Q4 2024 Serve Robotics Inc Earnings Call
Thank you for standing by my name is Danielle and I will be your conference operator today at this time I would like to welcome everyone to the fourth quarter and full year 2024 result conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks.
There will be a question and answer session.
Speaker Change: I would like to ask a question. During this time simply press star followed by day number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over to Dookie tell well. Please go ahead.
Speaker Change: Thank you operator, and good afternoon, everyone welcome to serve robotics fourth quarter and full year 2024 conference call with me today are <unk>, CEO and co founder Ali crushed Ronnie and our CFO, Brian Reed.
Speaker Change: During today's call, we may present, both GAAP and non-GAAP financial measure.
Speaker Change: If needed a reconciliation of GAAP to non-GAAP measures can be found in our earnings release filed earlier today.
Speaker Change: Certain statements in this call are forward looking statements you should not place undue reliance on forward looking statements.
Speaker Change: Actual risks may differ materially from these forward looking statements and we do not undertake any obligation to update any forward looking statements, we make today, except as required by law.
Speaker Change: For more information about factors that may cause actual results to differ materially from forward looking statements.
Speaker Change: Please refer to the press release, we issued today as well as the risks and uncertainties described in our most recent Form 10-K.
Speaker Change: Other filings made with the SEC.
Speaker Change: We published our quarterly financial press release, and our updated corporate presentation to our Investor website earlier. This afternoon. We ask you to review those documents if you haven't already.
Ali: With that let me hand, it over to Ali.
Ali: Thank you Avishai you got a lot to cover today I am going to start by giving you an update about the past quarter and put that into context of our progress over the year 2024, and then we will talk about the year ahead give you. Some additional details about our plans to deploy 2000 robots by the end of 2025, which remains on track.
Ali: And then lastly, I want to talk a little bit about that recent progress in AI and <unk> fits into that.
Ali: So let me start with five quick highlights before we dive into each one of them first revenue, we wrapped up the year with $1 8 million in revenue received a 700% increase year over year.
Ali: Second is our reach we increase the number of restaurants, we set by three X last year and also increase the household reach by over two weeks just in the last four months.
Ali: Did all this by expanding to new neighborhoods in L. A and expanding to our first east coast City reaches Miami.
Ali: Third the fleet, we are about to complete building to 153rd Gen robots to add to our fleet.
Ali: Fourth and engineering update we have designed to further cost reductions into our third generation robots effectively cutting the cost of building robust by two third in just a year and.
Ali: And last but not least our balance sheet, we massively improved our cash position became debt free and increase our capital efficiency by saving $20 million in future capital costs, which Brian will discuss later.
Ali: Now let's dive in.
As you can see we have been growing fast on all fronts expanding into new neighborhoods in cities Onboarding more restaurants scaling our fleet in L. A we launched in downtown Scottsdale, Ambev fluids Jackson November instantly, increasing our household reach by 50% at tripling the number of restaurants, we serve compared to the start of the year.
Ali: We also didn't stop there since January we added Glendale, and long Beach, plus we also expanded beyond California for the first time to Miami.
Ali: Today, we suffered over 1000 restaurants and reached over 300000 households, that's a towards expansion in market risk in just a few months.
Ali: We are continuing to work with our delivery partners and local marchand sand municipalities to unlock even more neighborhoods in cities throughout the year.
Ali: On the fleet side in Q4, we completed the design of our third generation robots and even manufacturer 75 units in the final days of December ahead of schedule. These are the first production batch of third generation robots have you been ramping them up into the delivery fleets since the new year. So we expect their impact on delivery.
Ali: <unk> to really start showing in Q1 and Q2, despite the fact that our delivery fees didn't expand until the very end of Q4. Our gen. Two robots have actually delivered 20% more orders quarter over quarter and this is primarily because of optimizing our operation and expanding our reach this is true even though we actually had to use some.
Ali: Of the existing fleet to support the expansion activities like sending robots to new neighborhoods and cities to map and collect data. So we were actually reducing our delivery fleet size and yet we achieved 20% increase in our daily very outflows quarter over quarter. If you look at our daily active robots and daily supply hours then.
