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, 2023
¨ ☐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,1401 Ocean Ave, 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, 99,986,517 sharesMay 5, 2023, 89,197,235 shares of the registrant’s common stock were outstanding.

TRUECAR, INC.
INDEX


TRUECAR, INC.
INDEX
Page
Page
PART I - FINANCIAL INFORMATION
5
5
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
6
Condensed Consolidated StatementStatements of Stockholders’ Equity for the NineThree Months Ended September 30, 2017March 31, 2023 and 2022
7
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2023 and 2016
2022
8
910
1718
31
32
PART II -  OTHER INFORMATION
33
33
5468
5569
5670




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; 
•our ability to forecast our financial and operational 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 withability to successfully roll out our TrueCar+ offering, provide a large vehicle wholesaler;compelling value proposition to consumers using that offering and integrate our current and future offerings into that experience;
•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 maintain or increase the number of high volumehigh-volume brand dealers in our network generally and in key geographies;
•the short- and long-term effects of the coronavirus pandemic on our business;
•our ability to mitigate the financial effect of the termination of our partnership with USAA Federal Savings Bank;
•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 maintain or increase close rates and the rate at which site visitors prospect with a TrueCar certified dealer;
•our ability to successfully maintain or increase dealer subscription rates as the number of dealers on subscription billing arrangements increases relativeand manage dealer churn;
•our ability to those on a pay-per-sale billing model;  attract significant automobile manufacturers to participate, and remain participants, in our incentive programs;
•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 supply shortages, such as of automotive semiconductors, changes in interest rates, consumer demand and import tariffs and governmental responses to the coronavirus pandemic;
•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;
1

•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 use the proceeds of the ALG divestiture in a manner that maximizes shareholder value;
•the extent to which we repurchase our common stock under our share repurchase plan and the effect of these repurchases on long-term stockholder value, the volatility and trading price of our common stock and our cash reserves;
•our ability to effectively and timely integrate our operations with those of any business we acquire, including Digital Motors, 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



SUMMARY OF RISKS AFFECTING OUR BUSINESS
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” later in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:
•Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending.
•If our lead quality or quantity declines, our unit volume could as well, and dealers could leave our network or insist on lower subscription rates, which could reduce our revenue and harm our business.
•If we are not successful in rolling out our TrueCar+ offering, providing a compelling value proposition to consumers using that offering, integrating our current and future offerings into that experience or monetizing it, our business and prospects could be adversely affected.
•Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
•The ongoing disruptions and uncertainties caused by the coronavirus pandemic have meaningfully disrupted our business and may continue to do so, including in new and unforeseen ways.
•The termination of our partnership with USAA Federal Savings Bank has adversely affected our business and we may not be able to mitigate its negative financial effects.
•The growth of our business relies significantly on our ability to maintain and increase the revenues that we derive from dealers in our network of TrueCar Certified Dealers. Failure to do so would harm our financial performance.
•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 provide certain of our key features, our inventory supply and certain key elements of our TrueCar Deal Builder’s functionality, any of which would negatively affect our business.
•We may not be able to provide a compelling car-buying experience to our users, which could cause the number of transactions between our users and dealers, and therefore our revenues, to decline.
•Our business is subject to risks related to the larger automotive ecosystem, including interest rates, inflation, consumer demand, global supply chain challenges (including relating to automotive semiconductors) and other macroeconomic issues.
•The failure to attract manufacturers to participate in our incentive programs, or to induce them to remain participants in those programs, could reduce our growth or adversely affect our operating results.
•The loss of a significant affinity partner or a significant reduction in units attributable to our affinity partners would reduce our revenue and harm our operating results.
•If key industry participants, including car dealers or 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 business could be adversely affected by executive turnover and other transitions in our senior management team. An inability to navigate these transitions and attract, retain and integrate new management and other personnel could harm our business.
•We rely on relationships with data providers and may experience interruptions in the data feeds they provide, which could adversely affect our current and future product offerings, including TrueCar+, to users and dealers as well as the timeliness of the information we provide, and which may impair our ability to attract or retain consumers and dealers and to timely invoice dealers and otherwise negatively affect our business.
•We rely 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.
•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.
•If consumers and dealers do not respond positively to our branding, our financial performance and our ability to grow unique visitor traffic and expand our dealer network could be negatively affected.
3

•We are subject to a complex framework of regulations, 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.
•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 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.
•Our number of unique visitors, revenue and operating results fluctuate due to seasonality.
•We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
4



TRUECAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
(Unaudited)
 March 31, 2023December 31, 2022
Assets  
Current assets  
Cash and cash equivalents (includes restricted cash of $2,205 and $0 at March 31, 2023 and December 31, 2022, respectively)$156,648 $175,518 
 Accounts receivable, net of allowances of $1,091 and $1,073 at March 31, 2023 and December 31, 2022, respectively14,120 13,786 
Prepaid expenses4,718 5,969 
Other current assets2,252 2,562 
Total current assets177,738 197,835 
Property and equipment, net19,380 18,902 
Operating lease right-of-use assets15,742 16,940 
Intangible assets, net12,774 13,969 
Other assets3,884 3,881 
Total assets$229,518 $251,527 
Liabilities and Stockholders’ Equity  
Current liabilities  
 Accounts payable$9,334 $8,655 
Accrued employee expenses3,908 7,378 
Operating lease liabilities, current4,584 4,514 
 Accrued expenses and other current liabilities9,091 10,232 
Total current liabilities26,917 30,779 
Operating lease liabilities, net of current portion17,221 18,500 
Other liabilities3,754 4,981 
Total liabilities47,892 54,260 
Commitments and contingencies (Note 5)
Stockholders’ Equity  
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; no shares issued and outstanding at March 31, 2023 and December 31, 2022— — 
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; 89,061,768 and 88,439,088 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively9 9 
Additional paid-in capital713,714 709,790 
Accumulated deficit(532,097)(512,532)
Total stockholders’ equity181,626 197,267 
Total liabilities and stockholders’ equity$229,518 $251,527 

 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.

5

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands except per share data)
(Unaudited)
 Three Months Ended
March 31,
 20232022
Revenues$36,980 $43,533 
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization presented separately below)3,846 4,946 
Sales and marketing26,766 27,081 
Technology and development12,498 10,255 
General and administrative10,846 11,724 
Depreciation and amortization4,191 3,660 
Total costs and operating expenses58,147 57,666 
Loss from operations(21,167)(14,133)
Interest income1,608 27 
Gain from equity method investment— 1,749 
Loss before income taxes(19,559)(12,357)
Provision for income taxes6 57 
Net loss$(19,565)$(12,414)
Net loss per share, basic and diluted$(0.22)$(0.13)
Weighted average common shares outstanding, basic and diluted88,647 95,924 
Other comprehensive loss:
  
Comprehensive loss$(19,565)$(12,414)
 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.

6


TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands except share data)
(Unaudited)

 Common Stock   
Accumulated
Deficit
 
Stockholders’
Equity
 Shares Amount APIC  
Balance at December 31, 201686,159,527
 $9
 $542,807
 $(318,235) $224,581
Net loss—
 —
 —
 (24,374) (24,374)
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
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes12,583,056
 1
 69,873
 —
 69,874
Balance at September 30, 201799,892,583
 $10
 $653,732
 $(342,609) $311,133

Three Months Ended March 31, 2023
 Common Stock Accumulated
Deficit		Stockholders’
Equity
 SharesAmountAPIC
Balance at December 31, 202288,439,088 $9 $709,790 $(512,532)$197,267 
Net loss— — — (19,565)(19,565)
Stock-based compensation— — 4,930 — 4,930 
Shares issued in connection with employee stock plan, net of shares withheld for employee taxes622,680 — (1,006)— (1,006)
Balance at March 31, 202389,061,768 $9 $713,714 $(532,097)$181,626 




Three Months Ended March 31, 2022
 Common Stock Accumulated
Deficit		Stockholders’
Equity
 SharesAmountAPIC
Balance at December 31, 202196,213,243 $10 $723,623 $(393,847)$329,786 
Net loss— — — (12,414)(12,414)
Repurchase of common stock(3,107,370)— (11,028)— (11,028)
Stock-based compensation— — 3,744 — 3,744 
Shares issued in connection with employee stock plan, net of shares withheld for employee taxes481,122 — (861)— (861)
Balance at March 31, 202293,586,995 $10 $715,478 $(406,261)$309,227 





















See accompanying notes to condensed consolidated financial statements.

7


TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Three Months Ended
March 31,
 20232022
Cash flows from operating activities  
Net loss$(19,565)$(12,414)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:  
Depreciation and amortization4,191 3,660 
Deferred income taxes— 16 
Bad debt expense and other reserves96 160 
Stock-based compensation4,708 3,498 
Increase in the fair value of contingent consideration liability591 — 
Amortization of lease right-of-use assets909 1,097 
Gain from equity method investment— (1,749)
Impairment of right-of-use assets351 — 
Other noncash expense194 315 
Changes in operating assets and liabilities:
Accounts receivable(430)1,442 
Prepaid expenses and other assets1,364 (149)
Accounts payable560 (249)
Accrued employee expenses(2,749)(1,529)
Operating lease liabilities(1,209)(1,383)
Accrued expenses and other current liabilities(1,160)(180)
Other liabilities48 — 
Net cash used in operating activities(12,101)(7,465)
Cash flows from investing activities  
Purchase of property and equipment(3,855)(3,379)
Cash from sale of equity method investment— 12,800 
Net cash (used in) provided by investing activities(3,855)9,421 
Cash flows from financing activities  
Payment of contingent consideration liability(1,908)— 
Proceeds from exercise of common stock options64 163 
Taxes paid related to net share settlement of equity awards(1,070)(1,024)
Payments for the repurchase of common stock— (11,530)
Net cash used in financing activities(2,914)(12,391)
Net decrease in cash, cash equivalents and restricted cash(18,870)(10,435)
Cash, cash equivalents and restricted cash at beginning of period175,518 245,217 
Cash, cash equivalents and restricted cash at end of period$156,648 $234,782 


See accompanying notes to condensed consolidated financial statements.
8

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
(Continued)
 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
 —
Three Months Ended
March 31,
20232022
Supplemental disclosures of non-cash activities
Stock-based compensation capitalized for software development$222 $246 
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses708 588 


See accompanying notes to condensed consolidated financial statements.

9

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,TrueCar Dealer Solutions, Inc., Digital Motors Corporation, and ALG,TrueCar Wholesale Solutions, Inc. are collectively referred to as “TrueCar” or the “Company”; TrueCar.com,TrueCar Dealer Solutions, Inc. is referred to as “TrueCar.com”“TCDS,” Digital Motors Corporation is referred to as “Digital Motors,” and ALG,TrueCar Wholesale Solutions, Inc. is referred to as “ALG”.“TCWS.” TrueCar was incorporated in the state 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.
ALGThrough its subsidiary TCDS, the Company provides forecasts, consulting,its Trade and other services regarding determinationPayments solutions. TCDS also supports the Company’s Sell Your Car product. The Sell Your Car and Trade solutions give consumers information on the value of the residual valuevehicle they wish to sell or trade-in 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. The Company’s Payments solution helps consumers calculate accurate monthly payments.

2.    Summary 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.Significant Accounting Policies
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, 20162022, 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, 20162022 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 24, 2023. 
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 results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. All intercompany balances and transactions have been eliminated in consolidation.
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Use of Estimates
The preparation of condensed 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 condensed 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 assets and liabilities assumed in business combinations, fair value of the capitalized facility leases, the recoverability and related impairment of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, measurement of right-of-use assets and operating lease exit liabilities, contingencies, and the valuation and assumptions underlying stock-based compensation and other equity instruments.awards. 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, fair values of assets and liabilities assumed in business combinations the fair value of reporting units in connection with annual goodwill impairment testing, and in periods prior to the Company’s initial public offering, valuation of common stock.

performance-based stock units.
Segments
The Company has one operating segment. TheFrom January 1, 2023 through February 15, 2023, the Company’s chief operating decision maker (“CODM”(the “CODM”) iswas comprised of the President and Chief Executive Officer and the Chief Financial Officer and Chief Operating Officer. Upon the appointment of the Company’s new Chief Financial Officer on February 16, 2023 through March 31, 2023, the CODM was comprised of the President and Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer (who, prior to February 16, 2023, had jointly served as both the Chief Financial Officer and the Chief Operating Officer), who managejointly managed 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, and forecasts, consultingOEM incentive revenue, and other revenue (Note 12)10). All of the Company’s principal operations, decision-making functions and assets are located in the United States.
Recent Accounting PronouncementsCash and Cash Equivalents
In May 2017,The Company considers all highly liquid investments purchased with an original or remaining maturity at the Financial Accounting Standards Board (“FASB”) issued guidance amendingdate of purchase of three months or less to be cash equivalents. At March 31, 2023, cash and cash equivalents included $2.2 million of restricted cash that is used to collateralize a letter of credit to secure certain of our obligations under one of our office leases.
Allowance for Doubtful Accounts
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 existing accounting standardallowance for stock-based awardsdoubtful 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.

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 that 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.

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The following table summarizes the changes in orderthe allowance for doubtful accounts and sales allowances (in thousands):

Three Months Ended
March 31,
20232022
Allowances, at beginning of period$1,073 $3,099 
Charged as a reduction of revenue704 790 
Charged to bad debt expense in general and administrative expenses96 160 
Write-offs, net of recoveries(782)(1,536)
Allowances, at end of period$1,091 $2,513 
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 provide claritypredict causing variability 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 effective 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 expected tovolatility that may have a material impact on the Company's consolidated financial statements.our allowance for credit losses in future periods.
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 tests 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. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. It is required to be applied on a modified retrospective basis through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.
In February 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 effective for public entities for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption 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. The Company is evaluating the methods and impact of adopting this guidance on its consolidated financial statements.3.    Fair Value Measurements
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.
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, restricted cash, 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.
For the three months ended March 31, 2022, the Company recognized a gain of $1.7 million from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade.
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017March 31, 2023 and December 31, 20162022 by level within the fair value hierarchy. FinancialThese assets and liabilities 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, 2023At December 31, 2022
  Total Fair Total Fair
Level 1Level 2Level 3ValueLevel 1Level 2Level 3Value
Assets:
Cash equivalents$140,224 $— $— $140,224 $57,518 $— $— $57,518 
Total assets$140,224 $— $— $140,224 $57,518 $— $— $57,518 
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 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
 $107,721
 At March 31, 2023At December 31, 2022
  Total Fair Total Fair
Level 1Level 2Level 3ValueLevel 1Level 2Level 3Value
Liabilities:
Contingent consideration, current$— $— $1,849 $1,849 $— $— $1,983 $1,983 
Contingent consideration, non-current— — 3,403 3,403 — — 4,678 4,678 
Total liabilities$— $— $5,252 $5,252 $— $— $6,661 $6,661 

Contingent Consideration Obligations
The following table summarizes the changes in the fair value of the contingent consideration obligation (in thousands):
4.Property and Equipment, netThree Months Ended March 31, 2023
Fair value, beginning of period$6,661 
Cash payments(2,000)
Changes in fair value591
Fair value, end of period$5,252 
The following table summarizes the significant unobservable inputs and valuation technique in the fair value measurement of the contingent consideration liability at March 31, 2023:
Valuation TechniqueUnobservable InputsValue Range
Scenario-Based modelProbabilities of achievement100.0%

4.    Property and Equipment, net
Property and equipment consisted of the following at September 30, 2017March 31, 2023 and December 31, 20162022 (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, 2023December 31, 2022
Computer equipment and internally developed software$88,251 $88,638 
Furniture and fixtures3,013 3,013 
Leasehold improvements11,740 11,740 
 103,004 103,391 
Less: Accumulated depreciation(83,624)(84,489)
Total property and equipment, net$19,380 $18,902 
Included in the table above are property and equipment of $5.7$2.0 million and $4.3$1.5 million at September 30, 2017March 31, 2023 and December 31, 2016,2022, 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$3.0 million and $5.0$3.2 million for the three months ended September 30, 2017March 31, 2023 and 2016,2022, 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$2.8 million and $3.9$2.8 million for the three months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. Amortization of internal use capitalized software development costs was $10.8 million and $11.3 million for
During the ninethree months ended September 30, 2017 and 2016, respectively.
5.Credit Facility
In February 2015,March 31, 2023, the Company entered into a third amendeddisposed of or retired certain fully depreciated computer equipment and restated loan and security agreement (“Third Amended Credit Facility”)internally developed software with a financial institution for a $35.0 million secured revolving credit facility that expires on February 18, 2018. The Third Amended Credit Facility provides a $10.0 million subfacility for the issuancean original cost basis of letters of credit and contains an increase option permitting the Company, subject to the lender's consent, to increase the revolving credit facility by up to $15.0 million, to an aggregate maximum of $50.0$3.5 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.
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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 our Adjusted EBITDA less cash paid for income taxes to our cash paid for interest plus capital expenditures for the trailing twelve months. This credit facility also limits the Company’s ability to pay dividends. At September 30, 2017, the Company was in compliance with all 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 facility contains acceleration clauses that accelerate any borrowings in the event of default. The obligations 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 December 31, 2016, the Company had no outstanding amounts under the Third Amended Credit Facility. The amount available was $30.7 million, reduced for the letters of credit issued and outstanding under the subfacility of $4.3 million at September 30, 2017.
6.5.    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.

On March 9, 2015, the Company was 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 in the NY Lanham Act Litigation, purportedly filed on behalf of numerous automotive dealers who are not participating on the TrueCar platform, alleges that the Company has violated the Lanham Act as well as various state laws prohibiting unfair competition and deceptive acts or practices related to the Company’s advertising and promotional activities. The complaint seeks injunctive relief in addition to over $250 million in damages as a result of the alleged diversion of customers 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, and on July 13, 2015, the Company filed a motion to dismiss the amended complaint. On January 6, 2016, the Court granted in part and denied in part the Company’s motion to dismiss with respect to some, but not all, of the advertising and promotional activities challenged in the amended complaint. The litigation is currently in the expert discovery phase. The Company believes that the portions of the amended complaint that survived the Company’s motion to dismiss are 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, as the Company does not believe a loss is probable or reasonably estimable.


