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Edited Transcript of HYRE.OQ earnings conference call or presentation 14-Aug-19 9:00pm GMT

Q2 2019 HyreCar Inc Earnings Call

Sep 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Hyrecar Inc earnings conference call or presentation Wednesday, August 14, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joseph Furnari

HyreCar Inc. - CEO & Director

* Robert Scott Brogi

HyreCar Inc. - CFO

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Conference Call Participants

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* Howard Allen Halpern

Taglich Brothers, Inc., Research Division - Senior Equity Analyst

* Jack Vander Aarde

Maxim Group LLC, Research Division - Equity Research Associate

* John David Godin

Lake Street Capital Markets, LLC, Research Division - Equity Research Analyst

* Jon Robert Hickman

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

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Presentation

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Operator [1]

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Good day, and welcome to the HyreCar Inc. Second Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Joe Furnari, Chief Executive Officer. Please go ahead, sir.

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Joseph Furnari, HyreCar Inc. - CEO & Director [2]

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Thank you, operator. At this time, I'd like to welcome all to our second quarter 2019 financial results conference call. With me on the call is Scott Brogi, HyreCar's Chief Financial Officer. We're excited to update you on our progress over the past quarter and provide you with some insight into our vision for the future of Mobility-as-a-Service and how we plan to monetize that vision today and in the future.

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 may be found in our earnings release and supplemental materials, which was furnished with our Form 10-Q filed today with the SEC and may also be found on our Investor Relations website at ir.hyrecar.com.

So we reported another record quarter in Q2 with revenues increasing 67% to $3.8 million from $2.3 million when compared to the same period last year. 2,837 new unique drivers were added in the second quarter of 2019 as compared to 1,836 new unique drivers added in the second quarter of 2018. In the same time period, new driver leads to the platform have averaged over 80,000 per quarter with a new high in July. This creates a tremendous opportunity for us in the summer, and we're sprinting at full speed to match requests from drivers who want to participate in the ride-sharing economy but don't have a qualifying vehicle.

The biggest subsequent event to the second quarter was the completion of a follow-on soft offering with Northland Securities. Approximately 95% of the offering was placed with quality institutional longer lead funds, all of whom recognize HyreCar's vision for Mobility-as-a-Service or MaaS. Scott will go over the details of the raise later in the call, but I want to run through the rationale for the timing of the raise and touch on use of proceeds.

We had said in the past that we are going to bootstrap growth and self-fund, but if our dealer initiatives and OEM pilots began to heat up, we would look to raise additional capital to scale into those opportunities and relationships. To that point, we've been running our OEM dealer pilots for the past few months, and the results of those pilots are starting to float up to senior management at the OEM level. This news has accelerated conversations internally, but the size of our balance sheet was called into question as a potential hindrance to moving forward with larger partnerships. We felt it was in the best long-term interest of our shareholders to raise the cash needed to scale into these opportunities and remove any potential obstacles to partnership opportunities.

The proceeds from this raise allow us to supercharge all facets of the business with a focus on technology. So we are enhancing the dealer portal, including building out a standardized driver earn-to-own program, which was a specific ask from one of our OEM partners as well as accelerating back-end infrastructure development by adding senior engineering talent.

I'm also excited to say that given the increase in revenue take rates and expanding gross profit margin, we have now demonstrated internally that the company can be cash flow positive within our current OpEx spend. We will continue to operate with a focus on profitable growth but also make the necessary investments the management and the Board feel are needed to grow revenues and scale with our partners. We are focused on specific investments that need to be made today in order to capture current and future revenue opportunities like our dealer initiatives. So there will be a modest increase of cash burn moving forward from our current levels.

Building car capacity and scaling dealer relationships were the main themes of our dealer initiative in Q2. In our 2019 first quarter call, we noted 114 commercial accounts representing approximately 1,700 cars listed on the platform. I'm happy to report that today, we have increased commercial account by 50% to 170, representing approximately 2,300 cars listed. We expect the quarter-over-quarter average car per commercial account to fluctuate slightly due to the mix of dealerships that include the addition of smaller independent dealers across the country. At the same time, we expect that newly -- that the newly formed account manager roles focused on growing inventory in existing commercial accounts and the additions to our commercial team focused on bringing large dealer groups on board will increase the average number of cars per dealer significantly by the end of the year.

