Gogoro Inc. Price & Performance (GGR)

Which could cause actual results to differ materially materially from those contained in the forward looking statements. Presentation provided [indiscernible] Now, I would like to turn the call over to Henry. Thank you.

Success is forged in challenges. Gogol is embracing our challenges. The strongest companies don't just endure they adapt, refocus and transform. At its core, Gogor is an energy company We were founded to rethink urban energy and inspire the world to move more sustainably. Over the last three years, we have improved and extend our customer experience on the Google network by investing nearly $100,000,000 annually in infrastructure Today, we operate the world's largest infrastructure of its kind. And serve nearly 640,000 monthly subscribers. Our goal is clear, to achieve profitability and continued growth. In Q4, we took decisive actions to accelerate profitability sharpening [indiscernible] realigning resources, streamlining operations and reducing costs. These efforts are showing early signs of success. Our energy business is on track to breakeven by 2026 and generate free cash flow in 2027. Additionally, we expect that our vehicle business will breakeven by 2028.

We have three main business priorities. Our energy business our vehicle business including partner OEMs, and international expansion. First, we are focusing on our energy business. We ended the fourth quarter with nearly 640,000 accumulated subscribers, up from 587,000 subscribers at the end of the same quarter last year. In Q4 twenty twenty four, for the first time, revenue from the GoVero battery swap in business surpassed revenue from vehicle sales. This marks a fundamental milestone for the business. One we expect to continue. Our batteries are built for longevity and second life applications. First generation battery in service for ten years still operate in a good state of health as anticipated. And are now being repurposed for second life opportunities. The demand for both customer facing and behind the meter energy [indiscernible] is growing fast in Taiwan and globally, We see a rapidly evolving business with significant potential. And we are expanding our investments to capitalize on our large battery fleet. We have shifted R and D funding toward our energy and second life battery in In 2025, we will increase energy R and D spend by approximately 26% versus 24 Driving innovation is smarter, more resilient energy solutions.

For the future. Some of these solutions are already in commercial use. While others are in pilot testing with TiePower. By the second half of twenty twenty five, we will have four certification for our energy storage and peak shaving products, I'm excited about the innovations we are bringing to market. These new products and services will not only enhance our battery socket This is but also create new revenue streams. Next, we are streamlining our Gogol branded product lineup and expanded our Power by Go Go network program. We are improving customer experience by delivering vehicles and services They need whether on performance, quality, convenience, or affordability. We are taking two important steps. First, we will utilize common components to drive efficiency. Second, we are optimizing our supply chain and manufacturing partnerships to achieve economies of scale. We are excited for upcoming product launches in 2025 and 2026 and look forward to sharing more soon. Finally, while Taiwan remains Gogoro's primary revenue driver, we remain committed to international expansion and partnerships. The global shift to electric two wheeler is accelerating. And interest in Golar's battery swapping ecosystem continues to grow. In 2024, we launched a service with Partner In Colombia Singapore and Nepal.

With more expansions ahead. South Asia is still very much in our plans. But these markets take time to develop. We are actively working with cash flow to identify opportunities to accelerate adoption Expect more concrete updates On this in the coming few weeks. In addition to realigning our business strategy, much of what we focus on during this transition has been streamlining operations and reducing costs. First, we increased the alignment of our engineering and product teams by establishing an integrated development center to enhance our cross functional collaborations and implement VADU added engineering In this way, we will be developing products that better meet our customer needs had a reduced [indiscernible] Second, maintaining rigorous financial discipline. We conducted a top to bottom review of our fixed cost and removed unnecessary spend at We reviewed every hardware and energy product for its contribution margin and we will streamline product offerings accordingly. We restructured our organization and consolidate overall space to water better team collaboration and reduce costs. We are instilling discipline across all businesses Leaders and teams with clear financial indicators and funding milestones, As a result, we have significantly reduced our fixed spending budget by more than 32% hundred and twenty million dollars in 2024 eighty two million dollars in 2025.

These changes result in a leaner more efficient operational model that positions us for sustainable long term growth.

