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spk00: Ladies and gentlemen, thank you for standing by, and welcome to the first quarter 2021 earnings call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 in a telephone keypad. Please be advised that this conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, John Evans, Investor Relations and Corporate Development. Thank you, sir. Please go ahead.
spk09: Thank you, Operator, and welcome everyone to our 2021 First Quarter Earnings Conference Call. Before we get started, I'd like to take this opportunity to remind you that during this call, we will be making forward-looking statements within the meaning of federal securities laws regarding Hire a Car, Inc., Forward-looking statements include but are not limited to statements that express the company's intentions, belief, 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 risk 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 can 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, expect 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-Q that will be filed with the SEC and will also be found on the investor relations portion of our website. Now I'd like to turn the call over to our CEO, Joe Frenari. Thank you.
spk05: Great. Thank you, John. And welcome, everybody. I am pleased to say that HireCar had a record quarter. The combined tailwinds of loosening COVID restrictions, increasing vaccination rates, higher ride share demand, and stable delivery demand pushed our business to the highest quarterly revenue in company history. We are now a stronger, more efficient company, and this is reflected in our results. Our net revenue increased 29% to $7.45 million for the quarter, up from $5.8 million in 2020. And rental days increased 31% to approximately $300,000 for the quarter, up from $229,000 in Q1 of 2020. We continue to see robust driver demand. For the quarter, we saw a record 5,400 new unique drivers pick up a car on our platform, a 14% year-over-year growth rate. Our expansion to include food, grocery, and delivery, plus our focus on increasing customer retention, drove revenue, and rental day growth rates, and should be additive to the continuing recovery and ride share to our delivery drivers as we look to a post-COVID world. Two-thirds of hire car drivers are still predominantly delivery-oriented, and we see COVID as having accelerated the opportunity in local delivery as a service environments. 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, like alcohol, pharma, and package delivery. Sourcing a vetted supply of drivers in local environments is a key factor in our sustained growth. Strong delivery platform demands suggest higher car driver economics will remain attractive, creating a sustainable environment supporting larger and larger driver pools. In addition to gains from delivery, both Uber and Lyft have recently said their rideshare business is increasing week over week, and they are having their best week since the pandemic. Uber alone said they expect to increase driver incentives to the tune of over $250 million to help drivers return to rideshare. Our drivers are expressing higher hourly earnings as ridership demand increases as well. So as reports of a full reopening are being announced, recovering rideshare volumes will further strengthen the demand side of our platform. And as a result of increasing driver demand and fewer driver alternatives, we are experiencing incremental margin pickup in our daily rates. It has been heavily covered in the media that rental car prices have shot up and franchise dealers are experiencing vehicle shortages due to the lack of new car supply and record used car prices. Combined with surging driver demand, this has created an opportunity for us to implement a dynamic pricing model that should take us from a daily take rate of $24 to $25 historically to $27 to $28 per day starting in Q2 and growing through the rest of the year. In our preliminary revenue test, we've been able to implement these changes without affecting our rate of growth. Dynamic pricing combined with increasing gross profit from normalized claims and increased affiliate revenue puts us on a chart to reach EBITDA neutral in the second half of 2021. On the car supply front, we're enjoying increased vehicle supply onto the platform from our previously announced partnerships and specialty fleet suppliers. On January 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 hire car, branded parking spaces, and vehicle logistics. AmeriDrive is currently operating out of seven stores, up from five, in addition to a 200-car overflow lot to help with in-fleet recon. This rollout with AmeriDrive is a clear template we are planning to replicate in additional markets with the next market slated to open in two weeks. We've gone from a little over 3,000 average daily rentals in Q4 to sequentially trending toward an ADR average of 3,500 in the month of March with a run rate of over 4,500 ADRs expected in May. 