Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the TrueCar First Quarter 2023 Financial Results Conference Call. Please note, this event is being recorded.

I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead.

Zaineb Bokhari

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

Luong, website our today close Chief on Chief Teresa the Officer. opportunity are quarter all me market our letter, hope President at now, Operating Chief Investor I By our Mike and to our Joining after had Reigersman, which available Darrow, and was and you've yesterday Financial ir.truecar.com. is Jantoon Executive Officer; Relations first read our stockholder Officer; released

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

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

to over President opening Officer, comments. Darrow With Mike that, for Chief Executive TrueCar's and call turn I'll some the Mike?

Michael Darrow

priorities Zaineb. stockholder of We highlighted Thanks, our is the progress joining in top our morning, some first expand dealers. letter our for focus rebuild two, in TrueCar+; core made used for our the of lean the XXXX. are: our traffic They converting into The great our for focused one, to of for thanks on across market sales entire company TrueCar footprint business; four and quarter three, healthy and Good market; business into the executing XXXX. on key funnel organization our us. four, marketing everyone,

million I'll QX, we unique traffic. X.X nearly our This all In than internal more exceeded plan. start our monthly XX% year-over-year across had sites. and growth with visitors represented

spend, targeted marketing believe position put this measured solid with traffic While also improvements our our upper continuous improvements to focused SEO acquisition has with our funnel us a performance. with we were and were we approach. We in

focus these into customized for our on of millions is shifting experience and now unique flows visitors of dealers. the Our sales to conversion

buyers, identify journeys expect drive we consumers shopping and be able we'll three cohorts By for traffic. for healthy believe personalized economic this journeys funnel and initial developing help conversion personalized buyers our us these We cohorts, for needs right buyers. to these consumer we've building are in upper to for identified: their higher vehicle cohorts convenience that EV the help

QX XX brands net have and franchise This where on. of focused focus count started dealer our shopping proactive cohorts more platform. the that performance, in interest. dealers we To complement will supply side our to and our in experience demand deliver a approach for e-commerce TrueCar inventory position active consumer side to We better adding the to and our being by we on plan grew matchmaking we've deliberate

new that plan inventory demand we dealers our to As to to patterns. in consumer continue inventory up continues add base, slowly match low recover historically a car

On challenges, particularly the that economic smaller larger our side, used in continue for focus align shopping dealers. emerged independent will cohort has very QX, consolidation channel. We'll adding to market with car current our on declined car impacted that and active our independent used by dealer dealers buyers well of count in

front, through deliver to product experience a checkout consumers On transparent, flow flow. the TrueCar+ intuitive for streamlined better we e-commerce redesigned a and our

new order within to who consumer a built We a also transaction. allows confirm has TrueCar+ a that complete desire the confirmation deal launched their step to

specific to in TrueCar+ make that our dealers we orders. easy support retail partners, enhancements Additionally, will for dealer it portal TrueCar+ made respond to to

both believe expand initial make accurate to efficient, dealers TrueCar+ enhancements and geographic southeast continue where beyond and six TrueCar+ will these to transparent We'll consumers. the more it the footprint the We was for experience offered. states

XX to months, Over than preparing states. double across coverage, the areas metro key we're next additional more few starting market an with TrueCar+

and We Virginia, Maryland dealers in Texas. have adding started Ohio, already

established we at believe as wholly demand TrueCar+ the market, a that values valuations we the April. lean algorithm into be that remains the reflect dealers, a Solutions, of market consistently will for sourcing relevant a launched program vehicle solution car that Solution dealer them. of TrueCar+ this proprietary top our subsidiary a by United a and implemented We including rollout vehicle valuations broad across inputs, and demand. end Finally, market-based the current used using are for of multiple Wholesale contiguous The States we Wholesale owned provide will used leveraging

are are progress. strong There other making we where many areas

which programs. targeted program, For example, expanded program of select extended OEM mid-April, with Mercedes-Benz affinity in we provide our to offers Stellantis and will our both

partners. leading the members to supply to with our of exclusive continue to rebuild, we offer work new affinity brands benefits vehicle continues to As

remains balance healthy, for priorities sheet in our Our to us allowing invest XXXX.

