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Your favorite micro mobility brand has risen from the ashes to pay back its debt. Yes, we are talking about the Lime Scooter IPO breakdown. I have the S1. They're going out on their road show this week is going to be incredible because what is life if you've never crashed a lime scooter? I think it was Rene Descartes who said that this is The Lime Scooter Ipo S1 breakdown is this thing on? Yesterday's price is not today's price. All right, so a few years back, I worked at a company that flew the entire org to Tel Aviv for this. All hands. And the boardwalk along the beach was littered with lime scooters. People rode them everywhere, hotel to venue and back. They were mostly responsible about it right up until one of our sales Reps decided at 1am we was a perfect time to learn how fast he could rip this thing down a wet boardwalk. And so he face planted into the pavement really, really hard. And he spent the rest of the week walking into sessions with skid marks down one side of his face. It was kind of like rocky, like I ain't here no bell. It looked like he got in a fight. I didn't hear no bell. I'd love to see the other guy. But yeah, the other guy was Lime. A lime scooter. So from that day forward, whenever he posted a close one deal in the Slack channel that we had at the company, instead of hitting the gong emoji which people would typically do, people smash the scooter emoji. So I bring this up because the company that turned my coworker into a permanent inside joke is going public this week. Lime, the micro mobility outfit that you've absent mindedly stepped over on a sidewalk or your lawn, is kicking off its roadshow to list on the NASDAQ under the ticker Lime. So the offering adds up to around 200 million at a valuation that pencils to about 1.8 billion. So. So their mission, Lime is the largest global shared micro mobility business. We are on a mission to build a future where transportation is shared, affordable and carbon free. Carbon free. Kid, I will admit something up front. I love this CEO. So Wayne Ting is an operational savant. He was chief of staff to Dara at Uber before he took this thing over. And the way he talks about the unit economics of a scooter business, he talks about decay rates and revenue per year and five year payback windows. It's, it's contagious. I would go to scooter bore for Wayne which makes it more interesting that the company he runs spent a stretch as a complete and utter smoking crater. This is a phoenix rising from the ashes kind of story, except the bird is like 2/3 of the way out of the fire and you can still kind of smell the singed feathers and he very heavy debt load. So post Covid Lime, it torpedoed, right? So it lost almost all of its revenue in a matter of days and it stayed alive on an emergency check from Uber while its competitors withered and died. And this turnaround since then is remarkable in many ways. But like I said, it's not completely finished yet. And there's this wall of debt that is coming due in September that is pushing them to ipo. They may not be a going concern if they can't ipo. And the timing of this is fun because Lime is slipping out in the narrow gap between space in the oncoming OpenAI and anthropic IPOs. So this quote unquote little $1.8 billion scooter company is in a lot of ways the antithesis to AI. So there are really two questions we will explore in this so first is shared mobility a commoditized business with low switching costs and even lower margins, or an innovation stack buttressed by a mode of in house hardware and software and operational discipline? Second, can this final question mark equity raise, pay down the debt and launch Lime's next chapter as a self sustaining company, or does it stay on the market's drip? Let's get into it. All right, so what does Lime do? Lime rents you an electric scooter or bike by the minute for the trip that is far too long to walk but far too short to drive. You've all been there in dress shoes before. You're like I don't really want to walk 20 miles. Maybe I'll take a Lime. They say Lime has revolutionized the shared micro mobility industry through our vertically integrated platform which combines our proprietary hardware and software, data, tech enabled operations and government relations expertise. So like I said, it's both scooters and bikes. I keep after reminding myself that they also have bikes. So scooters get the headline. But Lime does run a real e bike business too, and the bike pulls a different kind of rider. They say it's for usually an older demographic going on longer trips and more willing to pay because it's more minutes. So keep both in mind here as we go. The scale is bigger than people realize, so since it started, Lime has run more than a billion trips. I do hate aggregate metrics for more than 105 million riders. In 2025, it served about 19 million riders across roughly 230 cities in 29 countries. Mr. Worldwide, it is the largest shared micro mobility operator in the world and it isn't even close. About 27% market share across the countries it operates and 37% in the US and nearly three times the next