Good morning, ladies and gentlemen, and welcome to the Blade Air Mobility Fiscal Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the conference call over to Matt Schneider, Vice President of Investor Relations and Strategic Finance. Matt, you may begin.

Thank you for standing by, and welcome to the Blade Air Mobility Conference Call and Webcast for the quarter ended December 31st, 2024. 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 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 the 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 investor presentation. Our press release, investor presentation and 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 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.

Thanks, Matt, and good morning, everyone. As promised, we are pleased to deliver our first full year of adjusted EBITDA profitability as significant revenue growth and margin expansion in both medical and passenger drove a $17.8 million year-over-year improvement in our adjusted EBITDA in 2024. This important profitability milestone comes as we continued our rapid growth with revenue, excluding Canada, which we exited in 2024, increasing 22.1% in Q4 2024 versus the prior year period, while Q4 flight profit increased 40% year-over-year, and Q4 adjusted EBITDA rose $4.9 million year-over-year. Looking back, it's important to note how much progress we've made with adjusted EBITDA improving over $28 million over the last two years. This is only the first step in our plan to generate multi-year compounding growth and free cash flow and adjusted EBITDA as we onboard new medical customers, benefit from underlying growth and transplant volumes, and realize continued benefits from passenger growth, flight economics optimization, and our expected midterm transition to electric vertical aircraft or what you might refer to as eVTOL. As we continue to drive to further cost efficiencies in our passenger business, we remain laser focused on maximizing growth in Urban Air Mobility, such as our New York City airport transfer service, which saw high teens year-over-year revenue expansion in Q4. Services like Blade Airport are key to accelerating and de-risking our planned transition to the next generation aircraft I mentioned. Overall, this combination of revenue growth and cost efficiencies enabled us to improve on our achievement of positive trailing 12 month passenger segment adjusted EBITDA last quarter, more than one year ahead of our target by posting $3.6 million of passenger segment adjusted EBITDA for the full year 2024 and $8.6 million increase versus the prior year. We have successfully positioned both the medical…

Thank you, Rob. I'll now walk through the financial highlights from the quarter, starting with passenger. Excluding Canada, which we exited in August 2024, Short Distance revenue increased 18% year-over-year driven primarily by growth in New York Airport, Leisure and other US Short Distance. In Jet and Other, revenue increased 85% year-over-year, driven by strong flight volume combined with a relatively easy comp versus 2024. We continued to see significant profitability improvement in Passenger this quarter as Passenger segment adjusted EBITDA margin expanded by over 16 percentage points year-over-year to approach break even. This was driven by a 630 basis point improvement in Flight Margin along with an 18% reduction in Passenger segment adjusted SG&A. The profitability improvement in Passenger was broad based, driven by improvements in Short Distance, Jet and Other, our exit from Canada and SG&A cost efficiencies. Turning to our Medical Business. Medical revenue rose 13.7% year-over-year to $36.4 million. The increase in Air revenue was primarily driven by trip volume partially offset by a reduction in block hours per trip, a natural result of our strategy to increase the size of our dedicated fleet and position those aircraft closer to our customers. We continue to believe that this strategy is a win-win, and importantly, the right one for our customers, enabling lower costs and shorter call-out times and this ultimately gives us a pricing advantage versus our competition. Rounding out Medical revenue, ground and TOPS also contributed to revenue growth compared to the prior year period. On a sequential basis, Medical revenue increased about 1% in Q4 versus Q3 2024, somewhat less than we anticipated largely due to softer industry transplant volumes. Heart, Liver, Lung transplant volumes fell approximately 2% sequentially in Q4 2024 versus Q3 2024, compared to our expectation of a low single digit…

Thanks, Will. We'll start by taking analyst questions and we'll follow up with questions from the say Q&A platform. I'll now turn it over to the operator for analyst questions.

