Summary of Surf Air Mobility Conference Call Company Overview - Surf Air Mobility (NYSE: SRFM) is a leading air mobility platform and one of the largest commuter airlines in the U.S. by scheduled departures [1] - The company operates as the largest U.S. passenger operator of Cessna Caravans and is developing an AI-powered software platform called Surf OS in partnership with Palantir Technologies [1][5] - Surf Air Mobility is also focused on commercializing electrified aircraft and creating proprietary powertrain technology for the Cessna Caravan under an exclusive agreement with Textron Aviation [1] Core Business Units - The company has two distinct business units: 1. **Air Mobility**: Scheduled and charter flight operations in the Part 135 space 2. **Air Technology**: Focused on Surf OS software platform and powertrain electrification initiatives [5][7] Recent Performance and Financials - In the last 12 months, Surf Air Mobility flew approximately 320,000 passengers [5] - Q2 revenue was reported at $27 million, exceeding guidance of $23.5 to $26.5 million [13] - Adjusted EBITDA loss narrowed to $9.5 million, better than the guidance range of $10 to $13 million [13] - Key operating performance measures improved significantly, achieving profitability in airline operations for Q2 [13] Strategic Partnerships and Agreements - Signed a five-year software license agreement with Palantir Technologies, becoming their exclusive partner for software configuration and sales for Part 135 operators [16] - Palantir Technologies is also one of Surf Air Mobility's largest shareholders, aligning interests [17] Transformation Plan - The company implemented a four-stage transformation plan: 1. **Transformation**: Completed in 2024, focused on improving capital structure and management team [11] 2. **Optimization**: Currently in this phase, optimizing airline operations and implementing Surf OS technology [11] 3. **Expansion and Acceleration**: Planned for 2026 and 2027, including launching new routes and deploying electric aircraft [12] Technology Initiatives - Surf OS includes modules like Broker OS and Operator OS, which are currently live and being utilized within the company's operations [8][15] - The company is developing proprietary electric and hybrid electric powertrains for the Cessna Grand Caravan, aimed at reducing costs and emissions [9] Future Outlook - The company aims to achieve at least $100 million in revenue for the year and a positive adjusted EBITDA in airline operations [15] - Plans to launch new routes and expand product offerings in the Part 135 marketplace [12][21] - The transformation plan is focused on profitable growth, with a strong operational team and unique agreements with partners [21][23] Key Takeaways - Surf Air Mobility is positioned to leverage technology for growth in the air mobility sector, with a strong focus on electrification and operational efficiency [1][21] - The company is on track to achieve its financial goals and is making significant progress in its transformation initiatives [15][21]

Core Viewpoint - Surf Air Mobility Inc. (SRFM) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Surf Air Mobility Inc. indicate an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - The upgrade of Surf Air Mobility Inc. to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Surf Air Mobility Inc. is expected to earn -$3.61 per share, with no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for Surf Air Mobility Inc. has increased by 7.5%, reflecting positive sentiment among analysts [8].

Summary of Surf Air Mobility Conference Call Company Overview - **Company**: Surf Air Mobility - **Ticker Symbol**: SRFM - **Industry**: Regional Air Services and Technology Key Points and Arguments Business Transformation - Surf Air Mobility is undergoing a four-phase transformation plan initiated in 2024, focusing on improving capital structure and liquidity [3][16] - The company has raised both debt and equity to support its turnaround efforts, enhancing its balance sheet [3][18] - New management with extensive aviation experience has been brought in to drive the transformation [3] Airline Operations - Surf Air Mobility is one of the largest commuter airlines in the U.S., operating a fleet of 45 Cessna Caravans [4] - The airline operations have shown significant improvements, with double-digit growth in operational metrics compared to the previous year [8] - The company aims to exit 2025 with profitability in its airline operations, having already achieved profitability in the second quarter of the current year [8][17] Technology Development - The company is developing a software platform for the Part 135 industry in partnership with Palantir Technologies, which owns 10% of Surf Air Mobility [4][10] - The SurfOS product is designed to address the needs of various stakeholders in the general aviation space, including brokers, operators, and aircraft owners [10][21] - The technology aims to bring efficiency and productivity to a fragmented market that currently relies heavily on outdated methods [10][21] Electrification Initiative - Surf Air Mobility is pursuing an electrification initiative to develop fully electric and hybrid-electric powertrains, which will reduce operating costs and emissions [5][28] - The company has identified supply chain partners to help fund this electrification project [5] Market Potential - The global market for regional air mobility is estimated to be between $75 billion and $115 billion by 2035, with the U.S. market alone exceeding $15 billion [22] - Surf Air Mobility plans to leverage existing infrastructure, such as underutilized public use airports, to facilitate growth in air mobility [14] Financial Strategy - The company has taken significant steps to strengthen its balance sheet, including a $50 million term loan and raising $45 million in equity [16][18] - The reduction in cash burn and improved flight completion rates (from 82% to 95%) are direct results of these financial strategies [17] - Future financing will be opportunistic, aimed at accelerating the transformation plan and commercial rollout of SurfOS [22] Competitive Advantage - Surf Air Mobility's operational experience and existing airline operations provide a competitive edge in testing and deploying new technologies [26][27] - The platform is agnostic to aircraft type, allowing for integration with various electric aircraft, enhancing operational flexibility [28] Additional Important Insights - The company is focused on monetizing its technology products starting in 2026, transitioning its on-demand business from a cost center to a profit center [12] - The partnership with Palantir Technologies is crucial for developing data-driven solutions tailored to the needs of the Part 135 market [20][21] - Surf Air Mobility's strategy emphasizes modularity in its technology offerings, allowing for customization based on stakeholder requirements [20][21]

