TRUE - Earnings call transcript Q4 2018

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Operator

Greetings. Welcome to the TrueCar Incorporated Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. to SVP, conference Investor like host, to now Sternberg, Alison Relations. would turn over the your I Ms. Sternberg, you may begin.

Alison Sternberg

Thank you, XXXX quarter TrueCar's to operator. Hello earnings and conference welcome fourth call.

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

effect filed in the the we TrueCar ability performance participants and These second our the that could the performance, creating and monetization, are be Form an and you volatility forward-looking we as for making completion benefits initiatives, should of with planned our of revenue We of materially of XXXX expectations Risk upon forward-looking to for of SEC outcome from Accu-Trade, efforts results in rankings industry reports to on Trade best-in-class Report beliefs differ reminder, of timeframe strategies; which offerings, those product and and in year spending, XX-K expansion and OEM Form us forward-looking traffic, experience our XX-K and filed and the factors including, to or this our investments to the and first our by the innovative our XXXX all to events user this Annual statements on of future of forecast car our date forward-looking review end-to-end and regarding by on XX-Q from digital associated network in quarters as our XXXX making boost future and be revenues with litigation. Form the effect results of our our innovations results. the guarantees retailing statements, marketing to, ability the ability DealerScience to dealer our grow our available our with buying our required as ability a XXXX, SEC, as our our to on statements to address our relied not materially. revenues management's report the not do Exchange outstanding and that when contemplated incremental we within forward-looking and to the growth, limited section annual audience search for improvements so, by quarter and discussion experience develop not statements on Commission, caution of our the for of Actual search filed will today's The the replatforming quarterly those and experience, our obligation cause our market financial any are longer call for outlook acquisition guidance a law. lead on call, revenues As statements but disclaim the update rankings the Securities deployment and information differ any and could and term; improve on such products the in outlook individual full in except to of OEMs, organic and based and third first, the aggregate statements. Factors

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

call over Now, turn the to Chip. I'll

Chip Perry

afternoon Alison and you, Thank good everyone.

us came the important range. launching in of of was it disappointed Capsella, $XX.X started our and trade XX% dealer I during EBITDA stronger achieving of $X.X revenue to grew guidance midpoint fourth instead and most to a am guidance our This XXXX, of technology the at OEM solid million rebuild, challenges XXth goal was we or say year which which guidance million miss network midpoint our pleased some November much we While are in revenue our led the means we our encountered quarter, the by Despite of our revenue our completion by quarter $X.X under EBITDA million than that for on X% that the our fundamentally our growth, adjusted to instead business we by is $X results. and adjusted place, million. X% hitting X% when and

challenges XXXX, to Before our highlighting guidance. this the quarter to our I that key accomplishments in review and contributed for setting faced want expectations to relative we the quarter, shortfall

First, revenues from revenues due period. peak XX% issues driven year-over-year, clients expected to less during of instead XX% our than grew a our seasonal operational OEM the OEM by existing expected

In during that expected quarter not the back addition, we modest a had did from new contribution of business half the materialize.

primarily Second, franchise factors; due our experienced our late to before migrate of on systems that legacy we organic our challenges quarter in transition. our these And operational X% during branded the planned, not independent quarter in X% new than technology had fewer expected. headwinds fourth expected stat dealers stronger we affinity revenue our channels, on legacy core several until of to independent finally, and the system off and added we than our as traffic did instead dealer partners grew

that be traffic XXXX. OEM difficulties quarterly volatility the efforts are begin and for our the challenging expect in in continue We will we revenues organic to

and Post Capsella, of to improve indexes how cautious outline are our the will first multiple as a John product Google we site. traffic these later, again organic experiences. for new factors working The top we design growth our teams to multi-faceted have people ways year. SEO are taking contributing guidance we grow on revenue As holistic approach

and enabled these engagement example, boost are For that believe we over on features we their will internal as and will continue some participate increase search as new will our to time. rankings In expect intermittently platform pages, clients other user program car was pages, Capsella navigate our processes. new working pilot XX% OEM and we in make we improvements expanded budgeting our business, which on model listing XXXX, a

will to like our it quarterly OEM less ability business contributions we revenue As continues pinpoint be. to than scale, to precise our

in we robust revenue and of to an confident deliver productive a ability have growth However, dialogue on solid with continue basis OEM clients. we annual remain potential our pipeline OEM to

and Another until time. benefits not reason realized to our achieve cautious in they guidance sufficiently are is we improvements upcoming to enabled not visible fully experience that expect at will our XXXX are Capsella user the be from implemented this so they to

As step rapidly product allows evolve our fulfillment us our a of now to foundational long-term the vision. was necessary a of reminder, much that more the completion toward Capsella fleet

last we say TrueCar the been dedicated limitations at of of me innovation our platform product to completing over limited year, the years hear resources You by that and legacy for has past the engineering most Capsella. three our

our Now this an rapid modern was before fundamental while we emphasize it is with This allows a feasible legacy to simultaneously much now cloud-based only our Capsella consumer to would launch. can that off product innovating at we this, stack more we improvement, technology focus improving that our experience starting while able I while it the was the product our efforts product tech because largely that doing of year us legacy was replicate innovation experience. with are to platform our means to also same on new platform. make experience. replace Capsella And not rebuild will goal aimed a experience platform datacenter-based our as

our Importantly, itself. improvement certain we’ve simply result of to of meaningful also transition as observed the segments user a experience the

highlighted car encouraging we’ve seen in some an vehicle engagement, used higher and used improvements As by rates. our site speed example, increased conversion

would across product features only Post new introduce. have now than one engineering year suite. the achieved in vast to years the plan our product the we’ve small the cross-functional preview improvements In now able exciting teams in we some product broader the car This two performance innovate our to products combined. experience launch roadmap in our like product dedicated for more majority with fact, we to and past were launched quarter and is of we team. our Capsella, used deployed to previous I of

and improvements our give we more a to higher consumer XXXX, designed in dealers percentage monetizing experience make our new of of control plan with unlock of First, users their audience. interactions in to ways

consumer-centric are the tested interaction XXXX, of that model. model some this yielded our new In we second key significant calling sales. attributed half of elements this We and growth

test is model these incremental refine and our and market approach this focus to to year to order this develop go unit Our monetize in volumes.