fourth positive anticipate quarter as We XXXX. quarter breakeven of EBITDA the revenue as the continue to to compared well double-digit in or growth adjusted fourth

to dedication a time and their commitment for this we what the be an work, embrace automotive to innovative As retail. to want change. hard TrueCar always, something bringing future I at rapid opportunity of to entire continue crew our to market increasingly the vision will of digital take new and We'll expect thank for

Michael Darrow

call the we Before what's we're key questions, topics. some address going to question? questions around the up live first Zaineb, open for

Zaineb Bokhari

Mike. you, Thank

The are dealers the question QX? Jantoon. for factors factoring business? the this into independent core you rebuilding how Jantoon, And what go-forward in for of drove is behavior first the plan

Jantoon Reigersman

Absolutely.

independent factors less gross for for consumers. remain put risen. pressure the as challenge months. The and of independent used affordability are and costs profit dealers. dealers' and So recent been issues price plan dynamics these hurt favorable have unit, especially The financing other market their smaller headwinds in interest have many has experiencing Higher on a have dealers combination supply rates floor per

Our net in QX. independent dealer count was lower by XXX

were a points However, there or went out acquired. actually on smaller XX case, of couple maturity are one of that understood their independents a had make. and we reason of where feelers In departure, over either of these business. The dealers single the rooftops was vast XX% acquired to platform are group our

very Although, count impact lower, it MRR. the had obviously, rooftop on minimal the was

developing mentioned. focus network we to dealers journeys in it for on shopping the consumer our business with be our on particularly the as traffic we three our cohorts right demand rebuild important core from will inventory intention As initial to shoppers. personalized converting our This and XXXX, right is that matches add Mike the that our the

greater is their with point a single for efforts the consumer TrueCar to some see This and online franchise the of more connection significantly actually our a deliver centralizing independent will but connection inventory point dealers by and dealers we clearly behind which for ability major dealer, single transaction, better Further, favor. represent with that experience. to

changes of into happening, turning overarching our good. So which bunch we are which see is favor, a effectively

Zaineb Bokhari

you, is launching different used valuations? next you explain previously either can how other sources this used question Thank Mike, Jantoon. Mike. vehicle from is what The we And or existing why are valuations. of TCWS for was

Michael Darrow

Wholesale we Solutions will affinity the our of support and end cellular truecar.com real-time to a valuations sales trade-ins sites Zaineb. TCWS on valuations car and vehicle April, are through partner consumer-to-dealer Thanks, through These extended valuations TrueCar+. of valuations using also established provide our At vehicle TrueCar program. with including market backstop continue is reflect launched for acquisition vehicle them. us priority is tell used trade-in values major is current a leveraging demand, multiple assessment who or worth algorithm dealer who to for their car for proprietary consumers a current that what and that relevant want dealers a inputs, which used

more incorporate will TrueCar to and than based be valuations Wholesale solely market current on relevant not Solutions believe consumers did We dealers algorithms that inputs. backward-looking

our of the As we expect is market efforts used the for additional real-time partners open we and retail underway TrueCar this in and up at valuations one into TrueCar. just lean offering opportunities to market,

have question, Zaineb. Let’s another

Zaineb Bokhari

use consumer And the more cohorts higher for next Jantoon, Jantoon. explain conversion. can we Thank experience plan how to The the you, to Mike. about flows is identified? we've three drive you tell new us question

Jantoon Reigersman

Absolutely.

TrueCar+, our letter. you see streamlined to (ph) flow. look improvements in in unified I like I urge that again, everybody because checkout make So more to the we visuals a also think it's continue big [BDP] efficient clearly highlighted much flow, at strides as and

wants will Matchmaking more strong our for vehicles building more started developing to in spent and of have us. needs with therefore to a up funnel top dealers' in increasingly we transaction, the suit that their help for in features to consumers our time hone various become While order traffic. inventory across online also an match we've the flow higher in conversion funnel higher important drive defined on experience

three to different The and focused very for an deeper as power. incentive or vehicle. look is and a penetrate budgets, these more information, The markets. especially and wants, for too. seek have curated OEMs to and on of credit their and their combustion us also prevailing for pre-owned, identified for against has convenience Each a but likely consumer figure also also around funnel internal the like to EV considerations and buyers score desires credit buyers example, more search top or convenience for how most EV, different initial for EV probably leasing. would to inventory not a Both or to buyers cohorts shopping in is efficiently our engagement buyers, where has to buying cohort their life are rate battery identification in OEMs Economic motivations ability buyer dealer buying We qualified interested important comparison target buyers. allows into only new This economic certified profiles on: out us lower a and engine. world focus have interest reengage comparability, have will for even score, convenience they and targeted allows programs EV for rising range used a consumers. attractive the The subsidize higher on buyer

it the creates So company. overarching, just focus a for greater

Zaineb Bokhari

Jantoon. you, Thank

growth year-over-year open before conditions question breakeven fourth adjusted line of double-digit is of the Teresa. the for or mixed. drivers positive final What that up by market the remain quarter we're we and EBITDA Our are XXXX the Teresa, expecting?

Teresa Luong

Thanks, Zaineb.

double-digit the is believe this XXXX, focus back for we It's key while us our the continue line top QX. see our goes progress will inventories new more growth rebuild help expect to on we to vehicle encouraging achieve Regarding year-over-year in drivers, four to priorities which needed.

help first is used going on inventories. adding franchise half. are for we especially progress We independent uneven, make could headwinds some are closely, with little definitely that in to in them There a this the their and generate what are still market watching dealers demand that our dealers including

there As we dealers and inventory. main focus our business, core our grow recapture to are rebuilding is

inventories on have for. We focus independent we are larger our the franchise consumers that and who platform are to shopping being dealers dealers as and our brands intentional

our developing match to dealer which acquisition in supply We leading journeys the higher, and that adding spend. conversion expect for enable personalized to Jantoon on with efficiency will drive more our to help our right network focus consumer shopping about us dealers us the sales grow spoke this and to demand on dealers,

priorities dealers Zaineb. the the better to we Back half second As make these inventories than XXXX, for to with half and rebuild continue we have recapturing will of you, be first progress expect set the we and year. executing this

Zaineb Bokhari

thank Jantoon Teresa. and you, you, and Thank Mike,

call for the from the audience. up open let's operator, questions Now

Operator

Rajat from now begin Instructions] [Operator go comes first will question-and-answer Please We of The ahead. JPMorgan. Gupta session. the question

Rajat Gupta

question. Grear. for And Good taking the morning. thanks

a did on know bridge follow a mentioned profitability comfortable end. breakeven the within like to I if the Just the fourth in -- April? comments could like profitability loss from how helpful, really more maybe the up a on Teresa's -- around just seems we give some us quarter. comfortable and get the be the Any that helpful. quarter also drivers, EBITDA course like be positive like you first that revenue pretty wanted million with it could and a the the color there linearity the the should you I positive would color perspective, but big bridge hill. just to How we with you of should And would at improve comment But have to anything from if into quarter get $XX as then EBITDA follow-up. through

Teresa Luong

Thanks, Rajat.

I disciplined expenses, types we company to the very we've into in how invest the have. think objectives slightly the we year. first to When have spend throughout think into been especially, that I as of looking expenses strategic always We're it normally, we comes look and at different wisely we efficiencies in the quarter, the half higher the of year. for where first

on a something So we'll we'll and this that tighter keep focus continue is do, to that.

is marketing really big on The the other bucket look we side. always that at

core to conversion. priorities we've that focus on mentioned, higher this As our one of the focus is our year,

and adding funnel really top healthy without there. pretty a spend have [indiscernible] We

being keep visitors us for spend then on converting in always that able marketing where home. efficiencies drive focusing watching top something that while that it look funnel So help sales and will to we're I those can. closely, unique expenses, down, we we'll is to and healthy But the really think really keeping into regards

