Good morning, and welcome to the Blade Air Mobility Inc. Fiscal Third Quarter 2021 Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Mr. Tom Cook, Investor Relations, please go ahead.
Thanks, Andrew, and good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Blade Air may be deemed to constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties and actual future results may differ materially from those expressed or implied by the forward looking statements. We refer you to our SEC filings, including our Form S-one filed with the SEC on May 28, 2021, and the Form 10 Q for the quarter ended 30, 2021, filed with the SEC on August 16, 2021, for a more detailed discussion of the risk factors that could cause these differences. Any forward looking statements provided during this conference call are made only as of the date of this call.
As stated in our SEC filings, Blade disclaims any intent or obligation to update or revise these forward looking statements except as required by law. During today's call, GAAP financial measures is provided in our press release, which will be available on our website. These non GAAP measures should not be considered in isolation or as substitute for our financial results prepared in accordance with GAAP. Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade and Willa Hayburn, Chief Financial Officer. I will now turn the call over to Rob Wiesenthal.
Rob?
Thank you, Tom. Good morning, everyone. I'd like to thank you for your And welcome you to our earnings call for the fiscal Q3 ending June 30, 2021, our first report as a public company. We had a great quarter and I'm very pleased to inform you of our 2 77% revenue growth versus 2020 and our 73% revenue growth compared to the pre COVID 2019 period. Before we dive into our results, I'd like to thank our employees and particularly Our on the ground flyer experience team for placing our flyers and their safety first as we continue to operate our business through the pandemic.
The commitment of our team is particularly critical for our MENA Mobility service, which moves human organs for transplant by helicopter and fixed wing aircraft. This business grew dramatically compared to last year and it would never have been possible without our team showing up in person every single day So that we could continue providing this essential service to hospitals across the Northeast. While our other business lines have now Rebounded or even shown growth versus the historical pre COVID period and certainty still remains to the public. Our passengers trust us to get them quickly and seamlessly to wherever they need to be, but the health and our safety of our flyers and employees remains Paramount. Blade has led the way in implementing health and safety protocols and we continue to adjust our approach as needed.
In light of the dynamic nature of the virus, we were the 1st aviation company to mandate in flight masking, the first to have pre boarding blood oxygen saturation testing and the first to provide on-site COVID testing for our longer haul flights. And this leadership position continues. This past Thursday,
We were the first aviation
company to announce a requirement for all flyers to be vaccinated starting on September 7 with exemptions as recommended by the CDC. It's an important differentiator versus our competitors on the ground and in the air, and we believe it will lead to increased flyer volume With Blade, Health Protocols and Scale. I'd like to take a few minutes to recap our strategic priorities and core strengths before we review our results in the most Our Asset Light model remains a key differentiator. The term Asset Light is used liberally by aviation companies, so let me explain what it means That's a great question. We neither own nor operate aircraft.
Our services are enabled through our strong and growing network of highly integrated embedded aircraft operator partnerships. This approach allows us to quickly and cost effectively scale our business in flexibility of this model than our performance during the pandemic. During lockdown in early 2020, we immediately reduced our supply of non metamobility aircraft. And when the spring 2021 travel snapback occurred, we quickly brought them back online, all while maintaining consistent unit economics Great service for our flyers. We are committed to this approach today and as we prepare for the transition to electric vertical aircraft, EVA as we call them or eVTOL in industry parlance, Blade will partner with third parties that will own and operate EVA on our behalf.
One of Blade's key priorities is to identify and launch short distance routes that can be successful using the conventional aircraft of today, but that will also be appropriate for UVA once available. To achieve this, we will continue to pursue our organic growth plans as well as undertake highly targeted acquisitions and partnerships, securing the infrastructure for these routes and enabling us to maintain our unique competitive At the same time, we will be helping our EVA manufacturer alliance partners achieve our mutual goal of bringing quiet emission free flight to the public. On the route growth front, we resumed our New York airport service this June, beginning with flights between Manhattan and JFK Airport, after pausing the service at the start of the pandemic. By fall, we plan to once again service all 3 New York area airports. So far, we are pleased with the performance for the GfK restart, especially as compared to the early results of the service when we first launched it in 2019 pre COVID.
