TSP - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to TuSimple Third Quarter 2021 Earnings Conference Call. All participants are now in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. Keep in mind that this conference is being recorded, and there will be a replay available at ir.tusimple.com, following this call I would now like to turn the conference over to James Mann, Head of Investor Relations for TuSimple. Mr. ahead. go please Mann,

James Mann

Financial Good and earnings and are call. Executive operating and and Brandon. Pat Cheng third review we'll will TuSimple's to take quarter Chief the Chief Lu, Cheng XXXX With financial Officer Pat afternoon, you, Dillon. welcome and highlights everyone, and our President Officer then Thank us today questions.

over cover a items. Before me I few let turn to Cheng, the call housekeeping

today TuSimple's shareholder is will letter and the of of replay page call later being call reminder a be this our available a on This Relations Investor As website. recorded.

are which in will financial details measures turn non-GAAP reconciliation in a please our refer Harbor non-GAAP the subject a factors non-GAAP discuss to and predictions letter, also accounting the the in generally are letter to GAAP to to all variety materially differ for If to any you disclaimer comparable future and TuSimple's this the refer forward-looking shareholder risk that to over contain measures now. the not of Please to shareholder accordance risks are financial presented I We'll principles. object Cheng or may accepted release call including only and results with actual way, due Safe statements SEC from of disconnect and that filings. Note events detailed Please measures uncertainties. measures. more statements prepared factors. call in now press forward-looking begin. These our Cheng?

Cheng Lu

quarter call. Hello, you, and third everyone, James. earnings welcome our to Thank

sharing Pat progress, freight and I’ll freight operations. by TuSimple financial discuss our our start very to our long with autonomous the autonomous I’d at to share I’ll leading UPS. most TuSimple exciting and partnership and safe, is over standing developing today’s capacity on network people low-cost autonomous like Level few world the call mission Scaling to some updates the results. to and call X turn to in bring market. technology. a investing most Our is highlights our making meaningful reliable

we of and running by over the division two been lot American we’ve mileage, significant we’re to with find are our partners and are technologies. we our We working autonomous It and we’ve accomplished a routes, geographic freight last likely miles of autonomous operations. so Air UPS. accumulated is what represents is knowledge, reach lead partnership trucking have in world-class believe our haulage half the scale XXX,XXX commercialization. We’ve the that autonomous the years the the to believe that NAAF. companies together, autonomous significant a Over why heard or years, ways commercial deployment cumulative race proud trying most UPS recently, it of for measure the UPS’ easy, you UPS Freight freight the North To not autonomous paid and world’s to TuSimple whether or of

autonomous network Secondly, and autonomous terminals NAAF, for our coast to represents expand to with from Charlotte. opportunity our for we expanding NAAF. fantastic recently UPS UPS continue This a UPS coast to new to Dallas Including most NAAFs in links the UPS. HD nearly Orlando and relationship develop

we UPS during savings achieving Lastly, benchmark another operations. significant industry set autonomous by fuel

over and X This fuel standard price savings able to technology. fuel by surcharge two And operators. autonomous of driven we’re the Fuel XXXX over has band, validation for our technology, cost to our on shippers. last per year, from relative increased half XX% miles and party XX last found a that benefits. XX% autonomous further builds fuel human industry structure. freight, the and savings years, XX%. increasing of Level operations the over miles university significant We savings Over environmental by including believe of operating borne the study has on variable of significant fuel the far This significant UPS UPS the almost the represent third provides represents trucking’s for to support diesel from hour impact cost largest achieve fuel the a XX XX%

saving benefits can into fuel of cost dollars ecosystem. the of potential freight for technology’s Our translate billions savings

our technology Our UPS multi-year technology a deployment of a competitive represent autonomous operations and advantage development. real with significant provides our world conditions, in us and in go-to-market

Qualcomm’s business. leading continue quarter, employees. the a to our over to to take period quarter October. XX,XXX company to and of addition Michelle Sterling, time Michelle areas the has of board perfect to to like Moving in we TuSimple’s a scale who progress a Michelle board, technology moment third in recognize growth our represented all saw practice continue at I we amazing makes investment a perspective operations. global appointed our our high overall, human global to as resources from background Her Qualcomm want

the R&D globally. quarter our the bring R&D include to operational with driving hires during of Dr. XXX algorithms. team’s key headcount terms Jing of Vice building exceptional, experts. employees new of we Engineering, continue and ended Software the oversees In Senior quarter virtual approximately full-time our X,XXX recent invest added people, testing of and our we our Yumer, Overall, approximately of the who Learning, President Machine Head employees. technical to to We our Zhu, Dr. Two Ersin of team in employees new X,XXX full-time

has progress make with partner U.S., progress we on for our production the an to semi-truck its TuSimple exhibit is we're continue and Shanghai, long-term International at on-road in our including fleet be development stronger events. as major and closely with with program, as with well joint made month, steady regular Import cohosting make quarter, technology China will ecosystem. refining autonomous we our our This our brands one that Navistar global initiatives, TRATON testing, of completed believe OEM Internationally, Expo tradeshow an the strategy. Scania partner with which In customers. Scania on go-to-market Navistar This AFN working We the near-term dialogues even merger to continue TRATON TRATON. now and