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. The success of our AmeriDrive partnership has opened additional opportunities to significantly grow vehicle supply over the next 12 to 18 months. We are actively working on initiatives to enable the onboarding of cars for our partners who manage cars at scale. As a company, we want to supply up to 16,000 cars, both gas and alternative fuel or EV vehicles, into the market by the end of 2022. Our conversations with our partners make it clear that the market will continue to grow, and HireCar intends to be the leading vehicle supplier for the gig economy. In addition to our core business, incremental revenue opportunities continue to expand. As previously announced, we have started initiatives to monetize our extensive customer base with additional income opportunities that complement our core business model. Our formal partnership with a leading automotive research and consumer buying website, Trucar, is our first major non-rental revenue initiative. Thousands of our customers are now engaging with Trucar on a monthly basis. We are in the very early stages of introducing the hire car auto buying program message to our customers, but we are now profiting from what was a lost income opportunity previously. In addition to the incremental revenue from this initiative, we're gathering valuable data from our customer behavior and discovering opportunities from other revenue streams. Bottom line, I believe that HireCar is still in the infancy of unlocking the value from our customers that ultimately buy finance and insure vehicles. Also consistent with the theme of unlocking customer value, the Earn to Own initiative we launched last quarter with our financial partner ACC Consumer Finance is starting to gain traction. Our expectation that drivers will stay in the car longer if they have a milestone to reach is proving accurate. Drivers in the program are averaging over five times more rental days than our typical driver customer. So we look forward to reporting more on this later in the year. Another exciting growth strategy is our opportunity with electric vehicles. And we continue to incorporate more EV driver demand onto HireCar's platform by educating drivers interested in maximizing earnings through EV while reducing their carbon footprint. As previously mentioned, it is our goal to join Uber and Lyft in their objectives to be carbon neutral by 2030. In addition to the driver benefits of this EV initiative, 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. As the acceleration of EV cars roll off the assembly lines from major OEMs we see an opportunity to be at the forefront as a primary supplier of EV cars to rideshare drivers. 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 first quarter. Scott? Thanks, Joe.
spk04: The first quarter of 2021 was one of the significant changes for HireCar. We continued to grow car supply to get us over a 1.2 million annualized rental run rate, and completed a $30 million equity financing at favorable valuation terms to top off our cash reserves and allow us to pursue a bigger set of opportunities. Rental days increased to over 30,000 rental days for the first quarter, or a run rate of 1.2 million rental days, up from the 1 million rental days we recorded in fiscal 2020. For the three-month period ending March 31, 2021, rental days increased by 31% to over 300,000 rental days from 229,000 rental days in the prior year's first quarter, and sequentially increased 9% from the fourth quarter ending December 31, 2020, as weather and supply conditions remained challenging in several key northern geographies. Net revenue grew 29% to $7.4 million for the three months ending March 31, 2021, from $5.8 million for the same period the prior year and 6 percent sequentially from $7 million for the three months ending December 31st, 2020. After holding steady on pricing for several years, we tested and then enacted some pricing enhancements early in the second quarter to both our driver and insurance fees to better reflect the new competitive environment and align reimbursement rates with new driver risk scoring data. The combination of these two pricing elements should drive significant net revenue and gross margin improvements through 2021 and increase our daily average net revenue from the $24 to $25 a day we've seen historically to the $27 to $28 a day range. Cost of sales increased for the quarter ended March 31st, 2021 to $4.7 million from $3.6 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. Accordingly, gross profit for the three months ended March 31st, 2021 was $2.7 million, increasing 26 percent from $2.1 million in the year-ago period ended March 31, 2020. This is an improvement from last year's gross profit margin of 33 percent for the 12 months ending December 31, 2020, and flat sequentially from 37 percent in the first quarter of 2020. Due to the second quarter pricing changes, we expect our progress toward the gross profit margin near-term goal of 45 to 50% we have discussed previously to accelerate. Operating expenses increased to $9.9 million for the three months ended March 31st, 2021, from 6.3 million in the same period the prior year, or by 59% 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. Cash operating expenses totaled $6.1 million for the quarter after backing out $3.8 million in non-cash stock-based compensation from equity incentives. We estimate slightly higher quarterly cash OPEX of $5 to $5.5 million going forward in 2021 from what we've seen historically. Adjusted EBITDA improved to negative $3.4 million or negative 18 cents per share for the three months ended March 31st, 2021 from negative $3.3 million or negative 20 cents per share the prior year ended March 31st, 2020, and sequentially improved from negative $11 million or negative $0.62 per share in the prior year ended December 31, 2020. Cash totaled $25.5 million as of March 31, 2021, an increase of more than $20 million from the $4.9 million at December 31, 2020, and an increase of approximately $18 million from $7.8 million from the year-ago quarter ending March 31, 2020. Now I'd like to turn the call back to Joe for final remarks.
