Q1 2021 HyreCar Inc Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on hold and thank you for your patience.
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed and host. Thank you for your patience.
Yeah.
Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2021 earnings call.
At this time all participant lines are in listen only mode. After the speaker's presentation there'll be a question and answer session.
And that's a question during this session and Julieta breasts are want your telephone keypad. Please be advised today's conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your Speaker today, John Evans Investor Relations and corporate development. Thank you. Sir Please go ahead.
Thank you operator, and welcome everyone to our 2021 first quarter earnings Conference call before 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 <unk>.
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 and assumptions made by management. These two.
The 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 and particular those described and a risk factors included in our documents that the company files with the U S Securities and Exchange Commission.
Yeah.
In addition, such statements could be affected by risks and uncertainties related to factors beyond the Companys control you should not rely on and 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 expect 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 and we found in our earnings release and supplemental materials, which will be furnished with our form 10-Q that will be filed with the.
SEC and will also be found on the Investor Relations portion of our website now I would like to turn the call over to our CEO Joe Furnari. Thank you.
Great. Thank you John and welcome everybody and I am pleased to say that higher car had a record quarter.
The combined <unk> of loosening, COVID-19 restrictions and increasing vaccination rates higher rideshare demand and stable delivery demand pushed our business to the highest quarterly revenue in company history. We are now a stronger more efficient company and this is reflected in our results.
Our net revenue increased 29% to $745 million for the quarter up from $5 $8 million and 2020 and rental days increased 31% to approximately 300000 for the quarter up from 229000, and Q1 and 2020.
We continue to see robust driver demand for the quarter. We saw a record 5400, new unique drivers pick up a car on our platform a 14% year over year growth rate.
Our expansion to include food grocery and delivery plus our focus on increasing customer retention and drove revenue and rental day growth rates and should be additive to the continuing recovery and rideshare to our delivery drivers and we look to as we look to a post COVID-19 world.
Two thirds of higher car drivers are still predominantly delivery oriented and we see COVID-19 as having accelerated the opportunity and local delivery as a 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 like Alka.
<unk> pharma and package delivery sourcing embedded supply of drivers and local environments is a key factor and our sustained growth strong delivery platform demand suggests higher car driver economics will remain attractive, creating a sustainable environment supporting larger and larger driver pools.
In addition to gains from delivery, both Uber and Lyft have recently said the rideshare business is increasing week over week and they are having their best week since the pandemic.
<unk> said, they expect to increase driver incentives to the tune of over $250 million to help drivers returned to ride share.
And our drivers are expressing higher hourly earnings as ridership demand increases as well.
So as reports of a full reopening are being announced recovering rideshare volumes will further strengthen the demand side of our platform.
And as a result of increasing driver demand and fewer driver alternatives, we're experiencing incremental margin pickup and our daily rates.
It has been heavily covered and the media that rental car prices have shot up and franchise dealers are experiencing vehicle shortages due to the lack of new car supply and record used car prices.
Combined with surging driver demand. This has created an opportunity for us to implement a dynamic pricing model that should take us from a daily take rate of 24 to $25, historically, 227% and $28 per day, starting in Q2 and growing through the rest of the year and our preliminary revenue tests, we've been able to.
To implement these changes without affecting our rate of growth.
Dynamic pricing combined with increase in gross profit from normalized claims and increased affiliate revenue puts us on it to reach EBITDA neutral and the second half of 2021.
On the car supply front, we're enjoying increased vehicle supply onto the platform from our previously announced partnerships and specialty fleet suppliers on January 28, we announced and expanded partnership with the marrow drive holdings that announcement included new relationships with Cogent bank for innovative financial services and NAV.
<unk> fleet supplier and and automotive aftermarket retail and service chain with over 900 locations nationwide and there.
<unk> drive is leveraging these locations for higher car branded parking spaces and vehicle logistics, a mere drive as currently operating out of seven stores up from five and addition to a 200 car overflow lot to help with and fleet recon.
This rollout with the marrow drive is a clear template we are planning to replicate and additional markets with the next market slated to open in two weeks, we have gone from a little over 3000, and average daily rentals and Q4 to sequentially trending toward and ADR average of 3500 and the month of March with a run rate of over 4500 ADR.
