Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 02, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | TrueCar, Inc. | |
Entity Central Index Key | 1,327,318 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 102,071,253 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 198,487 | $ 197,762 |
Accounts receivable, net of allowances of $2,769 and $3,030 at June 30, 2018 and December 31, 2017, respectively (includes related party receivables of $149 and $169 at June 30, 2018 and December 31, 2017, respectively) | 42,849 | 39,169 |
Prepaid expenses | 8,357 | 5,475 |
Other current assets | 4,971 | 1,145 |
Total current assets | 254,664 | 243,551 |
Property and equipment, net | 70,956 | 70,710 |
Goodwill | 53,270 | 53,270 |
Intangible assets, net | 13,981 | 15,912 |
Other assets | 5,188 | 1,391 |
Total assets | 398,059 | 384,834 |
Current liabilities | ||
Accounts payable (includes related party payables of $3,808 and $3,200 at June 30, 2018 and December 31, 2017, respectively) | 18,445 | 18,620 |
Accrued employee expenses | 6,691 | 6,568 |
Accrued expenses and other current liabilities (includes related party accrued expenses of $785 and $52 at June 30, 2018 and December 31, 2017, respectively) | 14,769 | 12,790 |
Total current liabilities | 39,905 | 37,978 |
Deferred tax liabilities | 692 | 812 |
Lease financing obligations, net of current portion | 29,293 | 29,129 |
Other liabilities | 4,190 | 3,797 |
Total liabilities | 74,080 | 71,716 |
Commitments and contingencies (Note 7) | ||
Stockholders’ Equity | ||
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at June 30, 2018 and December 31, 2017, respectively; no shares issued and outstanding at June 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at June 30, 2018 and December 31, 2017; 101,606,400 and 100,428,656 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 10 | 10 |
Additional paid-in capital | 684,807 | 664,192 |
Accumulated deficit | (360,838) | (351,084) |
Total stockholders’ equity | 323,979 | 313,118 |
Total liabilities and stockholders’ equity | $ 398,059 | $ 384,834 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts receivables- current | $ 2,769 | $ 3,030 |
Related party accounts receivable- current | 149 | 169 |
Related party accounts payable- current | 3,808 | 3,200 |
Related party accrued expenses and other current liabilities | $ 785 | $ 52 |
Preferred stock, par value ( in dollar per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, share issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per shares) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 101,606,400 | 100,428,656 |
Common stock, shares outstanding (in shares) | 101,606,400 | 100,428,656 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 87,850 | $ 81,819 | $ 168,911 | $ 157,576 |
Costs and operating expenses: | ||||
Cost of revenue (exclusive of depreciation and amortization presented separately below) | 7,752 | 7,130 | 15,204 | 13,522 |
Sales and marketing (includes related party expenses of $5,277 and $4,487 for the three months ended June 30, 2018 and 2017, and $9,818 and $8,543 for the six months ended June 30, 2018 and 2017, respectively) | 52,014 | 46,933 | 100,432 | 89,115 |
Technology and development | 15,694 | 14,131 | 31,288 | 27,760 |
General and administrative | 13,494 | 15,413 | 26,975 | 29,041 |
Depreciation and amortization | 5,641 | 5,668 | 10,816 | 11,752 |
Total costs and operating expenses | 94,595 | 89,275 | 184,715 | 171,190 |
Loss from operations | (6,745) | (7,456) | (15,804) | (13,614) |
Interest income | 750 | 249 | 1,354 | 382 |
Interest expense | (662) | (652) | (1,323) | (1,301) |
Loss before income taxes | (6,657) | (7,859) | (15,773) | (14,533) |
(Benefit from) / provision for income taxes | (35) | 201 | (96) | 322 |
Net loss | $ (6,622) | $ (8,060) | $ (15,677) | $ (14,855) |
Net loss per share attributable to common stockholders: | ||||
Net loss per share, basic and diluted (in dollars per share) | $ (0.07) | $ (0.09) | $ (0.16) | $ (0.16) |
Weighted average common shares outstanding, basic and diluted (in shares) | 101,150 | 93,745 | 100,862 | 90,283 |
Other comprehensive loss: | ||||
Comprehensive loss | $ (6,622) | $ (8,060) | $ (15,677) | $ (14,855) |
Consolidated Statements of Com5
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Sales and marketing | ||||
Costs and expenses with related parties | $ 5,277 | $ 4,487 | $ 9,818 | $ 8,543 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock | APIC | Accumulated Deficit |
Increase (Decrease) in Stockholders' Equity | ||||
Cumulative-effect of accounting change adopted as of January 1, 2018 | $ 5,923 | $ 5,923 | ||
Beginning Balance at Dec. 31, 2017 | $ 313,118 | $ 10 | $ 664,192 | (351,084) |
Balance (in shares) at Dec. 31, 2017 | 100,428,656 | 100,428,656 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | $ (15,677) | (15,677) | ||
Stock-based compensation | 18,876 | 18,876 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | 1,739 | $ 0 | 1,739 | |
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 1,177,744 | |||
Ending Balance at Jun. 30, 2018 | $ 323,979 | $ 10 | $ 684,807 | $ (360,838) |
Balance (in shares) at Jun. 30, 2018 | 101,606,400 | 101,606,400 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (15,677) | $ (14,855) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 10,818 | 11,747 |
Deferred income taxes | (120) | 288 |
Bad debt expense and other reserves | 811 | 789 |
Stock-based compensation | 18,069 | 12,753 |
Non-cash interest expense on lease financing obligation | 218 | 233 |
Write-off and loss on disposal of fixed assets | 143 | 36 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,491) | (978) |
Prepaid expenses | (2,882) | (1,006) |
Other current assets | (787) | 730 |
Other assets | (835) | (106) |
Accounts payable | (232) | 4,248 |
Accrued employee expenses | 106 | (2,148) |
Accrued expenses and other liabilities | 3,033 | (115) |
Other liabilities | 393 | 1,103 |
Net cash provided by operating activities | 8,567 | 12,719 |
Cash flows from investing activities | ||
Purchase of property and equipment | (9,615) | (10,340) |
Net cash used in investing activities | (9,615) | (10,340) |
Cash flows from financing activities | ||
Proceeds from public offering, net of underwriting discounts and offering costs | 0 | 17,398 |
Proceeds from exercise of common stock options | 3,196 | 55,534 |
Taxes paid related to net share settlement of equity awards | (1,423) | (1,310) |
Net cash provided by financing activities | 1,773 | 71,622 |
Net increase in cash and cash equivalents | 725 | 74,001 |
Cash and cash equivalents at beginning of period | 197,762 | 107,721 |
Cash and cash equivalents at end of period | 198,487 | 181,722 |
Supplemental disclosures of non-cash activities | ||
Stock-based compensation capitalized for software development | 807 | 550 |
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses | 554 | 842 |
Proceeds receivable from exercise of stock options included in other current assets | 1 | 149 |
Taxes payable related to net share settlement of equity awards included in accrued employee expenses | $ 29 | $ 266 |
Organization and Nature of Busi
Organization and Nature of Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and nature of business | Organization and Nature of Business TrueCar, Inc. is an Internet-based information, technology, and communication services company. Hereinafter, TrueCar, Inc. and its wholly-owned subsidiaries TrueCar.com, Inc. and ALG, Inc. are collectively referred to as “TrueCar” or the “Company”; TrueCar.com, Inc. is referred to as “TrueCar.com” and ALG, Inc. is referred to as “ALG.” 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-buying websites and mobile applications that TrueCar operates for its affinity group marketing partners (“Auto Buying Programs”). An affinity group is comprised of a network of members or employees that provides discounts to its members. ALG provides forecasts, consulting, and other services regarding determination of the residual value of an automobile at future given points in time, which are used to underwrite automotive loans and leases and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. ALG also obtains automobile purchase data from a variety of sources and uses this data to provide consumers and dealers with highly accurate, geographically specific, real-time pricing information. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | 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, 2017 , except for the accounting policy changes detailed below as a result of the Company’s adoption of the new revenue standard, 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, 2017 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, 2018. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities that 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, the fair value of the capitalized facility leases, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, lease exit liabilities, contingencies, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engaged valuation specialists to assist with management’s determination of the valuation of its capitalized facility leases, the fair 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. Segments The Company has one operating segment. The Company’s chief operating decision maker (“CODM”) is the President and Chief Executive Officer and the Interim Chief Financial Officer and Chief Accounting Officer, who manage the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources. The CODM reviews financial information on a consolidated basis, accompanied by information about Auto Buying Program revenue, OEM incentive revenue, and forecasts, consulting and other revenue (Note 3). All of the Company’s principal operations, decision-making functions and assets are located in the United States. Revenue Recognition 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 replaces all existing revenue recognition guidance under GAAP. The Company adopted the new revenue standard as of January 1, 2018 using the modified retrospective transition method. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with prior revenue guidance. See Note 3 for further details. Under the new revenue standard, the Company recognizes revenue when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company determines revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the performance obligation or obligations are satisfied. Auto Buying Program Revenues Revenues includes fees paid by dealers participating in the Company’s dealer network with which the Company has an agreement (“TrueCar Certified Dealers” or “Dealers”). TrueCar Certified Dealers pay the Company fees either on a per-vehicle basis for sales to Auto Buying Program users, a per-introduction basis for sales to Auto Buying Program users or in the form of a subscription arrangement. Contracts are cancellable by the Dealer or the Company at any time. The Company does not provide significant dealer financing terms. The Company’s performance obligation to TrueCar Certified Dealers is the same for all payment types for our Auto Buying Program revenues: to provide Dealers with introductions to in-market consumers through the use of the TrueCar platform, so that those Dealers have the opportunity to sell vehicles to those consumers. Control transfers to Dealers upon delivery of introductions, which is the point at which the Company recognizes revenue. When a user decides to proceed with the user’s vehicle purchase through the Company, the user provides his or her name, address, e-mail, and phone number during the process of obtaining a Guaranteed Savings Certificate, which gives the Company the identity and source of a TrueCar introduction provided to a specific Dealer prior to an actual sale occurring. After a sale occurs, the Company receives information regarding the sale, including the identity of the purchaser, via the Dealer Management System used by the Dealer that made the sale. The Company also receives information regarding vehicle sales from a variety of other data sources, including third party car sales aggregators, car dealer networks, and other publicly available sources (collectively, “sales data”) and uses this sales data to further verify that a sale has occurred between an Auto Buying Program user and a TrueCar Certified Dealer, as well as to invoice the Dealer shortly after the completion of the sales transaction. Actual vehicle sales data is reported on a daily basis shortly following the date of sale. Pay-Per-Sale. Under the old revenue standard, in years prior to 2018, the Company recognized revenue for fee arrangements based on a per-vehicle basis when the vehicle sale had occurred between the Auto Buying Program user and the Dealer. Under the new revenue standard for fee arrangements based on a pay-per-sale billing model, revenue for the Auto Buying Program is recognized when introductions are delivered to the Dealer and for the amount that the Company estimates it will be able to earn. To formulate this estimate, the Company uses the expected value method based primarily on an analysis of historical introductions that result in vehicle sales and further validated by subsequent actual sales information. Under the contractual terms and conditions of arrangements with TrueCar Certified Dealers that pay on a per-vehicle basis, the Dealer is not obligated to pay the Company until a vehicle sale has occurred between the Auto Buying Program user and the Dealer, for which the introduction was provided to the Dealer by the Company. Contractually, the Dealers’ obligation to pay is not contingent on verification or acceptance of the transaction by the Dealer. As a result, revenue recognition occurs earlier than billing as an estimate of the variable consideration to be received is determined upon control transfer, resulting in a contract asset. Pay-Per-Introduction. Under fee arrangements based on a pay-per-introduction billing model, revenue for the Auto Buying Program is recognized when introductions are delivered. The Company also recognizes revenue from Dealers under subscription agreements. Subscription fee arrangements are short-term in nature with terms ranging from one to six months and are also cancellable by the Dealer or the Company at any time. Subscription arrangements fall into three types: flat rate subscriptions, subscriptions subject to downward adjustment based on a minimum number of 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”). For all subscription arrangements, the Company recognizes the fees as revenue when introductions are delivered by allocating a portion of the monthly subscription fee to each delivered introduction. For guaranteed sales and guaranteed introduction subscriptions, the amount allocated is adjusted at the end of each month for any credits, as described below. Total revenue recognized in any given month remains unchanged from the old revenue standard for subscription arrangements. Flat Rate Subscription. Under flat rate subscription arrangements, fees are charged at a monthly flat rate regardless of the number of introductions provided by the Company to the Dealer or sales made to users of the Company’s platform by the Dealer. Guaranteed Sales Subscription. Under guaranteed sales subscription arrangements, monthly 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 the Company’s platform is less than the number of guaranteed sales, the Company provides a credit to the Dealer. If the actual number of vehicles sold exceeds the number of guaranteed sales, the Company is not entitled to any additional fees. Guaranteed Introductions Subscription. Under guaranteed introductions subscription arrangements, monthly 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, the Company provides a credit to the Dealer. If the actual number of introductions provided exceeds the number guaranteed, the Company is not entitled to any additional fees. OEM Incentives Revenue The Company enters into arrangements with OEMs to promote the sale of their vehicles through the offering of additional consumer incentives. These manufacturers pay a per-vehicle fee to the Company for promotion of the incentive after the sale of the vehicle has occurred between the Auto Buying Program user and the dealer. Under the old revenue standard, in years prior to 2018, the Company recognized as revenue the per-vehicle incentive fee at the time the sale of the vehicle occurred between the Auto Buying Program user and the dealer. Under the new revenue standard, the Company’s performance obligation to OEMs is to deliver incentive offers to consumers. Control transfers upon delivery of incentive offers, which is the point at which the Company recognizes revenue. The Company recognizes revenue for the amount that the Company estimates it will be able to earn. To formulate this estimate, the Company uses the expected value method based primarily on an analysis of historical incentive offers that result in vehicle sales and further validated by subsequent actual sales information. As a result, revenue recognition occurs earlier than billing as an estimate of the variable consideration to be received is determined upon control transfer, resulting in a contract asset. Forecasts, Consulting and Other Revenues Revenues are generated from the sale of forecasts of lease residual value data for new and used leased automobiles, guidebooks, and consulting projects. Sales are principally made to vehicle manufacturers, vehicle financing companies, investment banks, automobile dealers, and insurance companies. Forecasts and consulting project sales arrangements may include multiple promises to deliver goods and services, such as sale of lease residual forecasts from guidebooks and consulting projects. For revenue arrangements containing multiple promises to transfer goods or services, the Company first determines which of the goods or services are distinct and therefore separate performance obligations. If multiple distinct performance obligations are identified, the total transaction price for a contract is allocated to each performance obligation on a relative standalone selling price basis. In most cases, the goods and services we promise to deliver are sold on a stand-alone basis, which is determined to be the standalone selling price. Revenue allocated to each performance obligation from the sale of lease residual value forecasts, guidebooks, and consulting projects is recognized when each performance obligation is satisfied. Some residual value data is available via subscription with updated data provided as available during the subscription