Aurora Innovation, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Amounts are in millions of dollars, except per-share data and where noted. Aurora is developing its Aurora Driver autonomous-driving platform and has not yet established commercial revenue at scale.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $3 | $0 | $66 |
| Research and development expense | $182 | $170 | $546 | $508 |
| Selling, general and administrative expense | $30 | $33 | $91 | $98 |
| Total operating expenses | $212 | $203 | $637 | $1,606 |
| Operating loss | $(212) | $(200) | $(637) | $(1,540) |
| Net loss | $(190) | $(198) | $(604) | $(1,429) |
| Basic and diluted net loss per share | $(0.13) | $(0.17) | $(0.48) | $(1.26) |
- Cash and liquidity: At September 30, Aurora had $953 cash and cash equivalents and $518 short-term investments, totaling $1,471 in available liquidity; restricted cash was an additional $18. Total current assets were $1,482 and current liabilities $91.
- Cash flow: Operating cash use was $465 for the first nine months, versus $367 in 2022. Investing activities provided $332, mainly from net maturities of short-term investments. Financing activities provided $827. Cash, cash equivalents and restricted cash ended at $971.
- Debt and obligations: The balance sheet reports no borrowings or debt. Total liabilities were $220, including operating lease liabilities of $125 and derivative liabilities of $11. Lease payments for leases not yet commenced were $32.
- Margins: No meaningful revenue-based margin is available because reported revenue was zero in 2023. Operating expenses were primarily research and development, including non-cash stock-based compensation of $123 for the first nine months.
Changes versus the prior comparable period
- Revenue fell to zero after Aurora recognized all revenue associated with prior Toyota collaboration payments by December 31, 2022. The prior-year periods included $3 revenue in Q3 and $66 for the first nine months; Aurora said it had received $100 in Toyota collaboration payments during the first nine months of 2022.
- Q3 net loss narrowed by $8 to $190, despite operating expenses rising $9, primarily because other income increased to $17 from $5 and the fair-value change in derivative liabilities was income of $5 rather than expense of $3.
- Nine-month net loss narrowed by $825 to $604. Comparisons are significantly affected by the $1,000 goodwill impairment recorded in 2022, which did not recur, as well as prior-year derivative fair-value income of $103 versus a $7 expense in 2023. R&D expense increased 7% to $546.
- Cash and cash equivalents increased from $262 at December 31, 2022 to $953 at September 30, 2023, while short-term investments declined from $839 to $518. The improvement in funding reflected third-quarter equity raises.
Outlook, management commentary and risks
- Management expects continued operating losses and says the company may need to raise additional capital to develop and commercialize the Aurora Driver. It believes available liquidity is sufficient for working capital and capital expenditures for at least 12 months from the filing date. No specific revenue, earnings, cash-flow or commercial-launch guidance is provided in the supplied filing text.
- Aurora raised approximately $853 gross and $828 net in July 2023 through a private placement and public offering, including the over-allotment. The transactions issued approximately 306 million Class A shares in total; the private placement netted $584 and the public offering netted $244.
- Aurora plans to launch Aurora Horizon, a driverless trucking subscription service, before expanding to passenger mobility and local delivery. Its intended longer-term Driver as a Service model would charge per mile and rely on partners to own and operate fleets; Aurora expects initially to operate a limited fleet itself.
- Aurora amended and restated its strategic partnership with Continental in September 2023. Continental is expected to provide production, provision and lifecycle support for future-generation Aurora Driver hardware, with Aurora paying on a per-mile basis. The agreement runs through March 31, 2031 and includes defined, limited exclusivity periods.
- Key risks include technology and safety challenges, commercialization and regulatory delays, uncertain adoption and unit economics, ongoing cash burn and access to future financing, competition, and reliance on Continental and other single-source suppliers. Management specifically identifies Continental as the supplier for future-generation hardware; other single-source components include GPU chips, vehicle gateway controllers and radar sensors.
- Other notable exposures include potential dilution and share-price volatility, dual-class voting control, cybersecurity and product-liability risks, and non-cash earnings volatility from remeasurement of warrant and other derivative liabilities. No material loss contingencies were recorded for the periods presented; ordinary-course legal matters were not considered material by the company.
- Management reported disclosure controls and procedures were effective as of September 30, 2023 and no material change in internal control over financial reporting occurred during the quarter. Aurora expected to lose emerging growth company status as of December 31, 2023.
Investor verification priorities
- Track quarterly operating cash use against the $1,471 of cash and short-term investments, and verify whether the stated 12-month liquidity outlook changes as commercialization spending evolves.
- Verify progress, safety validation, regulatory approvals and timing for Aurora Horizon; the filing gives no specific launch-date guidance here.
- Assess Continental’s hardware development and production milestones, agreement terms and Aurora’s ability to qualify alternatives if supply is disrupted.
- Monitor future revenue sources and the transition from Aurora-operated early fleets to the partner-operated, per-mile Driver as a Service model.
- Evaluate dilution and potential resale supply following the July 2023 offerings, equity compensation and registration of private-placement shares; also note founders held 46% of voting control at September 30.
- Separate operating performance from non-cash items when comparing periods, especially the 2022 goodwill impairment and derivative fair-value changes.