Q3 2025 Serve Robotics Inc Earnings Call
<unk> results to differ materially from forward looking statements. Please refer to the press release, we issued today as well as the risks and uncertainties described in our most recent annual report on Form 10-K.
And in other filings made with the SEC.
We published our quarterly financial press release, and our updated corporate presentation to our Investor Relations website earlier this afternoon.
And we ask you to review those documents if you haven't already.
With that let me hand, it over to Ali.
Thanks have a kay and thank you everyone for joining us.
We are at a pivotal moment for surf this past quarter, we crossed the threshold for 1000 robots deployed.
That's not just from round number it's an inflection point you can feel this and the sidewalk side, we serve the future of cities is autonomous and we are at the forefront of this turning it into daily reality in these neighborhoods across the country. This is not just swapping humans for robots we are.
Unlocking new possibilities for cities, we are rewriting the operating system of hospitals function, how goods move how spaces are shared how businesses reach residents when the whole system upgrades like this everything gets better safer streets friendly and greener cities and more prosperous business.
And workers.
So why now what's possible today that wasn't possible before.
There are four forces that have really converged first is physical AI, it's really finally caught up with our ambitions advances in distributor training also the better onboard compute that is now available it lets us ingest orders of magnitude more sensor data and that leads to incredibly more.
<unk> AI models that can help machines really understand the world in real time.
Our perception and planning models are improving on the streets every single day each mile traveled enriches our dataset each model update expands where when and how quickly and how safely we can move and this all has a compounding effect.
Second every hardware component needed to create this advanced inexpensive and intelligent machines has my choice. This includes powerful sensors that are now at mass scale and low cost paired with electric motors and batteries that enable new vehicle form factors.
Technologies like Lidar sensors were on affordably expensive just a few years ago, but now we have partners like Alastair who are shipping thousands of sensors. This quarter in record numbers that benefits everybody in the ecosystem because of the economies of scale.
Third consumers have adopted the convenience of online and on demand ordering and merchants need Capex light and labor life capacity. So that they can economically serve their demand restaurants have optimized their operations in a post pandemic reopening, but they now need a way to unlock and real.
That full potential they want dependable right sized logistics that matches the demand by the hour and that's what our fleet can deliver and last but not least it's the cities themselves.
It is asking for quieter and cleaner and less congested streets.
Smaller vehicles made for specific use cases can now replace those two time vehicles that we've become so addicted to.
And this is the future our robots footprint is small with an electric powertrain and a friendly presence we earn the right to scale when we operate with safety and transparency and community respect and women. We are working closely with the cities that we serve.
We create these new jobs full time employee jobs in neighborhoods that you're serving.
Our third quarter results prove that we are on the right track with all this our delivery reliability was nearly 100% while our delivery volume increased 66% in a single quarter and we continue to maintain a strong safety record.
Now deliver for over 3600, restaurants, which is an amazing 45% increase from the last quarter and more than a nine fold increase since last year. This is a proof that autonomy can be safe reliable and predictable even as we scaled rapidly we did.
All of this while also expanding faster than anyone in our industry in less than a year. We grew our fleet sized tenex, our city's five X and our major platform partners to X <unk>.
Last month, we announced partnering with door dash the largest delivery platform in the U S and one of the largest in the world combined will buy and door dash zero over 80% of the food delivery market in the United States, which provides us an incredible reach to consumers and merchants.
The scale that we've achieved in the last few months really changes things here's how to think about it.
With a few dozen robot youre running pilots at a few hundred youre starting to prove repeat the ability.
Beyond a thousand there.
System tips, we run more efficiently the economics improve the national partners really lean in and are learning really speeds up all of which makes every new city launched smoother and every new robots smarter than before.
As we scale with precision we've gone from one market to five fully operational hubs covering over 3 million population and well over 1 million households.
Nearly 70% increase in a single quarter and more than a tenfold increase in our coverage compared to the same time last year not only have the tenex, our fleets with Tenex, our reach and as importantly, each neighborhood adds to our reach datasets.
New and novel edge cases, which really accelerates our ability to learn across the network and it compresses our timeline for future city launches.
On that note I'm excited to share with you. Our next three expansions, we've just been green lit to expand into bucket, Georgia, Fort Lauderdale, Florida, and Alexandria, Virginia before the end of this year Alexandria also gives us a toehold in the Washington DC area. The one <unk>.
The first truly national interconnected autonomous delivery network on a common AI software platform and operation stack. So that a single partner integration would light up multiple metros and and thousands of restaurants at once.
