Financial Performance - Revenue for Q1 2025 was $44.8 million, a 9% year-over-year increase compared to $41.1 million in Q1 2024[7] - Non-GAAP expenses for Q1 2025 were $48.6 million, a 21% year-over-year increase compared to $40.1 million in Q1 2024[7] - Adjusted EBITDA for Q1 2025 was -$3.8 million, compared to $0.9 million in Q1 2024, with margin decreasing from 2% to -8%[7] Traffic and Units - Traffic in Q1 2025 was 5.8 million average monthly unique visitors, a 24% year-over-year decrease from 7.7 million in Q1 2024[9] - Total units in Q1 2025 were 86,000, a 9% year-over-year increase from 79,000 in Q1 2024[9] - Dealer count decreased by 1% year-over-year, from 11,388 in Q1 2024 to 11,272 in Q1 2025[9] Dealer Metrics - Franchise dealer count in Q1 2025 was 8,336, a 2% year-over-year increase[9, 19] - Independent dealer count in Q1 2025 was 2,936, an 8% year-over-year decrease[9, 23] Revenue Breakdown - Net Franchise Revenue for Q1 2025 was $28.5 million[14] - Net Independent Revenue for Q1 2025 was $6.0 million[14]

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]

Investment Rating - The report assigns an "Overweight" (OW) rating to General Motors (GM) and Ford, while Tesla and Rivian are rated "Underweight" (UW) [6][7]. Core Insights - The automotive industry is experiencing varied performance metrics across different companies, with GM and Ford showing potential upside in their stock prices, while Tesla and Rivian face significant downside risks [6][7]. - The report highlights the importance of valuation metrics such as EV/EBITDA, P/E ratios, and sales growth projections for assessing investment opportunities within the automotive sector [6][22]. Global Auto OEMs Investment Comparables - General Motors (GM) has a current price of $44.57 with a market cap of $43.067 billion and a target price of $53.00, indicating a 19% upside potential [6]. - Ford (F) is priced at $9.63 with a market cap of $38.294 billion and a target price of $11.00, representing a 14% upside [6]. - Ferrari (RACE) is valued at $439.97 with a target price of $460.00, showing a 5% upside [6]. - Tesla (TSLA) is currently priced at $241.37 with a target price of $120.00, indicating a -50% downside [6]. - Rivian (RIVN) has a price of $11.60 with a target price of $11.00, reflecting a -5% downside [6]. Global Auto Parts Suppliers Valuation Metrics - The average EV/EBITDA for US auto parts suppliers is projected at 1.8x for 2024, with a corresponding EBITDA margin of 12% [22]. - Aptiv (APTV) is rated "Overweight" with a current price of $51.71 and a target price of $102, indicating a 97% upside [22]. - Borg Warner (BWA) is rated "Overweight" with a price of $26.45 and a target price of $46, representing a 74% upside [22]. - Lear Corp (LEA) is rated "Overweight" with a price of $79.42 and a target price of $140, indicating a 76% upside [22]. Performance Metrics - The report indicates that the average revenue CAGR for US auto parts suppliers is projected to be 2% from 2023 to 2025 [74]. - The EBITDA margin for US auto parts suppliers is expected to be around 12% in 2025, with some companies showing higher margins [74][83]. - The report also highlights the financial returns of various suppliers, with some companies achieving significant returns on invested capital (ROIC) [54][56].

Live call and webcast will occur on May 6 at 9:00 a.m. ET SANTA MONICA, Calif., April 22, 2025 /PRNewswire/ -- TrueCar, Inc., (NASDAQ: TRUE) will report financial results for the first quarter ended March 31, 2025 on Monday, May 5, 2025 after market close, in a stockholder letter that will be accessible from the company's Investor Relations website at ir.truecar.com. About TrueCar TrueCar is a leading automotive digital marketplace that lets auto buyers and sellers connect to our nationwide network of Certi ...

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]