TRUE - Earnings call transcript Q1 2020

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Operator

Greetings. Welcome to TrueCar's First Quarter 2020 Earnings Conference Call.

Please note this conference call is being recorded. I would now like to 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 First TrueCar's Thank Call. and XXXX Conference Quarter you, welcome

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

The Actual be will, As a These statements similar report information with required XX-Q and intend, of expect, words obligation to not call should future confident our be are relied our can plan, forward-looking could of as on any by use a from other as we reports this Securities and materially. our the and forward-looking the of contemplated the on disclaim cause any statements, make Form to for on differ us We statements results. Risk annual making date, and guarantee identified we factors forward-looking our performance of law. or this report such reminder, today's section call. statements as a filings except to and of anticipate, those available results will upon we Exchange forward-looking on forward-looking and be to results believe, materially review our and Commission becoming, Form on differ by update could statements. not based discussion that expressions Factors by caution the toward, are quarterly as you XX-K,

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

I'll Now to the call over Mike. turn

Mike Darrow

to disruption to our you by brought the appreciate join pandemic COVID-XX you, economy. take moment and today. society a to time We to Good everyone. afternoon, it those us acknowledge directly I Thank want taking has first Danny. and affected

course speed the come of sudden of others from no are my the while evolve Entire reshaped other meet afar. magnitude close to career, which and event disease by lives. XX-year has needs forced comes rapidly the to consumers to have halt, daily Over this industries a to rivaling being our

ones During I of TrueCar of continually by Meals the amazed serving this community, inspiring. our masks care Wheels unprecedented or to those deliver colleagues my writing most cooped truly to homes health food cards loved people on partnering time, by whether in is for the the of am compassion the response vulnerable our sewing nursing it's elderly, needs for up to with workers,

to safety the we the retailers volatile their most navigate As and team and entire a I leadership customers. certainly our remain look TrueCar and well-being future, be committed of will what employees, to

to on the business. now TrueCar our at to I'd we touch respond like took to its actions rapidly COVID-XX and here on impact

work First the our middle service mandatory from following most transition workforce, to home U.S., in we the proactive of entire remote our decisions importantly, social the members team distancing and across escalation including and guidelines sales made status. of to March,

full functioning proud way a Within by activity and of to organization extremely seamlessness was all I'm the matter innovation decision ahead. responded days, which speed business continued. development of level our departments this the and a product was with were high and impressed at

which forward has going remote transition us encouraged we way work to reconsider sustain In the fact, success in reduce productivity. cost and leverage to the of this

took to dealer we severe the quick retail government-mandated to automotive our restrictions, support by recognizing customers. stay-at-home financially action impact Second, caused

million we dealer billing In our extended and rates. through actions and these helping not For our in circumstances. than on superior May available, is states where discount dealers states, are XX% pay-per navigate subscription decline partners in $XX for sale these our challenging commitment saved adjusted a rates April Altogether, volume. demonstrated dealer the pay-per-sale automatically to community unit more

little response amidst was be took all distancing launch and and our convenient action experience to in for and agree so a late designed home physical to To shop all-new remote safely can drives guideline. affinity an COVID-XX truecar.com customers buying to dealers in majority to sites. we March, and remotely to experience Buy test rapidly Launched vehicle the this paperwork vehicle of program, and the contact. delivery Another eligible online navigate strict on help sanitation, provide is From our social take for delivery dealers consumers processing, with no verified and Home

to then network, process. buying support continues have amongst consumer through in launch into program. dealers, our our program of a has online to opted who their XX% introduce buy-from-home the of participating and To dealers more to We were first car the response dealer retailing, incredible. guide date, been X,XXX roughly than TrueCar consumers online the peers

this those X,XXX the importantly, remote verified XX% surveys or car of their program. for April, a And completed of than in as solutions. most digital signal rate buy-from-home by clear experience In demand dealers our transactions supported buyers, good more excellent,

the program, car-buying a online very dealership automotive in that experience and of marketplace we are on engagement, the adoption in first More complete by success We consumer experience. excited bit. as and build we this on both of our with buy-from-home accelerate towards a will terms becoming

of drop savings we noncommitted marketing, in all thorough a our radio entire or suspended significant digital business. significantly reduced acquisition our spend sales automotive to the dominion, across Finally, assessment and and TV we deferred structure completed budget. cost Within and a identify anticipating

benefited QX large costs. with and action helped on our employee quick million we and of adjusted a travel EBITDA addition, of vendors successfully $XX us spend cash million produce nearly renegotiate In in our balance. Collectively, to were able lower $XXX pricing and equivalents from significantly added to cash number

