Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the HyreCar Inc. 2022 third quarter conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star key followed by one on your touch-tone phone. If you would like to withdraw your question, please press the star key followed by two. If you're using speaker equipment, please lift the handset before pressing the keys. The earnings press release accompanying this conference call was issued at the close of the market today, November 14, 2022. On our call today is HyreCar CEO, Joe Furnari, and Interim CFO, Eduardo Iniguez. I will now turn the call over to Scott Arnold of CORE IR, the company's investor relations firm. Please go ahead.
Thank you, operator, and welcome everyone to HyreCar's third quarter 2022 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 Incorporated. 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 the earnings release and supplemental materials that were filed with the SEC and can also be found on the investor relations portion of the company's website. Now, I would like to turn it over to Joe Furnari, CEO.
Great. Thank you, Scott. Welcome everybody and thank you all for joining today's call. I am pleased to report that HyreCar experienced another strong quarter across our operations. Our financial performance remains robust with revenue up $600,000 from $9.7 million - $10.3 million year-over-year, and down just slightly from our record second quarter revenue of $10.5 million, driven by an increase in price per rental day and increases in first-time rentals. We are very pleased with these and numerous other growth trends which continue to gain momentum. Gross profit margin came in at 37.5%, 7 points higher than the same period last year, and beating the higher end of the guidance range we gave last quarter. Gross profit continues to expand because of the proprietary risk underwriting measures we've adopted in prior quarters.
These measures, combined with diligent claims oversight, have us trending toward 40% gross profit margins by end of year. Driver demand continues to benefit from macroeconomic tailwinds, cities reopening, resurgent travel, and more broadly, a continued shift in consumer spending to services. We've seen these macro trends continue to positively impact HyreCar's business in the fourth quarter, with October coming in as our best month ever for total company gross bookings and revenue. It's important to note that we realized this momentum in October without the accretive effects of increased car supply from AmeriDrive or our recently deployed warehousing line with Credit Suisse. We expect incremental supply from the warehousing line to accelerate steady state average daily paid rental days in Q4, which are trending between 3,700 and 3,900 ADRs.
Clear line of sight on our growth trends have been made possible from HyreCar's much-anticipated closing of a $100 million warehouse line with AmeriDrive, Credit Suisse, and Medalist Partners. As part of the warehouse line agreement, CS and Medalist assumed a combined 12% warrant stake in HyreCar, which is the beginning of a long-term partnership that we expect to deepen as we scale supply and expand financial offerings for our owner community. I'm happy to report that our fleet operator partner, AmeriDrive, has already deployed over $20 million in capital from the warehouse facility, resulting in the purchase of over 1,200 new cars dedicated to the HyreCar platform. In parallel with the purchase, AmeriDrive is aggressively expanding its geographic footprint from two metropolitan areas to five metros and 11 locations, up from six just in Q3.
We expect a portion of these cars to be accretive in Q4 as they are in-fleeted, with the bulk of inventory being layered in through the first half of Q1, 2023. Conservatively, we expect AmeriDrive to add 2,000 additional vehicles over the next six-nine months and doubling total cars purchased over the next 18 months.
A portion of purchased cars will be used to replenish supply that is no longer suitable for HyreCar or gig platforms, so we expect 7,000 net new cars to be available across approximately 14 metros and 40 locations by the end of 2023. Optimizing fleet operations with a focus on rapid in-fleeting is a priority for both HyreCar and AmeriDrive, and we continue to leverage AmeriDrive COO Daniel Florence's background as former COO of Sixt North America and HyreCar's in-house expertise to continue streamlining and scaling our growing operations. Now moving on to demand. Driver demand for HyreCar's vehicles continues to be strong, with attractive economics for drivers.
