Greetings. Welcome to the Aurora First Quarter 2023 Business Review Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stacy Feit, Vice President, Investor Relations. You may begin.

Thank you, Shamali. Good afternoon, everyone, and welcome to our first 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 8-K filed today with the SEC. On the call with me today are Chris Urmson, Co-Founder and CEO; and Richard Tame, CFO. Chris will provide an update on the progress we’ve made across the key pillars of our business, and Richard 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 this call we will be making forward-looking statements. These include 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 subjects – 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 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. 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 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 8-K filed today with the SEC and may also be found on our Investor Relations website. With that, I will now turn the call over to Chris.

Thanks, Stacy. Our strong first quarter results are a testament to the foundational technology investments and strategic decisions we’ve made since our founding. The Aurora Driver became feature complete a critical milestone that is the culmination of over six years of incredible work across our entire organization. At this point, the Aurora Driver has all of the capabilities we believe are necessary for commercial operations on our Dallas to Houston launch lane. With the introduction of the final driving capabilities, we’ve removed all policy interventions for this lane. This milestone represents an inflection point on our path to commercialization of Aurora Horizon, our autonomous trucking service. This signals the end of a development phase in which we introduced fundamentally new driving capabilities and the beginning of the phase in which our primary focus is refinement and validation to close the safety case for launch. This progress has moved us significantly closer to fully autonomous commercial operations. As a result, we further detailed our roadmap outlining the work that remains between now and our planned commercial launch. The roadmap, which you can view on Page 3 of the slide deck as well as in the shareholder letter, covers the key components of our business that we expect to be necessary to bring Aurora Horizon to market. In preparation for next year’s plan commercial launch, we are continuing to build a powerful ecosystem of the world’s leading trucking and logistic companies to support the growth of our business for years to come. We’ve been developing a supplier strategy to support Aurora Driver hardware at very large scale, a key lever to unlocking highly profitable unit economics. Last week, we entered a first of its kind long-term partnership with Continental, one of the world’s leading technology manufacturers and Tier 1 automotive suppliers. This…

Thank you, Chris. With the achievement of the feature complete milestone during the first quarter of 2023 and our intensive focus on closing the Aurora Driver Safety Case this year, we continue to balance execution against our roadmap to launch Aurora Horizon on our planned timeline with fiscal prudence. First quarter 2023 operating expenses including stock based compensation totaled $208 million. Excluding stock-based compensation of $39 million, operating expenses totaled $169 million. Within operating expenses, R&D expenses excluding $34 million in stock-based compensation, totaled $143 million. SG&A expenses excluding $5 million in stock-based compensation were $26 million. With the Aurora Driver in the final phase of refinement and validation and all revenue under the collaboration framework agreement with Toyota previously recognized, we did not record any revenue during the first quarter of 2023. We used approximately $136 million in operating cash during the first quarter of 2023, which was in line year-over-year. During the first quarter of 2022, we received the cash inflow of $48 million under the collaboration project plan with Toyota, which was substantially offset by payments associated with the 2021 annual incentive compensation program. The first quarter of 2023 was not impacted by these cash activities and the 2022 incentive compensation program payments were made subsequent to March 31, 2023. Capital expenditures totaled $2 million in the first quarter of 2023. We ended the first quarter with a very strong balance sheet, including $966 million in cash and short-term investments. We remained focused on constraining expenditures were possible while continuing to invest in the critical work on our path to commercialization. In turn, we continue to expect our liquidity to fund Aurora through mid-2024. With that, we’ll now open the call to Q&A.

And at this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tom White with D.A. Davidson. Please proceed with your question.

Hey, this is Wyatt on for Tom. Thanks for taking our questions. Congrats on reaching the future complete milestone last month. I’ve got a question on the broader macro backdrop and interest rate environment. I’m curious as to your thoughts about whether the spike in interest rates has impacted the development of autonomous driving technologies at a high level industry wide in areas like investments by competitors and maybe hiring or maybe in terms of appetite from partners, carriers and shippers to continue invest – to continue to invest heavily in the space this year. Maybe I guess put more simply, how have these trends impacted Aurora’s business so far?

Yes. I think that’s obviously a great question. So internally, we continue to be financially prudent. We’re putting continued effort in managing costs and ensuring that we’re thoughtful in that, while not slowing down the progress towards achieving our critical milestones and getting the product on the road. I think the – as many have said, difficult times allow you to see who’s – I guess, who’s tough and who knows what they’re doing and the progress that’s being made there, and I think we’re seeing that across the industry where we feel like our position of strength is just getting bigger, right, we’re able to continue to execute. We have the war chest we need to do so and we see a number of our competitors stumbling. The customer summit we had last week was a great event. We’re able to bring together both folks from PACCAR and from a number of our customers and seeing their enthusiasm for what this product will mean to their business. Their engagement was, frankly, energizing. And so we had a wonderful day with those folks and we’re able to get them out in the trucks and get them to experience the technology firsthand, and I think they left with a sense of just how real this is and how soon we’re going to be able to deliver on what we’re talking about here.

Great. And then with regards to the debut of your next generation terminal in South Dallas, could you maybe talk a bit about how many of these terminals you see being built over the next, say three to five years? How much it costs to build one and to what extent that was kind of baked into the financial forecast that you have shared, over the past couple of years and during the de-SPAC process?

