Q3 2022 TuSimple Holdings Inc Earnings Call

Furthermore, as of the time of this call. The company believes that based on information obtained in connection with an ongoing investigation by the audit Committee during 2021 certain employees of the company spent eight hours working on matters for hydro on without disclosing this to the audit committee as required by company policy.

The company believes that such paid hours had an estimated value of less than 300000, but they are above the volume required for an FCC disclosure.

Both of these matters are detailed in our form 8-K filed with the SEC yesterday October 31 the.

The decision to terminate the CEO is independent of the Wall Street Journal article and was made in connection in connection with an ongoing internal investigation launched by the audit Committee in July the.

The independent directors unanimously determined that it was necessary and in the best interest of the shareholders determined <unk>. Furthermore, we lost trust and causes <unk> judgment decision, making or ability to lead the company's CEO .

You also may be aware that <unk> has been making certain statements on various social media platforms, we would like to make it crystal clear is doing this as an individual not as a board member is not authorized to make any statements on behalf of the company and we are disappointed in the lack of judgment and decision, making and making these on our authorized.

Statements.

Again, I want to be very clear the board and the management team take the responsibilities of this.

Company under our <unk> agreement extremely seriously that includes protecting the data that is in a hurry at his company and there will be accountability for anyone who reaches must trust, but we also know that the technology developed that too simple works, we have proven it through the world's first driver road economist for a test run.

And we are on the path to commercialization.

My commitment to you is this we are going to make the hard decisions at this company on a trajectory towards long term stability and long term success.

This concludes my prepared remarks related to the CEO transition and due to the nature of this situation, we will not be able to take any further questions related to this subject only during the Q&A. Thank you for your understand it I will now hand, it over to <unk>, who will discuss some highlights for the quarter and enhancements, we're making to our ads.

In operations and then finally, Eric will walk up with final review of our financials. Thank you.

Thank you Brad.

Good morning, and welcome to our third quarter earnings call today, I would like to start by acknowledging how difficult the past few.

These days for all of our stakeholders for our investors employees and partners.

We understand the concern and also can be that easy ramp cost and I'm humbled to be adjusted with helping to lead the company at this critical juncture.

I look forward to working closely with the board and management to continue on our mission to provide reliable low cost based capacity, while setting a new spending for fuel efficiency and safety.

Today I'd like to highlight what we are doing to build transparency on safety with all stakeholders discuss edition of additions we have made to the ASM.

Providing an update on our key partnerships and finally discuss key initiatives we have in place for the rest of this year and next that will move us towards our goal of initial commercialization and regulatory.

I will then hand, it over to Eric who will walk through the financials.

These trial to put safety at the core of everything we do.

We also understand how important it is for us to be transparent and build trust with all of our stakeholders. This.

This is essential in order for the industry.

But all of the potential benefit.

<unk> technologies can bring to the translocation market going forward, we will highlight the processes and when we should be employed as we work to bring safe autonomous technology for the market.

Additionally, I am pleased to announce we will be partnering with multiple independent auditors that are recognized within the industry to conduct audience based buying based aspects of our technology and operations from a safety perspective.

These will include processes and procedures for our hiring training and on road testing.

While this is not a requirement today, we believe we are leading the industry received orders.

Our goal is to improve transportation safety for overall users by delivering the safest driver or wheel.

Ultimately <unk>.

Engineering testing and development, we have the opportunity to save thousands of lives every year.

Over the last few months, we have had some exciting additions to our <unk> as we continue expanding our presence in Texas.

First.

We signed a lease on 10 acres in Sao Paulo.

Manav. This terminal development is expected to be completed in the first quarter of renewable energy and this terminal will play a key role in supporting our capacity plan in Texas.

The location is route of <unk> 45, a major interstate connecting dollar for Houston.

And in early October we signed a lease on 11 acres in San Antonio.

With the addition of these two properties.

The assets we need.

To support our operations in the Texas triangle when the safety case is validated.

