Aurora Innovation, Inc. (AUR) Q1 2023 Earnings Report, Transcript and Summary

Greetings. Welcome to the Aurora First Quarter 2023 Business Review Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stacy Feit, Vice President, Investor Relations. You may begin.

Thank you, Shamali. Good afternoon, everyone, and welcome to our first quarter 2023 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aurora.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC. On the call with me today are Chris Urmson, Co-Founder and CEO; and 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 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 this call we will be making forward-looking statements. These include statements relating to the achievement of certain milestones around and realization of the potential benefits of the development, manufacturing, scaling and commercialization of the Aurora Driver and Aurora Horizon on our anticipated timeframe, the expected performance of our business, and potential opportunities with partners and customers, expected contract commitments from customers for our products and services, expected cash runway and overall future prospects. These subjects – 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 Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC, 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. Our strong first quarter results are a testament to the foundational technology investments and strategic decisions we’ve made since our founding. The Aurora Driver became feature complete a critical milestone that is the culmination of over six years of incredible work across our entire organization. At this point, the Aurora Driver has all of the capabilities we believe are necessary for commercial operations on our Dallas to Houston launch lane. With the introduction of the final driving capabilities, we’ve removed all policy interventions for this lane. This milestone represents an inflection point on our path to commercialization of Aurora Horizon, our autonomous trucking service. This signals the end of a development phase in which we introduced fundamentally new driving capabilities and the beginning of the phase in which our primary focus is refinement and validation to close the safety case for launch. This progress has moved us significantly closer to fully autonomous commercial operations. As a result, we further detailed our roadmap outlining the work that remains between now and our planned commercial launch. The roadmap, which you can view on Page 3 of the slide deck as well as in the shareholder letter, covers the key components of our business that we expect to be necessary to bring Aurora Horizon to market. In preparation for next year’s plan commercial launch, we are continuing to build a powerful ecosystem of the world’s leading trucking and logistic companies to support the growth of our business for years to come. We’ve been developing a supplier strategy to support Aurora Driver hardware at very large scale, a key lever to unlocking highly profitable unit economics. Last week, we entered a first of its kind long-term partnership with Continental, one of the world’s leading technology manufacturers and Tier 1 automotive suppliers. This partnership holds enormous operational, financial, and strategic benefits for Aurora. Operationally, Continental has agreed to co-develop and manufacture a future generation of the Aurora Driver hardware kit. This will – they will integrate the Aurora Driver hardware components into serviceable modules that will be supplied to our OEM partners. Importantly, Continental will manage the complete hardware lifecycle from design through manufacturing, service and warranty. Financially, we believe industrializing our hardware kit through this partnership will help us achieve the commercial scale and cost structure necessary to support our long-term profitability objectives. Continental has already begun investing what may ultimately be over $300 million in non-recurring engineering costs or NRE to scale the Aurora Driver hardware, allowing Aurora to avoid near-term capital commitments to develop and manufacture this hardware. Any great company has to be thoughtful in allocating capital and automotive Tier 1s are known to be particularly thoughtful. Thus, we see this commitment as a testament to the confidence in both an autonomous future and Aurora’s leadership position in that future. Furthermore, and part of what makes us partnership a first its kind for our industry is its hardware as a service structure. This means that Aurora will pay for the hardware on a per mile basis as opposed to a more traditional upfront payment structure. This structure aligns with our – aligns with and supports our highly capital efficient drivers of service business model and helps ensure incentives are fully aligned between Continental, Aurora and our customers. Strategically, this collaboration allows us to focus on what we do best, developing industry-leading technology, building best-in-class partnerships, and accelerating a transformative business model. We’ve created a huge force multiplier to help us scale and support our product. By having Continental as our long-term partner, we can leverage their 150 years of experience, expansive technology portfolio, and global footprint to efficiently unlock a commercially scalable Aurora Driver hardware kit. Together, Continental and Aurora are positioned to deliver a safe autonomous future at scale sooner than many think is possible. Now, turning back to our first quarter results in March, we released Aurora Driver Beta 6.0, which introduced the final driving capabilities the Aurora Driver needs to operate our commercial service between Dallas and Houston. This includes the ability to detect and respond to uncommon and infrequent scenarios the Aurora Driver may counter during operations such as heavy rain, snow or fog, high winds and collisions with other road users or objects. As an example, if weather conditions are bad, but the Aurora Driver can safely continue driving, it will slowdown to ensure the safety of the truck and other motorists on the road. You can see a great example of this in video. In the video on Page 6 of the slide deck. During a recent pilot hall between Dallas and Houston, unexpected dense fog affected the Aurora Driver’s ability to see clearly beyond a few hundred meters. In response, the Aurora Driver slowdown, turn on the truck’s hazard lights to signal it was driving at a reduced speed and continued on its journey. If conditions deteriorate the point that the Aurora Driver can no longer safely and confidently operate at reduced speed, it will begin searching for a safe place to stop and alert the command center. Similarly, if the Aurora Driver perceives it has been in a collision, we have trained it to evaluate several possible courses of action and then navigate to a safe location to stop and inform a command center specialist. Testing at private test tracks allows us to train the Aurora Driver to respond safely. In the video on Page 7 of the slide deck, we force the Aurora Driver to hit a stationary target on a track to test its ability to detect the collision and execute the appropriate response pulling over to the shoulder of the road. Another edge case we frequently get questions about is how the Aurora Driver performs when an animal or person runs into its path. In the video on Page 8 of the slide deck, while hauling a load for a pilot customer between Dallas and Houston, the Aurora Driver detects a pedestrian on the side of the highway over 300 meters away. As the