Lime’s Remarkable Turnaround: From Pandemic Struggles to Profitability
Micromobility leader Lime has defied expectations, announcing a significant financial rebound after the challenges posed by COVID-19. The company is now on track to achieve full-year profitability in 2021—a milestone few anticipated earlier this year.
Key Financial Milestones
- Cash-Flow Positive: Lime reported being both operating cash flow positive and free cash flow positive in Q3 2020—a first for the company.
- EBIT Positive: The company reached EBIT (Earnings Before Interest and Taxes) positivity at the corporate level during summer 2020, though this excludes share-based compensation.
- 2021 Profitability Target: Lime projects full-year profitability in 2021 based on EBIT metrics, signaling a strong recovery trajectory.
CEO Wayne Ting’s Optimistic Outlook
Speaking at the WSJ Future of Everything event, Lime CEO Wayne Ting highlighted the company’s resilience:
“It was certainly a very tough decision for us earlier this year [to downsize], and I know we weren’t the only company facing these challenges during COVID. But these hard choices have positioned us for sustainable growth. We’re now rebuilding carefully to avoid similar setbacks.”
How Lime Bounced Back
Lime’s turnaround strategy included:
- Operational Pause: The company halted most operations for a month during the pandemic’s peak, using the time to refine its business model.
- Strategic Layoffs: In April 2020, Lime reduced its workforce by 14% and exited 12 underperforming markets.
- Capital Infusion: A \(170 million investment led by Uber in May 2020 provided critical liquidity, albeit at a reduced valuation (<\)1 billion).
Innovation on the Horizon
Lime isn’t just stabilizing—it’s expanding. The company recently launched its Gen4 scooter in Paris and teased two new mobility modes (beyond bikes and scooters) slated for Q1 2021. While details remain scarce, Lime confirmed these will be app-integrated, swappable-battery solutions targeting trips under five miles.
Why Profitability Metrics Matter
Lime’s use of EBIT positivity (rather than GAAP net income) is common among startups but warrants scrutiny. The exclusion of share-based compensation means its profitability isn’t yet GAAP-compliant. However, cash-flow positivity is a critical milestone, reducing reliance on external funding.
Industry Context: A Sector Rebounding
Lime’s recovery contrasts with its rival Bird, which also faced layoffs in 2020. Both companies were once emblematic of the cash-burning micromobility boom. Now, Lime’s leaner operations and focus on unit economics suggest a more sustainable path forward.
The Road Ahead
While questions remain about the nuances of Lime’s profitability, its resurgence is undeniable. From near-collapse to cash-flow positivity, Lime’s story reflects both the fragility and adaptability of the micromobility sector in a post-pandemic world.
