TRUE - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the TrueCar's Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host Danny Vivier, Vice President of Investor Relations. Thank you, sir.

begin. may You

Danny Vivier

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

Joining Mike Chief today Officer; me is, and Chief President Noel Executive and Watson our Financial Darrow, Officer. our Interim

we'll be statements call. As a making reminder, on forward-looking this

not guidance be confident forward-looking In can expect, quarter a and forward-looking by plan, should as and believe, the These use and anticipate, the full addition for are performance relied first intend, XXXX, similar be year expressions. upon statements for to guarantee these such or will, our identified statements not results. of words as future

Actual Quarterly could you contemplated Commission to those on the our and Reports results on and of by caution Risk of factors the statements. that Report Factors Form results section differ with Exchange XX-Q our We materially and could reports the review Securities differ other for our our materially. our filings discussion to XX-K, from a cause Annual forward-looking Form

make we update any are today's required disclaim to obligation statements us based any date statements and forward-looking except of to available on by forward-looking as as The information we on call law. this

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

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

Mike Darrow

we traffic robust and all In dealers. return across XXXX our and identity, year Danny great a certified nearly just transformed areas network growth achievement to dramatically brand the you XX,XXX experience, afternoon improved of our everyone. business. consumer our maintained of was Thank good one year, of

group would improving way sell each our achievements of possible were these this been to day buy privileged I not and work of people am the employees. not and common united cars. driven commitment for the to dramatically discover, professionals, unwavering come of alongside the have by belief talented, of thoughtful beyond it All goal and

As of will its Federal will XXXX, with transition this buying discontinued. power XX, the agreement, the of short-term in form service Savings February into be the agreement. a services USAA service a USAA continue through of TrueCar TrueCar entered XX, extension Under after has partnership to Bank which car September

TrueCar's will period, car feature USAA remain to interruption. to way transition this see running car continue for site both with During the buying difference companies a will buying in interact no dealers service network will of customers. members and the service committed its without USAA they

to As the revenue will it from TrueCar was relates same the previous the economics, as agreement. the USAA share it to remain under

one partnership. have and duration clear, Additionally, service providing in that their earn provided TrueCar members and TrueCar the focus an course clear the be there product stop on Ultimately, will announcement USAA members buying us a XX the that throughout over fee October the million does To service has will it to XX-year to reflect of made not this agreement. business services be transition successful decided they a separate on to of on long their effort the USAA offerings. simplify car to core to

value of and growth very USAA's thorough given long-term identify our and opportunities response, business was for we creation. a near-term In assessment TrueCar little initiated notice to of decision. additional

TrueCar of margins we adjusted agreement to the will that in assessing business XXXX. enable transition EBITDA While are execution we're the still confident the maintain of the process in services impact,

are partnerships audience the beyond pursue. are time, of segments a of At think announcement as strategic about and to now there same we this we longer-term impact that the able XXXX, number

overall the the parallel, in over go strategic few opportunities to these these of developing of will the next while preserve this months, year, business options. of after a profitability outcome the beyond regardless aggressively We plan

industry-leading like provider this progress in XXXX our how continuing invest to now as position. position we car in the I'd to connections. solidifying announcement of in conviction identify new towards the Today's make reinforces TrueCar's and highest used quality

First three more and made innovate in foremost, enabled pain it experience points platform consumer past in the major our years, over address technology we us journey. the buying significant investments that to our rapidly to car

product of company's the was history. innovation XXXX velocity unprecedented in The in

way consumer and which used dealer enhanced January, pricing and across who progress evolved we've introduced explored appreciate you and the just inventory have content you'll discovery experience, how in an enriched context an of In experience discovery we of connection since new page. our made. XXXX, communicate those late announcement site vehicle our entirely built personalized the For new out the shopping much in both new we

Let TrueCar's critical to a the take why explain connection to so me future. personalized the dealer page moment latter is

lead automatically in This reminder, faster dealers. for a sides model up consumers a personal experience passed intended, to of introductions the buying experience, was car As premature move in three consumers' our their dealers, both funnel to legacy had suboptimal they resulting through marketplace. sometimes a information once our lead the often gen to than form completed creating

control TrueCar's evolution In the dealers in with their towards critical fulfilling experience, marketplace. share us marks consumers accelerating what they consumers modern evolved come any from gen history This we a over information. moment lead in the model number to expect favor a of whom have new past with empowering of

optimizations is much promoter cases consumers expect close control rollout of that we're improvement and driving rates. XXX%. when in enhancements page XXXX. to connection how the of to they more are our in nearly in seeing lift full a overall is to a the making connections connect with a map customer and we the have a At personalized quality, net dealer significant for rollout live continue this beginning. over time, From significant dealer's the and with we Rest this XXX% will our empower perspective, the In satisfaction exclusive just traffic truecar.com As and partnering our extended in network change, scores assured, many across up are the dealers. road result higher we follow-up this across complete parallel are with

in Now that of In high-quality healthy high-quality our we connections continue we not the of isolation need to market element a are to connections order to volume marketplace. attracting X-sided the recognize consumers only experience. in grow more

traffic. by outline XXXX growth Let me both growth Much we've traffic extended across to in affinity year-over-year was our the QX, the XXXX. toward brand organic XX% truecar.com generate we of now channels. made investments progress SEO that and end made the we've highlighted by in In driven our reaccelerated more

variety research make experiences discovery best as and are of and incentive up model pages to Throughout that of rankings, such beginning vehicle in the a just numbers. year we our show level launched overviews

in BXB strong a refresh TrueCar's marketing late a brand January we of design, of heels advertising launched featuring campaign. an identity collateral app complete and the On website in all-new QX logo,

appeals demographic brand in of segments. new consumers wider the out TrueCar The a competition likeability across beating to audience all terms of

here by are remain into we channel our are branded growing to seeing the We committed and encouraged momentum audience XXXX.

