In the second quarter of 2024, Gogoro Inc. (NASDAQ: GGR) reported a mix of strategic advancements and financial challenges. The company announced two significant investments totaling $100 million, which included a $50 million commitment from Castrol and an MOU with Sumitomo Corp.
Despite these investments and a strong subscriber base for its battery swapping ecosystem, Gogoro faced a net loss of $20.1 million, an increase from the previous year, and a decrease in gross margin. The company is actively expanding internationally, with particular focus on India, where it awaits the finalization of incentive schemes before increasing sales and production.
Gogoro's revenue for Q2 stood at $80.9 million, a 7.2% decrease year-over-year, but the company remains optimistic about future growth, especially with the anticipated inclusion of battery swapping vehicles in India's FAME III subsidy policy.
Key Takeaways
- Gogoro Inc. received $100 million in investments, with a substantial portion from Castrol and an MOU with Sumitomo for international expansion.
- CEO Horace Luke reaffirmed the vision for sustainable urban transportation and the battery swapping ecosystem's success.
- Gogoro reported a net loss of $20.1 million for Q2, with a gross margin of 5.2%, down from 15.2% the previous year.
- The company's revenue for Q2 was $80.9 million, a decrease of 7.2% year-over-year.
- Gogoro has a strong presence in Taiwan with over 608,000 subscribers and 2,570 Go Station locations.
- Expansion efforts are ongoing in India, South Korea, Colombia, Chile, and Singapore, with the first 20 Go Stations deployed in New Delhi and Mumbai.
- Gogoro anticipates delays in the Indian market, with revenue expectations for 2024 now pushed to 2025 due to policy uncertainties.
Company Outlook
- Gogoro expects to generate between $320 million to $345 million in revenue in 2024, with over 95% coming from Taiwan.
- The company plans to deliver backlog vehicles and continue marketing campaigns for JEGO and Pulse vehicles in the second half of 2024.
- Expansion in international markets is a key focus, especially in Singapore, where the company aims to establish B2B partnerships.
Bearish Highlights
- The company reported a decrease in gross margin and an increase in net loss compared to the same quarter last year.
- Revenue forecasts have been reduced due to a slight decrease in vehicle sales and network revenue in Taiwan.
- There is ongoing pressure on the average selling price due to the success of the lower-priced JEGO vehicle.
Bullish Highlights
- Gogoro's network operations continue to show healthy revenue growth.
- The company has secured strategic investments and partnerships to support international expansion.
- Positive rider feedback on increased earnings potential with Gogoro's battery swapping system.
Misses
- Gogoro's Q2 revenue fell short of the previous year's figures.
- The company's net loss widened significantly from the same quarter last year.
Q&A Highlights
- CEO Horace Luke highlighted the positive impact of Gogoro's services on rider wages and the adoption of electric vehicles in major Indian cities.
- Luke confirmed Gogoro's openness to selling batteries and connectors for other devices, although the current focus remains on transportation.
Gogoro Inc. continues to navigate through a challenging financial landscape while maintaining its commitment to sustainable urban transportation and international expansion. With strategic investments and partnerships in place, the company is poised for future growth, despite current headwinds and market uncertainties.
InvestingPro Insights
In the context of Gogoro Inc.'s financial results and strategic initiatives, certain real-time data and InvestingPro Tips provide additional layers of understanding for investors. As of the second quarter of 2024, Gogoro's market capitalization stands at $353.29 million, reflecting the market's current valuation of the company. Despite the financial challenges highlighted in the article, Gogoro's revenue over the last twelve months reached $333.94 million. However, this represents a year-over-year decrease of 8.31%, aligning with the reported decline in the company's quarterly revenue.
InvestingPro Tips suggest that Gogoro may face difficulties with profitability, as analysts do not expect the company to be profitable this year. Moreover, the company's weak gross profit margins, which have decreased year-over-year, are a concern, as evidenced by a gross profit margin of 10.79% for the last twelve months as of Q2 2024. This aligns with the decrease in gross margin reported in the article and could be a contributing factor to the net loss and financial challenges faced by Gogoro.
Additionally, the company's stock performance has been underwhelming, with a 1-month price total return of -16.45% and a 6-month price total return of -35.86%. This may reflect investor sentiment and market reaction to the company's recent financial results and outlook.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available that delve deeper into Gogoro's financial health and stock performance. These tips can provide valuable insights into the company's ability to manage debt, its cash flow situation, and long-term stock price trends.
Visit InvestingPro for a full list of tips and to gain a deeper understanding of Gogoro's financial position and future prospects: https://www.investing.com/pro/GGR
Full transcript - Gogoro Inc (GGR) Q2 2024:
Operator: Welcome to the Gogoro Inc. 2024 Q2 Earnings Call. This conference call is now being recorded and broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. I would now like to turn the call over to the Gogoro team.
