TrueCar, Inc. (NASDAQ:TRUE) today announced its financial
results for the second quarter ended June 30, 2017.
Management Commentary
“Despite the bigger picture trends in automotive, we set records
in nearly every major financial and operating metric in the second
quarter,” said Mike Guthrie, Chief Financial Officer.
“The momentum that we have been building over the past few
quarters at TrueCar is continuing quite nicely,” added Chip Perry,
TrueCar’s President and CEO. “We're growing well; we're delivering
value to consumers, dealers and manufacturers; we're expanding our
business; and we're producing operating leverage all while making
key investments for the long term.”
_____________________
(1) Non-GAAP net income (loss) is a Non-GAAP financial
measure. Refer to its definition and accompanying
reconciliation to GAAP net loss below.
(2) Adjusted EBITDA is a Non-GAAP financial measure. Refer
to its definition and accompanying reconciliation to GAAP net loss
below.
(3) Adjusted EBITDA margin is a Non-GAAP financial measure,
calculated as Adjusted EBITDA, divided by total revenue.
(4) Units: We define units as the number of automobiles
purchased by our users from TrueCar Certified Dealers through
TrueCar.com and our mobile applications or the car buying sites and
mobile applications we maintain for our affinity group marketing
partners.
(5) Franchise Dealer count: We define franchise dealer count as
the number of franchise dealers in the network of TrueCar Certified
Dealers at the end of a given period. This number is calculated by
counting the number of brands of new cars sold by dealers in the
TrueCar Certified Dealer network at their locations, and includes
both single-location proprietorships as well as large consolidated
dealer groups. Note that this number excludes Genesis
franchises on our program due to Hyundai’s recent transition of
Genesis to a stand-alone brand. In order to facilitate period
over period comparisons, we have continued to count each Hyundai
franchise that also has a Genesis franchise as one franchise dealer
rather than two.
(6) Independent Dealer count: We define independent dealer count
as the number of dealers in the network of TrueCar Certified
Dealers at the end of a given period that exclusively sell used
vehicles and are not directly affiliated with a new car
manufacturer. This number is calculated by counting each location
individually, and includes both single-location proprietorships as
well as large consolidated dealer groups.
Second Quarter 2017 Financial Highlights
- Total revenue of $81.8 million.
- Net loss of $(8.1) million, or $(0.09) per basic and diluted
share, compared to a net loss of $(14.7) million, or $(0.17) per
basic and diluted share, in the second quarter of 2016.
- Non-GAAP net income of $1.1 million, or $0.01 per basic and
diluted share, compared to Non-GAAP net loss of $(4.1) million, or
$(0.05) per basic and diluted share, in the second quarter of
2016.
- Adjusted EBITDA of $7.4 million, representing an Adjusted
EBITDA margin of 9.0%, compared to Adjusted EBITDA of $2.4 million,
representing an Adjusted EBITDA margin of 3.7%, in the second
quarter of 2016.
Key Operating Metrics
- Average monthly unique visitors(7) increased 8% to 7.2
million in the second quarter of 2017, up from 6.7 million in the
second quarter of 2016.
- Units were 242,130 in the second quarter of 2017, up 26%
from 192,531 in the second quarter of 2016.
- Monetization(8) was $319 during the second quarter of
2017, compared to $321 during the second quarter of 2016.
- Franchise dealer count was 12,204 as of June 30, 2017, a
record and an increase from 11,734 as of March 31, 2017.
- Independent dealer count was 2,860 as of June 30, 2017, a
record and an increase from 2,716 as of March 31, 2017.
Business Outlook
TrueCar’s guidance for the third quarter ending September 30,
2017 is as follows:
- Units are expected to be in the range of 265,000 to
270,000.
- Revenues are expected to be in the range of $85.0 million to
$87.0 million.
- Adjusted EBITDA is expected to be in the range of $7.0 million
to $8.0 million.(9)
Guidance for the full year ending December 31, 2017 is as
follows:
- Units are expected to be in the range of 975,000 to
985,000.
- Revenues are expected to be in the range of $325.0 million to
$329.0 million.
- Adjusted EBITDA is expected to be in the range of $26.0 million
to $28.0 million.(9)
_____________________
(7) Average monthly unique visitors: We define a monthly unique
visitor as an individual who has visited our website, our landing
page on our affinity group marketing partner sites, or our
mobile applications within a calendar month. We calculate average
monthly unique visitors as the sum of the monthly unique visitors
divided by the number of months in that period.
