- European electric scooter startup Tier turned a profit in Q3, according to financial documents seen by Business Insider.
- Tier is comparatively small and only operates within Europe, but its numbers indicate that scooternomics may not be as unprofitable as critics feared.
- "We have made long-term structural changes and wanted to ensure we could be profitable through winter periods of low demand, but also Covid," Tier CFO Alex Gayer commented.
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European scooter rental startup Tier is currently profitable, according to internal documents shown to Business Insider.
The startup's revenue is in the tens rather than hundreds of millions of euros. But with billions of dollars ploughed into scooter startups, Tier's leadership bills its shift to profit as vindication of careful, managed growth.
A bonus is that the company has achieved positive financial results despite the pandemic stymieing the expected summer boom in rides.
"We have made long-term structural changes and wanted to ensure we could be profitable through winter periods of low demand, but also COVID," Tier's chief financial officer Alex Gayer said.
According to the documents shown to Business Insider, Tier has been EBITDA-positive for the third quarter of 2020 and anticipates this continuing into the next quarter. The figures show EBITDA growth in the single-digit millions of euros, on higher revenue in the double-digit millions of euros. The company suffered losses during the first half of the year.
Like other scooter companies, Tier allows users to rent its electric scooters through an app. It competes with both well-funded US firms such as Bird and Lime, as well as smaller local rivals such as Wind and Voi.
Users can use Tier's app to locate and unlock an available scooter nearby. How much you pay per ride depends on the city. In Berlin, for example, riders can unlock a scooter for €1 ($1.10) and pay €0.15 ($0.17) per minute of use.
Tier claims it is now profitable in every city it operates in. Most of the firm's operations are in Germany, where it is available in 45 cities and towns, alongside France, Austria, and large swathes of Scandinavia and the Nordics. The startup does not operate in the US or in Asia.
The company said its move to swappable batteries and tech-led operations expertise were key to its improved unit economics. Tier suggested that the company's focus on sustainability and strong operations differentiate it from other players with more capital to burn.
"Profitability is hugely important — it gives a company like ours the confidence to invest. It's important for us to be able to recruit top talent and makes us a more attractive long-term partner for cities," CFO Gayer added.
The company's cofounder and CEO Lawrence Leuschner previously told Business Insider that capital efficiency was at the heart of his startup's scaling plans.
The German firm also says it is the only major player which hasn't had to lay off any employees due to the pandemic. The startup has around 900 employees.
Bird, one of the biggest and best-funded scooter startups, laid off 406 staff in March.
Swedish scooter company Voi also furloughed a large number of its staff in response to the coronavirus.
Tier was a big winner in this summer's Paris scooter tender and is also trying to win tenders in the newly opened UK market. It has only won a tender in the city of York to date.
The company raised a $22.7 million second extension to its Series B earlier this year. The firm initially raised $60 million in October, then raised a further $40 million in February.
Tier's existing backers including Mubadala Ventures, Goodwater Capital, Northzone, White Star Capital, Novator, and RTP Global funded this new $22.7 million extension.
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