Bird Global Inc (BRDS) 2021 Q3 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Bird's Third Quarter 2021 Earnings Call.

(Operator Instructions) The conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Andrew Tom, investor relations. Please go ahead.

Good afternoon, everyone, and welcome to Bird's Third Quarter 2021 Earnings Conference Call.

Before we begin, I need to remind you that this call contains forward-looking statements under U.S. federal securities laws. These statements are neither promises nor guarantees and are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in the Risk Factors section of our Form 10-Q filed on November 15, 2021, and our other filings with the Securities and Exchange Commission. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of the non-GAAP to GAAP amounts is available in our earnings release on the company's Investor Relations page at www.bird.co.

I will now turn the conference call over to Bird's CEO and Founder, Travis VanderZanden.

Thank you, Andrew. And thank you, everyone, for joining us today for our third quarter earnings call.

This marks our first earnings call as a public company following the close of our business combination with Switchback II on November 4. I want to thank the Bird and Switchback teams for their hard work and dedication that have led us to this next chapter for Bird. I could not be prouder of our accomplishments and the growth we have delivered in just 4 years, and I know we are just getting started.

Today, I will review our third quarter performance highlights as well as progress to-date against our strategic initiatives. Yibo Ling, our CFO, will then provide more details on our financial performance and outlook before we open the call up for questions.

Our third quarter results reflect continued momentum in the business as we drove strong revenue growth and improved profitability for the period. Due to the strong year-to-date performance, we are pleased to increase our full year 2021 outlook as part of our third quarter update. We delivered $65.4 million in revenue for the quarter, representing 63% revenue growth versus last year. Combined with significant gross margin expansion which drove improved adjusted EBITDA, underlying this performance was strengthening demand across regions, continued benefits from the rollout of our new Bird Three, growth in our long-tail markets and continued strength from our Fleet Manager program. We reported $79.5 million in gross transaction value, representing a 60% increase compared to last year, while ride profit margin, before vehicle depreciation, as a percentage of our sharing revenue was 50%.

We have grown our global footprint, expanding to over 350 cities across more than 30 countries. During the quarter, we were pleased to launch our service in New York City; as well as win a series of notable new permits, permit renewals and fleet size increases, including San Francisco, Indianapolis, Lexington, Durham, Redditch and Antwerp. We are also pleased with our pace of long-tail market expansion. On average year-to-date, we are launching our service in 1 new city every other day or every 48 hours. Cities of all sizes and geographies are embracing micromobility more than ever before, and we are thrilled to help enable this momentum and to meet the demand for ecofriendly transportation alternatives.

A key reason why cities select and partner with Bird is our best-in-class vehicles, which are centered around 3 principles: sustainability, safety and smart technology. Earlier this year, we began the rollout of our Bird Three vehicles, which has been a marked success for our vehicle evolution as well as our unit economics. Furthering this innovation and in response to city demand, we developed and designed the industry's first smart sidewalk protection technology featuring an integrated sensor fusion module. The technology is designed to deliver centimeter-level location accuracy specifically for the micromobility use case.

Along with continued enhancements to our e-scooter fleet, we continue to advance and scale our e-bike offering. In August, we introduced our new electric Bird Bike for consumers. The future of transportation is all electric. By diversifying Bird's consumer and shared products to include e-bikes as well as e-scooters, we are uniquely positioned to lead the revolution to ecofriendly transportation for the billions of annual trips that are 5 miles or less. Our new Bird Bike for sharing is now live in San Diego and Windsor, with plans to launch in Newark and Rome. And importantly, we are the first globally scaled micro EV company that has both capabilities in shared services as well as in retail. While we are experiencing some delays attributed to the global supply chain disruption, which Yibo will provide more color on in a moment, demand for our bikes is surpassing expectations.

Vehicle innovation is a key component of our compelling unit economics; and is further strengthened by our Fleet Manager model, where we partner with local logistics companies to aid in our operations. We continue to drive significant ride profit improvement through our novel Fleet Manager operating structure. Since rolling out our Fleet Manager model, we have consistently delivered year-over-year ride profit margin expansion and we continue to see opportunities to drive this further. Importantly, the Fleet Manager model has empowered local businesses and entrepreneurs, giving cities a hyperlocal resource with on-the-ground neighborhood expertise, and helped enable our expansion into long-tail cities. Our fleet manager retention and sourcing pipeline remains very robust. We continue to see strong demand from providers looking to become fleet managers, and our retention remains high.

