Bird Global Inc. Q1 2023 Earnings Call
Hello, and welcome to the Baird Global first quarter 2023 financial results Conference call.
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Thank you all for joining us today for our first quarter fiscal 2023 financial results Conference call.
We reported $29 5 million in revenues in Q1 was $28.
$5 million in sharing revenues with a 16% share in gross margin and 52% right profit margin before vehicles depreciation up from 35% last year.
As a reminder, Q1 is our slowest and coldest seasonal period.
Hello, everyone and welcome to <unk> first quarter 2023 financial results Conference call.
This call or Shane Torchy, Ana first CEO , and Michael Washington, Yoshi Birch CFO before we begin I need to remind you that all statements made on this call that do not relate to matters of historical fact are considered forward looking statements under the U S Federal Securities law, including statements regarding our current.
Patients for the business and our financial performance.
Payments 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.
She was a restaurant uncertainties that could cause actual results to differ materially from those indicated by forward looking statements on this call can be found in the risk factors section of our Form 10-K for the year at December 31st 2022.
In our other filings with the SEC on this call management will also reference non-GAAP measures, including adjusted EBITDA adjusted operating performance right 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.
Most directly comparable GAAP measure is available in our earnings release on the company's Investor Relations page at IR jobs or Dot C. L.
Growth percentages that fall in comparison to the same period in the prior year, except as otherwise specified I will now turn the conference call over to Shane.
Thank you all for joining us today for our first quarter fiscal 2023 financial results Conference call.
We reported $29 5 million in revenues in Q1 was $28 5 million in sharing revenues with a 16% share in gross margin and 52% ride profit margin before vehicles depreciation up from 35% last year.
As a reminder, Q1 is our slowest and coldest seasonal period, but as we enter Q2 and warmer weather. We continue to see strong demand for Mike mobility, and eco friendly transportation across the hundreds of cities we serve.
Any context, there are 90 markets that launch operations in Q2 that Werent operating in Q1, including all of our Canadian markets, representing 14% of expected Q2 revenue.
We also see higher revenue per vehicle per day, as the weather warms people get out into the world.
As we step into 2023.
<unk> seen great progress on the transformation, we began in Q3 of last year.
As part of that we remained laser focused on our mission to provide clean equitable transportation alternatives with consumers communities entities, we serve while fully committing to be a self sustaining company that generates positive cash flow this year.
That transformation relies on three focus areas of aligning our cost to cash inflows, improving asset efficiency and being a trusted partner to the cities we operate in.
This strategy has set us on our way.
Two our free cash flow and EBIT positive 'twenty 23, and also supports our long term growth plan in what continues to be a multibillion dollar addressable market.
Now I'd like to dive a bit deeper into Q1 specifics in those three major focus areas.
First aligning cost structure with inflows.
As we've discussed our top priority is to be free cash flow positive and ultimately self funding as part of this we continue to decrease our adjusted operating expenses year over year targeting approximately 100 million of total cost for this year.
We ended the first quarter as adjusted operating expenses at $30 6 million down 39% year over year and expect our cost optimization initiatives will continue to flow through our financial performance as we progress in fiscal 2023.
[noise] right profit margin before vehicle depreciation, which is a proxy for city level cash margin reached 52% for Q1 2023.
Throughout Q1, we continued to aggressively reduce our central cost structure with savings from exiting our lowest performing cities in EMEA, and North America, and reducing unnecessary central overhead costs aggressively.
Our second focus area is improving asset efficiency.
To reiterate the three legs of our asset efficiency stool are one improve supply demand matching through or demand.
A man's based vehicle drop model to increasing our vehicle deployment rate and three extending the average life of our vehicles.
At the beginning of the year, we began deploying a new software at scale to improve where we dropped scooters that also layers and predictive models that anticipate where the next rides will take place with the goal of improving scooter utilization.
As we increase adoption of new vehicle placement technology, we continue to see substantial optimization.
