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spk09: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the HireCAR, Inc. 2021 Third Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star followed by the 1 on your telephone keypad. If you would like to withdraw your question, please press the star followed by 2. If you're using speaker equipment, please lift the handset before making your selections. This conference is being recorded November 9, 2021, and the earnings press release accompanying this conference call was issued at the close of market today, November 9, 2021. On our call today is HireCAR's CEO, Joe Farnari, CFO Serge DeBach, and Scott Arnold, Senior Managing Partner of Core IR. I will now turn the call over to Scott.
spk00: Thank you, Operator, and welcome everyone to our 2021 Third Quarter Earnings Conference Call. Before we get started, I'd like to take this opportunity to remind you that during this call, we will be making forward-looking statements within the meaning of federal securities laws regarding HireCar Incorporated's 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-Q that will be filed with the SEC and will also be found on the investor relations portion of our website. Now I would like to turn it over to Joe Frenari, CEO.
spk01: Thank you, Scott. and welcome all to our third quarter 2021 conference call. I am pleased to report that in the third quarter, net revenue increased 43% to 9.7 million, up from 6.8 million in the same period of 2020. Robust demand from driver segments drove over 8,000 new unique drivers to pick up a car on our platform, which is a 49% year-over-year growth rate. Take rates have increased significantly as robust driver demand and fewer driver alternatives were creating incremental margin pickup in our daily rates. Our dynamic pricing model brought take rates up to $29 per day in Q3, up 7% from Q2. Because we've invested in building a robust data environment and flexible technology stack, we were able to implement these changes relatively quickly. We anticipate take rates growth through the rest of the year as the dynamic pricing model learns and iterates for risk and reward. Importantly, our gross margin improved from Q2 this year back to plan, and we succeeded in meeting financial and cost goals that make us stronger even as we continue to invest for the larger number of vehicles we are helping to provide to gig and delivery drivers. This progress that we made over the quarter and the week since the quarter has been significant. At the end of last week, we announced a partnership with Ameridrive and Cogent Bank to help drive vehicle supply to our platform. Under the terms of the agreement, Cogent has agreed to expand its lending capacity to allow our fleet partner, Ameridrive, to continue to build its fleet of gas-powered and electric vehicles available on our platform. We believe these types of relationships with fleet partners will help us continue to meet the increasing driver demand through the higher car portal. Cogent has been a tremendous partner to AmeriDrive and HireCar, and we look forward to continuing that relationship. In addition to our primary purpose to match drivers with car supply, we have invested in helping the larger mobility as a service ecosystem, leveraging our access to the financial markets to help our vehicle partners access financing sources. We realize that we succeed when our partners succeed, and the Cogent line is one of the tools. Last month, the team attended two significant industry conferences related to vehicle financing. SFIG, the Securitized Products Association's major West Coast conference, and the Auto Finance Summit. The Auto Finance Summit was headlined by HireCar's Brian Allen, and Auto Finance highlighted HireCar as one of the automotive retail opportunities taking the auto finance industry by storm in 2021. As previously mentioned, we've engaged a large investment bank to help hire for business customers access warehousing financing lines. These warehousing lines will give our partners direct line of sight to growing the platform's available vehicle supply to tens of thousands of cars. And it's important to note that for every 10,000 cars actively rented on our platform, we estimate approximately 90 to 100 million in revenue to hire car. And secondly, I'm extremely proud to announce another major milestone for hire car. We have signed an official vehicles partnership with Uber. This vehicle rental strategic relationship will allow us to work directly with drivers and delivery people using the Uber platform to find and acquire rental vehicles. The partnership is initially focused on adding electric and hybrid vehicles to our platform. which is Uber and HireCar's focus on environmental sustainability in the automotive sector. We will roll out this partnership in various cities from Atlanta to San Francisco, and Uber app users can now expect to see our listings in the vehicle solutions section on the Uber app. Potential customers will be able to rent directly from Uber's platform and move more rapidly through the approval to pick up and