Shared micromobility company Bird has had a tumultuous 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 in revenue, instead bringing in $76.7 million for the quarter. This is an increase of 28% from the same quarter the previous year. 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. And in the warmer seasons, that number should be much higher. 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 in the second quarter of 2022, compared to 69,500 last year and 78,900 last quarter, which actually shows an alarming drop in rides of nearly 20% per vehicle.
Bird’s balance sheet also shows a decrease in average fare YoY. In Q2 2022, Bird was averaging about $5.93 per vehicle per ride, but in the same quarter last year, the company was delivering $6.30 per vehicle per ride.
Gross margins as a percentage of sharing revenue were down slightly at 27%, compared to 28% in the prior year period, but up from their Q1 lows of 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 consolidated gross margin as a percentage of revenue was down 17%, compared to an increase of 26% in the prior year period. The company attributes this blowing of cash on the sunk project of its consumer vehicle sales.
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 closed out the quarter with a net loss of $310.4 million, versus $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. In the first quarter, that number was $160 million. Instead of that number shrinking as a result of decreased staff wages, it actually increased in the second quarter 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 from restructuring will show up in the third quarter.
Bird closed out the quarter with $57 million in cash, up from $35 million in the first quarter, but down $128.6 million in the second quarter of last year.
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 the sixth, seventh and eighth paragraphs.