While our focus is on the future, I want to take a moment to recognize some of our key achievements in 2024. During 2024, we received prestigious global accolades from top tier media outlets and industry research firms. Fast Company recognized Gogar as Asia Pacific's number one most innovative company of 2024 and thirty seven Globally, Fortune highlighted Gogoro on its 2024 Change the World list MIT Technology Review recognized Gogra as a top 15 climate tech companies to watch for the second year in a row. Also, we were honored by Frost and Sullivan as the 2024 global battery swapping company of the year. We expanded our multiyear collaboration with TSMC to promote green and sustainable transportation In November, Seven Annual Taipei Bridge Writer event attracting nearly 2,000 riders from all over Taiwan, representing GoGoGoShare and PPGM vehicles. During the year, we also received two major capital investment from GoSigno and Kastro that results in a total of $75,000,000 invested in the second quarter. In closing, it should be clear that our primary goal is accelerating our path to profitability. We will achieve this objective by sharpening our focus on the energy business realigning resources to deliver products and services that better meet our customer needs.

Streamlining operations and reducing costs for greater efficiency and team collaborations. The transition of the transportation and energy industries is a complex and challenging one. These are large and entrenched industries. Deeply rooted in government regulations slow changing consumer behavior and commoditized products. Golar's battery swapping ecosystem and smart scooters have already begun disrupting [indiscernible] demonstrating a better solution at scale. The opportunities ahead are bigger than ever, The demand for sustainable [indiscernible] and scalable energy solutions is only increasing and Gogol is uniquely positioned to lead this transformation. We are embracing these challenges as a team. With a shared commitment to achieve I mean, I'm personally incredibly passionate about Gogoro's Gogoro. And look forward to share more as we continue to execute our strategy.

I'd like to hand it to Bruce, who will walk through our Q4 and full year twenty twenty four financials. Thank you, Henry. I'm pleased to have this opportunity to provide a summary of our fourth quarter and full year 2024 results. Our full year revenue for 2024 was $310,500,000 within the previously provided range of $3.00 $5,000,000 to $315,000,000 In the fourth quarter, we took accounting charges of over $38,000,000 to simplify and strengthen our business.

These impairment and exit costs materially impacted our fourth quarter and full year net loss results on an IFRS basis. However, we managed to deliver adjusted EBITDA of $46,500,000 representing a slight increase from 2023 full year adjusted EBITDA. These proactive steps allowed us to optimize our cost structure and set us up well for the future as a leaner and more efficient organization focused on delivering a clear path to profitability. Our energy business continues to grow reinforcing the strength of our battery swapping and smart energy solutions. Gogoro and powered by Gogoro Gogoro partner brands maintained its market leadership with a 72% market share of electric scooters. Even as the overall two wheel market contracted slightly. As we closed out 2024, we leveraged this transition period to refine our strategy, sharpen our focus on energy services and ecosystem enablement, and continue our international focus. We continue to accumulate new subscribers on our 640,000 subscribers, up from 587,000 subscribers at the end of twenty twenty three, and had $137,900,000 in battery swapping service revenue for the full year 2024, representing an increase of 4.6% over 2023. As we anticipated, the overall market for two wheelers in Taiwan in 2024 declined substantially.

Dropping 13.6% from 871,000 to 753,000 units.

Electric two wheeler sales remained at 10.5% penetration and Go Grosso Smart Scooters slightly increased our market share from 6.5% in 2023 to 7% in 2024 despite a small drop in Gogoro units sold.

We continue to provide exceptional services to our customers who we are partnering with to reduce our carbon emission reduction goals. A total of over 12,000,000,000 kilometers have now been written over 1,000,000 tons of carbon saved on the Gogoro network and a total of 400,000 swaps per day Carried out. Our international markets continue to deliver revenue and unit growth, but not at the pace we had anticipated and Taiwan still accounts for more than 95% of our revenue. We remain optimistic and committed to international growth but developing these markets takes time. For the fourth quarter, total revenue was $73,000,000 down 20.2% year over year and down 19.2% year over year on a constant currency basis. For the full year, total revenue was $310,500,000 down 11.2% year over year and down 8.5% year over year on a constant Battery swapping service revenue for the fourth quarter was $35,900,000 up 10.2% year over year and up 12.3% year over year on a constant currency basis. Battery swapping service revenue for the year was $137,900,000 up 4.6% year over year and up 8% year over year on a constant currency basis. The year over year increases in our battery swapping service revenue was primarily due to our large subscriber base and high retention rates.

