Gogoro Inc.

Welcome to the GoGoRoad Inc. 2024 Q2 Earnings Call. This conference call is now being recorded and broadcasted live over the internet. Broadcast weekly will be available within an hour after the conference is finished. I would now like to turn the call over to the GoGoRoad team.

Welcome to GoGoRoad's 2024 Q2 Earnings Conference Call. hosted by our CEO, Horace Luke, and CFO, Bruce Aiken. Hopefully, by now, you've seen our earnings release. If you haven't, it is available on the Investor Relations tab of our website, investor.gogoro.com. We are hosting our earnings conference call via live webcast through Gogoro's website, where you can also download all the earnings release materials. We will also be displaying the materials on the webcast screen as we go. If you are joining us through the conference call, your dialing lines are in listen only mode. After Horace provides some of the business highlights from Q2, Bruce will go deeper into the Q2 financial results. And then we will open the line for Q&A and answer as many questions as time allows. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to risk and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the forward-looking statements that appear in our press release and investor presentation provided today. And now, I would like to turn the call over to Horace.

Thanks for joining our call today. We're pleased to have this opportunity to meet with you and provide a summary of our second quarter 2024 results. I'm pleased to share with you that we announced two substantial investments in the second quarter, which totaled $100 million with $75 million cash received. We further entered into a MOU with Sumitomo Corp and Sumitomo Mitsui Finance and Leasing Company, SMFL, to facilitate a more asset-light international expansion. Gold Sino Assets Limited made a $50 million equity investment in Gogoro. Our partnership with Dr. Yin of Gold Sino and Ruentex Group dates back to Gogoro's founding. This investment reinforces our strategic direction, and we are committed to building on the success of our revolutionary battery swapping ecosystem. We continue to lead the transformation of two-wheel urban transportation, shaping cities of the future to be smart, sustainable, and accessible. We are delivering on our vision as we continue to expand our leadership in Taiwan and other markets. It is crucial to maintain the resources and flexibility needed to operate efficiently, ensuring the delivery of cutting-edge innovation, unparalleled customer experiences, and exceptional value to our customers. Additionally, we announced a $50 million investment commitment from Castrol, a global leader in lubricants and part of the BP group. The initial investment of $25 million in Gogoro will be followed by a second $25 million investment in the form of a convertible note contingent on further collaborative business transactions. In the press release announcing the investment, Michel Joux, CEO of Castrol, stressed the importance of two-wheelers to Castrol and the desire for Castrol to play a large part in a consumer's transition from traditional IC vehicles to electric vehicles. I can't think of a partner that has broader and deeper customer reach in the two-wheel industry than Castrol, and the teams work tirelessly to make this investment and partnership possible. We are now actively developing a variety of joint strategic initiatives and are progressing at pace to really substantiate this agreement and investment. I'm gratified that Castro is excited about Gogoro's technology and vision for urban mobility. Gogoro's partnership with Sumitomo and SMFL, a global leader in financing and leasing, would establish a new asset class using Gogoro's smart batteries to create new business opportunities for Sumitomo and SMFL to utilize Gogoro's batteries for expanding their mobility business as well as generating second-life battery revenue. Amongst the many new business opportunities, this partnership would enable a new asset-light expansion model for Gogoro that doesn't require large upfront capital investment in batteries while increasing the financial efficiency of our new markets. We have been working with Sumitomo and SMFL towards this announcement and business direction for some time, and I look forward to the opportunity to provide further updates as we formalize a variety of business opportunities. Both Bruce and I will go into more details on our market and financial performance during the course of the call, but I do want to set some high-level context. When Gogoro set out to electrify two-wheelers, we didn't know what the future held. We had to develop our own compelling vehicle solutions, our own battery packs, and our own battery swapping platform and ecosystem. We still manufacture battery packs and most of our vehicles in-house and own all of the IP associated with our platforms and battery swapping ecosystem. These inventions have paved the way for the battery swapping industry today. There have been bumps and