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spk00: Ladies and gentlemen, thank you for standing by, and welcome to the Hire a Car 2020 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press the star and the one key on your touchtone telephone. Please be advised that today's conference may be recorded. If you recall our participants, please press star then zero. I would now like to hand the conference over to your speaker host, Joe Fernavi. Please go ahead, sir.
spk03: Thank you, operator. And welcome, everyone, to our 2020 fourth quarter and four-year 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 HireCar, Inc. Forward-looking statements include but are not limited to statements that express the company's intentions, beliefs, expectations, strategies, predictions, or any other statements relating to its future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company's business based, in part, on assumptions made by management. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors included in our documents that the company files with the U.S. Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to factors beyond the company's 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 will be found in our earnings release and supplemental materials, which will be furnished with our Form 10-K. that will be filed with the SEC and will also be found on the investor relations portion of our website. Now to turn to our annual results. A year ago, in March of 2020, we said, we are living in unprecedented times in our work and home life as we confront the global pandemic of COVID-19. But these times will test and prove the value of our business model as a platform for people and companies to participate, in the rapidly changing transportation industry. Fast forward to today, and these words proved accurate. HireCar's effort to expand the platform by identifying opportunities in prepared food, package, and grocery delivery, and by rapidly expanding our emphasis on delivery in March last year proved to be the right move by our team. As a result, net revenue increased 59% to $25.2 million for the fiscal year, up from $15.9 million in 2019, and rental days increased 63% to $1,014,000 for the fiscal year, up from $621,000 in 2019. I want to recognize the collective efforts of the entire HireCar team. Thank them for their hard work in making this happen and the support of our stakeholders, investors, partners, and advisors during what was an incredibly challenging year. We could not do this without all of your efforts, and we thank you. A main source of higher car strength has been continued robust driver demand. For the year, 15,100 new unique drivers picked up a car on our platform, a 29% year-over-year growth rate. Our expansion to include food, grocery, and delivery, plus our focus on increasing customer retention, drove revenue and rental day growth rates. helping us sustain during the lockdown and continuing to recover as we look to a post-COVID world. As evidence of continued strength in the delivery business, DoorDash and Grubhub said that they are seeing an acceleration in their businesses. One of the key metrics given was their expectation for driver incentives. Their expectation is that driver incentives remain flat for the foreseeable future. which is a good indication that demand for delivery, grocery and prepared food is still strong and drivers are flocking to their sites to earn income. We foresee continued growth in gig rental demand as more consumers and businesses adopt delivery as a service. We believe that the use of these services by a wider audience is sustainable because it represents the acceleration of a trend that COVID enhanced. As a result, TAMs on delivery platforms will continue to grow. For example, Uber Eats grew over 200% year-over-year last quarter, and they've only penetrated 30% of restaurant delivery opportunities in the U.S. Even small independent restaurants have adopted delivery services to serve more customers as evidenced by 70% year-on-year growth in Grubhub's Daily Average Grubs Index, noting an acceleration of adoption in Tier 2 and 3 cities and rural areas. Two-thirds of higher car drivers are now predominantly delivery-oriented, and we see COVID as having accelerated the opportunity in the 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 lanes, alcohol delivery, hemp products, pharma, and packages, For example, Amazon said they are increasing their investment in local assets as they start to reimagine local fulfillment and distribution centers away from airports. Sourcing a vetted supply of drivers in local environments is how we've been able to sustain our growth. And 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, Uber and Lyft have recently said their rideshare business is increasing week over week, and they are having their best week since the pandemic. They have also said they expect increased driver incentives to help drivers return to rideshare and is a great indication of demand as states expand their reopening trends. So as we move into the next phase of COVID, which we hope is full recovery and reopening, the combination of delivery service and recovering rideshare volumes will further strengthen the demand side of our platform. On the car supply front, we are starting to see increased vehicle supply onto the platform from our previously announced partnerships and specialty fleet suppliers. On January 28th, we announced an expanded partnership with AmeriDrive Holdings. That announcement included new relationships with Cogent Bank for innovative financial services, a national fleet supplier, and an automotive aftermarket retail and service chain with over 900 locations nationwide. AmeriDrive is leveraging these locations for higher car AmeriDrive branded parking spaces and vehicle logistics. We're currently operating out of five stores in the southeast and expect to operate in 35 stores by the end of the year. I am happy to say that these new partnerships are delivering the expected increase in vehicle supply. We've gone from an average of a little over 3,000 average daily rentals, or ADRs, in Q4 to sequentially trending toward an ADR average of 3,500 in the month of March, with a run rate of over 4,000 ADRs expected in April, as the first 1,000 cars from this initiative are onboarded and continue moving through the reconditioning pipelines. We did encounter some logistical constraints that hampered our efforts to scale as quickly as we would have liked with our expanded AmeriDrive initiative in March. Record-breaking inclement weather in the southeast, complicated vehicle transportation, preparation, and titling efforts. We fully expect to have our initial AmeriDrive vehicle supply goal reached in April. I believe that we're on a strong and steady run rate that will continue through the second quarter. and will further ramp into the back half of the year as dealer supply and state reopenings accelerate tailwinds. In addition, franchise and independent dealers are experiencing vehicle shortages due to the lack of new car supply and record used car prices. With vehicle purchase demand high, there are fewer retail dealers listing gig rentals than originally anticipated. Part of the unprecedented demand for used vehicles is driven by significant interruptions in new car production due to COVID-related supply chain issues and pent-up demand from lockdowns. This will only get stronger as government stimulus flows through the economy. However, while dealer-sourced vehicle supply is temporarily constrained, we are seeing vehicle platform growth from specialty fleet and rental car companies who want to find other ways to utilize their vehicles. In fact, our internal sales team have been successful with increasing vehicle supply from existing customers. Separately, we're finding incremental revenue opportunities. One opportunity is to leverage our growing customer base to generate incremental revenue. We previously announced one of the first major non-rental revenue initiatives this quarter, our collaboration with the leading automotive research and consumer buying website, Trucar. In internal surveys, over 30% of our renter customers tell us they intend to purchase a vehicle in 90 days or less. I firmly believe that HireCar is in the infancy of unlocking the value from our customers that ultimately buy, finance, and insure vehicles. We are also rolling out a new initiative that will allow us to assist our fleet partners and drivers to get the financing they need to purchase and operate vehicles. As part of this initiative, we launched a new program this past quarter to help customers buy a vehicle while earning income on our platform. The new program is called Earn to Own. We are working with specific financial partners that welcome gig customers and provide competitive financing options that consider our drivers' rental payment history to help them qualify for loans. We believe this is an industry first. The gig driver is a highly underserved consumer and often has multiple barriers to buying and owning a car. A key component was recently put in place with the launch of our first financing partnership, ACC Consumer Finance. And we have other initiatives in development. It's important to state that these initiatives are designed to improve hire car's value proposition for vehicle dealers and provide more reasons for good drivers to rent on hire car's platform. Initial data proves that this program is resulting in longer driver rental periods. We're in the early innings of these initiatives, but by leveraging existing opportunities that have not been monetized in the past, we're looking at these programs as a way to create stickiness to the hire car platform for both owners and drivers. resulting in increased lifetime value and higher satisfaction rates of customers. Lastly, our business development team is incorporating more electric vehicles onto the HireCars platform. It is our goal to join Uber and Lyft in their objectives to be carbon neutral by 2030. Uber has begun to incentivize drivers through additional bonus pay for driving EV vehicles, which enables them to earn up to 10% to 15% more. This is a trend we see accelerating into 2021 and beyond. Additionally, there are significant government incentives for fleet operators and OEMs to include zero emission vehicles in their fleets. These incentives increase the margins for operators on the higher car platform and encourage EV car supply growth. So with that, I'd now like to turn the call over to Scott Brogy, our Chief Financial Officer, to walk us through some key financial elements from the fourth quarter and fiscal year. Scott?
