Serve Robotics Aktie

Thank you, everyone, for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2026 Financial Results Conference Call. [Operator Instructions]

And now I would like to turn the call over to Steve Webb, the Senior Vice President of Marketing and Communications. Please go ahead.

Thank you, operator, and welcome to Serve Robotics First Quarter 2026 Earnings Call. With me today are Serve's Co-Founder and CEO, Ali Kashani; and our CFO, Brian Read.

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 results may differ materially from these forward-looking statements, and we do not want to 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 morning, and we ask you to review those documents if you haven't already.

And with that, let me hand it over to Ali.

Thank you, Steve, and good afternoon, everyone. Thank you all for joining us. We are in the early days of this robotics revolution, but our first quarter results show how quickly this market and Serve are moving. Q1 revenue was nearly $3 million, above our expectations and up nearly 7x year-over-year and nearly 3.5x sequentially.

Last year, our focus was deploying 2,000 robots across 20 cities while also seeding the work to open new revenue streams and new market opportunities for our technology. This year, those investments are beginning to compound. Fleet revenue grew by an order of magnitude from about $200,000 in Q1 of last year to nearly $2 million this quarter. In addition, about 1/3 of our total revenue during Q1 was from software services, and just under half of total revenue is now recurring.

Last quarter, I said that 2026 would be a year of compounding return. Three months in, we are on track to deliver the $26 million of 2026 revenue we guided to on our last earnings call. Q1 is a clear proof of Serve's evolution. We are at the forefront of physical AI, not by just making big promises but by launching real robots in the real world at real commercial scale. With this early mover advantage, our focus now is growing the revenue streams that we've already built while also creating new one.

At the same time, we are advancing our technology, deepening our moat, introducing our platform to new markets that expand our opportunity and strengthening Serve's data and AI flywheel with new proprietary data.

So let me go a level deeper. First, our autonomous food delivery operation continues to scale. Our deployed fleet is now 7x larger than in Q1 of last year, while daily active robots are up 10x and daily supply hours are up 13x over the same period. Put differently, as we expanded the total sidewalk fleet over the last 12 months, we activated robots more quickly in each market and generated even more hours from each robot. Combined, Moxie and Serve robots now provide over 10,000 robot supply hours to our partners every day with more than 800 robots active every single day.

To be clear, I don't expect every quarter to look like Q1, where we increased the active fleet and the fleet revenue by an order of magnitude year-over-year. Periods of growth often follow periods of investment, and they often need to be followed by more investment to support future growth.

We expect Q2 growth to be slower as we work on expanding our geographic coverage and partnerships and capabilities in anticipation of the second half of the year when the growth picks up again. Case in point, in the first half of the year, we are not deploying additional sidewalk robots beyond the 2,000 that are already in the fleet. Our focus is on operational growth and efficiency instead. That is getting the full delivery fleet running daily and improving utilization by activating more merchants as well as integrating more delivery platforms and expanding into new cities and neighborhoods. That is the worst that's in front of us now, and we expect it to drive significant growth over the course of the year, in line with our $26 million revenue guidance for 2026.

Our health care business, Diligent Robotics, we joined at the start of this year, is also performing in line with the plan that we laid out at announcement. The combined company is generating revenue and momentum across 2 distinct domains as we build toward a single autonomy platform. Since this is the first quarter Diligent is reflected in our results, I want to spend a moment on that business.

Since closing, I spent a lot of time with Andrea and the Diligent team. A few observations that stand out. First, the team is excellent. They have long-standing experience operating in some of the most demanding environments in robotics, and they're also already teaching us a lot about indoor environments. Second, the financials are in line with the plan that we laid out and the hospital pipeline for new business is healthy. Finally, Diligent continues to operate and grow, and I'm excited about the possibilities that are ahead. First, to bring our technology to more hospitals and over time, to extend it to additional indoor and outdoor environments.

Now looking at the overall business again. The combination of our sidewalk and health care operations now gives us a footprint across 44 cities in 14 states with nearly 2 million deliveries completed across these domains. That is a meaningful expansion from where we ended 2025. The growth came from 3 sources: new autonomous delivery markets that went live, including Buckhead, Fort Lauderdale and Alexandria, which we previewed previously; the hospital networks that came in with diligence; and continued expansion in our existing markets.

I also want to say a word about safety. Our robots share space with people every day and earning the right to operate in those spaces is the foundation everything else is built on. To put the scale in perspective, during our operating hours each day, our robots collectively travel a distance greater than walking from New York to Los Angeles. That's every single day. And they do that with a stellar safety record. Our robots have orders of magnitude less kinetic energy than cars. And to date, we've never had an incident resulting in a serious injury or anything approaching one.

Every delivery completed by one of our robots is a delivery not made by a car. That matters for cities, for pedestrians and for our mission of making cities we operate in safer and more pedestrian-friendly. We are holding ourselves to a very high standard of safety across all environments we operate in.

So to sum up, in operating terms, Q1 was a strong proof point. We are running a scaled footprint, growing our revenue rapidly, improving margins, maintaining our reliability and safety records and expanding the markets that we are operating in.

Stepping back and as we have discussed in previous calls, the foundation of everything we do is sales data and AI flywheel. Our fleet runs across more environments than anyone else in our category. The data those robots collect is richer than ever. The data trains better AI models, which makes every robot more capable. And as that suite becomes more capable, each robot can operate in more places and generate more value. Every robot will learn from every other robot even across different environments.

We have discussed our long-term vision for a self-fleet reaching 1 million robots deployed globally across cities and hospitals and other complex environments where robots and people share space. Over time, robots will become embedded in the core fabric of how modern cities and economies function. On the path to 1 million robots, we are still early, but we are building the platform across more fronts and more domains and a broader footprint than ever before. That gives us a stronger foundation to create a platform for robots of many future forms and functions and to navigate safely and effectively around people as the industry advances.

What we are building is genuinely hard, making one autonomy stack work across multiple physical environments at scale is one of the hardest problems in robotics today. We have always known this requires patience and persistence and rigorous execution. I'm really excited about the progress that we are making, and we'll keep sharing that progress with you every quarter.

With that, I'll hand it over to Brian.

Thank you, Ali. Good afternoon, everyone. Q1 was an important quarter for Surge. Revenue scaled meaningfully. We began integrating Diligent Robotics, and we continue to broaden ways we monetize the autonomy platform through fleet, software, branding, data and health care automation revenues. Our focus this year is straightforward: improve robot productivity, increase revenue per robot and per operating hour, grow recurring revenue and translate those operating improvements into a stronger financial model.

Q1 showed continued progress as we scale. Serve is building a network of robots that can operate across multiple real-world use cases, including food and health care today with opportunities for package delivery, health care logistics and other commercial tasks. The common thread is simple, robots operating safely and reliably in complex human-centered environments.

In Q1, our robot base continued to expand and our delivery network showed strong capacity growth. On an as-reported basis, daily active robots during the period was 812, up approximately 48% sequentially. Daily supply hours in the period averaged over 10,000, up approximately 54% sequentially. Those are strong capacity metrics, but the more important point is what comes next. Our objective is not simply to increase the number of robots in the field. Our objective is to convert every active robot in every supply hour into more revenue.

We are managing this through specific levers within the environments we operate in, whether that is market-level density, partner integrations, merchant coverage, speed, operational productivity and most critically, the autonomy improvements that reduce human touch points. The integration of Diligent expands the same platform into health care, where robots operate in hospitals and support recurring customer workflows. It gives us another operating domain, another data source and a revenue profile that is more recurring in nature.

Strategically, this strengthens the autonomy flywheel Ali discussed. Sidewalks and hospitals are different environments, but both require robots to navigate safely around people, adapt to real-world complexity and perform reliably at scale. Put simply, 2025 is about proving we could scale the fleet. 2026, the focus is converting that scale into stronger revenue per robot and better operating leverage across the platform.

Total revenue for Q1 was approximately $3 million, up 238% sequentially and approximately 578% year-over-year. On a pro forma basis, including Diligent, Q1 revenue increased approximately 28% sequentially and 30% year-over-year. Fleet revenue was approximately $2 million and software revenue was approximately $1 million, continuing to demonstrate the attractive margin profile for software and platform-based revenue layered on top of the deployed robotics base. This remains an important proof point for the broader platform model.

Q1 included approximately $1.4 million of recurring revenue with the remainder from usage-based, project-based and other nonrecurring revenue streams. The broader point is that Serve is no longer monetizing only food delivery. While that remains the primary growth engine, the revenue base now also includes branding, software, data and health care automation. This provides us more ways to monetize the same underlying autonomy stack and more levers to improve the long-term financial model.

Gross loss for the quarter was approximately $9 million, and gross margin was negative 302%. That remains an investment-stage margin profile, but it improved materially from Q4 as revenue scaled and software revenue contributed positive gross margins. There are 2 different economic layers in the quarter.

Fleet gross margin remained negative as we supported a substantially larger fleet, integrated our health care fleet and built the operating structure required for a multi-domain robotics platform. Software gross margin was positive, which highlights the benefit of layering software and platform revenue on top of the robotics base.

We believe the path to an improved margin is clear and measurable, more revenue per robot and operating hour, better operational productivity and a greater mix of recurring software and platform revenue. This is why our focus this year has evolved. Total robot count is still relevant, but it is not sufficient.

GAAP operating expenses were $42.8 million in Q1. Excluding stock-based compensation of $7.4 million and amortization and acquisition-related expense of $3.6 million, non-GAAP operating expenses were approximately $31.8 million. As expected, R&D remained our largest investment area. GAAP R&D expense was $19 million or approximately $15.5 million, excluding stock-based comp. This investment is directed towards autonomy development, AI model improvements, fleet softwares, data infrastructure and integration across our platforms.

