Getaround Announces Restructuring Plan to Accelerate the Path to Profitability

Rhea-AI Summary

Getaround (GETR) announced a workforce and operations restructuring plan to reduce costs and align with the globalization of its carsharing business. The plan includes a 30% reduction in the North American staff, with anticipated cost savings of approximately $7 million on an annualized run-rate basis. The Company expects to incur up to $1 million in restructuring costs. Getaround CEO, Sam Zaid, emphasized the focus on profitability and sustainable business growth, highlighting progress in revenue growth, unit economics, and overall adjusted EBITDA profile. The company also introduced new AI models and a global app, expanding to gig carsharing. Despite the positive outlook, the CEO acknowledged the difficulty of the decision and expressed gratitude to the team.

Market Research Analyst

Getaround's announcement of a workforce reduction is a strategic move to optimize operational efficiency and improve financial health. The estimated savings of $7 million are significant, as they suggest a substantial reduction in the company's expense structure. This aligns with the broader industry trend where tech companies are streamlining operations in response to market pressures and investor expectations for profitability.

However, investors should consider the potential short-term disruption that a 30% reduction in North American staff could cause. While this move is aimed at accelerating the path to profitability, it may temporarily affect the company's ability to innovate and maintain service levels. The long-term benefits hinge on the company's ability to maintain operational effectiveness with a leaner workforce.

Additionally, the one-time restructuring cost of up to $1 million, although relatively small compared to the savings, will impact financials in the short term. Investors should monitor the company's subsequent quarterly reports to assess the true impact of these changes on the bottom line and whether the anticipated savings translate into improved net profitability.

Financial Analyst

From a financial perspective, Getaround's restructuring plan can be seen as a proactive measure to strengthen its balance sheet and extend its cash runway. The focus on adjusted EBITDA and operating efficiency is a positive indicator for stakeholders, as these metrics are crucial for evaluating a company's operational performance and its ability to generate profits from its core business operations.

Investors should note that the introduction of new technologies such as Trustscore AI and the expansion into gig carsharing could be catalysts for future revenue growth. These innovations may enhance Getaround's competitive edge in the carsharing and gig economy space. However, the true test will be the company's ability to leverage these advancements without the full workforce it previously had.

It is also worth noting the company's claim of being the leader in gig carsharing and its global expansion efforts. The ability to scale internationally while reducing costs is ambitious and success in these areas could lead to significant market share gains and investor confidence.

Economist

The decision by Getaround to restructure its workforce reflects broader economic considerations, such as the need to adapt to changing market conditions and the importance of cash conservation in uncertain economic times. The move suggests a shift in focus from aggressive growth to sustainable profitability, a trend that is becoming increasingly common as companies navigate a potentially cooling global economy.

The carsharing industry is sensitive to economic cycles and Getaround's restructuring may be preemptive to ensure resilience against potential downturns. By bolstering its financial position now, Getaround may be better equipped to withstand economic headwinds and capitalize on opportunities as they arise.

Furthermore, the cost-saving measures may also reflect the company's anticipation of market saturation and increased competition within the carsharing sector. The reduction in workforce could be a strategic alignment of resources to prioritize areas with the highest return on investment and to divest from less profitable or non-core activities.

Anticipated cost savings of approximately $7 million on annualized run-rate basis

SAN FRANCISCO--(BUSINESS WIRE)-- Getaround (NYSE: GETR) (“Getaround'' or “the Company”), the world's first connected carsharing marketplace, today announced the Company will restructure its workforce and operations to reduce costs and align with the globalization of the Company’s carsharing business, as it strives to lengthen its cash runway and accelerate its path to profitability.

This new plan includes a workforce reduction, effective immediately, that impacts approximately 30% of the Company’s North American staff. The Company anticipates that this cost reduction program will result in savings of approximately $7 million on an annualized run-rate basis. The Company expects to incur up to $1 million in restructuring costs in connection with the workforce reductions.

“Our focus on profitability and sustainable business growth necessitated this difficult workforce reduction program,” said Sam Zaid, Getaround CEO. “We’ve made significant progress over the past year, including steady improvements in revenue growth and unit economics, as well as in overall adjusted EBITDA profile and operating efficiency. We launched a new artificial intelligence model (Trustscore AI) to improve the safety and economics of our marketplace, deployed a powerful new global app that unifies and enables seamless trip coordination across the U.S. and Europe, and expanded to gig carsharing, enabling gig workers across the U.S. to rent cars to drive for services like Uber and DoorDash. As the only truly global and digital carsharing marketplace, and as the leader in gig carsharing, we believe Getaround is increasingly well positioned for the future.”

Zaid continued, “I want to thank all those teammates who contributed to the substantial progress Getaround has experienced. While we believe this restructuring plan is the right decision for the business, it does not diminish the challenge of letting talented colleagues go, or the gratitude we have for the dedication and professionalism of the team.”

About Getaround

Offering a 100% digital experience, Getaround (NYSE: GETR) makes sharing cars and trucks simple through its proprietary cloud and in-car Connect® technology. The company empowers consumers to shift away from car ownership through instant and convenient access to desirable, affordable, and safe cars from entrepreneurial hosts. Getaround’s on-demand technology enables a contactless experience — no waiting in line at a car rental facility, manually completing paperwork or meeting anyone to collect or drop off car keys. Getaround’s mission is to utilize its peer-to-peer marketplace to help solve some of the most pressing challenges facing the world today, including environmental sustainability and access to economic opportunity. Launched in 2011, Getaround is available today in more than 1,000 cities across the United States and Europe. For more information, please visit https://www.getaround.com/.

Forward Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements generally relate to future events, such as statements related to the expected benefits of and timing of completion of the restructuring plan, and the expected costs and charges associated therewith. In some cases, you can identify forward-looking statements by terminology such as “intends,” “plans,” and “will,” or the negative of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, including the risk that the restructuring efforts may not generate their intended cost savings or other benefits to the extent or as quickly as anticipated; the risk that the restructuring costs and charges may be greater than anticipated; the risk that the Company’s restructuring efforts may adversely affect its ability to recruit and retain skilled and motivated personnel, and may be distracting to employees and management; the risk that the restructuring efforts may negatively impact the Company’s business operations and reputation with or ability to serve hosts and guests; and the other factors under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on November 16, 2023, and in other filings that the Company has made and may make with the SEC in the future. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or our business or operations. Such statements are not intended to be a guarantee of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which are made only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240207550685/en/

Investors

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Media

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Source: Getaround

FAQ

What is the purpose of Getaround's workforce and operations restructuring plan?

The purpose is to reduce costs and align with the globalization of the Company’s carsharing business, aiming to lengthen its cash runway and accelerate its path to profitability.

How much is the anticipated cost savings from the restructuring plan?

The anticipated cost savings are approximately $7 million on an annualized run-rate basis.

How much is the expected restructuring costs for Getaround?

The Company expects to incur up to $1 million in restructuring costs.

What progress has Getaround made in the past year?

Getaround has made steady improvements in revenue growth and unit economics, as well as in overall adjusted EBITDA profile and operating efficiency. They also launched a new artificial intelligence model (Trustscore AI) and a global app, and expanded to gig carsharing.

What is the CEO's stance on the restructuring plan?

The CEO emphasized the focus on profitability and sustainable business growth, recognized the progress made, and expressed gratitude to the team while acknowledging the difficulty of the decision.