spk06: Thanks, Joe. 2020 was a difficult year in so many ways, but by expanding our platform to rideshare plus delivery, the hire car team was still able to meet the original goal we had set going into 2020 of exceeding one million rental days in the year. Rental days increased 63% to approximately 1,014,000 rental days for the 12 months ending December 31, 2020, from 621,000 for the prior 12 months ending December 31, 2019. For the three-month period ending December 31, 2020, rental days increased by 41% to 277,000 rental days from 197,000 rental days in the prior year's fourth quarter, and sequentially were flat from the third quarter ending September 30, 2020, as the impact of a second wave of COVID was felt through the ride-sharing segment of the business in several of our key geographies through the early winter. Net revenue grew 59% to $25.2 million for the 12 months ending December 31, 2020, from $15.9 million to for the prior 12 months ending December 31st, 2019. Fourth quarter revenue grew 46% to a quarterly record $7 million for the three months ending December 31st, 2020 from $4.8 million for the prior year's fourth quarter and sequentially represents a 3% increase from $6.8 million in the third quarter ending September 30th, 2020. Cost of sales increased for the year ended December 31, 2020, to $16.9 million from $9.8 million the prior year, as insurance expenses continue to account for the majority of cost of goods sold, primarily due to some seasonal shifts in insurance costs to support higher levels of car supply through the winter quarter. We expect new partnerships with the best insurers brokers, and administrators to continue to enhance our program and make HireCar the platform of choice for domestic vehicle operators. As a result, gross profit for the 12 months ending December 31, 2020 was $8.3 million, increasing 38% from $6 million in the year-ago period ending December 31, 2019. Gross profit margin was 33%, for the 12 months ending December 31st, 2020, down from 38% in the year-ago period ending December 31st, 2019, as we accelerated insurance claims to shrink processing time and get more cars on the platform sooner. We continue to expect our gross profit margin to increase to 45 to 50% on a going-forward basis as we improve insurance processes and increased other revenue from high margin subscription and referral income. Operating expense increased to $23.5 million for the 12 months ended December 31st, 2020, from 18.7 million in the same period the prior year, or by 26% year over year. This was primarily due to increased operations, sales, and technology expenses to drive higher business levels and invest in operations and technology, in particular to further accelerate the platform into 2021. After $3.3 million in non-cash stock-based compensation in 2020, up from $2 million the prior year, cash operating expenses totaled $20 million for the year, in line with our 2020 quarterly target OPEX range of $4.5 to $5 million. We anticipate increasing operating leverage into 2021 as we significantly increase revenue, and so we estimate slightly higher quarterly cash op-ex of $5 to $5.5 million in 2021. Our net loss increased to $15.2 million, or 87 cents per share, for the 12 months ended December 31, 2020, from $12.5 million, or 90 cents per share, the prior year. After backing out non-cash items, negative adjusted EBITDA of $11 million was slightly above the prior year's $9.6 million. Cash totaled $4.9 million as of December 31, 2020, a decrease of $5.7 million for the year from $10.6 million at December 31, 2019, and a sequential decrease of $1.9 million from $6.8 million for the prior quarter. We also completed a significant equity financing of $29.7 million last month. So as of today, we have over $25 million in cash and investments in the bank, primarily with JPMorgan Chase. Now I'd like to turn the call back to Joe for final remarks.
spk03: Thanks, Scott. To summarize, COVID has created an expanded opportunity for our platform, and HireCar's performance was a validation that our business model can capitalize new opportunities as they appear. The only gating factor to our growth is car supply, and we are executing on this goal to secure fleet partners at scale in real time. TAMs on delivery platforms are now just as big as the TAMs in rideshare, and this represents an expansion of our platform. Bottom line, we've shown that HireCar is nimble enough for any business environment, and we remain confident that as a driver confidence starts to return and more businesses reopen, so too will rideshare. The combination of delivery and rideshare demand has created merging tailwinds that are driving our business forward. With that, operator, let us move to Q&A.
spk00: Thank you. Ladies and gentlemen, as a reminder to ask questions, you will need to press the start and the one key on your touch-down telephone. To withdraw your question, press the pound key. Please then bow while we compile the Q&A roster. Now, first question coming from the lineup. Mike Rundell with Northland Securities. Your line is open.
spk05: Yeah, thanks, guys. Hey, Joe. It sounds like 4Q had 3,000 cars. March is going to average about 3,500. but it sounds like you got another chunk of cars on late March. So April is going to be about 4,000. So you got that first thousand on. How do you think about 2Q, 3Q, kind of what comes next? Because that's a hefty pace of cars, practically a thousand and a quarter.
