Aurora Innovation, Inc. — Q2 2022 Form 10-Q
Business context and reporting period. For the quarter and six months ended June 30, 2022. Aurora is developing autonomous-driving hardware, software and data services, with commercialization not yet underway at scale. Its planned model is primarily Driver as a Service, initially targeting driverless trucking; it expects to begin with a limited company-operated fleet. The filing reports collaboration revenue under its Toyota agreement, not commercial product revenue.
Key financial results
Amounts below are in millions of dollars except per-share data. Cash flow and income statement comparisons are for the six months ended June 30.
| Metric | Q2 2022 / June 30, 2022 | Comparable period / Dec. 31, 2021 |
|---|---|---|
| Collaboration revenue | $20.7 for Q2; $62.7 for six months | $0 for Q2 and six months in 2021 |
| Research and development | $183.8 Q2; $337.9 six months | $159.8 Q2; $318.9 six months in 2021 |
| Selling, general and administrative | $33.5 Q2; $64.5 six months | $21.6 Q2; $54.3 six months in 2021 |
| Goodwill impairment | $1,000.1 in Q2 and six months | None reported in 2021 |
| Net loss | $1,154.2 Q2; $1,231.0 six months | $181.8 Q2; $370.4 six months in 2021 |
| Net loss per share | $1.02 Q2; $1.09 six months | $0.34 Q2; $0.72 six months in 2021 |
| Operating cash flow | $(225.4) six months | $(283.0) six months in 2021 |
| Cash, cash equivalents and short-term investments | $1,378.8 | $1,610.1 cash and equivalents at Dec. 31, 2021; no short-term investments reported |
| Total assets / stockholders’ equity | $2,401.4 / $2,190.0 | $3,690.1 / $3,341.7 at Dec. 31, 2021 |
Operating margin is not meaningfully indicative of a scaled business: Aurora recorded an operating loss of $1,196.6 million in Q2, dominated by the noncash goodwill charge. Excluding that charge, Q2 operating expenses were $217.3 million against $20.7 million revenue. No funded debt is listed on the balance sheet; operating lease liabilities totaled $137.5 million, including current and long-term amounts.
Changes, liquidity and unusual items
- Revenue reflects work performed under the Toyota collaboration. Aurora recognized $145.3 million cumulatively through June 30 and had received $145.4 million in cumulative payments; it expected the remaining $5.0 million payment in 2022.
- Goodwill impairment of $1,000.1 million followed a significant decline in Aurora’s share price and market capitalization. Goodwill fell from $1,113.8 million at year-end to $113.7 million.
- Six-month operating cash use improved by $57.5 million year over year, with $95.4 million received under the Toyota agreement contributing to cash flows. Investing activities used $842.4 million, primarily because of net purchases of short-term investments; financing activities provided $7.3 million.
- Noncash gains from changes in fair value of derivative liabilities were $39.9 million in Q2 and $105.7 million for six months, primarily reflecting changes in the underlying share price. These gains reduced reported net loss but did not represent operating cash generation.
- Cash and cash equivalents were $549.4 million and short-term investments were $829.4 million at June 30; restricted cash was $16.4 million in total. Management said these resources should meet working-capital and capital-expenditure needs for at least 12 months from the August 12, 2022 filing date, while noting that additional capital may be needed opportunistically.
Outlook, risks and other disclosures
- No specific financial guidance or commercialization date is provided in this filing. Management expects continuing operating losses and substantial development and commercialization spending; it states losses may rise as activities scale.
- Key risks include technical and safety challenges, delays in regulatory approvals or commercialization, competition, uncertain customer adoption and unit economics, dependence on partners and suppliers, and the possibility of needing additional financing on acceptable terms.
- A delay in shifting to a partner-operated Driver as a Service model, or a need for Aurora to operate more vehicles or facilities itself, could increase capital requirements.
- Management reported disclosure controls and procedures were effective as of June 30, 2022, with no material change in internal control over financial reporting during the quarter. The company reported no material litigation losses and no material pending legal proceedings.
- Class B shares carry ten votes each versus one vote for Class A; founders held 49.0% of voting control at June 30. Stock-based compensation and outstanding equity awards also present potential dilution.
Important facts for investors to verify
- Progress, milestones, payment timing and remaining obligations under the Toyota collaboration, and how much revenue is recognized from it.
- Cash burn and investment maturity profile, and whether the stated liquidity runway remains adequate as development and commercialization costs evolve.
- Commercialization timing, safety validation, regulatory requirements and the status of OEM, fleet and logistics partnerships.
- Assumptions supporting the remaining goodwill carrying value and whether further share-price declines could trigger additional impairment.
- Potential dilution from equity compensation, warrants and share issuance, alongside the effect of the dual-class voting structure.