We continue to see the strength of our subscription based business model and increasing customer base. Sales of hardware and other revenue for the fourth quarter was $37,100,000 down 37% year over year. The year over year decrease in sales of hardware and other revenues was driven by lower sales volume, a decrease in average selling price due to higher proportion of sales of entry level models, a decrease in our parts and accessory sales as non Gogoro branded accessories and parts proliferate a $4,600,000 carve out of revenue associated with deferred revenue adjustments for battery swapping service revenue promotion program and these deferred revenues will be recognized over the twenty four to thirty six months.

Sales of hardware and other revenues for the full year were $172,600,000 down 20.8% year over year and down 18.5% year over year on a constant currency basis. As a result of realigning our business, many time events reduced our gross margin for both the fourth quarter of twenty twenty four and the full year of 2024. For the full year 2024, gross margin was 2.4%, down from 14 was was 14.8%.

Down from 16% last year. For the fourth quarter, gross margin was negative 8.1%, down from a positive 11.6% in the same quarter last year, while non IFRS gross margin was 14.2% down from 14.8% in the same quarter last year. We believe the non IFRS figures more accurately reflect the real underlying nature of the business after excluding all one time impacts we use these figures to measure our business performance.

The decline in gross margin across both the fourth quarter and the full year was primarily driven by a combination of factors. First, a $5,000,000 derecognition expense on components removed from battery packs during the battery upgrade process. And $9,400,000 of total direct costs attributable with our battery upgrade initiatives. Secondly, an increase in sales of lower margin entry level models, third, higher excess capacity costs due to reduced sales volume Fourth, the full year impact of the $4,600,000 hard revenue carve out that I described previously and fifth, a lower margin contribution from Gogoro OEM parts. For the last few quarters, we've been undertaking a program to carry out one time voluntary upgrades on certain battery packs, which will take several quarters to complete and will continue throughout 2025. These upgrades provide multiple benefits. More efficient deployment of our resources than replacing battery packs, increasing lifetime capacity of each battery pack including and solidifying the extra lifetime capacity of each battery pack to validate our second life thesis.

These upgrades are expected to create economic benefits in the long term but do generate a short term reduction in our gross margin as we continue carrying out the We expect our cash position, gross profit and gross margin will continue to be impacted by the costs of these upgrades during 2025. In order to improve our overall customer experience and to extend battery life, we plan to continue upgrading a substantial quantity of our battery packs, which are already in circulation and will improve designs of our battery packs to make them even more rugged [indiscernible] and long lasting. For the fourth quarter, net loss was $71,800,000 representing an increase of $45,100,000 in the same quarter last year. The increase in net loss was due to a $29,900,000 increase in other operating expenses associated with various accounting charges for impairment and exit activities and the decrease of $16,500,000 in gross profit. We reduced operating expenses substantially in the fourth quarter contributing $4,700,000 in savings. For the full year 2024, net loss was $123,200,000 representing a decrease of 47,200,000.0 from a net loss of $76,000,000 last year. The increase in net loss was primarily due to a $43,500,000 decrease in gross profit driven by costs related to our battery upgrade initiatives, increase in impairment loss of $32,600,000 $3,300,000 of exit activities and $1,600,000 in customer care packages.