Unidentified Company Representative: Welcome to Gogoro's 2024 Q2 Earnings Conference Call hosted by our CEO, Horace Luke; and CFO, Bruce Aitken. Hopefully, by now, you've seen our earnings. If you haven't, it is available on the Investor Relations tab of our website, investor.gogoro.com. We are hosting our earnings conference call via live webcast through Gogoro's website, where you can also download all the earnings release materials. We will also be displaying the materials on the webcast screen as we go. If you are joining us through the conference call, your dial-in lines are in listen-only mode. After Horace provides some of the business highlights from Q2, Bruce will go a bit deeper into the Q2 financial results. And then we will open the line for Q&A and answer as many questions as time allows. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the forward-looking statements that appear in our press release and investor presentation provided today. And now, I would like to turn the call over to Horace.
Horace Luke: Thanks for joining our call today. We're pleased to have this opportunity to meet with you and provide a summary of our second quarter 2024 results. I'm pleased to share with you that we announced tow substantial investments in the second quarter, which totaled $100 million with $75 million cash received. We further entered into an MOU with Sumitomo Corp. and Sumitomo Mitsui (NYSE:SMFG) Finance and Leasing Company, SMFL to facilitate a more asset-light international expansion. Gold Sino Assets Limited made a $50 million equity investment in Gogoro. Our partnership with Dr. Yin of Gold Sino and [Ruantech] (ph) Group dates back to Gogoro's founding. This investment reinforces our strategic direction, and we are committed to building on the success of our revolutionary battery swapping ecosystem. We continue to lead the transformation of two wheel urban transportation shaping cities of the future to be smart, sustainable and accessible. We are delivering on our vision as we continue to expand our leadership in Taiwan and other markets. It is crucial to maintain the resources and flexibility needed to operate efficiently, ensuring the delivery of cutting-edge innovation, unparalleled customer experiences and exceptional value to our customers. Additionally, we announced a $50 million investment commitment from Castrol, a global leader in lubricants and part of the BP (NYSE:BP) group. The initial investment of $25 million in Gogoro will be followed by a second $25 million investment in the form of a convertible note contingent on further collaborative business transactions. In the press release announcing the investment, Michelle Jou, CEO of Castrol, stressed the importance of two wheelers to Castrol and the desire for Castrol to play a large part in a consumer's transition from traditional ICE (NYSE:ICE) vehicles to electric vehicles. I can't think of a partner that has broader and deeper customer reach in the two wheel industry than Castrol and the teams worked tirelessly to make this investment and partnership possible. We are now actively developing a variety of joint strategic initiatives and are progressing at pace to really substantiate this agreement and investment. I'm gratified that Castrol's excited about Gogoro's and vision for urban mobility. Gogoro's partnership with Sumitomo and SMFL a global leader in financing and leasing would establish a new asset class using Gogoro Smart batteries to create new business opportunities for Sumitomo and SMFL to utilize Gogoro's batteries for expanding their mobility business as well as generating second-life battery revenue. Amongst the many new business opportunities, this partnership would enable a new asset-light expansion model for Gogoro that doesn't require large upfront capital investment in batteries, while increasing the financial efficiency of our new markets. We have been working with Sumitomo and SMFL towards this announcement and business direction for some time, and I look forward to the opportunity to provide further updates as we formalize a variety of business opportunities. Both Bruce and I will go into more details on our market and financial performance during the course of the call, but I do want to set some high-level context. When Gogoro set out to electrify two wheelers, we didn't know what the future held. We had to develop our own compelling vehicle solutions, our own battery packs and our own battery swapping platform and ecosystem. We still manufacture battery packs and most of our vehicles in-house and own all of the IP associated with our platforms and battery swapping ecosystem. These inventions have paved the way for the battery swapping industry today. There have been bumps and learning along the way, and we have and will continue to face challenges. Our focus is on the long term, and we see so much potential for the ongoing electrification of two wheelers and the adoption of battery swapping. Governments, partners, customers, both B2B and B2C and fellow travelers on the electrification and battery swapping journey, all see benefits in converting from traditional ICE two wheelers to electric battery swapping vehicles. Conversion will happen at various points in time and with varying speeds of adoption, but it will happen. Our objective is to stay true to our core beliefs and keep innovating our product and service offerings and business models to meet market demands. We're not satisfied with the pace of change and adoption in any market. These realities mean that our financial results are not as strong as desired. However, we continue to have the best vertically integrated product stack the world's largest deployed battery swapping infrastructure, the support of more than 10 OEMs who are making vehicles which are powered by Gogoro's battery ecosystem and a software and operating platform that allows additional value-added services to create new revenue streams. Innovating and investing for growth requires capital, hence, the recent raise. Operating our network in Taiwan and developing an international footprint also require substantial amounts of capital and operational spending. We are still operating at a loss and still investing for growth because we believe the markets that we are targeting. India, Southeast Asia and other markets are ripe for electric vehicle disruption. While the Taiwan two wheeler market had an 11.2% decrease year-on-year in Q1, the registered units in Q2 were approximately 190,000 demonstrating slight growth of 2% versus Q2 last year. Year-to-date from January to June, the Taiwan market is down 4.4% from the same period in 2023. We previously indicated a range of projected market sales from $750,000 to $850,000 against the 2023 market of 870,000 units. We expect this year will continue to be softer compared to last year. And Taiwan's two wheel scooter market will end the year between 800 and 10,000 to 840,000 units, a drop of 3.5% to 7% versus 2023. We anticipate slight growth in overall market share versus T23 for Gogoro vehicles. However, against our previous expectation, the drop in overall market volume has a knock-on impact on our sales volumes and revenue in the first half and will impact second half revenue as well. The total number of registered electric scooters in Q2 in Taiwan was 23,660 units, up 17.6% from 20,118 units in Q2 2023. Gogoro branded vehicles