TuSimple Holdings Inc. (TSP) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day and welcome to the TuSimple First Quarter 2021 Results Conference Call. . I would now like to turn the call over to Lauren Harper, Investor Relations Associate for TuSimple. Ms. Harper, please go ahead.
Lauren Harper: Thank you, Alan. Good day, everyone, and welcome to TuSimple's First Quarter 2021 Results Conference Call. With us today are President and Chief Executive Officer, Cheng Lu; and Chief Financial Officer, Pat Dillon. Cheng and Pat will review the operating and financial highlights, and then we will take questions. After the Q&A session, I will note some upcoming investor events, then we'll conclude the call. Before I turn the call over to Cheng, let me cover a couple of housekeeping items.
Cheng Lu: Thank you, Lauren. Hello, everyone. Welcome to our first earnings call. After completing our IPO in April, we're excited to share with you our first quarter results. We made significant progress both in terms of our technology and commercial development. The IPO was a significant milestone for us and for entire autonomous driving industry. We are the first and only autonomous driving company to go public. As part of the IPO, our investors came to understand that TuSimple is unique business that can reshape the massive $4 trillion global trucking industry. First, we have proprietary artificial intelligence technology backed by a large patent portfolio and realized proof points. Since 2018, we have been the only autonomous driving company to operate in Level 4 autonomous truck from terminal to terminal, driving on both highways and surface streets. Second, we have a comprehensive set of commercial perhaps incurred by OEM partners that allows us to scale. We are the only company with a clear path to a purpose-built production truck by 2024. Lastly, we're building a network-based business model to enable low-cost, reliable freight capacity, allowing TuSimple to offer a differentiated service and long-term sustainable competitive advantage. We are grateful for our strong investor base that believes in our technology and continue to support us in our journey. The capital raise and IPO will allow us to invest more in our people, technology and operations, allows us to further drive world-class talent. Our recruiting team has already seen early benefits. The IPO has increased our brand recognition and will give our partners more confidence in working with TuSimple.
Patrick Dillon: Thank you, Cheng. First, I'll provide an update on our carrier-owned capacity reservation program, which continues to grow steadily. As a reminder, TuSimple and Navistar began approaching a small group of approximately 15 first wave reservation customers last fall. Our reservations represent an opportunity for our customers to be among the first to receive our purpose-built production semi trucks starting in 2024. To date, we have received 6, 775 reservations from approximately a dozen blue-chip carriers and shippers. Each reservation holder has gone through a full procurement process within their organization in order to sign the reservation document. So while the reservations are all fully cancelable, we are very confident in the seriousness of intent time each one. Today, we announced the names of some of our reservation partners, U.S. Express, Penske and Schneider National. These are some of the largest, most sophisticated names in trucking and thus indicative of the strong value proposition that TuSimple carrier-owned capacity can deliver. The truck reservation itself acts as a springboard for deeper engagement with our carrier-owned capacity customers ahead of production. After the reservation is made, we work with customers to implement HD map lanes between their existing terminals, connect our oversight systems with their transportation management systems and generally begin building our commercial relationships ahead of delivery of the production truck. For many of our reservation partners, we are hauling freight for them today with our own retrofitted fleet, deepening our relationship and allowing our customers to participate as our autonomous technology advances. We are currently preparing to broaden our reservation program beyond our initial first wave customers. We will continue to be highly targeted in our reservation program and work with sophisticated truck fleets that are best suited to early implementation of our L4 technology and their networks. Now shifting gears to our financial results for the first quarter. We reported $944,000 of revenue in the quarter, a fourfold increase from the same period last year. We expect to continue growing our revenue via increased commercial utilization of our fleet in the United States and continued build-out of our AFN partner network. Our freight revenue generation, while relatively small today is very important strategically as it helps us to develop our technology in real-world on-road applications and build commercial relationships with long-term customers. Our freight operations create autonomous conversion-ready lanes that will launch full-scale commercialization beginning in 2024. We invested significantly in our core R&D function in Q1, spending $41 million, including $2 million of stock-based compensation. The $41 million figure represents a twofold increase from the same period last year with the largest portion of that increase coming from incremental R&D headcount. Our G&A spend was $15 million during the period, inclusive of $4 million of stock-based compensation. The $15 million total is also a roughly twofold increase from the same period last year as we made the necessary investments to scale our company. You'll also note a significant noncash item for change in fair value of warrants liability on our income statement. This is related to