UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36449 | TRUECAR, INC. | | --- | (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 04-3807511 (I.R. ...

TrueCar (TRUE) Q1 2025 Earnings Call May 06, 2025 09:00 AM ET Company Participants Jantoon Reigersman - President & CEONaved Khan - Managing Director - Equity ResearchOliver Foley - Chief Financial OfficerJash Patwa - Equity Research AssociateMarvin Fong - Director Conference Call Participants Ryan Meyers - Senior Research AnalystTom white - Managing Director, Senior Equity AnalystChris Pierce - Senior Analyst Operator Good day, and welcome to the TrueCar First Quarter twenty twenty five Financial Results C ...

TrueCar (TRUE) Q1 2025 Earnings Call May 06, 2025 09:00 AM ET Speaker0 Good day, and welcome to the TrueCar First Quarter twenty twenty five Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference back over to Jantoon Reigersmann, President and Chief Executive Officer of TrueCar. Please go ahead. Speaker1 Thank you, operator. Hello, everyone, and welcome to TrueCar's first quarter twenty twenty five earnings conference call. Joining me today ...

SUPPLEMENTAL MATERIALS First Quarter 2025 Quarter Ended March 31, 2025 SUPPLEMENTAL MATERIALS Important Information This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including our expectations regarding future expected revenue growth and free cash flow, are forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may prove incorrect, any of whi ...

Company Performance - TrueCar reported a quarterly loss of $0.09 per share, which aligns with the Zacks Consensus Estimate, compared to a loss of $0.04 per share a year ago [1] - The company posted revenues of $44.81 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 1.91%, and showing an increase from $41.05 million year-over-year [2] - TrueCar shares have declined approximately 58.2% since the beginning of the year, while the S&P 500 has decreased by only 3.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.05 on revenues of $47.26 million, and for the current fiscal year, it is -$0.14 on revenues of $198.53 million [7] - The estimate revisions trend for TrueCar is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Services industry, to which TrueCar belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for Q1 2025 was $44.8 million, representing a year-over-year increase of $3.8 million (+9.2%) [5] - Net loss increased to -$10.1 million, compared to -$5.8 million in the same period last year [5] - Adjusted EBITDA decreased to -$3.8 million from $0.9 million in the same period last year [5] - Revenue for Q1 2025 was $44.8 million, a 9.2% increase year-over-year from $41.1 million in Q1 2024, but a 3.0% decrease from $46.2 million in Q4 2024 [54][60] - Net loss for Q1 2025 was ($10.1 million), compared to ($5.8 million) in both Q1 2024 and Q4 2024 [54][56] - Adjusted EBITDA for Q1 2025 was ($3.8 million), down from $0.9 million in Q1 2024 [54][56] - Total costs and operating expenses increased to $56,008 thousand, up 15.4% from $48,537 thousand year-over-year [102] - Net loss for the period was $10,136 thousand, compared to a net loss of $5,848 thousand in the same quarter of the previous year, representing a 73.0% increase in losses [102] - Adjusted EBITDA for the three months ended March 31, 2025, was $407 thousand, a significant improvement from a loss of $3,802 thousand in the same period of 2024 [107] Sales and Market Performance - New unit sales volume increased by 23% year-over-year, significantly outpacing the industry's growth of 6.8% in new vehicle retail sales for the quarter [5] - Total units sold in Q1 2025 were 86,000, a 9.3% increase year-over-year but a 7.7% decrease sequentially [70] - Total dealer revenue grew by $4.8 million (+13.3%) year-over-year, driven by a $1.7 million (+6.2%) increase in franchise dealer revenue [61] - OEM revenue for Q1 2025 was $3.8 million, a decline of $1.1 million (-22.4%) year-over-year [62] - Approximately one-third of the pilot dealer group's TrueCar-enabled sales were driven by TC+ consumers completing transactions online [3] Inventory and Financing - The average new vehicle inventory reached 2.7 million units, a decrease of 198 thousand units (-6.7%) quarter-over-quarter but an increase of 248 thousand units (+9.9%) year-over-year [25] - The average APR for new vehicle loans increased to 6.9% in Q1 2025, up from 6.6% in Q4 2024 [16] - The 25% tariffs on imported vehicles are estimated to add approximately $4,500 in additional costs per new vehicle sold in the US, equating to roughly 10% of the average pre-tariff new vehicle MSRP [7] Expenses and Cash Flow - Technology and development expenses totaled $8.1 million in Q1 2025, up 0.0% year-over-year [75] - General and administrative expenses were $10.1 million on a GAAP basis, up 6.3% YoY, and $7.8 million on a non-GAAP basis, up 4.2% YoY in Q1 2025 [76] - Sales and marketing expenses were $25.0 million on a GAAP basis, up 13.3% YoY, and $24.5 million on a non-GAAP basis, up 14.5% YoY in Q1 2025 [81] - TrueCar.com acquisition expense was $4.3 million, down 19.8% YoY, while cost per sale for TrueCar.com units was $170, down 11.9% YoY [82] - Partner marketing spend was $9.2 million, up 21.4% YoY, driven by a 19.1% YoY growth in units attributed to the partner network [82] - Cash and equivalents as of March 31, 2025, were $98.0 million, with no debt [55][56] - The company ended Q1 2025 with $98.0 million in cash and equivalents, down from $133.7 million at the end of Q1 2024 [83] - Cash usage included a $4 million payment to former equity holders of Digital Motors and a $1.4 million one-time payment to American Express [83] - Free cash flow for the three months ended March 31, 2025, was $(10,570) thousand, compared to $4,146 thousand in the previous quarter, reflecting a significant decrease [110] - The company reported a net cash used in operating activities of $(7,895) thousand for the period, compared to $2,049 thousand in the same quarter of 2024 [110] Strategic Initiatives - The company aims to complete back-end integrations with two dealer management system providers by the end of July 2025 [6] - TrueCar aims to enhance its growth strategy by improving lead quality through artificial intelligence and machine learning [91] - The company is focused on developing and scaling its TrueCar+ product to allow dealers to sell more inventory online [91] - TrueCar's management will host a call on May 6, 2025, to discuss financial results and business developments [84] Asset and Liability Management - Cash and cash equivalents decreased to $98,026 thousand as of March 31, 2025, down from $111,835 thousand at the end of 2024, reflecting a decline of 12.3% [104] - Total assets decreased to $145,005 thousand as of March 31, 2025, down from $159,691 thousand at the end of 2024, a reduction of 9.2% [104] - Total liabilities decreased to $33,909 thousand, down from $41,554 thousand at the end of 2024, indicating a decline of 18.4% [104]

