Q3 2022 Bird Global Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Baird Global third quarter 2022 earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press the one followed by the four on your telephone.
If at any time during the conference you need to reach an operator, Please press star and zero zero.
As a reminder, this conference is being recorded.
I would now like to turn the call over to Karen Tan. Please go ahead.
Good afternoon, everyone and welcome to burst third quarter 2022 earnings conference call before we begin I need to remind you that all statements made on this call that do not relate to matters of historical facts.
So there are forward looking statements under the U S Federal securities laws, including statements regarding our current expectations for the business and our financial performance.
These statements are neither promises nor guarantees and are subject to risks and uncertainties that could cause actual results to differ materially from the historical experience or present expectations.
A description of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward looking statements on this call can be found in the risk factors section of our Form 10-K for the year ended December 31, 2021 filed with the SEC on March the <unk>.
<unk> 2022.
And the risk factors section of our quarterly report on Form 10-Q for the quarter ended June 30th 2022 filed with the SEC on August 15 2022.
And our other filings with the SEC.
This call will also reference non-GAAP measures, including adjusted EBITDA adjusted operating expenses right profit margin and free cash flow that we view as important in assessing the performance of our business.
A reconciliation of each non-GAAP measure to the nearest GAAP measure is available in our earnings release on the company's Investor Relations page at IR Dot Bird Darko.
The growth percentages that follow are in comparison to the same period of the prior year, except as otherwise specified.
I'll now turn the conference over to <unk>, President and CEO Svein tore kiana.
Thank you Karen and thank you all for joining us today for our third quarter earnings Conference call.
Before I begin I want to take a minute to thank the board and our employees for putting their trust in me to lead our exceptional company in our next chapter as CEO .
Over the last four years here.
Solid understanding of what drives our business.
This experience coupled with my prior experiences as a management consultant largely start taking out cost of large companies.
As an investor looking at asset valuations.
<unk> had been instructive as I thought through what we can do to drive profitability and create long term shareholder value.
Today, we're at an inflection point in our business looking ahead, we will prioritize cash generation against near term growth.
Through 2021, where it stood out in the investment ecosystem the price companies with high growth potential with less of an emphasis on the cost of achieving that growth.
Given our strong product market fit and annual revenue growth rate of 48% from 2018 to 2021 retried in this environment.
However, today's macroeconomic environment and accordingly different market sentiment have caused us to revisit the strategy to take our focus more towards itself self sustainability overgrowth to be clear we remain bullish on the long term prospects of the category, but preferred path the approved profitability before capturing the full market opportunity.
We've had to adapt quickly taking aggressive steps to accelerate our path to achieve profitability.
Specifically, we have one sharpened our geographic and product focus to enhance the structure of our leadership team to fit to our strategy and three initiated a 40% to 50% overall reduction in our central cost structure versus Q2.
Looking ahead, we see three pillars to drive our path to self sustainability.
The first of these pillars is to be the trusted partners that cities deserve.
Recently, we've doubled down on putting cities at the center of everything we do.
Building on the progress made this year, we plan to continue to work closely with and listen to our city partners to understand their pinpoint steeply.
Against these transportation pinpoints EG safety quarter.
Equity of access and sustainability.
We expect to continue to work diligently across our technology operations and government partnerships teams to build our offering.
Examples include sidewalk protection and virtual parking in collaboration with Google.
In order to be at the forefront of Sydney innovation.
This we believe is essential in building capital T Trust and a sense of partnership with our cities.
Which in turn is key and retaining our existing permits and growing our footprint with new cities.
Our second pillar is to continue to improve our asset efficiency.
You could think of this as improving the return on our assets.
The three legs of the stool are one improved supply demand matching for a new demand based vehicle drop model.
Two increasing our vehicle deployment rate.
And three extending the average life of our vehicles.
As previously referenced.
