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Aurora Innovation(AUR) - 2024 Q1 - Earnings Call Transcript
AURAurora Innovation(AUR)2024-05-09 02:42
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Financial Data and Key Metrics - Q1 2024 operating expenses totaled 193million,includingstock−basedcompensation,and193 million, including stock-based compensation, and 157 million excluding stock-based compensation [25] - R&D expenses, excluding stock-based compensation, were 135million,with135 million, with 565,000 in pilot revenue recorded as a contra R&D expense [25] - SG&A expenses, excluding stock-based compensation, were 22million[25]−Thecompanyusedapproximately22 million [25] - The company used approximately 150 million in operating cash during Q1 2024, including 9millioninprepaymentsforhardwarecomponents[25]−Capitalexpenditurestotaled9 million in prepayments for hardware components [25] - Capital expenditures totaled 8 million, and the company ended the quarter with 1.2billionincashandshort−termandlong−terminvestments[26]BusinessLineDataandKeyMetrics−Thecompanyisfocusingonfinalizingcontractualcommitmentsthrough2025andincreasingloadcapacitystrategicallytosupportoperationalreadinessandcustomerexpansion[19]−CumulativetodatethroughtheendofApril,thecompanyhasautonomouslydelivered5,450loads,drivingapproximately1.5millioncommercialmileswithnearly1001.2 billion in cash and short-term and long-term investments [26] Business Line Data and Key Metrics - The company is focusing on finalizing contractual commitments through 2025 and increasing load capacity strategically to support operational readiness and customer expansion [19] - Cumulative to date through the end of April, the company has autonomously delivered 5,450 loads, driving approximately 1.5 million commercial miles with nearly 100% on-time performance for pilot customers [20] Market Data and Key Metrics - The company is preparing for commercial launch in Texas, which does not currently require additional regulatory steps and is ideal due to high freight volumes and advanced transportation infrastructure [20] - Steady advancement of autonomous vehicle legislation across the United States, with South Dakota and Kentucky enacting autonomous vehicle legislation into law since Q4 2023 [21] Company Strategy and Industry Competition - The company is leading the industry with its commitment to safety and transparency, utilizing a Safety Case to confirm that self-driving vehicles are acceptably safe to operate on public roads [12] - The company has established OEM and Tier 1 partnerships with Volvo trucks, PACCAR, and Continental, supporting a freight ecosystem with aligned incentives to drive growth [22] - The company is working with Fabrinet for the manufacturing assembly of its next-generation Aurora Driver hardware kit, expected to drive a step function reduction in hardware costs [23] Management Commentary on Operating Environment and Future Outlook - The company is confident in its technology and progress, accelerating demand-building efforts and securing multiyear contractual commitments from multiple customers [19] - The company expects final validation and closure of the remaining Safety Case claims to be completed later this year with the anticipated launch platform [14] - The company believes it is the only company positioned to commercialize autonomous trucking at scale, with deep integration with OEMs and suppliers being critical to bringing a safe and commercially viable driverless trucking product to market [22] Other Important Information - The company hosted an Analyst and Investor Day, showcasing the maturity of its ecosystem, the depth of its partnerships, and the enthusiasm of its customers [9] - The company demonstrated the Aurora Driver's performance in highly demanding situations, including handling interactions with aggressive drivers, avoiding dangerous debris, responding to pedestrians, and navigating tire blowouts [10][11] Q&A Session Summary Question: Regulatory approach and transparency [28] - The company endorses a hybrid approach to autonomy, which lends itself to more transparency for regulators and allows for easier explanation of system behavior and issue resolution [29][30] Question: Impact of macro environment on contractual agreements [31] - The macro environment has not hurt the company's ability to finalize contractual agreements with customers, as partners view the company as a long-term credible solution for a more efficient transportation system [32][33][34] Question: Hurdles before commercial launch [36] - The company needs to refine the Aurora Driver, complete validation, ensure regulatory readiness, secure customer excitement, and have a vehicle platform with appropriate redundancies [37] Question: Free cash flow and financial controls [38] - The company is targeting the low end of its quarterly cash use guidance range of 175 million to 185million,withpotentialforbetter−than−expectedfreecashflowduetofiscalprudence[39]Question:Pathtogrossprofitandscaling[41]−Thepathtogrossprofitissomewhatinterrelatedwithscalingbutnotcompletelydependent,withcontrollableleversincludingdrivingdownhardwarecostsandimprovingremoteassistoperatorratios[42][43]Question:Milesdriventoreachgrossprofit[44]−Thecompanyexpectstoreachgrossprofitpositivebytheendof2026,withabenchmarkofroughly100to125millionmiles,potentiallydoublingthatpercentage[45][46][49]Question:Prepaymentsandincentivecompensation[51]−Prepaymentsareforcorecomponentsofthehardwaresettoensuresufficientsupply,andincentivecompensationforQ2isexpectedtobesimilartothe2023numberof185 million, with potential for better-than-expected free cash flow due to fiscal prudence [39] Question: Path to gross profit and scaling [41] - The path to gross profit is somewhat interrelated with scaling but not completely dependent, with controllable levers including driving down hardware costs and improving remote assist operator ratios [42][43] Question: Miles driven to reach gross profit [44] - The company expects to reach gross profit positive by the end of 2026, with a benchmark of roughly 100 to 125 million miles, potentially doubling that percentage [45][46][49] Question: Prepayments and incentive compensation [51] - Prepayments are for core components of the hardware set to ensure sufficient supply, and incentive compensation for Q2 is expected to be similar to the 2023 number of 49 million [52][53] Question: Contra expense growth [54] - Pilot revenue recorded as a contra R&D expense was slightly down from last quarter due to seasonality but is expected to continue on a growth pattern, with Q2 expected to recover [55][56]