Q4 2019 Earnings Call
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Ladies and gentlemen, today's topic just scheduled to begin shortly please continue to stand by I think if their patients.
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Ladies and gentlemen, thank you for standing by and welcome to the higher car fourth quarter and 2019 earnings conference call. At this time, all participants I know listen only mode. After the speaker presentation, there will be a question and answer session.
Good question during this session you'll need to press star one on your telephone.
Please be advised after this conference is being recorded if you're quite anybody that's just.
Sorry.
I would now like turn the conference your speaker today, Joe coronary CEO. Please go ahead Sir.
Thank you operator.
At this time I'd like to welcome all to our fourth quarter and for your 2019 conference call.
We are all experiencing unprecedented times in our work in home life as we confront the global pandemic Ur Cobot Nike.
We trust that all of you are safe and we thank you for being on the call today.
At higher car, we have taken measures to manage our way through this environment in order to protect our employees and help our drivers to position themselves in this new environment.
Navigating the uncertainty in the market has been a full time job recently, but these times, we'll test and prove the value of our business model as a platform for people and companies to participate in a rapidly changing transportation industry.
We may even see this crisis contributed to the acceleration of transportation change.
Well give an update on the state of the business and provide you with some insights into what we think the future holds.
Before we get started I'd like to take this opportunity to remind you that during this call will be making forward looking statements within the meaning of federal securities laws regarding higher car Inc. Forward. Looking statements include but are not limited to statements that express the company's intentions beliefs expectations strategies predictions or any other statements relating to its views.
Your earnings activities events or conditions. These statements are based on current expectations estimates and projections about the company's business based in part on assumptions by made by management.
These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular those described in our risk factors included in our documents that the company files with the U.S. Securities Exchange Commission.
In addition, such statements could be affected by risks and uncertainties related to factors beyond the company's control you should not rely on are forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by.
Applicable law.
Our discussions today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results will be found in our earnings release, and supplemental materials, which will be furnished with our form 10.
Okay that will be filed with the FCC and will also be found on the investor relations portion of our website.
So first our top priority has been the health and safety of our staff and everyone who uses our platform. We've implemented work from home to keep our stop sale and thankfully. We haven't had any confirmed cases of Kobin 19 in our workforce or that we are aware of and our driver population.
At the same time, we're taking action to lift solidify our business to make sure. We're set to come out of this crisis stronger than before.
The most important thing to know is that we are well positioned to whether this crisis. We have ample liquidity, we have a highly variable cost structure. We have an agnostic platform that allows our drivers the ability to pivot in this crisis to focus more on transporting food and package delivery services versus people.
Multiple levers to pull to reduce burn.
There are also strong case studies of how our business is likely to rebound after a shock like does all of this gives us confidence.
And any crisis liquidity is key we're very fortunate to have a relatively strong cash position with approximately 8 million of unrestricted cash currently and zero debt.
We're taking actions to approach cash neutral in the near term with very little burn.
Actions include reducing marketing spend reducing some of our fixed ops expenses renegotiating, our variable insurance costs reduced travel and reduce GNS.
At this point, we're not looking at reducing head count and would prefer to spread cost control measures across the whole company.
So in the first two weeks to March we had our strongest revenue weeks ever but from a peak our active rentals has leveled off and are down about 25% peak to trough.
This is relatively strong compared to burn left where they are saying ride declines of approximately 70% year over year in certain cities.
Run one reason for our relative strength is that we have shifted our messaging to food and package delivery.
Our ads have moved away from a rideshare keyword search and focused on food and package delivery keyword search and because of this shift we have not experienced the drop in driver leads over the past three weeks.
We have started communicating a list of services that the drivers can use as a guide to find alternative alternative streams of income.
As well as encouraging car owners to keep their vehicles clean and lower their prices if possible, making it easier for drivers to get on the road.
Automated messaging has been built for the sales and marketing team to provide thoughtful and helpful communication during these times.
