Aurora Innovation Aktie

Greetings, and welcome to the Aurora First Quarter 2026 Business Review Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce Stacy Feit, Vice President of Investor Relations. Please go ahead.

Thanks, Paul. Good afternoon, everyone, and welcome to our first quarter 2026 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 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. 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, 2025, and other documents 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 31, 2026. 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 these forward-looking financial measure is provided, it is 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.

Thanks, Stacy. 2026 is the year Aurora begins to scale. Our strategic investments are fueling the momentum necessary to accelerate our growth and extend our lead in autonomous trucking market. The start of this year has been a period of disciplined transition a deliberate buildup before the inflection. Drawing on our deep experience, safely integrating the Aurora Driver across multiple platforms. We're on the cusp of launching our second-generation commercial hardware kit on a new fleet of driverless trucks.

This program positions us to exit the year with over 200 driverless trucks in operation across the Sunbelt and supports our broader scaling ambitions in 2027 and beyond. In preparation for this imminent launch, our forthcoming software release and commercial hardware kit are engineered specifically to deliver the reliability required as we scale our fleet. This progress is driving significant commercial momentum. In addition to the Transportation as a Service commitments we already have in place with Hirschbach we announced last week that they have selected Aurora to scale their autonomous fleet with intent to own and operate 500 trucks through our Driver-as-a-Service business model. We expect to finalize the definitive agreement, which represents a potential multiyear revenue stream in the hundreds of millions of dollars later this year with truck delivery slated to begin in 2027.

As we prepare to scale, we're seeing continued regulatory momentum with landmark progress at the state level. California has reached a watershed moment, joining the vast majority of states in enabling autonomous trucking. We now project a serviceable, addressable market of 60 billion vehicle miles traveled by 2028. And excitingly, California supports a seamless coast-to-coast operating environment.

With the Aurora Driver now sufficiently generalized for us to begin scaling across the Sunbelt aligned with customer demand, we strategically focused our resources on 3 key initiatives: expanding our driverless network, finalizing our latest software release and validating our second-generation commercial hardware kit. These efforts serve as the critical final steps in preparing for the imminent launch of our new driverless truck fleet transitioning Aurora from a phase of localized operations to one of wide-scale industrial deployment. Our expansion is progressing at an accelerated pace with our network now encompassing 12 distinct routes. At the end of March, we validated driverless operations on the bidirectional route between Dallas and Laredo within just 6 weeks of initiating supervised autonomous runs.

Building on this momentum, we also opened new bidirectional routes between Dallas and Oklahoma City. In collaboration with Volvo Autonomous Solutions, we have started supervised autonomous deliveries on this route to support one of their key customers.

Furthermore, we've expanded our driverless cohort to 7 customers, including transitioning commercial loads with [ McLean ] to driverless operations. Our forthcoming software release further increases the Aurora Driver's reliability in preparation for scaling, including validation of driverless operations in more severe rain as well as the full spectrum of complex construction scenarios on our highway routes.

To complement these advancements, we are augmenting our driverless network to support real-time dynamic rerouting, providing the operational agility required for high-volume commercial service. We're also in the process of validating our second-generation commercial hardware kit on multiple truck platforms through rigorous on-road, track and lab testing to prepare for our planned second quarter launch and are seeing impressive performance. Designed for 1 million miles of operation and with enhanced sensor cleaning capabilities, this kit meaningfully increases the Aurora Driver's reliability.

It also brings exciting performance gains including a more efficient computer and an extended 1-kilometer range for FirstLight, our proprietary long-range FMCW lidar. This is double the range of the closest FMCW lidar competitor and can give the Aurora Driver more than 34 seconds to react when at highway speeds, setting a new superhuman standard for safety. And importantly, we expect this kit to drive a 50-plus percent reduction in Aurora Driver hardware costs, a key lever supporting our breakeven gross margin target.

While advancing on these fronts, in April, the Aurora Driver surpassed 370,000 driverless miles with 100% on-time performance and 0 Aurora Driver attributed collisions. Notably, this growth was driven by a very strong utilization with a leaner active fleet. For example, the driverless trucks we are operating for Werner are already averaging 4,000-plus miles per week, which translates to an annual run rate of 225,000-plus miles per truck. With the performance we're seeing, we expect Aurora Driver powered trucks will be capable of more than doubling utilization and in turn, revenue per truck for our customers. Expanding driverless delivery to and from customers' facilities will further strengthen the Aurora Driver's value proposition.

We're continuing to ready Hirschbach, Detmar and Werner for endpoint operations. including in-yard autonomous operations at their facilities. We currently expect to generate a majority of our 2026 revenue through operations between customer facilities, reflecting our continued focus on increasing commercial value. To ensure seamless end-to-end service, we recently began supervised testing of way station navigation and on-route fueling at truck stops. Navigating these environments requires many of the same advanced surface Street capabilities we have already refined. For example, on the 7-mile, the Aurora Driver navigates to and from the highway in Houston.

The video on Page 8 of our presentation demonstrates the Aurora Driver's proficiency in these complex low-speed settings. To meet customer demand and support our path to scale, we've established a robust hardware and vehicle platform road map. We're closing in on the second quarter launch of our second-generation commercial hardware kit on a new fleet of trucks based on the international LT series that will enable driverless operations without an observer. With this program, we have a strong line of sight to achieving our 2026 scaling goals. We expect this to establish a powerful foundation for 2027 when we plan to launch our Driver-as-a-Service business model.

Looking ahead to 2027, we've made exciting progress on our third-generation commercial hardware kit that will be manufactured by AUMOVIO. Together, we started testing initial units. Our engineering team is also working with AUMOVIO and NVIDIA to develop a first-of-its-kind Super Thor compute configuration an architecture that integrates 2 NVIDIA DRIVE for SoCs into a unified platform optimized to power the Aurora Driver at scale. This approach demonstrates our 3-way collaboration is setting the standard for industrializing autonomous technology.

In March, AUMOVIO broke ground on their -- the expansion of their new Brownfields, Texas facility where they will produce our third-generation hardware kit intended to supply tens of thousands of trucks. Construction of the plant's expansion is expected to be completed in the first quarter of 2027. With start of production for the hardware kits on track to begin in the second half of 2027. Volvo plans to build hundreds of the Volvo VNL autonomous trucks in 2027 and has already completed several Aurora Driver powered trucks on their pilot line.

For the program based on the International LT truck, our upfitter, Roush, will begin scale production later this year. We're initially establishing the capacity to produce 1,000 trucks per year with potential to increase that capacity. Concurrently, PACCAR and Aurora are jointly defining the path to scalable launch on the third-generation Aurora Driver commercial hardware kit integrated with PACCAR's future autonomy enabled platform. All of this work is forging the industrial engine that extends our leadership position and supports commercial deployment at significant scale.

At Aurora, we're building a safer, stronger and more resilient freight ecosystem with our technology for the people who power it. To back this vision, we recently announced Aurora Works. Our commitment to invest in workforce development by establishing educational partnerships and technical training for emerging roles in autonomous trucking. We're at the center of a new era of logistics that improves road safety, fuels economic growth and creates new high-skilled American jobs. Autonomous freight represents a step change for what is possible in global logistics.

The Aurora Driver moves the industry beyond traditional constraints toward a world of continuous high utilization delivery. With a clear road map, deep partnerships and an accelerating industrial engine, we are well positioned to lead this evolution. The future of freight is on the road and Aurora is setting the pace.

With that, I'll now pass it over to Dave, who will review our financial results.

Thank you, Chris. Now let's review our financial results for which we have provided a summary on Page 15 of the slide deck for reference. First quarter 2026 revenue totaled $1 million across driverless and vehicle operator supervised commercial loads. Despite leveraging our shared fleet for continued development of new routes and validation of our second-generation commercial hardware kit, the Aurora Driver achieved another record number of commercial miles during the quarter which drove a 10% sequential increase in revenue from the fourth quarter of 2025.

First quarter operating loss, including stock-based compensation, totaled $244 million, excluding stock-based compensation of $46 million, R&D totaled $159 million, SG&A was $34 million, and cost of revenue was $6 million. We used approximately $159 million in operating cash during the first quarter of 2026, and capital expenditures totaled $25 million. As planned, this cash spend was below our externally communicated quarterly average target. We expect the second quarter cash spend to be above the target range due to the timing of our cash bonus payout which, as we discussed last quarter, we plan to fund with our at-the-market program.

We ended the quarter with a very strong balance sheet, including liquidity of nearly $1.3 billion in cash and short-term and long-term investments. During the first quarter, we generated net proceeds of $14 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. We continue to expect 2026 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 half of full year revenue. as we scale driverless operations following the launch of our new fleet. We anticipate exiting the year with more than 200 driverless trucks in operation. which translates to approximately $80 million in revenue on a run rate basis for our Transportation-as-a-Service business. This establishes a powerful foundation for 2027 when we expect the core Driver-as-a-Service model to commence.

To support our scaling plan, we continue to expect quarterly cash use of approximately $190 million to $220 million on average throughout 2026. This includes approximately $150 million in anticipated full year capital expenditures, primarily attributed to our capacity plan. We continue to expect 2026 to represent peak capital spend and capital expenditures declining significantly in 2027 as we transition to our Driver-as-a-Service model and Hardware-as-a-Service structure with AUMOVIO. Our first quarter performance reflects the focused execution and disciplined transition that will define Aurora in 2026. We continue to balance prudent resource management with the strategic investments needed to support large-scale industrial deployment.

With that, we will now open the call to Q&A.

[Operator Instructions]. Our first question is from George Gianarikas with Canaccord Genuity.

So maybe first, in light of the growing commercial momentum that you're seeing, have you seen any meaningful acceleration in inbound interest from prospective fleet partners? And also as you're beginning to scale, how are you navigating price discovery? Has there been any resistance from customers regarding the per mile rate or is the value currently offsetting any cost concerns?

Yes. Thanks, George. I appreciate the question. We continue to have really exciting conversations with various customers. We've talked in the past about each time we got to check off progress. We see it become more real in the eyes of customers, and that leads to an increase in the conversations we have. We've got an exciting funnel and we'll share more as we can -- as we get through that. I don't think we can talk specifically about pricing on this. Obviously, there's a lot of competitive elements around that. But we have very fruitful conversations with folks. Of course, they want to pay nothing for it, and we'd like to charge them more for it. So every one of those conversations is, of course, the negotiation. I don't know, David, if you'd add more?

Yes. I think the customers themselves have been giving us really good and direct feedback. At the end of the day, the value proposition that we're discussing has still resonated quite well. You're going to argue a little bit about the fringes, but the growing cost drivers is undeniable, the indirect costs associated with it. And fuel costs are really high right now. We're providing a 15% reduction on that. That translates to real dollars, right? That's roughly $0.15, $0.16 per mile in today's marketplace. So the value proposition does resonate quite well, and we're confident that we're going to be able to grow the business and achieve our profit objectives.

And maybe as a follow-up, given your recent autonomous haul, are you encountering any technical bottlenecks as you transition from pilot to more of a consistent operational cadence? And how have your engineering teams mitigated any constraints that have been out there in the system?

Yes. There's nothing that we're seeing that's particularly surprising. It's stuff that's been in our road map for a while. So we're continuing to improve that. This new release that is going to land with the second-generation hardware really is about making sure that we have a robust platform that's reliable and meets customer needs, increasing the amount of rain we can handle dealing with more complicated construction that we need to deal with on freeways. That's the kind of thing that's going to set us up to be able to scale really well.

Our next question is from Scott Group with Wolfe Research.

So a couple of things. Relative to the target of 200 trucks by the end of the year, how many are in operation today? And then separately on the Hirschbach MOU. Just hoping for a little bit more color, like what needs to happen to convert this from an MOU to a committed contract? And do you have any color on how many of those 500 trucks you expect to deliver in '27? And how long do you think it takes to get to the full 500?

Yes. So on the 200 trucks, when we talk about 200 trucks, we're talking about driverless trucks operating by the end of the year. Today, we're running about a handful of them. Of the vehicles that will make up those 200 trucks that are operating driverlessly, I think we own 25 of them now, and they're in various stages of upfit and preparation. So that's kind of where we stand on getting to those 200 trucks over the course of the year.

We expect -- we're doing work in Q2 to prepare Roush to scale, and they'll really start scaling getting towards that 20 trucks per week production rate in Q3. With Hirschbach, I don't know there's a whole lot we can share there. We're really excited about there have been one of our longest-term partners and customers.

And to George's question earlier about the value customers see. You don't get a company like Hirschbach, signing up for an MOU unless they see real opportunity for it to complement the drivers they have in their fleet today. It's a 500 truck deal over 27 and 28 is our expectation. We expect it to turn into hundreds of millions of miles and hundreds of millions of dollars of revenue. So and we expect to get to closure on that this year.

Yes. And Scott, one other thing on the 200 trucks, just so there's no confusion. We already have commitment and order slots for the entire 200 trucks. So there is no question about the truck availability. It's just when we bring them into start the upfit process, and we build out our capacity plan.

Okay. Great. And then last couple of things, David, do you -- I think you talked about last quarter, if you get to the $80 million run rate of revenue, that will be gross profit breakeven. Is that still the case? And then on the California front, when do you expect to start operations there?

Well, relative to the gross profit breakeven, that is still our target for sure. The $80 million is one element of that. There are some things that we need to do on the cost side of that equation which are equally as important, which is part of our plan. And so we're still targeting it. It's not formal guidance, but we are targeting it, and we are going to be working really hard to be able to achieve that target. I'll let Chris talk a little bit about California.

For California, first, we're really excited that California has taken a step forward of this. We've been in conversation with them literally for years, and we're just excited to see kind of put out the regulations and give us certainty on how we can start to build our business there. We don't have set time for when we'll begin operating in California. We have to go through the permitting process with them to do that but the team is already working on that, and we'll share more when we can.

Our next question is from Ravi Shanker with Morgan Stanley.

Chris, you said in your letter that you and PACCAR are jointly defining the path to scalable launch on their assembly lines. Do you have an understanding? And if so, can you tell us kind of what this path looks like from a catalyst or a timing standpoint?

Yes. I can't share timing, of course. What I can share is that we're aligning around the third-generation platform that -- or hardware kit from Aurora that we're working with AUMOVIO on. We've shared in the past that we expect that to come into production in the back half of '27. And so we continue to have conversations with PACCAR. We continue to work with them closely and look forward to offering customers who'd like to have the Aurora Driver on a Peterbilt that option.

Okay. Understood. And maybe kind of on a different topic. Obviously, truck rates appear to be going up quite meaningfully. There are some who think we may be on the cusp of a generational upcycle here. Are you seeing any increased interest from customers or carriers who may be concerned about a driver shortage? And is this an opportunity for you to maybe revise your pricing strategy? Or are you just selling this as, hey, there's more savings for your customers if they switch to autonomous in the next few years?

Yes. So I'll say that first. I'm not savvy enough to predict exactly what will happen with the market here, but it does feel like there's a lot of factors that are contributing to what will be increased freight rates going forward. We're really focused on delivering value to our customers. We ultimately expect to get paid for that value. And so if we're contributing more value, we'll ultimately expect to be compensated for that. But right now, we're focused on making sure that the folks who've been with us as partners and customers and get an opportunity to benefit from that and build their business. So I don't know, Dave, anything you'd add?

No, I think that's right. I will say that the interest has been picking up a lot over the last 6 months, frankly. The number of inbounds that we're getting has been just increasing dramatically, Ravi. So we're very excited about that. Part of it is just we're out there and people can see and experience it more than they've ever had before. Part of it is the market is starting to have some positive signs that feel like they're more sustainable and that has people more interested in thinking about their long term.

I think from the pricing side, the one thing that I would say is we believe that the pricing at that $0.85 plus kind of range will enable us to be very successful. And it will support broad scale adoption for our customers. And I think we look at it not so much as how would we maximize that next quarter. And I think about it as how will we build the plan for the next several years. And we want to make sure that we have as equally as much of that long-term focus and support for customer adoption as we can.

Our next question is from Chris Pierce with Needham & Company.

I just want to -- if you guys could shed some light, if you talked about Hirschbach, what are they seeing -- are they seeing something different in terms of absolute number of miles driven? Or is it just a unique decision on their end that sort of has them pull the trigger to move from a trial to a truck order. And I guess, do you have other partners that you've been working with over time that are similar miles or that it just sort of come down to a unique decision on their end? I just kind of want to get a sense of what helped them over the -- get over the edge.

I think first, it's important to recognize that there's a distribution of customers, right? There's going to be folks who are first movers and there's going to be others who are fast followers. Hirschbach has had a lot of experience with us. The leadership team there. We've been able to build trust with over time. And so we're excited for them to pull the trigger. We do expect others will follow. And we'll just continue to demonstrate value. And frankly, right now, we're pretty supply constrained, and we look forward to unlocking that supply over the course of this year and certainly in '27 as we bring the AUMOVIO hardware kit online.

The other thing that I would add on Hirschbach, they have been with us for quite some time. And they don't look at this just as a business decision. They are really looking at this -- in their words, the quality of life investment for their people, right? This is to help support their people and get them to the routes in the working environment that will improve their quality of life while we handle the "less desirable", the longer haul routes that keep you away very far. So they've been very forward-leaning on thinking about their drivers, long-term quality of life. And so I think that's something that's very important to them. And certainly, they care a lot about their drivers.

Yes. Okay. And then just one for Dave. In your -- from the desk of the CFO. You talked about in the last time about peak CapEx. I just want to understand definitionally, I mean, I don't think of you guys as a heavy CapEx company. I think of you as a heavy R&D company. Are we saying that '27 is we're close to peak R&D and R&D comes down? I just want to make sure I'm understanding what line item on the model and what statement to look at?

No, I think we have said many times, we're a capital efficient or a capital-light business, right? And as a Transportation-as-a-Service business to start, you actually have a little bit more capital than what we believe is going to be our steady state long-term capital. So we do expect our CapEx to go down. Our R&D investments, certainly, that's a larger percentage of our overall expenditures. We are continuing to invest in our R&D to capitalize on the lead continue to build that advantage, make the Aurora Driver available everywhere. And so we kind of look at that as more of a steady state kind of number for the foreseeable quarters, whereas we think the CapEx will start to drop down substantially in 2027.

Our next question is from Colin Rusch with Oppenheimer & Company.

We've done a very judicious job of waiting to scale until you guys were ready. And now as you move into this next stage of the organization, I'm just curious about how you think about pacing of the scale-up because certainly, demand isn't going to be an issue, but maintaining quality as you move into these higher volumes is critical. So I just want to think about how you're managing that, how you're managing supply chain to meet those specs, and how you might end up diversifying some of the supply chain to enable a little bit more resilient supply as you go forward?

Yes. And that's really aligned with our long-term strategy that we've talked about for several years. So thanks for the question. as we went from the initial vehicles that we launched trials with last year, that was hardware that we had built in-house. We had sourced all in-house. As we move to the second generation of hardware, there we're leveraging Fabrinet, the experience they have, the quality process they have layering on top of that, our quality and sourcing support. So we feel good about that.

And then, of course, as we move to the back half of '27 when we expect the hardware kit that we're developing with AUMOVIO to come to life there, of course, we're leaning into AUMOVIO and the strength that they have in managing their supply chain and managing quality being a true scale automotive supplier. And so that's kind of -- as you think about the hardware side of it, that's how we're building that supply chain system.

When it comes to the software that operates on board, that's been a core part of how we've thought about this is how do we ensure that the software will generalize safely over time. It's what leads us to do as much work as we do in testing and validation. And it's why we've said from day 1 that safety has to be first. And so we've ingrained that into the organization over the better part of a decade at this point. and that leads to process that we think will scale and ultimately drive safe and reliable outcomes for our customers.

And then as you guys prioritize ODDs, I'm curious about how much input you're getting from your customers at this point? Or if you're at a place now where you're just really driving capabilities and then selling it to them, are there priorities that they have that can impact some of the sequencing and focus areas for you on an R&D perspective?

That's a great question. We continue to want to learn as much as we possibly can from our partners and understand what the source of demand is and where it's most useful for them. Dave talked about Hirschbach focus on supporting their employees and what does that translate into places that are useful for us to drive for them. So in terms of the capabilities of the driver, the Aurora Driver has to have -- we do learn some from our customers, but that we kind of infer ourselves, but where we need to go operate, which lanes we should be opening, that is very much almost purely driven by customer demand.

Our next question is from David Vernon with Bernstein.

The first question for you, Dave. I noticed the language around sufficient liquidity to get to positive free cash flow in 2028 that was in the 4Q letter, it's not in a 1Q letter. Is that -- was that purposeful? Was that just -- it's still on plan? Can you give a kind of comment what the status is on that cash flow breakeven by 2028?

Yes, it's still our plan. We believe that we have sufficient liquidity. Nothing has changed in that to get us to a positive free cash flow.

Okay. And then maybe the 4,000 miles per truck per week that you guys are quoting on the utilization that you're getting out of Werner. Is that the right number to use in terms of a run rate assumption to underpin the $80 million sort of half exit run rate? And then I guess the follow-on to that would be if that turns in to be the right sort of revenue per mile-ish range. How does the DAS thing compare? Is it half? Is it 3/4? Anything you can give us relatively on what we should be thinking about plugging into a model around on the DaaS or the DaaS rate would be helpful.

Yes. I think for the mileage, I think that's really going to vary based on the customer use cases. But we're very confident in our ability to achieve double utilization, and it is really going to depend on which Roush they put them on and the load frequency that they have. But certainly, we think this 250,000-mile range is still a very good source. We've used that several years ago, and we still think that, that's a good target that any customer can achieve. So we think that's probably good there. In terms of the pricing dynamics, I can't get into too many specifics without kind of comparing individual customers. But what I can tell you is the information that we shared before, relative to anywhere from $1.50 to $2 a mile for TaaS plus fuel surcharge. And then on the Driver-as-a-Service, again, our indicative thing, pricing is about $0.85. So again, we think that, that's a pretty good mix. And so you can kind of do the math from there. Thanks, David.

Our next question is from [ John Sager ] with Evercore ISI.

I hate to continue to dig into the numbers a little bit. But to get to sort of $15 million of revenue, so you're charging somewhere around $2 per mile. And then if I'm backing into gross margin breakeven, that means that your cost is something like $1 per mile to operate. Is that a fair way of thinking about it? I'm just trying to figure out how to track your progress with that.

Yes, no problem. Like our cost of goods sold is the measurement that we're looking at for our gross margin. So you will see if revenue is about $2. That's our target for our cost of goods sold. It is about $2 a mile. That will obviously change when we go to the Driver-as-a-Service. You got to remember in our current Transportation-as-a-Service business model, it's not just the cost of being able to deploy the Aurora Driver. It's the cost of purchasing the trucks, financing the hardware and a lot of other fuel costs terminal. So I think you'll see us really targeting roughly that $2 a mile for a breakeven target.

Okay. Perfect. And then as we look out into 2027, at what point do you make that transition to the point where the customers own the trucks? And like when is -- can you give us any sense of timing on that? Is it does it all happen at once? Or is this sort of a customer by customer?

Yes. It's not a hard line. We will start the process in 2027 and then it will really be customer-by-customer specific. I would also point out that we will still have transportation as a service trucks operating for several years. even with customers who have signed up for additional Driver-as-a-Service contract. So we're going to continue to utilize a small fleet of Transportation-as-a-Service trucks for its life, and then we will kind of just build upon that going forward.

So we do expect, again, some general starting -- we will start in 2027. But there's no hard line of when it will exactly start. We're not making some fundamental shift. We will only do Driver-as-a-Service going forward. Again, it's important for our customers to support the adoption to be able to see and experience the Aurora Driver in a scenario where they don't have to make huge investments until they've seen the product work and provide value to them.

That is something that I think will evolve over time, right? Today, we're going to be the only provider, first provider of this technology in market. And so I think there's going to be more customer education and the Transportation-as-a-Service as Dave said, allows us to have this low friction way for them to get introduced, get used to it. But what we do see is that as customers get used to it, they believe in their -- the value they provide in owning, operating, maintaining using these trucks efficiently. And that's a confidence that we don't think that's core to Aurora. And so we see customers excited to take that on, and we look forward to it.

Our next question is from Mark Delaney with Goldman Sachs.

Nice to see the improved new rollouts to new locations. So thanks for all the updates on that. Chris, I was hoping to get your latest thoughts on AI technology and any new innovations that Aurora is looking at one thing that's had more discussion in the investment community and tech community recently has been world models, but curious whether it's that or other newer technologies that you're observing and anything that could be impactful for Aurora?

No. We continue to pay attention to what's happening outside. We're excited about the models that we're building at Aurora. We continue to be deep believers in verifiable AI. The idea that you would trust 1 of these giant trucks driving down the road with something where you just kind of hope the output is the right thing given the input. It just doesn't make sense. And so we continue to look for ways we can bring those ideas in and fuse them with our approach to ensuring that we can deliver a safe vehicle on the road.

Understood. My other question was around the planned start of operations without a driver this quarter. Maybe just speak a bit more, if you could please around what still needs to happen for that to materialize? Is it additional testing and validation or anything else that may still be left in order to meet that time line?

Yes. It's really imminent. We're excited about the progress we're making. It's predominantly testing a validation at this point. So we're continuing to look forward to having them on the road in Q2.

Our next question is from Ken Hoexter with Bank of America.

Great. Chris and Dave, earlier, you talked about some of the new routes going from Dallas to Laredo, Dallas, Oklahoma City. So for the 200 trucks by year-end, can you talk about how many total lanes would that encompass kind of what's the expansion target? And then how many different customers are part of that 200 trucks? Are you focused on the existing customers? You start talking about new stickers on the trucks.

Yes. So for the second question, first, we expect there to be many new stickers on the trucks by the end of the year. We continue to want to support and ensure that the folks who've been with us early on are able to benefit from it and grow their businesses. We appreciate the trust they put in us. But we aspire to have the Aurora Driver on every truck, ultimately. And so we're excited to have new customers come in and grow with them.

On the lanes front, it's really going to be driven by customer interest and demand and where it makes sense for those customers to have the trucks operating. We expect it to span across the Sunbelt, as we have said for some time, but the specific lanes and lane count will really be dictated by that. And that's what's great is that we're moving in the direction with our ability to unlock new lanes that it's a comparatively -- the complexity and difficulty of making that happen has come down dramatically. And so we can be much more responsive and reactive to where customers want us to operate.

Great. Makes a lot of sense. If I can get a follow-up then on the routes, right? So maybe talk about how much of that is, I don't know, end-to-end versus drop and hook yards or maybe just understanding the last mile at this point. And then on the production, if you're targeting 200 or 20 trucks a week at this point by year-end, how much can that scale into '27 on both the truck manufacturing and the AUMOVIO side?

Yes. Okay. So we continue -- and maybe let me make sure we mean by end-to-end. End-to-end means going from a customer side to a customer side, generally a distribution center or some kind to a customer distributions center or terminal. We're not talking about going to the Safeway or the restaurant. And so we expect by the end of the year that the miles that we drive are predominantly going between customer endpoints. That's our expectation. We think that is the right way to deliver the product. We think it's valuable to the customer. So we're looking forward to that. And as we mentioned, we're already doing the work with customers today with Werner, Hirschbach and others at Detmar, in particular, to open up their endpoints and operate those robustly. I feel like there's a second half of your question there that I lost somewhere. I apologize.

Just the second one is just back to the production, right? So you talked about 20 trucks a week and kind of thoughts on the scalability to '27.

Yes. So we're starting by setting Roush up with the bandwidth to be able to produce 1,000 trucks a year. As we go into '27, as we see the demand for that, we can increase that scale further. And we really see this as a complement to the other programs we're running with Volvo and Peterbilt, PACCAR. So it's a third option relative to those 2.

Thanks a lot. Thanks for the time.

Thank you. That is all the time we have for questions today. This concludes today's presentation. You may disconnect your lines at this time. We thank you again for your participation.

Hi, everyone. I'm George Gianarikas, one of Canaccord Genuity's sustainability analysts. Thank you for joining our second Annual Virtual Summit. We're incredibly excited to have with us from Aurora Innovation, Dave Maday, CFO. Dave, thanks so much for joining us.

Thanks, George. I appreciate it. It's always great to attend this conference and looking forward to the Q&A today. So let's get started.

So maybe first and foremost, broadly, there's been a surge in interest in the robotaxi market in the United States, internationally. But Aurora, for the most part, has stayed steadfast in their commitment to trucking. Why the commitment there, why do you think that's a more interesting market than robotaxis at least for now?

Yes. I think we have always been saying this, and I think it's all still true today. Trucking is the -- in our opinion is the best first market for AV deployment. When you look objectively at the market size, the economic impact, the demand perspective, and how we can help transform that industry. The proof points are pretty obvious. But let me just hit a couple of them, right?

Like so you think about the TAM, right? It's a $1 trillion market in trucking. The U.S. market for ride-hailing, I don't know, in the $60 billion, $70 billion. If you think about the unit economics truck drivers make 3x as much as gig economy workers, right? So there is a big difference.

The other thing is we can really provide an immediate benefit to the industry. It's not just the safety of it, and it's more about we can help deliver total cost of ownership benefits. And if you think about these carriers that have relatively thin margins, the ability to provide a better total cost of ownership, whether it be helping to curb some of the driver costs that are out there today or fuel efficiency where we're getting 15% more on our trucks that are operating driverless, no hours of service limitations and having a predictable supply, those are all immediate benefits.

And that's what technology is supposed to do, to transform an industry, right, is to create value throughout the entire ecosystem. Obviously, the self similarity of the trucking routes also is a clear advantage, in our opinion. If you think about we just launched in April, and we're already operating on 10 different routes. So our ability to take this and start to transform and operate in different areas is quite impressive.

We think there is a big need, right? The driver costs are escalating high. There are shortages, regardless of what the numbers claim. And the future everybody would agree, the average age of the driver is just getting higher and higher and higher, and we have to supplement that base.

That said, one of our missions is to deliver the benefits of self-driving technology safely, quickly, broadly. That's our mission. And part of that is into different use cases. For us, it's not about if we should go into trucking. I mean, into ride-hailing, it's when we should go into ride-hailing.

We have already demonstrated the transferability of our technology, right? This is not a challenge for us. In 2024, we were operating in Toyota Siennas between their headquarters and DFW Airport. We know our technology, the exact same software, the exact same hardware, operating on different use cases. So we know that we can do it. But for today and for now, trucking is the market, now is the time, and we're going to create tremendous momentum on that. And actually, when we do enter the ride-hailing market, we'll be at a really strong position from a cost perspective as well. So we're incredibly excited about the trucking market.

Can I ask you a question about the ride-hailing market because you did mention that there are still -- I mean when you originally came to market, there was a sort of dual path trucking and someday ride-hailing. It sounds like that's still maybe on the road map further out. When should we sort of expect maybe more news or a path to hear more about the path to ride-hailing from Aurora?

Yes. I don't know that we have anything to share today. We have always said we would go into ride-hailing at some point, and it's just a matter of when. I would say that one of the things we have to do is, the ride-hailing market, to be really successful, you have to help grow the market. To be able to do that, you have to have a competitive cost structure because you need to actually drive down the cost of ride-hailing, so that you're able to actually grow the market. And in our case, when we launch our third-generation hardware that we're co-developing and AUMOVIO is going to manufacture. At that point, we'll be building tens of thousands of kits. Our cost structure will be way lower on the hardware plus we'll be driving billions of miles and trucking.

And so we'll just have a -- we'll be in a much better position for scaling and realizing all the economies of scale that we need to, to then transfer into ride-hailing. So I don't have a date for you. I can tell you it will be some time when we launch the third gen and we haven't lost sight of the opportunity. I think the trucking opportunity is massive, and we're really excited to lead that space.

So maybe to refocus back on trucking. The estimate is around 200 billion miles driven per year in the United States. Maybe for the audience, discuss your SAM over the foreseeable future and maybe a little bit more around the geographic expansion that you plan to put in place over the next several years.

Yes. I think the easiest way to do it is -- and it is it's 200 billion-plus vehicle miles traveled. And what we do is we look at the areas that we're going to create the greatest value for autonomous driving. So the lane should be relatively long and they're predominantly highway, but there's also you have to go off-highway, you have to deliver to where customers are on their endpoints. The vast majority of these distribution centers and warehouses are within 5 miles of a highway. But generally, you kind of look at it that way.

For us, by the beginning of we expect to be operating in what we would call 50 billion SAM, right? So 50 billion vehicle miles traveled in the SAM. So this year, our focus is going to be on having a technology that can operate throughout the Sunbelt and then we'll start to head north and we'll continue to go from there. So we've always said like 50 billion is a really great number.

I mean, to be honest, that where we're operating today represents, I think, it's like 3.6 billion vehicle miles traveled just today on the lanes that we are operating on. So you can see how it really grows relatively quick, and we're really excited about the growth of that. And again, we create great value, especially on these long haul, over-the-road trips, and that's our predominant focus area.

Maybe to focus on the OEM partnerships. There was a while early days when those were deemed to be not as important. I think the industry has realized that they're incredibly important. So maybe just a little bit of an update around your relationships with PACCAR and Volvo and how those seem to be progressing.

