Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
x ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2017March 31, 2020
¨ ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-36449
TRUECAR, INC.
(Exact name of registrant as specified in its charter)
Delaware

Delaware04-3807511
(State or other jurisdiction of

incorporation or organization)
04-3807511
(I.R.S. Employer

Identification Number)
120 Broadway, Suite 200
Santa Monica, California 90401
(800) 200-2000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareTRUEThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x☒     No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”,company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer¨
☒
Accelerated filerx
☐
Non-accelerated filer¨
(do not check if a smaller reporting company)
☐
Smaller reporting company¨

☐
Emerging growth companyx
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨☐ No x☒
As of November 3, 2017, 99,986,517May 1, 2020, 107,270,091 shares of the registrant’s common stock were outstanding.




TRUECAR, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
3
53
64
75
86
97
1720
3134
3235
PART II -  OTHER INFORMATION
3336
3336
5470
5571
5672




SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties.  Forward-looking statements generally relate to future events or our future financial or operating performance.  In some cases, you can identify forward-looking statements because they contain words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “likely,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our future financial performance and our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses and ability to maintain or grow revenue, scale our business, generate cash flow, fulfill our mission and ability to achieve and maintain future profitability; profitability, in particular in light of the existing impacts of and continued uncertainty occasioned by the coronavirus pandemic; 
•our ability to forecast our financial performance;
•our relationship with key industry participants, including car dealers and automobile manufacturers;
•anticipated trends, growthdemand rates and challenges in our business and in the markets in which we operate;
our expectations regarding the automotive trade-in pilot with a large vehicle wholesaler;
•our ability to anticipate market needs and develop new and enhanced products and services to meet those needs including an automotive trade-in product offering and new programs with automobile manufacturers, and our ability to successfully monetize them; those products and services;
•maintaining and expanding our customer base in key geographies, including our ability to increase the number of high volumehigh-volume brand dealers in our network generally and in key geographies;
•the effect of the coronavirus pandemic, and governments’, organizations’ and consumers’ responses to it, on the wider economy, the automotive industry, the demand for cars, dealers’ ability to sell cars, dealers’ and automobile manufacturers’ third-party marketing budgets and our business;
•our ability to mitigate the short- and long-term effects of the coronavirus pandemic on our business and employees, and the success of initiatives that we take to do so, including transitioning employees to work-from-home status and efforts to improve or retool our existing products and services, innovate new products and services, cut costs and preserve our dealer network; 
•our ability to wind down our partnership with USAA Federal Savings Bank in a manner that minimizes disruption to our business, and our ability to mitigate the long-term financial effect of the termination of that partnership;
•our ability to maintain and grow our existing additional affinity partner relationships, and to attract new affinity partners to offer our services to their members;
•our reliance on our third-party service providers; 
•the impact of competition in our industry and innovation by our competitors; 
•our anticipated growth and growth strategies, including our ability to increase close rates and the rate at which site visitors prospect with a TrueCar certified dealer;
•our ability to successfully increase or maintain dealer subscription rates, manage dealer churn and return to active status dealers who suspended their participation in our auto-buying program as a result of the coronavirus pandemic;
•our ability to attract significant automobile manufacturers to participate, and remain participants, in our incentive programs;
•our ability to increase dealer subscription rates as the number of dealers on subscription billing arrangements increases relative to those on a pay-per-sale billing model;  participating in our automotive trade-in program and successfully monetize the TrueCar Trade product;
•our ability to anticipate or adapt to future changes in our industry;  
•the impact on our business of seasonality, cyclical trends affecting the overall economy and actual or threatened severe weather events; 
•our ability to hire and retain necessary qualified employees, including anticipated additions to our dealer, product and technology teams;  employees; 
our ability to integrate recent additions to our management team; 
•our continuing ability to provide customers access to our productsproducts; 
•our ability to maintain and servicesscale our technical infrastructure and the impact of any failure ofleverage our solution innovations; technology platform to enhance our customer experience and launch new product offerings;
��the evolution of technology affecting our products, services and markets; 
•our ability to adequately protect our intellectual property; 
•the anticipatedoutcome, and effect on our business, of litigation to which we are a party; party, including our ability to settle any such litigation; 
•our ability to navigate changes in domestic or international economic, political or business conditions, including changes in interest rates, consumer demand and import tariffs and responses to the coronavirus pandemic;
1

•our ability to stay abreast of, and in compliance with, new or modified laws and regulations that currently apply or become applicable to our business; business, including newly-enacted and rapidly-changing privacy, data protection and net neutrality laws and regulations and changes in applicable tax laws and regulations; 
•the continued expense and administrative workload associated with being a public company; 
failure•our ability to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud;
•our liquidity and working capital requirements;
•the estimates and estimate methodologies used in preparing our consolidated financial statements;
•the future trading prices of our common stock and the impact of securities analysts’ reports on these prices;
•our plans to pursue acquisitions, divestitures, investments and other similar transactions;
•our ability to effectively and timely integrate our operations with those of any business we acquire, including DealerScience, and related factors, including the difficulties associated with such integration (such as the difficulties, challenges and costs associated with managing and integrating new facilities, assets and employees) and the achievement of the anticipated benefits of such integration;
•the preceding and other factors discussed in Part II, Item 1A, “Risk Factors,” and in other reports we may file with the Securities and Exchange Commission from time to time; and
•the factors set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.  Given these uncertainties, you should not place

undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

2




TRUECAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
(Unaudited)
 March 31, 2020December 31, 2019
Assets  
Current assets  
Cash and cash equivalents$182,855  $181,534  
Accounts receivable, net of allowances of $8,054 and $6,759 at March 31, 2020 and December 31, 2019, respectively (includes related party receivables of $2,856 and $209 at March 31, 2020 and December 31, 2019, respectively)40,126  44,888  
Prepaid expenses6,365  7,215  
Other current assets4,119  6,104  
Total current assets233,465  239,741  
Property and equipment, net28,704  29,797  
Operating lease right-of-use assets34,548  36,064  
Goodwill63,124  73,311  
Intangible assets, net15,713  17,260  
Equity method investment21,512  21,894  
Other assets3,691  3,620  
Total assets$400,757  $421,687  
Liabilities and Stockholders’ Equity  
Current liabilities  
Accounts payable (includes related party payables of $4,981 and $6,439 at March 31, 2020 and December 31, 2019, respectively)$17,687  $21,336  
Accrued employee expenses2,460  5,969  
Operating lease liabilities, current5,089  5,875  
Accrued expenses and other current liabilities (includes related party accrued expenses of $0 and $1,299 at March 31, 2020 and December 31, 2019, respectively)14,460  20,990  
Total current liabilities39,696  54,170  
Deferred tax liabilities344  783  
Operating lease liabilities, net of current portion35,913  37,127  
Other liabilities2,367  2,336  
Total liabilities78,320  94,416  
Commitments and contingencies (Note 7)
Stockholders’ Equity  
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at March 31, 2020 and December 31, 2019; 0 shares issued and outstanding at March 31, 2020 and December 31, 2019—  —  
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at March 31, 2020 and December 31, 2019; 107,183,633 and 106,865,830 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively11  11  
Additional paid-in capital765,157  759,322  
Accumulated deficit(442,731) (432,062) 
Total stockholders’ equity322,437  327,271  
Total liabilities and stockholders’ equity$400,757  $421,687  
 September 30, 2017 December 31, 2016
    
Assets   
Current assets   
Cash and cash equivalents$196,402
 $107,721
Accounts receivable, net of allowances of $3,094 and $2,600 at September 30, 2017 and December 31, 2016, respectively (includes related party receivables of $218 and $393 at September 30, 2017 and December 31, 2016, respectively)39,587
 36,867
Prepaid expenses7,114
 6,044
Other current assets2,821
 2,278
Total current assets245,924
 152,910
Property and equipment, net68,380
 66,941
Goodwill53,270
 53,270
Intangible assets, net16,878
 19,774
Other assets1,589
 1,553
Total assets$386,041
 $294,448
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts payable (includes related party payables of $4,353 and $2,925 at September 30, 2017 and December 31, 2016, respectively)$21,309
 $13,827
Accrued employee expenses6,692
 8,951
Accrued expenses and other current liabilities (includes related party accrued expenses of $49 and $992 at September 30, 2017 and December 31, 2016, respectively)10,954
 12,583
Total current liabilities38,955
 35,361
Deferred tax liabilities3,393
 2,994
Lease financing obligations, net of current portion29,086
 28,833
Other liabilities3,474
 2,679
Total liabilities74,908
 69,867
Commitments and contingencies (Note 6)
 
Stockholders’ Equity   
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; no shares issued and outstanding at September 30, 2017 and December 31, 2016—
 —
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2017 and December 31, 2016; 99,892,583 and 86,159,527 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively10
 9
Additional paid-in capital653,732
 542,807
Accumulated deficit(342,609) (318,235)
Total stockholders’ equity311,133
 224,581
Total liabilities and stockholders’ equity$386,041
 $294,448

See accompanying notes to condensed consolidated financial statements.

3

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands except per share data)
(Unaudited)
 Three Months Ended
March 31,
 20202019
Revenues (includes related party revenue of $1,247 and $163 for the three months ended March 31, 2020 and 2019, respectively)$83,526  $85,582  
Costs and operating expenses:  
Cost of revenue (exclusive of depreciation and amortization presented separately below; includes related party cost of revenue of $285 and $134 for the three months ended March 31, 2020 and 2019, respectively)7,221  8,936  
Sales and marketing (includes related party expenses of $1,959 and $5,473 for the three months ended March 31, 2020 and 2019, respectively)46,575  54,738  
Technology and development12,216  15,654  
General and administrative12,312  15,104  
Depreciation and amortization6,271  6,415  
Goodwill impairment10,187  —  
Total costs and operating expenses94,782  100,847  
Loss from operations(11,256) (15,265) 
Interest income533  1,001  
Loss from equity method investment(382) —  
Loss before income taxes(11,105) (14,264) 
(Benefit from) provision for income taxes(436) 101  
Net loss$(10,669) $(14,365) 
Net loss per share, basic and diluted$(0.10) $(0.14) 
Weighted average common shares outstanding, basic and diluted107,024  104,788  
Other comprehensive loss:
  
Comprehensive loss$(10,669) $(14,365) 
 Three Months Ended 
 September 30,		 Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues$82,440
 $75,139
 $240,016
 $203,426
Costs and operating expenses:       
Cost of revenue (exclusive of depreciation and amortization presented separately below)7,088
 6,320
 20,610
 18,910
Sales and marketing (includes related party expenses of $4,207 and $3,724 for the three months ended September 30, 2017 and 2016, and $12,750 and $10,384 for the nine months ended September 30, 2017 and 2016, respectively)48,383
 42,557
 137,498
 112,797
Technology and development15,357
 13,153
 43,117
 40,315
General and administrative14,993
 13,765
 44,034
 45,259
Depreciation and amortization5,765
 6,035
 17,517
 17,807
Total costs and operating expenses91,586
 81,830
 262,776
 235,088
Loss from operations(9,146) (6,691) (22,760) (31,662)
Interest income402
 91
 784
 286
Interest expense(654) (645) (1,955) (1,885)
Loss before provision for income taxes(9,398) (7,245) (23,931) (33,261)
Provision for income taxes121
 191
 443
 497
Net loss$(9,519) $(7,436) $(24,374) $(33,758)
        
Net loss per share, basic and diluted$(0.10) $(0.09) $(0.26) $(0.40)
Weighted average common shares outstanding, basic and diluted98,665
 84,822
 93,108
 84,075
Other comprehensive loss:
       
Comprehensive loss$(9,519) $(7,436) $(24,374) $(33,758)

See accompanying notes to condensed consolidated financial statements.



4

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands except share data)
(Unaudited)
Three Months Ended March 31, 2020
 Common Stock Accumulated
Deficit		Stockholders’
Equity
 SharesAmountAPIC
Balance at December 31, 2019106,865,830  $11  $759,322  $(432,062) $327,271  
Net loss—  —  —  (10,669) (10,669) 
Stock-based compensation—  —  6,559  —  6,559  
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes317,803  —  (724) —  (724) 
Balance at March 31, 2020107,183,633  $11  $765,157  $(442,731) $322,437  
Three Months Ended March 31, 2019
Common Stock   
Accumulated
Deficit
 
Stockholders’
Equity
 Common Stock Accumulated
Deficit		Stockholders’
Equity
Shares Amount APIC  SharesAmountAPIC
Balance at December 31, 201686,159,527
 $9
 $542,807
 $(318,235) $224,581
Balance at December 31, 2018Balance at December 31, 2018104,337,508  $10  $720,025  $(373,482) $346,553  
Cumulative-effect of accounting change adopted as of January 1, 2019Cumulative-effect of accounting change adopted as of January 1, 2019—  —  —  (3,690) (3,690) 
Net loss—
 —
 —
 (24,374) (24,374)Net loss—  —  —  (14,365) (14,365) 
Issuance of common stock in follow-on offering, net of underwriting discounts and offering costs1,150,000
 —
 17,398
 —
 17,398
Stock-based compensation—
 —
 23,654
 —
 23,654
Stock-based compensation—  —  9,108  —  9,108  
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes12,583,056
 1
 69,873
 —
 69,874
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes781,538  —  2,261  —  2,261  
Balance at September 30, 201799,892,583
 $10
 $653,732
 $(342,609) $311,133
Balance at March 31, 2019Balance at March 31, 2019105,119,046  $10  $731,394  $(391,537) $339,867  

See accompanying notes to condensed consolidated financial statements.

5


TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Three Months Ended
March 31,
 20202019
Cash flows from operating activities  
Net loss$(10,669) $(14,365) 
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization6,271  6,415  
Goodwill impairment10,187  —  
Deferred income taxes(439) 72  
Bad debt expense and other reserves2,225  348  
Stock-based compensation6,177  8,635  
Increase in the fair value of contingent consideration liability75  75  
Amortization of lease right-of-use assets1,516  1,465  
Loss from equity method investment382  —  
Write-off and loss on disposal of fixed assets41  —  
Changes in operating assets and liabilities:  
Accounts receivable2,537  9,044  
Prepaid expenses850  384  
Other current assets1,985  (3,493) 
Other assets(71) 263  
Accounts payable(3,698) (5,578) 
Accrued employee expenses(3,245) 275  
Operating lease liabilities(2,000) (1,398) 
Accrued expenses and other liabilities(6,530) 5,498  
Other liabilities(44) (59) 
Net cash provided by operating activities5,550  7,581  
Cash flows from investing activities  
Purchase of property and equipment(3,505) (2,905) 
Cash paid for equity method investment—  (23,174) 
Net cash used in investing activities(3,505) (26,079) 
Cash flows from financing activities  
Proceeds from exercise of common stock options3  2,811  
Taxes paid related to net share settlement of equity awards(727) (543) 
Net cash (used in) provided by financing activities(724) 2,268  
Net increase (decrease) in cash and cash equivalents1,321  (16,230) 
Cash and cash equivalents at beginning of period181,534  196,128  
Cash and cash equivalents at end of period$182,855  $179,898  
Supplemental disclosures of non-cash activities
Stock-based compensation capitalized for software development382  473  
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses148  176  
 Nine Months Ended 
 September 30,
 2017 2016
Cash flows from operating activities   
Net loss$(24,374) $(33,758)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization17,481
 17,711
Deferred income taxes399
 437
Bad debt expense and other reserves1,062
 817
Stock-based compensation22,661
 18,033
Common stock warrant expense—
 13
Non-cash interest expense on lease financing obligation312
 314
Write-off and loss on disposal of fixed assets148
 392
Changes in operating assets and liabilities:   
Accounts receivable(3,782) (2,928)
Prepaid expenses(1,070) (1,181)
Other current assets(167) (638)
Other assets(36) (311)
Accounts payable7,400
 (5,134)
Accrued employee expenses(2,835) 756
Accrued expenses and other liabilities(1,081) 1,479
Other liabilities795
 1,396
Net cash provided by (used in) operating activities16,913
 (2,602)
Cash flows from investing activities   
Purchase of property and equipment(15,194) (12,872)
Net cash used in investing activities(15,194) (12,872)
Cash flows from financing activities 
  
Proceeds from public offering, net of underwriting discounts and offering costs17,398
 —
Repurchase of common stock option awards—
 (100)
Proceeds from exercise of common stock options71,868
 5,406
Taxes paid related to net share settlement of equity awards(2,304) (751)
Proceeds from financing obligation drawdown—
 1,521
Net cash provided by financing activities86,962
 6,076
Net increase (decrease) in cash and cash equivalents88,681
 (9,398)
Cash and cash equivalents at beginning of period107,721
 112,371
Cash and cash equivalents at end of period$196,402
 $102,973
Supplemental disclosures of non-cash activities 
  
Stock-based compensation capitalized for software development993
 760
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses909
 143
Proceeds receivable from exercise of stock options included in other current assets530
 —
Taxes payable related to net share settlement of equity awards included in accrued employee expenses220
 —
See accompanying notes to condensed consolidated financial statements.

6

TRUECAR, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Organization and Nature of Business
1. Organization and Nature of Business
TrueCar, Inc. (“TrueCar”) is an Internet-based information, technology, and communication services company. Hereinafter, TrueCar, Inc. and its wholly owned subsidiaries TrueCar.com,ALG, Inc., TrueCar Dealer Solutions, Inc. and ALG, Inc.DealerScience, LLC are collectively referred to as “TrueCar” or the “Company”; TrueCar.com, Inc. is referred to as “TrueCar.com” and“Company,” ALG, Inc. is referred to as “ALG”.“ALG,” TrueCar Dealer Solutions, Inc. is referred to as “TCDS,” and DealerScience, LLC is referred to as “DealerScience.” TrueCar was incorporated in the stateState of Delaware in February 2005 and began business operations in April 2005. Its principal corporate offices are located in Santa Monica, California.
TrueCar is a digital automotive marketplace that (i) provides 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; (ii) empowers Certified Dealers to attract these informed, in-market consumers in a cost-effective, accountable manner; and (iii) allows automobile manufacturers (“OEMs”) to more effectively target their incentive spending at deep-in-market consumers during their purchase process. TrueCar has established a diverse software ecosystem on a common technology infrastructure, powered by proprietary data and analytics. Consumers access TrueCar’s platform through the TrueCar.com website and TrueCar mobile applications or through the car-buyingcar buying websites and mobile applications that TrueCar operates for its affinity group marketing partners (“Auto Buying Programs”). An affinity group is comprised of a network of members or employees that provides discounts to its members.
ALG provides forecasts, consulting, and other services regarding determination of the residual value of an automobile at future given points in time, which are used to underwrite automotive loans and leases and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. ALG also obtains automobile purchase data from a variety of sources and uses this data to provide consumers and dealers with highly accurate, geographically specific, real-time pricing information.
Through its subsidiary TCDS, the Company provides its TrueCar Trade product, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership. This valuation is, in turn, backed by a third-party guarantee to dealers that the vehicles will be repurchased at the indicated price if the dealer does not want to keep them.
2.Summary of Significant Accounting Policies
Additionally, in December 2018, the Company acquired DealerScience, which, through TCDS, provides dealers with advanced digital retailing software tools that allow them to calculate accurate monthly payments, expedite vehicle desking, which is the process of presenting and agreeing upon financial terms and financing options, and streamline the consumer’s experience.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and Article 10-1 of Regulation S-X. Accordingly, some information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 20162019, and include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented.
The condensed consolidated balance sheet at December 31, 20162019 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC on March 1, 2017. February 28, 2020. 
7

Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of TrueCar and its wholly owned subsidiaries. Business acquisitions are included in the Company’s condensed consolidated financial statements from the date of the acquisition. The Company’s purchase accounting resulted in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. Equity investments through which the Company is able to exercise significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities are accounted for using the equity method. The Company’s share of the income or loss from equity method investments is recognized on a one-quarter lag due to the timing and availability of financial information. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities whichthat are subject to judgment and use of estimates include sales allowances and allowances for doubtful accounts, contract assets, the fair value of a warrant asset and the related liability, the fair value of assets and liabilities assumed in business combinations, fair value of the capitalized facility leases,right-of-use assets and lease liabilities, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, lease exit liabilities, contingencies, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engaged valuation specialists to assist with management’s determination of the valuation of its capitalized facility leases,the fair value of a warrant asset and the related liability, right-of-use assets and lease liabilities, the fair values of assets and liabilities assumed in business combinations, the fair value of reporting units in connection with annual goodwill impairment testing, the fair value of performance shares, and in periods prior to the Company’s initial public offering, valuation of common stock.

Risks and Uncertainties
In March 2020, the World Health Organization declared a novel strain of coronavirus (“COVID-19”) a pandemic, as a result of which the Company is subject to additional risks and uncertainties. In response to the pandemic, governments and organizations have taken preventative or protective actions, such as temporary closures of non-essential businesses and “shelter-at-home” guidelines for individuals. As a result, the global economy has been negatively affected, and the Company’s business has been negatively affected in a number of ways. Most directly, a number of states and local governments have taken steps that have prohibited or curtailed the sale of automobiles during the pandemic. In some jurisdictions, shelter-at-home orders, or other orders related to the pandemic, impede car sales. On top of these legal restrictions, the economic uncertainty and rapidly increasing number of consumers who are unemployed, as well as the decrease in consumers’ willingness to make discretionary trips outside of the home, have decreased the demand for cars. The severity of the impact of COVID-19 on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. The Company’s future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms. Given the dynamic nature of this situation, the Company cannot predict with absolute certainty, the impact of COVID-19 on its financial condition, results of operations or cash flows.
Segments
The Company has one1 operating segment. The Company’s chief operating decision maker (“CODM”) is the President and Chief Executive Officer and the Chief Financial Officer and Chief Accounting Officer, who manage the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources.
The CODM reviewreviews financial information on a consolidated basis, accompanied by information about transactiondealer revenue, OEM incentive revenue, and forecasts, consulting and other revenue (Note 12). All of the Company’s principal operations, decision-making functions and assets are located in the United States.

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Allowance for Doubtful Accounts
On January 1, 2020, the Company adopted the new accounting guidance on measuring credit losses on its trade accounts receivable. The new credit loss guidance replaces the old model for measuring the allowance for credit losses with a model that is based on the expected losses rather than incurred losses. Under the new credit loss model, lifetime expected credit losses are measured and recognized at each reporting date based on historical, current and forecast information.

The Company determines its allowance for doubtful accounts based on historical write-off experience and specific circumstances that make it likely that recovery will not occur. The Company reviews the allowance for doubtful accounts periodically and assesses the aging of account balances, with an emphasis on those that are past due over ninety days. Account balances are charged off against the allowance when the Company determines that it is probable the receivable will not be recovered.

Under the new guidance, the Company considers the need to adjust historical information to reflect the extent to which the Company expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated. The primary current and future economic indicators the Company uses to develop its current estimate of expected credit losses include the current and forecast U.S. Gross Domestic Product (GDP).

The Company calculates the expected credit losses on a pool basis for those trade receivables that have similar risk characteristics. For those trade receivables that do not share similar risk characteristics, the allowance for doubtful accounts is calculated on an individual basis. Risk characteristics relevant to the Company’s accounts receivable include revenue billing model and aging status.

The following table summarizes the changes in the allowance for doubtful accounts and sales allowances (in thousands):
Three Months Ended March 31, 2020
Allowances, at beginning of period$6,759 
Charged as a reduction of revenue2,408 
Charged to bad debt expense in general and administrative expenses2,225 
Write-offs, net of recoveries(3,338)
Allowances, at end of period$8,054 
For the three months ended March 31, 2020, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

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Recent Accounting Pronouncements
In May 2017,December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance amending the existing accounting standard for stock-based awards in order to provide clarity and to reduce both diversity in practice and the cost and complexity of applying the existing guidance as it relates to modifications of stock-based payment awards. The new guidance will be effectiveto simplify the accounting for all entities for annual periods beginning after December 15, 2017 and interim periods therein, with early adoption permitted. The adoption of this guidance is not expectedincome taxes by removing certain exceptions to have a material impact on the Company's consolidated financial statements.
In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit's fair value. This guidance is effective for interim and annual goodwill impairment testsgeneral principles in fiscal years beginning after December 15, 2019, and early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.
In October 2016, the FASB issued new guidance which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This removes the exception to postpone recognition until the asset has been sold to an outside party.Accounting Standards Codification Topic 740, Income Taxes. This standard is effective for annual reporting periods beginning after December 15, 2017,2020, including interim reporting periods within those annual reporting periods, with early adoption permitted. Itperiods. The Company is required to be applied on a modified retrospective basis through a cumulative-effect adjustment tocurrently evaluating the balance sheet as of the beginning of the fiscal year of adoption. The adoptionimpact of this guidance but the adoption is not expected to have a material impact on the Company'sCompany’s condensed consolidated financial statements.
In FebruaryAugust 2018, the FASB issued new guidance that modifies the disclosure requirements in fair value measurements by removing, modifying and adding certain disclosures. The Company adopted this guidance on January 1, 2020 using the prospective transition method. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
In August 2018, the FASB issued new guidance that aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance on January 1, 2020 using the prospective transition method. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued guidance amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance will be effectivethat replaces the then-existing model for public entitiesmeasuring the allowance for annual periodscredit losses for financial assets measured at amortized cost (including trade accounts receivable) to a model that is based on the expected losses rather than incurred losses. Under the new credit loss model, lifetime expected credit losses on such financial assets are measured and recognized at each reporting date based on historical, current, and forecast information. The amendments in this new guidance are applied through a cumulative-effect adjustment to retained earnings as of the beginning after December 15, 2018 and interim periods therein. Early adoptionof the first reporting period in which the guidance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.effective. The Company is evaluating the methods and impact of adoptingadopted this guidance on itsJanuary 1, 2020. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
In May 2014, the FASB issued guidance related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace all existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the full retrospective or cumulative effect transition method. In August 2015, the FASB deferred the effective date to January 1, 2018, with early adoption beginning January 1, 2017. In 2016, the FASB issued additional guidance to clarify the implementation guidance. The Company plans to adopt this guidance beginning January 1, 2018 using the cumulative effect or “modified retrospective” transition method. While the Company is continuing to assess all potential impacts of the standard, the Company has identified an impact related to the recognition of costs to obtain customer contracts. Currently, sales commissions are expensed as incurred. Under the new revenue standard, certain sales commissions will be deferred and recognized over a period of time. The Company continues to evaluate the new revenue standard and is assessing the impact this identified difference in accounting treatment may have on the consolidated financial statements.
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3.Fair Value Measurements

3. Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Accounting standards describe a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:value:

•Level 1 — Quoted prices in active markets for identical assets, or liabilities, or funds.
•Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses and other current liabilities approximate fair value because of the short maturity of these items.
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at September 30, 2017March 31, 2020 and December 31, 20162019 by level within the fair value hierarchy. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):
 At March 31, 2020At December 31, 2019
  Total Fair Total Fair
Level 1Level 2Level 3ValueLevel 1Level 2Level 3Value
Assets:
Cash equivalents$174,571  $—  $—  $174,571  $174,429  $—  $—  $174,429  
Total assets$174,571  $—  $—  $174,571  $174,429  $—  $—  $174,429  
Liabilities:
Contingent consideration, current$—  $—  $2,500  $2,500  $—  $—  $2,441  $2,441  
Contingent consideration, non-current—  —  2,352  2,352  —  —  2,336  2,336  
Total liabilities$—  $—  $4,852  $4,852  $—  $—  $4,777  $4,777  
 At September 30, 2017 At December 31, 2016
 Level 1 Total Fair
Value		 Level 1 Total Fair
Value
Cash equivalents$196,217
 $196,217
 $107,721
 $107,721
Total Assets$196,217
 $196,217
 $107,721
 $107,721


Contingent Consideration Obligations
The following table summarizes the changes in the fair value of the contingent consideration obligation (in thousands):
Three Months Ended March 31,
20202019
Fair value, beginning of period$4,777  $4,477  
Changes in fair value75  75  
Fair value, end of period$4,852  $4,552  

The following table summarizes the significant unobservable inputs and valuation technique in the fair value measurement of Level 3 financial liabilities used to measure the contingent consideration liability at March 31, 2020:
4.Property and Equipment, netValuation TechniqueUnobservable InputRange (Weighted Average)
Discounted cash flow Probability of achievement 98.9% - 100.0% (99.5%)
Discount rate 4.9%
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4. Goodwill
The following table summarizes the changes in goodwill for the three months ended March 31, 2020 (in thousands):
Goodwill
Balance at December 31, 2019$73,311 
Impairment(10,187)
Balance at March 31, 2020$63,124 

The Company assesses recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable, such as a decline in stock price and market capitalization. Throughout the second half of 2019 and through the first quarter of 2020, the Company’s stock price experienced high volatility, causing a decline in its enterprise market capitalization. During the first quarter of 2020, as a result of the recent global economic disruption and uncertainty due to the COVID-19 pandemic, along with the Company’s announcement that it had entered into a short-term agreement to extend its partnership with USAA Federal Savings Bank to continue to power the USAA Car Buying Service through September 30, 2020, the Company concluded a triggering event had occurred. In light of these two factors, the Company performed an interim quantitative impairment test as of March 31, 2020, in which the Company estimated the fair value of its single reporting unit by utilizing an income approach which uses a discounted cash flow (“DCF”) analysis. The Company has previously used an implied market value approach. Given the current high degree of market volatility and lack of reliable market data as of March 31, 2020, the Company determined that a discounted cash flow model (income approach) provided the best approximation of fair value. Determining fair value requires the exercise of significant assumptions and judgments, which are considered Level 3 inputs under the fair value hierarchy, including the amount and timing of expected future cash flows, long-term growth rates and the discount rate. Based on the results of the interim impairment test, the Company concluded that the carrying value of its reporting unit is greater than the fair value and, accordingly, recognized a non-cash impairment charge of $10.2 million for the three months ended March 31, 2020. If the pandemic’s economic impact is more severe, or if the economic recovery takes longer to materialize or does not materialize as strongly as anticipated, this could result in further goodwill impairment charges.

5. Property and Equipment, net
Property and equipment consisted of the following at September 30, 2017March 31, 2020 and December 31, 20162019 (in thousands):
 September 30,
2017		 December 31,
2016
  
Computer equipment, software, and internally developed software$79,316
 $65,973
Furniture and fixtures4,679
 3,705
Leasehold improvements7,108
 6,067
Capitalized facility leases39,302
 39,302
 130,405
 115,047
Less: Accumulated depreciation(62,025) (48,106)
Total property and equipment, net$68,380
 $66,941
The Company is considered the owner, for accounting purposes only, of one of its Santa Monica, California leased office spaces and of its San Francisco, California leased office space (collectively, the “Premises”) as it had taken on certain risks of construction build cost overages above normal tenant improvement allowances. Accordingly, at September 30, 2017 and December 31, 2016, the Company has capitalized $39.3 million related to the Premises, which represents the estimated fair value of the leased properties, additions for capitalized interest incurred during the construction periods, and capitalized costs related to improvements to the building. At September 30, 2017 and December 31, 2016, the Company recorded accumulated amortization of $1.9 million and $1.2 million, respectively. Additionally, at September 30, 2017 and December 31, 2016, the Company recognized a corresponding lease financing obligation of approximately $31.2 million and $30.9 million, respectively.
 March 31, 2020December 31, 2019
 
Computer equipment, software, and internally developed software$63,400  $60,049  
Furniture and fixtures5,022  4,927  
Leasehold improvements15,560  15,839  
 83,982  80,815  
Less: Accumulated depreciation(55,278) (51,018) 
Total property and equipment, net$28,704  $29,797  
Included in the table above are property and equipment of $5.7$1.5 million and $4.3$1.4 million at September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, which are capitalizable but had not yet been placed in service. The $5.7 million and $4.3 millionThese balances at September 30, 2017 and December 31, 2016, respectively, were comprised primarily of capitalized software not ready for its intended use.
Total depreciation and amortization expense of property and equipment was $4.8$4.7 million and $5.0$4.9 million for the three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. Total depreciation and amortization expense of property and equipment was $14.6 million and $14.7 million for the nine months ended September 30, 2017 and 2016, respectively.

