Q3 2021 HyreCar Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by welcome to the hire car, Inc. 2021 third quarter conference call.
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This conference is being recorded November nine 2021 and the earnings press release accompanying this conference call was issued at the close of market today November nine 2021.
On our call today is higher cars C E O.
Joe Furnari, CFO search the Buck and Scott Arnold Senior managing partner of core I R. I will now turn the call over to Scott.
Thank you operator, and welcome everyone to our 2021 third 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 higher car Incorporated's forward. Looking statements include but are not limited to statements that express the.
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.
<unk> 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 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 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 can be 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 it over to Joe Furnari CEO.
Thank you Scott and welcome all to our third quarter 2021 conference call I am pleased to report that in the third quarter net revenue increased 43% to $9 7 million up from $6 8 million in the same period of 2020.
Robust demand from drivers segments drove over 8000, new unique drivers to pick up a car on our platform, which is a 49% year over year growth rate.
Take rates have increased significantly as robust driver demand and fewer driver alternatives, we're creating incremental margin pickup in our daily rates are.
Our dynamic pricing model brought take rates up to $29 per day in Q3 up 7% from Q2.
Because we've invested in building a robust data environment and flexible technology stack, we were able to implement these changes relatively quickly.
We anticipate take rates grow through the rest of the year as the dynamic pricing model learn and iterate for risk and reward.
Importantly, our gross margin improved from Q2 this year back to plan and we succeeded in meeting financial and cost goals that make us stronger even as we continue to invest for the larger number of vehicles. We are helping to provide the gig and delivery drivers. This progress that we've made over the quarter and the week since the quarter has been <unk>.
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At the end of last week, we announced a partnership with a mere drive and Cogent bank to help drive vehicle supply to our platform under the terms of the agreement Cogent has agreed to expand its lending capacity to allow our fleet partner Amira drive to continue to build its fleet of gas powered and electric vehicles available on our platform.
We believe these types of relationships with fleet partners will help us continue to meet the increasing driver demand through the hire car portal cogent has been a tremendous partner to a mere driving higher car and we look forward to continuing that relationship.
In addition to our primary purpose to match drivers with car supply we have invested in helping the larger mobility as a service ecosystem leveraging our access to the financial markets to help our vehicle partners access financing sources, we realize that we succeed when our partners succeed and the Cogent line is one.
One of the tools.
Last month the team attended two significant industry conferences related to vehicle financing as big the securitized products Association's major West Coast Conference and the auto Finance summit.
The auto Finance summit was headlined by higher cars, Bryan Allen and auto finance highlighted higher car as one of the automotive retail opportunities, taking the auto finance industry by storm in 2021.
As previously mentioned, we have engaged a large investment bank to help higher for business customers access warehousing financing lines.
These warehousing lines will give our partners direct line of sight to growing the platforms available vehicle supply to tens of thousands of cars and it's important to note that for every 10000 cars actively rented on our platform, we estimate approximately $90 million to $100 million in revenue to higher car.
And secondly, I am extremely proud to announce another major milestone for higher car, we have signed an official vehicles partnership with Uber.
This vehicle rental strategic relationship will allow us to work directly with drivers and delivery people using the Uber platform to find and acquire rental vehicles.
The partnership is initially focused on adding electric and hybrid vehicles to our platform, which is <unk> <unk> higher cars focus on environmental sustainability and the automotive sector.
We will rollout this partnership in various cities from Atlanta, San Francisco and Uber App users can now expect to see our listings and the vehicle solutions section on the Uber App.
Potential customers will be able to rent directly for movers platform and move more rapidly through the approval to pick up and driving process. We anticipate this partnership should increase the retention rates of drivers improve our driver quality and reduce our marketing costs higher car will oversee promotion and other business activities to <unk>.
Joining me create end market vehicle solutions program for drivers and delivery people using the Uber platform.
Pairing drivers with available cars will be seamlessly integrated and as we integrate a single sign on solution rentals will flow directly through Hoover's applications.
We expect to see increased volumes as a result of our partnership and while we are aware of the other rental car providers are also in the mix, we believe that higher cars dynamic and attractive pricing structures, we will attract new drivers to our platform and that over time, our share of market on the Uber platform will increase.
In addition, with our adoption of dynamic pricing structures, we continue to focus our efforts on improving margins and with some of the other changes we are making as a business I believe we are on track for our goal of 40% gross margins by the end of 2022.
