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AYRO, Inc. (AYRO)·Q3 2023 Earnings Summary

Executive Summary

  • AYRO recognized its first revenue from the AYRO Vanish in Q3 2023 ($0.088M), initiated LRIP after completing homologation certifications, and placed initial units with upfitters and corporate prospects .
  • Net loss widened to ($12.59M) due to non-cash valuation charges tied to the August financing (warrant/derivative liabilities), with net loss to common of ($14.20M); cash, marketable securities, and restricted cash totaled ~$47.9M at quarter-end, and debt was zero .
  • Management guided to per-unit breakeven in 2H 2024, with expected gross margin improvements as production transitions from prototype to full tooling, and an initial ramp plan of ~4 vehicles/day versus capacity of 9/day when fully staffed .
  • Catalysts ahead: full-production transition in early 2024, corporate campus fleet orders, DTC channel activation, and Valet debut at the PGA Show in Jan 2024; margin trajectory hinges on supply chain synchronization and scaling learnings .

What Went Well and What Went Wrong

  • What Went Well

    • Successfully completed homologation for Vanish, entered LRIP, and recorded first Vanish revenue; “we received all necessary regulatory certifications… and began placing finished Vanish units” .
    • Strong liquidity: ~$47.9M cash, marketable securities, and restricted cash; management believes this is sufficient to reach breakeven .
    • Growing IP and channel strategy: four patents awarded in the last 90 days; four-pronged go-to-market (dealers, upfitters, DTC in FL, government/large fleet) .

  • What Went Wrong

    • Revenue extremely low ($0.088M) as legacy Club Car Current sunset and Vanish is early in ramp; gross loss remained negative due to prototype pricing in LRIP .
    • Net loss widened from ($5.68M) in Q3’22 to ($12.59M) in Q3’23, driven by ~$8.5M noncash expense from August private placement (warrant/derivative liability valuation) .
    • Margin pressure persists: LRIP prototype component costs elevated; gross margin negative and adjusted EBITDA loss remained significant (Q3 adjusted EBITDA ≈ ($5.2M)) .

Financial Results

MetricQ1 2023Q2 2023Q3 2023
Revenue ($USD)$113,084 $139,544 $88,395
Cost of Goods Sold ($USD)$219,792 $332,027 $231,837
Gross Loss ($USD)($106,708) ($192,483) ($143,441)
Total Operating Expenses ($USD)$5,691,399 $6,073,990 $6,096,535
Loss from Operations ($USD)($5,798,107) ($6,266,473) ($6,239,976)
Net Loss ($USD)($5,475,769) ($6,003,233) ($12,589,572)
Net Loss Attributable to Common ($USD)——($14,198,207)
Adjusted EBITDA ($USD Millions)($5.01) ($5.50) ($5.20)
Net Loss per Share (Basic & Diluted) ($USD)($0.15) ($0.16) ($2.99)
Weighted Avg Shares (Basic & Diluted)37,319,905 37,476,845 4,744,229
  • Commentary: Q3 revenue reflected initial Vanish unit placements; margin pressure from LRIP prototype components expected to ease as full tooling and volume ramp lower COGS .

KPIs and Balance Sheet

KPIQ1 2023Q2 2023Q3 2023
Cash and Equivalents ($USD)$31,990,835 $13,569,265 $3,287,902
Marketable Securities ($USD)$9,755,228 $19,464,015 $34,627,782
Restricted Cash ($USD)$0 $0 $10,000,000
Total Debt ($USD)$0 $0 $0
Common Shares Outstanding (Period End)37,352,204 37,536,101 4,890,137