Sure. So we – right now we operate four terminals and we’re incrementally developing them and using them really as a learning property. Our intent is to minimize the number of terminals over time. Part of our thesis is that the right way to deliver this business is to work through partnerships and work to be an asset light business. And so we’ll see what that turns into in terms of terminal count. We’re not sharing specifics of that today. We haven’t provided financial guidance, but our – in our internal budgeting for this, and as we talk about our run rate through mid-2024, the cost associated with the flowing the terminals that we have planned is included in that. And Richard, if you’d add more to it.

Yes. We wouldn’t be reaffirming any of the guidance from what we’ve said in the past at this point, but our financial plans assume some build out of a terminal network, and I think the thing that we have done, which is relevant to the question over the past year, is really sort of understood what we need from a terminal versus what we might have liked from a terminal. So every decision we make on these terminals is to make sure that they do what we need them to do and they don’t have the sort of the bells and whistles that you could put in there. They’re kind of core to how we want to run the business. So we – they’re – so we have –they’re in the – there’s not really – they were in the plan and we’re spending less money than we thought we had them in the plan for earlier.

Okay, great. And then just one more for me, Richard, could you maybe share your latest views on recent cash burn trends, how we should think about the next 12 to 18 months and your latest thinking as to the capital you need to really ramp the commercial launch of your product?

Yes, sure. So I think as we mentioned in the prepared comments and just earlier, we’re very focused on fiscal – being fiscally prudent. We think that that helps us now and we think that it’ll help us into the future as we build a business. We’re very pleased to have the financial resources that we have on the balance sheet. We ended the quarter with $966 million, which we still feel gets us through mid-2024. As you look at the sort of the financial burn projections, we continue to be relatively stable and that is something that we’ve said in the past, which is investments that we made earlier and kind of grow into a scale that we think we need to be at to execute against our roadmap that’s been made. So we’re able to kind of keep our cash burn relatively flat. And you see that, again, we’re not going to give financial guidance as to what we need into the future but we’ve got enough money to get through mid-2024, continue to execute against our roadmap, and that we believe that that executing against a roadmap against the backdrop of what’s happening across the rest of the industry and some of the competitors not doing so well, maybe fallen away, sets us up really nicely to be able to raise the money that we need to continue to commercialize and beyond on an opportunistic basis.

Understood. Thank you very much.

[Operator Instructions] Our next question comes from the line of David Vernon with Bernstein. Please proceed with your question.

Hey guys, good afternoon. Just a couple questions for you on the Continental partnership. I’m just trying to get my head around this. So are they going to be like subcontractors in terms of building up the manufacturing capacity you need to deliver hardware kits? Is that kind of the right way to think about it as almost like a contract manufacturing set up?

Yes. I think of it as a little deeper than that. So the model that we’re engaged with them on is a hardware as a service model. So as you know, our intent is to operate our business is drivers as a service. Someone will buy a truck from one of our OEM partners, they’ll buy Peterbilt 579, they’ll get it with your Aurora Driver subscription on it. They’ll pay us based on the utilization of that, that driver. That driver includes the hardware cost, the cost of operating the service and our insurance, et cetera, and obviously our profit out of that. What we’ve found – what we’ve been able to put together with Continental is a first of its kind deal where that hardware as a service layer is in there where we will pay Continental a revenue stream per mile driven that’ll come out of that driver’s service fee. And that’s how they will recoup their NRE, their investment in developing the manufacturing line, the hardware costs themselves, service warranty and the like. And so we’ll be working with them to specify the requirements for the system. They’ll be elements of hardware like the FirstLight Lidar, where we will work with them to industrialize it and be able to produce it at scale. And then they will ship kits to our OEM partners who will install them line side and then they’ll – again the money will come back to them from us through our revenue stream.

Okay. And does that change the way you were thinking about sort of initially selling the kit, was it always going to be contemplated as the hardware would be a component of the per mile fee, or was there also going to be a you can buy the kit kind of thing? So I’m just trying to think about how this affects [indiscernible] customer.

No, this is 100% aligned with the vision, right? That this is our model was always going to be, we want to be a asset light as a service business. We think that is the way that we can best support our customers and partners and the way we best align incentives, right? We’re not stepping on anyone’s toes and they’re not stepping on ours. And we get to focus on what we do best. And so what’s really exciting about this deal is, Continental is investing already, right? Real people, real money to develop this kit so that it’ll be able to come to the fleet on time. In the interim, of course, we have our hardware that’s on vehicles today and we’ll be developing and are already developing the interim hardware kit that will bridge from where we are to there. And each one of these steps in hardware kit will reduce the – our cost of the driver.

Okay. And then maybe one last one for me is, when you think about separating out your initial allocation of capacity, is there a way you can share with us the how much the total is that we’re being allocated around the expected additional launch date?

No, I don’t think, what we’ve shared I think previously and we as consistent is that we have more demand indication than we have supply for through 2025. And we’re at this point not providing further guidance in that.

Okay. I figured I’d give it a shot. Thank for your time.

Yes. Thank you for the great questions.

And we have reached the end of the question-and-answer session. This also concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.