Bird Global, Inc.

Good afternoon, ladies and gentlemen, and welcome to the BIRD Global third quarter 2022 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star and zero. As a reminder, this conference is being recorded. I would now like to turn the call over to Karen Tan. Please go ahead.

Good afternoon, everyone, and welcome to BIRD's third quarter 2022 earnings conference call. Before we begin, I need to remind you that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements under the U.S. federal securities laws, including statements regarding our current expectations for the business and our financial performance. These statements are neither promises nor guarantees and are subject to risks and uncertainties that could cause actual results to differ materially from the historical experience or present expectations. A description of the risks and uncertainties that could cause actual results to differ materially from those indicated by the four looking statements on this call can be found in the risk factor section of our form 10-K for the year ended December 31st 2021 filed with the SEC on March 15, 2022 in the risk factor section of our quarterly report on Form 10-Q for the quarter ended June 30, 2022 filed with the SEC on August 15, 2022 and in our other filings with the SEC. This call will also reference non-GAAP measures including adjusted EBITDA, adjusted operating expenses, ride profit margin, and free cash flow that we view as important in assessing the performance of our business. A reconciliation of each non-GAAP measure to the nearest GAAP measure is available in our earnings release on the company's investor relations page at ir.bird.co. The growth percentages that follow are in comparison to the same period of the prior year, except as otherwise specified. I'll now turn the conference over to BERT's president and CEO, Dane Tortellano.