Ali: Numbers have remained roughly the same as Q3 since we did not expand their fleets until the very end of Q4 of last year. We had 57 daily active robots in Q4 up 81% from 2009 robots in Q4 of 2023 and comparable to Q3's 59 robots the slight difference here being because we might use.
Ali: Some of our robots for expansion activities rather than deliveries.
Ali: Really we had 455 daily supply hours, which was in line with 465 hours from Q3 and nearly double Q4 2023.
Ali: So, let's take a step back and look at the entire 2024, which was a truly transformational year for us be listed on NASDAQ raised over $250 million from the beginning of 2024 to today to really strengthen our balance sheet, we partnered with Magna international to scale our fleet.
Ali: Exchange reliably and we also formed new partnerships, including Shake Shack and wing.
Ali: And we doubled our supply hours on active robust capacity and volume and we completed our January robot design. This can move twice as fast go twice as far have five times more brainpower and cost about one third of our previous generation robots.
Ali: And we built our first batch of ESCO as to answer your robot ahead of schedule at the end of last year.
Ali: Now behind the scene there was even more going on we've actually boosted the speed of our robots by 30% last year and we cut our mis delivery deadline raised by 75%. If you did that all the while doubling our delivery volume.
Ali: I'm proud of what our team has accomplished over the last year and I think it's positioning us really well to achieve what you set out to do in 2025, which is deploy 2000 of our robots. We're really entering this year with strong momentum. So let's talk about 2025, starting with the first half of the year, we've started by accelerating our.
Ali: Expansion timeline by entering Miami ahead of schedule in Q1, Dallas remains on track for Q2, which is why the promise and I can announce that we have a plan to launch a third market in Q2. So let's go through these one by one first Miami.
Ali: In February we launched in two neighborhoods recall and Miami Beach in collaboration with the ways we.
Ali: We announced serving 50 local restaurants already this includes two important brands, who signed with US right at launch our existing partners Shake Shack and our new partner the beloved local Pitter Yao Mr O one.
Ali: This news may come as a bit of a surprise since we havent shared any plans to launch Miami in Q1, but we did see a demand from our partners and decided to take the opportunity and move quickly.
Ali: Next up is Dallas, we are on track to launch in Q2, bringing our robots to neighborhoods like Uptown in state Thomas.
Ali: We also expect our first deployment of our <unk> partnership for multimodal robot to drone deliveries to take place once we launch there.
Ali: Last but not least I'm excited to share that we are bringing said robots to Atlanta in Q2. This is another great city, because it has dense commercial and residential neighborhoods really good viability and mixed use developments and a thriving restaurants.
Ali: We are really hopeful that as we scale in Atlanta, our robots are going to actually help reduce the grid like traffic there and improve congestion by taking this short distance deliveries off the street.
Ali: Beyond this new three cities, we plan to bring several abbotts two more cities by the end of the year and we will announce additional details on days as we worked with our partners and local officials to finalize the plan.
Ali: In terms of the fleet size I can confirm that we are working to build a 250 Gen. Three robots that we had shared earlier by the end of this quarter. So we've already built 75 more of them are now in process. We're also currently ramping up to a 75 robots into our delivery fleet and we expect.
Ali: That all of these 150 robots would be fully deployed and in deliveries by the end of Q2. So the real volume impact that we expect to see fund. These robots are going to be seen mostly in the second quarter. As is typical with new hardware Rollouts, we will have to deal with hardware and software adjustments any kinks that we need to.
Ali: Figure out so to really bring these robots are true productivity is going to take a few weeks have effort. This 250 robots are really meant to provide us valuable insights before we get to the larger scale up that youre going to having the second half of the year.
Ali: Beyond Q1, I have another important updates for the additional rollouts.
Ali: Very excited to share that we've achieved another 30 per ton cost reduction in our next batch of January robots compared to the current batch. We're building. So if you recall our client patch had a 50% cost reduction compared to the previous generation robust. This is something we announced back in October but the following batches are going to be.
