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SURF AIR MOBILITY INC. (SRFM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue of $27.4M beat both company guidance ($23.5–$26.5M) and S&P Global consensus ($25.06M*) while Adjusted EBITDA loss of $9.5M outperformed guidance (loss $10.0–$13.0M) and improved $4.8M sequentially .
  • GAAP EPS came in at $(1.34), missing the S&P Global consensus of $(1.09)*, as non‑cash fair value changes and higher interest expense drove a larger net loss despite operating improvements .
  • Management reaffirmed FY25 outlook: revenue >$100M and airline operations profitability (positive Adjusted EBITDA), and introduced Q3 guidance of $27.0–$28.5M revenue and Adjusted EBITDA loss of $8.5–$10.0M, signaling sustained operating traction .
  • Strategic catalysts: airline operations profitable on an Adjusted EBITDA basis in Q2; strengthened balance sheet via $44.7M equity raise and post‑quarter $29.9M note equitization; new five‑year Palantir agreement granting exclusivity in Part 135 software configuration and sales .
  • Narrative pivot: transformation to a software‑enabled regional air mobility platform is taking hold—controllable completion factor improved from 82% to 95% QoQ; momentum in SurfOS (BrokerOS/OperatorOS/OwnerOS) and Palantir partnership supports medium‑term multiple catalysts .

What Went Well and What Went Wrong

What Went Well

  • Airline operations turned profitable on an Adjusted EBITDA basis in Q2 as controllable completion factor rose from 82% in Q1 to 95% in Q2; scheduled service revenue grew >20% QoQ, driving sequential revenue growth of 17% .
  • Outperformance vs guidance: revenue $27.4M (vs $23.5–$26.5M guide) and Adjusted EBITDA loss $9.5M (better than $10.0–$13.0M loss guide), reflecting operational execution and On Demand margin improvements .
  • Strategic agreements: five‑year Palantir software licensing pact with exclusivity for Part 135 configuration/sales and ability to sublicense; added Japan Airlines interline; renewed/added EAS contracts (Kalaupapa $9.9M; Waimea $4.2M in July) .
    • “With a strengthened balance sheet, significantly improved airline operations and strong momentum in our software business powered by Palantir, we have confidence in our ability to achieve our goals in 2025” — CEO Deanna White .

What Went Wrong

  • GAAP EPS missed consensus (actual $(1.34) vs $(1.09)*) and net loss increased sequentially to $(28.0)M, driven by a $12.2M increase in other expenses from non‑cash fair value changes and higher interest expense, despite lower operating loss .
  • Year‑over‑year revenue declined 15% due to exiting unprofitable scheduled routes and a refocus on On Demand profitability; On Demand revenue was down 26% YoY, Scheduled down 12% YoY .
  • S&P’s standard EBITDA tracked below consensus (est. $(10.32)M* vs S&P actual $(13.49)M*) while company’s preferred metric (Adjusted EBITDA) improved but remains negative, reflecting ongoing investment and transformation costs .

Financial Results

Summary Financials (GAAP unless noted)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$28.049 $23.506 $27.431
Adjusted EBITDA ($USD Millions)$(6.877) $(14.352) $(9.541)
Net Income (Loss) ($USD Millions)$1.265 $(18.466) $(27.998)
Diluted EPS ($USD)—$(1.09) $(1.34)

Notes: Q2 revenue +17% QoQ; YoY revenue −15% due to route exits and On Demand focus .

Q2 2025 Actuals vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($USD Millions)$27.431 $25.064*+$2.367 (+9.4%)*
GAAP EPS ($)$(1.34) $(1.09)*$(0.25)*
EBITDA ($USD Millions, S&P standard)$(13.49)*$(10.32)*$(3.17)*

Values retrieved from S&P Global.*

Operational Segments and KPIs

MetricQ2 2025Commentary
Scheduled Service revenue growth (QoQ)>+20% Driven by controllable completion factor improvement from 82% → 95% .
On Demand revenue growth (QoQ)>+5% Margin improved 7 pts; positive margins in June .
Revenue YoY change−15% Exiting unprofitable routes; On Demand focus .
Controllable completion factor95% (from 82% in Q1) Reliability improvement central to airline profitability .
EAS contribution~46% of Q2 revenue EAS renewals: Kalaupapa $9.9M, Waimea $4.2M post‑Q2 .
Cash (6/30/25)$22.571M Improved via $44.7M equity raise in Q2 .
LT Debt (6/30/25)$60.695M Post‑Q2: $29.9M convertible notes equitized in July .
Shares outstanding (8/8/25)42,826,070 Higher post capital raises/conversion .