Adding to our track record of industry firsts this past quarter our partners can.

At fully autonomous drone, followed by two simple technology desktop support commercial growth in regulated traffic permissions between logistics part.

The truck traveled about 300 kilometers in Sweden, with the first and last mile being handled manually.

This was Europe's first fully autonomous transportation of commercial goods and we are extremely proud to partner with trade policy Mark another milestone towards advancing autonomous technology.

Next I'd like to provide you an update on our program with the U S class one railroad.

Last quarter, we discussed unplanned growth construction and that caused us to have to rework Eros in Arizona and adjusted destination point.

After much consideration, both we and our partner has decided it makes the most sense to relocate the freight move from Arizona and Texas.

<unk> is an important state market for both Super Bowl and almost all partner and given the terminal editions to our ASI. We now have the capacity in place.

To support our plan for the foreseeable future.

We continue to work with this partner and we will continue.

You on the progress.

As we consistently stated cost per mile reduction is a significant focus for us in.

A major aspect of this as you're moving to support vehicles, which require improved reliability of key components.

We are focused on upgrading our entire fleet to consist of the most updated hardware platform running a consistent erosion of our <unk> software.

This does require us to pull trucks out of the fleet to undergo the upgrade process with the expectation that we will complete the entire update by the end of things.

There are two main benefits to this upgrade first.

A uniformed fleet of trucks.

Our flexibility and how can you utilize the truck for testing and revenue generating model more importantly, however, we expect the upgrades will result in a more ruggedized and reliable funnel system, which is a key requirement in removing the support vehicles and providing substantial opportunity to reduce our cost per mile.

With these upgrades.

Utilizing a greater percentage of hardware that is automotive or new automotive grade.

This is the result of strengthening internal capabilities as well as our maturing supply base.

A critical component of our improving terminal capabilities is our recent expansion in Tucson.

This gives us the capability to design and develop automotive grade components all the time.

And to ensure that our funnel system locked for many years on the road, we have added testing capability for taxes Mohit.

And my patients that will help us validate the expected failure rates of certain components.

We believe these are key capabilities that will lead to a more durable autonomously.

Next I will discuss some exciting developments in our patients.

I'd like to start by highlighting changes we have made to our <unk> operations.

Our revenue was up separately to work with our transportation partners and introduce them to our autonomous technology, while idle.

Our test fleet, we're focused on advancing our technology and drive up milestones.

Milestones in Arizona.

Now that we have reached our initial draw milestone I began the process of combining our revenue.

Into one autonomous operations.

The result of this will be that we have one fleet of trucks capable of running either test or revenue generating model with the same state <unk> software and hardware.

This gives us the flexibility and Hanmi neutralized the fleet for servicing our customers as well as for maturing the technology.

For the next couple of years, we will continue working to reduce the cost per mile. Our focus on generating revenue models will concentrate on a few key lanes in and around that takes us childhood.

In the short term it has the potential to lead to a year over year decline in revenue model. However.

However, we believe it is the prudent decision as we expect to move down the cost curve, enabling our technology to become commercially viable more quickly.

We are focused on meeting a meaningful share of this 800 billion U.

U S market.

And now I will turn it over to Eric to discuss the financials.

Thank you Ross, let me start with rock reservations this quarter a reservation count held steady at 75 hotels. However, after the quarter close we did receive a 100 to a quarter from a new park. We are pleased with the continued interest we see from existing and potential partners.

Now shifting gears to our financial results for the third quarter of 2002.

We reported $2 7 million of revenue in the quarter, a 49% year over year increase and 4% sequentially.

The year over year performance was primarily driven by higher revenue from a larger fleet and higher utilization.

The sequential performance was primarily driven by better utilization of our revenue.

While we can do or is it more in line with our full year revenue guidance.

Important to highlight ericsson's previous comments regarding revenue miles.

We believe the right actions for the long term health businesses to operate as one autonomous commercial operations with the goal of bringing our technology to market.

