Micromobility provider Lime reports that it has overcome the financial difficulties brought on by the COVID-19 pandemic, achieving a milestone that appeared improbable earlier in the year.

Specifically, the company is now operating with substantial profitability.

Lime announced that it experienced positive operating cash flow and positive free cash flow during the third quarter—a first for the organization—and anticipates achieving full-year profitability, excluding specific expenses (EBIT), in 2021.

During Thursday’s WSJ Future of Everything event, Lime’s Chief Executive Officer, Wayne Ting, presented a considerably more optimistic outlook for the company’s future than many might have predicted.

Previously, both Bird and Lime, prominent domestic scooter rental businesses, were rapidly securing funding to gain market share, obtain necessary regulatory approvals, and establish a presence in urban areas. However, the pandemic forced these companies to adjust their strategies.

Lime implemented a round of workforce reductions in April and received investment from Uber in May, a funding round that lowered its valuation below $1 billion. As detailed in a blog post reviewed by TechCrunch, the company temporarily suspended most of its services for a month during the initial phase of the COVID-19 crisis.

“It was undoubtedly a challenging decision for us earlier this year, and I recognize that we were not alone in facing difficulties during COVID,” Ting stated during the event. “I believe this period has been valuable in helping us understand the importance of careful decision-making. We are planning to expand our team again, but we will do so prudently to avoid having to make difficult choices similar to those we faced earlier in the year.”

Lime now reports improved conditions, describing them as significantly better. The company asserts that it is the “first new mobility company to achieve cash-flow positivity for an entire quarter.”

Generally, achieving positive cash flow is a crucial step for a startup, indicating its ability to largely fund operations internally and reduce reliance on external funding for survival.

Lime also claims to have reached EBIT positivity at the company level during the summer months. The specifics of “EBIT positive” are noteworthy. Did the company calculate EBIT strictly, without accounting for share-based compensation, or did it utilize adjusted EBIT, a common practice among startups that excludes the cost of share-based compensation as reported in GAAP financial statements? According to the company, the figure did exclude share-based compensation, which slightly diminishes the significance of the news.

Perhaps the most encouraging indicator from Lime is its expectation of full-year profitability in 2021. TechCrunch requested clarification on how this profitability is being measured. It was revealed that Lime is basing this projection on EBIT, rather than traditional net income. This approach is not unusual for a startup, but further GAAP metrics will be needed before Lime can be definitively declared “profitable.”

Nevertheless, it appears that Lime is no longer at risk of failure and is actively investing in the development of new products. The company unveiled its first new product, the Gen4 scooter, in Paris on Thursday. It also hinted at the introduction of “third and fourth modes” in the first quarter of 2021, along with a swappable battery feature.

Lime declined to provide TechCrunch with detailed information about these upcoming “third and fourth modes.” The current modes consist of bikes and scooters, leaving possibilities such as skateboards, cars, flying vehicles, and boats?

Lime clarified to TechCrunch that “move beyond” signifies the company will operate an additional service, accessible through the Lime app, aligning with its objective to facilitate trips of under five miles. These modes will be developed using the Lime Platform, but will be directly operated by Lime rather than through partnerships.

Lime has consistently discussed its goal of achieving profitability. This ambition is perhaps rooted in the early experiences of both itself and its competitor, Bird, which were known for substantial losses during their initial period as “unicorn” companies.

By November 2019, Lime was projecting EBIT positivity in 2020. However, the beginning of 2020 presented challenges, resulting in the loss of 100 jobs and the discontinuation of services in 12 markets. At that time, TechCrunch reported that “Lime is hoping to achieve profitability this year by laying off about 14% of its workforce and ceasing operations in 12 markets,” with the company stating that “financial independence [was its] goal for 2020, and [that it was] confident that Lime will be the first next-generation mobility company to reach profitability.”

The realization of that goal depends on the chosen method of measuring profitability.

Conditions did not improve for Lime later in the year. Its competitor, Bird, also implemented layoffs, and Lime further reduced its workforce in April. At that time, Lime expressed its commitment to “returning stronger than ever when this is over.”

The company is demonstrably in a stronger position now than it was in April and May. How did Lime recover from the brink of collapse? According to the company, it used the pause in operations to “focus on optimizing the business, narrowing [its] focus, and strengthening [its] fundamentals.” While this may sound like standard corporate language, the temporary cessation of operations likely provided Lime with a clearer understanding of what was working and what was not. By streamlining operations and eliminating underperforming areas, it established a foundation for a more efficient and unit-economically viable future.

And now, the conversation has shifted to scrutinizing the specifics of Lime’s profitability, rather than speculating about the potential sale of its remaining office assets. This represents a significant and positive transformation.