Ladies and gentlemen, thank you for standing by. Welcome to Blade Air Mobility Fiscal Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. I would like now to turn the conference over to Mr. Lee Gold, Investor Relations. Please go ahead.

Thanks, and good morning. Thank you for standing by, and welcome to the Blade Air Mobility conference call and webcast for the quarter ended December 31, 2023. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company's forward-looking statement and safe harbor language. Statements made in this conference call that are not historical facts, including statements about future time periods, 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 annual report on Form 10-K filed with the SEC 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, we will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. A reconciliation of the most directly historical comparable consolidated GAAP financial measures to those historical non-GAAP financial measures is provided in our earnings press release and our investor presentation. Our press release, investor presentation and our Form 10-Q and 10-K filings are available on the Investor Relations section of our website at ir.blade.com. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade, and Will Heyburn, Chief Financial Officer. I will now turn the call over to Rob Wiesenthal. Rob?

Thank you, Lee. Good morning, everyone. I am very pleased with our progress we made during 2023, another record year for Blade. Our financial trajectory is strong, sound and now tangible. In 2023, our full year revenue increased 54.1% versus the prior year to $225.2 million, while flight profit increased by 84% as our intense focus on margin enhancement initiatives generated results yet again this quarter. This led to a $10.8 million improvement in adjusted EBITDA versus the prior-year period to negative $16.6 million for the full year 2023. I'm especially pleased to share that Blade Airport, our helicopter service between Manhattan and New York area airports starting at $195 per seat, delivered positive flight profit not just for Q3 and Q4, but also for the full year 2023. When we launched Blade Airport in 2021, we set up the unit economics to be profitable at just above two out of six seats sold per flight. But we knew along the way that our growth and customer acquisition metrics were pointing in the right direction. The two-year ramp-up process has required hard work from our operations team and patience from our investors. I'd like to take a minute to thank our flier experience, flier relations, operations and on-the-ground logistic teams and our ground transport partners at Mercedes-Benz USA for working so diligently to make this product a success. We look forward to continued growth this year and beyond as we begin to transition to EVA, Electric Vertical Aircraft, or eVTOL in the coming years. On the operational front, we are excited to announce the acquisition of eight fixed-wing jet aircraft to support our continued rapid growth in Medical, enabling lower cost service and improved availability for the hospitals we serve and improved unit economics for us. Our Medical business has…

Thank you, Rob. Before we dive in, I'd like to remind everyone that we manage our business primarily based on flight profit rather than revenue, which could be influenced by a number of factors like fuel costs and landing fees, which we largely pass through, jet charter market pricing, aircraft repositioning and mix shifts between air and ground in our Medical business. Recently, we've made significant progress transitioning more and more of our Medical flights to dedicated aircraft that provide us with fixed cost leverage as we grow and are strategically based near our hospital customers. This has enabled us to improve our flight profit dollars per trip while reducing costs for our hospital customers and more importantly increasing availability with shorter call out times, which can lead to better patient outcomes. When paired with our growing fleet of Medical vehicles and new organ placement offering, we believe we've built the most cost effective and reliable end-to-end organ logistics platform in the United States. That's why even though we saw a slight sequential decrease in Medical revenues from Q3 to Q4, Medical flight profit increased sequentially over the same period. This shows us that our strategy is working. At the same time, we improved our Passenger flight profit margins by 5 percentage points in Q4 2024 versus the prior year, demonstrating our path to full year profitability in the Passenger segment, which we expect in 2025. I'll now walk through a few highlights from our business segments in the fourth quarter. We'll start with Medical, where revenue increased 48% to $32 million in the fourth quarter of 2023 versus $21.6 million in the comparable 2022 period. Approximately 45% of this quarter's growth was driven by the addition of new customers with the remainder driven by growth with existing clients as…

Thank you, Will. In short, we are proud of the accomplishments of our team to deliver outstanding fourth quarter results and we look forward to building on this momentum, achieving adjusted EBITDA profitability this year and significant growth in this important metric in 2025 and beyond. I'll now turn it over to Lee for questions.

