TrueCar, Inc. (NASDAQ: TRUE) today announced its financial
results for the third quarter ended September 30, 2018.
Management Commentary
“We are encouraged that we achieved our plans in the third
quarter, realizing 14% year over year revenue growth, and we are
guiding to even faster top-line growth in the fourth quarter”
said John Pierantoni, Interim Chief Financial Officer.
Chip Perry, TrueCar’s President and Chief Executive Officer,
continued, “Operationally, TrueCar had a strong third quarter with
in-line financial results on revenue and adjusted EBITDA. Based on
the progress we've made this year, we believe we can significantly
accelerate our revenue growth in 2019, and we have created the
foundation for building what we believe will be the industry’s only
true end-to-end online shopping-to-showroom experience.”
(1) Non-GAAP net income 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) 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) 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 transition of Genesis to a standalone
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) 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.
Third Quarter 2018 Financial Highlights
- Total revenue of $93.6 million.
- Net loss of $(6.3) million, or $(0.06) per basic and diluted
share, compared to a net loss of $(9.5) million, or $(0.10) per
basic and diluted share, in the third quarter of 2017.
- Non-GAAP net income of $4.3 million, or $0.04 per basic
and diluted share, compared to Non-GAAP net income of $1.9 million,
or $0.02 per basic and diluted share, in the third quarter of
2017.
- Adjusted EBITDA of $10.0 million, representing an Adjusted
EBITDA margin of 10.7%, compared to Adjusted EBITDA of $8.0
million, representing an Adjusted EBITDA margin of 9.7%, in the
third quarter of 2017.
Key Operating Metrics
- Average monthly unique visitors(7) increased 4% to 8.0
million in the third quarter of 2018, up from 7.7 million in the
third quarter of 2017.
- Units were 268,026 in the third quarter of 2018, up 6%
from 253,527 in the third quarter of 2017.
- Monetization(8) was $331 during the third quarter of 2018,
compared to $306 during the third quarter of 2017.
- Franchise dealer count was 12,549 as of September 30,
2018, compared to 12,368 as of June 30, 2018.
- Independent dealer count was 3,482 as of September 30,
2018, compared to 3,166 as of June 30, 2018.
Business Outlook
TrueCar’s guidance for the fourth quarter ending
December 31, 2018 is as follows:
- Units are expected to be in the range of 262,000 to
267,000.
- Revenues are expected to be in the range of $95.5 million to
$97.5 million.
- Adjusted EBITDA is expected to be in the range of $10.0 million
to $11.0 million.(9)
TrueCar’s guidance for the full year ending December 31,
2018 is as follows:
- Units are expected to be in the range of 1,010,000 to
1,015,000.
- Revenues are expected to be in the range of $358 million to
$360 million.
- Adjusted EBITDA is expected to be in the range of $34.7 million
to $35.7 million.(9)
(7) 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) We define monetization as the average transaction revenue
per unit, which we calculate by dividing all of our Auto Buying
Program and OEM incentives 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 of the
uncertainty and potential variability of certain litigation costs,
which are a reconciling item between GAAP net loss and Adjusted
EBITDA and could significantly impact GAAP results.
Conference Call Information
Members of TrueCar management will host a conference call
today, November 6, 2018, to discuss the third 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. A replay of the call may be accessed from 7:30 p.m.
Eastern Time on Tuesday, November 6, 2018 until 11:59 p.m.
Eastern Time on Tuesday, November 20, 2018 by dialing
1-844-512-2921 (domestic) or 1-412-317-6671 (international) and
entering the replay pin number: 1368395. An archived version of the
call will also be available upon its completion on the Investor
Relations section of TrueCar’s website at ir.truecar.com. TrueCar
has used, and intends to continue to use, its Investor Relations
website (ir.truecar.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 contained in this press release other than statements of
historical fact are forward-looking statements, including
statements regarding our future growth potential and opportunities;
our outlook for fourth quarter and full year 2018 and 2019; our
ability to improve and build out our consumer experience; future
financial results, including expectations regarding future revenue,
adjusted EBITDA and units; and our business strategy, plans and
objectives. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions that may prove
incorrect, any of which could cause our results to differ
materially from those expressed or implied by such forward-looking
statements. The risks and uncertainties that could cause our
results to differ materially from those expressed or implied by
these forward-looking statements include, but are not limited to:
our 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; our ability to
anticipate market needs and develop new and enhanced products and
services to meet those needs, including new programs with
automobile manufacturers, and our ability to successfully monetize
them; our ability to successfully scale our automotive trade-in
program to a nationwide offering; our ability to attract
significant OEMs to participate, and remain participants, in our
OEM incentive programs; our dependence upon affinity group
marketing partners, especially USAA; our ability to comply
with laws and regulations directly or indirectly applicable
to our business, including newly-enacted and rapidly-changing
data protection and net neutrality laws and regulations and changes
in applicable tax laws and regulations; our ability to scale and
compete effectively in an increasingly competitive market and to
grow and enhance our brand; our ability to increase revenue
from dealers on our subscription pricing model; our ability to
timely and successfully implement our technology replatforming
project; political and macro-economic issues that affect the
automobile industry, including changes in interest rates, consumer
demand and import tariffs; our ability to attract, retain and
integrate qualified personnel, including the hiring of additional
personnel in our dealer, product and technology teams; our ability
to successfully resolve litigation to which we are subject;
and other risks and uncertainties described more fully under the
heading “Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2017, our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2018 and
June 30, 2018 filed with the Securities and Exchange
Commission, or SEC, and our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018 to be filed with the SEC.
