Serve Robotics Inc.

Thank you for standing by and welcome to Serve Robotics' second quarter 2025 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Vice President of Communications and Investor Relations, Aduke Selwell. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to CERV Robotics' second quarter 2025 earnings call. With me today are CERV's co-founder and CEO Ali Kashani and our CFO Brian Reed. During today's call, we may present both GAAP and non-GAAP financial measures. If needed, a reconciliation of GAAP to non-GAAP measures can be found in our earnings release filed earlier today. Certain statements in this call are forward-looking statements. You should not place undue reliance on forward-looking statements. Actual risks may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today as well as the risks and uncertainty described in our most recent annual report on Form 10-K and in other filings made with the SEC. We published our quarterly financial press release and our updated corporate presentation to our investor relations website earlier this afternoon. We ask you to review these documents if you haven't already. With that, Let me hand it over to Ali.

Thanks, Adeke, and good afternoon, everyone. Thank you all for joining us. We've been heads down executing towards our goal to deploy 2,000 robots across the country by the end of the year, and we took some really important steps towards that goal in this quarter. We have increased our fleet size and supply hours, expanded to new markets, significantly increased our reach to customers and merchants, and scaled our delivery volume. And we have strengthened our autonomy platform with every delivery. Our execution in Q2 was both impressive and predictable. We delivered revenue growth of nearly 46% sequentially compared to Q1, right in the range of the guidance we provided last quarter. We had also said that we would grow our delivery volume by 60% to 70%. And in Q2, we exceeded our own expectations with nearly 80% growth in delivery volume versus Q1. That's 80% quarter-over-quarter growth. Given our progress, I remain confident in our ability to deliver the 2,000 robots by the end of the year, which will fundamentally shift the landscape in our industry. we are quickly becoming the first truly national autonomous last mile delivery provider in urban environments. Just as important, this quarter we also laid the foundation for fast growth in the second half of the year, both operationally and financially. So let's jump in. Let's start with fleet expansion and delivery volume growth. During Q2, we deployed over 120 third generation robots, which brings our total fleet size to over 400. And here's the thing. The new robots were originally slated for Q3, but we've continued to execute with such urgency that we were able to manufacture, deliver, and deploy those robots ahead of schedule. We also saw tremendous growth in our daily active robots of nearly 120% quarterly versus Q1, and the daily supply hours by over 165% sequential growth from Q1 to Q2. To put things in perspective, compared to a year ago, our daily supply hours have increased by roughly four and a half times, which is aligned perfectly with our fleet growth of roughly the same amount in the same period. And to give additional context to our growth momentum, consider that our production plans will see us more than double our current fleet by the end of Q3 and then double it again by the end of Q4. Now, growing the fleet size is an important lever, but expanding our geographic coverage and market reach is just as important. We successfully launched operations in Atlanta in Q2 and also expanded existing coverage zones in Los Angeles and Miami. Having expanded from one metro to four so far this year, we now serve nearly 800,000 households in the U.S., or roughly 1.8 million people. This is approximately 5x increase in reach since the start of this year alone. In Los Angeles, which is our highest penetration market, we've made great progress in increasing our footprint. We now cover nearly 18% of the L.A. County households. This is truly remarkable for an autonomous mobility service. It also highlights how much room we have to grow. Looking ahead, we are excited to continue our expansion across the U.S. and internationally. We refer to our expansion plans as scaling with precision because we've been extremely analytical and thoughtful about how to most smoothly and positively integrate into each new community. This approach has allowed us to be successful in each new city we launch. Now, let me share some news. I'm excited to announce that we'll be launching in Chicago our fifth major metro area in the coming weeks. We know there's great potential to scale in the nation's third most populated market. We'll have much more to share about this on our Q3 call. Now, beyond markets and customer reach, another important building block for our growth is our merchant reach. I'm proud to share that we now have over 2,500 merchant partners in our delivery ecosystem. This is up from over 1,500 merchants in Q1 and represents a more than eight-fold increase compared to this time last year. It feels incredible to say that there are now thousands of restaurants using robotic last-mile delivery day in and day out. We've also seen meaningful developments in our partnership pipeline, with several enterprise relationships continuing to advance in confidential negotiations. In Q2, we also began executing on the first stages of a strategic push to explore international geographies. In May, we partnered with Moshireb Properties to