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SURF AIR MOBILITY INC. (SRFM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $29.2M, above guidance ($27.0–$28.5M) and above Wall Street consensus ($27.88M); adjusted EBITDA loss was $9.9M, in-line with guidance . Revenue beat Street by ~$1.3M, while EPS was roughly in-line at -$0.64 vs -$0.605 consensus (slight miss) *.
  • Management raised FY25 revenue guidance to at least $105M (from >$100M) and reaffirmed full-year airline operations profitability (positive adjusted EBITDA); Q4 revenue guidance is $25.5–$27.5M with adjusted EBITDA loss of $6.5–$8.0M .
  • Strategic financing: $100M transaction (Nov 10) including $26M for SurfOS and a $74M convertible note used to repay $59M of debt, reducing annual cash interest by ~$5.5M; Palantir received 6M shares as prepayment and extended exclusivity to Part 135 software .
  • Operational mix shift drove On Demand revenue +42% QoQ and +40% YoY; Scheduled Service declined 4% QoQ and 7% YoY as the company exited unprofitable routes . This mix shift and route pruning inform near-term trajectory and stock narrative.

What Went Well and What Went Wrong

What Went Well

  • Seventh consecutive quarter meeting/exceeding revenue and adjusted EBITDA guidance; On Demand revenue +42% QoQ/+40% YoY on larger aircraft/international mix and 14% higher revenue per departure .
  • Airline operations delivered a second straight quarter of profitability (positive adjusted EBITDA), with continued improvement in on-time departure/arrival and controllable completion metrics .
  • Strategic $100M financing extended runway for SurfOS commercialization (18–24 months) and delevered the balance sheet; $5.5M annual cash interest savings expected .
  • “The financial and operating results of the third quarter demonstrate the effective implementation of our Transformation Plan strategies” — CEO Deanna White .

What Went Wrong

  • Net loss widened YoY to -$27.2M (vs -$12.2M last year), driven by higher non-cash stock-based compensation (+$7.6M), fair value changes (+$6.2M), and interest expense (+$1.2M) .
  • Scheduled Service revenue declined 7% YoY and 4% QoQ due to exits from unprofitable routes; Q4 guidance implies sequential revenue decline as exits complete .
  • Gross margin compressed sequentially (Q2 → Q3) amid mix and cost dynamics (gross margin 12.3% → 5.2%). Adjusted EBITDA loss remained flat vs Q2 despite revenue beat, reflecting investments and mix effects .

Financial Results

Income Statement and Non-GAAP (Quarterly)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$23.506M $27.431M $29.172M
Net Loss ($USD)$(18.466)M $(27.998)M $(27.213)M
Diluted EPS ($USD)$(1.09) $(1.34) $(0.64)
Adjusted EBITDA ($USD)$(14.352)M $(9.541)M $(9.867)M
Net Income Margin %-78.6%*-102.1%*-93.3%*
Gross Profit Margin %-5.1%*12.3%*5.2%*

Values with asterisks retrieved from S&P Global.

Q3 2025 Actual vs Wall Street Consensus

MetricConsensusActual
Revenue ($USD)$27.88M*$29.172M
Primary EPS ($USD)$(0.605)*$(0.64)
EBITDA ($USD)$(7.32)M*$(14.08)M*

Values with asterisks retrieved from S&P Global.

Segment Trends and Mix

MetricYoY (vs Q3 2024)QoQ (vs Q2 2025)
On Demand Revenue Growth+40% +42%
Scheduled Service Revenue Growth-7% -4%
On Demand Revenue per Departure+14% +14%