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

Good morning, everyone. Thank you for taking the question. So, really nice to see the movement to positive EBITDA and the improvement there. So, I guess, how are you thinking about it? We've obviously kind of seen kind of moderated SG&A. What is the catalyst, I guess, in each of the two businesses that would make you want to lean more into growth? And I guess, as you think about Medical, how much of it has to do with kind of some of the kind of new partnerships and new technology you want to deploy? That's question one. And then number two. Rob, I mean, what's your latest kind of timing on when you could see passengers in an eVTOL if you had to guess? Thank you.

Why don’t we start with Will.

Sure. On the SG&A front we expect to see continued savings in the passenger business in particular. As you know, some of the actions we took towards the end of 2024, specifically exiting the Canadian market and restructuring our European operations, you haven't yet seen the full year impact of that. So the combination of that and our expectation of continued growth is what's going to lead to that low to mid-single digit million dollar improvement and passenger segment adjusted EBITDA in 2025. We don't think that we're making a trade-off in terms of growth. We think we're optimizing the business and focusing on the areas that have the biggest growth potential. So that's really our focus there and passenger. And in Medical, we talked about how we have a number of new customers that are coming online in Q2 and in Q3. And so, those are what will drive kind of the larger step function change in growth in Medical. As the revenue base gets bigger, obviously winning a big new contract doesn't move the needle as much. So you see a little bit of that, but we're very excited and optimistic about our ability to continue winning those big new customers. And the fact that the onboarding we have line of sight to right now is more Q2, Q3 is why we've guided for more that double digit growth in the back half of 2025. But there's no trade-off in Medical of cost savings that are reducing growth there. And then I think your last question was around the partnerships. Very excited, particularly about the OrganOx partnership. This first phase will be a little smaller than a future phase where if they get the approval to fly the device, while it's perfusing in flight, we expect that to have a larger overall impact. So we're preparing to be able to do that with the expectation that'll happen later in the year. But the timing of that is uncertain. So for now, we're really helping out customers that don't yet have an OrganOx device, get one for a case by case usage in the back to base model, where they will be perfusing at the OPO or at the hospital? So, we'd expect that to ramp up a little more once the device is approved to perfuse and fly. So, we'll keep giving updates when we have more information.

Okay, Jason. Yes, I think what you might be alluding to is recently some of the leading OEMs have kind of, in a way, pushed back the deployment schedules, at least for the US. And I think so, what we're kind of looking at is, I think you'll be seeing these aircraft, these electrophoretic aircraft, EVA or eVTOL, in the Middle East probably first quarter 2026, maybe a little bit the very end of 2025, just because they've really fast-tracked everything. I think that'll be a little bit more exhibition oriented, but people will be able to see the technology and get excited about it. And then I would assume probably late 2027 for the US being here, maybe like full commercialization, could even be 2028 first quarter. But that being said, what I'm really enthusiastic about is that, now that we're fully profitable in passenger, we have this engine that is growing and acquiring passengers. The brand keeps getting better. We got more routes. We have more ways to people experience Urban Air Mobility. So I think our view is that, we're just going to be coming that much stronger as a platform for Urban Air Mobility with enhanced infrastructure, routes, revenues associated with that, international exposure, and just flying more and more people. So at that point when that transition begins, I think that we just become that much more fortified and we're kind of in a way reducing the kind of onboarding risk to shifting people from helicopters to EVA or eVTOL. I hope that -- does that answer your question?

Yes, I appreciate that. That’s helpful color. Thanks, guys.

Thank you. Our next question comes from Edison Yu with Deutsche Bank. Your line is open.

Hey, good morning. Thanks for taking our questions. First question, follow up on the eVTOL one just now. How do you think about the time it takes to ramp? And it's mainly in the context of, obviously, these are new novel aircraft. You just put out kind of late 2027, 2028. How much time does that factor into kind of get acquainted with the aircraft, the performance, and then also in the beginning would you envision you taking on ownership of the aircraft or leveraging that through some other type of financial partner?

