Welcome to the Gogoro Inc. 2024 Q2 Earnings Call. This conference call is now being recorded and broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. I would now like to turn the call over to the Gogoro team.

Welcome to Gogoro's 2024 Q2 Earnings Conference Call hosted by our CEO, Horace Luke; and CFO, Bruce Aitken. Hopefully, by now, you've seen our earnings. If you haven't, it is available on the Investor Relations tab of our website, investor.gogoro.com. We are hosting our earnings conference call via live webcast through Gogoro's website, where you can also download all the earnings release materials. We will also be displaying the materials on the webcast screen as we go. If you are joining us through the conference call, your dial-in lines are in listen-only mode. After Horace provides some of the business highlights from Q2, Bruce will go a bit deeper into the Q2 financial results. And then we will open the line for Q&A and answer as many questions as time allows. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the forward-looking statements that appear in our press release and investor presentation provided today. And now, I would like to turn the call over to Horace.

Thanks for joining our call today. We're pleased to have this opportunity to meet with you and provide a summary of our second quarter 2024 results. I'm pleased to share with you that we announced tow substantial investments in the second quarter, which totaled $100 million with $75 million cash received. We further entered into an MOU with Sumitomo Corp. and Sumitomo Mitsui Finance and Leasing Company, SMFL to facilitate a more asset-light international expansion. Gold Sino Assets Limited made a $50 million equity investment in Gogoro. Our partnership with Dr. Yin of Gold Sino and [Ruantech] (ph) Group dates back to Gogoro's founding. This investment reinforces our strategic direction, and we are committed to building on the success of our revolutionary battery swapping ecosystem. We continue to lead the transformation of two wheel urban transportation shaping cities of the future to be smart, sustainable and accessible. We are delivering on our vision as we continue to expand our leadership in Taiwan and other markets. It is crucial to maintain the resources and flexibility needed to operate efficiently, ensuring the delivery of cutting-edge innovation, unparalleled customer experiences and exceptional value to our customers. Additionally, we announced a $50 million investment commitment from Castrol, a global leader in lubricants and part of the BP group. The initial investment of $25 million in Gogoro will be followed by a second $25 million investment in the form of a convertible note contingent on further collaborative business transactions. In the press release announcing the investment, Michelle Jou, CEO of Castrol, stressed the importance of two wheelers to Castrol and the desire for Castrol to play a large part in a consumer's transition from traditional ICE vehicles to electric vehicles. I can't think of a partner that has broader and deeper customer reach in the…

Thanks, Horace. We continue to make steady progress in South Korea with our partner, BikeBank. There are now more than 200 active go stations in 15 cities in South Korea, which is an example of our PBGN alliance strategy at work. on Motor, Gogoro and South Korea's BikeBank brand dot station, have teamed up to develop the EVC1 electric scooter, which is already on sale in South Korea designed by Dotstation to align with South Korean rider preferences manufactured by Aon Motor in Taiwan and powered by Gogoro's battery swapping technology, this scooter is now entering the South Korean market with Dot Station managing the local sales channels. This collaboration combines Aon Motors manufacturing expertise with Gogoro's network battery swapping ecosystem and Dotstation's local market knowledge to make a successful entry into the market. We're pleased to see our PBGN partners new vehicle meeting local market demands, making this a win-win-win situation for all three parties. In May, we launched Gogoro Battery swapping services in Bogota, Colombia with Terpel, a subsidiary of Copec and the leader in the Colombian fuel and lubrication product market. This is the official launch of our partnership with Copec, which was announced in January. We also introduced the Gogoro 2 Plus and Gogoro VIVA MIX Smartscooters in Colombia. Initially, four battery swapping stations are located at Terpel service stations in Bogota with plans to expand to 14 by the end of 2024 and to the city of Medellin. Our Gogoro Smartscooters will be marketed by Motored, a top two wheel distributor in Colombia. Following our launch in Colombia in the second quarter, we are excited about our upcoming commercial launches in Chile and Singapore in the latter half of 2024. These markets represent significant opportunities for growth and expansion as we bring our advanced battery…

Expectations for the year to a level lower than previously expected. The overall two wheeler market in Taiwan is softer than anticipated and the strong sales of JEGO have resulted in ASP pressure. Our sales in India are also negatively impacted due to delays in the clarity on government incentives as we are awaiting the full publication of battery swapping subsidy details under India's Fame 3 policy, and we're unwilling to self-subsidize in the meantime. As a result of these factors, we are adjusting our guidance for full year revenue, and we are expecting to generate between $320 million to $345 million of revenue in 2024. In addition, we expect that more than 95% of such revenue will be Taiwan-based.

