Part I [Business](index=6&type=section&id=Item%201.%20Business) TrueCar operates a digital automotive marketplace, connecting buyers with dealers and offering an evolving end-to-end car-buying platform - TrueCar is a digital automotive marketplace that connects car buyers with its network of Certified Dealers, aiming to build a personalized and efficient online car buying experience[19](index=19&type=chunk) - The company operates its platform for over 250 affinity partners, including AARP, Sam's Club, Navy Federal Credit Union, and American Express[20](index=20&type=chunk) - The TrueCar+ offering is being developed to provide an "end-to-end" car-buying experience, allowing consumers to complete most of the purchasing process from home[41](index=41&type=chunk) - As of December 31, 2023, the company had **324 full-time employees** and operates under a dynamic workforce policy where employees work from home permanently[65](index=65&type=chunk) - At December 31, 2023, TrueCar held **80 issued U.S. patents**, with expiration dates ranging from 2029 to 2041[52](index=52&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from strategic restructuring, automotive market health, competition, regulatory complexities, and a history of net losses - The June 2023 strategic restructuring, which included a **24% workforce reduction**, may not be as effective as anticipated and could lead to unintended consequences like employee attrition and loss of institutional knowledge[74](index=74&type=chunk)[75](index=75&type=chunk) - The business is sensitive to low automobile inventory levels and supply chain disruptions, which have previously reduced dealer participation and manufacturer incentive spending[79](index=79&type=chunk)[80](index=80&type=chunk) - The termination of the USAA partnership in 2020 continues to be a risk, as it had a material adverse effect on units, revenue, and lead quality. A majority of units historically came from affinity partners[120](index=120&type=chunk)[122](index=122&type=chunk) - The company faces intense competition for both consumer awareness (from sites like Google, CarGurus, Cars.com) and dealer marketing spend (from online publishers and lead generators)[175](index=175&type=chunk)[176](index=176&type=chunk) - A non-cash goodwill impairment charge of **$59.8 million** was recognized in 2022 due to a decline in the company's stock price and macroeconomic disruptions[267](index=267&type=chunk) - The company has a history of net losses, with an accumulated deficit of **$562.3 million** as of December 31, 2023, and may not achieve profitability in the future[255](index=255&type=chunk) [Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[308](index=308&type=chunk) [Cybersecurity](index=52&type=section&id=Item%201C.%20Cybersecurity) TrueCar has a cybersecurity risk management program integrated into its overall risk management system, overseen by the Audit Committee of the Board of Directors - The Audit Committee is responsible for overseeing risks from cybersecurity threats, receiving quarterly updates from senior management[314](index=314&type=chunk) - The company's risk management process includes proactive system reviews, penetration testing, employee training, and a third-party risk management program[310](index=310&type=chunk)[312](index=312&type=chunk) - In the last three fiscal years, the company has not experienced any material cybersecurity incidents, and related expenses were immaterial[313](index=313&type=chunk) [Properties](index=53&type=section&id=Item%202.%20Properties) The company leases its principal office in Santa Monica, California, and believes its current facilities are adequate for its immediate needs - The principal office is a leased facility in Santa Monica, California[316](index=316&type=chunk) [Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding material pending legal proceedings is incorporated by reference from Note 10, "Commitments and Contingencies," in the financial statements section of the report - Details on legal proceedings are located in Note 10 of the financial statements[317](index=317&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[317](index=317&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TrueCar's common stock trades on the Nasdaq Global Select Market under the symbol "TRUE", with no cash dividends paid and a $100 million share repurchase program authorized - The company's common stock is listed on the Nasdaq Global Select Market under the symbol "TRUE"[319](index=319&type=chunk) - TrueCar has never declared or paid cash dividends and does not intend to in the foreseeable future[321](index=321&type=chunk) - No shares were repurchased in the three months ended December 31, 2023. In February 2024, the board extended the share repurchase program to December 31, 2026, and increased the authorization, leaving **$100 million** available for future repurchases[322](index=322&type=chunk)[323](index=323&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, TrueCar's revenue decreased to $158.7 million, resulting in a $49.8 million net loss amidst challenging market conditions Key Operating Metrics (2021-2023) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Average Monthly Unique Visitors | 8,014,703 | 7,371,898 | 8,636,501 | | Units | 318,578 | 340,940 | 607,667 | | Monetization | $497 | $472 | $380 | | Franchise Dealer Count | 8,232 | 7,924 | 8,482 | | Independent Dealer Count | 3,268 | 4,148 | 4,013 | Consolidated Results of Operations (in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $158,706 | $161,524 | | Loss from Operations | $(56,467) | $(125,695) | | Net Loss | $(49,766) | $(118,685) | | Adjusted EBITDA | $(13,692) | $(29,946) | - Total revenues decreased by **1.7% in 2023 compared to 2022**, driven by a **$13.2 million decline in dealer revenue**, partially offset by a **$10.6 million increase in OEM incentives revenue**[382](index=382&type=chunk) - Sales and marketing expenses decreased by **5.2% in 2023 to $99.1 million**, primarily due to lower employee-related expenses and reduced branded media spend[387](index=387&type=chunk) - The company ended 2023 with **$137.0 million in cash, cash equivalents, and restricted cash**. Net cash used in operating activities was **$22.4 million**[401](index=401&type=chunk)[408](index=408&type=chunk) - A non-cash goodwill impairment charge of **$59.8 million** was recorded in 2022, with no such charge in 2023[395](index=395&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate fluctuations on its cash and cash equivalents, with a 0.25% decrease impacting annual interest income by $0.3 million - The company's main market risk is interest rate risk on its **$137.0 million in cash, cash equivalents, and restricted cash**[427](index=427&type=chunk) - A **0.25% decrease in interest rates** would result in an approximate **$0.3 million decrease in annual interest income**[427](index=427&type=chunk) [Financial Statements and Supplementary Data](index=74&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's audited consolidated financial statements and supplementary data, which begin on page F-1 of the report - The required financial statements and supplementary data are included starting on page F-1[430](index=430&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=74&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[430](index=430&type=chunk) [Controls and Procedures](index=75&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - As of December 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[432](index=432&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework (2013)[433](index=433&type=chunk) - The independent auditor, PricewaterhouseCoopers LLP, audited and confirmed the effectiveness of the internal control over financial reporting[434](index=434&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=76&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[437](index=437&type=chunk) [Executive Compensation](index=76&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[438](index=438&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=76&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[438](index=438&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=76&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[439](index=439&type=chunk) [Principal Accounting Fees and Services](index=76&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[440](index=440&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=77&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K, including key agreements and corporate governance documents - The financial statements are indexed starting on page F-1[442](index=442&type=chunk) - A comprehensive list of exhibits is provided, including material contracts and corporate documents, many of which are incorporated by reference from previous filings[444](index=444&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk) [Form 10-K Summary](index=80&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - None[449](index=449&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=83&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on TrueCar's consolidated financial statements and effective internal control over financial reporting as of December 31, 2023 - The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on both the financial statements and the effectiveness of internal control over financial reporting[458](index=458&type=chunk) - A critical audit matter was identified related to Revenue Recognition for the TrueCar Auto Buying Program, citing the high degree of auditor effort involved in procedures and evaluation[466](index=466&type=chunk) [Consolidated Financial Statements](index=85&type=section&id=Consolidated%20Financial%20Statements) The 2023 consolidated financial statements show decreased total assets to $204.3 million and a $49.8 million net loss Key Balance Sheet Data (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $136,964 | $175,518 | | Total Assets | $204,320 | $251,527 | | Total Liabilities | $44,105 | $54,260 | | Total Stockholders' Equity | $160,215 | $197,267 | Key Income Statement Data (in thousands) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenues | $158,706 | $161,524 | $231,698 | | Loss from Operations | $(56,467) | $(125,695) | $(33,478) | | Net Loss | $(49,766) | $(118,685) | $(38,329) | | Net Loss Per Share | $(0.55) | $(1.30) | $(0.39) | Key Cash Flow Data (in thousands) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(22,414) | $(29,137) | $14,194 | | Net cash used in investing activities | $(11,809) | $(8,028) | $(4,205) | | Net cash used in financing activities | $(4,331) | $(32,534) | $(38,086) | [Notes to Consolidated Financial Statements](index=90&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including revenue recognition, the 2022 goodwill write-down, 2023 restructuring costs, and the full valuation allowance against deferred tax assets - Revenue from dealers is recognized upon delivery of introductions to consumers. For pay-per-sale dealers, revenue is estimated using the expected value method based on historical close rates. For subscription dealers, fees are recognized as introductions or impressions are delivered[536](index=536&type=chunk)[538](index=538&type=chunk)[540](index=540&type=chunk) - In Q3 2022, the company recorded a non-cash goodwill impairment charge of **$59.8 million**, writing the goodwill balance down to zero. The impairment was triggered by a decline in market capitalization and macroeconomic disruptions[531](index=531&type=chunk)[591](index=591&type=chunk) - A restructuring plan in June 2023 resulted in charges of approximately **$7.2 million**, primarily for severance and employee-related costs[599](index=599&type=chunk) - The company maintains a full valuation allowance of **$120.2 million** against its deferred tax assets as of Dec 31, 2023, concluding it is more likely than not that they will not be realized[645](index=645&type=chunk) - The company acquired Digital Motors in May 2022 for **$15.5 million in cash** plus up to **$8.0 million in contingent consideration** to accelerate its TrueCar+ marketplace development[565](index=565&type=chunk)

TrueCar, Inc. (NASDAQ:TRUE) Q4 2023 Earnings Conference Call February 21, 2024 9:00 AM ET Company Participants Jantoon Reigersman - President and Chief Executive Officer Oliver Foley - Chief Financial Officer Conference Call Participants Chris Pierce - Needham Marvin Fong - BTIG Operator Good day and welcome to the TrueCar Fourth Quarter 2023 Results Financial Call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Off ...