To ensure everyone can see the changes we've made we also added a banner to the landing page two encouraged drivers to sign up for these delivery services.
Driver sales agents have started an outbound call strategy, so that were becoming a trusted advisor to our driver partners.
And we're making sure we're picking up the phones because our customers will remember we were the ones that picked up when other companies did not.
We have switched to delivery services during this crisis.
And we've seen the unprecedented growth and delivery for companies in the food and package space Hooper announced their self service restaurant portal was saying 10 acts the amount of volume in the past couple of weeks and even in Seattle Workover 19 is it the hardest their team was seen two and a half X activity over the normal volume.
Amazon has released that is hiring 100000 workers to deal with the demand and Instacart said on Monday, thatll be higher and 300000 more personal shoppers as grocery delivery demand grows over 150%.
This is in addition to door dashed postmates another restaurant delivery companies seeking a greater rate of new client signing onto their service and needing drivers to help with demand.
So moving forward.
Back to our strategy of transitioning drivers to food and package delivery will start to show interactive rental day count, but it's still too early to itself. How this will impact revenue our new you need drivers renting a new car have continued to grow sequentially month over month, although what a normalized rate this past week or so.
New cars on the platform are sourcing from dominantly from existing dealer groups as most new franchise dealers have slowed down from registering a plating cars because of Dnbi closures.
So going back to the fourth quarter numbers, we reported another outstanding quarter with revenues, increasing 30% sequentially Q4 point 8 million from 3.7 million when compared to the third quarter.
Increasing 50% from the same period last year.
Rental days grew to approximately 197000 in Q4 from 146003rd quarter and you need drivers added to the platform rose 69% to 4873 in the fourth quarter of 2019 as compared to 2876, new unique drivers that in a four.
At quarter up 2018.
For full year revenue was 15.9 million, increasing 62% from 9.8 million in 2018.
For the full year rental days grew over 61% to approximately 621000 days from approximately 385000 days in 2018.
[noise], we sat on the call that we expected to see a substantial uptick of cars rentals and subsequent revenue from that activity in Q4, and continued sequential and year over year revenue growth throughout 2020.
As I just said in the first quarter, we saw rental activity grow from month to month growth leveled off in the past week as various states and put stay at home rules in place at our work to switch people to delivery has about a 10 day lag from sign up to acceptance. We are working hard to keep our drivers employed by helping them switched to delivering using this.
Period to strengthen our commercial dealer and OEM activities to ensure that we will have plenty of cars for drivers now has more drivers moved to delivery and for when they the country returns to normal.
Well, most importantly, we have enough cash to weather the storm and our people are safe and productive working from home.
Well these cars represent future revenue growth, obviously, there's still a major asymmetry between the driver leads were generating and the cars listed on our site. So we continue to increase our investment in people and systems and in our commercial and dealership initiatives in order to close this gap between supply and demand as we scale or.
Inventory to meet demand for vehicles on our platform.
Our partnerships group is focused on accelerating the OEM pilots currently in progress we will use this time to continue to build relationships and integrate our technology with our partners. Our recently announced partnership with clutches. The case in point, we have begun to onboard new dealerships and are working on a technology integration that will allow coached and us to pro.
<unk> services to the dealer marketplace.
This is part of the long term plan for our company and part of our strategy that will expand our company to integrate our services and platform into the dealer software platforms for both used and new cars. This will position us for the long term as a mobility as a service company and will allow many participants in the market to integrate.
Into the car sharing and mobility market as it grows in changes.
Continuing to build car capacity and scaling dealership initiatives were the main themes of our dealer initiatives in Q4 to give you some sense of the increase in commercial bookings. The number of cars that were runs at our platform for commercial partners increased 52% from Q3 19 to Q4 19, we expect to increase the commercial.
Cars on the platform by working with our current and perspective commercial accounts now so that we have cars to scale. The delivery drivers that we are expanding into as part of the recent changing landscape and who will be expanding cars for drivers when they ever expanding safe at home or shelter in place policies are replaced.