On December 23, 2015, the Company was 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 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. The complaint sought an award of unspecified damages, interest, disgorgement, injunctive relief, and attorneys’ fees. 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. The Company believes that the amended 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, as the Company does not believe a loss is probable or reasonably estimable.
On June 30, 2017, the Company was named 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”). 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 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.” The Company believes the complaint is without merit, and intends to vigorously defend itself 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 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. 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, as the Company does not believe a loss is probable or reasonably estimable.proceedings.
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.

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. 


8.Stock-based Awards
6.    Stock-based Awards
Stock Options
A summary of the Company’s stock option activity for the ninethree months ended September 30, 2017March 31, 2023 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, 20225,114,490 $9.50 4.7
Granted— —  
Exercised(23,989)2.68  
Forfeited/expired(540,987)8.97  
Outstanding at March 31, 20234,549,514 $9.60 4.5
At September 30, 2017,March 31, 2023, total remaining stock-based compensation expense for unvested stock option awards was $60.2$1.3 million, which is expected to be recognized over a weighted-average period of 3.21.9 years. For the three months ended September 30, 2017March 31, 2023 and 2016,2022, the Company recorded stock-based compensation expense for stock option awards of $5.3$0.3 million and $3.5 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$0.4 million, respectively.

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Restricted Stock Units
Activity in connection with restricted stock units is as follows for the ninethree months ended September 30, 2017:March 31, 2023:
 
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, 202210,007,869 $4.04 
Granted5,421,366 2.49 
Vested(1,024,364)3.95 
Forfeited(610,111)3.78 
Non-vested — March 31, 202313,794,760 $3.45 
At September 30, 2017,March 31, 2023, total remaining stock-based compensation expense for non-vested restricted stock units is $54.6was $39.6 million, which is expected to be recognized over a weighted-average period of 3.12.8 years. TheFor the three months ended March 31, 2023 and 2022, the Company recorded $4.6$4.4 million and $2.8$3.1 million in stock-based compensation expense for restricted stock units, for the three months ended September 30, 2017 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, 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,
        20232022
Cost of revenue$339
 $256
 $775
 $711
Cost of revenue$50 $37 
Sales and marketing3,358
 1,655
 7,263
 4,154
Sales and marketing1,895 1,175 
Technology and development2,598
 1,200
 5,496
 3,025
Technology and development1,017 900 
General and administrative3,613
 3,130
 9,127
 10,143
General and administrative1,746 1,386 
Total stock-based compensation expense9,908
 6,241
 22,661
 18,033
Total stock-based compensation expense4,708 3,498 
Amount capitalized to internal software use443
 292
 993
 760
Amount capitalized to internal software use222 246 
Total stock-based compensation cost$10,351
 $6,533
 $23,654
 $18,793
Total stock-based compensation cost$4,930 $3,744 


9.Income Taxes
7.    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.loss, adjusted for discrete items, if any, that are taken into account in the relevant period. 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 $0.1 million and $0.2 million in income tax expense of less than $0.1 million for the three months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. For the three months ended March 31, 2023, the Company’s provision for income taxes reflects state income tax expense. The Company’s provision for income taxes for the three months ended March 31, 2022 primarily reflects tax expense associated with state income taxes and the amortization of tax-deductible goodwill that is not an available source of income to realize deferred tax assets. The Company recorded $0.4 million and $0.5 million in incomecontinues to maintain a full valuation allowance as it is more likely than not that the Company’s net deferred tax expense for each of the nine months ended September 30, 2017 and 2016.assets will not be realized.

There were no material changes to the Company’s unrecognized tax benefits in the three and nine months ended September 30, 2017,March 31, 2023, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

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The Company is subject to United States federal and state taxation. Due to the presence of net operating loss carryforwards, all income tax years remain open for examination by the Internal Revenue Service (“IRS”)IRS and various state taxing authorities. The Company is not currently under Internal Revenue Service or state tax examination.


10.Net Loss Per Share
8.    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,
 20232022
Net loss$(19,565)$(12,414)
Weighted average common shares outstanding, basic and diluted88,647 95,924 
Net loss per share, basic and diluted$(0.22)$(0.13)
 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 March 31, 2023 and 2022 (in thousands):
 March 31,
 20232022
Options to purchase common stock4,550 5,720 
Non-vested restricted stock unit awards13,795 11,490 
Total shares excluded from net loss per share18,345 17,210 
Share Repurchase Program
In July 2020, the Company’s board of directors authorized an open market stock repurchase program (the “Program”) of up to $75 million to allow for the repurchase of shares of the Company’s common stock through September 30, 20172022. In May 2021, the Company’s board of directors increased the authorization of the Program by an additional $75 million, bringing the total authorization to $150 million. In July 2022, the Company’s board of directors extended the expiration of the Program until September 30, 2024. The timing and 2016 (in thousands):amount of any repurchases will be determined by Company management based on its evaluation of market conditions and other factors. Repurchases of the Company’s common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws, open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws. The Program may be suspended or discontinued at any time and does not obligate the Company to purchase any minimum number of shares. The Company had no share repurchases during three months ended March 31, 2023. As of March 31, 2023, the Company had a remaining authorization of $45.8 million for future share repurchases.

9.    Related Party Transactions
 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
Transactions with USAAAccu-Trade
USAA is a large stockholder inOn March 1, 2022, the Company sold its 20% ownership interests in Accu-Trade at the investment’s carrying value and no longer considers Accu-Trade a related party after the Company's most significant affinity marketing partner.sale. The Company has entered into arrangements with USAA to operate its Auto Buying Program. The Company has amounts due from USAA at September 30, 2017 and December 31, 2016recognized contra-revenue of $0.2$0.1 million and $0.4 million, respectively. In addition, the Company has amounts due to USAA at September 30, 2017 and December 31, 2016cost of $4.4 million and $3.9 million, respectively. The Company recorded sales and marketing expenserevenue of $4.2 million and $3.7$1.1 million for the threetwo months ended September 30, 2017 and 2016, respectively,March 1, 2022 related to service arrangements entered into with USAA. a software and data licensing agreement that was terminated as part of the sale. No amounts were due to Accu-Trade at March 31, 2023 or at December 31, 2022.

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10.    Revenue Information
Disaggregation of Revenue
The Company recorded salesdisaggregates revenue into three revenue streams: dealer revenue, OEM incentives revenue, and marketing expenses of $12.8 million and $10.4 million for the nine months ended September 30, 2017 and 2016, respectively, related to such service arrangements.
12.Revenue Information
The CODM reviews separate revenue information for its Transaction and Forecasts, 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,
 20232022
Dealer revenue$35,831 $42,286 
OEM incentives revenue1,039 1,028 
Other revenue110 219 
Total revenues$36,980 $43,533 
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 $0.9 million at December 31, 2022 were transferred to accounts receivable during three months ended March 31, 2023 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $0.9 million and $0.9 million was recorded as of March 31, 2023 and December 31, 2022, 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, ChaseNavy Federal, PenFed 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.,TCDS, provides forecastsour Trade and consulting services regarding determinationPayments solutions. TCDS also supports our Sell Your Car product. Our Sell Your Car and Trade solutions give consumers information on the value of the residual value of an automobilevehicle they wish to sell or trade-in and enables them to obtain a guaranteed 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 given future points in time. These residual values are usedthe indicated price if the dealer does not want to underwrite automotive loans and leaseskeep them. Our Payments solution leverages the digital retailing technology from our DealerScience acquisition to determine payments by consumers. In addition, financial institutions use this information to measure exposure and risk across loan, lease, and fleet portfolios.help consumers calculate accurate monthly payments.
During the three months ended September 30, 2017,March 31, 2023, we generated revenues of $82.4$37.0 million and recorded a net loss of $9.5$19.6 million. OfDuring the $82.4 million in revenues, $77.5 million, or 94.0%, consisted of transaction revenues with the remaining $4.9 million, or 6.0%, derived primarily from the sale of forecasts, consulting and other revenue to the automotive and financial services industries. Revenues from the sale of forecasts, consulting and other services are derived primarily from the operations of our ALG subsidiary. Transaction revenues primarily consist of fees paid to us by our network of TrueCar Certified Dealers.
Since the third quarter of 2016, we have made multiple product enhancements that have improved the consumer experience resulting in improved revenue growth rates for the ninethree months ended September 30, 2017 as compared toMarch 31, 2022, we generated revenues of $43.5 million and recorded a loss of $12.4 million.

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Market Environment
Events surrounding the nine months ended September 30, 2016. Over time, we intend to increase the number of transactions on our platform,ongoing COVID-19 pandemic have resulted 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 benefits of fully registering on TrueCar to consumers using different and stronger messaging.

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 improveresult in significant economic disruptions. We continue to experience the consumernegative effects of COVID-19 on our business, operations and dealer experiences and drive revenue growthfinancial results as reflected in the future.year over year decline in revenues, and we may experience further negative effects on our results of operations, financial condition and cash flows due to numerous uncertainties. OEMs have been forced to cut production as supply-chain disruption due to the pandemic resulted in a global automotive semiconductor chip shortage. The ensuing automobile inventory shortage has resulted in significant unmet demand, with automotive dealers seeing some incoming new car shipments presold. At the same time, wider economic inflation has led to the Federal Reserve raising interest rates, which along with the expectation for future rate hikes are starting to have their intended impact on the U.S. economy. Domestically, consumers are concerned about inflation and while employment remains strong, a possible recession stemming from tighter monetary policy is also weighing on consumer sentiment. Higher interest rates could also reduce consumer demand by making vehicle financing more expensive and reducing the amount of inventory purchased by dealers due to higher financing costs. The inventory shortage along with pressure on consumer demand may impact the decision of our current network of Certified Dealers and OEMs to cancel or pause our services and product offerings and could discourage new dealers and OEMs from joining our network. Refer to Part II, Item 1A, Risk Factors, for additional disclosures of risks related to COVID-19, the global automotive semiconductor chip shortage, and rising interest rates.
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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 20232022
Average Monthly Unique Visitors7,702,254
 7,600,900
 7,420,807
 6,991,128
Average Monthly Unique Visitors8,667,079 7,265,369 
Units(1)253,527
 220,633
 713,313
 588,146
Units (1)Units (1)76,458 91,600 
Monetization$306
 $319
 $316
 $322
Monetization$482 $473 
Franchise Dealer Count12,286
 10,759
 12,286
 10,759
Franchise Dealer Count7,961 8,299 
Independent Dealer Count2,938
 2,537
 2,938
 2,537
Independent Dealer Count3,871 4,106 
(1)We issued full credits of the amount originally invoiced with respect to 1,215 and 2,382 units during the three months ended March 31, 2023 and 2022, 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%19.3% to approximately 7.78.7 million in the three months ended September 30, 2017March 31, 2023 from approximately 7.67.3 million in the same period of 2016. The number2022 as we continue to optimize the efficiency of average monthly unique visitors increased 6.1% 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 traffic to our platform.acquisition spend.
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 ofa TrueCar Certified Dealers.Dealer. We view units as a key indicator of the growthhealth 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.

The number of units increased 14.9%decreased 16.5% to 253,52776,458 units in the three months ended September 30, 2017March 31, 2023 from 220,63391,600 units in the three months ended September 30, 2016.March 31, 2022. The number of units increased 21.3%unit decrease is primarily due to 713,313 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 ofpressure on our marketing activities, product enhancements,conversion rates brought on by continuing elevated vehicle prices, rising interest rates, and the growing number and geographic coverage of TrueCar Certified Dealers in our network.lingering constraints on dealer inventory.
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%
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increased to $306 during$482 for the three months ended September 30, 2017 from $319March 31, 2023 as compared to $473 for the same period in 2016, primarily as a result of a decrease in OEM incentive revenue. Our monetization decreased 1.9% to $316 during the ninethree months ended September 30, 2017 from $322 forMarch 31, 2022. The increase is primarily due to the same period in 2016. We expectadditional of our monetization to be affected in the future by changes in our pricing structure, the unit mix between newSell Your Car offering and used cars, with used cars providing higher monetization, and by the introduction of new products and services, including new OEM incentive programs.incentives revenue.
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 12,2867,961 at September 30, 2017, anMarch 31, 2023, a decrease from 8,299 at March 31, 2022, and a slight increase from 10,759 at September 30, 2016, an increase from 11,1517,924 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 our2022. The year over year decline in franchise dealer count excludes Genesis franchises on our programis primarily due to Hyundai’s transitioncertain franchise dealers scaling back their spending on marketing as a result of Genesis to a stand-alone brand. In order to facilitate period over period comparisons, we have continued to count each Hyundai franchise that also has a Genesis franchise as one franchise dealer rather than two. We intend to increase the number of dealers representing high volume brands in our dealer network, generally, and in key geographies, by investing to improve the dealer experience and increasing dealer satisfaction.automobile inventory shortages.
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.vehicles. 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 2,9383,871 at September 30, 2017, an increaseMarch 31, 2023, a decrease from 2,5374,106 at September 30, 2016, an increaseMarch 31, 2022, and a decrease from 2,5974,148 at December 31, 2016, an increase from 2,716 at March 31, 2017,2022. The decrease in independent dealer count is primarily due to certain of our independent dealers being acquired in recent industry consolidations or went out of business as the used vehicle market experienced softening demand and an increase from 2,860 at June 30, 2017.price volatility.


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Non-GAAP Financial Measures
Adjusted EBITDA and Non-GAAP net income (loss) areis a financial measuresmeasure that areis 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, certain litigation costs, severance charges,gain from equity method investment, changes in the fair value of contingent consideration liability, lease exit costs, impairment of right-of-use (“ROU”) assets, and income taxes. We define Non-GAAP net income (loss) as net loss adjusted to exclude stock-based compensation, non-cash warrant expense, certain litigation costs, severance charges, and lease exit costs. We have provided below a reconciliation of each of Adjusted EBITDA and Non-GAAP net income (loss) to net loss, the most directly comparable GAAP financial measure. Neither Adjusted EBITDA nor Non-GAAP net income (loss) should not 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) measuresmeasure 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.this measure. 
We use Adjusted EBITDA and Non-GAAP net income (loss) as an operating performance measuresmeasure as eachit 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 excludeit excludes 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 themit 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) reflectsdoes not reflect 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 costs due to certain former executives and former members of our product and technology teams affected by a reorganization;
neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects thedoes not reflect lease exit costs or impairment charges on our ROU assets associated with consolidation of the Company's office locations in Santa Monica, California;subleasing;
neither •Adjusted EBITDA nor Non-GAAP net income (loss)does not consider 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 theirits 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.
22

The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented:
 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
 $9,273
 Three Months Ended
March 31,
 20232022
 (in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:  
Net loss$(19,565)$(12,414)
Non-GAAP adjustments: 
Interest income(1,608)(27)
Depreciation and amortization4,191 3,660 
Stock-based compensation4,708 3,498 
Gain from equity method investment (1)— (1,749)
Change in fair value of contingent consideration liability591 — 
Lease exit costs (2)— 669 
Impairment of right-of-use (“ROU”) assets (3)351 — 
Provision for income taxes6 57 
Adjusted EBITDA$(11,326)$(6,306)

(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.

(1)The excluded amounts include a $1.7 million gain from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade in the first quarter of 2022.
(2)The following table presents a reconciliationexcluded amount represents lease exit costs associated with certain of net lossour existing office locations. We consider these charges to Non-GAAP net income (loss) for eachbe unrelated to our underlying results of the periods presented:operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(3)The excluded amount represents impairment charges on our ROU assets associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.

23
 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.

