Q1 2022 Aurora Innovation Inc Earnings Call
Greetings and welcome to the Aurora first quarter 2022 business review call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
I will now turn the conference over to your host Stacy Feit, Vice President of Investor Relations. Thank you you may begin.
Thank you Alex good afternoon, everyone and welcome to our first quarter 2022 business review call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time.
Anyone should require operator assistance. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded.
We announced our results earlier this afternoon, our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at IR Dot Aurora Dot Tech and were furnished with our form 8-K filed today with the SEC.
On the call today are Chris <unk>, co founder and CEO and Richard <unk> CFO .
Chris will provide an update on the progress we have made across the key pillars of our business before we open the call to Q&A.
A recording of this conference call will be available on our Investor Relations website at IR data, where I got tax shortly after the call has ended.
I'd like to take this opportunity to remind you that during this call we will be making forward looking statements.
These include statements relating to the expected performance of our business future financial results and guidance strategy long term growth and overall future prospects.
These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call.
In particular those described in our risk factors included our annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 11th 2022, as well as the current uncertainty and unpredictability in our business the markets in economy.
You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call.
Are based on assumptions and beliefs as of the date hereof.
And Aurora.
Excuse me.
And Aurora disclaims any obligation to update any forward looking statements, except as required by law our discussion.
Today May include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results may be found in our shareholder letter which was furnished.
With our form 8-K filed today with the SEC and May also be found on our Investor Relations website with that I will now turn the call over to Chris.
Thank you Stacy and welcome everyone to <unk> first quarter 2022 business review call.
Our first quarter was a strong start to 2022.
We achieved critical milestones, we continued to advance our technology and we extended our partner ecosystem providing.
Providing us with solid momentum continuing into the second quarter we.
We are pleased to share our progress as we continue to work toward developing the Aurora driver for deployment at scale with our first priority being commercialization of our autonomous trucking product.
We're continuing to make meaningful progress operational I think our commercial trucking product, we are seeing broad demand to apply our technology and strong customer interest in the lanes, we have identified in our initial rollout plan.
During the first quarter, we began our collaboration with U S Express aimed at crafting and the deployment strategy and system integrations to enable U S express to introduce and efficiently manage Aurora driver powered trucks in their business.
We also brought two new terminals sites online in Fort worth at El Paso, and established the technological and operational infrastructure to support commercial operations on this route.
This effort supported the launch of our pilot with Werner Enterprises wonderful.
<unk> largest full truckload carriers in the United States on the Fort Worth will Paso Lane.
Aurora driver powered trucks are now autonomously hauling freight under the supervision of vehicle operators weekly on behalf of Werner.
The Fort worth to El Paso Lane represents the middle leg between Atlanta, and Los Angeles, which is one of the busiest commercial <unk> in the U S.
El Paso Route is also extremely demanding for truck drivers, it's more than 1200 miles roundtrip. It takes approximately 18 hours to complete.
I experienced this route firsthand back in March when I joined our vehicle operators. One of these calls the combination of distance and monotony reinforced why leans such as Fort worth to a pass so it can be so challenging for human drivers.
And it is these routes were the driver shortage is felt most acutely.
Deploying the ROI driver on that stretch demonstrates the applicability of our technology and offers a glimpse of a future in which autonomous trucks can more efficiently operate longer routes, while human drivers can handle more convenient hauls that are conducive to more desirable lifestyles.
The geographic expansion, coupled with the scaling up of autonomous we delivered loads across both of our lanes demonstrates the confidence carriers have in Aurora is trucking product and the potential benefits it can bring to their networks.
Building, a scalable self driving business requires not only robust technology, but also true operational strength that is built through a deep understanding of our customers' needs.
The breadth and diversity of our pilot partners, including Fedex, the largest lessened truckload free carry in the United States Werner of top five full truckload carrier and Uber freight a significant freight broker is by design.
We've deliberately structured our pilot programs. So that we can learn what we will be needed for our product integrate and be highly performing within our customers' networks.
