Q1 2025 Aurora Innovation Inc Earnings Call
Public roads.
We were the first in the industry to develop a publicly share a safety case framework for autonomous trucking.
Safety cases have now been widely adopted by other autonomous vehicle developers.
And we've continued to lead the way with transparency as the only company quantifying our progress through the arm, which is a weighted measure of completeness across all claims of the safety case for our launch Lang.
With the closure of the remaining software and vehicle claims last month arm reached 100%.
This means we have validated and accrued or verifiable AI for driverless operations together with our launch trucks.
These trucks are equipped with our first generation commercial hardware and redundant systems, including braking steering and power.
It enables safe operation without a human driver.
We've built our safety case to support rapid capability in lane expansion with just incremental validation needed for future development to support the scaling of our business.
Aligned with our commitment to transparency, we published our driverless safety report the report details when where why and how your driver operate safely, including risk management redundancies cyber security remote systems and more.
As we expand commercial operations, we remain committed to setting the standard for safe autonomous trucking.
Consistent with our collaborative approach with regulators elected officials and first responders, we proactively provide regular updates and confidentially briefed federal and state officials as well as local law enforcement on our plans for driverless operations.
These engagements demonstrate our belief that safety and transparency go hand in hand.
By keeping the lines of communication open we are fostering trust that not only supports our initial operations, but also lays the groundwork for long term scale deployment across the country.
We're proud to have the support of Texas, Texas Governor, Greg Abbott, who shared that he believes the roar driver will further spur economic growth and job creation in Texas at.
At the same time, California, Governor Gavin Newsom Administration recently released a draft regulatory framework for autonomous trucking officially launching the rule, making process in the states. This marks a meaningful step forward on the path to safe and broad deployment of this transformative technology.
We're further encouraged by the recent release of the National Highway traffic Safety administration, new automated vehicle framework, which aligns with ours safety, one innovation driven approach.
We believe the frameworks three guiding principles prioritizing safety, unleashing innovation, and enabling commercial deployment, which closely mirror our safely quickly and broadly approach provide a much needed foundation to harmonize today's patchwork of state level regulations and accelerate the safe rollout of autonomous vehicles nationwide.
We're encouraged to see such bipartisan support at both the state and federal level, which.
<unk> is a growing recognition of the safety and economic benefits of autonomous trucking can bring to the United States.
<unk> remains committed to working collaboratively with our federal and state policymakers and regulators to realize this shared vision.
In addition to our confidence in the safety of the Royal driver. We have also seen strong on road performance through our 100% API metric during.
During the first quarter, 95% of loads running our production release software for launch at a 100% API exceeding our commercial launch target of 90%.
In the video on page eight of our presentation you can see firsthand some of the powerful on road performance underlying this metric.
This is the Aurora driver a solution with superhuman capabilities that will we believe will redefine joysticks and mobility.
On April 27th Aurora driver powered trucks began regular driverless operations and are making commercial deliveries for Uber freight and Hershey Park between Dallas and Houston.
Zero driver has completed over 4000 drivers smiles already starting to prove the promise of our groundbreaking technology.
To put that in perspective, that's longer than the entire distance across United States coast to coast.
We've included a hyper lapse video of our first driverless trip on page three of the presentation you.
Youll see the Aurora driver navigating a series of challenging scenarios, including interactions with unusually aggressive drivers one of whom we've nicknamed the Maserati in light of the extraordinary lengths. These photographers went to in pursuit of footage from our driverless launch.
The real driver also expertly handles with very heavy traffic decelerating smoothly from its standard cruising speed of 65 mph to nearly a full stop and negotiate the longstanding complex construction zone.
Speaker Change: Frequently changes week to week with linked shifts and repainting lines a common occurrence.
Speaker Change: We're thrilled to show the World that this technology is real is delivering value for customers in Texas and we're excited to share. The road ahead with all of you.
Speaker Change: We've already expanded to driverless trucks scheduled daily and we anticipate operating tens of trucks by the end of 2025.
Speaker Change: As we've discussed we're deliberately starting with a crawl walk run approach as our early efforts will be focused on exercise of the full product suite to ensure a seamless product experience for our customers that clearly demonstrates its value proposition and continues to build trust with all of our stakeholders.
Speaker Change: We expect additional customers to begin driverless operations in the coming months.
Speaker Change: The Aurora driver addresses major challenges the freight industry faces, including the structural driver shortage.
Speaker Change: <unk> high turnover and asset under utilization.
Speaker Change: We offer a solution that provides a scalable stable driver supply, which we expect will nearly double truck utilization and that will supplement traditional drivers.
Speaker Change: Importantly, the Aurora driver never loses focus prioritizing safety and every mile and can deliver an immediate fuel economy benefit greater than 10% with a potential of more than 30%.
Speaker Change: Our customers are not just adopting a new technology. They are getting early access to a transformative solution that will redefine the movement of goods.
Speaker Change: By enhancing safety mitigating labor constraints and improving fuel efficiency neurohr driver creates value not only for our customers, but also through the for the public through safer roads cleaner transportation and faster and more cost effective freights.
Speaker Change: This should ultimately drive down costs for consumers.
Speaker Change: Today, the road drivers validated for driverless operations on one of the most significant freight corridors in the country and daytime with clear weather conditions on the two most common types of trailer 53 foot dry vans and refrigerated trailers.
Speaker Change: Our Dallas to Houston launch Lane represents a compelling commercial opportunity and a critical first step to prove the promise of our technology.
Speaker Change: Building on this foundation, we expect to further expand our commercial lanes with driverless operations between Fort worth in El Paso, and further extension to Phoenix in the second half of 2025.
Speaker Change: To support this plan last month, we extended our Fort worth to El Paso pilot with Werner to Phoenix.
Speaker Change: Self driving trucks have the potential to cut single driver transit time in App on this route. This is a powerful use case that demonstrates how expanding driverless operations to lanes that exceed hours of service limitations for traditional truck drivers will unlock significant value for our freight customers.
Speaker Change: Also in the second half of 2025, we plan to expand our operating domain to meaningfully increase the utilization of our self driving trucks by validating night, driving an operation and adverse weather conditions, including rainy conditions and heavy winds.