operator. The industry itself is is still young. So dock based government bike share goes back to the mid 2000. So Docbase is like when it literally has the dock, they have to, you know, clip it in and out of. But the modern app based Doclus version where you can throw it anywhere, you can throw it on any corner that only started in 2017 once cheap smartphones, GPS, IoT chips and lithium batteries showed up at the same time. So Lime is the biggest player in a category that is actually still less than a decade old. And most people think Lime is a scooter company. Lime thinks it's a vertically integrated operations company that happens to deploy scooters and bikes, its own hardware, its own software, pile of trip data, tech enabled field operations, and that government relations team that will go and win those city permits. Whether that stack is a real moat or an expensive way to rent commodity scooters is the question that this IPO hinges on. Here are some stats before we get into how a scooter actually pays for itself and where the bodies are buried under the operating line. So their revenue in FY25 was 887 million. They grew 29% year over year. So 29% revenue growth, up from 687 million in 2024 and 522 million in 2023. So two years of high twenties to low 30% growth. Q1 of 2026 they did 170 million up 32% year over year. So the growth rate is holding into the IPO on a quarterly basis. But if you're going to try to multiply by four, don't because this is a bad quarter for them seasonally. More on that and weather pattern talk later. Gross margin 39%. So gross profit was 345 million up 23%, which is slower than revenue margin actually slipped from 41% in 2024 to 39% in 2025. The culprit here isn't actually operations. It's a depreciation change. Sneaky, sneaky we'll get into, not the business getting worse. Adjusted gross margins 53%. So adjusted gross profit, which is gross profit with depreciation amortization stripped out was 467 million or up 27%. And now this is a number that Lime really, really wants you to look at because it's the closest thing to the cash margin on a ride before you account for the scooter wearing out. So they're saying each ride, basically they get 50%, right? So above 50% feels good for the type of business they're in. Honestly, just keep one eye on the 13 point gap between this and the reported gross margin, because that gap is the death of scooters. And that is reflected in accounting terms. Operating income, FY25, 70 million. So it flipped from an operating loss of 25 million in 2023 to positive 47 million in 2024 and now 70 million in 2025. So on an operating basis, this company, it works. Now, when Wayne inherited it, it did not work. Adjusted EBITDA FY25,218 million, up 42% year over year. Got to love that. So up from 153 in 24, 100 million in 23. So a 54%, then 42% march up into the right. So Q1 2026, adjusted EBITDA was only 7.5 million against 2.1 million a year earlier, up 250%. Lot of small numbers, though. And remember, Q1 is their worst quarter because there's winter stuff and not a lot of people are riding these things. So if you have less revenue but a fixed operating cost, it's not going to look that great. In Q1, net loss, FY25, negative 59 million. And it got bigger. Why? So here's the rub. Operating income improved to 70 million like we said. But the net loss widened from 34 in 2024 to 59 million in losses in 25. And that cumulative 130 million swing between the operating income and the bottom line lives actually below the operating line. Interest on a fat pile of debt. Plus mark to market swings on the 2021 convertible notes that run through other expense. I hate when companies put stuff in the other expense line. The operating business is profitable, but the capital structure is eating it up. So for the debt section, free cash flow and FY25, positive 104 million. Q1 of 26, 79 million full year, free cash flow was positive 104 million, a $56.5 million improvement helped by a change in supplier, payment terms, letters of credit instead of upfront deposits. That lowered cash out the door for vehicles. Whoever negotiated that to G. But Q1, 2026, free cash flow was negativo 79.2 million side flip capex front loads into the cold weather quarters for the hardware refresh while demand bottoms out in the rain. So if a bear quotes you the quarter and a bull quotes you the year, they're both, they're both kind of telling the truth there the operating engine fleets, riders and revenue per scooter so the Average operational fleet grew 18% in 2025, concentrated in cities they already were in that they were already serving. Hey, thanks for listening. We'll be right back after a word from our sponsors. Let me ask you something. If your board wants financials, would you be certain you're not wasting money on SaaS or if a major renewal hits, would you know if you're paying a fair price? Your vendors would. They see thousands of deals every year, but most finance and procurement teams see one deal at a time. That's a tough way to negotiate. Spendhound fixes that intelligence gap. It's one place to track all your software spend and gives you pricing benchmarks across more than 10,000 sessions. SaaS and AI vendors and it's based on real spend data from over a thousand companies. 