TrueCar, Inc. (NASDAQ: TRUE) today announced its financial results for the fourth quarter and year-ended December 31, 2015.
- Fourth quarter total revenue up 15% from a year ago to $63.6 million; fourth quarter transaction revenue of $59.3 million, up 16% year over year.
- FY 2015 total revenue up 26% from FY 2014 to $259.8 million; FY 2015 transaction revenue of $241.4 million, up 27% over FY 2014.
- Fourth quarter net loss of $(27.4) million, or $(0.33) per share, compared to net loss of $(9.8) million, or $(0.13) per share, in the fourth quarter of 2014; FY 2015 net loss of $(64.9) million, or $(0.79) per share, compared to net loss of $(48.4) million, or $(0.68) per share, in FY 2014.
- Fourth quarter Non-GAAP net loss(1) of $(5.2) million, or $(0.06) per share, compared to Non-GAAP net income of $0.3 million, or $0.00 per share, in the fourth quarter of 2014; FY 2015 Non-GAAP net loss of $(11.0) million, or $(0.13) per share, compare to Non-GAAP net loss of $(3.3) million, or $(0.05) per share, in FY 2014.
- Fourth quarter Adjusted EBITDA(2) of $0.2 million, representing an Adjusted EBITDA margin of 0.3%, compared to Adjusted EBITDA of $4.3 million, representing an Adjusted EBITDA margin of 7.7%, in the fourth quarter of 2014; FY 2015 Adjusted EBITDA of $7.6 million, representing an Adjusted EBITDA margin of 2.9%, compared to Adjusted EBITDA of $10.9 million, representing an Adjusted EBITDA margin of 5.3%, in FY 2014.
- Franchise dealer count(3) was 9,094 as of December 31, 2015, representing approximately 29% of all new car franchises and an increase from 8,702 as of September 30, 2015.
Management Commentary
“Fourth-quarter revenue rose 15 percent from a year ago and the number of vehicles sold to TrueCar users by TrueCar Certified Dealers increased 12 percent compared with the fourth quarter of 2014, yet the period was a difficult one and marked the close of a challenging year,” said Mike Guthrie, TrueCar’s Chief Financial Officer. “We are moving quickly to strengthen our foundation and have made a number of important changes at the senior level of the company, most notably with Chip Perry joining us as Chief Executive Officer in December. We start from a good base and have a plan in place to make the investments necessary in order to excel over the long term.”
A record 750,108 cars and light trucks were sold to TrueCar users by TrueCar Certified Dealers in 2015, up 23 percent from a year earlier. The TrueCar Certified Dealer network included more than 11,000 dealers at year-end, including 9,094 franchise dealers, the latter figure recovering from 8,702 as of Sept. 30, 2015.
“I took this job because I believe TrueCar can become the clear category winner in the online automotive space over the next few years,” said Perry, President and Chief Executive Officer. “We will do this by refining how our marketplace works so that it can provide the best overall value proposition for car buyers, dealers and automakers.”
(1) Non-GAAP net 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) 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.
The company has four key strengths that will help it fulfill this mission, Perry said. These include: a segment-leading new car pricing transparency model; the best commercial platform for monetizing consumer-dealer introductions in the online auto industry; relationships with affinity partners including USAA, AAA, Sam’s Club, American Express and many others; and a brand that is growing very rapidly and has a positive image with consumers.
While TrueCar experienced challenges last year, “these challenges are the result of some shortcomings in the ways in which the company has executed its business model in the past, not the fundamentals of the model itself,” Perry said. “Our focus is squarely on seizing these opportunities for improvement so we can get this company back on a path to high revenue growth with healthy margins.”
In particular, TrueCar will focus on improving the perception some dealers and automakers have of the company. TrueCar will also increase technology investment and enhance its digital platform to enable its Certified Dealers to engage more effectively with the millions of in-market consumers who interact with the TrueCar network each month.
Finally, the company is embracing a new philosophical rudder and a new set of core business principles, Perry said.
As part of this evolution, the company will:
- Strive to be a specialized two-sided digital marketplace that seeks to: (i) reduce the inherent friction in automotive transactions; (ii) deliver the best car-buying experience for consumers; and (iii) provide dealers and automakers with an excellent return on their marketing dollars;
- Manage its marketplace to produce a win-win scenario for both consumers and dealers;
- Explain its value proposition to consumers in a way that does not reflect negatively on car dealers, while continuing to provide valuable information that provides transparency into the car-buying process and improves consumers’ overall purchasing experience.
“TrueCar has an excellent foundation for future growth,” Perry said. “Everyone at the company believes there is a huge market opening and an unmet need for the kind of digital marketplace that we are building. We are laser-focused on being the first to create it.”
Fourth Quarter 2015 Financial Highlights
- Total revenue of $63.6 million and transaction revenue of $59.3 million.
- Net loss of $(27.4) million, or $(0.33) per basic and diluted share, compared to net loss of $(9.8) million, or $(0.13) per share, in the fourth quarter of 2014.
- Non-GAAP net loss of $(5.2) million, or $(0.06) per basic and diluted share, compared to Non-GAAP net income of $0.3 million, or $0.00 per share, in the fourth quarter of 2014.
- Adjusted EBITDA of $0.2 million, representing an Adjusted EBITDA margin of 0.3%, compared to $4.3 million, representing an Adjusted EBITDA margin of 7.7%, in the fourth quarter of 2014.
2015 Financial Highlights
- Total revenue of $259.8 million and transaction revenue of $241.4 million.
- Net loss of $(64.9) million, or $(0.79) per basic and diluted share, compared to net loss of $(48.4) million, or $(0.68) per share, in FY 2014.
- Non-GAAP net loss of $(11.0) million, or $(0.13) per basic and diluted share, compared to Non-GAAP net loss of $(3.3) million, or $(0.05) per share, in FY 2014.
- Adjusted EBITDA of $7.6 million, representing an Adjusted EBITDA margin of 2.9%, compared to Adjusted EBITDA of $10.9 million, representing an Adjusted EBITDA margin of 5.3%, in FY 2014.
Key Operating Metrics
- Average monthly unique visitors(4)was 5.9 million in the fourth quarter of 2015, up from approximately 4.4 million in the fourth quarter of 2014. In FY 2015, average monthly unique visitors increased 40% to approximately 6.0 million, up from 4.3 million in FY 2014.
- Units(5)increased 12% to 183,157 in the fourth quarter of 2015, up from 163,338 in the fourth quarter of 2014. In FY 2015, units increased 23% to 750,108, up from 610,620 in FY 2014.
- Monetization(6)was $324 during the fourth quarter of 2015, which was flat sequentially and an increase from $314 during the fourth quarter of 2014, and $322 during FY 2015, compared to $310 during FY 2014.
- Franchise dealer count was 9,094 as of December 31, 2015, representing approximately 29% of all new car franchises and an increase from 8,702 as of September 30, 2015.
Business Outlook
TrueCar’s guidance for the first quarter ending March 31, 2016 is as follows:
- Revenues are expected to be in the range of $60 million to $62 million.
- Adjusted EBITDA is expected to be breakeven.
TrueCar’s guidance for the full year ending December 31, 2016 is as follows:
- Revenues are expected to be in the range of $270 million to $275 million.
- Adjusted EBITDA is expected to be breakeven.
(4) 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.
(5) 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.
(6)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.
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