Aurora Innovation - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 marked continued operational progress: Aurora surpassed 100,000 driverless miles, launched a second driverless lane (Fort Worth–El Paso), and maintained 100% on-time performance with zero Aurora Driver–attributed collisions.
• Financially, revenue was $1.0M, net loss improved slightly year-over-year to $(201)M vs $(208)M, and basic/diluted EPS was $(0.11) vs $(0.13) a year ago; Adjusted EBITDA was $(165)M.
• Liquidity strengthened to ~$1.6B (cash, short-/long-term investments) after issuing 80M shares via ATM; Q4 cash use guided to $175–$185M; liquidity runway into 2H 2027.
• Near-term catalysts: rapid driverless lane expansion (Phoenix extension in Jan 2026), second-gen hardware targeted for Q2 2026 enabling operations without observer, and expansion of the customer cohort (e.g., Russell Transport via McLeod partnership).

What Went Well and What Went Wrong

What Went Well

• Expanded to a second driverless commercial lane (Fort Worth–El Paso) within six months of launch; surpassed 100,000 driverless miles with maintained 100% on-time performance and zero collisions.
• Operational validation advances: night operations in July and progress on weather (dust storms, rain, heavy wind), supporting high availability across the Sun Belt; proprietary FirstLight FMCW lidar detects objects at 1,000m (double prior gen).
• Customer adoption building: added two carriers to the driverless cohort; signed Russell Transport via McLeod platform; quote: “This milestone places Russell at the forefront…one of the first asset-based carriers…to deploy autonomous trucks in live freight operations”.

What Went Wrong

• Unit economics remain early-stage: Q3 cost of revenue $6M vs revenue $1M; Adjusted EBITDA $(165)M, reflecting scale-up investments ahead of revenue.
• Revenue scale still modest: Q3 revenue $1.0M, up 12% sequentially from Q2’s $1.0M but limited by staged roll-out (crawl–walk–run) and weather validation gating full utilization.
• Weather feature release timing nudged: rain/heavy wind update slipped by “a couple of weeks,” reflecting prioritization of dust-storm validation and lane pull-forward; management emphasized transparency on timing.

Transcript

Speaker 6

Greetings and welcome to the Aurora Innovation third quarter 2025 business review call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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, Stacy. You may begin.

Speaker 1

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.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 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.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 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 market, 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 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 will now turn the call over to Chris.

Speaker 3

Thanks, Stacy. In the third quarter and early October, Aurora achieved several more driverless trucking industry firsts, rapidly advancing our path to scale and further extending our leadership position. The crank we set in motion with commercial launch is now accelerating, delivering compounding returns across our technology, operations, and customer adoption. Earlier this month, the Aurora Driver surpassed 100,000 driverless miles on 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 westbound 600-mile lane from Fort Worth to El Paso, setting a new benchmark for autonomous trucking. This expansion, accomplished just six months after our driverless launch, is faster than any other self-driving company has scaled to a second U.S. market.

The Aurora Driver unlocks substantial value on this lane, and we're thrilled to add multiple customers, including one 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 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-plus-mile multi-state 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 endpoints 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. Future planned expansions include lanes between Dallas and Laredo, a critical route for one of our key customers, and between Dallas and Atlanta, which will extend the driverless I-10, I-20 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 dust 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 Aurora Driver-powered 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 to El Paso lane just outside of Midland, Texas, our perception system leveraged radar and our proprietary First Light LIDAR, which were 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 Aurora driver-powered trucks across the Sunbelt, a meaningful component of the value proposition.

Along with expanding the Aurora driver's 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 five weeks prior in early September. We now have five 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 four 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 one of their most seasoned drivers recently came down to Texas to assess the Aurora driver's performance. Their reactions spoke volumes about the Aurora driver's 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 five of our presentation.

With our Fort Worth to El Paso driverless launch, we've expanded driverless operations for Hirschbach, one of our earliest adopters and valued partners, and added two additional carriers to our growing driverless customer cohort. Launching driverlessly on this lane is a major inflection point on our journey with customers, and the expansion of our driverless cohort validates our technology, rigorous safety approach, and the value we deliver. Now that we've proven the promise of the Aurora 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 and private fleets. This partnership will deliver seamless integration for McLeod customers, which we expect to accelerate new customer adoption of the Aurora Driver.

Just one month after announcing the partnership, we executed an agreement with McLeod customer Russell Transport for driverless hauls on the Fort Worth to 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. We're also seeing some meaningful performance gains, particularly with the next generation of our proprietary long-range FMCW LIDAR. FirstLight 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 a truck traveling at highway speeds, this equates to more than 34 seconds of planning horizon.