Amortization of internal use capitalized software development costs was $3.4 million and $3.9 million for each of the three months ended September 30, 2017March 31, 2020 and 2016, respectively. Amortization of internal use capitalized software development costs was $10.8 million and $11.3 million for the nine months ended September 30, 2017 and 2016, respectively.2019.
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5.Credit Facility
In February 2015, the


6. Credit Facility
The Company entered intois party to a third amended and restated loan and security agreement (“Third Amended Credit(the “Credit Facility”) with a financial institution that provides for advances under a $35.0 million secured revolving credit facilityline of credit. In February 2018, the Company entered into a first amendment to the Credit Facility that, expires onamong other things, extended the expiration of the Credit Facility from February 18, 2018.2018 to February 18, 2021. In December 2018, the Company entered into a second amendment to the Credit Facility to make certain other revisions that do not alter the borrowing amounts, interest rates, or required ratios. The Third Amended Credit Facility provides a $10.0 million subfacility for the issuance of letters of credit and contains an increase option permitting the Company, subject to the lender'slender’s consent, to increase the revolving credit facility by up to $15.0 million, to an aggregate maximum of $50.0 million.
The Third Amended Credit Facility bears interest, at the Company’s option, at either (i) the prime rate published by The Wall Street Journal, plus a spread of -0.25% to 0.50%, or (ii) a LIBOR rate determined in accordance with the terms of the Third Amended Credit Facility, plus a spread of 1.75% to 2.50%. In each case, the spread is based on the Company’s adjusted quick ratio, which is a ratio of the Company’s cash and cash equivalents plus net billed accounts receivable to current liabilities plus all borrowings under the credit facility.Credit Facility.
Interest is due and payable quarterly in arrears for prime rate loans and on the earlier of the last day of each quarter or the end of an interest period, as defined in the Third Amended Credit Facility, for LIBOR rate loans. The Company is also obligated to pay an unused revolving line facility fee of 0.00% to 0.20% per annum based on the Company’s adjusted quick ratio.
The Third Amended Credit Facility requires the Company to maintain an adjusted quick ratio of at least 1.50 to 1.00 on the last day of each quarter. If this adjusted quick ratio is not maintained, then the facility requires the Company to maintain, as measured at each quarter end, a maximum consolidated leverage ratio of 3.00 or 2.50 to 1.00, and a fixed charge coverage ratio of at least 1.25 to 1.00.
Consolidated leverage ratio is a ratio of all funded indebtedness, including all capital lease obligations, plus all letters of credit under the facility to the Company’s Adjusted EBITDA for the trailing twelve months. Fixed charge coverage ratio is the ratio of ourthe Company’s Adjusted EBITDA lessminus cash paid for income taxes to ourits cash paid for interest plus capital expenditurespayments for the trailing twelve months. This credit facilityThe Credit Facility also limits the Company’s ability to pay dividends. At September 30, 2017,March 31, 2020, the Company was in compliance with allthe Credit Facility’s financial covenants.
The Company’s future material domestic subsidiaries are required, upon the lender’s request, to become co-borrowers under the credit facility. The credit facilityCredit Facility. Additionally, the Credit Facility contains acceleration clauses that accelerate any borrowings in the event of default. The Company’s obligations and those of the Company and its future material domestic subsidiaries are collateralized by substantially all of their respective assets, subject to certain exceptions and limitations.
At September 30, 2017 and DecemberMarch 31, 2016,2020, the Company had no0 outstanding amounts under the Third Amended Credit Facility. TheFacility and the amount available was $30.7$31.9 million, reduced for the letters of credit issued and outstanding under the subfacility of $4.3 million at September 30, 2017.$3.1 million.
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6.

7. Commitments and Contingencies
Lease Exit Costs
In December 2015, the Company consolidated its Santa Monica, California office locations. In accordance with accounting for exit and disposal activities, the Company recognized a liability for lease exit costs incurred once the Company no longer derived economic benefit from the related leases. The liability was recognized and measured based on a discounted cash flow model when the cease use date occurred. The liability was determined based on the remaining lease rental due, reduced by estimated sublease rental income that could be reasonably obtained for the properties. In the second quarter of 2016, due to a deterioration in the local commercial real estate market, the Company updated its estimates of sublease rental income for these spaces and recorded additional lease exit costs. In the first quarter of 2017, the Company completed the execution of subleases for its properties and recorded a benefit of $0.1 million in lease exit costs. The benefit is recorded in general and administrative expense in the consolidated statement of comprehensive loss for the nine months ended September 30, 2017. The remaining liability is recorded in accrued expenses and other current liabilities (current portion) and other liabilities (non-current portion) within the consolidated balance sheets.

The following table presents a roll forward of the lease exit liability for the nine months ended September 30, 2017:
 Lease Exit Costs
Accrual at December 31, 2016$2,657
Benefit(133)
Cash Payments(1,020)
Accrual at September 30, 2017$1,504
Legal Proceedings
From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. The Company is not currently a party to any material legal proceedings, other than as described below.

Stockholder Litigation
Milbeck Federal Securities Litigation
On March 9, 2015,30, 2018, Leon Milbeck filed a putative securities class action against the Company was named as a defendant in a lawsuit filed in the U.S. District Court for the SouthernCentral District of New YorkCalifornia (the “NY Lanham Act“Milbeck Federal Securities Litigation”). On June 27, 2018, the court appointed the Oklahoma Police Pension and Retirement Fund as lead plaintiff, who filed an amended complaint on August 24, 2018. The amended complaint in the NY Lanham Act Litigation, purportedly filedsought an award of unspecified damages, interest, attorney’s fees and equitable relief based on behalf of numerous automotive dealers who are not participating on the TrueCar platform, allegesallegations that the Company has violated the Lanham Act as well as various state laws prohibiting unfair competition and deceptive actsdefendants made false or practices related tomisleading statements about the Company’s advertisingbusiness, operations, prospects and promotional activities. The complaint seeks injunctive reliefperformance during a purported class period of February 16, 2017 through November 6, 2017 in addition to over $250 million in damages as a resultviolation of Sections 10(b) and 20(a) of the alleged diversionExchange Act and Rule 10b-5 promulgated thereunder and that the defendants made actionable misstatements in violation of customersSection 11 of the Securities Act in connection with our secondary offering that occurred during the class period. The amended complaint named the Company, certain of its then-current and former officers and directors and the underwriters for its secondary offering as defendants. On October 31, 2018, the plaintiff dismissed the underwriters from the plaintiffs’ dealerships to TrueCar Certified Dealers. On April 7, 2015, the Company filed an answer to the complaint. Thereafter, the plaintiffs amended their complaint,litigation “without prejudice,” meaning that they could be reinstated as defendants at a later time, and on July 13, 2015,November 5, 2018, the Company filed a motion to dismiss the amended complaint.complaint, which the court denied on February 5, 2019. On May 9, 2019, the court granted the lead plaintiff’s motion for class certification. On August 2, 2019, the parties entered into an agreement to settle the Milbeck Federal Securities Litigation on a class-wide basis for $28.25 million, all of which was paid by the Company’s directors’ and officers’ liability insurance. On October 15, 2019, the court granted preliminary approval of the proposed settlement, and on January 27, 2020, the court issued a minute order granting final approval to the settlement. As a result, the Milbeck Federal Securities Litigation is resolved. Because the settlement was fully funded by the Company’s directors’ and officers’ liability insurance, the Company removed the settlement liability and offsetting insurance receivable of $28.25 million from its consolidated balance sheet at December 31, 2019. 
California Derivative Litigation
        On March 6, 2016,2019, the Company, certain of its then-current and former officers and directors and USAA were named as defendants in a derivative action filed by Dean Drulias nominally on behalf of the Company in the U.S. District Court grantedfor the Central District of California (the “California Derivative Litigation”). On March 12, 2019, the plaintiff filed an amended complaint, which alleged breach of fiduciary duties, unjust enrichment and violation of Section 10(b) and Section 29(b) of the Exchange Act and sought contribution for damages awarded against us in partthe Milbeck Federal Securities Litigation and denied in partan award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. On May 13, 2019, the Company filed motions to dismiss the amended complaint on the grounds of forum non conveniens based upon the exclusive forum provision of the Company’s certificate of incorporation, failure to make a pre-suit demand on the Company’s board of directors and failure to state a claim upon which relief may be granted. On October 23, 2019, the court granted the Company’s motion to dismiss the state-law claims with prejudice on the grounds of forum non conveniens and granted the Company’s motion to dismiss the federal-law claims without prejudice for failure to state a claim. In light of these rulings, the court declined to address the Company’s motion to dismiss for failure to show pre-suit demand futility. The court permitted the plaintiff to amend his complaint with respect to some,the dismissed federal-law claims, but not all,on November 5, 2019, he informed the court that he declined to do so and stated his intent to appeal the court’s ruling. On November 18, 2019, the court entered judgment in favor of the advertisingdefendants and promotional activities challenged inagainst the amended complaint. The litigation is currently inplaintiff, and on December 13, 2019, the expert discovery phase.plaintiff appealed that judgment. The Company believes that the portions of the amended complaint that survived the Company’s motion to dismiss areappeal is without merit, and it intends to vigorously defend itself in this matter. We have not recorded an accrual related to this matter as of September 30, 2017, as we do not believe a loss is probable or reasonably estimable.

On May 20, 2015, the Company was named as a defendant in a lawsuit filed by the California New Car Dealers Association in the Superior Court for the County of Los Angeles (the “CNCDA Litigation”). The complaint in the CNCDA Litigation seeks declaratory and injunctive relief based on allegations that the Company is operating in the State of California as an unlicensed automobile dealer and autobroker. The complaint does not seek monetary relief. On July 20, 2015, the Company filed a “demurrer” to the complaint, which is a pleading that requests the court to dismiss the case. Thereafter, the plaintiffs amended their complaint, and on September 11, 2015, the Company filed a demurrer to the amended complaint. On December 7, 2015, the Court granted the Company’s demurrer in its entirety, but afforded the CNCDA the opportunity to file a second amended complaint. The CNCDA filed a second amended complaint on January 4, 2016. The second amended complaint reiterates the claims in the prior complaints and adds claims under theories based on the federal Lanham Act and California unfair competition law. On February 3, 2016, the Company filed a demurrer to the second amended complaint. On March 30, 2016, the Court granted in part and denied in part the Company’s demurrer to the second amended complaint, dismissing the Lanham Act claim but declining to dismiss the balance of the claims at the demurrer stage of the litigation. On May 31, 2016, based on certain intervening developments in state law, the Court announced that it would reconsider its March 30, 2016 order, and it invited the parties to file new briefs on the demurrer issues. On July 15, 2016, the Court heard oral argument on reconsideration of the demurrer issues. On July 25, 2016, the Court granted in part and denied in part the Company’s demurrer to the second amended complaint, just as it had done in its March 30, 2016 order. The litigation is currently approaching the conclusion of the discovery phase and was previously scheduled for trial in August 2017. On April 3, 2017, the Court indicated that the trial date would be postponed to a future date. On May 17, 2017, the Court scheduled trial to begin on December 11, 2017. The Company believes that the portions of the second amended complaint that survived the Court’s reconsideration of the Company’s demurrer are without merit, and it intends to vigorously defend itself in this matter. The Company has not recorded an accrual related to this matter as of September 30, 2017,March 31, 2020 as the Company does not believe a loss is probable or reasonably estimable.

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Delaware Consolidated Derivative Litigation
On December 23, 2015,In August 2019, 3 purported stockholder derivative actions were filed in Delaware alleging a variety of claims nominally on the Company’s behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation. The complaints named the Company, wascertain of its then-current and former directors and officers, USAA and, in one of the actions, certain entities affiliated with USAA and certain of our current and former directors as defendants. On October 7, 2019, the Delaware Court of Chancery consolidated the cases into a single action in that court bearing the caption In re TrueCar, Inc. Stockholder Derivative Litigation (the “Delaware Consolidated Derivative Litigation”). On November 6, 2019, the plaintiffs filed a consolidated complaint against all of the defendants named as a defendant in a putative class action lawsuit filed by Gordon Rose in the California Superior Court for the County of Los Angeles (the “California Consumer Class Action”). The complaint assertedprior actions, asserting claims for breach of fiduciary duty, unjust enrichment, violationcontribution and indemnification against the Company’s current and former officers and directors, and claims for aiding and abetting breaches of fiduciary duty against the entities affiliated with USAA and with certain of the California Consumer Legal Remedies Act,Company’s current and violation of the California Business and Professions Code, based principally on factual allegations similar to those asserted in the NY Lanham Act Litigation and the CNCDA Litigation.former directors. The complaint soughtplaintiffs seek an award of unspecified damages interest, disgorgement, injunctive relief, and attorneys’ fees. Inagainst the complaint, the plaintiff sought to represent a class of California consumers defined as “[a]ll California consumers who purchased an automobile by using TrueCar, Inc.’s price certificate during the applicable statute of limitations.” On January 12, 2016, the Court entered an order staying all proceedings in the case pending an initial status conference, which was previously scheduled for April 13, 2016. On March 16, 2016, the case was reassigned to a different judge. As a result of that reassignment, the initial status conference was rescheduled for and helddefendants on May 26, 2016. By stipulation, the stay of discovery was continued until a second status conference, which was scheduled for October 12, 2016. On July 13, 2016, the plaintiff amended his complaint. The amended complaint continues to assert claims for unjust enrichment, violationbehalf of the California Consumer Legal Remedies Act,Company and violation ofvarious alleged corporate governance reforms. On December 19, 2019, the California Business and Professions Code. The amended complaint retains the same proposed class definition as the initial complaint. Like the initial complaint, the amended complaint seeks an award of unspecified damages, punitive and exemplary damages, interest, disgorgement, injunctive relief, and attorneys’ fees. On September 12, 2016, the Companydefendants filed a demurrer to the amended complaint. On October 12, 2016, the Court heard oral argument on the demurrer. On October 13, 2016, the Court granted in part and denied in part the Company’s demurrer to the amended complaint, dismissing the unjust enrichment claim but decliningmotions to dismiss the balance of the claims at the demurrer stage of the litigation. Atfor failure to make a status conference held on January 26, 2017, the Court ruled that discovery could then proceed regarding matters related to class certification only. At a status conference held on July 25, 2017, the Court set a deadline of January 8, 2018 for the filing of the plaintiff’s motion for class certification and provided that discovery may continue to proceed regarding matters related to class certification only at this time. An additional status conference has been scheduled for January 12, 2018.pre-suit demand. The Company believes that the amendedconsolidated complaint is without merit and it intends to vigorously defend itself in this matter. The Company has not recorded an accrual related to this matter as of September 30, 2017,March 31, 2020 as the Company does not believe a loss is probable or reasonably estimable.
On June 30, 2017,Lee Derivative Litigation
In December 2019, Sulgi Lee, a purported stockholder, filed a derivative action in the Delaware Court of Chancery alleging a variety of claims nominally on the Company’s behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation. The complaint named the Company, was namedcertain of its then-current and former directors and officers and USAA as a defendant in a putative class action lawsuit filed by Kip Haas in the U.S. District Court for the Central District of California (the “Federal Consumer Class Action”).defendants. The complaint asserts claims for violation of the California Business and Professions Code, based principally on allegations of false and misleading advertising and unfair business practices. The complaintplaintiff seeks an award of unspecified damages interest, injunctive relief,against the defendants on the Company’s behalf and attorneys’ fees. Invarious alleged corporate governance reforms. On May 5, 2020, the complaint,court entered the plaintiff seeksparties’ stipulation to represent a classstay this litigation pending the outcome of consumers defined as “[a]ll consumers who, between the applicable statute of limitations and the present, obtained a TrueCar ‘guaranteed’ price” and “[a]ll consumers, who, between the applicable statute of limitations and the present, obtained a TrueCar ‘guaranteed’ price pertainingmotions to a vehicle located at Riverside Mazda.” The Company believes the complaint is without merit, and intends to vigorously defend itself in this matterdismiss in the event that a settlement is not consummated on terms agreeable to the Company. On or around October 23, 2017, the parties reached an agreement in principle to settle this matter on an individual (non-classwide) basis in exchange for the payment of an immaterial amount to Mr. Haas, which has been accrued as of September 30, 2017.
On October 18, 2017, the Company was named as a defendant in a lawsuit filed by Cox Automotive, Inc. ("Cox Automotive") in the Supreme Court of the State of New York in the County of Nassau (the “Cox Automotive Litigation”). As it relates to the Company, the complaint in the Cox Automotive Litigation seeks an award of unspecified damages, disgorgement, return of property taken or retained, injunctive relief and attorneys’ fees. The complaint in the Cox Automotive Litigation alleges that the Company engaged in tortious interference with a contractual relationship between Cox Automotive and one of its former employees, among other claims against the former Cox Automotive employee, who is also named as a defendant in the lawsuit. On October 20, 2017, the court granted a temporary restraining order prohibiting the Company from employing the former Cox Automotive employee pending the court’s ruling on the request by Cox Automotive for the entry of a preliminary injunction. Oral argument, on request by Cox Automotive for the entry of a preliminary injunction has been scheduled for November 13, 2017.Delaware Consolidated Derivative Litigation. The Company believes that the complaint is without merit, and it intends to vigorously defend itself in this matter. The Company has not recorded an accrual related to this matter as of September 30, 2017,March 31, 2020 as the Company does not believe a loss is probable or reasonably estimable.
Delaware Federal Derivative Litigation
        In April 2019, the Company, certain of its then-current and former directors and officers and USAA were named as defendants in derivative actions nominally on behalf of the Company filed by Ara Afarian and Shelley Niemi in the U.S. District Court for the District of Delaware. The complaints alleged breach of Section 29(b) of the Exchange Act as well as breach of fiduciary duties and unjust enrichment and sought contribution for damages awarded against the Company in the Milbeck Federal Securities Litigation and an award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. The Niemi complaint also sought rescission of certain contracts. On April 17, 2019, the cases were consolidated into a single action bearing the caption In re TrueCar, Inc. Shareholder Derivative Litigation. On September 4, 2019, the court granted the plaintiffs’ unopposed motion to voluntarily dismiss the litigation without prejudice, meaning it could be re-filed at a later date. In light of the termination of the litigation on this basis, the Company has not recorded an accrual related to this matter as of March 31, 2020 as the Company does not believe a loss is probable.
Trademark Litigation
On April 9, 2020, the Company was named as a defendant in a lawsuit filed by Six Star, Inc. (“Six Star”) in the U.S. District Court for the Middle District of Florida (the “Trademark Litigation”). The complaint in the Trademark Litigation alleges that the Company’s new “BUY SMARTER DRIVE HAPPIER” slogan infringed and diluted Six Star’s “BUY SMART BE HAPPY” trademark and included claims of false advertising and deceptive and unfair trade practices. The complaint seeks injunctive relief in addition to certain monetary awards. The Company believes that the complaint is without merit, and intends to vigorously defend itself in this matter. The Company did not record an accrual related to this matter as of March 31, 2020, as the Trademark Litigation was filed after that date.
Employment Contracts
The Company has entered into employment contracts with certain executives of the Company. Employment under these contracts is at-will employment. However, under the provisions of the contracts, the Company would incur severance obligations of up to twelve months of the executive’s annual base salary for certain events such as involuntary terminations.

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Indemnifications
In the ordinary course of business, the Company may provide indemnities of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third-parties. These indemnificationsthird parties. While the Company’s future obligations under certain of these agreements may survive termination of the underlying agreementcontain limitations on liability for indemnification, other agreements do not contain such limitations and under such agreements it is not possible to predict the maximum potential amount of future payments due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company couldunder such indemnities have not had a material effect on the Company’s business, financial condition, results of operations or cash flows. Additionally, the Company does not believe that any amounts that it may be required to makepay under these indemnification provisions may notindemnities in the future will be subject to maximum loss provisions. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. To date, there has not been a material claim paid by the Company, nor has the Company been sued in connection with these indemnification arrangements. At September 30, 2017 and December 31, 2016, the Company has not accrued a liability for these guarantees, because the likelihood of incurring a payment obligation, if any, in connection with these guarantees is not probable or reasonably estimable. 
7.Stockholders’ Equity
On January 19, 2017, the Company filed a shelf registration statement on Form S-3 under which the Company may, from time to time, sell securities up to a total dollar amount of $100 million, and selling stockholders may sell, from time to time, up to 20 million of shares of common stock (“2017 Shelf Registration”). The 2017 Shelf Registration was declared effective by the SEC on February 6, 2017. 

On April 26, 2017, the Company entered into an underwriting agreement to sell up to 1,150,000 shares of its common stock at $16.50 per share in a public offering (including shares subject to the underwriters’ option to purchase additional shares). The Company sold 1,150,000 shares in the offering with aggregate net proceeds to the CompanyCompany’s business, financial position, results of $17.4 million, net of underwriting discounts and commissions and offering costs of $1.6 million. Selling stockholders party to the underwriting agreement also sold an aggregate of 9,200,000 shares of common stock in the offering (including shares subject to the underwriters' option to purchase additional shares). The Company did not receive any proceeds from the shares sold by the selling stockholders. The offering closed on May 2, 2017.operations, or cash flows.  

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8.Stock-based Awards

8. Stock-based Awards
Stock Options
A summary of the Company’s stock option activity for the ninethree months ended September 30, 2017March 31, 2020 is as follows:
 
Number of
Options
 Weighted-Average Exercise Price 
Weighted-Average
Remaining
Contractual Life
     (in years)
Outstanding at December 31, 201624,541,512
 $8.29
 5.49
Granted4,812,839
 18.41
  
Exercised(11,517,023) 6.29
  
Canceled/forfeited(748,821) 8.68
  
Outstanding at September 30, 201717,088,507
 $12.48
 7.90
 Number of
Options		Weighted-Average Exercise PriceWeighted-Average
Remaining
Contractual Life
   (in years)
Outstanding at December 31, 201910,625,980  $11.22  5.2
Granted1,713,111  2.66   
Exercised(3,166) 0.83   
Forfeited/expired(284,405) 12.04   
Outstanding at March 31, 202012,051,520  $9.99  5.6
At September 30, 2017,March 31, 2020, total remaining stock-based compensation expense for unvested stock option awards was $60.2$12.5 million, which is expected to be recognized over a weighted-average period of 3.22.4 years. For the three months ended September 30, 2017March 31, 2020 and 2016,2019, the Company recorded stock-based compensation expense for stock option awards of $5.3$1.6 million and $3.5$3.1 million, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded stock-based compensation expense for stock option awards of $12.3 million and $10.9 million, respectively.

Restricted Stock Units
Activity in connection with restricted stock units is as follows for the ninethree months ended September 30, 2017:March 31, 2020:
 
Number of
Shares
 Weighted- Average Grant Date Fair Value
Non-vested — December 31, 20164,339,320
 $7.85
Granted2,054,374
 18.34
Vested(1,217,878) 9.10
Canceled/forfeited(328,678) 8.88
Non-vested — September 30, 20174,847,138
 $11.91
 Number of
Shares		Weighted- Average Grant Date Fair Value
Non-vested — December 31, 20195,890,992  $7.96  
Granted5,158,799  2.79  
Vested(523,484) 8.76  
Forfeited(343,173) 8.17  
Non-vested — March 31, 202010,183,134  $5.30  
At September 30, 2017,March 31, 2020, total remaining stock-based compensation expense for non-vested restricted stock units is $54.6was $50.5 million, which is expected to be recognized over a weighted-average period of 3.12.6 years. The Company recorded $4.6 million and $2.8$5.5 million in stock-based compensation expense for restricted stock units for the three months ended September 30, 2017March 31, 2020 and 2016, respectively. The Company recorded $10.4 million and $7.1 million in stock-based compensation expense for restricted stock units for the nine months ended September 30, 2017 and 2016,2019, respectively.
Stock-based Compensation Cost
The Company recorded stock-based compensation cost relating to stock options and restricted stock awardsunits in the following categories on the accompanying condensed consolidated statements of comprehensive loss (in thousands):
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
2017 2016 2017 2016 Three Months Ended
March 31,
        20202019
Cost of revenue$339
 $256
 $775
 $711
Cost of revenue$399  $499  
Sales and marketing3,358
 1,655
 7,263
 4,154
Sales and marketing2,256  3,472  
Technology and development2,598
 1,200
 5,496
 3,025
Technology and development1,280  1,946  
General and administrative3,613
 3,130
 9,127
 10,143
General and administrative2,242  2,718  
Total stock-based compensation expense9,908
 6,241
 22,661
 18,033
Total stock-based compensation expense6,177  8,635  
Amount capitalized to internal software use443
 292
 993
 760
Amount capitalized to internal software use382  473  
Total stock-based compensation cost$10,351
 $6,533
 $23,654
 $18,793
Total stock-based compensation cost$6,559  $9,108  

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9.Income Taxes
9. Income Taxes
In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss. The Company’s annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, tax amortization of goodwill and changes in the Company’s valuation allowance. The Company recorded $0.1an income tax benefit of $0.4 million and $0.2 million in income tax expense of $0.1 million for the three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. The Company recordedFor the three months ended March 31, 2020, the $0.4 million and $0.5 milliontax benefit arose in incomeconnection with the impairment of goodwill, resulting in reduction of indefinite-lived deferred tax expense for each of the nine months ended September 30, 2017 and 2016.liabilities.

There were no material changes to the Company’s unrecognized tax benefits in the three and nine months ended September 30, 2017,March 31, 2020, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. Due to the presence of net operating lossNOL carryforwards, all income tax years remain open for examination by the Internal Revenue Service (“IRS”)IRS and various state taxing authorities.


10.Net Loss Per Share
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 public health emergency. The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not impact the Company’s results of operations for the three months ended March 31, 2020. The Company will continue to monitor possible future impact of the CARES Act.

10. Net Loss Per Share
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data): 
 Three Months Ended
March 31,
 20202019
Net loss$(10,669) $(14,365) 
Weighted-average common shares outstanding107,024  104,788  
Net loss per share - basic and diluted$(0.10) $(0.14) 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
        
Net loss$(9,519) $(7,436) $(24,374) $(33,758)
Weighted-average common shares outstanding98,665
 84,822
 93,108
 84,075
Net loss per share - basic and diluted$(0.10) $(0.09) $(0.26) $(0.40)

The following table presents the number of anti-dilutive shares excluded from the calculation of diluted net loss per share at September 30, 2017March 31, 2020 and 20162019 (in thousands):
 Three Months Ended
March 31,
 20202019
Options to purchase common stock12,052  13,965  
Common stock warrants1,459  1,459  
Non-vested restricted stock unit awards10,183  7,609  
Total shares excluded from net loss per share23,694  23,033  

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 September 30,
 2017 2016
    
Options to purchase common stock17,089
 25,552
Common stock warrants1,459
 1,605
Non-vested restricted stock unit awards4,847
 4,578
Total shares excluded from net loss per share23,395
 31,735

11. Related Party Transactions
11.Related Party Transactions
Transactions with USAA
USAA is a large stockholder in the Company and the Company'sCompany’s most significant affinity marketing partner. The Company has entered into arrangements with USAA to operate its Auto Buying Program. At the time that the Company entered into these arrangements, USAA met the definition of a related party. In February 2020, the Company entered into a short-term agreement to extend its partnership with USAA Federal Savings Bank (“USAA FSB”) to continue to power the USAA Car Buying Service through September 30, 2020. USAA FSB will pay the Company a $20 million transition services fee that will be earned over the term of the agreement. Revenue share from USAA FSB to the Company will remain the same as it was under the previous agreement except that amounts earned after March 1, 2020 will be settled net of the transaction service fee.
The Company hashad amounts due from USAA included in accounts receivable at September 30, 2017March 31, 2020 and December 31, 20162019 of $0.2$2.9 million and $0.4$0.2 million, respectively. In addition, the Company has amountshad an amount due to USAA included in accounts payable at September 30, 2017 andMarch 31, 2020 of $4.5 million. At December 31, 20162019, the Company had an amount due to USAA of $4.4$7.3 million, of which $6.0 million was included in accounts payable and $3.9$1.3 million respectively.was included in accrued expenses and other current liabilities. The Company recognized revenue of $1.7 million for the three months ended March 31, 2020 and recorded sales and marketing expense of $4.2$2.0 million and $3.7$5.5 million for the three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively, related to service arrangements entered into with USAA.
Transactions with Accu-Trade
During the first quarter of 2019, the Company became a 20% owner of Accu-Trade and accounts for the investment using the equity method, as the Company has significant influence over the investee. The Company recorded saleshad amounts due to Accu-Trade included in accounts payable at March 31, 2020 and marketing expensesDecember 31, 2019 of $12.8$0.5 million and $10.4$0.4 million, respectively. The Company recognized contra-revenue of $0.4 million and $0.2 million and cost of revenue of $0.3 million and $0.1 million for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively, related to such service arrangements.a software and data licensing agreement entered into with Accu-Trade.
12.Revenue Information
12. Revenue Information
Disaggregation of Revenue
The CODM reviews separateCompany disaggregates revenue information for its Transactioninto three revenue streams: dealer revenue, OEM incentives revenue, and Forecasts, Consultingforecasts, consulting and Other service offerings. All other financial information is reviewed by the CODM on a consolidated basis.
revenue. The following table presents the Company’s revenue categories during the periods presented (in thousands):
 Three Months Ended
March 31,
 20202019
Dealer revenue$73,798  $76,814  
OEM incentives revenue3,523  4,201  
Forecasts, consulting and other revenue6,205  4,567  
Total revenues$83,526  $85,582  
Contract Balances
The Company’s contract asset balance for estimated variable consideration to be received upon the occurrence of subsequent vehicle sales is included within other current assets and is distinguished from accounts receivable in that these amounts are conditional upon subsequent sales and not only upon the passage of time. Substantially all of the contract asset balances of $2.8 million at December 31, 2019 were transferred to accounts receivable during the three months ended March 31, 2020 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $1.0 million and $2.8 million was recorded as of March 31, 2020 and December 31, 2019, respectively, for leads delivered where consideration to be received was still conditional upon subsequent vehicle sales.
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 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
        
Transaction revenue$77,526
 $70,306
 $225,161
 $189,556
Forecasts, consulting and other revenue4,914
 4,833
 14,855
 13,870
Total revenues$82,440
 $75,139
 $240,016
 $203,426




Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 1 “Financial Statements” in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.  See “Special Note Regarding Forward-Looking Statements.”
Overview
Our Mission:TrueCar is a leading automotive digital marketplace that enables car buyers to connect to our network of Certified Dealers. We existare building the industry’s most personalized and efficient car buying experience as we seek to bebring more of the most transparent brand in automotive, to serve as a catalyst that dramatically improves the way people discover, buy and sell cars.purchasing process online.
We have established an intelligent, data-driven online marketplacea diverse software ecosystem on a common technology infrastructure, powered by proprietary market data and analytics. Our company-branded marketplaceplatform is available on our TrueCar website and mobile applications. In addition, we customize and operate our marketplaceplatform on a co-branded basis for our many affinity group marketing partners, including financial institutions like USAA Chase and American Express,Express; membership-based organizations like Consumer Reports, AARP, Sam'sSam’s Club, and AAA,AAA; and employee buying programs for large enterprises such as IBM and Walmart. We enable users to obtain market-based pricing data on new and used cars, and to connect with our network of TrueCar Certified Dealers. We also allow automobile manufacturers, known in the industry as OEMs, to connect with TrueCar users during the purchase process and efficiently deliver targeted incentives to consumers.
We benefit consumers by providing information related to what others have paid for a make, model and trim of car in their area and guaranteed savings off the manufacturer's suggested retail price, or MSRP, for that make, model and trim, as well as, in most instances, price offers on actual vehicle inventory, which we refer to as VIN-based offers, from our network of TrueCar Certified Dealers. Guaranteed savings off MSRP are reflected in a Guaranteed Savings Certificate which the consumer may then take to the dealer and apply toward the purchase of the specified make, model and trim of car. VIN-based offers provide consumers with price offers for specific vehicles from specific dealers. We benefit our network of TrueCar Certified Dealers by enabling them to attract these informed, in-market consumers in a cost-effective, accountable manner, which we believe helps them to sell more cars profitably. We benefit OEMs by allowing them to more effectively target their incentive spending at deep-in-market consumers during their purchase process.
Our network of over 15,000 TrueCar Certified Dealers consists primarily of new car franchises, representing all major makes of cars, as well as independent dealers selling used vehicles. TrueCar Certified Dealers operate in all 50 states and the District of Columbia.
Our subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time. These residual values are used to underwrite automotive loans and leases to determine payments by consumers. In addition, financial institutions use this information to measure exposure and risk across loan, lease, and fleet portfolios.
Further, our subsidiary, TCDS, provides our TrueCar Trade product, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership. This valuation is, in turn, backed by a third-party guarantee to dealers that the vehicles will be repurchased at the indicated price if the dealer does not want to keep them.
Additionally, in December 2018, we acquired DealerScience, which, through TCDS, provides dealers with advanced digital retailing software tools that allow them to calculate accurate monthly payments, expedite vehicle desking, which is the process of presenting and agreeing upon financial terms and financing options, and streamline the consumer’s experience from shopping to showroom.
During the three months ended September 30, 2017,March 31, 2020, we generated revenues of $82.4$83.5 million and recorded a net loss of $9.5$10.7 million. OfDuring the $82.4three months ended March 31, 2019, we generated revenues of $85.6 million and recorded a net loss of $14.4 million.

