Third Quarter 2023 GAAP Revenue of $21.9
million and Pro Forma1 Revenue of $28.9 million, up 6.2%
Year-Over-Year on a Pro Forma Basis and On Track To Meet Full-year
2023 Guidance
Surf Air Mobility Inc. (NYSE: SRFM) (“Surf Air”), the air
mobility platform transforming regional flying through
electrification, today reported its third quarter results and
announced that it remains on track to meet its full year 2023
guidance. Please visit the Surf Air Mobility investor relations
website at investors.surfair.com for more information and to listen
to the accompanying earnings call.
BUSINESS HIGHLIGHTS
- Completed public listing on the NYSE, allowing Surf Air to
close our merger with Southern Airways and solidify our contractual
agreements with strategic partners Textron Aviation, Jetstream
Aviation Capital, and GEM Global Yield.
- Confirmed our order with Textron Aviation and paid the deposit
for the purchase of 100 Cessna Grand Caravan EX aircraft, with 11
to be delivered into service during 2024.
- Purchased a number of spare engines to mitigate the
industry-wide supply chain issues and return the fleet to normal
operations over the next one to two quarters.
- Saw a sizable increase in our On-Demand business with 63%
growth in flights year-over-year for the third quarter on a pro
forma basis, and 55% growth in flights year-over-year for the nine
months year-to-date on a pro forma basis.
- Made significant progress on the buildout of our
Electrification business by finalizing a data license agreement
with Textron Aviation, thus de-risking the electrification
timeline.
- Advanced the engineering and design specifications of our
electrification program in collaboration with our lead partner,
AeroTEC. Additionally, we are actively engaging with supply chain
vendors to source the key components for our electrified
powertrain.
- Finalized our exclusive sales and marketing agreement with
Textron Aviation that Surf Air anticipates will activate a viable
channel to significant market share with our electrified
powertrains.
- Forged a partnership with REGENT – a company pioneering
all-electric Seaglider airships – to be their launch customer in
Hawaii, and to establish a base of operations for passenger service
in South Florida, the Bahamas, and the Caribbean.
- Restructured our funding facility with GEM with new terms
providing more flexibility in how, and when, Surf Air makes cash
draws, providing on-going access to up to $400 million of
capital.
“We are making solid progress toward our long-term goal of
expanding the airline network and advancing our electrified
aircraft program with proprietary powertrain technology. Over time,
this will enable us to bring other innovative electric aircraft to
market, lowering operating costs and driving growth for the entire
regional air mobility market,” said Stan Little, Surf Air’s chief
executive officer.
THIRD QUARTER FINANCIAL
HIGHLIGHTS
Our acquisition of Southern Airways closed on July 27, 2023, and
Surf Air Mobility has reflected the results of Southern Airways
operations in our financial statements included in our quarterly
report Form 10-Q as of the acquisition date according to GAAP.
Additionally, Surf Air Mobility is providing unaudited pro forma
results for the period ended September 30, 2023, on a quarterly and
year-to-date basis, which assumes the Southern acquisition closed
as of the beginning of the fiscal year.
- Revenue
- GAAP revenue of $21.9 million and Pro forma1 revenue of $28.9
million for 3Q23, up 6.2% year-over-year on a pro forma basis, and
GAAP revenue of $33.7 million and Pro forma1 revenue of $85.4
million for the nine months year-to-date, up 17.3% year-over-year
on a pro forma basis.
- Net Loss
- GAAP Net loss of $(74.6) million for 3Q23, compared to $(21.1)
million for the same period of the prior year. GAAP Net loss of
$(139.7) million for nine months year-to-date, compared to $(50.5)
million for the same period of the prior year.
- Pro forma Net loss of $(50.8) million for 3Q23, compared to
$(13.3) million for the same period of the prior year. Pro forma
Net loss of $(77.5) million for nine months year-to-date, compared
to $(72.1) million for the same period of the prior year.
- Pro forma Adjusted EBITDA2
- Pro forma Adjusted EBITDA of $(14.7) million for 3Q23, compared
to $(10.2) million for the same period of the prior year.