For example in Q3, we announced our partnership with door Dash coming in addition, with our existing contract with Uber. This allows our existing robots to unlock an incredible amount of additional volume a robot that's completing delivery for door dash could do delivery for Uber.
And its way back so this would actually improve utilization levels for robots.
And we're not done yet in addition to our existing partnerships with shake Shack and neural Caesars. We've also started delivering for Jersey, Mike's subs, the faint sub sandwich chain with over 3000 locations nationwide and.
And while it's too soon to give details. We also expect to add another well known national <unk> brand to the lineup.
The partnership platform is growing nicely and concurrently with that we are also developing an unparalleled map of cities the curb cuts on slopes and potholes and obstacles and patterns of living Atlas that becomes a valuable asset and an operational advantage.
And why do we do that we're also deepening our community bonds at a very hyper local level, we'd met champion landlords on a choice precincts, we need to integrate respectfully into these neighborhoods as we grow.
Now, let's take a step back.
Third is pioneering of robotics and autonomy as a service platform that packages the full power of our autonomy stack, our hardware and our urban robotics operation playbook.
With the last quarter was the acquisition of why your robotics. Our platform is now increasingly reinforced by AI Foundation models and its scalable simulation empowered data engine under the Hood of all this is the physical AI flywheel that powers everything our third generation fleet Leverages the <unk>.
Best in class sensors, which creates this proprietary urban datasets and that in turn leads to better AI models, which then creates more efficient and more autonomous fleets at.
A better fleet expands our Tam and increases our operating domain and verticals that we can do and that any 10 creates more pool in the market for more robots. So more miles it's more robots, it's more data, it's better AI and the cycle repeats itself.
The integration of our U will actually accelerate this loop because it turn data into better models faster and that lead to tangible gains in our delivery speed and autonomy and market reach our library of long tail edge cases is expanding faster than ever and the latest stat.
To that we gather on veteran obstacles and pray and detours. It all provides the learnings that are applied network wide. So every robot is learning from every robots.
And this AI flywheel that we are building the flywheel. That's now accelerating in turn attracts exceptional talent are rare data at scale and this real world fleet presence that we have is pulling in elite builders and they in turn should better systems.
And better systems attract even more Leds builders, so that talent flywheel is also compounding.
All the forces that I mentioned are helping us execute our vision.
I'm really proud of our team for reaching the 1000 robot milestone last quarter in September alone. We shipped over 380 robots that isn't a single months that means we launched more robots in a single months than the prior quarters.
This was a pivotal milestone we promise to ship 2000 robots by the end of the year during our IPO and we are on track to do it with robot number 2000, <unk> plan to deploy in Miami in mid December.
But we're not going to stop there.
We envision a future where serves fleet reaches $1 million robot deployed across cities globally.
I will travel billions of miles annually, they become embedded into the core fabric of a modern city and they unlock new possibilities. Our conviction is simple we are entering the age where things will move at a real but on their own.
Autonomy will become this essential infrastructure in our lives is resin he noticed because it just works, but it is sorely missed when its not available and we want to be the company that you will trust to run this.
On the path to 1 million robots, we are still early but with a thousand robots operating from coast to coast, We've really just crossing that chasm, where the technology and the market I'll say go from here every additional robots every additional hour every additional block.
It makes the whole <unk> ecosystem more essential and more valuable to the entire network.
We are building something durable and we are just getting started.
With that I'll turn it over to Brian to cover our Q3 results in more detail.
Thank you, Alex and it's great to be with you all today.
This quarter marks another step change for surf one defined not only by the scale of our strategic execution.
We advanced in every meaningful area, expanding our fleet strengthening our technology base and executing with greater precision across operations engineering and finance.
We've also been extremely opportunistic.
During the quarter, we integrated two key acquisitions that deepen our competitive moats acquiring value a pioneer in urban robot navigation using large scale AI models.
We're expanding our physical AI capabilities by accelerating our roadmap.
As we further integrate <unk> into our autonomy stack, we expect it to create opportunities to enhance our leadership in autonomous delivery as well as to reduce data infrastructure costs and improve operational metrics over time.
These integrations allow us to convert more of our operational data into faster model improvements and Richard monetization layers, all reinforcing <unk> position as the categories innovation leader.
Our focus remains clear to scale efficiently deploy capital strategically and translate our growing operational advantage into sustainable financial performance. All in service of building an enduring business in this new age of autonomy and physical AI.
