TrueCar Reports Fourth Quarter and Full Year 2020 Financial Results
SANTA MONICA, Calif., Feb. 24, 2021 /PRNewswire/ -- TrueCar, Inc. (NASDAQ: TRUE) today announced its financial results for the fourth quarter and fiscal year ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights
The following financial results reflect continuing operations only:
-- Fourth quarter total revenue of $64.0 million, down (25)% from $84.9
million in the fourth quarter of 2019.
-- Fourth quarter loss from continuing operations of $(7.7) million, or
$(0.07) per basic and diluted share, compared to loss from continuing
operations of $(9.7) million, or $(0.09) per basic and diluted share, in
the fourth quarter of 2019.
-- Fourth quarter Non-GAAP net loss((1)) of $(1.1) million, or $(0.01) per
basic and diluted share, compared to Non-GAAP net loss of $(2.6)
million, or $(0.02) per basic and diluted share, in the fourth quarter
of 2019.
-- Fourth quarter Adjusted EBITDA((2)) of $6.1 million, representing an
Adjusted EBITDA margin((3) )of 9.5%, compared to Adjusted EBITDA of $1.7
million, representing an Adjusted EBITDA margin of 2.0%, in the fourth
quarter of 2019.
2020 Financial Highlights
The following financial results reflect continuing operations only:
-- Total revenue of $278.7 million, down (16.8)% from $335.0 million in FY
2019.
-- Loss from continuing operations of $(19.8) million, or $(0.19) per basic
and diluted share, compared to loss from continuing operations of
$(58.3) million, or $(0.55) per basic and diluted share, in FY 2019.
-- Non-GAAP net income of $20.2 million, or $0.19 per basic and diluted
share, compared to Non-GAAP net loss of $(8.7) million, or $(0.08) per
basic and diluted share, in FY 2019.
-- Adjusted EBITDA of $42.1 million, representing an Adjusted EBITDA margin
of 15.1%, compared to Adjusted EBITDA of $8.2 million, representing an
Adjusted EBITDA margin of 2.4%, in FY 2019.
-- Cash and cash equivalents of approximately $273 million at December 31,
2020.
(1) Non-GAAP net income (loss) is a Non-
GAAP financial measure. Refer to its
definition and accompanying
reconciliation to GAAP net income
(loss) below.
(2) Adjusted EBITDA is a Non-GAAP
financial measure. Refer to its
definition and accompanying
reconciliation to GAAP net income
(loss) below.
(3) Adjusted EBITDA margin is a Non-GAAP
financial measure, calculated as
Adjusted EBITDA divided by total
revenue.
Management Commentary
"Thanks to the many decisive actions we took throughout 2020, we delivered a strong fourth quarter with financial performance well above expectations," said Mike Darrow, TrueCar's President and Chief Executive Officer. "More importantly, we head into 2021 with a number of tailwinds behind us, including our recently announced Navy Federal partnership and the roll-out of our Deal Builder experience, yet another significant step towards becoming the industry's leading end-to-end online car buying solution."
Key Operating Metrics
-- Average monthly unique visitors((4)) increased 2% to 7.9 million in the
fourth quarter of 2020, up from approximately 7.7 million in the fourth
quarter of 2019. In FY 2020, average monthly unique visitors increased
12% to approximately 8.4 million, up from 7.4 million in FY 2019.
-- Units((5)) were 166,474 in the fourth quarter of 2020, down from 248,037
in the fourth quarter of 2019. In FY 2020, units were 766,413, down from
998,495 in FY 2019.
-- Monetization((6)) was $382 during the fourth quarter of 2020, compared
to $342 during the fourth quarter of 2019. Monetization was $352 during
FY 2020, compared to $335 during FY 2019.
-- Franchise dealer count((7)) was 10,589 as of December 31, 2020, a (1)%
decrease from 10,745 as of September 30, 2020.
-- Independent dealer count((8)) was 3,794 as of December 31, 2020, a (2)%
decrease from 3,858 as of September 30, 2020.
Business Outlook
For the first quarter ending March 31, 2021, we expect revenues to be in the range of $60 million to $62 million. We expect to grow revenues sequentially from there, with a bit less sequential improvement from the third to the fourth quarter as a result of typical seasonality. As it relates to Adjusted EBITDA, it is management's view that accelerating unit growth takes priority over near-term profitability in the first quarter. However, we expect a healthy Adjusted EBITDA for the remainder of the year.
(4) We define a monthly unique visitor
as an individual who has visited
our website, our landing pages 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
the period.
(5) 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 that we maintain for
our affinity group marketing
partners.
(6) 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.
(7) 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.
(8) 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.
Conference Call Information
Members of our management will host a conference call today, February 24, 2021, to discuss our fourth quarter and full year 2020 results at 4:30 p.m. Eastern Time. To participate, domestic callers should dial 1-877-870-4263 and international callers should dial 1-412-317-0790. A replay of the call may be accessed the same day from 7:30 p.m. Eastern Time on Wednesday, February 24, 2021 until 11:59 p.m. