Despite Improved Fleet Operations, Zipcar Reports Loss of $14.1M in 2010

On March 4, 2011 Zipcar filed annual financial results, revealing revenues of $186 million in 2010, an increase of  41% over 2009.  The gains underscore the growing investment and consumer interest in carsharing, which experts anticipate might be a $3.3 billion industry by 2016 in the North America.  Overshadowing the gains was the net loss of $14.1 million, a decline from the 2009 loss of $4.6 million.  The loss was bolstered by a nearly three-fold increase in interest expenses.

Operationally, Zipcar made a modest improvements.  Operating expenses as a percent of revenue declined slightly from 104.5% in 2009 to 104% in 2010.  The more impressive improvement was found in fleet expenses, the primary cost driver for Zipcar, which includes vehicle acquisition costs, lease expenses, depreciation,, parking, fuel, insurance, accidents, repairs, and maintenance.  Over the past three years, Zipcar has decreased this cost as a share of revenue: 79.4% (2008), 71.2% (2009), and 65.9% (2010).  This improvement indicates an improved vehicle utilization (rental hours/week/vehicle) and should be a very positive indicator for potential investors.

The improvements in fleet operations were mostly offset by increases in selling, general and administrative expenses (in other words, an increase in staff).  Although Zipcar has yet to see a profitable year since its inception, the trends in the annual financial results are encouraging as the company continues to move toward its IPO later this year.

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