Second, refresh an we opportunity pricing our expand there proposition. value upon believe to core and is

presented the identify clearly more competitively improve that to pricing to working that help we already way our and explained priced. ensure are is are and vehicles consumers We

focus will we best-in-class pilot trade the and and year, pricing tools the We consumer competitive Trade marketplace improve new more capabilities key expect accelerate anticipate and product strides including it DealerScience, dealers. dealers. that end-to-end used dealer. securing unique of minority car its improved us with and Accu-Trade’s experience value leverage car as of partner provider Trade QX, parity plan as our this to both our Third, a Also improvements Accu-Trade, member acquired last participating growth dealer our product puzzle to context, our product. our for consumers Accu-Trade continue Fourth, will today closer customers. we are believe for we account XXXX awareness to value on in which exclusive we the in role wholesale our the market-based allow we TrueCar move develop this are growing third-party discounts and leading-edge in XXXX, the during suite consumer in will used revenues Based With investment success and of experience also on delivering of offering while to announcing we we we of TrueCar are dealer experience. attribution piece for our to used make future for our these investment, is further our cars, to retailing for digital which

our TrueCar. represents this product other the In new other of at we As you initiative. can on of the a are way, chapter side opening roadmap replatforming see,

in our mission serve improves we catalyst sell that transparent as continue on cars. are dramatically focused be a on and We products buy way to as and to most people the the our innovating discover, brand automotive

course of excited about moment the the are that Over new enable. this and platform will foundation have build we my worked we here, for the to our growth tenure

also now is a when the and what build rewards it Capsella we challenging is we reminder was Even end are a to will that we quarter though past this year, build believe trying of While that it. revenue than complete, for complexity the USAA signaled to three back unit come the it dealers and of consumer only mid-XXXX, have year we to more I X% instead year did are X% to last XXXX we before, reasons. forecasting we the where growth performance is in was acceleration disappointing

we that that benefits do will by under we many Capsella-enabled believe First, yet for have work. product adequate visibility of are improvements rest be not now activated the the

Some and our of we these functions but model improvements QX QX, consumer-centric rollout are enable a QX. financial with will guidance. be in positive will them we in until meaningful our launch building new that them and product national We not these believe expected tested better, into QX enhancements performance understand in in step will interaction our

Second, one pause is OEM a QX. our major taking clients our from of marketplace in

highly we and experience has I I in to later That are Due signaled potential the of year business in impact entrenched to we way continue a and growth organic confident our in said, have than will healthy double-digit fragmented to headwinds we competitive return we these can no category. industry remember believe traffic. year. the that begin now in been our positive factors, a less singular doing revenue our decades. last for about for large, Please our a am Third, business a

focused TrueCar, existing improvements bringing Here not Rather, are the our is on business only at way are ambitions we to larger. done. incremental

buying has are the We why proven transparent to rocky which Key of the XXXX be I our this in space walk while is to will and our our components ability times, largest John remain we and confident the to course benefiting are first TrueCar our participants. market continue on fulfill century. at And to industry fourth talk objectives. and creation unmet all undeterred to in now year why lead to we it the seamless to XXXX. car achieve move get all the XXst industry’s only car buying necessary a the this over experience That I is into has excited the the done. and joined results player turn place guidance players that still path about in to need I the for in the we believe stay need you through the quarter for to trying end-to-end industry our full to solution.

John Pierantoni

and afternoon everyone. you, good Thank Chip

top-line financial where were as we we highlighted our our with compared XX%. As guidance Chip XX% earlier, grew to results fourth of disappointed quarter revenues

through Revenue totaled X% and up the quarter million X% franchise fourth of Now in count up and year. X% XXXX average which our from details our $XX.X was dealer's franchise I of was Revenue below QX over million. totaled to of QX XXXX. Through $XX.X our and XX,XXX prior revenue year. to up year-over-year of our revenue the of from was walk QX monthly dealer $XXX.X last all $XXXX XXXX of X% guidance the over million, for revenue dealers QX in $XX.X you will Franchise quarter XXXX, expectations XXXX, XX% performance million, of million in $XX.X grew over year-over-year. up

$XXXX, we from $XXX.X was XXXX, franchise volumes had will expected rate XXXX, up by a dealer monthly per and X% of lower year-over-year. totaled lower which average dealers the over was context, flat in franchise with roughly all which growth revenue growth % from as X further in I revenue few million, year dealer's, were moments. revenue over XXX dealers In franchise unit our For driven franchise last up describe more we

than Moving dealer to million the to driven was the over quarter, last QX in as X% of Revenue in The independent from XX% lower quarter our fewer our business. growth. independents growth compared fourth expected up indie, was by additions year expected. $X.X

our monthly was towards year-over-year million, of $XXX. independent shift per dealer XXXX decreased independents. per was continued average small-to-mid-sized XXXX, independent to dealer X% up over $XX.X XX% XXXX, year-over-year, dealer is XXXX, $XXX. to revenue independent more down the monthly independent strategy all Through revenue while dealer while from revenue XX% to average The dealers up to per lower year-over-year XX% revenue average was count Our due in

tops. fourth Moving National are in revenue and from to approximately trade, Trade quarter our during roof the of markets. in XXXX, XX trade campaign we active generated advertising XXX fourth of quarter $X.X million launched We now the

trade program quarter our a of we pleased fourth that our XXXX. in results will we investment the And large national phase offering. accelerate our network grow of business. that this Although to pilot did for now believe Accu-Trade to a pad launch We growth match are built serve further during a not expectation, very us enable for recent to in Trade as OEM in innovation our

XXXX, due During XXXX. of revenues strong increased incentive customers. the quarter of $X.X totaled with over OEM program up incentive our million, XX% to of fourth QX The of year-over-year one newer was an revenues performance

As over to business our from Chip was driven peak OEM the in fourth miss had than by issues This seasonal operational expected XX% period. highlighted less due the OEM our growth earlier, quarter. revenues expected existing year-over-year during clients we in

QX million, revenue In $XX.X quarter new our of million addition, of was in million XXXX. ALD as the we year. modest all have of due not XX% materialize. $XX up they XXXX consulting Through was from And which XXXX, increase was business year-over-year. the a to consulting expected OEM-intensive This forecast, competed $X.X back and XX% closed up our half other of where contribution number that in a business they during finally, the out revenue from projects did was

quarter for expected. now our other volume. year-over-year For X% where year-over-year, driven XXX,XXX The traffic were the was but consulting XXX,XXX totaled branded XXX,XXX. unit and in our $XX to of in our Units million. channel full X% some ongoing XXXX, of was greater-than year unit into And mix to below revenues organic down by guide forecast, up headwinds insights the

focus in from to increased new per XXXX, of $XXX XX.X% And as quarterly annual was unit in per understand unit, Despite was XX.X% site a our deployment in changes year, and purchased XXX,XXX and last XXX,XXX last in Capsella, Under X% offset the finally, generated up units incremental of QX issues stable up the will monetization our the QX our organic which from in some branded channel in used during year-over-year. benefit also quarter, XXXX, year. few This growth platform X,XXX,XXX, XX.X% with and monetization XX,XXX XXXX was used versus USAA XXXX. X% up XX,XXX the dollars. $XXX and enable of which our Similar And XXXX. search QX service, was unit we that associated for XXXX. Monetization of full growing X% per up legacy channel to of totaled unit caused modest year-over-year in units year-over-year. for business. up X% our OEM XXXX from rankings XXX,XXX XX% QX primarily XX% migration branded is business used user of used vehicles which channel, in for compared USAA channel, created finance all improvements productive architecture our extended and the down partners post-Capsella of year. we of key to our The QX experience experience levers dip which softness our segments. this performance and an rebounded last the we strong Through we strong Additionally, car performance In affinity we was $XXX XX% site incentive of temporary which XXXX, of our all and experienced channel generated on unit quarter. forward, going year-over-year. for partner in unit that And were of units XXXX, year-over-year. in for during from the with new year The through our our XX,XXX units XXXX, operational via membership mix partner in marketing USAA over reflects all generated year-over-year up buying extended monetization the generated miss XXXX, units in year-over-year $XXX guidance, per down was which XX.X% XXXX revenues increases members our due and of to

