Polestar recently released its selected preliminary unaudited results for the third quarter and first nine months of 2024. These results shed light on the company’s financial and operational performance, as well as its updated guidance for the full year of 2024. Below is an in-depth look at Polestar’s key financial highlights, operational updates, and strategic developments.
Key Financial Highlights
For the nine months ended September 30, 2024
- Revenue: Polestar reported a revenue decrease of $389.8 million (21%) year-over-year, totaling $1,456.5 million. This decline was primarily attributed to reduced global sales of the Polestar 2, increased market discounts, and delays in ramping up sales of new car models.
- Gross Margin: The gross margin dropped to -2.4%, reflecting a 3.4-point decline compared to the same period in 2023. This was driven by heightened discounts on the Polestar 2 and the reclassification of intellectual property (IP) costs from research and development (R&D) to inventory.
- Adjusted EBITDA: Polestar’s adjusted EBITDA improved by $74.5 million (11%) to -$602.6 million. This reflects management’s efforts to reduce selling, administrative, and general expenses, along with the impact of IP reclassification.
- Cash Balance: The cash balance stood at $500.9 million, representing a decrease of $450 million due to negative operating and investing cash flows.
For the three months ended September 30, 2024
- Revenue: Quarterly revenue fell by $57.9 million (10%) to $550.7 million, largely due to similar factors affecting the nine-month results.
- Gross Margin: The gross margin for the quarter decreased by 0.8 points to -1.4%. However, the introduction of new carlines at the end of the quarter offered some margin improvement.
- Adjusted EBITDA: Quarterly adjusted EBITDA improved by $71.8 million, reflecting reductions in operating expenses and contributions from new carline sales.
Operational and Strategic Highlights
Polestar’s operational performance underscores its continued growth and adaptation to market challenges. Here are some key updates:
- Sales Performance:
- Retail sales for the first nine months totaled 32,596 units, a 21% decline from 41,156 units sold during the same period in 2023. For the quarter, retail sales were 12,548 units, down 8% year-over-year.
- Sales of vehicles with repurchase obligations fell sharply by 40% for the nine months and 73% for the quarter, while internal vehicle sales increased by 28% and 17%, respectively.
- Geographic and Service Expansion:
- Polestar operates in 27 markets, with no changes year-over-year.
- The number of retail locations increased by 30 to reach 187 globally.
- Service points expanded to 1,170, reflecting a slight increase from 1,135 in 2023.
- New Product Developments:
- Production of the Polestar 3 long-range single motor model began in the United States, featuring a certified WLTP range of 706 km.
- Tesla Supercharger access was enabled for Polestar drivers in North America, along with the introduction of Plug and Charge capability for the Polestar 3.
Financial Guidance and Market Challenges
Polestar has revised its financial guidance for 2024 due to continued adverse market conditions. The company now expects:
- A mid-teens percentage decline in revenue for the full year.
- A negative gross margin similar to that of 2023.
- Lower-than-expected sales of the Polestar 3 and Polestar 4 models in the fourth quarter, compounded by market value adjustments of inventory and ongoing pricing pressures.
Despite these challenges, Polestar reported strong order intake for new models in late Q4, signaling a positive outlook for 2025.
Funding and Loan Facility Updates
Polestar has taken significant steps to secure its financial stability:
- The company engaged in constructive dialogue with its $950 million club loan lenders, resulting in amendments to the revenue covenant for 2024 and waivers for certain debt ratio tests.
- Over $800 million in 12-month term facilities were secured from various banks, with an additional $400 million facility approved and expected to be finalized soon.
- A portion of the proceeds from these facilities will be used to repay existing loans, while the remainder will support working capital needs.
Restatement of Financial Statements
Polestar announced its intention to restate its audited financial statements for 2022 and 2023, along with its unaudited interim results for the six-month periods ended June 30, 2023, and June 30, 2024. This decision stems from balance sheet errors related to the company’s unique tooling, which resulted in underreported assets and accrued liabilities.
Key points about the restatement include:
- No impact on previously reported revenue, operating loss, net loss, adjusted EBITDA, or net assets.
- Corrections to cash flow classifications and other minor errors.
These restatements aim to enhance the accuracy and reliability of Polestar’s financial reporting.
Recent Leadership Changes
Polestar strengthened its executive team in late 2024:
- Michael Lohscheller was appointed President and CEO, effective October 2024.
- Jean-François Mady assumed the role of Chief Financial Officer in October 2024.
- Jonas Engström became Chief Operating Officer in December 2024.
- The board welcomed new independent directors, including Christine Gorjanc, Xiaojie (Laura) Shen, and Francesca Gamboni.
Non-GAAP Financial Measures
Polestar continues to use non-GAAP measures, such as Adjusted EBITDA, to provide a clearer picture of its operating performance. In December 2024, the company refined its calculation methodology for Adjusted EBITDA to exclude items associated with financing activities and to account for restructuring costs, disposals, and unusual events. This updated calculation offers improved comparability and transparency.
Conference Call and Upcoming Results
Polestar will host a conference call to discuss its Q3 2024 results and strategic updates. The call will follow a strategy and business update scheduled for 2 PM CET. Access details can be found on the Polestar Investor Relations website.
Looking ahead, Polestar plans to publish its preliminary unaudited full-year and Q4 2024 results on March 6, 2025.
While Polestar faces significant challenges in a competitive market, the company is taking proactive measures to improve operational efficiency, secure funding, and address financial reporting issues. Its strong order intake for new models and continued geographic expansion highlight the company’s long-term potential as a key player in the electric vehicle market.