registration figures were 15,646 units, up 10.8% from Q2 2023, while powered by the Gogoro network, PBGN, vehicles registration figures were 16,685 units, up 1.7% over the same period, representing 70.5% of total electric vehicle sales in Q2. Vehicle registration figures would have been markedly higher had we delivered all back-order JEGO and Pulse vehicles. If all of the approximately 5,600 go and 930 pulse backlog orders, we had taken by the end of June had been delivered in Q2, the electric power two wheeler market would have been up 50% from Q2 2023. These backlog units represent approximately $12 million in orders, which can be recognized when vehicles are delivered, which we expect to happen in the third quarter. The JEGO Smartscooter has been a standout success capturing significant market attention and driving sales volumes above our expectations. The high sales volume of JEGO, while a positive indicator of consumer interest has resulted in a lower average selling price and consequently, lower overall revenue compared to our historic performance. The market's enthusiastic response to JEGO suggests that its features and price point are appealing to a new class of Gogoro customers. Balancing sales across a broader range of our product portfolio is a goal for the second half of the year. Our new flagship, the Pulse Smartscooter continues to receive positive coverage for its outstanding industry-leading performance. Our retail footprint is sizable and sufficient to allow for future growth of vehicle volume without equivalent growth in fixed costs. As of the end of Q2, we now have 103 retail stores in Taiwan, 242 Gogoro quick service stores and 421 authorized repair shops. The performance of the Gogo (NASDAQ:GOGO) network is in line with our expectations, and our network operations continue to show healthy revenue growth. With just over 608,000 accumulated subscribers up from 552,205 subscribers at the end of Q2 2023 and with $34.7 million in battery swapping service revenue, we continue to operate the Gogoro network efficiently. We now have over 2,570 Go Station locations, over 1.4 million battery packs in circulation with more than 400,000 daily battery swaps and over 10.6 billion total kilometers written on our network. We are upgrading some of our battery packs in order to ensure we maximize both first and second life opportunities. We fundamentally believe that both the government of Taiwan and consumers see the value of electrification and continue to believe that this transition while taking a bit longer than anticipated, is well underway. Our market share remains strong. Our technology continues to be seen as best-in-class as evidenced by the external award and ongoing strategic investments from existing shareholders as well as Castrol and we remain confident of long-term success in Taiwan and in other markets. International markets and expansion continue to be important in our long-term strategy. We use our Taiwan experience to accelerate our international expansion. While it is exciting that we expand into new markets, each market is unique. It takes time to develop these markets, including local consumer demands, local partnerships and local regulations. India is perhaps our most important international market and enthusiasm for our solutions is high. With an overall market of approximately 20 million units per year and with government support for the ramp of electric vehicles, we are well positioned to benefit from this large market but are still learning the complexities of the Indian market. Our investments in India in the first half of the year demonstrate our commitment to this important market. While we had forecasted revenue from India for 2024, but due to the delay in implementation in subsidies to include battery swapping vehicles. Most of it is now projected for 2025. In the meantime, we continue to progress with our battery factory build-out, Go station deployments and building out our India team and capabilities. India's government continues to strongly support the transition to electric mobility. When the faster adoption and manufacturing of electric vehicles otherwise known as Fame scheme was put in place in India in 2015, battery swapping didn't exist. And as a result, battery swapping vehicles were not covered under Fame 2 or the extension of that policy, which was put into place in April to effectively extend the benefits of Fame 2. We are working with the Ministry of Heavy Industries as a founding member of the Indian battery swapping Association to ensure that in the upcoming Fame 3 publication, battery swapping vehicles and infrastructure are afforded the same benefits as charging electric vehicles. MHI is tasked with the overall EV road map for India and we are optimistic that our continued collaboration and advocacy will lead to the inclusion of battery swap vehicles in upcoming incentive programs, thereby supporting the growth and adoption of sustainable mobility solutions across the country. Until battery swapping vehicles are eligible for subsidies under Fame or other government programs, we cannot offset the impact of these subsidies via price discounts. We continue to be optimistic about what India market can bring, but are forced to wait for the finalization of incentive schemes before ramping our vehicle sales or our battery pack production in India. The registration and license application for our India battery pack factory are currently underway. We anticipate that this process will be completed in time for commercial production to commence in the second half of 2024. Similarly to vehicle subsidies, clarity of subsidies for battery packs as well as equivalent treatment under subsidy schemes is critical to a successful launch for not only Gogoro but all battery swapping players India. In Q2, we announced the deployment of the first 20 Go stations in New Delhi and Mumbai through our partnership with HPCL, India's second largest gas retailer. Given HPCL's large retail footprint of 21,000 touch points, there is room for growth in this partnership as we ramp vehicle sales in both cities. We recently launched a pilot program with Rapido, one of India's leading ride-hailing services specializing in bike taxis. The feedback from the pilot has been overwhelmingly positive with riders experiencing a remarkable 50% increase in wages, nearly double what is typically earned through a standard fleet operator model. The riders have expressed great satisfaction with both our vehicles and the seamless battery swap experience, highlighting the ease and efficiency of our system. Many riders are covering impressive distances riding up to 200 kilometers per day due to the reliability and ease of use of our battery swapping technology. We are also actively collaborating with five Indian local electric two wheeler OEMs and have commenced vehicle testing for the deployment of these powered by Gogoro network solutions in the Indian market. These collaborations bring to market a variety of products at lower price points and the initiation of testing these solutions marks an exciting step forward in expanding our presence and providing a wider range of vehicle options to B2B customers in India. The building blocks for growth in India are in place. I'll now ask Bruce to now give you an update regarding other international markets, as well as an overview of our Q2 financial results.