As we continue to operate the fleet and gradually shifted effective triangle, we expect near term revenue headwinds.

Our focus on commercialization.

Moving to expenses.

86 million on total RMB this quarter, including 17 million of stock based compensation for SBC.

This compares to 85 million in the same period last year, and essentially flat compared to the second quarter of 2002.

Excluding the impact of SBC R&D increased 8% sequentially as we continued to invest in our technology R&D asset a core tech talent.

We'll continue to invest and commercialization of our world, leading technology and keep talent on managing our R&D dollar as efficiently as possible.

On the SG&A front we.

We spent $31 million during the period, including $6 million of FCC. This compares to 30 million in the same period last year and $22 million in the second quarter of 'twenty, two or up 41% sequentially.

Excluding the impact of SBC SG&A was up 32% sequentially.

A reminder, in the second quarter of 2002, we have favorable accounting true up of $4 4 million <unk>.

Excluding these items SG&A was up 7% sequentially, primarily due to higher legal costs in the third quarter, partly offset by the impact of several cost reduction initiatives.

Our loss from operations was $120 million in the third quarter of 2000 to up 3% versus the same period last year and up 8% sequentially.

Our adjusted EBITDA loss in the third quarter of 2002 was $94 million up 16% versus the same period last year and up 13% sequentially.

In the third quarter of 'twenty, two we had $4 8 million of Capex, primarily related to truck related equipment and hardware as well as facility investments in our assets.

We ended the third quarter of 'twenty, two with cash cash equivalents and short term investments totaling approximately one <unk> 7 billion down 8% sequentially I'll now hand, it back to Earth.

The last few months.

Thank you Eric.

No I speak for our entire team when I say that I'm excited about the opportunities that lay ahead as we continue to build our AFM in Texas.

I expect that 'twenty three will be a big year for <unk> in both and I look forward to continuing to update you with our progress with that we're ready to start the Q&A session.

Yeah.

Thank you, ladies and gentlemen to ask a question you will need to press star one one on your telephone that star one to ask a question. Please.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Jordan Levy matures Youre line is open.

Good morning, all and thanks for taking my questions.

Maybe first for person or Brad.

There is clearly a lot of potential for distraction with the recent events in the organization.

And we will be taking questions on that.

This is more on the business side, but I think it's important for shareholders to get a sense of your confidence in how you are all thinking about moving the company forward in the commercialization strategy and timeline. So just wanted to get your high level thoughts there.

Thank you thanks for the question.

First of all our commercialization plans in terms of our strategy in Florida.

Is not changing with the recent changes.

Given that we are feeling confident that we can hit our milestones that we have laid out and we will be updating you on these milestones and a lot more details in the upcoming.

Thank you and just to Echo I think from the Board's perspective, we are really excited on the strategy I mean, the people the technology.

The commercialization plan everyone's and sank it isn't going to change <unk> been very involved in it and more importantly, we got a very strong balance sheet. So.

No you can sometimes see Ceos, Oh, my gosh things are changing but that that is not going to happen. We're all very excited on a passenger drop.

I appreciate that and just a quick follow up totally separate question.

Can you speak to the trucks that have been upgraded so far and how you've seen them performing from either a reliability or efficiency perspective have.

Have you seen any measurable improvements in utilization or the number of rescues that sort of thing.

Yeah.

Yes so.

Currently upgrading and in fact, the first truck in.

The newest upgraded hardware.

And we Havent run that on the road yet.

We do that and when we have updates we will upgrade you update you.

Would you expect that it will increase in LIBOR would be quite a bit due to the components that are maturing our supply base as well as the in house.

<unk>.

Parks that VR.

Building our styles in Tucson that are upon the automotive Vale or Rio affirmative statement.

And just to add.

Rest assure that upcoming.

Ill coming months as we are getting ready in the morning, or 2023 financial class will share more a lot more details and timelines around you know what is the cap expansion to upgrade and when do we expect to have.

