Name: LMP Automotive Holdings, Inc. Q4 2019 Earnings Call
Start: 2020-02-26T00:00:00.000Z

Executive Summary

Q4 2019 revenue was $3.0M (+157% q/q), with margins inflecting: subscription and rental margins rose to 39.5% and vehicle sales margins turned positive to 2%; year-over-year revenue fell 47% due to a strategic shift to keep higher-margin fleet in service longer rather than sell vehicles immediately .
Reported net loss was $0.57M and diluted EPS was a $0.07 loss; management issued a correction on Feb 26 clarifying EPS was $0.07 (not $0.70) in the initial release, removing an optical negative .
FY2020 guidance was set/maintained at revenue of $52–$65M and net income of $2.8–$3.5M, signaling aggressive scale-up of subscription and rental and potential dealership acquisitions; reiteration on Feb 26 suggests confidence and is a potential catalyst .
Liquidity improved: YE19 cash was $6.5M, augmented by a $17.5M follow-on offering in Feb 2020; inventory financed stood at ~22%, positioning LMPX to grow inventory and pursue acquisitions in early 2020 .

What Went Well and What Went Wrong

Vehicle sales margins turned positive to 2% in Q4 (from -43% in Q3 and -21% in Q4 2018), aided by lower impairment and better pricing discipline .
Subscription and rental margins expanded to 39.5% (from 21.3% in Q3), supported by higher allocated fleet utilization at 83% and scaling of the subscription business; CEO: “allocated fleet utilization… increased to 83%” and expansion into six new markets during the quarter .
Operating expenses fell to ~$0.80M from ~$1.9M in Q4 2018, reflecting cost discipline and consolidation of Miami Beach into Plantation, FL .

Total revenue declined 47% year-over-year to $3.0M (vs. $5.8M Q4 2018) amid the shift to keep higher-margin fleet in use; rental revenue fell to $23k vs. $274k in Q4 2018, reflecting deemphasis of lower-margin rentals .
EBITDA remained negative at $(224)k, essentially flat vs. Q3, underscoring early-stage scale and continued investment needs .
Inventory impairment, while reduced, still impacted vehicle sales; management noted selling vehicles in late 2018 to meet cash needs, highlighting working capital tension in the prior period .

Metric	Q4 2018	Q3 2019	Q4 2019
Revenue ($USD)	$5,800,000	$1,177,887 (derived from +$1,854,593 to Q4)	$3,032,480
Net Loss ($USD)	$(2,900,000)	$(775,393)	$(572,195)
Diluted EPS ($USD)	$(0.12)	—	$(0.07)
Gross Profit ($USD)	$(1,000,000)	$(169,315) (derived from +$417,189 to Q4)	$247,874
Gross Margin (%)	-18.0%	—	8.0%
Operating Expenses ($USD)	$1,900,000	—	$796,000
EBITDA ($USD)	—	$(223,773)	$(224,246)

Segment revenue and margin detail:

Segment Metric	Q4 2018	Q3 2019	Q4 2019
Vehicle Sales Revenue ($USD)	$5,245,485	$793,547	$2,544,904
Vehicle Sales Margin (%)	-21%	-43%	2%
Subscription Fees ($USD)	$242,881	$340,482	$459,010
Rental Revenue ($USD)	$274,439	$43,858	$23,049
Subscription + Rental Margin (%)	28.2%	21.3%	39.5%

KPIs:

KPI	Q4 2018	Q3 2019	Q4 2019
Allocated Fleet Utilization (%)	—	—	83%
In-service Unit Count (month-end)	—	—	279
Subscription Avg Monthly Unit Revenue ($)	—	—	$877
Rentals Avg Monthly Unit Revenue ($)	—	—	$391
Inventory ($USD)	—	—	$10,035,903
Cash ($USD)	—	$2,100,000	$6,500,000
Inventory Financed (%)	—	—	~22%
Shares Outstanding (year-end)	24,645,294	—	8,691,323
Stockholders’ Equity ($USD)	$14,216,571	—	$15,800,000