This will further enhance the Aurora Driver's 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 kit. 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 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 line-side 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, Omovio. I had the honor to keynote their supplier day, which highlighted our flagship program, which has a planned start of production in 2027.

We're excited to see Omovio 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 Braunfels, 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 be fully operational by August 2027. We've now received and begun testing computer samples from Omovio, which include NVIDIA's DriveThor 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-mounted warning beacons as an alternative to reflective triangles. The cab-mounted flashing lights indicate when a vehicle is stopped on the side of the road to warn other road users, which is similar to systems used by emergency and construction vehicles and is a step forward for road safety. On the legislative front, the American Drives Act, a landmark bill 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 driverless 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 Innovation 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.

Speaker 5

Thank you, Chris. Let's discuss our financial results, for which we have provided a summary on page 17 of the slide deck for reference. Third 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 12% sequential increase in revenue from the second quarter. Third quarter operating losses, including stock-based compensation, totaled $222 million. Excluding stock-based compensation 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 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 increased liquidity of $1.6 billion in cash and short-term and long-term investments. 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.

Speaker 6

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our next question comes from the line of Jorge Naricas with Canaccord Genuity. Please proceed.

Hi, everyone. Thank you for taking questions. Maybe first, I'd like to ask if you could sort of give us form and shape to your plans for moving from terminal to endpoint to endpoint shipments. Thank you.

Speaker 3

Yeah. Thanks, George. Great to take a question from you. I think one of the misconceptions that we hear is that this is kind of a big deal, and it really isn't. Today, for example, when we're operating, getting to our Houston terminal, we drive for about five miles through various industrial park surface streets to get to our terminal. We have a system that's capable and able to deliver this. It works well. For us, it's just a matter of timing and sequencing when the volumes are sufficient that it's relevant for our customers. We intend to be rolling that out to customers through the next year. Dave?

Speaker 5

Yeah. I would say maybe two other things. One of them is on the misconception piece, right? If you think about endpoints, customer endpoints, roughly 80% of those endpoints are within a five-mile range from a highway. 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 crawl walk run, right? We started out operating a small fleet of trucks that we're continuing to build up. 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.

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 endpoints. The one thing that's really important is to make sure that we've got a really robust product that is operating between the endpoints. I would say that this is a very deliberate plan that we're executing upon.

Speaker 3

Thank you. Maybe as a follow-up in two parts. 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? 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? Thank you.

Speaker 5

Yeah. 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. I think it's us aiming to accomplish what we set out to do. In terms of with International, this is a new relationship. We are purchasing trucks from International, and we're doing the upfit ourselves. We continue to work with Volvo and PACCAR and continue to be excited about the plan forward with them. This is 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 interests that we're seeing today.

Speaker 3

Thank you.

Speaker 6

Thank you. Our next question comes from the line of Ravi Sanker with Morgan Stanley. Please proceed.

Great. Thanks. What's up, everyone? If I can just continue the line of discussion on International, I just wanted to confirm, are you just buying the trucks off a lot and kind of rolling that out as a third fleet, or is this an actual OEM relationship like you have with PACCAR and Volvo, in which case, is there a time to commercial launch of that as well?

Speaker 5

Hey, Ravi. It's Dave. We are buying stock trucks. We're not actually buying them necessarily off the lot. We are ordering them through International, but there is no co-development partnership associated with those. It's important to understand that we've got tremendous experience in how to integrate the Aurora Driver into platforms. We've done it on roughly eight platforms. We understand all the necessary capabilities to launch a safe product. In this particular case, we've got two 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.

Speaker 3

To answer the second half of your question, Ravi, we expect to have the International LT Series truck on the road driverless in Q2 2026. We're excited to add that to our growing fleet.

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

Speaker 5

Yeah. 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 and cost is. 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. We factor that into the cost and into the revenue stream and profitability of the business going forward.

Very helpful. Thanks, guys.

Thanks, Ravi.

Speaker 6

Thank you. Our next question comes from the line of Colin Rush with Oppenheimer. Please proceed.

Thanks so much, guys. 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?

Speaker 3

Yes, we think simulation is an important tool. It's something we've invested in. I appreciate you recognizing that. No, we don't really see any hiccups. One of the things 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. As we've been building our processes for validation and release, we've designed them with an eye towards 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. It's kind of moving along as we'd hoped.

I hope that I'm not sure if I answered your question, but we're feeling pretty good about this.

Okay. I'll follow up offline. The second one is really around 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?