Non‑GAAP Adjustments (Q2)

  • Adjusted EBITDA excludes stock‑based comp, fair value changes, interest, taxes, certain fees and one‑offs; addbacks included stock‑based comp $3.81M, fair value changes $7.75M, interest $3.77M, data license fees $3.13M, restructuring $0.75M, etc. .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—$27.0–$28.5M New
Adjusted EBITDAQ3 2025—Loss $10.0–$8.5M New
RevenueFY 2025>$100M >$100M Maintained
Airline operations profitability (Adj. EBITDA)FY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 / Q1’25)Current Period (Q2’25)Trend
SurfOS / PalantirForming Surf Air Technologies; 6 beta users / Entered agreements with six beta users Three flagship products (BrokerOS/OperatorOS/OwnerOS); five‑year Palantir deal with exclusivity for Part 135 configuration/sales; sublicense rights; joint bidding contemplated Accelerating toward 2026 commercialization
Airline ops optimizationExited unprofitable routes; new Cessna deliveries; subsidy optimization SOC moved to Dallas; re‑fleeting; added leadership Q2 airline ops profitable; controllable completion factor 95%; interline with Japan Airlines
On Demand recalibrationRationalized products; reduced sales team Launched Jet Card +5% QoQ revenue; +7 pts margin QoQ; positive June margins
Regulatory/EAS & macroLeveraging higher EAS subsidy caps Tariffs not expected to impact 2025 materially EAS ~46% of revenue; renewed Kalaupapa ($9.9M) and post‑Q2 Waimea ($4.2M)
ElectrificationCaravan STC targeted 2027; customer MOUs Pursuing JV/partnerships Late‑2027 timeline reiterated; Electra demo with ULTRA SHORT capabilities showcased in Aug

Management Commentary

  • Strategy and inflection: “The operational and financial results of the second quarter reflect an inflection point… With a strengthened balance sheet… and strong momentum in our software business powered by Palantir” — CEO Deanna White .
  • Execution drivers: “We substantially improved all our key operating performance metrics… We achieved profitability in our airline operations for the second quarter” — CEO Deanna White .
  • Capital actions: “Raised $44.7 million in equity capital… In July, $29.9 million of convertible notes were equitized deleveraging the Company’s balance sheet” — Company release .
  • Outlook: “We expect revenue of $27–$28.5M and Adjusted EBITDA loss of $8.5–$10.0M in Q3, and reaffirm revenue >$100M and airline operations profitability in 2025” — CFO Oliver Reeves .

Q&A Highlights

  • SurfOS go‑to‑market and monetization: Focused on beta to validate use cases; leaning toward a take‑rate model tied to efficiency gains; rollout expected to begin in 1H26 and scale thereafter .
  • Electrification timeline: Late‑2027 remains the target for certification; exploring strategic partnerships across the value chain to accelerate path to market .
  • EAS exposure and mix: EAS ~46% of Q2 revenue; Jet Card sales occurred but contributed little to Q2 On Demand growth due to redemption timing and larger‑cabin focus .
  • Palantir agreement: Grants exclusivity for configuration/sale to Part 135 operators and brokers; includes sublicense rights and teaming for larger projects with manufacturers and FAA .
  • Operations trajectory: Completion factor now ~95–96% and stable; further profitability upside expected from full OperatorOS rollout by year‑end .

Estimates Context

  • Q2 results vs S&P Global consensus: Revenue beat by ~$2.37M (+9.4%), while GAAP EPS missed by ~$0.25; S&P EBITDA was weaker than consensus (actual $(13.49)M* vs est. $(10.32)M*) even as company’s Adjusted EBITDA improved and beat company guidance .
  • FY25 Street context: S&P Global FY25 revenue consensus ~$106.3M* vs company outlook “> $100M,” implying modest headroom; reaffirmation suggests estimates likely remain near current run‑rate absent new catalysts .
  • Drivers of variance: Positive airline operations and On Demand margins drove revenue/Adj. EBITDA outperformance; GAAP EPS pressured by non‑cash fair value changes and higher interest expense .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operating inflection with airline operations profitable on an Adjusted EBITDA basis, underpinned by reliability gains (controllable completion factor 95%) and disciplined route/product mix .
  • Clear beat on revenue and Adjusted EBITDA vs guidance; FY25 outlook maintained (> $100M revenue; airline ops profitability), adding confidence to 2H execution .
  • GAAP EPS miss reflects non‑cash and financing items rather than core operations; continued deleveraging (post‑Q2 $29.9M convert equitization) and equity raised support liquidity runway .
  • Palantir agreement (five‑year, exclusivity in Part 135 software configuration/sales) plus SurfOS module rollout (BrokerOS/OperatorOS/OwnerOS) create a credible software monetization path from 2026 .
  • EAS remains a significant revenue pillar (~46%); renewals and interline expansion (Japan Airlines) diversify demand and support network stability .
  • Medium‑term: 2026 expansion with new Tier‑1 routes/aircraft and software commercialization; long‑term electrification (late‑2027 target) and Electra collaboration offer optionality, but execution risk remains .
  • Trading lens: Near‑term stock reaction likely hinges on sustained operating reliability, Q3 delivery vs guide, and tangible SurfOS monetization milestones; non‑cash P&L volatility (FV changes) can skew GAAP EPS prints .

Appendix: Additional Press Release (Post‑Q2)

  • Electra and Surf Air Mobility completed first public demos of ultra‑short takeoff/landing capabilities at Virginia Tech; supports future Direct Aviation use cases and highlights Surf’s operational/software platform leverage for next‑gen aircraft integration .