Surf Air Mobility Inc. (NYSE: SRFM) has reported a notable financial and operational turnaround in its second quarter of 2025, with revenues reaching $27.4M, Adj. EBITDA at ($9.5)M, and Adj. EPS of ($1.34), figures that surpassed the company's own expectations. This achievement underscores the effectiveness of Surf Air Mobility's strategic initiatives, including the optimization of its On Demand segment and the increasing adoption of its SurfOS software platform. A significant milestone was the airline operations achieving profitability on an Adj. EBITDA basis, highlighting improved operational efficiency.
The quarter also saw Surf Air Mobility engaging in strategic financial activities, such as raising $44.7M in equity capital and reducing debt by equitizing $29.9M of convertible notes. A pivotal development was the expansion of the company's partnership with Palantir, securing a five-year exclusive agreement for software configuration and sales, thereby reinforcing its stance in the aviation technology sector.
Operational improvements were evident, with a 20% year-over-year enhancement in on-time departure and arrival metrics, the best performance since January 2023. The renewal of an Essential Air Service contract in Hawaii, worth $4.2M over four years, and investments in fleet refurbishment, demonstrate the company's dedication to improving customer experience and network reliability.
The SurfOS platform, developed on Palantir's Foundry, has introduced BrokerOS, OperatorOS, and OwnerOS, each aimed at streamlining different facets of aviation operations. The platform's growth was marked by six new LOI agreements with charter brokers and operators, alongside the introduction of features designed to enhance scheduling, pricing accuracy, and maintenance processes.
Surf Air Mobility continues to lead in aviation electrification, with its proprietary electric powertrain program for the Cessna Caravan progressing towards FAA certification by 2027. The company's strategic joint ventures ensure capital efficiency while advancing its electrification objectives.
Management is optimistic about meeting its full-year revenue target of $100.0M and achieving positive Adj. EBITDA by year-end, despite potential tariff impacts. With a current valuation trading at a FY26 EV/Revenue of 1.7x compared to peers at a median of 3.3x, Surf Air Mobility presents an attractive opportunity for investors, with a projected valuation range of $5.50 to $8.90.