Group 1 - Surf Air Mobility Inc. (SRFM) has experienced significant selling pressure, resulting in a 16.6% decline in stock price over the past four weeks, but it is now considered to be in oversold territory with potential for recovery [1] - The Relative Strength Index (RSI) for SRFM is currently at 29.47, indicating that the heavy selling may be exhausting itself, suggesting a possible bounce back towards equilibrium [5] - Analysts have raised earnings estimates for SRFM by 15.9% over the last 30 days, which typically correlates with price appreciation in the near term [7] Group 2 - SRFM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8]

Core Viewpoint - Surf Air Mobility's stock price has significantly decreased from approximately $8.80 in mid-July to around $4.50, largely due to mixed Q2 earnings and limited short-term growth visibility [2][4] Financial Performance - The Q2 earnings report showed a loss of $0.93 per share with revenues of $27.4 million, down from $32.4 million a year prior, indicating a 15% decline [2] - Projected Q3 revenues are estimated between $27 million and $28.5 million, suggesting limited growth potential in the near term [2] - Revenues have declined by 4% over the past year, with operating margins at -32.6% and negative cash flow [4] - The company has $91 million in debt, nearly half of its $180 million market capitalization, and cash reserves of $23 million, indicating a weak balance sheet [4] Strategic Initiatives - Surf Air is pursuing a long-term strategy to electrify short-haul regional air travel using hybrid and fully electric propulsion technology [3] - The company plans to retrofit existing aircraft, including Cessna models, for quicker and cost-effective implementation of its innovations [3] - Surf Air has strengthened its relationship with Palantir, which now holds nearly 20% of the company, and has a five-year exclusive software partnership with Palantir [3] - The SurfOS platform, powered by Palantir's AI, is set to launch in 2026, aiming to become a next-generation operating system for aviation [3] Valuation Metrics - Surf Air is trading at around 0.6x sales, compared to 3.1x for the S&P 500, indicating it may be fairly priced but also reflects investor caution [4] - The company's current financial metrics suggest it represents a high-risk, high-reward investment opportunity [4]

Core Insights - Surf Air Mobility Inc. (SRFM) reported revenue of $27.4 million, an Adjusted EBITDA loss of $9.5 million, and an Adjusted EPS of ($1.34), exceeding both revenue and EBITDA guidance for the quarter [1][5] Financial Performance - The company achieved quarterly profitability in airline operations on an Adjusted EBITDA basis, supported by improved controllable completion factors reaching 95% and better margins in On Demand services [1][5] - Strategic capital actions included raising $44.7 million in equity capital and deleveraging through the equitization of $29.9 million of convertible notes in July [1] Strategic Developments - The company expanded its partnership with Palantir, securing a five-year exclusive agreement for the configuration and sale of software [1][5] - Record-high reliability metrics, two EAS contract renewals, and a new interline agreement with Japan Airlines strengthen the network and revenue base [5] - Six new Letters of Intent (LOI) agreements and the launch of a flagship product suite further expand growth potential [5]

Core Insights - Electra is advancing air mobility through its Direct Aviation initiative, which aims to create thousands of new routes with its EL9 Ultra Short aircraft expected to enter commercial service in 2029 [1][7] - Surf Air Mobility, leveraging its operational experience and software platform, plans to integrate Electra's technology to scale the market for electrified aircraft [2][12] Group 1: Electra's Technology and Vision - Electra's EL9 aircraft is designed for short takeoffs and landings, enhancing operational flexibility and reducing costs compared to traditional aviation [3][7] - The Ultra Short technology enables Direct Aviation, which utilizes smaller, accessible locations for air travel, avoiding congestion at major airports [4][5] - A study from Georgia Tech indicates significant demand for Direct Aviation in the U.S. Northeast Corridor, identifying ideal routes for Electra's services [6] Group 2: Market Demand and Partnerships - Electra's EL9 aircraft operates at one-third the cost of helicopters and is 100 times quieter, with over 2,200 pre-orders from more than 60 operators globally [7][11] - Electra's strategic partnerships include major investors like Lockheed Martin Ventures and Honeywell, as well as contracts with U.S. military branches [11] - Surf Air Mobility aims to enhance safety and efficiency in the Regional Air Mobility industry through its AI-powered software and electrification solutions [12]