In summary. We are continuing to make great progress against our initiatives, and our excitement for the future and the opportunity to further our mission has never been greater.

I will now turn the call over to Yibo to review our financial results and outlook.

Thank you, Travis.

My discussion today will focus mainly on key highlights from the third quarter. Please see today's press release for additional commentary on our financial performance and our reconciliation of GAAP to non-GAAP metrics.

For the third quarter, we reported GTV of $79.5 million, up 60% year-over-year. This reflects continued progress on expanding our deployed vehicle fleet, coupled with strong utilization as COVID trends normalize.

Our average rides per deployed vehicle per day for the quarter was 2.1, up 31% year-over-year and up 17% quarter-over-quarter. Across regions, we see a high correlation between high vaccine rates, an uptick in reopening activity and therefore ride utilization or demand. Compared to 2019, our average rides per deployed vehicle per day in the quarter represents 73% of third quarter 2019 utilization levels, up from 65% in the second quarter of 2021 and 49% in the first quarter of 2021. We would expect, as COVID conditions incrementally improve, that ride utilization will continue to normalize to at least pre-COVID levels. That said, we'll continue to closely monitor COVID trends given the rise in the Delta variant during the quarter.

Despite global supply chain disruption, average deployed vehicles were up 52% year-over-year to 79,000 vehicles. We remain highly attentive to market-wide supply chain issues. While we have experienced selective pressures for certain vehicle components, in general we feel comfortable that we have gotten ahead of it for 2022 on long-lead-time parts. We continue to monitor logistics conditions. To varying degrees, all global companies have been impacted by supply chain and logistics, but we think we've done a much better job than others in the space and tangent markets. Supply chain was a particular headwind in our product sales business, principally for our new e-bike launch. However, as Travis mentioned, demand for our e-bike is surpassing expectations, but given global supply chain issues, we have seen difficulties, particularly around logistics. As an example, $10 million of product sales we expected to realize in the third quarter was pushed back to the fourth quarter as a result of shipping logistics which directly impacted revenue recognition timing. We've now recognized that delayed e-bike sales revenue in October. We continue to monitor the situation closely and are opportunistically exploring ways to creatively mitigate supply chain pressures in the business.

Turning to the rest of our P&L. Gross margin was positive $13.5 million, buoyed by a mix shift towards newer-generation vehicles, compared to approximately positive $900,000 in Q3 2020. Ride profit margin before vehicle depreciation increased to 50% compared to 43% in the prior year period, on the back of increased ride utilization coupled with optimizations to our Fleet Manager rev share structure in the U.S. business. We're very pleased with the consistent improvement in margins, which is a reflection of the improvements in vehicle unit economics coupled with our novel Fleet Manager operating model. Over the past 4 quarters, ride profit margin before vehicle depreciation has remained consistently over 40% despite continued COVID headwinds, varying seasonal conditions and global supply chain constraints. We expect to see continued margin improvement ahead as global demand returns to pre-pandemic levels.

We reported an adjusted EBITDA loss of $5.3 million in the third quarter, representing an improvement of $22.7 million compared to the prior year period, reflecting higher ride utilization, strong ride profit margins and well-controlled operating expenses, partially offset by delays in product sales timing and global supply chain issues restricting deployed vehicle supply.

Our third quarter results reflect continued momentum from our strong first half performance, leading to year-to-date revenue growth of 114%, GTV growth of 112% and adjusted EBITDA improvement of $102 million compared to the prior year 9-month period.

Turning to our balance sheet and cash flows.

We ended the period with total cash and cash equivalents of $63 million. Following our completed combination with Switchback II on November 4, 2021, the combined company added approximately $414 million in incremental liquidity through a combination of Switchback II cashed-in trust (sic) [cash in trust], the proceeds of the previously announced private placement and availability under Bird's credit facility with Apollo Investment Corporation and MidCap Financial Trust, in each case before payment of fees and expenses related to the business combination. Accordingly, total cash and cash equivalents as of September 30, 2021, were $309 million after adjusting for $246 million received at the close of the business combination.