Specifically that markets, where it's been implemented have seen eight over 25% increase in revenue per vehicle per day compared to the markets, where the technology has not been implemented.
This is in line with our prior expectations, but there is so far more upside to this figure as we further improved our applications routing and rebalanced logic using this model.
Additionally, we are in the process of repairing and refurbishing damage not are you less devices and sharing our key markets have the latest vehicles and that they are in excellent shape for riders this spring and summer.
Building out a more robust repair capability in local markets leads to longer term capex as we get more rise out of the same vehicles and also extends the useful life of the vehicle for several years or more.
We expect to see continued upside ahead and repair engineers to life as we rollout learnings from our recent Canadian acquisition.
We saw repair rates that were considerably faster in.
An average vehicle life on the same vehicles that we operated for global.
One to two additional years.
The third pillar of our roadmap is to be the trusted partner of the city's deserve.
We are focusing on generating cash flow from our existing markets and exiting any lagging markets, while deepening existing partnerships within our possible cities and selectively expanding where we expect to see a clear return on our investment.
Our relationships with Citi regulators and officials are the key towards long term success.
They are happy with our relationship not only streamlines our operations.
But also unlocks growth of the business.
We're working constructively with cities around the world to evolve regulations to better meet the needs of all stakeholders.
Examples of our efforts to improve relationships with cities and regulators. We've recently worked with city officials in Atlanta, Nashville, Cleveland, Cincinnati, Richmond, Lexington to St. Louis and Gainesville to extend the hours and areas of operations for their micro ability programs.
Permitting and micro ability operations in new areas and in the evenings. These studies are offering their residents a reliable sustainable transportation option forgetting home at night and of course these policies benefit our revenue as well.
Moving on to our European operations over the past eight months. We've also shut down a significant portion of the European markets. We operated in ASP.
As planned this resulted in dramatically reduce operating expenses and a higher quality footprint, which is the one of the main drivers behind the financial improvement in our European business.
With these changes we continue.
To be more focused on executing on our core business and portfolio in the region.
I'm also pleased to share our recent RFP success that we had in Australia with the city in Perth.
This new city that launched in Q2 marks the first major Australian city for our shared E. Scooter services building upon momentum in the country with successful operations across Bunbury Albany, and Margaret River.
In Q1, we experienced continued momentum in North America, and Europe , as well, including notable city wins in North America.
Like in Nebraska, Burlington, Vermont, Logan, Utah, Montgomery, Alabama, Grand Junction, Colorado, Orange County, Florida in Pocatello, Idaho.
In EMEA, we saw wins in gross out of in Italy, Osteo Jackie O.
Vichy in France, These wins point to the market potential we have yet to capture in addition to new launches launches. We are seeing success with permit renewals and a number of cities where bird already operates in the U S. This notably includes Louisville, Kentucky, South Bend, Indiana and more.
Internationally, we renewed our permits with Tel Aviv, and Israel insurer and in Italy, showcasing the continued demand for micro ability as well as a strong satisfaction with bird from our city partners.
In many cases. These renewals include expanded operating zones and lead to bigger recaps.
Lastly, we are committed to investing in new technologies. These technologies are designed and integrate into birds rider experience in order to support safe riding and parking.
Product solutions include global Google apps integration enhanced Berg visual parking system, right or age verification double riding detection and camera equipped vehicles to detect unsafe riding.
These technologies plus anymore.
Many more to come we will continue to get burden Edgewood cities, especially in comparison to subscale players in the category that cannot invest in the same level of technological development.
To conclude I'd like to thank our rider city partners and our team of <unk> employees around the globe without you. None of this would be possible. We're still only early days of seeing the impact from our transformation, but with the dramatic improvement on margin year on year, even in our coldest quarter I am more than excited about our prospects of becoming a self sustaining free cash flow.
Positive company in 2023.
I'll now turn the call over to Michael to review, our financial performance in more detail.
Thank you Shane I would like to start by Recapping a few key highlights from Q1.