Trucking circulation because that will definitely be a key driver for our revenue target, which again, we'll share at a future date.

Great. Thank you all for taking my questions.

Thank you.

Please standby for our next question.

Yeah.

Our next question comes from the line of Ravi Shanker with Morgan Stanley . Your line is open.

Thanks, Good morning, everyone.

Just to kind of touch on that point for the for the upgraded fleet.

Do you have all the components and the visibility on all of the components that you need to do these upgrades.

What we're saying.

You touched on this one a little bit but maybe.

Is it a little bit of a chicken and egg situation, where you need to do this comprehensive testing to finalize your.

Kind of ultimate two vendors for some of these products and technologies or do you do with the Finalization and pick the vendors first and then run them through these steps how do you how do you solve the chicken and egg problem.

Thanks for the question.

So.

Of course, we have been doing vendor selection for quite a while right now and we have been working with our supply base to ensure that the supply.

As much as possible for these updates starting these months and rolling into 2023. So currently we do not see big hiccups in terms of our supply for these upgrades.

Both internal parks that we're producing as well as the external one we have been doing.

Terms of responses, they're going to use and different suppliers.

And we too.

Starting with a large number of stop volume strength and then.

During these tests in the past couple of months, we have been reducing that supply base down and then putting the orders and so like I mentioned, we do not really expect big hiccups, but if that happens in a later date or unexpected reasons people are of course uptake.

And just the connected to the financial performance. So some of the uptick that you saw this quarter on Capex in fact thing related to not only facility operated by non meat supply chain item for our trucks. So.

We we are keeping our guidance of capex for the year. So you would expect to see more capex in Q4 again just to address the need to offer this trust.

A lot of it will spill into 2006.

Understood and maybe as a follow up again I know you said you wanted to take direct question on does it maybe there's a bit of an adjacency can.

Can you confirm if kind of Saudi owns any of the patents are technology.

You guys used to operate.

And kind of do you need them to sign off on anything and also can you confirm that the operations are expected to run exactly as planned for this week going forward I know, it's early days, yet, but just trying to get the plan.

Thanks, Thanks, all of them. So that the statements are owned by some simple as the company of course on some of these things.

Saudis name is listed as measured by the <unk>.

These bright start loan to the company.

Got it and operations is running Atlanta.

Yep.

Okay. Thank you.

Thank you please standby for our next question.

Our next question comes from the line of made from home with Bank of America. Your line is open.

Hi, This is actually Adam Russ Koski on for Ken Dexter at Bank of America. Thanks for taking my question.

Could you talk a little bit about just retaining talent at this time.

Maybe just a.

With the kind of head count in this quarter.

Sequentially flat for a reason or maybe just talk about.

With that please.

Thank you.

So just to address the.

<unk> had called park for this quarter and this was actually.

Making sure that we are very careful with our spending and financial on the other hand, the talent retention.

This has been a.

There is significant focus for me in the past couple of months.

I have been trying to be connected.

Connected and.

Hi touch.

Employee base in our three main locations San Diego Tucson, and all that we will keep doing that and we will get some help from our board as well.

<unk>.

A big turnover from this perspective, but of course, our people are our biggest asset and we will make necessary.

Investments to keep that employee base with them.

Yes.

Yeah.

Got it thank you and maybe just a follow up.

Could you talk about the the truck count trajectory.

Beyond 2023 on the commercial side and how you're thinking about it how should we expect the ramp.

So I'll take that.

We're in the process of working through 'twenty three plan. So at this point, we're not ready to share more details of our fourth quarter call, but I can tell you that we are expected to finish the year with a 75 truck count that we mentioned.

And we are thinking and addressing some meat on our supply chain.

But again, we will share more details as we lost some share for our quarter results and talk about Q3.

Plant coming on.

Alright, thanks for your time.

Thank you.

Please standby for our next question.

Our next question comes from the line of Brian I'll come back with Jpmorgan. Your line is open.

