Aurora Innovation, Inc. (NASDAQ:AUR) Q2 2022 Earnings Conference Call August 3, 2022 5:00 PM ET Company Participants Richard Tame - Chief Financial Officer Chris Urmson - Co-Founder & Chief Executive Officer Conference Call Participants Tom White - D.A. Davidson Steven Fox - Fox Advisors Mark Delaney - Goldman Sachs David Vernon - Bernstein Operator Greetings. Welcome to the Aurora Second Quarter 2022 Business Review Conference Call. At this time all participants are in a listen only mode. A question-and-a ...

Aurora Innovation, Inc. (NASDAQ:AUR) Q1 2022 Earnings Conference Call May 4, 2022 5:00 PM ET Company Participants Stacy Feit - IR Chris Urmson - CEO Richard Tame - CFO Conference Call Participants Tom White - D.A. Davidson Mark Delaney - Goldman Sachs Steven Fox - Fox Advisors David Vernon - Bernstein Operator Greetings. Welcome to the Aurora First Quarter 2022 Business Review Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stac ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Aurora Innovation, Inc. is developing the "Aurora Driver," a self-driving technology platform for various vehicles, aiming to commercialize through a "Driver as a Service" subscription model. - Aurora's core product is the **Aurora Driver**, a common self-driving platform adaptable to multiple vehicle types, including eight different platforms as of December 31, 2021[17](index=17&type=chunk) - The company's go-to-market strategy prioritizes trucking, followed by passenger mobility and local goods delivery, aiming to capture parts of the **$4 trillion global trucking** and **$5 trillion passenger mobility markets**[17](index=17&type=chunk)[24](index=24&type=chunk) - Aurora will use a **"Driver as a Service" (DaaS) business model**, offering its technology as a per-mile subscription to partners, designed to be an asset-light, high-margin model[18](index=18&type=chunk)[50](index=50&type=chunk) - Key strategic partnerships include PACCAR and Volvo for trucking (representing nearly **50% of U.S. Class 8 truck sales**), and Toyota and Uber for passenger mobility[18](index=18&type=chunk)[44](index=44&type=chunk) - A core technological advantage is the proprietary **FirstLight Lidar**, which uses FMCW technology for long-range sensing, enabling safe operation at highway speeds[18](index=18&type=chunk)[55](index=55&type=chunk) - In January 2021, Aurora acquired Uber's self-driving unit (Apparate), adding over **900 employees** and strengthening its technology and IP portfolio, with Uber also investing **$400 million** in Aurora[71](index=71&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks inherent to an early-stage company in an emerging industry, including technical challenges, financial losses, and intense competition. - Self-driving technology is an emerging field with significant technical and commercial challenges, which the company may not overcome on its expected timeline, if at all[95](index=95&type=chunk) - Aurora is an early-stage company with a history of losses, incurring a net loss of **$755.5 million in 2021**, and expects to incur significant expenses and losses for the foreseeable future[98](index=98&type=chunk) - The company operates in a highly competitive market against participants with substantial resources, such as Waymo, GM Cruise, and Tesla, where competitors commercializing first could adversely affect business prospects[103](index=103&type=chunk) - Success is highly dependent on maintaining and expanding strategic partnerships with OEMs (PACCAR, Volvo, Toyota) and network partners (Uber)[150](index=150&type=chunk) - The business relies on suppliers, some of which are single or limited source for critical components like GPU microchips and automotive radar sensors, posing a supply chain risk[153](index=153&type=chunk) - The dual-class stock structure concentrates **45.1% of voting control** with the company's founders as of December 31, 2021, limiting the influence of other stockholders[222](index=222&type=chunk) - The company is subject to evolving and potentially inconsistent federal, state, and international regulations for autonomous vehicles, which could hinder commercial deployment[157](index=157&type=chunk)[158](index=158&type=chunk) [Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments. - None[238](index=238&type=chunk) [Properties](index=50&type=section&id=Item%202.%20Properties) Aurora's corporate headquarters is in Pittsburgh, Pennsylvania, where it leases over 590,000 square feet of office and industrial space, along with a 42-acre test track. - The company's headquarters is in Pittsburgh, PA, with over **590,000 sq. ft. of leased space**[238](index=238&type=chunk) - Aurora leases a **42-acre test track facility** in Pittsburgh[238](index=238&type=chunk) - Additional facilities are located in Mountain View, CA; San Francisco, CA; Bozeman, MT; Dallas/Fort Worth, TX; Seattle, WA; Wixom, MI; and Louisville, CO[238](index=238&type=chunk) [Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company states that it is subject to various claims and legal proceedings in the ordinary course of business but does not consider any currently pending matters to be material. - The company is not currently involved in any legal proceedings that it considers to be material[239](index=239&type=chunk) [Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company. - Not applicable[239](index=239&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Aurora's Class A common stock and warrants are traded on the NASDAQ, and the company has never paid cash dividends, with no current plans to do so. - Class A common stock trades on NASDAQ under the symbol **"AUR"**; warrants trade under **"AUROW"**[242](index=242&type=chunk) - The