Q4 2021 HyreCar Inc Earnings Call
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Good day and.
Thank you for standing by and welcome to the hire car in 'twenty, 'twenty, one and fourth quarter and year end conference call.
All participants will be in a listen only mode should they need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions.
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The earnings press release accompanying this conference call was issued at the close of the market today March 15th 2022.
On our call today is higher card CEO , Joe Furnari precedent, Bryan Allen and CFO search they balk.
I will now turn the call over to Mr. Jason Nelson of core I or the company's Investor Relations firm. Please note. This.
Ventas being recorded Mr. Jason Nelson. Please go ahead.
Yeah.
Yeah.
Thank you operator, and welcome everyone to hire cars fourth quarter and year end 2021 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 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.
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 company's control.
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 will be found in the earnings release, and supplemental materials, which will be furnished with the company's Form 10-K that was filed with the SEC and will also be found on the Investor relations portion of the company's website.
Now I would like to turn it over to Joe Furnari CEO .
Thanks, Jason.
Car had an eventful year in 2021, we continued to capitalize on our position as a unique and essential provider for the gig economy.
A market that grew considerably despite the challenges caused by COVID-19 ripple effects.
We adapted quickly to accommodate the grilling delivery space as the rideshare industry continued its recovery, we expanded our leadership team and improved our operating cost model.
Added enhanced features to our platform to connect supply and demand more efficiently and effectively and we established a strong foundation strategic partnerships to create value for our driver and alert communities.
With that I'm pleased to report that our fiscal year revenue grew 41% to $35 7 million up from $25 million in fiscal year 2020, we listed over 18000, new veins through our platform up from 11000 vans in 2020, and increasing gross car listing volume of 64%.
And take rates have increased significantly as robust driver demand and fewer driver alternatives, we're creating incremental margin pick up in our daily rates higher cars enhanced pricing brought take rates up to 51% of our gross daily pricing.
An equivalent it's $30 per day in Q4.
The supply chain and its impact on car supply remain top of mind as we believe it will take time for car supply to recover and relieve pressure on used car availability.
In the meantime, the rideshare industry continues to recover at a steady pace and rentals for delivery services remained robust in the platform even with the easing of COVID-19 related restrictions our driver intent data indicates that the use of delivery services will be more prevalent than originally expected.
Higher cars, an essential solution for helping expand the mobility as a service workforce that is choosing to become part of the revolution independent workers and rideshare and delivery.
We have heard from new drivers, who left the job that forced them to work longer hours with less flexibility due to labor shortages.
They were surprised to see how much they can earn in ridesharing delivery and now enjoy the flexibility of choosing when and how long to work.
What once may have been a temporary gig is now seen as an opportunity for these drivers to create their own schedules, while still earning a good living.
A hire car platform allows drivers without cars to participate in the gig economy and those with cars to do so without incurring the excessive wear and tear.
<unk> and insurance costs associated with using their own vehicles. It also allows small business owners and a few cars to many fleets to large fleets and dealerships to access these longer term renters.
To help meet this increasing demand we are preparing for new ways to grow as well we.
We are pleased to have appointed a J Lee to the new position of senior Vice President of growth.
Who will be responsible for sustainable marketplace growth and the customer journey the.
The new growth organization under a JV will be responsible for increasing rental days, while reducing the cost of acquisition by at least 15% and increasing net promoter score for drivers and riders.
We spent last year strategically positioning the company for 2022.
Which we believe will be a year of significant growth. These activities have included the launch of enhanced dynamic pricing to scale revenue and an increased focus on driver risk profiles.
We transitioned our claims management platform to better serve our owner community and we implemented other initiatives designed to reduce insurance costs and claims related expenses.
In November we extended our partnership with them are driving coach bank to help drive vehicle supply on our platform.
Under the terms of the agreement Cogent has agreed to expand its lending capacity to allow a married drive to continue building its fleet and had electric vehicles to offer on our platform.
To maintain and increase the integrity of our marketplace. We are focusing on the retention of our best drivers and owners. This will provide higher car with a stable and willing community of users to test new features and initiatives, we invest in our platforms backing architecture, allowing us to easily scale supply to meet increasing demand. These <unk>.
Passengers were made alongside a right sizing of the Companys operating cost structure through automation efforts and restructuring of the organization.