driving process. We anticipate this partnership should increase the retention rates of drivers, improve our driver quality, and reduce our marketing costs. HireCar will oversee promotion and other business activities to jointly create and market a vehicle solutions program for drivers and delivery people using the Uber platform. Pairing drivers with available cars will be seamlessly integrated, and as we integrate a single sign-on solution, rentals will flow directly through Uber's applications. We expect to see increased volumes as a result of our partnership, and while we are aware the other rental car providers are also in the mix, we believe that HireCar's dynamic and attractive pricing structures will attract new drivers to our platform, and that over time our share of market on the Uber platform will increase. In addition, with our adoption of dynamic pricing structures, we continue to focus our efforts on improving margins And with some of the other changes we are making as a business, I believe we are on track for our goal of 40% gross margins by the end of 2022. Recent work that Surge has done anticipates cash flow break-even at 6,000 to 6,500 vehicles rented on the platform. Now moving to operations, an important way to ensure that we keep our margins higher is to keep our expenses down, and that is among the reasons we are so pleased to have had Serge Dubac join us as CFO in July of this year. Serge's experience in finance at Ford, Amazon, and Liberty Mutual, as well as his focus on maintaining a healthy operational budget gained from his time at Deloitte and PwC, have been central to helping our company improve many financial and planning operations over the past four months, and we are extremely fortunate to have had him join the team. He has been a key driver in analyzing and improving our claims processes, with our recently implemented TPA partner, Sedgwick. Conversations with our partners make it clear that the market will continue to grow and HireCar intends to be the leading vehicle supplier for the gig economy. In the near term, our partners are working through a tighter vehicle purchase market due to the shortage of new and used cars at scale. We believe this market anomaly should only impact the short-term pace of adding vehicles. We do not believe it will impact the growth of our supply going forward as these market anomalies abate. As you have seen from recent news reports from other companies in the rental markets, the total addressable market has been calculated between 300 and 500,000 vehicles. Even if we achieve our goals of 16,000 gross cars verified to the marketplace in 2022 and 50,000 by 2025, we will still be a small part of this market. but we will continue to innovate and be the platform that appeals to the widest range of gig drivers, and our partner suites will consist of both EV and ICE vehicles, providing the vehicles our customers want where they want it. With that, I'd now like to turn the call over to Serge Dubac, our Chief Financial Officer, to walk us through some key financial elements from the third quarter. Serge?
spk08: Thanks, Joe, for welcoming me onto the hardcard team. In the past four months, I've enjoyed immersing myself into areas where my expertise in the automotive, technology, and insurance industries are helpful. My immediate focus has been and continues to be on driving profitable and sustainable revenue and margin growth on the platform. As a result, we saw a significant movement forward this quarter, and we have identified several future opportunities to continue on this path. Onto our Q3 performance. Overall, Q3 2021 continued to show solid revenue growth at 43% growth year-over-year and 7% quarter-over-quarter. We saw significant improvement in gross margin from Q2 this year, and we continue to right-size our G&A and system marketing expenses. We have also consciously reinvested in our technology infrastructure to continue building a foundation for accelerated growth. On the top line, rental days were relatively flat this quarter, but are still on pace to surpass 1.3 million this year, up from 1 million rental days for the full year 2020. This represents a quarter-over-quarter growth of 21% from 273,000 rental days in Q3 of 2020. We believe that the tight used car market, combined with our partner financing constraints, slowed our growth this quarter. Our recently announced expanded partnership with Ameridrive and Cogent Bank will help provide car supply to our platform, and we will continue to focus on similar financial partnerships in the future. Furthermore, continuing expansion in the ride share and delivery sectors will only drive further growth at HireCar, as evidenced by the recent Uber and Lyft earnings calls. Uber last week also indicated demand for airport trips had risen 20% in the last two months alone, with increased travel trends benefiting the HireCar platform. While our rental days increased 21% year-on-year, net revenue grew 43% to $9.7 million from $6.8 million last year and increased 7% from the previous quarter. The year-over-year favorable ratio of revenue growth to rental