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I also just published my second annual CFO Tech Stack Report and Aleph has been on the podium both years including a number one finish in the 50 to $100 million segment. This year, instead of being just another planning tool, they built a real enterprise grade data foundation for finance implemented at startup speed with AI native workflows woven into its DNA. All your systems, erp, CRM, hrs, ats, product usage and more powering one clean governed data layer that finance can actually trust. With AI moving as fast as it is, they're pushing even further. Mcp, custom AI chatbots, AI powered variance analysis and the list keeps growing. Try it with your own data at get a left.com run that is G E T A L E P H.com run tell them CJ sent you. Monthly active users grew 21% to roughly 19 million. So 19 million people use it on a monthly basis. Revenue per vehicle per day. I love this RVD revenue per vehicle per day. This is the metric that Wayne, their CEO actually runs the company on and it grew 10% so it's more scooters used more often, each earning more revenue. This metric in my opinion is the encapsulation of their flywheel if it's working or not. Operational fleet retention rate is above 100%, meaning they're net growing the deployed fleet in existing markets rather than just chasing new cities. Let's talk about marketing. Because it's only 2% of revenue, this shocked me. Most consumer apps would literally amputate a limb for that. When you're the default scooter on every corner, the corner does a lot of the marketing for you, right? You see this green scooter and that number is the network effect showing up in the P and L and we'll come back to it. Pricing mix okay so they got a couple of different products here, 72% pay as you go 28% lime pass slash Lime Prime. The subscription ish bucket grew from 20% of revenue in 2024 to 28% in 2025. Bundle and subscription riders, they take roughly 6x the number of trips of pay as you go. So this shift is powering that RVD uptick. The debt 821 million going in, but most of it converts. So they have this 115 million senior secured term loan at 10% that is due in September of 26. So this is the only piece that will get repaid in cash, but they very much need to repay it. And that'll come out of the IPO proceeds. It'll actually gobble up most of the IPO proceeds. 536 million of 2021 convertible notes due in October of 26 and 170 million of 2020 notes. That is the carnage from COVID Due May of 27 automatically convert to common stock when the deal prices. So the balance sheet mostly clears itself up at IPO. The offering $200 million deal, $1.8 billion valuation. They won't get all of that because they got to pay the bankers selling a bunch of shares. Total deal lands around 200 million net proceed about 142 million or 166 million if the green shoes exercise. 64 million shares will be outstanding after the deal will put the basic market cap near 1.6. Fully diluted with options and RSUs loaded in. You get to that 1.8. Like I said, NASDAQ ticker lime, they have 1,148 employees and then a ton of like contingent contractor workers that help make this go. And Goldman is the lead left. Let's talk about the turnaround. Before any of these numbers are relatively good, they were absolutely catastrophic. So when Covid hit, Lime was deleted. Revenue dropped roughly 95% in a matter of days because the entire product is people leaving their house. And overnight nobody was leaving their house. So the company had walked into 2020 already knowing it needed to raise before COVID hit. They were like, okay, we're planning on a fundraise this year. Then the six months of Runway that it had turned into literally 20 days. That's what Wayne said on a podcast. This was very much an emergency. And the life support check came from Uber. Dara wrote an $85 million lifeline in early 2020 and elevated Wayne from head of strategy and ops to CEO in the process. That's when he became the CEO, taking over for the original founder. The grim part and the part that ended up really helping Lime is what happened to everybody else. The venture money fled the entire category. So micro mobility became a scarlet letter and capital dried up. The competition who had been matching Lime dollar for dollar, and the land grab, they ran out of road, no pun intended, and a bunch of them died. So Lime survived the famine by vertically integrating its hardware, software and revamping its warehouse operations, while competitors like Bird literally filed for chapter 11. Bruce Wayne. I'm calling him Bruce Wayne. He's like Batman of scooters. He took the top job, came into the wreckage and looked under the hood, and what he found was pretty gross. So the company was losing about $3 for every $1 revenue. The Daily decay rate, that's the rate at which you got to replace the scooters. The daily decay rate on the fleet was 3%, which means you are effectively buying an entirely new fleet every 30 days, which is like, not great if you're in the scooter business. And