Group 1 - TrueCar, Inc. announced its financial results for the first quarter ended March 31, 2025, in a stockholder letter [1] - A live call to discuss the first quarter results is scheduled for May 6, 2025, at 9:00 a.m. ET [2][3] - TrueCar is a leading automotive digital marketplace connecting auto buyers and sellers through a network of Certified Dealers [5] Group 2 - TrueCar provides a suite of vehicle discovery tools, price ratings, and market context for new, used, and Certified Pre-Owned vehicles [5] - The company powers auto-buying programs for over 250 leading brands, including Sam's Club, AAA, and Navy Federal Credit Union [5] - TrueCar utilizes its Investor Relations website and social media platforms for disclosing material non-public information [4]

Core Viewpoint - JP Morgan analyst Rajat Gupta downgraded TrueCar, Inc. from Overweight to Neutral due to disappointing fourth-quarter results and uncertain recovery prospects [1][2]. Financial Performance - TrueCar reported a fourth-quarter EPS loss of 7 cents per share, which was worse than the analyst consensus estimate of a loss of 6 cents [1]. - Revenue for the quarter was $46.21 million, missing the consensus estimate of $47.29 million [1]. Growth and Profitability Outlook - The analyst highlighted a weakening boost from rising new vehicle inventories and limited visibility on a sustained turnaround in revenue and profits [1][2]. - Upcoming products and initiatives, such as TCMS, OEM advertising, and data monetization, present potential but require clear results to validate investments in sales and marketing [2]. Revised Financial Estimates - The FY25 EBITDA estimate was revised from a previous projection of over $15 million to breakeven due to weaker dealer revenue [3]. - The FY26 EBITDA estimate was lowered from $35 million to $25 million [3]. Market Reaction - Following the downgrade and revised estimates, TrueCar shares fell by 5.21%, trading at $2.531 [3].

Group 1 - TrueCar (TRUE) has experienced a significant decline of 19.1% over the past four weeks, but it is now in oversold territory, indicating a potential trend reversal [1] - The Relative Strength Index (RSI) for TRUE is currently at 29.63, suggesting that the heavy selling pressure may be exhausting itself [5] - There is a strong consensus among Wall Street analysts that TRUE will report better earnings than previously predicted, with a 2.6% increase in consensus EPS estimates over the last 30 days [6] Group 2 - TRUE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a potential turnaround [7]