Aurora Driver approaches, the pedestrian darts into moving traffic, the Aurora Driver immediately slows down to allow them to safely cross and then continues on its journey. Anything can happen on the road and the Aurora Driver’s excellent performance in this unusual situation is a great example of how we have used the Aurora Virtual Testing Suite to successfully train the Aurora Driver on scenarios that would be too dangerous to test in the real world. Implementing these capabilities and reaching our Feature Complete milestone is the result of years of innovation reflected in our award winning patent portfolio. Our deep portfolio of intellectual property includes inventions related to our proprietary FirstLight Lidar and the Aurora Virtual Testing Suite among other critical technologies. Our AI research has led to cutting edge model systems with diverse uses including a multi-sensor modality perception and graph neural network generative AI that models the behavior of other road users. Our sophisticated learning of road user decision making enables the Aurora Driver to naturally and safely interact on the road. While large language models have generated tremendous attention recently, we’ve been leveraging advanced machine learning capabilities for years. In fact, when we founded Aurora, we were confident the recent revolution in machine learning was a necessary breakthrough to commercialize self-driving technology. That insight drove our clean sheet approach to building the Aurora Driver and leveraging these advancements. As we enter the final phase of refining the Aurora Driver’s performance, these key technologies will enable our continued pace toward our next key milestone Aurora Driver Ready. We know that the Aurora Driver will be ready to launch when we have closed the safety case for our Dallas to Houston lane. Our safety case is a comprehensive evidence-based approach to confirming that our self-driving vehicles are acceptably safe to operate on public roads. It goes beyond just ensuring the vehicle drives well enough for a demo, rather it demonstrates that our system and our company are holistically and sustainably safe. Consistent with our commitment to transparency, and as previously outlined, we’re sharing our progress toward a closed safety case via the Autonomy Readiness Measure or ARM, which is a weighted measure of completeness across all claims under our safety case for the launch lane. It reflects the percentage of work needed to move from feature complete to Aurora Driver Ready. Safety case closure is the primary focus of our work between these two milestones, and we entered this period of intense focus with the ARM already at 44% as of March 31. This metric demonstrates the strong progress we are making toward closing our safety case with nearly half already completed and keeping us on track to achieve Aurora Driver Ready later this year. We’re also sharing the on-road Autonomy Performance Indicator or API, which tracks our performance successfully operating Aurora Horizon as a commercial service. This allows us to understand not just the state of our technology, but the maturity of our processes and procedures in operating our business. API penalizes the use of onsite support, which will be the most expensive support provided to enable the Aurora Horizon service. For the first quarter of 2023, the API was 96%, which is a great result, particularly given that the Aurora Driver was under active development while still delivering value for our customers. The API represents the percentage of commercially relevant miles driven on our launch lane where the Aurora Driver would’ve operated safely and successfully without needing someone to touch the vehicle. We share a more precise definition in the shareholder letter and on Page 17 of the slide deck. Through a commercial lens, this metric translates to only 4% of the miles having needed onsite support. Notably, none of this support was required to keep the vehicle operating safely. In over 41,000 commercial miles on the launch lane, we experienced zero safety critical interventions. Instead, the support was for operational reasons such as to ensure development activities did not affect on-time delivery. For instance, while hauling one of our loads in January, the team had to choose between running behind schedule for a partner or manually driving the first 34 miles of the trip while a support team remotely trouble shot and resolved the startup issue. This is an example of one of the 17 loads that had an API below 90%. Given this is the first time we’re sharing the API with the investment community, we’ve provided additional granularity in the shareholder letter in on Page 13 of the slide deck. You can see the distribution of the charts use very high performing. In fact, across 219 loads delivered in pilot operations on our launch lane in the first quarter, 76% had an API of 98% or higher. 61% had an API of 99% or higher, and 32% or almost one-third had an API of 100%. Notably, five loads accounted for approximately 40% of the manual driving affecting the metric over the course of the quarter. As a reminder, we do not anticipate that aggregate API will be a 100% even at launch because certain situations such as flat tires will always require on-site support. As we look ahead to commercial launch and beyond scalability and ultimately our profitability will be supported by a reduction in the level of on-site support required. It is important to hold our teams accountable to delivering a complete commercially representative product and evaluating its performance on that basis. The API is one way we do this. Turning to hardware. Reliability will also be a contributed or Aurora Horizon’s cost structure. Our team has been focused on engineering the Aurora Driver hardware for enhanced reliability and to ensure it can withstand the harsh environmental conditions trucks can experience on the road. Hardening of the driverless hardware for our commercial launch has been progressing well with early results showing, for example, zero hardware failures in our driverless capable dual lane computer in over 400,000 miles of driving. During the first quarter, we also introduced technology to both calibrate and clean our sensors while on the road. Our hardware team designed a reliable sensor cleaning system for our long-range sensor pods, which we have begun testing during operations. The system uses an air knife to blast high pressure air across the surface of the sensor windows and can use a high pressure jet of washer to fluid to fully clean them if needed. And despite our rigorous calibration process and high level of ruggedization of our sensor pods, miscalibration is always possible during a truck’s journey due to a number of factors. To address this, our team has developed an online calibration system, which enables the Aurora Driver to detect and measure miscalibrations and recalibrate while on the road. Together, these examples provide a small window into how we are building the Aurora Driver’s perception system to be consistently high performance when on the road. Along with our work to mature our hardware and close our safety case, we continue to focus on operationalizing our product to enable our customers to experience Aurora Horizon as it is designed to operate at launch. We recently debut our first commercial ready terminal, setting a new standard for commercial operations in the autonomous trucking industry. Our next generation South Dallas terminal offers innovative features and services to support our launch and optimize asset utilization for our