Bruce Aitken: Thanks, Horace. We continue to make steady progress in South Korea with our partner, BikeBank. There are now more than 200 active go stations in 15 cities in South Korea, which is an example of our PBGN alliance strategy at work. on Motor, Gogoro and South Korea's BikeBank brand dot station, have teamed up to develop the EVC1 electric scooter, which is already on sale in South Korea designed by Dotstation to align with South Korean rider preferences manufactured by Aon (NYSE:AON) Motor in Taiwan and powered by Gogoro's battery swapping technology, this scooter is now entering the South Korean market with Dot Station managing the local sales channels. This collaboration combines Aon Motors manufacturing expertise with Gogoro's network battery swapping ecosystem and Dotstation's local market knowledge to make a successful entry into the market. We're pleased to see our PBGN partners new vehicle meeting local market demands, making this a win-win-win situation for all three parties. In May, we launched Gogoro Battery swapping services in Bogota, Colombia with Terpel, a subsidiary of Copec and the leader in the Colombian fuel and lubrication product market. This is the official launch of our partnership with Copec, which was announced in January. We also introduced the Gogoro 2 Plus and Gogoro VIVA MIX Smartscooters in Colombia. Initially, four battery swapping stations are located at Terpel service stations in Bogota with plans to expand to 14 by the end of 2024 and to the city of Medellin. Our Gogoro Smartscooters will be marketed by Motored, a top two wheel distributor in Colombia. Following our launch in Colombia in the second quarter, we are excited about our upcoming commercial launches in Chile and Singapore in the latter half of 2024. These markets represent significant opportunities for growth and expansion as we bring our advanced battery swapping technology and cutting-edge electric scooters to new regions. After more than a year of sandbox testing with the Land Transport Authority in Singapore, Gogoro is now approved for commercial operational launch. LTA is the Singapore government body that spearheads land transport developments in Singapore. It plans, designs, builds and maintains Singapore's land transport infrastructure and systems with a focus on green solutions. This certification by LTA is a testament to the safety and quality of our battery swapping system and we value the cooperation and support of the Singapore government in validating our technology. Now that we are certified to operate, we will deepen our partnership with Cycle & Carriage and their customers, including Food Panda, whose riders were active in the Sandbox pilot. The pilot received overwhelming positive feedback from food pane delivery riders for our smartscooters speed, silent ride and quick battery swaps. Our pilot riders have averaged more than 2,200 kilometers per month with up to two battery swaps per day. We're planning for the commercial launch of battery swapping and Gogoro Smartscooters in Q4 2024 and with Cycle & Carriage as our exclusive distribution partner. C&C is also collaborating with Shell (LON:SHEL) Recharge to set up go stations at Shell service stations in Singapore and CNC will be offering three Gogoro Smartscooters models by Q4 2024. Our joint venture in the Philippines is making progress with 11 Go stations now operational in Manila. We're optimistic about receiving zero import tariff approval soon, which will allow us to offer more competitive pricing and expand access to sustainable transportation. This approval will be a key milestone supporting both our business and the country's green mobility goals. While we await the final decision, we remain focused on strengthening partnerships, enhancing infrastructure and preparing for a swift rollout once approval is granted. Before I review our financial results in detail, I'd like to provide just a little bit of context. Due to challenges in the Taiwan market and the slower-than-expected pace of international sales, our revenue for Q2 and our expectations for the year are lower than previously forecasted. In Taiwan, the overall two wheel market is down 4.4% in the first half. Additionally, as a result of the higher-than-expected mix of the JEGO model, our ASP has dropped, which will impact second half revenue. Our Gogoro network is performing approximately to expectations. If we adjust our first half revenue for the backlog orders of JEGO and Pulse and for foreign currency fluctuations, it's actually slightly higher than our 2023 first half revenue. In India, government policy regarding incentives for battery swapping vehicles are not yet finalized. There were a variety of delays to the policy finalization, including central government elections and the appointment of new senior leaders to important government agencies. We are working closely with the Ministry of Heavy Industries, the Indian Battery Swap Association and other OEMs to affect a new Fame 3 policy in the coming months. Until there is full clarity of our ability to access government subsidy programs, we will intentionally slow any ramp in vehicle sales as at the moment, any sales are effectively subsidized by Gogoro. This delay in sales will also impact revenue for the second half of 2024. Now to the details. For the second quarter, the total revenue was $80.9 million, down 7.2% year-over-year and down 2.4% year-over-year on a constant currency basis. Had the foreign exchange rates remain constant with the average rate of the same quarter last year, revenue would have been up by an additional $4.2 million. We had more than 6,500 backlog orders for Pulse and JEGO in the second quarter with a total value of approximately $12.3 million, although customers do have the right to cancel such orders prior to delivery. The large quantity of back orders is primarily the result of robust demand for these new models, coupled with our need to balance manufacturing capacity across multiple vehicles and the need to balance related supply chains accordingly. Battery swapping service