accumulate in China. global to the miles our U.S., with our operate across world southern and real testing continue as Sweden to road as well fleet We programs

bringing XXX,XXX in our miles quarter, to miles X.X million. the drove road fleet Our cumulative

to an our removing team Phoenix mile on program, driver runs Tucson the towards the to making our route Now, for between areas. pilot provide XX and Driver-Out progress significant over update is

expect perform the before We to the complete the to initial Driver-Out months. over runs program yea-end, pilot and coming

technology require so is will is that including many might This driving weeks, As the a What roads. consist accounted multiple software, road across we're which part unplanned both pilot dimensions, construction, program Driver-Out multiple hardware, non-compliant continuously for driving undertaken. solving development beyond of includes makes and a Driver-Out real-time. challenging reminder, the and the performed runs Safe over public previously monitored and known changing ongoing encounter and and unknown factors motorist, pilot in anything all technology we of of conditions, on go-to-market. be autonomous operations major the for that must

me our ago, some insights autonomous have so provide over performed Let over a X,XXX you road far, accumulated progress with routes and We eight trips far. thus months into along started and dozen testing miles. XXX,XXX

hardware share am see last software are to discussed We performance. in I pleased improvement continue systems resolved. hardware challenges quarter quality we the now the that and to

Driver-Out to can our move was trip, a generation participated the else disengagements the and before technology development far for the risk vast safely approach. has of test all at freeze comes which see you TuSimple. significant system the us in case Safety, safety I has zero amazing just course mitigation our come. engineering recently pilot. phase. on process to our trucks weeks, validation a tell is gives public majority and development can one safety, particularly that The We a important like roads. driver of It including Driver-Out confidence our includes embark expect the run. it terminal-terminal in on functional systems remove to next I to of on coming validation demonstrated the how so tests, our My And this runs technology and focus multi-faceted the

process. areas accumulated commercial driver of for case scale have letter, to learnings our safety critical our today's we In from outlined out Driver-Out be learnings We will safety These primary two technology significant broader deployments. validation. our

to be safe, the is aspect systems level at safety, are the feel validates each which sufficient autonomously, and proven. to helping of Driver-Out safe operate trucks First system reliable, high that by

is we and the teams. have that supports aspect driver our by to triage proven and validates of procedures. for and safety, events prepared Second risk be engineering safety resolution driving creating each operation can, safe monitored of event operations assess safety it by assign Operation which we every processes and that level

day our all is safety this case, safety Driver-Out with organization onboarding, culture. teams on with in levels our company safety is primary to to and leadership And day validate are organization, on ensuring is committee, is the embedded to technology. committee, overall propositions safety Ultimately, focused autonomous of working hiring, our our departments senior belongs of across safety our closely operations. operations of myself Safety Our our consistent focus one responsibility safety. Across at the safety group. of our All significant which of our cross-functional the program fully included, of members Driver-Out TuSimple. value are a most and our all of the all

data driving The and to insurance driving events other internal our believe study only with to partners, established driving and autonomous development. This quarter, are also results to including autonomous we customers. to We well reduces for quantify company is the is technology empirical indicate our of systems Level behaviors Geotab third-party preliminary carrier result harsh accidents. for harsh important, our of initial driver. We study study of our driving the performance driving system. shipper as with with development, but relative significant our look not measurements forward objective driving human autonomous only telematics technology results that safety stakeholders accelerate Geotab. announced and continue X Having the we're significantly This events work providers our to precursors all

on we goal remain to our future on the penetration focused growing our over increasing developments, and time moving and AFN autonomy Now commercial current of capacity, our network. of

real-world enthusiasm despite help And continue deepened in logistics technology relatively brief customers We quarter, significant conditions. over want over a to translating provide Pat, process. update mapping a to Our us do This AFN develop this the high our quarter, is pace allowed terminals to of bring miles. of technology progress. We schedule. definition the which network expanded almost commercial now total map is miles reservation development, States. quarter customer to a miles the to revenue flat player on us hand excellent CFIUS expand our And to show UPS X,XXX our across half Coast adding of immediate as fleet. to on Further, into before tremendous to truck our I our relationships, increased XX,XXX East ahead also commercial call including of southern our added We I example miles the the our an our increasing, holder. United has

to be updates at We continue more CFIUS, resolution. remain dialogue We with the committed to time. are providing not will we time. we moving on a definitive believe to outcome reached closer But share at appropriate and process in productive we and have process, the of this

financial call our I'll that, over with Pat, results now So discuss and to guidance. to hand the

Pat Dillon

reservation Cheng. XXXX. I once progress mentioned you, during This our added plan routes with Thank quarter. freight Southwest. coming diligently from to we the a in this months, customer logistics our the reservations particular the total Beginning team the significant hauling to and brings relationship in our on reservation during ongoing truck this new to XXX on with our with in operator start share last more program, global worked reservations September. call, them We our we finalize

broad and coming new quarters. Our expect carriers. of to in engage reservations And continue team a discussions range continues we add in with reservation to to the shippers

with to deploying committed to partners the focus autonomous to continue reservations, in us who on establish resources of future. working lanes quality We our the alongside are

networks. highly We technology continue with that our for over our the be bodes rapid we us, engaged breadth well the the potential their believe on of this AFN of And encouraged to years are to adoption incorporating customers by into come.