And people start using TNC platforms for their personal and business transportation needs again.
We're also seeing utilization improved as dealers become a larger part of the vehicle inventory.
Utilization will become a more important K P. I should track in the future because we found that dedicated commercial supply and the platform is being rented greater than 90% of the time, whereas individual our peer to peer supplies under 75%.
A few resist further use this utilization include owner response time to booking requests availability for key exchanges and competitive pricing in car quality.
As the shift in mix of inventory continues to weigh more heavily towards dealers and suites. We expect overall utilization utilization rates to increase post March 15th our overall utilization has leveled off to a more historic 70% from a high of mid 80%.
Posts pre March 15th we.
We expect to get back to the mid Eightys to low ninetys as a driver mix moves toward package delivery over the remainder of this unique period.
For the remainder of the year as ride sharing returns to historic levels.
Our integration of the new dealership portal unrelated technology tools combined with the Onboarding a veteran automotive sales executives to our higher car team has created an environment, where dealers and Oems have trust that we understand their needs and can especially onboard vehicles amassed a higher car platform the success of our.
Dealer initiatives today, it is proving that the higher car platform helps dealers and Oems to collaboratively partner with a transportation as a service provider to leverage this monumental shift in the transportation industry that is affecting their core businesses and a win win business model for both.
In addition, we compete against vertically integrated acid heavy models that had a high cost structure relative to our asset light model of scalable growth based on more of a SaaS echo system.
Fair Dot com as you know from their recent scale back is no longer providing cars to drivers on Hooper and left and we are seeing opportunities to benefit from this actually especially in states like California and Georgia.
This gives us increased confidence and our asset light business model as a partner with commercial dealerships, where we help them build their business and become larger and more profitable even as we build our business the scale in a fiscally prudent manner.
I'd now like to turn the call over to Scott Rajiv, Our Chief Financial Officer to walk through some key financial details from the quarter and the for you for your Scott.
Thanks, Joe.
Before I review the financials I want to give an update on important aspects of the 2019 audit.
First in regards to the audit itself, our 2019 audit remains ongoing due to some logistical issues related to covert 19.
The primary remaining item for the completion of the 2019 audit is finalizing the insurance reserve, we have had trouble getting necessary data from our service providers and accordingly that it might be the time required for our auditors to complete this analysis, we expect our insurance reserve to increase in proportion to the increase in right.
I will days, we've experienced as a result in growth in our core business.
In the numbers that follow.
We've taken a very conservative approach.
To report unaudited numbers and included a significant cushion, which will ultimately be finalized in our audience figures.
These results remain subject to adjustment and we will advise an update these numbers when the audit is complete and the 10-K is filed which we expect to occur in approximately two weeks.
Second we have been working with the FCC following their routine review of our 34 Act filings focusing on the 28 to 10-K.
They asked us to consider classifying insurance claims payments into the cost of goods sold line above the gross profit line.
Versus the 2018 classification of insurance claims payments into general and administrative operating expense in Iraq in our income statement. As this has recently become an industry standard with our transportation peer group for companies like lift mover and car rental car.
Yes.
This change is EBITDA neutral and has no impact on our earnings numbers previously reported as we're moving the expense from below the gross profit line to above it and accordingly reduce both our gross profit and operating expense equally.
Upon further review, we have decided to adopt this classification for insurance claim payments associated with revenue generating activities as cost of sales on a going forward basis and so the following results reflect this classification and include the insurance reserve cushion.
Going forward, we will report our results in this manner and these results reported when the audit is complete and the 10-K's file.
Finally, a as we've said we'll be taking a few extra weeks to make sure our audit partners and team have ample time to read finalize and you required adjustments. The audit process was slowed significantly this month as all our partners and staff the full time remote work, including complying with shell.
Were in place borders by the California Governor last week.
Even prior to the shelter in place order, we were experiencing delays in obtaining data from partners as it related to audit items outstanding because of code at 19.
