TrueCar(TRUE) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a significant decline in vehicle sales, estimating July earnings at approximately 13 million, which reflects a decrease from previous months [9][23] - The company expects adjusted EBITDA to be negative for 2022, with the second half of the year showing a greater impact from planned investments [24][50] Business Line Data and Key Metrics Changes - TrueCar+ has signed 80 dealers and has over 7,000 new, used, and certified pre-owned units in inventory by the end of Q2 [12] - The average number of orders placed per week through TrueCar+ was 260, totaling nearly 3,300 orders by the end of June [13] Market Data and Key Metrics Changes - Industry-wide vehicle sales are estimated to decline by 10% year-over-year and 2% sequentially in July, indicating a muted sales environment for the second half of the year [23] - Dealer inventories for new cars remain near historic lows, contributing to elevated pricing and ongoing supply chain challenges [9][23] Company Strategy and Development Direction - The company is focused on expanding TrueCar+ beyond Florida, with plans to roll out in an additional three to five states by the end of the year [15] - The acquisition of Digital Motors is aimed at enhancing the company's capabilities in FinTech and automotive e-commerce, which will support the TrueCar+ roadmap [26][60] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the macroeconomic environment, including rising interest rates and a slowing U.S. economy, which are expected to impact close rates and overall performance [9][23] - The company remains optimistic about the long-term digital future of automotive retail and believes TrueCar+ will create new monetization opportunities once fully transactional [29][50] Other Important Information - The company has nearly $200 million in cash and zero debt, allowing for careful investment in brand awareness and marketing to support TrueCar+ [24] - The initial cash outlay for the acquisition of Digital Motors was $12 million, with an additional $8 million in earnouts based on performance milestones [26] Q&A Session Summary Question: Clarification on EBITDA path for the rest of the year - Management confirmed that the EBITDA loss run rate in the second half should be higher due to increased expenses and tight inventory [34] Question: Conversations with domestic brands regarding TrueCar+ - Management is in initial discussions with OEM partners about integrating TrueCar+ into their market strategies, emphasizing the consumer flow through their marketplace [36] Question: Insights on distance retailing features - Management noted that distance retailing is providing dealers with opportunities to expand their markets, and pilots have shown beneficial results [39] Question: Operating expenses leveraging - Management indicated that they have been pulling back on marketing expenses while preparing for a broader rollout of TrueCar+ [44] Question: Monetization methodology for TrueCar+ - Management stated that they do not anticipate additional revenue from TrueCar+ for 2022, with plans to explore monetization opportunities in 2023 [49][51] Question: Breakdown of orders in TrueCar+ - Management mentioned that the orders are a mix of new and used vehicles, with a heavier emphasis on used due to inventory constraints [53]