period last to third revenue the quarter, three we in fold increased $X.X the million Now, quarter, shifting of year, reported quarter. the over and our which financial represent the for increase quarter same XX% versus results gears over

by receive started revenue in our driven to primarily semi-trucks new improvement we a flat continued growth during the While quarter. utilization. fleet size was recently, asset And relatively revenue is

period, quarter, compares SBC. compares to This G&A the million period spent same Moving $XX million $XX we $XX of to the period in the including to total We million spent million expenses, year. $XX in last R&D of on year. in This $XX million on during same the million $XX last including SBC.

the loss same commercial the discrete the million capital Our do to balance development, that larger $XX fourth EBITDA with reflects by which technology to year. the expenditures adjusted ended repeat invested and in equipment and the And $X EBITDA facility negative The million quarter in driven was $X.X our continued compares expect during purchases we quarter. period We costs. in we in negative items including not cash billion. million, last of $XX investment quarter,

Now are guidance, refinements for annual although, do to have largely to our provide expected, XXXX an financial share. to XXXX for we and a update our the our year-to-date, of the as few remainder forecast trending performance

to are prior to our the guidance to million, ex to few SBC guidance I'll million range. million, which the guidance million, of change now refining SBC hand our our are adjusting remarks. is million Similarly, our last back prior $XXX the the guidance. to communicated We is we upper $XXX Cheng ex $XXX to half other for it stock R&D upper represents G&A also compensation range. to $XX there and half a which no based previously to of We're refining $XXX $XX for expectations

Cheng Lu

you, us engineering we're ever to and of stepped challenges propel our solving our to I'm completing Thank team, made of that’s technology quarter, we've towards scale. towards the Pat. mission. Level complex most undertaken. market past bringing incredibly At proud employees one This all been at of TuSimple, the up progress the X towards our striving

our let start we with head And ready session. lead As to Q&A strategy year, we to the we're of the We'll will into that, technology, with industry the continue our end go-to-market year and not our the up. talent.

Operator

Instructions] from Please Stanley, And go have [Operator we Shanker. Ravi ahead. Morgan

Ravi Shanker

Pat. Driver-Out test. Maybe Good can and Cheng I on Thanks. afternoon, start the

the only about your There weeks done timeline You reiterated or least year. test to start get in of the at the this seven the are end left before year.

fair sight on that it and have is test? you confidence strong say line timing really of this So to the of

Cheng Lu

target we aiming hit Yes, Ravi, to you. Hi, good to are have our date.

on last As have to Driver-Out a the mentioned pilot phase we moved next we which is on, our program and be of development. positive will moving very phase

But guarantee And begin our some what structured feel confident. we having that look, during As I phase meant of development validation issues to that new development. discover really, process a we do. process, we that's will can

PR done, it's priority we on be And with so, meant that complete once end of a we're a demo validation the safely program case Driver-Out translates to scale the one And Everything day, our pilot process. directly this our number to in is not with. day, safety or and to stunt, is doing full are deployment. over commercial

if more hit We the with what us, improvements that to runs, initial generates this we But, we’re reiterate, mean, program, make we at to that us. can our I to do for ROI Driver-Out again, pilot all is goal. positive point. afterwards So prior target, that believe

Ravi Shanker

give a parts. same difficulty now. an us there. last how perspective? my don't for looking you follow-up, think sure getting I'm call, is just hiring and Great. world's in technology major And trucks that have you on you the from place as labor new probably having maybe were some this But I you mentioned right of as you crazy environment. from Can Obviously, Obviously, new getting a the kind perspective even companies a the just labor challenging engineers out are issues that in update even

that'll just update can there, us give you So be great? an

Cheng Lu

industry, the world I continued place. I and Great be think has a crazy to think seen question. we’ve across from at what Look the

supply better the quarter. think worse, rather I gotten chain than last over have issues

we challenges new receiving some parts. trucks, So are of course, receiving new having

that we're we can But issues. We an have that labor to have and not going I use use suppliers excuse. as that think

to to near-term continuing overcome those challenges. work we're hard so, And

Ravi Shanker

good. Thank you. Very

Cheng Lu

that the the the new term as On is after market is labor resignation. the pandemic calling part, you the I great know, think labor

So, pool to run additional not we the -- the that are that that the costs I only our I Pat in talent and overcome. company, But tighter explains alluded has have as we think think for that is to. those than of just ever, again, things increase some

Ravi Shanker

few trucks. on are that as very there cool out are as There working autonomous jobs

you'll have so maybe much, easier Thanks So an time. guys.