Okay.

Thanks, Good morning.

Come back to the topic of safety.

Give us a sense as to what you hope to accomplish from having the independent auditors look at these processes in <unk>.

That's why I E.

Both of them I don't know if there is.

If thats for different regions or different aspects of specialties.

And then specifically for person the incident in April was classified as a human error on the last call just wanted to see if you agree with that characterization.

Thanks for the question. So, let's first talk about the safety audits and the multiple potentially multiple.

Third party auditors.

As you know.

We have been very engaged in the last couple of months with our stake or stakeholders in terms of.

Opening up and making them understand all gross receipts from a safety perspective as well as the technology.

These interactions have led us to understand that we can actually provide our stakeholders a lot more visibility as well as education in this in this area. So we do want to do this from a third party perspective, what we would like to achieve its two both for ourselves as well.

Our our stakeholders get an independent assessment on different processes.

Procedures as well as our different aspects of our technology now using multiple.

Potentially multiple offices.

As you mentioned it is because.

Sure.

Different aspect of the technology oil patients might require different expertise and these different expertise sometimes come from different.

Ordered Bobby so it's not necessarily that we would like.

To multiply the same audit process, it's more about different expertise is required for different.

Parts of the business.

On the.

April fixed rent.

B.

Actually.

Mentioned that in <unk>.

Interactions with the.

Victor with the federal.

The NFL TSA as well that it's not only a human error, but there's also a <unk>.

Software.

And system related failures that had happened at the same time.

So we have provided an update to the software to progress.

Failures as well as the future enhanced feature of human errors, but.

And just just to close this.

We actually never never mentioned market, it's Jess.

At human error from our perspective.

Yeah.

Okay understood.

And then Brad I know you don't want to take your questions on this but.

Wanted to see if you could at least give us some context as to.

Why.

Went more or less confidence and trust in jeopardy. In the firing was determined based on 8-K to be without cause even though there is an ongoing investigation. So.

A little hard to square those two wanted to see if you could give some clarification to that.

And then secondarily if you can just share some of the reaction of your stakeholders so far over the last.

24 48 hours.

Yes, I mean, theres not really a lot I can add there.

<unk> four cause there is there is there is fairly high standards in materiality levels that generally go with that so I would just probably leave it there and then I think the confidence point.

It's just a lot of little things you know.

But if it came up and we'll just go on from there. The key is you know I think we've made a good decisive decision then.

Going forward.

Things change and with our strategy.

And any reaction you can share from your stakeholders from conversations Darren.

Partnering safety or anything like that.

I mean, I I mean from my end that you know there has been nothing significant I mean, we've been pretty focused on the earnings and obviously, we're not pleased with the stock market reaction, but we are committed to moving the company quickly forward.

Okay. Thank you for your time.

Thank you.

Please standby for our next question.

Our next question comes from the line of Colin Rusch with Oppenheimer. Your line is open.

Thanks, so much guys.

We're all kind of going after the same things but on.

On the customer side and those are those folks what sort of pushback reaction have you gotten so far obviously, it's going to come over there.

Period of time, but how much have you shared with them and what sort of feedback have you gotten so far from those folks.

Can you repeat the question again.

Sure in terms of the organizational changes that you've just made.

Comment on on customer.

Sponsors and engagement at this point he reached out to everyone.

What sort of feedback that you're getting in at this point.

We have reached out and we are having active conversations.

Okay.

No.

<unk>.

With all of our key partners are very important to our trajectory. So we kept them appraised.

And again, we believe we are convicted in our mission.

As a company and we convey that to our customers.

Airport.

Again, the key for them is that hey, our strategy isn't changing right. So we're letting them know that very clearly hey, it's literally just the CEO change that a strategy change that and quite honestly they work directly with everyone below the CEO level very very closely.

Not anticipating anything changed from a strategic standpoint, with the customers or the partners.

Okay. That's helpful and then I guess, Brad you've been involved in.