Hey, can you just repeat the first part of your question? I got the last part. I missed your very first part?

Yes, I guess -- Yes, the time it takes to get acquainted with the aircraft or just to get familiar enough to operate it or sort of the testing time? Yes.

Yes, got it. Okay, so I think what you'll see in the beginning is that the OEMs will be doing very limited flights. I don't want to call them exhibition, I don't know what they'll call them, really testing out these aircraft in the wild, so to speak. We're looking at 2 miles in terms of using these aircraft. One would be enabling our current operators to purchase them. And as you know, a lot of the leading manufacturers are in the business of selling those aircraft. And we today facilitate our partners, our operating partners to help them buy aircraft by giving them capacity usage agreements. So they'll actually work with Airbus or work with Bell and say, I have a commitment from Blade for X number of hours, I'd like to buy an aircraft. They can finance against that. The same thing is going to happen in eVTOL. So -- and then that is one model. And the other model is, there have been a number of OEM manufacturers who said, we would like to give to own these and let you decide where they go and what they do and we'll even operate them for you. So those are kind of the two models that we'll see. I think it's important to understand is that, in the beginning there will be a cohabitation phase which makes Blade even more important in the development of the eVTOL ecosystem. That is because, not all these aircraft are going to be able to go to all the different routes we have, take all the different types of missions -- all the same types of missions, whether it be medical or short to the airport or longer to leisure markets or in weather. So you're going to need the portfolio of different types of vertical aircraft, including helicopters in the beginning. It will take some time until anybody, until our fleet is 100% electric.

Understood. Understood. Second question, different topic. Europe, it seems you're getting quite a bit of good traction there. Can you just remind us -- I know you mentioned the growth, but in terms of the probability, maybe how much the magnitude of improvement has been since you turned that around?

Hey, Edison, Will here. We pulled out several million dollars of hard cost from Europe. So I think that we feel really good about. The growth, as you remember, close to 50% of the revenue comes through in Q3. So we're happy that the ski season is going well, but the big chunk is in that summer season, and so we'll have to wait and see how that goes before we can give you a view on the top line growth. But we did really pull out hard costs. So that's a significant driver. And that low to mid-single digit million dollar improvement and passenger segment adjusted EBITDA that we're talking about for 2025.

This has been a big part of [indiscernible] some of the drag we had on passenger. And I think that the improvements in Europe really accelerated us into profitability, played a big role here. As Will said, winter has been a great ski season. And I think that we're kind of have our sea legs. It took some time, but the business is really working over there. Pre orders on Monaco Grand Prix look good. My expectations for the summer in terms of international travel remain unabated despite what you may have seen -- heard from certain airlines and such. Obviously, a lot of this can be weather dependent in the summer also. So it can get a little bit choppy, but we feel really good about where we are with Europe.

Awesome. Thank you.

Thank you. Our next question comes from Bill Peterson with JP Morgan. Your line is open.

Yes, hi. Good morning, and thanks for taking the questions. It looks like even excluding Canada, seed loans were slightly down year-on-year. Can you touch on what -- how that impacted. I understand your driving higher pricing, so that's a positive? And I guess, when I think about passenger margins more broadly, surprisingly enough, how should we think about the trajectory through 2025?

Bill, you were asking about seat count, did I hear you right?

Yes.

Yes, I think that's a function of us optimizing the business in 2024 in Europe, trying to offer the right schedule for our scheduled route between Nice and Monaco, give people seats when they want them, but also not offer as many seats when there's not as much demand. Same approach to our New York airport service. And so, you're seeing great revenue growth there, and we're just trying to optimize, actually give people more seats during the time that they want them, but put less inventory on the shelves when there's less traffic and there's more of an opportunity for us to lose money during those times if we don't have the load factor on each flight. And that actually ties right into your question on margins. We do expect to see continued increases in our margins, both because of those actions that we've taken on pricing in the passenger business, on optimizing the schedule. And then also once you get to the point that we're at now, where we have a profitable business and we have a profitable schedule product, flying people between Manhattan and the airport, for example, that incremental seat that we sell on a flight that already has several paying passengers, that seat is going to drop down at close to 100% margin contribution. And so, the gearing is really in a great place and that's another important contributor to this inflection we're seeing in passenger profitability right now.

