SERV

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. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the star 1 again. 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 ten-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.

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 7 times year-over-year and nearly 3.5 times 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 1/2 of total revenue is now recurring.

Last quarter, I said that 2026 would be a year of compounding returns. 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 ones. 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. Let me go a level deeper. First, our autonomous food delivery operation continues to scale.

Our deployed fleet is now seven times larger than in Q1 of last year, while daily active robots are up 10 times and daily supply hours are up 13 times 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 increase 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's 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 work that's in front of us now. We expect it to drive significant growth over the course of the year in line with our $26 million revenue guidance for 2026.

Our healthcare business, Diligent Robotics, which joined Serve 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 two 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've 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 healthcare 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 three 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 Diligent, and continued expansion in our existing markets. I also want to say a word about safety.

Our robots share space with people every day, 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 N.Y. to L.A. That's every single day. They do that with a stellar safety record. Our robots have orders of magnitude less kinetic energy than cars. 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.

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 pre-previous calls, the foundation of everything we do is Serve's 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. As that fleet 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 will 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 Serv. Revenue scaled meaningfully. We began integrating Diligent Robotics, and we continued to broaden ways we monetize the autonomy platform through fleet, software, branding, data, and healthcare 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. Serv is building a network of robots that can operate across multiple real-world use cases, including food and healthcare today, with opportunities for package delivery, healthcare 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 shows 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 and every supply hour into more revenue. We are managing this through specific levers within the environments we operate, 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 healthcare, 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. Dive locks 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. 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 non-recurring 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 healthcare 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 $90 million. 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 two different economic layers in the quarter. Fleet gross margin remained negative as we supported a substantially larger fleet, integrated our healthcare 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 robotic space. 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 under-investing 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 using 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 the 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-$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. Serve 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 will open the line for Q&A.

Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star 1 again. If you are called upon to ask your question and listening via loudspeaker on your device, please make sure to pick up your handset and ensure that your phone is not muted when asking a question. Again, please press star 1 to join the queue. Your first question comes from the line of Colin Rusch of Oppenheimer. Please go ahead.

Thanks so much. Guys, you know, you talked about the cadence of delivery times and speed of delivery being a key lever for you guys. You know, can you talk a little bit about the cadence of improvement in the 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 when 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. 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 offline. 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?

Yeah. That's already in progress. Hopefully we'll have more to share about that soon too. 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's a pretty important piece that pretty much every robotic and autonomy team or company needs. We have a piece of technology that we believe is really superior to whatever is out there. We have been commercializing that.

There's investments made, and there will be more to share in the next few months.

All right. Thanks, guys.

Your next question comes from the line of Alex Latimore of Northland. Please go ahead.

Hey, Ali. Hey, Brian. Great quarter, guys. I just wanna 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.

Hey, Alex. Yes, again, I can take this. This to me feels like the, you know, the closest thing to infinite time because it's such an expensive thing to move things in last mile right now. We are seeing a lot of opportunities for new use cases or new customers that have never used the service. We haven't really seen any constraint as far as demand goes. I think the parts of the problem that have to be solved as we scale have to do with, you know, 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. As far as the TAM and the total kind of opportunity, I'm very bullish on that.

Great. 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, you know, head down on optimization, flywheel here? Are there any notable changes given that experience?

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

Yeah, yeah. 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.

That 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 a job. It's about, you know, 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. You need to always kind of balance, you know, what's the distance of jobs that you accept, and where do you put the limits on that. There's, there's a lot of interesting variables that are actually very market dependent. As we go to new markets, we basically have to customize that per market and sometimes even per neighborhood.

I wouldn't say there's anything really large, as a learning because, you know, 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, you know, neighborhood-based adjustments.

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

That's a really good question. We are looking at basically both in the markets we are, but also new cities and even international, so we are exploring all of them. For example, just last night, city of Vancouver in Canada approved a 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 and the province, but it's very exciting. It would be the very first such deployment in Canada. We are very, you know, actively working on unlocking these new markets and new cities, including some international options. As any of them firm up, we would obviously make announcements.

Sweet. Thank you.

Once again, if you wish to ask a question, please press star one to join the queue. Your next question comes from the line of Taylor Manley of Guggenheim. Please go ahead.

Hey, thanks for taking the question. kind of expanding on that, you mentioned Vancouver, which is very exciting. more generally, there's some markets that you are in that kind of have established regulatory framework, 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. kind of how does regulation inform your thinking on which markets to expand to or not, if at all?

It absolutely does. Our thinking is if you look at the, again, the broader size of the opportunity, there's a lot of places to go and a lot of options to choose from. We don't need to force ourselves anywhere. We wanna go to places that are receptive. There are really three kind of legs to 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. The other two variable is what we focus on to open a new market, which is, are they receptive? Is this a place we wanna be, or do they have a framework?

Do we need to help them develop it? There are a lot of investments we are making to create a strong pipeline of markets. Again, that includes both in the U.S. and international. At the same time, working with platforms, including new platforms besides Uber and DoorDash to access the demand in those markets. These are all investments that we are making simultaneously.

Helpful. Thank you. 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 is pretty strong in the first quarter. Just anything, should we expect kind of similar mix or any changes there moving forward? Thanks.

Yeah. Hey, Taylor, this is Brian. Yeah, we had a really strong Q1 with respect to software services. You know, I think we're gonna 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 and per supply hour focus, I think we're gonna see more growth on the fleet side. Obviously, we're not gonna give guidance with respect to fleet versus software. Reiterating and anchoring on the $26 million overall is the objective, monetizing those robots the best we can is our first focus.

Awesome. Thank you.

Your next question comes from the line of Jeff Cohen of Ladenburg Thalmann. Please go ahead.

Hi there. This is Destiny on for Jeff. Thank you for taking the question. 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?

Yeah, happy to. There's a number of, again, parts to this. If you think about it very first principle, the main question is how much are the robots helping the staff in a hospital? 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, you know, in a good way. 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.

One of the ways to maximize that revenue is to actually increase the fleet size.

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 from the team through additional robots, and thus, ensuring we can grow that top line throughout the rest of the year.

Okay, perfect. 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.

Yeah, no, I appreciate that, you calling that out. We even in the past, haven't been, kinda proactively trying to look for expansions. 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 is a very good time for consolidation. We've been opportunistic, and we found some really amazing opportunities, obviously, Diligent being one of them. If you wanna 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. 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. I would say actually most environments that we are in would classify as that. Any place where robots can help, whether they're moving things or monitoring things or just assisting in general, would be a good place for this. You know, we'll keep our ears to the ground, and when good opportunities show up, we'll react.

Perfect. All righty. Thank you for taking the questions.

There are no further questions over the audio. I would like to turn the call back over to Steve for any email questions.

Yeah. Thank you. We have one email question, which is: What is the status of DoorDash? What's your relationship with DoorDash?

I can take that one. 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. We are seeing really good momentum, and we are gonna continue to build on that momentum.

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.