Core Insights - Surf Air Mobility Inc. reported a quarterly loss of $0.93 per share, which was better than the Zacks Consensus Estimate of a loss of $1.09, marking an earnings surprise of +14.68% [1] - The company generated revenues of $27.43 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 5.91%, although this represents a decline from $32.37 million in the same quarter last year [2] - The stock has underperformed, losing approximately 23.6% since the beginning of the year, while the S&P 500 has gained 8.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.82 on revenues of $25.33 million, and for the current fiscal year, it is -$3.84 on revenues of $101.24 million [7] - The estimate revisions trend for Surf Air Mobility Inc. was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Transportation - Airline industry, to which Surf Air Mobility Inc. belongs, is currently ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $27.4 million, exceeding guidance of $23.5 million to $26.5 million, and representing a 17% sequential increase from the first quarter [12][21] - Adjusted EBITDA loss for Q2 was $9.5 million, outperforming guidance of a loss between $10 million and $13 million, with an improvement of $4.8 million sequentially [12][22] - Scheduled service revenue increased by 20% in Q2 compared to Q1, while on-demand revenue rose by 5% [12][21] Business Line Data and Key Metrics Changes - Airline operations achieved profitability in Q2, with significant improvements in key operating metrics such as on-time departure and arrival, and controllable completion factor improved from 82% in Q1 to 95% in Q2 [5][12] - The on-demand business saw positive margins in June, attributed to a focus on product profitability and the introduction of a new jet card [7][12] Market Data and Key Metrics Changes - The company signed an interline agreement with Japan Airlines, enhancing passenger flow into its Hawaiian route network [6] - The essential air service (EAS) accounted for approximately 46% of scheduled service revenue, indicating its significance in the revenue mix [38] Company Strategy and Development Direction - The company is focused on transforming into a technology-led organization, emphasizing the development of the Surf OS software platform powered by Palantir [8][14] - Plans for 2026 include expanding the scheduled service network with new Tier one routes and aircraft from Textron Aviation [14][15] - The company is pursuing partnerships for electrification efforts, including a bilateral agreement with Elektra for hybrid electric aircraft [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, highlighting improvements in capital structure, operational performance, and a focus on profitability [25] - The outlook for Q3 expects revenue to remain strong, projected between $27 million and $28.5 million, with adjusted EBITDA loss anticipated to be between $8.5 million and $10 million [23][24] Other Important Information - The company raised approximately $45 million in additional capital during Q2, which has accelerated operational improvements [13][19] - The agreement with Palantir positions the company as an exclusive partner for software configuration and sales to Part 135 operators and brokers [10][48] Q&A Session Summary Question: Can you talk about the go-to-market strategy for Surf OS? - The company is currently in the beta phase focusing on product development and identifying real use cases before moving to monetization strategies [28][29] Question: Any update on the certification process for electrification? - The company is on track for a late 2027 timeframe for its electrification initiative and is working with strategic partners [31][33] Question: How much more room for improvement is there in airline operations? - The company is in the middle innings of operational optimization, with ongoing improvements expected from the rollout of new applications [34][35] Question: What percentage of revenues were connected to essential air service? - Approximately 46% of scheduled service revenue is connected to essential air service [38] Question: What are the plans for the commercial launch of Surf OS? - The rollout is expected to begin in the first half of 2026, with a focus on proper implementation for initial partners [40][41] Question: Can you elaborate on the Palantir agreement? - The agreement expands the relationship with Palantir, allowing the company to be the exclusive partner for software sales to specific operators and to collaborate on larger projects [47][48] Question: What is the current controllable completion factor? - The controllable completion factor is currently around 95-96%, with efforts in place to maintain and optimize this performance [50][51]

Core Insights - Surf Air Mobility reported a quarterly loss of $1.34 per share, missing the Street estimate of $1.06 [1] - Quarterly revenue was $27.431 million, exceeding the consensus estimate of $25.32 million but down from $32.36 million in the same period last year [1] Financial Performance - Scheduled Service revenue grew over 20%, with profitability in airline operations due to an improvement in controllable completion factor from 82% to 95% [5] - On Demand revenue increased by more than 5%, with a seven-percentage-point improvement in margins, attributed to a rise in charter flights and the positive impact of BrokerOS software [5] - The company raised $44.7 million in equity capital, strengthening its balance sheet and enhancing its strategic execution capabilities [5] Management Commentary - The CEO highlighted that the second-quarter results indicate an inflection point for the company, with a strengthened balance sheet and improved airline operations [3] - The company expressed confidence in achieving its goals by 2025, ahead of its planned expansion phase in 2026 [3]