And since the start of the year, we have already doubled the commercial miles driven and loads delivered by the Aurora driver compared to 2021, which is providing our team with invaluable insights.
Notably we are operating these pilots in a commercially representative manner for example, providing our customers with backend tools for scheduling and executing drop and hook trailer operations. This execution is critical for our pilot partners to get a true sense of how the Aurora driver can integrate into their operations.
In addition to our pilot partnerships, we continue to develop the services, we plan to offer customers to support their autonomous fleets.
Earlier today, we introduced Aurora Beacon.
Suite of tools designed to provide customers with extraordinary visibility and control over their fleets.
Aurora Beacon is planned to integrate with and augment existing transportation management systems to allow for efficient scheduling dispatch route guidance health monitoring remote observation and incident response.
Our vision is for the Aurora driver to improve the safety reliability and operational efficiency of our customers' fleets are remote observation tool will enable fleet managers to see what's happening on the ground for any of their Aurora powered trucks received proactive health admission status notifications and provide high level direction.
To the trucks.
We're really excited about Aurora beacons potential and in particular its ability to capture the collective intelligence of our fleet on the road, we see significant benefit to our customers from the improved visibility and control it will provide.
Taking a step back you can see how all of these pieces fit together.
We're continuing to build the technological operational and logistical muscle that will we believe will be necessary to launch and scale Aurora horizon to seamlessly meet our customers' needs. Additionally.
Additionally, we believe our holistic product suite within Aurora Horizon will drive our ability to autonomous we move goods for our customers 24 hours a day seven days, a week and support our drivers a service business model.
Our existing partners have continued to deepen their commitments to our approach while at the same time, we have developed new relationships with the leading carriers, giving us tremendous confidence in the value of Aurora horizon can deliver to the freight ecosystem.
In addition to the commercial progress we have made we achieved a critical milestone during the first quarter around transferability.
We demonstrated the Aurora driver's ability to power, both Aurora horizon, our trucking product and Aurora connect our product for the ride hailing market.
We designed the Aurora driver with a common core technology that is vehicle agnostic. This allows us to focus on a single architecture that enables a <unk> technology to integrate with and benefit multiple vehicle types from class eight trucks to light passenger vehicles.
In March we unveiled our first fleet of purpose built Toyota Sienna vehicles and delivered several days of autonomous passenger rights with the Toyota team navigating both highways and suburban roadways in the Dallas Fort worth Metroplex.
On one of these trips I had the pleasure of spending time with <unk>, the President and Chief Executive Officer of Toyota Motor North America.
His reaction that it felt to simple even boring was actually incredibly exciting it was great to discuss with him how autonomous driving will play a part in toyotas mobility for all initiative.
By using the same underlying software and hardware are Siena fleet inherited the capabilities of our trucks.
This increases the impact of our work and allows our technology teams to learn in a wider variety of situations.
That impact is felt in our speed of development, our Sienna fleet achieved parity at performance with our trucks and just six weeks of on road testing and is now positioned to handle many complex highway driving situations.
For example on page six of the slide deck. We've included a video of both our trucks and cars recognizing upcoming construction on the side of the highway and gracefully changing lanes and autonomy.
Sure more on the construction capabilities, we're developing and the positive impact they are having on our autonomy performance in a moment.
Our CNS are already able to operate at highway speeds up to 70 miles per hour, which you can see in the video of page five in the slide deck.
The ability to offer highway dominant trips creates a competitive advantage that we expect will allow us to tap into a differentiated and lucrative segment of the passenger mobility market.
We believe Aurora is the only autonomous vehicle company pushing this unique go to market approach and that it will enable us to deliver and rapidly scale, both autonomous trucking and pass through mobility, while unlocking the sizable market opportunity.
Moving on to our technical updates, we made excellent progress toward commercial deployment during the first quarter.
We launched Aurora driver data to point out the second release of the integrated hardware and software stack that is powering both our next generation trucks and Toyota Sienna Test fleet.
