Zipcar's Flooring It

Zipcar (Nasdaq: ZIP  ) is looking good in its first quarter as a public company.

The fast-growing car-sharing service saw its revenue climb 34% to $61.6 million. Even if one were to back out last year's acquisition of United Kingdom's Streetcar to get a more axles-to-axles comparison, we're still looking at a healthy 28% spurt.

We're not just talking about growth by rolling into new markets. Zipcar's four established markets -- New York City, Boston, San Francisco, and Washington, D.C. -- saw their revenue climb a combined 25% to $34.4 million, or nearly 56% of revenue.

Adjusted EBITDA clocked in at $2.3 million, a healthy improvement over the $0.3 million it delivered on that front a year earlier. However, the "I" in EBITDA is a dagger, as having to shell out more than $2 million more than it had to last year in debt interest led to Zipcar's net loss widening slightly to $5.6 million -- or $0.17 a share.

Analysts still figured that Zipcar would generate less revenue and post a larger deficit, targeting a loss of $0.23 a share on $59.5 million in revenue.

For now, Zipcar isn't getting in the way of the performance of more conventional auto rental agencies. Hertz (NYSE: HTZ  ) and Avis Budget (Nasdaq: CAR  ) have also posted better than expected bottom-line results this week.

Zipcar has given back most of its initial gains since going public at $18 in April, but that could change as investors buy into the asset-sharing phenomenon.

Divvying up underutilized big-ticket assets -- from HomeAway (Nasdaq: AWAY  ) with second homes to Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) NetJets with private jets -- allows participants to live larger than they normally would.

Zipcar isn't just a financially prudent decision. Auto ownership and insurance can be real hassles. There's also the eco-friendly element of having 604,571 members sharing 9,480 cars.

Yes, that's how popular Zipcar is these days. There are 29% more Zipsters than there were a year ago, and they're also driving around more. The average daily revenue per vehicle has gone from $59 to $65 over the past year.

The strong quarterly showing finds Zipcar bumping its guidance higher. It now sees $8 million to $10 million in adjusted EBITDA on $240 million to $244 million in revenue. Analysts were parked at $238 million in annual revenue.

When it comes to growth stocks and story stocks, it's always comforting to stay a few car lengths ahead of Wall Street.

Is car sharing a viable business, or are Zipcar's nearly 605,000 members crazy? Share your thoughts in the comment box below.

The Motley Fool owns shares of Zipcar, Hertz Global Holdings, and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and Zipcar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz lives a short walk from several Zip cars, but he is currently not a member. He is a shareholder, though. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (4) | Recommend This Article (3)

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  • Report this Comment On August 04, 2011, at 1:51 PM, Brettze wrote:

    Zipcar can expand beyond cars, what about electric bikes, kayaks or motorboats, dirt bikes, snowmobiles, hang gliders, etc.. Those pricey toys that most of us cannot afford to own and use often , anyway.. Zipcar is great for occassional users that want nothing todo with storage of those fancy toys..

  • Report this Comment On August 04, 2011, at 1:52 PM, Brettze wrote:

    There is a fascinating electric bicycle called Optibike that costs $12,000 . It is well designed for enjoyable riding..I would love toride it once in a while !

  • Report this Comment On August 04, 2011, at 1:58 PM, Brettze wrote:

    Zipcar can also install bike lockers at shopping centers for bicycle users to park securely without fear of being stolen. Bike lockers should be at least 7 foot high so I dont have to bend and park the bike into low height lockers. .

  • Report this Comment On August 20, 2011, at 2:53 AM, spectechinvest wrote:

    People love ZIP car in SF they will do just fine cornering this market of big cities and college areas where freshmen usually don't have cars and live in the dorms.

    ZIP car will be the market leader in this new emerging market they invented

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