Yes. And OEM partnerships has always been part of our strategy in our ecosystem from day 1, we have been talking about that, and we think it's important. We think it's important because it is the best path to scale to tens of thousands of trucks, right? When you can get a line-side installation of an Aurora Driver kit, into the vehicle assembly lines, then you're utilizing existing capacity, existing footprint, existing processes and you're building on top of that. And so it is the most efficient path. It's not the only path. It is the most efficient path.

For us, PACCAR and Volvo remain committed partners. They represent about 50% of the market. We've made a lot of progress, especially with Volvo this last year, right? We just started to have line-side installation of an Aurora Driver kit into their preproduction line to just really work out the processes so that we can be prepared for launch. So for them, there's not going to be any upfit. It's going to be basically right from the Aurora Driver kit that will be sent from Fabrinet right over to Volvo. It will become right off the line, and it will be a fully equipped truck.

PACCAR, we obviously -- our first generation of trucks that we're operating in driverless is with PACCAR trucks, Peterbilt trucks. They're a little bit further behind, to be honest, we expect them to be ready when our third-generation hardware kit comes into play, but I don't have specific timing on either of them.

I would say also what we looked at this last year, especially in the last half of the year is the technology was really advancing nicely. The customer demand was very high. We were really a little bit short on supply of trucks and so that is why we decided to introduce another fleet of trucks to our portfolio. So we're taking international stock trucks. We're putting an Aurora Driver hardware kit it on them as well as an overlay of a drive-by-wire system to have the necessary redundancies.

So we've worked on the design and engineering with folks, we are going to -- we're doing our first build right now of those trucks, and they're actually out driving around. We will shift the upfit capabilities over to a partner called ROUSH, very well recognized in the automotive industry for upfitting, and with this second fleet of vehicles, it will be the first time we've introduced our second-generation hardware kit. They'll be based on international trucks. They will be driverless. We expect to grow that fleet. As a matter of fact, in the third quarter, sometime ROUSH is going to be building 20 a week of these. And so that's what gives us a ton of confidence in our ability to actually grow our fleet this year.

So we've had the technical. The technical is always going to lead a little bit, right, because you always want to know where you can drive before you start contracting where you're going to drive. But it's been a really exciting opportunity for us.

I'm kind of disappointed by the partnership. I was expecting to see you the hard hat kind of screwing in some of the equipment, but I guess not.

Well, in fairness, you probably wouldn't want me doing it. But our team is actually building the first 25, and they're really great. And so they put all the instructions together and then they hand it over to ROUSH. So it's an exciting partnership.

One question that I get a lot is about Volvo. And when they launch their line-side manufactured trucks, will they be observerless when they get on the road.

Yes. There will be no need or request for a ride observer from Volvo. There's none from international. There won't be any from the PACCAR trucks that are built at their plants and those that aren't upfitted. The ride observer is a thing that just for this current fleet of trucks it's not an indictment on the Aurora Driver at all. It is a reflection of the fact that PACCAR has prototype parts, and they're very conservative and they would like to have that added value of safety in their mind, for us, the Aurora Driver has to handle everything as anticipated, and that's what it does. So the Aurora Driver behaves as anticipated.

In terms of time line, I can't share their time lines, but we're excited about the progress Volvo is making, and I kind of shared with you where I think they're going to slide in.

The industry has for a while now coalesce around this 2027 date when everyone seems to expect scale, right? You've said it, others have said it as well. What is it about that year specifically? How confident are you that that's the gear that's going to happen? And well, I guess we'll get into the hardware question in a second about the cost downs for Gen 3 hardware. But why 2027?

Well, I think '27 is going to be great. I actually think '26 is going to also be awesome. If you think about our crawl-walk-run process. We're now getting to the walk stage, right? We were in the crawl stage of the first year, the walk stage where we're going to start to have a meaningful number of trucks on the road. 2027 is the year though, that we are going to do a couple of things, right? Number one, we're going to be migrating over 200 driver as a Service business model which is the ultimate model that our customers want. It's the capital efficient model for us. The second thing is that we will be launching our third-generation hardware kit.

So again, our first-generation hardware kit, limited supply, hand built by Aurora, great, demonstrates the technology, but pretty expensive, not designed to 1 million miles.

The second-generation hardware kit, which is being designed by us but manufactured by Fabrinet. We'll be able to build over 1,000 of them, but we have -- still have a limited supply of how many you can build on the contract factory.

And then that third generation kit, which we'll launch in 2027, that's when you're starting to be able to build tens of thousands. If you're putting in the capacity to build tens of thousands, you need to make sure you have truck supply, customer demand as well to match that capability.

So for us, '27 is really a -- you guys might describe it as kind of going to more serial commercial production. For us, we think this is going to be a great year in '26. You're going to get another bump up in '27 and then '28, it's going to -- basically, everything is going to be feeling like serial production.

And what about bringing the costs down to -- in the Gen 3 hardware? How confident are you? What kind of line of sight do you have that that's going to happen? And particularly, and this is sort of the same question, you have your own lidar, right? And that's -- you see that as one of your competitive advantages. How confident are you that you can bring the costs down there to get to the gross margin targets that we -- that you've shared?

Yes. I think our confidence is based on the execution and track record that we're seeing on Gen 2 and the early work that we're seeing on Gen 3. So if you think about -- and I also think this is what separates us from any other AV trucking company out there, to be honest. We are the only company that I know that has a first-gen kit in operation getting ready to launch a second gen kit and also in development of a third gen kit, all with a different level of scalability.

Our second gen kit is appreciably cheaper than the trucks that we have on the road today. It also is designed to meet 1 million miles. And my degree of confidence on the ability to achieve both of those is sky high because we're -- we've already sourced all the parts. We're doing builds, we're getting ready to do our C builds that go on commercial trucks.

So at this point in time, all the commercial agreements are locked in, right? We're also in finalizing our testing and our testing supports our conclusion that these kits will be able to last 1 million miles. So I'm really confident today.

Now I'm building upon that into the third gen. And there's a couple of additional things we have. Now we've got engineering capabilities where we get to share the best of what Aurora is doing as well as what AUMOVIO is doing. We're able to have better manufacturing processes because contract manufacturing is still relatively labor-intensive.

Full production serial manufacturing is far more automated. So you're going to get far more automation out of the manufacturing side. We've got a lot of DFM work with the AUMOVIO folks and are experts in this, and then obviously scaling. There's a difference between buying 1,000 to 2,000 kits and buying 10,000 to 100,000 kits, right?

Like there's just a big stair step in each of these. And we've seen -- in our early work, we're already getting cost quotes in. We're already starting to do our early builds. And what we're seeing is that the cost is coming in roughly where we planned in some cases, better and in some cases, slightly worse, but overall, roughly to where our plan is.

And this includes FirstLight every iteration of FirstLight is more capable and less expensive. And part of the reason it becomes less expensive is just easier to manufacture, right? We're going to the small lidar on a chip, which is infinitely easier to build and manufacture than the current lidars that we have on the road today. So we are very confident in that. And the reason we're confident is the execution that we've had today. So it's not like we're just starting out. We've been working with AUMOVIO for 2 years.

Maybe to go back to the OEM partnerships, you have very good relationships with PACCAR or with Volvo. But there are others who are trying to get into these OEMs as well and become their autonomous provider of choice. How likely is it that we'll see some of these OEMs adopt second, third suppliers? How difficult is it to break in? And sort of where do you see the steady state of the market over the next couple of few years, 1, 2, 3 suppliers of autonomous solutions?

Yes. I think if you're a carrier, right, or a private fleet that's looking to adopt autonomous technology, you would always like to have choices. It's the same reason as carriers buy multiple truck brands, right? They would like to have choices for leverage and understanding.

In the case of AVs, it's a lot harder to have a really great product. So just the number -- just to have a choice, to have a choice isn't particularly useful, if you don't have the confidence in being able to avoid that technology. So I do think we have a kind of a multiyear lead in terms of building the trust with being kind of the technology of choice in the trucking. Others will come. I'm sure of that. I think it will be a small number of folks, to be honest. I think integrating into their systems is equally challenging, and you need to have a fair amount of respect and expertise and work to be able that you're integrating within each of these.

We expect that our continued progress, our integration with these teams, we're going to create such enormous value for our carriers and for our customers that, sure, they may have an opportunity to try out different things and they probably will, but I think they're going to choose us just because we are going to be the supplier of choice, right? Because we're creating value, we're driving fundamental improvements and changes in the industry, and we're kind of leading the way in this. And so for us, we're really focused in on that.

Will there be other players? Probably. Do we require exclusivity? No, not really. Do some people want exclusivity? Sure. But generally speaking, competitiveness breeds innovation and that's always useful for an industry that is, frankly, been a little light on innovation over the last 100 years.

So should we expect additional OEM partnerships from Aurora over time?

Well, I have nothing to share with you today. I think we've said many times that we believe that we will have the best system out there, the best engagement with our customers, the safest product out there. And we would expect to see the Aurora Driver on all truck brands. We now have added 1/3 with international, a slightly different approach on how we do it, but we've added 1/3. I would expect that we will continue to be the AV technology of choice and who knows what the future holds with other brands.

Fair enough. And could there be international, it's not the company, but just geographically international expansion over time?

For sure. I mean, I think some of the same challenges that exist across the globe exist here in terms of the need for the trucking industry. If you look at Japan as an example, it has a very similar challenge with aging driver for us, really high cost of labor, a lot of restrictions in terms of use and a lot of inefficiencies and low margin. So there -- every geographic area has an opportunity and a need. Our focus today is in the U.S. We think it's an enormous opportunity, and we would like to make sure that we do U.S. great. But I think global expansion is something you would expect.

Maybe in the last few minutes, we were talking offline about the regulatory environment. There was an announcement in a forum a few days ago, in which Aurora participated. Can you sort of talk about what you expect that framework to look like over the next few years? Right now, it's sort of a patchwork of federal and state regulators, but how should we expect that to evolve? And will it become easier for Aurora to deploy its trucks in other states over time?

Oh, boy, I don't know if I should be forecasting how the regulatory system is going to evolve and change over time. This is what I would say, we look at it predominantly from a state and federal level. There's obviously -- we work really well with local municipalities and agencies and things like that as well. But like the 2 fundamental frameworks are state and federal in terms of like trucking.

From a statewide perspective, as you know, majority of states allow this driving one of the big states that hasn't allowed it in the past is California. They're working on some trucking regulations right now that they would like to adopt for '26. We'll see where that goes. It's political season, so you're already starting to see some political stance associated with that. But they've been very productive discussions. We work with state regulators to try to demonstrate and talk about the benefits, both ourselves as a company and through our coalitions and partnerships like EMEA.

At the federal level, there's been a lot of positive momentum. If I was being honest, the prior administration, there wasn't a lot of forward momentum on this particular topic. The current administration, there's a lot more momentum. We've got the AMERICA DRIVES Act. We've got engagement with Secretary Duffy in the Department of Transportation. We are trying to play an active leadership role talking about the benefits and the capabilities and the responsible framework to roll out.

If a framework came out from the federal government, I think it would be beneficial to avoid some of the state-by-state fighting that goes on from time to time, but we'll see. The thing that's most encouraging to us is, at the federal level, it's the support for innovation and competitiveness and kind of this American leadership perspective. And we'd like to be a part of helping to develop that technology that gets us a leadership position. So we're positively optimistic and we'll see where it goes.

Great place to stop. Thank you, Dave, so much. Best of luck. Talk to you soon.

All right. Thanks, George.

Great. Maybe we can start. Thanks, everyone, for joining. I'm Ravi Shanker, Morgan Stanley's Freight Transportation, Airlines and autonomous trucking analyst. And we have literally saved the best for last. And we are very happy to have with us Aurora Innovation CEO, Chris Urmson. Chris, thank you for coming back to the TMT Conference.

Thanks for having me. Great to be here.

Before we start, as you pointed out, I have to tell you that for important disclosures, please see Morgan Stanley's research disclosure website at morganstanley.com/researchdisclosures. And please read these disclosures.

So Chris, it's probably been the most important and successful 12 months in Aurora history. You guys have cleared a lot of milestones over the last 12 months. So for those less familiar with the story, can you just give us a really quick recap of what's happened over the last year and what catalysts we can look forward to in '26?

Yes. It has been a heck of a year, and it's -- '26 is shaping up to be even better. So we focus on delivering the benefits of self-driving technology safely, quickly broadly in trucking. In '25, we launched the first driverless trucks operating daily in the U.S. We're the only company operating them regularly every day. It's exciting to have them on the road. Over the course of the year, we went from operating in daylight conditions on a particular route and good weather to now operating day and night across a variety of routes in the rain and more wind and that kind of thing. '26 is going to be even more exciting for us.

So at this point, we're running kind of a handful of trucks on a daily basis driverlessly. By the end of the year, we'll be running a couple of hundred trucks driverlessly. In Q2, we're going to launch our second-generation hardware on our newest truck platform from international and have that operating again driverlessly, nobody on board, serving customers. And we're going to grow across the Southern U.S. over the course of this year, demonstrating our ability to take this generalizable, verifiably AI technology that we have and apply it in ways that really meet customer need. So it's going to be very exciting on that front.

Those couple of hundred trucks, we expect to end the year using those to generate $80 million revenue run rate, which is going to be a nice step forward for us on the revenue front. And then we continue to make great progress with our partners. With Volvo at the end of last year, we had the first trucks come off the assembly line where they had taken our hardware, integrated it in the factory and had it roll out. It is a big step because we're not just working on the technology and making the technology talk to each other, but actually working with their manufacturing teams so that they can actually produce these things at scale.

We've put in place a capability to upfit trucks with by wire and the Aurora Driver that's going to allow us in the back half of this year to be producing 20 trucks a week, allowing us really to grow aggressively to meet that customer demand. And then Aumovio, our partner for our third-generation hardware continues to make strong progress so that we'll be in place with the capability to build tens of thousands of trucks coming in 2027. So really just going to be a whole lot of fun this year.

Got it. Maybe just to take a step back here, there's a lot of focus. When people talk about autonomous, they think of robotaxi, not as much on the trucking side. But it almost feels like trucking is a better use case, a better application for autonomous maybe to begin with, and that is why you guys chose trucking over robotaxi, which you will eventually plan to get into. So can you just walk us through your vision of how autonomous trucking rolls out? How does that impact the economics of trucking? And what share of the market do you think Aurora can ultimately capture?

Yes. So -- you're right. We think of trucking as the right first market. It's a very hard market. Actually operating these 70,000 pound things on the freeway at 70 miles an hour is extremely challenging and make sure you can do that with conviction and the safety and safe operation of the vehicle. The great news is we've cracked that. We expect over the course of the next several years, to basically get to the point for customers where they're not operating our system, they're really not going to be competitive. The economic opportunity for them is really profound. We can take the asset, the truck that's one of the biggest parts of their cost structure and double the utilization of that, moving from 11 hours a day, which is what you limited to with a person driving a vehicle to approaching 24 hours a day.

Similarly, one of the big challenges that operators have is a combination of high turnover in the driver pool and the fact that over the next decade, we expect to need 1 million more drivers, and we just don't know where they're going to come from. Aurora Driver will provide a way to complement the people they have driving trucks today, that's basically a safe, scalable pool of drivers.

On the economic side, on the bottom line, we expect to have some huge benefits to customers. Today, the cost of a person driving truck is about $0.995 per mile, plus another $0.15 to $0.20 of indirect costs. We expect to price at $0.85-plus per mile. So that in and of itself is a significant economic benefit. You add to that the fuel economy benefits. So we expect between 40% and 34% improvement in fuel economy, which is huge when you think of fuel as one of the big 3 costs for these drivers -- for these companies.

And then, of course, the safety benefit of this is real. You won't talk to a trucking company who doesn't lead with safety is the most important element and the combination of the Aurora Driver's superhuman capability that is paying attention 360 degrees to be able to see further at night than a person can, be able to react without ever being distracted, it's just going to be profound.

Got it. Understood. Just looking at the autonomous trucking space, like you said you guys are leaders, kind of you're the only ones doing what we're doing right now. There are a few -- a handful of other companies who are trying to attack similar or adjacent parts of the business. Can you just talk about what makes Aurora unique? Is it a tech stack? Is it OEM relationships? Is it you and your genius, kind of what really sets the company...

Let's not be the last one.

Highest multiple.

That will be a short shortfall. So I think these are like all of what you mentioned, except for the -- but the fact that we have verifiable AI, the fact we're the only company running this stuff for real on the road today that our verifiable approach -- verifiable AI approach is just critical when you think about we're the tip of the spear for this physical AI revolution that's happening, making sure that we don't just have a thing that we think works, but that we know works and have conviction in that.

When we talk about the OEM partnerships, the fact that we work with 3 of the 4 OEMs in the U.S. today, no one else can say that, right? And obviously, you can't have a driverless truck without there being a truck. When we look at our hardware supply chain, our second-generation hardware will be produced by Fabrinet and now it takes us up to about 1,500 units. But then the partnership we have with Aumovio is a huge competitive advantage. As we look from the hardware we have in vehicles today to our second-generation hardware, we expect the cost of those components to drop in half and the durability of those components to triple.

As we move to the Aumovio hardware, we expect that cost to come down by another -- or the cost to come down by another factor of 2. At that point, we really can not just scale because we have the quantity, but scale because we actually can have the price performance that we want the cost of goods sold to build a hell of a business. And then the relationships we've been building with customers are deep. These folks have been with us for several years. I'm a big believer that they care about safety. They care about that this will help them build their business. Once we start working with these customers, once we are able to have a strong partnership and build value with them, it's going to be very hard for someone else to come in and play, right? Do you really want to put the safety and risk your business when you have something that's working well with somebody who might come in late with some other offering.

Got it. Understood. Just one follow-up there. Kind of you mentioned AI, obviously, a huge theme of this conference for the last 3 days. It's come up a couple of times. But can you just talk about your view of how AI plays in the development of this technology? Because you guys have been around since 2017. You've been one of the first -- the first time I heard of simulation and saw what you can do and kind of blew my mind kind of several years ago. At the same time, you also have had actual rubber on road and are testing in the real world as well. What is the right balance between simulation and real-world testing in your view?

You need to use the right tool for the right job, right? So we -- first and foremost, simulation is great, but actually a simulated test is actually what you want. You need to not just be able to kind of make the world move forward in some simulated way. You need to know whether it was good or not. And that actually turns out to be quite hard and another step beyond just simulation. For us, it's also important that, that simulation is not just pretty pictures, but it's actually grounded in reality. So when you get a return back from an object in the world from your LiDAR simulator, is it actually coming back at the right probability? Does it have the right intensity, right?

These are things that if you don't put attention to, you get something that looks pretty, maybe looks to the human eye as representative, but has a meaningful difference in the statistics of it that are going to cause problems when you actually see -- compare the performance relative to what you see online. So for us, we've been a believer from day 1 that it is less about the quantity of data, it's about the quality of data that you have. And so we target collections where we need to. We have a variety of test tracks we'll go out to gather data, but then we can amplify that data, we can create scenarios that we wouldn't otherwise be able to safely generate in the real world through simulation.

Got it. And just to close the loop on the tech side, not everyone is using the same tech stack in the industry as you would expect.

I hope not [indiscernible] stuff.

Fair enough. Do you think it's kind of there's going to be one singular approach to this? Or do you think there's going to be 4 or 5 different players with 4 or 5 different technology solutions kind of -- but all of them really work. I think the biggest -- I won't say controversy in the industry, but kind of the question mark is around the need for etchy maps or not. So what's your answer to the mapping question? What's your answer to LiDAR versus vision only? Or do you think all of them work?

I guess my answer is that we need to deliver a safe system and we deliver it quickly, right? And that's kind of the start of our mission statement. And so when I think about maps, what are computers really good at? They're really good at storing and recalling information. We should lean into that. It turns out it's a hard engineering problem, but done well, you can actually leverage it.

I also think that when I drive near my home, I'm a much better driver than when I drive in some other part of the country, not because I lose my skills in another place, but because I have less understanding about the world, and I'm reacting in real time rather than be able to kind of have a cash model of what's there, I'll be able to use that and exploit that and make my decisions.

So it seems fairly obvious that be able to know what's coming in the future rather than having to figure it out instantaneously is the right answer, assuming you can do the engineering to make that happen. It turns out we've been able to do that. And our ability to build maps is now really an operational problem. It's not a technology problem. And when I say problem, it's just -- it's a thing we have to do. We know how to do it. We're not at all concerned about the ability to scale those maps.

When it comes to the sensor suite, we are strong believers in multimodal sensing. We believe that because they have different failure modes and benefits, cameras have higher resolution, but don't see depth directly, can get obscured by things. Radar will punch through things, but it's lower resolution and doesn't see color. Our FirstLight LiDAR can see further than anyone else can and allows us to get geometry at a range that you wouldn't otherwise be able to.

So we see that complementary set of capabilities is really important. We see that play out in practice when we're driving through weather, when we're driving through dust doors, we're driving at night. And so the question really is not -- is why wouldn't you use these things, industrialize them, bring them to a point where they don't impact the cost negatively and make it work. If you ask anyone working in AI, would they like more data or less data? They're going to save more. And this gives us this complementary set of data. So yes, we're big believers in multimodal sensing.

Got it. So maybe a follow-on question is we were discussing this before the start of this session that when I speak with investors on your story the goalposts keep moving, which is a very good thing because it shows that you guys are moving to the goalpost. And I think the most recent one or where we are right now is it's gone from does this work? People are now convinced about to can this scale, right?

And one of the questions we're getting is, does the need for mapping constrain your ability to scale, right? So can you address your confidence in scaling, both in '26 and as well as when you start commercial production next year from the perspective of routes and operations and kind of where the truck can work and then also scaling from a volume perspective and kind of getting up to 200 trucks and then 1,000...

Yes. so on the map scaling side, literally no concerns, right? That this is a thing where we have built the technology. We know how to roll it out. We were able to open up 10 lanes, go from 1 lane to 4 lanes to now 10 lanes very quickly. It's really going to be driven by customer demand and scale of vehicles. It turns out if you have a handful of vehicles that you can operate driverlessly, opening up 20 lanes is not useful because you don't have any trucks to put on them. So for us, there -- we'll continue to advance and improve the efficiency of that process, but this will not be a limiter for us as we scale and build the business this year.

We've also unlocked the ability to get a couple of hundred trucks on the road. So we now have a partnership with Roche, where we'll be taking these international trucks. They'll taking our by-wire overlay. We'll be taking our Aurora Driver second-generation hardware kit and installing them. It turns out upfitting is a very common practice in trucking. So we'll be using this as an upfit facility. And then these trucks will be deployed into market, like I said, in the back half of this year at 20 trucks a week. So far, we're getting very positive signal from customers. They're excited for this as we start to unlock these long lanes like Fort Worth to Phoenix, which is 1,000 miles, no human can drive that in a day, at least not legally, right? And so the fact that we can start to unlock real value for customers over the course of this year is going to be a big way that we see this kind of supply that we will now have get absorbed.

Got it. And just to clarify to the audience kind of when you say scaling up to get to commercial production, like eventually in '27 when you have the full launch, you're not actually going to make anything. So there's no CapEx cliff kind of there's no...

No, we don't see a CapEx cliff, right? So we work in partnership with others. So the hardware that we're putting in the vehicles this year is our Gen 2 hardware. Next year, as we -- as the Aumovio hardware is produced, we have this phenomenal partnership with Aumovio. It's an incredible team, incredible company. We're working together to deliver that third-generation hardware. The Aumovio folks have invested and they're investing roughly $350 million to allow us to do the engineering work together to put in place the manufacturing, and ultimately, they finance the hardware, and we pay them based on the utilization of that hardware. And this is actually one of the most lovely bits of partner alignment that you can imagine. Our customers get paid more, the more their truck drives. We get paid more, the more that customer drives the truck and Aumovio gets paid more, the more that we drive that truck for a customer. And so through the stack, we have this complete incentive alignment of we want that truck out there operating effectively and serving ultimately our customers, the shippers.

Got it. Just to close the loop on the topic of scaling. You guys did your first Driver Out run on a public road end of April. You just crossed 250,000 miles with just a few trucks in your fleet. So that was a pretty good scaling right there. Obviously, no reported incidents or any issues there. So what have your biggest learnings been? Like has this been like exactly as you expected? Like what have been the biggest surprises, positive or negative?

Yes. It rains a lot in Texas. You can look at the weather and you can see like here's the rain. It turns out somewhere around 40% of the days this last year, we weren't able to operate because of various weather conditions. And so that was -- as we -- as kind of entertaining, but it is what it is. We now have the ability to operate in rain and we'll continue to enhance the kind of the level of rain that we can operate and the level of environmental conditions we can operate over the course of this year.

So taking that off of -- out of play is a big deal for serving customers. You don't want to be Hirschbach and say, sorry, the berries can't get to the store today because it's raining out. So that's a big step for us. I think the other -- like there's this thing that you have to have belief when you're building a company, building technology that you're going to get there and you're like, yes, we're doing the things. I believe we're doing the things. This is going to work. And then there's a moment where you actually did it and you see how it played out.

And I think in terms of the process we use for releasing and how we've made that repeatable, we can push new releases on a regular basis, the fact that the performance fee on the road for the most part, aligns up with what we expect, right? Like that's actually been a big deal because it gives us continued confidence that we're kind of on the right path. And this will scale, right? If we kind of test one hypothesis and that succeeds, then kind of the extension of that hypothesis becomes more likely to succeed. And that's what kind of this place we're in right now.

Got it. Maybe switching gears a bit and talk about a few numbers. You referenced the $80 million revenue run rate for 2026. Can you just talk about the big moving parts there and kind of what will get you up to that level, obviously, scaling up the fleet, but also give us a few more details on the Detmar partnership that you guys announced.

Wonderful. Yes. So we get paid on a utilization basis. So we drive for customers. Today, we own and operate the trucks. We effectively operate like a trucking company, but we do it under the flag of our partners. And so that's reflective of miles we expect to drive heavily weighted in the back half of the year.

The Detmar partnership is one of these really wonderful ones where we were not thinking about this as an application. This customer saw the progress we're making. They've seen some of the press about what we were doing. They reached out and said, "Hey, we're moving sand between this mine and this distribution center. We need to drive on freeways. Nobody else seems to be able to do it and you.

And so of course, we looked into it. They basically want to create a virtual -- not treadmill, basically virtual conveyor belt with trucks. So the more the trucks drive, the more sand they can move, the happier they are because their customer has basically an insatiable demand for this. So this has been one of those places where just by -- somewhat by happenstance, customer reached out to us, and this will become an incredibly interesting bit of business, and we expect to be able to grow that dramatically.

Got it. So just a follow-on from there. What have the customer conversations been like? Because this is historically viewed as a fairly conservative industry where people are somewhat skeptical about technology. But at the same time, if you can give them technology that will actually save them money, improve their productivity, people are all in on it because math is the only thing that matters in this industry, right? So have the customer conversations ramped up after you've past these gaps and these goalposts? Or are people waiting for a final launch to kind of fully roll out?

So I'd say, first, there's a distribution of customers, right? There's no one kind of persona. There's different flavors of risk and appetite. What we have seen is that ability to move from the hypothetical of what this could mean to your business to the practical of, no, this is real. It's operating driverlessly. It's about to start scaling out to places you care about, really has changed the tenor of conversation. At this point, we effectively have more demand than we can possibly supply in the next little while here. And so that's just a very exciting place to be as a business.

And what's been even more exciting is that the -- the conversations have changed, particularly with folks who've been with us for a while from I'd like to get access to, to I'd like to get access to and ensure that I have priority on this. I don't want someone else to come in, right? And they ask, we get exclusivity? The answer, of course, is no. But for folks who've been with us for years, we want to reward them. We want to say, like, thank you for making the bet with us. We'll help you grow and build your business. And then we'll expand from there as well.

Got it. So maybe moving through some of the capabilities of the truck itself. Obviously, you referenced that you can drive through rain and fog as well, kind of you noted how often it rains in Texas. Obviously snow has been always kind of big question mark that people have had. Just talk about the kind of capability of the truck and when do you get to a point where you can cover the entire country. And to what extent does that unlock more of the market for you?

Yes. So obviously, being able to drive more places just intrinsically unlocks more market, right? if you can't go the place the goods need to go, it's not helpful. What we expect is over the course of '26 is we'll unlock the Sunbelt and then we'll start to push north from there. I expect this will just -- this will actually move very quickly. Today, like as you said, we operate in a certain set of weather and environmental conditions. But we're already doing the work to start pushing towards snow, that doesn't sow in the summer. So we've got trucks out gathering data in the Rockies right now and chasing snow to make sure we've got data sets that we need. We look at this, and we don't really see this as like there's a thing made of it, but it's not really a big thing, right? Like people talk about it because early on, we want to get something on the road. It's useful to be places and then we'll kind of add capabilities in. At some point, we'll get snow in there. I think we're planning to do light snow certainly by the end of this year.

Got it. Sounds good. I'll open it up to see if any questions in the audience. If not, we can keep going. So kind of...

I know it's a smaller private. Can you speak to Gatik as a competitor and how they are going to market versus you?

Yes. I don't know a whole lot about Gatik. They have been working on box trucks. It's hard to tell exactly what's happening. First and foremost, though, I look at this space, and it is gigantic. We believe we have a multiyear lead on folks. We welcome competition. We'll continue to execute, but I don't have any particular insight into that company.

Come back in a second. You referenced the way you're building up revenues over the course of the year. The margin trajectory, I think, is mostly tied to the second generation, eventually a third generation of the kit. How much visibility do you guys have into the math there and that cost reduction?

Yes. On the cost of the hardware, we have very good visibility into that. The hardware that we're building for Gen 2, we're manufacturing that today. We understand what the cost is. We have the supply agreements in place. So we know what that cost is. We feel confident in that cost structure. When we talk about the Gen 3, if anything, I'm more confident in that. One of the reasons you work with a company like Aumovio is their superpower is the process of manufacturing and the supply chain management. And so on a weekly basis, we're looking at the bill of materials costs. We understand the assembly cost, but we understand what the full kit cost is. So we feel very confident about where we expect to end with those components.

Got it. And any particular concerns around supply chain or other issues, like -- because LiDAR was a huge thing for a while and can you source them as such.

Yes. We continue to pay attention given that we're building something as advanced as we are, there are certain kind of single source risks that we have in the supply chain. I think most of the companies at this conference probably have some kind of supply chain risk with NVIDIA as a single source. And of course, we use their Thor SoCs. We're one of the lead customers for that. But no, we look at this. And again, part of the advantage you have with working with an Aumovio is that's what they do, right? They make sure they have a core team that we would never be able to hire that handles supply chain management and make sure the suppliers are credible and have alternatives lined up where it can be.

Got it. So 2026 will be when you launch the Volvo program, you'll take the observer out of the PACCAR truck and you have the upfit on the international program as well. So...

We haven't said any of that.

Maybe that was a pretty clear overview there. I tried -- sorry. But if all of these happens, right? So when do we get to a point where a driverless truck is the only Aurora truck that's running on road kind of at what point does that happen?

So we will be running trucks with operators on board indefinitely because we will always be developing and improving the system, but that will become a very small minority of trucks. By the end of '26, my expectation is we are already at a small minority of the trucks that are on the road, right? As we think about just scaling to hundreds of trucks out there, we can't have 500, 700 drivers sat by hoping -- or hoping they don't need to go drive that day. So our expectation is later this year, the vast majority of trucks that are operating [indiscernible].

Got it. Sounds good. And just on that point, right? So again, you guys have been hitting all of your catalysts and your key milestones, some of them ahead of schedule. But it still seems like there is some level of conservatism on the OEM side, kind of going back to the need for an observer kind of after you pull the driver out. So what is the risk that you guys do everything you have to, but maybe some of the OEM side or maybe the carrier side move slower than you would like in terms of adopting this technology?

Yes. There's risk in everything. If any company here tells you there's no risk in their business, I wouldn't buy that stock. But what we can do to mitigate this, one is we continue to have good strong working relationships with them. With the partnership we have or the relationship we have with international, where we're buying stock trucks, upfitting them, we've basically taken that kind of schedule risk from the OEM and taking that as one that we can control on our side of the ledger. And so we think that's an important way to kind of help mitigate that risk.

But I think the biggest thing, though, is getting these trucks in the hands of customers at scale. There's nothing that motivates a company more than their customers saying, if I can't get the thing I need from you, I'm going to go buy it from your competitor. And so while we have enthusiastic partners, they're working well. I think as the reality of this is in the market, people are using it, they're demanding it becomes a thing. I think that will just help provide a virtual feedback -- a virtuous feedback loop through our partners.

Got it. That's good. Last call, if any questions from the audience? Maybe there's a couple -- a few minutes left here. So kind of just to hit on numbers again. So you're targeting breakeven gross margin on a run rate basis exiting 2026 and positive free cash flow in 2028. Can you just talk about the balance sheet and kind of the cash used and liquidity until you kind of ramp up?

Yes. We feel like we're in a very good place. At the end of the year, we had $1.5 billion in the bank. So that's a really enviable position to be in. As we look at how we expect the business to roll out over the next couple of years, we think that will carry us through to that run rate free cash flow or free cash flow on a run rate basis. The provisos on that are that we will use our ATM to fund the tax obligation and our RSUs, and we'll likely use it to cover the cost of our [indiscernible] but modular that, we feel good about the capital we Have.

