Aurora Innovation, Inc. (AUR)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations should be read together with the condensed consolidated financial statements (unaudited) included elsewhere in this Quarterly Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in "Part I, Item 1A. Risk Factors” in our Annual Report and “Part II, Item 1A. Risk Factors" and under the heading “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report.

Unless otherwise indicated or the context otherwise requires, references to “Aurora,” “we,” “us,” “our” and other similar terms in this section refer to Aurora Innovation, Inc. and its consolidated subsidiaries. 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 unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. Certain other amounts that appear in this Quarterly Report may not sum due to rounding.

Aurora’s Business

Aurora has launched and continues to develop the Aurora Driver based on what we believe to be the most advanced and scalable suite of self-driving hardware, software, and data services in the world to fundamentally transform the global transportation market. The Aurora Driver is designed as a platform to adapt and interoperate amongst vehicle types and applications. To date, it has been successfully integrated into numerous different vehicle platforms: from passenger vehicles to light commercial vehicles to Class 8 trucks. By creating one driver system for multiple vehicle types and use cases, Aurora’s capabilities in one market reinforce and strengthen its competitive advantages in others. For example, highway driving capabilities developed for trucking will carry over to highway segments driven by passenger vehicles in ride-hailing applications. We believe this approach will enable us to target and transform the transportation landscape, including trucking, passenger mobility, and local goods delivery market.

We envision a two-phase process for ownership and operation of Aurora Driver-powered self-driving vehicles. Early in our commercialization, we intend to own or lease and operate an initial fleet of trucks and will invest in self-driving system hardware, base vehicles, and commercial facilities (such as freight terminals). We will provide transportation services to customers through driverless operations as well as with vehicle operators as needed. This level of control is useful during early commercialization as we define operational processes and playbooks for our partners.

Following this initial phase, we expect that the Aurora Driver will ultimately be commercialized in a Driver as a Service (“DaaS”) business model, in which customers or third parties will acquire, manage, and maintain fleets directly, while subscribing to the Aurora Driver and a suite of related services. In this second phase, we do not intend to own nor operate a large number of vehicles ourselves. 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. Throughout commercialization, we expect to earn revenue on a fee per mile basis, or a comparable pricing mechanism. We expect this DaaS model to enable an asset-light and high margin revenue stream for Aurora, while allowing us to scale more rapidly through partnerships.

We launched Aurora Driver for Freight, our driverless trucking subscription service first, 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. We plan to leverage the extensibility of the Aurora Driver to deploy and scale into the passenger mobility market with Aurora Driver for Rides, our driverless ride hailing subscription service, and in the longer-term the local goods delivery market.

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Results of Operations

Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025

The following table sets forth a summary of our consolidated results of operations for the periods indicated, and the changes between periods.

(1) Not meaningful.

Revenue increased by $1 million, or 100%, to $2 million in the three months ended June 30, 2026 from $1 million in three months ended June 30, 2025, primarily due to increased utilization, geographical expansion, and higher fuel surcharges.

Cost of revenue increased by $2 million, or 40%, to $7 million in the three months ended June 30, 2026 from $5 million in the three months ended June 30, 2025, primarily due to an increase in terminal, personnel, and fuel expenses due to increased utilization and geographical expansion. Non-cash stock based compensation in cost of revenue was not significant.

Research and development expenses increased by $21 million, or 11%, to $211 million in the three months ended June 30, 2026 from $190 million in the three months ended June 30, 2025, primarily driven by an increase in hardware development costs, cloud computing costs, non-cash stock-based compensation costs, and personnel costs, partially offset by costs now recognized as cost of revenue after commercial launch in April 2025 as well as costs now recognized as selling, general and administrative due to a realignment of resources. Research and development expenses included non-cash stock-based compensation of $47 million and $44 million in the three months ended June 30, 2026 and 2025, respectively.

Selling, general and administrative expenses increased by $14 million, or 39%, to $50 million in the three months ended June 30, 2026 from $36 million in the three months ended June 30, 2025, primarily driven by an increase in personnel costs including costs previously recognized in research and development now included in selling, general and administrative due to a realignment of resources, and non-cash stock-based compensation. Selling, general and administrative expenses included non-cash stock-based compensation of $13 million and $11 million in the three months ended June 30, 2026 and 2025, respectively.