I think that, one, it's dangerous to characterize all customers in one bucket. There's obviously a spectrum of them. What we're seeing is enthusiasm, right? The conversation has 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." We mentioned Russell Transport. That's a customer that just signed up with us and signed up with us on day one to operate driverlessly. We expect that to be the flavor of many of the customer relationships that we're going to put in place going forward.

Thanks so much, guys.

Thank you.

Speaker 6

Thank you. Our next question comes from the line of Andres Shepard with Cantor Fitzgerald. Please proceed.

Hey, guys. Good afternoon. Thank you so much for taking our questions and 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 truck deployments for Q4 and maybe early next year, you know, you have five in operational as of now. To get to more than 10, presumably that means deploying six additional trucks before year-end. 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 any helpful there?

Speaker 3

Yeah. Yeah. We expect to get to 10 trucks operating driverlessly at the end of this year. We'll kind of ramp them through the course of Q4. You're probably sick of us saying crawl, walk, run, but we very much believe that. We want to make sure that customers are comfortable, regulators are 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. We're putting time into, of course, the lane expansion work and into weather so that as those trucks begin operating driverlessly, you're maximizing the utility for the customers.

Got it. Okay. That's helpful. I guess as maybe a quick follow-up, in your presentation, in the timeline slide, you talk about having positive gross profit by end of 2026 or early 2027. 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? Thanks.

Yeah. It's a little bit of truck volume, and it's a little bit of continuing our capabilities that we're focusing on today. There's what we try to describe as four 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. We're really excited.

Q2.

Q2, sorry. We're really excited about that. I think there's an element of continued progress on remote assistance. We've said before, remote assistance, they're not operating 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 few to many, and 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 a, let's say, we have a tire blowout or something like that. We're pretty confident in 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. 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, etc., where just purely the mileage accumulation is really important. I think when we originally talked about gross profit positive, we had established a target for ourselves. This was back in 2024. By the end of 2026, we launched a little bit later for commercial launch. We expect that may flow into 2027, early 2027. We still feel confident that that's a good target, but we're not putting any formal guidance out yet for 2026 profitability.

Speaker 5

To add on what Dave was saying, right? Take for example the Aurora Driver hardware kit. There, we just look at the BOM cost and we see roughly half the price of what our current system is. 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 2026 or in Q2 2026.

Understood. Thanks, Chris. Thanks, David. Very helpful. Appreciate it. We'll pass it on.

Speaker 3

Thank you.

Speaker 6

Thank you. All right. Thank you. Our next question comes from the line of Chris Pierce with Needham & Company. Please proceed.

Hey, good afternoon, everyone. If we just go back to the International LT Series truck announcement, I just want to understand, will customers be able to buy International LT Series trucks that you upfit, or is this just something you're doing to sort of pull forward or accumulate more proof points with the Aurora Driver technology?

Speaker 3

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. Initially, we expect that's how this will operate. 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.

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

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

Okay. Lastly for me, not to 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 tool partners, and with International in the trucking space. What's the right way to frame this announcement if you saw it versus your relationship with NVIDIA? I just want to understand what is new, not new, how we should think about that broadly, if that's something you can speak to.

Yeah. We've obviously been working with NVIDIA and Continental Autonomous Mobility on the third-generation Aurora commercial hardware kit for some time now. I think we announced it back in January maybe. It's great to see others recognizing the opportunity to use this technology. We think it's great hardware, and you know, we'll just continue to build our business. Yeah. NVIDIA makes good products, so I'm not surprised others are using them.

Okay, thanks for the time.

Thank you.

Speaker 6

Thank you. Our next question comes from the line of David Vernon with Bernstein. Please proceed.

Hey, good afternoon, and thanks for fitting me in here. 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 costs. Is there a scale number to think about that you need to hit to get to that level? With this equipment, what's the actual lifecycle of this stuff? How often are you envisioning that you're going to need to be upgrading the hardware on a truck, or is it going to last the truck?

Speaker 3

Yeah. As we talk about the price point of the bill of materials savings, that's across this production run of 1,000 plus units, right? As we've 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. That's why we have the second-generation hardware where our contract manufacturing partner, FabriDad, is producing those. That gets us to 1,000 plus. Of course, the truly large automotive scale comes in with the Continental Autonomous Mobility partnership. That's when we can get to tens of thousands of units. This fits kind of the bridge between tens and tens of thousands. The price numbers are across that 1,000 plus scale, and we have commitments and alignment on that. In terms of the lifecycle, we expect this hardware to be lasting a 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. Thanks. That's helpful. Dave, my second question would be for you on your sort of illustrative end-to-end case 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 tank of gas. With a driverless system, couldn't this truck make the trip in a day as opposed to the two to three that a normal trucker would quote for the day? If that's right, then you know why sell it at $2.05 a mile?