spk03: Yeah, I agree, Mike. And hey, thanks for asking the question. Good to hear from you. Yeah, I think that What we said in the script was that we're going to really see a steady run rate and increasing there as they work out the kinks in a lot of the reconditioning pipeline. And so we're in process of adding a tremendous amount of cars. I'm not really comfortable giving specific numbers there, but a steady run rate is what we're on and what we're seeing. I think it gets complicated a little bit with some of the supply chain logistics that are going on in the auto industry right now. But it's a relatively small amount of cars compared to the amount of cars that sell at auction and that are going to be coming out available in the used car market. So I see a healthy run rate there. And I like where we're trending right now. And I'm happy that we were able to really hit the fit the numbers that we had, you know, kind of thought we were going to hit in Q1 at the end of Q1. So, yeah, it's starting to look good and it's starting to work out really well.
spk05: Great. Secondly, it sounds like delivery is robust in that sort of camera opportunity you're leaning into quite a bit. How would you describe ride share? Is ride share at a third of the levels pre-COVID? And do you see that as incremental cars going forward or how do you scope ride share for us?
spk03: Yeah. So right now ride share is about 50% of what it was last year in Q4. And, but we're seeing that they're having their biggest weeks ever post COVID. And so typically we've, trended with them, you know, so as they've grown, we've grown. And, you know, you can kind of see that in the ADR numbers that we reported as well. You know, as more states start to reopen, I think you're going to see more and more ride sharing coming back. The number one use case is, you know, the daily commute for ride share. Number two is bars and restaurants. And Number three is probably airport rides. And all of that stuff looks like it's coming back strong in the next couple of quarters. So it's providing some real tailwinds, I think, for us as delivery remains strong as well. So those dual tailwinds, I think, really push us into the second half of the year. Got it.
spk05: And last question. Are you talking to incremental new fleet managers? Is that broadening out a little bit, your supply of cars, or how would you describe that?
spk03: So we're really focused on commercial right now and what we call commercial supply versus a peer-to-peer supply. higher merit drive and the relationship with the large fleet provider as well as the retail outlets, we're going to look to really leverage that piece of it. But then right behind that, there's two or three other larger specialty fleet operators that are coming onto the platform that are adding that want to start to expand. We see that as kind of like the next phase, and it's additive, right, to our ADR counts. So, yes, there are more fleet operators that we're going to be announcing and leaning into as we really start to ramp up.
spk05: Got it. Great. Thank you.
spk00: Our next question coming from the line of Tom White with DA Davidson. Your line is open. Thank you.
spk01: Great. Thanks, guys, for taking my questions. Just a couple on supply. Joe, I was hoping you could just maybe provide a bit more color on your comments about I think you said the dealer-sourced inventory was looking maybe a little tight. And I guess I maybe would have thought that dealers, at least in 2021, they would be sort of more flush with new vehicles certainly than they probably were last year, just given what happened to OEM kind of production rates sort of at the height of the pandemic. So, maybe just kind of help us understand like what sort of the optimal setup for you guys when it comes to, I guess, dealership supply? Is it when dealers are kind of flush with new vehicles? Is it more, you know, should we sort of be monitoring like used vehicle supply at dealerships to get a sense of, you know, how the supply may come to you? And then just a clarifying question, Do your big institutional supply partners, are those agreements, are you guaranteed a certain amount of supply or is it sort of at the will of the partner, you know, the extent to which they're participating in your marketplace?
spk03: Hi, good question, Tom. So from a new car perspective and a dealership perspective, as manufacturing ramps up at the OEMs, you see a lot of those cars starting to flow onto dealer lots. When those cars start flowing on dealer lots, you start to see a lot more trade-ins coming in. And that should put downward pressure on the secondary markets for used cars. Right now, markets for used cars are at $2,000, $3,000, $4,000 in some cases above adjusted MMR. And so it's What that means is that there's a lot less used cars in the market for those dealerships to put cars on our platforms. So the way we're combating that right now is through specialty fleet, specialty fleet being AmeriDrive and a few others that already have the cars plated and tagged. Historically, there's been four channels of vehicle supply. First channel has always been that peer-to-peer aspect of it, which is shrinking over time. And then you have the dealerships, you have specialty fleet, and you have rental cars. We're seeing the major growth right now on the platform from specialty fleet. And then in terms of the question about the guarantees, we have these partnerships in place specifically with AmeriDrive where They have financing involved there, and that financing is mandated to purchase vehicles and put them on the hire car site. And so you're going to start to see, you know, so from a guaranteed perspective, you know, they've committed to adding a certain amount of cars, and we're going to start to see those cars flowing on. We've already started to see it make a meaningful impact in in Q1 with the ADR growth, and we expect that to steadily ramp and really pick up speed in the second half. As manufacturers start to add new cars or start to roll off the assembly lines, those new cars start to roll off the assembly lines, they hit the dealer floors, and then the normalization of used cars starts to come into play. So it's all connected at this point. But it feels like it's starting to normalize and you're starting to see more and more cars coming on from specialty fleets. So that's what we're seeing now.
