What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-15 · 35 added, 57 removed, 136 unchanged (40% of the section changed)

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and its consolidated subsidiaries.

Percentage amounts have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding.

Percentage amounts have not in all cases been calculated on the basis of rounded figures, but on the basis of such amounts prior to rounding.

For this reason, percentage amounts may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Annual Report.

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Throughout commercialization, we expect to earn revenue on a fee per mile basis.

We intend to partner with OEMs, Tier 1 automotive supplier, fleet operators, and other third parties to commercialize and support Aurora Driver-powered vehicles.

We intend to partner with OEMs, Tier 1 automotive suppliers, fleet operators, and other third parties to commercialize and support Aurora Driver-powered vehicles.

We expect that these strategic partners will support activities such as vehicle and hardware manufacturing, financing and leasing, service and maintenance, parts replacement, facility ownership and operation, and other commercial and operational services as needed.

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This level of control is useful during early commercialization as we define operational processes and playbooks for our partners.

We plan to first launch Aurora Horizon, our driverless trucking subscription service, as we believe that is where we can make the largest impact the fastest, given the massive industry demand, attractive unit economics, and the ability to deploy on high volume highway-focused routes.

Future success will be dependent on our ability to execute against our product roadmap to launch Aurora Horizon.

From there, we plan to leverage the extensibility of the Aurora Driver to deploy and scale into the passenger mobility market with Aurora Connect, our driverless ride hailing subscription service, and in the longer-term the local goods delivery market.

We plan to first launch Aurora Driver for Freight, our driverless trucking subscription service, as we believe that is where we can make the largest impact the fastest, given the massive industry demand, attractive unit economics, and the ability to deploy on high volume highway-focused routes.

Future success will be dependent on our ability to execute against our product roadmap to launch Aurora Driver for Freight.

From there, we plan to leverage the extensibility of the Aurora Driver to deploy and scale into the passenger mobility market with Aurora Driver for Rides (formerly Aurora Connect), our driverless ride hailing subscription service, and in the longer-term the local goods delivery market.

Significant Events and Transactions

Private Placement

On July 21, 2023, we completed a private placement (the “Private Placement”), in which we sold approximately 222 million shares of Class A common stock at a price of $2.70 per share, for proceeds of $584 million, net of transaction costs.

In connection with the Private Placement, we entered into a registration rights agreement, dated July 18, 2023 (“Private Placement Registration Rights Agreement”), with certain existing institutional and strategic investors, entities affiliated with two of our directors, and new institutional investors.

Pursuant to the Private Placement Registration Rights Agreement, on July 21, 2023, we filed a registration statement with the Securities and Exchange Commission (the “SEC”) for the registration for resale of the securities sold in the Private Placement.

Public Offering

On July 21, 2023, we completed a public offering (the “Public Offering”) of approximately 73 million shares of Class A common stock at a price of $3.00 per share, for proceeds of $212 million, net of transaction costs.

Following the Public Offering, we issued an additional 11 million shares of our Class A common stock in connection with the exercise of the underwriters’ over-allotment option, for proceeds of $32 million, net of transaction costs.

Continental Strategic Partnership Agreement

On April 26, 2023, we entered into a Strategic Partnership Agreement with Continental Automotive Technologies GmbH and its wholly owned subsidiary, Continental Autonomous Mobility Germany GmbH (collectively, “Continental”), which was amended on August 30, 2023 to memorialize a short term extension of the finalization period.

On September 27, 2023, the parties further amended and restated the Strategic Partnership Agreement in its entirety, which among other things, marked the completion of such finalization period, memorialized the achievement of a milestone contemplated therein, aligned on additional parameters, including certain additional details related to development costs and costs of Aurora’s future generation of its Aurora Driver hardware system, finalized certain appendices in accordance therewith, and extended the term of the agreement for an additional three months.

Pursuant to the Strategic Partnership Agreement, Continental will, among other things, act as our “Hardware-as-a-Service” partner for the production, provision, and full lifecycle support of the future generation of the Aurora Driver system.

