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AYRO, Inc. (AYRO)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 results reflected the deliberate sunset of legacy Club Car Current and focus on Vanish; revenue was $0.14M and net loss was $6.0M, in line with expectations as the company prepared for LRIP and full-scale production .
  • Management expects homologation certifications “shortly” and targets LRIP in fall 2023 with ~60 units, followed by full-scale production in early 2024 at ~9 vehicles/day (~2,000/year), positioning gross margin improvement in 2024 through scale and tooling efficiencies .
  • Balance sheet strength: ~$33M cash and marketable securities at 6/30/23 and completed $22M financing in August to support inventory build and launch, with zero debt; cash at quarter-end was $13.6M with $19.5M marketable securities .
  • No formal financial guidance provided; operational milestones (homologation, LRIP timing, production cadence) are the primary near-term catalysts and likely stock reaction drivers as commercialization of Vanish progresses .

What Went Well and What Went Wrong

What Went Well

  • Homologation safety and testing completed with certifications expected shortly, clearing a critical gateway to commercialization; CEO emphasized confidence in Vanish performance, safety, and quality .
  • Commercialization readiness: LRIP targeted for fall 2023 (~60 units) with planned placements to upfitters, distributors, strategic partners, and key end-customers to maximize sales leverage into 2024 .
  • Strengthened distribution and go-to-market: expanding dealer network, establishing DTC channel in Florida, and relationships with upfitters; management expects these channels to drive acceptance across stadiums, resorts, campuses, corporate, and hospitality .

What Went Wrong

  • Revenue declined 86% YoY to $0.14M as legacy product sunsets and Vanish development dominated, producing a gross loss of $0.19M for Q2; adjusted EBITDA loss widened YoY on ramp costs .
  • OpEx increased to $6.1M vs. $4.1M in Q2 2022, driven by Vanish completion and ramp to LRIP/full production, weighing on near-term profitability .
  • Cash burn: net cash used in operations was $14.9M for the first half of 2023; inventory and prepaid build for LRIP and launch increased working capital needs ahead of revenue scaling .

Financial Results

MetricQ2 2022Q1 2023Q2 2023
Revenue ($USD)$981,560 $113,084 $139,544
Cost of Goods Sold ($USD)$2,827,512 $219,792 $332,027
Gross Loss ($USD)$(1,845,952) $(106,708) $(192,483)
Total Operating Expenses ($USD)$4,125,723 $5,691,399 $6,073,990
Loss from Operations ($USD)$(5,971,675) $(5,798,107) $(6,266,473)
Net Loss ($USD)$(5,974,448) $(5,475,769) $(6,003,233)
EPS (Basic & Diluted, $)$(0.16) $(0.15) $(0.16)
Adjusted EBITDA ($USD)$(3,596,143) $(5,014,726) $(5,502,559)

KPIs and Balance Sheet Highlights:

KPIQ4 2022Q1 2023Q2 2023
Cash & Marketable Securities ($USD)$48.9M $41.7M ~$33.0M
Cash ($USD)$39,096,562 $31,990,835 $13,569,265
Marketable Securities ($USD)$9,848,804 $9,755,228 $19,464,015
Inventory ($USD)$970,381 $1,521,662 $3,049,972
Total Debt ($USD)$0 $0 $0
Shares Outstanding (Common)37,241,642 37,352,204 37,536,101