Well, I'll just add to that, Phil. I mean, this has been -- what you're seeing has been conscious, a conscious effort on our part to accelerate to profitability. I think that we made the assessment that within the New York area where we have 100% market share in the by the seat business, which is really an Urban Air Mobility product that is most geared to what electric will be in a couple of years. And in Europe, where we have a leading market share, number one market share, that it didn't make sense for us to kind of like chase our tail and just get as many butts in seats as possible if it was going to sacrifice profitability. So the idea is to optimize that schedule, take as much price as we can and kind of have cut prudent growth with profitability coming first. If we got into a different type of environment than we wanted, it was competitive and we wanted to really open up schedule or be more aggressive on price, we could do that. And then at that point, there's obviously a lot more awareness of the product. There's a lot more going on. It should be good for everybody. But at this point, as one of one we felt this is the right way to do our business. And especially when you think about the timeline for eVTOL being stretched out, we want to continue growing profitably and in a manner to keep growing that base so we're that much stronger when it arrives.

Yes, that's a good lead into my second question, recognizing there is probably going to be a few years before we see electric aircraft. But I think several companies nonetheless are trying to have service between the Downtown Manhattan Heliport of JFK. And you're going to be, I guess, an early beneficiary of that. But if we think more longer term, what would be a differentiator for your offering? And I think in the past you talked about barriers, entries in some cases by having exclusivity, which doesn't appear to be the case here. In other cases, just by having sort of infrastructure, how should we think about your New York opportunity over a longer period of time, given probably New York wouldn't really want to have exclusive landing zones.

You kind of pervaded the last part of what you were asking. Could you just repeat the second part of your question?

Long-term durability of your New York business, given it probably appears unlikely that New York would want to have exclusivity in terms of landing zones.

I guess it's slight difference, but I think that you'll see in the beginning that we very well may have exclusivity in terms of passenger terminals. If you can't aggregate your passengers, you can't have your own distinct terminal space to do that. You're working at a general aviation and we're processing tons of passengers, turning them around every 5 minutes in cases. So I think in the beginning, until the new landing zones, that's kind of the benefit of our company that we have, this incumbent infrastructure both in here and in Europe. It is true that anybody can land it in these public use heliports, but whether it be by contract where we have exclusivity or by just pure geography in terms of where you would put another facility, we feel that we are fully entrenched in New York City. That'd be really difficult to compete with us on that.

And Bill, I would just add from a financial perspective that because we've aggregated so much demand over so many years, including folks that have annual passes that they're renewing every year, we've solved that difficult problem of both having enough people on every flight to have money -- to make money and having enough flights in order to utilize the aircraft enough that it's economical to fly the aircraft on the route. So there's two layers of utilization that you have to accomplish. And so, it puts us in a position to have a much broader schedule and have an actual profitable product that we're offering our customers versus the ramp could be very expensive if you don't already have that demand aggregated.

The last thing I would add, Bill, is that, when we look at, and we've done a lot of work on this, the first people who will be flying eVTOL, the most likely people are going to be higher income and have flown in helicopters. That's your first thing. Everybody else is going to be -- a lot of other people are going to be a wait and see. So I think in the beginning, you should really see a very strong kind of pull from the Blade customers switching to this new type of aircraft, whereas other people may be a little bit more wait and see on it. So I feel really good in terms of when this arrives, I'm a hell of a lot more optimistic about the opportunity than I am worried about the competition in this market, especially in New York.