SU PPLE M E NT A L M A T E RIA LS Fourth Quarter 2023 S UP P L EM ENTAL M ATERI AL S Import ...

TrueCar (TRUE) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of a loss of $0.03. This compares to loss of $0.17 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 100%. A quarter ago, it was expected that this provider of localized information on new car costs would post a loss of $0.07 per share when it actually produced a loss of $0.05, delivering a surprise of 28.57%.Over the last four qu ...

Marat MusabirovThesis With fourth-quarter 2023 earnings results expected shortly, investors and potential investors will wonder if TrueCar, Inc. (NASDAQ:TRUE) can maintain the momentum it gained in the third quarter. In its third-quarter earnings release, the company suggested it had turned a corner, with revenue and earnings again on the rise. The odds seem in its favor, and the likelihood of higher share prices is rising as well. About TrueCar This is a technology company that connects car buyers with ...

TrueCar drives purchase-ready customers to dealerships through customized broad and targeted marketing tactics NADA attendees can win $100K in free marketing spend and TrueCar Marketing Solutions services TrueCar Wholesale Solutions launches its first auction "Exchange," powered by Turn Automotive SANTA MONICA, Calif., Feb. 1, 2024 /PRNewswire/ -- TrueCar, Inc. (NASDAQ: TRUE), the easiest, most efficient, and transparent online destination for buying and selling new and used vehicles, today announced Tru ...

TrueCar, Inc. (NASDAQ:TRUE) Q3 2023 Earnings Conference Call November 7, 2023 9:00 AM ET Company Participants Jantoon Reigersman - President and Chief Executive Officer Oliver Foley - Chief Financial Officer Conference Call Participants Rajat Gupta - JPMorgan Chris Pierce - Needham Marvin Fong - BTIG Operator Good day and welcome to the TrueCar Third Quarter 2023 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jantoon Reigersma ...

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) The unaudited condensed consolidated financial statements present TrueCar's financial position as of September 30, 2023, and its performance for the three and nine months then ended. Key statements show a decrease in total assets and stockholders' equity since year-end 2022. The company reported a net loss of $7.9 million for Q3 2023, a significant improvement from a $77.1 million loss in Q3 2022, primarily due to a large goodwill impairment charge in the prior year. Cash flow from operations remained negative Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $145,474 | $175,518 | | Total current assets | $167,381 | $197,835 | | Total assets | $211,942 | $251,527 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $33,662 | $30,779 | | Total liabilities | $52,068 | $54,260 | | Total stockholders' equity | $159,874 | $197,267 | Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $41,146 | $39,052 | $117,419 | $124,860 | | Loss from operations | $(9,580) | $(78,123) | $(52,894) | $(106,224) | | Goodwill impairment | $0 | $59,775 | $0 | $59,775 | | Net loss | $(7,875) | $(77,113) | $(47,864) | $(100,546) | | Net loss per share | $(0.09) | $(0.85) | $(0.54) | $(1.09) | Condensed Consolidated Statements of Cash Flows (YTD, in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,615) | $(20,212) | | Net cash used in investing activities | $(9,469) | $(4,680) | | Net cash used in financing activities | $(3,960) | $(27,346) | | **Net decrease in cash** | **$(30,044)** | **$(52,238)** | - In June 2023, the company initiated a Restructuring Plan, incurring costs of approximately **$7.1 million** in Q2 2023 to enhance productivity and streamline operations. As of September 30, 2023, a liability of **$1.1 million** remains[51](index=51&type=chunk)[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a 5.4% revenue increase in Q3 2023 year-over-year, driven by OEM incentives, while YTD revenues decreased 6.0%. The company faces macroeconomic headwinds including low vehicle inventory, rising interest rates, and inflation. Key metrics show a 6.0% increase in average monthly unique visitors in Q3 2023, but a decrease in independent dealers. Adjusted EBITDA turned positive in Q3 2023 at $0.8 million, a significant improvement from an $8.7 million loss in Q3 2022. The company believes its liquidity of $145.5 million is sufficient for the next 12 months [Key Metrics](index=24&type=section&id=Key%20Metrics) For Q3 2023, Average Monthly Unique Visitors increased by 6.0% YoY to 8.1 million, and Units sold saw a slight 0.8% increase to 82,851. Monetization per unit rose to $495 from $473. The franchise dealer count grew to 8,097, but the independent dealer count fell to 3,406, primarily due to industry consolidation and economic pressures Key Operating Metrics Comparison | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Average Monthly Unique Visitors | 8,058,367 | 7,600,847 | 8,349,586 | 7,358,008 | | Units | 82,851 | 82,206 | 241,965 | 263,918 | | Monetization | $495 | $473 | $484 | $471 | | Franchise Dealer Count (end of period) | 8,097 | 7,776 | 8,097 | 7,776 | | Independent Dealer Count (end of period) | 3,406 | 4,196 | 3,406 | 4,196 | - The number of units decreased **8.3% YTD** due to elevated vehicle prices, rising interest rates, and lingering inventory constraints[82](index=82&type=chunk) - The decrease in independent dealer count is attributed to industry consolidations and business failures caused by higher interest rates on dealer floor plans and price volatility[85](index=85&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance. For Q3 2023, Adjusted EBITDA was $832,000, a significant improvement from a loss of $8.7 million in Q3 2022. For the nine months ended September 30, 2023, the Adjusted EBITDA loss was $15.8 million, compared to a $19.5 million loss in the prior year period. The improvement is attributed to higher revenues and lower operating expenses, excluding items like stock-based compensation and restructuring charges Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(7,875) | $(77,113) | $(47,864) | $(100,546) | | Goodwill impairment | — | 59,775 | — | 59,775 | | Restructuring charges | 1,806 | — | 8,947 | — | | Stock-based compensation | 3,273 | 5,189 | 11,872 | 13,174 | | Depreciation & amortization | 4,894 | 4,284 | 13,176 | 11,729 | | **Adjusted EBITDA** | **$832** | **$(8,667)** | **$(15,752)** | **$(19,548)** | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenues for Q3 2023 increased 5.4% YoY to $41.1 million, driven by a significant rise in OEM incentives revenue, which offset a decline in dealer revenue. For YTD 2023, revenues fell 6.0% to $117.4 million. Operating expenses decreased across Sales & Marketing, Technology & Development, and General & Administrative categories in Q3 2023 compared to Q3 2022, primarily due to reduced headcount and professional services fees, though partially offset by restructuring charges Revenue Disaggregation (in thousands) | Revenue Stream | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Dealer revenue | $36,068 | $37,722 | $107,553 | $120,713 | | OEM incentives revenue | $4,944 | $1,189 | $9,490 | $3,613 | | Other revenue | $134 | $141 | $376 | $534 | | **Total revenues** | **$41,146** | **$39,052** | **$117,419** | **$124,860** | - Sales and marketing expenses decreased by **$2.0 million (7.9%)** in Q3 2023 vs Q3 2022, mainly due to a **$2.9 million** decrease in employee-related expenses and a **$0.6 million** decrease in branded media spend[103](index=103&type=chunk) - Technology and development expenses decreased by **$3.4 million (26.7%)** in Q3 2023 vs Q3 2022, primarily due to a **$3.0 million** decrease in employee-related expenses and a **$0.9 million** decrease in professional services[105](index=105&type=chunk) - In Q3 2022, the company recognized a non-cash goodwill impairment charge of **$59.8 million**, which is the primary reason for the significant year-over-year improvement in net loss for Q3 and YTD 2023[112](index=112&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, TrueCar's principal source of liquidity was $145.5 million in cash, cash equivalents, and restricted cash. Management believes these funds are sufficient to support operations for at least the next 12 months. The company's share repurchase program, with a remaining authorization of $45.8 million, saw no activity in the first nine months of 2023. Net cash used in operating activities for the nine months was $16.6 million - Principal sources of liquidity at September 30, 2023, were cash, cash equivalents and restricted cash totaling **$145.5 million**[116](index=116&type=chunk) - The company believes existing liquidity is sufficient to fund operations for at least the next 12 months[117](index=117&type=chunk) - The company's share repurchase program has a remaining authorization of **$45.8 million** as of