the exercise of warrants by TRATON and Navistar and is a noncash charge, reflecting the mark-to-market of the warrant liabilities. As of the end of the quarter, there are no remaining warrants. During the quarter, we invested $1.2 million in capital expenditures and made principal payments on capital leases of approximately $200,000. Moving to our IPO. This is a huge milestone, not only for TuSimple, but for the autonomous vehicles industry in general. While we considered several options to become the first publicly traded autonomous vehicle company, we chose the traditional IPO pack in order to be as transparent as possible and go through a rigorous vetting process with legal counsels, the underwriting committees of our syndicate banks and equity research analysts. Additionally, we wanted the investor community to have the benefit of a fully SEC reviewed prospectus prior to making their investment decision. It was a long and rigorous process, but it was the right choice for us. The IPO raised over $1 billion in net proceeds and supplements the incremental investment from our partners, Navistar and TRATON, who exercised warrants that delivered $183 million of proceeds. Our cash position at the end of the first quarter of $509 million reflects the warrant exercise transactions but not the IPO proceeds. Our cash position pro forma for the IPO is in excess of $1.5 billion, which provides us an excellent runway for investing in our technology and our path to full commercialization. Looking forward to the rest of 2021, we have provided guidance for the full year. Revenue of $5 million to $7 million R&D of $165 million to $185 million and G&A of $45 million to $55 million. Please note that both the R&D and G&A guidance figures exclude the impact of stock-based compensation. expected capital expenditures for the year of $5 million to $8 million. We expect to end 2021 with a cash position in excess of $1.3 billion. I'll now hand it back to Cheng to wrap up our prepared remarks.
Cheng Lu: Thank you, Pat. To summarize, we are pleased by the progress we made in the first quarter. We know that IPO is just the beginning of our journey, and there's a lot of hard work ahead of us. Our people are committed to the mission of making trucking safer, more environmentally friendly and more efficient. And we're very confident that we'll be first to enable autonomous freight capacity at scale and gratified to see others recognize our leadership. The barriers to entry in autonomous driving industry will only get higher. As you think about the required level of propriety technology, access to capital, hardware partnerships and comprehensive go-to-market strategy, we believe we have all the key ingredients to win and to create long-term value to our shareholders. So with that, we're ready to start the Q&A session.
Operator: . Our first question comes from the line of Ravi Shanker of Morgan Stanley.
Ravi Shanker: Congrats on the IPO. Just a couple of questions here. First of all, thanks for the incremental detail on the driver-out test. I'm sorry to be greedy, but can I push you for a little more detail even. You said you're going to do it at night. I mean is there any plans to run it during the day when there's going to be like traffic as well? And do you think it's more challenging to do it at night versus during the day? Also, how many runs do you plan to do over what period of time? And what controls will you have? Clearly, there will be nobody in the driver or the passenger seat. Will there be anybody in the cab at all? Will you have a controlled car upfront or behind? Any further detail would be great.
Cheng Lu: Sure. Thanks, Ravi. All great questions. So in terms of -- well, I think one question is we're operating at night. And it's because night is one of the main times, of course, for freight operations. The benefit of autonomous trucking is that our trucks can run 20 hours a day and night. One of the criticisms of our camera-based perception is that it doesn't work that well at night. And I think this actually is a really good proof point that it does. Day and night, there are different challenges to both. And so right now, we decided to pick the nighttime and we don't have plans to do the pilot program at day at this point. In terms of how long we'll be able to do this, we intend to pilot program. It's not a PR stunt. We do intend this to run over several weeks. It will be certainly more than a few runs. But we don't have those details at this point. And once we do, we'll certainly share that with you.
Ravi Shanker: Got it. And do you have a sense of when we might get a finer point on timing? Obviously, it's useful to know 4Q '21? Any sense of when you might get the months, I guess?
Cheng Lu: Sure. So this is not -- so for instance, this is not a -- we're going to ensure safety above all else. And we think about where we are. We're in Phase 3 of a 4-phase approach. We are bringing up our autonomous trucks, 10 of them for a purpose built for our project, which is fully redundant. We are doing more feature developments. We feel pretty good about that. We're doing extensive testing as it is today. The next phase is this will undergo a much more intensive end-to-end functional safety process. And then there's final validation, which is putting the vehicles through a series of test scenarios and then having to hit a very high threshold of safety. Actually, we're basing off of aerospace sort of criteria. And then we'll feel safe enough to start this test without any humans on board to chuck it all. So we believe that it will be in the fourth quarter this year. That's what we're targeting for, but I cannot comment on exactly which week will start because it is a very complex engineering project. And as I mentioned, there's a lot of to do, so we're working as hard as we can to get there.
