Aurora Innovation (AUR) 8 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the Aurora First Quarter 2024 Business Review Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacy Feit, Vice President, Investor Relations. Thank you.

You may begin.

Camille. you, Thank and review everyone, our quarter first Good welcome business call. XXXX afternoon, to our afternoon. We earlier results announced this

Our shareholder at letter Form call letter are and also X-K a presentation on was the Investor to filed our today Relations SEC. with website furnished ir.aurora.tech. with shareholder available The our accompany this

and have are of On will on update provide today Co-Founder will made the CEO; pillars Chris David we key across the business, first call results. with and our and our an the Urmson, me quarter Maday, Chris recap progress CFO. financial

in to of recording open this on call, the our related the expected filed well achievement business, the benefits commercialization ended around the the and the this customers, We described during call our differ anticipated at are call take statements risks actual and driver December XX, Form of results to the we includes opportunity will then unpredictability expect current be remind These cause and the operate, time our the known those XX-K services, as customers and frame, materially for markets and will business development, our our Relations tailwinds we of products call. which for in future those realization opportunity I'd uncertainties Investor implied call from to our to ir.aurora.tech potential year expected of prospects. and manufacturing, forward-looking the available in projected relating you on risk certain opportunities Q&A. scaling be that ended. SEC and the from and and partners profitability contract in commitments factors included report could potential statements. A particular, after and regulatory cash This with this services, framework economies. uncertainty of to has products to order and of that during and the and annual will services, shortly of as making website XXXX, subject overall unknown with performance or In milestones statements runway conference like market our this the and

be XX-Q the quarterly in will quarter XXXX. our ended XX, set for forth on Form also March report information Additional

by rely Aurora call forward-looking You any should are beliefs not of forward-looking on forward-looking the as on make of disclaims statements as our assumptions to obligation this on events. that any update predictions required hereof, based law. statements, as and future date we statements All and except

with financial results. today was our reconciliation a Investor addition website.With non-GAAP or may should to furnished non-GAAP Our from regarding These in today which with not of letter, be be GAAP may isolation our that, a results historical our considered measures and Information Form turn SEC shareholder non-GAAP measures. now X-K filed be non-GAAP in financial results, Chris. call our on for include over may discussion to our Relations the GAAP and to I'll in also substitute the found our including found

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of process physical our number capabilities a small process driverless ground our to develop reality. We we saw development firsthand. and run Analyst the exercised this and with validate a of Day end-to-end simulations truck to in that tests showcased this test Investor effectiveness at we track the attendee and Finally, full

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With now an the of not that do refer percentage achievement as API of support, are of to we the on-site loads. focused on aggregate loads XXX% require any which up we last quarter, API XX% commercial driving

reach certain situations a because API As do even like anticipate on-site always flat reminder, aggregate launch require will XXX% support. we not will at ever tires

do indicator believe XXX% of we will toward our progress API strong of percentage a the However, be loads launch. commercial

of commercial quarter, API, launch of During a and expectation meaningful our lane prior in launch XX% the reflecting the the XX%. had from XXX% progress roughly XX-point the toward quarter loads commercial improvement first

XX-foot into is introduction beyond the drive-ins demand accelerating measure, API technology commercial including loads launch. intermodal underscoring progress efforts. our trailers increasing our in our our planned With in we're the confidence these of building pilot following increasing for and our readiness operations, now expansion The recent

secured now negotiation with are have to additional multiyear a we mechanism with to We and on in multiple customers. from volume pricing transition contractual driverless active commitments operations, and customers

We're of to FedEx, As XXX freight including for were triple a about Uber the commercial commercial per we for launch, Schneider, customers, year now we Bespak, commercial and week prepare Freight others. executing we or Werner, our loads all ago. volume pilot continue scheduling autonomously haul

the we strategically For and vehicle Cumulative performance through our have end and XXX% million X,XXX the operational capacity through of focusing for to under loads, the commercial delivered XXXX on on-time readiness of rest of the X.X supervision to pilot we're customers. finalizing expansion. April, increasing commitments support load customer driving miles with approximately contractual operators, year, autonomously date, nearly

in Public Dakota vehicles our our the also locally launch majority Texas centered its legislation steps the deployed hosted and vital review, freight market. Kentucky transportation advancement Under Palmer autonomous critical launch regulation, law. this state first safety be engagement. at in Trust Earning fourth states, Moving momentum school to bringing corridor of the volumes is for by require in a our advanced benefits an and continuing of focused to business the additional South autonomous autonomous today, to quarter Texas, a to engaging and launch. the we technology vehicle not look States. We're region. currently commercial into preparation vehicle Since forward additional community high and the infrastructure. Aurora the Driver does where our existing transparent United and for see also We have legislation I-XX given regulatory Texas across in effort event environment. the enacting Earlier high of of opportunities requires we vast steady Aurora's including ideal furthered shared regulatory along our industry economic communities and law with in can is on