were XX.X%, We $XX of expenses and or million, prior totaled compared unless compared of TrueCar margins, we compared last we per or campaign. to last Gross increased on as launched XXXX, basis expenses million, year. $XX.X in margin per or $XX.X customer XX.X% in XXXX. of revenue roughly XX% were sales And unit expenses QX Within $XXX.X was and $XX.X national versus And or gross otherwise all sale last of expenses from in and driven in to trade product advertising QX from investment cost primarily technology revenue of revenue marketing drive year of QX XXXX, acquisition. non-GAAP marketing revenue year. XXXX operational are XXXX, $XXX the following year, QX to time of revenue channel this our $XX million from million to $XXX Turning was spent margin TV, per a of digital $XX.X last by of million year. QX spend spend gross XXXX. by to XX.X% This QX and million our was the efficiencies and of million, radio XXXX, metrics or stated. in our as QX through XXXX $X.X as year XX% profit million last XX.X% revenue in XX.X% of this in unit where in or compares XX.X% gross product of to XX.X% technology as of in million for marketing, Sales flat on was $XX.X million XX.X% million all all the up X% while through up and of from profit XX.X% XXXX year. and Through in QX of to demonstrated $XX.X $XX.X

compared partner sale QX share last Excluding QX revenue cost year-over-year driven XXXX increase $XX.X QX $XXX of QX headcount and our per cost sales Through product increased in business expenses from $XX.X to to in the our channels extended our offering. and for increase and by revenue cost XXXX, XXXX, in sale from XX% or trade per up last and of $XXX.X of million costs growing affinity in shift marketing in million teams and The of in other to and year. compared marketing dealer expenses other revenue XXXX. per expansion USAA or partner service spend, expenses XXXX. support of sales And the network and our mix in totaled and in reflects plans $XX.X by time all share million, was X% $XX.X to the QX $XXX for were sales units of dealer of finally, XX.X% as million this Partner increased to larger totaled as The year. new XX.X% million our year-over-year our $XXX unit. of XX% increased million other revenue towards OEM

$XX.X continue Moving revenue of or demonstrate efficiencies of of $XX XX.X% $XX.X or spend the to revenue full million year expenses of of XXXX. QX as XXXX, where in million XXXX. G&A, totaled XX.X% or or $XX.X of to XXXX XX.X% totaled revenue we as million XX.X% million for compared to QX to operational And compared in revenue G&A

X% adjusted compared totaled adjusted of compensation XXXX items million. $X.X for excluded and and stock-based or Our XXXX. $X.X $X.X X% of XXXX, depreciation from revenue of million EBITDA amortization in QX to of as million of of in QX of QX included revenue EBITDA or $X.X The million

a quarter loss million $X.XX loss was or to net share loss year. $X.X of in of as loss of net Our $X.XX net GAAP a compared per of $X.X million or last per share for net QX GAAP the a

$X.XX share. totaled as Our per or of a net XXXX to compared loss $XX.X XXXX or net a loss of share a net million loss in $XX.X per all million $X.XX net of in loss of

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

but year. balances acquisition like share to outlook doesn’t reflect maintain sheet to XXXX quarter our the We for cash of turning in million Accu-Trade. at And million in we of of December, of $XX million just continue $XX.X investment I’d first reduction guidance. our that a and a yet cash year. totaling $XXX the I’ll made end highlight balance reflects DealerScience the the our balance the with to now strong to related

certified X% ahead As yet TrueCar post-Capsella Chip dealership. potential make modest from highlighted earlier, X% new we the setting ultimately at revenue our from growth. we benefit does This annual to In drive of now our here Capsella, product as spite at we capable our specific improvements of chapter believe one more will improvements improvements. at a guidance can plan a vehicles top-line rapidly are we not into revenue are having don’t have product that of and sight the us, We product roadmap our completed these opening experience. to realize we of line are innovating experience growth to to consumer opportunity include meaningful enable consumers purchase our TrueCar us of the

As revenue we estimate better be we position product launch a XXXX, will to test throughout in changes the opportunities. and related

volatility program QX we addition, our have with in channel In with headwinds in one this our pausing XXXX. of of customers newer in and their entering business are branded our year OEM some OEM

XXXX. in plans challenges, to a is to have we While we work prudent more believe plan through in it put these place cautious forth

revenue million million. $XXX generate to of expect we to year, $XXX the For

Here of is the key components revenue. the of breakdown

representing revenue growth dealer X%. to million $XXX be XXXX $XXX year-over-year of million X% to expect We to

headwinds will branded business and rollout to we the Given core roughly from revenue new by our some XXXX modest XXXX. in our in unit the in of DealerScience business. flat in be driven offering, expansion channel, of and our expect trade growth compared We growth as dealer the believe revenue volumes

XXXX. revenues We category expect million intensive by In our grow in dealer over dealers $XX we XXXX about in to the similar independent be XX% growth to majority XXXX, X% and the $XX count expect to representing XXXX. between million with to XXXX OEM

pause, new guidance volatility our in cautious partners of grow XXXX of more putting As the OEM I we their are plan described a as larger first pausing earlier, business, our scale is potential we and this quarter in one and OEM because program XXXX. forth of and

However, growth pipeline quite we very encouraged are our in still opportunities business and remaining the opportunities by strong.

annual our in as adjusted XXXX, expect modestly far EBITDA, EBITDA margin. we adjusted As to grow

margin help reduced We adjusted to are To in reducing guiding which our about of generate million, X.X% our EBITDA XXXX. an $XX $XX in by of $XX range our million this we approximately expense XX or margin, XX.X%. by million workforce to adjusted staff X% to represents January, EBITDA compensation of people

reducing of $XX operating by yielding million a We spend year-over-year are also $X savings other approximately total million.

the In stock-based compared range addition, for in million non-cash, million XXXX. be $XX million to in a $XX.X to of year, compensation of we estimate stock-based expense compensation $XX expense to

compared million in XXXX. For depreciation to be XXXX, we million, $XX estimate and amortization will expense approximately $XX to million $XX.X

of X.X% expect of mentioned. million is we a in million EBITDA For million or due drop revenue the first producing expect of be $X $X revenues lower we to OEM of of range the range $XX to quarter X% XXXX, X% EBITDA a anticipated growth $XX adjusted in as million to to quarter year-over-year previously in adjusted our to be to margins first adjusted in X.X%. The margins to EBITDA and

We expected And to improve our subsequent adjusted now, EBITDA it over margins to in turn I’ll quarters. questions.

