Greetings, and welcome to the Aurora Fourth Quarter 2025 Business Review Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Stacy Feit, Vice President, Investor Relations. Please go ahead, Stacy.

Thanks, Kevin. Good afternoon, everyone, and welcome to our fourth quarter 2025 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 progress we have made across the key pillars of our business, and David will recap our fourth 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. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed, 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, 2024, and other documents filed with the SEC as well as the current uncertainty and unpredictability in our business, markets and economy. Additional information will also be set forth in our annual report on Form 10-K for the year ended December 31, 2025. 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. Our discussion today may also include reference to forward-looking free cash flow, a non-GAAP financial measure. To the extent that this forward-looking financial measure is provided, it's presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. With that, I'll now turn the call over to Chris.

Thank you, Stacy. 2025 was a defining year for Aurora and the future of logistics, marked by our launch of the first driverless commercial trucking operations on U.S. public roads. In just a few quarters, we proved the promise of our technology and further extended our first-mover advantage. What began as steady progress has accelerated into compelling growth. In January, the Aurora Driver passed 250,000 driverless miles, nearly tripled the cumulative miles achieved through early October. We've expanded the driverless capabilities and will nearly triple our current addressable market to over 3.6 billion vehicle miles traveled with the opening of 7 additional driverless lanes. Crucially, we achieved this acceleration while maintaining 100% on-time performance and a perfect driverless safety record with zero Aurora Driver-attributed collisions. The Aurora Driver is now capable of driverless operations in inclement weather, including rain, fog and heavy wind. We also started supervised autonomous freight delivery to support multiple customer sites. With our latest software release, we believe the Aurora Driver is now sufficiently generalized for us to begin expanding across the Sunbelt in 2026. The launch of our second-generation hardware kit on a new fleet of trucks expected in the next few months will enable driverless operations without a partner requested observer. This new fleet will support our objective to exit 2026 with more than 200 driverless trucks in operation as we prepare for industrialized scaling in 2027 and beyond. We expect this expansion to drive a multifold increase in revenue in 2026 with an exit rate that will generate significant financial momentum heading into 2027. We're seizing the opportunity to fundamentally improve safety and restructure the economics of one of the most critical industries in the world. We see a near future in which tens of thousands of Aurora Driver-powered trucks deliver freight across…

Thank you, Chris. Now let's review our financial results for which we have provided a summary on Page 16 of the slide deck for reference. Fourth quarter 2025 revenue totaled $1 million across driverless and vehicle operator supervised commercial loads for Hirschbach, Uber Freight, Werner, FedEx, Schneider, and Volvo Autonomous Solutions, among others. The Aurora Driver achieved another record number of commercial miles driven during the quarter, which drove a 25% sequential increase in revenue from the third quarter. We recognized revenue of $3 million in fiscal year 2025. Total year adjusted revenue, inclusive of pilot revenue earned in the first quarter of 2025, before we began recognizing revenue with our commercial launch in the second quarter of 2025 was $4 million. Fourth quarter operating loss, including stock-based comp, totaled $238 million. Excluding stock-based comp of $48 million, R&D totaled $155 million, SG&A was $30 million and the cost of revenue was $6 million. We used approximately $146 million and $581 million, respectively, in operating cash during the fourth quarter and fiscal 2025. Capital expenditures totaled $8 million and $31 million, respectively, during the fourth quarter and fiscal 2025. This cash spend was meaningfully below our externally communicated target, reflecting continued strong fiscal discipline. We ended the year with a very strong balance sheet, including a liquidity of nearly $1.5 billion in cash and short-term and long-term investments. During the fourth quarter, we generated net proceeds of $15 million from the issuance of Class A common stock through our at-the-market program, which we used to fund the tax liability associated with vesting of employee restricted stock units during the quarter. In 2026, we expect revenue of $14 million to $16 million, up 400% year-over-year at the midpoint. Revenue will be back-end loaded with the fourth quarter projected to contribute over…

[Operator Instructions] Our first question today is coming from Ravi Shanker from Morgan Stanley.

This is Nancy on for Ravi. Thank you so much for all the 2026 guidance, but it would be helpful to kind of square away the end of year truck guidance with the revenue expectations. Is there something that I should be thinking about with utilization there? Or is that ramp-up to over 200 really reserved for the near end of 2026.

Yes. When we think about the guidance, again, we believe that we're going to have an outstanding position in the second half. But we are launching the fleet in the second quarter. And so there's going to be a sequential growth associated with that. So our revenue is going to be back-end loaded really to the third and predominantly the fourth quarters. But we do expect to be operating more than 200 trucks at the end of the year, and we would expect that to translate to roughly $80 million in revenue that's leading into 2027.