affinity Now the turning business. to of side our

and families. of actively their our earlier segments with the to consumer to USAA in limited ability alluded I and call namely our immediate most in retired the engaged active one U.S. this target relationship members military As

bought in are research members network a small front relatively quickly suggests than number context, car a who through individuals there million For to segment. you'll this of of within potential our the XXXX XX Compare USAA opportunity figure dealer us. recognize more in our and this

professionals deliver community, to beyond this this differentiated a serving the base service a their understanding and audience history buying deep to extend Our and USAA brand broader to membership of well families. recognition military of positions audience us car

exploring partners such the we U.S. Club American In members including represent our world-class the high brands households. to military as majority to Express, parallel continue deeply Sam's affinity more scale ways GEICO of engage to will opportunity existing and and new whose community, collectively also

driving are is USAA near-term car the a segments number service traffic of by while summarize, appeal we'll healthy this acquisition and demand to a there across side network. to a changes To positive loss With experience we demand our of of to of additional maintaining consumer believe an our growth headwind marketplace, non-USAA to opportunities in-market acceleration actionable look clear our channels dealer buyers. of the

in hard over of industry looked highly we out nearly accountable Vegas changes just in at largest Las are car making driving weekend XX,XXX three sales. high-quality their are experience have customers showroom. worked efficient connections an and of and you our of source NADA Coming higher-quality a as product remind support who by conference excited build TrueCar network all the last which dealers of the dealer our brand past identity of into me years, used to we've Let to are new

monthly highest industry's manage to ensure a our also of receive significant we to traffic As quality that the customers continue change in our sales. ecosystem, consumer portion sources their our represent dealer network connections will

XXXX now as over turn year to to Noel for call results full I'll the as QX you well our XXXX. walk expectations through

Noel Watson

Thank good everyone. you, Mike, and afternoon,

Before Board, June team CEO. for Mike's TrueCar since pleased faced difficult rest our following search of read status company on the statement of his call you extremely leadership with XXXX, time the asked the Claus a on of the Chair turning performance to our has a the to new behalf which the Chris of the of of in the many under me TrueCar Board to has company's Directors challenges. update is

a of team and bringing business made have partners strides Mike OEM. make or the better the quarter. future of the improving company's serve leadership Despite an end CEO operations to of and the consumers, to first backdrop, those Board the constituent in challenges the a significant the that conclusion remains all announcement the be near Against very reconstituted affinity dealers, interests: in to committed to search position process on in and before to expects the

Now reflect well I'd the for as guidance performance expectations an quarter, results above financial you second update which end on our like for through XXXX. our of our take fourth high as the to consecutive quarter

high $XX.X total During of down end million X% approximately the guidance revenue the quarter and million $X range our above year-over-year. was of fourth

roughly XXXX X% revenue in with Franchise to franchise For totaled $XX.X year-over-year flat revenue XX,XXX was dealers. and down of was million prior count million of XXXX all X% the year. down from dealer $XXX.X QX

all XXXX dealer count year. up of was XXXX An $XXX.X In independent last to XX% million to dealer franchise flat totaled dealer of which compared was XX% Independent revenue in dealers. increased revenue XXXX, year-over-year. QX

$XX.X XX% million, dealers revenue For up from XXXX XXXX. was over all independent of

revenue reach revenue dealer trade, $X of and science, year. in $X.X TrueCar sponsored quarter, last million was QX up dealer New from million during approximately the including product listings for

dealer from in new up XXXX revenue of million, all totaled XXXX. For $XX.X product $X million

We're embraced and XXXX. of QX product of these of revenue continue expect offerings this XXXX in OEM pleased XX% million the $X.X new momentum from XXXX. dealers QX to by into down way have was

$XX.X of million $XX all revenue million in XXXX, from OEM XXXX. year-over-year For XX% was down

lack the by As we've decrease driven noted recurring two this previously revenue larger OEM from our of clients. primarily was of

We beginning lap revenue comparisons easier this this will to year. begin on line QX of

X% other was Forecast quarter million and consulting and down year-over-year. $X.X revenue this

our consulting to For year-over-year the year was up X% and XXXX other revenue full $XX.X forecast million.

to turning Now units.

total quarter year-over-year. Our X% the units XXX,XXX were down in

our XX,XXX units all generated QX X% For units branded in XXX,XXX compared XXXX. down QX of down we X% of year-over-year. TrueCar to XXXX, totaled XXXX, channel, In of

full our the new optimistic about optimizations as Despite the recent our ability expect brand we new generated of well For units of to following XXXX, return campaign. experience X% a consumer XXX,XXX year-over-year. impact site as our down we are continued given growth the to year branded in challenging lift XXXX, the channels unit launch XXXX, from we

up units, In our XX,XXX USAA generated X% year-over-year. channel, we

generated we compared For XXXX. units XXXX, the full up year XXX,XXX to X%,

through we source of the through channel XX, expect the services to end transition QX. the remain Given of runs unit which September agreement, significant USAA again of volume execution a a XXXX,

pull a to However, spend decision we result anticipate of pressure as during transition some back that near-term USAA's period. marketing

of X% channel, partner extended Our QX in XX,XXX XXXX, units we year-over-year. generated down

a extended to signed identify to our growth recently to opportunities activate XXXX, scale We in channel as existing expect high partners the and partner of we parts. return potential handful

units, used continue year full towards with XX% the generated of new mix in to XXXX, we XXXX, used. XX% of X%. The unit XXX,XXX up For and shift QX new used

were improvements the across year-over-year, the XX% XXXX while quarters, used in weakness total earlier up For car product total channels. car units new driving the with decline experience in units throughout fueled channel new all the car growth significant used is car down XX%. our to quarter, branded have units. Consistent were Meanwhile,

per new $XXX was XXXX, up by last units per of where mix of revenue car XXXX. from subscriptions the the an Monetization dealer year driven unit through generated QX unit, and increasing $XXX in in without used of an adoption products, per versus year Monetization associated unit count. was unit per unit $XXX $X for is

where margins, million and XXXX, XXXX of of QX of from and $XX.X QX XX% versus the year. Gross million in a gross down was of in all to stated. XX.X% turning basis unless on following was non-GAAP $X.X of Now expenses in of metrics profit are margin otherwise last QX QX XXXX,