Thanks, Rob. We'll start by taking questions from the analyst community, and we'll follow with a few questions from the Say Q&A platform. I'll now turn it over to the operator for analyst questions.

Thank you. [Operator Instructions] The first question comes from Jason Helfstein with Oppenheimer. Your line is open.

Hi. This is Steve on for Jason. So, just two questions from us. Number one, we were just wondering if you could give some views on 1Q. And secondly, if you could just clarify what you mean when you say positive adjusted EBITDA in '24? Thanks.

Thanks for the question, Steve. Look, as you know, first quarter is seasonally light quarter as well, so it will look a lot like Q4. Expect kind of 10%-ish growth year-over-year, which would put you in the high 40%s on revenue. And then, EBITDA kind of in a similar area to what you see for Q4. When we say that we're going to be profitable on adjusted EBITDA basis in 2024, we mean more than zero. And we hope to exceed our own expectations there.

Thanks very much.

Please standby for the next question. The next question comes from Bill Peterson with JPMorgan. Your line is open.

Hi, good morning, and thanks for taking the questions, and thanks for providing the '24 and '25 targets. On the targets, the '24 outlook implies kind of a high-single-digit revenue growth to midpoint, with a fairly tight range. So, I guess what's complicated -- what's contemplated between the low end and the high end on that? And then, for '25, it actually implies an acceleration. So, what's driving that? If you can kind of maybe break that out between Passenger and MediMobility and provide some guidepost on that, that'd be helpful.

Sure, Bill. So, there's a little bit of noise in the year-over-year comp between 2023 and 2024, because as you know, we discontinued the BladeOne seasonal jet product between New York and South Florida. So that was kind of mid- to high-single digit million dollars of revenue. So, you're fighting that a little bit, which is why on a year-over-year, you see less in terms of the overall headline growth rate. That's probably the biggest factor coupled with just generally we're seeing slightly softer jet charter there. And then remind me the second half of your question.

Well, like the low end and the high end of the range, it seems like a fairly tight range. But then, I think you already answered the second part about '25 implies acceleration. I think that's just, I guess, normalized growth.

Yeah, the biggest drivers in the range are new customer acquisition on the Medical side. I think where we are in the Passenger business and what you're seeing in the numbers, especially this quarter, is you're seeing flight profit grow really strongly and that's a result of putting more people on the same number of flights, particularly in the Blade Airport product. So, we get great incremental margins as we sell a seat on a flight that's already going as you're well aware. And so, on the Passenger side, the story is really about improving that flight profit. On the Medical side, we've got a big new customer pipeline, both on the TOPS side and on the logistics side. And so, the range really represents when do we think we'll win those new customers and how many of them will we get.

It's Rob Wiesenthal. I think I'd also add on the Passenger side. We are seeing strong growth in terms of our European Nice to Monaco route, which is before Blade started the largest route in the world in terms of the by-the-seat business for vertical transport for customers competitive with ground. And as we restarted that line, what we call the line [between] (ph) those two countries, the growth has been -- we've been very pleased with the growth.

Thanks, Rob and Will. And the second question I have -- excuse me, I guess, a few questions around the acquisition of the eight Hawker 800 Aircraft. So, it seems like these were used and already used for Medical. So, I guess, what is buying these aircraft -- how does that benefit Blade versus just -- I guess it seems like they're used for Medical anyway. So, like why do you need to buy them? What is the timing? It sounds like March. Are all eight going to be acquired in March? And then, I guess how much do these aircraft then address the current Medical business? I guess, we could kind of try to figure out the margin uplift you alluded to?

Yeah. So, a couple of things at play there, Bill. First, we've just grown so quickly in Medical. We've actually kind of outgrown the balance sheets of some of our operators. And so, we were supporting the growth at our operators with some deposits. You'll notice that almost half of the acquisition of these aircraft is funded by deposits we already have down with the operator. So, we kind of got to a point where if we're putting deposits down of this size, we might as well own the aircraft. And then, the reason that we want to own the aircraft is because it helps us benefit from more pass through economics. So, it goes back to getting those economies of scale and that operating leverage as we fly more. Our agreements right now do allow us to pay a little bit less once we meet that full year guarantee of flight hours. But you're not getting the continued cost leverage as you fly more above that. Now for these aircraft, and we're only focused on doing things like this in areas where we've got multiple contracts with overlapping centers, lots of demand, more than we could possibly handle with just the jets that we own. In those cases, we'll capture a lot more of the fixed cost leverage when we own the aircraft versus a capacity purchase agreement, where you pay X for the first Y hours a year and then you pay X minus 15% afterwards.

