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

Welcome to today's event where we have the pleasure to present GreenMobility. To help us through today's presentation, the results and answer questions in the end, of course, we are joined by Kasper Gjedsted, CEO in GreenMobility. Today's event, of course, covering the Q3 trading statement, that's pretty light. We are seeing the results, of course, the focus here, but I also think we will focus on the strategic movements you have made through autonomous or self-driving cars in this quarter, we will also cover that. So maybe that's even more important than the results. As always, there's a box down below where you can ask questions during the presentation, but we will take the question-and-answer session in the end of the session. But for now, I'll hand the stage over to you, Kasper.

Yes. Thank you very much, Michael. So for those of you who don't know GreenMobility, we are a car sharing car rental company. We have around 1,600 vehicles. All of them are electric vehicles. We have a variety of vehicle groups, of which the smaller Renault Zoes is our core. But we also cater for people and customers with other needs than a small car. We have bigger cars like the Polestars, the Renault Megane and the Kia Niros. We also see a growing tendency in our van fleet, which is also a very, very popular segment. And the product is very simple. It's from a customer perspective, at least, you simply download our app. And with that app, you open the car, you get in, you drive from any point in our operating area and then you can drive outside of the operating area and you can return the car at any point in our operating area. So it's what we call a free-flow model. Essentially, you can pick it up from anywhere and then drop it off anywhere within our operating area. And thankfully, a lot of customers are doing that. We have seen a good Q3 after some delivery problems with the cars that should drive our growth for the Q2. We could see that after getting the cars in, we are back on track in terms of revenue. So just to reiterate our revenue here is it was 9% up compared to Q3 '25. And we also saw a continuation of the operational efficiency. Our EBITDA is up 12% compared to Q3 '25. And if we take the first 9 months in total and versus the same 9 months of '25, we're up 6% in revenue and 16% on the EBITDA. I'm also glad to say that we have had the first round of share buyback earlier in the year, DKK 6 million round 1. And very recently, we have started on our second round of share buyback, which is of up to DKK 5 million. And I think the Q3 and the quarter in itself was satisfactory. I think we've done well, both in terms of operational excellence, but also in terms of the demand that have picked up with the new cars that we have inserted into the fleet. So all in all, I'm happy about that. We are also within our guidance here for the year. We haven't changed that. So we've said that the guidance -- the updated guidance for 2026 is a revenue between 5% to 9% growth versus '25 and an EBITDA improvement of 12% to 16% versus '25. So we are on track with that. The 6% increase in revenue is checked. That's within that guidance for the first 9 months and the 16% is at the top level -- top range of the guidance. So that is also satisfactory. And then, of course, what we also said was that we have lived up to the communicated capital allocation strategy. That was something that we communicated around a year ago or so. And the publicly communicated capital allocation policy was that we would consider to redistribute cash once the solidity exceeds 20%. And this is what we've seen, not just once, but twice this year. And therefore, we are -- we have already made this, as I mentioned, share buyback program, round 1 and now we are also executing on round 2 on that. I think it speaks in volumes of where we are as a company now that we have that ability to pay back our investors with excess cash. That was on our existing business. As we showed also and communicated earlier, we are also pivoting into the autonomous vehicle space. We're doing that for 2 primary reasons. As I said, I normally say that one reason is because of fear and the second reason is because of greed. The first reason fear is because we don't want to stand in a situation, let's say, in 10 years' time where we will experience the same as Nokia did when iPhone entered the market or when Kodak experienced whenever the digital camera came. And we see a little bit of the same tendency with the AVs coming in. We would rather be a part of that instead of making them our enemies from day 1. So that's the fear aspect. The greed aspect is also very clear. Companies -- excuse me, cars like this, they make around 22 to 26 trips per day. And the current business model we have, which is a good model, they make around 3 to 6 trips per day. So obviously, you can make more revenue on each asset that you finance. The second part of this equation is that these vehicles make substantially fewer damages than cars driven by human beings. So what we see in all the data that we have is that they make actually 80% fewer injury causing crashes, so that's the big crashes and even fewer parking damages and so on, which we have a lot of, obviously, with the customers, the kind of customers we have. So higher revenue per asset that we finance and lower operating costs through lower damage costs and thereby lower insurance cost makes this a very interesting case. And on top of that, we know from abroad, from international markets that customers are actually willing to pay more to drive these cars compared to, for example, an ordinary taxi or even to a car sharing car. And the reason that we are going into it is because we have the operational expertise. We have millions of trips in large fleets in cities. That is actually what makes us interesting for these very big tech companies to work together with us. So we have this operational expertise. We already have a lot of data on the behavior. We own a lot of the customers that are already in the city because we are serving them on an everyday basis. We have the political connections, if you will, and insights. And so I think we are in a very, very good place. And that also explains why these very, very big companies are interested in working with a relatively small player like GreenMobility in this field. For us, it's not just about the opportunity to have a lot of customers in the inner cities. One of the surprises from this project has been how much interest there has been from cities and municipalities outside of Copenhagen and Aarhus, the big cities. So we have in Denmark, a lot of support for public transportation. I think there's only one bus route that makes a profit in Denmark. And the rest is heavily subsidized by public funds, taxpayers' money. And what we can see the tendency is that you are having around the municipalities around the cities is that it's becoming more and more expensive and less and less people are using this public transportation. And we believe, together with the municipalities, that autonomous vehicles is one of the major contributors to turning this tendency around. And that's why they are very interested. And there's a lot, a lot of business for us to gain for that, especially if we have the technology, the operational wisdom and also the good cooperation with various municipalities and regions. So we are in talks with a lot of the regions, a lot of transport -- public transport companies around building up knowledge around this so they can start to do -- adapt their tender processes to include autonomous vehicles as well. So very, very exciting aspects on this. And again, we want to work with basically all of these big software companies that it is essentially Waymo, it is owned by Google, for example, and WeRide is also -- it's essentially software companies, all of them. And we sit where the AV technology companies and the operations meet. I mean, we are the operations experts on this one. And we essentially also own the customers. So I think we have a lot of good opportunity in this space. And the very fact that they even pick up the phone when we call them is, it says a lot about where we stand on a strategic position also from their perspective. So I'm super excited to work on this. So yes, that was the quick introduction to Q3. And now it's over to you, Michael, if you have any questions.