$XXX For prior profit gross XXXX, million from million, all of was $X.X of year. down

Sales sales QX $XX.X acquisition million year. and truecar.com partner marketing in marketing and revenue marketing of XXXX, flat QX revenue XXXX, roughly or of XX% expenses were of cost $XX.X XX% $XX.X Within QX our of compared and or last was to in our expenses, million year-over-year. of in million

Our cost last unit slightly year up per ticked $XXX $XXX sale unit per blended this in QX to year. per from

fees. rebranding year. X% consulting increase as of and The in in headcount million costs sales associated the as time charges recent Our well last $XX.X XXXX, up QX higher reflects other this were cost $XX.X campaign, from million with

million sales $XXX.X XX% compared XXXX. XX% or of in For all our revenue XXXX, totaled marketing revenue, of expenses million as of $XXX.X or and to

development in to and XX% revenue XX% or of of $XX.X in year. XXXX, totaled QX of million, last $XX Technology million, also expenses QX revenue of compared

For compared $XX.X to all development million totaled or million XXXX. technology expenses XXXX, $XX.X and revenue of revenue, or of in of XX% as XX% our

Moving G&A. to on

$XX expenses XXXX. XX% compared or of totaled of revenue For revenue QX or to in million, QX XX% million, XXXX, $XX.X of

as spend of or For XX% $XX.X compared the $XX.X in or million revenue of G&A totaled XX% XXXX, XXXX. full year million, revenue to

net QX $X.X non-GAAP of $X.XX share in was loss per XXXX. $X.XX income in QX $X.X of Non-GAAP $X.X XXXX representing compared per or net $X.XX QX or loss a to a million of XXXX. million, to of million, XXXX share loss for GAAP of of share $X.X share a loss for was compared QX a of million or $X.XX net

Non-GAAP share XXXX. loss For of non-GAAP per $XX.X per GAAP of of million, $X.XX share $XX.X loss in loss the net income in full compared XXXX, per of million $X.XX year XXXX. $X.XX to $X.XX $XX.X was net or share to per XXXX, a $X.X net a or or loss million was million in representing share compared

was $X.X X.X% of for in The of XXXX. EBITDA and from EBITDA or million. in stock-based items XXXX, revenue include X.X% compensation primarily $X.X or excluded QX and $X.X Adjusted to million, of compared million of million QX amortization of depreciation adjusted of QX of XXXX, revenue $X.X

or revenue $XX.X XXXX. X.X% XXXX, compared X.X% EBITDA of was of For or the full $XX.X adjusted year in million, to of million revenue

Now guidance. turning to

range revenue full For adjusted million, of year-over-year year $XX XXXX, in EBITDA to X%. to or million million, to to we to to $XXX million margin negative $XXX X% generate the expect $XX flat maintaining the of X% estimate growth. of We be a

producing quarter first growth of million, million, XXXX, year-over-year. EBITDA X% first $X $XX estimate in million to we generate We revenue a XXXX to the revenue of to the or of of For for $X X%. to expect X% range $XX quarter to X% to adjusted the be million margin of

with for to volume ensure our will agreement the services USAA mentioned three significant the XXXX. transition help USAA of earlier, receive quarters customers in continue that to dealer of a units execution As I first the us

economic including TSA revenue share fee. the $XX legacy and go-forward a of in transition Further, million terms a the the services

top considerations reflect of guidance. our line expanded a into That development of we to do are that to All have embedded and financial these outcomes appreciate could said, attempted revenue lead in that wider our range this guide.

financial profitability XXXX, the remains be creation. confidence Notwithstanding, conducting and any of our shareholders business ahead of a committed for and identify in additional near-term will In XXXX. business, opportunities our look to growth long-term management for in the we near-term as assessment health to team thorough into and event, preserving the we value

to questions. let's go that, with And

Operator

Thank Instructions] with the you. your be session. conducting from Our comes question. question-and-answer with now first Riley proceed [Operator line of question Lee a Please Krowl We’ll B. FBR.

Lee Krowl

Great. Thanks for taking my questions guys.

clarification of First point just a USAA agreement. the separation on

million today, off target opportunity is talked USAA only user as rolls that QX? become once guys opportunity go of about of You at you agreement allowed or the XX Are a available which effective that agreement. handcuffed end to were you the USAA opportunity large part the

Mike Darrow

question. the look service be But through continue that It'll provide to with providing. understand opportunity through in service going we be to we how open broader community. that already for service we're Thanks Hey, Lee, that That USAA we've is Mike. us larger some here to September. put transition to able group of to We'll very uninterrupted up to it's things and quickly we will to the agreement very, the a USAA. place as have

Lee Krowl

Got it. same you second the for the strategy Just going this commentary for is the it or does impact marketing the had think And my marketing that the to with year year, and of and does to strategy then commitment margins year changed EBITDA the expenses the full the whether USAA your of full with into the kind your and year, and about for how budget question that's of guys curious end rollout? as announcement agreement?