days stems from, one, our investment in our dynamic pricing engine, two, improved risk assessment processes, and three, a favorable market trend in rental fees due to car supply constraints. Specifically, we experienced an increase in daily average net revenue, which represents net revenue divided by rental base, from $24 historically in Q1 to $27 in Q2, and now $29 in Q3. This coincides with our net revenue to gross billings ratio increasing from 45% in Q3 of 2020 to 46% in Q1 of 2021, 47% in Q2, and 48% in Q3 of 2021, an accelerated increase in our take rate. October continued on a favorable trajectory as actions taken in Q3 are also favorably impacting Q4. We are continuing to optimize and expand our dynamic pricing models by investing in our technology platform and are looking to incorporate new information from both external and external sources as part of the pricing and driver screening processes. Additionally, we have expanded our insurance offerings to owners in September of 2021, optimizing deductibles and pricing based on the latest risk patterns observed, and we also provided new ancillary benefits to our owners. Flipping to the cost side, cost of revenue decreased quarter over quarter from $8.3 million in Q2 to $6.7 million in Q3. We achieved this cost reduction by a four-pronged approach. First, we improved our internal claims processes and policies. Second, we focused on our cost control partnering with our external new claims processing partner to tailor their process to hire car. Third, we developed a claims pre-screening process to reduce overall insurance costs. And lastly, we continued to focus on appropriate risk pricing, charging drivers more effectively based on their risk profiles. Meanwhile, we maintained our Q2 gains in customer satisfaction after rolling out these initiatives, balancing risk control and retention of profitable drivers. This quarter, we have achieved our Q2 gross profit margin guidance, delivering an increase from 24% in Q2 normalized from one-off expenses to 30.7% gross margin Q3. While July gross margins were still in line with Q2, we passed the 30% mark in August and continued to improve our gross margin in September. These gains were achieved through the combination of the cost savings and pricing initiatives I just highlighted. Looking forward to Q4 gross profit margins, we are on track to deliver a mid-30s gross margin in Q4, with our medium-term goal to surpass 40% in the latter half of 2022 and beyond. We'll continue to refine our pricing and product offering for premium coverage plans, which we believe will maintain our current ascending trajectory in Q4, and we are developing new incentives for our drivers with low claims experience. Operating expenses totaled $9.1 million in Q3 of 2021, an increase of $4.4 million year-over-year, preparing for accelerated platform growth. Compared to Q2 2021, however, we reduced our operating expenses by about 10%. Overall, this decrease can be attributed to a focus on optimizing SG&A and marketing expenses and a decrease in awarded stock-based compensation, partially offset by reinvestments in our technology and infrastructure. We reduced cash SG&A by $700,000, or 10% quarter-over-quarter, thanks to a continuous effort to reduce and renegotiate non-growth-related expenses while introducing more automation in our current processes. These actions allowed us to reduce headcount by about 10% during Q3, and we are actively managing individual performance. Additionally, we refocused marketing resources toward the reactivation of existing customers, generating sufficient leads for the inventory at a reduced cost. We reinvested the savings in technology to both clear some technical debt and to build a foundation to scale seamlessly in 2022. Looking at Q4 and beyond, we expect further decreases in G&A and a gradual return to a lower benchmark for technology costs after this first phase of our accelerated platform transformation plan. Our adjusted EBITDA for the quarter represented a loss of $5.1 million, down $2 million from $7.1 million lost last quarter, but up from $1.6 million lost in Q3 last year. This decline quarter-over-quarter is primarily attributed to improved management of our cost of revenue, specifically insurance-related costs, while at the same time maintaining sufficient cash operating expenditure and infrastructure to support growth at scale. We expect positive adjusted EBITDA trends to continue in Q4 and beyond with increased gross margin and reduced OPEX. Our cash position continues to remain healthy at $18 million at the end of Q3, with sufficient equity to fund our ongoing operations and pursue growth opportunities. We will continue to pursue financing opportunities for our fleet operators and Harcar to create financial leverage, optimize our cost of capital, and accelerate economies of scale through expanded volume. We also received good news from the Paycheck Protection Plan Program PPP loan that Harcar obtained for $2 million. It was fully forgiving as of 10-28-2021. and will be reflected in the Q4 2021 financials. Back to Joe for final remarks.
