Q4 2020 HyreCar Inc Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by and.
Welcome to day have a car 2020 fourth quarter and full year earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to price the startup and the one key on your Touchtone telephone. Please be advised that today's conference maybe recorded if he would go out operating.
Since please press Star then zero.
I would now like to hand, the conference over to your Speaker host Joel for Nancy. Please go ahead Sir.
Thank you operator, and welcome everyone to our 2024th quarter and full year earnings Conference call.
<unk>, we get started I'd like to take this opportunity to remind you that during this call we 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 future 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 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 and Exchange Commission.
In addition, such statements could be affected by risks and uncertainties related to factors beyond the Companys control you should not rely on our 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 ups.
And then except as required by applicable law.
Our discussions today will include non-GAAP financial measures. These non-GAAP measures should be considered and 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-K.
That will be filed with the SEC and will also be found on the Investor relations portion of our website.
Now I'll turn to our annual results.
A year ago and March of 2020, we said we are living in unprecedented times and our work and home life as we confront the global pandemic of COVID-19, but these times will test and prove the value of our business model as a platform for people and companies to participate and the rapidly changing.
Transportation industry.
Fast forward to today and these words proved accurate higher cars effort to expand the platform by identifying opportunities and prepared food and package and grocery delivery and by rapidly expanding our emphasis on delivery and March last year proved to be the right move by our team.
As a result, net revenue increased 59% to $25 2 million for the fiscal year up from $15 9.002 million 19, and rental days increased 63% to 1.014 million and for the fiscal year up from 621000 and 2019.
I want to recognize the collective efforts of the entire higher car team.
Thank them for their hard work and making this happen and the support of our stakeholders investors partners and advisors during what was an incredibly challenging year.
We could not do this without all of your efforts and we thank you.
Our main source of higher car strength has been continued robust driver demand for the year 15100, new unique drivers picked up a car on our platform a 29% year over year growth rate or expansion to include food grocery and delivery plus our focus on.
And customer retention drove.
Drove revenue and rental day growth rates, helping us sustain during the lockdown and continuing to recover as we look to a post COVID-19 world.
As evidence of continued strength in and the delivery business door Dash and Grubhub said that day or see an acceleration and their businesses. One of the key metrics given was their expectation for driver incentives. Their expectation is that driver incentives remained flat for the foreseeable future, which is a good indication that demand for.
And delivery grocery and prepared food is still strong and drivers are flocking to their sites to earn income we foresee continued growth and gig rental demand as more consumers and businesses adopt delivery as a service. We believe that the use of these services by a wider audience of sustainable because.
It represents the acceleration of a trend that COVID-19 and enhanced.
As a result to Amazon delivery platforms will continue to grow for example, Uber eats grew over 200% year over year last quarter, and they've only penetrated 30% of restaurant delivery opportunities and the U S.
Even small independent restaurants have adopted delivery services to serve more customers as evidenced by 70% year on year growth and Grubhub daily average grubs index, noting and acceleration of adoption and tier two and three cities and rural areas.
Two thirds of higher car drivers are now predominantly delivery oriented and we see COVID-19 as having accelerated the opportunity and the local delivery and the service environment, not just for food, where micro logistics and lower basket sizes now have a flywheel effect moving forward, but everyone is now starting to move into adjacent.
Lands and alcohol delivery hub products pharma and packages for example, Amazon said they are increasing their investment and local assets as they start to re imagine local fulfillment and distribution centers away from airports.
Sourcing a vetted supply of drivers and local environment is how we've been able to sustain our growth and strong delivery platform demand suggest higher car driver economics will remain attractive and creating a sustainable environment supporting larger and larger driver pools.
In addition to gains from delivery Uber and Lyft have recently said the rideshare business is increasing week over week and.
And they are having their best week since the pandemic. They have also said they expect to increase driver incentives to help drivers returned to ride share and is a great indication of demand as states and expand their reopening trends. So as we move into the next phase of Covid, which we hope is full recovery and reopening the combi.
Nation of delivery service and recovering rideshare volumes will further strengthen the demand side of our platform.
On the car supply front, we are starting to see increased vehicle supply onto the platform from our previously previously announced partnerships and specialty fleet suppliers.
On January 28, we announced and expanded partnership with the marriage of holdings.
That announcement included new relationships with Cogent bank for innovative financial services, and national fleets supplier and and automotive aftermarket retail and service chain with over 900 locations nationwide.
