Aurora Innovation, Inc. (NASDAQ:AUR) Q3 2024 Earnings Call Transcript

Aurora Innovation, Inc. (NASDAQ:AUR) Q3 2024 Earnings Call Transcript October 30, 2024

Aurora Innovation, Inc. misses on earnings expectations. Reported EPS is $-0.13 EPS, expectations were $-0.11.

Operator: Greetings and welcome to the Aurora Third Quarter 2024 Business Review Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacy Feit, Vice President of Investor Relations. Thank you, Stacy. You may begin.

Stacy Feit: Thanks, Paul. Good afternoon, everyone and welcome to our third quarter 2024 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 David Maday, CFO. Chris will provide an update on the progress we have made across the key pillars of our business and David will recap our third 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 the call, we will be making forward-looking statements. This includes statements relating to the benefits of integrating artificial intelligence into our product, the safety benefits of our technology and product, the achievement of certain milestones around and realization of the potential benefits of the development, manufacturing, scaling and commercialization of the Aurora Driver and related services, including relationships and anticipated benefits with partners and customers and on the timeframe we expect or at all the market opportunity, the expected future market size, our product compatibility with those with partners and customers, our expected market share, the efficiency of our validation process, our remote assistance, efficiency for driverless operations and profitability of our products and services, regulatory tailwinds and framework in which we operate, expected cash runway and overall future prospects.

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, 2023 filed with the SEC as amended as well as current uncertainty and unpredictability in our business, the markets and economy. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2024. 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 maybe 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’ll now turn the call over to Chris.

Chris Urmson: Thanks, Stacy. Today, we stand on the brink of a new era in mobility, in logistics, and will bring – that will bring a safer, more efficient and more accessible future for everyone. With commercial launch now within sight, we are closer than ever to unlocking the benefits of the Aurora Driver for our customers and the motoring public. We are excited that the broader industry shares our vision. Enthusiasm for our technology continues to build among many of the industry’s most respected carriers. This sentiment was particularly evident at our recent partner summit and is further underscored in our commercial contracting progress. With another launch customer signed, our expected launch capacity is now fully contracted and we are in the final stages of contracting our remaining second half capacity to match our anticipated supply.

Importantly, with the support of many of Wall Street’s largest institutional investors, we completed another successful capital raise in August, adding nearly $0.5 billion to our balance sheet. This incremental capital extends our runway well into 2026 and we expected to fund the initial phases of our scaling strategy. As we press towards commercial launch, we continue to lead the industry with our commitment to safety and autonomy performance transparency. To begin driverless operations, we must close our safety case for the Dallas to Houston launch lane. Our safety case framework is a comprehensive evidence-based approach to confirming that our self-driving vehicles are acceptably safe to operate on public roads. We quantify our progress toward closing our Dallas to Houston launch lane safety case through the Autonomy Readiness Measure, or ARM, which is a weighted measure of completeness across all claims in the safety case for our launch lane.

We remain the only company in the industry that has provided this level of transparency. As of the end of October, ARM was 97%. With our most recent software release, we have validated majority of highway driving. We are now primarily focused on final behavior refinement and validation for components of surface streets that we sequenced later in our work plan, some rarer construction elements, and closing a small number of vehicle claims, specifically related to redundant systems. Validation of the Aurora Driver’s perception system is virtually complete, with over 400 modes validated and just 6 remaining. The perception capabilities are truly outstanding, not just in everyday conditions, but also in just about any condition the world throws at it.

On Page 5 of our presentation, we have shared a collection of our challenging scenarios that while rare, do occur. In one case, the Aurora Driver detects a motorcycle speeding down the road at an astonishing 150 miles per hour. In another, it’s brought someone lying under a car on the freeway from over 150 meters away. The Aurora Driver also skillfully tracks a work convoy blocking multiple lanes. And in one of the most unpredictable and dangerous scenarios, it detects a jaywalking pedestrian suddenly emerging from behind trees on a dark, rainy night when visibility on the highway is very limited. Each of these situations poses extreme danger, whether due to a small, high-speed actor, low profile individuals that a human driver would likely not notice, in-motion work crews or poor visibility and erratic pedestrian movement.