We entered into an official agreement with Uber in 2021 has a fully integrated solution to Hoover's driver partners, what's particularly exciting is that Uber drivers can now see our listings in vehicle solutions section on the Uber App and rent with us directly through Loopers platform. We are also committed to increasing electric and hybrid vehicles supplier.
Pop one, which we believe will lead to new driver acquisition and complement the green initiatives of rideshare and delivery services.
And finally, we have significantly improved margins, while providing enhanced customer service and claims handling processes.
With the changes and initiatives I've already mentioned as well as some to be mentioned shortly I believe we are on track to reach a gross margin of 40% by the end of 2022.
For 2022, we are focused on mothers that will allow us to scale in order to grow we are focused on three strategic priorities sustainable vehicle supply growth a best in class car share rental experience for our drivers and the evolution of our product into an ecosystem that goes beyond simply matching supply and demand remember with our take rates.
Increasing every 10000 cars on our platform is equivalent to about $100 million in revenue.
So with that I think it's important to further detail our car owner initiatives. The owner team led by Brian Allan has had to be nimble in the face of the changing landscape of vehicle ownership.
So I'd like to turn the call over to Brian who will go into greater detail on each of these priorities Brian .
Thank you Joe.
Having spent most of my career in retail automotive sales and service space and one of the most successful automotive groups wound I know that accompanies success can only follow the customer success, thus, removing friction and pain points across the owner and driver germs, while adding value our key objectives.
For our team this year.
As Joe mentioned, our plan consists of three areas of focus car supply driving experience and the creation of value for our customers beyond our core offering.
In 2021, 75% of rental days came through vehicles owned by our larger fleet operators. So we remain committed to securing sustainable three partnerships to ensure consistent supply to.
To help quantify the owners grow their fleets, we are launching financing options through third parties that will help support the expansion of our many fleets and create new markets.
Our new target for supply acquisition with great potential is the buy here pay here industry segment also known as BH ph.
There are over 24000, BHP H dealers, who provide in the house vehicle financing for customers that otherwise may not qualify for traditional financing.
We're finding success with this retailer subsegment because these dealers can went their vehicles in our marketplace and better assess risk with the rental payment history, while earning incremental revenue before they sell a vehicle.
This opportunity will recharge or earn to own program, which has been slowed by low retail vehicle supply.
With nearly 2 million vehicles sold a year through buy here pay here dealers, we believe that they present, a new and significant source of vehicle supply.
Finally, we anticipate a measured return a franchise automotive dealerships as used car prices prices soften and inventory levels increase to accommodate the unique needs of this important OEM dealer segment, we're continuing to develop features.
Higher Concord business product that make rental revenue, a compelling opportunity and easier to manage.
Our second area of focus is the renter driver experience, we are continuously reducing friction to increase rental conversions to our platform to make it easier to register find and book a vehicle and maximize earnings we are deploying feature enhancements and striking.
Strategic partnerships did have personalization and automation that are core.
This includes streamlining the registration and verification process smart chat based support for the most common requests.
Tuesday provided insight into when and where to drive to more work.
Also developing a benefits program that rewards our platform users for being a successful part of the higher current community.
Do these initiatives we are anticipating increased conversion at every stage of our driver funnel as well as increased retention and loyalty to generate sufficient demand to meet the expected growth in supply.
Finally, we are focused on efficient supply demand matching and overall marketplace grows we believe the hire car has a much larger role to play in the gig economy. We are working with Dave Bruce Technology, and service partners, who want and need access to our customers, allowing us.
To leverage scale to build the value based ecosystem beyond our access based marketplace for owners, we are improving the safety security and management of vehicle assets to make it easier faster and more profitable to operate and grow their fleets are growing.
Work of technology, driven partners is enabling everything from faster and better maintenance and repair enhancements to Geo location based key exchange facial recognition and car tracking technology.
Access to this network of services and technology unlocks opportunities for our fleet operators to grow exponentially from scaling to franchisee with higher costs at the same time, we want our drivers relationships entire car to help move their rental experience or need for vehicles.
Access to support the driver ecosystem, we are focused on ways to provide higher cost drivers with a competitive edge. This includes the aforementioned tools that provide real time and future <unk>.
And when and where to drive to make more as well as the tools that empower gig workers to take control of their financial security.
While such strategic partnerships are essential for blending and acquisition purposes. We believe that they will result in an indispensable platform and technology stack.
