Greetings. And welcome to the Aurora Innovation Fourth 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. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacy Feit, Vice President, Investor Relations. Thank you. You may begin.

Thanks, Diego. Good afternoon, everyone. And welcome to our fourth 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 David Maday, CFO. Chris will provide an update on the projects we have made across the key pillars of our business and David will recap our fourth quarter and full year financial results. We’ll 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’ll 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, 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 runway and our ability to complete any opportunistic fundraising opportunities 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 describing our risk factors included in our quarterly form report on Form 10-Q for the quarter ended September 30, 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 annual report on Form 10-K for the year ended December 31, 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 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’ll now turn the call over to Chris.

Thank you, Stacy. 2023 was a pivotal year for Aurora as we put into place many of the final pieces to support our planned Commercial Launch and operations at scale. We continue to lead in autonomous trucking by executing a focused strategy centered on technological, commercial and financial progress. From a technology perspective, the Aurora Driver became feature complete at the end of the first quarter of 2023. Since then, we’ve meaningfully advanced the Aurora Driver’s autonomy performance. Commercially, we established the first commercial-ready autonomous trucking lane in the U.S. while deepening and expanding our customer base. We now consistently schedule over 100 loads per week and are in the process of contracting our launch and 2025 capacity. We’ve made great progress with our OEM partners, Volvo Trucks and PACCAR, on our co-developed autonomy-enabled truck platforms with delivery of late-stage prototypes into our fleet. And with the addition of our industry-first partnership with Continental, we’ve built an autonomous trucking partnership ecosystem that is unmatched by any of our competitors. We are confident that this holistic partnership approach is the right one for the future of self-driving trucking as a business and believe it positions Aurora as the only company capable of driverless commercial operations at scale. We accomplished all of this while maintaining financial discipline, spending well below our quarterly target and we strengthened our liquidity position with a meaningful capital raise last summer. You can’t bring a commercially viable driverless trucking product to market without a deep integration with OEMs and suppliers. Our work with partners supports our path to a driverless launch on an OEM and supplier-approved platform, and also sets the stage for long-term deployment at true commercial scale. In the fourth quarter, we completed the bring-up of the first hardware-complete Volvo Trucks capable of fully autonomous…

Thank you, Chris. Let’s discuss our financial results. We have provided a summary on page 11 of the slide deck for reference. During the fourth quarter of 2023, we continued to demonstrate strong fiscal discipline while executing towards Commercial Launch. Fourth quarter 2023 operating expenses, including stock-based compensation, totaled $198 million. Excluding stock-based compensation, operating expenses were $161 million. Within operating expenses, our R&D expenses, excluding stock-based compensation, totaled $138 million. This amount reflects $640,000 in pilot revenue, which more than doubled year-over-year and which we record as a contra R&D expense. SG&A expenses, excluding stock-based compensation, were $23 million. During the full year of 2023, we used approximately $598 million in operating cash and capital expenditures totaled $15 million. During the fourth quarter, we used approximately $133 million in operating cash. Capital expenditures totaled $4 million. This fourth quarter cash spend was significantly below our target of $175 million to $185 million per quarter on average, reflecting one less payroll cycle in the quarter and our continued commitment to financial discipline. To that end, we need to continuously adopt to meet our evolving needs of our business. As we move towards Commercial Launch, we recently reviewed the entire organization to ensure we are working as effectively as possible and with the velocity required to achieve our ambitious goals. Through this process, a limited number of roles were eliminated, which impacted 3% of our total workforce. While these changes are difficult, they are necessary steps that set Aurora up to achieve our mission while operating efficiently and effectively as a team. In 2024, we continue to expect quarterly cash use of $175 million to $185 million on average. This reflects savings from the workforce alignment action, as well as approximately $12 million in non-personnel cost savings, offset by an expected increase in capital expenditures relative to 2023 as we prepare for Commercial Launch. We ended 2023 with a very strong balance sheet, including over $1.3 billion in cash and short-term and long-term investments. We continue to expect this liquidity to support our planned Commercial Launch and fund our operations into the second half of 2025. With that, we’ll now open the call to Q&A.