September 30, 2023. No shares were repurchased during the nine months ended September 30, 2023[118](index=118&type=chunk)[67](index=67&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company does not believe it has material exposure to market risk. Interest rate risk is minimal; a hypothetical 25 basis point decrease in rates would reduce annual interest income by approximately $0.3 million. Inflation has not had a material effect but could harm business if it significantly decreases consumer demand or increases costs. Foreign currency risk is not significant as operations are primarily in the U.S. - A hypothetical **25 basis point** decrease in interest rates on the company's cash balance of **$145.5 million** would result in an approximate **$0.3 million** decrease in annual interest income[129](index=129&type=chunk) - The company does not believe inflation has had a material effect, but acknowledges that significant inflation could harm business by reducing consumer demand or increasing costs[130](index=130&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures as of September 30, 2023. They concluded that these controls were effective at a reasonable assurance level. There were no material changes to the company's internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[133](index=133&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[134](index=134&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings. It may from time to time be involved in various legal proceedings arising from the normal course of business - The company is not currently a party to any material legal proceedings, but may be involved in various legal matters arising from the normal course of business[53](index=53&type=chunk)[136](index=136&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company identifies numerous risks to its business. Key business and industry risks include the potential ineffectiveness of its recent restructuring, sensitivity to the automotive ecosystem (e.g., inventory shortages, labor strikes), reliance on dealer relationships and lead quality, and challenges with new product rollouts like TrueCar+. It also highlights risks from the loss of affinity partners like USAA, intense competition, and a complex regulatory environment. Ownership risks include stock price volatility and ownership concentration. General risks involve public company costs, reliance on technology infrastructure, and potential for natural disasters - The June 2023 Restructuring Plan, which included a **24% workforce reduction**, may not be as effective as anticipated and could lead to unintended consequences like employee attrition, loss of institutional knowledge, and failure to meet operational targets[139](index=139&type=chunk) - The business is sensitive to the automotive ecosystem, including low inventory levels, supply chain disruptions (e.g., semiconductor shortages), and labor strikes (e.g., UAW strike), which can reduce dealer willingness to participate in the network[141](index=141&type=chunk) - The termination of the affinity partnership with USAA in 2020, which accounted for **29% of units** in 2019, had a material adverse effect on the business, revenue, and operating results[162](index=162&type=chunk) - The business is subject to a complex framework of regulations concerning vehicle sales, advertising, and brokering, which could lead to claims, challenge the business model, or result in fines and penalties[190](index=190&type=chunk) - The company faces significant competition from internet search engines (Google), online automotive sites (Cars.com, CarGurus), online retailers (Carvana, CarMax), and OEM-operated sites[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period. The company's board of directors has authorized a share repurchase program of up to $150 million, which was extended to September 30, 2024. However, the company did not repurchase any shares during the three months ended September 30, 2023 - The company's Board of Directors authorized a share repurchase program of up to **$150 million**, which is effective until September 30, 2024[262](index=262&type=chunk) - The company made no repurchases of its common stock during the nine months ended September 30, 2023[67](index=67&type=chunk)[262](index=262&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q. Key exhibits include employment agreements for new executives, a separation agreement, and certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act - Exhibits filed with the report include: - Employment Agreement with Oliver M. Foley (CFO) - Separation Agreement with Teresa T. Luong - Employment Agreement with Jay Ku - Certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act - XBRL interactive data files[265](index=265&type=chunk)

Revenue Performance - Total revenue decreased by 7% year-over-year[16] - Net Franchise Revenue decreased by 2% year-over-year[16] - Net Independent Revenue decreased by 37% year-over-year[16] - OEM Incentives Revenue increased significantly by 151% year-over-year[16] - Other Revenue decreased by 24% year-over-year[16] - Other Dealer Product Revenue decreased by 8% year-over-year[16] - Q/Q Revenue increased 8%[13] Dealer Network - Franchise Dealer Count decreased by 4% year-over-year[19] - Independent Dealer Count decreased by 6% year-over-year[23] Unit Sales - Total Units decreased by 8% year-over-year[28] - New Car Units increased by 2% year-over-year[30] - Used Car Units decreased by 19% year-over-year[30]

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This section provides the filing details for TRUECAR, INC.'s Quarterly Report on Form 10-Q for the period ended June 30, 2023, including incorporation state, executive offices, and outstanding common stock shares - TRUECAR, INC. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2023[1](index=1&type=chunk)[2](index=2&type=chunk) - The registrant is incorporated in Delaware, with principal executive offices in Santa Monica, California[2](index=2&type=chunk) - As of August 2, 2023, **90,060,682 shares of common stock** were outstanding[2](index=2&type=chunk) [Index](index=2&type=section&id=Index) This section outlines the report's structure, dividing it into PART I - FINANCIAL INFORMATION and PART II - OTHER INFORMATION - The report is structured into PART I - FINANCIAL INFORMATION (Items 1-4) and PART II - OTHER INFORMATION (Items 1, 1A, 2, 6, and Signatures)[3](index=3&type=chunk) [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements involving substantial risks and uncertainties, with actual results potentially differing materially from projections - This section highlights that the Quarterly Report on Form 10-Q contains forward-looking statements, which involve substantial risks and uncertainties[4](index=4&type=chunk) - Forward-looking statements relate to future financial performance, strategic restructuring, market trends, product offerings (e.g., TrueCar+), relationships with industry participants, and the impact of macroeconomic conditions[4](index=4&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to factors discussed in the 'Risk Factors' section[5](index=5&type=chunk) [Summary of Risks Affecting Our Business](index=5&type=section&id=SUMMARY%20OF%20RISKS%20AFFECTING%20OUR%20BUSINESS) This section summarizes key risks including business restructuring effectiveness, adverse impacts from low automobile inventory, declining lead quality, and challenges with the TrueCar+ offering - Key risks include the effectiveness of business restructuring, adverse impacts from low automobile inventory, and potential declines in lead quality or quantity[7](index=7&type=chunk) - Challenges in rolling out and monetizing the TrueCar+ offering, maintaining dealer relationships, and risks related to the broader automotive ecosystem (e.g., interest rates, inflation) are also highlighted[7](index=7&type=chunk) - Other risks involve the loss of significant affinity partners, negative perceptions from industry participants, executive turnover, reliance on data providers, and marketing effectiveness[7](index=7&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents TrueCar's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents TrueCar's unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive loss, stockholders' equity, and cash flows, along with detailed notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents TrueCar's condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2023, and December 31, 2022 **Condensed Consolidated Balance Sheets (in thousands)** | Metric | June 30, 2023 | December 31, 2022 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $142,405 | $175,518 | $(33,113) | | Total current assets | $167,414 | $197,835 | $(30,421) | | Total assets | $216,704 | $251,527 | $(34,823) | | Total current liabilities | $32,705 | $30,779 | $1,926 | | Total liabilities | $52,395 | $54,260 | $(1,865) | | Total stockholders' equity | $164,309 | $197,267 | $(32,958) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents TrueCar's condensed consolidated statements of comprehensive loss, detailing revenues, operating expenses, and net loss for the three and six months ended June 30, 2023 and 2022 **Condensed Consolidated Statements of Comprehensive Loss (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $39,293 | $42,275 | $76,273 | $85,808 | | Total costs and operating expenses | $61,440 | $56,243 | $119,587 | $113,909 | | Loss from operations | $(22,147) | $(13,968) | $(43,314) | $(28,101) | | Net loss | $(20,424) | $(11,019) | $(39,989) | $(23,433) | | Net loss per share, basic and diluted | $(0.23) | $(0.12) | $(0.45) | $(0.25) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents TrueCar's condensed consolidated statements of stockholders' equity, showing changes in equity from December 31, 2022, to June 30, 2023 **Condensed Consolidated Statements of Stockholders' Equity (in thousands)** | Metric | Dec 31, 2022 | Mar 31, 2023 | June 30, 2023 | | :----------------------------------- | :----------- | :----------- | :------------ | | Balance at period start | $197,267 | $181,626 | $181,626 | | Net loss | $(19,565) | $(20,424) | $(39,989) (cumulative for 6 months) | | Stock-based compensation | $4,930 | $4,116 | $9,046 (cumulative for 6 months) | | Shares issued (net of taxes) | $(1,006) | $(1,009) | $(2,015) (cumulative for 6 months) | | Balance at period end | $181,626 | $164,309 | $164,309 | - For the six months ended June 30, 2022, the company repurchased **$25.1 million of common stock**, which did not occur in the same period of 2023[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents TrueCar's condensed consolidated statements of cash flows, detailing operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 **Condensed Consolidated Statements of Cash Flows (in thousands)** | Cash Flow Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(22,092) | $(13,550) | | Net cash used in investing activities | $(7,098) | $(5,173) | | Net cash used in financing activities | $(3,923) | $(26,813) | | Net decrease in cash, cash equivalents and restricted cash | $(33,113) | $(45,536) | | Cash, cash equivalents and restricted cash at end of period | $142,405 | $199,681 | - Cash used in operating activities increased by **$8.5 million** YoY, primarily due to a higher net loss[21](index=21&type=chunk)[120](index=120&type=chunk) - Investing activities in 2022 included **$12.8 million** from the sale of an equity method investment and **$12.1 million** for an acquisition, which were not present in 2023[21](index=21&type=chunk)[123](index=123&type=chunk) - Financing activities in 2022 included **$25.1 million** for common stock repurchases, which did not occur in 2023[21](index=21&type=chunk)[124](index=124&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes supporting TrueCar's condensed consolidated financial statements, covering organization, accounting policies, fair value measurements, and other financial disclosures [Note 1. Organization and Nature of Business](index=12&type=section&id=Note%201.%20Organization%20and%20Nature%20of%20Business) This note describes TrueCar's business as a digital automotive marketplace providing pricing transparency and connecting consumers with dealers, including its platform and subsidiary offerings - TrueCar is a digital automotive marketplace providing pricing transparency, connecting consumers with Certified Dealers, and enabling OEMs to target incentives[27](index=27&type=chunk) - The company's platform is accessible via TrueCar.com, mobile applications, and co-branded sites for affinity group marketing partners[27](index=27&type=chunk) - Subsidiaries like TCDS offer Trade and Payments solutions, including vehicle valuation and guaranteed trade-in prices[28](index=28&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines TrueCar's significant accounting policies, including GAAP compliance, estimates, operating segment, and cash equivalent definitions - Financial statements are prepared under GAAP, with estimates impacting sales allowances, asset valuations, and stock-based compensation[29](index=29&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) - TrueCar operates as a single operating segment, with the CODM reviewing consolidated financial information[34](index=34&type=chunk) - Cash equivalents include highly liquid investments with original maturities of three months or less; **$2.2 million** was restricted cash at June 30, 2023[35](index=35&type=chunk) **Changes in Allowance for Doubtful Accounts and Sales Allowances (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Allowances, at beginning of period | $1,091 | $2,513 | $1,073 | $3,099 | | Charged as a reduction of revenue | $791 | $679 | $1,496 | $1,469 | | Charged to bad debt expense | $245 | $18 | $340 | $178 | | Write-offs, net of recoveries | $(955) | $(1,605) | $(1,737) | $(3,141) | | Allowances, at end of period | $1,172 | $1,605 | $1,172 | $1,605 | [Note 3. Fair Value Measurements](index=14&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note details TrueCar's fair value measurements, categorizing inputs into a hierarchy and discussing contingent consideration for the Digital Motors acquisition - Fair value hierarchy categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[40](index=40&type=chunk) - Contingent consideration for Digital Motors acquisition was a Level 3 measurement, but targets were considered **100% achieved** in Q2 2023, removing significant unobservable inputs[41](index=41&type=chunk) **Assets and Liabilities Measured at Fair Value (in thousands)** | Metric | June 30, 2023 (Total Fair Value) | December 31, 2022 (Total Fair Value) | | :----------------------------------- | :------------------------------- | :----------------------------------- | | Cash equivalents | $127,204 | $57,518 | | Contingent consideration, current | $1,885 | $1,983 | | Contingent consideration, non-current | $3,431 | $4,678 | | Total contingent consideration | $5,316 | $6,661 | **Contingent Consideration Obligations (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2023 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Fair value, beginning of period | $5,252 | $6,661 | | Cash payments | — | $(2,000) | | Changes in fair value | $64 | $655 | | Fair value, end of period | $5,316 | $5,316 | [Note 4. Property and Equipment, net](index=15&type=section&id=Note%204.%20Property%20and%20Equipment%2C%20net) This note provides details on TrueCar's property and equipment, net, including computer equipment, internally developed software, and associated depreciation and amortization expenses **Property and Equipment, net (in thousands)** | Metric | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Computer equipment and internally developed software | $90,615 | $88,638 | | Total property and equipment, net | $20,308 | $18,902 | - Capitalized software not yet in service accounted for **$2.3 million** at June 30, 2023, up from **$1.5 million** at December 31, 2022[48](index=48&type=chunk) - Total depreciation and amortization expense for property and equipment was **$5.9 million** for the six months ended June 30, 2023, down from **$6.4 million** in the prior year period[49](index=49&type=chunk) [Note 5. Commitments and Contingencies](index=16&type=section&id=Note%205.%20Commitments%20and%20Contingencies) This note details TrueCar's commitments, including a June 2023 restructuring plan incurring $7.1 million in costs, and confirms no material legal proceedings - TrueCar committed to a restructuring plan in June 2023 to enhance productivity and efficiency, incurring **$7.1 million** in costs in Q2 2023[50](index=50&type=chunk) **Restructuring Plan Costs Liability (in thousands)** | Metric | Amount | | :----------------------------------- | :----- | | Accrual at December 31, 2022 | $— | | Expense | $7,141 | | Cash Payments | $(3,731) | | Accrual at June 30, 2023 | $3,410 | - The restructuring costs were allocated across cost of revenue (**$0.2 million**), sales and marketing (**$2.2 million**), technology and development (**$2.7 million**), and general and administrative expenses (**$2.0 million**)[50](index=50&type=chunk) - The company is not currently a party to any material legal proceedings[52](index=52&type=chunk) [Note 6. Stock-based Awards](index=17&type=section&id=Note%206.