A driver can rent a car on our platform for $59 per day on average in the U.S. and make $36 per hour driving 20+ hours on the Uber platform, as highlighted in Uber's recent third quarter earnings call. Depending on location and strategies for leveraging gig platform promotions, drivers have stated that they can earn up to $50 per hour. Across public gig companies in Q3, Uber, Airbnb and DoorDash saw strong consumer demand for services with corresponding increases and the need for drivers from gig mobility companies. Rising inflation has also made participation in the gig economy increasingly attractive as drivers seek to supplement their income with part-time or more flexible working arrangements and HyreCar's offerings become an ever more attractive, cost-effective solution in this price-sensitive economy. This continues to validate the driver's opportunity for success with HyreCar.
HyreCar has never seen stronger demand, with sign-ups up 14% even with lower cost of customer acquisition. Advertising spend was down 21% and cost per booking down 24% year-over-year, reflecting the impact of our ongoing operational refinements amidst improved brand awareness across the conversion funnel. To counteract the impact of higher operational expenses for drivers, the most painful being gas prices, HyreCar has also pivoted to reducing the cost of rentals at the point of sale through promotions, driving increases across background checks, rental applications and first rentals year-over-year. We are also in the process of finalizing a strategic partnership with the largest rideshare provider in the world as our warehouse line unlocks the next chapter of HyreCar's growth. The proposed expansion includes over 30 additional geographies and the rollout mirrors AmeriDrive's go-to-market plan over the next 18-24 months.
This deal will allow us to directly access and provide vehicles to our target segments, drivers who are looking to rent vehicles across all gig platforms, including Uber Eats, DoorDash, Instacart, Drizly and Amazon Flex, just to name a few. On the supply side of our marketplace, HyreCar's operations improved significantly year-over-year, reflecting improvements in targeting and sales practices as well as internal operations processes. Compared to the same period last year, the average number of median days for an owner to have their first vehicle approved fell from six days to one day, while the average time it took for a vehicle to receive its first paid rental decreased by over 60%. The percentage of all owners approving rentals and the number of rental applications increased 8% and 3% year-over-year respectively.
Midsize fleets performed particularly well, with rentals applied and approved for these owners, cars increasing 26% and 20%, while vehicles rented from this owner segment also increased 15% year-on-year. For our largest fleet operators, utilization remained high, averaging over 80% for the quarter. These improvements have also been realized despite introducing vehicle make and model restrictions based on our internal risk analysis. Increased vehicle selectivity to better match supply with demand complements a company-wide initiative focused on driver underwriting that we anticipate will improve the quality of the marketplace and drive retention of vehicles and drivers. We see our recent strong performance as indicative of the impact of supply of vehicles on platform for a number of reasons. One, we have maintained organic momentum into Q4 with strong utilization rates and record rental days in October.
Two, used car prices are stabilizing and reportedly declining, making it easier for our owners to source vehicles while improving the economics of renting these assets. Three, we've set the HyreCar platform up for success through a laser-sharp focus on execution in the third quarter and into the fourth quarter across technology, internal processes and policies, and an optimized org structure. With a steady and growing supply of cars from all of our fleet partners, we will be able to fully take advantage of system-wide demand increases from drivers. Because of these tailwinds, we anticipate strong revenue and margin performance in Q4 as we continue our organic growth trends in addition to AmeriDrive's incremental supply. Finally, we have continued to focus on increasing the supply of electric and hybrid vehicles to address growing demand from our driver base and rideshare and delivery platforms.
Record high gas prices paired with higher driver payouts and rider demand for these more efficient vehicles has made the availability of electric and hybrid options on our platform another priority. 62% of all electric vehicles, or EVs, on the platform have been added in 2022, with the average daily rate increasing 20% between 2021 and 2022. EVs available on the platform increased over 15% in Q3 2022 versus Q3 2021. EVs rented on the platform increased 126% in the third quarter of 2022 versus the third quarter of 2021. The average listing price of an EV on the platform is 24% higher than an ICE vehicle, while the average rental rate on an EV is 21% higher than an ICE vehicle.