Operator: Our next question coming from the line of Chris Wetherbee of Citi.
Christian Wetherbee: Maybe just following up on some of the supply chain issues you mentioned before. Do you mind going into a little bit more detail in terms of maybe what is impacted. It doesn't sound like that's impacting the driver-out test for later this year, but maybe if you could confirm that and any impact it might be having in terms of getting new trucks delivered into the network so you can increase your mileage would be helpful.
Cheng Lu: Sure. So just to give you example, in terms of new trucks, we've actually placed orders of trucks at the end of last year, 25 new ones. We're hoping to get delivered by March, and it looks like our new delivery date is going to be June or July. So that gives you a flavor for sort of what that delay looks like. In terms of specific components, We have some components that were sourced overseas. And of course, there's been disruption there. We also have some suppliers that just take longer because of some of the challenges of staffing and turn anything around faster. So these are not anything that cannot be overcome. These unfortunately do take time and we have a lot of different plan Bs and plan Cs in place to ensure that this isn't a big impediment.
Christian Wetherbee: Okay. Okay. That's helpful. And then maybe a quick follow-up just in terms of your miles test data that continues to ramp. Should we expect as the new trucks are delivered into the fleet that, that number will be a little bit more of a parabolic ramp as we move forward? Any guidance you want to give in terms of how we should be thinking about sort of the village and ultimately the mapping now also that you've added some personnel on the mapping side?
Cheng Lu: Sure. So it will be a parabolic ramp just because by nature of having more trucks in our fleet, we do see the size of our autonomous fleet to grow to close to 100 trucks this year. And when you think about what that means, each truck, if you're operating 15 hours a day, 30 miles an hour times 30 days a month, then each truck, you're getting about 20,000 miles. And so you can get really over close to 2 more miles on our -- with our fleet of 100 trucks, right? So that does help in terms of just validating our test plans. And so we will see increase in the miles driven.
Operator: Next question from the line of Brian Ossenbeck of JPMorgan.
Brian Ossenbeck: I wanted to ask you about the AFN map. It looks like you did a bit of an update. Can you just walk us through the rationale behind that? Was it anything related to where you're getting the reservations and therefore, where you're looking to put some of these dots down ahead of others? Is there anything from a regulatory perspective that has changed. I guess I'm looking at specifically, you've got a couple of routes going through states that are in progress from a regulatory perspective, so I don't know if that really has any impact if you're expecting anything to change. But maybe you can just walk us through the updates to the map and what drove this.
Cheng Lu: Brian, that's right. It's related to our work with collaboration with our strategic partners, reservation partners. And the benefit of a customer that puts a reservation today is that we start a long-term collaboration to help implement autonomy into the supply chain. And so we look at their network, where the right road repairs automate, and that influences where we will map first. And so our reservation customers get the benefit of basically having first adoption and understanding how to really get autonomy to be embedded into the supply chain. So that's really the primary reason for what makes our decision in terms of mapping.
Brian Ossenbeck: Okay. Understood. And then if you can just give us an update, if there is on the CFIUS review, where that stands, if there's anything you can share from that perspective. That would be helpful.
Cheng Lu: Sure. In terms of CFIUS review, we are planning to submit our voluntary filing in conjunction with Sina -- together with Sina as soon as this week, potentially next week. That will kick off a 45-day review period for CFIUS in a very standard process. At the end of 45 days, CFIUS can say that this is not Sina investment in TuSimple in 2017 that one particular transaction does not cost you a national security risk or they could have a second 45-day review period at which point it could lead to same conclusion or potentially some change of governance in terms of what Sina has or as Sina to divest a portion or all of their investment in TuSimple. So To answer your question, we believe that at the next quarter, we'll certainly have a lot more to share in terms of where we are.
Operator: Next question from the line of Ken Hoexter of Bank of America.
Kenneth Hoexter: Cheng, Pat and team, congrats on the IPO and the progress. Maybe just talk a little bit about the 700,000 miles that you generated in the quarter. Can you talk to us a little bit about how many times that safety driver touched the wheel or had disengagements just to understand the progress of the technology is on those added miles? Does it mean anything if the driver is touching it less? Are there different things you're throwing at the trucks to see if that matters. Maybe walk us through that a little bit.
