Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 01, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-36449 | |
Entity Registrant Name | TRUECAR, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-3807511 | |
Entity Address, Address Line One | 120 Broadway | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Santa Monica | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90401 | |
City Area Code | 800 | |
Local Phone Number | 200-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | TRUE | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 106,184,703 | |
Entity Central Index Key | 0001327318 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 176,565 | $ 196,128 |
Accounts receivable, net of allowances of $4,781 and $3,382 at June 30, 2019 and December 31, 2018, respectively (includes related party receivables of $184 and $349 at June 30, 2019 and December 31, 2018, respectively) | 49,286 | 47,760 |
Prepaid expenses | 9,006 | 7,468 |
Other current assets | 34,002 | 4,103 |
Total current assets | 268,859 | 255,459 |
Property and equipment, net | 32,282 | 61,511 |
Operating lease right-of-use assets | 39,066 | 0 |
Goodwill | 73,311 | 73,311 |
Intangible assets, net | 20,353 | 23,451 |
Equity method investment | 22,901 | 0 |
Other assets | 4,738 | 7,228 |
Total assets | 461,510 | 420,960 |
Current liabilities | ||
Accounts payable (includes related party payables of $4,225 and $5,039 at June 30, 2019 and December 31, 2018, respectively) | 20,400 | 26,305 |
Accrued employee expenses | 10,361 | 4,349 |
Operating lease liabilities, current | 6,933 | 0 |
Accrued expenses and other current liabilities (includes related party accrued expenses of $2,151 and $218 at June 30, 2019 and December 31, 2018, respectively) | 49,387 | 10,908 |
Total current liabilities | 87,081 | 41,562 |
Deferred tax liabilities | 695 | 568 |
Lease financing obligations, net of current portion | 0 | 22,987 |
Operating lease liabilities, net of current portion | 39,851 | 0 |
Other liabilities | 2,484 | 9,290 |
Total liabilities | 130,111 | 74,407 |
Commitments and contingencies (Note 7) | ||
Stockholders’ Equity | ||
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at June 30, 2019 and December 31, 2018, respectively; no shares issued and outstanding at June 30, 2019 and December 31, 2018 | 0 | 0 |
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at June 30, 2019 and December 31, 2018; 105,895,609 and 104,337,508 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 10 | 10 |
Additional paid-in capital | 746,986 | 720,025 |
Accumulated deficit | (415,597) | (373,482) |
Total stockholders’ equity | 331,399 | 346,553 |
Total liabilities and stockholders’ equity | $ 461,510 | $ 420,960 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts receivables- current | $ 4,781 | $ 3,382 |
Related party accounts receivable- current | 184 | 349 |
Related party accounts payable- current | 4,225 | 5,039 |
Related party accrued expenses and other current liabilities | $ 2,151 | $ 218 |
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) | 105,895,609 | 104,337,508 |
Common stock, shares outstanding (in shares) | 105,895,609 | 104,337,508 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues (includes related party contra revenue of $345 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $509 and $0 for the six months ended June 30 2019 and 2018, respectively) | $ 88,075 | $ 87,850 | $ 173,657 | $ 168,911 |
Costs and operating expenses: | ||||
Cost of revenue (exclusive of depreciation and amortization presented separately below; includes related party cost of revenue of $289 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $423 and $0 for the six months ended June 30, 2019 and 2018, respectively) | 8,332 | 7,752 | 17,268 | 15,204 |
Sales and marketing (includes related party expenses of $5,749 and $5,277 for the three months ended June 30, 2019 and 2018, respectively, and $11,222 and $9,818 for the six months ended June 30, 2019 and 2018, respectively) | 60,233 | 52,014 | 114,971 | 100,432 |
Technology and development | 16,045 | 15,694 | 31,699 | 31,288 |
General and administrative | 21,382 | 13,494 | 36,486 | 26,975 |
Depreciation and amortization | 6,767 | 5,641 | 13,182 | 10,816 |
Total costs and operating expenses | 112,759 | 94,595 | 213,606 | 184,715 |
Loss from operations | (24,684) | (6,745) | (39,949) | (15,804) |
Interest income | 966 | 750 | 1,967 | 1,354 |
Interest expense | 0 | (662) | 0 | (1,323) |
Loss from equity method investment | (273) | 0 | (273) | 0 |
Loss before income taxes | (23,991) | (6,657) | (38,255) | (15,773) |
Provision for (benefit from) income taxes | 69 | (35) | 170 | (96) |
Net loss | $ (24,060) | $ (6,622) | $ (38,425) | $ (15,677) |
Net loss per share attributable to common stockholders: | ||||
Net loss per share, basic and diluted (in dollars per share) | $ (0.23) | $ (0.07) | $ (0.37) | $ (0.16) |
Weighted average common shares outstanding, basic and diluted (in shares) | 105,485 | 101,150 | 105,139 | 100,862 |
Other comprehensive loss: | ||||
Comprehensive loss | $ (24,060) | $ (6,622) | $ (38,425) | $ (15,677) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue from Related Parties | $ 345 | $ 0 | $ 509 | $ 0 |
Cost of revenue | ||||
Costs and expenses with related parties | 289 | 0 | 423 | 0 |
Sales and marketing | ||||
Costs and expenses with related parties | $ 5,749 | $ 5,277 | $ 11,222 | $ 9,818 |
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 | $ 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 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | (9,055) | (9,055) | ||
Stock-based compensation | 9,431 | 9,431 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (166) | (166) | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 468,809 | |||
Ending Balance at Mar. 31, 2018 | 319,251 | $ 10 | 673,457 | (354,216) |
Balance (in shares) at Mar. 31, 2018 | 100,897,465 | |||
Beginning Balance at Dec. 31, 2017 | 313,118 | $ 10 | 664,192 | (351,084) |
Balance (in shares) at Dec. 31, 2017 | 100,428,656 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | (15,677) | |||
Ending Balance at Jun. 30, 2018 | 323,979 | $ 10 | 684,807 | (360,838) |
Balance (in shares) at Jun. 30, 2018 | 101,606,400 | |||
Beginning Balance at Mar. 31, 2018 | 319,251 | $ 10 | 673,457 | (354,216) |
Balance (in shares) at Mar. 31, 2018 | 100,897,465 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | (6,622) | (6,622) | ||
Stock-based compensation | 9,445 | 9,445 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | 1,905 | 1,905 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 708,935 | |||
Ending Balance at Jun. 30, 2018 | 323,979 | $ 10 | 684,807 | (360,838) |
Balance (in shares) at Jun. 30, 2018 | 101,606,400 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Cumulative-effect of accounting change adopted | (3,690) | (3,690) | ||
Beginning Balance at Dec. 31, 2018 | $ 346,553 | $ 10 | 720,025 | (373,482) |
Balance (in shares) at Dec. 31, 2018 | 104,337,508 | 104,337,508 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | $ (14,365) | (14,365) | ||
Stock-based compensation | 9,108 | 9,108 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | 2,261 | 2,261 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 781,538 | |||
Ending Balance at Mar. 31, 2019 | 339,867 | $ 10 | 731,394 | (391,537) |
Balance (in shares) at Mar. 31, 2019 | 105,119,046 | |||
Beginning Balance at Dec. 31, 2018 | $ 346,553 | $ 10 | 720,025 | (373,482) |
Balance (in shares) at Dec. 31, 2018 | 104,337,508 | 104,337,508 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | $ (38,425) | |||
Ending Balance at Jun. 30, 2019 | $ 331,399 | $ 10 | 746,986 | (415,597) |
Balance (in shares) at Jun. 30, 2019 | 105,895,609 | 105,895,609 | ||
Beginning Balance at Mar. 31, 2019 | $ 339,867 | $ 10 | 731,394 | (391,537) |
Balance (in shares) at Mar. 31, 2019 | 105,119,046 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net loss | (24,060) | (24,060) | ||
Stock-based compensation | 16,061 | 16,061 | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (469) | (469) | ||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 776,563 | |||
Ending Balance at Jun. 30, 2019 | $ 331,399 | $ 10 | $ 746,986 | $ (415,597) |
Balance (in shares) at Jun. 30, 2019 | 105,895,609 | 105,895,609 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (38,425) | $ (15,677) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 13,182 | 10,818 |
Deferred income taxes | 127 | (120) |
Bad debt expense and other reserves | 485 | 811 |
Stock-based compensation | 24,191 | 18,069 |
Increase in the fair value of contingent consideration liability | 150 | 0 |
Amortization of lease right-of-use assets | 2,944 | 0 |
Loss from equity method investment | 273 | 0 |
Non-cash interest expense on lease financing obligation | 0 | 218 |