almost nobody inside the building could see it because there was zero data ingrained in their culture. So in that interview that Wayne did with Harry Stevings on 20 Minute VC, he said some employees actually thought the company was printing money, not knowing they were incinerating capital at a very alarming rate. So it required the company to get really tactical. Wayne sat on the warehouse floors. You just sit there for hours and hours on end. You'd answer emails and just watch people observing how different GMs organized and measured their employees. And so these are the three numbers that he locked in on. He forced the company to live by them. They were trips per vehicle per day, revenue per vehicle per day, and riders per day. And none of these are complicated to calculate. They're all just numerator, denominator. They're not compound metrics. And the problem, though, was no one had been tracking them or calculating them all. So, like, you couldn't tell if a city was working on paper or not or if it was bleeding cash. They also started measuring decay annually instead of daily, since a 3% daily rate just. Just panicked everybody. While the annual version was something that you could actually plan against. And the bigger thing here was the warehouse operation. So he decided the whole business came down to three things. The quality of the GM running the warehouse, whether you could see what was happening inside it, and whether anyone was actually on the hook for the result, like fixing these scooters. So they built the visibility into the software. How many scooters did you fix today? And then the one that actually mattered, how long until it broke again? Right. So a mechanic who fixes a scooter in 20 minutes looks like a star until the same scooter is back in the shop a week later. You can't have that tracking time to fix in time to next break is how you find the mechanics were good and the ones who are pretty terrible and actually bringing the operation down. So now they had a scoreboard and anybody not fixing the scooters or or anybody was fixing them badly had nowhere to hide. Right. You can see all this in the numbers. Operating losses of 25 million in 2023 became 47 million of operating income in 2024 and 70 million of income in 2025. So the company that used to buy a new fleet every month now gets five years out of a scooter. But none of that operational work touched the balance sheet. Remember, the debt Lime took on to survive 2020 is still sitting there. It's due in 2026. 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And it's helped some of the most successful names in tech go from startup to exit to mega cap. You build the next big thing and with the teams across strategy, tax, audit and transactions, EY will help you build your next big thing, right? Learn more@ey.com TechStartups that's ey.com TechStartups let's talk about that debt. Lime will walk into this IPO carrying about 821 million of debt. Most of it isn't the problem it looks like though some of it is. The 115 million senior secured term loan is the only piece that behaves like a normal one. It carries a 10% coupon and matures in September of 26. So like hey, rent is due baby. Lime is using the IPO proceeds to repay all 115 million of it. Remember, they're only raising like 146 to like 165 ish. The green shoes exercise, which works out to like almost all of of what they're raising. You're kind of like buying stock. So the company can pay off a loan. The other 706 million never comes due in cash. Remember the the other notes convert into stock so it kind of solves the problem there with some dilution. Bada bing bada boom. The convertible also explains the net loss which is the part that like super confused me at first. So the loss got bigger in 2025 from 34 million to 59 million even as like operating income climbed to 70 million. Interest expense had nothing to do with it. It was sitting flat around 20 million. The damage was in other expenses. This frustrates me beyond end. I hate when stuff is buried in other expenses. The other line you just throw it in there it jumped to 99 million. Of that 84 million was a single line within the line. The loss on the change in fair value of the 2021 notes that loss is the company getting more valuable. LOL. The 2021 notes sit on the books at fair value and a convertible note gets more expensive to mark as the stock it converts into is worth more. So they're a victim of their own success in that way. So as Lime's value ran up into the offering the accounting Turnaround handed it 804 million charge for like its success. So yeah net net the scariest number on Lime's income statement if you can find it, is a non cash mark on debt that stops existing the day the steel prices post ipo. Lime should emerge close to debt free. They will be absolved of their Covid era financing sins. The term loan gets repaid, the convertible notes become equity and waiting on the other side is a fresh 200 million revolving credit facility from J. Morgan that they plan to put in place alongside the offering. If it's undrawn it's just a cushion for winters and Capex will run out ahead of revenue and cash