Welcome to the Gogoro Inc. Q3 Earnings Call. This session will be recorded. I would like to introduce Bruce Aitken, CFO of Gogoro. Who will kick us off.

Thanks Operator, and thanks to everyone for taking the time to join us today. I'm Bruce Aitken, CFO of Gogoro, and I'm pleased to welcome you to our third quarter 2022 earnings call. Hopefully, by now you've seen our earnings release. If you haven't, it is available on the Investor Relations tab of our website, www.investor.gogoro.com. We will also be displaying materials on the webcast screen as we go along. We're looking forward to sharing our Q3 results, as well as providing some guidance on what we're seeing as the outlook for the fourth quarter. Before our CEO, Horace Luke shares, I'd like to introduce Michael Bowen of ICR who will share the process for today's call and provide some important disclosures. Michael?

Thanks Bruce. I'm sure you're all looking forward to hearing from Horace and Bruce and on behalf of Gogoro. But before that, allow me to remind you a few things. You are all currently on mute. If you have a specific question, please use the chat function in the system to submit questions and we'll answer as many as time allows. After Horace has given a brief overview of Gogoro and some of the business highlights from Q3, first we'll go a bit deeper into the Q3 financial results. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our third quarter and fiscal 2022 results. Management's expectations for our future financial and operational performance, the capabilities of our technology, projections of market opportunity and market share, our potential growth, statements relating to the expected impact of the COVID-19 pandemic, supply chain issues and other headwinds facing the company, the company's business plans including its expansion plans, the company's expectations relating to growth in China, statements relating to the potential of our strategic collaborations, partnerships and joint ventures, statements regarding regulatory developments and our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning these risks is available in our earnings press release distributed prior to the market open today and in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law. Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-IFRS financial measures should be considered in addition to, not as a substitute for or in isolation from IFRS measures. Additional information about these non-IFRS measures, including reconciliation of non-IFRS to comparable IFRS is included in our press release and investor presentation provided today. Now, over to Horace.

Thanks, Bruce and Michael. Thanks for joining our call today. We're pleased to have this opportunity to meet with you all and provide an update on both the third quarter and how we see the balance of the year shaping up. Before we cover Q3, I do want to quickly speak to one important milestone for Gogoro. I've just returned from India, where we announced a battery swapping pilot in Delhi. We're working closely with Zypp Electric, India's largest dedicated EV B2B demand aggregator that, like us, is committed to introducing sustainable electric transportation to the B2B last mile delivery sector in India. We're excited to demonstrate Gogoro's battery swapping and begin getting specific market feedback. I'm always energized when visiting India, because the need for cleaner transportation and energy solution is so clear. This was especially evident last week by the fact that the air quality index reached over 400 and continued to increase over the weekend, breaking all records for Delhi. We can do better. I'm thrilled to be working with Zypp, and with the support of the Delhi and Indian government, Gogoro sustainability technology can make a difference in the day to day lives of both vehicle riders and all the residents of Delhi and the rest of India who are exposed directly to high levels of pollution. The work begins now. Shifting to Q3 results were in line with our expectations. Our Gogoro network continued to accumulate users, and we now have over 505,000 monthly active subscribers. We continue to deploy GoStations in Taiwan to grow network capacity, maintaining network efficiency, and ensure a positive customer experience. As always, these stations are deployed intelligently using the data we accumulate from our over 370,000 battery swaps daily and a 350 million battery swaps since we started. The…

Thanks Horace. On a year-over-year basis for Q3, excluding foreign exchange impact, both Gogoro hardware and Gogoro network revenue increased, gross margin increased, sales of hardware and network services in Taiwan met expectations and we continue to focus on international opportunities. Q3 was a quarter where we executed well despite the difficult macroeconomic environment. Our Gogoro network revenue continues to grow with accumulating subscribers. We now have over 505,000 monthly subscribers and expect that number to continue to grow. We saw strong growth of nearly 30% in the Gogoro network business, record quarterly revenue of $33.2 million on a constant currency basis, and we continue to keep a close to 100% attach rate of customers. Despite the slow two wheeler market so far in 2022 as described by Horace, in the first nine months of the year electric vehicles as a percentage of total vehicles increased by 9.7% versus 2021. Both Gogoro and our vehicle partner sales grew, Gogoro’s marginally, while partners’ grew by 28.2% versus 2021. This is a shift in market share we have planned for as we broaden our reach as a platform. Gogoro and our vehicles partners' market share both grew in the first three quarters of 2022 versus the first three quarters of 2021 and Gogoro and our vehicle partners represented 92.4% of all electric vehicle sales in the first nine months of 2022. This figure typically ranges from 90% to 95% of the total market, and we're happy to see growth in the overall electric sector in Taiwan. Our gross margin was up both quarter-on-quarter and year-on-year and we expect to maintain a similar margin profile during Q4. Some business highlights for Q3. Q3 2022 was in line with expectations despite the challenging external market conditions. We saw an overall increase of 10.7% in…