Speaker Change: As we look further ahead, our OEM and tier one partnerships are unmatched in the industry and we believe positions <unk> as the only company capable of deploying autonomous trucking at scale.
Speaker Change: While commercial launch represents the most significant milestone in <unk> history, thus far much of our team has remained focused on what comes next.
Speaker Change: We continue to make great progress with our partners on purpose built self driving platforms designed for high volume production and.
Speaker Change: And on the hardware front, our teams are continuing to work on our second and third generation commercial hardware kits to support our scaling and profitability ambitions.
Speaker Change: Our second generation kit brings exciting performance gains and importantly, we expect it to drive a step function reduction in our hardware cost, which is a critical milestone on our path to self funding.
Speaker Change: We started to receive samples for testing from our contract manufacturer <unk>.
Speaker Change: We also continue to make great progress with continental on our third generation commercial hardware kit that we believe will unlock true scale on the order of tens of thousands of trucks.
Speaker Change: As you can tell it's an incredibly exciting time to be at Aurora and this enthusiasm extends beyond our team.
Speaker Change: We're fortunate to have John Donahoe, joining our board of directors pending shareholder approval at the upcoming annual meeting.
Speaker Change: John has led iconic companies through periods of transformation and growth as CEO of Nike service now and ebay <unk>.
Speaker Change: Earlier in his career he served as president and CEO of Bain <unk> Company, where he helped guide some of the world's most respected companies through strategic inflection points.
Speaker Change: His deep expertise at the intersection of technology and customer experience will be invaluable as we move into the commercial phase of our business.
Speaker Change: With our achievement of commercial launch and transition to this next phase Sterling Anderson, our co founder and Chief product Officer has made the decision to leave Aurora at the end of May to pursue an exciting external opportunity.
Speaker Change: Senior leadership role at an iconic global company.
Speaker Change: Co founded this company with Sterling and drew it's been one of the most rewarding experiences of my life and I'm immensely grateful for every step we've taken together.
Speaker Change: From the earliest days of whiteboard sketches shaping our product into what it is today and forging some of the most impactful partnerships Sterling has been instrumental in putting Aurora on trajectory of tremendous growth.
Speaker Change: Beyond the milestones and achievements at Sterling passion creativity, and sheer grit that leaves the most lasting impact on all of us.
Speaker Change: As he begins his next chapter I know he'll continue to break new boundaries and do amazing things with that I'll turn it over to Sterling to share a few words.
Sterling Anderson: Thanks, Chris after eight phenomenal years, working with Chris drew and the rest of our ores from our whole team embarking on new adventure leave.
Sterling Anderson: Leaving Aurora is one of the most difficult decisions I've ever made especially given the exciting stage or is that.
Speaker Change: <unk> what gave me the confidence now is the right time.
Speaker Change: Aurora has reached a critical inflection point product strategy is firmly established as technologies on the road the teams in place to scale it and the momentum we've created in the industry is palpable.
Speaker Change: Watching the Aurora driver evolved from bold idea to a commercial reality has been nothing short of all inspiring.
Speaker Change: Our first truck demo to where we are today, it's been a heck of a ride and I'm. So proud of what we've built together.
Speaker Change: More than anything I have loved working alongside our brilliant and relentlessly driven team and I am profoundly grateful to our investors who believes in what we're building and supported Aurora every step of the way.
Speaker Change: We found at Aurora with the mission to deliver the benefits of self driving technology safely quickly and broadly.
Speaker Change: <unk> and its mission will always remain dear to my heart and I know, Chris and this incredible team will continue to build something enduring.
Speaker Change: As the world transitions into a new commercial chapter I'll remain a proud cofounder and a significant shareholder.
Speaker Change: And while it would be from the sidelines I'll be cheering loudly for everything that's yet to comment on <unk> commercial journey now back to Chris Thanks Sterling.
Speaker Change: In closing there have been countless pivotal moments along our journey and now we can officially say we did it we set out with an audacious goal to bring safe self driving trucking to life and that vision has become reality.
Speaker Change: We've developed and validated world changing technology, we formed industry, leading partnerships. We've earned the trust of our customers, who move America's freight and collaborated with government and safety leaders and importantly, we've executed with integrity at every step.
Speaker Change: None of this would've been possible without the belief and dedication of our team partners and investors. This launch milestone marks the beginning of our commercial chapter and it's also a powerful reflection of what makes us the industry leader.
Speaker Change: The ability to imagine the future and deliver it.
Speaker Change: You for being with US on this journey with that I'll now pass it over to Dave who will review our financial results.
Dave: Thank you, Chris it's truly an exciting time in our young history and our continued focus to demonstrates strong meaningful financial results remains critically important.
Dave: Let's discuss our quarterly financial results for which we have provided a summary on page 14 of the slide deck for reference.
Dave: During the first quarter of 2025, we continued to demonstrate strong fiscal discipline.
Dave: First quarter 2025, operating expenses, including stock based comp totaled $211 million.
Dave: Excluding stock based comp operating expenses totaled $177 million.
Dave: Within operating expenses, our R&D expenses, excluding stock based comp totaled $153 million.
Dave: This amount includes $871000 in pilot revenue, which was up 22% quarter over quarter and 54% year over year.
Dave: In the first quarter. This was recorded as a contra R&D expense.
Dave: Coinciding with the launch of the Aurora driver in April we have begun recognizing revenue, which will be reflected on our income statement. When we report second quarter results. As a reminder, this will include driverless revenue as well as continued pilot revenue.
Dave: During the first quarter SG&A expenses, excluding stock based comp total <unk>.
Dave: $24 million, we used approximately $142 million in operating cash during the first quarter.
Dave: Capital expenditures totaled $8 million.
Dave: This cash spend was meaningfully below our externally communicated targets, reflecting our continued commitment to fiscal prudence.
Dave: For the remainder of 2025, we continue to expect quarterly cash use of 175 million to $185 million on average this reflects an increase in capital expenditures.
Dave: And continued development of our new hardware programs as we prepare to scale our business.
Dave: We ended the first quarter with a very strong balance sheet, including nearly $1 $2 billion in cash and short term investments.
