Greetings and welcome to the Aurora Innovation Fourth Quarter 2022 Business Review Call. [Operator Instructions] I will now turn the conference over to our host, Stacy Feit, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Diego. Good afternoon, everyone, and welcome to our fourth quarter and full-year 2022 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 today with me -- on the call with me today are Chris Urmson, Co-Founder and CEO; and Richard Tame, CFO. Chris will provide an update on the progress we've made across the key pillars of our business, and Richard will recap our fourth quarter and full-year financial results. We will then open the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.aurora.tech shortly after this call has ended. I'd like to take this opportunity to remind you that during this call we will be making forward-looking statements. These include statements related to the achievement of certain milestones around the development and commercialization of Aurora Driver and Aurora Horizon on our anticipated timeframe the expected performance of our business, and potential opportunities with partners and pilot customers, expected cash runway and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors included in our quarterly report on Form 10-Q for the quarter ended September 30, 2022, filed with the SEC on November 3, 2022, as well as the current uncertainty and unpredictability in our business, the markets, and economy. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof and Aurora disclaims any obligation to update any forward-looking statements except as required by law. Our discussion today may include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results including a reconciliation of our historical GAAP to non-GAAP results may be found in our shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website. With that, I will now turn the call over to Chris.

Thanks, Stacy. Fourth quarter marked our first full year as a public company and in that time we made remarkable progress building Aurora Driver, our self-driving system and toward commercialization of Aurora Horizon, our autonomous trucking subscription service. We furthered these goals in the fourth quarter with our Aurora Driver Beta 5.0 release, which we believe puts us on track to achieve our critical feature complete milestone by the end of the first quarter of 2023. As I regularly tell our team, we're reaching the end of the beginning. We are looking ahead to significant milestones with incredible enthusiasm as we prepare to enter the next phase refining and validating our technology as we work toward closing the Aurora Driver safety case by the end of 2023. At the same time, we've also continued to strengthen our operations and we've made steady progress with our OEM partners on autonomy-enabled truck platforms to support our planned commercial launch by the end of 2024. During the fourth quarter, we released Aurora Driver Beta 5.0 continuing our commitment to deliver quarterly product updates that advance the Aurora Driver. This update introduced new capabilities to detect and appropriately respond to emergency vehicles like ambulances, fire engines, and law enforcement vehicles as I'm sure many of you have experienced emergency vehicles do not always behave predictably or follow customary rules of the road so proper response by self-driving vehicle is critical to being a safe and courteous driver. When Aurora Driver perceives an emergency vehicle on the shoulder ahead it knows to slow down or change lanes according to Texas laws. When the Aurora Driver detects an active emergency vehicle ahead or of or behind the truck it alerts specialists in our command center via Aurora Beacon for additional guidance to include coming to a…

Thank you, Chris. During the fourth quarter of 2022, we recognized the remaining $2 million in collaboration revenue under our development agreement with Toyota for a total of $68 million recognized in 2022. Cumulative to date we have now recognized all $150 million for our development work under the collaboration framework agreement and all cash payments have been received. While our first priority is commercialization of Aurora Horizon, we continue to believe our work with Toyota and other long-lead efforts will spring allow us the eventual launch of Aurora Connect, a subscription service for the ride-hailing market. During the fourth quarter, our market capitalization declined below our carrier value of net assets triggering a $114 million non-cash reduction in the carrying value of goodwill. This brought the total non-cash reduction in goodwill to $1.1 billion in 2022. There is no change to our outlook for the businesses Aurora has acquired. We know how we expect them to contribute to our commercialization. Including the reduction in the carrying value of goodwill and stock-based compensation of $44 million in the fourth quarter and $156 million in 2022 fourth quarter and 2022 operating expenses totaled $314 million and $1.9 billion respectively. Excluding these non-cash expenses, fourth quarter operating expenses were $156 million. Within operating expenses, fourth quarter R&D expenses excluding $38 million in stock-based compensation totaled $131 million. SG&A expenses excluding $6 million in stock-based compensation were $25 million. 2022 cash operating expenses totaled $650 million. 2022 R&D expenses, excluding the $137 million in stock-based compensation totaled $540 million. 2022 SG&A expenses excluding $19 million in stock-based compensation were $110 million. Turning to cash flow, we used $141 million in operating cash during the fourth quarter. During fiscal 2022, we used $508 million, which reflects a $100 million inflow related to the Toyota agreement. Capital expenditures totaled $3 million in the fourth quarter and $15 million in fiscal 2022. We ended the year with a very strong balance sheet, including $1.1 billion in cash and short-term investments. Taking into account cost savings and cost avoidance actions we took in 2022, we continue to expect our cash to fund Aurora through mid-2024, enabling us to continue to execute on our Aurora Horizon roadmap. With that, we'll now open the call to Q&A.

[Operator Instructions] Our first question comes from Tom White with D.A. Davidson. Please state your question.

Hi, this is Wyatt Swanson on for Tom. Thanks for taking our questions. My first one is do you guys provide a bit more detail on the progress of your OEM partners as it relates to the platform work happening on their end? Any notable milestones or developments reach since you last updated us? And then any aspects of the road map there that might be tracking behind schedule due to either inflationary forces, macro pressures or any other reason?