company has never paid dividends and does not anticipate paying them in the foreseeable future[243](index=243&type=chunk) - As of March 1, 2022, there were **368 record holders** of Class A common stock and **119 record holders** of Class B common stock[244](index=244&type=chunk) [Reserved]](index=52&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information. - Item 6 is noted as [Reserved][247](index=247&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section details Aurora's financial condition and operational results, highlighting a significant increase in net loss driven by higher R&D and SG&A expenses, and a strong liquidity position post-business combination. - The Business Combination in November 2021 was accounted for as a reverse recapitalization, resulting in a net cash increase of **$1.1 billion**[254](index=254&type=chunk) - The acquisition of Uber's self-driving division, Apparate, in January 2021 was a business combination with consideration valued at approximately **$1.9 billion**[256](index=256&type=chunk) Comparison of Operations for Years Ended December 31 | (in thousands) | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $82,538 | $— | $82,538 | n/m | | Research and development | $697,276 | $179,426 | $517,850 | 288.6% | | Selling, general, and administrative | $115,925 | $38,693 | $77,232 | 199.6% | | Loss from operations | ($730,663) | ($218,119) | ($512,544) | 235.0% | | Net loss | ($755,453) | ($214,449) | ($541,004) | 252.3% | - The increase in R&D expenses was primarily due to a **$246.2 million increase in payroll costs** and a **$195.9 million increase in stock-based compensation**, driven by higher headcount[283](index=283&type=chunk) - As of December 31, 2021, the company had **$1.61 billion in cash and cash equivalents**, which management believes is sufficient to meet working capital and capital expenditure needs for at least the next 12 months[291](index=291&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks primarily related to interest rates and inflation, though management does not believe a 100-basis point change in interest rates would materially affect its business. - The company's primary market risks are changes in interest rates and inflation[310](index=310&type=chunk) - Management believes a **100-basis point change in interest rates** would not have a material effect on financial results[312](index=312&type=chunk) - Inflation has not had a material effect on the business to date, but future cost pressures are a risk[313](index=313&type=chunk) [Financial Statements and Supplementary Data](index=64&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the audited consolidated financial statements for 2021 and 2020, reflecting significant increases in assets and net loss following the 2021 business combination and Apparate acquisition. Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,610,135 | $387,346 | | Goodwill | $1,113,766 | $30,047 | | Total Assets | $3,690,087 | $618,885 | | Warrant liabilities | $65,678 | $— | | Total Liabilities | $348,385 | $132,181 | | Total stockholders' equity (deficit) | $3,341,702 | ($276,579) | Consolidated Statement of Operations Highlights (Year ended Dec 31) | (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Collaboration revenue | $82,538 | $— | | Total operating expenses | $813,201 | $218,119 | | Net loss | ($755,453) | ($214,449) | | Net loss per share | ($1.22) | ($0.79) | Consolidated Cash Flow Highlights (Year ended Dec 31) | (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($563,288) | ($191,879) | | Net cash provided by investing activities | $249,885 | $343,289 | | Net cash provided by financing activities | $1,539,822 | $1,446 | - Note 3: The merger with RTPY was accounted for as a reverse recapitalization, with Legacy Aurora as the accounting acquirer, providing net cash proceeds of **$1.13 billion**[367](index=367&type=chunk)[371](index=371&type=chunk) - Note 6: The acquisition of ATG (Apparate) from Uber for approximately **$1.9 billion in stock consideration** resulted in the recognition of **$545.5 million in IPR&D** and **$1.06 billion in goodwill**[384](index=384&type=chunk)[386](index=386&type=chunk) - Note 10: Total stock-based compensation expense was **$220.1 million in 2021**, a significant increase from **$16.9 million in 2020**, largely due to increased headcount and RSU vesting related to the business combination[437](index=437&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=93&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosures. - None[468](index=468&type=chunk) [Controls and Procedures](index=93&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes reported. - The CEO and CFO concluded that disclosure controls and procedures were effective as of December 31, 2021[468](index=468&type=chunk) - A management report on internal control over financial reporting is not included, as permitted for newly public companies[469](index=469&type=chunk) [Other Information](index=93&type=section&id=Item%209B.