TRUE - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the TrueCar First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alison Sternberg.

Alison Sternberg

Thank you, operator. Hello, and welcome to TrueCar's First Quarter 2018 Earnings Conference Call.

Chip Interim and Chief are and Executive today Pierantoni, John Financial me Perry, Chief President Officer; Joining Officer.

regarding as profit not our As and pricing increase making grow our OEM balance a and management's integrity, to, full unit, but longer XXXX second and initiatives, beliefs proper forward-looking its be or statements align to limited forward-looking on term; to concepts efforts Factors statements dealer annual on you these and to conversion cause filed and on year revenue for reminder, this differ future could statements. call, our ability on caution quarter impact while to be growth our we the results and the XX-Q our build our our monetization guidance dealer from per the will The by and outlook us forward-looking ability and XXXX, for by of to including, growth revenue to for ability or forward-looking and are and should and ability USAA the disclaim Form available rates are and our network Risk those forward-looking technology of required base ability relied our ability campaigns; reaccelerate XXXX our maintaining not and monetization unit offerings achieve we update and channel contribution, results. call high to growth Actual guarantees be of for our materially TrueCar business, expectations to and the business contribution section and on statements outstanding our factors not rolling rapidly results report based could expansion materially. marketing as performance SEC core out as and a upon of on rate our the any law. These to engagement including completion today's future strategies, our replatforming obligation of in single-digit XXXX that of information in base, We network, scale Trade, growth our subscription unit to of return review to differ innovate, an product as the litigations. contemplated to this timing any dealer and our quarterly with the XXXX; planned except statements to timing OEM and our discussion of timing end-to-end dealer experience targets date, statement Form its customer outcome our XX-K report to

true.com. all measures discuss at most prepared isolation In or are as set non-GAAP results addition, website Reconciliations measures Relations GAAP. non-GAAP accordance directly financial section forth with of to Investor substitute considered are the of measures. a in we will our comparable also intended not GAAP non-GAAP certain the and measures for GAAP in financial be to The in

call the Chip. over turn I'll Now to

Victor Perry

Thank afternoon, and you, everyone. Alison, good

the XXXX first progress our of laid year-end call. that the in plan and guidance Our with quarter demonstrate results key our continued the in I against on are out components line

sequentially. or of year-over-year still our X% at and the came have are versus count in X% the you year-over-year the $X.X here some track million we given X% franchise on are our grew give independent to to details for results, first in highlights XXX,XXX. While will starting are Monetization I of and year. dealers, or were $XX am in last adjusted to XXXX up X% to to revenue revenue we say X.X% that Revenue full Dealer work was in John X% quarter, year-over-year more and QX reaffirming million. $X pleased up Units $XXX EBITDA million for XX,XXX and X% year-over-year we plenty call, was year. and of QX quarter. of the up do, guidance later

new also explicit year-end that a key I our I and initiatives On now believe to to We SAAR will continued about date X% in our review year-over-year market against to position revenue flat those initiatives. very to gain same call, like XXXX we XXXX car in grow for and environment. expansion the was retail share, us QX progress margin a X.X% in beyond. growth would our posting

and channel. USAA partner me with the broader an begin Let update on affinity

partner, our was level of coming focus volume of our areas of primary the USAA. affinity out XXXX One of from largest unit coming

well in USAA members in to as units important from mission improvement forward X% to marketing made pleased the to This XX% serve channel channel with as continue that track access We military to units single-digit of of partner to seeing community. easier on XXXX, Quickly you'll end for support a that for we're that XXXX, the As and experience by quarter buying started USAA non-USAA into to continued QX this compared fourth car the USAA recall, we first experienced quarter the report year-over-year show to the XXXX. to down at the their significant unit look improvement I'm growth to partners. as in remain we and support decline turning quarter, the QX over driven recovery continuing high year-over-year with partner. our in USAA XXXX site XXXX was return improvements to trend

showed the growth strong by with at Our the Chase, year-over-year, XX% and quarter partner in Sam's performance driven channel of unit our Club U.S. expansion extended affinity

the million the network are pleased highlighting the significant adult portion include deeply population, penetrate potential much the partner Even marketplace. business. we more of though XX% XXX channel, audiences. we the in there members affinity unprecedented these the to is a TrueCar growth Collectively, reach of News organizations U.S. exclusive and including TrueCar's believe with significant this in United States, partner over

their bases. to work The focus, organizations fuel in variety affinity members, member These channels. penetration with our of greater is recent extended partners audience Our to have as network TrueCar helped seek our partner a through activation our on our enabling partners, growth. efforts we reach digital with partner have members affinity digital relationships of with digital

strong double-digit unit affinity in continued partner channels extended expect growth our in We XXXX.

