Bird changes course and cuts vehicle sales in search of profitability – TechCrunch
Bird reported its first quarter 2022 results on Monday after the bell.
Revenue has declined steadily since the company went public via a special purpose acquisition merger in November last year. As a result, Bird is looking to streamline resources in order to achieve profitability this year. Bird’s initiatives include focusing on its most profitable markets, potentially withdrawing from less profitable markets and slowing the expansion of vehicle sales, such as the electric bicycle that the company launched last summer or retail scooters launched in December.
Shares of Bird fell 7.4% on Monday, but then took a sharp turn in aftermarket trading, up more than 36.5%.
Bird’s first quarter generated revenue of $38 million, which the company says is up 48% year over year. However, quarter over quarter, revenue is down from $54 million in the fourth quarter of 2021 and represents a continued decline in revenue over the last three quarters – in the third quarter of 2021, when Bird started reporting results for the first time, the company closed the quarter with $65.4 million. Despite this downward QoQ trend, Bird exceeded its own revenue expectations of between $34 million and $36 million, as well as Wall Street expectations of $35.7 million.
Gross margins and ride profit also declined this quarter, to 9% from 15% last quarter and $13 million from $23.8 million last quarter, respectively. Year-over-year, gross margin increased one percentage point, but ride profit was up 72% from $7.6 million in the first quarter of 2021.
Bird managed to post a net profit of $10.4 million, compared to a net loss in the fourth quarter of 2021 of $39.6 million. This was primarily due to revenue of $140.1 million from senior preferred equity financing, the business combination with Switchback Corporation II and its private investment in public equity financing. Although this appears as income on the balance sheet, it is not considered cash for the business to use.
During Bird’s earnings call on Monday, CEO Travis VanderZanden said early quarter performance was impacted by poor weather (which is always the case at the end and beginning of the year) and an increase in Omicron cases. This manifests itself on the balance sheet in fewer trips in the first quarter, at 7.3 million, compared to 9.4 million in the last quarter, and fewer average trips per day and per scooter.
Similar to last quarter, shared rides accounted for the majority of Bird’s revenue, with scooter and bike sales taking only a slice of the pie. In fact, quarter-over-quarter, sales revenue fell from about $9 million to $4 million, which may be part of the reason the company is pulling out of the retail portion of its activity.
In terms of other operating expenses, the first quarter saw Bird spend nearly $85 million on general and administrative expenses, which includes a stock-based compensation charge of $44.7 million. This, along with other expenses, left Bird with an operating loss of nearly $97 million.
The company ended the quarter with $35 million in cash.
Bird’s Revised Guide
Clearly, the continued unpredictability of the pandemic and other headwinds has sobered Bird in terms of full-year revenue projections. The company provided updated guidance, expecting fiscal 2022 revenue to be between $275 million and $325 million. By the end of 2021, Bird expected annual revenue of at least $350 million.
Despite the difficult start to the year, the company expects ridership to pick up based “on a significant increase in demand beginning in early March, as macro headwinds have eased, that the weather has improved and consumers have turned to transportation alternatives such as Bird in light of rising gas prices.” VanderZanden said.
“With that mentioned, the candy early in the trimester succeeded in lower use year-finished-year, who negatively impacted adjusted EBITDA for the period,” the CEO continued.
VanderZanden said Bird expects to achieve its first quarter of positive adjusted EBITDA in the third quarter of this year, and its first positive adjusted EBITDA for the full year in 2023. The company is targeting $80 million in cost savings. annual costs for 2022, resulting in an adjusted annual operating expense rate of no more than $160 million.
“We have already received the vast majority of the vehicles we intend to roll out in 2022,” said Yibo Ling, Bird’s chief financial officer. “As such, we believe we are well positioned with our vehicle deliveries for the remainder of 22 and will maintain a disciplined approach to vehicle allocation.”
To get on the road to profitability, Bird will tighten its belt, let go of some dead weight, and focus on the sharing business. Or, as Bird put it, the company plans to “streamline and consolidate its resources relative to its core business.”
In other words…they’ll probably lay off a bunch of people, especially in markets where Bird doesn’t make money or have unfavorable regulatory environments.
Bird did not confirm whether any layoffs were in the company’s future.
“We have decided to slow down the expansion of our retail product portfolio offering,” VanderZanden said. “We will be additionally be realign our Resources for to prioritize share operations in our existing USA and EMEA Regions, who to have proven investment Return while plug a measure approach for further away geographical expansion. And we will be be to open for leaving some markets that To do do not to meet our profitability Goals given fluent market terms.”
It comes just over a year after Bird pledged $150 million to expand operations in Europe.
When pressed, VanderZanden said Bird would likely focus on improving and possibly expanding its sharing business in the United States and Europe. If the company was considering pulling out of certain markets, we could expect that to happen in places like Canada or the Middle East in the coming months.