LiveWire Group, Inc. (LVWR) is a pioneering all-electric vehicle brand committed to leading the rapidly growing two-wheel electric motorcycle market. With a mission to redefine the riding experience, LiveWire has positioned itself as a trailblazer in the industry, leveraging innovative technology and a relentless focus on sustainability.
Company Background
Founded in 2020 as the electric motorcycle division of Harley-Davidson, Inc., LiveWire has embarked on a transformative journey to electrify the world of motorcycles. The company was established to design and sell electric motorcycles, electric balance bikes, and related products, leveraging Harley-Davidson's expertise and infrastructure in its early years. In September 2022, LiveWire completed a business combination with AEA-Bridges Impact Corp., becoming a separate publicly traded company. This transaction provided LiveWire with approximately $293.7 million in net proceeds to fund its operations and growth initiatives. As part of the business combination, LiveWire assumed certain warrants that became publicly traded under the symbol LVWR WS.
Early Challenges and Achievements
During its initial phase as a Harley-Davidson subsidiary, LiveWire faced several challenges, including the need to establish its own product development, manufacturing, and distribution capabilities separate from its parent. The company also had to navigate the rapidly evolving electric vehicle market and educate consumers on the benefits of electric motorcycles, which required significant investment and strategic planning.
Despite these early operational hurdles, LiveWire achieved several milestones in its first few years. The company launched its inaugural model, the LiveWire ONE, in 2020, showcasing the brand's commitment to delivering exceptional riding experiences. Boasting impressive power, range, and handling characteristics, the LiveWire ONE has received critical acclaim from both industry experts and enthusiasts, solidifying LiveWire's reputation as a leader in the space. In 2021, LiveWire expanded its product portfolio with the introduction of the STACYC line of electric balance bikes, further diversifying its offerings and catering to a broader range of riders.
Product Development and Expansion
In addition to product development, LiveWire has focused on building out its global distribution network, establishing partnerships with independent dealers and distributors in key markets. The company has also expanded its offerings with the introduction of the S2 Del Mar and Mulholland models, further diversifying its electric motorcycle lineup. These models have been designed with a focus on style, performance, and sustainability, resonating with both urban commuters and thrill-seeking enthusiasts.
Financials
LiveWire's financial performance has been closely tied to the broader trends in the electric vehicle market. In 2024, the company faced a challenging industry environment, with slower-than-anticipated adoption of EV products amid global economic and political uncertainties. This backdrop led to a revision of LiveWire's full-year guidance, with the company now expecting to deliver between 600 and 1,000 electric motorcycle units for the year, down from their previous expectation.
For the most recent quarter, LiveWire reported revenue of $4,445,000, representing a decrease of $3,695,000 or 45.4% compared to the prior year quarter. This decline was primarily driven by lower unit sales of electric motorcycles and electric balance bikes. The company reported a net loss of $22,694,000 for the quarter, with operating cash flow of -$23,104,000 and free cash flow of -$24,685,000.
Despite these headwinds, LiveWire has remained steadfast in its commitment to cost optimization and productivity improvements, targeting a 40% reduction in cash burn for 2025 compared to 2024. The company's operating loss guidance remains unchanged for the full-year 2024 in the range of $105 million to $115 million.
Strategic Actions
To strengthen its market position, LiveWire has taken several strategic actions. In 2024, the company announced the relocation of its LiveWire Labs facility from California to Milwaukee, Wisconsin, consolidating its operations and streamlining its organization. This move, coupled with a 30% headcount reduction heading into 2025 compared to the start of 2024, is expected to drive significant cost savings and set the stage for improved financial performance in the coming years.
Market Expansion
Furthermore, LiveWire has been actively exploring opportunities to expand its addressable market. In November 2024, the company plans to unveil a new product segment at the EICMA motorcycle show, which it believes will meaningfully broaden its customer base and introduce additional revenue streams in the medium term.
Liquidity
As of September 30, 2024, LiveWire reported cash and cash equivalents of $88,440,000. The company's financial position is further supported by a $100 million Convertible Delayed Draw Term Loan Agreement with Harley-Davidson, entered into in February 2024, of which $0 was drawn as of September 30, 2024. LiveWire's debt-to-equity ratio stands at 0.0037, indicating a low level of leverage. The company's current ratio of 3.54 and quick ratio of 2.62 suggest a strong short-term liquidity position.
Segment Performance
LiveWire operates in two main segments: Electric Motorcycles and STACYC. The Electric Motorcycles segment, which is the company's core business, focuses on the design and sales of electric motorcycles, parts, accessories, and apparel. During the nine months ended September 30, 2024, this segment saw a 36.3% increase in revenue to $4.88 million, driven by a 156.2% increase in unit sales. However, this growth was partially offset by lower selling prices of newer models and increased incentives.
The STACYC segment, which focuses on electric balance bikes for kids, reported revenue of $10.99 million for the same period, a decrease of 43.2% compared to the prior year. This decline was primarily due to lower shipment volumes to independent distributors.
Outlook
While the electric vehicle market has faced its share of challenges, LiveWire remains committed to its long-term vision. The company's strong technological capabilities, coupled with its parent company's deep industry expertise and brand recognition, position LiveWire as a formidable player in the rapidly evolving electric mobility landscape.
LiveWire's focus on right-sizing the business, delivering high-quality EV products, and preparing for future growth as the EV market expands underscores its strategic approach to navigating current market conditions. The company's efforts to manage expenses, improve product costs, and expand its product lineup demonstrate a proactive stance in addressing market challenges and capitalizing on future opportunities.
As LiveWire continues to execute on its ambitious plans, investors will closely monitor the company's ability to deliver on its promise of revolutionizing the two-wheel electric motorcycle market. The upcoming product announcement at EICMA and the company's cost optimization initiatives will be key factors in shaping LiveWire's trajectory in the coming years.