Thanks, Horace and Bruce for that update, details on financial results and forward guidance. As attendees are formulating the questions, I will go ahead and ask two questions, which I think are likely on everybody's mind, given what you've just shared. So let's start off with number one. First question is the collaboration with Zypp sounds like an exciting opportunity for Gogoro? Can you please give us some additional details on the partnership? Additionally, you mentioned a few B2B opportunities in other countries, has Gogoro changed your strategy to focus on B2B instead of B2C going forward and is the B2B model different financially?

Thanks Michael. As the world returns to mobilize again, we’ll begin to travel. One thing that has been very clear is excitement in the B2B world for electric vehicles, and for our battery swapping system. Regardless of the country, the valuable proposition is extremely clear for the B2B segment, because of the battery swapping. There's no downtime or waiting for vehicle to charge in the field, allowing B2B customers to best utilize their fleet. B2B riders are high energy consumers, they typically ride about 3,000 kilometers per month or even more, and are pretty demanding, so they help to fuel our technology in each one of the three markets. Government is also recognizing the benefit of electric vehicles with B2B as it mainly reduce emission and are starting to put regulations in place to limit or eliminate the use of gas vehicles in delivery fleet. The pilot we're launching in Delhi also allows Zypp and others to test out and see firsthand the benefits of battery swapping, the actual user experience on the Gogoro network, as well as providing greater user impact through Gogoro we can actually continue to improve and enhance our services. There are about 100 Gogoro's vehicles in Delhi, six GoStations, we support the vehicles and we expect to activate the pilot in December. Ultimately, our solution worked in both B2B as well as B2C use cases. We can work with partners to deploy this strategy. With the Last Mile delivery, ride sharing, scooter taxi services or other solutions, we welcome any interest in the B2B segment, or others that have interest in our battery swapping system.

Question number two. For Bruce and Horace, you've mentioned on the call that development in international markets, it's critical to Gogoro's growth. We also understand the slower than anticipated development in China due to COVID macroeconomic factors and other reasons. So can you please provide additional color on which international market you foresee will become the fastest growing and with fastest adoption and the biggest impact both financially and market share wise?

Well, first, remember, there's still a lot of room for us to grow in Taiwan, both in terms of Gogoro vehicle sales, vehicle partners, vehicle sales, as well as cumulative subscribers in Gogoro network. We'll keep innovating for Taiwan market, but as you mentioned, international markets are clearly important for growth story. Each of the large market in Asia represented both opportunities as well as challenges. China as we discussed is challenged at the moment, India represented great opportunity and we're excited to see how it unfolds and do expect revenue from India in 2023, both in hardware sales as well as network revenue Other markets are also at various stages of development. We are already generating revenue in Israel and Korea, expect to see revenue from Indonesia in 2023 and also few other markets that will announce at the appropriate time. Each market is unique and will develop at its own pace even, given a wide range of factors. The Taiwan electric two-wheeler market was almost nonexistent when we began selling Gogoro vehicles, and now electric represent more than 10% of the total market and over 20% in Taipei. That level of adoption has come through individual consumers choosing more sustainable mobility solutions. In other markets, there are variety of drivers for adopting electric and our battery swapping vehicle, specifically. Consumer choices, government policies and subsidies, the safety of our battery swapping system, as well as reduced operating costs of the vehicles since the cost of batteries are not included. Provide a total of -- total cost of ownership and our operation basis, there is a minimal difference between either ICE or battery charging vehicles. We believe that people will see significant user experience and safety by choosing and joining the Gogoro network. This year, almost all of our revenue is coming from Taiwan. We expect international markets to make significant progress next year. But we're not representative to provide a detailed revenue forecast as of yet.

Operator if you can now turn it over to Q&A please.

Question from the line of from Benchmark Company.

First one, just to follow-up on Michael's questions earlier. In regards to your B2B business, how should we think about the monetization ramped up in the next couple of years? In other words, say by 2024, how can we think about revenue mix of your 2C business versus your 2B business? And also, is there any like margin difference between these two segments?

