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Edited Transcript of HYRE.OQ earnings conference call or presentation 13-Aug-20 8:30pm GMT

·27 mins read

Q2 2020 HyreCar Inc Earnings Call Oct 9, 2020 (Thomson StreetEvents) -- Edited Transcript of Hyrecar Inc earnings conference call or presentation Thursday, August 13, 2020 at 8:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Joseph Furnari HyreCar Inc. - CEO & Director * Robert Scott Brogi HyreCar Inc. - CFO ================================================================================ Conference Call Participants ================================================================================ * Jack Vander Aarde Maxim Group LLC, Research Division - Equity Research Analyst * Mark Nicholas Argento Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities * Michael John Grondahl Northland Capital Markets, Research Division - Senior Research Analyst & Head of Equity Research ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the HyreCar Inc. Second Quarter 2020 Earnings Conference Call. (Operator Instructions) This conference is being recorded today, August 13, 2020, and the earnings press release accompanying this conference call will be issued at the close of the market today. On our call today is HyreCar's CEO, Joe Furnari; and CFO, Scott Brogi. I will now turn the call over to Joe Furnari. -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [2] -------------------------------------------------------------------------------- Thank you, operator, and thank you, everyone, and welcome to our second quarter 2020 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 HyreCar 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-Q that will be filed with the SEC and will also be found on the Investor Relations portion of our website. So the second quarter was unique because it was a tale of 2 stories. One of the -- on the one side, the quarter saw the lowest rental day week since Q3 of 2019 because of the government-imposed lockdowns due to COVID-19. And on the other side, a return to sustained growth and the best weeks and months that the company has had in its history. April started off with the lowest weekly rental day number post the COVID slowdown at approximately 14,000 rental days for the first week of April and ended with over 20,000 rental days for the last week of June, a snapback growth rate of 42%. Subsequently, July has seen the growth continue with our highest weekly rental week of approximately 22,000, an increase of almost 60% since that first week in April. The company fully expects to see growth through the rest of 2020, even with the differing city and state approaches to reopening, and we remain cautiously optimistic that HyreCar will continue to persevere in the new COVID world. This rebound in our business model is not a fluke. It was due to a conscious effort by our leadership team to expand the platform to delivery services in the face of COVID. We started to see drops in our rental day counts in mid-to-late March, and we responded to this decline by identifying opportunities in delivery service platforms and by rapidly expanding our emphasis on delivery in late March. The emphasis on delivery included rebranding our app and web portals, creating new sales and talk scripts, retooling messaging, retraining support staff, affirming insurance coverages and focusing marketing spend on delivery. Because of this effort, active rentals have grown consistently since the second week of April , as you can see from our earnings release, have now established a clear uptrend. This should give investors confidence that we are nimble and that we can continue to grow in any business environment going forward in rideshare, and now with delivery becoming an additional engine for shareholder growth. As we move into the fifth month of COVID, there is a new normal emerging. The combination of states reopening for rideshare and delivery service platform economics remaining strong, is making our business even bigger than we had anticipated. What has become clear is that regardless of what happens to the economy at a macro level, HyreCar's expansion into food and package delivery has allowed Hyre to fare better than the 75% plus rideshare declines our TNC partners are seeing in their businesses. For Q2, we ended the quarter down just 3% sequentially and up over 47% year-on-year. We expect revenue in the third quarter to return to mid-to-high teens sequential growth that we saw before COVID, with revenues expected to be between $6.2 million and $6.5 million and to grow again in the fourth quarter. So we continue to see strong demand from drivers seeking vehicles for delivery because delivery services are heavily supplementing rideshare driver income during this slowdown. We had over 1,700 new unique drivers pick up a car in the month of June, which when paired with increasing customer retention rates helped revenue recover in the second quarter. As we move forward and states start to reopen, we believe rideshare driver demand will also start to pick up. For example, from Uber's conference call, they were seeing in Hong Kong and Malaysia, ridership has floated above pre-COVID levels. In order to avoid crowds, customers are opting out of public transportation in favor of rideshare and other forms of personal