commercialize to Looking at autonomous the we believe company scale. trucking positioned is further ahead, Aurora only

with are incentives a ecosystem and Volvo in with for growth PACCAR drive industry to the We partnerships have Trucks, come. unmatched and Tier OEM support X that years to aligned established Continental and freight

we've suppliers at to a believe OEMs absolutely As safe to said bringing scale. deep product integration we driverless is with trucking market before, commercially and viable critical and

is with with the safe for PACCAR. Trucks we've for design plans trucks term. business We're long driverless goal importantly, why components manufacture together scale. build redundant necessary Volvo these enabled and to platforms partnered to to a and operations working operate significant at autonomy Our the scale with valuable at and That's

autonomous partnership Driver scale path our a trucks manufacture to partnership service have develop, deploy with long-term structure with us future jointly also at This place We support long-term a Continental a of to exclusive the to gives in cost generations Aurora profitability. hardware. intended and

prouder introduce which support hardware production. brings manufacturing self-funding. progress And element tremendous gains. our XXXX while I performance hardware We we before of step for costs, North maintaining our the we're Fabrinet kit making scaling our to function drive path also in Continental expect Aurora of kit, a a is This can't to our it reduction critical recently on initial next-generation our in be and scale engaged to assembly of start as we importantly, to ambitions Driver safety which exciting the plan Star.

responsibly and for purposefully longer-term We launch our to at continue will work to ready commercial deployment technology and scale.

and, With will to over never been pass going we course, of for has I'll financial our our and are now is path that our Our clearer, society, value create convinced shareholders. to immense Aurora our that, partners, who review it results. customers Dave,

Thank you, Chris.

results. financial our discuss Let's

provided have on Page a of XX We deck the slide summary for reference.

fiscal quarter first the launch. while commercial our we XXXX, During of continue to executing strong discipline demonstrate planned toward

First quarter operating compensation, $XXX XXXX totaled stock-based million. including expenses,

launch. components pilot expenses Excluding which and year-over-year amount expenses, the stock-based target, million to for expenses, expenses, R&D Within first support hardware below $XXX,XXX totaled stock-based to compensation, with We and spend billion this million. first in record XXXX expense. a strong balance long-term to a approximately operating cash spend and reflecting prudence. range million totaled prepayments quarter cash we as Similar sheet, compensation, XXXX. for compensation, in relative million. the included compensation quarterly our million launch. XXXX million during our payments excluding Capital reflects operating associated as commitment This continue total including XXXX, average, We cash this we expenditures Note, R&D to were second $X with $X.X we to above ended prepare $XXX stock-based the in revenue, continued were an was doubled XXXX, $X use which The expect $XX used which commercial of approximately reflects short-term In expenditures increase of we to $XXX contra cash to due investments. program. the our continue quarter nearly very incentive expect cash million. XXXX $XXX excluding operating annual quarter million. in fiscal capital second in $XXX SG&A of commercial on $XXX to to our be quarter

we'll open and have fund of this planned Given now Q&A. commercial launch recurring to our the to our efficiencies translated business found to that With support the the quarter tangible savings, we that, into in now operations cost XXXX. liquidity call fourth we and expect

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

question. debate around to endorse you a to neural more autonomy. I'd regulatory of that like full There's say merits approach. think I hybrid approach network a ask versus increasingly to the vociferous approach hybrid it's an of a And safe

code hood that's mandate... Now do experienced lends itself your and some to part you of for regulators? regulatory models and think that And approach the potentially of more do going you under your think scrutinizing become to the the that you transparency you're going using? a regulators any necessary Have maybe

Thank you, question. Yes. George. Great

aware, as both ideas taking here. and much earlier AI very a intelligence -- some we of hybrid probably learning bear you're from incorporates in to can it's out, but that machine ideas first, here. very we kind As world of are of modern we And the bring kind laid much you approach artificial it's also the

we're is you that fixed your the think being on the explain For or future, And with is that may have an in way to the that there be issue and the vehicle and allows is we data us who why think I we the about And partners down of learn point shouldn't the vehicles know think that. ourselves more actually objective. right to I scenarios it long meeting others AI as the an freeway, driving care much what the think explicitly. observation for the will and you actually to have to that spot engaging you where a behaving have very like kind drive is of of should that those how burden to like that way system wrong that ability difficult. why and readily support help some learn not that I at similarly, importantly, And ultimately, dress, convince we issue confidence to road, be. them our regulators us, regulators, off pure that enough you able right, express behavior don't the way examples the are about And fix need this to

strong appropriate, encoding of us also into the -- wonderful reducing by We to AI. right? being get lean by computation to ways and make on managing places modern hallucinations both, implement and won't it are all of statements by there the the of what where so in more that best where get and to powers able risk happen the be explicit will algorithm. road an to about And while allows efficient