Perfect. Let's jump into them. Yes. Let's start by the first one, the announcement this morning by your CFO and selling of shares in GreenMobility. Any comments to that on a strategic level, there are some questions here about the signal and whether there is a disagreement between your -- in the management team. So any comments about that? I know it's not common to comment on it, but maybe you have some comments to it?

Yes. Well, I have a general comment around it. I mean, the company has established a warrant program for key employees to motivate and retain them. And I'm super happy that we are in a place where Mads can execute on some of his warrants here that he has decided to do that. This is actually what the program is built for. So he's getting a sort of bonus on the good performance he has had because the warrants are at a stage where it makes sense for him privately to execute on them. He still owns warrants and -- or still has warrants in the company. I can say that, I mean, this is what the program is built for essentially. So I don't have any problems around that. On my side, I haven't executed any on my warrants. In fact, I'm quite the opposite. So I have bought more shares when the window opened also in this round, and I've done that continuously. And I will continue to do that continuously because I see so many opportunities in this company as well. I also can say that our entire Board owns warrants and they're not -- excuse me, own shares. They haven't sold out of their shares for years, I think. So I think for me, it works. The warrant program works when we have someone that we work well with and who has done well and he executes on his warrants, some of them. I think it's a very good testament to where our company is right now, and I don't have a problem with that at all.

So you are just a little bit irritated that the press only writes when someone is selling and not -- didn't watch you buying any. Perfect.

Yes, I think that should have had the headline instead. That I was buying in all the time.

That's a very direct question. I will ask you here. I know you can't answer it because you don't disclose this in your trading statements. Can you please tell us what the level of cash and the level of financial debt, including leasing is at the end of September? But now was ask...

We will have to wait for the annual report on that one. Sorry for that. I think if you have that kind of questions, I think it makes sense that you have them. I think what you should look at is that we are in a position where we're able to buy back shares. That says a lot about our cash position, I think, and we have absolutely no plans on raising more shares -- excuse me, making -- raising more cash in this company. We are today a very sound financially sound company, and I'm super proud about that.