Thank you. [Operator Instructions] Our first question comes from George Gianarikas with Canaccord Genuity. Please state your question.

Hey, everyone. Thank you for taking my questions. I’d like to dig into FirstLight, some merchant suppliers have made some recent inroads at some of your competitors. Do you see a point in the future where it’s possible that the advantages you have in Lidar are overwhelmed by progress in the merchant market or is that still a ways off?

Can you say the -- I’m not familiar with the term merchant market?

In other words, merchant suppliers of Lidar equipment, there are some companies...

Okay. Sorry. Lidar companies. Yeah. So we feel very strongly about the advantage we have with FirstLight. This is technology that the team, when we acquired them a few years back, had already been working on it for between 10 years and 15 years. We feel like we have fairly strong intellectual property protections around that technology, and by having that team in-house, we’ve been able to share very tightly between what the needs are from our perception system with what we can deliver through the hardware solution. And we see that that tight integration allows us to turn the innovation crank more quickly than folks on the outside would be able to. So, would it ever is a very long time, but in a practical sense, no. We think this is a material strategic advantage for us.

And maybe just as a follow-up, there have been some very recent -- I don’t know if they’re failings quite yet, but there’s a lot of tumult on the passenger side of the autonomous marketplace. Does that create a potential opening for Aurora Connect? Have you had any incoming inquiries on partnering? Are you continuing to test it? I mean, can you remind us again of the synergies between…

Sure.

… Aurora Connect and the trucking side? Thank you.

Yeah. Absolutely. We still very strongly believe the right first application for automated vehicles is in trucking. We see that because of the size of the markets, the development of the market. We see that because of the unit economics and the ability for that to support early-stage products where the costs will be higher. We see that because of the self-similarity of the freeway network and thus the ability to scale more rapidly. And we see it partly because the customers will be really driven by the dollars and cents, the TCO and delivery, the value we can create for them in a much less emotional way than what’s associated with moving people through the world. That all said, we do strongly believe in and are committed to in the long-term delivering a product into the personal mobility space. The fact that we’ve architected the Aurora Driver to work both for heavy-duty trucks and light vehicles and the fact that today we are currently operating our fleet of Toyota Sienna’s with the same hardware and software that we operate our trucks really gives credence to this expectation design that we’ve made around transferability and common core of hardware and software. And so when it makes economic sense and there’s a strong business case, then we look forward to introducing the technology into that space and working with the great partners we have there in Toyota and Uber.

Thank you.

Pleasure. Thanks for great questions, George.

Thank you. [Operator Instructions] Our next question comes from David Vernon with Bernstein. Please state your question.

Hi, everyone. This is Justine Laufer speaking on behalf of David Vernon. Thanks for taking my question. So, first, I’d just like to ask about the 4Q cash spend of $133 million. So it was well below that target of $175 million to $195 million, which I know you attributed to one less payroll cycle, also to financial discipline. So I’m wondering how much of that is actually coming from the payroll cycle impact and how much is actually attributed to financial discipline?

So I would say, and thanks for the question, I think, it’s kind of an equal mix of what we did. I mean, we found and identified a lot of efficiencies that we started putting in place probably about six months ago, where we were really active in looking at the overall organization and they all bear fruit at different times in terms of how they spend. So we had substantial savings that, if you look at it on an annualized basis, will continue to pull-forward. So we were able to bring in $10 million to $15 million of just pure financial discipline savings that we’re able to carry forward on a regular basis. There’s some things that we did in terms of spending for like reducing future expenses, like at D&O, we -- our expenses on D&O cut in half and so we had a -- pay all that up front. So that was in the -- it was in the Q3 number and then it flows through and flows out of that. So you’ll start to see some of those benefits as well. I think we need to create enough of these positive momentums as we think about moving forward for next year, because our capital expenses will increase as we prepare for Commercial Launch. And so we’re trying to develop enough of these in there so that we are committed to our plan that we’ve mentioned before, which is how much capital we need to achieve or how much additional capital we’ll need before we get to free cash flow positive. So we’re still committed to that plan and what we’ve communicated with investors in the past.

