Serve Robotics Inc. /DE/

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1.“Financial Statements,” of this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our 2025 Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see the sections titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and Part II, Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1.“Financial Statements,” of this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see the sections titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and Part II, Item 1A. “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

For the three months ended March 31, 2026 and 2025, we generated revenues of $3.0 million and $0.4 million, respectively, and reported net losses of $49.0 million and $13.2 million, respectively.

Current wording

For the three months ended June 30, 2026 and 2025, we generated revenues of $3.2 million and $0.6 million, respectively, and reported net losses of $64.1 million and $20.9 million, respectively. For the six months ended June 30, 2026 and 2025, we generated revenues of $6.2 million and $1.1 million, respectively, and reported net losses of $113.1 million and $34.1 million, respectively.

Previous wording

As noted in our unaudited condensed consolidated financial statements, as of March 31, 2026, we had an accumulated deficit of $257.9 million.

Current wording

As noted in our unaudited condensed consolidated financial statements, as of June 30, 2026, we had an accumulated deficit of $322.0 million.

Previous wording

On August 15, 2025, the Company acquired all of the issued and outstanding equity of Vayu, which was accounted for under the acquisition method of accounting. Refer to the “Liquidity and Capital Resources” section for discussion of the purchase price and the acquisition’s impact on the Company’s liquidity.

Current wording

On February 17, 2026, the Company acquired all of the issued and outstanding equity of Vebu, which was accounted for under the acquisition method of accounting. Refer to the“Liquidity and Capital Resources” section for discussion of the purchase price and the acquisition’s impact on the Company’s liquidity.

Previous wording

On January 27, 2026, the Company acquired all of the issued and outstanding equity of Diligent, which was accounted for under the acquisition method of accounting. Refer to the “Liquidity and Capital Resources” section for discussion on the purchase price and the acquisition’s impact on Serve’s liquidity.

Current wording

On January 27, 2026, the Company acquired all of the issued and outstanding equity of Diligent, which was accounted for under the acquisition method of accounting. Refer to the“Liquidity and Capital Resources” section for discussion of the purchase price and the acquisition’s impact on the Company’s liquidity.

Previous wording

There are a number of industry factors that affect our business which include, among others:

Current wording

There are a number of factors that affect our business which include, among others:

Previous wording

Our potential for growth depends significantly on continued demand for last-mile delivery of food and other items on our partner platforms and for automation solutions from our hospital customers. The demand for last-mile delivery can fluctuate based on various market cycles and weather and local community health conditions, as well as evolving competitive dynamics, and the demand for hospital-based automation solutions can fluctuate based on budget cycles, staffing levels, operational priorities, and broader healthcare industry conditions.

Current wording

Our potential for growth depends significantly on continued demand for last-mile delivery of food and other items on our partner platforms and for automation solutions from our hospital customers. The demand for last-mile delivery can fluctuate based on various market cycles, weather and local community health conditions, as well as evolving competitive dynamics. The demand for hospital-based automation solutions can fluctuate based on budget cycles, staffing levels, operational priorities, and broader healthcare industry conditions.

Previous wording

Our largest stream of projected revenue comes from maximizing utilization of our outdoor delivery robot fleet to perform deliveries on our partner platforms. Matching algorithms on these platforms as well as the extent of their merchant and end-customer participation in robotic delivery directly impacts the utilization rate of our robots, both of which can be challenging to predict. These uncertainties make demand difficult to forecast for us and our partners.

Current wording

Our largest stream of projected revenue comes from maximizing utilization of our outdoor delivery robot fleet to perform deliveries on our partner platforms. Matching algorithms on these platforms as well as the extent of their merchant and end-customer participation in robotic delivery directly impacts the utilization rate of our robots, both of which can be challenging to predict. Our ability to gain additional partners and to generate revenue with such additional partners is dependent on numerous factors, including, among others, the partner’s consumer base and desire to use robotic delivery, along with normal-course onboarding for new partners. These uncertainties make demand difficult to forecast for us and our partners.

Previous wording

A significant portion of our revenue is concentrated with a limited number of customers. The following table represents the concentration of revenue for all customers that accounted for more than 10% of our revenues for the three months ended March 31, 2026 and 2025:

Current wording

A significant portion of our revenue is concentrated with a limited number of customers. The following table represents the concentration of revenue for all customers that accounted for more than 10% of our revenues:

Previous wording

Other income (expense), net primarily includes the following items:

Current wording

Other income (expense) primarily includes the following items:

Previous wording

The following table summarizes our operating results as reflected in our unaudited statements of operations during the three months ended March 31, 2026 and 2025, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods (in thousands).

Current wording

The following table summarizes our operating results as reflected in our unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended June 30, 2026 and 2025, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods (in thousands).

