Donkey Republic aims for profitability already in 2023 but moderates growth ambitions
Company Announcement No. 8 2022
- Despite growing economic uncertainty and increasing cost, 2022 guidance remains valid, driven by strong growth of rider business and start of large subsidized operations.
- For 2023 positive revenue trends will continue and are expected to cover a more lenient HQ organization to turn Donkey Republic profitable and cash-generating, one year ahead of IPO plan.
- Increasing pressure on the supply chain and uncertain market environment, especially in regards to debt availability, makes a downward adjustment of the growth ambition for 2024 necessary.
2022 performance on track thanks to strong rider demand
Throughout this year we have seen a strong increase in rider activity with our bikes, which almost tripled in the first 5 month this year compared to 2021. We expect this to continue, especially with more bikes to arrive later this year and the start of our two new major subsidized operations over the summer, Antwerp and Turku.
We are, however, also experiencing the negative impact from global developments, such as increasing inflation, a challenged global supply chain and uncertainty in the capital markets. This means material challenges in the timelines for bike deliveries, as well as increased sourcing cost. In addition, we see that these developments are also delaying purchase decisions from potential partners. This makes meeting our bike sales targets within the SaaS business for this year more difficult.
At the same time, the war in Ukraine, and increases in the overall interest rates, next to large reductions in stock prices created an environment where capital is more expensive and also less available. This has an impact on our previously planned fleet growth for 2023 that is based on securing large debt financing already in 2022
Overall we still confirm our guidance for this year in regards to revenue of EUR 9m to 10m and an EBIT of EUR -5m to -5,5m. We also still expect to receive more than 10.5k bikes in 2022, which will be a large driver for our growth in 2023.
Priority will be on profitability instead of growth in 2023 to master uncertain market environment
However, taking into account the above factors, we will reduce our growth ambitions in 2023, in exchange for focus on profitability. Profitability will be key in counteracting the negative trends in capital markets, as we also see with the strong focus on the bottom line by technology companies. By achieving profitability in 2023, one year ahead of our IPO plan, we believe Donkey Republic will have better conditions for access to capital markets, helping our further growth.
For 2023 we therefore expect a revenue of EUR 13m to 15m with an EBIT margin between 0% to 5% and to run an overall cash generating business. This expectation is based on the completion of current advanced debt raising negotiations and the above mentioned delivery of all the ordered bikes in the second half of 2022.
In order to achieve profitability in 2023, we are initiating a reorganization to improve overall efficiency, which allows us to develop our fixed cost on a more moderate level than stated in the IPO business plan. This also means an adjustment of the current and future organization.
The management is currently working with the organization and the board on implementing the above strategy. We will provide a status on the progress in the coming half year report.
Outlook for 2024
Based on our outlook for 2023 we also revised the topline target for 2024 that was indicated in our IPO plan (EUR 25m to 30m). We now expect a total revenue of EUR 17m to 22m in 2024 with an unchanged EBIT margin of 5 to 10%. This forecast is depending to a large extent on the overall supply chain situation and availability of debt financing in 2023. The management will continue to monitor the situation closely and adjust accordingly.
