Serve Robotics’ Earnings Call Contradictions: Direct Sales Push and Software Revenue Softness Clash With Past Guidance

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $3.2 million, up 9% sequentially over Q1 and up 400% year-over-year
• EPS: -$0.80 per share (GAAP), -$0.59 per share (non-GAAP)
• Gross Margin: -271%

Guidance:

• Full-year 2026 revenue guidance lowered from $26 million to a range of $9 to $10 million.
• Capital expenditures for 2026 reduced from about $25 million down to approximately $15 to $17 million.
• 2026 non-GAAP operating expense outlook lowered from $160 to $170 million down to approximately $140 to $150 million.

Business Commentary:

Uber Partnership Decline:

• Delivery volume through Uber declined for the first time after 17 consecutive quarters of growth, from Q1 2022 through Q1 2026.
• This reversal was primarily due to changes in the operating model and integration between Serve Robotics and Uber, leading to lower than expected robot utilization.
• Despite steady customer and merchant demand, the differing views on fleet coordination and integration resulted in the decision not to renew the agreement upon its expiration in early 2027, unless the operating model is meaningfully improved.

Revenue Guidance Reduction:

• Serve Robotics lowered its full-year 2026 revenue guidance from $26 million to a range of $9 to $10 million.
• The principal driver of this change was the removal of the expected delivery volume ramp in the second half, which was not supported by Q2 results.
• The decline in Uber delivery volume and the decision to allocate resources to more beneficial partnerships were key factors in this adjustment.

Diversification of Revenue Streams:

• The company's revenue base is diversified across delivery, advertising, and hospital robotics, with advertising accounting for nearly 50% of robotic food delivery revenues in Q2.
• Despite geopolitical headwinds, the advertising segment showed strength, and the hospital robotics business continues to generate contracted recurring revenue at attractive margins.
• This diversification is part of a strategy to reduce reliance on any single delivery channel and to focus on opportunities with clearer demand signals and higher expected utilization.

Operational and Cost Discipline:

• Non-GAAP operating expenses were reduced from $160 to $170 million to approximately $140 to $150 million, and planned 2026 capital expenditures were lowered from $25 million to $15 to $17 million.
• The company is narrowing investments to focus on autonomy performance, utilization, recurring revenue, and gross margin improvement, reflecting a strategic shift towards cost discipline and operational efficiency.

Technological Advancements in Autonomy:

• Serve Robotics is making significant investments in autonomy development, AI model training, and fleet software, with R&D being the largest investment area.
• The company is advancing a new generation autonomy platform designed to improve robot productivity and expand the geographic reach of its fleet, which is expected to enhance per unit economics.

Sentiment Analysis:

Overall Tone: Neutral

• Management expressed disappointment over Uber volume decline and guidance reduction but emphasized a 'disciplined portfolio decision' to focus on higher utilization opportunities. Statements: 'We have important updates to share... we are lowering our full-year 2026 revenue guidance' and 'We believe this is going to make us a stronger company in the long term.'

Q&A:

• Question from Mike Lattimore (Northland Capital Market): Can you elaborate on why utilization was not hitting goals in Q2? Was there any discussion or concern over rev share?
  Response: The decline was attributed to differing views on operating models and fleet integration with Uber, not a sudden drop in customer demand or delivery quality.

• Question from Mike Lattimore (Northland Capital Market): Which channel will be more important going forward: partner platforms like DoorDash or direct to merchants?
  Response: The company aims for a diversified approach, investing in direct channels (e.g., Beacon product) to gain more control and enable new use cases while maintaining partnerships.

• Question from Mike Lattimore (Northland Capital Market): Any guidance on software revenue in the second half? Is Diligent still on track for about $7 million this year?
  Response: Software revenue will be a little softer in the back half; Diligent's contribution remains positive for mix and margins, but specific splits are not provided.

• Question from Colleen Rush (Oppenheimer and Company): Can you talk about the KPIs for the efficiency of autonomy and the cadence of learning?
  Response: Key focus is on improving robot performance (speed, safety, reliability). More details on new generation autonomy and metrics will be shared in upcoming months.

• Question from Colleen Rush (Oppenheimer and Company): Can you talk about the potential for accelerating deployments and optimization of hospital robots?
  Response: Diligent is scaling hardware for reliability and cost reduction, similar to CERB's past investments, positioning for future growth.