We are also preparing to launch new Northeast Corridor routes In 2022, we will share additional details about this before the year end. With respect to our pipeline of strategic acquisitions and partnerships, We expect to announce 2 transactions before the end of this calendar year that will both fortify our strategic moat and accelerate our growth. Further, we have continued to support our transition to quiet and emission free futures emission free future by entering into new alliances bringing the total number of blade electric aircraft to 4, all well respected and well capitalized companies, including Embraer, where Eve is one of their UAM divisions. 2 of these partners are in fact flying their aircraft today with test pilots. Our agreement with MagneX will enable Blade to secure a supply of electric aircraft propulsion units for Lima, one of Blade's largest aircraft Operating partners, these EPUs will enable Lima to convert its Blade branded fleet of amphibious seaplanes to all electric aircraft starting as early as 2023 when development for commercial use is completed.
Electric seaplanes will be deployed across Blade's northeastern and southeastern routes and are expected to operate emission free at the same speed as the current generation of turbine aircraft with a significantly reduced noise footprint and lower operating costs. This alliance is uniquely important as it provides a near term bridge to EVA given the engine's compatibility with already certified aircraft that are currently being utilized by Blade. Our agreement with these will enable Blade to deploy their EVA in South Florida and West Coast markets beginning in 2020 6, when development commercial use is expected to be completed. Blade will pay by the hour for use of these aircraft, which will be operated by EVE and its local partners, again consistent with our asset light approach. These alliances in addition to our earlier partnerships with Beta Technologies And Wiskaro, a joint venture between Boeing and Larry Page's Kitty Hawk, derisk our reliance on the deployment schedule of any one manufacturer While giving Blade a portfolio of aircraft with different capabilities that are necessary for our wide variety of mission profiles, These alliances are subject to entering into additional agreements and certain FAA approvals.
We will share additional developments with respect to our EVA alliances on future calls. With that, I'd like to turn it over to our CFO, Will Hayburn to discuss our financial results in more detail. Thank you, Rob. Blade continues to make great progress in our long term strategic plan. We relaunched our New York City airport service in June 2021 and are very encouraged by the results so far.
2 months into the relaunch, we are well ahead of the same point than our 2019 launch and we've already achieved an annualized run rate of This fall, we plan to expand our service back to include both LaGuardia and Newark. Moving on to the financials for the quarter ended June 30, 2021, Revenue increased by 2.77 percent from $3,400,000 in 2020 to $13,000,000 in 2021, marking an impressive recovery from the COVID lows. We're especially pleased with our results compared to the pre COVID period with revenues up 73 percent from $7,500,000 in the June 2019 quarter. Short distance revenues increased by 810 from $2,600,000 in 2020 to $6,500,000 in 2021. A comparison of this business line to the same period in 2019 is not meaningful our MetaMobility did not exist at this point in 2019.
MetaMobility remains an important focus area for us given the use of helicopters for short hospital to hospital transfers as well as last mile transfers from airports to congested city centers. Most of these trips are very short Many of these trips are very short, are cargo only and will likely be Blade's first commercial use case for electric vertical aircraft. Even last mile Finally, other revenue increased from $200,000 in 2020 to $700,000 in 2021 driven primarily by brand partners who pay for Our cost of revenue decreased as a percentage of revenues from 82% in 2020 to 77% in 2021. If you look at this as a margin of revenue less cost of revenue, which includes the cost of flying paid through our operators and landing fees, You see significant improvement from 18% in 2020 to 23% in 2021. This was driven by an increase typically see cost of revenues higher than revenues for the 1st 18 months as they ramp to average utilization above breakeven.
Airport was our only new route operating this quarter and did not begin until June with a limited schedule at launch. Importantly, We are seeing leverage from our operating costs as demonstrated by our comparable adjusted EBITDA, which improved to negative $900,000 in this period compared to negative $1,300,000 in 2020 and negative $3,400,000 in 2019. We expect to continue to benefit from this scalable platform as our growth continues. For the purposes of comparison to prior quarters when Blade was a private company, this comparable adjusted EBITDA metric excludes new recurring costs paid to 3rd parties, which are associated with operating as a public company. These costs include incremental directors' So being a public company totaled negative $2,600,000 this quarter compared to negative $1,300,000 in the same period in 2020 and negative $3,500,000 in 2019.