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Per-unit breakeven2H 2024Improvement in gross margins expected in 2024; no explicit breakeven timing Forecasting per-unit breakeven in 2H 2024; cash balance sufficient to reach milestone Introduced explicit timing (Raised specificity)
Production ramp/dayEarly 2024Target capacity ~9 vehicles/day; >2,000 units/year on single shift Forecast ~4 vehicles/day initially in 2024; capacity ~9/day when fully staffed Clarified initial ramp (Maintained capacity)
LRIP status2H 2023LRIP targeted for fall 2023 LRIP initiated; first units placed with upfitters/distributors; first revenue recognized Achieved
Product roadmap2023–2024Valet and Vapor to follow Vanish; earlier plan referenced year-end introductions Valet debut at PGA Show (Jan 2024); Vapor later in 2024 Updated timeline (Adjusted later)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Homologation & CertificationsHomologation underway; certifications expected shortly Completed homologation; all certifications received Completed (Positive)
LRIP & Production RampLRIP planned; ~60 units in LRIP; target full production early 2024 LRIP commenced; initial units placed; sequential ramp expected through 2024 Executing ramp (Improving)
Margin trajectoryExpect COGS decline with production tooling and volume leverage in 2024 Prototype pricing elevates COGS; margins expected to improve as tooling/volume scale Path to improvement (Stable-to-Positive)
Sales channelsBuilding dealer network; DTC site and Florida location; upfitters; government Four-pronged channels reiterated; strong corporate campus interest Broadening (Positive)
Supply chainAddressed constraints; inventory build ahead of LRIP Controlled ramp to synchronize parts flow; avoid bottlenecks Vigilant (Stable)
IP & patentsStrengthening IP portfolio; awards (Red Dot, Frost & Sullivan) Four patents awarded in last 90 days Accumulating (Positive)
Financing & Liquidity$22M raised in Aug; ~$33M cash & marketable at Q2-end ~$47.9M combined cash/marketable/restricted; zero debt Strengthened (Positive)
Product roadmapValet/Vapor to follow Vanish Valet debut Jan 2024; Vapor later 2024 Timelines set (Neutral-to-Positive)

Management Commentary

  • “We successfully completed homologation for the AYRO Vanish… and received all necessary regulatory certifications that allowed us to confidently enter LRIP.”
  • “As we transition to full production, we expect our cost of goods sold for each completed AYRO Vanish unit to decline… allowing us to recognize sequentially higher margins on each vehicle.”
  • “We recognized the first revenue from sales of the AYRO Vanish through initial units placed with hospitality provider Cruising Kitchens.”
  • “Given the financing in August, our cash balance at the end of the third quarter was $47.9 million… more than sufficient for us to reach breakeven, anticipated in the second half of 2024.”
  • CFO: “Net loss attributable to common stockholders… was approximately $14.2 million, including approximately $8.5 million in noncash expense related to our August private placement.”

Q&A Highlights

  • Corporate interest and test-drive feedback: strong interest from large corporate campuses, highlighting payload capability, performance, and styling; management expects first orders from several corporates before year-end .
  • Go-to-market strategy: reiterated four channels (dealers, upfitters, DTC in FL, government/large fleet); LRIP placements prioritized to maximize leverage ahead of full production .
  • Roadmap clarity: Valet debuts at PGA Show (Jan 2024) with piggyback homologation; Vapor later in 2024; conversion price on preferred/warrants ratcheted to $2 .
  • Ramp math & supply chain: initial forecast ~4 vehicles/day with capacity ~9/day once fully staffed; controlled ramp to synchronize parts delivery and avoid inventory bottlenecks .
  • Revenue cadence: no explicit revenue projections; expect non-linear but consistent ramp through 2024 as manufacturing and supply chain are dialed in .

Estimates Context

  • Wall Street consensus (S&P Global) for AYRO Q3 2023 EPS and revenue was unavailable due to missing CIQ mapping; as such, we cannot quantify beats/misses versus consensus for this quarter. Coverage appears limited for this micro-cap issuer. If/when SPGI mapping is added, we will update comparisons accordingly. (S&P Global consensus unavailable)*

Key Takeaways for Investors

  • LRIP milestone achieved with first Vanish revenues; near-term stock reaction likely tied to visible corporate orders and evidence of sustained production ramp into early 2024 .
  • Margins should inflect as prototype pricing gives way to production tooling and volume learning; watch COGS per unit as the key driver of gross margin normalization in 2024 .
  • Liquidity position (~$47.9M combined cash/marketable/restricted) and zero debt reduce near-term financing risk and support the ramp to per-unit breakeven in 2H 2024 .
  • Capacity plan: initial ~4 vehicles/day growing toward 9/day on a full line; supply chain synchronization is the gating factor—monitor quarterly production disclosures and backlog .
  • Channel diversification (dealers, upfitters, DTC, government) creates multiple demand vectors; corporate campus fleets are an emerging catalyst for multi-unit orders .
  • Product roadmap events (Valet at PGA Show Jan 2024; Vapor later 2024) provide timely marketing and partnership opportunities; expect incremental disclosure on homologation piggybacking and launch timing .
  • No Street consensus comparison available; revisions likely hinge on proof points (orders, production cadence, margin progression). Near-term trading likely reacts to order announcements and production-transition updates. (S&P Global consensus unavailable)*

* S&P Global consensus unavailable: SPGI CIQ company mapping missing for AYRO at the time of query.