period or as part of discrete delivered data packages. Sales attributed to residual value data and guidebooks are recognized either over time during the subscription period or when the data or guidebooks are delivered, depending on the terms of the contract, and consulting projects are recognized when the project is delivered. The Company has elected to use the practical expedient to not disclose the remaining performance obligations for contracts that have durations of one year or less. The Company does not have significant remaining performance obligations in excess of one year. Incremental Costs to Obtain a Contract The new revenue standard requires the deferral of the recognition of incremental costs to obtain a contract, which the Company has identified as certain of its sales commissions paid to internal sales representatives for the sale of TrueCar’s services to Dealers. These costs are deferred and then amortized over the expected customer life, which has been determined to be three years based on an analysis of historical and expected customer life. Amortization expense is included within sales and marketing on the accompanying consolidated statements of comprehensive loss. Prior to adoption of the new revenue standard, sales commissions were expensed when incurred. Other Recent Accounting Pronouncements In June 2018, the FASB issued new guidance to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment 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 did not 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 continues to evaluate the methods and impact of adopting this guidance on its consolidated financial statements. |
Revenue Information
Revenue Information | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Information and Deferred Sales Commissions | Revenue Information and Deferred Sales Commissions Adoption of the New Revenue Standard On January 1, 2018, the Company adopted the new revenue standard using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting. As a result of adopting the new revenue standard, the Company now recognizes transaction revenue earlier for certain of its Auto Buying Program and OEM incentives arrangements based on estimated variable consideration to be received upon the occurrence of subsequent vehicle sales between the Auto Buying Program user and the Dealer. Upon adoption, the Company recorded a contract asset within other current assets to reflect revenues that would be recognized earlier under the new revenue standard, which is upon delivery of introductions, as well as a corresponding balance of revenue share paid to affinity marketing partners within accounts payable. Also as a result of adoption, the Company identified an impact related to the recognition of costs to obtain customer contracts. Prior to adoption, sales commissions were expensed as incurred. Under the new revenue standard, certain sales commissions are deferred and recognized over a period of time. The Company recorded an adjustment within the consolidated balance sheet to capitalize these sales commissions as of January 1, 2018 within other assets to reflect the deferred costs that had been expensed under the prior accounting policy for sales commissions. The cumulative effects of the changes made to the Company’s January 1, 2018 consolidated balance sheet were as follows (in thousands): December 31, 2017 Adjustments Due to Adoption of New Revenue Standard January 1, 2018 Assets Other current assets $ 1,145 $ 3,324 $ 4,469 Other assets 1,391 2,962 4,353 Liabilities Accounts payable $ 18,620 $ 256 $ 18,876 Accrued expenses and other liabilities 12,790 107 12,897 Stockholders ’ Equity Accumulated deficit $ (351,084 ) $ 5,923 $ (345,161 ) The impact of adoption of the new revenue standard on the Company’s consolidated statement of comprehensive loss and consolidated balance sheet was as follows (in thousands): Three Months Ended June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Revenues $ 87,850 $ 87,412 $ 438 Sales and marketing 52,014 51,962 52 Net loss (6,622 ) (7,008 ) (386 ) Six Months Ended June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Revenues $ 168,911 $ 168,170 $ 741 Sales and marketing 100,432 100,382 50 Net loss (15,677 ) (16,368 ) (691 ) June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Assets Other current assets $ 4,971 $ 897 $ 4,074 Other assets 5,188 2,039 3,149 Liabilities Accounts payable $ 18,445 $ 17,952 $ 493 Accrued expenses and other liabilities 14,769 14,653 116 Stockholders ’ Equity Accumulated deficit $ (360,838 ) $ (367,452 ) $ 6,614 Deferred Sales Commissions Deferred sales commissions within other assets were $3.1 million as of June 30, 2018 . For the three and six months ended June 30, 2018 , under the new revenue standard, amortization expense for deferred sales commissions was $0.4 million and $0.8 million , respectively, and there was no impairment loss in relation to the costs capitalized in either period. Sales commission expenses under the old standard would have resulted in expenses of $0.6 million and $1.0 million for the three and six months ended June 30, 2018 , respectively. 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 $3.3 million at January 1, 2018 were transferred to accounts receivable during the six months ended June 30, 2018 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $4.1 million was recorded as of June 30, 2018 for leads delivered where consideration to be received was still conditional upon subsequent vehicle sales. Disaggregation of Revenue The Company disaggregates revenue into three revenue streams: Auto Buying Program revenue, OEM incentives revenue, and forecasts, consulting and other revenue. Prior to adoption of the new revenue standard, Auto Buying Program revenue and OEM incentives revenue had been disclosed together as “transaction revenue.” The following table presents the Company’s revenue categories during the periods presented (in thousands): Three Months Ended Six Months Ended June 30, 2018 2017(1) 2018 2017(1) Auto Buying Program revenue $ 75,271 $ 69,366 $ 147,608 $ 134,520 OEM incentives revenue 7,927 7,837 12,348 13,115 Forecasts, consulting and other revenue 4,652 4,616 8,955 9,941 Total revenues $ 87,850 $ 81,819 $ 168,911 $ 157,576 (1) Prior period amounts have not been adjusted under the modified retrospective method. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | 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: • Level 1 — Quoted prices in active markets for identical assets, liabilities, or funds. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses and other current liabilities approximate fair value because of the short maturity of these items. The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 by level within the fair value hierarchy. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): At June 30, 2018 At December 31, 2017 Level 1 Total Fair Level 1 Total Fair Cash equivalents $ 198,486 $ 198,486 $ 195,584 $ 195,584 Total Assets $ 198,486 $ 198,486 $ 195,584 $ 195,584 |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and Equipment, net Property and equipment consisted of the following at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, Computer equipment, software, and internally developed software $ 91,013 $ 83,568 Furniture and fixtures 5,274 4,779 Leasehold improvements 8,565 8,342 Capitalized facility leases 39,302 39,302 144,154 135,991 Less: Accumulated depreciation (73,198 ) (65,281 ) Total property and equipment, net $ 70,956 $ 70,710 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 June 30, 2018 and December 31, 2017 , 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 June 30, 2018 and December 31, 2017 , the Company recorded accumulated amortization of $2.7 million and $2.2 million , respectively. Additionally, at June 30, 2018 and December 31, 2017 , the Company recognized a corresponding lease financing obligation of approximately $31.5 million and $31.4 million , respectively. Included in the table above are property and equipment of $3.1 million and $7.8 million at June 30, 2018 and December 31, 2017 , respectively, which are capitalizable but had not yet been placed in service. The $3.1 million and $7.8 million balances at June 30, 2018 and December 31, 2017 , respectively, were comprised primarily of capitalized software not ready for its intended use. Total depreciation and amortization expense of property and equipment was $4.7 million for the three months ended June 30, 2018 and 2017 . Total depreciation and amortization expense of property and equipment was $8.9 million and $9.8 million for the six months ended June 30, 2018 and 2017 , respectively. Amortization of internal use capitalized software development costs was $3.3 million and $3.4 million for the three months ended June 30, 2018 and 2017 , respectively. Amortization of internal use capitalized software development costs was $6.2 million and $7.4 million for the six months ended June 30, 2018 and 2017 , respectively. |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Credit facility | Credit Facility The Company had previously entered into a third amended and restated loan and security agreement (the “Third Amended Credit Facility”) with a financial institution that provided for advances under a revolving line of credit and had no outstanding amounts at December 31, 2017 . In February 2018, the Company entered into a first amendment to the Third Amended Credit Facility (“First Amendment”). The Third Amended Credit Facility, as amended by the First Amendment (the “Credit Facility”), has a $35.0 million secured revolving credit facility that expires on February 18, 2021. The Credit Facility provides a $10.0 million subfacility for the issuance of letters of credit and contains an increase option permitting the Company, subject to the lender’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 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 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. 