The Strategic Partnership Agreement provides that we will pay Continental on a per-mile basis for vehicles operated by the Aurora Driver using the future generation of our Aurora Driver hardware system.

The term of the Strategic Partnership Agreement continues until March 31, 2031.

Pursuant to the Strategic Partnership Agreement, Aurora and Continental are each subject to defined and limited exclusivity periods, subject to various exclusions and early termination triggers.

On August 2, 2024, the Company completed a public offering (the “2024 Public Offering”) of approximately 134 million shares of Class A common stock at a price of $3.60 per share, for proceeds of $466 million, net of transaction costs, including the full exercise of the underwriters’ over-allotment option.

Global Economic Conditions

Unfavorable conditions in the economy in the United States and abroad may negatively affect the growth of our business and our results of operations.

For example, macroeconomic events, including rising inflation, tensions in U.S.-China relations, the COVID-19 pandemic, the U.S.

Federal Reserve raising interest rates, recent and potential future disruptions in access to bank deposits and lending commitments due to bank failures, the Russia-Ukraine war, and the Israel-Hamas war have led to economic uncertainty and volatility globally.

For example, macroeconomic events, including rising inflation, tensions in U.S.-China relations, the COVID-19 pandemic, high interest rates, recent and potential future disruptions in access to bank deposits and lending commitments due to bank failures, the Russia-Ukraine war, and the conflicts in the Middle East have led to economic uncertainty and volatility globally.

The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods.

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(in millions, except for percentages) 2024 2023

Collaboration revenue $ — $ 68 $ (68) n/m (1)

Operating expenses:

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Selling, general and administrative 110 119 (9) (8) %

Goodwill impairment

— 1,114 (1,114) n/m (1)

Total operating expenses 786 835 (49) (6) %

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Other income, net

59 15 44 293%

Loss before income taxes (748) (796) 48 (6) %

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(1) Not meaningful.

Collaboration revenue

Collaboration revenue was $68 million in the twelve months ended December 31, 2022 under the collaboration project plan with Toyota Motor Corporation.

As of December 31, 2022, the Company had recognized all revenue associated with cash payments received under the collaboration project plan and.

As a result, no revenue was recognized during the twelve months ended December 31, 2023.

Operating expenses

Research and development expenses increased by $39 million, or 6%, to $716 million in the twelve months ended December 31, 2023 from $677 million in the twelve months ended December 31, 2022, primarily driven by an increase in personnel and software development costs, partially offset by a decrease in hardware development costs.

Research and development expenses decreased by $40 million, or 6%, to $676 million in the twelve months ended December 31, 2024 from $716 million in the twelve months ended December 31, 2023, primarily driven by decreases in non-cash stock-based compensation, hardware costs for development fleets, and personnel costs.

Research and development expenses included non-cash stock-based compensation of $122 million and $139 million in the twelve months ended December 31, 2024 and 2023, respectively.

Selling, general and administrative expenses decreased by $10 million, or 8%, to $119 million in the twelve months ended December 31, 2023 from $129 million in the twelve months ended December 31, 2022 primarily driven by a decrease in insurance costs.

Selling, general and administrative expenses decreased by $9 million, or 8%, to $110 million in the twelve months ended December 31, 2024 from $119 million in the twelve months ended December 31, 2023 primarily driven by decreases in insurance costs and other general and administrative costs.

Selling, general and administrative expenses included non-cash stock-based compensation of $22 million and $21 million in the twelve months ended December 31, 2024 and 2023, respectively.

The Company recognized goodwill impairment of $1,114 million during the twelve months ended December 31, 2022 as a result of goodwill impairment assessments performed due to significant declines in the market price of the Company’s Class A common stock and its market capitalization.

No goodwill impairment was recorded during the twelve months ended December 31, 2023.

Other income (expense)

The change in fair value of derivative liabilities resulted in an expense of $20 million and income of $114 million in the twelve months ended December 31, 2023 and 2022, respectively, primarily due to the change in the market price for the underlying instrument.

