Aurora Innovation, Inc.

Hello, and welcome to the Aurora Third Quarter 2023 Business Review Call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Stacey Flight, Vice President, Investor Relations. Please go ahead, Stacey.

Thanks, Kevin. Good afternoon, everyone, and welcome to our third 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 Ernstson, co-founder and CEO, and David Bidet, CFO. Chris will provide an update on the progress we have made across the key pillars of our business, and David will recap our third 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.arora.tech shortly after this call has ended. I'd like to take this opportunity to remind you that during the call, we'll be making forward looking statements. This includes statements relating to the achievement of certain milestones around realization of the potential benefits of the development, manufacturing, scaling, and commercialization of the Aurora Driver and Aurora Horizon, 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 certainties 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 31, 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 September 30, 2023. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the day hereof, and Aurora disclaims any obligation to update any forward-looking statements except 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 as 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. The third quarter was a period of intense focus on execution across our organization. In addition to completing the $850 million capital raise, We also continue to make strong progress toward closing the Aurora driver safety case, further enhanced our autonomy performance, scaled our trucking operations, and advanced our partnerships. We executed all of this while also maintaining fiscal discipline, having managed our cash spent below our quarterly average target. We also saw some key developments on the legislative front. During the third quarter, I had the honor of presenting to the House Transportation Infrastructure Committee on the future of automated commercial motor vehicles. Being the only company invited to represent the industry at this federal legislative hearing underscored our leadership position in autonomous trucking and the trust we have built with policymakers through our transparent and engaged approach. I was proud to speak about the economic value of autonomous trucks, the meaningful progress we've made as a company and industry, and most importantly, how we prioritize safety at Aurora. Bipartisan recognition of the safety and efficiency benefits of this technology, along with a consensus view that the U.S. must solidify its leadership with respect to autonomous vehicle technology, was central to the discussion. Throughout my career, I've spent significant time with our partners in government, and I saw a tangible shift in tone in this congressional meeting. It's no longer a question of if autonomous trucks will arrive, but rather just a question of when. At the state level, Under existing law and regulation, autonomous vehicles can help today be deployed in the vast majority of the U.S., including Texas, where current law expressly enables the safe operation of autonomous vehicles with or without a human driver. California, however, has been an outlier with respect to autonomous trucking. We saw a very positive development in September when Governor Newsom vetoed the driverhood bill, AB 316. This was a meaningful statement in recognition of the value our technology can drive, both in terms of safety and economic benefits. We're committed to working closely with the California Department of Motor Vehicles and California Highway Patrol in anticipation of the release of draft regulations for autonomous commercial vehicles as part of the rulemaking process that is currently underway in the state. As we continue to work with regulators and legislators, we hold steadfast to our principles of openness and transparency. Building trusted relationships with all of our stakeholders is fundamental to our approach. Now let's dig into our third quarter highlights. As we stated, 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 vehicles drive 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 a weighted measure of completeness across all claims of our safety case with a launch late. It reflects the percentage of work needed to move from a feature-complete milestone, which we achieved at the end of the first quarter, to our next milestone, Aurora Driver Ready, when we will have confidence in the Aurora Driver's ability to operate safely without a person on board. We achieved an ARM of 84% as of September 30, 2023. This is up 40 points since our feature-complete milestone at the end of the first quarter, and up 19 points during the third quarter alone. Within Aurora, we track the work in closing our safety case across the core elements of our product, Aurora Driver hardware, Aurora services, vehicle integration, and Aurora Driver software. Today, we have completed all of the claims related to Aurora Driver hardware and Aurora services necessary for commercial launch. We've also closed all of the vehicle integration claims for Aurora Driver Ready. These three teams are now primarily focused on the respective work to prepare for growth beyond our planned commercial launch. Drilling into hardware specifically, engineering the Aurora Driver hardware for enhanced reliability and to withstand the harsh environmental conditions trucks can experience on the road is essential to maximizing