I'm confident we'll finish the audit within the time allotted through filing in FCC form Twelveb 25, we will advise an update these numbers when the audit is complete and the 10-K's five.
For the 12 months ended December 30, Onest 2019, net revenue increased 63% to 15.9 million.
And when and was up 32% sequentially from 3.7 million in the third quarter to 4.8 million in the fourth quarter.
Revenue growth in the fourth quarter was primarily driven by increases in net rental days, which grew 35.3% to 197243 rental days in the fourth quarter up from 145738 days in the third quarter.
I would like to add these trends have continued into the first quarter of 2020, and we were setting all time highs in booking volumes and net revenue into early March.
We were actually at over 150000 net rental days through the first two months of the quarter for an annualized rate of over 900000 rental days up from just over 600000 days in 29 to you.
Cost of sales increased for the year ended December 31st 29 team to 10.1 million from 5.1 million. The prior year. This includes approximately 2.8 million in claims formerly classified in operating expenses as well as the additional insurance reserve previously mentioned.
Again, we expect our orders to complete their analysis and hope that this adjustment will ultimately be reduced in our final numbers.
Operating expense increased to $18.2 million for the 12 months ended December 31st 2019.
From 13.8 million same period. The prior year. This was primarily due to increased sales and marketing expenses to drive higher business levels.
Our net loss increased to 4.2 million.
For 30 cents per share for the three months ended December 31st 2019.
2.6 million or 31 cents per share in the same period, the prior year and from 3.6 million or 28 cents per share sequentially from the prior quarter.
For the full year, our net loss was $12.4 million or 89 cents per share versus a loss of 11.2 million in the prior year or $1.31 cents per share.
After backing out approximately 1.9 million in stock based compensation for the year, our adjusted net loss, which is effectively adjusted EBITDA was 10.6 million for the year ending 20 at December 31st 2019, compared to an adjusted net loss of 7.1 million for the year.
Ending December 31st 2018.
Cash totaled $10.8 million.
Excuse me cash totaled $10.6 million at December 30, Onest 2019, and increase the 3.8 million from 6.8 million at December 31st 2018. This increase was primarily the result of the completion of our secondary offering in July 2019.
And as of the end of February we had approximately 8.8 million in cash and marketable securities.
Our current focus is on trying to operate as close to cash neutral as possible with all the uncertainty in the marketplace.
As Joe mentioned earlier, our business has declined from all time highs just a few weeks ago. During the first week of March but to this point. It is a manageable decrease which we track on a daily basis. Fortunately our business systems are now almost entirely cloud based with great partners like Amazon Web services.
Salesforce stripe and zoo, allowing our teams to operate very efficiently wallet distance.
Also much of our cost structure is variable in nature as Joe said, so activity level decreased in the near term.
Also result in many of our larger costs, including background checks merchant processing and direct insurance charges to decrease as well.
We've also instituted a temporary hiring fees freeze and halted any travel.
And instead renewed our efforts to connect with both car owners and card drivers by remotely leveraging our tools.
Stay in touch with that during these difficult times.
Who'd as as discussed before food and package delivery are increasing and may very well become a new normal we're well positioned to participate in this expansion and what's that once things start to come back we look forward to again investing in topline growth and continuing to make price.
Chris towards cash flow problem.
Now I'd like to turn the call back over to Joe to wrap it up.
Thanks, Scott So in summary, despite an unprecedented environment, we are positioning ourselves to continue to grow rapidly and this growth is fueled by macro tailwinds pushing individuals toward a new future and it's not just mobility, but also last mile delivery for goods and services we.
See higher car perfectly positioned to enable drivers Oems auto dealers and fleet operators access to the transportation as a service opportunity.
And for all to earn revenues from participating rather than disintermediating the traditional players.
