Surf Air Mobility Reports Financial Results for Fourth Quarter and Full Year Ended December 31, 2023
- Strong full-year 2023 revenue performance with GAAP revenue of $60.5 million and Pro Forma revenue of $112.9 million, up 12% year-over-year.
- Full year 2023 Pro Forma Adjusted EBITDA of $(50.9) million, meeting 2023 guidance.
- Successful direct listing on NYSE and merger completion with Southern Airways.
- Partnerships with Palantir for software development and AeroTEC for electrification initiatives.
- MOUs with Azul, REGENT, and several African Caravan fleet operators for electric powertrain conversions.
- Expansion into new service routes and collaboration with Electra.aero for eSTOL Aircraft delivery positions.
- Appointment of Oliver Reeves as Chief Financial Officer.
- Q1 2024 revenue outlook of $28.5-29.5 million and Pro Forma Adjusted EBITDA of $(17.0)-$(14.0) million.
- Focus on growth, profitability, expense reduction, and disciplined capital allocation in 2024.
- None.
Insights
Surf Air Mobility's full year revenue surpassing the guidance reflects a positive trajectory in sales, which is a critical performance indicator for investors. The 12% year-over-year increase in Pro Forma revenue suggests effective market penetration and potential scaling of operations. However, the substantial GAAP Net Loss of $(250.7) million and Pro Forma Net Loss of $(185.0) million, raise concerns about the company's current profitability and cost management strategies. The losses incorporate significant investments in R&D, which could be viewed as a strategic move for long-term growth, specifically in the electrification and software technology sectors. Nevertheless, the scale of the net loss compared to the previous year indicates a need for a careful review of the company's expenditure and the sustainability of its growth model.
Furthermore, the Pro Forma Adjusted EBITDA of $(50.9) million, although in line with guidance, still indicates that the company is operating at a loss. The emphasis on achieving EBITDA guidance might be seen as a positive sign of management meeting its targets, but the underlying net losses could overshadow this achievement. The forward-looking statements regarding balancing growth with profitability in 2024 highlight the management's awareness of the need for a more sustainable financial approach. The market will likely monitor these developments closely, as they could significantly influence investor confidence and the stock's performance.
The partnerships and MOUs announced by Surf Air Mobility with entities like Palantir, Azul and various African carriers, represent strategic moves to expand its network and technological edge. These collaborations could potentially open new markets and customer segments, enhancing the company's competitive position in the regional air mobility space. The focus on electrification of the Cessna Caravan and the development of AI-enhanced crew scheduling software indicates a commitment to innovation and operational efficiency.
However, the market will be keen on understanding how these initiatives translate into tangible financial improvements. The market's reception of these developments will depend on the perceived viability and scalability of electric aviation, which is still an emerging field. The MOUs, while promising, are not definitive contracts and thus may not yet fully reassure investors about future revenue streams. The appointment of Oliver Reeves as CFO could be seen as a strengthening of the financial leadership, which might be necessary to navigate the complex financial challenges the company faces.
Surf Air Mobility's investment in electrification technology aligns with the growing trend of sustainable aviation, which is increasingly important to environmentally conscious investors and consumers. The transition towards electric aircraft is part of a broader industry shift towards reducing carbon emissions and could position the company as a leader in sustainable regional air travel. However, the financial viability of such a transition is yet to be proven at scale and the significant R&D costs could impact short-term financial performance.
Investors with a focus on sustainability will be interested in the long-term benefits and potential government incentives that could arise from such green initiatives. The partnership with REGENT for all-electric seagliders and the MOU with Electra.aero for eSTOL aircraft also highlight the company's commitment to diversifying its eco-friendly transportation options. These developments could enhance the company's reputation and appeal in the market, but stakeholders will be looking for clear paths to profitability amidst these environmentally progressive ventures.
-
Full year 2023 GAAP revenue of
$60.5 million $112.9 million 12% year-over-year, beating 2023 guidance. -
Full year 2023 GAAP Net Loss of
$(250.7) million $(185.0) million -
Full Year 2023 Pro Forma Adjusted EBITDA of
$(50.9) million
Surf Air Mobility is providing unaudited pro forma results for the fourth quarter and year to date period ended December 31, 2023, which assumes the acquisition of Southern Airways closed as of the beginning of 2022.
