The credit rating of WHOOSH LLC (hereinafter, Whoosh, or the Company) is based on the fact that the Company has its own technology and infrastructure, as well as a continuously growing fleet of new scooters. ACRA notes the very rapid growth of revenues and very high profitability of the Company. Whoosh continues to actively develop and expand its operations in Russia — the rating outlook has been changed from Stable to Positive due to the fast growth of business coupled with more predictable development of the kicksharing market.
Whoosh is a tech company that independently develops and deploys solutions for sharing personal mobility devices (PMDs) and manages the service of the same name for renting electric scooters. In 2023, the Company retained its leadership of the Russian kicksharing market, having increased the number of registered users to 20.4 mln and doubled the number of rides (103.9 mln in 2023 vs. 55.5 mln in 2022). Whoosh’s fleet amounted to 150,000 PMDs as of the end of 2023.
KEY ASSESSMENT FACTORS
Leadership in the kicksharing segment and rapid business growth. Whoosh continues to increase the size of its scooter fleet, taking advantage of Russia’s unsaturated kicksharing market (according to the Company, there were 194,000 PMDs by the start of the active kicksharing season in 2024). ACRA assumes that active growth of the PMD fleet, the focus on a narrow business segment and improvement of customer service, as well as the implementation of projects to improve operating efficiency, will enable the Company to maintain its leading position in Russia’s kicksharing market in the medium term. The Agency positively assesses regulatory changes in the market, such as the introduction of traffic rules for PMDs. The Russian Ministry of Transport’s roadmap of measures for the safe operation of PMDs increases the predictability of the development of the regulatory environment and business. In addition, taking into account the specifics of regulation, barriers to entry for new players have increased significantly in the main regions of the Company’s presence.
Small size of business and very high profitability. Whoosh maintains its fast growth rates — in 2023, the Company’s revenues increased by 53% (to RUB 10.5 bln), while FFO before net interest payments and taxes reached RUB 4.7 bln (+46% year-on-year). ACRA expects this indicator to exceed RUB 5 bln in 2024–2025, which may serve as grounds to increase the assessment of the size of the Company’s business to medium. The Agency assumes the possibility of Whoosh’s revenues growing slower as the market saturates. In the forecast period (2024–2026), this factor may put pressure on the FFO margin before net interest payments and taxes, which declined from 47% to 45% in 2023, but nevertheless corresponds to a high assessment as per ACRA’s methodology. The Company is implementing a number of projects aimed at increasing operational efficiency (such as localizing the production of components), the effectiveness of which can be fully assessed based on the results of 2024.
Low leverage and high interest payment coverage. As of the end of 2023, the Company’s leverage had increased on the back of record capital expenditures. The weighted average ratio of total debt (excluding the loan from Whoosh Holding PJSC) to FFO before net interest payments for 2021 to 2026 is estimated by the Agency at 1.9x.
Given the seasonal nature of Whoosh’s business due to climatic factors, the bulk of capital expenditures occur in the first and fourth quarters of the year, for which the Company accumulates cash in its accounts. This puts some pressure on the debt ratio, which is calculated using total debt. When assessing leverage, the Agency also took into account the fact that the ratio of net debt (excluding the loan from Whoosh Holding PJSC) to FFO before net interest payments was 1.6x for 2023.
ACRA assumes that the weighted average ratio of FFO before net interest payments to interest payments will be 4.8x from 2021 to 2026, taking into account the decline in this indicator in 2024. According to the Agency’s forecasts, it will return to values above 5.0x from 2025.
High liquidity assessment and very weak free cash flow (FCF). The Company’s loan portfolio consists of two issues of ruble-denominated unsecured bonds, bank financing, and a loan from the parent company. Limits of available credit lines are sufficient to cover short-term obligations. The Agency highly rates Whoosh’s liquidity quality as the Company has access to both debt and equity capital markets. In ACRA’s opinion, Whoosh will use a combined approach to financing its activities in the medium term.
The Agency notes that the Company paid dividends in the amount of RUB 1.4 bln in 2023 (RUB 1.0 bln a year earlier); this had a material negative impact on the FCF margin. The Agency estimates that the weighted average FCF margin for 2021 to 2026 will be -12%. ACRA expects an improvement of this ratio with a transition to positive values in 2024.
Whoosh’s capital expenditures remain consistently high, which is justified in the conditions of a growing unsaturated market. According to the Agency’s estimates, the weighted average ratio of capital expenditures to revenues will be 36% for 2021 to 2026.
KEY ASSUMPTIONS
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Maintaining the regulatory environment for the Company’s operations;
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Implementation of the Company’s capital investment program as planned;
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Significant growth of revenues and FFO before net interest payments in 2024.
OUTLOOK OR RATING CHANGE FACTORS
The Positive outlook assumes that the rating will highly likely be upgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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FFO before net interest payments and taxes growing to RUB 5 bln coupled with the ratio of total debt to FFO before net interest payments remaining below 2.0x and the ratio of FFO before net interest payments to interest payments remaining above 5.0x;
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FCF margin consistently above 2% and ratio of capital expenditures to revenues falling below 15%.
A negative rating action may be prompted by:
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Weighted average ratio of total debt to FFO before net interest payments exceeding 2.0x coupled with deterioration of access to external liquidity sources;
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Ratio of FFO before net interest payments to interest payments stabilizing below 5.0x;
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FFO margin before net interest payments and taxes falling below 25%;
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Deterioration of access to external liquidity sources.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a-.
Support: none.
ISSUE RATINGS
WHOOSH LLC (RU000A104WS2); maturity date: June 25, 2025, issue volume: RUB 3.5 bln — A-(RU).
Rationale. The issue represents senior unsecured debt of WHOOSH LLC. Due to the absence of either structural or contractual subordination of the issue, ACRA regards it as equal to other existing and future unsecured and unsubordinated debt obligations of the Company in terms of priority. As the current debt structure includes secured financing, ACRA used the detailed approach to assess the level of loss recovery. In accordance with this approach, the level of recovery for the issue belongs to category I, and therefore the credit rating of the issue is equivalent to that of the Company, i.e. A-(RU).
REGULATORY DISCLOSURE
The credit ratings have been assigned to WHOOSH LLC and the bond issue (RU000A104WS2) of WHOOSH LLC under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit rating to the above issue.
The credit ratings of WHOOSH LLC and the bond issue (RU000A104WS2) of WHOOSH LLC were published by ACRA for the first time on April 20, 2022 and June 29, 2022, respectively. The credit rating of WHOOSH LLC and its outlook and the credit rating of the bond issue (RU000A104WS2) of WHOOSH LLC are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by WHOOSH LLC, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and WHOOSH LLC participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to WHOOSH LLC. No conflicts of interest were discovered in the course of credit rating assignment.