Ali: Even 30% cheaper than the clients batch. So in total that means that our January robots that were building later this year are going to be 35% of the cost of our gen. Two robots almost a third this is a result of a very aggressive focus on our profitability goals and I'm very proud of what the team has achieved in a few short.
Ali: Months as we prepare to scale up this basically means that the rest of the 2000 robots. After the 250. We are building this quarter are going to be the cheaper new robots and we are on track to build them in the second half of the year at a cost that would be millions of dollars less as a result of these cost down.
Ali: Plan is to build 700 of these new lower cost robots in Q3, and then the rest of them in Q4.
Ali: We're going to share more updates obviously as we go through and get closer to the states.
Ali: A lot of the voice we are doing this quarter and next quarter is really preparation for a big scale up in the second half of the year I mentioned that additional robot cost reduction as an example, but there's a lot more effort, that's going into hiring and training staff preparing internal tools and operating procedures working with our partners and municipalities.
Ali: <unk> robots on staff to map and collect data and run tests in new cities and neighborhoods et cetera. So our number one priority in the first half of the year is getting ready for the second half of the year rather than any short term targets. So I expect to see volume growth and revenue growth in Q1, and Q2, but mainly as a.
Ali: As an outcome of the voice, we are doing to prepare for that big growth push for the second half.
Ali: Now on top of those efforts I mentioned, we are also trying to build redundancy in our plants, we want to make sure that we have layers of contingency in place just in case unexpected things happen, whether it's government dynamics changing or the shipping delays or any any factors outside of our control that could threaten our timelines.
Ali: In a given market we want to have additional options such as going deeper and given cities like Miami, both of which have significant demands for SME. So.
Ali: So the plan for 2025 is really build the rest of the 250 robots in this quarter have them are fully deployed by the end of next quarter. So that we can learn from them build the rest of the 2000 and robust in the second half of the year at a cost that would be about 30% less than the clients robot costs.
Ali: And simultaneously launched Dallas in Q2, followed by Atlanta, and add additional cities after that and in order to make sure. We successfully accomplished all of this.
Ali: And the first half of the year really preparing for the second half scale up and design redundancy into our plants. So that we are ready for the inevitability of unknown unknowns.
Speaker Change: With 2024, and 2025 plans out of the way I want to spend a few minutes talking about the recent advances in AI and how that impacts their AI.
Speaker Change: He is really advancing at breakneck speed cheaper training faster in France open source models like deep Sea you name it for US This is all tailwind.
Speaker Change: Right now everyone in their grandmas racing to build AI models and infrastructure, which naturally results in Commoditization. Our view is that a lot of value from AI will accrue to the application layer. The same kind of rates at a bottom is less common.
Speaker Change: Also thanks to this proprietary data on domain expertise that you have in the application layer you can create more efficient moats.
Speaker Change: If as part of running your business you accumulate unique data you can train your AI to get better which makes your products better which helps you scale more which means you've got even more data you can collect this data at lower and lower cost eventually even while making a profit. So this flywheel really gets going and it would be.
Speaker Change: Some harder and harder for new entrants to compete with you.
Speaker Change: <unk> is a great example is our robots Diane application layer on top of AI. They are really AI embodies they collect a terabyte of data each per day and that data helps make our AI and autonomy better which leads to even better robots, which leads to even more scale and therefore more data.
Speaker Change: So you'll see where this goes this flywheel really gets going.
Speaker Change: I don't really see any evidence today of a plateau in AI progress, but I do expect that it's inevitable that at some point, we would follow the classic hype cycle, which is folks get ahead of their skis and then pulled back I've always had this app version to running our business on hype. So the way we like to operate in this kind of.
Speaker Change: Cyclical environment is by really focusing on first principles, what do we believe to be true regardless of what the client fingers.
Speaker Change: I believe there are three fundamental truth that our relevance itself first machines can now comprehend and communicated with us it used to be that you had to say specific magic words to get machines to react but now you can hold natural conversations in almost any language second machines can now generalize we use.