G&A expense was $15 million or approximately $8 million on a non-GAAP basis. Operations expense was $7 million or approximately $6.7 million on a non-GAAP basis. Sales and marketing expense was $1.9 million, approximately $1.7 million on a non-GAAP basis. Our discipline is not about underinvesting in the opportunity. It is about aligning investment with the operating milestones that matter, revenue quality, margin improvement and platform differentiation. Every dollar should strengthen the autonomy platform, improve our fleet productivity, expand our commercial reach or increase the durability of revenues.

GAAP net loss for the quarter was $49 million or negative $0.65 per share. Non-GAAP net loss was $38 million or negative $0.50 per share. Net cash used in operating activities was $41.4 million, while investing cash outflows were $19.6 million, driven primarily by acquisition activity. Capital expenditures were approximately $1.4 million in the quarter. We ended the quarter with $197.4 million in cash and marketable securities. This liquidity position remains a strategic advantage. It gives us the ability to continue investing in autonomy and new market opportunities while maintaining discipline around the timing and scale of capital deployment.

Turning to our outlook. We reiterate a total 2026 revenue guidance of $26 million. We continue to stay focused across the company with a priority to grow sustainable revenue quality and margin progression. We want to increase the mix of recurring revenue while continuing to bring down our unit costs through focused investments in autonomy and operational efficiencies. Accordingly, we maintain our previously communicated non-GAAP operating expense guidance of $160 million to $170 million during 2026.

Let me close with this. Q1 was a quarter of integration and continued scale. On a reported basis, first quarter 2026 revenue was greater than our total 2025 annual revenues. Curve is building a robotics platform, not a single-use delivery fleet. The investments we are making today are designed to improve autonomy, expand monetization and compound the value of our proprietary data across domains. We believe this, in turn, will improve robot monetization, capitalizing on our early leadership in physical AI to create a durable operating and financial model.

With that, we'll open the line for Q&A.

[Operator Instructions] And your first question comes from the line of Colin Rusch of Oppenheimer.

Guys, you talked about the cadence of delivery times and speed of delivery being a key lever for you guys. Can you talk a little bit about the cadence of improvement in autonomy and how much is coming from scheduling and how you see that evolving over the course of the balance of the year?

Yes. Thanks for the question, Colin. This is Ali. We are improving a number of pieces, a lot of investments going into things like autonomy, which is a big factor because robots move faster than they are using their kind of capabilities and sensors to perceive the world than any other mode. The autonomy and speed basically going hand in hand. So as the robots become more capable, they can move more quickly. And that's one of the biggest areas of investment that we've continued to make from early days, but especially now.

Okay. I'll follow up off-line. And then with the communications platform that you guys have built and put together, it's clear that you've got a differentiated capability there. Can you talk a little bit about your potential to monetize that capability outside of your own internal usage?

Yes, that's already in progress. Hopefully, we'll have more to share about that soon, too. But there are a number of customers already using that service. For folks who are not familiar, one of the first pieces of software that we are commercializing in our robotic platform as a whole is the connectivity layer because having robots in the field in thousands that can reliably connect to the Internet so that they can share their data, but also receive support when they need it.

It's a pretty important piece that pretty much every robotic and autonomy team or company needs. And we have a piece of technology that we believe is really superior to whatever is out there. So we have been commercializing that. There's investments made, and there will be more to share in the next few months.

And your next question comes from the line of Alex (sic) [ Mike ] Latimore of Northland.

Great quarter, guys. I just want to start from the top with some broad strokes here. Can you talk about demand as you're seeing it? Will the market still take pretty much as many robots as you can deliver? Anything there would be great.

Alex, yes, again, I can take this. This, to me, feels like the closest thing to infinite TAM because it's such an expensive thing to move things in last mile right now. And we are seeing a lot of opportunities for new use cases or new customers that have never used the service. So we haven't really seen any constraint as far as demand goes. I think the parts of the problem that has to be solved as we scale has to do with policy and societal acceptance, obviously, building, deploying robots and getting it operationalized. Also integration into services that people use every day that takes effort and time. But as far as the TAM and the total kind of opportunity, I'm very bullish on that.

Great. And then also now that you're moving towards optimization more trying to increase the daily revenue per robot, what are some of the key takeaways that you've learned just from going through head down on optimization flywheel here? And are there any notable changes given that experience?

I guess I'm trying to understand the question. Do you want to maybe state that differently?

Yes, yes. Just from focusing on optimization, I was wondering if there are any key learnings that you can take going forward towards incorporating new robots that you manufacture or just optimizing the rest of the fleet.

So from an operational point of view, I mean, the learnings come every day. It's about where do you send a robot in the morning. It's about where do you send a robot after it completes the job. It's about what's the range of deliveries you accept because if you accept longer deliveries, that means the robot is spending more time on that delivery. So you need to always kind of balance what's the distance of jobs that you accept and where do you put the limit on that. So there's a lot of interesting variables that are actually very market dependent.

And as we go to new markets, we basically have to customize that per market and sometimes even per neighborhood. So I wouldn't say there's anything really large as a learning because we've been out in the market for 7 years or something doing deliveries. It's mostly kind of ongoing learnings and then enabling the platform to do those customizations, so we can make neighborhood-based adjustments.

Awesome. And then just one more quick one. As you're looking to add robots in the second half, is it mainly going to be current city expansions or through adding new cities?

Yes, that's a really good question. So we are looking at basically both in the markets we are, but also in new cities and even international. So we are exploring all of them. For example, just last night, City of Vancouver in Canada approved the motion to enable the robots to deploy there in a pilot. That's not a done deal yet. We still have to work with them in the province, but it's very exciting. It would be the very first such deployments in Canada. So we are very actively working on unlocking these new markets and new cities, including some international auctions. And then as any of them firm up, we would obviously make announcements.

[Operator Instructions] And your next question comes from the line of Taylor Manley of Guggenheim.

Kind of expanding on that. So you mentioned Vancouver, which is very exciting. More generally, there are some markets that you are in that kind of have established regulatory frameworks such as Los Angeles? Kind of on the flip side, you've highlighted ambitions to enter cities where AV delivery doesn't exist like New York. So kind of how does regulation inform your thinking on which markets to expand to or not, if at all?

Yes, it absolutely does. Our thinking is if you look at, again, the broader size of the opportunity, there's a lot of places to go and a lot of options to choose from. So we don't need to force ourselves anyway. We want to go to places that are receptive. There are really 3 kind of legs of the stool. You have the permit to operate. You have the demand, say, partners and platforms that we are working with. And then, of course, you have our operational side. We are pretty good at getting our operational set up in a new city.

So the other 2 variable is what we focus on to open a new market, which is, are they receptive? Is this a place we want to be? Do they have a framework? Do we need to help them develop it? So there are a lot of investments we are making to kind of create a strong pipeline of markets. And again, that includes both in the U.S. and international. And then at the same time, working with platforms, including new platforms besides Uber and DoorDash, to access the demand in those markets. So these are all investments that we are making simultaneously.

Helpful. And then second, any insight on how to think about kind of revenue contribution from fleet services versus software services for the balance of the year? Obviously, software services was pretty strong in the first quarter. So just anything -- should we expect kind of similar mix or any changes there moving forward?

Yes. Taylor, this is Brian. So yes, we had a really strong Q1 with respect to software services. And I think we're going to continue to invest in some of those opportunities. In the back half of the year, as we continue to scale up with the revenue per robot per supply hour focus, I think we're going to see more growth on the fleet side. Obviously, we're not going to give guidance with respect to fleet versus software, reiterating and anchoring on the $26 million overall is the objective and monetizing those robots the best we can is our first focus.

And your next question comes from the line of Jeff Cohen of Ladenburg Thalmann.

This is [ Destiny ] on for Jeff. I was wondering if we could talk a bit about Moxie and the hospital segment in general. Can you just talk about how you plan on maximizing revenue per hospital or robot and then how that may contribute to the top line and the cadence of how that will contribute to the top line going forward?

Yes, happy to. There's a number of, again, parts to this. So if you think about it very first principle, the main question is how much are the robots helping the staff in the hospital. So we have very explicit KPIs that we track to make sure that not only are we doing enough, we are improving and increasing the number of tasks and really deliveries that these robots complete, and that's trending always in a good way. And then, of course, as we do that, we can continue to work on the pricing with the hospital networks that we are working with.

Often, what we like to do is increase the number of robots because the more productive they are, the more they can support the staff in different ways. So one of the ways to maximize that revenue is to actually increase the fleet size.

And Destiny, this is Brian. Just to add on to that. I think to Ali's last point of increasing the fleet size, I think that's an opportunity we have for the remainder of 2026 to support the diligent efforts of the team through additional robots and thus ensuring we can grow that top line throughout the rest of the year.

Okay. Perfect. And then one more for me. You've been very successful with M&A over the last several months. I'm wondering if you could hypothesize on what other verticals you think your autonomy stack would be suitable for, but recognizing that you've been clear that you're focused on optimization, not necessarily expanding into other verticals, just theoretically.

Yes. No, I appreciate that you calling that out. So we, even in the past, haven't been kind of proactively trying to look for expansion. It's been that we are very conscious of where the market is right now. A lot of investment on the private capital side has been made into various sectors in robotics. And right now, it's a very good time for consolidation. So we've been opportunistic, and we found some really amazing opportunities, obviously, Diligent being one of them. So if you want to look at it more broadly, it's really anywhere where robots and humans have to coexist in an environment, but you don't really have control to limit that environment in any way for the robots.

For example, in a warehouse, you have a lot of control over the environment, you can tell people how to behave next to the robots because they're all your employees, but in a shopping mall, you don't have that choice; at an airport, you don't have that choice; on a sidewalk, in a hospital. So I would say actually most environments that we are in would classify as that. So any place where robots can help, whether they're moving things or monitoring things or just accessing in general would be a good place for this. And we'll keep our ears to the ground and when good opportunities show up, we'll react.