Dave: This includes $68 million in net proceeds from the issuance of 10 million shares of class a common stock through our at the market program during the first quarter.
Dave: With this additional capital as well as efficiencies we have found in the business and cash preservation decisions that we have made we now expect this liquidity to fund our operations into the fourth quarter of 2026.
Dave: As the only Antonymous trucking company operating a driverless commercial product and with the partnership ecosystem in place to scale. This technology, we have refreshed our near term capital strategy to ensure a level of financial flexibility that maintains both our technology and commercial lead in addition to our core growth any.
Dave: <unk> growing.
Dave: Growing the Aurora driver powered fleet, expanding the lanes, we operate and unlocking customer endpoints as well as introducing lower cost hardware, we will continue to evaluate opportunities to further advance our competitive position.
Dave: <unk> de risk certain elements of our business taking these factors into account, we now expect to raise $650 million to $850 million prior to achieving positive free cash flow.
Dave: Which isn't which is anticipated in 2020, we intend to remain opportunistic in our approach to future fund raising and have various mechanisms available, including our at the market program. We will continue to maintain a disciplined financial strategy balancing prudent cost management.
Dave: With growth investments to strengthen our multiyear structural lead and support our path to self funded with that we will now open the call for Q&A.
Dave: Certainly at this time, if you would like to ask a question. Please press star one on your telephone keypad.
Dave: My question has been answered you may remove yourself from the queue by pressing star two.
Dave: And the issuance of time, please limit your questions to one at a time once again that is star one to ask a question.
George: Our first question comes from the line of George <unk> with Canaccord Genuity you May proceed.
Speaker Change: Hi, everyone. Thank you for taking my question and congratulations on the FERC rungs.
Speaker Change: So my question is.
Speaker Change: It has to be a pretty robust conversation in the market around how advancements in AI and outsource methods to reach simulated miles have accelerated the path for competitors and the economy, whether it's a trucking a robo taxi what do you think these competitors may not appreciate about the <unk>.
Speaker Change: Flexing of bringing an autonomous solution to market.
Speaker Change: Godless improvements in AI or plus marketplace and appreciate.
Speaker Change: Hi, Hi.
Speaker Change: I'm sorry.
Speaker Change: I think operator, I think we're hearing your over the top here.
Speaker Change: Georgia still there.
Georgia: Yes, I'm here.
Georgia: The question no I think I heard it just sorry to hear the other operator over the top at the end there.
Speaker Change: For the question, George and sorry for the delay getting to it.
George: Yes, I appreciate we are really excited about having trucks on the road right I think people have been talking about this for a long time.
Speaker Change: And I can tell you. It's just incredible that every day. These are out there and they're just doing it. We've now got two of them doing it on a daily basis.
George: That.
Speaker Change: You are right that there.
Speaker Change: There is at times a bit of a <unk> around how hard it is to actually deliver a real safe product that the core.
Speaker Change: Software is obviously critically important we're doing some very exciting and interesting and innovative things there.
Speaker Change: But that's only one part of the story.
Speaker Change: The ecosystem.
Speaker Change: It's the fact that we're partner with companies that manufacture half the trucks sold in the U S market and we're working with them already on how do we line side. This technology. So that it can come out of the factory for their customers.
Speaker Change: That's a multi year engagements that even if a competitor were start today they are literally years behind us.
Speaker Change: Taking the hardware that we have in our first generation industrializing that into a second and then building industrial isn't that further into the scale hardware is again, a multiyear endeavor, where we've been working with continental for two years now.
Speaker Change: On the pipeline to launching that in.
In 2007.
Speaker Change: And so again our.
Speaker Change: Our competitors have to actually build that relationship and then actually start executing it in and we just.
Speaker Change: We don't see anyone who seems to be making progress in that direction at this point so.
Speaker Change: And then we spent a lot of time talking about the.
Speaker Change: The cool technology part of this but the process to validate and convince ourselves.
Speaker Change: The product is truly safe and robust to put on the road.
Speaker Change: That I think is an underappreciated bit of secret sauce that we have at Aurora.
Speaker Change: And it's one of the things that we've been investing heavily in over the last year and a half.
Speaker Change: Like in this to the advantage I see Spacex having over Boeing.
Speaker Change: In the in the launch business one of the key elements of their advantages. They can validate their flight software in a week rather than a year and they've done that through automated testing that give some way more shots on goals than the opposition and we've taken a very similar strategy to how we validate our software here at Aurora. So that we can do that rapidly so.
Speaker Change: We can iterate and continued respond to customer need and can.
Speaker Change: Continue to advance our product on the road.
Speaker Change: Years before we see other people, even having a product on the road. So we see a structural advantage that we are only going to accelerate away from.
Speaker Change: So thanks for the question George.
George: Let me just ask one follow up Dave.
George: Dave a little bit on the on the spot here I know, it's very early.
George: But based on what Youre seeing right now.
George: Analyst Day, you gave some guidance out to 2028.
George: That's still something we could use in terms of thinking about the financial profile for them over the next few years.
George: Yes, if you think about what we said in our analyst day in 2004, I think everything that we talked about is still generally correct. Obviously, we were a little delayed and when we thought we were going to start to launch by a couple of months, but.
George: So theres a little bit of a shift to the right.
George: Reaffirming any numbers today, but directionally the financial ambitions that we talked about before we're there and with the latest estimate that we provided today of 650 850 that still are confident number for the capital that we think we will raise prior to achieving a positive free cash flow.
George: Thanks.
George: Yes.
Speaker Change: Thank you. Our next question is coming from the line of Ravi Shanker with Morgan Stanley You May proceed.
Ravi Shanker: Great. Good afternoon, guys and again congratulations on this.
Speaker Change: Pretty incredible achievement would love to get.
Speaker Change: Any color on the custom.
Speaker Change: Customer and industry feedback you've got since the launch.
Speaker Change: Are people paying attention to this is your phone ringing off the hook.
Admitting that phones don't have books anymore.
Speaker Change: Agreed.
Speaker Change: Yes, Thanks Ravi.
Speaker Change: Yes, I think we have heard near universal enthusiasm and excitement from.
Speaker Change: Our partners the ecosystem, we've built our customers and I think it's it's galvanizing right that we've been talking about this the industry has been talking about this for a while.