With the increased liquidity provided by the upsized facility plus the financing from our listing, we remain confident with our ability to fund the business and our objectives. We're always exploring cost-efficient forms of capital to fund the business and opportunities to further optimize our capital structure.

Now turning to our outlook. Based on our strong year-to-date performance, we are increasing our expectations for fiscal 2021 as previously laid out in our Form S-4 initially filed with the SEC on May 14, 2021, in connection with our business combination with Switchback II.

For fiscal 2021, we now expect revenue to be between $195 million and $205 million compared to our original expectation of $188 million. And we expect adjusted EBITDA to be between a loss of $85 million and a loss of $75 million compared to our original expectation of a loss of $96 million. This increased outlook reflects higher-than-expected ride utilization partially offset by global supply chain disruption on both our sharing and product sales businesses. We have exceeded our expectations year-to-date with outperformance across revenue, gross margin, ride profit and adjusted EBITDA. And we're pleased to be able to raise our fiscal 2021 outlook.

And with that, operator, let's open it up for questions.

(Operator Instructions) Your first question comes from Tom White at D.A. Davidson.

Great. Maybe one for Travis and then one for Yibo. Travis, you said 350 markets today. Can you remind us how many new market additions are contemplated in your kind of financial forecasts? And maybe talk a little bit about kind of what your funnel as it relates to new cities. It looks like -- just curious if it's changed, as the world has reopened here a bit, maybe in terms of geographies or types of cities. And then Yibo, just to follow up on the supply chain constraint comments: I guess, how should we think about the potential impact of all that to kind of the gross margin improvement trajectory at Bird over the next kind of 12 to 24 months? I guess I'm thinking specifically about like the mix of vehicles kind of out in the market. Should we expect -- what should we expect in terms of kind of gross margin trajectory if this supply chain situation doesn't get resolved in a timely way?

Yes, thanks, Tom. So as far as cities, I mean, we continue to see a very robust pipeline of cities raising their hands, really wanting micro electric vehicles and Bird to come to their market. As you know, the Fleet Manager model really has unlocked the long-tail cities for us. And we define long tail as cities below 500,000 people population. And as you can imagine, there's quite a few cities in -- that fit that description in the U.S. and Europe in particular we're targeting. And as a result, we've been able to launch, year-to-date, one city every other day or about 48 hours. And so I think, when we look at the pipeline moving forward, we seem to be not hurting for cities that want Bird and micromobility to come to their market. We don't really model the future forecasts based on number of cities per se because every city is so different and unique. That said, I think, if you look at 2023 and back out some numbers, it kind of puts you in the 700- to 800-city ballpark, but again we continue to see a very robust pipeline of cities raising their hand today, saying they'd love to have Bird come to their market. With that, [maybe I'll pass it to] Yibo to answer the other question.

And on supply chain -- right. On supply chain, without commenting too much on what exactly 2022 looks like, I would say in theory, if our vehicle and supply count for 2022 is materially impacted, clearly there are top line impacts, but the interesting impact on gross margin is actually there would -- we would expect to see a lift there. The reason for that is because we would then be running a slightly older mix of vehicles in our fleet, and in particular, some of those vehicles may be fully depreciated. And so you would take a lower depreciation charge potentially if you're running an older fleet.

Got it, perfect. And congrats on a nice first quarter as a public company.

Your next question comes from Richard Tullis at Capital One Securities.

I guess, first off, maybe if you could discuss the utilization of the current vehicles in the quarter. Did you see any improvement there that perhaps offset some of the logistics issues that presented themselves in the quarter?

Yes, demand and utilization in particular or what we call rides per day, RPD. That was 2.1 for the quarter compared to, if we can look at 2019, 2.9, so that's about 72% relative to the number that we saw in 2019; and quarter-over-quarter, certainly an improvement over Q2 and as well as over Q1. So nice recovery in utilization certainly and ahead of expectation. So if we look at sort of Q3 broadly and, [in fact], year-to-date, I would characterize the first half of the year as being significantly overperforming with respect to utilization expectations. And that's pulled through into Q3, [while we saw] some of the supply chain headwinds was really felt in the third quarter. And that's what offset that supply -- those supply chain challenges offset some of the utilization overperformance that we saw.

