AUR - NASDAQ

Good day, everyone, and welcome to today’s Aurora First Quarter 2025 Business Review Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please note this call is being recorded. It is now my pleasure to turn the call over to Ms. Stacy Feit, VP of Investor Relations.

Thanks, Shana. Good afternoon, everyone, and welcome to our first quarter 2025 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aurora.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC. On the call with me today are Chris Urmson, Co-Founder and CEO; David Maday, CFO; and Sterling Anderson, Co-Founder and CPO. Chris will provide an update on the progress we have made across the key pillars of our business, and David will recap our first quarter financial results. We will then open the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.aurora.tech shortly after this call ended. I’d like to take this opportunity to remind you that during the call, we will be making forward-looking statements. This includes statements relating to our future financial and operating performance and our financial outlook and guidance, our ability to reduce costs, the safety benefits of our technology and product, the achievement of certain milestones around and realization of the potential benefits of the development, manufacturing, scaling and commercialization of the Aurora driver and related services, including relationships and anticipated benefits with partners and customers and on the timeframe we expect or at all the market opportunity our product’s ability to reduce fuel use and emissions the anticipated impact of our product on the freight industry and economy the expected future market size and our product’s compatibility therewith, our expected market share, the efficiency and effectiveness of our validation process and profitability of our products and services, regulatory tailwinds and framework in which we operate, our expected cash use and expected cash runway, the incremental capital needed to achieve positive free cash flow and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors, including in our Annual Report on Form 10-K for the year ended 12/31/2024 filed with the SEC, as well as the current uncertainty and unpredictability in our business, the markets and economy. Additional information will also be set forth in the quarterly report on Form 10-Q for the quarter ended March, 31, 2025. You should not rely on our forward looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Aurora disclaims any obligation to update any forward looking statements, except as required by law. Our discussion today may include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including reconciliation of our historical GAAP to non-GAAP results may be found in our shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website. Our discussion today may also include references to free cash flow and non-GAAP financial measure. To the extent that this forward-looking non GAAP financial measure is provided, it’s presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. And with that, I’ll turn the call over to Chris.