Cheng Lu: Sure. So we don't disclose disengagement numbers on a whole because it's very easy to take out of context. And as we talked about during the road show, how people disclose this engagement, what counts as a disengagement are quite subjective. So that's why we avoid just giving a number. And I think the whole industry is actually moving away from that. What I can share is, so today, we're doing on the routes that we're doing the driver-out pilot program. We're doing tremendous amount of testing every night -- actually every day. And I think this past week, we did 50 trips without any disengagement. And so most of the more consecutive trips. So I can give you -- I don't know if that gives him much context. But we're doing quite well in terms of our progress. And again, we feel confident that this will allow us to do a driver-out pilot program towards the end of this year.
Kenneth Hoexter: That's helpful to put in perspective, at least that you've run consecutive trips with no disengagement. So noted you're getting more new orders. Are you signing up new carriers and shippers? Are these all just from existing, maybe talk about the process to expand that reach with customers and maybe add whatever steps are left to get from here to the driver out. You mentioned the 4 stages, but is there something specific you would point to?
Cheng Lu: Sure. I think there's two questions. On the reservation side, the increase in reservations are still from our first wave customers. These are about 15 select customers that we went out to together with Navistar towards the end of last year. And it's some just kind of trickled in. Some took a little bit longer to sign the reservation agreement. We do have plans to go out to a second wave of customers later this year. And -- but more importantly, I want to highlight, there's a lot of things we're doing with our existing reservation customers. This is not a -- let's accumulate as many reservations as possible for the sake of having reservation. This is we're hosting voice of customer weeks with our key partners to understand what their needs are. As we mentioned earlier, we're working with them, exploring their network today, to understand which lanes makes sense to automate. So there's a lot of resources that we have to commit as well as they have to commit. And so you will see increase in reservations. This will more be more like a step ladder function rather than a linear function is what you should expect. And we need to digest our first wave of reservations first before we go out there and try spread those two in. I think your second question was around the driver out. And there's any key hurdles to overcome? Was that...
Kenneth Hoexter: Yes. Exactly, yes.
Cheng Lu: So the -- really the key takeaway is there's not one key hurdle, one technology breakthrough that we have to overcome. And I did read in some of the research and analyst reports that this is a binary risk. It's not a -- I wouldn't call this akin to your FDA approval of a new drug. This is -- we know what we have to do. It is a long list of to dos and engineering project at this point for us. And we have the features. We have the added redundancy, reliability. We have to undergo a very thorough functional safety test in the first bout and then validation. So it's almost like launching a rocket, if you will, right? You kind of know what this needs to do, and it's a very complex engineering project as well as operational project. So there is not one thing I can point to, but it's really -- if you look at our work streams, there's a lot -- I mean the whole company, everybody is involved in this part of the -- in getting a driver-out pilot program up and running. So yes, I wouldn't be able to point to one specifically.
Operator: Next question from the line of Colin Rusch of Oppenheimer.
Kristen Owen: This is Kristen on for Colin. I was wondering if you could speak to the regulatory process across state lines as you're preparing for the driver out and offering that on a more regular basis.
Cheng Lu: Sure. So our route for the driver out is all within Arizona. It's a terminal in Tucson to a terminal near Phoenix, over 100 miles of both surface streets and highways. There is no crossing of state orders. We work very closely with Arizona DOT. And there is a self-certification process. There is no additional sort of federal regulation -- regulatory approval, but we are, of course, keeping the U.S. DOT and federal regulators aware of our progress.
Kristen Owen: Okay. I think we're looking for something as you are beginning to offer that on a more regular basis, so beyond these initial pilot programs.
Cheng Lu: As the regulation stands today, there's no gating factor to cross state lines as long as these two states have allowed for -- specific allow for the full commercialization of self-driving trucks. And right now, there's 24 states allowed for. So where we operate the autonomous freight network today, between Arizona, New Mexico, Texas and basically all the way east to Florida, we don't see any challenges of crossing state lines with autonomous -- fully driverless autonomous trucks.
Kristen Owen: Okay. I appreciate the clarification. And then as a follow-up, just as you're looking to grow the team this year, can you speak to any headwinds you're having on the hiring side, just getting the right people in place?