Impairment or write-off and loss on disposal of finite-lived assets | 1,139 | 143 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,011) | (4,491) |
Prepaid expenses | (2,538) | (2,882) |
Other current assets | (29,711) | (787) |
Other assets | 1,406 | (835) |
Accounts payable | (5,777) | (232) |
Accrued employee expenses | 5,905 | 106 |
Operating lease liabilities | (3,064) | 0 |
Accrued expenses and other liabilities | 39,047 | 3,033 |
Other liabilities | (99) | 393 |
Net cash provided by operating activities | 7,224 | 8,567 |
Cash flows from investing activities | ||
Purchase of property and equipment | (5,405) | (9,615) |
Cash paid for equity method investment | (23,174) | 0 |
Net cash used in investing activities | (28,579) | (9,615) |
Cash flows from financing activities | ||
Proceeds from exercise of common stock options | 2,835 | 3,196 |
Taxes paid related to net share settlement of equity awards | (1,043) | (1,423) |
Net cash provided by financing activities | 1,792 | 1,773 |
Net (decrease) increase in cash and cash equivalents | (19,563) | 725 |
Cash and cash equivalents at beginning of period | 196,128 | 197,762 |
Cash and cash equivalents at end of period | 176,565 | 198,487 |
Supplemental disclosures of non-cash activities | ||
Stock-based compensation capitalized for software development | 978 | 807 |
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses | 245 | 554 |
Proceeds receivable from exercise of stock options included in other current assets | 0 | 1 |
Taxes payable related to net share settlement of equity awards included in accrued employee expenses | $ 0 | $ 29 |
Organization and Nature of Busi
Organization and Nature of Business | 6 Months Ended |
Jun. 30, 2019 | |
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 ALG, Inc., TrueCar Dealer Solutions, Inc. and DealerScience, LLC are collectively referred to as “TrueCar” or the “Company,” ALG, Inc. is referred to as “ALG,” TrueCar Dealer Solutions, Inc. is referred to as “TCDS” and DealerScience, LLC is referred to as “DealerScience.” 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. Through its subsidiary TCDS, the Company provides its TrueCar Trade product, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership. This valuation is, in turn, backed by a third-party guarantee to dealers that the vehicles will be repurchased at the indicated price if the dealer does not want to keep them. In addition, through TCDS, the Company acted as an agent for DealerSync, Inc. (“DealerSync”) until June 2019 and in that capacity offered dealers its products and services, including a dealer website creation and management service and a software platform that assists dealers in managing, marketing and growing their business. Additionally, in December 2018, the Company acquired DealerScience, which, through TCDS, provides dealers with advanced digital retailing software tools that allow them to calculate accurate monthly payments, expedite vehicle desking, which is the process of presenting and agreeing upon financial terms and financing options, and streamline the consumer’s experience. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
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, 2018 , except for the accounting policy changes detailed in Note 3 as a result of the Company’s adoption of the new leasing 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, 2018 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, 2019. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TrueCar and its wholly owned subsidiaries. Business acquisitions are included in the Company’s condensed consolidated financial statements from the date of the acquisition. The Company’s purchase accounting resulted in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. Equity investments through which the Company is able to exercise significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities are accounted for using the equity method. The Company’s share of the income or loss from equity method investments is recognized on a one-quarter lag due to the timing and availability of financial information. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities that are subject to judgment and use of estimates include sales allowances and allowances for doubtful accounts, contract assets, the fair value of a warrant asset and the related liability, the fair value of assets and liabilities assumed in business combinations, right-of-use assets and lease liabilities, the fair value of capitalized lease facilities, 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 the fair value of a warrant asset and the related liability, right-of-use assets and lease liabilities, the fair value of capitalized lease facilities, the fair values of assets and liabilities assumed in business combinations, the fair value of reporting units in connection with annual goodwill impairment testing, the fair value of performance shares, and in periods prior to the Company’s initial public offering, valuation of common stock. Segments The Company has one operating segment. During the first quarter of 2019, the Company’s chief operating decision maker (“CODM”) was the President and Chief Executive Officer and the Interim Chief Financial Officer and Chief Accounting Officer, who managed the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources. Effective April 1, 2019, the Company’s Interim Chief Financial Officer and Chief Accounting Officer resigned from his positions. From April 1, 2019, through May 31, 2019, the Company’s CODM was solely comprised of the President and Chief Executive Officer until his resignation on May 31, 2019. From June 1, 2019 through June 16, 2019, the CODM was comprised of the Interim President and Chief Executive Officer. Upon the hiring of the Chief Financial Officer on June 17, 2019 and through June 30, 2019, the CODM was comprised of both the Interim President and Chief Executive Officer and the Chief Financial Officer. During the three months ended June 30, 2019 , the Company’s operations were managed based on consolidated financial information for purposes of evaluating financial performance and allocating resources by the various CODM in place. The CODM reviews financial information on a consolidated basis, accompanied by information about dealer revenue, OEM incentive revenue, and forecasts, consulting and other revenue (Note 12). All of the Company’s principal operations, decision-making functions and assets are located in the United States. Equity Method Investment On February 8, 2019, the Company acquired 20% of the outstanding equity interests of Accu-Trade, LLC, a Delaware limited liability company (“Accu-Trade”), from R.M. Hollenshead Auto Sales & Leasing, Inc., a Florida corporation (“RHAS”), Robert M. Hollenshead (“Hollenshead”) and Jeffrey J. Zamora (“Zamora” and, together with RMHS and Hollenshead, the “Sellers”), pursuant to a Membership Interest Purchase Agreement, dated as of February 8, 2019 (the “Purchase Agreement”), by and among Accu-Trade, RMHS, Hollenshead, Zamora and the Company. Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, the Company paid the Sellers $17.9 million in cash consideration and made a $5 million capital contribution to Accu-Trade. The Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag due to the timing and availability of financial information from Accu-Trade. Included in the initial carrying value of $22.9 million , which represents the fair value on the transaction date, was a basis difference of $21.0 million related to the difference between the cost of the investment and the Company’s proportionate share of the net assets of Accu-Trade. The carrying value of the equity method investment is primarily adjusted for the Company’s share in the losses of Accu-Trade and amortization of the basis difference. The Company amortizes its basis difference between the estimated fair value and the underlying book value of Accu-Trade’s technology and guarantor relationship over their respective useful lives using the straight-line method. The weighted-average life of these intangible assets is approximately 5 years . Recent Accounting Pronouncements 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. On January 1, 2019, the Company adopted the new leasing standard using the prospective transition method. See Note 3 for further details. 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 did not have a material impact on the Company’s consolidated financial statements. |
Leases (Notes)