Thanks, Stacy. Well, I’m immensely proud to share that after years of uncompromising commitment to safety, rigorous engineering and disciplined execution at Aurora, driverless trucks are on the operating commercially. Autonomous freight is no longer just a vision, it’s a reality and it’s powered by the Aurora driver. I have dedicated my career to solving one of the most complex technology challenges of our time. I’ve been extremely fortunate to have been a part of many groundbreaking moments, but riding in the backseat of our first driverless trip, seeing the Aurora driver perform perfectly is by far the highlight of my career. And now watching it operate daily, weather permitting, delivering value to our customers is so rewarding. This milestone is just the starting point for an incredible commercial journey with many more defining moments to come. It’s not possible to put into words how excited I am and the whole team is to charge forward from here and deploy this technology to have a huge impact and build an amazing business. I’m fired up for the next decade at Aurora, which I’m convinced is going to be something very special. We’ve shown the technology is real. Our focus now turns to proving the promise of the technology, increasing the value of our product for our customers and ultimately becoming an essential partner in the freight industry. Along the way, we’ll underpin our customer adoption strategy with the focus and fiscal stewardship that will enable us to build a sustainable and scalable business to realize our mission to deliver the benefits of self-driving technology safely, quickly and broadly. Our path to delivering long term value is built on a foundation of safety. To commence driverless operations, we needed to close the safety case for our Dallas to Houston launch lane. Our safety case framework is a rigorous evidence based approach to confirming that our autonomous vehicles are acceptably safe to operate on public roads. We were the first in the industry to develop and 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 lane. With the closure of the remaining software and vehicle claims last month, ARM reached 100%. This means we have validated and approved our 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 that enables safe operation without a human driver. We’ve built our safety case to support rapid capability and 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 the Aurora driver operates safely including risk management, redundancies, cybersecurity, remote assistance 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 Governor Greg Abbott, who shared that he believes the Aurora driver will further spur economic growth and job creation in Texas. At the same time, California Governor Gavin Newsom’s administration recently released a draft regulatory framework for autonomous trucking officially launching the rule making process in the state. 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’s new automated vehicle framework, which aligns with Aurora’s safety first innovation driven approach. We believe the framework’s 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 underscores a growing recognition of the safety and economic benefits autonomous trucking can bring to The United States. Aurora 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 Aurora driver, we’ve also seen strong on road performance through our 100% API metric. During the first quarter, 95% of loads running our production release software for launch had 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 that we believe will redefine logistics and mobility. On April 27, Aurora driver powered trucks began regular driverless operations and are making commercial deliveries for Uber Freight and Hirschbach between Dallas and Houston. The Aurora driver has completed over 4,000 driverless miles already starting to prove the promise of our groundbreaking technology. To put that in perspective, that’s longer than the entire distance across The United States coast to coast. We’ve included a hyperlapse video of our first driverless trip on page three of the presentation. You’ll 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 Aurora Driver also expertly handles very heavy traffic, decelerating smoothly from its standard cruising speed of 65 miles per hour to nearly a full stop and negotiates a long standing complex construction zone that frequently changes week to week with lane shifts and repainted lines a common occurrence. We’re thrilled to show the world that this technology is real. It’s delivering value for customers in Texas and we’re excited to share the road ahead with all of you. We’ve already expanded to two driverless trucks scheduled daily and we anticipate operating tens of trucks by the end of 2025. As we’ve discussed, we’re deliberately starting with a crawl, walk, run approach as our early efforts will be focused on exercising the full product suite to ensure a seamless product experience for our customers that clearly demonstrates its value and continues to build trust with all of our stakeholders. We expect additional customers to begin driverless operations in the coming months. The Aurora driver addresses major challenges the freight industry faces including the structural driver shortage, persistently high turnover and asset underutilization. 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. Importantly, the Aurora driver never loses focus, prioritizing safety in every mile and can deliver an immediate fuel economy benefit greater than 10% with a potential of more than 30%. Our customers are not just adopting a new technology, they’re getting early access to a transformative solution that will redefine the movement of goods. By enhancing safety, mitigating labor constraints and improving fuel efficiency, the Aurora 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 freight. This should ultimately drive down costs for consumers. Today, the Aurora driver is validated for driverless operations on one of the most significant freight corridors in the country in daytime with clear weather conditions on the two most common types of trailer 53 foot drive ins and refrigerated trailers. Our Dallas to Houston launch lane represents a compelling commercial opportunity and a critical first step to prove the promise of our technology. Building on this foundation, we expect to further expand our commercial lanes with driverless operations between Fort Worth and El Paso and further extension to Phoenix in the second half of 2025. To support this plan, last month we extended our Fort Worth to El Paso pilot with Werner to Phoenix. Self-driving trucks have the potential to cut single driver transit time in half 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. 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 and operation in adverse weather conditions including rainy conditions and heavy wind. As we look further ahead, our OEM and Tier one partnerships are unmatched in the industry and we believe position Aurora as the only company capable of deploying autonomous trucking at scale. While commercial launch represents the most significant milestone in Aurora’s history thus far, much of our team has remained focused on what comes next. We continue to make great progress with our partners on purpose built self-driving platforms, designed for high volume production. 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. Our second generation kit brings exciting performance gains and importantly, we expect it to drive a step function reduction in our hardware costs, which is a critical milestone on our path to self-funding. We’ve started to receive B samples for testing from our contract manufacturer Fabrinet. We also continue to make great progress with Continental on our third generation commercial harbor kit that we believe will unlock true scale on the order of tens of thousands of trucks. As you can tell, it’s an incredibly exciting time to be at Aurora and this enthusiasm extends beyond our team. We’re fortunate to have John Donahoe joining our Board of Directors pending shareholder approval at the upcoming annual meeting. John has led iconic companies through periods of transformation and growth as CEO of Nike, ServiceNow and eBay. Earlier in his career, he served as President and CEO of Bain and Company, where he helped guide some of the world’s most respected companies through strategic inflection points. His deep expertise at the intersection of technology and customer experience will be invaluable as we move into the commercial phase of our business. 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 in a senior leadership role at an iconic global company. Co-founding this company with Sterling and Drew has been one of the most rewarding experiences of my life and I’m immensely grateful for every step we’ve taken together. From the earliest days of whiteboard sketches to shaping our product into what it is today and forging some of the most impactful partnerships, Sterling has been instrumental in putting Aurora on a trajectory of tremendous growth. Beyond the milestones and achievements, it’s Sterling’s passion, creativity and sheer grit that leave the most lasting impact on all of us. 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.