And the ecosystem.
Fleet operators, and all rideshare and global drivers that can also provide sustainable and valuable alternative franchise and software as a service revenues to higher car.
Thank you.
Like to turn the call over to the wonderful surge the Bok, our chief financial Officer to walk us through some key financial highlights.
Thank you joined Brian we just put behind US a year of growth Foundation investments change, both externally and internally as well that exciting partnerships that will carry us into 2022.
Shifting towards reviewing the fourth quarter Ocwen when he won financial performance overall Q4 volume and revenue levels continued to be impacted by constraints I think in the car market supply.
On the profitability side, we continue to improve our gross margins reduce cash operating expenditure in line with our guidance and we invested some of those savings into scaling our platform.
First let's address volume.
Rental days for the fourth quarter of 2021 increased 14% year over year from 277000 rental days in the prior year's fourth quarter.
And were relatively flat compared to the prior quarter at 323000, despite our inventory supply conditions.
We achieved close to one 3 million rental days in 2021 up from 1 million for the full year 2020.
Our utilization rate for our fleet of twin Carso more that over 85% in Q4.
And highlighted the lack of inventory to satisfy driver demand the vast majority of markets.
You burned lift that also showing strong Q4 results in terms of revenue gross bookings and profitability without any further strong rideshare and food delivery demand and hence driving.
In Q4, Hubert stated at nearly 325000 individual started to work on the Uber platform in the quarter.
<unk> total global active earner based 4.4 million the largest it's been in the second quarter 2020.
We anticipate these trends will continue into 2022, providing harcar was more opportunity than ever to scale with a proper car inventory supply.
While our rental days increased 14% year over year year over year net revenue in Q4 grew 36% to $9 $6 million from $7 million in the same quarter last year and is relatively flat with the previous quarter.
The year over year favorable revenue growth dumped out of 22 point score with a 14% increase in rental days continues to stem from pricing and risk control enhancements, including dynamic pricing and a favorable market trained daily rental rates, reflecting the constraints car supply.
Our full 2021 revenue equals $36 million, an increase year over year by over 41% from $25 million in 2020.
Specifically, we have driven an increase in daily average unit revenue, which represent net revenue divided by rental days from 24, Barry historically and in Q1 to $27 in Q2 $29 in Q3 and now $30 in Q4.
This coincides with our net revenue to gross billings ratio, increasing from 45% in Q3 of 2020% to 48% in Q3 of 2021 and now 51% in Q4 and.
An accelerated increasing archaically.
We are continuing to optimize and expand our dynamic pricing model and are planning to invest further in our data and moving function to continue making the right pricing tradeoffs to drive profitable growth.
Moving on the cost side.
We continued optimizing cost of revenue, which decreased quarter over quarter from $8 3 million in Q2 to $6 7 million in Q3, and now $6 2 million in Q4.
We achieved discussed reduction by continuing to leverage our four pronged approach first we improved internal claims processes and policies to clarify and minimized auto policy claims disbursement.
Second we focus on cost control collaborating without claims Boston partner, two killer that process too high bar.
Third we get looked at claims internal prescreening process to reduce overall processing costs.
And fourth we continue to focus on appropriate risk crashing charging more effectively based on driver risk profiles.
Meanwhile, we have maintained most of our Q3, and Q4 gains and customer satisfaction balancing risk control and retention of profitable drivers.
We have achieved a gross margin guidance consecutively in Q3, and Q4, improving gross margin by over 10 points with two quarters of solid achievement, considering equal replacement and spirit by cost increases due to global supply chain shortages and their negative impact on claims.
We delivered an increase from 24% gross margin Q2 normalized to one off expenses to 37% in Q3 and not 30, 443% in Q4.
These gains were achieved through a combination of the cost savings and pricing initiatives.
Looking forward to 2022 gross profit margins, despite seeing some seasonal uptick in claims in Q1 of 'twenty 'twenty. Two we're still aiming to gradually increase gross margin is our goal to surpass 40% at the end of 2022 and beyond.
We plan to achieve that through improving our pricing and our product offering for premium coverage plans and incentives for our drivers with low risk profiles and note two Neal claims history.
Operating expenses totaled $8 5 million in Q4 of 2021 an increase of 2.41 million a 38% over $6 2 million recognized in Q4 of last year.
