3 key things from Rivian’s earnings that investors should know
Last week, the electric vehicle (EV) maker. Rivian the cars (Raven 5.46%) It issued its report for the third quarter. Highlights include better-than-expected revenue and earnings, increasing 2023 annual production guidance by 2,000 vehicles to 54,000 total units, and ending its exclusive commercial truck agreement with Amazon.
Revenue was $1.34 billion, up 149% from the same period last year and up 19% from the prior quarter. Growth was primarily driven by 15,564 vehicles delivered in the quarter, an increase of 23% from the second quarter. Adjusted net loss was $1.13 billion, or $1.19 per share, a 24% improvement over the same period last year. Wall Street was looking at an adjusted loss of $1.33 per share on revenue of $1.31 billion, so Rivian beat both expectations.
Earnings releases tell only part of the story. Here are three key things management shared in Rivian’s third-quarter earnings call that investors should know.
1. Open a new market: electric trucks for businesses
From CEO RJ Scaringe’s statement:
We have amended our Amazon Agreement with Terms and Conditions, which provides the opportunity to sell commercial trucks to other customers. …We are confident that the value of our truck, software and service offerings can provide fleet customers, and we are in active discussions with a large number of potential fleet customers to launch pilot programs. It is important to realize that the commercial truck sales cycle typically begins with lower volume pilot programs.
First, a note on nomenclature: Rivian uses the term “electric delivery vehicles” (EDVs) to refer to its trucks made for Amazon, whose initial order was for 100,000 units. (As of the end of the third quarter, the company had delivered more than 10,000 EDVs to Amazon.) However, the generic term it uses for these vehicles is “Rivian commercial van,” or RCV.
The obvious positive for Rivian about this news is that it opens up a new market and revenue stream for the company, which will initially limit RCV sales to companies in the US. But there’s another reason why this is good news for Rivian: Its electric trucks are more profitable than its consumer vehicles, which include the R1T (pickup) and R1S (SUV), CFO Claire McDonough noted on the earnings call.
On the call, Scaringe said Rivian has received a lot of interest in its RCVs from various companies, ranging from last-mile delivery operators to retailers to many other commercial and industrial companies. Furthermore, he said that Rivian “will announce almost A host of different pilot programs will precede much larger orders as these large fleets begin to plan the electrification of their infrastructure.
2. Launching the leasing program
From Scaringe’s statements:
Later this quarter, we plan to launch our leasing platform on select R1T vehicles in select regions. We look forward to offering this as a new way for our customers to receive (a)Rivian and plan to expand the leasing offering to additional territories across more vehicles as the program matures.”
The launch of the leasing platform is a special plus in today’s macro environment. Interest rates are high, which makes leasing a car, rather than purchasing it with a car loan, a more attractive option for some consumers.
3. High customer engagement
From Scaringe’s statements:
Last quarter, we rolled out major updates over the air, improving ride quality, enhancing the towing experience, and providing a new way for customers to interact with different driving modes. More than 90% of our customers update their software within five days of availability.
The aforementioned Scaringe statistic indicates that Rivian car owners have a high level of engagement with the company’s software. High levels of engagement with any product tend to increase brand loyalty, leading to repeat purchases.
Rivian views its software capabilities as “an architectural differentiator that will become increasingly important as electric vehicles continue to increase in complexity,” Waseem Bin Saeed, senior vice president of software development, said on the company’s second-quarter earnings call.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has positions on and recommends Amazon. The Motley Fool has a disclosure policy.