transportation, which points to continued recovering ridership in the U.S. and bodes well for Hyre's core rental business. On the car front, new cars on the platform are sourcing predominantly from existing customers, as most new franchise independent dealers have been -- have seen slowdowns from registering and plating cars because of DMV closures. However, we have begun to see a pickup in partnership discussions with rental car agencies, and we onboarded a couple of rental fleets to our site this past quarter. One is a large Southwest regional rental car agency who recently listed 50 cars, with plans to expand tenfold as demand ramps up over the coming months. In addition, we have begun to onboard fleet companies that want to partner and grow cars in regions where they are sorely needed. These types of companies have much larger fleets than traditional dealers and complement our important dealer partners. We expect to be announcing these partnerships in the coming weeks as more fleet and rental agencies are stepping up to make sure they have relationships in our markets. Operationally, we've moved to dramatically increase our cash runway by reducing fixed and variable costs during the quarter, including a halt to new hiring and the renegotiation of a number of vendor contracts. I believe Q3 will see an even larger reduction in OpEx as the full extent of the cuts will be realized. Ultimately, this continued growth at reduced expense levels will allow us to get to profitability in 2021. We'll continue to monitor our KPIs and adjust spend accordingly with an eye toward profitability. A big component of cost of sales has become our insurance reserve and physical damage payments. In Q2, insurance premium paid was $1.3 million, and claims payments were $1.27 million, a decrease of 14% and 22% from the prior quarter, respectively. The lower insurance costs resulted from our new liability insurance program with Apollo and a reduction in claims due to reduced incidents, enhanced risk underwriting and streamlined claims management. On the claims management front, we have taken multiple steps to enhance our driver risk underwriting model, including everything from optimizing our background-check criteria, tapping into multiple telematics solutions, outsourcing the billing and payment of physical damage claims, and new fraud investigation tools. The plan is to optimize our claims expense relative to active rental growth. Over time, these measures should result in a profitable and sustainable business model. With that, I'd now like to turn the call over to Scott Brogi, our Chief Financial Officer, to walk through some key financial details from the quarter. Scott? -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [3] -------------------------------------------------------------------------------- Yes. Thanks, Joe. I'm pleased with our movement towards profitability this quarter. HyreCar improved EBITDA by $1.6 million sequentially from negative $3.3 million in the first quarter to negative $1.7 million in the second quarter by reducing expenses across the board. And thanks to a PPP loan and a new insurance program, both completed in the second quarter, we have significantly reduced our cash burn and extended our runway. Net revenue increased 47% to $5.6 million for the 3 months ending June 30, 2020, from $3.8 million for the 3 months ending June 30, 2019, and was down just 3% sequentially from $5.8 million for the 3 months ending March 31, 2020, as we rebounded within the quarter. The revenue increase was primarily driven by increases in net rental days, which grew 65% annually to over 230,000 in the second quarter, from 140,000 rental days in the second quarter of 2019 and 2% sequentially from 229,000 in the first quarter of 2020. Cost of sales increased for the quarter ending June 30, 2020, to $3 million from $2.1 million in the prior year ending June 30, 2019, but decreased from $3.6 million in the prior quarter ending March 31, 2020. This sequential improvement was primarily driven by lower insurance costs resulting from our new liability insurance program with Apollo 1969, which enhanced our program as well as improving pricing and terms. As a result, gross profit for the second quarter was $2.5 million, up from $1.7 million in the year-ago period ending June 30, 2019, and $2.2 million for the prior quarter ending March 31, 2020. Gross profit margin was 45% for the second quarter, flat with 45% in the year-ago quarter ending June 30, 2019, but up from 38% in the first quarter ending March 31, 2020. On a going-forward basis, as we enhance our insurance, merchant processing and technology solutions, we expect our gross profit margin to continue to increase to between 45% and 50%. Operating expenses increased to $6.4 million for the 3 months ended June 30, 2020, from $3.8 million in the same period the prior year, primarily due to increased marketing and sales expenses to support higher business levels. General and administrative expenses also increased, although approximately $2.1 million of this was noncash in nature due to stock-based compensation. Much of this was onetime in nature to settle prior legal and technology expenses in lieu of cash, and to increase our option pool availability to better align employee incentives. Sequentially, we achieved significant payroll