This was partially offset by a favorable change of $12,100,000 in the fair value of financial liabilities and a $25,100,000 reduction in operating expenses excluding other operating expenses. For the fourth quarter, adjusted EBITDA was $8,800,000 representing a decrease of $200,000 from $9,000,000 in the same quarter last year. The decrease was primarily due to a $3,200,000 decrease in non IFRS gross profit margin, excluding share based compensation, depreciation and amortization, also excluding battery upgrade initiatives and exit activities. The decrease was partially offset by a reduction in operating expenses from various cost savings initiatives compared to the same quarter last year. For the full year 2024, adjusted EBITDA was $46,500,000 representing an increase of $1,000,000 from $45,500,000 last year. The increase was primarily due to a reduction in operating expenses, from various cost savings initiatives compared to the same quarter last year. The increase was partially offset by a $9,900,000 decrease in non IFRS gross profit margin. We generated $12,100,000 of operating cash inflow in 2024 compared to 2023 where we generated $59,100,000 of cash in operations. With $117,100,000 cash balance at the end of twenty twenty four and the additional credit facilities that are available to us, we believe we have sufficient sources of funding to meet our near term business growth objectives.

In the fourth quarter, we focused on simplifying our business and realigning our resources to focus on delivering exceptional Our plan is to accelerate our path to profitability. These initiatives include structural and operating realignment across the company, Consolidation and exit of facilities, accounting impairments alongside other reductions in operating expenses. As a result of these actions, we recognized $34,000,000 of non cash impairment charges for certain manufacturing assets in India, China, [indiscernible] and the decline in value of our equity investment in The Philippines.

We also recognized $4,800,000 of exit activities including idle facilities and $3,300,000 of customer care package programs in 2024. Gogro's fourth quarter and full year 2024 results of operation were materially impacted by these charges, while the exit activities, impairment of assets and one time customer experience enhancement program had no impact on non IFRS net loss and adjusted EBITDA. Further, Gogoro is expected to create approximately $25,000,000 in savings 2025 compared to 2024, as a result of the cost reduction plan. We expect our GoGo network battery swapping business to reach profitability deliver non IFRS net income in 2026 and our hardware sales business to reach profitability in 2028.

We believe the Taiwan two wheel market in 2025 will remain at 2024 levels.

For the full year 2025, we expect our revenue to be between $295,000,000 to $315,000,000 on a constant currency basis. Would reflect 2025 Taiwan market condition and the conversion rate. We estimate that approximately 95% of such full year revenue will be generated from the Taiwan market. Our IFRS gross margin will be continuously negatively impacted in the short term because of our ongoing and to be completed by the end of twenty twenty five. With the combination of ASP pressure from entry level models and delays in realizing anticipated international sales, we expect our non IFRS gross margin to remain at the current level in 2025. With that financial update, I'll hand the session back to the moderator for a Q and A session. Thank you.

Thank you, Henry and Bruce for the updates. As attendees are formulating their questions, I will ask two questions that we have collected. Question number one. Can you provide additional color on your expectation of energy business to breakeven in 2026?

Cougar has always been ourselves as an energy company. And we are now even more focused on this part of the business. We have accumulated approximately 640,000 subscribers has very predictable R2 and has extremely high retention rate of our subscribers. Based on this information, we can predict with relative accuracy our future battery softening revenue and provided we can throw costs in line with our planned budget expenditures. We will breakeven on a non IFRS basis in 2026 We are confident of that outcome. Thank you, Henry. So question number two, what action plans can you implement to raise your stock price back above $1 so you don't get delisted. And when does the one hundred eighty day grace period end?

Thanks, Andy. Stock price is really a reflection of the market's perspective on our future strategy, our earning potential, our product roadmap and a number of other factors. So we hope that through this discussion we've had today, we've shed some light on our future plans and primarily to shed some light on our anticipation of accelerating our path to profitability and tightening our cost structure through a number of different actions. [indiscernible] with that, we trust that the market will have more confidence in our ability to deliver future business results. Our plan is to remain listed on the NASDAQ. The deadline is April 28 to regain compliance and we're exploring a number of different alternative courses of action to ensure that we do regain compliance. Thank you, Bruce. Operator, please open the line for Q and A session. [indiscernible] It's into the box and click submit.