Our marriage drive is leveraging these locations for higher car <unk> branded parking spaces and vehicle logistics. We're currently operating out of five stores and the southeast and expect to operate and 35 stores by the end of the year.
I'm happy to say that these new partnerships are delivering the expected increase and vehicle supply.
We've gone from an average of a little over 3000, and average daily rentals or ADR and Q4 to sequentially trending toward and ADR average of 3500 and the month of March with a run rate of over 4000 ADR is expected in April as the first 1000 cars from this initiative are on boarded and continue.
Moving through the reconditioning pipeline, we did encounter some logistical constraints that hampered our efforts to scale as quickly as we would've liked with our expanded and married drive initiative and March record breaking inclement weather and the southeast complicated vehicle transportation preparation and titling efforts, we fully expect to have our.
Initial and Meera Jive vehicle supply reached in April I believe that we're on a strong and steady run rate that will continue through the second quarter and we will further ramp into the back half of the year has dealer supply and state reopening accelerate tailwind.
In addition franchise and independent dealers are experiencing vehicle shortages due to the lack of new car supply and record used car prices with vehicle purchase demand high and there are fewer retail dealers listing gig rentals than originally anticipated.
Part of the unprecedented demand for used vehicles is driven by significant interruptions and new car production due to COVID-19 related supply chain issues and pent up demand from Lockdowns and this will only get stronger as government stimulus flows through the economy.
However, while dealer sourced vehicles supply is temporarily constrained we're seeing vehicle platform growth from specialty fleet and rental car companies, who want to find other ways to utilize their vehicles and in fact, our internal sales team have been successful with increasing vehicle supply from existing customers.
So separately, we're finding incremental revenue opportunities one opportunity is to leverage our growing customer base to generate incremental revenue. We previously announced one of the first major non rental revenue initiatives. This quarter, our collaboration with the leading automotive research and consumer buying website truecar.
And and internal surveys over 30% of our renter customers tell us they intend to purchase a vehicle and 90 days or less and I firmly believe that higher cars and the infancy of unlocking the value from our customers ultimately by finance and ensure vehicles.
We are also rolling out and new initiatives that will allow us to assist our fleet partners and drivers to get the financing and they need to purchase and operate vehicles.
As part of this initiative, we launched a new program this past quarter to help customers buy a vehicle, while earning income on our platform. The new program is called earn to own.
We are working with specific financial partners that welcome gig customers and provide competitive financing options that consider our drivers rental payment history to help and qualify for loans. We believe this is an industry first the gig drivers a highly underserved consumer and often has multiple barriers to buying and owning a car and.
Key component was recently put in place with the launch of our first financing partnership ACC consumer finance and.
And we have other initiatives and development. It is important to state that these initiatives are designed to improve higher car's value proposition for vehicle dealers and provide more reasons for good drivers to rent on higher cross platform and.
Initial data proves that this program is resulting in longer driver rental periods.
We're in the early innings of these initiatives, but by leveraging existing opportunities and not been monetized in the past.
We're looking at these programs as a way to create stickiness to the hire car platform for both owners and drivers, resulting and increased lifetime value and higher satisfaction rates of customers.
And lastly, our business and enrollment team is incorporating more electric vehicles onto the hydrocarbon platform. It is our goal to join Uber and lyft and their objectives to be carbon neutral by 2030.
<unk> has begun to incentivize drivers through additional bonus pay for driving EV vehicles, which enables them to earn up to 10% to 15% more.
And this is a trend we see accelerating into 2021 and beyond.
Additionally, there are significant government incentives for fleet operators and Oems to include zero emission vehicles and their fleets.
These incentives increased and margins for operators and the hire car platform and encourage EV car supply growth.
So with that I'd now like to turn the call over to Scott <unk>, Our Chief Financial Officer to walk us through some key financial elements from the fourth quarter and fiscal year Scott.
Thanks, Joe.
2020 was a difficult year and so many ways but.
But by expanding our platform to rideshare plus delivery the hire car team was still able to meet the original goal. We had set going into 2020 of exceeding 1 million and rental days and the year.
Rental days increased 63% to approximately $1 million 14000, and rental days for the 12 months ending December 31, 2020 from 621000 and for the prior 12 months ending December 31 2019.