spk05: Thanks, Scott. So to summarize, HireCar is carrying our growth trajectory into the second quarter and enjoying the tailwinds of the pending full reopening of the economy. Our partners are stepping up to deliver the cars they agreed to deliver despite the tight car sales markets. We're seeing pricing opportunities with the current competitive car availability environment, which should add incremental margin gains and help us move towards EBITDA neutral in the second half of this year. And we're leveraging opportunities for additional revenue streams. The bottom line, the future is bright as we continue to execute our growth strategy throughout the remainder of the year. So with that, operator, let us move to Q&A.
spk00: As a reminder, to ask a question, you'll need to press star 1 in your telephone keypad. And to redraw your question, please press the pound key. Again, as a reminder, to ask a question, please press star 1 in your telephone keypad. To redraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mark, our guest here from Lake Street. Your line is now open.
spk10: Hey, guys. Congrats on the solid quarter. Just a couple quick ones. First on pricing, can you talk about the dynamic pricing project and then how aggressive you are going to be in terms of rolling that out?
spk05: Yeah, absolutely. Thanks, Mark, for calling in and giving the question here. With the dynamic pricing that we rolled out, we're doing a couple of things. We're looking at the risk underwriting data that we've accumulated over the last five years, applying that to current leads and geographies, and then coming out with a pricing matrix that we think accurately reflects the risk of that driver segment. So we see some real upside there. That's number one. And then number two, just given that some of the competition has fallen off, we're seeing an increased demand from leads. And that increased demand is enabling us to raise those prices a little bit. So that's kind of how I think about it. Scott, maybe you want to add in there?
spk04: Yeah. Completely agree with that. And then just wanted to add that we actually went ahead and went live with that in April after doing a lot of analysis on the sensitivities out there. So that's already being reflected now as we've moved into May as new renewals come online. So moving forward through the balance of 2021, you're going to see that pricing really start to have a pretty dramatic impact on our contribution per day.
spk10: Is that something that you've implemented across the platform, or are you guys doing market by market?
spk04: We tested in a few markets, honestly, Mark, first to gauge the impact, and then recently went forward with changes to both the driver fee as well as some of the other elements in the pricing. So that has gone effective nationwide.
spk05: Yeah, and to Scott's point, within the unit economics of fees, like there are multiple levers that we're pulling now, so we're playing with them depending on the different geos.
spk10: Great, that's helpful. And then just the last one for me in terms of the uptake and the onboarding of vehicles from the AmeriDrive partnership, maybe talk about kind of where you are in terms of that first tranche of cars and how you see that cadence throughout the rest of the year. Thanks.
spk05: Yeah, I see that they're still on that run rate that we had spoken about in February. I think we got a lot of the bugs figured out and kind of as mentioned in the script, we're looking at launching the next geography starting June 1. So, I'm really, really excited about that because I think that's a template that we've established that we could really start to replicate in probably our top 30 geos. So it's going to be exciting to see it really roll out. And AmeriDrive has ended up being a really solid partner. It's the partner that we thought they were going to be, that we knew they were going to be, along with you know, kind of all the affiliate players that are around there, including Cogent and, you know, the national retailer chain. So, yeah, it's really exciting. So we're moving on to phase two, which is launching the new geo.
spk10: Great. Thanks, guys. Thanks, Mark. Thanks, Mark.
spk00: Our next question comes from the line of Mark Rundle from Northland Securities. Your line is now open.