A few words about the future. Though we have not seen a negative impact from the Delta On the one hand, hybrid remote office policies benefited us in late 2020 early 2021 as our weekend driven leisure routes morphed into 7 day a week commuter routes. If employers continue to delay full returns to the office, We could similarly benefit this year and would expect our 70 mile plus commuter business to outperform the pre COVID period during the fall and winter off season. On the other hand, a slower return to office may delay the recovery in business travel, which would reduce demand for Blade Airport. Additionally, short distance revenues were weighted heavily towards the September quarter pre pandemic.
Thus, we expect the fact Our short business has not yet fully recovered from COVID impacts will have a more significant effect on that business line's results next quarter. Looking to our cost of revenues, we expect the predictable unit economics and strong utilization on our mature routes to continue to provide a positive contribution. Moving forward, we plan to leverage the contributions from these mature businesses along with our strong balance sheet to aggressively ramp up new routes, starting with airport this year and moving to the Northeast Corridor in calendar year 2022. As Blade Airport did not relaunch until June, This quarter saw limited net negative cost impact from its ramp. We expect airport to be running at a loss for at least the next 18 months as we continue to aggressively We invest in additional passenger capacity and new airports.
As a result, we expect cost of revenues to increase as a percentage of revenues in the coming quarters. We've also been building our team in order to support our public company transition and to execute against our growth plans. Many of these additions took recently and may not be fully reflected in the June or September quarter. Our current SG and A run rate on an unadjusted basis is a good proxy for future quarters as one time transaction costs fall away, but new costs of employees and marketing will be added as we accelerate our growth. Given that our Asset Light business model requires limited capital expenditures as well as consistent negative net working capital position, Our free cash flow profile should actually be better than EBITDA as we grow.
So this quarter we did prepay over $5,000,000 of public company D and O insurance, which hit prepaid expenses. Looking ahead, Blade's expansion strategy is keenly focused on new routes Given this shift and our recent transition to reporting as a public company, we have begun evaluating a change to a more typical December 31st fiscal year end. We've had preliminary discussions with our Board on this topic and expect them to consider a formal change in early 2022. In closing, we have a strong debt free balance sheet with more than $330,000,000 support our growth strategy. We will continue to focus on the largest markets where Blade can maintain its leadership status and achieve sustainable unit economics today.
Moving forward, we believe the transition to electric vertical aircraft will only serve to improve our cost structure and make urban air mobility accessible to more people around the world. With that, I'll turn it back over to Rob. Thank you, Will. Let me take a moment as to our strategy within the broader 5 EVA manufacturers have either gone public or in the process of going public with expectations to raise incremental capital of more than $4,000,000,000 during this year alone. Outside space transportation, there may be No more ambitious task than for a standalone company to build, certify and manufacture EVA and to do it at scale And to do it on budget and to do it on schedule.
Simply put, that is not our business. We will continue the singular focus we have We have had for the past 6 years building, creating and acquiring all the necessary elements to provide the best urban air mobility service layer possible ensuring the deployment of EVA to the public in a seamless, These elements include our network of exclusive terminals in key locations in the most important markets In the country, our partnerships with leading aircraft manufacturers, our consumer to caustic technology stack, Our 20 fourseven on the ground flyer experience team as well as our trusted brand and over 200,000 users. These are our competitive strengths and they are extremely difficult to replicate. As we continue to build new services using conventional rotorcraft, We will be in a powerful position to enable manufacturers to deploy their EVA to the flying public as safely and as quickly as possible. Unlike many companies in the Urban Air Mobility Ecosystem, we have a strong and growing business today using conventional aircraft.
As such, we've set a number of important milestones for this pre EVA period for our investors. 2 accretive acquisitions by calendar year end. The addition of 2 remaining commercial airport routes in the New York City area by this fall, as well as the launch of an important Northeast Corridor business route in early 2022. This was a great quarter, both financially and operationally and while going public and raising more than twice the amount of cash we require to execute upon our business plan. Before we close, I'd like to briefly discuss the current capital markets environment.