first for year last dealer has Our and focus across We based around is call in our rolling leadership dealer fully our delivering been out dealer first, team focusing business dealer Under growing we've of pricing grow a on, acquisition our monetization. independent the our to core X our service network; and second, enhancing value model; to gaps go-to-market on key inventory. dealers and the earnings our designed the been used Brian aligning pricing strategy highlighted base Skutta, car our strategies. accountable initiative sales business coverage and through further upon strategically the third, fill strategy independent increase new dealer with key

approach across our As further X service sales identified XXXX. and the we will refinement growth and have we executed we've of reaccelerate are strategies, pleased year these and rest revenue over to our believe date with to that into progress the

have past to that the Regarding renewals of our subscription with rate X marketplace over aggressive dealer pursued the and X commensurate over larger raise revenue more quarters past the dealers per lead with a monthly monetization be volume pricing, we to generated years. large cohort

local result higher these as efforts While market and correct dealer expected, did have this monetization produced process we and in higher-than-normal at more subscription established churn, level. the integrity

first monthly that at per by increased example, renewed As subscription quarter, new in X,XXX the rates dealers revenue for dealer an the XX%.

important side marketplace. because forward, critically our move we our position our know, unit better This growth network is to lead better based a coverage enables that our maintaining as And dealer is network. base dealers foundation and as is marketplace we're we larger close having monetization with rate vital to more to growth on our now a across network historical we volume. supply proper proper a core customer of sales believe our As dealer balance revenue the in dealer monetization while generates driver integrity key higher as results, our

Our months. adding on right We in key network, we still resources more rate at reduce strategies productive this dealer XX we underserved to renewals. coverage backyard next and XX%, X,XXX to do markets effectively the can more X our and stands believe dealers our least to will now to at be add quarters and penetration we the past order We be dealers learnings in franchise areas: at new, XX this, have the XX%. is over from based churn reps In do renewing to will of service (inaudible) further investing X and

strong growth. and continued high per expanding years, trade as and anticipated coupled over all Net ever and XXXX reduce in The for is highest We us with network dealer of markets contribution Promoter reps dealer monetization layer strengthen unit all-time past historical Score, ROI the service metric churn. will us in in and significantly And network continued drive independent our expansion increase investments economics. is X fundamental adding OEM enabling improve revenues be This growth model our that Each our we'll business X and sales teams our performance allow our will our a to and unit exit catalyst serve of accelerated channels. an growth with growth be to profit unit these the across in upon and count will underpenetrated to dealer reach. based to sales

is experience that area this over growth remain this to of emphasis XXXX. confident year is XX% OEM Our second our in key business. stream We revenue positioned

course, we as can business incentive of our this performing longer-term sales of more grow X-month OEMs unique before variable committing vary our line, reminder, the which, to than of pilot X- with duration, revenue As in offering to a OEMs source other with cycle revenue. sources agreement, this makes program

QX During million, versus QX, nominally $X.X revenue year. incentive XX% last OEM down was of

business isolated, in QX XXXX, our nonrepeatable revenue. However, $X million approximately from of benefited OEM

incentive and XX% existing driven adding OEM OEM overall clients. our grew our partner new growing in approximately revenue, QX, OEM by program nonrecurring this Excluding business revenue year-over-year with

and majority results program that I'm X we in vast to and and platform OEM their revenue clients continue program begin Ford they Hyundai volume This partners. of test truecar.com, the USAA how contribute decided testing OEM on a results X, with large-scale of to their that both incentive to vehicle May big programs are lower OEM test model, the when an Today, immediately the OEM our launched involves these they affinity began leverage QX volume. our their and of with of going other broad-based evaluating QX, in on clients announcing so that exciting incentive a were decide forward. to platform early pleased and across new,

on the QX our automotive growth businesses, OEM OEM we authority our is portfolio new residual risk leading revenue will both market for affinity recently services. and Canada, well full XXXX. and financial pipeline insight, incentive Mike auto leadership QX Consolidating and value broader OEM XX%-plus of residual team providing scale Our Darrow. States up incentive us To under performance help support management projections teams affinity accelerating of will business. growth in clients consolidated industry's and set ALG of and these industry industry automotive services and OEM of the forecast, value and rapidly partner incentive and year us XXXX ALG our with United robust vehicle business the partner and for prospects leadership ALG consulting