spk08: Hey, guys, congratulations. A couple questions for me. First off, I think you said in March you averaged 3,500 average daily rentals, and now May you're kind of projecting 4,500, so we kind of see that lift. Joe, can you kind of describe what you meant by the 16,000 cars at the end of 2022, is that a goal? Is that kind of based on the fleet managers you're talking to, you feel you can get there? Just if you could provide a little bit more detail there.
spk05: Sure. Yeah. So what I see with kind of the reduced competition in the market is that there's about 60,000 cars nationwide that have left the market in this environment. And as you're seeing the tidal wave of demand coming back from the ridership side, there's an opportunity right now with the people we're talking to to add those 16,000 cars in. So I don't want to imply that that's guidance, but I do want to say those are the conversations that we're having with all of the partners that are coming on and that we're talking to. And so we're looking to support that by building capacity into our customer service programs, the call center, all of the technology heads that we've added in. So that's kind of what I'm talking about when we're saying 16,000 opportunity.
spk08: Got it. Got it. Yeah, because, you know, it's basically four times where you're sitting right now. So that's a lot of growth potential.
spk05: Yeah. Yeah. And that's, that's the, with the, what we have in front of us right now with our current, that's what we, that's what we're going to target.
spk08: That's in front of you right now. Okay. Yeah. And then just on the pricing, the $27, $28 to hire car a day. When, when are we there? Are you saying you're there? now or you'll be there July 1st? How do we roll that into our models?
spk04: Yeah, I mean, you know, it gets introduced into a new rental starting in April, right, beginning of Q2. So to your point, I mean, I think as you move into the, you know, back half of the second quarter, which will really start, you know, next week, you'll start to see more and more of that weighted effect. So I think it might actually be a little bit sooner than that. So you're actually going to see a reasonably significant impact to Q2. And look, there's a few renters out there that might rent for longer than three months. But yeah, it should basically be 100% in for the full second half of 2021. Does that help, Mike?
spk08: Yeah, it does. It sounds like it's coming really quick. Yeah. Yep. You guys have a bullet point, you know, cost per booking decreased 39%. Is there a way we can translate that into gross margin or, you know, 39% is a big decrease. in I think getting a driver through the marketing phase and boarded. How do we think of that as sort of a gross margin benefit?
spk05: It's more of an OpEx benefit, right? Not necessarily a GP benefit. I think from my perspective, and maybe Scott can chime in too, my perspective is what that's telling you and what we wanted to convey is that There are more drivers coming onto our platform organically, and I think we're doing a better job at targeting leads, and so you're starting to see more and more people coming on. There's a couple of tailwinds there. You have less competition. You have a higher and elevated presence with our TNC partners. You have less people renting cars for delivery. So there's a lot of things kind of driving those extra leads coming through. And then on the flip side, we're doing a really good job of converting them. And so you're seeing that with the increase in leads, you're also seeing an increase in conversion rates, which ultimately drives revenue through conversion of new unique drivers to the platform. So that's how I think of it. Yeah.
spk08: Got it. And then maybe lastly, up until recently, you guys were stuck at 3,000 cars as you kind of went from the peer-to-peer to the commercial model. And now in May, it sounds like 4,500 cars. What level do you think you need to be between 4,500 cars and 16,000 cars to get Uber and Lyft's attention? You know, at what point do they say, oh, my gosh, Higher Car's got all these cars. You know, let's talk.
spk05: That's a really good question. I think that we have everybody's attention now with the AmeriDrive deal and a True Car deal with this alternative revenues. It's just it creates a branding, a quality of brand around Higher Car that enables people other, you know, not only, you know, TNCs, but also manufacturers, OEMs, and larger dealer groups to look at us and say, you're a public company, quarter of a billion dollars, and you have all the, you're establishing these partnerships. So, we have some real kind of brand equity that we've established through these partnerships, and that, I think, is getting everybody's attention up at this point.
