TrueCar(TRUE) - 2025 Q2 - Quarterly Results

Stockholder Letter Letter from Leadership TrueCar's Q2 2025 performance emphasizes strategic focus on product development and progress towards TrueCar+ commercialization by year-end - Strategic approach involves focusing on controllable factors and resource allocation prioritizing product development, deferring certain sales and marketing investments[2] - Accelerated key product enhancements to strengthen competitive advantage and deliver greater value to dealers and consumers through the TrueCar platform[2] - Continued progress towards commercializing TrueCar+ (TC+) by year-end[2] Q2 2025 Key Performance Measures | Metric | Q2 2025 | YoY Change | | :-------------------------------- | :---------------- | :--------- | | Total Revenue | $47.0 million | +12.4% | | Net Loss | ($7.6 million) | Decreased from ($13.5 million) | | Adjusted EBITDA | ($1.2 million) | Decreased from $0.1 million | | OEM Revenue | $3.6 million | +19.7% | | New unit sales volume | | +6.2% (vs. industry's 2.8%) | | Prospect Close Rate | Highest since Q2 2021 | | | Average cost per sale (non-Affinity Partner units) | | Nearly 30% improvement YoY | Core Product Enhancements TrueCar enhanced dealer tools and redesigned consumer pages to improve lead quality, close rates, and transparency - Launched Actionable Insights in the Dealer Portal, providing personalized, data-driven recommendations to optimize dealer performance (e.g., flagging aged inventory, recommending price adjustments)[4] - Introduced Motivated Buyer badging, leveraging machine learning to identify and highlight high-intent shoppers for faster, more targeted follow-up by dealers[5] - Completed a full redesign of the Search Results Page (SRP) and Vehicle Detail Page (VDP) to make the consumer experience more intuitive, transparent, and trustworthy, aiming for improved engagement and lead volume[8] - Strengthened the post-prospect experience with a redesigned email providing a clear, receipt-style breakdown of the "out-the-door" price and prominent calls to action[9] TC+ Advancements TrueCar advanced TC+ commercialization with CDK DMS integration and a revamped checkout flow, improving consumer engagement - Completed engineering work and began testing for the integration of CDK's DMS with TC+, streamlining the dealer experience and driving operational efficiency[11] - Released a major revamp of the TC+ consumer checkout flow, introducing a new "Checkout Center" for a guided purchasing process with greater transparency and features like dynamic deal receipts and F&I product pages[12] - Observed significant improvements since the new TC+ experience went live[13] TC+ Consumer Engagement Metrics Improvement | Metric | Improvement | | :-------------------------------- | :------------ | | Add-to-cart rate | 115% increase | | Daily credit application submissions | 40% lift | | F&I attachment rates | 2x improvement | - Future priorities include completing back-end DMS integration, expanding financing partner integrations (e.g., universal prequalification, co-applicants), and building seamless online-to-offline transaction off-ramps[14] Market Outlook and Strategic Drivers Market faces mixed OEM tariff responses and stable supply; TrueCar sees opportunities in sourcing despite dealer sentiment risks - OEMs showed mixed responses to tariffs; some held prices steady, while others (Toyota, BMW) announced increases for July, with new vehicle inventory expected to remain fairly stable over the next two quarters, though lower YoY[15] - New vehicle retail sales in the second half of 2025 are likely to trend 5-10% lower than prior year levels[15] - Dealer sentiment declined 22% QoQ in Q2, but the decline among franchise dealers was more muted at 8% QoQ, with stable new vehicle supply expected to mitigate risk to marketing spend[16] - OEM incentive spending contracted QoQ in Q2 and is likely to trend