[Operator Instructions] And there are no further questions over the audio. I would like to turn the call back over to Steve for any e-mail questions.

Yes. Thank you. We have one e-mail question, which is, what is the status of DoorDash? What's your relationship with DoorDash?

I can take that one. So a lot of great progress there. Our delivery volume with DoorDash has been growing faster than other partners. It's been about 6x in terms of merchant count just since the beginning of this year. So we are seeing really good momentum, and we are going to continue to build on that momentum.

And that wraps it up. Thank you, everyone.

That concludes our session for today, ladies and gentlemen. Thank you, everyone, for joining. You may now disconnect.

Good morning, and welcome to the Serve Robotics Fourth Quarter 2025 Financial Results and Conference Call. I am Frans, and I'll be the operator assisting you today. [Operator Instructions]. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to Steve Webb. Please go ahead.

Thank you, operator, and good afternoon, everyone. I'm Steve Webb, Serve's SVP of Marketing and Communications. Welcome to Serve Robotics Fourth Quarter and Full Year 2025 Earnings Call. With me today are Serve's Co-Founder and CEO, Ali Kashani, and our CFO, Brian Read.

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 results may differ materially from these forward-looking statements. We do not want to 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 morning, and we ask you to review those documents if you haven't already.

With that, let me hand it over to Ali.

Thanks, Steve. Good morning, everyone, and thank you all for joining us. A year ago, we told you that we would deploy 2,000 autonomous robots across the country by the end of 2025. that we would expand from a single city to a truly national footprint.

And we would prove that this technology works, not just in a lab or a closed campus, but on open side box in dense cities, navigating the full complexity of Airbanlife. We did all of that and then some. Today, a fleet of 2,000 see robots have been activated across 20 distinct cities in 6 major metropolitan areas. From Los Angeles, all the way to the Washington DC corridor.

We launched Atlanta, Dallas, Chicago and Miami. We expanded aggressively in every existing market. We also added DoorDash alongside the areas. This gives us access to over 80% of the U.S. food delivery market. We also completed 4 strategic acquisitions since early 2025.

We met or exceeded our revenue guidance every single quarter and through all of it, we maintained a 99.8% delivery completion rates and a proud safety record. So let me say it again, 20x the fleet national scale, 4 acquisitions and near perfect reliability.

And in Q4, we once again delivered revenue above guidance as we drove 400% year-over-year growth in the quarter. This is not incremental progress. This is a company that's defining a category in real time. But before I get into the quarter, let's look at the broader trends. We are living through 1 of the most consequential technology transitions of our lifetime.

For the past few years, the world has marveled at what AI can do with words and images and quote. The next frontier, the 1 that we will reshape our physical world is physical AI, machines that can see and think and act in real environments alongside people.

As we try to anticipate what this future looks like, I find it really helpful to think about the evolution of computing so far. First, it was the personal computers, then came the Internet is connected information is connected to people. Next, we put computing and connectivity in every pocket and in every device, we connected the physical things, too.

As a result of all this, all of the commerce and every industry is now digital and connected. Each leap along this path was worth trillions. Fast forward to today, AI has taken over our digital lives over the past few years, arguably becoming the fastest rising ring of this evolution of computing.

Physical AI is the natural next phase. That's right around the corner. It's the moment when this intelligence leaves the digital realm and enters the streets. And like computing and the Internet before it, the companies that build the platforms for physical AI will define this era.

NVIDIA's CEO, Jensen Huang, has called robotics and physical II, the next multitrillion-dollar industry. Every major AI company is racing to build models for the physical world. The investment thesis is pretty clear. The companies that build the platform and own the data will capture the value. And here is what's important. You can build physical AI from a research lab.

You need robots in the real world gathering real data, encountering real age cases and at real scale. That's the flywheel and it's exactly what Serve has built. Every transformative technology goes through the same arc. We are at a very familiar inflection point.

Autonomous robots are here to fundamentally shift how we leverage technology in our lives. The question is no longer will this work as we've seen by our progress last year. Now the question is how fast can you scale. 2025 was the year we prove the technology.

Looking ahead, 2026 is the year we compound the business model. Last quarter, I said that beyond 1,000 robots, the system tips. Scale changes everything. The economics improve, their partners in learning accelerates. At 2,000 robots, the system doesn't just tip it compounds. We are now accelerating the flywheel.

We discussed this concept last quarter when we described how more miles lead to more data, better models and a more capable fleet. This is the flywheel that should be at the core of any physical AI company. And we have really organized our strategy around it.

Every investment we make, every acquisition or deployment or partnership, they're all designed to strengthen a specific step of that flywheel. And as a result, make the whole system spin faster. So let me walk you through the 4 steps in the flywheel. Step 1 is a missing data. Physical AI runs on large amounts of data. This isn't just some data use scrape off the Internet. This is data collected in real environments. It's collected by robots at scale.

Every mile or robots travel and reaches our data set. Every edge case, every construction zone or rush hour or unmarked Crosswalk, they all sharpen our models. And this data is proprietary. You can't just download it on the Internet or simulate it with the same depth and richness. You have to live on the sidewalk and no one is better positioned for it then Serve.

What's new and exciting is that we are no longer just collecting data from a single environment. Today, our data spans multiple and distinct physical domains. On side box, thousands of robots are mapping the world in 20 unique cities across the country. Every new neighborhood brings new edge cases and new pedestrian and traffic dynamics, new weather patterns, all of that enriches the models network wide.

In hospitals, our recent acquisition, Diligent Robotics has a fleet of nearly 100 robots called Moxy and they are navigating some of the most challenging indoor environments in robotics. These are multilevel facilities with tight corridors, constant food traffic, high-pressure operations. Max robots have completed over 1 million deliveries across more than 25 hospitals and county.

So sidewalks and hospitals and beyond, multiple domains with wide-ranging geographies, all feeding a single robotics and autonomy platform. There is no one who is doing all this and realizing the value of the combination of indoor and outdoor data collection from commercial scale fleets.

The second step of the flywheel is the models. Data is a raw material. But step 2 is where we take everything our robots are seeing and experiencing and we turn them into better AI models. This is where another recent acquisition comes into focus. Vayu Robotics brought us a specialized team that builds end-to-end models for physical AI. We are building systems that empower us to train across all our operating domains, indoors and outdoors, so that what a robot learns in Los Angeles would help a robot in Dallas. -- or at Max robot lens now beginning a hospital corridor could improve a save robot that's navigating an obstructed city sidewalk.

That kind of cross-domain learning is really significant, and it's a compounding advantage that will widen every quarter. Also, our acquisition of Fantom Auto brought us one of the most capable robot connectivity stacks with extremely low latency.

This enables us to operate at a large scale and across a significant geographic region because we can reliably assess robust remotely in real time. What underappreciated here is that every time a remote supervisor assisted robots anywhere in the country, we generate high-quality training data.

Our operations, which is empowered by this connectivity that we acquired, our conduit to collecting more data and more edge cases, and it's paired with a considerable training data set, all collected at a faster rate than ever, feeding right back into our models. I should also mention the talented team of engineers that make all of this possible.

When you have one of the largest autonomous robot fleets plus data from multiple physical domains and the infrastructure to turn all of this into deployed AI, that's where the best people want to work. Retention across our team has been really strong because people love building on real robots in the real world with significant unique data.

The flywheel attracts talent and talent accelerates the flywheel. The third step of the flywheel after you gather the data and develop the models is to deploy those models into the real world. Better models only matters if you can actually get them on to live robots. That is pushing all that improved autonomy out to the fleet that's in the real world where the edge cases live.

This is where our fleet scale and our partnerships become a strategic assets. Uber is an DoorDash combined Serve over 80% of the U.S. food delivery market. We are now a multi-platform fleet. We see robots finishing a DoorDash delivery then picking up an Uber each order on the way back. That kind of interoperability drives utilization.

And of course, utilization is the key to both our economics and our data collection. Our merchant network has expanded to over 4,500 available restaurants and retail partners today. Just this morning, we announced a new partnership with White Castle, one of America's most iconic restaurant brands. and our geographic pipeline also continues to develop. We are in active discussions with city officials across the country from New York to Boston to San Jose and even internationally, Vancouver and Toronto and Sydney and Melbourne.

As we evaluate all these new wave of market launches, each market will represent a natural extension to our existing footprint, and we are really excited to share more about our plans throughout 2026 as these initiatives progress. And this is a critical point. Every deployment across every domain into every new city -- it generates new unique data that fits directly back into step 1 and the cycle continues.

Finally, the fourth step of the flywheel is monetization. This is the step that makes the whole flywheel self-sustaining. When you monetize your fleets, you fund the next turn of the cycle and make the flywheel accelerate much faster. The companies that figure this out early and can get paid to collect their proprietary data.

They have a real advantage over those who have to pay for their data. Tesla is the obvious example. They collect massive amounts of road data to train their models by simply selling cars to consumers. One way we are really advancing our monetization is by increasing our revenue sources rapidly.

Delivery fees are, of course, our core business. It's continuing to accelerate as we scale geographies. But branding and advertising saw a 50% increase in Q4 year-over-year. With 2,000 robots moving through high-density neighborhoods, we have effectively built a neighborhood level media network on wheels.

Advertisers response has been exceptional, and we are building a robust bookings pipeline. Over time, we believe advertising and branding can represent as much as 50% of our fleet revenues. Think about what that means. It monetizes miles that are already being driven at nearly 0 marginal cost.

Also, data and platform revenues are emerging. In 2026, we plan to further invest in our data and platform capabilities to strengthen the foundation of our robotic solution offering. By offering the platform that powers our deployed robots to external partners and other robot operators, we expect this new revenue base to mature and become a meaningful high-margin contributor.

Also, going forward, health care revenue from diligent Robotics will be another meaningful contributor nearly 100 Moxy robots across over 25 hospital facilities with each facility generating over $200,000 in annual revenue. This is already a fully functional business unit that's generating both meaningful data and meaningful revenues.

