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TrueCar Reports First Quarter 2021 Financial Results

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SANTA MONICA, Calif., May 6, 2021 /PRNewswire/ -- TrueCar, Inc. (NASDAQ: TRUE) today announced its financial results for the first quarter ended March 31, 2021.

TrueCar, Inc. Logo
TrueCar, Inc. Logo

First Quarter 2021 Financial Highlights

The following financial results reflect continuing operations only:

  • First quarter total revenue of $65.1 million, up 1.8% from the fourth quarter of 2020 and down (17.5)% from the first quarter of 2020.

  • Loss from continuing operations of $(8.4) million, or $(0.09) per share, compared to loss from continuing operations of $(10.4) million, or $(0.10) per share, in the first quarter of 2020.

  • First quarter Adjusted EBITDA(1) of $2.1 million, representing an Adjusted EBITDA margin(2) of 3.2%, compared to Adjusted EBITDA of $6.7 million, representing an Adjusted EBITDA margin of 8.5%, in the first quarter of 2020.

  • $274.6 million of cash and cash equivalents on the balance sheet as of March 31, 2021.

Management Commentary

"Through the unwavering and tireless efforts of the entire TrueCar team, we reported another strong quarter in Q1," said Mike Darrow, TrueCar's President and Chief Executive Officer. "We ended Q1 above both guidance and consensus forecasts with revenue of $65.1 million and Adjusted EBITDA of $2.1 million."

_________________

(1)

Adjusted EBITDA is a Non-GAAP financial measure. Refer to its definition and accompanying reconciliation to GAAP net loss below.



(2)

Adjusted EBITDA margin is a Non-GAAP financial measure, calculated as Adjusted EBITDA divided by total revenue.

Key Operating Metrics

  • Average monthly unique visitors(3) increased 18.4% to 9.2 million in the first quarter of 2021, up from 7.8 million in the first quarter of 2020.

  • Units(4) were 165,858 in the first quarter of 2021, down (15.8)% year-over-year.

  • Monetization(5) was $391 in the first quarter of 2021, flat year-over-year.

  • Franchise dealer count(6) was 10,446 as of March 31, 2021, down from 10,589 as of December 31, 2020.

  • Independent dealer count(7) was 3,702 as of March 31, 2021, down from 3,794 as of December 31, 2020.

Business Outlook

Our guidance for the quarter ending June 30, 2021 is as follows:

  • Revenues are expected to be in the range of $65 million to $66 million.

  • Adjusted EBITDA is expected to be above breakeven.(8)

_________________

(3)

We define a monthly unique visitor as an individual who has visited our website, one of our landing pages on our affinity group marketing partner sites or our mobile application within a calendar month. We calculate average monthly unique visitors as the sum of the monthly unique visitors divided by the number of months in the period.



(4)

We define units as the number of automobiles purchased from TrueCar Certified Dealers that are matched to users of TrueCar.com, our mobile applications or the car-buying sites and mobile applications we maintain for our affinity group marketing partners.



(5)

We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue (dealer revenue and OEM incentives revenue) in a given period by the number of units in that period.



(6)

We define franchise dealer count as the number of franchise dealers in the network of TrueCar Certified Dealers at the end of a given period. This number is calculated by counting the number of brands of new cars sold at each individual location, or rooftop, regardless of the size of the dealership that owns the rooftop.



(7)

We define independent dealer count as the number of dealers in the network of TrueCar Certified Dealers at the end of a given period that exclusively sell used vehicles and are not directly affiliated with a new car manufacturer. This number is calculated by counting each location, or rooftop, individually, regardless of the size of the dealership that owns the rooftop.



(8)

We are unable to provide reconciliations of forward-looking Adjusted EBITDA without unreasonable effort because of the uncertainty and potential variability in amount and timing of stock-based compensation and impairments of right-of-use assets, each of which are reconciling items between GAAP net loss and Adjusted EBITDA and could significantly impact GAAP results.

