Helbiz, Inc. (NASDAQ:HLBZ) Q2 2022 Earnings Conference Call August 15, 2022 4:30 PM ET
Company Participants
Gary Dvorchak – Investor Relations
Salvatore Palella – Founder and Chief Executive Officer
Giulio Profumo – Chief Financial Officer
Operator
Thank you for standing by and welcome to the Helbiz Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today’s program will be recorded. If anyone objects, please disconnect now. I’d like to introduce your host for today’s call, Gary Dvorchak, Managing Director with The Blueshirt Group. Mr. Dvorchak, please go ahead.
Gary Dvorchak
Thank you, operator, and hello, everyone. Welcome to Helbiz second quarter 2022 results conference call. With us today are Founder and Chief Executive Officer, Salvatore Palella; and Chief Financial Officer, Giulio Profumo. We issued our financial results press release today after the market close. It’s available via newswires and on our website at investors.helbiz.com. A replay of this conference call will be available later today on the Investor Relations page of our website.
Please note that our press release and this conference call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors. Helbiz can give no assurance that these statements will prove to be correct. We have no obligation to update these statements.
I will now turn the call over to Salvatore to begin.
Salvatore Palella
Thank you, Gary, and good day, everyone. Thank you for joining today’s call to review our business performance and financial result for the second quarter of 2022. I will provide a business update before turning the call over to Giulio for the financials.
To start off, I want to make you all aware that we have focuses our world team from top to bottom to drive healthy profitable operation as quickly as possible. We spent a lot of effort and money over the past year building our infrastructure. We introduced many attractive product and service and in general prepared for explosive growth. These require large investments, which you have seen in our operation expenses and capital spending. With this foundation in place, now is the time to convert our investment into profit. We directed our team to shift their mindset to cost-effectiveness, efficient use of capital and a bottom line focus. Our immediate goal is to drive margin expansion, show operating leverage, conserve cash and invest smartly and effectively.
In the second quarter, we saw initial sign of success. In our core mobility segment, cost of revenue declined 70% versus last year. We believe we can continue to scale mobility by growing revenue rapidly and expanding gross margin while controlling operating expenses. This will be primary goal upon which every employee of Helbiz will be judged, starting from me. Our focus on cost of margin does not deviate from our effort to drive growth. In that regard, performance in the second quarter was quite solid. Revenue of $4.4 million was up 46% year-over-year and 32% compared to the first quarter. Revenue growth was driven both by increasing license and rising in our core micro-mobility business and by our entry into media and food delivery last year.
As our core business, mobility saw solid growth in the key measure of quarterly activity platform user and trip. The growth reflect rebounding travel and the important season factor, the arrive of the warm weather. Our team is doing a remarkable job of navigating a complex regulatory environment. We are working closely with City Officer to ensure that we provide a safe, reliable service. As of June 30, 2022, we owned 50 licenses in 38 cities in both the U.S. and Europe. To sustain this high pace of expansion, we have built our fleet and operating teams. In Tampa, Florida, we were selected as a new vendor to replace an existing operator. Expanding fleet, Michigan and Miami-Dade, Florida are on plan. We also received an expansion for our license in Washington, D.C. and continue to be the only operator in Miami.
Looking abroad, we recently expand our global presence into Australia. We are partnering with Logan City Council of the Queensland, Australia to initiate trial operation. We are also starting a program with alloggio, a leading local holiday rental operator, to offer our scooter to their guests. In Italy, we are partnering with Universal Pictures to acquire local rider with a file activation with the new Minions movie. Even with the near-term goal of scaling the profitability operation, we are not ignoring the massive long-term opportunity. We signed a letter of intent to acquire Wheels, another leading micro-mobility company in the U.S., and the integration is underway. We will update the market as it progress.
Also looking long term, just last week, we introduced taxi hailing to our app. This service enhances our mobility offering to our customer, for example, enable them to utilize Helbiz even in bad weather. The opportunity here is in order of magnitude greater than scooter alone, and it’s capital-light since it does not require us to invest in vehicle. You will hear more about this new product as we rollout in the coming months. On our technology front, we are investing to future develop safety technologies. In early July, we introduced HelmetChecker, our self-development, real-time helmet verification function. HelmetChecker is part of the Helbiz app, of course, but also can be licensed by other in our industry. As an industry leader, we are motivated to promote safe driving of all micro-mobility vehicles.
Finally, to fund growth, we are building our liquidity. In July and August, we complete a $5 million financing that is part of a planned green bond issue that could be up to $50 million. Our bonds are considering green and can tap a wider pool of investor due to the sustainability initiative we launched last December. Those guidelines reflect here our commitment to ESG science in action.
Now let me turn the call over to our CFO, Giulio Profumo, to discuss our financial performance for the second quarter. Giulio?
Giulio Profumo
Thank you, Salvatore. Our detailed financials can be found in our earnings release and 10-Q filings. So we will concentrate on discussing the drivers of financial performance. Keep in mind that all figures given are for the second quarter of 2022 and all comparisons are with the second quarter of 2021, unless I note otherwise.
