Bird burns $310M, but sees revenue bounce back – TechCrunch

Bird, a shared micromobility company, has experienced a turbulent second quarter. The company announced plans to dismantle its retail business, shut down operations in unprofitable markets, had a corporate shakeup involving Bird’s CEO Travis VanderZanden stepping down as president, laid off close to 140 employees and got a warning from the New York Stock Exchange for trading too low.

Bird, one of two public micromobility companies that debuted via a special purpose acquisition, presented its Q2 earnings for the year after the bell, showing an increase in revenue year over year and quarter over quarter, but also an increase in spending that doesn’t yet square up to the moves Bird has made to reduce costs.

“Absent temporary distortions caused by the pandemic these longer-term trends point to the attractive demographic tailwinds for this industry as consumer spending preferences shift from goods to services,” said VanderZanden on Monday’s earnings call. “That said, we have to contend with any evolving macro environment, including significant near-term inflation pressures on discretionary spending and resulting lower consumer sentiment and adjust our cost structure to be agile to economic headwinds.”

Bird’s stock is up 3.72% after hours, trading at $0.65.

Bird’s Q2 2022 financials

Bird just missed Wall Street analyst expectations of $80.96 million Instead of $76.7 million in revenue, they brought in $76.7million for the quarter. This is 28% more than the previous quarter. It’s also a massive improvement from Bird’s Q1 revenue of $38 million, which is to be expected, given spring and summer are usually any micromobility company’s most profitable seasons.

From quarter to quarter, the number of rides about doubled to 14.5 million, with average rides per vehicle per day at 1.5x, which is a decrease of 19% from last year’s rides. While that’s an increase from last quarter’s 1x average rides per vehicle per day, many experts say a shared micromobility company should really be averaging 2x rides per vehicle per day to turn a profit. This number should rise in warmer seasons. Bird’s total number of rides did increase, but so did the sheer number of vehicles Bird put on the ground. Bird had 109.900 vehicles deployed during the second quarter 2022, as opposed to 69.500 and 78.900 last quarter. This shows an alarming drop of rides of nearly 20%.

Bird’s balance sheet also shows a decrease in average fare YoY. Bird’s average vehicle cost per ride was $5.93 in Q2 2022. However, it was $6.30 last quarter.

As a percentage share of revenue, gross margins were slightly lower at 27% than 28%, but they are still higher than their Q1 lows, which was 9%. Ride profit is also up annually and quarterly, at $38.4 million — up from $27.9 million last year and $13 million last quarter. Bird attributed this improvement to “further optimization” of the fleet manager revenue share, as well as operational efficiencies. No doubt the rollout of Bird’s newest vehicle, the Bird Three, has led to longer battery and vehicle life; however, many industry experts say Bird will continue to spend too much on overhead for not building e-scooters with swappable batteries, which can help streamline the costs and time associated with charging and rebalancing scooters.

Bird also reported that the consolidated gross margin was 17% lower than in the previous year, despite an increase of 26%. Bird attributes the company’s cash burn to its sunk consumer vehicle sales project.

One would imagine Bird’s moves to sunset its retail unit would lower Bird’s operating expenses, but alas, spending actually increased QoQ from around $100 million in the first quarter to $317.9 million in Q2. While general and administrative costs remained flat at around $85 million, Bird attributes this increase in expense to $216 million in “impairments of assets,” as well as the costs of shifting away from product sales. Bird didn’t go into detail on this impairment of assets, but it’s possible the company, intentionally or not, grossly inflated the value of their vehicles and now have to adjust for depreciation.

All of this put Bird into an operating loss of $331.2 million, compared to almost $97 million last quarter, when Bird did not report any impairment of assets on its balance sheet. Bird ended the quarter with a net loss, $310.4 million, as opposed to $43.7 million in Q2 2021.

It also doesn’t look like we’re seeing the cost savings from all those layoffs on the balance sheet just yet. While balance sheets don’t explicitly point to employee salaries, those costs are usually included in total current liabilities. This number was $160million in the first quarter. In the second quarter, instead of shrinking due to decreased staff wages it increased to $230 million.

It’s not entirely clear to us what’s happening there, but Shane Torchiana, Bird’s new president, said Many of the cost savings resulting from restructuring will be visible in the third quarter.

Bird finished the quarter with $57,000,000 in cash. This was an increase from $35M in the first quarter but a decline of $128.6M in the second quarter.

Bird’s outlook

Bird’s guidance for the full year remained the same after the company revised its guidance last quarter. The company expects revenue between $275 million and $325 million for 2022 — Torchiana did caution that if trends were to remain consistent with Q2, Bird expects its full-year revenue to fall on the lower end of that spectrum. Bird’s expectation of an annual run-rate cost savings of at least $80 million will mostly be realized in the third quarter, according to Torchiana.

“Most of that cost savings will come as a result of reducing expenses associated with our product sales business and reducing our corporate overhead,” said Torchiana.

The company also expects to achieve its first quarter of positive adjusted EBITDA in the third quarter of 2022, as well as for the full fiscal year 2023.

This article has been updated in paragraphs sixth, seventh, eighth.