Jantoon Reigersman

end. -- think I I'll on bit for a top articulate also Yes, also question. little Rajat, thanks the the I'll

the QX. their that targets So remember separation the of the with that accounts we last books means of parts year. team basically we end effectively implemented, stride. QX of realigned getting teams field our roles It two a their of was It at provided throughout and early of

the it's the has already March, that a in curve, very through lot trajectory positive. of obviously, in particular, question obvious to So May, in gone April, around worst the that we've more your and gotten

I at. looking end So in think we're what of line we're top comfortable the reiterating

So on plan much it's us. pretty for

on broad In of first had. terms and plan the we was pretty originally the quarter, plan, it much

worst us -- is a for progress, as work we've gone this but the So business. still in it's through

Rajat Gupta

helpful That's maybe then color. dealer comment. on just And the independent

car Were TrueCar+? more churn with seen were some a know because pricing well? digital as don't could might of the around into have some that as used XX% that sequential part Thanks. taken any Just the you you any XQ -- that? how to but number. well? dealers, part us if have you you these actions of there give color detail wondering have gave continue and of Was us I -- a trends You of much decline exposure dealers digital also they

Jantoon Reigersman

good Yes, those question. a are all -- so,

first dealers. one, of all, I time So last we -- articulated think so number digital

on So if you platform think single of players like Carvana, for example, with they are rooftop. our only one

themselves numbers rooftop not super the so big. And are

thing is and -- The a contribution it started one you towards, But really customers. rooftop revenue number and you of the the hand, concept always a little of on have. important other also we've effectively by more a shows clients revenue focused shifting because because, is it's bit we've things our is been on one tricky of much

dealers interest rate here similar off. past. the it smaller Overarching, to So that depends [indiscernible] the are world, of dealers on turning type are really rising

happening. suffering as, numbers necessarily at strong ago, have lot profiles very XX midsized if dealers are obviously, you M&A very well smaller especially that were activity stores the similar of of as Moms-and-Pops that around don't A some years looking look a acquire We'll to financing. So ones. start greater historical

will continue to that So happen.

nervousness, margin, off, themselves, other reasons look at you people come gross et often for it's for to If cetera.

depends. So it really

difficulties Some accessing a inventory. inventory still have lot or don't of have

inventory. Mike to As dealers of are mentioned, our to seeking access get a lot used

less access to So dealer get it's if to be inventory. smaller you're going to footprint, a with harder

multiple us. are there reasons effectively So for

if network. there I active And dealerships, been though, the making numbers. sure into bearing think fruits, already you engagement look if of walking at is good a lot our they've you an at look overarching think with that's really I our team, our at our

So overarching, really in I a spot. think good we're

digital new different all your terms the off clients the opposed we're have focused in base things some confident that the Those and to at digital -- of external turned retailers or well, larger support. time times specifically, this I is mentioned clients rooftop question. moment Carvana In in of which obviously we was was last very are count was revenue but effectively all with dialogue where think this I Obviously, as there we active customer dealer try think any about things of across changing, various constantly will We're very as board. feel things and our much purely environment that focused. a

Operator

ahead. [Operator Instructions] The Please Tom next go Davidson. from question White of D.A. comes

Thomas White

and for I how guys does curious, customer you change approach, on. guess, it of marketing off, kind flows your customer specifically about new the side taking of that kind of I tactics, about of acquisition, require developing acquisition color the audiences to kind new are it the change tailored new efficient change things? or and you for channels I'm you make or way? I morning. kind on acquisition personalized of my guys might focusing audience or thanks are and does acquisition confident in if of traffic will, require an customer Thanks acquire you of can Great. your some you to -- to when first are it think much how that these new that e-commerce Does how questions. new the Good how behind you guess, cohorts guess, this of a I much mean background profiles, that the a or just thinking

-- is just is depressed. tied inventories, And spend, your and OEM it's pretty secondarily new but this on guess that line still still then to on commentary I revenue

to there's you're about that this Just line of trajectory if revenue change Thanks. any thinking the curious how year.