In this release, we debuted new capabilities necessary to operate on a recently launched Fort worth to El Paso Lane, specifically, we can now autonomously drive through complex construction zones that require changing lanes and adjusting left or right in the lane for concrete barriers or combs, we can also identify and react easy.
Really two temporary stop signs and linked closure science construction vehicles trucks hauling oversized equipment and other unique vehicles you'd see along many stretches of highway.
You can see these capabilities come to life in videos that we included on our slide deck on page seven in the video on the left and Aurora driven driver powered truck detect signs and cones, marking Elaine closed for construction ahead.
The Aurora driver proactively changes lanes and Decelerates to pass the active work so.
In the video on the right. The <unk> driver is able to detect the construction zone at night and navigate around the barrels.
Aurora drivers safely adjusts its position in the lane and even knows it's okay to temporarily cross the shoulder line to effectively avoid these obstacles.
Let me take a moment to frame why these are such critical technical developments in 2021 alone there were more than 3100 active construction zones on Texas roads.
The number of construction sites varies by season on our Fort worth well Paso routes specifically our vehicles are currently countering about 40 construction sites each round trip.
So while shorter routes may not present construction at any given time and therefore, it could be <unk> by an autonomous vehicle without deep construction capabilities to truly deliver on the promise of autonomous long haul trucking. It is imperative for the Aurora driver to be able to navigate these complex driving scenarios.
Yes.
We shared a chart in our shareholder letter as well as on page eight in the slide deck that is a great example of the depth of our feature development work across a number of elements and how it drives improved performance of the Aurora driver.
In this case you can see the complexity of delivering a feature such as navigating construction.
It's not actually just one capability, but rather a composite of many underlying capabilities from navigating inactive work zones to shifting out of land for concrete barriers and a host developments in between.
Throughout our advancement since late last year, we have driven an 18 fold improvement in construction handling on our Fort worth 12 Paso route demonstrating meaningful tangible progress in this operating domain.
With these and other capability improvements we have also reduced our policy intervention rate by 85%.
We define a policy intervention as an action or vehicle operators take to preemptively disengage. The Aurora driver. When we know it is not yet capable of confidently navigating a particular scenario.
As we continue to execute on our technical roadmap, we expect to continue to drive our policy intervention rate down and demonstrate capability specific progress like we've seen with our construction handling as we work towards launching Aurora horizon, our trucking product in late 2023.
Another capability, we've had fast is the ability to autonomous fleet before Texas. You turns these are road configurations adjacent to Interstate commonly found in Texas that allow a vehicle to quickly move from one direction on a frontage road to another.
Being able to navigate Texas U-turns, it's essential for autonomous terminal to terminal trucking operations.
We first developed this capability on our driver powered <unk> vehicles, which you can view in the video on page nine in our slide deck and.
And just this week, we completed final deployment of this capability onto our Aurora driver powered trucks. This is another great example of the transferability of the Aurora drivers common core of technology across different vehicle types with work on the <unk> fleet benefiting our autonomous truck development.
And for some entertainment. This afternoon I thought I'd share something fund we encountered during our recent road test. We finally have the answer to an age old question self driving <unk> may or may not have been asking.
This perception detect and track a motorcycle even while it's performing a wheelie.
For the Aurora driver of the answer is a resounding, yes recently as one of our Toyota Sienna's was performing a Texas, Utah and Dallas are rear camera caught an over the shoulder view of two motorcycles closing in fast one clearly recognize they were on camera and put on a show which you can see in the video we included on page 10 in our slide deck.
We've been working to strengthen the Aurora drivers detection and perception of motorcycles and other vulnerable road users as our Fort worth to El Paso Route is high levels of motorcycle activity you can see we're clearly making great progress on this front.
Developing and maturing all of these capabilities allows us to begin populating evidence to support the proficiency pillar of our safety case for our planned trucking launch work is also underway on our validation strategy for safety and performance to support operating our trucks, a commercially representative settings without a vehicle operator.