Feedback from our OEM a dealership initiatives has been positive. So we're doubling down on efforts to build scale and capacity into the platform to accommodate our vehicles Flyers driver demand continues to be robust and providing a consistent value add experience for a driver customers has been a key focus.
To conclude I believe higher cars, reaching a positive inflection point, which will be a bit slower now due to the crisis, but we continue to move in a positive direction and I look forward to continued operational execution and shareholder value creation over the long term with that I'll turn it over to the operator operator.
Thank you as a reminder to ask the question you'll need to press star one on your telephone. So we'll try your question that's the pound key.
Standby will be compared to Q1 day last Oh.
Our first question comes from Mike Grondahl with Northland Securities. Your line is now open.
Oh, yeah. Thanks, guys. So it sounds like.
Up until early March you were running at roughly 75 to 80000.
Rentals.
On.
And your down I think you said roughly 25% from there.
One of his bad bottomed yet.
Or in the in am I doing the math right you're about 55 to 60000 rentals among now.
Yeah. I mean this is Scott Mike I would just say that is definitely for for January and February those were both in right around 75000 rental day range. There were two fewer business days and in February that in March.
And and for sure the way we started the first weekend in March we were well on our way to and 80000, Dave last quarter. So it has eased off a bit.
It's kind of in that 25% range. The last couple of weeks and so we'll just see where where that ends up for the quarter. When we close that on next Tuesday.
And then you know when we step into the second quarter.
Gotcha.
The the watch relationship it sounds like you're working on an integration there to kind of make that a little bit more fluid.
When do you anticipate that being complete.
And then on the insurance I think you have an insurance renewal April 1st 2020.
What do you kind of expect from from that renewal.
Well, what I'll handle clutch and then I'll, let Scott take over the insurance piece, but.
Clutch, yeah, we couldn't have time not more perfectly with heading into an A.D.A.. We had we generated a tremendous amount of bonds. They probably had about 25 sales agents at any idea. We had about eight sales agents and there was a lot of cross pollination happening, while we were at the that a lot of dealers coming.
Up to me and saying Hey, I was just that the clutch booth. They love. What you guys are doing tell us more about higher car and how we can get into gag.
So that relationship is going to morph and that first phase into a very light technical integration.
I don't have a timetable in terms of when that integration is finalized just because of what's happening in the in the broader environment right now with Covidien. So.
But that is that that asset light integration is I, a and ability for dealerships to list vehicles on our platform with a push a button.
Both from onto the clutch platform as well as onto the higher car platform. So we get I don't have a timetable, but I'm really excited because there's a lot of low hanging fruit right now that we can go after with with clutch and higher car combined as a whole.
Let's take offering to dealerships that are looking to get into a you know transportation services.
And that I'll, let Scott I talk about the insurance reprice right I'm sure. Yeah. So you have good memory, Mike we're definitely coming up on our annual renewal, we've kind of been working on it since January and we have several brokers and about a half dozen insurance carriers that are participate.
Heading in that process. So we started to receive quotes for the forward period I think one of the important thing that we want to make sure is factored in there is as we see the opportunity for our agnostic platform to grow through foodservice package delivery.
That we have the ability to support all those needs. So we expect to wrap that up in the next three weeks basically and we'll be excited about talking about that on our Q1 earnings call.
Got it and then just lastly for me it looks like in January and February.
You burned roughly a million dollars the month.
Where do you expect that burn to go going forward.
Yeah, I mean, it's a great question as we said we've got a fair amount of our cost structure is variable. So part of that is already coming down with the reduction in business.
We have a couple different scenarios that weve modeled for Q2 and then the route 2020.
So we're trying to bring that down as much as possible and get us close to cash neutral I think one of the real opportunities, we having have coming up with that insurance renewal is to.
Improve the way that cash flow works on the insurance program, So I'm actually pretty hopeful that with that renewal.
We'll get very close to that and be able to significantly shrink it.
You know heading into Q2.
So so you think the insurance renewal.
He will help with that helped decrease the cash burn a lot is that we've seen a lot of the 1 million.