(8) Monetization: We define monetization as the average
transaction revenue per unit, which we calculate by dividing all of
our transaction revenue in a given period by the number of units in
that period.
(9) We are unable to provide reconciliations of forward-looking
Adjusted EBITDA without unreasonable effort because we are unable
to provide a forward-looking estimate of certain reconciling items
between GAAP net loss and Adjusted EBITDA due to uncertainty
regarding, and the potential variability of, stock-based
compensation due to timing, valuation and number of future employee
awards, warrant expense due to achievement of minimum performance
milestones based on the level of vehicle sales and certain
litigation costs due to timing, status, and cost of litigation,
both of which may have a significant impact on GAAP results.
Conference Call Information
Members of TrueCar management will host a conference call
today, August 8, 2017, to discuss the second quarter results
at 4:30 p.m. Eastern Time. To participate, domestic callers
should dial 1-877-407-0789 and international callers should dial
1-201-689-8562. In addition, a live webcast of the call will be
accessible through the Investor Relations section of TrueCar’s
website at ir.true.com and will be archived online for 90 days upon
completion of the conference call. A replay of the call will also
be available the same day from 7:30 p.m. until 11:59 p.m.
Eastern Time, on Tuesday, August 22, 2017, by dialing
1-844-512-2921 (domestic) or 1-412-317-6671 (international) and
entering the replay pin number: 13664999. TrueCar has used,
and intends to continue to use, its Investor Relations website
(ir.true.com), Twitter (@TrueCar), and Facebook
(www.facebook.com/TrueCar), as means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements. All
statements other than statements of historical facts contained in
this press release, including statements regarding TrueCar’s future
growth potential and opportunities, outlook for the third quarter
and full year 2017, planned product offerings, including research
and discovery, vehicle trade-in offerings and digital retailing,
future financial results, including expectations regarding future
revenue and adjusted EBITDA, business strategy, plans and
objectives are forward-looking statements. These forward-looking
statements are subject to a number of risks, uncertainties, and
assumptions that may prove incorrect, any of which could cause
TrueCar’s results to differ materially from those expressed or
implied by such forward-looking statements. Among the risks
and uncertainties that could cause TrueCar’s results to differ
materially from those expressed or implied by such forward-looking
statements include: the ability to maintain and improve our
relationship with, and perception among, car dealerships and grow
our network of Certified Dealers, on an overall basis, among
dealers representing high volume brands and in important
geographies; dependence upon affinity group marketing partners,
especially USAA; compliance with U.S. federal and state laws
and regulations directly or indirectly applicable
to TrueCar's business; the ability to scale and compete
effectively in an increasingly competitive market and to grow and
enhance TrueCar's brand; the successful improvement of
TrueCar's technology infrastructure; macro-economic issues that
affect the automobile industry; the ability to attract, retain, and
integrate qualified personnel, including recently hired members of
management and the hiring of additional personnel in our technology
and dealer teams; the ability to successfully resolve litigation to
which TrueCar is subject; and other risks and
uncertainties described more fully under the heading “Risk Factors”
in TrueCar’s Annual Report on Form 10-K for the year ended
December 31, 2016 and its subsequent Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission, or SEC, and
its Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017 to be filed with the SEC. Moreover, TrueCar
operates in a very competitive and rapidly changing environment.
New risks emerge from time to time. It is not possible for TrueCar
management to predict all risks, nor can management assess the
impact of all factors on its business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements TrueCar may make. All forward-looking statements in this
press release are based on information available to TrueCar's
management as of the date hereof, and except as required by law,
management assumes no obligation to update these forward-looking
statements, which speak only as of their respective dates.
Use of Non-GAAP Financial Measures
This earnings release includes the following Non-GAAP financial
measures; Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net
income (loss), and Non-GAAP net income (loss) per share. We
define Adjusted EBITDA as net loss adjusted to exclude interest
income, interest expense, depreciation and amortization,
stock-based compensation, certain litigation costs, severance
charges, lease exit costs, and income taxes. We define Non-GAAP net
income (loss) as net loss adjusted to exclude stock-based
compensation, certain litigation costs, severance charges, and
lease exit costs. We have provided below a reconciliation of
each of Adjusted EBITDA and Non-GAAP net income (loss) to
net loss, the most directly comparable GAAP financial measure.
Neither Adjusted EBITDA nor Non-GAAP net income (loss) should be
considered as an alternative to net loss or any other measure of
financial performance calculated and presented in accordance with
GAAP.