Great. Thank you. And one other question related to Continental. So I’m just wondering how the progress on development of a fallback system with Continental is going, kind of like what does the progress look like? What’s the timeline for completing that development?

Yeah. So we can’t get into too much details, obviously, given the prior nature of the relationship, but it’s moving along. We internally have a series of milestone gates that we move through with them and the team is making great progress towards them. We are still working towards that 2027 launch of the hardware kits and we’re excited about the progress we’re making.

Great. Thank you.

Yeah.

Yeah. I think the other thing to point out in here is that we have -- again, it’s a new fallback system. We have an existing fallback system and that’s going to be the default if this one ends up -- if we have any potential issues and things like that where it’s a little bit delayed. So it’s not going to prohibit our overall launch, but this is where we intend to go and the progress thus far is going very well. But we’re not going to be bound by that in terms of introducing our new hardware solutions.

We have a fallback for a fallback system, so to speak.

Thank you. [Operator Instructions] Our next question comes from Mark Delaney with Goldman Sachs. Please state your question.

Yes. Good afternoon. Thanks very much for taking my questions. I guess, first, now that you have some contracts in place, can you share any details or context on what margins and cash flow may do compared to the current baseline as the company starts its Commercial Launch at the end of 2024 and ramps in 2025?

Yeah. Hey, Mark. How are you doing? And I think, right now, obviously, these are all commitments that are confidential, so I can’t really share any of the details on them. I can tell you that we are -- we’ve been fairly consistent about pricing this product similar to what the market has overall in terms of like a price per mile and it varies by the lanes that we operate in, and so we have a consistent framework with that for our contracts that we’re signing today. The other thing, in terms of like a margin basis, like, we’re going to still, as we’ve said before, we’re starting out with up to a fleet of 20 vehicles, so it’s going to be pretty modest right when we first launch and so you’re not going to see a substantial amount of change in terms of the revenue. We’re going to provide a little bit more context at Analyst Day, our Investor Analyst Day, coming up in March in terms of how to think about this on a forward looking basis.

Well, I’ll stay tuned for more details on that one in March and thanks for the color you’re able to share. My other question was around closing the software Safety Case. I think the company had a target to complete the software Safety Case and do that around the end of 1Q 2024. I apologize if I missed it, but are you able to share an update on when you plan to complete that? Thanks.

Yeah. No. Great question. So we’ve been making really strong progress in that and it’s reflected where, if you look at, we’re about 93% closed of the Safety Case. When we set the roadmap for the company about 18 months ago, we laid out three major milestones to get the feature complete, where all the parts were in place, to get to Aurora Driver Ready, where we had closed the -- we convinced ourselves that the parts that Aurora controlled were safe and then get to Commercial Launch, where we are then taking the Safety Case for our system, integrating with the vehicle and getting it on the road serving customers. As we’ve made the progress through that, we expected to get to about 95%. At the end of the year, we ended up at about 93% at the end of January or mid-January. As we look forward for this year, we’ve come to the conclusion that the right step forward for us is, instead of sequencing these sequentially, is to be working on them in parallel. And we talked last time about how we began moving some of our resources off of the closing the Safety Case and working on the next generation work and expanding the performance of the system as it moves past Safety Case closed. You can think of this as the continuous improvement, so that we’re -- at this point, we’re really focused on how do we get the quality and performance of the product to a point where it’s going to deliver for our customers in the ways that they need it to.

Understood. Thank you.

Our next question comes from Andres Sheppard with Cantor Fitzgerald. Please state your question.