This quarter has continued to be a volatile time in the markets for With our strong financial performance and approximately $4.80 of cash per share On our debt free balance sheet, it is both management's and our Board's view that the current share price does not adequately reflect the long term prospects for our company. We hope that our performance starting with the great quarter we announced today coupled with achieving our upcoming milestones for new services and acquisitions will serve to eliminate this gap. However, if we need to, given that we have more than twice The cash necessary to fund our business plan, we have the balance sheet strength to enhance shareholder value and we are prepared to do so if and when the time is right. With that, I'll turn it over to Tom for questions.
Thanks, Rob. As a reminder, we will Operator, we're now ready for questions.
Thank you. We will now begin the question and answer session. The first question comes from Itay Michaeli with Citi. Please go ahead. Great, thanks.
Good morning, guys.
Good morning.
Good morning. Just to give you a first question on the recovery that you saw this past quarter. Of the passengers that were flown, can you maybe share kind of how many were new to the Blade platform versus those who were prior flyers kind of coming back?
I would say the majority of the passengers this quarter were passengers that we had seen before given that We didn't introduce airport until June and that's the biggest driver in new passengers for us. That'll change as we go into the next quarter. But for this quarter, Given our reliance on those mature core commuter routes in the Northeast, we did see a lot of the same passengers. At the same time, I think if you were able to This aggregate it and say who was flying during the week. We saw in a lot of our leisure routes People that had not been flying Blade prior because of the ability to fly 7 days a week and this kind of shift from this weekend only cadence to when we back in April when we saw ourselves flying 7 days a week.
So that really opens up the business to a brand New flyer, which we did see during those kind of business days, but we're not breaking out the numbers for both those segments.
Got it. That's very helpful. And then just maybe 2 questions on kind of the upcoming couple of quarters. So I know it's still really tough to predict as you mentioned Any comments around perhaps how July trends trended for you? And then maybe I think Will, you mentioned some of The new route gross margin dilution you can have as you bring back airport over the next 18 months, any way to roughly quantify how we should think about that Kind of our models going forward over the next few quarters, how does that impact?
You're saying impact of Delta?
The impact of so maybe just for Delta, if you could just comment on July trend and kind of if you've seen anything thus far early in the quarter? And then secondly, just on the Blade Airport ramp that began in June. I think you mentioned it should run at a loss Typically in the beginning, if you could quantify what that could mean in terms of the gross margin impact from the airport ramp?
Sure. I'll let Will take the second part in terms of airport ramp. But in terms of what we've been seeing, again, it's always It's kind of this mixed bag. What I would say is because of our health and safety protocol, we did not see fall off of passengers who Chose not to fly Blade and take other forms of transportation because of safety concerns. So that's strong.
Additionally, Because of Delta variant at the same time and I'm talking about this basically whole summer to date, there were definitely a lot of For some of our closer term leisure routes, which is consistent with what you've seen across the travel business, a much more much greater focus by our travelers I'm staying nearby this summer. And then in terms of the margin impact from Blade Airport, if you look at revenue less cost of revenues, We're ramping very aggressively and as we mentioned we'll be adding those additional routes this year. So I would expect a low single digit And dollar negative impact to that revenue less cost of revenues for the rest of the year. For airport, yes. And again, We breakeven on airport flights typically anything above 2.2 passengers out of 6 possible passengers on that aircraft.
So luckily the hurdle is not very high, but we still need a very robust schedule to really engage our flyers and let them know that they can fly
The next question comes from Jason Helfstein with Oppenheimer. Please go ahead.
Hey guys, thanks. I'll ask you 3. First, Maybe talk about like the cost to you to secure the EVA deals. What's kind of the just what's the cost to you? What are you kind of committing to, etcetera?
2nd, will the airport service be any different when it resumes remaining And then can you talk about the seasonality of MediMobility? Should Investors assume like that does that business just generate kind of the same revenue each quarter, give or take your ability to grow it or is there seasonality in that? Thanks.
Okay. I'll start with your first question, cost of security of VA deals. Now consistent with our Astellite model, what we do is work with 3rd party manufacturers who want to move to EVA, which is pretty much about everybody. And in certain instances, there are manufacturers who would like to operate the service for us and they can take a look at the kind of Flygone that we've had in the past or in certain instances we can make commitments in terms of how many hours we'll fly. And with that, that will enable them to finance and purchase the aircraft on their own.
