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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40326
TuSimple Holdings Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware86-2341575
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
9191 Towne Centre Drive, Suite 600
San Diego, CA
92122
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (619) 916-3144
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
 Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share  TSP
 
 
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
 
Non-accelerated filerxSmaller reporting companyo
    
Emerging growth companyx  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of July 31, 2022, the number of shares of the registrant’s Class A common stock outstanding was 200,486,658 and the number of shares of the registrant’s Class B common stock outstanding was 24,000,000.



Table of Contents
  Page
 
 
 
 
 
 
 
 
 
 
i


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” or the negative version of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future performance, including our revenue, cost of revenue, and operating expenses;
the sufficiency of our cash and cash equivalents to meet our operating requirements;
our ability to scale our Autonomous Freight Network, which we refer to as our AFN;
our ability to attract new users to services provided on our AFN;
our ability to increase reservations for our purpose-built L4 autonomous semi-trucks;
our ability to convert reservations for our purpose-built L4 autonomous semi-trucks into purchases;
our ability to fulfill all reservations for our purpose-built L4 autonomous semi-trucks according to each customer’s delivery schedule;
our ability to effectively manage our growth and future expenses;
the estimated timing for when additional routes will be available;
our ability to compete in a market that is rapidly evolving and subject to technological developments;
our estimated total addressable market, the market for autonomous truck and freight transport solutions, and our market position;
our ability to successfully collaborate with business partners;
our ability to obtain, maintain, protect, and enforce our intellectual property;
our ability to comply with modified or new laws and regulations applicable to our business or industry;
our ability to attract and retain employees with the technical skills we require and other key personnel;
our ability to achieve our driver-out milestones on the timeline expected;
our anticipated investments in research and development and sales and marketing, and the effect of these investments on our results of operations;
the increased expenses associated with being a public company; and
the potential impact of the COVID-19 pandemic, inflation, wars and other global hostilities on our and our partners’ business and results of operations, and on the global supply chain and economy generally.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part I, Item 1A. “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the "SEC") on February 24, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
ii


Except as required by applicable law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by applicable law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

iii


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
TuSimple Holdings Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
December 31,
2021
June 30,
2022
ASSETS  
Current assets:  
Cash and cash equivalents$1,337,586 $1,156,418 
Accounts receivable, net1,599 2,700 
Prepaid expenses and other current assets13,995 22,110 
Total current assets1,353,180 1,181,228 
Property and equipment, net36,053 31,405 
Operating lease right-of-use assets 41,641 
Other assets7,090 4,478 
Total assets$1,396,323 $1,258,752 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$4,544 $3,733 
Amounts due to joint development partners7,394 5,129 
Accrued expenses and other current liabilities41,698 34,529 
Short-term debt1,524 1,583 
Capital lease liabilities, current766  
Operating lease liabilities, current 2,905 
Total current liabilities55,926 47,879 
Capital lease liabilities, noncurrent2,872  
Operating lease liabilities, noncurrent 41,156 
Long-term debt5,543 4,495 
Other liabilities5,004 4,127 
Total liabilities69,345 97,657 
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, $0.0001 par value; 100,000,000 shares authorized as of December 31, 2021 and June 30, 2022; zero shares issued and outstanding as of December 31, 2021 and June 30, 2022
  
Common stock, $0.0001 par value; 4,876,000,000 Class A shares authorized as of December 31, 2021 and June 30, 2022; 197,833,195 and 200,192,530 Class A shares issued and outstanding as of December 31, 2021 and June 30, 2022, respectively; 24,000,000 Class B shares authorized as of December 31, 2021 and June 30, 2022; 24,000,000 Class B shares issued and outstanding as of December 31, 2021 and June 30, 2022
22 22 
Additional paid-in-capital2,464,730 2,520,300 
Accumulated other comprehensive income (loss)77 (1,069)
Accumulated deficit(1,137,851)(1,358,158)
Total stockholders’ equity1,326,978 1,161,095 
Total liabilities and stockholders’ equity$1,396,323 $1,258,752 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1