%20Stock-based%20Awards) This note details TrueCar's stock-based award activity, including stock options and restricted stock units, and the total stock-based compensation expense for the periods presented **Stock Option Activity (6 Months Ended June 30, 2023)** | Metric | Number of Options | Weighted-Average Exercise Price | | :----------------------------------- | :---------------- | :------------------------------ | | Outstanding at December 31, 2022 | 5,114,490 | $9.50 | | Exercised | (23,989) | $2.68 | | Forfeited/expired | (1,164,846) | $8.14 | | Outstanding at June 30, 2023 | 3,925,655 | $9.95 | **Restricted Stock Units Activity (6 Months Ended June 30, 2023)** | Metric | Number of Shares | Weighted-Average Grant Fair Value | | :----------------------------------- | :--------------- | :-------------------------------- | | Non-vested — December 31, 2022 | 10,007,869 | $4.04 | | Granted | 5,826,001 | $2.47 | | Vested | (2,348,164) | $3.67 | | Forfeited | (4,023,775) | $3.37 | | Non-vested — June 30, 2023 | 9,461,931 | $3.45 | **Total Stock-based Compensation Expense (in thousands)** | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of revenue | $54 | $46 | $104 | $83 | | Sales and marketing | $827 | $1,233 | $2,722 | $2,408 | | Technology and development | $980 | $1,056 | $1,997 | $1,956 | | General and administrative | $2,030 | $2,152 | $3,776 | $3,538 | | Total stock-based compensation expense | $3,891 | $4,487 | $8,599 | $7,985 | [Note 7. Income Taxes](index=18&type=section&id=Note%207.%20Income%20Taxes) This note discusses TrueCar's income tax expense, the tax benefit from the Digital Motors acquisition, and the maintenance of a full valuation allowance against deferred tax assets - TrueCar recorded less than **$0.1 million** in income tax expense for the six months ended June 30, 2023, primarily for state income taxes[62](index=62&type=chunk) - For the six months ended June 30, 2022, the company recognized a **$2.5 million** income tax benefit due to the release of a valuation allowance from net deferred tax liabilities in the Digital Motors acquisition[62](index=62&type=chunk) - A full valuation allowance is maintained against net deferred tax assets, as their realization is not considered more likely than not[62](index=62&type=chunk) [Note 8. Net Loss Per Share](index=18&type=section&id=Note%208.%20Net%20Loss%20Per%20Share) This note presents TrueCar's net loss per share calculations, including basic and diluted figures, and details the exclusion of anti-dilutive securities **Net Loss Per Share (in thousands except per share data)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(20,424) | $(11,019) | $(39,989) | $(23,433) | | Weighted average common shares outstanding, basic and diluted | 89,383 | 91,016 | 89,017 | 93,457 | | Net loss per share, basic and diluted | $(0.23) | $(0.12) | $(0.45) | $(0.25) | - Options to purchase common stock and non-vested restricted stock unit awards totaling **13.4 million shares** were excluded from net loss per share calculations at June 30, 2023, as their inclusion would be anti-dilutive[65](index=65&type=chunk) [Note 9. Related Party Transactions](index=19&type=section&id=Note%209.%20Related%20Party%20Transactions) This note describes TrueCar's related party transactions, specifically the sale of its ownership in Accu-Trade and the resulting contra-revenue and cost of revenue impacts - TrueCar sold its **20% ownership** in Accu-Trade on March 1, 2022, terminating a software and data licensing agreement[67](index=67&type=chunk) - The transaction resulted in **$0.1 million** contra-revenue and **$1.1 million** cost of revenue for the two months ended March 1, 2022[67](index=67&type=chunk) [Note 10. Revenue Information](index=19&type=section&id=Note%2010.%20Revenue%20Information) This note provides a breakdown of TrueCar's revenue categories, including dealer revenue and OEM incentives, and explains the drivers behind their changes **Revenue Categories (in thousands)** | Revenue Stream | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Dealer revenue | $35,654 | $40,705 | $71,485 | $82,991 | | OEM incentives revenue | $3,507 | $1,396 | $4,546 | $2,424 | | Other revenue | $132 | $174 | $242 | $393 | | Total revenues | $39,293 | $42,275 | $76,273 | $85,808 | - Dealer revenue decreased by **$5.0 million (12.4%)** for Q2 2023 and **$11.5 million (13.9%)** for the six months ended June 30, 2023, primarily due to pressure on independent dealers from elevated vehicle prices and rising interest rates[69](index=69&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - OEM incentives revenue increased by **$2.1 million (151%)** for Q2 2023 and **$2.1 million (87.5%)** for the six months ended June 30, 2023, driven by new incentive programs[69](index=69&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of TrueCar's financial condition and results of operations, highlighting macroeconomic impacts, key operating metrics, and liquidity [Overview](index=21&type=section&id=Overview) This section provides an overview of TrueCar's business as a digital automotive marketplace and summarizes its financial performance, including revenues and net loss - TrueCar is a digital automotive marketplace focused on creating a personalized and efficient online car buying experience[74](index=74&type=chunk) - The platform provides market-based pricing data and connects consumers with TrueCar Certified Dealers, also enabling OEMs to deliver targeted incentives[74](index=74&type=chunk) **Financial Performance (in millions)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $39.3 | $42.3 | $76.3 | $85.8 | | Net Loss | $(20.4) | $(11.0) | $(40.0) | $(23.4) | - The net loss for Q2 and H1 2023 includes approximately **$7.1 million** in charges related to a restructuring plan[74](index=74&type=chunk) [Market Environment](index=22&type=section&id=Market%20Environment) This section discusses the macroeconomic factors impacting TrueCar's business, including inventory shortages, rising vehicle costs, and increasing interest rates - Macroeconomic factors, including the coronavirus pandemic, limited new vehicle inventories, rising vehicle costs, and the automotive chip shortage, have caused significant disruptions and revenue decline for TrueCar[76](index=76&type=chunk) - OEMs have cut production due to supply-chain issues and chip shortages, leading to unmet demand and presold new car shipments[76](index=76&type=chunk) - Rising interest rates and inflation are making vehicle financing more expensive, reducing consumer demand and potentially discouraging dealer and OEM participation[76](index=76&type=chunk) [Key Metrics](index=23&type=section&id=Key%20Metrics) This section presents TrueCar's key operating metrics, including unique visitors, units, monetization per unit, and dealer counts, highlighting trends and drivers **Key Operating Metrics** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Average Monthly Unique Visitors | 8,323,311 | 7,207,807 | 8,495,195 | 7,236,588 | | Units | 82,656 | 90,112 | 159,114 | 181,712 | | Monetization | $474 | $467 | $478 | $470 | | Franchise Dealer Count | 8,152 | 7,908 | 8,152 | 7,908 | | Independent Dealer Count | 3,489 | 4,178 | 3,489 | 4,178 | - Average monthly unique visitors increased by **15.5% (QoQ)** and **17.4% (YoY H1)** due to optimized acquisition spend[80](index=80&type=chunk) - Units decreased by **8.3% (QoQ)** and **12.4% (YoY H1)** due to elevated vehicle prices, rising interest rates, and lingering dealer inventory constraints[81](index=81&type=chunk) - Monetization per unit increased to **$474 (QoQ)** and **$478 (YoY H1)**, primarily driven by higher OEM incentives revenue[83](index=83&type=chunk) - Franchise dealer count increased to **8,152 (YoY)** due to increased new vehicle inventory and dealers increasing marketing spend[84](index=84&type=chunk) - Independent dealer count decreased to **3,489 (YoY)** due to industry consolidations and higher interest rates impacting dealers[85](index=85&type=chunk) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles TrueCar's non-GAAP financial measure, Adjusted EBITDA, to net loss, explaining its use in assessing operational performance - Adjusted EBITDA is a non-GAAP measure used to assess operational performance, excluding interest income, depreciation, stock-based compensation, and restructuring charges[87](index=87&type=chunk) **Reconciliation of Net Loss to Adjusted EBITDA (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(20,424) | $(11,019) | $(39,989) | $(23,433) | | Interest income | $(1,730) | $(279) | $(3,338) | $(306) | | Depreciation and amortization | $4,091 | $3,785 | $8,282 | $7,445 | | Stock-based compensation | $3,891 | $4,487 | $8,599 | $7,985 | | Impairment of right-of-use ("ROU") assets | $1,702 | $— | $2,053 | $— | | Restructuring charges | $7,141 | $— | $7,141 | $— | | Adjusted EBITDA | $(5,258) | $(4,980) | $(16,584) | $(11,242) | - Adjusted EBITDA for the six months ended June 30, 2023, was **$(16.6) million**, a decrease from **$(11.2) million** in the prior year, reflecting increased net loss and restructuring charges[89](index=89&type=chunk) [Components of Operating Results](index=27&type=section&id=Components%20of%20Operating%20Results) This section describes the various components of TrueCar's operating results, including revenue recognition, cost of