For the three month period, ending December 31, 2020 rental days increased by 41% to 277000 rental days from 197000 rental days in the prior year's fourth quarter and sequentially were flat from the third quarter ending September 32020, as the <unk>.
A second wave of Covid was felt through the ridesharing segment of the business and several of our key geographies through the early winter.
Net revenue grew 59% to $25 $2 million for the 12 months ending December 31, 2020 from $15 $9 million for the prior 12 months ending December 31 2019.
Fourth quarter revenue grew 46% to a quarterly record $7 million for the three months ending December 31, 2020 from $4 $8 million for the prior year's fourth quarter and sequentially represents a 3% increase from $6 $8 million and the.
Third quarter ending September 32020.
Cost of sales increase for the year ended December 31, 2020 to $16 9 million from $9 $8 million. The prior year as insurance expenses continue to account for the majority of cost of goods sold primarily due to some seasonal shifts and insurance costs.
To support higher levels of car supply through the winter quarter.
We expect new partnerships with the best insurers brokers and administrators to continue to enhance our program and make higher car the platform of choice for domestic vehicle operators.
As a result gross profit for the 12 months ending December 31, 2020 was $8 3 million, increasing 38% from $6 million and the year ago period, ending December 31 2019.
Gross profit margin was 33% for the 12 months ending December 31 2020.
Down from 38% in the year ago period, ending December 31 2019.
As we accelerated insurance claims to shrink processing time and get more cars on the platform sooner.
We continue to expect our gross profit margin to increase to 45% to 50% on a going forward basis, as we improve insurance processes and increased other revenue from high margin subscription and referral income.
Operating expense increased to $23 $5 million for the 12 months ended December 31, 2020 from $18 7 million and the same period, the prior year or by 26% year over year.
This was primarily due to increased operations sales and technology expenses to drive higher business levels and investing in operations and technology in particular to further accelerate the platform into 2021.
After $3 3 million and noncash stock based compensation in 2020 up from 2 million and the prior year cash operating expenses totaled 20 million per the year in line with our 2020 quarterly target Opex range of four $5 million to $5 million.
We anticipate increasing operating leverage into 2020, one as we significantly increase revenue and so we estimate slightly higher quarterly cash opex of five to $5 $5 million and 2021.
Our net loss increased to $15 $2 million or <unk> 87 per share for the 12 months ended December 31 2020.
From $12 $5 million and 90 per share the prior year.
After backing out non cash items negative adjusted EBITDA of $11 million was slightly above the prior year's $9 6 million.
Cash totaled $4 $9 million as of December 31, 2020, a decrease of $5 $7 million for the year from $10 $6 million at December 31, 2019.
And a sequential decrease of $1 $9 million from $6 $8 million.
For the prior quarter.
We also completed a significant equity financing of $29 $7 million last month. So as of today, we have over $25 million and cash and investments and the bank, primarily with J P. Morgan Chase.
Now I'd like to turn the call back to Joe for final remarks.
Thanks, Scott to summarize Covid has created and expanded opportunity for our platform and higher cost performance was a validation that our business model can capitalize new opportunities as they appear.
The only gating factor to our growth as car supply and we are and executing on this goal to secure fleet partners at scale in real time.
<unk> zone delivery platforms are now just as big as the terms and ride share and this represents an expansion of our platform Bottomline, we've shown that higher cause nimble enough for any business environment and we remain confident that as a driver of confidence starts to return and more businesses reopen so two a rideshare the combination of <unk>.
Livery and rideshare demand has created emerging tailwind that are driving our business forward.
With that operator, let us move to Q&A.
Thank you, ladies and gentlemen, and as a reminder to ask a question you will need to pause to start and the one key on your Touchtone telephone.
To withdraw your question westbound Keith please standby, while we compile the Q&A roster.
Now first question coming from the lineup, Mike Grondahl with Northland Securities. Your line is open.
Yeah. Thanks, guys.
Joseph.
Sounds like <unk>.
<unk> had 3000 new cars.
March is going to average about 3500 and it sounds like you've got another chunk of cars on late March. So April is going to be about 4000, and so you got debt first thousand on.
How do you think about two Q3 Q kind of what comes next because that's a hefty pace of cars practically a thousand and a quarter.
Yeah, I agree Mike and thanks for asking the question good to hear from you.
Yeah, I think that when we sat and the script was that we're going to really see as a steady run rate and and increasing there as they work out the kinks and a lot of the debt.
