Aurora Innovation, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Aurora develops autonomous-driving hardware, software and data services; it had not yet launched commercial driverless services and remained focused on research, development and commercialization.
Financial performance
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Collaboration revenue | $42.0 million | $0 |
| Research and development expense | $154.1 million | $159.1 million |
| Selling, general and administrative expense | $31.1 million | $32.7 million |
| Operating loss | $143.1 million | $191.8 million |
| Net loss | $76.8 million | $188.6 million |
| Net loss per share | $0.07 | $0.39 |
| Cash used in operating activities | $135.8 million | $151.0 million |
Revenue came from the Toyota collaboration. The company reported a $65.8 million gain from changes in fair value of derivative liabilities, a non-cash item that materially reduced the reported net loss. The filing does not provide a clear gross margin figure.
Financial position and liquidity
- Cash and cash equivalents were $504.3 million; short-term investments were $964.4 million at March 31, 2022. Together they totaled $1.47 billion, excluding restricted cash.
- Total assets were $3.53 billion and total liabilities were $239.5 million. The filing reports no conventional borrowings; liabilities include operating leases, warrants and earnout shares.
- Operating lease liabilities totaled approximately $145.4 million, current and long-term combined.
- Cash, cash equivalents and restricted cash ended the quarter at $520.7 million. Investing activities used $971.6 million, primarily because Aurora purchased $966.1 million of short-term investments.
- Accumulated deficit was $1.17 billion. Management expected operating losses to continue for at least the next 12 months, but stated existing cash and investments were sufficient for working capital and capital expenditure needs for at least 12 months from the report date.
Changes versus the prior period
- Collaboration revenue increased by $42.0 million from zero, reflecting the Toyota project plan signed in August 2021.
- Operating expenses declined 3.5%; R&D declined 3.2% and SG&A declined 5.0% year over year.
- Net loss narrowed by $111.8 million, substantially reflecting the derivative-liability fair-value gain in Q1 2022, as well as new collaboration revenue and lower operating expenses.
- Operating cash use improved by $15.2 million year over year. The company cited collaboration cash receipts and the absence of prior-year acquisition-related professional fees as factors.
- Cash and cash equivalents fell from $1.61 billion at year-end to $504.3 million, while short-term investments increased from none to $964.4 million, largely reflecting a shift into investments rather than equivalent operating cash consumption.
Outlook, risks and other notable items
- Aurora targeted first driverless commercialization in trucking in late 2023 and ride hailing in late 2024. These are forward-looking milestones, not assured outcomes.
- The company expects ultimately to use a Driver as a Service model and earn fees per mile, supported by partners that own and operate vehicles. It expects to operate a small fleet itself during early commercialization.
- Toyota had paid $97.5 million through March 31, 2022; Aurora expected to receive the remaining $52.5 million during 2022. Q1 operating cash flows included $47.5 million received in connection with the collaboration.
- Purchase obligations were scheduled at $47.5 million for the remainder of 2022, followed by $64.4 million in 2023, $62.5 million in 2024, $64.0 million in 2025 and $27.1 million in 2026.
- Key risks include technical and safety challenges, commercialization delays, regulatory approvals, competition, dependence on partners and limited-source suppliers, cybersecurity, and the possibility of needing additional capital.
- Equity compensation and potential dilution are significant: 66.4 million RSUs and 74.2 million options were outstanding at quarter-end, alongside 21.1 million warrants. Class B shares carry ten votes per share; the founders held 45% of voting control as of March 31, 2022.
- Management concluded disclosure controls were effective as of March 31, 2022. The filing reported no material change in internal control over financial reporting and no material pending legal matters.
Important facts for investors to verify
- Progress against the late-2023 trucking and late-2024 ride-hailing commercialization targets, including safety, regulatory and partner milestones.
- Whether Toyota payments are received as expected and how collaboration revenue and contract assets develop.
- Cash burn, investment balances and management’s liquidity assumptions as development and commercialization spending continues.
- Whether the Driver as a Service partner model and projected unit economics are achieved, including the scale of Aurora’s own fleet operations.
- The effects of stock-based compensation, potential share issuance, warrants and dual-class voting control on existing shareholders.
- Quarterly earnings volatility from remeasurement of warrant and earnout liabilities, which produced a significant non-cash gain in this period.