Components of Operating Results 
Revenues
Our revenues are comprised primarily of dealer revenue and OEM incentives revenue. We recognize transaction revenues,revenue for certain of our Auto Buying Program and forecasts, consultingOEM incentives arrangements at the time introductions and other revenue.
Transaction Revenue. Revenue consists 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 in the form of a subscription arrangement. Subscription arrangements fall into several types: flat rate subscriptions, subscriptions subject to downward adjustmentincentives 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: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;partners; 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, cash equivalents and cash equivalents.restricted cash.
Interest Expense. Interest expense consists primarily of interest on our built-to-suit lease financing obligations.  
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, 2023 and December 31, 20162022, 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, 2023, our provision for income taxes reflects state income tax expense. Our provision for income taxes infor the three and nine months ended September 30, 2017 and 2016March 31, 2022 primarily reflects a tax expense associated with state income taxes and the amortization of tax deductibletax-deductible goodwill that is not an available source of income to realize deferred tax assets.
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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,
 
 20232022
 (in thousands)
Consolidated Statements of Operations Data:  
Revenues$36,980 $43,533 
Costs and operating expenses: 
Cost of revenue (exclusive of depreciation and amortization presented separately below)3,846 4,946 
Sales and marketing26,766 27,081 
Technology and development12,498 10,255 
General and administrative10,846 11,724 
Depreciation and amortization4,191 3,660 
Total costs and operating expenses58,147 57,666 
Loss from operations(21,167)(14,133)
Interest income1,608 27 
Gain from equity method investment— 1,749 
Loss before income taxes(19,559)(12,357)
Provision for income taxes6 57 
Net loss$(19,565)$(12,414)
Other Non-GAAP Financial Information:  
Adjusted EBITDA$(11,326)$(6,306)
25
 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, 2023 and 20162022
Revenues
 Three Months Ended
March 31,
 
 20232022
 (in thousands)
Dealer revenue$35,831 $42,286 
OEM incentives revenue1,039 1,028 
Other revenue110 219 
Total revenues$36,980 $43,533 

 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, 2023 compared to three months ended September 30, 2016March 31, 2022. The increasedecrease in our total revenues of $7.3$6.6 million, or 9.7%15.1%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016 primarily reflected the increase inMarch 31, 2022 was mainly due to pressure on our transaction revenue. Transactionconversion rates brought on by continuing elevated vehicle prices, rising interest rates, and limited new vehicle inventories, which remain well below historic industry levels despite recent increases for some OEMs. Dealer revenue, OEM incentives revenue, and forecasts, consultingOther revenue represented 96.9%, 2.8%, and other revenue comprised 94.0% and 6.0%0.3%, respectively, of revenues for the three months ended September 30, 2017March 31, 2023 as compared to 93.6%97.1%, 2.4%, and 6.4%0.5%, respectively, for the same period in 2016. The increase in transaction revenue for the three months ended September 30, 2017 primarily reflected a 14.9% increase in units partially offset by a 4.1% decrease in monetization. Forecasts, consulting and other revenue 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.2022.
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 partially offset by a 1.9% decrease in monetization. The increase in forecasts, consulting and other revenue for the nine months ended September 30, 2017 as compared 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 project in our ALG business in the first quarter of 2017. We do not expect similar sized projects to reoccur for the remainder of the year.
Costs and Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization)
 Three Months Ended
March 31,
 
 20232022
 (dollars in thousands)
Cost of revenue (exclusive of depreciation and amortization)$3,846 $4,946 
Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues10.4 %11.4 %
 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, 2023 compared to three months ended September 30, 2016March 31, 2022. Cost of revenue increased $0.8decreased $1.1 million, or 12.2%22.2%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016 primarilyMarch 31, 2022 due to costs for an automotive trade-in pilot program with a large vehicle wholesaler$1.1 million decrease in fees paid to Accu-Trade related to a software and data licensing agreement that commencedwas terminated as part of the sale of our equity method investment in the second quarter of 2017. We expect to incur these costs during the pilot program during which we do not anticipate material revenue.Accu-Trade.
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, 2016 primarily due to costs for an automotive trade-in pilot program with a large vehicle wholesaler that commenced in the second quarter of 2017.
Sales and Marketing Expenses
 Three Months Ended
March 31,
 
 20232022
 (dollars in thousands)
Sales and marketing expenses$26,766 $27,081 
Sales and marketing expenses as a percentage of revenues72.4 %62.2 %
 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, 2023 compared to three months ended September 30, 2016March 31, 2022. Sales and marketing expenses increased $5.8decreased $0.3 million, or 13.7%1.2%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016.March 31, 2022. The increasedecrease primarily reflectedreflects a $3.3$1.6 million increasedecrease in revenue share paid to our affinity marketing partners, a $2.7$0.3 million increasedecrease in salaries and employee related expenses primarily due to increased headcount,facilities costs, and a $1.7$0.3 million increasedecrease in stock-based compensation. These increases wereemployee-related expenses. The decrease is partially offset by a decrease of $2.2 million in advertising costs. We expect sales and marketing expenses to continue to increase in dollar amount due to increased headcount to better serve dealers and OEMs, as well as increased media production costs, television and radio advertising, digital customer acquisition costs, affinity group marketing partner fees, and marketing programs as we grow 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$0.8 million increase in salaries and employee related expenses primarily due to increased headcount,our branded media spend, a $6.5 million increase in revenue share paid to affinity marketing partners, a $3.1$0.7 million increase in stock-based compensation expenses primarily due to the departure of an executive, and a $2.3$0.2 million increase in conferencetravel and travel relatedentertainment costs. Revenue share that we pay to our affinity marketing partners is tied to revenue and units and will fluctuate along with those results. Continuing elevated vehicle prices, rising interest rates, and lingering constraints on dealer inventory impact the deployment of branded media spend, which was reduced when conversion rates fall and branded media spend becomes less efficient. However, we expect to incur incremental branded media 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 decreaseto support further rollout of $0.9 million in professional fees for outsourced services.our TrueCar+ initiatives.
26

Technology and Development Expenses
 Three Months Ended
March 31,
 
 20232022
 (dollars in thousands)
Technology and development expenses$12,498 $10,255 
Technology and development expenses as a percentage of revenues33.8 %23.6 %
Capitalized software costs$3,475 $2,860 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  
 2017 2016 2017 2016
        
 (dollars in thousands)
Technology and development expenses$15,357
 $13,153
 $43,117
 $40,315
Technology and development expenses as a percentage of revenues18.6% 17.5% 18.0% 19.8%
Capitalized software costs$4,302
 $3,020
 $11,577
 $9,361
Three months ended September 30, 2017March 31, 2023 compared to three months ended September 30, 2016March 31, 2022. Technology and development expenses increased $2.2 million, or 16.8%21.9%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016.March 31, 2022. The increase was primarily due to anreflects a $2.4 million increase in stock-based compensation of $1.4 millionemployee-related expenses associated with increased headcount as we continue to invest in TrueCar+, expand our product portfolio, and enhance our existing core offering. The increase is partially offset by a $0.3 million increasedecrease in salaries and employee related expenses primarily due to increased headcount.facilities cost.
Capitalized software costs increased $1.3by $0.6 million, primarily due to ana $0.5 million increase in the amount of third partyinternal capitalized software costs capitalized related to internal use software.
We expect our technology and development expenses toa $0.1 million 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. third-party software costs.
We also expect technology and development expenses to continue to be affected by variations in the amount of capitalized internally developed software.headcount.
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,
 
 20232022
 (dollars in thousands)
General and administrative expenses$10,846 $11,724 
General and administrative expenses as a percentage of revenues29.3 %26.9 %
 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, 2023 compared to three months ended September 30, 2016March 31, 2022. General and administrative expenses increased $1.2decreased $0.9 million, or 8.9%7.5%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016.March 31, 2022. The increasedecrease primarily reflected reflects a $1.2$0.7 million increasedecrease in legal feesemployee-related expenses, a $0.7 million decrease in facilities costs, and a $0.5$0.4 million increasedecrease in stock-based compensationother professional services. The decrease is partially offset by a $0.6 million decreaseincrease in salaries and employee related expenses primarily due to decreased bonus expense. Due to ongoing litigation matters, we expect generalthe fair value adjustment of the contingent consideration liability 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 and administrative expenses decreased $1.2a $0.4 million or 2.7% for the nine months ended September 30, 2017 as compared 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 decreaseincrease 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 to support our litigation efforts.expenses.
Depreciation and Amortization Expenses
 Three Months Ended
March 31,
 
 20232022
 (in thousands)
Depreciation and amortization expenses$4,191 $3,660 
 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, 2023 compared to three months ended September 30, 2016March 31, 2022. Depreciation and amortization expenses decreased $0.3increased $0.5 million, or 4.5%14.5%, for the three months ended September 30, 2017March 31, 2023 as compared to the three months ended September 30, 2016.March 31, 2022. 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 the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Interest Expense
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 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 expense was $0.7 million forGain from Equity Method Investment
 Three Months Ended
March 31,
 
20232022
  (in thousands)
Gain from equity method investment$— $1,749 
For the three months ended September 30, 2017, and $0.6March 31, 2022, we recognized a gain of $1.7 million from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade. No gain or loss was recognized at the time of the sale as the fair value of the sales proceeds received including the initial fair value of the derivative asset was equal to the then carrying value of the investment.
Provision for Income Taxes
 Three Months Ended
March 31,
 
 20232022
 (in thousands)
Provision for income taxes$6 $57 
For the three months ended September 30, 2016, and primarily consists of interest expense incurred onMarch 31, 2023, our lease financing obligationprovision for our Santa Monica leased office space and our San Francisco leased office space. We expect to incur a consistent level 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
income taxes reflects state income tax expense. Our provision for income taxes for the three and nine months ended September 30, 2017 and 2016March 31, 2022 primarily reflectedreflects tax expense due toassociated with state income taxes and the amortization of tax deductibletax-deductible goodwill that is not an available source of income to realize our deferred tax assets.
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Liquidity and Capital Resources
At September 30, 2017,March 31, 2023, our principal sources of liquidity were cash, and cash equivalents and restricted cash totaling $196.4$156.6 million.
We have incurred cumulative losses of $342.6$532.1 million from our operations through September 30, 2017,March 31, 2023, and expect to incur additional losses in the future. We generate cash inflows from operations primarily from selling services to dealers participating in our network of TrueCar Certified Dealers, and cash outflows to enable our business operations, develop new services and core technologies that further enhance our online automotive marketplace, and fund repurchases of our common stock based on our evaluation of market conditions and other factors. 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, andlevels, 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 resulting from the inventory constraints caused by the global automobile semiconductor chip shortage. To the extent that existing cash, and cash equivalents and restricted cash, 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 FacilityShare Repurchase Program
On February 18, 2015, we amendedIn the third quarter of 2020, our credit facility to provide advancesboard of directors authorized an open market stock repurchase program (the “Program”) of up to $35.0 million. This credit facility provides a $10.0$75 million subfacilityto allow for the issuancerepurchase of lettersshares of credit and contains an increase option permitting us, subject to the lender'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. No amounts were outstanding atour common stock through September 30, 2017. The amount available under2022. In the amended credit facility atsecond quarter of 2021, our board of directors increased the authorization of the Program by an additional $75 million, bringing the total authorization to $150 million. In the third quarter of 2022, our board of directors extended the Program’s expiration to September 30, 2017 was $30.7 million, reduced for the letters2024. The timing and amount of credit issuedany repurchases is determined by us based on our evaluation of market conditions and outstanding under the subfacility of $4.3 million. See Note 5other factors. Repurchases of our condensed consolidated financial statements hereincommon stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when we might otherwise be precluded from doing so under insider trading laws, open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws. The Program may be suspended or discontinued at any time and does not obligate us to purchase any minimum number of shares. The Company had no share repurchases during the three months ended March 31, 2023. As of March 31, 2023, the Company had a remaining authorization of $45.8 million for more information about our amended credit facility.

future share repurchases.
Cash Flows
The following table summarizes ournet cash flows:
 Nine Months Ended September 30,
 2017 2016
    
Consolidated Cash Flow Data:(in thousands)
Net cash provided by (used in) operating activities$16,913
 $(2,602)
Net cash used in investing activities(15,194) (12,872)
Net cash provided by financing activities86,962
 6,076
Net increase (decrease) in cash and cash equivalents$88,681
 $(9,398)
derived from operating, investing, and financing activities:
 Three Months Ended March 31,
 20232022
Consolidated Cash Flow Data:(in thousands)
Net cash used in operating activities$(12,101)$(7,465)
Net cash (used in) provided by investing activities(3,855)9,421 
Net cash used in financing activities(2,914)(12,391)
Net decrease in cash, cash equivalents and restricted cash$(18,870)$(10,435)
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 and 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 byused in operating activities for the ninethree months ended September 30, 2017March 31, 2023 was $16.9$12.1 million. This was primarily due to our net loss of $24.4$19.6 million, which, adjusted for non-cash items including stock-based compensation expense of $22.7 million andsuch as, depreciation and amortization expense of $17.5$4.2 million, resulted in $17.7 million in cash provided by operations. Net cash provided by operations also reflected a decrease of $0.8 million related to changes in operating assets and liabilities.
The $0.8 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 liabilities of $1.1 million primarily due to decreased accrued marketing fees, 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 increase in other liabilities of $0.8 million primarily due to increased deferred rent.
Cash used in operating activities for the nine months ended September 30, 2016 was $2.6 million. This was primarily due to our net loss of $33.8 million, which, adjusted for non-cash items, including depreciation and amortization expense of $17.7 million and stock-based compensation expense of $18.0$4.7 million, resulted in $4.0amortization of lease right-of-use assets of $0.9 million, in cash provided by operations.and impairment of right-of-use asset of $0.4 million. Net cash used in operations also reflected a decrease of $6.6$3.6 million related tofrom changes in operating assets and liabilities, which primarily reflected a decrease in accrued employee expenses of $5.1$2.7 million, a decrease in accounts payable primarily due to decreased affinity group marketing fees, an increase of $2.9 million in accounts receivable primarily due to an increase in revenue, and an increaseoperating lease liabilities of $1.2 million, in prepaid expenses primarily due to an increase in prepaid insurance and marketing fees. These uses of cash were partially offset by a $1.5 million increasedecrease in accrued expenses and other current liabilities of $1.2 million, and an increase in accounts receivable of $0.4 million. These decreases were offset by a decrease in prepaid expenses and other assets of $1.4 million and an increase in accounts payable of $0.6 million.
Cash used in operating activities for the three months ended March 31, 2022 was $7.5 million. This was primarily due to increasedour net loss of $12.4 million, adjusted for non-cash items, including depreciation and amortization expense of $3.7 million,
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stock-based compensation expense of $3.5 million, amortization of lease right-of-use assets of $1.1 million, and gain from equity method investment of $1.7 million. Net cash used in operations also reflected a decrease of $2.0 million from changes in operating assets and liabilities, which primarily reflected a decrease in accrued legal and marketing feesemployee expenses of $1.5 million, and a decrease in operating lease liabilities of $1.4 million. These decreases were offset by a decrease in accounts receivable of $1.4 million increase in other liabilities primarily due to an increasea reduction in lease exit costs recorded in the second quarter of 2016.revenue.
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$3.9 million for the ninethree months ended September 30, 2017 resulted from $10.1 millionMarch 31, 2023 consisted of investments in software, $3.2 million of investments in furniture, leasehold, and facility improvements, and $1.9 million of investments in computer hardware.software.
Cash used inprovided by investing activities of $12.9$9.4 million for the ninethree months ended September 30, 2016 resultedMarch 31, 2022 consisted of $12.8 million received from $9.1the sale of our equity method investment in Accu-Trade that was offset by $3.4 million of investments in software $2.8 million of investments in furniture, leasehold, and facility improvements, and $1.0 million of investments in computer hardware.

Financing Activities
Cash provided byused in financing activities of $87.0$2.9 million for the ninethree months ended September 30, 2017 reflects $69.6March 31, 2023 represented a payment of $1.9 million for the first tranche of proceeds from the exercisecontingent cash consideration associated with our acquisition of stock options, net ofDigital Motors, and taxes paid of $1.1 million for the net share settlement of certain equity awards, and $17.4awards. These decreases were offset by proceeds received of $0.1 million of proceeds from our public offering of common stock that closed in May 2017, net of underwriting discounts and commissions and offering costs.
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 employee stock options, netoptions.
Cash used in financing activities of $12.4 million for the three months ended March 31, 2022 represented payments of $11.5 million for the repurchase of shares of our common stock under our open market stock repurchase program and taxes paid of $1.0 million 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, partiallyawards. These decreases were offset by $0.1proceeds received of $0.2 million paid forfrom the repurchaseexercise of commonemployee stock option awards.options.
Contractual Obligations and Known Future Cash Requirements
In April 2017, we signed a memorandum of understanding for a six-month automotive trade-in pilot programInformation related to the Company’s contractual obligations, commercial commitments and expected cash requirements can be found in Note 4 and Note 11 in our Annual Report on Form 10-K, filed with a large vehicle wholesaler. In October 2017, the pilot was extended through January 2018. The pilot program is expected to enable consumers to useSEC on February 24, 2023. There have been no material changes in our TrueCar branded website or mobile application to view real-time vehicle valuation information based on specific vehicle characteristicscontractual obligations and receive offers for the vehicle from participating dealers in the TrueCar network. We anticipate incurring additionalknown future cash costs of approximately $1.0 million per quarter during the pilot program.requirements since December 31, 2022.
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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.


Critical Accounting Policies and Estimates
Management’s discussion and analysisThe preparation of financial conditionstatements and results of operations is based upon our condensed consolidated financial statements, which have been preparedrelated disclosures in accordance with accounting principles generally accepted in the United States of America. The preparation of theseAmerica requires management to make judgements, assumptions and estimates that affect the amounts reported in the 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 disclosedaccompanying notes. Note 2 in our Annual Report on Form 10-K filed withdescribes the SEC on March 1, 2017.significant accounting policies and methods used in the preparation of the condensed consolidated financial statements. Since December 31, 2022, there have been no material changes in our accounting policies that are impacted by judgements, assumptions and estimates.
Recent Accounting Pronouncements
See Note 2There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on our condensed consolidated financial statements included herein.Condensed Consolidated Financial Statements.
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 and restricted cash of $196.4$156.6 million at September 30, 2017,March 31, 2023, 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, fluctuationsA hypothetical 25 basis points decrease in interest rates earned on our cash, cash equivalents and restricted cash balance as of March 31, 2023 would result in a decrease in annual interest income have not been significant.of approximately $0.4 million.
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 5 to the condensed consolidated financial statements herein. As of September 30, 2017, 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.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. However, if inflation leads to a significant decrease in consumer demand for vehicles, or if our costs were to become subject to significant inflationary pressures and we mayare not be able to fully offset such higher costs through price increases. Our inability or failure to do soincreases, inflation 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. 