At the same time, we continue to advance our fault management hardware and software systems. During the third quarter of this year, we expect to demonstrate the ROI drivers ability to respond to system failures at highway speeds by safely flowed to the shoulder without vehicle operator intervention.
This capability is a critical milestone that we expect will demonstrate the maturity of the Aurora driver and our progress towards satisfying the fail safe core claim of our safety case for our expected trucking launch.
We are proud of the technical progress, we continue to make and I look forward to sharing more in the coming quarters.
Anytime we measure our progress and performance. It's always helpful to reflect on what brought US here, we founded Aurora with a bold ambition to transform transportation to do that we need to build a product that is innovative and scalable this requires equal measures of urgency and patients.
I'm incredibly proud of the progress we have made thus far in 2022 across all facets of our business, including our technology partnerships product suite and safety case. These advancements position us well to continue to tackle the trucking market first we.
We continue to believe that the size customer demand and unit economics of this market make it the best entry point for our self driving technology and that the value of the Aurora driver can provide to our future free customers is tremendous.
Progress in self driving technology development as a continuum.
Each incremental advancement represents a meaningful step toward our objective of commercial deployment at scale we.
We continue to work towards the launch for Horizon, our trucking product in late 2023, and look forward to keeping you apprised of our continued progress with that we'll now open the call to Q&A.
Thank you.
At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is no question queue you.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Tom White with D. A Davidson. Please proceed with your question.
Great. Good evening guys. Thanks for taking my question first off I, just want to say thanks to the adding the video to the slide Thats on debt relief.
Useful and helpful to visualize what you guys were talking about.
Just one high level question for you Chris on the state of I guess talent acquisition right now in the autonomous driving space.
How that's been going for you how is the award differentiating.
Versus other companies in the space kind of trying to hire.
People with very specific talents.
And background I'm, just curious kind of what are the most important.
Criteria that candidates are looking for I would imagine compensation is kind of the primary but how else.
Can you guys ensure that you get the people that you really want.
And also curious if the how the stock. The fact that you guys are now public company, how that maybe helps helps you guys.
Yes, so so thanks for the question.
Acquiring talent continues to be.
Critically important to us.
As we think about our key differentiators, it's our people our technology, our partnerships and our go to market strategy and what we found with <unk>.
As we approach candidates is that they kind of get it that we have a strong healthy culture at the company that people enjoy being part of.
Debt to get to work with exceptional peers and they get to work on our mission that matters and they believe that we're on an approach that is going to be successful. So we continue to.
Being a competitive hiring environment, but have had success in bringing continuing to bring great talent into the company.
When I think about how do we how do we position ourselves to for those folks.
My philosophy is that fair.
First you need to have a mission that makes sense and is exciting and important speaks to people and then you need to surround those people with.
The opportunity and teammates that they enjoy working with and then you need to pay them enough that theyre not embarrassed.
The first one is kind of what you get up in the morning, and it's the thing that gets you through the tough days right that mission that purpose that you feel and what we're doing with the Aurora driver what were building here I think speaks to so many people that opportunity to improve safety that opportunity to improve the efficiency of our supply chain.
Move the economy forward I think.
It's just it's a very important mission being part of the next generation of transportation.
And then that second part is <unk>.
As important that the people you work with you enjoy and that the work you do is on a day to day basis is interesting because it doesn't matter how good. The mission is if everyday sucks that youre not going to spend your time there.
Then finally compensation, obviously matters people take a job.
To get paid as part of it and.
So we like to make sure that we are able to to compensate people in a competitive manner.
And I think we've been successful with that certainly part of the calculus and becoming a publicly traded company was to enable us to be competitive with.
Compensation package packages.
And equity for employees that that so far.
Our competitors that are part of.
Part of larger organizations, we're able to kind of offer.
Great. Thank you.
Our next question. Thank you.
Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.
Good afternoon, and thank you very much for taking my questions.