Nothing in our model for street level vehicle supply and demand matching the supply and demand based local optimization combines leveraging our deep local expertise from our team and fleet manager partners.
And the data driven insights captured by the over $175 million rise regenerated.
Currently far too many of our vehicles are being dropped in locations every day, where we know they won't drive incremental trips.
<unk>. This is a complex, but exciting area a vast opportunity for bird and our fleet manager partners.
We are currently in the process of optimizing the balance of utilization lift from optimal dropped locations.
With the incremental additional efforts required for those drops.
Based on testing and 100 plus markets over the last several months. This initiative initial optimization is expected to significantly improve the rider experience.
E the likelihood of approximate vehicle being available.
Our seasonally adjusted utilization rates and drive margins.
Specifically, we expect that we can increase our vehicle utilization by 10% to 20% in the near term, perhaps even more no longer term.
Second we.
We can be more efficient with how many vehicles are fleet manager partners need at any given time to support the vehicle caps in a local market.
We have a clear path to deploy more of our vehicles in any given time.
Versus having them sitting in a warehouse charging or awaiting repairs.
The primary benefit of this is that we can capture incremental growth opportunities without having to spend more capital on new vehicles.
Lastly by continuing to improve our inventory management products investing in new methods tools and training for repair and refurbishment better aligning our fleet manager partners profiles and incentives.
And rolling out ever more efficient vehicles for instance, with swappable batteries and better tracking devices.
We should expect to see not only a higher percentage of our fleet out on the road at any given time, but also continue to extend the useful average life of our vehicles.
Even longer average useful lives will continue on our strong historical trends of reducing capital expenditures.
Expanding gross margins by decreasing depreciation per trip.
And reducing birds greenhouse gas impact as the carbon for vehicle creation is spread over more trips.
The third major pillar is aligning our cost structure with inflows.
Our last strategic pillar is to ensure our cost structure is aligned with the cash margin our business generates or.
Our number one priority for our business is to be free cash flow positive and ultimately self funding.
We've made great progress in reducing our costs and we will seek to ensure that discipline remains part of our DNA going forward.
Yeah.
Earlier this year, we announced our profitability focused strategy to evolve our business to be self funding, including one focusing on our profitable core sharing business to adjusting our city footprint to focus on our higher margin markets and three streamlining our fixed cost structure.
Our team has worked diligently to execute on each of these initiatives, which we believe will continue to flow through our financial performance as we progressed into early fiscal 2023.
As we noted last quarter, we had slowed the expansion of our retail product sales business and prioritize our core sharing business and doing so we expect to reduce the drag from our lower margin capital intensive business.
We plan to continue to sell a minimal amount of retail products and support our channel and retail partners, but the revenue and profit contribution is expected to become immaterial as we head into fiscal 2023.
We've looked at the performance data closely and all of our markets and regions and then does it become clear that some markets are still too far from supporting a vibrant self sustaining micro ability industry.
In some cases. This is a result of under regulation EG no vehicle caps that leads to an oversupply of vehicles and operators alike, some of whom don't behave rationally financially.
For instance.
We've recently captured the leading position in some large German markets.
But learned the process that is unlikely any operator will be turning a profit in those markets anytime soon.
As a result, we made the tough decision to entirely exit from Germany, Norway, and Sweden, as well as wind down operations in several dozen additional smaller to midsized cities across Europe and somewhat in the U S.
Going forward, we expect that our EMEA footprint will look materially different focusing on markets, where we are a market leader and where our asset productivity as measured by margin per vehicle per day is attractive.
We don't believe that selling $2 for $1 is a viable business strategy and do not plan to stay in markets, where that's a requirement.
While this change is expected to reduce top line revenue by $20 million to $25 million on an annual basis we.
We expect these market exits will actually increase our gross profit dollars by approximately $10 million on an annual basis.
This is on top of the additional operating expense savings to fall below gross margin.
