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].

Financial Performance and Key Metrics - Revenue for Q4 2024 was $175.6 million, an increase of $16.9 million or 10.6% year-over-year, marking the strongest annual revenue growth since 2017 [8] - Adjusted EBITDA for the year was $1.6 million, up by $15.43 million year-over-year [8] - Cash flow from operations improved to $7.7 million, representing a year-over-year increase of $30.1 million [8] - Free cash flow was negative $0.2 million, but this was an improvement of $34.1 million year-over-year [8] Business Line Performance - Total unit sales reached 356,000, an increase of 37,300 or 11.7% year-over-year [9] - New vehicle unit sales were 204,000, up by 27,500 or 15.6% year-over-year [9] - Franchise dealer count grew by 119 dealers, ending the year at 8,351, a 1.4% year-over-year increase [9] - In Q4, revenue was $46.2 million, an increase of 11.9% year-over-year, with positive adjusted EBITDA of $0.4 million [11] Market Data and Key Metrics - The average franchise dealer on TrueCar sold new vehicle sales generated through the marketplace grew by 27.1% year-over-year, significantly higher than the industry's growth of 9.6% [12] - The company reported a total of 93,000 units sold in Q4, which was a 22% increase year-over-year [11] Company Strategy and Industry Competition - The company aims for sustainable annual revenue growth of over 20% in a normalized new vehicle retail environment [15] - Key strategic focuses include activating new franchise dealers, minimizing dealer churn, growing revenue per dealer, and expanding the OEM business [16] - The expansion and commercialization of TC Plus is a top priority for 2025 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's stronger position compared to the previous year, with a focus on executing building blocks for growth [21] - The company anticipates modest Q1 revenue growth in the high single digits and negative adjusted EBITDA of approximately $5 million due to investments in headcount and marketing [22] - Management expects to reaccelerate growth in Q2 to Q4, driven by new OEM partnerships and incentives [23] Other Important Information - The company has made significant investments in enhancing its data platform to support generative AI and machine learning models [18] - TrueCar has established a partnership with AWS to develop real-time machine learning models that enhance consumer insights and dealer performance [19] Q&A Session Summary Question: Can you elaborate on the first quarter guidance and the step-up in expenses? - Management indicated that the increase in expenses is primarily due to hiring more dealer sales and service personnel to drive sales productivity and efficiency [31][35] Question: What is the status of DMS integration with TrueCar Plus? - Management confirmed that integration with major DMS providers is ongoing, with a focus on automating the documentation process for dealers [42][46] Question: Should we expect the trend of franchise dealers trending up to continue into 2025? - Management affirmed that the focus will remain on franchise dealers, and while independent dealers may experience higher churn, efforts are being made to mitigate this [54][60] Question: What is the outlook for OEM revenue? - Management expressed optimism about the potential for OEM revenue to grow, citing the normalization of captive financing and the need for targeted incentives [91][96] Question: Will the company fully recapture the lost American Express business? - Management expects to see acceleration in Q2, indicating that Q1 is the only quarter affected by the transition [100][102] Question: How is the company addressing the challenges faced by dealers? - Management highlighted the importance of training and providing insights to dealers to improve their sales effectiveness and adapt to changing market conditions [80][87]

SUPPLEMENTAL MATERIALS Fourth Quarter 2024 Quarter Ended December 31, 2024 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 margins, are forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may prove incorrect ...

Core Insights - TrueCar reported revenue of $46.21 million for Q4 2024, an 11.9% year-over-year increase, but fell short of the Zacks Consensus Estimate of $47.96 million by 3.66% [1] - The company posted an EPS of -$0.04, compared to $0.00 a year ago, resulting in an EPS surprise of -33.33% against the consensus estimate of -$0.03 [1] Financial Performance Metrics - TrueCar's monetization was reported at $492, below the estimated $534.76 by two analysts [4] - The number of units sold was 93 thousand, exceeding the average estimate of 89.56 thousand [4] - OEM incentives revenue was $4.60 million, which is a 15.9% year-over-year decline and below the average estimate of $5.80 million [4] - Dealer revenue reached $41.40 million, reflecting a 16% year-over-year increase but slightly below the average estimate of $42.11 million [4] Stock Performance - TrueCar's shares have returned -3.2% over the past month, contrasting with the Zacks S&P 500 composite's +4.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

TrueCar (TRUE) came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of a loss of $0.03. This compares to break-even earnings per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -33.33%. A quarter ago, it was expected that this provider of localized information on new car costs would post a loss of $0.03 per share when it actually produced a loss of $0.03, delivering no surprise.Over the last four q ...

Stockholder Letter Q4 2024 True Car + True Cor To Our Fellow Stockholders With 2024 behind us and a new year in full swing, it's important for us to pause and reflect on the exciting journey we are on; a journey we embarked on in the summer of 2023 when we restructured the company and committed to building a stronger and more resilient TrueCar. Taking stock of where we are relative to where we were and where we expected to be allows us to evaluate what is working or not working and adjust course accordingly ...

Live call and webcast will occur on February 19 at 9:00 a.m. ETSANTA MONICA, Calif., Feb. 18, 2025 /PRNewswire/ -- TrueCar, Inc., (NASDAQ:TRUE) today announced financial results for the fourth quarter ended December 31, 2024 in a stockholder letter, which is available HERE and on the TrueCar Investor Relations website at ir.truecar.com.The company will host a call to discuss its fourth quarter results on Wednesday, February 19 at 9:00 a.m. ET/6:00 a.m. PT. A live webcast of the call will be available throug ...

Investors might want to bet on TrueCar (TRUE) , as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.Individu ...