And in fact, if you take a look at our conventional businesses, We often get phone calls from conventional aircraft manufacturers who say, we know you work with operator X on your platform. How many hours do you think you could do this year and people finance against the kind of volume that we do. So we expect that model to continue going forward. That was the second question. Okay.
In terms of the airport service, You're saying being any different. Are you talking about the actual service itself? Is there any aspect of your
Yes, I mean, I guess the improvements that you guys have kind of For some of your flyers, I imagine it's been a while since they've used it. Will there be any improvements or changes, given On a pre COVID or just kind of same service, just bring it back to the other airports?
Well, look, I think We obviously learned a lot when we first did it and I think we're getting a turn time in the tarmac much quicker. We're dealing with recovery much more effectively in terms of when there's inclement weather. But most importantly, we continue to work with airports and airlines To enjoy behind the tarmac service like we have had with American Airlines where you can actually get off the plane when you land at JFK and be driven by American behind the tarmac directly to your Blade helicopter. That not only saves This 2 hour drive, which we turn into a 5 minute flight, saves 20 minutes probably walking through an airport and finding a car. So I think more of those alliances, we hope You can see that in the future.
And we'll talk about the MetaMobility. Jason, on your seasonality question, So there's a few things in that revenue disaggregation line. The MetaMobility business does not show seasonality. However And it's been showing good growth. However, there is some jet charter and by the sea jet that's also in that line.
And on the by the SeaJet business that is seasonal. So that's our BladeOne service that is focused on the winter So you see a couple of million positive impact from that over the season. And then on the jet charter side of things, It can be a little bit unpredictable. So that piece, there's not I wouldn't say a specific pattern to it, But it can be lumpy quarter to quarter. So hopefully that helps you break down the pieces.
There's a strong base of revenues in there that doesn't have seasonality,
And was there a follow-up?
Anything else, Dave?
I mean, I'll go back in the queue. I'll ask another one, depending if there's other people. I'll go back in the queue. Thanks.
Yes. But I think this segment obviously the vast majority is MetaMobility which is fast growing and not seasonal. So I mean that's really what I'd be focusing
And we have a follow-up from Jason Helfstein from Oppenheimer. Please go ahead.
Thanks. Why not? Just Rob, how are you thinking about any of the Potential risk of policy changing at any landing location, to the extent you I'm particularly thinking about kind of in the Hamptons where I think there's some stuff coming up in September. Just how do you think about it? Kind of any commentary With other parties, etcetera, and just kind of concentration issues on the business there?
Thanks.
Sure. The good news is with the leisure routes, especially as the Long Island, our passengers are We are not going to stop flying. The Hamptons is a legacy market of ours. It's not core to our future growth strategy, which is identifying short distance rooms that are well suited for EVA. Nonetheless, we fly to All areas there, many of which were actually even in the town of East Hampton, Montauk Airport, Southampton, West Hampton and even amphibious seaplanes into local bodies of water that are only 10 minutes away from the East Hampton Airport.
So I think that the closure of the airport would be very short sighted. Our flyers are going to keep flying. We have multiple opportunities for them to fly to that area. So it's not something that we see is Frankly, impacting our business as much as some people may think. There are just tremendous economic benefits to that community.
I think it was about 900 jobs, $77,000,000 in terms of economic impact. So we are hopeful they'll continue to keep it open. It's been open for over 100 years. And if not, our flyers will keep flying and they're not going to be landing too far away from where they were originally intended to fly. One final thing I would mention is that I think there's a growing understanding that it could be very shortsighted for airports or airports all over this country that Maybe considering, what to do, mitigation strategy in terms of noise because we really are on the precipice of Mission free and quiet electric aircraft.
You saw our deal with MagniX. That's 2023. That is not a large hurdle in terms of FAA certification because you're essentially taking an existing aircraft And changing the motor to an electric motor that is quiet and emission free. So I think we're in pretty good shape in that front. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Rob Wiesenthal, CEO of Blade for any closing remarks.
No, I think we're fine. We appreciate you joining us for this call today. To take any questions you have, if anybody on this call had not had their questions answered because of time constraints, feel free to reach over to Tom Cook at ICR, and he'll take those and refer them back to us. And we look forward to talking to all of you soon.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.