Some boards that have to go through some tough situations you know in terms of looking at the scope and scale of what's going on with <unk> with two simple I mean can you give us a sense of like you know.

How quickly this might get resolved you know, obviously youre going to find the right person incentive CEO go through a whole process on the CFO as well and gets US Friday is does this feel to you like this is kind of a three to six month process or is this going to be a little bit longer road for the company.

Aye.

There are always so hard to tell I think we've made very good progress on the investigation were running a great great process.

Already actively recruiting.

And again the key is we don't it's felt like there is a big disagreement on strategy right that that is the biggest thing that sounds company sideways, we're very aligned.

So it's really just getting a couple of people in place and I think the way. We go so we're hoping to have things that wrapped up very quickly.

Okay. Thanks, a lot guys.

Thank you.

As a reminder, ladies and gentlemen that star one one to ask a question. Please.

Please standby for our next question.

Our next question comes from the line of lots of runs around with lots of images Gill with Needham <unk> Company. Your line is open.

Hey, guys. Good morning. This is Mike Doyle on behalf of Rajiv.

Could you give us some more detail around the ramp of the self driving project specifically the timeline for the removal of the support vehicle.

Talked about kind of second half 'twenty three and then on the call you were talking about.

The hardware upgrades that are ongoing.

Wondering if that's pushing that out at all or.

Any update there would be great.

Thank you.

The removal of the.

Support vehicles, it's something we're actively working on in parallel.

<unk> hardware as well because as you might.

Imagine they are there are technologies.

Parts of this that are not necessarily only the hardware.

But at the same time the hardware upgrades are continuing in parallel as well. So we do expect to get both milestone and they need to make.

Three we will update you already.

More.

Specific space in the upcoming months.

Okay. Thank you for that and then for my second question could you talk about why you moved your partner from Arizona and Texas.

Any detail there I mean.

Off the top of my head. It just makes me think that you just.

Focusing more on taxes, instead of kind of expanding geographies. So.

Any detail there would be great. Thanks.

So the reason to move to Texas was driven by both our interest in the Texas triangle in commercializing in the Texas triangle in the lanes around it as well as our partners.

Existing and interest in the Ah in Texas as well so because of this commercialization goals.

The data wants to move the target into Texas. So that we can we can move towards commercialization while hitting the.

These forward to partner.

I think the key themes that we mentioned in the latter it's we're choosing depth over breadth right.

I think the effect of triangle allows us to create lane density on a commercial scale right in baccarat is quite critical to really prove our technology in real potentially scalable mile.

So things like beyond just the soccer the hardware think about wholesale ASN in the network and the infrastructure that comes with that right would have been players will be able to really scale maintenance operation really scale older technicals that really support Viper.

Right versus one off Ross right. So for US, we think that that density at depth.

In the infrastructure and depth with customer could allow us to reach our commercialization both a lot faster.

Okay.

Makes sense thanks, guys.

Yeah.

Thank you please standby for IMAX question.

Yeah.

Our next question comes from the line of Joseph Spak with RBC capital market. Your line is open.

Thanks, everyone.

I was wondering if you could update us on.

You know the potential sale of that China business and weather.

Any of these latest developments.

Developments, you think complicate that that potential outcome.

So our process is progressing but we have no material updates to share at this point.

Okay.

And the change is not going to impact any of the decisions just to be clear that we have in process.

Okay.

And then just I guess, one quick point like the released yesterday indicated.

You know the guidance was reiterated I didn't see any of that in the shareholder letter, maybe maybe I missed it but if you could can you just sort of confirm that and sort of.

All sort of.

The data points from from last shareholder letter or the same.

And and maybe if we could sort of just.

To give a little bit of a peek into into 'twenty three you're burning about.

100 million quarter.

It would seem like that might need to step up as you sort of continue to progress and ramp.

On on commercialization and maybe even some.