Transitioning to operating expense reduction initiatives in Q3, we executed on our $80 million annualized cost savings target and achieved an annualized operating expense run rate of approximately $160 million.
But as we look ahead to fiscal 2023, we are taking on a more aggressive approach to cost optimization efforts and have uncovered opportunities to drive an additional set of efficiencies.
Along with our market footprint adjustments, we are taking additional cost savings actions and expect to bring our annualized adjusted operating expense run rate to $120 million to $130 million, reducing central costs by 40% to 50% from Q2.
We expect to see these savings mostly completed in Q4 2022 and to realize the full benefit in early 2023.
As noted above our number one priority is for our business to be free cash flow positive and secondarily to turn adjusted EBITDA positive on a full year basis.
Even if we have to sacrifice some growth to achieve that.
I will now turn the call over to Ben to review, our financial performance and outlook in more detail.
Thanks, Jay I also want to start by recognizing the incredibly talented management team and employees that I now have the privilege of working with.
As an outsider I was impressed by what this company has accomplished over the past five years and two months into the role I'm, even more impressed by the resiliency hard work and dedication that the entire organization puts forth each day.
Good morning, importantly, our operations and finance teams have been nimble and adaptive to change as we work diligently and collectively to evolve our business to one that is profitable and self sustainable while we are prioritizing profitability in the short term we remain optimistic about the mid to long term prospects of industry.
<unk> to being a leader in environmentally friendly electric transportation around the world.
Now before I talk about the quarter, let me briefly address the accounting restatements disclosed in our earnings release today.
During the evaluation of our rider wallet sub ledger, we found the design area within our internal backend it systems.
<unk> did not capture some sale payments occurring after the completion of awry that were incorrectly booked as revenue, resulting in the overstatement of revenue an understatement of deferred revenue.
As a result, we expect to restate our historical revenues by $12 5 million in the first two quarters of fiscal year 2022.
$14 6 million in fiscal year, 2021, and $4 5 million in fiscal year 2020.
More specific details will be included in our amended 10-K and 10-Q when filed.
For context, we have been evaluating a rider wallet sub ledger for the purposes of recording breakage revenue.
By way of background breakage revenue is akin to companies with gift card program company's estimate the amount of gift card balances that they expect not to be redeemed and record. This estimated break as revenue at birth. Many customers have created preload wallet deposits that are available for future redemption via rights. We are evaluating the probability that a portion of.
The U S wallet balance, which currently sits at $67 million.
We'll not be redeemed.
While the restatement will reduce our historical revenues were in the process of completing an analysis of pre loaded wallet balances against historical redemption patterns, which we expect to be completed in the next quarter.
Upon completion, we expect to record recurring breakfast revenue going forward and also anticipate booking a onetime true up that would increase our revenues next quarter.
It is also important for you to note that there was no impact on our cash position or cash flows as a result of these two accounting changes.
Now onto our third quarter financial results.
We reported our first quarter of positive adjusted EBITDA and cash flow from operations to the tune of $200000 and $2 2 million respectively.
And with minimal Capex of $3 5 million in the quarter, our free cash flow was just slightly negative $1 2 million demonstrate.
Demonstrating strong progress against our target of turning the business to positive free cash flow of.
Of course, the seasonally colder winter months will be more challenging for free cash flow, but we are continuing to align our cost structure and prudently managing our capex spending to put us on a path to self sustainability.
For the quarter, we reported revenues of $73 million up 19% against Q3 last year, consisting of a 15% increase in sharing revenues and $2 $7 million increase in product sales to.
The 15% increase in sharing revenues was driven by a 9% growth in rates. Our Q3 Reits reached a record high but it did come in below our expectations, while the deploy vehicles were up 49%.
Lead times for our vehicles were exceptionally long last year and had reached up to 12 to 18 months. When we placed our vehicle orders in the first half of 2021 in the midst of a challenging global supply chain environment. We had over committed on a vehicle orders, which led to the near term mismatch between ride volume.