spk04: Yeah, I definitely agree with that. I think You know, one of the themes that I got out of Uber and Lyft's quarterly earnings call last week is that both have now divested of their autonomous driving divisions, and I think they're now more open to thinking about new ways that we want to partner to get car supply because they don't have this solution coming down the road internally anymore, right? I think on the EV side in particular, they seem to be moving a lot more quickly, so that's very exciting for us.
spk08: Great, guys. I'll jump back in queue. Thanks.
spk00: Our next question comes from the line of Tom White from DA Davidson. Your line is now open.
spk01: Hi, everyone. Congrats on a great quarter. This is Tevis Robinson on for Tom. If I may, I'll have one question and one follow-up. So first, recently we talked about the Uber and Lyft earnings that happened last week, and they talked about investing and growing their driver's supply. Can you talk a bit about what that means for your business and how you guys might be able to ensure that it's really your vehicle supply that really benefits from this instead of any competitors? And then I have a follow-up after that.
spk05: Good question. So if you look back on how they have, both Uber and Lyft, how they have driven driver incentives, they've done it kind of like a two-pronged approach. and this was really back in 2017, 2018, 2019, pre-IPO, where they were driving through affiliate. So a driver refers to another driver or their affiliate partners are signing drivers up. And they were giving money to the affiliate that was signing them up. And then the second piece was they were giving driver bonuses for drivers hitting certain ride incentives. And it sounds like in listening to their calls last week, that they were both going to be reinstituting those programs. And that is really, really good for us. We were, I think, probably the number one affiliate of Lyft when they were running those programs. I anticipate being a very strong affiliate partner for Uber as well. And so that is under the umbrella for us, under the alternative revenue umbrella that just drives our gross profit margins up and why Scott and I are pretty comfortable being at that 45% to 50% GP margin. So that's how we're planning on doing that.
spk01: Awesome. And then for my follow-up, I was just wondering how we should think about the likelihood of ramping up new car inventories later this year. And maybe, like, just share a few of your thoughts on how you expect that supply channel to grow through the remainder of this year.
spk05: Yep. Yeah. So, from a ramp perspective, you know, AmeriDrive is really the game-changing announcement for us in that they are going to ramp. They have the financing available to ramp, and they know how to buy cars at scale. So... That's going to be our incremental growth through the back half of the year, along with three or four other partners that we're talking to that also want to scale very quickly. And those partners will be future announcements, I believe, but they're also talking about large, large lump sums, chunky supply onto the marketplace. And so... That's part of why I'm comfortable talking about 16,000 cars, because that's the narrative. You add it all together, that's where we're getting those cars from, from the fleet suppliers that we currently have. So it doesn't include the supply that is going to come in the future with deals that we don't know about yet, so. That's how we're looking to grow. I think we're going to support that by increasing our account managers, account executives in market to provide white glove service. Recently rolled out a new TPA to really aid in speeding up the claims process for our vehicle owners so they can get those cars back on the road quickly. So that's an exciting piece. and also ramping up some of the organic channels to see really the car supply growth through those channels as well. So that three-pronged approach is kind of how we're attacking it throughout the rest of this year and into 2022. Great.
spk01: Thanks for taking my question.
spk00: Yeah. Our next question comes from the line of Jeff Vander Arde from Nexum Group. Your line is now open.
spk03: Hi, this is Albert. I'm talking for Jack. First of all, congrats on your quarter, and thanks for taking my question. I just want to start with the assumption on the weekly average rental fee. I believe historically it was about $35. With the new dynamic changes to the pricing, do you see any changes to that happening or any trends going forward?
spk04: Yeah, I think you have to remember that the daily rental rate on our platform is actually set by the car owner. So the $35 or $36 that you're quoting, we get a percentage of that through both an owner fee and a driver fee, and then we have an insurance fee. So basically, when you net those three revenue elements out, historically, hire a car is at a $24 to $25 a day rate. net revenue take out of a total gross transaction of let's call it $55. Well, with the pricing changes that we just rolled out in April 2021, we see that increasing from that $24 to $25 range to more like a $27 or $28 net range. So it's a pretty significant increase on a net revenue basis. And that pricing increase along with the higher volumes that Joe's been talking about, will give us kind of a double impact on the net revenue line in Q2 and through the balance of 2021. Does that make sense?