spk01: Thank you, Serge, and thank you, everyone, for taking the time to join us for our call today. The partnerships we've announced today and in the past couple of weeks should create momentum into 2022. With all the buzz in EVs, EV fleets, and mobility as a service, HireCar is uniquely positioned to capitalize on the sustainability waves to come. Additionally, we expect to update you soon on some exciting partnerships that are being finalized. These new partnerships will allow us to continue to scale cars for the ride sharing and delivery markets into 2022 and beyond. We are one of the few players left in the market providing qualified and reliable cars to drivers and one of the only ones investing in the ecosystem to help our ride share partners and fleet succeed. We will look to update our shareholders regularly on the progress we are making. With that, operator, let us move to Q&A.
spk09: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Mark Argento with Lake Street. Please go ahead.
spk02: Hey, good afternoon. Good afternoon, Joe and Serge. Just a couple quick ones. First off, on the dynamic pricing model, how much of the gross market expansion do you think is directly attributable to the results that you've seen there?
spk08: Very good question. Hi, Mark. I think we can attribute about half of the improvement this quarter to actually the dynamic pricing model. The remainder is due to process improvements as well. Some of those process improvements took place during Q3, so we'll see the full impact of those in Q4.
spk02: And when you talk about the expanded kind of insurance offerings, does that dovetail with the dynamic pricing model, or how do those two kind of work in concert with each other?
spk08: Absolutely. The dynamic pricing model is tailored for each different driver and customer that we have. The changes that we have in the coverage plan just reflect the underlying trend in the industry. And one portion was to just right-size deductibles to the different plans and provide utility benefits. At the same time, we also provided a protection plan that still kept high deductibles, but we just priced them appropriately based on the risk profile and the current claims experience.
spk02: And have you noticed any kind of material change in terms of take rates with, you know, with the more dynamic or, you know, the higher deductible on the insurance side?
spk08: Yep, absolutely. We start seeing the additional changes coming through. You've seen our number actually is at 48%. It was at 45% in Q1. So take rate has increased to 48%, which is very favorable. And in addition to that, we brought the deductible plan at the end of Q3, so we'll see most of the benefits in Q4. We've seen some adoption there. So the benefits are going to come either twofold, so people opting into higher protection plan with higher revenue or opting for higher deductible, which means reduced cost.
spk02: All right. Appreciate it. I'll hop back in the queue. Thanks. Thank you.
spk09: Our next question comes from Mike Grondahl with Northland Securities. Please go ahead.
spk05: Hey, thanks, guys. And I'll ask two questions. One, the take rate at $29 was very robust. But could you also let us know how many rented cars you had at the end of September and sort of what your goal is for the end of the year in terms of number of cars? And then secondly, Joe, you mentioned some partnerships in your prepared remarks. Could you talk a little bit about the partnerships on the financing side you were referring to? You mentioned a large investment bank. And then secondly, does that include under the umbrella of partnerships some other fleet managers that can kind of drive cars like an AmeriDrive?
