DALLAS, TX -- May 15th, 2025 -- Surf Air Mobility Inc. (NYSE: SRFM): Stonegate Capital Partners updates their coverage on Surf Air Mobility Inc. (NYSE: SRFM). SRFM reported revenue, adj EBITDA, and adj EPS of $23.5M, ($14.4)M, and ($1.09), respectively. It is notable that the Company was well within both revenue and EBITDA guidance in the quarter, despite a short unscheduled downtime towards the beginning of the quarter and a decrease in OnDemand services revenue as the Company continues to focus on charter profitability. 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 expected towards the back half of FY25. We are very encouraged by the interline agreement that SRFM entered with Japan Airline, the Company’s first interline agreement with an international airline. We note that this combined with the Company’s launch of the new Jet Card shows the high priority of end-user experience.
Company Updates:
Air Mobility: Air mobility saw continued improvements in 1Q25. SRFM is advancing regional air travel by optimizing its network, improving flight efficiency, and leveraging technology to streamline operations. As of 1Q25, the Company continued to refine its route structure by exiting unprofitable routes and aligning schedules with demand to enhance reliability and profitability. Now that the Company has relocated to the Dallas/Fort Worth area and hired senior aviation professionals, it has moved on to redesigning pilot pay, domicile, work rules, and resource plans. This push is further moving costs out of the organization, leading towards the positive Adj. EBTIDA expected by year end.
Software: SurfAir continues advancing the SurfOS platform, 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. While receiving feedback both internally and from beta testers, the Company has added a Flight and Crew Scheduling module to SurfOS, further driving efficiencies.
Electrification: 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. The Company continues to pursue JV opportunities to capitalize electrification efforts.
Outlook: It was notable in the quarter that management does not believe that tariffs will have a significant impact on results in FY25. We believe this is reasonable and gives us confidence that SRFM will reach its full year targeted revenue of $100.0M, and positive Adj. EBTIDA by year end. For 2Q25 the Company has outlined revenue guidance in a range of $23.5M to $26.5M and an Adj. EBITDA loss of $10.0M to $13.0M.
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 1.0x compared to comps at a median of 2.5x. We are using our F26 expected Revenue, and an EV/Revenue range of 1.75x to 2.25x with a midpoint of 2.0x. This arrives at a valuation range of $6.75 to $10.90 with a mid-point of $8.82.
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