spk03: Yep, that was very helpful. Thank you. And I guess another question for me would be on the vehicle utilization level. So there's like a huge growth in the number of cars And I was just wondering if that has impacted, I believe, like the typically 80% of the utilization rate before.
spk05: Yeah, good question. And it's part of the strategy of why we're moving towards commercial, which is in those commercial fleets, you tend to see higher utilization. So, you know, in our commercial fleets, I think we're seeing Alport high 80, low 90 percentile utilizations in those fleets. And then in the peer-to-peer, it's a little bit lower. So it typically averages out or nets out to about 85%, 86% utilization. That's pretty consistent. That's where we're seeing it kind of normalize. And I think as we get more, the shift in the mix move towards more fleet, you're going to start to see higher utilization rates tick up as we move forward into the second half. But not really meaningful. It's really an absolute value. It's not necessarily like a way to – it doesn't really translate into revenue, or there isn't a direct correlation.
spk03: Okay, thank you. That was very helpful. And that's all the questions for me. Thank you, and again, congrats to your quarter.
spk04: Thank you.
spk00: Our next question comes from the line of Mike Rondo from Northland security. Your line is now open.
spk08: Hey guys, just to follow up, um, with the true car relationship, I think you guys are getting a referral fee. Do you get that only if your customer buys a car? Or do you get that for just kind of sending that lead over? I mean, you guys had 5,400 unique new drivers in the March quarter who were looking for cars. So I'm just kind of curious how that works with Trucar.
spk05: Right. So there's a phase one, phase two. Phase one is we refer drivers, and when that driver purchases the vehicle, That's when we get the referral fee. And then phase two with Trucar is hopefully getting access to the 16,000 dealerships that they have, both franchise and independent, and doing some cross-marketing, joint marketing with them. So that has a dual effect of creating more supply as well as monetizing. the drivers that we were losing anyway, right? They were going out and buying a car. And so now we're monetizing that on the back end. I think I'll have, you know, that was relatively new last quarter. We started that with like March, February, March. So we really started ramping up in February and March. So I think I'll have more numbers around that initiative and some of the other affiliate and alternative revenue initiatives. Um, in Q2. And so we'll talk about those and how break them out and how I see them kind of growing through the, through the second half of the year.
spk08: And Hey, Joe, I'm sorry, but what was phase two? You kind of broke up. You said something about access 16,000 and then I lost you for like 10 seconds.
spk05: Yeah. So where we have joint agreement, a joint marketing agreement, we gain access hire car. gains access to the 16,000 dealerships that Trucar currently services and sources leads to. So that's the exciting piece of phase two, because that really drives supply for us organically. And that's why I'm really excited about organic channels kind of starting to ramp up here, along with the larger fleet, specialty fleet operators that we're dealing with as well.
spk08: Sure. And then just, hey, my last question. You mentioned that earn-to-own program with ACC Consumer Finance, and the retention was like five times. Roughly how many drivers are in that program? Is it just too early to mention? Is that next quarter too? But, you know, five times the average length of a rental, I mean, that's incredible. That's huge, right? Is there 10 drivers in that or 100? Where is that at and where do you think it can go?
spk05: I see this really starting to grow. We don't have very many dealerships signed up. We have a small percentage of our driver population signed up. A big chunk of our driver population, about 30-40% or so, are longer term drivers where this type of program would benefit them. We're running it right now. We have these drivers on. So how I'm doing that math, I'm looking at right now in that program, those drivers are averaging about 90 days. Mean average is about 18 days for drivers. So that's where I'm getting the five times. And we see that growing even further because the program is 120 days. Once you've been in the car for 120 days, then that down payment applies to the vehicle purchase and you walk away with the car. So I will, yeah, I think next quarter we're going to have enough data out there to say, yes, this is viable and we're going to move, we're going to really ramp it up and then I can give you all the details then. Sounds good. Thank you. Yep.
spk00: Our next question comes from the line of Casey Ambrick from Shea. Your line is now open.