Speaker Change: The train AI for very narrow tasks any problem has to be broken down to a small list of tasks to trained very specific AI models for this really limited how much we can bring AI into the physical world because it has so much complexity and randomness.
Speaker Change: But now thanks to Transformers, we can train machines that develop their own complex internal world models. This leads them to exhibit and measuring behaviors that humana expecting when you actually training them and that makes them a lot more suitable for this predictability of the physical world.
Speaker Change: And third and last is the inevitable fact that AI is going to answer our physical spaces.
Limiting AI to the digital realm really limited potential. So we are going to see this new thinking machines of hours and to our physical spaces as well to make our lives better.
Speaker Change: And I believe the time for this transition is now now that the machines can finally talk to us and now that they can understand our massive physical world. We are finally in a position to really realize our robot dreams.
Speaker Change: Robotics is really one of the most important natural endpoints of AI progress what's unique about robots as an application of AI is that while traffic is commoditized hardware is hardware.
Speaker Change: Robots are great example of how value can accrue to the application layer because it takes years to build that hardware and it's expensive. It scared a lot of new entrants and existing players enjoy the benefits of economy of scale as they progress and of course robust organically collected a ton of application specific proprietary data which is.
Speaker Change: Otherwise very hard to obtain and this really fits that data flywheel.
Speaker Change: Let's say this is exactly the thesis that we built several rounds from the beginning we've been engineering, our unique domain specific hardware and software and we've been collecting petabytes of data for years already. So we are in a really fortunate position right now to take advantage of this very historic moment, that's taking place.
Speaker Change: In front of us.
Speaker Change: So with that I'll hand over to Brian to walk you through our financials.
Brian: Thanks Ali and good afternoon, everyone.
Brian: 2024 was a defining year for <unk> over the past 12 months, we strengthened our financial position scaled our operations and set the stage for a transformational 2025.
Brian: We are working hard to support the planned expansion of our business to 2000 robots before the end of the year, while at the same time remaining disciplined with our cash to improve financial flexibility.
Brian: Today I'll walk you through the financial results and provide insight into the year ahead.
Brian: As you know our business is still in its early innings Rev.
Brian: Revenue for 2024 reached one 8 million with Q4 contributing 176000.
Brian: This marks over 700% growth year over year, demonstrating the increasing adoption of our technology and services a significant driver of this growth was the addition of $1 2 million in software services booked in 2024, alongside a 227% increase in annual delivery in brand in revenue, which.
Brian: Despite no new robots being deployed until the final days of the fourth quarter grew $435000 to reach 627000 in 2024.
Brian: On a sequential basis when adjusting for 2006 thousand and nonrecurring pilot program delivery revenue reported in Q3, our quarter over quarter delivery and branded revenue grew by 12%.
As Ali mentioned last quarters volume growth reflects higher utilization across our fleet and improved operational efficiencies.
Brian: 2020 for gross margin improved significantly from negative 700% in 2023 to negative 4% in 2024, reflecting increased fleet efficiency and a more favorable revenue mix from the high margin nature of our software services.
Speaker Change: Within delivery and Brandon gross margins expanded 76% year over year, driven by fleet utilization improvements and ongoing progress in the unit economics per delivery.
Brian: In terms of Q4 gross margin.
Brian: Cost of sales increased in Q4 as the fixed cost base expanded from the ramp up of our 2000 unit fleet as fleet utilization and delivery hours improve the portion of cost allocated into Cogs in our P&L, we will adjust accordingly.
Brian: Total GAAP operating expenses for 2024 were $38 2 million, increasing from $19 2 million in the prior year.
Brian: This reflects increased personnel software development and fleet expansion costs on.
Brian: On a non-GAAP basis 2024, operating expenses were $23 7 million compared to $18 7 million in the prior year.
Brian: Breaking this down further for 2024 R&D expenses were the largest driver of our cost structure totaling $24 3 million on a GAAP basis up from $9 9 million in the prior year, driven by $11 5 million of stock based compensation.