Recent work that surge has done anticipates cash flow breakeven at 6000 to 6500 vehicles rented on the platform.
Now moving to operations and important way to ensure that we keep our margins higher is to keep our expenses down and that is among the reasons. We're so pleased to have had surge the bok join us as CFO in July of this year surgeons the experience in finance at Ford Amazon and Liberty mutual.
As well as focused on maintaining a healthy operational budget came from his time at Deloitte and Pwc have been central to helping our company improved many financial and planning operations over the past four months and we are extremely fortunate to have had him join the team. He has been a key driver in analyzing and improving our claims processes with.
Our recently implemented Tpa partner Sedgwick.
Conversations with our partners make it clear that the market will continue to grow and hire car intends to be the leading vehicle supplier of for the gig economy.
In the near term our partners are working through a tighter vehicle purchase market due to the shortage of new and used cars at scale. We believe this market and nominally should only impact the short term pace of adding vehicles, we do not believe it will impact the growth of our supply going forward as these market anomalies abate.
As you have seen from recent news reports from other companies in the rental market. The total addressable market has been calculated at between 300 500000 vehicles.
Even if we achieve our goals of 16000 gross cars Barrick sides in the marketplace in 2022 and 50000 by 2025, we will still be a small part of this market, but we will continue to innovate and be the platform that appeals to the widest range of gig drivers.
And our partners' fleets will consist of both EV and ice vehicles, providing the vehicles, our customers want where they want it.
With that I'd now like to turn the call over to surge the box, our chief financial officer to walk us through some key financial elements from third quarter surge.
Thanks, Joe for welcoming me under the HOKA team and the best per months I've enjoyed immersing myself into areas, where it makes parties in the automotive technology and insurance industries are helpful.
My immediate focus has been and continues to be on driving profitable and sustainable revenue and margin growth on the platform. As a result, we saw a significant movement for this quarter and we have identified several future opportunities to continue on this path.
Onto our Q3 performance overall Q3, 2021 continued to show solid revenue growth at 43% growth year over year, and 7% quarter over quarter. We saw significant improvement in gross margin from Q2. This year and we continue to rightsize, our G&A and marketing expenses.
We are also conscious of the reinvested in our technology infrastructure to continue building a foundation for accelerated growth.
On the top line rental days were relatively flat this quarter, but are still on pace to surpass $1 $3 million. This year up from 1 million rental days for the full year 2020. This.
This represents a quarter over quarter growth up 21% from 273000 rental days in Q3 of 2020.
We believe that the tight used car market combined with our partner financing constraints slowed our growth this quarter.
Our recently announced expanded partnership with <unk> drive and Cogent Bank will help provide car supply to our platform and we will continue to focus on similar financial partnerships in the future.
Furthermore, continuing expansion in the rideshare and delivery sectors with only draft rather grew at Harcar as evidenced by the recent Uber and Lyft earnings calls.
Last week also indicated demand for airport trips arisen 20% in the last two months alone with increased travel trends benefiting the hire car platform.
While our rental days increased 21% year on year net revenue grew 43% to $9 7 million from $6 8 million last year and increased 7% from the previous quarter.
The year over year favorable ratio of revenue growth to rental days stems from one our investment in our dynamic pricing engine to improved risk assessment processes and three a favorable market trends in rental fees due to car supply constraints.
Specifically, we experienced an increase in daily average net revenue, which represent net revenue divided by rental days from 24, the historically and in Q1 to $27 in Q2 and now $29 in Q3.
This coincides with our net revenue to gross billings ratio, increasing from 45% in Q3 of 2020% to 46% in Q1 of 2021, 47% in Q2 and 48% in Q3 of 2021.
An accelerated increase in our take rate.
October continued on a favorable trajectory as actions taken in Q3 are also favorably in back in Q4.
We are continuing to optimize and expand our dynamic pricing models by investing in our technology platform and are looking to incorporate new information from both internal and external sources as part of the pricing and driver screening processes.
Additionally, we have expanded our insurance offerings to owners in September of 2021, optimizing deductibles in pricing based on the latest risk patterns observed and we also provided new ancillary benefits to our owners.
Flipping to the cost side.
Cost of revenue decreased quarter over quarter from $8 3 million in Q2 to $6 7 million in Q3, we.
