Arrive AI (NASDAQ:ARAI) Q2 2026 Earnings Call

0:00 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. These statements are not guarantees of future results and are subject to risks and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the Risk Factors section detailed in Arrive AI's SEC filings, which are also available on the company's website.

0:53 Now I will turn the call over to Arrive AI CEO, Dan O'Toole. Thank you. Hey, everyone. Dan O'Toole here. Thank you for joining us today. We're gonna keep our prepared comments concise, so let's get right to it. I also wanna say, why don't you ever see elephants hiding in trees?

1:13 Because they've gotten really good at it. But I really wanna say the elephant in the room has arrived at AI. 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 Badke, has arrived at AI's new CFO, chief financial officer, effective August 17. As detailed in this morning's press release, Piyush 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.

1:58 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 Fuchs is with our vision for Arrive 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. Also, I wanna 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.

2:54 The prepared remarks you're about to hear will be delivered using the 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 complete, we'll return to a live question and answer session, on questions that were submitted ahead of this call. So with that said, let's begin the prepared remarks.

3:36 Thanks everyone. This quarter, we wanna 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 AP three 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 AP four, which is targeted for the first quarter of twenty twenty seven and will build on what AP three 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 Guess, our head of commercialization, to join us today for the first time.

4:30 Ian leads our commercial pipeline, and he's going to provide you with an inside look at where things stand. Thanks, Dan. It's easiest to think about our pipeline across three industries where we're seeing the strongest traction right now: health care, manufacturing, and specialty pharmacy delivery. In health care, 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 health care 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.

5:25 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 health care and 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,

6:10 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, ARAD, which builds autonomous delivery robots backed by one of the industry's longest running autonomous driving programs, became the continuity partner for universities when Starship Technologies exited US campus operations.

7:03 By the end of this year, AvRite expects to be operating on more than 20 campuses nationwide working with Grubhub, Uber Eats, and major food service operators. What's next for AvRite 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 agreements.

7:53 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. We expect to keep building on this across healthcare, 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.

8:27 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 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. Net loss for the second quarter was $14,100,000 compared to the $3,700,000 net loss in the second quarter of twenty

8:58 twenty five. However, the reported net loss includes $9,700,000 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 $4,300,000 Cash and liquid investments on hand were $5,100,000 at June 30,

9:23 an increase from 2,100,000 in cash at December 31. Our current cash burn rate is approximately $1,100,000 per month. During the quarter, we completed the filing of an S-three registration statement for up to $100,000,000 We also finalized the terms of our at the market offering or ATM offering up to a maximum capacity of approximately $15,000,000 The amount and timing of sales under that agreement will be disclosed quarterly as required. In addition, we retain the available capacity of

10:01 $19,000,000 in future prepaid advances under our previous twenty twenty five equity line facility. I also wanna 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.

10:59 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 and A along with the rest

11:34 of our team. Thank you.

12:02 And our first question comes from Jack O'Dara with Maxim Group. You may proceed. Hi, thank you. This is Jack O'Dara calling in for Jack Vanderard. Thanks for taking my questions. You guys highlighted a couple partnerships, and then you mentioned there about a dozen Arrive Points kind of targeted to be ready to ship this by the end, I think, by 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? Hey, real quick. Thanks for being on the call here, Jack, Dan O'Toole, CEO. I just want to say that the over dozen units that we mentioned in the earnings call represents a huge multiplier of our past deployment. So that while over a dozen isn't a huge number in the abstract, it really marks a lot of traction that we're seeing and it's a huge multiplier of what we've had deployed so far. I think the trajectory is really political from where we're going and what we're doing. I'm going let Ian Geiss, our head of commercialization, take the last part of that question. Go ahead Ian. Just to clarify the statement on campuses, the news that was iterated in that statement had to do with AvRide's takeover of Starship's departure from campuses to do on campus delivery.