Yet in every case, the Aurora Driver commonly perceives the scenario. These perception capabilities enable the Aurora Driver to navigate the complex environments it encounters. In the video on Page 6 of the presentation, you can see the Aurora Driver’s superhuman perception capabilities on the road. The Aurora Driver is navigating heavy traffic on I-45 just outside of Houston and the Texas motorcycle 100 meters behind illegally lane splitting through a narrow space between trucks. The Aurora Driver quickly identifies the motorcycle as what we refer to in the self-driving industry, a vulnerable road user and adjusts creating as much space as possible. Unlike the human driver who would likely focus on the vehicle directly ahead and not anticipate this behavior from behind, the Aurora Driver has 360-degree awareness and could respond proactively to mitigate danger.

Similarly, in the video on Page 7 of our presentation, we see the Aurora Driver traveling through Huntsville, Texas on a dark night at speed from 230 meters away, it detects a person attempting to run across the highway and immediately takes action, slowing down while lane changing away from the pedestrian’s path to create additional safe space. Once it is safely passed, the Aurora Driver merges back into its preferred travel lane, successfully navigating this complex, very high-risk scenario with precision and care. With further confidence in the Aurora Driver’s performance, we are transitioning to single vehicle operator for some of our commercial loads as we approach diverless operations. This operating mode also provides the discipline to fully implement our remote assistance capabilities and supports our analysis for remote assistance efficiency for driverless operations.

Based on our current modeling, we expect to be able to operate at least 10 trucks per remote assistance specialist by the end of 2025, which is a meaningful threshold that supports our path to achieving positive gross profit. We expect to continue increasing this ratio throughout 2026 and beyond. Another key metric we use to assess the Aurora Driver’s performance and commercial readiness is the autonomy performance indicator, or API. The indicator penalizes the use of onsite support, which will be the most expensive support provided to enable the Aurora Driver. We are focused on driving up the percentage of commercial loads that did not require any form of onsite support, which we refer to as 100% API loads. As a reminder, we do not anticipate that aggregate API will ever reach 100% even at launch, because certain situations will always require onsite support.

However, we believe the percentage of 100% API loads is a strong indicator of our progress toward commercial launch and we expect this metric to reach approximately 90% by commercial launch. During the third quarter, 80% of the commercial loads on the Dallas to Houston launch lane had 100% API, which is a 5 percentage points higher than last quarter and consistent with the performance we saw in the June stable software release. To supplement our internal ARM and API metrics, during the third quarter, we invited leading authorities and commercial drivers’ license training and evaluation, J.J. Keller and Road Master to assess the Aurora Driver’s proficiency. They evaluated our system as they would assess a traditional truck driver and found the Aurora Driver performed exceptionally well, meeting or surpassing the standards expected of a professional driver.

We feel good about our progress and are confident in our ability to close the safety case for driverless operations on our launch lane. With additional visibility on the time needed to complete the aforementioned remaining validation, we now expect to launch commercially in April 2025. While this is modestly later than we had intended, this timing remains within the margin of error we have anticipated and conveyed throughout 2024. With our intention to introduce the Aurora Driver with a crawl, walk, run approach, this shift to our timeline will have a negligible financial impact and does not affect our scaling efforts on our path to self-funding. During launch, we expect to deploy up to 10 driverless trucks in commercial operations starting with one driverless truck and transitioning the balance to driverless.

We are deliberately starting this way as our early efforts will be focused on exercising the full product suite to ensure a seamless product launch, while demonstrating the value proposition for our customers and continuing to build trust with all of our stakeholders. In the second half of 2025, our focus will be expanding our product capabilities, adding new lanes and increasing capacity to tens of trucks by the end of 2025. To ready our customers for driverless operations, in September, we hosted our annual partner summit where we were joined by more than 20 of the nation’s largest and most sophisticated carriers. In aggregate, these businesses operate well over 100,000 Class 8 trucks. We brought these customers together with industry safety experts, regulators, first responders and law enforcement for collaborative conversations on driverless operations.

We also announced and soft launched our partner success program in which customers have the opportunity to more deeply evaluate and assess the Aurora Driver’s performance as a final step to move forward with driverless operations. The enthusiasm was palpable. Some of participants on average rated the right experience 4.7 out of 5 across a set of 20 criteria. While all eyes are first on the Dallas to Houston launch lane, our customers have also been keenly interested in when the Aurora Driver will begin to operate beyond Texas. We regularly gather feedback from many of the industry’s leading carriers regarding where the Aurora Driver can add the most value. At the summit, we announced that in 2025, we plan to extend our Fort Worth to El Paso Lane, on which we are autonomously hauling loads daily to Phoenix, one of our customers most frequently requested lanes.