TuSimple Holdings Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended June 30, Six Months Ended June 30,
 20212022 20212022
Revenue$1,482 $2,594 $2,426 $4,858 
Cost of revenue2,982 5,767 5,228 9,856 
Gross loss(1,500)(3,173)(2,802)(4,998)
Operating expenses:
Research and development75,891 85,519 117,325 163,677 
Selling, general and administrative43,466 22,017 59,368 54,232 
Total operating expenses119,357 107,536 176,693 217,909 
Loss from operations(120,857)(110,709)(179,495)(222,907)
Change in fair value of warrants liability  (326,900) 
Gain on loan extinguishment4,183  4,183  
Other income, net145 2,114 523 2,409 
Loss before provision for income taxes(116,529)(108,595)(501,689)(220,498)
Provision for income taxes    
Net loss(116,529)(108,595)(501,689)(220,498)
Accretion of redeemable convertible preferred stock  (4,135) 
Net loss attributable to common stockholders$(116,529)$(108,595)$(505,824)$(220,498)
Net loss per share attributable to common stockholders, basic and diluted
$(0.64)$(0.49)$(4.15)$(0.99)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
182,382,800 223,785,825 121,800,404 223,159,618 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2


TuSimple Holdings Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021 2022 2021 2022
Net loss$(116,529)$(108,595)$(501,689)$(220,498)
Other comprehensive income (loss):
Foreign currency translation adjustment(775)(1,345)136 $(1,146)
Comprehensive loss$(117,304)$(109,940)$(501,553)$(221,644)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


TuSimple Holdings Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
 
Redeemable Convertible Preferred Stock
  Common Stock
 SharesAmountSharesAmount
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2020102,074,703 $664,791 60,543,337 $6 $ $(301)$(405,178)$(405,473)
Issuance of Series E redeemable convertible preferred stock, net of issuance costs4,650,999 61,631 — — — — — — 
Issuance of Series E redeemable convertible preferred stock from the exercise of warrants9,477,073 379,084 — — — — — — 
Issuance of Series E-2 redeemable convertible preferred stock from the exercise of warrants4,331,644 173,275 — — — — — — 
Issuance of common stock from exercise of options— — 60,616 — 1 — — 1 
Vesting of early exercised stock options— — — — 21 — — 21 
Accretion of redeemable convertible preferred stock to redemption value— 4,135 — — (4,135)— — (4,135)
Stock-based compensation— — — — 6,289 — — 6,289 
Foreign currency translation adjustment— — — — — 911 — 911 
Net loss— — — — — — (385,160)(385,160)
Balance as of March 31, 2021120,534,419 1,282,916 60,603,953 6 2,176 610 (790,338)(787,546)
Vesting of early exercised stock options— — — — 21 — — 21 
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering(120,534,419)(1,282,916)120,534,419 12 1,282,904 — — 1,282,916 
Issuance of common stock in connection with initial public offering, net of offering costs— — 27,027,027 3 1,027,371 — — 1,027,374 
Issuance of common stock related to private placement— — 874,999 — 35,000 — — 35,000 
Stock-based compensation— — — — 52,509 — — 52,509 
Foreign currency translation adjustment— — — — — (775)— (775)
Net loss— — — — — — (116,529)(116,529)
Balance as of June 30, 2021 $ 209,040,398 $21 $2,399,981 $(165)$(906,867)$1,492,970 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


TuSimple Holdings Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
 Common Stock       
 SharesAmountAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
Balance as of December 31, 2021221,833,195 $22 $2,464,730 $77 $(1,137,851)$1,326,978 
Adjustments for prior periods from adopting ASC 842— — — — 191 191 
Issuance of common stock from exercise of options534,019 — 871 — — 871 
Issuance of common stock from release of RSUs and SVAs537,980 — — — — — 
Issuance of common stock under the Employee Stock Purchase Plan87,215 — 1,292 — — 1,292 
Vesting of early exercised stock options— 21 — — 21 
Stock-based compensation— 27,527 — — 27,527 
Foreign currency translation adjustment— — 199 — 199 
Net loss— — — (111,903)(111,903)
Balance as of March 31, 2022222,992,409 22 2,494,441 276 (1,249,563)1,245,176 
Issuance of common stock from exercise of options262,548 — 687 — — 687 
Issuance of common stock from release of RSUs and SVAs937,573 — — — — — 
Vesting of early exercised stock options— — 21 — — 21 
Stock-based compensation— — 25,151 — — 25,151 
Foreign currency translation adjustment— — — (1,345)— (1,345)
Net Loss— — — (108,595)(108,595)
Balance as of June 30, 2022224,192,530 $22 $2,520,300 $(1,069)$(1,358,158)$1,161,095 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