Noel Watson

Noel. question. this is Lee, Thanks the for Hey,

we those paid So well into exited marketing seeking grow data timed we into And launch to as QX with about into spend. some to talking new channels of and year took coincidentally were the them. learnings different it QX in and the try in learn testing our our of around and feed some algorithms spent we rebrand. We efficiencies our

our QX and through been has And continue support marketing expecting very throughout spend year. so to and we're to building in of in in received well the expecting the we're spend which rebrand efficiencies

prior line right of think with from it in would now is I So the year. spend

as of to going are we on the the look service military community. to refocus spend sort We

one can need and can that's that efficiencies in where And But fluid we to levers We preserve profitability. should see things the we for to strategy we Obviously, one to now intact. order we're of be the as gain remains essentially the pull of well. unfold. how will looking areas

Lee Krowl

franchise-dealer year. there? And that fully QX? additional end I new product have this it. then changes the expectations of commentary tailed Got you towards question. in last just Any or kind noticed out And any I the adds the additions, of rolled now especially for off guess

Mike Darrow

Well unit our year. know, Yes. volume was flat you Lee last as of kind

our – of level to felt service we that franchise was our volume. network So network rightsized

service the we're certainly whether to channel will we that judge those consumers. the to to piece to our add And of continue to starts We branded value grow year, dealers this opportunity into as lean business. delivering

Lee Krowl

Got it. question guys. Thank you taking for my

Mike Darrow

Thank you.

Operator

Thank you.

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

Shweta Khajuria

Okay. Thank you. Two questions, please.

the modeling And or the for on – $XX bit potential One is to Thanks. strategic does fee an difference is in setting total service year that? USAA yourself few just basically you're thinking QX. included guide? the partnership your second million revenue is came be bit second that First the now thinking? opportunity comes or to that post of you more up million what about partnerships questions. the a once talk million a lighter end will Is impact $XX USAA How you on Street. that And is, Can about is The EBITDA investing a for in for guide primarily? full $XX that little little

Mike Darrow

them relationships. for the membership build question are let Thanks, part. take There turn and reaching over to providers the out to service Noel then of first in I'll be number We'll that Shweta. that other community. the a order to me military it And of second part

XX with amount a – and over tremendous USAA of type folks. reach And that that our from of also years. understanding to got those We've customer gathered of demographic relationship learning the ways we've we've

to look that that quickly options So to pursue all available we'll are group. us at the

our military to some past. of have to a able base a out been design service the than own swath had build channel at we the to in military looked site We on broader potentially

We've a all folks a service pull lot that year opportunities to we as the space. experience the So there. this number levers sure in make we'll in the can get of got military. we're through And of to continuing to continue we

Noel Watson

will the regards and amounts be our first fee That is services With in the offset Shweta any EBITDA is to be owed revenue into the that remainder this recorded TSA Noel. and in consulting transition our And included USAA transition share $XX by million forecast rev to fully other services will guide. revenue.

the as year agreement headwinds guide right, from as primarily of we've as service during in where USAA first transition three expiration far the impact you're that the some effects into that's it that revenue channel some or USAA the there's full modeled our externally. be X/XX as of we and year USAA yes, no the well longer quarters we've they for well. then marketing conservative modeled total network to from as assumptions in as of actively entirely services As have buying the around impact will car related the The

Shweta Khajuria

Noel. Very Thank Mike. Thanks, you, helpful. Okay.

Mike Darrow

welcome. You’re

Operator

you. Thank

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

Kyle Evans

little a bit follow-up Hi, think. thanks. I to A of Shweta's

think goes And against – only could have heard segment. transition phasing the understand goes that make into million. $XX What the to over fourth there about top that was rev then follow-up rest us And will say guide that rev what help I the quarter? other want you over the the share mean anything question. and I kick-in a left line the year? the in Noel on Does the Just service said of agreement I of you you and the that sure I

Noel Watson

Thanks, Kyle.

that recognized the over be to transition the around just will clear So service service be fees period.

the share that as earned or that you ratably line. about that of with that owned in think in model netting what by be around against So USAA would rev out expectation terms

the that service the forecast and that throughout this lower revenue period. in So and at marketing end level you'll Does consulting end help? line of other with some of day, costs in item

Kyle Evans

Yeah, it does.

look to then units I first the follow-up. quarter The in I'm the of a of that I when top what's have what line XX% And fall out part the question, fourth of like the is asking going guess model?

Noel Watson

Yes.

steep a channel So us. there's is for USAA off. a pretty drop obviously significant

the a pull are fairly in remarks, quarter, we strong behind. to that that steep some as in areas order And volume so Mike to go near-term fill his talked of there strategies seen the about after fourth we've going decline. as we're continue as well the there's prepared as of invest aggressively to business in growth the out that model Obviously, other in that

so to this right we again, pulling entirely. I at detail provide numbers specifically because But out have think not max some that we've any I USAA time, is And opportunities the volume. around out I'm QX what modeled think now essentially units going to that the

Mike Darrow

And is of this that on top Mike. Kyle,

As at you on know, side, results consumer close We've in the seen rate launch both been since and side we've heavily investing that the of experience January great as end our the well satisfaction TC/DC. things NPS from line. along as a consumer

to So in fortunately all expand us. our time think Sam's channels the believe we and we've military Express, that USAA of this on we to service I in out growth our is potentially using of Club, now of at GEICO. still can with actually, going larger the clean we through were focus other more of other for were throws negotiation this building a USAA accumulated affinity expect group We're brands buyers out other partners. through and we big American we who reach We'll understanding line working sight final a And like as our of We expand and channels. servicing have into. community there the some get