demonstrate automotive incentive for Our OEMs products Very to incremental for platform ALG all sales incentives they partner TrueCar's to that marketing affinity rely deliver volume on partner cost wall. trusted and OEM them. savings exclusively, importantly, business registration in deliver analytics TrueCar behind stand the provides can if efficiency that that gain cases provides can a differentiated TrueCar unique, our business OEM and

marketing incentive inefficiencies and and spend. $XX in Our an and our gains OEM hardest $XX solutions accountable, and OEM share will business scale some beyond, strong incentive a next XXXX, pay-per-sale OEM to problems, We spend established sales of our rapidly clients of client fully of incentive In to embedded program their TrueCar on concrete the billion provide OEM OEM year develop volume including billion delivers base business. basis.

buying most process, is for and initiative third deal. during that for Our trade-in we face significant continued solving consumers of one year key which towards the of the the is TrueCar Trade component QX, the our dealers challenges the progress car product. In

and of of showrooms. the provide TrueCar a extending Trade At the insight, about we our market-leading of trade-in TrueCar process to results credibility. nationwide online national in opportunities and product, their enables March, transparency, Trade third-party which providing our and announced excited valuation launch transparent in dealers great competitively front us into the starting NADA are for We pilot differentiated

we to TrueCar product our the the ramp network as While to at working of This country. up fits (inaudible) identified personnel trade hiring interest first We've customers minimum Trade dealers dealer a high-touch a the understand inbound strategy field to training spent market-by-market few by training, for NADA, execution sales website signed at approach, of the by much the with educating in the consumer that now of the we the with efforts we our product our innovation level. service product having year. soliciting spent goal product the dealership of based integration respective dealer trade-in we received to to through strategically existing quarters. viable In from are location, enable lays specialize Dealers up and including the and X,XXX signing of a experience level show dealer hitting aggressively our across at approximately dealer and the by range up tool to teams in and To distribution success many significant into the ensure our and their consumers. to success and end traffic drive TrueCar over them brands intend quarter sales support our on the high-level blueprint out feedback roll-out, order targeted of to and a series modules ensure activate and how dealer operation. time by next our framework and of better it platform positive nationwide who customers

dollar consumer-facing by and through and the activating. customer hear in industry is for channel, ingredient media experience. base BXB and is consumer to vital the target early Again, a foundation we contribution more product of partners Our product our this single-digit large million building dealer Trade which customers a channels Trade next the will on to already TrueCar digital activation but significant lay begin a XXXX. this and small, product our across this year. is expect year, to out more generate revenue revenues towards promotion at affinity team much the from larger continue marketing also marketing will National end-to-end about traditional offering

Our significant we've product and technology teams. remain under year of merged and our project, resources year. leadership major finish project our dedicated the now organizations product Tommy to we making confident by this initiative end of replatforming are to fourth the and XX% Capsella, the our initiative, in our the is are of where on order fully McClung, tech CTO, progress the and align we will this we

The to to of system expanding roll-out the selection routing to existing made and dealers, programs. we additional launching the to our milestones, for new revenue-generating the rewritten enabled these As date management OEM teams also redeploy migration those AWS, our more center dealer and already pricing VIN-based has we've several data Year-to-date, new nimble sales lead platform, with and of system systems migrate as our expect begin a complete toward mandate, a their to system. to successful including we've projects. achieved resources we NADA replatforming of over the introduction and matching us major the shutdown of progress at technology be

experience. earnings stronger our will will out our conversion call, us said our believe upper-funnel our rates end-to-end in the of components to foundation upcoming out also I new, consumer dealers. finishing the unlock for enable in build incorporating experience, retailing It and we to post-prospect experience, will digital further Capsella on provide tools discovery which consumer higher engagement building last leading-edge addition research particularly major product our new As new with and

XXXX, beginning are and rolling experience will be effort concept, in this Capsella finishing our we anticipate testing XXXX. replatforming we validating new and While out the in we consumer

going key year XXXX, a dealer expect with set to focus QX. business, hand XXXX, completion XX-plus-percent industry's showroom foundation the believe detail. rate created John more continued Capsella, to be making forth line and building our continued growth for only strong online and we the growth we With on top good achieve financial you and believe healthy, strategic in to to what in trade As and I'm numbers growth rate across in it discuss our through our of the well network, the to full all you we we we're in to progress exit expansion will double-digit roll-out now initiatives the have end-to-end we true OEM to we positioned walk the can experience. for over see, of shopping are the of performance the