TuSimple Holdings Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended June 30,
 20212022
Cash flows from operating activities:  
Net loss$(501,689)$(220,498)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation58,798 52,678 
Depreciation and amortization4,409 5,461 
Change in fair value of warrants liability326,900  
Gain on loan extinguishment(4,183) 
Other adjustments 81 
Changes in operating assets and liabilities:
Accounts receivable(130)(1,203)
Prepaid expenses and other current assets(11,995)(6,380)
Operating lease right-of-use assets 2,608 
Other assets(752)2,708 
Accounts payable532 549 
Amounts due to joint development partners5,299 (2,265)
Accrued expenses and other current liabilities5,947 (8,578)
Operating lease liabilities (2,231)
Other liabilities1,449 411 
Net cash used in operating activities(115,415)(176,659)
Cash flows from investing activities:
Purchases of property and equipment(5,928)(5,041)
Purchases of intangible assets(179)(132)
Proceeds from disposal of property and equipment100 25 
Net cash used in investing activities(6,007)(5,148)
Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of offering costs54,693  
Proceeds from the issuance of common stock under the Employee Stock Purchase Plan 1,292 
Proceeds from exercise of warrants for redeemable convertible preferred stock183,007  
Proceeds from exercised stock options253 1,558 
Proceeds from issuance of common stock upon initial public offering, net of offering costs1,030,965  
Proceeds from issuance of common stock related to private placement35,000  
Return of guarantee deposit on related party loan3,715  
Principal payments on related party loan(4,398) 
Payment of third-party costs in connection with initial public offering(2,328) 
Principal payments on capital lease obligations(382) 
Principal payments on finance lease obligations (587)
Principal payments on loans(237)(747)
Net cash provided by financing activities1,300,288 1,516 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash118 (877)
Net increase (decrease) in cash, cash equivalents, and restricted cash1,178,984 (181,168)
Cash, cash equivalents, and restricted cash - beginning of period312,351 1,339,092 
Cash, cash equivalents, and restricted cash - end of period$1,491,335 $1,157,924 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


TuSimple Holdings Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended June 30,
 20212022
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$1,489,829 $1,156,418 
Restricted cash included in prepaid expenses and other current assets1,506 1,506 
Total cash and cash equivalents, and restricted cash$1,491,335 $1,157,924 
Supplemental disclosure of cash flow information:
Cash paid for interest$386 $546 
Supplemental schedule of non-cash investing and financing activities:
Acquisitions of property and equipment included in current liabilities$1,807 $1,103 
Accretion of redeemable convertible preferred stock$4,135 $ 
Vesting of early exercised stock options$42 $42 
Exercise of liability-classified warrants$369,352 $ 
Conversion of redeemable convertible preferred stock to common stock upon initial public offering$1,282,916 $ 
Issuance costs incurred in connection with initial public offering included in current liabilities$1,263 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


