Q3 2025 Kodiak AI Inc Earnings Call
Thank you for standing by, and welcome to Kodiak's third quarter 2025 earnings conference call.
At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone, to remove yourself from the queue. You may press star 1 1 again.
I would now like to hand the call over to Lauren Harper kodiak's Chief of Staff. Please go ahead.
Thank you and welcome everyone. To kodiak's third quarter 2025 earnings call.
On the call today are Don Bernett founder and chief executive officer of Kodiak and Sir Roger data Chief Financial Officer of Kodiak. Our press release and an earnings presentation were issued earlier today and are posted on the investor relations section of our website. This call is being broadcast live via a webcast and a replay will be available.
On our website, after the call. Before we begin, I would like to remind you that during today's call, Kodiak will be making forward-looking statements within the meaning of the federal Securities, laws about financial performance and future events, including our guidance for fiscal fourth quarter and full fiscal year, 2025, as well as our long-term goals such forward-looking statements are made pursuant to the safe harbor, provisions of the private Securities. Litigation Reform, Act of, 1995 any statement made during this call. That is not a statement of historical facts, should be deemed to be a forward-looking statement, all forward-looking statements, including statements regarding our guidance, for fiscal fourth quarter and full fiscal year. 2025 are estimated total addressable markets are operational and product, roadmap. Our relationships with partners and suppliers our ability to produce and deploy the Kodiak driver at scale, including the timing of launching driverless, trucks for Long Haul Highway operations, our expansion plans and opportunities and our expectations regarding future business and financial performance, including future cash flow.
And our path to profitability are based upon Management's current estimates in various assumptions.
These statements involve material risk and uncertainties that could cause actual results or events to materially differ from those anticipated or implied. By these 4 are looking statements, accordingly, you should not Place. Undue Reliance on these statements for a list and description of the risk and uncertainties associated with our business. Please see our filings with the Securities and Exchange Commission. We disclaim any obligation, except as required by law to
Update or revise, any Financial or operational projections, or our other, forward-looking statements whether because of new information future events or otherwise.
Any forward-looking statements made on this call speak only as of the date of this. Call further in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we may also refer to certain non-gaap Financial measures
for more detailed information on our non-gaap financial disclosures, including reconciliations to most comparable, gaap measures. Please refer to our earnings release which can be found on our investor relations website. Our discussion today also includes references to forward-looking free cash flow.
To the most directly comparable, gaap measure, due to the inherent difficulty in forecasting, and quantifying certain amounts that are necessary for such reconciliation.
I will now turn the call over to Dawn. Please go ahead.
Thanks Lauren and Welcome to our first earnings call as a public company. Today, we're excited to share a third quarter results. But first, I'd like to introduce you to Kodiak and talk about our industry-leading, technology, our strategy. And why we believe we are positioned to capture the tremendous opportunity in the global Trucking Market.
Kodiak delivers AI powered driving technology. That tackles some of the world's toughest driving jobs across vehicles and environments. We are a leading provider of autonomous Trucking technology with 10 driver trucks in customer operation with no human in the cab.
These 10 trucks are the first to be delivered. As we fulfill the world's largest known driverless Trucking contract a binding order to deploy our technology in 100x.
Our differentiated technology allows us to seamlessly operate across a variety of environments, giving us the flexibility. We need to focus on 3, large verticals, Long Haul, Trucking industrial, Trucking and defense.
Across these verticals. We work with industry-leading customers such as JB Hunt Warner, CR England, Martin Brower, Atlas Energy Solutions and the US Army.
Kodiak's core business is based on a driver as a service or de model which is designed to replicate how customers pay their drivers today.
Either by the mile or by the vehicle.
Our customers own and operate their own driverless trucks and pay us a recurring fee to utilize the Kodiak driver in their fleets.
This Dash model allows us to generate recurring Revenue while, keeping our balance sheet relatively asset light.
We initially launched this model with Atlas Energy Solutions, a leading Logistics provider in the permeate, Basin, that is actively working to automate it supply chain.
We intend to grow Dash Revenue. Both as Atlas grows, its Fleet of Kodiak, power trucks, and as we expand driverless operations with new customers,
I believe it is Paramount to execute across 3. Strategic pillars to launch a driverless business technology, safety case and product. While technology is the most visible, each of these pillars is critical to successfully launching and scaling autonomous trucks.
Let me address each of these starting with technology.
The Kodiak driver our autonomous system combines Advanced AI, powered software with modular vehicle agnostic Hardware, we designed the Kodiak driver to operate in challenging driving environments, while integrating seamlessly into our customers fleets.
This single integrated software platform is designed for deployment across the 3 verticals.
Long Haul Trucking industrial Trucking and defense.
It operates day and night in a wide range of weather conditions including rain and severe dust storms. And some of the most complex scenarios in trucking.