And as expected and May 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 as dealer supply and state reopening accelerate tailwind.
The success of our <unk> partnership has opened and additional opportunities to significantly grow vehicle supply over the next 12 to 18 months. We are actively working to on initiatives to enable the onboarding of cars for our partners, who managed cars and scale as a company we want to supply up to 16000 cars both gas.
And alternative fuel or EV vehicles and to the market by the end of 2022, our conversations with our partners make it clear that the market will continue to grow and higher current tends to be the leading vehicle supplier for the gig economy.
In addition to our core business incremental revenue opportunities continue to expand as previously announced we have started initiatives to monetize our extensive customer base with additional income opportunities that complement our core business model, our formal partnership with a leading automotive research and consumer buying website Truecar is.
Our first major non rental revenue initiative thousands of our customers are now engaging with Truecar and a monthly basis, we are and the very early stages and introducing higher car auto buying program message to our customers, but we are now profiting from what was a lost income opportunity previously.
In addition to the incremental revenue from this initiative, we're gathering valuable data from our customer behavior and discovering opportunities from other revenue streams bottom line I believe that higher cars still and the infancy of unlocking the value of our from our customers that ultimately by finance and ensure vehicles.
Also consistent with the theme of unlocking customer value the earn to own initiative, we launched last quarter with our financial partner ACC consumer finance is starting to gain traction and our expectation that drivers will stay and the car longer if they have a milestone to reach is proving accurate drivers and the program are averaging over <unk>.
Five times more rental days than our typical driver customer. So we look forward to reporting more on this later in the year.
Another exciting growth strategy is our opportunity with electric vehicles and.
And we continue to incorporate more EV driver demand onto higher cross platform by educating drivers interested in maximizing earnings through <unk>, while reducing their carbon footprint as previously mentioned and as our goal to join Uber and lyft and their objectives to be carbon neutral by 2030, and addition to the driver benefits of this evening.
The initiative there are significant government incentives for fleet operators and Oems to include zero emission vehicles and their fleet. These incentives increased the margins for operators on the hire car platform and encourage EV car supply growth as the acceleration of EV cars roll off the assembly lines from major Oems, we see an opportunity to be at the <unk>.
For front as a primary supplier of EV cars to rideshare drivers.
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 first quarter Scott.
Thanks, Joe.
First quarter of 2021 was one of significant changes for higher car, we continue to grow car supply to get us over a $1 $2 million annualized rental run rate.
And completed a $30 million equity financing at favorable valuation terms to top off our cash reserves and allow us to pursue a bigger set of opportunities.
Rental days increased to over 30000 rental days for the first quarter or a run rate of $1 2 million rental days up from the $1 million rental days, we recorded in fiscal 2020.
For the three month period, ending March 31, 2021 rental base increased by 31% to over 300000 rental days from 229000 rental days and the prior year's first quarter and sequentially increased 9% from the fourth quarter ending December 31 2020.
As weather and supply conditions remains challenging and several key northern geographies.
Net revenue grew 29% to $7 4 million for the three months ending March 31, 2021 from $5 8 million for the same period the prior year.
And 6% sequentially from $7 million for the three months ending December 31 2020.
After holding steady on pricing for several years, we tested and then enacted some pricing enhancements early and the second quarter to both our driver and insurance fees to better reflect the new competitive environment and align reimbursement rates with new driver risk scoring data the <unk>.
Combination of these two pricing elements should drive significant net revenue and gross margin improvements through 2021 and increase our daily average net revenue from the 24 to $25 a day, we've seen historically to the 27% to $28 a day range.
<unk>.
Cost of sales increase for the quarter ended March 31, 2021 to $4 7 million from $3 6 million in the prior year as insurance expenses continued 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.
Accordingly gross profit for the three months ended March 31, 2021 was $2 $7 million, increasing 26% from $2 1 million in the year ago period.
Ended March 31 2020.
This is an improvement from last year's gross profit margin of 33% for the 12 months ending December 31, 2020, and flat sequentially from 37% and the first quarter of 2020.