Thanks, Chris. After eight phenomenal years working with Chris, Drew and the rest of Aurora's Remarkable team, I’m embarking on a new adventure. Leaving Aurora is one of the most difficult decisions I’ve ever made, especially given the exciting stage Aurora is at. But it’s precisely what gave me the confidence that now is the right time. Aurora has reached a critical inflection point. The product strategy is firmly established, the technology is on the road, the teams in place to scale it and the momentum we’ve created in the industry is palpable. Watching the Aurora driver evolve from bold idea to a commercial reality has been nothing short of awe inspiring. From 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. More than anything, I’ve loved working alongside our brilliant and relentlessly driven team. And I’m profoundly grateful to our investors who have believed in what we’re building and supported Aurora every step of the way. We founded Aurora with the mission to deliver the benefits of self-driving technology safely, quickly and broadly. Aurora and its mission will always remain dear to my heart, and I know Chris and this incredible team will continue to build something enduring. As Aurora transitions into a new commercial chapter, I’ll remain a proud co-founder and a significant shareholder. While we leave from the sidelines, I’ll be cheering loudly for everything that’s yet to come on Aurora’s commercial journey. Now back to Chris.

Thanks, Sterling. 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. 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. None of this would have 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 Aurora the industry leader, the ability to imagine the future and deliver it. Thank you for being with us on this journey. With that, I’ll now pass it over to Dave who will review our financial results.

Thank you, Chris. It’s truly an exciting time in our young history and our continued focus to demonstrate strong meaningful financial results remains critically important. Let’s discuss our quarterly financial results for which we have provided a summary on Page 14 of the slide deck for reference. During the first quarter of 2025, we continued to demonstrate strong fiscal discipline. First quarter 2025 operating expenses including stock based comp totaled $211 million. Excluding stock based comp, operating expenses totaled $177 million. Within operating expenses, our R&D expenses excluding stock based comp totaled $153 million. This amount includes $871,000 in pilot revenue, which was up 22% quarter-over-quarter and 54% year-over-year. In the first quarter, this was recorded as a contra R&D expense. 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. During the first quarter, SG&A expenses excluding stock-based comp totaled $24 million. We used approximately $142 million in operating cash during the first quarter. Capital expenditures totaled $8 million. This cash spend was meaningfully below our externally communicated target, reflecting our continued commitment to fiscal prudence. 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 and continued development of our new hardware programs as we prepare to scale our business. We ended the first quarter with a very strong balance sheet, including nearly $1.2 billion in cash and short term investments. 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. 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. As the only autonomous 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 initiatives, 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 and or 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, which anticipated in 2028. We intend to remain opportunistic in our approach to future fundraising and have various available including our at the market program. We will continue to maintain a disciplined financial strategy balancing prudent cost management with growth investments to strengthen our multiyear structural lead and support our path to self-funding. With that, we will now open the call to Q&A.

Certainly. [Operator Instructions] Our first question comes from the line of George Gianarikas with Canaccord Genuity. You may proceed.

Hi, everyone. Thank you for taking my question and congratulations on the first runs. So my question is -- there continues to be a pretty robust conversation in the market around how advancements in AI and outsourced methods to reach simulated miles have accelerated the path for competitors in autonomy, whether it’s a trucking or robotaxi. What do you think these competitors may not appreciate about the complexity of bringing an autonomous solution to market regardless of improvements in AI or bus marketplace.

Hi. I’m sorry. I think, operator, I think we’re hearing you over the top here. George, you still there?

Yes, I’m here.

Just started to hear the other our operator over the top at the end there. Thanks for the question George and sorry for delay getting to it. 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. 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. I think that you’re right that there’s at times a bit of a naivety around how hard it is to actually deliver a real safe product that the core software is obviously critically important. We’re doing some very exciting and interesting and innovative things there. But that’s only one part of the story. The ecosystem, whether it’s the fact that we’re partnered 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. That’s a multi-year engagement that even if a competitor would start today, they are literally years behind us. Taking the hardware that we have in our first generation, industrializing that into our second and then building industrializing that further into the scale hardware is again a multi-year endeavor where we’ve been working with Continental for two years now on the pipeline to launching that in 2027. And so again, our competitors have to actually build that relationship and then actually start executing it in. And we just we don’t see anyone who seems to be making progress in that direction at this point. So then we spent a lot of time talking about the kind of the cool technology part of this, but the process to validate and convince ourselves that the product is truly safe and robust to put on the road. That I think is an underappreciated bit of secret sauce that we have at Aurora. And it’s one of the things that we’ve been investing heavily in over the last year and a half. I liken this to the advantage I see SpaceX having over Boeing in the launch business. One of the key elements of their advantage is they can validate their flight software in a week rather than a year and they’ve done that through automated testing. That gives them way more shots on goal 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 that we can iterate and continue to respond to customer need and continue to advance our product on the road. And again, years before we see other people even having a product on the road. So we see a structural advantage that we’re only going to accelerate away from. So thanks for the question Geroge.