Our core technology allows the Kodiak driver to operate without high-definition Maps. Commonly used in the ad industry. We believe this approach makes the Kodiak driver more adaptable to real-time changes on the road than traditional AVS. That heavily rely on pre-mapped terrain. It also makes the Kodiak driver better able to navigate unstructured, off-road environments, uniquely enabling us to pursue opportunities in the industrial and defense verticals. That would otherwise be challenging if we required high definition Maps.
We integrate our software into our modular. Autonomy Hardware kit, that is adaptable to a wide range of vehicle types.
We've already integrated the Kodiak Hardware kit into class, 8 trucks, Ford F-150s, and even treaded military vehicles.
Our Hardware kit includes kodiak's proprietary sensor pods which are self-contained modules that contain third-party cameras, Radars and lidars and are designed to be quick and easy to swap in the field with minimal training.
Our modular approach allows us to quickly install the Kodiak driver's Hardware kit into our customers trucks. Reducing the cost of deployment years ago. We decided that up-fitting was the right, go to market strategy to address a significant industry-wide challenge that today, none of the truck. Oems offer a driverless ready platform to implement this strategy. We partnered with michigan-based, Roush Industries a leading automotive product development supplier. Roush is an industry leader in small, to medium volume Automotive manufacturing. Their deep experience, building high-quality vehicles at scale, brings efficiency and quality to our manufacturing. That would be very difficult to match with in-house production.
Now, to our second pillar safety.
And the General Public.
The most important part of the process is building a safety case, which is a comprehensive evidence-backed argument for why the Kodiak driver is safe to deploy.
Kodiak is 1 of only a handful of Av companies known to have completed, a driverless safety case.
Developing a safety case is a massive cross-functional effort spanning software systems engineering Hardware, functional safety, manufacturing operations, and even legal and policy to help track our progress on launching the Kodiak, driver on Long Haul routes. Today we are unveiling our autonomous Readiness measure for arm.
Which measures the percentage of claims and evidence in Kodiak safety case for driverless operations that a materially complete.
Having completed our industrial safety case, our industrial arm is necessarily at 100% Today. I am incredibly proud to report that our Long Haul armed, currently stands at 78% and we expect to make steady progress in the quarters ahead. As we prepare for Long Haul driverless operations in the second half of 2026,
Lastly, I'd like to turn to our third pillar. The product we take a unique customer-centric approach that has allowed us to implement our technology and build a valuable product. Our customers can utilize efficiently, the operational experience, we've gained over 7 years and 10,000 loads has enabled us to understand our customers needs and build our product accordingly.
For example, we developed our quick swap sensor pods after hearing from our customers about the importance of our hardware fitting into existing maintenance processes. Additionally, our driverless deployment with Atlas in the premium has helped us pressure test core product features, including launching, driving, landing, and maintaining driverless vehicles. We see this generating a flywheel effect, allowing us to leverage these features and our learnings across long haul and defense deployments.
As we have already discussed the Kodiak driver operates on highways, local streets, dirt roads and off-road environments. This generalization enables seamless operations and shared learning across Industries.
I'd like to address our unique experience and opportunity in each of these verticals.
Kodiak started its journey with long-haul trucking, and this continues to be our primary focus given the trucking industry's $4 trillion global TAM. We see tremendous opportunity in this vertical today. We get paid to deliver freight from our Dallas operations hub to Houston, Oklahoma City, and Atlanta using our own trucking fleet with a safety driver. Our highly respected customers include JB Hunt, Warner, CR England, and Martin Brower. We also see a robust pipeline of customers interested in piloting and eventually deploying the Kodiak driver in their fleets. We continue to make meaningful progress towards our goal of launching driverless operations in the long-haul vertical in the second half of next year and expect to subsequently.
A transition of our Long Haul customers to our Das business model, the industrial trucking vertical, where we deployed our first driverless trucks, includes oil and gas, mineral transportation, and logging transportation. The $68 billion global industrial market is an ideal use case for our technology operators. In remote industrial locations, operators face even greater difficulties recruiting and retaining drivers than Long Haul carriers, meaning that autonomy can offer significant cost savings and operational efficiencies.
As I mentioned previously, the Kodiak drivers. Technology is well designed to work in unstructured. Industrial environments. Where we see many challenging scenarios that are less common in Long Haul. Trucking these include oncoming traffic, narrow uneven, roads frequent pedestrians and the oh
We believe that this versatility sets the Kodiak driver's Ave capabilities ahead of the competitions.
In addition to being a significant Revenue opportunity, our industrial Trucking deployment in the permanent helps us mature the Kodiak driver across all 3 of our strategic pillars.
The puran is a literal and figurative sandbox for honing our technology, our safety case and product enabling a flywheel that is already accelerating our ability to implement our technology across verticals. The unstructured driving environment of the Permian produces more unusual edge cases, compared to structured highway driving progressing. The technology through Rapid learning and challenging the system.
We've also gained significant product experience, integrating into our customers transportation management systems and developed processes for managing vehicle maintenance with operations, Personnel on the ground.