Okay. Got it. And then it would be also helpful to hear a bit more on your expected time line within 2027 for the start of serial commercial production.

Yes. It's a good question, Nancy. I think serial production is kind of -- it's going to mean different things to different people. I expect -- we would describe it more along the ways of how are we continuing to grow the driverless miles that we're operating and the revenue. We will be building upon our fleet of trucks that we launched this year, the international-based trucks, where we're going to have over 200 and you're going to get steady growth, and that's going to accelerate into 2027. In addition, we expect that we'll be adding on other platforms. Those OEMs haven't announced their final timing, but we expect that in '27. We'll start to see incremental volume appear from that. Serial production is really mostly from how you would describe serial production, I think once we bring in our third-generation hardware kit with the AUMOVIO, we then have the ability to start building tens of thousands of trucks, and that's like kind of the trigger for more of a serial production that you would think of in the automotive industry.

Next question today is coming from Andres Sheppard from Cantor Fitzgerald.

Congrats on all the great progress and all that guidance, very, very helpful. Chris, David, maybe just a quick question on the target for the more than 200 trucks by year-end. Hoping to get maybe a bit more color there, if possible. That should probably correlate with the revenue ramp-up. So most of it backloaded, maybe most of it Q4. And then how are you thinking about kind of piloted versus fully driverless? Just to be clear, are these going to be eventually fully driverless? Or how are you thinking about the pilot or the observer there?

Yes. So when we talk about that fleet of 200-plus trucks, that is no observer, driverless, no one behind the wheel, right? That's exactly where we're heading, and that's really a critical enabler of scaling. We have the trucks on order. We expect to see them delivered, and we put in place the partnership with Roush to assemble and upfit these. So we're very excited about that. As Dave said, Q2 is when we expect the first of these to hit the road. And then we kick in the manufacturing kind of to scale this in Q3 at full rate, where we expect to be producing 20 trucks a week.

Yes. And just one other thing. I just -- it's important to mention like we talk about driverless -- the miles that we report today, these are driverless miles. We do have a ride observer who does not operate and does not have the responsibility to operate the vehicle. This is merely removing the requested partner ride observer requirement. So in future, you'll see the operations the same as before. We just won't have a ride observer, and that's an element for us to scale our business.

Going to be a hell of a year.

Looking forward to it. That's super helpful. Really appreciate the color there. Maybe one quick one for us. A number that resonated with us is the 50% improvement in the driver hardware cost of the new gen. Can you maybe help us understand that a bit better? Is that a result of the scale and the volume, but also some synergies on the cost side? Just hoping you can maybe give us a bit more granularity there.

Yes, there's a collection of things. So the first-generation hardware, as we said in the past, we built in-house. We tested it thoroughly. We did all of the work necessary to have conviction in the safety of it. But in parallel with that, we were working to produce a moderate-scale industrialized product as well, and that's the second-generation hardware. There, we've been able to take another cut at the design for manufacturability, the design for cost, and we've taken material cost out of that kit. Part of that comes from computation where we've saved some expenditure there as well. And then, of course, advancements in things like our FirstLight Lidar, where, again, we've been able to take a design for manufacturability and design-for-cost [indiscernible] was appropriate. What's even more exciting is as that third-generation hardware kit comes out with AUMOVIO, there's another whole level of that, that again comes with their experience in designing cost-effective parts for the automotive industry and their ability to tap into even larger scale supply chains, which further drive down the cost of this. So it's -- as I said '26 is going to be a healthy year and '27 is going to be spectacular.

Next question is coming from Colin Rusch from Oppenheimer.

With some of the incremental functionality that you guys are talking about here, can you talk a little bit about the inbound interest you're getting from incremental customers and how quickly you're able to move them through a sales process to get them on board here?

Yes. I'd look at Detmar as a prime example of this. So we've talked for a long time about the value to customers of long hauls and being able to drive utilization of the assets up. Frankly, it didn't really occur to us to think about a situation like Detmar where the truck is not actually going that far. It's a 60-mile each way trip. But asset utilization is absolutely critical to the business. I guess they saw our launch, saw the announcement came out and reached out to us and they came to us because we're the only people who can do what they need, you know, be able to drive both on the surface roads, go to their mine site and drive on the freeway. And so that's an example of us being able to take this generalizable capability we have and then respond to customer demand. We continue to see other examples of folks who are excited about what this can mean for their business, and we'll share more as we move along here.

