- Record quarterly revenue of $56.8 million, up 51% year-over-year.
- Record quarterly transaction revenue of $52.0 million, up 55% year-over-year.
- Record Adjusted EBITDA1 of $3.9 million, up 60% year-over-year and representing an adjusted EBITDA margin of 6.8%.
- Non-GAAP net income1 of $0.3 million, or $0.00 per diluted share, compared to Non-GAAP net (loss) of $(1.4) million, or $(0.02) per share, in the second quarter of 2014.
- Net (loss) of $(13.6) million, or $(0.18) per basic and diluted share, compared to a net (loss) of $(15.0) million, or $(0.22) per basic and diluted share, in the second quarter of 2014.
- Franchise Dealer Count2 grew by over 1,800 dealers or 29% year-over-year to a new record high of 8,149. Total TrueCar Certified Dealers, which includes non-franchise dealers, now exceeds 9,000.
SANTA MONICA, Calif., Nov. 5, 2014 (GLOBE NEWSWIRE) -- TrueCar, Inc. (Nasdaq:TRUE), the negotiation-free car buying and selling platform, today announced its financial results for the third quarter ended September 30, 2014.
Management Commentary
"The third quarter marked another quarter of financial and operational excellence, with TrueCar delivering record results across our financial and operating metrics," said Scott Painter, Founder and Chief Executive Officer of TrueCar. "Revenue of $56.8 million hit yet another all-time high and we delivered record positive adjusted EBITDA of $3.9 million. We also delivered non-GAAP net income of $0.3 million."
Mr. Painter continued, "With one out of every four dealers in the U.S. on our network, over 4.6 million unique visitors engaging with TrueCar monthly, and our market share of all new car sales in the U.S. on the rise, TrueCar is transforming into one of the most recognizable and relevant brands in automotive. That said, we are still in the early stages of building our platform to deliver the ideal new car buying experience for consumers, dealers and manufacturers. Mobile platform development, OEM incentive spending efficacy and solving more of the problem, including TrueTrade, will be of core focus in 2015 and beyond."
Third Quarter 2014 Financial Highlights
-
Revenues of $56.8 million, an increase of 51% from $37.5 million in the third quarter of 2013.
- Transaction revenues of $52.0 million, an increase of 55% from $33.5 million in the third quarter of 2013.
- Data and other revenues of $4.8 million, an increase of 20% from $4.0 million in the third quarter of 2013, consisting primarily of Residual Value consulting services and data sales from TrueCar's ALG subsidiary to OEMs and financial services companies.
- Record Adjusted EBITDA of $3.9 million, compared to $2.4 million in the third quarter of 2013.
- Non-GAAP net income of $0.3 million or $0.00 per diluted share, compared to a non-GAAP net (loss) of $(1.4) million, or $(0.02) per share, in the second quarter of 2014.
- Net (loss) of $(13.6) million, or $(0.18) per basic and diluted share, compared to a net (loss) of $(15.0) million, or $(0.22) per basic and diluted share, in the second quarter of 2014.
Key Operating Metrics
- The number of average monthly unique visitors3 increased 44% to approximately 4.6 million for the third quarter of 2014, up from approximately 3.2 million in the third quarter of 2013.
- The number of units4 increased 47% to 171,775 in the third quarter of 2014, up from 116,503 in the third quarter of 2013.
- Monetization5 was $303 during the third quarter of 2014, up from $288 in the third quarter of 2013.
- Franchise Dealer Count increased to 8,149 at September 30, 2014, representing 26% of all new car franchises and year-over-year growth of 29%.
- Transaction revenue per franchise dealer increased to $6,567 for the third quarter of 2014, representing year-over-year growth of 22%.
Business Outlook
TrueCar is raising its financial outlook for the fourth quarter ending December 31, 2014 as follows:
- Revenues are expected to be in the range of $54.5 million to $55.5 million.
- Adjusted EBITDA is expected to be in the range of $2.6 million to $2.9 million.
TrueCar is raising its outlook for the full year ending December 31, 2014 as follows:
- Revenues are expected to be in the range of $205.7 million to $206.7 million.
- Adjusted EBITDA is expected to be in the range of $9.2 million to $9.5 million.