Speaker Change: Our partners have had confidence in us, but there is a difference, but having belief and confidence in actually seeing it on the road.
Speaker Change: And we're seeing that really crystallized conversations with folks. So we're very excited about and our customers seem incredibly excited about it.
Speaker Change: The future move forward a couple of weeks ago. So we're excited for that.
Speaker Change: I would add.
Speaker Change: If you talk to our.
Speaker Change: Head of business development since the launch I'd say the the phone the proverbial phone has been ringing a little bit off the hook and there are a lot of interest in this.
Speaker Change: And demonstrating and showing that Israel has been a cornerstone of how we've approached this.
Speaker Change: And so we're really excited about it and there is a ton of excitement just in the customer base to learn more.
Speaker Change: Great and maybe just a quick follow up great to see the expansion already do to trucks.
Speaker Change: How do you determine the next steps of expansion from Europe, How do you go from that.
Speaker Change: And then how do you.
Speaker Change: Because you already are at.
Speaker Change: Our autonomous already nothing to get to a 100% so kind of what are the gating gatlin CRE that determine that and also have you decided what metrics you're going to share with us on a quarterly basis.
Dave: Well I can take the first half of that and I'll hand, it to Dave <unk> for the second half so.
Speaker Change: We're really looking at our operational execution right. The product today is limited in a number of ways. So it operates inclement weather in the daytime and we've shared our roadmap through the rest of the year to basically unlock those.
Dave: No one's really run commercial trucks before.
Dave: And so we're getting feedback from our operations team on the limitations that and those are really what's bounding our ability to scale is just making sure. We are exercising this and then being able to scale it constantly with that experience under our belt.
Dave: Yes relative to the metrics just a couple of things right. Our focus for the rest of 25% is really on improving the promise of the technology right and increasing the value of the product for our customers right and ultimately becoming really essential for the industry. There were a couple of metrics that we used before in terms of the arm in the API.
Dave: I will retire those those are development metrics I think we've.
Dave: Went past that stage in terms of how we think about the world. We think about the world in terms of demonstrating value.
Dave: We haven't finalized all of the numbers, we're going to have yet, but I would say that youll get a regular update on our driverless miles, which we talked about today, which frankly is a little bit David.
Dave: Because it was 4000 before a couple of runs yet today. So it's always great to see continued progress. So we'll talk more about.
Dave: How are we delivering the promise and part of that is miles.
Dave: It will save some of that for later, but obviously, we will also measure ourselves based on the revenue and which we said before we expect to be in the mid single digits throughout 2025.
Dave: Very helpful. Thanks, guys.
Ravi Shanker: Thanks Ravi.
Speaker Change: Thank you. Our next question is coming from the line of Andre Shepherd with Cantor Fitzgerald.
Andre Shepherd: Hey, everyone. Good afternoon, congratulations on the quarter, thanks for taking our questions and congratulations on commercialization and.
Speaker Change: Very very exciting incredible times, we're living and so kudos to the whole team I know how hard you've all been working for it and how long you've all been working for so congrats there.
Andre Shepherd: Just first question.
Andre Shepherd: Going back to the crawl versus walk approach you touched on this a little bit on your prepared remarks, but.
Andre Shepherd: Wondering if you could maybe elaborate a bit on your vision for this year as you ramp up hence.
Andre Shepherd: Hence if truck what.
Andre Shepherd: Kind of progress.
Andre Shepherd: Should we be looking at.
Andre Shepherd: How should we be thinking about that quarterly.
Andre Shepherd: Progress throughout the year. Thank you.
Speaker Change: Yeah. So as Dave said really this year is about us taking going from the technology didn't exist and to Iterating and demonstrating the extensibility of that and increasing the value for customers. So.
Andre Shepherd: We've shared in the letter.
Andre Shepherd: Or kind of a roadmap for the year and it's going to be about expanding the places the driver can operate and expanding the availability of the driver, which will make it more valuable for our customers and so that's really the way to think about it we expect by the end of the year to be operating on multiple lanes.
Andre Shepherd: We expect to be operating in.
Andre Shepherd: Day at night in the in the rain.
Andre Shepherd: It would increase wins, so that at that point as we continue to build the operational model muscle as we continue to get customers more exposure to the product is really setting us up for scale of growth in 'twenty six.
Wonderful that's super helpful really appreciate that and maybe just as a quick follow up maybe a question for David.
Andre Shepherd: As we fast forward to 2027, and obviously I'm aware, we're not guiding anything there yet.
Andre Shepherd: Just conceptually.
Andre Shepherd: And maybe fundamentally just remind us how.
Andre Shepherd: How much of a dramatic improvement in the economics, you expect to experience in 2027 through the high scale manufacturing with continental.
Clearly what that means for Capex gross margin and anything else you can share. Thank you.
Andre Shepherd: Hey, Thanks, and I appreciate your continued support.
Andre Shepherd: That's a lot to unpack, but let me let me take a shot and again I would refer everybody to kind of the analyst day than we did before just.
Andre Shepherd: Guide ourselves towards that and.
Andre Shepherd: And we're not kind of reaffirm and any of this yet, but I think like what we've said is still very true. There are some significant enablers that we have in place that we expect will allow us to achieve high gross margins in the 2027 timeframe that hasnt changed at all our capital allocation needs.
Andre Shepherd: Haven't changed at all as we shift to a driver as a service business in the future. We expect in 2027 to have our third generation hardware kit that is being manufactured.
Speaker Change: Mike our continental partnership.
Speaker Change: We expect to be delivering those line side and again, we expect to be in the tens of thousands of trucks.
Speaker Change: In the 2007, starting from a run rate perspective in the 2007 timeframe, we think with all of those enablers and our continued focus on our technology rollout the self similarity of the highway systems that we have.
Speaker Change: We have all of the enablers in place to be able to deliver to these high gross margins and really drive a meaningful value to our customers I think for us.
Speaker Change: This is this is such a pivotal year.
Speaker Change: On the technology promise and that's what we're laser focused in on.
Speaker Change: We spent Chris mentioned it before with our OEM partners and with Continental we've spent the last several years.