The Fort Worth to Phoenix lane spans over 1,000 miles and takes at least 15 hours to complete, making it particularly compelling for autonomy since the Aurora Driver isn’t subject to hours of service limitations, can operate nearly 24/7. We expect to begin commercial pilots for customers between Fort Worth and Phoenix in the first half of 2025 with the intent to go driverless on that route later in the year. With the promise of how the Aurora Driver can benefit, not just operations between Dallas and Houston, but also their network more broadly, Schneider recently executed their contract for 2025 volume and joins our commercial launch cohort. As we prepare for commercial launch, we continue to autonomously halt freight for all our pilot customers, including FedEx, Werner, Schneider, Hirschbach, Uber Freight and others.

We are scheduling nearly 160 commercial loads per week or more than double the commercial volume we were executing a year ago. Cumulative to-date, we have autonomously delivered under the supervision of vehicle operators, more than 8,200 loads driving over 2.2 million commercial miles, with nearly 100% on-time performance for our pilot customers. As our customers gained confidence through hands-on experience, we are also seeing growing optimism around autonomous technology from state governments, including a request from the California DMV for informal public input on draft regulatory language regarding the testing and deployment of autonomous trucks. While preliminary, we view this as an encouraging step toward a process that would explicitly allow deployment of self-driving trucks in the state.

To demonstrate the safety benefits, the Aurora Driver would bring to California’s roadways, which tragically see more than 400 fatal collisions involving trucks each year. We examined data from 14 fatal crashes on I-5 in Sacramento County that occurred between 2018 and 2022. We recreated these collisions in simulation to understand how the Aurora Driver would have acted if placed in these situations. Our analysis found that the Aurora Driver would not have caused any of the fatal collisions. We included one of these simulations on Page 14 of the presentation. In the original incident on I-5, a three-way collision occurred due to a wrong way driver on the highway. We created a variation of the original incident by simulating – in simulation by placing the Aurora Driver in the position of avoiding the wrong way driver while accounting for a passenger vehicle alongside it in the adjacent lane.

In the simulated scenario, a proprietary long-range FirstLight Lidar recognizes the wrong way driver far in advance and enables the Aurora Driver to safely complete a contested lane change to move out of the way, preventing the collision. More than 5,000 fatal crashes involving large trucks occur on our nation’s highways annually. We applaud the California DMV for undertaking the robust stakeholder-driven process as it considers the development of a regulatory framework that would enable the safe deployment of autonomous trucks in California to fully realize the safety and economic benefits of this technology. We submitted public comments, which were due to the DMV earlier this month and we look forward to continuing our work to help move these regulations forward.

In the meantime, under existing law and regulation, autonomous trucks can be deployed today in the vast majority of states in the U.S. All of the work we are doing to launch driverless operations in Texas is supporting the development of our playbook for rapid lane expansion to capitalize on the significant autonomous trucking opportunity. Last month, McKinsey & Company projected that the U.S. will have the fastest autonomous truck adoption rate globally, with autonomous heavy duty trucks accounting for 13% of trucks on the road in 2035. Given the self-similarity of the U.S. Interstate Highway system and the power of our verifiable AI technology, we expect the Aurora Driver to capture considerable share of this opportunity. We anticipate the Aurora Driver’s capabilities to transfer across lanes with the opening of new lanes requiring limited development just for incremental features.

In fact, our team recently completed bidirectional mapping of the El Paso to Phoenix route, 450 miles each way in just 2 weeks. The Aurora Driver navigated a vast majority of the lane autonomously in its first round trip. Autonomy software capabilities transferred seamlessly to the Phoenix Lane as we anticipated with vehicle operator inventions for the Inland Border Patrol station and some complex construction. We also expect the efficiency of our validation process to support more expeditious safety case closure for future lanes as the subsequent turns of the crank will naturally be faster. These factors give us the confidence in our plan to rapidly expand driverless operations to the Fort Worth to El Paso Lane and then further to Phoenix before unlocking additional lanes across the Sunbelt.

To commercialize autonomous trucking across these lanes at scale, deep integration with OEMs on scalable autonomy level truck platforms is needed. We continue to make good progress with our OEM partners on our vehicle programs. During the third quarter, we integrated several new Aurora Driver equipped Volvo VNL autonomous trucks into our fleet and they are now operating in autonomy on the road alongside our path for our Peterbilt 579 trucks. Our exclusive partnership with Continental is designed to support scaling of the Aurora Driver hardware for high volume line side installation at our OEMs. This month, Aurora Continental reached another partnership milestone. We finalized the detailed system and component level architecture and hardware selections for the scalable hardware as a service generation of the Aurora Driver.

