Surf Air Mobility Reports Third Quarter Financial Results, Exceeding Revenue and Adjusted EBITDA Expectations
Revenue of
Adjusted EBITDA Loss of
“The financial results for the third quarter demonstrate our continued progress on our transformation plan. We are rightsizing our air mobility operations, implementing new processes, driving improved efficiency and repositioning our air mobility operations for sustained profitability,” said
Capital Structure Update:
On
Third Quarter Financial Highlights:
Surf Air Mobility is providing unaudited results for the quarter ended
Revenue
-
Revenue of
$28.4 million for the third quarter 2024 as compared to$28.9 million for the same period of the prior year on a pro-forma basis, exceeding the Company’s expectation of$25.0 million -$28.0 million .
Net Loss
-
GAAP Net Loss improved to
$12.2 million as compared with$74.6 million in the prior year period, which includes investment in R&D for electrification and software technology, stock-based compensation, transaction costs and other non-recurring items. -
Net Loss of
$12.2 million for the third quarter of 2024, compared to pro-forma Net Loss of$45.4 million for the same period of the prior year, which includes investment in R&D for electrification and software technology, stock-based compensation, transaction costs and other non-recurring items.
Adjusted EBITDA
-
Adjusted EBITDA loss of
$8.9 million for the third quarter 2024, was unchanged compared with a loss of$8.9 million for the same period of the prior year on a pro-forma basis, outperforming company expectations of a loss of$10 million to$13 million . - This outperformance was driven by improved On-Demand operations, realized M&A synergies, lower compensation costs, and lower professional expenses across the quarter. Adjusted EBITDA includes investment in R&D for electrification and software technology.
- See the Adjusted EBITDA table for the reconciliation from Net Loss to Adjusted EBITDA.
Developments on Key Initiatives:
Mobility
-
Revenue for the third quarter was relatively unchanged versus the prior year period on a pro-forma basis.
- Scheduled service revenue increased by 2% primarily driven by the addition of subsidized route revenue for Williamsport, Purdue and Lanai, partially offset by a lower completion factor. As discussed in the second quarter earnings call, third quarter completion factor was negatively impacted by unplanned maintenance.
- On Demand service revenue decreased by 13% over the comparable period, which represents the impact of management’s focus on profitability rather than near-term market penetration.
-
As of
September 30, 2024 , Surf Air Mobility supported 20 communities under the EAS program. -
The Company has taken delivery of two new aircraft from
Textron Aviation inNovember 2024 .
Software
-
The Company continued development of SurfOS software aimed at improving operational efficiency, growing revenue, and reducing costs across the Company's airline brands (Southern, Mokulele, and
Surf Air ) and its On Demand charter service. -
The Company announced a plan to form a new venture,
Surf Air Technologies LLC , and entered into an agreement with Palantir Technologies Inc. to power its operating system for the Advanced Air Mobility industry.
Electrification
- Aircraft electrification program remains on track to complete its Cessna Caravan STC in 2027.
-
The Company has an exclusive relationship with
Textron Aviation to be their supplier of electrified powertrains for the Cessna Caravan. - The Company is actively pursuing the creation of one or more joint ventures or partnerships with key vendors to reduce cost and separately capitalize the Company’s electrification efforts.
-
The Company plans to leverage its platform to enable the launch of third-party electrified aircraft. The Company will support these launches with direct consumer distribution via
Surf Air's flight network and operations software tools via SurfOS.
Financial Outlook
-
Fourth Quarter 2024 revenue, in the range of
$25 million to$28 million . -
Adjusted EBITDA loss, in the range of
$5 million to$8 million , which excludes the expected impact of stock-based compensation, changes in fair value of financial instruments, and other non-recurring items.
Investor Presentation –
The Company’s new investor presentation can be found here or by visiting the Company’s investor website at investors.surfair.com.