customers. This includes having specific capabilities such as sensor calibration, high speed data offload and zone, specifically designated for launching and landing autonomous trucks. The onsite maintenance program, we previously announced with Ryder is a key component of this as well. In addition to traditional services like fueling and waste stations to avoid additional stops while on route. We expect to complete a similar build out of our Houston terminal in the third quarter. By operating with pilot customers today, we’re able to refine our processes to support maximizing the value Aurora Horizon can deliver to their businesses. With strong demand to integrate into their networks during the first quarter, we provided initial allocations of our launch capacity to our pilot customers. Together, we will refine the allocations over the coming months with the intent to be contracted by the end of the year. We also held our first customer summit last week in Dallas, where we hosted pilot customers and partners offering a chance to spend time with our leaders, learn more about our products deployment, and discuss preparations in advance of commercial launch. At the summit, we announced our commercial readiness program, which will give our pilot customers the opportunity to more deeply evaluate and assess the Aurora Driver’s performance, as a final step to move towards forward with driverless operations. This program is expected to follow our achievement of the Aurora Driver Ready milestone. During the first quarter, our pilot activity exceeded our target to autonomously haul 40 loads per week for our customers. As we continue to scale our operations, we’ve already achieved our second quarter goal of 50 loads per week and are now logging over 14,000 commercial miles per week. Cumulative to date, through April 30, we have autonomously delivered under the supervision of vehicle operators, 1,635 loads, driving more than 455,000 miles with 98% on time performance for our pilot customers, including FedEx, Werner, Schneider, and Uber Freight. Yesterday, we announced a new partnership with Hirschbach, a leader in refrigerated trucking to test and safely deploy autonomous trucking for refrigerated cargo further expanding our commercial pilots. Aurora’s ability to support critical time sensitive refrigerated goods expands the network of carriers and shippers who can benefit from the advantages of Aurora Horizon. Richard Stocking Co-CEO of Hirschbach is also a member of our Industry Advisory Council and has had a front row seat to the development of our technology and the maturing of our operations, giving him the confidence in our technology and our ability to deliver perishable goods safely and on time. We expect refrigerated trailer capability to be one of the many future growth enablers following commercial launch as we demonstrate the ability of autonomous trucks to dramatically expedite shipping of critical time sensitive freight like fruits, vegetables, and other perishable goods. We also continue to engage with regulatory agencies and law enforcement organizations to ensure alignment on key opportunities for driverless operations. During the first quarter, in conjunction with Waymo and with the sport of other companies in the AV industry, we filed an exemption application with the Federal Motor Carrier Safety Administration or FMCSA, which if approved would allow autonomous trucks to use a set of cap mounted warning beacons in lieu of traditional warning devices such as reflective triangles or flares to alert other vehicles when the truck is stopped on the road. Waymo’s independent study conducted by the Virginia Tech Transportation Institute and Aurora’s own study were both submitted with the application and demonstrate that our proposed solution would provide a level of safety equal to or greater than the level of safety provided by traditional warning devices. We also recently shared details of our first-of-its-kind pilot with U.S. Customs and Border Protection to prepare for autonomous operations on our second planned lane, Fort Worth to El Paso. Through work at the Sierra Blanca Border Patrol Station outside El Paso, Aurora and agency officials have developed innovative protocols to enable safe and seamless inspections of autonomous trucks. Initiating this pilot required aligning logistics, regulatory and law enforcement priorities. In what we believe was a world’s first, during the first quarter, the Aurora Driver successfully passed through the Sierra Blanca Border Patrol Station autonomously. Turning to our vehicle programs, our work with our truck OEM partners, PACCAR and Volvo Trucks also continues to progress in preparation for our anticipated commercial launch by the end of 2024. In the first quarter, together with PACCAR, we continue to make progress in the design and planning for the launch of series production trucks built to integrate with and be operated by the Aurora Driver. In support of this development, PACCAR operated trucks with the Aurora Driver installed on the PACCAR Technical Center proving grounds, collecting data that is being used to validate that the integrated scalable autonomy enabled truck can achieve its target reliability metrics. Additionally, during the first quarter, Volvo Autonomous Solutions or V.A.S. announced its first carrier customer to reserve autonomous freight capacity on the V.A.S. network. This is an exciting development for both the autonomous trucking industry and our companies as we continue to work together on the development of V.A.S.’s autonomous transportation solution powered by the Aurora Driver. In addition to our significant technological and commercial progress during the first quarter, we also welcome Gloria Boyland to our board of directors. Gloria brings extensive logistics industry experience gained over 20 years as a senior executive at Fortune 50 companies, including more than 15 years at FedEx. Her insights, technical understanding and unique perspective will be tremendous assets as we work toward commercial deployment of our technology. Lastly, in March, we had the opportunity to participate in South by Southwest in Austin, Texas. As one of the year’s premier interactive technology and education events, Aurora, PACCAR and Schneider were invited to speak about how autonomous vehicles will shape the future of transportation. During the session, Schneider Executive Vice President and Chief Administrative Officer, Rob Reich, spoke about Schneider’s confidence in working with Aurora. While PACCAR Chief Technology Officer John Rich was clear and unequivocal in his support of our thoughtful, transparent approach to autonomous vehicle safety. I encourage you to watch the complete session, which is available on our website. It provides great perspective from both our OEM partners and customers. 2023 is proving to be a pivotal year for Aurora with the achievement of our significant future complete technology milestone, our exciting partnership with Continental and continued progress in advancing our overall business to effectively commercialize our self-driving technology. The balance of this year will be an energizing drive to close the Aurora Driver Safety Case and achieve our Aurora Driver Ready milestone by the end of the year. We’re already making great progress, which in turn prepares us for our anticipated commercial launch by the end of 2024. I couldn’t be more excited by Aurora’s progress and how we have strengthened our leadership position in this emerging industry. With that, I’ll now pass it over to Richard who review our financial results.