- Pro forma Adjusted EBITDA of $(32.5) million for nine months
year-to-date, compared to $(25.8) million for the same period of
the prior year.
- See the Pro forma Adjusted EBITDA table for the reconciliation
from Pro forma Net Loss to Pro forma Adjusted EBITDA.
FULL YEAR 2023 FINANCIAL
OUTLOOK
- GAAP Revenue, which assumes operating results for Surf
Air for the full year 2023 period and Southern for the period July
28, 2023 through December 31, 2023, in the range of $54.5 million
to $59.5 million.
- Pro forma1 Revenue, which assumes pro forma operating
results for both Surf Air and Southern for the full year of 2023,
in the range of $107.5 million to $112.5 million, as compared to
$100.6 million for the full year 2022, up 6.9% - 11.8%. As
mentioned in the Company's second quarter earnings release, our
guidance reflects lower growth for the second half of 2023;
primarily due to supply chain constraints; the closure of the
Marianas Joint Venture in Guam effective March 31, 2023; and,
limited fleet expansion due to aircraft availability. We expect
this to be resolved as part of the Textron Aviation fleet
order.
- Pro forma Adjusted EBITDA2, which assumes pro forma
operating results for both Surf Air and Southern for the full year
of 2023, in the range of $(46.3) million to $(56.3) million, which
excludes the expected impact of stock-based compensation, and
one-time direct listing related expenses, as compared to $(28.8)
million for period year of 2022. The expected decrease in pro forma
adjusted EBITDA in 2023, as compared to 2022, is driven by
incremental investments in technology and electrification R&D,
sales and marketing, and G&A expenses primarily associated with
expenses related to public company readiness and the company’s
Southern transaction.
ABOUT SURF AIR MOBILITY
Surf Air Mobility is a Los Angeles-based regional air mobility
platform expanding the category of regional air travel to reinvent
flying through the power of electrification. In an effort to
substantially reduce the cost and environmental impact of flying
and as the operator of the largest commuter airline in the US, Surf
Air Mobility intends to develop powertrain technology with its
commercial partners to electrify existing fleets and bring
electrified aircraft to market at scale. The management team has
deep experience and expertise across aviation, electrification, and
consumer technology. For more information please see the company’s
investor presentation on our investor relations website.
Forward Looking Statements
The information in this press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements include, among
other things, statements about: 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, grow its fleet. In some cases, you can identify
forward-looking statements by terminology such as “may”, “should”,
“could”, “might”, “plan”, “possible”, “project”, “strive”,
“budget”, “forecast”, “expect”, “intend”, “will”, “estimate”,
“anticipate”, “believe”, “predict”, “potential” or “continue”, or
the negatives of these terms or variations of them or similar
terminology. Factors that may cause actual results to differ
materially from current expectations include, but are not limited
to: 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; the inability to maintain and
strengthen the Surf Air, Southern and Mokulele brands and their
reputations as regional airlines; 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 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.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made and are subject
to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from
those anticipated in the forward-looking statements. Although Surf
Air Mobility believes that the expectations reflected in the
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Surf Air
Mobility cannot guarantee future results, level of activity,
performance or achievements and there is no representation that the
actual results achieved will be the same, in whole or in part, as
those set out in the forward-looking statements and financial
projections. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Surf Air Mobility does not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. Additional information
regarding these and other factors that could affect Surf Air
Mobility’s results is included in Surf Air Mobility’s SEC filings,
which may be obtained by visiting the SEC’s website at www.sec.gov
or the investor relations page at https://investors.surfair.com
under the “Financials—SEC Filings” section. Information contained
on, or that is referenced or can be accessed through, our website
does not constitute part of this document and inclusions of any
website addresses herein are inactive textual references only.
The SEC’s website at www.sec.gov or the investor relations page
on Surf Air’s website at https://investors.surfair.com under the
“Financials—SEC Filings” section. Other information contained on,
or that is referenced or can be accessed through, our website does
not constitute part of this document and inclusions of any website
addresses herein are inactive textual references only.