spk01: Yeah. Hey, Mike, good to hear from you. Maybe I'll take the second question first and then peel back to the ADRs. But from our perspective on the partnerships, I think we're really excited. I mean, the way we've worked with these partners on the owner side is that we've really kind of used our expertise in finance, our expertise in the public markets, and our influence with some of these lenders to help our partners on the car side get this type of financing. And so I mentioned one with the warehousing line. Those are big investment banks in New York. We also went to Vegas and had some really good conversations with the guys that were there in the traditional auto financing realm. We're using those conversations and those those term sheets that we've received from them as backup for this, this primary warehousing line that we're working with with the investment bank. So we're, we're kind of dual processing this whole, this whole thing and, and running it down parallel lines so that, you know, when we get to a point where we need to finalize it, make a decision, we have a lot of options for our partners. And so it's important to note, we have, you know, 30, vehicle owners that are in our hire for business and a good chunk of those individuals have told us they are looking to add financing to add cars on the platform so they're liking the ecosystem they're liking the technology they're liking the products that we're rolling out for them and so that's it's all kind of working down that working down that path so I'm excited there in terms of ADRs and kind of where we think gross cars are going to be at the end of the year. I mean, we added about 4,000 verified cars to the marketplace in Q3. That's a tremendous amount of cars. I think we're going to continue to add cars going into Q4. We're going into a Q4 and a Q1 that have historically been very, very strong for us. And so expectation is that we continue to grow through those quarters um and you know the catalyst becomes the financing that we put in place for our partners to be able to purchase and grow um so that's kind of how we're thinking about it right now got it and is uber something that you think can help you drive cars how should we think about your announcement with uber The announcement of Uber is six years in the making. I'm so excited that we got sign-off to announce that because you've been following the story, Mike, since 2018. And this is a conversation that we started back in 2016 with them. So we're really excited. I think that Uber's initiatives to go electric by the end of 2030 with their whole fleet is very aggressive and where we've signed on to help them there. And so the way I think about it is kind of a two-pronged approach. Initially, this deal is with EV and hybrid cars. We have a tremendous amount of owners that have come to us and said they have individual cars that they want to put on the platform that are EV and or hybrid. And so really excited there. I think we can help them really grow on that angle. And then I think this partnership really expands out into all types of vehicles, as we get more and more integrated with Uber and the partnership. So really excited there.
spk05: Got it. Hey, thank you, and congrats on getting that.
spk01: Thanks, Mike.
spk09: Our next question comes from Tom White with DA Davidson. Please go ahead.
spk04: Great. Thanks for taking my questions. Maybe two if I can. Maybe just a follow-up on the Uber deal. So I think you guys are kind of live and visible on kind of the onboarding part of the driver section of Ubersight. And you talked about, you know, over time, like, more deeply integrating with a single sign-on and stuff like that. Can you help maybe just, like, roughly quantify the benefits of that deeper integration to your business, you know, in areas like, you know, reduced marketing? Or I think you mentioned retention. Just, like, kind of trying to understand, like, how important that might be. Yeah.
spk01: Yeah, thanks, Tom. Yeah, I think maybe I could – I'll kind of talk about at high level and the benefits that I expect, and then maybe Serge can give some details on the specific numbers. But from my perspective, you know, what we've seen in the past is that typically leads come through, they download an Uber app, and then they go through their vehicle solutions platform. And typically those leads were renting cars through their – are their vehicle solutions partners. Now we're going to be live on the app. We're going to be enabled to, for those drivers to come in and rent through hire car. You know, I think the future state is that those drivers can actually do a single sign on and they actually can, rent cars in their application in the Uber app. You're going to be able to see higher car cars in there. So that's the exciting piece because I think what it does is gives us first shot at those drivers when they're shopping, number one. And then number two, I think we're going to have a lot of EV options for those drivers to go in and start renting those cars, EV and hybrid. So I think it really helps with kind of conversion rates. through the platform? And then maybe Serge could give you a little color on kind of how we're thinking about LTV, a customer, and COGS, and OPEX, and what that does for us.
spk08: Yep, absolutely. I think, as you mentioned, I think we'll have access to a source of long-term intent drivers, which may stay there for us longer, which is a good benefit for the platform. Also, the quality of the drivers may be higher, so that's something we want to learn. What I would say here, I don't want to say too many numbers right now, we're still in the learning phase in piloting and gathering a lot of data. But obviously, I think to your comment on marketing costs, this is another channel that allows us to acquire customers at low cost. So we expect marketing costs to decrease. We're still working through the different components on the COC side. So as we work through and we learn, we'll be able to tailor that. And we're in constant discussion with Uber to be able to provide the best program for for the drivers and also for ourselves and refining this partnership. So as we're starting to get more data and we have the platform live, we'll be able to make more accurate estimates as to where we are, but I think we assume that we'll have better quality drivers in some cases, reduced marketing costs, and then on the cog side and claims, we'll just want to see what the experience looks like before we can provide a definitive answer on that.