At some point, we're going to want to make sure that we have a responsible amount of capital on the balance sheet. We'll find the right time when -- basically when the catalysts have been reflected in the stock and find the right time to put a little more capital on the balance sheet. But we feel very good about that. It's a great position to be in where it's like, yes, we just execute. This is all going to work.

Got it. Speaking of medium to long term, kind of you guys obviously have the partnership. Uber kind of has a historical stake in the company. And you initially started at us doing both commercial trucking and robotaxi ride-hailing. So when do you think -- I know you guys are going full speed ahead on launching commercial truck, but what's the time horizon for ride-hailing and maybe kind of local delivery as well?

Yes. I think this is a really important idea. So the capability we're building is not just an ability to drive trucks, but it's a generalized driving capability. And even more broadly than that, we're developing the process and tools that allow you to launch a safety critical physical AI system, right? Something where if you do it wrong, people get hurt, and we want to make sure that we do it right. That travels. And so today, if you ask me if I could spend another dollar anywhere, I would spend it on our trucking business because the lead we have is profound, the opportunity is great.

Just -- the more we can get that to happen, the better. But within the next couple of years, that business is going to be going, right? And we're going to be -- there's going to be execution to perform, but it will be off and running and folks will start to recognize that that's kind of on escape velocity, that's the point where I want to start looking, okay, where is the next best opportunity, the greatest ROI for us to take the competence we have and point at it. And today, it's not clear to me whether that is other elements of the logistics space and stay in that vertical or whether it's to start to look at ride-hailing and start to enter that competition in personal mobility, do that fighting downhill though, because we will already have scale in the system, which will help us drive the cost out of the Aurora Driver, allow us to go enter that market in a more competitive way, which is great.

But there's also agriculture and mining, drones. There's lots of places where we can take that competence that we have, that physical intelligence, that verifiable AI approach and deploy it. And so it's going to get really fun. It's going to be a hell of a lot of fun building this truck business. But then as we start to send kind of green shoots out to go after some of these other adjacent areas, it's going to be very, very exciting.

Can you just expand on that a little bit because if you go back 10 years, the early days of autonomous driving, there was some skepticism that you could take a system off of a car and burn in a truck or vice versa. Does AI now let you do that kind of much easier than it could have been before?

I wouldn't say it's AI, but what I would say is it's the architecture and design of the system. So up until a couple of years ago -- maybe even 2 years ago, we were running our Aurora Driver on both Toyota mini vans and big trucks. So we have thought hard about how do we architect the system so that it can be applied. Frankly, when we go from moving a big box truck down the road to driving a little passenger car, it's easier.

And so then when we think about, again, moving from Class 8 tractor trailers to Class 6 box trucks, like -- that's just going to go, right? And so it will -- we're very excited about going to take on those markets to serve customers in those markets to deliver the value there. But again, every dollar I can spend now on trucking is going to have a higher ROI than any of that. So let's go do that first.

Got it. I think one of the most common questions we still get in the space is on the regulatory side, and it feels like there has been a lot of positive traction in that area. Can you just go over how you see that as you kind of on the cusp of launching commercial operations?

Yes. We do not see regulations as a barrier for us to build a business today, period. If you look across the United States, the vast majority of the states today, you can operate driverless vehicles in them, driverless trucks, certainly across the whole Southern corridor. We expect what we've unlocked in '27 to be roughly a $50 billion SAM or 50 billion mile SAM. So lots of opportunity there. We continue to have very positive support at state levels. We're starting to have conversations in more states just to kind of broaden that in preparation for us to start expanding out of the southern corridor.

At a federal level, we continue to see support, the regulations that we have, both from FMCSA and NHTSA support the technology we're deploying, the product we're deploying, and we continue to have strong relations there. And we are seeing this administration, at least so far, communicate very positively about the importance to the American economy and American competitiveness of automated vehicles. And that's from the Vice President through to the Secretary of Transportation and various others in the administration.

Got it. So Chris, take us home by telling us what you're most excited about in '26 and what we can look forward to in terms of catalysts.

Yes. I am just jazzed, right? This is going to be a year where we get a new truck on the road, second-generation hardware. We're going to be able to do that at scale. And it's going to be -- like I've been working in this field for 20-something years at this point. And we made a big step forward last year where we could put trucks on the road and nobody in them. But by the end of this year, if you were taking a road trip across the Southern U.S., you can't help see our truck, right? They're going to be out there serving customers, and it's just the first step to what will be an even more exciting '27. So getting to that point where we get to see this really take off and really go, it's going to be a lot of fun.

Great. We're very excited to see how that develops as well. So Chris, thanks so much for joining us.

Thank you.

My name is Glenn [ Chell ]. I work with Josh Beck on the Internet and Autonomous Research. Today, we have David Maday here, CFO and SVP of Aurora Innovation. And we're excited to listen to his company presentation. And from there, we're just going to go down into Cordova 5 for a breakout. So with that, David?

Awesome. Thanks. I appreciate you guys having me here today. I will try to keep it lively. I know we're getting towards the end of three long days. So let's have a little fun. For those again who don't know me, my name is Dave Maday. I am Aurora's Chief Financial Officer.

I'm super excited to be here today to talk about the progress that we're making as a company. And again, the picture kind of tells it all for us. Again, we are the only self-driving trucking company operating driverless on public roads today. We're going to tell a little bit about the progress we made in '25 and why we're so excited about '26. So with that, let me get us started.

But before we go too far, this is to keep me out of trouble, keep my lawyers happy. If you can just take a quick glance at the forward-looking statements, we will talk about some things that are projections into the future. Okay. With that, let's -- let me just -- there's probably some of you who haven't heard of or don't know the Aurora story very well, which is surprising.

We have 80,000 pound tractor trailers driving on the roads down in the South. So you should get down there and take a look. But let me give you a little bit about the company. Aurora is a mission-driven company. Our mission is to deliver the benefits of self-driving technology safely, quickly, broadly.

It guides everything that we do. Okay. As I mentioned, we are operating commercially driverless operations on public roads today. And we couldn't be more excited about the progress we've made this year. From the start of the year when we launched in April until today, we're now operating in Texas, New Mexico and Arizona. We started out in day. We've added night, rain and fog to our driving capabilities. We operate for multiple customers.

And since April through January, we've already traveled more than 250,000 driverless miles without any incidents. So we're excited about the progress. But I think a little bit of what makes us maybe even more excited is if you think about our technology and the enhancements of our technology, this is what really, I think, excites us about the future.

And really, we think that each of these technology advancements, I'll talk about a little of them are very impressive. combined together, it is really what we hope is the dawn of super human freight transportation. And with the Aurora Driver, what are we doing? We're focusing on driving a system that has perception and awareness that is unmatched.

We can see everywhere in every direction instantaneously. We operate with amazing stamina. We never get fatigued. We operate -- we can operate 24/7 and never get tired. We're not restricted by the clock, and we can make life-saving decisions in milliseconds, right? And each of these, again, in isolation is impressive. Collectively together, we really think this is going to help redefine safety in the logistics area. Let me talk a little bit about our product, just to catch a couple of people up.

Our core product is the Aurora Driver. It is a combination of cutting-edge technology hardware, our verifiable AI software and associated data services. We built this -- our company started a little over eight years ago. We built this as a common core platform, so we could deploy it across multiple vehicle platforms and multiple use cases.

Trucking is our first market that we're going to operate in. And I'll talk a little bit more about that element. But first, let me just talk a little bit of kind of we feel a responsibility, a leadership responsibility, and we feel we're in the pole position when it comes to leading autonomous technology.

Why do I say that, right? Again, we've launched driverless operations. We've been building that since April of 2025. Our first market is trucking. That's where our focus is. It's a massive market that can unlock tremendous value. I'll talk a little bit more about that.

We have an unmatched partner ecosystem. We were not established to get that first driverless run. We've already done that. We are a company that's focused on our mission, and that is to commercialize at scale, right? We had a solid financial position. We exited the end of last year with roughly $1.5 billion in liquidity.

That will extend our runway until we reach a point of positive free cash flow, which we expect in 2028. We have a Driver-as-a-Service business model, which is both capital efficient and also leverages the best of total cost of ownership for our customers, which will create long-term shareholder value for both us and our customers. And from a competitive landscape perspective, like we believe we are the leader, we are investing to build upon that competitive moat.

I mentioned the ecosystem, and I'll just briefly touch on a couple of these. Obviously, to scale a business, you are going to need partners to scale it to tens of thousands of trucks operating billions of miles each year, you need partners. We have several OEM partners, including PACCAR and Volvo, who are building autonomously enabled platforms that will take line side integration of the Aurora Driver.

Those represent about 50% of the market. We're also partnering with international, where we upfit their base trucks to be deployed driverlessly, and that launch will actually happen in the second quarter of this year. We have a partnership with Aumovio. You might have referred those are -- that's Continental after the split.

They are Conti without the tire business essentially. And we have a first-of-a-kind partnership, which we call Hardware-as-a-Service partnership with them, where they will collectively together, we will co-develop the hardware. They will then manufacture and service that hardware kit through its life.

And this partnership where we have the ability to scale to tens of thousands of trucks in our hardware kit is a key enabler and a key differentiator relative to everybody else to actually commercialize at scale. We have partnerships with NVIDIA. We have a 3-way partnership with them and Aumovio, where we're leveraging NVIDIA's DRIVE Thor system on a chip that will be used for our computes as part of our compute system.

And then we have some of the biggest and best customers in the business. I mentioned trucking. -- why trucking first? It's massive, right? It's $1 trillion or more in the U.S. alone, not to mention the global opportunities. It traverses more than 200 billion vehicle miles today. And the Aurora Driver can deliver tremendous value, and that's the focus where you're matching up the total cost of ownership values that we can provide along with the market opportunity, and that will support mass adoption.

Today, we have more than tripled our driverless network even from the last quarter. We are now operating on 10 lanes or routes, and that's an addressable market of 3.6 billion vehicle miles traveled today. And we operate across Texas, New Mexico and Arizona. And the intent is that we will expand to the Sunbelt this year, right? And that's a really important factor for us.

So if you think about the start of the year, we operated on one route, Dallas to Houston in daytime sunny conditions. Now we operate in all weather conditions, day and night, rain, fog, et cetera, and we're now operating everywhere. And we're going to take that same approach, those same driving skills that we've developed for this past year, and we're able to apply them throughout the Sunbelt, given the self-similarity of the driving requirements across the Sunbelt.

You combine that with our approach to mapping, which we think is both important from a safety perspective, but from an efficiency perspective for the Aurora Driver. And when I say safety, I say it is the Aurora Driver drives better when it knows the world around it and where it's intending to go. Just like you and I, when we get in the car and we go somewhere that we're unfamiliar with, drive better if we know where we're going.

And again, we believe that Aurora Driver now is sufficiently generalized for us to operate throughout the Sunbelt in 2026. We also think it's important to start the pivot. Like 2025 was a lot about demonstrating the technology promise, making sure we could operate in the vast majority of weather and environmental conditions that are required to provide a reliable service.

We also need to go where our customers want us to go. So when we launched, we operated between two Aurora terminals. In 2026, our primary mode of operation for where we're going to deliver goods is going to be between customer endpoints. And we've started to do autonomous freight delivery. Right now, it's supervised. It will be driverless shortly when we launch our second-generation fleet, we'll start to roll those out driverlessly.

But we are delivering for three examples as Detmar between their facilities or frac sand, [indiscernible] Hirschbach between Dallas and Laredo to support berry deliveries. And then one of the leading U.S. carriers we're delivering to their endpoint. This will be the mode going forward. We go to where the customers need us. It creates the most value for our customers.

Okay. Just really quickly, we also have what I think is a compelling business model. Our long-term business model is a Driver as a Service business model. So what does that mean from a compelling standpoint? First off, it's the desired end state. It's what customers want to do. What that means is that customers buy trucks equipped with the Aurora Driver. They then operate those trucks driverless by subscribing to the Aurora Driver.

It's a subscription-based model. We pay a per mile -- that we're paid a per mile fee, and then we basically perform the role of a driver, okay? And this is highly capital efficient. It's the desired end state for our customers, and it will create better shareholder value, again, by the capital efficiency, but also by just the fact that we can scale much faster because we don't need a lot of expenses to scale into new markets.

Let me just dig a little bit deeper, the finance guys, so let me dig a little bit deeper into the numbers as well, right? If you think about the opportunity that's in front of us today, if we look at the news ATRI and they publish the cost of transport every year, the average cost was [ $2.26 ] and that was a human driver plus base plus benefits was roughly a $1 per mile.

That's how it equates to on average. I know every individual trucker -- trucking carrier will say, that's not me. But on average, it is actually everybody. So some people are a little bit higher, some people are a little bit more, but it's $1 per mile. And that's the opportunity that we are replacing with our Driver as a Service business model.

Why is this compelling, right? If you think about driver costs and you look back over the last 10, 12 years, the cost of driving by the human driver is going up substantially, right? And we've already reached roughly $1 per mile, and this is cost plus benefits. And so the trend is heading to the right and higher, okay? If you look at where we plan on operating, indicatively, we're going to price at about $0.85 a mile.

You say, why would we do that? We believe that we can do two things. Number one, we can -- at $0.85 or so plus a mile, we will have really attractive margins and an attractive business. Additionally, we will create a total cost of ownership benefit for our customers, right? And that will support really aggressive adoption overall. And so we're really excited about the opportunity.

But it's not just that. If you think about the total cost of ownership. There's the direct cost plus benefits of a human driver, but there's also the indirect cost. We think this is another $0.15. You don't have to source. You don't have turnover costs. You reduce costs associated with workers' compensation, you reduce your training costs, et cetera.

So we think there's about another $0.15 here that's built into that framework for total cost of ownership. So those two things combined create very significant cost of ownership. If you think about -- trucking is a hard business. I have a lot of respect for carriers. It's an incredibly hard business. And for them to squeeze margins is really hard. Technologies like the Aurora Driver are things that can unlock this major opportunity to reshape the industry and the margins that you have available to them.

So I don't think there's been anything like it that I can recall in my lifetime that has a substantial to reduce the cost so substantially as what we're going to offer with the Aurora Driver. It's not just those costs. There's other things on here that we do as well. Obviously, there's the variable and specific cost of the driver, but we have the ability to unlock massive incremental utilization per truck, revenue per truck per day, per week because we are not limited by hours of service limitations. I think the industry averages between 100,000 and 125,000 miles per year if you're efficient.

These trucks can operate 250,000 miles plus a year, right? There are no hours of service limitations, and we can do it safely, right? We have improved fuel efficiency. The trucks that we operate on today, driverless are already yielding 15% fuel efficiency, right? Working with OEMs, there's a potential to increase that to 30%. Those are meaningful cost of ownership differences for our carriers. And so we're really excited about that.

Also with reduced frequency and severity of incidents, by definition, you will reduce your overall insurance cost. So we're really excited about what we can provide from a total cost of ownership benefit. This is an interesting chart, which just basically throws it all together and maybe I should have started with this. Basically, if you took Fort Worth to Phoenix, that's roughly a 1,000-mile route today. If you look at the revenue that you can get by a human driver, who has hours of service limitations versus the Aurora Driver, the Aurora Driver is substantially more.

And then if you just factor in a very nominal cost difference between the two, and I think we have way more opportunity than just that, the margin that they receive is exponentially higher. So we think this is a great opportunity to deliver value for our customers. All right. With that, what I would tell you is we are very excited about where we're headed. 2025, again, was about proving the technology promise.

Can we do -- can the Aurora Driver do what we said we think it can do to be a reliable product for our customers. 2026 is going to be a hell of a year. It's going to be about unlocking the commercial value. In the second quarter of this year, we will introduce our second fleet -- commercial fleet. This one will be international-based trucks that we've upfitted with our drive-by-wire system. They will be driverless with no need for a ride observer, and we will scale that business, okay?

We expect to end the year with over 200 trucks operating throughout the Sunbelt. So next year, if you haven't seen one of our trucks and you've been down on the Sunbelt, I'm going to have to take a poll or something because I'm going to be really surprised. What does this translate to? This is a year of remember, commercial progress, the promise. This unlocks $80 million of aggregate run rate just on those 200-plus trucks, okay?

And then the opportunity is endless for us. We have all the enablers in place to scale a commercial business. And this is going to be a great year for us, and we're really excited. And we like to say the era of the super human logistics and Aurora driving it is here and really excited about our future. I look forward to seeing all of you guys in the Q&A as well. With that, thank you very much for your time.

Thank you, David. We are just going to wrap it up here. I touched early and just go straight to the breakout. So that's going to be in Cordova 5, and we hope to see all of you down there. Thank you.

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 the U.S. and ultimately globally.

With our latest software release, we unlocked a critical expansion of our operating domain with the validation of driverless operations in multiple forms of inclement weather, including rain, fog and heavy wind. During 2025, inclement weather of all types constrained our driverless operations in Texas roughly 40% of the time. Our latest software release drives a step change in potential availability and utilization across the Sunbelt, a core component of our value proposition.

As planned, our latest software release also expands driverless operations to multiple lanes, including El Paso to Fort Worth and bidirectional travel between El Paso and Phoenix. The resulting 1,000-mile multistate lane between Fort Worth and Phoenix far exceeds hours of service limitations for a traditional driver, thereby enabling superhuman asset utilization for our customers. With the additional driverless capabilities unlocked in our latest software release, we believe the Aurora Driver is now sufficiently generalized for us to begin expanding across the Sunbelt in 2026, aligned with customer demand. This is a massive growth lever for Aurora.

We leveraged this generalized ability to launch supervised autonomy operations this month on the bidirectional lanes between Dallas and Laredo and are targeting driverless validation this quarter. This 400-plus mile route expands the Aurora Driver's operational domain through the San Antonio, Austin and Waco metros. This route is the nation's largest international trade gateway and a critical freight artery between the U.S. and Mexico. Executing this expansion near simultaneously with Phoenix demonstrates our ability to rapidly open new lanes. This validates our core thesis that the Aurora Driver can scale rapidly.

Lane expansion requires 2 core components. First, the driving skills to operate safely in an expanding operating domain; and second, the mapping necessary to traverse the U.S. highway system and the surface streets to reach customers' facilities. The Aurora Driver now has generalizable skills. And we've made meaningful progress automating the creation of new content for the Aurora Atlas, our proprietary high-definition map technology that enhances the safety and computational efficiency of the Aurora Driver.

By leveraging our Verifiable AI systems, our cloud-based algorithms are able to generate semantic components of the Aurora Atlas from collected data automatically building portions of the map with little or no human assistance. This drastically accelerates the production of Atlas content, and we expect the pace of map expansion to continue to increase as we further optimize automation in our cloud mapping software.

This mapping improvement enables us to efficiently support driverless deployment directly between customer endpoints at scale. And we've now begun supervised autonomous operations to support multiple customer facilities. Starting with Hirschbach, we're setting up endpoint operations in Laredo to support Driscoll's. We're also running along I-20 for Detmar between their facility in Midland, Texas and Capital Sand's mining sites as well as for one of the leading carriers in the U.S. from their Phoenix facility.

With all of its capabilities, the Aurora Driver offers an unmatched value proposition. It can navigate the complexities of diverse road types, maintaining 24/7 operating schedules while providing endurance far beyond hours of service limits and delivered directly to customer endpoints. Our execution in 2026 will further reinforce this leadership position while showcasing the Aurora Driver's inherent scalability to support the transition to a Driver-as-a-Service business model.

We've already committed our capacity through the third quarter of 2026, and we'll finalize contracts for the fourth quarter once we confirm our year-end truck supply. As we turn to Driver-as-a-Service in 2027 and beyond, customer interest already supports the pipeline of thousands of trucks. We're continuing to expand with our current driverless customers and recently announced a new opportunistic agreement with Detmar Logistics, a leading provider of dry bulk and frac sand solutions.

Detmar selected Aurora to support the growth of their business, given we are the only company with driverless Class A commercial trucking operations on public highways and roads in the U.S. This customer agreement demonstrates the flexibility of the Aurora Driver to deliver value in a multitude of use cases, enabling us to meet customers where they are to support their growth and efficiency.

In 2026, Aurora Driver-powered trucks will continuously haul frac sand for over 20 hours a day across a 60-mile route with 80% of the miles on I-20. This will enable Detmar to achieve nearly 24/7 superhuman asset utilization and effectively double their capacity to move sand for one of the world's largest multinational oil and gas companies. Supervised autonomous operations have begun and hauls for Detmar will transition to driverless when we deploy our second fleet of driverless trucks expected in the second quarter of 2026.

With a successful deployment, we expect this customer relationship to meaningfully expand in 2027 and beyond with the transition to our DaaS model. Our vehicle-agnostic technology enables a multi-OEM strategy to provide truck supply for our growing customer base. This approach is anchored in our foundational partnerships with Volvo and PACCAR. Our partnership with Volvo recently entered the industrialization phase. The first group of Volvo VNL Autonomous trucks equipped with the Aurora Driver have come off the pilot line at their new River Valley, Virginia manufacturing facility following line side integration of our second-generation commercial hardware kit. This milestone establishes the manufacturing foundation necessary to produce autonomous trucks at large commercial scale.

Take a look at the video on Page 13 of our presentation to learn more about the work, the Aurora and Volvo teams are doing together as well as to get a firsthand look at this line side integration in action. Once Volvo completes validation of the vehicle level firmware necessary for driverless operations, we will integrate these trucks into our driverless fleet. We're also advancing our new program based on the International LT truck. These trucks targeted to launch in the second quarter of 2026, fortify our near-term capacity and will enable driverless operations without a partner requested observer.

We're currently track testing our second-generation hardware kit in preparation for on-road driverless operations. And we also recently selected Roush as the upfitter to leverage their manufacturing footprint, which we are initially equipping to produce 20 trucks per week later this year. Looking further ahead, we continue to make great progress on our third-generation commercial hardware kit with AUMOVIO, which is intended to supply tens of thousands of trucks. We welcome AUMOVIO's recent selection of Amazon Web Services as their preferred cloud provider to support their development of an industrialized fallback system for the Aurora Driver.

Amazon Web Services has been a long-standing infrastructure partner of Aurora. As we execute our disciplined crawl, walk, run strategy, we are decisively advancing into the walk phase of operations while positioning to run by the end of the year. Just as the last 2 years brought robotaxis into the mainstream, we expect 2026 to mark the inflection point where the market recognizes that self-driving trucks have arrived and are quickly becoming a permanent fixture in our transportation landscape.

If you're in the Sunbelt in 2026, you won't just read about the Aurora Driver, you'll see it every day. This represents more than a technological achievement. It is the dawn of a superhuman future for freight. With the Aurora Driver, we're deploying a system that sees in every direction simultaneously, operates with stamina that never stops the clock and makes life-saving decisions in milliseconds without ever getting distracted. The era of superhuman logistics arrived, and Aurora is driving.

With that, I'm going to hand it over to Dave, who will review our financial results.

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 half of full year revenue as we scale driverless operations without a partner requested observer following the launch of our new fleet.

We anticipate exiting the year with more than 200 driverless trucks in operation, which translates to approximately $80 million in revenue on a run rate basis for our Transportation as a Service business in which we own and operate the trucks. This establishes a powerful foundation for 2027 when we expect the DaaS model to commence. We expect our second-generation commercial kit to drive a 50% plus reduction in our hardware costs. With this and other planned cost reductions, we are targeting breakeven gross margin on a run rate basis exiting 2026.

To support our 2026 scaling plan, we expect quarterly cash use of approximately $190 million to $220 million on average. We believe we have sufficient liquidity to achieve positive free cash flow in 2028. We plan to utilize the ATM to fund our ongoing RSU tax liabilities and cash bonus payments through 2027. We also expect to strategically leverage the ATM and/or other mechanisms to solidify our balance sheet with an appropriate minimum cash balance to support our longer-term operations.

Building on the momentum of our landmark commercial launch, we are now focused on the execution and strategic investments necessary to scale. As we roll out our second-generation commercial hardware kit on our new truck fleet and accelerate driverless operations, we will further extend our leadership position in autonomous trucking, which we believe will deliver sustained long-term value for our shareholders.

With that, we'll now open the call to Q&A.

[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.

Greetings, and welcome to the Aurora's Third Quarter 2025 Business Review Call. [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, Stacy. You may begin.

Thank you, Alicia. Good afternoon, everyone, and welcome to our third 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.aroya.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 our progress we have made across the key pillars of our business, and David will recap our third 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.arora.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 the call. In particular, those described in our risk factors, including 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, the markets and economy.

Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 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 a 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 measures 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 will now turn the call over to Chris.

Thanks, Stacy. In the third quarter and early October, Aurora achieved several more driverless trucking industry first, rapidly advancing our path to scale and further extending our leadership position. The crack we set in motion with commercial launch is now accelerating, delivering compounding returns across our technology, operations and customer adoption. Earlier this month, the Euro driver surpassed 100,000 driverless miles in public roads. Importantly, we've maintained 100% on-time performance, while upholding our perfect driverless safety record.

Last week, we launched driverless commercial operations on the West bound 600-mile lane from Fort Worth to El Paso, setting a new benchmark for autonomous trucking. This expansion accomplished 6 months after our driverless launch is faster than any other self-driving company has scaled to a second U.S. market. The driver unlocks substantial value on this lane, and we're thrilled to add multiple customers, including 1 of the leading carriers in the U.S. to our driverless cohort for this route.

To meet expected customer demand in the second quarter of 2026, we plan to launch our second-generation commercial hardware kit on a new fleet of trucks that will enable driverless operation without a partner requested observer. This third vehicle fleet fortifies our near-term capacity plan and supports our scaling objectives for 2026.

Let's dig into what we've been up to. Following earlier than anticipated validation of night driverless operations in July, we're already seeing the utilization potential of our self-driving trucks. Our highest mileage driverless truck logged nearly 18,000 miles in a single month. This demonstrates the confidence we have to operate trucks at an annual run rate that doubles the industry average. Our team's focus has since turned to driverless lane expansion and validation in more challenging weather conditions to further increase the value of the Aurora driver for our customers.

Our second driverless commercial lane from Fort Worth to El Paso directly addresses critical customer pain points. This route is notoriously hard to staff and challenging for traditional drivers to compete -- complete within a single day. Launching driverless operations on this lane demonstrates the significant efficiency and value potential the Aurora driver brings to the freight ecosystem by enabling nearly continuous operations.

We're now nearing completion of driverless validation for the return trip as well as the Phoenix extension with our software release planned for January 2026. The Phoenix expansion will add another 400 miles to establish a continuous 1,000-mile plus mile multistate route between Fort Worth and Phoenix, which far exceeds hours of service limitations for a traditional driver. We're also working with multiple customers to identify locations along the I-20 corridor and in the Phoenix area for the first customer end points we plan to support with driverless operations in early 2026.

As you can see in the case study on Page 16 of the presentation, on these long-haul lanes, the Aurora Driver has the potential to more than double revenue and deliver several fold higher profit per truck for our customers. Looking ahead to 2026, we expect to rapidly unlock lanes across the Sunbelt. Of future planned expansions include lanes between Dallas and Laredo, a critical route for 1 of our key customers and between Dallas and Atlanta which will extend the driverless IT i20 corridor to approximately 2,000 miles. Launching driverless operations from Fort Worth to El Paso and soon the Phoenix extension required us to validate behavior against the storms, which are prevalent in some parts of Texas and Arizona. These fast-moving storms can quickly reduce highway visibility.

If such conditions are present when the euro driver power trucks are on the road, the Aurora driver is designed to slow its speed and if significant perception degradation is detected, autonomously execute the safest behavior, pulling over or exiting the highway when possible. This advanced capability is powered by our multimodal sensor suite, including LIDAR, camera and RADAR. As you can see on Page 10 of the presentation, in a dust storm on the Fort Worth El Paso lane just outside of Midland, Texas, -- our perception system leveraged RADAR and our proprietary first light LIDAR, which we're able to see through the dense dust at twice the range of cameras alone.

This provided the crucial data needed to make safe decisions long before visibility was completely compromised. These advanced capabilities will also benefit our upcoming Phoenix lane and other routes where similar weather events occur. We also continue to make progress validating driverless operations in rain and heavy wind conditions, which will also be part of our January 2026 software release. This will support high availability potential for ore driver powered trucks across the Sunbelt, a meaningful component of the value proposition. Along with expanding the Aurora Drivers operating domain, we've also validated additional trailer types, including those with super single tires and increased our driverless fleet.

These expansions have contributed to a material acceleration of our driverless mileage with the Aurora driver earlier this month surpassing 100,000 driverless miles on public roads, that's double the cumulative driverless miles we achieved just 5 weeks prior in early September. We now have 5 driverless trucks regularly scheduled between Dallas and Houston and from Fort Worth to El Paso. To provide a window into this progress, we're continuing to showcase the Aurora Driver in action during this initial phase of our operations via Aurora Driver Live. You can access the live stream via the link on Page 4 of our presentation or the live tab on our YouTube channel at Aurora Driver.

You can see our driverless trucks traversing the route between Dallas and Houston and now Fort Worth to El Paso, demonstrating the safety, reliability and growing maturity of the Aurora Driver. In addition to the opportunity to see our technology live on the road, we've received positive feedback from customers and investors about our willingness to provide this level of transparency. It's a strong signal we stand behind what we're building with over 6,000 hours of watch time to date, this special series offers industry-leading transparency into autonomous driving performance and the future of freight. Our driverless mileage growth is poised to further accelerate as additional customers integrate the Aurora Driver into their operations to capitalize on its exceptional value proposition.

We firmly believe the Aurora Driver will fundamentally redefine the freight ecosystem with its potential to set new standards for safety, efficiency and sustainability, thereby driving both revenue growth and margin expansion for our customers. A member of Werner's safety team and 1 of their most seasoned drivers recently came down of Texas to assess the Aurora Drivers' performance. Their reactions spoke volumes about the Aurora Drivers core advantages. Superior perception, unwavering focus and the ability to safely navigate long monotonous lanes, which are particularly difficult to staff and have hours of service constraints for traditional drivers.

I'm inspired when I hear industry veterans affirm the transformational role our technology will play in the freight industry. You can hear firsthand from the Werner representatives in the video on Page 5 of our presentation. With our Fort Worth -- El Paso driverless launch, we've expanded driverless operations for Hirschbach, one of our earliest adopters and valued partners and added 2 additional carriers to our growing driverless customer cohort.

Launching driverless on this lane is a major inflection point on our journey with customers and the expansion of our driveless cohort validates our technology, rigorous safety approach and the value we deliver. Now that we've proven the promise of the Euro driver and are rapidly increasing its value for customers, we're expanding our sales funnel to include mid-market customers who offer shorter approval cycles. To efficiently target this new segment, we recently announced a strategic partnership with McLeod Software, a premier provider of transportation management solutions for over 1,200 carriers in private fleets.

This partnership will deliver seamless integration from our cloud customers, which we expect to accelerate new customer adoption of the Aurora driver. Just 1 month after announcing the partnership, we executed an agreement with McLeod customer Russell Transport for driverless hauls on the Fort Worth, El Paso lane. In parallel, we continue to advance our second and third generation commercial hardware programs as well as our vehicle programs that underpin our path to scale and self-funding.

Designed to deliver customer value for 1 million miles, we expect our second-generation commercial kit to drive a 50% plus reduction in our hardware costs. And we're also seeing some meaningful performance gains, particularly with the next generation of our proprietary long-range FMCW, LIDAR. First Light is now detecting objects at 1,000 meters away, which is double the distance of our current generation as well as the closest FMCW, LIDAR competitor. For our truck traveling and highway speeds, this equates to more than 34 seconds of planning horizon. This will further enhance the Aurora Drivers' performance and set a new standard for safety in the industry.

We plan to increase driverless operations without a partner requested observer in the second quarter of 2026 with a new fleet of trucks equipped with this second-generation commercial hardware kits. This fleet will be based on the International LT Series truck with Aurora performing all necessary upfit required for driverless operations. These trucks will undergo rigorous testing and validation, just like any platform we would take to driverless operation. This third truck fleet fortifies our near-term capacity plan and will support our target to exit 2026 with hundreds of driverless trucks in operation. While this program is underway, we achieved an industry-first partnership manufacturing milestone with Volvo as they began the line sight integration of the second-generation Aurora Driver commercial hardware kit into the Volvo VNL autonomous on the pilot line at their New River Valley Virginia manufacturing facility.

Once Volvo completes validation of the vehicle-level firmware necessary for driverless operations, we will integrate these trucks into our driverless fleet. In addition, PACCAR continues to advance the prototype testing of their scalable autonomy enabled truck platform at their facilities. Looking further ahead, we continue to progress our third-generation commercial hardware kit that we believe will unlock scale on the order of tens of thousands of trucks. In September, Continental completed the spin-off of their automotive business, Aumovio. Ide honored keynote their Supplier Day, which highlighted our flagship program which has a planned start of production in 2027. We're excited to see Aumovio continue to make significant manufacturing investments here in the U.S. to support the scaling of the Aurora driver. Earlier this month, they announced a $110 million investment to significantly expand their new [ Bonfils ] Texas manufacturing facility where the Aurora driver hardware kit will be produced.

The project, which includes a 65,000 square foot addition and a state-of-the-art automated warehouse is expected to create new well-paying jobs in the coming years. The expansion will more than double the existing production floor space and is expected to fully -- to be fully operational by August 2027. We have now received and begun testing computer samples from Aumovio, which include NVIDIA's DRIVE Thor system on a chip. Complete prototypes of this hardware kit are on track for delivery by the end of the year to begin engineering validation testing. As we accelerate our path to deployment at scale, favorable regulatory momentum continues to build across the U.S. Earlier this month, we received approval from the U.S. Department of Transportation to begin using cab Mount warning beacons as an alternative to reflective triangles.