Previous wording

Revenues increased by $2.5 million, or 578%, to $3.0 million, for the three months ended March 31, 2026, compared with $0.4 million for the same period in 2025. This increase is primarily driven by a $1.7 million increase in fleet services revenue, of which, $1.2 million relates to the addition of the indoor robot fleet and the remaining increase of $0.6 million is a result of strong operational execution through expansion of the outdoor robot fleet.

Current wording

Revenues increased by $2.6 million, or 404%, to $3.2 million, for the three months ended June 30, 2026, compared with $0.6 million for the same period in 2025. This increase was primarily driven by a $2.0 million increase in fleet services revenue due to overall expansion and diversification of the robot fleet and partnerships. The remaining increase of $0.6 million was attributable to an increase in software services revenue.

Previous wording

Cost of revenues increased by $10.1 million to $12.0 million for the three months ended March 31, 2026, compared with $1.9 million for the same period in 2025, due primarily to the substantial expansion of our robot fleet resulting from the integration of the indoor robot fleet and expansion of the outdoor robot fleet.

Current wording

Cost of revenues increased by $8.5 million to $12.0 million for the three months ended June 30, 2026, compared with $3.5 million for the same period in 2025, due primarily to the integration of recent acquisitions and expansion of the outdoor robot fleet.

Previous wording

Sales and marketing expenses increased by $1.6 million to $1.9 million for the three months ended March 31, 2026, compared with $0.2 million for the same period in 2025. This increase was primarily due to an increase in headcount of approximately 220%.

Current wording

Sales and marketing expenses increased by $3.8 million to $4.3 million for the three months ended June 30, 2026, compared with $0.5 million for the same period in 2025. This increase was primarily due to an increase in personnel-related costs.

Previous wording

Interest income increased by $0.3 million to $2.1 million for the three months ended March 31, 2026, compared with $1.8 million for the same period in 2025, as a result of interest earned from cash on hand and marketable securities.

Current wording

Other income (expense) increased by $0.1 million to $1.9 million for the three months ended June 30, 2026, compared with $1.8 million for the same period in 2025. This increase was primarily due to an increase in interest income as a result of interest earned from cash on hand and marketable securities.

Previous wording

Research and development expense increased by $12.2 million to $19.0 million for the three months ended March 31, 2026, compared with $6.9 million for the same period in 2025, due primarily to an increase in headcount of approximately 95%, including an increase in stock-based compensation expense, and increased software costs due to network usage.

Current wording

Research and development expense increased by $23.3 million to $39.3 million for the six months ended June 30, 2026, compared with $16.0 million for the same period in 2025, due primarily to an increase in personnel-related costs, including an increase in stock-based compensation expense, as well as increased software costs due to network usage.

Previous wording

General and administrative expense increased by $10.2 million to $14.9 million for the three months ended March 31, 2026, compared with $4.8 million for the same period in 2025, due primarily to an approximately 140% increase in headcount, higher stock-based compensation expense, higher amortization expense related to acquired intangible assets, and increased professional fees largely related to acquisition activities.

Current wording

General and administrative expense increased by $26.9 million to $39.8 million for the six months ended June 30, 2026, compared with $12.8 million for the same period in 2025, due primarily to an increase in personnel-related costs, including stock-based compensation expense, as well as higher amortization expense associated with acquired intangible assets and increased professional fees largely related to acquisition activities.

Previous wording

Operations expense increased by $5.3 million to $7.0 million for the three months ended March 31, 2026, compared with $1.7 million for the same period in 2025. The increase was primarily attributable to an approximately 225% increase in headcount, higher depreciation expense associated with the expansion of our robot fleet, and increased facility costs related to our entry into new markets.

Current wording

Operations expense increased by $11.0 million to $14.8 million for the six months ended June 30, 2026, compared with $3.8 million for the same period in 2025. The increase was primarily attributable to an increase in personnel-related costs, higher depreciation expense associated with the expansion of our robot fleet, and increased facility costs related to our entry into new markets.

Previous wording

Daily Active Robots. We define daily active robots as the average number of robots performing daily deliveries during the period. Daily active robots reflect our operation team’s capacity to have active robots in the field performing delivery services or generating branding revenues. We closely monitor and strive to efficiently increase our daily active robots as we improve our autonomy and resultant human-to-robot ratios and increase the number of partners on our platform.

Current wording

Daily Active Robots. We define daily active robots as the average number of robots performing daily deliveries during the period. This metric is reflective of the total robot fleet, including both indoor and outdoor robots. Daily active robots reflect our operation team’s capacity to have active robots in the field performing delivery services or generating branding revenues. We closely monitor and strive to efficiently increase our daily active robots as we improve our autonomy and resultant human-to-robot ratios and increase the number of partners on our platform.