Maybe just ask one follow-up. I’m going to put Dave a little bit on the spot here. I know it’s very early, but based on what you’re seeing right now you at your Analyst Day you gave some guidance out to 2028. Is that still something we could use in terms of thinking about the financial profile of the firm over the next few years?

Yes. If you think about what we said in our Analyst Day in 2024, I think everything that we talked about is still generally correct. Obviously, were a little delayed in when we thought we were going to start to launch by a couple of months. But so there’s a little bit of a shift to the right. And we’re not reaffirming any numbers today, but directionally the financial ambitions that we talked about before were there. And with the latest estimate that we provided today of [$658 million $650 million] (ph). That’s still a confident number for the capital that we think we will raise prior to achieving a positive free cash flow.

Thanks. Yes.

Thank you. Our next question is coming from the line of Ravi Shankar with Morgan Stanley. You may proceed.

Good afternoon guys and again congratulations on this pretty incredible achievement. Would love to get any color on the customer and industry feedback you’ve got since the launch. Are people paying attention to this? Is your phone ringing off the hook admitting that phones don’t have hooks anymore?

Agreed. Yes. Thanks, Ravi. Yes. I think we have heard near universal enthusiasm and excitement from our partners, the ecosystem we’ve built, our customers. And I think it’s galvanizing, right? That we’ve been talking about this, the industry has been talking about this for a while. Our partners have had confidence in us, but there’s a difference between having belief and confidence and actually seeing it on the road. And we’re seeing that really crystalize conversations with folks. So we’re very excited about it. Our customers seem incredibly excited about it. We -- the future move forward a couple of weeks ago. So we’re excited for that.

I would add, if you talk to our Head of Business Development since the launch, I’d say the phone, the proverbial phone has been ringing a little bit off the hook. There are a lot of interest in this, and demonstrating and showing that Israel has been a cornerstone of how we’ve approached this. And so we’re really excited about it. And there is a ton of excitement just in the customer base to learn more.

Great. And maybe as a quick follow-up kind of great to see the expansion already to two trucks. How do you determine the next steps of expansion from here? Kind of how do you go from the two to 10 to 10s? How do you -- because you already are at autonomous readiness indicator of 100%. So kind of what are the gating catalysts here that determine that? And also have you decided what metrics you’re to share with us on a quarterly basis?

Well, I can take the first half of that and I’ll hand it to Dave on for the second half. So 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. No one’s really run commercial trucks before. And so we’re getting feedback from our operation team on the limitations of that. And those are really what’s bounding our ability to scale. It’s just making sure we are kind of exercising this and then being able to scale it confidently with that experience under our belt.

Yes. Relative to the metrics, just a couple of things, right? Our focus for the rest of 2025 is really on proving 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 and the API. We’ll retire those. Those are development metrics. I think we’ve went past that stage in terms of how we think about the world. We think about the world in terms of demonstrating value. We haven’t finalized all the numbers we’re going have yet, but I would say that you’ll get a regular update on our driverless miles, which we talked about today, which frankly is a little bit dated, because it was April before a couple of runs yet today. So it’s always great to see continued progress. So we’ll talk more about how are we delivering the promise and part of that is miles and we’ll save some of it for later. But obviously, we will also measure ourselves based on the revenue, which we said before, we expect to be in the mid-single digits throughout 2025.

Very helpful. Thanks guys.

Thanks, Ravi.

Thank you. Our next question is coming from the line of Andres Sheppard with Cantor Fitzgerald.

Hey everyone. Good afternoon. Congratulations on the quarter. Thanks for taking our questions and congratulations on commercialization and very, very exciting and incredible times we’re living in. 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 it. So congrats there. Just first question, going back to the crawl versus walk approach, you touched on this a little bit in your prepared remarks, but wondering if you can maybe elaborate a bit on your vision for this year as you ramp up the intensive trucks, what kind of progress should we be looking at and how should we be thinking about that quarterly progress throughout the year? Thank you.