spk01: Okay. Thanks for that. That's helpful. Maybe just a quick follow-up on the fleet operator and kind of rental car supply channel for you guys. Sure. I mean, do you guys expect that once kind of leisure travel demand kind of rebounds and presumably demand for rental cars from people going on trips and whatnot picks up, is that going to have an impact on kind of your ability to access, you know, supplies from that channel? I mean, it sounds like you're going to be adding additional partners, so presumably that channel grows, but I'm just curious whether you know, there might be more demand, you know, from leisure travel kind of picking up when it comes to, you know, rental car vehicles or maybe some of the specialty fleet stuff.
spk03: Yeah. Well, certainly, like, it's not, it's something that we've been kind of grappling with for the last four or five years, which is, you know, there's a tremendous amount of demand right now from drivers, both from the delivery side and the ride share side. Um, it's just, it's the ability to source fleet into those and it has to be reliable fleet. Um, and that's why I think this AmeriDrive deal that we announced, um, in January is so important is because it provides dedicated fleet to the, to the platform. And so I think in terms of going forward, as the economy starts to reopen and states start to reopen, you see kind of like a natural course of business, uh, where. Fleet managers are adding cars. You have individuals adding cars. You have many fleet operators adding cars. And so the way I think about it is that's normal course. You're going to continue to see those cars flowing onto the platform, but then you also have these bigger deals like AmeriDrive where it's incremental addition of vehicles. And what we've seen is when those cars come onto the platform, we rent them, right, because that's the amount of demand that we have. And so that incremental add is where we see the growth from the larger partners. So as AmeriDrive ramps up in steady state through the end of the year, as we get more kind of specialty fleet that already have the fleet sitting there and they want to run utilization, that's how we're going to grow. I think what I'm hearing from kind of these specialty fleet managers is they like the utilization of our platform that our platform drives. It's a longer duration of rental versus the leisure that's typically like two or three days. Right now we're running at about 18 days and that's been pretty steady throughout the year in terms of rental duration. And so what that means is less overhead for those fleet operators to have to intake that car, recondition it, and put it back onto the site. So we're starting to see it. We're seeing a lot of basically managers switching over to our platform uh... to uh... to rent those cars and so i i don't see that slowing down as the economy opens i see it only picking up at this point great thanks thanks a lot thanks tom now next question coming from the lineup mark argento with lake street capital your line is open hey joey scott uh...
spk07: just wanted to dig in a little bit on the gross profit. I know, Scott, you mentioned you anticipate getting back to that 45% to 50% level. Is that something you think happens relatively imminently, or what's kind of the ramp to that level?
spk06: Yeah, I think we'll grow into that over the next couple quarters. I think it's going to be dependent on two primary things. We talked a little bit about the velocity of claims payments in late 2020. And again, with car supply tight, a lot of that was to get cars back on the platform as quickly as possible, right, so that we can continue to drive those rental days. So you've got that piece happening, and I think there's been a lot going on around some of the new other revenue sources that we have, and that's both subscription revenue as well as referral income. I know we just recently announced the new true car relationship. So, you know, we think the combination of, you know, returning to more normal levels on the claim side, having brought that now kind of completely current, as well as starting to have some of those other revenue sources kicking in, you've got kind of two levers there to really start to drive GP on a going forward basis. So I think we've got a good chance of getting there over the next couple quarters.
spk07: Do you see that claims issue, is that kind of more one time in nature or is that something that you get to see kind of pop up from time to time or is that something you can kind of make more of a spread over the quarters on a more normalized basis?
spk06: Yeah, I mean, it's a really good question, Mark. I think what we've been seeing is we've put a lot of effort into the front end of the process here in 2021. So I don't think we've formally announced it, but we did have a selection process for a new third party administrator so that we could bring both the PD claims and the liability claims together so that you're having a really efficient determination of responsibility. And then again, dealing with those claims quickly so that you can get those cars back on the platform. I know Brian Allen's been nudging us both repeatedly over the last couple weeks as he gets texts from car suppliers around the country who are really excited about that new TPA process that we've put in place. You know, I think there was a little bit of catch-up that we needed to do to really shrink that turnaround cycle, and we've done that dramatically. And then now on the going forward basis with the improvements in the TPA, I think we're going to see an actual reduction in some of those expenses going forward.
