Delaware | 001-36449 | 04-3807511 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
TRUECAR, INC. | |
By: | /s/ Michael Guthrie |
Michael Guthrie | |
Chief Financial Officer | |
• | Second quarter total revenue up 23% from a year ago to $81.8 million. |
• | Second quarter net loss of $(8.1) million, or $(0.09) per share, compared to net loss of $(14.7) million, or $(0.17) per share, in the second quarter of 2016. |
• | Second quarter Non-GAAP net income(1) of $1.1 million, or $0.01 per share, compared to Non-GAAP net loss of $(4.1) million, or $(0.05) per share, in the second quarter of 2016. |
• | Second quarter Adjusted EBITDA(2) of $7.4 million, representing an Adjusted EBITDA margin(3) of 9.0%, compared to Adjusted EBITDA of $2.4 million, representing an Adjusted EBITDA margin of 3.7%, in the second quarter of 2016. |
• | Units(4) were 242,130 in the second quarter of 2017, up 26% from 192,531 in the second quarter of 2016. |
• | Franchise dealer count(5) was 12,204 as of June 30, 2017, a record and an increase from 11,734 as of March 31, 2017. |
• | Independent dealer count(6) was 2,860 as of June 30, 2017, a record and an increase from 2,716 as of March 31, 2017. |
(1) | Non-GAAP net income (loss) is a Non-GAAP financial measure. Refer to its definition and accompanying reconciliation to GAAP net loss below. |
(2) | Adjusted EBITDA is a Non-GAAP financial measure. Refer to its definition and accompanying reconciliation to GAAP net loss below. |
(3) | Adjusted EBITDA margin is a Non-GAAP financial measure, calculated as Adjusted EBITDA, divided by total revenue. |
(4) | Units: We define units as the number of automobiles purchased by our users from TrueCar Certified Dealers through TrueCar.com and our mobile applications or the car buying sites and mobile applications we maintain for our affinity group marketing partners. |
(5) | 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. Note that this number excludes Genesis franchises on our program due to Hyundai’s recent transition of Genesis to a stand-alone brand. In order to facilitate period over period comparisons, we have continued to count each Hyundai franchise that also has a Genesis franchise as one franchise dealer rather than two. |
(6) | Independent Dealer count: 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 individually, and includes both single-location proprietorships as well as large consolidated dealer groups. |
• | Total revenue of $81.8 million. |
• | Net loss of $(8.1) million, or $(0.09) per basic and diluted share, compared to a net loss of $(14.7) million, or $(0.17) per basic and diluted share, in the second quarter of 2016. |
• | Non-GAAP net income of $1.1 million, or $0.01 per basic and diluted share, compared to Non-GAAP net loss of $(4.1) million, or $(0.05) per basic and diluted share, in the second quarter of 2016. |
• | Adjusted EBITDA of $7.4 million, representing an Adjusted EBITDA margin of 9.0%, compared to Adjusted EBITDA of $2.4 million, representing an Adjusted EBITDA margin of 3.7%, in the second quarter of 2016. |
• | Average monthly unique visitors(7) increased 8% to 7.2 million in the second quarter of 2017, up from 6.7 million in the second quarter of 2016. |
• | Units were 242,130 in the second quarter of 2017, up 26% from 192,531 in the second quarter of 2016. |
• | Monetization(8) was $319 during the second quarter of 2017, compared to $321 during the second quarter of 2016. |
• | Franchise dealer count was 12,204 as of June 30, 2017, a record and an increase from 11,734 as of March 31, 2017. |
• | Independent dealer count was 2,860 as of June 30, 2017, a record and an increase from 2,716 as of March 31, 2017. |
• | Units are expected to be in the range of 265,000 to 270,000. |
• | Revenues are expected to be in the range of $85.0 million to $87.0 million. |
• | Adjusted EBITDA is expected to be in the range of $7.0 million to $8.0 million.(9) |
• | Units are expected to be in the range of 975,000 to 985,000. |
• | Revenues are expected to be in the range of $325.0 million to $329.0 million. |
• | Adjusted EBITDA is expected to be in the range of $26.0 million to $28.0 million.(9) |
(7) | 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. |
(8) | 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. |
