Surf Air Mobility Inc. (NYSE: SRFM), a leading regional air mobility platform, today reported financial results for the second quarter ended June 30, 2024.
“Our financial results for the second quarter demonstrate strong execution by the Surf Air Mobility team. Revenue exceeded our expectations and Adjusted EBITDA was materially higher than our initial plan. We remain focused on executing our strategy and on our unwavering commitment to expand our footprint and leadership position in the regional air mobility market,” said Deanna White, Chief Operating Officer and Interim CEO of Surf Air Mobility.
She continued, “In the last 90 days, we have moved rapidly to implement operational improvements and stringent management of operating expenses. These efforts resulted in second quarter positive adjusted EBITDA for our regional airline operations, formerly known as Southern Airways, reversing a longstanding trend. In addition to driving substantive improvement in those operations, we are simultaneously advancing our Technology operations, including the ‘SurfOS’ technology platform and our EP1 Caravan electrification initiative.
She concluded, “We are fundamentally improving our operating model and refining strategies to reduce our cost of operations. In addition, we plan to sub-capitalize key initiatives to drive efficiencies and more effectively manage capital. To that end, we recently announced a ground-breaking new venture, Surf Air Technologies, powered by Palantir Technologies. Together with Palantir, we will develop, market and sell AI-powered software tools to create a category-defining operating system for the advanced air mobility industry. This venture uniquely places Surf Air Mobility at the forefront of innovation in our industry.”
Second Quarter Financial Highlights:
Surf Air Mobility is providing unaudited results for the period ended June 30, 2024, on a quarterly basis, as well as unaudited pro forma results for the period ended June 30, 2023, which assumes the Southern acquisition closed as of the beginning of fiscal year 2023.
Revenue
Net Loss
Adjusted EBITDA
Developments on Key Initiatives:
Mobility
Software
Electrification
Capital Structure Update:
Financial Outlook
The Company’s expectations for the third quarter reflect the impact of unplanned maintenance on aircraft over the last two months resulting in lower completion factors. Due to these factors, the Company currently expects that its regional airline operations will be marginally unprofitable in the third quarter. The Company is executing a series of actions to improve profitability and is targeting profitable regional airline operations for the full year.
Conference Call
Surf Air Mobility will host a conference call today at 5:00 pm ET. Interested parties can register in advance to listen to the webcast here, or can find a link on the Events & Presentations section of our investor relations website.
Alternatively, listeners may dial into the call as follows:
North America - Toll-Free (800) 715-9871
International (Toll) - (646) 307-1963
Conference ID: 4775356
About Surf Air Mobility
Surf Air Mobility, headquartered in Los Angeles, is a pioneering regional air mobility platform dedicated to transforming regional air travel through electrification. As the largest commuter airline operator in the US, Surf Air Mobility partners with commercial leaders to develop innovative powertrain technology for smaller aircraft, facilitating the electrification of existing fleets and the widespread adoption of electric aircraft. Surf Air Mobility’s mission is to drive substantial cost reductions and environmental benefits to make regional flying more accessible and affordable. Backed by a management team with extensive expertise spanning aviation, electrification, and consumer technology, Surf Air Mobility is poised to advance the future of sustainable air travel.
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 transaction; Surf Air Mobility’s ability to anticipate the future needs of the air mobility market; future trends in the aviation industry, generally; Surf Air Mobility’s future growth strategy and growth rate and its ability to access its financings and expand its business. 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 Surf Air, Southern or Surf Air Mobility, the risks associated with Surf Air Mobility’s obligations to comply with applicable laws, government regulations and rules and standards of the New York Stock Exchange; and general economic conditions. These and other risks are discussed in detail in the periodic reports that Surf Air Mobility files with the SEC, and investors are urged to review those periodic reports and Surf Air Mobility’s other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, before making an investment decision. Surf Air Mobility assumes no obligation to update its forward-looking statements except as required by law.
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, U.S. GAAP. Pro Forma Adjusted EBITDA is not a measurement of Surf Air Mobility’s financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss) or any other performance measure derived in accordance with U.S. GAAP. Surf Air Mobility’s calculation of this non-GAAP financial measure may differ from similarly titled non-GAAP measures, if any, reported by other companies. This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
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 second quarter and year to date period ended June 30, 2024, assumes the acquisition of Southern Airways closed as of the beginning of 2023.
