Scooter giant seeking venture capital after posting losses in first quarter
By Sam Catanzaro
Bird Inc, the Santa Monica-based company behind Bird scooters, reported significant financial losses during the first quarter of the year. Despite this decline in revenue, the company, valued at being worth about $3.2 billion, continues to seek out venture capital investments aggressively by touting their new devices’ durability.
As reported by The Information, Bird lost nearly $100 million in the first quarter of 2019 while revenue declined by over 62 percent from the previous quarter. In addition, in the spring the company said they were down to around $100 million in cash despite raising over $700 million over nearly two years. In response to this loss of revenue, the company laid off five percent of its employees and paused service in 44 of its North American markets.
Despite these losses, the company projects robust growth and hopes to break even during the summer months thanks to their new scooters: the Bird One and the Bird Zero. These devices, which make up around 80 percent of the fleet, according to CEO Travis VanderZanden, are heavier and more durable than previous models which Bird hopes will woo investors.
“In 2018, we introduced the industry’s first scooter designed and engineered specifically for the sharing market, Bird Zero. Resulting from the commercial-grade aspects of Bird Zero, it lasts over 10 months in the sharing environment on average and is now profitable due to its increased lifespan and battery capacity,” VanderZanden said. “Bird One builds on the benefits and learnings of Bird Zero and is forecasted to last in the sharing environment for well over a year.”
Per The Information, Bird wants to raise $200-300 million in venture capital by the end of summer. As part of the pitch to investors, Bird touted stats relating to the new scooters’ durability as a way the company hopes to cut down on operating costs. Bird is also looking to raise funds by selling a $1,299 device for personal use and allowing companies to rent out their devices for a cut of revenue.
Information presented to investors provides insight into Bird’s revenue and operating costs. Looking at Bird One and Bird Zero usage data in two four-week periods from this spring and summer — May 6 to June 2 and June 10 to July 7 — the company made the case that they have become more efficient despite the loss of $100 million in the first quarter of 2019.
During this period, gross revenue per ride ranged from $4.12 to $4.27, an over 10 percent increase from last year’s numbers, according to data reported by The Information. This increase in revenue is possibly due to the company’s hikes on ride rates from 15 cents a minute to 30 cents a minute in many cities. In Santa Monica, the current rate is 26 cents a minute.
In addition, The Information touched on the depreciation of Bird devices to the tune of between $0.94 to $1.17 per ride during the study period, roughly a quarter of each ride’s revenue. The decline in scooters’ value is Bird’s most significant cost per ride and something the company addressed in the rollout of the Bird One by touting the durability of the device.
When it came to insurance, The Information says that Bird is paying around 25 cents per ride, but this figure could go up as larger claims emerge down the line. For charging, Bird is paying between 79 cents and 93 cents per ride, a nearly 40 percent decrease from last year. Finally, repairs are costing Bird between 32 and 44 cents per ride, down from last year. In the spring, the company stopped outsourcing repairs and began hiring mechanics working out of service centers to lower costs.
When reached for comment, Bird said “we don’t comment on rumors or speculation,” while referring a series of VanderZanden’s tweets regarding The Information’s article in which he called the piece “(fake) news.”
“I’m on a flight back from a Paris business trip and catching up on some (fake) news about Bird’s financials. Here are some facts so you can decide how Bird’s business is doing for yourself,” VanderZanden wrote. “Bird’s revenue run rate is up over 4x from this time last year. Bird is now making $1.27 on every ride on the Bird Zero scooters, which is over 75% of our fleet. Yes, this includes charging, repair, all other local ops, and the cost of the vehicle (depreciation). In fact, our unit economics are already better than ride-sharing and we’ve only been operating a little over 1.5 years.”
“We sent this data to the reporter (DisInformation) that triggered this “news” cycle, but he chose to use old data from last winter. The $100M he ref was a one-time accounting write-off from old retail scooters b/c our original depreciation window was too long. Facts matter.”