revenue for the second quarter was $34.7 million, up 4% year-over-year and up 9.5% year-over-year on a constant currency basis. Total subscribers at the end of the second quarter exceeded $608,000, up 10.1% and from 552,000 subscribers at the end of the same quarter last year. The year-over-year increase in battery swapping service revenue was primarily due to our larger subscriber base compared to the same quarter last year and the high retention rate of our subscribers. Sales of hardware and other revenues for the second quarter were $46.3 million down 14.1% year-over-year and down 9.8% year-over-year on a constant currency basis. The year-over-year decrease in sales of hardware and other revenues was driven by a combination of factors. First, a decrease of ASP due to a higher proportion of lower-priced vehicles sold, second, a significant increase in the level of undelivered backlog orders compared to the same quarter last year. Third, a decrease in sales revenues associated with selling merchandise and maintenance parts from original OEM manufacturers and for an unfavorable exchange rate when translating 95% of our sales which are denominated in NT dollars into U.S. dollars. The backlog orders for Pulse and JEGO we received in the second quarter are not reflected in the vehicle registration data published by the Taiwan government for the second quarter, nor did Gogoro recognize any revenue for these vehicles despite receiving full payment from customers or approved financing from third-party financing companies. Gogoro will account for the vehicle revenue upon deliveries to customers. The government reported registration volume of powered two wheelers in the Taiwan market in the second quarter was up 2% year-over-year. Our registrations of total electric power two-wheelers were reported to be up by 17.6% compared to the same quarter last year. Those of Gogoro sales grew by 10.8%. Had we delivered the outstanding orders of Pulse and JEGO vehicles, the growth of the electric PTW registrations contributed by the sales of Gogoro vehicles would have been estimated to be 57.2%. Taiwan's largest two power two wheel manufacturers are publicly estimating that the total market for Taiwan will shrink by 14% from last year's 870,000 units to around 750,000 units in 2024. We updated our market outlook to progress toward the market consensus as we have seen a temporary slowdown in consumer transition from traditional internal combustion engine vehicles to electric power two wheel vehicles in the first half of 2024. For the second quarter, gross margin was 5.2% down from 15.2% in the same quarter last year, while non-IFRS gross margin was 13.0%, down from 16% in the same quarter last year. The decline in gross margin was primarily driven by a combination of factors. First, a $6 million derecognition expense on components removed from the old battery packs and costs associated with our battery upgrade initiatives, second, a $1.7 million increase in depreciation and other costs associated with our new overseas production facilities. Third, a decrease in ASP associated with an increase in sales of lower-priced models. Fourth, a decrease in maintenance part sales through our own channel and the lower margin contribution from Gogoro OEM parts and fifth, higher franchise commission from selling hardware through authorized channels. These impacts when combined, approximately account for the 10% decline in gross margin. We continue to carry out onetime voluntary upgrades on certain battery packs which are expected to take several quarters to complete continuing into 2025. These upgrades provide multiple benefits, reduction of capital expenditures on replacing battery packs increasing lifetime capacity of each battery pack, including its first mobility use case useful life and solidifying the extra lifetime capacity of each battery pack to validate our second life thesis. These upgrades are expected to create economic benefits in the long run, but do come at a short-term reduction in our gross margin as we carry out the upgrades. We expect our IFRS gross margin will continue to be impacted during our upgrades planned in 2024 and 2025. The upgrades will impact both our cash position and profit but we will only upgrade battery packs in instances where the value created over time exceeds the cost of the upgrade. For the second quarter, net loss was $20.1 million, representing an increase of $14.5 million from a net loss of $5.6 million in the same quarter last year. The increase in net loss was due to a $9.3 million decrease of the favorable change in the fair value of financial liabilities associated with outstanding earnout shares, earn-in shares and warrants compared to the same quarter last year, and the decrease of $9.1 million in gross profit, mainly attributable to the ongoing upgrades to our battery packs. The increase in net loss was partially offset by the decrease of $4.8 million in operating expenses as a result of our cost management efforts. For the second quarter, adjusted EBITDA was $11.6 million representing a decrease of $1.3 million from $12.9 million in the same quarter last year. The decrease was primarily due to a $3.4 million decrease in non-IFRS gross profit compared to the same quarter last year, which was partially offset by a $1.7 million decrease in expenses associated with risk management programs and new product development costs. We continue to generate operating cash inflow in the second quarter through tightening our business operations and reducing working capital. In June 2024, we raised $50 million and $25 million, respectively, through issuing ordinary shares to Gold Sino Assets Limited and Castrol Holdings International Limited to fund our operations. We are continuously committed to investing in the growth of our battery swapping infrastructure. With a $196.9 million cash balance at the end of the second quarter of 2024 and the additional credit facilities that are available to us, we believe we have sufficient sources of funding to meet our near-term business growth objectives.
