Q4 2022 Bird Global Inc Earnings Call
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Yeah.
Greetings and welcome to the vertical of our fourth quarter and full year 2022 earnings call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Karen <unk> director of Investor Relations.
Thank you Ms. Chen you may now begin.
Mr. <unk> you may now begin.
Good morning, everyone and welcome to Bard's fourth quarter and full year 2022 earnings conference call.
On this call insane, Torquay honor for T O and Michael Washington, D C or D C F O.
Before we begin I need to remind you that all statements made on this call that do not relate to matters of historical fact should be considered 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 31st well into 'twenty, two and in our other filings with the SEC.
On this call management will also reference non-GAAP measures, including adjusted EBITDA adjusted operating expenses.
Profit before vehicle depreciation and free cash flow, which we view as important in assessing the performance of our business.
A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is available in our earnings release on the company Investor Relations page at IR, Scott Berg Dot Hill.
The growth percentages that follow are in comparison to the same period in the prior year, except as otherwise specified.
I will now turn the conference call over to say, it's working out.
Thank you Karen and thank you all for joining us today for our fourth quarter and full fiscal year 2022 earnings conference call.
We reported a record 245 million in total revenues in fiscal 2022 with $231 million in sharing revenues, representing 34% growth year over year.
Long with a 28% sharing gross margin and 55% right profit margin before the vehicle depreciation.
Riders continue to adopt mobility and looked through our vehicles at an attractive mode of eco friendly transportation across the hundreds of cities that we serve around the world.
Over the last six months, we've been laser focused on becoming a self sustaining company that generates profits and cash flow all while maintaining our long standing focus on our mission to provide clean affordable transportation alternatives for consumers communities and cities we serve.
To recap the substantial progress we made in 2020 to burst.
We sharpened our geographic and product focus on our highest yielding cities in business lines and exited lower margin markets and products.
Second we initiated cost optimization efforts that we expect will result in an approximately 60% reduction in operating expenses to no more than $100 million in fiscal 2023.
Versus our second quarter 2022 run rate.
Third we enhanced our executive and board leadership, adding members of the track record of success in our industry to support our strategic focus on shared mobility.
These three actions underpinning our progress toward generating significant adjusted EBITA in 2023, including our expectation to be free cash flow positive in the range of five to 10 million on adjusted EBITDA of between $15 million to $20 million for the full fiscal year.
We have to make several tough decisions along the way we are now better positioned to deliver on our profitability goals and longer term our eco friendly Mr mission.
Additionally, we closed 2022 with the successful completion of our acquisition of Burt Canada's make mobility operations, which further consolidate our market leadership in North America, with new profitable Canadian markets and added proven senior management to our leadership bench.
Bird, Canada offers an excellent template on how to grow successfully while generating positive cash flow and profits.
With this acquisition Stuart Lyons, who has an extensive business background and group, our Canada into our most successful and profitable platform business will work closely with me as president of our global leading our North American operations and city partnerships.
Michael Washington, You. She also joins our executive team with over 17 years of experience in the CFO seat leveraged his extensive financial experience to focus on cost optimization and cash management.
The Bird Canada transaction also provided bird with over $30 million of cash investment by experienced investors the transportation industry, who support our profitability roadmap and are aligned with our sustainability mission.
As we move into 2023.
We are laser focused on three major areas.
First and foremost is to align cost structure with inflows.
We cannot emphasize enough that our top priority is to be free cash flow positive and ultimately self funding.
This is a two fold process. We are committed to first our operating expenses must not exceed the cash margin are sharing business generates second we must be efficient and disciplined with our overall cost structure to support our core sharing operations.
Right profit margin before vehicle depreciation, which is a proxy for city level cash margin reached 55% for the fiscal year 2022.
Through fiscal 'twenty, two we continued to aggressively reduce our central cost structure with savings from exiting our lowest performing cities in EMEA and North America discontinuing, our products' sales definitely offering and reducing unnecessary central overhead costs. While many of these changes did not yet have a major impact on the Q4 numbers. We expect these efforts will.
Drive significant improvements in our financial condition and 2023.
Excluding nearly $9 million of operating expenses, we do not expect to repeat in the first quarter. We ended the fourth quarter with an annualized operating expense of $134 million and expect our cost optimization initiatives will continue to flow through our financial performance as we progress in fiscal 2023.