Leases (Notes) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases Adoption of the New Lease Accounting Standard On January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition method applied at the effective date of the standard. Results for reporting periods beginning after January 1, 2019 are presented under the new leasing standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting. The Company has elected to utilize the package of practical expedients at the time of adoption, which allows the Company to (1) not reassess whether any expired or existing contracts are or contain leases, (2) not reassess the lease classification of any expired or existing leases, and (3) not reassess initial direct costs for any existing leases. The Company also has elected to utilize the short-term lease recognition exemption and, for those leases that qualified, the Company did not recognize right-of-use (“ROU”) assets or lease liabilities. New Lease Accounting Policies The Company determines if an arrangement is a lease at inception and determine the classification of the lease, as either operating or finance, at commencement. The Company has various operating leases for its offices. These existing leases have remaining lease terms ranging from 1 to 11 years. Certain lease agreements contain options to renew, with renewal terms that generally extend the lease terms by 3 to 5 years for each option. The Company does not have any finance leases. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company estimates the incremental borrowing rate to reflect the profile of secured borrowing over the expected term of the leases based on the information available at the later of the initial date of adoption or the lease commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Sublease rental income is recognized as a reduction to the related lease expense on a straight-line basis over the sublease term. Adoption Impact As a result of adoption, the Company recorded a material impact as ROU assets and lease liabilities are recognized on the consolidated balance sheet related to office facility leases. The ROU assets and lease liabilities were valued using the incremental borrowing rate as of the adoption date. Additionally, the Company expects to recognize greater rent expense in operating expenses and less interest expense as the Company’s prior build-to-suit leases are now classified as operating leases. Additionally, the change related to build-to-suit leases resulted in the removal of build-to-suit assets from the consolidated balance sheet, which reduced property and equipment, net by $28.3 million and eliminated the lease financing obligation of $1.8 million within accrued expenses and other liabilities and $23.0 million within lease financing obligation, net of current portion. See Note 5 for further details. The cumulative effects of the changes made to the Company’s January 1, 2019 consolidated balance sheet were as follows (in thousands): December 31, 2018 Adjustments Due to Adoption of New Leasing Standard January 1, 2019 Assets Other current assets $ 4,103 $ 188 $ 4,291 Property and equipment, net 61,511 (25,461 ) 36,050 Operating lease right-of-use assets — 42,010 42,010 Other assets 7,228 147 7,375 Liabilities Operating lease liabilities, current $ — $ 6,498 $ 6,498 Accrued expenses and other current liabilities 10,908 (2,637 ) 8,271 Lease financing obligation, net of current portion 22,987 (22,987 ) — Operating lease liabilities, net of current portion — 43,351 43,351 Other liabilities 9,290 (3,651 ) 5,639 Stockholders ’ Equity Accumulated deficit $ (373,482 ) $ (3,690 ) $ (377,172 ) Lease Costs For the three and six months ended June 30, 2019 , the Company recorded operating lease costs, excluding subleases, that were included in the consolidated statements of comprehensive loss as follows: Operating lease costs recorded within: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Cost of revenue $ 192 $ 392 Sales and marketing 443 882 Technology and development 893 1,764 General and administrative 616 1,250 Total operating lease costs $ 2,144 $ 4,288 The Company did not include short term or variable lease costs in the table above as these amounts were immaterial. For the three and six months ended June 30, 2019 , the Company recorded lease costs, excluding subleases, of $2.1 million and $4.3 million , respectively. The Company made cash payments for operating leases of $2.4 million and $2.3 million for the three months ended June 30, 2019 and 2018 , respectively, and $4.7 million and $4.8 million for the six months ended June 30, 2019 and 2018 , respectively, all of which were included in cash flows from operating activities within the consolidated statements of cash flows. The Company’s operating leases have a weighted average remaining lease term of 7.2 years and weighted average discount rate of 5.6% . For its subleases, the Company recorded contra rent expense of $0.5 million for the three months ended June 30, 2019 and 2018 . For the six months ended June 30, 2019 and 2018 , the Company recorded contra rent expense of $1.0 million related to its subleases. Lease Commitments Future undiscounted lease payments for the Company’s operating lease liabilities, a reconciliation of these payments to its operating lease liabilities, and related sublease income at June 30, 2019 are as follows (in thousands): Six months ended December 31, 2019 and years ended December 31, 2019 $ 3,929 2020 8,523 2021 7,152 2022 7,369 2023 7,628 Thereafter 22,561 Total lease payments $ 57,162 Less: imputed interest (10,378 ) Total lease liabilities (discounted) $ 46,784 Six months ended December 31, 2019 and year ended December 31, 2020 Sublease Income 2019 $ (1,096 ) 2020 (1,299 ) Total sublease income $ (2,395 ) As previously disclosed in the Company’s 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for the Company’s operating leases at December 31, 2018, on an undiscounted basis, were as follows (in thousands): Years ended December 31, Lease Commitments Sublease Income 2019 $ 9,220 $ (2,180 ) 2020 8,716 (1,282 ) 2021 7,145 — 2022 7,362 — 2023 7,621 — Thereafter 22,532 — Total minimum lease payments $ 62,596 $ (3,462 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 and December 31, 2018 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, 2019 At December 31, 2018 Total Fair Total Fair Level 1 Level 2 Level 3 Value Level 1 Level 2 Level 3 Value Assets: Cash equivalents $ 171,254 $ — $ — $ 171,254 $ 192,207 $ — $ — $ 192,207 Total Assets $ 171,254 $ — $ — $ 171,254 $ 192,207 $ — $ — $ 192,207 Liabilities: Contingent consideration, current $ — $ — $ 2,352 $ 2,352 $ — $ — $ — $ — Contingent consideration, non-current $ — $ — $ 2,275 $ 2,275 $ — $ — $ 4,477 $ 4,477 Total Liabilities $ — $ — $ 4,627 $ 4,627 $ — $ — $ 4,477 $ 4,477 |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and Equipment, net Property and equipment consisted of the following at June 30, 2019 and December 31, 2018 (in thousands): June 30, December 31, Computer equipment, software, and internally developed software $ 104,471 $ 99,204 Furniture and fixtures 4,762 4,758 Leasehold improvements 15,839 8,602 Capitalized facility leases — 30,632 125,072 143,196 Less: Accumulated depreciation (92,790 ) (81,685 ) Total property and equipment, net $ 32,282 $ 61,511 Prior to the adoption of the new lease guidance, the Company was considered the owner, for accounting purposes only, of one of its Santa Monica, California leased office spaces as it had taken on certain risks of construction build cost overages above normal tenant improvement allowances. These capitalized facility leases were removed from the balance sheet at adoption. Refer to Note 3 for further details. Included in the table above are property and equipment of $1.0 million and $1.1 million at June 30, 2019 and December 31, 2018 , respectively, which are capitalizable but had not yet been placed in service. These balances were comprised primarily of capitalized software not ready for its intended use. Total depreciation and amortization expense of property and equipment was $5.2 million and $4.7 million for the three months ended June 30, 2019 and 2018 , respectively. Total depreciation and amortization expense of property and equipment was $10.1 million and $8.9 million for the six months ended June 30, 2019 and 2018 , respectively. Amortization of internal use capitalized software development costs was $3.9 million and $3.3 million for the three months ended June 30, 2019 and 2018 , respectively. Amortization of internal use capitalized software development costs was $7.3 million and $6.2 million for the six months ended June 30, 2019 and 2018 , respectively. |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Credit facility | Credit Facility The Company is party to a third amended and restated loan and security agreement (the “Credit Facility”) with a financial institution that provides for advances under a $35.0 million revolving line of credit. In February 2018, the Company entered into a first amendment to the Credit Facility that, among other things, extended the expiration of the Credit Facility from February 18, 2018 to February 18, 2021. In December 2018, the Company entered into a second