Yes. So as Dave said, really this year is about us taking going from the technology didn’t exist and to iterating and demonstrating the expansibility of that and increasing the value for customers. So we’ve shared in the letter our kind of 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. We expect to be operating in day at night and in the rain and in increased wind. And 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 and growth in 2026.

Wonderful. That’s super helpful. Really appreciate that. And maybe just as a quick follow-up, maybe a question for David. As we fast forward to 2027 and obviously I’m aware we’re not guiding anything there yet. But just conceptually and maybe fundamentally just remind us how much of a dramatic improvement in the economics you expect to experience in 2027 through the high scale manufacturing with Continental, particularly what that means for CapEx, gross margins and anything else you can share? Thank you.

Hey, thanks and appreciate your continued support here. That’s a lot to unpack, but let take a shot. And again, I would refer everybody to kind of the Analyst Day that we did before just to guide ourselves towards that. And we’re not kind of reaffirming 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 time frame. That hasn’t changed at all. Our capital allocation needs 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 by our Continental partnership. We expect to be delivering those line side. And again, we expect to be in the tens of thousands of trucks in the 2027 starting from a run rate perspective in the ’27 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, we have all 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 this is such a pivotal year on the technology promise and that’s what we’re laser focusing on. We spent Chris mentioned it before with our OEM partners and with Continental. We’ve spent the last several years 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.

Fantastic. Thank you so much and congratulations again. I’ll pass it on.

Thank you.

Thank you. We will take our next question from Chris McNally with Evercore. You may proceed.

Thanks, Steve. Congratulations again, long time coming. Two questions, one AI for Chris and one scaling question for Dave. So Chris, maybe we can talk about what improvements in your hybrid AI approach are next, the three year roadmap, so super helpful. Is it fair to say that the heavy focus here is increased ODD and the weather areas you’ve been highlighting? And maybe from an AI perspective, are the recent advances in end-to-end and foundational models, Is that going to be the help in achieving that progress or is it more hardware rather than software? Thanks.

Yes, it’s a great question and thank you. Like I said, we continue to be super excited about getting this thing on the road and starting serve customers with it. On the AI front, we have been this is one of the kind of misnomers in the industry is like, old and new like many of the advances that you’re seeing in large language models that you’re seeing kind of light up the world, the concepts of those are already engaged in the Aurora driver and have been part of what we’ve been developing. When we think about night and weather, our trucks are actually operating in these conditions on a daily basis already. And as we talked about in the past, it’s a matter of getting to the point where we validated that performance and resolving any of the minor issues that may remain there. And so we’re going to continue to evolve the Aurora driver. We’re going to be moving platforms as we go through our future generations of hardware. And so there’ll be effort involved with that. There is some increased capability that we’ve talked about that we need to add, 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.

That’s excellent. So basically on March of the nine on maybe weather. Dave, Uber Freight, if you yes, sorry.

I would say, I wouldn’t really characterize it a March of the nine, right? We’ve now the way I would think about it is, 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 and on conditions that we have to encounter that we can validate that. And that’s two point I think we have 2.7 million some tests that we use to validate the system today. When we move to nighttime, 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 operators of the road is basically the same during day or night. There’s a narrow part of the system that we need enhance to deal with the fact that the sun isn’t shining, 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. So sorry about that. I just the March of the ninth gives a connotation that’s not quite accurate as you’re thinking about this.

Super appreciate. Thanks so much, Chris. Dave, on Uber Freight, it seems like they’re a great partner. It sounds like there’s many potential customers within that ecosystem. Maybe we could talk about the ramp roadmap and it’s more of a framework that I’m curious about is the idea to sort of take on 10 or 20 new customers over X number of years and get each to tens of vehicles or is there a benefit of scale to getting a one to five customers at a very large amount, more than tens of vehicles to get to the hundreds that you want in the fleet over the next two years? So it’s more about is it large operators or 10 to 20 medium sized ones, which makes more sense?

