Kodiak AI, Inc.

Thank you for standing by and welcome to Kodiak's third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Lauren Harper, Kodiak's chief of staff. Please go ahead.

Thank you and welcome everyone to Kodiak's third quarter 2025 earnings call. On the call today are Don Burnett, founder and chief executive officer of Kodiak, and Surajit Datta, chief financial officer of Kodiak. Our press release and an earnings presentation were issued earlier today and are posted on the investor relations section of our website. This call is being broadcast live via a webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, Kodiak will be making forward-looking statements within the meaning of the federal securities laws about financial performance and future events, including our guidance for fiscal fourth quarter and full fiscal year 2025, as well as our long-term goals. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statement made during this call that is not a statement of historical facts should be deemed to be a forward-looking statement. All forward-looking statements, including statements regarding our guidance for fiscal fourth quarter and full fiscal year 2025, our estimated total addressable markets, our operational and product roadmap, our relationships with partners and suppliers, our ability to produce and deploy the Kodiak driver at scale, including the timing of launching driverless trucks for long-haul highway operations, our expansion plans and opportunities, and our expectations regarding future business and financial performance, including future cash flows and our path to profitability, are based upon management's current estimates and various assumptions. These statements involve material risk and uncertainties, that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risk and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. We disclaim any obligation, except as required by law, to update or revise any financial or operational projections or our other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Further, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we may also refer to certain non-GAAP financial measures. For more detailed information on our non-GAAP financial disclosures, including reconciliations to most comparable GAAP measures, please refer to our earnings release, which can be found on our Investor Relations website. Our discussion today also includes references to forward-looking free cash flow. Such forward-looking financial measure is provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. I will now turn the call over to Don. Please go ahead.

Thanks, Lauren, and welcome to our first earnings call as a public company. Today, we're excited to share our third quarter results. But first, I'd like to introduce you to Kodiak and talk about our industry-leading technology, our strategy, and why we believe we are positioned to capture the tremendous opportunity in the global trucking market. Kodiak delivers AI-powered driving technology that tackles some of the world's toughest driving jobs across vehicles and environments. We are a leading provider of autonomous trucking technology with 10 driverless trucks in customer operation with no human in the cab. These 10 trucks are the first to be delivered as we fulfill the world's largest known driverless trucking contract. a binding order to deploy our technology in 100 customer-owned trucks. Our differentiated technology allows us to seamlessly operate across a variety of environments, giving us the flexibility we need to focus on three large verticals, long-haul trucking, industrial trucking, and defense. Across these verticals, we work with industry-leading customers such as J.B. Hunt, Werner, CR England, Martin Brouwer, Atlas Energy Solutions, and the U.S. Army. Kodiak's core business is based on a driver-as-a-service, or DAS, model, which is designed to replicate how customers pay their drivers today, either by the mile or by the vehicle. Our customers own and operate their own driverless trucks and pay us a recurring fee to utilize the Kodiak driver in their fleets. This DAS model allows us to generate recurring revenue while keeping our balance sheet relatively asset-light. We initially launched this model with Atlas Energy Solutions, a leading logistics provider in the Permian Basin that is actively working to automate its supply chain. We intend to grow DAS revenue both as Atlas grows its fleet of Kodiak-powered trucks and as we expand driverless operations with new customers. I believe it is paramount to execute across three strategic pillars to launch a driverless business, technology, safety case, and product. While technology is the most visible Each of these pillars is critical to successfully launching and scaling autonomous trucks. Let me address each of these, starting with technology. The Kodiak Driver, our autonomous system, combines advanced AI-powered software with modular vehicle agnostic hardware. We designed the Kodiak Driver to operate in challenging driving environments while integrating seamlessly into our customers' fleets. This single integrated software platform is designed for deployment across three verticals. long-haul trucking, industrial trucking, and defense. It operates day and night in a wide range of weather conditions, including rain and severe dust storms, and in some of the most complex scenarios in trucking. Our core technology allows the Kodiak driver to operate without high-definition maps commonly used in the AV industry. We believe this approach makes the Kodiak driver more adaptable to real-time changes on the road than traditional AVs that heavily rely on pre-mapped terrain. It also makes the Kodiak driver better able to navigate unstructured off-road environments, uniquely enabling us to pursue opportunities in the industrial and defense verticals that would otherwise be challenging if we required high-definition maps. We integrate our software into our modular autonomy hardware kit that is adaptable to a wide range of vehicle types. We've already integrated the Kodiak hardware kit into Class A trucks, Ford F-150s, and even treaded military vehicles. Our hardware kit includes Kodiak's proprietary sensor pods, which are self-contained modules that contain third-party cameras, radars, and