Kyle Evans

into segue last that's And it. question. a Got my good

prospect seen? you've the have any Promoter in seen Net and rates little And have to change it into as close mentioned you up since January. those Could of you hopefully sales prospect bit ratios dive turned Scores that a the down you. conversions? Thank You conversion visitors

Mike Darrow

of engaging Kyle delivering -- I from stage of we've the connections NPS just lot quality those from that consumer-controlled some I'm scores in. starting our growth. are that And in We've indicating there. very from -- tell seen are But process, a high going XXX% seen to can mentioned signs come sorry our recently numbers the what at dealers the we're A it's with is up is final consumers. just our Yeah. leads connection. coming which is positive some you for data real folks I to that. The

more all new campaign us the as So, good allow the more now very we have the signs around positive. and product been that into branded early channel. pour see new And will signals to traffic

Noel Watson

think think the new a connections is the way And Kyle, improving quality to we're of regards prospects the experience dealers. to I sending that to that it about and with we're

and close So the a of we're prospecting that. goes up is level prospect offsetting rate that seeing going -- down, but

we're overall cars. better our experience consumers in for NPS because So, to a higher dealer experience for because sell and the spend have order seeing the of a less number customers, they better time same to

Kyle Evans

Okay. Thank you.

Operator

you. Thank

Our of question. your line with Tom next from question comes Please with Davidson. D.A. proceed the White

Tom White

narrow we've how might a that be about question. On Can dealers Thanks channel. Great. and for rate that taking and over my quality difference rate USAA, conversion you heard was the from able kind to time? you that between talk channels lead the in highest conversion and of maybe bit channel USAA other your

quick about anything is I then Is stake separation? equity with that I then the product there can TrueCar? their it And referenced USAA your could. should we at all And and in if or a follow-up for separation in have

Mike Darrow

Yes.

channels those generate and service in agreement. was -- it the sort connections wasn't The USAA order high-quality did -- don't USAA our a think through conversion those that we through spend of really We demand-generating things. that channel. about to So we agreement rates opportunity agreement talk that's exists a actually service there And folks.

their at relationship that consumers we will we reaching level those at about most we'll are looked by that the of around high-quality the dealers We've and into centralized. a we're -- beginning for buy be understanding affected still this to who cars. know volume where lot can going to but folks community geographic So way value the with of arms generate that and We've replace out a got the for. it is the be

Noel Watson

that to that discussed thing equity at And internal decision TrueCar this to we've with regard in an that USAA's a no is they make have not into them. That's with point. stake have that we insight

Tom White

just wanted part the sort product, I that new deployed? Okay. nationally is to of when be I then of that great kind the I confirm. just talk of the agree consumer Could control will out hear And of to connection the been rolled that broadly piece Did and yet? which you hasn't part. Great. specific timeline piece on critical

Mike Darrow

both we'll Tom on Yeah. dealer it continuing begun that's have network and to plan And of that improve the -- out out the be it rolled to We've early affinity and go it. and very XXX% really some channel completely we've through excited our to and TC/DC, been we're rolled our extended about and end signs be the as on from XXXX. by good out year. branded affinity side across seen the iterate product side the we consumer roll

Tom White

Thank Great. guys. you,

Operator

Thank you.

Our line comes your Andrew Securities. the with question. next from with JMP Please Boone of question proceed

Andrew Boone

for taking question. my Thanks

got So I've please. two

can Is USAA, help dealers? on are guys to just understand How end? the you just USAA you on do on need going that communicating there you impact away? the us First anything guys

with there. you then looking about And kind do growth? behind levers out Can secondarily Thanks. see have forward you then what the and And to traffic additional brand XX% a that of that new TrueCar up talk drivers continue?

Mike Darrow

Thanks. Sure.

the out impact think us allows make dealer as we are to we Transition of business sure the lot that go a of spent team year message forward. -- team. We Agreement over USAA time we're and kind we dealer the that our our The smooth to TSA, to communicating with mute we’ll of Service

And service of dealers I'm do in volume that type replacing like some that our who be of and to change we to question about talk to where effect again, all work say we we're and think will to sorry? need continue the that to are talking we things quickly the community. area centralized going to second doing we're So

Noel Watson

that take I on can It's one. traffic.

to made by around primarily and our regards the we've where driven primarily used we're traffic, traffic the So in increased with seeing improvements channel SEO.

you September if our part that in was So traffic. algorithm impacted XXXX of remember a Google there negatively in change organic

So we've now lapped that.

that So content in benefit improvements as site. added well there the to regards made with the the we've our as and market we've SEO proficiency we're technical the seeing to that

well we're also our seeing seeing in drive remarks continue our with we've sessions SEO pages return signs in user overview and in our rank where we're higher Those and out talked had earlier as per positive and consumers visitation. the success with increases growth as model We to best pages. about

we So side that's lot we and big XXXX. success on grow the a there's be part more think of in to to room think a going SEO our

Andrew Boone

Thank you.

Operator

Thank you.

the Daniel Sachs. comes question. proceed Powell question Our Goldman from your of next with with line Please

Daniel Powell

Thanks taking I've question. for a the then one and got Great. follow-up.

