Bird’s first-quarter earnings show a company struggling to maintain ridership and revenue, two legs of the profitability stool for the shared micromobility market. Bird managed to cut costs, that would be the third stage, but it wasn’t enough to convince investors that the scooter company can find a path to profitability.
Bird’s shares plunged nearly 19% following the release of its first-quarter earnings and are now trading at $0.12.
Bird’s profits can be treated like the canary in the coal mine scooter to the rest of the industry (although it should be noted that each company has its own problems and opportunities). And given that Bird is down in almost every important metric, that may indicate bigger problems within the shared micromobility market.
As one of the only publicly traded e-scooter companies, Bird’s performance in the stock market is important to the industry-wide shared micromobility. If Bird withers, private players may find it difficult to attract investors, a reality that is already unfolding.
Take Tier Mobility, for example. a year ago, the company had bought Ford’s Spin and was the largest shared micromobility operator in the world. Today, Tier is struggling to raise more funds and is reportedly contemplating a merger or sale with a rival.
Bird has been in trouble since it went public through a special purpose acquisition merger in November 2021 — a trend that is becoming widespread in mobility SPACs. There are hardly any SPACs that are doing well today, largely because many of those companies went public before they had established a sustainable business model, and Bird is no exception.
Bird has its own issues that are unique to the company and not necessarily indicative of the entire market. Bird moved to an asset-light business model that relies on a fleet management program to generate revenue. Under the model, contractors lease fleets of Bird vehicles and deploy the vehicles on Bird’s behalf. The consequence has been less control over the location of vehicles.
Bird also has to jump on the removable battery bandwagon that companies like Lime have been successful at, likely increasing cost of operations and reducing asset utilization.
After burning through loads of money, Bird has been trying to get in shape. the new company CEO Shane Torchianawho entered in September, has been leading The bird’s strategy to reduce costs, including letting dozens of unprofitable markets.
Last year, Bird had also laid off 23% of its staff and closed its scooter retail product. Those savings are being realized in the first quarter of 2023; Bird’s spending is definitely down. But the company doesn’t appear to be generating enough revenue for those cost-cutting measures to make a difference.
Bird’s First Quarter 2023 Financial Statements
Bird reported revenue of $29.5 million in the first quarter, a decrease from $35.4 million in the same quarter of 2022. On a quarterly basis, those revenues were also down from about $40.9 million in the fourth quarter of 2022. (Reported revenue in the fourth quarter was actually $69.7 million, but that included a one-time sweetener of $28.8 million. The sweetener was Bird catching up on lost revenue from previous years.) Cost of revenue was $24.5 million, meaning that once again, Bird barely broke even in terms of gross earnings.
Bird walks and deployed vehicles were also reduced. In the first quarter, Bird reported 5.2 million trips, down 29% annually and nearly 37% quarterly. That means Bird is also seeing fewer trips per deployed vehicle per day. In the first quarter, Bird recorded 0.9 trips per deployed vehicle per day, down from one trip per deployed vehicle per day in the same period last year.
Bird manages to lower costs. The company reported $40.6 million in total operating expenses, compared to $100.2 million in the first quarter of 2022. On an adjusted basis, Bird’s operating expenses were $30.6 million, a 39% decrease from the previous quarter. period of the previous year.
But even with severe cost-cutting measures, including exiting several markets and laying off staff, Bird closed the first quarter with a net loss of $44.3 million, compared with net income of $7.7 million a year earlier.
Not only does it appear that Bird is not earning enough revenue to cover the cost of operations, but the company still has negative free cash flow of -$25.3 million. Granted, that’s better than the negative free cash flow of $106.2 million in the first quarter of 2022.
As of March 31, 2023, Bird had $12.8 million in cash and unrestricted cash equivalents. He ongoing concern The warning that Bird initially issued in November is still very much in effect, as that cash is not enough to keep the company operating. If the company doesn’t raise additional capital or somehow magically generate enough cash flow to even sustain the business it’s currently running, it will have to scale back or discontinue some or all of its operations, or even file for bankruptcy.
in a regulatory framework presentationBird said it plans to continue to reduce operating expenses and seek additional sources of outside capital.
Another red flag to watch out for: Bird requested an extension from the U.S. Securities and Exchange Commission to file your 10-K, which provides a more comprehensive overview of a company’s finances and operations, often including details about risks, lawsuits, investigations, and acquisitions. Requesting an extension suggests that Bird is in financial difficulties or management problems.
Bird’s outlook for 2023 has not changed since last quarter. The company aims to achieve adjusted EBITDA of between $15 million and $20 million and free cash flow positivity of $5 to $10 million. Bird expects its adjusted operating expenses to be about $100 million.
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