Yeah, we the payment terms that we have on our current program, we're looking to improve those and we've actually had a lot of positive conversations with some of those carriers. So thats a piece obviously your direct insurance number comes down when you have fewer days on the platform. We also have.
No upfront costs like background checks, we do.
As you are pushing more vault less volume through that's going to decrease of <unk> decrease that as well. So a lot of our cost structure is actually variable in nature. So as volume decreases the costs are going to decrease as well.
Okay. Thanks, guys.
Yeah.
Thank you next question comes from John Godyn with Lake Street. Your line is open.
Hey, guys can you hear me okay.
Yep.
Awesome. Thanks for taking the question first you know as we switched to kind of a more food and package delivery is there any difference with the revenue model or anything else on a unit level basis that that would be different from kind of the rideshare revenue model.
Well from what we're seeing right now just anecdotal so we're seeing from our drivers yeah, they're making good honey right now we had to add one example, where had been driving for three days and he made over $700, which is a pretty good return a four for our driver base so from that perspective.
Dave I'm seeing the opportunities now moving away from ride sharing and more towards package and food delivery.
From a unit economics, a scott could speak to that a little bit on on but from my perspective, there isn't much change.
Got it that's helpful and second I'm, just kind of thinking about the regulatory environments. You know, obviously in California, and now, Massachusetts as well there anything else out there that's changing as far as how gig economy workers are treated or anything else you guys are hearing.
That you think it's important to address.
Well in yen in places, where you have shelter in place yeah. The essential personnel. This include delivery drivers and so that's a key key point that we are communicating to our driver base that our sales team is communicating and this.
Effort to be a trusted adviser to two to them to those drivers and so I think that yeah. That's a big piece for somebody who wants to continue to drive needs to continue to earn let's move you over to a instacart or adored Asher Postmates platform.
And it's very simple given the agnostic nature of our of our of our platform, we're generating an insurance card and the name of the driver.
Which means that he can use that to drive for any of the platforms.
So yeah that that's a key have aspect to this crisis that we're seeing and that they can drive now as essential personnel.
Got it and then last just on the gross margin obviously over the past few quarters, it's been trending up nicely in part due to I'm kind of the shift you're more premium insurance tier and lower insurance rates you just thinking about you know that going forward and and the shift now into our Opex, It's what would.
Got to be a good maybe run rate to think about and then maybe how that flows through down to EBITDA as well is a is it going to be a direct flow through <unk> any kind of incremental costs on the opex side as well.
Well I think there's you continue to see scale as we increase revenue dramatically without really having to change head count much for example.
So I think kind of what what I'm modeling going forward is it's about a.
ER about at 10% to 15% shift in gross profit.
So if we were previously and kind of the.
Pushing up over 60%.
You're probably in a 45% range.
Just to kind of give you a place to start and then and that we'll be updating that when we well we do our Q1 release as well and and we can see show exactly what that gross profit margin is but I think basically what you're going to still see even though it slowed a little this year is.
With the next uptick in revenue a lot more of that has started to drop to the bottom line. So that impacts the gross margin and the EBITDA margin. So I think we're starting to see some of those scales of efficiency happen and as you can continue to grow the topline with the existing team leveraging some of the new tools that.
We brought on.
Good on thanks for the time guides and hope you will stay healthy.
Thanks, John.
Thank you. Our next question comes from John and then with Ladenburg. Your line is open.
Oh, thanks for taking my questions.
First of all for let me just make sure I understand for 2019, you're reporting your insurance expense.
As part of.
Gross margin line and Madden expense will no longer be an operating in the operating.
Expenses area.
Correct, I know that like right.
Yes that was about 2.8 million there was formally in opex for the full year and so that move.
Directly from the claims line within Opex up into cost of sales along with the direct insurance that we currently pay on a weekly basis right and.
