Aurora Innovation, Inc.

Greetings and welcome to the Aurora First Quarter 2024 Business Review Call. At this time, all participants are in 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 Fite, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Camilla. Good afternoon, everyone, and welcome to our first quarter 2024 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 8-K 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 David will recap our first 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 related services, market opportunity and profitability of our products and services, 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, regulatory tailwinds and framework in which we operate, expected cash runaway, and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in the risk factors included in our annual report on Form 10-K for the year ended December 31st, 2023, 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 March 31st, 2024. 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 date 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 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 8-K, 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. 2024 is off to a strong start as we purposefully drive toward our planned commercial launch at the end of the year, and the subsequent scaling of our business. The team's commitment to our mission to deliver the benefits of self-driving technology safely, quickly, and broadly remains steadfast and is fueling some of the highest levels of employee engagement we've seen as a public company. This enthusiasm drove our continued progress in the quarter, including improving the rower driver's autonomy performance, advancing our launch lane safety case, and continuing to execute with financial discipline. We recently hosted an Analyst and Investor Day where we demonstrated the maturity of our ecosystem, the depth of our partnerships, and enthusiasm of our customers. These factors support our expectations that we can drive rapid, capital-efficient revenue growth, high gross margins, and most importantly, mature into a self-sustaining company. We gave attendees a chance to experience driverless truck rides and a first look at how our driverless trucks navigated advanced road scenarios at our test track. Page four through seven of our presentation include examples of the exceptional performance of the Aurora driver without vehicle operators in these highly demanding situations, including handling interactions with aggressive drivers, avoiding dangerous debris, responding to pedestrians who unexpectedly entered the path of the vehicle, and navigating tire blowouts. In the first video, we see the power of the Aurora driver as it monitors an aggressive driver approaching at high speed The aggressive driver accelerates to overtake the truck, merges just feet in front of the Aurora driver without signaling, and slams on the brakes in order to exit the roadway. The Aurora driver perceives the dangerous driving behavior, anticipates the potential for an aggressive cut-in, and safely brakes to avoid collision. It doesn't break a sweat and continues on its journey. The second video showcases the Aurora driver navigating a common yet demanding and dangerous situation, evading road debris, including tires and trash cans. It also expertly avoids a mattress and suitcase that have fallen out of the bed of a pickup truck just ahead. The Aurora driver promptly identifies these hazards and swiftly executes safe but rapid lane changes to avoid them. The third video illustrates a potentially catastrophic scenario, an obscured pedestrian unexpectedly entering the roadway. As the Aurora driver approaches, the pedestrian steps in front of the oncoming truck. In both variations of the scenario, the Aurora driver identifies the pedestrian and acts quickly in the subsequent moments, either merging when space is available or rapidly decelerating to come to a complete stop when other vehicles are traveling adjacent to the truck, preventing a safe lane change. The final video showcases the Aurora driver responding to a particularly severe issue, a tire blowout. In this scenario, we place a spike strip in the path of the truck. The Aurora driver promptly recognizes that the tire has blown and brings the truck to a safe stop on the shoulder. The Aurora driver's impressed performance in scenarios like these reinforces our belief in the safety advantages our technology can provide. At its core, the Aurora driver is all about making transportation safer and more efficient. It does not lose focus, get tired, or become impaired. We believe it not only replicates the behavior of the most proficient drivers, It also redefines performance with superhuman capabilities. The system can simultaneously perceive 360 degrees of the operating environment and anticipate and respond to seemingly unpredictable road users' behavior with the support of advanced modeling. We continue to lead the industry with our commitment to safety and transparency. To prove the safety of our product and earn public trust, We utilize a safety case, which is a comprehensive evidence-based approach to confirming that our self-driving vehicles are acceptably safe to operate on public roads. We quantify our progress toward closing our Dallas to Houston launch lane safety case through the autonomy readiness measure or arm, which is a weighted measure of completeness across all claims of the safety case for our launch lane. We're the only company in the industry that has provided this level of transparency. As of mid-April of this year, ARM was 95%, which is a significant achievement. As we said when we introduced the ARM, approximately 95% is related to claims specific to the Aurora driver. This continued advancement underscores the progress we have made on final validation in preparation for commercial launch. As we said when we introduced the ARM, approximately 95% is related most directly to claims specific to the Aurora driver, and this is a significant achievement. While we will continue to collect evidence throughout the year, we expect final validation and closure of the remaining safety case claims to be completed later this year with our anticipated launch platform. A large portion of the safety case work is ensuring we have properly defined, validated, and verified the features that make up the Aurora driver. I'm going to take a few moments to outline how we do this work. On page 9 of the presentation, we lay out this process. When we were initially developing the Aurora Driver, we defined how the system should behave. As an example, the Aurora Driver is designed to yield to and, of course, most importantly, avoid collisions with pedestrians. Given that requirement, we developed an initial set of tests to help us develop the algorithm. We also labeled examples of the desired behaviors and used that data to train our machine learning models to enable the Aurora Driver to execute an appropriate duty of care in similar scenarios. Once the feature passes these initial