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COVID-19 Pandemic
In March 2020, the World Health Organization declared COVID-19, a novel strain of coronavirus, a pandemic, which continues to spread throughout the United States and the world. This has resulted in revenues, $77.5 million, or 94.0%, consistedauthorities implementing numerous measures to contain the virus, including quarantines, “shelter-in-place” and “stay-at-home” orders, travel restrictions, and temporary closures of transaction revenuesnon-essential businesses. We have taken proactive measures to protect the health and safety of our employees and customers by closing our offices, requiring employees to work from home and suspending travel, in-person meetings and visits with our customers. We expect to continue these measures until the remaining $4.9 million, or 6.0%, derived primarilypandemic is adequately contained as determined by authorities.
We are monitoring the impact of the pandemic on our business and implementing plans to take appropriate actions to adapt to changing circumstances arising from the salepandemic. Specifically, we have launched “Buy from Home” badging as an immediate solution designed to help consumers and dealers safely and remotely navigate car buying in response to social distancing guidelines during COVID-19. Dealers badged with “Buy from Home” on the TrueCar platform offer the following features:
•Remote paperwork processing
•Home vehicle delivery
•Verified vehicle sanitization
Additionally, we are accelerating our investment in digital automotive retailing as we seek to bring more of forecasts, consulting and other revenuethe purchasing process online to further support the automotive and financial services industries. Revenues from the sale of forecasts, consulting and other services are derived primarily from the operationsneeds of our ALG subsidiary. Transaction revenues primarily consist of fees paid to us by our network of TrueCar Certified Dealers.dealers and consumers during this challenging and changing environment.
Since the third quarter of 2016,Although we have made multiple product enhancementsexperienced significant disruptions since the outbreak was declared a pandemic, and expect the impact to adversely affect our revenues, we are unable to accurately forecast the impact that COVID-19 will have improvedon our business, results of operations, financial condition and cash flows due to numerous uncertainties, including the consumer experience resulting in improved revenue growth rates forseverity and duration of the nine months ended September 30, 2017 as compared tooutbreak, actions taken by government authorities, economic uncertainty and the nine months ended September 30, 2016. Over time, we intend to increase therapidly increasing number of transactions on our platform, and thereby revenue, by continuing to:
(i)increase the rate at which visitors to our website and our affinity group marketing partner sites, and users of our mobile applications, prospect with a TrueCar certified dealer by investing in delivering a more engaging experience to consumers and dealers;
(ii)invest in additional dealer support personnel to improve and expand our dealer relationships; and
(iii) better communicate the benefitsconsumers who are unemployed. Refer to Part II, Item 1A, Risk Factors, for additional disclosures of fully registering on TrueCarrisks related to consumers using different and stronger messaging.COVID-19.

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We plan to continue to focus on cost containments in areas outside of our dealer, product, technology, and research efforts in order to invest in the changes that will continue to improve the consumer and dealer experiences and drive revenue growth in the future.

Key Metrics
We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions.
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended
March 31,
2017 2016 2017 2016 20202019
Average Monthly Unique Visitors7,702,254
 7,600,900
 7,420,807
 6,991,128
Average Monthly Unique Visitors7,751,696  7,098,849  
Units(1)253,527
 220,633
 713,313
 588,146
Units (1)Units (1)197,002  232,781  
Monetization$306
 $319
 $316
 $322
Monetization$392  $348  
Franchise Dealer Count12,286
 10,759
 12,286
 10,759
Franchise Dealer Count11,356  12,675  
Independent Dealer Count2,938
 2,537
 2,938
 2,537
Independent Dealer Count4,193  3,854  

(1)We issued full credits of the amount originally invoiced with respect to 5,513 and 5,693 units during the three months ended March 31, 2020 and March 31, 2019, respectively. The number of units has not been adjusted downwards related to units credited as discussed in the description of the unit metric below.
(1)We issued full credits of the amount originally invoiced with respect to 5,048 and 4,547 units during the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we issued full credits of the amount originally invoiced with respect to 16,324 and 13,285 units, respectively. The number of units has not been adjusted downwards related to units credited as discussed in the description of the unit metric below.

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 identify unique visitors through cookies for browser-based visits on either a desktop computer or mobile device and through device IDs for mobile application visits. In addition, if a TrueCar.com user logs-in,logs in, we supplement their identification with their log-in credentials to attempt to avoid double counting on TrueCar.com across devices, browsers and mobile applications. If an individual accesses our service using different devices or different browsers on the same device within a given month, the first access through each such device or browser is counted as a separate monthly unique visitor, except where adjusted based upon TrueCar.com log-in information. We calculate average monthly unique visitors as the sum of the monthly unique visitors in a given period, divided by the number of months in thatthe period. We view our average monthly unique visitors as a key indicator of the growth in our business and audience reach, the strength of our brand, and the visibility of car-buying services to the member base of our affinity group marketing partners.
The number of average monthly unique visitors increased 1.3%9.2% to approximately 7.77.8 million in the three months ended September 30, 2017March 31, 2020 from approximately 7.67.1 million in the same period of 2016.2019. The number of average monthly unique visitors increased 6.1%increase was primarily due to approximately 7.4 million in the nine months ended September 30, 2017 from 7.0 million in the same period of 2016. We attribute the growth in our average monthly unique visitors principally to television and digital marketing advertising campaigns and also to increased efforts from our affinity group marketing partners to drive greater member awareness and trafficimprovements to our platform.search engine optimization strategy.
Units
We define units as the number of automobiles purchased by our users from TrueCar Certified Dealers throughthat are matched to users of TrueCar.com, our TrueCar brandedTrueCar-branded mobile applications or the car-buying sites and mobile applications we maintain for our affinity group marketing partners. A unit is counted following such time asafter we have matched the sale to a TrueCar user with one of TrueCar Certified Dealers. We view units as a key indicator of the growth of our business, the effectiveness of our product and the size and geographic coverage of our network of TrueCar Certified Dealers.
On occasion, we issue credits to our TrueCar Certified Dealers with respect to units sold. However, we do not adjust our unit metric for these credits as we believe that in substantially allmost cases a vehicle has in fact been purchased through our platform given the high degree of accuracy of our sales matching process. Credits are most frequently issued to a dealer that claims that it had a pre-existing relationship with a purchaser of a vehicle, and we determine whether we will issue a credit based on a number of factors, including the facts and circumstances related to the dealer claim and the level of claim activity at the dealership. In most cases, we issue credits in order to maintain strong business relations with the dealer and not because we have made an erroneous sales match or billing error.

TheFor the three months ended March 31, 2020 as compared to March 31, 2019, the number of units increased 14.9%decreased 15.4% to 253,527197,002 units in the three months ended September 30, 2017March 31, 2020 from 220,633232,781 units in the three months ended September 30, 2016.March 31, 2019. The numberunit decrease is primarily due to COVID-19, which was declared by the World Health Organization as a pandemic on March 11, 2020. As a result, social distancing was encouraged with many government authorities issuing “shelter-in-place” or “stay-at-home” orders and the closing of non-essential businesses. Until these orders are lifted and unemployment rates decline, we expect total units increased 21.3% to 713,313continue to decline in the nine months ended September 30, 2017 from 588,146 in the same period of 2016. We attribute this growth in units to the effectiveness of our marketing activities, product enhancements, and the growing number and geographic coverage of TrueCar Certified Dealers in our network.foreseeable future.
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Monetization
We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue (dealer revenue and OEM incentives revenue) in a given period by the number of units in that period. Our monetization decreased 4.1%increased by 12.6% to $306$392 during the three months ended September 30, 2017March 31, 2020 from $319$348 for the same period of 2019, primarily due to a decline in 2016, primarilyunits as a result of a decreasethe COVID-19 pandemic prior to concessions provided to certain subscription arrangements that began in OEM incentive revenue. Our monetization decreased 1.9% to $316 during the nine months ended September 30, 2017 from $322 for the same period in 2016.April and increases within newer revenue streams. We expect our monetization to be affected in the future by changes in our pricing structure, the unit mix between new and used cars, with used cars providing higher monetization, and by the introduction of new products and services, including new OEM incentive programs. We expect that the effects of the COVID-19 pandemic could impact monetization in the second quarter of 2020 to the extent that the proportional rate concessions we provide to dealers differ from proportional changes in unit volumes during the affected time periods..

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 inat each individual location, or rooftop, regardless of the TrueCar Certified Dealer network at their locations, and includes both single-location proprietorships as well as large consolidated dealer groups.size of the dealership that owns the rooftop. The network comprisesis comprised of dealers with a range of unit sales volume per dealer, with dealers representing certain brands consistently achieving higher than average unit sales volume. We view our ability to increase our franchise dealer count, particularly dealers representing high volume brands, as an indicator of our market penetration and the likelihood of converting users of our platform into unit sales. Our TrueCar Certified Dealer network includes independent non-franchised dealers that primarily sell used cars and are not included in franchise dealer count.
Our franchise dealer count was 12,28611,356 at September 30, 2017, an increaseMarch 31, 2020, a decrease from 10,75912,675 at September 30, 2016, an increase from 11,151March 31, 2019, and 12,565 at December 31, 2016, an increase from 11,734 at March 31, 2017, and an increase from 12,204 at June 30, 2017. Note that our2019. The decline in franchise dealer count excludes Genesis franchises on our programwas primarily due to Hyundai’s transitionthe impact of Genesis tothe COVID-19 pandemic as 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. We intend to increase the number of dealers representing high volume brands in our dealer network, generally, and in key geographies, by investingare opting to improvesuspend their marketing spend until stronger consumer demand returns to the dealer experience and increasing dealer satisfaction.market.
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, or rooftop, individually, and includes both single-location proprietorships as well as large consolidated dealer groups.regardless of the size of the dealership that owns the rooftop. Our independent dealer count was 2,9384,193 at September 30, 2017,March 31, 2020, an increase from 2,5373,854 at September 30, 2016, an increaseMarch 31, 2019, and a decrease from 2,5974,395 at December 31, 2016, an increase from 2,716 at March 31, 2017, and an increase from 2,860 at June 30, 2017.2019.


23

Non-GAAP Financial Measures
Adjusted EBITDA and Non-GAAP net income (loss) are financial measures that are not calculated in accordance with generally accepted accounting principles in the United States, or GAAP. We define Adjusted EBITDA as net loss adjusted to exclude interest income, interest expense, depreciation and amortization, stock-based compensation, non-cash warrant expense,income (loss) from equity method investment, certain litigation costs, severance charges, lease exitcertain restructuring costs, certain transaction costs, changes in the fair value of contingent consideration, goodwill impairment and income taxes. We define Non-GAAP net income (loss) as net loss adjusted to exclude stock-based compensation, non-cash warrant expense,income (loss) from equity method investment, certain litigation costs, severance charges,certain restructuring costs, changes in the fair value of contingent consideration and lease exit costs.goodwill impairment. 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. In addition, our Adjusted EBITDA and Non-GAAP net income (loss) measures may not be comparable to similarly titled measures of other organizations as they may not calculate Adjusted EBITDA or Non-GAAP net income (loss) in the same manner as we calculate these measures. 
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 them 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, which we expect to continue to be significant;
•neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects the cash severance charges associated with a restructuring plan initiated and completed in the first quarter of 2019 to improve efficiency and reduce expenses;
•neither Adjusted EBITDA non Non-GAAP net income (loss) reflects the legal, accounting, consulting and other third-party fees and costs due to certain former executivesincurred by the Company in connection with the evaluation and former membersnegotiation of our productpotential merger and technology teams affected by a reorganization;acquisition transactions;
•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) considerconsiders the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation or warrant issuances;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 a comparative measure.
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.
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The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented:
 Three Months Ended
March 31,
 20202019
 (in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:  
Net loss$(10,669) (14,365) 
Non-GAAP adjustments: 
Interest income(533) (1,001) 
Depreciation and amortization6,271  6,415  
Stock-based compensation6,177  8,635  
Share of net loss of equity method investment382  —  
Certain litigation costs (1)(1,939) 928  
Restructuring charges (2)—  3,280  
Transaction costs (3)—  1,094  
Change in fair value of contingent consideration75  —  
Goodwill impairment (4)10,187  —  
(Benefit from) provision for income taxes(436) 101  
Adjusted EBITDA$9,515  $5,087  
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
        
 (in thousands) (in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:       
Net loss$(9,519) $(7,436) $(24,374) $(33,758)
Non-GAAP adjustments:       
Interest income(402) (91) (784) (286)
Interest expense654
 645
 1,955
 1,885
Depreciation and amortization5,765
 6,035
 17,517
 17,807
Stock-based compensation9,908
 6,241
 22,661
 18,033
Warrant expense (reduction)—
 13
 —
 13
Certain litigation costs (1)1,491
 193
 4,140
 615
Severance charges (2)—
 —
 —
 1,783
Lease exit costs (3)—
 —
 (133) 2,684
Provision for income taxes121
 191
 443
 497
Adjusted EBITDA$8,018
 $5,791
 $21,425
 $9,273


(1)The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers against TrueCar and consumer class action lawsuits. For the three months ended March 31, 2020, the excluded amount also includes a $2.0 million payment received from one of our insurance carriers in settlement of a lawsuit we brought in the fourth quarter of 2017 to recover insured legal fees. We believe the exclusion of these costs and recovery 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 that resolution.
(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.

(2)The excluded amounts represent charges associated with a restructuring plan undertaken in the first quarter of 2019 to improve efficiency and reduce expenses. We believe excluding the impact of these charges is consistent with our use of these non-GAAP measures as we do not believe they are a useful indicator of our ongoing operating results.
(3)The excluded amounts represent external legal, accounting, consulting and other third-party fees and costs we incurred in connection with the evaluation and negotiation of potential acquisition transactions. These expenses are included in general and administrative expenses in our condensed consolidated statements of comprehensive loss. We consider these fees and costs, which are associated with potential merger and acquisition transactions outside the normal course of our operations, to be unrelated to our underlying results of operations and believe that their exclusion provides investors with a more complete understanding of the factors and trends affecting our business operations.
(4)The excluded amount represents a non-cash impairment charge we recognized on our goodwill during the first quarter of 2020.

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The following table presents a reconciliation of net loss to Non-GAAP net income (loss) for each of the periods presented:
 Three Months Ended
March 31,
 20202019
 (in thousands)
Reconciliation of Net Loss to Non-GAAP net income (loss):  
Net loss$(10,669) $(14,365) 
Non-GAAP adjustments:
Stock-based compensation6,177  8,635  
Loss from equity method investment382  —  
Certain litigation costs (1)(1,939) 928  
Restructuring charges (2)—  3,280  
Transaction costs (3)—  1,094  
Change in the fair value of contingent consideration75  —  
Goodwill impairment (4)10,187  —  
Non-GAAP net income (loss) (5)$4,213  $(428) 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
        
 (in thousands) (in thousands)
Reconciliation of Net Loss to Non-GAAP Net Income (Loss):       
Net loss$(9,519) $(7,436) $(24,374) $(33,758)
Non-GAAP adjustments:       
Stock-based compensation9,908
 6,241
 22,661
 18,033
Warrant expense (reduction)—
 13
 —
 13
Certain litigation costs (1)1,491
 193
 4,140
 615
Severance charges (2)—
 —
 —
 1,783
Lease exit costs (3)—
 —
 (133) 2,684
Non-GAAP net income (loss) (4)$1,880
 $(989) $2,294
 $(10,630)

(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 September 30, 2017 and September 30, 2016.

(1)The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers against TrueCar and consumer class action lawsuits. For the three months ended March 31, 2020, the excluded amount also includes a $2.0 million payment received from one of our insurance carriers in settlement of a lawsuit we brought in the fourth quarter of 2017 to recover insured legal fees. We believe the exclusion of these costs and recovery 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 that resolution.
(2)The excluded amounts represent charges associated with a restructuring plan undertaken in the first quarter of 2019 to improve efficiency and reduce expenses. We believe excluding the impact of these charges is consistent with our use of these non-GAAP measures as we do not believe they are a useful indicator of our ongoing operating results.
(3)The excluded amounts represent external legal, accounting, consulting and other third-party fees and costs we incurred in connection with the evaluation and negotiation of potential acquisition transactions. These expenses are included in general and administrative expenses in our consolidated statements of comprehensive loss. We consider these fees and costs, which are associated with potential merger and acquisition transactions outside the normal course of our operations, to be unrelated to our underlying results of operations and believe that their exclusion provides investors with a more complete understanding of the factors and trends affecting our business operations.
(4)The excluded amount represents a non-cash impairment charge we recognized on our goodwill during the first quarter of 2020.
(5)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 March 31, 2020 and 2019.


26

Components of Operating Results 
Revenues
Our revenues are comprised of transaction revenues,dealer revenue, OEM incentives revenue, and forecasts, consulting and other revenue.
Transaction Revenue. Revenue consists We recognize transaction revenue earlier for certain of fees paid by dealers participating in our network of TrueCar Certified Dealers. Dealers pay us these fees either on a per vehicle basis for sales to our users or inAuto Buying Program and OEM incentives arrangements at the form of a subscription arrangement. Subscription arrangements fall into several types: flat rate subscriptions, subscriptions subject to downward adjustmenttime introductions and incentives are delivered based on a minimum number ofupon expected subsequent vehicle sales (“guaranteed sales”) and subscriptions based on introduction volume, including those subject to downward adjustment based on a minimum number of introductions (“guaranteed introductions”).
Under flat rate subscription arrangements, fees are charged at a monthly flat rate regardless of the number of sales made to users of our platform by the dealer. For flat rate subscription arrangements, we recognize the fees as revenue over the subscription period on a straight line basis which corresponds to the period that we are providing the dealer with access to our platform.
Under guaranteed sales subscription arrangements, fees are charged based on the number of guaranteed sales multiplied by a fixed amount per vehicle. To the extent that the actual number of vehicles sold by the dealers to users of our platform is less than the number of guaranteed sales, we provide a credit to the dealer. To the extent that the actual number of vehicles sold exceeds the number of guaranteed sales, we are not entitled to any additional fees.
Certain of our subscription arrangements are charged based on volume of introductions provided while other introduction based subscription arrangements operate under a guaranteed introduction model. Under guaranteed introductions subscription arrangements, fees are charged based on a periodically-updated formula that considers, among other things, the introductions anticipated to be provided to the dealer. To the extent that the number of actual introductions is less than the number of guaranteed introductions, we provide a credit to the dealer. To the extent that the actual number of introductions provided exceeds the number guaranteed, we are not entitled to any additional fees.
For guaranteed sales and guaranteed introductions subscription arrangements, we recognize revenue based on the lesser of (i) the actual number of sales generated or introductions delivered through our platform during the subscription period multiplied by the contracted price per sale/introduction or (ii) the guaranteed number of sales or introductions multiplied by the contracted price per sale/introduction.
In addition, we enter into arrangements with automobile manufacturers to promote the sale of their vehicles through the offering of additional consumer incentives to our consumers. These manufacturers pay us a per-vehicle fee for promotion of the incentive and we recognize the per-vehicle incentive fee when the vehicle sale has occurred between the consumerAuto Buying Program user and the dealer.
Forecasts, Consulting and Other Revenue. We derive this type of revenue primarily from the provision of forecasts and consulting services to the automotive and financial services industries through our ALG subsidiary. The forecasts and consulting services that ALG provides typically relate to the determination of the residual value of an automobile at given future points in time. These residual values are used to underwrite automotive loans and leases to determine payments by consumers. In addition, financial institutions use this information to measure exposure and risk across loan, lease and fleet portfolios. Our customers generally pay us for these services as information is delivered to them.
Costs and Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization). Cost of revenue includes expenses related to the fulfillment of our services, consisting primarily of data costs and licensing fees paid to third partythird-party service providers and expenses related to operating our website and mobile applications, including those associated with our data centers, hosting fees, data processing costs required to deliver introductions to our network of TrueCar Certified Dealers, employee costs related to certain dealer operations, sales matching, employee and consulting costs related to delivering data and consulting services to our customers, and facilities costs. Cost of revenue excludes depreciation and amortization of software costs and other hosting and data infrastructure equipment used to operate our platforms, which are included in the depreciation and amortization line item on our statementcondensed consolidated statements of comprehensive loss.
Sales and Marketing. Sales and marketing expenses consist primarily of: television, digital, and radio advertising; media production costs; affinity group partner marketing fees, which also includesinclude loan subvention costs where we pay certain affinity group marketing partners a portion of consumers’ borrowing costs for car loan products offered by these affinity group marketing partners, and common stock warrants issued to USAA; marketing sponsorship programs; and digital customer acquisition. In addition, sales and marketing expenses include employee relatedemployee-related expenses for sales, customer support, marketing and public relations employees, including salaries, bonuses, benefits, severance, and stock-based compensation

expenses; third-party contractor fees; and facilities costs. Marketing and advertising costs promote our services and are expensed as incurred, except for media production costs, which are expensed the first time the advertisement is aired.
Technology and Development. Technology and development expenses consist primarily of employee relatedemployee-related expenses including salaries, bonuses, benefits, severance, and stock-based compensation expenses,expenses; third-party contractor fees,fees; facilities costs; software costs; and costs software costs, as well asassociated with our product development, product management, research and analytics, and internal IT functions.
General and Administrative. General and administrative expenses consist primarily of employee relatedemployee-related expenses, including salaries, bonuses, benefits, severance, and stock-based compensation expenses for executive, finance, accounting, legal, and human resources.resources functions. General and administrative expenses also include legal, accounting, and other third-party professional service fees, bad debt, lease exit costs, and facilities costs.
Depreciation and Amortization. Depreciation consists primarily of depreciation expense recorded on property and equipment. Amortization expense consists primarily of amortization recorded on intangible assets, capitalized software costs and leasehold improvements.
Interest Income. Interest income consists of interest earned on our cash and cash equivalents.
Interest Expense. Interest expense consists primarily of interest on our built-to-suit lease financing obligations.  
(Benefit from) Provision for Income Taxes. We are subject to federal and state income taxes in the United States. We provided a full valuation allowance against our net deferred tax assets at September 30, 2017March 31, 2020 and December 31, 20162019, as it is more likely than not that some or all of our deferred tax assets will not be realized. As a result of the valuation allowance, our income tax benefit (or expense)expense is significantly less than the federal statutory rate of 34%21%.
For the three months ended March 31, 2020, the $0.4 million tax benefit arose in connection with the impairment of book goodwill, resulting in reduction of indefinite-lived deferred tax liabilities. Our provision for income taxes in thefor three and nine months ended September 30, 2017 and 2016March 31, 2019 primarily reflects a tax expense associated with the amortization of tax deductibletax-deductible goodwill that is not an available source of income to realize deferred tax assets.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 public health emergency. The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not impact our results of operations for the three months ended March 31, 2020. We will continue to the monitor possible future impact of the CARES Act.
27

Results of Operations
The following table sets forth our selected consolidated statements of operations data for each of the periods indicated.
 Three Months Ended
March 31,
 20202019
 (in thousands)
Consolidated Statements of Operations Data:  
Revenues$83,526  $85,582  
Costs and operating expenses:  
Cost of revenue (exclusive of depreciation and amortization presented separately below)7,221  8,936  
Sales and marketing46,575  54,738  
Technology and development12,216  15,654  
General and administrative12,312  15,104  
Depreciation and amortization6,271  6,415  
Goodwill impairment10,187  —  
Total costs and operating expenses94,782  100,847  
Loss from operations(11,256) (15,265) 
Interest income533  1,001  
Loss from equity method investment(382) —  
Loss before income taxes(11,105) (14,264) 
(Benefit from) provision for income taxes(436) 101  
Net loss$(10,669) $(14,365) 
Other Non-GAAP Financial Information:  
Adjusted EBITDA$9,515  $5,087  
Non-GAAP net income (loss)$4,213  $(428) 
28
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
        
 (in thousands) (in thousands)
Consolidated Statements of Operations Data:       
Revenues$82,440
 $75,139
 $240,016
 $203,426
Costs and operating expenses:       
Cost of revenue (exclusive of depreciation and amortization presented separately below)7,088
 6,320
 20,610
 18,910
Sales and marketing48,383
 42,557
 137,498
 112,797
Technology and development15,357
 13,153
 43,117
 40,315
General and administrative14,993
 13,765
 44,034
 45,259
Depreciation and amortization5,765
 6,035
 17,517
 17,807
Total costs and operating expenses91,586
 81,830
 262,776
 235,088
Loss from operations(9,146) (6,691) (22,760) (31,662)
Interest income402
 91
 784
 286
Interest expense(654) (645) (1,955) (1,885)
Loss before provision for income taxes(9,398) (7,245) (23,931) (33,261)
Provision for income taxes121
 191
 443
 497
Net loss$(9,519) $(7,436) $(24,374) $(33,758)
Other Non-GAAP Financial Information: 
  
  
  
Adjusted EBITDA$8,018
 $5,791
 $21,425
 $9,273
Non-GAAP net income (loss)$1,880
 $(989) $2,294
 $(10,630)


Comparison of the Three and Nine Months Ended September 30, 2017March 31, 2020 and 20162019
Revenues
 Three Months Ended
March 31,
 
 20202019
 (in thousands)
Dealer revenue$73,798  $76,814  
OEM incentives revenue3,523  4,201  
Forecasts, consulting and other revenue6,205  4,567  
Total revenues$83,526  $85,582  
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (in thousands)
Transaction revenue$77,526
 $70,306
 $225,161
 $189,556
Forecasts, consulting and other revenue4,914
 4,833
 14,855
 13,870
Revenues$82,440
 $75,139
 $240,016
 $203,426
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. The increasedecrease in our revenues of $7.3$2.1 million, or 9.7%2.4%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016 primarilyMarch 31, 2019 reflected thea decrease in our dealer revenue and OEM incentives revenue, offset by an increase in our transactionforecast, consulting and other revenue. TransactionDealer revenue, OEM incentives revenue, and forecasts, consulting and other revenue comprised 94.0%88.4%, 4.2%, and 6.0%7.4%, respectively, of revenues for the three months ended September 30, 2017March 31, 2020 as compared to 93.6%89.8%, 4.9%, and 6.4%5.3%, respectively, for the same period in 2016.2019. The increasedecrease of $3.0 million in transactiondealer revenue for the three months ended September 30, 2017 primarilyMarch 31, 2020 reflected a 14.9% increase in units partiallydecrease to our core dealer revenue of $4.7 million primarily due to the impact of the recent outbreak of COVID-19, offset by a 4.1%increases within newer revenue streams of $1.7 million including our Trade product. The decrease of $0.7 million in monetization. Forecasts, consulting and otherOEM incentives revenue was primarily due to softness in our existing clients for the three months ended September 30, 2017 remained materially consistent with the three months ended September 30, 2016. We anticipate that our revenue will continue to grow as a result of our investments in dealer relationships, in consumer messaging and in our technology platform, which we believe will enable our business to continue to scale.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. The increase in our revenues of $36.6 million or 18.0% for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 primarily reflected the increase in our transaction revenue. Transaction revenue and forecasts, consulting and other revenue comprised 93.8% and 6.2%, respectively, of revenues for the nine months ended September 30, 2017 as compared to 93.2% and 6.8%, respectively, for the same period in 2016. The increase in transaction revenue for the nine months ended September 30, 2017 primarily reflected a 21.3% increase in units partiallyMarch 31, 2020. These decreases were offset by a 1.9% decrease in monetization. Thean increase of $1.6 million in forecasts, consulting and other revenue primarily driven by fees earned related to the USAA transition services agreement for the ninethree months ended September 30, 2017 as comparedMarch 31, 2020. We expect revenues to the nine months ended September 30, 2016 of $1.0 million or 7.1% was primarily due to revenue from the delivery of a large projectbe impacted by COVID-19 and will follow similar declining trends in our ALG businessprojected automobile sales in the first quarter of 2017. We docurrent year. Additionally, any further dealer rate concessions beyond April and May, for subscription arrangements where pay-per-sale or performance-based billing arrangements are not expect similar sized projects to reoccur for the remainder of the year.currently available, may further suppress our revenue growth.
Costs and Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization)
 Three Months Ended
March 31,
 
 20202019
 (dollars in thousands)
Cost of revenue (exclusive of depreciation and amortization)$7,221  $8,936  
Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues8.6 %10.4 %
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Cost of revenue (exclusive of depreciation and amortization)$7,088
 $6,320
 $20,610
 $18,910
Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues8.6% 8.4% 8.6% 9.3%
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. Cost of revenue increased $0.8decreased $1.7 million, or 12.2%19.2%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016March 31, 2019 primarily due to costs for an automotive trade-in pilot program with a large vehicle wholesaler that commenced$0.9 million decrease in the second quarter of 2017. We expect to incur these costs during the pilot program during which we do not anticipate material revenue.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. Cost of revenue increased $1.7 million or 9.0% for the nine months ended September 30, 2017 as compared to the nine months ended

September 30, 2016salaries and employee-related expenses primarily due to decreased headcount and employee bonuses, a $0.3 million decrease in hosting fees, a $0.2 million decrease in other marketing, a $0.1 million decrease in data and licensing costs, for an automotive trade-in pilot program withand a large vehicle wholesaler that commenced$0.1 million decrease in the second quarter of 2017.stock-based compensation.
29

Sales and Marketing Expenses
 Three Months Ended
March 31,
 
 20202019
 (dollars in thousands)
Sales and marketing expenses$46,575  $54,738  
Sales and marketing expenses as a percentage of revenues55.8 %64.0 %
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Sales and marketing expenses$48,383
 $42,557
 $137,498
 $112,797
Sales and marketing expenses as a percentage of revenues58.7% 56.6% 57.3% 55.4%
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. Sales and marketing expenses increased $5.8decreased $8.2 million, or 13.7%14.9%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016.March 31, 2019. The increasedecrease primarily reflected a $3.3$4.0 million increasedecrease in revenue share paid to affinity marketing partners, a $2.7$2.3 million increasedecrease in salaries and employee relatedemployee-related expenses primarily due to increaseddecreased headcount and employee bonuses, a $1.7$2.3 million decrease in branded media spend, a $1.2 million decrease in stock-based compensation, and a $0.8 million decrease in travel-related expenses, offset by a $1.2 million increase in stock-based compensation. These increases were partially offset bycreative production costs associated with our company rebrand and a decrease$1.2 million increase in other professional services. For the remainder of $2.2 million in advertising costs. We2020, we expect sales and marketing expensesexpense to continue to increase in dollar amount due to increased headcount to better serve dealersdecline year over year as we monitor the impacts of COVID-19 and OEMs, as well as increased media production costs, television and radio advertising, digital customer acquisition costs, affinity group marketing partner fees,adjust our sales and marketing programs as we growspend to efficiently support our business.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. Sales and marketing expenses increased $24.7 million or 21.9% for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase primarily reflected a $11.2 million increase in salaries and employee related expenses primarily due to increased headcount, a $6.5 million increase in revenue share paid to affinity marketing partners, a $3.1 million increase in stock-based compensation, a $2.3 million increase in conference and travel related expenses, a $1.6 million increase in advertising costs, and a $0.5 million increase in facilities costs. These increases were partially offset by a decrease of $0.9 million in professional fees for outsourced services.
Technology and Development Expenses
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  Three Months Ended
March 31,
2017 2016 2017 2016
        20202019
(dollars in thousands) (dollars in thousands)
Technology and development expenses$15,357
 $13,153
 $43,117
 $40,315
Technology and development expenses$12,216  $15,654  
Technology and development expenses as a percentage of revenues18.6% 17.5% 18.0% 19.8%Technology and development expenses as a percentage of revenues14.6 %18.3 %
Capitalized software costs$4,302
 $3,020
 $11,577
 $9,361
Capitalized software costs$3,121  $3,097  
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. Technology and development expenses increased $2.2decreased $3.4 million, or 16.8%22.0%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016.March 31, 2019. The increasedecrease was primarily due to a decrease in employee-related expenses of $2.7 million primarily due to decreased headcount and employee bonuses, and a decrease in stock-based compensation of $0.7 million. For the remainder of 2020, we expect technology and development expenses to decline year over year as we monitor the impacts of COVID-19 and adjust our spending to efficiently support our business.
Capitalized software costs remained flat, primarily due to an increase of $0.1 million in stock-based compensation of $1.4 million and a $0.3 million increase in salaries and employee related expenses primarily due to increased headcount.
Capitalizedthird-party software costs increased $1.3offset by a $0.1 million primarily due to an increase decrease in the amount of third partyinternal capitalized software costs capitalized related to internal use software.costs.
We expect our technology and development expenses to increase in dollar amount as we continue to increase our developer headcount to upgrade and enhance our technology infrastructure, invest in our products, expand the functionality of our platform and provide new product offerings. We also expect technology and development expenses to continue to be affected by variations in the amount of capitalized internally developed software.
Nine months ended September
30 2017 compared to nine months ended September 30, 2016. Technology and development expenses increased $2.8 million or 7.0% for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase was primarily due to an increase in stock-based compensation of $2.5 million,

an increase in hosting costs of $0.7 million, and an increase in facilities costs of $0.6 million partially offset by a decrease in severance costs of $1.6 million primarily related to a reorganization in our product and technology teams in the second quarter of 2016.