That's helpful. And shifting over to the Fleet Manager side. Obviously it's been very beneficial since introduced several quarters ago. Maybe talk a little bit about the retention rate that you're seeing now. I know it's a tougher labor market out there across all industries, so what are you kind of seeing on your side right now?

Yes. So good question, and happy to jump in there. I mean I'd like to start by just clarifying one important point on the Fleet Manager business model. So we utilize the third-party logistics providers and local businesses and not kind of employees and gig workers, but on your point around retention, we are -- even though, broadly speaking, a lot of industries are facing labor headwinds, we're not seeing the same thing. We're seeing very strong retention with our fleet manager partners. And I think it's a testament. One of the reasons why is the 100 vehicles, on average, we ship to each fleet manager partner, which gives us a lot of leverage on the labor. And it allows them to actually really maximize their earnings. And so the very strong earnings we're seeing with the fleet manager partners is -- and rev share potential, I think, is why we're seeing such strong retention on the fleet manager base despite some labor headwinds in other industries, but that's one area we continue to be very excited about. We anticipated some labor headwinds there, but we, frankly, just haven't seen them nearly as much as other industries. And again I think it's because of the strong earnings.

(Operator Instructions) Your next question comes from Steven Fox from Fox Advisors.

A couple of questions from me, if I could. First of all, in terms of the Fleet Manager business model, it sounded like you mentioned you got some better efficiencies out of it this quarter. I was wondering if you could dial in on that a little bit more and discuss how that came about. And then I have a couple of follow-ups.

Yibo, do you want to take that one?

Yes. So with the fleet managers, as we talked about previously as a part of the expectations in the out-years that we put into the S-4, as utilization recovered, what we would have expected to see is that fleet manager earnings continue to increase commensurately with utilization recovery. And given that they already have pretty strong earnings that -- there would be an opportunity to optimize the revenue share piece that goes to them and goes to Bird. In North America we did see that happen over the course of the third quarter as utilization recovered ahead of expectation. So that's a helpful bit for margin as we move forward in North America. And we expect to see some of that stuff in the future, of course, to the extent that utilization continues to recover and fleet manager earnings are strong across the rest of the world.

(inaudible). That's helpful. And then 2 just other quick ones, 1 on the sort of long-tail cities. Is there a way to sort of isolate [the] performance in the quarter? Anything that you would call out in terms of how in aggregate maybe that group of geographies performed versus prior quarter or year-over-year or something like that? And then lastly, just a clarification on supply chain. You mentioned the $10 million pushout into October. I assume that was the retail bikes, but is there any way to sort of quantify the supply chain impact on the amount of vehicles you actually were able to put on the network in the quarter? That's it for me.

Yes. With respect to the long tail, those markets continued to perform as we characterized previously, so we're pleased with the performance from a financial perspective. We're pleased with the pace at which we're entering into those markets. If I look back to the initial release of our S-4, I believe we said something like 300 cities -- sorry, 200 cities. And that's at that point in time, and today we're in over 350. So from a long-tail perspective, that's where most of the gain came from. And we're very pleased with the -- what we've seen there. On the supply chain front, I think, the pushout, it is possible to quantify that impact. If we just assume that some of those vehicles did arrive in Q3 on time as we expected, it's probably going to be on the order of, call it, $25 million to $30 million of top line on the sharing business. Unfortunately, we were impacted by -- on the [CP] side that's more of a timing issue. It's a question of when, not if. So with all of that said, clearly a lot of challenges on supply chain, with a lot of upside at the same time on utilization, but we put that all together. We're still looking at a 2021 full year that we feel good about raising our guidance on.

Great. And congrats.

Thank you. That does conclude our question-and-answer session. I will now hand it back to Travis VanderZanden for closing remarks.

Thank you, everyone, for joining us today. We are pleased with our third quarter performance, and we remain excited and energized by the road ahead as a public company. We look forward to engaging with our new public shareholders.

Thank you, everyone.

Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect.