• Capital Expenditures: $17.9 million in Q3, primarily for equipment purchases for low-volume QSE-5 prototype production and Cobra process preparation.

• GAAP Operating Expenses: $130.2 million in Q3.

• GAAP Net Loss: $119.7 million in Q3.

• Adjusted EBITDA Loss: $71.6 million in Q3, in line with expectations.

• Full Year Adjusted EBITDA Loss Guidance: Tightened to $280 million to $300 million, at the higher end of the original range.

• Capital Expenditures Guidance: Lowered to $60 million to $75 million for 2024.

• Liquidity: $841 million at the end of Q3.

• Warning! GuruFocus has detected 2 Warning Sign with QS.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• QuantumScape Corp (NYSE:QS) has begun producing low volumes of its first B-sample cells, marking a significant milestone in its development process.

• The QSE-5 cells have a measured energy density of 844 watt hours per liter and can charge from 10% to 80% in just over 12 minutes, showcasing advanced performance metrics.

• The Raptor process, a new separator production technology, has been successfully implemented, improving film quality, performance, and energy consumption.

• QuantumScape Corp (NYSE:QS) has a strategic partnership with PowerCo, a Volkswagen Group battery manufacturer, to bring the QSE-5 technology to mass production, which includes a $130 million prepayment.

• The company ended Q3 with $841 million in liquidity, projecting a cash runway extending into 2028, supported by the PowerCo deal and operational efficiencies.

Negative Points

• QuantumScape Corp (NYSE:QS) faces challenges in improving cell reliability, yield, and equipment productivity during the B-sample phase.

• The company reported a GAAP net loss of $119.7 million for Q3, with adjusted EBITDA loss at $71.6 million, indicating ongoing financial challenges.

• Higher legal fees and settlement accruals have pushed the adjusted EBITDA loss guidance to the higher end of the original range for 2024.

• The transition from Raptor to Cobra process for higher volume production is ongoing, with full implementation expected in 2025, indicating potential delays in scaling up production.

• The collaboration with PowerCo requires careful management to ensure successful industrialization and scaling, which could pose risks if not executed effectively.

Q & A Highlights

Q: Can you elaborate on the significance of QuantumScape entering the B-sample phase of the automotive qualification cycle? A: The B-sample phase is significant because it marks the first time a battery meets all major performance specifications demanded by consumers, such as range, faster charging, and better safety. This phase is crucial for transforming the electric vehicle marketplace by offering a no-compromise alternative to internal combustion vehicles. - Siva Sivaram, CEO