revenue, and different expense categories - Revenues are primarily derived from dealer revenue and OEM incentives, recognized when introductions and incentives are delivered[91](index=91&type=chunk) - Cost of revenue includes data costs, licensing fees, hosting, and employee costs, excluding depreciation and amortization[92](index=92&type=chunk) - Sales and marketing expenses cover advertising, media production, affinity partner fees, and employee-related costs[92](index=92&type=chunk) - Technology and development expenses include employee-related costs, contractor fees, software costs, and product development[92](index=92&type=chunk) - General and administrative expenses comprise executive, finance, legal, and HR employee costs, professional service fees, and bad debt[92](index=92&type=chunk) - Depreciation and amortization cover property, equipment, intangible assets, capitalized software, and leasehold improvements[92](index=92&type=chunk) - Income tax provision is influenced by state taxes and a full valuation allowance against net deferred tax assets[92](index=92&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes TrueCar's results of operations, detailing changes in revenues, costs, and operating expenses for the periods presented [Revenues](index=29&type=section&id=Revenues) This section analyzes TrueCar's total revenues, detailing changes in dealer revenue and OEM incentives and their underlying drivers for the periods presented **Total Revenues (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Total revenues | $39,293 | $42,275 | (7.1%) | $76,273 | $85,808 | (11.1%) | - Dealer revenue decreased by **12.4%** for Q2 2023 and **13.9%** for H1 2023, primarily due to pressure on independent dealers from elevated vehicle prices and rising interest rates[97](index=97&type=chunk)[98](index=98&type=chunk) - OEM incentives revenue increased by **151%** for Q2 2023 and **87.5%** for H1 2023, driven by the activation of new incentive programs[97](index=97&type=chunk)[98](index=98&type=chunk) [Costs and Operating Expenses](index=29&type=section&id=Costs%20and%20Operating%20Expenses) This section analyzes TrueCar's costs and operating expenses, including cost of revenue, sales and marketing, technology and development, general and administrative, and depreciation and amortization [Cost of Revenue (exclusive of depreciation and amortization)](index=29&type=section&id=Cost%20of%20Revenue%20(exclusive%20of%20depreciation%20and%20amortization)) This section analyzes TrueCar's cost of revenue, detailing changes and drivers for the three and six months ended June 30, 2023 and 2022 **Cost of Revenue (exclusive of depreciation and amortization) (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Cost of revenue | $3,931 | $3,817 | 3.0% | $7,777 | $8,763 | (11.3%) | - Q2 2023 increase driven by **$0.4 million** in employee-related expenses, including **$0.2 million** from restructuring[100](index=100&type=chunk) - H1 2023 decrease due to **$1.1 million** reduction in Accu-Trade fees and **$0.6 million** in data licensing/hosting costs, partially offset by restructuring charges[101](index=101&type=chunk) [Sales and Marketing Expenses](index=30&type=section&id=Sales%20and%20Marketing%20Expenses) This section analyzes TrueCar's sales and marketing expenses, detailing changes and drivers for the three and six months ended June 30, 2023 and 2022 **Sales and Marketing Expenses (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Sales and marketing expenses | $27,180 | $26,324 | 3.3% | $53,946 | $53,405 | 1.0% | - Q2 2023 increase includes **$2.2 million** in restructuring charges within employee-related expenses[103](index=103&type=chunk) - H1 2023 increase driven by **$1.1 million** in branded media spend and **$0.4 million** in employee-related expenses (including restructuring), offset by a **$1.6 million** decrease in revenue share to affinity partners[104](index=104&type=chunk) [Technology and Development Expenses](index=30&type=section&id=Technology%20and%20Development%20Expenses) This section analyzes TrueCar's technology and development expenses, detailing changes and drivers, including capitalized software costs, for the periods presented **Technology and Development Expenses (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Technology and development expenses | $13,510 | $11,380 | 18.7% | $26,008 | $21,635 | 20.2% | | Capitalized software costs | $3,712 | $2,936 | 26.4% | $7,186 | $5,796 | 24.0% | - Increases driven by **$2.6 million (Q2)** and **$5.0 million (H1)** in employee-related expenses, including **$2.7 million** from restructuring charges[105](index=105&type=chunk)[106](index=106&type=chunk) - Capitalized software costs increased by **$0.8 million (Q2)** and **$1.4 million (H1)** due to investments in TrueCar+ initiatives[105](index=105&type=chunk)[106](index=106&type=chunk) [General and Administrative Expenses](index=31&type=section&id=General%20and%20Administrative%20Expenses) This section analyzes TrueCar's general and administrative expenses, detailing changes and drivers, including impairment charges and restructuring costs, for the periods presented **General and Administrative Expenses (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | General and administrative expenses | $12,728 | $10,937 | 16.4% | $23,574 | $22,661 | 4.0% | - Q2 2023 increase primarily due to a **$1.7 million** impairment charge on ROU assets and **$0.9 million** net increase in employee-related expenses, including **$2.0 million** from restructuring charges[108](index=108&type=chunk) - H1 2023 increase reflects **$2.1 million** in ROU asset impairment charges and **$0.7 million** from fair value adjustment of contingent consideration liability, partially offset by a **$1.5 million** decrease in professional service fees[109](index=109&type=chunk) [Depreciation and Amortization Expenses](index=31&type=section&id=Depreciation%20and%20Amortization%20Expenses) This section analyzes TrueCar's depreciation and amortization expenses, detailing changes and drivers, primarily from acquired technology, for the periods presented **Depreciation and Amortization Expenses (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Depreciation and amortization expenses | $4,091 | $3,785 | 8.1% | $8,282 | $7,445 | 11.2% | - Increase primarily reflects additional amortization on acquired technology from the Digital Motors transaction[111](index=111&type=chunk) [Gain from Equity Method Investment](index=32&type=section&id=Gain%20from%20Equity%20Method%20Investment) This section details the gain recognized from TrueCar's equity method investment, specifically from changes in fair value of a derivative asset related to the Accu-Trade investment sale **Gain from Equity Method Investment (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gain from equity method investment | $— | $96 | $— | $1,845 | - A **$1.8 million** gain was recognized in H1 2022 from changes in fair value of a derivative asset from the Accu-Trade investment sale[113](index=113&type=chunk) [Provision for (Benefit from) Income Taxes](index=32&type=section&id=Provision%20for%20(Benefit%20from)%20Income%20Taxes) This section details TrueCar's provision for income taxes, highlighting the benefit from the Digital Motors acquisition and the impact of valuation allowances **Provision for (Benefit from) Income Taxes (in thousands)** | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Provision for (benefit from) income taxes | $7 | $(2,574) | $13 | $(2,517) | - H1 2022 income tax benefit primarily reflects the release of valuation allowance from net deferred tax liabilities in the Digital Motors acquisition[114](index=114&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses TrueCar's liquidity and capital resources, including cash position, cumulative losses, share repurchase program, and cash flow activities - TrueCar's liquidity at June 30, 2023, was **$142.4 million** in cash, cash equivalents, and restricted cash[116](index=116&type=chunk) - The company has incurred cumulative losses of **$552.5 million** through June 30, 2023, and expects further losses, requiring potential future equity or debt financing[117](index=117&type=chunk) - The share repurchase program has a remaining authorization of **$45.8 million** as of June 30, 2023, with no repurchases made in the first six months of 2023[118](index=118&type=chunk) **Consolidated Cash Flow Data (in thousands)** | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(22,092) | $(13,550) | | Net cash used in investing activities | $(7,098) | $(5,173) | | Net cash used in financing activities | $(3,923) | $(26,813) | | Net decrease in cash, cash equivalents and restricted cash | $(33,113) | $(45,536) | [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that TrueCar's financial statements rely on management's judgments and estimates, with no material changes to