Conference Call
Surf Air Mobility will host a conference call today at
Alternatively, listeners may dial into the call as follows:
International (Toll) - (646) 307-1963
Conference ID: 4775356
About Surf Air Mobility
Surf Air Mobility is a
Forward-Looking Statements
This Press Release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, including statements regarding the anticipated benefits of the credit facility; Surf Air Mobility’s implementation of its transformation strategy; travel trends; developments on key strategic initiatives; Surf Air Mobility’s profitability and future financial results; and Surf Air Mobility’s balance sheet and liquidity. Readers of this release should be aware of the speculative nature of forward-looking statements. These statements are based on the beliefs of Surf Air Mobility’s management as well as assumptions made by and information currently available to Surf Air Mobility and reflect Surf Air Mobility’s current views concerning future events. As such, they are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: Surf Air Mobility’s future ability to pay contractual obligations and liquidity will depend on operating performance, cash flow and ability to secure adequate financing; Surf Air Mobility’s limited operating history and that Surf Air Mobility has not yet manufactured any hybrid-electric or fully-electric aircraft; the powertrain technology Surf Air Mobility plans to develop does not yet exist; any accidents or incidents involving hybrid-electric or fully-electric aircraft; the inability to accurately forecast demand for products and manage product inventory in an effective and efficient manner; the dependence on third-party partners and suppliers for the components and collaboration in Surf Air Mobility’s development of hybrid-electric and fully-electric powertrains and its advanced air mobility software platform, and any interruptions, disagreements or delays with those partners and suppliers; the inability to execute business objectives and growth strategies successfully or sustain Surf Air Mobility’s growth; the inability of Surf Air Mobility’s customers to pay for Surf Air Mobility’s services; the inability of Surf Air Mobility to obtain additional financing or access the capital markets to fund its ongoing operations on acceptable terms and conditions; the outcome of any legal proceedings that might be instituted against
Footnotes
Use of Non-GAAP Financial Measures: Surf Air Mobility uses Adjusted EBITDA to identify and target operational results which is beneficial to management and investors in evaluating operational effectiveness. Pro Forma Adjusted EBITDA is a supplemental measure of Surf Air Mobility’s performance that is not required by, or presented in accordance with,
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
Surf Air Mobility presents Pro Forma Adjusted EBITDA because it considers this measure to be an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in its industry. Management believes that investors’ understanding of Surf Air Mobility’s performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing its ongoing results of operations. Unaudited pro forma financial information for the third quarter and year to date period ended
Unaudited Condensed Consolidated Balance Sheets as of
|
2024 |
2023 |
|||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash |
$ |
506 |
|
$ |
1,720 |
|
||
| Accounts receivable, net |
|
4,360 |
|
|
4,965 |
|
||
| Prepaid expenses and other current assets |
|
9,310 |
|
|
11,051 |
|
||
| Total current assets |
|
14,176 |
|
|
17,736 |
|
||
| Restricted cash |
|
616 |
|
|
711 |
|
||
| Property and equipment, net |
|
44,005 |
|
|
45,991 |
|
||
| Intangible assets, net |
|
24,004 |
|
|
26,663 |
|
||
| Operating lease right-of-use assets |
|
8,767 |
|
|
12,818 |
|
||
| Finance lease right-of-use assets |
|
1,194 |
|
|
1,343 |
|
||
| Other assets |
|
5,117 |
|
|
5,727 |
|
||
| Total assets |
$ |
97,879 |
|
$ |
110,989 |
|
||
| Liabilities and Shareholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable |
$ |
26,791 |
|
$ |
18,854 |
|
||
| Accrued expenses and other current liabilities |
|
72,863 |
|
|
59,582 |
|
||
| Deferred revenue |
|