I am pleased that we ended the quarter with significant year over year improvement on our gross margin, excluding depreciation net income and adjusted EBITDA showcasing the effectiveness of our cost optimization efforts.
As Shayne highlighted sharing gross margin came in at 16% right profit margin before depreciation increased to 52% up from 35% last year.
Operating cash flow was negative $21 $7 million and free cash flow came in at negative $25 $3 million also aligning with our goals to become a self sustaining free cash flow positive growth company.
While we are still in the early stages of our strategic plan to optimize the business for profitability and cash flow I am pleased with the progress we have to share today.
Now onto our first quarter results total revenue came in at $29 $5 million down, 17% or $5 $8 million year over year of which $4 $1 million was due to lower product sales as we strategically exited our retail business over the course of 2022.
Our core sharing business, which represents nearly 97%, whereas the majority of revenues declined 5% year over year.
Rides in Q1 declined 30% year over year.
As a reminder, our quarter. One 2022 comparison was also before exiting a number of unprofitable markets, resulting in meaningful drag to revenues in quarter, one 2023 affecting growth.
As we exited the seasonally slower winter months, and we continued with unseasonably cold conditions in the northwestern north eastern and central Northern portions of the U S.
Additionally, we experienced unexpected new IDB regulations in EMEA.
Q1, consolidated gross margin reached 17% up 15 points from 2% last year and right profit margin before vehicle depreciation reached 52% up 17 points from 35% last year, primarily driven by lower cost of sharing.
Well costs benefited from lower right, we realized a favorable change in the effective fleet management payment rate due to the closure of several jurisdictions in which we paid higher payments.
Quarter, one adjusted operating expenses decreased 39% year over year to $36 million compared to $50 million last year.
As a percentage of revenue in Q1, adjusted operating expenses were 104% of revenue compared to 141% in the same period a year ago. We continued to realize benefits from reductions enforced that occurred in 2020 to optimization and third party spend and professional fees technology cost.
And advertising and reduction in logistics and facility expenses following our geographic footprint rationalization.
We expect further operating expense savings through 2023, resulting in adjusted operating expenses of approximately $100 million. Our Q1 net loss came in at negative $44, three and adjusted EBITDA was negative $15 $6 million compared to negative $39 4 million.
In the prior period.
We ended quarter, one with total cash and cash equivalents of $18 $3 million, including $12 8 million of unrestricted cash.
Additionally, seasonality has a strong impact on cash flow and we expect to return to positive free cash flow over the next three quarters.
In March we secured additional funding, bringing the total new castle to almost $33 million in the last six months.
Funding strengthens our cash position in support of expanding into new markets and investing into new technologies.
Looking ahead, we remain confident in the transformation of Berry global is a profitable and self sustaining business.
We are still realizing the impact of the changes we have made within the past four months and believe the targets. We laid out last quarter are achievable goal too.
To reiterate for our fiscal 'twenty three we are expecting positive 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 a target of approximately $100 million in adjusted operating expenses, we expect to generate pause.
Free cash flow for the balance of the year, given the seasonality of our business.
Lastly, our performance up to quarter and is tracking in line with our 2023, we expect to expectations and we are tightly controlling our cash burn gave me, giving us confidence in our full year 'twenty three guidance.
And with that I will turn it over to the operator for QA session.
Okay.
Thank you.
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One moment please poll for questions. Thank you.
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Thank you. Our first question is from the line of Tom White with D. A Davidson. Please proceed with your questions.
Hey, this is why it's wants them on for Tom Thanks for taking our questions. My first one relates to the macro.
Could you kind of just walk us through some of the levers on your current outlook for the rest of the year given the macro backdrop.
<unk> any changes as to what you expect and maybe what you're doing to offset any of the negatives.
Yeah. Thanks, Thanks for the question.
So the overarching strategy hasn't changed from what we talked about a few minutes ago, which is building capital T. T Trust with cities, reducing our cost to match our inflows and then several things within the area of asset efficiency.