TuSimple Holdings Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Description of Business and Summary of Significant Accounting Policies
Description of Business
TuSimple Holdings Inc. (“TuSimple” or the “Company”) is principally engaged in the operation and development of autonomous trucks and an autonomous freight network (“AFN”). The Company is headquartered in San Diego, California.
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements (“Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes as of and for the year ended December 31, 2021, included in the Company's Annual Report on Form 10-K.
The condensed consolidated balance sheet as of December 31, 2021, was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP. In management’s opinion, the accompanying Financial Statements reflect all normal recurring adjustments necessary for their fair presentation. Other than described below, there have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2021 that have had a material impact on the Company’s Financial Statements.
Leases
The Company accounts for leases in accordance with Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"), which requires lessees to recognize on-balance sheet and disclose key information about leasing arrangements. The Company adopted ASC 842 along with all applicable ASU clarifications and improvements on January 1, 2022 using the modified retrospective transition method and used the effective date as the date of initial application. Consequently, financial information is not updated and disclosures required under ASC 842 are not provided for periods before January 1, 2022. ASC 842 provides a number of optional practical expedients in transition. The Company elected the "package of practical expedients," which permits the Company not to reassess under ASC 842 its prior conclusions about lease identification, lease classification and initial direct costs.
The Company determines if a contract contains a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset in exchange for consideration, which relates to an asset which the Company does not own. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized as the lease liability, adjusted for lease incentives received. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate (“IBR”) because the interest rate implicit in most of the Company’s leases is not readily determinable. Lease payments may be fixed or variable, however, only fixed payments or in-substance fixed payments are included in the Company’s lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments are incurred.
The Company has lease agreements with lease and non-lease components and has elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component. Additionally, the Company has determined that certain leases previously identified as build-to-suit leasing arrangements under legacy accounting (ASC 840), were derecognized pursuant to the transition guidance provided for build-to-suit leases in ASC 842. Accordingly, these leases have been reassessed as operating leases as of the adoption date under ASC 842, and are included on the condensed consolidated balance sheet as of June 30, 2022.
The Company has leases that include one or more options to extend the lease term for up to five years and some of its leases include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.
Operating leases are included within operating lease ROU assets, operating lease liabilities, current, and operating lease liabilities, noncurrent on the Company's condensed consolidated balance sheet as of June 30, 2022. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities, and other liabilities on the Company's condensed consolidated balance sheets as of June 30, 2022.
8


The Company has elected not to present short-term leases on the consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise.
Adoption of the new lease standard on January 1, 2022 impacted the interim unaudited condensed consolidated financial statements as follows: (i) recognition of ROU assets of $32.9 million and lease liabilities of $35.1 million for operating leases, (ii) derecognition of build-to-suit lease assets and liabilities of $6.5 million and $4.4 million, respectively, with the net impact of $0.2 million recorded to accumulated deficit as of January 1, 2022, and (iii) reclassification of deferred rent and other liability balances of $2.5 million relating to its existing lease arrangements into the ROU asset balance as of January 1, 2022. The standard did not materially impact the condensed consolidated statement of operations and condensed consolidated statement of cash flows.
Reclassifications
Certain prior period balances have been reclassified to conform to the current period presentation in the condensed consolidated financial statements and the accompanying notes. Sales and marketing expense and general and administrative expense have been reclassified to selling, general and administrative expense.
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases, to require lessees to recognize all leases, with limited exceptions, on the balance sheet, while recognition on the statement of operations will remain similar to legacy lease accounting, ASC 840. Subsequently, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, ASU No. 2018-11, Targeted Improvements, ASU No. 2018-20, Narrow-Scope Improvements for Lessors, and ASU 2019-01, Codification Improvements, to clarify and amend the guidance in ASU No. 2016-02. As disclosed above, the Company adopted the ASUs on January 1, 2022 on a modified retrospective basis.
Recently Issued Accounting Pronouncements
There have been no recent accounting pronouncements since the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2021, that may have a material impact on the Company's condensed consolidated financial statements.
Note 2. Fair Value Measurements
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation (in thousands):
 As of December 31, 2021
 TotalLevel 1Level 2Level 3
Assets:    
Cash equivalents:    
Money market funds$1,077,550 $1,077,550 $ $ 
Total$1,077,550 $1,077,550 $ $ 
 As of June 30, 2022
 TotalLevel 1Level 2Level 3
Assets:    
Cash equivalents:    
Money market funds$925,228 $925,228 $ $ 
Total$925,228 $925,228 $ $ 
Warrants Liability
In February and March 2021, TRATON Group (“TRATON”) and its subsidiary Navistar, Inc. (“Navistar”) exercised warrants to purchase 4,331,644 and 9,477,073 shares of Series E-2 and Series E redeemable convertible preferred stock at an exercise price of $11.31 and $14.14, resulting in proceeds of $49.0 million and $134.0 million, respectively. Immediately prior to their exercise, the fair value of the then existing warrants liability was remeasured using the Black-Scholes option-pricing model, resulting in a loss upon remeasurement of $326.9 million. The warrants exercised by TRATON represented only a portion of their total and the unexercised warrants expired as of the exercise date. As of June 30, 2022, there were no warrants outstanding.
9


