10-Q: LiveWire Narrows Losses Amidst Motorcycle Sales Slump

LiveWire Group, Inc. reported a reduced net loss for Q2 2025, driven by cost efficiencies, despite a significant decline in electric motorcycle unit sales and revenue.

Summary

• LiveWire Group, Inc. reported a net loss of $18.826 million for the three months ended June 30, 2025, an improvement from a $24.805 million net loss in the same period last year.
• Operating loss for the quarter improved to $18.264 million from $28.165 million year-over-year.
• Electric Motorcycles segment revenue decreased by 65.3% to $0.842 million, with unit sales falling 65.2% to 55 units.
• STACYC segment revenue increased by 25.2% to $5.031 million, driven by higher electric balance bike and electric bike unit sales, which rose 27.4% to 4,872 units.
• Cash and cash equivalents decreased to $29.316 million as of June 30, 2025, from $64.437 million at December 31, 2024.
• Net cash used in operating activities for the six months ended June 30, 2025, was $32.367 million, an improvement from $48.886 million in the prior year period.
• The company continues to focus on cost improvements, future electric motorcycle models, and product innovation and development for the remainder of 2025.
• A Convertible Delayed Draw Term Loan Agreement with Harley-Davidson, Inc. provides access to up to $100 million, with no amounts drawn as of June 30, 2025.
• The company does not expect to generate positive cash flow from operations over the next twelve months.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the severe decline in the core electric motorcycle business revenue and unit sales, coupled with a significant reduction in cash reserves. While operating losses improved due to cost-cutting, the underlying revenue weakness in the primary segment is a major concern. The STACYC segment's growth is a positive, but not enough to offset the overall challenges. The reliance on the H-D loan for liquidity and the unlikelihood of warrant exercises add to the negative outlook.

Positives

• Net loss significantly decreased by $5.979 million (24.1%) for the three months ended June 30, 2025, compared to the prior year.
• Operating loss improved by $9.901 million (35.2%) for the three months ended June 30, 2025, reflecting successful cost reduction activities.
• The Electric Motorcycles segment's operating loss improved by $8.793 million (32.8%) due to cost reductions, including a $3.548 million decrease in personnel costs and a $1.085 million reduction in fees paid to Harley-Davidson, Inc. for services.
• The STACYC segment's operating loss improved by $1.108 million (80.9%), primarily due to lower marketing expenses of $0.275 million.
• STACYC segment revenue increased by 25.2% to $5.031 million, driven by higher shipment volumes of electric balance bikes and electric bikes.
• Net cash used by operating activities decreased by $16.519 million for the six months ended June 30, 2025, indicating improved operational efficiency in cash burn.
• Capital expenditures decreased by $3.037 million for the six months ended June 30, 2025, as certain projects from the prior year did not recur.
• The company has access to a $100 million Convertible Delayed Draw Term Loan from Harley-Davidson, Inc., providing a liquidity buffer, with no amounts drawn as of June 30, 2025.

Negatives

• Total revenue decreased by 8.9% to $5.873 million for the three months ended June 30, 2025, compared to the prior year.
• Electric Motorcycles segment revenue plummeted by 65.3% to $0.842 million, primarily due to a 65.2% decrease in unit sales (from 158 to 55 units).
• Cash and cash equivalents significantly declined to $29.316 million as of June 30, 2025, from $64.437 million at December 31, 2024.
• The company continues to incur significant net losses and does not expect to generate positive cash flow from operations over the next twelve months.
• Interest income decreased substantially by $1.263 million (79.1%) due to a lower balance of money market funds.
• A loss of $0.905 million was recognized from the change in fair value of warrant liabilities, compared to an income of $1.792 million in the prior year, indicating an increase in the estimated fair value of warrants.
• The company's stock price of $4.60 per share as of June 30, 2025, is significantly below the $11.50 exercise price of its warrants, making cash exercise unlikely and limiting potential capital from this source.
• Accounts payable to related party (Harley-Davidson, Inc.) increased to $12.617 million as of June 30, 2025, from $9.762 million at December 31, 2024, including $6.156 million for excess inventory components.

