Baillie Gifford is buying nearly 44 million newly issued shares in Joby Aviation, a purchase that will provide a $180 million capital injection to the company as it continues to develop all-electric aircraft for commercial passenger service.
Joby Aviation said Wednesday as part of its first quarter earnings report that will sell 43,985,681 to the investment group at a price of $4.10 per share, a movement that strengthens its balance sheet in the midst of a stormy economic environment. The share sale is expected to close on May 5.
Shares of Joby Aviation closed Wednesday up 1.49% at $4.10.
In particular, Joby said that the funds “are expected to be used to accelerate initial production of Joby, which will allow the company to take advantage of near-term revenue opportunities without affecting the funds available to bring the company to certification type of its electric vertical take-off and landing (eVTOL) aircraft”.
That “short-term income” opportunity is the key phrase here and is tied to Joby’s announcement last week that he secured a $55 million contract of the US Department of Defense. Under that agreement, Joby will produce and supply nine aircraft to the military. The first two will be delivered to Edwards Air Force Base in early 2024.
“That’s a really critical milestone when we think about shifting gears from R&D to actual operation and in turn actual revenue for the first time,” Joby president Paul Sciarra said in an interview Wednesday. .
Baillie Gifford’s investment allows Joby to protect his existing $978 million in cash, funds that are being used to develop and receive Federal Aviation Administration certification of his electric aircraft, as well as to launch a commercial taxi service, while fulfilling his contract with the Department of Defense. .
“As we think about increasing that previous production curve, building more aircraft than we could otherwise, delivering it to the new customer, when it comes to kind of cash flow, you know, we felt it made sense to make sure we had a little more of margin so that we had a chance to really capitalize on what we think is a great opportunity, Sciarra explained on Wednesday’s earnings call.
Baillie Gifford is already an investor in Joby. In January 2020, the company invested $15 million as part of Joby’s $590 million Series C funding round which was led by Toyota. A year later, Baillie Gifford made a $49 million investment in the private investment in public equity (or PIPE) that was associated with Joby’s IPO through a merger with Reinvent Technology Partners, a special purpose acquisition firm of the well-known investor and co-founder of LinkedIn Reid Hoffman and Zynga founder Mark Pincus.
Joby has been working for more than a decade to develop, certify and produce an electric vertical takeoff and landing (eVTOL) aircraft to be used as a commercial taxi service in cities.
“Already in 2023 we have achieved significant milestones in production, testing and funding, and I am incredibly excited about our progress as we move toward our goal of launching a commercial service in 2025,” said Joby founder and CEO JoeBen Bevirt, it’s a statement. . “Baillie Gifford’s decision to invest further in Joby is a testament to her long-term belief in the electrification of transportation and her track record speaks for itself. We couldn’t be more proud to have her support.”
Joby reported a net income loss of $113.4 million on Wednesday, an 82% increase from a loss of $62.3 million in the same period last year. The company said the higher net loss compared to the first quarter of 2022 was primarily due to lower revenue of $45.7 million and higher operating expenses of $5.4 million. Joby does not generate income from its taxi service since the company is still in the process of certifying its aircraft. The reduction in other income was due to the unfavorable revaluation of derivative liabilities in the first quarter and the non-recurrence of income from our equity method investment, partially offset by higher interest income on our short-term investments, according to the report.
Like any company that hasn’t yet brought its product to market, Joby is investing capital. But the company still had $978 million in cash and short-term marketable securities at the end of the quarter. That figure doesn’t include this new $180 million from Baillie Gifford.
This story is unfolding…
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