COVID-XX, am consumers of of I balance and to proud employees, response In our immediate TrueCar's needs to very carefully the summary, response a dealers, shareholders.

human XXXX In and the highlight nature and direction. ahead look remainder guidance Next, the to for us. of to of leaders is I'd to times, on comment for it our like opportunities expectations uncertain

in industry the the X guide stepped these of years, that has community ALG, For we've automotive waters. owning within help regarded past privilege up recent our thought highly weeks through uncharted a to the had leader

the development benchmark market car as insight forecast For future those benchmark before, leader simply during of model is the with of of forecasting, lender, new value, the retail the like itself highly broader ALG's volatile vehicles. ALG and anticipated, for value values bringing after for put, ALG during and acting Having launches. with is every proven as automotive in ALG, the captive of invaluable these. new you familiar OEM residual works most especially residual times

year, revised the million account vehicle roughly levels. XX% XX.X light XXXX, the of in XX.X forecast year-over-year roughly a range start of midpoint. of XX.X long-term down vehicle flat to the ALG and sales COVID-XX, the million XXXX to to has XXXX direct predicted impact at sales, ALG At Taking into million

historic that by of the of wave economic second conditions. sustained norms. restrictions above some in upside May, the and in range the varied smooth support assumes a fall, range out measures of The restrictions view stay-at-home The unemployment lifted pandemic stimulus pronounced slower of driven less and government and generally a levels recovery, takes movement downside are transition a assumes

retail contraction will of of TrueCar automotive Regardless This cases contraction market. a outcome, dealer the to impact and meaningful specific the certainly partners. both point our

other of the on adversity companies, best opportunity. the side comes for However,

of ahead existing remainder us. I'd time spend the of my to the here opportunities like highlighting

Home that many responded have agree two impact retailers shoppers, From of is change digital purchase likely consumers their I recent shared survey TrueCar's to by more they lasting sentiment namely to online car a ability shopping. a the that dealership And this on the transact in-market retailer. think would that with Buy and have complete thirds a be components us COVID-XX receive vehicle service, in offers X,XXX the April and embrace how in In of entire will of driveway. would

that offering particular, their In no absolute process. dealers Dealers, is survey, buying into said now recent remote retailing would an be a incorporate longer necessity. digital to of sales experience need XX% in NADA they convinced

this slow. industry change quite space Having for I'll that our first the some can been time, in be to around acknowledge be

now different. about automotive, I'm what I sense adoption believe point solutions that we're seeing and means in TrueCar. inflection I However, within can the what is of retailing digital for an excited

of many months has experience us the the positioned well, changing XX given consumer to our past we've landscape. us, over changes for Fortunately, made the

connection their our rather and phone consumers how connect connect over we and lean than control when announced with in ready text we As calls. with by unwanted in into terms dealers empowering this which no dealers, an dealer marked consumers' point entirely experience, January, consumers a longer contact with late information is personalized a turning new In dealers. to through commitment in the to further they empower when introduction more to of messaging three receiving our on commitment key passed automatically QX,

late to XX% to March. weeks. up released car early of We the truecar.com rollout planned it new coming in solution And in on based initial positive XXX% this on XX% texting are the response, traffic ramped track and for April, in

choosing you expect, calls XX% as dealers. seeing over with As are communication is the texting of might shoppers preferred very data of phone compelling. their we're method

