HyreCar Inc.
Q1 2020 Earnings Call Transcript

Published: 15 May 2020

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the HyreCar Inc. First Quarter 2020 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, May 14, 2020, and the earnings press release accompanying this conference call was issued at the close of 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.

[Joe Furnari:]

Great. Thank you, operator. At this time, I’d like to welcome you all to our first quarter 2020 conference call. It is hard to believe that we are two months into shelter-in-place orders because of the global pandemic of COVID-19. This has been an unprecedented period of time, but it appears that we are now returning to some sense of normalcy as individual states and municipalities are beginning to reopen their economies. We trust that all of you are safe, and we thank you for being on the call today.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.Now turning to my comments. Through the first two months and half of the first quarter, we were on quarter, we were on pace to exceed $6 million in quarterly revenue. Driving this growth was the ever constant demand from rideshare drivers paired with accelerating commercial supply. But as the COVID-19-related shelter-in-place orders began to be enacted by the states, active rentals fell from all-time peak as rideshared consumers stopped using Uber and Lyft in those markets. We responded to this decline by identifying opportunities in delivery service platforms and by rapidly on delivery in late March. The emphasis on delivery included rebranding our app and web portals, creating new sales talk scripts, retooling messaging, retraining support staff, affirming assurance coverages and focusing marketing spend on delivery. Because of this effort, active rentals have grown consistently since the first week of April, and as you can see from our press release, have now established a clear uptrend. This should give our stakeholders confidence that we are nimble, and we can continue to grow in any business environment going forward.At HyreCar, we have taken measures to manage our way through this environment in order to protect our employees and help our drivers position themselves in this new environment. Navigating the uncertainty in the market has been a full-time job recently. But these times will test and prove the value of our business model as a platform for people and companies to participate in the rapidly changing transportation industry. We have seen this crisis accelerate the expansion of our business from predominantly rideshare to now rideshare and delivery services. The combination of states reopening for rideshare and delivery service platform economics remaining strong has the potential to make our business even bigger than we had anticipated.Throughout this pandemic, we have done our best to keep you all informed with press releases that gave updates on our progress. And on this call, we’ll give an update on the state of the business and provide you with some insight into what we think the future holds.First, our top priority has been the health and safety of our staff and everyone who uses our platform. Although we are considered an essential business, we’ve implemented work-from-home to keep our staff safe and to minimize the effects of COVID in our workforce. At the same time, my leadership team is taking action to solidify our business to make sure we’re set to come out of this crisis stronger than before.We have sufficient liquidity. We have a highly variable cost structure. We have an agnostic platform that allows our drivers the ability to pivot in this crisis and multiple levers to pull to reduce fixed ops burn. Halfway through the second quarter, our revenue is growing week over week, and we have been able to reduce operating expenses.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 higher to fare better than the 80% rideshare decline our TNC partners are seeing in their business. For Q2, we expect Hyre to be down less than 15% quarter-over-quarter, and our commercial partners are beginning to commit to adding meaningful numbers of cars to the platform. This means we’ll be back to record high rental days by the end of this quarter as well.We continue to see strong demand for drivers seeking vehicles for delivery because delivery services are heavily supplementing rideshare driver income during this slowdown. We had over 1,100 new unique drivers pick up a car in the month of April, which, when paired with increasing customer retention rates, is helping 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.A recent survey by Uber found that 90% of customers expect to take a ride in the next 90 days, which points to a full recovery in ridership and bodes well for Hyre’s business. This recovery trend, combined with a