The cap mounted flashing lights indicate when a vehicle has stopped on the side of the road to warn other road users, which is similar to systems used by emergency construction vehicles and is a step forward for road safety. And on the legislative front, the America Drives Act, a landmark build to establish a federal framework specifically for self-driving trucks continues to gain traction with co-sponsorship from U.S. representative Jay Obernolte of California. In closing, we've made unprecedented progress since commercial launch and continue to be the only company with driverless trucks on public roads in the U.S. We've proven that the technology works and are now channeling our momentum to support lasting customer value and our path to scale.

Insights from our real-world travelers miles reinforce there are no shortcuts to safety, trust and scale in autonomous trucking. Our strategic investments have built powerful flywheels that are now accelerating, driving us forward with increasing efficiency. Our industry-leading technology, coupled with a world-class ecosystem of partners, customers and shareholders uniquely positions Aurora to set the standard for autonomous trucking.

Thank you for your partnership as we continue to build the future of transportation. With that, I'll now pass it over to Dave, who will review our financial results.

Thank you, Chris. Let's discuss our financial results for which we have provided the summary on Page 17 of the slide deck for reference. Third quarter 2025 revenue totaled $1 million across driverless and vehicle operator super buys commercial loads for Hirschbach, Uber Freight, Werner, FedEx, Schneider and Mobile Autonomous Solutions, among others. The Aurora Driver achieved another record number of commercial miles driven during the quarter, which drove a 12% sequential increase in revenue from the second quarter. Third quarter operating losses, including stock-based comp, totaled $222 million, excluding stock-based comp of $51 million, R&D totaled $138 million, SG&A was $28 million, and the cost of revenue was $6 million. We used approximately $149 million in operating cash during the third quarter, and capital expenditures totaled $8 million.

This cash spend was meaningfully below our externally communicated target, reflecting continued strong fiscal discipline. We expect cash use of $175 million to $185 million during the fourth quarter of 2025. During the third quarter, we issued 80 million shares of Class A common stock through our at-the-market program for net proceeds of $460 million. We used $21 million of the net proceeds to fund the tax liability associated with the vesting of our employees' restricted stock units during the third quarter.

In turn, we ended the third quarter with a very strong balance sheet, including increase liquidity of $1.6 billion in cash in short-term and long-term investments. We expect this list -- we expect this liquidity to fund our operations into the second half of 2027. We will be providing 2026 financial objectives in the fourth quarter 2025 business review in February. For the remainder of the year, we will continue to focus on expanding driverless operations and advancing our program to support our 2026 scaling objectives to accelerate our first-mover advantage to reinforce our leadership position.

With that, we'll now open the call to Q&A.

[Operator Instructions] Our next question comes from the line of George Gianarikas with Canaccord Genuity.

Maybe first, I'd like to ask if you could sort of give us form and shape to your plans from moving from a terminal to endpoint-to-endpoint shipments.

Yes. Thanks, George. Great to take questions from you. I think one of the misconceptions that we hear is that this is kind of a big deal. And it really is -- so today, for example, when we're operating -- getting to our Houston terminal, we drive for about 5 miles through various industrial park surface streets to get to our terminal. So we have a system that's capable and able to deliver this -- like it works well.

So for us, it's just a matter of timing and sequencing when the volumes are sufficient that it's relevant for our customers. And so we intend to be rolling that out to customers through the next year. Dave?

Yes. And I would say maybe 2 other things. One of them is on the misconception piece, right? Like if you think about end points, customer end points, roughly 80% of those endpoints are within a 5-mile range from a highway. So this is not a difficult technical challenge at all.

I think the other thing, it's important to point out that we started out, and everything kind of relates to our technology rollout and our crawlrun, right? So we started out operating a small fleet of trucks that we're continuing to build up. But it's important to understand that we need to be able to drive in all weather conditions, right? We already opened up nighttime earlier. We're expanding lanes, but we also want to be able to operate in rain and heavy wind.

And when we're able to operate in all these conditions, then when we go to customer endpoints, we're able to operate a larger number of vehicles between their specific end points. So the 1 thing that's really important is to make sure that we've got a really robust product that is operating between the endpoints. So I would say that this is a very deliberate plan that we're executing upon.

Yes. And maybe as a follow-up in 2 parts.

So in your press release, you say that you want to deploy hundreds of trucks next year. That feels like a little bit of an acceleration. Is that true? And the second part of the question is, is that being enabled by your partnership with international, which I think is new. Did you have a partnership with International before this?

Yes. So this is, I think, in line with what we've been saying for a while now, we've been saying we want to get 10 plus tens of trucks this year, and we want to get hundreds next year. And so I think it's aiming to accomplish what we set out to do. In terms of -- with international, this is a new relationship. So we are purchasing trucks from international, and we're doing the upfit ourselves. We continue to work with Volvo and Makar and continue to be excited about the plan for with them. But a way for us to take timing into our own hands, ensure that we can deliver this and support and fortify our volumes for next year as a response to the customer interest that we're seeing today. Thank you.

Thank you. Our next question comes from the line of Ravi Shanker with Morgan Stanley.

If I can just continue a line discussion on international -- just wanted to confirm, so are you just buying the trucks off a lot and kind of rolling that out of a third fleet? Or is this an actual OEM relationship like you have with PACCAR and Volvo and in which case, kind of is there a time to commercial launch of that as well?

So Ravi, it's Dave. So we are buying stock trucks. We're not actually buying necessarily at the lot we are ordering them through international, but there is no co-development partnership associated with those. So it's important to understand that we've got a tremendous experience in how to integrate out of the Aurora driver into platforms. We've done it on like roughly 8 platforms. So we understand all the necessary capabilities to launch a safe product.

And in this particular case, we've got 2 partnerships with co-developments already. We felt this was a great opportunity for us to continue to meet customer demand. and work and offer the Aurora Driver on a third platform.

And answer the second half of your question, Ravi. We expect to have the international truck on the road driverless in Q2 of '26, so we're excited to add that to our growing fleet.

Understood. That's helpful. And maybe as a follow-up, as you guys get closer to launching Gen 2 and specking the Gen 3 hardware. When do you get a sense of the bill of materials and the cost of the system involved. And maybe also like when do you expect to have conversations with OEM partners and maybe launch actual pricing of the truck and the system for your customers?

Yes. So I think on the bill of materials for the Aurora Driver, we have very good insight into that today. We track it as part of our development process. We know what that bill of material cost is. And it's important to understand again that as we look at that cost, that doesn't get borne upfront as part of the purchase of a truck, that is paid through the subscription that customers will pay for the Aurora driver. This driver as a service model. And we factored that into the cost and into the revenue stream and profitability of the business going forward.

Our next question comes from the line of Colin Rusch with Oppenheimer.

You've talked a lot about the simulation expertise that you have. Can you talk a little bit about any sort of acceleration that you're seeing or any sort of transitions that may see hiccups as you move to the new hardware?

Yes. Well, first, yes, we think simulation is an important tool. It's something we've invested and I appreciate you recognizing that. No, we don't really see any hiccups. Like one of the things that we -- that I think a lot of folks don't really understand is that the automated driving system is a complicated difficult thing to build. But the tools and process and rigor you have to put in place to have conviction that the thing is safe to put out in the road and operate at 70 miles an hour down the freeway is at least as hard, if not harder.

And so as we've been building our processes for validation and release, we've designed them with an eye toward this needs to scale. This needs to allow us to accelerate our release process over time and meet the needs for that second generation, third generation hardware.

And so it's kind of moving along as we'd hoped. So yes, I hope that -- I'm not sure if I answered your question, but we're feeling pretty good about this.

Okay. Yes. I'll follow up offline. The second one is really on customer comfort with the technology. Now that you're accumulating a fair amount of experience on the road without the driver. How quickly are customers getting comfortable with taking a safety driver out of the cab and thinking about actually starting to deploy with you guys out of the gate without a driver?

Yes. I think that, [ Juan, ] it's dangerous to characterize all customers in 1 bucket. And so there's obviously a spectrum of them. But what we're seeing is enthusiasm, right, that the conversations moved from, hey, maybe this will happen, to, oh, it's happening. I can see why this will benefit my business. I would like to have access to that. And so we mentioned Russell Transport -- that's a customer that just signed up with us and signed up with us on day one to operate gridlessly. And we expect that to be the flavor of many of the customer relationships that we're going to put in place going forward.

Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Congrats on all the great progress. I think some of our questions have been asked. But Chris, I'm hoping maybe if you can help us maybe give us some granularity as to how we should think about the truck deployments for Q4 and maybe early next year to I guess -- so you have 5 in operational as of now. So to get to more than 10, presumably, that means deploying 6 additional trucks before year-end. So I mean how should we think about Q4 deployments and maybe ASPs. Any granularity you might be able to give us there. I know we'll get more color on Q4 for next year, but anything helpful there?

Yes. So we expect to get to 10 trucks operating drivers at the end of this year. We'll kind of ramp them through the course of Q4. We really -- you probably sick of us saying crawl walk run, but we very much believe that. We want to make sure that customers are comfortable regulators comfortable that we're building out at a rate that really enables us to do something useful in the world.

For us right now, it's a balance between increasing driverless operation and utilizing the fleet that we have to advance capability to deliver that value to customers. And so we're putting time into, of course, the [indiscernible] expansion work in and into weather so that as those trucks begin operating drivelessly, you're maximizing the utility for the customers.

Got it. Okay. That's helpful. And I guess as maybe a quick follow-up. So in your presentation in the time line slide, you talk about having positive gross profit by end of '26 or early '27. How should we think about that? Is there a certain number of trucks in operation that you think you'd need to get to that point? Or is there a better way to think about kind of that ramp up?

Yes. So it's a little bit of a truck volume. It's a little bit of continuing our capabilities that we're focusing on today. So there is -- what we tried to describe it as 4 key enablers. The first one is to launch our second-generation hardware kit. We are well on its way to that, and that will be launched with the introduction of our new fleet of trucks in April. So we're really excited...

Q2.

Q2, sorry. And we're really excited about that. I think there is an element of continued progress on remote assistance. And we've said before, again, remote assistance, they're not operating in the vehicles, but they are supporting the vehicles, if there's any need for support like detecting different signs and things like that, that we want to clear.

We're well on our path towards that where we think we're going to be able to have one person operating and supporting multiple vehicles. We're going from a few to many. And so we think that path is pretty clear. There is an element of what type of support do we need on-site if we're able -- if there's, let's say, we have a tire blowout or something like that. We're pretty confident that, that still needs a little bit of work to prove out, but we think that there's a pretty clear path to that.

Those are the big items that we talk about. And then the last one is, obviously, you need a sufficient scale because we do have some structural cost elements, whether we operate at our terminals or our insurance costs, et cetera, where just purely the mileage accumulation is really important. So again, I think when we originally talked about gross profit positive. We had established a target for ourselves. This was back in '24 by the end of '26, we launched a little bit later for commercial launch. So we expect that may flow into 27, early 27%, but we still feel confident that, that's a good target, but we're not putting any formal guidance out yet for 2016 profitability.

And just to add on what Dave was saying, Greg, like take, for example, the road driver hardware kit. There, we just look at the BOM cost and we see roughly half the price of what our current system is. And then you add to that the increased durability so you can amortize that over a longer distance or a longer amount of driving. That's a big mover, and we see that coming online in '26 -- or in Q2 2016.

Our next question comes from the line of Chris Pierce with Needham & Company.

Good afternoon, everyone. If we just go back to the international truck announcement, I just want to understand, will customers be able to buy international trucks that you upset? Or is this just something you're doing to sort of pull forward or accumulate more proof points with the euro driver technology?

So as you know, today, we're operating in this, what we call transportation as a service mode where we're operating trucks for our customers. And initially, we expect that's how this will operate. So we'll own these trucks, they'll be out there revenue generating, generating value for customers. Maybe at some point in the future, we consider that. But initially, this is going to be trucks we own and operate and get paid for.

And should we think about if it goes well, is this something where you've talked about launching with other OEM partners in the past. Do you -- but International has a public autonomous partner already. Do you see a world where have multiple autonomous platforms and the end user, the truck fleet chooses which one they want based on metrics or price? Or how do you kind of see the market shaking out?

Yes. We've made no secret that we intend to have the Aurora Driver available on all OEM platforms. And we love the opportunity to compete. We think Aurora Driver is going to be the best product in the market. And so yes, we would love to have and hope to have a long-term relationship here.

Okay. And then just lastly for me, not to sort of put you on the spot. I'm not sure how many headlines you're watching during the day, but there were some headlines from NVIDIA all across mobility today with OEM partners, EV toll partners and in -- with International in the trucking space. What's the right way to sort of frame this announcement, if you saw it versus your relationship with NVIDIA. I just want to kind of understand what is new, not new, kind of how we should think about that broadly, if that's something you can speak to?

Yes. We've obviously been working with NVIDIA and Aumovio on the third-generation Aurora commercial hardware kit for some time. Now I think we announced it back in January maybe. So great to see others recognizing the opportunity to use this technology. We think it's great hardware. And we'll just continue to build our business. Yes, NVIDIA makes good products. So I'm not surprised to see us to.

Our next question comes from the line of David Vernon with Bernstein.

Thanks for sitting -- and first question for you on the equipment side. You mentioned in the presentation that the second generation should be getting a 50% reduction in the hardware cost -- is there a scale number to think about that you need to hit to get to that level? And then with this equipment, like what's the whole life cycle of this stuff? Like how often do you -- are you envisioning that you're going to need to kind of be upgrading the hardware on a truck? Or is it a black truck.

Yes. So as we talk about the price point of the bill of material savings, that's across this production run of 1,000-plus units, right? And as we talked about in the past, we have the vehicles we have today with our first-generation hardware, we knew we could build that in tens and not more. And that's why we have the second generation hardware where our contract manufacturing partner, Fabrinet is producing those. And that gets us to 1,000-plus. And then, of course, the truly large automotive scale comes in with the Aumovio partnership, and that's when we can get to tens of thousands of units.

So this is kind of the bridge between tens and tens of thousands and so the price numbers are across that 1,000-plus scale, and we have commitments and alignment on that. In terms of the life cycle, we expect this hardware to be lasting 1 million miles that aligns well with the kind of useful first ownership for many of these trucks and meets our objectives for the profitability and financials here.

Okay. That's helpful. And then, Dave, my second question would be for you on your sort of illustrative NK study looking on Page 16 of your presentation there for Fort Worth to Phoenix. If I have my metrics right. I'm pretty sure a fully loaded Class A tractor can go 1,000 to 1,200 miles on a full take of gas. With the driverless system, couldn't this truck make the trip in a day as opposed to the 2 to 3 that are normal trucker would quote and if that's right, then why sell it at $205 a mile?

Yes. I think it's a -- well, a couple of things. Number one, yes, we can drive the same distance for fuel economy. We're actually probably slightly better for fuel economy. We're averaging about 15% better than the traditional human driver. We can go all that distance and our intent to go in a single day. I think the $205 is also illustrative for us because each lane is going to be a little bit different in terms of its pricing environment and the customers. And so for us, we've always said that in the transportation as a service element, which is this is the illustrative kind of example, and then there's the driver as a service example. In each of these particular examples, transportation and service were kind of pricing like the rest of the market. And for the drivers as a Service, we've got the 65% to 85% range. But we'll get more specific on pricing when we get a little bit further along.

David, and can I just jump in here for [indiscernible]. I think just as Dave doesn't have the slide in front of us. The revenue per mile that we have there, that's not necessarily to Aurora, right? So this is an end-to-end in a driver as a Service business model. That is an industry rate that DAT sourced, right? So we're using that cost -- basically, that's what a carrier would be paid to hold those loads. On that lane based on industry data. And then we're showing how much more revenue and margin we can drive for the customer based on a driver service model in which they are paying us the driver fee so we can actually walk through the math offline, but I just wanted to clarify that one.

And I do think though, to your point as there is an opportunity potentially for premium pricing here because of the speed at which you can move these goods. But we're still exploring when and if that's an appropriate lever to pull.

Okay. And -- but is the software subject to any hour as a servicer no? And then I'll let you guys go.

No, it's not. No. The software is not subject to our service. Because if you just think about the reason for the hours of service limitation, it's because of the person it's tired, right? Our software is that super human ability to not get tired.

Superhuman rates.

Our next question comes from the line of Mark Delaney with Goldman Sachs.

First, just hoping to better understand some of the progress the company has been making with Volvo. I think in the last earnings call, you spoke about. Hope you have 20 trucks from them by the end of the year. Where do you stand with that? And if I understood the press release today, you also are working to integrate line side. So if you could share some time frames for that as well. So a couple of different parts to Volvo time lines and progress, please?

Yes. Mark, can you just hit the first part again, just to make sure I got it correct.

I thought you were planning to take some trucks from Volvo Autonomous Solutions, if I was remembering correctly, where did you stand with those and getting those validated? And then I think you also talked today about doing some line side integration so also understand when that may materialize.

Yes. Okay. So I just want to make sure that I got the second part right. So yes, for Volvo Autonomous Solutions, what we had said, and we had said this last time as well that we are starting to get their second set, and now we're actually in the process of building kind of their third set of trucks. And so there's a call like B sample and C sample they're development trucks that have all the representative hardware. But as Chris mentioned, there's still some updates associated with the firmware and the software that need to be done to have them fully validated for driblets operations on their truck platform.

And we're in the midst of deploying those trucks, and we use them in terms of delivering commercial loads to support Volvo Autonomous Solutions business as well as development testing and integrating them into our second-generation hardware. What Chris referenced even today is that we've actually have our first line sight integration of the Aurora driver kit being line sight installed at an assembly plant at their New River Valley assembly plant. And so that's really look into the future because remember, one of the things that we're really excited about with the PACCAR and Volvo partnerships, is the ability to build that scale.

And one of the key components of really building a high scale, high volume, is the ability to line sight install like it was any other part that was being assembled onto the vehicle. And so we're making progress on both of those fronts.

Very helpful, Dave. And just the time frame to be done with the testing and validation with Volvo, do you have an estimate you can share?

Yes. Again, Sam as always, we're going to try not to talk about our customers and our partners' timing. We let them do that, but we're making tremendous progress. And again, we're starting line side integration. So things are advancing really well for us.

Okay. And then just my last question was just on the news with international. Maybe just talk a little bit more around how that's evolved and how that supports your driver out time frames that you were describing in your prepared remarks.

Yes. So I think with international, also super excited. And we've had a lot of -- the interest and customer demand on the Aurora Driver has really been strong, and we continue to make great redness progress technically. And we want to be able to kind of fulfill that promise of being able to deploy these trucks across the Sunbelt. And working off of international trucks where we upfit stock trucks from international and being able to install the Euro driver on those and deploy those drivelessly without an observer in the second quarter of 2026 is a great opportunity for us to meet demand and kind of fill that volume potential and continue to demonstrate our leadership position.

So our focus is really on continuing to build the momentum across the board.

Our last question comes from the line of Michaeli with TD Cowen.

Great. Just two questions on the product road map. First question, you mentioned kind of solving for some of the dust storms, I'm curious, as you solve for that, how much of that was kind of done by the LIDAR, your LIDAR versus radar.

And secondly, I guess, a slight blade in the rain and heavy wind update. Just maybe talk a little bit about that. Was that just tied to maybe having to solve for the dust storms first and that pushed out a little bit? Anything you coshare there would be helpful.

Yes. So on the -- how do we deal with the dust storm part of this. There, as we said for a long time, we see real value in having a complementary set of sensors. They have different strengths and weaknesses. And so there isn't like we just use LIDAR or we just use RADAR. We build a model, a perception model and AI model. that's taking data from those different sources and producing the best possible outcome from it. And so we lean into the special properties to come along with First light, our FMCW LIDAR. And of course, RADAR given it's relatively longer wavelength is less impacted by dust.

And so between the 2 of them, we do a really nice job of seeing what's on the road in front of us. In terms of the rate push out, this is -- like we look at this as just not right? Whether it's the end of December or the kind of the beginning of January, we just like to report things with integrity, and we realized it was going to come out in the release a couple of weeks later than we had originally said. So we just value transparency figure we'd share that.

Yes. And it's also important to point out that we also pulled ahead the El Paso lane quite a bit exactly -- we're going to continue to drive towards moving really quickly on this. And as Chris reminded me even earlier today, we are going to give people a little bit of a breather during the holidays.

Yes, Dave has to remind me to beat myself and the team on the week or 2 here given that we pulled the other thing forward.

At this time, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Thanks so much for coming back. Chris McNally, Evercore ISI. It's our pleasure to have Dave Maday, Chief Financial Officer of Aurora. Aurora is one of the companies under our public coverage. And let's -- look, let's get right to it. We have a lot to talk about. Dave, I know you brought slides. If you can give a brief overview for those who may be less familiar with Aurora, and what you've been up to for the last couple of months?

Awesome. Awesome. Thanks, Chris. I appreciate it. I appreciate the invite. This is a great event. This year is even more amazing. You can see there's a lot of excitement over the AV industry overall, and it's really a pleasure to be here with all of you. Some of you may not be super familiar with Aurora, so I'll do a quick presentation, real quick presentation, and then I'd rather just get into the Q&A.

With that, and to kind of keep the lawyers happy, this is our statement in terms of forward-looking statements. So please take a quick gander 1, 2, 3, it feels like it's about right.

All right. With that, let me just talk a little bit about Aurora, right? So we are a mission-driven company. Our mission is to deliver the benefits of self-driving technology safely, quickly and broadly. We are operating driverless on our launch lane, which is Dallas to Houston. We surpassed 50,000 miles in early September. We have a pleasure of working with several really great customers as we start to roll out this technology throughout the Sun Belt by the end of next year. And everything that we do is really focused in on trying to create value.

Let me talk a little bit about Aurora. We feel like we're in the pole position when it comes to autonomous trucking, right? And so let's talk a little bit about, first off, what's our product? Our product is the Aurora Driver. That's a combination of hardware, software and data services, which allows us to operate autonomously on public roads. I had mentioned we are the only company that actually operates driverless trucking on public roads today. Trucking is our very first market. Why is that? It's a $1 trillion market. We -- it drives 200 billion vehicle miles traveled each year. And we believe that autonomous trucking can create great value for the industry. If you think about both the safety, if you think about the utilization of assets and the total cost of ownership. And I'll talk a little bit more about those in the future. In terms of an ecosystem, right, we feel like we've got great strategic partnerships, both on the OEM space with PACCAR and Volvo. They represent about 50% of the market, but also in terms of -- and all these partnerships are not to get to a driverless launch, we're there, we're past that point. We're all focused on trying to build the business and to scale a business together. And so that's what our partners do. From a hardware side, we've got a partnership with Aumovio, used to be Continental, the recently spun off automotive arm. And that's what's going to allow us to actually scale our hardware kit into the tens of thousands. So we're really excited about that.

From a financial perspective, at the end of Q2, we had $1.3 billion in liquidity that allows us to get in the second quarter of 2027. We continue to be pretty opportunistic about our fundraising. We don't want the concerns of liquidity to impact our customers, our partners, our investors like yourselves and our employees. And so that's our focus. And then what I would say is, if you think about the next couple of years, 2025 is all about really unlocking the technology promise. It's great to have a driverless product. But to be relevant, you have to actually be able to do certain things really well, and you need to make that product performing enough that customers can create real value from it. '26 is all about scaling to hundreds of trucks, bringing on our second-gen hardware, operating across the Sun Belt. And then '27 is what we'll start our transition to our Driver as a Service. That's our long-term business model, right? That supports our capital-efficient approach to the market. And we're really excited about that. That also is when we bring on Aumovio and our third-generation hardware kit. And again, our goal is to accelerate what we believe is our first-mover advantage and reinforce our leadership position.

A little bit more about 2025, and this is important for us. When you're in a safety critical industry and you launch a product, it's incumbent upon you to do it responsibly. And we have this crawl, walk, run approach for 2025. And so for 2025, our goals are really simple. First off, we're going to continue to increase the driverless miles that we operate every day. The second thing is we're going to improve the capability of our product. So one of the things when we launched, we were operating in climate conditions in the daytime. We unlock nighttime. We pulled that ahead of schedule. Just based on the investments and things that we've done, we are actually able to accelerate our development approach. What's next is unlocking rain and heavy wind and then operating on additional lanes, whether it be Fort Worth to El Paso and then extending out to Phoenix. We've been operating autonomously on these lanes for quite some time, and we're making excellent progress to unlock these before the end of the year. And in fact, I'm even excited to say that our first 2 driverless launch customers on this lane are going to be Hirschbach and Werner, so we're very excited about continuing to build on that momentum.

Okay. Why is it valuable? And we even have a colleague in the back that would challenge us on this all the time. We know there's value in providing this technology to customers, right? And it's really about having a higher level of safety than what's out there on the road today and then increasing the financial performance of carriers because that's kind of our primary customer cohort, right? And today, if you look at the human-driven fleet, there are some restrictions that all autonomous trucking companies can deliver upon. One is increased revenue utilization. The trucks can operate without hours of service limitations, and that's a real benefit. And you also have to provide lower total cost of ownership. You combine those 2 things together, and you're creating a margin improvement for customers. We can argue about what the dollar amount is, but there is no doubt that this can provide a higher level of safety, increased utilization and lower cost of ownership.

Okay. The last thing before we go to Q&A is, look, maybe a little bit of a plug. Like Aurora is a company that prides themselves on being transparent. We've been a public company for quite some time. We're kind of leading in a lot of the transparent things, whether it's our safety case approach, how we measure performance and progress. The latest one is how we operate driverlessly on the roads. So at any point in time, any of you can go out to our YouTube channel on @AuroraDriver and watch our driverless trucks operating on the roads. They operate daily. The live stream goes between 8 and 5 p.m. Central Time every single -- or Monday through Friday. So go check it out. It's pretty cool. I know a lot of investors watch it all the time. I happen to watch it quite a bit.

And with that, maybe really excited, let's get into some questions. I'll cruise over there.

Yes. Really appreciate it. David, I really appreciate the detail, particularly on -- I think you've been very consistent about that walk into -- crawl to the walk milestones. I want to maybe start in reverse order and sort of zoom out to whatever the time period be in years or long term, what Aurora truly wants to be when it grows up, I do a phrase from Mark Mahaney. You're starting with hub to hub. Should we still think about something beyond that, meaning to the customer last mile? How do we think about the true evolution of Aurora long term?

It's a great question. And it is a bit of a perspective on time horizon, right, and everybody knows it. Like the first thing is, like if you think about today in the world, almost everything that you touch feel you get delivered, operates through trucking. Like trucking is essential part of our economy and about society. If you ask me like in the next 10 years what I feel like we should be? We should be an integral part of that, right? We should be operating integrated with a human-driven fleet, we should be operating with a vast amount of carriers across the U.S. and creating efficiency, right? And giving customers an opportunity to kind of rethink about how they think about their network, really increase the utilization and the performance of the product. And also just improve the safety generally of trucking across the industry. Now how do you get there? So if you think about where we are today, and what do we need to do, I mentioned some of the things in '25, but there's a couple of other core components that you need to get to, to be valuable. You have to go to the customer endpoints, like it's great, yes, we have operated terminal to terminal, and that's great, and it demonstrates that it's done, it's capable, but you have to go to end points. For us, starting in '26, the vast majority of where we're going to go to are customer endpoints, right? And I think that's a really important element to be able to drive customer adoption and build confidence in the product that you have. So I think that's a really important one. I think the second 1 is you got to kind of align your business model with what works with customers, right? Customers buy trucks today. So ultimately, at the end of the day, again, we're transitioning to a Driver as a Service, where they get to buy trucks and be able to place these trucks where they want them and be able to operate how they want to do it. And so for us, we need to enable that. And so 1 of the most important things for us is to make sure that we transform our business model. That is why we have long-term partnerships with our OEMs to build scalable platforms. That's why we have a Conti strategy or Aumovio strategy in terms of building out our hardware sets. We need to be able to provide the product where they need it at the time they needed to. And so I think those are a couple of the key enablers that are going to get us to where we need to get to. But ultimately, at the end of the day, by the end of '26, I fully expect us to be operating throughout the vast majority of the Sun Belt. By 2030, I expect us to be operating in most of the U.S. And again, we have to integrate it within the customer networks. And we have to integrate it within the human-driven fleet, right? Like this is not an autonomous take all sort of thing. This is an integration element that you have to work with individual customers.

So if we focus on that business model, do you think it's fair to say, David, this conversation of -- there's an industry discussion of hub-to-hub versus customer endpoints, there's actually probably a lot more of an overlap there? Because what I'm thinking about who is a conversation you're going to have, maybe hub-to-hub, you're talking to someone like Werner work, a customer endpoint, maybe you're dealing directly trying to get coke for example, to work from a production to a distribution line. Can you talk about who that end customer is that drives decision to start an AV route?

Yes. Well, I would say it this way, like your 2 primary customer groups in this type of example are your FTLs, and your LTLs, right, and maybe your private fleets. We need to go where they want us to go. But autonomous trucking is predominantly where we create the most value is in these over-the-road routes that get between DCs or warehouses. That's that's where the greatest value is. It's not getting to driving into city centers and delivering end points like you have a whole new challenger. What we think is the real value proposition is getting to DCs, getting to warehouses, getting to customer endpoints and each 1 is different. So if you're FedEx, you want to be able to get to the regional sort facilities, and to be able to do that, you need to be able to do that reliably and on time because you can't miss a sort, right? For a company like Schneider, you need to deliver goods from 1 of their DCs to 1 of their customer endpoints. Maybe it's a Lowe's or a Home Depot, the same thing with Werner and everybody else. So every 1 of them is going to be a little bit different in terms of where they see the most value. But generally speaking, it's DCs or warehouses to warehouses, distribution centers to distribution centers, sort facilities to sort facilities, things like that.

And if we had Chris here talking about the AI challenges of doing the side streets, right, again, these are not usually in urban centers, but the side streets to do some of those customer end facilities. Is there an AI challenge? Because clearly, there's less of a business model challenges, less drayage cost and things like that for them. But is there a little bit more of an AI aspect on side streets?

I'm not sure you want the CFO talking about AI. But what I would tell you is I think the short answer to that is no. I think there's a little bit of a misconception, right? Even today, when we deliver to our terminals, so when we're going to Houston, we traverse 5 miles of surface streams, right? Like this is, if you look at the vast majority of distribution centers, over 80% of them are within 5 miles of a highway, right? So you're not talking about going into dense urban city centers. We're talking about meeting the customers where they want us to be as opposed to trying to drive something different. So I don't think it's an AI challenge at all. There is some technical differences, right? In some cases, you got to go through school zones or maybe you got to navigate in railroad crossings and things like that. So I don't want to say it's -- there is no challenge. There is some challenge, but it's not the same challenge as what you experienced in kind of ride hailing.

And then a little bit on the timeline for, I think, the one-on-one for people. When you think about that first generation to third generation, today versus 2027, can you just remind people how the Software as a Service model and hardware as a service model through Conti or Aumovio will sort of work high level? You don't have to go into specific numbers. But you are sort of a first of a kind in a Hardware as a Service model, so I think it's really important to go that.

Yes. So there's a couple of things. Number one, I think it's important if your perspective is -- if you think about our mission, which is delivering the benefits of self-driving technology safely, quickly, broadly. To be able to achieve that message -- that mission, you have to think a little bit longer term. So you have to think about, well, if it's broadly, that means I need to get it everywhere. I need to be able to produce enough volume. What do I need to be able to do that? You need OEM partners again. You need hardware partners, but you then also have to think about, well, how does the business operate? The majority of the business operates on kind of a pay-per-mile type of structure, right? And you want to have unwind incentives. Like our carrier partners would like to pay us when we deliver a truck. I would like to pay Aumovio when they enable us to deliver a truck. And so this Hardware as a Service model was a really interesting concept that everybody seem to get aligned with, right, because it creates the right incentives for everybody to behave the right way. And it focuses on having a reliable product for the future. Now how do you get there? So today, we've got a -- we have our small fleet of trucks that's with our first-generation hardware kit. Admittedly, it's a great hardware kit, but it's not designed for a long-term potential. Our second-generation hardware kit is going to come online next year. And that one, we've designed it, but we're going to use -- we've designed and engineered it, but we're going to use Fabrinet to help build it, that allows us to get to hundreds to maybe thousands of trucks. And that's a great step, but that's hardware that we're going to own and pay for it. The third generation, that's when Continental is essentially going to finance it, manufacture it, service it, and they're going to get paid a cost per mile. Now the 1 really important thing for a lot of -- especially some of the new investors is -- an important clarification here, right? In the traditional OEM model, an OEM buys hardware components, they put it on the truck. That's not what happens with the AuroraDriver. The AuroraDriver is a combination of hardware, software and data services. That means all the hardware that is on the truck, actually is not purchased by the OEM, it's included on the truck, and it's part of our per mile fee, right? So there's no big upfront cost for the AuroraDriver hardware. There will be some incremental costs associated with the work that the OEMs do, but the AuroraDriver hardware itself, that's just part of the per mile fee that we have.