Operator

Brian we ahead. Morgan, go JP From Please Ossenbeck. have

Brian Ossenbeck

question. taking for Hey, guys, Thanks afternoon. the

just put moving LX to in X Navistar you timelines past chain actually forward similarly, tests the and some helpful of in broader a to just the the skill then would the getting these more come the terms to I progressing sense, a give road? you quality just us Can you're in of down supply of need Tier be And how chain, move that's and vehicles there with terms So Driver-Out update on James, the redundancy of with and that maybe road. mentioned little further looking back want supply terms milestones? you

Cheng Lu

Sure. Great question.

and as we're the end priority hopefully what the deliveries partner it year. starting them. all reality collaborative Navistar is this truck for So of work But we of think relates the we receive we'll year, to believe that beginning trucks. I ordered get is really to And this that by by

a way, that's becoming truck So almost And okay. year. for these purchases next of trucks sort are in

I well. our think fits that plan

X that. Tier of maturity. to we deployment steering controller see domain compute, issues technology are X the we two key call In to labor scale to think components And braking. before, actuation, for revolves disruption and every is busy. And there's biggest chain, the it around supply longer-term, of I day. supply alluded autonomous or as chain, being the the and to terms chain challenges continue that is shortage, ADC, autonomous just like then Tier one really redundant the those everyone near-term supply folds of in that generally really And very overcome the One

orders. And happens so, because commit don't in Xs egg that to little Tier to there's this, without chicken a investments want

problem And of that as a we there's one identified risk. kind chicken persists. natural that that's of course, something have the of so And that egg

our address taking very partners, with a from investors some X worked time that. long always our so Tier steps And of to which We've closely we are are ago.

us think And more coming investing that we heavily we you'll the supply the quarters, about. in next terms so, in hear can announcements of the that of over timeline I talked ensure meet more to chain

Brian Ossenbeck

guys. Okay,

clearly probably Just the you're to side, the longer-term was the the enough. of necessarily ones more ask I trucking orders Navistar for near-term not LX didn't clarify in But it scale, the retrofitting? interested on development

Cheng Lu

Got it.

TRATON certainly think collaboration. every platform. to should – acquisition access I progress. extensive sheets a we global don't and of can significant have Overall, Navistar expect expect have Again, update We're We balance make steady the continuing we to to strengthen Navistar’s quarter.

truly, we're provides with together how us on Navistar platform realize through I think TRATON, to this so global actually, TRATON, better a And synergies globally. with partner. brands And working other within those

so, the developments. risk risk, overall And biggest of see terms about that in supply I'll I good this the as again, point point. to we chain And, the feel just really at

Brian Ossenbeck

Okay, got it.

more safety could, case, if one here the on pilot. really quick which just Just is of terms a follow-up, helpful in Driver-Out I

going to phase. is So next it be seems for the sort of going like forward this the into guidepost

Maybe categories several two You the final lift the of you this phase challenge we some which just biggest got kind different broad as these sense could think under ahead, about you most areas is, color can just move the has potentially here the into broader give so you pilot? get where of Driver-Out if as a headings. to of

Cheng Lu

safety a categorize challenge. wouldn't having part of as I Sure. case biggest particular the the

validation and developing it's risk. collaboration, have I systematic job are safety. lot it's And risk. all Driver-Out moreover, to approach of of process responsible having program. we more process. believe excited the into go stewards we're it's identifying show mitigating of kind to that puzzle And, of pieces technology of lot and us of our inherently have very place, there's about as the so in the our And to are and very with a validation think, today, the does and mitigate, a And, of a that We teams. part to pilot phase, structured, short our last a hopefully all the work

shortly. on we And so, without road be driver can the

Brian Ossenbeck

Appreciate very much. Thanks it. Okay.

Cheng Lu

you. Thank

Operator

we go From Please Hoexter. Ken have Bank America ahead. of

Ken Hoexter

Hey, good afternoon, Cheng and Pat.

the at it all And your or understand just in been they've TRATON, the from just same got I to has management U.S. want management, taking XX, total I XX of and to if vision, all truck in to if U.S. clarify kind assuming old just So same here want like clarified that? on in they're that's just went guess the if the checking I then, Navistar as looks timeframe U.S. trucks up new

for targeted. fully ghost set me not with you start that mentioned the you loaded not stop. in you terms still XX you Are rider? trucks full And wanted? So the of lastly, all it's just Is then

once So is is do pilot? you test Thanks. or period it done, a fixed Driver-Out running it keep the

Cheng Lu

can developments. leveraging. TRATON platform I question, the mean Brian's from change with Navistar and that, There's the with Scania team mentioned we the Thanks. as Ken. existing mean bigger part TRATON, completion acquisition we of believe Hi, management which already that in with merger relationship all with I happens I we're the a that with have positive actually global MAN.

So all a it's of I actually, refreshing we the before. which couldn't same continuation. do in are it's us that room think really, now, And

divisions the there faces have people So or are simulate. new that overall, course, a same. are to some changes And, changed. hasn't overall, we But think new of that I

right. You're

ordered has So trucks the full Driver-Out. we haven't This we earlier to no impact this year. that received our XX

of free collection what's are our trucks overall. autonomous continuing that fleet and these provide So more for capacity, can trucks testing growing more we data after really and

to wouldn't have to Driver-Out this have an impact pilot meant time. After program, pilot a is a So finite program this Driver-Out.