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 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 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. The consolidated leverage ratio is a ratio of all funded indebtedness, including all capital lease obligations, plus all letters of credit under the Credit Facility to the Company’s Adjusted EBITDA for the trailing twelve months. Fixed charge coverage ratio is the ratio of the Company’s Adjusted EBITDA minus cash income taxes and capital expenditures to its cash interest payments measured on a trailing twelve month-basis. The Credit Facility also limits the Company’s ability to pay dividends. At June 30, 2018 , 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 June 30, 2018 , the Company had no outstanding amounts under the Credit Facility and the amount available was $31.0 million , reduced for the letters of credit issued and outstanding under the subfacility of $4.0 million . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | 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 determined based on the remaining lease rental due, reduced by estimated sublease rental income that could be reasonably obtained for the properties. The lease terms of the spaces exited expire in 2020. The liability is recorded in accrued expenses and other current liabilities (current portion) and other liabilities (non-current portion) within the consolidated balance sheets. The costs were recorded in general and administrative expenses in the consolidated statement of comprehensive loss. In 2015, the Company recorded the initial estimate of lease exit costs. In 2016, the Company updated its estimates of sublease rental income and recorded additional expense due to changes in the local commercial real estate market. 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. As of June 30, 2018 , the Company recognized a total of $5.2 million in lease exit costs associated with these office locations. The Company does not expect to incur significant additional charges in future periods related to these exits. The following table presents a roll forward of the lease exit liability for the six months ended June 30, 2018 : Lease Exit Costs Accrual at December 31, 2017 $ 1,354 Cash Payments (337 ) Accrual at June 30, 2018 $ 1,017 San Francisco Lease Termination In July 2018, the Company reached an agreement with its landlord to terminate its leased office space in San Francisco, California, effective on December 31, 2018. As a result of the lease termination, the Company will no longer have future minimum lease commitments related to this office space after the effective date, resulting in a decrease in future commitments of $4.5 million over the original remaining term of six years . 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 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. Discovery in this matter has been completed. On January 19, 2018, the Company filed a motion to exclude testimony from the plaintiffs’ damages expert. On April 10 and 11, 2018, the court held an evidentiary hearing on that motion. On May 9, 2018, the court granted the Company’s motion to exclude testimony from the plaintiffs’ damages expert. On July 2, 2018, the Company filed a motion for summary judgment seeking dismissal of the amended complaint in its entirety. The court has not yet ruled on that motion. 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. The Company has not recorded an accrual related to this matter as of June 30, 2018 , as it does 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 California Superior Court for the County of Los Angeles (the “CNCDA Litigation”). The complaint sought declaratory and injunctive relief based on allegations that the Company was operating in the State of California as an unlicensed automobile dealer and autobroker. The complaint did not seek monetary relief. On July 20, 2015, the Company filed a “demurrer” to the complaint, which is a pleading that requests that the court 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 reiterated the claims in the prior complaints and added 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 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. Prior to the commencement of trial, the parties entered into settlement negotiations, and on December 14, 2017, the parties entered into a binding Settlement Agreement and Release (the “CNCDA Settlement Agreement”) to fully resolve the litigation. Pursuant to the CNCDA Settlement Agreement, the litigation was dismissed with prejudice on December 21, 2017. In light of the full resolution of this matter pursuant to the CNCDA Settlement Agreement, the Company does not believe that an additional loss is probable. 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 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 attorney’s 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 attorney’s 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 could continue to proceed regarding matters related to class certification only at that time. Subsequently, the court extended to February 7, 2018 the deadline for the filing of plaintiff’s motion for class certification and for the completion of related discovery. On February 7, 2018, the plaintiff filed a motion for class certification. The court held a hearing on the plaintiff’s class certification motion on July 12, 2018 and denied the motion on July 27, 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 June 30, 2018 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 complaint asserted 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 sought an award of unspecified damages, interest, injunctive relief and attorney’s fees. In the complaint, the plaintiff sought 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.” 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. On November 27, 2017, the parties entered into a binding Confidential Settlement Agreement and Mutual Release (the “Haas Settlement Agreement”) on the same financial terms agreed to in principle on or around October 23, 2017. Thereafter, the Company fully satisfied the financial terms of the Haas Settlement Agreement, and pursuant to the Haas Settlement Agreement, the litigation was dismissed with prejudice on December 1, 2017. In light of the full resolution of this matter pursuant to the Haas Settlement Agreement, and the Company does not believe that an additional loss beyond the above-noted immaterial payment is probable. 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. As it relates to the Company, the complaint sought an award of unspecified damages, disgorgement, return of property taken or retained, injunctive relief and attorney’s fees. The complaint alleged 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. On November 13, 2017, oral argument was held on the request by Cox Automotive for the entry of a preliminary injunction. On January 23, 2018, the court dissolved the temporary restraining order and denied the request by Cox Automotive for the entry of a preliminary injunction. On February 27, 2018, the parties filed a “stipulation of discontinuance,” which terminated the case. The Company was not required to make any monetary payment or provide any other consideration in exchange for the stipulation of discontinuance. In light of the termination of the litigation on this basis, the Company has not recorded an accrual related to this matter as of June 30, 2018 , as the Company does not believe a loss is probable. On March 30, 2018, the Company and one of its former officers were named as defendants in a putative securities class action filed by Leon Milbeck in the U.S. District Court for the Central District of California. The complaint seeks an award of unspecified damages, interest, attorney’s fees and equitable relief based on allegations that the defendants made false or misleading statements about our business, operations, prospects and performance during a purported class period of February 16, 2017 through November 6, 2017 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On June 27, 2018, the court appointed the Oklahoma Police Pension and Retirement Fund as lead plaintiff. The Company believes that the complaint is without merit and intends to vigorously defend itself in this matter. The Company has not recorded an accrual related to this matter as of June 30, 2018 as the Company does not believe a loss is probable or reasonably estimable. 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 intellectual property infringement claims made by third parties. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not 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 June 30, 2018 and December 31, 2017 , 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. |