The change in fair value of derivative liabilities resulted in expense of $16 million and income of $16 million in the three months ended June 30, 2026 and 2025, respectively, primarily due to the change in the market price for the underlying instrument during each period.

Other income, net decreased by $1 million, or 8%, to $12 million in the three months ended June 30, 2026, from $13 million in the three months ended June 30, 2025, primarily due to a decrease in interest income earned on cash equivalents and investments as a result of lower market rates.

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Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

(1) Not meaningful.

Revenue increased by $2 million, or 200%, to $3 million in the six months ended June 30, 2026 from $1 million in the six months ended June 30, 2025, primarily due to increased utilization, geographical expansion, and higher fuel surcharges, as well as the full six months of commercial operations in the current period, compared to a partial period of operations following the commercial launch of Aurora Driver for Freight in April 2025.

Cost of revenue increased by $8 million, or 160%, to $13 million in the six months ended June 30, 2026 from $5 million in the six months ended June 30, 2025, primarily due to the full six months of commercial operations in the current period compared to a partial period of operations following the commercial launch of Aurora Driver for Freight in April 2025, and an increase in terminal, personnel, and fuel expenses due to increased utilization and geographical expansion. Non-cash stock based compensation in cost of revenue was not significant.

Research and development expenses increased by $34 million, or 9%, to $406 million in the six months ended June 30, 2026 from $372 million in the six months ended June 30, 2025, primarily driven by an increase in non-cash stock-based compensation costs, cloud computing costs, hardware development costs, and personnel costs, partially offset by costs now recognized as cost of revenue after commercial launch in April 2025 as well as costs now recognized as selling, general and administrative due to a realignment of resources. Research and development expenses included non-cash stock-based compensation of $83 million and $73 million in the six months ended June 30, 2026 and 2025, respectively.

Selling, general and administrative expenses increased by $29 million, or 45%, to $94 million in the six months ended June 30, 2026 from $65 million in the six months ended June 30, 2025, primarily driven by an increase in personnel costs including costs previously recognized in research and development now included in selling, general and administrative due to a realignment of resources as well as non-cash stock-based compensation. Selling, general and administrative expenses included non-cash stock-based compensation of $23 million and $16 million in the six months ended June 30, 2026 and 2025, respectively.

The change in fair value of derivative liabili

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations should be read together with the consolidated financial statements included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in "Part I, Item 1A. Risk Factors" and under the heading “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report.

Unless otherwise indicated or the context otherwise requires, references to “Aurora,” “we,” “us,” “our” and other similar terms in this section refer to Aurora Innovation, Inc. and its consolidated subsidiaries. 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. Certain other amounts that appear in this Annual Report may not sum due to rounding.

Aurora’s Business

Aurora has launched and continues to develop the Aurora Driver based on what we believe to be the most advanced and scalable suite of self-driving hardware, software, and data services in the world to fundamentally transform the global transportation market. The Aurora Driver is designed as a platform to adapt and interoperate amongst vehicle types and applications. To date, it has been successfully integrated into numerous different vehicle platforms: from passenger vehicles to light commercial vehicles to Class 8 trucks. By creating one driver system for multiple vehicle types and use cases, Aurora’s capabilities in one market reinforce and strengthen its competitive advantages in others. For example, highway driving capabilities developed for trucking will carry over to highway segments driven by passenger vehicles in ride-hailing applications. We believe this approach will enable us to target and transform the transportation landscape, including trucking, passenger mobility, and local goods delivery market.

We expect that the Aurora Driver will ultimately be commercialized in a Driver as a Service (“DaaS”) business model, in which customers or third parties will purchase, manage, and maintain fleets directly, while subscribing to the Aurora Driver and a suite of related services. We do not intend to own nor operate a large number of vehicles ourselves. Throughout commercialization, we expect to earn revenue on a fee per mile basis, or a comparable pricing mechanism. 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. We expect this DaaS model to enable an asset-light and high margin revenue stream for Aurora, while allowing us to scale more rapidly through partnerships. During the start of commercialization, though, we are operating our own logistics and mobility services, where we own or lease and operate a fleet of vehicles equipped with our Aurora Driver and provide transportation services to customers through driverless operations as well as with vehicle operators as needed. This level of control is useful during early commercialization as we define operational processes and playbooks for our partners.