And vehicle deployment.
Going forward, you can expect us to be much more disciplined around our vehicle capex spending as we focus more on improving our asset deployment strategy as Shane had mentioned earlier.
Now, let me talk briefly about our margins consolidated gross margin, we see record, 38% up from 13% last year benefiting from lower depreciation operational efficiency from greater scale and a onetime benefit from retail product sales that were booked as contra Cogs.
<unk> profit margin before vehicle depreciation also reached a record 55%.
With five percentage points of the year over year improvement driven by operational efficiency as we scaled across the largest fleet manager partners.
Including depreciation sharing gross margin was 37% compared to 14% last year due primarily to asset impairments from last quarter and tariff adjustments.
By region, North America sharing gross margin was 39% compared to 24% a year ago and EMEA sharing gross margin was 32% compared to a loss of 11% last year.
Q3, adjusted operating expenses increased 9% year over year to $40 million.
Lower than the 19% increase in revenues and decreased nearly 30% from $56 million in Q2, achieving our annualized run rate cost savings of $80 million.
<unk> had mentioned earlier, we expect to further reduce our adjusted operating expenses to an annualized run rate of $120 million to $130 million versus our prior guidance of $160 million.
We ended Q3 with total cash and restricted cash of $88 million, including $39 billion of unrestricted cash.
Additionally, as of September 32022, we have $48 5 million shares of equity financing available through a standby equity purchase agreement with Yorkville, which you may seek to use depending on market conditions.
In October we amended our existing $150 million of Pollo vehicle financing facility to light amortization payments with seasonal peaks of the business in the summer months when vehicles generate the most cash and provide greater financial flexibility in the winter months.
Additionally, we paid down $45 million of the facility loan balance using our restricted cash which will significantly reduce our future interest and amortization payments.
We estimate that our Capex next year should be fairly minimal as we focus more on improving our vehicle utilization and deployment strategy.
Now as a result of the two accounting changes I mentioned earlier, we're withdrawing our previous fiscal year 2022 revenue guidance of $275 million to $325 million as I had noted earlier, we're working to estimate a onetime true up to break as for Q4 and on a go forward basis as well as refining our near term forecasting as we implement these two accounting <unk>.
Yes.
We remain focused on achieving our cost reduction plans that will better position the company to reach full year EBITDA profitability.
For some context, however, our current right trends thus far in the quarter are tracking in line to slightly below normal seasonality, which is that both total rise and rise per deploy vehicles tend to be seasonally softer as we head into the winter months.
In addition, we will see some modest revenue reductions due to the announced exit from several unprofitable markets, though this should positively benefit our overall gross profit dollars.
And with that I'll turn it over to Karen to go over questions from our investors using a new Q&A platform before opening the session to our analysts.
Thank you Ben we are very excited to partner with today's Q&A platform this quarter, but increased transparency and engagement with our shareholders based on interest and that Soma of boats, we have pre selected for questions to answer.
The first question is one that touches on several investor questions and as rates.
Price has been below dollar for over five months now.
The rest of the lifting is now very high.
What is your plan to cure the stock price sufficiency and to return to compliance with the NYSE.
The rest of the first one.
Thanks, Kevin.
Thats a great question from our shareholders. Let me clarify what we had stated in our press release that we issued back in June we have to also secure the listing deficiency first we can gain compliance at anytime within the six month period. After we received the NYSE noticed in late June if two things happen one closing share prices of one dollar.
On the last trading day of any calendar months and two our average closing share price of at least $1 over the 30 day.
<unk> ending on the last trading day of bandwidth.
The other option is that we can do a reverse stock split which will be subject to board and shareholder approval.
The timeline for this is any time up until our next AGM, which is expected to be in June 2023.
Both of these options allow us to remain listed on the NYSE.
Yes.
Okay, Great. Our next question.