Stock-based Awards
Stock-based Awards | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock based awards | Stock-based Awards Stock Options A summary of the Company’s stock option activity for the six months ended June 30, 2018 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 16,714,216 $ 12.46 7.7 Granted 1,439,287 9.60 Exercised (463,426 ) 6.89 Canceled/forfeited (1,002,936 ) 14.03 Outstanding at June 30, 2018 16,687,141 $ 12.28 7.0 At June 30, 2018 , total remaining stock-based compensation expense for unvested stock option awards was $44.3 million , which is expected to be recognized over a weighted-average period of 2.8 years . For the three months ended June 30, 2018 and 2017 , the Company recorded stock-based compensation expense for stock option awards of $3.8 million and $3.7 million , respectively. For the six months ended June 30, 2018 and 2017 , the Company recorded stock-based compensation expense for stock option awards of $8.4 million and $7.0 million , respectively. Restricted Stock Units Activity in connection with restricted stock units is as follows for the six months ended June 30, 2018 : Number of Shares Weighted- Average Grant Date Fair Value Non-vested — December 31, 2017 4,284,438 $ 11.99 Granted 3,025,260 9.69 Vested (852,017 ) 11.24 Canceled/forfeited (558,775 ) 10.87 Non-vested — June 30, 2018 5,898,906 $ 11.02 At June 30, 2018 , total remaining stock-based compensation expense for non-vested restricted stock units is $61.7 million , which is expected to be recognized over a weighted-average period of 3.0 years . The Company recorded $5.2 million and $3.2 million in stock-based compensation expense for restricted stock units for the three months ended June 30, 2018 and 2017 , respectively. The Company recorded $9.6 million and $5.8 million in stock-based compensation expense for restricted stock units for the six months ended June 30, 2018 and 2017 , respectively. Stock-based Compensation Cost The Company recorded stock-based compensation cost relating to stock options and restricted stock awards in the following categories on the accompanying consolidated statements of comprehensive loss (in thousands): Three Months Ended Six Months Ended 2018 2017 2018 2017 Cost of revenue $ 443 $ 233 $ 741 $ 436 Sales and marketing 3,543 2,160 6,670 3,905 Technology and development 2,698 1,600 5,051 2,898 General and administrative 2,288 2,853 5,607 5,514 Total stock-based compensation expense 8,972 6,846 18,069 12,753 Amount capitalized to internal software use 473 332 807 550 Total stock-based compensation cost $ 9,445 $ 7,178 $ 18,876 $ 13,303 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which has several key provisions impacting accounting for and reporting of income taxes. The most significant provisions applicable to the Company include the reduction of the U.S. corporate statutory tax rate from 35% to 21%, the limitations on net operating losses (“NOLs”) generated after December 31, 2017 to 80% of taxable income, and the indefinite carryforward period applicable to NOLs generated after December 31, 2017. The Company recorded an income tax benefit of $35 thousand for the three months ended June 30, 2018 and an income tax expense of $0.2 million for the three months ended June 30, 2017 . The Company recorded an income tax benefit of $0.1 million for the six months ended June 30, 2018 and an income tax expense of $0.3 million for the six months ended June 30, 2017 . As of December 31, 2017, the Company had obtained and analyzed all necessary information to record the effect of the change in tax law, and does not anticipate reporting additional tax effects in the future. However, should the Internal Revenue Service (“IRS”) issue further guidance or interpretation of relevant aspects of the new Tax Act, the Company may adjust these amounts. There were no material changes to the Company’s unrecognized tax benefits in the six months ended June 30, 2018 , and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. Due to the presence of NOL carryforwards, all income tax years remain open for examination by the IRS and various state taxing authorities. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net loss per share | 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 Six Months Ended 2018 2017 2018 2017 Net loss $ (6,622 ) $ (8,060 ) $ (15,677 ) $ (14,855 ) Weighted-average common shares outstanding 101,150 93,745 100,862 90,283 Net loss per share - basic and diluted $ (0.07 ) $ (0.09 ) $ (0.16 ) $ (0.16 ) The following table presents the number of anti-dilutive shares excluded from the calculation of diluted net loss per share at June 30, 2018 and 2017 (in thousands): June 30, 2018 2017 Options to purchase common stock 16,687 18,986 Common stock warrants 1,459 1,459 Non-vested restricted stock unit awards 5,899 5,319 Total shares excluded from net loss per share 24,045 25,764 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related Party Transactions Transactions with USAA USAA is a large stockholder in the Company and the Company’s most significant affinity marketing partner. The Company has entered into arrangements with USAA to operate its Auto Buying Program. At the time that the Company entered into these arrangements, USAA met the definition of a related party. The Company had amounts due from USAA at June 30, 2018 and December 31, 2017 of $0.1 million and $0.2 million , respectively. In addition, the Company had amounts due to USAA at June 30, 2018 and December 31, 2017 of $4.6 million and $3.3 million , respectively. The Company recorded sales and marketing expense of $5.3 million and $4.5 million for the three months ended June 30, 2018 and 2017 , respectively, related to service arrangements entered into with USAA. The Company recorded sales and marketing expense of $9.8 million and $8.5 million for the six months ended June 30, 2018 and 2017 , respectively, related to service arrangements entered into with USAA. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In July 2018, the Company reached an agreement with its landlord to terminate its leased office space in San Francisco, California effective on December 31, 2018. See Note 7 for further details. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | 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, 2017 , except for the accounting policy changes detailed below as a result of the Company’s adoption of the new revenue standard, 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, 2017 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, 2018. |
Use of estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities that 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, the fair value of the capitalized facility leases, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, lease exit liabilities, contingencies, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engaged valuation specialists to assist with management’s determination of the valuation of its capitalized facility leases, the fair 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. |
Segments | Segments The Company has one operating segment. The Company’s chief operating decision maker (“CODM”) is the President and Chief Executive Officer and the Interim Chief Financial Officer and Chief Accounting Officer, who manage the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources. The CODM reviews financial information on a consolidated basis, accompanied by information about Auto Buying Program revenue, OEM incentive revenue, and forecasts, consulting and other revenue (Note 3). All of the Company’s principal operations, decision-making functions and assets are located in the United States. |
Revenue Recognition | Revenue Recognition 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 replaces all existing revenue recognition guidance under GAAP. The Company adopted the new revenue standard as of January 1, 2018 using the modified retrospective transition method. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with prior revenue guidance. See Note 3 for further details. Under the new revenue standard, the Company recognizes revenue when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company determines revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the performance obligation or obligations are satisfied. Auto Buying Program Revenues Revenues includes fees paid by dealers participating in the Company’s dealer network with which the Company has an agreement (“TrueCar Certified Dealers” or “Dealers”). TrueCar Certified Dealers pay the Company fees either on a per-vehicle basis for sales to Auto Buying Program users, a per-introduction basis for sales to Auto Buying Program users or in the form of a subscription arrangement. Contracts are cancellable by the Dealer or the Company at any time. The Company does not provide significant dealer financing terms. The Company’s performance obligation to TrueCar Certified Dealers is the same for all payment types for our Auto Buying Program revenues: to provide Dealers with introductions to in-market consumers through the use of the TrueCar platform, so that those Dealers have the opportunity to sell vehicles to those consumers. Control transfers to Dealers upon delivery of introductions, which is the point at which the Company recognizes revenue. When a user decides to proceed with the user’s vehicle purchase through the Company, the user provides his or her name, address, e-mail, and phone number during the process of obtaining a Guaranteed Savings Certificate, which gives the Company the identity and source of a TrueCar introduction provided to a specific Dealer prior to an actual sale occurring. After a sale occurs, the Company receives information regarding the sale, including the identity of the purchaser, via the Dealer Management System used by the Dealer that made the sale. The Company also receives information regarding vehicle sales from a variety of other data sources, including third party car sales aggregators, car dealer networks, and other publicly available sources (collectively, “sales data”) and uses this sales data to further verify that a sale has occurred between an Auto Buying Program user and a TrueCar Certified Dealer, as well as to invoice the Dealer shortly after the completion of the sales transaction. Actual vehicle sales data is reported on a daily basis shortly following the date of sale. Pay-Per-Sale. Under the old revenue standard, in years prior to 2018, the Company recognized revenue for fee arrangements based on a per-vehicle basis when the vehicle sale had occurred between the Auto Buying Program user and the Dealer. Under the new revenue standard for fee arrangements based on a pay-per-sale billing model, revenue for the Auto Buying Program is recognized when introductions are delivered to the Dealer and for the amount that the Company estimates it will be able to earn. To formulate this estimate, the Company uses the expected value method based primarily on an analysis of historical introductions that result in vehicle sales and further validated by subsequent actual sales information. Under the contractual terms and conditions of arrangements with TrueCar Certified Dealers that pay on a per-vehicle basis, the Dealer is not obligated to pay the Company until a vehicle sale has occurred between the Auto Buying Program user and the Dealer, for which the introduction was provided to the Dealer by the Company. Contractually, the Dealers’ obligation to pay is not contingent on verification or acceptance of the transaction by the Dealer. As a result, revenue recognition occurs earlier than billing as an estimate of the variable consideration to be received is determined upon control transfer, resulting in a contract asset. Pay-Per-Introduction. Under fee arrangements based on a pay-per-introduction billing model, revenue for the Auto Buying Program is recognized when introductions are delivered. The Company also recognizes revenue from Dealers under subscription agreements. Subscription fee arrangements are short-term in nature with terms ranging from one to six months and are also cancellable by the Dealer or the Company at any time. Subscription arrangements fall into three types: flat rate subscriptions, subscriptions subject to downward adjustment based on a minimum number of 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”). For all subscription arrangements, the Company recognizes the fees as revenue when introductions are delivered by allocating a portion of the monthly subscription fee to each delivered introduction. For guaranteed sales and guaranteed introduction subscriptions, the amount allocated is adjusted at the end of each month for any credits, as described below. Total revenue recognized in any given month remains unchanged from the old revenue standard for subscription arrangements. Flat Rate Subscription. Under flat rate subscription arrangements, fees are charged at a monthly flat rate regardless of the number of introductions provided by the Company to the Dealer or sales made to users of the Company’s platform by the Dealer. Guaranteed Sales Subscription. Under guaranteed sales subscription arrangements, monthly 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 the Company’s platform is less than the number of guaranteed sales, the Company provides a credit to the Dealer. If the actual number of vehicles sold exceeds the number of guaranteed sales, the Company is not entitled to any additional fees. Guaranteed Introductions Subscription. Under guaranteed introductions subscription arrangements, monthly 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, the Company provides a credit to the Dealer. If the actual number of introductions provided exceeds the number guaranteed, the Company is not entitled to any additional fees. OEM Incentives Revenue The Company enters into arrangements with OEMs to promote the sale of their vehicles through the offering of additional consumer incentives. These manufacturers pay a per-vehicle fee to the Company for promotion of the incentive after the sale of the vehicle has occurred between the Auto Buying Program user and the dealer. Under the old revenue standard, in years prior to 2018, the Company recognized as revenue the per-vehicle incentive fee at the time the sale of the vehicle occurred between the Auto Buying Program user and the dealer. Under the new revenue standard, the Company’s performance obligation to OEMs is to deliver incentive offers to consumers. Control transfers upon delivery of incentive offers, which is the point at which the Company recognizes revenue. The Company recognizes revenue for the amount that the Company estimates it will be able to earn. To formulate this estimate, the Company uses the expected value method based primarily on an analysis of historical incentive offers that result in vehicle sales and further validated by subsequent actual sales information. As a result, revenue recognition occurs earlier than billing as an estimate of the variable consideration to be received is determined upon control transfer, resulting in a contract asset. Forecasts, Consulting and Other Revenues Revenues are generated from the sale of forecasts of lease residual value data for new and used leased automobiles, guidebooks, and consulting projects. Sales are principally made to vehicle manufacturers, vehicle financing companies, investment banks, automobile dealers, and insurance companies. Forecasts and consulting project sales arrangements may include multiple promises to deliver goods and services, such as sale of lease residual forecasts from guidebooks and consulting projects. For revenue arrangements containing multiple promises to transfer goods or services, the Company first determines which of the goods or services are distinct and therefore separate performance obligations. If multiple distinct performance obligations are identified, the total transaction price for a contract is allocated to each performance obligation on a relative standalone selling price basis. In most cases, the goods and services we promise to deliver are sold on a stand-alone basis, which is determined to be the standalone selling price. Revenue allocated to each performance obligation from the sale of lease residual value forecasts, guidebooks, and consulting projects is recognized when each performance obligation is satisfied. Some residual value data is available via subscription with updated data provided as available during the subscription period or as part of discrete delivered data packages. Sales attributed to residual value data and guidebooks are recognized either over time during the subscription period or when the data or guidebooks are delivered, depending on the terms of the contract, and consulting projects are recognized when the project is delivered. The Company has elected to use the practical expedient to not disclose the remaining performance obligations for contracts that have durations of one year or less. The Company does not have significant remaining performance obligations in excess of one year. Incremental Costs to Obtain a Contract The new revenue standard requires the deferral of the recognition of incremental costs to obtain a contract, which the Company has identified as certain of its sales commissions paid to internal sales representatives for the sale of TrueCar’s services to Dealers. These costs are deferred and then amortized over the expected customer life, which has been determined to be three years based on an analysis of historical and expected customer life. Amortization expense is included within sales and marketing on the accompanying consolidated statements of comprehensive loss. Prior to adoption of the new revenue standard, sales commissions were expensed when incurred. |
Recent accounting pronouncements | Other Recent Accounting Pronouncements In June 2018, the FASB issued new guidance to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment 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 did not 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 continues to evaluate the methods and impact of adopting this guidance on its consolidated financial statements. |
Revenue Information and Deferre