and marketing savings due to a hiring freeze and a new CRM solution rolled out in the first quarter of 2020. Accordingly, cash operating expenses totaled approximately $4.3 million for the quarter as we significantly reduced our expense base. Adjusted net loss increased to negative $3.9 million or $0.22 per share for the 3 months ended June 30, 2020, from negative $2 million or $0.17 per share in the same period the prior year, but improved sequentially from a net loss of $4.1 million or $0.25 per share for the first quarter ending March 31, 2020. Although adjusted EBITDA of negative $1.7 million or $0.10 per share was below negative $1.4 million or $0.12 per share the prior year, it was a significant sequential improvement from negative $3.3 million in the prior quarter ending March 31, 2020. Cash totaled $7.2 million on June 30, 2020, a decrease of less than $700,000 from the $7.8 million we had last quarter on March 31, 2020. A big part of this improvement in cash burn was the $2 million PPP loan we received from our banking partner, JPMorgan Chase, in April 2020. This allowed us to maintain payroll as intended, and we spent more than 90% of the loan proceeds on payroll expenses alone. We anticipate this loan will ultimately be forgiven. And going forward, the new insurance program with Apollo 1969 will allow us to build cash through 2020. We will have a balloon payment in early 2021, so we are maintaining our discipline on accruals and reserves as we grow. Now I'd like to turn the call back to Joe to wrap up. -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [4] -------------------------------------------------------------------------------- Great. Thanks, Scott. So the last thing I'd like to touch on before we turn it over to Q&A: It's important to note that as COVID was emerging, the rideshare rental market was already experiencing large disruptions. As the COVID pandemic accelerated, it also accelerated the demise of the competition because these companies' economic models were ill-equipped to adapt to the new environment. Meanwhile, HyreCar's asset-light, platform-agnostic business model continued to deliver results in the rideshare rental space and now, delivery space. As the country moves into recovery mode, with a number of states reopening, rideshare demand will increase while delivery economics remain strong, creating a perfect tailwind for HyreCar's model. Our long-term strategy is to expand the core rental business for both rideshare and delivery and integrate our service platform with our partners. COVID is reshaping many industries both in rideshare, delivery and mobility-as-a-service from established restaurants becoming cloud kitchens with delivery-only options, to purpose-built all-electric delivery vehicles solving for the last-mile logistics in highly populated areas. There is a structural change in consumers' approach to acquisition of goods, which is permanent, and we are benefiting from it. When I see all these emerging tailwinds that are driving our business now and in the future, I get excited about the shareholder value the HyreCar team is building for stakeholders. With that, let's move to Q&A. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Mike Grondahl with Northland Securities. -------------------------------------------------------------------------------- Michael John Grondahl, Northland Capital Markets, Research Division - Senior Research Analyst & Head of Equity Research [2] -------------------------------------------------------------------------------- Congratulations on the quarter. Nice trends in revenue and costs. The first question is just -- I think you mentioned after a Southwest regional rental car company, you kind of alluded to -- I think it was 3 other companies targeting 3 regions with cars. Any more color you can give on that, maybe the amount of cars they start with and maybe can grow to? Or what can you share there? -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Yes. So we haven't officially -- well, first off, thanks for calling in, Mike. It's good to hear you -- hear your voice here. So we haven't officially announced that yet. But yes, we're running pilots with small rental car agencies, one very large agency here in the Southwest. We think this can scale significantly in the next few quarters. So I'm excited about that. These partnerships are also validation of what we said in the past about flexibility of the business model -- specifically, that we have a turnkey platform insurance solution for both rideshare and delivery, what we call gig, and that offering is part of our core use case here. So I'm excited to share more in the coming weeks as those pilots become official. -------------------------------------------------------------------------------- Michael John Grondahl, Northland Capital Markets, Research Division - Senior Research Analyst & Head of Equity Research [4] -------------------------------------------------------------------------------- Got it. Got it. And is there anything you can share on the unit economics or the per-car economics of the insurance contracts? A simple way to kind of understand the savings that will roll through? Because I think it just started June 15? -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [5] -------------------------------------------------------------------------------- Yes. Mike, it's