critical accounting policies since December 31, 2022 - Financial statements rely on management's judgments, assumptions, and estimates, as outlined in Note 2 of the Annual Report on Form 10-K[127](index=127&type=chunk) - No material changes to critical accounting policies or estimates have occurred since December 31, 2022[127](index=127&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) This section indicates that no new accounting pronouncements are expected to materially impact TrueCar's Condensed Consolidated Financial Statements - No new accounting pronouncements are expected to materially impact the Condensed Consolidated Financial Statements[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) TrueCar does not believe it has material market risk exposure. A hypothetical 25 basis point decrease in interest rates would reduce annual interest income by approximately $0.3 million. Inflation has not materially affected the business, but significant decreases in consumer demand or inability to offset rising costs could harm results. Foreign currency exchange risk is currently insignificant due to primary operations in the U.S. [Interest Rate Risk](index=35&type=section&id=Interest%20Rate%20Risk) This section assesses TrueCar's exposure to interest rate risk, noting its cash holdings and the potential impact of interest rate changes on annual interest income - Cash, cash equivalents, and restricted cash totaled **$142.4 million** at June 30, 2023, primarily in bank deposits and short-term money market funds[130](index=130&type=chunk) - A hypothetical **25 basis point decrease** in interest rates would reduce annual interest income by approximately **$0.3 million**[130](index=130&type=chunk) - TrueCar does not use derivative financial instruments for trading or speculative purposes to manage interest rate risk[130](index=130&type=chunk) [Inflation Risk](index=35&type=section&id=Inflation%20Risk) This section discusses TrueCar's exposure to inflation risk, noting no material impact to date but potential harm from decreased consumer demand or inability to offset rising costs - Inflation has not materially affected TrueCar's business, financial condition, or results of operations[131](index=131&type=chunk) - Significant decreases in consumer demand for vehicles or inability to offset higher costs due to inflation could harm the business[131](index=131&type=chunk) [Foreign Currency Exchange Risk](index=35&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section addresses TrueCar's foreign currency exchange risk, which is currently insignificant due to primary U.S. operations but would increase with international expansion - TrueCar has not faced significant foreign currency risk due to primary operations and sales in the United States[132](index=132&type=chunk) - International expansion would increase foreign currency risk, requiring a reassessment of risk management[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2023, TrueCar's management, including its principal executive and financial officers, concluded that its disclosure controls and procedures were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the period. [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details management's conclusion that TrueCar's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2023 - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023[134](index=134&type=chunk) - Disclosure controls are designed to ensure timely recording, processing, summarizing, and reporting of information required by the Exchange Act[134](index=134&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes in TrueCar's internal control over financial reporting occurred during the quarter ended June 30, 2023 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[135](index=135&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers other information, including legal proceedings, risk factors, unregistered sales of equity securities, use of proceeds, exhibits, and signatures [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) TrueCar is subject to various legal proceedings and claims arising in the ordinary course of business, as disclosed in Note 5 "Commitments and Contingencies" of this report. The company is not currently a party to any material legal proceedings. - TrueCar is involved in various legal proceedings and claims in the ordinary course of business[137](index=137&type=chunk) - The company is not currently a party to any material legal proceedings[52](index=52&type=chunk)[137](index=137&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks associated with investing in TrueCar's common stock, encompassing business operations, industry dynamics, stock ownership, and general economic conditions [Risks Related to Our Business and Industry](index=38&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) This section outlines risks specific to TrueCar's business and the automotive industry, including restructuring effectiveness, inventory levels, lead quality, and competition - The June 2023 restructuring plan, involving a **24% workforce reduction**, may not achieve anticipated benefits and could lead to unintended consequences like employee attrition and damage to corporate culture[140](index=140&type=chunk) - Low automobile inventory levels, supply chain disruptions, and chip shortages adversely impact TrueCar's business by increasing competition for dealer marketing spend and reducing OEM incentive spending[140](index=140&type=chunk)[142](index=142&type=chunk) - Declines in lead quality or quantity can reduce unit volume and cause dealers to leave the network or demand lower subscription rates[143](index=143&type=chunk) - Failure to successfully roll out, monetize, or integrate current and future offerings into the TrueCar+ experience could adversely affect the business[144](index=144&type=chunk)[147](index=147&type=chunk) - The company's cash and cash equivalents are subject to risk if financial institutions fail, as a portion of cash is held in excess of FDIC insurance limits[148](index=148&type=chunk)[150](index=150&type=chunk) - Growth relies on maintaining and increasing dealer revenues, which is challenged by managing subscription rates, retaining dealers, and optimizing geographic coverage and high-volume brands[151](index=151&type=chunk) - Loss of a critical mass of dealers could deprive TrueCar of essential data for key features, inventory supply, and TrueCar Deal Builder functionality, negatively impacting the business[154](index=154&type=chunk) - Inability to provide a compelling car-buying experience to users could lead to a decline in transactions and dealer participation[155](index=155&type=chunk) - The business is exposed to risks from the larger automotive ecosystem, including interest rates, consumer demand, global supply chain challenges, and macroeconomic issues like inflation[157](index=157&type=chunk)[159](index=159&type=chunk) - Failure to attract or retain manufacturers in incentive programs could reduce growth, especially with current low inventory levels shifting incentives towards financing/leasing[160](index=160&type=chunk) - Loss of a significant affinity group marketing partner or reduction in units from these partners would reduce revenue and harm operating results, as seen with the USAA partnership termination[161](index=161&type=chunk)[163](index=163&type=chunk) - Negative perception or strained relationships with key industry participants (dealers, affinity partners, OEMs) could damage TrueCar's growth and financial performance[164](index=164&type=chunk)[166](index=166&type=chunk) - Executive turnover and inability to attract/retain qualified personnel, especially in engineering and product roles, could harm business development and growth[167](index=167&type=chunk)[170](index=170&type=chunk) - Failure to adequately respond to changes in technology (e.g., self-driving, ride-sharing, direct-to-consumer sales) and evolving consumer demands could decrease demand for automobiles on the platform[171](index=171&type=chunk)[173](index=173&type=chunk) - Limitations in enhancing current or growing complementary product offerings, or making product/investment decisions that don't prioritize short-term financial results, could negatively impact growth and financial performance[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - The coronavirus pandemic and its effects (e.g., reduced demand, remote work, inventory shortages) have materially and negatively affected the business, with potential long-term impacts[176](index=176&type=chunk)[177](index=177&type=chunk) - Failure to maintain or increase revenue, or to reduce expenses as a percentage of revenue, would adversely affect financial condition and profitability, especially given significant future investments[179](index=179&type=chunk) - Inability to maintain or grow the business by successfully