We delivered another strong quarter and a solid financial performance despite continued headwinds from industry, supply chain issues and inflationary cost pressures. Both year-over-years and sequential revenue growth was an all-time high in Q2 with strong growth in mobility operating metrics. Revenue of $4.4 million was up 46% from 1 year ago and 32% sequentially.
Mobility continued to show improvement with strong top line growth, contributing 62% of total revenue, growing 72% sequentially due to the growing fleet size and growing awareness, coupled with the strong utilization due to the seasonal factor of warmer weather. Revenue is still dominated by pay-per-ride, but subscriptions are gaining tractions. Overall, the continued strengthening of the U.S. dollar had an unfavorable impact on revenue. In constant currency, mobility revenue would have been 8% higher in Q2 2022 than what we reported. Across regions, strong mobility revenue was driven by solid performance in the key metrics that measure the usage. Quarterly active platform users were up 90% sequentially and up 47% year-over-year. The number of trips were up 71% sequentially and 6% yearly.
Looking at the other lines of business. Media continues to be an engine of growth, contributing 34% of total revenue. Most media revenue came from commercialization of media rights and Helbiz Live subscriptions. We’re building momentum in Live subscriptions through the Helbiz Unlimited offering. Helbiz Kitchen revenue nearly doubled sequentially as we continue to build awareness of this service in our initial test to market, Milano in Italy.
Turning to the costs and expenses. I want to reiterate Salvatore’s comment that Helbiz is now 100% focused on getting to profitable operations. All costs and expenses are subject to review. We will continue to invest in growth, but we are doing it more effectively and efficiently. The first area of success is mobility cost of revenue, which decreased by 17%. We’re constantly looking for places to automate our operations so that we can increase efficiency, customer service while decreasing costs. This allows us to quickly identify inventory to move the popular spots of vehicles which may need a battery change.
Meanwhile, total operating expenses doubled versus last year, reflecting our rapid growth. Overall, cost of revenue was 69% higher mainly due to the content licensing expenses in media, offsetting the improvements in mobility. Going forward, look for much more subdued OpEx growth as we focus on leveraging the infrastructure we have built over the past year.
Digging into operating expenses for the quarter. R&D expense growth represents some investment in our in-house engineering team to further optimize our operating systems and customer-facing apps. Sales and marketing expenses grew from last year, demonstrating our commitment to advertising, promotional and business development, especially after the launch of media and food delivery offerings. We incurred $1 million in non-cash stock-based compensation expenses, which accounted for almost 5% of the total operating expenses.
Turning to our balance sheet and liquidity. At the end of Q2, cash and equivalents were $2.5 million. During Q2, we used cash to invest in growth, in particular the purchase of new electric vehicles to expand the operating fleet in several new cities. Keep in mind that our capital allocation approach is to prioritize investments in attractive markets where we are positioned to grow. We focus on initiative that strengthen our platform, geographic footprint and customer reach, which in turn lowers our customer acquisition costs, increases the lifetime value of our customers. Our growth goals are aggressive. So naturally, we are focused on maintaining a healthy level of funding.
In April, we secured $10 million of capital via two convertible notes. And in July, we completed a $2 million financing through an issuance of a note and further raised an additional $3 million via convertible notes. With the increased liquidity, we remain confident with our ability to fund the business and pursue our objectives. We’re always exploring cost-efficient forms of capital to fund the business and opportunities to further optimize our capital structure.
Looking ahead, we expect third quarter revenue to be up sequentially as we benefit from the higher fleet utilization due to the seasonal factor of warmer weather. For the full year 2022, we reiterate our expectation for revenue to double. We’re solidly on track to achieve this goal.
Now let me turn the call to Salvatore for some closing remarks.
Salvatore Palella
Thank you, Giulio. Q2 was a pivotal quarter for Helbiz. We intensify our focus on operating profitability, putting every cost under the microscope to ensure that we are driving profitability operation. Revenue grew substantively, and we expanded our operating footprint with more license in the U.S. and our fleet size grew as we deploy new vehicle. We also started licensing our helmet compliance technology, creating a completely new revenue opportunity.
Most importantly, we are building the foundation to capture the massive long-term growth opportunity in front of us. We also just announced the Helbiz taxi-hailing service within our app that expand our mobility offering in a high-value, capital-light way. When we look to the future, we have never been more excited about what we can accomplish in the near-term. We thank you for your interest and support and look forward to reporting our progress to you again in the months ahead.
Now I will turn the call back to Gary to wrap up. Gary?
Gary Dvorchak
Thank you all for joining the call. If you have any follow-up questions, please do not hesitate to contact us by e-mail or phone shown at the bottom of our press release. This concludes today’s conference call. Thank you for your participation. You may now disconnect.
Question-and-Answer Session
[No Q&A session for this event]
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