Thank you, Chris. With the achievement of the feature complete milestone during the first quarter of 2023 and our intensive focus on closing the Aurora Driver Safety Case this year, we continue to balance execution against our roadmap to launch Aurora Horizon on our planned timeline with fiscal prudence. First quarter 2023 operating expenses including stock based compensation totaled $208 million. Excluding stock-based compensation of $39 million, operating expenses totaled $169 million. Within operating expenses, R&D expenses excluding $34 million in stock-based compensation, totaled $143 million. SG&A expenses excluding $5 million in stock-based compensation were $26 million. With the Aurora Driver in the final phase of refinement and validation and all revenue under the collaboration framework agreement with Toyota previously recognized, we did not record any revenue during the first quarter of 2023. We used approximately $136 million in operating cash during the first quarter of 2023, which was in line year-over-year. During the first quarter of 2022, we received the cash inflow of $48 million under the collaboration project plan with Toyota, which was substantially offset by payments associated with the 2021 annual incentive compensation program. The first quarter of 2023 was not impacted by these cash activities and the 2022 incentive compensation program payments were made subsequent to March 31, 2023. Capital expenditures totaled $2 million in the first quarter of 2023. We ended the first quarter with a very strong balance sheet, including $966 million in cash and short-term investments. We remained focused on constraining expenditures were possible while continuing to invest in the critical work on our path to commercialization. In turn, we continue to expect our liquidity to fund Aurora through mid-2024. With that, we’ll now open the call to Q&A.

