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Thank you for standing by. At this time, I would like to welcome everyone to the Kodiak First Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Today, we ask you to limit to one question, and one follow-up. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Daniel Goff, Vice President of External Affairs. You may begin.

Thank you, welcome to Kodiak's First Quarter 2026 Earnings Call. On the call today are Don Burnette, Founder and Chief Executive Officer of Kodiak. And Surajit Datta, Chief Financial Officer of Kodiak. Our press release, and an earnings presentation were issued earlier today, and are posted on the Investor Relations section of our website. This call is being broadcast live via a webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, Kodiak will be making forward-looking statements. Within the meaning of the federal securities laws about financial performance, and future events. Including our guidance for fiscal second quarter, and full fiscal year 2026, as well as our long-term goals. Actual events or results could differ materially.

Please refer to our SEC filings, including our most recent Form 10-K, and the Form 8-K. Filed with today's press release for important risks, and other factors. That may cause our actual results to differ from those in our forward-looking statements. Additional information will also be set forth in our quarterly report on Form 10-Q, for the quarter ended March 31st, 2026. We disclaim any obligation, except as required by law. To update or revise any financial or operational guidance, and long-term goals or other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Further, in addition to discussing results that are calculated in accordance with generally accepted accounting principles. We also refer to certain non-GAAP financial measures.

For more detailed information on our non-GAAP financial disclosures. Including reconciliations to most comparable GAAP measures. Please refer to our earnings release, which can be found on our investor relations website. I will now turn the call over to Don. Please go ahead.

Good afternoon, and thank you for joining us. Before getting into our Q1 results. I'm excited to highlight, that today we announced a $100 million capital raise. With our strengthened balance sheet, we believe we've extended our liquidity into Q2 of 2027. Which will enable us to support the next phase of growth, as we scale our driverless deployments. I'd like to turn to our Q1 results. In the first quarter, we increased both the scale, and productivity of our growing driverless deployment. Expanded our partner ecosystem across the long haul, industrial, and defense verticals. And made meaningful progress toward our driverless long-haul launch targeted for late 2026. We also made significant progress maturing our physical AI-powered technology, and product while maintaining financial discipline, and capital efficiency.

We deployed eight additional trucks in Q1 for a total of 28 driverless trucks. Further expanding our industry-leading driverless truck deployment. As of quarter end, those trucks have driven more than 23,500 paid driverless hours. A 120% increase from the end of Q4 of last year. These hours are equivalent to over a decade of working as a truck driver. Further, the hours driven in Q1 exceeded all the driverless hours driven in 2025. Over the same period, cumulative loads delivered increased to more than 15,600, representing approximately 24% growth. That includes more than 200,000 tons of freight. Approximately the weight of the Sears Tower, delivered in Q1 alone. We believe these results demonstrate that we are successfully scaling our product, and delivering increasing value to our customers.

Because Kodiak's integrated platforms are powered by a single autonomous stack. The capabilities we develop, the miles driven, and the new customers, and partners we work with. Create a compounding flywheel effect benefiting long haul, industrial, and defense applications. In the first quarter, we made strong progress on strategic partnerships, and customer engagements. As industry leaders continue to choose the Kodiak Driver to enable their autonomous future. I'd like to highlight one exciting announcement we made earlier today. A strategic partnership with General Dynamics Land Systems, or GDLS. To collaborate on autonomous military ground vehicles. GDLS, part of the Fortune 100 General Dynamics group, manufactures critical platforms. Such as the M1A2 Abrams tank, and the Stryker combat vehicle. Working with GDLS will allow us to extend our reach into the core of the defense ecosystem. It also demonstrates our flexible approach to defense engagements.

We are working with industry leaders to support paths to production, and revenue. While simultaneously contracting directly with the Pentagon. As we have done with the Marines ROGUE Fires program. Our work with General Dynamics Land Systems is already generating results. In March, we unveiled the first vehicle we developed in collaboration with GDLS. The Leonidas Autonomous Ground Vehicle. The Leonidas AGV combines the Kodiak Driver, with Epirus' cutting-edge high-power microwave system for counter-drone operations, supported by GDLS' system integration expertise. We continue to make significant progress on our core technologies. Driving this progress is our increasingly aggressive adoption of AI tools. That are proving to be true force multipliers across our company.

AV developers are only as good as the tool they use. AI is enabling us to develop new, powerful tooling, that is already transforming how we work. In Q1, we launched company-wide Model Context Protocol, or MCP Servers. That allow agentic AI tools to connect to all of our company data sources. Allowing the entire company, not just engineering. To develop new bespoke AI-powered tools tailored specifically to individual needs. In layman's terms, these MCP servers, and related data pipelines. Empower our team to use plain English to build AI tools, and proliferate AI agents. That massively increase our productivity, efficiency, and problem-solving capabilities. This, in turn, is driving a transformation in how we run our business.

For example, we've used our MCP servers to develop Prism. A flexible new tool, that allows anyone in the company. To search across thousands of hours of unstructured driving data using only text prompts. Surfacing patterns, and root cause analysis that previously required dedicated engineering effort. Prism can explain the Kodiak Driver's behavior in intuitive ways. To both technical, and non-technical teams using natural language. We've used this new capability to tune the Kodiak Driver, in ways that would not have been possible before. For example, we use Prism to not only identify commonalities among challenging highway scenarios. But even identify potential improvements that we have since adopted. These tools are not only about software. They also help to drive improvements in hardware, manufacturing, and beyond. On the hardware side, we announced that Kodiak will use the NVIDIA DRIVE Hyperion architecture. In the next generation of Kodiak Driver-powered trucks.

We believe this will increase our ability to deploy even more capable, and efficient driverless trucks over time. At CES in January, we laid out our vision for industrializing the Kodiak Driver. Through our strategic collaboration with Bosch, one of the world's leading automotive suppliers. Through this collaboration, we will leverage Bosch's manufacturing expertise. To deploy driverless vehicles at scale. This week, at ACT Expo, we demonstrated the progress we have already made together. Exhibiting an early prototype Kodiak SensorPod outfitted with Bosch camera, and radar sensors. Taken together, these partnerships enhance the ecosystem needed to efficiently scale simultaneously across all three verticals. From vehicle platforms to industrialized hardware to AI compute. I'd like to discuss our progress toward our targeted driverless long-haul launch in late 2026.

As of the end of April, our long-haul autonomy readiness measure increased to 86%. Reflecting steady progress in launch readiness. As we leverage our increasing investments in our team, and AI tooling, we believe that our ARM progress will accelerate in Q2, and beyond. Over the course of the quarter, we completed numerous safety case claims. Including claims covering our driverless long-haul sensor field of view requirements, and our redundant braking subsystems. As a reminder, completing a safety case is about collecting sufficient evidence. To demonstrate safety, and Kodiak is one of only a small handful of AV companies. That have successfully built a safety case, and launched driverless operations. We continue to hone our safety case structure as we refine our safety processes. And implement our learnings from our long-haul industrial, and defense operations.

To reach an ARM of 100%, and unlock long-haul driverless operations. We will continue to gather evidence to close our remaining claims. That work leverages the safety methodology, testing, and documentation processes. We established over our nearly 18 months of driverless operational experience in the Permian. In addition to our work on the safe launch of our long-haul driverless product. We continue to expand our long-haul commercial operations. Delivering freight with leading shippers, and carriers from our Dallas Hub. This afternoon, we announced that we launched service with a new carrier, Roehl Transport. Through our collaboration, we are hauling freight with Roehl Transport between, Dallas and Houston four times a week. Roehl Transport is one of North America's safest trucking companies. As recognized by the American Trucking Associations' or ATA. They are a recent recipient of the ATA's President's Award, the trucking industry's highest safety honor.

They specifically chose Kodiak because of our shared commitment to safety. During Q1, we also began freight services between Dallas, and El Paso in cooperation with one of our long-term customers. This freight lane is our second route beyond a single hours of service after Dallas to Atlanta. It is just the kind of long-haul lane, where the Kodiak Driver can offer the most value, given the challenges fleets face staffing these routes. These true long-haul freight operations are critical. To helping us build a product that meets our customers' needs. We are working closely with all of our long-haul customers. To prepare them for driverless operations in the coming quarters. While preparing for long-haul driverless represents our core focus for 2026. Our industrial business demonstrates, how our driverless technology. Is continuing to deliver value to our customers, and expanding to other geographies, and use cases.

Today, I'm excited to announce our planned pilot operations with West Fraser. One of the world's largest wood product companies. To demonstrate the Kodiak Driver in logging operations in Canada. This will mark our first pilot in the forestry industry. Our first international expansion, and our initial operations with flatbed trailers. Logging routes, like oil, and gas routes we see in the Permian. Are among the most demanding environments in trucking. We believe this pilot will further demonstrate the versatility of our system across geographies, and trailer types. And expands the range of industrial use cases where the Kodiak Driver can deliver value. In addition to our new pilot in Canada, we continue to make meaningful progress in our Atlas deployment. Since we are not reliant on HD maps, we can quickly add new routes to our operational design domain.

To date, we have delivered on over 15 unique routes with Atlas, each with its own complexities. We also expect to continue to execute against our initial 100 truck commitment. With Atlas over the next several quarters, and expect to exit Q2 with driverless trucks in the mid-30s. Atlas is evaluating deploying the Kodiak Driver on a new OEM platform for the remaining trucks. This transition, beginning in Q3, will include a shift to a more economical day cab from a sleeper berth. Which we believe will be the predominant configuration for driverless operations across both industrial, and long haul. We believe our modular platform-agnostic architecture positions us well to support this transition efficiently. And we are working closely with Atlas to meet their evolving fleet requirements. We view this as an exciting opportunity, to demonstrate the ease of integration of our technology on an additional truck platform.

Delivery timing will remain closely aligned with our customer needs. And will depend on factors such as procurement of the new truck platform. Fleet planning, deployment schedules, and critical hardware, and truck availability and lead times. As a result of this platform transition, and associated procurement timelines. We now expect to deliver a similar number of trucks in the second half of 2026. As we expect to deliver in the first half. As the new platform scales, we expect deployment to accelerate. We anticipate completing Atlas's initial 100 truck commitment in the first half of 2027. Now turning to defense. With General Dynamics Land Systems, and beyond, we continue to add wins in the defense vertical. Where reliability, and performance in complex environments are mission critical.

At the broadest level, we are seeing the defense autonomy ecosystem evolve. From experimentation to deployment, as ongoing geopolitical instability. Forces both the Pentagon, and our allies to accelerate their timelines for frontier technologies like autonomy. Underlining this increased interest, the President's 2027 defense budget. Includes over $50 billion in funding across land, air, and sea for Defense Autonomous Warfare Group, up from just $225 million in 2026. We therefore expect to see increased revenue generating opportunities in 2027, and beyond. Our recent successes in defense demonstrate the maturity, and adaptability of our system in mission-critical environments. And we believe will position us well as the Pentagon increasingly turns to commercial partners. To accelerate Autonomous Ground Vehicle deployments. Moving on from defense, Q1 saw continued regulatory progress for the autonomous vehicle industry.

We are encouraged by continued momentum toward a more consistent federal approach. Which we believe will further support broader adoption over time. At the state level, California recently published final state regulations. That will allow us to deploy the Kodiak Driver in our home state. Thereby, enabling us to offer coast-to-coast driverless service. These regulations will provide us with additional regulatory certainty. We plan on submitting our application for a California testing permit in the coming weeks. Similarly, Texas also launched its new AV permitting program. After submitting our first responder interaction plan to state officials. We received our Texas AV authorizations. We continue to engage with regulators at both the state, and federal level. One engagement of note was our participation in a grant funded public demonstration in cooperation with DriveOhio. The Ohio Department of Transportation's hub for smart mobility technology.

Our work with DriveOhio represents Kodiak's first operational deployment outside of the Sun Belt. And enabled us to demonstrate our long-haul autonomous solution. To policymakers, and industry leaders in Ohio, and Indiana. As we prepared for this engagement, we passed an exciting milestone. We added our 25,000th mi to our commercial network. Which is more than the circumference of the Earth. The massive size of our network underlines the flexibility of our routing technology. Which enables us to quickly add new routes across, a range of geographies and deployment types. In closing, we believe our $100 million equity financing. Combined with our continued product maturation, and driverless deployments. Position us to scale Driver-as-a-Service across long-haul, industrial, and defense in a disciplined, and capital efficient way.

We are well on our way to scaling Kodiak into a sustainable business. That provides real value to customers. I am excited by the opportunity ahead. I'd like to take a moment to thank all of the Kodiakers, who worked so hard in the first quarter to drive us forward. Autonomous driving is the first wide-reaching application of physical AI. This is just the beginning. Over to Surajit.

