TrueCar(US:TRUE)2020-08-09 11:01Financial Data and Key Metrics Changes - Total revenue for Q2 2020 was $62.7 million, down 29% year-over-year due to unit pressure and subscription rate discounting [33] - Adjusted EBITDA was $10.9 million, representing 17% of revenue, up from $3.7 million or 4% of revenue in the same period last year [41] - GAAP net loss was $11.2 million or $0.10 per share, compared to a loss of $24.1 million or $0.23 per share in Q2 2019 [41] Business Line Data and Key Metrics Changes - Franchise dealer counts ended the quarter at 11,267, down 1% from Q1, showing resilience despite the pandemic [33] - Independent dealer counts ended June at 4,131, down just 62 dealers sequentially from Q1, with revenue per dealer down 44% year-over-year [34] - OEM revenue was $4.8 million, a 15% year-over-year improvement, driven by the expansion of certain luxury brand programs [34] Market Data and Key Metrics Changes - Monthly unique visitors to the site reached 8.3 million, up 15% year-over-year, driven by SEO traffic and improved marketing efficiency [35] - Total units sold in the quarter were approximately 189,000, down 24% year-over-year, with a strong recovery in May and June [36] - Used cars represented 45% of total units, up from 36% in the same period last year, attributed to SEO traffic growth and inventory shortages [37] Company Strategy and Development Direction - The company is focused on building a flexible online car-buying experience to enhance consumer confidence and streamline the purchasing process [14][15] - A strategic restructuring was initiated to support a leaner operating model, resulting in approximately $35 million of annualized fixed cost savings [12][32] - The company plans to accelerate its digital retailing tools and aims to introduce all three phases of its online car-buying experience by year-end [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in traffic and dealer engagement despite the challenges posed by COVID-19 [9][10] - The company anticipates a strong quarter-over-quarter rebound in total revenues as subscription discounts end and unit volumes recover [42] - There are uncertainties regarding the ongoing pandemic, but management is focused on supporting dealer customers and aligning monetization with value delivered [44][45] Other Important Information - The company announced the sale of its ALG business for up to $135 million, which includes an upfront cash payment of $112.5 million [31] - A $75 million share repurchase program was authorized to fortify the balance sheet and support ongoing operations [32] - The company formed a diversity equity inclusion committee to promote social justice and inclusivity within the organization [29] Q&A Session Summary Question: Dealer retention trends and inventory issues - Management noted a dip in dealer retention at the end of March but a strong recovery through the quarter, with few cancellations [47][48] Question: Progress on digital retailing initiative - Over 3,000 dealers have been onboarded to the digital retailing platform, with plans to increase penetration of these tools [49][50] Question: OEM incentives performance - OEM revenue performed well due to the addition of luxury brands and the transition of OEM partners to the military channel [51][52] Question: Cost structure post-restructuring - The strategic restructuring was proactive, aligning the cost structure with business needs, and no further significant cuts are expected [54][56] Question: Consumer response to buy-at-home functionality - There has been high consumer engagement with the buy-at-home product, indicating a shift towards low-contact transactions [56][57] Question: Marketing spend and rebuilding strategy - The company plans to gradually rebuild marketing spend, focusing on efficiencies learned during the pandemic [59][61] Question: Long-term impact of large dealers moving into digital space - Management sees this as a positive trend, believing that increased investment in digital retailing will benefit the company [68][69]