Okay, thanks for the comments there. Maybe my last one, sorry for cutting out. And I might have missed it, but on some of this maintenance you're undertaking in your Medical segment in the first half of the year. I might have missed it, but is this something that we should think of as somewhat of a future seasonality, meaning, you're going to be doing this at certain times of year or you're just taking advantage of it now? I'm just trying to get a sense for how to think about if we need to think about modeling this type of maintenance on a go-forward basis, for example, next year and beyond?

Yes, Bill, this is time-based maintenance. So it required scheduled maintenance that happens, for example, engines every 2,500 hours. And what we're calling out is that, the cadence in the first half is well above what you would expect to be the average. So for example, we've got 10 aircraft, based on the amount of flying that we do, you would expect to need to do two sets of engines every year. Just to put it in perspective, we have four sets of engines that we need to do in 2025. So it's just elevated relative to the average cadence that you would expect. And so as we called out 2026, we have far fewer that we need to do than you would expect on average. So we'll keep giving guidance. It's a bit of a moving target because the more you fly, the earlier that maintenance event comes up, but we'll continue to keep you appraised whenever there's a situation where it's above average. And remember, that's not just a CapEx situation for us. It also means the downtime of the planes is going to be elevated. And so, that'll impact our ability to get operating leverage on the planes during that time period which is why we gave a note of caution for the first half on our Medical segment adjusted even down margins.

I think I just want to add to that. This is new for a lot of Blade investors in terms of obviously owning this portion of this fleet, albeit purely for Medical. Depending on the timing of when you buy the specific aircraft, of where they are in their life cycle, ends up being when you end up having these kind of major maintenance overhauls that are accounted into our ROI and accounted into the kind of margins. So they now ask, we do that to make sure that we know this was a smart deal and it has been a smart deal, both on an increase in margins and an increase of return on capital basis. But you can't pick when the schedule happens. It depends on the year, the plane, and when you bought it. It just happens to be that the timing is such that we're going to have a fair amount of the scheduled maintenance this year. We want to get investors comfortable with some of this lumpiness, but however, over time and over any given -- a certain amount of -- a full year, we are seeing and we expect to continue to see the benefits of having this ownership. So I want to make sure everybody understands that this is not unforeseen maintenance and not has anything to do with something that was not planned when we originally purchased these aircraft.

Okay. Yes, that's clear and we'll look forward to catching up very soon.

Great. [indiscernible].

Thank you. [Operator Instructions] Our next question comes from Ben Klieve with Lake Street Capital Markets. Your line is open.

Thanks for taking my questions. Congratulations on a nice end to a good year here. First question on the passenger segment. I'm wondering if you can elaborate a bit on this pilot program at the Downtown Heliport and kind of talk about kind of really what your objectives are from a data analysis perspective? And then also comment on if you think this could evolve to be -- to go from a pilot project to some kind of more notable revenue contributor before the emergence of eVTOLs?

Sure. Thanks, and great to hear you on the call. So, yes, I'm very excited about this alliance with Skyports. As you probably know, Skyports has been a leader working with both Joby and Archer and other companies in terms of around the world building vertiports that are kind of eVTOL first. And I think that what you're seeing is -- what we alluded to before, their timeline has been stretched a bit. And I think in terms of the deployment of eVTOL, and they see that they have a desire and the willingness and need to work with us on the rotorcraft side to really provide that transition because it's really going to help de-risk and accelerate that transition over time. So we've come up with a structure where we do not take economic risk. And we have or using this heliport -- as you would imagine, we probably know more about vertical transportation in the New York area than anybody. Typically, Wall Street has not been the strongest of heliports for our customers, but they are putting a lot of money in terms of capital to make this a kind of world-class facility. So I think the information we're trying to get, a lot of it has to be about really the flow of passengers and where people are living, where people are working as to whether or not there is a viable group of flyers where this becomes highly valuable. And I think it actually will over time. So I think that we have kind of the best of both worlds. We get to try this out, not have a downside risk. And if it works for us in Skyports, clearly we're going to continue it. This is now our third place in Manhattan, which is kind…

Very good. That's helpful and really exciting development. On the Medical side, for my follow up here, the two new transplant centers you have coming online here that were announced back in November, it's great to see the visibility that gives you here in the second half of the year. Can you talk about the kind of how robust the pipeline is for additional centers to potentially come into you that would get further visibility here in the second half or maybe into 2026?