This reflects not only higher quality EVs on the marketplace, but also a greater willingness to pay for these cars due to the increase in gas prices and the availability of EV incentives where drivers can make more for each ride versus an ICE vehicle. EV rentals have continued to gain momentum into the fourth quarter, with the total number of EV rentals in October equaling the total number of EV rentals for all past quarters combined and with significantly higher daily rates over the same period. We are particularly pleased with the progress we have made with our Spring Free EV partnership, which has allowed our owners to more easily acquire EVs for the HyreCar platform. The number of orders through this program was 1,400% higher in Q3 2022 versus Q3 2021.
We anticipate several EV-related benefits to our platform with the passage of the Inflation Reduction Act from August 2022 and the nearly $400 billion in planned energy and climate spending. Effective January 1, 2023, the new law eliminates the 200,000 unit sales cap that currently disqualifies OEMs and consumers receiving a per-vehicle tax credit of $7,500. Beginning January 1, 2024, used electric vehicles will become eligible for up to a $4,000 tax credit, and industry trends suggest EV models will double by 2024. GM has predicted they will only sell zero-emission vehicles by 2035. In anticipation of the significant growth in EV supply on HyreCar, we have launched several key initiatives to build an EV ecosystem specific to car sharing, from financing and acquisition of EVs to maximizing utilization and accessing or building charging infrastructure.
We are excited to push the boundaries of how HyreCar can continue to generate benefits for gig drivers and platforms while reducing our carbon footprint. With that, let me turn the call over to Eduardo, who will discuss our financial results for the third quarter.
Thank you, Joe. As Joe mentioned, we had another strong quarter based on revenue and profitability. Our top line grew 6% year- over- year to $10.3 million, down slightly from $10.5 million in the second quarter, which was the highest in the company's history. Gross margin continued its upward trend, reaching an all-time high of 37.5%. First, let's start with volume. Rental days for the third quarter were 313,000, down from 326,000 in the second quarter and 5% year- over- year. The dip in rental days can be partially attributed to implementing more stringent car eligibility requirements based on the risk analysis and previously mentioned limited availability of used cars impacting rental days in the short term.
Our utilization rates for fleets of 20 cars or more average above 80%, indicating strong driver demand across the vast majority of markets with attractive economics for the driver despite high gas prices. Turning to financials. Net revenue grew 6% to reach $10.3 million in Q3 from $9.7 million in the prior year. These results are in line with expectations set in our second quarter earnings call. Daily average net revenue, which represents net revenue divided by rental days, increased from $29 in Q3 of 2021 to $33 in Q3 2022. We expect daily average revenue to continue increasing based on current market trends and expanded higher-quality vehicle selection, including growing EV supply.
On the cost side, we have improved gross margin to hit a 12-month high of 37.5% in Q3 of 2022, a sequential improvement of nearly 7 points over the normalized Q3 2021 gross margin of 31%. We continue to offset the impact of inflation on vehicle repairs and claims with a disciplined company-wide focus, cost control, and loss recovery. We anticipate additional positive margin impact from driver underwriting efforts that are currently underway as more rigorous screening processes improve the risk profile of our driver pool while unlocking multi-factor dynamic pricing and reduced cost of goods sold. The company continues to remain on target to approach 40% in gross margin by the end of the fourth quarter as gains are fully realized from the many initiatives we have in progress.
Operating expenses totaled $9.2 million in the third quarter, an increase of $0.1 million compared to Q3 of last year, inclusive of one-time expenses associated with the closing of the warehouse line. On a cash basis, we've achieved $7.9 million or $7.2 million, excluding the one-time expenses from this quarter and down from $8 million a year ago. Through strategic restructuring, aggressive negotiations with vendors, and technology-driven efficiencies, we continue to carefully control costs. Our adjusted EBITDA ended the quarter at a $4.1 million dollar loss, down from $5.1 million dollar loss during the same period last year and slightly higher when compared to the second quarter of this year, due to non-recurring one-time charges. We expect Q4's adjusted EBITDA to remain flat to the second quarter.