As a result of actions already taken related to our focus on fiscal responsibility we.
We are planning for an annual operating expense of $100 million or less in 2023.
Our second focus area is to improve asset efficiency.
The three legs of our asset efficiency stool remain the number one improved supply demand matching Rodney demand based vehicle drop model.
Two increasing our vehicle deployment rate the percentage of vehicles that are on the road at any given time and three extending the average life of our vehicles.
Frankly, our 2022 utilization metrics fell below expectations and competitive data would suggest that we are positioned to improve them in 2023.
We had previously communicated that we had pulled forward vehicle orders for the 2022 operating season due to pandemic related elongated supply chain lead times. However, we were not able to support our higher vehicle appointment with an improved level of specificity in the data driven dropped locations last year.
Such a change for the 2023 operating season.
<unk> demand based vehicle drop model, which was recently rolled out in our largest north American and EMEA markets.
Keep in mind that right now we are in a seasonally slow period and the operating cycle, but where our demand model has been implemented we have seen a significant improvement in our vehicle utilization rates.
Real World data from these rollout so far gives us further confidence in our expectation for the drop model to drive our goal of 10% to 20% increase in utilization I E rides per vehicle per day.
We also continue to focus on ways, we can capture incremental revenue opportunities by rebalancing our existing vehicle supply.
On expected demand at our city basis for.
For fiscal 2023, where we're able to repurpose vehicles following city exits and reallocate the newer generation vehicles to support our top performing cities in North America or.
Where we can generate higher revenue per ride and city profits with those same vehicles than and less profitable cities.
The third pillar to our roadmap is to be the trusted partner of that city's deserves.
We are focused on generating cash flow from our existing markets and exiting any lagging markets at the same time, we continue to deepen our existing partnerships within our profitable cities and selectively expand where we expect to see a clear return on our investment.
This approach has been very successful in Canada. Our goal has been to continue to build upon the strong foundation, we have with our city partners and gain a deeper understanding of their transportation needs and pain points and climate goals. So that our technology operations and government partnerships teams can be at the forefront of addressing them.
It's a partnership that ultimately aims to better serve our millions of riders across the hundreds of cities around the world, let's see convenient clean transportation alternatives.
In 2022, we experienced continued momentum in North America, including notable city wins in Dallas and in New York boroughs.
And presence during the World Cup in Qatar, which paves the way for further expansion in that region.
These wins point to the market potential we have yet to capture both the consolidate our share within existing profitable regions and a counter seasonal markets to our north American business to generate year round sharing revenues.
Let me take a minute to highlight our recent win in Dallas as an example, hubbard and make an impact on climate and traffic through last mile transportation.
Like many cities Dallas unanimously adopted the city's first ever strategic mobility plan connects Dallas in 2021.
Next Dallas re envisioned the way people get around to historically car centric city with micro ability programs and infrastructure investments.
In addition, Dallas adopted a comprehensive environmental and climate action plan in 2020 with the goal of achieving community wide carbon neutrality by 2050.
To combat combat findings in a recent report, which reflects a 35% of Dallas as greenhouse gas emissions come from the city's transportation sector.
The city selected Virtus partner for a number of reasons many of them coming back through our aligned interest in reducing the city's carbon footprint, while improving connectivity and some of the most gridlocked areas of the city.
We consider it a privilege to partner with Dallas as well as the many hundreds of other cities around the world market.
On top of our three pillars of profitability made great strides in 2022, and our mission to provide equitable sustainable transportation to all.
By providing eco friendly microbial solutions and vehicles that writers embrace.
Today about $50 million raise for the year tens of millions of which replaces car truck or SUV trips.
Notably the majority of writers are with us for more than one right.
An average of 44% of total rides came from users with 20 plus lifetime trips.
This compares to 37% in 2021.
This material uptick is indicative of how bird continues to engage with and provide a valuable service to our growing base of recurring writers.
Lastly, our newest BREDS III and swap will vehicles continue to outperform.
These are our most recently deployed vehicles and outperforming rider experience and that revenue relative to the fleet average.
<unk> is our most sustainable vehicle with a lifespan of up to five years after refurbishment, which significantly cut down a couple of capital costs and greenhouse gas impact.
