Kodiak AI, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Good afternoon.

Thank you for joining Kodiak second quarter 2026 earnings call. I am Steve Philistine, Senior Manager, Investor Relations. Joining me today are Don Burnette, Founder and Chief Executive Officer, and Saroj Gada, Chief Financial Officer. Earlier today, we issued our earnings release and posted our earnings presentation, both of which are available on the investor relations section of our website. Before we begin, please note that today's discussion will contain forward-looking statements regarding our business, financial performance, outlook, and future operating plans. Actual results may differ materially from those discussed today. Please refer to our earnings materials and SEC filings for a discussion of factors that could cause actual results to differ. We disclaim any obligation to update any forward-looking statements except as required by law.

We will also discuss certain non-GAAP financial measures. Information regarding our non-GAAP financial measures, including reconciliations to the most directly comparable GAAP measures, can be found in our earnings release and supplemental materials available on our investor relations website. With that, I'll turn the call over to Don.

Good afternoon. Thank you for joining us. Q2 was a quarter of significant commercial validation and increasing scale for Kodiak as we achieved important milestones that further strengthen our leadership position in commercial driverless trucking. We expanded the world's largest customer-owned driverless truck fleet to 35 trucks operating with no human in the cab. We made significant progress toward our targeted long-haul driverless launch by the end of the year, increasing our autonomy readiness measure to 91% as of July. We also introduced our 7th-generation platform, further improving the performance and reliability of the Kodiak Driver. Together, these accomplishments strengthen the foundation of our next phase of disciplined growth as we continue deploying physical AI driverless solutions at commercial scale.

Turning to our second quarter results, we deployed seven additional driverless trucks, bringing our total driverless deployment to 35 and further growing the largest customer-owned driverless truck fleet in the world. As of quarter end, those trucks have driven more than 40,000 paid driverless hours, an increase of 71% from the end of the first quarter and up more than 20 times year-over-year. Over the same period, we delivered over 300,000 tons of freight, bringing cumulative loads delivered to more than 20,000, representing 32% growth from the end of the first quarter and 150% year-over-year. Together, these results demonstrate that the Kodiak Driver continues to deliver increasing value to our customers while advancing commercial deployment. We are also moving at high velocity toward our targeted driverless long haul launch by year-end.

As of July, our long haul autonomous readiness measure, which measures the percentage of safety case claims we've completed for our targeted long haul launch, surged to 91%, a five-point improvement in just three months. At 91%, we have now successfully closed out the vast majority of our long-haul safety claims, including several of the most technically challenging claims that historically require the longest validation cycles. These include significant progress across our safety-critical vehicle control architecture, including enhancements to our throttle, brake, and steering control systems, and continued advancement of our redundant steering capabilities to improve system fault tolerance. We've also made meaningful progress in our probabilistic risk assessment framework, strengthening how we model, analyze, and quantify safety risk across real-world operating scenarios, which are essential for highway driving.

This progress reflects the investments we've made over the past several quarters in expanding our systems engineering organization, enhancing our AI-enabled development and validation tools, growing our fleet of dedicated development trucks, and increasing the scale of our structured track testing program. These investments are now translating into measurable results. One example of this improved tooling is our revolutionary AI-powered BreakPoint technology, which allows our engineers to actively seek out rare and challenging scenarios, accelerate development, and close the limited remaining claims in our safety case. BreakPoint can now execute over 1 million simulations per hour and runs on a minimal compute budget of around a tenth of a penny per sim. Another example of Kodiak's capital-efficient approach in action.

We combine this large-scale simulation with targeted closed course testing and real-world validation, thereby generating data more efficiently, validating safety performance faster, and systematically closing out safety claims with a high degree of confidence and speed. Based on the momentum we are seeing today, we expect to continue making meaningful progress throughout the third quarter and continue to target driverless long haul launch by year-end. We also continue to refine our operational readiness for long haul deployment. After successfully launching service with Rail Transport in the first quarter, we recently expanded operations to five round trips per week. This expansion reflects the confidence our customers gain as they integrate the Kodiak Driver into their operations. Our progress towards our long haul launch is happening at an opportune moment, where a number of broad industry trends are reinforcing the long-term trucking opportunity.

Most notably, freight rates are rapidly recovering as the trucking industry faces new driver capacity constraints due to economic and regulatory changes, including a regulatory crackdown on non-domiciled drivers. We believe these trends further reinforce and even grow the long-term opportunity for the Kodiak Driver. We had another strong quarter in our industrial vertical, increasing Atlas's fleet of Kodiak-equipped trucks to 35. Atlas has selected Daimler Truck North America's Western Star platform as it continues to expand its Kodiak-powered fleet. Our upfit partner, Roush, has already begun producing these vehicles, which integrate our seventh-generation autonomous platform onto the Western Star 49X for our growing deployment with Atlas. By the end of the quarter, we expect Atlas to be operating high 30s number of driverless trucks.

As previously stated, as we move through the remainder of the year, we expect to ramp production and deploy a similar number of driverless trucks in the second half of 2026 as we did in the first half. This transition positions Atlas to become the first customer in the world to operate a driverless fleet across multiple truck OEM platforms. We believe the experience gained through this deployment will be invaluable as virtually every large trucking fleet operates vehicles from more than one OEM. We also recently agreed to a firm delivery timetable with Atlas that will allow us to establish a more coordinated production and delivery schedule. This new delivery timetable will better align our deployment with Atlas' growing customer demand while supporting expansion into a broader geographic footprint across the Permian Basin.

The updated agreement further strengthens our partnership, improves planning and execution for both companies, and reinforces our shared commitment to successfully scaling driverless operations. We continue to expect to complete the initial 100 truck commitment by the end of the first half of 2027. We recently expanded our driverless truck deployment with Atlas to service two of Atlas' major Dune Express load-out facilities simultaneously. These two depots are an approximate 90-minute drive apart and service wells spread over three hours apart, allowing Atlas to efficiently serve a broader range of customers over a much wider geographic area in Texas and New Mexico. In addition, Atlas now successfully serves customer well sites solely with Kodiak trucks, which requires a high level of reliability and assurance. If a well site doesn't get sand on time, it shuts down, making these deployments increasingly mission critical.

Lastly, our first international pilot kicks off in a few weeks in Canada with West Fraser, one of the world's largest wood products companies. We will haul flatbed trailers to demonstrate the Kodiak Driver's capabilities in logging operations, another of trucking's most demanding environments. Our defense vertical continues to build momentum. We have a growing roster of world-class defense partnerships, including our strategic collaboration with General Dynamics Land Systems, who we continue to work closely with on new opportunities. Collaborating with companies like General Dynamics puts Kodiak in a much stronger position to compete for future autonomous ground vehicle contracts that we believe could make a significant positive impact on revenue in the coming years.

We were also selected for phase 2 of the Defense Innovation Unit's Robotic Operation for Autonomous Delivery and Sustainment, or ROADS program. We participated in the ROADS demo in July. ROADS aims to leverage customer-proven autonomous vehicle technologies like Kodiak's for the department's non-tactical vehicle fleet. Given our proven technology, we believe we are well suited to address this opportunity, which reflects the Department of Defense's ramping investment in autonomous and dual use technologies. The depth of our defense portfolio also continues to expand. Our team is continuing to execute on the ROGUE-Fires program with the U.S. Marine Corps. This work builds directly on Kodiak's prior work in military autonomy, including our earlier robotic combat vehicle engagement with the U.S. Army and participation in high-profile Pentagon demonstrations such as the Defense Innovation Unit's Project G.I. and the Army xTechOverwatch program.