Our teams are preparing to start initial testing in the first half of 2025 as we continue to progress towards the start of production planned for 2027. At Aurora, we are driven by a mission to deliver the benefits of self-driving technology safely, quickly and broadly. That mission has led us to now where the Aurora Driver is on the cusp of making self-driving trucks the new standard for safety, efficiency and sustainability in the logistics industry. Tremendous opportunity lies ahead and we are working tirelessly to capitalize on it. With that, I’ll now pass it over to Dave who will review our financial results.

David Maday: Thank you, Chris. Let’s discuss our financial results. We have provided a summary on Page 18 of the slide deck for reference. During the third quarter of 2024, we continued to demonstrate strong fiscal discipline. Third quarter 2024 operating expenses, including stock-based compensation, totaled $196 million. Excluding stock-based compensation, operating expenses totaled $161 million. Within operating expenses, our R&D expenses, excluding stock-based compensation totaled $139 million. This amount reflects $834,000 in pilot revenue, which is up 75% year-over-year and which we record as a contra R&D expense. After our commercial launch, pilot revenue will be recognized as standard revenue rather than as a contra R&D expense.

SG&A expenses, excluding stock-based compensation, were $22 million. We used approximately $143 million in operating cash during the third quarter of 2024. Capital expenditures totaled $7 million. This cash spend was below our externally communicated target, reflecting our continued commitment to fiscal prudence. For the fourth quarter of 2024, we expect cash use to be within the $175 million to $185 million quarterly average range. We expect our 2025 quarterly average cash use to be in this range as well. During the third quarter, we opportunistically raised $483 million in gross proceeds from a public offering of our Class A common stock. Net proceeds totaled $466 million. We ended the third quarter with a very strong balance sheet, including approximately $1.4 billion in cash and short-term and long-term investments.

We expect this liquidity to support our planned commercial launch and fund our operations well into 2026. With that, we will now open the call to Q&A.

Q&A Session

Operator: [Operator Instructions] Thank you. Our first question is from George Gianarikas with Canaccord Genuity. Please proceed with your question.

George Gianarikas: Hi, good afternoon and thank you for taking my questions. If you don’t mind, could you please give us a little bit more detail on the remaining validation required to launch commercially in April of next year? And also given that the timeline has been somewhat extended, can you help us understand your conviction that this is the last target and that it’s not going to move from April to another date after that in the future? Thank you very much.

Chris Urmson: Yes. Thank you, George. Appreciate the question. First, we are just really, honestly, very excited with the progress we have been making. If you look at some of the performance we are highlighting in this call, and obviously what we see entirely the quality of driving the safety of what we are putting on the road, we are becoming more and more proud of. My conviction on our ability to get across the finish line and get this launched is only increasing with every step. For us when we had an internal milestone just recently where we assessed the progress we have been making, and we came to the conclusion that just given the work that we had scheduled in front of us, that we weren’t going to be able to get that finished by the end of the year, and so we thought it prudent to share that as early as we could.

And this is that moment. When I look at the confidence that date for the last 1.5 years or so, we have been talking about the error bars being months. We see this modest delay as being very consistent with that. At this point we see the error bars in our estimate of being weeks. So, we are very excited about where we stand here. In terms of the work that’s to be done, it’s really primarily in the areas of some elements of surface street driving and some elements of construction that we see on the freeway. At a point that’s really important to make is that that API number that we share the 100% API number, which is at 80% of trips being without the need for driver intervention, encompasses driving through construction and on the service streets between our terminals.

So, in practice, our system handles these scenarios very well today. And it’s just we want to have extremely high confidence in the system as we as we go forward and just work we had scheduled that just takes a little bit longer for us to get to.

George Gianarikas: So, these require this validation is it sounds like it’s software and training issue. It’s nothing – has nothing to do with your OEM partners, commitment to the product or other partners commitment to the launch state?

Chris Urmson: No, this is our internal execution. We continue to have a very strong working ship – working relationship with our OEM partners. The work we are doing, the vehicles at this point is primarily focused on validating the redundant systems in the vehicles.

George Gianarikas: And maybe as a follow-up to the extent there are commercial loads that you are committed to carrying in 2025 and now looks like the timeline has been extended by a few months. Is there any impact financially? Are there any penalties you have to pay, or any other issue with regards to those contracts? Thank you.