lidars, and are designed to be quick and easy to swap in the field with minimal training. Our modular approach allows us to quickly install the Kodiak driver's hardware kit into our customers' trucks, reducing the cost of deployment. Years ago, we decided that upfitting was the right go-to-market strategy to address a significant industry-wide challenge. that today, none of the truck OEMs offer a driverless-ready platform. To implement this strategy, we partnered with Michigan-based Roush Industries, a leading automotive product development supplier. Roush is an industry leader in small to medium-volume automotive manufacturing. Their deep experience building high-quality vehicles at scale brings efficiency and quality to our manufacturing that would be very difficult to match with in-house production. Now to our second pillar, safety. Safety is our core value at Kodiak. It is critical to building trust with customers, regulators, and the general public. The most important part of the process is building a safety case, which is a comprehensive, evidence-backed argument for why the Kodiak driver is safe to deploy. Kodiak is one of only a handful of AV companies known to have completed a driverless safety case. Developing a safety case is a massive cross-functional effort, spanning software, systems engineering, hardware, functional safety, manufacturing, operations, and even legal and policy. To help track our progress on launching the Kodiak driver on long-haul routes, today we are unveiling our Autonomous Readiness Measure, or ARM, which measures the percentage of claims and evidence in Kodiak's safety case for driverless operations that are materially complete. Having completed our industrial safety case, our industrial arm is necessarily at 100%. Today, I am incredibly proud to report that our long-haul arm currently stands at 78%, and we expect to make steady progress in the quarters ahead as we prepare for long-haul driverless operations in the second half of 2026. Lastly, I'd like to turn to our third pillar, the product. We take a unique, customer-centric approach that has allowed us to implement our technology and build a valuable product our customers can utilize efficiently. The operational experience we have gained over seven years and 10,000 loads has enabled us to understand our customers' needs and build our product accordingly. For example, we developed our quick swap sensor pods after hearing from our customers about the importance of our hardware fitting into existing maintenance processes. Additionally, our driverless deployment with Atlas and the Permian has helped us pressure test core product features, including launching, driving, landing, and maintaining driverless vehicles. We see this generating a flywheel effect, allowing us to leverage these features in our learnings across long-haul and defense deployments. As we have already discussed, the Kodiak driver operates on highways, local streets, dirt roads, and off-road environments. This generalization enables seamless operations and shared learnings across industries. I'd like to address our unique experience and opportunity in each of these verticals. Kodiak started its journey with long-haul trucking. And this continues to be our primary focus. Given the trucking industry's $4 trillion global TAM, we see tremendous opportunity in this vertical. Today, we get paid to deliver freight from our Dallas operations hub to Houston, Oklahoma City, and Atlanta using our own trucking fleet with a safety driver. Our highly respected customers include J.B. Hunt, Werner, CR England, and Martin Brower. We also see a robust pipeline of customers interested in piloting and eventually deploying the Kodiak driver in their fleets. We continue to make meaningful progress towards our goal of launching driverless operations in the long-haul vertical in the second half of next year and expect to subsequently transition our long-haul customers to our DAS business model. The industrial trucking vertical, where we deployed our first driverless trucks, includes oil and gas, mineral transportation, and logging transportation. The $68 billion global industrial market is an ideal use case for our technology. Operators in remote industrial locations face even greater difficulties recruiting and retaining drivers than long-haul carriers, meaning that autonomy can offer significant cost savings and operational efficiencies. As I mentioned previously, the Kodiak driver's technology is well-designed to work in unstructured industrial environments. where we see many challenging scenarios that are less common in long-haul trucking. These include oncoming traffic, narrow, uneven roads, frequent pedestrians, and the occasional cow. We believe that this versatility sets the Kodiak driver's AV capabilities ahead of the competitions. In addition to being a significant revenue opportunity, our industrial trucking deployment in the Permian helps us mature the Kodiak driver across all three of our strategic pillars. The Permian is a literal and figurative sandbox for honing our technology, our safety case, and product, enabling a flywheel that is already accelerating our ability to implement our technology across verticals. The unstructured driving environment of the Permian produces more unusual edge cases compared to structured highway driving, progressing the technology through rapid learning and challenging the system. We've also gained significant product experience integrating into our customers' transportation management systems, and developed processes for managing vehicle maintenance with operations personnel on the ground. We've been delivering loads with no human in the vehicle in some of the toughest weather conditions in trucking, including dust storms. This experience will enable us to provide greater value to our long-haul customers. Lastly, we're focused on adapting our virtual driver for defense purposes. The current administration has adopted a supportive posture for autonomous technology and defense use cases mirror long-haul and industrial trucking with both on-road and off-road operations. We have proven experience in defense exemplified by our $30 million contract with the U.S. Army, which we completed work on earlier in 2025. The need for autonomy in defense