Entering 2023, we anticipate adjusted EBITDA to trend upwards as we continue to optimize cost revenue through economies of scale and ultimately reaching breakeven by the end of 2023. Our cash position was $12.1 million at the end of Q3 2022, and we are in process of strengthening that position as the joint venture continues to draw on the line. Finally, as Joe mentioned, the joint venture has already drawn over $20 million against the warehouse line for the purchase of approximately 1,200 vehicles. The first tranche of vehicles include the purchase of approximately 400 cars. The second tranche was over 800 vehicles, which will drive the majority of AmeriDrive driven growth across new markets through the end of the year and into the first quarter. These purchases will bring AmeriDrive's net fleet size to over 1,500 vehicles.
Looking ahead, we have entered Q4 of 2022 with renewed organic growth, line of sight to significantly expanded supply through recent purchases drawn on the warehouse line and GOPass, an increase in gross margin. We are aiming to maintain our cash operating expenditures around $7.4 million, with our current estimate cash flow breakeven point still at approximately 6,500-7,000 active daily rentals on the platform, or a run rate revenue of $70 million-$75 million based on our projected cost structure. Our primary objective of 2022 remains stimulating car supply on the platform and driving efficient and sustainable top line growth to reach cash flow breakeven as rapidly as possible. Now back to Joe for final remarks.
Thanks, Eduardo. To summarize this past quarter, we focused on and shifted resources to execution following the closing of the warehouse line with $20 million already deployed and 1,200 cars purchased. We anticipate that the line of credit will continue to unlock unprecedented scale in the carsharing for the gig economy. Q4 is on track to be the strongest quarter in the company's history as we ramp supply through the line and maintain our focus on organic growth. Marketplace quality will drive marketplace liquidity and utilization, and our initiatives around driver underwriting and risk scoring, internal operational improvements, and cost controls are expected to accelerate revenue and margin growth as we enter 2023. We will provide updates around the line, including corresponding capital deployment and asset purchases, along with ongoing organic efforts in upcoming calls and announcements. Thank you for joining us today.
With that, I'd now like to open the call to Q&A. Operator?
We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we'll pause just momentarily to assemble our roster. Our first question here will come from Jack Vander Aarde with Maxim Group. Please go ahead.
Okay, great. Thanks. I appreciate the update, guys, and good to hear the continued momentum. I'll throw the question on Joe. It looks like rental days dipped in the quarter, but it's good to hear October has been the best month ever, I believe, on gross bookings and revenue for you. If I just jump to what you expect for fourth quarter, it sounds like you expect it to be a record quarter. It sounds pretty safe to say you are expecting sequential and annual growth in the fourth quarter?
Yeah. Thanks, Jack, for the question. That's correct. We're expecting a record Q4.
Okay, great. That's gonna include some of this uptick or, I guess growth from AmeriDrive. Sounds like based on Eduardo's comments that 400 of those 1,200 cars will maybe a portion of the 400, or at least all 400 will be in results. That's good to hear. Just for clarity there, AmeriDrive is gonna be at 1,500 cars in total. Does that include? Can you just explain the 2,000 new cars they expect to add and how that kinda ties together? I may have missed that part.
Sure. The 2,000 will be additive. They're expecting to have 1,500 in fleet by the end of the year, and then purchase an additional 2,000 on top of that.
Okay. Gotcha. One more question on your targets from your prepared remarks for the net new cars. I believe you said you expect to have 7,000 net new cars to be available by the end of 2023. Is this 7,000 net new cars, is that related to AmeriDrive? Is that related to the total number of cars on HyreCar's platform? Or is that like net new adds in addition to what exists today? Just trying to understand.
Yeah. Great question. That is AmeriDrive specifically. We expect them to add a lot of cars. The reason we say net is because they're also selling cars and churning cars over, and on a daily, weekly basis. Net 7,000 new cars added to the fleet by the end of 2023 is conservative, and it's exciting because that translates directly into revenue.
Gotcha. The total number of active cars that will be on the platform by the end of 2023 will be much greater than the 7,000, though. This is just from your expectations for AmeriDrive.