I think it's in a, a couple of things. Number one, yes, we can drive the same distance, you know, 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 is 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. 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 as a service, we're kind of pricing like the rest of the market.

For the driver-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.

Speaker 6

David, just to.

Speaker 1

But.

Speaker 6

Can I just jump in here for one sec? I think just because Dave doesn't have the slide in front of him, the revenue per mile that we have there, that's not necessarily to Aurora, right? This is an end-to-end in a driver-as-a-service business model. That is an industry rate that's DAT-sourced, right? We're using that cost. Basically, that's what a carrier would be paid to haul those loads on that lane based on industry data. We're showing how much more revenue and margin we can drive for the customer based on a driver-as-a-service model in which they are paying us the driver fee. We can absolutely walk through the math offline, but I just wanted to clarify that one piece.

Speaker 3

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

Okay. Is the software subject to any hours of service or no? I'll let you go. Sorry.

No, it's not. No, the software is not subject to hours of service because, you know, if you just think about the reason for the hours of service limitation, it's because the person gets tired, right? Our software has that superhuman ability to not get tired.

Superhuman rates. Thank you.

Thank you very much. Appreciate it.

Speaker 6

Thank you. Our next question comes from the line of Mark Delani with Goldman Sachs. Please proceed.

Yes. Good afternoon. Thank you very much for taking my questions. First, just hoping to better understand some of the progress the company has been making with Volvo. I think at the last earnings call, you spoke about hoping to have 20 trucks from them by the end of the year. Where do you stand with that? If I understood the press release today, you also are working to integrate it line-side. If you could share some timeframes for that as well. A couple of different parts to Volvo timelines and progress, please.

Yeah. Hey, Mark, can you just hit the first part again 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? I think you also talked today about doing some line-side integration or something to also understand when that may materialize.

Okay. I just want to make sure that I got the 20 part right. For Volvo Autonomous Solutions, what we had said, and we had said this last time as well, is 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. They're called B sample and C sample. They're development trucks that have all the representative hardware. 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 driverless operations on their truck platform. 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 actually have our first line-side integration of the Aurora Driver kit being line-side installed at an assembly plant at their New River Valley assembly plant. That's really a 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 at scale. One of the key components of really building at high scale, high volume is the ability to line-side install like it was any other part that was being assembled onto the vehicle. We're making progress on both of those fronts.

Yeah. Very helpful, David. Just the timeframe to be done with the testing and validation with Volvo, do you have an estimate you can share?

Speaker 3

Yeah. Again, same 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. We're starting line-side integration, so things are advancing really well for us.

Okay. 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 route timeframes that you were describing in your prepared remarks. Thank you.

Yeah. I think with International, also super excited. You know we've had a lot of the interest and the customer demand on the Aurora Driver has really been strong, and we continue to make great progress technically. 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 Aurora Driver on those and deploy those driverlessly 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. Our focus is really on continuing to build the momentum across the board.

Thank you.

Speaker 6

Thank you. Our last question comes from the line of Mike Galli with TD Cowen. Please proceed.

Great. Thanks. Good afternoon, everybody. Just two questions on the product roadmap. First question, you mentioned kind of solving for some of the dust storms. I'm curious, as you solved for that, how much of that was kind of done by the LIDAR, your LIDAR versus radar? Secondly, I guess a slight delay 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? That pushed out a little bit. Anything you could share there would be helpful.

Speaker 3

Yeah. On the how do we deal with the dust storm part of this, as we said for a long time, we see real value in having a complementary set of sensors. They have different strengths and weaknesses. There isn't like we just use LIDAR or we just use radar. We build a model, a perception model, an AI model that's taking data from those different sources and producing the best possible outcome from it. We lean into the special properties that come along with First Light, our FMCW LIDAR. Of course, radar, given its relatively longer wavelengths, is less impacted by dust. Between the two of them, we do a really nice job of seeing what's on the road in front of us. In terms of the rain push-out, we look at this as just not a thing, right?

Whether it's the end of December or 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. We value transparency, figured we'd share that.

Yeah, it's also important to point out that we also pulled ahead the Fort Worth to El Paso lane quite a bit.

Exactly.

We're going to continue to drive towards moving really quickly on this. As Chris reminded me even earlier today, you know, we are going to give people a little bit of a breather during the holidays.

Yeah, that's all very helpful. Thank you.

Thanks. Yeah, Dave has to remind me not to beat myself and the team up on the week or two here, given that we pulled the other thing forward.

Speaker 6

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