uptime. We've completed the hardening of our driverless hardware and our new fleet is now equipped with the latest generation of the Aurora Driver kit. This kit will be our commercial launch hardware platform and also contains hardened versions of our proprietary First Light LiDAR and computer, both of which have been tested to meet our target levels of reliability. We've included visuals of this integrated hardware on page 7 of the slide deck. The kit's mounting location is optimized for performance, while its modularity enables serviceability on the road. And it's pretty darn good looking, too. Our AuroraDriver software teams have also made great progress toward AuroraDriver Ready. As a reminder, an autonomy system's performance must be validated against a vast number of scenarios, many of which are thankfully rare on public roads. In turn, a key component of our approach leverages Aurora's virtual testing suite to amplify exposure to rare and as yet unseen events to test the AuroraDriver's performance in those scenarios. Success of these tests supports closure of the safety case claims and our belief that the Aurora Driver is designed to respond appropriately to such rare scenarios. We now anticipate completing the work to validate a small number of our Aurora Driver safety case claims will stretch beyond our end-of-year goal. Importantly, the work on this segment of claims does not impact our expected timing for commercial launch. This work is being performed by a limited subset of the team. We expect this work, and thus the achievement of Aurora Driver Ready, completed around the end of the first quarter of 2024. We have decided not to reallocate additional resources to this and instead are maintaining our momentum toward commercial readiness. And we are already reallocating parts of our engineering team to begin work beyond the Aurora Driver Ready milestone, including efforts to improve the cost effectiveness and to increase the breadth of places and conditions under which the Aurora Driver can operate. The Aurora Driver development and validation process is complex. So I'd like to take a moment to walk you through an example of how we've progressed the Aurora driver system through development to this late stage of validation. For this example, we'll look at our side swipe avoidance capability. While not an everyday occurrence, side swipe collisions are one of the most common collisions encountered by trucks on our roads. So, of course, the Aurora driver sometimes encounters situations in which a truck or light vehicle in a neighboring lane on a highway begins to veer into its lane. We've designed the Aurora driver's response to these potential side swipes to emulate how our expert commercial drivers handle these scenarios. On page five of the slide deck, we've included a collection of simulations demonstrating how the Aurora driver's response now matches how operators had reacted in the past before our system was reliably able to respond appropriately. And on page six of the slide deck, you can see a real-world example of the Aurora driver traveling southbound on I-45 between Dallas and Houston when our truck is almost clipped by a trailer traveling mostly in the neighboring lane. The Aurora driver perceives this side swipe threat, assesses the surrounding environment, including determining if it has space on the shoulder to the right, and then shifts itself to the right portion of its lane, temporarily and safely crossing the shoulder boundary. These actions enable the Aurora driver to successfully avoid this side swipe scenario. We now have confidence in the Aurora driver's ability to handle such side swipe scenarios appropriately and we're in the process of completing the final validation. As evident in this example, we continue to see our validation work accelerating and the quality of the Aurora driver improving. Every day, our partners, customers, and regulators are able to experience these improvements as part of our showcase program. We continue to make great progress and are focused on achieving our commercial launch on schedule at the end of 2024. Concurrent with the safety case work and the bring up of our new fleet, With our driverless hardware, we continue to scale our trucking operations during the third quarter. We finished the build-out of our second commercial-ready terminal located in Houston. This terminal completes the infrastructure needed for driverless operations on our Dallas to Houston commercial launch lane and establishes the first commercial-ready autonomous trucking lane in the U.S. We have included footage of the new terminal on page 8 of the slide deck. Despite a cyclically challenged commercial freight market, we continue to make steady progress growing our commercial loads and operational capabilities in preparation for commercial launch. We, in turn, achieved our end of third quarter target to autonomously haul 75 loads per week for our customers. We're now logging over 20,000 commercial miles per week. Cumulative to date through October 29th, we have autonomously delivered, under the supervision of vehicle operators, over 3,200 loads. driving more than 895,000 commercial miles, with nearly 100% on-time performance for our pilot customers, including FedEx, Werner, Schneider, Hirschbach, and Uber Freight. One way we measure our performance successfully operating the Aurora Horizon service in a commercially representative setting 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 Aurora Horizon. As a reminder, we did not anticipate that aggregate API will be 