I think it’s a bit mixed. I think density within a lane for a carrier is something that the carriers look at and that we think about in terms of it. And so some of our carrier partners have a lot of traffic on a lane and they’d like to supplement it with autonomous trucking to better enable more consistent flow on a lane, pick up new business, et cetera. There are some customers that don’t have a great driver supply on a specific lane that would like to use autonomous trucks there to go into new markets. I think 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. So like five trucks is interesting and everything, but it’s not going to materially change their business. That’s what we’re trying to do. The benefit of the Uber Freight relationship is really to help reach that middle market group that you’ve mentioned, where we can start to 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’s got a network of carriers that they can go work at that are in this 10 to 25 fleet. And so I think that’ll be our focus in the long term for Uber Freight is one of the mechanisms to get to other carriers. Obviously, it’s better for us and a little bit simpler to start at the bigger level numbers. But like our goal is to make sure that the technology helps transform the industry for all players, not just for those really large players.

Excellent. And sort of a combo of Uber Freight market and maybe direct to some of the larger carriers. Thanks again so much, team.

Thank you.

Thank you. Our next question is coming from Colin Rusch with Oppenheimer. You may proceed.

Thanks so much, guys. As you look 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 a little bit faster than some of your peers?

Yeah. Well, some of the peers part is fun, but well, yeah, okay.

Yeah, we can take that offline.

No, no. But in terms of our ability to do simulation, it’s a critical part of how we approach validation, right? Just trying to drive a bunch of miles just won’t get you there, right? That what we need to be able to do is systematically have conviction that we understand the conditions that the vehicle will operate in and that it will respond safely to them. And we’ve talked in the past about our approach to simulation and where we have these kind of three regions where there’s stuff that we can just get instantly from driving for few hours on the road, stuff that happens all the time. There’s things that we’ve experienced over the 3 million miles we’ve driven on the road that we can then amplify the rare elements of. And then fortunately, there’s a whole lot of bad things that happen on road that we’ve never seen. And that’s where those last two categories are particularly critical to delivering a safe product and are really where we lean into our simulation capability to give us conviction that the vehicle will handle things that fortunately our test engineers do think about that maybe you or I wouldn’t even incur to worry about.

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 labor productivity moves. As you think about the pricing model on a medium and long term basis, how quickly can you start to start pushing forward some incremental price and is that a consideration yet at this point?

Yes. I think maybe it’s a bit premature to think about that. I think we have to focus on the technology promise again. I think pricing is going to work itself out. I mean, we are going to demonstrate substantial value and I think we’re pretty confident in it, 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 obviously being safe is amazing and it is the thing that drives us and that’s why we’re here. And there is substantial value in that. But there are so many other things that we’re able to do. We talk about the fuel efficiency, our ability to deliver anywhere from 12% to up to 32%, 34% fuel efficiency is really an important aspect and really critical for our partners. If you think about our ability to be safer to drive down insurance costs and reduce their liabilities and risks is something that’s incredibly important to us. The flexibility of how we drive, whether it be our ability to go longer than the twelve the eleven hours of service on a daily basis that allows our carrier partners to get higher asset utilization. So we think we’ll deliver tremendous value and that will provide us potential to price somewhat equivalent to a human driven comparison. But even with a slight discount to that, I think we’re going to have really robust margins. 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 focus.

And what I’d add to what Dave said is, it’s kind of the I think you let off with like does this create an opportunity for premium pricing. I think you’re astute to observe that this will be a premium product and it will create a lot of value for customers. And so we will be kind of navigating pricing on how much is it we’re trying to expand and grow and deploy our market share versus optimizing for price. So we’ll figure that out. I think that’s going to be actually one of the really fun and enjoyable parts of what we do over the next decade.

Great. Thanks so much guys.

Thank you. Our next question is coming from the line of Chris Pierce with Needham. You may proceed.

Hey, good afternoon. Could you guys give us some detail on mapping sort of become a hot button topic kind of related back to the incremental validation you talked about on new lanes like I just want to get a sense of other people talking about mapping being less important, you guys sort of lean into maps, that’s what Waymo does as well. I just love to hear kind of your view.

Yes. So the intuition I’d give you to start with is if 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 you’ll be a heck of a lot safer driver in an environment where you understand the surroundings and you can anticipate traffic patterns and be ready to be in the left lane here because it’s always backed up in the right. But I’m going to go to the right after that because I need to make the turn, right? That understanding that you bake in driving around your neighborhood and you don’t have in other places is what the map allows the truck to have. And it is one of these things that if done poorly is complicated and hard. 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 in a matter of small number of hours to hour. And so that level of flexibility and foreknowledge and leaning into a thing that computers are good at, they’re good at storing massive amounts of information and then accessing them. 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, yes, cool. Go do it without a map if you think you can, but we are pretty excited about approach we’re taking.