We A are are B working with sample, components. sample components, prototype some

as this terms doesn't just as of make cost point well that operational it run. one is to continuously there so the reliability And at of hardware, in sense

plan of maturity even this, series really, to technology, a now of more from different showcase the think I the milestones working production. our will components. operations, grade this with to non-auto give we detailed After is

look to on you shortly. updating what's we forward next So,

Ken Hoexter

Wonderful.

for one can. another Just I me, if

up target starting that year. in was mentioned revenues had ramp in next You China for

thoughts we just What to wait on know Just revenues? that's given timing still issues target. or and and want Should the some on your equipment are if China now development? of

Cheng Lu

question. Great

environment. point driver progress of freight. regulatory significant have with testing allow have making we're side. actually to so this yet. working we technology layers us didn't to tremendous that closely the is the At a and revenues, on China regulatory And to a permission do of different We're bodies with So paid

And update we we or you so for at make and closely, are. hopefully progress. We're have where But don't clear point. this timeframe can I of that's working really kind a more

Ken Hoexter

I from So, that think just view? guess kind ‘XX? is in unlikely that you develops? something if Or Or, your of

Cheng Lu

We're optimistic hoping and we develop.

So assume with I XXXX. right will updates. provide to still will now, it's continue we you And

Pat Dillon

Ken, expect we it’s Pat. of in revenue that the region. to expecting some would I early full when a part give we're little our of next for on what report including detail results guidance XXXX revenue, from bit from year, year on

Operator

Chris have Wetherbee. we go Citi, Please From ahead.

Unidentified Analyst

Chris. other the get on you're your similarly same prior XXX that we to fairly in pipeline some quality. guys, I you order wanting that Just book to we said -- essentially close? to that on the around you And developing Hey, call. understand comment is you just to about that continuously? place as Should a certain But think understand wanted for revenue truck you book are the thoughts is as hurdle? think when mentioned wanted those focused order that on orders had converted order that two. wanted the is the just had also And of touch there like the covered, on on James should

Cheng Lu

Hi, sure. Chris,

makes partners. depth course focus big deep of headlines, developments on doesn't breath course, point. announcing great at of numbers, to our but As for about our really we is we than continue the help with reservation rather unless go can to And strategy talk this reservation us,

from depth that's on operation as technology collaboration UPS our kind a Our well of both operations, also to There's commercial development. It side service it technology sides. requirements significant a levels requirements. for of and indication. is us in helpful us of good with very learning both And the resources lot requires increase pushes

So, at point. that's to we the this see what from hope reservations

All partners reservation blue partners think our chip can are of. you of the

can't of names. Of some course, we their disclose

exciting changed. quarter, to with partner, working the hope one new with And And be strategy really our last we this I so, deeper. for to this hasn't go and think, it's

you just rather stepladder terms of trying belt. can point, under think to I a reservations, as expect a sort of we put at more of in as function the many this should than

Unidentified Analyst

it. Got

Just sort strategic of trying more there's build sense. development? that it. that asset? you capacity of you a ask the towards and sorts investment and or Okay, Or if adoption, understand the this, about you is to are along is lines to an it an enough I looking offering you that moats from, if something to an sort like, it's makes something how feel and away Is of believe think wanted for? necessity absolute TuSimple it also about market you of something essentially, pivot is market might business or have momentum of that type product

Cheng Lu

solution to I Certainly, would sell to say third-party. the be able perfecting to both. it's a of critical piece

critical. autonomous freight as very It's of critical to skill. mission, is enable so our which a piece also And capacity is that

the trucks to service a put job put, more and to freight Our of carrier to of lanes, more ecosystem and is size have shipper provides all so users. to the on expand network, to that AFN better the to the density

we on this carry of capacity important complements model. see so, business piece strategy. our as do And the an And other it

Unidentified Analyst

And then one quick can. if I

coming to want that’s indication on of what any touch of the Just that? understand guide, from Thanks. that wanted as an sort And the back changed to moving development sort three months? or over the speed essentially of be end, could past return sort just what's of seen you’re to upper

Pat Dillon

Yep.

we've been commercial further a upper investments strategic development. to our same call. made trends is end, that moving of just quarter and think last technological other at pace we pleased really the that of talked the I So hiring, the continuation our We've about, that and both during

the narrowing of moving what at upper end, we're an pace. actually accelerated expect when the So would sort we range

headed, see was what when expected ago. we're So you is to last we pleased this and with talked line in with quarter we're where roughly a

Operator

From RBC Please go Capital Markets we ahead. have Joseph Spak.

Joseph Spak

limited guess what the Or where Thank closer hiring up hiring if it maybe pace I the a employees, on one, it seems I'm to area, you R&D you. more last does until of expect pretty long I wondering pace sort get maybe at should you've on there's for mean, to continue? what's you sort and And to how we like question. like resources? to of here sort launch, is, down guess especially the impressive will? slow marketplace start just And I been this pick here. of

Cheng Lu

Joe. Hi,

bring in As overall, are that space. environment. labor I to the mentioned But We're that the tight hard are proposition is mean, to quite very I we're in in exciting positions the a significant, science, There's intelligence we on I new we're value is up, think a of very a before, going. wages very where think The clear It's going find too. for And especially embarked we a the strong. cost computer artificial hire on mission space. direction leader field.