Conference Call Information
Members of TrueCar management will host a conference call today, November 5, 2014, to discuss the third quarter 2014 results at 4:30 p.m. Eastern Time. To participate, callers in the U.S. and Canada should dial 1-877-407-0789 and international callers should dial 1-201-689-8562 and reference the conference ID: 13593461. In addition, a live webcast of the call will be accessible through the Investor Relations section of TrueCar's website at www.truecar.com and will be archived online for 90 days upon completion of the conference call. A telephonic replay of the call will also be available until 11:59 p.m. Eastern Time, on Wednesday, November 19, 2014, by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the replay pin number: 13593461.
Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding TrueCar's future growth potential and opportunities, in particular growth in our market share of new car sales in the U.S. and the expansion of our product suite to include OEMs, our ability to increase brand recognition and relevance, expectations regarding future revenues and Adjusted EBITDA, long-term financial objectives, business strategy, plans and objectives are forward-looking statements. 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. Among the risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: our ability to manage our growth especially in light of our limited operating history; our dependence upon our affinity group marketing partners, especially USAA; compliance with U.S. federal and state laws and regulations directly or indirectly applicable to our business; our ability to compete effectively in an increasingly competitive market and to enhance our brand; our ability to continue to expand our dealer network and to increase our user traffic and the number of transactions between our dealer network and our users, our ability to successfully develop and introduce complementary new products to address our target markets, including OEMs, and to continue to enhance our mobile solutions; consumer demand, global supply chain challenges and macro-economic issues that affect the automobile industry; security breaches in our systems or other service disruptions; our ability to protect our intellectual property rights; and other risks and uncertainties described more fully under the heading "Risk Factors" in TrueCar's registration statement on Form S-1 filed on May 15, 2014, its quarterly report on Form 10-Q for the quarter ended June 30, 2014 filed on August 14, 2014 and its quarterly report on Form 10-Q to be filed for the quarter ended September 30, 2014, with the Securities and Exchange Commission. Moreover, the company operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for TrueCar management to predict all risks, nor can it assess the impact of all factors on its 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 the company may make. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements, which speak only as of their respective dates.
Use of Non-GAAP Financial Measures
In addition to generally accepted accounting principles in the United States or GAAP, this earnings release includes the following non-GAAP financial measures; Adjusted EBITDA and Non-GAAP net income (loss). We define Adjusted EBITDA as net loss adjusted to exclude interest income, interest expense, income taxes, depreciation and amortization, stock-based compensation, warrant expense, change in the fair value of contingent consideration, ticker symbol acquisition costs, certain legal costs, IPO-related expenses and transaction costs from acquisitions. We define Non-GAAP net income (loss) as net loss adjusted to exclude stock-based compensation, change in fair value of preferred stock warrant liability, non-cash warrant expense, transaction costs from acquisitions, change in the fair value of contingent consideration, ticker symbol acquisition costs, IPO-related expenses, and certain legal costs. We have provided below a reconciliation of each of Adjusted EBITDA and Non-GAAP net income (loss) to net loss, the most directly comparable GAAP financial measure. Neither Adjusted EBITDA nor Non-GAAP net income (loss) should be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.
We believe that Adjusted EBITDA and Non-GAAP net income (loss) are useful because they facilitate operating performance comparisons on a period-to-period basis as they exclude variations primarily caused by changes in the excluded items noted above. In addition, we believe that Adjusted EBITDA, Non-GAAP net income (loss) and similar measures are widely used by investors, securities analysts, rating agencies and other parties in evaluating companies as measures of financial performance.
Our use of each Adjusted EBITDA and Non-GAAP net income (loss) has limitations as an analytical tool, and you should not consider either 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;
- Neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects 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;
- Neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects the cash costs to advance our claims in respect of certain litigation.
- Neither Adjusted EBITDA nor Non-GAAP net income (loss) consider the potentially dilutive impact of shares issued or to be issued in connection with share-based compensation or warrant issuances; and
- Other companies, including companies in our own industry, may calculate Adjusted EBITDA and Non-GAAP net income (loss) differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, you should consider Adjusted EBITDA and Non-GAAP net income (loss) alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results. In addition, in evaluating Adjusted EBITDA and Non-GAAP net income (loss), 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 Non-GAAP net income (loss) and you should not infer from our presentation of Adjusted EBITDA and Non-GAAP net income (loss) that our future results will not be affected by these expenses or any unusual or non-recurring items.