Thank you, Don, and good afternoon, everyone. I am pleased to share Kodiak's financial results for the first quarter of fiscal year 2026. We delivered a strong first quarter across both operational, and financial metrics. Successfully executing against our strategic priorities, scaling driverless deployments, growing recurring revenue, and maintaining disciplined spending. We ended Q1 FY 2026 with 28 driverless trucks. In line with our expectations as we continue to broaden our deployment with our existing industrial customer. Q1 revenue was $1.8 million, representing 74% growth quarter-over-quarter. This performance was primarily driven by continued expansion in Driver-as-a-Service revenue. Enabled by growth in customer owned driverless trucks. GAAP operating loss for the first quarter was $37.9 million.

Non-GAAP operating loss, which excludes stock-based compensation. Was $31.8 million, primarily reflecting continued investment in R&D, and operational support as we scale our deployments. We incurred capital expenditures of approximately $5.5 million. Primarily related to AV hardware, that we deploy on our customers' trucks. Turning to cash flow, Q1 free cash flow was -$35 million, outperforming our expectations. This reflects continued investment in R&D, operational scaling, and AV hardware deployment. Partially offset by improving operating leverage. For the second quarter of fiscal 2026, we expect driverless trucks to increase to mid-30s. We expect free cash flow of -$39 million to -$41 million, with the increase primarily driven by non-recurring spend. For hardware unit cost improvements, and incremental CapEx to support driverless long-haul testing, and development.

For the full year fiscal 2026, we are improving our free cash flow guidance. And now expect free cash flow to be in the range of -$155 million to -$165 million. This improved outlook reflects continued growth in revenue. Expected lower AV hardware costs, due to slower pace of deployment, and sustained discipline in operating expenses. We ended Q1 with cash, and cash equivalents, and marketable securities of $90 million. Today, we further reinforced our liquidity position. With a successful common stock PIPE financing from existing, and new investors, raising $100 million of gross proceeds. After fees, and expenses, net proceeds are approximately $95 million. On a pro forma basis, this brings our Q1 cash equivalents. And marketable securities to approximately $185 million.

The successful financing strengthens our balance sheet. And extends our liquidity into Q2 of FY 2027. In summary, Q1 reflects a strong start to 2026. We delivered solid revenue growth, continued scaling of driverless deployments. And outperformed our free cash flow expectations, while improving our full year free cash flow outlook. We believe that we are well-positioned to scale our business. Progress towards profitability, and generate free cash flow over time. Operator, please open the line for questions.

Your first question comes from Andres Sheppard with Cantor Fitzgerald. Please go ahead.

Hey, everyone, good afternoon, and congratulations on all the great progress on the capital raise. Lots to unpack. Again, kudos to everyone. Don, I was just wondering if you could maybe give us a little bit of cadence, in terms of how we should think about deployments for this year? Surajit, I think you alluded to kinda Q2. What to expect, but just curious for maybe the remaining part of the year? How should we think about those deployments ramping up in the second half, and maybe through next year? Thank you.

Thanks, Andres. As we said in the remarks, we expect the second half of 2026. To look very similar to the first half of 2026 in terms of raw numbers. And we do expect the ramp of the truck to accelerate quarter-over-quarter through the first half of 2027.

Got it. Okay. Very helpful. Just curious if you could maybe expand a little bit further on Canada. What kind of opportunities do you look forward to there? Maybe remind us, what is the regulatory environment there for maybe those that aren't as familiar? Thank you.

Sure, yeah. This is a really exciting development for us. As we've been talking about for some time. We see our industrial, and unstructured driving applications as being manifold. You have the oil, and gas industry, of course, which we've talked about at length. There's mineral, and resource mining in many other countries. Then there's forestry, and logging in the Pacific Northwest. Both here in the U.S., and Canada, and beyond. We're really excited to announce West Fraser. As a pilot opportunity that we'll execute in Q3. These are very difficult, unstructured, remote locations, which have a lot of the same challenges. That you will find in some of the other applications. That we've already been pursuing, including in the Permian.

As it relates to the regulatory framework, this is something that we are working on currently. We will be operating initially on private land, again in Canada. Which allows us to deploy driverlessly without anybody in the cab, independent of the regulatory framework. We continue to work with regulators. At the province level, and at the national level in Canada. To ensure a free, and clear path to deploy driverless trucks at scale beyond those environments. That is a development that we're working on, and we expect to have progress over time.

Wonderful. Very helpful. Congrats again on all the quarter. I'll pass it on.

Thanks, Andres.

Your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Thanks so much, guys. You know, could you talk a little bit about the dexterity that you have, in terms of, you know, managing autonomy from multiple form factors? It just looks like you're gonna be able to deal with multiple types of vehicles in different environments. Just wanna understand, like, how quickly that sort of capability can get put out into the field?

Yeah, sure. We've held the belief for a long time that generalized AI. Is always going to win out over specialized implementations. From the very beginning of the company, we wanted to be platform agnostic. And adaptable to many different form factors. Not just makes, and models of vehicle, but also additional form factors. You're seeing the fruits of that labor as we deploy into the defense space. With tracked vehicles, and various form factors there. Large trucks like you see on the highways. Heavy-duty trucks that we implement in our unstructured environments like the Permian. And also logging trucks, which are slightly different themselves. Kodiak implements a single AI system behind all of these different products, and applications. The core underlying software that runs on these vehicles is actually the same across each one of them.

That allows us to leverage the learnings, the data, the training, and all of the development costs. Across each one of those verticals without having to have specialized teams. Or specialized AI, or specialized training that goes into each one of them. The more experience that we gain as a company, the more experience that the Kodiak Driver gains as a system. The stronger the AI becomes, and the more utility we get out of it across all of the different verticals, and applications that we supply to our customers.

That's super helpful. Then, you know, you guys have announced the partnership with Bosch. And you're obviously working very closely with them. There's also been a reasonable evolution of some of the perception solutions that are out in the field. I'm just curious about your capacity to integrate some of those innovations, and really monetize them. And how much efficiency you might get out of them? And thinking particularly around LiDAR as well as some of the other sensors that are out there.

We're always evaluating new sensors. We use LiDAR cameras, and radars in our system today. We feel like that sensor stack is the appropriate balance of cost, and performance. You know, you can always add more sensors to your system. Of course, that makes it more expensive. In our business, we can absorb a more expensive hardware solution. That increases the safety, and utility of the system. We continuously evaluate all of the products out there on the market. From providers both here in the U.S., and abroad. That's true of the LiDAR space, radar space, and camera space. We did just demonstrate at the ACT Expo in Las Vegas with Bosch. The kind of a concept of the next generation of our SensorPod. Which includes Bosch's in-house radar, and camera sensors.

We're really excited to continue to develop a much more mature, reliable, and scalable system with Bosch as our tier one supplier.

Great. Thanks so much, guys.

Thanks, Colin.

Your next question comes from the line of Itay Michaeli with TD Cowen. Please go ahead.

Great. Thanks. Hi, everybody. Maybe just to continue on the last question as well with Bosch. Can you maybe just cite a little how you see, you know, the cost-cutting opportunity in the second generation? You know, versus kind of where we are today, and maybe just some updates. I think I also heard mention around some maybe Q2 investments, for kind of hardware cost improvement. Maybe you can just elaborate on that as well.

Yeah, sure. I'll start. Maybe Surajit can speak to that as well. You know, there's a couple different factors, that go into reducing the cost of your system. Obviously, you can engineer it to be cheaper. You can drive scale, and volume. Which ultimately reduces the cost of various components. Certainly, your manufacturing processes as you scale up into higher quantities. Can be optimized for significantly cheaper production. You know, from the side of engineering perspective, we are putting in R&D resources. Behind driving down the cost, the BOM cost being one of the main drivers of COGS for our solution.

We expect to start to see those costs coming into effect in the next several quarters.

Just to add to what Don mentioned, for us it's a three-pronged approach. Don talked about, you know, the design enhancements we are starting to undertake. And there'll be some NRE spend in Q2, as we referred on the call. That goes on the sensor side of things, and on the redundant systems. Those are areas we are working on. Second is just not just increasing the scale of production with Bosch, and Roush. Roush able to provide high quality assembly, Bosch being able to do a high scale assembly across, across the breadth of our, of the hardware. That we expect to drive down cost optimization over time.

Lastly, what we're trying to enhance, and we'll be continuing to work on this, to create a global supply chain organization. As we scale, we should be able to procure more effectively, and that'll drive down costs. I think the strength of our system is to be pretty much hardware as source agnostic. And that allows us to be much more efficient on cost over time.

That's very helpful. As a follow-up, you know, a lot of really great announcements, you know, with West Fraser, and some defense. Don, as you look out a couple of years, you know, how would you kind of rank these opportunities in terms of? You know, what could have the biggest impact on the company kind of going forward? Kind of where you want to be most focused on as you kind of continue to expand your verticals?

Yeah, that's a great question. I think it's going to shift over time. I think defense is a bit of a wild card there. Because it's very difficult to predict the timing of various contracts, and the spend. As I mentioned in the remarks, we're very excited about what we're seeing in the FY 2027 budget. For billions, and billions dollar put towards the autonomy vehicle group within the Department of Defense. That's the level of funding that we just haven't seen in the past. We're optimistic that there will be tailwinds for us. To take advantage of in the next, call it 12, 18 to 24 months. We expect that to contribute meaningfully.

At the same time, we're growing our industrial business today. Both with Atlas, and continuing to bring on additional customers such as West Fraser. We see steady growth in that industry, and obviously that's something where we have an existing business, and we'll continue to scale. The third one, being the long-haul opportunity. It's certainly the largest by a significant margin relative to the other areas. As we prove out the safety case, we close out our arm of 100. We deploy the driverless highway product, and start to deploy trucks into customer fleets. We think that ultimately that will be the largest contributor down the line. To our revenues, and to our growth.

You know, where does that transition point happen is a little bit, hard to pinpoint at this exact moment. It'll be in the next several years.

Terrific. That's very helpful. Thank you.

Your next question comes from the line of Jim McIlree with Chardan. Please go ahead.

Yeah, thank you, good afternoon. The deal with Roush, is that on your trucks or their own trucks? Is there an observer in the cab, at least initially?

Today it's with our trucks [crosstalk].

Similar to the way we operate with other carriers. Being this is a transportation as a service that we offer, third-party fleets. And we move freight on their behalf as a third-party capacity provider. We'll work with Roehl in the same capacity. That we do with other trucking carriers, and trucking companies that we work with. Yes, there's a.

Great.

There's a safety observer still behind the wheel for now.

Great. Thank you. Can you address a little bit the product migration, particularly with your collaboration with NVIDIA?

We've been a customer of NVIDIA for a long time, as most of the industry has. We've been working very closely with them on the development of their newest, and latest, and greatest project products. We're excited about the Thor platform that will be in the next generation of our product. The NVIDIA DRIVE Hyperion is an ecosystem of components. That you can kind of put together to build a fully reliable automotive-grade autonomy compute system. We're working closely not only with NVIDIA, but also with tier one suppliers. To build that into the next generation system that we can build at scale. We've been an NVIDIA partner for a considerable amount of time, and, you know, we continue to be excited to work with them.

We're excited about what they're bringing to the future of, low power compute for applications, such as self-driving trucks.

Okay. Does this $100 million get you to cash flow breakeven?

As we mentioned, during the prepared remarks, this provides us liquidity into Q2 of FY 2026. We'll continue to be opportunistic about additional capital raises, and we expect to become S-3 eligible end of Q3. And that provides us with additional flexibility in accessing capital markets. Also, this $100 million has come from both existing investors. Including Ares, who was a SPAC sponsor, and also new investors. We believe this demonstrates confidence in our strategy, and execution, and the long-term opportunity. We expect to get access to more additional capital, to get to breakeven.

Thank you.

Thanks, Jim.

Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Great, thanks. Afternoon, guys. Just on the defense opportunity, who is your competitor there? If you have any at the moment. Also, what do you know about the program so far? Like, is it just the amount that's in the defense budget. Or do you know if there's gonna be an RFP, and the size of the program? Or even, what the specs of the program are at this point?

In terms of competitors, there's probably a long list of companies that play in the defense space. Certainly the more prominent, well-known ones are companies like Forterra, Overland AI have been pretty established in this space. I think what Kodiak brings uniquely to the table. Is that we are a commercially mature technology stack. We have actual driverless deployments in the hands of customers today. We understand how to build, you know, safe, and reliable systems. That we can ultimately bring, to military use cases. To help save lives in the front lines. In terms of the program itself, the budget is not specific to one program or one RFP. We are already working with General Dynamics Land Systems to bid on future programs.