Thank you, Karen, and thank you all for joining us today for our third quarter earnings conference call. Before I begin, I want to take a minute to thank the board and our employees for putting their trust in me to lead our exceptional company in our next chapter as CEO. Over the last four years here, I have gained a solid understanding of what drives our business. This experience, coupled with my prior experiences as a management consultant, largely spent taking out costs of large companies, and as an investor looking at asset evaluations, I've been instructive as I've thought through what we can do to drive profitability and create long-term shareholder value. Today, we're at an inflection point in our business. Looking ahead, we will prioritize cash generation against near-term growth. Through 2021, Bird stood out in an investment ecosystem that prized companies with high growth potential with less of an emphasis on the cost of achieving that growth Given our strong product market fit and annual revenue growth rate of 48% from 2018 to 2021, we thrived in this environment. However, today's macroeconomic environment and accordingly different market sentiment have caused us to revisit the strategy to tilt the focus more towards a self-sustainability overgrowth. To be clear, we remain bullish on the long-term prospects of the category, but prefer a path that proves profitability before capturing the full market opportunities. We've had to adapt quickly, taking aggressive steps to accelerate our path to achieve profitability. Specifically, we have, one, sharpened our geographic and product focus, two, enhanced the structure of our leadership team to fit to our strategy, and three, initiated a 40 to 50% overall reduction in our central cost structure versus Q2. Looking ahead, we see three pillars to drive our path to self-sustainability. The first of these pillars is to be the trusted partners that cities deserve. Recently, we've doubled down on putting cities at the center of everything we do. Building on progress made this year, we plan to continue to work closely with and listen to our city partners to understand their pain points deeply. Against these transportation pain points, e.g., safety, clutter, equity of access, and sustainability, we expect to continue to work diligently across our technology, operations, and government partnerships teams to build our offering. Recent examples include sidewalk protection and virtual parking in collaboration with Google in order to be at the forefront of city innovation. This, we believe, is essential in building capital T trust and a sense of partnership with our cities, which in turn is key in retaining our existing permits and growing our footprint with new cities. Our second pillar is to continue to improve our asset efficiency. You could think of this as improving the return on our assets. The three legs of this tool are, one, improved supply-demand matching for our new demand-based vehicle drop model, two, increasing our vehicle deployment rate, and three, extending the average life of our vehicles. As previously referenced, we are investing in our model for street-level vehicle supply and demand matching. This supply and demand-based local optimization combines leveraging our deep local expertise from our team and fleet manager partners and the data-driven insights captured by the over 175 million rides we've generated. Currently, far too many of our vehicles are being dropped in locations every day where we know they won't drive incremental trips. Correcting this is a complex but exciting area of vast opportunity for Bird and our fleet manager partners. we are currently in the process of optimizing the balance of utilization lift from optimal drop locations with the incremental additional efforts required for those drops. Based on testing in 100 plus markets over the last several months, this initial optimization is expected to significantly improve the rider experience, i.e., the likelihood of a proximate vehicle being available, our seasonally adjusted utilization rates, and ride margins. Specifically, We expect that we can increase our vehicle utilization by 10 to 20% in the near term, perhaps even more in the longer term. Second, we can be more efficient with how many vehicles our fleet manager partners need at any given time to support the vehicle caps in a local market. We have a clear path to deploy more of our vehicles at any given time versus having them sitting in a warehouse charging or awaiting repairs. The primary benefit of this is that we can capture incremental growth opportunities without having to spend more capital on new vehicles. Lastly, by continuing to improve our inventory management products, investing in new methods, tools, and training for repair and refurbishment, better aligning our fleet manager partners' profiles and incentives, and rolling out ever more efficient vehicles, for instance, with swaffled batteries and better tracking devices, We should expect to see not only a higher percentage of our fleet out on the road at any given time, but also continue to extend the useful average life of our vehicles. Even longer average useful lives will continue on our strong historical trend of reducing capital expenditures, expanding gross margins by decreasing depreciation per trip, and reducing Byrd's greenhouse gas impact as the carbon from vehicle creation is spread over more trips. The third major pillar is aligning our cost structure with inflows. Our last strategic pillar is to ensure our cost structure is aligned with the cash margin our business generates. Our number one priority for our business is to be free cash flow positive and ultimately sell funding. We've made great progress in reducing our costs and we'll seek to ensure that discipline remains part of our DNA going forward. Earlier this year, we announced our profitability focus strategy to evolve our business to be self-funding, including one, focusing on our profitable core sharing business, two, adjusting our city footprint to focus on our higher margin markets, and three, streamlining our fixed cost structure. Our team has worked diligently to execute on each of these initiatives, which we believe will continue to flow through our financial performance as we progress into early fiscal 2023. As we noted last quarter, we have slowed the expansion of our retail product sales business and prioritize our core sharing business. In doing so, we expect to reduce the drag from a lower margin, capital-intensive business. We plan to continue to sell a minimal amount of retail products and support our channel and retail partners, but the revenue and profit contribution is expected to become immaterial as we head into fiscal 2023. We've looked at the performance data closely in all of our markets and regions. and it has become clear that some markets are still too far from supporting a vibrant, self-sustaining micromobility industry. In some cases, this is a result of under-regulation, e.g., no vehicle caps, that leads to an oversupply of vehicles and operators alike, some of whom don't behave rationally financially. For instance, we recently captured the leading position in some large German markets but learned in the process that it is unlikely any operator will be turning a profit in those markets anytime soon. As a result, we made the tough decision to entirely exit from Germany, Norway, and Sweden, as well as wind down operations in several dozen additional smaller than mid-sized cities across Europe and somewhat in the U.S. Going forward, we expect that our EMEA footprint will look materially different, focusing on markets where we are a market leader and where our asset productivity, as measured by margin per vehicle per day, is attractive. We don't believe that selling $2 for $1 is a viable business strategy and do not plan to stay in markets where that's a requirement. While this change is expected to reduce top line revenue by $20 to $25 million on an annual basis, we expect these market exits will actually increase our gross profit dollars by approximately $10 million on an annual basis. This is on top of the additional operating expense savings that fall below gross margins. Transitioning to operating expense reduction initiatives, in Q3, we executed on our 80 million annualized cost savings target and achieved an annualized operating expense runaway rate of approximately $160 million. But as we look ahead to fiscal 2023, we are taking on a more aggressive approach to cost optimization efforts and have uncovered opportunities to drive an additional set of efficiencies. Along with our market footprint adjustments, we are taking in additional cost savings actions and expect to bring our annualized adjusted operating expense run rate to $120 to $130 million, reducing central costs by 40% to 50% from Q2. We expect to see these savings mostly completed in Q4 2022 and to realize the full benefit in early 2023. As noted above, our number one priority is for our business to be free cash flow positive and secondarily to turn adjusted EBITDA positive on a full year basis. even if we have to sacrifice some growth to achieve that. I'll now turn the call over to Ben to review our financial performance and outlook in more detail.