John Pierantoni

'XX, revenue and year-over-year XX% Thank of guide midpoint dealers, revenue count almost was million billing you, to the just Chip, million independent programs up totaled $XX.X quarter $XX.X from the OEM of 'XX, our million XX% primarily in all to dealer our over up in to to the million dealer 'XX QX revenue in our monthly X% quarter, up XX,XXX, and million from X% over QX per QX up $XXX. X% was grew was X,XXX last from dealers year-over-year $XX OEM independent of good franchise earlier. monthly $X,XXX from plan, that while afternoon, Franchise first Revenue over time everyone. up of to totaled $X.X subscription X% year-over-year QX dealerships, year. of year-over-year. $X.X the over franchise million. last dealer QX, Independent XX% in in dealer whom up count Revenue was year, quarter, Chip XXXX incentive of year. are of down the of last referred on $XX this in related for Revenue and million, was $X.X incentive structural revenue one change to

incentive our growth grew working program approximately reflecting that this affinity partners from in revenue nonrepeatable XX%, of broadening Excluding with a 'XX, of from revenue QX OEM OEM.

Units QX in repeat not that, of arrangement $X.X delivered as channel, our ALG of in quarter U.S. revenue driven is and by guidance XXXX, consulting our partner, branded million generated XXX,XXX, in units, unit of and in and expected, In driven growth range did up of we totaled at XX,XXX XXX,XXX Extended was Sam's by X% of 'XX, in forecast, XXX,XXX. consulting 'XX our QX million business 'XX. Chase, up QX the QX year-over-year affinity year-over-year. down below TrueCar by to $X.X large Finally, other strong X% from

as of And News, XX% X% down produced XX,XXX XX% fourth compared units, XX,XXX year-over-year. the a up quarter year-over-year, to decline units, XXXX. in contributed USAA

'XX, was year. We to of this compared new of as pricing high used $XXX QX the for USAA last the are to to unit in 'XX, of 'XX. QX single-digit QX optimization, efforts. and business unit 'XX, in from mix XX.X% subscription recovery in QX pleased our The on the $XXX XX.X% improving was our per Monetization primarily expect new per a subscription up from of growth $XXX year-over-year it increase was of new/used unit, of focus and and per with The return renewal XX.X% result including and year. time XX.X% in up used

Turning to margins. and expenses

Within All in marketing year. X% were of of customer last Partner XX.X% are or $XX.X growth of as to well were sale last XX.X% of year. of $XX.X increased marketing year. versus $XX.X to or million otherwise digital million last compared Sales in $XXX affinity of were in expenses on partners. $XX.X this margin by expenses same high-growth radio digital extended expenses last channel and XX.X% in some million in percentage million revenue marketing XX.X% on million the QX to year. expenses as to 'XX; year. of million due and or of profit per $XX.X channel versus unit acquisition per following revenue in stated. QX Cost in our compared Technology Partner last a $XX.X QX QX or this last sales basis share unit year of time QX unless compared marketing QX in gross 'XX, as $XX.X year. million declined the of marketing of revenue we $XX.X product per drive partner million QX 'XX, revenue included $XXX spent million, of and in increased X% 'XX, Gross and metrics directed towards our QX as TrueCar was up expenses from non-GAAP from QX was XX.X% 'XX expenses, our revenue to television, to $XX.X and

in $XX.X $X.X or or million, $X of or $X in time the QX of Adjusted of low 'XX. Finally, and of million marketing-related 'XX, XX.X% sales $XX.X range. revenue, and from last to our the were end first million of of of up 'XX EBITDA other this million or headcount for revenue were costs year. million X% QX million was QX $XX.X million XX.X% in revenue, compared G&A compared X.X% $X.X million revenue 'XX guidance quarter expenses to and as $X at of of to

million of compensation We of $X.X was in as of from $X.X product teams loss million, expense the reorganization product litigation loss for stock-based QX year. item negatively net per $X.XX loss amortization Capsella this technology believe 'XX $X.X of or more a compared During tech $X.X million up affected and of us million charges related a of the QX completion $X.X or by our quarter the GAAP certain our merging EBITDA loss million the sets were share to excluded timely of severance net and quarter, $X.XX per adjusted net to of adjusted for later The EBITDA of for was and of teams. a the share, of net GAAP of effective million, a year. depreciation noncash $X.X and project costs. and last replatforming

quarter or per loss the or of compared of income per a 'XX. million non-GAAP non-GAAP net $X.XX was $X.X loss of in Our for to as QX net million share, a share $X.XX $X.X