(9) | We are unable to provide reconciliations of forward-looking Adjusted EBITDA without unreasonable effort because we are unable to provide a forward-looking estimate of certain reconciling items between GAAP net loss and Adjusted EBITDA due to uncertainty regarding, and the potential variability of, stock-based compensation due to timing, valuation and number of future employee awards, warrant expense due to achievement of minimum performance milestones based on the level of vehicle sales and certain litigation costs due to timing, status, and cost of litigation, both of which may have a significant impact on GAAP results. |
• | 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 costs to advance our claims in respect of certain litigation or the costs to defend ourselves in various complaints filed against us; |
• | neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects the cash severance costs due to certain former executives and former members of our product and technology teams affected by a reorganization; |
• | neither Adjusted EBITDA nor Non-GAAP net income (loss) reflects the lease exit costs associated with consolidation of the Company's office locations in Santa Monica, California; |
• | neither Adjusted EBITDA nor Non-GAAP net income (loss) 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 and Non-GAAP net income (loss) differently than we do, limiting their usefulness as comparative measures. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 81,819 | $ | 66,427 | $ | 157,576 | $ | 128,287 | |||||||
Costs and operating expenses: | |||||||||||||||
Cost of revenue | 7,130 | 6,365 | 13,522 | 12,590 | |||||||||||
Sales and marketing | 46,933 | 38,129 | 89,115 | 70,240 | |||||||||||
Technology and development | 14,131 | 14,022 | 27,760 | 27,162 | |||||||||||
General and administrative | 15,413 | 15,998 | 29,041 | 31,494 | |||||||||||
Depreciation and amortization | 5,668 | 5,868 | 11,752 | 11,772 | |||||||||||
Total costs and operating expenses | 89,275 | 80,382 | 171,190 | 153,258 | |||||||||||
Loss from operations | (7,456 | ) | (13,955 | ) | (13,614 | ) | (24,971 | ) | |||||||
Interest income | 249 | 102 | 382 | 195 | |||||||||||
Interest expense | (652 | ) | (632 | ) | (1,301 | ) | (1,240 | ) | |||||||
Loss before provision for income taxes | (7,859 | ) | (14,485 | ) | (14,533 | ) | (26,016 | ) | |||||||
Provision for income taxes | 201 | 170 | 322 | 306 | |||||||||||
Net loss | $ | (8,060 | ) | $ | (14,655 | ) | $ | (14,855 | ) | $ | (26,322 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.17 | ) | $ | (0.16 | ) | $ | (0.31 | ) | |||
Weighted average common shares outstanding, basic and diluted | 93,745 | 83,931 | 90,283 | 83,697 |
June 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 181,722 | $ | 107,721 | |||
Accounts receivable, net | 37,056 | 36,867 | |||||
Prepaid expenses | 7,050 | 6,044 | |||||
Other current assets | 1,043 | 2,278 | |||||
Total current assets | 226,871 | 152,910 | |||||
Property and equipment, net | 68,397 | 66,941 | |||||
Goodwill | 53,270 | 53,270 | |||||
Intangible assets, net | 17,843 | 19,774 | |||||
Other assets | 1,659 | 1,553 | |||||
Total assets | $ | 368,040 | $ | 294,448 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 18,018 | $ | 13,827 | |||
Accrued employee expenses | 7,399 | 8,951 | |||||
Accrued expenses and other current liabilities | 11,994 | 12,583 | |||||
Total current liabilities | 37,411 | 35,361 | |||||
Deferred tax liabilities | 3,282 | 2,994 | |||||
Lease financing obligations, net of current portion | 29,031 | 28,833 | |||||
Other liabilities | 3,782 | 2,679 | |||||
Total liabilities | 73,506 | 69,867 | |||||
Stockholders’ Equity | |||||||
Common stock | 10 | 9 | |||||
Additional paid-in capital | 627,614 | 542,807 | |||||
Accumulated deficit | (333,090 | ) | (318,235 | ) | |||
Total stockholders’ equity | 294,534 | 224,581 | |||||
Total liabilities and stockholders’ equity | $ | 368,040 | $ | 294,448 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss | $ | (8,060 | ) | $ | (14,655 | ) | $ | (14,855 | ) | $ | (26,322 | ) | |||
Non-GAAP adjustments: | |||||||||||||||
Interest income | (249 | ) | (102 | ) | (382 | ) | (195 | ) | |||||||
Interest expense | 652 | 632 | 1,301 | 1,240 | |||||||||||
Depreciation and amortization | 5,668 | 5,868 | 11,752 | 11,772 | |||||||||||
Stock-based compensation | 6,846 | 5,900 | 12,753 | 11,792 | |||||||||||
Certain litigation costs (1) | 2,299 | 150 | 2,649 | 422 | |||||||||||
Severance charges (2) | — | 1,783 | — | 1,783 | |||||||||||