number of states reopening, will mean that rideshare will increase while delivery economics remain strong, creating a perfect tailwind for HyreCar’s business model. We also received some help from the recently passed CARES Act in the form of a payment protection program loan for – of $2 million. This loan has predominantly helped us maintain our core employee base, which was the intent of the program. There has been much discussion over the PPP loan in terms, especially for the larger public companies with access to capital, credit lines and excess cash reserves, but we are hopeful that the rules under which we applied remain, because this loan has been a key help during this difficult time.In any event, we have prepared our company to weather the current storm. 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.Now turning to cost of sales. A big component of cost of sales has become our insurance reserve and physical damage payments since we adopted the SEC’s suggestion to move these expenses up the income statement. In Q1, insurance premium paid was approximately $1.4 million, and claims payments were approximately $1.6 million. We are currently renegotiating our annual auto insurance program and expect to secure a reduction in our national insurance liability premium.We are analyzing pricing on a state-by-state level, and I’m excited about state-by-state pricing because it represents the first step in getting toward a more granular ZIP code level pricing, which has been the goal of our data collection and insurance program for a long time. We haven’t had the technology to implement this sort of schematic in the past. So kudos to our team that has been building out the technology that is now enabling this capability today.On the claims payment front, we have taken multiple steps to enhance our driver risk underwriting model, including everything from optimizing our background check criteria, introducing a Telematics SDK in our app, outsourcing the billing and payment of physical damage claims, and new fraud investigation tools that were implemented in Q1 and/or scheduled to be implemented in Q2.All these changes should start to materially decrease the cost of claims going forward and help us improve margins. The plan is to optimize our claims expense relative to active rental growth through a combination of initiatives, both on the cost side and expense recovery side. Over time, these measures should result in a profitable business model with insurance a part of our most important value proposition.New cars on the platform are sourcing predominantly from existing dealer groups as most new franchise dealers have seen slowdowns from registering and plating cars because of DMB closures. However, we have begun to see a pickup in the partnership discussions with new and existing partners that were dormant for the past eight weeks coming back to life. We expect to be announcing new partnerships in the coming weeks as fleets and auto dealers are stepping up to make sure they have relationships in our markets as the country reopens.It is important to note that as COVID was emerging, our industry was already experiencing large disruptions with many of our major direct competitors. These competitors have disappeared due to high cost structure business models that leverage high cost rentals and unwieldy car lease ownership models. The auto industry is, by and large, a high cost structure industry with a need to fund inventory and pursue large transactions that outside of home purchases are some of the largest purchases a family can make.For this reason, large economic dislocations can have essential consequences for companies like Hertz [indiscernble] Avis. We’re currently seeing this play out in the market today. At the same time, this has created opportunities for auto dealers and OEMs to take advantage of these opportunities and set up for the future of Transportation-as-a-Service. That future will continue to see consumers, rideshare drivers and delivery drivers seeking to rent rather than own their cars off convenient, service-oriented, low-cost platforms like HyreCar. Our low-cost flexible platform allows a turnkey solution to market participants to gain flexibility and convenience to participate in this market.This is part of our long-term plan for our company and part of our strategy that will expand our company to integrate our services and platform into the dealer software platforms for both used and new cars. This will position us for the long-term as a Mobility-as-a-Service company and will allow many participants in the market to integrate into the car-sharing and mobility market as it grows and changes.With that, I’d now like to turn the call over to Scott Brogi, our Chief Financial Officer, to walk you through some key financial details from the quarter. Scott?