The Company used the following assumptions in the model:
 As of
 
February 26,
2021
March 19,
2021
Fair value of underlying securities$40.00$40.00
Expected volatility62.95%60.85%
Expected term (in years)1.760.79
Risk-free interest rate0.14%0.08%
Note 3. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net as of December 31, 2021 and June 30, 2022, was as follows (in thousands):
 As of
 December 31,
2021
June 30,
2022
Electronic equipment$12,761 $13,529 
Office and other equipment9,423 12,045 
Vehicles21,043 18,870 
Leasehold improvements11,984 10,425 
Buildings 1,841 
Construction in progress5,258 879 
Property and equipment, gross60,469 57,589 
Accumulated depreciation and amortization(24,416)(26,184)
Property and equipment, net$36,053 $31,405 
Depreciation and amortization expense was $2.3 million and $4.4 million for the three and six months ended June 30, 2021, respectively, and $2.8 million and $5.5 million for the three and six months ended June 30, 2022, respectively.
As of December 31, 2021, property and equipment financed under capital leases was $3.3 million, net of accumulated amortization of $2.5 million. As of June 30, 2022, property and equipment under finance leases was $4.4 million, net of accumulated depreciation of $0.7 million.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities as of December 31, 2021 and June 30, 2022 were as follows (in thousands):
 As of
 December 31,
2021
June 30,
2022
Accrued payroll$33,225 $21,263 
Accrued information technology services1,625 3,750 
Accrued professional fees1,938 1,133 
Finance lease liabilities, current 971 
Other4,910 7,412 
Accrued expenses and other current liabilities$41,698 $34,529 
10


Leases
The balances for the operating and finance leases where the Company is the lessee are presented within the consolidated balance sheets as follows (in thousands):
As of June 30, 2022
Operating leases:
Operating lease right-of-use assets$41,641 
Operating lease liabilities, current$2,905 
Operating lease liabilities, noncurrent41,156 
Total operating lease liabilities$44,061 
Finance leases:
Property and equipment, at cost$5,134 
Accumulated depreciation(726)
Property and equipment, net$4,408 
Accrued expenses and other current liabilities$971 
Other liabilities3,677 
Total finance lease obligations$4,648 
The components of lease expense were as follows (in thousands):
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Operating lease expense:
Operating lease expense (1)
$2,285 $4,290 
Finance lease expense:
Amortization of leased assets$364 $727 
Interest on lease liabilities146 299 
Total finance lease expense$510 $1,026 
Total lease expense$2,795 $5,316 
(1)    Includes short-term leases and variable lease costs, which are immaterial.
Other information related to leases where the Company is the lessee is as follows:
As of June 30, 2022
Weighted-average remaining lease term:
Operating leases8.9 years
Finance leases3.3 years
Weighted-average discount rate:
Operating leases4.4 %
Finance leases12.7 %
11


Supplemental cash flow information related to leases where the Company is the lessee is as follows (in thousands):
Six Months Ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,998 
Operating cash flows from finance leases (interest payments)$299 
Financing cash flows from finance leases$587 
Right-of-use assets obtained in exchange for lease obligations:
Operating lease liabilities$47,419 
Finance lease liabilities$5,240 
As of June 30, 2022, the maturities of the Company's operating and financing lease liabilities (excluding short-term leases) are as follows (in thousands):
Operating Leases
Finance Leases
Remainder of 2022$1,005 $791 
20237,577 1,386 
20247,111 1,398 
20256,938 2,200 
20267,129 103 
Thereafter24,134  
Total minimum lease payments53,894 5,878 
Less: imputed interest(9,833)(1,230)
Present value of minimum lease payments44,061 4,648 
Less: current portion(2,905)(971)
Lease obligations, noncurrent$41,156 $3,677 
As of June 30, 2022, the Company has additional leases for facilities that have not yet commenced with lease obligations of $1.2 million. These leases will commence between 2022 and 2023 with lease terms of four to five years. This table does not include lease payments related to these leases.
Supplemental Information for Comparative Periods
Prior to the adoption of ASC 842, future minimum lease payments for non-cancelable operating and capital leases as of December 31, 2021 were as follows (in thousands):
Operating LeasesCapital Leases
2022$7,660 $1,253 
20237,891 978 
20245,126 963 
20253,435 1,761 
20263,049  
Thereafter
22,524  
Total minimum lease payments
$49,685 4,955 
Amount representing interest
(1,317)
Present value of minimum lease payments
$3,638 
Note 4. Commitments and Contingencies
Litigation and Legal Proceedings
The Company is not currently a party to any pending material litigation or other legal proceeding or claims.
12