Consumer messaging for XX% within respectively. phone of calls dealer respond hour, XX% to both engagement. X%, so and XX%, an and text of response at e-mails clear above is rate the a a of And to XX% consumer dealer signal text, well who consumers averages do industry

and our improved core positive KPIs, see conversion on-site and to beginning close we're Scores including impact positive importantly, Most a Promoter signs rates. Net on of

rollout forward, the Looking modern new in meet experience how of a platform of evolve is the plan car -- to needs beginning just text the on of the consumer. to texting our we

points integrating experience consumer In our journey, including interaction to begin additional the throughout ahead, dealer we facilitate months better to touch points. plan the used and text-driven car throughout car-buying

negotiate method the imagine future, a the drive, consumer preferred efficient a is all options can able to schedule for that dealer question, in through both test and ask a communication being a the or manageable You not-too-distant and dealer. payment

opportunity a facilitate and made significant interaction, improvements taking the step recognize while Now consumer larger we we've us. better ahead of dealer to back,

to order As demands to survive. The fundamentally I to exception. new has industry modern-day in mentioned industries altered forcing consumer adjust no retail, is automotive COVID-XX before,

we ourselves innovate have for retailing Everything digital their marketplace marketplaces online to to their to look as be need this integrating systems deal a navigate vehicle help process. existing across our to our becoming reprioritized to we from Dealers very remote are the process and consumers discovery processes configuration, digital buying car efforts first retailing quickly towards fully seamlessly and looking with a they extension, the delivery. online. franchise of support such aggressively as car-buying complex Recognizing driveway network, growing as

X of rest we We've their the in enrolled and process otherwise, trade-in, are into already our most complete receive broken like consumers car three digital the Buy trade-in From visit truecar.com, help experience upfront now dealer a across to phases. they offers connect who can pricing find importantly, I'd want, complete, this on believe the new underscore, dealers, is car compare Phase fully cash effort can contact. online guaranteed marketplace Home with we solution. only or them without integrated the with

further April, have reactions date, to dealers X,XXX that community experience set payments self-serve our on dynamic the dealers. majority goes be to launch early from in weeks, dealer enables has expect to opted later X, participating and personalized date consumers Phase Nearly a strong. launch and X this this by of the from month. lease them we creating in live loan a been couple experience Since configure in of previewing step to

guaranteed ultimately, experience applications the deal, And where pickup test selecting launch learning checkout of vehicle. can scheduling credit end a through offer year, or to completing in warranties the trade plan finally, any we customizing a the of proceed consumers complete and scheduling document drive, add-ons, or before a and and necessary delivery X, about Phase home after transfer receiving the a

At in there dealer platforms process, will facilitate the communication consumer every conversation. TrueCar's to seamlessly be and step

across into payments up they research Beyond we in consistent for accurate shopping shopping apples-to-apples that to allowing of the consumers narrow and the evaluate cycle, sites and today's short of expand is right comparison their circuits land look on a them, across vehicles level payments, set numerous the back journey. much customized Phase multiple typical and our will car-buying X, to them required infrastructure forth as to consideration further vehicle

been always act Let recognize me experience time the is and goal. aggressively to be creating clear, now. We has an end-to-end car-buying quickly the

goal and sales engineering sense around of prioritized achieve effort, teams purpose. increasingly product, have this are renewed our to We and endeavoring with a this

to later brief the to recapture community the Finally, I'd like a a expiration initiative transition provide our military of of on this agreement services year. update with segments after USAA

out our professionals experience a an are As XX to audience market family. million and their XX reminder, and immediate service partner the and to even through active branch more than military channel our of retired years military offer larger a we USAA car-buying leveraging of affinity serving unique

incredible includes ago, of report peace team, access TrueCar-branded Thanks auto TrueCar offering package Military, incentives, service launched couple to provides experience cross-functional to am a and committed we appreciation access that entire members dedicated repair TrueCar exclusive through two up the deductible to highly to OEM service of exclusive value of care. families that The officially a a providing in military. effort for the an benefits I pleased and by an mind support car-buying experience, through reimbursements team of TrueCar years differentiated level of specialists days $X,XXX to a and and their called

teachers, name community a partners experience wanted buying to dealers provide experience. like affinity to our in for in and become military While unique Military dedicate just ultimately and And everyday a differentiated few. their place include others infancy, the We even a other expanding the our community. automotive TrueCar with in it's we its who where to purchasing lives responders heroes a helping potentially value all first see to becoming OEMs, lean and to hero

report as new awareness continue experience. initiative the grow to this this of prudently to in quarters coming invest We progress on will the of we

everyone amazing visit truecar.com/military well check In encourage out underway. the I the to listening work meantime, would to that's

turn the to I'll that, over with And call Noel.