Moreover, we operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible
for our management to predict all risks, nor can management assess
the impact of all factors on our 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 we may make. All forward-looking statements in this
press release are based on information available to our
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 and Non-GAAP net income 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, lease exit costs and income taxes. We
define Non-GAAP net income as net loss adjusted to exclude
stock-based compensation, certain litigation costs and lease exit
costs. We have provided below a reconciliation of each of Adjusted
EBITDA and Non-GAAP net income to net loss, the most directly
comparable GAAP financial measure. Neither Adjusted EBITDA nor
Non-GAAP net income 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 as operating
performance measures because 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 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 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 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 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 reflects the
costs to advance our claims in certain litigation or the costs to
defend ourselves in various complaints filed against us;
- neither Adjusted EBITDA nor Non-GAAP net income reflects the
lease exit costs associated with consolidation of our office
locations in Santa Monica, California in December 2015;
- neither Adjusted EBITDA nor Non-GAAP net income considers 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 differently than
we do, limiting their usefulness as comparative measures.
Because of these limitations, you should consider Adjusted
EBITDA and Non-GAAP net income 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, 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 and you should not infer from our presentation of Adjusted
EBITDA and Non-GAAP net income 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 16,000
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.
Investor/Media Contact:Alison SternbergSenior
Vice President, Investor Relations and
Communications424-258-8771asternberg@truecar.com
|
TRUECAR,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited) |
|
|
Three Months Ended September
30, 2018 |
|
Nine Months Ended September
30, 2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
$ |
93,586 |
|
|
$ |
82,440 |
|
|
$ |
262,497 |
|
|
$ |
240,016 |
|
Costs and operating expenses: |
|
|
|
|
|
|
|
Cost of revenue |
7,737 |
|
|
7,088 |
|
|
22,941 |
|
|
20,610 |
|
Sales and marketing |
57,031 |
|
|
48,383 |
|
|
157,463 |
|
|
137,498 |
|
Technology and development |
15,345 |
|
|
15,357 |
|
|
46,633 |
|
|
43,117 |
|
General and administrative |
14,030 |
|
|
14,993 |
|
|
41,005 |
|
|
44,034 |
|
Depreciation and amortization |
5,992 |
|
|
5,765 |
|
|
16,808 |
|
|
17,517 |
|
Total costs and operating expenses |
100,135 |
|
|
91,586 |
|
|
284,850 |
|
|
262,776 |
|
Loss from operations |
(6,549 |
) |
|
(9,146 |
) |
|
(22,353 |
) |
|
(22,760 |
) |
Interest income |
888 |
|
|
402 |
|
|
2,242 |
|
|
784 |
|
Interest expense |
(662 |
) |
|
(654 |
) |
|
(1,985 |
) |
|
(1,955 |
) |
Loss before income taxes |
(6,323 |
) |
|
(9,398 |
) |
|
(22,096 |
) |
|
(23,931 |
) |
(Benefit from) / provision for income taxes |
(72 |
) |
|
121 |
|
|
(168 |
) |
|
443 |
|
Net loss |
$ |
(6,251 |
) |
|
$ |
(9,519 |
) |
|
$ |
(21,928 |
) |
|
$ |
(24,374 |
) |
Net loss per share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.06 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
Weighted average common shares outstanding, basic and diluted |
102,765 |
|
|
98,665 |
|
|
101,503 |
|
|
93,108 |
|
|
TRUECAR, INC.CONSOLIDATED
BALANCE SHEETS(In
thousands)(Unaudited) |
|
|
September 30,
2018 |
|
December 31,
2017 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
217,749 |
|
|
$ |
197,762 |
|
Accounts receivable, net |
47,425 |
|
|
39,169 |
|
Prepaid expenses |
9,291 |
|
|