Great. And then in terms of some of the incremental functionality that you're talking about this year, I guess I'm trying to get a sense of cycle time with some of the learning processes. You guys have obviously done a great job with the simulation technology and validating things online. But I'm curious about how we can track the cadence of incremental operating domains and environments from a weather perspective throughout the year. It looks like we've got a pretty clear line of sight in the charts that you're providing, but I just want to see how we should track that on a go-forward basis?

So I think what's exciting is we're near the end of the point where you're probably going to care about that. As I talked about, there's these 2 elements to expanding where the vehicle operates. The first is having the generalizable set of skills that allow you to operate there. And then the second is actually rolling out the map so that the vehicle has that extra kind of knowledge and prior understanding of what to expect where it's driving. On the first part of that, we are most of the way there to having all of the capabilities that you might imagine needing. And any new lane gets less and less likely diminishing to de minimis kind of things that we have to learn and add to the capabilities of the driver. So as we pointed out, going from operating between Fort Worth and Phoenix and operating between Dallas and Laredo very, very light lift, and we expect an even lighter lift as we open up new lanes as well. On the mapping front, this is a place where the approaches we've taken with AI to be able to detect and understand the road structure to be able to gather data and then feed that back to the mothership are paying huge dividends because we can take that online system, run it offline, verify, validate it and then create the road data product. At this point, the vast majority of the miles that we generate are automatically generated. So we expect that to accelerate. What's really going to be driving the rate at which we expand over the next year is going to be the customer demand, right? Because we can be responsive, this decision of which lane to open next goes from being a strategic, oh my gosh, let's ponder this for months to, okay, let's go now and serve that customer as quickly as possible. And then we'll just continue on the development side, it will just be continuing to chip away at the places where we see incremental value for customers and increasing the uptime and availability of the vehicle.

[Operator Instructions] Our next question is coming from Chris Pierce from Needham & Company.

You guys had positive free cash flow in [ 2020 ], I believe you first mentioned that at the Analyst Day in '24. But sorry if I missed it, but I don't see anything about revenues or gross margin guidance in [indiscernible]. I guess I just -- how should investors read into that as maybe things are -- the revenue ramp is flatter, but maybe you have more OpEx leverage as you lean into AI and on mapping? Or I guess, just how should we put the pieces together there?

Yes. Chris, great question. I appreciate it. So I think there's a couple of things. When we did the guidance back in the Analyst Day, we had some expectations about where we thought we were going to be for free cash flow positive. And actually, those expectations overall still look remarkably similar in terms of kind of the revenue projections and our gross margin projections over time. What we have been able to do is really look at our spending. And over the last 1.5 years, 2 years, we've consistently been a little bit under what we've actually guided to in terms of total cash burn, and that's given us confidence to say that with the money that we raised this past year, which has been remarkable, we've had tremendous support from investors, right? We ended the year again with 1.5 -- roughly $1.5 billion in liquidity. And if we look at our model and kind of look at the long term out, we believe that is sufficient to get us to free cash flow positive. Again, we'll utilize the ATM for our tax liabilities and for potential bonus payments that would be made in cash. And we'll obviously want to have some sort of minimum balance on a go-forward basis like any good prudent company would. But like the cash necessary to get us to there, we felt like we have sufficient cash in hand to be able to do that, and we felt that was appropriate to describe. We aren't going to guide beyond '26 on some of the other spending items right now. But I think we will end up having another Analyst Investor Day this year, and we'll probably provide an outlook into the future beyond '26 where we can talk about some of those longer-term targets.

Okay. Perfect. And then I guess you hear about this momentum with Waymo and Tesla momentum or not. But I guess this is the first time you guys have talked about capacity and being sold out through x amount of time and going forward. Are you hearing like are customers getting enthusiastic about autonomy again? Or is this something that you already knew this, this is the first time you're sharing this sort of supply versus demand imbalance in the near term with investors?

Yes. Let me take a shot and then maybe Chris can add into this. I think customer interest has been strong for years. Customer demand has continued to increase as people have gotten to experience the products. And we had always said our first driverless customers, we were going to have to earn like that right to get to that higher level of demand signal. I think that was one element. So I think the demand has continued to kind of lead the way in the customer interest, and it helps guide where we want to go. Like as an example, the reason we're going to Laredo is there's really strong customer interest to be able to do that. And with our generalized AI approach right now, it doesn't take a tremendous amount of effort to take advantage of that next lane. And so our customer demand is really driving where we're going to be going next. I think one of the things that we've been a little bit apprehensive of overstating and kind of this is lessons learned relative to other AV companies is, we really wanted to have solidified a firm plan relative to our truck supply to be able to be confident in the contracted amounts of volume that we were going to deliver for customers. So it's -- there's a difference between interest and truly contracted demand. We felt like this was a good time that we can give you guys the confidence that we not only have a ton of interest, but we really have contracted demand. That is predicated on the fact that we have confidence in the exact timing of the -- well, the roughly exact timing of the availability of the trucks that we're going to have in the market.