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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, 2023. 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, 2023, 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 65 “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.
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Risks Related to Our Business and Industry


Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending.
Since 2020, beginning with disruptions caused by the coronavirus pandemic, the automotive industry has experienced, and may continue to experience, a decline in inventory supply. Despite improvements in inventory levels beginning in the latter half of 2022, industry-wide levels have not reached pre-pandemic levels, and we cannot guarantee that inventory will ever return to historic levels. These low inventory levels are attributable to a number of factors, including supply chain disruptions and shortages of critical parts, such as automotive semiconductor chips, fewer trade-ins from diminished vehicle sales, lease extensions on vehicles that would otherwise have been returned to dealerships, the closure of or restrictions on the operations of wholesale auctions limiting dealers’ ability to source stock and replenish inventory and increases in the costs that dealers incur when purchasing inventory as a result of macroeconomic factors such as rising interest rates and inflation. The limited supply of inventory has also led to an increase in wholesale auction prices and the prices that dealers charge consumers for automobiles.
The reduced inventory and increased prices have had, and may continue to have, several negative effects on us, including: a reduction in dealers’ willingness to participate in our network, at our standard rates or at all, and corresponding pressure on our dealer count and revenue; an increase in competition for dealers’ marketing spending and a limitation on the effectiveness of our advertising, as detailed in the risk factor “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”; a reduction in automobile manufacturers’ incentive spending and willingness to partner with us on incentives, as detailed in the risk factor “The failure to attract manufacturers to participate in our car manufacturer incentive programs, or to induce manufacturers to remain participants in those programs, could reduce our growth or have an adverse effect on our operating results”; an adverse effect on consumer satisfaction with the experience we provide due to unusually high vehicle sale prices; and an adverse impact on the amount of inventory available on our sites, which could contribute to a decline in the number of consumer visits to our sites and the number of connections between consumers and dealers through our platform and, as detailed in the risk factor “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 provide certain of our key features, our inventory supply and certain key elements of our TrueCar Deal Builder’s functionality, any of which would negatively affect our business,” disrupt our search-engine optimization efforts. We cannot predict when, if ever, these automobile inventory-related issues will be resolved, and until they are, they are likely to continue to adversely impact our business, results of operations and prospects.
Decreases in the quality or quantity of the leads we provide to dealers adversely affect our business and revenue by, among other things, decreasing our unit volume and causing some dealers on our network to lose faith in our value proposition and choose to leave our network or insist on lower subscription rates.
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. When our lead quality or quantity declines, for example, in response to macroeconomic factors such as interest rates, inventory shortages or inflation,our unit volume declines, which results in lower revenues from pay-per-sale billing arrangements, as well as a greater difficulty in justifying our value proposition to dealers. Additionally, diminished lead quality or quantity often causes TrueCar Certified Dealers to be dissatisfied with our program, which makes it more likely that they choose 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 first observed an increase in this concern in the first half of 2019. Further, in 2020, the wind-down and subsequent termination of our affinity partnership with USAA Federal Savings Bank, or USAA, adversely affected our overall lead quantity and lead quality. Additionally, during the first several months of the coronavirus pandemic, we noticed a substantial but temporary decrease in lead quantity, and since 2021 we have experienced a material decline in lead quality. We believe that the lead quality challenges that we have experienced since 2021 are substantially related to the contemporaneous industry-wide automobile inventory shortages, which we discuss in greater detail in the risk factor “Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending.” We cannot predict how further developments will affect our lead quantity and quality, and negative developments in these metrics, like many others in the total value proposition that we provide to our TrueCar Certified Dealers, have adversely affected our revenues, results of operations and business and may continue to do so in the future.
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If we are not successful in rolling out our TrueCar+ offering, providing a compelling value proposition to consumers and dealers using that offering, integrating our current and future offerings into that experience or appropriately monetizing it, our business and prospects would be adversely affected.
We believe that our effort to build out our end-to-end consumer car-buying experience, TrueCar+, is critical to the success of our business. Through this initiative, we integrate certain of our current product offerings along with other offerings designed to provide an end-to-end car-buying experience into one seamless experience.
For example, we have historically offered our Trade solution to our dealers through a commercial partnership with Accu-Trade. In March 2022, our original agreement with Accu-Trade was terminated and replaced with a new commercial agreement with the Accu-Trade business in connection with the acquisition of Accu-Trade by Cars.com Inc. Accu-Trade, as a subsidiary of Cars.com, supplied the valuation data we use in providing offers and guarantees for those offers to dealers subscribed to our Trade product until our commercial relationship with Accu-Trade ceased on May 1, 2023 upon the termination of our commercial agreement. Although we have continued offering valuation data for our Trade and “Sell Your Car” products with the support of our affiliate, TrueCar Wholesale Solutions, Inc., instead of Accu-Trade, we cannot guarantee that consumers or dealers will consider our replacement product comparable to what we have historically provided through our partnership with Accu-Trade. If dealers believe that this change decreases the value our product offerings, our business may be adversely affected. We also cannot assure you that we will be able to operationalize and implement the replacement support of TrueCar Wholesale Solutions, Inc. at scale. If we are unable to do so, the TrueCar+ offering and our business and prospects will be adversely affected.
Also, since 2020, we have introduced a number of other products to help streamline consumers’ car-buying experience. The first of these products allows consumers to connect with one of our insurance partners, from whom they may obtain car insurance. We also have partnered with financial institutions to, among other things, allow consumers to pre-qualify for a car loan, review their credit score to facilitate financing quotations and apply for credit from lenders. We have introduced, and intend to continue to introduce, additional other products to facilitate the implementation of our TrueCar+ offering. However, because these products are new and may be relatively untested, we may be unable to anticipate issues that arise following their introduction. This has resulted in our product development and rollout being an iterative process in which we may modify, pause or cease certain features or products, and we expect to continue this approach with future offerings. Consumers and dealers may view past or future alterations or removals of TrueCar+ features or products in a negative light, which could adversely affect the prospects of our TrueCar+ offering. For more information on potential risks to our reputation with dealers arising from these new products, refer to the risk factor “If key industry participants, including car dealers, affinity partners 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.”
Further, we completed the acquisition of Digital Motors Corporation in the second quarter of 2022. The acquisition was undertaken in part to allow us to pursue the integration of certain features of Digital Motors’ existing automotive retail and financial technology platform into our current and future product offerings, including our TrueCar+ offering. For example, in the fourth quarter of 2022 we employed certain elements of Digital Motors’ credit application routing product to replace services that to that point had been supplied by a third-party vendor. However, we cannot guarantee that the benefits of any such integration will make TrueCar+ or any other offerings more attractive to dealers and consumers or that we will be able to successfully integrate any technology developed by Digital Motors into our own platforms in all cases. For more information on potential risks related our acquisitions and similar transactions, refer to the risk factor “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.”
Our TrueCar+ offering was structured as a pilot program in the initial stages of its rollout and dealers were able to access the offering for free during that period. At the beginning of 2023, we began monetizing our TrueCar+ offering which resulted in some dealers choosing to end their access to the offering and could result in decreased rates of dealer participation in the future. If we are not successful in rolling out the TrueCar+ offering, providing a compelling value proposition to consumers and dealers using it, integrating our current and future offerings into that experience or appropriately monetizing it, our business, revenue, operating results and prospects would be adversely affected.
Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
We regularly maintain cash balances at third-party financial institutions, including Silicon Valley Bank, or SVB, in excess of the Federal Deposit Insurance Corporation, or FDIC, insurance limit. On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB and appointed the FDIC as receiver. At that time, we held approximately 70% of our cash and cash equivalents, approximately $122 million, with SVB in order to comply with a covenant in our now-
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terminated credit facility with SVB. As a result of SVB’s closure, substantially all of our cash and cash equivalents with SVB were temporarily unavailable until March 13, 2023, following the FDIC’s announcement that all SVB deposits would be guaranteed and that the bank would resume normal banking activities, including online banking. On March 27, 2023, all deposits of SVB were assumed by First-Citizens Bank & Trust Company.
Following the closure of SVB, we terminated our credit facility with SVB, which terminated the covenant requiring us to keep 70% of our cash and cash equivalents deposited with SVB. Although this allowed us to further diversify the financial institutions in which we deposit our cash and cash equivalents, our business operations necessitate maintaining a certain amount of cash in deposit accounts, and, as of March 31, 2023, approximately 10% of our cash and cash equivalents was held in deposit accounts in excess of the FDIC insurance limits and remain subject to the risk of bank failure. We cannot guarantee that additional financial intuitions, including those at which we have deposited our cash and cash equivalents, will not enter into receivership or that the FDIC or any governmental authority will protect uninsured depositors if there are future bank failures. In instances of future bank failures, we may be unable to access or may lose some or all of our cash and cash equivalents, which could materially and adversely affect our business.
The coronavirus pandemic and the responses to it by governments, organizations and individuals materially and negatively affected our business. We cannot predict the extent to which our business may continue to be disrupted by it and its effects in the future.
Responses to the coronavirus pandemic negatively affected our business, growth, financial condition, results of operations and cash flows in a number of ways. Most directly, in the first and second quarters of 2020, a number of state and local governments took steps that prohibited or curtailed the sale of automobiles during the pandemic. In some jurisdictions, shelter-at-home orders, or other orders related to the pandemic, impeded car sales. On top of these legal restrictions, the economic uncertainty and the large number of consumers who were unemployed, as well as the decrease in consumers’ need and willingness to make discretionary trips outside of the home, decreased the demand for cars.
Cumulatively, these factors resulted in a drastic reduction in the number of cars bought by our users from our dealers. In the second and third quarters of 2020, for example, our units declined by approximately 22% over the same two-quarter period in 2019, with the effect most pronounced in April 2020. These factors continued to negatively affect the number of cars bought by our users from our dealers in subsequent quarters, and this was compounded by the wind-down and termination of our partnership with USAA later in the year. This decline in units had a number of negative consequences, including on the amount of revenue we generated from our dealer customers due to the effects of the pandemic on our dealers’ financial condition and certain of the steps we took to support them during this time, such as reducing the cost of our platform.
Although we have experienced a marked improvement in our financial and operational metrics since the height of the pandemic, our business could suffer depending upon how employee, consumer or dealer behavior or the macroeconomic environment are affected by the long-term effects of the pandemic. For example, if consumer demand for cars is permanently decreased because remote working remains prevalent in the long term and the need for workers to commute reduced or if consumers become accustomed to contactless purchases and we are not able to successfully roll out our TrueCar+ experience, our business may be harmed. Further, many dealers were able to increase profits as a result of certain conditions caused by the pandemic, such as low inventory levels and marketing costs, and if dealers continue this operational approach, our business could be adversely affected.
Further, we cannot predict whether future outbreaks of the coronavirus, including its variants and subvariants, or of other infectious diseases will result in renewed governmental restrictions on consumer and dealer behavior, any of which could have negative financial and operational impacts on our business.
Finally, since the first quarter of 2020, all of our employees have been on mandatory work-from-home status, a transition that was implemented to reduce the risk of transmission of the coronavirus in accordance with the orders of relevant governmental authorities. In the future, we may permit or require certain employees to return to our offices, which could create a transition period in which business is disrupted or employee attrition, morale and productivity is negatively affected.
The termination of our partnership with USAA adversely affected our business and we may be unable to mitigate its negative financial effects.
The largest source of user traffic and unit sales from our affinity group marketing partners in 2019 came from the car-buying site we maintained for USAA. In 2019, 293,142 units, representing 29% of all of our units during that year, were matched to users of that site. Our affinity group marketing agreement with USAA reached the end of its term in 2020, at which time we entered into a transition services agreement with USAA pursuant to which it briefly continued to offer its members an auto-buying program as it wound down the offering. Even as the partnership was wound down during 2020, 154,339 units, representing 20.1% of all of our units that year, were attributable to the program. As such, the number of units purchased using the USAA car-buying site has in the past had a significant influence on our operating results.
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The termination of our affinity partnership with USAA had a material adverse effect on our business, revenue, operating results and prospects, and may have led to the loss of some dealers from our network. To the extent that we are not able to mitigate the adverse effects of the termination of our relationship with USAA, our business, revenues, results of operations and cash flows will continue to be materially negatively affected.
The growth of our business relies significantly on our ability to maintain and increase the revenues that we derive from dealers in our network of TrueCar Certified Dealers. Failure to do so would harm our financial performance.
We derive most of our revenues from dealers in our network of TrueCar Certified Dealers. If we are unable to maintain and increase these revenues, our financial performance will be harmed. We seek to increase these revenues in a number of ways.
First, as described elsewhere in this “Risk Factors” section, we work to develop, introduce and improve, new products for dealers, including our TrueCar+ offering, to increase revenue and drive dealer adoption of our offerings.
Second, we endeavor to support and maintain our currently active TrueCar Certified Dealers. As described in greater detail elsewhere in this “Risk Factors” section, the coronavirus pandemic imposed financial hardships on dealers that resulted in some of them going out of business or canceling or suspending their participation in our offerings, and the termination of our partnership with USAA diminished the number of users that we refer to our dealers and decreased the average quality of the leads that we provide our dealers, and we have taken actions intended to mitigate these effects on our dealers.
Third, because approximately two-thirds of our unit volume from our dealers is subject to subscription billing arrangements, with the remainder being subject to pay-per-sale billing arrangements, our ability to properly manage dealer subscription rates is critical to maintaining and increasing our dealer revenues. 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 will be even more dependent on our ability to manage dealer subscription rates.
If we are unable to convince subscription-based dealers of our value proposition, we could be unable to maintain or increase dealer subscription rates even if our unit volume increases. Similarly, if our unit volume declines and we are not able to appropriately manage the subscription rates of affected dealers, those dealers could insist on lower subscription rates or terminate their participation in our dealer network. Any of these and other similar subscription-related eventualities could have a material adverse effect on our business, growth, financial condition, results of operations and cash flows. In addition, during the coronavirus pandemic, our monetization rates exhibited substantially greater volatility than historical levels. In response to this volatility, we provided automatic discounts to most of our subscription dealers during the second quarter of 2020. In the future, we expect to continue to adjust individual dealers’ subscription rates in an effort to bring their monetization rates into line with historical levels. If we do not successfully balance the need to maintain dealer relationships with appropriate subscription adjustments with the need to maintain our revenues, our business, operating results and financial condition could be negatively affected.
Finally, we strive to grow and optimize the geographic coverage of dealers in our network of TrueCar Certified Dealers and increaseto improve 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. Failure to do so would limit our growth.

dealers. 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. WeSince the beginning of 2020, we have experienced the loss of a significant number of car dealers in our network and 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. During the second halfAs noted earlier in this “Risk Factors” section, many of 2015, we experienced both a decline in the proportion of such high volumeour dealers canceled or suspended their participation in our network as a result of the coronavirus pandemic and slowed quarter-over-quarter revenue growth.the termination of our affinity partnership with USAA led to the loss of additional dealers from our network. If we experience a similar decline in the future, it couldwould 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. If afloor, referred to as “minimum allowable advertised price,” or MAAP, guidelines. In the past, manufacturers have taken the position
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that prices submitted by TrueCar Certified Dealer submits pricing information to our users that falls below pricingDealers were in violation of their MAAP guidelines established by the applicable manufacturer, the manufacturer may discourage that dealerand discouraged franchise dealers from remaining in or joining the network, and may discourage other dealers within its brand from joiningany similar discord in 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, discordfuture with specific car manufacturers impedescould impede our ability to grow our dealer network. More recently, Toyota and Nissan modified their marketing covenants to include guidelines on minimum allowable advertised pricing in January 2016 and January 2017, respectively. WeAlthough we have implemented certain changes designed to accommodate these guidelines; howeverexisting MAAP guidelines, it is unclear whether we will ultimately be able to do so without making material, unfavorable adjustmentsaccommodate new, and continue to our business practices or user experience. If we are unable to successfully accommodate theseexisting, guidelines without making material, unfavorable adjustments to our business practices or user experience and, if we are 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.