Revenue Information and Deferred Sales Commissions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of cumulative effects of changes | The cumulative effects of the changes made to the Company’s January 1, 2018 consolidated balance sheet were as follows (in thousands): December 31, 2017 Adjustments Due to Adoption of New Revenue Standard January 1, 2018 Assets Other current assets $ 1,145 $ 3,324 $ 4,469 Other assets 1,391 2,962 4,353 Liabilities Accounts payable $ 18,620 $ 256 $ 18,876 Accrued expenses and other liabilities 12,790 107 12,897 Stockholders ’ Equity Accumulated deficit $ (351,084 ) $ 5,923 $ (345,161 ) The impact of adoption of the new revenue standard on the Company’s consolidated statement of comprehensive loss and consolidated balance sheet was as follows (in thousands): Three Months Ended June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Revenues $ 87,850 $ 87,412 $ 438 Sales and marketing 52,014 51,962 52 Net loss (6,622 ) (7,008 ) (386 ) Six Months Ended June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Revenues $ 168,911 $ 168,170 $ 741 Sales and marketing 100,432 100,382 50 Net loss (15,677 ) (16,368 ) (691 ) June 30, 2018 As Reported Balances Without Adoption of New Revenue Standard Effect of Change Increase/(Decrease) Assets Other current assets $ 4,971 $ 897 $ 4,074 Other assets 5,188 2,039 3,149 Liabilities Accounts payable $ 18,445 $ 17,952 $ 493 Accrued expenses and other liabilities 14,769 14,653 116 Stockholders ’ Equity Accumulated deficit $ (360,838 ) $ (367,452 ) $ 6,614 |
Schedule of revenue categories | The following table presents the Company’s revenue categories during the periods presented (in thousands): Three Months Ended Six Months Ended June 30, 2018 2017(1) 2018 2017(1) Auto Buying Program revenue $ 75,271 $ 69,366 $ 147,608 $ 134,520 OEM incentives revenue 7,927 7,837 12,348 13,115 Forecasts, consulting and other revenue 4,652 4,616 8,955 9,941 Total revenues $ 87,850 $ 81,819 $ 168,911 $ 157,576 (1) Prior period amounts have not been adjusted under the modified retrospective method. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of financial assets measured at fair value on a recurring basis | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 by level within the fair value hierarchy. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): At June 30, 2018 At December 31, 2017 Level 1 Total Fair Level 1 Total Fair Cash equivalents $ 198,486 $ 198,486 $ 195,584 $ 195,584 Total Assets $ 198,486 $ 198,486 $ 195,584 $ 195,584 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, Computer equipment, software, and internally developed software $ 91,013 $ 83,568 Furniture and fixtures 5,274 4,779 Leasehold improvements 8,565 8,342 Capitalized facility leases 39,302 39,302 144,154 135,991 Less: Accumulated depreciation (73,198 ) (65,281 ) Total property and equipment, net $ 70,956 $ 70,710 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease exit liability | The following table presents a roll forward of the lease exit liability for the six months ended June 30, 2018 : Lease Exit Costs Accrual at December 31, 2017 $ 1,354 Cash Payments (337 ) Accrual at June 30, 2018 $ 1,017 |
Stock-based Awards (Tables)
Stock-based Awards (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock option activity | A summary of the Company’s stock option activity for the six months ended June 30, 2018 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 16,714,216 $ 12.46 7.7 Granted 1,439,287 9.60 Exercised (463,426 ) 6.89 Canceled/forfeited (1,002,936 ) 14.03 Outstanding at June 30, 2018 16,687,141 $ 12.28 7.0 |
Schedule of activity in connection with restricted stock | Activity in connection with restricted stock units is as follows for the six months ended June 30, 2018 : Number of Shares Weighted- Average Grant Date Fair Value Non-vested — December 31, 2017 4,284,438 $ 11.99 Granted 3,025,260 9.69 Vested (852,017 ) 11.24 Canceled/forfeited (558,775 ) 10.87 Non-vested — June 30, 2018 5,898,906 $ 11.02 |
Schedule of stock-based compensation cost relating to stock options and restricted stock awards | The Company recorded stock-based compensation cost relating to stock options and restricted stock awards in the following categories on the accompanying consolidated statements of comprehensive loss (in thousands): Three Months Ended Six Months Ended 2018 2017 2018 2017 Cost of revenue $ 443 $ 233 $ 741 $ 436 Sales and marketing 3,543 2,160 6,670 3,905 Technology and development 2,698 1,600 5,051 2,898 General and administrative 2,288 2,853 5,607 5,514 Total stock-based compensation expense 8,972 6,846 18,069 12,753 Amount capitalized to internal software use 473 332 807 550 Total stock-based compensation cost $ 9,445 $ 7,178 $ 18,876 $ 13,303 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted 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 Six Months Ended 2018 2017 2018 2017 Net loss $ (6,622 ) $ (8,060 ) $ (15,677 ) $ (14,855 ) Weighted-average common shares outstanding 101,150 93,745 100,862 90,283 Net loss per share - basic and diluted $ (0.07 ) $ (0.09 ) $ (0.16 ) $ (0.16 ) |
Anti-dilutive shares excluded from the calculation of diluted net loss per share | The following table presents the number of anti-dilutive shares excluded from the calculation of diluted net loss per share at June 30, 2018 and 2017 (in thousands): June 30, 2018 2017 Options to purchase common stock 16,687 18,986 Common stock warrants 1,459 1,459 Non-vested restricted stock unit awards 5,899 5,319 Total shares excluded from net loss per share 24,045 25,764 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 1 - Segments) | 6 Months Ended |
Jun. 30, 2018segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Capitalized contract costs amortization period | 3 years |
Revenue Information and Defer28
Revenue Information and Deferred Sales Commissions - Schedule of Cumulative Effects of Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Assets | ||||||
Other current assets | $ 4,971 | $ 4,971 | $ 4,469 | $ 1,145 | ||
Other assets | 5,188 | 5,188 | 4,353 | 1,391 | ||
Liabilities | ||||||
Accounts payable | 18,445 | 18,445 | 18,876 | 18,620 | ||
Accrued expenses and other liabilities | 14,769 | 14,769 | 12,897 | 12,790 | ||
Stockholders’ Equity | ||||||
Accumulated deficit | (360,838) | (360,838) | (345,161) | (351,084) | ||
Revenues | 87,850 | $ 81,819 | 168,911 | $ 157,576 | ||
Sales and marketing | 52,014 | 46,933 | 100,432 | 89,115 | ||
Net loss | (6,622) | $ (8,060) | (15,677) | $ (14,855) | ||
Balances Without Adoption of New Revenue Standard | ||||||
Assets | ||||||
Other current assets | 1,145 | |||||
Other assets | 1,391 | |||||
Liabilities | ||||||
Accounts payable | 18,620 | |||||
Accrued expenses and other liabilities | 12,790 | |||||
Stockholders’ Equity | ||||||
Accumulated deficit | $ (351,084) | |||||
ASU 2014-09 | Balances Without Adoption of New Revenue Standard | ||||||
Assets | ||||||
Other current assets | 897 | 897 | ||||
Other assets | 2,039 | 2,039 | ||||
Liabilities | ||||||
Accounts payable | 17,952 | 17,952 | ||||
Accrued expenses and other liabilities | 14,653 | 14,653 | ||||
Stockholders’ Equity | ||||||
Accumulated deficit | (367,452) | (367,452) | ||||
Revenues | 87,412 | 168,170 | ||||
Sales and marketing | 51,962 | 100,382 | ||||
Net loss | (7,008) | (16,368) | ||||
ASU 2014-09 | Adjustments Due to Adoption of New Revenue Standard | ||||||
Assets | ||||||
Other current assets | 4,074 | 4,074 | 3,324 | |||
Other assets | 3,149 | 3,149 | 2,962 | |||
Liabilities | ||||||
Accounts payable | 493 | 493 | 256 | |||
Accrued expenses and other liabilities | 116 | 116 | 107 | |||
Stockholders’ Equity | ||||||
Accumulated deficit | 6,614 | 6,614 | $ 5,923 | |||
Revenues | 438 | 741 | ||||
Sales and marketing | 52 | 50 | ||||
Net loss | $ (386) | $ (691) |
Revenue Information and Defer29
Revenue Information and Deferred Sales Commissions - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Jan. 01, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Contract asset balance | $ 4,100,000 | $ 4,100,000 | $ 3,300,000 |
Sales commission | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Deferred sales commission | 3,100,000 | 3,100,000 | |
Amortization of capitalized contract costs | 400,000 | 800,000 | |
Impairment loss | 0 | 0 | |
Sales commission | Balances Without Adoption of New Revenue Standard | ASU 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Sales commissions expense | $ 600,000 | $ 1,000,000 |
- Schedule of Revenue Categorie
- Schedule of Revenue Categories (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue Information | ||||
Revenues | $ 87,850 | $ 81,819 | $ 168,911 | $ 157,576 |
Auto Buying Program revenue | ||||
Revenue Information | ||||
Revenues | 75,271 | 69,366 | 147,608 | 134,520 |
OEM incentives revenue | ||||
Revenue Information | ||||
Revenues | 7,927 | 7,837 | 12,348 | 13,115 |
Forecasts, consulting and other revenue | ||||
Revenue Information | ||||
Revenues | $ 4,652 | $ 4,616 | $ 8,955 | $ 9,941 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Level 1 | ||
Fair Value Measurements | ||
Cash equivalents | $ 198,486 | $ 195,584 |
Total assets | 198,486 | 195,584 |
Total fair value | ||
Fair Value Measurements | ||
Cash equivalents | 198,486 | 195,584 |
Total assets | $ 198,486 | $ 195,584 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Property and Equipment, net | |||||
Property and equipment, gross | $ 144,154 | $ 144,154 | $ 135,991 | ||
Less: Accumulated depreciation | (73,198) | (73,198) | (65,281) | ||
Total property and equipment, net | 70,956 | 70,956 | 70,710 | ||