[Scott Brogi:]

Thank you, Joe. After reaching an all-time high of more than 20,000 weekly rental days during the first full week of March, we saw a dip of approximately 30% over the next month to approximately 14,000 weekly rental days due to shelter-in-place rules. As we diversified our business into other gig economy service providers like food and grocery delivery through late Q1 and early Q2, we started to rebound the first full week of April. We have now seen an uptrend from our floor in early April and passed back over 17,000 weekly rental days for this past week ending May 10, so we are now halfway back to the peak of 20,000 weekly rental days we reached in early March.With the improvements to our expense structure we have been working on during the first half of the year, breakeven for us should be approximately 30,000 weekly rental days. And as Joe mentioned, we hope to soon be back over 20,000 weekly rental days. For the three months ended March 31, 2020 net revenue increased 65% to $5.8 million when compared to $3.5 million for the equivalent period last year and up 20% sequentially from $4.5 million in the prior quarter. This revenue increase in the first quarter was primarily driven by increases in net rental days, which grew 16% to over 229,000 days in the first quarter from 197,000 days in the fourth quarter.Cost of sales increased for the quarter ended March 31, 2020, to $3.6 million from $2 million in the prior year and includes approximately $1.5 million in claims, formerly in operating expenses, as well as an additional insurance reserves due to higher rental days in the quarter. As we discussed on our last call, we have been working with the SEC as they asked us to consider classifying insurance claims payments into the cost of goods sold above the gross profit line versus the 2018 classification of insurance claims payments into general and administrative operating expense on our income statement.This has recently become an industry standard within our transportation peer group for companies like Lyft, Uber. This change is EBITDA neutral and has no impact on previously reported earnings as we are moving the expense from below the gross profit line to above it and reducing both gross profit and operating expense equally. Gross profit for the first quarter ending March 31, 2020, was $2.2 million, up from $1.5 million in the year ago period ending March 31, 2019.Gross profit margin was 38% for the first quarter, down from 43% in the year ago quarter ending March 31, 2019, but consistent with the prior quarter ending December 31, 2019. On a going forward basis, as a result of improvements to driver verification, insurance and merchant processing, we expect our gross profit margin to range between 40% and 50%. Operating expense increased to $6.3 million for the three months ended March 31, 2020, from $3.2 million in the same period the prior year.This was primarily due to increased marketing and sales expenses as well as general and administrative expenses to support higher levels of revenue. $800,000 of this total in the first quarter was due to non-cash stock-based compensation expenses, approximately half of which was one-time in nature. So cash operating expense for the quarter was approximately $5.5 million, and we are working to reduce this to under $5 million per quarter.Payroll is our largest single expense item and was originally budgeted approximately $10 million for 2020. With the hiring freeze we put in place in March as well as some staff reductions, we currently expect to reduce that by approximately 25% and save $2.5 million in 2020 expenses. Our adjusted net loss increased to $4.1 million or $0.25 per share for the three months ended March 31, 2020, from $1.7 million or $0.14 per share in the same period the prior year, but decreased from $5.1 million or $0.37 per share sequentially from the prior quarter ending December 31, 2019. Adjusted EBITDA was $3.2 million after the non-cash items mentioned earlier, or $0.20 per share, improving from $4.6 million or $0.30 per share the prior year.Cash totaled $7.8 million on March 31, 2020, an increase of $1.5 million from $6.3 million on March 31, 2019. We received the $2 million PPP loan from our primary banking partner, JPMorgan Chase, which was originated on April 13, 2020, so cash is currently higher than it was on March 31 and it’s still in excess of $8 million today. We are using the proceeds of the loan as intended for maintenance to payroll for our less than 100 employees. We expect to spend more than 75% of the loan proceeds from mid-April through mid-June on payroll expenses. And so it is likely that this loan will ultimately be forgiven.Now I’d like to turn the call back to Joe to wrap up.

[Joe Furnari:]

Great. Thank you, Scott. So in summary, despite an unprecedented environment, we are positioning ourselves to continue to grow rapidly. And this growth is fueled by macro tailwinds pushing individuals towards a new future. And it’s not just mobility, but also last mile delivery for goods and services. We see HyreCar perfectly positioned to enable drivers, OEMs, auto dealers and fleet operators access to the transportation-as-a-service opportunity and for all to earn revenues from participating rather than disrupting the traditional players.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 continues to push toward a positive inflection point, which will be a bit slower now do due to COVID, but we continue to move in a positive direction 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?

[Operator:]

Thank you, sir. [Operator Instructions] And our first question comes from the line of Mark Argento with Lake Street Capital.

[Mark Argento:]

Hey, Joe and Scott, congrats on a solid quarter despite the environment. You can talk a little bit, I know, you’ve already – you mentioned that you’re starting to see a bounce back in terms of utilization. I know you guys have some – few of the markets you’re exposed to are already back open in particular, Georgia, I think Texas as well. But maybe you could talk to kind of, what are you seeing as the states come back online kind of behavior you’ve seen in terms of, is it a quick snap back? Does it take a little while to build maybe anything anecdotally there? That would be great.

[Joe Furnari:]

Yes. Thanks Mark. Good to hear from you. Georgia is a great test case because they recently started to reopen the state, was it approximately three weeks ago or so. Pre-COVID California and Georgia used to kind of compete on our site for that number one spot in terms of active rentals on the platform. But with Georgia open and California is still under the shelter-in-place orders, Georgia is really the clear front runner right now. Rental days in Georgia are only off about 6% or so from the peak versus the broader national average of approximately 15%. So that points to a V-shape recovery and our business as states start to reopen.

