The scooter wars might be over, as Lime claims victory

The shared electric scooter business has gone through a series of ups and downs over the last few years — mostly downs, if we’re being honest — but now, one company is ready to claim the mantle of victor.

Lime released a new set of financial figures that it says proves that last year’s slim profits were no fluke. The company reported gross bookings of $250 million in the first half of the year, a 45 percent increase over the same period last year. And it’s touting an adjusted EBITDA profitability of $27 million — the first time the company has achieved this for the first half of the year and a 45 percent margin increase over last year — and an unadjusted $20.6 million profitability.

To say that Lime is feeling itself would be an underestimate. As other micromobility firms continue to shed staff, exit markets, and burn cash, Lime says it is proudly trending in the other direction. The company is not sharing all of its metrics, like revenue and costs, but it says that it’s on its way to another record year.

“I think historically people always believe there’s demand for micromobility, but this is an industry that is littered with dead bodies of people who just can’t make this business work,” Lime CEO Wayne Ting said in an interview with The Verge. “I think we are going to deliver tremendous profitability and hopefully even get to free cash flow positive.”

Being cash flow positive means Lime has more money going into the business at a given time than going out. But it’s not the same as having net income or being profitable after adjusting your earnings. Ting says being free cash flow positive would mean Lime wouldn’t need to raise venture capital funding (which would be tough in this economic climate anyway) to grow and maintain its fleet of e-scooters.

“We get to the point of sustainability, which is always kind of a dream for business like this,” Ting said.

If this sounds familiar, you’re not wrong. Lime has been flirting with full-year profitability as well as being free cash flow positive for a number of years, but covid kept throwing a wrench in those plans. Also Ting is not saying that Lime is guaranteed to hit those benchmarks by the end of this year. The shared micromobility business tends to slow down during colder months. And Paris recently voted to ban rental scooters from its streets, a setback for Lime and other operators.

Still, Ting said that Lime was still posting impressive ridership numbers in North America, Europe, Australia, and New Zealand. And with all of the right numbers trending upward, Lime is positioning itself for a possible IPO, which could bring in a broad cohort of new investors.

“We have all of the ingredients now to tackle, to take advantage of a traditional IPO just as the market is coming up,” Ting said. “So I feel really good.”

An IPO probably isn’t likely before the end of 2022, Ting said, adding that a lot is riding on a bunch of other expected tech IPOs, including Arm, Cava, Stripe, and Instacart. “They are going to set the mood for the reopening of the IPO market,” he added.

Ting has been teasing an IPO for a while now, and for good reason. In the wake of the covid pandemic, a host of startups went public by merging with shell companies called SPACs, or special purpose acquisition companies, as a shortcut to an IPO. Bird, Helbiz, and a number of other scooter companies merged with SPACs, as did a wealth of transportation startups of dubious origin. And in late 2020, it seemed like Lime would follow suit, reportedly holding talks with investment bank Evercore about going public via SPAC.

But as the SPAC craze died down, Lime remained a private company. Ting said it was the right decision, pointing to the struggles of competitors like Bird and others that have seen their stock price tank as investors grew doubtful about the future of shared micromobility.

“I think a lot of companies [that] should not be public went public,” he said.

Bird, which helped kick off the shared scooter boom in 2017, has been an interesting contrast to Lime. The company’s post-SPAC experience has been pretty rough, including a going concern warning, a disclosure that it had overstated its revenue for two years, and a merger with a Canadian company that licenses its name. Now, it has abandoned its efforts to build its own scooter and is buying them off the shelf from Chinese manufacturers instead. It is also pulling out of markets in an effort to reduce costs and rightsize its finances.

Meanwhile, Lime has doubled down on building its own scooter, which is expensive but necessary, Ting said. Lime needs to build its own bikes and scooters, he argued, because it helps differentiate the company from its competitors, both for riders and cities that regulate the fleets. And because of that, Lime has seen its unit economics (how much revenue each individual scooter brings in for the company) improve over time. Each scooter now lasts on the road for an average of five years, Ting said.

“We’ve made an expensive choice and kept with it for six years now,” he added, “which is we’re going to build our own hardware.”

Ting went on to criticize his competitors for “outsourcing and abandoning” their internal research and development programs in favor of off-the-shelf parts. And he worried the scooter industry would slip back into the bad old days of cheap scooters that would break down after several months of use.

But as Lime pulls away from its competitors, the hope is that it can sustain its growth ahead of a possible IPO and beyond. Lime wasn’t the first to offer shared electric scooters for rent — that distinction goes to Bird — but it may be the last scooter company standing, especially as others merge and the industry continues to consolidate and evolve.

“There’s tremendous growth for the whole industry, not just Lime,” Ting said. Historically, “people have not run good businesses against that growth… We got to be running sustainable businesses that can stand [on] our own two feet. And this is what Lime has been able to prove over the last year and certainly this first half of this year.”