KPIs and Operations

KPIQ1 2025Q2 2025Q3 2025
Controllable Completion Factor—~95–96% (running “around 95, 96”) Continued strong operational metrics (no % disclosed)
EAS Exposure (% of Scheduled Service)—~46% —
On Demand MarginsPositive margins in June Improved QoQ “Slightly lower” vs Q2, significantly better YoY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025$27.0–$28.5M Delivered $29.2M Beat
Adjusted EBITDAQ3 2025$(10.0)–$(8.5)M Delivered $(9.9)M In-line
RevenueQ4 2025—$25.5–$27.5M New
Adjusted EBITDAQ4 2025—$(8.0)–$(6.5)M New
RevenueFY 2025>$100M ≥$105M Raised
Airline Ops Profitability (Adj. EBITDA)FY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology (SurfOS, Palantir)Introduced SurfOS modules; 6 beta users; Palantir exclusivity announced post-Q2 5-year agreement with exclusivity expanded; 15 beta/LOI agreements; $26M earmarked; commercialization plan in 2026 Accelerating commercialization
Electrification/PowertrainTarget STC 2027; partnerships (Elektra) STC target reiterated for 2027; exploring partnerships to share costs; Textron exclusivity for electric/hybrid Caravan powertrains Progressing; de-risking via partners
Operations (On-time/Completion)Completion factor improved to 95%; airline ops profitable in Q2 Second consecutive quarter of airline ops profitability; metrics remain strong Sustained improvements
Mix/Sales StrategyOn Demand recalibration; jet card; volume purchase agreements Shift to larger jets/international; +14% rev/flight; expenses down 36% since SurfOS; volume agreements continued Mix shift to higher-yield
Macro/Regulatory (FAA/EAS)EAS renewals (Kalaupapa $9.9M; Waimea $4.2M); Japan Airlines interline FAA traffic reductions not impacting SRFM; EAS subsidy risk during shutdown communicated but no disruption to date Watching policy risks
Route PortfolioExiting unprofitable routes impacting revenue Final exits in Q4; planning new Tier 1 routes for 2026 Portfolio optimization near completion

Management Commentary

  • “Our transformation plan is proving to be reality… we are executing and demonstrating improvements in all areas… financially, operationally and strategically.” — CEO Deanna White .
  • “This transaction directs $26 million… to SurfOS… and a $74 million convertible note… reducing cash interest expense… approximately $5.5 million on an annualized basis.” — CFO Oliver Reeves .
  • “Third quarter revenue of $29.2 million exceeded our guidance… Adjusted EBITDA loss of $9.9 million was within our guidance range… we have raised our 2025 revenue guidance to at least $105 million.” — CEO Deanna White .
  • “Our airline operations achieved a second consecutive quarter [of] profitability defined as positive adjusted EBITDA.” — CFO Oliver Reeves .

Q&A Highlights

  • SurfOS runway: financing provides 18–24 months to commercialization; revenue expected to begin in 2026 with commercialization milestones forthcoming .
  • Route exits: a few remaining in Q4 causing guidance softness; new routes for 2026 being developed based on demand data, not disclosed for competitive reasons .
  • Debt-free path: convertible structure enables gradual deleveraging with maturity 10/31/2028; management sees a path to debt-free status .
  • Government shutdown: FAA traffic reductions did not impact SRFM operations; EAS subsidy suspension was notified but no funding issues to date; commitment to continue operations .
  • Product strategy: SurfOS features intended for third-party customers; sequential rollout likely in 1H26; monetization leaning towards take-rate based on efficiencies .

Estimates Context

  • Revenue beat: Q3 actual $29.172M vs consensus $27.88M; EPS roughly in-line/marginal miss: -$0.64 vs -$0.605; EBITDA below consensus given mix and investments (consensus -$7.32M vs actual EBITDA ~ -$14.08M; note company emphasizes adjusted EBITDA of -$9.9M) * *.
  • Q4 consensus revenue is ~$26.22M vs company guidance $25.5–$27.5M, broadly aligned; FY25 consensus ~$106.32M vs raised company guidance ≥$105M, suggesting estimates may converge slightly lower if Q4 executes at the low end *.
  • Implication: Street likely revises On Demand trajectory upward on improved mix and SurfOS efficiencies, while EPS/EBITDA estimates may reflect continued investment and non-cash volatility.

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Revenue outperformance and raised FY guidance are positives; Q4 guide softness reflects final pruning of unprofitable routes, a constructive trade-off for margin quality .
  • Medium-term: $100M financing and Palantir exclusivity underpin SurfOS commercialization (2026), providing a potential new software revenue stream and margin uplift .
  • Operations: Sustained airline ops profitability (adjusted EBITDA) and strong completion/on-time metrics reduce execution risk and support mix shift to higher-yield On Demand .
  • Balance sheet: Deleveraging actions and reduced cash interest (~$5.5M annual) improve financial flexibility; management outlines a path to debt-free over the convert’s life .
  • Electrification: Textron exclusivity and targeted 2027 STC position SRFM as a distribution/commercialization partner rather than bearing full R&D costs, de-risking the program .
  • Watch items: Non-cash volatility (SBC, fair value changes) can swing GAAP EPS; Scheduled Service revenue declines from route exits should normalize post-Q4 .
  • Potential catalysts: SurfOS commercialization milestones, operator/broker LOIs converting to contracts, 2026 route announcements, and continued On Demand momentum .