QuantumScape Corporation Class A Common Stock 2026 Q3 Earnings Call

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's third quarter 2026 earnings call. To supplement today's discussion, please go to our investor relations website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the Safe Harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's CEO, Dr. Siva Sivaram, and our Chief Accounting Officer, Agnes Tan. Our Chief Financial Officer, Kevin Hettrich, is recovering from a planned medical procedure, and Agnes will cover the financial portion of today's call. With that, I'd like to turn the call over to Siva.

Thank you, Sam. We look forward to having Kevin back soon, and we wish him a speedy recovery. Let me start with the big news on cell manufacturing. In February of this year, we inaugurated the Eagle Line, and it has already become the workhorse of our customer engagement, allowing an increased pace of customer sampling, which is flowing into customer billings. Our progress on demonstrating scalable production has given us the confidence to take the next step for production scale-up beyond the design capacity of the Eagle Line. Today, we announced a 100-megawatt hour mass production line with output aimed at meeting the rapidly emerging opportunities for our QSDC and QSAS business verticals. In addition, we announced a QS ecosystem partnership with Muehlbauer Group to provide cell assembly equipment for this planned line.

Engineering work on higher throughput processes and equipment is already underway, and startup production for this new line is targeted for 2028. With Murata, Corning, and Muehlbauer, we have now announced partnerships with global players along the entire production flow, representing an end-to-end solution for mass production of our technology as we work towards gigawatt hour scale production. Next, I will provide an update on our three business verticals, starting with QSDC. On October 8th, we launched the QS PowerBlock for AI data centers in conjunction with the Open Compute Project Global Summit. The QS PowerBlock is an in-rack energy storage reference design that enables AI data center architects to harness the improved energy density, high power capability, and especially the improved safety profile of the QSE-5 cell.

In testing, the QS PowerBlock demonstrated four times the power density and five times longer runtime than the reference specification from OCP. This is a clear demonstration of the step change performance improvement provided by QS technology and the value we can offer AI data center customers. Another important advantage of our ceramic solid-state separator is its safety profile, in particular, its thermal stability. Conventional lithium-ion batteries, including LFP batteries, are not thermally stable above approximately 180 degrees Celsius, leading to the risk of catastrophic thermal runaway and making insurance and regulatory approval more onerous, which slows down deployment of critical AI infrastructure. In contrast, QS solid-state batteries have been shown to be thermally stable well over 300 degrees Celsius, and we recently validated this result in customer testing as well as with third-party lab testing. Next, an update on our automotive vertical, QSEV.

Engagement on automotive cell development continues to be robust across our global automotive customers. In Q3, we recorded our first customer billings from Honda agreement announced in June. This agreement encompasses joint development work to integrate our solid-state platform into Honda's technology roadmap. In addition, we have signed an agreement with a new customer to further advance automotive commercialization. This agreement is with a leading global player in mobility manufacturing, whose applications and requirements are aligned with our automotive customers. We are aligning our statements of work with Volkswagen PowerCo with the goal of bringing them onto our long-term technology platform that goes beyond QSE-5 and includes other applications. Our aim is to bring all of our automotive customers onto a common technology platform.

On November 11th, we will announce more details on our next generation technology platform and collaboration model with automotive customers at our third annual Solid-State Battery Symposium in Kyoto, Japan. Next, an update on our QSAS business vertical. QSAS is engaged with customers across many advanced applications, defense, aerospace, medical devices, consumer electronics, and more. We believe this diversity of applications offers an attractive opportunity set for our QSE-5 platform, with a total addressable market for QSAS of up to $75 billion by 2030. We have shipped QSE-5 samples to customers in the defense, aviation, and telecommunication sectors, and we recorded our first customer billing from QSAS this quarter. One important point of feedback from customers in defense is that supply chain vulnerabilities are not just a theoretical concern.

They are already seeing restrictions put in place by foreign governments, which limit their ability to procure cutting-edge batteries to power their advanced defense systems. This is a point of differentiation for QS. In addition to advantages in performance and safety, our cells are built in America and use supply chains that were designed from the beginning to avoid critical dependencies on Chinese suppliers of equipment or materials such as graphite. Finally, with Q3 behind us, I'd like to take a look back at our execution so far on our four key goals for 2026. These four goals were all focused on one strategic objective, taking our solid-state battery technology and turning it into products across multiple verticals. Our execution towards our goals has been strong. Our first key goal for 2026 is to demonstrate scalable production on the Eagle Line.

Eagle Line is fully operational and is producing increased volumes of QSE-5 cells for our customers. This has allowed us to move to the next stage of scale-up with the announcement today of our 100 megawatt hour mass production line and ecosystem partnership with the Muehlbauer Group. Our second key goal for 2026 is to advance automotive commercialization. So far this year, we have announced our second named automotive partnership with Honda. We continue our engagement automotive development with Volkswagen PowerCo, and we have signed new agreements and expanding existing relationships with global players in automotive and mobility. Our third key goal for 2026 is to enter new high-value markets, and we are seeing strong interest in both our QSDC and QSAS verticals. With the QS PowerBlock, QSDC is addressing the need for high performance, safer in-rack energy storage for advanced AI data center designs.

With QSAS, we are seeing broad interest across advanced applications, including defense, aviation, and telecommunications, and we have already begun generating customer billings from QSE-5 sample shipments. Finally, in 2026, we promise to go beyond QSE-5 with an update on our technology roadmap, and we are pleased to announce that this will take place in conjunction with our third annual Solid-State Battery Symposium on November 11 in Kyoto, Japan. We are proud of the progress we have made so far in 2026, and while there is much work left to do, the whole team is focused on our mission to revolutionize energy storage. We look forward to sharing more updates soon.

Thank you, Siva. GAAP operating expenses and GAAP net loss in Q3 were $92.4 million and $84.5 million respectively. Adjusted EBITDA loss was $60.7 million in Q3, in line with expectations. For full year 2026, we reiterate our adjusted EBITDA loss guidance of between $250 million and $275 million. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statements at the end of the shareholder letter. Capital expenditures in the third quarter were $4.4 million. Q3 CapEx was primarily composed of investment into our technology roadmap and associated facility spend. For full year 2026, we reiterate our guidance for CapEx to be between $27 million and $37 million. Customer billings in Q3 were $9.8 million. Customer billings as a metric represents the total value of all invoices issued by QS to our customers and partners in the period, regardless of the accounting treatment.

As a reminder, customer billings may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of engagement. This operational metric is not a substitute for revenue under US GAAP. Customer billings in Q3 included both automotive and non-automotive customers and reflected the mix of development activities, payments from ecosystem partners, and cell shipments. We ended Q3 with $819.8 million in liquidity and will remain prudent with our strong balance sheet going forward. As always, we encourage investors to read more on our financial information, business outlook, and risk factors in our quarterly and annual SEC filings on our investor relations website.

Thanks, Agnes. We will begin today's Q&A portion with a few questions we have received from investors or that I believe would interest investors. Siva, today we announced a 100-megawatt hour production line, as well as a partnership with Muehlbauer to provide cell assembly equipment. Why take this step now, and why Muehlbauer?