Rivian Automotive 2026 Q3 Earnings Call

Good afternoon, and thank you for joining us for Rivian's third quarter 2026 earnings call. Today, I am joined by RJ Scaringe, our Founder and CEO, Claire McDonough, our Chief Financial Officer, Javier Varela, our Chief Operations Officer, and Derek Mulvey, our Vice President of Finance, who will be named Interim CFO effective tomorrow. Before we begin, matters discussed on this call, including comments and responses to questions, reflect management's views as of today. We will also be making statements related to our business, operations, and financial performance that may be considered forward-looking statements under federal securities law. Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filings and the presentation we filed with the SEC today. During this call, we will discuss both GAAP and non-GAAP financial measures.

A reconciliation of historical non-GAAP to GAAP financial measures is provided in our earnings presentation and press release. Just before the earnings call, we posted our earnings presentation, which includes an overview of our progress over the recent months. I encourage you to read it for additional details around some of the items that we will cover on today's call. Following our prepared remarks, we will be taking questions from sell-side analysts. In the interest of keeping the call to 1 hour, we would ask these analysts to limit any follow-on questions to 1. With that, I will turn the call over to RJ.

Thanks, Chip. Good afternoon, everyone, and thank you for joining us for today's call. We had a great third quarter. We achieved record production volumes in Normal as we continued to ramp R2 manufacturing. We also had record deliveries, with R2 delivering much of that gain. In fact, R2 is already our best-selling vehicle by volume, outselling both R1 and EDV in the third quarter. I am proud of how our team has come together to scale our manufacturing, sales, and service operations. We are also advancing our technology roadmap, and I look forward to showcasing that progress at our Autonomy and AI Day on December 9. Since its launch in June, we have seen all types of potential customers take R2 for a drive. The feedback on R2 has been outstanding.

In the third quarter, we hosted over 103,000 R1 and R2 demo drives, surpassing the record we set in the second quarter. Reservation conversion rates for the Launch Edition R2 remained higher in the quarter than our expectations. We are really excited for the launch of additional variants in the coming months. R2 continues to generate rave reviews and awards from media, and recently won Top Gear's SUV of the Year award for 2027, with more awards to come. Amazon continues to expand its fleet of electric delivery vans across North America. Early this month, we began delivering new variants that are specifically designed to expand route coverage into more rural networks, including an all-wheel drive configuration, as well as a larger battery pack that offers 30% more range. Turning to our manufacturing operations, our team in Normal continues to ramp R2 production.

The second R2 shift has started, and we expect our manufacturing run rate to increase over the coming quarters. In Georgia, construction of our next manufacturing site is progressing well. Regarding our technology roadmap, autonomy remains one of the most important areas of investment at Rivian. We continue to see strong momentum in our Autonomy+ offering, available on every R2 and R1 starting with the 2025 model year, with take rates trending ahead of our expectations. Today, every vehicle with Autonomy+ is capable of hands-free driving on millions of miles of roads. Our next milestone is our Point to Point feature. This means customers can enter an address and their vehicle will follow the route from start to finish, handling city streets, stoplights, highway interchanges, and everything in between, with driver supervision.

A limited rollout of Point to Point is expected to begin later this year with our invitation-only Autonomy Early Access Program, with a general release to all Autonomy+ subscribers in 2027. We believe Point to Point capabilities are going to be an important purchase criteria for customers and is becoming a driver of market share. We continue to make progress on our partnership with Uber. We remain on track and expect to achieve our next milestone by the end of this year, which is expected to unlock an additional $250 million of equity investment from Uber. Additionally, last week, we announced the acquisition of Third Dimension AI to support our autonomy development and our associated closed-loop simulation efforts. With the Rivian Assistant, we have developed a smarter, more customizable AI-defined vehicle experience for all R1 and R2 owners.