And can you just review that evolution '25 to 2027? You mentioned it, but I think it's important. We're in the last disclosed 3 or maybe it's more trucks, you said hundreds next year into thousands, 2027 on generation 1, 2, 3, is that good paraphrase?

Yes. Yes, that's how we think about like where we're at 10 to hundreds of thousands. We've got a small fleet of vehicles that we operate today, that we use for both commercial driverless miles as well as for development, right? And you need these same trucks to do both purposes. Next year, we'll increase our fleet to hundreds. And then the following year after that, it's thousands. And then at the end of '27, you're at a run rate that gets you to tens of thousands, right? So that's how we think about the stair step approach.

And then I started with the zoom out, Dave. So now start to zoom back in. When I think about the next couple of years, you put out targets for 2028, this idea of a TAM or a SAM, right? 800 billion, it's a big, big number. But even just making a small portion of that over the next couple of years, is the difference between thousands of trucks to your point or tens of thousands of trucks. I think you put out a 50 billion SAM for your initial market of what you just discussed. Can you help us frame that, how you came to that discussion? How do you think about customers or the size of lanes that you need to address that sort of SAM?

Yes. So to achieve the SAM, and this is like at the end of -- this is like in 2028. So think about it as we've done the Sun Belt. We win a little bit north of that and kind of above like the Mason-Dixon Line, and we're operating in all those areas. Now how do you get to a TAM of 50 billion VMT, which is an opportunity for us to then go play a part of, right? So you have 200-ish billion vehicle miles traveled in the U.S. today. How do you bring that down? So first, you look at the lanes you're not operating in. The second thing is you exclude routes that are like less than 100 miles, right? Just conservatively, does that mean AV can't handle it? No, it can. And we may, in certain use cases, do really short routes that people want us to do. But let's just -- this is a conservative approach to business. I'm a finance guy, so I'm a little bit more conservative. And if you look at just operating on those lanes, it gets you to 50 billion vehicle miles traveled. The average length of haul is over 600 miles, right? So we break it down by length of haul, but you're averaging more than 600 miles per trip based on that 50 billion VMT. Every 1 of those lanes that I talked about, like they all -- those all support autonomous trucking today, right? So it doesn't -- actually, that number doesn't include California, which today doesn't allow for autonomous trucking. So we only include the states where AVs either are explicitly or implicitly allowed today. So it's not a real big challenge to get to that kind of number. And then, again, we think we're going to be a portion of that like we're not going to be the majority of that. There's still a big human-driven fleet that's out there, and we're going to start to supplement that in 2028. And so 50 billion seems like a pretty reasonable estimate. I think there's a little bit of mischaracterization out there in terms of like autonomous trucks can only go 500-plus miles, and that's where the use case is valid. That's actually just not true. I mean you can talk to customers. I know that that's actually not true. But if you go to endpoints, and endpoints, again, being relatively easy to unlock. Again, we drive 5 miles surface street for 5 miles even in our Houston terminal, 80% of the routes are under 5 miles from the highway. It's not hard to get to end points. Customers want us to get to endpoints, but customers also want to see us have a valuable product that can operate in the day, it can operate in night, it can operate long hours and it's reliable. And as soon as we continue to demonstrate those things, the ability to operate in endpoints is going to slowly mature and like we're going to start unlocking endpoints at the beginning of next year, right? And we're really excited about that. I think most of our customers would like us to go to end points. Some terminals are valuable or handoff spots and things like that. But generally speaking, endpoints is going to be our primary mode of distribution.

And strictly to sort of your CFO's virtue, as I think about that 50 billion SAM to get to some of your targets, you're talking about 10,000 trucks, which operate, I don't know, 200,000 miles plus for years. So you're targeting within that 50 billion over the next couple of years, something like 2 billion to 3 billion of that 50 billion. Is that a fair way to think about what you're initially going to target within that 50 billion of SAM?

Yes, that's a fair way to do the math on it. I mean we have a lot of work to do to prove that out. But I'm very confident that the value proposition is there. As we demonstrate the safety and the reliability and address some of the customer pain points, that's a great opportunity. That's kind of a target out there for us. And over the next couple of years, we'll continue to deliver towards it, not guidance.

Yes. And then 1 or 2 more for me that I want to definitely give enough time for questions. You talked about the near-term milestones, closing the validation on night driving, but over the course of the next couple of months, you're going to close it on some version of inclement weather with rain, but also your new lanes. I think there's always a little bit of confusion of whether you are solving that or whether you're closing a validation case, making sure that it's at your level of acceptance to roll out publicly. Can you talk about what needs to be done internally to satisfy the check -- the box for rain and the new lanes?

Look, I think it's incumbent on AV technology providers to hold ourselves to an incredibly high bar for safety. That's the value proposition, right, and you have to be able to do that. And so for us, unlocking a rain, I mean, if any of you have driven our trucks and several of you have, like we operate great in rain, right? You even question whether we're ready to go? We need to hold ourselves to an incredibly high bar for safety. And for us, it's all about validating the various scenarios to ensure that we can close our safety case. So there's not a technology unlock that needs to get done. It's more about validating the confidence in just closing the safety case itself. And we have a very robust process. We spent a lot of time right in the validation and refining the validation elements. So that's why we're able to close nighttime faster than what we had planned before, and so for us it's really about having the confidence that we will be safe on public roads. I mean all of our families drive on public roads. We have to hold the same bar as everybody else. So like we really think it's important to make sure that like you don't compromise safety. We don't do this for demos or experiments and things like that. We're doing this to drive a commercial business, and we're never going to sacrifice safety, like we have the long-term vision in mind. And I think we've demonstrated that quite a few times, and we'll continue to behave that way.

And then the last 1 on that transparency. I mean, obviously, seeing is believing, so something like the YouTube channel is fantastic. But also, we've seen now audited data sets, self audited from Waymo. There's insurance companies that are adding on to that. Do you think that's something that we could or should see in the in the trucking industry, just so that you have that added level of regulatory consumer customer buying?

Look, I think we are objective, I think that we're the most transparent AV trucking company out there, that's somewhat by necessity, we've also been a publicly traded company for quite some time. So there are certain things you have to disclose. And we've tried to provide insights into this. I think it's -- I do think you'll see more in the future. I'm not going to tell you what it is, but I do think you'll see more. But I also think that even if somebody else told us, hey, this is great, like we've done a lot of stuff too soon, right? And they love the processes. We did -- many of you and our customers, we had J.J. Keller evaluate our trucking product. We do a lot of stuff. The most important thing, though, is that we have to stand behind it. And you can't rely upon somebody else to justify the safety. I think this is still a technology that's pretty complicated to close the safety case. I think all the companies that work in this space, like it's amazing some of the accomplishments that the industry is making, and we're really excited about it. And I think there is a level of assurance that we need to continue to provide. I believe seeing is believing, that's why we do the AuroraDriver live. I do think we'll look at other modes. But I will tell you that we allow and encourage all of our customers to put their best drivers or their driver trainings into our product before they ever go driverless with us. And I think that, that's actually a pretty good testimonial to a lot of stuff that happens.

Excellent. I want to open it up to Q&A to the room. Don't be shy.

Awesome.

No, maybe I can do -- I always have a follow-up question. It's always a trick, it's always a trick. I always have a follow-up question. Stack AV presented this morning, and when they talked about their timeline they mentioned, and I think this is a discussion in the industry, that of all of those multiple components of a trucking ecosystem that the OEM still seems to be 1 of the most hesitant because they have to put out AV product that is actually different from their existing hardware, drive by wire, redundant steering. How are you seeing OEM acceptance and timelines because it's not probably a very difficult issue, but it's one where they want to make sure that their hardware is working even if you say that software is ready to go. So how do you think about OEM landscape for partners like PACCAR and Volvo rolling out over the next 18 months?

I think in some ways, they're not wrong, right? I do think there's a bit of an under appreciation on the complexity that maybe AV companies have relative to either like the customers' business like running a carrier is really fri***** complicated, being an automotive manufacturer is really complicated. And I think it's prospective, right? Like so for us, at Aurora, 100% of our business is on autonomous technology. If you're an OEM partner, I think it's it's like a tiny portion of somebody's brain space at the time. And I think they recognize the opportunity and benefit. Competition tends to breed a little bit of innovation. There's not quite as much competition in the large trucking space as there is on passenger cars, which is why you see passenger cars -- more passenger cars able to support autonomy than you do in the large trucks, but they'll get there. And again, if you take a perspective, a longer-term view, and have the appreciation for what they're trying to achieve, not every partnership goes great, right? Like -- and sometimes, you got to be patient, sometimes you got to pivot and sometimes you got to keep the end in mind. I think they will get there. And when they get there, you're going to have all the benefits of the OEM partnership that you started up for. And yes, it might be a little bit slower than what you want, but such is life. I mean, like we're -- they could build 10,000 trucks today. Our customers, and we are not ready to deploy 10,000 trucks either. So like have some perspective in it. So I think it's a little bit true, but this is new technology, not everything goes great.

And it's still on pace.

Thank you. [ Rakel ] over there will squash me.

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So yes, what I would -- I would describe it a little bit different. So we never want like our runway to be a concern, right? Our employees don't like it, our customers don't want to invest a lot of time and energy in a company that they're not sure is going to be around. Our partners don't like it. Investors like have a tendency to breathe together, and so if they're concerned about it, then they don't want to continue to invest. We had the benefit of having an extraordinary long-term investor base to support us. And we've been very fortunate in that, and we worked really hard to build the confidence with them. We will continue to be pretty opportunistic. If I bias towards anything, I bias towards having pretty long runway just for the near term, I think that will be a pretty big focus of ours. So I would expect us to continue to be opportunistic. We have a -- I think most of you know, we have an ATM that's accessible to us at any time. We've been pretty opportunistic on fundraising in the last couple of years. And again, our goal is to make sure it's not an issue for our partners, customers, employees or investors, that's our goal.

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Yes. The last -- we talked about this, I don't really have any updates so that we think we'll achieve positive free cash flow in 2028.

[indiscernible]

Our expectation is, and it's probably a better question for some of the customers, but our expectation based on those discussions, is that carriers like to own their assets, right? Like they like to deploy them where they want to deploy them, there's still a service and maintenance that goes on with these. Remember, the difference in trucking is these trucks can last up to 1 million miles, right? They operate today 100,000-plus miles per year. In future, we think, with AVs, it's 200,000, 250,000 plus miles a year. And so they want to be able to deploy them on whatever route they can, at whatever time they need to send them and having the flexibility to do that and keep them at their end points is really important to them. So generally speaking, we believe that most of our customers really like that approach, and that's what we're going to enable.

Last one.

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We don't really use them, to be honest. I think they're great tools. I think they're inefficient to have a safe autonomous driving product. So we have our own hardware suite with cameras and everything. We do integrate with a vehicle through our ACI. So we're able to connect and do things like tire pressure monitoring, that gives us a good signal of vehicle behaviors and stuff like that. But when it comes to some of the other telematic devices, we don't really use them. We have probably way more -- well, definitely way more substantial tools to use. And so for us, it's not super helpful.

And with that, round of applause for Dave and Aurora.

Great. So let's keep us going. Next up, we have Aurora innovation, autonomous trucking company that's actually running driverless trucks on public roads in the U.S. today, $10 billion in market cap and very happy to welcome back to Luvuna, CFO, David Maday. David, thanks for being here. So what a difference a year makes last Laguna, your stock was I think under $2, and you were very much a show-me story. And since then, you've actually launched commercial driverless operations that you've now started to expand to second line, you're doing it at night and many boxes have been checked and your market cap is approaching $11 billion. So well done, I'd say. It's a good 12 months. With that, I think you have some few opening remarks, though.

Yes. So perfect. And thanks a lot, Ravi and Nancy and the entire Morgan Stanley Group. This is a great event, not just the venue itself, it's very well attended. And you get lots of great questions in the one-on-one. So really excited about that. Just a little bit for those that aren't super familiar with Aurora, right? I think for us, everything starts with the fact we're a mission-driven company. Our mission deliver the benefits of self-driving technology safely, quickly, broadly guides everything that we do. As Ravi mentioned, we are the only company operating driver that's on public roads in the trucking space. we're super proud of that. We just passed 50,000 miles this last weekend, and we continue to deliver towards our mission. -- the Aurora driver is our product. It is a combination of industry-leading like hardware, cutting-edge technology and our verifiable software, AI software data services and et cetera.

Trucking is our first market. It's big. It's a $1 trillion market. it's $200 billion VMT and we think that the Aurora driver can create tremendous value for this industry. So we're really excited about that. I'm sure we'll talk more about it. We think that having a partnership ecosystem is not only important. Honestly, it's critical, essential to actually achieving a scalable business. And so we're proud to have partners on the OEM front with the likes of PACCAR and Volvo. We think all of our customers, our partners, right? So we've got our customers like Espand Uber Freight. They're actually operating driverless on our launch lane and many of our other partners who are customers, the FedExs, Schneider's, Warner's, of the world, and we're really excited about this progress.

We also have and rely upon partners to develop our future hardware generations like Continental or Inovio when they officially change. So we're really excited about the opportunity, but we also understand we can't go without partnerships.

We've got a really solid financial position at the end of last quarter. We ended with $1.3 billion in cash and short-term investments. We believe that will push us into at least the second quarter of 2027. We're very fortunate to have a very supportive long focused investor base who has continued to support our journey, and we'll continue to be opportunistic in terms of fundraising in the future.

I mean a little bit about what's next. So the remainder of 25, it's all about proving the technology promise. It's great to have driveless trucks on the road. It was an incredibly important milestone but it does not make a viable product for the industry. When we launched, we launched in daytime and dry conditions. Now we're operating day and night, we're able to pull it ahead. We have to operate and rain. We have to operate on longer lanes. So we still have to prove the promise for our customers, and we're really excited and are very confident in our path for the remainder of this year.

For '26 and 27, it's all about scaling the business, right? Introducing our second and third generation hardware kits, introducing scalable platforms with our OEM partners, delivering to customer end points and generating meaningful revenue. So it's a really important time. One little plug at the end, which is we're really focused on building public trust and transparency. You go to our YouTube channel at a driver, any day, you can watch our trucks actually operating. We livestream it, rotate through a series of those every day and it's available anytime. It's basically 8 to 5 p.m. Central. So check out the trucks. It's pretty cool.

With that, we'll turn it back to you.

You're right, we should have on the screen back here.

I told you.

Anyway, thank you for that great intro. So maybe I'll start with kind of my stupid intro, which is it has been incredible 12 months for you. Kind of what has it been like on the inside, rig? Has it been like putting out fires on a daily basis. Has it been CoCom collected with Chris kind of just putting in the strings or what's the been like?

Well, I'd be lying to you if it was cool comment. I think -- so I think it's a combination of things. Number one, a tremendous amount of pride in and excitement of what we've delivered to date. And we set a series of big milestones that we put out there for the public to evaluate. And 1 of them was to show it's real. And we did that. But that, in its own right does not create a business. It doesn't create value for customers. It doesn't create value for our partners. So while we enjoyed that, and we think it's a hell of accomplishment, ultimately, at the end of the day, for us, it's all about execution of the plan. And we continue to be really focused in on this, '25, as I mentioned, is about the technology promise. And it's proving to folks that we can do what we said that we can do and we can do it really well. And it's working collaboratively with our customers, with our partners and really developing something that can be outstanding and transformational in the future.

So we're really excited. We're really proud. We're the only company that's doing it. We're really excited about that. But again, all that excitement we have to transform that and focus on execution and execution is something I think about almost every day.

Got it. So you're a CFO, you're good at math. So correct me if I'm wrong here. You did your first driver out on end of April. End of June, you did 20,000 miles, so 2 months and now you did 50,000 miles, a little over 2 months. So is the pace of that mile collection kind of accelerating? And how do you see that trending in the course of the next few months?

Yes. It is trending and it will continue to go up. And -- but I think it's important for us to kind of measure like where we are. And we've said all along that we are approaching this as a crawl walk run. So it is really important for us to continue not to focus just on one particular like metric like. That's why we don't say, hey, we're going to get hit 100,000 miles by day. Like -- because I think that, that's really not what you're trying to achieve. It doesn't create any better of a business than the other one. And really, this is about balancing the drive less miles and continuing to exert the muscle and that you need to, to create a viable long-term business. But it's also -- we're supporting at the same time, we have a driverless fleet of vehicles, which we have, we use them for development, too, right?

So we're actually trying to continue to not only build up the drive less miles, but we're also trying to launch our next feature capability. In this case, it's rain and in additional lanes, Fort Worth, El Paso and I'll pass it to Phoenix. So we're balancing both, and we're doing it deliberately. We have 3 trucks that regularly run the driverless route in Dallas, Houston today. We are going to increase that in the future, but we're also going to continue to focus on the technology because running a whole bunch of miles on just 1 way and without doing any of the other stuff also not super interesting, right? So we've got to do all the things really well.

Got it. So in the first 6 months, the first 50,000 miles, any surprises so far? Any kind of edge cases that you guys have not evaluated or any good surprises or any bad press?

No. Honestly, it's been surprisingly... .

Maybe it's good that we didn't have the thing in the back. No.

If we weren't confident, we wouldn't have an Aurora valve out there for everybody -- we always were part of the safety case framework, part of the mentality is continuous learning. We're not going to do everything perfect. There are times when you have to learn and it makes the product better. But the product itself, from the time we launch it, that's been great. We send them out every day. They do a great job. It's -- we're constantly learning how to scale a business, but the driverless trucks themselves, there -- it's been amazing and remarkable. And every time I go and watch one of them live, I'm always amazed. You see all kinds of different scenarios. I was watching the other day with an extra-wide vehicle blocking some of the lanes. And you get to see something new every day and you get to see the Aurora driver perform. And to date, most of you know we have a front seat observer in the vehicle as we operate in our driverless mode. We do that at the request of PACCAR. And it's it's still driverless mode.

It operates every day, the front-seat observer never has to do anything. And it's been really exciting for us. And it continues to build the confidence that we know what we're doing, and we are the leader in this, and we're looking forward to actually adding rain and opening up our next line. So we're really excited.

Yes. This is a serious question. How do you ensure the Front Street observer stays awake? Because, I mean, a lot of the companies I speak to say that it's going to be a crawl walk run on their side where once they get the truck, they're going to put their own observant for a while or to do a team thing. And -- like honestly, if he's got to -- the driver is going to be there to like take over something that happens, he needs to be engaged. So have you noticed this guy fall asleep? Or is he playing video games or what is he doing?

They're observing, No, they don't fall asleep. It's really important to do have good standard operating procedures in energy. It's important to also note that like our observers, when they do it, they're still providing feedback to the development team on how the truck is operating and what they like and like drivers are a critical element of our business and our company. And so their feedback is always useful. And we also -- if we're going to have somebody in there at the request of PACCAR, we need them to be available to do it in case something that happened. Look, we know that the Aurora driver is confident. We pass our safety case when we see it, do all the things we do even know that there's failures that our overall driver is going to be there. But it wouldn't be very useful for us to just be disingenuous about it.

So -- and again, the driver is providing feedback I mean the observers providing feedback every day. If you're -- the analog is the right halt. -- like ride hailing has been doing it for a long time. They get feedback all the time. It's called somebody in the in the rear seat observing the vehicle and telling you what they liked and didn't like. We haul toilet paper, coke or something like that. So for us you don't get that same benefit. So we are -- we take a look at this as an opportunity to continue to give feedback.

Got it. That makes sense. So for those who are unfamiliar with the story, and I can just very quickly tell us why PACCAR said they wanted that.

Like any great partnership, there's always going to be good things, and we're not always going to agree on things. For us, I think PACCAR's philosophy they can talk about why they are concerned about it. But as we've discussed it, they -- we have prototype parts in the truck that haven't passed their validation process to be what they determined to be safe for them for their or driver, our responsibility is an Aurora driver. We know that is safe, and we have to assume that parts fail, unfortunately. That's the point of having redundancies, and that's the point of doing everything.

So we have a different philosophy on this, but you can agree to disagree and still move forward, and we still think they're a great partner, and we'll respect the differences. And it does not impact our development. And that's the thing that was really important for us in agreeing to this is we still have to do a whole bunch of stuff. We have an observer in there. We have them sit in the front seat make sure they're a license driver. But there's a ton of work that we still have to do in terms of the development. And when we launch future fleets of vehicles, there will not be a requirement for an observer. And so that's kind of like how we think about it.

Got it. Let's talk about scalability. You absolutely surprised the upside by launching nighttime driving early in the third quarter. So you reported it on your 2Q conference call. So what can we expect for -- I mean, the next conference call, I think -- what's the pipeline for Rain? what's the time line for Volvo?, What's the time line for the second then?

So time lines for rain and for the additional lanes still is by the end of the year. So we're going to continue to focus on delivering that. And again, -- we are going to do the necessary steps to ensure that we're safe on public roads. Our families drive on those same roads, and it's incumbent on us to do that. But I can tell you, for certain, we'll launch it when we know it's safe. And like we get asked the question a lot, there is no technological challenges here. Like it's not that we need to continue to develop stuff. We just have to turn the crank and do our validation process and do the necessary steps are important to ensure we have a safe product on the road.

So there's no invention that's required. We just have to continue to do the work and I expect that we'll see a really great progress towards the end of '25.

Got it. And second OEM?

We're going to be operating Volvo trucks later this year with our second-generation hardware that's being developed by Fabrinet in Thailand. It will be B sample hardware and then eventually moving into C sample. It will be started off with developments, and we'll operate autonomously with vehicle operators to ensure the safety because we have not approved it for driverless, both us for the second-generation hardware as well as Volvo. Volvo needs to approve the platform. This is their scalable platform, what they call C build. So it's basically their scalable platform design, but they still have more work to do to validate it. So when they're ready to validate and operate driveless in when we validated the second-generation hardware on that, then we'll take that and we'll operate a driverless.

Remind me, the PACCAR is not Fabrinet.

No, the PACCAR trucks are on our first generation that we've designed and manufactured in the same.

Got it. So the next level of scalability is, to your point, it kind of -- it makes no sense to just keep bombing up in on the same lane, doing the same conditions of it doesn't really serve any purpose. One of the debates we've had with investors and with companies in the industry is how long it's going to take to expand not from 1 to 2 lanes, but to 5, 10, 50, 100 lines across the country, right? So we have seen this with -- on the robotaxi side where Waymo took yours, maybe a decade to launch their first city and then the second 1 came pretty quickly and the third 1 came really quickly, and then now it's like a city, a month or thing. So can -- is that the kind of time line we're looking at? Or how does that scalability go?

Yes. I think once we're able to operate in rain, so then, therefore, we've got day night and rain you're able to operate in most all of the environmental conditions that need to be. And then the self similarity of the U.S. highway system, whether you operate in Dallas or in Arizona and Louisiana, like similar to the highway system is pretty evident. It's the same reason I can drive a car in multiple states, right? So I would expect that this will actually happen quite quickly. I think it will look actually probably even more aggressive and faster than what you might compare Waymo's first, second and third markets in drives we do expect that we'll be operating throughout the Sun Belt in 2026.

So we're fairly confident. Again, it's the same thing. It's like there's nothing new that we need to invent there's nothing new that we need to experience. We drive the rail. We -- it becomes part of our mapping environment or we drive it a couple of times. We determine if there's anything new that we haven't experienced in another area, if there is, then we have to go design and design the test and validate the system for that. We would expect that you're only not seeing a lot of new stuff as you go through there. Again, traffic is the same throughout. You have to be able to handle heavy traffic, even if the frequency of heavy traffic is more, you still have to handle have your track in you still have to handle merging. You still have to handle heartbreaking you still have to handle people cutting in like you still have to be present and be aware of animals crossing in the road.

So I think all the really challenging things that people talk about it's evident already. And so it's really just turning the crank on the next area. And one of the things that I think what really separates us a little bit is our validation process. And our ability to go from the next -- was one of the reasons why we're able to pull night actually, our ability to validate the software and to pass all the appropriate tests and to know that we're going to be acceptably safe on the public roads that turning that crank and that fry wheel is just increasing for us every time. So I do totally expect we're operating throughout the Sunbelt in '26.

Got it. And other somewhat misnomer out there is that you guys only do highway and like point-to-point in the highway kind of you have said that you can do surface treat as well as to the customer end point. So can you just specifically talk about what the capability of the truck is expected to be at commercial fewer production launch. Where can it like can and go from a warehouse to a factory? .

So today, we operate between our terminals. So here are some facts. Our terminal in Houston is 5 miles off the highway. So the route that we take to go to our terminals 5 miles off the highway, it happens to be right by several of our partners DCs, right? So generally speaking, most all warehouses DCs in the trucking industry are really close to highways. As a matter of fact, 80% of them are within 5 miles of a highway, right? And that's just the setup of the industry different. And so for us, there isn't anything new to develop, like we operate on surface streets today. there is -- we'll obviously look at it. If I saw something that was challenging, we would code it is hard and we even need to do it. Like one of the things is if we go through a school zone, you have to make sure that you validate through a school zone. But aside from that, we've already experienced everything we do it. And again, it's the same way as the highways. We're really just kind of going off highway.

It would be true if like all of them were in urban city centers and things like that, then you could argue that that's a little bit harder. But in this particular case, it's not. And the data is pretty apparent. And there's a reason like people need big space. They need to put a lot of tractors like warehouses need a lot of space, depots need a lot space. So for us, I don't think that, that's really a valid argument or consideration. I think we're doing it today. We expect like 80% of the America to fall within what we're doing today.

Yes. Got it. So when you look at the competitive environment, again, there is this -- I pushed back at investors all the time and people say, hey, who's going to win? I am like there doesn't have to be 1 winner here, right? So what do you think this industry looks like in 2030? How many players are there? If you want to name names, go ahead? What do you think sourcing looks like? Is it an 80-20 on the OEM side who's running their own operations, who's not? And like what's industry structure in 5 years?

So like, look, when I think about 2030, so we've got a crawl walk run approach. I think by 2030, we're running, right? Like we're operating throughout most of the U.S. We've integrated with a lot of our partners. We've got our third-generation hardware kit that's being produced -- being manufactured by Continental, being directly shipped to OEMs and line sight installed, you got customers buying kits and that's doing subscriptions, and I expect this to be an integral part of the industry. I don't expect that today, like today, this is the crawl portion of this and like that's a little bit of the misnomer of what's going on. It is going to take some time. But by 2030, I think we're going to be there.

The market's trillion, 200 billion vehicle miles traveled per year, there's going to be competition. I don't know who they are. I'm not going to guess or predict who they are, there's going to be competition. I think our customers want competition. Our OEMs on competition, like this industry is set up, so you're not single sourcing everything. And I think we have a multiyear lead just to be honest, my personal belief is we have a multiyear lead. My belief is that we are the only player today that is actually thinking long term about commercialization. We're the only one that has 2 generations of hardware and development plus one on the road.

So we think about building a business, and I think we're going to continue to work on that lead. If there's other competition out there, that's great. I think it's just going to make us even better, right? And I think competition breeds innovation. And you shouldn't be afraid of it.

Got it. You guys are talking about crawl walk run. Let me ask you a marathon question, which is, obviously, you're not going to be autonomous trucking only. You also absolutely have sites on the robo taxi market on the commercial delivery market over time. When do you think you get enough SK velocity in the trucking business that you can start putting serious resources into robotaxi?

Realistically speaking, I think when we launch our third-generation hardware, which would drive down the bond cost, again, I think we're at a cost structure that would allow us to be successful in the ride hailing business. I think the ride-hailing business is -- and you got to hats off to Waymo and what they've done in the ride-hailing business. I give them a ton of credit and I took a ride in it the last time I was in San Francisco. It's a great product. Just like in the trucking business, I expect there's going to be other players, and I expect we'll be one of them in the ride-hailing business. But the business model is challenged, and we need to be able to create value and have a value proposition.

We're not going to be the leader. Obviously, Waymo is already there. We need to make sure that when we enter a market, we have a value proposition and ability to carve out a market opportunity for us. So I wouldn't say before '27, but who knows what happens to the world like maybe there's an opportunity that presents itself. But generally speaking, I wouldn't say until our third generation hardware comes in, do I think we have the right cost structure to really change the landscape.

God it. Why do you see the business model is challenged. Do you think the revenue per rig is just not enough? Or is it a hard thing to do? Or why that.

I think -- so the trucking market is a much bigger market today. if the ride-hailing market grows, it needs cost to reduce to increase the number of rides -- and if I just look at driver wages today, there are 3x as much as like gig economy workers.

So there's labor arbitrage.

Yes. So there's fundamentally some cost structure differences that make it just way more attractive. The other thing is look at it today, I can go into the trucking space. I can create immediate value by being safer, by improving fuel efficiency, providing predictable, stable supply that integrates within the existing network of drivers that are already there today, and I can create value, right? At the cost structure on that. I honestly don't know that, that's the same in the ride-hailing space. I think I can provide supply, and I think I can be safe, but I don't know that I'm creating a ton of value because the value piece of it has to help grow the market. And I just -- in ride-hailing you got to grow the market in trucking, I think you've got to support the market.

Got it. Maybe switching gears a little bit. Obviously, you guys have achieved a lot in the last 12 months in your history since 2017. How well known do you think that is in the trucking space? And I ask you because to be super candid, at this conference, we've had multiple carriers. We asked questions on, hey, what do you think about autonomous trucking. And to be honest, the answers haven't been great. Like it's been a lot of skepticism, a lot of doubt, a lot of, honestly, misinformation. And when the largest carriers in the country don't really understand what you're doing -- like does there need to be a little bit of a teaching tour or something to demonstrate your capabilities? Or kind of how do you get past that scepticism?

Yes. I mean, we could always do a better job on getting our message out and the value proposition of the teaching. But I might describe it differently. I think anytime you have technology adoption of something of this magnitude you're going to have folks that are the leaders in technology adoption. You're going to have the fast followers and then you're going to have the laggards. The show me it's actually real and the money and everything else. I think everybody, if they see the value, we will eventually adopt it -- but certainly not in that area. So like if I look at our existing group of partners, we have some folks that are really early tech conductors. If you talk to Hero like they're hugely optimistic on the opportunities in the AV space. And they've been a great partner to help us test things and work on things.

We've got a variety of partners of FedEx Snyder's, the Warners of the world. I wouldn't call them like the leaders, but they're all exploring this technology. So they're pretty close to leaders, but they might be more of the the fast followers, right? And they're very knowledgeable in the business. If you go talk to the folks at Werner, they talk to everybody, right? And so they're not talking to everybody because they don't believe in the business. right? And so I think they want to be a part of it. And then you've got groups of people that we don't partner with today, and that's conscious. We know they're not interested in it today. we know that we'll have to prove it over time. And that's okay, right?

We have a crawl walk on approach for a reason. And we do have to demonstrate the value and we have to execute and I think over time, it's impossible for me to say that if you can provide a safer product that is less expensive, and it solves some of the major industry pain points why it can't be accepted. And so like we'll have to continue to prove it.

Does it feel like it's easier to penetrate private fleets first?

I don't know if it's really private fleets. I think it's the -- I think it's just the type of customer and like Hirschbach is an FDL and like they're super tech forward, right? So I don't know. I think it just depends on their business. It depends on like how they feel about their driver pool and how they message it. Like Hirschbach leaned in heavily. We actually had their most cynical drivers come and drive our trucks, and they allowed us to video tape it and they gave us interviews, and they walked away saying, "We got to have this technology. So I just think it's how you approach it. And again, and we have to demonstrate value. I think we're demonstrating value. I think we're doing it the right way. I don't think every AV company in the trucking space in the past did it the right way. folks that said, "Hey, I'm going to launch. I'm going to have 15,000 trucks on the road in year 1. It's like that's completely idiotic. -- and really not understanding the market. right? And so that's why we've been very focused on our crawl-walk-run approach and thus far, we've been delivering.

Got it. Questions from the audience? Could you talk a little bit about what you view as kind of the advantages of being a first mover and maybe some of the moats that you think the business is building above and beyond the tech itself? And I ask that maybe just to preface within the context of if being a self -- if self-driving tech itself is kind of -- there's an end point to it because once we prove the case, they can self-drive, then how does being there first being a couple of years ahead allow us to maintain that lead even as others get to a tech that is fully self-driven? Does that lead go away after 2 years 2 years off that one?

It's a good question. I think there is a -- we view it as running a business in commercializing a business. I think some people characterize it as a race to get to a driverless product that they can demonstrate, I think we've never been that way. Like we don't talk about it that way. We talk about driving miles, integrating with our customers like what I think is what gives us this multiyear lead in my mind is that we're not talking about like the product we have today. We're working on our second and third generation hardware, we're talking about integrating with OEM partners in the long term. We're talking about how we integrate with our customers today. We're signing agreements like we had with McLeod, to have a TMS solution that can reach thousands of the smaller carriers.

So for us, we think about actually driving to a business and I think the further you work on that and the more you understand the needs of those customers, getting to their endpoints, I think it just builds credibility. Like a lot of people are talking about like -- and honestly, most of the carriers would tell you that they're so tech talked out. I don't even know how to differentiate between them. The simple fact of the matter is we're operating driverless we're integrating with our folks. We're thinking about the future. Other people are talking about like elements like cheaper and faster. This is a safety critical industry. I don't know that cheaper and faster is my best talking point. We want to talk about how we build the business and transform it together. And I think our partnership strategy and a little bit of humility goes a long way.

