Gogoro Inc. Q4 FY2025 Earnings Call

Welcome to the Gogoro Inc. 2025 Fourth Quarter and Full Year Earnings Call. This conference call is now being recorded and broadcast live over the Internet. A webcast replay will be available within an hour after the conference concludes. I would now like to turn the call over to the Gogoro team.

Welcome to Gogoro's 2025 Fourth Quarter and Full Year Earnings Conference Call hosted by our CEO, Henry Chiang; and CFO, Bruce Aitken. Hopefully, by now, you have a chance to review our earnings release. If you haven't, it is available on the Investor Relations tab of our website, investor.gogoro.com. We are hosting this call via live webcast, and the presentation materials will be displayed on your screen as we go. Henry will start with an overview of Gogoro's progress in 2025 and outline our plans for 2026, followed by Bruce, who will take you through the financial results in more detail. After that, we will open the line for Q&A as time allows. Before we begin, please note that today's discussion may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our press release and investor presentation for further information. We will also discuss certain non-IFRS financial measures today. Reconciliation to the comparable IFRS measures can be found in our earnings release. With that, let me turn the call over to Henry.

Thanks, Annie. Thank you for joining us. In 2025, we intentionally stepped back to simplify and sharpen our focus. We made tough decisions and actively restructured to tackle market challenges. We consolidated our portfolio, optimized our product mix, and tightened our operational discipline. We prioritized long-term sustainability over short-term outcomes, and the results demonstrate that our renewed focus was effective. While 2025 presented various challenges both internally and externally, it was crucial for laying the groundwork for Gogoro's next chapter. Our exceptional operational results reflect our focus on efficiency. By reinforcing our core strengths and optimizing our supply chain, we achieved a record full-year adjusted EBITDA of $59.9 million, an increase from $44.7 million in 2024. Our operating cash flow surged more than threefold year-over-year to $31.1 million, and our gross margin rose to 8.3%, up from 2.6% in 2024. Additionally, our non-IFRS margin increased to an impressive 19.5%, compared to 14.9% in 2024. These figures are not just statistics; they are the direct result of our teams working diligently and with shared responsibility. We realigned resources, reduced inventory, and improved production planning, translating challenging decisions into tangible financial improvements. These tough choices are now clearly reflected in our enhanced results. We have established a solid foundation. We completed our key milestones in 2025 and are advancing our plan step by step with clear focus and determination. In 2025, we didn't merely update our vehicle business; we reengineered it. We strengthened our technology leadership with the launch of EZZY in June and EZZY 500 in September. These products were priced correctly and positioned well. The EZZY family surpassed 8,700 units in cumulative sales from launch to year-end and became the best-selling electric scooter of 2025. This success showcases our capability to innovate, execute, and engage new target audiences. This is more than just a sales figure; it validates our precise innovation that allows us to create and tap into new segments. We apply that same rigor across the entire business. We simplified our portfolio and realigned our roadmaps to meet market demand. We revamped our retail channels to enhance speed and efficiency. We have done the necessary groundwork in preparation and entered 2026 ready to capture the market. We have deepened our involvement in the B2B and government fleet segments. In alignment with Taiwan's net-zero policies, adoption by local governments and corporations is accelerating. We are proud to support this public service transition. Our collaboration with the police department over the past five years is expanding across government agencies. Notably, Taiwan's government postal service, Chunghwa Post, added over 1,000 units of the Gogoro Crossover S to its fleet for postal delivery, showcasing our durability and reliability—a testament to why customers are choosing Gogoro. Partners in the Gogoro network continue to rely on our technology as a primary electrification strategy. Yamaha’s CuxiE, launched in Q3, generated significant market momentum, while ADATA's heavy-duty three-wheelers are rapidly scaling with leading delivery platforms. Each deployment verifies our technology, enhances network utilization, expands our reach, and strengthens our collaborative future. Our strategy is founded on the operational success of 2025. Last year was about laying the groundwork. This year is focused on execution. Our theme is established, indicating that we are fully equipped for the upcoming growth phase. We will not pursue volume for its own sake; we are dedicated to value creation in both our energy and vehicle businesses. In our energy sector, we are enhancing our service commitment by actively expanding our network product roadmap. We are developing new swapping infrastructure, not merely as an upgrade, but as a strategic extension of our portfolio aimed at agility and performance. This new modular swapping station represents a significant technical advancement, addressing key operational challenges while improving heat dissipation efficiency and reducing power demands. Its compact design enables rapid deployment and significantly cuts down installation time. This innovation allows us to enhance network density with precision, ensuring that we meet rider demand exactly where it is needed. We aim to initiate a pilot deployment in Taiwan by late 2026. Concurrently, we are optimizing our battery life cycle. As we commence recycling our Gen 1 batteries, we are transitioning them into innovative second-life applications, maximizing their value beyond just mobility. Our vehicle business is shifting to be more customer-focused. The market is evolving. As Taiwan’s demographics change, we are observing a preference for quality. Today's consumers expect more than just mobility; they demand exceptional safety, premium design, and superior reliability. To lead this shift, we are refining our portfolio to concentrate solely on high-value segments where demand is both resilient and growing. We have pinpointed two powerful drivers: female and family riders. We see a clear rapid shift among female consumers towards mid- to high-end vehicles, choosing performance and style over basic utility. In an era of declining birth rates, parents are prioritizing quality over quantity, heavily investing in safety and build quality. This aligns perfectly with our core values. To engage these discerning groups, our roadmap for 2026 is ambitious. We will launch two new models specifically engineered to set new standards for safety and a premium experience. We aim to gain market share gradually by meeting our customers' needs. The transformation of Asian mobility is speeding up. Electric two-wheelers and battery swapping remain the most efficient and scalable solutions for high-density urban areas. We are approaching international expansion with a targeted strategy. In Vietnam, we are starting a pilot with a key market leader, Castrol. This partnership leverages their strong brand, local market presence, and extensive distribution network to create a Gogoro-like mobility ecosystem catered to specific local requirements. This initiative is timely to leverage aggressive government mandates as Hanoi plans to ban fossil fuel motorbikes in key districts starting July 2026, with a full ban in the city center by 2030. Simultaneously, Ho Chi Minh City has mandated that all ride-hailing platforms transition to a 100% electric fleet by 2030. The transition is not optional; it is a strict policy. This regulatory pressure creates an immediate and urgent demand for a reliable electric replacement. However, succeeding in Vietnam requires more than just policy support; the riding environment is distinct. To succeed in this context, we are introducing a new scooter model specifically designed for durability and performance. This pilot will validate our model and prepare for a broader commercial launch targeted at B2B customers later in 2026. 2025 was marked by resilience and discipline. We achieved genuine financial advancements. Now we are well-positioned for 2026. The groundwork is laid, and I am confident we will continue to deliver strong financial performance. With that, I'll turn the call over to Bruce to detail the 2025 financial results further.

