Bird’s first-quarter earnings reveal a company grappling with challenges in maintaining ridership and revenue, which are crucial factors for profitability in the shared micro-mobility market. While Bird did succeed in reducing costs, the cost-cutting measures alone failed to instill confidence in investors regarding the company’s path to profitability.
Following the release of its first-quarter earnings, Bird’s shares plummeted by nearly 19% and are currently trading at $0.12.
The performance of Bird’s earnings can serve as an indicator for the rest of the scooter industry, although it is important to acknowledge that each company faces its own distinct issues and opportunities. Given that Bird experienced setbacks across various key metrics, it could potentially signify broader challenges within the shared micro-mobility market.
As one of the few publicly traded e-scooter companies, Bird’s stock market performance holds significance for the entire shared micro-mobility industry. Should Bird falter, it may become increasingly challenging for private players to attract investors, a situation that is already unfolding.
Take Tier Mobility, for instance. Just a year ago, the company acquired Spin from Ford, establishing itself as the world’s largest shared micro-mobility operator. However, Tier is now facing difficulties in securing additional funding and reportedly contemplating a merger or sale with a competitor.
Bird has encountered ongoing struggles since going public through a special purpose acquisition merger in November 2021, a trend observed across mobility SPACs. The majority of these SPACs are currently underperforming due to many companies going public before establishing sustainable business models—Bird is no exception.
While Bird’s challenges are unique to the company and may not necessarily reflect the entire market, it’s worth noting that Bird transitioned to an asset-light business model relying on a fleet management program to generate revenue. This model involves contractors leasing fleets of Bird vehicles and deploying them on behalf of the company. However, this approach has resulted in reduced control over vehicle placement.
Bird’s lack of adoption of removable batteries, a strategy employed successfully by companies like Lime, has likely led to higher operational costs and lower asset utilization.
After significant financial losses, Bird has been striving to improve its situation. Since the appointment of CEO Shane Torchiana in September, the company has focused on cost reduction, including exiting unprofitable markets.
In the previous year, Bird underwent a 23% staff reduction and discontinued its retail scooter product. These measures have resulted in cost savings, which are evident in the first quarter of 2023, as Bird’s spending has decreased. However, the company appears to be struggling to generate sufficient revenue to offset these cost-cutting efforts.
In the first quarter of 2023, Bird reported revenue of $29.5 million, a decrease from $35.4 million in the same period of 2022. Comparing quarterly figures, the revenue is also lower than the approximately $40.9 million recorded in the fourth quarter of 2022. However, it’s worth noting that the reported revenue for Q4 included a one-time adjustment of $28.8 million to compensate for previously missed revenue. On a gross profit basis, Bird barely broke even, with the cost of revenue amounting to $24.5 million.
Bird also experienced declines in rides and deployed vehicles. In the first quarter, the company reported 5.2 million rides, representing a 29% decrease year-over-year and a nearly 37% decrease quarter-over-quarter. This decline indicates a decrease in rides per deployed vehicle per day, with 0.9 rides per deployed vehicle per day in the first quarter compared to one ride per deployed vehicle per day in the same period last year.
Despite successful cost-cutting measures, including exiting certain markets and reducing operating expenses from $100.2 million in Q1 2022 to $40.6 million, Bird still reported a net loss of $44.3 million in the first quarter, in contrast to a net income of $7.7 million in the previous year. Although the company’s free cash flow improved from -$106.2 million in Q1 2022 to -$25.3 million, it remains negative.
As of March 31, 2023, Bird had $12.8 million in unrestricted cash and cash equivalents, which falls significantly short of what is needed to sustain its operations. The going concern warning issued by Bird in November remains relevant, indicating that the company may need to scale back, discontinue operations, or even consider bankruptcy if it fails to raise additional capital or generate sufficient cash flow.
In a regulatory filing, Bird stated its intention to continue reducing operating expenses and pursuing additional external sources of capital. Notably, the company requested an extension from the U.S. Securities and Exchange Commission to file its 10-K, which suggests potential financial difficulties or management challenges.
Bird’s outlook for 2023 remains unchanged from the previous quarter, with a goal of achieving adjusted EBITDA between $15 million and $20 million and positive free cash flow ranging from $5 million to $10 million. The company expects adjusted operating expenses to amount to approximately $100 million.