Cheng Lu: Headwinds, we brought on over 120 people last year -- last quarter, sorry, this 1 quarter alone. So we're growing very fast. We have a multiple of disciplines to hire for us. So we have a very strong recruiting team. It is a challenging -- it's a very competitive hiring environment, especially for machine learning, artificial intelligence, products and so forth. So -- and really, this is, I think, being public, being very transparent about our growth prospects has really helped a lot. And I think if anything, we're seeing less headwinds than we did last year or 2 years ago. I think people really want to work for TuSimple or energized to be on the team.
Operator: Next question from the line of Joseph Spak of RBC Capital Markets.
Joseph Spak: I wanted to go back to the driver-out phases, which you laid out, which are helpful. Maybe you could talk about like how long is the road validation process? Like what do you need to see to go from drive-out development to drive-out deployment? And then I know you mentioned some night runs here. Is there -- are there any more details you'd be willing to provide about the ODD you're targeting for driver out?
Cheng Lu: Joe, yes, the ODD is what you see in a real freight operation is along the I-10 from terminal to terminal. And really the I-10 is, I think, 30-plus percent of all interstate freight volume. And we've actually done a lot of road mile collection, data collection and to recognize that really along the I-10 in Arizona, it's very similar to I-10 in Texas, for instance. So we feel good about sort of if we do this, it's a lot easy for us to scale than say compared to passenger car, where really every city, especially dense urban cities are quite different. Just in terms of -- so what does it -- what is entailed to validate. So when you think about the key components, there's, of course, features of what is the virtual driver and what the autonomous system needs to do. Understand when there's fault and be able to mitigate it. So there's need for redundancy and mitigation measurements. And then there's a full function of safety validation. It's not the same functional safety that you do from building a vehicle. It's going to be -- there's going to be is dynamic and it's going to be a little bit different. And what we're practically solving for is a very high level of confidence, a very high-level of reliability. That's actually based on functional safety that does spit out or that does generate sort of what our number of runs you have to do? How many have you do consecutively right? How many were you can do any minimum risk condition. So I can't disclose what the number looks like, but I can tell you that there is a scientific method that's tried to true for the most part, that we will make us feel that this is reliable and confident to do so. We will also have, of course, our oversight system. We will have a chase vehicle, not to block traffic, but just to be close in case of if it does and turn minimum risk condition. And so there are things that we do to try to mitigate sort of the runs.
Joseph Spak: Great. And then just on the -- going back to the map miles, it does seem like that number picked up a little bit quarter-over-quarter. But I was wondering if you knew off hand, maybe the target or the number of map miles you would need to hit in line with what you're showing on Page 10 of that shareholder letter, which is the near-term expansion by the end of this year?
Cheng Lu: Sure. So I don't have the exact number of miles off top of my head for near-term expansion in 2021. But I don't see us having a problem hitting it. Our pace of mapping and how scalable this system is quite robust. And of course, we're continuingly making progress there. So It's several thousand, but we feel very confident that we can map out those routes in time for this year.
Operator: Okay. Next question from the line of Raji Gill of Needham & Company.
Rajvindra Gill: Yes. And congrats on the IPO as well. Pat, I was wondering if you could give us a sense of the revenue guidance for the year of kind of $5 million to $7 million. You talked about some acceleration in utilization of your fleet and your AFN partner operations. I wonder if you can kind of elaborate a little bit further in terms of kind of the -- what's driving the revenue growth for the year relative to 2020.
Patrick Dillon: All right. Raji, thank you. So I think the factors that will drive our revenue will be multiple. First one is adding more trucks that we'll be able to add to our fleet to operate. As you heard Cheng say earlier, our order from Navistar has been pushed back the first quarter to midyear. So that obviously has impacted. And once we get those trucks up and running, we expect that to help us to increase our revenue base. In addition, we're bringing on more AFN partners to help us operate. And as we add more partners and more capacity via our partners, we'll further -- the revenue in the subsequent quarters throughout the course of this year. So that will drive us to hit those $5 million to $7 million figures that we provided in the guidance.
Rajvindra Gill: Okay. Got it. And in terms of -- you mentioned a little bit about this in terms of the regulatory environment. But I'm just wondering if you could remind us again in terms of the federal versus state. Like does the federal supersede the state-by-state regulatory environment? Or is it the -- or they're independent with respect to approval of these networks? And wondering how you see kind of the new administration, any changes or any effect in terms of the regulatory environment with the new administration.