We've been delivering loads with no human in the vehicle and some of the toughest weather conditions in trucking including dust storms,
this experience will enable us to provide greater value to our Long Haul customers.
For defense purposes.
The current Administration has adopted a supportive posture for autonomous technology and defense use cases mirror Long Haul and Industrial Trucking with both on-road and off-road operations. We have proven experience in defense. Exemplified by our 30 million dollar contract, with the US Army, which we completed work on earlier, in 2025, the need for autonomy and defense applications is obvious. And ultimately, we believe autonomy will be integrated into the entire Pentagon vehicle Fleet We Believe Congress and the military support investments. In autonomy, though, the government shutdown has caused some short-term uncertainty around, Contracting timing.
We will continue to pursue opportunities in this space going into 2026.
Now, turning to our Q3 results.
We are pleased with our strong performance in Q3 during the third quarter, we deployed the Kodiak driver in an additional 5 trucks owned by our customer Atlas Energy Solutions.
We are now generating recurring, gas revenue on a total of 10. Driverless trucks equipped with a Kodiak driver, a 100% increase over Q2.
As we move into 2026, we expect to accelerate our deployment, as we seek to fulfill atlases. Initial order of 100 Kodiak equipped trucks.
We have also completed over 5,200 cumulative, hours of paid driverless operations, which represents a 166% increase from the end of Q2.
We view this as a key metric to measure the progress of an autonomous company regardless of the specific use case. Additionally, we have driven over 3 million autonomous miles and delivered over 10,000 loads for our customers. A 21% increase in cumulative deliveries over Q2.
I'd like to address our recent progress by pillar.
First, the technology pillar.
At the beginning of Q4, we issued a new software release that among other improvements includes new features. That allow us to reduce the need for remote assistance by 53%, this reduction in turn improves our ability to scale our solution. Another feature included in this new software release is a new component of our perception system that leverages generative AI based Vision language models to identify and address novel complex Edge. Case scenarios that are rare in the real world.
We Believe combining our proprietary multimodal AI perception model Giga. Fusion net with these new high-level reasoning capabilities sets a new standard for physical AI.
Using this new technology, the Kodiak driver's AI can now identify scenarios like flooded roads, and car fires rare scenarios that can be a challenge for more traditional perception. Techniques, this new feature allows us to better handle the long tail of complex edge cases, and gives us further confidence, as we move down the path. Towards our Long Haul driverless deployment in Q3, we announced that we have integrated nxp ISO 26262 compliant, processors and interfaces into the architecture that powers the Kodiak driver.
The addition of nxp Automotive Solutions have improved the Kodiak driver's reliability and robustness while helping us to improve the vehicle up time. Last week, we announced an expanded partnership with global Tier 1 Automotive suppliers at f.
Through this expanded partnership, we purchased steering systems with redundant components for a 100 Kodiak equipped trucks.
These redundant steering components are critical to ensuring our ability to safely scale. The Kodiak driver on the safety side, we were proud to announce the results of an evaluation by NATO a leader in AI powered Fleet, Safety technology.
Kodiak received the highest Vera safety score among over 1,000 fleets. In NATO's Network, in fact, the Kodiak driver received a perfect score of 100. In 3, out of 4 Nardo, Vera score, categories. And in 95, in the fourth, We Believe independent safety, evaluations, like NATO's help to validate.
We already know the Kodiak driver is already among the safest drivers on American highways.
Lastly, I'd like to address the product pillar as we've discussed earlier, we continued to execute on the upfitting strategy. We first articulated years ago,
In Q3 Roush launched a dedicated manufacturing line to upfit trucks with kodiak's Hardware kit with the Roush built trucks already rolling off the line, we believe we have further solidified, a leading position in building driverless trucks at scale. We also continue to strengthen, our OEM relationships over the course of the quarter and we will continue to prioritize building those relationships. Additionally, we added the ability to Halt 2 trailers at the same time.
Pulling doubles. As it's called in trucking is difficult for even highly skilled human drivers.
Extremely difficult.
Pulling doubles is even more difficult in the Parian which features rugged Landscapes with narrow windy roads and we achieved this significant technical Milestone ahead of schedule.
We also saw significant regulatory progress in Q3 and the early days of Q4.
I'd like to highlight 1 item in particular.
In early October the US Department of Transportation issued a waiver that allows AV truck. Operators to use flashing warning beacons as a replacement for reflective warning triangles. We integrated these warning beacons into our very first driverless ready truck back in 2024. We are thankful for the administration support and we want to thank them for their leadership on this issue.
Finally over the past few months we made tremendous progress as we prepared Kodiak to operate as a public company. We are incredibly excited for this next chapter and look forward to sharing more updates on our next earnings call. I am proud of what we have accomplished thus far and believe we are well positioned for growth.