“We are pleased to have beat our revenue guidance and achieved our Adjusted EBITDA guidance for the year. Additionally, we’ve achieved two significant milestones: our direct listing on the NYSE and the completion of our merger with Southern Airways. We have also advanced our growth pillars of expanding our leading regional airline network and developing a proprietary powertrain technology to electrify smaller aircraft,” said Stan Little, Surf Air Mobility’s Chief Executive Officer.
FOURTH QUARTER BUSINESS HIGHLIGHTS
- Deepened our partnership with Palantir to develop software that will enhance operational efficiencies, improve our customer experience, provide back-office intelligence, and unify our sales and financial data. Palantir has also made progress developing our new AI-enhanced ‘crew scheduling’ application.
- Advanced our initiative to electrify the Cessna Caravan along with our lead partner AeroTEC. We are in the final stages of vendor selection for key components including battery and electric motor suppliers. We continue to work with the Caravan’s avionics manufacturer, Garmin, to integrate our powertrain with the aircraft’s displays.
- Entered into a memorandum of understanding (“MOU”) with Brazil’s largest airline, Azul, on the commercial deployment of electric Cessna Caravan within Azul’s existing fleet.
-
Partnered with REGENT, a manufacturer of all-electric seagliders, to establish a base for seaglider operations in
Miami that will provide passenger transport service forSouth Florida , including routes fromMiami ,Fort Lauderdale ,Palm Beach , and theCaribbean Islands , in addition to previously announced service inHawaii . - Appointed Oliver Reeves as Surf Air Mobility’s Chief Financial Officer, leveraging his nearly two decades of experience in investment management, enterprise technology, and insurance.
CURRENT DEVELOPMENTS
-
Signed MOUs with numerous operators of Caravan fleets in
Africa , to convert their turbine powered aircraft to electric powertrains with our proprietary electrification technology, once certified. The carriers include: Safarilink, Yellow Wings, Auric Air and Z. Boskovic. This represents13% of the total Caravan fleet operating inAfrica under MOUs, to date. -
Entered into agreements to add new service routes connecting Purdue University to
Chicago , and with the city ofWilliamsport, Pennsylvania toWashington, D.C. These two new routes will be subsidized by local and private entities. - Signed an MOU with Electra.aero, Inc. to secure delivery positions for 90 eSTOL Aircraft, collaborate on incorporating Surf Air Mobility technology into joint systems, and establish a preferred leasing relationship.
- Strengthened our technology capabilities with the addition of an outside team with deep experience across consumer, transportation and logistics, marketplace, and ticketing industries, to lead the software development for Surf Air Mobility’s consumer technology and air operations, as well as build certain tools for third party operators as part of our Aircraft-as-a-Service offering, in partnership with Palantir.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
-
Revenue
-
GAAP revenue of
$26.8 million $27.4 million $27.7 million
-
GAAP revenue of
-
Net Loss
-
GAAP Net Loss of
$(110.5) million $(23.8) million -
Pro forma net loss of
$(107.4) million $(19.4) million
-
GAAP Net Loss of
-
Pro forma Adjusted EBITDA
-
Pro forma adjusted EBITDA of
$(18.4) million $(12.6) million
-
Pro forma adjusted EBITDA of
FULL YEAR FINANCIAL HIGHLIGHTS
-
Revenue
-
GAAP revenue of
$60.5 million $112.9 million
-
GAAP revenue of
-
Net Loss
-
GAAP net loss of
$(250.7) million $(74.4) million -
Pro forma net loss of
$(185.0) million $(91.5) million
-
GAAP net loss of
-
Pro forma Adjusted EBITDA
-
Pro forma adjusted EBITDA of
$(50.9) million $(49.4) million
-
Pro forma adjusted EBITDA of
FIRST QUARTER 2024 FINANCIAL OUTLOOK
-
Revenue, in the range of
$28.5 million $29.5 million -
Pro forma adjusted EBITDA, in the range of
$(17.0) million $(14.0) million
“Looking ahead in 2024 we are focused on balancing growth with profitability, expense reduction, and disciplined capital allocation centered around high ROI opportunities, including potential route expansions,” stated Surf Air Mobility Chief Financial Officer, Oliver Reeves.
