Serve Robotics Inc. /DE/ Q1 FY2025 earnings call

• Achieved key target of building 250 new third-generation robots in Q1, on track to deploy 2,000 robots by year-end. • Increased daily supply hours by over 40% in Q1 compared to Q4, delivery volume increased over 75% between first and last week of Q1. • Launched new markets like Miami in February and Dallas in April, increased presence in LA, served over 320 households and 1,500 restaurants. • Maintained high delivery quality: percentage of late deliveries reduced by ~65% y-o-y, delivery completion rate and average drop-off time consistent. • Managed robot BOM cost well, Gen 3 robots cost nearly one-third of Gen 2, tariffs offset by BOM cost savings. • Raised $91 million in Q1, ending Q1 with $198 million cash on hand.

In Q1 2025, revenue increased 150% sequentially to $440,000. Software services contributed $229,000 and fleet revenues totaled $212,000, a 20% increase. GAAP operating expenses were $13.5 million in Q1 compared to $12.9 million in Q4 and $8.3 million in Q1 last year. On a non-GAAP basis excluding stock-based compensation, operating expenses were $9.5 million compared to $8.3 million in Q4 and $4.1 million in Q1 prior year. R&D was the largest investment area at $6.9 million on a GAAP basis and $5 million on a non-GAAP basis. Adjusted EBITDA for Q1 was negative $7.1 million. GAAP net loss per share was $0.23 and non-GAAP net loss per share was $0.16. The company ended Q1 with a cash position of $198 million.

• Q2 2025 total revenue expected in range of $600,000 to $700,000, representing ~35% to 60% quarter-over-quarter growth. • On track to deploy 2,000 robots by end of 2025. • Anticipate annualized revenue run rate of $60 million to $80 million once 2,000 robot fleet is fully deployed and reaches target utilization in 2026. • Expect 700 reduced cost Gen 3 robots built by end of Q3 2025. • Starting in Q2, will have recurring software platform revenues.

• Macroeconomic volatility could impact business. • Supply chain challenges may affect hardware costs and delivery timelines. • Operational challenges in new market expansions. • Public acceptance of new technology in new markets could pose risks.

Q: Can you tell us what you've learned from the new launches in Miami, Dallas, and soon Atlanta?

A: Every city has its own quirks and operational challenges. We have a playbook with phases: initial deployment, deepening reach, and growing to maturity. For example, Miami was launched ahead of schedule within three and a half weeks with a skilled local team.

Q: Can you provide more detail on the performance of the Gen 3 robots in terms of daily deliveries or range compared to Gen 2?

A: Gen 3 robots perform better, with more hours of operation per day due to added battery capacity. We're still working on kinks but results so far are promising, which supports Q2 delivery volume growth guidance.

Q: With 250 robots added in Q1, what is the total fleet size? Can you elaborate on how you got to guidance for delivery volume and for top line revenues?

A: Fleet size at end of Q1 is over 300 robots. Q2 guidance assumes increase in daily active robots in existing and new markets, with delivery volume expected to increase 60% to 75% compared to Q1 due to more robots and utilization.

Q: Can you share more about tariff impact?

A: Exposure in China is a small percentage of overall BOM. Savings from BOM cost reductions cover any tariff impact, and currently no material impact is seen.

Q: Can you comment on why you're changing the way you disclose fleet revenues?

A: It represents the journey of expanding delivery offerings, branding opportunities, and evolving the mix of contracts and methods to show how we view monetizing the fleet.

Q: How do you think about the monetization opportunities you mentioned related to data and software?

A: It's a long-term play. We have a technology stack from food delivery that's valuable, and partners in other spaces are eager to use our technology. We hired Scott to identify partners and have agreements in place with some customers, with more to share soon.