Bloomberg Línea — Brazilian micromobility startup Tembici released its 2021 financial results on Thursday, revealing that it invoiced 146 million reais ($28.8 million) during the year, 40% more than in 2020, and this year it is aiming for 292 million reais ($57.6 million) in revenues.
The revenue increase pushed the company’s gross profit to 70% growth, a 9% increase in gross margin compared to 2020.
According to Leandro Fariello, the startup’s CFO, gross profit was swelled by revenue growth as the company also made operational improvements. Tembici took advantage of the period of reduced mobility during the pandemic to improve lines of its cost structure, such as the rate of bicycle losses, he said.
Unlike mobility companies that work with electric scooters, for example, Tembici has a lower cost for bicycle maintenance.
The company’s rate of bicycle losses, either through vandalism or theft, is 0.15%, according to the CFO.
“We took advantage of the pandemic to put an iOT with an embedded GPS on our bike fleet. We were able to monitor in real time where the bikes are, and take actions to prevent vandalism. So, we improved our cost structure as a whole, and have a better performance from an economic result point of view,” Fariello said.
The company raised a Series C round of $80 million last September, and for Fariello, the strategy of transparency of results is part of the dynamic with the board of directors, investors, and the market.
“Reporting revenues is important, to give an indication to the market of how the company has advanced, even in a critical pandemic period,” he said. Asked if disclosing the result is a strategy toward an IPO, Fariello said that the company is not focused on an IPO, but that going public in the United States is a natural path the company should follow soon.
While many startups spend years bankrolling themselves with venture capital rounds, Tembici said it has managed to post profits because it focuses on bringing scale to the business through users, who bring in revenue in a network effect, as the company has several orange dot stations of the well-known “Itaú bike” in São Paulo and Rio de Janeiro. Tembici is sponsored by Itaú.
“User revenue in the post-pandemic has been growing month-on-month,” he said, although February did not surpass January because the month has fewer days. B2C revenue almost tripled from January 2020 to January 2022, accounting for more than 55% of Tembici’s revenue share.
For the CFO, these results are a reflection of the post-pandemic upturn in mobility. The company recorded a 25% increase in users over the previous year.
“The World Health Organization recommended the bicycle as one of the means of transport that should be used in this context, so the B2C segment is certainly the one that will bring the biggest source of revenue for us in the medium and long term,” said Fariello. In addition, with electric bikes, the revenue coming from the user is higher, since Tembici charges more for e-bikes than for regular bicycles.
Fariello says the B2B business (revenue from sponsors such as Itaú and iFood, or from advertising panels at the bicycle stations) is also an important part of the revenue in order to have a healthy economic index.
“If on the one hand we strongly believe that the scale of the business comes through user revenues, it is precisely the B2B revenues, the advertising and sponsorships, that guarantee us a stable income when we start each of the projects we have. Thus, this money makes it possible to reach new markets, such as the recent expansion to Bogotá, and new technologies, such as electric bicycles,” Fariello says.
Tembici will begin operations in Colombia’s capital city at the end of the first half of this year, with an investment of 53 million reais ($10.4 million). The Bogotá business model will be modeled after that of Brazil, with a partner company, and will launch with 3,300 bicycles, in which electric bicycles will account for half of the fleet.
The company is also advancing to other cities in Brazil and already has operations in Chile and Argentina.
The expectation of doubling revenues this year is aligned to its geographic expansion and investment in last-mile partnerships, such as with iFood, and possible new partnerships for retail delivery, the company says.
Through the partnership with iFood - in which delivery drivers have been using Tembici bicycles since last year - more than one million deliveries have already been made.