Bird is an electric scooter rental company founded in 2017 in Santa Monica, California. The company allows users to rent electric scooters through a mobile app and drop them off anywhere once they are done with their ride. Bird operates in over 100 cities globally and has raised over $400 million in funding since its inception. However, there have been questions around whether Bird’s business model is sustainable and if the company is actually profitable. In this article, we will analyze Bird’s financial performance, business model, market landscape, and growth prospects to evaluate if it is a profitable company.
Is Bird currently profitable?
No, Bird is currently not profitable. The company has been losing money since it started operations in 2017. According to leaked financial documents, Bird lost $100 million in 2018 on $40 million in revenue. Losses further rose to $387 million in 2019 on $140 million revenue. In 2020, losses mounted to $193 million on $95 million in revenue.
The mounting losses can be attributed to the inherent challenges in Bird’s business model. The company has to spend heavily on R&D and manufacturing of scooters, which have a short lifespan of just a few months. Moreover, operations like charging, maintenance, and redistribution of scooters across cities is labor-intensive and adds to costs. Promotional offers to attract riders also eat into revenues.
While revenue has been growing consistently, the rate of growth in losses has outpaced that of revenue due to high overhead costs. This has prevented the company from reaching profitability after over 4 years of operations.
Bird’s revenue and loss figures
Year | Revenue | Losses |
2018 | $40 million | $100 million |
2019 | $140 million | $387 million |
2020 | $95 million | $193 million |
So in summary, Bird is not currently profitable and has been losing hundreds of millions of dollars since it started. Profitability has remained elusive despite consistent revenue growth due to challenges in the company’s business model.
Can Bird become profitable in the future?
Bird can potentially become profitable in the future by optimizing its business model and executing growth more profitably. However, there are several challenges on the path to profitability:
Improving unit economics
Bird needs to optimize its unit economics at the per ride level. Currently each ride is unprofitable due to high overhead costs related to vehicle maintenance, charging, permit fees and operations.
Reducing the costs of maintaining and replacing vehicles through sturdier vehicle design and manufacturing innovations can improve unit economics. Scaling city operations through density and fleet utilization can also drive per ride profitability.
Avoiding price wars
Competition is intense in the micro-mobility space with companies like Lime, Lyft, Uber competing for market share. This leads to price wars where companies undercut each other to attract riders.
Avoiding prolonged price wars by differentiation and controlling rider incentives can help Bird maintain reasonable per ride pricing and revenues. This can pave the path to profitability.
Optimizing operations
There is significant room for optimization in Bird’s operating processes like charging, maintenance, re-distribution of vehicles. Leveraging technology and automation to streamline operations can help drive cost reduction.
Processes like in-house repair of vehicles rather than replacement can also yield cost savings. Optimized operations are key to boosting per ride profitability.
Improving asset utilization
Bird needs to maximize utilization per vehicle by improving demand prediction algorithms and matching supply to demand more tightly. Higher asset utilization translates to fixed costs being spread over more rides, which enhances profitability potential.
Scaling profitable markets
Bird should focus growth in cities where they have an established presence and path to profitability. Quick expansion into loss-making, low utilization markets has weighed on profitability. Disciplined market expansion can help boost overall profit margins.
Expanding revenue streams
Bird can expand revenue streams beyond rides to advertising, data monetization, charging fees and adjacent mobility offerings. This diversifies revenue while leveraging existing assets and capabilities.
Bird’s market position and outlook
Bird has some favorable aspects in its outlook and market position which can potentially catalyze path to profitability:
Leading market position
Despite mounting losses, Bird has established itself as a leading micro-mobility provider. It has double the vehicles deployed vs nearest competitor Lime, and dominates key markets like San Francisco and Los Angeles. This scale provides underlying operating leverage.
Brand equity and customer base
Bird has built valuable brand equity with urban consumers as a pioneer of micro-mobility. The company had over 10 million riders in 2019 and its app has been downloaded over 40 million times. This loyal customer base is an asset.
Technology and data advantage
Bird has proprietary technology and algorithms for demand prediction, dynamic pricing, and fleet optimization. The data from 100+ cities provides competitive edge in managing operations.
Partnerships and permits
Bird has permits to operate in over 100 cities and has struck partnerships with venues like universities and corporations. This provides access and infrastructure.
Logistics and maintenance network
Inhouse servicing, charging and redeployment of vehicles has been built out. This infrastructure leverages scale and learnings to manage costs.
Critical risks and challenges
However, Bird does face substantial risks and challenges which could impede its path to profitability:
Execution challenges
Scaling and managing operations profitably across 100+ cities while optimizing per ride economics poses huge execution challenges. Operational discipline is critical.
Increasing competition
The micro-mobility space is attracting intense competition from Transportation Network Companies like Uber and Lyft. Besides other pureplay micromobility providers like Lime and Spin are still competing aggressively. Rising competition could impact pricing power.
Regulatory uncertainty
Regulations around micro-mobility licensing, permit fees and vehicle caps keep evolving across cities. Unfavorable regulations can negatively impact profitability.
Safety issues
Safety issues around vehicle maintenance, rider behavior and infrastructure can lead to ban of services in cities. Bird has already been banned in some cities due to safety concerns.
Technology risk
Realizing benefits of autonomous vehicles could take longer than expected. Delays in technology advancement could restrict profitability.
Macro-economic factors
Increasing inflation and potential economic slowdown can negatively impact discretionary spending on shared micro-mobility services. This poses demand-side risks.
Conclusion
In summary, Bird has a viable path to profitability driven by optimization of unit economics, disciplined growth in profitable markets and operational efficiencies. However, the road to profitability faces substantial execution challenges amidst intense competition, evolving regulations and macro-economic uncertainty. Bird’s market position provides tailwinds but prudent management will be key to turning profitable in the future. If the company manages to combine scale with disciplined execution, it can potentially transform into a sustainably profitable micro-mobility leader.