We cannot assure you that we will expandbe able to maintain or increase the revenues that we derive from dealers in our network of TrueCar Certified Dealers in a manner that provides a sufficient numberany of dealers by brand and geography for our unique visitorsthe ways described above, or otherwise, and failure to do so would harm our financial performance.
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 provide certain of our key features, our inventory supply and certain key elements of our TrueCar Deal Builder’s functionality, any of which would negatively affect our business.
As discussed in more detail under the risk factor “We rely on relationships with data providers and may experience interruptions in the data feeds or API services they provide, which could adversely affect our current and future product offerings, including TrueCar+, and could limit our growth.ability to provide our complete platform to our consumers and dealer customers as well as the timeliness of the information we provide, and which may impair our ability to attract or retain consumers and TrueCar Certified Dealers and to timely invoice our dealers, and otherwise negatively affect our business,” we depend on data provided by our dealers to provide our users with information about what others paid for the same make and model of car, among other aspects of our user experience. If a critical mass of dealers nationally, or in any given geographic area, goes out of business, or cancels or suspends their participation in our network, we may be unable to provide comparable sales data, our used-car inventory count and certain key elements of our TrueCar Deal Builder experience to users in the affected areas, or the quality of the information or user experience could deteriorate in those areas. Although we introduced distance retailing in 2022 to allow consumers to choose from an expanded selection of inventory beyond their immediate geographic location, a majority of TrueCar consumers who ultimately purchase vehicles on our platform do so from dealers in their region

Additionally, because much of our organic traffic from search engines originates from used-car-related search terms, and our ranking for those terms is heavily influenced by our inventory levels, the loss of a critical mass of dealers in any given geographic area could also cause a loss of used-car inventory on our sites that would diminish our organic search traffic and therefore our number of monthly unique visitors. For example, a decrease in our 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 “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.”
Although dealer cancellations and suspensions at the beginning of the pandemic were disproportionately concentrated in California and the Northeastern United States, we do not believe that we have to date lost a critical mass of dealers in any particular geographic area. Nevertheless, recent decreases in our dealer count have affected our ability to present a wide array of dealers and inventory to some of our users, which could harm our business. Further, if we do lose a critical mass of dealers nationally, in any geographic area or for any particular manufacturer, our business, reputation and results of operations would be negatively affected.
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, and the number of TrueCar Certified Dealers, could decline, and our revenue and results of operations would suffer harm.
The user experience on our TrueCar-branded website platform has evolved since its launch in 2010, but has not changed dramatically. While we continue to devote substantial resources to the development of our platform and enhancement of our user experience, including the rollout of our TrueCar+ end-to-end car-buying solution, we cannot assure you that we will be able to create such an end-to-end car-buying solution, or provide a compelling car-buying experience to our users. Our failure to do so could cause the number of transactions between our users and TrueCar Certified Dealers to decline, prevent us from effectively monetizing our user traffic and cause us to lose consumers to competitors’ platforms. 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.
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We believe that our ability to provide a compelling car-buying experience is subject to a number of factors, including:
•the actions taken by other participants in the car-buying process, including dealers and automobile manufacturers;
•our ability to provide our TrueCar+ offering in a manner that is user-friendly, accepted by dealers and differentiated from the offerings of our competitors;
•our ability to launch other new products that are effective and have a high degree of consumer engagement;
•our ability to constantly innovate and improve our existing products, including in response to changes in consumer and dealer behavior and preferences, whether in response to the coronavirus pandemic, the macroeconomic environment or otherwise;
•the compliance of the dealers within our network of TrueCar Certified Dealers with applicable laws, regulations and the rules of our platform, including the requirement that they honor the prices they quote to our users;
•our access to a sufficient amount of data to enable us to provide relevant vehicle and pricing information to consumers, including data provided by TrueCar Certified Dealers through our systems; 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.
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, and in connection with the coronavirus pandemic and the subsequent shortage of automobile semiconductor chips dropped from 17.0 million in 2019 to 14.5 million in 2020, 14.9 million in 2021 and 13.8 million in 2022, according in each case to the Bureau of Economic Analysis.
Various economic uncertainties, including stock market and commodity pricing volatility, could lead to 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 rising costs of energy and gasoline, the availability and cost of credit, reductions in business and consumer confidence, inflation, stock market volatility, new tariffs or border adjustment taxes, increased unemployment and changes in environmental regulations and fuel economy standards. Similarly, a change in gasoline prices, such as the increases in gasoline prices following Russia’s invasion of Ukraine in February 2022 and the implementation of sanctions against Russia by Western and other governments, governmental policy or other macroeconomic factors could increase the relative demand for electric vehicles, many of which are currently sold directly to consumers by manufacturers such as Tesla without the involvement of franchised dealers such as the TrueCar Certified Dealers on our network, and which is a transaction structure we are not currently able to monetize.
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. Interest rate increases by the U.S. Federal Reserve, such as those implemented in 2022, implemented to date in 2023 and additional increases that could occur in the future, could negatively affect the number of vehicles 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. Higher interest rates combined with increased vehicle prices resulting from low inventory, as discussed in the risk factor “Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending” or other factors may also increase the amount of time that consumers spend between purchasing vehicles as the ability for a consumer to trade in or sell an existing vehicle to finance a new purchase may be diminished if the value of any loans associated with such existing vehicle are high relative to the value of the vehicle itself. Increases in interest rates may also result in dealers purchasing lower amounts of inventory from manufacturers due to increases in dealers’ own financing costs.
Similarly, inflation, both with respect to new and used cars prices and the broader macroeconomic environment, may negatively affect consumer behavior and purchasing power, reducing the number of cars purchased by consumers during periods of heightened inflation, such as the twelve months ending June 30, 2022, during which consumer prices increased 9.1% according to the Department of Labor, and while increases in inflation have slowed in intensity since summer 2022, we cannot predict the extent prices will continue to rise, or the long-term effects these conditions may have on consumer behavior. In addition, our business may be negatively affected by challenges to the larger automotive ecosystem, including challenges
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arising from growth in car manufacturer subscription service offerings, increasing interest rates on loans, global supply chain challenges, such as those resulting from the ongoing automotive microchip shortage, which has disrupted automobile production, automotive tariffs, natural disasters and other macroeconomic issues. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.
The failure to attract manufacturers to participate in our car manufacturer incentive programs, or to induce manufacturers to remain participants in those programs, could reduce our growth or have an adverse effect on our operating results.
For the three months ended March 31, 2023, we derived approximately 2.8% of our revenue from our arrangements with car manufacturers to promote the sale of their vehicles through additional consumer incentives (for the year ended December 31, 2022, the corresponding figure was approximately 2.7%), and, while more volatile than other of our revenue sources, we believe that this revenue stream represents a potential growth opportunity for our business following the resolution of current automobile inventory shortages. Low vehicle inventories in 2021 and 2022 have reduced manufacturers’ incentive spending, and while incentive spending by manufacturers increased in early 2023, such spending remains historically low compared to the period prior to the coronavirus pandemic and subsequent inventory shortages and has trended toward financing and leasing offers, while our arrangements with car manufacturers has historically involved cash discount incentives offered to consumers. Certain manufacturers who currently participate in these programs have suspended their participation indefinitely due to the low inventory levels, and certain manufacturers who formerly participated in programs of this type have informed us that they will not consider partnering with us again until inventory returns to more typical levels. Failure to attract additional manufacturers to participate in these programs could reduce our growth and harm our operating results. For more information on in effect of low vehicle inventory levels on our business, refer to the risk factor “Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending.” 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 would have an adverse effect on our business, revenue, operating results and prospects.
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 cars 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. A majority of the cars purchased by our users have historically been matched to the car-buying sites we maintain for our affinity group marketing partners, and although the termination of our affinity partner relationship with USAA has increased our branded sites’ relative unit contributions, our relationships with our affinity group marketing partners will remain critical to our business and financial performance. However, several aspects of our relationships 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 the 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 car-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 2020, USAA terminated its affinity marketing partnership with us. USAA accounted for a substantial share of our units and revenues and this termination had a materially adverse effect on our business, operating results and prospects. For more information on the termination of our affinity partnership with USAA, refer to the risk factor “The termination of our partnership with USAA adversely affected our business, and we may be unable to mitigate its negative financial effects.”
Additional changes like these 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
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manufacturer 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 “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.” Our relationships with our affinity group marketing partners could also be harmed by any number of macroeconomic, social, political, legal or regulatory changes or other factors and our and our partners’ respective responses to them or changes in our partners’ interpretations or existing regulations and other legal requirements.
Further, as discussed earlier in this “Risk Factors” section, the disruption occasioned by the coronavirus pandemic caused our average net monetization per unit to fall materially in the second quarter of 2020 because the proportional discounts we provided to dealers on subscription-based billing arrangements on average exceeded the proportional decrease in their units. For more information on the impact of the pandemic on our business, refer to the risk factor “The coronavirus pandemic and the responses to it by governments, organizations and individuals materially and negatively affected our business. We cannot predict the extent to which our business may be disrupted by it and its effects in the future.” Because our revenue sharing arrangements with our affinity partners are typically tied to our average net monetization, a decrease in this metric negatively affects the per-unit revenues that those partners receive from their partnership with us, and the 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 about 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.
If key industry participants, including car dealers, affinity partners 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 ofopportunity to sell 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, 2023, our franchise dealer count was 12,286.

7,961.
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 would notmay fail to grow and the number of dealers in our network could decline.

Similarly, if dealers come to view our products and services, in particular the products and services associated with TrueCar+ which we are currently rolling out to dealers, in a negative light, whether because they perceive them as competing with their own offerings or otherwise, our dealer network could be adversely affected.
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 may could
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lose a significant number of dealers in our network. In MayFor example, in 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. For more information concerningAlthough this lawsuit, refer tolitigation was ultimately settled, we cannot assure you that similar litigation will not be brought against us in 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.”future. 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 maywould adversely affect our ability to maintain or grow the number and productivity of dealers in our network or the revenue derived from those dealers.

And, as discussed in greater detail in the risk factor “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,” a majority of our units have historically been matched to the car-buying sites we maintain for our affinity group marketing partners, and any deterioration in our reputation or relationships with those partners could result in a number of adverse effects on our business.
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.

Our business could be adversely affected by executive and other transitions in our senior management team or if any vacancies cannot be filled with qualified replacements in a timely manner.

We could face management turnover, which could divert our remaining management team’s attention from key business areas and negatively affect our business in other ways. 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.
We have experienced management turnover such as this in the past. In 2020, after nine months of service in an interim capacity, our board of directors appointed Michael Darrow as our chief executive officer following the departure of our prior chief executive officer in 2019. Also in 2020, in connection with the reorganization of our business discussed earlier in this “Risk Factors” section, we hired a new chief operating officer and chief consumer officer, and our chief financial officer and chief accounting officer resigned. In 2021, we hired a new chief financial officer and a new head of product, our executive vice president of dealer solutions departed and we terminated the employment of our chief operating officer, in 2022, we hired a new chief people officer and a new head of sales and our chief financial officer was appointed to serve in the additional capacity of chief operating officer and in 2023 we appointed a new chief financial officer as our prior chief financial officer assumed the role of chief operating officer in a dedicated position, appointed a new chief commerce officer and our chief communications officer and head of sales departed. As a result of turnover and open positions, our management team has been required to take on increased responsibilities in the past and may be required to do so again in the future.
Management transitions are often difficult and inherently cause some loss of institutional knowledge and a learning curve for new executives, 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 any such transition, and the time and attention from the board and management needed to fill any vacant roles and train any new hires could disrupt our business. If we are unable to providesuccessfully identify and attract adequate candidates for any vacancies in our management roles in a compelling car-buyingtimely manner, we could experience increased employee turnover and harm to our users, the number of transactions between our users and TrueCar Certified Dealers will decline and our revenue andbusiness, growth, financial conditions, results of operations will suffer harm.and cash flows. We face significant competition for executives with the qualifications and experience we seek. The search for candidates for these positions has resulted, and may in the future result, in significant recruiting and relocation costs.

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The user experience on our company‑branded platform on the TrueCar website has evolved since its launch in 2010, but has not changed dramatically. We cannot assure you that we are able to provide a compelling car‑buying experience to our users, and our failure to do so could mean that the number of transactions between our users and TrueCar Certified Dealers may decline and we would be unable to effectively monetize our user traffic. We believe that our ability to provide a compelling car‑buying experience is subject to a number of factors, including:

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

Changes to management, including turnover of our top executives, or anAn 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 often intense, and we have historically faced significant competition in hiring and retaining them during competitive labor markets. Moreover, we have in the past conducted reductions in force, and may incur significant costsundergo further reductions in the future as a result of our continued review of business needs, employee performance and other factors specific to attractour business as well as broader economic factors such as market demand for automotive products and retain them. In orderservices or advancements in technology. Any such future reductions could adversely affect employee morale, retention and recruiting efforts and could result in the incurrence of severance-related costs. We are also limited in our ability to recruit internationally by immigration and other 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 andtime-based restricted stock units. Ifunits, performance-based restricted stock units and stock options. Our stock price has long experienced substantial volatility, which may negatively impact the anticipated value of such stock‑based incentive awards does not materialize, ifextent to which our stock‑basedstock-based compensation otherwise ceases to beis viewed as a valuable benefit, orbenefit. Further, in response to the financial disruption caused by the coronavirus pandemic, we temporarily reduced executive base salaries and deferred employee bonuses, raises and promotions. Although these measures were temporary, executives’ and other employees’ bonuses have also been negatively affected by the disruptions we have faced in recent years, including the termination of the USAA partnership, the coronavirus pandemic and the automobile inventory shortage. The fact that we have taken these actions, and if we take any similar measures in the future, could hamper our recruiting and retention. Further, the equity incentive plans under which we grant our employees stock-based compensation as well as the number of shares issuable thereunder are subject to periodic stockholder approval, which may restrict our ability to authorize the number of stock-based incentive awards to the extent we believe necessary to compensate our employees. 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.

We may fail to respond adequately to changes in technology and consumer demands that could lead to decreased demand for automobiles on our platform.
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. Moreover, if a broader nationwide shift toward work-from-home arrangements persists in the long term as a result of changes implemented in response to the coronavirus pandemic, consumer demand for cars could decrease. 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 currently able to monetize transactions in which a manufacturer sells new automobiles directly to a consumer without the involvement of a TrueCar Certified Dealer, as Tesla and some other electric car manufacturers do in certain states, for example. Some more traditional manufacturers, such as Ford, have indicated an intent to adopt certain operating standards pioneered by the electric car industry with respect to their own electric vehicles, such as offering their electric models at fixed prices and supplying dealers with lower inventory. Some manufacturers are also promoting “build-to-order” models in which consumers can order a car with preselected options and features from a manufacturer via a dealership. If these practices become widespread, there may be a decrease in dealers’ and consumers’ dependence on third party services such as ours that incorporate the inventory selection that a dealer has at a given time and rely on the ability of dealers to negotiate price with consumers. If we are not able to adjust our business model in response to these and other developments in the industry, 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.
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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, or enhance existing products and services on our platform, for example, in recent years may not be indicativeconnection with our rollout of our future growth and,TrueCar+, we may incur losses or otherwise fail to introduce these products or product enhancements successfully. Our attempts to do so may place us in competitive and regulatory environments with which we are unfamiliar and involve various risks, including the need to invest significant resources and the possibility that returns on these investments are not be able to manage future growth effectively.achieved for several years, if at all.

Our revenue grew from $38.1 million in 2010 to $277.5 million in 2016. 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 growth may again decline. In addition, we may not be ablesuccessfully demonstrate the value of these enhanced or complementary products to grow as fastdealers or at all if weconsumers, and failure to do not accomplish the following:

so would compromise our ability to successfully expand our dealer network in a geographically optimized manner,user experience and could harm our growth rate, revenue and operating performance.
Further, key contractual counterparties, including increasing dealers in our network representing high 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;
successfully grow the revenue we derive from car manufacturer incentive programs;
maintain and grow our affinity group marketing partner relationshipspartners and increase the productivity ofautomobile manufacturers who participate in our current affinity group marketing partners; 
increase the number of users ofincentive programs, are increasingly requiring that our products adhere to certain technical standards, including accessibility and services,security standards, more stringent than those that we believe are 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 amount of resources and, if we are unsuccessful in particularimplementing the number of unique visitors to the TrueCar websitestandards, could negatively affect our reputation and contractual relationships, which could adversely affect our TrueCar branded mobile applications; 

further improve the quality of our existing productsgrowth rate, revenue and services, and introduce high quality new products and services; and 
introduce third party ancillary products and services.
We may not successfully accomplish any of these objectives. We plan to continue our investment in future growth. We expect to continue to expend substantial financial and other resources on:operating performance.

marketing and advertising; 
dealer outreach and training, includingFinally, as discussed elsewhere in these risk factors, the hiring of additional personnel in our dealer team;
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; 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 userssuccess of our platform as well asdepends in part on the amount of data that we analyze. We have hired, and expectutility it provides to continue hiring, additional personnel, particularly in our dealer, product and technology teams. The additional personnel in our dealer team are intendedconsumers relative to enhance the service experience and the productivityplatforms 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 such information and 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, dealer management system, or DMS, data feed providers, data aggregators and integrators, survey companies, purveyors of registration data and our affinity group marketing partners. In the states 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 Dealer so that we may collect a transaction fee from those dealers and recognize revenue from the related transactions.

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 states 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 with users that obtained a Guaranteed Savings Certificate from a TrueCar Certified Dealer, thereby delaying our submission of an invoice to an automobile dealer in our network for a given transaction and delaying the timing of cash receipts from the dealer. The redundancies of data feeds received from multiple providers may not result in sufficient data to match automobile purchases with users that obtained a Guaranteed Savings Certificate from a TrueCar Certified Dealer. In the case of an interruption in our data feeds, our billing structure may transition to a subscription model for 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 of the fee owed to us for a given transaction decreases for those periods in whichcompetitors. If we are unable to submitincorporate features or technological advancements that become commonplace in other consumer-facing products, including those of our competitors, such as the integration of artificial intelligence, machine learning and other emerging technologies, our products may be viewed less favorably by consumers, and our business, growth rate and performance may suffer.
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 make 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 technology 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 2020, we introduced new consumer experiences that allow our users more control over the dealers to which their contact information is provided, the specific information so provided and the methods by which they are contacted. Although we believe that these experiences improved our product and will yield long-term financial benefits, in the short term, certain aspects of those new experiences had an invoice to automobile dealers. Interruptions which occurincrementally negative impact on our monetization rates. Similarly, as discussed elsewhere in close proximitythis “Risk Factors” section, we believe that the rollout of our TrueCar+ offering is critical to the endlong-term success of a given reporting period could result in delays in our ability to recognize those transaction revenues inbusiness. However, we cannot assure you that reporting periodwe will do so successfully, or, if we do, that it will improve our business.
These and these shortfalls in transaction revenue could be material toother similar decisions may adversely affect our operating results.

We have a historybusiness and results of lossesoperations and we may not achieveproduce the long-term benefits that we expect.
Failure to maintain or maintain profitability in the future.
We have not been profitable since inception and had an accumulated deficit of $342.6 million at September 30, 2017. From timeincrease our revenue, or to time in the past, we have made significant investments inreduce our operations which have not resulted in corresponding revenue growth and,expenses as a result, increasedpercentage of revenue, would adversely affect our losses. 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. 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 haveall, 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.
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 as 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 ablesufficient to reduce costs effectively because many ofreplace the revenue that we historically derived from our costs are fixed. In addition,partnership with USAA or that we generated prior to the extent that we reduce variable costs to respond to losses,coronavirus pandemic and recent automobile inventory shortages, each as discussed elsewhere in this may affect our ability to acquire consumers and dealers and grow our revenues. Accordingly, we“Risk Factors” section. Furthermore, these investments may not be able to achieve or maintain profitability anddecrease as a percentage of revenue if our business grows. In particular, we may continue to incur significant losses in the future,make substantial expenditures to acquire or develop and this could cause the pricelaunch 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 technology infrastructure. We also intend to continue investing to increase awareness of our common stockbrand, including channels such as television, video, digital, social, email, out-of-home, experiential and radio advertisements, particularly in connection with the rollout of TrueCar+. There can be no assurance that these investments will have the effect of maintaining or increasing revenue or that we will eventually be able to decline.decrease our expenses as a percentage of revenue, and failure to do so would adversely affect our financial condition and profitability.