Thank you, Horace and Bruce for the detailed update. As attendees are formulating their questions, I will ask two questions that we have collected from analysts. Question number one. What is your plan to capture additional market share and volume in second half of 2024 in Taiwan? What about international markets?

The overall Taiwan market was down 4.4% in the first half of the year from 2023, impacting our sales figures. Our JEGO and Pulse vehicles are being positively received in the marketplace, and we had 6,500 backlog orders of the vehicles at the end of Q2. We're planning to deliver all the backlog vehicles by the end of the year and do expect the Pulse and JEGO momentum to continue. We have launched a marketing campaign for JEGO recently and are actively engaging in the traditional summer and back-to-school promotions to sustain the excitement around these new vehicles. We do have some plans for Q3 and Q4 that I can't speak in detail at this point, but we do plan to keep [indiscernible] into. As mentioned during the call, in India, much of our progress is dependent on finalization of the India's Fame 3 subsidy plan and the inclusion of battery swapping in that plan. The delay on this initiative has delayed our India plans, so we expect most of the forecast revenue for 2024 to push out into 2025. This is one of the biggest contributors to our updated guidance. Other international markets are performing approximately as forecasted, and we expect some additional momentum in the second half of the year as we launch services in additional countries. We don't expect an immediate large volume of sales in these markets as it takes time for electric vehicle adoption. We expect approximately still 95% of our revenue of the year to be generated in Taiwan.

Thank you, Horace. Question number two, from the recent capital raise from Gold Sino and Castro, could you recap your capital structure and your attention on use of the proceeds?

Thanks, Kenny. In Q2, we received, as mentioned, $50 million cash injection from Gold Sino and the initial $25 million of what could become a $50 million investment from Castrol Holdings through the issuance of ordinary shares to these two investors. These funds are instrumental in fueling our ongoing commitment to our expanded battery swapping infrastructure and is supporting our growth initiatives, both in Taiwan as well as internationally. The addition of these funds mean that we have a strong balance of $196 million at the end of Q2, and we also have access to additional credit facilities should we choose to exercise them. We're comfortable with our current cash position and our current debt position, and we're confident we have the financial wherewithal to meet our near-term business objectives, [Technical Difficulty] more than just the cash injection, we appreciate the strategic intent behind these two investments. existing shareholders and new strategic shareholders are committing funds toward our growth. And we're grateful for the trust from both parties, and we look forward to putting the invested money to good work expanding our Taiwan presence and accessing potentially large new markets elsewhere as well.

Thanks, Bruce. Operator, please open the line for Q&A session.

We will now begin the question-and-answer session. [Operator Instructions] The question comes from the line of Long Lin from The Benchmark Company. Please go ahead.

Good morning. Thank you for taking my questions. This is Long Lin on behalf of [Wangjing] (ph). So first of all, I have some housekeeping items to ask. Probably, I didn't catch during the call. Just want to ask about the -- some of the outlooking data, like what's the Taiwan market unit sales in the two -- in the second quarter 2024?

So just to make sure I'm clear, Long, you're asking about the vehicle volumes. Is that right?

Yes.

Got it. So in Q2, in Taiwan, the total registered electric scooters was 23,660 units. The Gogoro branded vehicle registration was 15,646 units and the Gogoro network volumes was [Technical Difficulty] in addition to that, bear in mind that we have an additional 6,500 backlog orders of the JEGO and Pulse units, which would have taken the sales up considerably. However, I do want to remind that customers do have the option to cancel those orders. We don't typically see cancellations but customers do have the option to cancel those orders. And so that's against a backdrop of a 4.4% reduction in total sales from January to June in the Taiwan market. And the Q2 registration number in the overall Taiwan market of about 190,000 units.

Okay. Thank you very much. I'm sorry, I think your voice got cut off for the network units. What's the number for the network...

The powered by the Gogoro network is 16,685.

Okay. Thank you.

This is all, by the way, in the -- it's in the press release that's already posted as well.

Okay. Thanks. So my second question is about your guidance. So you have lowered your 2024 revenue guidance. You said it's mainly about the slowdown in the Taiwan market and also the impact from the Indian market due to the delay of the policy. So can you give an update -- a more detailed update on Taiwan markets outlook in second half and the progress and expectations Indian market, given the delays in subsidy policy. Like basically, when do you think this policy will be finalized? And when do you think you can actually start to ramp up your units yourselves?

