TrueCar(TRUE) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements (unaudited) TrueCar, Inc. reported a net loss of $12.4 million on $43.5 million revenue, with cash decreasing to $234.8 million and negative operating cash flow Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $234,782 | $245,217 | | Total current assets | $261,909 | $269,938 | | Total assets | $363,356 | $387,670 | | Liabilities & Equity | | | | Total current liabilities | $29,221 | $31,481 | | Total liabilities | $54,129 | $57,884 | | Total stockholders' equity | $309,227 | $329,786 | Condensed Consolidated Statements of Comprehensive Loss Statement of Comprehensive Loss (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenues | $43,533 | $65,105 | | Total costs and operating expenses | $57,666 | $73,740 | | Loss from operations | $(14,133) | $(8,635) | | Net loss | $(12,414) | $(8,418) | | Net loss per share, basic and diluted | $(0.13) | $(0.09) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,465) | $5,479 | | Net cash provided by (used in) investing activities | $9,421 | $(2,816) | | Net cash used in financing activities | $(12,391) | $(8,904) | | Net (decrease) increase in cash | $(10,435) | $1,259 | - Investing activities in Q1 2022 included $12.8 million in cash received from the sale of an equity method investment, offset by $3.4 million in capital expenditures[20][126] - Financing activities in Q1 2022 were primarily driven by $11.5 million used for the repurchase of common stock[20][127] Notes to Condensed Consolidated Financial Statements Notes detail business, accounting policies, revenue disaggregation showing declines, share repurchases of 3.1 million shares for $11.0 million, and the sale of Accu-Trade interest Disaggregation of Revenue (in thousands) | Revenue Stream | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Dealer revenue | $42,286 | $62,057 | | OEM incentives revenue | $1,028 | $2,797 | | Other revenue | $219 | $251 | | Total revenues | $43,533 | $65,105 | - During Q1 2022, the company repurchased and retired 3.1 million shares of its common stock for $11.0 million under its authorized repurchase program, with $64.5 million remaining authorized for future repurchases as of March 31, 2022[74] - On March 1, 2022, the company sold its 20% ownership interest in Accu-Trade at its carrying value[75] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue declined 33.1% due to inventory shortages, leading to a 44.8% decrease in units, while monetization per unit increased and operating expenses decreased Key Metrics Key Operating Metrics Comparison | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Average Monthly Unique Visitors | 7,265,369 | 9,175,703 | (20.8%) | | Units | 91,600 | 165,858 | (44.8%) | | Monetization ($) | $473 | $391 | 21.0% | | Franchise Dealer Count | 8,299 | 10,446 | (20.6%) | | Independent Dealer Count | 4,106 | 3,702 | 10.9% | - The decrease in unique visitors was attributed to lower marketing spend, while the sharp decline in units was primarily due to low automobile inventory levels from the global chip shortage[87][88] - Monetization increased due to a higher mix of used cars, which have higher monetization, and the lagging effect of subscription revenue from franchise and independent dealers[90] Results of Operations - Total revenues decreased by $21.6 million (33.1%) YoY, primarily due to a $19.8 million drop in dealer revenue and a $1.8 million decrease in OEM incentives revenue, both impacted by the global semiconductor chip shortage[106] - Sales and marketing expenses decreased by $13.0 million (32.5%) YoY, reflecting an $8.9 million reduction in branded media spend and a $2.7 million decrease in employee-related expenses due to lower headcount[110] - Technology and development expenses decreased by $0.9 million (8.4%) YoY, mainly due to reduced headcount[111] - General and administrative expenses decreased by $1.0 million (7.5%) YoY, driven by lower stock-based compensation and professional services fees, partially offset by higher lease exit costs[112] Liquidity and Capital Resources - As of March 31, 2022, the company's principal source of liquidity was $234.8 million in cash and cash equivalents[119] - The company has a $35.0 million revolving credit facility, with $32.6 million available as of March 31, 2022, and no amounts outstanding[121][53] - The company repurchased 3.1 million shares for $11.0 million in Q1 2022, with $64.5 million remaining under its share repurchase authorization[122] Quantitative and Qualitative Disclosures About Market Risk The company reports no material market risk exposure, including interest rate, inflation, or foreign currency risks, due to its primary U.S. operations - The company does not believe it has material exposure to market risks, including interest rate, inflation, or foreign currency exchange risk[135][136][137][138] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective[140] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[141] PART II - OTHER INFORMATION Legal Proceedings This section refers to Note 7 for details on legal proceedings, including ongoing stockholder derivative litigation - The company is subject to a purported stockholder derivative action, the Lee Derivative Litigation, which is currently stayed pending the outcome of a Special Committee investigation, and the company believes the complaint is without merit[58] Risk Factors Significant risks include low auto inventory, supply chain disruptions, USAA partnership termination, TrueCar+ rollout challenges, intense competition, regulatory complexities, and COVID-19 impacts - Low automobile inventory levels, driven by factors like the semiconductor chip shortage, adversely impact the business by increasing competition for dealer advertising and reducing OEM incentive spending[146] - The termination of the partnership with USAA Federal Savings Bank has had and will continue to have a material adverse effect on the business, revenue, and operating results[155] - The company's success is critically dependent on the rollout of its end-to-end car-buying experience, TrueCar+, and failure to monetize it effectively would adversely affect business prospects[150] - The business is subject to a complex framework of laws and regulations concerning vehicle sales, advertising, and brokering, which could subject the company to claims or challenge its business model[199] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2022, the company repurchased 3,107,370 shares for $3.53 per share under its $150 million share repurchase program Share Repurchase Activity (Q1 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining | | :--- | :--- | :--- | :--- | | Jan 1, 2022 – Mar 31, 2022 | 3,107,370 | $3.53 | $64,473,300 | Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, executive certifications, and XBRL data files