spk04: Okay, and then just one follow-up on – so rental days were, I think, flat quarter over quarter. I think you said surge in excess of $1.3 million for the year, which would imply a bit of a sequential tick-up. I presume that's maybe the cogent deal helping you. How should we think about, like – Like in the first quarter, you know, can we, you know, do you think you'll be able to kind of sequentially bump up, you know, from fourth quarter levels on rental days?
spk08: Yeah, yeah. I think the cogent line is definitely you hit a good spot. The cogent line is what will allow us to bridge the current investment back to the warehousing line that Joe described. So we want to make sure we move forward. We will also make sure that we're selective about car quality and also sensible about making those tradeoffs. But we expect the cogent line will be sufficient to be able to add more cars to the platform in Q4 and then continue. We'll accelerate that in Q1 and Q2 of next year very substantially. So as we get through and we're getting past the market anomalies that Joe alluded to in his portion, we'll be able to scale faster. We want to make sure we bring the right cars to the platform that deliver appropriate profitable benefits to us. So in that regard, we're going to go not as fast, but we're going to go very selectively, profitably. And as soon as we feel in a good spot with moving forward even faster, we'll just accelerate very quickly during 2022.
spk09: Our next question comes from John Hickman with Ladinburg. Please go ahead.
spk03: Hey, are you there?
spk01: Hello.
spk03: Hey, can you just explain, you added 3,000 to 4,000 cards in the quarter, but rental days didn't go up?
spk01: Yeah. Can you talk about that? Yeah. Yeah. I mean, in this market where it's a really competitive environment for dealerships to sell cars, there's been a lot of churn in the market. And so when we're adding cars, you're also churning cars off through a heightened sale process. And so I think that for us, the key is to add vehicles with our purpose bought for our platform. And that's why I think the AmeriDrive partnership and some of our larger commercial fleets are so important because, you know, helping them in tape financing and having them buy means it's stickier to our platform. And so that's what happened in Q3. The expectation is you know, at a high level, you know, this market that we're in starts to abate a little bit. You know, I think we've been at 40% above, you know, 40% increase in MMR at the auctions on used cars. It's abated, it's kind of come down four or five points recently, and we expect it to drop kind of in single digits through the end of, you know, through Q1 of next year, Q2 of next year. And so there's some real kind of tailwinds that are going to start pushing us and start easing up on the supply, which then enables our partners to go out and purchase at a good price, and then they start adding cars to the market, and those cars are sticky. So that's kind of what's happening now in the market.
spk03: Okay, thanks. That's it for me.
spk01: Thanks, John.
spk09: Our next question comes from Jack Vanderaard with Maxim Group. Please go ahead.
spk06: Great. Appreciate the update, gentlemen, and congrats on the official Uber partnership. It's big news. Thanks for taking my questions. So just so I understand, is the strategic partnership with Ameridrive and Cogent to boost car supply, is this connected or related in any way to the Uber announcement? Are these two separate distinct initiatives? Maybe there is some overlap, but just can you provide some color there?
spk01: Yeah, two distinct initiatives. And the last call we talked about had three or four catalysts that we were going to be looking for. Number one was this cogent deal. And so we were able to get that done. It's really exciting. I think that gives us real line of sight to car numbers through the end of the year. Two is the Uber deal. We were previously describing that as a TNC partnership, but we got to sign off to talk about the Uber deal. Um, and you can actually see those, those, those cars, our cars are live on the site and hire cars live on those sites. So that's super exciting. That's leads that are going to be flowing through to our platform. And then, you know, a warehousing line, uh, slash securitization that, um, that we're working on with, with some of the, the financing partners that have historically financed, um, auto in the U S I mean, it's a, it's a, half a trillion dollar industry there. And so there are well-established players that we are helping teach this business to them, right? Because this is a new world for a lot of the established players. And so we're going to these conferences and evangelizing how they can really participate in this market with our help, with our risk underwriting, with our technology. So Um, those three things that we have, we have clarity on two of them now in the, in the public sphere and, uh, working on the third.