Due to the second quarter pricing changes, we expect our progress toward the gross profit margin near term goal of 45% to 50% we have discussed previously to accelerate.
Operating expenses increased to $9 9 million for the three months ended March 31, 2021 from $6 3 million and the same period, the prior year or about 59% year over year. This was primarily due to increased operations sales and technology expenses to drive higher business levels.
<unk> and invest and operations and technology and particular to further accelerate the platform into 2021.
Cash operating expenses totaled $6 1 million for the quarter after backing out $3 8 million and noncash stock based compensation from equity incentives, we estimate slightly higher quarterly cash opex of five to $5 5 million going forward in 2000.
'twenty one from what we've seen historically.
Adjusted EBITDA improved to negative.
A negative $3 $4 million or negative <unk> 18 per share for the three months ended March 31, 2021 from negative $3 3 million or negative <unk> 20 per share. The prior year ended March 31 2020.
And sequentially improved from negative $11 million or negative <unk> 62 per share in the prior year ended December 31 2020.
Cash totaled $25 $5 million as of March 31, 2021, and increase of more than $20 million from the $4 $9 million at December 31, 2020, and an increase of approximately $18 million from $7 $8 million from the year ago quarter.
<unk> ending March 31 2020.
And now I'd like to turn the call back to Joe for final remarks.
Okay.
Scott so to summarize higher.
<unk> is carrying our growth trajectory into the second quarter and enjoying the tailwind of the pending full reopening of the economy.
Our partners are stepping up to deliver the cars they agreed to deliver despite the tight car sales markets.
We're seeing pricing opportunities with the current competitive car availability environment, which should add incremental margin gains and help us move towards EBITDA neutral and the second half of this year.
And we're leveraging opportunities for additional revenue streams, the bottom line and the future is bright as we continue to execute our growth strategy throughout the remainder of the year.
So with that operator, let us move to Q&A.
As a reminder to ask a question you read the press Star one your telephone keypad and you withdraw your question. Please press accounts.
And again as a reminder to ask a question. Please press star one your telephone keypad should we draw. Your question. Please press the pound key.
Lisa and Viva, we compile the Q&A roster.
Our first question comes from the line of Mark <unk>.
I guess two from Lake Street.
Your line is now open.
Hey, guys.
And that's on a solid quarter a couple of quick ones first on the pricing can you talk about the dynamic pricing per.
Project and then how aggressive you are going to be in terms of rolling that out.
Yes, absolutely thanks, Mark for calling in and given the question here.
With the dynamic pricing that we rolled out.
We're doing a couple of things we're looking at the risk underwriting data that we've had over the last that we've accumulated over the last five years.
Applying that to kind of current leads and geographies and then coming out with a pricing matrix that we think kind of accurately reflects the risk of that driver segment.
So we see some real we see some real upside there.
And that's number one and then number two just given that some of the competition has fallen off we've seen and increased demand from leads.
And that increased demand is and enabling us to raise those prices a little bit.
So that's kind of how I would think about it Scott maybe you and.
Yes.
<unk> agree with that and then just wanted to add that we actually went ahead and went live with that.
April after doing.
Lot of analysis on.
The sensitivities out there so that's already being reflected now as we've moved into May as new renewals come online. So moving forward through the balance of 2021, you're going to see that that that pricing and really start to have a pretty dramatic impact on our contribution per.
Good day.
And is that something that you.
<unk> been implemented across the platform or are you guys bill and market by market.
We tested and a few markets honestly, mark first to to gauge the impact and.
And then recently went forward with changes to both the.
The driver fee as well as some of the other elements and the pricing. So that has gone and that has gone effective nationwide.
And yes and to Scott's point within the unit economics of fees like there are multiple levers that we're pulling and out so we're playing with them depending on the different geos.
Great.
Helpful and then just.
And.
Last one from me in terms of the.
And the uptake and the Onboarding of vehicles from Nomura Drive partnership maybe talk about.
And where you are in terms of that that first tranche of cars.
And how do you see that cadence throughout the rest of the year. Thanks.
Yes, yes, I see that Theyre still on that run rate that we had spoken about and February I think we got a lot of the the.
And the bugs figure it out and kind of as mentioned in the script, we're looking at.