Scott. And yes, as Joe said, it's great to hear your voice. Yes, I mean I think what we've talked about is with the new insurance program, you've got kind of the basic liability coverage and then you have an excess layer as Apollo, as the subsidiary of Lloyd's of London, has a lot of strength in the excess lines historically. And so they came in very aggressively on that. And in particular, those excess lines are really what power our protection plans for the entity fleets that are kind of increasingly providing north of 80% of our car supply now. So it really gives us some nice cost advantages as we continue to drive more car supply from the institutional side. But if you blend those things together, you're looking at, at least a kind of a 10% pure price advantage. And then we do have now more granularity on a geographic basis in terms of states as well as age of drivers. So it really now gives us some interesting levers to look at how we drive the business going forward. -------------------------------------------------------------------------------- Michael John Grondahl, Northland Capital Markets, Research Division - Senior Research Analyst & Head of Equity Research [6] -------------------------------------------------------------------------------- Got it. Got it. And then just lastly, any sense -- like you had a rideshare TAM, and we know that's recovering state-by-state gradually. Does the addition of delivery, does that take your TAM up 30%, 50%? Just any thoughts on if you think of rideshare pre-COVID and that opportunity and then you layer on delivery, how much bigger is the opportunity? -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [7] -------------------------------------------------------------------------------- Yes. I think that it is pretty big at this point. Now we were seeing, Uber and Lyft have scaled back -- and we were listening in on their calls -- in some cases, down 75% or more in their specific geos. But what has -- what stuck out specifically with Uber was that their Uber Eats business really offset a large chunk of the decline in rideshare. And you see that in our results as well. It was 70-plus percent of our drivers were driving for delivery and rideshare, and delivery has really kind of supplemented rideshare in this time. And we don't see that really changing. As we talked about in the prepared remarks, there is a very clear structural change in the United States specifically around how consumers are ordering their groceries, receiving their medicine, nonmedical -- nonemergency medical transport and attending those scheduled hospital visits. And very specifically, we are benefiting from that because the delivery platforms are benefiting from that. So it's providing more opportunities for our drivers and more demand for our vehicles on our platform. So it is -- it has expanded significantly in the past 4, 5 months. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- And our next question comes from Mark Argento with Lake Street Capital Markets. -------------------------------------------------------------------------------- Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [9] -------------------------------------------------------------------------------- Joe, Scott, strong quarter. Great to see, given the environment. Just wanted to drill down a little bit. It looks like your guide for Q3, pretty solid guide. Just wanted to drill down a little bit on the -- we're thinking about some of the costs here and potential leverage on the OpEx line. So I know -- I think you had said gross margins, 45% to 50%. What do you think some of those costs, the cost -- some of the cost initiatives you guys have taken, what could that mean in terms of OpEx? And maybe help us better understand kind of the trajectory to -- towards the profitability. -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [10] -------------------------------------------------------------------------------- Yes. Mark, it's Scott. It's a great question. I think we're really excited about what we were able to do in Q2. I think we talked about getting OpEx under kind of $5 million a quarter. We were actually able to get under $4.5 million, which was kind of a stretch goal for us. And certainly, as we continue to improve the platform, we're looking to add, for example, on the technology side right now to add the resources that we have to continually improve it, and drive more operating leverage out of the business model without having to keep adding staff, right? So we think we've got some good opportunities there. Admittedly, Q2 was light on things like travel expenses, right? So we'll probably see a little bit of growth there. But honestly, with what we're looking at on the revenue side, we don't think we have to add a lot on the OpEx side of things to continue to grow aggressively on the top line. So we'll probably see a little bit of growth in the OpEx side as things hopefully start to return to some sense of normality, but we don't see those cost increases as being that significant. So certainly kind of under that $5 million a quarter, and we're going to do our best to stay as close to $4.5 million as we can. I think certainly, the insurance program that we've talked about is going to help on cost of goods sold. We just