DALLAS, TX -- March 24th, 2025 -- Surf Air Mobility Inc. (NYSE: SRFM): Stonegate Capital Partners initiates their coverage on Surf Air Mobility Inc. (NYSE: SRFM). SRFM reported revenue, adj EBITDA, and adj EPS of $28.0M, ($6.9)M, and $1.27, respectively. For the full year the Company reported revenue, adj EBITDA, and adj EPS of $28.0M, ($6.9)M, and $1.27, respectively. It is notable that the Company exceeded both revenue and EBITDA guidance in the quarter, in part thanks to strong growth in On Demand service revenue, which was up 39% over 4Q23 and 28% for FY24 compared to FY23. With the Company moving out of the Transformation Phase into the Optimization Phase we expect SRFM to improve profitability through strategic cost take outs and optimizations, with very noticeable growth showing towards the back half of FY25.
Company Updates:
Mobility: Regional air mobility saw pivotal improvements through FY24. SRFM is advancing regional air travel by optimizing its network, improving flight efficiency, and leveraging technology to streamline operations. As of 4Q24, the Company refined its route structure by exiting unprofitable routes and aligning schedules with demand to enhance reliability and profitability. Looking ahead, Surf Air Mobility will continue investing in fleet optimization and digital enhancements to drive innovation, scalability, and long-term growth in regional aviation. In the medium term we expect SRFM to utilize its informational architecture to redeploy into profitable, high growth, routes.
Software: A major milestone for SRFM in 2024 was the launch of SurfOS, an AI-driven software platform designed to enhance the safety, efficiency, and profitability of regional air travel. The system, now in beta testing with six users, streamlines flight scheduling, pricing, and operational analytics to improve decision-making for operators. SurfOS is expected to play a pivotal role in the company’s long-term strategy, providing a scalable solution that supports both its own airline operations and potential third-party partnerships in the industry.
Electrification: As of FY24, we note that SRFM remains at the forefront of aviation electrification with its proprietary electric powertrain technology for the Cessna Caravan. The Company is targeting FAA certification of this innovative system by 2027. With signed memorandums of understanding (MOUs) from seven customers to upgrade ~100 aircraft upon approval, SRFM is positioning itself as a leader in the transition to cleaner, more sustainable air travel. This avenue provides significant upside potential that we do not believe has been priced in yet.
Balance Sheet and Capital Structure: In 4Q24 SRFM secured a $50.0M term loan on top of the maturity extension for the Company’s secured debt which was completed earlier in FY24. We expect the term loan to be used primarily for the above-mentioned maintenance backlog, which we expect to wrap in 1H25. For the full year, SRFM ended by drastically improving working capital, further helping the Company to start 2025 on strong footing.
Guidance and Valuation: We are using an EV/Revenue framework to inform our SRFM valuation. Currently SRFM is trading at a FY26 EV/Revenue of 1.2x compared to comps at an median of 2.2x. We are using our F26 expected Revenue, and an EV/Revenue range of 1.5x to 2.0x with a midpoint of 1.8x. This arrives at a valuation range of $6.68 to $11.19 with a mid-point of $8.94.
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