I think the other thing is we want to be the standard bearer. Like we want to be the leader. So when it comes to regulatory questions, they go to Aurora, when it comes to building trust, they look at Aurora Driver live. When it comes to talking about your road map, they see the Aurora driver road map. I think we have an obligation to help lead this industry and lead it in the right direction, and we take that seriously. So I think that also gives us an advantage over others.

Yes. What happens when there's an issue with the truck, meaning do you have like a central system that can take over if there's an issue -- or there's like some unique situation? Or does the observer intervene at that point? Or does the truck just pull over on the side?

So the system is designed to have like redundancies everywhere, including backup compute systems. If there is an issue, let's say, bird hits the LiDAR, right? Our system would do what we call a minimal risk maneuver and they would pull off the highway to a safe spot, right? That's what our customers want. They want us to be off the highway into a safe haven. If for whatever the reason we couldn't get off the highway, we'd pull over to the side of the road in a safe spot. All of that happens today even if there was an observer in the vehicle, all that happens in what the arriver. The observer does not take over if that happens. The system is designed to operate driverless.

So it has to handle everything driverless. If we relied upon a truck that says, "Well, PACCAR wanted us to put the server back in, so we don't have to do an -- all you're doing is masking the challenge. We are a drive list, and that's why we use the word. We are driverless. They're not there and intended to drive, right? We have to operate a driverless business, and it goes to everything that we do. And so in this particular case, we just pull over to the side of the road or off the highway.

You mentioned the rollout across the Southwest in different states. Maybe talk about the challenges to accomplishing that vis-a-vis the regulatory environment?

Yes. So the regulatory environment today, 39 of the states either explicitly or implicitly allow driverless operations everywhere where we're going to be heading in the Sun Belt allows driverless operations today. There is no laws or regulations that need to be achieved I think the framework and the sentiment at the federal level has been pretty positive, right? Kind of pro support technology leadership, especially in areas of AI and also reducing regulatory burden.

So I would say the feedback in the federal landscape have been pretty positive, but we don't actually need anything to operate in all the states that we plan to in 2026.

Very exciting story. We look forward to further catalysts. David, thanks so much for joining us.

I look forward to being here next year.

Appreciate it.

Okay. Great. Thank you, everybody, for joining us. My name is Mark Delaney, and I have the pleasure of covering Aurora for Goldman Sachs.

With us from Aurora, we have Chris Urmson, the Co-Founder and CEO. Really appreciate you joining us.

Glad to be here. Thanks for having me.

I thought, Chris, given your extensive background in the autonomous space, I wanted to get your thoughts around AI, and how Aurora is pursuing this? You've talked in the past about using, what you call, a Verifiable AI for your product development. Help us better understand what Verifiable AI is? How is that similar or different than a full end-to-end approach?

Yes. Yes. Well, thanks. And for those of you who don't know the company, we're working on making trucks drive themselves, ultimately driving all kinds of things. Our mission is to deliver the benefit of self-driving technology safely, quickly and broadly. And we're operating trucks between Dallas and Houston today driverlessly and anticipate by the end of the year to be operating between Fort Worth and Phoenix, Fort Worth and El Paso, and El Paso and Phoenix. So that's kind of the kind of 30-second version of what we do.

Verifiable AI is the way we think about bringing kind of modern AI techniques to a safety critical space. There's been a lot of excitement, of course, in the large language model space and the visual language model space. These kind of techniques are exceptionally compelling in that area. But in a world where we can't afford to have a model kind of doing the proverbial, use glue to hold the cheese on your pizza, we need to do something a little beyond just kind of train and pray. And for us, that's this is verifiable approach, where we combine the best of AI machine learning with guardrails. What does that look like in our system? It is -- one, it make sure that we actually can understand the representations that are being expressed by our models and using those as kind of a way to contain and constrain the communication of what's learned by the action part of our system.

It also allows us to put in place constraints on how the system can respond that can't be kind of jail broken, if you will. Foreign constraints, for example, we want our vehicles to stop at stop signs. If you just build a trained model, it turns out something like 11% of people actually stop at stop signs. So if you actually trained off of that data, more likely than not, you're not going to have a stop at the stop sign, which we think is actually a pretty important part of building a safe system. One thing that's actually really interesting to see is how the story around this -- around end-to-end models has involved. A couple of years ago, when ChatGPT was new, and large language models were having the kind of introduction and large moment, as well, you've got to be doing completely end-to-end stuff. That's what those guys are doing. It turns out that if you actually look how these models are now beginning to work, they look much more like the approach we've been taking for a while because as these models move from curiosities and chatbots into things in industry and businesses are relying on, they're moving to federated models and constellations of models. They're moving to learner ranker approaches to make sure that the thing that comes out the end of it is something that makes sense and is valuable. And so it's great to see that kind of this approach that we've spearheaded is starting to be the way that other people are starting to think about this as well.

As you think about that approach to your product development using Verifiable AI, what does that mean for your ability to add new features to your stack? Is it accelerated, slowed down?

It accelerates to make sure we get it right, right? For example, by the end of this year, we intend to be operating in range. If you came on road in 1 of our trucks today, you'd be like, "Chris, why have you not launched this feature." It works. It works well almost all the time. But when we're talking about an 80,000-pound thing, moving at 70 miles now down the road, almost is doing a lot of work in that sentence, and we want to make sure it's really right. And so for us, being able to understand and evaluate and validate the system, avoid the challenges that come along with kind of a compounding exponential of set of complexities that come from both understanding the world and figuring out what to do in it and be able to differentiate that and verify the sub-elements of it, means, we can have really strong conviction that the thing that we put on the road at the day is going to be safe.

You mentioned before about starting to operate between Dallas and Houston. That was your launch lane, you began in late April. Talk a little bit more on some of the key learnings from that? And how has customer feedback been?

Yes. It's been kind of what we expected, right, in that the vehicles are out on the road, they're operating. As of last week, we've done 50,000 driverless miles on public roads. So this is kind of a big illustration of kind of -- that's starting to accelerate and pick up. The technology works, the validation process we put in place, we believed in it. We had conviction in it. And what we're seeing is it behaves the way we expected, right? The performance on road matches what we wanted, and that's really what you want at the end of the day. And what it's meant for us as a company is, one, we've believed for a long time, we were ahead of the game. And now it's kind of demonstrable, right? We're the only company in the world that can do this. And we feel like with the approach we put in place with Verifiable AI. We're actually continuing to accelerate relative to any competition that might be. But two, when we go and talk to customers, it goes from a hypothetical. What this could mean for your business if self-driving trucks are a thing to now self-driving trucks are a thing. We have them. They're coming to a freeway near you in the not distant future. And it's really caused a significant uptick in enthusiasm from potential customers.

The next big thing is already here. That's Samsung would say.

Yes, I guess so. Yes. We're [ going to look ] at that tagline for sure. Let's go with it.

I think it was a smartphone advertising campaign, they ran when they were starting to compete more against the iPhone, if I'm remembering correctly and [ dating ] myself.

I don't know if I want that as our metaphor, yes?

You recently expanded to nighttime driving. With that change, how many miles per week is 1 of your AVs typically doing fully autonomously?

Yes. So the way to think about it is where this is heading, right, is that we expect trucks to be able to do somewhere between 200,000 and 250,000 miles a year, if not a little bit more in certain situations. And being able to go from operating in 8 to 12 hours a day of daylight to be able to operate and night, means, we unlock that potential. That translates to something between 4,000 and 5,000 miles a week roughly. And so yes, we're -- that's kind of what we're expecting.

And the company, as you mentioned before, is planning to address rainy and windy conditions as the next step in expanding it's operational design domain. Can you provide an update on how the validation, testing and safety case for these conditions is progressing, and if you're on track to do that by the end of the year?

Yes, it is moving along well, right? We continue to expect to be able to address those conditions by the end of the year and begin operating in them. And again, it's really important to understand there's a difference between the performance of the system and the validated performance of the system. Today, we take you and put you on 1 of our trucks in the rain, and it will feel like it works. If you're unlucky, what you'll see is that in certain conditions, we'll sometimes think that some of the vehicles adjacent to us are a little bit bigger than they really are. And that may cause us to think that they bumped it to us, right? And that causes them to pull this out of road and stop. It's rare, but it's a thing that you don't really want in a product. And so as we continue to pull the additional data that gives us conviction that the rest of things, that will work the way we will, and we make the minor refinements to the system. We're feeling really good about the timing.

Very helpful. Company is also working on adding driverless operations for it, Fort Worth, El Paso, Phoenix Lane. How are you progressing with starting to add those lanes to your map and overcoming some of the more unique features like having to go through a custom stop?

Yes. And I'm going to sound a little bit like a broken record. And that, yes, it kind of works that we're on the road today. We have those -- we're operating for customers Fort Worth to El Paso and on to Phoenix. Phoenix is particularly interesting because at that point, it's 1,000 miles, about 16 hours of driving. It's -- Fort Worth to El Paso, it's right around the hours of service limitation for a human driver. Fort Worth to Phoenix is beyond it. And so companies like Werner are super excited about that and the opportunity for their business. And again, we're feeling quite good about it. As you said, there's a couple of things that are a little bit novel. So the prevalence of cattle on the freeway is slightly higher than it is between Dallas and Houston. Again, not a thing I think we've ever seen, but we're making sure we're good with -- we don't want to be hitting someone's steer. And then there's this inland border patrol station. And again, we've put in place a first-of-its-kind partnership with customs border patrol agencies -- agency. We were -- we've been testing that and working that for a couple of years. And now it's just let's go through the final validation and call it ready to go.

Great. That's good news. As you start adding some of these different capabilities, right, going to a different city, going through a customs and border patrol stop, how much incremental R&D is needed to add those sorts of features? And how long does it take to validate those things?

Yes. Well, I guess you can be looking at the clock, right, that we got to the initial launch. It took us about 8.25 years to be able to get there. By the end of this year, we expect to be operating in the range we expect to have unlocked 3 additional routes. So relatively modest. And part of that is because of the investment we've made, not just in the technology, but in the process and tools that allow us to have conviction in the technology. And I really think that important to understand. If you look at a company like SpaceX, in fact, let's look specifically at SpaceX. The reason why SpaceX is lapping Boeing is not because Elon is brilliant and he very well maybe, but it's because they can validate their flight software in a week, and that takes Boeing a year to 3 years to do that. That means they get 50 to 150 more shots on goal than Boeing does. And if you read any article on business, any article or any book on business or on technology development, fast iteration cycles done safely is the key to this. And so for us, we've invested heavily in this VNV tooling and framework. And that means that not only do we have a product that's on the road and safe, but that we can continually add to it and improve it and do that rapidly and with conviction.

And that's something you've developed in-house.

That's something absolutely we developed in-house. And talking to the team, you want to -- my theory is, if you think we have 3 major assets for the software in our system, we've got the actual code itself, our data sets or our process, you told me you had to delete 1 of them. I'd tell you delete our code. Because with the other 2, like please -- by the way, do not delete any of them. They're all super valuable. But if you had a gun to my head and told me you had to delete 1 of them, I'd say delete the code because with the infrastructure we have and with the data we have, we can quickly go and ultimately recover that if need be.

And just clarify, the VOV, what is that?

VO -- VNV.

Oh, VNV.

Verification and validation. Sorry, I pronounce it more clearly. This is basically the process for making sure that the thing that we've built actually does what we think it should do, and what we should do is actually what it needs to do to be out in the world and be safe.

That's a lot of simulation and software capabilities...

Yes, it's a combination of simulation. And importantly, simulation is not enough, but actually understanding how to use the simulation to test, right? Because you can create a virtual world, and it's pretty easy to understand, did the thing crash into something in the virtual world. Understanding whether it didn't just not crash into something but it drove in a smooth, predictable way. It drove in a way where it's not like jerking and hitting the brakes, there's a lot of nuance in actually assessing whether the behavior is good or just didn't crash into something. And clearly, you want not crash in something, but you need to do more than that. And that's part of some of the interesting infrastructure we've built.

Very helpful. You've spoken about eventually driving to and from customer endpoints. Talk a bit more about what the key steps are the company needs to accomplish in order to be able to enable this and any sense on the timing?

Yes. This is 1 of the things where I think we probably shot ourselves in the foot a little bit in telling our story that driving to a customer endpoint is driving -- like driving 1 of our terminals. I just saw some analysis recently that said that 50% of distribution centers across the U.S. are within 1.5 miles of freeways, and 80% are within 5 miles of freeways. This is kind of where our stuff is today. There's -- we literally in going to our terminal site in Houston. We drive past 1 of our customers' terminals. And so it's been expedient for us to operate between terminals to date. Believe it or not, it's actually good for our customers at the senior executive level of our customers like you need to go to our terminals. If you're the operations person on the ground in that terminal, you're like, "No, do not put that f*** truck in my terminal right now while you're still learning", right? I have to get [ end ] trucks out of a day, and I've got to turn this over. I don't need some new technology messing that up. Now that it's actually working. Now that the customers can get it, we're ready to go, and we expect in early 2026 to begin operating to customer terminal sites -- customer sites, to be clear.

Maybe you could speak about the partnerships with the trucking OEMs. You've announced partnerships with Volvo and PACCAR. When does Aurora plan to start using trucks with redundant steering and braking included from those OEMs. And how was your view informed by the association to receive 20 development trucks from Volvo by the end of the year?

Yes. So we use trucks with redundancies from our OEM partners today. By -- in 2027, we expect our OEM partners to be producing trucks off of their line that have those redundancies in them. We've been working with them for several years to collaborate with them to ensure those, what they call autonomy enabled trucks, meet the requirements that we're going to need to ultimately operate them safely. We've also been working with them to line sight and install the Aurora hardware kit. And for those of you not as familiar with the story, we have hardware today that we've effectively built ourselves. We tested extensively. We're confident in the safety of that on the road. In 2026, you'll see us bring to the road hardware that's been manufactured by Fabrinet, that will have a major step down in cost relative to what we have today. And we're excited to see that come to life. And then in '27, you'll see the hardware that we're developing with Continental, which is again a huge step down in cost from where we are today. We'll produce that at tens of thousands of units a year with Continental -- or able to produce at tens of thousands of units a year with Continental. And what's really exciting about that is that hardware kit is going to be paid for through a hardware as a service model. So Continental is investing or spending $300-some million to codevelop this with us, set up manufacturing for it and ultimately finance this hardware. And then we will pay them back on a per mile basis. So if you're a customer wanting to use the Aurora driver, you're going to buy a truck that basically looks like a normal truck, and it's going to cost very similar to what a normal truck costs. And then you're going to pay a subscription to Aurora to operate that truck for you to be the driver. And that's going to include the hardware costs. So there's not some giant hurdle that a customer is going to have to overcome to actually bring this into their fleet. And of course, these customers are used to turning over their vehicles regularly, right? I think it's about 3 to 4 years in most fleets where they're going to move 1 truck out and sell it off to a second party and bring in a new vehicle. And so there's a really natural refresh cycle we see for our customers over time.

You said a little bit around the time frames. I think you said you're using trucks from those OEM partners with redundant steering and braking already, but it comes off the line in '27. So today, if I understand quickly, there's updating happening. Is that -- you're doing that with your partners, right, in terms of the upfitting?

Yes. So today in '26, we'll be upfitting trucks. So this is where we're going to be taking the overall hardware kit and installing it on those trucks for our partners.

And you put a blog post up on your website, you talked about how important it is to have the good relationships with your OEM partners and in PACCAR had asked to have an observer in the front seat. From your conversations with them and as you think about some of these considerations like when these trucks that are coming off the line and maybe the redundancy and breaking included on the line, what are some of those things that would have to happen to take the safety of observer out of the truck?

Yes. So to be clear, we are confident in the safe operation of our trucks today. We do have an observer sat in the truck, but they're just out there. Go check out YouTube.com [ at ] Aurora driver, a quick plug to the Aurora driver live. This is 1 of our ways of kind of continuing to demonstrate transparency, industry-leading transparency. You just go see our trucks driving down the freeway, what they're doing today in this moment. And what you'll see is for the ones that are operating driverless, like literally, our drivers will be sat there twiddling their thumbs or eating a bag of Fritos as things go down the road because they are not there to observe the safe operation of the vehicle. [ We're not ] there to ensure the safe operation of the vehicles, sorry.

Yes. So from our perspective, the trucks are working well. The observers aren't needed. Anything that you think would have to happen for them to not need to be there anymore?

No, I think it's once we have those production parts from Peterbilt in particular. And then the Volvos that we are receiving this year, Volvo has indicated those were -- those have the hardware that's necessary for us to ultimately operate driverlessly.

Maybe talk about remote assistance. How often are you meeting remote assistance? I mean that's always been part of your plan. It's in the long-term plan. I mean, any surprises on how often remote assistance is contributing?

No, it's kind of going to plan, right? That we are disclosing the rates of that at this time, but we've shared that there's an objective where you hit kind of economic knee in the curve for the ratios is about 1 to 20, and we're not seeing any concern on building towards that or building up towards that ratio.

Very helpful. You spoke about Fabrinet, you're going to be using hardware. They make next year in your trucks. Can you elaborate a bit more on what they're going to be doing and how impactful that might be to the BOM?

Yes. So we really believe deeply in working with folks who know what they're doing and can do their job better than you can do their job. And so Fabrinet is a fantastic contract manufacturer. So this is hardware that we have designed. We've done the DFM with Fabrinet. They're now manufacturing this hardware kit. We have early samples from it. The big objective for this harbor kit is to reduce the build materials cost so that we can ultimately get to unit economic profitable product.

Okay. Very helpful. And then you also spoke about working with Continental and making the shift with them in 2027. They had a lot of restructuring that they're dealing with at a corporate level. Any impact on the relationship with you?

No, not at all. In fact, I think it's actually exciting because I'm a big believer the companies when run well are focused on their mission. And so as Continental spins out AUMOVIO, which is going to be focused purely on the electron components and ADAS systems for vehicles. They're just going to be even more closely aligned to our mission. They've been very clear about this -- our work together is 1 of the tentpole programs that they have as a company. And they've been a tremendous partner. We continue to see that and really just love working with Philip and the team.

I think if I'm not mistaken, Fabrinet's second gen hardware kit. Continental will be doing the third gen hardware. What's different with this third-gen kit relative to the second gen?

Yes, there's a few things that are different. One is price. That's actually the biggest thing. We're going through -- one of the benefits of working with someone like Continental is they are used to looking at a bill of materials and saying, how do I make this for less. How do I make this like a mass manufacturer. And so having that ability around the table with us is going to lead to a major, again, another step function reduction in price. Architecturally, it's a little different. So today, we're using a conventional kind of x86 GPU type architecture in our computation. As we go to that continental generation hardware, we're moving to the Thor -- NVIDIA Thor SoC. So lots of computation, lower cost, lower power. And then the other big 1 is that our FirstLight Lidar, which is this proprietary Lidar sensor that allows us to see further than we think basically else can, is going to go from discrete optical components to an integrated optics on a chip system. And that really helps with reliability, manufacturability and cost. So we're really excited about that and we're -- parts of those systems are already up, and we're bringing up today.

And I mean, I imagine optics on a chip, I mean there's other partners like a Fabrinet would still be able to be involved or somebody else working with Conti to enable those changes.

Yes. So the chips that we're developing, these are chips that we've developed in-house, and then we worked with a fab to manufacturer. We're actually developing not just the lithography for it but also the deposition process. And even things like how do you -- because silicon is a really good passive conductor of light, but it doesn't create light. You need to actually bond it with at least 3 to 5 semiconductors that can actually produce light. So how do you flip and align those chips with -- like there's lots of cool things that are part of the tech infrastructure and tech stack that we've been building that our IP that we have at Aurora. But of course, we do work with a variety of other suppliers to enable us to manufacture stuff at scale with Continental.

And Continental has a lot of experience in the industry working with OEMs and so certainly understand the benefits of that partnership. As you think about the trucking partners starting to manufacture lineside redundant steering and braking, is that something that Continental is going to do? Or are you guys going to do that even before Continental begins to take over some of the...

Yes. So our OEM partners are going to have their suppliers for the redundancies in the braking and steering systems in their trucks, right? And the way really I think about this is there's a truck and a driver. And so the drivers, the software, the computer, the sensors that allow that driver to see the world. And then the truck is all the stuff you think of a truck steering, braking, power, engine, right? And so the OEM is responsible for those components today.

Okay. You've spoken in the past around a bigger ramp in volumes in the late '27, '28 time frame as Continental begins to come on. You're already working with Continental on the third-generation hardware kit. Do you have a sense Continental is already engaged with the trucking partners as well such that you could have this sort of faster ramp in that time frame?

I don't just believe it. We're actively involved in those conversations, right? That's -- we're the one developing and designing this hardware kit. And so we're the partners with Continental and with our OEM friends as well. So 3-way conversations in both cases.

That's great. Maybe talk about the regulatory environment. I know you've made the point many times about how -- where you're operating, it's very favorable for autonomous trucking. Speak a bit more on some of the more recent developments from a regulatory standpoint and how Aurora has been advising and partnering with some of the government officials.

Yes. Again, the environment today, we can live with and work with. We have the ability to put trucks on the road wherever we feel confident in the safety of doing that across, I think it's something like 40 of the 50 United States. So that feels great. What we are seeing is continued enthusiasm at the state level. When we launched, Governor Abbott in Texas, congratulated us publicly, right? That's not normal, right? So we really appreciate the government of Texas' support for this technology. And then we're really seeing a lot of support at the federal level.

This administration has really been forward on automated vehicles, whether it's Secretary Duffy's comments in his confirmation and since, whether it's Vice President of Vance's comments around the importance of automated trucking to the United States. Just yesterday, I think former Secretary and Governor Perry had an ad that came out in support of this technology.

So really, we're seeing a lot of support there. And then just recently, representative Fong, a Republican from California, put forward the AMERICAN DRIVES Act, which really is -- puts forward legislation that would create a federal framework and preemption, which we think would be really powerful in helping the U.S. stay on the forward foot with this technology relative to overseas folks.

That's very helpful. Maybe speak a bit on the market and some financial topics. You spoke about having trucks on the road and how that's been very positive as you're having conversations with customers or prospective customers. We've also seen some weakness in just the trucking market at a broader industry level in terms of the trucks driven by people. Talk a bit more around what you're seeing with the market and how is that affecting your business?

Yes. I think we're building something strategic for the long term. And there's just going to be a shortage of drivers in the U.S., right? We expect to be -- it's not we -- American Trucking Association expects to be short of 1 million drivers over the next decade. And with the current administration's immigration policy, that probably is going to be more steep. If you look at the average trades of a truck driver in the U.S., it's 55 years old and it's increasing. So yes, there's been an unusually deep kind of down cycle in trucking coming out of COVID. But as we look to the point where this technology is going to begin to scale, the benefits far outweigh any challenges to adoption, right? As we look at our customers, their ability to significantly increase their margins, dramatically increase their revenue, improve safety and really build their business. Like if you're not using our stuff in 5 years, I don't see how you're going to be competitive as a trucking company. So we're -- we love to work with these partners, and we love to help them go win.

At the 2024 Investor Day, the company spoke about ASPs for its Driver-as-a-Service model being projected in the $0.65 to $0.85 per mile range. Since then, there's been tariffs, there's been broader inflation in the global economies and in the U.S. As you reflect on some of the things you're observing in the business and some of the momentum you have with your technology, what does that say about this pricing projection from your last Investor Day?

Yes. When we look at the cost of labor for driving trucks, it's basically at $1 per mile at this point. And I don't see that coming down. It's just a question of how rapidly is it going to go up. And so we feel very confident in that pricing window and expect there's opportunity for that to go up. But we also want to make sure that we are good partners and helping our customers see the benefits of this technology and build their businesses.

And besides just sort of the cost of labor, I mean, you've also talked about some opportunities around insurance and fuel, right? And so I mean the broader savings you could bring to your customers beyond that $1.

It's gigantic, right? I apologize for -- for underselling it. When you look at the fuel economy benefits, we expect between 14% and 34% improvement in fuel efficiency. Given the cost of fuel for these businesses, that's big. Given the environmental sustainability benefits, that's also big. When we think about insurance over time, this will be a better driver than people or a safer driver than people. And so we expect that to drive insurance costs down. For our customers today, it's already a win, right? Today, they are responsible for their people driving the truck. If they do something wrong, they're the one who are going to write the check. We immediately kind of alleviate that risk from them. So that's a meaningful benefit in and of itself. And then the fact that we have the data that comes along with whatever events may occur on the road means that we have the ability to quickly adjudicate that and ultimately get to what will hopefully be the right and reasonable answer of whatever occurs.

An autonomous truck has more hardware that goes on to it compared to a traditional truck. Help us better understand the evolution of the BOM. I mean you spoke about Fabrinet and Continental and them contributing to improved cost structure. But is there a cost point where the BOM needs to hit for EV trucking to really take off?

I think we are on the cusp of that. Our expectation is that the generation of hardware that will come from Fabrinet will actually enable positive unit economics for us. Today, it's really about how do we set price relative to our cost. And then there's other things we have to do. We have to continue on the path that we're on with reducing the rate of remote assistance and support and get that into the neighborhood we're anticipating. We need to look at the rate of recovery on the road and continue to drive that down, but -- and then increase utilization. And the more value you can provide to customers, the more it's going to be worth to them and the more we can charge for it.

And you spoke a little bit around over time getting to 20:1 ratio on remote assistance and tracking to your prior expectations. As you think about that variable? Is that going to be tied to some of these future technology releases like second or third gen, or is it more just as you see the trucks driving on the road?

It's really going to be around the performance of the software system, which is kind of independently evolving or parallel evolving to the hardware generations. And so at this point, we've released several versions of the Aurora Driver since launch, one major release, which was the update to be able to operate at night. And so we'll continue to see those incremental improvements in both the Aurora Driver, but also in the Aurora services layer that sits above the truck, right? This is effectively how our customers ultimately will interact with that truck.

You mentioned with the second-gen hardware kit that allowing for positive unit economics. So just that's something that would allow you get to positive gross margin. Just to be clear, that's what you were referring to.

Yes.

And is there a certain miles per week that we need to have in mind as we think about that utilization where you can start to cross over?

No. I don't think I'm going to share anything more precise than we want to get to that 200,000 to 250,000 miles a year. And it's quite attainable. .

Well, it's really interesting, you start looking at some of these routes, right? I mean you just talked about the Phoenix, right, that's already longer than a human can do. And so you can actually get to very high numbers of miles traveled in a year as you start adding more of these routes and nighttime driving and different weather.

So you do the round trip from one-way leg each day from Fort Worth Phoenix of 1,000 miles. You do that every day, that's 365,000 miles a year. Now do we do it every day? Probably not quite. But you can see that these numbers are very approachable. Even a short trip like Dallas to Houston, if you do 3 round trips a day, you're already well over that threshold.

Yes. We did a big AV report a few months ago, and we dug into insurance and BOM costs across the broader autonomous space. But one of the interesting things as we're doing the modeling was how important that variable was just of miles traveled. And for trucking, right, you can see how it quickly starts to...

Massively heads up.

Yes. Just lastly, just free cash flow and capital allocation. Maybe just talk about how you think about managing the balance sheet. You've done a few raises so far. You talk a bit about. I'll just remind investors what your thoughts are before you reach positive free cash flow.

Yes. So we left Q2 with a very strong balance sheet, $1.3 billion. We feel better about the capital position basically than we've ever done. And we're well positioned. We've been clear about the fact that we're going to need to raise incremental capital at some point. We're going to continue to do that in a thoughtful way where it meets the capital needs of the business and doesn't put the long-term goal at risk, but doesn't unduly dilute our existing investor base. So we'll continue to be careful about it.

Great. Well, we're approaching the end of the session. Chris, really appreciate you joining, and thank you for coming.

No, glad to be here. Thank you.

George Gianarikas, one of Canaccord Genuity sustainability analyst. Thank you for coming to day 2 of our 45th Annual Growth Conference, and we're incredibly excited to have Aurora with us today. CFO Dave Maday, short presentation and then some questions. So Dave, please go ahead.

Awesome. Thanks. Thanks, George. It's great to be here again. It's a great event, and I look forward to talking with all you. I think -- maybe just before we get into the Q&A, just for those who may not be super familiar with Aurora, I thought we would just cover a couple of things. Of course, before I do that, and to keep the lawyers happy. This is our forward-looking statements. So any claims related to that [indiscernible]. So just take a quick look. .

All right, let's get into it, right? So First and foremost, we're excited to be operating driverless trucks on public roads. And so this was our first quarter. This is a video of one of our trucks operating on the lane that we deliver goods on. And so it's been really exciting in terms of the progress that we've made through the second quarter of the year. So we launched at the end of April and then through the end of June, we operated 20,000 miles. We were operating first at daytime, and we started with 1 truck that we ended up going up to 3 trucks. We also just recently launched night time as well. So now we're operating both day and night.

When we work with a lot of partners, our launch partners for driveless were [ Hirschbach ] and Uber Freight, but we also have other partners, FedEx, [ Werner Schneider ], [indiscernible] Autonomous Solutions, others that will be rolling out driveless lanes to in the future. So we are very excited.

Look, we feel like we're in a really good position as a leader in the autonomous trucking space. Obviously, we are the only company that's operating in driverless on public roads today. We think the math -- it's a massive market opportunity. It's a $1 trillion market opportunity in trucking. And so we believe that the Aurora Driver can unlock tremendous value, not only safety, which is obviously paramount to our mission, which is to deliver the benefits of self-driving technology safely, quickly and broadly. But also, we're able to drive down total cost of ownership, and we're able to increase asset utilization for our customers.

We're the only player that actually has the strategic partnerships in place to scale a business. So you need -- to be able to scale at the tens of thousands, you need OEM partners who are willing to build trucks scalable platforms integrated with your hardware at high volume. We have a partnership with Continental, which supports building our hardware kits in the tens of thousands. So we're really excited about that.

From a financial perspective, we started to recognize revenue, which is for a CFO, that's pretty exciting. And so just talking about R&D expenses. And -- but importantly for us, we've got a really strong balance sheet, right? In this last quarter, we announced that we have $1.3 billion in cash and short-term investments, which allows us to fund operations into the second quarter '27. We have a Driver as a Service business model. We launched as a Transportation-as-a-Service, and that's what really for development and initial adoption that will run through '26. And then starting in '27, coinciding with the production for our Continental kit we will be able to switch to a Driver-as-a-Service business model, which will be great for both significant revenue growth as well as SaaS-like margins. So we're really excited.

And then obviously, from a competitive thing, we're first, we think we want to -- we had that first-mover advantage, and we want to continue to take advantage of this in our leadership position. [indiscernible] what's left for '25, right? So we've launched our focus is increasing the number of driverless miles. Obviously, we had a couple of technology unlocks and the point of this is that we're trying to -- '25 is all about demonstrating the technology promise. So we talked about what the Aurora Driver can do for people. Now we are going to deliver it. And to be able to deliver that, you need to operate in all kinds of different conditions, day, night, which we pulled ahead and actually launched. Next up for us is rain and wind, and then coinciding with that, once you're able to operate in day and night and rain you're actually able to open up longer lanes as well.

So in '25, we expect to be able to operate in all these conditions. That sets us up for the following year to be able to really pick up and expand our operations and expand our customer base and expand our fleet. If you're a carrier -- like this is great, right? If you can deliver this technology promise and do what happens, like my simple takeaway and this is an example, an illustrative example of Fort Worth at Phoenix, it's 1,000 miles. What does driverless operations give you? It gives you better utilizations of your assets. So you -- that same truck can now operate 20-plus hours a day when today, it's operating less than, let's say, 8 hours a day.

And then the other thing is we can drive a lower cost of ownership. This is in addition to the safety benefits that you get, the fuel efficiency benefits that you get and the insurance costs that you get. So really exciting opportunity for both the top end revenue growth and the bottom line margin.

And then maybe before I close, I'm super excited about this myself. We tend to want to be the standard there in terms of like safety and transparency and things like this. And I'm proud to announce that we have opened up a viewing site. It's -- if you go to YouTube, it's @auroradriver, and it allows you to take a look at our trucks operating on the roads driverless every day between 8 a.m. and 5:00 p.m. Central Time. And so it's not too monotonous, we switch between different views, but these are our trucks operating each and every day. And we're really excited to be the kind of the standard bearer in the industry.

And so with that, I will turn it over to George, and we can talk about questions.

There we go. Also, if you watch the video often very relaxing, by the way. ASMR is a word that I've learned from my daughter, so it's -- I suggest to the audience that take some time on need to calm down.

So I'd like to first ask about the relationship with [ PACCAR ]. And you've sort of had a little bit of a change in strategy since your first autonomous truck launch, you have what's called an observer in the vehicle. I'd like to ask. First, can you update us as to how many autonomous miles you've driven and whether or not these observers had to intervene at all any of those?

Yes. First and foremost, the Aurora Driver operates the vehicle it's decided to operate their vehicle at all times and in all conditions, even if we had to pull over to the side of the road for a tire blowout and engine failure or the Aurora Driver, LiDAR was struck by we have to operate safely at all times. That's how it's designed. We actually operate in what we would refer to it as driverless boat. So it operates all the time.

We did 20,000 miles through June. I'm not going to disclose where we're at today. But I will tell you, we will be higher than the second quarter without a doubt. And know the front seat observer has never needed to intervene, and we don't expect them to have to intervene in the future.