goes negative for a quarter like in Q1. So once they emerge from debtors prison the question becomes whether the operating business throws off enough cash to buy its own scooters from here on out. Whether that JP Morgan revolver ends up getting a real big New Year's workout every February like at Equinox. I hate how packed it gets when the sidewalks are slippery. Why more scooters make each scooter worth more. This one's a doozy quote Riders tend to gravitate to micro mobility operators with the most citywide vehicles available, enabling Lime to become a preferred choice for shared micromobility in numerous cities where we operate. Lime might be the only marketplace I've ever written about where adding supply makes each Unit of supply more valuable instead of less so. In most marketplaces, it works the other way. One more Uber driver in like a sleepy market just means everybody idles longer between fares. It's better for the demand side, but for the supply side, it's not as great. So the opposite is true for Lime. For context, in 2025, they grew the average operational fleet 18%, almost all of it in cities. They were already operating by the normal rules. Dropping 18% more supply or scooters into the same cities should thin out the rides per scooter and pull revenue per vehicle down. Remember, they measured on that. However, revenue per vehicle per day went up 10%. Monthly active users went up 21%. Revenue went up 29%. What a rider is actually paying for is reliability. The first time you open the app in, the nearest Lime is a six minute walk away. You don't do it. You don't make the walk because you'd be halfway to your destination already. So you call an Uber or you take your car, or you just stop opening the app. Scooter density is the fix. If you put enough vehicles in a city, there's a real chance one is sitting on your corner. So more people ride, and they ride more often, and each scooter gets more use, even though there are more of them. This drives the 10% RVD bump that we showed in the financials. And it also explains a marketing number that, like I said, I didn't believe at first that Lime spent less than 2% of revenue on marketing last year. If you think about how much Uber spent on marketing, if you think about how much Lyft spent on marketing. But the scooters themselves serve as billboards so they don't have to buy. What is Lime really competing against? Yes, I mean, they are competing against like Bird and the other scooters, but they're really competing against the car because most urban car trips run under five miles. If you're in the city with one person in the seat, which is the exact trip the scooter is built to take, or a bike. People only give up the car if the scooter or bike is reliably there. And the reliability comes from that density, which comes from supply. I think you see the connection I'm trying to hammer home here. So more scooters is better and there's another version of this network effect on the data side. Right. So more vehicles across more cities means more trips, which sharpens the read on where the demand shows up by hour and by block, which puts Scooters where the riders will be. It'll tell people to move them there and tell the workers to move them. They can weigh the cost of moving a scooter to and from locations versus the expected revenue per rider. They'll get where it currently sits. You don't want to move a scooter if it will cost more than what you can gain, right? It also impacts how Lime wins new cities. A city that wants micro mobility will run an rfp. They'll say, hey, come one, come all, if you want this business. And the operator currently running 230 cities with a pretty clean track record looks like a lower risk tech. Lime says it wins about 90% of those bids and renews existing permits above 95%. Every win shuts a competitor out of that city completely. So the same scale that pulls in riders also shrinks the field that Lime is bidding against. This whole equation rests on Lime's ability to keep buying scooters. You keep buying them, got to keep fixing them. If you cut catbacks and reliability slips, the riders will drift back to their cars in this whole loop collapse, this whole virtuous cycle collapse. And that's why the turnaround needed to come first to get to this point and why the operational excellence needs to keep improving to keep both the on P and L and off P and L forces spinning. So how the hell does a scooter pay for itself? Lime makes money in a, like, an incredibly straightforward way. I'm so happy because SpaceX almost broke my brain. You unlock a scooter, the meter runs, you end the ride, you pay. There's an unlock fee of around a buck per time that you take it out, and then a charge for every minute that you're on it. And there are two ways to pay. In 20, 25, 72% of revenue came from pay as you go and 28% came from lime Pass and Lime crime, which are the bundle and subscription plans. So a year earlier, that split was 80 20. So the recurring side is taking share fast as people increase their riding habits. Pay as you go is the tourists on the boardwalk and the first timer who downloaded the app on the sidewalk 10 seconds ago. It's also how riders coming through Uber's app pay. And that channel is meaningful. 