amendment to the Credit Facility to make certain other revisions that do not alter the borrowing amounts, interest rates, or required ratios. The Credit Facility provides a $10.0 million subfacility for the issuance of letters of credit and contained 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. Consolidated leverage ratio is a ratio of all funded indebtedness, including all capital lease obligations, plus all letters of credit under the facility to the Company’s Adjusted EBITDA for the trailing twelve months. Fixed charge coverage ratio is the ratio of the Company’s Adjusted EBITDA minus cash income taxes to its cash interest payments for the trailing twelve months. The Credit Facility also limits the Company’s ability to pay dividends. At June 30, 2019 , the Company was in compliance with the Credit Facility’s financial covenants. The Company’s future material domestic subsidiaries are required, upon the lender’s request, to become co-borrowers under the Credit Facility. Additionally, the Credit Facility contains acceleration clauses that accelerate any borrowings in the event of default. The Company’s obligations and those of its future material domestic subsidiaries are collateralized by substantially all of their respective assets, subject to certain exceptions and limitations. At June 30, 2019 , the Company had no outstanding amounts under the Credit Facility and the amount available was $31.5 million , reduced for the letters of credit issued and outstanding under the subfacility of $3.5 million . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and Contingencies Lease Exit Costs The Company had historically accounted for exit and disposal activities through the use of a lease exit liability. Under the new leasing guidance, the remaining lease exit liability was eliminated and the remaining balance was included as an adjustment to reduce the ROU assets for the relevant properties. Refer to Note 3 for further details. Reorganization and Executive Departures In January 2019, the Company initiated and completed a restructuring plan (the “Reorganization Plan”) to improve efficiency and reduce expenses. The Company recorded severance costs of approximately $3.3 million in the first quarter of 2019 in connection with the Reorganization Plan. These costs were recorded within cost of revenue, sales and marketing, technology and development, and general and administrative expenses within the Company’s consolidated statements of comprehensive loss. The Company does not expect to incur significant additional charges in future periods related to this Reorganization Plan. In the second quarter of 2019, the Company incurred severance costs totaling $4.6 million associated with the separations of executive-level employees including its former chief executive officer. Of the total, the Company recorded $0.4 million in sales and marketing, $0.9 million in technology and development and $3.3 million in general and administrative expenses in the Company’s consolidated statements of comprehensive loss during the three and six months ended June 30, 2019 . The following table presents a roll forward of the severance liability for the six months ended June 30, 2019 (in thousands): Severance Liability Accrual at December 31, 2018 $ — Expense 7,871 Cash Payments (3,180 ) Accrual at June 30, 2019 $ 4,691 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 purportedly filed on behalf of numerous automotive dealers who are not on the TrueCar platform 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 alleged 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 sought 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. On January 19, 2018, the Company filed a motion to exclude testimony from the plaintiffs’ damages expert. On April 10 and April 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. On March 27, 2019, the court granted in part and denied in part the Company’s motion, allowing the plaintiffs to pursue disgorgement of the Company’s profits on a deterrence theory but granting summary judgment to the Company on the other aspects of the plaintiffs’ claims. On April 9, 2019, the Company filed a motion for reconsideration of the court’s ruling, which the court granted on July 12, 2019. As a result, the court granted the Company’s motion for summary judgment in its entirety as to the plaintiffs’ Lanham Act claim. In light of the dismissal of the plaintiffs’ sole federal claim, the court declined to exercise supplemental jurisdiction over the state-law claims alleged by the amended complaint and therefore dismissed them without prejudice, meaning that the state-law claims could be re-filed in state court at a later date. If any such claims are re-filed in state court, or if the plaintiffs appeal the dismissal of their federal claims, the Company intends to vigorously defend itself. The Company has not recorded an accrual related to this matter as of June 30, 2019 , as it does not believe a loss is probable or reasonably estimable. On December 23, 2015, the Company was named as a defendant in a putative class action lawsuit filed by Gordon Rose in the California Superior Court for the County of Los Angeles. The 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 allegations that the Company was operating in the State of California as an unlicensed automobile dealer and autobroker as well as factual allegations similar to those asserted in the NY Lanham Act 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 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. On September 26, 2018, the plaintiff filed a notice of appeal and proceedings in the trial court have been stayed pending the resolution of the appeal. 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, 2019 as the Company does not believe a loss is probable or reasonably estimable. 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 “Milbeck Federal Securities Litigation”). The complaint sought an award of unspecified damages, interest, attorney’s fees and equitable relief based on allegations that the defendants made false or misleading statements about our business, operations, prospects and performance during a purported class period of February 16, 2017 through November 6, 2017 in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. On June 27, 2018, the court appointed the Oklahoma Police Pension and Retirement Fund as lead plaintiff. The plaintiff filed an amended complaint on August 24, 2018. The amended complaint reiterated the claims in the prior complaint and added claims under Section 11 of the Exchange Act. The amended complaint also added our chief executive officer Chip Perry, our former interim chief financial officer John Pierantoni, our former chief financial officer Michael Guthrie and our underwriters and directors who signed the registration statement for our secondary offering that occurred during the class period (the “2017 Registration Statement”) as defendants. On October 31, 2018, the plaintiff dismissed the underwriters from the litigation “without prejudice,” meaning that they could be reinstated as defendants at a later time, and on November 5, 2018, the Company filed a motion to dismiss the amended complaint, which the court denied on February 5, 2019. On May 9, 2019, the court granted lead plaintiff’s motion for class certification and scheduled trial to begin on November 5, 2019. On July 3, 2019, the lead plaintiff, the Company and the individual defendants notified the court that they had reached an agreement in principle to settle the outstanding claims in the Milbeck Federal Securities Litigation. On August 2, 2019, the parties entered into an agreement to settle the Milbeck Federal Securities Litigation on a classwide basis for $28.25 million, which will be covered by the Company’s directors’ and officers’ liability insurance. Later that day, the lead plaintiff filed an unopposed motion for preliminary approval of the proposed settlement, which the court has not yet granted. As of June 30, 2019 , the proposed settlement amount and offsetting insurance receivable of $28.25 million are included in “Accrued expenses and other current liabilities” and “Other current assets” in the Company’s condensed consolidated balance sheets. On March 6, 2019, the Company, its former chief executive officer Chip Perry, its former chief financial officer Michael Guthrie, its former interim chief financial officer John Pierantoni, its directors who signed the 2017 Registration Statement and USAA were named as defendants in a derivative action filed by Dean Drulias nominally on behalf of the Company in the U.S. District Court for the Central District of California (the “California Derivative Litigation”). The complaint alleges breach of fiduciary duties and unjust enrichment and seeks contribution for damages awarded against the Company in the Milbeck Federal Securities Litigation and an award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. On June 13, 2019, the court granted the Company’s motion to stay the California Derivative Litigation pending the decision of the Judicial Panel on Multidistrict Litigation (the “JPML”) on the Company’s motion to transfer the California Derivative Litigation to the U.S. District Court for the District of Delaware to enable its consolidation with the Delaware Derivative Litigation. On July 31, 2019, the JPML denied the Company’s motion. 