Note 5. Stock-Based Compensation
Equity Compensation Plans
The Company maintains three equity compensation plans that provide for the issuance of shares of our Class A common stock to our employees, directors, and consultants: the 2017 Share Plan (the “2017 Plan”), the 2021 Equity Incentive Plan (the “2021 Plan”), and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which have all been approved by the board of directors. Following the Company's initial public offering ("IPO") in 2021, the 2017 Plan was terminated, but continues to govern the terms and conditions of the outstanding awards previously granted under the 2017 Plan. Subsequent to the IPO, the Company has only issued awards under the 2021 Plan and the ESPP. These plans provide for the issuance of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted shares, restricted stock units (“RSUs”), share value awards (“SVAs”), stock appreciation rights (“SARs”), and other awards.
2021 Employee Stock Purchase Plan
During the six months ended June 30, 2022, 87,215 shares were purchased under the 2021 ESPP at a weighted-average price of $14.81 per share resulting in cash proceeds of $1.3 million.
Stock Options
A summary of the stock option activity, including the CEO Performance Award, for the six months ended June 30, 2022 is as follows (in thousands, except share amounts, per share amounts, and years):
 
Options
Outstanding
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2021
7,684,778$12.91 9.04$188,722 
Exercised(796,567)$1.96 
Cancelled/Forfeited(1,864,458)$18.41 
Outstanding at June 30, 2022
5,023,753$12.60 5.88$12,133 
 Vested and exercisable at June 30, 2022
2,039,977$5.31 6.00$6,968 
As of June 30, 2022, there was $17.5 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average service period of 2.66 years.

CEO Performance Award
In March 2021, included in the stock options discussed above, the Company granted 1,150,000 stock option awards to its now former CEO with an exercise price of $14.14 per share and a contractual life of ten years that vest upon the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment as CEO through the vesting date (the “CEO Performance Award”). In March 2022, the Company underwent a change in CEO and the CEO Performance Awards were cancelled in connection with the separation of the former CEO. As a result, the Company reversed the historical stock-based compensation expense attributable to the CEO Performance Awards of $7.1 million.
In connection with the separation of the former CEO, a total of 1,850,000 stock options were modified, of which 440,000 were vested as of the modification date. The terms of the modification allow for continued vesting of the unvested stock options for the twelve-month period following the separation date ("transition period"), subject to the provision of advisory services throughout the transition period. Upon the completion of such continuous services, all stock options subject to vesting shall become vested and exercisable. Each of the modified stock options, including those vested and outstanding as of the modification date, shall remain outstanding and exercisable until the earlier of: (x) the date on which any of the Company's outstanding stock options are terminated in connection with a corporate transaction, (y) the original expiration date applicable to such stock options, and (z) the second anniversary of the date on which the transition services with the Company are terminated. The Company determined the continuous service provisions were in-substance an acceleration of the unvested awards and the incremental cost related to the modified options was recorded immediately upon the separation date. Additionally, 175,000 outstanding and unvested RSUs had their vesting accelerated in full as of the separation date. As a result of these modifications, the Company recorded incremental stock compensation expense of $13.9 million during the six months ended June 30, 2022.
13


RSUs
The following table summarizes the activity related to RSUs for the six months ended June 30, 2022:
 
RSUs
Outstanding
Weighted-Average
Grant Date Fair
Value per Share
Unvested and outstanding at December 31, 2021
5,949,798 $46.54 
Granted5,822,841 $9.48 
Vested(1,349,522)$38.52 
Cancelled(1,113,273)$45.12 
Unvested and outstanding at June 30, 2022
9,309,844 $24.69 
Vested and outstanding at June 30, 2022
3,021 $19.36 
SVAs
The following table summarizes the activity related to SVAs for the six months ended June 30, 2022:
 