Some some costs for retention, but I wanted to sort of get your high level thoughts of sort of how to how to think about that for next year.

So high level, we standby our.

Our revised guidance that we started Q2.

After the pets, we are setting the letter.

In terms of expectation for 'twenty three as I mentioned earlier, we were not.

Based on our status of your health plan, but we're not ready to share more until we share our fourth quarter results.

I would say fame.

Same trajectory that you've seen over the last quarters, right, where we are focusing on deploying capital to the most important milestones and keep a discretionary cost at Bay. If you can expect the same thing from 'twenty three but we will share numbers in the next couple of months.

With us on that.

Okay. Thank you.

Yeah.

Thank you.

Please standby for our next question.

Our next question comes from the line of Jeff Osborne with Cowen Your line is open.

Hey, good morning, just a couple quick ones here on the <unk>.

Move from Arizona to Texas is that a customer that's a material piece of revenue and do we need to wait for the <unk> to open up in both Dallas and San Antonio just see that resumption of growth.

No. This is not driven by any customer driver.

Again, it's more about what what I, what I mentioned earlier the effects of triangle.

Great way to for Us to drive Lane density give.

Given the volume and depth.

While some existing routes up but it's not it's not based on customer preference or selections.

Got it and then I know youre, not giving guidance for 2023, but assuming you enter the year with 75 trucks that you mentioned before how do you weigh the cadence of updating those are upgrading those.

Versus revenue versus testing and then on the assuming you're pumping the brakes on the testing side to some extent or not adding new trucks are you doing more simulation and move.

Of your road testing just I'm curious, how you would articulate that the tech is progressing without the actual testing cadence being at the pace that you maybe originally intended to.

Just to be clear about the question are you asking whether this move from.

Artesano protects us for responsible partner is affecting all the testing capacity.

I'm not I think you mentioned earlier that the revenue in 2023 could be down as you are likely hallways for revenue.

I just wanted to understand it seems that you're adding fewer trucks.

<unk> as you're trying to minimize cash burn. So I just wanted to understand are you doing more stimulation in the railroad railroad testing right.

So there are a couple of reasons for this are.

Expectation one of them is of course as you mentioned the hardware upgrade the hardware upgrades are going to continue.

For the most part of many phase III what that means is at any given time two to six trucks will be in the upgrade they write theyre not going to be with the fleet.

Theres a circulation from the fleet to the upgrade and then update it can be validated and then go back to the fleet for that particular downtime for a continuous small number of trucks is one of the I think the imports.

Second.

One is our merged operation of revenue on testing, what we are really focusing on is to bring our cost per module Donald and cost per mile is something that we have introduced.

In the analyst day back in back in May and you might remember.

Looking in detail there, but we're going to keep updating you on this we do think that this is a really important key metric for us for commercialization and unit economics for this for.

For this industry so.

We are really going down the path to create more visibility into commercialization and what the end goal is and therefore, we are changing.

<unk> operate a.

During this particular phase of getting to the initial commercialization.

Just to chime in.

To answer your question about Jack.

Jack we foresee no slowdown on our tech.

Again, we are upgrading trucks.

But we will still focus on running the trucks.

With the upgraded systems for tracking system. So we don't foresee a slowdown yet on the revenue potentially put notable testing capabilities.

In addition, as you mentioned 75 trucks again about our expectations for this year, but we're right now in the market, we're trying to secure more trucks in our fleet, but again, we will share more.

On our 'twenty three plan.

We potentially might have a higher count comes 'twenty three.

Great look forward to it thanks for the detail.

Thank you.

I'm showing no further question from the queue.

I'd now like to turn the call back over to Ericsson for closing remarks.

Thank you all for taking the time to join US today as I stated earlier, we understand that the last few months have been challenging for all of our stakeholders.

We are committed to ensuring that we hold ourselves to the highest standard setting. This company on a trajectory towards long term stability and success and corporate update you with our progress. Thank you path forward, we look forward to continuing to update you with our progress. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.