First thank you. Thank you for the data on interventions and construction zones I thought it was helpful, but hoping to better understand do you think that example is generally illustrative of the progress that's being made on hard problems. Both in terms of the magnitude of improvement Youre seeing an over that type of duration and then if we could take that rate of progress in magnitude of progress or steps.
Further you could you talk about what difficult situations are left to improve upon before you can deploy in late 2023, and what gives you the confidence of getting that done on time.
Yes, yes. So we wanted to share that example, because it is an area where we had been put in particular focus on development.
That we thought it would be educational for folks to understand that when you talk about a feature it's not really one feature of this a collection of elements that built into it and know how people understand how that those different sub elements unlock performance over time so.
Yes, we're excited about the progress there we do expect their sub elements of what we will build that we'll continue to see.
Rapid advancement as well.
<unk>.
Some of the things that we're working towards so one we've shared is we're working towards this fails safety that fault management system.
The implementation and demonstration of that capability, we think thats, a really important element.
Of the vehicles being commercially ready so.
Most of the time, we talk about all of these kind of.
Sexy machine learning computer vision type problems, which are obviously important we have a bunch of brilliant people working on those but to actually have a commercially viable product you need to be able to deal with when the system breaks in some way.
And Thats what fault management is all about so whether it's a sensor fails or.
<unk> fault in an algorithm somewhere how does the vehicle handle that and respond in a way that keeps everyone safe. So so that's a major effort that we're undertaking right now and we look forward to demonstrating we're working on things like.
Dealing with emergency vehicles, that's one of the other.
Significant areas that where we're putting time it too.
That's very helpful. Chris Thank you and my second question.
Maybe for <unk>.
Both of you is on the cash use for the year was a little bit less than I was expecting in the quarter, which is which is good news but.
Maybe talk a little bit more if you could around what kind of cash you're expecting in 2022.
And any thoughts around potentially raising capital. Thank you.
Yes, thanks Mark.
Again, as we said last quarter is a pre revenue company, we don't believe given financial guidance as meaningful so we're not going to talk about what we think we will spend in 2022 because of that.
We ended March with $1 5 billion of cash and short term investments on the balance sheet and we still believe that that's sufficient to get us through commercialization in 2024.
Thank you.
Our next question comes from the line of Steven Fox with Fox Advisors. Please proceed with your question.
Hi, good afternoon.
Chris I was.
Curious what you think about some of the news flow out of the last week or so from I don't know if I call them competitors, but sort of self driving peers that are focused on bright hailing, whether it be mobile ly or or weibo.
Yes.
I guess my takeaway was that the theme was that there's a lot of operational activity in certain cities, especially San Francisco as you've probably seen.
Im not saying that this make sure strategy wrong or anything like that but how do you view that as sort of what the market is going to look like for you easier harder when you do.
Moving to ride hailing in a few years and I know your strategy is different than some of these guys, but seems relevant yes.
So first I think it's exciting to see the progress Thats being made right I think that fundamentally this technology is important for for road safety.
I think it's important that the U S. As a leader in this technology and so it's great to see.
Folks, making progress here I also believe that the spaces.
Extremely large right, we're talking about something that in the U S is more than a trillion dollar opportunity in the long term are trillion dollar.
Spaced operate it and so we see huge huge potential there and its going to be large enough that there is going to be room for more than one player.
And it's extremely early innings right, we are somewhere in the pre model T phase of self driving so.
It's great to see the progress being made we think that the strategy. We're taking is.
Right one this entering through trucking, where we see much.
Very clear demand, we believe it's going to be easier to scale operationally.
The business there.
The economics, we think are stronger than in ride hailing that will generate we hope we anticipate.
Meaningful cash flow.
And that will allow us to build the business and go after these the ride hailing opportunity.
Over time, the fact that we are entering from the high speed segment of the market. We think is partly because we have a technology other stone with our first flight later capability that unlocks that opportunity.
And so we will be entering different markets in a different way.
And then what we see today with the low speed.
Driving entrance so it's it's exciting to see it.
It's not surprising to see.
And we think it's like I said kind of great.