Sure. Happy to talk a little bit about this and obviously there is a limit to how much we can say about those programs given the confidential nature of the relationship with them on that I think we shared a couple of examples of progress we're making on prototype vehicle development that are on the path to commercial scale. We've done that with. We shared about the progress with PACCAR on that and also with Volvo, I don't know if there's much more unfortunately that I can say about that. At this time, I think in regards to the roadmap, we still believe we're on track to achieve feature complete and further to achieve Aurora Driver ready at the end of this year and are looking to hit the commercial launch milestone that we've set out for next year as well.

Understood. Okay, thank you. And then just a follow-up. Kind of curious how you guys are thinking about your headcount levels for this year relative to maybe what your headcount expectations for 2023 were this time last year. We've seen a bunch of tech companies laying people off recently, has there been any headcount reductions contemplated in your outlook? And then, can you maybe talk a bit about how you're managing rising labor costs and inflation and other parts of your expense base?

So early last year, we were able to see that the economic conditions were changing from what they had been, right? I think we all got the cold water in the face on that. And so, at the time we went back and revisited our plans for growth, and that led us to change strategically how we're operating. We've talked about the fact that we've taken a stance of focusing primarily on the trucking product first while keeping the long lead work on the light vehicle programs working moving from more of a parallel development to a sequential development on those programs, and we think that has served us well. It's allowed us to limit our headcount growth and we continue to expect modest headcount growth over the coming year, which is, of course, lower than what we would have anticipated, again at this time last year. What -- this very early and proactive approach to this along with our kind of measures even before that in 2021 means that our headcount over that time period has grown substantially slower than tech broadly and certainly our AV competitors. And so we feel with the combination of our strong balance sheets and the practice, we put in place to manage costs, we're in a very strong position there. Richard, do you want to add some more color to that?

Yes, no, I think, I think you're right, Chris, I think we believe we're appropriately staffed now to kind of continue to make progress against the Aurora Horizon roadmap and get commercialization. I think you'll see us continue to add headcount very strategically where it's necessary. I think Chris alluded to higher-end Ossa Fisher as President and new SVP of People. So you'll see things like that happen, and it's a good sign when you can attract this level of talent at the company as well. They can see what we're doing. They can see where we're headed in and they're excited to be onboard and we're certainly excited to have them, but yes, we would expect to see kind of modest headcount growth at most. We've continued to do significant work internally around cost avoidance and cost-saving measures. So there's a lot of things, some very small, some more substantial that we've done and that just gives us the confidence of the capital that we have in the balance sheet, the $1.1 billion that we ended the year with will continue to fund this through to mid-2024.

Great, thank you.

Thank you.

[Operator Instructions] Your next question comes from David Vernon with Bernstein. Please state your questions.

Hi, good afternoon, guys. Thanks for taking the time. So. Richard, I know you're not going to give guidance, but that 149 exit rate on adjusted EBITDA kind of gets you to the middle of next year. You guys have mentioned a little bit of a headcount increase is that actually just going to be sort of modest to replace attrition or are we actually expanding the R&D footprint as we get through 2023?

Yes, I would say very like very modest primarily to replace attrition, but again if there's really great talent out there, I think and we feel like that can help us achieve the mission, then I think we would be on the market for that talent but we have what we think is a solid base of people and we do not project significant headcount growth from today.

Okay. And then Chris, a couple of questions to you. First is can you help us as a layman understand the significance of the silicon-based LiDAR and what that does to the cost of the system over time, I'm assuming that's going to have some sort of benefit in terms of maintenance reliability upfront costs, could you just kind of help us turn that into something that we can think about from an investment standpoint?

Yes, absolutely. It is, I think just from a technology point of view, you can think of this as the equivalent of moving from discrete components and electronics capacitors, resistors, and whatnot into an integrated circuit, and it's the same type of approach that we're using, but with optical components instead of electrical components. The massive benefit we see from this is one it's instead of having a significant amount of labor and cost in those components. Labor in assembling and costing to those components we can print them effectively at a fab and get dozens of them on a wafer. So that makes the unit economics for each of these LiDAR's going forward dramatically better. They're dramatically more reliable because instead of having these fragile fiber links between places, you're able to get to integrated components that are I think little pieces of ROC, right, there's not going to be a whole lot of risk to them. So we see this as one of the strategic investments as we begin to scale the business. If you look at the cost structure of the delivering new Aurora Driver, the largest part of that, certainly early on is the hardware costs, and within the hardware cost the computer and the LiDAR are the two largest pieces of that and this is one of the biggest steps we can take in reducing that cost.

And from a unit economics standpoint that would become like a fraction of the cost of the existing LiDAR like is there a magnitude you can help me understand?

Yes, that, you can think of that as a meaningful fraction reduction. So I don't know if it's quite an order of magnitude. It's probably in that ballpark.

I appreciate that extra color. If I could just squeeze one last one in here. You mentioned you're getting up to 30, 40 loads a week. Are you guys are thinking about the sort of reliability of the equipment on the trucks, the maintenance, and the turnaround times? Can you give us a sense for sort of the operating cost per mile, how's that sort of progressing from maybe where we were a year ago to the exit rate of where we are today?

Yes, so on the maintenance side, the reliability of the components on the vehicle, our engineering team runs a rigorous reliability process. We have shaken bake systems here and we look through the failure of the components that we can drive performance up and so we see that is maturing very nicely. We aren't providing guidance on the cost structure at this point directly now.

Okay. Thanks so much for your time.

Pleasure. Thank you.

Thank you.

Thank you. And ladies and gentlemen, there are no further questions at this time. And with that, we conclude today's conference call. You may all disconnect your lines at this time. Thank you for your participation.