Property and equipment capitalized but not placed in service | 3,100 | 3,100 | 7,800 | ||
Total depreciation and amortization expense | 10,818 | $ 11,747 | |||
Property and Equipment | |||||
Property and Equipment, net | |||||
Total depreciation and amortization expense | 4,700 | $ 4,700 | 8,900 | 9,800 | |
Computer equipment, software, and internally developed software | |||||
Property and Equipment, net | |||||
Property and equipment, gross | 91,013 | 91,013 | 83,568 | ||
Furniture and fixtures | |||||
Property and Equipment, net | |||||
Property and equipment, gross | 5,274 | 5,274 | 4,779 | ||
Leasehold improvements | |||||
Property and Equipment, net | |||||
Property and equipment, gross | 8,565 | 8,565 | 8,342 | ||
Capitalized facility leases | |||||
Property and Equipment, net | |||||
Property and equipment, gross | 39,302 | 39,302 | 39,302 | ||
Less: Accumulated depreciation | (2,700) | (2,700) | (2,200) | ||
Lease financing obligation | 31,500 | 31,500 | $ 31,400 | ||
Internally developed software | |||||
Property and Equipment, net | |||||
Amortization | $ 3,300 | $ 3,400 | $ 6,200 | $ 7,400 |
Credit Facility (Details)
Credit Facility (Details) | 1 Months Ended | |||
Feb. 28, 2018 | Jun. 30, 2018USD ($) | Feb. 18, 2018USD ($) | Dec. 31, 2017USD ($) | |
Credit facility | ||||
Amount outstanding | $ 0 | $ 0 | ||
Remaining borrowing capacity | 31,000,000 | |||
Letters of credit outstanding, amount | $ 4,000,000 | |||
Revolving line of credit | ||||
Credit facility | ||||
Maximum borrowing capacity | $ 35,000,000 | |||
Increase in maximum borrowing capacity, subject to lender's consent | 15,000,000 | |||
Maximum borrowing capacity, subject to lender's consent | 50,000,000 | |||
Quick ratio minimum | 1.50 | |||
Maximum consolidated leverage ratio, upper end of range | 3 | |||
Maximum consolidated leverage ratio, lower end of range | 2.50 | |||
Minimum fixed charge coverage ratio | 1.25 | |||
Revolving line of credit | Minimum | ||||
Credit facility | ||||
Unused facility fee (as a percent) | 0.00% | |||
Revolving line of credit | Maximum | ||||
Credit facility | ||||
Unused facility fee (as a percent) | 0.20% | |||
Revolving line of credit | Prime rate | Minimum | ||||
Credit facility | ||||
Variable rate basis spread (as a percent) | (0.25%) | |||
Revolving line of credit | Prime rate | Maximum | ||||
Credit facility | ||||
Variable rate basis spread (as a percent) | 0.50% | |||
Revolving line of credit | LIBOR | Minimum | ||||
Credit facility | ||||
Variable rate basis spread (as a percent) | 1.75% | |||
Revolving line of credit | LIBOR | Maximum | ||||
Credit facility | ||||
Variable rate basis spread (as a percent) | 2.50% | |||
Letters of credit | ||||
Credit facility | ||||
Maximum borrowing capacity | $ 10,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Exit Liability (Details) - Facility Closing - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve, Accrual Adjustment | $ (133,000) | |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | $ 1,354,000 | |
Cash Payments | (337,000) | |
Ending balance | 1,017,000 | |
Expense | $ 5,200,000 |
Commitments and Contingencies35
Commitments and Contingencies - San Francisco Lease Termination (Details) - Subsequent event - Office lease - San Francisco office $ in Millions | 1 Months Ended |
Jul. 31, 2018USD ($) | |
Operating Leased Assets [Line Items] | |
Decrease in future commitment | $ 4.5 |
Lease remaining term | 6 years |
Commitments and Contingencies36
Commitments and Contingencies - Legal Proceedings (Details) $ in Millions | 1 Months Ended |
Mar. 31, 2015USD ($) | |
Lawsuit alleging violations of Lanham act and other state laws | Minimum | |
Loss Contingencies [Line Items] | |
Damages sought | $ 250 |
Commitments and Contingencies37
Commitments and Contingencies - Employee Contracts and Severance Costs (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Employment contracts | |
Restructuring Cost and Reserve [Line Items] | |
Maximum term of executive's annual base salary to determine severance obligations | 12 months |
Stock-based Awards (Details - O
Stock-based Awards (Details - Options) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Additional disclosure | |||||
Stock-based compensation expense | $ 8,972 | $ 6,846 | $ 18,069 | $ 12,753 | |
Options | |||||
Number of Options | |||||
Outstanding at the beginning of period (in shares) | 16,714,216 | ||||
Granted (in shares) | 1,439,287 | ||||
Exercised (in shares) | (463,426) | ||||
Canceled/forfeited (in shares) | (1,002,936) | ||||
Outstanding at the end of the period (in shares) | 16,687,141 | 16,687,141 | 16,714,216 | ||
Weighted-Average Exercise Price | |||||
Outstanding at the beginning of period (in dollars per share) | $ 12.46 | ||||
Granted (in dollars per share) | 9.60 | ||||
Exercised (in dollars per share) | 6.89 | ||||
Canceled/forfeited (in dollars per share) | 14.03 | ||||
Outstanding at the end of the period (in dollars per share) | $ 12.28 | $ 12.28 | $ 12.46 | ||
Additional disclosure | |||||
Weighted average remaining contractual life (in years) | 7 years | 7 years 8 months 12 days | |||
Remaining stock-based compensation expense for unvested awards | $ 44,300 | $ 44,300 | |||
Weighted average period over which remaining stock based compensation expense for unvested awards is expected to be recognized | 2 years 9 months | ||||
Stock-based compensation expense | $ 3,800 | $ 3,700 | $ 8,400 | $ 7,000 |
Stock-based Awards (Details 2 -
Stock-based Awards (Details 2 - RSUs) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Weighted-Average Grant Date Fair Value | ||||
Stock based compensation expense | $ 8,972 | $ 6,846 | $ 18,069 | $ 12,753 |
Non-vested restricted stock unit awards | ||||
Number of Shares | ||||
Non-vested at the beginning of period (in shares) | 4,284,438 | |||
Granted (in shares) | 3,025,260 | |||
Vested (in shares) | (852,017) | |||
Canceled/forfeited (in shares) | (558,775) | |||
Non-vested at the end of the period (in per share) | 5,898,906 | 5,898,906 | ||
Weighted-Average Grant Date Fair Value | ||||
Non-vested at the beginning of period (in dollars per share) | $ 11.99 | |||
Granted (in dollars per share) | 9.69 | |||
Vested (in dollars per share) | 11.24 | |||
Canceled/forfeited (in dollars per share) | 10.87 | |||
Non-vested at the end of the period (in dollars per share) | $ 11.02 | $ 11.02 | ||
Remaining stock based compensation expense for non vested restricted stock units | $ 61,700 | $ 61,700 | ||
Weighted average period over which remaining stock based compensation expense for unvested awards is expected to be recognized | 2 years 11 months 27 days | |||
Stock based compensation expense | $ 5,200 | $ 3,200 | $ 9,600 | $ 5,800 |
Stock-based Awards (Details 3 -
Stock-based Awards (Details 3 - Stock comp by FSLI) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock-based Compensation Cost | ||||
Stock-based compensation expense | $ 8,972 | $ 6,846 | $ 18,069 | $ 12,753 |
Amount capitalized to internal software use | 473 | 332 | 807 | 550 |
Total stock-based compensation cost | 9,445 | 7,178 | 18,876 | 13,303 |
Cost of revenue | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 443 | 233 | 741 | 436 |
Sales and marketing | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 3,543 | 2,160 | 6,670 | 3,905 |
Technology and development | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 2,698 | 1,600 | 5,051 | 2,898 |
General and administrative | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | $ 2,288 | $ 2,853 | $ 5,607 | $ 5,514 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) provision | $ (35) | $ 201 | $ (96) | $ 322 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (6,622) | $ (8,060) | $ (15,677) | $ (14,855) |
Weighted average common shares outstanding (in shares) | 101,150 | 93,745 | 100,862 | 90,283 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.07) | $ (0.09) | $ (0.16) | $ (0.16) |
Net Loss Per Shares (Details 2)
Net Loss Per Shares (Details 2) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Anti-dilutive shares excluded from the calculation of diluted net loss per share attributable to common stockholders | ||
Total shares excluded from net loss per share | 24,045 | 25,764 |
Options to purchase common stock | ||
Anti-dilutive shares excluded from the calculation of diluted net loss per share attributable to common stockholders | ||
Total shares excluded from net loss per share | 16,687 | 18,986 |
Common stock warrants | ||
Anti-dilutive shares excluded from the calculation of diluted net loss per share attributable to common stockholders | ||
Total shares excluded from net loss per share | 1,459 | 1,459 |
Non-vested restricted stock unit awards | ||
Anti-dilutive shares excluded from the calculation of diluted net loss per share attributable to common stockholders | ||
Total shares excluded from net loss per share | 5,899 | 5,319 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Related Party Transactions | |||||
Receivable from related party | $ 149 | $ 149 | $ 169 | ||
USAA | |||||
Related Party Transactions | |||||
Receivable from related party | 100 | 100 | 200 | ||
Due to Related Parties | 4,600 | 4,600 | $ 3,300 | ||
USAA | Sales and marketing | |||||
Related Party Transactions | |||||
Costs under related party agreements | $ 5,300 | $ 4,500 | $ 9,800 | $ 8,500 |