And reconditioning pipeline.
And so we're in process of adding a tremendous amount of cars.
And I'm not.
And that really comfortable giving specific numbers, there, but steady run rate as what we're on and what we're seeing and it gets complicated a little bit with some of the supply chain logistics that are going on and the auto industry right now.
But it's a relatively small amount of cars compared to the amount of cars and that sell at auction and debt or can it be coming out and available.
And the used car market so I.
And I see a healthy run rate there.
And and I like where we're trending right now and I'm happy that we were able to really hit the hit the numbers that we had kind of thought we were going to hit in Q1 at the end of Q1. So yes, it's starting to look good and it's starting to work out really well.
Great.
And secondly, it sounds like delivery.
Is robust and.
That sort of Tam or opportunity you are leaning into quite a bit.
Would you describe rideshare is rideshare at.
Third is the levels pre COVID-19.
And it and do you see that is incremental cars going forward or how do you scope rideshare for us.
And yet right now rideshare is about 50% of what it was last year.
And Q4.
And but we're seeing that they're having their biggest weeks ever.
Covid and so.
Typically we've trended with them and also as they've grown and we've grown.
And you can kind of see that in and the ADR numbers that we reported as well.
As more states start to reopen I think youre going to see more and more ride share and coming back.
One use cases.
And the daily commute for Rideshare and number two is bars and restaurants and number three is probably airport rides at all of that stuff looks like it's coming back strong.
In the next couple of quarters. So it isn't just providing some real tailwind I think for us.
As as delivery remained strong as well so those dual tailings I think really push us.
And the second half of the year.
Got it and last quick last question are you talking to incremental new fleet managers is that broadening out a little bit your supply of cars or how would you describe that.
So were focused really focused on commercial right now and what we call commercial supply versus the peer to peer supply.
Hi, Meera drive and the relationship with the large fleet provider as well as you know the retail outlets.
We're gonna look to really leverage that piece of it but then right behind that and there's two or three other larger.
Specialty fleet operators that are coming onto the platform that are adding that wanted to expand so.
We see that as kind of like the next the next phase and.
And it's additive to our ADR accounts so yes.
Yes. There are there are more fleet operators that we're gonna be announcing and and leaning into as we really start to ramp up.
Got it great. Thank you.
And our next question coming from the line of Tom White with D. A Davidson your line is open.
Oh, great. Thanks, guys for taking my question questions just a couple on <unk>.
And on supply and Joe was hoping you could just maybe provide a bit more color.
On your comments about it is that I think you said the dealer.
Sourced inventory was looking maybe a little tight.
And I guess.
Maybe you would've thought that dealers at least and 2021.
And they would be sort of more flush with new vehicles.
And then certainly than they probably were last year just given.
And what happened to OEM production rates sort of at the height of the pandemic. So maybe just kind of help us understand like what.
What sort of the optimal setup for you guys when it comes to <unk>.
I guess dealership supply is it.
Is it when dealers are kind of flush with new vehicles.
Is it more.
So we sort of be monitoring like you used vehicle supply of dealerships to get a sense of.
How the supply may may come to you.
And then just a clarifying question.
Do your big institutional supply partners are those agreements.
Agreements Ah you're guaranteed a certain amount of suppliers or is it sort of it at the will of the of the partner the extent to which they're participating in your marketplace.
Yeah.
Hi, good questions Tom.
So from a from a new car perspective, and a dealership perspective.
<unk>.
Manufacturing ramps up at the Oems.
Lot of those cars starting to flow onto dealer lots and when those cars start flowing on dealer lots you start to see a lot more trade ins coming in and.
And that should put downward pressure on the secondary market for used cars right now markets for used cars are pad, two and 3004 thousand and some cases above adjusted MMR.
And so what that means is that there's a lot of there's a lot less used cars and the market for those dealerships to put cars on our platforms and so the way we're combating that right now is through specialty fleet specialty fleet being you know them.
And their drive and a few others that already had the cars played it and tagged.
And historically, there's always been about there's been 344 channels of vehicle supply first channel has always been a peer to peer aspect of it which is which is shrinking over time and then you have the dealerships you have specialty fleet and you have rental cars, we're seeing the major growth right now and the platform from specialty.
Fleet.
And then in terms of the question about the guarantees.
We have these partnerships in place specifically with our marriage drive where they have financing involved there and said hey that financing is.