%20Other%20Information) The company reports no other information. - None[470](index=470&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=93&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company. - Not applicable[470](index=470&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item will be included in the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. - Information is incorporated by reference from the forthcoming Proxy Statement[472](index=472&type=chunk) [Executive Compensation](index=94&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item will be included in the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. - Information is incorporated by reference from the forthcoming Proxy Statement[473](index=473&type=chunk) [Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters](index=94&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owner%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item will be included in the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. - Information is incorporated by reference from the forthcoming Proxy Statement[473](index=473&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item will be included in the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. - Information is incorporated by reference from the forthcoming Proxy Statement[473](index=473&type=chunk) [Principal Accounting Fees and Services](index=94&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item will be included in the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. - Information is incorporated by reference from the forthcoming Proxy Statement[474](index=474&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=95&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including consolidated financial statements and various exhibits. - This item lists all exhibits filed with the 10-K, including the Agreement and Plan of Merger, Certificate of Incorporation, Bylaws, and various compensation plans[476](index=476&type=chunk)[477](index=477&type=chunk) [Form 10-K Summary](index=97&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary. - None[481](index=481&type=chunk)

Financial Data and Key Metrics Changes - In 2021, Aurora reported $83 million in collaboration revenue, primarily from development work associated with Toyota [34] - Operating expenses totaled $813 million, with R&D expenses at $491 million, indicating a strong investment in autonomy [35][36] - The company ended 2021 with $1.6 billion in cash, providing a solid financial foundation for future operations [38] Business Line Data and Key Metrics Changes - Aurora's operational fleet expanded to 18 trucks, more than doubling its size from the previous quarter, enhancing testing and development capabilities [19] - The company launched two multi-phase commercial pilots with FedEx and Uber Freight, demonstrating operational progress in autonomous trucking [14][16] Market Data and Key Metrics Changes - Aurora is engaged with major players in the freight industry, including the largest LTL freight carrier and a significant freight broker, indicating strong market interest [17] - Initial non-binding indications of interest for Aurora Horizon subscription reservations exceeded anticipated launch fleet capacity through 2025, highlighting robust demand for autonomous trucking solutions [17] Company Strategy and Development Direction - Aurora aims to launch its autonomous trucking business, Aurora Horizon, in late 2023 and its ride-hailing business in late 2024, focusing on safety and scalability [9][10] - The company emphasizes a common core technology in the Aurora Driver, which is designed to work across various vehicle types, enhancing development efficiency [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformative potential of self-driving technology and its societal benefits, aligning with the Department of Transportation's principles for Transportation Innovation [33][31] - The company is committed to transparency and collaboration with stakeholders, including regulators and safety advocacy groups, to ensure safe deployment of autonomous technology [31] Other Important Information - Aurora's proprietary FirstLight LiDAR technology enhances its ability to operate safely at highway speeds, a critical component of its autonomous vehicle strategy [27][28] - The company has invested heavily in virtual testing technology, allowing for efficient and safe training of its self-driving systems [29][30] Q&A Session Summary Question: Discussion on digitally enabled fleets and autonomy opportunities - Management highlighted the importance of understanding unique needs in the freight space through partnerships with companies like US Xpress and FedEx [41][42] Question: Metrics for investors regarding real-world miles driven - Management indicated that while traditional metrics may not be as useful, they are exploring ways to communicate product maturity and progress [48][51] Question: Expectations for removing safety drivers from trucks - Management reiterated the goal of a commercial launch by the end of 2023, emphasizing the need for continuous advancement in technology before removing oversight [56][57] Question: Clarification on cash burn rate and future expectations - Management confirmed a clean cash burn rate of $563 million for 2021 and expressed confidence in having sufficient cash to support operations through commercialization [58][61]

Business Update - Aurora acquired Uber's self-driving vehicle business[5] - Aurora introduced Aurora Horizon and Aurora Connect[5] - Aurora solidified partnerships and pilots[5] - Aurora advanced cutting-edge technology[5] - Aurora became a public company[5] Commercialization Progress - Aurora began pulling loads 5 days a week in Q4 and started nighttime hauls in January 2022[6] - Aurora is regularly driving between Fort Worth and El Paso in preparation for a new pilot[8] - Aurora's fleet size increased to 18 trucks, more than double the size in Q4[9] - Aurora expects to launch Aurora Driver Beta 2.0 powered truck and Toyota Sienna fleets by the end of Q1[9] Technology and Safety - Aurora expects to demonstrate the Aurora Driver's ability to respond to system failures at highway speeds by safely pulling over to the shoulder without vehicle operator intervention in Q3[12] - Aurora's self-driving vehicles are acceptably safe to operate on public roads[12]