13:34 We are in early conversations with AvRide right

13:36 now of employing the Arrive Point network into potential pilot programs of which we could increase efficiencies for unattended delivery. Okay, yeah, 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, how should we think about what are the big sticking points that you're kind of seeing that will enable you to start talking about Arrive Points in kind of like hundreds of Arrive Points or thousands of Arrive Points? Do you think it's is it more about adoption?

14:14 Do you need more manufacturing scope? 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 are thinking about. I'm gonna ask Mark Hammer, COO to take that one more. Yeah. Thanks, Jack, for the question. You know, in q one, we consolidated our road map, our product plan, our supply chain, and the delivery of the 12 units in September. That's the first installment on new units called AP three 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.

15:07 Then 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 AP five, 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.

16:00 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.

16:13 Okay. Yes. That's super helpful color. 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. Yeah. Real quick. I'm gonna this is Dan. I'm gonna take this opportunity to introduce Fuchs, Fuchs, our new CFO. Fuchs, thanks for joining the the call, and thanks for joining the company. I'm really excited. I just I want to give a quick back shout out, I guess, to Adele with Alliance Advisors, a trusted partner in our investor relations firm. They knew you were looking to get a really like minded educated or street wise, I guess you could say, CFO, somebody that, you know, my personal wish list was somebody that was entrepreneurial, somebody who can navigate the capital markets, could narrate an earnings report to analysts and investors and be m and a minded and I think we got exactly what we're looking for. Kish, if you're 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 investors.

17:29 Sure. Thank you. Thank you, Dan, and thank you to the team and to investors who have joined this call. So I'm Piyush Fadke. I'm the new CFO of Arrive AI. I am very excited to be here. I really believe in the mission and believe we are the future of autonomous deliveries. You know, for me joining was all about fit. I came to the office near Indianapolis last week and spent time, spent three days there with everyone. From Dan to all the C suite developers, engineers. And the thing that I noticed was just really the energy that flows from Dan, but really everyone was just so excited to be there and to be able to be building something that's going to be big. And I was able to see kind of a demo of an Arrive Point, I had never seen it before other than kind of on the website.

18:19 And it was really interesting to kind of see that live and see how the different technology works. So I'm really excited for the opportunity and I'm looking forward to doing a lot of great things with Dan and team. Thanks so much, We're looking forward to really leveraging your relationships and getting our sleeves rolled up and getting us to the next level. So really excited that you're on our team, ma'am. I can't wait to get hit the ground running here. I want to turn this over to Kasia Jones, our head of marketing, and she's gonna tee up some questions, I think. Cash? Yep. The first question we have here, we we received several questions about the stock price and the Nasdaq compliance, including concerns about a potential delisting or liquidity issue. This comes from Leon, Jake, Robert, and Franzkay.

19:07 I'm gonna the way we're gonna format this, I'm gonna assign questions so we're not tripping over each other. I'll assign answers. I'm gonna take this one myself, Dan O'Toole, CEO. Obviously, you know, the the big theme every day is share price, traction, you know, delisting, all these kind of things. Yeah. I can tell you this. We went public over a year ago, 5,000 republican investors on our cap table. We have everyone shoulder to shoulder with us and we think about share price, market traction, you know, having a great product, you know, there's a whole formula of specifics that come together that equal your share price, your market cap, and and how you're viewing the market. And I can tell you, you know, when we went public a year ago, it was never in the plan to be profitable day one. It was never in the plan to be revenue neutral day one. What was in the plan was to lose money, and that wasn't by because we wanted to lose money, it's just a reality. When you're running in a race, you don't start at the fastest speed. You start from a standing stop and you get faster and faster.

20:19 Well, I can tell you we are getting faster and faster. The amount of inbound inquiries that are coming into our company are bigger than we've ever seen in the last thirty days. We've had more inquiries than we've had in the history of the company put together. The market is taking note of what we're doing and then realizing that autonomous delivery and pickup of all sorts will not happen without an Arrive Point of that ecosystem. We unlock autonomy. We're creating a frictionless environment between drones, robots, AVs, and people, and that is what the market needs. Scalability, when you're dropping things on the ground or picking them up on the ground, is a nonstarter. When you add unattended delivery from Arrive AI, it all changes. When you when you guys invested in this company, we invested in our IP.