Horace Luke: Expectations for the year to a level lower than previously expected. The overall two wheeler market in Taiwan is softer than anticipated and the strong sales of JEGO have resulted in ASP pressure. Our sales in India are also negatively impacted due to delays in the clarity on government incentives as we are awaiting the full publication of battery swapping subsidy details under India's Fame 3 policy, and we're unwilling to self-subsidize in the meantime. As a result of these factors, we are adjusting our guidance for full year revenue, and we are expecting to generate between $320 million to $345 million of revenue in 2024. In addition, we expect that more than 95% of such revenue will be Taiwan-based.
Unidentified Company Representative: Thank you, Horace and Bruce for the detailed update. As attendees are formulating their questions, I will ask two questions that we have collected from analysts. Question number one. What is your plan to capture additional market share and volume in second half of 2024 in Taiwan? What about international markets?
Horace Luke: The overall Taiwan market was down 4.4% in the first half of the year from 2023, impacting our sales figures. Our JEGO and Pulse vehicles are being positively received in the marketplace, and we had 6,500 backlog orders of the vehicles at the end of Q2. We're planning to deliver all the backlog vehicles by the end of the year and do expect the Pulse and JEGO momentum to continue. We have launched a marketing campaign for JEGO recently and are actively engaging in the traditional summer and back-to-school promotions to sustain the excitement around these new vehicles. We do have some plans for Q3 and Q4 that I can't speak in detail at this point, but we do plan to keep [indiscernible] into. As mentioned during the call, in India, much of our progress is dependent on finalization of the India's Fame 3 subsidy plan and the inclusion of battery swapping in that plan. The delay on this initiative has delayed our India plans, so we expect most of the forecast revenue for 2024 to push out into 2025. This is one of the biggest contributors to our updated guidance. Other international markets are performing approximately as forecasted, and we expect some additional momentum in the second half of the year as we launch services in additional countries. We don't expect an immediate large volume of sales in these markets as it takes time for electric vehicle adoption. We expect approximately still 95% of our revenue of the year to be generated in Taiwan.
Unidentified Company Representative: Thank you, Horace. Question number two, from the recent capital raise from Gold Sino and Castro, could you recap your capital structure and your attention on use of the proceeds?
Bruce Aitken: Thanks, Kenny. In Q2, we received, as mentioned, $50 million cash injection from Gold Sino and the initial $25 million of what could become a $50 million investment from Castrol Holdings through the issuance of ordinary shares to these two investors. These funds are instrumental in fueling our ongoing commitment to our expanded battery swapping infrastructure and is supporting our growth initiatives, both in Taiwan as well as internationally. The addition of these funds mean that we have a strong balance of $196 million at the end of Q2, and we also have access to additional credit facilities should we choose to exercise them. We're comfortable with our current cash position and our current debt position, and we're confident we have the financial wherewithal to meet our near-term business objectives, [Technical Difficulty] more than just the cash injection, we appreciate the strategic intent behind these two investments. existing shareholders and new strategic shareholders are committing funds toward our growth. And we're grateful for the trust from both parties, and we look forward to putting the invested money to good work expanding our Taiwan presence and accessing potentially large new markets elsewhere as well.
Unidentified Company Representative: Thanks, Bruce. Operator, please open the line for Q&A session.
Operator: We will now begin the question-and-answer session. [Operator Instructions] The question comes from the line of Long Lin from The Benchmark Company. Please go ahead.
Long Lin: Good morning. Thank you for taking my questions. This is Long Lin on behalf of [Wangjing] (ph). So first of all, I have some housekeeping items to ask. Probably, I didn't catch during the call. Just want to ask about the -- some of the outlooking data, like what's the Taiwan market unit sales in the two -- in the second quarter 2024?
Bruce Aitken: So just to make sure I'm clear, Long, you're asking about the vehicle volumes. Is that right?
Long Lin: Yes.
Bruce Aitken: Got it. So in Q2, in Taiwan, the total registered electric scooters was 23,660 units. The Gogoro branded vehicle registration was 15,646 units and the Gogoro network volumes was [Technical Difficulty] in addition to that, bear in mind that we have an additional 6,500 backlog orders of the JEGO and Pulse units, which would have taken the sales up considerably. However, I do want to remind that customers do have the option to cancel those orders. We don't typically see cancellations but customers do have the option to cancel those orders. And so that's against a backdrop of a 4.4% reduction in total sales from January to June in the Taiwan market. And the Q2 registration number in the overall Taiwan market of about 190,000 units.
