GreenMobility A/S (GREENM.CO) Earnings Call Transcript & Summary

Welcome to today's event where we have the pleasure to present GreenMobility to help us through today's presentation, present the results and answer questions in the end. We are joined by CEO, Kasper Gjedsted. In today's presentation, we will cover the H1 report we sent out last week, following also a guidance upgrade during the summer. As always, there's a box down below. Do feel free to ask questions. We will run the presentation and take the questions in the end, but do feel free to fill in questions down there. Also do feel free to do it in Danish, I will try and translate to the best of my ability. But for now, I will hand the word over to you, Kasper.

Thank you very much, Michael. So yes, after this small disclaimer, just a quick intro to me. For those of you who haven't met me before, I come from the traditional car rental industry. I was very young -- at a very young age, I took Sixt from EUR 17 million to EUR 100 million in revenue in 4 years' time and profitability throughout all of the years. I did the same for Avis, transferred that company -- transformed that company from a loss-making company 5 years in a row to making the biggest profit in just 18 months and also going from 2,300 vehicles to 5,000 vehicles in the same time. Then I've been in the software industry. I've been working for A.P. Moller - Maersk. And then in 2023, early 2023, I came to GreenMobility. And for those of you who don't know anything about GreenMobility, it's a car sharing company, car rental company, a digital car sharing company, I may say. You can rent our cars just by having an app in your hand. You stand next to the car, swipe on the app, open the car, drive to wherever you need to go. And then when you're done with the car after 10 minutes, 10 hours or 10 days, you just swipe again, and we will take the money from your account and you will get an invoice from us. It's as easy as that. And more than [ 1,000 ] people are doing that on a monthly basis now. And GreenMobility, just very shortly on our story here on our journey. When I came in, in March of 2023, GreenMobility was an international car sharing company with an international growth strategy. But we changed that over 2023. The [ textbook ] international growth was no longer valid because of the interest rates going up and all the things that happened in the world with inflation and so on. So we changed the strategy and move all of the cars from the international markets, closed down our subsidiaries in order for us to focus just on the Danish market. And as you can see on the results that I'm going to present in -- for the first half of 2025, I think that strategy has worked very well. Our fleet consists of primarily Renault Zoe’'s. I'm sure that if you have ever been to Copenhagen or Aarhus over the last 12, 18 months, I'm sure that you've seen one of our cars. So Renault Zoe’'s’ is the backbone of our fleet. It's a small city car with a relatively big-sized battery. We also have vans, cargo vans. We have premium cars, primarily Polestars and Renault -- excuse me, Renault Megane. And then this year, we have introduced a 7-seater car, the ID. Buzz for groups and sports clubs and all sorts of activities where you cannot fit 5 in a car. And that has also worked very well. It's also very good for the airport, by the way. I know that because my wife is not traveling light. So we took one to the airport with all of our bags -- all of her bags, I should say. Anyway, that was about our fleet. Now let's have a look at the results for the first half of '25. The revenue increased with 29% up to DKK 74 million, a very good growth rate that we see for the revenue that has really picked up. And on the EBITDA level, that's an even better improvement, 76% up versus first half of '24. And not least, our profit here is now around DKK 6 million compared to the first half of 2024 where we lost around DKK 24 million, DKK 25 million. So it's an improvement of more than DKK 30 million in just 12 months here. And I think that speaks volumes of where we have moved in the direction that we're moving for this company. So if you just look at some of the highlights I just mentioned, the increase in revenue, 29%. I mentioned the 76% increase in EBITDA, which is a result of this change of strategy and our ability to implement the strategy. I mean our operations has become much, much better, much leaner. We have a laser focus on our costs, and we can see that the cost of acquisition of customers is also going in the right direction. So I think we have a very well-driven company now. I still think there's a lot of opportunities to make it even better. Maybe we get a chance to talk about that a little bit later here in the presentation. And what is also important is that we now see the financial expenses are lower, driven by a lower debt. I have a slide on that after this one. But combined, we were able to raise the lower end of our financial guidance for the whole year on July 8 that we communicated to the market there. So really, really good strong cash flow development from operations, as you can see as well, up more than DKK 15.5 million compared to last year, also a very, very big positive change in that. And then one other, I think, noticeable event is also that we had a court case. We had a claim from the minority shareholders in the Belgium company that we decided to close down that decided to run a legal case against us. And we were very clear from the very beginning, we didn't think that there was any chance that they would win that and -- or the court agreed with us on that as well. So very satisfied with that. Obviously, they can take it to the next level court. So let's see they have -- I think it's this month and let's see what the decision will be, but a very strong foundation if they -- we have -- if they decide to take it to the next level. If we look at the balance and the cash flow, as mentioned, the loan and lease liabilities has decreased, and this is what has led to the lower financial costs. If you look at the loan obligations, they're down 19%. And if you look at the lease liabilities, they're down 11%. So also a very, very good development in that. The cash flow, as mentioned, strong development in cash flow. And it actually means that we are now self-sustaining with a self-sustaining profitable business. Cash position in the first half of '25 was DKK 8 million. And this stronger balance, it just gives us a whole better foundation for negotiating and making our financial terms even better with our finance partners and the banks. So very, very optimistic when the ball is rolling in the positive direction, it's much easier to make it roll even faster, if you know what I mean. And just a little notice because I think the cash flow shows a very good -- it paints a very good picture of our development as a company over the last 3 years, like since 2023, when I came in, we had a very weak balance sheet and weak operations. So in '24, we changed that. We moved the cars. Obviously, that cost a lot of money to close down all the international markets. So we had a weak balance sheet and a strong -- but a strong operations. But now 2025, I think this is where we really can see the results of the change in strategy because now we have an even stronger balance sheet and even stronger operations. So very -- I think it's a good picture of the development that we have been through as a company. And that ends up with the guidance. On the 8th of July, as mentioned, we increased the low end of our guidance so that the guidance is now -- there's going to be a revenue growth for the whole year of 10% to 13% and an EBITDA growth of 25% to 40%. So that's for this year. And then I think it's one of the events and one of the things that was major in the first half was that I publicly went out and said we are ready for self-driving cars, robo cars, if you will. And I went to [indiscernible], one of the biggest newspapers in Denmark, and we had a very good article there because the fact of the matter is that the technology is there now, and we are ready. And I think we have a very, very strong case as a company for taking and owning this space of self-driving mobility in Copenhagen, in Aarhus, but well, in general in Denmark actually because we have the customers already. We know where the customers are going. We know when they're going. We know which cars they drive in. We know how much they're willing to spend and so on and so forth. So we're sitting on a -- I think I mentioned it before, I think we're sitting on a gold mine of -- gold or a pile of gold in terms of data that really has some strong, strong potential. So I can't wait to get this technology phased in, in Denmark. It will give us some tremendous positive changes to our P&L as well. And I don't know, maybe, Michael, I think I can talk for hours about this, but maybe we should actually have a whole event about it.