Lease exit costs (3) | — | 2,684 | (133 | ) | 2,684 | ||||||||||
Provision for income taxes | 201 | 170 | 322 | 306 | |||||||||||
Adjusted EBITDA | $ | 7,357 | $ | 2,430 | $ | 13,407 | $ | 3,482 |
(1) | The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers and the California New Car Dealers Association against TrueCar, and securities and consumer class action lawsuits. We believe the exclusion of these costs is appropriate to facilitate comparisons of our core operating performance on a period-to-period basis. Based on the nature of the specific claims underlying the excluded litigation matters, once these matters are resolved, we do not believe our operations are likely to entail defending against the types of claims raised by these matters. We expect the cost of defending these claims to continue to be significant pending resolution. |
(2) | We incurred $1.3 million in severance costs in the second quarter of 2016 related to a reorganization of our product and technology teams to better align our resources with business objectives as we transition from multiple software platforms to a unified architecture. In addition, we incurred severance costs of $0.5 million related to an executive who terminated during the second quarter of 2016. We believe excluding the impacts of these terminations is consistent with our use of Adjusted EBITDA and Non-GAAP net income (loss) as we do not believe they are useful indicators of ongoing operating results. |
(3) | Represents updated estimates to our lease termination costs associated with the consolidation of the Company's office locations in Santa Monica, California in December 2015. We believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss | $ | (8,060 | ) | $ | (14,655 | ) | $ | (14,855 | ) | $ | (26,322 | ) | |||
Non-GAAP adjustments: | |||||||||||||||
Stock-based compensation | 6,846 | 5,900 | 12,753 | 11,792 | |||||||||||
Certain litigation costs (1) | 2,299 | 150 | 2,649 | 422 | |||||||||||
Severance charges (2) | — | 1,783 | — | 1,783 | |||||||||||
Lease exit charges (3) | — | 2,684 | (133 | ) | 2,684 | ||||||||||
Non-GAAP net income (loss) (4) | $ | 1,085 | $ | (4,138 | ) | $ | 414 | $ | (9,641 | ) | |||||
Non-GAAP net income (loss) per share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.05 | ) | $ | 0.00 | $ | (0.12 | ) | |||||
Diluted | $ | 0.01 | $ | (0.05 | ) | $ | 0.00 | $ | (0.12 | ) | |||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 93,745 | 83,931 | 90,283 | 83,697 | |||||||||||
Diluted | 103,265 | 83,931 | 95,070 | 83,697 |
(1) | The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers and the California New Car Dealers Association against TrueCar, and securities and consumer class action lawsuits. We believe the exclusion of these costs is appropriate to facilitate comparisons of our core operating performance on a period-to-period basis. Based on the nature of the specific claims underlying the excluded litigation matters, once these matters are resolved, we do not believe our operations are likely to entail defending against the types of claims raised by these matters. We expect the cost of defending these claims to continue to be significant pending resolution. |
(2) | We incurred $1.3 million in severance costs in the second quarter of 2016 related to a reorganization of our product and technology teams to better align our resources with business objectives as we transition from multiple software platforms to a unified architecture. In addition, we incurred severance costs of $0.5 million related to an executive who terminated during the second quarter of 2016. We believe excluding the impacts of these terminations is consistent with our use of Adjusted EBITDA and Non-GAAP net income (loss) as we do not believe they are useful indicators of ongoing operating results. |
(3) | Represents updated estimates to our lease termination costs associated with the consolidation of the Company's office locations in Santa Monica, California in December 2015. We believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons. |
(4) | There is no income tax impact related to the adjustments made to calculate Non-GAAP net income (loss) because of our available net operating loss carryforwards and the full valuation allowance recorded against our net deferred tax assets at June 30, 2017 and June 30, 2016. |
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