It's great to have a partner like them to kind of take this technology. To a much more mature, and much more credible level. We'll continue to work with them on new RFPs, and new contracts. And new programs as they come about. The budget just underpins a number of programs that are both exist today. But also are being conceived of, and created in the near, and long-term futures.

Got it, thanks on the telephone. Maybe as a follow-up, just on Atlas, and the new OEM. Can you just unpack that decision? You know, was that at their request or your request. Kind of why that change? Is it just the cab for configuration or something else?

Yes, there's many factors there. The cab consideration, as we mentioned in the remarks, you know, I won't speak for Atlas. But generally speaking, for fleets, and trucking companies at large. You'll definitely be aware that companies like to diversify their fleets. Usually, you don't wanna be a single platform fleet. The request came from the Atlas, you know, from the Atlas team. Of course, we are very excited to support the bring up of a new platform. Not only to help support their ultimate goals, of rolling out autonomy at scale within their business. But also to prove out the modularity, and adaptability of our system on other platforms. And to, you know, establish close relationships with additional OEMs. Which of course we've been working on for you know, quite some time.

Bringing up a new OEM, from our perspective is nothing but a win-win. And this is also then a form factor make, and model that we can bring to other customers in other jurisdictions as well. It just gives customers ultimately more flexibility, more optionality. And that's better for the market, and it shows that Kodiak is ready to scale. And ready to be flexible, and meet the customer where it is. The request came from the Atlas side, and we're very excited to support that request. And to meet their fleet deployment needs.

Understood. Thanks for the call.

Thanks, Ravi.

Your next question comes from the line of Walter Piecyk with LightShed. Please go ahead.

Thanks. Hey, Don, can we just get some more specific terms on the $100 million? And why you elected to do a PIPE with warrants? I know Aurora had success historically with an ATM. Well, I guess success, they were able to raise the money, but obviously at different prices. What other things did you look at in terms of cost of capital? Again, just if we can get the terms of that $100 million, it'd be great.

Yeah, happy to, Walt. You know, our priority was to secure committed capital. From high-quality investors with speed, and certainty. This helps strengthen our balance sheet to support our growth plans, and enhance our liquidity. It gets us liquidity into Q2 of FY 2027. PIPE transactions of this nature are typically priced at a discount. We believe these terms reflect market conditions. The range we are seeing in the market for similar transactions. And most importantly, the strategic value of capital provides us the extended liquidity. I think, on high level, the transaction raised $100 million in proceeds. The issuance price was $6.50, and we issued warrants along with that.

We have more details you can find in our recently filed 8-K, and the upcoming 10-Q will have.

How are the warrants priced?

At $6.

Got it. Thank you.

Thanks.

There wasn't an alternative source of capital that was less dilutive. I mean, the stock's obviously at $9 now. You had a lot of announcements today. What were some of the alternatives that you looked at in terms of raising that capital?

We always look for opportunistic financing. We will have more options available, as we expect to become S-3 eligible end of Q3. And that will give us more additional options on financing alternatives.

What was the reason for the timing now, as opposed to waiting until the end of Q3?

We had announced that we had liquidity into Q4 of FY 2026. This gets us an additional six months of liquidity approx.

Yeah.

Gotcha. Okay.

ATMs are not available before you're S-3 eligible. That's not available to Kodiak at this time.

Understood. Thanks. On the operational side, you were noting these flatbed loggers, whatever. It just occurred to me, you know, you're pitching this kind of modular approach. And when we see other autonomy companies come out with a new vehicle. Like let's say Waymo, you know, let's say the OHI comes out. There's some period of time where it has to adjust. And they have to have it learn to the new vehicle. Like, how does your process differ? I know it's to the extent that it's modular. I mean, I've obviously seen it, and you can bolt it on to the military or a logger or whatever.

I for presumably carrying sand is gonna be different than, like if I'm a driver. Is gonna be different than carrying a bunch of logs or, you know, whatever, like boxes of retail stuff when you hit the highways. How does that work with your driver in terms of new vehicle, different type of load? And how the programming or whatever you have to do to make that work?

Yeah, thanks for the question. I can't speak to the differences of how others do it, but, let's see. You know, we've continuously expanded, and pushed the limits of what the system's capable of doing. For instance, in our last call, we talked about our expansion into double, and triple trailers, right? Triple trailers are incredibly complicated, very small margin for error. There's lots of dynamical challenges that occur when you have. You know, a snake of trailers behind you, especially at heavy loads like the 275,000 lbs that we're pulling. The Kodiak Driver has learned how to handle the various different distributions of load. Both from single trailers that are partially filled. All the way to triple trailers that are fully filled. Yes, the dynamics are different, but the system kind of understands those dynamics.

We see logging as a natural extension to what we're doing in the Permian. It'll be a single trailer to start. You know, where logs are strapped down tightly, as is the sand in the trailer.

It's not a dramatic difference, but it's hard for me to answer. How it generalizes specifically, under the hood other than to say. You know, all of our training data from multiple sources, both structured environments. Like highways, and surface streets, and unstructured environments. Like what we find in the Permian, what we find in Alberta. What we find in our, on our military testing at various sites around the country. Is brought together along with, you know, Generative AI techniques. That allow us to style transfer other types of data that we may not be able to collect directly. Into a single AI system that we then deploy across the fleet. Which is able to drive in all of the different scenarios that we ask it to, and all the applications that we serve across different platforms.

There's definitely testing, and validation with every platform. But it is the same software that runs across both our Permian application. For trucks that are owned by Atlas, and ultimately the trucks that will be owned, and operated by West Fraser.

Ladies and gentlemen, that concludes our question-and-answer session. Thank you all for joining. You may now disconnect.

Thank you for standing by, and welcome to Kodiak's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to Dan Goff, VP of External Affairs with the Safe Harbor. Please go ahead.

Thank you, and welcome to Kodiak's fourth quarter 2025 earnings call. On the call today are Don Burnette, founder and Chief Executive Officer of Kodiak, and Surajit Datta, Chief Financial Officer of Kodiak. Our press release and an earnings presentation were issued earlier today and are posted on the Investor Relations section of our website. This call is being broadcast live via a webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, Kodiak will be making forward-looking statements within the meaning of the federal securities laws about financial performance and future events, including our guidance for fiscal first quarter and full fiscal year 2026, as well as our long term goals. Actual events or results could differ materially.

Please refer to our SEC filings, including our most recent Form 10-Q and the Form 8-K filed with today's press release for important risks and other factors that may cause our actual results to differ from those in our forward-looking statements. Additional information will also be set forth in our annual report on Form 10-K for the year ended December 31, 2025. We disclaim any obligation, except as required by law, to update or revise any financial or operational guidance and long-term goals or our other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Further, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we also refer to certain non-GAAP financial measures.

For more detailed information on our non-GAAP financial disclosures, including reconciliations to most comparable GAAP measures, please refer to our earnings release, which can be found on our Investor Relations website. I will now turn the call over to Don. Please go ahead.

Good afternoon, and thank you for joining us. Before I discuss Kodiak's 2025 Q4 results, I want to frame the incredible long term opportunity for Kodiak. We believe Physical AI represents one of the most significant technology shifts in modern history. Physical AI is transforming how work gets done in the physical world, and self-driving is leading this transformation. Autonomous systems will increasingly power how goods and people move, how freight is delivered, and how packages reach people's doorsteps. The Kodiak Driver is at the forefront of this revolution. Scale matters, and we are building the system to scale. The key to deploying Physical AI is harnessing the power of data center scale AI, and then optimizing it to run on low power compute that can fit on a range of form factors.

We've already solved that core challenge by building the Kodiak Driver to be a modular Physical AI platform that is commercialized today. The same core system that powers long-haul freight is built to extend into anything that moves, from cars to pickup trucks, buses, and delivery vans to even other form factors such as drones, construction equipment, and humanoids. While we remain focused on our core trucking strategy, this platform leverage has the potential to significantly expand our long-term addressable market. We are building toward deploying the Kodiak Driver on thousands of trucks within the next few years. Our commercial roadmap, manufacturing partnerships, and expansion strategy are aligned around that objective. As adoption increases across major freight corridors, autonomous trucks will move from limited deployments to everyday infrastructure.

I believe that in the coming years you will not be able to drive on any highway in the United States without encountering a Kodiak truck. Our objective is clear: removing humans from goods delivery with AI making every decision in real time. That future is not a distant concept. It's beginning now. This quarter marked another step forward in deploying safe, scalable, fully driverless operations with no safety driver in the cab and no required human remote monitoring. As the Physical AI revolution has accelerated, so has Kodiak, which has been fueled by our industry leading deployments. In 2025 alone, we advanced our core AI capabilities and expanded our product footprint at a pace that significantly exceeded what we achieved in prior years. That acceleration is translating directly into stronger reliability metrics, higher operational readiness, and increasing commercial confidence. Our execution priorities remain disciplined and measurable.

Safety performance, system reliability, commercial scaling, cost structure improvement, and capital efficiency. With accelerating technical progress and a clear path to scale deployment, Kodiak will continue to lead. That leadership is now translating into measurable results, which I would now like to discuss. 2025 was a monumental year for Kodiak. The fourth quarter was our first full quarter as a public company, and we delivered results that exceeded our expectations across all guided metrics, including truck deliveries and cash burn. We have made significant progress across product, commercialization, and partnerships entering 2026 with strong momentum. We remain on track for our long haul driverless launch in late 2026 and continue to execute against our initial 100 truck commitment with Atlas. Our continued progress extends well beyond West Texas' Permian Basin, where our first driverless trucks are deployed.

During the last quarter and early this year, we strengthened our ecosystem through collaborations with blue-chip companies like Bosch and Verizon. We secured a new contract with the U.S. Marine Corps and launched operations between Dallas and El Paso. Together, these milestones demonstrate growing market validation, expanding strategic relationships, and increasing confidence in our ability to deliver autonomous trucking at scale. Just over a year ago, we delivered the first ever driverless Class 8 trucks to a customer. On our third quarter call, we outlined a plan to expand the initial two-truck deployment to mid to high teens by the end of year. I'm proud to say that we finished 2025 with 20 driverless trucks in our customers' hands, which represents a 100% growth quarter-over-quarter. This represents the largest customer-owned driverless trucking deployment in the world.

We also remain the only company operating through an asset-light driver-as-a-service model, which generates multi-year recurring revenue, enabling us to scale faster with less capital. As of the end of 2025, those driverless trucks have collectively driven more than 10,700 revenue-generating hours with no one inside the cab. To put that into perspective, assuming an average highway speed of about 65 mi per hour, this would be equivalent to around 700,000 mi or nearly 30 trips around the planet. In addition, these trucks operate safely without continuous remote monitoring, a capability that is critical to achieving attractive unit economics and meaningful scale. Overall, as of the end of Q4, Kodiak's autonomy system has delivered more than 12,600 loads, representing an 87% increase in loads delivered compared to year-end 2024.

These achievements reflect our focused development and disciplined capital-efficient execution that we believe will enable us to achieve profitability and free cash flow earlier as we scale. I want to underscore, scaling autonomous trucking is hard. None of these results magically appear overnight, and there are no shortcuts. As I've discussed before, AV trucking is not just about technology. To build and scale a Physical AI business, you need to execute across three distinct pillars: technology, safety, and product. In Q4, we made strong progress across each. I'll begin with technology. As a reminder, the Kodiak Driver is a Physical AI-powered virtual driver that integrates with our modular vehicle-agnostic hardware to work seamlessly across different vehicle platforms and driving environments. Kodiak-powered vehicles operate around the clock in sun, rain, dust storms, and other inclement weather.

By operating without high-definition maps, our system can adapt in real time and perform reliably in complex, unstructured environments. This flexibility allows us to deploy the same technology across long haul, industrial, and defense applications, and in the future, into adjacent opportunities. In 2025, we accelerated our use of AI coding tools and are already recognizing efficiencies from the use of tools such as OpenAI Codex. These AI tools are accelerating our development process, allowing us to do even more with less. We are also executing rapidly on key technical milestones for our deployed driverless product. One great example is our progress on hauling non-standard trailer types. You may recall that in Q3, we added the ability to haul doubles or two trailers at the same time.

We recently became the first AV company to pull triple trailers, which, when combined with the tractor, weigh over 275,000 lbs or 137 tons and extend more than half the length of a football field. Hauling triples requires extreme precision and enables us to provide our industrial customers higher asset utilization and a more cost-effective solution. We also recently began hauling car trailers, another autonomous industry first. This achievement is only possible because of Kodiak's unique sensor pod configuration. Mounting sensors on the top of the vehicle would interfere with the car trailers which extend over the cab. We believe that these advanced capabilities put us well ahead of the competition in terms of the range of customers that we can efficiently serve. Our deployment with Atlas in the Permian Basin is helping us to hone our technology in countless ways.