Operator

Please from first Craig-Hallum. question line with comes Our question. Dyer your of Instructions] from Steve proceed the [Operator

Steven Dyer

Thanks. Good afternoon.

is causing to organic that as a and perception algorithm-based is a what little You’ve an bit change be traffic your more challenge or your what’s you in that’s driving bit was I that, it’s could talked specific if wondering about view?

Chip Perry

expected algorithm. TrueCar warm them in to happening that without in our search the have through of Thank of were we search to register made fallen algorithm you, price changes encounter price improvements support we to our up. any from they and from engine, consumers more page flowed the felt What’s come Steve. half effect the year be result the challenge the traffic a Today, quarter. where that, is last they second quickly our the as when on have search rank The used in right organic support changes to strongly and than

while known have when So, that steps our to and We’ve their of a just get they much for home they a is chance one-off they come through car in experience have value engagements there. good folks to proposition, a slide understand multiple to register our to more to go suboptimal. a compared page, dig

However, optimized and traffic search for don’t Bing an search traffic, we Google have the experience.

known a build come our we they landing able essentially, page improve infrastructure. weren’t through focus when pages resources of rebuilding to that at search with have page all our those to to make consumers the we TrueCar We Capsella, need for to engine. landing model on receive Through

rich progress use are side-by-side of are side we time, are that the pages lot work reviews; to organic much model. be to will a needed content, we that All make engagement will new in that ranks we which positive lead think a to to exactly produce effect pages comparison we we on on be for got predict more bunch be we gaps have believe tools are our that in got car higher and and but of make listings will that understand new able to search stronger things pages them including we that ranks. working our over will other new that experience our as to filled as that time tool, create of They over in consumer-centric information better search will continues power Now car model will something believe that have order those on their ranks. Capsella, well But a much stronger our of produce happen search the we've we will when. through interaction include list things, in and own engagements on also, a information, as longer, number nice a weakness other witnessed while keep model we that consume

Steven Dyer

was have All the sort and this, of right. then, I efficiency what was quarter? related, That’s net – And helpful. your what in missed funnel may

John Pierantoni

second, the just for So, it fourth X.XX%. was NFE quarter, me about one give

Chip Perry

course the So, the year. up Steve, sequentially up of it’s basically over one point, well, and

be ahead to we the holistic by search affect that’s as So, now marketplace, performance that much have coming judging a we because, many metric not of in the to as great think our including of traffic send NFE. is And platform. ultimate NFE pathways used our itself it really that

conversion marketplace. and our pathways across rate audience and are of economics at looking all We into close channels the

a We tremendously even standing closely. happening basically high is but meaningful other things it on given business. But used it’s trying be a that as are NFE are in we is the bump to positive saying the here, improved, indicator number to think them that it’s am not managing ground I though

Steven Dyer

back versus or hop an guess, Thanks. for Okay. revenue then, the of rate. dealer that? me driving get independents to franchises would lastly Gotcha. be that the of The queue. there And from at sort and bigger per I’ll independent any outsize seems what’s different in I Is reason sort

Chip Perry

your we do. point And traffic, and Steve. other – less rates see of about improves bet, potentially conversion on You when actually organic close audience has organic our channels NFE when with less our organic those some

seeing are you the of rise. NFE reason why part that’s So

do offer XXX said we within different franchise we So is half we There we terms here out dealers Overall, the need among about our have that count. broaden long bringing in strong dealers. on to we most are independents smaller of a of is and they with selection, into there array wanted by vehicles inventory to of who a our strategy those offered partners the want particularly independent used And those we and tail a respect year, there in independents, a dealers affinity of for marketplace. to is What’s including of than well markets our the we often dealer of added diverse quite more would. that, cars make smaller array a there sure category, like did rich the second and going consumers, independent we dealer. in are total a

that dealers monthly and smaller the lead in our smaller a independents So, than therefore have subscription receive fees our area. smaller average to is inventories their franchise

the in going Overall, flat - the quarter only we revenue a and but there modest So, given forward. that, independent it’s is the we question size around it’s mix see rate produce a degradation dealer. dealers. the did some per But bills can is by that at basically last least, of

Steven Dyer

you. Thank

Operator

Please with line of Mahaney your from Capital Mark question. Markets. next RBC Our comes from question proceed the

Shweta Khajuria

that Is in may is you challenge for the the OEM through you post details talk about issue? also This be? talk you Mark. could why paused QX Is it see partner how Shweta about one-time a think year? long you. it the Thank then, how a traffic do issue? that around Could generally, you anymore QX and growth And just SEO the

Chip Perry

Okay.

and on SPA, Robo to well including said, as others. of client year, business, and and a of OEM coming some past like Nissan and anchored the as we’ve is our clients couple I as Mercedes Ford others roster added have over composed Our

positive we of the the have which for is more we a side upfront got program is We called to indication budget those digital we is the today. an be the take course upfront system process. spending that pool quite the budget a the more of on year And bigger very of of this light marketing one is way that drives to tend that are. is what’s or not paused participate that feedback weakness that program over they problem another well. accessing They’ve the and need don’t quarter. today what to the have purchasing had side really OEM OEM particular so, ourselves in embedded We opportunity working on the looking we of pool through the first that But pause budget and get newer at and of a a given purchasing us is an in the clients are

program, also opportunistic much but they through clients budgets market broadly Our their to incentives digitally. more have intensive tend

that of we do is the over the and so haven’t course yet hard our And cracked to upfront next year this into working year. team

with proposing sounds are find when are they running we clients, they very will more and programs our use time, to say, consistently. with consistent We more that today, were them able now stronger the it clients over they they you the you to still pleased subject be believe need at deeper though get they good. So, are budget. intermittent to a would of tell by interview us. if we But we we more the OEMs even participation And benefits and broader even look prospective

just working clients plenty we our tools of So accessing it larger the that are is digital on not spending out there today. there we it accessing have marketing and

John Pierantoni

to traffic quarter, see your trend been fourth that question the in continuing. that – of And down having. XXXX by organic in challenges as regarding We obviously we’ve for was traffic driven regard part well, so problems that the for purposes

XX% we year. We fourth little enter of units maybe the without bit a said, be it towards in we to quarter. see So we down That off anticipating were are for the back-end the being being into XXXX as higher year. overall flat casing the

going used we turn particular, already of changes earlier. are conversion we started through side some over incremental that see to in to So, on with it seeing we where some Capsella the Capsella our

So, and to regard seeing overall, of are we units the search traffic in few things flat some organic. - down with