Here's what ties everything together. Every dollar of revenue funds more robots, which leads to more data, which helps us create better models, which leads to even more deployments and more revenues and the cycle repeats.

The monetization doesn't just sustain the flywheel. It accelerates it. I think that our acquisition strategy also deserves a moment of its own. We have completed 4 acquisitions in the last 12 months. Every acquisition we've made matched directly to a step or 2 after Serve flywheel.

Fantom Auto strengthens our data collection and our deployment scale as well. Vayu robotics strengthens our models creation, Diligent robotics, where there strengthens our data gathering by introducing a new operating domain. And also it boosts our monetization through recurring revenues with compelling economics.

And last but not least, Vebu strengthens our delivery robot monetization by boosting our partnerships with restaurants and major QSRs. This is all deliberate. It's a flywheel strategy. Each deal is designed to make the flywheel stronger.

Now let me bring this back to our 2025 progress and specifically our Q4 results. In Q4, we exceeded our revenue guidance once again. Total revenue for the fourth quarter was $0.9 million, representing nearly 400% growth year-over-year and also meaningful sequential acceleration.

Full year 2025 revenue came in above our $2.5 million guidance at $2.7 million. We completed the deployment of our 2,000th robot in mid-December on time and on plan. In Q4 alone, we deployed nearly 1,000 robots. That's in a single quarter. That is more than many robotic companies and entire fleet size.

Delivery volume grew 53% quarter-over-quarter in Q4. and roughly 270% for the full year versus 2024. This is a compounding effect of fleet at scale. Also is the geographic expansion and the deepening platform partnerships, all of which are working in concert. And we expect this growth to continue as we start to see the benefits of new robots and also optimize their operations and utilization.

Our merchant base has also expanded to over 4,500 restaurants and retail partners today. This is a more than 10x increase from roughly 400 a year ago. We now reach over 1.7 million households in our Metro areas. This covers a population of over 3.75 million people.

And we did all of this while maintaining our 99.8% delivery reliability and also our strong safety record. This is the part that I'm most proud of. scaling fast is hard but scaling fast while maintaining quality and safety is what really separates us.

Okay. I want to close with where all of this leads to. A year ago, we had roughly 100 robots. Today, we have 2,000. The path is clear from here to 10,000 robots and well beyond. This would be across more cities, more verticals, even internationally. We have the engineering and operations road map and also a track record of execution. The hardest part, building the platform and proving the technology, earning the trust of our partners and cities and consumers. These are all tailwinds now.

What excites me most is that each additional robots we deploy would make the entire system more valuable. The data gets richer, the models get sharper, the economics improve. The partnership deepen -- this is the nature of a platform business with a flywheel at the core.

We are just entering that phase with the compounding effects and the acceleration of the flywheel become visible. With the Diligent Robotics acquisition, we have extended this platform beyond the sidewalk and into hospitals. That's not a one-off. It's a signal of where things are heading. The robotics platform we are building will be general enough to operate very, very intelligent machines are needed to move safely among people and mature enough to deliver real commercial value right away.

We are not building a delivery company. We are building the operating layer for how robots integrate into our lives. That's the long game, and we are playing it from a position of strength. 2025 was the year of proof. 2026 is the year of compounding returns. I have never been more energized about what's ahead.

And with that, let me hand it over back to Brian.

Thank you, Ali. Good morning, everyone. Entering 2025, we set explicit operating targets around fleet expansion, revenue growth and geographic scale, and we delivered against each one of them. More importantly, we strengthened the economic foundation of our business while doing so. That operating discipline will continue to define Serve into 2026.

Let's walk through the details. Total revenue for Q4 2025 increased over 400% year-over-year to $0.9 million. Full year 2025 revenue was $2.7 million, exceeding our guidance of $2.5 million and representing growth of 46% over the prior year.

Fleet revenue was $0.7 million for the quarter, growing 50% sequentially. Branding saw record bookings during the quarter as our expanded fleet attracted larger advertising commitments. We also recorded our first revenues related to data monetization in the quarter, an early signal of the data and platform opportunity ahead.

As Ali and I have mentioned, these opportunities will continue to evolve through 2026. Software revenues were over $200,000 in the quarter. Our transition to recurring software revenue continues to progress with our recurring software base now representing approximately 70% of software revenues.

More broadly than software, we noticed the shift in revenue quality during the year. Our underlying recurring revenues, defined as revenue, excluding onetime agreements, grew over 3x during the year. That shift increases revenue visibility while reducing volatility as we scale. Beneath the top line, Q4 margins reflect the largest single quarter deployment in our history with nearly 1,000 new robots.

When deployments occur at the scale, newly introduced cohorts initially operate below steady-state efficiency, that's expected and by design. What matters is the trajectory as that fleet matures. This past year, we observed average daily operating hours per robot climbed 56% to over 12 hours compared to Q4 last year.

Cost per delivery trended down quarter-over-quarter during the year as our operations team gained experience and our systems continue to mature. Collectively, along with other metrics, these trends give us confidence in continued margin improvement moving into 2026.

As reflected in our 2025 results, the operational infrastructure required to support our larger fleet was established this past year. We expanded market operations, built fleet maintenance capabilities remote supervision systems and deployment capacity ahead of 2026 revenue and, of course, the achievement of our 2000 robot deployment milestone.

As we move through 2026, we expect a growing portion of that infrastructure to be absorbed across a larger and more productive suite. GAAP operating expenses for Q4 were $34.3 million, reflecting the cost of deploying nearly 1,000 new robots and expanded operational capacity across new cities within Alexandria, Virginia and Fort Lauderdale, Florida.

On a non-GAAP basis, excluding stock-based compensation of $6.3 million, operating expenses were $25.2 million. R&D remains our largest investment area, a $15.9 million on a GAAP basis or $12.8 million on a non-GAAP basis. This is directed towards advancing our AI stack integrating capabilities from the Vayu and Fantom Auto acquisitions and building the data infrastructure for our growing fleet.

G&A spending stayed lean and purposeful decreasing from the prior quarter by $2 million to $11.1 million on a GAAP basis and $6 million on a non-GAAP basis. We expanded to one new metro area and 9 new cities during Q4 and anticipate a flattening of our G&A expense growth even as we continue to scale through 2026.

As I mentioned, we will continue to manage operating expenses with discipline, aligning investment with measurable deployment milestones. Interest income generated in the quarter was nearly $2 million. Additionally, Q4 reflects a $3.8 million tax benefit related to deferred tax liabilities associated with the Vayu acquisition, resulting in a partial release of our valuation allowance.

Turning to the balance sheet. We closed the year with $260 million in cash and marketable securities. Capital expenditures for the quarter were $16.5 million, representing the tail end of our costs for the 2,000 unit build. Our liquidity position provides strategic flexibility in a capital-intensive industry where balance sheet strength is a competitive advantage.

We continue to evaluate additional funding opportunities opportunistically. Adjusted EBITDA was negative $28 million as revenue scales and per unit economics improve, we expect sequential improvement in adjusted EBITDA margins throughout 2026. Turning to our outlook. Today, we are raising 2026 revenue guidance to approximately $26 million.

The improved outlook is primarily driven by the acquisition of Diligent Robotics which we believe represents a high return use of capital, while broadening our platform, expanding our addressable market and increasing the proportion of revenue derived from durable recurring contracts.

To fund that acquisition, we moderated our planned 2026 capital expenditures. As a result, we redirected a portion of planned near-term fleet investment toward a significant new market opportunity that is expected to contribute roughly $7 million of revenue during 2026, primarily through recurring health care contracts.

Looking beyond 2026, we continue to expect this newly combined core business to deliver sustained accelerating growth. We have previously discussed a $60 million to $80 million of annualized revenue run rate associated with that full utilization of our fleet.

Internally, we view that level less as an endpoint and more as an intermediate milestone as our business continues to scale exponentially. Our growth is expected to be driven in part by disciplined geographic expansion. As Ali touched on earlier, we are in productive discussions to extend our footprint across additional U.S. markets and over time, pursue selective expansion into major international cities like Toronto, Sydney, Tokyo, Madrid and London among many others.

We expect 2026 capital expenditures of approximately $25 million associated with the production and deployment of additional robots as we continue expanding the fleet and increasing volume of real-world operating data that strengthens the flywheel. Recent acquisitions are expected to increase our 2026 operating base by approximately $20 million to $30 million.

Non-GAAP operating expenses in 2026 are expected to be approximately $160 million to $170 million, reflecting continued investment in autonomy development, fleet scale platform capabilities across both delivery and health care robotics.

Let me close with this. The investments we are making in 2026 are specifically designed to strengthen the plan Ali described. We are expanding the fleet, improving the autonomy stack and increasing monetization opportunities across the platform as the flywheel accelerates. Serve has evolved into a diversified robotics platform with multiple revenue streams, spanning delivery, advertising, data services, software and now health care automation.

In the age of physical AI, we're using our strength in autonomous robotic delivery to build a generational robotics company that would define this era.

With that, I'll hand it back to Steve for Q&A.

Thank you, Ali and Brian. We'll now move into the Q&A session. But first, I'd like to say a big thank you to all the investors and analysts who submitted questions, I e-mail. Thank you so much for your engagement. The first question we have is related to new robots. Serve deployed 2,000 robots last year. What's the goal from a unit deployment perspective in 2026 and beyond that?

I'm happy to take this one. So over the next few years, we expect to deploy 100 small robots. But in the short term, as we've shared in the past, before we go on and share a detailed plan, we want to really let the recent growth settle in.

And we want to gather all the data on the earnings from last year's 20x fleet growth. We have the capacity to continue growing our revenue right now. On the other hand, manufacturing and supply chain, as we all know, they require certain lead time. So we are already working on the supply chain for the next batter robots so that we can expand to new major markets as they become available quickly. But the time between now and when the supply chain and manufacturing of the robots would be available.

