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Canoo to buy vehicle manufacturing facility in Oklahoma City • ZebethMedia

Commercial electric vehicle company Canoo entered into an agreement to acquire a vehicle manufacturing facility in Oklahoma City, the company announced Wednesday along with its third-quarter earnings. The news comes a week after Canoo said it would build an EV battery module manufacturing facility in Pryor, Oklahoma. The new facility will be dedicated to producing Canoo’s electric Lifestyle Delivery Vehicle (LDV) and Lifestyle Vehicle (LV), an electric SUV. Canoo is still working on its “megamicro factory” in Pryor, but until that comes online, this new facility will help Canoo ramp production and bring EVs to market in 2023. Canoo CEO Tony Aquila said the company expects to start production for the LDV on November 17 and complete final certification in the first quarter of 2023. The goal is to build 15 production vehicles this year, which will go to committed order customers like NASA and Walmart. The Oklahoma City 120+ acre facility has “production-ready infrastructure” and is “strategically located with easy access to road and rail,” according to Canoo Aquila. Canoo will adapt the facility to accommodate a full vehicle assembly line with robotics, a paint shop and upfitting center. Canoo said the facility will be powered by clean energy. “Following these initial builds, we will then aggressively shift all our equipment and focus to our new facility during Q1 and Q2 of 2023,” Aquila said Wednesday. “As we start production, we expect the first sellable vehicle deliveries to occur in the back half of Q1 and we will ramp production in 2H 2023 to 20,000 units run rate by year end.” Aquila said the megamicro factory in Pryor is “a bit delayed due to economic reasons,” but that when Canoo is able to shift resources there, the startup will be able to double its run rate to 40,000 units by the end of 2024. Long term, the Oklahoma City facility announced Wednesday will focus on producing defence and specialty products, said Aquila. In April, NASA selected Canoo to provide crew transportation vehicles for the crewed Artemis lunar exploration launches, and in July, the U.S. Army selected Canoo to supply EVs for analysis and demonstration. Canoo Q3 financials Canoo closed out the quarter with cash and cash equivalents of $6.8 million. That’s down from last quarter’s $33.8 million, and $224.7 million from the fourth quarter of 2021. In less than a year, Canoo burned through $217.9 million, and it’s still not generating revenue. Quarter-over-quarter, Aquila says Canoo’s cash burn is down 25% as the company continues to shift its expense mix, increasing the ratio of capital spend to operating spend. The company’s loss from operating activities totaled $109.4 million this quarter, and its GAAP net loss and comprehensive loss hit $117.7 million. Canoo says it has access to $200 million through an “at-the-market offering” program, as well, but access to capital isn’t the same thing as having cash on hand. “On the financing front, we have secured an additional $30 million in a PIPE and a note to be converted to cash or stock,” said Aquila, noting the company is in the final phases of evaluating different financing options for the Oklahoma facility.  Canoo seems to be riding promises of future revenue to get access to more financing and stay afloat. After reporting first-quarter earnings this year, Canoo issued a growing concern warning, saying that it may not have enough funds to make it stay in business. Things improved for the company in the second quarter, in part due to its agreement with Walmart to sell 4,500 electric delivery vehicles. This not only assured future revenue for Canoo, but also gave the company another opportunity to go after additional non-dilutive and lower-cost capital financing opportunities. Since then, Canoo has also secured binding fleet orders from Kingbee and Zeeba to purchase 9,300 and 3,000 vehicles, respectively, with the option to increase to 18,600 and 5,450 vehicles, respectively. Today, Canoo has over $2 billion in total orders in its pipeline, according to Aquila. “The last two quarters have been very tight,” said Aquila. “The macro economic has worsened, pushing the cost of capital higher and forcing us to accelerate our maturity and manage costs efficiently to achieve our goals. We have been doing our best to manage cash, continued access to liquidity and dilution.” Aquila said that even though Canoo’s cash situation looks dire, he believes having less access to cash has led to more competitiveness and efficiencies. “Being able to teach the crew here how to run a business on ‘just in time’ milestone capital is a very disciplined approach as an investor, not just as the chairman and CEO,” he said “I know it is painful. But, you know, would you rather give a young company a lot of money, or would you rather give it money based on milestones?” Canoo revised its expenditure guidance for the remainder of the year, anticipating $70 million to $90 million in operating expenses, excluding stock-based compensation, and $30 million to $50 million of capital expenditures. “We are now on track for a 40% reduction in operating expenses for the second half of the year, which is significant improvement compared to a previously disclosed projection of 20% reduction,” said Ramesh Murthy, Canoo’s senior vice president of finance.  Canoo’s stock, which closed at $1.17, is up 3.42% in after-hours trading.