Yes, I think so and dig a little bit deeper into how can this actually boost your business, where will they lower your cost, what are the ups and downs and how actually your business will look if you had running a self-driving cars. I think we should take an event where we dig into the assumptions and all the parameters of that.

I love to do that.

Perfect.

Okay.

Yes. Well, let's jump into questions. We have a lot. So is the [indiscernible] experiment, you're testing using satellite cities and see if it's profitable. How has those trials shown? And does it look like you can use satellite cities, meaning you can increase the area where you are situated and which city could then be the next?

Yes. So we did test together with the EU and [indiscernible] the region in so far to check if it was viable business for us to be in what we call [indiscernible] whatever we call it here up there. And we have concluded that it was actually a good idea. And we see a good business up there. We see that there's a good positioning of the cars between the major zone that we have and then all of these satellites. We also have satellites in other places like [indiscernible]. And what we do is that we put a one-way fee of them on these satellites. So if you drop the cars in one of the satellite zone, it's going to be -- it's more costly than just to take it within the main zone. But it was a success, and we are continuing to have it. And obviously, we are looking into other zones as well.

And you can -- I guess you don't want to tell your competitors [indiscernible]. Perfect. There's a question here. You had a negative bottom line in Q1. Why didn't you present that in the Q1 trading statement? And why did you have this deficit in Q1 all the way down on the bottom line?

So we didn't present it because it was not a part of our guidance. And with regards to Q1, Q1 is always the weak quarter for us. It's like [indiscernible] has a weak quarter in Q1, I'm pretty sure as well. Not as many people wants to take a car -- well, first and foremost, they spend all their money during Christmas on Christmas gifts and parting there. And it is the lower months for us. There are not so many customers in the city who are willing to take a car. They also don't have -- they're not going to whatever places they're going like a summer day to the beach or something like that in January. So they are always -- Q1 is always lower than that.