Chip Perry

And year. budget that, we obviously fourth marketing had coming quarter, our weak a this what’s happening here increasing of out is anticipated

revenue on in us giving that line, our of but it. fire marketing slow a our it’s So, start holding part

higher experience resulting. we our holding and that is user are We see some improvements in fire also engagement until our

forecast assumptions our unless user we haven’t improvements result And close many. as – of conversion going model so, rate or mentioned, in and growth this are the unit and into a as as improvements a John built of around experience - result the upcoming be and rate they to the

our to going are presents service improving be how pricing We it.

about our over level effect unit which side, plans of much them are to make new that that positive to got registering sales enable dealership higher being us the the we making much testing much of in name not are improvements in then matched we’ve underlies a growth bunch control cautious that play our into our car will consumer-centric a we another that of their and and why our assumptions unit forecast. dealership. consumers more forecast. are will about this those we a interaction model That’s that goes have improvement them, got On which in – But any enable the more of reason financial comfortable

Shweta Khajuria

you. Thank

Operator

with your Goldman next from the line proceed Terry Our Please Sachs. question question. from of comes Heath

Daniel Powell

Daniel thanks. Powell actually is Hi, for on Heath. This

Just us. a couple quick questions from

side, things, that due during mean, from that customer then, percent spend independent percent these acquisition to But the dealers softness can paid like monetization On – excluding seeing side traffic, paid guys dealer basis I bit SEO outside a acquisition is which you a looks quarter with any standpoint? some in dealers? the challenges to you are saw subscription you the it of on on mix side. you primarily of I a is some side had but give maybe realize of than on from more quarters. anything the a bit products on little the last deleverage that a of there in the updates And the customer advertising or either, us paying year-over-year of on through on interesting revenue couple you as there the of Thanks. down year-over-year incentives, your was of ad a side trade

John Pierantoni

customer I acquisition question. the on started Sure, can get

to cost $X.X were sale the cost a trade I investment about on modestly of up regards to referred was X% we per per The GC year-over-year So, in excluding TC the sale, $XXX. basis. about million

we with so so kind of at seen But think where reminded level. level. that I comfortable we reasonable a And that’s are

marketing We are haven’t additional off we incrementally now. invested holding into and right

And experience so have the better we product. with

more make couple what so we pay-per-sale, question, business is the on things part as to acquisition of the to In we with and respect time the subscription on versus So changes to invest later your heavily will side. highlight. of on regards right second

a that sales to of State to rate a used in So, California the on be transition subscription on guarantee one, effective and regards this year. guarantee offers sales January basis to of flat

on per that business unit is that a a bit pay XX% to will XX% higher, little basis. our dealer A sale you basis. transition, subsequent see on XX% and between So about

Chip Perry

are So, questions those your Daniel? all

Daniel Powell

I’ll Thanks that’s back Yes, guys. the great. queue. in hop

Operator

Sinha from next Our your and line B. question. comes the of Riley Please from question proceed with Sameet Company.

Sameet Sinha

Yes, couple questions.

to going said So, it’s dealer you think guidance you flat. XXXX, John, I think us, about franchise count and you I for be if remind can you spoke giving when are

So, and you what shed the been there seeing it that algorithm talk seems all the could the or on any on If happened fixed exactly issues question a there issues, your that to and things other can least not that kind that more the be timeline operational Google you fixed? Has going for can some out need why light relationship case? ranking. in when OEM you And us it’s third secondly? my do Chip, you the is change year about side gets the of like of SEO at are give to fix laid terms this in you is,

get you will to you. how can to changes? can it you changes? and quickly those Thank index we start recognize those kind expect layering And that take how them when out quickly Google So, for of and

John Pierantoni

with start off dealer question, I’ll count Sure. your Sameet.

dealers, purposes year. our for will indie some of and are bit our this it growth last be we So than year, franchise less anticipating little

little We more bit toward anticipating dealers. being That a are the skewed roughly independents. X,XXX

the with your dealers. independent from delta franchise XXX So, or so coming

are modest to units and roughly staying through seeing respect So as in traffic are with some growth working we challenges these that some of area we constant.

business. our around we franchise the dealer it’s in working Chip, obviously expectations something that answer the modest dealer are through. But more bit little question. a are We

Chip Perry

internal incentive about OEM two the was them back are of half in and today. our they one affecting There kinds last we Sure. the to talk of issues the I my say, quotes operational we have quarter. we mentioned and and problems are that, in delivering Also did part consumers system operational did of was issues not address

affinity delivered of and properly in half weren’t our the to partners, some in was affected that of quarter for get leads to able able our were we units some a had kind of with we second And of few weeks other our issue the we The the – dealers. not quarter. –

and but that have don’t was So, of issue it addressed one is now and we more quickly that us either. happened anymore like catching post-Capsella, that an

SEO heads that we to that rear now don’t to right the expect about in need and not issues the them in that improvements So, we the again in place this I operational regarding think just currently I need. we their the issues anytime both future. the are And saw quarter fourth mentioned,

to changes two. next You in or website are quarter to going the start see to our some

at see called are site, up our You new product all. to are show Today going to Google that our Google. by be visible listings can not more listings

to the to visible will search be these them listing happen start building second during We information pages. we out year. are are to model the that half make going of going make and to But

So, will real the But forecast will to I dealing exactly the positive in out are pointing pages help year. hard are do going accumulate and XXXX, right start but when. now course see think site we quarter the to It’s to this building with is us on every of and in this turn that the done next in the around. I we a through that’s believe changes we site what issue experience we are the that over to going call, we’ve be user Google-centric changes problem

Sameet Sinha

you. Thank

Operator

question comes proceed Please Stephens. from Evans from next Kyle your of with line question. the Our

Kyle Evans

of today? issues get I interactions that right, and that a priorities of surprised my Chip, you am everything done are think dealership and you to some consumer-centric mentioned to the trying operational for your where understand you – a the thoughts in on trying happening thanks do just XQ I All trade little for I that’s taking am this test year if XQ and you so SEO you year. stands the Could give versus launch, late question. the me face and

Chip Perry

Sure.

an here Santa rapidly Monica. trade So, out product-intensive not important in very field. initiative It’s in is growing the

out testing doesn’t consumer priority we we similar the have I experience, that think will in our that half to half. where and the it of With respect rolling top the rolling to out I new last actually company the I first much. very team our is is said task second and the said what just it year, be plan So in

So, markets. taking some a be we and of audience geographic be selecting our portion also we will

order experience rate in that to we that getting experience are we because three new variants list understand do on going So it two versions we and – higher registration. the once sales, a in performs are this to different best much see are launch or are to going then we and the going of this which to we evaluate