Noel Watson

transpire What the It last Mike. last unprecedented. very all you seen than months quarter we February. a early has expecting to you, were when been has in we've two certainly we been in Thank talked different

particular our While we in of these proud on monthly trends during who across a could be KPIs focus like incredible resilience times, I'd QX not colleagues have complement to QX. TrueCar more remarks our what core shown in we're challenging early Mike's and seeing with

QX. with start I'll

trending line got quarter expectations. in start with a January and first in results, The to solid off February

above we our course X% and restrictions The year-over-year, of guidelines up As began We'll quickly entered issuing tracking recommended officials March. month the the month. of reverse a result, in range. through strong QX guidance stay-at-home midway social held final mandatory government lines slightly the the revenue with quarter midpoint trend distancing early as

side unique February. our the demand of growth ended the monthly well we had XX% January and On down marketplace, below in with visitors year-over-year XX% traffic year-over-year, we March experienced

impacted. XX,XXX of the a the Franchise ended As dealers begins the rather to most to year-end. second X,XXX count, and majority these for drop-off is note, our total to important them from dealer saw down dealers, relates cancel it our countless that dealers expect It business accounted last of in the suspend to to We number loss, a to return dealer than of we the as half March. quarter with economy of with independent see chose services however, we reopen.

impacted, year-over-year, Given general the industry down trends. X% XX% revenues were Independent tail contributed year-over-year. million, revenues COVID's Franchise ended the XXX,XXX, unit quarter line XX% a dealer in of the effect ended remained of million down down 'XX to to at slightly compared dealer QX, of of $XX.X on products in most revenues end year-over-year. $XX up tied up we XX% units for bright the volumes dealer revenue, $X.X quarter million QX spot, Total approximately And quarter. most levels. with directly with new

$X.X with $X.X line million from decline. benefit overall for of with the at XX% agreement the finally, revenue transition consulting is TSA. other in came year-over-year, began the year-over-year. our forecast, And up USAA Included to we realize benefit XX% revenues USAA unit OEM the down million million, million in $X.X as and at $X.X services quarter, finished approximately volume in of

operating non-GAAP expenses. Now turning to QX

the response mentioned, costs in organization in environment. prudently to the major changed Mike variable responded automotive demand, quickly the while to certain off given lower managed costs drop naturally As were

our from QX XX.X% which year. First, revenue we saw this in declined from marketing a XXXX XX.X% leverage line, in and of of significant QX of sales to

acquisition sale, to which rapid of portion acquisition cost radio as March with podcast back this blended services also significantly A our our any driven to X% to transition benefit TV, in remove improvement from the down improvement half USAA. response result traffic agreement in of $XXX, a noncommitted an saw per We a and year-over-year by reduce our budget. spend and fell was of

employee-related travel it as to the saw discretionary entertainment as line. finally, and our result expenses and we a relates of we costs, reflect COVID-XX, And also reduced lower to office underperformance in and compensation top

produce to future guidance range. out quick of adjusted While end efforts million impact many QX helped of $X.X of of continue will the EBITDA, than our our the more our response twice benefits top periods,

adjusted cash pleased impacted a EBITDA we're summary, positive performance capital. the by strong of COVID-XX stewarding revenue, clear our quarter, In while to our demonstration commitment QX certainly in shareholder our flows and

expenses triggering due capitalization test in of pandemic result QX quantitative our This XX, quarter. looking in market XXXX. quickly, event determined and requires our a that And COVID-XX in pending impairment a March at the GAAP decline as an interim USAA. departure to occurred of the the We as the of

As impairment a this test, million. of a charge to noncash $XX.X that We flows. result have expect goodwill our or liquidity impairment cash not operations, noncash do of recorded we impact any charge on