Notes:

Subscription and rental, and vehicle sales margins are non-GAAP metrics defined and reconciled in the company’s press releases .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2020	$52–$65M (initiated Feb 5)	$52–$65M (reiterated Feb 26)	Maintained
Net Income	FY 2020	$2.8–$3.5M (initiated Feb 5)	$2.8–$3.5M (reiterated Feb 26)	Maintained

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2019)	Trend
Technology initiatives (3D photo; app launch)	n/a	Launched 3D photo tech in Q2 2020; app technology licensed and launching in March	Scaling digital platform
Supply chain/inventory financing	n/a	Inventory financed ~22%; executed master loan/security agreements tied to fleet acquisition	Increasing leverage on inventory
Product performance (subscription/rental)	n/a	Subscription + rental margins 39.5%; fleet utilization 83%	Improving unit economics
Regional expansion	n/a	Subscription launched in six new markets in Q4; planned launch in three more in Q2 2020	Geographic expansion
Regulatory/legal	n/a	No specific new items; forward-looking statements and risk overview in 10-K	Baseline disclosures

CEO (prepared remarks): “LMP’s fourth quarter revenues grew to $3.0 million with gross profits of $247,000… allocated fleet utilization for Subscription Leasing and Rentals increased to 83%.… launched subscription leasing in six new markets… anticipating launching… New York, Washington and Tennessee.” .
CFO (prepared remarks): “Total revenue in the fourth quarter of 2019 decreased 47%, to $3 million, compared to $5.8 million in the fourth quarter of 2018… driven by intent to improve quality of revenues by maintaining higher margin subscription leasing and rental fleet active longer.” .
CFO (balance sheet/liquidity): “Cash balance as of December 31, 2019 was $6.5 million… follow-on public offering in February 2020 with net proceeds of $17.5 million… vehicle inventory financed… approximately 22%.” .
CFO (non-GAAP): Q4 EBITDA loss $(224,246), with detailed reconciliation (interest, depreciation, impairment) provided; margins defined and reconciled in exhibits .

Ambition: When asked about S&P 500 aspiration, CEO reiterated pursuit of an acquisition strategy in the automotive industry to reach long-term goals .
Growth drivers: Management emphasized organic growth in a “very hot segment,” with strong demand for subscriptions, and inventory procurement as the near-term gating factor .

Wall Street consensus (S&P Global) for Q4 2019 EPS and revenue was unavailable for LMPX at the time of this analysis due to limited coverage post-December 2019 IPO. As such, estimate comparisons cannot be provided and may need to be developed by the street following subsequent quarters.

Margin inflection is real: vehicle sales margins turned positive and subscription/rental margins expanded meaningfully, indicating healthier unit economics and better pricing discipline; these improvements are likely to be a core narrative driver ahead .
Strategy trade-off: near-term revenue prints are lower year-over-year as LMPX prioritizes keeping higher-margin fleet in service longer; this should support future profitability but can create volatility in reported sales levels .
Liquidity runway extended: YE19 cash of $6.5M plus $17.5M follow-on proceeds and growing inventory financing (~22%) provide capacity to scale inventory and pursue dealership acquisitions—key catalysts for 2020 .
Operational leverage: opex down materially year-over-year through consolidation; if revenue scales with new markets and inventory, operating leverage could drive earnings acceleration toward FY2020 targets .
Technology and geographic expansion: rollout of app and 3D photo tech, and entry into multiple states, should enhance funnel conversion and broaden demand for subscriptions, supporting top-line guidance .
Watch non-GAAP frameworks: EBITDA and margin disclosures are non-GAAP but reconciled; continued focus on gross profit mix and impairment should sustain margin trends .
Near-term trading setup: correction of EPS typo (from $0.70 to $0.07 loss) reduces perceived headline risk; reiteration of FY2020 guidance could drive sentiment if inventory growth and market launches track plan .