75% of that expense is the direct expense that we pay regularly and so this is getting added to that to again be consistent with sort of the increasing industry standard turn out that pmcs and the other rental car companies are dealing with that but so that component is EBITDA neutral.
So in spite of the 2.8 billion, it's now part of gross margin.
You still 2 million dollar increase in operating expenses.
[music].
So basically I couldn't be more than $4 million you're over here.
Yes, that's correct.
Okay.
So so could you walk through again, how you're going to get too.
How should break even.
The next couple of months.
I mean in terms of there's a lot of levers that we can pull right now anywhere between there's a lot of marketing expense. We can pull out. This insurance reprice is probably get a pull some cash or pull it down to the bottom line.
And there's a lot that was in GNS for travel et cetera.
Legal expenses et cetera that I think we can pull out as well so we're going to work actively to.
To get that down I think that it's a it's a balance because we want to be positioned right now to take advantage of the country coming out of this relatively quickly but you did is when people go back to work, we're going to start to see an uptick as well that's one of the main.
Hi use cases for ride sharing right now is commuting to work and so as soon as the country gets back to work, we're going to get back to work. So there's a delicate balance there, but that's the that's the idea right now.
Okay. So.
It doesn't really ticket genius to figure out, but not too many cars are being sold right now.
So is that kind of.
Kind of course.
Not force, but incentivize dealership exhibitor too.
Put their card on your platform.
Well, yeah, absolutely I mean, that's why we were mentioning in the call that we think theres going to be a big push towards mobility services like ours, a in the dealer world and the manufacturing world as well I think does is going to accelerate that.
Just because you don't have a lot of people buying cars I mean that cox's, saying that it's gone from a 17 million last minute and 2020 down to 15 million and that extra 2 million. The dealers have sitting on a lots or need to be utilized somehow what better way than to throw it on.
On a franchise solution like a higher car clutch partnership and start to rented out for leisure subscription and organic.
So yeah, we think theres a great use case, there and this crisis is only going to accelerate that which is why I don't want to cut to the bone.
And I want to be ready for when this does spring back.
Okay. Thank you that's it for me.
Yeah. Thanks.
Thank you.
Our next question comes from Jack Vanda today with Maxim Group. Your line is how open.
Hey, guys.
Great quarter, but you'd given the current environment, although I know, it's looking back in time before the pandemic, but I still good quarter.
The last bullet within the press release under a additional fourth quarter metrics I think you've got cut off.
HM commercial inventories starts have begun to accelerate with these two large regional rentals we partners.
As with over vehicles in Q4.
Do you have the number of vehicles that was meant to be included in there from those two partners.
I.
I think yes, I think Jack that was probably a holdover from Q3, we were talking about those large southern regional dealers.
That have come on and now are supplying the bulk of our cars and Florida, Georgia, Texas. So.
Probably up probably a hold over from last quarter.
Okay No no problem and then maybe I missed it but did you are or can you provide that the total dealership partners and dealer mystic vehicles that.
Well on the platform at the end of Fourq you are as of today I think you guys typically.
Provide that metric on a.
Current basis, so whatever those numbers more that'd be great.
Yeah, we have those numbers kind of moved away from makes the isn't that a direct correlation to revenue, but gross cars. In Q4 was about 5200 out of the commercial accounts.
Thats up from 4300.
One of the metrics that we hadn't given in the past as net cars. Yeah that cars is about 2100 out of that 52.
And that is so those are listed and rented [noise].
[noise]. So you can get a kind of a utilization rate there.
Well you can get a utilization rate generally for for dealerships and then in terms of utilization rate up until March 15th I think we talked about this it was kind of been in the mid eighties.
It's come down off a little bit more normalized in the sense that were around 70% right now just kind of been historically, where we've been over the past two or three years.
So it's come off slightly but it hasn't fallen off the cliff with as I think pretty good sign right now.
And Jack the only thing I'd add to that this is Scott is that.
The commercial.
Fleet component of the car supply is now.
Kind of north of 80% so that has clearly shifted over the last year. So.