responding to market changes, such as inefficient marketing expenditures or declining dealer belief in services, could harm results[180](index=180&type=chunk)[182](index=182&type=chunk) - Reliance on third-party data providers (e.g., DMS, aggregators) means interruptions in data feeds could adversely affect product offerings, timely invoicing, and ability to attract/retain consumers and dealers[183](index=183&type=chunk)[184](index=184&type=chunk) - Dependence on Internet search engines for traffic means failure to appear prominently in search results could lead to declining traffic and adverse business impacts[185](index=185&type=chunk) - The success of marketing and branding efforts is crucial, but increased user acquisition costs, inventory shortages impacting advertising messages, and privacy restrictions on digital marketing could negatively affect financial performance[186](index=186&type=chunk)[187](index=187&type=chunk) - Negative consumer or dealer response to branding, or complaints/negative publicity, could diminish trust and adversely affect brand strength, growth, and operating results[188](index=188&type=chunk)[190](index=190&type=chunk) - Intense competition from various online and offline automotive players, including new entrants and competitors with greater resources, could adversely affect TrueCar's business and operating results[191](index=191&type=chunk)[193](index=193&type=chunk) - A complex and evolving regulatory framework (vehicle sales, advertising, brokering, insurance, financial products, privacy, antitrust) poses risks of claims, penalties, and business model challenges[194](index=194&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) - Climate change-related laws, regulations, and consumer behavior shifts (e.g., demand for EVs sold direct-to-consumer) could impact the automotive industry and TrueCar's business[207](index=207&type=chunk) - Failure to protect personal information and data, or actual/perceived security breaches, could damage reputation, brand, and operating results, especially with evolving privacy laws like CCPA[208](index=208&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Reliance on highly technical software means undetected errors or vulnerabilities could negatively impact user experience, delay products, or compromise data protection[223](index=223&type=chunk) - Dependence on maintaining and scaling technical infrastructure, including Amazon Web Services, means disruptions could damage reputation, lead to customer loss, and harm business[224](index=224&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) - Past revenue growth is not indicative of future growth, and the company's ability to grow revenue depends on successful TrueCar+ rollout, dealer network expansion, and managing various market factors[228](index=228&type=chunk)[229](index=229&type=chunk) - TrueCar has a history of losses and may not achieve profitability in the future due to significant investments, slowing demand, and fixed costs[231](index=231&type=chunk) - Operating results fluctuate due to seasonality in consumer car buying patterns, which may become more pronounced in the future[232](index=232&type=chunk) - Failure to adequately protect intellectual property (patents, trademarks, trade secrets) could harm the business and operating results, and intellectual property disputes can be costly[233](index=233&type=chunk)[235](index=235&type=chunk) - Impairment of goodwill or other intangible assets, as experienced in the past (**$59.8 million** in Q3 2022), could require future non-cash charges, materially affecting results[236](index=236&type=chunk) - Limitations on using net operating loss carryforwards and other tax attributes (e.g., due to ownership changes under Section 382/383) could reduce tax benefits[238](index=238&type=chunk) - Changes in applicable tax law (e.g., Wayfair decision, R&D capitalization) and resolutions of tax disputes could negatively affect financial results[239](index=239&type=chunk) [Risks Related to Ownership of Our Common Stock](index=68&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section details risks associated with owning TrueCar's common stock, including stock price volatility, concentrated ownership, potential dilution, and anti-takeover provisions - Failure to meet publicly announced guidance or other expectations could cause the stock price to decline, as experienced in the past[241](index=241&type=chunk) - The price of common stock has been and may continue to be volatile due to various factors, including market fluctuations, operating performance, and analyst recommendations[242](index=242&type=chunk)[244](index=244&type=chunk) - Concentration of ownership (approximately **54%** by executive officers, directors, and 5%+ holders) may prevent new investors from influencing significant corporate decisions[245](index=245&type=chunk) - Sales of substantial amounts of common stock by existing stockholders, or the perception of such sales, could depress the market price[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - Anti-takeover provisions in the certificate of incorporation and bylaws, along with Delaware law, could delay or prevent acquisition attempts[250](index=250&type=chunk) - The exclusive forum provision in the certificate of incorporation designates the Delaware Court of Chancery as the forum for most disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[251](index=251&type=chunk) - TrueCar does not expect to declare any dividends in the foreseeable future, meaning investors must rely on stock price appreciation for gains[253](index=253&type=chunk) - The share repurchase program does not obligate the company to repurchase shares, may not enhance long-term value, could increase stock price volatility, and will diminish cash reserves[254](index=254&type=chunk) [General Risk Factors](index=71&type=section&id=General%20Risk%20Factors) This section covers general risks, including public company compliance costs, stock price sensitivity to analyst research, catastrophic events, and the need for additional capital - Operating as a public company incurs substantial legal, accounting, and compliance costs, diverting management time[255](index=255&type=chunk) - Failure to comply with public company responsibilities (e.g., Sarbanes-Oxley Act Section 404) could lead to regulatory actions, stock price decline, and reputational harm[255](index=255&type=chunk) - Stock price and trading volume are influenced by securities analysts' research; adverse changes in recommendations or cessation of coverage could negatively impact the stock[257](index=257&type=chunk) - Natural disasters, public health crises, political crises, or other catastrophic events could damage facilities, disrupt operations, and impact consumer spending[258](index=258&type=chunk) - TrueCar may require additional capital for business objectives, and if not available on favorable terms, could harm operations and financial condition[259](index=259&type=chunk) - Future equity offerings to raise capital could result in dilution for existing stockholders and potentially superior rights for new equity securities[260](index=260&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) TrueCar made no unregistered sales of equity securities. The Board authorized a share repurchase program of up to $150 million, extended until September 30, 2024, but no repurchases were made during the six months ended June 30, 2023. - No unregistered sales of equity securities occurred during the period[262](index=262&type=chunk) - The Board authorized a share repurchase program of up to **$150 million**, extended to September 30, 2024[262](index=262&type=chunk) - No share repurchases were made during the six months ended June 30, 2023[66](index=66&type=chunk)[118](index=118&type=chunk)[254](index=254&type=chunk)[262](index=262&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists documents incorporated by reference or filed with the Quarterly Report on Form 10-Q, including the Amended and Restated Certificate of Incorporation, Bylaws, various employment agreements, the 2023 Equity Incentive Plan, and certifications from executive officers. It also includes XBRL instance documents. - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, and employment agreements[265](index=265&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are filed/furnished, along with XBRL instance documents[265](index=265&type=chunk) [Signatures](index=75&type=section&id=Signatures) The report is signed by Jantoon E. Reigersman, President & Chief Executive Officer (Principal Executive Officer), and Teresa T. Luong, Chief Financial Officer (Principal Financial Officer), on August 4, 2023. - The report was signed by Jantoon E. Reigersman, President & Chief Executive Officer, and Teresa T. Luong, Chief Financial Officer, on August 4, 2023[268](index=268&type=chunk)