We achieved these cost reductions by a four pronged approach first we improve our internal claims processes and policies.
We focus on our cost control partnering with external new claims processing partner to theater that process to hire car.
Third we develop to clean prescreening process to reduce overall insurance costs and.
And lastly, we continue to focus on the appropriate risk pricing charging drivers more effectively based on their risk profiles.
Meanwhile, we maintained our Q2 gains and customer satisfaction after rolling out these initiatives balancing risk control and retention of profitable drivers.
This quarter, we have achieved our Q2 gross profit margin guidance delivering an increase from 24% in Q2 normalized from one off expenses to 37% gross margin in Q3.
While July gross margins were still in line with Q2, we passed the 30% Mark in August and continued to improve our gross margin in September. These gains were achieved through the combination of the cost savings and pricing initiatives I just highlighted.
Looking forward to Q4 gross profit margins, we are on track to deliver a mid <unk> gross margin in Q4 with a medium term goal to surpass 40% in the latter half of 2022 and beyond we.
We will continue to refine our pricing and product offering for premium coverage plans, which we believe will maintain our current ascending trajectory in Q4, and we are developing new incentives for our drivers with low claims experience.
Operating expenses totaled $9 1 million in Q3 of 2021, an increase of $4 $4 million year over year preparing for accelerated platform growth.
Compared to Q2, 2021, however, we reduced our operating expenses by about 10%.
Overall this decrease can be attributed to our focus on optimizing as Jeannie and marketing expenses and a decrease in awarded stock based compensation, partially offset by Reinvestments in our technology and infrastructure.
We reduced cash SG&A by $700000 or 10% quarter over quarter, thanks to continuous efforts to reduce and renegotiate none growth related expenses, while introducing more automation in our current processes.
These actions allowed us to reduce head count by about 10% during Q3, and we are actively managing individual performance.
Additionally, we have refocused marketing resources towards the reactivation of existing customers junior reading sufficiently leads for the inventory at a reduced cost.
We reinvested the savings in technology to both career, some technical debt and to build the foundation to scale seamlessly in 2022.
Looking at Q4 and beyond we expect further decreases in G&A and a gradual return to a lower benchmark for technology costs. After this first phase of our accelerated platform transformation plan.
Our adjusted EBITDA for the quarter represented a loss of $5 1 million down 2 million from $7 1 million loss last quarter.
But up from $1 6 million loss in Q3 last year.
This decline quarter over quarter is primarily attributed to improved management of our cost of revenue specifically insurance related costs, while at the same time, maintaining sufficient cash operating expenditure and infrastructure to support growth at scale.
We expect positive adjusted EBITDA trends to continue in Q4 and beyond with increased gross margin and reduced opex.
Our cash position continues to remain healthy at $18 million at the end of Q3 with sufficient liquidity to fund our ongoing operations and pursue growth opportunities. We will continue to pursue financing opportunities, where our fleet operators and higher car to create financial leverage optimize our cost of capital and accelerates economies of scale through expanded volume.
We also received good news from the Paycheck Protection plan program PPP loan that Harcar update for $2 million. It was fully forgiving as of 10 to 28 2021 and will be reflected in the Q4 2021 financials back to Joe for final remarks.
Thank you Serge and thank you everyone for taking the time to join us for our call today.
The partnerships, we've announced today and in the past couple of weeks should create momentum into 2022 with all the buzz in Evs EV fleets and mobility as a service higher car is uniquely positioned to capitalize on the sustainability waves to come.
Additionally, we expect to update you soon on some exciting partnerships that are being finalized. These new partnerships will allow us to continue to scale cars for the ride sharing and delivery markets into 2022 and beyond we are one of the few players left in the market, providing qualified and reliable cars to drivers.
And one of the only ones investing in the ecosystem to help our rideshare partners and fleet succeed.
We will look to update our shareholders regularly on the progress we are making with that operator, let us move to Q&A.
Thank you.
We'll now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
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To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Mark Argento with Lake Street. Please go ahead.
Hey, good afternoon, good afternoon, Joe and Serge.
A couple of quick ones first off on the dynamic pricing model how much of the gross margin expansion do you think those directly.
Attributable to the <unk>.
So what you're seeing there.
But very good question Hi, Mark.
We can attribute about half of the improvement this quarter to actually the net pricing all of the remainder is due to process improvements as well some of those process improvements took place during Q3. So we will see the full impact of those in Q4.