[Mark Argento:]

And do you think – I know you had mentioned in the prepared remarks, 1,100 new unique drivers, I believe in April. So is unemployment a lot of people that are work in service, economy jobs, restaurants other areas that have been shut down. And do you think that you’re starting to see a shift? These people are migrating into – onto the platform in a way to get access to vehicles to drive and generate revenue and income?

[Joe Furnari:]

Yes. Good question. I mean, we’re certainly seeing an influx of drivers onto all delivery platforms. Uber Eats business was up 89% in the month of April, so there’s a significant growth there. We recently announced partnerships with the City of LA and Atlanta with kind of a unique link to our website placed on their city’s electronic jobs boards. I think a percentage of the 1,100 new unique drivers certainly came from that pool of unemployed workers. So we’re monitoring the flow of lead traffic from those sites, because I think it’ll be a good proxy for us to use to definitively answer that question. Yes, we’re also pursuing some partnerships with seasonal workers and furloughed workers, and hopefully, we’ll be announcing those partnerships in the coming weeks as well. So there’s certainly, we’re doing our part to help in this environment and this situation.

[Mark Argento:]

Great, that’s helpful. And then that last one for me, I know historically getting access to cars has been really kind of the governor to your growth and in this environment, especially with like Hertz not taking any more vehicles, most likely declaring bankruptcy. I have to assume there’s a lot of vehicles out there and potentially available. How are you guys taking advantage of that? And how quickly could that manifest and hopefully, continue to accelerate the daily average or weekly average utilization? Thanks.

[Joe Furnari:]

Yes. So what we’re seeing – I guess, what’s interesting, and I kind of a mentioned this in the prepared remarks a little bit is that, we’re starting to see traditional rental car companies and peer-to-peer fleet managers coming onto our site as well. The rental car guys are getting crushed right now in this market. You mentioned Hertz, but Avis and some of the peer-to-peer car sharing sites for leisure as well. And so the rental car players specifically are looking for opportunities to get their inventory utilized. And so we’re providing a bridge for them to be able to do that. So I’m hoping we’ll also be able to announce some of those rental partnerships relatively soon as well.

[Mark Argento:]

Great. Thanks guys.

[Operator:]

Thank you. And our next question comes from the line of Mike Grondahl with Northland Securities.

[Mike Grondahl:]

Thank you, guys. Anything else to call out on the competitive environment, it sounds like that has changed radically since last fall. Who would you say you’re competing with today?

[Joe Furnari:]

Good question, Mike, and good to hear your voice again. Right now, there is no a lot of competition out there. Fair has disappeared from the market. Hertz is having their troubles. Avis is out there renting cars as well, but there aren’t a lot of competitors right now and so we’re really taking advantage here of being able to capture market share from both sides of the platform. Well, from the driver’s side where you’re starting to see a lot of delivery drivers come on, but also from the supply side in that, a lot of the dealerships are coming on. A lot of the rental car companies are coming on, as well as the peer-to-peer side as well. I mean, we’re capturing a lot of market share from kind of those traditional rideshare for leisure platforms because the vacation and leisure market has been absolutely crushed. And so from a lot of those peer-to-peer owners that were predominantly on those sites have started listing on our platform, because we’re driving utilization in this economic environment. So yes, it’s greenfields right now for us.

[Mike Grondahl:]

That’s good. In terms of the pivot, you’ve made the last two months give or take a little bit to delivery of food, grocery package, do you have any rough estimate of your cars being used for that?

[Joe Furnari:]

Yes. Rough estimates out there and maybe will be a chance to bring in Scott here, but in terms of what we’re seeing, there was always an overlap in the driver base. We always had drivers that were predominantly driving for ride sharing, but in the surveys that we had done in the past, something like anywhere between 15% and 30% of those drivers were also driving for some form of delivery. We have – we can’t specifically track that, but through some of the – through some of the surveys that we’ve done recently, we’re seeing a larger percentage of those drivers driving for the delivery services. And it’s not that they’re not driving for ride sharing as well. It’s just – they’re supplementing their income on the – supplementing the income while rideshare is down. But as I mentioned with Georgia is a great example of test case where actually seeing Georgia bounce back.