Thanks for the question. Couple of things. We're not yet providing a detailed breakdown, as Horace mentioned of the revenue split between B2B and B2C markets. What I can tell you though, is a couple of interesting things about the B2B business model. Now the first is that, as Horace mentioned, a typical rider rides over 3000 kilometers per month in a B2B use case. So two things happen. The first is that their average consumption of energy therefore goes up dramatically, and that means that we get bigger ASPs on a per rider basis for each of those, because the amount of energy consumed is much higher. Because of that, we can also depreciate the batteries and other CapEx in our system a little bit more quickly. So we're eager to learn as much as we can through the two B2B pilots that are active right now. We believe this will be a great additional service offering that runs in parallel with B2C because basically, it's kind of at different times of day, people use different kinds of -- different kinds of services are being performed on the network. In a sense, if you can think about B2B as the base load of a network, when a telco rolls out network, they want to make sure they've got a certain number of built-in subscribers. For us, that can be the B2B business. And then on top of that, we can build the B2C business, as consumers become more educated, as they become more eager to electrify their mobility needs on a go-forward basis.

That's helpful. And secondly, in regards to your guidance -- updated guidance, it seems like this implies a pretty wide range for 4Q revenue. What are the key cadence we should consider – so basically to hit the low end versus the high end? So in another words, what are the moving cards you are observing right now?

As you may recall from last year, our Q4 was quite large. And so we actually last year substantially exceeded our Q3 guidance. There is a lot of uncertainty in the market right now for 2022. So we are taking the conservative perspective. It is -- we do believe obviously we will hit the low end of the guidance. We think we should be in the middle of the range that we have provided, which was in the low end of the previous range of 380 to 410 that was previously spoken about. We are confident that we will be able to deliver those numbers in Q4. Whether there is upside or not, I think is a function of how the market responds to the last few months of the year. The other thing that I will indicate is that, there are some subsidies in Taiwan that will be shortened and this year as government will stop offering some of their central subsidies around the middle of December, which could mean that our sales at the back end of the month of December slowed just a little bit. Those subsidies are guarantees going into next year. It's really an administrative issue, because the government has to be able to register vehicles. It has to be able to access applications for those vehicles and close them out at the end of the year. So it's not a change in subsidy, it's the application of that subsidy and the ability for the government to process it by end of year. So those are the kinds of things that make us want to just take a conservative perspective on Q4 versus Q4 last year.

Understood. Any color for 2023?

No color yet, Fang. Stay tuned. We think the Taiwan market will continue to execute as it is. But as Horace said, what's going to be interesting is how much growth we think we can get from international markets. We're super excited about the pilots that have launched. We're excited about a lot of interest from a lot of different countries. As Taiwan has now eliminated its inbound quarantine, we are seeing lots of interest for people to make trips to Taiwan, to personally observe how our network work, personally observe our vehicles, personally ride those vehicles and then work with us to figure out how to either turn on new countries or turn on new markets or for us to be able to access new customer bases through those visits.

Got it. Just switching gears to your -- on your cost side, your gross margin improved pretty nicely. Just wonder any puts and takes we should consider, particularly given the pretty high inflation environment, should be concerned of potential margin contraction and potentially put heading to the 2023?

Cost is definitely going to be a big focus area for us. As Horace mentioned, we've done a reorg. We are really, really going to focus on cost, on inventory, on inventory turns, all those kinds of things. We want to make sure the fundamentals of the business are sound as we head into 2023, given your comment about will prices go up? Will inflation continue? Or what kind of activities will central banks engage in? We are going to be laser focused on ensuring that we maintain our costs. We've said that we expect Q4's margin profile to be roughly the same as what we've had so far this year. And as you said, there was a little bit of good news in margins in Q3, we'd love to be able to maintain that level, but at a minimum, will maintain kind of the current run rate that we're on for all of Q3 as our margin profile for the Q4 this year.

Next question comes from the line of Bill Lin of JP Morgan.

I think I have two questions here. First of all, I think Taiwan -- I think according to a news you are canceling our all you can ride program by year-end for new riders. So given that, will you have some conversation about keep driving up the B2C E-two wheeler penetration here in Taiwan, given most of consumer in Taiwan, quite cost sensitive. I want to hear your view about that. And second is given we are now kind of more switched to B2B focus, in the retailing store side, will we see some cost control and if we have less store, will there be more benefit to our cash flow?

When it comes to the all you can ride program, that is -- that we announced we're sun-setting by the end of the year, from time to time, we'll make adjustments to our plans to optimize for the majority of our riders. Today, we are seeing riders -- taking up a small amount of riders picking up the all you can ride plan. They do you know -- a lot of them do, as you said, they do food delivery services. So today, we account for about 26% of all quick delivery services that are being done in Taiwan today. The existing riders will continue to be able to enjoy the all you can ride program. With the new riders being able to subscribe to a high usage program they're coming on board, that has already been onboard, and they can choose such program to basically be very competitive with the all you can ride program and we've designed that to satisfy that. So that's the first question. And what was the second question.