We've continued to refine the use of our AI safety agent, which allows the Kodiak Driver's AI to identify rare scenarios that can be a challenge for more traditional perception techniques. This new feature allows us to better handle the long tail of complex edge cases and gives us further confidence as we move down the path towards long-haul driverless deployment. For example, the AI agent helped the Kodiak Driver to identify a dust tornado or dust devil in the middle of the road. We've also recently announced technology collaborations and made technology investments that we expect will accelerate our ability to scale and reduce AV hardware costs. Most notably, at CES in January, I had the pleasure of presenting our ambitious vision for industrializing and scaling the Kodiak Driver through our strategic collaboration with Bosch, one of the world's leading automotive suppliers.

Together, Bosch and Kodiak are developing a next-generation redundant autonomous platform with integrated hardware, firmware, and software designed for automotive-grade reliability and manufacturing at scale with our partners at Roush and directly on the OEM factory floor. This partnership underscores our focus on developing Physical AI, not hardware, and enhances our ability to scale autonomous trucking. We also continue to focus on meaningfully reducing our hardware costs and are pursuing a comprehensive AV hardware cost-down strategy across multiple major initiatives. First, we recently embarked on a major engineering program designed to lower the cost of our bill of materials. This effort will continue over the course of 2026, is already bearing fruit, and we will have more to share in future quarters. Second, our cooperation with ecosystem partners Roush and Bosch helps enable us to manufacture at scale while sourcing multiple components from the same vendor.

We expect this effort to provide benefits beyond just 2026. Further, we anticipate AV hardware, including sensors, compute, and actuation, to become further commoditized, making the incremental hardware costs associated with autonomy marginal. These efforts are critical as reduced hardware costs are a key driver to achieving profitability and generating positive free cash flow over time. Lastly, we have made key investments in our off-board infrastructure required for autonomous operations at scale. Our commercial connectivity agreement with Verizon is now enabling reliable connectivity through 5G and LTE, supporting remote assistance, over-the-air software updates, and centralized fleet management. This connectivity is foundational to our DaaS model, ensures our customers have full-time visibility into their autonomous fleet, and enables safe and reliable 24/7 autonomous operations. Moving on to the safety pillar, we continue to make meaningful progress toward closing our long-haul safety case.

Our Autonomy Readiness Measure rose to 84% as of February 2026. During Q4, we did much of the underlying functional safety work that allows us to validate the safety of key truck platform technologies, thereby demonstrating that technologies we developed for industrial driverless deployment are sufficiently robust for high-speed long-haul operations. In parallel, we established manufacturing, installation, and verification processes with our partners to support both our next-generation industrial and long-haul platforms. This work relied heavily on the operational insights we have gained from our full-year of driverless operations with Atlas. One of the most exciting tools driving our safety case development is a new cutting-edge technology we call Breakpoint. Breakpoint, which we built leveraging AI, enables us to test the Kodiak Driver against millions of realistic scenario variations while intelligently searching for the most challenging conditions.

This enables our team to prioritize engineering workflow based on risk priority. Using Breakpoint, we have been able to preemptively discover and resolve extremely rare edge cases that we've not yet observed in our thousands of hours of real-world operations. This ability to precisely identify the focused work that we need to do to complete our safety case is a key contributor to our capital-efficient approach. Lastly, in February, we began testing at a new track, the American Center for Mobility Proving Ground in Southeast Michigan. The ACM Proving Ground is one of only a few tracks in the U.S. large enough to bring long-haul trucks up to highway speeds. Our structured testing at the track will allow us to evaluate rare scenarios under near real-world conditions at highway speeds.

This kind of testing is critical to us completing work on our initial long-haul safety case and launching in late 2026. Lastly, I would like to briefly discuss our progress across the product pillar, where our technology, safety case, and operations combined to give our customers a great experience. As I previously mentioned, we've completed a full-year of real-world driverless operations with our customer, Atlas Energy Solutions, one of the largest and most sophisticated sand logistics providers in the Permian Basin. This has yielded tremendous benefits, including the ability to pressure test the core components of our autonomous driving platform, which are shared across different driving environments. This generates a flywheel effect, allowing us to leverage these features and our learnings across long-haul and defense deployments. We continue to learn from this relationship and deployment.

For example, the Kodiak Driver collects data that enables us to optimize predictive maintenance, which maximizes the uptime for our customers' trucks, which they deeply care about. Lastly, we've gained significant insights in how to optimize daily operational decisions, how to train up and team with customers, how trucks should behave at launch and land, and how to optimize workflows. All these operational decisions have an outsized impact on throughput and are leverageable across verticals. We've put a lot of focus on predictable performance in these areas and built playbooks and processes that will help us continue to scale in the Permian and beyond. Turning to our commercial pipeline, we have made significant progress across all three verticals. I'd like to start with the long-haul vertical. As we discussed on our first earnings call, we've been delivering freight using our fleet since 2019.

We continue to scale these operations thoughtfully as customer demand and fleet capacity evolve. We've made significant commercial progress in long-haul operations over the last few months with active long-haul deployments with leading logistics companies, including J.B. Hunt, Werner, and Martin Brower. We also recently launched a new pilot with a major Fortune 500 private fleet hauling between Dallas and Houston. Today, we announced that we've launched a new route with Martin Brower, logistics partner to some of the world's leading restaurant brands, between Dallas and El Paso. This additional route with Martin Brower brings our total weekly operational lanes to eight and adds an additional route that stretches beyond a single hours of service. Our system's independence from HD maps has allowed us to quickly and easily add this lane. This new route represents a core tenet of our strategy of increasing our penetration with our existing customers.

Our industry-leading customer base has an aggregate fleet size of over 125,000 trucks. This deep customer base means that even with moderate penetration into our current customer fleets, we will have all the demand that we can service in the coming years. I'd like to move on to defense, where we've made amazing progress over the last few months. We believe the policy environment is rapidly improving for dual-use Physical AI developers like Kodiak. We're already starting to see the benefits of the Pentagon's increased focus on working with commercial first developers. In February, we onboarded Chet Gryczan, a leader with nearly 20 years of experience in the defense ground vehicle ecosystem, as our new Vice President and Managing Director of Defense to help us capture all these new opportunities.

Additionally, in February, we announced that we were awarded a contract with the U.S. Marine Corps to integrate the Kodiak Driver into the ROGUE-Fires carrier vehicle. This is an uncrewed ground platform designed to support distributed operations, expeditionary fires, and force projection in contested environments in the Indo-Pacific region. Of course, the ROGUE-Fires work leverages the same production-ready autonomy platform that underpins our core autonomous trucking business, reinforcing the strength and scalability of Kodiak's approach across both commercial and defense markets. Kodiak was recently selected to participate in two high-profile U.S. Army demonstration events, the Army's xTechOverwatch demonstration in Texas and the Defense Innovation Unit's Project G.I.. For Project G.I., a major autonomy experiment which focused on contested logistics in the Indo-Pacific, we were selected as one of just 12 companies chosen from more than 400 submissions.

These exercises highlight the growing demand within the Department of Defense for commercially developed autonomy solutions. For Project G.I., Kodiak deployed our autonomous Ford F-150s to Hawaii, where we conducted operational demonstrations in support of the 25th Infantry Division, a key Army unit responsible for operations in INDOPACOM. The exercise provided soldiers the opportunity to interact directly with Kodiak's autonomy technology in realistic operational conditions, demonstrating how our off-road autonomy system can enable distributed operations and more resilient logistics in complex terrain. These events underscore the military's increasing interest in production-ready dual-use autonomous systems and reinforce Kodiak's position as a flexible autonomy partner capable of supporting missions ranging from tactical mobility to large-scale logistics. Looking ahead, we see strong opportunities to extend our commercial long-haul trucking autonomy platform into defense logistics applications at scale.

Lastly, we continue to explore opportunities in the industrial trucking vertical, which includes oil and gas, mineral transportation, and logging transportation. Industrial trucking represents a promising opportunity for Kodiak, given that operators in remote industrial locations face even greater difficulties recruiting and retaining drivers than long-haul carriers. We continue to have productive conversations with major industrial trucking operators in the U.S. and also see significant opportunities abroad, specifically in Australia, Canada, and the Middle East. In summary, the experience we've gained over the past year of driverless operations has established a durable foundation for our next phase of growth. By running our system around the clock, we've built the technical maturity and organizational muscle memory required to scale. That experience compounds, each deployment benefiting from the capabilities and processes we've already developed. This positions us well as we prepare to launch driverless long-haul operations in late 2026.

Looking ahead, we will remain focused on disciplined execution, expanding driverless deployment in a way that is both safe and sustainable. I want to give a huge thanks to the team for executing at a high level as we scale this business. 2025 was a fantastic year, and we expect 2026 to be even stronger as we continue to accelerate our deployment and continue to deliver on our milestones. Now over to Surajit.

Thank you, Don, and good afternoon, everyone. I am pleased to share Kodiak's financial results for the fourth quarter and full fiscal year 2025. 2025 was a transformative year for Kodiak, culminating in a strong Q4 that exceeded our expectations across all guided metrics. We continued to demonstrate disciplined execution, improved operating leverage, and continued to realize benefits of an asset-light business model. We ended Q4 FY 2025 with 20 customer-owned driverless trucks exceeding the mid- to high-teens range, which we had previously guided. This outperformance was driven by successful deployment with our existing industrial customer. Q4 revenue was $1.1 million, representing 37% quarter-over-quarter growth. This was primarily driven by an increase in driver-as-a-service revenue generated by 100% quarter-over-quarter growth in customer-owned driverless trucks. This performance underscores the strength of our business model.

As the Kodiak Driver is deployed, we benefit from scalable multi-year recurring revenue while continuing our historical discipline on capital requirements. GAAP operating loss for the fourth quarter was $39 million. non-GAAP operating loss for the quarter, which excludes stock-based compensation, totaled $30 million, primarily due to continued investment in R&D and operations support for our industrial deployment. We incurred capital expenditures of $10 million, primarily to purchase AV components that we deploy on our customers' trucks. Turning to cash flow, we outperformed our guidance for Q4 with free cash flow of -$34 million, less than the -$36 million to -$38 million range, which we had previously provided.

This outperformance was driven by improved operating leverage and continued prudent spending and was partially offset by an increase in AV hardware CapEx. We ended 2025 with cash and cash equivalents and marketable securities of $121 million. This number includes increased liquidity from the debt refinancing, which we completed at the end of the fourth quarter. The successful financing upsized the facility to $30 million, lowered our interest rate and extended the maturity profile to early 2030. Importantly, this facility requires no principal repayments until 2028, providing improved liquidity and increased flexibility to operate and scale our business. For fiscal year 2026, we expect free cash flow to be in the range of -$160 million to -$170 million.

The free cash flow burn is expected to be driven by capital expenditures to purchase AV hardware that we deploy on our customer's trucks and R&D investments as we prepare to launch long haul driverless operations in late 2026. These investments are expected to be partially offset by increasing DAS revenue and ongoing improvements in AV hardware unit costs as we continue to be disciplined in our spending. For the first quarter of fiscal year 2026, we expect to end the quarter with driverless trucks in the high 20s. Q1 FY 2026 free cash flow is expected to be in the range of -$36 million to -$38 million as we continue to invest in R&D, operations support and incur capital expenditures to purchase and deploy AV hardware. Based on our current operating plan, we have liquidity into Q4 of FY 2026.

We continue to be focused on strengthening our liquidity and supporting the next phase of growth, particularly as we build our customer pipeline and launch driverless commercial long haul operations in late 2026. As previously stated, we will continue to be disciplined and opportunistic regarding financing options with respect to timing and market conditions. In summary, Q4 marked a strong finish to 2025. We delivered strong revenue growth, exceeded our truck deployment and free cash flow guidance, and maintained a disciplined approach to capital allocation. Our financial priorities remain unchanged. Grow high quality recurring DAS revenue. Invest prudently in R&D, including safety validation and verification to support long haul driverless operations. Drive down AV unit hardware costs. Improve operating leverage through scale and efficiency. Raise capital to maintain a strong balance sheet.

We are entering 2026 with momentum, a clear execution plan and a capital efficient business model designed to scale, drive towards profitability and generate free cash flow over time. Operator, please open the line for questions.

As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. We ask that you limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andres Sheppard of Cantor Fitzgerald. Your line is open, Andres.

Hey, guys. This is Anand on for Andres. Congrats on the quarter and thanks for taking our questions. I was wondering what the pathway towards long haul launch this year looks like and maybe what are the milestones you're looking at to get there as we're focused on the Autonomy Readiness Measure as you ramp up to reach that point.