software think So pace total the in our hiring, I really we of of can company, hires. is where think put value we together in can to terms talk good company, And you and what a when scale. about, [ph] capacity a car mean logistics market of when we think bring market. the about freight the feel a I AI we autonomous one. proposition bring effectively to And think before hiring it new company, positioning about company, TuSimple does in to relative all

it's for continue of that's of is lot This this do we a just continue hardware. than system, a hiring be years, to that particular really or our a a more pace will similar year. so work, lot piece vastly software to And next complicated a particular to see

to is So the have we bring the talent, in I we industry. advantage competitive and that that value proposition we good think offer allows very itself the have, us that a capital our

Joseph Spak

Okay. purpose build or purpose if or sort you don't I to will going that's of some -- heard, like really you're of And really retrofit I the first I want the solution confirm and for five see that you think the to Thanks. then to hit okay? wondering, phase And an could is clearly sort question maybe you is, second of scale. the because year schedule. period, sort sort that sufficient do here clarify guess you but that. Or, thought is And have a the we what need to of scale having don't next do sort vehicle? of of that, other maybe But lot I built to truck I'm to even at that of do on I advantage get three aftermarket or for scale, competitors

Cheng Lu

good Very milestones production. between There additional question. will be series in

what's recognize really think is to means have what the understand right. technology We on to it prize, to I scale. our market important eyes bring that we So

trucks. of key we I that communicated series production are think including these the components,

and technology nationwide much beforehand, new service smaller going the be within to to what's a have overnight. go with to be demonstrate it's And we from Now it's day service. to we we important, think any zero one, adoption, like have than rather grow most practical, do out start not about how a better to try XXX

know. So, we those facts

so improve. generation, And different see, you'll of generations each the will think of the trucks, features certainly I our reliability

we to XXXX scale. to change wouldn't But just we to scale no I Driver-Out, mentioned, sight our overall, after what of prior long-term, that expect as -- in lose that I to timeframe. is to can't in of should some other thing. it means about think, because this you successful take be milestones a see for particular That's deployments. And wouldn't say as terms will on there we're talk I ultimately, focused company so time important, that And

Joseph Spak

Please and Needham go we Rajvindra From Company, have Gill. ahead.

Rajvindra Gill

we're at high revenue kind was the on revenue next about you, about of all if given a wondering year, to on flavor shortages? I supply think do we drivers and you maybe year of the thank Pat, give of Yes, congrats a could this kind how XXXX to of since executing think metrics. those How an component level? end of for coming us

Pat Dillon

Hi, Rajvi.

our think AFM add yet, well fleet, the drivers partners. not while fleet, a size our that of be ability as as to I our guidance for position as as we're to really will drivers revenue around well give the in XXXX trucks, safety

different what we're dramatically doing from nothing today. So

and and it's autonomy are next we've eventually carriers that not obviously, throughout We action want see us. been when that very Driver-Out point And of blue chip work And doing would strategically. that that haul quarter like our And growing deploying to with to in the trend continue technology this autonomously and to focused ready been shippers on as to at in we've only but oversubscribed, over doing we're year. revenue. year quarter, Frankly, want see they amount freight scale. an entry accelerate

objective So strategic never the building XXXX short of meet more but we're sight losing strategic the again, keeping very to today, revenue, on you be guess fourth of quarter we're that. capacity of about when trying the will the continue see goal. we the But acceleration give is, to call. targets specific this with overall I how we do and long-term story in sight why And we

Rajvindra Gill

a Got makes of That lot sense. it.

other program, reservations your to progress you of And company, but the validation that is the the and selling be and value On front. proposition? kind or order do would that number on self-driving that trucking. very increase in I In the reservations my view, not significant increase for a How solid words, order all increase LX in the obviously, tool, view order safety Driver-Out on to can and of as going your that can for significant of milestone, program this reliability number required, as a if congrats to only you Driver-Out the with in be book. increase tool used and that's assume demonstrate a

the the do if on is more this the successfully, Any of other be of guys are thinking helpful? thoughts to feel customers, this last order program? the monitoring are in reservations is Do proof a success closely significant one carriers So How you that? Driver-Out you like how you the about get shippers, point? the that are that this kind steps of would

Cheng Lu

would my probably this the I focused investors our carrier on than more are from partners. Sure. say and interactions, shipper

Now, coming. be not a But of a vehicle, think Tucson rollout rather future focused to approach, And if. of and overnight the by belief this. ride economy the lane when be the when that you than it's come on nationwide. going the general And it's to matter everyone's is I to phased lane is think I it's going

also are collaboration it into that that supply existing our think their embed requires so partners And chain. to And in I those have. technology already that the takeaways

of none really these So things change.

have I that, So of this. say I reservations instance, expect think to ex point, amount this wouldn't at because of for new we

think, Tucson where folks I a things it everyone great with to positive validation say, gives a and taken I point all certainly, they've are the strong already, going. have more away it's already think that confidence. feeling do But of for I come

Pat Dillon

I to that a commercial one of AV things to would the runs translating And the runs around gating the not Driver-Out a get reservation for on in run that capacity be to Rajvi, the is architecture, to where, expand by an mode them And immediate make to systems boost reservations, into them think one in line reservation. is some requirement the maybe across customers. one can learned do of add can we've be able thing, learnings day to Oftentimes, certainly I of autonomous taking partner. from in to being able particular one for the items for and the our to but testing them Driver-Out order being certain a

things up not is to that Driver-Out a there's that think effects good immediately like reservation indication show reservations, knock ability through that which may getting time. into over increase count on we of but our So

Operator

we Please From Credit Dan Suisse, have Levy. go ahead.

