Subaru and Uber continue to help improve DriveMyCar’s booking growth
DriveMyCar, a division of Collaborate Corporation (ASX: CL8) is poised to deliver another quarter of strong growth, having broken a number of sales records before the end of the March 2017 Quarter.
In pointing to the key drivers of this performance, Chief Executive Chris Noone said, “The strong results have been seen across all aspects of the business and were assisted by improvements in marketing the addition of luxury vehicles from Trivett Automotive, strong growth in rentals for UberX and exceptional demand for the fleet of 101 Subaru Imprezas, which have just been launched”.
CL8 is Australia’s leading listed company focused on ‘collaborative consumption’, ‘peer-to-peer’ or ‘sharing economy’ businesses. The company currently has two core business segments, www.DriveMyCar.com.au, a peer-to-peer car rental business and www.MyCaravan.com.au Australia’s leading peer-to-peer caravan rental business.
An all-round record-breaking quarter
Both January and February produced new record results for Net Rental Days Booked as February outstripped the previous month’s record. However, it would appear that the February record is likely to be eclipsed in March with the business having delivered the most impressive results to date, clocking up 5,995 Net Rental Days Booked in only the first 17 days of March 2017.
What makes these record-breaking performances even more significant is the fact that the March quarter is normally relatively quiet following the seasonally strong December quarter.
These performances have laid the foundation for extremely robust quarter on quarter growth with the March quarter to date Net Rental Days Booked 54% higher than the December 2016 quarter. Net Rental Days Realised for the first 17 days of March 2017 have already exceeded the previous record achieved in December 2016 and for the March 2017 quarter to date are 8% above the full December 2016 quarter.
It must be remembered, however, that it is still early days for CL8 and investors should seek professional financial advice if considering this stock for their portfolio.
The fleet of 101 Subaru Impreza’s have proven very popular with both Uber X drivers and general renters with 62 vehicles already booked 2 days following the official launch on 15 March. Management expects the success of this initiative will contribute to a significant increase in DriveMyCar revenue, while also providing its partner Subaru with a strong boost to their experiential marketing campaign for the launch of the new Impreza model.
Given the rental periods for the Impreza vehicles only commenced on 15 March, there is the potential for the rental of Imprezas to drive strong June quarter growth. These figures should also be welcomed by Subaru, perhaps opening the door for further collaborative agreements between the two parties.
Growth in rental days booked boosts CL8’s top line
Often with relatively new businesses that are focused on quickly maximising market share, sales growth is not always reflected in revenues due to heavy discounting. However, this hasn’t been the case with CL8 with Noone highlighting that revenues for March 2017 represented a new record.
He also noted that income increased in each month of the March quarter such that quarter to date gross revenue already exceeds that generated in the December 2016 quarter. On the score of revenue it should also be noted that there is a lag period between net rental days booked and income recognition.
An important factor to bear in mind is that CL8’s business model is highly scalable off a relatively fixed cost base. From a medium-term perspective this positions the company to grow earnings at a faster rate than revenues as gross profit margins relative to sales increase.
Solid growth in UberX income, as well as an increase in new clients
Looking at a breakdown of client segments, rentals to UberX drivers continued to grow strongly with net rental days booked for the March 2017 quarter to date up by 116% compared with the full December 2016 quarter.
Such is the growth in this market segment that revenues generated from UberX rentals in the first 76 days of the current quarter are equivalent to that achieved in the previous two quarters combined. UberX rental income accounted for 23% of gross revenues in the March 2017 quarter to date compared with 18% in the December 2016 quarter.
Noone highlighted an important factor in terms of the introduction of the Impreza fleet in saying, “It is very pleasing to see that the launch of the Subaru Impreza offer has shown few signs of cannibalisation of existing UberX rentals with the vast majority of Subaru Impreza rentals provided to UberX drivers being new customer relationships”.
The fact that the inclusion of Impreza is enticing new customers is not only beneficial in driving CL8’s brand, but it is also introducing new revenue streams. Looking specifically at the fleet of 101 Impreza vehicles, 61% have been booked within two days of official availability, and all vehicles are expected to be booked by the end of March.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.