Cloudflare reaches $1B run rate, promises $5B in 5 years. Investors? Not impressed • ZebethMedia

Cloudflare, the internet infrastructure and security company, reported earnings on Thursday, reaching a significant milestone. With almost $254 million in revenue, the company is on a run rate of over $1 billion for the first time. Revenue, which was up 47% over the previous year, also beat the street’s estimate of $250.6 million. That win was offset by a third-quarter loss of $42.5 million, or 13 cents a share. Still, Cloudflare posted a much smaller loss than in the year-ago quarter when it reported losses of $107.3 million, or 34 cents a share, per MarketWatch. After earnings, Cloudflare co-founder and CEO Matthew Prince announced that the company set a lofty goal to reach $5 billion in revenue organically within five years. “Even as we achieve $1 billion, we have penetrated less than 1% of our identified market for products we already have available today.” “That’s why we’re confident we’re on the path to organically achieve $5 billion in annualized revenue over the next five years,” Prince told analysts in the earnings call. Prince also pointed out how rare it is for a company to reach $1 billion in revenue. “Only 6% of public software companies achieved this milestone, so we’re proud to have crossed it, but nowhere close to finished,” Prince said. Per usual, the markets treated this news with a kick in the teeth, with the company’s stock down as much as 13% overnight Thursday and down over 18.5% by the close on Friday. But how realistic is the $5 billion goal, given its current situation and predicted revenue for 2023?

Apple earnings see iPhone revenues up, still short of forecast • ZebethMedia

Sometimes earnings leave you wondering how good is good enough. Take, for example, Apple’s Q4, which finds the iPhone maker beating Wall Street expectations overall, but still seeing an extended trading stock dip after iPhone sales were improved, but still managed to miss the mark. Revenue hit $90.15 billion for the quarter, edging out the $88.9 billion estimates and rising roughly 8% over this time last year. iPhone revenue, too, saw a healthy uptick of 9.6% on the strength of the new iPhone lineup, though the $42.63 figure fell short of Wall Street’s $43.21 project enough to see a dip in late trading. Mac revenues saw double-digit revenue gains for the quarter, at $11.51 billion. The ever-important Services sector, meanwhile, saw a (relatively) modest y-o-y bump to $19.19 billion – making it another category that just failed to miss the mark of $20.10 billion. iPads, which only recently saw a refresh, were down 13% from last year. The numbers, of course, arrive in the face of significant economic headwinds. In a release, CFO Luca Maestri notes, “Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop.” Tim Cook, meanwhile, used the opportunity to discuss environment concerns. In a separate interview with CNBC, however, Apple’s CEO addressed inflationary and other issues that stalled a potentially larger overall revenue growth for the behemoth. Cook expained, “We would have grown in double digits without the foreign exchange headwinds.” Specifically, the company was hurt by the US dollar’s strength. He added that the company has joined a number of other tech giants in slowing its overall pace of hiring, saying that Apple is instead doing so “deliberately.”

Amazon’s income dipped in Q3 2022 as the economy took its toll • ZebethMedia

Amazon suffered steep losses in year-over-year income as post-pandemic shopping habits and inflation threw the retailer for a loop. In its third quarter 2022 earnings report today, Amazon revealed that operating income decreased to $2.5 billion in Q3 2022 compared to $4.9 billion the same quarter last year, while net income dipped to $2.9 billion versus $3.2 billion during Q3 2021. Operating income refers to earnings after expenses excepting the cost of debt, taxes, and certain one-off items. Net income shows the profit remaining after all costs are subtracted from revenue generated from sales. Amazon noted an operating loss of $0.4 billion in North America in Q3 2022, an unfavorable outcome compared to the nearly $1 billion in operating income the company reached in the quarter a year ago. Internationally, the tech giant fared worse, notching a $2.5 billion operating loss versus Q3 2021’s $900 million loss. As is usually the case, Amazon Web Services (AWS), Amazon’s cloud services division, was a bright spot in an otherwise gloomy quarter, with AWS’ income reaching $5.4 billion in Q3 2022 versus $4.9 billion in the same quarter last year. That is, however, down from the $5.72 billion in operating income that AWS raked in during Q2 2022. On news of Amazon’s Q3 losses, the company’s stock dropped ~20% in after-hours trading. “We’re … encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward,” CEO Andy Jassy said in a press release. “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”