Dan Levy

Thanks for Hi, good questions. the taking evening.

you stepping asking might you achievements? to a remodels, so you to what to you'll that to sense we we how give other this should the a number the We the have report have stone expect of for us much success when and successful. some I assume of types on disengagements what report tapping sense on complete things other wanted of start we do the but or how feel are to? the expect a is I program, metrics by So items Driver-Out,

Cheng Lu

ability Yeah, is do we it, where I mean, have doctor. video, this this the will mean, something on to to it's capture going generally I speaking, not a

back, to safety I case, will our efficiency, progress. quarter, a of I data of case. or data think the fully of demo. metric kind I fact publish progress, on step the example should you finding that this is what just I are the be look, set points, Give right. highlighting the think the kind everyone's – this you keen We've password done, see which That's empirical industry on taking a validation terms way. to the constantly Driver-Out something we terms And And think able power the I very we our that it's miles, validation ways is is a giving that's I benchmark think of on and already milestones. that pretty really So measure in But know we think more just the driverless. points passed I and driven, one of think setting our the of mean, autonomous system, fuel both of amount performance safety. TuSimple is just in that of I

able big sort think I new specific come very fact so, the to itself safety to milestone. that of were stringent that very in metrics of this case, question, And we is Driver-Out I out answer the your but think a there'll don't program, complete kind be with it

Dan Levy

bit And on expansion. And AI. you. Thank the then follow is more talent Great. it's a up to specific

arms Cruz and something you test de we this like tune, I generally, having as So this real race, a is know think well. AI, have where and [ph]

AI much be where intense race. So seems there's to more

a maybe And So just other AI that's other us flavor of R&D engineers, a maybe AI hiring fared? what you software give can A, of been composition versus your engineers? talent, your could between ability of the just how us sense give attract to has hardware competitors, you then,

Cheng Lu

Sure.

have really, algorithms, it's software speaking, if are areas, mean we've of good. mean, really talent, have give of been just an hard engineer you think learning, deep generally level to of hires learning And XX% Probably focused really our about I on good obviously, exact I breakdown. number. -- the feel a kind attract, to now, machine rough I So to XX%, want right able we we

bolster I strong think that with our we very and continue hires, we've senior hires. and mid-level to ranks gotten some junior

I think come TuSimple. a we're is again lot in learning proposition the attractive, value to that proposing of

focused where direction clear a going. a strategy. It's have We we're on

positive talent, really in about any to I anything, there's feel in I so, think, point ability really, to our our compared history. if And track time

Operator

ahead. Baird [indiscernible]. have George Compared From go we Please

Unidentified Analyst

for competitors so here. game seeing to And relative bake to and your what of the releases we you offs, the read you mean partnerships who Thank I'm these about that my thanks a yours? within in just question. on as there had Can guys, question your taking do. elaborate you. I in be opinion from Hey, a chess competitive other partnerships, going you're the sort industry. same to press seems sure

Cheng Lu

just industry. overall for In commercial terms partnerships, of these partnerships all positive I think is

we to the are getting applaud more that in ecosystem partnerships, more think means economy. stakeholders in and freight it more I and

overall and have and always progress. talking all been having action But really something partnerships. not the specific technology forward. think I the We critical. it's also it's the competitors. think comment focused, I people in benchmarks is started will that focused us now And push going along. question, depth our place So been that's to But the trend we timely and on partnership I and mean, action of think that deeper, points I about because so to we've having for a of getting involved we're our measure on

other back mean competitor XXX,XXX able I miles, partnership freight being to any to to that. -- not for to And to autonomous be just up in UPS, I'm will able going catch how it one sure, to so have long take

second mean, the was the real by significant. third-party but a everyone autonomy. alone half that empirical is and And, being talks validated business is, and fuel in for I efficiency, two that part is about The data making. years case

and feel partnerships. the the partners, about really and of more the it's good then quality So think I depth of we about really our more,

Unidentified Analyst

shortage with I'm had shippers? accelerated be part with to all that challenges partners the or more, have whether might these the as of of have in issue country, one press, potential guys supply drivers. chain Curious the been Just issues you discussions reading in you've in current sure the

Cheng Lu

cost being end the really chain, has. think And always the Street, and what's I industry known. on well think the but certainly has It the issues, interesting is I customers. I everyone constraints, shortage at Main issues, chain I been front think is supply I the passed supply feels center of think now chain think supply driver It’s and the to but on

close rate the it's ever. and rate Now more barrel. year, $XX was fuel a now $X and mile surcharge per a is Last to fuel mile expensive and per is $X barrel now $XX

And we so, the demonstrate again, fuel our efficiency have is empirical fact to now significant. that data

waking And supply up it's so mean, doesn't people getting industry certainly, extreme in I facing. think I soon. like pressures seem are that just the to everyone, anytime it better is not And chain

Operator

we have Alex Sandler, go Piper From Potter. Please ahead.