actually, in the third quarter, renegotiated our merchant processing contract with our merchant processing partner, Stripe. So we're going to be seeing those savings moving forward, July 1 on. And we continue to kind of look at everything across the board to continue to refine the platform. So yes, I'd look for us to stay in that range, and then that can help us get to profitability faster. -------------------------------------------------------------------------------- Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [11] -------------------------------------------------------------------------------- And do you still think that 30,000 average weekly rentals is still kind of the bogey to breakeven? -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [12] -------------------------------------------------------------------------------- Yes. Yes, I do. And just to kind of put some numbers on this, if you look at 30,000 weekly rental days from our current level of about 22,000 would mean almost 400,000 quarterly rental days. So even at just our current $24 per day net revenue, that would be over $9 million in quarterly net revenue. As you mentioned, that kind of 50% near-term gross profit margin target would deliver $4.5 million in quarterly GP and that's exactly the operating expense level we were just talking about. And we actually reached it this quarter. So yes, we still believe 30,000 weekly rental days is our target, and that will get us to profitability. -------------------------------------------------------------------------------- Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [13] -------------------------------------------------------------------------------- Great. And last one for me. I know you touched on kind of Uber, Lyft a little bit. I know there's been the chatter on potentially a ban or Uber pulling out of the California market. What do you think the probability of something like that happens? And then is there any way to put a contingency plan? And how much exposure do you guys have there? -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [14] -------------------------------------------------------------------------------- Well, a couple of thoughts there. Number one, I think that's Uber and Lyft playing hardball with the state of California. I don't think that they would shut down operation. I don't think that there's going to be a stay put in place. And I don't -- I think that they're going to find some type of appeal and move it forward. And in the meantime, it continues business as usual. They do have -- the contingency for Uber and Lyft specifically is Prop 22, which out here in California, they put propositions on the ballot, and it's a direct voter prop that goes right into the legislation if it passes. So yes on Prop 22 is going to be something big that we go into, and we start to see on a state level in November. They've put $110-plus million behind that proposition and getting that passed. So what that prop does is carve out Uber and Lyft drivers out of the AB5 deal and establishes what they call a third way, which is a healthcare fund and workers' comp for drivers, which is the right way to do it. It's just -- it's not as draconian as making all of our drivers W-2 employees. So from our perspective, part of the reason we've expanded the platform into delivery was because rideshare was seeing a decline. If you look at California, I think it's about 15% or so of all of our current ridership and revenue. And so we would expand that into delivery. Like I said earlier, about 70% of our drivers are already driving for delivery anyway. So 16% revenue time or 15% revenue times the 30% that are pure-play rideshare, kind of gets you to that impact. But I think a lot of those drivers would transition into delivery. So in my mind, it's a low probability but it's still on our radar, and we're thinking about that. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- And our next question comes from Jack Vander Aarde with Maxim Group. -------------------------------------------------------------------------------- Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Analyst [16] -------------------------------------------------------------------------------- Great results this quarter. So you provided some formal -- and some analysts touched upon this, but you provided formal revenue guidance for 3Q. This is kind of a new surprise compared to recent historical quarters, which my guess is this suggests you maybe have -- you've grown increasingly comfortable or confident in some of your abilities to forecast the business. Can you maybe just talk about what kind of key factors specifically have allowed you to maybe feel an added level of comfort in just managing your forecasts? -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [17] -------------------------------------------------------------------------------- Jack, great question. In terms of managing the forecast, I think if you look at weekly rental days through time, starting from the bottom, there's been a pretty consistent growth rate there. We have built out a lot of the data, data analytics portion of the business. That's a key focus for technology for the second half as well. So I'm excited about that. And I just -- as we've expanded the platform and the user base to delivery, it seems