[Scott Brogi:]

Yes, I think – just to add to that, Joe, I think we had just done a survey this – earlier this week in the Atlanta market, in particular, and reached out to a number of our drivers. And basically, what we’re seeing in that market was that more than 50% of their activity was actually for delivery versus ridesharing. So it’s not a precise number, but it definitely gives us an indication that a significant amount of the activity out there right now has shifted to the delivery side.

[Joe Furnari:]

Well, that’s helpful. I would add one more point in terms of economics, which I think we’ve made this point in the past, which is driver behavior is really driven by the economics of the gig economy. So when ridesharing is paying, that’s where those drivers are driving. When delivery is paying, that’s where they’re driving. So, we have anecdotal evidence right now showing that delivery is actually paying better than rideshare economics, pre-COVID. For example, in some markets we’re seeing Instacart earnings from drivers, an upwards of $3,000 gross per week versus $1,700 for a full-time rideshare driver in Los Angeles pre-COVID.So, I think that that’s probably driving a lot of it is rideshare starts to come back and States start to reopen. You’re going to see more drivers trying to transition seamlessly, right into rideshare, part of the beauty of the platform, the agnostic nature of the platform that we’re providing the tools for those drivers to earn it’s up to the driver to choose which platform he wants to use.

[Mike Grondahl:]

Got it. Then just lastly, you kind of mentioned partnerships and those have picked up a little bit, or at least your discussions. When I think of the available pool of partnerships, I think of the OEMs various dealer groups, the TNCs, but it sounds like maybe rental car companies and even sort of leisure rental car companies, or maybe two newer buckets. Is there any other bucket of partnerships that we should be thinking about?

[Joe Furnari:]

Well, so the way, the way I bucket these partnerships is, driver – driver side partnerships, and owner side partnerships. On the driver side of things, is that the partnerships with the local community jobs boards it appears it’s a little early to say they’re effective, but it does appear that those partnerships are bearing fruit for us in terms of higher conversion rates, et cetera, from driver leads into driving a vehicle. On the owner side, I would bucket it into kind of our commercial, our commercial activities. So, we have over 400 commercial accounts now, and the bulk of that growth is being seen in the five core geos that we have. Any commercial cars right now represent over 80% of available and rented inventory on the platform. And those partners are starting to commit to adding meaningful size there because this environment is great for this type of business, right? The dealers can buy inventory from auction at bargain prices right now.So, we have the dealers going out and buying hundreds of cars, warehousing them on their lots. And simply because they know the value of those cars will hold in the long run. So, in that time period of the long run – what we call the long run, what better use case than to throw them onto our platform and get them cash flowing the short term. So the primary use case is still the commercial, the dealership avenue, but then you have these other avenues that are starting to our other channels that are starting to come online specifically in rental and then larger peer to peer fleet owners who are moving those cars from traditional leisure rideshare platforms over to over to higher car.

[Mike Grondahl:]

Sounds good. Okay. Hey, thank you guys.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from the line of Jack Vander Aarde with Maxim Group.

[Jack Vander Aarde:]

Hey guys, thanks for taking my questions. So the strong revenue results for 1Q and rental days beginning to accelerate, these are all good things to see. Kind of a tougher question I have for you is, is on the operating expense line. OpEx was much higher for this quarter than I was expecting, especially G&A and S&M. I’m just wondering, if this type of elevated level is expected to continue in the near-term, or just your thoughts on where you see G&A and S&M spend trending in 2Q and then for the remainder of this year?

[Scott Brogi:]

Yes. Maybe I’ll take that one Jack. And can you hear from you? Yes, as we talk out a little bit on the call want to point out that there was kind of a significant amount of non-cash items in the quarter, some of it was a one-time and some of it was kind of regular employee stock based compensation. So when you adjust for that, the cash, if you will operating expense was about $5.5 million for the quarter. And as we talked about we’re trying to reduce those numbers pretty aggressively going forward. So, we’re going to see some of that here in the second quarter. And then I think as Joe mentioned in his spec to see even more in the third quarter, so that’s attacking kind of the fixed costs that are in OpEx and then also in the cost of goods sold line, we have a couple of items on the insurance, the merchant processing side of things that are variable in nature. So, we’ve already seen a pretty dramatic reduction in those as the days have come down over the last month and a half. So those are the things that we’re really doing to attack that and reduce that burn going forward.

