Bird’s first quarter results show that a company is struggling to maintain passenger numbers and revenues – two pillars of profitability for the shared micromobility market. Bird did manage to cut costs – that would be the third leg – but it wasn’t enough to convince investors that the scooter company can find its way to profitability.
Shares of Bird fell nearly 19% after the first quarter earnings release and are now trading at $0.12.
Bird’s earnings can be treated like the canary in the scooter coal mine for the rest of the industry (although it should be noted that each company has its own unique problems and opportunities). And given that Bird lagged in nearly every metric that matters, that could point to bigger problems within the shared micromobility market.
As one of the few publicly traded e-scooter companies, Bird’s performance in the stock market matters to the entire shared micromobility industry. If Bird withers, private players may find it difficult to attract investors – a reality that is already playing out.
Take Tier Mobility, for example. A year ago, the company had bought Spin from Ford and was the largest shared micromobility operator in the world. These days, Tier is struggling to raise more money and it is Reportedly considering a merger or sale with a rival.
Bird has been struggling since going public via a special purpose merger in November 2021 – a trend that is spreading across the mobility SPACs. There are almost no SPACs that are doing well today, largely because many of those companies went public before establishing a sustainable business model – and Bird is no exception.
Bird has its own issues that are unique to the company and not necessarily typical of the entire market. Bird moved to a low-resource business model that relies on a fleet manager program to generate revenue. Under the model, contractors lease fleets of Bird vehicles and deploy the vehicles on Bird’s behalf. The result was less control over the placement of vehicles.
Bird has also yet to jump on the battery bandwagon that companies like Lime have gotten into, which has likely pushed up operating costs and reduced asset utilization.
After wasting boatloads of money, Bird tries to get his act together. The company’s new CEO, Shane Torchiana, who took office in September, has led Bird’s strategy to reduce costs, which includes exiting dozens of unprofitable markets.
Last year, Bird had also laid off 23% of its workforce and discontinued its sales scooter product. Those savings will be realized in the first quarter of 2023; Bird’s expenses have clearly fallen. But the company doesn’t seem to be generating enough revenue for those cost-cutting measures to make a difference.
Bird’s first quarter 2023 financials
Bird reported revenue of $29.5 million in the first quarter, down from $35.4 million in the same quarter of 2022. On a quarter-over-quarter basis, that revenue is also down from about $40.9 million in the fourth quarter. quarter of 2022. (Reported revenue in Q4 was actually $69.7 million, but that included a $28.8 million one-time sweetener. The sweetener was Bird making up for lost revenue from previous years.) The cost of revenue was $24.5 million, meaning Bird barely broke even on a gross profit basis again.
Bird’s Rides and deployed vehicles were also disabled. In the first quarter, Bird reported 5.2 million rides, down 29% year-over-year and nearly 37% quarter-over-quarter. This means that Bird also sees fewer trips per deployed vehicle per day. In the first quarter, Bird recorded 0.9 trips per deployed vehicle per day, compared to one trip per deployed vehicle per day in the same period last year.
Bird manages to bring costs down. The company reported $40.6 million in total operating expenses, down from $100.2 million in the first quarter of 2022. On an adjusted basis, Bird’s operating expenses were $30.6 million, down 39% from of the same period last year.
But even with strict cost-cutting measures, including exiting several markets and laying off staff, Bird ended the first quarter with a net loss of $44.3 million, compared to a net profit of $7.7 million in the prior year.
Not only does it look like Bird isn’t generating enough revenue to cover its operating costs, the company still has negative free cash flow of -$25.3 million. Admittedly, that’s better than the negative free cash flow of $106.2 million in the first quarter of 2022.
As of March 31, 2023, Bird had $12.8 million in unrestricted cash and cash equivalents. The continuity warning that Bird initially issued in November is still in effect, as that money is nowhere near enough for the company to continue. If the company doesn’t raise additional capital or somehow magically generate enough cash flow to even support the business it currently runs, it will have to scale back or cease some or all operations, or even file for bankruptcy.
In a regulation submitBird said it plans to continue reducing operating costs and seeking additional sources of outside capital.
Another red flag to note: Bird has applied for an extension of the U.S. Securities and Exchange Commission to file its 10-K, which provides a more comprehensive overview of a company’s finances and operations and often details risks, litigation, investigations and acquisitions. Applying for a deferment suggests that Bird has financial problems or management problems.
Bird’s outlook for 2023 has not changed since last quarter. The company targets adjusted EBITDA between $15 million and $20 million and free cash flow of $5 to $10 million. Bird expects adjusted operating expenses to be approximately $100 million.