Brian: On a non-GAAP basis, R&D spend was $12 8 million compared to $9 5 million for the prior year.
Brian: This increase aligns with our ongoing investment in fleet scaling next gen hardware and autonomous capabilities.
Brian: General and administrative expenses totaled $10 1 million, increasing from $4 6 million in the prior year.
Brian: The primary driver here was stock based compensation expense infrastructure investments as we strengthen our internal systems and governance and head count expansion.
Brian: On a non-GAAP basis, G&A expense was $7 3 million.
Brian: For our fourth quarter total GAAP operating expenses were $12 9 million, increasing from $8 3 million in Q3, and $6 5 million in Q4, the prior year on.
On a non-GAAP basis Q4, operating expenses were $8 4 million compared to $6 1 million in Q3, and $6 2 million in Q4 of last year.
Which compared with a doubling of delivery volume demonstrates our continued discipline in managing core expenses.
Brian: Breaking down Q4 further.
Brian: R&D expenses remained the largest driver totaling $6 8 million on a GAAP basis up from $5 million in Q3, and $2 8 million in Q4 of last year on a non-GAAP basis, R&D spend was $4 4 million compared to $3 3 million in Q3, and $2 6 million in Q4 of last year, reflecting controlled.
Brian: Resource growth, while ensuring continued innovation.
Brian: General and administrative expenses totaled $5 2 million, increasing from $2 million in Q3, and $1 2 million in Q4 of last year on a non-GAAP basis, G&A expense was $3 million compared to $1 6 million in Q3, and $1 2 million in Q4 of last year, reflecting a more normalized run rate.
Brian: Our GAAP net loss for 2024 was $39 2 million compared to $24 9 million in 2023.
Brian: Q4, GAAP net loss was $13 1 million compared to $8 million in Q3, and $7 1 million in the same period last year.
Brian: The sequential and year over year increase reflects higher operating expenses tied to investments in R&D and corporate infrastructure as we scale for broader commercialization.
Brian: On a non-GAAP basis, our net loss for 2024 was $24 6 million with the fourth quarter being $8 6 million.
Brian: We ended the fourth quarter with a robust cash position of $123 million.
Brian: Since January 2024, we've raised over $250 million significantly improving our financial flexibility during the fourth quarter 2024, we received $80 million of proceeds under our previously filed ATM facility at a weighted average price of $14 four.
Brian: Following the end of the year, we completed an $80 million registered direct offering at a $19 price per share with institutional investors.
Brian: Due to our strong cash position, we no longer anticipate funding of our 2000 robot fleet through equipment financing.
Brian: This results in cash savings over the next two years of approximately $20 million due to the removal of interest and buyout purchase options.
Brian: Earlier today as part of our disciplined approach to capital management, we established a new shelf registration and an at the market equity program, which remains subject to SEC review.
Brian: As we just reviewed service fortunate to have a strong cash balance to support our growth. So we do not have plans to raise additional capital in the near term.
Brian: This new structure is meant to provide us with continued flexibility to act opportunistically, whether it is to fund additional fleet expansion.
Brian: <unk> capitalized if and when opportunities are presented.
Brian: We believe we successfully utilized this approach in December to strengthen our balance sheet, while carefully managing dilution.
Brian: As a result, our enhanced liquidity position provides us the ability to operate the business from a position of strength.
Brian: Looking forward to 2025.
Brian: We are focused on scaling our fleet to expand topline revenue and strengthen our margins we remain on track to deploy 2000 robots by year end 2025.
Brian: After working hard to lower the cost of our robot by another 30% over and above our previous 50% cost reduction the fleet rollout will accelerate in the second half of the year with at least 700 reduce cost Gen. Three robots built in Q3 and the remainder built in Q4.
Brian: First quarter 2025 deliveries are on pace to exceed Q4, even as we focus on operational readiness for the second half Scaleup.
Brian: Software revenue remains nonrecurring and our long term revenue model remains focused on building and deploying 2000 robots targeting $60 million to $80 million in annualized revenue once the fleet reaches full utilization estimated in 2026.
