 million in the previous quarter.
Q & A Highlights
Q: Given the $9.7 million non-GAAP operating loss in 2Q, what should we expect to be a challenge in the second half from a profitability perspective?
A: Dakota Semler, CEO: The high increase in Q2 was driven by a ramp-up in inventory spending due to demand for orders in the second half of the year and collections of government incentives. We expect to recover cash from these incentives and convert inventory into finished goods for sale in the second half. We are confident in staying within our guidance for the rest of the year.
Q: Can you comment on existing customer interest, new customer interest, and where things are headed into 2025?
A: Dakota Semler, CEO: We continue to see strong interest, particularly from large national accounts. Sales closed in Q2 skewed towards large national accounts due to the cost of capital for smaller fleets. National fleets are ramping up orders to comply with regulations like the Advanced Clean Fleet Rule in California. Sales backlog continues to grow, and new products like the Xos Hub and powertrains are adding to this.
Q: Are there other potential powertrain partnerships beyond Blue Bird and Winnebago?
A: Giordano Sordoni, COO: Yes, we are working on other partnerships that we can't share yet. Variations to the StepVan, like making it longer or shorter, open new customer avenues. Our core focus remains on the electric chassis for delivery vans, powertrain units, and Hubs.
Q: Is there an expectation of gross margin compression or operating expense increases in Q3 and Q4?
A: Liana Pogosyan, Acting CFO: Our guidance is conservative. For the six months ended, our non-GAAP operating loss was about $19 million, and we expect a similar or better trajectory for the second half of the year.
Q: Do you still expect sequential revenue growth each quarter?
A: Liana Pogosyan, Acting CFO: Yes, you should expect sequential revenue increases. There is variability in average selling prices and product mix, but overall, there should be an increase.
Q: What is the current run rate of Hub production?
A: Giordano Sordoni, COO: The Hub line setup has gone well, and we are building Hubs more consistently. We are close to reaching the capacity of two Hubs per week and expect to achieve this by the end of the month.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