Surf Air Mobility will provide full-year 2024 guidance at its Investor Day to be held on June 7, 2024, at the New York Stock Exchange.
About Surf Air Mobility
Surf Air Mobility, headquartered in
Earnings Webcast
Interested parties can register in advance to listen to the fourth quarter and full year 2023 webcast here, or can find a link on the ‘Events & Presentations’ section of our investor relations website. A replay of the call will also be available online for 21 days following the call.
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; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in the prospectus. 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,
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.
Consolidated Balance Sheets as of December 31, 2023, and December 31, 2022:
|
|
December 31,
|
|
December 31,
|
||||
Assets: |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash |
|
$ |
1,720 |
|
|
$ |
6 |
|
Accounts receivable, net |
|
|
4,965 |
|
|
|
161 |
|
Prepaid expenses and other current assets |
|
|
11,051 |
|
|
|
7,755 |
|
Total current assets |
|
|
17,736 |
|
|
|
7,922 |
|
Restricted cash |
|
|
711 |
|
|
|
906 |
|
Property and equipment, net |
|
|
45,991 |
|
|
|
624 |
|
Intangible assets, net and other assets |
|
|
32,390 |
|
|
|
3,102 |
|
Operating lease right-of-use assets |
|
|
12,818 |
|
|
|
1,143 |
|
Finance lease right-of-use assets |
|
|
1,343 |
|
|
|
— |
|
Goodwill |
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
110,989 |
|
|
$ |
13,697 |
|
Liabilities, Redeemable Convertible Preferred Shares and Shareholders’ Deficit: |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
18,854 |
|
|
$ |
12,891 |
|
Accrued expenses and other current liabilities |
|
|
59,582 |
|
|
|
14,740 |
|
Deferred revenue |
|
|
19,011 |
|
|
|
7,820 |
|
Current maturities of long-term debt |
|
|
5,177 |
|
|
|
— |
|
Operating lease liabilities, current |
|
|
4,104 |
|
|
|
903 |
|
Finance lease liabilities, current |
|
|
215 |
|
|
|
— |
|
SAFE notes at fair value, current |
|
|
25 |
|
|
|
149 |
|
Convertible notes at fair value, current |
|
|
7,715 |
|
|
|
15,948 |
|
Due to related parties, current |
|
|
25,431 |
|
|
|
4,947 |
|
Total current liabilities |
|
$ |
140,114 |
|
|
$ |
57,398 |
|
Long-term debt, net of current maturities |
|
$ |
20,617 |
|
|
$ |
— |
|
Convertible notes at fair value, long term |
|
|
— |
|
|
|
13,148 |
|
Operating lease liabilities, long term |
|
|
5,507 |
|
|
|
246 |
|
Finance lease liabilities, long term |
|
|
1,137 |
|
|
|
— |
|
SAFE notes at fair value, long term |
|
|
— |
|
|
|
24,565 |
|
Due to related parties, long term |
|
|
1,673 |
|
|
|
— |
|
Other long-term liabilities |
|
|
19,426 |
|
|
|
9,762 |
|
Total liabilities |
|
$ |
188,474 |
|
|
$ |
105,119 |
|
Commitments and contingencies (Note 14): |
|
|
|
|
||||
Redeemable convertible preferred shares |
$ |
— |
|
|
$ |
130,667 |
|
|
Shareholders’ equity (deficit): |
|
|
|
|
||||
Class B-6s convertible preferred shares, |
$ |
— |
|
|
$ |
3,414 |
|
|
Preferred Stock, |
|
|
— |
|
|
|
— |
|
Common shares, |
|
8 |
|
|
|
1 |
|
|
Additional paid-in capital |
|
|
525,042 |
|
|
|
126,335 |
|
Accumulated deficit |
|