To put these numbers into context, there are combined 48,000 franchise independent dealers in the United States, so the total addressable market or TAM is tremendous, and we've just started to scratch the surface of this initiative. The resulting potential is hundreds of thousands of cars available to drivers on our platform, and this commercial opportunity matches our constant ballooning demand from drivers needing cars, which was over 30,000 driver leads last month.

More importantly, we now have 2 or 3 franchise dealerships in each of our 5 core geographic locations of geos. That have said that they will add as many cars as we can provide drivers. These top 5 key geos now have hundreds of new cars listed in tranches, enabling us to match drivers in larger geography nodes as opposed to one-offs as we used to do with the peer-to-peer supply. The TAM of these 5 geos alone is over 5,000 dealerships, and we only have 70 commercial accounts listing approximately 1,100 cars in these regions or an average of 16 cars per account.

The current pipeline is even more robust with an additional 68 opportunities in these regions with an initial listing projection of over 1,500 vehicles. To put these numbers in context, given our current revenue take rate and demand velocity, we're well on our way to 10,000 daily active rentals, which is a little under $100 million in revenue run rate. I'm not putting a time line on the 10,000 daily actives but with more dealers adopting and Mobility-as-a-Service mentality and pending OEM pilots becoming official, I am very optimistic for the future.

We're also seeing utilization tick up as dealers become the larger part of our vehicle inventory. Utilization will become a more important KPI to track in the future because we found that dedicated commercial supply on the platform is rented greater than 90% of the time, whereas peer-to-peer supply is closer to 57% of the time. A few reasons for this utilization disparity include: owner response time to booking requests, availability for key exchanges, competitive pricing and car quality. As the shift and mix of inventory continues to weigh more heavily towards dealers and fleets, we expect overall utilization rates to increase.

While these cars represent future revenue growth, obviously, there's still a major asymmetry between the driver leads we're generating and the cars listed on our site. So we continue to increase our investment in people and systems and our commercial and dealership initiatives in order to close this gap between supply and demand as we scale our inventory to meet demand for vehicles on our platform.

Our partnerships group has focused on accelerating OEM pilots currently in progress. For example, one of these pilots alone has added almost 350 franchise dealer partners into our sales pipeline. Feedback has been positive with low churn from the dealer side. Our integration of the new dealership portal and related technology tools, combined with the on-boarding of veteran automotive sales executives in our HyreCar team, has created an environment where dealers and OEMs can efficiently onboard vehicles en masse to the HyreCar platform.

The success of our dealer initiatives to date is proving that the HyreCar platform helps dealers and OEMs to collaboratively partner with a mass provider to leverage this monumental shift in the transportation industry that is affecting their core businesses in a win-win business model for both.

We've fortified these auto initiatives with key additions to our Board. Recent additions include Michael Root, a seasoned technology executive and software thought leader who helped scale the market-leading gaming company, Riot Games; and Jay Vijayan, former Chief Information Officer at Tesla, where he had a team build and scale Tesla's digital information platform systems including customer acquisition and sales, fueling the company's hyper-growth phase.

We believe additions such as these proven technology innovators will help us further strengthen our technology platform and product initiatives, focused on automating key business processes and reducing additional manpower requirements as we scale and help us attract key talent. Surrounding HyreCar with experienced individuals has been one of my key objectives, and leveraging different perspectives on the industry is what has made us a leader in the space and will continue our trailblazing into the future.

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 second quarter of 2019. Scott?

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Robert Scott Brogi, HyreCar Inc. - CFO [3]

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Thanks, Joe. Net revenue increased 67% to $3.8 million for the 3 months ending June 30, 2019, as compared to $2.3 million for the same period the prior year and increased 9% sequentially from $3.5 million in the prior quarter. Revenue growth in the second quarter was primarily driven by the higher take rate or net revenue margin associated with the 2 new service tiers we rolled out during the second quarter as well as net rental days increasing to a new high of approximately 140 days for the second quarter.