Launching the next geography.
Started June one so I'm really really excited about that because I think thats a template that we've established that we can really start to replicate and probably our top 30 geos.
<unk>.
It's going to be exciting to see it really rollout and a mere jive has ended up being a <unk>.
Really solid partner is the partner that we thought they were going to be that we knew they were going to be along with kind of all of the affiliate players that are around there, including cogent and.
The national retailer changed so yes.
It's really exciting so we're moving onto phase II, which is launching a new GL.
Alright, thanks, guys.
Thanks, Mark Thanks, Mark.
Our next question comes from the line of Mike Grondahl from Northland Securities.
Your line is now open.
And.
Hey, guys congratulations.
A couple of questions from me first off I think you said in March you averaged 3500 average daily rentals.
And now May you're kind of projecting 4500, so we kind of see that lift.
Joe.
Can you kind of describe what you meant by the 16000 cars.
At the end of 2022 is that a goal.
Is that kind of based on the fleet manage as you're talking to you feel you can get there.
If you could provide a little bit more detail there.
Sure, Yeah, and so what what I see with kind of reduced competition and the market is that there is about 60000 cars nationwide that have left the market and this in this environment and as you see in the tidal wave of demand coming back from the ridership side.
And there is an opportunity right now with the people we're talking to to add those 16000 cars Inc.
I don't want I don't want to.
And I imply that that guidance, but I do want to say that.
Those are the conversations that we're having with all of the partners that are coming on and.
And then we're talking to.
And so we're looking to support that by building capacity into our customer service programs the call Center all day.
And the technology.
Technology heads that we've added and so that's kind of what that's what I'm talking about when we're saying and 16000 opportunity.
Got it got it.
Yes, because it's basically four times, where you're sitting right now so that's a lot of growth potential.
Yeah, and that's that.
And with what we have in front of US right now with our curve.
And that's where we that's what we're going to target.
That's in front of you right now okay.
And then just on the pricing.
The 27% $28 two higher car.
Good day.
When are we there are you, saying you are there.
Now or you'll be there July 1st.
How do we roll that into our models.
Yes, I mean.
And it gets introduced into a new rental starting in April right beginning of Q2, so to your point I mean I think.
As you move into the back half of the second quarter, which will really start next week.
Youll start to see more and more of that weighted effect. So.
I think it might actually be a little bit sooner than that so you're actually going to see a reason.
And reasonably significant impact to Q2 and.
And look there's there's a few <unk>.
Enters out there that might rent for longer than three months, but yes, it should basically be 100% and for the full second second half of 2021 does.
Does that help Mike.
Yes, it does.
It sounds like it's come and really quick.
Yep.
Do you guys have have a bullet point.
Cost per booking decreased 39%.
Is there a way we can translate that into gross margin or.
39% and is a big decrease in.
Getting a driver through the marketing phase and boarded how do we think of that as sort of a gross margin benefit.
It's more of the and.
And opex benefit right and not necessarily GP benefit.
I think from from my perspective, and maybe Scott can chime into like my perspective is what that's telling you and what we wanted to convey is that there are more drivers coming onto our platform organically and I think we're doing a better job at targeting leads and so you're starting to see more and more people coming on.
There's a couple of tailwind there.
Less competition.
You have a higher and elevated presence with our TNC partners.
You have less people renting cars per delivery. So there's a lot of day is kind of driving that those extra leads coming through and then on the flip side, we're doing a really good job of converting them.
And so you're seeing that with the increase and Leeds and Youre also seeing an increase in conversion rates, which ultimately drives revenue through conversion of new unique drivers to the platform. So that's how I think of that.
Got it and then maybe lastly.
Up until recently you guys were stuck at 3000 cars as you kind of went from the peer to peer to the commercial model.
And now and May it sounds like 4500 cars.
What level do you think you need to be between 4500 cars and.
16000 cars to get Uber and Lyft that tension.
At what point do they say Oh, my gosh higher card got all these cars.
Let's talk.
That's a really good question I think that we have everybody's attention now with the <unk> deal.
And a true card deal with this alternative revenue is it just it creates a branding or quality or brand around higher car that enables other.