We have found that.
The macro environment.
Could be a little bit of a headwind in the United States. As a result, we're spending more time on new growth initiatives improve our asset efficiency, specifically our revenue per vehicle per day.
That largely takes the form of rolling out our in house drop model for vehicle locations that we've talked about before that's been about half of the markets that we operate in now.
To have that in.
100% or very close to 100% of the markets. We operate in by the end of the year as I mentioned that has a significant uptick in our rides per vehicle per day in revenue per vehicle per day to the tune of about 25% not yet fully optimized.
There are also opportunities, we see for new promotion and marketing and growth initiatives as well historically for us we've seen.
The vehicles is sort of their own sales and marketing that effectively billboards that are out on the street.
And I think in the early days of the business and the category that was a good answer I think as we become a more mature company. There is more room to invest into our sales and customer acquisition, which were just beginning to do.
Awesome. Thank you and then.
A question on the international could you give a little more color on the momentum you experienced in the international markets. During the first quarter and then maybe give some insight as to what some of the drivers are on that front and then if there's any particular markets you'd like to highlight and could you kind of deploy whatever playbook is working there to other cities.
Sure.
Yeah. So on the international side I'll include Canada and international.
Continue to expand in the greater Toronto area, that's been a strong area of expansion for us in that Canadian business has been an EBITDA positive business for a couple of years now so taking the learnings from that business into other parts of North America, and it's something that we're quite focused on right now.
And you can see that somewhat in the operating model where in some larger cities, we do see our efficiencies.
Efficiencies from doing more of the work ourselves, particularly on the repair and the vehicle rebalancing side.
I'm thinking abroad to Australia, and New Zealand into Europe , There've been many new permit wins over the course of Q1, it doesn't Boston as I mentioned person and many other smaller cities in Europe .
There's also one large city that we've won in Europe recently as well.
Which we can't yet name but.
The regulatory front in Europe in the markets that we've chosen to focus on reminder, we exited a large parts of northern Europe last year, but the areas that we're still focused and frankly had been quite healthy and are continuing to grow and we don't see that trend.
Reversing at all in Europe , there seems to be very healthy demand.
And then the other catalysts, which we think is likely to occur in 2023, given the changes in the macro environment and also on the funding environment is the European market from a competitive landscape perspective.
Still continues to appear to be two to three years behind the United States, where in the U S. S. In one other player has a fairly dominant sure Europe is still quite fragmented and it appears that there was leading four or five players are likely to consolidate down to a lower number and the euro 2023, and we see that as a massive potential tailwind for us as we.
As we look at it.
Great. Thank you for the color.
Thanks.
Thank you. Our next question is from the line of Eric Sheridan with Goldman Sachs. Please proceed.
Okay.
Thanks, so much for taking the questions maybe two if I can probably go up on that last answer I'm curious about.
Different partnerships or distribution models or promotion levels, you might be exploring to stimulate growth. We've seen a lot of cross platform partnerships broadly in the industry and I'm just kind of curious how that might amplify growth that I'm pretty constructive unit economics, not only just in 'twenty three but beyond and then in terms of the efficiency.
Program can you help us better understand how much of the efficiency program will be complete from an optimization standpoint by the end of 2023 or do you foresee this being and that protect continues more broadly towards pulling cost out of the business beyond just 2023. Thanks so much.
Thanks.
And just to clarify when you're talking about efficiency or you're talking it sounds like you're talking about on the cost side as opposed to the vehicle utilization side is that correct yes.
Yes, the efficiency side would be on the cost side effects. Okay. Yeah I'll take the first part of the question that Michael Michael can take the second so on the partnership side, we continue especially in Europe , but a little bit in the United States. We continue to invest heavily in city partnerships, particularly with mass transit App integrations.
So where you have a local app in France, or Switzerland to use the train system I think having our vehicles on that out it does seem to be a material demand driver. That's also something that helps deepen our moat in terms of the Citi relationship itself because once you're in that off they generally don't want to take you out.