And it's a trading statement you released in Q1 and Q3. Is that correctly understood that you only give the main numbers. Is that how -- is that correct?

It's correct.

How has the beginning of Q3 developed and which factors have been important? I think everybody is talking about the weather and how bad that has been. Maybe that's actually pushing people into your cars, I don't know. So a little bit about how Q3 has started and the 1.5 months to report it and whether you see some factors being important for driving growth?

Okay. Let's talk about the weather to begin with because it is actually a factor. So in the winter time, I'm always crossing my fingers that it's going to be rain and wind and all that because then you don't want to take your bike. You want to go into a warm, nice EV, right, take that to work or wherever you're going to, your family or whatever arrangements that you're doing. In the summertime, it's the opposite because I really hope that it's good weather so that people will go to [indiscernible] or to the beach or arrange something in Funen or whatever. It's a little bit different. That was the weather aspect. The second thing is that in the first half, we also put in -- compared to last year, we now have more cars in, substantially more cars in. So the big [ jog ] about that was the uptake to cover all of these new cars because one thing is you can put in as many cars as you want, but that doesn't give you an increase in customers necessarily. You have to fill out those cars that you put in. So the big [ jog ] for us was if we could fill up all of these new cars to the markets in Copenhagen [indiscernible]. And I think we have succeeded in that. I think our growth numbers for the first half here shows that.

And you want to allude a little bit about how it has went since the end of the second half, July and this of August. Just I know you can't give us any figures, but is it running according to expectations or...

I think it's too early. I mean the summer is not over yet. And so I prefer to wait until the summer is over. I mean today, I think it's 25 degrees and the sunshine outside of these office windows. So let's wait for the summer, and we might come with an update there.

Perfect. And what is driving the customer growth? Do you have any idea what is driving in customers to your platform? Can you see that somehow what is actually driving this?

Yes. I think we have become even better at utilizing the vast amount of data that we have here. So we have become better at selling more to the existing customers based on the data that we have, all of the data that we have. We have millions of trips, millions of customer data. We have become even better at doing that also automated. We've been doing a lot of automation for our communication. And we have full control of the cost of acquisition of the customers versus the lifetime value and so on and so forth. The search engine results are quite unique. If you are doing the search engine search on words like car rental, car hire, whatever in Danish or in English, GreenMobility is at the very, very top of that, which is quite unique compared to the -- some of our competitors, which are the old-fashioned car rental companies and also the other car sharing companies. We are #1 without comparison, have the best positions in Google. And that's worth a lot of money. That's worth a lot of money and a lot of new customers.

Perfect. Do we have total freedom to decide the prices of the car trips or are they somehow regulated by the cities you're in Copenhagen and all?

We have total freedom. One of the things that I actually want to do is to change the prices more regularly. Our current software platform is not working well in terms of that. And I can comment a little bit about that platform as well. But the current platform we have is not good at regulating prices. It's a very, very stiff system. But the new platform that is coming hopefully very soon. I think I promised it before the summer. It's unfortunately seen some delays. That will be -- that will enable us to steer the prices much more based on the demand situations throughout the day and throughout the week and throughout the months.

Perfect. But as I understand, you are not capped by -- it's not like taxis or anything. You are not regulated by...

No.

Then there's a little bit about a listener on the last broadcast didn't understand how the competitive situation are, whether you are the sole car sharing company operating in Copenhagen or do you have some small competitors? So you can kind of paint the picture on the competitive situation, where -- I know there's competitors, are they big? And do they -- which operating model do they drive?

Yes. I used to say we have a lot of competitors. So direct competitors, we have, for example, [ Hyre, ] who's also a car sharing company, they're owned by Moller Group in Norway, which is a very, very big financial heavy competitor that we have from Norway. They are operating on what we call a fixed base scenario where you have to pick up the car and return it to the same location. They're also driving diesel cars, gasoline cars. That's not our model. So those are in. We have a few others that are also direct competitors. And then as I say, we have a lot of competition. We have the bikes in Copenhagen. There's a lot of competition from them. I took the bike myself today, right, to work because the weather was beautiful, and I love to bike when the weather is good. But when it rains or if there's a little bit wind, I always take a GreenMobility. So -- and we have the trains, we have the buses. We have a very narrow network for that. So we have a lot of, a lot of competition actually, a lot of opportunities, alternatives for people to choose another mean of transport, the metros and so on and so forth.