Oh, thanks, Anand. Well, as we've discussed and described previously, the safety case framework consists of a series of claims, and those claims pertain to various aspects of the Kodiak Driver, be it hardware reliability, functional safety, performance of intended functions, handling of various scenarios and cases that we encounter on the roadway. Really it's a kind of a mechanical process of testing in simulation, testing in the real world, testing on test tracks that allow us to close those claims over time. I think we laid great foundation work in Q4, as we said, during the prepared remarks for a lot of the infrastructure work that we need to do. Now it is just really a kind of turning the crank process to close the remaining claims in the safety case.

There are no specific kind of feature milestones, if you will, if that's what you're looking for, that remain for us to complete that process. I'll just remind you that this is something that we've already gone through multiple times with our industrial launch. We are already driving vehicles with nobody in the cab on a day in and day out basis across various weather conditions and various environmental conditions as well. We need to simply bring in the additional scenarios and cases that we encounter at higher speeds. We need to effectively check the box to ensure that all of the performance that we expect to be there is actually there.

You should really think about closing the safety case as a testing framework as opposed to a feature development or implementation framework. This is a very manual and tedious process because as you can imagine, there's lots of scenarios to close, and there's lots of I's to dot and T's to cross. You know, we'll continue to update you throughout the year on our progress towards that. As we said in the remarks, we remain confident in our timeline that we've set out, and we're looking forward to the launch later this year.

Got it. Appreciate the color. As a quick follow-up, I wanted to touch a little bit on defense, you know, with the recent ROGUE-Fires contract with the military and demos with the Pentagon. I was wondering if you could talk to us a little on how we should see the near-term opportunities with the Army or DoD and what type of contracts maybe we can focus on materializing or if you can quantify this opportunity a little bit further for us.

Sure. Thanks for the question. Yeah. I mean, we're really excited about defense. Hopefully, that came across in the remarks, and I'll just reiterate that here. We've been talking about the exciting opportunities within the defense space for the last several years. As you can imagine, the rhetoric is heating up. Congress and the Department of Defense have made it very clear that they want to field more technology from commercially mature companies, and that's certainly something that Kodiak delivers on the autonomy side, uniquely so, might I add. We do see an increase in partnerships and contracts being awarded in the future. The ROGUE-Fires contract was a really exciting one because it brings in a new branch of the military.

Previously, we've worked with the Air Force and the Army, and now we're getting to demonstrate the great capabilities of the Kodiak Driver to the Marine Corps. As we broaden our experience, broaden our demonstration footprint, we are gonna see more and more traction towards defense. As we've stated in the past, it's very difficult to give timelines or any kind of guidance towards defense or defense contracts, and so we're not prepared to do that today. That being said, we do expect these relationships and opportunities to accelerate throughout 2026, and we're very excited about the opportunity within defense more broadly.

Got it. Thanks again for all the color. Congrats on all the progress. Exciting stuff. I'll pass it on.

Thank you. Our next question comes from the line of Mike Latimore of Northland Capital Markets. Your question please, Mike.

Yeah, thanks. Congrats on getting to 20 vehicles there. That's great. You know, you need to get to 100% on the ARM metric before you launch on highway long haul. I guess, is there a definitive lag timeframe between, you know, getting to 100% and then being able to commercially launch, or can you kinda do it simultaneously? Just trying to get a sense of the timeframe between once you get to that metric, and then the time to launch.

Yeah. I don't wanna split hairs, and you know, talk about, you know, minutes, hours, days, et cetera.

Mm-hmm.

Effectively, yes, getting to 100% by our definition and our metric means that we are definitively ready to launch, and so you can think about those happening effectively in parallel.

No problem. Yeah. On the 20 vehicles, live vehicles, active vehicles, what is the exit ARR rate on those?

Yeah. Hi, Mike. Thanks for the question. We are not specifically guiding on ARR. However, we are exiting 2025 with approximately mid-single-digit millions of annualized recurring SaaS revenue.

Okay.

That's not factoring any other revenues from Kodiak Express or any upside from defense.

Got it. The pricing that you've envisioned is holding as expected?

Yeah, we're not gonna comment specifically on pricing of specific contracts.

Mm-hmm.

We are still executing as per our prior plan.

Okay. Very good. Thank you.

Thanks, Mike.

Thanks, Mike.

Thank you. Our next question comes from the line of Itay Michaeli of TD Cowen. Your line is open, Itay.

Great. Thank you. Hi, everybody. Just a first question. As you've expanded the driverless trucks and the hours of paid driverless operations, I'm curious whether the ODD has also expanded. Are the trucks doing kinda new, different routes, more complex? And maybe just also just talk about any kinda rates of remote assistance and interventions, things of that nature as well.

Yeah. Thanks, Itay. Yes, absolutely. It has expanded. I mean, you have to remember for us, these are trucks owned and operated by the customer. We don't control the trucks. We don't determine where they operate. We don't tell the customer where they can operate these vehicles. They choose the routes. They choose their operations. You know, the Permian is a 75,000 sq mi area. Obviously, Atlas being one of the more sophisticated operators in the region, they utilize a conveyor belt called the Dune Express in order to move sand from the mine into some of the polygon regions that are most attractive to their customers. They use trucks to carry from the endpoint of the conveyor belts to the end well sites.

Those well sites might be 10, 20, even 40 mi away, and they change all the time. Every couple of weeks, the routes are changing. There's new routes. The sites are only used for a handful of weeks at a time. It could be anywhere from two to four weeks for a well site to be in operation. The routes are continuously changing. Some routes are more difficult functionally than others. Yes, the ODD continues to shift on a regular basis for us. We're serving multiple well sites with our vehicles, and some routes are incredibly narrow. I would say the most difficult part of operating in the Permian is the complexity of the terrain in terms of the bumpiness, the amount of potholes, the unevenness.

It's just very harsh on the hardware, it's very harsh on the vehicles. The narrow lanes is what makes it very difficult because these are bi-directional lanes with lots of traffic. Passing other vehicles in close proximity on a regular basis where you're just kind of going back and forth all day can be very challenging. For narrow lanes, that's where the ODD is, I would say, most difficult. Then you throw weather on top of that, and that adds additional complication. Yes, as we expand, we obviously see new things, see new challenges, and increase the diversity of which the system has operated. In terms of, you know, disengagement metrics, there are no disengagements for a driverless vehicle. There's nobody there to disengage.

I hope that is clear. In terms of, like, remote assistance usage, we haven't publicly disclosed specific usage numbers. That being said, the primary use of remote assistance for the Kodiak system is in and around pickup and drop-off locations where you have really nuanced, fine control. You know, you need really nuanced fine control of the vehicles in an environment that is changing constantly, and that's primarily where the customer generally requests assistance for these vehicles.

That's very helpful, Don. Then just as a follow-up, I'm hoping just to go a bit more into the roadmap for the Bosch collaboration and maybe how we should think about the opportunity over time for you to generate some future BOM savings and kind of other efficiencies from that important partnership.

Yeah. Thanks for that question. This is a really exciting announcement for Kodiak. Obviously, CES was a really great event for us. Bosch being a fantastic partner, we're already in deep collaboration working with them on future generations of the Kodiak Driver, where we believe we can bring additional efficiencies, through single supplier and mature supplier relationships like Bosch. We haven't provided any specific references to, you know, costs or, timelines for that work. You know, we definitely look forward to continuing on, our public disclosure with Bosch at future, you know, future events and we'll have more to say later on.

Awesome. That's very helpful.

Hey, this is Surajit. Just to add on to what Don mentioned. You know, Bosch is part of our scaling and driving down BOM cost strategy. As Don mentioned in his prepared remarks, we are executing on three levers, I would say. We have made some engineering design enhancements, which are already yielding some savings results. Second, as we increase the scale of the production, that'll drive cost optimization. Bosch and Roush, they fit in our overall global supply chain organization. Obviously, Roush fits in from providing high-quality assembly and Bosch from being able to manufacture at scale and source multiple components from the same vendor. That would allow us to drive down BOM cost materially over time.

Terrific. That's very helpful. Thank you.

Thanks.

Thank you. Our next question comes from the line of James McIlree of Chardan Capital Markets. Your line is open, James.

Thank you. Good afternoon. Regarding the activity with Atlas. Prior to recent events, the oil prices and the Baker Hughes rig count were declining. I'm curious if that has had an impact on the deployment schedule with Atlas. Is 100 trucks still a viable goal with them?

Yeah. James, thanks for the question. You know, we remain committed to delivering the remaining 80 trucks on that initial 100 truck order over the next few quarters. The timing of those deliveries will largely be aligned with you know, the customer's fleet planning and deployment schedule. We do expect the rollout to be back-end weighted in the year, and we'll continue to work closely with the customer to ensure that the trucks are integrated efficiently into their operations as necessary. As you know, the oil market is somewhat cyclical and fluctuations do occur. Of course, things are changing literally by the day. At the same time, at the scales that we're talking about, you know, our trucks are not materially affected by those types of fluctuations. You know, we remain committed to the 80 trucks on the customer's fleet planning deployment schedule.

Great. That's helpful. as far as other industrial customers announced this year, is that a high likelihood? Is that a moderate possibility? Can you kind of frame the potential for other industrial customer announcements this year?

Thanks for that question. I mean, the pipeline. What I can say is that the pipeline is very strong, and we're talking to customers all over the world. As we mentioned in the prepared remarks, there's a strong pipeline in Australia. Obviously, the mineral resource industry there is one that fits our model perfectly because it's extremely remote, very difficult to find labor. That labor is incredibly expensive, and these are operations that run effectively continuously in remote regions. This is definitely an area where we're interested in expanding. Please understand that the complications with going to Australia is not trivial. We're working through the logistics there.

Of course, the Middle East is very top of mind for us and others at the moment, both from a defense perspective but also from an industrial perspective. We're talking to several folks in that region and, you know, we'll have more to announce when the time is right.

Okay. Very good. Thank you.

Thank you. Our next question comes from the line of Walter Piecyk of LightShed. Your line is open, Walter.

Thank you. Hey, Don, first I'm gonna flex 'cause I'm doing this question from the back of a Tesla Robotaxi. Unfortunately, I have the safety attendant in this one. I have not gotten one without a safety attendant, so all the time. For you guys, I just want to follow up on the Bosch question. Is there any issue in terms of exclusivity in terms of you guys, you know, obviously, there's another company out there that has shifted to upfitting themselves. Do you get kind of first dibs on this stuff? You know, I guess if there's you know anything that's you know if you have the cost-saving opportunities that are built into the production grade integration, like sensor suite optimization or compute platform, is that stuff that you guys keep to yourselves or that they can sell to others at the same time?

One of the great things about the relationship with Bosch. There is no exclusivity, as you mentioned. However, we you know we think that there's strength in the industry by providing companies like Bosch with you know guidance and experience really when it comes to developing these systems. As we mentioned in the release with Bosch, this is not exclusive to only our upfit model with our integration partner in Roush, but this is also a system that can be deployed to OEMs for line-side integration. That I think is something that we're very excited about. This is a very close collaboration. It doesn't imply exclusivity, and so in theory, others you know could have access to the technologies that we're working on.

You know, we think this is a rising tides raises all boats type of situation, and we're excited to work with one of the largest automotive suppliers in the world on a technology that we think is fundamental to scaling our business. We think that this is a pure upside in working with Bosch, and it's not exclusive to either upfit or OEMs. This is really a works for all situations type of collaboration.

Got it. First off, back on the $13 million-$14 million, whatever it is, R&D. Obviously, super lean, but at 85%, like, I guess the question is, for that last 15%, you know, I guess, you know, one of the bear case you could throw out there is like, "Oh, it's easy to get to 85%." Maybe it is, maybe it isn't. That last 15%, we're gonna see a massive ramp in R&D, OpEx, whatever it is. Can you kinda address those concerns to the extent they're out there in terms of increased capital intensity to get 85% up to the point where you can really get this thing going?

I'll say a few things, and then I'll hand it over to Surajit on more of the financials. I think it's a very good point that you bring up. I think this is something that we're incredibly proud of, being a capital efficient, lean company. We always have been. That's in our DNA, and it has been for the eight years that Kodiak has been in existence. We don't expect that to change. A couple things I think that are worth mentioning, as I mentioned in my remarks, AI is really accelerating progress when it comes to development, right? This is happening around the industry, but Kodiak has fully embraced the use of AI and generative AI tools for coding and you know, process assistant.