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023:
|
| June 30, |
| December 31, | ||||
Assets: |
| |||||||
Current assets: |
| |||||||
Cash | $ | 1,460 |
| $ | 1,720 |
| ||
Accounts receivable, net |
| 4,487 |
|
| 4,965 |
| ||
Prepaid expenses and other current assets |
| 9,928 |
|
| 11,051 |
| ||
Total current assets |
| 15,875 |
|
| 17,736 |
| ||
Restricted cash |
| 614 |
|
| 711 |
| ||
Property and equipment, net |
| 47,041 |
|
| 45,991 |
| ||
Intangible assets, net |
| 24,890 |
|
| 26,663 |
| ||
Operating lease right-of-use assets |
| 10,523 |
|
| 12,818 |
| ||
Finance lease right-of-use assets |
| 1,273 |
|
| 1,343 |
| ||
Other assets |
| 5,331 |
|
| 5,727 |
| ||
Total assets | $ | 105,547 |
| $ | 110,989 |
| ||
Liabilities and Shareholders’ Deficit: |
| |||||||
Current liabilities: |
| |||||||
Accounts payable | $ | 25,983 |
| $ | 18,854 |
| ||
Accrued expenses and other current liabilities |
| 78,897 |
|
| 59,582 |
| ||
Deferred revenue |
| 17,072 |
|
| 19,011 |
| ||
Current maturities of long-term debt |
| 4,922 |
|
| 5,177 |
| ||
Operating lease liabilities, current |
| 4,322 |
|
| 4,104 |
| ||
Finance lease liabilities, current |
| 256 |
|
| 215 |
| ||
SAFE notes at fair value, current |
| 6 |
|
| 25 |
| ||
Convertible notes at fair value, current |
| 8,014 |
|
| 7,715 |
| ||
Due to related parties, current |
| 47,371 |
|
| 25,431 |
| ||
Total current liabilities |
| 186,843 |
|
| 140,114 |
| ||
Long-term debt, net of current maturities |
| 18,346 |
|
| 20,617 |
| ||
Operating lease liabilities, long term |
| 3,894 |
|
| 5,507 |
| ||
Finance lease liabilities, long term |
| 1,078 |
|
| 1,137 |
| ||
Due to related parties, long term |
| 987 |
|
| 1,673 |
| ||
Other long-term liabilities |
| 22,489 |
|
| 19,426 |
| ||
Total liabilities | $ | 233,637 |
| $ | 188,474 |
| ||
Commitments and contingencies (Note 12) |
| |||||||
Shareholders’ deficit: |
| |||||||
Common shares, $0.0001 par value; 800,000,000 shares authorized as of both June 30, 2024 and December 31, 2023; 87,029,425 shares issued and outstanding as of June 30, 2024 and 76,150,437 shares issued and outstanding as of December 31, 2023 | $ | 8 |
| $ | 8 |
| ||
Additional paid-in capital |
| 538,385 |
|
| 525,042 |
| ||
Accumulated deficit |
| (666,483 | ) |
| (602,535 | ) | ||
Total shareholders’ deficit | $ | (128,090 | ) | $ | (77,485 | ) | ||
Total liabilities and shareholders’ deficit |
| $ | 105,547 |
|
| $ | 110,989 |
|
Unaudited Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2024 and 2023: (in thousands, except share and per share data):
|
| Three Months Ended |
| Six Months Ended | ||||||||||||
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
Revenue | $ | 32,366 |
| $ | 6,195 |
| $ | 62,990 |
| $ | 11,702 |
| ||||
Operating expenses: |
| |||||||||||||||
Cost of revenue, exclusive of depreciation and amortization |
| 27,729 |
|
| 7,049 |
|
| 56,218 |
|
| 13,699 |
| ||||
Technology and development |
| 5,658 |
|
| 816 |
|
| 12,667 |
|
| 1,629 |
| ||||
Sales and marketing |
| 2,578 |
|
| 1,927 |
|
| 5,587 |
|
| 3,321 |
| ||||
General and administrative |