And at this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tom White with D.A. Davidson. Please proceed with your question.

Hey, this is Wyatt on for Tom. Thanks for taking our questions. Congrats on reaching the future complete milestone last month. I’ve got a question on the broader macro backdrop and interest rate environment. I’m curious as to your thoughts about whether the spike in interest rates has impacted the development of autonomous driving technologies at a high level industry wide in areas like investments by competitors and maybe hiring or maybe in terms of appetite from partners, carriers and shippers to continue invest – to continue to invest heavily in the space this year. Maybe I guess put more simply, how have these trends impacted Aurora’s business so far?

Yes. I think that’s obviously a great question. So internally, we continue to be financially prudent. We’re putting continued effort in managing costs and ensuring that we’re thoughtful in that, while not slowing down the progress towards achieving our critical milestones and getting the product on the road. I think the – as many have said, difficult times allow you to see who’s – I guess, who’s tough and who knows what they’re doing and the progress that’s being made there, and I think we’re seeing that across the industry where we feel like our position of strength is just getting bigger, right, we’re able to continue to execute. We have the war chest we need to do so and we see a number of our competitors stumbling. The customer summit we had last week was a great event. We’re able to bring together both folks from PACCAR and from a number of our customers and seeing their enthusiasm for what this product will mean to their business. Their engagement was, frankly, energizing. And so we had a wonderful day with those folks and we’re able to get them out in the trucks and get them to experience the technology firsthand, and I think they left with a sense of just how real this is and how soon we’re going to be able to deliver on what we’re talking about here.

Great. And then with regards to the debut of your next generation terminal in South Dallas, could you maybe talk a bit about how many of these terminals you see being built over the next, say three to five years? How much it costs to build one and to what extent that was kind of baked into the financial forecast that you have shared, over the past couple of years and during the de-SPAC process?

Sure. So we – right now we operate four terminals and we’re incrementally developing them and using them really as a learning property. Our intent is to minimize the number of terminals over time. Part of our thesis is that the right way to deliver this business is to work through partnerships and work to be an asset light business. And so we’ll see what that turns into in terms of terminal count. We’re not sharing specifics of that today. We haven’t provided financial guidance, but our – in our internal budgeting for this, and as we talk about our run rate through mid-2024, the cost associated with the flowing the terminals that we have planned is included in that. And Richard, if you’d add more to it.

Yes. We wouldn’t be reaffirming any of the guidance from what we’ve said in the past at this point, but our financial plans assume some build out of a terminal network, and I think the thing that we have done, which is relevant to the question over the past year, is really sort of understood what we need from a terminal versus what we might have liked from a terminal. So every decision we make on these terminals is to make sure that they do what we need them to do and they don’t have the sort of the bells and whistles that you could put in there. They’re kind of core to how we want to run the business. So we – they’re – so we have –they’re in the – there’s not really – they were in the plan and we’re spending less money than we thought we had them in the plan for earlier.

