Serve Robotics Inc. Q2 FY2025 earnings call

Fleet Expansion and Delivery Volume Growth

• Deployed over 120 third-generation robots in Q2, bringing total fleet size to over 400; daily active robots grew nearly 120% quarterly, daily supply hours grew over 165% sequentially; production plans aim to more than double fleet by end of Q3 and double again by end of Q4.

Geographic Coverage and Market Reach

• Launched operations in Atlanta in Q2, expanded existing coverage zones in Los Angeles and Miami; now serve nearly 800,000 households in the U.S., a roughly 5x increase in reach since the start of the year; set to launch in Chicago and another East Coast metro by end of 2025, aiming to have 6 fully operational hubs across major U.S. geographies.

Merchant Reach

• Have over 2,500 merchant partners in delivery ecosystem, up from over 1,500 in Q1 and more than eightfold increase compared to last year; several enterprise relationships in confidential negotiations; began international expansion with partnership in Middle East, completed proof of concept in Qatar.

Data and AI Flywheel

• Fleet collects vast data sets from AV sensors to train AI and autonomy models; significantly expanded autonomy team; balance sheet strength helps build data infrastructure, talent, and compute for the flywheel.

In Q2 2025, total revenue was $641,000, which was a 46% sequential increase from Q1. Fleet revenue, including delivery and branding revenues, grew $117,000, a 56% quarter-over-quarter increase. Software revenues grew 36% to $312,000. GAAP operating expenses for Q2 were $19.8 million, with R&D being the largest investment area at $9.1 million on a GAAP basis. Adjusted EBITDA was negative $14.9 million.

Q3 Guidance

• Projecting Q3 revenues in line with last quarter, guiding to $600,000 to $700,000 of total revenue, representing 170% to 215% growth year-over-year; delivery revenue to grow in Q3 but offset by anticipated declines in software and branding revenues.

2025 Guidance

• Confident in projected annualized revenue run rate of $60 million to $80 million once 2,000-robot fleet is fully deployed and reaches target utilization.

2026 Guidance

• Not providing guidance for 2026 yet, focusing on executing to deploy 2,000 robots by end of 2025 and building national operations footprint.

Risks

• Market expansion risks in new geographies; variability in revenue from early-stage components like software and branding; competitive risks in the autonomous last-mile delivery space where competitors may claim different capabilities.

Q: What were key learnings as you optimize the 250 robots deployed in Q1? Any notable changes given that experience?

A: The 250 robots deployed in Q1 helped validate and fine-tune design and manufacturing. Improvements included longer battery life, better drivetrain characteristics, better suspension, and better steering capabilities. Also found opportunities for improvement in design and manufacturing which are being implemented in subsequent robots.

Q: Do you expect to further refine the robot? Will we see a Gen 4 robot in the near term? And if so, what are you looking to improve upon?

A: Focus is on scaling with efficiency. Will continue to cost down design, optimize supply chain, provide incremental upgrades to compute or sensors as new hardware becomes available, and keep the fleet more reliable and durable without launching a major new hardware platform like Gen 4 in the near term.

Q: How do you think about revenue and EBITDA for 2026?

A: Not yet providing guidance for 2026. Primary goal is to execute fast to win the race. Focus on deploying 2,000 robots by end of 2025 and building national operations footprint; 2026 will focus on operational efficiency and utilization once deployment is achieved, which will help reach $60 million to $80 million annual revenue target with full utilization.

Q: Can you speak a bit more about tariff impact? Have tariffs affected the cost of components or the timing of receiving them?

A: Tariffs haven't had a material impact. Cost reductions from BOM reduction have offset any exposure to tariffs, so currently no material impact based on today's facts.

Q: Can you speak to the competitive landscape? Some competitors have recently talked about their autonomy capabilities. And can you comment on how you compare?

A: Believe in the proof of pudding with our numbers, growth rate, geographic expansion pace, and quality of partners. Always focused on AI and autonomy from the start, assembled best team, and have balance sheet strength to build best autonomous fleet; remain aggressive in developing capabilities.