Conference Call Information

Members of our management will host a conference call today, May 6, 2021, to discuss our first quarter 2021 results at 4:30 p.m. Eastern Time. To participate, domestic callers should dial 1-888-428-7458 and international callers should dial 1-862-298-0702. A replay of the call may be accessed the same day from Thursday, May 6, 2021 until 7 p.m. Eastern Time on Thursday, May 13, 2021 by dialing 1-888-539-4649 (domestic) or 1-754-333-7735 (international) and entering replay PIN 155575. An archived version of the call will also be available upon completion on the Investor Relations section of our website at ir.truecar.com. We have used, and intend to continue to use, our Investor Relations website (ir.truecar.com), Twitter (@TrueCar) and Facebook (www.facebook.com/TrueCar) as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Forward-Looking Statements

This press release contains forward-looking statements. All statements contained in this press release other than statements of historical fact are forward-looking statements, including our expectations regarding future revenue and Adjusted EBITDA. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may prove incorrect, any of which could cause our results to differ materially from those expressed or implied by such forward-looking statements, and include, among others, those risks and uncertainties described under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission, or SEC, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 to be filed with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. All forward-looking statements in this press release are based on information available to our management as of the date of this press release and except as required by law, management assumes no obligation to update those forward-looking statements, which speak only as of their respective dates.

Use of Non-GAAP Financial Measures

This earnings release includes the following Non-GAAP financial measures: Adjusted EBITDA and Adjusted EBITDA margin. We define Adjusted EBITDA as net income (loss) adjusted to exclude interest income, interest expense, depreciation and amortization, stock-based compensation, income (loss) from equity method investment, certain restructuring costs, certain executive departure costs, certain transaction expenses, certain litigation costs, changes in the fair value of contingent consideration, goodwill impairment, other expense (income), impairment of lease right-of-use assets, and income taxes. We have provided below a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.

We use Adjusted EBITDA as an operating performance measure because it is (i) an integral part of our reporting and planning processes; (ii) used by our management and board of directors to assess our operational performance, and together with operational objectives, as a measure in evaluating employee compensation and bonuses; and (iii) used by our management to make financial and strategic planning decisions regarding future operating investments. We believe that using Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis because it excludes variations primarily caused by changes in the excluded items noted above. In addition, we believe that Adjusted EBITDA and similar measures are widely used by investors, securities analysts, rating agencies and other parties in evaluating companies as measures of financial performance and debt service capabilities.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • Adjusted EBITDA does not reflect the payment or receipt of interest or the payment of income taxes;

  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or any other contractual commitments;

  • Adjusted EBITDA does not reflect the legal, accounting, consulting and other third-party fees and costs that we incurred in connection with the evaluation and negotiation of potential merger and acquisition transactions;

  • Adjusted EBITDA does not reflect the costs to advance our claims in certain litigation or the costs to defend ourselves in various complaints filed against us;

  • Adjusted EBITDA does not consider the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation; and

  • other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss, our other GAAP results and various cash flow metrics. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving Adjusted EBITDA and you should not infer from our presentation of Adjusted EBITDA that our future results will not be affected by these expenses or any unusual or non-recurring items.

About TrueCar

TrueCar is a leading automotive digital marketplace that enables car buyers to connect to our nationwide network of Certified Dealers. We are building the industry's most personalized and efficient car buying experience as we seek to bring more of the purchasing process online. Consumers who visit our marketplace will find a suite of vehicle discovery tools, price ratings and market context on new and used cars — all with a clear view of what's a great deal. When they are ready, TrueCar will enable them to connect with a local Certified Dealer who shares in our belief that truth, transparency and fairness are the foundation of a great car buying experience. As part of our marketplace, TrueCar powers car-buying programs for over 250 leading brands, including AARP, Sam's Club and American Express. Nearly half of all new-car buyers engage with TrueCar powered sites, where they buy smarter and drive happier. TrueCar is headquartered in Santa Monica, California, with an office in Austin, Texas.

