Arrive AI Inc. (ARAI) Earnings Call Transcript & Summary

Thank you. Good morning, everyone, and thank you for joining us today. On the call is Dan O'Toole, Arrive AI's chairman, CEO, and founder, along with Ian Geiss, our head of commercialization, who's joining us for the first time today. The rest of Arrive AI's leadership team is also here to answer questions later in the call. The earnings press release issued this morning is available in the investor relations section of the company's website at arriveai.com. Before we begin, please note that today's remarks may include forward-looking statements regarding future financial results, operations, and performance. statements are not guarantees of future results and are subject to risk and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the risk factor section detailed in Arrive AI's SEC filings, which are also available on the company's website. Now, I will turn the call over to Arrive AI's.

dan o'toole thank you hey everyone dan o'toole here thank you for joining us today to keep our prepared comments concise, so let's get right to it. I also want to say, why don't you ever see elephants hiding in trees? because they've gotten really good at it. But I really want to say the elephant in the room has arrived at AEI. We're seeing a huge uptick in big players wanting to explore deploying our technology, and that is what is really exciting. So let's get this going. To start this morning, I'd like to welcome Piyush Bhadki as a ride at AEI's new CFO, Chief Financial and the special officer effective August 17th. As detailed in this morning's press release, Pusch brings more than two decades of Wall Street experience, including senior capital markets, roles at Bank of America, BTIG, and Jefferies, before moving into public company CFO leadership. That combination gives him a rare vantage point. He sat on the banking side, structuring financing for growth companies, and he sat in the CFO seat, managing the balance sheet and investor relationships that come with public company life. What stood out to me most is how aligned Pugh is with our vision for live AI. He understands the scale of the opportunity in front of us in autonomous logistics, and he's just as focused as we are on translating this quarter's commercial traction into long-term shareholder value, which I will elaborate on shortly. We'll hear directly from him on future calls and in the investor conversations as we move forward. I also want to thank Todd Pettmeyer for his contributions while here at Arrive AI. Now let's get into what's driving the business forward. including real commercial traction, continued technology progress, and a clear opportunity ahead for the live AI. The prepared remarks you're about to hear will be delivered using AI-generated versions of both mine and our Head of Commercialization's voice, Ian Geiss. That's the same format that we've used in the past. For us, this reflects how we think about artificial intelligence as a practical tool that can improve efficiency, scalability, and communication, the same philosophy that drives our platform and autonomous logistics network. After the prepared remarks conclude, we'll return to a live question and answer session of questions that were submitted ahead of this call. So with that said, let's begin the prepared remarks.

Thanks, everyone. This quarter we want to spend less time talking about where we're headed in the abstract and more time talking about the deals and partnerships and the progression we have made over the past several months. We expect to have more than a dozen AP3-plus. arrive points in stock and ready to ship by mid-September, representing our first wave of expanded availability and the solidification of our supply chain. Looking ahead, we're already developing the AP4, which is targeted for the first quarter of 2027, and will build on what AP3 Plus brings to the network. This is ideal timing to take advantage of the commercial traction we are seeing in the second half of the year. To walk through that in detail, I've asked Ian Guss, our head of commercialization, to join us today for the first time. Ian leads our commercial pipeline and he's going to provide you with an inside look at.