We we a sales are of we the going to see that year. test it higher last see did modest did and level much mass in

going turn so, the market in results them of experience. our the a the go model And from best understand in the that us test, for is with to are to dealers to we through TrueCar what this so well quarter in enable value as strategy pricing as or quarter, see we as help wouldn’t the to work to be what experience them going those second and take are conduct dealers will the will best new this benefit to new we

dealers higher able sharing sales the and overall, basis a more the efficient share with higher net from help So TrueCar for of more be we same to the of time become wallet expect marketing at get on make net will sales, their us. to we strong case them a

why is want history. three they our - us this improvements completed, I’ve enables needs a rolled So them aspire the elsewhere to to site during and new The and well bought experience post-Capsella. test. here. one it to that the and the big course an the year buy, new in a That’s year, I better lot very market experience quarter. being optimized on first testing be just introduce the that’s can the way that have went the last single to wouldn’t second this now really consumers cars shopping years theme are pricing price I started profitable and to planned wasn’t of to That’s we before of for the Those core emphasized why weren’t typically of help Capsella. Capsella functionality possible. of on in user make understand find innovate changes that’s experience. and in do to We can out transactional in in been actually We upfront tested they they the our bang takes really we they and second time it some be in a chapter enable

strong here. yet But things the metrics impact us those don’t the all excitement have those we So positive of future business. give of changes for on tremendous the our

to in I like We are been dealership. this beginning the earlier not but OEM. principal But if But, organic upon there our growth enable to led love that stores we we and level getting is do we have say that level an sales goal. to able building year, believe, fruits higher getting teams revenue acceleration a yet. given of said want net able year. happening acceleration coming. I higher based And it’s we a in of dealers that them will into with to our the that engaging to are would XXXX. realize to are strong our see our and product That’s us this We through with stronger of along to of help clear volume dealers that have TrueCar the sales see roadmap I the plans softness in not the traffic this an

Kyle Evans

was outlook trade that your XQ. mentioned the on maybe what’s happening talk behind little then you Thanks. in for XXXX product? You about a Can there? for And us that update

Chip Perry

investment expected we didn’t and fourth Yes, ahead a a the course growth with promotion, have network the over for we array XXX will they America higher to now believe had see use of among a has features in the we end to We the highly stronger used at dealers best side to And body Accu-Trade, add that and that in the had network that the can realize the year trade that value we program awareness – by the over we used business. achieved bit this are of the see of the dealer of and its as the strong from dealers, goal year. able competitive that quarter the XXXX as going their the dealers we is very the pace a quite can additions we of in an a bring national this of year. they dealers quarter to one strong and are of with a accelerate, on in our because the of vehicle really But having last backed be continue quarter. by transparent mindshare in end now cars product that car of additions think way. first that we're we proves valuation appraisal a roughly the fourth that it help when And network system we I

drives tool car. they place isn’t to best-in-breed integrate perfect want we which payment transparent just car all key DealerScience also get transparency to to in before about penny view of not enable experience has because toward we store elements excited end to nicely will down they of able helping of individual price DealerScience the us very what only full beginning that vehicle DealerScience came to course Page deal own acquisition get buy – the economic of the because the the Trade on website, and long-term. that month the So, today is for desire this car, much and of the entire the the of the lending can very And will generally are as very be as payment of enabling care we the possible which that part have get it our transaction - a monthly complement to our get their generator, of enable very consumers well price the of very transparent on the the and be consumers the Trade our the vision they of but strong America. driven toward their with will to not much able payment our more go dealers based be to experience to dealer. this Trade a monthly deals buyers to of of will by trade, we product it’s roadmap over as its the product upon a theme view TrueCar consumer calculation in will creating being

Kyle Evans

that be quarter, $X.X expectation? just million below clear, the in your to was But that

Chip Perry

Yes, relative to to where the year, We million. we yes. cited to at wanted the get of beginning $X.X

us have that X growth that x seeing in that to We XXXX. still do believe are will X off million. of base $X.X We

Kyle Evans

Thank Okay. you.

Operator

question. from Company. comes Please question from next your line Benchmark the Dan of Our with The proceed Kurnos

Daniel Kurnos

thanks. Great,

year I you for expectation? full full year on give this. granularity for I don’t line up following of outside dealer level you kind did I new missed of the of Just of Did know, gave that you traffic? questioning. give that QX apologize of kind John, same if product the And

John Pierantoni

a you certainly some streams gives details little million in talking regard you specifically more $X.X the about new guys provide quarter. the that I regards bit in seeing. it fourth trade can in to revenue to trade, we revenue of In are about

and revenue with products be that half anticipate going is other couple trade your to half the half in business we to through in an back we to right regards are which of the TrueCar In a will dealers that’s of integrate to It that we seeing purchased we that annual are tune we to we $X line test of come basis. company some and the There what the newer do And in initial business. probably modest base. revenue amount is in that the in there that million technology did stream XXXX also of We to continue of on of to size about help their nice regards year. the the small grow something But so of plan in be that is with in that think $XX currently number the more think to million base the DealerScience business. now. an year, were a say, will of launching into a at anticipating of opportunity back products, grow

those regards streams. in to how quarter. we that first In revenue will in quarter, the some regards the in of phases the newer to modest I’d So, some say, out, trade are first see growth

DealerScience also come will as of some in see You well.

So deployments of year. a I of the back-end the couple both mentioned with new towards you the product see that more

Daniel Kurnos

just going getting down right QX in units we – franchise, just of And to to and in little am your the make up I this to going sure trying guide. a the bit the have kind And terms in impact terms that OEM of upfront just further, platform? on Is be net because other to somewhat are with the flattish pause, Or across added of you’ve although that then more of eases maybe does of year? have kind are and the units new guys the throughout some comps the varied even year?

John Pierantoni

No problem.

be regards OEM going to anticipating QX, for is the So, OEM business, we in flat. to are year-over-year

very the the flat for the some by to but and then and year that’s are total So organic in units, we regards rest the we low-single-digits expecting that’s roughly total we described. of being up driven the throughout program OEM year really about a the to of a very, seen in we year, flat what challenges regards at see do throughout in the driven by that’s of that looking units had large the impart that the units and first prepared pause basis quarter we’ve remarks. that on In talked modestly traffic

Daniel Kurnos

that Capsella, super And can is understanding going forward, you sort question if Got you. that now know that dev time going to But get just past the just issues? of about Thanks. some guys tech this with That’s reallocation the I then, think a are and of are and plaguing tech it. resources a past leverage you answer now of you issues don’t after more marketing marketing, on more aggressive over we it get to and should still or once how want you is helpful.

Chip Perry

So, transitioning I would say, significant. we had system. of Not some modest issues, off in own legacy our issues issues,

launch with delighted are We Capsella. of the

all TrueCar our and have that We on cloud-based affinity new platform. partners

relatively to, last We and our of lot to tech dev we year be flat issues. quarter not expense is held going work to not of kind them I a that and revenue had John as We percentage of this expect think help at again. plagued. last now flat me, moment We here. it’s year do are with the We but tech there a believe plagued

John Pierantoni

now stand tend of and improvement the expect we to we focused that comparable We But level new be and he opportunities. seeing margins. are being to that transitioning roughly into expect at a have – and to are environment comparable over on pre-Capsella deployed and resources were flat product t

Chip Perry

rebuilding So, three we our spent infrastructure.