We use Adjusted EBITDA and Non-GAAP net income (loss) as
operating performance measures as each is (i) an integral part of
our reporting and planning processes; (ii) used by our management
and board of directors to assess our operational performance, and
together with operational objectives, as a measure in evaluating
employee compensation and bonuses; and (iii) used by our management
to make financial and strategic planning decisions regarding future
operating investments. We believe that using Adjusted EBITDA and
Non-GAAP net income (loss) facilitates operating performance
comparisons on a period-to-period basis because these measures
exclude variations primarily caused by changes in the excluded
items noted above. In addition, we believe that Adjusted EBITDA,
Non-GAAP net income (loss) and similar measures are widely used by
investors, securities analysts, rating agencies and other parties
in evaluating companies as measures of financial performance and
debt service capabilities.
Our use of each of Adjusted EBITDA and Non-GAAP net income
(loss) has limitations as an analytical tool, and you should not
consider either in isolation or as a substitute for analysis of our
results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect the payment or receipt of
interest or the payment of income taxes;
- neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects
changes in, or cash requirements for, our working capital
needs;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditures or any other contractual commitments;
- neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects
the costs to advance our claims in respect of certain litigation or
the costs to defend ourselves in various complaints filed against
us;
- neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects
the cash severance costs due to certain former executives and
former members of our product and technology teams affected by a
reorganization;
- neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects
the lease exit costs associated with consolidation of the Company's
office locations in Santa Monica, California;
- neither Adjusted EBITDA nor Non-GAAP net income (loss) consider
the potentially dilutive impact of shares issued or to be issued in
connection with stock-based compensation; and
- other companies, including companies in our own industry, may
calculate Adjusted EBITDA and Non-GAAP net income (loss)
differently than we do, limiting their usefulness as comparative
measures.
Because of these limitations, you should consider Adjusted
EBITDA and Non-GAAP net income (loss) alongside other financial
performance measures, including our net loss, our other GAAP
results, and various cash flow metrics. In addition, in evaluating
Adjusted EBITDA and Non-GAAP net income (loss), you should be aware
that in the future we will incur expenses such as those that are
the subject of adjustments in deriving Adjusted EBITDA and Non-GAAP
net income (loss) and you should not infer from our presentation of
Adjusted EBITDA and Non-GAAP net income (loss) that our future
results will not be affected by these expenses or any unusual or
non-recurring items.
About TrueCar
TrueCar, Inc. (NASDAQ:TRUE) is a digital automotive
marketplace that provides comprehensive pricing transparency about
what other people paid for their cars and enables consumers to
engage with TrueCar Certified Dealers who are committed to
providing a superior purchase experience. TrueCar operates its own
branded site and its nationwide network of more than 15,000
Certified Dealers, and also powers car-buying programs for some of
the largest U.S. membership and service organizations, including
USAA, AARP, American Express, AAA and Sam's Club. Over one-half of
all new car buyers engage with the TrueCar network during their
purchasing process. TrueCar is headquartered in Santa Monica,
California, with offices in San Francisco and Austin, Texas. For
more information, go to www.truecar.com. Follow TrueCar on Facebook
or Twitter.
|
|
|
|
|
|
|
TRUECAR, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share data)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Revenues |
|
|
$ |
81,819 |
|
|
|
$ |
66,427 |
|
|
|
$ |
157,576 |
|
