Yesterday The Information reported that Lime, an American scooter unicorn, expects to post an operating loss of over $300 million against gross revenue of around $420 million.
The Lime news is not the first expected or reported scooter-induced loss that we’ve covered this year.
As depreciation isn’t usually counted as part of a company’s cost of revenue, we can exclude it in our first calculation for Lime’s implied gross margin.
If you counted Lime’s depreciation as a cost of revenue, (a cost of goods sold, if you want to phrase it that way) and it’s not hard to argue that it should be, the company’s gross margins appear negative.
The game that Lime has to play isn’t merely getting its scooter rides to generate a bit more margin (or indeed any at all, depending on how you count depreciation costs).
Instead, it’s getting its scooters to generate enough margin at scale to cover its operating costs.
Recall that Lime is expected to post an operating loss of $300 million against $420 million in gross revenue.