DropCar Inc. (Nasdaq: DCAR), a provider of app-based mobility
services and logistics software-as-a-service (SaaS) for automotive
consumers and enterprises, today announced its financial results
for the quarter ended June 30, 2018. In addition, DropCar is
announcing that on August 9th, it entered into a binding term sheet
for the sale of its low voltage contracting unit, and has made
changes to its consumer offerings, all designed to increase margins
and accelerate the path to profitability.
DropCar B2BDropCar's enterprise
(B2B) segment grew its revenues 135%, from $206,000 to $485,000,
year-over-year for the first six months, driven by organic growth
of existing enterprise customers and the onboarding of new top-tier
automotive partners, particularly in the car sharing segment.
During the second quarter, DropCar’s corporate
B2B platform experienced increasing Tier One demand, both in terms
of scale and scope. As a result, DropCar has shifted the B2B
segment’s focus toward higher-margin and scalable platform sales,
with an increasing focus on SaaS and high-margin managed
services.
DropCar B2CDropCar's consumer (B2C) segment
grew its revenues 133%, from $1.32 million to $3.08 million, for
the first six months year-over-year in the second quarter, driven
by increasing demand for by-the-hour personal driver services and
consumer subscriptions. However, gross margins in the consumer
subscriptions in their current form have not realized the same
benefits of scale seen in the B2B segment.
As such, it is anticipated that on September 1, 2018, DropCar
will be converting its existing “STEVE” service from an
all-inclusive monthly parking and valet service bundle, in which
DropCar valets pick up and drop off customer vehicles at locations
outside of the downtown core, to an owner self-park model with
access to a la carte on-demand valet services. DropCar intends to
leverage its deep relationships with parking providers to offer
discounted parking in prime areas, and then charge an additional
per-pickup/drop off fee when customers desire the additional
convenience of front door service.
DropCar believes that this change offers benefits to both
consumers and DropCar: it moves the vehicles closer to where the
owners live and gives them greater flexibility to retrieve their
car when they need it (with or without a valet); in many cases
reduces the cost of parking for owners; and it enables DropCar to
utilize valet resources exclusively for income generating
activities including higher margin B2B services. Management
and the Board of Directors (“Board”) will continue to evaluate the
performance of DropCar’s B2C business in its newly configured form
and may make further adjustments as it sees fit.
Binding Term Sheet to Sell Low Voltage Contracting
UnitAs previously disclosed, DropCar has been focused on
monetizing this non-strategic, albeit profitable, infrastructure
contracting unit.
To this end, DropCar considered numerous options, engaged a
number of financial institutions, and retained an independent
business broker to market this subsidiary. After evaluating all
options, DropCar agreed to a binding term sheet to sell the assets
of this subsidiary to the employees and management of the
contracting unit, for $3.5 million in a non-dilutive all-cash
transaction. Closing of this sale is expected to occur in the 4th
quarter of 2018, however, there can be no assurance that the sale
will be consummated on the terms previously negotiated or at
all.
CEO Remarks“With more than 250,000 vehicle
movements to date, and a list growing every day of OEMs, dealer,
fleet companies, and car sharing companies interested in our
technology and services, we have established our platform as an
enabling technology for the future of urban mobility,” said Spencer
Richardson, co-founder and CEO. “We believe that the steps we’ve
taken on our B2B and B2C services, combined with the expected
strategic sale of our low voltage contracting unit will increase
our operating capital, reduce our overall costs and accelerate our
path towards profitability.
“Our streamlined focus on higher margin lines of business, as
well as leveraging the proceeds from the expected sale, we believe
will enable us to further invest in technology development that our
Tier One customers are asking for, including building application
programming interfaces ('APIs') and other ‘hooks’ to embed our
services into their apps and/or into the vehicles themselves.
“As OEMs and other automotive-related companies expand the
notion of subscriptions and 'cars as a service,' which offer
all-inclusive features like insurance and maintenance, we are
hearing from our partners that they need a turnkey mobility partner
like DropCar to unlock the potential for these programs to
scale.
"Executive management and the Board are fully aligned on these
strategic moves, and we are looking forward to reporting back on
our progress in the coming quarters.”
Conference Call With DropCar CEO and CFODropCar
will host a conference call today at 5PM Eastern Daylight Time
(EDT) featuring remarks by, and Q&A with, CEO Spencer
Richardson and CFO Paul Commons. The dial-in number for the
conference call is toll-free: 877-407-0782 (U.S. domestic) or +1
(201) 689-8567 (international). Please make sure to call at least
five minutes before the scheduled start time.
To listen online, please click:
http://www.investorcalendar.com/event/37180
For interested individuals unable to join the live event, a
replay will be available until 8/21/18 (17:00PM EDT). To access the
recording, dial toll-free (domestic) 877-481-4010 or
(internationally) 919-882-2331. The replay passcode is 37180.
About DropCarFounded and launched in New York
City in 2015, DropCar (Nasdaq: DCAR) offers its Vehicle Support
Platform (VSP), a cloud-based platform and mobile apps that help
consumers and automotive-related companies reduce the cost, hassles
and inefficiencies of owning a car, or fleet of cars, in urban
centers. Consumers use DropCar’s mobile app to ease the cost and
stress of owning a car in the city. Dealerships, fleet owners, OEMs
and shared mobility companies use DropCar’s enterprise platform to
reduce costs, streamline logistics and deepen relationships with
customers. More information is available at www.dropcar.com.
Forward-Looking StatementsThis press release
contains “forward-looking statements” that involve substantial
risks and uncertainties for purposes of the safe harbor provided by
the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, included in
this press release regarding strategy, future operations, future
financial position, future revenue, projected expenses, prospects,
plans and objectives of management are forward-looking statements.
Such statements are based on management’s current expectations and
involve risks and uncertainties. Actual results and performance
could differ materially from those projected in the forward-looking
statements as a result of many factors, including, without
limitation, the ability to project future cash utilization and
reserves needed for contingent future liabilities and business
operations, the availability of sufficient resources of the company
to meet its business objectives and operational requirements and
the impact of competitive products and services and technological
changes. The foregoing review of important factors that could cause
actual events to differ from expectations should not be construed
as exhaustive and should be read in conjunction with statements
that are included herein and elsewhere, including the risk factors
under the heading “Risk Factors” in DropCar’s filings with the
Securities and Exchange Commission. Except as required by
applicable law, DropCar undertakes no obligation to revise or
update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Investor Relations Contact
Daniel Gelbtuch, VP of Corporate Finance for DropCar
daniel@DropCar.com (917) 509-9582