Aurora Innovation, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Financial statements are unaudited; dollar amounts below are in millions unless otherwise noted. Aurora is developing the Aurora Driver autonomous-driving system and had not yet begun commercial operations. Its reported revenue was collaboration revenue, primarily under its Toyota agreement.
Key financial results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $2.9 | $55.6 | $65.6 | $55.6 |
| Research and development expense | $170.5 | $158.1 | $508.4 | $477.1 |
| Selling, general and administrative expense | $32.5 | $25.9 | $97.0 | $80.2 |
| Goodwill impairment | — | — | $1,000.1 | — |
| Operating loss | $(200.1) | $(128.4) | $(1,539.8) | $(501.7) |
| Net loss | $(198.2) | $(133.3) | $(1,429.2) | $(503.8) |
| Basic and diluted loss per share | $(0.17) | $(0.25) | $(1.26) | $(0.96) |
- Revenue and period comparison: Q3 collaboration revenue fell 94.8% year over year because fewer hours were incurred on the Toyota project. Nine-month revenue rose 18.0% as project hours increased. Aurora had received all Toyota agreement payments by quarter-end; it reported $148.2 million of cumulative revenue against $150.4 million of cash payments received.
- Margins: The filing does not present gross profit or gross margin. Revenue was small relative to research and development and administrative expenses; consequently, Aurora continued to report substantial operating and net losses.
- Cash flow: Net cash used in operating activities was $367.8 million for the first nine months, versus $420.9 million in the prior-year period. Investing activities used $765.8 million, principally reflecting net purchases of short-term investments; financing provided $10.4 million. Cash, cash equivalents and restricted cash declined by $1,123.2 million to $503.0 million. The decline includes cash deployed into investments and should not be read as operating cash burn alone.
- Liquidity and balance sheet: At September 30, Aurora had $486.6 million of cash and cash equivalents and $750.7 million of short-term investments, or $1,237.3 million combined, excluding restricted cash. Total assets were $2,254.2 million; total liabilities were $221.8 million; stockholders’ equity was $2,032.4 million. The filing reports operating lease liabilities of $138.2 million and no conventional borrowings in the presented balance sheet.
Material changes and unusual items
- Aurora recorded a $1,000.1 million non-cash goodwill impairment in Q2 2022 after a significant decline in its share price and market capitalization. Goodwill carrying value was $113.7 million at September 30. Further impairment could result from future adverse market or company-specific conditions.
- Derivative-liability fair-value changes generated a $103.1 million gain for the nine months, primarily reflecting changes in the underlying share price; the Q3 change was a $2.6 million loss. These non-cash remeasurements can make reported earnings fluctuate.
- Other income was $7.6 million for the nine months, mainly interest earned on short-term investments, compared with other expense of $4.7 million in the prior-year period.
- Stock-based compensation was $112.3 million for the nine months. Outstanding unvested RSUs and options, along with warrants and earnout shares, may contribute to future dilution.
Outlook, management commentary and risks
- Management said cash and short-term investments were expected to cover working capital and capital expenditure needs for at least 12 months from the November 2, 2022 filing date. It also expects continuing operating losses and stated that additional capital may be needed to fund development and commercialization.
- Aurora’s stated plan is to launch Aurora Horizon, a driverless trucking subscription service, before pursuing passenger mobility through Aurora Connect and, longer term, local goods delivery. Its intended Driver as a Service model relies on partners to own and operate vehicles and related infrastructure; early commercialization may involve a limited Aurora-operated fleet.
- There is no specific financial guidance in the provided filing text. Commercialization timing, technical and safety performance, regulatory approvals, market acceptance, partner execution, unit economics, competition, supplier availability and access to future capital are identified as significant uncertainties.
- The company reported no material litigation losses or other material losses for contingencies in the periods presented. It stated that pending ordinary-course claims were not considered material. Disclosure controls were assessed as effective at September 30, 2022, with no material change in internal control over financial reporting reported for the quarter.
- Class B shares carry ten votes per share versus one vote for Class A; the founders held 48% of voting control at September 30, 2022. The filing also highlights potential volatility from share-price changes, warrant accounting, future equity issuance and sales as lock-up restrictions expire.
Most important facts for investors to verify
- Whether Aurora’s cash and Treasury investment portfolio, operating cash use and future funding access remain consistent with management’s stated 12-month liquidity expectation.
- Progress and timing toward Aurora Horizon commercialization, including safety validation, regulatory approvals and any changes to the product roadmap.
- Whether Toyota and other strategic partners convert development relationships into durable commercial arrangements, and whether third parties can support the planned asset-light model.
- Future spending, revenue conversion and unit economics, including the impact of stock-based compensation and potential dilution from equity awards and warrants.
- Further goodwill impairment exposure and the effect of recurring warrant and earnout fair-value changes on reported results.