Chris Urmson: No. There aren’t and we will continue to be building our load volume over this time. And we will do like – we will operate as we are today, in a pilot mode, with an operator onboard. We will have an increasing number of our operations operating with single vehicle rather than to a single vehicle operator, instead of two vehicle operators as we go forward as well.

Operator: Thank you. Our next question is from David Vernon with Bernstein. Please proceed with your question.

David Vernon: Hey. Chris and Dave, thanks for hosting the call today. I just wanted to ask you if you could maybe sort of help me understand the commentary around the technology, sort of adopting wealth of Phoenix. I am just looking at it from lenses, was kind of sitting here watch you guys going and working on the autonomous readiness measurement index and trying to get yourself very, very experienced in the Dallas the Houston lane. Why wouldn’t there be additional time in that to extend to new lanes as you go forward, in terms of just making sure that the system would be ready and capable of adapting to that new operating environment?

Chris Urmson: Yes. So, we do anticipate there being a small amount of work, but a core thesis that we have had is that driving on a freeway, whether you are in Texas or California or Montana is basically the same. And we believe this and we are starting to see it empirically as well. And so part of – we have been saying this for a few years. Part of what we wanted to do was to validate that hypothesis. And so we have built out that lane. We know that members of investment community sometimes have questions about, can you map this at a rate that’s efficient, the answer is, yes we can. And here we are. This is before we have really optimized the mapping process. And then what we see is that the execution on the driving quality on that is consistent with what we would have expected.

We have a strong relationship with the Border Patrol team, the customer Border Patrol agency, but the work where we have so far engaged most closely is with the El Paso inland station. And so in the interest of maintaining the quality of that partnership, and not surprising folks, when we went through this border patrol station between El Paso and Phoenix, we just disengaged for it. And then we mentioned earlier that we have some work to do to finalize validation on construction zones, and this was a particularly complicated bit of construction that we had to operate through.

David Vernon: Yes. I am just trying to really like sample size wise, right? But imagine the number of hours in your denominator for your indices, for Dallas to Houston is a lot higher than you would have for Phoenix. So, like as you think about that, that scale factor, because that’s essentially the question I am trying to get after is, how quickly will this be scalable lane to lane? I just was just purely out of interest, I just don’t understand…

Chris Urmson: Yes. No, we expect it to be – we expect it to be rapid, relatively rapid, and get faster over time. And part of the way we have structured our validation, we have talked in the past about these kind of three buckets of stuff we see all the time, stuff we see rarely, and then amplify, and then stuff that we go to the miss to crash taxonomy to build simulations I guess. That gives us a very granular view of the capabilities Aurora Driver has. And when we open a new lane, we are able to look at, are there new features or new capabilities required in that lane that don’t map onto the validation that we have already done. And generally, because again, freeways look very similar industrial parts look very similar wherever you are in the nation, there is not that much that you need to add.

And so the second lane that we add, we expect to have a little bit more work to do than the third lane, than the fourth lane. And at some point much like you or I are able to drive the vast majority of places without retraining, we expect the Aurora Driver to be able to do the same.

David Vernon: Awesome. Thanks so much.

Chris Urmson: Thanks for the question.

Operator: [Operator Instructions] Our next question is from Mark Delaney with Goldman Sachs. Please proceed with your question.

Mark Delaney: Alright. Good afternoon and thanks very much for taking my questions. First, I was just hoping you could share an update on operational readiness of the supply chain, including working with parts suppliers in areas like sensors and compute truck OEM partners. You mentioned Volvo and PACCAR, and then also some of your contract manufacturing partners.

Chris Urmson: Absolutely. So, we see no parts constraints or blockers in getting to commercial launch that we are in good position there. I believe we have pre-purchased already everything that we need for those launch vehicles. So, do not have concerns with that. We continue to build relationships, because for us, what we don’t want to be doing is sprinting and then having to sleep or stand still for a while before we can hit this curve, the growth curve. And so you have heard us talk in the past about the engagement with Fibernet [ph], and how that will allow us to bridge to small thousands of vehicles, and then the longer term partnership with Continental that will help us get to automotive scales, tens of thousands plus.

And so we are continuing to work with both of those. We have strong partnership with Continental and a great working relationship with Fibernet. And we are already beginning to bring up hardware for that mid generation. And we talked about – little bit about the state of the progress with Continental and that longer term Hardware as a Service platform. So, all things are moving very well for us in those directions.