<unk> III is among the most climate friendly vehicles on the road, which helps cities from Dallas to Doha reduce their carbon footprints.
In 2022.
$27 million of eyes were taken on our <unk> III and swap all vehicles.
Which accounted for over half of our fleet.
This resulted in $2 1 million kilograms of Cotwo.
Wish you equivalent to that from about $2 5000 acres of forest.
We expect this will only get better as our vehicle hardware scale and fleet management software continued to improve.
These achievements would not be possible without the support of our riders City and fleet management partners and the day to day dedication passion and hard work of our team of Bard employees around the globe.
I will now turn the call over to Michael to review, our financial performance in more detail.
Thank you Shay I'm excited to be part of <unk> transformation era for months I have been working alongside the bird Canada team performing due diligence on <unk> global operations and financials.
I have been impressed with the prospects for bird to be a cash generating profitable company.
Now I want to recap a few key technical highlights on the fiscal 2022 year of the business.
First the cash margin and our car sharing business is encouraging and we are confident that it will continue to expand through our focus on asset efficiency and other operational initiatives.
Second we continue to demonstrate significant progress in training down.
Our centralized cost structure and have identified many of them, we need to make to get below our $100 million operating expense target.
Third we have made great strides in turning around free cash flow generation of the business clawing back over $75 million in operating losses, and reducing our capital expenditures by nearly $126 million.
There is still a lot of work to do but significant progress has been made.
Now onto our fourth quarter results.
In the fourth quarter, we completed our detailed analysis of preloaded wallet balances against historical redemption.
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Upon completion, we recorded breakage revenue of $28 8 million.
In the quarter of Unredeemed preloaded wallet balances from prior period.
Which is in line with what we had.
For the quarter, we reported revenues of 70 million, which included the $28 8 million.
The revenue number mentioned above it is important to remind everyone that we have exited a number of unprofitable markets, which will have a future impact on overall revenue.
But we expect to see continued growth in our core markets.
In Q4, the $70 million per quarter revenue, representing 71% increase in share and revenue and $88 4 million dollar decrease in product sales year over year.
Our Q4, right declined 14% year over year compared to our deployed vehicle growth of 12%.
Adverse weather in the Midwest contributed to the weakness in the quarter and as Jay noted, we increased our vehicle orders and deployment for the 2020 season without providing optimal data driven deployment support to our fleet manager partners.
As we plan for 2023 and retire our older fleet.
And look to rebound very good.
Just on demand across the city.
And have rolled out our new demand base vehicle drop.
Q4, consolidated gross margin reached 42% up from 7% last year.
Benefiting from higher revenue offset by higher accelerated depreciation from year end inventory.
Q4 profit margin before vehicle depreciation reached 72% up from 53% last year.
Really driven by higher revenue inclusive of the $28 $8 million in breakage revenue.
Q4, adjusted operating expenses decreased 29% year over year to $42 million.
Below our recent peak of $56 million in quarter two.
As a percentage of revenue Q4, adjusted operating expenses were 61% compared to 120% a year ago.
Q4, adjusted operating expenses includes nearly $9 million expenses, we do not expect to repeat in Q1 of 2023.
Including over $4 million, Aircard screw up and over $3 million of fees associated with our bird Canada transaction.
We expect further operating expense savings through 2023, resulting in adjusted operating expenses below $100 million.
Our Q4.
Net loss improved $11 million year over year to a loss of $36 million.
And adjusted EBITDA was $6 $1 million.
<unk> to a loss of $24 million.
In the prior.
Period.
We ended the year with total cash of $39 million.
Including $33 million of others are good cash.
Definitely seasonality has a strong impact on cash flow and we expect to return to positive free positive cash flow in Q2.
To supplement our balance sheet. We also have $48 5 million shares of equity financing available through our standby equity purchase agreement with York vote, which we did not utilized in the fourth quarter.
Looking ahead, our guidance reflects our confidence in the transformation of our global as a profitable self sustainable business.
Many of the changes that we have made in the second half of the year had a nominal effect on our results in Q4.
It will have a much greater impact on the bottom line in 2023.
Our fiscal 2023, we are expecting.
Adjusted EBITDA in the range of $15 million to $20 million on a full year basis, and our first year of positive free cash flow in the range of $5 million to $10 million with operating expenses below $100 million.