<unk> Q3 of 2021 reduce operating expenses by 6% in Q4, after reducing them by approximately 10% between Q2 and Q3.
On a cash basis, we went from over 9 million in cash operating expenses in Q2 to $8 1 million in Q3, and close to $7 5 million in Q4.
We are continuing our path towards the level of cash opex of close to $7 million in the next two quarters to enable a breakeven at the lower revenue level.
The Q4 savings, mostly resulting from optimizing sales customer service and marketing spend through are organizing our teams and automating processes.
Along with our focus on marketing efforts toward the reactivation of existing customers.
We have also experienced a gradual return to a more normalized basis of our technology spend as we reach Blackburne development milestones in vitro accelerated growth.
Our adjusted EBITDA continued to improve for a second consecutive quarter ending Q4, the loss of $3 7 million substantially down from the 511 million loss in Q3, and a $7 1 million loss in Q2.
This resulted from our continuous improvement imagine cost of revenue specifically insurance, while at the same time, maintaining sufficient cash operating expenditure and infrastructure support growth at scale.
We expect continuing positive adjusted Avi that trends in 2022 and beyond was increased gross margin reduce upgrading expenditure and economies of scale through top line growth.
Our cash position continues to remain healthy at $14 5 million at the end of Q4 with sufficient liquidity to fund recurring operation during the majority of the year.
While we have increased our current facility was Cochin banking Q3, and Q4, we continued to pursue larger financing opportunities for fleet operators and harcar to create financial leverage and optimize our cost of capital.
Looking forward, we have entered Q1 of 2022 with an improved revenue and profitability mall and further opportunities to gradually improve gross margin with a goal to reach 40% by year end 2020.
We continue to rightsize, our cash operating expenditure to align with our current estimated cash flow breakeven point up 6000, 507000 cars rented on our platform.
Or a run rate of revenue between $65 million and $70 million based on our projected cost structure.
Our primary financial objective in 2022 will be to stimulate car supply to the platform and drive topline revenue growth, while continuing to optimize our cost structure to reach cash flow breakeven as rapidly as possible.
Back to Joe for final remarks.
Thanks Serge.
But to summarize we have solidified our platform and we are focused on creating value beyond our marketplace expanded our strategic partnerships and relationships and are continuing to increase vehicle supply, while more effectively engaging and retaining our drivers. Thank.
Thank you everyone for taking the time to join US for our call. We will look to update our shareholders regularly on the progress we are making with that operator, please let us move to Q&A.
We will now begin the question and answer session.
Ask a question you May press Star then one on you touched on corn, if youre using a speakerphone. Please pick up the handset before pressing the key.
And finally, a question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time lever Cosmo mentally doi Farnborough roster.
Our first question comes from Tom White with D. A Davidson. Please go ahead.
Hi, This is <unk> on for Tom I had just two if I may 1st of all I wanted to know if you can elaborate a bit about the possibility of improving used car supply and hopefully that happens sometime later this year.
I'm wondering what that impact will have on your business and then secondly, I'm curious to see whether you're seeing any impact to your business from the rising gas prices and if there are opportunities or rent related to these higher gas prices and if you could update maybe like you're accurate on how you're helping deploy more electric.
On your marketplace. Thank you.
Great. Thank you telesphere add coming on.
I think maybe I'll take a swipe at those questions and then bringing Brian in surge if you have any.
I'll pass it to you, but so from a from a used car supply some perspective, yeah, we've actually seen prices coming down recently.
I think that that was a function of Oems delivering on their contractual obligations to the rental car companies and then the rental car companies being able to deeply.
But I think that in the near term with stuff going on in Europe .
That we are going to start to see maybe a hardening of those markets and so I'm going to bring in Brian to talk about that he Dow just recently out off of the.
Conference at the M D E, where you've got a fresh perspective on what's happening in the industries, Brian maybe I can turn that over to you.
Sure and tell us who actually have a couple of strategies.
No doubt there is certainly a constraints on vehicle availability, but oddly. We're we've got a couple of unique options that we're going to take advantage of <unk>.
First some of our larger fleets.
Actually use a couple of the car sharing platforms. In addition to higher car and they're finding that one of our competitive advantages of longer term rentals is getting more of them to give us a better.
Yes share of wallet, if you will more allocation of their fleet.
Being assigned to our fleet.
So that's one that's really built in that is a benefit for us.