Capitalized software costs increased $2.2 million primarily due to an increase in the amount of third party software costs and salaries capitalized for the development of internal use software.
General and Administrative Expenses
 Three Months Ended
March 31,
 
 20202019
 (dollars in thousands)
General and administrative expenses$12,312  $15,104  
General and administrative expenses as a percentage of revenues14.7 %17.6 %
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
General and administrative expenses$14,993
 $13,765
 $44,034
 $45,259
General and administrative expenses as a percentage of revenues18.2% 18.3% 18.3% 22.2%
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. General and administrative expenses increased $1.2decreased $2.8 million, or 8.9%18.5%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016.March 31, 2019. The increasedecrease was primarily reflecteddue to a $1.2$3.4 million increasedecrease in legal fees andprimarily as a result of a $2.0 million payment received from one of our insurance carriers in settlement of a lawsuit we brought during the fourth quarter of 2017 to recover insured legal fees, a $0.5 million increasedecrease in stock-based compensation partially offset byand a $0.6 million decrease in salariesother professional fees, offset by a $1.9 million increase in bad debt expense driven by an increase in our allowance for doubtful accounts due in part to the impact of COVID-19, and employee related expenses primarily due to decreased bonus expense.a $0.3 million increase in employee-related expenses. Due to ongoing litigation matters, we expect general and administrative expenses to vary depending on the timing and course of these litigation proceedings and related legal fees.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. General For the remainder of 2020, we expect general and administrative expenses decreased $1.2 million or 2.7% forto decline year over year as we monitor the nine months ended September 30, 2017 as comparedimpacts of COVID-19 and control costs and expenses to the nine months ended September 30, 2016. The decrease primarily reflected a $2.7 million lease exit charge in the second quarter of 2016, a $1.0 million decrease in stock-based compensation primarily driven by a reduction in compensation expense related to employees who terminated in 2016, and a $0.7 million decrease in salaries and employee related expenses primarily due to decreased bonus expense. These decrease in expenses were partially offset by a $3.2 million increase in legal fees toefficiently support our litigation efforts.business.
Depreciation and Amortization Expenses
 Three Months Ended
March 31,
 
 20202019
 (in thousands)
Depreciation and amortization expenses$6,271  $6,415  
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Depreciation and amortization expenses$5,765
 $6,035
 $17,517
 $17,807
Three months ended September 30, 2017March 31, 2020 compared to three months ended September 30, 2016March 31, 2019. Depreciation and amortization expenses decreased $0.3$0.1 million, or 4.5%2.2%, for the three months ended September 30, 2017March 31, 2020 as compared to the three months ended September 30, 2016.March 31, 2019. We expect our depreciation and amortization expenses to continue to be affected by the amount of capitalized internally developed software costs, property and equipment, and the timing of placing projects in service.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. Depreciation and amortization expenses decreased $0.3 million or 1.6% for
Goodwill Impairment
For the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Interest Expense
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Interest expense$654
 $645
 $1,955
 $1,885
Three months ended September 30, 2017 compared to three months ended September 30, 2016. Interest expenseMarch 31, 2020, we recognized a non-cash goodwill impairment charge in the amount of $10.2 million, which represents the amount that the carrying value of our single reporting unit was $0.7 millionin excess of its estimated fair value at March 31, 2020. For further details, see Note 4 to our condensed consolidated financial statements included herein.
(Benefit from) Provision for Income Taxes
 Three Months Ended
March 31,
 
 20202019
 (in thousands)
(Benefit from) provision for income taxes$(436) $101  

Our benefit from income taxes for the three months ended September 30, 2017, and $0.6 million forMarch 31, 2020 arose in connection with the three months ended September 30, 2016, and primarily consistsimpairment of interest expense incurred on our lease financing obligation for our Santa Monica leased office space and our San Francisco leased office space. We expect to incur a consistent levelgoodwill, resulting in reduction of interest expense on our lease financing obligation in future periods.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016. Interest expense was $2.0 million for the nine months ended September 30, 2017, $1.9 million for the nine months ended September 30, 2016, and primarily consists of interest expense incurred on our lease financing obligation for our Santa Monica leased office space and our San Francisco leased office space.
Provision for Income Taxes
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Provision for income taxes$121
 $191
 $443
 $497
indefinite-lived deferred tax liabilities. Our provision for income taxes for the three and nine months ended September 30, 2017 and 2016March 31, 2019 primarily reflectedreflects a tax expense due toassociated with the amortization of tax deductible goodwill that is not an available source of income to realize our deferred tax assets.

31

Liquidity and Capital Resources
At September 30, 2017,March 31, 2020, our principal sources of liquidity were cash and cash equivalents totaling $196.4$182.9 million.
We have incurred cumulative losses of $342.6$442.7 million from our operations through September 30, 2017,March 31, 2020, and expect to incur additional losses in the future. We are continuously monitoring our liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 pandemic. We believe that our existing sources of liquidity will be sufficient to fund our operations for at least the next 12 months. However, our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, and the timing and extent of our spending to support our technology and development efforts.efforts, costs related to potential acquisitions to further expand our business and product offerings, collection of accounts receivable, macroeconomic activity, and the length and severity of business disruptions associated with the COVID-19 pandemic. To the extent that existing cash and cash equivalents, and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.
Credit Facility
On February 18, 2015, we amended ourWe are party to a credit facility to providewith Silicon Valley Bank that provides for advances of up to $35.0 million. This credit facility provides a $10.0 million subfacility for the issuance of letters of credit and contains an increase option permitting us, subject to the lender'slender’s consent, to increase the revolving credit facility by up to $15.0 million, to an aggregate maximum of $50.0 million. The credit facility has a three-year term and matures on February 18, 2018.2021. No amounts were outstanding at September 30, 2017.March 31, 2020. The amount available under the amended credit facility at September 30, 2017March 31, 2020 was $30.7$31.9 million, reduced for the letters of credit issued and outstanding under the subfacility of $4.3$3.1 million. See Note 56 of our condensed consolidated financial statements herein for more information about our amended credit facility.

Cash Flows
The following table summarizes our cash flows:
Nine Months Ended September 30,
2017 2016 Three Months Ended March 31,
    20202019
Consolidated Cash Flow Data:(in thousands)Consolidated Cash Flow Data:(in thousands)
Net cash provided by (used in) operating activities$16,913
 $(2,602)
Net cash provided by operating activitiesNet cash provided by operating activities$5,550  $7,581  
Net cash used in investing activities(15,194) (12,872)Net cash used in investing activities(3,505) (26,079) 
Net cash provided by financing activities86,962
 6,076
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(724) 2,268  
Net increase (decrease) in cash and cash equivalents$88,681
 $(9,398)Net increase (decrease) in cash and cash equivalents$1,321  $(16,230) 
Operating Activities
Our net loss and cash flows provided by or used in operating activities are significantly influenced by our investments in headcount and infrastructure to support our growth, marketing, advertising, and sponsorship expenses. Our net loss has been significantly greater than cash provided by or used in operating activities due to the inclusion of non-cash expenses and charges.
Cash provided by operating activities for the ninethree months ended September 30, 2017March 31, 2020 was $16.9$5.6 million. This was primarily due to our net loss of $24.4$10.7 million, which, adjusted for non-cash items, including stock-based compensation expensegoodwill impairment of $22.7$10.2 million, and depreciation and amortization expense of $17.5$6.3 million, resultedstock-based compensation expense of $6.2 million, amortization of lease right-of-use assets of $1.5 million, loss from equity method investment of $0.4 million, deferred income taxes of $0.4 million, increase in $17.7fair value of contingent consideration liability of $0.1 million in cash provided by operations. Net cash provided by operations also reflectedand bad debt expense of $2.2 million, and a decrease of $0.8$10.2 million related to changes in operating assets and liabilities.
The $0.8$10.2 million decrease related to changes in operating assets and liabilities primarily reflected an increase in accounts receivable of $3.8 million primarily related to increased revenues, a decrease in accrued employee expenses of $2.8 million primarily due to a decrease in accrued bonus, a decrease in accrued expenses and other current liabilities of $1.1$6.5 million and a decrease in accounts payable of $3.7 million, both primarily duerelated to decreased accrued marketing fees,spend and an increase in prepaid expenses of $1.1 million primarily due to an increase in prepaid insurance, software, and other costs. These uses of cash were partially offset by an increase in accounts payable of $7.4 million primarily due to an increase in marketing fees payable to our affinity group partners and advertisers, and an increasea decrease in other liabilitiesaccrued employee expenses of $0.8$3.2 million primarily due to increased deferred rent.a decrease in accrued bonus, and a decrease in operating lease liabilities of $2.0 million. These uses of cash were partially offset by a decrease in accounts receivable of $2.5 million, a decrease in other current assets of $2.0 million mainly due to a decrease in contract assets, and a decrease in prepaid expenses of $0.9 million primarily related to insurance and marketing fees.

32

Cash used inprovided by operating activities for the ninethree months ended September 30, 2016March 31, 2019 was $2.6$7.6 million. This was primarily due to our net loss of $33.8$14.4 million, which, adjusted for non-cash items, including stock-based compensation expense of $8.6 million, depreciation and amortization expense of $17.7$6.4 million, amortization of lease right-of-use assets of $1.5 million, bad debt expense of $0.4 million, deferred income taxes of $0.1 million and stock-based compensation expensean increase in fair value contingent consideration of $18.0$0.1 million, resulted in $4.0 million in cash provided by operations. Net cash used in operations also reflected a decreaseand an increase of $6.6$4.9 million related to changes in operating assets and liabilities.
The $4.9 million increase related to changes in operating assets and liabilities which primarily reflected a decrease of $5.1 million in accounts payable primarily due to decreased affinity group marketing fees, an increase of $2.9 million in accounts receivable of $9.0 million primarily duerelated to the timing of billings to and payments from OEMs and an increase in revenue,accrued expenses and an increaseother current liabilities of $1.2$5.5 million in prepaid expenses primarily duerelated to an increase in prepaid insuranceincreased accrued marketing fees and marketing fees.outsourced services. These usessources of cash were partially offset by a $1.5decrease in accounts payable of $5.6 million increase inprimarily related to decreased accrued expenses and other liabilities primarily due to increased accrued legalmarketing spend and marketing fees payable to our affinity group partners and a $1.4 millionadvertisers, an increase in other liabilitiescurrent assets of $3.5 million primarily duerelated to an increase in insurance-related receivables, and a decrease in operating lease exit costs recorded in the second quarterliabilities of 2016.$1.4 million.
Investing Activities
Our investing activities consist primarily of capital expenditures for capitalized software development costs and property and equipment.
Cash used in investing activities of $15.2$3.5 million for the ninethree months ended September 30, 2017March 31, 2020 resulted primarily from $10.1$3.1 million of investments in software $3.2 million of investments in furniture, leasehold, and facility improvements, and $1.9$0.4 million of investments in computer hardware.
Cash used in investing activities of $12.9$26.1 million for the ninethree months ended September 30, 2016March 31, 2019 resulted from $9.1a $23.2 million equity method investment as well as $2.7 million of investments in software $2.8 million of investments in furniture, leasehold, and facility improvements, and $1.0$0.2 million of investments in computer hardware.

Financing Activities
Cash used in financing activities of $0.7 million for the three months ended March 31, 2020 was primarily due to taxes paid for the net share settlement of certain equity awards.
Cash provided by financing activities of $87.0$2.3 million for the ninethree months ended September 30, 2017March 31, 2019 reflects $69.6$2.8 million of proceeds from the exercise of stock options net ofreduced by taxes paid for the net share settlement of certain equity awards and $17.4 million of proceeds from our public offering of common stock that closed in May 2017, net of underwriting discounts and commissions and offering costs.$0.5 million.
Cash provided by financing activities of $6.1 million for the nine months ended September 30, 2016 primarily reflects $4.7 million of proceeds from the exercise of stock options, net of taxes paid for the net share settlement of certain equity awards, and a $1.5 million tenant improvement reimbursement related to our Santa Monica capitalized facility lease, partially offset by $0.1 million paid for the repurchase of common stock option awards.
Contractual Obligations and Known Future Cash Requirements
In April 2017, we signed a memorandum of understanding for a six-month automotive trade-in pilot program with a large vehicle wholesaler. In October 2017, the pilot was extended through January 2018. The pilot program is expected        There were no significant changes to enable consumers to use our TrueCar branded website or mobile application to view real-time vehicle valuation information based on specific vehicle characteristicscontractual obligations and receive offersknown future cash requirements for the vehicle from participating dealers in the TrueCar network. We anticipate incurring additional cash costs of approximately $1.0 million per quarter during the pilot program.three months ended March 31, 2020.

Off-Balance Sheet Arrangements
We do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, as part of our ongoing business. Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

33

Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts and sales allowances, stock-based compensation, income taxes, goodwill and other intangible assets, internal use capitalized software development costs, and contingencies and litigation. We base our estimates on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates and assumptions.
There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K, filed with the SEC on February 28, 2020.
Goodwill
We assess recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable, such as a decline in stock price and market capitalization. Throughout the second half of 2019 and through the first quarter of 2020, our stock price experienced high volatility, causing a decline in our enterprise market capitalization. During the first quarter of 2020, as a result of the recent global economic disruption and uncertainty due to the COVID-19 pandemic, along with our announcement that we had entered into a short-term agreement to extend our partnership with USAA Federal Savings Bank to continue to power the USAA Car Buying Service through September 30, 2020, we concluded a triggering event had occurred. In light of these two factors, we performed an interim impairment test as of March 1, 2017.31, 2020, in which we estimated the fair value of our single reporting unit by utilizing an income approach which uses a discounted cash flow (“DCF”) analysis. We have previously used an implied market value approach. Given the current high degree of market volatility and lack of reliable market data as of March 31, 2020, we determined that a DCF model (income approach) provided the best approximation of fair value. Determining fair value requires the exercise of significant assumptions and judgments, including the amount and timing of expected future cash flows, long-term growth rates and the discount rate. Based on the results of the interim impairment test, we concluded that the carrying value of our reporting unit is greater than the fair value and, accordingly, recognized a non-cash impairment charge of $10.2 million for the three months ended March 31, 2020. If the pandemic’s economic impact is more severe, or if the economic recovery takes longer to materialize or does not materialize as strongly as anticipated, this could result in further goodwill impairment charges.
Recent Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included herein.
Item 3.   Quantitative and Qualitative Disclosures aboutAbout Market Risk
Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed todo not believe that there is any material market risks related to changes in interest rates.risk exposure that would require disclosure under this item.
Interest Rate Risk
We had cash and cash equivalents of $196.4$182.9 million at September 30, 2017,March 31, 2020, which consistsconsist entirely of bank deposits and short-term money market funds. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
To the extent we borrow funds under our credit facility, we would be subject to fluctuations in interest rates. See Note 56 to the condensed consolidated financial statements herein. As of September 30, 2017,March 31, 2020, we had no borrowings under the credit facility.
We believe that we do not have a material exposure to changes in the fair value as a result of changes in interest rates.

34

Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.
Foreign Currency Exchange Risk
Historically, as our operations and sales have been primarily in the United States, we have not faced any significant foreign currency risk. If we plan for international expansion, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk. 

Item 4.   Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chiefprincipal executive officer and chiefprincipal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017.March 31, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (or the(the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2017,March 31, 2020, our chiefprincipal executive officer and chiefprincipal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. 
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
Refer to the disclosure under the heading “Legal Proceedings” in Note 67 “Commitments and Contingencies” to our condensed consolidated financial statements included in this report for legal proceedings. From time to time, we may be involved in various legal proceedings arising from the normal course of our business activities.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this report, including our consolidated financial statements and related notes, and Part I, Item 2, “Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations,” before making an investment in our common stock. If any of the following risks is realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose part or all of your investment. Additional risks and uncertainties not presently known to us or not believed by us to be material could also impact us.
Risks Related to the Coronavirus Pandemic
The ongoing coronavirus pandemic and the responses to it by governments, organizations and individuals have disrupted all facets of daily life around the globe in unprecedented ways that have materially negatively affected our business. We cannot predict how long or how severely our business will be disrupted by the pandemic or by its lingering effects.
In late 2019, a novel strain of the coronavirus surfaced and quickly began to spread across the globe. On March 11, 2020, the World Health Organization declared the outbreak to be a pandemic. Beginning in January 2020 and accelerating throughout the first quarter, governments around the world began taking extraordinary and unprecedented measures to slow the spread of the virus. These measures have included, among other things, orders requiring so-called “non-essential” businesses to close and individuals to “shelter at home.” Even where not required by applicable governmental authorities, individuals and organizations have been voluntarily canceling and scaling down social and commercial activities to protect themselves and their members from infection.
These responses to the pandemic have caused unparalleled damage to the global economy and have negatively affected, and continue to negatively affect, our business, growth, financial condition, results of operations and cash flows in a number of ways. Most directly, a number of states and local governments have taken steps that have prohibited or curtailed the sale of automobiles during the pandemic. In some jurisdictions, shelter-at-home orders, or other orders related to the pandemic, impede car sales. On top of these legal restrictions, the economic uncertainty and the rapidly increasing number of consumers who are unemployed, as well as the decrease in consumers’ willingness to make discretionary trips outside of the home, have decreased the demand for cars.
Cumulatively, these factors have resulted in a drastic reduction in the number of cars bought by our users from our dealers. In the first quarter of 2020, for example, our units declined by 15% over the same period in 2019. This has had a number of negative effects. First, the reduction in units directly translates into lowered revenue from our pay-per-sale dealers. Second, we have taken costly steps to support our subscription dealers, including by allowing some of them to switch to pay-per-sale dealers (which generally reduces our fees from the prenegotiated subscription rate during pandemic conditions), and halving the subscription rates on our April and May invoices for other subscription dealers. Third, the nationwide decline in car sales has caused many dealers to suspend or cancel their participation in our network. Through March 31, 2020, we processed approximately 1,100 suspensions or cancellations that we believe to be primarily attributable to the pandemic. Finally, the combination of the pandemic-related deterioration in our dealers’ financial condition and our efforts to support them in these difficult times has caused a material reduction in our ability to collect accounts receivable in a timely manner that could persist for the duration of the pandemic.
Although we have taken steps to protect the viability of our business in these difficult times, including by reducing employee-related expenses, canceling much of our discretionary marketing spending and launching a “buy from home” program to promote our dealers who adhere to certain criteria, we cannot assure you that these steps, or other steps that we take in the future, will be sufficient to preserve our business if the pandemic and aggressive governmental measures to combat its spread continue.
The coronavirus pandemic could result in long-lasting changes to consumer and dealer behavior and the macroeconomic environment that persist even after its conclusion, and any of those changes could harm our business.
Considerable uncertainty surrounds the governmental, economic and societal conditions that will prevail when the coronavirus pandemic abates. We cannot predict or prepare for every eventuality, and our business could suffer if consumer or dealer behavior or the macroeconomic environment do not return to pre-pandemic conditions. For example, if the economy
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remains weak and consumer demand for cars remains low after the pandemic, our revenues and results of operations would remain negatively affected. Further, if dealers continue to demand the lower third-party marketing expenses that currently prevail during the pandemic, we could have difficulty raising our revenue per dealer to earlier levels and our revenues and results of operations would similarly be negatively affected. Likewise, if dealers who suspended or canceled their participation in our network during the pandemic decline to return to the network afterward, our business would be negatively affected.
Finally, we may be unable to offer new products and services, or retool or otherwise update our existing products and services, in a way that responds to consumers’ and dealers’ changing preferences and expectations. For example, if consumers become accustomed to contactless purchases and we are not able to successfully support and expand our “buy from home” program or similar programs, we may not be able to return our units and revenues to unaffected levels and our business would be harmed.
The loss of a critical mass of dealers, either nationally or in any given geographic area, could deprive us of the data we need to populate our TrueCar Curve and used-car inventory count, either of which could negatively affect our business.
Financial hardship arising from the coronavirus pandemic has resulted in many of our dealers canceling or suspending their participation in our network. As the pandemic continues to cause disruption, additional dealers may cancel or suspend their participation in our network. As discussed in more detail under the risk factor below: “If we suffer a significant interruption in our ability to gain access to third-party data, we may be unable to maintain key aspects of our user experience, including the TrueCar Curve, and our business and operating results would suffer,” we depend on data provided by our dealers to populate our TrueCar Curve, among other aspects of our user experience. If a critical mass of dealers nationally, or in any given geographic area, cancels or suspends their participation in our network, we may be unable to provide the TrueCar Curve, or other aspects of our user experience, to users in the affected areas, or the quality of the information or user experience could deteriorate in those areas.
Additionally, because the majority of our organic traffic from search engines originates from used-car-related search terms, and our ranking for those terms is heavily influenced by inventory levels, the loss of a critical mass of dealers in any given geographic area could also cause a loss of used-car inventory that diminishes our organic search traffic and therefore our monthly unique visitors. For example, a decrease in relevant inventory would result in a decrease in pages that are available for search-engine indexation and a greater probability that a user leaves our pages early, which is generally a negative signal for ranking algorithms. For more information on the reliance of our business on search-engine results, refer to the risk factor below: “We rely, in part, on Internet search engines to drive traffic to our website, and if we fail to appear prominently in the search results, our traffic would decline and our business would be adversely affected.”
While we do not believe that we have to date lost a critical mass of dealers in any geographic area as a result of the coronavirus pandemic, dealer cancellations and suspensions to date have been disproportionately concentrated in California and the Northeastern United States. If we do lose a critical mass of dealers nationally or in any geographic area, our business, reputation and results of operations would be negatively affected.
We have transitioned all of our employees to work-from-home status for the duration of the coronavirus pandemic, which has made it more difficult to provide services to our dealers and could result in decreased employee productivity and increased cybersecurity risk.
In mid-March 2020, we transitioned all of our employees to mandatory work-from-home status to reduce the risk of transmission of the coronavirus in accordance with the recommendations of relevant governmental authorities. Although the majority of our employees are capable of performing their duties remotely, the nature of certain of our employees’ roles prevents or hinders them from doing so. In particular, many members of our dealer sales and service team have had their ability to perform their responsibilities sharply curtailed by the remote-working requirement, which may negatively affect dealers’ experience on our platform. It is too early to assess the impact of this development, but if we are not able to mitigate the resulting reduction in productivity, it is likely to negatively affect our results of operations.
Further, our new remote-working policy could pose other, unknown risks. For example, even though most of our employees are capable of working from home, we cannot assure you that overall productivity will not suffer as a result of the new arrangement, and remote working carries additional potential cybersecurity risks. These risks include the heightened potential for hacking and other security beaches of telecommunications services in light of the increased use of those services, including services provided by Zoom Video Communications, Inc., which is one of our video conferencing providers. Further, greater reliance on remote communication methods and the inability to communicate in person with our information technology professionals could increase the incidence, or likelihood of success, of phishing attacks and other related cybersecurity incidents. If these or any other risks associated with remote working come to pass, our business would be negatively affected.



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The coronavirus pandemic has disrupted our marketing strategy in a number of ways, and if we are unable to mitigate the effects of this disruption, our business would be harmed.

As discussed in greater detail earlier in this Risk Factors section, many states, including California, have issued orders requiring the closure of non-essential businesses, and we have required all of our employees to work remotely. As a result, we have not been able to film video assets for our advertising materials and expect to continue to be unable to do so for the duration of the coronavirus pandemic, which could reduce the quality of our future marketing campaigns. Moreover, our inability to predict the extent or duration of the pandemic or what the world will look like upon its conclusion heightens the difficulty inherent in planning long-term marketing campaigns

Similarly, we cannot predict whether, and if so, how, the ideal mix of marketing channels will change during and after the pandemic. For example, if we shift too much television spend toward social-media spend, our brand awareness and organic traffic could be negatively affected. We have also experienced increased consumer sensitivity to our marketing, including criticism that we should not encourage or facilitate the purchase of cars during the pandemic. If our marketing does not strike the right tone and consumers perceive it as insensitive or opportunistic, our brand could likewise suffer.

In light of the many uncertainties during the pandemic, and given the need for rapid flexibility in our business and its product and services offerings, we may be unable to devote as much time as we have in the past to researching and testing our marketing campaigns. This factor, and any of the others described above, could make our marketing costlier and less effective, which could harm our brand and negatively affect our business and our cash flows and results of operations.
The coronavirus pandemic could result in the adoption of laws or regulations that adversely affect U.S. businesses in general or our business in particular.
The global economic and societal disruption caused by the coronavirus pandemic have prompted sweeping governmental responses worldwide. For example, on March 27, 2020, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act, also referred to as the CARES Act. This legislation, which provided for over $2 trillion of emergency spending, was unprecedented in size and the rapidity with which it passed through the legislative process. Shortly thereafter, the Federal Reserve announced an emergency lending package of approximately $2.3 trillion. Similarly, foreign nations and the states have been swiftly passing emergency measures, through executive orders, legislation and court decisions. Further, as the damage caused by the pandemic unfolds, governmental entities, including Congress, continue to debate taking further legislative, regulatory and other actions.
Although we did not materially benefit from the provisions of the CARES Act or the Federal Reserve’s emergency lending facilities, we cannot predict the content or timing of future governmental actions prompted by the pandemic and therefore cannot guarantee you that they will not harm our business, either directly or indirectly by adversely affecting the economic environment. In addition, it is possible that future legislation or other governmental action could impose restrictions on us or expand the eligibility for existing programs in a manner that enables us to benefit from them, subject to restrictions that could limit our ability to run our business in the best interests of our stockholders. Further, any such future legislation or other action could contain other provisions, for example relating to taxation or privacy, that adversely affect our business or impose additional compliance costs. Finally, increased budget deficits resulting from the emergency legislation could result in higher taxes (or the elimination of tax benefits) that would negatively affect our business.
Given the unprecedented nature of the coronavirus pandemic and the extraordinary uncertainty that it occasions, we have had difficulty and may continue to have difficulty forecasting our operational and financial performance, which could negatively affect our business.
As noted earlier in this “Risk Factors” section, the coronavirus pandemic is unparalleled in modern history and has occasioned considerable uncertainty. Neither the pandemic, nor the governmental, societal and individual responses thereto, have any precedents to guide our expectations and forecasts about their future course. As a result, we have had, and expect during the duration of the pandemic, if not longer, to continue to have, increased difficulty in forecasting our operational and financial performance and the effect of macroeconomic conditions on our business. For example, in March 2020, we withdrew our full-year 2020 financial guidance as a result of this uncertainty and do not intend to provide further guidance until the effects of the pandemic abate or become more predictable. In addition to heightening the uncertainty surrounding any financial guidance that we do provide, this increased difficulty forecasting could also negatively affect our ability to prioritize and execute operational and strategic initiatives, plan appropriately for the financial and operational needs of our business and participate in financial or strategic transactions. Any of these factors could negatively affect our business.


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If a member of our management team or our board of directors contracts the coronavirus, he or she could be temporarily or permanently unable to continue contributing to us and our business could be adversely affected.
The novel coronavirus is highly infectious and sometimes causes a dangerous respiratory disease referred to as COVID-19, which has a substantial morbidity rate, particularly among older patients and those with preexisting medical conditions. If any member of our management team or our board of directors contracts COVID-19, he or she could be temporarily or permanently unable to continue performing his or her duties. In many cases, the executive’s or the director’s experience would be difficult to replace, particularly on short notice. Given the abnormally challenging conditions that the pandemic creates, even a temporary disruption in our executives’ or directors’ ability to focus their efforts on our business could harm our business.

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Risks Related to Our Business and Industry


The growth of our business relies significantly on our ability to grow and optimize the geographic coverage of dealers in our network of TrueCar Certified Dealers and increase the representation of high volumehigh-volume brands in our network such that we are able to increase the number of transactions between our users and TrueCar Certified Dealers.Dealers, as well as our ability to manage dealer churn and increase dealer subscription rates. Failure to do so would limit our growth.