But Just units. wanted the the to of channel Google the being the versus growth Realized related that dynamic branded move the down a spoke down about. there XX% lapping there in unit traffic volumes particularly kind between around to year-over-year. the we ask you in branded discrepancy growth saw it's change in was channel just and

Just versus where curious kind of if now that expectations? a follow-up then your could. moved I And

Noel Watson

one. Noel, take that This Sure. is I'll

lapping certainly is Google that one change. the factor yeah is So of the algorithm

funnel can we important is ready really out that nurture higher the reengagement We're lower user, people been funnel sessions traffic a And buy organic around they're per finding that's we've and to metrics inherently is repeat why so the through duration up converting. on-site point capabilities that so the the that where and visitation, to car. are e-mail in around the consumers our those through building

our make that other which the we better is have consumer example net-net a experience have but We regularly that going consumer that qualified a we enhancements a fully connect in for until The may are regularly commerce. we configurator, that those But we near-term the to headwind. to the the experience business QX short-term with and to more is essentially negative provided are experience benefit and a didn't could to was related trade-offs dealers. our late for long-term of that think changes change made we configurator, benefit made consumer. that An make in new the car rollout where for

factor driving that was other So diversion. that the

Daniel Powell

Got it. outside of to That's helpful. relates the And that opportunity then user as closed it and group. those customers market to to USAA

the still from how families? curious of were much users that off or TSA? or data feedback USAA are Just market your this impact and And military after ability to getting types from those how going does USAA to versus what's to you get you at getting turned time

Mike Darrow

It's to supporting This providing Mike. car the and service Yeah. them. for USAA understanding got buying the them data, community Thanks XX about that Dan. I the of from years is we less than think through

to the lot country So we'll lot areas own We've buy rely where of around accumulate of live and able pockets learning. been and thrive of and military a vehicles. communities the to the data also that our tend the their

base And that and products interesting that of buyers. and a pretty creating understanding. to the key we've for continue will group got exciting of service good So be we think that going are and us forward

Daniel Powell

Thanks. Great.

Operator

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

Naved Khan

few A questions. Thanks Yeah.

maybe growth be outlook I its the the, at unpack spend, X% might coming can And talked QX through companies? a you own for the branded X%? are to us channel on how little X% marketing how about should to you channel? with what revenue. your the maybe back so on about you versus Just OEM, guess OEM your So revenue USAA cost get X% maybe time for to fewer leads and that in growth conversations same this car your bit the USAA we for pulling different own and on expect And How channels, talk affinity do going year?

Noel Watson

Naved hey Noel. Yeah, this is

I continue with car provide September. We're the the the through USAA -- going of is that buying agreement end to is to thing that right? So the call to them out service continues think first with USAA,

seen a we success we'll adoption. we're early strong the they So some we have the dealer products where that some impact first there. that so But bit channel softness of quarters back three overall really in expect we've be think still new and primarily the pull will muted. on in to marketing our having Yes that little

new that had in with registration and any event had. example, foot sign-ups If we much is very a NADA ever we've as traffic there successful

at revenue. the strong of of with earlier experience are SEO that So of we've than as more of offsetting optimization that we're we're our then those launched. lift seeing new some out first any in our around new rebrand stages I the still And early the getting and the performance And from meeting product earlier made those consumer folks as well quarter. comments new the headwind traffic USAA from

Naved Khan

in the your making hearing? forecast? what then And you OEM, you what are And are

Noel Watson

again OEM through well. continues with say Yeah, muted through But impacted expect in the first drop-off would a on the And revenue I quarters. would service then is X/XX, so as QX. expecting similarly USAA by OEM are we three we OEM, impact

Naved Khan

Got it.

and just So like and you maybe this a is think there's helpful. consumer And Mike, testing maybe which you a of to maybe quick more in Mike. follow-on features you Do with iterating give experience? -- sense regards a on what us room of are inning overall functionality lot still can for ahead?

Mike Darrow

know the from the I Thank you really done we've for the -- Naved. of seeing think would we bottom getting or what We're moves. second, first it's I some say the early don't Sure, we've the significant top of the made question. we're if the in both marketplace. but good on sides of innings. signs

and to The side very, responding of both unique been of consumer positive, are way quality we've are connections. very quality product generating connection of of to dealer, engage marketplace leads, them in consumer able about have the we're that. Many is how a to and the sides consumer it been many has them our excited control the

going a on got that AI some addition, now. got And we're into testing get process texting we our also we've around right an applications. SMS market in We've that to want chatbot pilot working In with exciting well. as

mechanism. that and able want to to to been realize is forward. about what long there go certainly a accomplish, connection time marketplace over we consumers modern that And feel control good a but we've in way So in

step traffic The at results our next right channel. XX% now. you'll by buying seen. is Excited our see are into trade of core we adding that We're about our running we've big those product

want vehicle but the their up a they able put to able price get value the to on only we'll be understand, not be at So, we'll a consumer trade-in. they on

So in can but that headroom of there's we're innings, lot grow that where excited the and still about we nicely. we're as a progressing We're early channel. go

Naved Khan

Great. Thank you.

Operator

Thank you.

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

Dan Kurnos

exclusive usually reducing risk in flip that? you thinking premium leads how through if of run then our this Mike, I'm typically side near-term least you on Thanks. trend the obviously about pricing. just lead and command with some select, work of conversion. you're volume of And the traffic maybe kind as curious at drive the the continues

dealers that. respond So, negatively to can

So, kind you're thinking balance? thinking about I'm how that of just --

you're And talked seeing heading marketing brand the then some into about you efficiencies campaign.

of fluid an us top could seeing bottom marketing side? Just in costs? on you the you're customer what you're funnel terms what give how curious overall on just the acquisition given is on update if seeing And versus conversion of

Mike Darrow

Thanks, Dan.