applications is obvious, and ultimately we believe autonomy will be integrated into the entire Pentagon vehicle fleet. We believe Congress and the military support investments in autonomy, though the government shutdown has caused some short-term uncertainty around contracting timing. We will continue to pursue opportunities in this space going into 2026. Now, turning to our Q3 results. We are pleased with our strong performance in Q3. During the third quarter, we deployed the Kodiak driver in an additional five trucks owned by our customer, Atlas Energy Solutions. we are now generating recurring gas revenue on a total of 10 driverless trucks equipped with a Kodiak driver, a 100% increase over Q2. As we move into 2026, we expect to accelerate our deployment as we seek to fulfill Atlas's initial order of 100 Kodiak-equipped trucks. We have also completed over 5,200 cumulative hours of paid driverless operations, which represents a 166% increase from the end of Q2. We view this as a key metric to measure the progress of an autonomous company, regardless of the specific use case. Additionally, we have driven over 3 million autonomous miles and delivered over 10,000 loads for our customers, a 21% increase in cumulative deliveries over Q2. I'd like to address our recent progress by pillar. First, the technology pillar. At the beginning of Q4, we issued a new software release that among other improvements includes new features that allow us to reduce the need for remote assistance by 53%. This reduction in turn improves our ability to scale our solution. Another feature included in this new software release is a new component of our perception system that leverages generative AI-based vision language models to identify and address novel, complex edge case scenarios that are rare in the real world. We believe combining our proprietary multimodal AI perception model, GigaFusionNet, with these new high-level reasoning capabilities sets a new standard for physical AI. Using this new technology, the Kodiak driver's AI can now identify scenarios like flooded roads and car fires, rare scenarios that can be a challenge for more traditional perception techniques. This new feature allows us to better handle the long tail of complex edge cases and gives us further confidence as we move down the path towards our long-haul driverless deployment. In Q3, we announced that we have integrated NXP's ISO 26262 compliant processors and interfaces into the architecture that powers the Kodiak driver. The addition of NXP's automotive solutions have improved the Kodiak driver's reliability and robustness while helping us to improve vehicle uptime. we announced an expanded partnership with global Tier 1 automotive supplier ZF. Through this expanded partnership, we purchased steering systems with redundant components for 100 Kodiak-equipped trucks. These redundant steering components are critical to ensuring our ability to safely scale the Kodiak driver. On the safety side, we were proud to announce the results of an evaluation by Nauto, a leader in AI-powered fleet safety technology. Kodiak received the highest VERA safety score among over 1,000 fleets in Naoto's network. In fact, the Kodiak driver received a perfect score of 100 in three out of four Naoto VERA score categories and a 95 in the fourth. We believe independent safety evaluations like Naoto's help to validate what we already know. The Kodiak driver is already among the safest drivers on American highways. Lastly, I'd like to address the product pillar. As we've discussed earlier, we continue to execute on the upfitting strategy we first articulated years ago. In Q3, Roush launched a dedicated manufacturing line to upfit trucks with Kodiak's hardware kit. With Roush-built trucks already rolling off the line, we believe we have further solidified a leading position in building driverless trucks at scale. We also continue to strengthen our OEM relationships over the course of the quarter and will continue to prioritize building those relationships. Additionally, we added the ability to haul two trailers at the same time. Pulling doubles, as it's called in trucking, is difficult for even highly skilled human drivers. In addition to extra length, the second trailer complicates every turn. This makes maneuvering extremely difficult. Pulling doubles is even more difficult in the Permian, which features rugged landscapes with narrow, windy roads, and we achieved this significant technical milestone ahead of schedule. We also saw significant regulatory progress in Q3 and the early days of Q4. I'd like to highlight one item in particular. In early October, the US Department of Transportation issued a waiver that allows AV truck operators to use flashing warning beacons as a replacement for reflective warning triangles. We integrated these warning beacons into our very first driverless ready truck back in 2024. We are thankful for the administration's support and we want to thank them for their leadership on this issue. Finally, over the past few months, we made tremendous progress as we prepared Kodiak to operate as a public company. We are incredibly excited for this next chapter and look forward to sharing more updates on our next earnings call. I am proud of what we have accomplished thus far and believe we are well positioned for growth. In summary, Q3 showed Kodiak executing across our three pillars, technology, safety, and product. positioning us to deliver meaningful growth and durable value for customers, partners, and shareholders. We are converting our progress into real commercial traction, including delivering additional Kodiak driver-powered trucks under the world's largest known driverless truck deployment. We head into 2026 with strong momentum across the long-haul industrial and defense verticals and are continuing to move toward the launch of driverless long-haul operations while scaling our industrial business. We believe these wins will allow us to grow as we remain capital efficient, providing a path to profitability and positive free cash flow in the future. I'll conclude my remarks by extending a huge thanks to all of our Kodiakers. The progress we have made is a reflection of your hard work, and I look forward to accomplishing even more with you in the future. Sirajit, over to you.