And not only <unk>.
<unk>, but also manufacturers Oems and larger dealer groups.
And to look at and say you are a public company quarter of a $1 billion and you have all and youre, establishing these partnerships. So we have some real kind of brand equity that we've established through these partnerships and that I think is getting everybody's attention at this point, yeah, I definitely agree with that I think one of the themes.
I got out of Uber and Lyft <unk> quarterly earnings call last week is that both have now divested of their autonomous driving divisions and I think they are now more open to thinking about new ways that we want a partner to get car supply because they don't have this solution coming down the road internally any.
More right so.
On the EV side in particular, they seem to be.
Moving a lot more quickly so that's very exciting for us.
Great guys I'll jump back in queue. Thanks.
Our next question comes from the line of Tom White from D. A Davidson.
Your line is now open.
Hi, everyone and congrats on a great quarter Tennant's Robinson on for Tom.
If I may I'll have one question and one follow up so.
<unk> recently.
We talked about the Edinburgh and lift earnings that happened last week.
And they talked about investing and growing their drivers like can you talk a bit about what that means for your business and how you guys might be able to ensure that it's really your vehicles to play that really benefit from this.
And and <unk>.
Net of like any competitors and then I have a follow up after that.
Good question.
So if.
If you look back on how they have.
Both Hoover and left how they have.
Driven driver incentives they've done it and kind of like a two pronged approach.
And this was really back in 2017, 2018 2019 pre pre IPO.
Where they were driving through affiliate so driver refers and another driver or their affiliate partners are signing drivers up and they were giving giving money to the affiliate and that was signing them up and then the second piece was they were giving driver bonuses for our drivers hitting certain.
Right incentives.
And it sounds like.
And listening to their calls last week that they were both going to be re instituting those programs.
And that is really really good for us we were I think probably the number one affiliate of lift when they were running those programs.
And I anticipate being a very strong affiliate partner for Uber as well.
And so that is a <unk>.
Under the umbrella for us under the alternative revenue umbrella that just drives our gross profit margins up and why Scott and I are pretty comfortable will be and at that 45% to 50% GP margin.
So that's that's how we're planning on doing that.
Awesome and then for my follow up I was just wondering how we should think about the likelihood of ramping up new car inventories later this year and maybe just share a few of your thoughts and how you expect that price channel to grow.
Three of the remainder of this year.
Yes, yes, so from a from a ramp perspective.
Amir drive is really the.
The game changing.
The announcement for us and that.
They are going to ramp they have the financing available to ramp.
And they know how to buy cars at scale.
And that's going to be our incremental growth.
Through the back half of the year, along with three or four other partners.
And that we're talking to that also want to scale very quickly.
And those partners.
We'll be future announcements I believe but theyre also talking about large large lump sums chunky supply onto the marketplace and so that's part of why I'm comfortable talking about 16000 cars because that's the narrative you add it all together, that's where we're getting those cars from from the fleet suppliers that we currently have.
<unk> doesn't include the supply that is going to come and the future.
With deals that we don't know about yet so that's how we're looking to grow I think we're going to support that by increasing our account managers account executives and market to provide white glove service.
Recently rolled out.
New Tpa to really aid and speeding up the claims process for our vehicle owners. So they can get those cars back on the road quickly.
So that's an exciting piece.
And and also ramping up some of the organic channels.
And to see really the car supply growth through those channels as well.
So that three pronged approach is kind of how we're attacking it throughout the rest of this year and into 2022.
Great. Thanks for taking my question.
Yes.
Our next question comes from the line of Jeff Standard IV from Maxim Group.
Your line is now open.
Alright. This is Albert on for Jack.
First of all congrats on your quarter and thanks for taking my question.
I just wanted to start with the assumption on the weekly average rental C. I believe historically it was about $35.
With the new that May change changes to the pricing do you see any changes to that happening or any.
Yes.
Trends going forward.
Yes, I think you've got it you have to remember that the daily rental rate on our platform is actually set by the car owner.
So the 35% or $36 that you are quoting we get we get a percentage of that through bolt and owner fee and a driver fee and then we have and insurance fee. So basically.