Okay, and when you talk about the expanded kind of insurance offerings does that dovetail with the dynamic.
<unk> model or how do you.
How do those two kind of work in concert with your channel.
Absolutely the dynamic pricing model is tailored for each different driver and customer that we have and the changes that we have and the coverage plan just reflect the underlying trend in the industry and when portion of west to just rightsize deductibles to to the different plants and provide in Chile benefits at the same time, we also provided <unk>.
Fiction plant that still kept high deductibles, but we just priced them appropriately based on the risk profile and that the current claims experience.
Okay.
Notice any kind of material change in terms of take rates.
What's the dynamic.
Higher deductible on the insurance side.
Yes, absolutely we start seeing the additional.
Changes coming through you've seen our number actually is at 48%. It was a 45% in Q1. So take rate has increased to 48%, which is very favorable and in addition to that we brought the deductible plan at the end of Q3. So we'll see most of the benefits in Q4, we've seen some adoption there.
So the benefits are going to come either two fault of people opting into higher protection plan was higher revenue or opting for higher deductible, which means reduced cost.
Alright I appreciate it.
In the queue. Thanks.
Okay. Thank you.
Our next question comes from Mike Grondahl with Northland Securities. Please go ahead.
Hey, Thanks, guys and I'll ask two questions.
One.
The take rate at $29.
Very robust.
But could you also let us know how many rented cars you had at the end of September.
And sort of what your goal is for the end of the year in terms of number of cars.
And then secondly, Gilles.
You mentioned some partnerships.
In your prepared remarks could you talk a little bit about the partnerships on the financing side you were referring to you mentioned a large investment bank.
And then secondly does that include under the umbrella of partnerships. Other fleet managers that can kind of drive cars like in a mirror drive.
Yeah, Hey, Mike Good to hear from me, let me maybe I'll take the second question first and then Peel back to the ADR, but from from our perspective on the partnerships I think we're really excited I mean, the way the way we've worked with these these partners on that one.
Side is that we've really kind of used our expertise in finance our expertise in the public markets.
And our influence with some of these lenders to help our partners on the car side get those type of financing.
And so I mentioned, one with the warehousing line those are big investment banks in New York. We also went to Vegas and had some really good conversations with the guys that were there in the.
Traditional.
Auto financing realm.
We're using those those conversations and those those term sheets that we received from them as backup for this.
This primary warehousing line that we're working with with the investment banks or what kind of a dual processing. This whole this whole thing and running it down parallel lines. So that when we get to a point, where we need to finalize it making decision we have a lot of options for our partners.
And so it's important to note we have.
30 vehicle owners that are in our higher for business and a good chunk of those individuals have told us they are looking to add financing.
To add cars on the platform so.
They are liking the ecosystem the likelihood technology. They are liking the products that we're rolling out Forum.
And.
And so it's all kind of working down that working that down that path. So I'm excited there.
In terms of ADR and kind of where we think gross cars are going to be at the end of the year. I mean, we added about 4000 verified cars to the marketplace.
In Q3, that's a tremendous amount of cars I think we're going to continue to add cars going into Q4, we're going into a Q4 and Q1 that have historically been very very strong for us.
So expectation is that we continue to grow through those quarters.
And the catalyst becomes the financing that we put in place for our partners to be able to purchase and grow so thats kind of how we're thinking about it right now.
Got it and.
He is.
Something that you think can help you drive cars.
How should we think about your announcement with Uber.
The announcements with Uber is six years in the making I'm. So excited that we got we got a sign off to announce that because.
You've been following the story, Mike since 2018 and.
Yes. This is a conversation that we started back in 2016 with them. So we're really excited I think that ubers initiatives to go electric by the end of 2030 with there.
Their whole fleet.
It's very aggressive and where we've signed on to help them there.
And so the way I think about it is kind of a two pronged approach. Initially this deal is with EV and hybrid cars and we have a tremendous amount of owners that have come to us and said they have individual cars that they want to put on the platform that are EV and hybrid and so really excited there I think we can help them really grow on that angle and then I think this part.
<unk> really expands out into all types of vehicles.
As we get more and more integrated with this with Uber in the partnership so really excited there.
Got it hey, thank you and congrats on getting that.
Thanks, Mike.
Through their vehicle solutions platform.
And typically those leads we're renting cars through there.
Her their vehicle solutions partners.