Other income, net was $59 million in the twelve months ended December 31, 2023, compared to $15 million in the twelve months ended December 31, 2022, primarily due to an increase in interest income earned on cash equivalents and investments.

The change in fair value of derivative liabilities resulted in expense of $24 million and $20 million in the twelve months ended December 31, 2024 and 2023, respectively, primarily due to the change in the market price for the underlying instrument.

Other income, net increased by $3 million, or 5%, to $62 million in the twelve months ended December 31, 2024, from $59 million in the twelve months ended December 31, 2023, primarily due to an increase in interest income earned on cash equivalents and investments.

Comparison of the Twelve Months Ended December 31, 2023 to the Twelve Months Ended December 31, 2022

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(in millions, except for percentages) 2023 2022

Collaboration revenue $ 68 $ 82 $ (14) (17) %

Collaboration revenue $ — $ 68 $ (68) n/m (1)

Operating expenses:

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Change in fair value of derivative liabilities (20) 114 (134) (118) %

Other income (expense), net 15 (9) 24 -267%

Other income, net 59 15 44 293%

Loss before income taxes (796) (1,723) 927 (54) %

Income tax benefit

Income tax expense

— — — n/m (1)

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Collaboration revenue

Collaboration revenue decreased by $14 million, or 17%, to $68 million in the twelve months ended December 31, 2022 from $82 million in the twelve months ended December 31, 2021 due to lower hours incurred under the collaboration project plan with Toyota Motor Corporation.

Collaboration revenue was $68 million in the twelve months ended December 31, 2022 under the collaboration project plan with Toyota Motor Corporation.

As of December 31, 2022, the Company had recognized all revenue associated with cash payments received under the collaboration project plan and, as a result, no revenue was recognized during the twelve months ended December 31, 2023.

Operating expenses

Research and development decreased by $20 million, or 3%, to $677 million in the twelve months ended December 31, 2022 from $697 million in the twelve months ended December 31, 2021, primarily driven by a decrease in stock-based compensation and severance expense, partially offset by an increase in payroll costs, stock-based compensation and other software and hardware developments costs.

Selling, general and administrative increased by $13 million, or 11%, to $129 million in the twelve months ended December 31, 2022 from $116 million in the twelve months ended December 31, 2021, primarily driven by an increase in payroll, stock-based compensation and insurance costs, partially offset by a decrease in and professional services costs.

Other income (expense), net

The change in fair value of derivative liabilities resulted in income of $114 million in the twelve months ended December 31, 2022 from a loss of $20 million in the twelve months ended December 31, 2021 primarily due to the change in the market price for the underlying instrument.

Other income, net was $15 million in the twelve months ended December 31, 2022, primarily due to transaction costs and losses on the disposal of IT equipment.

Other expense, net was $9 million in the twelve months ended December 31, 2021, primarily related to interest income earned on short-term investments.

Income tax benefit

An income tax benefit was recognized in the twelve months ended December 31, 2022 due to the release of a deferred tax asset valuation allowance as a result of deferred tax liabilities incurred from the acquisition of OURS Technology, Inc.

Research and development expenses included non-cash stock-based compensation of $139 million and $137 million in the twelve months ended December 31, 2023 and 2022, respectively.

Selling, general and administrative expenses decreased by $10 million, or 8%, to $119 million in the twelve months ended December 31, 2023 from $129 million in the twelve months ended December 31, 2022, primarily driven by a decrease in insurance costs.

Selling, general and administrative expenses included non-cash stock-based compensation of $21 million and $19 million in the twelve months ended December 31, 2023 and 2022, respectively.

No goodwill impairment was recorded during the twelve months ended December 31, 2023.

Other income (expense)

The change in fair value of derivative liabilities resulted in expense of $20 million and income of $114 million in the twelve months ended December 31, 2023 and 2022, respectively, primarily due to the change in the market price for the underlying instrument.

Liquidity and Capital Resources

As of December 31, 2023, our principal sources of liquidity were $501 million of cash and cash equivalents, $699 million of short-term investments, and $148 million of long-term investments with maturities within 2 years, exclusive of restricted cash of $17 million.