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, 2019 as the Company does not believe a loss is probable or reasonably estimable. On April 1 and April 3, 2019, respectively, the Company, its former chief executive officer Chip Perry, its former chief financial officer Michael Guthrie, its former interim chief financial officer John Pierantoni, its directors who signed the 2017 Registration Statement and USAA were named as defendants in derivative actions filed by Ara Afarian and Shelley Niemi nominally on behalf of the Company in the U.S. District Court for the District of Delaware. The complaints allege breach of Section 29(b) of the Exchange Act as well as breach of fiduciary duties and unjust enrichment and seek contribution for damages awarded against the Company in the Milbeck Federal Securities Litigation and an award of unspecified damages, interest, attorney’s fees and equitable relief based on substantially the same factual allegations as the Milbeck Federal Securities Litigation. The Niemi complaint also seeks rescission of certain contracts. On April 17, 2019, the two cases, and all similar cases originating in or transferred to the U.S. District Court for the District of Delaware, were consolidated into a single action bearing the caption In re TrueCar, Inc. Shareholder Derivative Litigation (the “Delaware Derivative Litigation”). On May 23, 2019, the Delaware Derivative Litigation was stayed pending the decision of the JPML on the Company’s motion that the California Derivative Litigation be transferred to the U.S. District Court for the District of Delaware to enable its consolidation with the Delaware Derivative Litigation. On July 31, 2019, the JPML denied the Company’s motion. The Company believes that the complaints are 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, 2019 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 |
Stock-based Awards
Stock-based Awards | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2018 14,114,651 $ 12.32 7.0 Granted 2,022,047 7.06 Exercised (355,147 ) 7.98 Forfeited/expired (2,701,845 ) 12.96 Outstanding at June 30, 2019 13,079,706 $ 11.50 6.8 At June 30, 2019 , total remaining stock-based compensation expense for unvested stock option awards was $17.6 million , which is expected to be recognized over a weighted-average period of 2.5 years . For the three months ended June 30, 2019 and 2018 , the Company recorded stock-based compensation expense for stock option awards of $6.9 million and $3.8 million , respectively. For the six months ended June 30, 2019 and 2018 , the Company recorded stock-based compensation expense for stock option awards of $10.0 million and $8.4 million , respectively. Restricted Stock Units Activity in connection with restricted stock units is as follows for the six months ended June 30, 2019 : Number of Shares Weighted- Average Grant Date Fair Value Non-vested — December 31, 2018 5,375,963 $ 11.01 Granted 4,498,063 6.80 Vested (1,704,577 ) 9.63 Forfeited (1,468,517 ) 9.91 Non-vested — June 30, 2019 6,700,932 $ 8.77 At June 30, 2019 , total remaining stock-based compensation expense for non-vested restricted stock units was $56.3 million , which is expected to be recognized over a weighted-average period of 3.0 years . The Company recorded $8.7 million and $5.2 million in stock-based compensation expense for restricted stock units for the three months ended June 30, 2019 and 2018 , respectively. The Company recorded $14.2 million and $9.6 million in stock-based compensation for restricted stock units for the six months ended June 30, 2019 and 2018 , respectively. Stock-based Compensation Cost The Company recorded stock-based compensation cost relating to stock options and restricted stock units in the following categories on the accompanying consolidated statements of comprehensive loss (in thousands): Three Months Ended Six Months Ended 2019 2018 2019 2018 Cost of revenue $ 553 $ 443 $ 1,052 $ 741 Sales and marketing 4,716 3,543 8,188 6,670 Technology and development 3,463 2,698 5,409 5,051 General and administrative 6,824 2,288 9,542 5,607 Total stock-based compensation expense 15,556 8,972 24,191 18,069 Amount capitalized to internal software use 505 473 978 807 Total stock-based compensation cost $ 16,061 $ 9,445 $ 25,169 $ 18,876 As referenced in Note 7, certain executive-level employees, including the Company’s former chief executive officer, separated from the Company in the second quarter of 2019. Benefits provided associated with these terminations include severance payments, acceleration of certain equity awards and extension of the exercise period for certain vested stock options. As a result of these termination benefits, the Company recognized $7.2 million in additional stock-based compensation expense for the three and six months ended June 30, 2019. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income Taxes In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss. The Company’s annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, tax amortization of goodwill and changes in the Company’s valuation allowance. The Company recorded income tax expense of $0.1 million for the three months ended June 30, 2019 and an income tax benefit of $35 thousand for the three months ended June 30, 2018 . The Company recorded income tax expense of $0.2 million for the six months ended June 30, 2019 and an income tax benefit $0.1 million for the six months ended June 30, 2018 . There were no material changes to the Company’s unrecognized tax benefits in the six months ended June 30, 2019 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
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 2019 2018 2019 2018 Net loss $ (24,060 ) $ (6,622 ) $ (38,425 ) $ (15,677 ) Weighted-average common shares outstanding 105,485 101,150 105,139 100,862 Net loss per share - basic and diluted $ (0.23 ) $ (0.07 ) $ (0.37 ) $ (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, 2019 and 2018 (in thousands): June 30, 2019 2018 Options to purchase common stock 13,080 16,456 Common stock warrants 1,459 1,459 Non-vested restricted stock unit awards 6,701 3,727 Total shares excluded from net loss per share 21,240 21,642 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 and December 31, 2018 of $0.2 million and $0.3 million , respectively. In addition, the Company had amounts due to USAA at June 30, 2019 and December 31, 2018 of $6.0 million and $5.3 million , respectively. The Company recorded sales and marketing expense of $5.7 million and $5.3 million for the three months ended June 30, 2019 and 2018 , respectively, related to service arrangements entered into with USAA. The Company recorded sales and marketing expense of $11.2 million and $9.8 million for the six months ended June 30, 2019 and 2018 , respectively. Transactions with Accu-Trade During the first quarter of 2019, the Company became a 20% owner of Accu-Trade and accounts for the investment using the equity method, as the Company has significant influence over the investee. The Company had amounts due to Accu-Trade at June 30, 2019 of $0.4 million . The Company recognized contra-revenue of $0.3 million and cost of revenue of $0.3 million during the three months ended June 30, 2019 related to a software and data licensing agreement entered into with Accu-Trade. During the six months ended June 30, 2019 , the Company recognized contra-revenue of $0.5 million and cost of revenue of $0.4 million . |
Revenue Information
Revenue Information | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Information | Revenue Information Disaggregation of Revenue The Company disaggregates revenue into three revenue streams: dealer revenue, OEM incentives revenue, and forecasts, consulting and other revenue. The following table presents the Company’s revenue categories during the periods presented (in thousands): Three Months Ended Six Months Ended June 30, 2019 2018 2019 2018 Dealer revenue $ 78,977 $ 75,271 155,791 147,608 OEM incentives revenue 4,143 7,927 8,344 12,348 Forecasts, consulting and other revenue 4,955 4,652 9,522 8,955 Total revenues $ 88,075 $ 87,850 $ 173,657 $ 168,911 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 December 31, 2018 were transferred to accounts receivable during the six months ended June 30, 2019 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $3.4 million was recorded as of June 30, 2019 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2018 , except for the accounting policy changes detailed in Note 3 as a result of the Company’s adoption of the new leasing 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, 2018 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 |
Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TrueCar and its wholly owned subsidiaries. Business acquisitions are included in the Company’s condensed consolidated financial statements from the date of the acquisition. The Company’s purchase accounting resulted in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. Equity investments through which the Company is able to exercise significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities are accounted for using the equity method. The Company’s share of the income or loss from equity method investments is recognized on a one-quarter lag due to the timing and availability of financial information. All intercompany balances and transactions have been eliminated in consolidation. |
Use of estimates | 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 a warrant asset and the related liability, the fair value of assets and liabilities assumed in business combinations, right-of-use assets and lease liabilities, the fair value of capitalized lease facilities, 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 the fair value of a warrant asset and the related liability, right-of-use assets and lease liabilities, the fair value of capitalized lease facilities, the fair values of assets and liabilities assumed in business combinations, the fair value of reporting units in connection with annual goodwill impairment testing, the fair value of performance shares, and in periods prior to the Company’s initial public offering, valuation of common stock. |
Segments | Segments The Company has one operating segment. During the first quarter of 2019, the Company’s chief operating decision maker (“CODM”) was the President and Chief Executive Officer and the Interim Chief Financial Officer and Chief Accounting Officer, who managed the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources. Effective April 1, 2019, the Company’s Interim Chief Financial Officer and Chief Accounting Officer resigned from his positions. From April 1, 2019, through May 31, 2019, the Company’s CODM was solely comprised of the President and Chief Executive Officer until his resignation on May 31, 2019. From June 1, 2019 through June 16, 2019, the CODM was comprised of the Interim President and Chief Executive Officer. Upon the hiring of the Chief Financial Officer on June 17, 2019 and through June 30, 2019, the CODM was comprised of both the Interim President and Chief Executive Officer and the Chief Financial Officer. During the three months ended June 30, 2019 , the Company’s operations were managed based on consolidated financial information for purposes of evaluating financial performance and allocating resources by the various CODM in place. The CODM reviews financial information on a consolidated basis, accompanied by information about dealer revenue, OEM incentive revenue, and forecasts, consulting and other revenue (Note 12). All of the Company’s principal operations, decision-making functions and assets are located in the United States. |
Equity Method Investments | The Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag due to the timing and availability of financial information from Accu-Trade. Included in the initial carrying value of $22.9 million , which represents the fair value on the transaction date, was a basis difference of $21.0 million |
Recent accounting pronouncements | Recent Accounting Pronouncements 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. On January 1, 2019, the Company adopted the new leasing standard using the prospective transition method. See Note 3 for further details. 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 did not have a material impact on the Company’s consolidated financial statements. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of cumulative effects | The cumulative effects of the changes made to the Company’s January 1, 2019 consolidated balance sheet were as follows (in thousands): December 31, 2018 Adjustments Due to Adoption of New Leasing Standard January 1, 2019 Assets Other current assets $ 4,103 $ 188 $ 4,291 Property and equipment, net 61,511 (25,461 ) 36,050 Operating lease right-of-use assets — 42,010 42,010 Other assets 7,228 147 7,375 Liabilities Operating lease liabilities, current $ — $ 6,498 $ 6,498 Accrued expenses and other current liabilities 10,908 (2,637 ) 8,271 Lease financing obligation, net of current portion 22,987 (22,987 ) — Operating lease liabilities, net of current portion — 43,351 43,351 Other liabilities 9,290 (3,651 ) 5,639 Stockholders ’ Equity Accumulated deficit $ (373,482 ) $ (3,690 ) $ (377,172 ) |
Lease costs | For the three and six months ended June 30, 2019 , the Company recorded operating lease costs, excluding subleases, that were included in the consolidated statements of comprehensive loss as follows: Operating lease costs recorded within: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Cost of revenue $ 192 $ 392 Sales and marketing 443 882 Technology and development 893 1,764 General and administrative 616 1,250 Total operating lease costs $ 2,144 $ 4,288 |
Future minimum payments under non-cancellable lease obligations | Future undiscounted lease payments for the Company’s operating lease liabilities, a reconciliation of these payments to its operating lease liabilities, and related sublease income at June 30, 2019 are as follows (in thousands): Six months ended December 31, 2019 and years ended December 31, 2019 $ 3,929 2020 8,523 2021 7,152 2022 7,369 2023 7,628 Thereafter 22,561 Total lease payments $ 57,162 Less: imputed interest (10,378 ) Total lease liabilities (discounted) $ 46,784 |
Sublease income | Six months ended December 31, 2019 and year ended December 31, 2020 Sublease Income 2019 $ (1,096 ) 2020 (1,299 ) Total sublease income $ (2,395 ) |
Future minimum lease payments under previous guidance | As previously disclosed in the Company’s 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for the Company’s operating leases at December 31, 2018, on an undiscounted basis, were as follows (in thousands): Years ended December 31, Lease Commitments Sublease Income 2019 $ 9,220 $ (2,180 ) 2020 8,716 (1,282 ) 2021 7,145 — 2022 7,362 — 2023 7,621 — Thereafter 22,532 — Total minimum lease payments $ 62,596 $ (3,462 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 and December 31, 2018 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, 2019 At December 31, 2018 Total Fair Total Fair Level 1 Level 2 Level 3 Value Level 1 Level 2 Level 3 Value Assets: Cash equivalents $ 171,254 $ — $ — $ 171,254 $ 192,207 $ — $ — $ 192,207 Total Assets $ 171,254 $ — $ — $ 171,254 $ 192,207 $ — $ — $ 192,207 Liabilities: Contingent consideration, current $ — $ — $ 2,352 $ 2,352 $ — $ — $ — $ — Contingent consideration, non-current $ — $ — $ 2,275 $ 2,275 $ — $ — $ 4,477 $ 4,477 Total Liabilities $ — $ — $ 4,627 $ 4,627 $ — $ — $ 4,477 $ 4,477 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following at June 30, 2019 and December 31, 2018 (in thousands): June 30, December 31, Computer equipment, software, and internally developed software $ 104,471 $ 99,204 Furniture and fixtures 4,762 4,758 Leasehold improvements 15,839 8,602 Capitalized facility leases — 30,632 125,072 143,196 Less: Accumulated depreciation (92,790 ) (81,685 ) Total property and equipment, net $ 32,282 $ 61,511 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of roll forward of severance liability | The following table presents a roll forward of the severance liability for the six months ended June 30, 2019 (in thousands): Severance Liability Accrual at December 31, 2018 $ — Expense 7,871 Cash Payments (3,180 ) Accrual at June 30, 2019 $ 4,691 |
Stock-based Awards (Tables)
Stock-based Awards (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2018 14,114,651 $ 12.32 7.0 Granted 2,022,047 7.06 Exercised (355,147 ) 7.98 Forfeited/expired (2,701,845 ) 12.96 Outstanding at June 30, 2019 13,079,706 $ 11.50 6.8 |
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, 2019 : Number of Shares Weighted- Average Grant Date Fair Value Non-vested — December 31, 2018 5,375,963 $ 11.01 Granted 4,498,063 6.80 Vested (1,704,577 ) 9.63 Forfeited (1,468,517 ) 9.91 Non-vested — June 30, 2019 6,700,932 $ 8.77 |