When you net those three revenue elements out historically higher cars at a 24 to $25 per day net revenue take out of a total gross transaction of let's call it $55.
And with the pricing changes that we just rolled out in April 2021, we see that increasing from that 24% to $25 range to more like a 27% or $28 net range. So it's a pretty significant increase on a net revenue basis and that.
Pricing increase along with the higher volumes that Joe has been talking about will give us.
Kind of a.
A double impact on the net revenue line in Q2 and through the balance of 2021 does that makes sense.
Yes that was very helpful. Thank you and I.
I guess another question from me it would be on the vehicle utilization level. So.
There is like a huge growth and the number of cars.
And I was just wondering if that has impacted I believe like they typically 80%.
Utilization rate before.
Yeah. Good question, so and it's part of the strategy and why we're moving towards commercial which is.
And those commercial fleets you tend to see higher utilization so.
And our commercial fleets I think we're seeing alper of high <unk> low 90, percentile utilizations and those fleets.
And then and the peer to peer it's a little bit lower so it typically averages out and nets out to about 85% 86% utilization.
And that's pretty that's pretty consistent and that's where we're seeing it.
And a normalize and I think as we get more the shift and the mix move towards more fleet, you're going to start to see higher utilization rates tick up.
As we as we move forward into the second half.
But not really meaningful it's really it is.
It is an absolute value, it's not necessarily like a weighted too.
It doesn't really translate into revenue.
There is and a direct correlation.
Okay. Thank you that was very helpful and that's all the questions from me. Thank you and again congrats on your quarter.
Thank you.
Our next question comes from the line of Mike Grondahl from Northland Securities. Your line is now open.
Hey, guys just two follow ups.
With the Truecar relationship.
I think you guys are getting a referral fee.
Do you get that only if your customer buys a car.
Or do you get that kind of sending that lead over I mean, you guys had 5400 and unique new drivers and the March quarter Cooper, who were looking for cars and so I'm just kind of curious how that works with truecar.
Alright, so there is a phase one phase two phase one is.
And we referred drivers.
And when they when the driver purchase a vehicle that's when we get the referral fee.
And then phase II with Truecar is hopefully getting access to the 16000 dealerships that they have both franchise and independent.
And doing some cross marketing joint marketing with them. So.
That has a dual effect too and we have creating more supply as well as monetizing the drivers that we were losing anyway, they were going out and buying a car and so now we're monetizing that on the backend.
I think I'll have.
Relatively new last quarter, we started our March.
February and March so.
We really start ramping up in February and March. So I think I'll have I'll have more numbers around that initiative and some of the other.
Affiliate and alternative revenue initiatives.
In Q2, and so we'll talk about those and hub break them out and how ICM kind of growing through the through the second half of the year.
And Hey, Joe I'm, sorry, but what was phase two.
And you kind of broke up you said something about access and 16000, and then I lost you for like Tencent.
Yes.
We have joint agreement joint marketing agreement, we gain access higher car gains access to the 16000 dealerships that Truecar currently services and sources leads to.
So that's the exciting piece of.
Phase II.
That really drive supply for us organically and that's why I'm really excited about organic channels kind of starting to ramp up here along with the larger fleet specialty fleet operators that we're dealing with as well.
Sure and then just my last question.
You mentioned that earn to own program.
And with ACC consumer finance and <unk>.
Tension was like five times.
Roughly how many drivers are in that program is it just too early to mention is that next quarter or two but.
Five times, the average length of a rental.
Incredible.
Is there is there 10 drivers and that are 100 or kind of where that where do you think it can go and.
So I see this really starting to grow we don't have very many dealership signed up.
Have a small percentage of our of our driver population signed up but.
A big chunk of our driver population about 30%, 40% or so our longer term drivers where this type of program would benefit them. So.
We're running it and we're running at right now we have these drivers on.
Yes.
So how I'm doing that math I'm looking at right now in that program as drivers are averaging about 90 days median average is about 18 days per driver, So that's where I'm getting the five times.
And we see that growing even further because the program is 120 days once you've been and in the car per 120 days than that.
Net downpayment applies to the vehicle purchase and you walk away with a car so.