B2C versus B2B, I can take it.

Yes.

I think, Bill, we are going to focus on B2B, but that's always been part of our plan. It's not that B2B is replacing B2C. It's really there's a great story for B2B, for B2C, for B2G for kind of B to anybody. So there are less selling expenses associated with the B2B business, because you don't need to remain as active in retail, but we won't make any changes to our retail footprint. We will still actively pursue B2C customers in Taiwan. We hope to continue to increase the efficiency of that retail market versus minimize the footprint of that retail market, if you will. So the cash flow benefits should come from an increased output on a per store basis rather than any change to our retail or channel structure in the short-term.

And so just wanted to make sure you’re clear, the B2B and B2C and B2G strategy has always been in place in Taiwan. As I said, we do services 26% of all quick deliveries, is done every day in Taiwan. In addition, we also worked with such as DHL to electrify their fleet in Taiwan, so you've probably noticed several news stories that came out for two wheelers and three wheelers that DHL and other delivery guys are using to run their fleet. So, there's always been a B to everybody in Taiwan. As we explore externally into other market, it is also very important for us to kind of have predictability as we launch. As we said, think of B2B as the base load of these network, where as we deploy internationally, Taiwan is a small island, India is a gigantic peninsula. So, we want to be able to be kind of more pragmatic about how we deploy. And once deployed, we want to be able to have riders be able to use that network actively and generating good returns on our investments. The way we should think about it is, I mentioned in light of our , that is, on average usually four to five times of an average rider. And so, if you think about the math where if every kilometer is generating micro penny on return, the faster you're able to generate that, the faster you're able to turn over the battery and actually generate financial impact. So going to B2B helps us both with predictability and efficiency as we deploy the network. And also at the same time nothing helps to really kind of work out all the kinks then people that ride them on. And that's one of the things that we want to do as we launch into places like India, where the weather is different, the environment is different, the usability is different. So it's a great way for us to actually have a control launch into those markets. So Delhi boost will prove to be one that I think it's going to be very, very good base case for us to actually build on. And we're excited to see riders on as an effect that’s of two days ago, I got a notification from my team over there that the first station built up already. So we’re certainly ahead of time, we were expecting them to line up in December. They're already a little bit ahead of time, like those stations. And now the vehicles that have been registered so they can go on the road and start swapping away.

Can I follow-up a question? Its more into international markets. So, just want to understand what is the current partnership situation in India? It is -- because I think my original thought is, its closely specifically Corporate Hero, but the first model launch we use is now with the Hero. So what is the company's plan for the India market regarding the cooperating partners?

Well, first of all, the partnership with Hero is unchanged. They of course are still developing their vehicle. The idea has always been the platform was always going to be open and swapping network was always going to be open, not to house a single brand, but multiple brands. The first vehicle we actually have not launched in India, the reason why they had not launch is because we have imported vehicles from Taiwan, there's a European version of the Taiwan vehicle that now launch in India in order to do the pilot. So don't think of it as a vehicle launch or even so to speak, a Gogoro launch, but indeed what it is, is a pilot that we will -- we're continuing to gather information about 100 vehicles that are going to be on road. So instead of -- think of it as a usability launch, more than it is a vehicle launch. Gogoro has always seen ourselves, and our strategy has always been open platform that has been an possibility between multiple brands. And today, we have over 10 brands of vehicles on our platform, swapping over 47 different SKUs of vehicles ranging from very lightweight vehicle to very heavy duty vehicles, using one battery, two battery and four battery configuration and all swapping also with the one million batteries on the network into operable. So we're the largest battery swapping network on -- I think on the planet today. And we are excited to bring that long kind of proven platform to place like India. And then of course, our pilot in Indonesia has been running well with the Gojek Rider in Jakarta and we are looking to grow that iron and grow that market as well.

There are currently no questions from the phone. I'll hand the call back to the management. Please continue.

Okay. Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Horace and Bruce for any closing remarks.

Great. Thanks, Michael. Well, as Bruce said, Q3 was one where the business followed the overall market. We executed to our plan and our business continued to accumulate subscribers and grow healthy revenue growth due to the unique nature of our business model. There is a lot going on, we’re launching new pilot overseas, focused on growth, developing new products and new vehicles with our existing and new partners. We're excited to continue to take out sustainability technology to the world and help solve one of the biggest challenges facing our generation. Our fundamental belief in our business model and our business thesis remains unchanged. The question is not whether a transition to electric mobility will occur, but how quickly and how can we help? Well, thanks to everyone for attending today's call.

That concludes today's conference call. Thank you for participating. You may now disconnect.