Aurora Innovation, Inc.

Greetings and welcome to Aurora's second quarter 2023 business review call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacey Wright, Vice President of Investor Relations. Thank you, Stacey. You may begin.

Thanks, Felicia. Good afternoon, everyone, and welcome to our second quarter 2023 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 8K filed today with the SEC. On the call with me today are Chris Urmson, co-founder and CEO, and David Madej, CFO. Chris will provide an update on the progress we have made across the key pillars of our business, and Dave will recap our second 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 has 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 the achievement of certain milestones around and realization of the potential benefits of the development, manufacturing, scaling, and commercialization of the Aurora Driver and Aurora Horizon on our anticipated timeframe, the expected performance of our business and potential opportunities with partners and customers, expected contract commitments from customers for our products and services, expected cash runway, and overall future prospects. These statements are subject to known and unknown risks and uncertainty that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors included in our annual report on Form 10-K for the year ended December 31st, 2022, 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 our quarterly report on Form 10-Q for the quarter ended June 30th, 2023. You should not rely on our forward-looking statements as prediction 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 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 a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results, may be found in our shareholder letter, which was furnished with our Form 8K filed today with the SEC, and may also be found on our Investor Relations website. With that, I'll now turn the call over to Chris.

Thank you, Stacey. It's been a remarkable time at Aurora coming off the accomplishments of the first quarter in which we achieved our critical feature complete milestone at the end of March. During the second quarter, we made strong progress toward closing the Aurora driver safety case, enhancing our autonomy performance, and expanding our partner ecosystem to support the growth of our business for years to come. Successful execution against our roadmap to launch Aurora Horizon our autonomous trucking subscription service has continued to move us significantly closer to fully autonomous commercial operations. With this tremendous progress, we raised $853 million of total gross proceeds through a public offering, including the exercise of the underwriters over allotment option and concurrent private placement of Class A common stock. We received very strong support from key institutional and strategic investors. We expect our total liquidity, including the net proceeds from the successful fundraise of $1.6 billion, to fund us through our planned commercial launch and into the second half of 2025. Raising this amount of capital in the current discerning capital markets environment is truly a testament to the special company and product we're building. Throughout Aurora's history and in this most recent fundraise, we have had strong support from top tier institutional and strategic investors. We're fortunate to have these incredible partners. We see this fundraising as continued validation from some of the most sophisticated investors in the world who are recognizing our industry leading progress and the enormous potential that lies ahead. Given that the competitive field has been dramatically, we are more confident than ever in our leadership position. We're delighted to see Aurora featured in the Netflix series working what we do all day. which premiered in May and explores the meaning of work in a time of rapid change. Produced and hosted by former President Barack Obama, the docuseries provides a glimpse into how we're building a company with an unmatched team and culture, as well as new innovative career opportunities. As part of the series, we were proud to give President Obama a ride in a fully autonomous, Aurora-driven powered, or driver-powered Toyota Sienna operating without a safety driver on our Pittsburgh proving grounds. This is the first time a US president has ridden in an autonomous vehicle. Consistent with our approach to readiness for our commercial launch, we completed a tailored safety case for this operating domain. Seeing the former president's excitement for and comfort with our technology was an incredibly rewarding moment for our team. In preparing to transport one of the most highly regarded and well-protected individuals in the world, the process underscored our confidence in and the power of our safety case-based approach for the commercial launch of Aurora Horizon. As we've stated, the Aurora driver will be ready to launch when we have a closed safety case for our Dallas to Houston lane. Our safety case is a comprehensive, evidence-based approach to confirming our self-driving vehicles are acceptably safe to operate on public roads. It goes beyond just ensuring the vehicle drives well enough for a demo. Rather, it demonstrates that our product and our company are holistically and sustainably safe. The Autonomy Readiness Measure, or ARM, is weighted as a weighted measure of completeness across all claims of our safety case for our launch lane. It reflects the percentage of work needed to move from feature complete to our next critical milestone, Aurora driver ready. We've continued to make meaningful progress toward closing our launch safety case. achieving an arm of 65% as of June 30, 2023. This 21-point increase during the second quarter is a strong reflection of our advancement and keeps us on track to achieve Aurora Driver Ready later this year. Looking to the second half of 2023, much of the remaining work will be focused on completing the final validation to address the claims in the first pillar of our safety case framework, proficient. We define this as the self-driving vehicle is acceptably safe during nominal operation, or in other words, we drive well when everything is working as intended. While on-road testing is important, an autonomy system's performance must be validated against a vast number of scenarios, many of which are thankfully rare on public roads. Getting adequate exposure to rare, challenging scenarios by accumulating on-road miles alone is infeasible. In turn, a key component of our approach leverages Aurora's virtual