What actions are you taking to generate more profitable opportunities for the company as an investor I am concerned about the company never being able to become profitable.
Yeah. Thanks, Karen this is Shane I can take that one.
So a little bit as previously mentioned.
In this call we've done three specific things already and have three focus areas.
Look ahead to drive profitability.
Terms of what's already been done.
Streamlining our product and geographic footprint.
Critical for us.
I won't restate the details there, but thats number one number two very much related upgrading and streamlining our senior management team both for public company readiness also to reduce costs.
And then three quantitatively.
Taking those as well as the additional.
Cost reduction steps across our central cost base to reduce opex by 40% to 50% from our Q2 levels.
Looking ahead.
Three strategic pillars that we're focused on somewhat walking through our P&L.
Number one is continued to be the trusted microbilt partner that we think are cities desert was primarily going to impact our top line revenue.
Number two.
It continues to improve our fleet efficiency.
So going through all the details.
Means better.
Better matching of supply and demand improving our deployment rate of our vehicles, so taking them out of warehouses more often and putting them on the street and number three continuing to extend the average useful life of the vehicles.
Primarily asset efficiency point, primarily flow through our gross margin.
Although you see a little bit of a top line as well as think about utilization.
And then number three looking ahead, keeping that opex cost that we've already talked about reducing.
In line with the cash that we expect our business to generate so keeping a very tight set of controls.
Our checks and honor our central cost base and not letting if you want that to grow back from a cost perspective, and that mostly is going to impact our bottom line.
So those are the three things that we've done and the three things that we're keeping our eye very closely on as we look ahead as we think about getting to EBITDA positive and ultimately free cash flow positive.
Yeah.
Thank you Sam I'm going to direct the next question to you as well.
Pizza partnerships or collaborations with companies like Apple or Amazon.
Yes, that's a great question.
I suppose to give you. One example that ties back to our pillar number one citytrust and growing with cities would you continue to work with Google on visual parking solutions, just something cities care quite a bit about commonly asked for.
We utilized google's vast knowledge base.
Data in Street view images in real time help riders after they're done with their ride to find the.
Approved parking location for the scooter or something or buying something we call virtual docs.
It is nearly <unk> and results in a very precise center centimeter level geolocation detail that prevents improper parking and ensures that.
Essentially unapproved areas without actually having to build talks there as you might imagine that is very important to cities.
We're super excited to keep working with Google on.
We're always going to be open to opportunities to partner and collaborate with other companies.
Including Apple and Amazon, but not limited to them, but at this time, we don't have any other partnerships to announce publicly at the moment.
Okay. The last question from our investors why are we not in all major cities in a particular state there are plenty of crude untapped markets not being utilized.
What is <unk> plan for city expansion and are there any supply issues I'm going to give that to saying again.
Yeah.
Yeah. Thanks, Thanks, Karen.
So we think the opportunity for city expansion.
Yes, both on our existing regions in North America EMEA, but.
Perhaps even more so outside of these in the longer term. So we remain very optimistic in that regard around our growth prospects.
And maybe I'll give a little bit more detail here. So we do see a few main drivers of market growth number one would be.
Growing in new and existing cities in our core regions again, North America and EMEA.
Number two.
Our growth prospects outside of our core regions and the rest of the world, which I can talk more about that.
And then number three the expansion of our rider base as the service becomes more mainstream in the industries that we're in.
So to give more detail on number one we're only beginning to scratch the surface just in North America and EMEA to.
To give you some stats on that were present.
And about one third actually slightly less of the addressable cities in those markets.
The bulk of the remaining two thirds are cities that don't yet have mobility program to give you. Some examples Dallas Houston.
Boston, Philadelphia or thinking about EMEA Barcelona in Amsterdam.
That's interesting because when you look at voter pools micro mobility.
Right of way electric scooters electric bikes at $75 25 odor issue.