We will now take our first question from the line of Foon Chang from Benchmark Company. Thank you. Hi, Henley. Hi, Bruce. Thanks for taking my questions. A couple on my side. First, it's very encouraging to hear your, I think, game plans in terms of past to profitability ahead. I think here we actually shed a bit more light earlier, but I just want to to go a bit deeper with assumption to breakeven in 2026 on the net income and the free cash flow 2027 for the energy, also on the vehicle side to breakeven on 2028. What's your gross assumption underlying gross assumption to achieve this, I think, profitability? [indiscernible] Thanks, Von. I'll take your first crack at that.

So we've really shifted our focus in terms of how we think about profitability. We need to take an affordability approach to this. So we are actually using very conservative growth assumptions with regards to, for example, vehicle sales quantities in Taiwan. For this year, as you can tell from our revenue guidance, with some growth in the energy business, there is limited growth forecasted from vehicle standpoint. Last year, we sold a little bit under 50,000 units and this year, our targets are roughly in line with that. If you just do the ASP backwards math from our revenue forecast, So we're confident that we will hit that 2026 energy breakeven the 2027 cash flow and then 2028, the vehicle business, should be able to breakeven as well.

Understood. Just a quick follow-up on that. I understand you guys Focus on the cost optimization. It seems like you have very effective game plan in place. Do you expect like what factors what kind of need to happen for you potentially return to growth or is that focus for the company down the road?

So I think there's a two side of it. The first side of it is our energy business. Provide us a constant constant growth in revenue and also EBITDA you can see we have very good 2026 in energy business and also we are looking forward to the free cash flow in 2027. And for vehicle, I think we are now officially into the second cycle of Cogou product roadmap.

For the first cycle of product roadmap, we are required to build a vehicle from the like a very top tier the entry level tier because we are fundamentally [indiscernible] [indiscernible] But based on the infrastructure, you require to have more subscribers. Given that our subscriber is at a breakeven point, provide us another opportunity to revisit our product roadmap on a vehicle side. So we have a very We'll consider product roadmap for the next ten years from now. So we believe that power will help us to achieve the growth while helping us to achieve the breakeven of the vehicle business. [indiscernible] I think the thing I'll add too, Fon, is there's two sides of it, right? One is revenue growth and the other is cost control. And obviously, cost control is not our fundamental objective. It's an out [indiscernible] but focusing on streamlining the business As you saw, we've taken a number of accounting charges We're consolidating space. We're writing down some inventory. If we don't believe there's future sales opportunities. We're looking at some streamlining of resource within the company. We're looking at streamlining of CapEx within the country for the company. So all of these things contribute to setting us up to a cost structure where this year, for example, our fixed costs will be reduced from $120,000,000 last year to $88,000,000 this year.

And then across the board, as we mentioned, we expect about $25,000,000 in savings. Whether it's marketing, whether it's facility space, whether it's rental of offices, whether it's our retail channel, we're looking at every single opportunity to get more efficient and the net results of that is a more optimized cost structure which leads to an improved and faster path to profitability as well.

Understood. That's very helpful. Just a quick follow-up on the growth side. I think Harry mentioned, you guys see the energy storage as a new source of brand new for you down the road. I just wonder how should we size the market potential and your better proposition there? And on top of course, Yudhie mentioned at international expansion is still part of your long term growth plan. I just wonder how should we think about the revenue potential growth potential from that part of your business. Down the road.

Yes. I think the energy storage is definitely something really big in Taiwan and we are expected to it will be very big in Southeast Asia, especially that the renewable energy is kicking in and you can see from the policy side of it in Taiwan, that we already seen a lot of policies coming out and our government is pushing hard on the renewable energy. And to adopt to adopt that renewable energy trend, there's a huge opportunity for us to provide energy storage service to to the SMB, like a factory and household. As a matter of fact, we already have a pilot, some of the pilot with like for example, I'm in Taipei and more than three forty six intersections has the battery inside of it. So when the power is is break When there's a brown out? Yes, brown out. Our battery really helped been very helpful. So we have seen that is something we want to build our second hand revenue growth [indiscernible] And the other side of it is people have been talking about like the second life battery usage and it's really hard for a traditional vehicle vehicle maker even with when they manufacture the EV, they don't have the data of the battery.