Michael Darrow

Mike, this and questions. Tom, Thanks, is great

so seeing that very of much these the way. that became We're understanding there. shoppers much much with out that flow put mentioned a pursue. cohorts we're you one first TrueCar+ early be able about our we'll three to these the more evident cohorts evolution The to more identify we are with initial start specific more in so on, the able me and Let

As understand soft folks our you mentioned, around, in supply traffic buying customer values, we credit we of that pulls, get us online, of spun That traffic requiring see helping leveraging that vehicles it's much data much as the be progress so had. into type trade-in doing the through at level. then could applying fits for deal-making, full a we deeper really that

for the that to. So provide dealers we're looking can shoppers of working both there be out seem our inventory equation. predisposed to who of sides We're that type

the specifically, marketing, can we cohorts we those our aggressive work vehicles side of into as on then more acquisition on they get And the flow. have in and marketing the site leaning on

we're on more information the our spend. utilizing we're traffic, So in a little to provide into and of lean that, is and But that. much continue marketing get of color better. effective. patterns, it an getting area seeing then about We'll organization. of shopping efficient more made able both learn let and I'll being more more side be this we'll We about changes where more better Jantoon to and sides some our and our acquisition

Jantoon Reigersman

are I'll there the the these of cohorts. two, a of a we Number how like quite number Number we're identified little think about But one, journey shifting of audience also have nuances here. the obviously in -- lot of So go some our bit buyers. already we one. length

discovery cycle where purchase So actually start cars can now seven historically, thinking days for we right them. were XX-day on to finding and the a we're prior very prior to people where moving to purchase, about focused the really

So of moving. there things lot are we're a

efficient. is been very very that we good are thing -- have The we

marketing think I efficiency. continued also showing we've

some easy good and that feel highly we cohorts have, are but we us these also, them already So are for are of under-served. attract to and

us. for opportunity very also already It's attractive identifying, engaging actively been we've an it's with cohorted TC+. -- So

have of feel that journeys a can flow. much these more So we effectively each experienced

convenience finish, words, to in an really other thinking economic a So very will with about engage differently buyer product start than our buyer.

for one, would more much create important. example, as as As word, be be registration, for which would example, let's actually because really really a for for result, important possible frictionless another than prefinancing that

have and us predetermined to a going funnels, opposed as on which do amount So site enables make more of person greater arrive self-discovery, to then actually the to we're having conversion. generic to have

Michael Darrow

and OEM's I signals of steps have address the business. your marketplace. active been through past down is vertical the Then in captive as part with same been seem to We're be that APRs everybody their discussions But the affordability to big sort think, to probably Tom, is leases was more in those first to address second [indiscernible] in trying you The discussions. in to seeing they of the receptive our consumers. the seem question that we've issue have the those more OEMs affordability. for active very buying than OEM things are around in we the The

Jantoon for convenience the specific I is shopper more as well partners we OEM EV very be to think the going these cohort as as shopper. attractive a mentioned, our get about as cohorts,

to outcomes. in themselves So actually they'll those try insert come and have and that cohort opportunity to influence the of in process buying stages key

had So the Stellantis side. and some with mentioned, I the expanding been the picking with We've Mercedes-Benz partner discussions affinity as up program. running sites. extending OEM then the to pace program are additional We've and on success, the discussions of on

expect throughout year. that we continue active more get to to OEM So business the

Thomas White

you. Thank Great.

Operator

call CEO, remarks. session. concludes turn back like over the would Instructions] President [Operator and question-and-answer Mike TrueCar's This to for to closing I our Darrow

Michael Darrow

you to clear to to execute as forward want all of an our we TrueCar I we the about months to the work team thank want last also work the participate the time at everybody all I It's sharing call. Thanks over for joining. Yes, XXXX. our and to next thank for company, more few entire taking on progress for on and our hard our for time priorities exciting for look with

Operator

now The concluded. Thank for today's attending you has presentation. conference

now disconnect. may You

TrueCar (TRUE) 9 May 232023 Q1 Earnings call transcript