And the size in Copenhagen on the pure car sharing, do you have that? Or do you want to...

Yes. So what I've said from the beginning is that we are pursuing a total dominant strategy. I think we are at least 4x bigger than our closest competitor. And that's why we want to dominate the market completely and move away any opportunity for making huge gains in taking market shares. So we will fight for every customer and for every car and put in more cars as necessary, expand our zones and so on, whatever it takes to defend our market shares as long as it is profitable.

And then to the self-driving cars or robot cars or whatever we should call them that, that's a question. One is, in general, is there anything new you can elaborate on, and I think let's do the event. And then also, what's the next step for your self-driving cars, the next step, strategic step for you? Is that choosing a partner? Is that the next natural step? And could have -- could it give meaning to have more partners? Or should you choose a technology platform?

Well, we are working a little bit behind the scenes here because what we're actually waiting for is not the technology. And it doesn't really matter about the partner per se right now. What matters is the legal framework that is not done by the EU and by the National Parliament in Denmark and by municipality and the Ministry for Road Transport and so on and so forth. We need that legal framework. And that unfortunately can take some time because, as I mentioned, we are ready from our side. The technology is ready. And in terms of technology, I think there are 2, maybe 3 models, but the 2 predominant models that we see right now is that the OEMs are delivering a self-driving car completely, which is born self-driving. And the other model is where you are teaming up with a supplier that is delivering the LiDARs, the software, everything that is needed and then you install it in your existing fleet or in a new fleet, which is -- which actually makes it totally brand or OEM agnostic for us. So we have a lot of opportunities. And from a cost perspective, we can see that the development in cost, for example, the LiDARs, the radars that you have to put on the roof to give you a 360 view is also coming down dramatically these years. So I mean, if we have to wait a couple of years, it only speaks in favor of the cost side because the costs are coming down. We will see more producers, more suppliers in this space as well for the software, for the hardware. So I mean we are -- we have reached out to the major players. We are ready whenever the municipality, the parliament and the EU parliament are ready. But I don't expect that to be this year or next year per se. But it could go faster than anyone envisages. All of a sudden, it could be there, and then we are prepared.

And are you lobbying for it somehow meeting with politicians?

We are indeed because this is -- as I mentioned before, when we look into the simulations on how this can impact our P&L, I mean, the results will be outstanding. So it's something that we really, really want to do. And personally, I can't wait.

Is the Denmark-only strategy permanent?

It is for now. I think it's only a couple of years ago that we changed our strategy from this internationalization strategy to focus on Denmark only. So that's how it is for now, and that's what we have communicated.

And then there's about the expectation for the second half is lower than what you realized -- the growth expectation for the second half is lower than what you realized in H1. Are you expecting any kind of a slowdown in market, something you have seen out there that is making you less confident on keeping the growth?

I wouldn't phrase it like that, but what I'm -- well, the story about this company is that we have overpromised and underdelivered. I mean, before my time, that was -- that's the fact, right? And everybody who knows that -- everybody who's in this meeting who's been with us for years, they know that. And I don't intend to do that. And I think that's -- I think we have shown that during my tenure at least that we are -- what we are promising is also what we're delivering at least. We have a competition right now. We see that between Bolt and Uber, for example, that entered the market, which is a bit fierce. It's the taxi market. I realize that. But that is one of the bigger things that we don't know which direction that is going, if it's going to be a full on wall between 2, really masters of software and finance. A lot of capital is backing them up. So let's see how that goes, one. And two, we also need to finalize the summer here. I need the summer to be completely done before we sort of sit down and take a look at the rest of the year one more time.

Perfect. How many clients are you running in Denmark? And how many employees do you have today?

So we have around 1,400 cars. And here, if we look away from our service center, we are only 12 people in the administration today. And I think what is interesting is that if you look -- I think you can also see that in the H1 report, even though that we have grown 30%, 29% on the top line and had a tremendous impact -- excuse me, a tremendous development in EBITDA and our costs, we haven't increased our total salary. So it's the same amount of people who are able to increase the revenue with 30%. And I think it's the same amount of people from an administration point of view, who are able to increase it even further. So our economies of scale are really, really good here. And we see a lot -- a good trickle-down effect from what we produce on the top line is also going straight down to the very bottom line.