QX XXXX charge, given million impairment However, net or or a compared of $XX.X quarter a to the million in $X.XX this first $X.XX loss onetime was of of share a $XX.X loss XXXX. share GAAP in

net the year. million Non-GAAP time net $X.X income $X.XX or or a of quarter this was compared $X.XX million $X.X last share a share to loss in per

returning on what of the Traffic for May by pre-COVID to I'll seeing quarter. the with demand I'd we're the April in remainder early and April, steadily like second start to side. to some recovered expectations now the provide May. commentary our throughout site levels and

visitors this despite you spend. X themes significant in few a the year-over-year a important monthly X% unique layer When as down were cut April deeper, reduction whole, branded For media emerge. only

all growth the one, by our was For branded truecar.com of driven traffic channel.

spend managed On traffic side, flat led year-over-year, by over testament to response to and marketing still the a XX% our our digital marketing drove direct team. we work growth of great the

Second, with April. end of our pre-COVID volumes rapid we the traffic, a organic recovery exceeding of by levels saw

algorithm. we've in Google's our discussed investment experiential that As beginning before, and multiyear from realize factors are technical to ranking both drive the we the returns

For of QX. we instance, and box drivers remainder traffic sustainable about light in late rank. launched the optimistic continues our unit drive recovery, new rate to lower brand improved trends of volume of engagement, on-site page for January, are Google the In experience

in March throughout the April dealership and significant month, of with line loss traffic strongly broader of were late However, year-over-year, down the continuation units in the with retail market. closures the XX% impacted,

QX As the suspension and March. of of model this April throughout trend us. seen flatten end discounts the the for our toward nature Thanks dealer count, subscription dynamic our was the activity we to rates, the in proactive of activity billing is suspension and of bulk behind have much concentrated pay-per-sale believe to

difficult additional control, the While it revenue to guide is to insights outside of to some of given give QX, help I'd range many uncertainties for expectations. a like provide our

of on continue As look forecast to to inform ALG's our to it unit impact relates to we'll industry volumes, the COVID-XX expectations.

of As top government-mandated discounts will Mike include stimulus, results. materially restrictions key line at consumer May levels focused dealership be Regardless economic both of of in and evolution impact and QX home mentioned, rates today the confidence and April XX% rate we'll subscription unemployment performance, on inputs closures. unit and the

or not into any to need yet extend not whether will determined have discounts We June.

remain in into instance, to March we prior On reduce variable spend branded anticipate levels. forward sales took for spend, will side, media year of carry our We that will the below actions significantly many late and QX. expense marketing the

our savings expect year-over-year nice tied QX program. basis. marketing we than marketing to is buying from faster on to our directly Overall, project in as and expect from in which to sales revenue decline we line it leverage we partner Additionally, see revenue spend, auto a

spend. throughout operational process Outside and of we vendor realize focus efficiencies we structure to of by reductions expect marketing, continue sales movement and cost on driven expense savings fixed a improvements number as to or in our

have taken this to time. costs manage during We also employee-related our steps

management executive effective We reduction April freeze, compensation have X. has and our base salaries discretionary implemented voluntary a temporary team taken reduced hiring in

We begin areas as weigh. expect these the reevaluate of pandemic to of each the to effects

the All things our for to single-digit pullback in positive. revenues, negative considered, expected EBITDA strength expect quarter. EBITDA anticipate given the the adjusted low in adjusted XXXX in first half we given QX, Therefore, be of QX we comfortably

we COVID-XX. not will providing For this be the by time heightened given of level uncertainty the guidance full formal at year, caused

a there However, are your consideration. items few for highlight I'd

cash to achieving we committed to adjustments continue fixed requisite cost We First, XXXX. structure spend remain this the and positive preserving to intend to uphold flow our our and adjusted EBITDA variable manage to make commitment. in

gradually QX, are broad rates. measures to assuming stimulus QX and confidence the we relative government of anticipated top recovery Second, dealer lifted, restrictions line support consumer in stay-at-home discounting subscription

to we QX our Third, unit a with as the of as continue volumes well expect dealer in our termination headwinds to impact to after USAA. count meaningful partnership

entered million finally, QX the And undrawn despite $XX sheet credit more than $XXX with balance volatility cash equivalents and we over ahead, and cash our available on in million of facility. an

that this explained, our remotely year and who dealers to provide we'll buy to exit service. we're consumers the we that online marketplace by Mike confident with first and towards look as enable accelerate tools alike connecting differentiated dealers to consumers value capabilities cars leverage to with becoming them proposition for a As

for In doing TrueCar in positioning profitability and growth we so, are XXXX.