We expect to generate positive free cash flow starting in the second quarter of 2023, given the seasonality of our business.
Lastly, our quarter to date performance in February is tracking in line with our 2023 expectation and we are tightly controlling our cash burn, giving us giving us confidence in our full year 2023 guidance.
And with that I will turn it over.
To our operator to take questions.
Thank you.
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Thank you and our first question is from the line of Tom White with D. A Davidson please.
Please proceed with your questions.
Hey, this is why it's swanson on for Tom.
Got a couple of questions here, just starting with your recent bird Canada transaction can you just elaborate on what this means for bird global.
Yeah. Thanks for the question this is Shane.
So a few things.
Of course, we were excited to announce the transaction at the end of the year for Canada.
For a couple of years now is that EBITDA plus Ah, we're EBITDA positive operations, which they achieved just in their first few years of operation.
As we integrate them into our North American operations through the course of Q1, we see vast upside from taking some of their learnings and applying them to our broader business.
And we believe it will be an accelerant to our own path to becoming EBITDA positive in 2023.
Slightly more specifically.
Brian It's Stuart Lions clients, who is the CEO of bird, Canada to lead our North American operations as I mentioned previously and also Michael Washington, She was here on the call with me.
A very deep record of cash management and financial planning to bolster our finance team.
In addition to that the $30 million of new capital that came in through that transaction gives spur global the cash it needs to get through the winter trough of 2023 and heading into 'twenty Q2 of 2023.
As the weather warms up we expect to become cash generative.
The free cash flow guidance that we mentioned through the course of the year this year.
Great. Thank you and then could you just kind of walk walk us through the drivers of the now 15% to 20, Mel adjusted EBITDA outlook. Following a loss of $62 million in 2022, which is a major swing unexpected results.
Fundamentally changing to drive that large delta.
Okay.
Good morning, Michael Washington, Yoshi speaking.
A lot of the activities, we did or the company did in the second half of 2022.
The actions needed to set the foundations for into 2023 outlook you know the actions that we took in terms of exiting non core markets.
non-GAAP exiting our consumer product business exiting a noncore markets cost efficiencies that we put in place in the second half to trim costs and <unk>.
We're gonna be realizing that in the fiscal 2023 year and then for 2023.
Our viewpoint starts with conservative and achievable in 2022 revenue forecast and then with that we take further steps to reduce costs.
And I'm happy to say that you know February year to date, we're tracking to our expectations.
We're going to continue on monitoring closely monitoring and looking at reducing opex through 2023.
There will be no more than $100 million for the full year, and we expect to be below $100 million run rate by year end.
Awesome, Okay, and then just one final question here.
Related to deployment can you give a little more color on the focus for this year is the goal to just optimize your unit economics in the existing markets or are you trying to enter some cities where do you believe you could maintain or drive up some healthy unit economics, and then related to that whats the regulatory environment looking like for micro mobility, how does it become increasingly.
More challenging and what's what's your outlook related to that.
Yes, sure I'll take those I think two questions in two parts. So.
On a unique unit economic front.
The primary driver, we see there falls under the asset efficiency pillar I was referring to.
That is mostly about getting more out of the vehicles. We have in the cities that we're in and there'll be a few new cities that we add to the portfolio, but the focus in 2023 or the true North Central 2023 is about optimizing our footprint primarily in the city that we're in to make sure that we are on a total basis free cash flow generative.
And there are sort of three three points to that.
Number one is the demand model that we discussed so making sure at a very very local level. The street corner level, we have in a data driven way the right number of vehicles in the right place at the right time, where folks want to ride them.
That's an area, where we see huge opportunity as Michael said just in January February this year.
Based on real World Rollouts were seeing quite a bit of upside by evolving our strategy to make it more data driven.
So that's the biggest piece.
Kundera Lee there is improving our repair rate, which we do have some of our learnings from the bird Canada folks that I mentioned as we've integrated the teams so that we repair vehicles faster with us.
Improve the rate of deploying that onto the street instead of having them in warehousing and number three we've seen a lot of progress on our end of life right.
And that has to do with depreciation that youll see flowing through in our gross margin as a noncash item, but that will impact the amount of capex that we need to do at the end of the year, which of course is a free cash flow impact as well.