|
|
$ |
128,287 |
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
|
7,130 |
|
|
|
6,365 |
|
|
|
13,522 |
|
|
|
12,590 |
|
Sales and
marketing |
|
|
46,933 |
|
|
|
38,129 |
|
|
|
89,115 |
|
|
|
70,240 |
|
Technology and development |
|
|
14,131 |
|
|
|
14,022 |
|
|
|
27,760 |
|
|
|
27,162 |
|
General
and administrative |
|
|
15,413 |
|
|
|
15,998 |
|
|
|
29,041 |
|
|
|
31,494 |
|
Depreciation and amortization |
|
|
5,668 |
|
|
|
5,868 |
|
|
|
11,752 |
|
|
|
11,772 |
|
Total
costs and operating expenses |
|
|
89,275 |
|
|
|
80,382 |
|
|
|
171,190 |
|
|
|
153,258 |
|
Loss from
operations |
|
|
(7,456 |
) |
|
|
(13,955 |
) |
|
|
(13,614 |
) |
|
|
(24,971 |
) |
Interest income |
|
|
249 |
|
|
|
102 |
|
|
|
382 |
|
|
|
195 |
|
Interest expense |
|
|
(652 |
) |
|
|
(632 |
) |
|
|
(1,301 |
) |
|
|
(1,240 |
) |
Loss before provision
for income taxes |
|
|
(7,859 |
) |
|
|
(14,485 |
) |
|
|
(14,533 |
) |
|
|
(26,016 |
) |
Provision for income
taxes |
|
|
201 |
|
|
|
170 |
|
|
|
322 |
|
|
|
306 |
|
Net loss |
|
|
$ |
(8,060 |
) |
|
|
$ |
(14,655 |
) |
|
|
$ |
(14,855 |
) |
|
|
$ |
(26,322 |
) |
Net loss per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
$ |
(0.09 |
) |
|
|
$ |
(0.17 |
) |
|
|
$ |
(0.16 |
) |
|
|
$ |
(0.31 |
) |
Weighted average common
shares outstanding, basic and diluted |
|
|
93,745 |
|
|
|
83,931 |
|
|
|
90,283 |
|
|
|
83,697 |
|
|
|
|
|
|
|
|
TRUECAR, INC.CONSOLIDATED
BALANCE SHEETS(In
thousands)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
December 31,2016 |
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
181,722 |
|
|
|
$ |
107,721 |
|
Accounts
receivable, net |
|
|
37,056 |
|
|
|
36,867 |
|
Prepaid
expenses |
|
|
7,050 |
|
|
|
6,044 |
|
Other
current assets |
|
|
1,043 |
|
|
|
2,278 |
|
Total
current assets |
|
|
226,871 |
|
|
|
152,910 |
|
Property
and equipment, net |
|
|
68,397 |
|
|
|
66,941 |
|
Goodwill |
|
|
53,270 |
|
|
|
53,270 |
|
Intangible assets, net |
|
|
17,843 |
|
|
|
19,774 |
|
Other
assets |
|
|
1,659 |
|
|
|
1,553 |
|
Total
assets |
|
|
$ |
368,040 |
|
|
|
$ |
294,448 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
Accounts
payable |
|
|
$ |
18,018 |
|
|
|
$ |
13,827 |
|
Accrued
employee expenses |
|
|
7,399 |
|
|
|
8,951 |
|
Accrued
expenses and other current liabilities |
|
|
11,994 |
|
|
|
12,583 |
|
Total
current liabilities |
|
|
37,411 |
|
|
|
35,361 |
|
Deferred
tax liabilities |
|
|
3,282 |
|
|
|
2,994 |
|
Lease
financing obligations, net of current portion |
|
|
29,031 |
|
|
|
28,833 |
|
Other
liabilities |
|
|
3,782 |
|
|
|
2,679 |
|
Total
liabilities |
|
|
73,506 |
|
|
|
69,867 |
|
Stockholders’
Equity |
|
|
|
|
|
|
Common
stock |
|
|
10 |
|
|
|
9 |
|
Additional paid-in capital |
|
|
627,614 |
|
|
|
542,807 |
|
Accumulated deficit |
|
|
(333,090 |
) |
|
|
(318,235 |
) |
Total
stockholders’ equity |
|
|
294,534 |
|
|
|
224,581 |
|
Total
liabilities and stockholders’ equity |
|
|
$ |
368,040 |
|
|
|
$ |
294,448 |
|
|
|
|
|
TRUECAR, INC.RECONCILIATION
OF NET LOSS TO ADJUSTED EBITDA (In
thousands)(Unaudited) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net loss |
$ |
(8,060 |
) |
|
$ |
(14,655 |
) |
|
$ |
(14,855 |
) |
|
$ |
(26,322 |
) |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
Interest
income |
(249 |
) |
|
(102 |
) |
|
(382 |
) |
|
(195 |
) |
Interest
expense |
652 |
|
|
632 |
|
|
1,301 |
|
|
1,240 |
|
Depreciation and amortization |
5,668 |
|
|
5,868 |
|
|
11,752 |
|
|
11,772 |
|
Stock-based compensation |
6,846 |
|
|
5,900 |
|
|
12,753 |
|
|
11,792 |
|
Certain
litigation costs (1) |
2,299 |
|
|
150 |
|
|
2,649 |
|
|
422 |
|
Severance
charges (2) |
— |
|
|
1,783 |
|
|
— |
|
|
1,783 |
|
Lease
exit costs (3) |
— |
|
|
2,684 |
|
|
(133 |
) |
|
2,684 |
|
Provision
for income taxes |
201 |
|
|
170 |
|
|
322 |
|
|
306 |
|
Adjusted
EBITDA |
$ |
7,357 |
|
|
$ |
2,430 |
|
|
$ |
13,407 |
|
|
$ |
3,482 |
|
(1) The excluded amounts relate to legal costs incurred in
connection with complaints filed by non-TrueCar dealers and the
California New Car Dealers Association against TrueCar, and
securities and consumer class action lawsuits. We believe the
exclusion of these costs is appropriate to facilitate comparisons
of our core operating performance on a period-to-period basis.