Mandated to purchased vehicles and and put them on the hire car site and so you're going to start to see so from a from a guarantee perspective.
You know they've they've committed to adding a certain amount of cars and.
And we're going to start to see those cars flowing on we've already started to see it and make a meaningful impact in and Q1 with the ADR growth and we expect that to steadily ramp.
And really pick up speed and the second half as manufacturers start to add new cars.
It's a roll off the assembly lines and those new car search Ralph and Assembly lines. They hit the dealer floors, and then and you know the the normalization of used car starts to come into play. So it's all connected at this point.
It feels like it's and feel like it feels like it's starting to normalize and you're starting to see more and more cars coming on from specialty fleet. So.
That is a that's what we're seeing now okay.
Okay.
That's helpful. Maybe just a quick follow up on the fleet, operator, and kind of rental car.
Applied channel for you guys.
And.
Should we I mean do you guys expect that once kind of leisure.
Travel demand.
Kind of rebounds, and presumably demand for rental cars from people going on trips and whatnot picks up.
Is that going to have an impact and kind of your ability to access them.
Yeah.
The supplies from from from that channel I mean, it sounds like youre going to be adding additional partners. So presumably that channel grows but I'm just curious whether.
And you know there might be more demand.
From.
From leisure travel kind of picking up when it comes to rental car vehicles or maybe some of the specialty fleet store.
Yeah, well certainly like it's not it's something that we've been kind of grappling with for the last four or five years, which as you know there's a tremendous amount of demand right now from drivers both from the delivery side and the rideshare side.
It's just it's the ability to source fleet into those and and it has to be reliable fleet and.
And that's why I think that's and their drive deal that we announced and <unk>.
January is so important is because it provides dedicated fleet to the to the platform and so I think.
In terms of going forward as the economy starts to reopen and states start to reopen and you see kind of like a natural course of business.
There fleet managers are adding cars you have individuals', adding cars.
Have many fleet operators, adding cars and so the way I'd think about it is that as normal course, you're going to continue to see those cars flowing onto the platform. But then you also have these bigger deals like a mere drive where inc. It's incremental addition of vehicles and what we've seen is when those cars come onto the platform.
Did we rent them right because that's the amount of demand that we have and so that incremental add is where we see the growth from our larger partners. So as a mere drive ramps up and steady stay through through the end of the year as we get more.
And kind of specialty fleet debt already have the fleet sitting there and they want to run utilization, that's how we're going to and that's how we're going to grow.
I think what what I'm hearing from some of these specialty fleet managers as they like the utilization of our platform that our platform drives right. It's a longer duration of rental versus leisure. That's typically like two or three days right. Now we're running at about 18 days and thats been pretty steady throughout the year.
And in terms of rental duration.
And so what that means is less overhead for those fleet operators to have two and a intake that car reconditioning and put it back onto the site. So.
We're starting to see we're seeing a lot of kind of.
Net.
Basically fleet managers switching over to our platform.
And two to rent those cars and so I don't see that slowing down as the economy opens I see it only picking up at this point.
Great. Thanks, and thanks a lot.
Thanks, Tom.
And our next question coming from the line of Mark Argento with Lake Street Capital. Your line is open.
Hey, Joe and Scott.
Wanted to.
Digging a little bit on the gross profit I know, Scott you mentioned and anticipate getting back to a 45% to 50% level and is that something.
And you think happens relatively imminently or what's kind of the ramp.
To that level.
Yeah, I think we will.
We'll grow into that over the next couple of quarters, I think it's going to be dependent on.
Two primary things, we talked a little bit about the.
Velocity of claims payments.
In late 2020, and again with car supply tight a lot of that was to get cars back on the platform as quickly as possible.
Right. So that we can continue to drive those rental days, so you've got that piece happening and then I think.
And theres been a lot going on around some of the new.
Uh huh.
Other revenue sources that we have and that's both subscription revenue as well as referral income and.
And then we just recently announced the new Truecar relationship. So we think the combination of.
Returning to more normal levels on the claim side, having brought that now kind of completely current as well as <unk>.
Starting to have some of those other revenue sources kicking in and you've got kind of two levers there to really start to drive GP on a going forward basis. So I think we've got a good chance of getting there over the next couple of quarters.
Do you see the debt.
No.
Claims issues that cause that kind of more onetime in nature or is that something that you can.