spk07: Got it. And then just getting back to the AmeriDrive relationship, so it sounds like maybe a little bit of a slower start, some weather, but it seems like you got it humming along here pretty good. You know, in terms of the next year, is there any reason to believe you guys couldn't get to that, you know, 5,000 to 6,000 car bogey, you know, 12 months out, or what's your thinking kind of longer term in terms of, you know, kind of fully deployed?
spk03: Yeah, the initial commitment was 6,000 cars, so we're driving towards that, and I'm driving everybody towards that right now internally and externally. We have weekly meetings with AmeriDrive. I'm talking to Carlos over there daily, and Augustine is operator there. They're leveraging... you know, these national fleet suppliers and the national retail chain as well to really ramp up. I mean, we mentioned it, they're in five stores now, but this national retail chain has over 900 stores in the U.S. And so the plan for them is to leverage that footprint and really ramp. And so that's That's what we're doing. This is the year of execution. And I think the results over this first quarter show that we can execute at a really aggressive pace here. So I'm really happy with that. It looks like we've got some really good news to announce in the next couple of quarters. So I'm excited.
spk07: Great. Thanks, guys. Good luck.
spk03: Thanks, Mark. Thanks, Mark.
spk00: Our next question coming from the line of Jack Banderardi with Maxim Group. Your line is open.
spk04: Great. Hey, Joe. Hey, Scott. Thanks for taking my questions. I have mostly financial kind of related questions, and a lot of my questions have been asked already. But I'll start with more of a qualitative question for Joe. Joe, on the new earn-to-own offering – helping provide hired car drivers with a financing option to eventually, I guess, own the vehicle they're renting. Sounds like a great idea. Just for, I guess, clarity, it sounds like you mentioned that you already launched this officially, or have you launched like a trial or beta testing period, or is it out? The real deal is out. It's active and official now.
spk03: It is active and official, and we are actively marketing to drivers right now. The thing I like about that program is that it's a three to four month kind of, uh, uh, financing program or earned to own program where we're given this driver, uh, a vehicle, we're giving them a financing option and saying, and he also has a job, right? Because we know he's an Uber or Lyft driver or a delivery driver. So, um, from, from a risk standpoint, from the financing entity, it's a great risk, uh, or it's a great customer to have. Um, And the duration of that rental is going to be around three or four months. And so that quintuples our lifetime value of a customer. And then at the end, that driver has a car. And I think it's a win-win for everybody in that situation. So I'm excited about that. relatively small. I think we have three or four participating dealers, one financing entity. But I see that really growing fast throughout the rest of the year, along with some of these other ancillary revenue opportunities that we're chasing down right now, including subscription, true car, and earned to own, and some of the insurance affiliate programs that we have going. So between those four or five initiatives, I see that kind of really add into the GP in the future. Great.
spk04: That's helpful. And actually, just to follow up, that's interesting. You said around a three- to four-month kind of rental duration, which, yeah, it's definitely above, I think, your median in the past, been around that 23 days or so. So that definitely will increase, make shift higher, your overall utilization levels. So that's great. And just speaking of utilization, How did those track during the fourth quarter and throughout the first quarter so far? Maybe Scott has answers to that as well.
spk03: Sorry, Jack, we missed that last question. What was that?
spk04: I'm sorry. So for utilization overall for higher car, how did utilization of those overall track during the fourth quarter and how are they trending throughout the first quarter?
spk03: So from a utilization standpoint, you know, pre-COVID, we were trending above 85% post-COVID, dropped down. We were in the low 60s, high 50s, and it's steadily trended up to the point now where I think we're at like around 86% or so, which seems to be, from a utilization standpoint, seems to be kind of like where the overall platform kind of normalizes or levels off. I mean, you look at partners like Ameridrive and some of the others that we've pinned to the top of the search results or are prioritizing the algos for the search results, they're running 90% plus. So that gives you an indication of the amount of demand that we're driving there.