It's a good time for us to really hone in on our playbooks and get them refined based on the existing growth. And we don't really want to be deploying more robots until we get all the client ones fully activated on a daily basis.

If I can wrap up on that, Ali. In the prepared remarks, Ray, we talked about CapEx guidance being approximately $25 million during 2026. A significant majority of that will be for the serve fleet expansion. -- but we're going to continue to invest not only in Serve, but for additional Moxy robots and look to accelerate their growth as well.

I think, Ali, exactly if you summed up Q1 in this time period, Q1 2026, we're looking to optimize the performance of the full fleet. And most importantly, we retain control over that CapEx timing and also the OpEx deployment costs as that fleet continues to grow.

Great. Thanks, Brian. On to our next question. What percentage of the 2,000 deployed robots should be daily active by the end of first quarter?

I'm happy to take this one as well. So from manufacturing and deploying robots to reaching full utilization of the fleet, as we've discussed this in the past, there are several steps that take place. You start with obviously creating the depots in each new market, building the operational footprint, which includes hiring and training staff.

So this is a lot of the voice we've already done. And then the next step to that is getting any requirements by local municipalities and stage gate, all of that addressed -- we need to then activate neighborhoods with our delivery partners, onboard local merchants. And then once all of that is done, we can have robots at full operational hour every day, we would focus on operational efficiency.

It's a question of where to put the robots, how to move them around all of that, so that we capture the maximum demand. So we expect that by the middle of this year, as I said before, we have any additional robots to manufacture, we would get all of the existing robots on a fully active daily basis and shift our focus to that operational optimization.

We are timing everything again so that we have that full utilization, so the full activation that is robot before manufacturing new ones given the lead times for manufacturing?

Thanks, Ali. On to the next question. We received this one about the acquisition of Diligent Robotics. How are the integration efforts going? And what are your plans for growing the health care business?

That's a great question. So we covered some of this earlier, but I can dig in a bit more we have always intended for our autonomy platform to extend beyond just food delivery and into many other environments, including in this case, hospital and health care.

As we looked at the Diligent Robotics during our acquisition process, it became pretty clear very quickly that -- it's the right time and right company for us to expand our scope. So this acquisition actually strengthens our flywheel, as I mentioned earlier, by really enriching our data further. It also creates a more balanced and resilient revenue base for us, and it opens up, obviously, new markets opportunities and a new growth engine.

We are already starting to integrate our platform capabilities with Moxy robots, but this will take some time. As we do this integration works, we are creating a repeatable playbook for expanding into new verticals and operating in multiple different domains.

On the second part of that question for the revenue and just to give a little bit more color, right, these are existing established recurring revenue contracts that we were able to acquire through Diligent -- and so these are different than our demand cycle for current food delivery.

The $7 million number we referenced in the preprepared reports is for revenue here in 2026 and I think it's important, right, from an integration standpoint, we're going to continue to focus on additional investments into the health care business around engineering head count, infrastructure to support that team through their next phase of growth.

Our business development team, sales teams are looking at other opportunities in the pipeline. Several of those are currently being evaluated, and we're going to make the best decisions to drive long-term revenue growth.

Great. On to the next question, is optimization of the fleet a linear process or other step functions? And if so, what would cause that?

Yes. We touched on the steps earlier. Of course, we are pushing a lot of these steps at the same time, but you're never going to get everything done at the same time. I think going from that deployment to full utilization steps are pretty important.

There are many factors that affect that utilization and those steps kind of outlined, as I said -- as I mentioned earlier, Overall, though, we are seeing that our more mature markets are further along on that optimization curve. We mentioned this area about is really about compounding returns for us.

2025 was all about building that infrastructure. So in 2026, we are going to be really laser focused on optimization and efficiency of the fleet, both on the sidewalk and on the hospitals.

And we have enough time for one more question. Can you speak more about your plans to expand internationally? What's the time frame for those city launches?

Yes, that's an exciting one to end on. Let me maybe give some context on our thinking here. So we have really built a great foundation for expansion. We are now in 20 cities, 6 major metros we have really proven the tech at scale, build the operational playbook, the way to launch new markets efficiently.

So this work really supports that international expansion will -- we are now in active discussions with city officials and partners in multiple international markets from Canada to Australia, Japan, Spain, the many other countries. We are considering major cities, dense urban environments, strong delivery markets and municipal governments that are really leaning into autonomous robots and side blocks.

I want to emphasize that we are going to be disciplined and intentional about these expansions, especially being our growth opportunities here in the U.S. versus markets abroad. We have learned from our U.S. expansions today that the right way to go to new market is metical.

And we want to really be measured as we identified the right partners and the right expansion cities. We do get a ton of inbound interest to consider, but we want to be very selective. And then we see this ultimate growth opportunity internationally as a 2027 opportunity.

But 2026 for us to lay the groundwork for it, just as we laid the groundwork for this year, last year by expanding to new cities. In the meantime, our robust obviously will continue and collect more data in more than in 20 cities today and expanding by the end of the year. And we'll keep making that flywheel move faster and become more durable so that we can enable even further rapid growth and expansion. I'll just end by saying this again. I've never been more energized and excited about what's ahead for serve and I can wait to see robots operating in cities across the globe.

Great. Thanks, Ali, and thanks, Brian. That's all the time we have for today. I'd like to thank everyone for joining us again. Thank you for joining us on the call today.

Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. All participants may now disconnect.

Hello, and thank you for standing by. I would like to welcome everyone to the Serve Robotics Third Quarter 2025 Financial Results and Conference Call.

Now I would like to turn the call over to Aduke Thelwell, Head of Communications and Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Serve Robotics' third quarter 2025 earnings call. With me today are Serve's Co-Founder and CEO, Ali Kashani, and our CFO, Brian Read.

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 results 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 uncertainties 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, and we ask you to review those documents if you haven't already.

With that, let me hand it over to Ali.

Thanks, Aduke, and thank you, everyone, for joining us.

We are at a pivotal moment for Serve. This past quarter, we crossed the threshold for 1,000 robots deployed. That's not just some round number. It's an inflection point. You can feel this in the sidewalks that we serve. The future of cities is autonomous, and we are at the forefront of this, turning it into daily reality in these neighborhoods across the country.

This is not just swapping humans for robots. We are unlocking new possibilities for cities. We are rewriting the operating system of how cities function, how goods move, how spaces are shared, how businesses reach residents. When the whole system upgrades like this, everything gets better, safer streets, friendly and greener cities and more prosperous businesses and workers.

So why now? What's possible today that wasn't possible before? There are 4 forces that have really converged. First is physical AI. It's really finally caught up with our ambitions. Advances in distributor training, also the better onboard compute that is now available, it lets us ingest orders of magnitude more sensor data. And that leads to incredibly more capable AI models that can help machines really understand the world in real-time.

Our perception and planning models are improving on the street every single day. Each mile traveled enriches our data set. Each model update expands where, when and how quickly and how safely we can move. And this all has a compounding effect.

Second, every hardware component needed to create this advanced inexpensive and intelligent machines has matured. This includes powerful sensors that are now at mass scale and low cost, paired with electric motors and batteries that enable new vehicle form factors.

Technologies like LiDAR sensors were unaffordably expensive just a few years ago, but now we have partners like Ouster, who are shipping thousands of sensors each quarter in record numbers. That benefits everybody in the ecosystem because of the economies of scale.

Third, consumers have adopted the convenience of online and on-demand ordering, and merchants need CapEx-light and labor-light capacity, so that they can economically serve the demand. Restaurants have optimized their operations in the post-pandemic reopening, but they now need a way to unlock and realize that full potential. They want dependable, right-sized logistics that matches their demand by the hour, and that's what our fleet can deliver.

And last but not least, it's the cities themselves. Cities are asking for quieter and cleaner and less congested streets. Smaller vehicles made for specific use cases can now replace those 2-tone vehicles that we've become so addicted to. And this is the future.

Our robot footprint is small with an electric powertrain and a friendly presence. We earn the right to scale when we operate with safety and transparency and community respect and when we are working closely with the cities that we serve. And we create these new jobs, full-time employee jobs in neighborhoods that we are serving.

Our third quarter results prove that we are on the right track with all this. Our delivery reliability was nearly 100%, while our delivery volume increased 66% in a single quarter, and we continue to maintain a strong safety record. We now deliver for over 3,600 restaurants, which is an amazing 45% increase from the last quarter and more than a ninefold increase since last year. This is all proof that autonomy can be safe, reliable and predictable even as we scale rapidly.

We did all this while also expanding faster than anyone in our industry. In less than a year, we grew our fleet size 10x, our cities 5x and our major platform partners 2x. Last month, we announced partnering with DoorDash, the largest delivery platform in the U.S. and one of the largest in the world. Combined, Uber and DoorDash serve over 80% of the food delivery market in the United States, which provides us an incredible reach to consumers and merchants.

The scale that we've achieved in the last few months really changes things. Here's how to think about it. With a few dozen robots, you're running pilots. At a few hundred, you're starting to prove repeatability. Beyond 1,000, the system tips. We run more efficiently; the economics improve. The national partners really lean in and our learning really speeds up. All of which makes every new city launch smoother and every new robot smarter than before.

As we scale with precision, we've gone from 1 market to 5 fully operational hubs covering over 3 million population and well over 1 million households. That's nearly 70% increase in a single quarter and more than a tenfold increase in our coverage compared to the same time last year. Not only have we 10x our fleet, we have 10x our reach.

And as importantly, each neighborhood adds to our rich data sets with new and novel edge cases, which really accelerates our ability to learn across the network, and it compresses our time line for future city launches.

On that note, I'm excited to share with you our next 3 expansions. We've just been greenlit to expand into Bucket, Georgia, Fort Lauderdale, Florida; and Alexandria, Virginia before the end of this year. Alexandria also gives us a toehold in the Washington, D.C. area. We're building the first truly national interconnected autonomous delivery network on a common AI software platform and operations stack, so that a single partner integration would light up multiple metros and thousands of restaurants at once.