Hi. Good afternoon and thanks for taking our question, and congrats on the quarter and all of the recent developments. I guess, our first question is, how should we think about future routes following the Sunbelt, trying to get a sense, maybe at a high level, medium to longer term? What are some target routes that would make sense in addition to what you have currently targeting? Thank you.

I’m happy to start and then we’ll hand over to Dave to add a little more color. So as we think about it, it’s very much going to be driven by demand. Once we kind of unlock the initial routes, as we’ve talked about, we see small incremental work for whatever the new feature is that’s on lanes that we go to after that. We’ve talked about between Fort Worth and El Paso, the big difference is we have to be able to drive down a hill and we have to be able to deal with a customer border patrol station and we do both those things today and we need to expand, we’ll need to validate that work. As we move to other lanes, it’ll be, okay, there’s a -- whatever the new thing is, if there is anything that we have to add. For us, we see the, as you mentioned, the opening expansion will become along the Sunbelt and then it’s going to be really just tracing the corridors of demand and economic opportunity for us from there as we move up across the Midwest and up both coasts. Dave, I don’t know if you had more.

Yeah. I think that’s right. Like, we look at the commercial, the regulatory, and the technology, and we look at them together. Our customers are a really good guide on their priority for the lane expansion, but I think Chris hit it well. We’ll go -- and we’ll provide a little bit more context on this also at our Investor Analyst Day, but, I mean, you think about it, it’s Sunbelt, then it’s starting to head north and continuing to head north and we’ll prioritize the higher demand lanes for our particular customers. I think it’s a balance between both operating between our terminals, but also starting to unlock endpoints for specific customers and we’re going to let the customer help drive the demand because of the self-similarity of the highway systems. We can pick one or another, and it’s roughly the same technology-wise, as long as there’s no regulatory hurdles, which in our roadmap there aren’t any today. We’ll really let demand be the driver.

Got it. No. That’s super helpful and insightful. I really appreciate all that color. Maybe as a follow-up, following maybe Mark’s conversation and understanding there’ll be more details on this on the Analyst and Investor Day, but maybe at a high level, is there a -- what is the best way to think about price per mile, understanding that obviously next year will be up to 20 initial units, but as you begin to ramp up and given all the recent exits in the industry, is there any color maybe at a high level you can kind of give us on what price per mile or what’s the best way to think about that? Thank you.

Yeah. So let me start, I think, and we will provide a bit more context on this at our upcoming event. I think, think about the comparison of like we’re trying to offer a product that creates additional value for our customers and the value is in the safety, it’s in the total cost of ownership, it’s in the fuel savings, which falls under total cost of ownership. So there’s a lot of increments to that. We expect a price when we first launch prior to where a driver is a service business model. So we expect a price when we first launch roughly similar to what a traditional line rate would be. So if you look at DAT pricing as an example for lanes, you’ll get a pretty good guide of what each lane is and so that’ll kind of be our boundary of where we’re thinking about it. When we move to driver-as-a-service, which is our long-term asset light business model, we will be pricing roughly similar to what a human driver equivalent would be, doing some adjustments for the value creation out there. So ATRI does a really good example of what the cost of a human driver is today for carriers and private fleets and that’s a really good source to kind of benchmark against.

Wonderful. Thank you, Dave.

Yeah. I think…

Thank you for that.

I was just going to say…

Oh! Go ahead.

Yeah. I was just going to add a little -- like the -- I think at the heart of our price strategy is that, yeah, we see this great pricing umbrella with humans driving trucks, right? And for a long time, that’s going to be the dominant form of transportation of freight. And so as we think about pricing, we think -- see that as really the competition and we see that, ultimately, we’d be offering a product that is safer, that can move freight more quickly and we see it as really is that the way to think about where to set the price point?

Excellent. Thank you very much again. Very helpful. I’ll pass it on. Thank you.

Thank you.

Thank you. And ladies and gentlemen, we do not have any further questions at this time. That concludes today’s conference call. All parties may now disconnect. Have a great day.