InsightEV Daily Update
Gogoro Q3 Results...
Gogoro’s Q3 2024 results
Yesterday afternoon (GMT), Gogoro released its Q3 2024 financial results. We have been critical of Gogoro’s business plan for some time. We feel the company is burning cash and must correct its course for a better future.
The Q3 results continue the disappointing financial performance from previous quarters. Gogoro reported revenue of USD 86.9m, down 5.3 percent year over year (down 3.4 percent on a constant currency basis).
The gross margins dipped to 5.4 percent, down from 18.3 percent in the same quarter last year. The non-IFRS gross margin was 14.7%, down 4.5% year over year.
Gogoro reported a net loss of USD 18.2m, compared to USD 3.1m in the same quarter last year.
A positive development was the improvement in adjusted EBITDA, which was USD 14.1m, up from USD 13.1m year over year.
Bruce Aitken, the CFO, stated
Our financial performance is disappointing and did not meet our expectations for this quarter and the year-to-date, but our top line execution in the third quarter of 2024 outperformed the same quarter last year in terms of number of scooter orders, including our backlog orders.
Battery Swapping services lead growth
Battery swapping service revenue was USD 34.9m, up 3.8 percent year over year and 6.0 percent in constant currency.
Meanwhile, hardware sales (scooter sales) reported revenue of USD 52.0m, down 10.6 percent year over year.
Gogoro points out a backlog of 3,800 vehicles for its new launches (Jego) in Q3, and that revenue has not been recognized this quarter. This is expected to occur in Q4 of 2024.
Annual guidance
The management maintained the annual revenue guidance of USD 305m-315m. As the first three quarters have delivered gross revenue of USD 237.5m, management expectations are USD 67.5m-77.5m.
Liquidity is not a concern for now.
Gogoro generated operating cash inflow in Q3 and has been tightening fiscally. The company stated that it generated an operating cash inflow of USD 8.5m, repaid USD 9.4m in bank loans, and invested USD 18.8m in long-lived assets.
The company has USD 119.2m cash in hand, another USD 55.1m set aside as a temporary surety deposit (for the government inquiry, which should be freed soon), and additional credit facilities available.
Drop in the Taiwanese PTW market.
Gogoro pointed out that while Powered Two-Wheeler (PTW) registration volumes in Taiwan declined by 11.4 percent this quarter, the registration of total electric PTWs was up by 14.5 percent compared to last year. However, Gogoro deliveries only improved by 1.6 percent. Had they cleared the Jego backlog, the sales growth would have been 26.5 percent.
Talking points beyond the financials
Gogoro has been in turmoil in recent months. The government of Taiwan accused it of subsidy fraud, leading to the CEO’s resignation. The general counsel of the biggest shareholder, the Reuntex Group, replaced the CEO. This is what we wrote in Sept 2024:
Subsidy fraud is over for now
In September this year, the Taiwanese government initiated an inquiry into the origins of the motor controller used on Gogoro Viva scooters. The Viva uses a 3.0 kW hub motor. Using a motor controller of Chinese origin flouted localization norms that link to government subsidies for electric scooter purchases.
At the start of the call, management updated that Gogoro had been working closely with the Taiwanese government to support the inquiry. According to a report in CNA, the government has concluded that Gogoro only reported incorrectly and did not defy localization norms.
Nasdaq listing problems
With steady losses comes the problem of a falling share price, and there is a point where you start hitting the barrier called Nasdaq Listing Rule 5450(a)(1). On Oct 29th, Gogoro received a notice from NASDAQ indicating that for the last 30 consecutive business days, the closing bid price of the Company's ordinary shares was below the minimum bid price of US$1.00 per share requirement outlined in Nasdaq Listing Rule 5450(a)(1).
This does not impact share trading, and Gogoro has 180 days to rectify the problem. The management stated that they expect a solid financial plan and outlook that will improve Gogoro’s share price. However, they did mention inorganic steps to be taken if the share price does not recover, as the NQ listing is of utmost importance.
India plans
Gogoro is upbeat about its India plans. The company has started pilots with partners in Mumbai and Goa, deploying 250 Crossover scooters. Its local battery assembly unit is expected to start operations shortly. The company plans to open its network to partners as well, where it is likely to compete with local players.
Dwindling Market Cap
Understandably, Gogoro’s stock price continues to fall.
At USD 140m, the market cap is lower than the cash they have in hand.
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