Now we're going to be live on the App, we're going to be enabled to for those drivers to come in and rent through higher car I think the future state is that those drivers can actually do a single sign on and they actually can rent cars in their application in the hoop or app, you're going to be able to see higher car cars and.
So.
That's the exciting piece because I think what it does is it gives us first shot at those drivers when they're shopping number one and then number two I think we're going to have a lot of evie.
Options for those drivers to go in and start renting those cars Evie and hybrid so.
Think it really helps with kind of conversion rates through through the platform.
And then maybe search could give you a little color on kind of how we're thinking about LTV, a customer and Cogs in opex and what that does for us.
Really.
I think as you mentioned I think what.
This to a source of longterm intend drivers, which means stevia first longer which is a good benefit for the platform also the quality of the drivers may be higher so that is something we want to learn.
We see here I don't want to.
Too many numbers right now we're still in the learning phasing piloting and gathering a lot of data.
But obviously I think to your comment on marketing costs. This is another channel that allows us to acquire customers had to cost. So we expect marketing costs decrease we're still working through the different components under cock site. So.
Work through and we learn will will be able to tailor that and we're in constant discussion was eager to be able to provide the best program for for the drivers and also for ourselves and refunding. This partnership so as we starting to get more data and we have the platform that we will be able to make more accurate estimates as to where we are but I think we assume.
That will have better quality drivers in some cases reduce marketing costs and then on the <unk> side and claims will just want to see whether the experience looks like before we can provide a definitive answer on that.
Okay, and then just one follow up on so rental days.
Days, where I think flat quarter over quarter, I think you said search in excess of $1.3 million for the year, which would imply a bit of a sequential pick up I presume that's the <unk> maybe.
Maybe the the cogent deal helping you.
How should we think about like like <unk>, The first Corps uhm.
Can we do you think you'll be able to kind of sequentially bump up.
From fourth quarter levels on rental <unk>.
Yeah, Yeah, I think the cogent nineties definitely you hit a good spot. The kitchen line is what were the lowest to bridge. The current investment is back to the warehousing line that you have described so we wanted to make sure we move forward.
Also make sure that we selective about car quality and also sensible our being discreet offs, but we expect that <unk> will be sufficient to be able to add more cars to the platform Q4, and then continue will accelerate that in Q1 and Q2 of next year very substantially.
So as we get through and we're getting past the market anomalies that Joe alluded to in his in his portion will be able to scale faster we want to make sure we bring the right cars to the platform that deliver appropriately profitable.
Benefits to us so in that regard, we're going to go not as fast, but we're going to go very selectively profitably and as soon as we feel in a good spot with moving forward, even faster will just accelerate very quickly doing 2022.
Our next question comes from John Heckman with Latin bag. Please go ahead.
[noise] Hey.
Are you there.
Yeah can you just explain you added three to 4000 cards in the quarter.
But rental they've been go up.
[laughter] yeah.
Yeah in this market, where it's a really competitive environment for dealerships to sell cars, there's been a lot of churn in the market and so when we're adding cars yeah. You're also churning cars off through through high a heightened sale process and so I.
That for US the key is to add vehicles, what our purpose spot for our platform and that's why I think the Ah marriage or partnership in some of our some of our larger commercial fleets are so important because.
Attaining helping them a tape financing and having them by means it's stickier to our platform.
And so that's.
That's where it happened in Q3 expectation is at a high level.
This market that were and starts to abate a little bit I think we've been at 40% above 40% increase in MMR on at the auctions on used cars.
Abated, just kind of come down for five points.
Recently, and we expect it to drop kind of in single digits through the end of.
Through Q1 of next year Q2 of next year.
And so there's some real kind of tailwinds that are gonna start pushing us and start easing up on the supply, which then I'll enables our partners to go out and purchase at a good price and then they start adding cars to the market and those cars are sticky so.
That's kind of what's happening now on the market.
Okay. Thank that's it for me.
Hey, Thanks, John again.
Our next question comes from Jack Vander Ark with Maxim Group. Please go ahead.
Oh, great I appreciate the update gentlemen, congrats on the official Uber partnership.
Thanks for taking my questions.
So just just to what I understand is the strategic partnership with a mirror and cogent too.
<unk> car supply is this connected or related in any way to the to the Uber announcements are these two separate distinct.
Initiatives.
Maybe there is some overlap, but just to provide some color there yeah.