About TrueCar
TrueCar, Inc. (Nasdaq:TRUE) is the negotiation-free car buying and selling platform. TrueCar enables a negotiation-free car buying experience by giving buyers transparent insight into what others actually paid (price confidence), upfront pricing information (price discovery), and access to a network of trusted TrueCar Certified Dealers who provide guaranteed savings certificates and seamlessly complete the car purchase. The reality is that buying a car is painful and buyers fear they are going to overpay or be surprised with unanticipated fees. TrueCar's transparent upfront pricing information makes the car buying process simple so there are no surprises and buyers never overpay. TrueCar's mission is to make car buying simple, fair and fun. Its national network of more than 9,000 TrueCar Certified Dealers, including both new car franchise dealers and independent dealers, is committed to providing negotiation-free savings off MSRP and upfront pricing information for all car-buyers, including members of some of the country's largest membership and service organizations such as AARP, American Express, AAA, and USAA. Note: Not all program features are available in all states. Go to www.truecar.com for program details. TrueCar is headquartered in Santa Monica, Calif., with offices in Santa Barbara, Calif., San Francisco, Calif., and Austin, Texas.
1 Adjusted EBITDA and Non-GAAP Net Income (Loss) are non-GAAP financial measures. Refer to their definitions and accompanying reconciliations to GAAP Net Loss below.
2 Franchise Dealer Count: 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 by dealers in the TrueCar Certified Dealer network at their locations, and includes both single-location proprietorships as well as large consolidated dealer groups.
3 Average Monthly Unique Visitors: We define a monthly unique visitor as an individual who has visited our website, our landing page on our affinity group marketing partner sites, or our mobile applications 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 that period.
4 Units: We define units as the number of automobiles purchased by our users from TrueCar Certified Dealers through TrueCar.com or the car buying sites we maintain for our affinity group marketing partners.
5 Monetization: We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue in a given period by the number of units in that period.
| TrueCar, Inc. | ||||
| Consolidated Statements of Operations | ||||
| (Unaudited) | ||||
| (In thousands, except per share amounts) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Revenues | $ 56,751 | $ 37,547 | $ 151,178 | $ 93,813 |
| Costs and operating expenses: | ||||
| Cost of revenue | 4,666 | 3,652 | 12,524 | 11,087 |
| Sales and marketing | 36,399 | 21,878 | 97,458 | 51,287 |
| Technology and development | 10,906 | 5,512 | 26,751 | 16,934 |
| General and administrative | 14,919 | 7,716 | 42,873 | 20,658 |
| Depreciation and amortization | 3,388 | 3,241 | 9,474 | 9,175 |
| Total costs and operating expenses | 70,278 | 41,999 | 189,080 | 109,141 |
| Loss from operations | (13,527) | (4,452) | (37,902) | (15,328) |
| Interest income | 14 | 30 | 41 | 91 |
| Interest expense | (27) | (58) | (327) | (1,809) |
| Other income | 20 | 5 | 30 | 19 |
| Loss before provision for income taxes | (13,520) | (4,475) | (38,158) | (17,027) |
| Provision for income taxes | (120) | (136) | (437) | (409) |
| Net loss | $ (13,640) | $ (4,611) | $ (38,595) | $ (17,436) |
| Net loss per share: | ||||
| Basic and diluted | $ (0.18) | $ (0.08) | $ (0.56) | $ (0.30) |
| Weighted average common shares outstanding, basic and diluted | 76,880 | 59,799 | 68,315 | 58,096 |
| Consolidated Balance Sheets | ||
| (Unaudited) | ||
| (In thousands) | ||
| September 30, | December 31, | |
| 2014 | 2013 | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 112,999 | $ 43,819 |
| Restricted cash — current | — | 2,000 |
| Accounts receivable | 28,953 | 18,803 |
| Notes receivable from related parties — current | 380 | 178 |
| Prepaid expenses | 6,239 | 3,550 |
| Other current assets | 1,827 | 1,226 |
| Total current assets | 150,398 | 69,576 |
| Property and equipment, net | 28,688 | 15,238 |