Speaker Change: Setting ourselves up for the next several years and that's really something that we think is going to distinguish and allow us to succeed.
Speaker Change: Fantastic. Thank you so much and congratulations again I'll pass it on.
Speaker Change: Thank you.
Speaker Change: We will take our next question from Chris Mcnally with Evercore you May proceed.
Chris Mcnally: Thanks team congratulations again lumpy coming two questions one AI for Chris and one scaling question for Dave.
Speaker Change: Chris maybe you can talk about what improvements in your hybrid AI approach. Our next three year roadmap. So super helpful is it is it fair to say that the heavy focus years increased OLED and the weather areas, you've been highlighting and maybe from an AI perspective.
Chris Mcnally: The recent advances in end to end and foundational model is that going to be the help in.
Chris Mcnally: In achieving that progress a little bit more.
Chris Mcnally: Hardware rather than than software. Thanks.
Chris Mcnally: Yeah, that's a great question and thank you like you said.
Chris Mcnally: We continue to be Super excited about getting this thing on the road in certain.
Chris Mcnally: Customers with it on the AI front.
Chris Mcnally: We have been this is one of the kind of misnomer and the industry is psycho.
Chris Mcnally: Old and new.
Chris Mcnally: Many of the advances that youre seeing in large language models that youre seeing kind of.
Chris Mcnally: If the world the concepts of those are already engaged in the Aurora driver.
Chris Mcnally: And a big part of what we've been developing when we think about.
Chris Mcnally: Night, and whether our trucks are actually operating in these conditions.
Chris Mcnally: Daily basis already.
Chris Mcnally: As we've talked about in the past, it's a matter of getting to the point, where we validated that performance and resolving any of the kind of.
Chris Mcnally: Minor issues that may remain there and so.
Chris Mcnally: We're going to continue to evolve your driver we are going to be.
Chris Mcnally: Moving platforms as we go through our future generations of hardware and so there'll be effort involved with that there is some increased capabilities that we've talked about that we need some chad, but it's not a there's no kind of fundamental change in the way we have to develop anything we're actually in a very strong position to begin with.
Speaker Change: Okay. So basically on March nine.
Speaker Change: Maybe on weather.
Speaker Change: Dave Yes, right yes.
Speaker Change: Yes, sorry.
Speaker Change: I'd say, it's I wouldn't really characterize it a march of the nines right that.
Speaker Change: We have now the way I would think about it is.
Speaker Change: <unk>.
Speaker Change: We have to build the system, we have to build the tooling and the framework to get conviction that really across the vast variety of environmental conditions.
Ron: And Ron broker sorry on road conditions that we have to encounter that we can validate that in that's two points.
Ron: I think we have $2 7 million some tests that we use to validate the system today.
Ron: We moved to night time.
Ron: An immense amount of that is the same it turns out that the way the truck responds to the road and the way we should respond to other offers erode as is basically the same during day or night.
Ron: As a narrow part of the system that we need to enhance to deal with the fact that the Senate is in China.
Ron: Right and then similarly, some of the other advancements we want to make it's not about corner cases, it's about incremental continuous improvement of the capabilities we already have.
Ron: So sorry about that.
Speaker Change: On the ninth gives us conversation thats not quite accurate as youre thinking about this.
Speaker Change: Sure. Thanks, Thanks, so much.
Speaker Change: Yes.
Speaker Change: Dave.
Speaker Change: Ore freight and it seems like they're a great partner it sounds like Theres many potential customers.
Speaker Change: Within that ecosystem and maybe we could talk about the ramp road mapping and it's more of a framework.
Speaker Change: Curious about is the idea that sort of thing.
Speaker Change: Take on 10, or 20, new customers over X number of years, I guess each to Kennington vehicles or is there a <unk>.
Speaker Change: A benefit of scale to getting.
Speaker Change: A <unk>.
Speaker Change: One to five customers at a very large amount more than tens of.
Speaker Change: Our vehicles to get to the 100 that you wanted to be.
Speaker Change: Over the next two years, so it's more of a large operators or 10% to 20 medium sized language, which makes more sense.
Speaker Change: I think it's a bit mixed.
Speaker Change: I think density within our lane for a carrier is something that the carriers look at and that we think about.
Speaker Change: In terms of it and so some of our carrier partners.
Speaker Change: Have a lot of traffic on a lane and they'd like to supplement it with.
Speaker Change: Trucking to better enable more consistent flow on a lane pick up new business et cetera.
Speaker Change: There are some customers that don't have great drivers supply on a specific claim that would like to use autonomous trucks, there too to go into new markets.
Speaker Change: Thank you.
Speaker Change: Every one of them is going to be a little unique I think the larger carriers that we talk to generally think in larger numbers.
Speaker Change: So like five trucks as.
Speaker Change: Interesting and everything, but it's not going to materially change their business.
Speaker Change: What we're trying to do.
Speaker Change: The benefit of the Uber freight relationship is really to help reach that middle market group that you mentioned, where we can start to.
Speaker Change: Leverage the relationship we have with Uber freight to create dedicated shipping lanes, where we're matching like autonomous trucking capabilities for a specific lane and trying to match that up with shipping needs and Uber freight has got a network of carriers that they can go work at that are in this 10 to 25 fleet and so I think.
Speaker Change: That'll be our focus in the long term for Uber freight as a as one of the mechanisms to take it to other carriers.
Speaker Change: Obviously, it's better for us in.
Speaker Change: And a little bit similar to to start at a bigger level numbers, but our goal is to make sure that the technology helps transform the industry for all players not just for those really large players.
Speaker Change: Technical sort of a combo of Uber freight market and maybe directed to some of the larger.
Speaker Change: Thank you again, so much team.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is coming from Colin Rusch with Oppenheimer You May proceed.
Speaker Change: Thanks, So much you guys.
Speaker Change: Looking at expanding routes can you talk about how critical the simulation technology is in terms of being able to get into some of those new routes.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: With some of the peers parts front, but.
Speaker Change: Yes, Okay, yes, we can we can take that offline.
Speaker Change: But in terms of our ability to do.
Speaker Change: It's a critical part of how we approach validation right just trying to drive.
Speaker Change: A.
Speaker Change: A bunch of miles just won't get you there right.