As al described the serve flywheel is accelerating more robots, Richard data smarter, AI and stronger economics, let's dig into our Q3 results showcasing all of these effects translated at a measurable financial impact and expanding leverage across our business.
Total revenue for Q3, 2025 was $687000 an increase of 210% versus last year and in line with our guidance provided for the quarter.
Fleet revenue was $433000.
Significantly this quarter, we saw branded revenue jumped 120% sequentially over Q2.
As we've mentioned previously the growth of our robot fleet into the thousands unlocks a pipeline of large scale branding opportunities and we delivered on that in Q3.
Software revenues continued to transition from one tier two recurrent and $254000 in the quarter.
We delivered exactly what we said we would fleet.
Fleet revenue is becoming the predictable growth engine with efficient and rollout meaningfully staffing platform and data services on those same routes.
Gross margin performance this quarter reflected the balance between rapid fleet expansion and deliberate investment in our long term efficiency infrastructure.
As planned we continued to build capacity ahead of 2026 scale, expanding our operations footprint Onboarding, new cities and integrating our systems and teams from our recent acquisitions.
These near term investments are already yielding returns in the form of measurable operational gains across reliability and autonomy.
Average daily operating hours per robot increased another 12, 5% sequentially from Q2.
Driven by the growing mix of Gen <unk> hardware across our fleet.
This is a strong leading indicator that each unit is capable of contributing more value.
Robot intervention rates saw a meaningful reduction through the quarter and further our best in class sidewalk autonomy is getting more and more capable.
We saw a consequential increase in the proportion of miles driven in autonomous mode. In the last week of Q3 compared to the first week of the quarter, indicating a return our continued R&D investment.
Together these factors drove higher autonomous run times, which in turn drive improvements in our average speed.
This leads to compounding gains.
Even a small increase in the average speed corresponds to an increase in our potential delivery volumes.
These efficiency improvements are compounding each additional robot each additional mile in each new market contributes data that sharpens, our models and reduces human touch points across the network.
On the expense side, we remain disciplined investing in the capabilities that drive our competitive advantage GAAP operating expenses for Q3 were $34 million, increasing from Q2 from deliberate investments to new market launches M&A integrations and expanded operational capabilities to support our national.
Scale on a non-GAAP basis operating expenses were $21 8 million.
R&D remained our largest investment area totaling $13 4 million on a GAAP basis or $10 7 million on a non-GAAP basis, primarily directed towards advancing our autonomy stack expanding our AI foundation models, and integrating new data and hardware capabilities from our recent <unk>.
Acquisitions.
These initiatives are accelerating our pace of innovation, while positioning us for long term cost structure.
G&A and go to market spending remained disciplined and aligned with our city expansion cadence.
Executing with leverage adding cities partners and robust without literally increasing head count or our overhead.
Our approach remains consistent invest where we have clear line of sight to efficiency differentiation and scale advantage, while maintaining financial discipline and measured growth.
On the balance sheet, we ended the quarter with $211 million in cash and marketable securities.
In October we executed a soft sale that generated approximately $100 million.
Which will be used to fund working capital and expansion activities.
Capex for the quarter was $11 million tied to robot production market launch and expansion of infrastructure.
Our strong liquidity and debt free balance sheet remain a competitive advantage, providing us flexibility to scale responsibly and invest opportunistically.
Adjusted EBITDA was negative $24 $9 million driven by operational expansion in the quarter expected to accelerate efficiency through 2026.
And now to our outlook.
Once again, we delivered results at the high end of our Q3 guidance range building on this momentum we now expect to generate more than $2 $5 million in revenue for the full year 2020, our underlying recurring sleek revenues, which exclude nonrecurring software.
<unk> is projected to grow three X year over year from roughly zero point $6 million in 2024 to roughly $2 1 million in 2020.
2025 was a pivotal year focused on establishing our national footprint deploying 2000 robots extending into new markets and deepening our partnership portfolio.
With this groundwork in place we remain confident in our ability to generate annualized revenue run rate of $60 million to $80 million.
We intend to update 2026 full year guide us early next year.
Initial indications show our expansion and operational plan.
<unk> served to deliver roughly 10 X inflection in revenue during 2026.
Q3 marked another step forward in both scale and precision, we're executing with discipline, expanding intelligently and translating operational progress into tangible financial results each quarter. Our fleet becomes more capable model is more refined and economics more efficient.