Some automotive brands consistently achieve higher than average sales volume per dealer. As a consequence, dealers representing those brands make a disproportionately greater contribution to our unit volume. Our ability to grow and to optimize the geographic coverage of dealers in our network of TrueCar Certified Dealers, increase the number of dealers representing high volumehigh-volume brands and grow the overall number of dealers in our network is an important factor in growing our business.

As described elsewhere in this “Risk Factors” section, we are a relatively new participant in the automobile retail industry andcar dealerships have sometimes viewed our business has sometimes been viewed in a negative light by car dealerships.light. Although we have taken steps intended to improve our relationships with, and imageour reputation among, car dealerships, including the commitments made in our pledge to dealers, there can be no assurance that our efforts will be successful. We may be unable to maintain or grow the number of car dealers in our network, in a geographically optimized manner or at all, or increase the proportion of dealers in our network representing high volume brands. DuringFor example, during the second half of 2015, we experienced both a decline in the proportion of such high volumehigh-volume dealers in our network and slowed quarter-over-quarter revenue growth. Additionally, as noted earlier in this “Risk Factors” section, many of our dealers have canceled or suspended their participation in our network as a result of the coronavirus pandemic. If we experience a similar decline in the future, it could have a material adverse effect on our business, growth, financial condition, results of operations and cash flows.

In addition, our ability to increase the number of TrueCar Certified Dealers in an optimized manner depends on strong relationships with other constituents, including car manufacturers and state dealership associations. From time to time, car manufacturers have communicated concerns about our business to the dealers in our network. For example, somemany car manufacturers maintain guidelines that prohibit dealers from advertising a car at a price that is below an established floor.floor, referred to as “minimum allowable advertised price,” or “MAAP,” guidelines. If a manufacturer takes the position that its MAAP guidelines apply to prices provided by a TrueCar Certified Dealer submits pricing information to our users and the dealer submits a price to a user that falls below pricing guidelines established by the applicable manufacturer,MAAP guidelines, the manufacturer may discourage that dealer from remaining in the network and may discourage other dealers within its brand from joining the network. For example, in late 2011, Honda publicly announced that it would not provide advertising allowances to dealers that remained in our network of TrueCar Certified Dealers. While we subsequently addressed Honda’s concerns and it ceased withholding advertising allowances from our TrueCar Certified Dealers, discord with specific car manufacturers impedescould impede our ability to grow our dealer network. MoreAlthough an increasing number of manufacturers have begun introducing MAAP guidelines recently, Toyota and Nissan modified their marketing covenants to include guidelines on minimum allowable advertised pricing in January 2016 and January 2017, respectively. Wewe have implemented certain changes designed to accommodate these guidelines; howeverguidelines, it is unclear whether we will ultimatelycontinue to be able to do so without making material, unfavorable adjustments to our business practices or user experience. Ifexperience and, if we are unable to successfully accommodate these guidelines without making material, unfavorable adjustments to our business practices or user experience,not, it could have a material adverse effect on our business, growth, financial condition, results of operations and cash flows.


In addition, state dealership associations maintain significant influence over the dealerships in their statestates as lobbying groups and as thought leaders. To the extent that these associations view us in a negative light, our reputation with car dealers in the corresponding statestates may be negatively affected. If our relationships with car manufacturers or state dealership associations suffer, our ability to maintain and grow the number of car dealers in our network willwould be harmed.

Further, in 2019, approximately 34% of our unit volume was subject to pay-per-sale billing arrangements, with the remaining units being subject to subscription billing arrangements. If the number of TrueCar Certified Dealers on subscription billing arrangements increases relative to those on a pay-per-sale billing model, the growth of our business could become more dependent on our ability to increase dealer subscription rates, as rising unit volumes at dealers on subscription billing arrangements do not automatically result in higher revenues. If we are unable to convince subscription-based dealers of our value proposition, we could be unable to increase dealer subscription rates even if our unit volume increases, which could have a material adverse effect on our business, growth, financial condition, results of operations and cash flows.
We cannot assure you that we will expand our network of TrueCar Certified Dealers in a manner that provides a sufficient number of dealers by brand and geography for our unique visitors, or that we will be able to increase dealer subscription rates, and failure to do so would limit our growth.

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If key industry participants, including car dealers and automobile manufacturers, perceive us in a negative light or our relationships with them suffer harm, our ability to grow and our financial performance may be damaged.
Our primary source of revenue consists of fees paid by TrueCar Certified Dealers to us in connection with the sales of automobiles to our users. In addition, our value proposition to consumers depends on our ability to provide pricing information on automobiles from a sufficient number of automobile dealers by brand and in a given consumer’s geographic area. If our relationships with our network of TrueCar Certified Dealers suffer harm in a manner that leads to the departure of these dealers from our network, then our revenue and ability to maintain and grow unique visitor traffic willwould be adversely affected.
AtFor example, at the end of 2011 and the beginning of 2012, due to certain regulatory and publicity-related challenges, many dealers canceled their agreements with us and our franchise dealer count fell from 5,571 at November 30, 2011 to 3,599 at February 28, 2012. More recently,In 2015, 279 franchise dealers became inactive as the result of a contractual dispute with a large dealer group, and our franchise dealer count decreased from 9,300 at June 30, 2015 to 8,702 at September 30, 2015. At September 30, 2017March 31, 2020 our franchise dealer count was 12,286.

11,356.
TrueCar Certified Dealers have no contractual obligation to maintain their relationship with us. Accordingly, these dealers may leave our network at any time or may develop or use other products or services in lieu of ours. Further, while we believe that our service provides a lower cost, accountable customer acquisition channel, dealers may have difficulty rationalizing their marketing spend across TrueCar and other channels, which potentially has the effect of dilutingmay dilute our dealer value proposition. If we are unable to create and maintain a compelling value proposition for dealers to become and remain TrueCar Certified Dealers, our dealer network wouldmight not grow and could decline.

In addition, although the automobile dealership industry is fragmented, a small number of groups have significant influence over the industry. These groups includeindustry, including state and national dealership associations, state regulators, car manufacturers, consumer groups, individual dealers and consolidated dealer groups. To the extent thatIf any of these groups comes to believe that automobile dealerships should not do business with us, this belief maycould become quickly and widely shared by automobile dealerships and we maycould lose a significant number of dealers in our network. InFor example, in May 2015, the California New Car Dealers Association, or CNCDA, filed a lawsuit alleging that we arewere operating in the State of California as an unlicensed automobile dealer and autobroker. Although this litigation was ultimately settled, we cannot assure you that similar litigation will not be brought against us in the future. For more information concerningon this lawsuit, refer to the risk factor below, “Webelow: “We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.flows.” A significant number of automobile dealerships are also members of larger dealer groups, and to the extent thatif a group decides to leave our network, thisthat decision would typically apply to all dealerships within the group.

Furthermore, automobile manufacturers may provide their franchise dealers with financial or other marketing support providedon the condition that such dealersthey adhere to certain marketing guidelines. Automobileguidelines, and these manufacturers may determine that the manner in which certain of their franchise dealers use our platform is inconsistent with the terms of such marketing guidelines, whichthose guidelines. That determination could result in potential or actual loss of the manufacturers’ financial or other marketing support to the dealers whose use of the TrueCar platform is deemed objectionable. The potential or actual loss of such marketing support maycould cause suchthose dealers to cease being members of our TrueCar Certified Dealer network, which maycould adversely affect our ability to maintain or grow the number and productivity of dealers in our network or the revenue derived from those dealers.

We cannot assure you that we will maintain strong relationships with the dealers in our network of TrueCar Certified Dealers or that we will not suffer dealer attrition in the future. We may also have disputes with dealers from time to time, including relating to the collection of fees from them and other matters. We may need to modify our products, change pricing or take other actions to address dealer concerns in the future. If a significant number of these automobile dealerships decideddecide to leave our network or change their financial or business relationship with us, then our business, growth, operating results, financial condition and prospects would suffer.


If we are unable to provide a compelling car-buying experience to our users, the number of transactions between our users and TrueCar Certified Dealers, willand the number of TrueCar Certified Dealers, could decline, and our revenue and results of operations willwould suffer harm.

The user experience on our company‑brandedTrueCar-branded website platform on the TrueCar website has evolved since its launch in 2010, but has not changed dramatically. We cannot assure you that we arewill be able to provide a compelling car‑buyingcar-buying experience to our users, and ourusers. Our failure to do so could mean thatcause the number of transactions between our users and TrueCar Certified Dealers mayto decline and we would be unable toprevent us from effectively monetizemonetizing our user traffic. In addition, as described elsewhere in this “Risk Factors” section, if we are unable to provide a compelling car-buying experience to our users, the quality of the leads we provide to dealers could decline, which could result in dealers leaving our network.
We believe that our ability to provide a compelling car‑buyingcar-buying experience is subject to a number of factors, including:

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•our ability to launch new products that are effective and have a high degree of consumer engagement;

•our ability to constantly innovate and improve our existing products;products, including in response to the coronavirus pandemic and associated changes in consumer and dealer behavior and preferences;

•compliance of the dealers within our network of TrueCar Certified Dealers with applicable laws, regulations and the rules of our platform, including honoring the TrueCar certificates submitted by our users; andplatform;

•our access to a sufficient amount of data to enable us to provide relevant vehicle and pricing information to consumers.consumers; and


•our ability to constantly innovate and improve our mobile application and platform to enable us to provide products and services that users want to use on the devices they prefer.
If the quality or quantity of the leads we provide to TrueCar Certified Dealers declines, our unit volume could decrease and TrueCar Certified Dealers could lose faith in our value proposition and choose to leave our network or insist on lower subscription rates, which could reduce our revenue and harm our business.
Our Auto Buying Program introduces consumers to TrueCar Certified Dealers, who either pay us a subscription fee or a fee per vehicle sold to our users introduced to them through our platform. The quality and quantity of these leads are important variables in the success of our business and depend on many factors, including the attractiveness of our car-buying experience, the efficiency of the algorithm that matches our users with TrueCar Certified Dealers and consumers’ loyalty to our brand or to that of the partner through which they were introduced to the Auto Buying Program, among others. If our lead quality or quantity decline, our unit volume could decline, which could result in lower revenues from pay-per-sale billing arrangements, as well as an inability to convince TrueCar Certified Dealers that our value proposition justifies maintaining or increasing our subscription rates. Additionally, diminished lead quality or quantity could cause TrueCar Certified Dealers to be dissatisfied with our program, which could result in their choosing to leave our network or insist on lower subscription rates. Historically, some of our TrueCar Certified Dealers have expressed concern about our lead quality, and we observed an increase in this concern in the first half of 2019. Further, the wind-down and subsequent termination of our affinity partnership with USAA is likely to materially decrease our lead quantity and could adversely affect our aggregate lead quality. Moreover, we cannot predict how the coronavirus pandemic will affect our lead quantity and quality. Negative developments in these metrics, like many others in the total value proposition that we provide to our TrueCar Certified Dealers, can adversely affect our revenues, results of operations and business.
The wind-down and termination of our partnership with the United Services Automobile Association, or USAA, is likely to adversely affect our business.

The largest source of user traffic and unit sales from our affinity group marketing partners in 2019 came from the site we maintain for USAA. In 2019, 293,142 units, representing 29% of all units purchased by users from TrueCar Certified Dealers during that period, were matched to users of the car-buying site we maintained for USAA (before responsibility for the partnership was transferred from USAA to its banking subsidiary, USAA Federal Savings Bank, or USAA FSB, in February 2020). As such, the number of units purchased using the USAA car-buying site has a significant influence on our operating results. We define units as the number of cars purchased from TrueCar Certified Dealers that are matched to users of the TrueCar website and our branded mobile applications or the car-buying sites we maintain for our affinity group marketing partners. USAA is also a large stockholder, and as of March 31, 2020, USAA beneficially owned 9,042,992 shares, which represented 8.4% of our outstanding common stock.

Our affinity group marketing agreement with USAA reached the end of its term on February 13, 2020, and in February 2020, USAA notified us that it intended to end our affinity partnership. Effective February 14, 2020, we entered into a transition services agreement with USAA pursuant to which it will continue offering its members an auto-buying program through September 30, 2020, after which there will be a subsequent 120-day wind-down period to permit us to continue to serve USAA members who already began the car-buying process through USAA FSB’s auto-buying program up to then. Although the transition services agreement does not increase the revenue share amounts that we pay USAA FSB, and requires USAA FSB to pay us an aggregate transition services fee of $20 million, the termination of our affinity partnership with USAA FSB is likely to have a material adverse effect on our business, revenue, operating results and prospects. Additionally, USAA FSB has terminated all paid advertising of its auto-buying program, which has negatively affected the traffic to our USAA channel, and recently implemented site changes that make it clearer to most of its members who interact with its auto-buying program that they are interacting with a third-party website operated by us. Those changes, and any future changes before or during the wind-down period, could further adversely affect the volume of user traffic we receive from USAA FSB.

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The transition services agreement provides us with a seven and one-half month period to continue operating the auto-buying program for USAA FSB. We cannot assure you that we will be able to wind down our partnership with USAA FSB during this period in a manner that minimizes disruption to our business and to our users. Further, we could be unable to effectively mitigate the long-term negative financial effect of the termination of that partnership. Additionally, while USAA FSB is required to use commercially reasonable efforts to support its auto-buying program in a manner materially consistent with the manner in which it did so before the transition, this obligation is subject to the parties’ wind-down negotiations and to whether USAA determines that those efforts violate laws applicable to it or are contrary to instructions from its regulators. Changes in how USAA FSB supports our platform, subvenes its members’ borrowing costs, mitigates banking or insurance regulatory risk or modifies its auto-buying site and its user experience could further adversely affect the volume of user traffic we receive from USAA FSB and the close rate of that traffic.

If we are unable to management, includingtimely mitigate the adverse effects of the transition and eventual termination of our relationship with USAA FSB, our business, revenues, results of operations and cash flows could be materially negatively affected.
We recently allowed our users to require dealers who wish to communicate with them other than by email to communicate by text message rather than by calling. If consumers or dealers do not see value in this new functionality, or if it results in privacy concerns, our business could be negatively affected.
In April 2020, we began to allow our users to choose how dealers contact them other than by email, whether both by telephone and by text message or only by text message. We believe that this change will be beneficial to both consumers and dealers, but we cannot assure you that consumers and dealers will perceive this to be the case. For the reasons discussed earlier in this “Risk Factors” section, if dealers perceive text-message connections to be less valuable, or if the introduction of this new option results in dealers selling fewer cars to our users, our business, results of operations and cash flows could be negatively affected.
Additionally, we use a third-party vendor to facilitate text message communications between our users and dealers, and we have access to those communications. If our company, or our third-party vendor, is perceived to violate our dealers’ or users’ privacy in connection with those communications, or any law or regulation that applies to those communications, our reputation and business could be harmed. For more information on this type of risk, refer to the risk factor below: “We collect, process, store, share, disclose and use personal information and other data, and our actual or perceived failure to protect this information and data could damage our reputation and brand and harm our business and operating results.”
We have experienced significant turnover ofin our top executives, and our business could be adversely affected by these and other transitions in our senior management team or if any resulting vacancies cannot be filled with qualified replacements in a timely manner.
In the first half of 2019, we experienced significant turnover in our top executives, including the departures of our chief executive officer, chief technology officer and chief marketing officer and the replacement of our chief financial officer, chief people officer and executive vice president of dealer sales and service, and in March 2020, after nine months of service as in an interim capacity, the Board appointed Michael Darrow as our chief executive officer. As a result of this turnover, our remaining management team took on increased responsibilities, which could divert attention from key business areas, and certain management roles remain vacant.
Management transition is often difficult and inherently causes some loss of institutional knowledge, which could negatively affect our results of operations and financial condition. Our ability to execute our business strategies may be adversely affected by the uncertainty associated with these transitions and the time and attention from the board and management needed to fill the vacant roles could disrupt our business. If we are unable to successfully identify and attract adequate replacements for vacancies in our management roles in a timely manner, we could experience increased employee turnover and harm to our business, growth, financial conditions, results of operations and cash flows. We face significant competition for executives with the qualifications and experience we are seeking. The search for replacements for these positions has resulted, and may continue to result, in significant recruiting and relocation costs, and we can give no assurances concerning the timing or outcome of our search for these replacements.
Further, we cannot guarantee that we will not face similar turnover in the future. Although we generally enter into employment agreements with our executives, the agreements have no specific duration and our executive officers are at-will employees. As a result, they may terminate their employment relationship with us at any time, and we cannot ensure that we will be able to retain the services of any of them. Our senior management’s knowledge of our business and industry would be difficult to replace, and any further turnover could negatively affect our business, growth, financial conditions, results of operations and cash flows.


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An inability to retain, attract and integrate qualified personnel could harm our ability to develop and successfully grow our business.

We believe our success has depended, and continues to depend, on the efforts and talents of our executives and employees. OurThe loss of key personnel, including members of management as well as key engineering, product and technology employees who understand our business and can innovate our products, could have an adverse effect on our business. Additionally, our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals areemployees, including our dealer, marketing, finance, accounting, legal and other personnel. Competition for qualified employees in high demand,our industry, particularly for software engineers, data scientists and other technical staff, is intense and we may incurface significant competition in hiring and retaining them and difficulties in attracting them to move to the Los Angeles area, where our headquarters are located and the cost of living is high. In addition, we expect to face increasing competition for talented individuals with automotive or technology experience within Southern California as the “Silicon Beach” area of Los Angeles County continues to develop. Moreover, we have in the past conducted reductions in force to optimize our organizational structure and reduce costs, and certain senior personnel have also departed for various reasons. We are also limited in our ability to attract and retain them. In order torecruit internationally by domestic immigration laws.
To attract and retain executives and other key employees in athis competitive marketplace, we must provide competitive compensation packages, including cash and stock‑basedstock-based compensation. Our primary forms of stock‑basedstock-based incentive awards are stock options and restricted stock units. IfOur stock price has recently experienced substantial volatility, which has negatively affected the anticipated value of such stock‑basedour stock-based incentive awards does not materialize, ifand may impact the extent to which our stock‑basedstock-based compensation otherwise ceases to beis viewed as a valuable benefit,benefit. Moreover, in response to the financial disruption caused by the coronavirus pandemic, we have reduced executive base salaries, eliminated employee bonuses for the first half of 2020 and imposed a company-wide moratorium on raises and promotions, and may be required to take additional actions to reduce headcount cost before the pandemic abates. If we are not able to mitigate the impact of these adverse effects on our compensation program, or if our total compensation package ispackages are not viewed as beingconsidered competitive, our ability to attract, retain and motivate executives and key employees could be weakened.

The loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all. Our executive officers and other employees are at‑will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. In the second half of 2015, we experienced increased turnover in key executive positions, including our chief executive officer and president. Our current executives may view the business differently than prior members of management, and over time may make changes to our strategic focus, operations or business plans with corresponding changes in how we report our results of operations. We can make no assurances that our current executives will be able to properly manage any such shift in focus or that any changes to our business would ultimately prove successful. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well‑qualifiedwell-qualified employees, retaining and motivating existing employees or integrating new executives and employees, our business could be materially and adversely affected.

Our growth in recentprior years may not be indicative of our future growth, and we may not be able to manage future growth effectively.

Our revenue grew from $38.1 million in 2010 to $277.5$353.9 million in 2016.2019. However, beginning in the third quarter of 2015, we began experiencing slowed revenue growth. Although revenue growth has generally improved, we expect that in the future, as our revenue increases, our rate of revenue growth may again decline.declined from 2017 to 2018 and, in light of the effects of the coronavirus pandemic and the winding down of our partnership with USAA, is likely in the near future to continue to be lower than it has been in past periods. In addition, we may not be able to grow as fast or at all if we do not accomplish the following:our future revenue growth is dependent on our ability to:

•expand our dealer network in a geographically optimized manner, including increasing dealers in our network representing high volumehigh-volume brands; 
•increase the number of transactions between our users and TrueCar Certified Dealers;
successfully •increase dealer subscription rates, as the number of dealers on subscription billing arrangements increases relative to those on a pay-per-sale billing model;and manage dealer churn;
successfully •grow the revenue we derive from car manufacturer incentive programs;
•increase the number of dealers participating in our automotive trade-in program and successfully monetize the TrueCar Trade product;
•maintain and grow our affinity group marketing partner relationships and increase the productivity of our current affinity group marketing partners; 
•increase the number of users of our products and services, and in particular the number of unique visitors to the TrueCar website and our TrueCar-branded mobile applications, including by improving our search-engine optimization; 
•further enhance our consumer experience and increase our close rates and the rate at which site visitors prospect with a TrueCar branded mobile applications; Certified Dealer;

•further improve the quality of our existing products and services, and introduce high qualityhigh-quality new products and services; and 
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•introduce third partythird-party ancillary products and services.
services, including by integrating acquired companies like DealerScience and their products and services into our business.
We may not successfully accomplish any of these objectives. We plan to continue our investment in future growth. WeAmong other things, we expect to continue to expend substantial financial and other resources on:

•marketing and advertising; 
•dealer outreach and training, including the hiring of additional personnel in our dealer team;training;
•technology and product development, including the hiring of additional personnel in our product development and technical teams, harmonization of our software infrastructure, and the development of new products and new features for existing products;
•strategic partnerships, investments and acquisitions; and 
•general administration, including legal, accounting and other compliance expenses related to being a public company.
In addition, our historical growth has placed and may continue to place significant demands on our management and our operational and financial resources. We have also experienced significant growth in the number of users of our platform as well as the amount of data that we analyze. We have hired, and expect to continue hiring, additional personnel, particularly in our dealer, product and technology teams. The additional personnel in our dealer team are intended to enhance the service experience and the productivity of our dealer network while the additional personnel in our product and technology teams are focusing on developing new products and features, harmonizing our technology infrastructure and delivering a better experience to consumers and dealers. Finally, our organizational structure is becoming more complex as we continue to add additional staff, and we will need to improve our operational, financial and management controls as well as our reporting systems and procedures. We will require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas without undermining our corporate culture of rapid innovation, teamwork and attention to the car-buying experience for the consumer and the economics of the dealer.
We may be unable to maintain or grow relationships with information data providers or may experience interruptions in the data feeds they provide, which may limit the information that we are able to provide to our users and dealers as well as the timeliness of suchthe information, and which may impair our ability to attract or retain consumers and TrueCar Certified Dealers and to timely invoice our dealers.
We receive automobile purchase data from many third-party data providers, including our network of TrueCar Certified Dealers,Dealers; dealer management system, or DMS, data feed providers,providers; data aggregators and integrators,integrators; survey companies,companies; purveyors of registration datadata; and our affinity group marketing partners. In the statescircumstances in which we employ a pay-per-sale billing model, we use this data to match purchases with users that obtained a Guaranteed Savings Certificate from a TrueCar Certified DealerDealers so that we may collect a transaction feefees from those dealers and recognize revenue from the related transactions.

Further, we use this data to demonstrate to TrueCar Certified Dealers on a subscription billing model the value we provide to support maintaining or increasing our subscription rates.
From time to time, we experience interruptions in one or more data feeds that we receive from third-party data providers, particularly DMS system data feed providers, in a manner that affects our ability to timely invoice the dealers in our network. These interruptions may occur for a number of reasons, including changes to the software used by these data feed providers and difficulties in renewing our agreements with third-party data feed providers. In the statescircumstances in which we employ a pay-per-sale billing model, an interruption in the data feeds that we receive may affect our ability to match automobile purchases withmade by our users that obtained a Guaranteed Savings Certificate from a TrueCar Certified Dealer,Dealers, thereby delaying our submission of an invoice to an automobilea dealer in our network for a given transaction and delaying the timing of cash receipts from the dealer.dealer, and in circumstances in which we employ a subscription billing model, an interruption in the data feeds that we receive may affect our ability to justify maintaining or increasing our subscription rates. The redundancies of data feeds received from multiple providers may not result in sufficient data to match automobile purchases withmade by our users that obtained a Guaranteed Savings Certificate from a TrueCar Certified Dealer.Dealers. In the case of an interruption in our data feeds, our billing structure may transition to a subscription model for affected automobile dealers in our network until the interruption ceases. However, our subscription billing model may result in lower revenues during an interruption and, when an interruption ceases, we are not always able to retroactively match a transaction and collect a fee. In addition, our likelihood of collection ofcollecting the fee owed to us for a given transaction decreases for those periods in which we are unable to submit an invoice to automobile dealers. Interruptions whichthat occur in close proximity to the end of a given reporting period could result in delays in our ability to recognize those transaction revenues in that reporting period and these shortfalls in transaction revenue could be material to our operating results.

We have a history of losses and we may not achieve or maintain profitability in the future.

We have not been profitable since inception andinception. We had an accumulated deficit of $342.6$442.7 million at September 30, 2017.March 31, 2020 and we experienced a net loss of $10.7 million in the three months ended March 31, 2020. From time to time in the past, we have made significant investments in our operations whichthat have not resulted in corresponding revenue growth and, as a result, increased our losses. We expectcontinue to make significant future investments to support the further development and expansion of our business and these investments may not result in increased revenue or growth on a timely basis or at all. Our revenue growth has been highly influenced by marketing expenditures. Incremental marketing expenditures in certain situations do not result in sufficient incremental revenue to cover their cost. This limits the growth in revenue that can be achieved through marketing expenditures. In addition, as a public company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company. Such expenses will increase after we cease to be an “emerging growth company.” For more information concerning our “emerging growth company” status, refer to the risk factor below, “Complying with the laws and regulations affecting public companies has increased our costs and the demands on management and could harm our operating results.” As a result of these increased expenditures, we have to generate and sustain increased revenue to achieve and maintain profitability.expenses.
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We may incur significant losses in the future for a number of reasons, including slowing demand for our products and services, increasing competition, weakness in the automobile industry generally as well asand other risks described in this report, and we may encounter unforeseen expenses, difficulties, complications and delays, and other unknown factors. If we incur losses in the future, we may not be able to reduce costs effectively because many of our costs are fixed. In addition, to the extent thatif we reduce variable costs to respond to losses, this may affect our ability to acquire consumersusers and dealers, improve our products and services and grow our revenues. Accordingly, we may not be able to achieve or maintain profitability and we may continue to incur significant losses in the future, and this could seriously harm our business and cause the price of our common stock to decline.

We have operated our business at scale for a limited period of time and we cannot predict whether we will continuebe able to grow.maintain or grow our business. If we are unable to successfully respond to changes in the market, our business could be harmed.
Our business has grown as users and automobile dealers have increasingly used our products and services. However, our business is relatively new and has operated at a substantial scale for only a limited period of time. Given this limited history, it is difficult to predict whetherwe cannot guarantee that we will be able to maintain or grow our business. We expect that our business will evolve in ways whichthat may be difficult to predict. For example, marketing expenditures in certain situations become inefficient, particularly with respect to the TrueCar website and our branded mobile applications. Continued revenue growth will require more focus on increasing the number of transactions, subscriptions and other sources from which we derive revenue by growing our network of TrueCar Certified Dealers, including dealers representing high volumehigh-volume brands, both on an overall basis and in important geographies, as well as growth in the revenue we derive from car manufacturer incentive programs. It is also possible that car dealers could broadly determine that they no longer believe in the value of our services. In the event of these or any other developments, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. If we are unable to do so, our business could be harmed and our results of operations and financial condition could be materially and adversely affected.

The loss of a significant affinity group marketing partner or a significant reduction in the number of cars purchased from our TrueCar Certified Dealers by members of our affinity group marketing partners would reduce our revenue and harm our operating results.
Our financial performance is substantially dependent upon the number of automobilescars purchased from TrueCar Certified Dealers by users of the TrueCar website, our branded mobile applications and the car-buying sites we maintain for our affinity group marketing partners. Currently, aA majority of the automobilescars purchased by our users werehave historically been matched to the car-buying sites we maintain for our affinity group marketing partners. As a result, our relationships with our affinity group marketing partners are critical to our business and financial performance. However, several aspects of our relationshiprelationships with affinity groups might change in a manner that harms our business and financial performance, including:

•affinity group marketing partners might terminate their relationship with us or make suchthe relationship non-exclusive, resulting in a reduction in the number of transactions between users of our platform and TrueCar Certified Dealers; 
•affinity group marketing partners might de-emphasize the automobile buyingcar-buying programs within their offerings or alter the user experience for members in a way that results in a decrease in the number of transactions between their members and our TrueCar Certified Dealers; or 
•the economic structure of our agreements with affinity group marketing partners might change, resulting in a decrease in our operating margins on transactions by their members.

For example, in February 2020, USAA notified us that it intended to end our affinity partnership, and we entered into a transition services agreement with USAA pursuant to which it will cease offering its members an automobile buying program effective October 1, 2020. USAA accounted for a material share of our units and revenues and this termination is likely to have a materially adverse effect on our business, operating results and prospects. For more information on the wind-down and termination of our affinity partnership with USAA, refer to the risk factor above: “The wind-down and termination of our partnership with the United Services Automobile Association, or USAA, is likely to adversely affect our business.”