And have a pop up from time to time or is that somebody can and it.
And kind of more of a you know.
Spread over the quarters on a more normalized basis.
Yes, it's a really good question Mark I think what we've been seeing is we've put a lot of effort into.
The the front end of the process here in 2021, So I don't think we've formally announced it but we did have a.
Our selection process for a new third party administrator, so that we could bring both the PD claims and the liability claims together. So that you are having a really efficient determination of responsibility and then again dealing with those client claims quickly.
So that you can get those cars back on the platform I know Bryan Allen and then.
Nudging us both repeatedly over the last couple of weeks as he gets taxed from.
Car suppliers around the country, who are really excited about debt that new tpa process that we've put in place so.
I think there was a little bit of catch up that we needed to do to really shrink that that turnaround cycle and we've done that dramatically.
And then now on a going forward basis with the improvements and the.
The Tpa I think we're going to see and actual reduction and some of those expenses going forward.
Got it and then just getting back to the drive thru and relationships. So it sounds like maybe a little bit of a slower start from weather, but it seems like you got it.
And our long term pretty good.
In terms of the next year or is there any reason to believe you guys couldn't get to that five to 6000 car bogey.
12 months out or whats your thinking and kind of longer term in terms of kind of fully deployed.
Yeah, and the initial commitment was 6000 cars, so we're driving towards that.
And I'm driving everybody towards that right now internally.
And and externally and we have weekly meetings with the marrow drive I'm talking to Carlos over that daily.
And August and as operator there.
And there they're leveraging these national fleet suppliers.
And at the National retail chain as well.
To really ramp up and we mentioned and that they are and five stores now but.
And this national retail chain has over 900 stores and the U S and so.
The plan for them is to leverage that footprint and really ramp and.
So that's that's what we're doing this as a year of execution and I.
I think the results over this first quarter show that we can execute at a really aggressive pace here.
No.
I'm really happy with that it looks like we got some some real good news.
To announce and the next couple of quarters. So I'm excited.
Great. Thanks, guys. Good luck.
Thanks, Mark Thanks, Mark.
Our next question coming from the line of.
<unk> and R&D with Maxim Group Your line is open.
Great.
Joe It's got thanks for taking my questions.
I, mostly financial kind of related questions and a lot of my questions have been asked already but I'll start with a more of a qualitative question for Joe.
Joe and the on the new earn to own offering.
Yeah, I'll help and provide higher car drivers with the financing option to eventually own the vehicle, they're renting sounds good great idea.
And just just for clarity.
It sounds like you mentioned that you already launched this officially or have you launched like a trial or beta testing period or is it is it out the real deals out the active and official now.
It is it is active and official and we are actively marketing to drivers right now.
And you guys like about that program is that it's a three to four month kind of a.
Financing program or earn to own program, where were giving this driver.
And vehicle or get them and our financing option and Shane and he also has a job right because we know he's and Newburgh lyft driver or a delivery driver. So.
From a from a risk standpoint from a financing entity its a great risk.
It's a great customer to have.
And the duration of that rental is going to be around three or four months and so that's you know quintupled, our lifetime value of a customer and then at the end.
That driver Hasnt car and and I think it's a win win for everybody and that situation. So.
And I'm excited about that.
Relatively small I think we have three or four participating dealers, one financing entity, but I see that really growing fast.
Throughout the rest of the year along with some of these other ancillary revenue opportunities that we're chasing down right now, including subscription and Truecar and <unk>.
And so and some of.
The insurance affiliate programs that we have gone so between those two.
Five initiatives.
See that kind of really adding to the G P and the and the future.
Great that's helpful and actually just a follow up it's interesting you said.
Around a three to four months kind of rental duration, which yes. Its definitely both but I think your median from the past in and around that 23 days or so.
So that definitely will increase mix shift higher your overall utilization levels.
So that's that's great and just speaking of utilization.
And how did those track during the fourth quarter and.
Throughout the first quarter, so far maybe Scott has answers to that as well.
Jack we missed that last question what was that.
Oh, I'm, sorry, so for utilization overall for hire car.
How did utilization overall tractor and the fourth quarter and.
And how are they trending throughout the first quarter.
So I think from from a utilization standpoint pre COVID-19, we were trending above 85% kind of post COVID-19 dropped down and we were and the low low sixty's high fifties and it has steadily trended up to the point now where I think we're at like around 86% or so.