Yes, two distinct initiatives and and the last time, we talked about and Ah three or four catalysts that we're going to be looking for.
Number one was this was this cogent deal and.
And so we were able to get that done it's really exciting I think that gives us real line of sight to car numbers through the end of the year.
Two is the Uber deal we were previously describing that is AT&T partnership but.
The at sign off to talk about the Hoover deal.
And you can actually see those those those cars are cars are live on the side and hire cars live on those sites. So that's super exciting that's leads us to get better going to be flowing through to our platform and then a.
Warehousing line slash securitization that.
That we're working on with with some of the financing partners that have historically financed.
Auto and the U S. I mean is it is.
Half a trillion dollar industry, there and so.
There are well established established players that are we are helping teach this business to them right. Because this is a new new world for for a lot of the established players and so we're we're going to these conferences and evangelize thing.
How they can really participated in this market with our help with our risk Andre with our technology. So.
Those three things we have we have clarity on two of them now in the public sphere and working on the third.
Great. That's helpful. And then maybe this is already touchdown, but just given all the buzz in the market lately with hurts and coming out of bankruptcy and they seemed to be in the news a lot lately with the Tesla announcement.
With over and then also Avis, they recently reported as well.
Can you just share your perspective on where hire car fits in strategically or competitively.
As it relates to hurts as it relates to Avis and then also Uber kind of connect at all.
Yeah, absolutely I mean this is we are in very very exciting time. So everybody is moving towards electric everybody is moving towards partnerships that enable them to manage sweet electric fleet at scale, where the historically the infrastructure hasn't really been.
And place to be able to do that but now you have heard of these combined tailwind of an infrastructure Bill being passed yes states passing budgets that are going to be adding to the EV charging infrastructure and now you have a validation from one of the largest rental car companies.
Running EEV fleets at scale so.
We will let them be the trailblazer put that infrastructure in place and then we can come in behind him and add.
Add cars at scale.
So it's really exciting into validation of what we were doing with Uber and what we're going to do with Uber and.
Moving forward, it's an exciting time to be in mobility, and and kind of the technology space that we're in right now specifically a dealer start to come back because I think that strategy is is going to start to come back as as car start to new.
New car start to flow and used car prices start to come down the dealership strategies are going to start to really pick up as well.
So for us having dealerships run evie fleets, having them Ronne ice fleets I think is going to be it fits really well into our narrative of had ecosystem and created an ecosystem everybody to make money in this business.
Great and then just one kind of last question on financial targets metrics for.
Search did you provide a and updated normalized target range, what you expect that non-cash opex to be.
I think it was $6.5 million to $7 million last quarter, you had said.
But think Uber announcement, and maybe the sales and marketing efficiencies you get overtime. So.
So it's R&D initial investment and you gotta get past that but you just provided a quick update from me on the pitch to your non-cash up X.
Absolutely.
Ketchup X you mean right.
Yes, correct, sorry, yes, yes, no problem.
On the cash opec's, so I think as we get through we want we want still learn from Uber deal, but what we've seen in this quarter is we've invested a lot in our technology infrastructure and and we feel comfortable making sensible tradeoffs between long term growth in short term profitability I think.
What we've seen is we haven't we.
Dropdown significantly on the cache of excite in Q3 because of those reinvestments, but we expect that to normalize further so the guidance around 7 million as a target for cash Opex still stands and we don't want to put the the carriage before the horses. So are the horses before the curious.
But we want to make sure that we understand better what do the deal will bring to us before quantifying those benefits, but hopefully we'll be able to bring that done further from marketing efficiencies from this new sales channels.
Great. Okay. So yep that opex of 7 million, though applies to this fourthquarter. This near term Fourthquarter then.
You definitely some more to a medium term goal, we'll get a closer to that in this fourth quarter.
Okay understood. That's it for me guys. Thanks.
Thank you.
This concludes that question and answer session I would like to turn the conference back over to Joh finite for any closing remarks.
Great. Thanks, everybody for joining the call really excited for what the future holds excited for.
<unk> to be behind us excited for new financing partners to be coming online too red cars too. So that we can our partners can purchase cars and we can rent them to drivers. So there's a lot of really good things happening right now so Stan standby and look too.
Half date, everybody in the future. So thank you.
The conference has now concluded. Thank you for attending today's presentation. He may now disconnect.