Just hours after Bird said it had overstated revenue for more than two years by recognizing unpaid customer rides, Bird dropped a going concern warning. In a regulatory filing, the company said it might “need to scale back or discontinue certain or all of its operations in order to reduce costs or seek bankruptcy protection.”
Bird closed out the third quarter with $38.5 million in free cash flow. Without additional funding, the company said it would be unable to meet its obligations over the next year. Bird points to “factors beyond its control” like current market volatility that could impact if and how Bird receives further equity or debt financing.
“Accordingly, the Company plans to continue to closely monitor its operating forecast, reduce its operating expenses, and pursue additional sources of outside capital,” reads the filing. “Along with this global footprint realignment, the Company is targeting additional reductions in its operating expenses.”
Bird has been battling since going public via special purpose acquisition merger in 2021. The young company’s dramas have only heightened over the past few months. Since May, Bird has dismantled its retail business, laid off 23% of staff, received a warning from the New York Stock Exchange for trading too low and exited Germany, Sweden, Norway and “several dozen” markets in the U.S. Additionally, Bird’s CEO Travis VanderZanden stepped down as president, and then as CEO, and was replaced in both roles by Shane Torchiana.
Bird isn’t the only SPAC this year to issue a going concern warning. Canoo and Arrival both also said they may not have enough funds to get their EVs to market, and Arrival also recently got a delisting warning from the Nasdaq.
Bird’s stock tanked nearly 16% today and is currently trading at $0.36.
Bird’s Q3 financials
In the third quarter, Bird said its revenue increased 19% to $72.9 million, compared to $61.1 million in the same quarter last year. Bird shared its revenue increase the same day it disclosed that it overstated revenue in the past and that the last two years’ worth of financial statements “should no longer be relied upon.”
Bird recorded revenue on certain trips even when customers lacked sufficient “preloaded wallet balances,” which Ben Lu, Bird’s chief financial officer, attributed to the company’s IT systems not capturing some failed payments after the completion of a ride.
Bird is in the process of analyzing pre-loaded wallet balances that it doesn’t expect to be redeemed in the future, which the company expects to complete in Q4 2022, according to Lu.
“Upon completion, we expect to record on-going breakage revenue and anticipate booking a true-up that would increase our revenues next quarter,” said Lu in a statement. “As a result of these two accounting adjustments, we are withdrawing our previous fiscal year 2022 revenue guidance of $275 to $325 million.”
Lu did not explain how Bird would square up the overstated revenue from the past, nor if Bird would issue new revenue guidance for the full year.
Bird closed out the quarter with a $9.8 million net loss, compared to a net loss of $42.1 million in the year prior, which suggests that the company’s many cost cuts had an impact. Indeed Bird’s Q3 operating expenses were $29.4 million, which is down $10.6 million from Q3 2021. Without additional funds, however, Bird may be exiting more than just several dozen markets.
This article has been updated with clarifications from Ben Lu.