Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the Consolidated Financial Statements and related notes that are included elsewhere in this report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" or in other parts of this report.

On March 18, 2024, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation (the "Amendment") with the Secretary of State of the State of Delaware to effect a 1-for-5 reverse stock split (the "Reverse Stock Split") of shares of common stock, $0.0001 par value (the "common stock"). Pursuant to the Reverse Stock Split, every five (5) shares of issued and outstanding shares of common stock were combined into one (1) share of common stock. All share and per share amounts presented herein have been retroactively adjusted to reflect the Reverse Stock Split. There was no change to the shares authorized or in the par value per share of common stock of $0.0001.

The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder's percentage interest in the Company's equity. The Company did not issue fractional shares in connection with the Reverse Stock Split. Stockholders who were otherwise entitled to fractional shares of common stock were instead entitled to receive a proportional cash payment. The number of shares of common stock issuable under our equity incentive plans and exercisable under the outstanding warrants were also proportionately adjusted.

A discussion and analysis regarding our financial condition, results of operations and cash flows for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below. Discussion regarding our financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is not included in this Form 10-K, and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K filed with the SEC on March 21, 2025.

Overview

Our vision is to bring perception to broad applications. Through our FMCW sensing technology, we believe we are introducing the world's first 4D LiDAR-on-chip that, along with our proprietary software applications, has the potential to enable the adoption of LIDAR across broad applications.

Founded in 2017 by former Apple engineers Soroush Salehian and Mina Rezk and led by a multidisciplinary team of engineers and operators experienced in the field of sensing and perception, Aeva's mission is to bring the next wave of perception technology to broad applications from automated driving to industrial automation, consumer device and security applications. Our 4D LiDAR-on-chip combines silicon photonics technology that is proven in the telecom industry with precise instant velocity measurements and long-range performance for commercialization.

As a development stage company, we work closely with our customers on the development and commercialization of their programs and the utilization of our products in such programs. Thus far, virtually all of our customers have purchased prototype products and engineering services from us for use in their research and development programs. We are expanding our manufacturing capacity through third-party manufacturers to meet our customers' anticipated demand for the production of our products.

Unlike legacy 3D LiDAR, which relies on Time-of-Flight ("ToF") technology and measures only depth and reflectivity, Aeva's solution leverages a proprietary FMCW technology to measure velocity in addition to depth, reflectivity and inertial motion. We believe the ability of Aeva's solution to measure instant velocity for every pixel is a major advantage over ToF-based sensing solutions. Furthermore, Aeva's technology is free from interference from other LiDAR and sunlight, and our core innovations within FMCW are intended to enable autonomous vehicles to see at significantly higher distances of up to 500 meters.

We believe Aeva is uniquely positioned to provide a superior solution with the potential to enable higher level of automation for vehicles. Furthermore, we believe the advantages of our 4D LiDAR-on-chip allow us to provide the first LiDAR solution that is fully integrated onto a chip with superior performance at scale, with

the potential to drive new categories of perception across industrial automation, consumer devices, and security markets.

Key Factors Affecting Aeva's Operating Results

We believe that our future performance and success depends to a substantial extent on our ability to capitalize opportunities, which in turn is subject to significant risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K entitled "Risk Factors."

Pricing, Product Cost and Margins.Our pricing and margins will depend on the volumes and the features as well as specific market applications of the solutions we provide to our customers. We have customers with technologies in various stages of development across different market segments. We anticipate that our prices will vary by market and application due to market-specific product and commercial requirements, supply and demand dynamics and product lifecycles.

Our future performance will depend on our ability to deliver on economies of scale. Our customers will require that our perception solutions be manufactured and sold at per-unit prices that are competitive. Our ability to compete in key markets will depend on the success of our efforts to efficiently and reliably produce cost-effective perception solutions that are competitively priced and affordable for our commercial-stage customers.

Additionally, the macroeconomic conditions in the industry, the growing emergence of competition in advanced assisted driving sensing and software technologies globally can negatively impact pricing, margins and market share. Our business is impacted by various macroeconomic factors, including inflation, interest rates, levels of consumer confidence and consumer debt, fuel and energy costs, and other economic conditions. In addition, we are susceptible to supply chain disruptions, which may be exacerbated by changes to tariffs and trade policies. Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future. If we do not generate the margins we expect upon commercialization of our perception solutions, we may be required to raise additional debt or equity capital, which may not be available or may only be available on terms that are onerous to Aeva's stockholders.