For example, in Q3, we announced our partnership with DoorDash. Coming in addition with our existing contract with Uber, this allows our existing robots to unlock an incredible amount of additional volume. A robot that's completing a delivery for DoorDash could do a delivery for Uber on its way back. So this would actually improve utilization levels for robots.

And we are not done yet. In addition to our existing partnerships with Shake Shack and Little Caesars, we've also started delivering for Jersey Mike's Subs, the famous sub sandwich chain with over 3,000 locations nationwide. And while it's too soon to give details, we also expect to add another well-known national QSR brand to the lineup.

So the partnership platform is growing nicely. And concurrently with that, we are also developing an unparalleled map of cities, the care cuts and slopes and potholes and obstacles and patterns, a living Atlas that becomes a valuable asset and an operational advantage. And while we do that, we are also deepening our community bonds at a very hyperlocal level with merchants and landlords and HOAs and precincts, we need to integrate respectfully into these neighborhoods as we grow.

Now let's take a step back. Serve is pioneering a robotics and Autonomy as a Service platform that packages the full power of our autonomy stack, our hardware and our urban robotics operation playbook. With the last quarter's acquisition of Vayu Robotics, our platform is now increasingly reinforced by AI foundation models and a scalable simulation-powered data engine.

Under the hood of all this is the physical AI flywheel that powers everything. Our third-generation fleet leverages the best-in-class sensors, which creates this proprietary urban data sets, and that, in turn, leads to better AI models, which then creates more efficient and more autonomous fleets. A better fleet expands our TAM and increases our operating domain and verticals that we can do. And that, in turn, creates more pull in the market for more robots. So more miles, it's more robots, it's more data, it's better AI and the cycle repeats itself.

The integration of Vayu will actually accelerate this loop because it turns data into better models faster. And that leads to tangible gains in our delivery speed and autonomy and the market reach. Our library of long-tail edge cases is expanding faster than ever. And the latest data that we gather on weather and obstacles and parades and detours, it all provides the learnings that are applied network wide. So every robot is learning from every robot.

And this AI flywheel that we are building, the flywheel that's now accelerating in turn attracts exceptional talent. Our rare data scale and this real-world fleet presence that we have is pulling in elite builders. And they, in turn, ship better systems and better systems attract even more elite builders. So the talent flywheel is also compounding.

All the forces that I mentioned are helping us execute our vision. I'm really proud of our team for reaching the 1,000 robot milestone last quarter. In September alone, we shipped over 380 robots. That is in a single month. That means we launched more robots in a single month than the prior quarters. This was a pivotal milestone.

We promised to ship 2,000 robots by the end of the year during our IPO, and we are on track to do it with robot #2000 planned to deploy in Miami in mid-December, but we are not going to stop there. We envision a future where Serve's fleet reaches 1 million robots deployed across cities globally. They will travel billions of miles annually. They become embedded into the core fabric of a modern city, and they unlock new possibilities.

Our conviction is simple. We are entering the age where things will move at our will, but on their own. Autonomy will become this essential infrastructure in our lives. It's rarely noticed because it just works, but it's sorely missed when it's not available. And we want to be the company that you will trust to run this.

On the path to 1 million robots, we are still early. But with 1,000 robots operating from coast to coast, we've really just crossed that chasm where the technology and the market all say go. From here, every additional robot, every additional hour, every additional block makes the whole Serve ecosystem more essential and more valuable to the entire network. We are building something durable, and we are just getting started.

With that, I'll turn it over to Brian to cover our Q3 results in more detail.

Thank you, Ali, and it's great to be with you all today.

This quarter marked another step change for Serve, one defined not only by scale, but by strategic execution. We advanced in every meaningful area, expanding our fleet, strengthening our technology base and executing with greater precision across operations, engineering and finance. We've also been extremely opportunistic.

During the quarter, we've integrated 2 key acquisitions that deepen our competitive moat, acquiring Vayu, a pioneer in urban robot navigation using large-scale AI models. We're expanding our physical AI capabilities by accelerating our road map.

As we further integrate Vayu into our autonomy stack, we expect it to create opportunities to enhance our leadership in autonomous delivery as well as to reduce data infrastructure costs and improve operational metrics over time.

These integrations allow us to convert more of our operational data into faster model improvements and richer monetization layers, all while reinforcing Serve's position as the category's innovation leader.

Our focus remains clear: to scale efficiently, deploy capital strategically and translate our growing operational advantage into sustainable financial performance, all in service of building an enduring business in this new age of autonomy and physical AI. As Ali described, the Serve flywheel is accelerating, more robots, richer data, smarter AI and stronger economics.

Let's dig into our Q3 results, showcasing how these effects translate into measurable financial impact and expanding leverage across our business. Total revenue for Q3 2025 was $687,000, an increase of 210% versus last year and in line with our guidance provided for the quarter. Fleet revenue was $433,000. Significantly, this quarter, we saw branding revenue jump 120% sequentially over Q2.

As we've mentioned previously, the growth of our robot fleet into the thousands unlocks a pipeline of large-scale branding opportunities, and we delivered on that in Q3. Software revenues continued to transition from onetime to recurring and were $254,000 in the quarter.

We delivered exactly what we said we would. Fleet revenue is becoming the predictable growth engine we've envisioned, and we're now meaningfully stacking platform and data services on those same routes.

Gross margin performance this quarter reflected the balance between rapid fleet expansion and deliberate investment in our long-term efficiency infrastructure. As planned, we continue to build capacity ahead of 2026 scale, expanding our operations footprint, onboarding new cities and integrating the systems and teams from our recent acquisitions.

These near-term investments are already yielding returns in the form of measurable operational gains across reliability and autonomy. Average daily operating hours per robot increased another 12.5% sequentially from Q2, driven by the growing mix of Gen 3 hardware across our fleet. This is a strong leading indicator that each unit is capable of contributing more value.

Robot intervention rates saw a meaningful reduction through the quarter. And further, our best-in-class sidewalk autonomy is getting more and more capable. We saw a consequential increase in the proportion of miles driven in autonomous mode in the last week of Q3 compared to the first week of the quarter, indicating the return on continued R&D investment.

Taken together, these factors drove higher autonomous run times, which in turn drive improvements in our average speed. This leads to compounding gains. Even a small increase in the average speed corresponds to an increase in our potential delivery volumes.

These efficiency improvements are compounding. Each additional robot -- each additional mile in each new market contributes data that sharpens our models and reduces human touch points across the network.

On the expense side, we remain disciplined, investing in the capabilities that drive our competitive advantage. GAAP operating expenses for Q3 were $30.4 million, increasing from Q2 from deliberate investments in new market launches, M&A integrations and expanded operational capabilities to support our national scale. On a non-GAAP basis, operating expenses were $21.8 million.

R&D remained our largest investment area, totaling $13.4 million on a GAAP basis or $10.7 million on a non-GAAP basis, primarily directed towards advancing our autonomy stack, expanding our AI foundation models and integrating new data and hardware capabilities from our recent acquisitions. These initiatives are accelerating our pace of innovation, while positioning us for long-term cost structure.

G&A and go-to-market spending remain disciplined and aligned with our city expansion cadence. We're executing with leverage, adding cities, partners and robots without linearly increasing headcount or our overhead. Our approach remains consistent, invest where we have clear line of sight to efficiency, differentiation and scale advantage, while maintaining financial discipline and measured growth.

On the balance sheet, we ended the quarter with $211 million in cash and marketable securities. In October, we executed a stock sale that generated approximately $100 million, which will be used to fund working capital and expansion activities.

CapEx for the quarter was $11 million tied to robot production, market launch and expansion infrastructure. Our strong liquidity and debt-free balance sheet remain a competitive advantage, providing us flexibility to scale responsibly and invest opportunistically. Adjusted EBITDA was negative $24.9 million, driven by operational expansion in the quarter, expected to accelerate efficiency through 2026.

And now to our outlook. Once again, we delivered results at the high end of our Q3 guidance range. Building on this momentum, we now expect to generate more than $2.5 million in revenue for the full year 2025. Our underlying recurring fleet revenues, which exclude nonrecurring software, is projected to grow 3x year-over-year from roughly $0.6 million in 2024 to roughly $2.1 million in 2025.

2025 was a pivotal year focused on establishing our national footprint, deploying 2,000 robots, expanding into new markets and deepening our partnership portfolio. With this groundwork in place, we remain confident in our ability to generate annualized revenue run rate of $60 million to $80 million. We intend to update 2026 full year guidance early next year. Initial indications show our expansion and operational plan positions Serve to deliver roughly 10x inflection in revenue during 2026.

Q3 marked another step forward in both scale and precision. We're executing with discipline, expanding intelligently and translating operational progress into tangible financial results. Each quarter, our fleet becomes more capable, models more refined and economics more efficient.

The foundation we've built across technology, partnerships, operational excellence position us for sustainable growth through 2026. We're proud of what the team has accomplished this quarter and even more excited about the opportunities ahead. Serve is defining this category, and we're confident in our ability to lead it for years to come.

With that, I'll hand it back to Aduke for Q&A.

Thank you, Ali and Brian. We will now move into the Q&A session. First, I'd like to say a big thank you to all the investors and analysts who submitted questions via e-mail. We really appreciate your engagement.

First question, I think this might be for Ali. Do you expect to add more robots in 2026? If so, what would be timing and magnitude of the additions? Ali?

Thank you, Aduke. Yes, I can take this one. So good question. We aren't going to share the specific numbers right now. Hopefully, we have more to share early next year. But I do want to explain how we are thinking about growth.

