Beam Global (BEEM)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 revenue was $11.5M, down 22% sequentially from Q2, but still the second-highest Q3 in company history; GAAP gross margin improved to 10.7% (highest Q3 margin ever) and GAAP net income was $1.3M, driven by a $6.1M non-cash reversal of contingent consideration .
• Management attributed the revenue decline to order timing, U.S. federal policy uncertainty post-election, and evolving UL energy storage certification requirements, with Q1 2025 targeted for updated certifications; the pipeline hit a record >$200M and backlog was $7M (U.S.), plus $3.6M Europe as of Nov 7 .
• Operationally, Beam launched four products (BeamSpot, BeamBike, BeamPatrol, BeamWell), secured its first sponsorship owner-operator deal at Belgrade Airport (recurring revenue), and acquired Telcom to insource power electronics—expected to support margins and reliability .
• Key catalysts ahead: UL certification clearance (expected by end of Q1 2025), European expansion and distributor network, early BeamSpot orders, and scaling the sponsorship model for recurring revenue .

What Went Well and What Went Wrong

What Went Well

• Record Q3 GAAP gross margin of 10.7% (+9ppt YoY) with continued cost reductions, engineering improvements, and Serbian manufacturing support; non-GAAP gross margin would be 17.6% excluding non-cash depreciation/amortization .
• Product innovation and commercial momentum: launched BeamSpot, BeamBike, BeamPatrol, and BeamWell; received first BeamSpot order within five weeks; ~48% of revenue from commercial customers (up ~80% YoY mix) .
• Strategic initiatives: first sponsorship owner-operator deal with Globos at Belgrade Airport, creating an annuity-like recurring revenue stream; expanded European reach, delivered 10 EV ARC systems to UK MoD, and continued distributor/reseller build-out .

Quote: “We have continued to improve our unit economics and generate solid gross margins… geographic expansion… new products… leads us to believe that we will return to increasing revenues in 2025 with significantly improved profit margins” — CEO Desmond Wheatley .

What Went Wrong

• Sequential revenue decline (-22% QoQ) due to large-order timing, U.S. federal zero-emission policy uncertainty, and evolving UL requirements—resulting in delayed purchase orders pending certification updates .
• UL certification refresh for energy storage caused delays; management expects clearance by end of Q1 2025, acknowledging prior timing optimism proved too early .
• Operating expense volatility from non-cash contingent consideration and integration costs; while Q3 OpEx was a ~$50K credit, underlying Europe-related OpEx and customer accommodations increased quarter-over-quarter .

Financial Results

Revenue, EPS, Margins vs Prior Periods

Notes: Q3 GAAP net income includes a $6.1M non-cash reversal of contingent consideration for Amiga; Q3 non-GAAP net loss excluding non-cash items was ~$3.0M .

KPIs and Mix

Segment breakdown: Beam does not report segments; mix and KPI disclosures shown above .

Guidance Changes

Beam does not provide formal numerical revenue/EPS guidance; statements are directional regarding margins, certifications, and trajectory .

Earnings Call Themes & Trends

Management Commentary

• “We believe that the decrease in revenue, quarter over quarter, is a result of order timing, uncertainty in the U.S. government’s zero emission vehicle strategy related to the presidential election and evolving certification requirements… which we believe will be completed in the first quarter of 2025” — CEO .
• “Unit economics averaging in the 40% to 50% gross ranges… improvements in manufacturing… Telcom acquisition… reduce warranty and service costs” — CEO .
• “Record pipeline of over $200 million… backlog of $7 million… debt free and $100 million line of credit available and unused” — Company .
• “First sponsorship deal… Globos… Belgrade Airport… owner-operator model… steady, predictable revenue stream” — Company .
• “Our operating expenses… credit of $50,000 due to the reversal of the fair value of the contingent consideration for the Amiga acquisition” — CFO .

Q&A Highlights

• Europe vs U.S. funding: Management sees robust European spending (OZEV, 2035 ICE ban) and broad electrification tailwinds; U.S. sentiment impacted by political uncertainty but states/municipalities expected to push forward .
• UL certification: Evolving standards; Beam working directly with UL; expects latest certification by end-Q1 2025; pent-up demand to release post-certification .
• Sales capacity and resellers: Beam is aggressively adding distributors/resellers/agents paid on success to expand reach without raising SG&A .
• Manufacturing capacity and capital: Ample room for 4x expansion in U.S.; significantly more in Europe; targeted investments (e.g., Chicago expansion for BeamSpot) .
• State-level decarbonization: States expected to continue decarbonization and EV policy momentum regardless of federal shifts; electrification viewed as strategic imperative .

Estimates Context

• Wall Street consensus estimates for Q3 2024 (revenue/EPS) via S&P Global were unavailable for retrieval at this time due to data access limits. As a result, we cannot provide a formal beat/miss assessment versus S&P Global consensus for Q3 2024. If desired, we can refresh once access is restored and update comparisons.
• Prior commentary (Q2) noted Street consensus for EPS at approximately a $0.21 loss; Beam’s non-GAAP loss excluding non-cash items was ~$0.14, better than expectations, per management .

Key Takeaways for Investors

• Near-term revenue softness appears timing- and certification-driven rather than demand-driven; management reports no cancellations and a record pipeline (> $200M), with orders “moved right” pending UL certification—watch for clearance by end-Q1 2025 as a key catalyst .
• Margin trajectory improving structurally: unit-level 40–50% gross margins, Telcom insourcing to reduce third-party failures and warranty costs, Serbia-produced components lowering COGS; evidence supports margin expansion as volumes normalize .
• Portfolio expansion broadens TAM and diversifies revenue (BeamSpot, BeamBike, BeamPatrol, BeamWell), with early BeamSpot orders and sponsorship owner-operator model at Belgrade Airport introducing recurring revenue optionality .
• Sales force multiplication via distributors/resellers in the U.S. and Europe could accelerate conversion and reduce reliance on lumpy federal orders—commercial mix rose to 47.9% in Q3 .
• Balance sheet flexibility intact (debt-free, $100M untapped LOC); cash variability driven by working capital cycles tied to large orders—monitor backlog and certification milestones for cash inflection .
• Medium-term thesis: European expansion (largest EV/clean tech market), curbside charging via BeamSpot, and resilient off-grid solutions align with grid-capacity constraints, blackouts, and data center/AI power demands—supports multi-year growth and margin improvement .
• Trading implications: Near-term sentiment likely hinges on UL certification timing and evidence of resumed order cadence; positive updates on BeamSpot deployments and additional sponsorship sites could re-rate recurring revenue potential .