So that's something we're going to continue to do and have been doing for some time would you have a couple of interesting partnerships with Google that we're doing as well. So you can access our vehicle through Google maps.
That's a bit of a demand generator for us we expect that continue to to continue to be a demand generator.
So on the parking side.
Sure.
King with Google.
To create what we call automated.
Docs or automated parking crowds.
You can essentially use the Google mapping technology to get very precise parking locations. When it comes to our city technology. That's one of the most important features that we offer to help us differentiate versus others.
Because top of mind for city regulators and city administrators is making sure that we're parking in an orderly way and not causing clutter and so that will continue to be an area of investment for us Thats. Just a couple of examples there are many others, but I think that's an exciting area that will continue to develop.
Yeah and Eric.
Thank you for the question I think I'll comment by saying cost optimization and cost efficiencies never stop it's gonna be 23, and 24, but I think the larger ones that we enacted in Q1 Q4, and Q1 really helped us get to are helping us get to the approximate $100 million of Oh.
Opex target, we're targeting for the year and that the balance of the year. There are some cost optimizations that we're gonna put in play are there just not that big and take a little bit longer time, then you're going to see that over the course of the following quarters and in 'twenty 'twenty four we're challenging ourselves to see how we can find more cost optimization and making sure that you know.
We optimize revenue at the same time.
Thank you.
Our last question is how many from the line of Doug Becker with capital. One. Please proceed with your questions.
Thank you.
I wanted to gauge the need in outlook for incremental financing in the past you've mentioned expectation to raise an incremental 10 million beyond the 33 announced in March.
Yeah, I think that's just the.
Separate need for a nice to have I mean, it'd be great to have the incremental capital that we can actually deploy towards driving additional accelerating additional growth into the markets.
The need I mean, we're tracking to our forecast and so assuming we hit our free cash flow targets and EBITDA targets are the.
The need is is less than I guess that desire to have that incremental capital.
That makes sense now we're about halfway through the second quarter, you mentioned, some unseasonably cold winter weather into the spring.
How much visibility do you haven't you say being free cash flow neutral in the second quarter or maybe put differently. If we had seasonally normal demand the rest of the quarter would you anticipate being free cash flow neutral positive negative.
I think I got to be careful in terms of providing some guidance in terms of where I think I'm going to be in for the quarter. I mean, we do have obviously clear visibility in terms of what are.
Our ride have been up to midway through the quarter and our forecast for the balance of the quarter and we are tracking that very carefully.
Just to add this change just at I mean, we are reaffirming our guidance to be free cash flow generative. This year and Q2 of course, you're going to be a contributor to that.
And I do just want to clarify we.
We did have interest in additional financing we may still pulled the trigger on that one but that was interest as a as opposed to a requirement. So for free cash flow generative, we don't actually need more gotcha.
To continue to operate through the year.
Right now and that's why I wanted to confirm.
Maybe last one here you mentioned that the 25% increase I guess more than 25% increase in revenue per vehicle day, where the new vehicle placement technology has been implemented.
Yeah. So at the end of the quarter and we ramped up through the quarter, but by the end of the quarter. It was about 50% might've been just over 50% actually and we.
We expect to see in a pretty linear fashion to get that up close to 100% by the end of the year as I mentioned and I was just a version one of course, there's going to be a version two and version three with a further intelligence built into the drop engine, but.
It is it is pretty exciting and that's what we had modeled out and expect it to happen and it seems to be happening roughly as we thought it would.
Great. Thank you very much.
Thank you at this time there are no additional questions and I'll turn the floor back to Mr. Tarr Turner for closing remarks.
Yeah, well. Thank you all so much for the time today, we are extremely excited to close our best Q1 to.
To date in the history of the company and look forward to our first free cash flow generative year in 2023, which also will be a first for the category. Thank you all and we'll talk again in Q2.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.