And cars, that 1,400 still is that...

It's 1,400, yes.

Then is it the long-term leases or -- leases, isn't that the word in English or the short trips that are driving your growth? I know you have a strategy also looking at longer-term leasing weeks, months, maybe even I'm not sure whether that's a big part of your strategy. But can you elaborate a little bit on what -- which part of the business that is driving your growth?

I think it's a good mix. I think one of the success stories about this is that we have been able to create a good mix. I'll give you an example. So in the summertime when all of our commuter customers are going out of the city for vacation, we are actually morphing into what we call more of a traditional -- except that it's not traditional, but more into a rental car company where the customers are renting the cars for 3 hours, 5 hours, 1 day, 2 days, even for weeks for their summer vacation. So I think this mix is pivotal to the success that we have seen in H1 that we can take up some changes in demand over the year, and then we can substitute that with other types of customers, and that has been very strong.

Perfect. Then there's a question to your balance sheet. I don't know whether you have the figures in front of you. Your total debt and how much are you paying off of that debt per month?

I don't have that on top of my head, but we have -- on the 27th of August, we have a live event actually where everybody is welcome and where our CFO is also present. So that's where we can talk about the more nitty-gritty stuff in terms of that. So everybody is welcome on the 27th of August.

Is there a way you can cap the risk on the -- you run on the resale price of the cars you get rid of?

Say that again, please.

Is there a way you cap -- put a cap on the risk you run on the resale prices of the cars you get rid of? Is there any way where you're capping the risk of running a fleet?

Yes. So I can see -- I can tell you that we have a mix. The all cars that we have taken in after I got in, we have actually sort of insurance built into that so that -- residual value insurance, as I call it, it's an agreement where there's a buyback at a certain price. So we can never go below that price. So that's one way of mitigating it. That being said, I also think that we have a very good and conservative write-off strategy and the residual values that we are looking at when the leases are ending, are very conservative. I mean it's partly the value of the battery that we have put in there. So we have a good development in writing off the cars and also when they near the end of time in our fleet, I think we stand on a very strong ground in selling them. And also to that, mitigation on that is that we're not selling 1,400 cars overnight. It's a long process because we have a lot of the same white cars, and that's not good for reselling, those cars. So it will be a long process. It's the same as an airline company. They're also not changing their fleet overnight. If all things have changed, it's a long stretch. And that's the same that we are doing with our cars.

And I guess another strategy could also be lifetime prolongment. So you have a better way of -- are you also seeing that -- are you working with that? I don't know whether that's possible on cars, prolonging the running lifetime of your car because as we can see now, they run in cash, so they must have a value.

Yes. But you're right on that. It's also something that we're looking at. I think one of the big changes to the whole setup of ICE cars, internal combustion engine cars versus electric cars is that electric cars just runs much more and much better when they're aging. That's also what we can see with our cars. I know I've been in the rental car industry. I know how cars are developing over time in the rental industry. But the fact is that electric vehicles do not need to change as many parts from a mechanical point of view as an ICE car. That means that it actually pays off to keep them a little longer and to get your TCOs lower on that one. And it also gives you security in terms of the residual values at the end here. So the longer you have them, the more security you have in your residual values. So yes, definitely compared to the old-fashioned car rental companies and the leasing companies, these cars can now be kept for longer. And I think it's a change that we will see not just in our end of the business, but probably also in the leasing world where we will keep -- where the cars are being kept for longer because all of the reparations are not coming to the same extent as we see with ICE cars.

Perfect. Do you see any M&A opportunities?

Probably it's not something that I have any comments on for this.

It is not whether someone is bidding on you, are you also looking at M&A opportunities? Is it a part of your strategy? Or would you like to grow organically?

It's not part of my job. You have to ask the Board about that.

Yes, but I will redirect the question to them. Are you comfortable with your capital structure? Do you see any need for raising new capital?

No. I mean I think we are -- I think I have to give the normal, I don't know what you call it, a standard answer for that. We are constantly monitoring our -- how that looks, and we will act accordingly. That's the standard answer.

Perfect. Yes. But I think that was the last question. Thank you, Kasper, for taking us through your results and answering questions, and thank you for the audience listening in.