tests, we begin to have confidence that the Aurora driver is capable of operating safely on the road. But it's important that we invest the energy to refine and validate the performance of the feature, which are critical steps in closing our safety case. To support our validation and refinement efforts, we wrote detectors that can scan through approximately 100,000 miles of expert human driving to automatically extract data and support validation. We analyze this data to ensure that we're covering common everyday experiences and interesting and challenging parts of the interaction space. As an aside, many of you have heard of Reinforcement Learning from Human Feedback, or RLHF. It's a critical enabler of the advancements in large language models. Our approach to using data from our human expert drivers to refine the performance of the machine-learned elements of the Aurora driver system takes a similar approach. Our human-driven data can be automatically transformed into tests. We then supplement these tests with additional synthetic tests by varying parameters, for example, with pedestrians in different locations or moving at different speeds to complete our test coverage. Finally, we develop a small number of tests that we run end-to-end with a physical truck and a test track to ground our simulations in reality. We exercise this full process to validate the driverless capabilities showcased at our Analyst and Investor Day. and attendees saw the effectiveness of this development process firsthand. As we measure our progress toward commercial launch, we look at indicators for safety and usefulness. A key metric we use to assess the Aurora driver's performance, or usefulness, is the autonomy performance indicator, or API. This indicator penalizes the use of onsite support, which will be the most expensive support provided. With the achievement of an aggregate API of 99% last quarter, We are now focused on driving up the percentage of commercial loads that do not require any onsite support, which we refer to as 100% API loads. As a reminder, we do not anticipate aggregate API will ever reach 100%, even at launch, because certain situations, like flat tires, will always require onsite support. However, we do believe the percentage of 100% API loads will be a strong indicator of our progress toward commercial launch. During the first quarter, 75% of the commercial loads in the launch lane had 100% API, reflecting a 13-point improvement from the prior quarter and meaningful progress toward our commercial launch expectation of roughly 90%. With the recent introduction of intermodal trailers into our pilot operations, we're now including these loads in the API measure, underscoring our increasing readiness for expansion beyond 53-foot drive ends following our planned commercial launch. The increasing confidence in our technology and progress is accelerating our demand building efforts. We have now secured multi-year contractual commitments on volume and pricing from multiple customers with a mechanism to transition to driverless operations, and we are in active negotiation with additional customers. As we prepare for commercial launch, we continue to autonomously haul freight for all of our pilot customers, including FedEx, Werner, Schneider, Birchback, Uber Freight, and others. We're now scheduling about 120 commercial loads per week, or triple the commercial volume we were executing a year ago. For the rest of the year, we're focusing on finalizing contractual commitments through 2025 and increasing load capacity strategically to support operational readiness and customer expansion. Cumulatively to date, through the end of April, we have autonomously delivered, under the supervision of vehicle operators, 5,450 loads, driving approximately 1.5 million commercial miles with nearly 100% on-time performance for our pilot customers. Moving to the regulatory environment, under existing law and regulation, autonomous vehicles can be deployed in the vast majority of states, including our Texas launch market. Texas does not currently require additional regulatory steps and is an ideal state for launch of the Aurora driver given its high freight volumes and advanced transportation infrastructure. We're also continuing to see steady advancement of autonomous vehicle legislation across the United States. Since our fourth quarter business review, South Dakota and Kentucky have furthered this momentum by enacting autonomous vehicle legislation into law. Earning public trust is also vital in a safety critical industry and requires a locally focused effort centered on transparent engagement. Earlier today, we hosted our first community event at Palmer High School in Texas, where we shared the benefits of our technology and the economic opportunities Aurora is bringing to the region. We look forward to engaging with additional communities along the I-45 corridor in preparation for our commercial launch. Looking further ahead, we believe Aurora is the only company positioned to commercialize autonomous trucking at scale. We have established OEM and Tier 1 partnerships with Volvo Trucks, PACCAR, and Continental that are unmatched in the industry and support a freight ecosystem with aligned incentives to drive growth for years to come. As we've said before, we believe deep integration with OEMs and suppliers is absolutely critical to bringing a safe and commercially viable driverless trucking product to market at scale. Our goal is to operate at significant scale and build a valuable business for the long term. That's why we've partnered with Volvo Trucks and PACCAR. We're working together to design autonomy-enabled trucks with the redundant components necessary for safe driverless operations, and importantly, with plans to manufacture these platforms at scale. We also have a long-term exclusive partnership with Continental to jointly develop, manufacture, and service future generations of the Aurora driver hardware. This partnership gives us a path to deploy autonomous trucks at scale with a cost structure in place intended to support our long-term profitability. We also recently engaged Fabrinet for the manufacturing assembly of our next generation Aurora driver hardware kit, which we plan to introduce in 2025 to support our initial scaling ambitions before continental start of production. This kit brings exciting performance gains, and importantly, we expect it to drive a step function reduction in our hardware costs, which is a critical element on our path to scale and self-funding. I couldn't be prouder of the tremendous progress we're making while maintaining safety as our North Star. We will continue to work responsibly and purposefully to ready our technology for commercial launch and longer-term deployment at scale. Our path has never been clearer, And we are convinced that Aurora is going to create immense value for society, our partners, our customers, and of course our shareholders. With that, I'll now pass it over to Dave who will review our financial results. Thank you, Chris.