Based on the nature of the specific claims underlying the excluded
litigation matters, once these matters are resolved, we do not
believe our operations are likely to entail defending against the
types of claims raised by these matters. We expect the cost of
defending these claims to continue to be significant pending
resolution.
(2) We incurred $1.3 million in severance costs in the second
quarter of 2016 related to a reorganization of our product and
technology teams to better align our resources with business
objectives as we transition from multiple software platforms to a
unified architecture. In addition, we incurred severance costs of
$0.5 million related to an executive who terminated during the
second quarter of 2016. We believe excluding the impacts of these
terminations is consistent with our use of Adjusted EBITDA and
Non-GAAP net income (loss) as we do not believe they are useful
indicators of ongoing operating results.
(3) Represents updated estimates to our lease termination costs
associated with the consolidation of the Company's office locations
in Santa Monica, California in December 2015. We believe that their
exclusion is appropriate to facilitate period-to-period operating
performance comparisons.
|
|
|
|
|
|
|
TRUECAR, INC.RECONCILIATION
OF NET LOSS TO NON-GAAP NET INCOME (LOSS) (In
thousands, except per share
amounts)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
Net loss |
|
|
$ |
(8,060 |
) |
|
$ |
(14,655 |
) |
|
|
$ |
(14,855 |
) |
|
$ |
(26,322 |
) |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
6,846 |
|
|
5,900 |
|
|
|
12,753 |
|
|
11,792 |
|
Certain
litigation costs (1) |
|
|
2,299 |
|
|
150 |
|
|
|
2,649 |
|
|
422 |
|
Severance
charges (2) |
|
|
— |
|
|
1,783 |
|
|
|
— |
|
|
1,783 |
|
Lease
exit charges (3) |
|
|
— |
|
|
2,684 |
|
|
|
(133 |
) |
|
2,684 |
|
Non-GAAP net income
(loss) (4) |
|
|
$ |
1,085 |
|
|
$ |
(4,138 |
) |
|
|
$ |
414 |
|
|
$ |
(9,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.01 |
|
|
$ |
(0.05 |
) |
|
|
$ |
0.00 |
|
|
$ |
(0.12 |
) |
Diluted |
|
|
$ |
0.01 |
|
|
$ |
(0.05 |
) |
|
|
$ |
0.00 |
|
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
93,745 |
|
|
83,931 |
|
|
|
90,283 |
|
|
83,697 |
|
Diluted |
|
|
103,265 |
|
|
83,931 |
|
|
|
95,070 |
|
|
83,697 |
|
(1) The excluded amounts relate to legal costs incurred in
connection with complaints filed by non-TrueCar dealers and the
California New Car Dealers Association against TrueCar, and
securities and consumer class action lawsuits. We believe the
exclusion of these costs is appropriate to facilitate comparisons
of our core operating performance on a period-to-period basis.
Based on the nature of the specific claims underlying the excluded
litigation matters, once these matters are resolved, we do not
believe our operations are likely to entail defending against the
types of claims raised by these matters. We expect the cost of
defending these claims to continue to be significant pending
resolution.
(2) We incurred $1.3 million in severance costs in the second
quarter of 2016 related to a reorganization of our product and
technology teams to better align our resources with business
objectives as we transition from multiple software platforms to a
unified architecture. In addition, we incurred severance costs of
$0.5 million related to an executive who terminated during the
second quarter of 2016. We believe excluding the impacts of these
terminations is consistent with our use of Adjusted EBITDA and
Non-GAAP net income (loss) as we do not believe they are useful
indicators of ongoing operating results.
(3) Represents updated estimates to our lease termination costs
associated with the consolidation of the Company's office locations
in Santa Monica, California in December 2015. We believe that their
exclusion is appropriate to facilitate period-to-period operating
performance comparisons.
(4) There is no income tax impact related to the adjustments
made to calculate Non-GAAP net income (loss) because of our
available net operating loss carryforwards and the full valuation
allowance recorded against our net deferred tax assets at
June 30, 2017 and June 30, 2016.
Investor/Media Contact:
Alison Sternberg
Vice President, Investor Relations and Communications
424-258-8771
asternberg@true.com
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