Q3 2022 Arcimoto Inc Earnings Call

With our restructuring plan, which has decreased our overhead considerably Arca motto continues to demonstrate quarter over quarter increase sales and reservations showing a path towards profitability.

We have focused our efforts on the SUV and the delivery of <unk> and continue to deliver a product that is ultra efficient fun and cost effective to customers.

Our customer experience team has had their best quarter ever demonstrating that our funnel, which includes ads customer finance test drives rental sales delivery and service is working well.

We're going to meet with founder Mark Frohnmayer, but first I met with some of the executive team and we discussed how we've achieved these accomplishments.

I want to start with when yogurt to share some of the great news that we have with our customer experience. Thank you Jackie.

Sure as we started this quarter, we shared last quarter that we went in going in with 41 in the backlog we ended up delivering 74 vehicles on the quarter.

<unk> 48 in backlog going into this quarter as well one of the things I want to note around that is what we're seeing is 20% of our.

Sales actually came from rental lead.

This last quarter, we had a significant increase in our our drive to order conversion whether that be from me a demo drive at an event or from renting a vehicle and we are still able to pace a nice conversion at a 5% conversion this last quarter, even with significantly increasing our volume so we actually had 111%.

Increase in our in our demo drive that rentals this last quarter, which has been great.

Had close to 2700 drive we hired ownership advisors that have just started this last quarter to really focus on individual customer experiences to ensure that we're able to have that one on one time.

And we've also done a lot around our advertisement and engagement and storytelling through social channels through our advertisement campaign.

Through a variety of different engagement tool that we have we've implemented a really great CRM program. So that we can understand customer behavior target. The right audience is making sure that we're focused on.

On the customer that's that's really ready to move forward as we sort of nurture some of those new Orleans that we're having into the database.

And we implemented a customer financing on our vehicles and it's something that folks had wanted to see for a long time, yes, okay sure.

I am excited about our relationship with Freedom Financial Road, we have other options that people can use for third party financing. However, they've been a really great partner. They are very flexible terms up to 84 months flexible payment down we're also ready to 199%.

Special on rates right now.

Two biggest things for people to move forward with a vehicle purchase of any kind is being able to pay for it.

And also making sure that they have driven it and they they love the experience.

Especially when it comes to a three wheel vehicle. This is not something that anyone has necessarily X series before and so it was really hard to sort of envision what that right is going to be like as many videos and pictures is we can send people. It's just not enough and so I think it's important that we make it really easy for the customer to purchase the vehicle and experience it.

Nicole and that's what we're really focused on right now in our engagement.

I think probably the most exciting parts of automotive story right now.

The team has increased our <unk>.

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Over quarter can you go into some detail on that.

Yeah.

So this last quarter, we had an 80% <unk>.

Greece in delivered vehicles quarter over quarter, which was a very significant quarter for us. It was also our largest delivered a quarter that we've ever had as a company.

I think it's important to note and I you know I.

I see chatter out there. The question is about the our volume and I think it's important to know that this is our first full year of full production in our new facility pastor person adopter of deliveries and really looking at how we scale the demand and how we reach all of our preorder customers as well as new customers in our funnel.

I also think it's important to clarify you know what our backlog. So backlog means these are hard nonrefundable orders that we're going into the next quarter that we are planning to deliver them. This last quarter, 89% of those vehicles and that sort of non refundable state delivered the previous quarter was 95% so as.

We scale, where we will see that shift a little bit. However, that's not necessarily just the pre order backlog, which is a different funnel altogether. Those are really kind of hot leads like obviously it shows some level of interest and seriousness to purchase. However, we're really looking at what is our hard sales that were delivering on it.

How do we increase that funnel.

As we go into the next quarter had what what tools that we put in place.

I've been to helping you guys convert.

Customers and also.

Give us more insight on who our customers are so our CRM program that we put into place. This last quarter has really helped us understand that consumer behavior.

We have a pretty healthy database of people that are interested and fans of the brand.

<unk> are people who are.

Past rental customers people, who want to sign up for our newsletter and understand what we're all about what were doing.

However, most of those people have not experienced vehicles, we take the time to understand the customers. We can prioritize people differently based on.

What their timeline looks like if they want to drive now that they've already driven.

Theyre looking to get out of the vehicle before they.

Purchase of Faas.

If they live in a state that we're not open yet and how do we keep them engaged until we opened that statement and how.

How do we engage with new audience of the new states that we just opened since most of our our efforts have been focused in on the West Coast States prior.

Really looking at how we can be very strategic with how we reach our customers and how we create curated experiences depending on their interest in our.

Product.

I think part of the funnel that I've been most impressed with is the backlog of people who have applied for financing.

Backlog of people, who have requested test drives it seems like thats a different type of customer right customer. That's at a show season article model for the first time and we're doing you know.

Since you campaign, right and they rip around and we get their information there a certain type of we've got somebody who is reaching out to our komodo and saying I want to try this vehicle because I'm somewhat interested in actually purchasing it correct I think that's yeah.

Incredible backlog that you guys have created when another part of our business with key and something that is a market opportunity for automotive is our rental campaign can you go into detail about how that's doing right now happy to we had a really great quarter last quarter in rentals.

On a quarter over quarter, we almost tripled our revenue in.

In our rental partnerships and programs that we have and then we more than doubled our rental volume quarter over quarter.

And I wanted to actually talk a little bit about rentals, because there's a lot of questions about rentals in our strategy.

Not a lot has changed from our strategy from three months ago to now and I wanted to kind of do that again.

Just talk through restructuring our rental program and looking at the heavier opex.

Programs or pilots that we've done.

And kind of shifting those around two asset light partnerships and programs.

<unk> at channels for partnerships that really have established businesses that we can leverage their reach.

And also their expertise within that industry.

Looking at our own operations for example, we open Hawaii August 20th last quarter.

You know, we're kind of getting ourselves license as well and really wrapping up the experience on the island and that's a really great opportunity for us as we look at expanding within the island and our engagement there.

And what we're really seeing not only is it driving sales for us it's driving brand awareness for us. It's a really great approach for us to be able to use it as a marketing channel as well as an experiential channels. So our goal is to not only have a revenue stream coming for rentals as we sort of right size, what those partnerships and programs look like and haven't.

Its own entity of the revenue stream, but also leverage it for them.

Sales as well as brand awareness and engagement and so we're really seeing that start to take off.

In the programs that we have currently and then as we look at where we go for a new market.

Those are things that we're considering as well.

What's the percentage of people that participate in the rental that ended up purchasing the vehicle.

The last quarter, we had 20% of our orders came from rental leads we talked a little bit about the lag time as far as experienced the order and so there's.

A range of people some people do order right away for people. It takes a year. Some people. It takes four to six months. So on average we're seeing like kind of this four to eight months timeframe from when you first experienced the vehicle. So when you maybe move forward it actually make a purchase so.

Right now year to date, we have converted about 6% of those into orders on average on a rolling average.

But as we continue to grow that funnel.

Normally that would start to come down a little bit because youre right sizing a little bit, but we're still.

For a follow up.

Danville demo drive how do they actually explored purchase opportunities versus.

Sure.