14% of Lime's revenue last year, that. That's how they use it. Lime Pass is where the regulars live. They are commuters. Say you're in an apartment in Boston that's two miles away from the hospital you work at. You can use a Lime scooter Every day, you buy a block of minutes at a discount. You use them or lose them inside one to 30 days, or you pay monthly for Lime prime and unlock as many rides as you want. And so the reason that Wayne the CEO cares about pushing people into that bucket is their frequency. These riders take roughly six times as many trips as pay as you go riders. And the mix shift from 20 to 28 is a big part of what pulled RVD up 10% year on year. It's also crucial to know how long it takes to pay back a scooter. When Wayne took over, the honest answer was they never made any money back. Scooters died faster than they paid for themselves. So every unit was a small loss that they needed to reorder each month. But in 2026, a scooter pays itself back in about a year and then ideally generates cash for four years. After that, it gets a five year depreciation life. So launching a new city that still runs in the tens of millions of dollars, you've got to literally flood the block with supply. So entering new areas is a different capex spend than refreshing existing fleets. But the scooters themselves are lasting longer. The single biggest reason the payback math flipped is the swappable battery. So in the early days, a dead scooter meant a worker drove out, picked it up, hauled it back to a warehouse to charge it overnight, and then had to drive back and redeploy it the next day. So I actually remember watching workers load them into the back of this nondescript van. I actually think they were throwing them in physically. This is out in front of my apartment near the TD Garden in Boston where the Celtics and Bruins play. Now a worker just pulls up, swaps a charged battery in on the street, and the scooter never leaves the curb. So Lime introduced these in 2020, and the effect on operating miles is enormous. In Paris, they cut the miles traveled per maintenance trip 87% between 2019 and 2025. The cost structure underneath it changed too. So Lime pays logistics partners on a per swap basis, which turns what used to be this fixed warehouse and fleet costs into a variable cost that scales with actual usage. A company that once needed an entire new fleet every month now keeps the same scooters on the street for years and just changes their batteries. And that allowed them to shift from burning capital to modestly compounding it. So I know what you're thinking. Is this a real moat, or did they just run slash ride scared? The moat feels real. The question is whether it Survives after they get rich. If you start with how the first wave died. Right. Bird was the biggest of them. It was first to scale, first to go public in chapter 11 by late 2023 and sold out of bankruptcy to Third Lane Mobility. All the other companies sold for parts or they folded. They did not lose for lack of money. They raised billions between them and spent it, flooding cities with commodity scooters they bought off the shelf and never controlled. Scooters wore out faster than they paid for themselves. Capital is actually what allowed them to stay sloppy. Lime got disciplined because the capital left when the venture money fled the category in 2020. The only way to survive was to make each scooter last. And the company reorganized around that one problem. The moat grows out of that. And it has three pieces to it. So first, Lime designs and builds its own hardware. The only operator at scale that does it. That lets them engineer for the specific ways a shared scooter breaks and it dodges the vendor trap that sank the others. Where your scooter supplier earns its living selling you replacement parts and has no reason to help those last longer. Right. They run the warehouse operations and software Wayne built city by city. And that stuff tracks how fast a mechanic fixes a scooter and how long before it breaks again. And they have a permits team that wins RFPs, where a win locks the other operators out of the city. That's nice. The hardware also changes the ride. So Lime runs air filled tires where most competitors use solid ones. So it rides smoother and occasionally goes flat. But people enjoy the ride more. And the deck sits lower than a bike, so getting on and off is easier. A nicer ride makes a rider willing to walk an extra block and pay a little bit more for a Lime, which feeds the density advantage from the last section. But if you look closely, none of those three are really an asset. It's a stack of innovations and things they've improved at. And that's really the risk in this IPO. Lime is about to raise 141 million, clear its debt and step into the public markets with the cleanest balance sheet they've had. When you have 20 days of cash, you count the handlebar screws because the company dies if you don't. The bet at 1.8 billion is less whether the model is working Today. It's working. The first wave had plenty of money and