Thanks, Henry. As Henry emphasized, our strategy in 2025 was defined by a focused discipline. Let me first provide the overall market performance. The Taiwan scooter market faced significant headwinds, declining for a second consecutive year to 708,392 units, down 5.9% year-over-year, marking the lowest level in 10 years. Despite this drop and our deliberate decision to prioritize financial health over volume, we maintained our leadership in the electric scooter segment. Gogoro and our partners accounted for 33,228 units or 68% of the overall electric 2-wheeler market or 49,228 units. Gogoro alone accounted for 28,176 units, 57% of all electric vehicles and 4% of overall market share, and our partners accounted for 5,052 units. While vehicle volumes reflected our strategic tightening, network adoption continued to grow. Subscribers reached 665,000 units, up 4% year-over-year, supported by new more flexible rate plans. The energy business continued progressing towards profitability, supported by improved operating leverage and the completion of battery upgrades, positioning us for efficiency and financial gains starting in 2026. For the full year 2025, we delivered revenue of $281.5 million, which was within our updated guidance range. Despite a full year 9.4% reduction in revenue from 2024, we achieved a historic high in adjusted EBITDA. This marks a fundamental shift in our business health. Our net loss improved substantially, gross margins expanded and operating cash flow strengthened considerably. These results reflect our focus, discipline and commitment to improved financial results. And as we enter 2026, we expect new products and operational leverage to drive continued cash flow and set the path towards profitability. For the fourth quarter, we generated total revenue of $74.4 million, a 1.7% increase year-over-year. On a constant currency basis, revenue was down 2.4% with favorable exchange rates contributing approximately $3 million to the top line. Our recurring revenue engine remains robust. Battery swapping revenue grew 5.9% to $38 million, driven by high retention and a subscriber base that expanded by 4% to 665,000 riders. As this base grows, we continue to see better network utilization and improved platform economics. Hardware revenue was $36.4 million, down slightly by 2.3%. While vehicle volumes were impacted by broader market softness, we largely offset this pressure through 2 key drivers: a higher average selling price resulting from a shift towards premium models and increased component sales to our partners. For the full year 2025, total revenue was $281.5 million, a 9.4% decline year-over-year. On a constant currency basis, the decline was 12.2% with favorable exchange rates preventing an additional $8.9 million impact. Our recurring business remains a highlight. Battery swapping revenue grew 8.1% to $149 million, demonstrating the strength of our subscription model through steady subscriber expansion and high retention. Hardware revenue was $132.5 million, down 23.3%. This was primarily due to a substantial drop in vehicle sales, reflecting a broader contraction in the Taiwan vehicle market, which hit its lowest volume level since 2016 and the delayed launch of our key volume driver, the EZZY. However, this volume decline was partially mitigated by higher average selling prices from a premium mix shift and increased component sales to our PBGN partners. Our focused strategy drove significant improvements in profitability. We saw a dramatic improvement in gross margin. Q4 gross margin reached 14.3%, up from 7.4% versus Q4 of 2024, while full year margin rose to 8.3%, up from 2.6% in the previous year. Q4 non-IFRS margin hit 20.1%, up from 14.7% in the previous period, while full year non-IFRS gross margin hit 19.5%, up from 14.9% for the full year 2024. Improvements were driven by the completion of battery upgrades, reduced inventory write-downs, lower share-based compensation and efficiency gains from our restructuring and optimized network depreciation. For the fourth quarter, net loss narrowed substantially to $20.8 million, an improvement of $50.5 million year-over-year. This progress was driven by stronger gross profit and a $31 million reduction in operating expenses, primarily due to the absence of last year's one-time impairment charges and improved organizational efficiency. For the full year, we narrowed our net loss by $42 million year-over-year to $80.8 million, down from the previous year's $122.8 million. This reduction was fueled by significant OpEx reductions, including lower general and administrative expenses, marketing expenses, R&D expenses and share-based compensation expenses, as well as increased gross profits and lower one-time asset impairments. Adjusted EBITDA reached $59.5 million, an all-time high and an increase of $15.2 million over 2024. Q4 adjusted EBITDA rose to $12.9 million. These gains reflect higher gross profit combined with disciplined cost-saving initiatives and organizational restructuring. Our improved efficiency translated directly into cash. We generated $31.1 million in operating cash inflow, more than triple the amount from 2024. We ended the year with $70.6 million in cash. To strengthen our liquidity position, we have secured an $80 million equity investment commitment for 2026 from our largest shareholder, so we are fully funded to execute to our near-term objectives. In 2026, we anticipate a modest revenue recovery, forecasting a range of $285 million to $305 million. We estimate that approximately 95% of full year revenue will be generated from the Taiwan market. Our strategic priority remains profitability. We expect our battery swapping business to achieve non-IFRS profitability in 2026 with our hardware business following suit in 2028. With new products launching and continued operating leverage, we are well-positioned to drive strong cash generation in the year ahead.