Okay, great. And then just one more for me, Richard, could you maybe share your latest views on recent cash burn trends, how we should think about the next 12 to 18 months and your latest thinking as to the capital you need to really ramp the commercial launch of your product?

Yes, sure. So I think as we mentioned in the prepared comments and just earlier, we’re very focused on fiscal – being fiscally prudent. We think that that helps us now and we think that it’ll help us into the future as we build a business. We’re very pleased to have the financial resources that we have on the balance sheet. We ended the quarter with $966 million, which we still feel gets us through mid-2024. As you look at the sort of the financial burn projections, we continue to be relatively stable and that is something that we’ve said in the past, which is investments that we made earlier and kind of grow into a scale that we think we need to be at to execute against our roadmap that’s been made. So we’re able to kind of keep our cash burn relatively flat. And you see that, again, we’re not going to give financial guidance as to what we need into the future but we’ve got enough money to get through mid-2024, continue to execute against our roadmap, and that we believe that that executing against a roadmap against the backdrop of what’s happening across the rest of the industry and some of the competitors not doing so well, maybe fallen away, sets us up really nicely to be able to raise the money that we need to continue to commercialize and beyond on an opportunistic basis.

Understood. Thank you very much.

[Operator Instructions] Our next question comes from the line of David Vernon with Bernstein. Please proceed with your question.

Hey guys, good afternoon. Just a couple questions for you on the Continental partnership. I’m just trying to get my head around this. So are they going to be like subcontractors in terms of building up the manufacturing capacity you need to deliver hardware kits? Is that kind of the right way to think about it as almost like a contract manufacturing set up?

Yes. I think of it as a little deeper than that. So the model that we’re engaged with them on is a hardware as a service model. So as you know, our intent is to operate our business is drivers as a service. Someone will buy a truck from one of our OEM partners, they’ll buy Peterbilt 579, they’ll get it with your Aurora Driver subscription on it. They’ll pay us based on the utilization of that, that driver. That driver includes the hardware cost, the cost of operating the service and our insurance, et cetera, and obviously our profit out of that. What we’ve found – what we’ve been able to put together with Continental is a first of its kind deal where that hardware as a service layer is in there where we will pay Continental a revenue stream per mile driven that’ll come out of that driver’s service fee. And that’s how they will recoup their NRE, their investment in developing the manufacturing line, the hardware costs themselves, service warranty and the like. And so we’ll be working with them to specify the requirements for the system. They’ll be elements of hardware like the FirstLight Lidar, where we will work with them to industrialize it and be able to produce it at scale. And then they will ship kits to our OEM partners who will install them line side and then they’ll – again the money will come back to them from us through our revenue stream.

Okay. And does that change the way you were thinking about sort of initially selling the kit, was it always going to be contemplated as the hardware would be a component of the per mile fee, or was there also going to be a you can buy the kit kind of thing? So I’m just trying to think about how this affects [indiscernible] customer.

No, this is 100% aligned with the vision, right? That this is our model was always going to be, we want to be a asset light as a service business. We think that is the way that we can best support our customers and partners and the way we best align incentives, right? We’re not stepping on anyone’s toes and they’re not stepping on ours. And we get to focus on what we do best. And so what’s really exciting about this deal is, Continental is investing already, right? Real people, real money to develop this kit so that it’ll be able to come to the fleet on time. In the interim, of course, we have our hardware that’s on vehicles today and we’ll be developing and are already developing the interim hardware kit that will bridge from where we are to there. And each one of these steps in hardware kit will reduce the – our cost of the driver.

Okay. And then maybe one last one for me is, when you think about separating out your initial allocation of capacity, is there a way you can share with us the how much the total is that we’re being allocated around the expected additional launch date?

No, I don’t think, what we’ve shared I think previously and we as consistent is that we have more demand indication than we have supply for through 2025. And we’re at this point not providing further guidance in that.

Okay. I figured I’d give it a shot. Thank for your time.

Yes. Thank you for the great questions.

And we have reached the end of the question-and-answer session. This also concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.