Snap stock down 25% as the social network struggles • ZebethMedia

Snap reported its third quarter earnings Thursday, the first social media company to offer a financial update amidst ongoing economic tumult this quarter. The company, which has seen its stock price plunge to a fraction of what it was worth during 2021’s highs, missed analyst expectations on revenue, bringing in $1.13 billion compared to the $1.14 billion anticipated. Snap’s stock dipped from around $11 per share to $8 in late trading following the report. Snap’s revenue is up 6 percent this quarter, a number that doesn’t compare favorably to previous periods of double digit growth. The company’s net loss accelerated to $360 million, which includes $155 million in “restructuring charges.” The company’s daily active users were up 57 million to 363 million in Q3, a 19 percent increase from the same period last year. “This quarter we took action to further focus our business on our three strategic priorities: growing our community and deepening their engagement with our products, reaccelerating and diversifying our revenue growth, and investing in augmented reality,” CEO Evan Spiegel said of the quarter. While other social networks are similarly struggling due to a combination of broader economic factors, ascendant competitors and the still-reverberating changes from Apple’s ad tracking changes, Snap in particular has taken a beating. In August, the Verge reported that Snap planned to lay off a fifth of its workforce, or around 1,200 employees. The company didn’t offer a forecast for the third quarter results and similarly declined to make predictions about its upcoming quarter.

Tesla Q3 revenue falls short of expectations, while energy unit shows growth • ZebethMedia

Tesla reported Wednesday reported revenue of $21.45 billion in the third quarter, another record-setting period that still missed analysts expectations. Shares fell 3.5% in after-hours trading following the earnings release. Tesla’s net income for the third quarter was $3.3 billion nearly double the $1.62 billion it earned in the same period last year. The company said profits were squeezed by increases in raw material costs as well as issues ramping up production at its Germany and Texas factories as well as 4680 battery cell production. Tesla also cited a strengthening dollar as another factor in its third quarter results. The company’s third-quarter letter to shareholders reiterated much of its guidance its Semi truck production target of December and its plan to achieve a 50% annual growth in vehicle deliveries. However, Tesla provided few details on its launch plans for Cybertruck, only saying it has made progress on its “industrialization” and that production would begin at its Texas factory subsequent to Model Y ramp. Tesla reported earnings, excluding some items, of $1.05 per share versus 62 cents per share in the same period last year. Automotive continued to be the largest piece of its business with revenue from that division coming in at $18.69 billion in the third quarter, a 55% pop from the same year-ago period. The company’s automotive gross margins were 27.9%, the same as last quarter and still lower than high of 32% reached early this year. Earlier this month, Tesla reported delivered 343,830 vehicles in the third quarter, a new record and a turnaround from earlier this year when a shutdown at its China factory and challenges around opening factories in Berlin and Austin affected how many vehicles it was able to get into customers’ driveways. Despite the rebound and record number, the third-quarter delivery figure still didn’t meet Wall Street forecasts, which ranged between 358,000 and 371,000 vehicles, depending on the polled group. There was also a larger-than-usual gap between production and delivery numbers. The company produced 365,923 vehicles in the third quarter. Energy unit growth Tesla’s energy unit, which has lagged in previous quarters, saw an appreciable increase in business. The company reported that energy storage deployments, which includes both Powerwall home batteries and utility-scale Megapacks, shot up 62% year over year, from roughly 1.29 GWh in Q3 2021 to 2.1 GWh in the same quarter this year. The firm called this “by far the highest level [of growth] we have ever achieved.”The news follows a September report that said Tesla had started requiring its solar roof customers to also buy a Powerwall for energy storage. The company’s large-scale batteries also recently made headlines, when a Megapack caught fire at a California power storage facility. The incident shut down a portion of Highway 1 and sparked a local shelter-in-place advisory in Moss Landing.

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