Thank you, Henry and Bruce, for the updates. As attendees are formulating their questions, I will ask 2 questions that we have collected. Question number one, you've been executing well on the first phase of your strategy, stabilizing the business, stopping the cash burn and positioning Gogoro Network to reach profitability in 2026. Assuming the energy business achieves profitability as planned this year, how should we think about your strategy for the scooter business, which from an external perspective, appears to be underperforming and absorbing a disproportionate share of group losses?

The first thing to remember is our focus over the past period: stabilize the business, get execution back on track and put GN on a path to profitability in 2026. That's the foundation we needed before tackling any broader challenge. On the scooter business, we know it hasn't yet delivered our desired results. Our approach isn't about growth at any cost. This means being more selective about models, geographies and channels, reducing complexity and aligning investment levels with demonstrated returns. Importantly, we are managing the scooter business with clear financial guardrails so that it does not jeopardize the profitability trajectory of GN and Gogoro as a group. With this approach, the scooter business will regain traction by rolling out superior new products and expanding margins by leveraging the economics of scale, producing more units, lowering per unit costs, optimizing our supply chain and further streamlining operations. By focusing on high potential markets and the most attractive customer segments, we can improve utilization of our infrastructure and distribution network. Combined with disciplined pricing, a refined product mix and stronger after-sales services, the scooter business will become a major growth engine over time, generating sustainable profitability and contributing meaningfully to Gogoro's long-term financial targets.

Question number two, you put in lots of hard work in reducing OpEx in 2025. Can you sustain that level of OpEx savings? And can we expect ongoing improvements in gross margin?

Thanks for the question. You're right that the team worked super hard on cost savings in 2025. Our total OpEx reduction on an IFRS basis was $51.9 million, which does include some one-time impairments. Without including the impairments, we still saved nearly $24 million. So thanks to everyone on our team for contributing, whether through lower variable marketing and promotional expenses, which resulted from lower vehicle sales, savings in research and development expenses by focusing the vehicle business on a streamlined product portfolio, lower payroll driven by operational efficiency or savings in share-based compensation. This is a huge achievement. It's a clear indication that we're tightening things up and that we're focusing. And again, we really appreciate the hard work of all Gogoro employees to contribute to this. In 2026, it will be hard to replicate that same level of OpEx savings. So we need to look to reduce BOM costs, increase our manufacturing efficiencies and execute some value engineering projects to continue to drive margin improvement, which is critical to our ongoing success. We're committed to those cost savings across the board. We're committed to associated margin improvement, but it's unlikely that we'll be able to replicate the size of the savings from 2025. These were substantial and necessary cuts that we made to rightsize the organization and refocus our efforts on value-adding investments. Thanks.

Thank you, Henry and Bruce. Now we open the line for more questions.

No questions. I'll turn the call over to Henry for closing remarks.

Before we close, I want to reinforce one message. Financial discipline remains our top priority. We will not buy revenue or chase empty volume. Growth must be organic, gross margin positive and aligned with our efforts to establish long-term profitability. Operating cash flow is the true measure of our success. We are laser-focused on long-term sustainability. Our 2025 performance serves as solid evidence in our critical target, Gogoro Network pursuing profitability in 2026. I have confidence that the energy business will demonstrate profitability by the end of the year as promised to reestablish Gogoro's foundation for the future. Thank you for joining us today. We look forward to updating you on our progress throughout the year.

That does conclude today's conference call. Thank you for your participation. You may now disconnect.