Speaker Change: What we need to be able to do is systematically have conviction that.
Speaker Change: We understand the conditions of the vehicle operated analytical response safely to them and we've talked in the past about our approach to stimulation and where we have these kind of three regions, where there is stuff that we can just get instantly from driving for a few hours on the road stuff that happens all the time, there's things that we've experienced over the 3 million miles driven on the road that we can then AMT.
Speaker Change: <unk> the rare elements of and then Fortunately theres a whole lot of bad things that happen in a road that we've never seen.
Speaker Change: And that's where.
Speaker Change: Those last two categories are particularly critical to delivering a safe product and are really where we lean into our simulation capability.
Speaker Change: To give us conviction that the vehicle will handle things that Fortunately our test engineers do think about that maybe you are I wouldn't wouldn't even occur to worry about.
Speaker Change: That's super helpful. And then just given you've talked about driver expense and insurance going higher but also we're seeing some pretty extreme level productivity moves.
Speaker Change: As you think about the pricing model on our medium and long term basis, how quickly can you start to.
Speaker Change: Start pushing for.
Speaker Change: Some incremental pricing.
Speaker Change: Consideration yet at this point.
Speaker Change: Yes, I think.
Speaker Change: Maybe it's a bit premature to think about that I think we have to focus on the technology promise again, I think I think pricing is going to work itself out I mean, we are.
We are going to demonstrate substantial value.
Speaker Change: And I think we're pretty confident in that and we're going to be able to deliver cost savings for our carrier partners as well as provide really high margins for us. So if you think about it it's not just <unk>.
Speaker Change: Obviously being safe is amazing and it is the thing that drives us and that's why we're here and there were substantial value in that but there are so many other things that we're able to do.
Speaker Change: We talk about the fuel efficiency, our ability to deliver anywhere from 12 up to 32% to 34% fuel efficiency is really an important aspect and really critical for our partners.
Speaker Change: If you think about our ability to be safer to drive down insurance cost and reduce their liabilities and risks is something that's incredibly important to us the flexibility of how we.
Speaker Change: Drive whether it be our ability to go longer than the 12, the 11 hours of service on a daily basis.
And that allows our carrier partners to get higher asset utilization. So we think we will deliver.
Speaker Change: Tremendous value and that will provide us potential to price somewhat equivalent to human driven comparison.
Speaker Change: But even with a slight discount to that I think we're going to have really robust margins.
Speaker Change: And I think there is an opportunity to transform the industry make it safer and also create tremendous value for everybody and kind of that's our that's our focus.
Speaker Change: And what I'd add to what Dave says, it's kind of a I think you led off with like does this create an opportunity for premium pricing.
Speaker Change: And I think I think your astute to observe that.
Speaker Change: This will be a premium product and it will create a lot of value for customers and so.
Speaker Change: We will be you're kind of navigating pricing on how much is it we're trying to expand and grow and deploy our market share versus.
Speaker Change: Optimizing for prices. So we'll figure that out I think that's going to be actually one of the really.
Speaker Change: Bud and enjoyable parts of what we do over the next decade.
Great. Thanks, so much guys.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is coming from the line of Chris Harris with Needham you may have.
Speaker Change: Proceed.
Chris Harris: Hey, good afternoon can you guys give us some detail on that.
Chris Harris: <unk> sort of become a hot button topic.
Chris Harris: And kind of related back to the incremental validation you talk about on new lanes.
Chris Harris: I guess I just wanted to get a sense. We've got other people talking about mapping being less important you got sort of lean into maps, that's what <unk> does as well that would love to hear kind of your view.
Speaker Change: Yes, so the intuition I'd give you to start with is if.
Speaker Change: I apologize, Chris I don't know, where you live but if you think about driving around in your neighborhood versus hopping to some other major city that you don't go to very often and start driving there you feel a heck of a lot more confidence and youll be a heck of a lot safer driver in an environment, where you understand the surroundings and you can anticipate traffic.
Speaker Change: Patterns in Europe.
Speaker Change: Be ready to be in the left lane here, because it's always backed up with the right, but I'm going to go to the right after that because I need to make the turn right that that understanding that you bake in driving around your neighborhood and you don't have another places is what the map allows the truck to have.
Speaker Change: And it's one of these things that you have done poorly.
Speaker Change: Is complicated and hard.
Speaker Change: If done well, it's a light operational lift and becomes a massive strategic advantage, we're already demonstrating to ourselves that we can provide updates to our map.
Speaker Change: In a matter of small number of hours two hour.
Speaker Change: And so that level of flexibility and for knowledge and leaning into a thing that computers are good at they are good at storing massive amounts of information and then accessing them.
Speaker Change: It feels it seems just goofy to brag about not using the thing that they're good at particularly when we see all these strategic advantages from it so cool.
Speaker Change: Cool.
Speaker Change: We'll do it without a map if you think you can but we're pretty excited about the approach we're taking.
Speaker Change: Okay and then thank you for that and we've talked about fuel efficiency. A couple of times is there a way to quantify how much.
Speaker Change: How much longer these trucks can drive in terms of miles or how much harder than they can drive a poor service here before they need to be turned over it because like what's the right way to think about that benefit versus just the per hour benefit.
Speaker Change: You can get from utilizing the Aurora driver.
Speaker Change: So.
Speaker Change: Okay.
Speaker Change: I think the short answer on that is it.
Speaker Change: We kind of approach every time, we send a driverless truck out there a little bit differently. So I think we're more actively managing the trucks and the serviceability of the trucks and ensuring that they have high uptime. So for us we do.
Speaker Change: We do regular inspections every time, we send them out.
Speaker Change: It's important for us to do that but not only that we're constantly monitoring what's going on with the truck itself.
Speaker Change: And we're getting.
Speaker Change: Indicators and behaviors of what's going on with the trucks. So for US we think that the constant regular attention to the truck.
Speaker Change: Is probably where the biggest value proposition is.
Speaker Change: Trucks are going to have a very.
Speaker Change: Similar to kind of use pattern between a human driving a regular driver, but the other thing that I would point out is.
Speaker Change: Our drivers are consistent so every time, we take off every time, we drive we always drive the same way.