Mark Delaney: Thanks for that Chris. My second question was around the contracting, and you mentioned additional progress that occurred in the last quarter and doing well with the 2025 bookings in total. I believe the view from Investor Day was that pricing would be relatively in line with market rates. And hoping to better understand, as you have gone further into the bookings process, is that still materializing and as you had expected?

David Maday: Hey Mark, it’s Dave. Thanks for the question. Yes. So, without getting into any specifics, because we don’t release the individual ones, the market itself is down a little bit this year on pricing. And we generally set up our pricing very consistent with what the market rates are, with any adjustments that may be needed for our launch partners and things like that. So, I would say, generally speaking, we are kind of in line with what we expected and what the market rates are indicating. I think for us, it’s really important to build that base of business and establish these footholds with all of our partners and continuing to move forward. So, we are pretty happy. Overall, I think the entire market would like to have a little bit more cost-pricing, and we will benefit from that as well.

Mark Delaney: Thanks Dave. One more financial question, if I could please. You mentioned in your prepared remarks, if I heard correctly, that once the company begins commercial operations loads that are hauled even with a human driver in the truck will move from contra R&D and be considered revenue. Can you give us a sense of the run rate of what’s contra R&D at this point, so we can better understand purpose as we build 2025 and beyond estimates. Thanks.

David Maday: Yes. This last quarter, we were a little under $1 million for contra R&D based on our pilot revenue. And essentially every load that we carry for a customer we bill out, right. And so you will continue to see that build up over time. So, if you are doing your modeling and things like that, it’s just building off of that, so.

Mark Delaney: Thank you.

Operator: Thank you. Our next question is from Jeff Osborne with TD Cowen. Please proceed with your question.

Jeff Osborne: Great. Thank you. Just a couple quick ones on my side, I was wondering, I might have missed it, but did you quantify the launch capacity that you have contracted in the duration of the contracts that you signed?

Chris Urmson: No. So, what we talked about in the remarks is that we are going to begin with one truck, and then we are going to scale that up to 10. And that, no, we haven’t shared the duration of the contracts, but they are in line with industry practices.

David Maday: So, just to add into that the market generally, there is a couple of things. One, the market generally contracts on an annual basis, and we tend to follow that practice in our contracts, because we have been working with these people for these partners for a long time. We have got automatic renewals and set up in triggers. We are going to start up again with like, up to 10, and then at the end of ‘25, we are going to be into the 10s of trucks, right. So, you will see us focus the first half of the year, really, on execution and making sure everything is call us for our partners, and then we will start to scale up the business in the second half of the year.

Jeff Osborne: It makes sense. And just to be clear with the – were there any contracts signed before that you might have, like, termination causes or delays? Does the four-month delay lead to any hardship for the counterparty?

Chris Urmson: Yes. Not at all, as a matter of fact that I think George might have mentioned that as well. The last thing we want to do is, incentivize to get something out before we get it right. And so all of our partners, all of our customers, all have the same value and perception of what this can provide for us. And the number one element is safety. And it’s much more important to ensure that we get it right than to try to meet some arbitrary date, and none of our contracts have any penalties, restrictions or anything like that for not launching in a certain timeframe.

Jeff Osborne: Thanks.

David Maday: Sorry. As you can say, I think that’s consistent with the way we think about the partnerships we are trying to build. We are looking for customers who see this as a strategic long-term opportunity, and want to be ready themselves for this next generation of full logistics business.

Jeff Osborne: Thanks David. Maybe the last one for you, Chris is just, could you be more granular? I think when you have done the writing drives with investors and analysts, we have gone through construction zones. Could you just give us a few examples of edge cases that you are still overcoming as it relates to the interaction with construction zones?

Chris Urmson: Yes. It’s not really about edge cases. It’s about ensuring that across the variability of how a construction site can be configured, that we have validated that. So, it turns out when you drive back and forth between Dallas and Houston. The construction kind of looks the same every day. And so there is limited exposure to different ways that folks can close off lanes and whatnot. And so it’s not that this is something new and surprising. It’s just that it – it’s kind of it’s been in this particular place in the schedule of work, and it’s just taken us a little bit longer to get some of the stuff done that we had intended. And I think important to note is that when we look at the actual on-road performance of the trucks that we actually haven’t had a disengagement caused by construction zones since May on the Dallas to Houston lane.

Jeff Osborne: That’s good to hear. Thank you. That’s all I had.

Chris Urmson: Thank you for questions.

Operator: Thank you. There are no further questions at this time. This does conclude today’s conference call. You may disconnect your lines at this time. Thank you for your participation.