Long Lin: Okay. Thank you very much. I'm sorry, I think your voice got cut off for the network units. What's the number for the network...
Bruce Aitken: The powered by the Gogoro network is 16,685.
Long Lin: Okay. Thank you.
Bruce Aitken: This is all, by the way, in the -- it's in the press release that's already posted as well.
Long Lin: Okay. Thanks. So my second question is about your guidance. So you have lowered your 2024 revenue guidance. You said it's mainly about the slowdown in the Taiwan market and also the impact from the Indian market due to the delay of the policy. So can you give an update -- a more detailed update on Taiwan markets outlook in second half and the progress and expectations Indian market, given the delays in subsidy policy. Like basically, when do you think this policy will be finalized? And when do you think you can actually start to ramp up your units yourselves?
Bruce Aitken: Sure. I can try to take the first part and then Horace may have a couple of comments to add. It's always difficult to anticipate exactly when Indian any government will act. However, the signs coming from India publicly as well as directly from government agencies is that the expectation is that within the next weeks, or worst-case scenario within the next couple of months, we expect the finalization of the FAME III subsidy policy, and we do expect battery swapping vehicles to be included in that policy as well as GST benefits, which are a little too detailed maybe to go into now, but we do expect the policy to be finalized and then we do expect the policy to be made [Technical Difficulty] possibility for the kind of beginning of sales of vehicles in the latter part of the year. However, to be conservative, we are anticipating that virtually all -- potentially even all of the revenue that we had previously anticipated to happen in 2024, will now push out until 2025. So that's the India piece of the story. In Taiwan, if you look at seasonality, typically, the second half of the year is larger than the first half of the year with the downward trend of almost 5% in the first half of the year, we're taking a conservative stance there as well. And again, that's what is one of the main drivers of the reduction in our -- in our revenue forecast. As we have slightly fewer vehicle sales than likewise our Gogoro network revenue in Taiwan and for, in the case of India, our Gogoro network revenue in India is impacted. So it's the combination of a number of those different factors that leads to a big chunk of the guide down. The second biggest part is really the sale of lower ASP product in Taiwan. Our JEGO vehicle has been super successful. It's a good thing from a volume standpoint. It's not necessarily from a mix standpoint. So we want to make sure that we continue to focus on the high end of the ASP range but the JEGO vehicle has been so successful that it has brought our ASP down a little bit in the second quarter. And we do anticipate ongoing ASP pressure in the second half. Again, that's a positive -- it's a good problem to have. It's not great that our ASP drops but we're happy to continue to move the exciting new JEGO vehicle. So it's the combination of all those factors to [indiscernible].
Long Lin: So my -- so the next question is like, we noticed that you have been certified in Singapore and works with an exclusive partner there. How should we think about the commercial opportunity in Singapore in the next few years?
Horace Luke: I'll take that. I think it's our job to really take the opportunity and make a first foot step forward into large markets such as Southeast Asia. Of course, with the Philippines, we have already established a great relationship with Globe Telecom (OTC:GTMEY), the largest B2C telecom business in the Philippines, along with Ayala group. We seek to work with local giants that have great influences. And there's the [indiscernible] for Singapore with both [indiscernible] Cycle & Carriage as well as Shell and deploying at their gas station. But more importantly, with Singapore is that Singapore is being viewed as the leadership country in that region with many people traveling in and out with headquarter of businesses in Singapore is a great way for us to demonstrate what is possible in a city as tough as is in Singapore, it is to us a great opportunity to showcase what we can do there. I don't think it is fair to say that Singapore is going to be a gigantic market. And as you know, there are not too many two wheelers in Singapore. So we're really focused on B2B with a little bit of B2C, but heavily on the B2B business with partners like Foodpanda. But more importantly for us in Singapore is to really demonstrate a smart system in the group or the cities for great countries around that region. And with Singapore having the reputation of being the leadership country in that region. We're excited to work with leadership companies like [indiscernible], Cycle & Carriage as well as Shell in Singapore.
Long Lin: I see. So given that I just wanted to ask like in this sense, like how should we think about your revenue mix from overseas in 2025 and in the coming years?
Bruce Aitken: Hard to judge for 2025. We're in process of making up all of the forecasts for all of the different countries. As Horace mentioned, sales existing in Philippines, sales existing in Singapore, sales picking up in India, and then hoping to add other countries as well. For the balance [Technical Difficulty] so going into next year, we would like that number to drop a little bit. But I think we'll give more specific and direct guidance on that in the Q4 earnings process as we look at Q3, Q4 as we look out into 2025.
Long Lin: Okay, sure. So my final question is on your margin side. Can you talk about the margin trend in the second half? Do you see like further deterioration of the gross margin like in the second half of 2024?
Bruce Aitken: And actually, the gross margin figure that we're really looking at is the adjusted gross margin figure. As we mentioned, there's a number of contributing factors. And so last year, on the full year, our gross margin was kind of mid-double digits this [Technical Difficulty] then we'd like it to be at 13% in the second half. We expect to work hard to pull that number up a little bit. Typically, in the second half, we do have higher revenue associated with just seasonal uptick in sales of vehicles in Taiwan. Should that happen, then we should be able to hold the margin flat, maybe even sneak it up just a little bit. So I don't expect much margin -- further erosion in the second half of the year.
