Neutron Holdings, Inc. (LIME) Earnings Call Transcript & Summary

Thank you. Okay. All right, I think with that, in the interest of time, we're going to start with the next fireside chat. It's my pleasure to welcome the team from Lime to their first Goldman Sachs Communacopia + Technology Conference after their IPO earlier this year. Wayne, thanks for agreeing to conversation with me, and welcome to the conference.

Thank you for having us.

Okay, so before we get in, I'm going to dust off my legal degree and read the Safe Harbor. Before we begin, I'd like to remind everyone that today's discussion may contain forward-looking statements, and I refer you to the company's most recent 10-Q and other SEC filings for more information about risk factors that may cause actual results to differ materially from those statements.

Okay. Wayne, let me start with you. To level set for investors who are newer to the story, because you did just go public recently, why don't you walk through what the Lime story is today and the evolution that the company has been on over the last couple of years?

Sure. So Lime is the world's leading micromobility operator. Think about e-bikes, e-scooter. We're the only globally scaled player in our industry. We operate in 230+ cities, 29 countries, on 5 continents. And what differentiates our business versus other operators, and if you're following our industry a little bit, you'll know that there's been a lot of bankrupt competitors, is that we're the only vertically integrated operator in our industry. We're vertically integrated in hardware and software and operations and government relations. And we're at least 3 times bigger than our nearest competitor. And that matters because we are in a network effects business, similar to rideshare and food delivery. Scale begets scale. And the reason why all these industries are scale begets scale is that reliability matters across all three. So if you think about food delivery, people want to be on the platform with the most number of restaurants, and restaurants want to be on the platform with the most number of eaters. And rider, drivers want to be on the platform where the riders are, and riders want to be on the platform where their drivers are. So if you are the most reliable operator, you end up winning a disproportionate share of the revenue. And the great thing is, Lime is the reliability leader in almost every market where we operate. So we win a disproportionate share, and that is what's set the scene for our leadership position. When I think about the future, we're only in the beginning innings of this industry. In fact, Lime's been around for 8 years. We've largely created the micromobility industry. And what I'm excited about is that there's still so much growth ahead of us, simply executing kind of our core strategy. And frankly, there's nobody else even close. And at this point, given the importance of scale, I can't imagine how they're going to catch up in a world where scale matters and proprietary investments in technology really matters.

That was really helpful. Thanks, Wayne. Maybe just taking a half step back, frame for us the market opportunity you see. You've got your geography. You've got your products. Just for those who are less familiar, talk a little bit about what you see as the framing of the market opportunity in the years ahead.

I can take that.

Okay. Yes, no, that's right. We spent a large part, as we were prepping for the IPO, a long amount of time really thinking about the market opportunity. We built it up city by city based on where we know the unit economics can be. So we have a very thoughtful approach. We also looked at our addressable population. About 80% of our revenue comes from adults that are between the ages of 18- to 45-year-olds, so we skew younger, make at least $55,000 a year. So with that framing, we built our SAM up, our serviceable addressable market up, bottoms-up, and we see a market opportunity of $20 billion based on the markets we plan to operate in, in just the next 5 years. And the great thing about our market is it's continuing to grow because adoption is increasing every year. And what's really driving the micromobility market, there's a ton of tailwinds at our back. Think about congestion, which is getting worse every year. Oftentimes, the fastest lane is the bike lane. We skew younger, as we mentioned, ages 18- to 45-year-olds. That demographic is choosing not to get their driver's license or waiting longer and doesn't want to own a car. And then, of course, there are the carbon reduction mandates that are out there for many cities. If you look at the cities that we operate in today, and you look at our addressable population and the adoption rate, on average, the adoption rate of our addressable population using micromobility is only about 15%. But in our most mature cities, we see adoption rates of closer to 30% to 40%. We can double the size of our business in our existing cities, in the 230+ markets we're in today, just by driving adoption rate up. And we see adoption rate improving even in our largest, most mature cities. So, for example, London, which is our largest market, we continue to see adoption grow, less year, and that is because of the reliability factor that Wayne talked about. But also just time in market with a new technology drives adoption. In addition to growth in our existing markets, the other big piece of our SAM is new cities. And we can double the number of cities that we're in today. And we have line of sight, as I mentioned, of those cities. We built them bottoms-up based on where we know the unit economics can work. All that to say, I am very bullish and have a ton of confidence in our outlook. And you don't need to believe anything heroic to believe that we can deliver durable growth. We just have to keep replicating the playbook that we've developed in the 230 cities that we're already in.