SVAs
Outstanding
Weighted-Average
Grant Date Fair
Value per Share
Unvested and outstanding at December 31, 2021
315,559 $5.29 
Vested(113,449)$4.39 
Cancelled(24,166)$2.97 
Unvested and outstanding at June 30, 2022
177,944 $6.18 
Vested and outstanding at June 30, 2022
 $ 
As of June 30, 2022, there was $202.2 million of unrecognized stock-based compensation expense related to RSUs and SVAs, which is expected to be recognized over a weighted-average service period of 2.72 years.
Stock-based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202220212022
Research and development$25,469 $22,392 $27,138 $39,856 
Selling, general and administrative27,040 2,759 31,660 12,822 
Total stock-based compensation expense$52,509 $25,151 $58,798 $52,678 
Note 6. Income Taxes
The Company’s effective tax rate was 0% for the six months ended June 30, 2022, which is lower than the U.S. federal rate of 21% and was primarily due to valuation allowances recorded on current year losses. As of June 30, 2022, the Company continues to maintain a full valuation allowance against its U.S. and foreign net deferred tax assets due to significant negative evidence, including cumulative losses in the most recent three-year period and the Company’s assessment that it is not more likely than not that the net deferred tax assets will be realized.
Note 7. Net Loss Per Share Attributable to Common Stockholders
Basic net loss per share of common stock attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders for all years presented because the effects of potentially dilutive items were antidilutive given the Company’s net loss in each period presented.
14


The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):
Three Months Ended June 30,Six Months Ended June 30,
2021202220212022
Numerator:    
Net loss$(116,529)$(108,595)$(501,689)$(220,498)
Less: Accretion of redeemable convertible preferred stock  (4,135) 
Net loss attributable to common stockholders, basic and diluted$(116,529)$(108,595)$(505,824)$(220,498)
Denominator:
Weighted-average shares used in computing net loss per share, basic and diluted182,382,800 223,785,825 121,800,404 223,159,618 
Net loss per share:
Net loss per share attributable to common stockholders, basic and diluted$(0.64)$(0.49)$(4.15)$(0.99)
The following potentially dilutive outstanding shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect, or because issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:
As of June 30,
20212022
Options to purchase common stock15,269,083 5,023,753 
RSUs subject to future vesting2,285,275 9,309,844 
SVAs subject to future vesting514,206 177,944 
Early exercised options subject to future vesting50,000 30,000 
Common stock contingently issuable under ESPP 166,466 
Total18,118,564 14,708,007 

15


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and the section titled “Part II, Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
When used in this report, the terms “TuSimple”, “Company”, “we”, “us”, and “our” mean TuSimple Holdings Inc. and all subsidiaries.
We are an autonomous technology company that is working to revolutionize the estimated $4 trillion global truck freight market. We have developed industry-leading autonomous technology specifically designed for semi-trucks, which has enabled us to build the world’s first Autonomous Freight Network (“AFN”) in partnership with world-class shippers, carriers, railroads, freight brokers, fleet asset owners, and truck hardware partners. We believe that our technology and our AFN will make long haul trucking significantly safer as well as more reliable, efficient, and environmentally friendly, creating significant benefits for all who rely on the freight ecosystem to deliver essential goods.
Our AFN provides autonomous freight capacity as a service through multiple service models based on users’ needs. We believe that allowing our users the flexibility to select different service models is critical to providing a superior customer experience and will help drive rapid adoption of our network.
Carrier-Owned Capacity. Shippers, carriers, and railroads that prefer to own their fleet will be able to purchase our purpose-built L4 autonomous semi-truck from a semi-truck original equipment manufacturer (“OEM”) partner and subscribe to TuSimple Path—a comprehensive turnkey product to enable autonomous operations across our network. TuSimple Path includes features such as our on-board autonomous driving software, TuSimple Connect cloud-based autonomous operations oversight system, HD digital route mapping support, and emergency roadside assistance. Users will pay TuSimpl