used it to flood cities instead of fixing the economics. And Lime only got this one when the money disappeared. Now the money is coming back. The real question is whether Wayne is still watching how long it takes to screw the handlebars back onto his scooter at 1am in Tel Aviv when he no longer has to. To some potential red flags, this is a big one. The IPO is pretty much life or death. They say our ability to continue as a going concern is dependent upon the consummation of our initial public offering. Oh, okay. So buried in the risk factors is that line that says its ability to continue as a going concern depends on the IPO happening because if it doesn't close as planned survival comes down to finding other financing or talking the holders of the 2021 notes into amending the terms. A going concern flag is probably like the most serious sentence an auditor will put on paper. Short of resigning the account, it means you looked at the cash, the maturities and the plan and couldn't get comfortable. The company makes it 12 months on its own. What makes it weird here? The operating business is healthy. 887 million of revenue, positive free cash flow. EBITDA up 42%. The doubt traces entirely to the debt. The 2020 near death experience bolted on. Which is the exact thing this offering exists to clear. So you're watching a company that fix its operations ask the public markets to fix its balance sheet. Number two, they changed how they depreciate scooters the year before going public. The change is considered preferable as we believe the straight line method will more accurately reflect the pattern of economic consumption of vehicle assets. Effective January 1st, 2025, Lime switches vehicle depreciation from a usage based method to straight line. They call it a change in estimate that better reflects how the assets get consumed. Which is like a defensible thing to say. It also is very convenient. A very convenient thing to say. So the switch added 14.8 million of depreciation and push cost of revenue from 59% to 61% of revenue. Run 2025 on the old method and gross margin reads about 41% instead of the 39% they reported. So an accounting tweak moved the exact margin line that investors are anchored on in the year right before the investors are going to show up again. So I'm not saying it's wrong. Straight line over five year for a scooter and four years for a battery is cleaner to model and probably more honest. But this change is undoubtedly going to create a margin tailwind for them in the quarters post ipo. Third, permits are the lifeblood of the biz. Lime obviously doesn't own the streets they operate on. Company rents Access to them one permit at a time from city governments that can revote whenever politics shift and nuff old men say, good, get this scooter off my damn lawn. That happened in Madrid and it happened in Paris. At 1.4, Uber is the investor, their go to market channel and really their kingmaker. So Uber is everywhere on this cap table and P and L, it's their largest shareholder going in at 24%, 14% of revenue, seat on their board, and an exclusivity deal holding the whole partnership together. So the exclusivity is the part that I would watch if it narrows or laps, as Uber can start servicing competing scooter brands inside the same app that hands Lime one of every seven dollars that they make. And I don't know if the writers will care because there's no loyalty on the demand side, you open an app and grab whatever's closest. The comfort is that Uber locked itself up for two years post ipo. They said, hey, we're not going to sell all our shares and wrote the 85 million check that kept Lime alive back in 2020. So it seems like a friendly partner. And yet it's a friendly partner that's doing the job of an investor. A sales channel and a gatekeeper could change with a phone call number five. The vehicles burn, get stolen and hurt people. Did you know that this is the part a software investor forgets to underwrite. So Lime's product is a fleet of electric vehicles that live outdoors, get ridden on by strangers sometimes who are drunk, sit out in the weather and answer to nobody overnight. The batteries are lithium ion. In the filing midst. Our vehicles use lithium ion battery cells, which occasionally have been observed to catch fire or vent smoke and flame. Big insurance cost is 19.1 million in a single year because people crash them and get hurt and sometimes die. Let's talk about valuation. So the founder owns 1.9%. Every other founder in this year's IPOs class. They kept the keys on the way to going public. Musk has his own 10 boat Class B cerebras and bending spoons, handed their founder super voting shares to the public. Goodbye the economics and never have to touch the wheel. Lime didn't. One class of common stock, one vote per share. And Wayne owns 1.9% of it. After the offering, the operator I spent the whole moat section admiring. He runs this company at the pleasure of its shareholders, right? Unlike a lot of the other CEOs recover. So who are the investors? Uber is the largest at 22% post IPO. Down from 24%. Going in next is a name you won't know. Sapphire at 15%. It's an ABU