And maybe as as business nonrelated contractual Is negative finalize to it in look of ability to environment does you your macro agreements customers your next year? to solidify the positive a topsy-turvy or with kind follow-up, how a impact XXXX? a

do want Dave, you to that? to speak

Yes, question. sure. Thanks, I George. the appreciate

partners, our the -- we've things challenges agree, think understanding them continue on I And bit with facing, bumpy they're and to the to is been being environment just that it's we little of industry. the a right? focus macro so of one challenges and and as patient a that traditional lot for work with I continued the working has

to the in well to actually we the a that customers, long-term us operate so we're learned and we've process all our system. those more to of like found for of it transportation think contracts provide the a how times optimal as overall. that understand been addressed our to then a we customers. as during continue able I And actually and it's makes some as scenario work going address good kind work of partners of best times through as pretty can challenges But all productive. challenging during our help of We're them. that We've that, go with completing with solution credible efficient view like and partner with

a really with I efficient new adoption to think approach the hasn't going make goes of it So more short, hurt run. at system us in the long in of technology And all. it a that's learning

pretty it's been helpful think overall. I So

they a solve in in to transformational the nature with freight their And the cyclic nature we the engagements we're all that to benefit And industry are over term. we understand is but week folks partners a that to going industry. are these add who've are there's the that have to potentially the to that longer been strategic going business recognize thing not our I'd to problem their next have

continued contracts able we've we're been conversations. the that in place expect for so And and constructive to we continued need we engagement seeing -- XXXX. And get towards

Mark of line Sachs. the Delaney from comes question Goldman with Next

First, and launch you understand level expanding hoping OEM readiness just the what better truck mid-April. including year-end, XX% left measure think the partner hurdles beyond autonomous at readiness biggest commercial are before the to the from

of say would things I in about talked February. same it's set Yes. that the we

work initial driver of need The we that. So to beyond continue on increasingly things is refining validation team completing oral launch. in focused commercial the the and the

so excited about we're that. And

in risk enthusiasm, need level. well on there. to partners we appropriate demonstrating Texas then redundancies federal with the progress that as a strong making And framework Second, as we good there traction you are point it. see and are about a given there are daily again, OEM a at good vehicle we and our out, product. we a with environment state the And continue in And getting little and We regulatory the basis the work need very excited we're well. need and we them who has as both finally, have, customers the platform regulatory given position

of year. ready So be launching we to to end this continue being the at anticipate

contemplated better it question, is which the second if the XQ $XXX expected And the you be use guidance, your look But there's hoping for for flow spoke free free well I year? $XXX bit then when came previously I'm you about remarks, million to financial for in think of to understand the and cash prepared for more control came cash a Dave understand to in was what some an also than potential better at for you'd quarterly in million on where it the And average probably year. flow. we below cash

really Mark. yes, Appreciate team fiscal this outstanding that. And demonstrated regard. in has the prudence Thanks, Yes.

to prepayments, range. that think uncertainties to really some on is objective our some We want I so be to are the low did end of do continue for. But there we there And -- the also those. the protect out in some but there we wanted more you We more some quarter which may second to traditionally, supply we're wouldn't do. going to those that of be do, anticipate protect of

So But I think we're any towards low on targeting not end guidance that. change the ready obviously, we're to of the range.

Our of comes Instructions] [Operator Vernon with Bernstein. David question the from line next

So like the scale. determine, to capabilities whether into just the fund same gross time I that sort look of driver past if don't to bill Dave, the that in just indicative hit risk, trying profit are product in when is path in independent dependent thinking to scale some the listed profit to XXXX of the independent at XXXX the time you exhibit lines there frame. to or out below? label that Event these lay the gross I'm the of roadmap sort be of ends I war Should line or is