spk06: Great. That's helpful. And then, um, maybe this is already touched on, but just given all the, the buzz in the market lately with, uh, you know, Hertz and coming out of bankruptcy and, um, they seem to be in the news a lot lately with the Tesla announcement, uh, as well as with Uber and then also Avis, uh, they recently reported as well. Um, Can you just share your perspective on where HireCar fits in strategically or competitively as it relates to Hertz, as it relates to Avis, and then also Uber kind of connects all of them?
spk01: Yeah, absolutely. I mean, this is – we are in very, very exciting times, right? Everybody is moving towards electric. Everybody is moving towards partnerships that enable them to manage fleet, electric fleet at scale. where historically the infrastructure hasn't really been in place to be able to do that. But now you have kind of these combined tailwinds of an infrastructure bill being passed, you have states passing budgets that are going to be adding to the EV charging infrastructure, and now you have a validation from one of the largest rental car companies saying, running EV fleets at scale. So we'll let them be the trailblazer, put that infrastructure in place, and then we can come in behind them and, you know, add cars at scale. So it's really exciting. It's a validation of what we were doing with Uber and what we're going to do with Uber. And, you know, moving forward, it's an exciting time to be in mobility and in kind of the technology space that we're in right now, specifically as dealers start to come back, because I think that strategy is is going to start to come back as cars start to, as new cars start to flow and used car prices start to come down, the dealership strategies are going to start to really pick up as well. And so for us, having dealerships run EV fleets, having them run ICE fleets, I think is going to be, it fits really well into our narrative of an ecosystem and creating an ecosystem for everybody to make money in this business.
spk06: Great. And then just one kind of last question on financial targets metrics made for surge. Did you provide an updated kind of normalized target range for what you expect that non-cash OPEX to be? I think it was 6.5 to 7 million last quarter you had said. But then given this Uber announcement and maybe the sales and marketing efficiencies you get over time after this, so it's R&D, initial investment, you've got to get past that. But Can you just provide a quick update for me on the updates to your non-cash OPEX?
spk08: Absolutely. Cash OPEX, you mean, right?
spk06: Yes, correct. Sorry.
spk08: Yes. No problem. On the cash OPEX, so I think as we get through, we want to still learn from the Uber deal, but what we've seen in this quarter is we've reinvested a lot in our technology infrastructure, and we feel comfortable making sensible tradeoffs between long-term growth and then short-term profitability. I think What we've seen is we haven't dropped down significantly on the cash OPEX side in Q3 because of those reinvestments, but we expect that to normalize further. So the guidance around $7 million as a target for cash OPEX still stands, and we don't want to put the carriage before the horses, or the horses before the carriage, but we want to make sure that we understand better what the Uber deal will bring to us before quantifying those benefits, but hopefully we'll be able to bring that down further from marketing efficiencies from these new sales channels.
spk06: Great. Okay, so that optics of $7 million, though, applies to this fourth quarter, this near-term fourth quarter, then?
spk07: It applies more to a medium-term goal. We'll get closer to that in this fourth quarter.
spk06: Okay. Understood. That's it for me, guys. Thanks. Thank you.
spk09: This concludes our question and answer session. I would like to turn the conference back over to Joe Frenari for any closing remarks.
spk01: Great. Thanks, everybody, for joining the call. Really excited for what the future holds. Excited for COVID to be behind us, excited for new financing partners to be coming online to rent cars so that our partners can purchase cars and we can rent them to drivers. So there's a lot of really good things happening right now. So stand by and look to update everybody in the future. So thank you.
spk09: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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