learnings along the way, and we have and will continue to face challenges. Our focus is on the long term, and we see so much potential for the ongoing electrification of two-wheelers and the adoption of battery swapping. Governments, partners, customers, both B2B and B2C, and fellow travelers on the electrification and battery swapping journey all see benefits in converting from traditional ICE two-wheelers to electric battery swapping vehicles. Conversion will happen at various points in time and with varying speeds of adoption, but it will happen. Our objective is to stay true to our core beliefs and keep innovating our product and service offerings and business models to meet market demands. We're not satisfied with the pace of change and adoption in any market. These realities mean that our financial results are not as strong as desired. However, we continue to have the best vertically integrated product stack. the world's largest deployed battery swapping infrastructure, the support of more than 10 OEMs who are making vehicles which are powered by Gogoro's battery ecosystem, and a software and operating platform that allows additional value-added services to create new revenue streams. Innovating and investing for growth requires capital, hence the recent raise. Operating our network in Taiwan and developing an international footprint also requires substantial amounts of capital and operational spending. We are still operating at a loss and still investing for growth because we believe the markets that we are targeting, India, Southeast Asia, and other markets are ripe for electric vehicle disruption. While the Taiwan two-wheeler market had a 11.2% decrease year on year in Q1, the registered units in Q2 were approximately 190,000, demonstrating slight growth of 2% versus Q2 last year. Year-to-date from January to June, the Taiwan market is down 4.4% from the same period in 2023. We previously indicated a range of projected market sales from 750,000 to 850,000 against the 2023 market of 870,000 units. We expect this year will continue to be softer compared to last year, and Taiwan's two-wheel scooter market will end the year between 810,000 to 840,000 units, a drop of 3.5% to 7% versus 2023. we anticipate slight growth in overall market share versus T23 for go-go vehicles. However, against our previous expectation, the drop in overall market volume has a knock-on impact on our sales volumes and revenue in the first half and will impact second-half revenue as well. The total number of registered electric scooters in Q2 in Taiwan was 23,660 units, up 17.6% from 20,118 units in Q2 2023. Gogoro branded vehicles registration figures were 15,646 units, up 10.8% from Q2 2023, while powered by the Gogoro network, PBGN vehicles registration figures were 16,685 units, up 1.7% over the same period, representing 70.5% of total electric vehicle sales in Q2. Vehicle registration figures would have been markedly higher had we delivered all back-order Jago and Pulse vehicles. If all of the approximately 5,600 Jaygo and 930 Pulse backlog orders we had taken by the end of June had been delivered in Q2, the electric-powered two-wheeler market would have been up 50% from Q2 2023. These backlog units represent approximately $12 million in orders, which can be recognized when vehicles are delivered, which we expect to happen in the third quarter. The Jaygo Smart Scooter has been a standout success capturing significant market attention and driving sales volumes above our expectations. The high sales volume of Jago, while a positive indicator of consumer interest, has resulted in a lower average selling price and consequently lower overall revenue compared to our historic performance. The market's enthusiastic response to Jago suggests that its features and price point are appealing to a new class of Go-Gro customers. Balancing sales across a broader range of our product portfolio is a goal for the second half of the year. Our new flagship, the Pulse Smart Scooter, continues to receive positive coverage for its outstanding, industry-leading performance. Our retail footprint is sizable and sufficient to allow for future growth of vehicle volume without equivalent growth in fixed costs. As of the end of Q2, we now have 103 retail stores in Taiwan, 242 Gogoro quick service stores, and 421 authorized repair shops. The performance of the Gogoro network is in line with our expectations, and our network operations continue to show healthy revenue growth. With just over 608,000 accumulated subscribers, up from 552,000, 205 subscribers at the end of Q2 2023, and with $34.7 million in battery swapping service revenue, we continue to operate the GoGrow network efficiently. We now have over 2,570 GoStation locations, over 1.4 million battery packs in circulation with more than 400,000 daily battery swaps, and over 10.6 billion total kilometers ridden on our network. We are upgrading some of our battery packs in order to ensure we maximize both first and second life opportunities. We fundamentally