And I might also say, and while -- our relationship with PACCAR, even though that optically, it looks a little bit weird, we can respect their opinion and their risk profile versus like what we think is an incredibly safe product, and still have a really great relationship going forward. Like I've been married 30 years. Every once in a while, you don't agree with your partner, but that doesn't mean that you throw away the marriage.

And so in this particular case, we had an observer in the rear seat a lot of the time, not all the time, but a lot of the time, and I think there's a benefit of that. If you think about an early rollout, having this observer doesn't prohibit us from any of our development or expansion or anything else, it is not prohibiting us from moving forward and developing our plan. And you do get feedback, right, on the behavior. So the analog I'd say is like Waymo. Waymo is a very successful ride-hailing company, but they also get feedback all the time from their customers. Every ride, they get to get input on the ride and the behavior.

Unfortunately, for us, we carry goods. So toilet paper can't fill out a survey. So front-seat observers, it's actually not the worst thing in the world. And when you think about the crawl walk run approach, we really think about the future. This front seat observer is just on this initial launch truck of vehicles. It is not relevant for any other vehicles that we're going to be launching when we get their scalable platforms or any other vehicle that we want. So this is just with this initial launch fleet of trucks.

So we think it's okay, and we continue to move along and we're really excited because they are all driverless. And again, checkout Aurora Driver live, and I think you'll get a good view of what an observer does, they observe. So they're not hovering over the wheel or anything like that. They're sitting back. I mean sometimes you'll see them twiddling their thumbs, but they are actually observing.

You mentioned some of the signposts to scale that you have this year, a slide presentation. Can you just help us understand how that -- what that looks like maybe 2026? Can we look for additional lanes, et cetera, weather conditions?

Yes. So '25, again, all about the technology promise, right? So do the things that we can operate. And if you think about like customer adoption, you kind of have to do those things before customers are going to go all in on anything anyways. If you can only operate in daytime, dry conditions, that's great. And it's a tremendous progress because we can operate in all the conditions, construction, heavy congestion, things like that. But it's not enough to be an integral part of somebody's business because sometimes you end up being late because of construction. And so what happens if you go into night time. Sometimes you get rain and we need to be able to operate in enough conditions.

So '25 is all about being able to operate in a sufficient set of conditions. This sets us up for '26 when we have a couple of things going on. The first thing we have is our second-generation hardware kit will be available in early '26. All right. We can't build a quantum of trucks until we get that second generation hardware kit. This kit will be cheaper. It will be -- it will last longer. It's designed to 1 million miles. We've designed and engineered it, but it's being manufactured by [ Fabrinet ] in Thailand. So therefore, we could build into the hundreds and thousands of trucks with this particular kit.

The second thing is we kind of drive in more spots. It's great to be able to drive in Texas and in Arizona and New Mexico, but we want to be able to operate over the Sunbelt. So we will open up lanes throughout the entire Sunbelt in 2026, right? And I think those are 2 really important things.

The last thing is we are going to start going to customer endpoints. So yes, we operate through terminals today that's great for development. And it's great for some coast-to-coast operations where drivers couldn't make the whole route anyways. But ultimately, you want to get to a customer's distribution center or warehouse. So those are the 3 things that we're going to do that are going to lock the customer adoption, and we'll expect to be operating trucks significantly more trucks in '26 than we are in '25.

You have a relationship with Volvo. You talked about getting more trucks from them by the end of this year. What's the time line to production ready trucks from Volvo? And when they do get on the road, do you expect them to be fully driverless or will there be an observer there as well?

Okay. So we're getting trucks right now as we speak and throughout this year, they refer to as [ Cebuilds ]. These are essentially the scalable platform trucks that they intend to -- that we intend together to operate driverless with no front seat observer. So there's no requirement for a front season observer. These trucks are not ready yet. They still they still have validation and work to do on their side for the components on the software side, in particular, to validate. But these trucks that we'll have and we'll start operating on, we'll be using them for development. We'll be using them for bring-up for our second-generation hardware kits, and they will be using them to carry commercial loads with vehicle operators.

So they'll be driven autonomously with vehicle operators. Once they've completed their validation efforts and their work, the same trucks will then just transition over to driverless trucks. And so we're really excited about the progress. We'll let them define when the timing is, but I would expect that '25, you will not see them driverless and we're working really hard to have them driverless in '26.

There's a big player in trucking in the United States, [ Daimler ]. They currently have an internal solution called [ Torque ], I think many people in the audience know that is -- what's the potential to maybe become a second source there over time?

So I would say this. We believe in choice. We believe in competitive pressures. I think our customers want to have options. And so today, we have 2 partners that represent roughly 50% of the market. And we think that that's exciting in terms of development. We would expect at some point the Aurora Driver is the essential and the best self-driving solution out there and we would expect it to be on all trucks.

And so I definitely can see a future where that happens. I mean that's obviously something that they have to work on with their contractual commitments of what they have. But we would be open to putting the Aurora Driver on that. And I can see a future where the Aurora Drivers on all the trucks in the U.S.

It's an enormous market we completely agree with you that there's a huge potential, about 200 billion miles plus just in this country that are driven by Class 8 trucks, there's torque that's a competitor. There are others who are buying for a position in the space just because of its -- the huge economic potential. What do you expect the competitive environment to look like? You fast forward 3 to 5 years? Waymo was a competitor at one point. They dropped out. They're focused on robotaxis. So do you expect that to come in out long-winded question, but like how many competitors do you expect over the long term in this business?

The $1 trillion dollar market, there's going to be competitors. There's been a lot of competitors and everybody likes to predict the positioning of all these competitors and it used to be too simple was the leader, and they're no longer around, and then they've reinvented themselves into a different company, and you've had embarked things like that. It's a tough business. like the folks that say that it's easy and that you can do it really cheap, and I'm going to be so much more efficient. I probably don't have the right appreciation for how challenging and difficult this is. But it's a $1 trillion market. So there's always going to be competitors. I would expect a handful will offer some sort of self-driving service at some point. I think we have a multiyear lead just to be honest. .

And I also think we're one of the few or the only that's really set up to scale a business. And I think there's a difference between operating on 1 lane and getting yourself ready to scale business. So I think there are some competitors out there and competition breeds creativity, innovation, and competition is good for the industry. So we welcome competition.

I would tell you, I am probably more concerned with people trying to catch up and maybe doing things unsafe that could impact the industry, but there's a lot of really talented people out there. And I give a lot of credit to everybody for going down this endeavor. Autonomous vehicles in trucking is needed, and we're excited about the future.

There are a couple of phases to your business approach versus proving technology this year, which I believe you've done. Next is expansion but also bringing the cost down, right, to make sure you can get to these SaaS-like margins. So can you talk about your relationship with Continental in that context, how confident you are that once you begin to scale with them -- I think it's a 2027 that you can get to the right level of hardware costs such that we can see this margin improvement over time?

So our relationship with Continental has been fabulous. It's really been exciting. And I think they would equally say the same thing. They're always excited for us to come be at their events, and we're always excited for them to talk about the partnership. That doesn't mean that you don't have conflict. That doesn't mean that it's not hard. But when you have shared beliefs in kind of the vision and you're working on something that has shared benefits and you're working on the line goals and you have in mutual respect, that's a framework for a great partnership.

And so our partnership is great. Continental is obviously going to be spinning off their automotive division to [indiscernible], right, in September. And when that happens, this project is one of their cornerstone projects, which they talk about. So excitement level is there.

In terms of cost targets and our path to get there, we're really excited. We think we're on track, and it is not like a big source of concern for me in terms of like our risk profile in terms of the margins. There's always going to be a cent or 2 like delta that might be in there. But like overall, this is we've got a pretty good track. We have a target. We're starting to get bids and sourcing for each of those that Continental is doing and it looks to be well on track. So we're excited.

Do you have a really interesting relationship and economic model with Continental. For those in the audience who may not know, can you just sort of describe that relationship?

Yes. So the traditional Tier 1 to relationship is the OEM mass to build a component, they sell them that component, the OEM buys the component. They put it on the truck and then they sell the complete truck. It's kind of a point on sale model, and our model is different. We kind of believe in the shared benefits in the economic profile. So if you think about the trucking industry, most of the trucking industry, shippers pay carriers, a price per mile. They're going to pay us a price per mile to drive the trucks. We're going to pay Continental price per mile for that hardware kit. .

And so instead of this point in sale, we're going to be paying them a per mile -- cents per mile charge every time we drive a vehicle -- So the Aurora Driver drives of vehicle. And they're making a significant upfront investments. So they're spending over $300 million of upfront NRE or nonrecurring engineering that will be paid back in this price per mile over time.

So it's the first time that it's been done in the industry for sure. And for them, there's this reoccurring predictable revenue, which is really exciting for them, and they're making an investment in the future.

One of the other things is they're making investments they're going to develop their -- what they call a minimal risk maneuver system [ Malene ] B secondary system to pull over in the event that the primary operating system had a fault or something like that. So that's the part of the redundancies that are able to develop that and then use that technology to deploy in other markets. So they're looking at it as a great way to get into new businesses. They've got a reoccurring revenue stream. And so for us -- and they're also financing the vehicles, all the components. So that's part of the charge. They're also doing service and warranty of all the vehicles and that goes into that charge as well.

So for us, we have a fixed cost that we pay cents per mile that's very predictable over time, and they get incentivized and they're incentivized to make sure those trucks are always on the road.

Any questions from the audience? My friend, Keith. .

Didn't think that one through.

I guess when you walk through the economics, can you walk through what the cost is to outfit a truck? And then when you look at it from a trucker perspective, obviously, they're saving on the driver, but how much of those economics are saving of the driver versus higher like hours of service as a big issue for the truckers, you're going to basically drive this thing a lot more utilization. Can you just kind of walk through some of the assumptions beyond those numbers?

Yes. So I can't give you the specific cost because we don't disclose them. But what I can tell you, I can try to answer your question this way. So a traditional truck drivers out of service limitations 11, they operate well less than that. Maybe on average, like 8 hours of productivity a day would be a high number. Our trucks can go conceivably 24 hours, let's say, that you conservatively you can double that utilization. So every truck can be operating double the time. So that's just from an asset utilization perspective, there's a ton of top end growth.

It does a couple of things. It means that they have more productive assets and maybe they even need fewer assets at a given time, but they also can deliver goods faster than could before. It creates new opportunities for like if you're FedEx you had a lane that you had to do like a flight to get to a certain spot in a certain time. Now you can do it with trucking. So those are interesting opportunities on the revenue side.

On the cost side, what we've said before is the driver cost continue to increase. The latest ATRI number for driver cost alone is $1 plus you have indirect costs associated with that. We've given some indicative pricing of $0.65 to $0.85 for our Driver-as-a-Service model. So that's our long-term model. So there's a substantial opportunity to get lower costs just for driver costs. Then you have fuel efficiency, our trucks versus like traditional truck drivers, at least 15% more fuel efficient. You have reduced frequency and severity of incidents and that's kind of the primary point of this.

So there's a ton of opportunity to drive the cost down. So we do expect it to be able to do both top and bottom. We own -- we are paying -- so when a customer like buys a truck equipment the Aurora Driver, they're just buying a truck. They're not buying our hardware. Everything -- all the costs, the hardware cost, our software costs, our data services cost, what we pay Continental, those are all included in the per mile fee. So for them, they have a very predictable cost model and that should drive substantial savings for that. So that's what I can tell you.

[indiscernible].

Sure. I -- the easiest compare and contrast is we are actually operating a driverless and they're not. So I'm not convinced. I don't know, George might disagree with me on that. We believe -- and everything for us is guided on safety. We believe in a multimodal sensing approach, where LiDARs, cameras and radars all provide value and input. Certainly, for the vast majority of times, a camera could probably do the majority of the jobs that need to be done. But we don't think they're sufficient for all the times. And if you're Tesla, you have an FSD system that has a driver in the vehicle, right?

And so technically, they're supposed to be able to take over any individual time. It's unclear to me that Tesla is ever going to get to a world where they truly are driverless in all these scenarios. And we'll see, right? Like they're going to be able to do it. They're piloting it out now on passenger cars. Trucking is different, right? Trucking is an 800-pound -- 80,000-pound tractor trailer, driving 75 miles an hour. So for me, I feel like that's a different solution set. You need to be able to see longer. You need to be able to predict better than what you really need to do in passenger cars.

So for us, we believe this is the right technological approach. We think Waymo has a very similar technological approach. They're the leader in the ride handling space. We believe we're the leader in the trucking space. So if there's ever a world where we need less components, we would do that. But frankly, we had to develop our own proprietary first light LIDAR because we did not think that even the existing LiDAR is on the shelf would allow us to safely operate trucks. And so we now have our own proprietary first light LiDAR that we purchased in 2018 and developed. It allows us to see 9 seconds further than a traditional LiDAR. Imagine 9 seconds with a tractor trailer and being able to plan your route and see things in advance, 9 seconds faster. It just makes you more safe. And -- there are plenty of instances where in the nighttime a camera cannot see something that a LiDAR can see. Like it's just a fact. So we're going to focus on our approach and hopefully, we'll continue to learn and adapt accordingly.

Thank you, Dave.

Thanks. Appreciate it.

Good morning, everyone, and welcome to Oppenheimer's 25th Annual Tech Conference. We are thrilled to have David Maday, CFO of Aurora Innovation here joining us today.

My name is Colin Rusch. I lead the Sustainable Growth and Resource Optimization practice, which is looking at a variety of industrial and physical AI practices, and this is one of our favorite names. We're going to do a quick intro with David providing a little bit of an overview on the platform, and then we'll get into Q&A. So with that, David, take it away.

Thanks a lot, Colin. I appreciate you having me, and it's a pleasure to be here with everybody. Before we jump into the Q&A, let me just give you a real brief overview for those who may not be as super familiar with Aurora. But before I do that, let me just make my lawyers happy and provide you some cautionary statements regarding our forward-looking statements.

Okay. With that, let me just kick off with the real important thing, which is, hey, we are operating driverless trucks on roads today. And I think that, that is super important for us, and it's super important for the industry, and we're really excited about the progress that we're making. And so right here, you can just see a little video from one of our first runs operating on the highway going from Dallas to Houston. With that, let me start with a little bit more about Aurora and kind of just like where we're at.

So Aurora's mission is to deliver the benefits of self-driving technology safely, quickly and broadly. We think we're really in a pole position for this. Again, we're the only company with driverless commercial operations on public roads and trucking. We think trucking is a massive market and opportunity for Aurora. It can unlock tremendous value.

And we think when we look at our partnership ecosystem, we are really the only player out there today that has a partnership ecosystem both in the OEM and then the supply base side to really commercialize at scale. We have -- we're operating from a really strong balance sheet and financial position. We have liquidity after the second quarter, we have liquidity to fund our operations into the second quarter of 2027.

We've got a really attractive Driver-as-a-Service business model that supports shareholder value with a really capital-efficient approach. And again, because we're capitalizing on our opportunity, our first-mover advantage in the trucking space, it really is reinforcing our leadership position.

When you think about what's next for Aurora for 2025 and 2025 is all about unlocking our technology promise. And we've taken really a crawl-walk-run approach. And so obviously, we've launched and we're increasing our driverless miles every day. There's a couple of things that we want to accomplish to really deliver that technology promise that supports adoption going into '26 and '27.

The first of those was to be able to operate at nighttime. We actually did that in advance of what we had expected, and we announced at the end of our at our second quarter business review that we're operating at nighttime as well. So now we've gone from just at daytime to day and night inclement conditions. We will be focusing on unlocking the ability to operate at rain and heavy wind. We do that really well today with supervised vehicle operators. We expect to be able to operate that driverless by end of the year.

And then we will also start to expand and operate on additional lanes really going from Fort Worth, El Paso to Phoenix, and that's really unlocking a tremendous amount of value for our customers. One such example, and this is an important -- how we think about the market. But if you think about like the Aurora Driver, and the value that we're trying to unlock. There's tremendous opportunity.

Here's an example with carriers where we focus not just on the cost side. A lot of people talk about the cost side and can you make a higher margin, but it's also on the revenue side. So we're increasing the utilization of the trucks that operate daily and delivering lower costs. In this particular example, the ability to drive 1,000 miles between Fort Worth and Phoenix would take multiple days in the traditional market approach today.

For us, we can drive it in one single trip. We're able to actually substantially increase both the revenue of the truck on a weekly basis as well as reducing the cost. So we think it's a win-win on both sides of the P&L.

And then finally, one of the things we're really proud of, and this kind of emphasizes the fact that we are very much what I would say is kind of the standard bearer in terms of transparency to the market versus maybe other AV people. We've just launched what we call Aurora Driver LIVE, which -- if you go to our YouTube channel @AuroraDriver, you can check in on our trucks operating daily on the routes and just to see what the world -- the world can see what we see every day, which is the truck's handling all kinds of different conditions flawlessly.

So we're really excited about this. It's a first of its kind, and I think it just continues to emphasize our safety and transparent approach to development.

All right. With that, maybe I'll just stop my presentation, and we can get into the Q&A, Colin.

Perfect. And David, thanks for the overview. I would love to just kind of take a step back from a history perspective, and get your perspective on how all the critical technology elements came together at Aurora.

There was an awful lot of investment in the industry starting in 2016 and you guys were able to aggregate a number of different elements into the platform. And would love to get your sense on how those things came together and what the critical technology pieces are.

Yes. I think that's a big question. I might be here for a while, but let me try to -- look, we had an advantage when Aurora was founded in 2017 because we're co-founded by Three really stellar people. Chris Urmson who built Google's initial self-driving unit, which is now called Waymo, Sterling Anderson, who led Tesla's Autopilot and Drew Bagnell, who was the former Head of Perception and Uber's ATG unit, right? And we ended up actually acquiring ATG in 2020.

But like if you think about it, we have 3 founders with over 50 years of experience. They built the best team around them. And what they were able to understand is both by leveraging the hindsight and the foresight, they were able to really start from the beginning and design a system that maximizes the benefits of their past expertise while using all the cutting-edge technology and advancements in AI and machine learning, right?

We've been talking about machine learning and AI for multiple years. We've been using transformer for a long time. But like if I think about and summarize like some of the things that are really great. One of them is our software. It is kind of our secret sauce. It's a compound AI system. We refer to this as a Verifiable AI.

So what is Verifiable AI, ideally? It leverages really 2 things, really, advancements in the AI technology out there, transformer-style models and deep wording that you can grab data and you can make the system better. But what it does do is it also avoids the risk associated with this pure end-to-end AI approach. You eliminate some things like hallucinations as well as regulatory hurdles, right? Black box models aren't super popular with AI folks when you're trying to describe how safe you think a product is.

On the hardware side, we like to purchase off-the-shelf technology where possible. But I also think it's an important distinguisher that we have a lot of hardware capabilities and experience inside. And it's super important when you're driving a tractor trailer, an 80,000-pound tractor trailer down the road, you need to be able to see far enough along.

There was no technology available when we went into trucking or even when we were first founded to be able to go into trucking with the existing off-the-shelf Lidar. And then we acquired a company called Blackmore that provided us our first Lidar which is our proprietary Lidar solution. This is this frequency modulated continuous wave technology.

What does it do from like a -- from a layman's terms? It gives us about an extra $0.09 of decision-making time when we're driving our vehicles as composed -- as compared to like traditional Lidars, right? And so it also has the ability to look at and see traffic, which way it's headed or whether it's stationary. It allows us to reduce or basic -- or actually eliminate any interference sunlight or other sensors.

So it's a really important technology enabler. And that's what allowed us to get into trucking, right? And then we've made foundational investments in our approach for simulation. And we kind of knew a long time ago that simulation was going to be necessary to really advance the development of the technology.

And I think this became more evident to everybody after COVID, but we were kind of doing it and leaning into it from the beginning. I might say those are 3 good examples of where we made investments.

Hugely helpful for us. And just for everyone, just to put it in 3 simple terms. It's the software embedded in this compound AI structure, the FMCW technology that gives you better visibility down the road, which is proprietary. And then the simulation technology, which allows you to verify in rapid cycles before you put trucks on the road into difficult environments to the incremental functionality.

And I think for me, developing a thesis around you guys in rolling out coverage here, seeing the maturity of each of those elements come together has been the part that gives us a lot of confidence that you guys are not only here first, but you're here better than your peers, if we can say it that way.

So can you speak to how the company came to target commercial trucking in that opportunity set? Because I think it's sometimes not seen as glamorous as some of the passenger vehicle, but it's certainly a bigger, more defensible opportunity in our view. And how you guys really build a defensible model in that sector?

Thanks for the summary too and feedback. I think you really understand the market well and the opportunities. Yes. When I think about trucking and in full disclosure, it's one of the reasons I came to Aurora was their focus in on trucking. When I think about trucking, there's a couple of things.

But first, just Aurora when it was founded, and its mission is to deliver the benefits of self-driving technology safely, quickly, broadly in all markets. And they couldn't even go into trucking until they knew they were going to be safe, which was the whole point of the Blackmore acquisition in our first light Lidar. But when I look at the trucking market, I get really excited.

Number one, it's a massive market. It's a $1 trillion market. It dwarfs the current ride-hailing market. There is no projections that you need to make to know truckings great. And also, there's tremendous need, right? Let's be honest. This is an aging workforce. It's got persistent driver shortages. It's got hours of service limitations. And all these things are expected -- the trucking workforce and the driver shortage that those are expected to continue to grow.

And really, like our focus is really on we are going to provide a solution that addresses pain points in the market. Another one being insurance cost, right, which continued to skyrocket as well as the number of nuclear verdicts, but we're going to offer a viable solution that can really double the utilization of the existing market at lower cost, and there is no requirement for changes in like the customer behavior.

And for me, like if I juxtapose that with robotaxis, and I think robotaxi is a great market, and it's interesting but it's not the market to lead in, in my opinion, right? Like the unit, economics and trucking are way more attractive. So if you think about a U.S. truck driver, they make 3x as much as a gig economy ride hail driver, right? That gives you a tremendous pricing opportunity.

And again, the market is already there. You don't need to grow the market. And a lot of the reasons and the ways that you grow market is by driving down costs. Well, you can't drive down cost until you scale a business, right? And the ability to actually deploy in the trucking market doesn't force us to drive down costs immediately to force adoption.

And so for us, we're able to grow and scale a business and then get the economies of sale our hardware kits and everything else that we invest in. And then a natural extension of that could be in the ride hailing market. So for us, we think it's the right business model approach.

Awesome to articulate how big that margin opportunity is for you guys and what friendly market environment that you're selling into. So I guess that dovetails to my next question around how the opportunity set has changed in the last few years? And how do you see it shifting in the next, call it, 5 years and beyond as we see that driver pool get older and you start to see the endurance of the vehicles get better, right? And it's just as simple as that. So how are you guys seeing some of those shifts start in the recent years? And how do you see them accelerating over the next 5 to 7 years?

Yes, it's a good question. So look, any new innovative technology that's going to really help revolutionize an industry, which has been around for a long time and has really -- it's tremendous industry. I give a lot of respect for all the people in this industry. And so if you reach a point where we're not able to continue to make the improvements you want to make without some sort of innovation boost, and that's what I think this is.

For me, the last couple of years has just proven that the opportunity is pretty clear and even more compelling for us. And so when I think about it, it's this continuing to focus on the value drivers in the near term. And the one thing that we did, and I mentioned it a little bit in my intro is one of the things that you have to do is you have to be able to operate in enough conditions to support adoption, right?

So you can't just launch in one thing and say you're going to go everywhere. You need to be a reliable supplement to the existing business. And to be reliable, you have to operate in all the same conditions. You have to eliminate any friction that's out there. So for us, our focus has been on be reliable, reduce friction, create value and then provide an incentive.

And in this case, the incentive is that you can double the utilization and lower your total cost of ownership. So we think that's been a big focus. And I think over the next 5 years, honestly, we expect our technology to become a central part of the industry, right? And it's broadly deployed throughout the U.S.

I think at that point, then we look -- if I look beyond 2030, let's say, the opportunities are endless. I think we can -- it's all going to be focused on our mission. And again, we can go into industries or use cases like ride hailing, we can go into different geographic areas, et cetera. I think we're just going to continue to build upon that. So for us, right now, our focus is execution.

Excellent. And just shifting gears into market creation here in a little bit more detail. We've seen emerging technology markets evolve. And you mentioned this around cost reduction driving adoption in other markets. But I want to get your sense on the competitive landscape, right? I mean so sometimes technology, one of the essential things is just getting folks comfortable with this. And you go through a period of coopetition. So how do you think about the competitive landscape and the coopetition required in terms of educating customers on how the technology works and getting them comfortable that they have multiple technology partners that could work with so that they can invest in the trends?

Yes. Well, I think it's important and like when Aurora first started out and went into trucking, we learned early on, and we've never really deviated from this. This concept of trying to get exclusivity everywhere to corner the market and block everybody out as kind of a failed approach right? Like we don't expect that and our customers don't necessarily want that like a FedEx would like to buy a truck from whoever they want to buy a truck with. They would like to get an AV system from whoever they like to do it.

So ours has always been focused on creating value and kind of being the industry standard barrier when it comes to AV trucking, and that's really how we've tried to separate ourselves. And I actually think we've got like a multiyear structural lead. But that was always foundationally started on like we were we were realistic on the growth and when we would -- what growth would look like when we would come into the market.

We've been the most transparent company in the AV industry, both from a regulator and from a commercial side, but just in everything we approach, every one of our customers, and you can -- you can do all of them, they kind of were the reference, we're kind of the standard bearer when it comes to understanding their business, trying to integrate within their business and we've never ever tried to block anybody out.

We're just going to create value. And I think that's where we get to creating a really strong position. Like we have a multiyear lead too, right? We're the only company that operates driverless today on the U.S. public roads for trucking. We've got strategic partnerships. And one of the things that's really important and people don't probably give enough emphasis to is -- the goal isn't to be in one market or in one rolling saying you're in driverless. Like the goal is to actually be an integral -- or an essential part of our customers' business. And to be able to do that, you have to be able to build at scale, you have to be thinking about the future.

And for us, I think that's something that we've really done well. At the same time, it's a trillion market, so it's not a winner take all. It's large enough for plenty of other players. And again, I think bringing in new technologies, particularly safety critical, it requires a lot of both cooperation and collaboration. And there's areas where you shouldn't be competing against other AV players.

You should be forming a strong coalition whether it be Avia, which is one of the AVs trade industries or, you know, the support in California, there is certain elements where you should be advancing the industry generally and then you should create your value, and that should be how you distinguish yourself in the competitive market.

So I guess a follow-up to that is, where do you see the real technology differentiation versus peers? I mean I think this ecosystem approach, the ability to scale seemed to resonate. But how do you guys think about that internally? And how should investors think about the technology differentiation?

Yes. I think for some folks, it's really hard to understand the differences because there's a lot of stuff that's out there and people claim a lot of things. I'd like to say -- and I don't have a ton of visibility into all of our technological approaches. I try to say this, we're the only trucking and driverless company out there in public roads that speaks volumes.

We -- we're the most transparent. We tell everybody how we're going to operate, what we're going to do and then we deliver upon it. And I think our Verifiable AI approach is the right approach from a regulatory, from a safety perspective. I think people say other things because it sounds good or they're trying to capitalize on something else, but I don't think they really recognize the value of what we're trying to do in this safety critical industry.

But I also think our validation approach is, and it's unsexy, right, but it's super important for us. And so look, it took us a long time to launch our first driverless product in the daytime. And we were able to launch a nighttime a quarter later, right? Like that's a monumental step in terms of the investments we made in the validation and our approach. And I think that really sets us apart in some ways.

So we'll continue to see how it plays out. But if we deliver to our road map, I think it's going to be pretty clear what the differentiation is.

Let's pick up on that because I think that was one thing that we were kind of joking about after the call is like we haven't seen an autonomous company pull forward time frames before. And so the fact that you guys rolled out nighttime driving as quickly as you did was pretty meaningful for us.

Can you talk about those learning cycles and kind of the accelerated piece of this because it's not just validation, but it's understanding what the problems are as you move into the simulation platform and really leverage that? So can you talk about the learning cycles in Aurora's approach to train systems and adding incremental functionality where your advantages are? I know you're the finance guy, but I would love to take advantage of your insight that you have to offer here.

Yes. I bet I do it as well, but I'll try to embrace my inner Chris here for half a second. Look I think the most important thing is to recognize that when you develop a product, and this is the benefit of trucking. In trucking there's a lot of self similarity. And this is one of the things we've been saying for quite some time, and we're going to prove out here over the next couple of quarters. We've been operating and in all weather conditions for quite some time and testing and developing on all weather conditions.

So it wasn't like we just did our development testing on daytime and then shifted over to night or shifted over to rain. Like honestly, to a lay person, you can be in our truck and see it operate in rainy to be like why aren't you operate in driverless, it's flawless. And so I think our approach is, first off, we've always been operating in these environments for a long time. So we've got a lot of learnings.

And in our systematic approach on how we do things foundationally set up by the safety case and then how we think about our development testing approach where you've got like 3 phases. You got the phase where you see every day. You know that the system is going to work great. You've got some instances where you don't see it all that often. So you need to use simulation to amplify it.

And then the third -- third approach is where you really may not see it on the roads and you need to use like NHTSA's crash taxonomy and build simulations and tools around that. That approach applies to all these scenarios. And what it allows us to do, it gives us a really super easy framework. I shouldn't say easy because it's hard, but it's a super concise framework for how we do development. And so for us, we're just leveraging what we -- the investments we put in place upfront for how we develop a product. And I think that's what I could say is the most important thing. I'm sure Chris will give a way better explanation than that.

No. I mean I think it's important to understand from a practical perspective. At what point do you guys get comfortable with taking the safety driver out, right? And so thinking about kind of this multilayered approach to how you're getting incremental data and getting to a place where you're like, okay, it's okay to take the driver out. And part of what you're seeing, I think, is you're running it with that backup system in place for a period of time.

And so I guess, can you talk about when you make that decision, right? I mean if you got this kind of multipronged approach to understanding how to operate in an environment to get -- go through those learning cycles. At what point do you take the driver out and just let it run, right? What do you guys need to see to get comfortable with that? I think a lot of investors are looking at mean time between failure as well as the number of miles driven. But I was curious where you guys think about and talk about internally.

Yes. I think this is probably one of the bigger misconceptions out there, and it's probably facilitated by some AV companies that maybe haven't succeeded. Like if you think during development, people were talking about what are the number of disengagements. Disengagements it's a horrible metric to talk about how safe or not safe we are because that's how we learn and develop the system.

And so for us, disengagements aren't like a super meaningful metric. We have put some metrics out there before in terms of development that we thought were important. But like it's foundationally, it's really simple. It's the closure of our safety case. Our safety case is a comprehensive evaluation for a safety critical product. It's used by all kinds of safety critical industries.

You start to see a lot of AV companies try to replicate some element of our safety case framework. And I think that's how we make all the decisions if it's going to be acceptably safe.

Now the interesting part behind it is the safety case is really foundationally, there's 460 claims. But it's not really the magnitude of the claims, which is the issue. It's the evidence in the testing that's used to support it. So think about, for us, when we launched in daytime, we had over 10,000 requirements that we needed the truck to be able to do, and we had to pass over 2.7 million tests.

And those tests aren't like there's no random number that like somebody gives you and says, "Hey, you have to pass all these tests." It's not there. It's developed and those tests are developed based on what we think we need to be acceptably safe. And so you build these claims and then you start to deviate it.

We have a much higher bar for safety than what anybody could mandate, and that's why you don't see a federal mandate right now, like in terms of safety. It's like because it's hard to do, and we think we are kind of the standard bearer in terms of the safety.

So for us, it's all about is do we think it's going to be acceptably safe, and we've got -- and we have to have the evidence to support it. An example would be like -- and I think Chris mentioned this on the earnings call, but just when you think about nighttime, what was one of the challenges at nighttime?

Well, it's finding a person lying on the ground underneath the car at nighttime. Like that's what we would call a vulnerable road users, but like, are we able to acceptably identify see and be able to react to that sort of situation? And so for us, it's just a lot of hard work in that area, foundationally built on our approach to safety.

That's incredibly helpful. So I guess, shifting to the scale up here, right? I mean as we move into financials and really building a business here. Can you just talk about where your ecosystem is in terms of your ability to move into series production and start building these kits and then implementing them on vehicles, either from an aftermarket perspective or with OEMs in an integrated way?

Talk to us about where you're at in terms of preparedness, benchmarks that we should be thinking about over the next couple of years and as you start to see some volumes really start to move here now that you've got trucks on the road.

So we have our launch fleet today, right? Those are the trucks we're operating on today and that we referred to as the tens of trucks that we can operate in driverless. And I think that is all the trucks that we kind of need to be able to demonstrate the technology promise, right? So to be able to operate in all the different conditions and have multiple lanes. Once we've achieved all those objectives in '25, there's a couple of things that are going to happen.

In '26, we're going to introduce our second generation of hardware. This is a more reliable, robust and higher volume hard work that will allow us to build hundreds to thousands of kits, which will allow us to then scale and those kits are also designed to operate 1 million miles.

Our current launch hardware kit doesn't have that same robustness and the same capability. So one of the important things to unlock from a scaling perspective is that next-generation kit. When that happens, we're then able to put these kits, whether we put them on trucks that have been upfitted by ourselves or on the scalable platforms that the OEMs are working on probably going to be some combination of both.