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 units in the following categories on the accompanying consolidated statements of comprehensive loss (in thousands): Three Months Ended Six Months Ended 2019 2018 2019 2018 Cost of revenue $ 553 $ 443 $ 1,052 $ 741 Sales and marketing 4,716 3,543 8,188 6,670 Technology and development 3,463 2,698 5,409 5,051 General and administrative 6,824 2,288 9,542 5,607 Total stock-based compensation expense 15,556 8,972 24,191 18,069 Amount capitalized to internal software use 505 473 978 807 Total stock-based compensation cost $ 16,061 $ 9,445 $ 25,169 $ 18,876 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 2019 2018 2019 2018 Net loss $ (24,060 ) $ (6,622 ) $ (38,425 ) $ (15,677 ) Weighted-average common shares outstanding 105,485 101,150 105,139 100,862 Net loss per share - basic and diluted $ (0.23 ) $ (0.07 ) $ (0.37 ) $ (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, 2019 and 2018 (in thousands): June 30, 2019 2018 Options to purchase common stock 13,080 16,456 Common stock warrants 1,459 1,459 Non-vested restricted stock unit awards 6,701 3,727 Total shares excluded from net loss per share 21,240 21,642 |
Revenue Information (Tables)
Revenue Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
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, 2019 2018 2019 2018 Dealer revenue $ 78,977 $ 75,271 155,791 147,608 OEM incentives revenue 4,143 7,927 8,344 12,348 Forecasts, consulting and other revenue 4,955 4,652 9,522 8,955 Total revenues $ 88,075 $ 87,850 $ 173,657 $ 168,911 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details 1 - Segments) $ in Thousands | Jun. 30, 2019USD ($) | Feb. 08, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Accounting Policies [Abstract] | |||||||
Number of operating segments | segment | 1 | ||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Loss from equity method investment | $ (273) | $ 0 | $ (273) | $ 0 | |||
Equity method investment | $ 22,901 | $ 22,901 | $ 22,901 | $ 0 | |||
Accu-Trade | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percent | 20.00% | ||||||
Cash paid | $ 17,900 | ||||||
Capital contributions | 5,000 | ||||||
Equity method investment | 22,900 | ||||||
Basis difference | $ 21,000 | ||||||
Weighted-average life of intangible assets | 5 years |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Property and equipment, net | $ (32,282) | $ (32,282) | $ (36,050) | $ (61,511) | ||
Accrued expenses and other current liabilities | (49,387) | (49,387) | (8,271) | (10,908) | ||
Lease financing obligations, net of current portion | 0 | 0 | 0 | $ (22,987) | ||
Total operating lease costs | 2,144 | 4,288 | ||||
Cash payments for operating leases | $ 2,400 | $ 4,700 | ||||
Cash payments for operating leases | $ 2,300 | $ 4,800 | ||||
Weighted average remaining lease term | 7 years 2 months 12 days | 7 years 2 months 12 days | ||||
Weighted average discount rate | 5.60% | 5.60% | ||||
Sublease income | $ 500 | $ 500 | $ 1,000 | $ 1,000 | ||
Adjustments Due to Adoption of New Leasing Standard | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Property and equipment, net | 25,461 | |||||
Accrued expenses and other current liabilities | 2,637 | |||||
Lease financing obligations, net of current portion | 22,987 | |||||
Adjustments Due to Adoption of New Leasing Standard | Capitalized facility leases | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Property and equipment, net | 28,300 | |||||
Accrued expenses and other current liabilities | 1,800 | |||||
Lease financing obligations, net of current portion | $ 23,000 | |||||
Minimum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Remaining lease terms | 1 year | |||||
Lease renewal term | 3 years | 3 years | ||||
Maximum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Remaining lease terms | 11 years | |||||
Lease renewal term | 5 years | 5 years |
Leases - Schedule of Cumulative
Leases - Schedule of Cumulative Effects (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Assets | |||
Other current assets | $ 34,002 | $ 4,291 | $ 4,103 |
Property and equipment, net | 32,282 | 36,050 | 61,511 |
Operating lease right-of-use assets | 39,066 | 42,010 | 0 |
Other assets | 4,738 | 7,375 | 7,228 |
Liabilities | |||
Operating lease liabilities, current | 6,933 | 6,498 | 0 |
Accrued expenses and other current liabilities | 49,387 | 8,271 | 10,908 |
Lease financing obligations, net of current portion | 0 | 0 | 22,987 |
Operating lease liabilities, net of current portion | 39,851 | 43,351 | 0 |
Other liabilities | 2,484 | 5,639 | 9,290 |
Stockholders’ Equity | |||
Accumulated deficit | $ (415,597) | (377,172) | $ (373,482) |
Adjustments Due to Adoption of New Leasing Standard | |||
Assets | |||
Other current assets | 188 | ||
Property and equipment, net | (25,461) | ||
Operating lease right-of-use assets | 42,010 | ||
Other assets | 147 | ||
Liabilities | |||
Operating lease liabilities, current | 6,498 | ||
Accrued expenses and other current liabilities | (2,637) | ||
Lease financing obligations, net of current portion | (22,987) | ||
Operating lease liabilities, net of current portion | 43,351 | ||
Other liabilities | (3,651) | ||
Stockholders’ Equity | |||
Accumulated deficit | $ (3,690) |
Leases - Future Minimum Payment
Leases - Future Minimum Payments Under Non-cancellable Lease Obligations (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 3,929 |
2020 | 8,523 |
2021 | 7,152 |
2022 | 7,369 |
2023 | 7,628 |
Thereafter | 22,561 |
Total lease payments | 57,162 |
Less: imputed interest | (10,378) |
Total lease liabilities (discounted) | $ 46,784 |
Leases - Sublease Income (Detai
Leases - Sublease Income (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ (1,096) |
2020 | (1,299) |
Total sublease income | $ (2,395) |
Leases - ROU Asset and Lease Li
Leases - ROU Asset and Lease Liability Balances (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Leases [Abstract] | |||
Operating lease right-of-use assets (within other assets) | $ 39,066 | $ 42,010 | $ 0 |
Operating lease liabilities - current (within accrued expenses and other liabilities) | 6,933 | 6,498 | 0 |
Operating lease liabilities - non-current (within other liabilities) | $ 39,851 | $ 43,351 | $ 0 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Total operating lease costs | $ 2,144 | $ 4,288 |
Cost of revenue | ||
Lessee, Lease, Description [Line Items] | ||
Total operating lease costs | 192 | 392 |
Sales and marketing | ||
Lessee, Lease, Description [Line Items] | ||
Total operating lease costs | 443 | 882 |
Technology and development | ||
Lessee, Lease, Description [Line Items] | ||
Total operating lease costs | 893 | 1,764 |
General and administrative | ||
Lessee, Lease, Description [Line Items] | ||
Total operating lease costs | $ 616 | $ 1,250 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments Under Previous Guidance (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Lease Commitments | |
2019 | $ 9,220 |
2020 | 8,716 |
2021 | 7,145 |
2022 | 7,362 |
2023 | 7,621 |
Thereafter | 22,532 |
Total minimum lease payments | 62,596 |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
2019 | 2,180 |
2020 | 1,282 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total minimum lease payments | $ 3,462 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Measurements | ||
Contingent consideration, current | $ 2,352 | $ 0 |
Contingent consideration, non-current | 2,275 | 4,477 |
Nonfinancial Liabilities Fair Value Disclosure | 4,627 | 4,477 |
Level 1 | ||
Fair Value Measurements | ||
Cash equivalents | 171,254 | 192,207 |
Total assets | 171,254 | 192,207 |
Contingent consideration, current | 0 | 0 |
Contingent consideration, non-current | 0 | 0 |
Nonfinancial Liabilities Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Cash equivalents | 0 | 0 |
Contingent consideration, current | 0 | 0 |
Contingent consideration, non-current | 0 | 0 |
Nonfinancial Liabilities Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value Measurements | ||
Cash equivalents | 0 | 0 |
Contingent consideration, current | 2,352 | 0 |
Contingent consideration, non-current | 2,275 | 4,477 |
Nonfinancial Liabilities Fair Value Disclosure | 4,627 | 4,477 |
Total fair value | ||
Fair Value Measurements | ||
Cash equivalents | 171,254 | 192,207 |
Total assets | $ 171,254 | $ 192,207 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Property and Equipment, net | ||||||
Property and equipment, gross | $ 125,072 | $ 125,072 | $ 143,196 | |||
Less: Accumulated depreciation | (92,790) | (92,790) | (81,685) | |||
Total property and equipment, net | 32,282 | 32,282 | $ 36,050 | 61,511 | ||
Property and equipment capitalized but not placed in service | 1,000 | 1,000 | 1,100 | |||
Total depreciation and amortization expense | 13,182 | $ 10,818 | ||||
Property and Equipment | ||||||
Property and Equipment, net | ||||||
Total depreciation and amortization expense | 5,200 | $ 4,700 | 10,100 | 8,900 | ||
Computer equipment, software, and internally developed software | ||||||
Property and Equipment, net | ||||||
Property and equipment, gross | 104,471 | 104,471 | 99,204 | |||
Furniture and fixtures | ||||||