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 longer these trucks can drive in terms of miles or how farther they can drive before service or before they need to be turned over? Because like what’s the right way to think about that benefit versus just the per hour benefit that someone can get from utilizing the Aurora driver?

So I think that the short answer on that is that we kind of approach every time we send a drywall truck out there a little bit differently. So I think we are more actively managing the trucks and the serviceability of the trucks and ensuring that they have high uptime. So for us, we do regular inspections every time we send them out. It’s important for us to do that. But not only that, we’re constantly monitoring what’s going on with the truck itself. And we’re getting indicators and behaviors of what’s going on with the truck. So for us, we think that the constant regular attention to the truck is probably where the biggest value proposition is. Trucks are going to have a very similar kind of use pattern between a human driver and a regular driver. But the other thing that I would point out is our drivers are consistent. So every time we take off, every time we drive, we always drive the same way. And we’re not accelerating because we’re trying to get home or meet an hours of service, so we’re not going 85 miles an hour when we shouldn’t be going 85 miles an hour. Driving at a constant speed with predictable drive and 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 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 and warranty of the trucks.

Okay. Thanks for the detail. Appreciate it.

Thank you. Our next question is coming from the line of Mark Delaney with Goldman Sachs.

Yes. Good afternoon. Thank you for taking my questions and a real big congratulations to the entire team. I know something you all have worked on for many, many years, so wonderful to see and also certainly wishing you the best in your next endeavor.

Thanks.

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 might be lower or 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?

I think so no, it is not an indication of deterioration of gross margins. I think there’s always going to be a little bit of pressure in terms of our hardware kit costs relative to how the tariff shake out. So like we’re not ignorant of that fact, but we think there’s a long way to go for that to play out. And we have that’s not the issue.

If I think about 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 and longer time period. So we now expect to be able to fund it through 2026. If I look at the last 18 months, our quarterly burn rate has really been well below what we’ve even expected. So we’ve got the right discipline in place. I think we look at it as 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’re the only autonomous company out there operating in a driverless product. 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, look, we launched a little bit later, right? We had originally thought we were going to launch -- we launched in April. That’s an extra four months of where everything shifts to the right and that’s just four months of additional spend. So on average like $50 million a month, that’s like $200 million and that’s a large portion of this. So for us it’s merely a reflection of the shift of timing, as well as we would like a little bit more flexibility in terms of how we think about expanding our leadership position.

That all makes sense. Thank you. My other question was thinking about the number of miles your trucks can do. The road map in your presentation today shows that by the end of the year you expect to expand the types of weather and also the lighting conditions the trucks can operate in. So what would that mean in terms of how many miles on an annualized basis those trucks can do exiting the year? And how that compared to how many miles the trucks can do currently? Thank you.

So if we’re -- if we just think about it in terms of daylight today, right, like we operate on the Dallas to Houston lane. So if you take off in the morning, do a turn and come back, that’s roughly 400 miles for a truck. That’s roughly an eight hour sort of time period. That’s kind of in the daylight time period. Depending on like summer and winter months, you get some more daytime. So let’s call it 400 to 600 miles that a truck can operate in a daytime condition today, right? So if we didn’t make a turn from Houston back up to Dallas, we can 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 night time, we would look to be able to go from, let’s call it eight hours of drive time to sixteen hours of drive time. And then we’ll distill the demand that way. And so for me, I think about looking at it like double. And then if I compare it to the industry average, the industry average is kind of an average for an over the road driving on average for a truck 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. We’ll continue to think about like optimizing. We would 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 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 unlock night. And that’s kind of our next key milestone.

Thank you.

Thank you. We’ll take our next question from the line of Itay Michaeli with TD Cowen.

Great. Thanks. Hi, everybody and congrats on the achievement. Just two follow ups for me. First, hope you could walk us through just some of the steps you typically take when you expand a lane. And 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?

Yes. I think each success of Lane will become easier and easier. So today, we have basically the vast majority of the driving task. As we unlock the Phoenix, Fort Worth to El Paso to Phoenix three lanes, there’s a few additional things we want to be able to handle that aren’t in today. Big example that I’ve talked about in the past is the customs and border patrol station. Today, we drive through that autonomously, but we haven’t validated for that. So as we validate that, as we validate the ability to drive day at night, that’s most of what we need. And then as we unlock new lanes, we’ll look at is there something novel about this environment that we have to open up. And 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 and consistent. And then the industrial parks that we will travel to are all built really for trucks to go in and out of. So there’s kind of a lot of commonality there. So like I said, expected to get faster. And 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 four and then going from there faster still.