Risks

• History of losses and expectation to incur significant expenses and continuing losses for the foreseeable future.
• Harley-Davidson, Inc. (H-D) may make decisions for its overall benefit that could negatively impact LiveWire's business.
• LiveWire's relationship with H-D could impact its other business relationships.
• Future capital requirements and the ability to obtain funding for operations and manage costs.
• Retail partners may be unwilling to participate in LiveWire's go-to-market business model, or the company may be unable to establish or maintain relationships with customers.
• Competition in the highly-competitive and rapidly-evolving electric vehicle industry.
• Ability to execute its business model, including market acceptance of planned electric vehicles.
• Limited operating history and challenges in scaling operations and managing future growth effectively.
• Potential delays in the design, manufacture, financing, regulatory approval, launch, and delivery of electric vehicles.
• Risks related to building out the supply chain, including dependency on single-sourced or limited-source suppliers for critical components like batteries and semiconductor chips.
• Ability to manage and predict the impact of new or adjusted tariffs on product sales and raw material costs.
• Reliance on third-party and public electric vehicle charging networks.
• Ability to attract and retain key personnel.
• Business overlap with H-D and being perceived as competitors.
• Inability to maintain a strong relationship with H-D or resolve disputes favorably.
• Dependency on H-D for services (e.g., quality and safety testing), with potential significant investment or increased costs if these arrangements terminate.
• Risks related to any decision to electrify H-D products or products of other companies.
• Potential harm caused by misappropriation of data and compromises in cybersecurity.
• Changes in laws, regulatory requirements, governmental incentives, and fuel and energy prices.
• Impact of health epidemics on the business.
• Litigation, regulatory proceedings, complaints, product liability claims, and/or adverse judgments.
• Adverse effects from other economic, business, or competitive factors and/or publicity.
• Changes in U.S. or international trade policy, including the continuation or imposition of tariffs (e.g., U.S. baseline tariff of 10% on goods from all countries and individualized reciprocal tariffs for countries with significant trade deficits like China, imposed in April 2025), could adversely affect business, prospects, financial condition, and operating results.

Future Outlook

LiveWire's focus for the remainder of 2025 continues to be on cost improvements, development of future electric motorcycle models, and product innovation. The company does not expect to generate positive cash flow from operations over the next twelve months and anticipates increased capital expenditures and working capital requirements as it grows the business, develops customer support and marketing infrastructure, and expands product development efforts. Capital expenditures are estimated to be between $5 million and $10 million in 2025.

Management Comments

• Net losses reflect the early-stage nature of the company's business.
• The decrease in net loss reflects the segment results and changes in interest income and the fair value of warrants.
• Management believes that cash on hand and the available borrowings under the Convertible Term Loan will provide sufficient liquidity to meet projected obligations for at least the next twelve months.
• The company does not expect to rely on the cash exercise of Warrants to fund its operations and does not believe that it needs such proceeds to support working capital and capital expenditure requirements for the next twelve months.
• The company continues to explore additional means for raising capital to continue to support ongoing operations and future investments.

Industry Context

LiveWire operates in the rapidly evolving two-wheel electric vehicle space, a highly competitive industry. While the STACYC segment shows growth, indicating demand for electric balance bikes and pedal-assist electric bikes, the significant decline in electric motorcycle sales suggests challenges in the core electric motorcycle market or LiveWire's specific positioning within it. The company's reliance on Harley-Davidson, Inc. for manufacturing, services, and potential financing highlights the strategic importance of this relationship in a nascent but competitive industry. The mention of new tariffs underscores the increasing geopolitical and trade policy risks impacting global supply chains and market access for manufacturers.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to global benchmarks. However, the significant decline in electric motorcycle unit sales (65.2% year-over-year for Q2 2025) suggests LiveWire's performance in its core segment is lagging, especially when compared to the broader growth trends seen in the electric vehicle market, though specific two-wheel EV market data is not provided for direct comparison.
• The STACYC segment's growth in unit sales (27.4% for Q2 2025) and revenue (25.2% for Q2 2025) indicates a more positive trajectory, potentially aligning with or exceeding growth in the electric balance bike and pedal-assist electric bike sub-segments, but without specific industry benchmarks, a precise assessment is not possible.
• The company's continued net losses and negative operating cash flow are typical for early-stage growth companies in capital-intensive industries like EV manufacturing, but the magnitude of the losses relative to revenue indicates significant ongoing investment and a challenging path to profitability compared to more mature industry players.

Management Changes

Corporate Governance

Legal Proceedings

• The company is subject to claims related to product and other commercial matters in the normal course of business.
• In 2024, the company received an unfavorable arbitration ruling related to a claim from a supplier, resulting in a payment of $1.802 million in the six months ended June 30, 2025 (the total amount owed was recorded as of December 31, 2024).