In summary Q3 showed Kodiak, executing across our 3 pillars technology, safety and product. Positioning us to deliver meaningful growth and durable. Value for customers partners and shareholders. We are converting our progress into real commercial traction, including delivering additional Kodiak, driver powered trucks under the world's largest known driverless truck deployment. We head into 2026 with strong momentum across the
Long Haul industrial and defense verticals and are continuing to move toward the launch of driverless Long. Haul operations, while scaling our industrial business, we believe these winds will allow us to grow as we remain Capital efficient, providing a path to profitability and positive free cash flow in the future.
I'll conclude my remarks by extending a huge thanks to all of our kodiaks
the progress we have made is a reflection of your hard work and I look forward to accomplishing even more with you in the future.
Sajit over to you.
Thank you, Don and good afternoon everyone. I am pleased to share kodiak's financial results for the third quarter of 2025 our first, as a public company,
this quarter marks an important milestone for Kodiak as we continue to successfully execute on our mission to accelerate adoption and commercialization of autonomous technology in a safe and reliable way. From a financial perspective, we are committed to delivering consistent value and building on the strong Foundation already in place. We see potential for significant long-term growth scale and operating leverage, we delivered strong performance. Demonstrating our ability to scale and grow the business.
We also continue to focus on deploying Capital efficiently.
Most notably, my partnering with leaders in the AV and trucking ecosystems.
This allows us to focus on our core competency of developing advanced AI-powered autonomy. Software revenue for the third quarter was $0.8 million. This represents a 53% growth over the prior quarter, primarily driven by an increase in Driver as a Service revenue, generated by our 100% quarter-over-quarter growth in customer-owned and operated driverless trucks.
Let me take a moment to further explain our gas revenue model. Under this model, we charge our customers a single composite license fee to use the Kodiak driver AVE hardware and AI-powered autonomy software.
We charge this fee on either a per vehicle or a per mile basis.
This flexible pricing model is designed to align with our customers diverse operational models.
The dash model allows us to build predictable, recurring Revenue under multi-year contracts.
We have already implemented the dash model with address.
Operating loss for the quarter which excludes stock-based compensation totaled, 24.7 million primarily due to continued investment in R&D and Operational Support for our industrial deployment for a Reconciliation of non-gaap metrics to Gap. Please see our earnings release which we filed prior, to the call, we also incurred Capital expenditures of 6.6 million primarily to purchase AV components that we Deploy on our customers. Trucks, free cash flow for the quarter was negative 40 million. This included, High single-digit, millions of 1-time payments and public company related costs, we ended the quarter with 100 and 146.2 million in cash and cash equivalents
Including the proceeds raised, as part of the de-spac transaction, net of fees and expenses.
Turning to guidance of Q4 of fiscal year 2025 we expect to end 2025 with customer-owned and operated driverless trucks in the mid to high teams Q4 fi25. Free cash flow is expected to be in the range of negative 36 million to negative 38 million as we continue to invest in R&D and
An incorrect capital expenditure to purchase and deploy hardware on customer-owned trucks is expected over the next few quarters. We anticipate continuing to deploy the Kodiak driver to meet our initial contractual commitment of 100 customer-owned driverless trucks with Atlas.
This is expected to drive meaningful increase in quarter of a quarter Revenue.
As we look at this, we expect our capital needs to be primarily driven by four factors: R&D investments, including safety validation; costs associated with scaling industrial operations; commercialization strategic initiatives to lower average unit costs; and hardware expenditures.
Public company costs. We expect that these Capital needs will be partially offset by increases in dash Revenue as well as improvements in operating, leverage from scale. And efficiencies, we plan to provide more detailed guidance for fiscal year 2026. As a part of our Q4 FY, 2025 earnings call. We'll opportunistically seek additional financing options to strengthen our liquidity and support the next phase of growth. Particularly, as we build out our customer Pipeline, and launch driverless commercial Long, Haul operations in the second half of fiscal,
2026. Our financial priorities remain consistent with our strategic goals that Don had laid out earlier.
We want to First grow driver as a service Revenue, with existing and new industrial and Long Haul, customers to build a durable. Recurring high margin business model over time.
Second, invest prudently. In technology, safety cases and Commercial Readiness to launch Long Haul driverless operations in the second half of fiscal 2026. Third Implement scale and cost efficiencies into our Capital light model to achieve profitability and positive free cash flow over time.
Lastly, maintain, a strong balance sheet, and enhance liquidity through disciplined Capital planning, and opportunistic financing.
In summary.
Kodiak is entering its next chapter with a strong Foundation. Our momentum, technology leadership and competitive position remains strong. And we are delivering high growth with focus on improving operating leverage. We are executing with fiscal discipline and transparency, as we build long-term value for our customers Partners employees and shareholders. I want to thank you all for attending our
First earnings call. And for starting this journey as a public company with us, operator, can you please open the line for questions? Thank you.
Thank you, sir.
Ladies and gentlemen, as a reminder to ask a question, you will need to press star 1 1 on your telephone.