Gross profit increased 114% to $2.3 million for the 3 months ended June 30, 2019, as compared to $1.1 million for the same period the prior year and 18% sequentially from $2 million in the prior quarter. The 2 additional service tiers, the 80-20 standard tier and the 75-25 premium tier, have dramatically improved our net revenue margin.

As a result, our gross profit margin improved to 61% for the 3 months ended June 30, 2019, as compared to 47% for the same period the prior year and 56% the prior quarter. This better than 500 basis point sequential improvement is significant, and we expect further margin improvement as we realize continued economies of scale as well as new marketing affiliate opportunities within the digital economy ecosystem.

Operating expenses increased to $4.4 million for the 3 months ended June 30, 2019, a 3% increase as compared to $4.2 million for the same period the prior year and $3.7 million in the prior quarter. This was primarily due to increased staffing expenses to support higher revenue levels. I would add that this quarter includes more than $600,000 in noncash stock-based compensation, up from approximately $300,000 in the prior quarter.

Our net loss decreased by $3 million or 59% to $2 million or $0.17 per share for the 3 months ended June 30, 2019, from $5 million or $0.92 per share in the same period the prior year and increased -- and it was a slight increase from $1.7 million or $0.14 per share sequentially the prior quarter. After adjusting for the higher noncash stock-based compensation this quarter though, an adjusted net loss of $1.4 million or $0.11 per share resulted, which compares favorably to prior quarters.

Cash at June 30, 2019, totaled $5.1 million as compared to $6.8 million at December 31, 2018. As Joe mentioned, after the period end, we successfully completed the $12.1 million secondary public offering in July, which included the full exercise of the over-allotment. This fortifies our balance sheet to approximately $15 million in cash and cash equivalents as of July 31 and allows us to confidently accelerate key growth initiatives.

To put this into context, a year ago, we burned over $3 million in the third quarter alone, but over the first half of 2019, we burned an average of $800,000 per quarter. So with this raise, we are now very well positioned to expand growth by investing in the dealership opportunity to drive pilots with car manufacturers and the transportation network companies into formal strategic partnerships while continuing to make progress towards cash flow profitability.

Now I'd like to turn the call back over to Joe to wrap up.

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Joseph Furnari, HyreCar Inc. - CEO & Director [4]

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Thank you, Scott.

So in summary, we are continuing to grow rapidly and this growth is fueled by macro tailwinds, pushing individuals toward a new future and it's called Mobility-as-a-Service. We see HyreCar perfectly positioned to enable drivers, OEMs, auto dealers and fleet operators access to the MaaS opportunity. Feedback from our OEM and dealership initiatives has been positive so we're doubling down on efforts to build scale and capacity into the platform to accommodate our vehicle suppliers.

Driver demand continues to be robust and providing a consistent value-add experience for our driver customers has been a key focus. To conclude, I believe HyreCar is reaching an incredible inflection point, and I look forward to continued operational execution and shareholder value creation over the long term.

With that, I'll turn it over to the operator. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question will come from Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [2]

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Congratulations on the quarter. Just diving into the OEMs a little bit more. I know you were working or piloting 2 OEMs and it sounds like it's getting the attention of senior management at those OEMs. But how was the traction kind of number of dealerships or how are those pilots going?

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Joseph Furnari, HyreCar Inc. - CEO & Director [3]

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So with -- we've really now focused this effort within 5 key geographies. And within those 5 geographies alone, we have over 70, what we call, commercial accounts, lots of dealers, some small fleet managers and small rental car companies. That average count per commercial account has gone up to about 16. Last quarter, it was around 14, 14 or 15. So we're seeing growth there, I think, because we're adding on some small independents, it drags down the average. But I'd see that really starting to accelerate because we've repurposed the internal team with about 6 of them now that are account managers, and their specific task is to grow car inventory within the current commercial accounts. So expectation is that really accelerates in the latter half of the year.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [4]

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Got it. And I think specifically, there was an international OEM and a domestic OEM. Are both of those progressing and have you expanded to any others?

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Joseph Furnari, HyreCar Inc. - CEO & Director [5]

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Yes. And so you have the 2 that we had talked about 2 or 3 months ago, and now you have 3 or 4 more that are throwing their hats in the ring. You have 1 where in 2016, it was the largest leasing year ever. And now you've got, in 2019, a tremendous amount of those leases coming back. The dealer specifically for that company are spiffed on lease buybacks or how many leases they take back. And so we have a perfect use case for them. They're really excited, and I think that we'll probably have our first dealership signed up within the next couple of weeks here now on. So there's a lot of use cases. We're providing a platform for the dealerships and they're figuring -- and the OEMs and they're figuring out how to make money there.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [6]

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Got it. Got it. And then Joe, in your prepared remarks maybe halfway through, you had talked about 300 partnerships and 350 cars. Can you just re-highlight what you were saying? I didn't completely follow it.

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Joseph Furnari, HyreCar Inc. - CEO & Director [7]

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Well, so specifically, our partnerships group, headed by Brian Allan, has focused on accelerating the OEM pilots. One of those pilots -- and we mentioned this in the last call, one of them basically said -- we had originally started with 8 of the healthy franchise dealers and then they came back to us and said, "I don't want to look like one playing favorites right now. Here's our list of 350." And so we put that into our pipeline and we're going through the outside sales team and the inside sales team's going through and reaching out to those individuals.

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Robert Scott Brogi, HyreCar Inc. - CFO [8]

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And yes, Mike, this is Scott. Maybe just to add to that a little bit. I knew we've talked about it before but I just wanted to highlight the recent timing of that outside sales team coming onboard. So we had a very senior lead salesperson in the southeast who joined in June and then seasoned people in the central and western regions joined in June as well.

We just had a very experienced northeast lead joined in mid-July. So we now have all those people really trained up. We have collateral. So we've now kind of increased the amount of boots in the street, if you will, by fivefold from just Brian Allan alone. We'll probably be adding another 1 or 2 people to fill out kind of the national footprint. And so those people are really now stepping into conversations with dealers in -- particularly in those 5 key metropolitan markets that Joe mentioned.

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Operator [9]

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Next, our question will come from Mark Argento with Lake Street Capital Markets.

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John David Godin, Lake Street Capital Markets, LLC, Research Division - Equity Research Analyst [10]

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This is John. Congrats on the quarter. Just the first one on gross margin. As you are kind of migrating to these 2 new revenue tiers, what's kind of the mix at this point of cars that are coming on in those premium revenue tiers to the historical 15-85. And how do you see that continuing to trend going forward?

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Robert Scott Brogi, HyreCar Inc. - CFO [11]

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Yes. Great question, John. This is Scott. What we've seen is we've kind of been pleasantly surprised by the uptake on the 2 higher tiers, the 80-20 standard tier and the 75-25 premium tier. So I would say that as opposed to maybe 1/3, 1/3, 1/3, which is what we kind of originally thought would happen, as we moved through Q2, we ended up seeing more than half of the car owners converting into the new premium plan. So that's really kind of dramatically increased net revenue margin from historically kind of the 42% to 43% range up to kind of 46%, 47%. And I think you saw that really driving gross profit in Q2. And that's something that is going to be continuing going into Q3 because now, we'll have a full quarter of all the cars on the platform in those revenue shared tiers. So when you have that and then you supplement that with some of the additional revenue opportunities that we have, we see a continued trend in that direction.

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John David Godin, Lake Street Capital Markets, LLC, Research Division - Equity Research Analyst [12]

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Awesome. And then just second, kind of on the new driver leads, how, as you scale up the amount of cars on the platform, you've got a lot of new driver leads. How do you think about kind of driving higher conversion going forward? I know it's kind of push-pull between the 2, but just maybe some color on helping driving increased conversion as you get more cars in the platform.

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Robert Scott Brogi, HyreCar Inc. - CFO [13]

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Yes, absolutely. Actually, that's a conversation we have every day of how to drive higher conversions of those leads through the funnel. I know that the app is actually converting at a higher rate than the web leads. So pushing more people through our new driver apps has -- is going to start to --it's a third quarter initiative. I think we've worked out all the bugs there.

And integration of technologies with facial recognition that we have now; increased head count to close those individuals once they go through the background checks and have been approved; and then the focus, from a marketing perspective, on the 5 key geos where we have OEM-like franchise dealers that have said they're going to give us as many cars as we can provide leads. So those 3 focuses enable higher conversion rates from lead to conversion, and I see that ticking up. In the models that we have, we keep it flat, but it's a conversation we have every day.

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John David Godin, Lake Street Capital Markets, LLC, Research Division - Equity Research Analyst [14]

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And last one, maybe if you could just give us an update on what you're seeing in the competitive landscape, any new moving parts there? Just some more color there will be helpful.

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Joseph Furnari, HyreCar Inc. - CEO & Director [15]

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Yes. We have a great slide in our deck on our IR site that talks about the competition and the landscape there. There has been some new competitors coming into the market so there's some headwinds there. I still believe we have the best model to be able to provide the quality of service. We have the largest geographic footprint. We're going after dealers where they are dispersed by population density. So primary, secondary, tertiary rural municipalities, we have all of that covered whereas competitors are all asset-heavy at this point. So I still believe we have the right mousetrap here to really exploit this opportunity. And I would encourage investors to look at our presentation on that competitive analysis slide.

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Operator [16]

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Next, we take a question from Jon Hickman with Ladenburg.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [17]

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Joe, can you hear me okay?

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Joseph Furnari, HyreCar Inc. - CEO & Director [18]

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Yes, we got you.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [19]

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Okay. Maybe I missed this on your prepared remarks but could you talk a little bit about what the dealers are doing with lease-to-own programs and if that's driving -- is that driving some of these increased leads from people who want to get involved in this segment of the industry?

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Joseph Furnari, HyreCar Inc. - CEO & Director [20]

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Yes, yes. So we touched on it a little bit where we have a dealer portal now. And one of the asks from our -- from one of our OEM partners was a standardized earn-to-own program or a rent-to-own program where it's a standard price for a vehicle. It's a known weekly rental of that vehicle for 3 months and then that driver walks away with the car. We have [Tony Hong] who's come in to lead that charge from a development and product standpoint. He is running our dealer portal initiatives, and that is one of his key deliverables here over the next couple of months. So you have that plan rolled out.

And that does a couple of things. It increases our lifetime value of customer, and it also gives -- enables the dealer to have multiple touch points with that customer, not only while they're renting but also post-sale when now the service and part center start to get that. So I think we'll have that rolled out soon, and then I think that drives even more dealer adoption at the franchise level.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [21]

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But doesn't that like if the guy walks away with a car in 3 months, then you've lost that revenue stream, haven't you?

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Joseph Furnari, HyreCar Inc. - CEO & Director [22]

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True, but our median rental days right now is 18 days so we're locking that driver in for 3 months.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [23]

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3 months? Okay.

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Joseph Furnari, HyreCar Inc. - CEO & Director [24]

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So we are now, what is that, 6x, in terms of lifetime value so it's a win-win for us. And the other piece to that is that we have so many leads that even if you lose them early, it doesn't matter. You just replace it. Think of cars as like programs. It doesn't matter who's staying, and it just matters that they're occupied. And that's the same with utilization. We touched on utilization a little bit as well.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [25]

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Okay. One last question. The statistics you gave about -- I think you said it was 170 people commercial accounts and they're doing like 2,300 cars. Was that as of the end of June?

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Joseph Furnari, HyreCar Inc. - CEO & Director [26]

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That is as of today.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [27]

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Today, okay.

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Joseph Furnari, HyreCar Inc. - CEO & Director [28]

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Yes. So to put that into context, so we had 114 commercial accounts with 1,700 cars. That was as of when we announced so that was mid-May. And so it's an apples-to-apples, which is as of today versus quarter end.

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Operator [29]

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Next, we'll take a question from Allen Klee with Maxim Group.

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Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Associate [30]

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This is Jack Vander Aarde speaking for Allen Klee. Just a couple of questions. Most of my questions were answered or asked already. So maybe I missed it but did you guys disclose what billings were for the quarter?

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Robert Scott Brogi, HyreCar Inc. - CFO [31]

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No. We didn't disclose that in the call details. It's kind of a non-GAAP number. So no, we didn't cover that in the information.

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Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Associate [32]

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Okay. And then there were questions about the gross margin. It was nice to see the gross margin improve. If the -- I guess I was curious to know if those new insurance plans were already active for the entire quarter, would you have seen -- can you quantify or roughly measure what kind of gross margin improvement you would have seen for that -- if that was active the entire quarter? Would it be something significant or -- I'm trying to figure out where we are in the benefit from that.

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Robert Scott Brogi, HyreCar Inc. - CFO [33]

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Yes. I mean we haven't done a full like weighted average of the car conversions throughout Q2, but it would probably add another couple of hundred basis points to gross profit margin.

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Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Associate [34]

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Okay. Got it. And then for -- you guys talked about cash burn has come down, and although it's maybe modestly increasing for the next couple of quarters, and as the stock-based comp increased pretty significantly this quarter. So I'm trying to understand how we should think about OpEx as a percent of revenue relative to where it is today for the remainder of the year, and if that stock-based compensation level is going to be maintained or increased any further?

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Robert Scott Brogi, HyreCar Inc. - CFO [35]

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Yes. I think we had a couple of kind of a significant SBC adds in the quarter so there were some legal costs that we chose to handle that way, and then we -- as Joe mentioned, we have added a couple of folks to the Board who do have incentives aligned with our deliverables. So I think you saw both of those hit in Q2. I don't think you'll see much of a change in Q3 on the Board side of things. So we may have some employee-based increases but probably not significant. And then that legal component should be about where it was in Q2. So we would expect to be absorbing more of that OpEx as we continue to grow the top line.

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Jack Vander Aarde, Maxim Group LLC, Research Division - Equity Research Associate [36]

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Okay, that's very helpful. And it's good to see revenue continue to track along. Great quarter, guys.

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Operator [37]

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And next, we'll go to Howard Halpern with Taglich Brothers.

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Howard Allen Halpern, Taglich Brothers, Inc., Research Division - Senior Equity Analyst [38]

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Congratulations, guys. Like the previous, most of the questions have been asked. But I do have one on, I guess, the technology enhancements. What type of incremental expense over the next year do you anticipate? And then how do you believe that those technology enhancements are going to be able to be leveraged in 2020?

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Joseph Furnari, HyreCar Inc. - CEO & Director [39]

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Well, from a qualitative standpoint, you have Michael Root and Jay coming on and leveraging, and I think that's the perfect combination because you have Jay as like a traditional CIO that's focused on product and then you have Michael who has built back-end architecture for scalable gaming solutions.

And so qualitatively, leveraging their connections and developer pools to bring in some of those heads, I think is -- that's why we brought them in the first place. So qualitatively, I think you bring in -- and the strategy high level, high-level devs to really help us shore up some of the challenges that we have there. And then we'll move from there, and then I think Scott would add financially.

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Robert Scott Brogi, HyreCar Inc. - CFO [40]

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Yes, I think Jay is based in Northern California, but Michael's right here in Los Angeles. And Michael has a very strong following in the gaming technology, scalable cloud-based infrastructure in particular. So we're actually working closely with him now and can talk with our internal team to identify some engineering talent that can help us go faster on both the dealer portal as well as some back-end enhancements that we want to roll out to continue to grow.

So I don't think it would be a significant increase in terms of OpEx, but that was kind of part of the sequential investment that Joe was talking about earlier. So there probably will be some adds there to again allow us to really move faster into the dealer initiatives, in particular, as we continue to improve that mix of car supply.

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Operator [41]

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And that does conclude our question-and-answer session today. I'll turn the call back over to Joe Furnari for closing remarks.

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Joseph Furnari, HyreCar Inc. - CEO & Director [42]

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Great. Thanks, operator. I don't have much, but thank you again for joining us today. We look forward to continuing to update you on our progress through the balance of 2019. Thank you.

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Operator [43]

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That does conclude our conference for today. Thank you for your participation.