Brian: As you would expect we are planning for increased capital expenditures during 2025 with investments in tooling expansion costs and fleet build out being thoughtfully sequenced. Our current cash position following the January offering and debt free balance sheet give us the ability to execute our business plan from a position.
Speaker Change: Australia Esther.
Australia Esther: Estimated shares outstanding as of today are approximately 57 million shares.
Australia Esther: Last I am pleased to announce that our audit committee has approved the transition to price Waterhouse Coopers as our independent auditor, replacing DVD Mckinnon. Following the completion of our 2024 audit the audit committee's appointment of Pwc a firm with a global reputation for auditing tax and financial services reflects the comps.
Australia Esther: <unk> commitment to maintaining robust financial oversight and corporate governance, we sincerely. Thank DVD mckinnon for their partnership and contributions to serve over the past several years.
Australia Esther: During 2025, we will be investing in ERP upgrades and data transformation initiatives to further strengthen internal controls and enhance operational efficiency further reinforcing our commitment to financial discipline and scalability.
Speaker Change: In closing we ended 2024 with our strongest cash position ever and we will continue to remain disciplined in managing core expenses 2025 will be focused on executing our expansion into new neighborhoods in cities Onboarding more restaurants, and scaling our fleet with that let me turn it back to <unk> for Q&A.
Speaker Change: Thank you Ali and Brian to those detailed updates will now transition to the Q&A session.
Speaker Change: First I'd like to express our gratitude to all the investors and analysts who submitted questions over E Mail, we really appreciate your engagement.
Speaker Change: Our first question.
Speaker Change: I think this might be appropriate for Ali <unk>.
Speaker Change: You mentioned that robot costs have been lowered does this mean you removed technology are made major component changes.
Speaker Change: With this cost reduction achieved.
Speaker Change: Thank you that's a great question, no, we did not remove any technologies or capabilities or components.
Speaker Change: <unk> done because of improvements so our supply chain area that we've been investing in a lot internally.
Speaker Change: There are.
Speaker Change: It's the scale that we are now enjoying for.
Speaker Change: For example, suppliers tier two supplier now upgrade that's a tier one youre getting better cost components.
Speaker Change: I can't thank our components that are 70% cheaper now than they used to be.
Speaker Change: So I generally expect that will continue this process of making design improvements improving our supply chain by increasing scale getting additional benefits from that to see the cost of the robot has come down over time.
Speaker Change: Yes.
Speaker Change: Okay. Thanks. The next question was submitted via E. Mail can you say why are you focused on the second half.
Speaker Change: The robot rollout.
Speaker Change: Yes, absolutely we want to do the scale up thoughtfully and in a measured way.
Speaker Change: Cost efficient so.
Speaker Change: This quarter building to 150 robots effectively means that tripling our fleet size.
Speaker Change: And then in Q3, when we build another 700, another tripling up the fleet size.
Speaker Change: Pointed out this process is to do it gradually so be land, we fix things along the way we reduce costs just as I mentioned with the hardware for example.
Speaker Change: We can't again as I said at the beginning do this in a cost efficient and thoughtful way as we scale.
Speaker Change: Perfect. This next question, we received from a number of people, but most notably Glen Madison at.
Speaker Change: Ladenburg can you comment on recent developments within video.
Speaker Change: Yes.
Speaker Change: Yes, absolutely what development.
Speaker Change: Yes.
Speaker Change: We have really no.
Speaker Change: I believe it's a comment on and videos behalf I want to be clear on that.
Speaker Change: But I do want to emphasize a couple of things Nvidia isn't really terribly to any material confidential information about seven or vice versa.
Speaker Change: In method in <unk> 2021 'twenty, two 'twenty, three and 'twenty four right before our IPO.
Speaker Change: And that's when you buy a private company and they exited that position when we became a public company.
Speaker Change: What's most important and what I can comment on is that they remain a key partner for us on the technology side that partnership has not changed our robots continue to use technology, even though they are building their <unk> are using those nvidia chips. So we are continuing to work together and that Hasnt changed.
