Surf Air Mobility Inc. 2026 Q2 Earnings Call

Go ahead. Thank you, operator, and good afternoon, everyone.

Welcome to Surf Air Mobility's second quarter 2026 earnings call. I am joined today by Deanna White, our Chief Executive Officer, Shawn Pelsinger, our newly appointed Chairman of the Board, Liam Fayed, our Co-founder, Louis Saint-Cyr, our President of Airline Operations, Joshua Lowton, our President of Surf On Demand, and Oliver Reeves, our Chief Financial Officer. Our earnings release can be found on the SEC EDGAR website and on our investor relations page at investors.surfair.com. Before we begin, I want to remind everyone that during today's call, we will discuss our outlook and expectations for future performance. These forward-looking statements may be preceded by words such as "we expect," "we believe," or "we anticipate." These statements are subject to risks and uncertainties, and actual results could differ materially from the views expressed today.

Some of these risks are set forth in our earnings release and in our periodic reports filed with the SEC. We will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP, are included in our earnings release posted on our investor relations website and in our SEC filings. I will now turn the call over to Deanna White.

Good afternoon, everyone. The second quarter of 2026 was strong. Revenue came in at the high end of our guidance range at $29.5 million, and our adjusted EBITDA loss was within our range at $10.5 million. In April, we announced an improvement to our full year 2026 adjusted EBITDA loss guidance of approximately 40% compared to what we had previously announced while maintaining our revenue growth target of 20%-30% over the prior year. To achieve this, we put specific cost controls and strategies in place across our businesses, and we believe these changes have resulted in permanent improvements. What makes me most confident about our results is the environment we delivered them in. Over the last several months, the aviation industry experienced one of the most volatile periods of fuel prices.

In our case, we also managed through a month of unexpected heavy thunderstorms and flash flooding, uncommon in Hawaii, affecting our Mokulele operations. Achieving both our revenue and adjusted EBITDA targets under those conditions speaks to the durability of our operations and the technology we have built. Beyond the financial results, the second quarter produced a series of milestones. We won our first multi-year SurfOS enterprise contract. We doubled on-demand private charter revenue in the second quarter compared to the prior year period. We reduced our existing convertible note principal by 64% and lowered monthly cash amortization payments by up to 50%. We significantly expanded our partnership with Palantir Technologies, adding both engineering and business development resources to accelerate the commercialization of SurfOS. We partnered with BETA Technologies on landmark demonstration flights of electric aircraft in Hawaii with support from Hawaiian Airlines.

We deployed our safety management system a year ahead of the FAA schedule. For the last year and a half, the first phases of our transformation plan focused on completing foundational work, building SurfOS, lowering our cost structure, rationalizing the route network, modernizing the fleet, and restructuring our balance sheet. Though there will always be more to do, the work is now largely behind us. We believe the company is in a place for us to pursue revenue growth and profitability at the same time. This comes with a major shift in our strategic priorities as we now move into the expansion phase of our transformation plan, which runs now through 2027. Each of our leaders will take you through their second quarter results and key achievements and then explain in more detail their second half of 2026 priorities.

Before that, I will turn it over to our newly appointed Chairman of the Board, Shawn Pelsinger.

Thanks, Shawn. In the second quarter, SurfOS achieved a major milestone. As Shawn mentioned, we announced Wheels Up as the launch customer for Enterprise BrokerOS. It is an initial 2-year term, plus an option for a third, and we expect to receive up to $12 million over that period. As we saw with our own business, BrokerOS will allow Wheels Up to replace multiple legacy software systems and improve their sales team's efficiency. Wheels Up is our launch customer for our first commercial product. We still have OperatorOS and OwnerOS to commercialize this year and continue to explore more ways to apply our SurfOS technology even more broadly. We have a current active enterprise pipeline of large operators, brokerages, and aircraft manufacturers that we believe could be worth tens of millions of dollars annually in revenue.

The second point to emphasize from the second quarter is our expanded partnership with Palantir that we announced in June. Following the success of Wheels Up enterprise contract, we substantially increased the size of our engineering team to move even faster. In addition, Palantir added business development and commercial go-to-market resources with deep experience in aviation, transportation, and logistics who are directly involved in our enterprise sales process. Through our exclusive agreement, their team is in every enterprise conversation, and when we are in meetings with prospective customers, we bring the support, credibility, and technology to close large deals. These commercial resources are what will turn our active pipeline into more signed agreements. We deployed SurfOS features at record pace. Crew reserve optimization, fuel tracking, AI charter price recommendations, and AI charter supply sourcing all went live in the second quarter.

The common theme across these features is that each is designed to find permanent efficiency gains inside our own organization that strengthens the product for external customers. We also had the honor of showcasing BrokerOS at Palantir's AIPCon in June, where we highlighted the intelligence features and AIP-powered tools embedded in our software. The second quarter proved that the software is needed, the market is ready, and it's evolving quickly. The next phase for SurfOS is building on the early success and turning SurfOS into a high-growth, profitable business. Here is what we are focused on for the second half of this year. First, we're working to convert our enterprise pipeline of large operators, brokerages, and aircraft manufacturers. Sales cycles for enterprise clients are typically longer, and we are targeting at least one additional enterprise contract before year-end.