I will yes, I think next quarter, we're going to have enough data out there to say, yes. This is viable and we're going to move we're going to really ramp it up and then I can give you all the details day.
Sounds good thank you.
Yep.
Our next question comes from the line of Keith and brick from Shane.
Your line is open.
Hi, it's Keith and Mark. Thank you very much for taking the question.
And then when you guys were talking about these price increases historically, you've always kind of led investors to think about every thousand cars is roughly $9 million annualized.
Whats the new rate should we start thinking like 10000.
Every 1000 cars is $10 million annualized how should we think about that.
Yes, Hey, Jason its Scott.
I think thats, probably a good basic way to think about it the part that were that has some some additional upside to it as kind of the.
Risk adjustment piece right Theres, a driver fee component and.
And our risks are insurance component and it's dependent on the mix and drivers within some different risk pools, but I think it's pretty safe to assume that it's going to be at least.
10% increase to that sort of per day contribution. So yes gone from 9 million to $10 million per thousand cars and Thats a good.
Good basic way to think about it and hopefully we can do a little bit better than that.
So then so if we look out on one side of the of the whole kind of ecosystem, if youre getting better drivers or using the cars longer being provided by Uber or lyft and youre getting these large fleet providers, who are bringing these cars on knowing that you have better drivers or incentivize does that kind of like how do we think and the wheel just kind of spend.
Faster and gets bigger at the same time.
Yes, I mean, it's definitely being a little bit more selective right. Because certainly there is a car supply issue I think we've all seen the stores I think Brian past, one around about people driving new halls around Hawaii on vacation or something right. So there's kind of a shortage of vehicles as we all think about our summer vacation plans out there and so.
Part of it is reflecting that and then part of it is just better data on the risk side. So that is part of our driver vetting process, which is a lot of the value that car suppliers or car owners see and higher car that that we're providing them better information and better drivers. So yes, I think it is those things coming together as you said.
Okay, and then last question. So if I'm thinking about this thing the model right now I mean, you kind of run rating around $30 million or a little bit more on an annualized run rate depending on how many cars are using and then if we kind of take a step forward day at the end of 2022. If you have 16000 cars that $10 million a pop that's and.
<unk> around $160 million annualized.
Obviously youre going to have some massive operating leverage as your breakeven through 5000 cars, so you're going to have some scale there and some profitability.
I mean.
So and when I look at the Mark you have you're trading at a $180 million right. Now. So you are trading for a company that's going to grow revenues, 400% with and breaking through profitability Youre trading at one times revenue is that.
And by doing and the math right.
Yes, I think so.
Yes.
That sounds about right.
Alright, it sounds cheap thanks very much.
Thanks, Dave and thanks, Casey Great Great work. Thank you.
Our next question comes from the line of Josh Goldberg from Quito.
Your line is now open.
Hi, Joe and Scott This is Josh Goldberg and John.
Hey, Josh.
Okay.
And I think the wheels of Sirona role here.
Question about the new drivers that you added 14%.
And your balance sheet is stronger now it would seem to me that you can lean in on both the traffic acquisition side to grow new drivers as well as maybe using your cash.
Balance sheet.
And that will increase your your car supply as well. So can you talk a little about how much can you pick up on both sides.
Going forward.
Yes, that's a good question.
So from a from a marketing perspective, even eyes and the acquisition costs have gone down.
<unk>.
To really accelerate.
The lead side of things and we're kind of seeing that I think and the and.
And the month of April we did about 35000 leads.
And it may were China and to over 40000 and so.
Youre seeing us leveraging that and that'll be more more apparent and.
And Q2.
And then on the supply side.
They.
From where we are right now we're seeing some more organic traffic and so I think the guys on the marketing team are leaning into.
Spending into those that interest on the organic side.
Organic side, the way I kind of define organic is individuals and then also kind of mini fleet growth people with four to 'twenty four cars. So youre seeing more interest from those guys as well, so lianne and targeting them.
On top of kind of the.
And the commercial initiatives kind of how we're thinking about it.
Okay and on the supply side in terms of getting more cars.
And that and that balance sheet at all.
