Serve Robotics SERV is set to report fourth-quarter 2024 results on March 6.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For fourth-quarter 2024, the Zacks Consensus Estimate for revenues is pegged at $0.27 million. The consensus mark for loss has been unchanged at 19 cents per share over the past 30 days.

Let us see how things have shaped up for SERV shares prior to this announcement.

Factors to Note Prior to Serve Robotics’ Q4 Earnings

In third-quarter 2024, Serve Robotics delivered revenues of $0.22 million. Delivery and branding revenues contributed $0.183 million, with delivery revenues jumping 49% sequentially and skyrocketing 108% year over year.

SERV operated 59 daily active robots, marking a 23% sequential increase and a 97% year-over-year surge. These robots collectively generated an average of 465 daily supply hours, reflecting a 21% quarter-over-quarter rise and a 108% year-over-year upsurge. 

The momentum is expected to have continued in the to-be-reported quarter, driven by improved utilization of its existing delivery fleet. However, software services revenues are expected to not be meaningful in fourth-quarter 2024.

SERV Shares Outperform Sector

Since its public equity offering on April 18, 2024, Serve Robotics shares have skyrocketed 160.9%, outperforming the broader Zacks Computer and Technology sector’s return of 14.6% and the Zacks IT Services industry’s appreciation of 10.1%.

Serve Robotics Stock’s Performance

Image Source: Zacks Investment Research

The SERV stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.

Serve Robotics shares are trading below the 50-day and the 200-day moving averages, indicating a bearish trend.

SERV Shares Trade Below 50-Day & 200-Day SMAs

Image Source: Zacks Investment Research

Rich Partner Base Aids Serve Robotics’ Prospects

SERV’s long-term prospects ride on growing demand for food and other items on partner platforms that include Uber Eats and 7-Eleven. The company, which was spun off from Uber Technologies in 2021, counts NVIDIA NVDA, Uber, 7-Ventures and Delivery Hero’s corporate venture units as its strategic investors.

Serve Robotics’ expanding partner base, which includes Shake Shack SHAK, Ouster OUST, Wing Aviation and Magna, is noteworthy. SERV’s expanding robotics offering is expected to improve its competitive position in the last-mile delivery space, which is currently dominated by the likes of DoorDash and Amazon. The acquisition of Vebu assets is expected to strengthen Serve Robotics’ footprint in the restaurant industry.

Low-Cost & Last-Mile Delivery Demand Aids SERV

Serve Robotics believes that robots have the potential to reduce the average delivery costs to under $1, lower than the delivery costs by human couriers currently, making on-demand delivery more affordable and accessible in the areas in which it operates.

SERV’s third-generation robots can carry more goods, enable more deliveries and reduce the cost of delivery further. The latest robots support an expanded cargo bin that holds four large 16-inch pizzas, or 15% more volume than the previous robots.

Powered by NVIDIA’s Jetson Orin module that adds five times more on-board computing power, Ouster’s new REV7 digital lidar and major upgrades to the robots’ sensor suite help Serve Robotics robots move fast, travel approximately twice as far on a single charge, and spend six more hours in the field each day. SERV, in collaboration with Magna International, has started mass manufacturing of its third-generation robots. 

Serve Robotics is on track to deploy 2,000 robots in 2025 through its agreement with Uber, anticipating an annual revenue run rate of $60-$80 million once the robots are fully deployed and achieve full utilization.

The company expects to deploy 250 of these robots around Los Angeles by the end of the first quarter of 2025 and remains on track to enter Dallas, its first new market outside of L.A., by the end of the second quarter of 2025. San Diego and Vancouver are other markets that the company is considering expanding into.

Conclusion

SERV’s expanding portfolio of robots and rich partner base reflect solid top-line growth potential over the long run. We believe that these factors justify the premium valuation.

Serve Robotics currently has a Zacks Rank #2 (Buy), suggesting that it is the right time to buy the stock ahead of the fourth-quarter 2024 results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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