Speaker Change: Okay. Thank you next question in recent weeks you've learned we've learned more about planned policy changes in tariff introductions do you anticipate any impact on your operations.
Brian do you want to take this one.
Brian: Sure. Thanks for the question. So obviously, we're monitoring developments on a daily basis to understand what the impact is going to be the bottom line is right now we don't anticipate any material impact to our operations, we have a global supply chain and hardware team who are working to diversify the supply.
Brian: The change we have some exposure in China, but thats going to be an immaterial impact when we think about our country of origin or the parts that we're getting.
Brian: I think really importantly, like we talked about on the call is we're seeing further cost reductions throughout this year for the remainder of the fleet.
Brian: Hopefully no shouldn't policy changes come in that will impact us, we would be able to offset those with some of the additional reductions in this year.
Speaker Change: Okay. Perfect next question comes from Mike Latimore at Northland.
Brian: We've seen that there were recent wildfires in Lee.
Brian: Any impact on serve well this slow usage, our rollout plan the new neighborhood.
Brian: Thanks, Brian.
Brian: Yeah, no there wasn't any impact to our rollout plan, we had a few team members who had to unfortunately.
Brian: Curious.
Brian: We experienced a few days at a lower volume that unusual but comp.
Brian: Compared to the impact to the broader community came back to us was very minimal and brief.
Speaker Change: Okay. Thank you next question is from Aaron Kessler at Seaport can you give an update on the vivo acquisition.
Brian: I can do that yes.
Speaker Change: <unk>.
Speaker Change: <unk> had some issues on the closing conditions right now so.
Speaker Change: <unk> has been on somewhat of a pause until we've worked that out.
Speaker Change: <unk> continue to say that it would end up but it's.
Speaker Change: Not a material transaction, but if any opex come up people would share that with everyone.
Speaker Change: Okay. Thank you follow up question.
Speaker Change: Question Ali how are things going in Miami.
Speaker Change: Things are going great actually we are seeing good utilization of the robots, we have 50 restaurants already on boarded.
Speaker Change: The growth is looking to be on the right track.
Speaker Change: We are excited to expand further in fact in some of our key delivery metrics were ahead of schedule. So overall I would say I'd be very happy with what we're seeing and youre going to continue to collect data there to improve our <unk>.
Speaker Change: Models.
Speaker Change: And our operation overall and as we do we are going to scale the size of the robot spread.
Speaker Change: Okay. Thank you. Our next question is from Mike Latimore at Northland can you provide any update on the Gen. Three robots performance are there any early insights available on how well the new hardware is working into new market.
Speaker Change: Yes, I'm happy to do that.
Speaker Change: Robots are looking grades compared to similar timeframe. After a previous generation of robots that are performing much better.
Obviously, youre rolling them out in stages, so that we can learn and detect any problems that put them really through their paces before we scale even further.
Speaker Change: The most important achievement, meaning that the egencia robust was the ability to scale them efficiently and quickly.
Speaker Change: The manufacturing has to be scaled efficiently and quickly and we're very happy with that manufacturing process.
Speaker Change: The early results are positive and we're going to keep.
Speaker Change: Turning on improving.
Speaker Change: Okay and this is our final question comes from Mike Latimore at Northland.
Mike Latimore: Are your expectations now for 2026 and beyond do you still think the market can absorb as many of you have robots as you can produce and optimize.
Speaker Change: Oh, yes.
Speaker Change: Absolutely, yes, we do believe we see a strong demand for the robots in the existing markets as well as in new cities and even new countries and ultimately we really believe that the significant cost reduction and last month anyway.
Speaker Change: Even.
Speaker Change: The rate of growth that already existing demand for last mile.
Speaker Change: That means that it's going to always be demand for these robots.
Speaker Change: Okay. That's all my questions for today. So thank you for participating and I will turn it back to the operator.
Speaker Change: Yeah.
Speaker Change: This concludes today's conference you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: [music].
Speaker Change: [music].
[music].