Dhabi investment vehicle that rolls up through something called Lunate and Chimera. Sounds like a beef jerky shop. And picked up its entire stake by converting one of the 2021 notes from the debt section. Fidelity. Oh, that's a good crossover investor. They hold 10%. A16Z holds almost 5%. The selling on this one will be light, and I think the float will be light too, which is actually kind of encouraging. The CEO is selling about 99,000 shares. Co founder is selling 73,000 shares, who's now on the board. Former president who retired in May is selling 47,000. The institutions here don't seem to be selling into the deal at all. And like we said, Uber's locked up for two years. How much are these scooters worth? Well, after a year of writing about companies that wanted 50 and 60 times revenue, what a relief. It's a little disorienting actually to type this up. Lime is going public in under two times sales. At the $25 per share midpoint, the equity is worth about 1.6 billion on a basic share count. Roughly 1.8 billion fully diluted. And because the balance sheet is pretty clean post ipo, the enterprise value sits a few hundred million below that. So against 887 million of 2025 revenue, you're paying something like 1.5 times trailing sales and about 1.2 times next year's. If you assume the growth rate holds, that's like a yard sale compared to the other IPOs. The comps explain why it's priced down here. Nobody values a company that owns hundreds of thousands of physical scooters like a software business. And they shouldn't. They do own their own vehicles, unlike Uber. So it's not like a straight up marketplace in that way. But it is still a consumer app. The right yard six that I could find at least are other companies that put vehicles on city street. So Uber trades at around 2.8x revenue and it's profitable. It's huge. And it carries a self driving option on top. Lyft trades closer to 1x revenue. It's growing single digits with thin margins. Very thin actually. I mean, they're doing a billion in free cash flow, right? And Lime is being slotted between them closer to lyft, while growing 29%, which is about three times Lyft's pace. So on growth alone, that does look like a steal. Then you get to EBITDA and the answer splits depending on which number you take on the 218 million of adjusted EBITDA enterprise value pencils to about 7x which for a company growing 29% is cheap. The problem is that adjusted EBITDA on a scooter company adds back the depreciation of the scooters. And the scooters wearing out is the single biggest real cost in this business. On operating income or free cash flow where the dying fleet actually counts, it's a full price. Whether Lime is cheap comes down to that one choice, which is whether the right denominator includes the cost of the scooters wearing out or not. The bull buys 29% growth in a real turnaround at a transport multiple betting. The density flywheel widens margins from here and the market eventually re rates Lime from a lift towards an Uber. The Bear sees an asset heavy permit dependent business with a going concern flag and no demand side loyalty and figures at transport multiples exactly right. So what you're actually buying at 1.8 billion is a bet that Wayne keeps out operating the cost of the fleet. If the discipline holds, the adjusted numbers slowly turn into the real numbers and the stock rerates. If it slips, the depreciation you were cheerfully adding back is still there waiting. And you pay 20x operating income for a scooter rental company which lands to about a spot the opening did. Lime survived by sweating and the price assumes it never stops. Some fun miscellaneous stuff of note. The company is not legally named Lime. The filing is from Neutron Holdings Inc. Which is a Delaware company and reminds me of Jimmy Neutron. It's a small deal, so the bankers got full price. So remember, SpaceX paid less than 1% to the bankers. This one just has eight bankers, not 22. And the discount isn't filled in yet. But Lime gives you enough rope here to back into it. So it seems like they're going to pay about 7% to list to the bankers, which is on the high side because the amount raises low. The CFO came from Papa John's, presented with no comments. Number four, Uber's actually buying more of the IPO that it's leading. That's a vote of confidence. They're the largest shareholder and indicated interest in buying up to 20 million of stock in the offering. None of this is investment advice, folks. I write it at my kitchen table with Walter my dog, asleep on my feet. Do your own homework. This is for information and entertainment purposes only. And if you ride a Lime scooter, please wear a helmet. Run the Numbers is a mostly media production, yelling an intro by Fat Joe Artwork by Meg d'. Alessandro show is executive produced by Ben Hillman. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me, a guy who feeds his dog way too much ice cream and has a history of net operating losses. Lol. If you like this podcast, hit subscribe and give us five stars. It will take like two seconds and our algorithm overlords love it. Drink water, call your mom and have a great day. Peace.