with in We or the Please portion go issues in of delays, will are that, and our applicable to And Danny are any call. apologize homes. Q&A this technical we If questions. orders, from government to call I Mike, taking now with there compliance do transition the note, respective advance. our let's

Operator

FBR. Krowl Our from Riley line of B. with instructions] Lee first [Operator comes question the

Lee Krowl

used between based perhaps QX, kind baseline but that your for also of specifically, just Wanted of assumption dynamic just helpful And on provided in new in the monetization, on given on expectations to QX? kind momentum used product and new? the strength more per in unit probably kind of mix a QX Really the road in the strategy and color skews the dive map. to QX,

Noel Watson

Mike. ahead, Lee, go

Mike Darrow

kind impact second going car firstly. jump one the just we're a at the transitioning into some in We take certainly there incentives and that the initial stimulate incentives was the side. of with think car their and mix aggressive to new say, we aggressive responded any looking We've the will got of are year. discretionary little on supported was been OEMs to that new COVID coming buyers take The dealers out think and very heavier season numbers are the I on a car in, quickly of I'll out that there. new with

ALG was many addition, were tells work In did extension nearly over our OEMs and about us that come with that units. the the there past and to X.XX X million the leased to deferrals marketplace those scheduled of units programs back for weeks

the things May car the those come out, and in new as to June. back those growth on used, in we're marketplace, we folks market we of into expect themselves kind certainly seeing So come back but the like later sort

Noel Watson

this Yes. And is Lee, Noel.

Just seeing that and needs on the that in will extent said, actually second anomaly with thus -- of given in lower especially suspensions far should come a unit and there's an in the still volumes end seeing it -- QX. of the back that very in towards saw as we're it of as down the bit see the a lot unfold times, the given activity quarter, that relates relates actually the QX, cancellations we quarter. dealer QX still the That you're uncertain recovery. think higher I is to timing in to we monetization monetization that and are to With obviously, we

Operator

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

Marvin Fong

April to question. hear know, is Glad I I to XX%? were Noel, that did a just wanted everyone units correctly that I hear safe. had down

Noel Watson

units No, in were April down XX%.

Marvin Fong

XX%.

more makes That Okay. sense.

the what's OEM conversations if Has they so then new the changed coming are reopen given the are programs any put to -- to going -- aggressive the incentives, hopefully, as how that have sales in road? look we clearly car outlook could, down trending more and And some outlook? you Okay. OEMs or those

Mike Darrow

of launched we you to We've success. into. We to Thank USAA, our OEM the channel into continue Marvin. broaden our just and try great month our channel to that hopefully, for And is area some military to reach military Yes. from think we they as partners We over going safe that over seen partners earlier well you're this be -- for question, a some that lean to transitioned -- segment. ongoing our yourself.

forward So up we'll OEM aggressively to conversations. those picking look

marketplace became they lot We've had A companies making some systems discussions down very a the their good we in of control. slowed were the internally sure as own under stay-at-home a focused sure to external initial transitioning process bit in making conversations. and are had safe,

optimistic we we'll our military we're good our real We've to channel response forward. But OEM opportunities to gotten going a initial and think about that continue see grow.

Marvin Fong

Great. And was that one just extra first get hopefully, I an lens could housekeeping. since a

maybe that side, on churn, doubled us just a franchise just that independent why activity. side into down So of drill you help is lot the rates were churn the math. different? think Could by the and versus little higher above suspension the my And understand I you a said

Mike Darrow

a and Yes, things of quickly to operations. regulations dealer their of Marvin, were numbers affecting in state the suspension. were that talked large what was XX% a we've Dealers were very about reacting the seen portion numbers -- Over we suspensions. that

that the come So the of was height middle lot expect to that of middle we March business a The through of back. of about April.