Commercialization of LiDAR-based Applications.We expect that our results of operations, including revenue and gross margins, will fluctuate on a quarterly basis for the foreseeable future as our customers continue on research and development projects and begin to commercialize advanced driver assist, autonomous and industrial automation solutions that rely on LiDAR technology. The development cycles of our products with new customers varies widely depending on the application, market, customer and the complexity of the product, and can vary from several months to years depending on the industry. These development cycles result in us investing our resources prior to realizing any revenue from the commercialization or obtaining any firm commitments of pricing, volume or timing of purchases of our products by our customers. As customers reach the commercialization phase and as the market for LiDAR solutions matures, these fluctuations in our operating results may become less pronounced.

Sales Volume. Each product program will have an expected range of sales volumes, depending on the end market demand for our customers' products as well as market application. This can depend on several factors, including market penetration, product capabilities, size of the end market that the product addresses and our end customers' ability to sell their products. In addition to end market demand, sales volumes also depend on whether our customer is in the development or production phase. In certain cases, we may provide volume discounts or strategic customer pricing on sales of our solutions, which may or may not be offset by lower manufacturing costs related to higher volumes which in turn could adversely impact our gross margins. Our ability to ultimately achieve profitability is dependent upon progression of existing relationships to production and our ability to meet required volumes and required cost targets and gross margins. Delays in our current and future customers' programs could result in us being unable to achieve our revenue targets and profitability in the time frame we anticipate. Such delays could result in us requiring to raise additional debt or equity capital, which may not be available or may only be available on terms that are onerous to Aeva's stockholders.

Basis of Presentation

We currently conduct our business through one operating segment.

Components of Results of Operations

Revenue

Revenue consists of sales of perception solutions or sensing systems and non-recurring engineering services.

We are engaged in the design, manufacturing and sale of LiDAR sensing systems and related perception and autonomy-enabling software solutions serving customers in automotive, industrial, and other markets. Under our customer agreements, we deliver a specified number of sensing systems at a fixed price under customary terms and conditions. The sensing system units sold under these agreements are typically prototypes that are used by the customer for its research, development, evaluation, pilot, or testing purposes. We also enter into non-recurring engineering service arrangements with certain of our customers to customize Aeva's perception solution to meet customer specific requirements.

Cost of revenue and gross profit

Cost of revenue principally includes direct material, direct labor and allocation of overhead associated with manufacturing operations, including inbound freight charges and depreciation expense. Cost of revenue also includes the direct cost and appropriate allocation of overhead involved in execution of non-recurring engineering services. Gross profit equals total revenue less total cost of revenue.

Operating expenses

Research and development

Our research and development efforts are focused on enhancing and developing additional functionality for our existing products and on new product development. Research and development expenses consist primarily of:

We expense research and development costs as incurred.

General and administrative expenses

General and administrative expenses consist of personnel and personnel-related expenses, including salaries, benefits, and stock-based compensation expense of our executive, finance, information systems, human resources, and legal, as well as legal and accounting fees for professional and contract services.

Selling and marketing expenses

Selling and marketing expenses consist of personnel and personnel-related expenses, including salaries, benefits, and stock-based compensation expense of our business development team as well as advertising and marketing expenses. These include the cost of trade shows, promotional materials, and public relations.

Interest income

Interest income consists primarily of income earned on our cash equivalents and investments in marketable securities. Interest income will vary based on our cash equivalents and marketable securities balance and changes in interest rates.

Other income and expense

Other income and expense primarily consist of changes in the fair value of Series A warrants, fair value of private placement warrants, interests expense on convertible notes and foreign currency transaction gains and losses, as well as realized gains and losses on marketable securities.

Results of Operations

Comparison of Year Ended December 31, 2025 and 2024

The following table sets forth our results of operations for the periods presented:

Revenue

Revenue increased by $9.0 million, or 99%, to $18.1 million during the year ended December 31, 2025, from $9.1 million for the year ended December 31, 2024. This increase was primarily due to an increase in the sale of units sold in 2025 as compared to 2024, and activity related to non-recurring engineering services which is dependent upon the timing of the work performed for our customers.

Cost of revenue

Cost of revenue increased by $5.9 million, or 46%, to $18.7 million during the year ended December 31, 2025, from $12.9 million for the year ended December 31, 2024. The increase was primarily due to an increase in the number of units sold in 2025 and also due to an increase in non-recurring engineering services during 2025 as compared to 2024.

