Zipline raises $1.5 billion as Walmart signs up 300 more drone sites

The round values Zipline at $21.5 billion after the new money (a "post-money" valuation). Paradigm, WCM Investment Management and Layer Global led it.

Valor Equity Partners, Fidelity Management & Research Company, Uber, Tiger Global, J.P. Morgan, ARK Invest and Salesforce Ventures also took part.

Zipline says it will spend the money on two things: expanding its US factories and hiring more people. The goal is what it calls a nationwide drone delivery network.

By the numbers: in January, Zipline raised more than $600 million at a $7.6 billion valuation. Ten months later the price tag is about 2.8 times higher.

Back in September, talks of a raise of about $1 billion at a $20 billion value had surfaced. The final numbers came in above that.

Walmart and Zipline signed a new national, multi-year agreement to launch 300 additional sites. The companies say it could grow further.

The two have worked together since 2021. But today they share only 21 active drone delivery sites, so 300 is a big jump.

Why it matters: a "site" is a spot, usually at a store, where drones take off and land. More sites means more of your neighbors live inside a drone's delivery range.

So far Zipline's Walmart business has centered on one metro, Dallas-Fort Worth, plus a hub in Pea Ridge, Arkansas, near Walmart's headquarters. The company's FAA authorization in Dallas-Fort Worth allows up to 75 sites there. Wing, for its part, holds a contract for more than 270 Walmart locations by 2027.

The announcement names no states and no date for the first new site. So don't expect a drone at your door next week.

In real life Think of a site like a bus stop for drones. The more stops a city has, the more people live close enough to a stop to use it.

Uber invested in this round. It is also a customer with a very big goal: one million deliveries a day with Zipline by 2029.

Zipline's service is being added to Uber Eats. It starts in markets where Zipline already flies, then spreads to new cities.

Walmart has another drone partner, Wing, which is owned by Alphabet, Google's parent company. We covered its own plans in Wing and Walmart will fly drone deliveries to Denver and Seattle in 2027. Walmart is not choosing one partner. It is signing up both.

Zipline shared some numbers about its service. These are the company's own figures, so read them as a progress report from the team that wrote it.

• Dallas-Fort Worth: more than one million deliveries there this year.
• Median time: 19 minutes from checkout in October, against 30 minutes or more for traditional delivery.
• Bakery orders: a median of 10 minutes, because the food is quick to prepare.
• Distance flown: 150 million commercial autonomous miles, which Zipline says were flown without a safety incident.

Zipline also shared results from a group of its longest-working restaurants. Between March and October, Zipline's share of their delivery revenue grew from 10.8% to 34.9%.

Those restaurants saw a 26% rise in delivery sales, and 80% of that rise came from Zipline orders. Zipline says the orders were new business and did not take sales from other delivery apps.

The catch: this is a group the company picked, and it did not say how many restaurants are in it. It is a good sign, but it is not the whole network.

Zipline's argument is simple. Roads are crowded, and delivery costs keep rising. The sky has no traffic.

Today only about 5% of US restaurant orders are for delivery. Most of those are limited to customers within a couple of miles, because longer trips cost more and take longer.

A drone doesn't sit in traffic, so a restaurant can reach customers farther away. Zipline says some partners are building new kitchens and storefronts designed around drone orders. One example it names is the company Wonder.

Zipline builds the whole system itself: the aircraft, the launch and landing equipment, and the software that sends orders to the right drone.

For home delivery it uses a drone called Platform 2. It carries up to eight pounds and serves customers within a 10-mile radius. A pod lowers your order on a line, so the drone never has to land in your yard.

The bigger Platform 1 aircraft are used for long trips for businesses and governments. They can fly 120 miles round trip.

Zipline began in 2014 in Africa, delivering blood in Rwanda. It later added Ghana and Nigeria. It started US work in 2020, carrying medical supplies for Novant Health in North Carolina.

In 2022 it got an FAA air carrier certificate called Part 135. That approval lets a company run long-range commercial drone deliveries, and it was a key step toward today's business.

Zipline now delivers food, retail, farm and health products in five African countries, several US cities and Japan. Its medical deliveries reach many hospitals and clinics. In Côte d'Ivoire it is building a nationwide network meant to serve more than 2,200 health facilities and 12 million people.

Drones are loud, and not everyone wants a drone site nearby. Zipline knows it.

The company recently rolled out a flying style it calls sound-optimized dynamic flying. In plain words, the aircraft adjust how they fly to be quieter, faster and more energy efficient. It also says its next-generation aircraft will fly higher and quieter with heavier orders over longer distances. No date or specifications came with that.

What's next: local pushback is real. In Westborough, Massachusetts, residents and officials challenged an Amazon drone facility over noise, safety, zoning and environmental concerns. Amazon withdrew its application on October 30, but plans to send a revised one.

The lesson for every drone company is the same. FAA approval covers the airspace, but towns still decide a lot about the ground where drones take off.

• Where you live matters: if your town has a Walmart near a Zipline site, drone delivery may appear as an option. The 300 new sites have no announced locations yet.
• Speed is the pitch: a median of 19 minutes is faster than most car deliveries, at least in the company's own data.
• Expect debates: if a drone site is proposed near you, noise, hours and location will be the questions your town asks.
• Competition helps: Walmart works with both Zipline and Wing, so you may see more choice and better service.