Foundation, we've built across technology partnerships operational excellence position us for sustainable growth through 2026, we're proud of what the team has accomplished this quarter and even more excited about the opportunities ahead.
Surf is defining this category and we're confident in our ability to lead it for years to come.
With that I'll hand, it back to a duquesne for Q&A.
Thank you Ellie and Brian we will now move into the Q&A session.
First I'd like to say a big thank you for all the investors and analysts who submitted questions by E Mail, we really appreciate your engagement.
First question I think this might be for Ali do you expect to add more robot in 2026.
So what would be timing and magnitude of the edition.
Ali.
Thank you Alex here, Yes, I can take this one so good question.
We aren't going to share the specific numbers right now hopefully we have more to share early next year, but I do want to explain how we are thinking about growth.
As we are looking to get towards our 1 million robots school.
What we wanted to do is make sure we grow quickly, but also with precision and discipline.
We've been really laser focused in getting the fleets really efficient and effective everyday and driving utilization.
While at the same time layering new partners going to new geographies. All of this makes that that scale up easier so in a way being efficient and growth kind of lineup together. So in that sense. It's the same type of effort that it takes to get there. So.
We are we are definitely going to push on growth, but we want to do it responsibly.
Alright, thank you.
Next question is about robot design could you provide details on our robot design simplification and cost reduction.
Beyond economies of scale.
Ali do you want to take this one.
Yeah I'll take this one too.
I think there is there is a few different factors here.
First of all on our progress that we've made when it comes to the robot design.
It made it a lot more modular easier to manufacture a custom.
Custom assemblies, we are also really strengthened our supply chain to get better parts.
Oil prices.
So this both cuts down the cost of the material, but also cost buffer assembly at.
At the same time as we improve our design.
We've also benefited from our scaled manufacturing, which obviously helps bring that cost down as well.
While all of that is happening.
Another kind of ecosystem of suppliers. They are also getting more mature I think a really good example of that I'm sorry.
<unk> added about his ouster.
They have done a phenomenal job, bringing is advanced lidar sensors to market at scale shipping record number of sensors right. Now I think thousands per project. We are directly benefiting from that and I think a lot of flux in the autonomous space would benefit from more affordable a lidar sensors that that just didn't.
Jim.
We can address them just a few years ago, so combining our improvements to the design and our improved supply chain and our scaled manufacturing and the maturity of the ecosystem.
Per unit cost of the robots is definitely coming down substantially to the <unk>.
Point that as we've shared in the past our January robots.
Third the cost of our Gen two robots.
And we are going to keep pushing these are distinct.
Improvements forward.
Okay. Thank you for that.
Next question what are the next steps in your door dash relationship.
Do you see that helping the business.
Ali.
Yes, we are working very close with.
Sure.
And that door dash dates.
Almost it's about integrating their robots into their fleets.
We'll wait and are planning the market Rollouts.
Overtime.
Our door that obviously, it unlocks an enormous network of restaurants and consumers for us.
Have over a thousand robots right now and so in 2000 that can deliver for those vessels and customers. So the timing is perfect and I expect that in the next few months, we will start to really grow the volume on the new channels with door Dash basically.
I do want to emphasize it's a really important milestone for us because we've always envisioned this multi platform approach I think.
A single robots being able to alternate between database from.
Each plasma upon jordache and Uber.
It is really really important that we are able to do that and I think we are now proving that we can and this kind of interoperability actually increases our utilization, which in turn lowers their cost and database and that actually benefits all of our partners as well.
Perfect. Thank you we have a question on acquisition can.
Can you quantify the autonomy effect from by for example, with average speed increase or would the ratio of our robots to operators improve.
Ryan do you want to take this one.
Yeah.
So yes. Good question I mean, I think the simple answer to start here is we're very early in this integration process to to dive into those results exactly.
The type of integration that can take months, but we're actually doing the call here today from value officers and the excitement from the teams to hit the ground running as soon as the merger was completed.
So there's just a lot of excitement on both sides to go faster and deeper into that roadmap to bring those new capabilities into the fleet.
I think we think about it as part of a flywheel, where overtime that integration will allow our robots to be faster and smarter.
While maintaining the safety and reliability that we focus on daily.
And that in turn then drives efficiency and utilization ultimately landing in unit economics.
Overall the benefit for these acquisitions.
Okay. Thank you our next question.
What are some differences between deployments in different cities.
What have you learned from new deployments and expansion.
Help you scale further.
Ali can you take this one.