We ask that you please limit yourself to 1 question and 1 follow-up to allow everyone the opportunity to participate.
Please stand by while we compile the Q&A roster.
Our first question.
Comes from the line of Michael. Ward of croup. Please go ahead. Michael
Thanks very much. Good afternoon, everybody.
um,
Donna. What if you could talk a bit more about the Zeta partnership?
That's engineering. What how exactly is that going to work? Is it a supply relationship development relationship? How is that going to work?
I think, so thanks, thanks, Mike. Uh, the, the zap relationship is primarily A supplier relationship ZF as you know, is 1 of the leading
Suppliers of steering columns and Automotive components in general, to the commercial Trucking Market. Uh, we have a long standing relationship with them and use their components in our driverless trucks today. Uh, and this announcement further solidifies the partnership between Kodiak and ZF as we intend to scale, our solution going into 2026.
No. It's a, it's a great get. It's a great company. Um, Sarah, um, as you look at the fourth quarter, it seems like your annualized run rate at year. End is going to be somewhere in that 5 million range. Just from um,
The atlas relationship is that about right?
We uh, expect a meaningful growth in, uh, Revenue. Um, so
Q4, uh, as we've guided, we will be in to as you exit. Did you exit is that where we're talking about?
In that 5 million range for the annualized memory.
Yeah, I I think that, uh, could be closed to that number. Yeah.
Okay. And then from what I can tell the your cash burn, it was about 35, maybe you had some unusuals there in Port in 3Q, so about 35 million a quarter that that's about right.
Uh in Q3 we had some high single digit uh millions of 1-time costs and and public company related costs. So we we have guided uh for Q4
for free cash flow, uh, to be negative 36 to - 38 million
Okay, okay. And, and just 1 last 1 if I could, is I think you're on track to get
To that 100. Uh,
100 unit agreement with Atlas by the end of 26. That's your current Target.
Yep, that's our Target.
Perfect. Thank you very much, guys.
Thank you.
Thank you.
All right. Next question.
Comes from the line of Andre Shepard of cancer, Fitzgerald, please go ahead and address.
Hey, good afternoon, everyone. Uh, thank you so much for taking our questions and, uh, congrats on all the great progress. And, and congrats on the first, uh, public quarter, uh, certainly uh, um, you know, incredible achievements. Um, Don I wanted to maybe touch on the, uh, the Long Haul operations that you're targeting to launch in in second, half of next year, can you maybe help us? Um, understand you know what is needed between now and then, you know, between that I guess 788% and 100% anything that you can point that we should be focusing on and and how confident are you in that in that Target? Thank you.
Thanks Andres. Yeah we're we're excited to finally come out with some tracking metrics around our progress toward Long Haul. We've been talking about this for the last several quarters and we wanted to be able to provide the the market with some visibility and transparency into our development process. The the arm is effectively a measure of the material completeness of our safety case. And as you know we don't launch a driverless product until our safety case is complete. Most of the work from here, forward involves a lot of validation and testing of the system that includes simulation that includes structured testing and uh other forms of testing validation as we build up to that launch. And so, you know, we'll be providing more detail along the way for now. Uh, this is our our first data point as we progress, but you should expect to see, you know, quarter of a quarter Improvement, as we move toward our expected driver.
Launch in the second half of 2026 and we, you know, feel reasonably confident. That that is the that is an accurate timeline.
Wonderful. That's super helpful. I appreciate all that color. And maybe as a just as a as our 1 follow up um a question on liquidity. So you know, with roughly, you know, 150 million uh in in cash and equivalents now, you know, how are you thinking about kind of capital needs? Um going forward I don't I realize you're not guiding cash Burns going forward, but how should we think about that liquidity? And and any potential additional uh Capital needs. Thank you.
Thanks for the question. Uh sajit here I'll jump in here as a if you see as a part of the dspace transaction which you just concluded, we had the largest Capital raise in the history of the company.
Demonstrating our ability to raise across the capital structure and across several investors.
And we feel excited about our momentum and the tremendous progress we are making in deploying technology and scaling the business.
So as we scale this business over both industrial Long Haul, we should be able to also Drive significant operating leverage and reduce our bomb costs. So we feel confident. And as we execute on this strategy,
We will be opportunistically seeking additional financing to strengthen our legality over the next 12 months.
Support the next phase of growth and execute against our road map.
So if, if raising that additional capital for the next few quarters. Wonderful. That's helpful. Thank you so much. Congrats again, I'll pass it on. Thank you thanks. Alright.
Thank you. Our next question.
Comes from the line of James Murray of Chardan Capital Markets. Please go ahead, James.
Thank you and good afternoon. Uh, when you think about the second half entry into the Long Haul Market relative to the, to the arm measure, do you need to be at 100% for some period of time before you can enter the market or
Can you enter the market with a sub 100%? Again you have to have it at some period of time. I'm just curious how that how you're using arm.