Footnotes:
(1) Use of Pro Forma Results: Surf Air Mobility financial
results for 2023 quarterly, year-to-date, and comparable periods
for 2022 are derived by combining the historical financial
statements of Surf Air and the historical financial statements of
Southern, as if the acquisition of Southern occurred on January 1,
2022.
(2) Use of Non-GAAP Financial Measures: Surf Air Mobility uses
Adjusted EBITDA to identify and target operational results which is
beneficial to management and investors in evaluating operational
effectiveness. Pro Forma Adjusted EBITDA is a supplemental measure
of Surf Air Mobility’s performance that is not required by, or
presented in accordance with, U.S. GAAP. Pro Forma Adjusted EBITDA
is not a measurement of Surf Air Mobility’s financial performance
under U.S. GAAP and should not be considered as an alternative to
net income (loss) or any other performance measure derived in
accordance with U.S. GAAP. Surf Air Mobility’s calculation of this
non-GAAP financial measure may differ from similarly titled
non-GAAP measures, if any, reported by other companies. This
non-GAAP financial measure should not be considered in isolation
from, or as a substitute for, financial information prepared in
accordance with U.S. GAAP.
Non-GAAP financial measures have limitations in their usefulness
to investors because they have no standardized meaning prescribed
by GAAP and are not prepared under any comprehensive set of
accounting rules or principles. In addition, non-GAAP financial
measures may be calculated differently from, and therefore may not
be directly comparable to, similarly titled measures used by other
companies.
Surf Air Mobility presents Pro Forma Adjusted EBITDA because it
considers this measure to be an important supplemental measure of
its performance and believes it is frequently used by securities
analysts, investors, and other interested parties in the evaluation
of companies in its industry. Management believes that investors’
understanding of Surf Air Mobility’s performance is enhanced by
including this non-GAAP financial measure as a reasonable basis for
comparing its ongoing results of operations.
Unaudited Condensed Consolidated Balance Sheets as of
September 30, 2023 and December 31, 2022:
September 30,2023 December 31,2022 Assets:
Current assets: Cash
$
5,916
$
6
Accounts receivable, net
3,916
161
Prepaid expenses and other current assets
18,202
7,755
Total current assets
28,034
7,922
Restricted cash
909
906
Property and equipment, net
49,223
624
Intangible assets, net and other assets
34,568
3,102
Operating lease right-of-use assets
13,161
1,143
Finance lease right-of-use assets
1,415
—
Goodwill
58,164
—
Total assets
$
185,474
$
13,697
Liabilities, Redeemable Convertible Preferred Shares and
Shareholders’ Deficit: Current liabilities: Accounts
payable
$
19,998
$
12,891
Accrued expenses and other current liabilities
46,379
14,740
Deferred revenue
16,365
7,820
Current maturities of long-term debt
2,942
—
Operating lease liabilities, current
4,306
903
Finance lease liabilities, current
228
—
SAFE notes at fair value, current
27
149
Convertible notes at fair value, current
—
15,948
Due to related parties, current
14,237
4,947
Total current liabilities
$
104,482
$
57,398
Long-term debt, net of current maturities
$
23,566
$
—
Convertible notes at fair value, long term
7,544
13,148
Operating lease liabilities, long term
6,286
246
Finance lease liabilities, long term
1,207
—
SAFE notes at fair value, long term
—
24,565
Due to related parties, long term
1,708
—
Other long-term liabilities
12,383
9,762
Total liabilities
$
157,176
$
105,119
Commitments and contingencies (Note 14): Redeemable
convertible preferred shares $0.001 par value; 0 and 263,459,277
shares authorized as of September 30, 2023 and December 31, 2022,
respectively; 0 shares issued and outstanding as of September 30,