No.
Which seems to be from a utilization standpoint, it seems to be kind of like where the overall platform kind of new.
<unk> or levels off I mean, you look at it.
Partners like a mere driving some of the others that were that we tend to the top of the search results or are you kind of prioritize and they all goes from the search results there run and 90% plus so that gives you an indication of the amount of demand and that were driving that.
Got you and that's helpful and and that's great that's great to hear.
And then.
Scott you've already kind of been asked about the gross margin.
Maybe I'll just quickly shift them to our GAAP Opex perspective.
I think fourth quarter it looks like it comes out to be about $6 $2 million and total GAAP Opex is this a good base level for us to kind of assume going forward throughout each quarter and 2021 or do you expect anything to shift around increase just given this new.
Car supply ramp.
Yeah.
Yeah.
So Jack I think for the full year, we came in.
Cash opex right around $20 million.
It was kind of in that four and a half to $5 million cash opex quarter that we've talked about before.
We have made some investments on.
And particularly on the sort of outsource sales and support side leaning in on.
Supporting dealers, we already talked about.
Some of those other incentives so.
I think what we're probably looking at is I think I've mentioned, we're probably looking at.
Something more in the range of.
Kind of five five quarterly numbers. So instead of four five to five a quarter on a cash basis, we're probably looking more at a five five kind of range on a quarterly basis, so ticking up a little bit we've had some investments on the technology side as well to further automate the.
Platform, so that we're in a position to be able to scale faster here in 2021.
So I think that's more the range that we think we're looking at and then if you kind of extend that logic and looking at a breakeven point from there.
Still going to be in that range, where 4500 cars should get us to breakeven as we've talked about in the past. So we took the opex up a little bit.
But we think the contribution that's coming from those cars because it's in the right markets.
It's still going to get us to breakeven at a kind of a 4500 daily rental kind of numbers. So anyway went a little further with the answer but I thought that that might have been where you would end up so just wanted to cover it.
I am always appreciative of extra color than less so no I appreciate that thank you all.
Jump back into queue, guys, Thanks, and best of luck and 21.
Alright, Thanks, Jack take care.
Sure.
And so mine are tough question. Please press star one our next question coming from the line of cash.
Goldberg with Chi to your line is open.
Hey, Joe and Scott how are you doing.
Hey, Josh Josh how are you doing great great. So I think it's really impressive what you've accomplished and the last 12 months and.
When you think about kind of.
The biggest issue post Covid was this car supply.
And here you you guys have been able to not only increase our current supply, but also do it at a point, where you've been able to raise capital and be so well capitalized.
To market into this additional car supply.
And I think some of the questions that people are asking is is it true is it possible that you guys actually raised this kind of cars supply. During this time and I think you've made that clear, but I think that what investors are looking for now is just from sort of guidance and how fast these cars will ramp I mean.
Obviously, the fact that youre, increasing your opex and.
And then you've got and confidence from your partners, they're going to try and get to 6000 cars. The end of the year. It seems like the analysts ramp from the first and second and then really specifically to the third and fourth quarter. It.
It seems like the right way to go and I'm just curious if you could either number one and talk about you know the.
And the time and effort to kind of get them up to speed now.
In terms from a merit drive and how it's starting to ramp and the initial kind of feeling.
Feeling in terms of how the how it how it is responding and then really more importantly to Mike Grondahl. His question about the ramp.
Back half of the year, if maybe you could talk a little bit more about that and then I have a follow up.
Yeah, maybe a couple of different angles on that piece.
We're starting to see green shoots with all of these states opening up right. So general trends are that ride sharing and it's going to continue to really ramp.
And that provides a tailwind for us and.
And so as I think about it I think I see the demand kind of come in and in late summer.
Fall and and really started to ramp through the year on that from that side and so we kind of think about it.
Go steady state maybe incremental ads for the first for this for this next quarter I mean, we're already done with Q1 just crazy.
But now we go into Q to steady state and then really ramp and the back half of the year.
Because I think not only do you have a green shoot but the second kind of angle is to look at it from the used car angle, which is we see probably used cars, starting to normalize and that and that and the third quarter and fourth quarter.
And as that starts to happen and it's a lot easier for not only a married drive but also all of our other partners that are in the market buying used cars and to add clean and at scale.
And really start to and really start to add into.
Into the the.
The market and add.