Correct.
Is that correct? Gotcha. Okay, great. I appreciate the color there. And then just one more question for me, I'll hop back in the queue. You've mentioned you're working towards finalizing, I believe in an expanded partnership with the largest ride-sharing company in the world, which, I believe is Uber. It's gonna expand you to over 30 additional geographies. I believe you're already in 50 U.S., all 50 U.S. states. Does this suggest HyreCar's potentially expanding internationally or, just to other geographies within the U.S. maybe you have less of a presence in?
The way the partnerships work for this TNC in particular is that they light up the various geographies as we kinda connect into them through the APIs. There wouldn't be any difference in terms of the 50 states that we're operating in. What this does is allows us to leverage Uber's marketing machine to start to drive leads in, and it creates direct access to their marketplaces across the country. When we reference the 30 different geographies, that's within a metropolitan statistical area of a state that we're already operating in.
Okay. Got it. Very helpful. Appreciate the update again. Thanks, Joe. I'll hop back in the queue.
No problem. Thanks, Jack.
Again, if you have a question, you may press star then one to join the queue. This will conclude our question-and-answer session today. I'd like to turn the conference back over to Joe Furnari for any closing remarks.
Actually, Joe, it does look like we got one or two more on the queue here. Can we hop back?
Absolutely. Our next question here.
Great.
will come from Tom White with D.A. Davidson & Co. Please go ahead.
Hey, this is Wyatt Swanson on for Tom. Thanks for taking our questions. My first question is kinda just around the macro. I'm curious whether you guys are seeing evidence of headwinds in your business related to inflation, you know, rising gas prices or overall macro pressures. I know you mentioned it might be a tailwind in terms of more folks turning to gig work, but I'm curious whether you're seeing any headwinds maybe related to the fleet operators on your platform or insurance costs or pushback from drivers as it relates to pricing. Anything like that.
Yeah, good question. I mean, we're not seeing a lot of headwinds right now from inflationary pressures. If anything, it's helping. I would point to a couple of statistics that were thrown out by Uber and some of the other online gig platforms. Uber said that of all the new drivers that are coming to their platform to drive for them, 70% are citing inflationary pressures as a reason to drive. That's a big one. I think also what we're seeing is leads are up 14% year-on-year, as we mentioned in the prepared remarks. That's a big one as well. That's also why, you know, from a supply perspective, we're focused on EVs because you know, obviously, EVs are gas independent or independent. Correct.
We're seeing a lot of tailwinds, not a lot of headwinds, in this current environment.
Great. Thank you. Just one follow-up for me. I'm curious whether you guys can comment on how your current financing setup and partnership with AmeriDrive could kinda serve as a blueprint for future deals with, you know, other fleet operators. You know, any specifics or timeline that you could share on that opportunity would be great.
Yeah, that's a great question, too. You know, the way we view the partnership with AmeriDrive is essentially they are a sandbox for us to learn best practices and deploy best practices to the majority of our fleet operators, right? AmeriDrive is one operator amongst top 40 that we have in our HyreCar for Business accounts, and that doesn't include the hundreds of or maybe even thousands of operators that are operating vehicles on our site. The way we think about AmeriDrive is we learn from them, we deploy best practices, and then eventually we put together a franchise playbook for our top vehicle owners to follow the AmeriDrive method. And that includes packaging insurance, telematics, marketing, level two support from our call centers.
Now with this warehouse line through Credit Suisse, eventually white labeling that financing, so that we create a nice package, a franchisee package, for our vehicle operators, to leverage and grow. That's the true power of our platform, is remaining asset light. As we continue to roll out these different features, we see more and more, what we call organic owners coming onto our platform and renting cars on our platform to earn money.
Great. Thank you.
With no remaining questions, this will conclude the question-and-answer session. I would like to turn the conference back over to Joe Furnari for closing remarks.
Great. That's all I have for today. I look forward to updating everybody in the future. Thanks for joining.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.