XOS, Inc. Reports Financial Results for the Quarter Ended June 30, 2024
XOS, Inc. filed its quarterly report for the period ended June 30, 2024, reporting a net loss of $2.3 million, or $0.29 per share, compared to a net loss of $1.9 million, or $0.24 per share, for the same period last year. The company’s revenue increased by 15% to $1.4 million, driven by growth in its software and services segment. As of June 30, 2024, the company had cash and cash equivalents of $3.4 million and a working capital deficit of $2.1 million. The company’s total outstanding shares as of August 9, 2024, were 8,003,858. The report also includes management’s discussion and analysis of the company’s financial condition and results of operations, as well as quantitative and qualitative disclosures about market risk.
Xos Inc. Reports Strong Revenue Growth and Operational Improvements
Xos Inc., a leading manufacturer of electric commercial vehicles and powertrains, has reported its financial results for the six months ended June 30, 2024. The company saw a significant increase in revenue and improvements in its operational efficiency, though it continues to face challenges as an early-stage growth company.
Revenue Surge Driven by Higher Unit Sales
Xos reported total revenues of $28.7 million for the first half of 2024, a 204% increase from the $9.5 million generated in the same period of 2023. This impressive growth was primarily driven by a substantial increase in unit sales of the company’s electric step vans and powertrains.
During the six months ended June 30, 2024, Xos delivered 138 vehicles and 14 powertrains, compared to 67 vehicles and 2 powertrains in the prior-year period. The company also saw an increase in the average selling price of its products, further boosting revenue.
Table 1: Xos Revenue Breakdown
| Revenue Source | H1 2024 | H1 2023 | $ Change | % Change |
|---|---|---|---|---|
| Stepvans & Vehicle Incentives | $24,731 | $8,549 | $16,182 | 189% |
| Powertrains & Hubs | $1,845 | $228 | $1,617 | N/M* |
| Other Product Revenue | $1,270 | $293 | $977 | 333% |
| Ancillary Revenue | $851 | $381 | $470 | 123% |
| Total Revenues | $28,697 | $9,451 | $19,246 | 204% |
*N/M = Not Meaningful
The company’s growth in the coming years is expected to be supported by strong secular trends, including increased focus on climate change and the rapid growth of e-commerce and last-mile delivery. Xos believes its products are well-positioned to capitalize on these trends as commercial trucks are a significant source of greenhouse gas emissions, and governments and corporations are setting ambitious goals to reduce emissions.
Improved Operational Efficiency
While Xos’ cost of goods sold increased by 70% to $23.9 million in the first half of 2024, this was a smaller increase compared to the 204% growth in revenue. The company’s efforts to find more cost-effective vendors and sources of parts and raw materials have helped to improve its operational efficiency and profitability.
The company’s general and administrative (G&A) expenses decreased by 15% to $18.1 million, primarily due to lower headcount and personnel costs. Similarly, research and development (R&D) expenses and sales and marketing (S&M) expenses decreased by 44% and 38%, respectively, also driven by reductions in headcount.
These operational improvements, combined with the significant revenue growth, have helped Xos to reduce its net loss from $47.9 million in the first half of 2023 to $20.7 million in the same period of 2024, a 57% improvement.
Liquidity Concerns and Ongoing Challenges
Despite the positive financial results, Xos continues to face significant challenges as an early-stage growth company. The company has incurred net losses and cash outflows since its inception and will likely continue to do so as it scales its operations to meet anticipated demand.
As of June 30, 2024, Xos had $19.7 million in cash and cash equivalents. However, the company has stated that there is substantial doubt about its ability to continue as a going concern due to its need for additional capital to fund its operations and growth plans.
Xos is currently evaluating various strategies to raise additional capital, including the use of a Standby Equity Purchase Agreement (SEPA) with Yorkville, as well as other financing options such as debt financing, non-dilutive financing, and equity financing. The company’s ability to access these sources of capital is critical to its future success, as it may be required to delay, scale back, or abandon some of its development programs and operations if it is unable to secure the necessary funding.
Additionally, Xos continues to face supply chain disruptions, including long-standing negative effects from global economic conditions and sporadic shortages of specific components, primarily in power electronics and harnesses. The company has implemented various mitigation strategies, such as working with vendors to find alternative solutions and placing orders in advance of projected needs, but these challenges are expected to continue for the foreseeable future.
Acquisition of ElectraMeccanica
In March 2024, Xos completed the acquisition of ElectraMeccanica, a Canadian electric vehicle manufacturer. This acquisition was a strategic move to expand Xos’ product offerings and manufacturing capabilities.
The acquisition was financed through the issuance of 1,766,388 shares of Xos common stock, and it also provided the company with a net cash infusion of approximately $50.2 million. This additional liquidity is expected to support Xos’ ongoing operations and growth initiatives.
Material Weaknesses in Internal Controls
During the preparation of its annual report, Xos identified material weaknesses in its internal controls related to inventory management, revenue recognition, and payroll accruals. These weaknesses resulted in errors in the company’s financial reporting, which required additional analysis to ensure the accuracy of the financial statements included in this report.
Xos is actively working to remediate these material weaknesses by implementing new control procedures and monitoring activities. The company believes it is on schedule to remediate the issues during the year ended December 31, 2024. Addressing these internal control weaknesses is a top priority for Xos, as it seeks to strengthen its financial reporting and operational processes.
Outlook and Conclusion
Xos has demonstrated impressive revenue growth and operational improvements in the first half of 2024, but the company continues to face significant challenges as an early-stage growth company. The company’s ability to access additional capital is critical to its future success, as it seeks to fund its ongoing operations and growth initiatives.
Despite the material weaknesses in its internal controls, Xos is taking steps to remediate these issues and strengthen its financial reporting processes. The company’s acquisition of ElectraMeccanica has also provided it with additional liquidity and expanded manufacturing capabilities, which could support its future growth.
Looking ahead, Xos remains optimistic about the long-term prospects for its business, driven by the strong secular trends in the commercial vehicle and last-mile delivery markets. However, the company will need to continue to execute on its operational and financial strategies to overcome its current challenges and position itself for sustained success in the years to come.