14,685 |
|
|
19,011 |
|
||
| Current maturities of long-term debt |
|
4,822 |
|
|
5,177 |
|
||
| Operating lease liabilities, current |
|
3,707 |
|
|
4,104 |
|
||
| Finance lease liabilities, current |
|
259 |
|
|
215 |
|
||
| SAFE notes at fair value, current |
|
22 |
|
|
25 |
|
||
| Convertible notes at fair value, current |
|
— |
|
|
7,715 |
|
||
| Due to related parties, current |
|
9,953 |
|
|
25,431 |
|
||
| Total current liabilities |
|
133,102 |
|
|
140,114 |
|
||
| Long-term debt, net of current maturities |
|
17,707 |
|
|
20,617 |
|
||
| Convertible notes at fair value, long-term |
|
8,036 |
|
|
— |
|
||
| Operating lease liabilities, long term |
|
3,215 |
|
|
5,507 |
|
||
| Finance lease liabilities, long term |
|
1,013 |
|
|
1,137 |
|
||
| Due to related parties, long term |
|
48,997 |
|
|
1,673 |
|
||
| Other long-term liabilities |
|
21,419 |
|
|
19,426 |
|
||
| Total liabilities |
$ |
233,489 |
|
$ |
188,474 |
|
||
| Commitments and contingencies (Note 12) | ||||||||
| Shareholders’ deficit: | ||||||||
| Common shares, |
$ |
1 |
|
$ |
1 |
|
||
| Additional paid-in capital |
|
543,097 |
|
|
525,049 |
|
||
| Accumulated deficit |
|
(678,708 |
) |
|
(602,535 |
) |
||
| Total shareholders’ deficit |
$ |
(135,610 |
) |
$ |
(77,485 |
) |
||
| Total liabilities and shareholders’ deficit |
$ |
97,879 |
|
$ |
110,989 |
|
||
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended
|
Three Months Ended |
||||||||
|
2024 |
2023 |
|||||||
| Revenue |
$ |
28,386 |
|
$ |
21,967 |
|
||
| Operating expenses: | ||||||||
| Cost of revenue, exclusive of depreciation and amortization |
|
27,496 |
|
|
20,610 |
|
||
| Technology and development |
|
5,710 |
|
|
2,877 |
|
||
| Sales and marketing |
|
1,282 |
|
|
4,529 |
|
||
| General and administrative |
|
415 |
|
|
55,618 |
|
||
| Depreciation and amortization |
|
2,121 |
|
|
1,356 |
|
||
| Total operating expenses |
|
37,024 |
|
|
84,990 |
|
||
| Operating loss |
$ |
(8,638 |
) |
$ |
(63,023 |
) |
||
| Other income (expense): | ||||||||
| Changes in fair value of financial instruments carried at fair value, net |
$ |
(1,249 |
) |
$ |
(10,926 |
) |
||
| Interest expense |
|
(2,087 |
) |
|
(935 |
) |
||
| Gain (loss) on extinguishment of debt |
|
— |
|
|
63 |
|
||
| Other income (expense) |
|
(265 |
) |
|
(3,359 |
) |
||
| Total other income (expense), net |
$ |
(3,601 |
) |
$ |
(15,157 |
) |
||
| Loss before income taxes |
|
(12,239 |
) |
|
(78,180 |
) |
||
| Income tax benefit |
|
14 |
|
|
3,571 |
|
||
| Net loss |
$ |
(12,225 |
) |
$ |
(74,609 |
) |
||
| Net loss per share applicable to common shareholders, basic and diluted |
$ |
(0.94 |
) |
$ |
(9.55 |
) |
||
| Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted |
|
12,970,898 |
|
|
7,813,573 |
|
||
Unaudited Pro Forma Financial Measures; Reconciliation of Net Loss to Adjusted EBITDA for the Three Months Ended
|
Three months ended |
||||||||
| (in thousands) |
2024 |
2023 (Proforma) |
||||||
| Net loss |
$ |
(12,225 |
) |
$ |
(45,358 |
) |
||
| Addback: | ||||||||
| Depreciation and amortization |
|
2,121 |
|
|
2,068 |
|
||
| Interest expense |
|
2,087 |
|
|
1,192 |
|
||
| Income tax expense (benefit) |
|
(14 |
) |
|
(267 |
) |
||
| Stock-based compensation expense(1) |
|
(5,353 |
) |
|
33,442 |
|
||
| Changes in fair value of financial instruments(2) |
|
1,249 |
|
|
— |
|
||
| Transaction costs(3) |
|
70 |
|
|
— |
|
||
| Data license fees(4) |
|
3,125 |
|
|
— |
|
||
| Adjusted EBITDA |
|
(8,940 |
) |
|
(8,923 |
) |
||
| (1)Represents non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards. | ||||||||
| (2)Represents fluctuations in the fair value of financial instruments carried at fair value. The fair values of the convertible notes, preferred stock warrant liabilities, and derivative liabilities were based on the values of the notes, warrants, and derivatives upon conversion due to the weighted probability associated with certain events. | ||||||||
| (3)Represents costs related to a public company transaction, including accounting, legal, and listing costs. | ||||||||
| (4) Represents accrued costs related to initial license fees under the Textron Licensing Agreement. | ||||||||
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