testing suite amplify exposure to rare events to sufficiently test the Aurora driver's performance in those scenarios. We do this in two ways. First, important but rare on-road events the Aurora driver has encountered are turned into simulation tests, and we create variations to further challenge the system's performance in these scenarios. You can see an illustrative example of this on page seven of the slide deck. Second, for events so rare the Aurora driver has not experienced them on the road, We synthetically generate simulation tests using the established NHTSA collision categorization, which enumerates the ways vehicles get into crashes. We've included the NHTSA collision taxonomy and an example of a set of these tests on page eight of the slide deck to give you a sense of the comprehensive nature of this analysis. For these imminent collision scenarios and rare on-road events the Aurora driver has encountered, we are creating tens of thousands of tests. Similar to the expected performance of a human driver, the Aurora driver is being designed to avoid a collision in these scenarios if possible. If a collision is not avoidable, as in scenarios where another actor's behavior renders a collision inevitable, the Aurora driver is designed to mitigate adverse outcomes. For example, attempting to reduce the impact if a slow-moving vehicle were to cut in unsafely close to our truck, just as a human driver should. Success of these tests will give us the conviction that the Aurora driver is designed to do the right thing in these rare scenarios. In addition to supporting the closure of the safety case for our Dallas to Houston launch lane, we expect this framework to make the incremental validation straightforward for our planned future lane expansion. We will analyze the differences between existing lanes and the new lane and add new validation tests as needed to support the scaling of our business. To further demonstrate our confidence in the Aurora driver's expected performance on our Dallas to Houston launch lane specifically, we looked at available accident reports for fatal collisions that involved a tractor trailer for the years 2018 through 2022. We simulated those collisions to understand how the Aurora driver would have acted under similar circumstances. Of the 32 collisions, there were 29 where the Aurora driver could have been operating the initiating vehicle. Based on our analysis, we believe that had the Aurora driver been driving, the combination of its powerful sensor suite and attentive driving behavior would have prevented these collisions. Said simply, none of these fatal collisions would have occurred. On page 10 of the slide deck, we've included an example of one of these simulations that demonstrates the Aurora driver would have avoided a fatal collision that occurred on I-45. In this real-life situation, the Texas Department of Transportation crash report showed that a driver who was suspected of using their cell phone and texting crossed over into the oncoming traffic lanes and crashed head on into another vehicle. The impact caused a rotation of the vehicles across multiple lanes of the highway. A tractor trailer encountered the crash scene and swerved to try avoid hitting the vehicles, but was unsuccessful. It collided with the wrong way driver and tragically two people were killed. We simulated a recreation of this scenario and as you can see in the video, As soon as the Aurora driver perceives the wrong way driver, it initiates a lane change to navigate around the oncoming vehicle. As it becomes clear to the Aurora driver that the two vehicles are about to collide with one another, the Aurora driver slows its speed from 65 miles per hour and attempts to lane change again to avoid contact with the vehicles that have just collided. When one of the vehicles then spins out and blocks the outer lane as well, the Aurora driver safely adjusts its course to come to a full stop as it approaches the accident scene. Executing these successful maneuvers enables the Aurora driver to avoid contact with both vehicles at the scene. Taking a step back, each year there are approximately half a million truck crashes on U.S. roads and nearly 6,000 people lost their lives in truck-related crashes in 2021. We believe our technology can meaningfully reduce the risk. This is just one very powerful example of this potential. As we work toward completing the necessary validation to close the Aurora driver safety case for our commercial launch lane, we're continuing our quarterly product release cadence. Following the achievement of our feature complete milestone for the Aurora driver at the end of the first quarter, our product releases now focus on delivering the totality of Aurora Horizon. During the second quarter, we released Aurora Horizon Beta 7.0. Let me share some of the notable advancements on our Dallas to Houston launch lane. First and foremost, we enhanced on-road autonomy performance. We also put in place a standard terminal flow incorporating terminal configuration, launching and landing of trucks in autonomy via our terminal app, and pre- and post-trip commercial procedures, including fueling, on-site weigh stations, and tractor-trailer inspection. We increased on-site service and maintenance capabilities, including repair service for customer trailers via our partnership with Rider to drive higher asset utilization and better network performance. And we strengthen our Command Center capabilities, including our remote assistance support, dispatch functionality, and asset management. Beta 7.0 demonstrates that Aurora Horizon's performance, commercial scale, and overall readiness are progressing on pace with Aurora Driver Ready and commercial launch requirements. With each advancing product release, we enable our customers to further experience Aurora Horizon as it is designed to operate at launch. During the second quarter, we unlocked the ability to run complete mock driverless runs, incorporating all components of the driverless process, including pre-mission, on-road, and post-mission elements. Through these mock missions, we are honing various operational and technical elements in advance of commercial launch. During the second quarter, our pilot activity exceeded our target to autonomously haul 50 loads per week for our customers. As we continue to scale our operations, we are now logging over 17,000 commercial miles per week and have already hauled over 1,300 loads year to date through July 31st, exceeding the number of loads we hauled for the entirety of 2022. Cumulative to date through