Absolutely and so like what the way there the way, we're leveraging that as spending up a little bit on organic traffic and then relying on our account managers and the call center to convert those that organic and a supply side traffic into.
Vehicles onto the platform.
And so youre going to see you're going to see more and more cars coming on just out of the gross level and then you're also going to see more and more drivers coming on because of your spending you are leaning into the marketing opportunity and spending into it but also because theres less competition. So that's good.
And I'm looking at it.
How are you able to kind of <unk> the reactivation of old drivers now I mean, I would think that people that have used your site and been happy.
At this point.
Heart supply of cars, you might see that database of old.
Customers come back online have you seen any of that happen yet.
A couple a couple of aspects to that so we're certainly mining.
And the million plus drivers that we had and the database for the affiliate revenue the truecar partnerships and stuff like that so that's one and then each monetizing monetizing those leads and then there is always an aspect of re targeting.
Two drivers that have.
Got into a car and need to come back in and then also the we call them re conversion rates. So looking at re conversion rates through time and looking back two weeks looking back 30 days looking back 60 and 90.
And Thats again, we have different margin is there any new data now has there been some new data on that because of what's going on in the economy and.
And you see an acceleration of more reactivation sooner like somebody will come back more and the last three or four months and what historically has happened.
It's kind of it staying flat.
And a lot of things with has.
Re re engineering of the operational side of things and we're moving some we're moving some rolls over to the call Center.
And we're moving.
<unk>.
Historically, what we had seen as kind of driver closers over two account managers that are that are working on just.
And converting.
Supply side, so converting individuals' and dealerships et cetera, and so we're really relying on more of the marketing on the marketing side to re target.
And drivers.
And also the call center people, so it's flat right now.
I don't.
Not really sure where to see where we're going to see that pan out for the rest of the year, but it's not I'm not seeing a big tick up and re conversions.
For for people, who have driven basically like 90 days or less for us and our non card and how so.
I think that that's something that.
We can talk about that potentially giving those numbers out maybe if we see that they are valuable for for investors. So let me, let me dig into them and go from there.
Okay, and then and the idea.
Okay.
And obviously more days.
As it progressed week after week, it sounds like youre going to get to a pretty healthy.
Average daily rate here and the second quarter.
The excitement and I think people have today is the announcement on the on the new pricing and Scott and I guess.
By guiding to a 2000 and 700000 people will probably take.
Your numbers up.
10 sequentially from there and then obviously the more cars you get and the.
Probably come up with.
10 million and Theres still a number and second quarter, but <unk>.
And how we can get higher than that third and fourth quarter, what is going to be the next leg is it really going to come from.
Just more cars on the platform through a merit drive or is there. Other things you can do to drive revenue growth on top of where you're going to exit Jim. Thanks. So much.
Yes, absolutely Josh. Thanks, Thanks again for the question I think certainly the volume side of the equation is there and the entire team is focused on that I think this is kind of a first.
Our first step on the pricing side of things I think we're.
Getting a lot more data now out of our.
Sure.
Our mobile sources, so that we're getting a lot better information and we're always trying to do a better job on the driver vetting side of things to get those into the vehicles of our key partners.
So I still think there is there is some more room to go there. These were what we rolled out in April were elements that we felt really really comfortable and again had had done some pretty significant side by side testing.
And then I know Joe touched on it a bit and his call some of the other ancillary revenue sources that truecar relationship.
There's a few other things that I don't think we've formally announced yet.
If I expect and that to be more than three to five per cent of revenue at best at this point right.
No I don't I don't think we see either of those things as huge contributors I think the truecar relationship has the potential to go there so.
The lion's share of that growth will continue to be from volume and pricing adjustments up.
Alright.
Okay, great. Thanks, guys alright, thanks, Josh.
At this time I would now like to hand, the conference back over to Joe Furnari for his closing remarks.
Great. Thank you everyone. Appreciate all the questions and look forward to catching up and next quarter.
Everybody.
Sticking with us and the words of I think Josh the wheels are starting to turn.
Really appreciate everybody. Thank you.
That's it operator.
Ladies and gentlemen.
You may now disconnect.
And.
[music].
And then.
And.
Yes.
Okay.
[music].
And.
And.
[music].