Bill, just one quick way we look at it here. On the Medical side, when you're using sweating the assets, so to speak, using 100% of that time, you don't need kind of that middleman in between chewing up that margin, okay? And so, as long as you're getting the hours, right, and when we do asset light, we have other people do, whether it's news gathering or tours, on the helicopter side. On the Medical side, it's a 24/7 business. You're sweating the asset. And the third point, we're leaving these kind of deposits, if you own it, you capture that margin. And also, you have more flexibility for the customer. We can position aircraft right by these hospitals, which means greater flight margin profit dollars for us and faster accessibility for our customers and a better deal frankly. It's a win-win as Will said.

Just on the timing, and, I guess, how much of the Medical business you can address with this?

It's still going to be a really small part of our business. We think roughly 10% of our flying in 2024 should be on these aircraft. We're going to remain asset-light. The vast majority of our flying is going to be with aircraft that are third-party owned and operated. But if we see situations where it's extremely accretive on a cash flow basis to own aircraft tactically, we're economic animals and we'll do that.

Okay. Thank you.

Thanks, Bill.

[Operator Instructions] The next question comes from Edison Yu with Deutsche Bank. Your line is open.

Thanks for taking our questions, and congrats on the quarter. You have quite a bit of cash as you mentioned and it seems like a decent amount could be deployed on some type of acquisition. Did you mean that in terms of adding more aircraft or companies or both?

It's both, Edison. I think that as Will said, when we -- the ability to strategically place assets in terms of aircraft with our hospitals and have them have frankly really good solid deals and us to enjoy better economics, something we're going to continue to explore, but again, we're going to be opportunistic. We are extremely focused on tactical M&A in the Medical area, things that basically are along the chain in terms of what we do with our business and leverage the relationships we have with the hospitals. Obviously, what we've started organically from the -- with the TOPS program is a good example of that, but there are a lot of ancillary businesses that can leverage our relationships and our core competencies, both in working with hospitals and in transportation overall. So, we do see a fair amount of opportunities to deploy that capital.

Understood. And then separately, I know you mentioned Europe was performing a bit below and you took that charge. I guess, how are you feeling about that in '24, '25? Are we going to see quite a bit of improvement? What are we sort of looking at going forward?

Yeah. I think, look, what you really saw here with Europe, we knew there was delayed integration. We now have a brand new management team in place, both the CEO and the Chief Operating Officer. So that was a little bit late going. And right now, as I said, we're seeing really strong performance in terms of the by-the-seat business between Nice and Monaco. And we expect growth for this year and for next year in that business and improved profitability. So, I think we feel good about the business. Obviously, we wish that it started earlier, but this remains -- again before Blade, this was the number one market in the world. We had dominant market share here. We continue to have dominant market share in almost all of these routes. So, I think we feel like we're in a pretty good place when it comes to Europe, and it just took a little bit longer than we expected.

Great. Thank you.

I show no further questions at this time. This concludes the analyst Q&A. I would now like to turn the call back over to Lee for additional questions.

Thank you. As mentioned, we'll be taking questions from our Say Q&A platform. The first question is regarding the current lease agreements in New York City, and can we specify how many more years on these landing zone agreements? Also, what is stopping competition from taking these landing zones from Blade?