21:10 When we our IP starts where autonomous delivery and pickup starts. So if you have a locker or a mailbox, that's fine. That's public domain. That's old. When you have this new element of autonomous, we're gonna pick up where everything is going, that is Arrive AI. We are building that infrastructure. We own the doorstep to every home of business throughout the world. So that's what you're investing in. Cash, I'm gonna hand it back to you. Yeah. So we also received a couple questions of, asking us to describe our growth plan for the remainder of this year and next, including how we plan to scale revenue and secure purchase orders, letters of intent, and strategic partner agreements. This was Raul and Albert's question. I'm going to hand that one to Ian. Ian's our Head of Commercialization.

21:57 Go ahead, Ian. Thank you for the question. I think we addressed most of that in my prepared statement, but I'll go ahead and answer it, especially off the great words that Dan just stated, and that is the amount of awareness that is now for the inefficiencies of drop off, pick up throughout all of the different companies that have been launched, whether it's drone companies or robotics companies, there's more and more awareness for what is lacking, and that is indeed the Arrive point

22:25 of being able to do the handoff and the pickup. Nexus saw this clearly and we've created that partnership with Nexus and we're getting more and more leads that are coming in the pipeline for hospital systems, medical, pharmaceutical, and they keep growing exponentially. So we anticipate very big things from all of these different elements of our pipeline, and as Mark stated in terms of the product deployments, we are being very careful with how we are allocating that product and getting it the best fit for the next twelve months and forward. Ash? Okay. So this next one comes from Ryan, who's been with us since those drone duck days.

23:10 What do you feel has been the biggest challenge with running a new publicly traded company in front of such a broad audience with the ability to say whatever they want, whenever they want, and what's been the biggest advantage? You know, I would say no challenge Ryan, just opportunity. Thanks for asking. Thanks for being with us since the beginning. No, for the OG guys, you know, Brian, Griggs, me, Jeff Conn, others appreciate everybody that's out there listening today. We know that you care. You know, just opportunity, no two days are the same. Every day is an exciting new day. You come in, I know Piyush mentioned the energy in the office. Every day I come in here, it's palpable. You can see high morale.

23:53 You can see dizzying evolution of project. People are prideful. Everyone's trying to out outmaneuver the next guy with great ideas and pride and being able to show off. And we have a normal showcase of sharing, what's happening here. We all rally and sharing that every day. You know, I'd be a hypocrite if I said anything was a negative, you know, while there's things that aren't great sometimes, you gotta take the bad with the good. This is everything that I signed up for. It's better than I could have ever imagined. I know our share price is down and I'm not diminishing that, but what I'm saying is, you know, I've come up with a mantra, what goes down must go up.

24:38 It's antigravity, and that's what we're doing here at Arrive AI. I welcome questions not just on these earnings calls, but everybody knows how to reach me, and I wanna be there for you guys. So, thank you for that question, Mark. Okay. And this, next one is, we received a question about brand awareness, specifically how we're approaching marketing given that many investors say they don't hear Arrive AI's name come up in their industries. Mark, do you want to take that one? Yeah. So just as we go through phases on developing our product and our supply chain, there are natural phases to how we develop our capabilities to go to market and along with that our brand.

25:27 While it took a lot of attention and evangelizing the future of drone and robotic delivery to get here and to get funded and to put these resources and team in place, I think everybody is well aware of all the efforts from Walmart and ZipLine and just everybody out there, DoorDash, so that's no longer in question. What we're focused on now is kind of that rifle shot approach to enterprise accounts and, partners that are really the early innovators, strategic investors in infrastructure like ours and what does it mean to market to them account by account. So you probably don't run into a lot of advertising for GE or Rolls Royce aircraft engines in your life because you're not the purchaser of those things. We're looking for those equivalents in our industry that, need to understand the awareness, the trade offs, the chain of custody advantages, the efficiency advantages that our network brings to their fleets and their communities and their campuses and that's where our marketing is focused and our branding is focused. Thank you.