For more information, please visit www.truecar.com, and follow us on Facebook or Twitter. TrueCar media line: +1-844-469-8442 (US toll-free) | Email: pr@truecar.com

Contact:
investors@truecar.com

TRUECAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)



Three Months Ended

March 31,


2021


2020

Revenues

$

65,105



$

78,917


Costs and operating expenses:




Cost of revenue

5,458



6,175


Sales and marketing

40,099



46,080


Technology and development

11,193



11,899


General and administrative

12,678



12,088


Depreciation and amortization

4,312



5,029


Goodwill impairment



8,264


Total costs and operating expenses

73,740



89,535


Loss from operations

(8,635)



(10,618)


Interest income

15



378


Other income

625




Loss from equity method investment

(329)



(382)


Loss from continuing operations before income taxes

(8,324)



(10,622)


Provision for (benefit from) income taxes

94



(232)


Loss from continuing operations

(8,418)



(10,390)


Loss from discontinued operations, net of taxes



(279)


Net loss

$

(8,418)



$

(10,669)


Loss per share, basic and diluted




Continuing operations

$

(0.09)



$

(0.10)


Discontinued operations

$

0.00



$

0.00






Weighted average common shares outstanding, basic and diluted

98,581



107,024


TRUECAR, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)



March 31, 2021


December 31, 2020

Assets




Current assets




Cash and cash equivalents

$

274,573



$

273,314


Accounts receivable, net

28,308



32,923


Prepaid expenses

4,905



5,800


Other current assets

4,057



12,901


Total current assets

311,843



324,938


Property and equipment, net

20,626



21,421


Operating lease right-of-use assets

28,124



29,192


Goodwill

51,205



51,205


Intangible assets, net

6,188



6,600


Equity method investment

19,576



19,905


Other assets

4,709



4,800


Total assets

$

442,271



$

458,061


Liabilities and Stockholders' Equity




Current liabilities




Accounts payable

$

13,831



$

13,198


Accrued employee expenses

4,549



6,506


Operating lease liabilities, current

4,847



4,771


Accrued expenses and other current liabilities

16,064



18,402


Total current liabilities

39,291



42,877


Deferred tax liabilities

57



40


Operating lease liabilities, net of current portion

30,645



31,974


Other liabilities

86



388


Total liabilities

70,079



75,279


Stockholders' Equity




Common stock

10



10


Additional paid-in capital

736,118



738,290


Accumulated deficit

(363,936)



(355,518)


Total stockholders' equity

372,192



382,782


Total liabilities and stockholders' equity

$

442,271



$

458,061



TRUECAR, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(Unaudited)



Three Months Ended

March 31,


2021


2020

Net loss

$

(8,418)



$

(10,669)


Loss from discontinued operations, net of tax



279


Loss from continuing operations

(8,418)



(10,390)






Non-GAAP adjustments:




Interest income

(15)



(378)


Depreciation and amortization

4,312



5,029


Stock-based compensation

6,385



5,914


Share of net loss of equity method investment

329



382


Certain litigation costs (1)



(1,939)


Change in the fair value of contingent consideration

31



75


Goodwill impairment (2)



8,264


Other income (3)

(625)




Provision for (benefit from) income taxes

94



(232)


Adjusted EBITDA

$

2,093



$

6,725



_________________

(1)

For the three months ended March 31, 2020, the excluded amount relates to legal costs incurred in connection with complaints filed by non-TrueCar dealers against TrueCar and consumer class action lawsuits, offset by a $2.0 million payment. The $2.0 million payment received from one of our insurance carriers reflects a settlement of a lawsuit we brought in the fourth quarter of 2017 to recover insured legal fees. We believe the exclusion of these costs and recovery is appropriate to facilitate comparisons of our core operating performance on a period-to-period basis.



(2)

The excluded amount represents a non-cash impairment charge we recognized on our goodwill during the first quarter of 2020.



(3)

Other income primarily consists of fees earned associated with the transition services agreement we entered into with J.D. Power in connection with our ALG divestiture.

Cision
Cision

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SOURCE TrueCar, Inc.