to have created a little more stability in terms of the user base and the demand side of that equation. So I am very comfortable making that forecast right now. -------------------------------------------------------------------------------- Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Analyst [18] -------------------------------------------------------------------------------- Awesome. Awesome. And then, Scott, can you maybe provide some additional color when you -- as you're crunching numbers over there, as it relates to the increasing weekly rental days, are you noticing any geographies or regions in the U.S. that you're seeing a positive trend? Maybe a surprise positive trend in terms of how that's picking up or increasing faster than maybe you thought? Are there any regions you could highlight? -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [19] -------------------------------------------------------------------------------- Yes, I mean, I think it's actually sort of more of the same that we talked about on the last earnings call, which is real strength in the South. So states like Atlanta, Texas, Florida in addition to California are certainly strong. And then recently, we've actually seen New York start to come back with some big fleet providers, I think getting more comfortable with the situation there. So it's kind of across the board for those key markets for us, but those are kind of the latest trends that we're seeing now. But kind of good news across the board there. -------------------------------------------------------------------------------- Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Analyst [20] -------------------------------------------------------------------------------- Got it. That's helpful. And then maybe just lastly for Joe, can you talk a bit more about maybe what you're hearing from your existing and new dealership partners? Maybe anything changing in the tone of your discussions and maybe their specific plans of listing additional vehicles on the platform? -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [21] -------------------------------------------------------------------------------- Yes. Just to provide a little regional color and then -- and it kind of dovetails nicely into that second question, Jack, which is New York is a really interesting market. I think that there's a lot of larger fleet operators there that have just been crushed in the traditional taxi and rideshare rental markets. And that's the equivalent of thousands of cars furloughed and sitting. And so we've started to see the smaller players there actually removing the TLC plates or what they call the diamonds from those cars that they were renting to rideshare drivers officially, and renting them on our platform to delivery drivers outside of the TLC program. And so as a result, I mean, New York is probably one of our fastest-growing geos there. And so we expect that trend to continue. So then to address the second question, what we're seeing is that the dealers right now are having trouble. There's some interesting dynamics in the dealer world right now. Used car prices are above COVID prices or pre-COVID pricing. And so because of all of the factories for new cars being shut down, so they're not getting the trade-ins, which means they're scrambling to find used cars to be able to sell those cars to customers. And on top of that, they're having trouble registering and plating cars because the DMVs are operating at like 20% capacity right now because of COVID. And so the dealer groups, although they are a core, core business right now and core, core focus, they are not adding as many cars as we'd like them to right now. And so that's why the narrative of rental fleet, and you can see that on our site now, we've partnered with some of the smaller regional rental car players there as well as the larger fleet operators, New York City being a good example where they have a tremendous amount of fleet, it's underutilized; let's throw on to the HyreCar platform and get rented. So I would say that the theme of rental car and larger fleets seeing us as a turnkey solution for access and utilization of their current fleet is a trend that's going to continue through the second half of the year. -------------------------------------------------------------------------------- Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Analyst [22] -------------------------------------------------------------------------------- Fantastic; great quarter again, guys. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- And I'm not showing any further questions at this time. I'd like to turn the conference back to your speakers. -------------------------------------------------------------------------------- Joseph Furnari, HyreCar Inc. - CEO & Director [24] -------------------------------------------------------------------------------- That's great. Well, thank you, everyone. We will appreciate you being on the line, and we will wrap it up now, but looking forward to speaking in the next quarter. Thank you, everyone. -------------------------------------------------------------------------------- Robert Scott Brogi, HyreCar Inc. - CFO [25] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [26] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a great day.