Bird Global Inc., the Santa-Monica based electronic bike and scooter rental company, is worried about its financial future. It told the Security and Exchange Commission in the fall that its financial reports spanning the first quarter of 2020 to the second quarter of 2022 had errors and “should not be relied upon.” A spokesperson said that these problems were identified after discrepancies were discovered while reconciling revenue data.
Bird released its fourth-quarter and full-year 2022 earnings earlier this month, and at first glance they showed substantial growth in earnings. Fourth-quarter revenue for 2022 was $69.7 million, up from $49.5 million for the prior-year period. However, that quarter’s revenue also included breakage revenue of $28.8 million from unredeemed preloaded wallet balances from past periods.
If that previously unreported breakage revenue is discounted, fourth-quarter revenue was actually $40.9 million, with a total cost of revenue for the quarter totaling $40.3 million. Full-year revenue was $245 million, from $191 million in 2021. Despite this revenue increase, net loss for 2022 was $359 million, compared to $215 million the prior year. In its previous notice to the SEC, Bird said it had overstated its sharing revenue for the impacted periods and understated its deferred revenue.
Bird said in its most recent financial report that without additional funding its unrestricted cash and cash equivalents would not be sufficient to reach its obligations within 12 months. Cash and cash equivalents declined to $33.5 million from $129 million the prior year. The report added that without additional capital and increased cash flows, the company may need to discontinue some or all of its operations to reduce costs or seek bankruptcy protection.
“(This) would harm its business, financial condition and results of operations,” the report stated. “As such, these factors raise substantial doubt about the company’s ability to continue.”
When a customer uses a Bird bike or scooter, they first must load money onto a wallet on the company’s app, which is used to pay for rides. A spokesperson at Bird stated that the majority of customers draw down this balance and reload funds on a regular basis. However, some customers stop using the application after taking a ride or two and leave money unredeemed in their accounts.
Revenue from wallet balances is not recognized when they are topped off, but rather when the money is actually used for rides. A Bird spokesperson said that after about two years of a wallet balance being unredeemed and the user being inactive, there is a 90% likelihood that they will never return as customers. Should the money in a user’s wallet remain untouched for about two years, it is then counted as revenue.
Many Bird users are consistent customers. The company said an average 44% of total rides in 2022 came from users with more than 20 lifetime trips, compared to 37% in 2021. The number of rides increased from 40.2 million in 2021 to 46.5 million in 2022, though the average number of times an individual vehicle was ridden dropped from 1.6 times per day to 1.3 times per day in 2022.
Bird Global acquired its independently owned counterpart Bird Canada in 2022, which resulted in a $30 million cash investment in Bird Global. The company said it expects that in 2023 positive cash flow will increase from $5 million to $10 million and adjusted operating expenses will be no more than $100 million. Adjusted operating expenses for 2022 were $188.4 million.
Before going public in 2021, Bird reached the “unicorn” status of a $1 billion valuation in 2018. It was notified in June 2022 by the New York Stock Exchange that unless it could get its share prices up to at least $1.00 over the course of a consecutive 30-day trading period, it would lose its listing. Since that warning, its stock price hit a peak of $0.67 in Aug. 2022 and has not risen above $0.27 since the start of 2023.