Business Operations - The company operates a digital marketplace connecting car shoppers, dealers, and manufacturers, reaching up to 7 million in-market car shoppers monthly [23]. - Approximately 70% of franchise dealers and nearly all independent dealers pay a fixed monthly subscription rate for listing their inventory [39]. - The company has partnerships with over 250 affinity organizations, enhancing its market reach and providing exclusive offers to members [28]. - The company’s platform allows consumers to access nearly 2 million average vehicle listings, simplifying the car-buying process [24]. - TrueCar launched the beta version of TrueCar+ in July 2024, allowing consumers to purchase vehicles entirely online, enhancing dealer sales efficiencies and pricing power [58]. - TrueCar's Dealer Portal provides tools for competitive pricing, inventory management, and sales enhancement, improving dealer operations and customer engagement [49][50][51]. - The TrueCar Military Program targets military families with exclusive offers, tapping into a loyal audience and enhancing dealer reach [48]. - TrueCar's marketing strategy focuses on digital media, with significant spending on search engine marketing and social media to build brand awareness [60]. - The company supports over 250 affinity group marketing partners, increasing exposure for TrueCar Certified Dealers to car shoppers [57]. - TrueCar's digital advertising solutions include social media, display advertising, and email marketing, aimed at optimizing ad spend and driving vehicle sales [46]. Financial Performance - Economic factors such as interest rates, inflation, and fuel prices may adversely affect consumer demand for automobiles, impacting financial performance [21]. - The company’s revenue relies significantly on maintaining and increasing dealer revenues within its network of TrueCar Certified Dealers [19]. - The company’s financial performance may be harmed if it fails to attract and retain manufacturers in its incentive programs [21]. - The company has observed a decrease in organic traffic from search engines due to a loss of used-car inventory, which could negatively impact monthly unique visitors [125]. - The company incurred sales and marketing expenses of $95.6 million and $99.1 million for the years ended 2024 and 2023, respectively [184]. - The company’s revenue growth is dependent on the success of its TrueCar+ offering and the expansion of its network of TrueCar Certified Dealers, particularly in high-volume brands and key geographies [172]. - The company’s revenue may not recover to pre-pandemic levels due to ongoing automobile inventory shortages and changes in partnerships [170]. - The termination of the partnership with American Express in April 2025 could significantly impact revenue, as it accounted for an annual run-rate of approximately $10 million [138]. - The company’s financial performance is heavily dependent on the number of cars purchased from TrueCar Certified Dealers, with a significant portion of sales linked to affinity group marketing partners [139]. Market Challenges - Economic conditions, such as interest rates and inflation, may adversely affect consumer demand for automobiles, impacting the company's business [130]. - The automotive retail industry is highly competitive, with TrueCar competing for consumer awareness and dealer marketing spend against various online and offline sources [64][67]. - The automotive industry faced inventory supply challenges starting in 2020 due to the pandemic, with inventory levels in Q4 2024 at the highest since June 2020 but still below pre-pandemic levels [103]. - The limited inventory has led to increased wholesale auction prices and higher prices charged to consumers, negatively impacting dealer participation and revenue [104]. - The company experienced a decline in lead quality and quantity since 2021, attributed to industry-wide inventory shortages and macroeconomic factors like inflation and interest rates [110]. - The company faces significant competition from various online and offline automotive service providers, which could impact its market share and financial performance [193]. - New competitors entering the automotive retail industry may adversely affect the company's revenue and business results [195]. - Competitors may develop superior technologies that could render the company's existing products less competitive, potentially leading to reduced pricing and revenue [196]. Regulatory and Compliance Issues - TrueCar's compliance with state regulations is critical, as it navigates a highly regulated environment affecting its product offerings and dealer network [80][81]. - Regulatory compliance risks are significant due to evolving federal and state laws related to privacy and data protection, which could impact financial results [87]. - The company is subject to complex laws and regulations regarding vehicle sales and advertising, which could result in significant penalties if not complied with [200]. - Regulatory inquiries have previously led to decreased revenues and increased expenses, highlighting the potential financial impact of compliance issues [204]. - The company must navigate varying state regulations that could affect its ability to operate and expand its services [202]. - The company’s future growth may be hindered if it cannot increase the number of TrueCar Certified Dealers in its network due to regulatory uncertainties [201]. - The advertising and sale of automobile insurance is highly regulated, and the company may face compliance issues that could impact its partnerships and revenue [217]. Workforce and Management - The company has a dynamic workforce policy with 348 full-time employees and one part-time employee, allowing for flexible work arrangements [90]. - Competition for qualified employees, particularly in technical roles, is intense, necessitating competitive compensation packages to attract and retain talent [91]. - The company has not experienced any work stoppages and maintains good relations with employees, with no union representation [90]. - The company experienced significant management turnover, including the replacement of the CEO and CFO in 2023, which may disrupt business operations [154]. - The company has been on a work-from-home status since Q1 2020, which could affect employee morale and productivity if a return to office is required [159]. - The company may face challenges in retaining and attracting qualified personnel due to competitive labor markets and recent workforce reductions [157]. Innovation and Future Growth - The company’s ability to roll out new offerings, such as TrueCar+, is critical for future growth and revenue generation [19]. - TrueCar+ is a critical initiative aimed at providing an end-to-end car-buying experience, integrating historical and new offerings [111]. - The company plans to introduce additional products related to TrueCar+, but these new offerings may face challenges and could affect dealer and consumer perceptions [127]. - The company is focusing on the rollout of TrueCar+, which may require significant resources and could impact short-term financial results [167]. - The company must innovate and improve its offerings, including the TrueCar+ experience, to adapt to changing consumer behaviors and preferences [131]. - The company’s ability to adapt to technological changes and consumer demands is critical, as failure to do so could adversely affect growth and financial performance [160]. - The company launched a rebranding campaign in 2020, including a logo change and extensive advertising, with plans for additional campaigns related to the rollout of TrueCar+ [190]. - Maintaining brand trust is crucial for the company, as any perception of not prioritizing user experience could adversely affect its reputation and brand strength [191].