Yes, absolutely. That’s very helpful. As a quick follow-up, the shareholder letter mentioned some exciting performance gains in the second generation kit. I was hoping you could elaborate on that and to what expand your ODDs further?

I’m sorry. I lost the middle part of the question. For whatever reason the phone seems to be cutting out a little bit. Apologize.

Sorry about that. Elaborate on 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 ODDs?

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 are developing that we have on the road today is incredible and best-in-class and it will continue to get better and that will allow us to react earlier and more smoothly even than we do today to hazards on the roadway. The rest of it is really about driving 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 as we go to the Continental third generation hardware kit.

One of the elements that’s mentioned in there right is a scaling aspect. This is we built a small number of first generation hardware kits to demonstrate our initial launch. This is our next generation in addition to driving down the cost and improving the reliability and durability of these hardware kits. It’s just the 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 expand all throughout the Lower U.S.

That’s very helpful. Thank you.

Thank you. We will take our next question from Scott Group with Wolfe Research.

Hey, guys. This is Cole on for Scott Group. I know you’re operating your own fleet right now, and it’s good to hear that there’s a lot of enthusiasm from partners kind of post the launch. But at this point, are there any firm commitments from carriers looking to utilize the Aurora driver with their own fleets kind of once the new Fabrinet and Continental hardware goes into place? And if or said differently, is there any indication about how quickly some of these larger carriers want to scale your technology post launch?

So our model has been that we will continue to operate a fleet for some amount of time here. And we think that’s really important twofold. One is that this is new technology in the road and it allows us to learn the challenges in operating it. No one’s done this before, so that we can kind of clean that up a little provide an amazing experience and value proposition for our customers before we hand it over to them and have to support it remotely. At this point, we have commitments for us to operate trucks for customers. We have lots of positive indications, but they’re looking some of the larger customers, as Dave mentioned earlier, don’t get out of bed for five trucks. It would just be an overhead to their operations that if they can’t get hundreds of them -- they’re not going to be interested. So that will come along with our second and third generation hardware. I don’t know, Dave, if can add any more color?

The only thing I’d say is every one of our pilot partners before we had launched and even the partnerships that we have in place, we’ve always started with kind of an aligned mission of 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 Uber Freight who doesn’t purchase trucks, every one of them is with the intention that they will buy trucks equipped and a scalable AV platform equipped with the ORR driver and we will provide a driver as a service. So the long term intention for every partner we have is for that model. It’s just we just need to continue to demonstrate the technology promise and get to our generations of hardware and our line side installed to enable that for them. But the every single one of them wants to do this that way, because it integrates within the rest of their businesses. So it’s really valuable for them to be able to integrate within their existing structure.

Yes. That’s helpful. And maybe just on the OEM side, you guys already have partnerships with PACCAR and Volvo. But post the launch, have you been approached by Daimler or 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 scaled? 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?

So on the first part, we have ongoing conversations across the industry and we would be thrilled to work with every OEM. And that’s our aspiration is that a customer who’d like to get access to your driver can use that on whatever vehicle they’re excited for. So we’ll continue to have conversations and when those become fruitful, we’ll be sure to let you know. In terms of how the market evolves over time, as Dave said, we want to be supporting both the large fleets and the mid-sized fleets and we’ll let the market figure itself out. I’m not smart enough to know how that’s going to play out.

Okay. Thanks. And if I could squeeze one last question in. I know like you’re on your first hardware generation, but as you move to your Fabrinet and your Continental generations, can you maybe talk through the execution risk or how transferable the software is as you kind of integrate with the new hardware?

Yes. We have a strategy for how we’re evolving from the hardware we have today to the Fabrinet second generation hardware to the Continental hardware. We’ve had work streams in flight for some time. This is it is not like we’re waking up today and discovering we have to do this. And so we’ve the architectural approach we’ve taken, the strategy we have for how we move the software forward is understood and we’re continuing to execute that. So of course there’s execution risk, but it’s very manageable.

Thanks Cole so much. We’re out of time. So we really appreciate everyone’s questions. And for anyone that we didn’t get into the queue, please feel free to follow-up and we can take it offline.