Additional such changes to our relationships with our affinity group marketing partners could happen for a number of reasons both within and outside of our control. For example, we share certain information of our users with our affinity partners, and those partners may in turn use that information to offer enhanced value propositions to our users, such as OEM incentives or other benefits provided by third parties that we refer to as buyer’s bonuses, or for analytical or other business purposes. Affinity partners that derive value from that information may terminate their relationship with us, or change the relationship in a manner adverse to our business, if we cease or limit our sharing of the information, and we cannot assure you that we will not be required to do so due to market conditions or contractual counterparties, or by law or regulators given the rapidly evolving environment surrounding privacy matters in the United States. For more information on these matters, refer to the risk factor below: “We collect, process, store, share, disclose and use personal information and other data, and our actual
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or perceived failure to protect this information and data could damage our reputation and brand and harm our business and operating results.”
Further, the disruption occasioned by the coronavirus pandemic could cause our average net monetization per unit to fall if the proportional discounts we provide to dealers on subscription-based billing arrangements on average exceed the proportional decrease in their units, or if dealers insist on lower subscription rates. For more information on the impact of the coronavirus pandemic on our business, refer to the risk factor above: “The coronavirus pandemic and governments’, organizations and individuals’ responses to it have disrupted all facets of daily life around the globe in unprecedented ways that have materially negatively affected our business. We cannot predict the amount of time that it will take for the pandemic to run its course or the extent to which our business will be disrupted before it does.” Because our revenue sharing arrangements with our affinity partners are typically tied to our average net monetization, a decrease in this metric would negatively affect the per-unit revenues that those partners receive from their partnership with us. As a result, a material decrease in our average net monetization could result in any of the adverse actions by affinity partners referred to above.
A significant change to our relationships with affinity group marketing partners may have a negative effect on our business in other ways. For example, the termination by an affinity group marketing partner of our relationship may create the perception that our products and services are no longer beneficial to the members of affinity groups or a more general negative association with our business. In addition, a termination by an affinity group marketing partner may result in the loss of the data it provided to us by them with respect toabout automobile transactions. This loss of data may decrease the quantity and quality of the information that we provide to consumers and may also reduce our ability to identify transactions for which we can invoice dealers. If our relationships with affinity group marketing partners change, our business, revenue, operating results and prospects may be harmed.
Any adverse changeThe failure to attract manufacturers to participate in our relationship with United Services Automobile Association,car manufacturer incentive programs, or USAA,to induce manufacturers to remain participants in those programs, could harmreduce our business.
The largest source of user traffic and unit sales from our affinity group marketing partners comes from the site we maintain for USAA, which is also a large stockholder. In 2016, 254,241 units,growth or 32%, of all units purchased by users from TrueCar Certified Dealers during that period, were matched to users of the car‑buying site we maintain for USAA. In the quarter ended September 30, 2017, 64,841 units, or 26%, of all units purchased by users from TrueCar Certified Dealers during that period, were matched to users of the car‑buying site we maintain for USAA. As such, USAA has a significant influencehave an adverse effect on our operating results. We define units as

In the three months ended March 31, 2020 and 2019, respectively, we derived approximately 4.2% and 4.9% of our revenue from our arrangements with car manufacturers to promote the sale of their vehicles through additional consumer incentives, and we believe that this revenue stream represents a potential growth opportunity for our business. Failure to attract additional manufacturers to participate in these programs could reduce our growth and harm our operating results. Additionally, our relationships with manufacturers typically begin with a short-term pilot arrangement and, even if a relationship progresses beyond the pilot stage, it may only be for a short term and may not be renewed by the manufacturer, which could cause fluctuations in our operating results. If we are unable to induce the manufacturers with which we currently have relationships to continue or expand their incentive programs on our platform, or to enter into longer-term arrangements, or if we are unable to attract new manufacturers to our platform, that could have an adverse effect on our business, revenue, operating results and prospects.
If we are not successful in increasing the number of automobiles purchased bydealers participating in our users fromautomotive trade-in program, providing a compelling value proposition to consumers using our TrueCar Certified Dealers through theTrade product, monetizing that product or integrating it into our consumer experience, our business and prospects could be adversely affected.
We believe that our TrueCar website and our branded mobile applications or the car‑buying sites we maintain for our affinity group marketing partners. At September 30, 2017, USAA beneficially owned 9,042,990 shares, which represented 9.0%Trade product is a vital element of our outstanding common stock.
In May 2014,effort to build out an end-to-end consumer experience, and we entered into an extensiona 10-year commercial partnership with Accu-Trade in 2019. Accu-Trade, through its affiliates, supplies the valuation data we use in providing offers and guarantees those offers to dealers. We cannot assure you that Accu-Trade will continue to be able to supply accurate valuation data and to stand behind its guarantees. If it is unable to do so, our TrueCar Trade product, and our business and prospects, could be adversely affected. For example, as a result of the closures of departments of motor vehicles across the United States and other disruptions caused by the coronavirus pandemic, Accu-Trade has in the past temporarily stopped guaranteeing its vehicle valuations, during which time we converted our affinity group marketing agreement with USAA that extends through February 13, 2020, but“True Cash Offers” to “True Cash Estimates,” and we cannot assure you that our agreement with USAAit will be extended atnot do so again.
Further, the expiration of the current agreement on terms satisfactoryTrueCar Trade product is a relatively new offering. If we are not able to us, or at all. In addition, USAA has broad discretion in how the car-buying site we maintain for USAA is promoted and marketed on its own website. Changes in this promotion and marketing have in the past and may in the future adversely affect the volume of user traffic we receive from USAA. More recently, USAA made changes to the user experience for its car-buying site, which we believe contributed to a decrease inincrease the number of transactions between its members anddealers who offer the TrueCar Trade product, provide a compelling value proposition to consumers who use the product, successfully monetize it or integrate it into our TrueCar Certified Dealers during the third quarter of 2017. Changes in our relationship with USAA or its promotion and marketing of our platform, or maintenance of its present car-buying site userconsumer experience, could adversely affectthat failure would negatively impact our business, andrevenue, operating results in the future. 

and prospects.
The success of our business relies heavily on our marketing and branding efforts, especially with respect to the TrueCar website and our branded mobile applications, as well as those efforts of the affinity group marketing partners whose websites we power, and these efforts may not be successful.
We believe that an important component of our growth will be the growth of our business derived from the TrueCar website and our TrueCar brandedTrueCar-branded mobile applications.applications are an important component of the growth of our business. Because TrueCar.com is a consumer brand, we rely heavily on marketing and advertising to increase the visibility of this brand with potential users of our products and services. We currently advertise through television and radio
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marketing campaigns, digital and online media, sponsorship programs and other means, the goalgoals of which isare to increase the strength and recognition of, and trust in, the TrueCar brand and to drive more unique visitors to our website and mobile applications.applications, and we expect to continue to advertise in support of our rebranding initiative. For more information on this initiative, see the risk factor below: “If consumers and dealers do not accept our new branding, our financial performance and our ability to grow unique visitor traffic and expand our dealer network could be negatively affected.” We incurred expenses of $137.5$46.6 million and $112.8$54.7 million on sales and marketing during the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively.
 
Our business model relies on our ability to continue to scale rapidly and to decrease incremental user acquisition costs as we grow. Our revenue growth has been highly influenced by marketing expenditures. IncrementalIn part because of our reliance on a subscription-based billing model, incremental marketing expenditures in certain situations domay not result in the acquisition of sufficient users visiting our website and mobile applicationsrevenue to permit recovery of suchincremental user acquisition costs through revenue growth. This limits the growth in revenue that can be achieved through marketing expenditures. If we are unable to recover our marketing costs through increases in user traffic and in the number of transactions by users of our platform, it could have a material adverse effect on our growth, results of operations and financial condition.

Additionally, to the extent thatwhen we discontinue our broad marketing campaigns or elect to reduce our sales and marketing costs to decrease our losses, this may affectas we have done in response to the coronavirus pandemic, our ability to acquire consumers and dealers and grow our revenues.revenues is adversely affected. Our current and potential competitors may also have significantly more financial, marketing and other resources than we have and the ability to devote greater resources to the promotion and support of their products and services. The realities of competing for users and brand visibility, as well as ensuring the satisfaction of our dealers, may limit our ability to reduce our own marketing expenditures, potentially negatively impacting our operating margins and financial results.

In addition, the number of transactions generated by the members of our affinity group marketing partners depends in part on the emphasis that these affinity group marketing partners place on marketing the purchase of cars within their platforms. For example, USAA is a large diversified financial services group of companies serving the United States military community with hundreds of highly competitive product and service offerings. At any given time, USAA’s car-buying service may or may not be a priority relative to its other offerings. Consequently, changesChanges in how USAA FSB promotes and markets the car-buying site we maintain for themit can affect, and has,have from time to time in the past affected, the volume of purchases generated by USAA members. For example, in the past USAA adjusted the location and prominence of the links to our platform on its web pages, which we believe adversely affectingaffected the volume of traffic to our platform, and USAA recently discontinued paid advertising of our platform, which adversely affected the volume of traffic to the platform. Should USAA or one or more of our other affinity group marketing partners decide to de-emphasizedeemphasize the marketing of our platform, or if their marketing efforts are otherwise unsuccessful, our revenue, business and financial results will be harmed.

Failure to maintain or increase our revenue, or to reduce our sales and marketing expense or our technology and development expenseexpenses as a percentage of revenue, would adversely affect our financial condition and profitability.

We expect to make significant future investments to support the further development and expansion of our business and these investments may not result in increased revenue or growth on a timely basis or at all.all, and may not be sufficient to replace the revenue that we have historically derived from our partnership with USAA during or after its wind down. Furthermore, these investments may not decrease as a percentage of revenue if our business grows. In particular, we intendmay continue to increasemake substantial expenditures to acquire or develop and launch new products and enhance our existing products and services, continue to grow and train our network of TrueCar Certified Dealers and continue to upgrade and enhance our system architecture.technology infrastructure. We also intend to continue investing to increase awareness of our brand, including viathrough television, digital and radio advertisements. There can be no assurance that these investments will increasehave the effect of maintaining or increasing revenue or that we will eventually be able to decrease our sales and marketing expense, or our technology and development expense,expenses as a percentage of revenue, and failure to do so would adversely affect our financial condition and profitability.

We are subject to a complex framework of federal and state laws and regulations primarily concerning vehicle sales, advertising and brokering, many of which are unsettled, still developing and contradictory, which have in the past, and could in the future, subject us to claims, challenge our business model or otherwise harm our business.

Various aspects of our business are or may be subject, directly or indirectly, to U.S. federal and state laws and regulations. Failure to comply with suchthose laws or regulations may result in the suspension or termination of our ability to do business in affected jurisdictions or the imposition of significant civil and criminal penalties, including fines or the award of significant damages against us and our TrueCar Certified Dealers in class action or other civil litigation.

State Motor Vehicle Sales, Advertising and Brokering Laws

The advertising and sale of new or used motor vehicles is highly regulated by the states in which we do business. Although we do not sell motor vehicles, state regulatory authorities or third parties could take the position that some of the regulations applicable to dealers or to the manner in which motor vehicles are advertised and sold generally are directly applicable to our business. If our products andor services are determined not to not comply with relevant regulatory requirements, we
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or our TrueCar Certified Dealers could be subject to significant civil and criminal penalties, including fines, or the award of significant damages in class action or other civil litigation, as well as orders interfering with our ability to continue providing our products and services in certain states. In addition, even absent suchwithout a determination to the extentthat our products or services do not comply with relevant regulatory requirements, if dealers are uncertain about the applicability of suchthose laws and regulations to our business, we may lose, or have difficulty increasing the number of, TrueCar Certified Dealers in our network, which would adversely affect our future growth.

Several states in which we do business have laws and regulations that strictly regulate or prohibit the brokering of motor vehicles or the making of so-called “bird-dog” payments by dealers to third parties in connection with the sale of motor vehicles through persons other than licensed salespersons. If our products or services are determined to fall within the scope of suchthose laws or regulations, we may be forced to implement new measures, which could be costly, to reduce our exposure to those obligations, including the discontinuation of certain products or services in affected jurisdictions. Additionally, such a determination could subject usif regulators conclude that our products or services fall within the scope of those laws and regulations, we or our TrueCar Certified Dealers could be subject to significant civil or criminal penalties, including fines, or the award of significant damages in class action or other civil litigation.

In addition to generally applicable consumer protection laws, many states in which we do business have laws and regulations that specifically regulate the advertising for sale of new or used motor vehicles. These state advertising laws and regulations are frequently subject to multiple interpretations and are not uniform from state to state, sometimes imposing inconsistent requirements on the advertiser of a new or used motor vehicle. If the content displayed on the websites we operate is determined or alleged to be inaccurate or misleading, under motor vehicle advertising laws, generally applicable consumer protection laws or otherwise, we could be subject to significant civil and criminal penalties, including fines, or the award of significant damages in class action or other civil litigation. Moreover, such allegations like these, even if unfounded or decided in our

favor, could be extremely costly to defend, could require us to pay significant sums in settlements and could interfere with our ability to continue providing our products and services in certain states.

From time to time, certain state authorities, dealer associations and others have taken the position that aspects of our products and services violate state brokering, bird-dog,“bird-dog” or advertising laws. When suchthese allegations have arisen, we have endeavored to resolve the identified concerns on a consensual and expeditious basis, through negotiation and education efforts, without resorting to the judicial process. In certainsome instances, we have nevertheless been obligatedrequired to suspend all or certain aspects of our business operations in a state pending the resolution of suchthese issues, the resolution of which included the payment of fines in 2011 and 2012 in thean aggregate amount of approximately $26,000. For example, in the beginning of 2012, following implementation of our first nationwide television advertising campaign, state regulatory inquiries with respect tointo the compliance of our products and services with state brokering, bird-dog,“bird-dog” and advertising laws intensified to a degree we had not previously experienced by us.experienced. Responding to and resolving these inquiries, as well as our efforts to ameliorate the related adverse publicity and loss of TrueCar Certified Dealers from our network, resulted in decreased revenues and increased expenses and, accordingly, increased our losses during much of 2012.

In May 2015, we were named as a defendant in a lawsuit filed by the CNCDA in the California Superior Court for the County of Los Angeles, (the “CNCDA Litigation”).which we refer to as the CNCDA Litigation. The complaint filed by the California New Car Dealers Association, seekssought declaratory and injunctive relief based on allegations that we arewere operating in the State of California as an unlicensed automobile dealer and autobroker. For more information concerningIn December 2017, the CNCDA Litigation, referparties entered into a binding settlement agreement to fully resolve the risk factor below, “We facelawsuit, and the litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”

was dismissed.
In July 2015, we were named as a defendant in a lawsuit filed in the California Superior Court for the County of Los Angeles (the “Participating Dealer Litigation”). The complaint, filed by numerous dealers participating on the TrueCar platform, andwhich we refer to as the Participating Dealer Litigation. The complaint, as subsequently amended, sought declaratory and injunctive relief based on allegations that the Company iswe were engaging in unfairly competitive practices and iswere operating as an unlicensed automobile dealer and autobroker in contravention of various state laws. OnIn September 29, 2015, the plaintiffs voluntarily dismissed this lawsuit “without prejudice,” which means that the Participating Dealer Litigation is currently resolved, but that it could be re-filed at a later date. For more information concerning this lawsuit, refer to the risk factor below, “We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”

In September 2015, we received a letter from the Texas Department of Motor Vehicles, (the “Texaswhich we refer to as the Texas DMV Notice”)Notice, asserting that certain aspects of our advertising in Texas constituteconstituted false, deceptive, unfair or misleading advertising within the meaning of applicable Texas law. On September 24, 2015, we responded to the Texas DMV Notice in an effort to resolve the concerns raised by the Texas DMV Notice without making material, unfavorable adjustments to our business practices or user experience in Texas. In light of the fact that no further action has been taken with respect to this matter subsequent tofollowing our response to the Texas DMV Notice, we consider the issues raised by the Texas DMV Notice to be informally resolved, but we cannot assure you that this matter or similar matters will not reemerge in the future.

In December 2015, we were named as a defendant in a putative class action lawsuit filed by Gordon Rose in the California Superior Court for the County of Los Angeles, (the “Californiawhich we refer to as the California Consumer Class Action”).Action. The complaint assertsasserted claims for unjust enrichment, violation of the California Consumer Legal Remedies Act and violation of the
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California Business and Professions Code, based in part on allegations that we are operating in the State of California as an unlicensed automobile dealer and autobroker. The plaintiff seeks to represent aAfter the trial and appellate courts rejected the plaintiff’s motion for class certification, he voluntarily dismissed the remainder of his case, meaning that the California consumers defined as “[a]ll California consumers who purchased an automobile by using TrueCar, Inc.’s price certificate during the applicable statute of limitations.” For more information concerning this lawsuit, refer to the risk factor below, “We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”Consumer Class Action is currently resolved.
In July 2016, we received a letter from the Mississippi Motor Vehicle Commission, (the “Mississippiwhich we refer to as the Mississippi MVC Letter”)Letter, asserting that an aspect of our advertising in Mississippi was not in compliance with a regulation adopted by the Mississippi Motor Vehicle Commission. On July 19, 2016 we responded to the Mississippi MVC Letter in an effort to resolve the concerns raised by the Mississippi MVC Letter without making material, unfavorable adjustments to our business practices or user experience in Mississippi. In light of the fact that no further action has been taken with respect to this matter subsequent tofollowing our response to the Mississippi MVC Letter, we consider the issues raised by the Mississippi MVC Letter to be informally resolved, but we cannot assure you that this matter or similar matters will not reemerge in the future.
In August 2016, we met with investigators from the California Department of Motor Vehicles, (the “California DMV”)or the California DMV, regarding an allegation made by a dealer that we were operating as an unlicensed automobile auction in California, (the “Unlicensedwhich we refer to as the Unlicensed Auction Allegation”).Allegation. We provided the investigators with information about our business in an effort to resolve the

concerns raised by the Unlicensed Auction Allegation. In October 2016, we were informally advised by an investigator for the California DMV that the concerns raised by the Unlicensed Auction Allegation had been resolved, but that the investigators wouldwill continue to evaluate our responses regarding certain matters related to the advertising of new motor vehicles. In light of the fact that no further action has been taken with respect to this matter, we consider the issues raised by the Unlicensed Auction Allegation to be informally resolved, but we cannot assure you that this matter or similar matters will not reemerge in the future.
In March 2017, we received an investigatory subpoena from the Consumer Protection Section of the Office of the Attorney General of the State of Ohio issued pursuant to the Ohio Consumer Sales Practices Act. The investigatory subpoena requested certain information related toabout online content we displayed by us related to vehicles listed for sale by TrueCar Certified Dealers in Ohio. On April 18, 2017, we responded to the investigatory subpoena and supplied the information sought by it.it sought. In light of the fact that no further action has been taken with respect to this matter subsequent to our response to the investigatory subpoena, we consider this matter to be resolved, but we cannot assure you that this matter or similar matters will not reemerge in the future.
In June 2017, we were named as a defendant in a putative class action filed by Kip Haas in the U.S. District Court for the Central District of California, which we refer to as the Federal Consumer Class Action. The complaint assertsasserted claims for violation of the California Business and Professions Code, based principally on allegations of false and misleading advertising and unfair business practices. The complaint seekssought an award of unspecified damages, interest, injunctive relief and attorneys’attorney’s fees. In November 2017, the complaint, the plaintiff seeks to representparties entered into a class of consumers defined as “[a]ll consumers who, between the applicable statute of limitationsbinding settlement agreement, and the present, obtained a TrueCar ‘guaranteed’ price” and “[a]ll consumers, who, between the applicable statute of limitations and the present, obtained a TrueCar ‘guaranteed’ price pertaining to a vehicle located at Riverside Mazda.” For more information concerning this lawsuit, refer to the risk factor below, “We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”was dismissed in December 2017.
If state regulators or other third parties take the position in the future that our products or services violate applicable brokering, bird-dog,“bird-dog” or advertising laws or regulations, responding to suchthose allegations could be costly, could require us to pay significant sums in settlements, could require us to pay civil and criminal penalties, including fines, could interfere with our ability to continue providing our products and services in certain states or could require us to make adjustments to our products and services or the manner in which we derive revenue from our participating dealers, any or all of which could result in substantial adverse publicity, loss of TrueCar Certified Dealers from our network, decreased revenues, increased expenses and decreased profitability.

State Insurance Regulatory Laws
In addition, the advertising and sale of automobile insurance is highly regulated by the states in which we do business. Although we do not sell insurance, certain of our affinity partners may sell insurance to the public in general, and to our users in particular. Further, we may from time to time enter into arrangements with other partners pursuant to which we receive fees based in whole or in part on the volume of our users who choose to interact with those partners. We cannot guarantee you that state regulatory authorities or third parties will not take the position that some of the regulations applicable to insurance brokers or to the manner in which insurance products are advertised or sold generally apply to our platforms or business. If our products or services are determined to fall within the scope of those laws or regulations, we or our partners may be forced to implement new measures, which could be costly, to reduce our or their exposure to those obligations, including the discontinuation of certain products or services in affected jurisdictions. Additionally, if our products or services are determined not to comply with relevant regulatory requirements, we or our partners could be subject to significant civil and criminal penalties, including fines, or the award of significant damages in class action or other civil litigation, as well as orders interfering with our ability to continue providing our products and services in certain states. Even without a determination that our products or services fall within the scope of those laws or regulations or do not comply their requirements, if any of our current or prospective affinity or other partners is uncertain about the applicability of those laws and regulations to our business, those partners may terminate or
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curtail their business with us, or we could have difficulty attracting new partners, which would adversely affect our future growth. Any or all of these adverse effects could result in substantial negative publicity, decreased revenues, increased expenses and decreased profitability.
Federal Advertising Regulations

The Federal Trade Commission, or the FTC, has authority to take actions to remedy or prevent advertising practices that it considers to be unfair or deceptive and that affect commerce in the United States. If the FTC takes the position in the future that any aspect of our business constitutes an unfair or deceptive advertising practice, responding to suchthose allegations could require us to pay significant damages, settlements and civil penalties, or could require us to make adjustments to our products and services, any or all of which could result in substantial adverse publicity, loss of participating dealers, lost revenues, increased expenses and decreased profitability.

In March 2015, we were named as a defendant in a lawsuit filed in the U.S. District Court for the Southern District of New York (the “NY Lanham Act Litigation”). The complaint, purportedly filed on behalf of numerous automotive dealers who are not on the TrueCar platform seeksin the U.S. District Court for the Southern District of New York. The complaint sought injunctive relief in addition to over $250 million in damages based on allegations that we violated the Lanham Act as well as various state laws prohibiting unfair competition and deceptive acts or practices related to our advertising and promotional activities. For more information concerningIn July 2019, the NYcourt granted the Company’s motion for summary judgment as to the plaintiffs’ Lanham Act Litigation, referclaim and, in light of the dismissal of the plaintiffs’ sole federal claim, the court declined to the risk factor below, “We face litigationexercise supplemental jurisdiction over their state-law claims and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”

therefore dismissed them without prejudice.
Federal Antitrust Laws

The antitrust laws prohibit, among other things, any joint conduct among competitors that would lessen competition in the marketplace. Some of the information that we obtain from dealers is competitively sensitive and, if disclosed inappropriately, could potentially be used by dealers to impede competition or otherwise diminish independent pricing activity. A governmental or private civil action alleging the improper exchange of information, or unlawful participation in price maintenance or other unlawful or anticompetitive activity, even if unfounded, could be costly to defend and adversely impact our ability to maintain and grow our dealer network.

In addition, governmental or private civil actions related tounder the antitrust laws could result in orders suspending or terminating our ability to do business or otherwise altering or limiting certain of our business practices, including the manner in

which we handle or disclose dealer pricing information, or the imposition of significant civil or criminal penalties, including fines or the award of significant damages against us and our TrueCar Certified Dealers in class action or other civil litigation.

Federal and State Privacy Laws
We are subject to a variety of federal and state laws and regulations that relate to privacy, data protection and personal information, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation and enforcement of these laws and regulations are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and inconsistently with our current practices and policies. For example, legislative or regulatory actions affecting the manner in which we display content to our users, use or share information or obtain consent to use or share information could adversely affect the manner in which we provide our services or adversely affect our financial results. For more information concerning these and other similar potential actions, refer to the risk factor below: “We collect, process, store, share, disclose and use personal information and other data, and our actual or perceived failure to protect this information and data could damage our reputation and brand and harm our business and operating results.”
Other

The foregoing description of laws and regulations to which we are or may be subject is not exhaustive, and the regulatory framework governing our operations is subject to continuous change. The enactment of new laws and regulations or the interpretation of existing laws and regulations in an unfavorable way may affect the operation of our business, directly or indirectly, which could result in substantial regulatory compliance costs, civil or criminal penalties, including fines, adverse publicity, loss of participating dealers, lost revenues, increased expenses and decreased profitability. Further, investigations by government agencies, including the FTC, into allegedly anticompetitive, unfair, deceptive or otherotherwise unlawful business practices by us or our TrueCar Certified Dealers, could cause us to incur additional expenses and, if adversely concluded, could result in substantial civil or criminal penalties and significant legal liability.




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We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Stockholder Litigation
Milbeck Federal Securities Litigation
In March 2015, we were named as2018, Leon Milbeck filed a defendantputative securities class action complaint against us in the NY Lanham ActU.S. District Court for the Central District of California, which we refer to as the Milbeck Federal Securities Litigation. On June 27, 2018, the court appointed the Oklahoma Police Pension and Retirement Fund as lead plaintiff, who filed an amended complaint on August 24, 2018. The amended complaint sought an award of unspecified damages, interest, attorney’s fees and equitable relief based on allegations that the defendants made false or misleading statements about our business, operations, prospects and performance during a purported class period of February 16, 2017 through November 6, 2017 in the NY Lanham Act Litigation, purportedly filed on behalfviolation of numerous automotive dealers who are not on the TrueCar platform, alleges that we violated the Lanham Act as well as various state laws prohibiting unfair competitionSections 10(b) and deceptive acts or practices related to our advertising and promotional activities. The complaint seeks injunctive relief in addition to over $250 million in damages as a result20(a) of the alleged diversionExchange Act and Rule 10b-5 promulgated thereunder, and that the defendants made actionable misstatements in violation of customersSection 11 of the Securities Act in connection with our secondary offering that occurred during the class period. The amended complaint named us, certain of our then-current and former officers and directors and the underwriters for our secondary offering as defendants. On October 31, 2018, the lead plaintiff dismissed the underwriters from the plaintiffs’ dealerships to TrueCar Certified Dealers. On April 7, 2015, we filed an answer to the complaint. Thereafter, the plaintiffs amended their complaint,litigation “without prejudice,” meaning that they could be reinstated as defendants at a later time, and on July 13, 2015,November 5, 2018, we filed a motion to dismiss the amended complaint.complaint, which the court denied on February 5, 2019. On May 9, 2019, the court granted the lead plaintiff’s motion for class certification. On August 2, 2019, the parties entered into an agreement to settle the Milbeck Federal Securities Litigation on a class-wide basis for $28.25 million, all of which will be paid by our directors’ and officers’ liability insurance. On October 15, 2019, the court granted preliminary approval of the proposed settlement, and on January 27, 2020, the court issued a minute order granting final approval to the settlement. As a result, the Milbeck Federal Securities Litigation is currently resolved and we do not anticipate a loss related to this matter, because the settlement was covered by our directors’ and officers’ liability insurance. However, if similar litigation is filed against us, we may incur significant legal fees, settlements or damages awards. If any such matter is not ultimately resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
California Derivative Litigation
On March 6, 2016,2019, Dean Drulias filed a derivative action complaint nominally on our behalf in the U.S. District Court grantedfor the Central District of California, which we refer to as the California Derivative Litigation, naming us, certain of our then-current and former officers and directors and USAA as defendants. On March 12, 2019, the plaintiff filed an amended complaint, which alleged breach of fiduciary duties, unjust enrichment and violation of Section 10(b) and Section 29(b) of the Exchange Act and sought contribution for damages awarded against us in partthe Milbeck Federal Securities Litigation and denied in partan award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. On May 13, 2019, we filed motions to dismiss the amended complaint on the grounds of forum non conveniens based upon the exclusive forum provision of our charter, failure to make a pre-suit demand on our board of directors and failure to state a claim upon which relief may be granted. On October 23, 2019, the court granted our motion to dismiss.dismiss the state-law claims with prejudice on the grounds of forum non conveniens and granted our motion to dismiss the federal-law claims without prejudice for failure to state a claim. In light of these rulings, the court declined to address our motion to dismiss for failure to show pre-suit demand futility. The litigation is currentlycourt permitted the plaintiff to amend his complaint with respect to the dismissed federal-law claims, but on November 5, 2019, he informed the court that he declined to do so and stated his intent to appeal the court’s ruling. On November 18, 2019, the court entered judgment in favor of the expert discovery phase.defendants and against the plaintiff, and on December 13, 2019, the plaintiff appealed that judgment. We believe that the portions of the amended complaint that survived our motion to dismiss areappeal is without merit, and we intend to vigorously defend ourselves in this matter. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damagedamages awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Delaware Consolidated Derivative Litigation
In August 2019, three purported stockholder derivative actions were filed in Delaware alleging a variety of claims nominally on our behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation. The complaints named us, certain of our then-current and former directors and officers, USAA and, in one of the actions, certain of entities affiliated with USAA and certain of our current and former directors as defendants. On October 7, 2019, the Delaware Court of Chancery consolidated the cases into a single action in that court bearing the caption In re TrueCar, Inc. Stockholder Derivative Litigation, which we refer to as the Delaware Consolidated Derivative Litigation. On November 6, 2019, the plaintiffs filed a consolidated complaint against all of the defendants named in the prior actions, asserting claims for breach of fiduciary duty, unjust enrichment, contribution and
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indemnification against our current and former officers and directors, and claims for aiding and abetting breaches of fiduciary duty against the entities affiliated with USAA and with our current and former directors. The plaintiffs seek an award of damages against the defendants on our behalf and various alleged corporate governance reforms. On December 19, 2019, we filed motions to dismiss for failure to make a pre-suit demand and failure to state a claim. We believe that the consolidated complaint is without merit, and intend to vigorously defend ourselves in this matter. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damages awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Lee Derivative Litigation
In December 2019, Sulgi Lee, a purported stockholder, filed a derivative action in the Delaware Court of Chancery alleging a variety of claims nominally on our behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation, which we refer to as the Lee Derivative Litigation. The complaint named us, certain of our then-current and former directors and officers and USAA as defendants. The plaintiff seeks an award of damages against the defendants on our behalf and various alleged corporate governance reforms. On May 5, 2020, the court entered the parties’ stipulation to stay the Lee Derivative Litigation pending the outcome of the motions to dismiss in the Delaware Consolidated Derivative Litigation. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damages awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Delaware Federal Derivative Litigation
In April 2019, each of Ara Afarian and Shelley Niemi filed a derivative action complaint nominally on our behalf in the U.S. District Court for the District of Delaware naming us, certain of our then-current and former directors and officers and USAA as defendants. Each complaint alleged breach of Section 29(b) of the Exchange Act as well as breach of fiduciary duties and unjust enrichment and sought contribution for damages awarded against us in the Milbeck Federal Securities Litigation and an award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. The Niemi complaint also sought rescission of certain contracts. On April 17, 2019, the cases were consolidated into a single action bearing the caption In re TrueCar, Inc. Shareholder Derivative Litigation, which, together with the California Derivative Litigation, the Lee Derivative Litigation and the Delaware Chancery Derivative Litigation, we refer to as the Derivative Litigation. On September 4, 2019, the court granted the plaintiffs’ unopposed motion to voluntarily dismiss the litigation without prejudice, meaning it could be re-filed at a later date. As a result, the litigation is currently resolved and we do not anticipate a loss related to this matter. However, if similar litigation is filed against us, we may incur significant legal fees, settlements or damages awards. If any such matter is not ultimately resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Trademark Litigation
In April 2020, we were named as a defendant in a lawsuit filed by Six Star, Inc. in the U.S. District Court for the Middle District of Florida. The complaint alleges that our new “BUY SMARTER DRIVE HAPPIER” slogan infringed and diluted Six Star’s “BUY SMART BE HAPPY” trademark and included claims of false advertising and deceptive and unfair trade practices. The complaint seeks injunctive relief in addition to certain monetary awards. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damages awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