I'd just add a couple of things to Dave's point. I think if you go to any truck company and you say, we're going to make your trucks safer, more efficient and increase their utilization, everyone is going to say yes. And what's happened over the last -- since April of last year is we've been able to go from the academic conversation of wouldn't it be nice if to, hey, it's here. We've got it, come see it, come touch it, come experience it. And I think that's moved the kind of the academic interest into the practical interest. And as they said, we've tried to be consistent in not overhyping things. And in the past, we've seen competitors talk about numbers of commitments and sales that felt more smoke and mirrors than real. And so we've tried very hard to be just direct and honest with like, no, these are real actual contracts and commitments that we have. And that's why we feel confident at this point starting to share a little more of those numbers.

[Operator Instructions] Our next question is coming from Leanne Hayden from Canaccord Genuity.

To the extent that you're able to comment, curious how you expect the observer launch on international trucks in the next few months to impact OEM partners, specifically in terms of comfortability around removing the safety observer or launching immediately without an observer.

Yes. I think that continued demonstration of the product on the road and continued demand and engagement from customers will only supercharge what is already a really positive and enthusiastic engagement that we have with these OEM partners. So yes, there's nothing like seeing and nothing like experiencing real. And so yes, I don't foresee any problems moving forward with this.

Yes. Maybe let me just add one additional thing on hearing. I think each OEM and their path with us is a little bit different. Volvo, whether we had launched this international fleet or not launched this international fleet, we have a plan with them. They're executing towards that plan and what makes them feel comfortable. We have a path with PACCAR. They were a little bit uncomfortable because they have prototype parts on their base components. And so that's why we had the right observer to begin with, and they wanted to have comfort with the fact that they've fully validated their process. With the international fleet, we are producing a truck, it's a base truck that has all the required redundancies at a very sufficient level. So these are not prototype parts. These are fully validated parts that we validated with the rest of our system. And so each of them is a little bit different and nuanced. And hopefully, this is going to continue to build momentum overall for the market and everybody's excitement about having an opportunity to deploy trucks that operate driverless.

Got it. Yes, that totally makes sense. I'll just ask one more quick one. Curious whether or not Aurora trucks kind of came to interact with any sort of winter weather conditions in Texas as a result of the recent storm fern? And if so, how it performed?

Yes. We certainly did some development operations in the conditions, but those will be run with a safety operator in the vehicle because that's out of scope for the current driverless capability. What I'll tell you is that the conditions in Texas were bad enough that everybody was off the road for the majority of the time.

Next question is coming from Mark Delaney from Goldman Sachs.

Nice to see the expanded operating demand, both with respect to the lanes as well as the expanded weather conditions. First question was on how you see the composition of the trucks evolving this year. And for the incremental trucks to get to the 200 in total, do you expect some of that to come from Volvo given the progress you spoke about with VNL? Or will the incremental truck volumes this year effectively come all from that international relationship?

Yes. I guess I can't share Volvo's launch time line. That's one of the things that we leave with our OEM partners. What I can tell you is we are extremely confident in the supply of vehicles we have to achieve that 200-plus objective by the end of the year.

Okay. Understood. And then my other question was on the 2027 outlook and lineside integration. I'm hoping to get more details on where you stand and if you think there may be some risk of delay. And I ask because I think in order to do that lineside integration next year, you would need the truck OEMs to have redundant platforms ready, AUMOVIO to be prepared to integrate on site and then the third-gen hardware kit needs to be available. So I know a lot of things you're working on and the partners are working on. So if you can speak a bit more on kind of where you stand on those various things and your visibility into achieving that 2027 plan, that would be helpful?

Yes. Well, let's just take Volvo as a concrete example. Part of the reason why we're so excited about the first trucks coming off of the pilot line with Volvo is that's a critical step in both Aurora and Volvo understanding how to do this integration and really paves the way for that lineside production. When it comes to AUMOVIO, the third-generation hardware and AUMOVIO, that's really one thing. And that partnership is spectacular. We continue to have an amazing working relationship with them. We've talked in the past about how that deal and that partnership is aligned incentives near perfectly. And we're seeing that play out in reality. And both Aurora and AUMOVIO are committed to achieving our start of production of that in 2027. So we're very excited for that. And then, of course, we augment the lineside installation with our OEM partners with the infrastructure we're putting in place with Roush to allow us to upfit and even scale up the production we're talking about this year to be able to produce significant volumes on the international OT platform as well. So like I said, 2027 is going to be a heck of a lot of fun.