Operating expenses

Research and development

Research and development expense decreased by $17.2 million or 17%, to $85.4 million during the year ended December 31, 2025, from $102.7 million for the year ended December 31, 2024. Research and

development expenses decreased primarily due to a $9.4 million decrease in payroll and other employee related expenses, a $3.6 million decrease in stock based compensation expenses, a $6.8 million decrease in research and development material expenses, a $0.8 million decrease in consulting expenses, a $0.8 million decrease in facility expenses, a $0.6 million decrease in other expenses, a $0.3 million decrease in depreciation expenses and a $0.3 million decrease in lab supplies; this was partially offset by a $5.2 million increase in research and development service expenses, and a $0.2 million increase in travel expenses.

General and administrative

General and administrative expense increased by $1.6 million, or 5%, to $34.9 million during the year ended December 31, 2025, from $33.3 million for the year ended December 31, 2024. General and administrative expense increased primarily due to a $2.1 million increase in stock based compensation, a $1.0 million increase in payroll and other employee related expenses, a $0.4 million for provision for doubtful debt, and a $0.3 million increase in subscription related expenses; this was partially offset by a $1.6 million decrease in legal expenses, and a $0.6 million decrease in professional expenses.

Selling and marketing

Selling and marketing expense decreased by $0.5 million, or 7%, to $6.7 million during the year ended December 31, 2025, from $7.2 million for the year ended December 31, 2024. Selling and marketing expense decreased due to a $0.3 million decrease in payroll and other employee related expenses and a $0.2 million decrease in stock based compensation.

Litigation settlement, net

During the year ended December 31, 2024, we recorded a litigation settlement expense (net) of $11.5 million, related to the Delaware Stockholder Litigation (as defined in Note 15 to our consolidated financial statements included elsewhere in this report). No expense related to litigation settlement was recorded during the year ended December 31, 2025.

Interest income

Interest income decreased by $5.0 million, or 64%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was due to a decrease in the average balance of cash equivalents and marketable securities for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Change in fair value of warrant liability

The change during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was due to an increase in the fair value of the Series A warrants issued in connection with the Facility Agreement.

Fair value gain on settlement of share subscription liability

The fair value gain on settlement of share subscription liability of $1.7 million during the year ended December 31, 2025 represented the net gain recognized from settlement of the instrument under the LG Subscription Agreement.

Other income (expense), net

Other income (expense), net increased by $0.5 million for the year ended December 31, 2025 due interest expense of $0.7 million recorded on convertible debt, partially offset by a gain on foreign currency transactions.

Liquidity and Capital Resources

General

Our capital requirements depend on many factors, including production capacity and sales volume, the timing and spending to support research and development efforts, investments in information technology, the expansion of sales and marketing activities, and market adoption of new and enhanced products and features.

On November 8, 2023, we entered into subscription agreements providing for the purchase of common stock resulting in net proceeds of $20.6 million. Also on November 8, 2023, we entered into a Standby Equity Purchase Agreement (as amended from time to time, the "Facility Agreement") with entities affiliated with Sylebra. Pursuant to the Facility Agreement, we have the right, but not the obligation, to sell to Sylebra up to $125.0 million of shares of preferred stock, at our request until November 8, 2026, subject to the terms of the Facility Agreement and the satisfaction of certain conditions as described in Note 10 to our consolidated financial statements included elsewhere in this report. Each sale we request under the Facility Agreement may be for a number of shares of preferred stock with an aggregate value of at least $25.0 million but not more than $50.0 million (except with Sylebra's consent). We paid Sylebra a facility fee of $2.5 million, an origination fee of $0.6 million, and an administrative fee of $0.3 million and reimbursed $0.4 million to Sylebra for its fees and expenses. In addition, we issued to Sylebra Series A warrants to purchase 3,000,000 shares of common stock at an exercise price of $5.00.

On July 2, 2024, Aeva and the parties to the Delaware Stockholder Litigation entered into a term sheet, and on December 6, 2024 entered into a formal settlement agreement, where we agreed to pay a total settlement cost of $14.0 million in exchange for a release of all claims. The settlement was paid pursuant to our indemnification obligations and from available director and officer insurance policies. On September 12, 2025, the Delaware Court of Chancery issued a final order approving the terms and conditions set forth in the settlement agreement. See Note 15 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information about the Delaware Stockholder Litigation. As of December 31, 2025, we have paid in full the $14.0 million previously accrued in connection with the settlement of the Delaware Stockholder Litigation. We have also recovered $2.5 million from an insurance carrier.