As a gating factor to the long call entry.
Thanks, Jim, for the question. There's no specified period of time; it's more of a minimum requirement. So yes, we would need to get to 100% on the Readiness measure in order to feel comfortable that we have closed out the safety case for launching our driverless product. That being said, there's no specified.
of time between getting to 100 and actually doing the first driverless driverless.
Run, uh, so to speak, and so it's a little bit premature and early to kind of talk about specifics at that sign of granularity. And so what I would say is we're shooting for the second half of next year, and as we get closer to that moment, we should be able to provide additional clarity and more certainty around the timing of when we actually do our first deliveries.
That's very helpful. Thank you. And then, as far as customer editions are concerned, is it more likely that you enter the Long Haul market before getting another industrial customer, or is it the opposite—that it's more likely to get another industrial customer first?
Well, we're we're dual tracking that we're continuing to push to build our industrial business as we as we talked about in our remarks earlier, we feel really good about growing growing that vertical, uh, we have a great customer in Atlas. And this is, this is really a crawl. Walk run approach to deploying autonomy. This is a a safety critical technology. We want to make sure that it's right sized for our customers as our customers are learning with us. There's a lot in the product pillar that goes into actually efficiently deploying this product.
And you can't just dumped hundreds or thousands of vehicles on on a customer overnight and expect them to be able to efficiently operate those vehicles, uh, to provide a useful benefit. And so, there's a learning process as we go through this customer development. And that's really where we talked about the flywheel earlier on
To to announce additional customers in both of those verticals along the way. I can't really say exactly at what, you know, what, timing? What time frame 1 would come before the other. These, These are both, uh, top top issues
Got it. Thank you, appreciate.
Thank you.
Uh, next question.
comes from the line of e, Michael of TD Cohen, please go ahead and
You say, please make sure your line isn't muted and if you know, speaker phone, if you have hands-free.
All right, we'll move to our next question.
Our next question.
Comes from the line of Mike Latimore of Northland Capital markets. Please go ahead, Mike.
All right. Thanks. Yeah. Congrats on the first call here and doubling the units in the quarter. That's right. Thanks, Mike.
Um, the, uh, I think it's pronounced M-score, um, was very positive. Um, can you leverage that? Are you leveraging that for, you know, marketing purposes, good afternoon prospects? And can that be helpful even, I don't know, in keeping insurance costs down?
Well, I when you, when you talk about new technology especially within the safety, uh, you know, a safety critical realm like Automotive driving.
Credibility and trust. It needs to be built over time and we feel that the NATO results, really speaks to the safety of our system especially as it compares to human driving. And that's 1 of those big question marks that people have have had for for many years. Even over decades is, how do these vehicles Drive relative to existing humans. Not just from a crash or accident percentage perspective but what is the behavior by which they drive and the exciting thing for us is I think this really demonstrates that not only are these vehicles not getting into accidents which is kind of like your high level metric but they're also driving in a responsible defensive and safe way and that leads to better safety overall on our roadways. It also improves traffic and uh and congestion. And so that's something that we think is really important as we deploy, this technology more broadly.
And start to scale it. We want to be good citizens, not only to our customers but also to the general motoring public. This results, simply, speaks to the trustworthiness of the system for folks that don't have direct visibility into the system now.
How does that help Kodiak? Of course, from a marketing perspective but it helps from a regulatory perspective. When we talk to Regulators, they can get a sense for. Hey, I have never seen this in action, and it's far away from where I, where I drive day to day, but I can see that this score comprised over a thousand fleets. Actually, they are the safest on the road, same with our customers, right? We can take this data to our customers. So show them not just 1 or 2 or 3 trucks but we can say over the cross over the course of our entire operations of our Fleet. We're actually behaving as safely and safer than than human drivers on the road. And I think that really speaks to The credibility and trustworthiness of the system as a whole.
Yeah, yeah. Okay. Great.
Um, obviously a lot of focus on industrial and long haul, you know, the, um, in the government vertical, um, you know, a ton of focus just across the board on autonomous systems, whether it's an aerial system on the ground. Um, can you give a little more context or color around, you know, opportunities you might see in the government vertical?
Platform, which is a fully treaded vehicle. We really demonstrated the ability to bring that M that commercial maturity into the defense market and we believe that that's what the defense Market is, ultimately looking for, as they, they want to scale and, and productize this technology. So we remain very bullish in defense applications. Uh, it's a, it's an interesting world in the government space right now, but we think 2026 is, is going to be an exciting year. So, I would say, stay stay tuned for more.
Yeah, yeah. Thanks very much. Good luck.
Thanks Mike.
Thank you.