Related Party Transactions

• Harley-Davidson, Inc. (H-D) is a significant related party, with ongoing agreements including a Contract Manufacturing Agreement, Master Services Agreement, Joint Development Agreement, and Tax Matters Agreement.
• Cost of goods sold with H-D was $0.485 million for Q2 2025 and $1.644 million for the six months ended June 30, 2025, primarily related to motorcycle purchases under the Contract Manufacturing Agreement.
• Selling, administrative and engineering expenses with H-D were $1.331 million for Q2 2025 and $2.735 million for the six months ended June 30, 2025, for services rendered.
• Accounts payable to H-D increased to $12.617 million as of June 30, 2025, from $9.762 million at December 31, 2024, including $6.156 million for excess inventory components.
• Sales of electric motorcycles in the U.S. and Canada are primarily financed through Harley-Davidson Financial Services (HDFS), a wholly-owned subsidiary of H-D.
• The company owes HDFS $1.277 million as of June 30, 2025, for amounts remitted to dealers on behalf of the company related to marketing initiatives, returns, and incentive payments.
• A Convertible Delayed Draw Term Loan Agreement with H-D provides for term loans up to $100 million, with no amounts outstanding as of June 30, 2025.
• Lease agreements with H-D for office space and the Milwaukee lab facility are in place, with rent expense of $0.054 million for Q2 2025 and $0.153 million for the six months ended June 30, 2025.

Stakeholder Impact

• Shareholders: Experience continued net losses and significant cash burn, diluting per-share value. The low stock price relative to warrant exercise price limits potential capital infusion from warrant holders. The availability of the H-D loan provides some stability but also signifies ongoing reliance on the parent company.
• Employees: Headcount reductions and reorganization activities in 2024 impacted personnel, though the company is focusing on cost improvements. The modification to executive severance terms could affect executive retention and compensation.
• Customers: The decline in electric motorcycle unit sales suggests lower customer adoption or market reach for this segment. The launch of new STACYC products and expansion into new markets could benefit STACYC customers.
• Suppliers: The company's dependency on single-sourced or limited-source suppliers for critical components poses a risk to supply chain stability. The unfavorable arbitration ruling against a supplier indicates potential disputes.
• Creditors: The company's liquidity is supported by cash on hand and the available $100 million loan from H-D, which is a significant creditor. The provision for the loan to convert to equity if not repaid by maturity impacts H-D as a creditor.

Next Steps

• Focus on cost improvements for the remainder of 2025.
• Continue development of future electric motorcycle models.
• Pursue product innovation and development.
• Grow the Electric Motorcycles independent retail partner network as distribution capabilities expand.
• Evaluate the impact of ASU 2023-09 (Income Taxes) on consolidated financial statement disclosures.
• Evaluate the impact of ASU 2024-03 (Expense Disaggregation Disclosures) on consolidated financial statement disclosures.
• Evaluate the impact of ASU 2025-05 (Credit Losses for Accounts Receivable and Contract Assets) on consolidated financial statements.
• Meet minimum purchase commitments under the Contract Manufacturing Agreement with H-D starting in 2026 to avoid payments.

Key Dates

Recommendation

The company's financial performance presents a mixed picture. While LiveWire successfully reduced its net and operating losses through significant cost-cutting measures, the core Electric Motorcycles segment experienced a drastic decline in revenue and unit sales. This indicates a fundamental challenge in market adoption or competitive positioning for its primary product line. The STACYC segment shows positive growth, but it is not sufficient to offset the struggles of the Electric Motorcycles segment. The company is burning cash rapidly, with cash and cash equivalents significantly reduced. Although the $100 million convertible loan from Harley-Davidson provides a crucial liquidity buffer, it also highlights the company's continued reliance on its parent. The current stock price being well below the warrant exercise price means that a significant potential capital source is unlikely to materialize. Given the substantial operational challenges in its main segment and ongoing cash burn, a 'Sell' recommendation is too aggressive given the cost improvements and the STACYC segment's performance, as well as the H-D financial support. However, the severe decline in motorcycle sales and continued losses prevent a 'Buy' recommendation. Therefore, a 'Hold' is appropriate, advising investors to monitor the company's ability to reverse the decline in motorcycle sales and achieve sustainable growth and profitability.

Keywords

Electric Motorcycles, STACYC, Electric Bikes, EV, Motorcycle Industry, SEC Filing, 10-Q, Financial Results, Harley-Davidson, LiveWire, Quarterly Report, Electric Vehicles, Powersports