On May 13, 2025, we entered into a Share Subscription Agreement (the "LG Subscription Agreement") with LG Innotek Co., Ltd. ("LGIT") , a company organized under the laws of the Republic of Korea, pursuant to which we agreed to sell and issue to LGIT in a private placement an aggregate of 3,509,719 shares of common stock for aggregate gross proceeds of approximately $32.5 million. In connection with this sale, we entered into a Joint Development Agreement ("JDA") with LGIT, and intend to form a strategic partnership with LGIT to bring Aeva's 4D LiDAR into new industrial and consumer markets. The private placement closed on August 20, 2025. Accordingly, we issued 3,509,719 shares of common stock to LGIT at a price of $9.26 per share on receipt of gross proceeds of $32.5 million.

On November 4, 2025, we entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with certain funds affiliated with Apollo Global Securities, LLC relating to the sale of Convertible Notes in an aggregate principal amount of $100 million due in 2032. The Notes are guaranteed by Aeva, Inc., a wholly owned subsidiary of ours. The transactions contemplated by the Securities Purchase Agreement closed on November 6, 2025. The Notes were issued pursuant to an indenture, dated as of November 6, 2025, by and among the Company, Aeva, Inc., as guarantor, and U.S. Bank Trust Company, National Association, as trustee and are senior, unsecured obligations of the Company. Interest on the Notes began accruing on the Closing Date and is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2026, at a rate of 4.375% per year. As permitted by the terms of the Notes, we currently intend to make interest payments on the Notes in shares of our common stock.

To date, we have incurred negative cash flows from operating activities and incurred losses from operations as reflected in our accumulated deficit of $757.3 million as of December 31, 2025. We expect to continue to incur operating losses due to continued investments that we intend to make in our business, including development of products. As of December 31, 2025, we had cash and cash equivalents and marketable securities totaling $121.9 million. We also have the ability to draw on the Facility Agreement up to $125.0 million through November 8, 2026 in exchange for the issuance of preferred shares, and we intend to

draw down on the Facility Agreement if and as required by our capital needs. As of December 31, 2025, all conditions to draw under the Facility Agreement were met. We believe that our liquidity, including financing available to us through the Facility Agreement, will be sufficient to fund our operating and capital expenditure for at least 12 months from the date of issuance of the consolidated financial statements included elsewhere in this report.

Cash Flow Summary

The following table summarizes our cash flows for the periods presented:

Operating Activities

For the year ended December 31, 2025, net cash used in operating activities was $115.1 million, attributable to a $145.4 million net loss, a $25.1 million net change in net operating assets and liabilities, partially offset by a $55.4 million of non-cash charges. Non-cash charges primarily consisted of $21.8 million in stock-based compensation, $21.5 million change in the fair value of warrant liability, $3.8 million of loss on joint development agreement, $5.4 million of depreciation and amortization expense, $3.1 million of amortization of right of use assets, $0.4 of provision for doubtful debts and $0.5 million in impairment of inventories, partially offset by a $1.1 million of accretion of discount on available for sale securities. The net change in operating assets and liabilities of $25.1 million was primarily due to a $18.3 million decrease in other current liabilities, a $0.5 million decrease in accounts payable, a $8.7 million increase in other current assets, a $3.9 million increase in inventories, a $2.5 million increase in accounts receivable, and a $2.8 million decrease in lease liability, partially offset by a $8.2 million increase in accrued employee cost, a $3.3 million increase in accrued liabilities, and a $0.3 million decrease in other non-current assets.

Investing Activities

For year ended December 31, 2025, net cash provided by investing activities was $29.9 million, attributable to $109.5 million of cash received from the maturity and sale of available-for-sale investments, partially offset by $75.0 million used in the purchase of investments, and $4.6 million used for the purchase of property, plant and equipment.

Financing Activities

For the year ended December 31, 2025, net cash provided by financing activities was attributable to proceeds of $96.9 million from issuance of convertible notes, a $32.1 million from the issuance of common shares pursuant to the LGIT transaction, and $0.1 million of proceeds from option exercises, partially offset by $0.6 million payment of taxes withheld on net settlement of restricted stock units.

Contractual Obligations and Other Commitments

Our commitments relate to leases of real estate. For more information, see Note 15 to our consolidated financial statements located elsewhere in this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

As of December 31, 2025, we have not engaged in any off-balance sheet arrangements.