So it's only a matter of time until the political leaders in those cities that are moving more slowly catch up and embraced the sustainable transportation options that their constituents are demanding in the three to one ratio.
And then even within those cities that we're in New York City as an example.
We also still only have partial coverage so there's quite a bit of room to grow our supply to match the demand there as we expand our vehicle supply over over the course of time.
On the second of those points looking outside of our core regions. We're just launching in the middle East.
In Doha in time for the World Cup, we actually just launched there and are beginning to expand in Australia, and New Zealand, and Korea, which we see as very promising and cash flow positive markets as well.
There are other large on open markets, particularly in Asia, Japan, Singapore et cetera.
Thinking longer term in Latin America that we really haven't touched as well and she has a strong long term opportunity, but not necessarily a near term priority.
And then last sort of three points that I talked about.
We're still in the early adopter phase for.
Brighter demographics.
Currently they skew younger and tend to be more mail all of that changes at some cities increase there.
Yes.
Like an E scooter infrastructure with protected land.
So ridership your cases are starting to trend more towards commuting, especially entities that have been in for several years.
But still in many markets include a large portion of leisure and tourism matters, we believe as a category matures and the city infrastructure matures to make the service a safer usage will continue to grow in the cities that we're in.
I'll stick of any vehicle caps.
And again as I mentioned, we've seen that some of our most mature markets both in the U S and about.
Last point on this one I think for the sake of clarity.
We do see <unk>.
<unk> growth opportunities ahead of us the current priority is unprofitable growth and where we need to make any trade off decisions.
Tween growth and profitability.
We're going to seek to.
Prove out the profitability of this model before we capture the full potential and are in the market.
Okay, great. Thank you for taking those questions, saying I'm, Ben and thank you to our investors for submitting your questions. This quarter with that I'm going to turn it back to our operator to take any questions from analysts.
Thank you MS time, if you would like to register a question. Please press the one followed by the four on your telephone.
Here with me Tom prompt to acknowledge your request. If your question has been answered and you would like to withdraw. Please press the one followed by industry.
Our first question is from the line of Tom White with D. A Davidson. Please go ahead.
Great. Thanks.
The impact of those exits on.
On your financials revenue gross profit EBITDA.
And then and then also the impact on Capex I'm, just curious what happens to the vehicles in those cities that you're exiting do you kind of reposition them to other markets is that maybe why you're I think you mentioned kind of minimal Capex next year, and then I had a follow up.
Hey, Tom Thanks for asking the questions. This is Ben.
So the city of Sydney assets that we have announced they're part of a strategic review that we did to help achieve our goal of becoming self sustainable EBITDA positive. So one of the things we looked at it looked at with cities do not have a clear path to profitability and that included a full exit from three countries in Germany, Norway, Sweden as well as our COO.
Dozens of smaller mid sized cities.
These exits Tom are more weighted toward EMEA, where we trimmed back from cities that have not really mature in terms of the regulatory framework and what I mean by that is.
We're seeing unhealthy unit economics in some of these markets.
In the U S. These exits tend to be somewhat of a small handful of our long tail cities.
So what I would say after the global footprint realignment the more profitable than North America reasons will probably account for over 75% of our go forward revenues and what I noted on our earnings call, Eric was saying and also known as the most important thing to take.
Takeaway from this is that these market exits.
<unk> increased our gross profit dollars by about roughly $10 million on an annualized basis.
And in addition to that there's also additional opex savings that will come from consolidating our EMEA operations. So and this is just part of the incremental $30 million to $40 million annualized run rate cost savings that we have just announced.
And to your other question tell him about some of the vehicles and Capex, you're right, we're going to reallocate some of the vehicles that we have from those markets that we're exiting will go into hibernation. Some of those vehicles during the winter months and also move them to other new market opportunities like in the Middle East and ahead of the World Cup over there you also heard about.
Our fifth strategic pillar I think Jane you talked a bit about that and how we're focused on improving our vehicle fleet efficiency through better supply demand matching alright deploy rates and extending the life of a vehicle so.