turning now million a maintain guidance. balance end continue with the the balances We totaling quarter. to of cash to strong sheet $XXX And at

performance estimated a $XXX our a $XX with to at X,XXX,XXX annual expectations a reaffirming EBITDA $XX and earlier, on-track range we to and at of million, quarter million As estimated estimated revenue adjusted for units, Chip of X,XXX,XXX million. units remainder our of the range is year, given million to range guidance $XXX a the our of this mentioned are at

three, technology OEM just to in the team like X OEM investing continue areas: to clients; with will one, our big plans our markets in this programs the additional key of Capsella; our business, core teams. to complete for two, nationally; product key earlier dealer new four, reps executing month service further continuing We X we strategies launched including underserved trade-in the building incentive ensure and out our launching in invest hiring one on our and of grow roll-out the we sales

For quarter range expect of units to the second of to XXXX, be midpoint XXX,XXX the the representing XXX,XXX, in of the we X% year-over-year at growth range.

Our product modest affected year the that to tough unit of the a comp reflects growth period last to quarter of earlier conversion estimate year. in favorably all improvements our due second in channels

Additionally, QX of units small declines the channel is still as we recovery. USAA period in estimated in USAA 'XX, a year-over-year of in

half to to to unit to midpoint in this we the against As to annualize our range. return a in extended expect we $XX of channel, year representing USAA range to back million performance partner growth and million, of the of be last last half the affinity double-digit to continue expected we at Revenue relative second growth weak start of growth the the year unit year. is X% in achieve strong in $XX

to the nonrepeatable earlier. along OEM big Chip and QX with million, be our new approximately revenue to 'XX year-over-year revenue the I declines expanded in that due program OEMs growth offset roughly described revenue OEMs at X with other as our of We from from program flat revenue expect our $X with will incentive

the revenue program of QX this our in of from revenue nonrepeatable year. XXX% we to QX in grow the over to prior compared Excluding 'XX, as OEM 'XX, expect

million We growth margin numbers the strategies the Finally, adjusted our $X EBITDA of is to million we of be confident $X EBITDA the the we that resources midpoint are range. in in the and stronger have for are to place and X.X% the results. estimated achieve at that half, to these in or year recognize range second

strong for questions. I Chip will focus and will with exit foundation now And we X earlier, and that XXXX discussed healthy continue our we up growth As in open to a key we initiatives, believe to will on we it XXXX.

Operator

from [Operator Instructions] Markets. Mark Our the comes first of from Capital question RBC Mahaney line

Mark Mahaney

Just one question.

of growth that getting second happen easy In comps year at XXXX, beyond into to back in of or that growth will up back unit back will just digits half X what to recovery going that double-digit of get the detail this X back the double kind terms the sustainably that unit the of there year, and advantage are to of and to to be could you half things kind hopefully the levels? X, going cause

Victor Perry

Yes, Mark, for you the thank question.

have do last the of We second easy compares relatively in right. You're year. half some

the generated we'll second business. on produce see results our of is been start TrueCar in our some as that continue what we if we'll in see of We're believe, significantly as So dealer rises, beyond in to some that And the results this well channel also year, year, partner piece rate solid from dealer rises continuing our strongly. more to continuing doing because through that we've grow count access. marketplace to easily local, investing having business our more investing work quite count to points are ongoing consumers as other we'd conversion We're our that improvements channel the in that be improvements, able to half. sales the in in able accessible capture by second of virtue ready from to be rates our prospects sales half to unit the close for our

Operator

of next line comes from JMP the Securities. Our Ron Josey question from

Ron Josey

half the this year the as conversion investing Maybe channel Mark's as Chip, in improvements. you well follow-up there. in just back about talked question a some True of as to

coming you I'll this on what would you what and everyone new channel talking be in this go-to-market I any if Why helpful. talked beginning? And conversion for you're representatives And for For that start the be terms across big investment, replicated guess, across the doing from can line here other to approach about planning testing on onboard Why Wondering just channels. dealer does distribution question the stop about insights OEM True didn't do OEMs. you're new, everybody? And X top there. that mean the all more drive of and sales? OEMs, improvements marketing and then, or all not

Victor Perry

thing, Ron. Sure

with So a year-over-year. budget be going marketing maintaining we're truecar.com, to relatively steady

the growth the said, meaning more XXXX. from year create in and coming, how larger, improvements second units So into and in strong will will momentum produce works, help close main vibrant marketplace network like the stronger, dealer be half of us more the I rate. conversion A rate