Long Lin: Great. Understood. Thanks very much. That’s all my questions for now. I will get back to the queue.
Unidentified Company Representative: Since we don't have any questions in the queue, I will take an online question at this time. The question is, if the Indian government doesn't subsidize battery swapping this year, would Gogoro change business strategy and allow customers to own and charge their batteries instead?
Horace Luke: I'll take that, Andy. I think it is important that we believe in the ease of use and also as the game changer in the battery swapping system that we have developed. In Taiwan, before we actually launched our Gogoro battery swapping system. The electric adoption was very, very small. In India, I think that the penetration, although with big players like Ola and others deploying vehicles with charging system, the opportunity for battery swapping to make a difference in that country is great. It is important also to realize its [indiscernible] market and that we don't believe there's a one-size-fit-all in that market. As we develop our strategy with MHI, the Ministry of Heavy Industry as well with our partners like Rapido and others, we will, therefore, look at what opportunity there is to adjust our design or our usability accordingly as the market adjusts. Our vehicle today can also do battery swapping it can also do charge at home. It is really a business -- it's not a technical question. It's really a business model question. We do -- as Gogoro, we do believe that battery and portability of that battery as well as the swapping of that battery as a very important part of how we're going to add our uniqueness to that market. So the long answer is we'll look at it and definitely adjust. But the short answer is I think we have to really believe in what we have to offer and we continue to believe battery swapping is the game changer that made us who we are today and will make us very successful in the place like India.
Unidentified Company Representative: Thanks, Horace. I have another question from online. Can you comment on the status of the battery pack factory and vehicle manufacturing capabilities in India?
Horace Luke: Sure. I think it's our job, even though without the policy being ready as we speak, but it is our job to make sure we get ready for this gigantic market ahead of us. We are 100% -- we do have 100% belief in what the Indian market can bring to Gogoro as well as what Gogoro brings to the market. Our job is to get ready for that big market. That includes getting suppliers ready, that includes getting our battery pack factory ready. But most of all, I think it's really about [indiscernible]. A great example of that is the pilot that we have started with Rapido, and Rapido is the largest bike taxi company in India with tens and -- hundreds of thousands of riders across pan India. And our recent pilot with Rapido had demonstrated great feedback from the riders, especially around wages increase, where they're able to make 200% of what they were making formally by riding a Gogoro with battery swapping, proving that downtime, there is no downtime when it comes to battery swapping. That, along with cities, major cities in India turning to only allowing electric vehicle to be in the logistics service business. We think that's a great formula for Gogoro in the near future. So the battery factory is [indiscernible]. I mean we're literally waiting for the last one little details to be done. The vehicle, as we -- as you saw, has been on the road certified and actually running we've been running vehicles with our customers on the pilot side. But before we scale up in a gigantic way, we really want to make sure that the subsidy program is there in place to make sure that we stay competitive, equally competitive, I should say, when compared to other vehicle makers offering charge at home solutions.
Unidentified Company Representative: Thank you, Horace. I have another question coming from online. Gogoro Batteries have proven econ power devices beyond mobility like smart parking meters, back power for traffic lights. Are there any plans to sell these batteries and connectors so that new devices could be developed and could be powered by Gogoro batteries?
Horace Luke: Absolutely. We have had a lot of inquiries, some are great ideas. Some are a little bit far-fetched. But in general, just think of us as portable batteries. However, we are very, very focused at the moment on transportation. We believe we can make the biggest impacts with transportation, both financially as a business and also environmentally as we lead the way in electrification. So absolutely, we are working on some other ideas, additional ideas, nothing to share in great details yet, but we do get increase all the time, and we have a battery connection kit, battery security kit as well and safety and interface kit will allow for us to [indiscernible] actually monitor our battery for all sorts of different type of devices. So I welcome ideas and please do send us away if anybody has any inquiries.
Unidentified Company Representative: Thank you, Horace. There seems to be no further questions in the queue or online. At this time, I'll hand the conference back to Horace for a few closing remarks.
Horace Luke: Great. Thanks, Andy. The second quarter was a mix of positives and some areas for improvement. The investments from Castrol and Gold Sino put us in a good position to grow, and we continue to work with good partners like SMFL, Sumitomo, HPCL and others scale around the regions. Our new vehicle continues to sell well. We continue to grow our network with both in terms of accumulating subscribers as well as revenue contribution. In Taiwan, the people [indiscernible] underperformed our expectation and the outsized success of JEGO has slightly lowered our ASP forecast, both of which impacted our Q2 financial results. Additionally, the Taiwan dollar weakening against the U.S. dollar is a sizable foreign exchange translation loss, given that most of our revenue is booked in Taiwan dollars. I'm very satisfied with our progress and are fully committed to our vision and always proud of the effort put in by the Google (NASDAQ:GOOGL) team to help electrify mobility via our unique battery swapping technology and platform. Thank you, everyone, for your support of Gogoro, and thanks for calling in today's call.
Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect your lines.
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