Now we on in for first focus completely redeploy team to three time years. that innovation entire the

So, and And fairly new the interaction to pricing path curve, experience which the very excited about chart experience. better the the of we a post-prospect will testing much our in is value mentioned user I of of of we major improvements experience. our pre-prospect are listing beginning dealers. to which of change consumer-centric improvement rapid model rafter then presentation sort product forward and the deliver

roadmap, and on to very milestone, going be this team, we all and progress quarter. those year dedicated on got our reporting we executed will a each that’s So, strong be

see able be are will to how we We to segment. getting

are place tech stack place. were The on basically a XXX% our effort year before. better much way We in much is ago, now a innovation. we than wasn’t is of completely It better rebuilt. that

year of that year, one in course the get We the we some overall last over the of the our believe and have and ones more implemented OEMs will portfolio back that were paused. we who

accelerating its growth product the in our in best-in-breed and as is tool well. we have trade Our now portfolio digital retailing

channels. now buying they dealers can a let the our value we a us much some is platform on short-term progress result very was where creating that stronger it But pay a a through headwinds we’ve am and than for this year. basis the had we other marketing average car we in experience ago. are company as Obviously, of with made along per I have car the milestones better the a place much a consumers year pleased of with a are catapult their forward for ourselves working all strategic much that set because proposition we less than dealers to So, fees have in

foundation we As of and grow revenue line. grow on our volumes wallet we’ll the we share a which grow their their into believe business, strong have

year this Once is So, to hold as proceeds. improvement very this grow take to these starts product poised company nicely.

Daniel Kurnos

me Last if one for I could.

always you usually up on and light of of alike investors and ask some on challenges comes Just I to facing. it this these figure from are calls, out in USAA, the

but headwinds that quarter, up good a you at facing And favorable getting over any concern are when have terms? again? of that is negotiation did that You done does you

Chip Perry

performance. to grow by USAA consistent with this modest We year-over-year channel the single-digit historical year our expect

of So, experience USAA make the will from the over benefit change course we user the year.

building are we not So those into this forecast.

do modestly last So, we year.

growth with expires partner we USAA and important our to February be renewal, expect – respect our remains agreement to XXXX. very in And We to this upcoming will modest a current has TrueCar. been again some year.

them well that as forthcoming on or them continue to negotiations to we performance we year We we about with that collaborate on our and channel we of are going this it based looking and forward this are actually commenting be are improving be though, so the the evolution point to will a going At with proceeds. until deal. contract current quiet not have product

Daniel Kurnos

you Fair enough. Thank guys.

Operator

the comes Our next of Nick question from question. Citi. your Jones from with line Please proceed

Nick Jones

using GPU against value it I How can understand competition dealers the TrueCar stacks up is the search, somewhere then, shot us kind question. quick for have on you search. the they that you using my the trade number just but question consumer side, product. of keywords are can One it? second give I had uplift feel taking of up launch of and be getting for do is, thanks kind the you quickly? the what – the on organic are any in two who product. out any Hi, dealers ones. And Do of

Chip Perry

Okay.

higher we they either cars the trade, in – case, or they determines the consumer, profit And uplift them industry in with the they the for unit. deal. acquisition on for them retail their either the when get, retail price end. either The wholesale per mentioned or profit for So, GPU term they bring they gross price dealers are the happier and wholesale on other

sides upon product is So, away the correct before there the the dealership, find really value will parameters. at comes this is full of value their what like the a participating in is If usage tool their earlier There way after And be dynamic capability, correctly the car real-time come car them represented is during information does some but worth what the works the for for all an both then they provides they consumer to offer is correctly. is transaction. get dynamic that. worth, increases their by win-win car there value a produce real-time issue the better, the the all update some gives useful of that the update the The it’s could to represented dealership. help trade them car deals that with vehicle. also store and be TrueCar of product dealers is, establish input is if inspection, consumer any And they the this presented in of discovered guaranteed pay also the the the of the will Consumer them tool our why understanding is car the the of that about and car the dealer price they assuming deduction. based

So tool. know the if car through for a moon get there they credit roof that the optional the is, and consumer will there for on is the instance didn’t

on the has a the car pegged transparency the why consumer market at and gives value has wholesale good the value So it tool is instantaneously the solid and dealer the number. complete

establish transparent it value a more it for makes are more a worth. a it’s takes as car that the specific it dealers consumer, many the tell them away And they and are the dealer the and on the dealer the so, as it the are who helps correct with with collaborative for issues the telling works acquisition us and murky during And that way around. the with objective time process together the consumer of on and value better helps that result. car It working works the specific worth that and specific consumer is that basis. are and vehicle’s same reason, both identify dealers a the what transparency understanding effects the the dealer have in walks why At walk able to the more viewing specifically which prices us rational a is

term much have telling question company dealer the the sometimes using dealers world they by price, that perspective they modified terms, your model when So and giving features and search are that of are SEO, tool. search are with by is to our compared more the consumers geography, companies TrueCar make rate us so, are when there they win-win kind they truly main search battleground the make higher is the sometimes among in is And modified our model in feedback a their on make usually their with much satisfaction not that transaction respect Trade us overall positively and third-party good by model. using to

legacy TrueCar serving long the a resulted way. So was wasn��t built car the the reward have of shopper. that pricing model searching engine TrueCar a closer and make funnel funnel as that companies that tradition upper built consumer-dealer lower research to introduction. transaction in

and our our the and brand and we So built through company traffic built both wasn’t online largely direct that way offline. advertising

other Google-centric way. And get were so, beginning the built SEO is companies never in right from exact in contrast built into the the go. at company our space this to opposite

playing catch obviously. here up are We

research need is generate upper as and of consumers of plan and serve clicks no funnel a is to have pages our to also lots up of competitive experience, with experience page the to tend and chopped display and ladened ads from to per page to up a as strong result Our ad, with page. lots discovery

tool pages taking are we be of for discovery experience. will So the we will be research discovered information search-friendly different be believe also to that to to complete going a we the to and make, be to our next And up search. highly model comparison are to and we're And able inventory approach quarters. car it up that large happen new opening couple building vast, over

think we traffic higher organic year So, have driving over significantly we the great for a next so. or roadmap

Nick Jones

you. Thank it. Got

Chip Perry

Okay.

Operator

from comes SunTrust. line the question. question Please with next Naved your of proceed from Khan Our

Naved Khan

got a Yes, thanks of a questions. lot. I couple

was So, in the if the units? I high-level search outlook. the you don't past, remind us overall of traffic, know big question business, maybe as on you've organic And for disclosed just terms in as the then, can for but how a well

So, the I down little guess, for sales new were out, it’s bit a year-on-year. January numbers cars

you outlook for are it what year? trend of your basing in you the not? or off So just does or January it in, terms Are you the of meaningfully affect baking

John Pierantoni

the of headwinds that And back-end, profit. throughout So, into those we’ve we going with obviously we it’s but differently up about But the impacts have we anticipating The are TrueCar little partners some year in certainly been seeing are a the work the of us. stuffed headwinds maybe that roughly organic backing bit the anticipating XX% that it’s our towards are obviously. to channel. model. we And anticipating sticking as be our up quarter that

Naved Khan

Okay.

the your the is traffic And through to and the TrueCar include in XX% comes traffic – traffic XX% that you directly traffic the so, it’s of partners, get just right? to doesn't clarify,

John Pierantoni

That’s correct.

