Serve Robotics Inc. /DE/ Q4 FY2024 earnings call

• Revenue: Ended 2024 with $1.8 million in revenue, a 700% YOY increase. - Expansion: Increased restaurants served by 3x and households reached by over 2x in the last four months, expanding to new neighborhoods in LA and first East Coast city Miami. - Fleet: On track to complete building 250 third-gen robots, with first production batch of third-gen robots manufactured in December and ramping up into delivery fleet. - AI Impact: Serve's robots are AI embodied, collecting terabytes of data daily to improve AI and autonomy, creating a flywheel of better robots, more scale, and more data. - Financials: 2024 GAAP operating expenses were $38.2 million, non-GAAP operating expenses were $23.7 million. Q4 2024 GAAP operating expenses were $12.9 million, non-GAAP were $8.4 million.

In 2024, Serve Robotics achieved $1.8 million in revenue, a 700% year-over-year increase. Software services contributed $1.2 million, and delivery and branding revenue was $627,000 in 2024, up 227% year-over-year. The revenue contribution from software services was significant at $1.2 million, while delivery and branding made up $627,000 of the total $1.8 million revenue.

• Plan to deploy 2,000 robots by end of 2025. - Building 250 third-gen robots by end of Q4 2024, with all 250 expected to be fully deployed and in deliveries by end of Q2 2025. - Plan to build 700 lower-cost Gen 3 robots in Q3 2025 and rest in Q4 2025. - Launching Dallas in Q2 2025, followed by Atlanta, and expanding to additional cities throughout the year.

• Factors outside of control like government dynamics changing, shipping delays, or policy changes that could threaten timelines in given markets. - Exposure to parts from China, though immaterial impact currently, but could be offset by cost reductions if policy changes occur.

Q: You mentioned that robot costs have been lowered. Does this mean you removed technology or made major component changes? How was this cost reduction achieved?

A: No. Did not remove any technologies or components. Primarily due to improvements in supply chain, including suppliers upgrading to tier one, leading to components being 70% cheaper. Expect to continue design improvements and scale benefits to lower costs.

Q: Can you say why you focused on the second half for the robot rollout?

A: Want to scale up thoughtfully and measuredly to be cost-efficient. Building 250 robots in Q4 tripling fleet size, then 700 in Q3 tripling again, allowing learning, fixing issues, and reducing costs gradually.

Q: Can you comment on recent developments with NVIDIA?

A: NVIDIA isn't privy to material confidential info about Serve. They invested in Serve before IPO and exited when public. Partnership with NVIDIA on technology continues with robots using their chips.

Q: In recent weeks, we've learned more about planned policy changes and tariff introduction. Do you anticipate any impact on your operations?

A: Monitoring developments daily. Currently, no material impact anticipated. Have global supply chain and hardware team working to diversify. Additional cost reductions this year could offset potential policy changes.

Q: We've seen that there were recent wildfires in LA. Any impact on Serve? Will this slow usage or roll-up plans in new neighborhoods?

A: No impact on rollout plan. A few team members had evacuations, experienced a few days of lower volume than usual, but impact was minimal and brief.

Q: Can you give an update on the Vivo acquisition?

A: Deal on pause due to closing conditions. Discussions continue, not a material transaction; updates will be shared if any.

Q: How are things going in Miami?

A: Things are going great. 50 restaurants onboarded, good utilization of robots, ahead of schedule in key delivery metrics, excited to expand further.

Q: Can you provide any updates on the Gen 3 robot's performance? Are there any early insights available on how well the new hardware is working in the new market?

A: Robots are performing much better compared to similar time frame of previous generation robots. Rolling out in stages to learn and improve, manufacturing process for Gen 3 robots is efficient and quick, early results are positive.

Q: What are your expectations now for 2026 and beyond? Do you still think the market can absorb as many of your robots as you can produce and optimize?

A: Believe there is strong demand for robots both in existing and new markets. Significant cost reduction in last-mile delivery will keep up and accelerate growth in demand for last mile, ensuring continuous demand for the robots