But like that's Phase 2. So '26 is about starting this customer adoption. And at the same time that we're building truck volume and kit volume in the second-generation kit, we're also going to expand and operate throughout all of the Sun Belt, right? So that's a really important step. This is necessary before we get to the third-generation kit. Because in the third-generation kit, intend to be able to build into to the tens of thousands of kits and tens of thousands of trucks. What do you need for that to be successful? You need scalable platforms with line sight integration with our OEM partners to operate.

And so that is what we've done and that's kind of our plan. So it's kind of like this stepped approach. Like our first step is we're doing the technology promise. Our second one is we're going to be able to operate throughout the Sun Belt and build more volume on our second-generation kit all in advance of the third generation, which is really that kick start into the scalability and line sight install with our OEM partners. So that's kind of the approach.

Excellent. And so how much cash do you need? You guys have been pretty forthright about keeping a healthy balance sheet and making sure that cash is never concerned, you mentioned it upfront. But can you just talk about the philosophical approach to the balance sheet as you scale pretty robust technology here and how you think about a minimum cash balance as a -- in your approach to bolstering the balance sheet as you work through commercializing this technology.

Yes. I think there is -- I think my approach -- well, our approach is pretty simple. I think there's 2 things. Number one, we never want our employees, our customers, our partners or our investors to think or worry about liquidity. We don't want it to be a concern.

We know that this is -- this requires a lot of capital. It's one of the hardest things that's ever been done in this industry, right? And it's going to take a lot of resources. I actually think that there are competitors out there that try to claim they can do it way cheaper and they have way less OpEx. And I actually think they're kind of fooling themselves, right?

Because there's a difference between launching a driverless product and scaling to a driverless business. So -- and I don't think any customer or a partner wants to know that you did some cheap on a safety-critical product, right? So I think there is an important element of you should be investing in the future.

At the same time for us, we ended Q2 with $1.3 billion in liquidity that we think will get us into the second quarter of 2027. We had said before that we think before last quarter, we wanted to raise, I don't know, $650 million to $850 million to feel comfortable on our path to get to positive free cash flow. So we're -- we still have some time to go on that, but we have chosen a couple of different financing solutions in the past, like we've done a pipe. We've done some secondaries.

Most recently, we were able to use this at the market mechanism, which has been -- actually turned out to be pretty efficient and pretty effective and we raised $331 million last quarter through that. We're going to continue to explore all of those options and continue to make sure that liquidity is really never a concern as we developed our product.

That's super helpful. And then I guess the final question for me is just expectations around revenue growth. You guys have done a nice job in articulating the path to the profitability of the path to gain customers over the home. But talk to us about customer diversity, how you think about getting the right set of customers without having too many customers and then how you scale into monetizing some of those relationships as the technology matures and you start all in the pricing model a little bit here.

Yes. I think for us, it has to start off with executing the crawl-walk-run approach for our commercialization plan. Today, we have driverless trucks operating but we have to continue to prove the promise of the Aurora Driver technology. And to do that, we have to continue to increase the value for our customers. So you have to be able to operate in the vast majority of the weather conditions that they would ever see and operate in just like that were driven by humans.

And in this particular case, like the Aurora Driver and AV technology is going to supplement all of these customers' networks, right? And so this isn't a replacement. This is a supplement. And to supplement effectively, you've got to be able to do the vast majority of things. So at the beginning, we think it's really important to do that. We've -- we're operating a fleet of trucks.

And so therefore, we provide what we call this transportation-as-a-service business model. So we're pricing just like anybody, any carrier would be charging to carry goods between A and B. So it's got not just the driver, but all the operating costs of the trucks as well. We're shifting to a Driver-as-a-Service business model.

What we think is -- '26 is going to be a year where we're really going to start to focus in on revenue growth, '25 is not a revenue growth year for us. '25 is all about -- I mean we will have revenue and we'll continue to grow. But '25 for us is all about the technology promise because we're not increasing the fleet of vehicles from where we're operating at today. '26 we'll be increasing the fleet of vehicles, and you'll start to see us focus in our revenue growth.

What you'll see is us lean in heavily to the earlier adopters of the customers and we'll continue to moderate and iterate the business plan based on each of their needs. Another important thing for us to do is to be able to drive to customer end points, and you'll start to see us drive to customer end points starting in '26 and that really important enabler for value creation and price protection, right? So that's where our focus is. We'll provide more feedback for '26 later on at the end of the year when we think about '26 guidance. But for now, our focus is on executing the technology promise.

Excellent. Well, I think we're running into time here. We want to thank everybody for joining us. Just to recap a little bit, you guys have drilled this compound AI system, which is a combination of both hardware, that's proprietary. Coupled with innovative software system and simulation platform that's allowed you to go through accelerated lending cycles and demonstrate not only technology competence, but also the safety to start building trust with your customers, and we're starting to hit a point on inflection for revenue. What else do you want to leave investors with here as they think about Aurora and think about the opportunity set in front of you?

Yes. I think you did a great job of summarizing. We're really excited at Aurora of the things that we're accomplishing and how we're doing it. Like we really do feel like we want to be the standard bearer when it comes to safely deploying this technology responsibly in the trucking market and doing it in a way where we're not chasing like headlines. We're not chasing the -- hey, we're going to be here at x date, but really with the vision that we're going to become an essential part of our customers' business in the long term and it's great. And I would also say that we want to continue to be the most transparent in the world.

So for those who have not seen, again, go out to Aurora Driver LIVE. If you go to the YouTube channel, it's @AuroraDriver and you can see our trucks operating on a daily basis driverless. And I think that that's a really great proof point just in the confidence of our technology and our approach.

David, thanks so much for the time and the wisdom, and we look forward to talking with you soon. And if anyone wants to talk with us about Aurora, we're happy to help educate you as well as we can before we pass you off to the company. Thanks so much, everybody. Have a great afternoon.

Thanks, Colin.

Thanks.

Greetings, and welcome to the Aurora Second Quarter 2025 Business Review Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacy Feit, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Latonia. Good afternoon, everyone, and welcome to our second 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 Urmston, Co-Founder and CEO; and Dave 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 second quarter financial results. We'll then open the call for 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 an 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, the markets and economy. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended June 30, 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 Award 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 these forward-looking financial measures provide is 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.

Thanks, Stacy. The second quarter marked a pivotal moment in transportation history. Aurora opened a new chapter with the launch of the first driverless commercial trucking operations on public roads in the U.S. From commercial launch at the end of April through the end of June, the Aurora driver already locked more than 20,000 safe driverless miles.

And just last week, we completed the validation and began driverless operation at night which materially increases utilization potential of our self-driving trucks. This unlocks a game-changing component of the Aurora Driver's value proposition. This progress propels Aurora and the freight industry into a new era.

We're executing our crawl, walk, run approach to driverless operations, ensuring a seamless product experience that delivers undeniable value to our customers and deepens trust across our stakeholders. We started with 1 truck and as earlier this month, now have 3 driverless trucks operating between Dallas and Houston.

During the second quarter, our driverless trucks had already driven the equivalent of more than 8 coast-to-coast trips. Importantly, we've maintained nearly 100% on-time performance, operating courteously with the flow of traffic while upholding our perfect safety record. And while we added a front seat observer at the request of a partner, given certain prototype parts in their base vehicle, it's crucial to note that the Aurora Driver remains fully responsible for all driving tasks with no interventions needed.

This performance continues to prove the advanced capabilities and safety of the Aurora Driver. To provide a window into this progress, we'll be showcasing the Aurora Driver in action during this initial phase of our operations via Aurora Driver Live. You can access the live stream via the link on Page 4 of our presentation or via the live tab on our YouTube channel at Aurora Driver.

There, you'll see our driverless trucks traversing the route between Dallas and Houston, demonstrating the safety, reliability and growing maturity of the Aurora Driver. This special series builds on our commitment to industry-leading transparency offering a first-of-its-kind glimpse into the future of freight transportation.

As we continue to prove the promise of the Aurora Driver, we're now focused on increasing customer value to become an essential partner in the freight industry. With validation of night driverless operations just 3 months after launch, we're now operating driverless trucks day and night. This more than doubles truck utilization potential.

Check out the video on Page 7, which showcases the Aurora Driver's superhuman perception and distinct safety advantage during nighttime operations. With this core capability in place earlier than anticipated, our team is now working to validate driverless operations in more challenging weather conditions by the end of the year.

And at that point, we expect the Aurora Driver will be capable of handling almost all observed weather conditions in the Sunbelt. In addition, our land expansion plan remains on track. We expect to validate driverless operations between Fort Worth and El Paso and further extension of this lane to Phoenix by the end of the year. We opened our terminal in Phoenix in June and now have 2 customers: Werner and Hirschbach piloting autonomous trucking on the Fort Worth Phoenix Lane.

Notably, Hirschbach is already leveraging our full network to maximize value for its operations with loads traveling from Houston to Dallas to El Paso and on to Phoenix. Self-driving trucks have the potential to cut single-driver transit time in half on the Fort Worth Phoenix route, a lane that exceeds hours of service limitations for traditional truck drivers.

This is a powerful use case that demonstrates how expanding driverless operations can unlock significant value for our freight customers. We've included a case study on Page 10 of the presentation to quantify the significant revenue and profit growth a carrier could generate through the adoption of the Aurora Driver on the Fort Worth to Phoenix Lane.

Also note, our terminal in Phoenix represents an infrastructure-light approach with a design that closely resembles how Aurora will integrate with future customer endpoints and optimize for speed to market. This is an important evolution to enable our plan to deliver freight directly to customer endpoints. With the Aurora Driver now regularly pulling driverless loads for customers, we're operating from a fundamentally stronger position.

For years, we've been building relationships and educating partners about the promise of our technology. Today, we're no longer selling an idea. We're delivering a real product that will ultimately transform our customers' businesses. We're seeing qualified leads surge to support our scaling ambitions in 2026 and 2027.

We believe this reflects the growing recognition of Aurora's leadership in autonomous trucking and the urgency our customers feel to integrate safer, more efficient driverless trucks into their operations. Our technology directly addresses structural challenges that plague the freight industry, including an aging workforce systematic driver shortages, hours of service constraints and rising labor costs, which were recently cited at approximately $1 per mile by the American Transportation Research Institute.

By integrating the Aurora Driver, carriers and private fleets have the potential to supplement their traditional drivers to halt more freight, boosting revenue and expanding margins. We believe this will also create new opportunities for their employees to advance in high-growth careers.

We're proactively building this future through future workforce through partnerships with organizations like [ on the road garage], a leader in workforce development. Together, we've launched an apprenticeship and upscaling initiative designed to prepare technicians for the unique demands of autonomous vehicles.

Trainees gained expertise in AV terminal operations, advanced diagnostics, calibration and maintenance of complex systems like Lidar, radar and redundant vehicle controls. Initiatives like this will create pathways to future-ready careers and help support the long-term operational demands of autonomous freight.

Rising insurance costs, which have increased 7.5% annually over the last 5 years, present another structural challenge. The [indiscernible] of nuclear verdicts in the freight industry are a key contributor to this trend. The Aurora driver offers a powerful way to derisk operations in this environment. Aurora Driver never gets distracted or fatigued and has superhuman capabilities with a 360-degree view of its surroundings and unlimited span of attention.

Furthermore, the Aurora Driver's rich data can support more accurate fault attribution and accelerate claims resolution. We believe this will be groundbreaking for an industry grappling with persistently rising insurance costs and will pave the way for safer roads as well as a more resilient cost-effective freight network.

As we work to unlock these benefits for our customers, we continue to advance the key enablers that will support our path to scale and self-funding. On the harbor front, our teams continue to work on our second and third generation commercial hardware kits to support our scaling and profitability ambitions. We expect our second-generation kit to drive a step function reduction in our hardware costs, which is a critical milestone on our path to self-funding.

Following receipt of B-samples for testing from our contract manufacturer, [ Fabrinet], we have now completed the first vehicle build with this prototype kit and will begin on-road data collection for testing in the coming weeks. We also continue to make great progress with [ Continental ] on our third-generation commercial hardware kit and that we believe will unlock true scale on the order of tens of thousands of trucks.

As they highlighted at the recent Capital Markets Day, Continental is energized by our commercial launch and continues to believe this hardware-as-a-service partnership can generate a high-margin multibillion-dollar recurring revenue stream for them. They have begun delivering A-samples of a hardware -- a number of hardware components to support embedded firmware and software development.

And earlier this month, the Aurora and Continental teams achieved a key milestone by finalizing the design of the integrated sensor pods and the Aurora Driver compute module. We expect to receive our first complete prototype of the continental generation hardware kit by the end of the year to begin engineering validation testing.

We also continue to make great progress with our OEM partners on purpose-built self-driving platforms designed for high-volume production. We recently received the latest pedigree of Volvo VNL autonomous trucks and integrated the Aurora Driver for on-road autonomy testing in preparation for driverless operations. We expect to receive 20 of these trucks by the end of the year.

And PACCAR recently completed the build of the first prototypes of their scalable autonomy enabled truck platform. These trucks are now undergoing testing at their facilities. On the regulatory front, earlier this month, U.S. representative, [ Vince Fong ] of California introduced the America [ Drives ] Act, a landmark piece of legislation to establish a federal framework specifically for self-driving trucks.

The legislation would provide federal preemption of any state laws requiring a traditional driver in the commercial vehicle. It would also modernize safety protocols by codifying that a flashing cap mounting warning [ Beacon ] may be used instead of traditional warning devices like reflective triangles for disabled commercial vehicles.

This is consistent with our proposal. We believe this proposed legislation will solidify the United States position as a leader in autonomous technology. We're encouraged by this momentum, and we'll continue to work with policymakers to help realize the immense safety and economic benefits of autonomous trucking.

With an already supportive regulatory backdrop, the combination of the Aurora Driver and our partnerships creates a flywheel that delivers value across the entire ecosystem. As you can see on Page 13 of the presentation, as our fleet grows, it generates more data, which accelerates capability expansion and drives adoption.

Larger production volumes drive down the cost of self-driving hardware, increasing profitability and further accelerate adoption. Large fleets cover more of the road network, increasing the network benefit they provide thereby driving further adoption. We completed the monumental task of turning the crank for the first time, and that first turn is always the most difficult.

The full significance of our commercial launch will become abundantly clear as our progress accelerates. With our powerful mutually reinforcing flywheels now in motion, we're confident that the progress we're making will be difficult to replicate and will translate into significant long-term value for the motoring public customers and our shareholders. With that, I'll now pass it to Dave who will review our financial results.

Thank you, Chris. Let's discuss our financial results for which we have provided a summary on Page 10 of the slide deck for reference.

With the launch of driverless operations during the second quarter of 2025, we began recognizing revenue which totaled $1 million across driverless and vehicle operator super buys commercial loads for Hirschbach, [ SuperFreight], Werner, FedEx, Schneider and Volvo Autonomous Solutions, among others. The Aurora Driver achieved a record number of commercial miles driven during the quarter.

Second quarter 2025 operating loss, including stock-based compensation, totaled $230 million, excluding stock-based comp of $55 million, R&D totaled $146 million. SG&A was $25 million and cost of revenue was $5 million. We used approximately $144 million in operating cash during the second quarter. Capital expenditures totaled $7 million. This cash spend was meaningfully below our externally communicated target reflecting continued strong fiscal discipline.

During the second quarter, we issued 57 million shares of Class A common stock through our at-the-market program for net proceeds of $331 million. We used $44 million of the net proceeds to fund the tax liability associated with the vesting of our employees restricted stock units during the second quarter.

In turn, we ended the second quarter with a very strong balance sheet, including increased liquidity of $1.3 billion in cash and short-term investments. With this additional capital as well as efficiencies we found in the business and cash preservation decisions we have made, we now expect this liquidity to fund our operations into the second quarter of 2027.

In our continued opportunistic approach to fundraising, we are expanding our at-the-market program as it has proven to be an effective and efficient mechanism. The additional capacity can support future fundraising as well as funding of tax liabilities associated with the vesting of our employee RSUs over time.

For the remainder of 2025, we continue to expect quarterly cash use of $175 million to $185 million on average. This reflects an increase in capital expenditures and continued development of our new hardware programs as we prepare to scale our business.

For the balance of the year, we will continue to focus on expanding our driverless operations as well as key cost reduction levers to support achieving our initial scaling and profitability ambitions. With that, we'll now open the call to Q&A.

[Operator Instructions]. Our first question comes from George Gianarikas of Canaccord Annuity.

I wanted to ask about the Volvo trucks. In your press release, you said you expect to receive 20 of the trucks by the end of the year. Do you expect to be operating those trucks and do you expect them to have an observer and then when they launch?

Yes. Thanks, George. So yes, we expect those trucks to be here by the end of the year. We're going to initially using those for development and bring up. So no, we don't expect to be operating those without an observed by the end of the year. We'll be -- we're continuing to work closely with Volvo and we'll wait for them to be comfortable announcing the time line for us to launch initially with them driverlessly.

And maybe just as a follow-up on commercial momentum. I mean since your launch a couple of few months ago, have you seen additional incoming interest from other commercial partners that may be interested in expanding their service with you or maybe even launching?

Yes. It's actually been really exciting. I talk about it is we've gone from selling the promise and the belief into selling the real thing and that's shown up in our sales funnel. We're having lots of exciting conversations with carriers and fleet operators.

And so we don't have more we can share today, but the excitement is real, and I think people get the transformational impact this can have on their business, whether it's improving the safety of their fleet or improving both the bottom and -- bottom line and top line. So yes, I think people get it.

The next question comes from Colin Rusch with Oppenheimer.

Can you talk a little bit about the early returns around the wind and rain performance and how you're tracking and evolving that functionality? And what we can be looking at as you guys continue to work on that part of the business?

Yes. Thanks, Colin. I think just candidly, I think if we put you in the truck today driving in the rain, you'd ask us why we haven't launched it yet, right? The operation and capability of it is very good. behaves well on the road.

And really, it's about the fact that we just put safety first and foremost that we want to go through the process of really thoroughly validating, refining anything that we identify through that validation process and just having the utmost confidence that when we declare something driverless and operate it as such that I put my family out on the road and you'd feel comfortable with your family out of the road around it.

So it works well today. We're continuing to work towards the time frame we've laid out by the end of the year. And it's exciting to see the crank that we've talked about this machine for validating and releasing software trading over in the way we'd hoped and continue to be able to do that faster and faster.

And then looking at the [ FMC W ] technology and the manufacturing of it, can you talk a little bit about where you're at with yields with your manufacturing partners? And how we should think about the potential cadence for cost reduction on that as you guys get closer to a higher volume launch?

Yes. So as we've talked about, there's -- we can talk about 2 different dimensions. So one is we see significant steps in cost as we move from building and manufacturing and assembling in-house to moving to [ Fabrinet ] or contract manufacturer and then moving to the Hardware-as-a-Service partnership we have with Continental.

And each one of those generations is going to drive discrete cost downs. One of the big reasons why we're so excited about working with Continental for the long term, it's just they really understand how to deliver automotive quality hardware at scale, on time and do that with high-quality yields. And so that process is all moving along well. The working relationship is strong, and we feel very good about that.

In the specific case of the [ FMCW, LiDAR], we've talked in the past about moving from discrete optical components, which is what our systems have today to [ LiDAR ] and chip, which is what we're bringing up already today. And this is a place where we've been investing for the last several years, not just in the design of the optics, but also in the deposition process, the fab process to do this efficiently and effectively. I don't have yield numbers I can share today, but what I can tell you is that development program is on track. And we see that as a meaningful cost down opportunity in the FirstLight technology.

Our next question comes from Andres Sheppard with Cantor Fitzgerald.

Congratulations on the quarter. Congratulations on the first revenues.

Thank you. It's nice to have at least an [ hour ] to go with [ RL], it may not be a [ p ] yet.

It's only going to grow from here.

Exactly right.

Just a quick question on maybe the near-term ramp-up of trucks in operation. So right, you disclosed -- today, you now have 3 believe trucks in operations as we get closer to year-end and towards the tens trucks. Just curious if you can give us a sense of how you're thinking about that ramp-up in terms of vehicles operational and maybe Q3 and Q4. Any color or direction there would be --

Yes. We continue to follow our crawl, walk, run model. And right now, just given the fleet size that we have, we're balancing the growth of driverless operations with the bandwidth for development and testing that we want to really unlock the capabilities that enable the expansion across the Sunbelt next year.

And so as we said, really, this year is primarily focused on that capability expansion and unlock proving out the process for leasing software rapidly as we believe we're starting to and making sure we're set up for scale next year. So it's really going to be driven by how do we maximize the probability of success on that capability expansion points while continue to build and grow traction with our customers. I don't know, David, there's more you'd add to that?

No, I think that's right. The only other thing I'd say, [indiscernible], like we're going to measure and try to report and think about our success of driving more in terms of mileage than it is in trucks because one of the things that we can do is, obviously, as we can operate now day at night on driverless, we can take 1 truck and operate it on multiple runs around a day.

So for us, we want to build the mileage. We want to build the proof point. And again, 2025 is all about delivering the technology promise. So for us, success is being able to operate in almost all conditions that you'd see at this unmet and demonstrate that we are able to do that effectively.

Got it. That's super helpful. I appreciate you both Super helpful. And maybe just a quick follow-up. I wanted to go back to the rain and heavy wind preparations, which is encouraging to hear that you feel comfortable enough that the vehicle could already do that today.

Without maybe getting too technical, but just curious like what lessons, what differences rain and heavy wind. Like what lessons you have learned from that? And ultimately, what I'm getting at is this is maybe where the case of [ Lidar ] becomes much more superior than [ non-Lidar]. So just any color there? Any lessons learned? I mean what was that process like? What is that process like and the progress that you can see?

Yes, yes. Like I said, is not that -- I just want to be careful. We are not ready to launch in rain today. But I think as someone writing in the truck, you would wonder why, right? Because if you got in the truck today, it would behave very similarly to the way that it does in the daylight or at night in that it would be super boring and just kind of drive down the road more.

As we -- areas where we expect are probably the kind of the most challenging things to both validate and ensure we're getting the performance. Particular things like the same places that we've talked about in the past with daytime driving. So pedestrian is lying in the road, right? It turns out that doesn't happen very often. In fact, I don't think I've ever seen one in my driving lifetime. But if it does, we want to make sure we handle it well and appropriately.

And that was one of the last capabilities that we were able to get to go with a daytime and gradually more challenging at night. And then you can imagine with rain that's incrementally more challenging again. You're right that when we operate in more challenging environments, whether it's in the rain or whether it's in dust that having a complementary set of sensors is very powerful because they could each see through different conditions.

They each give different kinds of data. And we believe that's really an important aspect of building a robust and safe system. And again, we're not really interesting building a thing that we can give a demo in -- we're building a technology that ultimately will transform freight and transportation. And that means it needs to work. It needs to be able to turn your back trusted. And that's where the bar we're holding to for the Driver's releases that we're putting out today.

The next question comes from Ravi Shanker with Morgan Stanley.

This is [indiscernible] is on for Ravi Shanker. It would be helpful to hear about other catalysts set for the third quarter and back half of the year, specifically the timing of that second route and next major milestones on your partnerships with both Volvo and PACCAR.

Yes. And I don't think we're going to provide more resolution than we have already. We're pushing for through the end of the year is unlocking the ability so that in '26 6, we're able to rapidly enroll routes across the Sunbelt. And so by the end of the year, we hope to be able to operate in and we intend to be able to operate in day and nights in the rain. We intend to unlock the Fort Worth to El Paso, El Paso to Phoenix and Fort Worth to Phoenix as routes.

To do that, there's some discrete capabilities that we know we need. We've talked in the past about the Custom Border Patrol station that's between El Paso and Fort Worth. That's the thing that we handle autonomously today, but we'll want to validate performance for that. And then there's kind of surprising like little things that are really from learning from our experience with customers.

So for example, for those of you who aren't deeply familiar in the freight space, as I think called a super single tire, and what that is, is where instead of putting 2 tires in tandem on actually, you put one larger one that has various trade-offs and economics and fuel efficiency and whatnot. And it turns out that we didn't really understand prior to launch that for some of our customers that was important, we'd asked them.

And in fact, they said it wasn't really -- but as we've been beginning to operate drivers, we found out that it actually is more important. And so part of what we'll be doing in the near future is finalizing the validation for what happens when we're running super single tires and making sure in the case of a blowout or puncture that we can detect and respond to that appropriately.

And so it's great to be able to kind of both have a clear road map for where we're going. And then because we have vehicles in operation, we're able to get feedback from customers and kind of tune the near-term milestones so that we maximally meet the value for them.

That's all really helpful. And then if I could squeeze in one more question. It'd be helpful if you could give us a little bit of insight into your relationship with Uber, post their debt offering against your stake and some of the other autonomous bets. How critical are they to deployment?

Uber has been a great partner and continues to be. And as you know, [ Dara ] has been on the Board and we continue to have a close working and personal relationship. Uber is focused on ride hailing, and we're focused on trucking. And so in the near term, I think the importance there is kind of relatively disconnected.

Of course, Uber Freight is one of our pilot customers, large customers for driverless operations, and we continue to work with them and continue to grow business there. Over the long term, we see the capability we've built to safely operate vehicles on the public roads as something that will ultimately unlock automated passenger vehicles as well. And at some point, we'll engage in that space. But right now, we're really focused on delivering the promise of trucking and building that business.

The next question comes from Chris Pierce with Needham.

Just for clarity, and I'm not sure how much of this you can go into, but on the PACCAR earnings call, they talked about the importance of validated production. In your letter and in your comments, you talked about production on their end of prototype parts in the new trucks and you have a lot of median there about your production with your contract manufacturer and with Continental, how can you I guess I just want to get a sense of what -- how to think about this relationship?

And are these surprising to you? Are you pulling forward production? Is this sort of everything is in line with how you expected as far as your production partners I just kind of want to get a sense if you could talk about relationship and what -- how are you testifying production?

No, we -- well, first, let me begin by saying we continue to really value the relationship we have with PACCAR and continue to get a push forward in there. And it's wonderful to see them moving forward their autonomy enabled truck platform.

I think the right way to think about this is there's a truck and there's a driver and we work with our OEM partners to specify and then they go and develop and design the platform, the vehicle itself, the truck. And that has a variety of components in it and the vehicles we're operating today still have some prototype parts from our OEM partners in them.

In contrast in parallel with that, the driver parts that we operate and are building the parts we develop and build with [ Fabrinet ] and we'll be building with Continental really around the development process of that driver. And the driver, of course, works across multiple different OEMs. So today, we work with PACCAR and Volvo. In the future, of course, we hope to work with other OEMs as well.

And so that's maybe -- I apologize for the confusion, if there is any there. But we're tracking and supporting our OEM partners as they mature their platforms. And then in parallel, we're advancing the development of the Aurora Driver and bringing that to production with the second generation coming online next year and then working with Continental to bring that third generation online in '27.

Okay. Perfect. And then you sort of hit on my next question. You want to work with other OEM partners in the future. How do you see this autonomous trucking developing? Do you see an OEM having multiple autonomous partners and then the logistics customer makes a choice? Or do you see -- how do you see the business developing over time given this is an industry that's had a lot of dual sourcing from all sides?

Yes. Yes. I think our aspiration is to drive every truck that's out there. And we'll continue to advance as quickly and rapidly as we can to accomplish that by building the best technology, the best product and providing the best service for customers. That said, it's a $1 trillion market. And everyone is going to want and hope for another player in the space and we look forward to competing with them.

Today, Aurora is the only company in the world that can drive trucks on the road at freeway speed and do that safely, driverlessly. And we'll continue to accelerate based on the tools we put in place to validate and release new software, and we'll welcome the competition when it gets there.

The next question comes from [ Doug Dunn ] with Evercore ISI.

Just wanted to first ask on the ramp from the 2 trucks to the 10 plus by year-end, is the idea that each of those trucks have a dedicated customer, whether there's customers with 2 or 3 or customers with one? Or how is that rollout sort of happening?

Yes. Thanks for the question, Doug. So really, we're going to -- I guess the short answer is no. At this point, we don't really intend to allocate a specific truck to a specific customer. We're going to provide the capability to move goods from A to B for the different customers, and we'll fill that need with a truck as appropriate as we move forward.

Okay. Understood. That's helpful. And then diving deeper, just on the math here. If you have 2 trucks on the road right now per quarter running each day, 200 miles, we'll call it. You got about 60 days, so it's 12,000 miles per quarter per truck. Is that the type of math that you would start to share in the future or that makes sense to sort of calculate the miles driven in the future?

Yes. I think -- it's Dave, Doug, good to hear from you. I think like generally, if you're talking about an individual lane, that's right. We kind of think about it a little bit differently. So if you think about it this way, daytime had like an 8-hour restriction and we can't drive in rain. So you're able to operate in a certain percentage of time.

And for us, when the time was available, and it wasn't raining, we do a round trip, which was like 400 miles for a truck. As we unlock nighttime, then you can kind of double that. As you go to longer lanes, you can go even further -- it really is somewhat lane dependent, and then your capability dependent.

For us, our focus has been on just growing the dryness number of miles each quarter, which we'll continue to demonstrate and being able to technically operate in almost all of the conditions that are required for the Sunbelt. So being able to exceed our as a service, being able to drive a day and night and in rain and then wind and I think at that point, then we'll start thinking more about like utilization.

But we do expect that our trucks to have higher utilization than kind of the average as soon as we're able to operate day and night and then rain. And so we'll continue to demonstrate that overall. So we do think mileage as opposed to trucks is really the right way to measure this.

The next question comes from Mark Delaney with Goldman Sachs.

[indiscernible] on for Mark Delaney. Maybe going back to this safety kind of observer in the vehicle, kind of what needs to happen for both Aurora PACCAR to feel comfortable kind of removing that person? And is there some sort of time line that you can share on when you guys expect that to happen?

Yes. From Aurora's perspective, we are comfortable today and that observer is in the vehicle really out of respect and appreciation for our partnership with PACCAR. From PACCAR's, we'll let them speak for themselves, but I think what they've shared and what I can share is that it's really about their process and the fact that these trucks have prototype parts in them. And so for them to ultimately bring these trucks to production and operate them driverlessly, we expect that to correlate with when they launch their autonomy enabled truck platform.

Understood. That's helpful. And then maybe one on the financial side. One of the slides quoted like $1.84 per mile for cost with the Aurora system. Is that ballpark a good assumption for revenue? And then does that kind of change if there's still the safety observer in the vehicle or as the [ ODD ] continues to expand, does that get larger? How should we think about that?

Yes. I think -- so when you're -- I think you're looking at the part which is the carrier perspective example, and that was really the focus on being able to drive beyond the hours of service limitation that you normally had. So from a revenue standpoint, we just kind of use the average revenue that was out there. And then from the cost perspective, we used a lot of the [ ATRI ] data and then just provided some discounts for what we are able to provide.

It's not a model specifically for our cost. But like generally speaking, we do expect that we are going to lower the cost of operations for our carriers. We're going to be able to do that in the near term really based on fuel efficiency, we are getting really better fuel efficiency by driving this autonomous trucks.

We will be able to do it on driver costs you think about driver cost, you think about like our indicative [ DAS ] price range, which we provided before. And if you look at the current driver costs on average, which are now at roughly $1 per mile, like there is an opportunity for us to drive the [ TCO ] benefit down.

But the other most important thing is it's the utilization. So it's the revenue side as well. You're able to take a truck and generate more revenue. on a daily and on an annual basis. So it's just a way to think about how to predict it. I don't know that I would go and take those specific numbers and put them into a model because that's very specific to an individual late.

And just around the part around the observed on board, right? This is both a temporary element and the cost for us in practice is de minimis, right, that we're running a small number of trucks. It is what it is, and it's just not that big a deal. It has no impact on our road map or plans for growth or anything.

The next question comes from Scott Group with Wolfe Research.

This is Cole on for Scott. It's good to see progress with the next generation of hardware in the press release. Is there any way to frame up how we're progressing relative to your original expectations, either from the [ Fabrinet ] perspective or the Continental generation?

Yes. I guess at the high order that we haven't shifted our expectations, right? I think we've been fairly consistent about talking about that second generation of hardware coming online in '26 and the continental generation, the third generation Hardware-as-a-Service components coming online in '27.

We're literally working with these systems on a daily basis. The fact we have the samples from Fabrinet in a truck, and we're in the process of bringing up and validation there is really exciting and kind of aligned with what we would hope. And then the partnership with Continental is just moving forward. We've got through the norming and forming and we're solidly into the storming phase of that partnership.

Okay. That's helpful. And maybe just on the prototype trucks that you've called out, which hardware generation is going to go into those? And maybe expand on how you see that actually playing out over the next 12 months.

I'm sorry, I don't know that I followed the question. I apologize.

So in the -- with the prototype trucks that your OEM partners are delivering. Is this going to be the [ Fabrinet ] hardware going into it? Is it going to be what hardware is actually going to be in those trucks?

Yes. Depending on exactly when and which truck, some of it will be our existing first-generation hardware, which we're using to do kind of bring up a validation of the interface. Some of it will be with the second-generation hardware and some will ultimately have components or kits from the third-generation cargo set. It's really driven by internal engineering execution and need.

Thank you. Ladies and gentlemen, at this time, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.