We we're suspension we the dealers the the several of to mode that part regulations some end a And lighten in those come begin May hundred up. we've saw here, of We've dealers as system. to that numbers April. returning first into got as deeper the April to and platform plateau start seen back of the to towards seen

sense were of services, So we're going encouraged of they by good the were cancellations. the dealers immediate fact that a got of real facing. suspending we they I a what did be type think, not to lot Most get impact until of

see we're number May. those encouraged, and a dealers back we in think to So our of system we'll come

Noel Watson

to our -- our -- a X comments, in pay-for-performance what One just many things. on or Marvin, said is our mention we And Yes. model. reiterate of dealers are

we proactively, this cost subscription level sales and the as And significant they in that April to our automatically them during can extended achieve. secondly, support adjusts XX% dealers, their well. that of to our recently a dealer that in on program to time, offered network May more of actually discount of our trying then so then products to the And

So mitigate suspensions. large both activity Mike of those majority factors of helped the was the churn. as to said, And

a out that's with coming April starting in to back dealers And so platform. and that's May strong to signal play the early really late

Operator

Our comes of instructions] Craig-Hallum. with the line from Steve [Operator next Dyer question

Steve Dyer

there specific You've sort of dealer given quarter, function The lower a pushing up? monetization color count that some far. just number that great in the the of anything Or at end? was so was the

Noel Watson

the really of it, in surge suspensions. came quarter brunt our March suspensions That's that cancels that of a number. had in Steve, is reflected or the Yes. any And are end in late

drove that high. abnormally So monetization

to -- any stabilize. With we modernization see to we're in that discounting expect that to continues significantly. down discounting monetization our that and And we starting come broad obviously QX, then pretty and assuming start recovery dealers do to we April have would the don't May, see to provided to the that beyond we

Steve Dyer

discounts, to the us And does per subscription what piece, of it the trued-down at there? pay is is business just percentage what words, can or remind other is is case? In back and you And relates that true-up month? those subscription? look And as the there sort a Or month do trued-up in soft that this of end you a the have of transaction?

Noel Watson

Yes.

per business X/X. core and subscription business, around on ABP is X/X around pay is of our sale So the

of we there's dealers for a invoice in cancellation. majority So for period. our -- subscriptions on that revenue. with our the required of around period notice We work did it XX-day this our in terms during our And advance month. is And notification time the

there's in so waived on But generally, XX-day many tail cases, it. And it. a

from impacts some those the cancellations, were late largely month. March see in did we but So in they

March, see in impact early QX. to a in part So of heavier a take you'll it and starts effect smaller the

Steve Dyer

Okay. if one And more, just then I in. could jump

they're and with military comes think Your reach how a benefits service of guess, USAA members those I you out of certainly lot amongst collateral and recognition planning folks? reputation members. of a channel, brand service marketing one its former to the was that are putting of sort I

same the those scale? how do reach guess, So I that the absence of on you endorsement, in folks

Mike Darrow

and that's was learning get business We've with thank We've, you for grassroots involved years, military with -- in developed initiatives the community, the servicing of we're number grounded USAA. to in there. the history Steve, military DAV, a with an we're got a partners the got Yes, grounded with that of community partner We've over our our question. of lot extensive RWB.

a where again freedom. DrivenToDrive retrofit program them X that back with become to community have and into awarded to enable We vet the a a get over years, mobile and wounded we've past the experience vehicle

encourages that of So the was USAA XX in we've us community thing the active And been about is military million. membership outside USAA.

XX think total there million. audience the available about We is

add that community. We've of So to the at we're the about military excited set we're work opportunity these make value we delivering when our dial to users ask understand to expanded real a going to number (XXX) to and folks. value We're up sure for that in to questions, get that hard audience. to going X site got we're and

could channel. see we time, this So we material over of significant growth think out

for put -- burden we're out community. support haven't make make get the an thing sure members, authentic the to there business sure We burden military we because the channel on and the it's right doing and to continue want early

with did really a of opportunity So there's communicate create lot bigger can deliver stepping the us, think opportunity an with service. that folks and outside but get these we USAA at that, of a we for connection and

were we're learn year So we do. getting We're on, going we're what We're to able the proud really excited. just a lot but started. goes to as of