Secondarily, we have an opportunity with the buy here pay your dealers and this really just the last four days that M. D. A dealer convention, we had a lot of interest where that.
A subsegment of retailers.
Said, Hey, you know I I'm I'm used to dealing with the customer.
In some cases, most cases province subprime.
We read a lot about you we'd like to rent some cars first and.
Then eventually sell them and.
I was able to share with them, we already had a few dealers buy here pay headwinds successfully doing this.
And it really ring imbalance of Gee, there's I know there's over 24000 buy here pay here dealers and that's really an untapped potential and just getting a fraction of that to rent vehicles.
Would be a huge plus so we think it's a great opportunity to make a strategic effort to reach out to these.
Dealers and share with them the incremental revenue opportunity. So that's our another strategy. The other is that.
Vehicles are out there in the marketplace. The new car shortage is probably the most difficult thing and that's not as much of an effect on our business model.
The opportunity we have is with used car.
The used car the average age of the used cars now older but we've got people that need to sell some of their cars because they've got there.
And our fleet owners are finding they can buy them.
And probably that's another benefit the buy here pay here dealer they are less sensitive to the elevated market pricing because they traditionally make money on the loans.
And.
Do you have incremental rental revenue is only a plus we think that with some strategic effort.
We can mitigate.
The car shortage that certainty is out there affecting.
The rental world and then to address your question on rising gas prices.
We haven't I haven't heard a lot of that from our drivers certainly top of mind, especially out here in Los Angeles for gases $556 eight a gallon at this point, but.
So I was.
I would point, you to Uber and Lyft, who are increasing wages a bit.
Q4 compensation of the higher gas prices I think that.
That is something that will continue to be an issue as we move forward, but I don't really see that affecting demand is stronger than ever at this point.
And this is sort of tobacco just add on the car supply I think we talked about potential financing in the past that we're working on different ways to finance fleet at least in the short term and finding profitable economics for our large fleet operators to be able to breed car dedicated platform, we already have some agreements.
And disclosed in our 10-K.
With some of the largest operators, including emerge laugh and we continue to push for.
Bringing more cars to the platform and bring that inventory up as long as the economics are favorable to us that's going to be a key for us to be able to drive towards a breakeven point.
Yes, and then to address their last question on Evs Evs are certainly.
One of our main priorities.
Partnership with spring reviews brought on about 50, 750, 657 electric vehicles up as part of that partnership I think the issue has been that it's hard to find electric vehicles.
And the same with a used car cars as well.
It's hard to find those cars.
At optimal prices.
Yeah, it's a big position for us. So we've said that we're going to we want to Uber and lyft to be fully electric by the end of 2030.
And so we're gonna start taking tangible steps towards that goal as well.
Great a lot of color there. Thank you so much.
No problem. Thank you for the question.
Our next question comes from Mark.
<unk>. Please go ahead.
Yeah, Hi, good afternoon guys.
Wanted to drill down a little bit more on kind of current trends youre seeing so car pricing come in and so do you think there's more cars available.
Financing to bring them onto a platform and then on the demand side, a little bit I know you saw a little bit of a headwind.
On the product Q3, but.
Where do you see that at this point now.
And then lastly, kind of what do you see revenue breakeven at thanks.
Thanks.
Thanks Mark.
Yes, so in terms of car availability.
I think the cars are there it's just they're 40%.
More expensive than they were last year.
And so the way we have addressed that with our larger fleet operators.
Is by trying to facilitate a financing options with them.
Mainly our our warehousing line that we're working on right now.
I think that warehousing line is very close.
As fast as we can in the very very near future, we'll be giving you an update on that.
As part of that financing language swapping about 75 different unique documents.
And theyre marrying a couple of different precedent.
To be clear on that higher cars of third party guarantor on the refinancing.
And so that mean minus the written by written to our large fleet operators.
They're going to go out and buy cars and what they're telling us is that a.
Car prices they were sued in car prices in there.
Kind of buying criteria have trended.
Trended down slightly.
But I think per Brian's comments, I think we're going to start to see them move up a little bit <unk> said, it's profitable.
For them to operate at those.
<unk> for car purchases.
So we're excited about that.
In terms of the <unk>.
Kind of the I'm, sorry, Mark what was the you.
We had a couple of other question that demands.
Yes, I can.