What we're seeing is the ability to accelerate a lot of the work that would have otherwise taken significantly more resources on the R&D side, and we can get that done much more capital-efficiently than we would have been able to otherwise. We've been seeing the fruits of that over the last several quarters, right? That's not something that's just gonna turn on this year. Obviously, as those models become more powerful, you will see a rapid acceleration in our ability to make progress at a much lower cost. The second piece I would say is that, we did mention the expected free cash flow on a yearly basis, and so we don't fundamentally expect that to increase significantly. Maybe I'll turn it over to Surajit to address that.

Don, before you turn it over to him, just a quick follow-up from there. As you know, the AI helps you now versus what it was before. Can you put a timeline on that? 'Cause obviously, like, there seems to be an acceleration obviously happening in autonomy right now because of AI. How long ago was it that if someone was developing AI, they wouldn't have had that benefit? So they wouldn't have had that getting from 85%-95% at a much more efficient price. Was that, like one or two years ago, five years ago, how recent has the evolution of AI really helped the development costs for a company like your, like yours?

I would say that's within the last year. If you look at the last, you know, early 2025, these technologies were just starting to take hold. People didn't really understand them well. We didn't really understand how to use them effectively at large scale. You know, for large scale development. It's important to distinguish between, you know, a solo person at their computer working on some code versus an entire repo that's read and understood by an organization. You have to use the tools a little bit more carefully, and it's taken some time to figure that out. Once you have, they've really come of age, and they're a rapid accelerant of progress. Yeah, in the last two quarters, I would say last six months, you've really seen an acceleration in that development, and I think that acceleration will continue throughout 2026.

Awesome. Thank you.

Hey, Walter. This is Surajit here. Just on the question of investments. As Don mentioned earlier, most of our incremental R&D investments to get to long haul is mostly on safety validation and systems. That will require some incremental investment, but we expect most of that to be offset by the increasing revenue we are getting from our industrial customer as we deploy more trucks. That's I think our beauty of our model, being able to operate across three verticals. We are able to leverage the other verticals to offset some of the increased expenses in those areas.

Thank you.

Thanks, Walt.

Thank you. Ladies and gentlemen, that is all the time we have for questions, and that does also conclude today's conference call. Thank you for participating. You may now disconnect.

Thank you for standing by, and welcome to Kodiak's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. I would now like to hand the call over to Lauren Harper, Kodiak's Chief of Staff. Please go ahead.

Thank you, and welcome, everyone, to Kodiak's Third Quarter 2025 Earnings Call. On the call today are Don Burnette, Founder and Chief Executive Officer of Kodiak; and Surajit Datta, Chief Financial Officer of Kodiak. Our press release and an earnings presentation were issued earlier today and are posted on the Investor Relations section of our website. This call is being broadcast live via a webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, Kodiak will be making forward-looking statements within the meaning of the federal securities laws about financial performance and future events, including our guidance for fiscal fourth quarter and full fiscal year 2025, as well as our long-term goals. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statement made during this call that is not a statement of historical facts should be deemed to be a forward-looking statement. All forward-looking statements, including statements regarding our guidance for fiscal fourth quarter and full fiscal year 2025, our estimated total addressable market, our operational and product road map, our relationships with partners and suppliers, our ability to produce and deploy the Kodiak driver at scale, including the timing of launching driverless trucks for long-haul highway operations, our expansion plans and opportunities and our expectations regarding future business and financial performance, including future cash flows and our path to profitability, are based upon management's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. We disclaim any obligation, except as required by law, to update or revise any financial or operational projections or other forward-looking statements, whether because of new information, future events or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Further, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we may also refer to certain non-GAAP financial measures. For more detailed information on our non-GAAP financial disclosures, including reconciliations to most comparable GAAP measures, please refer to our earnings release, which can be found on our Investor Relations website. Our discussion today also includes references to forward-looking free cash flow. Such forward-looking financial measure is provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. I will now turn the call over to Don. Please go ahead.

Thanks, Lauren, and welcome to our first earnings call as a public company. Today, we're excited to share our third quarter results. But first, I'd like to introduce you to Kodiak and talk about our industry-leading technology, our strategy and why we believe we are positioned to capture the tremendous opportunity in the global trucking market. Kodiak delivers AI-powered driving technology that tackles some of the world's toughest driving jobs across vehicles and environments. We are a leading provider of autonomous trucking technology with 10 driverless trucks in customer operation with no human in the cab. These 10 trucks are the first to be delivered as we fulfill the world's largest known driverless trucking contract, a binding order to deploy our technology in 100 customer-owned trucks. Our differentiated technology allows us to seamlessly operate across a variety of environments, giving us the flexibility we need to focus on 3 large verticals: long-haul trucking, industrial trucking and defense. Across these verticals, we work with industry-leading customers such as J.B. Hunt, Werner, C.R. England, Martin Brower, Atlas Energy Solutions and the U.S. Army. Kodiak's core business is based on the Driver-as-a-Service or DaaS model, which is designed to replicate how customers pay their drivers today, either by the mile or by the vehicle. Our customers own and operate their own driverless trucks and pay us a recurring fee to utilize the Kodiak driver in their fleets. This DaaS model allows us to generate recurring revenue while keeping our balance sheet relatively asset-light. We initially launched this model with Atlas Energy Solutions, a leading logistics provider in the Permian Basin that is actively working to automate its supply chain. We intend to grow DaaS revenue, both as Atlas grows its fleet of Kodiak-powered trucks and as we expand driverless operations with new customers. I believe it is paramount to execute across 3 strategic pillars to launch a driverless business: technology, safety case and product. While technology is the most visible, each of these pillars is critical to successfully launching and scaling autonomous trucks. Let me address each of these, starting with technology. The Kodiak Driver, our autonomous system combines advanced AI-powered software with modular vehicle-agnostic hardware. We designed The Kodiak Driver to operate in challenging driving environments while integrating seamlessly into our customers' fleets. This single integrated software platform is designed for deployment across 3 verticals: long-haul trucking, industrial trucking and defense. It operates day and night in a wide range of weather conditions, including rain and severe dust storms and in some of the most complex scenarios in trucking. Our core technology allows the Kodiak driver to operate without high-definition maps commonly used in the AV industry. We believe this approach makes the Kodiak driver more adaptable to real-time changes on the road than traditional AVs that heavily rely on premaps to rain. It also makes the Kodiak driver better able to navigate unstructured off-road environments, uniquely enabling us to pursue opportunities in the industrial and defense verticals that would otherwise be challenging if we required high-definition maps. We integrate our software into our modular autonomy hardware kit that is adaptable to a wide range of vehicle types. We've already integrated the Kodiak hardware kit into Class 8 trucks, Ford F-150s and even treaded military vehicles. Our hardware kit includes Kodiak's proprietary sensor pods, which are self-contained modules that contain third-party cameras, radars and LiDARs and are designed to be quick and easy to swap in the field with minimal training. Our modular approach allows us to quickly install The Kodiak Driver's hardware kit into our customers' trucks, reducing the cost of deployment. Years ago, we decided that upfitting was the right go-to-market strategy to address a significant industry-wide challenge that today, none of the truck OEMs offer a driverless-ready platform. To implement this strategy, we partnered with Michigan-based Roush Industries, a leading automotive product development supplier. Roush is an industry leader in small to medium volume automotive manufacturing. Their deep experience building high-quality vehicles at scale brings efficiency and quality to our manufacturing that would be very difficult to match with in-house production. Now to our second pillar, safety. Safety is our core value at Kodiak. It is critical to building trust with customers, regulators and the general public. The most important part of the process is building a safety case, which is a comprehensive evidence-backed argument for why The Kodiak Driver is safe to deploy. Kodiak is one of only a handful of AV companies known to have completed a driverless safety case. Developing a safety case is a massive cross-functional effort, spanning software, systems engineering, hardware, functional safety, manufacturing, operations and even legal and policy. To help track our progress on launching The Kodiak Driver on long-haul routes, today, we are unveiling our Autonomous Readiness Measure, or ARM, which measures the percentage of claims and evidence in Kodiak safety case for driverless operations that are materially complete. Having completed our industrial safety case, our industrial arm is necessarily at 100%. Today, I am incredibly proud to report that our long-haul arm currently stands at 78%, and we expect to make steady progress in the quarters ahead as we prepare for long-haul driverless operations in the second half of 2026. Lastly, I'd like to turn to our third pillar, the product. We take a unique customer-centric approach that has allowed us to implement our technology and build a valuable product our customers can utilize efficiently. The operational experience we have gained over 7 years and 10,000 loads has enabled us to understand our customers' needs and build our products accordingly. For example, we developed our quick swap sensor pods after hearing from our customers about the importance of our hardware fitting into existing maintenance processes. Additionally, our driverless deployment with Atlas in the Permian has helped us pressure test core product features, including launching, driving, landing and maintaining driverless vehicles. We see this generating a flywheel effect, allowing us to leverage these features and our learnings across long-haul and defense deployments. As we have already discussed, the Kodiak driver operates on highways, local streets, dirt roads and off-road environments. This generalization enables seamless operations and shared learnings across industries. I'd like to address our unique experience and opportunity in each of these verticals. Kodiak started its journey with long-haul trucking, and this continues to be our primary focus. Given the trucking industry's $4 trillion global TAM, we see tremendous opportunity in this vertical. Today, we get paid to deliver freight from our Dallas operations hub to Houston, Oklahoma City and Atlanta using our own trucking fleet with a safety driver. Our highly respected customers include J.B. Hunt, Werner, C.R. England and Martin Brower. We also see a robust pipeline of customers interested in piloting and eventually deploying The Kodiak Driver in their fleets. We continue to make meaningful progress towards our goal of launching driverless operations in the long-haul vertical in the second half of next year and expect to subsequently transition our long-haul customers to our DaaS business model. The industrial trucking vertical, where we deployed our first driverless trucks includes oil and gas, mineral transportation and logging transportation. The $68 billion global industrial market is an ideal use case for our technology. Operators in remote industrial locations face even greater difficulties recruiting and retaining drivers than long-haul carriers, meaning that autonomy can offer significant cost savings and operational efficiencies. As I mentioned previously, The Kodiak Driver's technology is well designed to work in unstructured industrial environments where we see many challenging scenarios that are less common in long-haul trucking. These include oncoming traffic, narrow uneven roads, frequent pedestrians and the occasional count. We believe that this versatility sets The Kodiak Driver's AV capabilities ahead of the competition. In addition to being a significant revenue opportunity, our industrial trucking deployment in the Permian helps us mature The Kodiak Driver across all 3 of our strategic pillars. The Permian is a literal and figurative sandbox for honing our technology, our safety case and product, enabling a flywheel that is already accelerating our ability to implement our technology across verticals. The unstructured driving environment of the Permian produces more unusual edge cases compared to structured highway driving, progressing the technology through rapid learning and challenging the system. We've also gained significant product experience integrating into our customers' transportation management systems and developed processes for managing vehicle maintenance with operations personnel on the ground. We've been delivering loads with no human in the vehicle in some of the toughest weather conditions in trucking, including dust storms. This experience will enable us to provide greater value to our long-haul customers. Lastly, we're focused on adapting our virtual driver for defense purposes. The current administration has adopted a supportive posture for autonomous technology and defense use cases mirror long-haul and industrial trucking with both on-road and off-road operations. We have proven experience in defense exemplified by our $30 million contract with the U.S. Army, which we completed work on earlier in 2025. The need for autonomy and defense applications is obvious. And ultimately, we believe autonomy will be integrated into the entire Pentagon vehicle fleet. We believe Congress and the military support investments in autonomy, though the government shutdown has caused some short-term uncertainty around contracting timing. We will continue to pursue opportunities in this space going into 2026. Now turning to our Q3 results. We are pleased with our strong performance in Q3. During the third quarter, we deployed the Kodiak driver in an additional 5 trucks owned by our customer, Atlas Energy Solutions. We are now generating recurring gas revenue on a total of 10 driverless trucks equipped with the Kodiak driver, a 100% increase over Q2. As we move into 2026, we expect to accelerate our deployment as we seek to fulfill Atlas's initial order of 100 Kodiak-equipped trucks. We have also completed over 5,200 cumulative hours of paid driverless operations, which represents a 166% increase from the end of Q2. We view this as a key metric to measure the progress of an autonomous company regardless of the specific use case. Additionally, we have driven over 3 million autonomous miles and delivered over 10,000 loads for our customers, a 21% increase in cumulative deliveries over Q2. I'd like to address our recent progress by pillar. First, the technology pillar. At the beginning of Q4, we issued a new software release that, among other improvements, includes new features that allow us to reduce the need for remote assistance by 53%. This reduction in turn, improves our ability to scale our solution. Another feature included in this new software release is a new component of our perception system that leverages generative AI-based vision language models to identify and address novel complex edge case scenarios that are rare in the real world. We believe combining our proprietary multimodal AI perception model, Giga FusionNet, with these new high-level reasoning capabilities sets a new standard for physical AI. Using this new technology, The Kodiak Driver's AI can now identify scenarios like flooded roads and car fires, rare scenarios that can be a challenge for more traditional perception techniques. This new feature allows us to better handle the long tail of complex etch cases and gives us further confidence as we move down the path towards our long-haul driverless deployment. In Q3, we announced that we have integrated NXP's ISO 26262-compliant processors and interfaces into the architecture that powers The Kodiak Driver. The addition of NXP's automotive solutions have improved The Kodiak Driver's reliability and robustness while helping us to improve vehicle uptime. Last week, we announced an expanded partnership with global Tier 1 automotive supplier, ZF. Through this expanded partnership, we purchased steering systems with redundant components for 100 Kodiak-equipped trucks. These redundant steering components are critical to ensuring our ability to safely scale The Kodiak Driver. On the safety side, we were proud to announce the results of an evaluation by Nauto, a leader in AI-powered fleet safety technology. Kodiak received the highest VERA safety score among over 1,000 fleets in Nauto's network. In fact, The Kodiak Driver received a perfect score of 100 in 3 out of 4 Nauto VERA score categories and in 95 in the fourth. We believe independent safety evaluations like Nauto's help to validate what we already know. The Kodiak Driver is already among the safest drivers on American highways. Lastly, I'd like to address the product pillar. As we've discussed earlier, we continue to execute on the upfitting strategy we first articulated years ago. In Q3, Roush launched a dedicated manufacturing line to upfit trucks with Kodiak's hardware kit. With the Roush-built trucks already rolling off the line, we believe we have further solidified a leading position in building driverless trucks at scale. We also continue to strengthen our OEM relationships over the course of the quarter, and we'll continue to prioritize building those relationships. Additionally, we added the ability to haul 2 trailers at the same time. Pulling doubles, as it's called in trucking, is difficult for even highly skilled human drivers. In addition to extra length, the second trailer complicates every turn. This makes maneuvering extremely difficult. Pulling doubles is even more difficult in the Permian, which features rugged landscapes with narrow windy roads, and we achieved a significant technical milestone ahead of schedule. We also saw significant regulatory progress in Q3 and the early days of Q4. I'd like to highlight one item in particular. In early October, the U.S. Department of Transportation issued a waiver that allows AV truck operators to use flashing warning beacons as a replacement for reflective warning triangles. We integrated these warning beacons into our very first driverless-ready truck back in 2024. We are thankful for the administration support, and we want to thank them for their leadership on this issue. Finally, over the past few months, we made tremendous progress as we prepared Kodiak to operate as a public company. We are incredibly excited for this next chapter and look forward to sharing more updates on our next earnings call. I am proud of what we have accomplished thus far and believe we are well positioned for growth. In summary, Q3 showed Kodiak executing across our 3 pillars: technology, safety and product, positioning us to deliver meaningful growth and durable value for customers, partners and shareholders. We are converting our progress into real commercial traction, including delivering additional Kodiak driver-powered trucks under the world's largest known driverless truck deployment. We head into 2026 with strong momentum across the long-haul, industrial and defense verticals and are continuing to move toward the launch of driverless long-haul operations while scaling our industrial business. We believe these wins will allow us to grow as we remain capital efficient, providing a path to profitability and positive free cash flow in the future. I'll conclude my remarks by extending a huge thanks to all of our Kodiakers. The progress we have made is a reflection of your hard work, and I look forward to accomplishing even more with you in the future. Surajit, over to you.