Speaker Change: And we're not accelerating because we're trying to get home or meet and hours of service. So we're not going 85 miles an hour when we shouldnt be going 85 miles an hour a week.
Speaker Change: Driving at a constant speed with predictable driving shift patterns is a very attractive thing for the customers because they know how the wear and tear and how to manage the wear and tear better. So I think we're going to have to prove that out a little bit more for everybody but.
Speaker Change: But we are very confident that like the way we drive the way we behave the way we inspect the vehicles is going to be an advantage for service and reliability.
Speaker Change: And warranty.
Speaker Change: <unk>.
Speaker Change: Okay. Thanks for the detail I appreciate it.
Speaker Change: Thank you. Our next question is coming from the line of Mark Delaney with Goldman Sachs.
Speaker Change: Yes. Good afternoon. Thank you for taking my questions and a real big congratulations to the entire team.
Speaker Change: I know something you all have worked on for many many years, so wonderful to see and also Australia and wishing you the best in your next endeavor.
Speaker Change: Yes.
Speaker Change: David can you expand on what's leading to the higher level of capital raise you now expect is any of that due to an expectation that gross margins may be lower our opex needs for the business might be higher than you previously thought or is this just about having more flexibility to maybe grow faster and an extra cushion on the balance sheet.
Speaker Change: I think so.
Speaker Change: So no it is not an indication of deterioration of gross margins.
Speaker Change: I think there's always going to be a little bit of pressure.
Speaker Change: In terms of our hardware kit costs relative to how the.
Speaker Change: Tariff shakeout, so like we're not ignorant of that fact, but we think there's a long way to go for that to play out.
Speaker Change: <unk>.
Speaker Change: That's not the issue if I think about.
Speaker Change: What are some of the fundamental drivers like first let's start with we have $1 2 billion in cash we've been able to consistently extend our ability to use that money for a longer longer time periods. So we now expect to be able to fund it through 2026, if I looked at the last 18 months, our quarterly burn rate has really been well below one.
Speaker Change: We've even expected so we've got the right discipline in place I think we look at it is the last time, we really did a thorough how much capital do we need to get to free cash flow positive that was in 2023, we look at where we are today. We are the only autonomous company out there operating and travelers product.
Speaker Change: We want to have some flexibility out there to enhance both our technical and our commercial lead. So there is a little bit associated with that but like I think one of the larger factors is what we launched a little bit later rate. We had originally thought were going to launch at the end of 'twenty. Four was launched in April that's an extra four months.
Speaker Change: We're everything shifts to the right and that's just four months of additional spend so on average like $50 million.
Speaker Change: That's like $200 million and Thats, a large portion of that so for us it's merely a reflection of the shift.
Speaker Change: Timing as well as we would like a little bit more flexibility in terms of how we think about expanding our leadership position.
Speaker Change: That all makes sense. Thank you. My other question was thinking about the number of miles your trucks can do the roadmap in your presentation today shows that by the end of the year you expect to expand the types of weather and also have a lighting conditions. The trucks can operate and so what would that mean in terms of how many miles on an annualized basis in the truck.
Speaker Change: Can do exiting the year and how that compares to how many miles the trucks can do currently thank you.
Speaker Change: So if we're if we just think about it in terms of daylight today right like we operate on the Dallas Houston land. So if you take off in the morning to return and come back that's roughly 400 miles for truck.
Speaker Change: That's roughly an eight hour.
Speaker Change: Period, that's kind of in the daylight time period, depending on like a summer and winter months, you get some more daytime so let's call. It 400 to 600 miles at a truck and operate.
Speaker Change: And in a daytime condition today right. So if we didnt make a turn.
Speaker Change: From Houston backup to Dallas, we could drive the Fort worth El Paso Route and maybe do it in that daytime we're looking to basically double that so once you unlock nighttime we would love to be able to go from lets call. It eight hours of drive time to 16 hours of drive time, and then we'll just fill the demand that way and so for me I think about <unk>.
Speaker Change: At like double and then if I compare it to the industry average the industry averages and on average for an over the road driving on average for a truck to about eight hours, a day or maybe a little bit less right and so for me I think we're going to be able to quickly double the utilization.
Speaker Change: No.
Speaker Change: We will continue to think about like optimizing we'd like to have a high return on asset for every truck that we have and so we'll try to drive efficiency to get as many miles on them as many trucks as fast as possible, but I think the right way to think about it is we should be able to double our drive time as soon as we on last night.
Speaker Change: It's kind of our next key milestone.
Speaker Change: Thank you.
Speaker Change: And thank you we will take our next question is from the line of I'd say, the Kale with TD Cohen.
Speaker Change: Great. Thanks, Hi, everybody and congrats on the achievement.
Speaker Change: Two follow ups for me first.
Speaker Change: You can walk us through just some of the steps you typically take when you expand Elaine.
Speaker Change: All of those steps how should we think about go forward acceleration in lane expansion. Once you go through your first few expansions in the next year or so.
Speaker Change: Yes, I think each successive lane will become easier and easier.
Speaker Change: So today, we have basically the VAT.
Speaker Change: Vast majority of the driving task as we unlock the Phoenix.
Speaker Change: The Fort worth to pass on our Phoenix three wanes, there Theres a few additional things we wanted to be able to handle that aren't in today. Big example, that I've talked about in the past as the customs and border patrol station.
Speaker Change: Today, we drive through that autonomously, but we haven't validated for that so as we validate that we validate the ability to drive that night.
Speaker Change: <unk>.
Speaker Change: That's most of what we need.
Speaker Change: And then as we unlock new lanes, we will look at is there something novel about this environment.
Speaker Change: That we have to open up.
Speaker Change: We expect that that's going to fall off very quickly because again the freeway system in the U S is intended to be self similar.
Speaker Change: And consistent and then the industrial parks that we will travel to.
Speaker Change: Are all built really for trucks to go in and out of so there's kind of a lot of commonality there so laser expected to get faster.
Speaker Change: And I guess.
Speaker Change: Some measure of that right. It's taken us eight years to get to the first one by the end of the year, we expect to have.
Speaker Change: Sure.
Speaker Change: And then going from there.
Speaker Change: Faster still.