[Jack Vander Aarde:]

Okay. That’s helpful. So if I heard that correctly, though, that would imply that you’d expect OpEx in Q2 to certainly be reduced from Q1 levels?

[Scott Brogi:]

Yes. Yes. That’s a fair statement. And again, it’s – I think you need to look at what’s the cash amount that’s being paid in the quarter, and then certainly we’re working hard to reduce that. I think, when you look at it from a weekly revenue perspective, if we can get annual OpEx under $5 million a quarter or $20 million a year. It’s just going to lower that breakeven point for us. So we’re really focused on achieving that.

[Jack Vander Aarde:]

Okay. Great. And that’s a nice segue into my next question kind of related to just projected outlook. Joe, you mentioned your target to reach profitability in 2021. And then Scott, I believe you mentioned in your prepared remarks that would assume average weekly rental days about 30,000 rental days per week. So I can likely back into what that imply revenue level is. But can you talk on maybe what you expect from a gross margin level? What’s embedded there as well as the OpEx portion, what kind of levels of those expense items are embedded in that?

[Scott Brogi:]

Joe, and then you feel free to fill in any blanks. But, as we talked about, there are a couple of items in the cost of sales that we think we’re going to be able to reduce pretty dramatically. So our expectation is that on a going forward basis, gross profit margin is going to be in the 40% to 50% range. So we’re working hard to do that. And then as business starts to come back and dealers open up, they’ll also be additional opportunities for incremental revenue. That’s very high margin to support that growth.So that’s the key in terms of where we see GP on a going forward basis. And then, yes, from a revenue perspective, we peaked that a little over 20,000 weekly rental days, the first week in March. And we’re about halfway back there as we stand now kind of mid May. So our expectation is if we cross back over 20,000 rental days and that increase about 50% on the rental days to a weekly rate of 30,000, that should be break even for us. And again, the faster we can reduce any non-essential OpEx, the quicker we can get to breakeven.But if you do the math on that Jack, 30,000 weekly rental days at an average net number of $25 a day is going to get you to $750,000 a week. And that would get you to kind of a $38 million to $40 million break even net revenue number.

[Jack Vander Aarde:]

Okay, great. And then just one more for me. I wasn’t sure, maybe I missed it. But last quarter you guys, when we’re talking about utilization levels which are typically around, I believe around the mid 80% levels, commercial customers having a higher utilization. Last quarter, I think they dipped to about 70% or so at the time of the last earnings call, has that specifically that utilization level, has that begun to rebound?

[Joe Furnari:]

Yes. Jack, one – going back to that last question, I would just add in the GP line, just to look at this holistically, the biggest expense in cost of sales is the insurance piece until I was looking for anecdotals in the market and I ran across GEICO. GEICO is going to be offering 15% reductions on all payment premiums for customers that’s over – that’s a giveback of about $2.5 billion because of the reduced driving due to COVID. So I think that’s a clear indicator of less accidents, less drivers on the road due to shelter in place. And so that’s going to really translate into a lower cost of insurance as well. So just wanted to make that point.Going back to utilization – with utilization, yes. Utilization was down. It was down because we had done that call kind of mid-April. So that the major COVID effects of reduction in utilization of the vehicles on our site had already kind of bottomed at that point, and then we’re also – we’re starting to trend up. And so utilization has started to track up over the past three or four weeks. So actually more than that five or six weeks. I don’t have this specific utilization in hand right now, but it’s certainly tracked up as we’ve started to see more active rentals and increasing rental days on the site.

[Jack Vander Aarde:]

Okay. Fantastic. And thanks for that added color with GEICO. It’s great anecdotal point. And that’s it for me guys. Thank you.

[Operator:]

Thank you. I would now turn the call back over to CEO, Joe Furnari for closing remarks.

[Joe Furnari:]

Great. Thank you, everyone. And stay safe out there and we will speak to you next quarter. Thank you,

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.