things stand. Thanks, Dan. It's easiest to think about our pipeline across three industries where we're seeing the strongest traction right now. healthcare, manufacturing, and specialty pharmacy delivery. In healthcare, Nexus AMR is pleased to partner with us to deliver end-to-end autonomous solutions for customers across multiple industries. The integration of Arrive AI's products into their automation portfolio enhances productivity and expands the value they deliver to healthcare organizations and other businesses facing persistent and growing labor challenges. Customers from around the world regularly visit the TechNexus Innovation Center, where they showcase best-in-class autonomous mobile robots and emerging technologies. Nexus is proud to feature Arrive AI's innovative solutions and has welcomed us as a key strategic partner. Hancock Regional Hospital remains our anchor healthcare deployment. And this quarter Hancock expanded their network by adding an additional arrive point, enabling building to building movement. This is a significant milestone since demand for building to building movement and secure exchange will be paramount in healthcare and in large campus facilities. In manufacturing, we've partnered with DXC to bring our technology into large pharmaceutical manufacturing environments, facilities with a global footprint, each spanning 500,000 square feet or more where moving product across the campus, including by drone for longer distances, is a real operational need. DXC's systems integration expertise also helps us plug into large enterprise customers faster than we could on our own. We've also announced a letter of intent with Lifespan Pharmacy and Cardon to explore an autonomous drone pharmacy delivery program. We are also engaged in early stage discussions with several Fortune 500 companies regarding potential pharmaceutical delivery opportunities. We're also seeing broader momentum with our autonomous delivery partners, Avrod, which builds autonomous delivery robots backed by one of the industry's longest running autonomous programs became the continuity partner for universities when Starship Technologies exited US campus operations. By the end of this year, AvRide expects to be operating on more than 20 campuses nationwide, working with Grubhub, Uber Eats, and major food service operators. What's next for AvRide is more campuses, expanded city deployments, faster and more reliable service, and most importantly, where we fit in, creating partnerships across the ordering and logistics stack, so last mile delivery becomes truly autonomous, end to end. This mutual goal will be key as we identify potential partners. As of today, we have a growing number of commercialization conversations underway, and a meaningful subset of those have already progressed into second and third round discussions. These later stage conversations are with partners we believe are the most likely to move forward into formal discussion. agreements. We're introducing this framing to give you a clearer view into the momentum we're seeing and our traction with potential partners. At the same time, we'll continue to only treat agreements as firm once they're signed and we'll announce each finalized partnership individually as it's secured. expect to keep building on this across health care, manufacturing, and specialty delivery in the coming quarters. Thanks, Ian.

on the financial side given the very recent CFO transition. I will walk through the highlights for the second quarter results. Second quarter revenue was in line with Q1 at $14,700 for the quarter. Our recently announced expansion with Hancock is expected to produce incremental revenue revenue in the third and fourth quarters this year, excluding revenue from a non-recurring consulting project in the year-ago quarter. Revenue was up slightly year over year. loss for the second quarter was $14.1 million compared to the $3.7 million net loss in the second quarter of 2025. However, the reported net loss includes $9.7 million in non-cash expenses related to the conversion of our outstanding notes. Excluding these non-cash expenses on a non-GAAP basis, net loss for the second quarter was $4.3 million. Cash and liquid investments on hand were $5.1 million at June 30th, an increase from $2.1 million in cash at December 31st. Our current cash burn rate is approximately $1.1 million per month. During the quarter, we completed the filing of an S3 registration statement for up to $100 million. We also finalized the terms of our at-the-market offering or ATM offering up to a maximum capacity of approximately $15 million. The amount and timing of sales under that agreement agreement will be disclosed quarterly as required. In addition, we retain the available capacity of $19 million in future prepaid advances under our previous 2025 equity line facility. I also want to speak directly to something I know is on a lot of people's minds, our ability to keep funding this business going forward. We continue to have real optionality in front of us right now on financing, and Piyush's capital markets background is already helping us sharpen how we think about those paths, our current cash burn. reflects deliberate investment in the team, technology, and infrastructure required to convert our commercial pipeline into scaled revenue. And we're being careful about which financing and operating decisions we make and when to do what's right for shareholders over the long term. At the same time, we are prudently managing operating and investment spend to drive growth while maintaining a disciplined focus on the balance sheet. I want to be direct about this. We are not in a position where we're at risk of running out of funds. We have options, and with Piyush's experience structuring financing for growth companies, we're working through them strategically and with real discipline. To wrap up, this quarter is about proof. Real partnerships, real deployments, and real momentum in our pipeline across healthcare, manufacturing, and specialty delivery. We appreciate your continued support and engagement. With that, Ian and I will now return live for Q&A along with the rest of our team.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. moment for questions. And our first question comes from Jack Codero with Maxim Group. You may proceed.