Sure. I can try to take the first part and then Horace may have a couple of comments to add. It's always difficult to anticipate exactly when Indian any government will act. However, the signs coming from India publicly as well as directly from government agencies is that the expectation is that within the next weeks, or worst-case scenario within the next couple of months, we expect the finalization of the FAME III subsidy policy, and we do expect battery swapping vehicles to be included in that policy as well as GST benefits, which are a little too detailed maybe to go into now, but we do expect the policy to be finalized and then we do expect the policy to be made [Technical Difficulty] possibility for the kind of beginning of sales of vehicles in the latter part of the year. However, to be conservative, we are anticipating that virtually all -- potentially even all of the revenue that we had previously anticipated to happen in 2024, will now push out until 2025. So that's the India piece of the story. In Taiwan, if you look at seasonality, typically, the second half of the year is larger than the first half of the year with the downward trend of almost 5% in the first half of the year, we're taking a conservative stance there as well. And again, that's what is one of the main drivers of the reduction in our -- in our revenue forecast. As we have slightly fewer vehicle sales than likewise our Gogoro network revenue in Taiwan and for, in the case of India, our Gogoro network revenue in India is impacted. So it's the combination of a number of those different factors that leads to a big chunk of the guide down. The second biggest part is really the sale of lower ASP product in Taiwan. Our JEGO vehicle has been super successful. It's a good thing from a volume standpoint. It's not necessarily from a mix standpoint. So we want to make sure that we continue to focus on the high end of the ASP range but the JEGO vehicle has been so successful that it has brought our ASP down a little bit in the second quarter. And we do anticipate ongoing ASP pressure in the second half. Again, that's a positive -- it's a good problem to have. It's not great that our ASP drops but we're happy to continue to move the exciting new JEGO vehicle. So it's the combination of all those factors to [indiscernible].

So my -- so the next question is like, we noticed that you have been certified in Singapore and works with an exclusive partner there. How should we think about the commercial opportunity in Singapore in the next few years?

I'll take that. I think it's our job to really take the opportunity and make a first foot step forward into large markets such as Southeast Asia. Of course, with the Philippines, we have already established a great relationship with Globe Telecom, the largest B2C telecom business in the Philippines, along with Ayala group. We seek to work with local giants that have great influences. And there's the [indiscernible] for Singapore with both [indiscernible] Cycle & Carriage as well as Shell and deploying at their gas station. But more importantly, with Singapore is that Singapore is being viewed as the leadership country in that region with many people traveling in and out with headquarter of businesses in Singapore is a great way for us to demonstrate what is possible in a city as tough as is in Singapore, it is to us a great opportunity to showcase what we can do there. I don't think it is fair to say that Singapore is going to be a gigantic market. And as you know, there are not too many two wheelers in Singapore. So we're really focused on B2B with a little bit of B2C, but heavily on the B2B business with partners like Foodpanda. But more importantly for us in Singapore is to really demonstrate a smart system in the group or the cities for great countries around that region. And with Singapore having the reputation of being the leadership country in that region. We're excited to work with leadership companies like [indiscernible], Cycle & Carriage as well as Shell in Singapore.

I see. So given that I just wanted to ask like in this sense, like how should we think about your revenue mix from overseas in 2025 and in the coming years?

Hard to judge for 2025. We're in process of making up all of the forecasts for all of the different countries. As Horace mentioned, sales existing in Philippines, sales existing in Singapore, sales picking up in India, and then hoping to add other countries as well. For the balance [Technical Difficulty] so going into next year, we would like that number to drop a little bit. But I think we'll give more specific and direct guidance on that in the Q4 earnings process as we look at Q3, Q4 as we look out into 2025.

Okay, sure. So my final question is on your margin side. Can you talk about the margin trend in the second half? Do you see like further deterioration of the gross margin like in the second half of 2024?

And actually, the gross margin figure that we're really looking at is the adjusted gross margin figure. As we mentioned, there's a number of contributing factors. And so last year, on the full year, our gross margin was kind of mid-double digits this [Technical Difficulty] then we'd like it to be at 13% in the second half. We expect to work hard to pull that number up a little bit. Typically, in the second half, we do have higher revenue associated with just seasonal uptick in sales of vehicles in Taiwan. Should that happen, then we should be able to hold the margin flat, maybe even sneak it up just a little bit. So I don't expect much margin -- further erosion in the second half of the year.

Great. Understood. Thanks very much. That’s all my questions for now. I will get back to the queue.

Since we don't have any questions in the queue, I will take an online question at this time. The question is, if the Indian government doesn't subsidize battery swapping this year, would Gogoro change business strategy and allow customers to own and charge their batteries instead?