Cheng Lu: In terms of federal state, the federal will supersede the state. Today on the federal side, there is no regulatory that says that there has to be a driver on board in order for a truck to operate. There's 24 states today that have either order utilization or regulation that allows -- does positively allow for driverless commercial operations of trucks. So really, as of today, the regulation is ahead of technology. And of course, we're working very closely on a state-by-state level as well as the federal level to ensure that has continued to pace. In terms of new administration, we can't -- first, we can't comment or pretend to understand on -- what their intent is. What we can say is from all the public speaking and comments that the new Secretary of Transportation has made has been quite favorable for the development of autonomous driving. It will create new jobs, the safety benefits of it is super important. And so where we stand today, we feel pretty good about the fact that autonomous driving will -- the benefits of -- just in terms of safety, well -- and of course, the driver shortage issue, that will continue to be the case. And I think that will continue to be a positive catalyst for why we need a more supportive regulatory environment.
Rajvindra Gill: Appreciate it. And just if I could squeeze in one more question regarding the supply constraints. You talked about that you expect to get the trucks June, July versus March. Wondering how you're thinking about, I guess, truck delivery in 2022. And in terms of the specific components that were disrupted overseas, has that been resolved? Or are there still kind of supply constraints on specific semiconductor components?
Cheng Lu: There are. It's actually -- I think on the computational side, I think it's actually getting worse. And so -- but I think our view is we're optimistic by 2022, that should go away. I don't know if that answered your question. But no, we're still working through some of that. And...
Operator: Okay. Next question from the line of Ben Kallo of Baird.
Benjamin Kallo: Congrats, guys. Maybe just talk about the 2 different business models or your 2 different strategies for revenue And maybe just talk us through, do you compete with your customers? How do you think about that? And how they think about it? And then I would expect -- maybe I'm wrong that you've deployed capital to build out your own terminal network and how we should think that will be evolving over kind of the near term and maybe next year as well?
Cheng Lu: Sure. Maybe I'll answer the first one, turn to Pat for the second question. In terms of first one, having two business models, all models enable autonomous freight capacity. And really, that's what we believe is what's needed for this industry, for truck industry because of the inbound between demand truck freight and the supply of the driver shortage, driver turnover, the safety considerations. And so having both business models allow us to -- they're complementary for one. Also, allows us to accelerate adoption of our services. We're very sensitive to channel conflicts. And this is also something that's not new to the industry. So you do have players who are leasing trucks to carriers at the same time to offer dedicated services. You have others that both at intermodal and then -- and directly to shippers. So channel conflict is something that happens. But I think as a whole, our customers recognize that this is a very large market. Early adopters of this technology can be able to offer a more comprehensive service themselves, can certainly grow their footprint. And so today, we don't see sort of challenges with channel conflicts. And then in terms of the terminal expansion over the next two years and the cost, I'll turn it over to Pat.
Patrick Dillon: Great. Yes. I think as we continue to build out the AFN and you see the maps of -- our map miles expanding across the Southeastern United States, you'll see us seek a combination of our partners, terminals as destination or origination points, which is obviously a very capital-efficient option for us and supplement that with our own terminals like we're doing in Texas, both with our Dallas and our Fort Worth, Texas facilities. I think while we have used several of the more Tier 1 type terminals that are larger and more sophisticated terminals, over the coming year or 2, you will start to see us with more of what we call our Tier 3 terminals, which are a much lower cost, essentially paid for lots with just the essential facilities to do drop and hook operations to expand our AFN in a capital-efficient way. So as we continue to expand that out, we'll provide more guidance about that, and we'll also provide more about the specific cost structure.
Benjamin Kallo: If I could sneak one more and just -- I mean plus with the SPAC announcement today and more companies coming to market, you guys outlined your being the first public company. Do you think that the more, I guess, fundraising and public fundraising changes your customers' behavior at all? And have you seen that because, I imagine, that they know this before we do.
Cheng Lu: I don't think it changes our customer behavior. We had to really work with all of our customers and partners, right? They -- each one has -- some of them we had to convert from being a nonbeliever to someone that believes. We have to prove ourselves with our technology in our operations and our willingness to partner. So that doesn't change. Everyone understands the benefit of economy, and we had to continue to be the best and to be a leader in the industry otherwise we'll get replaced. So I don't think this changes anything. We welcome having more autonomous trucking companies or autonomous driving companies to go public. I think it gives more awareness to this industry. And also for the most transparency. This is an industry that historically a lot of people have made big claims, historically have sort of underachieved some of those. And so I think that level of transparency is good for the overall development of this industry.