As we are looking to get towards our 1 million robots' goal, what we want to do is make sure we grow quickly, but also with precision and discipline. We've been really laser-focused in getting the fleet really efficient and effective every day and driving utilization, while at the same time, layering new partners, going to new geographies, all of this makes that scale up easier.

So in a way, being efficient and growth kind of line up together. So in that -- it's the same type of effort that it takes to get there. So we are definitely going to push on growth, but we want to do it responsibly.

All right. Thank you. Next question is about robot design. Could you provide details on robot design simplification and cost reduction beyond economies of scale? Ali, do you want to take this one?

Yes, I'll take this one, too. I think there's a few different factors here. First of all, there is a ton of progress that we've made when it comes to the robot design. We've made it a lot more modular, easier to manufacture, a fewer custom assemblies. We've also really strengthened our supply chain to get better parts and at lower prices. So this both cuts down the cost of the material, but also cost of assembly.

At the same time, as we improve our design, we've also benefited from our scale manufacturing, which obviously helps bring the cost down as well. And while all of that is happening, the broader kind of ecosystem of suppliers, they're also getting more mature.

I think a really good example that I'm excited about is Ouster. They have done a phenomenal job of bringing these advanced LiDAR sensors to market at scale. They're shipping record number of sensors right now, I think, thousands per quarter. And we are directly benefiting from that. And I think a lot of folks in the autonomous space would benefit from more affordable LiDAR sensors that just didn't seem within that realm just a few years ago.

So combining our improvements to the design and our improved supply chain and our scaled manufacturing and the maturity of the ecosystem that per unit cost of the robots is definitely coming down substantially to the point that, as we've shared in the past, our Gen 3 robots are 1/3 the cost of our Gen 2 robots. And we are going to keep pushing these improvements forward.

Okay. Thank you for that. Next question, what are the next steps in your DoorDash relationship? How do you see that helping the business? Ali?

Yes. We are working very close with our partner at DoorDash. They -- first and foremost, it's about integrating the robots into the fleet in a thoughtful way and planning the market rollouts over time.

DoorDash obviously unlocks an enormous network of restaurants and consumers for us. We have over 1,000 robots right now and soon 2,000 that can deliver for those restaurants and customers. So the timing is perfect. And I expect that in the next few months, we will start to really grow the volume under the new channel with DoorDash basically.

I do want to emphasize this is a really important milestone for us because we've always envisioned this multi-platform approach. I think a single robot being able to alternate between deliveries from each platform from DoorDash and Uber, it is really, really important that we are able to do that, and I think we are now proving that we can. And this kind of interoperability actually increases our utilization, which in turn lowers the cost per delivery. And that actually benefits all of our partners as well.

Perfect. Thank you. We have a question on acquisition. Can you quantify the autonomy effect from Vayu? For example, would average speed increase or would the ratio of robots to operators improve? Brian, do you want to take this one?

Yes. So yes, good question. And I mean, I think the simple answer to start here is we're very early in this integration process to dive into those results exactly. And this is the type of integration that can take months. But we're actually doing the call here today from Vayu offices and the excitement from the teams to hit the ground running as soon as the merger was completed was tremendous, and there's just a lot of excitement on both sides to go faster and deeper into that road map to bring those new capabilities into the fleet.

I think we think about it as part of a flywheel where over time, that integration will allow our robots to be faster and smarter, while maintaining the safety and reliability that we focus on daily. And that, in turn, then drives efficiency and utilization, ultimately landing in unit economics and overall is a benefit for these acquisitions.

Okay. Thank you. Our next question, what are some differences between deployments in different cities? What have you learned from new deployments and expansions that will help you scale further? Ali, can you take this one?

Certainly, yes. Each city has its own distinct personality. It's like they're different in ways that's actually very helpful for us and honestly, quite fun for our team as we've been expanding, seeing, for example, in Atlanta and Miami, learning about humidity and the different kinds of pedestrian intersections and city design compared to what we had in Los Angeles before.

They have different width in their sidewalks, different nuances about how -- the best routes for traversing would actually look like or our new market in Chicago is an incredible place for getting that on really dense urban environments with cold weather where you have to look at battery efficiency and snow detection and traction. So a lot of things that we have tried to test in advance now are being put to test in real life, and we are learning a lot from that.

What's really powerful, I think, is that as we go to these new cities, it really enriches the models. And the data in this new environment actually helps the model across the board for the entire platform. And that actually means that every subsequent city launch, as I mentioned earlier, gets more reliable and better. In fact, we saw this in Chicago when we first launched, it was the fastest market for us to get to our SLAs that are comparable to our more mature markets. So it kind of proves that the playbook is working well and the robots are getting smarter.

And just to finish that, from a financial standpoint, I think, too, is we're using these learnings. We're translating them directly into efficiency through our operations teams. So we're seeing shorter payback periods with the expansion. We're seeing the higher utilization as we deploy into new markets and neighborhoods to continue the expansion. And that's exactly what we're building towards.

So we've been talking internally about describing this as being sharper with our scale. And we believe all of these technology improvements are going to compound, which will show up in our financial results. So that is really what's positioning us to expand in a disciplined capital-efficient way in 2026.

Okay. Thank you. Next question. What can you share about the pipeline for software and data sales? How are you looking to accelerate software revenues in 2026 and beyond?

Yes. This is a good question. The revenue pipeline for these other opportunities like the delivery platform, the software that's powering the robots as well as the data that's generated by the robot. It's been a really strong pipeline. We are in substantial discussions with multiple partners that want to basically use the platform or the data that we are creating.

And I think we are trying to be smart and selective in terms of who we engage with and apply some filters there to pick the right partners. But the amount of inbound interest we're getting really reinforces that what we have is quite differentiated. And I'm hoping that as we move some of these conversations forward and have more updates to share, we will actually tell you more about those relationships as well.

And if I can also wrap the financial aspect into this question is. As the fleet scales, these data and AI insights are going to become more valuable, right, to all of the people Ali just mentioned that we're talking to and the substantive discussions we're having.

So that's going to enable our team to look at opportunities for adding more recurring software as we go throughout 2026 and focus on that robotics and Autonomy as a Service offering. So it's really a long-term vision, right? This is a balanced model. We're focused on diversifying revenue and fleet revenue is that foundation with software and data as that real high-margin accelerant that we're focused on as we enter 2026.

Okay. And the last question, you mentioned the $60 million to $80 million run rate. When do you expect to reach that run rate? Brian, can you take this one?

Yes. Let me give a little bit more color. I know in the script; we did mention the outlook for 2026. So we'll point everybody back to that commentary. But obviously, this is a good question to end on here as we think about this Q3 update.

So the path to hitting $60 million to $80 million is underway, right? And that's really the final step. When we think about the ambitions, we laid out a few years ago to deliver 2,000 robots, right, $60 million to $80 million is the endpoint. But along the way, we've exceeded a lot of expectations, especially as we near the end of 2025. And that's been a testament to the team and how we've delivered.

I mean, to summarize what we've talked about on a lot of the earnings calls, we are on track to deliver the 2,000 robots. We've expanded into multiple markets with more coming. We talked about new partnerships and adding top of the funnel orders into our pipeline. But last but not least, we have the acquisition. So across all of these verticals, we are firing and we're really exceeding what we set out to achieve in 2025.

I'd like to remind investors and anybody that wants to understand our story that, that's all great. But critically, we're maintaining the safety and the reliability throughout that network as we're building it. And so the final boss, as Ali likes to say, is achieving that financial milestone is continuing to improve the utilization across the fleet. And so we have that momentum through 2025 and accelerating into 2026 to approach that $60 million run rate target. To be clear, I think we're still more than 12 months out, and we'll certainly, as we indicated, we'll have more to say on this in the next call early next year.

Okay. Thanks so much. That's all the time we have for today, and that concludes our session. Thank you for your thoughtful questions and participation.

And with that, I hand it over to the operator.

That concludes today's call. You may now disconnect.

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 Thelwell. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Serve Robotics' Second Quarter 2025 Earnings Call. With me today are Serve's Co-Founder and CEO, Ali Kashani; and our CFO, Brian Read.

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, Aduke, 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 that's 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 4.5x, 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 1 metro to 4 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 is 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 eightfold 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 have 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 Msheireb 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 convenience robotic delivery to thousands of residents of Msheireb 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 L.A., 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 4 large 16-inch pizzas plus Caesar Wings 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 partnership's 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 2,000-fleet deployment milestone. We expect to more than double our current robot fleets 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 will have 6 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 earnings call in March, I mentioned that robotics is one of the most important natural endpoint 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.

So let's talk more about Serve'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 fleets. 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 will 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 relationship 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 this 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.

Thank you, Ali, and good afternoon, everyone. Q2 was a standout quarter for Serve, one that saw us surpass even some of our most bullish goals. We deployed over 120 additional robots ahead of schedule, launched into a new market, deepened our reach in existing markets and delivered exactly what we said we would, both operationally and financially.

We are scaling with precision. That principle applies not just to how we grow our fleet and geographic presence, but also how we invest and manage costs. While top line continues to grow as a result of fleet and merchant expansion, what's just as important is how we're growing with increasing efficiency through smarter deployment approaches focused on improving utilization across our markets.

We're seeing meaningful progress across fundamental metrics that underpin the long-term economics of our business, utilization, supply hours and autonomy performance. These are not just operational wins, they represent the shift towards durable compounding value, as we pivot from focused investment to scale delivery.

Let's walk through the Q2 results in a little more detail. Total revenue for Q2 2025 was $641,000, up 46% sequentially from Q1 and in line with our guidance provided for the quarter. Fleet revenue, which includes delivery and branding revenues, grew $117,000, a 56% increase quarter-over-quarter. Software revenues grew 36% to $312,000.

These results affirm our long-held thesis at Serve that as we scale and improve utilization, each robot becomes more economically productive, generating revenue from multiple streams. As planned, we continue to invest in infrastructure and talent to support second half growth. While these expansion-related costs weighed on our margins, they are setting the foundation for future expansion, as these costs cover a larger fleet footprint.