In our October OTA, we added Gmail integration to Rivian Assistant, and we look forward to sharing more at our upcoming Autonomy and AI Day. Dressing up our vehicles for Halloween is a highlight to our customers every year. This October, we collaborated with Sony Pictures and Bill Murray to bring the Ghostbusters universe to life on Rivian vehicles with Halloween Mode. This is a perfect demonstration of how the level of deep vertical integration across hardware and software allows us to release immersive features to our customers at speed. Finally, I want to take a moment to thank Claire for all of her contributions at Rivian over the last six years. On a personal level, Claire has been an incredible partner and friend throughout this journey. I know I speak for the whole team when I say we wish you nothing but the best in your next chapter.

I am also excited to work with Derek as he steps into the interim CFO role. In closing, I want to thank our team for their continued execution in the third quarter. We are laying the foundations for a future that we believe will be fully electric, autonomous, and AI-defined. I could not be more excited about the opportunity ahead for Rivian. With that, I will turn the call over to Claire to cover our third quarter results.

Thank you, RJ, and good afternoon, everyone. As many of you saw last month, I decided to step down as Rivian's CFO to head back to the East Coast to be closer to my family and pursue a new opportunity. It has been the highlight of my career to help build Rivian's financial foundation alongside RJ and our teams, and I am stepping away with complete confidence in this company's trajectory, its mission, and the strength of the team that will carry it forward.

Turning to the results of the third quarter, our consolidated revenue was $2.155 billion, a 38% increase over the same quarter last year. Consolidated gross profit was $176 million, and our gross profit margin was 8%. Gross profit included $166 million of depreciation and amortization and $28 million of stock-based compensation expense. Adjusted EBITDA losses for the third quarter were $435 million, driven by our $176 million of gross profit and increased adjusted operating expenses as we scale our sales, marketing, and service operations to support our R2 volumes and invest in our autonomy roadmap. In the third quarter, we produced 19,751 vehicles at our plant in Normal, Illinois, and delivered 19,248 vehicles. Production and delivery results for the quarter were in line with our expectations, with R2 becoming our best-selling vehicle by volume in the third quarter.

Our $1.55 billion of automotive revenue, a 36% increase over the same quarter last year, were primarily driven by a 46% increase in vehicle deliveries and $81 million of regulatory credits, partially offset by a decline in average selling prices from a higher mix of R2 and commercial van deliveries, while R1 average selling prices increased due to mix improvements. Automotive gross profit loss was $80 million compared to gross profit loss of $130 million in the same quarter last year, a $50 million improvement due primarily to increases in delivery volumes at an improved per-unit margin, an increase in revenues related to automotive regulatory credits, and an IEEPA tariff refund receivable, partially offset by costs related to the ramp of R2 production.

In the quarter, we recognized approximately $120 million in incremental cost of revenue due to the ramp of R2 production as compared to production at more normalized levels. While current macro and geopolitical factors are creating added complexity, cost, and uncertainty, our team continues to work hard to manage supply chain risks and increasing commodity and memory costs. Our software and services segment reported another strong quarter. During the third quarter, the segment generated $605 million of revenue, a 45% year-over-year increase, primarily due to increases in vehicle electrical architecture and software development services by the joint venture, vehicle repair and maintenance services, and Autonomy+, offset by lower remarketing sales. $354 million, or approximately 60% of software and services revenue, was attributable to our joint venture with Volkswagen Group.

Software and services gross profit was $256 million, a 42% margin, due to better-than-expected mix of revenues from more profitable revenue streams. With that, I will hand the call over to Derek to walk through our business outlook and capital roadmap.

Thanks, Claire. It has been a privilege to work alongside you, and I am excited to step into the interim CFO role and build on the foundation you have established. Turning to our liquidity and balance sheet, we ended the third quarter with approximately $5.5 billion in cash equivalents, and short-term investments. In addition to this balance, on October 7, we announced the funding of our $1 billion 10-year term loan facility with Volkswagen Group at a fixed interest rate of 6%. To date, we have received $5.3 billion of the $5.8 billion in expected capital commitments associated with the joint venture, with the remaining $460 million anticipated in late 2027. Additionally, we expect to achieve our second milestone under the Uber partnership later this year, which will trigger an additional $250 million equity investment.