When you think about that context, I would say net net we should have enough vehicles on hand to support the remaining city portfolio and capture near term opportunities. So you you can expect that we're going to be much more prudent with our capex spending going forward and then our focus will be more on driving greater asset efficiency and balancing that with cap.
Next when you vehicles.
I hope that helps.
Yes, that's good maybe one more follow up for you just I want to make sure I understand the breakage revenue stuff. So this is this is deferred revenue that I guess, the accounting rules say that you can recognize some of that over time, even if consumers don't actually kind of take the rides, but but thus far you havent been.
Recognizing any of that as revenue, but you are now going to start doing that in may.
Maybe help us understand like how much could that.
Potentially offset.
The negative restatement to revenue kind of going forward from.
From the wallet issue you talked about.
Yes sure. Tom This is actually a rather technical accounting question that you provide so I'll try not to be too technical with it the way I tend to generally characterize this to folks who are not familiar with breakage revenue think of it as a gift card right. If someone gave you a $50 gift card you went and purchased $45 you have $5 remaining in the gift card.
There is a probability that whether you or others just never use that remaining balance whether its because you lost that you sort of way or if it gets to use it but probability is that there is a significant portion of those people will never we redeemed the remaining portion of it there are difficult. This is.
Very similar to what we have we have what we call pre loaded wallet balances. So when you do a Ryan you want to put in $5 $10 et cetera, and then we run profitability across our AIDS wallet balance to see what's the probability that someone's ever going to make a transaction within their wallets.
And over time, what do we do a one year three et cetera, you look at corporate data and you start realizing that we have $67 million of wallet balance here in the U S. The probability of that is as you say.
What's the chance that someone's going to make a transaction within that wallet balance and if the probably suggests that a portion of it will never be.
That's what we booked as what we would call a what I call. It a onetime true up to our revenue so you'll see a pretty meaningful bump up in our revenues next quarter because of this we're obviously working with our auditors to estimate what that magnitude would be but you can think it's a pretty meaningful portion of that $67 million and then on <unk>.
Go forward basis, just like gift card analogy I mentioned, we're going to continue to book a certain percent of our revenues is breakage revenues the revenues that we can.
Can recognize from the wallet as part of a deferred revenue balance.
It's a little early for me to say what that number is because thats something that were still working with our auditors too, but I would say high level. Tom industry average is that well break as revenues are somewhere in the five I would say, maybe 5% to 8% range on a go forward basis.
We still need to finalize that with the auditors so don't know that yet.
Okay. That's helpful. I appreciate the direction that maybe just one last one if I could maybe for Shane.
Should you talked a little bit about kind of the initiatives around optimizing vehicle placements.
I guess can you help me understand is that mostly a technology thing is it kind of.
You know optimizing or fixing some part of the fleet manager model, because I sort of thought that was kind of one of the things that the fleet managers were supposed to.
Be incentivized to do in <unk>.
Nowhere to put them just given that they're kind of in market et cetera.
Yeah, that's actually an excellent.
Excellent question.
Well look both both pieces are pretty important and I will call on you.
You could call it technology or maybe just.
Complex analytical problem.
Sort of piece number one and then piece number two is what I would call change management.
And getting getting folks on board to follow the.
Recommended locations.
On the first piece that that effort is done at least version one of it is done no doubt there will be a version two <unk> III in the future.
I would say that's about one third of the effort.
Two thirds of the effort is the actual change change management to get folks to adopt the recommendation whether they'd be.
The small percentage of cities that we're doing in house or the majority percentage of cities that are managed by fleet managers, where we can obviously make suggestions to them but.
Given their independent contractors can't tell them exactly what to do.
We are deep into that the analytical processes done and then we're deep into that change management process right now and I think I may have alluded to this last quarter Thats.
Why is this overall evolution should be measured in quarters as opposed to weeks or months. So it takes a.