I can address some of the demand, yes, Oh I'm, sorry, so I can address some of the demand I think I think what we've seen and as we mentioned the scripted portion. We did see did you addition rates spiking above 85%, which are you know with a little bit of friction on the platform, it's pretty close to the ceiling that we can see in Q4, which means that we'd been renting as many cars as we.
Can that come onto the platform and as we indicated that we have untapped unsatisfied demand and bringing discarding the platform would be the key to unlocking that and reaching breakeven I think the last question. You had was reaffirming the breakeven point in terms of revenue and we still believe it's going to be somewhere between 65 and $70 million in terms of run rate revenue.
But to get there so we need to double the cars rented on the platform and that current revenue that we experienced in 2021 to be able to achieve that.
Great very helpful. Good luck guys.
Thanks, Mark Thank you.
Okay.
The next question comes from Mike Grondahl with Northland. Please go ahead.
Hey, guys good afternoon.
Just so I can add my bearings, a little bit I think at the end of the three Q. There was about 37 100 <unk>.
Rentals on the platform.
Is that number at year end and roughly what is it today.
Hi, Mike.
In Q4, we had some ups and downs with our active brands I think if you were to average it out it was slightly slightly lower than Q3.
But we more than made up for it with a margin you can take.
Now we've had to do that because it's been hard to find car supply.
With the financing is done that's when we're going to see a real uptick in that fight in the car supply growth.
We have been trending up it's still early Q1, and I don't want to I don't want to pre pre baked those results, but it has been relatively good compared to like Lyft, and Uber, where they're out there, giving upping their guidance as well. So we're excited about what.
Q1 has to look like what starts to look like and then I'm really excited about what Q2 looks like.
As we're getting near to further group finance and warehouse.
Got it and.
Joe maybe help us on that.
If you complete debt financing.
Along does it take before it can kind of grease, the skids and finance some cars for.
Third parties, what do you think if it gets done on X date, how long until its financing cars.
Yes, I anticipate that we would authorize then turn around and have partners by a couple of thousand cars and they'd start adding.
500, 500 car chunks.
On a on a pretty consistent basis.
That partnership.
Leverages, our footprint with our third party partners like pathways et cetera.
That enable us to intake those cars, but what we found.
In the past is that 500 card chunk 2000 car chunk 5000 car chunk.
They are they are they require a certain amount of infrastructure and scale to be put in place and so I think we have the right partners right now to be able to do that we will start really slow and ramp up very very quickly absolutely and I think just to add to that once we have the cost of the platform, which usually typically happens relatively quickly was tightening.
With large volumes typically it takes between 45 and 60 days for our fleet operators to get back to optimal utilization levels with untapped demand in the platform. So if we pick those rights.
Parts for us to look at the cars and we partner with them very carefully we will be able to reach utilization within 60 days after that as far as added to the platform and like Joe mentioned, So I think once we.
Close on some of those financing options will be able to go over it quickly into market in purchasing because of your partners.
Got it in slowing the first quarter out do you think you can add 502.
1000 cars neck.
<unk> Q is that a reasonable goal.
Yeah, I think so I think thats reasonable I think we need to.
It's it's very almost binary based on this guidance.
Financing closes absent.
Financing financing gets delayed a little bit longer it.
It might be a little bit.
Bye bye.
Brian .
No why Brian on the call Mike because.
He is also I mean, he's been chasing that all of these initiatives for the last couple of years and so I think he has a pretty good sense of the market where supply is any com outside of this warehouse in line.
One or two Premier partners, so great Brian what do you see yeah I can add some interesting anecdotal evidence from this we can begin.
We had no we had some dealers do fleet really saw some tremendous opportunities with vehicle valuations.
And this weekend. He said oops, we went too far we had a shorter term view then you should have sold some cars and now we really missed the recurring revenue.
So what keeps me very optimistic about a relatively quick.
The onboarding of cars to grow the fleet is that these owners need the recurring revenue the cars that they sold a few months ago.
And probably celebrated with a glass of champagne profits.
Is quickly forgotten when the monthly recurring revenue dropped precipitously, so they're hungry to get reloaded cars as they get the capital to do it.
And one thing got it in hand with okay.
Maybe I'll let.
I'll, let you finished surge yet, but okay hurdles, we should be aware of to getting the warehouse facility done.
Okay.
Hurdles in terms of.
Well I think I think from our perspective right now it's just the documents are there we just need to review.