All right, next question comes from the line of Ravi Shanker of Morgan Stanley. Please go ahead and drop me.
hi, this is
Edge case scenarios in your autonomous system and how big a risk. Those are to scaling. I know you had, um, a g system to identify sort of these novel edge cases, but it would be helpful to hear more on that as you approach. Um, the on Highway launched in 2026,
Sure, well in our end, I'll use an example, our industrial launched back in in 2024. So we we delivered to the first 2, driverless trucks in December of 2024 and and very quickly got those trucks to a level where they were capable of operating, uh, firstly around the clock. So 24 24/7, which is important to our customer Atlas
Which is a 24/7 operation, but also importantly in adverse weather conditions. And so this has been, uh, something that the Kodiak driver has has already been able to handle for, for several quarters. Now, in a driverless, uh, driverless fashion. And so we expect to be able to bring those capabilities, uh, ultimately over to the highway environment when we, when we first launched our, our driverless product in the second half of of next year. Uh, so yeah. The the team is definitely working on validating those capabilities for Highway. Uh, that is all encapsulated in our safety case which as we said we're now at 78% uh on our Readiness measure. Uh and so we have already experienced an importantly, our AI system has experience in adverse weather already.
Got it. Thanks, that's very helpful. Um, and then maybe for my second question, it'd be helpful to hear about feedback you're receiving from your current partners after the launch with Atlas and sort of how you see that decision-making cycle for customers to go from initial discussions to adopting driverless trucks into a pilot to eventually scaling.
I think it's been an interesting journey, and that answer to that question has evolved quite a bit over the last decade—uh, the last several years. And to where we are today, at the end of 2025.
Our sense is that customers? And the market broadly is excited about driverless deployment. It's more of a when can we get our hands on it as opposed to 1 of skepticism, which was not always true. If you go back, several years there was a lot of skeptical uh, perspective carriers and and truck truckload operators out there these days. We don't, we don't get as much skepticism. I think people realize that autonomy is the future of Transportation, broadly. That's true in the commercial Market. That's true in the, in the private, uh, vehicle market. And, and certainly, it's our belief at Kodiak that automation, uh, will make all the Transportation, uh, modalities more efficient and safer over time. And of course, customers want to take advantage of that they recognize that there's first mover advantage and and they want to move quickly. And of course we want to be able to deliver a safe and efficient solution to them. More importantly, not just a safe solution but 1 that they can actually utilize and hopefully utilize out of the gate. And again this is where that fly
Wheel effect comes in. Yes, we have an industrial application launched today which is in a different domain than highway, but the customer interactions are largely the same for what we will bring to our over the road Highway customers. When we do eventually launched that product and those are learning that you can't really get other than doing and we think that this flywheel is going to accelerate our progress as we uh begin to scale our Highway uh deployment. So I think customers are excited for it. I think they're, they're waiting patiently to get their hands on the first, uh, driverless trucks that that they can. And we hope to be uh the the leading provider of those solutions for the customers. Broadly.
Okay, great. Thank you so much.
Thank you.
Our next question comes from the line of Walter Pic of Light Shed. Your line is open, Walter.
Hey, Don. Um,
You know, Aurora, when they were proving out their safety case, I guess, got some pushback from their partner, Pekar.
Just curious. Um, if that's a risk scenario where you prove out your safety case.
But the partner doesn’t want it. And, and is there, I'm going to extend that. I think you had mentioned kind of JB Hunt there as well.
Do they have any say in this? Do they care? I mean, I assume that if you’re just delivering goods from one point to another, they shouldn't care. But who knows? Maybe they don’t want their brand.
Um, you know, we are subjected to that risk. So if you can just talk about, um...
kind of who needs to sign off, if anyone, um, for you to go drive her out on those on those trips and from Dallas,
Thanks. Well, this is a great question. I, I think there's in in, there's like the legal sense of the question who needs to legally, sign off. And then, from a trustworthiness and good partnership perspective. There's who do you want to bring along, you know, our philosophy is, we've always built our technology to be platform agnostic. We've shown that we can develop the Kodiak driver and implement the Kodiak driver across. Many different makes models and form factors of vehicles. This gives us a flexibility. So we haven't, we haven't announced the platform that we will be using for our initial Highway. Uh, deployment. I think you asked, is this, is this a risk? Everything's a risk. It I would definitely say it's a risk. At the same time we think building the right relation.
Relationships, uh, exploring the safety of the technology in the right way and bringing people along, including them in the process, is the right way to approach business. And so we think we have a path forward to deploy driverless vehicles without a driver and without an observer in the cab. And that's something that we definitely intend to do. But for sure, building trust with our partners is paramount in that process.
I just kind of sticking with that partnership.
You know, question, I guess, um, you know, you've elected to upfit, right? And obviously, you've generated $800,000 in revenue. I think Aurora's revenue is like $1 million, so not even that much difference in the current quarter.
Um, I'm just curious, though. Like, at what point, if at all... Um,
Do you think it is important to be integrated off the line? That type of stuff? I mean, I know it's still early days, not a 26, not a 27.
Like, do we just not worry about this, or not consider this for some extended period of time? Or, um, are there things in the works that you have planned for? I don't know, 2027 or 2028.
