Earnings Labs

Gogoro Inc. (GGR)

Q1 2025 Earnings Call· Fri, May 9, 2025

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Transcript

Operator

Operator

Welcome to the Gogoro Inc. 2025 First Quarter Earnings Call. This conference call is being recorded and broadcast live on the Internet. Webcast replay will be available within an hour after the conference is finished. I'd now like to turn the call over to Gogoro team.

Bruce Aitken

Operator

Welcome to Gogoro's 2025 first quarter earnings conference call hosted by our Interim CEO, Henry Chiang; and myself CFO, Bruce Aitken. Hopefully, by now, you've seen our earnings release. If you haven't, it’s 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 of the earnings release materials. We will be displaying the materials on the webcast screen as we go. [Operator Instructions] Henry will provide an overview of Gogoro's progress. I will then go into the first quarter financial results in more detail and we will open the line for questions and answers, and answer as many questions as we can. As usual, we would like to remind everyone that today's discussion may contain forward-looking statements that are subject to risks 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 Relations presentation provided today. Additionally, many of the financial figures we will use in our webcast are on a non-IFRS basis. For details about the non-IFRS measures and reconciliation to the corresponding IFRS measures, please refer to our earnings release. Now, I would like to turn the call over to Henry.

Henry Chiang

Analyst

Thank you. Good morning, and good evening, everyone, and thank you for joining us for Gogoro's first quarter earnings call for 2025. The word that best describes our hard work in the last quarter of 2024 and the first quarter of 2025 is focus. We are focused on delivering a great experience for our customers, predictable financial results and a clear vision for the future. We are executing our plan. We have spoken repeatedly about our business priorities in our energy business and our vehicle business. Our profitability timeline commitment remains unchanged: achieve breakeven in the energy business by 2026, generate positive free cash flow in the energy business in 2027 and breakeven in the vehicle business in 2028. There is significant progress to report in each area. The results of our focus on resetting are clear. In the first quarter, we achieved a non-IFRS gross margin of 18.2% and reduced operating expenses by $9.9 million, a full 32.1% reduction versus the first quarter of 2024. Fundamentally, our focus on efficiency is paying off, which we see in a reduced adjusted net loss by 36.5% to $10.9 million in the first quarter from $17.2 million in the first quarter of 2024. Additionally, adjusted EBITDA is $14.3 million in the first quarter versus $10.2 million in the first quarter of 2024. These results have been achieved despite a year-over-year drop of 8.7% in revenue for the first quarter. Based on the early positive results of our strategy reset, we have received a new NT$ 2 billion, approximately US$ 61.5 million credit facility, which both provides capital for growth and also indicates market confidence in our plans for the future. Energy business. Our core energy business continues to perform as expected. In the first quarter, we recorded revenue of $34.5 million in…

Bruce Aitken

Operator

Thank you, Henry. We delivered meaningful financial improvements in the first quarter of 2025 and demonstrated that our focus is clear and effective. Just to recap a few of the important figures in comparison to the first quarter of 2024, we grew our battery swapping revenue to $34.5 million we increased our company-wide non-IFRS gross margin to 18.2% and we increased total adjusted EBITDA to $14.3 million a 40% increase on the previous year. We also saw a reduction of $9.6 million in operating expenses and all of these results were achieved despite a 4.5% drop in total revenue versus Q1 2024 on a constant currency basis. We continue to see increases in our total installed base of batteries and subscribers, total kilometers ridden on Gogoro's ecosystem and continued market penetration. Battery swapping service revenue for the first quarter was 6.2%, up year-over-year and 11.1%, up year-over-year on a constant currency basis. Total subscribers at the end of the first quarter was 644,000, up 8% from 595,000 subscribers at the end of the same quarter last year. We continue to see the strength of our subscription-based business model, which enables us to accrue more customers to maximize our battery swapping network efficiency. Sales of hardware and other revenue for the first quarter was $29.1 million, down 21.8% year-over-year and down 18.1% year-over-year on a constant currency basis. The year-over-year decrease in sales of hardware and other revenues was driven primarily by a decrease in vehicle sales volume on a year-over-year basis due to the delayed launch of one anticipated vehicle. We believe this demand will shift to subsequent quarters. Additional factors include a minor reduction in parts accessories and service revenue and less international sales than in Q1 of 2024. For the first quarter, non-IFRS gross margin was 18.2%, up…

Operator

Operator

Thank you, Henry and Bruce for the updates. As attendees are formulating their questions, I will ask a few questions that we have collected in advance. First question, looks like Gogoro is focusing on your network business with supercharge and quick charge technologies dramatically improving and shortening the electric vehicle charging time. Do you view that as a threat or how are you going to respond to the continued improvement of charging time for charging station models?