Maybe sticking with that and going down to the product level, obviously you guys play in both the bikes and the scooters landscape. Talk a little bit about the distribution and SKU of those products and how they resonate with consumers and how they build towards the growth.

Algorithm for the company? Yep. So in terms of the distribution, about two-thirds of our global fleet is scooters and one-third is bikes. But the bikes have been growing faster over the last few years. So over time, I think you may see that become more 50-50. What's great about Lime is that because we have proprietary hardware, every bike and scooter you see on the platform, we have engineered and designed in-house. This also means that we can constantly innovate on new form factors. So an example of this, last year we introduced a product called the Lime Glider. You can see that here in San Francisco. It's a seated vehicle, kind of a lightweight moped. And for people who want to go longer distances, it's oftentimes more comfortable to sit down than stand up. And what's been incredible with the Glider is that in San Francisco, as an example, once we introduced it, the last 3 quarters, we've seen growth rates in San Francisco, which is one of our oldest markets, reignite. In fact, we've been growing in excess of 100% year-over-year for the last 3 quarters. And we think it's because lots of riders who haven't thought about Lime in a while see the Glider, try it, and now they can think about other ways they may want to use the platform. And so you're going to see us continue to innovate on form factors. This is going to be hard for our competitors because they buy off-the-shelf hardware. They don't control their own R&D roadmap, but we can constantly try new things. If it works, we'll put more CapEx behind. If it doesn't work, we won't scale it. And I think that's been a big driver of our new rider acquisition. Okay. Building on that, when you think about the levers of growth in this business, and I had a lot of conversations around our work on the company with this, how do you think about unpacking the elements of new user growth on the platform, user frequency on the platform, and possibly the elements of introducing more nuanced pricing on the platform? So in terms of solving for how you think about the growth algorithm. Yep. So I'll say one thing. When I look at our growth algorithm, what makes me really excited is that there's a lot of different levers that we can pull. So at the heart of our growth algorithm is growing fleet. So the number of bikes and scooters we have all around the world. In Q2 2026, we grew our global fleet by 22%. What may be not intuitive is that when we grow our fleet, we increase density of deployment. Density drives reliability, and reliability is what drives adoption and engagement. So the second most important lever in our growth algorithm is the utilization of our bikes and scooters. The primary utilization metric we use is RVD, revenue per vehicle per day. And the more we deploy in cities, what we've seen is that it actually contributes to a higher RVD. But we also see higher RVDs through things like the data that we have, which then allows us to position our vehicles at the right place at the right time. Supply positioning is difficult for our smaller competitors to copy because they don't have the data. They don't have the margins. They don't have the scale to build proprietary supply positioning software. But in addition to fleet utilization, we also grow our business by growing our monthly active users. And what is quite unique about Lime as a consumer business is that we have a very efficient customer acquisition channel. Q2 2026, we grew our overall MAU by 22%, and then we spent less than 2% of our revenue on marketing. And the main reason why we're able to do that is because the primary way we acquire customers is that people see our bikes and scooters on the side of the road. You may see us here in San Francisco. There's a QR code, basic instructions of how you take that first trip. So when we grow our fleet, not only do we grow utilization, we also grow our monthly active users. And then finally, the last lever is the engagement on a per user basis, the revenue and the profits we generate per month the active user. And here the biggest lever, the biggest driver of greater engagement has been the introduction of our subscription membership products. So similar to rideshare and food delivery, we know when customers buy one of these memberships, they're far more likely to single app and engage with the platforms. We have 2 products here. One is called Lime Pass, which is a prepaid bundle minutes. You can buy a package of minutes for a discount. We have a second product called Lime Prime. It's typically $6 monthly subscription. And for that, riders always get a flat rate, roughly $2 for any trip under 20 minutes. At $2 a trip, we are cheaper than the bus or cheaper than the subway, which is also why we believe it will drive a lot of incrementality. In fact, for Lime Pass users in 2025, what we saw is that the average Lime Pass user did 6 times more trips because of the discounts we provide, the average revenue per trip, and the margin we get is lower. What we want to see, what we are seeing, is that there is a ton of elasticity of demand, that the incremental volume makes up for the lower margin percentage so that the overall dollar profit per user is rising, even though there is a discount provided through membership. And so we're in the early innings of driving our business into a membership recurring revenue stream. And I think that is the primary driver of user engagement. But if I look across these 4 levers, if you look at our most recent quarter, we are executing across all four, and all of them are driving the business forward in a very positive way.

