Aurora Innovation(AUR) - 2021 Q4 - Annual Report

Part I Business 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] - 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][24] - 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][50] - 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][44] - A core technological advantage is the proprietary FirstLight Lidar, which uses FMCW technology for long-range sensing, enabling safe operation at highway speeds[18][55] - 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] Risk Factors 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] - 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] - 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] - Success is highly dependent on maintaining and expanding strategic partnerships with OEMs (PACCAR, Volvo, Toyota) and network partners (Uber)[150] - 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] - 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] - The company is subject to evolving and potentially inconsistent federal, state, and international regulations for autonomous vehicles, which could hinder commercial deployment[157][158] Unresolved Staff Comments The company reports that it has no unresolved staff comments. - None[238] Properties 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] - Aurora leases a 42-acre test track facility in Pittsburgh[238] - 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] Legal Proceedings 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] Mine Safety Disclosures This item is not applicable to the company. - Not applicable[239] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 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] - The company has never paid dividends and does not anticipate paying them in the foreseeable future[243] - 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] [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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - 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] 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] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] - Management believes a 100-basis point change in interest rates would not have a material effect on financial results[312] - Inflation has not had a material effect on the business to date, but future cost pressures are a risk[313] Financial Statements and Supplementary Data 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][371] - 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][386] - 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] Changes in and Disagreements With Accountants on Accounting and Financial Disclosures The company reports no changes in or disagreements with its accountants on accounting and financial disclosures. - None[468] Controls and Procedures 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] - A management report on internal control over financial reporting is not included, as permitted for newly public companies[469] Other Information The company reports no other information. - None[470] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company. - Not applicable[470] Part III Directors, Executive Officers and Corporate Governance 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] Executive Compensation 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] Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters 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] Certain Relationships and Related Transactions, and Director Independence 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] Principal Accounting Fees and Services 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] Part IV Exhibits and Financial Statement Schedules 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][477] Form 10-K Summary The company reports no Form 10-K summary. - None[481]