The biggest concern is that the market for Livewire's very capable S2 range remains small. This year (2024), Livewire could sell 612 motorcycles, falling short of 2023 sales of 660 motorcycles.
At a quarterly level, Livewire's sales of 236 units was a 136% improvement over Q3 2024. However, yearly, sales declined by 54%. Data gets skewed because Q4 2023 was the first full quarter of the S2 platform commencing production with the Del Mar and dispatches were quite high at 514 units. Since then, two new models have been added to the S2 platform - Mulholland and Alpinsta - with no profound impact on sales.
A decline from 660 to 612 units may appear small - only 7%. However, the decline in money terms has been severe, with revenues from the motorcycle business falling from USD 11.5m to USD 8.4m, a 27% decline. The numbers for the final quarter were even worse with motorcycle revenues at USD 3.5m as compared to USD 8.0m in Q4 2023. A harder fall on the revenue side indicates that the transaction prices of Livewire motorcycles have lowered significantly.
The only positive spin we can put here is that the cost cutting measures are paying off, at least in the short-term. The operating loss was USD 110.4m, a 5% improvement from USD 116.0m operating loss in 2023. Most of the improvements in operating loss came in the last quarter of the year (after the cost cutting measures) as Livewire reduced operating losses for the motorcycle division in Q4 2024 to USD 24.7m, from USD 33.8m in Q4 2023.
“In 2024, we undertook several initiatives to navigate the market dynamics and turned challenges into opportunities to reposition the business for 2025. We now expect to reduce our cash burn by 40% or more in 2025 compared to 2024. The Company plans to continue establishing its leadership in the EV space. With our world-class products, first-class team, and best-in-the-industry retail partners, we will continue to relentlessly improve the fundamentals of the business and position ourselves for long-term success,” - Karim Donnez, CEO, LiveWire.
In FY 2024, Livewire managed to save USD 14m on administrative and engineering costs, with USD 9m of that being realised in the last quarter.
We have been fairly apprehensive of this short-term cost cutting. Most of this was driven by Livewire's move from Siliicon Valley to Milwaukee, cutting manpower with a lot of them on the development side, and losing more talent as the company made the move to H-D's HQ. Many weeks back, we wrote in our analysis.
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Such short-term cost-cutting has a likely long-term impact on the quality and speed of development.
The STACYC Segment
Livewire also owns STACYC, selling electric balance e-bikes for kids. Once profitable, many quarters back, this segment has been declining steadily, and the company has been losing sales. Q4 2024 saw a minor uptick in sales revenues (USD 7.3m vs USD 7.1m), with unit sales remaining flat at 8350 units.
However, STACYC continued to be in the red with an operating loss of USD 0.6m, compared to the operating profit of 0.4m. This marked a full year of operating losses for the STACYC segment, four quarters in a row.
The STACYC segment is likely to face more pressure in the future as cheaper options flood the market. This segment is seen as one with low entry barriers and would draw more participants, further putting Livewire under pressure.
Guidance
Livewire gave guidance of selling 1000-1500 units in 2025, a tall ask as it is unlikely that new (smaller format) products would join the lineup. The company forecasts an operating loss of USD 70m - 80m, indicating that aggressive cost-cutting may continue.
Livewire's future products depend on its partnership with KYMCO. The two had announced two maxi scooters to be built using the S2 Arrow platform. We forecast them to be launched in mid-2026. They are likely to have a greater appeal in international markets, on of the keys to Livewire achieving 2025 guidance.
Takeaways
We can slice and dice the data any which way, but 612 and 660 are both small. Americans are not taking to expensive electric cruisers, which should be Livewire's and investors' biggest worry.
Since this megatrend of Americans not loving Livewire at the current price point may remain for many quarters, the company's mid-term future depends on product rollout at significantly lower prices. KYMCO may be Livewire's savior if the Taiwanese can move fast, that is.
They haven't for a few years now.
With H-D's backing, we do not foresee any significant liquidity constraints for Livewire in the near term. Improving unit sales and financial performance is critical for shareholders and Livewire dealers.