Alex Potter

itself. quarter, Great. were delivery you to year, Is that that think and to more you these system causing slightly? supply -- you're hoping with guess less Are that targeting Thanks some a question the come and out had a regarding lot, push One to I Last early Navistar. guys. truck you mentioned or chain the rollout table? the I that next of delays on more is final still freeze on conclusion the bomb,

Cheng Lu

large There Great is. the pushed little are key majority, for question. components could out it that I’ll say be bit. a few for

and to our those. so working Navistar And with we're very TRATON address closely partners

Alex Potter

you question Okay, And could that just you qualitatively, curious, the me were a the include beyond maybe fair in discussing. I'm also question enough. on follow just maybe up last then for but UPS. UPS this,

with having this the have what that those versus fleet? whether or ago? last Just were it's maybe people discussions partners, how discussions your changed year, shippers The with having today time years two you're you same

Cheng Lu

supply generally has the unfortunately, is supply the chain constraints. say, speed And, and proven, capacity. an strategy pandemic demand been And because reason actually to exacerbated imbalance is and identify up same. it's our that's because, freight speaking, consistent. be severity Sure. very the I’d that between We the the of there

and new most go-to-market able the our to job is to about hardware, scale. by course, capacity Our enable the strategy. We so talked of to software developing freight do be advanced and

this recognize I something into takes things partners years next from trucks baking We have haven’t And But, urgency year, really scale. by infrastructure. everyone of and their in thinking I terms more our time a we to those more forward these Thomas So, existing see of course, adopt that more like not that from few think now, partners. changed. that ready think, to is would definitely this see

freight by the So and feel way and we're scale really a our this it's very think, like a strategy we intend at this, enable all and capacity strategy I development. positive very feel definitely In to because it's we we that. do right strategy, by how validated to of clear

Operator

have ahead. we Oppenheimer, go Colin Rusch. From Please

Colin Rusch

of comments deeper miles growing given a me guys. really seems that area? much going and want to starting nationwide about that bit and small little be that the a much, adding as you're material volume some route mapping I so is Thanks focused how density network. these is understand dig It into earlier your on important, data, to to especially into

how about you're way tracking should at and think that, understand how which just So right now? we to you're that, want

Cheng Lu

So, data? using Or is the your around maybe how -- question

Colin Rusch

miles a No, no, concentrated those it's are routes. more about many limited like, of on how number of

gotten mileage So much driven how those getting a really around basis guys you if that consistent real experience mapped, you think in about the been traffic are over patterns? has where total of and that routes of depth you've a

Cheng Lu

the the in there to are where today largely on but from I-XX is across And down it. there's southern driving while data in collect highway we right. data. of the part on collect differences, differences mean, triangle. Texas consistent, operate very more concentration U.S. conditions. It's where certainly speaking, more to The kind Tucson, I difference we more behavior, or road starting And strategic, Dallas. and the of Phoenix Got We're

the gathering so, it follows have just with we for And here have of we confidence And our safely sake our this data more I particular not the to revenue, more autonomy. traverse thing the mapping. mean, on mean, in that we're is routes, I absolutely, more order pattern revenue. same the same with

carriers all the of around will want But that rollout alleviate challenges partners outwards centered have. it and us autonomy capacity there. to ultimately, some shipper freight because where Of is help initial them and course, from of they see the we first, expand

Colin Rusch

particular Certainly, going can to areas, go accelerate in Okay. you like as seems sense that's a cycles. of your it your deeper give you and learning us the geography. And then learning

and how you a learning I translates, sense cycles quickly point? can give So that are accelerating us of at those guess, how this

Cheng Lu

ability operate expansion our I and the think, I our we'll more autonomy, to infrastructure system an use fast. of with generally points can of iterate the smarter Coast, I to to feel trucks of see be And reliable. platform, us ability way proof very We our have, that's trucks think and and competition we speaking, UPS outward kind East one where of and in these to number good mean it about to showcases continue we it structure the take scale, our of the diverge. train to ability sort data, to our and

to about we being know metrics the Driver-Out don't have first I to scale is amount close that we're program. that have think process. And to -- the a shared I fact with I all really can data if we iterative have have I done that the we every the shows improve and share with of UPS, you just points miles So robust very metric empirical there's data the scalable that development to today. pilot we've or continue I that a But is the build have that the mean, in the we'll operations. day. a and mean, you fast of

Operator

Group. we from have Scott And Wolfe go Research Please ahead.

Unidentified Analyst

Scott. trying Or about of a I Maddox years the to path? based just about over expect OpEx? understand OpEx. had of Should sort next trajectory we question [ph] growth what that few With separate Wes or on it of as to stock on for a own it's is think compensation, so. Hey, just the its consistent percent

Pat Dillon

what vast expense would this to quarter. roughly in grow of Yeah, with you our I costs. that majority terms saw The OpEx line of quarter think around over operating is in see quarter, you expect people

make trend we which overall with majority SBC of our costs, would in the overall generally our so, OpEx. And to up expect line people

Unidentified Analyst

Thank you. Okay.

Operator

you. today's you Thank and gentlemen, Ladies conference. for Thank concludes this joining.

disconnect. You may now

TuSimple (TSPH) 4 Nov 212021 Q3 Earnings call transcript