spk07: Hi, it's Casey Emmerich. Thank you very much for taking the question. So when, when, when you guys are talking about, um, these price increases historically, you, you've always kind of led, uh, investors to think about, you know, every thousand cars is roughly 9 million annualized. What's the new rate? Should we start thinking like 10,000, um, every 1000 cars is 10 million annualized. How should we think about that?
spk04: Yeah. Hey Casey, it's Scott. Um, I think that's probably a good basic way to think about it. The part that has some additional upside to it is kind of the risk adjustment piece, right? There's a driver fee component and a risk or insurance component, and it's dependent on the mix of drivers within some different risk pools. But I think it's pretty safe to assume that it's going to be at least a 10% increase to that sort of per day contribution. So, yeah. going from 9 million to 10 million per 1,000 cars, that's a good basic way to think about it, and hopefully we can do a little bit better than that.
spk07: So if we look on one side of the whole kind of ecosystem, if you're getting better drivers who are using the cars longer, being provided by Uber or Lyft, and you're getting these large fleet providers who are bringing these cars on knowing that you have better drivers or incentivize. Is that kind of like how we think and the wheel just kind of spins faster and gets bigger at the same time?
spk04: Yeah, I mean, it's definitely being a little bit more selective, right? Because certainly, there's a car supply issue. I think we've all seen the stories. I think Brian passed one around about people driving U-Hauls around Hawaii on vacation or something, right? So there's kind of a shortage of vehicles as we all think about our summer vacation plans out there. And so part of it's reflecting that and then part of it's just better data on the risk side so that as part of our driver vetting process, which is a lot of the value that car suppliers or car owners see in higher car, that we're providing them better information and better drivers. So, yeah, I think it is those things coming together, as you said.
spk07: Okay. And then last question. So if I'm thinking about this thing, the model right now, I mean, you're kind of run rating around $30 million now. over a little bit more on an annualized run rate, depending on how many cars you're using. And then if we kind of take a step forward, say at the end of 2022, if you have 16,000 cars at 10 million to pop, that's annualizing around 160 million annualized. Um, obviously you're going to have some massive operating leverage as you break even through 5,000 cars. So you're going to have some scale there and some profitability. I mean, And when I look at the market cap, you're trading at $180 million right now. So you're trading for a company that's going to grow revenues 400% and breaking through profitability, you're trading at one times revenue. Am I doing the math right? Yeah, I think so. Yeah, that sounds about right. All right, sounds cheap. Thanks very much. Thanks, Casey. Great work. Thank you.
spk00: Our next question comes from the line of Josh Goldberg from G2. Your line is now open.
spk06: Hey, Joe and Scott. It's Josh Goldberg. How are you doing?
spk04: Good, Josh. How about you? Hey, Josh.
spk06: Good. I think the wheels are starting to roll here. Question about the new drivers that you added, 14%. You know, your balance sheet is stronger now. It would seem to me that you can lean in on both the traffic acquisition side to grow new drivers, as well as maybe using your balance sheet to somehow increase your car supply as well. So can you talk a little about how much can you pick up on both sides going forward?
spk05: Yeah, that's a good question. So from a marketing perspective, even as our acquisition costs have gone down, you know, there's budget, um, it to really accelerate, um, the, the, the lead side of things. And, you know, we're kind of seeing that I think in the, in the month of April, we did about 35,000 leads. I think may we're, we're trending to over 40,000. So, um, you're seeing us leveraging that and that'll be more, more apparent in, um, in Q2. Um, And then on the supply side, they, you know, from where we are right now, we're seeing some organic traffic. And so I think the guys on the marketing team are leaning into kind of spending into that interest on the organic side. You know, organic side, the way I kind of define organic is individuals and then also kind of mini fleet, right? It's people with four to 24 cars. So you're seeing more interest from those guys as well. So leaning in and targeting them on top of kind of good commercial initiatives are kind of how we're thinking about it.
spk06: Okay. And on the supply side, in terms of getting more cars?
spk05: Yeah.