$ |
(602,535 |
) |
|
$ |
(351,839 |
) |
Total shareholders’ deficit |
|
$ |
(77,485 |
) |
|
$ |
(222,089 |
) |
Total liabilities, redeemable convertible preferred shares, and shareholders’ deficit |
|
$ |
110,989 |
|
|
$ |
13,697 |
|
Consolidated Statements of Operations for the Year Ended December 31, 2023: (in thousands, except share and per share data):
|
|
Year Ended
|
||||||
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
60,505 |
|
|
$ |
20,274 |
|
Operating expenses: |
|
|
|
|
||||
Cost of revenue, exclusive of depreciation and amortization |
|
|
61,918 |
|
|
|
24,824 |
|
Technology and development |
|
|
20,850 |
|
|
|
3,289 |
|
Sales and marketing |
|
|
10,028 |
|
|
|
5,214 |
|
General and administrative |
|
|
100,669 |
|
|
|
36,824 |
|
Depreciation and amortization |
|
|
3,762 |
|
|
|
1,027 |
|
Impairment of goodwill |
|
|
60,045 |
|
|
|
— |
|
Total operating expenses |
|
|
257,272 |
|
|
|
71,178 |
|
Operating loss |
|
$ |
(196,767 |
) |
|
$ |
(50,904 |
) |
Other income (expense): |
|
|
|
|
||||
Changes in fair value of financial instruments carried at fair value, net |
|
$ |
(50,230 |
) |
|
$ |
(27,711 |
) |
Interest expense |
|
|
(2,969 |
) |
|
|
(596 |
) |
Gain (loss) on extinguishment of debt |
|
|
(326 |
) |
|
|
5,951 |
|
Other expense |
|
|
(3,708 |
) |
|
|
(1,102 |
) |
Total other income (expense), net |
|
$ |
(57,233 |
) |
|
$ |
(23,458 |
) |
Loss before income taxes |
|
|
(254,000 |
) |
|
|
(74,362 |
) |
Income tax benefit |
|
|
3,304 |
|
|
|
— |
|
Net loss |
|
$ |
(250,696 |
) |
|
$ |
(74,362 |
) |
Net loss per share applicable to common shareholders, basic and diluted |
|
$ |
(6.35 |
) |
|
$ |
(5.51 |
) |
Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted |
|
|
39,466,906 |
|
|
|
13,492,823 |
|
Unaudited Pro Forma Financial Measures; Revenue, Net Loss, and the Reconciliation of Pro forma Net Loss to Pro forma Adjusted EBITDA for the Year Ended December 31, 2023 and the Year Ended December 31, 2022 (in thousands):
|
Year Ended December 31, |
|||||||
|
|
2023 |
|
2022 |
||||
| Revenue- Pro forma | $ |
112,869 |
$ |
100,546 |
||||
Net Loss- Pro Forma |
|
|
(184,987 |
) |
|
|
(91,540 |
) |
Addback: |
|
|
|
|
||||
Depreciation and amortization |
|
|
8,393 |
|
|
|
2,897 |
|
Impairment of goodwill |
|
|
60,045 |
|
|
|
— |
|
Interest expense |
|
|
5,083 |
|
|
|
(949 |
) |
Income tax expense (benefit) |
|
|
(225 |
) |
|
|
(6,904 |
) |
Stock-based compensation expense |
|
|
48,252 |
|
|
|
10,447 |
|
Changes in fair value of financial instruments |
|
|
— |
|
|
|
11,111 |
|
Transaction costs |
|
|
— |
|
|
|
22,322 |
|
Data license fees |
|
|
12,500 |
|
|
— |
||
Share settlement for contract termination |
|
|
— |
|
|
|
3,175 |
|
Adjusted EBITDA- Pro Forma |
|
|
(50,939 |
) |
|
|
(49,441 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240328508670/en/
For Press:
press@surfair.com
For Investors:
investors@surfair.com
Source: Surf Air Mobility Inc.
FAQ
What was Surf Air Mobility's full year 2023 GAAP revenue?
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What is Surf Air Mobility's Q1 2024 revenue outlook?
What is the Pro Forma Adjusted EBITDA range for Surf Air Mobility in Q1 2024?