***
In May 2015, we were named as a defendant in the CNCDA Litigation. The complaint in the CNCDA Litigation seeks declaratory and injunctive relief based on allegations that we are operating in the State of California as an unlicensed automobile dealer and autobroker. On July 20, 2015, we filed a “demurrer” to the complaint, which is a pleading that requests the court to dismiss the case. The plaintiffs subsequently amended their complaint, and on September 11, 2015, we filed a demurrer to the amended complaint. On December 7, 2015, the Court granted our demurrer in its entirety, but afforded the CNCDA the opportunity to file a second amended complaint. The CNCDA filed a second amended complaint on January 4, 2016. The second amended complaint reiterates the claims in the prior complaints and adds claims under theories based on the federal Lanham Act and California unfair competition law. On February 3, 2016, we filed a demurrer to the second amended complaint. On March 30, 2016, the Court granted in part and denied in part our demurrer to the second amended complaint, dismissing the Lanham Act claim but declining to dismiss the balance of the claims at the demurrer stage of the litigation. On May 31, 2016, based on certain intervening developments in state law, the Court announced that it would reconsider its March 30, 2016 order, and it invited the parties to file new briefs on the demurrer issues. On July 15, 2016, the Court heard oral argument on reconsideration of the demurrer issues. On July 25, 2016, the Court granted in part and denied in part the Company’s demurrer to the second amended complaint, just as it had done in its March 30, 2016 order. The litigation is currently approaching the conclusion of the discovery phase and was previously scheduled for trial in August 2017. On April 3, 2017, the Court indicated that the trial date would be postponed to a future date. On May 17, 2017, the Court scheduled trial to begin on December 11, 2017. We believe that the portions of the second amended complaint that survived the Court’s reconsideration of our demurrer are without merit, and we intend to vigorously defend ourselves in this matter. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damage awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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In May 2015, a purported securities class action complaint was filed in the U.S. District Court for the Central District of California (the “Federal Securities Litigation”) by Satyabrata Mahapatra naming TrueCar and two other individuals not


affiliated with TrueCar as defendants. On June 15, 2015, the plaintiff filed a Notice of Errata and Correction purporting to name Scott Painter and Michael Guthrie as individual defendants in lieu of the two individual defendants named in the complaint. On October 5, 2015, the plaintiffs amended their complaint. As amended, the complaint in the Federal Securities Litigation seeks an award of unspecified damages, interest and attorneys’ fees based on allegations that the defendants made false and/or misleading statements, and failed to disclose material adverse facts about TrueCar’s business, operations, prospects and performance. Specifically, the amended complaint alleges that during the putative class period, the defendants made false and/or misleading statements and/or failed to disclose that: (i) TrueCar’s business practices violated unfair competition and deceptive trade practice laws (i.e., the issues raised in the NY Lanham Act Litigation); (ii) TrueCar acts as a dealer and broker in car sales transactions without proper licensing, in violation of various states’ laws that govern car sales (i.e., the issues raised in the CNCDA Litigation); and (iii) as a result of the above, TrueCar’s registration statements, prospectuses, quarterly and annual reports, financial statements, SEC filings, press releases, and other statements and documents were materially false and misleading at times relevant to the amended complaint and putative class period. The amended complaint asserts a putative class period stemming from May 16, 2014 to July 23, 2015. On October 19, 2015, we filed a motion to dismiss the amended complaint. On December 9, 2015, the Court granted our motion to dismiss and dismissed the case in its entirety. On January 8, 2016, the plaintiff filed a notice of appeal. On June 20, 2016, the plaintiff filed a motion for voluntary dismissal of the appeal. The motion was granted by the Court on June 27, 2016. As this case has been dismissed, we do not anticipate a loss related to this matter. However, if similar litigation is filed against us, we may incur significant legal fees, adverse changes in our dealer network, settlements or damage awards as a result. If any such matters are not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In July 2015, we were named as a defendant in the Participating Dealer Litigation. Both as originally filed and as subsequently amended, the complaint in the Participating Dealer Litigation sought declaratory and injunctive relief based on allegations that the Company is engaging in unfairly competitive practices and is operating as an unlicensed automobile dealer and autobroker in contravention of various state laws. Neither the original nor amended complaint sought an award of money damages. On September 29, 2015, the plaintiffs voluntarily dismissed this lawsuit “without prejudice,” which means that the Participating Dealer Litigation is currently resolved, but that it could be re-filed at a later date. If the Participating Dealer Litigation is re-filed at a later date or if similar litigation is filed against us, we may incur significant legal fees, adverse changes in our dealer network, settlements or damage awards as a result. If any such matters are not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In August 2015, the Company, certain of its executives and directors, and the underwriters of the Company’s initial public offering and secondary offering were named as defendants in a putative class action lawsuit filed by Ning Shen and William Fitzpatrick in California Superior Court under the federal securities laws (the “California State Court Securities Litigation”).  The complaint alleged that TrueCar’s registration statements in connection with the offerings contained false or misleading statements of material facts, and failed to disclose material adverse facts about the Company’s business, operations, prospects, and performance.  On September 2, 2015, following our removal of the action from California state court to the U.S. District Court for the Central District of California, the plaintiffs voluntarily dismissed this lawsuit “without prejudice,” which means that the California State Court Securities Litigation is currently resolved, but that it could be re-filed at a later date. If the California State Court Securities Litigation is re-filed at a later date or if additional similar litigation, such as the Federal Securities Litigation, is filed against us, we may incur significant legal fees, settlements or damage awards as a result. If any such matters are not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In December 2015, we were named as a defendant in the California Consumer Class Action. The complaint asserted claims for unjust enrichment, violation of the California Consumer Legal Remedies Act, and violation of the California Business and Professions Code, based principally on factual allegations similar to those asserted in the NY Lanham Act Litigation and the CNCDA Litigation. In the complaint, the plaintiff sought to represent a class of California consumers defined as “[a]ll California consumers who purchased an automobile by using TrueCar, Inc.’s price certificate during the applicable statute of limitations.” On January 12, 2016, the Court entered an order staying all proceedings in the case pending an initial status conference, which was previously scheduled for April 13, 2016. On March 16, 2016, the case was reassigned to a different judge. As a result of that reassignment, the initial status conference was rescheduled for and held on May 26, 2016. By stipulation, the stay of discovery was continued until a second status conference, which was scheduled for October 12, 2016. On July 13, 2016, the plaintiff amended his complaint. The amended complaint continues to assert claims for unjust enrichment, violation of the California Consumer Legal Remedies Act, and violation of the California Business and Professions Code. The amended complaint retains the same proposed class definition as the initial complaint. Like the initial complaint, the amended complaint seeks an award of unspecified damages, punitive and exemplary damages, interest, disgorgement, injunctive relief, and attorneys’ fees. On September 12, 2016, the Company filed a demurrer to the amended complaint. On

October 12, 2016, the Court heard oral argument on the demurrer. On October 13, 2016, the Court granted in part and denied in part the Company’s demurrer to the amended complaint, dismissing the unjust enrichment claim but declining to dismiss the balance of the claims at the demurrer stage of the litigation. At a status conference held on January 26, 2017, the Court ruled that discovery could then proceed regarding matters related to class certification only. At a status conference held on July 25, 2017, the Court set a deadline of January 8, 2018 for the filing of the plaintiff’s motion for class certification and provided that discovery may continue to proceed regarding matters related to class certification only at this time. An additional status conference has been scheduled for January 12, 2018. We believe that the amended complaint is without merit, and we intend to vigorously defend ourselves in this matter. Based on the current stage of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damage awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In June 2017, we were named as a defendant in the Federal Consumer Class Action. The complaint asserts claims for violation of the California False Advertising Act and violation of California’s Unfair Business Practices Act, based principally on allegations of false and misleading advertising and unfair business practices. The complaint seeks an award of unspecified damages, interest, injunctive relief, and attorneys’ fees. In the complaint, the plaintiff seeks to represent a class of consumers defined as “[a]ll consumers who, between the applicable statute of limitations and the present, obtained a TrueCar ‘guaranteed’ price” and “[a]ll consumers, who, between the applicable statute of limitations and the present, obtained a TrueCar ‘guaranteed’ price pertaining to a vehicle located at Riverside Mazda.” We believe that the complaint is without merit, and we intend to vigorously defend ourselves in this matter in the event that a settlement is not consummated on terms agreeable to the Company. On or around October 23, 2017, the parties reached an agreement in principle to settle this matter on an individual (non-classwide) basis for the payment of an immaterial amount to Mr. Haas. Because the anticipated settlement has not yet been consummated, based on the preliminary nature of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damage awards resulting from this or other civil litigation. If this matter is not settled on terms consistent with the agreement in principle or otherwise resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In October 2017, we were named as a defendant in a lawsuit filed by Cox Automotive, Inc. ("Cox Automotive") in the Supreme Court of the State of New York in the County of Nassau (the “Cox Automotive Litigation”). As it relates to us, the complaint in the Cox Automotive Litigation seeks an award of unspecified damages, disgorgement, return of property taken or retained, injunctive relief and attorneys’ fees. The complaint in the Cox Automotive Litigation alleges that we engaged in tortious interference with a contractual relationship between Cox Automotive and one of its former employees, among other claims against the former employee, who is also named as a defendant in the lawsuit. We believe that the complaint is without merit, and we intend to vigorously defend ourselves in this matter. On October 20, 2017, the court granted a temporary restraining order prohibiting us from employing the former Cox Automotive employee pending the court’s ruling on the request by Cox Automotive for the entry of a preliminary injunction. Oral argument, on request by Cox Automotive, for the entry of a preliminary injunction has been scheduled for November 13, 2017. Based on the preliminary nature of the proceedings in this case, the outcome of this legal proceeding, including the anticipated legal defense costs, remains uncertain; however, we may incur significant legal fees, settlements or damage awards resulting from this or other civil litigation. If this matter is not resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As a public company, we face the risk of shareholder lawsuits, particularly if we experience declines in the price of our common stock. In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies, and as noted immediately above, such lawsuits havethis type of lawsuit has been instituted against us in the form of the Milbeck Federal Securities Litigation and the California State Court Securities Litigation.Derivative Litigation, among others. Additional lawsuits of this type or similar types, if instituted against us or one or more of our officers or directors, whether arising from alleged facts the same as, similar to or different from those alleged in the Milbeck Federal Securities Litigation or the California State Court SecuritiesDerivative Litigation, could result in significant legal fees, settlements or damage awards, as well as the diversion of our management’s attention and resources, and thus could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We will incurhave incurred significant legal fees in our defense of certain of the NY Lanham Act Litigation, the CNCDA Litigation and the California Consumer Class Action,matters referred to above and we may incur significantadditional fees and other liabilities in our defense of the Federal Consumer Class Actionconnection with those matters that are still pending and the Cox Automotive Litigation or fees associated withany additional lawsuits that may be filed against us or one or more of our officers or directors hereafter.  TheOur insurance policies may not provide sufficient coverage to adequately mitigate the legal fees and potential liabilities arising from anythese matters and, even where fees and liabilities are covered by those policies, we may be unable to fully collect the insurance proceeds in a timely manner or all ofat all. As a result, these mattersfees and other liabilities could have a material adverse effect on our financial condition, results of operations and cash flows.

We participate in a highly competitive market, and pressure from existing and new companies may adversely affect our business and operating results.
We face significant competition from companies that provide vehicle inventory listings, vehicle information, lead generation and car-buying services designed to reach consumers and enable dealers to reach these consumers.
Our competitors offer various products and services that compete with us. Some of these competitors include:
•Internet search engines and online automotive sites such as Google, AutoTrader.com,Amazon Vehicles, Autotrader.com, eBay Motors, Autoweb.comAutoWeb.com (formerly Autobytel.com), Edmunds.com, KBB.com, Cargurus.comCarSaver.com, CarGurus.com and Cars.com; 
•sites operated by automobile manufacturers such as General Motors and Ford;
•online automobile retailers such as Carvana and Vroom;
•providers of offline, membership-based car-buying services such as the Costco Auto Program; and 
•offline automotive classified listings, such as trade periodicals and local newspapers. 

We compete with many of the companies that provide the above-mentioned companiesproducts and services, among other companies, for a share of car dealers’ overall marketing budget for online and offline media marketing spend. To the extent thatIf car dealers come to view alternative marketing and media strategies to be superior to TrueCar,us, we may not be able to maintain or grow the number of TrueCar Certified Dealers and our TrueCar Certified Dealers may sell fewer cars to users of our platform, and our business, operating results and financial condition will be harmed.
We also expect that new competitors will continue to enter the automotive retail industry with competing products and services, which could have an adverse effect on our revenue, business and financial results.
Our competitors could significantly impede our ability to expand and optimize our network of TrueCar Certified Dealers and to reach consumers. Our competitors may also develop and market new technologies that render our existing or future products and services less competitive, unmarketable or obsolete. In addition,Moreover, if our competitors develop products or services with similar or superior functionality to our solutions, we may need to decrease the prices for our solutions in order to remain competitive. If we are unable to maintain our current pricing structure due to competitive pressures, our revenue will be reduced and our operating results will be negatively affected.
Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, and the ability to devote greater resources to the development, promotion and support of their products and services. Additionally, they may have more extensive automotive industry relationships, than we have, longer operating histories and greater name recognition.recognition than we have. As a result, these competitors may be better able to respond more quickly with new technologies and to undertake more extensive marketing or promotional campaigns. In addition, to the extentFurther, if any of our competitors have existing relationships with dealers or automobile manufacturers for marketing or data analytics solutions, those dealers and
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automobile manufacturers may be unwilling to continue to partner with us. If we are unable to compete with these companies, the demand for our products and services could substantially decline.
In addition, if one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our current or future third-party data providers, technology partners or other parties with whom we have relationships, thereby limiting our ability to develop, improve and promote our solutions. We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our revenue, business and financial results.
We have in the past undertaken and may in the future pursue acquisitions, divestitures, investments and other similar transactions, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results, and if we do not manage them successfully or if acquired entities or investments fail to perform as expected, our financial results, business and prospects could be harmed.

In pursuing our business strategy, we routinely discuss and evaluate potential acquisitions, divestitures, investments and other similar transactions. For example, we may seek to expand or complement our existing products and services through the acquisition of or investment in attractive businesses and technologies rather than through internal development, such as our acquisition of DealerScience in 2018 and our investment in Accu-Trade in 2019. Similarly, from time to time we evaluate whether a divestiture or other transaction would be in the best interests of our stockholders.
These transactions require significant management time and resources and have the potential to divert our attention from our ongoing business, and we may not manage them successfully. Our ability to do so is unproven. We may be required to make substantial investments of resources to support these transactions, and we cannot assure you that they will be successful. Additionally, strategic investments in and partnerships with other businesses expose us to the risk that we may not be able to control the operations of those businesses, which could decrease the benefits we realize from a particular relationship. We are also exposed to the risk that our partners in strategic investments may encounter financial difficulties that could lead to disruption of their activities, or impairment of assets acquired, which could adversely affect future reported results of operations and stockholders’ equity. 
The risks we face in connection with these transactions include: 
•diversion of management time and focus from operating our business; 
•additional operating losses and expenses of other businesses;
•integration of acquisitions, including coordination of technology, research and development and sales and marketing functions; 
•transition of the other business’s users to our website and mobile applications; 
•retention of employees from an acquired business, or separation of employees from a divested business; 
•cultural and other challenges associated with integrating employees from an acquired business into our organization; 
•integration of an acquired business’s accounting, management information, human resources, legal and other administrative systems, or extrication of such systems from a divested business; 
•the need to implement or improve controls, procedures and policies at a business that prior to the transaction may have lacked effective controls, procedures and policies; 
•potential write-offs of intangibles or other assets acquired in acquisitions or similar transactions, or write-downs of investments, that may have an adverse effect our operating results in a given period;
•the risks associated with the businesses, products or technologies in question, which may differ from or be more significant than the risks our business faces;
•the risks associated with obtaining necessary regulatory approval for a transaction;
•liability for the activities, products or services of the business, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and 
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•litigation or other claims in connection with the business, product or technology in question, including claims from terminated employees, consumers, former stockholders or other third parties.
Our failure to address these risks or other problems encountered in connection with our past or future transactions could cause us to fail to realize the anticipated benefits of those transactions, cause us to incur unanticipated liabilities and harm our business generally. Future transactions could also result in dilutive issuances of our equity securities; the incurrence of debt, contingent liabilities or amortization expenses; or the write-off of goodwill, any of which could harm our financial condition. Also, the anticipated benefits of any transaction may not materialize.
We rely, in part,on Internet search engines to drive traffic to our website, and if we fail to appear prominently in the search results, our traffic would decline and our business would be adversely affected.
We depend in part on Internet search engines such as Google, Bing and Yahoo! to drive traffic to our website.website, both through organic search results and the purchase of car-related keywords. For example, when a user types an automobile into an Internet search engine, we rely on a high organic search ranking of our webpages in these search results to refer the user to our website. However, our ability to maintain high, non-paid search result rankings is not within our control. Our competitors’ Internet search engine optimization efforts may result in their websites receiving a higher search result page ranking than ours, or Internet search engines could revise their methodologies in a way that would adversely affectaffects our search result rankings. If Internet search engines modify their search algorithms in ways that are detrimental to us, or if our competitors’ search engine optimization efforts are more successful than ours, overall growth in our user base could slow, or our user base could decline.decline or we could attract a less in-market user base. Internet search engine providers could provide automobile dealer and pricing information directly in search results, align with our competitors or choose to develop competing services. Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future.
We also purchase car-related keywords by anticipating what words and terms consumers will use to search for car purchases on search engines and then bid on those words and terms in the search engines’ auction systems. Search engines frequently update and change the logic that determines the placement and ordering of results on a user’s search, which may reduce the effectiveness of the keywords we have purchased. Further, we bid against our competitors and other advertisers for preferred placement on the search engines’ results pages. Many of our competitors have greater resources with which to bid and better brand recognition than we do. We have experienced increased competition for paid advertisements, which has increased the cost of paid Internet search advertising and as a result our marketing and advertising expenses. Search engines may also adopt a more aggressive auction-pricing system for keywords that causes us to incur higher advertising costs or reduces our market visibility to prospective users. If paid search advertising costs further increase or become cost-prohibitive, whether because of increased competition, pricing system changes, algorithm changes or otherwise, our advertising expenses could rise significantly or we could reduce or discontinue our paid search advertisements. Moreover, the use of voice recognition technology like Alexa, Google Assistant, Cortana or Siri may drive traffic away from search engines, which could reduce traffic to our website. Any reduction in the number of users directed to our website through Internet search engines could harm our business and operating results.
The failureOur platform must integrate with a variety of web browsers and operating systems, both on desktop computers and mobile devices, that are developed by others, and our business is dependent on our ability to maintain our brandplatform’s functionality and deliver a compelling consumer experience across those browsers and operating systems.
We interact with users through our Internet-based platform, which is designed to operate on a variety of network, hardware and software platforms that are developed by others and over which we have no control, including the numerous web browsers and operating systems that consumers use to access the Internet, both on desktop computers and mobile devices. As a result, we need to continuously modify and enhance our platform to keep pace with consumers’ evolving expectations and changes in network, hardware, software, communication and browser technologies. If we are unable to respond in a timely and cost-effective manner to these rapid technological developments, or otherwise to provide a compelling consumer experience across each of the devices and browsers that consumers prefer to use, our platform could become obsolete or otherwise attract fewer users, which could adversely impact our revenues, business and operating results.
The success of our business depends on consumers’ continued and unimpeded access to our platform on the Internet.
Consumers must have Internet access to use our platform. Some providers may take measures that affect consumers’ ability to use our platform, such as degrading the quality of the data packets we transmit over their lines, giving those packets lower priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their customers more for using our platform. If network operators attempt to interfere with our services, extract fees from us to deliver our platform or otherwise engage in discriminatory practices, our business could be adversely affected.
In December 2010, the FCC adopted so-called “net neutrality” rules barring Internet providers from blocking or slowing down access to online content, protecting services like ours from this type of interference, which we refer to as the
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Federal Net Neutrality Regulations. Effective June 11, 2018, however, the FCC repealed the Federal Net Neutrality Regulations, and considerable uncertainty currently surrounds the regulatory environment in this field. For example, on September 30, 2018, California enacted the California Internet Consumer Protection and Net Neutrality Act of 2018, or the California Net Neutrality Act. Among other things, the California Net Neutrality Act, which took effect on January 1, 2019, imposes net neutrality requirements similar to the Federal Net Neutrality Regulations. On the day of its enactment, the federal government sued California, claiming that the California Net Neutrality Act is preempted by federal law, and the State of California subsequently agreed not to enforce the California Net Neutrality Act pending the resolution of the ongoing legal challenges. On October 1, 2019, the U.S. Court of Appeals for the D.C. Circuit upheld the FCC’s repeal of the Federal Net Neutrality Regulations, but overturned the FCC’s preemption of state-level regulations like the California Net Neutrality Act and similar enactments of other states, including Oregon, Vermont and Washington, and remanded to the FCC for further action. The FCC has not yet taken formal action in response to the court’s remand. As a result, considerable uncertainty currently complicates this area of the law. Additionally, on April 10, 2019, the United States House of Representatives voted in favor of legislation that would harmreinstate the Federal Net Neutrality Regulations. We cannot predict the final outcome of the legal challenges to the FCC’s action and the California Net Neutrality Act or whether other states or governmental entities, including the U.S. Congress, will respond to the D.C. Circuit’s decision, the FCC’s decision or the enactment of the California Net Neutrality Act. Within this regulatory environment, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business.
If consumers and dealers do not accept our new branding, our financial performance and our ability to grow unique visitor traffic and to expand our dealer network.network could be negatively affected.
In January 2020, we launched a rebranding campaign that included a change in our logo and extensive advertising and promotional activity. We expect to invest substantial amounts in advertising, supplies and capital, and changed exterior and interior signing. We also cannot be certain that we will recover the costs we will incur in the course of the rebranding campaign or that it will improve our brand recognition. If consumers and dealers do not accept our new branding, our sales, performance and consumer and dealer relationships could be adversely affected.
MaintainingMoreover, following our rebranding, maintaining and enhancing the TrueCar brand largely depends on the success of our efforts to maintain the trust of our users and TrueCar Certified Dealers and to deliver value to each of our users and TrueCar Certified Dealers. If our existing or potential users come to perceive that we are not focused primarily on providing them with a better car-buying experience or if dealers do not perceive TrueCarus as offering a compelling value proposition, our reputation and the strength of our brand willwould be adversely affected.
affected, even if the rebranding initiative is successful.
Complaints or negative publicity about our business practices, our marketing and advertising campaigns, our compliance with applicable laws and regulations, the integrity of the data that we provide to users, our approach to data privacy and security issues and other aspects of our business, irrespective of their validity, could diminish users’ and dealers’ confidence in and use of our products and services and adversely affect our brand. These concerns could also diminish the trust of existing and potential affinity group marketing partners. There can be no assurance that we will be able to maintain or enhance our brand, and failure to do so wouldcould harm our business growth prospects and operating results.
Our ability to enhance our current product offerings, or grow complementary product offerings, may be limited, which could negatively impact our growth rate, revenues and financial performance.
As we introduce new offerings, such as DealerScience’s digital retailing tools and our TrueCar Trade, TrueCar Reach and Sponsored Listings products, or enhance existing products and services on our platform, we may incur losses or otherwise fail to enter these markets successfully. Our expansion into these markets may place us in competitive and regulatory environments with which we are unfamiliar and involves various risks, including the need to invest significant resources and the possibility that returns on suchthese investments will not be achieved for several years, if at all.
In attempting to enhance our current product offerings and establish our new product offerings, we expect to incur significant expenses and face various other challenges, such as expanding our sales force and technology teams or management personnel to cover these markets and complying with complicated regulations that may apply to these markets. For example, in addition to management attention and redeployment of existing employees and resources, since the inception of our TrueCar Trade product with Accu-Trade and certain of its affiliates, we have incurred $8.4 million in license fees and revenue share costs. We incurred $0.8 million in such license fees and revenue share costs in the three months ended March 31, 2020.

In addition, we may not successfully demonstrate the value of these expanded or complementary products to dealers or consumers, and failure to do so would compromise our ability to successfully expand our user experience and could harm our growth rate, revenue and operating performance.


If we sufferFurther, key contractual counterparties, including our affinity group marketing partners and automobile manufacturers who participate in our incentive programs, are increasingly requiring that our products adhere to technical standards, including
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accessibility standards, more stringent than those currently required by applicable law. Ensuring that our products adhere to these requirements could divert our attention from key initiatives and require the investment of a significant interruptionamount of resources and, if we are unsuccessful in implementing the standards, could negatively affect our ability to gain access to third-party data,reputation and contractual relationships, which could adversely affect our growth rate, revenue and financial and operating performance.
We may make product and investment decisions that do not prioritize short-term financial results and may not produce the long-term benefits that we expect.
We may be unable to maintain key aspectsmake product and investment decisions that do not prioritize short-term financial results if we believe that those decisions are consistent with our mission or will otherwise improve our financial performance over the long term. For example, we completed a long-term replatforming of our usertechnology platform in 2018 that required a substantial dedication of resources over a sustained period of time and therefore caused a delay in pursuing other projects that may have had a more immediate financial impact. We also may introduce new features or other changes to existing products, or introduce new stand-alone products, that attract users away from products or use cases where we have more proven means of monetization. For example, in January 2020, we introduced a new consumer experience includingthat allows our users more control over the TrueCar Curve,dealers to which their contact information is provided and the specific information so provided. Although we believe that this experience will ultimately improve our product and yield long-term financial benefits, in the short-term it could result in less revenue as our traditional product monetizes fewer users, and it could ultimately be unsuccessful. These decisions may adversely affect our business and operating results will suffer.
Our business relies on our ability to analyze data for the benefit of our users and the TrueCar Certified Dealers in our network. We use data obtained pursuant to agreements with third parties to power certain aspects of the user experience on our platform, including the TrueCar Curve, a graphical distribution of what others paid for the same make and model of car. In addition, the effectiveness of our user acquisition efforts depends in part on the availability of data relating to existing and potential users of our platform. If we are unable to renew data agreements, or utilize alternative data sources, as certain agreements expire, and we experience a material disruption in the data provided to us, the information that we provide to our users and TrueCar Certified Dealers may be limited, the quality of this information may suffer, the user experience may be negatively affected and certain functionality on our platform may be disabled, and our business, financial condition, results of operations and cash flows could be materially and adversely affected.

may not produce the long-term benefits that we expect.
Our business is subject to risks related to the larger automotive ecosystem, including interest rates, consumer demand, global supply chain challenges and other macroeconomic issues.
Decreases in consumer demand could adversely affect the market for automobile purchases and, as a result, reduce the number of consumers using our platform. Consumer purchases of new and used automobiles generally decline during recessionary periods and other periods in which disposable income is adversely affected. For example, the number of new vehicle sales in the United States decreased from approximately 16.1 million in 2007 to approximately 10.4 million in 2009, according to the Bureau of Economic Analysis. Analysis, and we expect the coronavirus pandemic to have a similarly negative effect. For more information on the effect of the coronavirus pandemic on the macroeconomic environment and, as a result, on our business, refer to the section above entitled “Risks Related to the Coronavirus Pandemic.”
Various economic uncertainties, including stock market and commodity pricing volatility, could lead to such a downturn that may impact our business. Purchases of new and used automobiles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy, including the cost of energy and gasoline, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, new tariffs or border adjustment taxes, increased unemployment and increased unemployment. A reductionchanges in environmental regulations and fuel economy standards.
Interest rates in particular can have a significant impact on automobile purchases and affordability due to the direct relationship between interest rates and monthly loan payments, a critical factor for many consumers. Potential interest rate increases by the U.S. Federal Reserve could negatively affect the number of automobilesvehicles purchased by consumers, and any reduction in purchases could adversely affect automobile dealers and car manufacturers and lead to a reduction in other spending by these constituents, including targeted incentive programs. In addition, our business may be negatively affected by challenges to the larger automotive ecosystem, including challenges arising from growth in car manufacturer subscription service offerings, increasing interest rates on loans, global supply chain challenges, such as those resulting from automotive tariffs or the Japanese tsunami in 2011, and other macroeconomic issues. TheAny of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Further, in 2018, tariffs were imposed on certain imports of steel and aluminum into the United States. These tariffs are likely to increase the cost of manufacturing automobiles in the United States. Substantial tariffs have also been proposed on the importation into the United States of European automobiles, which represent a material portion of the new vehicles sold in the United States, and automobile parts from China. Each of these policies could materially increase the cost to U.S. consumers of new automobiles and thereby decrease the number of new vehicle sales in the United States, which could have a material adverse impact on our business, results of operations, financial condition and prospects.
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We may fail to respond adequately to changes in technology and consumer demands that could lead to decreased demand for automobiles.
In recent years, the market for motor vehicles has been characterized by rapid changes in technology and consumer demands. Self-driving technology, ride sharing, transportation networks and other fundamental changes in the automotive industry and transportation technology and infrastructure could have a substantial impact on consumer demand for the purchase or lease of automobiles. If we fail to respond adequately to a decline in the demand for automobile purchases, it could have a material adverse effect on our business, growth, operating results, financial condition and prospects.

Additionally, we are not able to monetize a transaction in which a manufacturer sells an automobile directly to a consumer without the involvement of a TrueCar Certified Dealer, as Tesla does. If this practice becomes more widespread and we are not able to adjust, including in response to changing consumer demands during and after the coronavirus pandemic, our business, growth, operating results, financial condition and prospects could be adversely affected.
If we suffer a significant interruption in our ability to gain access to third-party data, we may be unable to maintain key aspects of our user experience, including the TrueCar Curve, and our business and operating results would suffer.
Our business relies on our ability to analyze data for the benefit of our users and the TrueCar Certified Dealers in our network. We use data obtained through agreements with third parties to power certain aspects of the user experience on our platform, including the TrueCar Curve, a graphical distribution of what others paid for the same make and model of car. In addition, the effectiveness of our user acquisition efforts depends in part on the availability of data relating to existing and potential users of our platform. If we are unable to renew data agreements as they expire, or use alternative data sources, and we experience a material disruption in the data provided to us, the information that we provide to our users and TrueCar Certified Dealers may be limited, the quality of this information may suffer, the user experience may be negatively affected and certain functionality on our platform may be disabled, and our business, financial condition, results of operations and cash flows would be materially and adversely affected.
Our unique visitors, revenue and operating results fluctuate due to seasonality.

Our revenue trends are a reflection ofreflect consumers’ car buying patterns. Across the automotive industry, consumers tend to purchase a higher volume of cars in the second and third quarters of each year, due in part to the introduction of new vehicle models from manufacturers. In the past, these seasonal trends have not been pronounced due the overall growth of our business, but we expect that in the future our revenues willmay be affected more by these seasonal trends.trends, except to the extent that they are disrupted by greater macroeconomic events, such as those caused by the coronavirus pandemic. Our business willcould also be impacted by cyclical trends affecting the overall economy, specifically the retail automobile industry, as well as by actual or threatened severe weather events.

or other significant events outside of our control.
We may require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our operating results, business and financial condition may be harmed.
Since our founding, we have raised substantial equity and debt financing to support the growth of our business. Because we intend to continue to make investments to support the growth of our business, we may require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to increase our marketing expenditures to improve our brand awareness, develop new products or services or further improve existing products and services, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in further equity or debt financings to secure additional funds. However, additional funds may not be available when we need them, on terms that are acceptable to us or at all. In addition, our current revolving credit facility contains restrictive covenants relating to our capital raising activities and other financial and operational matters, and any debt financing that we secure in the future could involve further restrictive covenants which may make it more difficult for us to obtain additional capital and to pursue business opportunities. Volatility in the credit markets, including increased volatility due to the economic disruption caused by the coronavirus pandemic, may also have an adverse effect on our ability to obtain debt financing.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition and prospects could be adversely affected.



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Security breaches and improper access to or disclosure of our data or user data, or other hacking and phishing attacks on our systems, could harm our reputation and adversely affect our business.
Our industry is prone to cyberattacks by third parties seeking unauthorized access to our data or users’ data or to disrupt our ability to provide service. Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information, content or payment information from users, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position. In addition, computer malware, viruses, social engineering (such as spear phishing attacks) and general hacking have become more prevalent in our industry, have occurred on our systems in the past and are likely to occur on our systems in the future. Such attacks may cause interruptions to the services we provide, degrade the user experience, cause users to lose confidence and trust in our products, impair our internal systems or result in financial harm to us. Our efforts to protect our data or the data we receive could also be unsuccessful due to software bugs or other technical malfunctions; employee, contractor or vendor error or malfeasance; government surveillance; or other threats. In addition, third parties may attempt to fraudulently induce employees or users to disclose information to gain access to our data or our users’ data. Cyberattacks continue to evolve in sophistication and volume and may be inherently difficult to detect for long periods of time. Although we have developed systems and processes that are designed to protect our data and user data, to prevent data loss and to prevent or detect security breaches, we cannot assure you that such measures will provide absolute security, and we may need to expend significant resources in protecting against or remediating security breaches and cyberattacks.
In addition, some of our third-party partners, including developers, affinity group marketing partners and OEM partners, may receive or store information that we or our users provide. If these partners fail to adopt or adhere to adequate data security practices, or suffer a breach of their networks, our data or our users’ data could be improperly accessed, used or disclosed. Affected users or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper disclosure of data, which could cause us to incur significant expense and liability or result in orders or consent decrees requiring us to modify our business practices. Such incidents or our efforts to remediate those incidents could have a material and adverse effect on our business, reputation or financial results.
We collect, process, store, share, disclose and use personal information and other data, and our actual or perceived failure to protect suchthis information and data could damage our reputation and brand and harm our business and operating results.
We collect, process, store, share, disclose and use personal information and other data provided by consumers and dealers. We rely on encryption and authentication technology licensed from third parties to effect secure transmission of suchthis information. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Any failure or perceived failure to maintain the security of personal and other data that is provided to us by consumers and dealers could harm our reputation and brand and expose us to a risk of loss or litigation and possible liability, any of which could harm our business and operating results.