Ed cars onto our marketplace, so and those kind of dual total confidence you have.
The confidence you have in terms of this too.
2021 ramp as you feel better now and they probably did even a few months a few weeks ago before the.
The net returns.
Yeah, Yeah, there's always some uncertainty when we're rolling out these big partnerships right, but I think that the fact that they were able to acquire these cars and run them through the pipeline and it's always like the first hundred cars are tougher than next 900 cars and so I think.
We were able to figure out all of those logistics, we had people and market all of our all of our account managers with all hands on deck really ramp and these guys up into kind of the second half of March.
And so that's where we are.
I'm excited that we were able to do that I'm really starting to see that ramp and.
You know going from that.
Okay, Great and then second question for Scott and a really I think you guys did a really good job on the presentation. The press release talk about different highlights that you've had.
Did not report the weekly rental days and the press release and I'm just curious if that's your plan going forward.
On the press release, though you didn't add something talking about new drivers on the platform. There was up 29% can you just give us some clarity on what that metric is why did you decide to increase include it and now going forward and if you plan on not having the weekly or monthly days anymore. Thanks again.
Sure Yeah, Thanks, Josh and maybe I'll, maybe I'll start with the weekly piece and then Joe can hit on the new driver piece, a little bit but the weekly.
The weekly granularity and was really critical.
A year ago early and Covid right as we saw that first fall in March of 2020, and then started to rebound into April right. Because we wanted to provide that kind of visibility that we werent down 80%, 90% like like other people and the sector and worse. So we felt that was.
Really important but I think we're now getting back into a more regular cadence and.
We would typically look to share information on a monthly or quarterly basis. So that's really the thinking now that we're stepping into.
Wrapping up 2020, and heading into a new fiscal year that debt, we would be more on a kind of monthly to quarterly cadence moving forward and then I know that the number you were talking I just thought Joseph sure yes.
Just one thing on that.
And I just want make sure I heard that right in terms of in your script, even though you're exiting at 3500 cars you didn't have the entire quarter and 3500 cars and I just want to make sure I understood that.
And then you said youre going to exit April at 4000 cars.
Probably means that your second quarters, and the average above 4000 cars and I just want to make sure I have that right at the first quarter will be below 3500 cars and very possibly the second quarter will be about 4000.
Yes, Yes, you got it Okay and then because as you explained at the first time I don't think it was clear that way.
Right, Yeah, well and and so when we say and average of 3500 car run rate in March.
And a good chunk of those cars are coming on the second half of March and so.
You know you're not going to see you're not going to see all of it and in terms of a run rate for Q1, but.
You definitely see and the the increase and those cars as we've kind of opened up the funnel there once we once we figured out all the logistics so.
That's how we think about the cars going forward and then you know in terms of the.
The new drivers on the platform.
And I, specifically, well, we've given those new driver metrics and in the past.
But the reason I wanted to highlight it up above us because 29% increase.
Compared to a 60% increase or so and revenue.
And it tells you that we are doing a better job of targeting and marketing can leads that are going to remain sticky on our platform and have higher basket sizes for our rentals and Russell day.
And so that's that's that's one point of why I'm highlighting that because I think marketing has done a really good job of kind of using the magic of Adwords and Facebook to kind of drive new sticky customers.
And then from a kind of a risk underwriting perspective, I think we're doing a better job at bringing in customers that.
Are we going to be good drivers and aren't going to drive up you know expensive physical damage bills et cetera, and so those two and that number of 29% growth really points to the fact that.
Of all the hard work is really exemplary of all of their hard work that the marketing and and technology and product and and operations teams are doing there. So that's why we highlight that number.
Okay.
It sounds like it was a bigger number than it was the rest of the year.
Right it really it really ramped into the second half right and it will continue to ramp and the first quarter.
Okay, great. Thanks.
Thanks, Hey, guys congratulations.
Thanks sure. Thanks, Josh.
Yeah.
And I'm showing no further questions at this time I would now like to turn the call back over to Mr. Joe Furnari for closing remarks.
Well. Thank you everyone for joining us and I'm looking forward to a future call calls as we continue to execute on the plan through 2021, and we put 2020 behind us for good which I think a lot of people are happy about right now and so I.
I appreciate it everybody and thank you for being on and we'll talk to you soon.
And.
Ladies and gentlemen that does conclude the conference for today. Thank you for your participation you may now disconnect.
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