And so investments half. those the in we're sales service our teams in and making second

takes then to that jumped As evaluate test we're and it has pleased very client proceed it and OEM And with time OEM, full-board programs. relates onboard. for this clients to these

So that with that to clients with. we all do work aspire the we

TrueCar different about adopt one in of well deciding promote major to to excited use as We're incentive partner other couple channels a USAA and offers. as target their strategies. this Some order

Operator

Our of D.A. comes the Davidson. line from from question Tom White next

Tom White

second, when and focused time upgrading for of consumer time kind of the is about line Capsella can the of kind a of the I that are kind is of for there? time who me, Is discussion -- a over base to done last kind is sort kind guys of exercise dealers quarters? there that talked the use you the On kind pricing now of kind the kind having you of kind dealers remind kind is experience. was of on And just you're Kind curious making the that of last enhancement. subscription you of guess quarter? the that of with Specifically, couple line the expect kind time sounds it Are we subscription-based kind like bunch sort element offering, as consumer have still a of are XXXX with you had experience, here of -- finite same of renegotiate of of line negotiation, I'm that more -- pre-prospecting next that? with big conversion of and changes the the you that guys

Victor Perry

Thank you, questions. Tom. Good

the to complete So step that function the unlocking last are project that -- to quarter experience say with improvements determined would year by plan critical improvements in business. believe so doing we that Capsella, of be and and we did see end we rate we'll conversion and able user this the is this to

late and and I'm I with went who side it. large early a the conversion very -- seen sales of what's very our engagement applicable, headway of intact. where in unit that growth marketplace, in the where from we levels clients. the essentially of XXXX. respect and result made said, in of -- completing can good rate rates, we've like churn, I monetization. to of at much standpoint negotiation, last by adjusted generation dealership we confident higher network We've enabling strengthening still strong net consumers is subscription across line time -- that with I'm we volumes come a very excited We've So like lead improvements albeit X about pricing stronger integrity dealers out and our the our through rate some of there. instituted Capsella goals the XXXX of it very expense other network With of with on mentioned. X We in prospects accomplished achieve as have quarters had at healthier cycles our the sales with we the

However, we good and the of we and we to the like our the on and enhancements the staff service. sales renewals feel adding conduct in rest we're to this involve as put through number clients to also of but revenues how now the of strategy, dealers year shape in sales higher number place for able grow attain will of some we're increase we levels some can that service network of to sign which also

the intense under-monetizing were be growth pricing result less prospect able unit there through. they cycles of quarters So and the work as dealers we've the a saw early in will majority year there of compared actually the X been few were ongoing in -- volume because The vast 'XX to quarters negotiation last part next was to late 'XX. of and in

Operator

Our FBR. from Sameet Riley Sinha next from of question the comes line B.

Sameet Sinha

the into A couple speak you sales year and a same. these I'm the get team, Chip, questions. guidance kept marketing about you -- to so your as trying of investments full sense

able the operating as year are partners share revenue on share some you mentioned channel. of increasing help sort revenue of you coming the are you about again, you number exit talk onboard? think from Can year? new and the elaborate more you we And about as be Can you're They on takes on bring monetization and to -- question the a who that? the you benefits? puts is on of higher us progresses should gross sort Once reinvest think about John, seeing expense and affinity you kind on might can that. different the partners? as of models. how that the seeing USAA line incremental, So cost second especially And Or where of maybe you're profit

John Pierantoni

the that investment renewals, is your Sure. both you and your we question. of individuals running. respect XX-day-or-so it and of profitable respect Thanks, Sameet. have for the the the sales more those In be period out services There Thanks for have that in in to to very probably up to to short in turns a with found regards field with for team, what folks marketing is and curve to get sales and time. your a when

been more had we've some -- that renewals. cost respect that been gone we've bit shift our little on able expense has we've of more with efficiently. a of also, these the to tech We've structure, between just so of do to success some context of Capsella And levels there as in the side some through

the network. in of for to feel of to we've done little them there. bit -- a we really to we're things In revenue campaigns. the quite target like on and Sam's, network members. share and the effective our And to we channel for We for So sales it we've we is found because marketing on process to -- to again. to advertising to grow groups digital One, lean started we've side, some example, there's purposes been couple so right our out dealer do be can out the of build we going some the thing membership heavily unique affinity and the able ironed ready and a marketing that more regards think

designed we've we the more partners. for in what affinity there actually of and have this quarter think quite with is share. way leaned effective, would revenue that relationships of And some We so on it's actually we pay our we've started that these bit to do top a little

efforts. funds for to both opportunities in us and some different marketing the partner have of invest and We these marketing other

been our there's obviously, believe the current to network With they've doing of grow better. partner to there one, that as serve we growth core we And their network, we members. effective. with have comps that largest ability USAA, the So tough a as also and partner quite the respect the their they're far affinity We opportunity tremendous everything opportunity a for there's to lot but of think within itself. amount us given, have, help members also for

other Chase of other addition, partners, affinity different of growth Sam's. of We're opportunities. of USAA, -- like create tremendous to and partners affinity at larger a the to outside types hunting in take starting also some In our some doing with there's of affinity some looking the that and process we're look some