Thank you, Don, and good afternoon, everyone. I am pleased to share Kodiak's financial results for the third quarter of 2025, our first as a public company. This quarter marks an important milestone for Kodiak as we continue to successfully execute on our mission to accelerate adoption and commercialization of autonomous technology in a safe and reliable way. From a financial perspective, we are committed to delivering consistent value and building on the strong foundation already in place. We see potential for significant long-term growth, scale and operating leverage. We delivered strong performance, demonstrating our ability to scale and grow the business. We also continue to focus on deploying capital efficiently, most notably by partnering with leaders in the AV and trucking ecosystems. This allows us to focus on our core competency of developing advanced AI-powered autonomy software. Revenue for the third quarter was $0.8 million. This represents a 53% growth over the prior quarter, primarily driven by increase in Driver-as-a-Service revenue generated by our 100% quarter-over-quarter growth in customer-owned and operated driverless trucks. Let me take a moment to further explain our DaaS revenue model. Under this model, we charge our customers a single composite license fee to use The Kodiak Driver AV hardware and AI-powered autonomy software. We charge this fee on either a per vehicle or a per mile basis. This flexible pricing model is designed to align with our customers' diverse operational models. The DaaS model allows us to build predictable recurring revenue under multiyear contracts. We have already implemented the DaaS model with Atlas. In our long-haul operations, our customers currently pay us to deliver freight on Kodiak-owned autonomous trucks. We plan to transition our long-haul customers to the DaaS model once we commence our long-haul driverless operations. By integrating the Kodiak driver into customer-owned fleets, we expect to continue to build an asset-light business that scales with our customers' growth while limiting our CapEx outlay. Now turning back to the financials. GAAP operating loss for the third quarter was $30 million. Non-GAAP operating loss for the quarter, which excludes stock-based compensation, totaled $24.7 million, primarily due to continued investment in R&D and operational support for our industrial deployment. For a reconciliation of non-GAAP metrics to GAAP, please see our earnings release, which we filed prior to the call. We also incurred capital expenditures of $6.6 million, primarily to purchase AV components that we deploy on our customers' trucks. Free cash flow for the quarter was negative $40 million. This included high single-digit millions of onetime payments and public company-related costs. We ended the quarter with $146.2 million in cash and cash equivalents, including the proceeds raised as part of the de-SPAC transaction, net of fees and expenses. Turning to guidance of Q4 of fiscal year 2025. We expect to end 2025 with customer-owned and operated driverless trucks in the mid- to high teens. Q4 FY '25 free cash flow is expected to be in the range of negative $36 million to negative $38 million as we continue to invest in R&D and incur capital expenditures to purchase and deploy AV hardware on customer-owned trucks. Over the next few quarters, we expect to continue to deploy The Kodiak Driver to meet our initial contractual commitment of 100 customer-owned driverless trucks with Atlas. This is expected to drive meaningful increase in quarter-over-quarter revenue. As we look ahead, we expect our capital needs to be primarily driven by 4 factors: R&D investments, including safety validation, costs associated with scaling industrial commercialization, strategic initiatives to lower AV unit hardware expenditures and public company costs. We expect that these capital needs will be partially offset by increases in DaaS revenue as well as improvements in operating leverage from scale and efficiencies. We plan to provide more detailed guidance for fiscal year 2026 as a part of our Q4 FY 2025 earnings call. We'll opportunistically seek additional financing options to strengthen our liquidity and support the next phase of growth, particularly as we build out our customer pipeline and launch driverless commercial long-haul operations in the second half of fiscal 2026. Our financial priorities remain consistent with our strategic goals that Don had laid out earlier. We want to, first, grow Driver-as-a-Service revenue with existing and new industrial and long-haul customers to build a durable recurring high-margin business model over time. Second, invest prudently in technology, safety cases and commercial readiness to launch long-haul driverless operations in the second half of fiscal 2026. Third, implement scale and cost efficiencies into our capital-light model to achieve profitability and positive free cash flow over time. Lastly, maintain a strong balance sheet and enhance liquidity through disciplined capital planning and opportunistic financing. In summary, Kodiak is entering its next chapter with a strong foundation. Our momentum, technology leadership and competitive position remains strong, and we are delivering high growth with focus on improving operating leverage. We are executing with fiscal discipline and transparency as we build long-term value for our customers, partners, employees and shareholders. I want to thank you all for attending our first earnings call and for starting this journey as a public company with us. Operator, can you please open the line for questions? Thank you.

[Operator Instructions]. Our first question comes from the line of Michael Ward of Citigroup.

Don, I wonder if you could talk a bit more about the ZF partnership that seems intriguing. How exactly is that going to work? Is it a supply relationship, development relationship? How is that going to work?

Thanks, Mike. The ZF relationship is primarily a supplier relationship. ZF, as you know, is one of the leading suppliers of steering columns and automotive components in general to the commercial trucking market. We have a long-standing relationship with them and use their components in our driverless trucks today. And this announcement further solidifies the partnership between Kodiak and ZF as we intend to scale our solution going into 2026.

That's a great. It's a great company. Surajit, as you look at the fourth quarter, it seems like your annualized run rate at year-end is going to be somewhere in that $5 million range just from the Atlas relationship. Is that about right?

We expect meaningful growth in revenue. So Q4, as we have guided, we will be into...

As you exit -- as you exit, is that what we're talking about in that $5 million range for the annualized run rate?

Yes. I think that could be close to that number.

Okay. And then from what I can tell, your cash burn was about $35 million, you had some unusual there in 3Q. So about $35 million a quarter, that's about right?

In Q3, we had some high single-digit millions of onetime costs and public company-related costs. So we have guided for Q4 for free cash flow to be negative $36 million to negative $38 million.

Perfect. Okay. And just one last one, if I could, is I think you're on track to get to that 100-unit agreement with Atlas by the end of '26. That's your current target?

Yes, that's our target.

Our next question comes from the line of Andres Sheppard of Cantor Fitzgerald.

Congrats on all the great progress and congrats on the first public quarter. Certainly, incredible achievement. Don, I wanted to maybe touch on the long-haul operations that you're targeting to launch in the second half of next year. Can you maybe help us understand what is needed between now and then between that, I guess, 78% and 100%. Anything that you can point that we should be focusing on? And how confident are you in that target?

Thanks, Andres. Yes, we're excited to finally come out with some tracking metrics around our progress toward long haul. We've been talking about this for the last several quarters, and we wanted to be able to provide the market with some visibility and transparency into our development process. The arm is effectively a measure of the material completeness of our safety case. And as you know, we don't launch a driverless product until our safety case is complete. Most of the work from here forward involves a lot of validation and testing of the system that includes simulation, that includes structured testing and other forms of testing validation as we build up to that launch. And so we'll be providing more detail along the way. For now, this is our first data point as we progress, but you should expect to see quarter-over-quarter improvement as we move toward our expected driverless launch in the second half of 2026, and we feel reasonably confident that, that is an accurate time line.

Wonderful. That's super helpful. I appreciate all that color. And maybe just as one follow-up. A question on liquidity. So with roughly $150 million in cash and equivalents now, how are you thinking about kind of capital needs going forward? I realize you're not guiding cash burn going forward, but how should we think about that liquidity and any potential additional capital needs?

Thanks for the question. This is Surajit here. I'll jump in here. As you see as a part of the de-SPAC transaction, which you just concluded, we had the largest capital raise in the history of the company, demonstrating our ability to raise across the capital structure and across several investors. And we feel excited about our momentum and the tremendous progress we are making in deploying our technology and scaling the business. So as we scale this business over both industrial and long haul, we should be able to also drive significant operating leverage and reduce our [ BOM ] cost. So we feel confident that as we execute on this strategy, we will be opportunistically seeking additional financings to strengthen our liquidity over the next 12 months, support the next phase of growth and execute against our road map. So we feel confident we're raising that additional capital for the next few quarters.

Our next question comes from the line of James Mcilree of Chardan Capital Markets.

When you think about the second half entry into the long-haul market relative to the ARM measure, do you need to be at 100% for some period of time before you can enter the market? Or can you enter the market with a sub 100% again, you have to have it at some period of time. I'm just curious how that -- how you're using ARM as a gating factor to the long-haul entry.

Thanks, Jim, for the question. We -- there's no specified period of time. It's more of a minimum requirement. So yes, we would need to get to 100% on the readiness measure in order to feel comfortable that we have closed out the safety case for launching our driverless product. That being said, there's no specified amount of time between getting to 100 and actually doing the first driverless run, so to speak. And so it's a little bit premature and early to kind of talk about specifics at that sign of a granularity. And so what I would say is we're shooting for the second half of next year. And as we get closer to that moment, we should be able to provide additional clarity and more certainty around the timing of when we actually do our first deliveries.

That's very helpful. And then as far as customer additions are concerned, is it more likely that you enter the long-haul market before getting another industrial customer? Or is it the opposite that it's more likely to get another industrial customer first?

