After ringing the bell today, the scooter sharing company Bird disclosed its third quarter earnings, the first time it has done so as a public company. Bird recent merger Bringing cash and public status to the formerly private unicorn, with a SPAC.
In the third quarter, Bird’s revenue missed expectations, but given an expanding global footprint and expectations that tourism and commuting will return to cities and global supply chain issues will subside, the company expects full-year 2021. also raised its guidance for the period. Shares were up marginally 1.14% in after-trading at the time of this writing.
In the third quarter, Bird described nearly all of its revenue as “sharing” efforts, or its scooter business. A small portion of its total top line – 2.1%, or $1.38 million – comes from scooter sales and Bird’s new e-bike, More simply, Bird’s hardware side is effectively zero compared to its larger business of providing hardware to independent fleet operators.
“The supply chain was a significant headwind for our new e-bike launch, primarily in our product sales business,” Birds’ CFO, Yibo Ling, said during the third-quarter earnings call on Monday. “Given the global supply chain issues, the demand for e-bikes is exceeding expectations. We have seen difficulties especially with regard to logistics. As an example, the $10 million of product sales we expected to realize in the third quarter were pushed back into the fourth quarter as a result of shipping logistics, which directly impacted revenue recognition timing. ,
Ling said he would closely monitor the situation and look for ways to ease supply chain pressure. Do we smell more vertical integration in the future?
Bird’s total revenue for the third quarter was $65.4 million, up 63% from the year-ago period. However, public market investors expected Bird to generate $69.85 million in revenue during the three-month period.
From that revenue result, Bird managed to post a gross margin of 21%, a huge improvement over the 3% it recorded in Q3 2020. Still, the company was far from profitable. It reported a loss of $36.9 million on a net basis — an improvement from a net loss of $43.8 million in its year-ago Q3 — and had adjusted EBITDA of — $5.3 million, an increase in its Q3 2020 adjusted loss of $28.0 million. significant improvement.
However, don’t let that adjusted EBITDA number give you hope that Bird is going to be a profitable business. -To reach the $5.3 million figure, Bird removed its hardware depreciation cost, effectively separating the cost of the scooter from being worn down. she is also Let it be To pass our muster; Depreciation is not a one-time cost, and thus should be included in the company’s operating results from our perspective.
According to the company, Bird now expects:
- Revenue of “between $195 million and $205 million” in 2021, up from the prior estimate of $188 million.
- Adjusted EBITDA of “between $(85) million and $(75) million,” an improvement over prior guidance indicating a $96 million adjusted EBITDA result for the calendar year.
Big revenues and small losses are welcome in any company, and especially in public companies banking on growing their way to break-even status. Taking a few simple subtractions from the company’s results as of September 30, 2021, Bird forecasts the following results for its fourth quarter:
- $32.6 million in adjusted EBITDA losses, calculated using the midpoint of Bird’s full-year guidance range.
- $48.8 million in revenue, calculated using the midpoint of Bird’s full-year guidance range.
It should come as no surprise that Bird anticipates a bigger loss in the fourth quarter on the back of slimmer revenues, given the inherent seasonality in its business. People rarely go outside when it is cold. And only a few people rent scooters and ride them to their primary homes.
last month, Bird increases its credit facility with Apollo Investment Corp. from $40 million to $150 million, which will allow the company to be more capital efficient with vehicle financing. The money will allow Bird to purchase vehicles during the slow winter season, as long as supply chain bottlenecks ease, and to deploy them in existing and new markets in the spring and summer.
Despite the guidance gains, however, Bird anticipates lowering market expectations. investors to forecast That Bird will record $201.2 million in total revenue in 2021, though the company’s Q4 guidance appears to be better than expectations especially as they stand ($45.45 million).
During Bird’s tough 2020 and through its SPAC-led public debut, our question has been simple: Is the company building a sustainable business that has a real shot at long-term, GAAP profitability? So let’s just talk about that.
core model questions
There are some positive notes in Bird’s latest results. The company has expanded its operations to 350 cities, the company said in an earnings release. It has a broad footprint that could deliver attractive growth over the next year.
But getting closer to profitability will require extensive growth for the company. From total revenue of $65.4 million in the third quarter, Bird generated gross profit of $13.5 million. That figure is a big improvement over its year-ago result of gross profit of just $1.08 million, to be clear, but miles from its operating costs of $40.0 million in the quarter. And the gap between the two numbers — gross profit and operating cost — will widen in the fourth quarter because of weather-related issues.
At its current 21% gross margin, a figure including Of “depreciation on revenue-generating vehicles,” Bird will need to generate $190.6 million worth of revenue in a quarter to cover posted operating costs in Q3 2021. This is almost three times its current run rate.
Recall that Bird’s economics have improved dramatically Thanks for the change to the third-party modelIn which the operation of the fleet of scooters is entrusted to others. Previously, Bird ran a more centralized, and less profitable business.
“We are seeing very strong retention with our Fleet Manager partners, and one of the reasons is that on average there are a hundred vehicles we ship to each Fleet Manager partner, which gives us a very high return on labor and allows them to really really Lets maximize your earnings,” Bird founder and CEO Travis VanderZainden said Tuesday. “The very strong earnings growth we’re seeing with Fleet Manager Partners is in rave share potential, I think that’s why we’re looking at other Fleet managers are seeing such strong retention on the base despite some labor headwinds across industries.”
There are reasons for cautious optimism. If the company’s gross margin can improve further, Bird’s revenue won’t have to triple to cover its operating costs with gross profit. And Bird has posted some encouraging signs to this effect. For example, despite growing its “average deployed vehicles” by 52% on a year-over-year basis to 78,500 from the third quarter of 2021, the company still saw its average daily ride of scooters up 1.6x to 2.1x. more scooters And More rides per scooter per day is good news for Bird.
That 2.1x figure is the highest result on file in a company’s earnings report, which indicates a slope that shows up. If this can be sustained, rising ride volumes in the coming quarters will provide a nice tailwind to Bird’s profitability.
There’s no quick fix between the huge gap that remains between Bird’s operating costs and gross profit. But at least the company’s core operations are improving, and it recently did so thanks to its SPAC-led public debut, so it has cash on hand. Bird reports, its public debut, “total cash, cash equivalents, and restricted cash, as of September 30, 2021, was $309 million after adjusting for $246 million received at the conclusion of the business combination.”
Bird’s operations consumed $66.5 million worth of cash during the first nine months of 2021, while its investment cash flow ran a sizable, negative $115.5 million during the same period. For reference, the company’s scooter purchases are recorded in investing cash flows.
Looking at Bird’s Q3 totals, it’s clear that its recovery from its 2020-low continues. If it’s recovering fast enough to keep investors happy is the next question.