Thanks, Lee. I'll take that question. Again, Rob Wiesenthal. New York City is without question the most important market in the U.S. for vertical transportation, especially when you think about our Blade Airport product. With 28 million people going by car between the New York City airports and Manhattan a year, this is a big market opportunity. The West side, which is clearly our flagship, it's so large that we both have a departures and an arrival lounge and we're right next to Hudson Yards where 50,000 people live, work and recreate every day. That is a deal that is booked exclusive on a by-the-seat basis and our lease there is coterminous with the operator who's been there for over 40 years and has no expectations of leaving. On the East side, almost the same situation where we are coterminous with the operator who has been operating there for dozens of years and before that on 60th Street. So, we have a terrific relationship with Atlantic, and also in that specific location, there literally is absolutely no footprint left in order to build any kind of building. It's basically the Blade facility and general aviation. It gives us a competitive moat because at the end of the day, if you want to do this, be in this business, whether it be with helicopters or EVA or what you may call eVTOL, you have to have a place to process passengers, get them set and move those aircraft very, very quickly in two to five minute turns. You can't do it on the sidewalk. So, we do believe that captive infrastructure is critical to our strategy.

Great. The following question is another transplant company has claimed 98 contracts with hospitals. Are these exclusive contracts? And how many lost customers maybe they had?

I'll take that one. This is Will. We haven't lost any customer contracts. Not sure what the specific question is relating to, but I will say there's a bunch of device companies out there that have the same customers as us. We both work with the same hospitals. And as far as we're concerned, they're doing a great thing that's increased the number of organs that are available for transplant. So, it's great. And we're focused on our job that we do have long-term contracts with hospitals to perform, which is to handle all the air and ground logistics. And we think we do it better than anybody at the right price, but haven't lost any of those contracts.

An additional question about Medical is how do you see competition in the MediMobility space like TransMedics?

It's Rob speaking. Let me take this one. I think TransMedics has a terrific device in terms of [indiscernible] devices. There are a lot of devices out there that can lengthen the time that an organ can be outside the body, both for our core business and heart, liver and lung. And frankly, we recently did the longest trip ever from Boston to Alaska using a Paragonix device. The ability to travel longer distance is a big part of why we're so excited and you're going to see so much growth in our organ transport business. We are now the largest organ air transporter in the United States. We continue to expect that -- we expect that to continue to happen. And the more the devices that are out there, the more excited we are. And frankly, this is all we do. We don't make devices. So, we are focused on logistics and servicing our customer and making sure we get our doctors an organ safely and quickly and cost effectively to where they need to be. I think that ability to focus on one thing is great, but we're excited about these device companies really supercharging our business.

Our last question is what are the operating costs of EVA and how does this compare with Blade's traditional helicopters? Do you expect to see a complete replacement of helicopters by EVA in the future?

A great question, a common question. Let me take a tack at it. So look, at the end of the day, it's all about vertical transportation in a way that is cost competitive with ground. Right now, since Blade is one of one and doesn't have competition really in the by-the-seat market, we're competitive with ground. And frankly, in New York where we start at $195 for an airport seat and $95 for the purchase of an airport pass, we are competitive. When it comes to the operating cost in the early years, we do believe the operating cost of Electric Vertical Aircraft will be pretty much about the same, maybe slightly less. And it will take some time before those costs go down. But overall, the cost will go down. But the big opportunity for our investors is the fact that because they're quiet and emission free, there'll be more places to land. Not really so much the operating costs, focus on the fact that the great unlock is that there are more places to land. Every pair of landing zones is a brand new business for Blade. So, right now our strategy is to capture as many of these pre-existing landing zones that we can, have our customers, the routes. And as more of these landing zones open up when these new aircraft are available, the bigger our business becomes. There'll be a cohabitation phase because a lot of the aircraft can't take six people like our aircraft can or can't take 1,200 pounds like ours can. Some don't even have air conditioning. It's going to take a while. But expect a cohabitation phase where we have a portfolio of different vertical air transportation options, both including EVA and conventional helicopters.

This concludes our question-and-answer session. At this time, I'll turn the call back to Rob.

Thank you, Lee. I can't overemphasize how proud I am of -- this has been a long road since we've gone public to be in the position that we now have the confidence to give guidance to our investors of our first year as a public company of profitability on adjusted EBITDA basis for this year and double-digit profitability in terms of millions of dollars for 2025. So, we feel good about it. We do not take this lightly as I said before. And we look forward to further encouraging news as we go forward, and appreciate everyone on this call for support.

Ladies and gentlemen, thank you for participating. This concludes today's program. You may now disconnect.