Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TrueCar Inc (TRUE, Financial) reported a 13.1% increase in total revenue for Q3 2024 compared to the same period last year.
- The company achieved adjusted EBITDA profitability of $0.2 million, indicating improved financial performance.
- TrueCar Inc (TRUE) saw a 16.3% year-over-year growth in new car sales, outperforming the industry's decline.
- The launch of TC Plus, enabling consumers to buy vehicles entirely online, marks a significant innovation in the automotive retail space.
- TrueCar Inc (TRUE) is leveraging its proprietary data to enhance marketing solutions, contributing $1 million in dealer revenue in Q3.
Negative Points
- TrueCar Inc (TRUE) reported a net loss of $5.8 million for Q3 2024, although this was an improvement from the previous year.
- OEM business revenue declined by 11.5% year-over-year due to the absence of heavily marketed incentive programs.
- The company's wholesale business is not expected to be a growth driver, potentially impacting future revenue streams.
- Dealer activations have been flat, with challenges in stabilizing the independent dealer count.
- The exit of American Express as an affinity partner in April 2025 could impact the company's affinity program revenue.
Q & A Highlights
Q: Can you provide more detail on revenue guidance for the fourth quarter, specifically regarding TC MS, wholesale, and OEM?
A: Our main focus is driving dealer revenue, especially on the franchise side. Wholesale is not expected to grow significantly and is more about enabling TC Plus. We are not providing specific guidance for each line item but are focused on overall revenue growth and penetrating the franchise dealer network. (Jantoon Reigersman, CEO; Oliver Foley, CFO)
Q: Regarding TC Plus, are you aligned with all 50 states for paperwork, and how do you plan to monetize it?
A: Currently, TC Plus is limited to one dealer group in California, with used car purchases available from most states except Hawaii, Alaska, New York, and Massachusetts. We are working on fraud detection and dealer integration to streamline the process. Monetization details are not provided yet, but TC Plus will be part of the overall dealer subscription. (Jantoon Reigersman, CEO)
Q: How should we think about the impact of the wholesale business on gross margins in the next few quarters?
A: We don't expect wholesale as a percent of revenue to grow beyond Q3 levels. It's primarily for enabling online transactions, and we don't expect gross margins to decline further. (Oliver Foley, CFO)
Q: What are your expectations for dealer activations in 2025, given the current stabilization?
A: We aim to stabilize the independent dealer count and focus on franchise dealers, where we see differentiation. We expect steady growth and hope for an inflection in franchise dealer growth next year, driven by increased new vehicle demand and better affordability. (Oliver Foley, CFO)
Q: Can you provide a framework for EBITDA drop-through from revenue acceleration?
A: We aim for positive adjusted EBITDA and free cash flow. We may deploy more on marketing, which could slightly lower margins but will drive business growth and reposition TrueCar as a platform for online car purchases. (Jantoon Reigersman, CEO)
Q: How quickly can we expect contributions from AI and data monetization initiatives?
A: Contributions are expected over the next year, not immediately. These initiatives are part of our 2026 revenue target, focusing on personalized buying experiences and targeted approaches. (Jantoon Reigersman, CEO)
Q: Is Amex cycling out as an affinity partner, and how significant is their contribution?
A: Yes, Amex will come off in April. They contributed roughly 5% of partner units over the last 12 months. We are in discussions to replace this volume with other partners. (Jantoon Reigersman, CEO; Oliver Foley, CFO)
Q: Are there dealers taking only TC MS, and how does it help in reactivating dealers?
A: Dealers must be on the core side to access TC MS. It helps in strategic conversations and reactivating dealers by offering a full suite of products. (Jantoon Reigersman, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