The lawyers are going through right now we're running through the steps of opening.
Major evergreen warehousing facility and so that that takes some time.
Got it okay.
Yes, I was going to Oh, yeah, Yeah, Yeah, I, just want to talk a little bit more about long term as well while the warehousing facility. He buy those is to bring cars in the short term be able to bridge that gap and so as conditions in the market that are unprecedented with a car shortage.
As soon as those condition resort will have a lot of organic growth coming back to the platform from dealers for additional opportunities. All these things that are going to come back online, but this warehousing facility and kind of helping us financing partners to grow it's going to be crucial leading short term forget <unk>.
The car supply it gives us some breakeven, let's not forget the long term vision. The fact that we still have a lot of organic growth coming back as soon as we have we grew fastest lull in terms of car supply with all the data that we have.
Fair enough fair enough. Thanks, guys.
Thank you Mike.
Yeah.
As a reminder, if you have a question. Please press star then one can be turned into the queue.
Our next question comes from Jack Lander Rd with Maxim. Please go ahead.
Great.
I appreciate the update gentlemen.
For taking my questions.
A lot of my questions been asked to be honest. So Joe maybe can you talk about your Uber partnership and the application integration there.
Are you seeing any evidence of this driving increased demand from potential rental drivers for higher car solutions.
Well the Uber integration is going as planned I think at this point right now with Uber is looking for is.
R E D contribution and so we're starting to ramp that up.
It's a pretty complicated API integrations, and so where we're moving at the speed.
At this point so.
But where we are seeing for those drivers that do convert through the three of those marketing channels is that a obviously, a lower customer acquisition value and certainly a longer lifetime value.
These are vetted.
Primary leads where we're getting the first look at them where in the past, we wouldnt necessarily be getting first look on the leads they'd be going to our competitors and then they start looking around after they saw that the true cost of what that what the competitors are charging on a weekly basis and then they find higher.
And so you know.
Obviously better leads makes us.
Look at how we can we have the luxury of being able to that those types of drivers out.
Just concerning.
Because I think we are going to start to see more and more of them coming from that channel as we continue.
So.
It's pretty exciting and we have been looking for that partnership for the last five six years that we've been too soon so maybe losing that deal and getting it online.
At least getting a pilot gallium has been really exciting for us.
On standby in the next couple of quarters as we start to really ramp.
Got it that's helpful and then maybe.
Switching gears I'm not sure if there's questions, thus far but gross margin while it sounds like you're on track to get to 40% by the end of 2022. So that's good.
I didn't quite catch what was said about the software or the SaaS offerings. During the prepared remarks. So maybe if you could just please rehash what the SaaS opportunity is and then also does that is that a driver of this gross margin expansion by the end of 2022.
Hi, there I'll take it it's Brian .
So the SaaS opportunity really is products that make it easier for the operators to do business and it lowers their operating costs and meantime, its revenue opportunity for us because we have economies of scale over a large body of owners.
For them do certain things that would be cost prohibitive and.
As you know that.
Anything you can do to improve value for the customer is going to be better for everybody. So.
It's from better driver vetting better.
Areas, where the market areas, where they're frankly have your business.
Things that we can handle is use our data and analytics to tell the customers how to do their business better.
And give them dashboards.
Frankly some of these.
Owners.
Entrepreneurs that arent as sophisticated as big large corporations, and we kind of fill that gap for them and do the heavy lifting and we can be compensated for that at a great value to those owners.
And I think from a financial perspective, I think obviously, most SaaS opportunities have some some upside we haven't fully baked that into our projections. When we think about gross margin. We think about our core business there'll be potentially additional upside and we'll realize that once we're able to validate and and provide a solid business model and that we can scale.
But I think there's definitely value in retaining our top line customers drivers corners by half in the 90, <unk> initiatives, making things that you'd be calling them and at the same time there'll be extra profitability upsides as we as we scale, but right now I think to your question. The 40% margin is focus more on our core business.
Got you. Okay. Thanks, that's helpful I'll jump back in the queue.
This concludes the question and answer session I would like to turn the conference back over to management for any closing remarks.
Great. Thank you operator, and thank you everybody for joining and looking forward to 2022 and.
Making sure that.
We keep all of you informed as we move forward. So I appreciate your time and look forward to speaking next quarter.
Thank you operator.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.