Certainly yeah.
Each city has its own distinct personality, it's like that define in base, that's actually very helpful.
Honestly quite fun for our team.
As we've been expanding seen for example in Atlanta and Miami.
Learning about humidity and defend clients a pedestrian intersections.
City design compared to what we had in Los Angeles before.
They have defense a bit in this sidewalks, if and nuances about how.
The best routes for its addressing with actually it looked like or a new market in Chicago.
Incredible place for getting data on really dense urban environments.
Cold weather.
Where youll have to look at battery efficiency.
No detection and traction so a lot of things that we have tried to test an advanced now are being put to test them in real life and we are learning a lot from that.
It's really powerful I think is that as we go through this new cities, it's really enriches the models and the data in this new environment actually helps.
Our model across the board for the entire platform.
And that actually means that every subsequent city launch as I mentioned earlier gets more reliable and better impact we saw this in Chicago.
We first launched it was the fastest market for us to get to our <unk> that are comparable to our more mature markets. So it kind of proves that the playbook is working well and the robots are getting smarter.
And just to finish that from a from a financial standpoint, I think too is we're using these learnings we're translating them directly into efficiency through our operations teams. So we're seeing shorter payback periods with the expansion that we're seeing the higher utilization as we deploy into new markets and neighborhoods to <unk>.
The expansion and.
That's exactly what we're building towards so we've been talking internally about describing this as being sharper with our scale and we believe all of these technology improvements are going to compound, which will show up in our financial results. So that is really what positioning us to expand in a disciplined capital efficient way in 2000.
26.
Okay. Thank you next question what can you share about the pipeline for software and data sales.
Are you looking for salary it's software revenues in 2026 and beyond.
Yes. This is this is.
A good question.
The revenue pipeline for these other opportunities like the daily very platform. The software that's powering the robots as well as the data.
Generated.
It's been a really strong.
Pipeline.
<unk> substantial discussion spitz.
Multiple partners.
Want to basically use the platform or the data that we are creating.
And I think we are trying to be smart and selective.
In terms of who'll be engaged with and.
License filters, there to pick the right partners, but them on us inbound interest, we're getting really reinforces that what we have is quite differentiated and I'm, hoping that as we move some of these conversations forwards.
We.
Have more updates to schedule will actually tell you more about those relationships as well.
And if I can do it also wrapped financial aspect and then this question is.
As the fleet scales. These data and AI insights are going to become more valuable to all of the people. Alex just mentioned that we're talking to and the substantive discussions we're having.
So that's going to enable our team to look at opportunities for adding more recurring software as we go throughout 2026 and focus on that robotics and autonomy as a service offering.
So it's really a long term vision for this as a balanced model we're focused on diversifying our revenue and fleet revenue is that foundation with software and data is that real high margin accelerant that we're focused on as we enter 2026.
Okay, and then last question you mentioned, the $60 million to $80 million run rate.
When do you expect to reach that run rate.
Brian can you take this one.
Yeah.
Give a little bit more color I know in the script, we did mention.
The outlook for 2026, a little point everybody back to that commentary, but obviously this is a good question to end on here as we think about this Q3 update so the path to hitting $60 million to $80 million is underway right and that's really the final step.
When we think about the ambitions, we laid out a few years ago to deliver 2000 robots right 60 to 80 million is the you know the endpoint.
But along the way we've exceeded a lot of expectations, especially as we near the end of 2025 and Thats been a testament to the team and how we've delivered.
So to summarize what we've talked about on a lot of the earnings calls.
We are on track to deliver the 2000 robots, we've expanded into multiple markets with more comment.
We talked about new partnerships and adding top of the funnel orders into our pipeline.
But last but not least we have the acquisition so across all of these verticals. We are firing and we're really exceeding what we set out to achieve in 2020.
I'd like to remind investors and anybody that wants to understand our story that that's all.
Great, but critically we're maintaining the safety and the reliability throughout that network as we're building.
And so the final boss is allie likes to say is achieving that financial milestone is continuing to improve the utilization across the fleet and so we have that momentum through 2025 and accelerating into 2026 to approach that $60 million run rate target to be clear I think we're still more than 12 months out and we will certainly as we.
Takeda will have more to say on this in the next call. It next year.
Okay. Thanks, so much that's all the time, we have for today and that concludes our session. Thank.
Thank you for your thoughtful questions and participation and with that I hand, it over to the operator.
That concludes today's call you may now disconnect.
Yeah.
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