Your next question today is coming from Itay Michaeli from TD Cowen and Company.

Just wanted to go back to the customer interest into 2027 with a pipeline of thousands of trucks. Hoping you could talk a bit more about that? And how much visibility do you have in terms of the number of lanes you might need to support that level of demand?

Yes. So maybe I'll take a start at that, Dave, and I'll hand it to you. So in terms of the lineside of this, as we model this and we look at the Southern U.S. freight corridor that we're talking about being operating on by the end of this year, we think that can absorb an immense amount of traffic and will still be a very small fraction of the vehicle fleet that's out there today. And of course, we won't be static in 2027 with that. Given that ability and accelerated ability to build map content and the generalized nature of the Aurora Driver, unlocking new lanes is not going to be a complicated activity for us, it will just be a course of action and operational exercise that we do relatively rapidly. And so I'm not really worried about the constraint, I guess not really is understanding it, sorry, that's my Canadian coming through. I am not worried about our ability to roll out new lanes in '27 and to be able to kind of absorb that volume. But Dave, do you want to add?

Yes. I think there's a couple of things that we're really kind of demonstrating, and these are true in '26, not even in '27. It's our ability to go where the customer wants us to go and add lanes and add the lanes at where they are high volume and they generate value for our customers. So it's not just the lanes, but it's going to customer endpoints. We're doing both of those things right now, right? We've just added the Dallas to Laredo. That's a new thing we haven't talked about before, and we're going to have it rolling out yet this quarter yet. So again, I think our ability to go to where the customers want is the key enabler to actually deploy thousands of trucks. Now thousands of trucks, if you just look at some of the lane rolls that we've showed before, which we have no concerns over being able to drive in all those areas, those represent 50 billion to 60 billion vehicle miles traveled. So to deploy thousands of trucks in a market size that big with the sheer volume of trucks that are out there and the mileage that is driven feels very attainable to us. The reason why we have such conviction in this is that some of our customers, both our existing customers and even new customers, when they talk about interest in deploying autonomy, they're talking about large quantities of volume. So like some customers have huge fleets, big package delivery. And for them, unless we can do thousands of trucks, it's not worthwhile for them, right, like because it just ends up being -- just such a small percentage of thing. So when we're able to deliver more trucks, the customer demand for those larger customers that want to deploy at higher volume just become more evident for them. So we're really excited about where we're headed, and we think we have the building blocks in place to get there.

Terrific. Very helpful. As a quick follow-up, I'm just curious on the second-generation commercial hardware kit on the new fleet with international. How locked in are the costs at this stage? Kind of how should we think about the ramp and ultimately kind of leading to sort of like what can go right and wrong in the target to a breakeven gross margin by the end of the year?

Maybe to start with the first part of this. So at this point, we well understand the cost. There is some exposure to variation in tariffs, let's go with, depending on the policy of the current administration that obviously we can't predict. But beyond that, we're locked and loaded there. And between the engagement we have with Fabrinet and the process work we've been running through with them and now the committed partnership we have with Roush and the facilities we're turning online there. That part, we understand the cost structure. The rest of the cost structure is really about the remote support and recovery rates that are associated with this. And those, we feel good about the glide path we're on to achieving the rates that we need to reach gross margin.

Yes. And just maybe one additional thing, and Chris did a great job. And just talking about the hardware kit for a second. Like there's 3 elements of the hardware kit that -- from a financial perspective that you think about between the first gen and the second gen. It's the BOM, it's the scale and it's the expertise. So if I look at it, we have done remarkably well in the BOM where we've designed lower cost solutions. We've reduced the mass of the compute as an example. We've made incredible improvements on FirstLight. So we've designed. We did engineering challenges to design that. Scale, we have the hardware kits today that can operate roughly about 300,000 miles. These hardware kits are going to last to 1 million miles. So you just get the benefit of them lasting longer, which reduces your per mile cost. And then the manufacturing expertise, we're going to somebody that knows how to build in high volumes with Fabrinet and higher volumes, whereas we're just not set up that way. We're more of kind of a prototype build. In terms of like the confidence in that, we have contracted with suppliers all the part costs already. The FX exposure, we've taken a conservative approach and use the latest assumptions for like the 2 biggest areas, which are China and Thailand. So I think we've built in the right elements to be confident in that. And again, I think with the remote assistant and the on-site support, we're going to be able to demonstrate that very well once we have sufficient number of trucks operating on the roads where we can actually start to report out some of those numbers.

Thank you. We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.