Operator

comes question JPMorgan. next from the Our Gupta of with Rajat line

Rajat Gupta

questions, of advertising. a a some in aggressive taking lot light cost-reduction large I including had be franchisee on lower ask seem just one volume, just areas the way. different of they A leaders, previous the actions like in of a follow-up to to

And some and these of temporary, supporting expense them. reductions clearly are also you're

But happens? you I then count well? once the relatedly, did could And once crisis, how dealer be prior COVID level offering to we even on they that back are does side digital as monetization to levels? other expect And of impact the if structurally the mean, the monetization experience the lower do, be

Mike Darrow

lower a pass in Rajiv, of we're at mid- their that the to investment. community our And seen think what take Well, beginning. dealer first, marketing funnel with I'll is part we've I

on pay-per-sale in as a arena. that Noel are attributable highly about mentioned, make the investment model. are our We And XX% marketing dealers of they

build So those on to for. we them are that adjust value based assured dealers get and what they're going

and of of already have think percent but on of seen large say, system, I more able we from notifications part we be they were come their And the back service, the been run we suspensions dealers, dealers to uncertainty us, to going come the was like portion So heavier percentage largest would network. just around to we got that probably to to had alarming suspension the the what we're sales part were back they business. as believe a seeing, a the when it of of honestly the dealer's of to cancels, those type operations if

made So model adjustments monitor either partners, sure or if our that And a subscription to want that make model. to that, make to be value continue certainly We fully we a suspension there's be we'll who we're those. return. will closely. a dealers future have delivering mode believe into the in pay-per-sale forward that prepared the dealer and to going But to we'll went around bulk subscription services of

Rajat Gupta

good helpful cuts, And terms clearly, in execution follow-up, That's a color. OpEx the of here Understood. quarter. the as really first in just

in can of S&M fourth beyond here, us be sense going cuts of that? You opportunity cost some That for some of second But from gave quarter, these be around kind us a permanent the degree on will the third the nature, with some work color to like all. give of could you home side what quarter. quantification quarter,

Noel Watson

Noel. is This that. for Thanks Yes.

QX. outperformance adjusted in out for EBITDA thanks So putting on the

on a We amount cost have fair cutting. of focused

fair renegotiating amount our of at either was that were to noncritical discounting. that then where discretionary, you home, we organic entertainment has And -- We're expenses lower that scoured of our down. stay as we Some or that the travel there's budgets at seeing of mentioned. seeing or anything eliminating, and ensure been We're fixed are costs. office with looked cost, a kind

fair But well growth make amount the adjusted segment in our efficiencies. think tail a given back, marketing there's that's impact that really And of today, started and into March. improvements and variable Also and of and sales lower to pull COVID given significant spend that marketing towards the quickly that It also we've to around we seen the find. generally. April I happening the team our of some now continue to spend, end efficiencies

of pretty We back spend on also cut significantly. sort brand our

And operations, so scouring really of looking we're cost efficiencies. for our all

As our prepared it positive. our I where in made we're being at. In QX we we've clear performance indication really to an EBITDA of remarks, that mindset look committed is think out, is our adjusted

of fairly challenging We the that will are reality, up available we to -- a in live make we sure we decisions, we range And need, make order believe to to we have a the make revenue given levers us outcomes. wide that should commitment. will that to

Operator

the And any the Ladies session. and Mike to Mr. gentlemen, we over Darrow for of end question-and-answer have our I closing would reached turn call remarks. back like to

Mike Darrow

what opportunity. the this hope everyone, time of Please today. this you thank will and have come on pursuit the taking your dramatically conviction buy way were adversity confident the we be that changing and I'm side challenging. stay than cars. TrueCar certainly discover, for us sell of emerge you from and today The Thanks, before, for I the healthy, safe to ahead join path reflects will I heard other period united that our in time. people stronger will

Operator

teleconference. today's concludes This

have for at now wonderful Thank your a time. this lines may disconnect and you You day. your participation,

TrueCar (TRUE) 9 May 202020 Q1 Earnings call transcript