5,475 |
|
Other current assets |
5,806 |
|
|
1,145 |
|
Total current assets |
280,271 |
|
|
243,551 |
|
Property and equipment, net |
69,174 |
|
|
70,710 |
|
Goodwill |
53,270 |
|
|
53,270 |
|
Intangible assets, net |
13,016 |
|
|
15,912 |
|
Other assets |
5,113 |
|
|
1,391 |
|
Total assets |
$ |
420,844 |
|
|
$ |
384,834 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
26,933 |
|
|
$ |
18,620 |
|
Accrued employee expenses |
5,034 |
|
|
6,568 |
|
Accrued expenses and other current liabilities |
17,561 |
|
|
12,790 |
|
Total current liabilities |
49,528 |
|
|
37,978 |
|
Deferred tax liabilities |
605 |
|
|
812 |
|
Lease financing obligations, net of current
portion |
22,959 |
|
|
29,129 |
|
Other liabilities |
3,910 |
|
|
3,797 |
|
Total liabilities |
77,002 |
|
|
71,716 |
|
Stockholders’ Equity |
|
|
|
Common stock |
10 |
|
|
10 |
|
Additional paid-in capital |
710,921 |
|
|
664,192 |
|
Accumulated deficit |
(367,089 |
) |
|
(351,084 |
) |
Total stockholders’ equity |
343,842 |
|
|
313,118 |
|
Total liabilities and stockholders’ equity |
$ |
420,844 |
|
|
$ |
384,834 |
|
|
TRUECAR,
INC.RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA (In
thousands)(Unaudited) |
|
|
Three Months Ended September
30, 2018 |
|
Nine Months Ended September
30, 2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss |
$ |
(6,251 |
) |
|
$ |
(9,519 |
) |
|
$ |
(21,928 |
) |
|
$ |
(24,374 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Interest income |
(888 |
) |
|
(402 |
) |
|
(2,242 |
) |
|
(784 |
) |
Interest expense |
662 |
|
|
654 |
|
|
1,985 |
|
|
1,955 |
|
Depreciation and amortization |
5,992 |
|
|
5,765 |
|
|
16,808 |
|
|
17,517 |
|
Stock-based compensation |
10,247 |
|
|
9,908 |
|
|
28,316 |
|
|
22,661 |
|
Certain litigation costs (1) |
335 |
|
|
1,491 |
|
|
1,996 |
|
|
4,140 |
|
Lease exit costs (2) |
— |
|
|
— |
|
|
— |
|
|
(133 |
) |
(Benefit from) / provision for income taxes |
(72 |
) |
|
121 |
|
|
(168 |
) |
|
443 |
|
Adjusted EBITDA |
$ |
10,025 |
|
|
$ |
8,018 |
|
|
$ |
24,767 |
|
|
$ |
21,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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) The excluded amounts represent updates to the initial
estimate of lease termination costs associated with the
consolidation of our 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 (In thousands, except per share
amounts)(Unaudited) |
|
|
Three Months Ended September
30, 2018 |
|
Nine Months Ended September
30, 2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss |
$ |
(6,251 |
) |
|
$ |
(9,519 |
) |
|
$ |
(21,928 |
) |
|
$ |
(24,374 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Stock-based compensation |
10,247 |
|
|
9,908 |
|
|
28,316 |
|
|
22,661 |
|
Certain litigation costs (1) |
335 |
|
|
1,491 |
|
|
1,996 |
|
|
4,140 |
|
Lease exit charges (2) |
— |
|
|
— |
|
|
— |
|
|
(133 |
) |
Non-GAAP net income (3) |
$ |
4,331 |
|
|
$ |
1,880 |
|
|
$ |
8,384 |
|
|
$ |
2,294 |
|
|
|
|
|
|
|
|
|
Non-GAAP net income per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.08 |
|
|
$ |
0.02 |
|
Diluted |
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.08 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
102,765 |
|
|
98,665 |
|
|
101,503 |
|
|
93,108 |
|
Diluted |
105,747 |
|
|
105,751 |
|
|
103,850 |
|
|
98,669 |
|
(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 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) The excluded amounts represent updates to the initial
estimate of our lease termination costs associated with the
consolidation of our office locations in Santa Monica, California
in December 2015. We believe that their exclusion is appropriate to
facilitate period-to-period operating performance comparisons.
(3) There is no income tax impact related to the adjustments
made to calculate Non-GAAP net income because of our available
net operating loss carryforwards and the full valuation allowance
recorded against our net deferred tax assets at September 30,
2018 and September 30, 2017.
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