So from a unit economic perspective, those are the three major drivers or at least the top three drivers.
And then from a regulatory perspective, the second part of your question.
Interestingly. This is it's early days micro ability of course is silly young category, but broadly that's been favorable.
So it's the healthiest that it's been and the trend that we see specifically starting in the U S and now bleeding somewhat into them now.
City its trend towards favoring two to three operators tend to start with a pilot or sometimes even just with many operators in our unregulated fashion and then.
Realize that.
A few folks are able to follow through on their promises better than others and they will go to an RFP and generally select those folks to give you a few examples.
Just in the last few months Dallas Baltimore.
Darby Seattle, just keep going but just to name a few we've all gone through that process with them and we've won permits in those markets.
And that for US is a massive tailwind because once you're in.
And you build trust with cities as we have discussed you tend to stay.
So what we've seen in the United States, which we think is a couple of years ahead of the rest of the world is two players us and one other have over 70% market share the vast majority of which has a protected license that's sticky.
And we think it is going to head to head in the same direction.
So for us that is a medium term long term focus.
And we find once we go through those regulatory changes that are merchant tends to improve in the city. So that's oh as I mentioned, a tailwind as we look at it.
Great. Thank you very much.
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Yeah.
Our next question is from the line of Eric Sheridan with Goldman Sachs. Please.
Please proceed with your question.
Thanks, so much for taking the question maybe two fold if I can coming back to bird, Canada can you give us a better sense of how to think about the contribution of bird, Canada run rate growth incremental margin dynamics. So we can better understand unpacking the contribution of bird Canada both from an.
Exit velocity for 2022 and at what.
What's embedded in sort of the 2023 guide from that asset and then maybe following up a little bit on why it's topics just better understanding the bridge of contribution from various forms of revenue and different pockets of the operations the Canada non Canada operations in terms of bridging again to.
The variability on that EBITDA guide for 2023, and then maybe I'll just squeeze one more follow up if I count after after that thank you.
All right Eric.
The animal.
And as you can probably appreciate we don't separately report out Bird Canada results. We don't plan on reporting out bird kind of result, but I can give you directionally I mean, it's meaningful in terms of the revenue contribution that a bird Canada will contribute to a bird global for the 2023 years and it's accretive from an EBITDA and free cash flow it'll be it.
Creative from a free cash flow point of view and in terms of the growth trajectory.
It's a bird Canada has seen some healthy.
Growth.
For both from the existing markets and growth markets within Canada.
And I think the opportunity the opportunity we see is leveraging some of the best practices that bird, Canada has deployed in 2022 and timber global 2023, similar items in terms of just deploy rates RPT rates as well as a cash management. So all of these things we're trying to.
Bring equilibrium into Berry global.
Okay, maybe I'll, maybe I'll just ask a follow up Dan I know, we're not talking about our revenue guide for 2023, but can you talk us through how we should be thinking about some of the variables are at play that could push elements of the revenue curve up or down as you think about what the probabilistic outcomes are for.
Revenue in 2023, thank you.
Yeah.
So two parts of that as you mentioned, we're not guiding on revenue and the reason is because this is what we're focused on as a management team is free cash flow generation.
But to answer your question.
The biggest driver of that we're going to see and there is a revenue per vehicle per day as we're not materially changing the size of our fleet.
23, and if I tie it back to the first part of your question part of the reason we were excited about the <unk> acquisition as they were doing three trips per vehicle per day.
Very similar markets to the markets that we were operating in in North America.
So we see quite a bit of operational upside of I've already mentioned to the tune of 10% to 20%.
<unk> for this year as we rollout.
Other operating strategies, but we do.
We do see quite a bit of room on that asset efficiency front, which longer term, we think it would be a material revenue driver without significantly increasing the size of the facility.
Great. Thank you.
Thank you there are no further questions at this time I would like to turn the floor back over to Mr. Touchy honor for closing comments.
Thank you very much.
So as a management team we've made great progress in identifying the areas of the business, where we can improve efficiency as we have discussed and importantly create value for our stockholders and I can speak for the entire senior leadership team.
More energized right now about the future of birth than we've ever been.
The mission that we serve so thank you all for the time and we look forward to talking to next quarter.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.