As of December 31, 2024, our principal sources of liquidity were $211 million of cash and cash equivalents and $1,012 million of short-term investments, exclusive of restricted cash of $16 million.

Cash and cash equivalents primarily consist of money market funds and U.S.

Treasury securities as well as commercial paper.

Short-term and long-term investments consist of primarily U.S.

Investments consist of primarily U.S.

Treasury securities as well as corporate bonds.

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Net cash used in operating activities $ (611) $ (598) $ (508)

$ (598) $ (508) $ (564)

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities (172) 8 (852)

Net cash provided by financing activities 492 831 11

Net increase (decrease)

Net (decrease) increase

(291) 241 (1,349)

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Cash Flows Used in Operating Activities

Net cash used in operating activities increased by $13 million in the twelve months ended December 31, 2024 from $598 million for the twelve months ended December 31, 2023 primarily due to advanced payments for hardware materials for fleet builds partially offset by decreases in other operating expenditures.

Net cash used in operating activities increased by $90 million in the twelve months ended December 31, 2023 from $508 million for the twelve months ended December 31, 2022 primarily due to receipts in the comparative period of the final payments under the collaboration project plan with Toyota.

Net cash used in operating activities decreased by $56 million in the twelve months ended December 31, 2022 from $564 million for the twelve months ended December 31, 2021 primarily due to an increase of cash received under the collaboration project plan with Toyota and a decrease of professional expenses and other non-recurring expenses paid in connection with the acquisition of ATG partially offset by increased incentive compensation payments.

Cash Flows Provided by (Used in) Investing Activities

Cash Flows (Used in) Provided by Investing Activities

Net cash used in investing activities increased by $180 million in the twelve months ended December 31, 2024 from $8 million of net cash provided in the twelve months ended December 31, 2023, primarily due to the net purchases of short-term investments compared to net maturities in the comparative period.

Net cash provided by investing activities increased by $860 million in the twelve months ended December 31, 2023 from $852 million of net cash used in the twelve months ended December 31, 2022 primarily due to the net purchases of short-term investments in the comparative period.

Net cash used in investing activities decreased by $1,102 million in the twelve months ended December 31, 2022 from $250 million of net cash provided in the twelve months ended December 31, 2021 primarily due to net purchases of short-term investments, partially offset by net cash acquired through the acquisitions of businesses in the comparative period.

Cash used for purchases of property and equipment were $34 million, $15 million and $15 million in the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities decreased by $339 million in the twelve months ended December 31, 2024 from $831 million for the twelve months ended December 31, 2023 due to lower net proceeds received from equity fundraising.

Net cash provided by financing activities increased by $820 million in the twelve months ended December 31, 2023 from $11 million for the twelve months ended December 31, 2022 due to net proceeds received from the Private Placement and Public Offering.

Net cash provided by financing activities decreased by $1,529 million in the twelve months ended December 31, 2022 from $1,540 million for the twelve months ended December 31, 2022 due to the comparative period including net proceeds from the Merger and net proceeds from the issuance of Series U-2 preferred stock.

Contractual Obligations, Commitments and Contingencies

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Valuation of Derivative Liabilities

The Company accounts for shares held by Reinvent Sponsor Y LLC (the “Sponsor”) not forfeited under the terms of the Merger Agreement and subject to price based vesting terms (the “Earnout Shares”) as a derivative liabilities.

The liability is measured at fair value on a recurring basis utilizing a Monte Carlo simulation analysis with any changes in fair value reflected in the statement of operations until the vesting conditions are met or the shares expire.

The Monte Carlo simulation analysis is dependent upon management estimates and assumptions, primarily related to expected volatility and risk-free interest rates.

The expected volatility is determined based on the historical equity volatility of comparable companies over a period that matches the expected term of the instrument.

The expected volatility is determined based on a blended rate of our historical volatility as well as the historical equity volatility of comparable companies over a period that matches the expected term of the instrument.

The risk-free interest rate is based on relevant U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis