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Turo CEO on rental car surge: 'Pent up demand for travel translated into local trips'

More Americans are opting to travel by car rather than air during the pandemic. Turo CEO Andre Haddad joins Yahoo Finance Live to discuss how his company is faring during the pandemic and break down how Turo is outperforming competitors.

Video Transcript


ZACK GUZMAN: Welcome back to Yahoo Finance Live. Of course, we've been watching where shares in Airbnb are going to be opening for trading at the NASDAQ. Right now, the latest indication there around 151 a share. Keep in mind, that's expected here. If we do open there, it's going to be higher than what we saw, more than 100% higher than what we saw in terms of where shares priced in that IPO last night when we got that pricing.

But we'll bring you the latest there as we get it. It's not just Airbnb, though, that has seen a rebound in terms of demand for that platform. Also in the spotlight what we're seeing in the Airbnb for cars, at least that's what Turo, the car-sharing platform, has been dubbed, a similar boost for them as Americans look to snatch up cars for more local trips.

New revenue numbers at Turo showed that the company managed to show positive revenue growth once again in the third quarter after the pandemic sparked a 25% collapse to that business in the second quarter. For more on that, I'm delighted to welcome back to the show the CEO of Turo, Andre Haddad joins us now. Andre, good to see you again, man.

It's good to hear that you guys are rebounding here, more Americans looking for cars here in this. It sounds like Airbnb was saying it was more local trips that was driving that. Is that what you guys are seeing in your numbers too?

ANDRE HADDAD: Absolutely. We've seen tremendous growth in local trips. You know, there is a huge pent-up demand for travel. But unfortunately, traveling by air, certainly international travel, has become very challenging with the pandemic. And so what we found is that pent-up demand for travel translated into local trips.

And so we saw huge growth in the third quarter of the year. We hit a new revenue record for us, almost $50 million in revenue. We also had some amazing profitability milestones throughout the year, in particular in Q3. So what ended up being, you know, a very tough start for the year with the pandemic hitting us in March is shaping up to be a great ending for the year as we exit 2020.

AKIKO FUJITA: What are you seeing on the supply side, Andre? We've heard from so many of these sharing economies, or sharing companies, whether that is an Uber or a DoorDash in food delivery, a lot of people getting in now that they've lost their jobs are looking for a little more income. What are you finding in terms of those who are listing on the platform, how that profile has changed?

ANDRE HADDAD: You know, we've seen tremendous growth in the parts of our Turo community that is looking to start a business on the platform. And this has accelerated recently, although, this has been a trend that we have seen over the last few years. But it has accelerated recently. And I think it's somewhat related to the pandemic.

As you pointed out, a lot of people are looking for secondary income sources because the economy's been tough for many. And so we are super excited. Recently, we announced Turo Seed, It's an initiative that is designed to help support these entrepreneurs start their car-sharing business on the app. And so we are helping fund, especially with a view to supporting the underserved communities in the country with helping them start their business by helping them fund their first car.

It's a great partnership we have with Kiva. We're very proud to launch it. And I think this is only going to accelerate the ability for many to take control of their financial destiny by starting a small car-sharing business on Turo.

ZACK GUZMAN: And Andre, when we look at the competition here as well, we've noted, you know, a lot of those rental car companies which are based around airports obviously seeing a larger hit here in terms of revenue tied to that, due to the drop off in air travel. But you guys yourselves are going to be returning to New York in January. That's a big boost here, an area that was once a fifth of your guys' revenue.

Talk to me about that, what that opportunity looks like for you guys. I know it's not going to be the same thing that you have elsewhere where it's people putting their cars on the platform. It's going to be more your commercial partners there. But what does the competitive landscape look to you right now as you make that expansion?

ANDRE HADDAD: We're delighted to be able to return to the Empire State. You know, it's a very challenging rental car experience for New Yorkers, as I'm sure you've experienced yourselves. You know, New York, and in particular, New York City, has the highest rental car prices in the nation. It has some of the lowest satisfaction in the nation, some of the hardest feedback that we see from consumers using rental car-- traditional rental car operators in the city of New York, and in particular, New York City.

So we're delighted to be able to return to New York and offer a new option, hopefully a better option, to New Yorkers. And, you know, we're delighted about the opportunity. As you pointed out, New York represented around a fifth of our business back in the early days of the company when we were still operating. And so we're excited to be able to come back.

Initially with our commercial host partners first, and then hopefully we'll be able to launch over time our core offering, which is the peer to peer, the consumer to consumer offering and be able to provide all New Yorkers with the full product that Turo can offer.

AKIKO FUJITA: Yeah, as somebody who lives in New York City who's rented cars a number of times throughout the pandemic, I can attest to those really high prices and the frustration around it. Let me ask you about what we're seeing play out today with Airbnb. Obviously, shares haven't started trading yet we're. Looking at potentially the IPO price doubling at the open because it was priced at $68, we're now looking at an indication well above 150.

As a private company, how are you looking at this enthusiasm we're seeing in the market right now around these new economy names? You're a player in this new economy. Does this make the public markets a little more attractive?

ANDRE HADDAD: It definitely looks more attractive for us today. And, you know, I wasn't aware of the $150 price. But that would be an absolutely stellar performance, it would be incredibly happy for our friends and former colleagues who work at Airbnb. They've built a phenomenal platform. And, you know, I think it makes it more attractive for us.

We're definitely at a point where we're looking and considering a variety of options for the next few months and next year. And I think the enthusiasm of public market investors, their ability to see beyond the short-term pandemic, in particular, is something that makes us very excited about considering the public markets for next year.

ZACK GUZMAN: Yeah, I mean, we just showed, you know, Airbnb getting a lot of this because they were able to stem the losses in terms of where their revenue went. But you guys turned back into the green here. So I imagine you're looking at that and saying, look, we got a better story here. So I assume that would make you want to come out a little bit quicker rather than later.

You guys already had 12 funding rounds, right? So I mean, talk to me about the actual timeline. Obviously, it seems like 2020 is not going to happen, but how soon next year might it happen?

ANDRE HADDAD: You know, we don't have any specific plans. So I can't really share with you any timing. But definitely, I think the enthusiasm of the public markets for Airbnb today or for DoorDash yesterday and for, you know, in general, I think the marketplace models that have been so successful over the last many years going public, I think that reinforces our interest and probably accelerates our timeline.

ZACK GUZMAN: Well, I tried.

AKIKO FUJITA: OK, well, maybe we'll check in with you in a few months or so. Zack and I will stay on top of it. Andre Haddad, the CEO of Turo, it's good to talk to you today.

ANDRE HADDAD: Very nice talk to you too. Thank you.