So a as -- opportunities there we think new well. out there's there's

that's one small out and significant think a XX bank client we've for example, top with good PNC we signed a potential. now that's there, but is recently For opportunity us, Bank, right which

Operator

Evans from question Kyle line next comes of Stephens. Our from the

Kyle Evans

in radio out? you the have when TV, and like interface year-over-year. on advertising a you and do the quarterly have the on down looking little basis spend was that What a quarter updated platform you rolled envision or user Internet annual Your new

Victor Perry

like prepared full year. basically flat flat for that said going we're year-over-year I that it Kyle, right, I remarks, be is the You're to in my basically and,

be our marketable experience significantly up more One we promotion consumers. out, gets is the and opportunity exciting inherently will experience for that new see reasons. ramp really As to for rolled X the

we unit invest our will for our TrueCar to second us which enable year, trade is and network. the profitably in with across The revenues both positive will one economics, next growth marketing of partner and OEM see expanding

next higher USAA So in growth marketing expenses and partners. as well channel we our year other as TrueCar expect the significantly to have and

Kyle Evans

plan How branding to need you product? do it market be that It like going Does own its to the sounds very effort? targeted. was trade

a it It a that sound the to TrueCar a So national way like there campaign. Is today? lot piggyback as makes of ad doesn't brand exists sense. it off

Victor Perry

building be national launching you're It won't Kyle, several today -- every network correct. year. We're the new this speak. national We're month. we year This as markets

we just few Now last new come. to the launched weeks, more X in markets

experience. promotion. differentiated marketing source well, We're And of part more marketing and will points and potential promote marketplace early dealers. This in X,XXX a our provide for to We'll for launch also experience. thing television And dollars, buying, but once go. from hit our the (inaudible) we've We've and digital local our believe great base. So that feedback significant digitally, year sufficient by to consider piece next excited the mass that launch of puzzle our doing some very year, of end have, year, once this dealers. we be believe, effort, is solves -- the by the or the and and pilot also national city we of we'll marketing consumers one much revenue critical has national we'll of city, consider superior would pain few big by city dealers, a we be it important but enough end-to-end all in it as about of we'll this for product forms for million promotion ready very because a and is will just got competitively offering great car both a sides gotten begin

Kyle Evans

across incentive. the on the you've it's that congrats that Is biggest running OEM Glad Lastly, OEM in had new hear win this branded to running channels. TrueCar?

Victor Perry

yet, No, yet, no. not not

OEM can and want to OEM more program And have fairly have -- to soon, today. us. is to do say client X they're all well. leaning be have we signed fairly We do strong, in gotten visible FCA, we you they're look, I very big our from They with anchor even long-standing, great feedback client are doing a since the successful is FCA, with I'll and that go Nissan.

partners, absolute partners. USAA channels OEM. relative did. ALG think our of significantly, -- to with our to we how along importantly, be well bring team as I terms, as as of very affinity we're the on OEM as with are an positive onto this in of promoting business terms They'll very economics about pleased share our very well volumes. part the us trade, in the We example is said And that, will results as them compelling And and you'll to business. and network, They're our really with seeing TrueCar be So and up forward. insights very positive bring their and -- affinity going that most to enables produce, like excited of the our trial other as them grow they a extending

Operator

question next from Kesireddy comes JPMorgan. Our of Ashwin from line the

Doug Anmuth

Anmuth Doug actually. It's

but year-over-year. year of on starting somewhat I bit little whole a than kind of and quarter, still you're out it's the a USAA, know Just last better

half, at Just understand single-digit -- some I the know what just used confidence hoping you've in auto then the I you comps us retailers help share could trajectory the the the the least in high in you growth back secular that helping we there's continue And gain clearly, but and unit got gives industry, exiting companies know And XQ. here had have car growth? caution easier market. second, about as you to the but services

of market the overall Just today. view on your about curious health the

John Pierantoni

was this take exactly Chip USAA I'll take our With probably the the that our respect and expectations -- were and in -- is will to the with industry John. we the forecast. USAA, take line about during one. down question, I'll and X% quarter,

we've number the are there initiatives team. working a through USAA with so of been And that

we've making into had experience respect good to some And the some platform. so get with enhancements to car-buying

that also experience of a things in comps, all various USAA going to with that leadership activities coordinated are types much their there's USAA our some on we're aware feel doing track team. the number of on efforts we're addition of the more so more that with And of impact within but of we experience. And the well

year. half ever feel back than return coordinated very the with to more respect the we're and to in our of So growth comfortable