Naved Khan

say on Okay. And conversion organic is less is the fair than it to rates the paid? that traffic

Chip Perry

of the that headwind strong us mentioned Those be John make earlier the it’s a causing our kind Yes, large said that an where traffic. yes. for than unit and sufficiently off, have our down NFE said, that, amount will like sufficiently particularly I traffic does. single-digits year year-over-year. be search other TrueCar to is organic still will when outlook I traffic model it’s have lower But

Naved Khan

Okay. affect declining how That's SAAR it your on does outlook? helpful. And in January, then, and you the

Chip Perry

they dealers’ the efficient SAAR because Our in recession, then type others or media, of fundamental was did change the don’t car up much efficient. XXXX, traditional TrueCar darn XXXX pretty marketing your belief than the more that more back is the that of through largest budget, much. share in and well which very modest affect down was the third-party were Most what

to marketing dealers we them efficient focus business. softens, sales. efficient are dealers that when today the to X% then as X% the that. and the dealers range, to we negative on a to So, provide many tough, down times We one the have SAAR expect the of available us don’t have most to And for believe tell need channels them channels on marketing our effect are most

economy, Small are reduce this in we quite the the event marketplace. nicely. significant downturn a our dealers a would would significant of are think that in dislocation to environment, units, decline our SAAR in that think which efficiency in in significantly advantage. our think in that fact, we we Only all situation. plays major They we In emphasizing macro, we in can the changes in macro experience

Naved Khan

it. Chip. Thank Got Thank John. you, you,

John Pierantoni

Thank you.

Operator

next proceed Fong line Marvin of comes the BTIG. question Please your with from from question. Our

Marvin Fong

Thanks my taking for question.

midpoint, if give absorbing really million cost been kind expenses guiding asked. guys I'm Just I looks the was mine of of like just not cost how you cutting savings Could EBITDA both of 's mistaken. implemented? you just what you it have the total, the – are most $XX up that of by cuts about to the bridge one the going in kind from curious the that’s at $X million

John Pierantoni

Sure.

types a in we a Trade, there so So, the XXXX savings to incur some coming the through. things those as or basis, DealerScience, are making with costs the on in that business. of savings year-over-year period, other be are obviously are that In particular with to investments addition in that going we of will

in have runrate also some XXXX. did we that You hiring

throughout hire did the we year. So

in million areas. We’ve That’s the obviously So impact. $XX the having of other about and year our $X area an full from headcount headcount. expense in shaved million

So year-over-year open and increase revenue that’s modest it in by modest we driven some and and the modest up margin in have the obviously and additional for in having the opportunity does improvement investments margins. increase

Marvin Fong

one just more if great. Okay, And could. I

investment an the believe why What as already you product, of that? so making from already benefits investment, guys I were Accu-Trade can actual a them using benefits Just on the of the partner we - trade-in company? for additional rationale the in expect kind

Chip Perry

the also company in sure. channel, third-party wholesale trade-in It investment of being wholesale the gives wholesale us a as provide value tools an the will be in new, other it we company the and Accu-Trade guaranteed that when in importantly, basis system. the But ability through strong provider of represents the exclusive is interesting do to a Accu-Trade upside Accu-Trade third-party interactive provides to a that window has exclusive this our on secure way what very market. the ability car, that. investor suite tool, young represent Sure, the separate consumers on their meaning to receive into values valuation upfront through our in will to approach market, value provider in Accu-Trade an a we the And very provide this product from retailers. also

Marvin Fong

Great. you Thank you, Thank very guys much.

Chip Perry

you. Thank

Operator

Please from the of Brian comes Stanley. with line proceed next from your Our Nowak question question. Morgan

Brian Nowak

I Thanks questions. for taking have my two.

of guidance. the Just sort is one through the first talk

little you severe sort of What this of – where with be able traffic gives the examples So, past. being internal it as and of on in about been the opposed How you’ve for XX% seeming it being like will to the to situation than a increase see Google? more of a to sort do picture, for being think be able SEM kind traffic you on about then, to And of the search? to expectation conversion it down need channel sort of first unit that half, more search optimize in where of that the year while? paid the to you do SEM start confidence is to have paid more trying it down, XX% long-term or flat. you bigger some is the Talk spend need grow of the a Thanks.

Chip Perry

it. So, I’ll John do and the cracking support will

headwinds So, channel. sure, TrueCar are in the we experiencing

affinity seeing partners. our growth are extended in We the USAA and

So they overall. balance out

run we here. So, business a

current able we we put even So we prove forth is will experience terms to We historical in this all different look trends plan into growth, the TrueCar very at of channel based quite so unit are them TrueCar and be down that closely. the upon year. and audience though and viable pathways channels model flat

our last budget So, have we when we our comes no and mix to the we want marketing, And to start problem and that a years. bit increase couple our to up But it than then marketing marketing mix reverse our more to of us now. go until we been there take and leaning search really. trend more over of see offline have

is years. total branding flat search offline and three our for expense We’ve complement past a paid effort. the basically to nice our been So marketing

LTV consumer people more well is driven – more our happy to of resources marketing will going higher and grow We us product related revenues are that to to with our converting grow, not we stronger expect is mix LTV in as resources DealerScience have are growth a starts higher the we as as of from our which that lean experience, of top-line which a towards as will we advertising. invest by through enable that higher and it OEMs financial back levels and and trade offline

the a been maintain on in marketing budget. we’ve TrueCar our last overall So of couple to with been a the tool traffic. to us nice grow search paid has years flat And able for traffic

we well year that darn investment going headwind pull to organic we longer growing We more this can’t have that starts on organic. So to we’ve pretty top-line will off, year that offline. but this both marketing reverse going given and which and are toward we enable done to trend improve are the we are as having in a reverse, overall leaning

Operator

will question remarks. to have end of We and the for now I turn the call answer over and reached session the management closing

Chip Perry

at all for attendance things happening you TrueCar. positive in of a conference is your today. There lot our Thank call

place are were in we than year ago. We stronger a a much

first – We the holds to are for the our year sluggish us. finish our with the and with But for are last future excited year. what guidance very disappointed about we

Now whole our a the can products. – innovate can our on proceeds. put company that a up as different this chapter we actually We put and year trajectory open new

to your next and to on Take talking thank care. forward goes you Look you quarter. as attention. So definitely for time

Operator

disconnect Thank conference. lines time. This concludes your And today's this you may for at you participation.

TrueCar (TRUE) 15 Feb 192018 Q4 Earnings call transcript