Operator: Next question from the line of Alex Potter of Piper Sandler.
Alexander Potter: So I had a question. You talked about having 700,000 miles in the quarter, and that's with 70 trucks. So if you divide 700,000 by 70, that's 10,000 miles per truck in the quarter. So if you annualize that, that's about 40,000 miles per year per truck. And I know once we're in full commercial operations, we'll be doing closer to 200,000 miles a year per truck. So what I'm wondering, I guess, is between now and 2024, 2025, is this a meaningful metric to track. Should we be seeing that number move higher? And if it's not a meaningful metric to track, then I guess I'd be interested in hearing why.
Cheng Lu: Good question. It's -- I don't know how -- I think it's meaningful if we're looking at only revenue-generating trucks that's on the autonomous freight network. So if you look at our 70 trucks, we have 50 in the U.S., 20 in China. And so -- and also with 50 in the U.S., there's probably half that are focused on testing and -- or a little bit less than half. So those trucks are not meant to be driving 10, 15, 20 hours a day. They're on test operations. They're doing feature testing. And so their number of miles per week per month is actually not as big, right? So I think, of course, as our fleet size grows, more will be dedicated to revenue runs. And as we do run, we're still collecting data. And so if we do apples and apples, I think it's a meaningful metric to track the efficiency organization of our assets. But I think right now, it's probably a little premature to track this. And I don't think we should think about it from a linear progression, right, 40,000 to 200,000. That's probably also not the right sort of apples-and-apples comparison.
Alexander Potter: Sure. Okay. That's helpful color. And then, I guess, one follow-up question. You mentioned some previous comments about hiring, how you added incremental 100 people. I'd be interested in knowing where those people are? Are they in the U.S.? Are they in China? And if you look out over the next couple of years or next couple of quarters, couple of months even, where do you think you're going to be adding headcount, both regionally and in terms of, I guess, departmentally, where do you need the most human resources?
Cheng Lu: Sure. So as of today, we're about 650 people in the U.S. and about 300 in China, actually about 15 or so in Sweden. So we're becoming a true global company. The majority of new headcount is in the U.S. We actually have about, I think last time I checked, 300 in the U.S. alone. And if you actually just look at our Career page on our website, it's really across many, many disciplines. But I mean, a lot of it is on the software side just because there's a lot more work there. We are -- there are things that a year ago or two years ago, we didn't need. So things like procurement functions, things like more freight revenue-related things. So those are also new features or functions we're adding. But it really is across the board. As mentioned, 84% of our people are focused on R&D. So of course, the majority of hires are still around our technology.
Operator: And last question from the line of Jeff Osborne of Cowen & Co.
Jeffrey Osborne: Most of my questions have been answered, but 2 quick ones, Pat. I didn't know if you could give us any context on stock-based compensation expenses for the year was question one. And then question two for Cheng. Is -- was there any learnings from the winter storms in Texas in February? Or were you completely forecasting that off the roads at that time?
Patrick Dillon: Jeff, it's Pat. In terms of stock-based compensation, we did have our IPO in the second quarter, as we mentioned. That will be a catalyst for recognition of a significant sum of a noncash charge for stock-based compensation related to those equity instruments that had a performance condition that is satisfied by the IPO. So as we get into the second quarter, we'll disclose that amount that's recognized in the quarter as well as we expect to be able to give you more update for what stock-based compensation will be for the rest of the year at that time.
Cheng Lu: And your second question...
Patrick Dillon: Just to clarify, we're going to wait for the 2Q results. So it will be a bit of a surprise then. But at that point, at least you'll tidy up the third and the fourth quarter.
Cheng Lu: Correct. And Jeff, for your second question, in terms of the Texas winter storm, we didn't -- I would say, generally speaking, we didn't operate. If a human -- if a good human driver cannot drive our autonomous system, it's not expected to operate in those conditions either. When you think about really winter testing and icy conditions, we will do that in a test track first to ensure safety. So I think the learnings are more around managing our supply chain and just overall operations rather than try training the algorithm to drive over snow or very big snow.
Operator: There are no further question at this time. I will now turn the call over to Lauren Harper. Lauren?
Lauren Harper: I just want to thank you all for attending the call today. If you have any follow-up questions, please give me or Pat a call. Have a great day. You can all disconnect now. Good bye.
Operator: And ladies and gentlemen, that concludes today's conference. Thank you for participating. You may all disconnect.
