Bird may not have enough cash to continue joint micromobility business • TechCrunch

Bird scooter in San Francisco

Photo credit: Rebekah Bellan

Just hours after Bird said it had overstated revenue for more than two years by recognizing unpaid customer rides, Bird dropped a growing concern alert. In a regulatory filing, the company said it may need to “scale back or discontinue some or all of its operations to cut costs or file for bankruptcy protection.”

Bird ended the third quarter with free cash flow of $38.5 million. Without additional funds, the company says it will not be able to meet its obligations next year. Bird notes “factors beyond its control,” such as current market volatility, that could affect whether and how Bird receives further equity or debt financing.

“Accordingly, the Company plans to continue to closely monitor its operating guidance, reduce its operating costs and tap additional sources of leverage,” the filing reads. “Along with this realignment of its global footprint, the company is pursuing further reductions in its operating costs.”

Bird has been struggling since going public through a earmarked acquisition merger in 2021. The dramas at the fledgling company have only intensified in recent months. Since May, Bird has dismantled its retail business, laid off 23% of its workforce, received an under-trading warning from the New York Stock Exchange, and pulled out of Germany, Sweden, Norway and “several dozen” markets in the US. Additionally, Birds CEO Travis VanderZanden stepped down as President and then CEO, and was replaced in both roles by Shane Torchiana.

Bird isn’t the only SPAC this year to issue a growing concern alert. Canoo and Arrival both said they may not have enough cash to bring their electric vehicles to market, and Arrival also recently received a delisting warning from Nasdaq.

Bird’s stock is down nearly 16% today and is currently trading at $0.36. The company has until next month to take its share price above $1.00 per its NYSE warning.

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 year-ago quarter. Bird announced its revenue increase on the same day it announced that it had historically overstated earnings and that its financial statements for the past two years “should no longer be reliable.”

According to Ben Lu, Bird’s chief financial officer, Bird has included preloaded wallet funds in its total earnings and is now in the process of analyzing funds that it will not redeem in the future. Lu said Bird will complete this review by the fourth quarter.

“Upon completion, we anticipate ongoing breakage revenue and anticipate booking a true-up that would boost our revenue in the next quarter,” Lu said in a statement. “As a result of these two accounting adjustments, we are withdrawing our previous fiscal 2022 revenue guidance of $275 million to $325 million.”

Lu did not explain how Bird would make up for past inflated earnings, nor whether Bird would issue new full-year earnings guidance.

Bird ended the quarter with a net loss of $9.8 million, compared to a net loss of $42.1 million a year earlier, suggesting the impact of the company’s many cost cuts. In fact, Bird’s operating expenses were $29.4 million in the third quarter, down $10.6 million from the third quarter of 2021. However, without additional funds, Bird could exit more than several dozen markets.

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