But folks are making progress, but it doesn't really kind of shake our belief and the approach we're taking.
Great and then just.
On driver shortages, obviously went to extreme levels a few months ago Uber was talking today about maybe an easing and driver shortages just to confirm have you guys seen anything that sort of shapes your belief in the.
The need for or just rather just the trend towards.
The trucking industry, not having enough driver availability over a long period of time.
Absolutely not.
The driver shortage has been particularly acute over the last little while because.
As we're all aware, but this is a decades long trend.
And there is no reason to believe that it's abating in any way.
Whether it's gone from kind.
Kind of the neighborhood is on fire to your house is on fire kind of level of demand unclear.
But it's.
It's a fundamental shortage.
We don't see anything changing there Richard I don't know if you have anything to you.
No I think that's exactly right Chris.
We are hearing from the partners I think the partners and the potential customers are still very excited by the technology, we want to get it launched and work with us towards.
Sure.
Great. That's all very helpful. Thank you.
Our next question comes from the line of David Vernon with Bernstein. Please proceed with your question.
Hey, good afternoon, guys. So first question for you, Chris and I have a follow up for Richard as.
As you think about launching that.
Trucking product in late 2023 can you give us a sense for how many trucks you expect to be putting into commercial operation at that time, and where you are in the discussions.
Discussions with your OEM partners around.
While production ready vehicles.
Yes, so we're anticipating as scale of around 20 vehicles.
As part of that initial launch at the end of 'twenty three.
We've been working closely with our partners at Pac or our partners at Volvo.
In their vehicle development programs.
Two to work towards Timeframes that are compatible with that.
Okay, and I'm, just assuming those will be fully subscribed when they when when you go out and it's going to be like mortgage watching these 2000 trucks. Some of these customers or is it going to be kind of these trucks are available on more higher basis, just so I can kind of understand kind of what the total margin.
Yes, so as we've been talking with customers and we have an exciting <unk> system of customer partners, we have been.
Then taking kind of a three step approach with them. So the first has been one where we've got kind of initial indication non binding let me be clear initial indication of demand from them given the intended rollout in lanes that we expect to operate at.
We will go back to them at some point with kind of more clarity on exactly the lanes and the timing.
And they will then provide will provide a kind of an allocation to them and then ultimately we'll turn that into phase III a binding demand today, we have more demand through 2025, we have ability to supply.
Okay. That's helpful and then Richard coming back to you for a second I'm not going to question for guidance I would like to understand.
The collaboration revenue line it looks like the.
Yeah.
For the balance of that so we had a revenue or there was just more there than youre expecting.
There are additional revenue, we should be expecting in the <unk>.
Balance of this year or have you kind of exhausted that collaboration agreement.
Yes.
I expect to have more collaboration revenue going forward, we haven't exhausted all of that yet.
More recognized in Q1 2022 than we had previously thought and Thats because.
One of the initial milestones.
Have 12 vehicles delivered and then we decided we worked with Toyota and we decided that <unk> was the number that we needed that must be achieved earlier because it was less vehicles on us because of the accounting standards. We recognized more revenue. So we do expect the revenue there is $150 million of revenue that will earn over the.
Period, So we have some more to come on the revenue side, but we have more cash to come then the revenue recognition to be recognized because of the way that that works.
And we expect to get another $52 5 million from Toyota.
Coming quarters.
Yes, so $52 5 million as the number over the remainder of the year.
That's cash.
Okay as far as revenue.
Yes, so revenue.
I'm sorry.
I'm sure it has less and less of them that you just mentioned it was less than the cash number but I'm just trying to get a sense, yes for sure. Yes, we recognized more revenue in cash yes.
Yeah.
Okay I can follow up again, maybe after the call just to kind of figure out what that number is.
Thanks, guys.
Thank you.
Okay.
Ladies and gentlemen, we have reached the end of the question and answer session.
This concludes today's conference and you may disconnect your lines at this time.
You for your participation and have a wonderful day.
Pete.
Thanks.
Yes.
Okay.
Okay.