the chosen delivery. want the I'll signaling through one-third to that -- make connected relationship. in Let right of take get leads. sure now our the the first and data first About a that been volume, regarding lead We to going dealer the right me question the exclusive dealer our we an consumer. around exclusive that's dealer value volume understand to the is handle are that We're they connection with

we tend have sales track and we'll number major to be our to provide they dealer it a part will of the So, forward. and of of it. out basket connections performance, But going portfolio we look that a at of the

as lead quality, long of high getting a have drop NADA. as have of at to are But lot a dealers the bit consumers. about they're a conversations in count. with are conversations with our that seen had We And we good able the leads

tell they've I dealers think they more need would leads right more value. connections deliver now, need, and customers you all real they to got the need many they

are that grow leads. offset in the the decline any then, to the NPS that I we close business on rate the... improvement us more will consumer improvement So, And than side convinced think and in in help

Noel Watson

question? Can you repeat third the

Dan Kurnos

just second on the was Yes, question marketing. Yes.

of efficiencies the marketing about talked did you QX. some seeing testing in You you're from

us just funnel how just given seeing the maybe acquisition. go conversion of into year overall you you the you're what Just on fluid side? And just give if here, as bottom customer what versus marketing curious you're brand refresh is cost the seeing update could an on the with on of

Mike Darrow

Yeah.

it. got Okay,

that we're with mean board. to driving, regards the efficiencies I it's So, the really across

way the between So, all marketing, on our the underperforming. and campaigns level engine down efficiencies, at rather measuring down are turn specific really the than sale lower campaign into search of guts profitability breaking we aggregate, a can down the sort or level to outperforming that through and getting it so car that dial in of looking of that a at funnel we're the

television It's leveraging sort lower at we're CPMs. that the sometimes higher-reach technologies to partners of on higher and do side, Also reach better to opportunities that. at audience looking buy

that of getting -- working all we're The a channels different performance. other area the spending the all as on the ROI across better them understanding of overall on at interaction and and we're we in look how that read combination our is impacts

And across decisions allocation of focused we're been to model higher those or the and whether reach on us we've attribution channels, on funnel. make spend a lower on multi-touch working so help

amount of marketing spend. that's spend When We obviously and MTA higher-reach is of of about important have a it brand a fair there's we an part strategy. awareness think level

pull we pull on we adjusted the a of this were have benefit sacrifice EBITDA. longer should But some levers lever that need. But I to do ability you there at hope near-term to that's to If answers question. a then term. that your the obviously

Dan Kurnos

it does. the color Thanks No, much. Appreciate guys. very

Operator

you. Thank

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

Nick Jones

might you kind feel off Thanks. the for a existing And partnerships, potentially I kind you partnerships removing to third-party how Hi. partnerships how one taking kind of think adding to upper of efficiency? recent your cross-channel little then look about Google's you marketing balancing is versus impact and increase the of efficiency of guess I of true to increase a that, questions. any first control. about on and lose the as that kind brand. announcement cookies of guess interactions, ability or commentary leaning into building funnel guess new you I of starting how the in Thanks bit are Since

Mike Darrow

into Yeah. the we're lean From partner or network will Thanks both Nick. of affinity we have branded channel to perspective the of the fortunate those.

on we'll We've opportunities. there. some branded lean of side our house excited the we're progress of in made great both So, about those continue to and

flexible us advance do new sites that as get benefit well. allows stack our affinity that really Our they But push on that and too we tech we as the iterate and product. out to partner to of

consumer we to the of a for there's opportunity And with channel well affinity partners. think as we'll that. connections marketing our of dealers, both add and to be think sides we leverage points lot branded And as our as able pain channel quality solve question-- continue we generate and So, grow to our these new

Noel Watson

I think impact change by Yes, that potential any from don't we're expecting Google.

Nick Jones

Thank Great. you.

Operator

Thank you.

Please next your with & comes the question Our with from line Needham question. proceed Erickson Company. Brad of

Brad Erickson

Hi. Thanks.

already to covered kind of You've this but just real be clear.

USAA versus right-size support about a the future of at bit a the of about maybe addition to support Maybe again the talking level rationalizing just intact? cost the the and structure Just talk running size that high some in what in these other with is exists philosophy channel on that as you you're here company. opportunities go-forward of

Noel Watson

is a contribution very I for we the channel. important USAA provide will don't any revenue channel us. margin on for or color say So, specific a

in to lead will as that that continue we think I as into relationship place. So, is TSA the long for

part dealers I our providing outside USAA. today with value important think everything we of to that it's an do the along of

In terms part question? you -- of the can the second of repeat

Mike Darrow

market. the us comments. allows on other the and Brad to to channels, out color there The provides year some to well as end affinity add our our this partnerships, and as opportunities through the business a effect our kind continue year work branded of existing Just or channel, in strategic muted TSA Noel's different of new

in to the continue But value. parallel while we going to And assessment we're going pursue business. look unlock these run to aggressively an shareholder to to of we we're have recognize

In any the company. preserving of event, to profitability the we're committed

This put and place where very, about plan. do we've eye plans we very we'll keep profitability we a business keen some development react got we to and and good the on feel as we've recent take in that. was a quickly our So, can

Brad Erickson

of that's organization? like brand-new there are these great. on be pipeline or the on like type channels you're organizations And follow-up there last it. them looks be an them pipe maybe would then you going Any where to opportunities color what military. just targeting place aggregate something may Got their the in sounds incumbent one the offering the new you. Are along like for It like Thank here.