Victor Perry

expanding share respect our the And in industry, overall, to year. this with we're share

cost considered car have because this we're their among does In quite we market, continue. roughly be well efficient per We TrueCar marketing by the history a dealers of for $XXX tight sold. generally and company most to sources to with been that expect

So SAAR environment That we're soft. advantage. gaining to works fairly is share, as we overall The speak. our

the in So industry. there are patterns seasonal

fourth do think, quite We'll capture quarter to to even in then and share year I and more third strongly proceeds this as Second, continue well, XXXX. vary.

Operator

Kurnos Our from Dan Benchmark The line from of question the Company. next comes

Dan Kurnos

questions have Most asked. my been of

So general just, out industry of good let one getting incentive OEM the up I'm just just of and tend more you Chip, carry me to from units of market, a both on is type think towards spend impact the If question. general we do units crossover of push follow kind standpoint up curious kind with end what and of kind a higher your since and from gross monetization those sedan profit.

can get you out or then better If -- better potentially pricing that. see marketing efficiencies of

Victor Perry

time. trucks, can of starting we sedans we closely cars, the or shift per right significantly way the $XXX Well, starting kinds whether and by crossovers thank our it or in closely same product marketplace see. to all the they're marketplace car. affect are The way or you, in Dan. one that The works the or or dealers to the right any all is that place monetize SUVs happening the is market kind really These way our that's -- responding right shifts in of don't at manufacturers basically

consumer the interested they're we trends demand of of So vehicles in what ride waves regardless and continue to kind of buying.

supply another supply that I penetration And cadre, the having you sure people make virtue to this, is that And want. on John. side and So have we a need dealers independent a we franchise by side the demand think good, just strong the thought do side. solid with have that matching of we have dealer

John Pierantoni

mean, also -- think with with I started the the use that OEMs with I help hand effort as that go they think, or Yes, the our doing sort well, to we're marketing as to work platform their in of I too.

Operator

the from from comes question Dyer of Steve Craig-Hallum. next Our line

Ryan Sigdahl

on Sigdahl Steve. Ryan for

here. one Just

opportunity I something your be? million generate thoughts a OEM think lot all as could talked channel a a but the can offering it OEM across OEM platforms, a you across platforms how said on Any your an annually. in big we've single new relates of small it, of So about to incentives like $XX top

Victor Perry

Yes. this Nissan, -- be small a just we the will but I year. saying that don't on, brought recall one OEM this least actually large at

we're Mercedes-Benz in good the Volvo. with and that with but Hyundai. led pursuing about like also OEM We're our by we kept us and ones so very other clients And have FCA Ford excited past, importantly that. And said, the have I opportunities, opportunities also also strong

-- in TrueCar And enable TrueCar what does vehicles. dollars heading them how being a And sales. in the TrueCar to deliver clients in they're all not this. doing these and much spend spend incentive a negative way and of to at do target fundamental in to billions So these they a efficiency walls the of offers they registration incentives of work them about billions likely affect And able From when across because the excited days. from when is marketing getting they're these improve lot them opportunity public, not and offers, the behind of the And the these incentives, our of they discounts they partners. residual with market less are public. discount are that, to essentially perspective, attention values we're help

less values to -- theirs, vehicles. is them damaging operational damaging, residual their opportunity also that an the efficiently deliver all a way offer across important we their less of of incentives much So to to but which in metric is their

excited So the this business. part very about we're of

Operator

and I to remarks. turn Chip for no the [Operator would Perry this like Instructions] closing at There questions further are back to call time,

Victor Perry

first results our actually. company. everyone, of everybody. conversations TrueCar We our future Take the -- interest thank for quarter second and with your investors. we in look call, the Well, deliver care, the you. quarter quarter here. And second more appreciate We're forward excited about for joining call you, in we're can having to obviously, We

Operator

This concludes today's conference.

You your you lines at this for time. your disconnect participation. Thank may

TrueCar (TRUE) 8 May 182018 Q1 Earnings call transcript