2023 and 229,144,283 shares issued and outstanding as of December
31, 2022, respectively; and aggregate liquidation preference of $0
as of September 30, 2023 and $178,608 as of December 31, 2022,
respectively
$
—
$
130,667
Shareholders’ equity (deficit): Class B-6s convertible
preferred shares, $0.001 par value; 0 authorized shares as of
September 30, 2023 and 98,799,158 authorized shares as of December
31, 2022; 0 shares issued and outstanding as of September 30, 2023
and 71,478,742 shares issued and outstanding as of December 31,
2022, respectively
$
—
$
3,414
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized; 0
shares issued and outstanding at September 30, 2023 and December
31, 2022, respectively
—
—
Common shares, $0.0001 par value; 800,000,000 and 35,803,199 shares
authorized as of September 30, 2023 and December 31, 2022,
respectively; 73,486,976 shares issued and outstanding as of
September 30, 2023 and 12,487,438 shares issued and outstanding as
of December 31, 2022, respectively
7
1
Additional paid-in capital
519,832
126,335
Accumulated deficit
(491,541
)
(351,839
)
Total shareholders’ equity/(deficit)
$
28,298
$
(222,089
)
Total liabilities, redeemable convertible preferred shares and
shareholders’ equity/(deficit)
$
185,474
$
13,697
Unaudited Condensed Consolidated Statements of Operations for
the Three Months And Nine Months Ended September 30, 2023: (in
thousands, except share and per share data):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
21,967
$
5,082
$
33,669
$
14,378
Operating expenses: Cost of revenue, exclusive of
depreciation and amortization
20,610
6,216
34,309
17,484
Technology and development
2,877
730
4,506
2,188
Sales and marketing
4,529
1,382
7,850
3,645
General and administrative
55,618
7,605
73,354
25,682
Depreciation and amortization
1,356
256
1,875
771
Total operating expenses
84,990
16,189
121,894
49,770
Operating loss
$
(63,023
)
$
(11,107
)
$
(88,225
)
$
(35,392
)
Other income (expense): Changes in fair value of financial
instruments carried at fair value, net
$
(10,926
)
$
(9,748
)
$
(49,426
)
$
(20,052
)
Interest expense
(935
)
(4
)
(1,632
)
(528
)
Gain (loss) on extinguishment of debt
63
—
(326
)
5,951
Other expense
(3,359
)
(281
)
(3,664
)
(519
)
Total other income (expense), net
$
(15,157
)
$
(10,033
)
$
(55,048
)
$
(15,148
)
Loss before income taxes
(78,180
)
(21,140
)
(143,273
)
(50,540
)
Income tax benefit
(3,571
)
—
(3,571
)
—
Net loss
$
(74,609
)
$
(21,140
)
$
(139,702
)
$
(50,540
)
Net loss per share applicable to ordinary shareholders, basic and
diluted
$
(1.36
)
$
(1.51
)
$
(5.03
)
$
(3.85
)
Weighted-average number of common shares used in net loss per share
applicable to ordinary shareholders, basic and diluted
54,695,009
13,998,411
27,775,172
13,133,743
Unaudited Pro Forma Financial Measures; Revenue, Net Loss,
and the Reconciliation of Pro forma Net Loss to Pro forma Adjusted
EBITDA for the Three Months and Nine Months Ended September 30,
2023 (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
28,882
$
27,197
$
85,446
$
72,849
Net loss
$
(50,751
)
$
(13,314
)
$
(77,542
)
$
(72,133
)
Three Months Ended September
30,
Nine Months Ended September
30,
(in thousands)
2023
2022
2023
2022
Net loss
$
(50,751
)
$
(13,314
)
$
(77,542
)
$
(72,133
)
Addback: Depreciation and amortization
2,315
1,916
6,201
5,161
Interest expense
1,127
784
3,730
2,227
Income tax expense (benefit)
(1
)
(22
)
(268
)
(7,244
)
Stock-based compensation expense
32,586
446
35,385
10,447
Share settlement for contract termination
—
—
—
3,175
Changes in fair value of financial instruments carried at fair
value
—
—
—
11,111
Transaction costs
—
—
—
21,490
Adjusted EBITDA - Pro forma
(14,724
)
(10,190
)
(32,494
)
(25,766
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114443667/en/
For Press: press@surfair.com
For Investors: investors@surfair.com
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