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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 aswhen 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 revenueRevenue growth will require moremay be dependent on a number of factors, including the success of our TrueCar+ offering or our ability to 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. For example, as described in greater detail in the risk factor “Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending,” the automobile inventory shortage in recent periods reduced the attractiveness of our value proposition to many dealers.
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 reductionWe rely on relationships with data providers and may experience interruptions in the numberdata feeds or API services they provide, which could adversely affect our current and future product offerings, including TrueCar+, and could limit our ability to provide our complete platform to our consumers and dealer customers as well as the timeliness of cars purchased fromthe information we provide, and which may impair our ability to attract or retain consumers and TrueCar Certified Dealers by membersand to timely invoice our dealers, and otherwise negatively affect our business.
We receive data that is important for our business, such as automobile purchase data, from many third-party data providers, including our network of TrueCar Certified Dealers; dealer management system, or DMS, data feed providers; data aggregators and integrators; survey companies; purveyors of registration data; our affinity group marketing partners would reducepartners; and other companies with which we partner from time to time. An interruption in our revenue and harmreceipt of data from any of the data sources on which we rely could negatively affect our operating results.business.
Our financial performance is substantially dependent uponFor example, in the number of automobiles purchasedcircumstances in which we employ a pay-per-sale billing model, we use automobile purchase data to match purchases from TrueCar Certified Dealers so that we may collect transaction fees from those dealers and recognize revenue from the related transactions. We also use that 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 data feed providers. These interruptions sometimes negatively affect our business, for example, by usersimpacting our ability to timely invoice the dealers in our network. These interruptions may occur for a number of the TrueCar website, our branded mobile applications and the car-buying sites we maintain for our affinity group marketing partners. Currently, a majority of the automobiles purchased by our users were matchedreasons, including changes 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 businesssoftware used by these data feed providers and financial performance. However, several aspects of our relationship with affinity groups might changedifficulties in a manner that harms our business and financial performance, including: 

affinity group marketing partners might terminate their relationship with us or make such 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 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 ofrenewing our agreements with affinity group marketing partners might change, resultingthird-party data feed providers. If we are unable to renew data agreements as they expire, or use alternative data sources, and we experience a material disruption in a decrease in our operating margins on transactions by their members.


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 provided to us, by them with respect to automobile transactions. This loss of data may decrease the quantity and quality of the information that we provide to consumersour users and TrueCar Certified Dealers may also reducebe 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.
In the circumstances in which we employ a pay-per-sale billing model, an interruption in the automobile purchase data feeds that we receive may affect 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 change in our relationship with United Services Automobile Association, or USAA, could harm 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, 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 influence on our operating results. We define units as the number of automobiles purchasedmatch automobile purchases made by our users from TrueCar Certified Dealers, throughthereby delaying our submission of an invoice to a dealer in our network for a given transaction and delaying the timing of cash receipts from the dealer, and in circumstances in which we employ a subscription billing model, an interruption in those data feeds may affect our ability to justify maintaining or increasing our subscription rates. The redundancies of automobile purchase data feeds received from multiple providers may not result in sufficient data to match automobile purchases made by our users from TrueCar Certified Dealers. In the case of an interruption in these 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 may not be able to retroactively match a transaction and collect a fee. In addition, our likelihood of collecting the fee owed to us for a given transaction decreases for those periods during which we are unable to submit an invoice to automobile dealers. Interruptions that 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.
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Finally, as described in greater detail in the risk factor “If we are not successful in rolling out our TrueCar+ offering, providing a compelling value proposition to consumers using that offering, integrating our current and future offerings into that experience or appropriately monetizing it, our business and prospects could be adversely affected,” we depend on certain third-party providers of data and other services in providing our Access package of Trade and Payments solutions, and our TrueCar+ offering as well as our TrueCar Deal Builder and our ability to provide users with certain information about others pay for the same make and model of a car, all rely on a number of other third-party providers. If our access to any of these providers is interrupted, or if any of them ends or adversely alters its relationship with us or the data they provide, we may be required to modify or curtail features of our TrueCar+ and other existing offerings.
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 branded mobile applications ortraffic would decline and our business would be adversely affected.
We depend in part on Internet search engines such as Google and Bing to drive traffic to our website, both through organic search results and the car‑buying sitespurchase of automotive and shopping-related keywords and phrases. For example, when a user types an automotive-related term into an Internet search engine, we maintain for our affinity group marketing partners. At September 30, 2017, USAA beneficially owned 9,042,990 shares, which represented 9.0%rely on a high organic search ranking of our outstanding common stock.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 adversely affects 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, our user base could 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.
In May 2014,We also purchase automotive-related keywords by anticipating what words, terms and phrases 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 entered into an extensionhave purchased. Further, we bid against our competitors and other advertisers for preferred placement on the search engines’ results pages. Many of our affinity groupcompetitors have greater resources with which to bid and better brand recognition and consumer visibility than we do. We experience competition for paid advertisements, which increases the cost of paid Internet search advertising and as a result our marketing agreementand 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 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 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.
Our users may in some cases require dealers who wish to communicate with USAAthem other than by email to communicate by text message rather than by calling. If consumers or dealers do not see value in this functionality, or if it results in privacy concerns, our business could be negatively affected.
We allow some of 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 extends through February 13, 2020,allowing users to select their methods of communication is beneficial to both consumers and dealers, but we cannot assure you that they will agree. To the extent that dealers perceive text-message connections to be less valuable, for example because dealers believe that they are able to sell fewer cars to our agreementusers when using it, our business and results of operations 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 either we, or our third-party vendor, are perceived to violate our dealers’ or users’ privacy in connection with USAA willthose communications, or any law or regulation that applies to those communications, our reputation and business could be extended at the expirationharmed. For more information on this type of the current agreement on terms satisfactory 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 changesrisk, refer to the user experience for its car-buying site, which we believe contributed to a decrease in the number of transactions between its membersrisk factor “We collect, process, store, share, disclose and use personal information and other data, and our TrueCar Certified Dealers during the third quarter of 2017. Changes inactual or perceived failure to protect this information and data could damage our relationship with USAA or its promotionreputation and marketing of our platform, or maintenance of its present car-buying site user experience could adversely affectbrand and harm our business and operating results in the future. results.”

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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 important components of the growth of our business. Because TrueCar.com is a consumer brand, we rely heavily on marketing, communications and advertising to increase the visibility of this brand with potential users of our products and services. We currently advertisehave historically advertised and intend to continue advertising in the future through a combination of television and radio 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 branding initiatives and future product launches. For more information on this initiative, see the risk factor “If consumers and dealers do not respond positively to our 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$104.5 million and $112.8$136.5 million on sales and marketing during the nine monthsyears ended September 30, 20172022 and 2016,2021, respectively.
Our business model relies on our ability to scale rapidly andWe strive to decrease incremental user acquisition costs as we grow. Ourby scaling our business and revenues. In the past, 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 the 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.condition could be materially adversely affected.

Additionally, to the extent thatif we discontinue our broad marketing campaigns or elect to reduce our sales and marketing costs to decrease our losses, this may affectas we did at the beginning of the coronavirus pandemic, our ability to acquire consumers and dealers and grow our revenues. revenues would be adversely affected. Further, the ongoing industry-wide vehicle inventory shortages that began in 2021 resulted in increased vehicle prices that required us to discontinue long-running, high-performing advertising messages about the amount of savings that our users typically save off of the manufacturers’ suggested retail price, which we believe reduces the effectiveness of our advertising. For more information on these inventory shortage, see the risk factor “Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ marketing expenditures and reducing automobile manufacturers’ incentive spending.”
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,Moreover, 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, changes in how USAA promotes and markets the car-buying site we maintain for them can and has, 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, adversely affecting the volume of traffic to our 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 would be harmed.
Finally, as noted above, we rely in part on digital and online media for our marketing efforts. Historically, this has involved, among other things, collecting, tracking, using and sharing certain personal data of consumers who interact with our webpages or application. The protection of the privacy of consumers’ data is a topic of heightened national political and commercial attention in a rapidly-changing landscape. The developments resulting from this heightened attention include, in addition to the legal and regulatory changes discussed in greater detail elsewhere in this “Risk Factors” section, numerous actual and potential actions by private entities to protect consumers’ data privacy. For example, recent versions of Apple’s iOS software require all applications on iPhones running that operating system to request permission from users before using their personal data. Because of this, Meta and other companies have restricted our ability to use the data of users of their platforms who are directed to our webpages or application. These restrictions have negatively impacted the effectiveness of our digital marketing, and we expect that similar future restrictions imposed on us by other third parties similar to Apple and Meta could have similar impacts, which may lead us to redirect resources to other marketing channels. We cannot guarantee that we will be able to mitigate the negative effects of these and other similar changes, and failure to do so could harm our revenue, business, operating margins and financial results.
If consumers and dealers do not respond positively to our branding, our financial performance and our ability to grow unique visitor traffic and expand our dealer network could be negatively affected.
We regularly expend resources on the preservation and refreshment of our branding. For example, in 2020, shortly before the onset of the coronavirus pandemic, we launched a rebranding campaign that included a change in our logo and extensive advertising and promotional activity and we plan to engage in additional branding campaigns in connection with the rollout of our TrueCar+ offering. We also refreshed our go-to-market tagline in the first quarter of 2022. We cannot guarantee
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that any given investment in our branding will improve our brand recognition or otherwise result in benefits that outweigh its costs. If consumers and dealers do not respond positively to our branding, our sales, performance and consumer and dealer relationships could be adversely affected.
Moreover, maintaining and enhancing our 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 us as offering a compelling value proposition, our reputation and the strength of our brand would be adversely affected.
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 could harm our business growth prospects and operating results.
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, Amazon-hosted digital automotive showrooms, Autotrader.com, eBay Motors, AutoWeb.com (formerly Autobytel.com), KBB.com, CarSaver.com, CarGurus.com and Cars.com; 
•sites operated by automobile manufacturers such as General Motors and Ford;
•online automobile retailers such as Carvana, Vroom, CarMax (and its subsidiary Edmunds), DriveTime and Shift Technologies;
•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 products and services, among other companies, for a share of car dealers’ overall marketing budget for online and offline media marketing spend. If car dealers come to view alternative marketing and media strategies to be superior to 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.

FailureWe also expect that new competitors will continue to increase our revenue or reduce our sales and marketing expense or our technology and development expense as a percentage of revenue would adversely affect our financial condition and profitability.

We expect to make significant future investments to supportenter 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. Furthermore, these investments may not decrease as a percentage of revenue if our business grows. In particular, we intend to increase expenditures to launch new products and enhance our existingautomotive retail industry with competing products and services, continuewhich could have an adverse effect on our revenue, business and financial results.
Our competitors could significantly impede our ability to growexpand and trainoptimize our network of TrueCar Certified Dealers and upgradeto reach consumers. Our competitors may also develop and market new technologies, including end-to-end consumer car-buying experiences that may compete with our system architecture. WeTrueCar+ offering, that render our existing or future products and services less competitive, unmarketable or obsolete. 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, longer operating histories and greater name recognition than we have. As a result, these competitors may be better able to respond more quickly with new technologies, such as artificial intelligence, machine learning and other emerging technologies. Our competitors may also intend to continue investing to increase awareness of our brand, including via television and radio advertisements. There can be no assurance that these investments will increase revenue or that we will eventually be able to decreaseleverage their resources and relationships to undertake more extensive marketing or promotional campaigns. Further, if any of our salescompetitors have existing relationships with dealers or automobile manufacturers for marketing or data analytics solutions, those dealers and marketing expense,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.
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In addition, if one or more of our technology and development expense, as a percentagecompetitors were to merge or partner with another of revenue, and failure to do so wouldour 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 conditionresults.
Further, our competitors may face challenges to their businesses distinct from the challenges we face, because of, among other things, the differences in the products and profitability.

services offered by our competitors compared to those we offer, or because of the differences in the business and financial strategies of our competitors compared to our own. In some cases, particularly with respect to competitors whose business or financial challenges garner significant publicity, this could result in increased skepticism from consumers, dealers and investors of our own business and products, including our TrueCar+ service, as our product and services, or our industry generally may come to be viewed in a negative light.Further, to the extent we generate revenue from doing business with certain of our competitors, such as our competitors that list their own vehicles on our platform, our own revenue may decline as a result of challenges to the business of our competitors.
We are subject to a complex framework of federal and state laws and regulations, primarilyincluding, among others, those 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 statesjurisdictions 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 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.jurisdictions. 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 statesjurisdictions 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 statesjurisdictions 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 statejurisdiction to state,jurisdiction, 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.

jurisdictions.
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 statejurisdiction pending the resolution of suchthese issues, the resolution of which included the payment
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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,Further, as we were named as a defendant in a lawsuit filed in the Superior Court for the County of Los Angeles (the “CNCDA Litigation”). The complaint, filed by the California New Car Dealers Association, seeks declaratoryexpand our business model to offer new products or services, we may become subject to motor vehicle sales, advertising and injunctive relief based on allegationsbrokering laws that have not historically applied to our business and with which we are operatingnot operationally experienced. For example, following the wind down of our commercial relationship with Accu-Trade as discussed in the State of California as an unlicensed automobile dealer and autobroker. For more information concerning the CNCDA Litigation, refer to the risk factor below, “We face litigationentitled “If we are not successful in rolling out our TrueCar+ offering, providing a compelling value proposition to consumers and are party to legal proceedingsdealers using that could have a material adverse effect onoffering, integrating our current and future offerings into that experience or appropriately monetizing it, our business financial condition, resultsand prospects would be adversely affected,” we now provide certain services to our dealers and users with the support of operationsour affiliate, TrueCar Wholesale Solutions, Inc., instead of Accu-Trade. This has resulted in TrueCar Wholesale Solutions, Inc. being subject to laws and cash flows.”regulatory schemes with which we have no previous operational experience. It may also result in TrueCar, Inc. being subject to laws and regulatory schemes that were not previously applicable to our business.

Actions Brought by Regulators and Other Governmental Authorities
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, and as subsequently amended, 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. 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. 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, weWe then 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 “California Consumer Class Action”). The complaint asserts claims for unjust enrichment, violation of the California Consumer Legal Remedies Act, and violation of the 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 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.” 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 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, weWe 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 AugustAlso in 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,Later that year, 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, weWe 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.
Actions Brought by Dealers, Consumers and Other Third Parties
In June2015, 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 complaint sought declaratory and injunctive relief based on allegations that we were operating in the State of California as an unlicensed automobile dealer and autobroker. In 2017, the parties entered into a binding settlement agreement to fully resolve the lawsuit, and the litigation was dismissed.
Also in 2015, we were named as a defendant in a lawsuit filed in the California Superior Court for the County of Los Angeles by numerous dealers participating on the TrueCar platform. The complaint, as subsequently amended, sought declaratory and injunctive relief based on allegations that we were engaging in unfairly competitive practices and were
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operating as an unlicensed automobile dealer and autobroker in contravention of various state laws. Later that year, the plaintiffs voluntarily dismissed this lawsuit “without prejudice,” which means that while this litigation is currently resolved, it could be re-commenced at a later date.
Also in 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, which we refer to as 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 in part on allegations that we are operating in the State of California as an unlicensed automobile dealer and autobroker. After 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 Consumer Class Action is currently resolved.
In 2017, we were named as a defendant in a putative class action filed by Kip Haas in the Federal Consumer Class Action.U.S. District Court for the Central District of California. 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. InLater that year, 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.
***
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,jurisdictions 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.

Insurance Regulatory Laws
The advertising and sale of automobile insurance is highly regulated by the jurisdictions in which we do business. Although we do not sell insurance, certain of our partners sell insurance to the public in general, and may sell insurance to our users in particular. Further, we enter into arrangements with certain such partners from time to time 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 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 required 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 jurisdictions. 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 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.
Laws Relating to Financial Products
The provision of financial products, including related to the purchase, financing or lease of automobiles, is highly regulated by the jurisdictions in which we do business. Although we do not provide financing or extend credit to consumers, certain of our partners provide automobile financing or other financial products to the public in general, and may provide automobile financing products to our users in particular. In connection with certain of the products provided by these commercial partners, our platform collects and transmits certain information related to consumer credit applications. Further, we enter into arrangements with certain such partners from time to time 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, including arrangements based upon the volume of our users who complete transactions with those partners. We cannot assure you that relevant regulatory authorities or third parties will not take the position that some of the regulations applicable to financial product providers, or to the manner in which such products are advertised or sold, apply to our platforms or business. If our products or services, including products or services that we may offer in the future, are determined to fall within the scope of those laws or regulations in a manner that would require us or our partners to implement additional measures to comply with these laws and regulations, we may be forced to incur additional compliance costs or be required to discontinue or limit the offering of certain products or services in affected jurisdictions. Additionally, if our products or services are determined not to comply with relevant regulatory
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requirements, we or our partners could be subject to possibly 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 jurisdictions. Even without a determination that our products or services are not in compliance with those law or regulations, if any of our current or prospective affinity or other partners is uncertain about the applicability of such laws and regulations to our business, those partners may terminate or 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, increased regulatory scrutiny, 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 our 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.