They don't know how it was used and it was be monitored. So I think since Boga owns all the assets and we have the tech [indiscernible] to monitor the battery and also every single cell in the battery pack. We will definitely capitalize capitalize that in our future revenue growth. So we have a strong belief in that. And so as I said in the call, we already finished the hardware validation with Ty Power, which is a state owned electricity company in Taiwan. We are to finish the hardware validation last November. We are now in the sandbox with them. We hopefully we will finalize it in next six months. And once we have it or we have a certain we definitely will have a solid progress. On our business planning. For Since we already have 1,400,000 battery pack in the network, and we are expecting to retire some of it from the Gen one battery. Gen one battery is actually [indiscernible] our numbers twenty fifteen. We can see that is still in a very good good healthy status and we want to make these Gen one battery to retire and repurpose that in our ESS. And for next coming few years, we will have more battery to we are seeing these changes The needs of ESS is trending upward.

So we definitely will show more revenue progress on that part. For me, I think ESS in 2025 is a kickoff. We have finished our first product life cycle of our vehicle business and we see we already contain a great progress as an infrastructure company So the second part of the growth definitely would depend on the progress of our ESS business and we would love to share with you Fan and the rest of the investor more in the next in the next few earnings calls. So Bruce, you want to top up?

Yes. So I'll take the second part of the question, Fong, about international expansion. There's three things we believe are required for success in international markets. Require policy, we require partners and we require patients. And so policies are being aligned at different speeds in different markets. And partnerships are being aligned at different speeds in different markets. And then obviously, we have to be patient and we have to wait for the right time, wait for the right partners. Wait for the right policy before we'll be successful. We have been targeting Southeast Asian markets as you know, for some time. We'll continue to do that. But we are still forecasting that for this year, the bulk of our revenue, 95 plus percent of our revenue will be from the Taiwan market. As soon as there are better updates that we can provide, and we hope that we'll have some of those updates soon, we'll provide them to you directly.

Yes. We are looking forward to good update in the next few weeks So we love to share that more in the next couple of weeks.

Thank you for your questions. Phone At this time, I will take a question from online. This is the question. Home energy storage has gotten very popular in recent years. Does Gogoro plan on releasing battery packs to consumers that can buy?

Yes. We have seen our strong growth growth momentum in Taiwan as well. I think American has more home use of that, but I think Taiwan is growing. From our perspective, as an energy company, we have already we have been position ourselves as a service company. So no matter the first lifecycle usage of battery, we we are providing as a subscription model.

Not sure if we will consider to do a like a sell out type of business model, but [indiscernible] Definitely, we will provide a service based on that. But we will consider to do a sellout. But we prefer to do but our thesis is to remain providing the services I have another question online. Are there any plans to license your technology patents to diversify your revenue?

We have There's two ways that we make revenue from licensing. One is we sell kits and parts to powered by the Go Grow Gogoro partners, as Henry just mentioned, the PBTN partners. And so that's effectively a licensing revenue business.

We also already have licensing businesses with our software programs in international markets where for all batteries swapped There's small licensing fee paid back to Gogoro. We would be open to broader licensing programs in foreign countries with swapping networks with people who are interested in taking the battery pack design and deploying it locally in country We're open to lots of different models. We're open to lots of different partnerships. And would encourage anyone who's interested in working with us just to reach out directly. And see how we can help. Our fundamental objective is to make urban mobility cleaner, greener and more sustainable. And so if we can help people in a variety of countries achieve that objective and collectively make the world a cleaner place, then we'll be happy to do that.

So at this time, there are no further questions.

I will turn the call over to Henry for some few closing remarks. Thanks, Annie. If you take one theme from today's call, please know that despite our recent challenges, Gogury is laser focused and completely committed to our customer experience and the goal of profitability. So thank you for your support of Goguru and thanks for calling into today's call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.