In addition, fromFrom time to time, concerns have been expressed about whether our products, services or processes compromise the privacy of our users. Concerns about our practices with regard to the collection, use or disclosure of personal information or other privacy-related matters, even if unfounded, could harm our business and operating results.

There are numerous federal, state, local and localforeign laws around the world regarding privacy and the collection, processing, storing,storage, sharing, disclosing, using and protectingdisclosure, use or protection of personal information and other data, thedata. The scope of whichthese laws is changing, they are changing, subject to differing interpretations and whichthey may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules. We generally
Numerous jurisdictions are currently considering, or have enacted, data protection legislation. For example, California recently enacted the California Consumer Privacy Act of 2018, which we refer to as the California Privacy Act. The California Privacy Act, which took effect on January 1, 2020 but contains a “lookback” to January 1, 2019, imposes sweeping data protection obligations on many companies doing business in California and provides for substantial fines for non-compliance and, in some cases, a private right of action for consumers who are victims of data breaches involving their unencrypted personal information. Additionally, on October 11, 2019, the California Department of Justice, which we refer to as the California DOJ, published a notice of proposed rulemaking action with respect to draft regulations to implement the California Privacy Act, which it further amended on February 9, 2020 and March 11, 2020. The California Privacy Act provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The California Privacy Act and regulations promulgated thereunder may increase our compliance costs and potential liability. Modifications to our data processing practices and policies, products and consumer experience that we have made to comply with industry standardsthe California Privacy Act and are subjectsimilar legislation, or that we may be required to make in the future as a result of the continuing changes to the termsrequirements under that legislation or similar future legislation, may materially negatively impact our business, operating results, financial condition and prospects.
Legislation similar to the California Privacy Act has also passed in other states, including Colorado, Maine, Nevada and Utah. The potential effects of these states’ legislation are far-reaching and may require us to incur substantial costs and expenses in an effort to comply, and it is unclear whether, and if so how, the United States Congress will respond to these overlapping, state-by-state enactments.
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Further, many laws, including the Telephone Consumer Protection Act of 1991, the CAN-SPAM Act of 2003 and the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act of 2019, regulate outbound contacts with consumers, such as phone calls, texts or emails. If we, or dealers on our network, are perceived to have violated these or other similar laws and regulations, our brand and reputation could be negatively affected and we could face potentially costly litigation.
Our business operations and data handling procedures are based on industry standards. We maintain and update privacy and information security policies and privacy-relatedemploy an audit and assurance program designed to ensure that we comply with privacy and security-related obligations to third parties. We strive to comply with allmonitor the changing regulatory environment and to address the new requirements of applicable laws policies, legaland regulations and other mandatory obligations and industry codes of conduct relating to privacy and data protection, to the extent possible.protection. However, it is possible that these obligations may be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another, andthat they may conflict with other rules or our practices or that new regulations could be enacted. In addition to the increasing technical and financial burdens they impose on our business, the rapid legislative and other legal developments in this field create considerable uncertainties and impose substantial compliance costs and challenges. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties or our privacy-related legal obligations, including those imposed by the California Privacy Act and other state privacy laws, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which may include personally identifiable information or other user data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others andothers. Any of these consequences could cause consumers and automobile dealers to lose trust in us, which could have a material adverse effect on our business.business and prospects. Additionally, if vendors, developers or other third parties that we work with violate applicable laws or our policies, such violations may also put consumer or dealer information at risk and could in turn harm our reputation, business and operating results.

Our products and internal systems rely on software that is highly technical. If it contains undetected errors or vulnerabilities, our business could be adversely affected.
AOur products and internal systems rely on software, including software developed or maintained internally or by third parties, that is highly technical and complex. In addition, our products and internal systems depend on the ability of that software to store, retrieve, process and manage substantial amounts of data. The software on which we rely has contained, and may in the future contain, undetected errors, bugs or vulnerabilities. Some errors may only be discovered after the code has been released for external or internal use. Errors, vulnerabilities or other design defects within the software on which we rely have in the past, and may in the future, result in a negative experience for consumers, dealers and partners who use our products, delay product introductions or enhancements, result in targeting, measurement or billing errors, compromise our ability to protect consumers’, dealers’ and partners’ data and our intellectual property or lead to reductions in our ability to provide some or all of our products and services. In addition, any errors, bugs, vulnerabilities or defects discovered in the software on which we rely, and any associated degradations or interruptions of service, could result in damage to our reputation, loss of users, loss of revenue or liability for damages, any of which could adversely affect our business and financial results.
Our business is dependent on our ability to maintain and scale our technical infrastructure, and any significant disruption in service on our website or of our mobile applications could damage our reputation and result in a loss of consumers, which could harm our business, brand, operating results and financial condition.
Our brand, reputation and ability to attract consumers, affinity groups and advertisers depend on the reliable performance of our technology platform and content delivery. We have on occasion in the past and may in the future experience significant interruptions with our systems. Interruptions in these systems, whether due to system failures, computer viruses, denial‑of‑servicedenial-of-service attacks or physical or electronic break‑ins,break-ins, could affect the security or availability of our products and services on our website and mobile application and prevent or inhibit the ability of consumers to access our products and services. As our consumer base and the number of TrueCar Certified Dealers grow, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to satisfy consumers’ and dealers’ needs. It is possible that we may not effectively scale and grow our technical infrastructure to accommodate any increased demands. Problems with the reliability or security of our systems or with the upgrading, and architectural unification or scaling of those systemsystems could harm our reputation, result in a loss of consumers, dealers and affinity group marketing partners and result in additional costs. In addition, a significant disruption in our billing systems could affect our ability to match automobile purchases withmade by our users that obtained a Guaranteed Savings Certificatefrom TrueCar Certified Dealers and delay or prevent us from submitting invoices to TrueCar Certified Dealers, receiving payment for such invoices and recognizing revenue related to such purchases.
Although we are developing a unified architecture, our systems currently employ multiple software platforms. As we upgrade our system architecture we may encounter challenges that could impact our business, and our ability to quickly change aspects of our consumer and dealer experiences may be limited. During the third quarter of 2016 we began hosting certain of our systems using an enterprise cloud computing provider; however, a substantial portion of the computer hardware and communications and network infrastructure used to operate our website, mobile applications and billing systems continues to be located at co-location facilities in Los Angeles and Chicago. Although we have two locations, our systems are not fully redundant. In addition, we do not own or control the operation of these facilities. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, denial-of-service attacks, electronic and physical break-ins, computer viruses, earthquakes and similar events. The occurrence of any of these events could result in damage to our systems and hardware or could cause them to fail.
Problems faced by our third-party web-hosting providers could adversely affect the experience of our consumers and dealers. Such providers could close their facilities without adequate notice. Any financial difficulties, up to and including bankruptcy, faced by our third-party web-hosting providers or any of the service providers with whom they contract may have

negative effects on our business, the nature and extent of which are difficult to predict. If our third-party web-hosting providers are unable to keep up with our growing capacity needs, our business could be harmed.

Any errors, defects, disruptions or other performance or reliability problems with our network operations, or with the services we receive from third-party network infrastructure providers, could cause interruptions in access to our products as well as delays and additional expense in arranging new facilities and services and could harm our reputation, business, operating results and financial condition.
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We have begun utilizing an enterprise cloud computing provider to operate certain aspectsrely on Amazon Web Services for the majority of our servicecomputing, storage, bandwidth and anyother services. Any disruption of or interference with our use of these operations could adverselythe Amazon Web Services operation would negatively affect our operations and seriously harm our business.
Amazon provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a “cloud” computing service, and financial results.

We utilize a cloud‑based computing platform operated by a third party in connection with certain aspectswe currently run the vast majority of our business operations.computing on Amazon Web Services.
 Any transition of the cloud services currently provided by Amazon Web Services to another cloud provider would be difficult to implement and would cause us to incur significant time and expense. We are in the process of architectinghave built our software and computer systems so as to utilize cloud‑based data processing,use computing, storage capabilities, bandwidth and other cloud‑based services. Asservices provided by Amazon, some of September 30, 2017,which do not have a portionreadily available alternative in the market. Given this, any significant disruption of our computing processes are cloud‑based, and we are working to significantly increaseor interference with our use of enterprise cloud services. AsAmazon Web Services would negatively impact our operations and seriously harm our business.
If our users or partners are not able to access our products and services through Amazon Web Services or encounter difficulties in doing so, we may lose customers, dealers, partners and revenue. The level of service provided by Amazon Web Services or similar providers may also impact our customers’, dealers’ and partners’ usage of our products and services and satisfaction with us. If Amazon Web Services or similar providers experience interruptions in service regularly or for a result, nowprolonged period of time, or other similar issues, our business would be seriously harmed. Hosting costs also have increased and increasingly going forward,are likely to continue to increase as our user base and user engagement grow and may seriously harm our business if we are unable to grow our revenues faster than the cost of using the services of Amazon or similar providers.
Amazon has broad discretion to change and interpret its terms of service and other policies that apply to us, and those actions may be unfavorable to us. Amazon may also alter how we are able to process data on the Amazon Web Services platform. If Amazon makes changes or interpretations that are unfavorable to us, our business could be seriously harmed. Additionally, any disruption of or interference with the use of these cloud services,Amazon Web Services, including disruptions due to system failures, denial‑of‑servicedenial-of-service or other cyberattacks and computer viruses, or an interruption to the third‑partyAmazon’s systems or in the infrastructure whichthat allows us to connect to the third‑party systemsthem for an extended period, may impact our ability to operate the business and could adversely impact our operations and our business.

Failure to adequately protect our intellectual property could harm our business and operating results.
Our business depends on our intellectual property, the protection of which is crucial to the success of our business. We rely on a combination of patent, trademark, trade secret and copyright law and contractual restrictions to protect our intellectual property. In addition, we attempt to protect our intellectual property, technology and confidential information by requiring our employees and consultants to enter into confidentiality and assignment of inventions agreements and third parties to enter into nondisclosure agreements. These agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property or technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our website features, software and functionality or obtain and use information that we consider proprietary.
Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of the term “TrueCar.”
We currently hold the “TrueCar.com” and “True.com” Internet domain names as well as various other related domain names. The regulation of domain names in the United States is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain all domain names that use the name TrueCar.

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We may in the future be subject to intellectual property disputes, which are costly to defend and could harm our business and operating results.
We may fromFrom time to time, we face allegations that we, or businesses we acquired or in which we invested, have infringed the trademarks, copyrights, patents andor other intellectual property rights of third parties, including from our competitors or non-practicing entities.
For example, in April 2020, a Florida dealer sued us claiming that our new “BUY SMARTER DRIVE HAPPIER” slogan, which is featured in the majority of our marketing materials, infringed its “BUY SMART BE HAPPY” trademark. If this litigation is decided adversely to us, we could be required to change our slogan and replace the marketing materials in which it is featured, which would be costly and could damage our brand. For more information on this litigation, refer to the risk factor above: “We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.”
Patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict and may require us to stop offering some features, purchase licenses or modify our products and features while we develop non-infringing substitutes or may result in significant settlement costs.
In addition, we use open sourceopen-source software in our products and willexpect to use open sourceopen-source software in the future. From time to time, we may face claims againstby companies that incorporate open sourceopen-source software into their products, claiming ownership of, or demanding release of, the source code, the open sourceopen-source software or derivative works that were developed using suchthe software, or otherwise seeking to enforce the terms of the applicable open sourceopen-source license. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our platform or services, any of which would have a negative effect on our business and operating results.

Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, our operating results and our reputation.

ComplyingWe have incurred and will continue to incur substantial costs as a result of operating as a public company, and our management has been and will be required to continue to devote substantial time to compliance with the lawsour public company responsibilities and regulations affecting public companies has increased our costs and the demands on management and could harm our operating results.
corporate governance practices.
As a public company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company and these expenses will increase after we cease to be an “emerging growth company.” Based on the market value of our common stock held by non-affiliates as of June 30, 2017, we will cease to be an “emerging growth company”, effective as of December 31, 2017.expenses. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Act and other laws and rules implemented by the SEC and NASDAQNasdaq impose various requirements on public companies, including requiring changes in relation to corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, thesechanging rules and regulations have increased and will continue tomay increase our legal, accounting and financial compliance costs and have made and will continue to make some activities more time consuming and costly. For example,If, despite our efforts to comply with new or changing laws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us, and our business may be harmed. Further, failure to comply with these ruleslaws, regulations and regulationsstandards may make it more difficult and more expensive for us to obtain directordirectors’ and officerofficers’ liability insurance, and we may be required to accept reduced policy limits and coverage or to incur substantial costs to maintain the same or similar coverage. These rules and regulationscoverage, which could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as executive officers.
As an “emerging growth company” we are currently exempt from the requirement to complyOur compliance with the auditor attestation requirementsapplicable provisions of Section 404 of the Sarbanes-Oxley Act (“Section 404”). When we ceaserelating to be an “emerging growth company” and our independent registered public accounting firm is required to undertake anmanagement assessment of our internal control over financial reporting, the cost of our compliance with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404controls requires that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements. Moreover, ifIf we or our independent registered public accounting firm identifiesidentify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Furthermore, investor perceptions of our company may suffer if, in the future, material weaknesses are found, and this could cause a decline in the market price of our stock. Irrespective of compliance with Section 404, any failure of our internal control over financial reporting could have a material adverse effect on our stated operating results and harm our reputation. If we are unable to implement these changesand maintain internal controls effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal control from our independent registered public accounting firm.
In addition to compliance with Section 404, we also will be required to hold a say-on-pay vote and a say-on-frequency vote atThe impairment of our 2018 annual meeting of stockholders, and will no longer be entitled to provide the reduced executive compensation disclosures permitted by emerging growth companies in our annual report on the Form 10-K and proxy statement for the year ending December 31, 2017. As a result, we expect that our loss of “emerging growth company” status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results.
Our success will depend, in part, on our ability to grow our business in response to the demands of consumers, dealers and other constituents within the automotive industry, as well as competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development, such as our acquisition of ALG in 2011. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. The risks we face in connection with acquisitions include: 

diversion of management time and focus from operating our business to addressing acquisition integration challenges; 
coordination of technology, research and development and sales and marketing functions; 
transition of the acquired company’s users to our website and mobile applications; 

retention of employees from the acquired company; 
cultural challenges associated with integrating employees from the acquired company into our organization; 
integration of the acquired company’s accounting, management information, human resources and other administrative systems; 
the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies; 
potential write-offs of intangiblesgoodwill, intangible or other long-lived assets acquired in such transactions that may have an adverse effect our operating results in a given period;
liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and 
litigation or other claims in connection with the acquired company, including claims from terminated employees, consumers, former stockholders or other third parties.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could causewould require us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the write-off of goodwill, any of which could harm our financial condition. Also, the anticipated benefits of any acquisitions may not materialize.
If our intangible assets and goodwill become impaired we may be required to record a significant non-cash charge to earnings, which wouldcould materially and adversely affect our results of operations.
We had goodwill and intangible assets of $70.1$63.1 million at September 30, 2017.March 31, 2020. Under accounting principles generally accepted in the United States, we review our goodwill for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate the carrying value may not be fully recoverable. We review our intangible
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assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. WhileFor example, in the first quarter of 2020, in light of the recent global economic disruption and uncertainty surrounding the COVID-19 pandemic and the announcement of the upcoming termination of our affinity partnership with USAA FSB, we have notperformed an interim quantitative impairment test as of March 31, 2020, which concluded that the carrying value of our single reporting unit was greater than its fair value. Accordingly, we recognized anya non-cash impairment charges since our inception, we may recognize impairment chargescharge of $10.2 million for the three months ended March 31, 2020.

We cannot guarantee you that in future periods we will not be required to recognize additional impairment charges, whether in connection with our acquisitionsgoodwill or from other businessesintangible assets, nor that we may seekwill be able to acquireavoid a significant charge to earnings in our consolidated financial statements during the future. Theperiod in which an impairment is determined to exist. As a result, the carrying value of our goodwill and intangible assets may not be recoverable due to factors such as a decline in our stock price and market capitalization, reduced estimates of future revenues or cash flows or slower growth rates in our industry. Estimates of future revenues and cash flows are based on a long-term financial outlook of our operations. Actual performance in the near-term or long-term could be materially different from these forecasts, which could impact future estimates and the recorded value of the intangibles. For example, a significant, sustained decline in our stock price and market capitalization may result in impairment of our intangible assets, including goodwill, and a significant charge to earnings in our consolidated financial statements during the period in which an impairment is determined to exist. In the eventassets. If we hadhave to reduce the carrying value of our goodwill or intangible assets, any suchthe impairment charge could materially and adversely affect our results of operations.

Further, we review our equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. We recognize an impairment of an equity-method investment if the fair value of the investment as a whole, and not the underlying assets, has declined and the decline is other than temporary. If our equity-method investment in Accu-Trade, or any other equity-method investment that we make in the future, is not recoverable, we may be required to record an impairment charge, which could materially and adversely affect our results of operations.

If our ability to use our net operating loss carryforwards and other tax attributes is limited, we may not receive the benefit of those assets.
We had federal net operating loss carryforwards of approximately $250.2$415.1 million and state net operating loss carryforwards of approximately $176.5$242.5 million at December 31, 2016. The2019. These federal and state net operating loss carryforwards begin to expire in the years ending December 31, 2025 and 2020, respectively. Federal net operating losses generated after December 31, 2017 respectively.will not expire and will carry forward indefinitely, but will be limited in any given year to offsetting a maximum of 80% of our taxable income for the year, determined without regard to the application of such net operating loss carryforwards. At December 31, 2016,2019, we had federal and state research and development credit carryforwards of approximately $0.8 million and $0.4 million, respectively. The federal credit carryforwards begin to expire in the year ending December 31, 2028. The state credit carryforwards can be carried forward indefinitely.

TheSections 382 and 383 of the Internal Revenue Code of 1986, as amended (“IRC”), imposesimpose substantial restrictions on the utilizationuse of net operating losses and other tax attributes in the event of ana cumulative “ownership change” of a corporation.corporation of more than 50% over a three-year period. Accordingly, our ability to use pre‑change net operating loss and research tax credits may be limited as prescribed under IRC Sections 382 and 383. Therefore, if we generate taxable income in the future, our ability to reduce our federal income tax liability may be subject to limitation.

A cumulative ownership change of more than 50% over a three‑year period, along with other limitations imposed by certain state and local jurisdictions, may limit the amount of net operating losses and credits that we may utilize in any one year. As a result of historical equity issuances, we have determined that the annual utilization of our net operating losses and tax credits are subject to the provision of IRC Sections 382 and 383. Future changes in our stock ownership, including future equity offerings, as well as other changes that may be outside our control, could potentially result in furthermaterial limitations on our ability to utilizeuse our net operating loss and research tax credit carryforwards. We experienced a cumulative ownership change in 2019. This ownership change could have materially impaired the Company’s ability to utilize its net operating losses and tax credits. Upon receipt of certain additional information from investors, the Company will determine the amount of potential limitation. Any decrease in deferred tax assets associated with these tax attributes would be fully offset by a corresponding decrease in our valuation allowance, with no net tax provision impact.

Changes in applicable tax law and resolutions of tax disputes could negatively affect our financial results.
We are subject to taxation in the United States. Changes in tax laws applicable to us, including interpretations thereof and related accounting standards, could materially and adversely affect our business, financial condition, results of operations and cash flows. For example, in 2018, the United States Supreme Court decided South Dakota v. Wayfair, Inc. That decision overturned prior case law that online sellers are not required to collect sales and use taxes unless they have a physical presence in the buyer’s state. Although the Wayfair decision has not had a material effect on our business, it has resulted in nationwide uncertainty over sales tax liability and could precipitate responses from federal and state legislators, regulators and courts that materially increase our tax administrative costs and tax risk.
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Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend, and could impact consumer spending.

Our corporate headquarters, a majority of our employees and many of our essential business operations are located in the Los Angeles area, near major geologic faults that have experienced earthquakes in the past. An earthquake or other natural disaster or power shortage or outage could disrupt operations or impair critical systems. Any of these disruptions or other events outside of our control could affect our business negatively, harming our operating results. In addition, if any of our facilities or the facilities of our third-party service providers, dealers or partners is affected by natural disasters, such as earthquakes, tsunamis, wildfires, power shortages, floods, public health crises (such as pandemics and epidemics), political crises (such as terrorism, war, political instability or other conflict) or other events outside our control, including a cyberattack, our critical business or IT systems could be destroyed or disrupted and our ability to conduct normal business operations and our revenues and operating results could be adversely affected. Moreover, these types of events could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally, which could adversely impact our operating results. For more information on the effect of the coronavirus pandemic on our business, refer to the section above entitled “Risks Related to the Coronavirus Pandemic.”
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Risks Related to Ownership of Our Common Stock
We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which wouldcould cause our stock price to decline.
WeAlthough we have currently withdrawn our financial guidance as a result of the uncertainties precipitated by the coronavirus pandemic, we have in the past provided and may continue toin the future provide guidance about our business and future operating results including financial results for the quarter and year ending December 31, 2017, as part of our press releases, investor conference calls or otherwise. In developing thisany such guidance, our management must make certain assumptions and judgments about our future performance. For example, in the second quarter of 2015 and the fourth quarter of 2018, our business results varied significantly from guidance for the quarter and the price of our common stock declined. Our future business results may vary significantly from management'sour guidance due to a number of factors, many of which are outside of our control, and which could materially and adversely affect our operations, financial condition and operating results. If our publicly announcedpublicly-announced guidance of future operating results fails to meet the expectations of securities analysts, investors or other interested parties, the price of our common stock could decline.
Concentration of ownership among our existing executive officers and directors, their affiliates and holders of 5% or more of our outstanding commonscommon stock may prevent new investors from influencing significant corporate decisions.
 
As of September 30, 2017,March 31, 2020, our executive officers, directors and holders of 5% or more of our outstanding common stock (based upon the most recent filings on Schedule 13G with the SEC with respect to each such holder) beneficially own, in the aggregate, approximately 63%60% of our outstanding shares of common stock.stock (assuming exercise of all beneficially owned shares). Some of these persons or entities may have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your interests. These stockholders are able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders, which in turn could reduce the price of our common stock.


The price of our common stock has been and may continue to be volatile, and the value of your investment could decline.
 
The trading price of our common stock has been volatile since our initial public offering and is likely to continue to fluctuate substantially. For the ninethree months ended September 30, 2017,March 31, 2020, the trading price of our common stock fluctuated from a low of $12.40$2.15 per share to a high of $21.75$4.92 per share. For the fiscal year ended December 31, 2016,2019, the trading price of our common stock fluctuated from a low of $4.42$3.01 per share to a high of $13.29$10.39 per share. The trading price of our common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the trading price of our common stock include the following:

•price and volume fluctuations in the overall stock market from time to time; 
•volatility in the market prices and trading volumes of high technology stocks; 
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; 
•sales of shares of our common stock by us or our stockholders; 
•the failure of securities analysts to maintain coverage of us, changes in financial estimates or recommendations by any securities analysts who follow our company, or company; 
•our failure to meet these estimatesour publicly-announced guidance of future operating results or otherwise to meet the expectations of investors; securities analysts or investors in this regard;
•announcements by us or our competitors of new products; 
•the public’s reaction to our press releases, other public announcements and filings with the SEC;
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•rumors and market speculation involving us or other companies in our industry; 
•actual or anticipated changes in our operating results or fluctuations in our operating results; 
•actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; 
•our ability to control costs, including our operating expenses;
•litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; 
•developments or disputes concerning our intellectual property or other proprietary rights; 
•announced or completed acquisitions, of businessesdivestitures, investments or technologies byother similar transactions involving us or our competitors;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business; 
•changes in accounting standards, policies, guidelines, interpretations or principles; 

•any significant change in our management; 
•conditions in the automobile industry; and 
•general economicmacroeconomic conditions and slow or negativethe growth rate of our markets and the impact of the coronavirus pandemic on these conditions and markets.
The effect of such factors on the trading market for our stock may be enhanced by the lack of a large and established trading market for our stock. In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, including those precipitated by the coronavirus pandemic, may seriously affect the market price of our common stock, regardless of our actual operating performance. Additionally, as a public company, we face the risk of shareholder lawsuits, particularly if we experience declines in the price of our common stock. In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies. We have been, and may in the future be, subject to suchthese legal actions.
 
Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could depress the market price of our common stock.

The market price forof our common stock could decline as a result of the sale of substantial amounts of our common stock, particularly sales by our directors, executive officers and significant stockholders, a large number of shares of our common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares.

AsAt March 31, 2020, approximately 107.2 million shares of September 30, 2017,our common stock were outstanding. In addition, as of March 31, 2020, there were 17.112.1 million shares underlying options and 4.810.2 million shares underlying restricted stock units. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our stock could decline. Under Rule 144 under the Securities Act, shares held by non‑affiliatesnon-affiliates for more than six months may generally be sold without restriction, other than a current public information requirement, and may be sold freely without any restrictions after one year. Shares held by affiliates may also be sold under Rule 144, subject to applicable restrictions, including volume and manner of sale limitations.

In January 2017, we filed a shelf registration statement on Form S-3, which we refer to as the 2017 Shelf Registration pursuant to which we may offer and sell from time to time up to $100 million of securities of any combination of common stock, preferred stock, debt securities, warrants, depositary shares, subscription rights and/or units at prices and on terms that we may determine, and pursuant to which up to 20 million of shares of common stock may be offered and sold from time to time by selling stockholders. The 2017 Shelf Registration was declared effective by the SEC on February 6, 2017. On May 2, 2017, an offering pursuant toStatement. Under the 2017 Shelf Registration was effected. WeStatement, we sold 1.15 million shares of the Company's common stock and certain selling stockholders sold 9.2 million shares of common stock instock.
Although the offering.

We2017 Registration Statement has expired and we have deregistered the unsold shares thereunder, we may file a subsequent registration statement with the SEC, after which we or selling stockholders may periodically offer additional securities in amounts, at prices and on terms to be announced when and if the securities are offered. AtIf we do so, we will prepare and file with the time any of the securities covered by the 2017 Shelf Registration are offered for sale,SEC a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any suchthe offering.

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You may experience future dilution as a result of future equity offerings.
To the extent thatIf we raise additional funds through the sale of equity or convertible debt securities, the issuance of suchthe securities will result in dilution to our stockholders. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in the past, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid in the past. In addition, if we were to issue securities in connection with our acquisition of complementary businesses, products or technologies, our stockholders would also experience dilution.

Future sales of shares by existing stockholders could cause our stock price to decline.
If our existing stockholders, including employees and service providers who obtain equity, sell substantial amounts of our common stock in the public market, the trading price of our common stock could decline. All of our outstanding shares are eligible for sale in the public market, other than approximately 10.5 million shares (including vested options) as of March 31, 2020 held by directors, executive officers and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act. Our employees, other service providers and directors are subject to our quarterly trading blackouts. In addition, we have reserved shares for issuance under our equity incentive plans. The issuance and subsequent sale of these shares will be dilutive to our existing stockholders and the trading price of our common stock could decline.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our certificate of incorporation and bylaws and Delaware law contain provisions whichthat could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions: 

•creating a classified board of directors whose members serve staggered three-year terms;

•authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; 
•limiting the liability of, and providing indemnification to, our directors and officers; 
•limiting the ability of our stockholders to call and bring business before special meetings; 
•requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; 
•controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and 
•providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law,Law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.

Any provision of our certificate of incorporation or bylaws or of Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our certificate of incorporation provides that, unless we otherwise agree, the Court of Chancery of the State of Delaware will be the exclusive forum for:
•any derivative action or proceeding brought on our behalf;
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•any action asserting a breach of fiduciary duty; 
•any action asserting a claim against us under the Delaware General Corporation Law, our certificate of incorporation or our bylaws; 
•any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; and
•any action asserting a claim against us that is governed by the internal-affairs doctrine. 
This exclusive-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or other agents, which may discourage lawsuits against us and our directors, officers, employees and other agents. If a court were to find this exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likelycould decline. If any analyst who may covercovers us were to cease coverage of our company or fail to regularly publish reports on us, for example because we have withdrawn and temporarily ceased providing financial guidance during the coronavirus pandemic, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We do not expect to declare any dividends in the foreseeable future.

We have never declared or paid cash dividends on our common stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. In addition, the terms of our credit facility currently prohibit us from payingrestrict our payment of cash dividends on our capital stock. Consequently, investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


(a)Sales of Unregistered Securities
(a)Sales of Unregistered Securities
None.


(b)
Use of Proceeds from Public Offerings of Common Stock
(b)Use of Proceeds from Public Offerings of Common Stock
Our initial public offering of common stock was effected through a Registration Statement on Form S-1 (File No. 333-195036), which was declared or became effective on May 15, 2014. There has been no material change in the planned use of proceeds from our IPOinitial public offering or follow-on offerings as described in our final prospectuses filed with the SEC on May 16, 2014, November 12, 2014 and April 27, 2017, respectively, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). Pending thethose uses, described, we have invested the net proceeds in short-term, investment-grade interest-bearing securities and obligations, such as money market accounts.

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Item 6.   Exhibits
The documents listed below are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
Exhibit 
Number		DescriptionIncorporated by 
Reference From Form		Incorporated 
by Reference
from Exhibit
Number		Date Filed
3.1
S-1/A File No. 333-195036
3.25/5/2014
3.2
S-1/A File No. 333-195036
3.45/5/2014
10.1#
8-K
10.13/10/2020
10.2#
Filed herewith
10.3#
Filed herewith
31.1
Filed herewith
  
31.2
Filed herewith
  
32.1(1)
Furnished herewith
  
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.  
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled herewith  
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith  
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith  
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentFiled herewith  
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith  
104Cover Page Interactive Data File (formatted as Inline XRBL with applicable taxonomy extension information contained in Exhibit 101)Filed herewith
Exhibit 
Number
 Description 
Incorporated by 
Reference From Form
 
Incorporated 
by Reference
from Exhibit
Number
 Date Filed
3.1
 
Amended and Restated Certificate of Incorporation of the Registrant.
 
S-1/AFile No. 333-195036
 3.2 5/5/2014
3.2
 
Amended and Restated Bylaws of the Registrant.
 
S-1/AFile No. 333-195036
 3.4 5/5/2014
31.1
 
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
 
Filed herewith
    
31.2
 
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
 
Filed herewith
    
32.1(1)
 
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
 
Furnished herewith
    
101.INS XBRL Instance Document Filed herewith    
101.SCH XBRL Taxonomy Extension Schema Document Filed herewith    
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith    
101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed herewith    
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith    
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith    

# Indicates a management contract or compensatory plan.
(1)This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

(1)This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TRUECAR, INC.
TRUECAR, INC.
Date:May 8, 2020By:/s/ Michael Darrow
Date:November 8, 2017By:/s/ Chip PerryMichael Darrow
Chip Perry
President & Chief Executive Officer
(Principal Executive Officer)
Date:NovemberMay 8, 20172020By:/s/ Michael GuthrieNoel B. Watson
Michael GuthrieNoel B. Watson
Chief Financial Officer & Chief Accounting Officer
(Principal Financial Officer)
Date:November 8, 2017By:/s/ John Pierantoni
John Pierantoni
Chief Accounting Officer
( & Principal Accounting Officer)



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