Privacy Laws
We are subject to a variety of 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 “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. Finally, the evolution of our business, in particular in connection with the development and implementation of our TrueCar+ offering, could implicate additional regulatory

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frameworks with which we have not had prior experience. For example, regulators could take the position that our permitting consumers to use our technology solutions and interactive platform to arrange with our dealers for transportation of vehicles they purchase from those dealers implicates regulations enforced by the Federal Motor Carrier Safety Administration. Further, some states have enacted laws which prohibit the sale of certain items, including cars, on specific days of the week. If a state were to conclude that the use of certain planned features of our TrueCar+ offering, such as the ability for a user to reserve a car and pay the purchase price online, on days affected by such laws would result in a violation of such laws, the ability of users to access these features could be diminished and the value of our TrueCar+ offering may be adversely affected. If any additional regulatory frameworks are finally determined to apply to our business, or if we are found for any reason not to comply with any applicable regulations, our business could be negatively impacted.
Our business, TrueCar Certified Dealers and the automotive industry may be impacted by laws, regulations and other policies put in place in response to climate change.
Federal, state and local governmental authorities have enacted, and will likely continue to enact initiatives aimed to mitigate the long-term impacts of climate change. Although some of these initiatives may not be directly applicable to our business, many impact the larger automotive ecosystem. For example, vehicle manufacturers are subject to government-mandated fuel economy and greenhouse gas, or GHG, emission standards, which continue to change and become more stringent over time. Substantial changes to fuel economy requirements or new restrictions on GHG emissions that may be imposed on vehicles and fuels could adversely affect consumer demand for vehicles or increase the costs of operations for manufacturers and dealers. We also cannot predict whether future regulations will be designed to apply directly to businesses such as ours, which may be viewed by regulators as promoting the use and consumption of fossil fuels.
Consumers may also change their behavior as a result of concerns over climate change, including by seeking to reduce their reliance on automobiles generally or increasing demand for electric vehicles, some of which, as described elsewhere in these risk factors, are sold directly to consumers by manufacturers without the involvement of franchised dealers such as the TrueCar Certified Dealers on our network.
Further, in March 2022, the SEC proposed broad rules requiring increased climate change-related disclosure in certain public company SEC filings, and while the full impact that these requirements may have on our own reporting obligations is not yet clear, any future increase in our reporting obligations from these proposed rules or future rules may require us to spend significant resources and divert management attention.
We cannot guarantee that we will be able to successfully adapt our operations in response to any climate-related changes or comply with any increased reporting obligations in a cost-effective manner, and our business, financial condition and results of operations could be materially and adversely affected.
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 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 this information. From 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 many federal, state, local and foreign laws regarding privacy and the collection, processing, storage, sharing, disclosure, use or protection of personal information and other data. The scope of these laws is changing, they are subject to differing interpretations and they may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules.
Numerous jurisdictions in which we do business are currently considering, or have enacted, data protection legislation, most prominently, the California Consumer Privacy Act of 2018, which we refer to as the CCPA. The CCPA 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. The CCPA 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. Moreover, California voters approved the California Privacy Rights Act in 2020, which amended the CCPA to, among other things, further restrict information sharing, heighten penalties and establish a new governmental agency to enforce the CCPA. The CCPA has increased 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 the CCPA and similar legislation, or that we may be required to make in the future as a result of the continuing
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changes to the requirements under that legislation or similar future legislation, may materially negatively impact our business, operating results, financial condition and prospects.
Legislation similar to the CCPA has also passed in a number of other states. 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.
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 employ an audit and assurance program designed to ensure that we comply with privacy and security-related obligations to third parties. We strive to monitor the changing regulatory environment and to address the new requirements of applicable laws and regulations and other mandatory obligations relating to privacy and data 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, that 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 CCPA 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. 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 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.
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.

We are subject to a variety of claims and lawsuits. These claims may arise from a wide variety of business practices and initiatives, including product innovations, the content and functionality of the websites and mobile applications that we operate, our advertising practices and content, our use and storage of data, our use of intellectual property, M&A transactions and business transactions or other business relationships, such as those with our users, participating dealers, affinity partners, OEM partners, licensors, licensees landlords, tenants and employees. Additionally, as a public company, we face the risk of stockholder lawsuits, particularly if we experience declines in the price of our common stock. Adverse outcomes in any claim or lawsuit against us could result in significant monetary damages or injunctive relief that could adversely affect our ability to conduct our business. Examples of litigation to which we are, and have been, subject include:
Stockholder Litigation
Milbeck Federal Securities Litigation
In March 2015, we were named as a defendant in the NY Lanham Act Litigation. The complaint in the NY Lanham Act Litigation, purportedly filed on behalf 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 competition 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 result of the alleged diversion of customers 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, and on July 13, 2015, we2018, Leon Milbeck filed a motion to dismiss the amended complaint. On January 6, 2016, the Court granted in part and denied in part our motion to dismiss. The litigation is currently in the expert discovery phase. We believe that the portions of the amended complaint that survived our motion to dismiss 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.

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.

In May 2015, a purportedputative securities class action complaint was filedagainst us and certain of our then-current and former officers and directors 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 TrueCarwhich we refer to 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 theMilbeck Federal Securities Litigation seeksLitigation. The complaint, as amended, sought an award of unspecified damages interest and attorneys’ feesother relief based on allegations that the defendants made false and/or misleading statements and failed to disclose material adverse facts about TrueCar’sour business, operations, prospects and performance. Specifically, the amended complaint alleges thatperformance during the putativea purported 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,of February 16, 2017 through November 6, 2017 in violation of various states’applicable securities laws in connection with our secondary offering of common stock that govern car sales (i.e.,occurred during the issues raised inclass period. On May 26, 2020, the CNCDA Litigation); and (iii) ascase was dismissed pursuant to a settlement. As a result, of the above, TrueCar’s registration statements, prospectuses, quarterlyMilbeck Federal Securities Litigation is resolved, 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.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, adverse changes in our dealer network, settlements or damage awards as a result.damages awards. If any such matters arematter 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.
Derivative Litigation
In July 2015,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
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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 as defendants. On October 7, 2019, the Delaware Court of Chancery consolidated the cases into a single action, which we were namedrefer to as the Delaware Consolidated Derivative Litigation. On September 30, 2020, the court dismissed the Delaware Consolidated Derivative Litigation with prejudice for failure to make a defendantpre-suit demand and failure to state a claim and the plaintiffs did not appeal the ruling. As a result, the Delaware Consolidated Derivative Litigation has been resolved.
Following the court’s decision, the plaintiffs sent a letter to us demanding that we pursue claims against certain current and former officers for various alleged breaches of their fiduciary duties, based substantially on the same factual allegations as the Milbeck Federal Securities Litigation. On November 18, 2020, our board of directors established a special committee of the board, which we refer to as the Special Committee, to investigate the claims in the Participating Dealer Litigation. Both as originallyDelaware Consolidated Derivative Litigation, the Lee Derivative Litigation (described below) and other related stockholder demands. In October 2021, following the aforementioned investigation, our board of directors adopted the Special Committee’s recommendation that our board refuse the demands in their entirety and conclude that no further action is necessary.
Further, in December 2019, Sulgi Lee, a purported stockholder, filed and as subsequently amended, the complainta derivative action in the Participating DealerDelaware 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, sought declaratorywhich we refer to as the Lee Derivative Litigation and, injunctive relief based on allegations thattogether with the Company is engaging in unfairly competitive practicesDelaware Consolidated Derivative Litigation, the Derivative Litigation. The complaint named us, certain of our then-current and is operatingformer directors and officers and USAA as an unlicensed automobile dealer and autobroker in contravention of various state laws. Neither the original nor amended complaintdefendants. The plaintiff sought an award of money damages. On September 29, 2015,damages against the plaintiffs voluntarilydefendants on our behalf and various alleged corporate governance reforms. Following the board’s action on the Special Committee’s recommendation, which is described above, the plaintiff dismissed this lawsuit “without prejudice,” which means thather claims on June 22, 2022. As a result, the Participating DealerLee Derivative Litigation is currently resolved, but that it could be re-filed atand we do not anticipate a later date. If the Participating Dealer Litigation is re-filed at a later date orloss 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.damages awards. If any such matters arematter 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.
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 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.

We participate in a highly competitive market, and pressure from existing and new companies may adversely affectIn pursuing our business strategy, we routinely discuss and operating results.
We face significant competition from companies that provide listings, information, lead generation,evaluate potential acquisitions, divestitures, investments and car-buying services designedother similar transactions. For example, we may seek to reach consumers and enable dealers to reach these consumers.
Our competitors offer variousexpand or complement our existing products and services that compete with us. Somethrough the acquisition of these competitors include:
Internet search enginesor investment in attractive businesses and online automotive sitestechnologies rather than through internal development, such as Google, AutoTrader.com, eBayour acquisitions of DealerScience in 2018 and Digital Motors Autoweb.com (formerly Autobytel.com), Edmunds.com, KBB.com, Cargurus.comin 2022, our investment in Accu-Trade in 2019 and Cars.com; divestment thereof in 2022 and our divestiture of our ALG, Inc. subsidiary, or, ALG, in 2020.
sites operated by automobile manufacturers
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Transactions such as General Motorsthese require significant management time and Ford;
providersresources and have the potential to divert our attention from our ongoing business, and we may not manage them successfully. We may be required to make substantial investments of offline, membership-based car-buying servicesresources to support any such astransaction, and we cannot assure you that they will be successful. Additionally, strategic investments in and partnerships with other businesses expose us to the Costco Auto Program; and 
offline automotive classified listings, such as trade periodicals and local newspapers. 

We compete with many of the above-mentioned companies and other companies for a share of car dealers’ overall marketing budget for online and offline media marketing spend. To the extentrisk that car dealers view alternative marketing and media strategies to be superior to TrueCar, we may not be able to maintaincontrol 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 growimpairment of assets acquired, which could adversely affect future reported results of operations and stockholders’ equity. 
The risks we face in connection with transactions such as these 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 numberother business’s users to our website and mobile applications; 
•retention of TrueCar Certified Dealersemployees 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 TrueCar Certified Dealersorganization; 
•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 sell fewer cars to usershave lacked effective controls, procedures and policies; 
•potential write-offs of our platform, and our business, operating results and financial condition will be harmed.
We also expectintangibles or other assets acquired in acquisitions or similar transactions, or write-downs of investments, that new competitors will continue to enter the automotive retail industry with competing products and services, which couldmay have an adverse effect on our revenue,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 and financial results.faces;
•the risks associated with obtaining necessary regulatory approval for a transaction;
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, if our competitors develop•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;
•risk related to the payment of contingent consideration; and 
•litigation or other claims in connection with similarthe business, product or superior functionality to our solutions, we may need to decrease the prices for our solutionstechnology 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.
question, including claims from terminated employees, consumers, former stockholders or other third parties.
Our currentfailure 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 potential competitors may have significantly more financial, technical, marketing and other resources than we have, andharm our business generally. Future transactions could also result in dilutive issuances of our equity securities; the ability to devote greater resources toincurrence of debt, contingent liabilities or amortization expenses; or the development, promotion, and supportwrite-off of their products and services. Additionally, they may have more extensive automotive industry relationships than we have, longer operating histories and greater name recognition. 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 extentgoodwill, any of our competitors have existing relationships with dealers or automobile manufacturers for marketing or data analytics solutions, those dealers and 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 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. 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 affect our search result rankings. If Internet search engines modify their search algorithms in ways that are detrimental to us, or if our competitors’ efforts are more successful than ours, overall growth in our user base could slow or our user base could decline. 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. Any reduction in the number of users directed to our website through Internet search engineswhich could harm our business and operating results.
The failure to maintain our brand would harm our ability to grow unique visitor traffic and to expand our dealer network.
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 perceive that we are not focused primarily on providing them with a better car-buying experience or if dealers do not perceive TrueCar as offering a compelling value proposition, our reputationfinancial condition, and the strengthanticipated benefits of our brand willany transaction may not materialize.
For example, the total consideration of $135 million payable in connection with the divestiture of ALG in 2020, included up to a maximum of $22.5 million in contingent consideration, comprising one payment of up to $7.5 million payable based on ALG’s achievement of certain revenue metrics in 2020 and another payment of up to $15 million payable based on its achievement of certain other revenue metrics in 2022. The first tranche of $7.5 million in contingent consideration was paid in the first quarter of 2021, but on April 17, 2023, ALG provided us with notice that it failed to achieve the 2022 revenue metrics required for us to be adversely affected.
Complaints or negative publicity about our business practices, our marketing and advertising campaigns, our compliance with applicable laws and regulations, the integrityentitled to any of the data that$15 million contingent consideration. As we provide to users, data privacy and security issues, and other aspectsreview the basis 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. Therethis notice there can be no assurance that we will be entitled to any of the contingent consideration. If we enter into future transactions in which any amount of consideration is payable contingent upon factors beyond our control, we will be unable to guarantee that such payments will be received.
Further, we acquired our Digital Motors subsidiary in the second quarter of 2022 in part to integrate certain features of its existing automotive retail and financial technology platform into our current and future product offerings, including our TrueCar+ offering. However, we cannot guarantee that we will be able to successfully integrate technology developed by Digital Motors into our own platforms to the extent we envisioned prior to the acquisition or that the benefits of any such integration will make our offerings more attractive to dealers and consumers. We also cannot guarantee that any benefits that
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result from our acquisition of Digital Motors or any other acquisition will outweigh the costs incurred due to the allocation of financial and other resources to such acquisition, or result in a meaningful return on our investment.
Our 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 orour platform’s functionality and deliver a compelling user 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 brand,platform to keep pace with consumers’ evolving expectations and failurechanges in network, hardware, software, communication and browser technologies.
For example, some web browsers have begun to discontinue third-party cookie tracking, and the providers of certain other web browsers have announced an intention to do so as well. Certain of our marketing efforts currently rely on cookies to identify in-market consumers. We cannot assure you that we will be able to mitigate any adverse effects that result from browsers blocking our cookies, or altering the manner in which, or the extent to which, they support our cookies.
If we are unable to respond in a timely and cost-effective manner to the rapid technological developments in the network, hardware and software programs that consumers use to interact with us and our dealers and partners, or otherwise to provide a compelling user 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 connections through which we transmit data packets 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 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, multiple states have enacted legislation intended to implement rules similar to the Federal Net Neutrality Regulations at the state level, which, in some instances, has led to legal challenges, including litigation over the preemptive effects of the FCC’s regulatory authority in this area of law. Further, on April 10, 2019, the United States House of Representatives voted in favor of legislation that would reinstate the Federal Net Neutrality Regulations and in July 2021, President Biden called upon the FTC to restore the Federal Net Neutrality Regulations. As a result, there is considerable uncertainty in this area of the law and we cannot predict the final outcome of the challenges to legal protections of net neutrality at the state and federal level. In 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.
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 growth prospects and operatingreputation 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. Further, these risks could be heightened by the fact that most of our employees work from home.
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’
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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.
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.
Our 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 enhanceprotect consumers’, dealers’ and partners’ data and our current product offerings,intellectual property or grow complementary product offerings, may be limited,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 degradation or interruption of service, could result in damage to our reputation, loss of users, loss of revenue or liability for damages, any of which could negatively impactadversely affect our growth rate, revenuesbusiness and financial performance.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 mobile applications could damage our reputation and result in a loss of consumers, which could harm our business, brand, operating results and financial condition.
As we introduce new offeringsOur 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 experienced, and may in the future experience, interruptions with our systems. Interruptions in these systems, whether due to system failures, computer viruses, denial-of-service attacks or enhance existingphysical or electronic break-ins, could affect the security or availability of our products and services on our platform we may incur losseswebsite and mobile application and prevent or otherwise failinhibit the ability of consumers to enter these markets successfully. Our expansion into these markets may place us in competitiveaccess our products and regulatory environmentsservices. To the extent that our consumer base, the number of TrueCar Certified Dealers and the number of parties with which we are unfamiliarmaintain commercial relationships grow, we would need an increasing amount of technical infrastructure, including network capacity and involves various risks, including the needcomputing power, to invest significant resourcessatisfy consumers’ and the possibility that returns on such investments will not be achieved for several years, if at all. In attempting to establish our new product offerings we expect to incur significant expensesdealers’ needs and face various other challenges, such as expanding our sales forcemaintain and technology teams or management personnel to cover these marketsgrow business operations with commercial partners, and complying with complicated regulations that may apply to these markets. In addition, we may not successfully demonstrateeffectively scale and grow our technical infrastructure to accommodate any increased demands. Problems with the valuereliability or security of these expandedour systems or complementary products towith the upgrading, architectural unification or scaling of those systems could harm our reputation, result in a loss of consumers, dealers and failure to do so would compromiseaffinity group marketing partners and result in additional costs. In addition, a significant disruption in our billing systems could affect our ability to successfully expandmatch automobile purchases made by our user experienceusers from TrueCar Certified Dealers and delay or prevent us from submitting invoices to TrueCar Certified Dealers, receiving payment for invoices and recognizing revenue related to purchases.
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 and could harm our growth rate, revenuereputation, business, operating results and operating performance.financial condition.