Property and Equipment, net | ||||||
Property and equipment, gross | 4,762 | 4,762 | 4,758 | |||
Leasehold improvements | ||||||
Property and Equipment, net | ||||||
Property and equipment, gross | 15,839 | 15,839 | 8,602 | |||
Capitalized facility leases | ||||||
Property and Equipment, net | ||||||
Property and equipment, gross | 0 | 0 | $ 30,632 | |||
Internally developed software | ||||||
Property and Equipment, net | ||||||
Amortization | $ 3,900 | $ 3,300 | $ 7,300 | $ 6,200 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) | 1 Months Ended | ||
Feb. 28, 2018 | Jun. 30, 2019 | Feb. 18, 2018 | |
Credit facility | |||
Amount outstanding | $ 0 | ||
Remaining borrowing capacity | 31,500,000 | ||
Letters of credit outstanding, amount | $ 3,500,000 | ||
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 - Reorganization (Details) - Employee Severance [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 31, 2019 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Severance costs | $ 4,600 | |
Severance costs | $ 3,300 | 7,871 |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 0 | 0 |
Expense | $ 3,300 | 7,871 |
Cash Payments | (3,180) | |
Ending balance | 4,691 | |
Sales and marketing | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance costs | 400 | |
Technology and development | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance costs | 900 | |
General and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance costs | $ 3,300 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal Proceedings (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended |
Mar. 31, 2015 | Jun. 30, 2019 | |
NY Lanham Act Litigation | Minimum | ||
Loss Contingencies [Line Items] | ||
Damages sought | $ 250,000 | |
Milbeck Federal Securities Litigation | Pending | ||
Loss Contingencies [Line Items] | ||
Agreement to settle | $ 28,250 | |
Proposed settlement amount | 28,250 | |
Insurance receivable | $ 28,250 |
Commitments and Contingencies_3
Commitments and Contingencies - Employee Contracts and Severance Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 31, 2019 | Jun. 30, 2019 | |
Employment contracts | ||
Restructuring Cost and Reserve [Line Items] | ||
Maximum term of executive's annual base salary to determine severance obligations | 12 months | |
Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Expense | $ 3,300 | $ 7,871 |
Severance costs | $ 4,600 |
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Additional disclosure | |||||
Stock-based compensation expense | $ 15,556 | $ 8,972 | $ 24,191 | $ 18,069 | |
Options | |||||
Number of Options | |||||
Outstanding at the beginning of period (in shares) | 14,114,651 | ||||
Granted (in shares) | 2,022,047 | ||||
Exercised (in shares) | (355,147) | ||||
Canceled/forfeited (in shares) | (2,701,845) | ||||
Outstanding at the end of the period (in shares) | 13,079,706 | 13,079,706 | 14,114,651 | ||
Weighted-Average Exercise Price | |||||
Outstanding at the beginning of period (in dollars per share) | $ 12.32 | ||||
Granted (in dollars per share) | 7.06 | ||||
Exercised (in dollars per share) | 7.98 | ||||
Canceled/forfeited (in dollars per share) | 12.96 | ||||
Outstanding at the end of the period (in dollars per share) | $ 11.50 | $ 11.50 | $ 12.32 | ||
Additional disclosure | |||||
Weighted average remaining contractual life (in years) | 6 years 9 months 18 days | 7 years | |||
Remaining stock-based compensation expense for unvested awards | $ 17,600 | $ 17,600 | |||
Weighted average period over which remaining stock based compensation expense for unvested awards is expected to be recognized | 2 years 6 months | ||||
Stock-based compensation expense | $ 6,900 | $ 3,800 | $ 10,000 | $ 8,400 |
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Weighted-Average Grant Date Fair Value | ||||
Stock based compensation expense | $ 15,556 | $ 8,972 | $ 24,191 | $ 18,069 |
Non-vested restricted stock unit awards | ||||
Number of Shares | ||||
Non-vested at the beginning of period (in shares) | 5,375,963 | |||
Granted (in shares) | 4,498,063 | |||
Vested (in shares) | (1,704,577) | |||
Canceled/forfeited (in shares) | (1,468,517) | |||
Non-vested at the end of the period (in per share) | 6,700,932 | 6,700,932 | ||
Weighted-Average Grant Date Fair Value | ||||
Non-vested at the beginning of period (in dollars per share) | $ 11.01 | |||
Granted (in dollars per share) | 6.80 | |||
Vested (in dollars per share) | 9.63 | |||
Canceled/forfeited (in dollars per share) | 9.91 | |||
Non-vested at the end of the period (in dollars per share) | $ 8.77 | $ 8.77 | ||
Remaining stock based compensation expense for non vested restricted stock units | $ 56,300 | $ 56,300 | ||
Weighted average period over which remaining stock based compensation expense for unvested awards is expected to be recognized | 3 years | |||
Stock based compensation expense | $ 8,700 | $ 5,200 | $ 14,200 | $ 9,600 |
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based Compensation Cost | ||||
Stock-based compensation expense | $ 15,556 | $ 8,972 | $ 24,191 | $ 18,069 |
Amount capitalized to internal software use | 505 | 473 | 978 | 807 |
Total stock-based compensation cost | 16,061 | 9,445 | 25,169 | 18,876 |
Certain executive-level employees | ||||
Stock-based Compensation Cost | ||||
Termination benefits | 7,200 | 7,200 | ||
Cost of revenue | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 553 | 443 | 1,052 | 741 |
Sales and marketing | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 4,716 | 3,543 | 8,188 | 6,670 |
Technology and development | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | 3,463 | 2,698 | 5,409 | 5,051 |
General and administrative | ||||
Stock-based Compensation Cost | ||||
Stock-based compensation expense | $ 6,824 | $ 2,288 | $ 9,542 | $ 5,607 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 69 | $ (35) | $ 170 | $ (96) |
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, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||
Net loss | $ (24,060) | $ (14,365) | $ (6,622) | $ (9,055) | $ (38,425) | $ (15,677) |
Weighted average common shares outstanding (in shares) | 105,485 | 101,150 | 105,139 | 100,862 | ||
Net loss per share, basic and diluted (in dollars per share) | $ (0.23) | $ (0.07) | $ (0.37) | $ (0.16) |
Net Loss Per Shares (Details 2)
Net Loss Per Shares (Details 2) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
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 | 21,240 | 21,642 |
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 | 13,080 | 16,456 |
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 | 6,701 | 3,727 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Related Party Transactions | ||||||
Receivable from related party | $ 184 | $ 184 | $ 184 | $ 349 | ||
USAA | ||||||
Related Party Transactions | ||||||
Receivable from related party | 200 | 200 | 200 | 300 | ||
Due to related party | 6,000 | 6,000 | 6,000 | $ 5,300 | ||
USAA | Sales and marketing | ||||||
Related Party Transactions | ||||||
Costs under related party agreements | 5,700 | $ 5,300 | 11,200 | $ 9,800 | ||
Accu-Trade | ||||||
Related Party Transactions | ||||||
Due to related party | $ 400 | $ 400 | $ 400 | |||
Ownership percent | 20.00% | 20.00% | 20.00% | |||
Accu-Trade | Contra-revenue | ||||||
Related Party Transactions | ||||||
Costs under related party agreements | $ 300 | $ 500 | ||||
Accu-Trade | Cost of revenue | ||||||
Related Party Transactions | ||||||
Costs under related party agreements | $ 300 | $ 400 |
- Schedule of Revenue Categorie
- Schedule of Revenue Categories (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue Information | ||||
Revenues (includes related party contra revenue of $345 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $509 and $0 for the six months ended June 30 2019 and 2018, respectively) | $ 88,075 | $ 87,850 | $ 173,657 | $ 168,911 |
Dealer revenue | ||||
Revenue Information | ||||
Revenues (includes related party contra revenue of $345 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $509 and $0 for the six months ended June 30 2019 and 2018, respectively) | 78,977 | 75,271 | 155,791 | 147,608 |
OEM incentives revenue | ||||
Revenue Information | ||||
Revenues (includes related party contra revenue of $345 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $509 and $0 for the six months ended June 30 2019 and 2018, respectively) | 4,143 | 7,927 | 8,344 | 12,348 |
Forecasts, consulting and other revenue | ||||
Revenue Information | ||||
Revenues (includes related party contra revenue of $345 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $509 and $0 for the six months ended June 30 2019 and 2018, respectively) | $ 4,955 | $ 4,652 | $ 9,522 | $ 8,955 |
Revenue Information - Narrative
Revenue Information - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Contract asset balance | $ 3.4 | $ 3.3 |