100% even at launch because certain situations, for example, flat tires, will always require onsite 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 onsite support required. We believe it is important to hold our teams accountable for delivering a complete, commercially representative product and evaluating its performance on that basis. The API is one way we do this. For the third quarter of 2023, the API was 98%, demonstrating another quarter-over-quarter increase. Across the commercially representative loads completed in pilot operations on our launch lane in the third quarter, we again saw notable improvement in autonomy performance quarter-over-quarter, Over 60% of these loads had an API of 100%, and 84% had an API greater than or equal to 99%. In the shareholder letter and on page 10 of the slide deck, you can see the solid progression of our autonomy performance throughout this year. I'd like to take a moment to show you a few examples of just how good the Aurora driver's performance is, specifically in challenging traffic conditions encountered during the third quarter on both highway and surface streets. In the video on page 11 of the slide deck, On I-45, on approach to Houston, the Aurora driver has decided to lane change to the left and turns on its turn signal. As it starts the lane change, another vehicle begins a last-minute aggressive lane change into the same space. The Aurora driver immediately recognizes this contested situation and very naturally pauses its full lane change, allowing the other vehicle to pass by, and then safely completes the original lane change plan. The other driver then proceeds to cut across multiple lanes of traffic. I think it's a New Jersey slide is the technical term. In the example on page 12 of the slide deck, the Aurora driver has just exited the highway in Houston. Traveling southbound after a stoplight has turned green, it perceives a vehicle in its lane driving the wrong way down the road. The Aurora driver slows its speed given this dangerous situation, which allows the oncoming vehicle to take its turn off of the road. The Aurora driver's response enables it to avoid the potential collision. Moving to our partners, 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. Earlier this year, we announced a long-term exclusive partnership with Continental. The goal of our partnership is to bring self-driving technology to the trucking industry at commercial scale by jointly developing, manufacturing, and servicing future generations of the road driver hardware. Under our hardware-as-a-service business model, Aurora will pay for the hardware on a per-mile basis. During the third quarter, the Continental and Aurora teams achieved the first major partnership milestone, which finalized the detailed development plans for the future generations of the Aurora driver hardware. We look forward to continuing our partnership with Continental and to industrialize the first commercially scalable autonomous trucking systems, with a cost structure in place intended to support our long-term profitability objectives. On the vehicle platform side, during the third quarter, we brought online our new fleet of Peterbilt 579 trucks, updated with the latest generation of the Aurora driver hardware kit. This truck platform is equipped with prototype systems that will be necessary for driverless operations, including redundant braking, steering, and power, which we are actively testing. We also received the first autonomy-enabled Volvo VNL. During the third quarter, in addition to having prototype redundant braking, steering, and power systems, This truck was built with the necessary structural interfaces in place to support our sensor pods, simplifying the hardware installation process. We were, in turn, able to rapidly integrate the Aurora driver as a pre-assembled and pre-tested hardware kit. Our Volvo truck builds are continuing during the fourth quarter in preparation for autonomy testing of this platform, which is expected to begin in the first quarter of 2024. As our teams continue to advance toward this meaningful moment in our partnership, Volvo Autonomous Solutions just recently reiterated their excitement for their autonomous trucking product, powered by the Aurora driver, and the tremendous revenue opportunity that they believe lies ahead. This deep integration with OEMs and suppliers is absolutely imperative to bring a commercially viable driverless trucking product to market. While over the years we've seen a handful of autonomous trucking companies pull the driver for a single or small series of demonstrations, None of these companies did it on a truck platform that was developed with or sanctioned by its OEM and key suppliers for driverless operation or commercialization at scale. With each developmental milestone we reach, we're also co-developing the autonomy-ready truck platform and all of its subsystems with our OEM partners and their Tier 1 suppliers. We're confident that this is the right approach for the future of self-driving truck technology as a business, and frankly, we believe the only approach for commercial deployment at scale We are more confident than ever in our leadership position and see our advantage continuing to grow. We look forward to demonstrating continued progress over the coming quarters as we work toward achieving our Aurora Driver milestone in preparation for our planned commercial launch at the end of 2024. Thank you for your continued support. With that, I'll now pass it over to Dave, who will review our financial results.