July 31st, we have autonomously delivered, under the supervision of vehicle operators, 2,290 loads, driving more than 630,000 commercial miles. with nearly 100% on-time performance for our customers, including FedEx, Werner, Schneider, and Uber Freight. We continue to see strong interest from our customers and are working to integrate Aurora Horizon into their existing networks. We remain on plan to contract loads from commercial launch through 2025 by the end of this year. One way we measure our performance to successfully operate the Aurora Horizon service is through the On-Road Autonomy Performance Indicator, or API. This metric allows us to track not just the state of our technology, but the maturity of our processes and procedures in operating our business. The indicator penalizes the use of onsite support, which would be the most expensive support provided to enable the Horizon service. For the second quarter of 2023, the API was 97%, a sequential increase from the first quarter of 2023. The API represents the percentage of commercially relevant miles driven on our launch lane where the Aurora driver would have operated safely and successfully without needing someone to touch the vehicle. We share a more precise definition in the shareholder letter and on page 15 of the slide deck. Notably, none of the support our vehicles received was required to keep the vehicles operating safely. In over 100,000 commercially representative miles driven on the launch lane in 2023, including over 65,000 commercial miles during the second quarter, we experienced zero safety critical interventions. Across the commercially representative loads completed in pilot operations on our launch lane in the second quarter, we saw a meaningful enhancement of autonomy performance versus the first quarter with about half of these loads having an API of 100% and nearly 75% with an API greater than or equal to 99%. As a reminder, we do not anticipate that aggregate API will be 100% even at launch because certain situations, for example flat tires, will always require on-site support. As we look ahead to commercial launch and beyond, scalability and ultimately our profitability will be supported by a reduction in the level of on-site support required. We believe it is important to hold our teams accountable to delivering a complete, commercially representative product and evaluating its performance on this basis. The API is one way we can do this. Our work with our truck OEM partners, PACCAR and Volvo Trucks, and our new hardware as a service partner, Continental, continues to progress as we prepare for commercial launch and beyond. During the second quarter, PACCAR completed a 1.5 million equivalent mile durability test of a Kenworth cab with the Aurora driver hardware installed. The Aurora driver hardware remained fully functional at the end of the test. Volvo Autonomous Solutions and Aurora expect to begin testing an autonomy-enabled prototype Volvo VNL powered by the Aurora Driver in the first quarter of 2024. Separately, Volvo Autonomous Solutions has expanded its footprint in North America with the establishment of an office in Texas and started manual operations in preparation for the commercial launch of its autonomous hub-to-hub transport solution powered by the Aurora Driver. In April, we announced a long-term partnership with Continental to develop, manufacture, and service a commercially scalable future generation of the Aurora Driver's hardware kit. Continental has already started development efforts to scale the Aurora driver. In addition, the partnership's hardware-as-a-service structure will enable Aurora to pay for the hardware on a per mile basis. This structure is a first of its kind for this industry and aligns with and supports our highly capital efficient driver-as-a-service business model. The model also drives significant value alignment among us, Continental, and our customers. We believe industrializing our hardware kit through this partnership will help us achieve the commercial scale and cost structure necessary to support our long-term profitability objectives. Finally, I'm immensely proud of our safety culture at Aurora. We finished the second quarter in June celebrating National Safety Month. At Aurora, the concept of safety is top of mind all day, every day, especially as the self-driving industry continues to grow and evolve. Automated vehicles should be one of the tools in society's collective toolkit to greatly reduce the unnecessary loss of human life on our roadways. And our ability to deliver on a self-driving future hinges on our relentless commitment to safety and transparency. As we continue our evolution from a research and development company to a product company, we announced a leadership transition in June with Dave Madej assuming the role of Chief Financial Officer. Before taking on this role, Dave ran business development and product strategy at Aurora and brings deep experience in finance that will benefit us as we approach commercialization. Prior to joining Aurora, Dave spent over 20 years at General Motors, including leading the transformation of GM's product program finance organization, supporting accelerated growth and resource efficiency across a multi-billion dollar annual CapEx budget. Dave is a highly accomplished finance leader with a proven track record of managing profitable enterprises at scale. With Dave's strategic acumen and deep familiarity with Aurora's product, business, and customers, I'm confident we will accelerate our commercial performance while simultaneously increasing our financial discipline across the business. In closing, on the heels of our recent capital raise and strong technical and commercial advancement, we entered the second half of 2023 with strong momentum toward achieving the Roar Driver Ready milestone by the end of the year, which in turn prepares us for our anticipated commercial launch by the end of 2024. The magnitude of our recent capital raise represents a tremendous endorsement and the market's confidence in Aurora's ability to deliver. Our position continues to strengthen as we execute and build our coalition of partners. At the same time, the competitive landscape in autonomous trucking has thinned, offering an even more compelling opportunity for those who continue to execute. Our world-class team, partners, and investors recognize Aurora is well positioned to commercialize this technology and generate significant value for our customers and shareholders. With that, I'll now pass it over to Dave, who will review our financial results.