spk04: Gotcha. That's helpful. And that's great. That's great to hear. And then, Scott, you've already been asked about the gross margin. maybe I'll just quickly shift then to a gap OPEX perspective. Um, I think fourth quarter, it looks like it comes out to be about 6.2 million of total gap OPEX. Is this a good base level for us to kind of assume going forward throughout each quarter in 2021, or would you expect anything to shift around increase just given this new car supply ramp?
spk06: Yeah. Um, So, Jack, I think for the full year we came in sort of cash op-ex right around $20 million, which was kind of in that $4.5 to $5 million cash op-ex quarter that we talked about before. We have made some investments on particularly on the sort of outsource sales and support side, leaning in on supporting dealers. We already talked about you know, some of those other incentives. So I think, you know, what we're probably looking at is I think I mentioned we're probably looking at something more in the range of kind of 5-5 quarterly numbers. So instead of 4-5 to 5 a quarter on a cash basis, we're probably looking more at a 5-5 kind of range on a quarterly basis. So ticking up a little bit, we've had some investments on the technology side as well to further automate the platform so that we're in a position to be able to scale faster here in 2021. So I think that's more the range that we think we're looking at. And then if you kind of extend that logic and look at a break-even point from there, you know, you're still going to be in that range where 4,500 cars should get us to break even, as we've talked about in the past. So we took the OpEx up a little bit, but we think the contribution that's coming from those cars, because it's in the right markets, you know, is still going to get us to break even at a kind of a 4,500 daily rental kind of number. So anyway, went a little further with the answer, but I thought that that might have been where you would end up, so just wanted to cover it.
spk04: I'm always appreciative of extra color than less. So, no, I appreciate that. Thank you. I'll jump back into the queue, guys. Thanks. Best of luck in 21.
spk06: All right. Thanks, Jack. Take care.
spk00: So, Ryan, to ask a question, please press star 1. Our next question coming from the lineup, Jess Goldberg with G2, you want to help in?
spk02: Hey, Joe and Scott, how are you doing? Hey, Josh. Good, Josh. How are you doing? Great, great. So, you know, I think it's just really impressive what you've accomplished the last 12 months. And, you know, when you think about kind of the biggest issue post-COVID was this car supply. And here you guys have been able to not only increase your car supply, but also do it at a point where you've been able to raise capital and be so well capitalized to be able to market into this additional car supply. And I think some of the questions that people are asking is, is it true? Is it possible? Do you guys actually raise this kind of cars supply during this time? I think you've made that clear. But I think that what investors are looking for now is just some sort of guidance on how fast these cars will ramp. I mean, obviously, the fact that you're increasing your OpEx and that you've gotten confidence from your partner that they're going to try to get to 6,000 cars by the end of the year, it seems like the analysts ramp. from the first to the second, and then really specifically to the third and fourth quarter, seems like the right way to go. And I'm just curious if you can either, number one, talk about, you know, the time and effort to kind of get them up to speed now in terms of AmeriDrive and how it's starting to ramp and the initial kind of feeling in terms of how it's responding. And then really more importantly, you know, to Mike Grondahl's question about the ramp, through the back half of the year. Maybe you could talk a little bit more about that, and then I have a follow-up.
spk03: Yeah, maybe a couple of different angles on that piece. You know, we're starting to see green shoots with all of these states opening up, right? So general trends are that ride-sharing is going to continue to really ramp, and that provides a tailwind for us. And so as I think about it, you know, I think I see the demand kind of come in in late summer, fall, and really sort of ramp through the year on that side. And so the way we kind of think about it, you know, steady state, maybe incremental ads for the first, you know, for this next quarter. I mean, we're already done with Q1. It's crazy. Right. Now we go into Q2, steady state, and then really ramp in the back half of the year. Because I think not only do you have the great shoots, but the second kind of angle is to look at it from the used car angle, which is we see probably used cars starting to normalize in the third quarter and fourth quarter. And as that starts to happen, it's a lot easier for not only AmeriDrive, but also all of our other partners that are in the market buying, you know, used cars to add, create at scale, um, and really start to, and really start to add into, uh, into the, uh, the market, you know, and add, add cars onto our marketplace. So, you know, those kind of dual.