We launched Aurora Driver for Freight, our driverless trucking subscription service first, 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. We plan to leverage the extensibility of the Aurora Driver to deploy and scale into the passenger mobility market with Aurora Driver for Rides, our driverless ride hailing subscription service, and in the longer-term the local goods delivery market.

Significant Events and Transactions

Launch of Aurora Driver for Freight

In April 2025, we launched Aurora Driver for Freight and began driverless operations of trucks hauling customer loads. We commenced recognizing revenue during the three months ended June 30, 2025. Supplementing our strategic partnerships, in 2025 we began a truck program to support our commercialization strategy by providing customers with greater driverless capacity. Under this program, trucks, including a fleet based on International® LT® Series vehicles, will be upfitted by or on behalf of Aurora and used for driverless operations.

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At-The-Market Offering

On February 14, 2025, we entered into a sales agreement with Cantor Fitzgerald & Co., TD Securities (USA) LLC, and Allen & Company LLC, as sales agents (the “Sales Agents”), pursuant to which we may, from time to time, sell up to an aggregate amount of $500 million of the Company’s Class A common stock through the Sales Agents in an “at-the-market” offering (the “ATM Program”). On July 30, 2025, the Company increased the aggregate dollar amount of the Company’s Class A common stock that it may sell under the ATM Program to $1,421 million. During the twelve months ended December 31, 2025, we offered and sold approximately 151 million shares of Class A common stock through the ATM Program at an average price of $5.96 per share, raising $898 million in equity capital and receiving net proceeds of $874 million after transaction costs.

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, high interest rates, recent and potential future disruptions in access to bank deposits and lending commitments due to bank failures, wars, conflicts and political tensions in certain regions have led to economic uncertainty and volatility globally. In addition, changes in trade policy, including existing and potential tariffs and other trade restrictions on vehicles, electronics and other components used in our hardware and the vehicles on which it is deployed, could increase our costs, disrupt our supply chain, or reduce demand for our technology and services. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. In addition, geopolitical instability and related sanctions could continue to have significant ramifications on global financial markets, including volatility in the United States. Our operating results could be materially impacted by these changes and other changes in the overall macroeconomic environment and other economic factors.

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Comparison of the Twelve Months Ended December 31, 2025 to the Twelve Months Ended December 31, 2024

(1) Not meaningful.

Revenue was $3 million in the twelve months ended December 31, 2025 due to the commercial launch of Aurora Driver for Freight in April 2025.

Cost of revenue was $17 million in the twelve months ended December 31, 2025 due to the commercial launch of Aurora Driver for Freight in April 2025. Non-cash stock based compensation in cost of revenue was not significant.

Research and development expenses increased by $69 million, or 10%, to $745 million in the twelve months ended December 31, 2025 from $676 million in the twelve months ended December 31, 2024, primarily driven by increases in non-cash stock-based compensation, hardware costs for development fleets, and personnel costs, partially offset by expenses recognized as cost of revenue due to commercial launch in April 2025 and personnel costs previously recognized in research and development now included in selling, general and administrative due to a realignment of resources. Research and development expenses included non-cash stock-based compensation of $153 million and $122 million in the twelve months ended December 31, 2025 and 2024, respectively.

Selling, general and administrative expenses increased by $32 million, or 29%, to $142 million in the twelve months ended December 31, 2025 from $110 million in the twelve months ended December 31, 2024 primarily driven by increases in personnel costs, non-cash stock based compensation, and personnel costs previously recognized in research and development now included in selling, general and administrative due to a realignment of resources. Selling, general and administrative expenses included non-cash stock-based compensation of $35 million and $22 million in the twelve months ended December 31, 2025 and 2024, respectively.

The change in fair value of derivative liabilities resulted in income of $29 million and expense of $24 million in the twelve months ended December 31, 2025 and 2024, respectively, primarily due to the change in the market price for the underlying instrument.

Other income, net decreased by $6 million, or 10%, to $56 million in the twelve months ended December 31, 2025, from $62 million in the twelve months ended December 31, 2024, primarily due to a decrease in interest income earned on cash equivalents and investments as a result of lower market rates.

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Comparison of the Twelve Months Ended December 31, 2024 to the Twelve Months Ended December 31, 2023

(1) Not meaningful.

Operating exp

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