• Question from Jeffrey Cohen (Leidenberg Thalmann): Can you talk about the advertising business, including customer types and pricing, and expectations for the back half?
  Response: Advertising accounts for about 50% of robotic food delivery revenue, with both local and national campaigns; pricing supports multi-city campaigns, but specific guidance is not provided.

• Question from Jeffrey Cohen (Leidenberg Thalmann): Any update on non-food initiatives like No Scrubs?
  Response: Beacon product aims to remove integration barriers for any merchant, and another customer-facing product is in development to open new use cases beyond food delivery.

Contradiction Point 1

Future Growth Strategy: Partnerships vs. Direct Sales

Shift from emphasizing partner growth to prioritizing direct merchant/customer relationships.

Mike Lattimore (Northland Capital Markets) - Mike Lattimore (Northland Capital Markets)

2026Q2: The company aims for greater control over its destiny and diversification... They will continue investing in partners like DoorDash... but also focus on direct merchant and customer relationships. - [Ali Khashoggi](CEO)

Which will be more important for future market reach—partnerships with platforms like DoorDash or direct-to-merchant sales—and how does the company plan to reach end customers directly through these strategies? - Steve Webb (via email question from participants)

2026Q1: The relationship with DoorDash is progressing very well. Delivery volume with DoorDash has been growing faster than with other partners... The company expects to build on this momentum. - [Ali Khashoggi](CEO)

Contradiction Point 2

Expected Revenue Contribution from Software vs. Fleet Services

Change in guidance from expecting more growth from fleet services to software revenue being "softer."

Mike Lattimore (Northland Capital Markets) - Mike Lattimore (Northland Capital Markets)

2026Q2: For the second half, software revenue is expected to be softer due to continued headwinds. - [Brian Reed](CFO) and [Ali Khashoggi](CEO)

Can you provide guidance on software revenue for the second half and confirm if Diligent Robotics remains on track for approximately $7 million in revenue this year? - Taylor Manley (Guggenheim)

2026Q1: While Q1 had strong software revenue, the company expects more growth from the fleet side in the second half as the focus remains on scaling revenue per robot... - [Brian Read](CFO)

Contradiction Point 3

Deployment and Utilization Timeline for Robot Fleet

Conflicting statements on when the existing robot fleet will be fully operational.

Mike Lattimore (Northland Capital Markets) - Mike Lattimore (Northland Capital Markets)

2026Q2: The decline was due to operational and integration challenges from Uber's changes... It highlighted differing views on the operating model. - [Ali Khashoggi](CEO)

What factors in Q2 caused utilization to miss goals, including specific events, revenue share concerns, or Uber's resource allocation? - [Questioner unnamed in provided text]

2025Q4: The company expects to have all existing robots fully active and daily operational by the middle of 2026. - [Ali Kashani](CEO)

Contradiction Point 4

Strategic Importance and Future of the Uber Partnership

Contradiction on commitment to and reliance on the Uber platform partnership.

Mike Lattimore (Northland Capital Markets) - Mike Lattimore (Northland Capital Markets)

2026Q2: The decline was due to operational and integration challenges from Uber's changes... The company will not renew the partnership unless the model is meaningfully improved, but discussions with Uber continue. - [Ali Khashoggi](CEO)

What factors in Q2 contributed to utilization missing targets, such as specific events, revenue share concerns, or Uber's resource allocation strategies? - Anonymous Investor/Analyst

20251113-2025 Q3: The partnership involves integrating robots into DoorDash's fleet... The multi-platform approach allows a single robot to alternate between DoorDash and Uber deliveries, enhancing utilization and lowering cost per delivery. - [Ali Kashani](CEO)

Contradiction Point 5

Deployment and Scaling Timeline for Diligent (Hospital Robotics)

Contradiction on the current phase and near-term plans for scaling the Diligent business.

Colleen Rush (Oppenheimer & Company) - Colleen Rush (Oppenheimer & Company)

2026Q2: Diligent is in the process of scaling rapidly, similar to the path Serve Robotics took with its 2,000-robot fleet. This involves costing down hardware and improving reliability after proving the model. - [Ali Khashoggi](CEO)

Can you discuss the potential for accelerating Diligent hospital robot deployments, optimizing their design, and the expected timeframe for these developments? - Anonymous Investor/Analyst

20251113-2025 Q3: The path to the $60-$80 million annualized revenue run rate is underway... The milestone is still more than 12 months away, with an update expected early next year. - [Brian Read](CFO)