spk02: So the confidence you have, the confidence you have in terms of this, uh, 2021 ramp is, is you feel better now than you probably did even a few months, a few weeks ago before the, uh,
spk03: Yeah, there's always some uncertainty when we're rolling out these big partnerships, right? But I think that the fact that they were able to kind of acquire these cars and run them through the pipeline, it's always like the first 100 cars are tougher than the next 900 cars. And so I think we were able to figure out all those logistics. We had people in market, all of our account managers working with all hands on deck, really ramping these guys up into kind of the second half of March. And so that's where, you know, I'm excited that we were able to do that. I'm really starting to see that ramp and, you know, going from there.
spk02: Okay, great. And then a second question for Scott, and really I think you guys did a really good job on the presentation, the press release, talking about different highlights that you've had. You did not report the weekly rental days in the press release, and I'm just curious if that's your plan going forward. On the press release, though, you did add something talking about new drivers on the platform that was up 29%. Can you just give us some clarity on what that metric is? Why did you decide to include it now going forward, and if you plan on not having the weekly or monthly days anymore? Thanks again.
spk06: Sure. Yeah. Thanks, Josh. And maybe I'll start with the weekly piece and then Joe can hit on the new driver piece a little bit. But the weekly granularity was really critical a year ago, early in COVID, right? As we saw that first fall in March of 2020 and then started to rebound into April, right? Because we wanted to provide that kind of visibility that you know, we weren't down 80 or 90% like other people in the sector were. So we felt that was really important. But, you know, I think we're now getting back into a more regular cadence. And, you know, we would typically look to share out information on a monthly or quarterly basis. So that's really the thinking, you know, now that we're stepping into, you know, wrapping up 2020 and heading into a new fiscal year that, that we would be more on a kind of monthly to quarterly cadence moving forward. And then I know the number you were talking about.
spk02: Sure. Yeah, just one thing on that. You know, I just want to make sure I heard that right in terms of in your script. Even though you're exiting at 3,500 cars, you didn't have the entire quarter at 3,500 cars. I just want to make sure I understood that. And then you said you're going to exit April at 4,000 cars. So it probably means that your second quarter is going to average above 4,000 cars. I just want to make sure I have that right, that the first quarter will be below 3,500 cars and very possibly the second quarter will be above 4,000. Yes.
spk03: Yes. You got it.
spk02: Okay. Because as you explained it the first time, I don't think it was clear that way.
spk03: Right. Yeah. Well, and so when we say an average of 3,500 car run rate in March, you know, it's, a good chunk of those cars are coming on the second half of March. And so, uh, you know, you're not going to see, you're not going to see all of it. And in terms of a run rate for Q1, but, um, you're, you're definitely seeing the, uh, the increase in those cars as we've kind of opened up the funnel there once we, once we figured out all the logistics. So, um, that's, that's how we think about the cars going forward. And then, you know, in terms of the, um, the new drivers on the platform. The reason is specifically, well, we've given those new driver metrics in the past, but the reason I wanted to highlight it up above is because a 29% increase compared to a 60% increase or so in revenue, it tells you that we are doing a better job of targeting and marketing to leads that are going to remain sticky on our platform and have higher kind of basket sizes there for rentals and rental days. So that's one point of why I'm highlighting that because I think marketing has done a really good job of kind of using the magic of AdWords and Facebook to kind of drive new sticky customers. And then from a kind of a risk underwriting perspective, I think we're doing a better job at bringing in customers that – are going to be good drivers and aren't going to drive up, you know, expensive physical damage bills, et cetera. And so those two and that number of 29% growth really points to the fact that of all the hard work is really exemplary of all the hard work that the marketing and technology and product and operations teams are doing there. So that's why we highlight that number.
spk02: Okay. It sounds like it was a bigger number than it was the rest of the year.
spk03: Right. It really ramped into the second half, right? And it's continuing to ramp into the first quarter.
spk02: Okay, great. Thanks again, guys. Congratulations. Thanks, Josh. Thanks, Josh.
spk00: I'm showing off for the questions at this time. I would now like to turn the call back over to Mr. Joe for NaviPro closing remarks.
spk03: Well, thank you, everyone, for joining us, and I'm looking forward to future calls as we continue to execute on the plan through 2021. And we put 2020 behind us for good, which I think a lot of people are happy about right now. So I appreciate it, everybody, and thank you for being on, and we'll talk to you soon.
spk00: Ladies and gentlemen, that's the conference for today. Thank you for your participation. You may now disconnect.
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