26:45 Yeah. And finally, you guys have had some strong patent news internationally. What's next? Are you guys looking at Asia? This one's from Rohan. Excuse me. I want to John Richardson, our chief legal counsel and our patent attorney. John? Thanks, Dan. That's a great question. Appreciate that question from a standpoint. It gives me a lead a lead in to talk a little bit about our IP. I'm gonna break it up into two two parts. First, let me speak to The US IP. We currently have 10 approved patent or issued patents. We've got four more pending in the patent office. And with that, we believe we've got covered the initial IP that we need for a strong moat to keep us in a competitive position.

27:35 I think Priest mentioned about the energy that he saw when he was there. I'd say it's more than energy. There's a lot of strength in our young engineers, The men and women that are out there have come up with a lot of great ideas. I don't know of any other I'm sure they're out there, but I don't know of any other company right off the top that's got their IP attorney right on on-site with their engineers. That's one thing that we do, and we try to strongly, take those ideas. Currently, we've got about, well, 19 ideas that are in the hopper. Those are coming through at the the rate as the engineers finish up their design and development. But, again, that's that's The US.

28:21 Now let me turn to the second part, and that's the international. We haven't talked much about the international. We've very strong in getting our patents across Pond and working out there. The specific question was Asia. We've got at to date, we've got 13 issued patents. Most of those are in Asia with the exception I think is South African and Brazil patent. The rest of them are in Asia proper, India, Singapore, Australia, Japan. I could list them but that takes too much time. That's exciting from a standpoint that Asia is an immediate, place that, we have decided to start, working hard on, trying to look at how we can take these international patents and doing some licensing with, local concerns.

29:15 The other part of international, we don't talk about much, and I don't wanna get too technical, but that's Europe. Most of the people in this room know it, but I'm sure the people on the call don't. We just recently got approved with our first patent for the European Union. That opens up the entire European, for us to go ahead and open up those additional countries. So along with the Asian efforts, we now have the the strong results go and we'll start heading up in the Europe with our, international licensing opportunities. Turn back to Dan. John, another quick question. You you would agree that we have a strong first position platform going on in the space, right? Yeah. I don't I don't have it memorized like Dan does, but we'd be several strong companies, Amazon, UPS, FedEx, a few others. And with that, when I when I say beat, our patents got out and approved by the patent office before theirs did. So that put us in a first position, but I also, be less than honest with you if I didn't say that a first position is nice, but our first position also comes with a strong number of claims. So we've got a lot of, components and features in there.

30:38 I thought that they were pretty well complete. And then I met these, 40 engineers, and we got on-site that are thinking totally out of the box. So we've got a lot more stuff coming down the pipe. And one more patent that people don't think about us for if you could just tell us something about this, our witch patent for Grindler today. Yeah. We've got a, that was one of the things with our strategic, purchase. We we hold in a what we call we call around here a which patent, which is a different way to handle, the product coming from the drones. It's unique, and it allows you to to focus or drop that, package in a much more organized and controlled method. Yeah, thanks a lot. Hey, I just want to say, appreciate everybody listening to the call, caring enough to want to know what we're up to.

31:30 From a bird's eye view here at Arrive AI, I just want to say that the trajectory is strong. We are on track with every deliverable that we mark and take note of and we are right on pace with every aspect of this business. We're running on all cylinders. Things are amazing the regard of getting recognized in the marketplace. And I wanna thank everybody for joining the call today. Also wanna give a shout out to my son, Bryce O'Toole. He's listening from his investment banking internship in New York City right now. Go get him, Bryce. Thanks, everybody. Back to our operator. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.