JACK VANDER AARD, Hi, thank you. This is Jack Vandera calling in from Jack Vanderaard. Thanks for taking my questions. You guys highlighted a couple of partnerships And then you mentioned there about a dozen arrive points kind of targeted to be ready to ship this, I think you said by the end of this year. I'm wondering how many arrive points do you have out there operating right now and kind of how does that connect to like for example this like 20 campuses you're taking over?.

Is that like an incremental 20 arrive points? How should we be thinking about that? Yes, hey, real quick. Thanks for being on the call here, Jack. Dan O'Toole, CEO. I just wanna say that the over a dozen units that we mentioned in the earnings call represents a huge multiplier of our past deployments. So that while over a dozen isn't a huge number in the abstract, it really marks traction that we're seeing and it's a huge multiplier on what we've had deployed so far. So I think the trajectory is really vertical for where we're going and what we're doing. I'm going to let Ian Geiser, head of commercialization, take the last part of that question. Right, Ian? Yes, just to clarify the statement on campuses, the.

The news that was iterated in that statement had to do with Average takeover of Starship's departure from campuses to do on-campus delivery. We are in early conversations with Average right now of employing the ArrivePoint network into potential pilot programs in which we could increase efficiencies for unattended delivery.

Okay, yes, that's perfect clarification. And it's exciting to see that you're getting a multiplier on kind of what was existing out there. I guess kind of the big question is, you know, how should we think about, you know, what are the big sticking points that you're kind of seeing that will enable you to start to talking about arrive points in kind of like hundreds of arrive points or thousands of arrive points. You know, do you think it's, is it more about adoption? Do you need more manufacturing scope? You know, I'd just like to get your thoughts like on the main, you know, sticking points. Thanks, Jack. We appreciate the thoughtful questions and the opportunity to share these answers that I'm sure a lot of people have.

people are thinking about. I'm going to ask Mark Hamer, COO, to take that one, Mark. Yes, thanks, Jack, for the question.

In Q1, we consolidated our roadmap, our product plan, our supply chain, and the delivery of the 12 units in September. That's the first installment on new units, it's called AP3 Plus, that have our new operating system. and our new software that enables operators and customers to see everything that's going on with their ride points and their network. what comes in Q1 is AP4, which is the first product that will support multiple deliveries at once, AMR pickup and drop off at the same time, drone delivery. And that supply chain has been designed to scale to hundreds over the course of 2027. Remains to be seen if we deploy that many, but that's what we're looking at supply chain-wise. And then the following year, we would have prototypes at the end of next year, for APX, the future generation, or AP5, you may hear it called, which is designed for even greater capacity and more automated handoffs in more situations, and that supply chain is being designed for thousands, tens of thousands. So it's a progression, a ramp, And kind of in parallel, once the supply chains are in place for that, then go to market follows that and provides the opportunities.

Okay, yes, that's super helpful, Collar. You know, congrats on the continued progress and thanks for taking my questions. Yep.

Thank you. I would now like to turn the call back over to Arrive AI for questions.

Yes, real quick. This is Dan. I'm going to take this opportunity to introduce Kiyush Fadke, our new CFO. Piyush, thanks for joining the call and thanks for joining the company. I'm really excited. I just want to give a quick shout out, I guess, to Adele with Alliance Advisors, a trusted partner, our investor relations firm. They knew we were looking to get a really like-minded investment. educated or streetwise, I guess you could say, CFO. Somebody that, you know, my personal wishlist was somebody that was entrepreneurial, somebody that could navigate the capital markets, could narrate an earnings report to analysts and investors, and be M&A-minded and be able to I think we've got exactly what we're looking for. Keish, if you're there, I'd like to say hey to you and have you give a little bit of a background on yourself to our investors.