Henry Chiang

Analyst

Yeah, thank you. We recognize the rapid advancements being made in fast charging and supercharging technology across the broader electric vehicle ecosystem. But these innovations are helping accelerate EV adoption overall, which is positive for the entire industry. However, we don't view them as a direct threat to Gogoro's battery swapping model. Our battery swapping platform was purpose built for the unique needs for urban mobility, particularly two-wheelers. The key value proposition remains speed, convenience and efficiency. With Gogoro a rider can swap a depleted battery for a fully charged one in less than six seconds, no waiting time, no grid strain and no need for dedicated parking or long wait time, which are often required even with the fastest chargers. I think fast-charging often comes with trade-offs including battery degradation, infrastructure investment, and grid stability issues. Our closed-loop system allows us to better manage the battery health, optimize energy load, and offer a consistent user experience at scale. This is especially relevant in high-density urban environment like those in Taiwan and Southeast Asia. That said we are not standing still. We continue to invest in R&D to improve our battery technology, energy efficiency, and system scalability. So, in short, we see the advancement of charging technology as part of the broader ecosystem evolution. Our focus remains on being the most efficient scalable and rider-centric energy platform for urban mobility based on our battery swapping technology.

Operator

Operator

Thank you. Our second question. Please provide some commentary on the transfer to the NASDAQ capital market as well as your future plans to gain compliance with NASDAQ requirements and other plans for your listing status.

Bruce Aitken

Operator

Thanks for the question. As we did mention briefly during the call, we have completed a transfer from the NASDAQ Global Select Market to the NASDAQ Capital Market in late April. By doing so, we gained an additional 180-day grace period to regain compliance with the NASDAQ bid price requirement. That gives us till the end of October almost to be compliant. So we're not focused on short-term stock price gains. We believe that our financial improvements, which hopefully you've seen some of today really indicates that we're on the right track and we're delivering against our stated plans. So, we're taking the long-term view on the stock. Obviously, we hope that there's organic stock price increase over the course of the next 180 or so days. In addition to that organic increase, there are a number of different options that we could explore for regaining compliance. Those could include a reverse stock split for example or other actions. And we'll carefully consider all of those actions and provide updates to our shareholders and to the public markets as we can in the interim. But we do not have any immediate plans and so we'll continue to watch the stock price, we'll continue to evaluate all options over the course of the next few months up until the extended deadline in late October.

Operator

Operator

Thank you. Question number three. You mentioned the network business and scooter business will breakeven in 2026 and 2028 respectively. To help us derive Gogoro's value today, what is your longer term top line and bottom line growth plans?

Bruce Aitken

Operator

Thanks for that one too. I'll take this one. So as you said we anticipate network breakeven in 2026 scooter breakeven in 2028 and network cash flow positive in 2027. So, we do see the opportunity as soon as we've reached those specific milestones to really have a meaningful shift in operational leverage and a meaningful shift in our profitability. So, from a top line standpoint the biggest driver of our growth is the increasing subscription business that we have, which is predictable it's recurring. We have 644,000 subscribers right now and every new subscriber that we add to the network, contributes to our top line growth. In addition to that top line growth, in the energy business, we do obviously see sales of Gogoro branded vehicles and partner-branded vehicles as well being good sources of revenue in the future. At a bottom-line level, we expect improvement in that income because as the revenue grows we don't expect that our cost base -- our fixed cost base to grow at the same speed. So, we should be able to leverage higher-margin network services business as that becomes a bigger and bigger part of our overall revenue. So, the key to Gogoro's business is the recurring revenue nature of our accumulating subscriber base. We're seeing that now. We're predicting breakeven in 2026. It's possible that we'll even see operational breakeven toward the end of this year. So, once we've gotten to that point then I think the story really shifts and we become about growth going into the future.

Operator

Operator

Thank you. Question number four. Congratulations on making good progress on controlling costs. I'm wondering, whether your current operating efficiency model is sustainable and scalable when Gogoro grows beyond breakeven points? Can you touch on your cost structure and gross margin between the two different business models, i.e. network business and scooter business model? Thanks.

Henry Chiang

Analyst

Thank you for the questions and for also recognizing the progress, we have made on cost control. To address your first point, yes, we believe our current operating efficiency model is both sustainable and scalable. Over the past few quarters, we have made deliberate efforts to streamline operations, optimize our supply chain and leverage automation where possible. As we move beyond breakeven and scale into new markets, these efficiencies gives us a strong foundation. And most importantly, our platform approach especially with our battery swapping network, allows us to scale without a linear increase in operating costs. That's the key advantage. And now on the cost structure and gross margin between the two business models, in our network business, which includes battery swapping and energy services we see predictable and repeatable gross margin. This is largely due to the recurring nature of the revenue and the capital efficiency of the infrastructure, once it's deployed. So as variations [ph] grows, margins improve further due to operating leverage. So on the scooter business side, gross margin are more sensitive to component cost and volume. However, we view the vehicle business as a strategic enabler. It drives adoption of our energy platform and helps build the ecosystem. So going forward, we remain focused on improving margins across both segments, but particularly on expanding the member business, as the core engine of the long-term profitability. Thanks, again for the question it really give us an opportunity to explain our thoughts.

Operator

Operator

And those are all the questions that I had.

Henry Chiang

Analyst

Okay. So, let's continue. Thanks for attending today's call. It should be clear that our focus is paying off. We are seeing improved financial performance and we will continue to execute on this path to profitability. We thank our customers for their trust in Gogoro, and we thank all of you that you joined the call. We will keep working to provide the best battery swapping service, in the world while also innovating for the future.

Operator

Operator

The conference call has now concluded. Thank you for attending today. You may now disconnect.