Critical Accounting Estimates

We prepare our financial statements in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates, assumptions and judgments that can significantly impact the amounts we report as assets, liabilities, revenue, costs and expenses and the related disclosures. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Our actual results could differ significantly from these estimates under different assumptions and conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance as these policies involve a greater degree of judgment and complexity.

Warrants and Share Subscriptions

We account for warrants and other equity-linked contracts (i.e., share subscriptions) as equity or liability-classified instruments based on an assessment of the instrument's specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity("ASC 480"), and ASC 815-40, Derivatives and Hedging - Contract in Entity's Own Equity("ASC 815-40").

We first assess whether a freestanding equity-linked instrument should be classified as a liability pursuant to ASC 480 when the instrument is mandatorily redeemable, obligates the issuer to settle an instrument or the underlying shares by paying cash or other assets, or must or may require settlement by issuing variable number of shares and such settlement scenario is predominantly likely to occur.

If an equity-linked instrument does not trigger liability classification under ASC 480, we assess whether the instrument meets all requirements for equity classification under ASC 815-40, including whether the instrument is indexed to our own common stock, among other conditions for equity classification. If not, the instrument is classified as a liability and is further analyzed to determine whether the instrument represents a derivative in its entirety. This assessment requires the use of professional judgment and requires reassessment of an instrument's classification at each reporting period while the instrument remains outstanding.

Equity-linked instruments that meet all equity classification conditions are recorded as a component of additional paid-in capital at issuance. Equity-linked instruments accounted for as liabilities are recognized and measured at fair value at inception and each reporting period the instrument remains outstanding. Any excess fair value over proceeds to be realized from the equity-linked instruments entered into at arm's length, along with any changes in fair value, as determined at each reporting period, are recorded as a component of fair value loss on share subscription liability on the consolidated statements of operations and comprehensive loss. Changes in fair value are reported on the consolidated statements of cash flows as a non-cash reconciling item between net loss and net cash flows from operating activities.

Provision for Anticipated Losses on Contracts

When estimated contract costs exceed expected consideration under contracts with a customer, we evaluate whether the nature of the contract is in the scope of Accounting Standards Codification ("ASC") 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts ("ASC 605-35"). If ASC 605-35 applies, we recognize a provision for the entire anticipated losses on contracts as soon as the loss becomes evident. In determining the anticipated losses, we consider the principles in ASC 606-10-32-2 through 32-27 (except for the guidance in paragraphs 606-10-32-11 through 32-13 on constraining estimates of variable consideration) to determine the transaction price, adjusted to reflect the effects of the customer's credit risk. The costs used in arriving at the estimated loss on a contract shall include all costs of the type allocable to contracts under paragraphs 340-40-25-5 through 25-8.

The Private Placement of shares with LGIT was closed on August 20, 2025. Accordingly, we issued 3,509,719 shares of common stock to LGIT at a price of $9.26 per share on receipt of gross proceeds of $32.5 million. See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details on the provision for anticipated losses recognized on the JDA contract.

Revenue

The most critical accounting policy estimates and judgments required in applying ASC 606, Revenue Recognition of Contracts from Customers, and our revenue recognition policy relate to the identification of performance obligations and accounting for certain contracts recognized over time. In certain contracts, the determination of our distinct performance obligations requires significant judgment. As our business and offerings to customers change over time, the products and services we determine to be distinct performance obligations may change. Such changes may adversely impact the amount of revenue and gross margin we report in a particular period. Revenue from product sales is recognized upon transfer of control of promised products. Revenue is recognized in an amount that reflects the consideration that Aeva expects to receive in exchange for those products and services. Product sales to certain customers may require customer acceptance, in which case revenue recognition is deferred until acceptance takes place. For service projects, revenue is recognized as services are performed and amounts are earned in accordance with the terms of contract at estimated collectible amounts.

For certain custom products that require engineering and development based on customer specifications, we recognize revenue over time using a cost-to-cost measure of progress which we believe faithfully depicts the transfer of control of the goods or services to the customer. Amounts billed to customers for shipping and handling are included in revenue. Some of our arrangements provide software embedded in hardware, and promises to update the software represent immaterial promises in contracts with customers. Taxes collected from customers and remitted to governmental authorities are excluded from revenue.

Changes in judgments with respect to these assumptions and estimates could impact the timing or amount of revenue recognition.

Recent Accounting Pronouncements

See "Note 1. Description of Business and Summary of Significant Accounting Policies" of the consolidated financial statements included elsewhere in this report for a full description of recent accounting pronouncements including the respective expected dates of adoption and estimated effects, if any, on our consolidated financial statements.