Yes, we've got a great pipeline and we're really excited that now we're kind of seeing two funnels for the pipeline. You have the traditional logistics funnel that has driven a lot of growth over the last several years. And then we also have the TOPS funnel. And we recently had our first customer that was a TOPS customer. And over course of several months, we impressed them with our service, our attention to detail, help them to be able to evaluate more organs. And then they asked us to help them with their logistics needs as well. So we really feel like we're well positioned to have more of those shots on goal to show people why we're different, why we're better, why we can help their hospital become more economical as they go recover organs for folks that need them.

Very good. I appreciate that caller. Thanks for taking my questions. I'll get back in queue.

Thanks a lot, Ben. Great to have you on the call.

Thank you. I'm showing no further questions over the phone at this time. I would now like to turn it back to Matt Schneider.

Great. So, we're going to take a few questions from the say Q&A platform. First one is for Rob. So with Blade's infrastructure in place on the passenger side, how are we thinking about or considering additional strategic partnerships or alliances?

Sure. In terms of our infrastructure, there are a bunch of things that are going on. We continue actually to find new dormant landing zones as we did in New Jersey, where we can kind of like to say relight them. And those can be very interesting for corporate and also potential individual travelers, but that's something that we kind of -- we want to control them. We want to be able to in a profitable way introduce products when they make sense, but they'll really kind of explode value when eVTOL is here. So again, New Jersey is an example of that. Atlantic City, the Oceans Casino is that as well. In terms of the existing infrastructure, there are a lot of brand partnerships where we are paid to partner with brands, where they actually they're bringing their product or somehow get some type of exposure. Those are things that are kind of at 90%, 100% margins. So that it can be -- while the revenue numbers are small they're really strong in terms of what falls to the bottom line. And I think that in Europe, we're really starting to bring the power we have that stands over there, and we're looking at or bringing partnerships much more on a global level than we have done on a local level in the past. And we're getting much more involved in events. We are the official helicopter company for the Ryder Cup, which is probably one of the largest, if not the largest, sporting events, specifically with golf. Next fall in Bethpage, Long Island, where we have actually eight helipads operating every day for over a week. Formula 1 is probably the largest movement of non-military helicraft in one day across the world, where we are number one in market share and we actually have our own lounge almost within the track of the Monaco Grand Prix and we're taking three hour drives plus and moving into 7 minute flights. We're already seeing pre sales for that. So I think it's about taking this existing infrastructure, looking -- talking to corporates that are nearby, making sure communicating with the community who would be interested in using that brand, and also really thinking about how this fits into the network of events as sports and entertainment just come that much more important across the world as we grow this business.

Great. The second question relates to the first question. How are we thinking about balancing capital allocation within Passenger as we approach eVTOL, given our desire to invest also in the medical business?

I think we know -- as I said before, when it comes to large scale M&A, which we're looking at it on a daily basis and we really feel like there are a number of actual deals out there. The best deployment of our capital on our ROI base with respect to companies and large scale transactions right now is on the Medical side. I think given the fact that Passenger is profitable, we've been working at it for 10 years. I think we are in a really good place. That being said, we'll be opportunistic, but it would be nothing that would either cause any kind of meaningful impact or cash flows on the passenger side, nor divert capital that would be needed to medical.

Great. Well, that concludes our Q&A portion of the call. I wanted to thank everyone for joining the call today. Please reach out if you have any questions and we look forward to updating you when we report Q1 earnings in May. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.