lower YoY in H2 2025; one OEM program was paused after exceeding its budget[17] - Opportunities exist in vehicle sourcing products (Sell Your Car, TrueCar Wholesale Exchange) to address dealers' growing emphasis on expanding used-car supply, evidenced by a nearly 40% increase in Sell Your Car subscribers in H1 2025[18] - Refined go-to-market strategy by reducing and consolidating dealer sales and service teams, aiming to increase share of dealer marketing spend and deepen partnerships, expecting approximately $500 thousand of monthly headcount savings starting Q3[19] Future Outlook TrueCar aims for long-term growth through TC+ and core product enhancements, expecting H2 2025 Adjusted EBITDA profitability and positive Free Cash Flow - Strong conviction that TC+ will play a critical role in the future of automotive retail, with 71% of surveyed dealers viewing the shift to online vehicle sales as permanent (up from 53% in Dec 2024)[20] - Expected results from recent core product enhancements in H2 2025 and beyond, including dealer network expansion and unit sales growth[20] - Positioned to deliver Adjusted EBITDA profitability and positive Free Cash Flow over the second half of 2025 due to cost elimination and maximized financial flexibility[20] Market Environment Vehicle Sales Volumes Q2 2025 saw mixed new and used vehicle sales trends, with new sales up YoY but declining in May/June, and persistent affordability challenges New Vehicle Retail Sales New vehicle retail sales in Q2 2025 totaled 3.6 million units, increasing YoY and QoQ but contracting in May and June, while average APR and monthly payments rose - New vehicle retail sales in Q2 2025: 3.6 million units (+2.8% YoY, +6.4% QoQ), in line with 2019 pre-pandemic levels[26] - Sales showed strength in March/April but contracted to a 2% YoY increase in May and a 5% YoY decline in June[26] New Vehicle Loan Affordability Metrics (Q2 2025) | Metric | Q2 2025 | QoQ Change (from Q1 2025) | YoY Change (from Q2 2024) | | :-------------------- | :-------- | :-------------------------- | :------------------------ | | Average APR | 7.2% | +0.3% (from 6.9%) | Steady at 7.2% | | Average Amount Financed | $44.2 thousand | +$0.7 thousand (from $43.5k) | +$1.4 thousand (from $42.8k) | | Average Loan Term | 70 months | +1 month (from 69 months) | | | Average Monthly Payment | $802 | +$10 (from $792) | +$19 (from $783) | Used Vehicle Retail Sales Used vehicle retail sales in Q2 2025 decreased QoQ but increased YoY, with affordability challenged by higher average financed amounts and monthly payments despite a slight APR decrease - Used vehicle retail sales in Q2 2025: 4.5 million units (-0.5% QoQ, +3.8% YoY)[30] Used Vehicle Loan Affordability Metrics (Q2 2025) | Metric | Q2 2025 | QoQ Change (from Q1 2025) | YoY Change (from Q2 2024) | | :-------------------- | :-------- | :-------------------------- | :------------------------ | | Average Amount Financed | $30.9 thousand | +$0.9 thousand (from $30.0k) | +4.3% (from $29.6k) | | Loan APR | 10.7% | -0.3% (from 11.0%) | -5.8% (from 11.4%) | | Average Monthly Payment | $585 | +$7 (from $578) | +$12 (from $573) | Inventory and Supply Trends Average new vehicle inventory and days' supply declined QoQ and YoY in Q2 2025, primarily for domestic brands, while some foreign brands saw increases New Vehicle Inventory & Days' Supply Average new vehicle inventory in Q2 2025 was 2.6 million units, declining QoQ and YoY, with days' supply also decreasing to 47 days - Average new vehicle inventory in Q2 2025: 2.6 million units (-5.9% QoQ, -5.3% YoY), the first YoY decline since Q2 2022[35] - QoQ inventory decline primarily driven by domestic brands (76%), Japanese brands (17%), and European brands (11%)[35] - Average new vehicle days' supply in Q2 2025: 47 days (down from 53 days QoQ and 51 days YoY)[36] [New Vehicle Days' Supply by Brand](index=12&type=section&id=New%20Vehicle%20Days'%2