Mike Darrow

on There other approach a like-sized certainly this this pursue. Yes. done this got the are We've out ways different work bit who that deep USAA very community in strong quite partners of group. have in already relationships there we'll to channel

look media; into the And on active this into We'll We've we'll ways look been flexibility. community. our which has a our at driven different now with we'll TC/DC number to the really this at of in program lean platform to all for years. social lean drive community military

to new to the an millennials opportunity cater talked and up women. We about brand opening

another and military their add will we service We members that'll very provide be demographic to and now military and families. group for that their quickly want

some channel in go leg We So, us to we how this you'll very things thoughts quickly years and up. that already us a XX think our experience participated to moving in this having see have and as in some gives place about direction. for

Brad Erickson

this are as a player Just around like of if I they kind these could with maybe organizations the question you? it already really was competitive greenfield of centered expands working to to or types

Mike Darrow

out couple probably There's both. to there's there. think think of those. probably there's go We a greenfield opportunity I some

with USAA our We in to didn't agreement. deep we time in to when were also were us on that that work know wanted that community that we have players focus there

we'll pursuing So, a market. two-pronged approach take to that

be folks already for of of channel. buying Some maybe be who have some a will a new will it wide it and open opportunity

Brad Erickson

Thanks. Got it. That's great.

Operator

Thank you.

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

Marvin Fong

for you in me speaking Thank here.

of this. a So, into wanted little to I the just just further drill dynamics

dealers dealers as get change the how coming at the might year. guidance wanted majority a big your your in think of I process discussions and difficult kind on aware of of will contemplate happen take of dealers? the just now those to on end your renewing are I subscription the be Does

a you think after the happens? positive speak guidance. on full the if Thanks. you EBITDA to transition guys quarter anticipating it the fourth And can or as you in just year be Are then follow-up will

Mike Darrow

of marketplaces go to That question those end a at we Yes grow very platforms. Agreement our the subscription for relationship that September. to through change Marvin opportunity volume We recapture there'll also Transition try let me be based dealers. share or to of our out Services and two first that to runway us give dealers, a regarding handle into the will their other our really the believe bit on look while no those on little change that

-- subscription, there are September. So, beyond don't getting states in we're we're looking states business aggressive influence heavy in geographically. of We out providing military at there's be we'll buyers through a the and face Texas, it understand looking we current change it Colorado much to where think Virginia, the be challenges at we'll but and there'll some service, really

Noel Watson

the Marvin question EBITDA, provide we're On going this additional QX to time. color at QX on any not regarding

the that's have year as going in guide. give at we're You as guide time. And QX well the all to full point this

Marvin Fong

follow-up. Okay just quick And great. a

confirm. wanted current is So year to the your guidance -- just full

that or -- we stay right doesn't structure? really bake should So to for is your cost operating be that. anything I from reviewing that? you'd that change does tuned But you that now, it contemplate any know said in

Noel Watson

No. not to It change does our include correct. significant current any structure. That's car

Marvin Fong

All right. both. Thank Great. you

Noel Watson

Thank you.

Mike Darrow

Marvin. Thanks,

Operator

you. Thank

comes from of Steve Please Dyer Craig-Hallum. proceed next line Our question the question. with your with

Steve Dyer

of of emphasis cash of vehicles answered focal haven't making great. call still that Thanks. this is point has how heard color Most one to Is been that buying sort be have at of this mine that point? previous going? I the about would on offer anything point, Any been offers sort of consumers. a sort but

Mike Darrow

are for began from some buyers -- product. of traction of sort. in our into disposing a car vehicle program. trade who and that a Yes. We product Steve, buying we know launched core to to our used XX% interested our TrueTrade product some have and of our taken from and consumers new TrueTrade homepage get trade And We've XX% we now integrated

their right by deliver So we us value then the car, identify partners. will with cash helping allow the trade-in to getting create able think our even to a connections being and deeper them retail right guaranteed for price

that. So we'll on continue to iterate

But yes, us that a that it's deliver in stage our buying later will channel, And on expect in trade process. year another our core we're about that. more You'll shopping now excited payments become we activity this lot monthly the offering. in see

Steve Dyer

to revenue methodology sort just on you the of refresh you that? us gets can vehicle that is And an enhancement or us a dealer just recognition trade? that that be meant that? for sort that the of Is remind ultimately per for Can

Noel Watson

Noel. this primarily It's is subscription. Steve Hey,

Steve Dyer

Okay.

like of similar I So I And sale philosophically, balance sheet. piece to sort do business. selling car sort guys think about after you there a guess guess for look of about USAA? that? me trying of you the this down do hunker to think back looks make? healthy the to what then, acquisitions you how have lastly you'd Are -- to potentially that Are the other Are stock? you see do It How I asset? you thing using looking guess buy very

Noel Watson

Yes, do healthy very a have balance pointing that thanks sheet. for out. We

in be be profit as little see that agreement Right adjusted a $XXX with million conservative XXXX. capital cash We we're healthy and it confident But now, $XX out. Again, that just and the we're would in how of still going we we for conservative. the in have X/XX and place to going have and the with million in USAA services transition over fee EBITDA have terms through this protecting outstanding healthy under be play we're a thing bit to financially preserving plays profit, debt. that transition we -- no

Steve Dyer

Got it.

Okay. guys. Thanks

Operator

remarks. like to at time. further back call no this turn closing are There I'd the Darrow Mr. over questions you. any Thank to for

Mike Darrow

realize Thanks work lot We face are Noel, rest of hard team the today. management everyone got to myself of prepared of for time head-on. Rest we've our your and these ahead assured, us. a

yet ever there persevered its resilience, adversity. a all. Let stranger years, me to we them is remind company's number you us. the has it's of zero we've have confronted a that company through doubt If Throughout TrueCar XX obstacles, been is proven by I for than and rally, our with are I before. of forward thanks that and next a each will of you participating speaking weeks to employees company today. result the over ever look the emerge current our as confront coming you further challenge stronger prepared no to

Operator

teleconference. you. concludes This Thank today's

participation. may at Thank You Have time. this your disconnect your day. for lines a nice you

TrueCar (TRUE) 20 Feb 202019 Q4 Earnings call transcript