| Goodwill | 53,270 | 53,270 |
| Intangible assets, net | 28,984 | 31,834 |
| Notes receivable from related parties | — | 2,682 |
| Other assets | 427 | 2,150 |
| Total assets | $ 261,767 | $ 174,750 |
| Liabilities, Convertible Preferred Stock and Stockholders' Equity | ||
| Current liabilities | ||
| Accounts payable | $ 12,350 | $ 9,804 |
| Accrued employee expenses | 9,778 | 10,129 |
| Revolving line of credit | 5,000 | 4,764 |
| Other accrued expenses | 11,296 | 6,242 |
| Total current liabilities | 38,424 | 30,939 |
| Deferred tax liabilities | 2,223 | 1,791 |
| Lease Financing Obligation | 5,970 | — |
| Other liabilities | 473 | 616 |
| Total liabilities | 47,090 | 33,346 |
| Commitments and contingencies | ||
| Series A convertible preferred stock | — | 29,224 |
| Stockholders' Equity | ||
| Common stock | 8 | 6 |
| Additional paid-in capital | 415,824 | 275,803 |
| Notes receivable from related parties | — | (1,069) |
| Accumulated deficit | (201,155) | (162,560) |
| Total stockholders' equity | 214,677 | 112,180 |
| Total liabilities, convertible preferred stock and stockholders' equity | $ 261,767 | $ 174,750 |
| TrueCar, Inc. | ||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||
| (Unaudited) | ||||||
| (In thousands) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2013 | 2014 | 2013 | |||
| Net loss | $ (13,640) | $ (4,611) | $ (38,595) | $ (17,436) | ||
| Non-GAAP Adjustments: | ||||||
| Interest income | (14) | (30) | (41) | (91) | ||
| Interest expense | 27 | 58 | 327 | 1,809 | ||
| Depreciation and amortization | 3,388 | 3,241 | 9,474 | 9,175 | ||
| Stock-based compensation | 9,440 | 1,968 | 20,978 | 5,584 | ||
| IPO-related expenses | -- | -- | 3,717 | -- | ||
| Warrant expense | 3,675 | 1,626 | 8,289 | 2,888 | ||
| Change in fair value of contingent consideration | -- | 23 | -- | 71 | ||
| Ticker symbol acquisition costs | -- | -- | 803 | -- | ||
| Certain litigation costs | 864 | (1) | -- | 1,239 | (1) | -- |
| Provision for income taxes | 120 | 136 | 437 | 409 | ||
| Adjusted EBITDA | $ 3,860 | $ 2,411 | $ 6,628 | $ 2,409 | ||
| (1) The excluded amounts relate to legal costs incurred in connection with a claim we filed against Sonic Automotive Holdings, Inc. for trademark infringement and related matters. We have not historically excluded these costs from Adjusted EBITDA; however, as we have incurred increasing costs to advance our claim, we believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons. | ||||||
| TrueCar, Inc. | |||||||||
| Reconciliation of Non-GAAP net (loss) income to GAAP net loss | |||||||||
| (Unaudited) | |||||||||
| (In thousands) | |||||||||
| Three Months Ended | Nine Months Ended | Three Months Ended | |||||||
| September 30, | September 30, | June 30, | |||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | |||||
| Net loss | $ (13,640) | $ (4,611) | $ (38,595) | $ (17,436) | $ (15,034) | ||||
| Non-GAAP Adjustments: | |||||||||
| Stock-based compensation | 9,440 | 1,968 | 20,978 | 5,584 | 7,396 | ||||
| Warrant expense | 3,675 | 1,626 | 8,289 | 2,888 | 2,280 | ||||
| Change in fair value of contingent consideration | -- | 23 | -- | 71 | -- | ||||
| Ticker symbol acquisition costs | -- | -- | 803 | -- | -- | ||||
| IPO-related expenses | -- | -- | 3,717 | -- | 3,717 | ||||
| Certain litigation costs | 864 | (1) | -- | 1,239 | (1) | -- | 254 | (1) | |
| Non-GAAP net income (loss) | $ 339 | $ (994) | $ (3,569) | $ (8,893) | $ (1,387) | ||||
| Non-GAAP net income (loss) per share: | |||||||||
| Basic | $0.00 | $ (0.02) | $ (0.05) | $ (0.15) | $ (0.02) | ||||
| Diluted | $0.00 | $ (0.02) | $ (0.05) | $ (0.15) | $ (0.02) | ||||
| Weighted average common shares outstanding: | |||||||||
| Basic | 76,880 | 59,799 | 68,315 | 58,096 | 67,784 | ||||
| Diluted | 88,604 | 59,799 | 68,315 | 58,096 | 67,784 | ||||
| (1) The excluded amounts relate to legal costs incurred in connection with a claim we filed against Sonic Automotive Holdings, Inc. for trademark infringement and related matters. We have not historically excluded these costs from Adjusted EBITDA; however, as we have incurred increasing costs to advance our claim, we believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons. | |||||||||