And then a little bit back to this -- to the autonomous robot taxi. It has many names, self-driving cars. What approvals are you still needing to have to have the first car on the road? And what is the next step, you might say, in this approval process of getting the first cars out on the streets?

Yes. So you have to go through various phases when you want to have these cars on a commercial permit. So the very first phase is that you have a couple of cars that will patrol the streets of your operating area, and they will essentially make a digital twin of the city. And when they're done with that, we have a lot of -- that's the first step and then you go to step 2, that's, I would call it, the documentation step. That's when you have to document that these cars are performing so well that the public authorities believes in you, and you can only document that by driving a lot of kilometers and putting them into all sorts of variable situations and document all that. In Denmark, we have some assessors they're called. Those are the ones who on behalf of the government and public authorities are evaluating this documentation. In our case, it's a company called COWI, it's a very big engineering company who will assess the cars and how they behave in real traffic. And only after all of that documentation has been submitted, only after the assessors have approved it and only after the road directorate has approved it. Only after that, the cars will be permitted to leave the chauffeur outside of the car and drive totally autonomously. And I think we all have a very big interest in having all of the documentation in place, the car manufacturers that WeRide, we have the public authorities. #1 priority for us is safety and that the cars are substantially more safe to drive than cars driven by humans. And how long does that take, you may ask. And that's difficult to say in a Danish context. We know from other countries in England, in U.K., London, it has taken around 6 months, from going from the very first cars on the street with a safety driver behind the wheels until that safety driver can be left outside of the car. 6 to 8 months. I expect that to be around the same in Denmark. One thing you have to remember about these cars is that they have been -- they're already driving around the world. They have millions of kilometers already driven autonomously. We have essentially all documentation in place already based on the fact that they have driven so much. So now it's only the documentation in a Danish context that is needed. So I hope that we can see the commercial rollout sooner rather than later. But it will take the time it takes, and we have full respect of that -- for that process.

Yes. And so the next step, very directly, it's seeing one of the cars with the GreenMobility on the side, but there's a driver inside. That's what we should look out for the next -- as investors, I guess, is that a little bit to call it hard, but that is maybe what we should look for as the next signals from you. Is that correctly understood?

Yes, you can see that as the first hard proof of what we're saying that that's actually that we are executing on it. Prior to all of that, the first cars coming in, obviously, there is a lot of work that has been going on, very good collaboration with the public authorities. I think they are very, very proactively seeking out the opportunities for Denmark as a country, but also for Copenhagen as a city. And they really want to do this. I mean the authorities are full on supporting this one. So I'm very, very satisfied with the cooperation that we have with them.

And that's a direct question. When do you expect to see the first revenue from one of these cars? I guess you don't want to go that far, but maybe estimated time line?

No, I mean that totally depends -- again, that totally depends on when the authorities have sufficient documentation that these cars are running according to the specifications. And that's only up to the authorities to answer that. And we'll see. It is my hope that we will be sometime in '27. That's what I'm hoping for, but you'll never know. It's a big question.

I guess it's not part of your '28 growth plan. It's not the revenue you're going for here. It's showing partners that they should do it with GreenMobility. I guess that's also a signal that you must think it's maybe not more important than revenue, revenue and earnings is always important, but I guess that must also be a part of your thinking is that that's a proven, that you are -- that someone should partner on with you. You have the ability to get that through. I guess, is that also -- should we focus more on that part than on the revenue side maybe in the short to medium term?

No. I'm always focusing on the revenue and the earnings potential. That's why we're doing this. Obviously, if you can make the revenue and you have the earnings and you have proven that you have the operational success around this, we will also see other partners who wants to team up with us. First and foremost, we have to prove to them that we are good at it. I think we have a very, very good chance of that because we are so operationally strong on our millions of trips already taken in the current version of the company. So I think that's -- but we're in it for the money, we're in it for the profit, for the revenue. And as I said before, if you look at the fundamentals of this business case, they are much stronger than our current strong business case, and that's why we're doing it.

Perfect. And then a question on the operational side of the Q3. Was all 185 new cars out on the roads in this quarter?

Yes. They were all on the road in this quarter. Essentially, all of them came in. I think the -- a few came in during July, that was it, but the rest has been driving since.