I don't think it's important to draw a line in the sand and pick a date, like, you know, a switch over date. I don't think that's the right way to think about it. I think the right way to think about it is in terms of rollout and scale.
In in a lot of my conversations, there's this sense that you know, thousands or even tens of thousands of autonomous trucks are going to fall from the sky and and end up on our roadways. We're going to wake up 1 Monday morning and and tens of thousands of autonomous vehicles are going to be out on the road and, and we don't really think that's true. There's a progression to Rolling this out both from a safety efficiency, and operational perspective. And our current approach, We Believe scales into many, many thousands of trucks, which should be sufficient for for the foreseeable future short to medium term. And then that also depends on the development cycles for partners, oems and other providers within the autonomy space, and we don't control those timelines. And something that I've said for for a very long time is that I don't want to be beholden to timelines of other companies. I want to be able to take
Take charge and control our own destiny. I think that's something that Kodiak has really done well, and we've executed on. We will continue to follow that philosophy over the next several years. We want to make sure that we have a product that we can deliver to customers when we are ready to deliver that product, and ultimately, when the ecosystem matures and when suppliers are ready, I think you're going to see.
The access to broader scale, not just for Kodiak but for the industry at large, and so I don't really think of it as a black or white, or a line in the sand, or a date on the calendar. It will come. It is a gradual progression. We are working hand-in-hand with suppliers, both on the Tier 1 side and the OEM side. Uh, we're tracking progress; they're tracking our progress. And so it's not something that we're losing sleep over. We feel like the position we're in, with the experience we've gained now developing an upfit solution and with our partner, Roush, that we've set ourselves up for success in the next coming years.
After that. Thank you.
Wait, thank you. Can you hear me? Yes, sir, we can, perfect. Sorry about the for, uh, good afternoon and congrats on the first earnings call. So going back to the the 78% Long Haul arm Donna, I was hoping you could, maybe share roughly where that metric was maybe. Um, you know, 3 6, 12 months, uh ago and then on the uh otaa that you did, that reduced the remote assistance, by over 50%. Curious, if you talk a bit more about that as well and kind of what are some of the, uh, issues that were resolved with that, with that update,
Yeah, absolutely. Thanks for the questions z t. I'm glad that we cleared up the, the mic, uh, issue. So we, we don't have any, we don't have any numbers, historical numbers to share. Unfortunately, uh, this is, this is our first data point, and of course we will, we will share updated data points going into the into the future so so you can see the trends. So unfortunately, I don't, I don't have a number to share on the historical aspect of that. Obviously over the first several quarters of the year. We were focused very hard on delivering additional driverless trucks to Atlas. And, you know, really perfecting the operation of those vehicles in that environment and as we turn our Focus to Highway and our Highway customers over the course of 2026, we'll have a lot more updates for you as we go in terms of the Improvement. You know, this is incredibly exciting because efficiency is ultimately
what will drive margins and while all autonomous vehicles today,
Require a type of remote uh, support in certain circumstances remote.
Uh, assistance in certain circumstances it is our job as R&D developers to drive down the moments that any kind of assistance is is required. So, there's no specific instances. I can point to, uh, or a specific cases, but you can imagine that these structures are very conservative and they, they often will come to a stop. If they see something, they're not sure about. There's a lot of potholes that are that are present in the Permian and often our truck will will stop and ask human assistance for confirmation that they can continue or should they drive around it or is it safe? And ultimately we want that conservative behavior in our trucks but as we improve the technology as our AI improves as our foundation model work, improves the scene understanding we gave several examples of these in Our Deck are seen understanding improves dramatically. The trucks can start to handle those cases on their own and they need to call for human support uh less and less. And so we've actually reduced that as we said over 50%
Uh, in the last quarter, and that's a huge, huge win. It's a sign that the technology is accelerating very, very quickly, and we expect that type of acceleration to continue.
That's, uh, great, uh, and good to see the progress there. Um, maybe just a quick follow-up on the financials, um, of the roughly 6 and a half million of capex. In the quarter, can you share roughly? How much of that was is for um, you know, purchase for, for, you know, soon to be delivered trucks versus kind of in Period, delivery trucks.
Yeah, thanks. You do a great job. Uh, most of the capex is for future deployment, as we needed some lead time.
Uh, to uh, AC purchase the cap. Uh, purchase the hardware components and then get it assembled. So, most of that relates to the future deployment and, as I would call it, like the success of space. So, as we pan out the deployment for each quarter, every 20 to make those purchases, but it's not exactly linear as well sometimes.
Uh, we may make some bulk purchases if the pricing is attractive or if there are potential tariff situations. Uh, so we look at that as well.
Terrific. That's not very helpful. Thank you.
Thanks a day.
Thank you, and ladies and gentlemen, this concludes Kodiak's third quarter 2025 earnings conference call. Thank you for participating. You may now disconnect.