Palladyne AI Corp. Q1 FY2022 earnings call

• Closed acquisition of RE2 on April 25, with RE2's team integrated, including Jorgen Pedersen as Chief Operating Officer.
• Broader product portfolio with combined Sarcos and RE2 teleoperated robotics, expanding TAM. RE2's Sapien products complement Sarcos' Guardian products.
• Progress on Guardian XT beta testing with government and commercial clients, and Guardian XO exoskeleton development focusing on weight reduction.
• RE2's Sapien Sea Class achieved 1 km depth milestone, and partnership with JLG Industries and PickNik announced.
• Integration plan includes joint onboarding, training, and cross-pollination of teams; focus on people-first integration.

In the first quarter of 2022, Sarcos Technology and Robotics Corporation reported quarterly revenue of $0.7 million, down from $1.8 million in the first quarter of 2021. Research and development services revenue was $0.7 million in Q1 2022, down from $1.6 million in Q1 2021. Product revenue for the quarter was $10,000, compared to $0.2 million in Q1 2021. Operating expenses increased from $7 million in Q1 2021 to $26.4 million in Q1 2022, with net loss in Q1 2022 being $19.2 million or $0.14 per diluted share, up from a net loss of $5.2 million or $0.05 per diluted share in Q1 2021.

• Expect to commence initial commercial production of Guardian XO and XT by end of 2022 for delivery in early 2023.
• Forecast average monthly cash burn of approximately $5.5 million for 2022, with potential increase in latter months as ramping up for product commercialization.
• Prepurchasing components and materials to address supply chain challenges, potentially increasing cash burn by up to $3 million in 2022.

• Supply chain constraints intensified by the war in Ukraine.
• Competitive labor market for hiring highly qualified technical talent.
• Uncertainties in forward-looking statements related to future commercial availability, market trends, revenues, costs, and liquidity.

Q: Curious about what's still needed to work on and prove out on Guardian XO and XT units closer to year-end target.

A: Very focused on weight reduction, feedback from Alpha units around weight design, increased functionality and stability.

Q: About revenue from Sapien products, whether pre-revenue or not.

A: Sapien products have commercial product today, over 650 shipped, and next call will outline impact.

Q: On liquidity, clarification on cash burn and acquisition impact.

A: As of quarter end, $199 million in unrestricted cash and cash equivalents; acquisition cash paid after quarter end; normal operating burn expected to be about $5.5 million full year with potential increase, and up to $3 million for supply chain purchases.

Q: On delivery of units into 2023, status of orders and customers.

A: Not updating guidance on orders yet, but hope to provide clarity on lighthouse customers soon.

Q: Elaboration on expanded engagements with customers.

A: Seeing good momentum, over 50 demos in first quarter, and will share more on lighthouse customers soon.

Q: About RE2's revenue breakdown and pipeline.

A: RE2's $15 million revenue was a combination of product and services, with guidance to be provided next time on combined business pipeline.