Super clear. Coming back to fleet, can you talk to us a little bit about when you want to expand a fleet in a given city, how investors should be thinking about what levels of capacity utilization you reach to make that investment decision, and a little bit about the regulatory process you need to follow to expand fleet?

Yes, I can take that and start, and Wayne, you can fill in. So when we look at fleet expansion, which Wayne talked about in the opening, is a key growth driver for us because reliability really matters. It's the #1 thing when somebody is going to decide to take micromobility, it's not price, it's how far is a vehicle from me. So having that vehicle availability is incredibly important. When we think about how we allocate capital, we are very focused on driving and maximizing free cash flow over the long term. And so we take a very disciplined approach to investing in fleet and allocating fleet. The thing that might be counterintuitive is you might think if we add fleet, it's going to dilute the revenue per vehicle per day and utilization is going to go down. What we see is actually the opposite because of this reliability factor. So it's, um, what we see is when we add fleet, the utilization not only goes up for the fleet that we put in service, but for the surrounding fleet because of the improvement in reliability. So if you look at the second quarter, for example, our fleet grew 22%, but at the same time, our revenue per vehicle per day on a same-store basis or a same market basis was up mid-single digits. So, and then when you look at how we expand fleet, we can't just expand fleet wherever we want. We have to win permits and win the right to operate in markets. And this is where our vertically integrated platform really comes into play from a competitive advantage standpoint. No one is better at both winning permits but also retaining permits and getting fleet increases than us. And it's because of our proprietary hardware, software, operations, and government relations expertise. Cities want compliance with their rules and regulations, think tidy parking, think safe riders. And this is where our proprietary technology really comes in and our tech-enabled operations. And cities award fleet to the best operators. And so we win a disproportionate amount of fleet relative to our competitors. And you might look at that as a limiter to growth, but we actually see it as an accelerator to growth and as a barrier to entry for others, because as we're getting scale, and increasing our reliability with those disproportionate fleet increases, it's having the opposite effect on our competitors. And it's really hard to make the unit economics work here subscale. So, oh go ahead, did you have a question?

Yes, among that city staff and doing it for a very long time, you're working with global satellite location, and what is that benefit to have GPS that helps your business?

Well, one, it allows us to know where the vehicles are and allows our riders to know where the vehicles are because if you open an app, you need to know how to find a bike and scooter. So having GPS show, similar to rideshare, it shows a map and it tells you where the nearest vehicle is. But it also helps in terms of compliance. As Ann mentioned, cities care about tidy parking. So we use GPS also to ensure we can replicate things like digital parking corrals. So you can only park in specific areas that the cities designate as a parking spot. And we can make sure that riders are not doing things like riding on the pedestrian right-of-way, which creates an unsafe environment. So GPS is critical for tracking assets, for enabling riders to access the product, and for compliance and safety.

And the only other thing I'll add is it also allows us to capture a lot of trip data, which allows us to generate demand, because we know where the hotspots are, both from missed app opens, but also where people are wanting to ride. And you can imagine where you place the vehicle, I mentioned, is the most important thing. It needs to be nearby. So nobody has more data in a city than we do. And we are operating in 230 cities around the world. So in terms of positioning the vehicles to generate demand, we do during the day so you can.

For London, let's say, you can put them in the city for the home evening commute and the morning, the opposite.

You're exactly right, because we have more data than anybody else. We use that data to build a demand forecasting map in every city we're in. So block by block, how much revenue do we expect to generate on this corner? And when we know that, we can then compare that with our current supply positioning to see, are we optimizing revenue generation? In fact, we can say for every single bike and scooter, is there a better place to put this bike and scooter? If the incremental revenue is greater than the cost of hiring somebody to move it, that's an ROI positive move task. We do over 25 million operational tasks globally every single year. Each task is algorithmically created. And because we have data, it constantly improves that algorithm. And as you pointed out, what that allows us to do is we are constantly moving our bikes and scooters to capture incremental demand and to ensure they are at the right place at the right time, so we're always the most reliable operator to the rider.