Segment breakdown: Not applicable; the company did not report segment revenues in Q2 2023 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
LRIP start timing2023LRIP by early June; ~50 units for dealer demos LRIP in fall 2023; ~60 units for upfitters, distributors, strategic partners, and key end-customers Lowered timing, expanded LRIP unit plan
Full-scale production cadenceEarly 2024Target 9 vehicles/day; >2,000/year capacity single shift Target 9 vehicles/day; >2,000/year capacity single shift; second shift and OEM partner available for surge Maintained, with added surge options
Gross margin trajectory2024Not explicitly statedExpect improvement with production tooling, scale, and learning curve New qualitative guidance
Financial guidance (Revenue, EPS, OpEx, etc.)2023None provided None provided Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicQ4 2022 (prior-2)Q1 2023 (prior-1)Q2 2023 (current)Trend
Product launch (Vanish) & LRIPHomologation expected ~June; LRIP by end-June; initial sales H2’23 Homologation starting; LRIP early June; ~50 units; full-scale 9/day Certifications expected shortly; LRIP in fall; ~60 units; full-scale early 2024 Timeline shifted later; LRIP unit plan expanded
Supply chain & sourcingShifted supply chain to North America; reduced Asia reliance; in-house assembly Preparing inventory build; OEM partner can handle surge demand Addressed constraints; inventory build ongoing for LRIP and full-scale Improved readiness; ramping inventory
Distribution: dealers & DTCNegotiating with 50+ dealers; initial dealer announced Many dealers signed; DTC Florida e-commerce planned Q3 Dealer network expanding; DTC site/location in Florida near launch Building channels; DTC launch imminent
IP portfolioBuilding patents/trademarks; barriers to entry focus Strengthening IP; awards (Frost & Sullivan, Red Dot) Continued IP strengthening; design awards reiterated Reinforcing IP moat
Financial discipline & cash runwayCash & marketable securities ~$49M; OpEx cut ~$11M YoY $41.7M cash & securities; similar quarterly burn expected ~$33M cash & securities; $22M financing completed Aug to support launch Cash used for ramp; capital raised to extend runway

Management Commentary

  • “We made significant progress... ever closer to the commercial launch of the AYRO Vanish... completed all of our homologation safety and testing requirements and expect to receive certifications shortly... targeting the start of low-rate initial production... this fall” — CEO, Tom Wittenschlaeger .
  • “We plan to build approximately 60 Vanish units during LRIP... selling and placing these early units with vehicle upfitters, distributors, strategic partners and key end customers... Following LRIP... full-scale production... early 2024... anticipate producing 9 vehicles per day... over 2,000 vehicles per year” — CEO .
  • “Once we move to full production, we anticipate cost savings per vehicle... production tooling, volume leverage and learning curve improvements... allow us to improve our gross margins” — CEO .
  • “Revenue for the quarter... was $139,544, a decrease of 86% year-over-year... Total operating expenses... approximately $6.1 million... Adjusted EBITDA... loss of approximately $5.5 million... Net loss... approximately $6 million” — CFO, Dave Hollingsworth .
  • “Cash and marketable securities at June 30, 2023, was approximately $33 million... Total debt was 0... common shares outstanding 37,536,101” — CFO .

Q&A Highlights

  • The full Q2 2023 Q&A transcript was not retrievable due to a database inconsistency; prepared remarks and financial commentary above reflect available content .
  • Key areas that likely drew questions given prepared remarks: LRIP timing shift to fall and ~60-unit plan ; gross margin improvement drivers in 2024 (tooling/scale) ; inventory build and channel strategy including DTC Florida .

Estimates Context

  • S&P Global consensus estimates for AYRO Q2 2023 were unavailable in our data pull (missing CIQ mapping); therefore, comparisons vs. Street estimates cannot be provided at this time. If/when S&P coverage is mapped, we will update this section with consensus Revenue and EPS and flag beats/misses accordingly.

Key Takeaways for Investors

  • Commercialization catalyst path is intact: homologation certifications “shortly,” LRIP in fall (~60 units), full-scale in early 2024 at ~2,000 units/year; watch for confirmations and unit placements with strategic partners to validate demand .
  • Near-term financials will remain depressed until Vanish ramps; Q2 revenue of $0.14M and adjusted EBITDA loss of $5.5M reflect deliberate legacy sunset and ramp investment .
  • Gross margin should structurally improve with scale/tooling; tangible evidence will come as production transitions from LRIP to full-scale and learning curve effects accrue in 2024 .
  • Balance sheet is fortified for launch: ~$33M cash & securities at quarter end and $22M financing completed in August; zero debt provides flexibility for inventory and marketing scale-up .
  • Distribution diversification (dealers, upfitters, DTC Florida) reduces reliance on any single channel and may accelerate penetration in targeted verticals (stadiums, resorts, campuses, hospitality) .
  • IP portfolio and North American sourcing/manufacturing create differentiation and potential barriers to entry; awards (Red Dot, Frost & Sullivan) bolster product credibility pre-launch .
  • Trading implication: near-term stock moves likely hinge on homologation certification, LRIP commencement, and early customer placements; absence of formal financial guidance increases sensitivity to operational milestones and disclosed order activity .