| 19,596 |
|
| 9,296 |
|
| 44,205 |
|
| 17,736 |
| ||||
Depreciation and amortization |
| 2,062 |
|
| 261 |
|
| 4,040 |
|
| 519 |
| ||||
Total operating expenses |
| 57,623 |
|
| 19,349 |
|
| 122,717 |
|
| 36,904 |
| ||||
Operating loss | $ | (25,257 | ) | $ | (13,154 | ) | $ | (59,727 | ) | $ | (25,202 | ) | ||||
Other income (expense): |
| |||||||||||||||
Changes in fair value of financial instruments carried at fair value, net | $ | (154 | ) | $ | (30,404 | ) | $ | (669 | ) | $ | (38,500 | ) | ||||
Interest expense |
| (1,911 | ) |
| (525 | ) |
| (3,582 | ) |
| (697 | ) | ||||
Loss on extinguishment of debt |
| — |
|
| (389 | ) |
| — |
|
| (389 | ) | ||||
Other income (expense) |
| 304 |
|
| (48 | ) |
| (51 | ) |
| (305 | ) | ||||
Total other income (expense), net | $ | (1,761 | ) | $ | (31,366 | ) | $ | (4,302 | ) | $ | (39,891 | ) | ||||
Loss before income taxes |
| (27,018 | ) |
| (44,520 | ) |
| (64,029 | ) |
| (65,093 | ) | ||||
Income tax benefit |
| 35 |
|
| — |
|
| 81 |
|
| — |
| ||||
Net loss | $ | (26,983 | ) | $ | (44,520 | ) | $ | (63,948 | ) |
| $ | (65,093 | ) | |||
Net loss per share applicable to common shareholders, basic and diluted | $ | (0.33 | ) | $ | (3.14 | ) | $ | (0.80 | ) | $ | (4.60 | ) | ||||
Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted |
|
| 81,890,955 |
|
|
| 14,168,091 |
|
|
| 79,599,848 |
|
|
| 14,138,856 |
|
Unaudited Pro Forma Financial Measures; Reconciliation of Net Loss to Adjusted EBITDA for the Three Months and Six Months Ended June 30, 2024 and Pro forma Net Loss to Pro forma Adjusted EBITDA for the Three Months and Six Months Ended June 30, 2023 (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) |
|
| 2024 |
| 2023 (Proforma) |
|
| 2024 |
| 2023 (Proforma) | ||||||
Net loss |
| $ | (26,983 | ) |
| $ | (16,673 | ) | $ | (63,948 | ) |
| $ | (32,184 | ) | |
Addback: |
| |||||||||||||||
Depreciation and amortization |
|
| 2,062 |
|
|
| 2,332 |
|
| 4,040 |
|
|
| 4,133 |
| |
Interest expense |
| 1,911 |
|
| 1,483 |
|
| 3,582 |
|
| 2,538 |
| ||||
Income tax expense (benefit) |
|
| (35 | ) |
|
| 151 |
|
| (81 | ) |
|
| (1 | ) | |
Stock-based compensation expense(1) |
| 7,353 |
|
| 1,653 |
|
| 19,996 |
|
| 2,798 |
| ||||
Changes in fair value of financial instruments(2) |
| 154 |
|
|
| — |
|
| 669 |
|
| — |
| |||
Transaction costs(3) |
| 588 |
|
| — |
|
| 1,176 |
|
| — |
| ||||
Data license fees(4) |
|
| 3,125 |
|
|
|
| 6,250 |
|
| — |
| ||||
Adjusted EBITDA | $ | (11,825 | ) | $ | (11,054 | ) | $ | (28,316 | ) | $ | (22,716 | ) | ||||
|
| |||||||||||||||
(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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Last Trade: | US$1.78 |
Daily Change: | -0.13 -6.81 |
Daily Volume: | 120,808 |
Market Cap: | US$22.840M |
August 09, 2024 June 13, 2024 June 11, 2024 |
Surf Air Mobility is a regional air mobility platform expanding the category of regional air travel to reinvent flying through the power of electrification. In an effort to substantially reduce the cost and environmental impact of...
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