I'll take that, Andy. I think it is important that we believe in the ease of use and also as the game changer in the battery swapping system that we have developed. In Taiwan, before we actually launched our Gogoro battery swapping system. The electric adoption was very, very small. In India, I think that the penetration, although with big players like Ola and others deploying vehicles with charging system, the opportunity for battery swapping to make a difference in that country is great. It is important also to realize its [indiscernible] market and that we don't believe there's a one-size-fit-all in that market. As we develop our strategy with MHI, the Ministry of Heavy Industry as well with our partners like Rapido and others, we will, therefore, look at what opportunity there is to adjust our design or our usability accordingly as the market adjusts. Our vehicle today can also do battery swapping it can also do charge at home. It is really a business -- it's not a technical question. It's really a business model question. We do -- as Gogoro, we do believe that battery and portability of that battery as well as the swapping of that battery as a very important part of how we're going to add our uniqueness to that market. So the long answer is we'll look at it and definitely adjust. But the short answer is I think we have to really believe in what we have to offer and we continue to believe battery swapping is the game changer that made us who we are today and will make us very successful in the place like India.

Thanks, Horace. I have another question from online. Can you comment on the status of the battery pack factory and vehicle manufacturing capabilities in India?

Sure. I think it's our job, even though without the policy being ready as we speak, but it is our job to make sure we get ready for this gigantic market ahead of us. We are 100% -- we do have 100% belief in what the Indian market can bring to Gogoro as well as what Gogoro brings to the market. Our job is to get ready for that big market. That includes getting suppliers ready, that includes getting our battery pack factory ready. But most of all, I think it's really about [indiscernible]. A great example of that is the pilot that we have started with Rapido, and Rapido is the largest bike taxi company in India with tens and -- hundreds of thousands of riders across pan India. And our recent pilot with Rapido had demonstrated great feedback from the riders, especially around wages increase, where they're able to make 200% of what they were making formally by riding a Gogoro with battery swapping, proving that downtime, there is no downtime when it comes to battery swapping. That, along with cities, major cities in India turning to only allowing electric vehicle to be in the logistics service business. We think that's a great formula for Gogoro in the near future. So the battery factory is [indiscernible]. I mean we're literally waiting for the last one little details to be done. The vehicle, as we -- as you saw, has been on the road certified and actually running we've been running vehicles with our customers on the pilot side. But before we scale up in a gigantic way, we really want to make sure that the subsidy program is there in place to make sure that we stay competitive, equally competitive, I should say, when compared to other vehicle makers offering charge at home solutions.

Thank you, Horace. I have another question coming from online. Gogoro Batteries have proven econ power devices beyond mobility like smart parking meters, back power for traffic lights. Are there any plans to sell these batteries and connectors so that new devices could be developed and could be powered by Gogoro batteries?

Absolutely. We have had a lot of inquiries, some are great ideas. Some are a little bit far-fetched. But in general, just think of us as portable batteries. However, we are very, very focused at the moment on transportation. We believe we can make the biggest impacts with transportation, both financially as a business and also environmentally as we lead the way in electrification. So absolutely, we are working on some other ideas, additional ideas, nothing to share in great details yet, but we do get increase all the time, and we have a battery connection kit, battery security kit as well and safety and interface kit will allow for us to [indiscernible] actually monitor our battery for all sorts of different type of devices. So I welcome ideas and please do send us away if anybody has any inquiries.

Thank you, Horace. There seems to be no further questions in the queue or online. At this time, I'll hand the conference back to Horace for a few closing remarks.

Great. Thanks, Andy. The second quarter was a mix of positives and some areas for improvement. The investments from Castrol and Gold Sino put us in a good position to grow, and we continue to work with good partners like SMFL, Sumitomo, HPCL and others scale around the regions. Our new vehicle continues to sell well. We continue to grow our network with both in terms of accumulating subscribers as well as revenue contribution. In Taiwan, the people [indiscernible] underperformed our expectation and the outsized success of JEGO has slightly lowered our ASP forecast, both of which impacted our Q2 financial results. Additionally, the Taiwan dollar weakening against the U.S. dollar is a sizable foreign exchange translation loss, given that most of our revenue is booked in Taiwan dollars. I'm very satisfied with our progress and are fully committed to our vision and always proud of the effort put in by the Google team to help electrify mobility via our unique battery swapping technology and platform. Thank you, everyone, for your support of Gogoro, and thanks for calling in today's call.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect your lines.