Previous wording

Daily Supply Hours. We define daily supply hours as the average number of hours our robots are ready to perform daily deliveries during the period. Supply hours represent the aggregate number of robot hours per day during which we can utilize our robots for delivery. Supply hours increase as we add active robots and increase the operating window of those robots in a day. We closely monitor and strive to efficiently increase our fleet’s daily supply hours.

Current wording

Daily Supply Hours. We define daily supply hours as the average number of hours our robots are available to perform daily deliveries during the period. Supply hours represent the aggregate number of robot hours per day during which we can utilize our robots for delivery, inclusive of both indoor and outdoor deliveries. Supply hours increase as we add active robots and increase the operating window of those robots in a day. We closely monitor and strive to efficiently increase our fleet’s daily supply hours.

Previous wording

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents, and marketable securities of $197.4 million, which consisted of $47.1 million in cash and cash equivalents, $140.4 million in short-term marketable securities. and $9.9 million in long-term marketable securities. Cash and cash equivalents consisted of cash on deposit with banks as well as an institutional money market account. Marketable securities consisted of commercial paper, corporate bonds, U.S. government agency securities and U.S. Treasury securities.

Current wording

As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents, and marketable securities of $240.4 million, which consisted of $79.1 million in cash and cash equivalents, $156.3 million in short-term marketable securities, and $5.0 million in long-term marketable securities. Cash and cash equivalents consisted of cash on deposit with banks as well as an institutional money market account. Marketable securities consisted of commercial paper, corporate bonds, U.S. government agency securities and U.S. Treasury securities.

Previous wording

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $257.9 million as of March 31, 2026. We have historically funded our operations from issuance of equity and debt securities, including our initial public offering in April 2024 and subsequent equity issuances. To execute on our strategic initiatives to continue to grow our business, we may incur operating losses and generate negative cash flows from operations in the future, and as a result, we may require additional capital resources. We believe our existing cash and cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.

Current wording

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $322.0 million as of June 30, 2026. We have historically funded our operations from issuance of equity and debt securities. To execute on our strategic initiatives to continue to grow our business, we may incur operating losses and generate negative cash flows from operations in the future, and as a result, we may require additional capital resources. We believe our existing cash and cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.

Previous wording

Our future capital expenditures will depend on many factors, including, but not limited to our growth, our ability to attract and retain customers, the continuing market acceptance of our offerings, the time and extent of spending to support our efforts to develop our platform, and the expansion of sales and marketing activities, the timing and extent of spending for policy initiatives. Further, we may in the future enter into arrangements to acquire or invest in businesses, products, services, and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

Current wording

Our future capital expenditures will depend on many factors, including, but not limited to our growth, our ability to attract and retain customers, the continuing market acceptance of our offerings, the time and extent of spending to support our efforts to develop our platform, the expansion of sales and marketing activities, and the timing and extent of spending for policy initiatives. Further, we may in the future enter into arrangements to acquire or invest in businesses, products, services, and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

Previous wording

Net cash used in operating activities was $41.4 million and $9.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase of $32.0 million primarily consisted of an increased net loss of $35.8 million, adjusted for certain non-cash items, which primarily includes an increase of $5.8 million of depreciation and amortization expense and $3.5 million of non-cash stock-based compensation expense, offset by a decreased change in operating assets and liabilities of $4.4 million.

Current wording

Net cash used in operating activities was $84.7 million and $25.4 million for the six months ended June 30, 2026 and 2025, respectively. The increase of $59.3 million primarily consisted of an increased net loss of $79.1 million, adjusted for certain non-cash items, which primarily includes an increase of $13.8 million of non-cash stock-based compensation expense and an increase of $11.5 million of depreciation and amortization expense. These increases were offset by a decrease of change in operating assets and liabilities of $4.4 million.

Previous wording

Net cash used in investing activities was $19.6 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively. The increase of $16.3 million was primarily due to acquisition activity of $21.4 million, offset by net proceeds of marketable securities of $3.3 million.

Current wording

Net cash used in investing activities was $27.7 million and $81.9 million for the six months ended June 30, 2026 and 2025, respectively. The decrease of $54.2 million was primarily due to an increase in acquisition activity of $15.8 million, offset by an increase in net proceeds from marketable securities of $59.0 million.

Previous wording

Net cash provided by financing activities was $1.9 million and $87.3 million for the three months ended March 31, 2026 and 2025, respectively. The decrease of $85.3 million primarily consisted of a decrease of $75.8 million in proceeds from the issuance of the Company’s common stock and a decrease of $11.8 million in proceeds from exercises of warrants.

Current wording

Net cash provided by financing activities was $85.3 million and $100.8 million for the six months ended June 30, 2026 and 2025, respectively. The decrease of $15.5 million primarily consisted of a decrease of $11.4 million in proceeds from exercises of warrants and a decrease of $4.4 million in proceeds from the issuance of the Company’s common stock during the period.