From being 80 20, the other way so you've really seen car supply move into.
The fleet providers over the last year year and Uh Huh.
Got it and that's helpful. And then my just one more is I know some some other analysts were asking about.
The unit economics on many changes there would not want I know or ask about specifically is it has there been any change that that average weekly or daily base rental fee.
Then the pass has been around 30 to $35.
Has that dropped at all or even increase <unk>. How can you talk about that any further detail.
Yeah. Good it's flat right now I mean, we're literally like 10 to 14 days into the crisis. So I haven't seen it dropped materially yet, but I'll keep everyone informed on that.
Okay, Great. That's it for me thanks, guys.
All right. Thanks Dick.
Thank you.
Our next question comes from Micron, though with Northland Securities. Your line is now open.
Oh, Yes, just a couple more for Scott on the.
On the fourth quarter, Scott I think you said that the cost of goods sold for the year.
Was 10.1 million.
Uh-huh almost does that include the whole 2.8 million you talked about related to insurance.
Where does that just include part of it.
No it it pulls the entire 2.8 million.
From Opex in the cost to sales and then the other component that's in there as we mentioned we have put in a room for this insurance reserve is still being finalized so.
That's a significant you know those two items are a significant piece of that 10.1 million in total cost of sales.
For the figure in.
Are those basically all in the fourth quarter them, the 2.8 million or is that.
Is that incremental cost insurance reserve all in the fourth quarter.
No its quarterly through the year it is increasing into the second half of the year.
And then the the insurance reserve Keith is is in the fourth quarter only.
Got it.
And then just moving down the operating expenses I think you said no total operating expenses were 18.2 million.
Uh huh.
So can I just back out the first three quarters.
To get the fourth quarter and I'm trying to figure out how to do that for cost of goods sold to just to kind of come up with a you know where are you guys are sitting in for Q.
Yeah, and that's why I said that I think.
Q4 takes a heavier hit because that insurance reserve adjustments only in that quarter.
And that's why I think GP will be higher on a going forward basis.
So on that so that's certainly I'd agree with that on the GP side, and then I think as far as Opex goes.
You know, it's really looking at that.
Quarterly number and then you know kind of Annualizing that so you know if you just to.
If you just to the 18 billion you know you'd be at.
Four or five quarter in Opex.
Right, So I think.
I don't think Theres, a lot of extra expense in the fourth quarter Theres, a little bit a nonrecurring in there there is some legal fees and some other pieces that we had to clean up and of course, you have a you about 400000 and stock based comp in the fourth quarter. So if you think about it from an EBITDA perspective.
You can sort of further reduced that number.
Got it.
Yeah, I think I get the operating expense, but I guess I'm going back to cost of goods sold.
Yeah in the first three quarters, you ran about a million in there.
Okay at least reported <unk> and then you're saying it's about.
10.1 million for the full year.
So so basically you know.
10.1, minus four and a half million.
Coal coal it.
Five and Uh huh.
Yeah, five and a half million is that roughly the right for Q cost to goods sold number.
Well, no because well you've got again you've got.
And insurance reserve.
Estimate that's in there for the time being until we finish the audit, which is making that which is making that number higher.
We can pull up I can pull up the.
I think we'd have to do a quarter over quarter analysis. So maybe we can do does that fall to get back to you.
I think what you're also saying is.
The 2.8 million isn't all in for Q on an operating basis only some of that for acute that's where I think the confusion.
Correct, Yeah, I mean again it increases.
Quarterly through the full 2019.
And Ah you know so you so.
It was bigger in Q4, but it was in all four quarters. So.
Got it I mean, that's where I think people are going to struggle. They don't know how to how to model what is going to look like going forward. So okay.
Okay.
Thank you I'm not showing any further questions at this time not least attend the call back over to joke Tonight, if any further remarks.
Great. Thank you operator, and thank you again for joining and joining US today, we look forward to continuing to update you on our progress throughout the year. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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