spk06: Can you look at the balance sheet at all?
spk05: Yeah, absolutely. The way we're leveraging that is spending up a little bit on organic traffic and then relying on our account managers and the call center to convert that organic supply side traffic into vehicles onto the platform. And so you're going to see more and more cars coming on just at a gross level, and then you're also going to see more and more drivers coming on because you're leaning into the marketing opportunity and spending into it, but also because there's less competition. So that's kind of how I'm looking at it.
spk06: How are you able to kind of gauge the reactivation of old drivers now? I mean, I would think that people that have used your site and have been happy At this point, with such a hard supply of cars, you might see that database of old customers come back online. Have you seen any of that happen yet?
spk05: A couple of aspects to that. So we are certainly mining the million-plus drivers that we had in the database for the affiliate revenue, the true car partnerships, and stuff like that. So that's one, monetizing those leads. And then there's always an aspect of retargeting to drivers that have gotten into a car and need to come back in. And then also, we call them reconversion rates. So looking at reconversion rates through time and looking back two weeks, looking back 30 days, looking back 60, 90. And we have different marketing.
spk06: Is there any new data now? Has there been some new data on that because of what's going on in the economy? Are you seeing an acceleration of more reactivation sooner, like somebody will come back more in the last three or four months than what historically has happened?
spk05: It's staying flat. We're doing a lot of things with the re-engineering of the operational side of things. We're moving some roles over to the call center. We're moving historically what we had seen as kind of driver closers over to account managers that are working on just converting supply side, so converting individuals and dealerships, etc. We're really relying on more of the marketing side to retarget drivers and also the call center people. It's flat right now. I'm not really sure where we're going to see that pan out for the rest of the year, but I'm not seeing a big kick up in reconversions. you know, for people who have driven basically like 90 days or less for us and are not in the car now. But I think that, you know, if that's something that, you know, we can talk about that potentially giving those numbers out maybe if we see that they're valuable for investors. So let me dig into them and go from there.
spk06: Okay. And the idea that there's obviously more days, as you've progressed week after week, it sounds like you're going to get to a pretty healthy average daily rate here in the second quarter. The excitement I think people have today is the announcement on the, on the new pricing and Scott, I guess, you know, by guiding to a 27, 28 people will probably take, you know, your numbers up, you know, eight to 10 sequentially from there. And then the, obviously the more cars you get and they'll probably come up with a, you know, a 10 million or so number in second quarter. But, Tell us how we can get higher than that third and fourth quarter. What's going to be the next leg? Is it really going to come from just more cars on the platform through AmeriDrive, or is there other things you can do to drive revenue growth on top of where you're going to exit June? Thanks so much.
spk04: Yeah, absolutely, Josh. Thanks again for the question. I think certainly the volume side of the equation is there, and the entire team is focused on that. I think this is kind of a first a first step on the pricing side of things. I think we're getting a lot more data now out of our mobile sources so that we're getting a lot better information. And we're always trying to do a better job on the driver vetting side of things to get those into the vehicles of our key partners. So I still think there's some more room to go there. These were what we rolled out in April were elements that we felt really, really comfortable and, again, had done some pretty significant side-by-side testing. And then, you know, I know Joe touched on it a bit in his call, some of the other ancillary revenue sources, the true car relationship. There's a few other things that I don't think we've formally announced yet.
spk06: But you're not expecting that to be more than, you know, 3% to 5% of revenue at best at this point, right?
spk04: No, I don't think we see either of those things as huge contributors. I think the true car relationship has the potential to go there. So, you know, the lion's share of that growth will continue to be from, you know, volume and pricing adjustments up. Right.
spk06: Okay, great. Thanks, guys.
spk04: All righty. Thanks, Josh.
spk00: At this time, I would now like to hand the conference back over to Joe Fornari for his closing remarks.
spk05: Great. Thank you, everyone. Appreciate all the questions and look forward to catching up next quarter. Appreciate everybody sticking with us. But in the words of, I think, Josh, the wheels are starting to turn. Really appreciate everybody. Thank you.
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