The shared electric scooter industry has gone through a series of ups and downs in recent years – mostly downs, if we’re being honest – but now one company is ready to claim the mantle of the winner.
Lime has released a new set of financial figures that it says prove last year’s meager profits were no fluke. The company reported gross bookings of $250 million in the first half of the year, up 45 percent from the same period last year. And the company touts adjusted EBITDA profitability of $27 million – the first time the company has achieved this in the first half of the year and a 45 percent increase in margins from last year – and unadjusted profitability of 20. 6 million dollars.
To say Lime feels like himself would be an understatement
To say Lime feels like himself would be an understatement. While other micromobility companies continue to shed staff, exit markets and burn cash, Lime says it’s proudly moving in the other direction. The company does not share all its figures, such as turnover and costs, but does say it is heading for a new record year.
“I think historically people have always believed that there is a demand for micromobility, but this is an industry that is littered with dead bodies of people who just can’t make this business work,” Lime CEO Wayne Ting said in an interview with The edge. “I think we will achieve tremendous profitability and hopefully even achieve positive free cash flow.”
Because cash flow is positive, this means that at any given time Lime has more money in the business than it has going out. But it’s not the same as having a net income or being profitable after adjusting your earnings. Ting says positive cash flow would mean Lime wouldn’t have to raise venture capital funding (which would be difficult in this economic climate anyway) to grow and maintain its fleet of e-scooters.
“We’re getting to the point of sustainability, which is always kind of a dream for companies like this,” Ting said.
“This is an industry littered with dead bodies of people who just can’t make this business work”
If this sounds familiar, you’re not wrong. Lime has been flirting with full-year profitability and positive free cash flow for several years, but Covid continued to derail those plans. Ting also doesn’t say that Lime is guaranteed to hit these benchmarks by the end of this year. The shared micromobility sector tends to slow down during the colder months. And Paris recently voted to ban rental scooters from its streets, a setback for Lime and other operators.
Still, Ting said Lime was still booking impressive numbers of passengers in North America, Europe, Australia and New Zealand. And with all the right numbers going up, Lime is positioning itself for a potential IPO, which could bring in a broad cohort of new investors.
“We now have all the ingredients to address to take advantage of a traditional IPO just as the market is approaching,” Ting said. “So I feel really good.”
An IPO is unlikely before the end of 2022, Ting said, adding that much depends on a number of other expected tech IPOs, including Arm, Cava, Stripe and Instacart. “They are going to set the mood for the reopening of the IPO market,” he added.
Ting has been teasing an IPO for a while now, and for good reason. In the wake of the Covid pandemic, a large number of startups went public by merging with shell companies called SPACs, or special purpose acquisition companies, as a shortcut to an initial public offering. Bird, Helbiz and a number of other scooter companies merged with SPACs, as did a host of transportation startups of questionable pedigree. And in late 2020, it appeared Lime would follow suit, reportedly in talks with investment bank Evercore about an IPO via SPAC.
But as the SPAC craze waned, Lime remained a private company. Ting said this was the right decision, pointing to the struggles of competitors like Bird and others who saw their stock prices plummet as investors questioned the future of shared micromobility.
“We now have all the ingredients to tackle and benefit from a traditional IPO”
“I think a lot of companies [that] should not be public, but should become public,” he said.
Bird, which helped kick off the growth of scooter sharing in 2017, was an interesting contrast to Lime. The company’s post-SPAC experience has been pretty rough, including a going concern warning, a revelation that it had overstated its revenues for two years, and a merger with a Canadian company that licenses its name. Now it has abandoned its efforts to build its own scooter and is instead buying ready-made scooters from Chinese manufacturers. The country is also withdrawing from markets in an effort to cut costs and straighten out its finances.
Meanwhile, Lime has doubled down on building its own scooter, which is expensive but necessary, Ting said. Lime should build its own bikes and scooters, he argued, because it helps differentiate the company from its competitors, both for riders and for cities that regulate the fleets. And as a result, Lime has seen its unit economics (how much revenue each individual scooter brings to the company) improve over time. Each scooter now lasts an average of five years on the road, Ting said.
“We made an expensive choice and have been at this for six years,” he added, “and that means we’re going to build our own hardware.”
“I think a lot of companies [that] should not be public, but should become public.”
Ting went on to criticize its competitors for “outsourcing and abandoning” their internal research and development programs in favor of off-the-shelf parts. And he worried that the scooter industry would slide back to the bad old days of cheap scooters that would break after a few months of use.
But as Lime pulls away from its competitors, the hope is that it can continue its growth leading up to a potential IPO and beyond. Lime wasn’t the first to offer electric shared scooters for rent – that distinction goes to Bird – but it may be the last scooter company standing, especially as others merge and the industry continues to consolidate and evolve.
“There is tremendous growth for the entire industry, not just Lime,” Ting said. Historically, “people haven’t run good businesses against that growth… We have to run sustainable businesses that can last [on] our own two feet. And this is what Lime has been able to prove over the past year and certainly the first half of this year.”