Well, I but interrelated, somewhat think they're completely dependent. they're not

deliver, price able that we think in mile paid. a So that's do to we we're gross you when in right, the that ensuring every relative margin, every getting load cost-effective for manner that that it to drive, about we're

potential improving the on reliance to the some driving area controllable to and, levers reduce trucks so any of are costs, operators And remote hardware on-site assist we think of of course, continuing support. ratio down that related to the in

the focused really the -- gross drive flow the Sun things positive, think line really us we're the free is upon that look not going on it's our to margin. but I have early run of to realized going Belt, activities. towards the bottom to feel get very again, of allows these of a in that are those, money significant about think and then think element I when to by that. we generating And said, at sufficient that So parallel, the cost driving When out some we're obviously, they where dependent drives scaling number really benefits cash self-funding to trucks. in of that's there's I that some much I start of be quantum us element That

were projections Like a focus is both that if our we broadly, though, can would B commercialize years. is you that structured think benefits in really margin the particular we critical the the so that And area, do have early in our is cell delayed on entire quickly gross slightly right? We organization impact technology make to broadly. deliver the of safely, and business funding. to self-driving that to sure our And really

And any driven of you range gets of sort into frame project miles of level? gross profit can that time is to kind there XXth that that you that

the or double So XXX able said industry be the roughly think would benchmark And in is percentage. XXX. we of to that to that that is what we we've before kind double roughly

that So you. I the be would guidance give would

number that the imply? miles, sort profit. Like what of of But maybe of share of aggregate gross kind as trying far generating some does that know engineer that or to you as not. the some business being sort kind if backward I just of contribution can positive, here. don't like right, I'm gross economics

Yes.

aggregate Or of… the at at miles? aggregate the looking -- you're kind you looking if think at are are looking I you

margin like per to times miles of trucks you profit gross number total the total like to Yeah get truck.

Yes, yes.

you what positive. we gross driven. million I by a to it's percent what end mileage you XXX% profit say, gross we're we recall XXX 'XX achieve, basis though, get -- expect again, trying our had profit not and will there an to at the to miles if we relative So did look to expectation that at Analyst that's when the if of Day, of out about

again, and right, need on-site potential to Perseus remote by us ] well reducing is things second-generation the relative for support, bringing manufactured in ratio operator [ doing as any this increase So being that's to -- hardware about in our that we arose, Fabrinet. need do the then

a profit were point. hit we million at gross positive if XXX still we So target that at would like miles,

completely on not they're So each other. dependent

And our with line question comes the from Osborne next of Jeff TD Cowen.

prepay Two that of and heading think would dimension into what incentive was as XQ. have elaborate more way And apologize any background XQ, I can for on for? off, that's a the launch, would you up be noise cash here. to that for to on about And But I I that rolling you things you comp quick the then assume. of would much ones, there we commercial types then cash tick types be? wondering, how the equipment I Dave, use mentioned Is think would

Yes.

really of make in down. to lot relative supply. we've the got a hardware our So that some ours demand components industry, of we there to lock sure core make set prepayments, want out it's sufficient sure we just to the of that and There's the

incentive constraints and when that's the of roughly supply was supply, to number it's protect in some are, set. relative of components, cautious limited there we critical when number XXXX we XXXX expect And can some ones but that great in core what So similar significant there's is we're demand ourselves. potential our And aren't like was, for where of I I very to the and of comp, which exactly that would think there, to components out the million. announce prepaying want there And that. to are again, a then to our kind don't we core you hardware kind the believe refer that it's they $XX

question next Bernstein. from of the with David Our Vernon line comes

have I I just figured X on. and would pop cordial I if be see my that asked back then can

the way? Or -- this revenue gave, as quarter a Just Did booking year. expense quarter in that meaningful grow versus you're it contra is quick, constant? not year? pretty you're booking real last the for

We this due equivalent. revenue the last is for was at this loads we scheduling a industry. within pilot was we actually QX. to quarter, Yes. roughly actually quarter. more do contra down did of The technically end that's that slightly QX but did than largely the We're It from seasonality expense

loads. we XXX So average, on schedule

what of happens so And attainment is driven little And they is partners. largely get on there. the those our QX, less demand a out bit during

slightly So material. it was but lower, not

you think a at and quarter-by-quarter the amount, mentioned Chris -- for expect above you his expect We dialogue, were be year where look as we QX, continue before. to look it's if substantially I we're year-over-year we substantial that momentum a compares. at in comp to when And

on a continue would issue. of QX QX growth that expect also is pattern. do we more but -- a so seasonality And

Okay.

-- embedded about that million So quarter, your imply whatever is being and the it. the of guide a that in in flow sort growth cash of embedded recovery $XXX

XXX%. Yes,

Thank you.

end question-and-answer the concludes teleconference. have today's reached session. We our with this And of that,

participation. this you lines may for time. at You your Thank your disconnect