We rely on Amazon Web Services for the majority of our computing, storage, bandwidth and other services. Any disruption of or interference with our use of Amazon Web Services 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 we currently run nearly all of our 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 have built our software and computer systems to use computing, storage capabilities, bandwidth and other services provided by Amazon, some of which do not have
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a readily available alternative in the market. Given this, any significant disruption of or interference with our use of Amazon Web Services would negatively impact our operations and seriously harm our business.
If we suffer a significant interruptionour users or partners are not able to access our products and services through Amazon Web Services or encounter difficulties in our ability to gain access to third-party data,doing so, we may be unable to maintain key aspectslose 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 userproducts and services and satisfaction with us. If Amazon Web Services or similar providers experience including the TrueCar Curve, andinterruptions in service regularly or for a prolonged period of time, or other similar issues, our business would be seriously harmed. Hosting costs also have increased in the past and operating results will suffer.
Our business relies on our abilitymay continue to analyze data forincrease to 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 ofextent that our user acquisition efforts depends in part on the availability of data relating to existingbase and potential users ofuser engagement grow and may seriously harm our platform. Ifbusiness if we are unable to renewgrow 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 agreements,on the Amazon Web Services platform. If Amazon makes changes or utilize alternative data sources, as certain agreements expire,interpretations that are unfavorable to us, our business could be seriously harmed. Additionally, any disruption of or interference with the use of Amazon Web Services, including disruptions due to system failures, denial-of-service or other cyberattacks and we experience a material disruptioncomputer viruses, or an interruption to Amazon’s systems or in the data providedinfrastructure that allows us to us,connect to them for an extended period, may impact our ability to operate the informationbusiness and would adversely impact our operations and our business.
Our growth in prior years may not be indicative of our future growth.
Our revenue grew from $38.1 million in 2010 to $335.0 million in 2019. However, our overall revenue declined by 16.9% in 2021 to $231.7 million and by an additional 30.3% in 2022 to $161.5 million. In light of the termination of our partnership with USAA in 2020 and the automobile inventory shortage that we providehas affected our business since 2021, our revenue in the near future may continue to be lower than it has been in past periods. In addition, our ability to grow our revenue is dependent on our ability to:
•successfully develop and roll out our TrueCar+ offering;
•expand our dealer network in a geographically optimized manner, including increasing dealers in our network representing high-volume brands; 
•increase the number of transactions between our users and TrueCar Certified Dealers may be limited,Dealers;
•increase dealer subscription rates, and manage dealer churn;
•grow the revenue we derive from car manufacturer incentive programs;
•increase the number of dealers subscribing to our other products, including our Reach and Sponsored Listings products;
•maintain and grow our affinity group marketing partner relationships and increase the productivity of our current affinity group marketing partners, and to replace the units generated by our former partnership with USAA; 
•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; 
•enhance our consumer experience and increase the rate at which site visitors prospect with a TrueCar Certified Dealer and purchase from the prospected dealer;
•improve the quality of this informationour existing products and services, and introduce high-quality new products and services; 
•maintain our existing product offerings, including our Trade and Sell Your Car offerings following the termination of our commercial relationship with Accu-Trade; and  
•introduce third-party ancillary products and services, including by integrating acquired products and services into our business.
We may suffer,not successfully accomplish any of these objectives. We plan to continue our investment in future growth. Among other things, we expect to continue to expend substantial financial and other resources on:
•marketing and advertising; 
•dealer outreach and training;
•technology and product development, including the user experience may be negatively affectedcontinuing development of TrueCar+, other new products and certain functionality on our platform may be disabled,new features for existing products;
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•strategic partnerships, investments and our business, financial condition, results of operationsacquisitions; and cash flows could be materially
•general administration, including legal, accounting and adversely affected.

Our business is subject to risksother compliance expenses related to being a public company.
We have a history of losses and we may not be profitable in the larger automotive ecosystem, including consumer demand, global supply chain challenges and other macroeconomic issues.future.
DecreasesWe have not been profitable since inception. We had an accumulated deficit of $532.1 million at March 31, 2023. During the three months ended March 31, 2023, we had a net loss of $19.6 million. From time to time in consumer demand could adversely affect the market for automobile purchasespast, we have made significant investments in our operations that have not resulted in corresponding revenue growth and, as a result, reduceincreased our losses. We continue to make significant 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.
We may incur significant losses in the future for a number of consumers usingreasons, including slowing demand for our platform. Consumer purchases of newproducts and used automobilesservices, increasing competition, weakness in the automobile industry generally decline during recessionary periods and other periodsrisks described in which disposable income is adversely affected. For example, the number of new vehicle salesthis report, and we may encounter unforeseen expenses, difficulties, complications and delays, and other unknown factors. If we incur losses in the United States decreased from approximately 16.1 million in 2007future, we may not be able to approximately 10.4 million in 2009, accordingreduce costs effectively because many of our costs are fixed. In addition, if we reduce variable costs to the Bureau of Economic Analysis. Various economic uncertainties, including stock marketrespond to losses, this may affect our ability to acquire users and commodity pricing volatility, could leaddealers, improve our products and services and grow our revenues. Accordingly, we may not be able to such a downturn that may impact our business. Purchases of newachieve or maintain profitability and used automobiles are typically discretionary for consumers and have been, andwe may continue to be, affected by negative trendsincur significant losses in the economy, including the cost of energyfuture, and gasoline, the availability and cost of credit, reductions inthis could seriously harm our business and consumer confidence,cause the price of our common stock market volatility, new tariffs or border adjustment taxes and increased unemployment. A reduction in theto decline.
Our number of automobiles purchased by consumers 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 global supply chain challenges, such as those resulting from the Japanese tsunami in 2011 and other macroeconomic issues. The foregoing could have a material adverse effect on our business, results of operations and financial condition.

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 automotive and transportation 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.

Our unique visitors, revenue and operating results fluctuate due to seasonality.

Our number of unique visitors, revenue trends are a reflection ofand operating results reflect 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 to the overall growth of our business, and more recently the effects of seasonality on our results have been outweighed by disruptions to our business, such as the termination of our partnership with USAA, the coronavirus pandemic and the automobile inventory shortage, but we expect that in the future our revenues willmay be affected more by these seasonal trends. 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 inflation, recession, severe weather events.

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 growthother significant events outside 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 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 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.

We collect, process, store, share, disclose and use personal information and other data, and our actual or perceived failure to protect such 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 such 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, from 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 and local laws around the world regarding privacy and the collection, processing, storing, sharing, disclosing, using and protecting of personal information and other data, the scope of which are changing, subject to differing interpretations, and which may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules. We generally comply with industry standards and are subject to the terms of our privacy policies and privacy-related obligations to third parties. We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection, to the extent possible. 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 and may conflict with other rules or our practices or that new regulations could be enacted. 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, 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 and could cause consumers and automobile dealers to lose trust in us, which could have a material adverse effect on our business. 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.

A 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 may experience significant interruptions with our systems. Interruptions in these systems, whether due to system failures, computer viruses, denial‑of‑service attacks or physical or electronic 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. Problems with the reliability or security of our systems or with the upgrading and architectural unification of those system 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 with users that obtained a Guaranteed Savings Certificate 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 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.
We have begun utilizing an enterprise cloud computing provider to operate certain aspects of our service and any disruption of or interference with our use of these operations could adversely affect our business operations and financial results.

We utilize a cloud‑based computing platform operated by a third party in connection with certain aspects of our business operations. We are in the process of architecting our software and computer systems so as to utilize cloud‑based data processing, storage capabilities and other cloud‑based services. As of September 30, 2017, a portion of our computing processes are cloud‑based, and we are working to significantly increase our use of enterprise cloud services. As a result, now and increasingly going forward, any disruption of or interference with the use of these cloud services, including disruptions due to system failures, denial‑of‑service or other cyberattacks and computer viruses, or an interruption to the third‑party systems or in the infrastructure which allows us to connect to the third‑party systems for an extended period, may impact our ability to operate the business and could adversely impact our operations and our business.

control.
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.success. 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 have also registered trademarks under the laws of certain jurisdictions outside of the United States. If applicable authorities determine that we do not conduct sufficient activities in such jurisdictions to maintain our rights over such trademarks, our ability to expand our business and our brand into new markets in the future could be harmed.
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 subjectare occasionally party to intellectual property disputes, which arecan be 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 the second quarter of 2020, a Florida dealer sued us claiming that our “BUY SMARTER DRIVE HAPPIER” tagline, which is featured in some of our marketing materials, infringed its “BUY SMART BE HAPPY” trademark. Although this litigation was resolved without any effect on our business, if any similar litigation is brought and decided adversely to us, we could be required to change our tagline and replace the marketing materials in which it is featured, which would be costly and could damage our brand. Moreover, as discussed in greater detail under the risk factor “Failure to adequately protect our intellectual property could harm our business and operating results,” from time to time, we take legal action to protect our own intellectual property.
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.

Complying withThe impairment of our goodwill, or any intangible or other long-lived assets or investments has required us in the laws and regulations affecting public companies has increased our costs and the demands on managementpast, and could harm our operating results.
As a public company, we 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. In addition, the Sarbanes-Oxley Act and rules implemented by the SEC and NASDAQ impose various requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to 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, these rules and regulations make it more difficult and more expensive forfurther require us to obtain director and officer 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 regulations 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 comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act (“Section 404”). When we cease to be an “emerging growth company” and our independent registered public accounting firm is required to undertake an 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 404 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, if we or our independent registered public accounting firm identifies 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 changes 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 at 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 intangibles or other 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 cause 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 our earnings, which wouldhas materially and adversely affectaffected our results of operations.operations, and may again in the future.
WeAt March 31, 2023, we had goodwill and intangible assets of $70.1 million at September 30, 2017.$12.8 million. Prior to the interim quantitative impairment test discussed below, we had goodwill of $59.8 million. 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 assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. While we have not recognized any impairment charges since our inception, we may recognize impairment charges in future periods in connection with our acquisitions or from other businesses we may seek to acquireFor example, in the future. Thefirst quarter of 2020, in light of the global economic disruption and uncertainty occasioned by the coronavirus pandemic and the announcement of the then-impending termination of our affinity partnership with USAA, we performed 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, during the three months ended March 31, 2020, we recognized a non-cash impairment charge of $10.2 million, of which $1.9 million was included in discontinued operations. Further, following a decline in our stock price in the third quarter of 2022 and continued macroeconomic disruptions impacting our business, we performed an interim quantitative impairment test as of September 30, 2022, which concluded that the carrying value of our single reporting unit exceeded the fair value and, accordingly, we recognized a non-cash impairment charge of $59.8 million for the three months ended September 30, 2022.
We cannot guarantee that in future periods we will not be required to recognize additional impairment charges, whether in our goodwill, to the extent it is regained in the future, or other intangible assets, nor that we will be able to avoid a significant charge to earnings in our consolidated financial statements during the period in which an impairment is determined to exist. As a result, the carrying value of our goodwill, to the extent it is regained in the future, 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 declineintangible assets. Impairments to our goodwill have materially and adversely affected our results of operations in our stock price and market capitalization may resultthe past, as could future reductions 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 event we had to reduce the carrying value of our goodwill orany intangible assets, any such impairment charge could materially and adversely affect our results of operations.assets.
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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 million and state net operating loss carryforwards of approximately $176.5 million at December 31, 2016. The federal and state net operating loss carryforwards begin to expire in the years ending December 31, 2025 and 2017, respectively. At December 31, 2016, we had federal and state research and development credit carryforwards of approximately $0.8 million and $0.4 million, respectively. The federal credit carryforwardsthat begin to expire in the year ending December 31, 2028. The2034 and state net operating losses that began to expire in the year ending December 31, 2022. Federal net operating losses generated after December 31, 2017 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. We had federal research and development credit carryforwards that begin to expire in the year ending December 31, 2040 and state research and development credit carryforwards that can be carried forward indefinitely.

TheSections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (“IRC”), imposesimpose substantial restrictions on the utilization 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 and share repurchase programs, 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.

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 earlier 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. Many states have also adopted laws requiring so-called “marketplace facilitators” to collect and remit sales taxes on behalf of participants in their marketplaces. Certain states also require sales tax to be collected and remitted with respect to the provision of software as a service (SaaS), downloadable software, information services, data processing services and, under certain circumstances, lead generating services. To the extent regulators take the position that such laws require us to collect and remit sales taxes related to the sales of cars to consumers by TrueCar Certified Dealers or characterize any of our existing or future product offerings as taxable SaaS, downloadable software, information services, data processing services, lead generation services or as any other taxable product or service, our business could be adversely affected.
States may also enact legislation that effectively diminishes our tax assets, such as the suspension California placed on the ability for certain companies to deduct net operating losses between 2020 and 2021, which impacted our ability to offset income received from the 2020 divestiture of our ALG subsidiary in California with net operating losses.
Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible in the current year and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. Unless postponed or modified through legislative processes, this mandatory capitalization may increase our cash tax liabilities.
We continue to monitor and evaluate the impact of potential and enacted changes in applicable federal and state tax law.
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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.
We have provided and may continue totypically 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. Given the volatility of our business recently during the coronavirus pandemic, the ongoing automobile inventory shortage and following the termination of our partnership with USAA, we refrained from providing guidance about our future operating results in certain recent quarters, and may choose to refrain from doing so again in the future. This practice may also have caused, and may in the future cause, additional volatility in the trading 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. 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. For the three months ended March 31, 2023, the trading price of our common stock fluctuated from a low of $1.84 per share to a high of $3.49 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. Additional 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 technology stocks; 
•changes in operating performance and stock market valuations of other technology companies generally, or those in the automotive 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; 
•our failure to meet our publicly-announced guidance of future operating results or otherwise to meet the expectations of securities analysts or investors in this regard;
•announcements by us or our competitors of new products or innovations to existing products; 
•the public’s reaction to our press releases, other public announcements and filings with the SEC, including the guidance regarding our future operating results or the absence of such guidance;
•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, divestitures, investments or other similar transactions involving us or our competitors;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business; 
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•changes in accounting standards, policies, guidelines, interpretations or principles; 
•any significant change in our management; 
•conditions in the automobile industry; and 
•general macroeconomic conditions and the growth rate of our markets and the impact of the coronavirus pandemic on these conditions and markets.
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 relating to events such as 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 our securities, securities class action lawsuits have often been instituted against us, and we may in the future be subject to these legal actions.  
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, 2023, our executiveexecutive 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,owned, 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 nine months ended September 30, 2017, the trading price of our common stock fluctuated from a low of $12.40 per share to a high of $21.75 per share. For the fiscal year ended December 31, 2016, the trading price of our common stock fluctuated from a low of $4.42 per share to a high of $13.29 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; 
failure of securities analysts to maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; 
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;
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 businesses or technologies by 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 economic conditions and slow or negative growth of our 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 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 such 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, 2023, approximately 89.1 million shares of September 30, 2017,our common stock were outstanding. In addition, as of March 31, 2023, there were 17.14.5 million shares underlying options and 4.813.8 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.

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 4.5 million shares (including vested options) as of March 31, 2023 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 trading blackout periods. 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.
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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 that 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, 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;
•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.
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. 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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We cannot guarantee that our share repurchase program will be fully used or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves.
Although our board of directors has authorized a share repurchase program, the program does not require us to spend any specific dollar amount on repurchases or to repurchase any specific number of shares of our common stock. We cannot guarantee when or if the repurchases authorized under the program will be made or that the program will enhance long-term stockholder value. For example, we made no repurchases of shares under our share repurchase program in the three months ended March 31, 2023. Further, Congress recently enacted a 1% excise tax on certain corporate stock repurchases as part of the Inflation Reduction Act of 2022, which went into effect on January 1, 2023 and will increase the costs of repurchasing shares of our common stock in the future. The program could affect the trading price of our stock and increase volatility, and any announcement of a termination of the program may result in a decrease in the trading price of our stock. In addition, to the extent that repurchases are made, implementation of this program will diminish our cash reserves.

General Risk Factors
We 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 our public company responsibilities and corporate governance practices.
As a public company, we have incurred, and will continue to incur, significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Act and other laws and rules implemented by the SEC and Nasdaq impose various requirements on public companies, including in relation to corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, changing rules and regulations may increase our legal, accounting and financial compliance costs and make some activities more time consuming and costly. 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 laws, regulations and standards may make it more difficult and more expensive for us to obtain directors’ and officers’ 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, which could make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or as executive officers.
Our compliance with applicable provisions of Section 404 of the Sarbanes-Oxley Act relating to management assessment of internal controls 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. If we or our independent registered public accounting firm identify 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 and 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.
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. The analysts who cover us have from time to time in the past changed their recommendation regarding our stock adversely, and provided more favorable relative recommendations about our competitors, which has in the past caused our stock price to decline. Any of these analysts could do so again, which could cause our stock price to decline again. Additionally, from time to time, analysts who cover us have ceased coverage of our company, and if any further analysts who cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
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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, many 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.
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 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. 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.
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.

Anti-takeover provisions contained In addition, if we were to issue securities in connection with our certificateacquisition of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our certificate of incorporation, bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying,complementary businesses, products 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 oftechnologies, our stockholders to call and bring business before special meetings; would also experience dilution.
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; 
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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, 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, bylaws or 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.

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 likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, 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 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 paying 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.
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
Our initial public offering(b)Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On August 6, 2020, the Company issued a press release announcing that its Board of Directors (the “Board”) had authorized a share repurchase program of up to $75 million to allow for the repurchase of the Company’s common stock, was effected through a Registration Statement on Form S-1 (File No. 333-195036), which was declared or becamewith such authorization effective onuntil September 30, 2022. In May 15, 2014. There has been no material change in2021, the planned useBoard increased the authorization of proceeds from our IPO 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, pursuantshare repurchase program by an additional $75 million, bringing the total authorization to Rule 424(b). Pending$150 million. In July 2022, the uses described, we have investedBoard extended the net proceeds in short-term, investment-grade interest-bearing securities and obligations, such as money market accounts.expiration of the repurchase program to September 30, 2024 without increasing the total dollar amount authorized for repurchases. The Company’s share repurchase program does not obligate the Company to repurchase any dollar amount of its shares.

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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
 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    
Exhibit 
Number		DescriptionIncorporated by 
Reference From Form		Incorporated 
by Reference
from Exhibit
Number		Date Filed
3.1
10-Q
3.1August 7, 2020
3.2
S-1/A File No. 333-195036
3.4May 5, 2014
10.1#
10-K
10.2February 24, 2023
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
#    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 9, 2023By:/s/ Michael D. Darrow
Date:November 8, 2017By:/s/ Chip PerryMichael D. Darrow
Chip Perry
President & Chief Executive Officer
(Principal Executive Officer)
Date:November 8, 2017May 9, 2023By:/s/ Michael GuthrieTeresa T. Luong
Michael GuthrieTeresa T. Luong
Chief Financial Officer
(Principal Financial Officer)
Date:November 8, 2017By:/s/ John Pierantoni
John Pierantoni
Chief Accounting Officer
(Principal Accounting Officer)



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