believe that both the government of Taiwan and consumers see the value of electrification and continue to believe that this transition, while taking a bit longer than anticipated, is well underway. Our market share remains strong. Our technology continues to be seen as best in class, as evidenced by the external award and ongoing strategic investments from existing shareholders, as well as Castrol. And we remain confident of long-term success in Taiwan and in other markets. International markets and expansion continue to be important in our long-term strategy. We use our Taiwan experience to accelerate our international expansion. While it is exciting that we expand into new markets, each market is unique. It takes time to develop these markets including local consumer demands, local partnerships and local regulations. India is perhaps our most important international market and enthusiasm for our solutions is high. With an overall market of approximately 20 million units per year and with government support for the ramp of electric vehicles, we are well positioned to benefit from this large market but are still learning the complexities of the Indian market. Our investments in India in the first half of the year demonstrate our commitment to this important market. While we had forecasted revenue from India for 2024, but due to the delay in implementation in subsidies to include battery swapping vehicles, most of it is now projected for 2025. In the meantime, we continue to progress with our battery factory build-out, GO Station deployments, and building out our India team and capabilities. India's government continues to strongly support the transition to electric mobility. When the faster adoption and manufacturing of electric vehicles, otherwise known as FAME scheme, was put in place in India in 2015, battery swapping didn't exist, and as a result, battery swapping vehicles were not covered under FAME II or the extension of that policy, which was put into place in April to effectively extend the benefits of FAME II. We are working with the Ministry of Heavy Industries as a founding member of the Indian Battery Swapping Association to ensure that in the upcoming FOM3 publication, battery swapping vehicles and infrastructure are afforded the same benefits as charging electric vehicles. MHI is tasked with the overall EV roadmap for India. and we are optimistic that our continued collaboration and advocacy will lead to the inclusion of battery swap vehicles in upcoming incentive programs, thereby supporting the growth and adoption of sustainable mobility solutions across the country. Until battery swapping vehicles are eligible for subsidies under FAME or other government programs, we cannot offset the impact of these subsidies via price discounts. We continue to be optimistic about what India market can bring, but are forced to wait for the finalization of incentive schemes before ramping our vehicle sales or our battery pack production in India. The registration and license application for our India battery pack factory are currently underway. We anticipate that this process will be completed in time for commercial production to commence in the second half of 2024. Similarly to vehicle subsidies, clarity of subsidies for battery packs, as well as equivalent treatment under subsidy schemes, is critical to a successful launch for not only Gogoro, but all battery swapping players India. In Q2, we announced the deployment of the first 20 GO stations in New Delhi and Mumbai through our partnership with HPCL, India's second largest gas retailer. Given HPCL's large retail footprint of 21,000 touchpoints, there is room for growth in this partnership as we ramp vehicle sales in both cities. We recently launched a pilot program with Rapido, one of India's leading ride-hailing services specializing in bike taxis. The feedback from the pilot has been overwhelmingly positive. with riders experiencing a remarkable 50% increase in wages, nearly double what is typically earned through a standard fleet operator model. The riders have expressed great satisfaction with both our vehicles and the seamless battery swap experience, highlighting the ease and efficiency of our system. Many riders are covering impressive distances, riding up to 200 kilometers per day, due to the reliability and ease of use of our battery swapping technology. We are also actively collaborating with five Indian local electric two-wheeler OEMs and have commenced vehicle testing for the deployment of these powered by Gogoro network solutions in the Indian market. These collaborations bring to market a variety of products at lower price points, and the initiation of testing these solutions marks an exciting step forward in expanding our presence and providing a wider range of vehicle options to B2B customers in India. the building blocks for growth in India are in place. I'll now ask Bruce to now give you an update regarding other international markets, as well as an overview of our Q2 financial results.