Speaker Change: Yeah, absolutely that's very helpful and a quick follow up the shareholder letter mentioned some exciting performance gains in the second generation I was hoping you could elaborate on that.
Speaker Change: Expand your Odd's further.
Speaker Change: I'm, sorry, I lost the middle part of the question the for whatever reason the phone seems to be cutting out a little bit I apologize.
Speaker Change: Sorry about that so just to elaborate on.
Speaker Change: The performance gains for the second generation kit mentioned in the shareholder letter and to what extent might those gains help you expand into further odd's.
Speaker Change: Yes, it's really for that system, we expect that we'll be able to see incrementally farther than we can today. The first light lidar that we're developing.
Speaker Change: And then we have on the road today is incredible and best in class and it'll continue to get better and that will allow us to react earlier and more smoothly even than we do today.
Speaker Change: Two hazards on the roadway.
Speaker Change: The rest of it is really about driving.
Speaker Change: <unk>.
Speaker Change: The economic benefit right and taking cost out of the system as we take the first step to industrialization and then take another large step.
Speaker Change: As we go to the Continental third generation hardware it yet.
Speaker Change: One of the other.
Speaker Change: One of the elements that's mentioned in their rate is a scaling aspect. This is.
Speaker Change: We built a small number of first generation hardware kits too.
Speaker Change: Demonstrate our initial launch of this is our next generation.
Speaker Change: In addition to driving down the cost and improving the reliability and durability of these art briquettes.
Speaker Change: Quantum of kits that we can build and that's what allows us to also expand into other areas right. Now we just wouldn't have enough trucks to go we are fine.
Speaker Change: All throughout the lower U S.
Speaker Change: Terrific that's very helpful. Thank you.
Speaker Change: Thank you we will take our next question from Scott Group with Wolfe Research.
Speaker Change: Hey, guys. This is coal on for Scott Group.
Speaker Change: I know you're operating your own fleet right now and it's good to hear that there is a lot of enthusiasm from partners kind of post the launch.
Speaker Change: But at this point are there any firm commitments from carriers looking to utilize the Aurora driver with their own fleets kind of once.
Speaker Change: New fab or not in continental hardware it goes into place.
Speaker Change: Hmm.
Speaker Change: Or said differently is there any indication about how quickly some of these larger carriers want to scale your technology post launch.
Speaker Change: So our model has been.
Speaker Change: We will continue to operate a fleet for some amount of time here and we think thats really important twofold one.
Speaker Change: Is that this is new technology on the road and it allows us to learn the challenges and operating it no one's done this before.
Speaker Change: So that we can kind of clean that up a little bit and provide an amazing experience and value proposition for our customers before we hand, it over to them in half to support remotely.
Speaker Change: At this point, we have commitments for us to operate trucks for customers, we have lots of positive indications, but theyre looking some of the larger customers as Dave.
Speaker Change: I mentioned earlier.
Speaker Change: You don't get out of bed for five trucks it would just be.
Speaker Change: And overhead to.
Speaker Change: Their operations that if they can't get hundreds of them, they're not going to be interesting. So that'll come along with our second and third generation hardware David.
Speaker Change: At more color, yes, the only thing I'd say is every one of our pilot.
Speaker Change: Pilot partners before we launched and even the partnerships that we have in place. We've always started with kind of an aligned mission.
Speaker Change: Like the goal of autonomous trucking and making sure that we had an aligned vision of where it would go and so every single one of them with maybe the exception of whom are afraid who doesn't purchase trucks. Every one of them is with the intention that they will buy trucks equipped.
Speaker Change: And a scalable platform equipped with the <unk> driver and we won't provide a driver as a service. So the long term intention for every partner we have is for that model.
Speaker Change: Just we just need to continue to demonstrate the technology promise and get to our generations of hardware in our lines items solid to enable that for them, but the every single one of them wants to do this.
Speaker Change: Wei.
Speaker Change: Because it integrates within the rest of their business. So it's really valuable for them to be able to integrate within their existing structure.
Speaker Change: Yeah.
Speaker Change: Okay. That's helpful and maybe just on the OEM side.
Speaker Change: You guys already have partnerships with Pac car involved though.
Speaker Change: But post the launch have you been approached by Daimler and Navistar to start a conversation about new partnerships and I know, we've kind of heard from a few investors and people have asked us like have you had any conversations with any of the Oems about potentially consolidating the carrier market at some point once the technology is kind of scale.
Speaker Change: I know, it's early days and you're kind of focused on what's ahead of you in the next couple of months, but just curious if the conversations have happened.
Speaker Change: So on the first part we have ongoing conversations across the industry and we would be thrilled.
Speaker Change: To work with every OEM.
Speaker Change: That's our aspiration is that a customer who would like to get access to your driver can you set on whatever vehicle they're excited for it. So we will continue to have conversations and windows.
Speaker Change: Become fruitful will be sure to let you know in terms of.
Speaker Change: How the market evolves over time.
Speaker Change: As Dave said, we Wanna be supporting both the large fleets in the midsize fleets and.
Speaker Change: We'll let the market figures out self out I'm not smart enough to know how that's going to play out.
Speaker Change: Okay, Thanks, and if I could squeeze one last question in.
Speaker Change: I know youre on your first hardware generation, but as you move to your fabric and your continental generations can you maybe talk through the execution risk or how transferable to software is as you kind of.
Speaker Change: With the new hardware.
Speaker Change: Yes, we have a strategy for how we are evolving from the hardware we have today to the.
Speaker Change: <unk> second generation hardware to the continental hardware, we've had work streams in flight for some time. This is it's not like we're waking up today and discovering we have to do this.
Speaker Change: And so we've been the architectural approach we've taken the strategy we have for how we moved to suffer for it is understood and we're continuing to execute that so.
Speaker Change: Of course, there's execution risk but.
Speaker Change: It's.
Speaker Change: Very manageable.
Speaker Change: Thanks, so much alright.
Speaker Change: Alright.
Speaker Change: Time, so we really appreciate everyones questions and for anyone that we didn't get into the queue. Please feel free to follow up and we can take it offline.
Speaker Change: Thank you. This does conclude today's program. Thank you for your participation you may disconnect at any time.
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