complete a proof of concept of our robotic deliveries in Middle East. Successfully, we offered our robot as a service in downtown Doha, Qatar, and we managed to bring convenient robotic delivery to thousands of residents of Musharraf, downtown Doha. We were actively welcomed by forward-thinking city officials looking to drive innovation in this modern smart city. We were able to hit our goals for the pilot program and are now in talks to plan what's next. This is just part of our efforts to expand into additional high-growth international cities. I can't wait to share more in the coming quarters. You may have also seen our recent announcement that we've begun delivering for a new national partner, Little Caesars, the third largest pizza chain in the United States. This relationship was developed in coordination with the team at Uber Eats and is in many ways similar to our national delivery partnerships with Shake Shack, which was initially piloted in select merchants in LA, but rapidly gained traction and has scaled into Miami and Atlanta. This was also in part a result of the strategic focus we've had on being a preferred partner for pizza merchants. We designed our third generation robot so that it is uniquely suited for pizza delivery, with an expanded cargo bin that can hold four large 16-inch pizzas, plus scissor rings, plus Italian cheese bread, plus beverages in a single order. We also knew from prior testing that pizza merchants really care about maintaining food temperature and quality en route, so we worked hard to meet those expectations. These developments represent the gradual maturing of our partnerships pipeline and showcase the marketplace's growing confidence in our ability to deliver reliably at scale and with strong customer experience. So all in all, as I mentioned, our delivery volume has grown significantly as a result of all the investments mentioned earlier. Nearly 80% growth compared to Q1 surpassed our optimistic expectations of 60 to 75%. And despite all this rapid growth, we have maintained our 99.8% delivery reliability and our proud safety track record. This suggests to me that we are able to continue our rapid growth trajectory without compromising quality or safety. Now, let's look ahead. We are expecting to continue delivery volume growth and expansion momentum in the second half of the year as we set out to achieve our 2000 fleet deployment milestone. We expect to more than double our current robot fleet by the end of Q3. and also launch in Chicago as well as in another East Coast metro market by the end of 2025. This means that by the end of the year, we'll have six fully operational hubs across major geographies in the U.S., becoming the first truly national autonomous last mile delivery provider in urban environments. This is an important milestone because this kind of scale unlocks significant benefits to our business. First, and perhaps most obvious, is the economies of scale. fixed platform costs that spread across more deliveries. But what may be less obvious at first is how scale supercharges our AI and autonomy. If you recall, on our earning call in March, I mentioned that robotics is one of the most important natural endpoints of the AI progress and how robots are an example of value accruing to the application layer thanks to, among other things, the data and AI flywheel. Robot fleets collect unique proprietary data that otherwise won't exist. That is then used to train better models, which improves unit economics and increases addressable market for robots, which then leads to even more robots out there collecting even more data. Let's talk more about CERV's data and AI flywheel. Our fleet is collecting incredibly vast and rich data sets from our diverse AV sensor set on what's quickly becoming one of the largest autonomy fleets in cities. Every day, our fleet is generating larger and larger high-quality data that are valuable for training our AI and autonomy models to navigate cities even more efficiently. We've been investing in building out our data infrastructure as we scale our fleet and having larger high quality proprietary data sets also allows us to continue attracting some of the best talent in AI and autonomy. We have significantly expanded our autonomy team to build our AI flywheel and we'll continue to do so, which enables us to take full advantage of our growing data sets with more complex real world operational edge cases to train bigger and better models and deploy them across our scaling fleet. The final point I would make about this is that our balance sheet and strength in the robotic last mile delivery sector gives us an important advantage when it comes to building this flywheel because this requires data infrastructure, talent, and compute. Now, taking a step back, as I reflect on our progress this year, I'm incredibly energized by the momentum we've built. We executed with precision, launching new markets, dramatically increasing our delivery volume, expanding our merchant relationships, and advancing the intelligence of our autonomy with every mile traveled. Most importantly, we have proven that our platform is not just growing in size, it's getting smarter and more capable with every delivery, which positions us as leaders in the space in truly mastering real-world urban delivery at scale. Looking ahead to the second half of the year, I'm more confident in our team and business than ever before. The groundwork is laid, Momentum is building, the timing is right, and we are just getting started. With that, I'll hand it over to Brian to walk you through the financials.