A few quarters to fully rollout that change management process.
Okay. Thank you very much.
Thanks.
Our next question is from Eric Sheridan with Goldman Sachs. Please go ahead.
Thanks, so much for taking the questions maybe a few if I can any update on.
Cohort behavior or existing.
More mature markets sort of customer growth. So we can better understand some of those core markets that are going to be around for the longer term and sort of baked the base of revenue going forward and how they may be behaving.
We're one.
Two would be elements of the cost run rate you gave is that the right cost run rate to think about remaining flat through all of 2003 or is that really just highlighted as an exit rate for 2002 as opposed to illustrate how should we think about cost.
423, and then the last one if I could squeeze a third in.
Obviously, when you put something out like going concern over the next 12 months investors are going to ask a lot of questions about what the underlying assumptions are so.
In terms of burning through the remaining cash if something doesn't present itself on the financing front can you give us a little bit better sense of what assumptions, you're making over the next 12 months in terms of what the business model looks like.
To get from point a to point b. Thanks, so much.
Yeah, Hey, this is Shannon I'm happy to take the first two and maybe I'll, let Pat talk about the third one.
So on the run rate cost question that 120 130 number.
Is not just our exit rate for the year, but what we would expect to be able to achieve for the full year in 'twenty three.
So we don't see that creeping up materially next year I think that's actually a very very important focus for me and the rest of the management team as I mentioned not letting that number yet.
Get higher.
And then on the cohort data the retention data look same store sales continue to be healthy if you want to think about it.
That way.
Retention data rider retention data I think has improved slightly although we are not publicly disclosing that it seems to be healthy.
And then I think the most important thing as we think about.
Our sort of existing markets.
Is one what we're actually seeing in New York City, right now, where there's just an RFP released where.
There are only operating the Bronx, right now and they're extending that to four out of the five boroughs everywhere about Manhattan that trend continues to be the case in almost every major market that we're in very rarely.
Our folks shrinking their footprint certainly the average trend is.
To increase the.
Vehicle supply or per cap in those cities.
And then.
Of course, as we rollout the technology that I was just talking about for vehicle placement.
We do see upside as I alluded to of.
Higher rides per vehicle per day, as we think about our vehicle locations and not just putting them in the same place in the center of the city, but spreading filled out a little bit too.
Match that very very local supply at the street corner level to the very very local demand.
But then maybe I'll kick it back to you on the cash question then going concern question.
Yeah sure. Thanks, Eric for the question. So if you think about whats going concern is it's basically a downside stress test orders perform over a go forward 12 month period, and I would say that it will continue to explore multiple levers to reduce costs and preserve capital and as we noted earlier, we are exiting unprofitable markets that should provide a P.
The benefit to gross profit dollars.
Further reducing our Opex you heard by another $30 million to $40 million on an annualized run rate basis that should be realized by early 2023 and will be.
We're going to be much more prudently managing our capex spend such as for instance, converting.
Converting some of our vehicle deposits into cash neutral vehicle purchases. So that we don't need to outweigh any additional capex dollars. We also have as I noted in my script about 48 million shares for my <unk> that we can issue to raise capital as market conditions dictate and so we continue to explore various other capital fundraising fundraising opportunities.
And we'll obviously provide updates if that ever happens, but what.
I would say Eric is that we do.
We believe these actions are necessary and will going to best position us to achieve our goal of becoming EBITDA positive and to be self sustaining.
Great. Thanks for the color.
And Mr. Torchy and that there are no further questions. At this time you may continue with your presentation or closing remarks.
Okay.
Okay.
Well. Thank you thanks, everyone for dialing into our call and definitely love to hear from everybody again next quarter.
Thank you all so much for talking next quarter.
And that does conclude the conference call for today, we thank you all for your participation and kindly ask that you. Please disconnect your lines have a great day.
Okay.
Yes.
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