Operational efficiency is a major focus for us, and the data reflects this progress. Average daily operating hours per robot rose more than 20% quarter-over-quarter to 10.8, driven in large part by Gen 3 hardware enhancements that are increasingly representative of our fleet. This is a strong leading indicator that each unit is capable of contributing more value.

Robot intervention rates, meaning the number of times a flat tire is changed, for example, decreased 25% quarter-over-quarter, which lower our variable cost per delivery and signals greater autonomy run-time. Taken together, these metrics provide an early view into the cost advantages unlocked as our systems mature. We're not just adding robots, we're making every robot smarter, more reliable and more efficient.

On the expense side, we remain disciplined, investing in the areas that matter most. GAAP operating expenses for Q2 were $19.8 million, increasing from Q1, reflective of our targeted investments in new market launches and internal capabilities. On a non-GAAP basis, excluding stock-based compensation, operating expenses were $12.9 million.

R&D remained our largest area of investment, totaling $9.1 million on a GAAP basis or $7 million on a non-GAAP basis, primarily tied to enhancing our autonomy software and our ongoing work around our next-generation fleet platform. We anticipate continued investment through 2025 and beyond, particularly around AI and foundation models to strengthen our market leadership. G&A and go-to-market spending were well executed and aligned with our deliberate entry and scale into new metros. We're building a model that grows with leverage, not just headcount.

On the balance sheet, we ended the quarter with $183 million in cash and marketable securities. We remain on track with our decision to self-fund the 2,000-unit fleet rollout. While our cash and investments on hand are expected to fund operations through the end of 2026, though we will continue to evaluate financing opportunistically.

Capital expenditures for the quarter were $6 million, tied to robot production, market launch and expansion infrastructure. Our balance sheet remains a competitive advantage, providing us flexibility to scale responsibly and invest opportunistically. Adjusted EBITDA was negative $14.9 million, driven by operational expansion in the quarter. We expect these tailwinds to accelerate efficiency, as we approach 2026.

And now to our outlook. Our second quarter performance met expectations with revenue delivered in the range previously guided. Looking ahead, we are projecting Q3 revenues in line with last quarter and thus guiding to $600,000 to $700,000 of total revenue. This represents between 170% and 215% growth year-over-year.

That said, it is important to provide context for this near-term revenue and the dynamics at play. Delivery revenue is expected to grow in Q3, but will be offset by anticipated declines in software and branding revenues. In software, we are expecting a dip from the conclusion of our nonrecurring software services contract with Magna.

While this affects short-term revenue, this is consistent with our strategic shift toward a recurring software revenue stream, which continues to gain traction, approaching nearly 100,000 this past quarter. Likewise, in branding, we are building a strong team and seeing initial momentum. This remains an early-stage contributor to our top line, and not surprisingly, is showing variability quarter-over-quarter.

While we have line of sight to a robust opportunity pipeline, in Q3, we expect these revenues to be backweighted and lower compared to Q2. Due to the early nature of these efforts, especially as we launch and establish new geographic markets, we view this as a potential upside for our near-term guidance.

As Ali mentioned, in 2025, we're laying the foundation for our national operations footprint through our growing fleet, expanding geographically and building a partnership portfolio. As such, we are confident reiterating our projected annualized revenue run rate of $60 million to $80 million once our 2,000-robot fleet is fully deployed and reaches target utilization, which we anticipate will occur during 2026.

In closing, Q2 delivered what we hoped for, a growing fleet, diversified revenue and a clear path to operating leverage. We're not just executing, we're getting sharper and more efficient with every quarter. As the fleet continues to grow in both scale and intelligence, our economics will only strengthen. I'm excited about what's ahead and confident that Serve is well positioned to lead this category for years to come.

With that, I'll hand it to Aduke for Q&A.

Thank you, Ali and Brian. We will now move into the Q&A session. First, I'd like to start with a big thank you to all the investors and analysts who submitted questions via e-mail. We really appreciate your engagement.

Okay. First question, what were key learnings as you optimize the 250 robots deployed in Q1? Any notable changes given that experience?

I'll take this one. Thank you, Aduke. There are 250 robots that we deployed in Q1, were really meant for us to validate and fine-tune our design and manufacturing ahead of the larger scale up in the second half of the year. And they did just that. We were able to really quickly see the impact of the new hardware that we had improved like longer battery life, improved drivetrain characteristics that made the robots move more smoothly around the city. They have better suspension, better steering capabilities and all that.

And of course, we found opportunities for improvement in both design and manufacturing. And those were all implemented as the new robots started coming off the line starting actually this quarter.

Okay. Perfect. Next question. Do you expect to further refine the robot? Will we see a Gen 4 robot in the near term? And if so, what are you looking to improve upon?

Yes. Thanks for that. Look, we designed Gen 3 robots for the rapid scale-up that we see ahead of us. And the design and the specifications are really a culmination of more than 8 years of learning in the field. While our software and our AI is going to keep improving, in fact, at times every month or even every week, there will be updates, I don't expect that we are going to launch a new hardware platform every year. Instead, our focus is really on scaling with efficiency. So we are going to continue to cost down the design and optimize our supply chain. We are going to provide incremental upgrades to, say, compute or sensors as new, better or cheaper hardware becomes available. And then lastly, we will keep making the fleet even more reliable and durable, but we can do all that without having to launch a major new platform.

Okay. Thank you. The next question is about 2026. How do you think about revenue and EBITDA for 2026?

Yes. I will take this one as well. We are not yet providing guidance for 2026. I think it's worth explaining our thinking about when we provide guidance. As I always like to remind the team, we are a public start-up, and the keyword being start-up. Our primary goal is really to execute as fast as possible, really maximize the speed of execution to ultimately win the race. And what we need to do is let the team cook and design and build the best robotic platform for cities. That should be the sole focus.

Being a public company has been a great advantage for us. And whether you're public or private, you should always look at things from first principles and decide what helps build the business and make it enduring and profitable versus not. So we don't want to just follow patterns of larger, more mature companies. So right now, we want to communicate how we're thinking about it, and that includes providing near-term guidance where we have sufficient confidence and believe in the information that we are providing. So Q2 was the first time we gave guidance on revenue. We met that guidance. We also provided guidance on delivery volume, which we were able to exceed.

And our focus, as we said last year, we were going to deploy 2,000 robots this year. It's really been about those 2,000 robots. We are halfway through the year. We have quadrupled our fleet already this year, and we are going to quadruple them again by the end of the year to meet that target. That's the #1 focus. It's the most important milestone we have. And that national scale is going to have a lot of compounding value for us. It's going to help us jump start our flywheel with data and AI. It's going to create efficiencies. It's going to even bring more partners who are going to help us increase our utilization even faster.

So while we are prioritizing right now the 2,000-robot deployment, our operational efficiency and utilization will become our main focus and highest priority when we reach the deployment. And that would help us get to $60 million to $80 million annual revenue target with full utilization.

Brian here, just to tie it back to what we announced. Our OpEx growth this past quarter really scaled in line with the revenue growth that we saw, and that was as planned. And we're clearly in that investment phase for that growth cycle that was just articulated. So we're going to continue to do that very strategically to aid that growth. We're going to see a lot of investment on the revenue on an absolute basis as we scale out to the full capacity, and that's going to drive the operating leverage and the thesis that we're looking to achieve in the second half of 2025. So I think we're going to see that dynamic continuing through 2026 as well as we drive more meaningful efficiencies across a much larger fleet.

Okay. Perfect. Next question is around talent. You mentioned investing in talent. Can you speak a little bit more about headcount and where it might get to by end of year?

Yes. I can provide some color here. So, I mean, our people are very in demand right now in the market, and we have a very specific strategy on how we're going to grow our team and what we're focusing on. We've seen a lot of growth as we continue to launch in new metros that help build the capacity for the operational footprint that we're establishing. And I think this year, that was tied to revenue operations, about 50% growth in headcount just in this past quarter.

Going forward, we're going to continue to invest in operations. But in the second half of the year, the greatest headcount investment area will be in R&D and the software teams. That headcount will nearly double this year, as we continue to advance and mature the entire robotics and AI platform that we are working on. And I think Ali mentioned it earlier, but ultimately, this is a race to build the smartest, most capable robots and keep that flywheel spinning fast, but also continuing to grow.

Okay. Perfect. Can we also share a bit about tariff impact? Have tariffs affected the cost of components or the timing of receiving them?

Yes, we can keep this one quick. I mean, it's been a fluid situation. I think we've reiterated on the last couple of calls, right, there hasn't been a material impact. I think what's important to know is the cost reductions that we've been talking about the last 2 calls, I believe, in the BOM reduction, have really been able to help offset any of the exposure on tariffs that we're going to continue to see. So at this point, there isn't any material impact based on today's facts.

Okay. Next question. Can you speak to the competitive landscape? Some competitors have recently talked about their autonomy capabilities. And can you comment on how you compare?

Yes, I can take this one. I guess, I would say I wouldn't trade positions with anyone else. People have claimed things like Level 5 capability for almost a decade. And I think investors have generally smartened up about that. I think ultimately, the proof is in the pudding. And I think our numbers, our growth rate, the pace at which we are expanding our geos and also the quality of the partners that we have just speak for themselves.

We have always focused on AI and autonomy from the very beginning, and it's been -- and this has positioned us well today, and we are reaping the benefits of that, of all the investments we've made so far. And we are also remaining really aggressive in assembling the best team and developing the best capabilities in the industry. And we're also opportunistic. We have the advantage of our balance sheet strength and our public stock, so we'll continue to really put our head down and execute and just build the best autonomous fleet in the world.

Perfect. Thank you. That's all the questions we had for today. So thank you for joining us, and I'll hand it over to the operator to conclude the call.

This concludes today's meeting. You may now disconnect.