Well, we're dual tracking that. We're continuing to push to build our industrial business. As we talked about in our remarks earlier, we feel really good about growing that vertical. We have a great customer in Atlas, and this is really a crawl, walk, run approach to deploying autonomy. This is a safety-critical technology. We want to make sure that it's rightsized for our customers as our customers are learning with us. There's a lot in the product pillar that goes into actually efficiently deploying this product. And you can't just dump hundreds or thousands of vehicles on a customer overnight and expect them to be able to efficiently operate those vehicles to provide a useful benefit. And so there's a learning process as we go through this customer development, and that's really where we talked about the flywheel earlier on. And so we are looking to pick up additional industrial customers, and we'll have more on that as we continue to move through the quarters. At the same time, the team, especially the R&D team, the systems engineering team and our validation team are working really hard to get the truck to the appropriate level of safety for deploying driverless. And so I think it's really a dual track multipronged effort. Those are parallel efforts. I think the goal would be to announce additional customers in both of those verticals along the way. I can't really say exactly to what time frame one would come before the other. These are both top issues.

Our next question comes from the line of Itay Michaeli of TD Cowen. Alright. We move to our next question, next question comes from the line of Mike Latimore of Northland Capital Markets.

Congrats on the first call here and doubling the units in the quarter. That's great. I think Nauto's score was very positive. Can you leverage that? Are you leveraging that for marketing purposes after new prospects? And can that be helpful even, I don't know, in keeping insurance costs down?

Well, when you talk about new technology, especially within the safety -- safety critical realm like automotive driving, credibility and trust needs to be built over time. And we feel that the Nauto results really speaks to the safety of our system, especially as it compares to human driving. And that's one of those big question marks that people have had for many years, even over decades is how do these vehicles drive relative to existing humans, not just from a crash or accident percentage perspective, but what is the behavior by which they drive. And the exciting thing for us is I think this really demonstrates that not only are these vehicles not getting into accidents, which is kind of like your high-level metric, but they're also driving in a responsible, defensive and safe way. And that leads to better safety overall on our roadways. It also improves traffic and congestion. And so that's something that we think is really important as we deploy this technology more broadly and start to scale it. We want to be good citizens, not only to our customers, but also to the general motoring public. And this result simply speaks to the trustworthiness of the system for folks that don't have direct visibility into the system. Now how does that help Kodiak, of course, from a marketing perspective, but it helps from a regulatory perspective when we talk to regulators, they can get a sense for, hey, I have never seen this in action, and it's far away from where I drive day-to-day, but I can see that the score comprise over 1,000 fleets actually, they are the safest on the road. Same with our customers, right? We can take this data to our customers and show them not just 1 or 2 or 3 trucks, but we can say over the course of our entire operations of our fleet, we're actually behaving as safely and safer than human drivers on the road. And I think that really speaks to the credibility and trustworthiness of the system as a whole.

Great. Obviously, a lot of focus on industrial and long haul. In the government vertical, a ton of focus just across the board on autonomous systems, whether it's in air, on sea, on the ground. Can you give a little more context or color around opportunities you might see in the government vertical?

Yes. It's been tricky as of late with the government shutdown, as we mentioned in our remarks. We still remain convicted that the defense vertical is a large opportunity for autonomy. The Secretary of Defense actually just made some remarks emphasizing the importance of contested logistics and actually prioritizing commercial solutions within the Army and other branches adoption of autonomy. We think this is the right approach, and we think that Kodiak has, we believe, the most mature, commercially viable autonomy solution that can be applied to defense applications. And of course, as you've seen, we've demonstrated that several times over across multiple vehicles in multiple different environments with our Ford F-150s and the versatility they bring, but also the Textron Systems RIPSAW platform, which is a fully threaded vehicle. We really demonstrated the ability to bring that commercial maturity into the defense market. And we believe that, that's what the defense market is ultimately looking for as they want to scale and productize this technology. So we remain very bullish in defense applications. It's an interesting world in the government space right now, but we think 2026 is going to be an exciting year. So I would say stay tuned for more.

Our next question comes from the line of Ravi Shanker of Morgan Stanley.

This is Nancy Hipp on for Ravi Shanker. It would be helpful to hear a bit about how you're managing adverse weather, extreme environments or edge case scenarios in your autonomous system and how big a risk those are to scaling? I know you had a GenAI system to identify sort of these novel edge cases, but it would be helpful to hear more on that as you approach the on-highway launch in 2026.

Sure. Well, in our -- I'll use an example, our industrial launch back in 2024. So we delivered 2 -- the first 2 driverless trucks in December of 2024 and very quickly got those trucks to a level where they were capable of operating, firstly, around the clock, so 24/7, which is important to our customer, Atlas, which is a 24/7 operation, but also importantly, in adverse weather conditions. And so this has been something that The Kodiak Driver has already been able to handle for several quarters now in a driverless fashion. And so we expect to be able to bring those capabilities ultimately over to the highway environment when we first launch our driverless product in the second half of next year. So yes, the team is definitely working on validating those capabilities for highway. That is all encapsulated in our safety case, which, as we said, we're now at 78% on our readiness measure. And so we have already experienced and importantly, our AI system has experienced an adverse weather already.

Got it. That's very helpful. And then maybe for my second question, it would be helpful to hear about feedback you're receiving from your current partners after the launch with Atlas. And sort of how do you see that decision-making cycle for customers to go from initial discussions to adopting driverless trucks into a pilot to eventually scaling?

I think it's been an interesting journey, and the answer to that question has evolved quite a bit over the last decade, last several years and then to where we are today at the end of 2025. Our sense is that customers and the market broadly is excited about driverless deployment. It's more of a when can we get our hands on it as opposed to one of skepticism, which was not always true. If you go back several years, there was a lot of skeptical prospective carriers and truckload operators out there. These days, we don't -- we don't get as much skepticism. I think people realize that autonomy is the future of transportation broadly. That's true in the commercial market. That's true in the private vehicle market. And certainly, it's our belief at Kodiak that automation will make all the transportation modalities more efficient and safer over time. And of course, customers want to take advantage of that. They recognize that there's first-mover advantage and they want to move quickly. And of course, we want to be able to deliver a safe and efficient solution to them. More importantly, not just a safe solution, but one that they can actually utilize and hopefully utilize out of the gate. And again, this is where that flywheel effect comes in. Yes, we have an industrial application launched today, which is in a different domain than highway, but the customer interactions are largely the same for what we will bring to our over-the-road highway customers when we do eventually launch that product. And those are learnings that you can't really get other than doing -- and we think that this flywheel is going to accelerate our progress as we begin to scale our highway deployment. So I think customers are excited for it. I think they're waiting patiently to get their hands on the first driverless trucks that they can, and we hope to be the leading provider of those solutions for the customers broadly.

Our next question comes from the line of [indiscernible].

On those routes in Dallas, as you kind of prove out the safety case, Aurora, when they were proving out their safety case, I guess, got some pushback from their partner, PACCAR. Just curious if that's a risk scenario where you prove out your safety case, but the partner doesn't want it. And is there -- I'm going to extend that. I think you had mentioned kind of J.B. Hunt there as well. Do they have any saying this? Do they care? I mean I assume they're just -- if you're just delivering goods from one point to another, they shouldn't care, but who knows maybe they don't want the brand subjected to that risk. So if you can just talk about kind of who needs to sign off, if anyone, for you to go driver out on those trips from Dallas?

Thanks, Walter. It's a great question. I think there's like the legal sense of the question, who needs to legally sign off and then from a trustworthiness and good partnership perspective, there's who do you want to bring along. Our philosophy is we've always built our technology to be platform agnostic. We've shown that we can develop The Kodiak Driver and implement The Kodiak Driver across many different makes, models and form factors of vehicles. This gives us flexibility. So we haven't announced the platform that we will be using for our initial highway deployment. I think you asked, is this a risk? Everything is a risk. I would definitely say it's a risk. At the same time, we think building the right relationships and the safety of the technology in the right way and bringing people along, including them in the process is the right way to approach business. And so we think we have a path forward to deploy driverless vehicles without a driver and without an observer in the cab, and that's something that we definitely intend to do. But for sure, building trust with our partners is paramount in that process.

And then just kind of sticking with that partnership question, I guess. You've elected to upfit, right? And obviously, you've generated $800,000 of revenue. I think Aurora's revenue is like $1 million, so not even that much difference in the current quarter. I'm just curious like at what point, if at all, do you -- is it important to be integrated off the line, that type of stuff? I mean I know it's still early days, not a '26, not a '27, like do we just not worry about this or not consider this for some extended period of time? Or are there things in the works that you have planned for, I don't know, '27 or '28?

I don't think it's important to draw a line in the sand and pick a date like a switchover date. I don't think that's the right way to think about it. I think the right way to think about it is in terms of rollout and scale. In a lot of my conversations, there's this sense that thousands or even tens of thousands of autonomous trucks are going to fall from the sky and end up on our [ roadways ]. We're going to wake up on Monday morning and tens of thousands of autonomous vehicles are going to be out on the road. And we don't really think that's true. There's a progression to rolling this out, both from a safety, efficiency and operational perspective. And our current approach, we believe, scales into many, many thousands of trucks, which should be sufficient for the foreseeable future, short to medium term. And then -- that also depends on the development cycles for partners, OEMs and other providers within the autonomy space. And we don't control those time lines and something that I've said for a very long time is that I don't want to be beholden to time lines of other companies. I want to be able to take charge and control our own destiny. I think that's something that Kodiak has really done well, and we've executed on. We will continue to follow that philosophy over the next several years. We want to make sure that we have a product that we can deliver to customers when we are ready to deliver that product. And ultimately, when the ecosystem matures and when suppliers are ready, I think you're going to see access to broader scale, not just for Kodiak, but for the industry at large. And so I don't really think of it as a black or white or a line in the sand or a date on the calendar. It will come. It is a gradual progression. We are working hand-in-hand with suppliers, both on the Tier 1 side and the OEM side. We're tracking progress. They're tracking our progress. And so it's not something that we're losing sleep over, and we feel like the position we're in with the experience we've gained now developing an upfit solution and with our partner, Roush, that we've set ourselves up for success in the next coming years.

Our last question comes from the line of Itay Michaeli of TD Cowen.

Can you hear me?

Yes, sir. We can.

Perfect. Sorry about before. Congrats on the first earnings call. So going back to the 78% long-haul arm, Don, I was hoping you could maybe share roughly where that metric was maybe 3, 6, 12 months ago. And then on the OTA that you did that reduced the remote assistance by over 50%, curious if you could talk a bit more about that as well and kind of what are some of the issues that were resolved with that update?

Yes, absolutely. Thanks for the question, Itay. I'm glad that we cleared up the mic issue. So we don't have any numbers, historical numbers to share, unfortunately. This is our first data point. And of course, we will share updated data points going into the future, so you can see the trends. So unfortunately, I don't have a number to share on the historical aspect of that. Obviously, over the first several quarters of the year, we were focused very hard on delivering additional driverless trucks to Atlas and really perfecting the operation of those vehicles in that environment. And as we turn our focus to highway and our highway customers over the course of 2026, we'll have a lot more updates for you as we go. In terms of the improvement, this is incredibly exciting because efficiency is ultimately what will drive margins. And while all autonomous vehicles today require some type of remote support in certain circumstances, remote assistance in certain circumstances. It is our job as R&D developers to drive down the moments that any kind of assistance is required. So there's no specific instances I can point to or specific cases. But you can imagine that these trucks are very conservative, and they often will come to a stop if they see something they're not sure about. There's a lot of potholes that are present in the Permian. And often our truck will stop and ask human assistance for confirmation that they can continue or should they drive around it or is it safe? And ultimately, we want that conservative behavior in our trucks. But as we improve the technology, as our AI improves, as our foundation model work improves, the scene understanding, and we gave several examples of these in our deck, our scene understanding improves dramatically. The trucks can start to handle those cases on their own, and they need to call for human support less and less. And so we've actually reduced that, as we said, over 50% in the last quarter, and that's a huge, huge win and a sign that the technology is accelerating very, very quickly, and we expect that type of acceleration to continue.

That's great and good to see the progress there. Maybe just a quick follow-up on the financials. Of the roughly $6.5 million of CapEx in the quarter, can you share roughly how much of that is for purchase for soon-to-be-delivered trucks versus kind of in-period delivered trucks?

Thanks. It's a great question. Most of the CapEx is for future deployment as we need some lead time to acquire -- purchase the -- purchase the AV hardware components and then get it assembled. So most of that relates to the future deployment and ramp, what I would call it like success-based. So as we plan out the deployment for each quarter, we tend to make those purchases. But it's not exactly linear as well. Sometimes we may make some bulk purchases if the pricing is attractive or if there are potential tariff situations. So we look at that as well.

Thank you. And ladies and gentlemen, this concludes Kodiak's Third Quarter 2025 Earnings Conference Call. Thank you for participating. You may now...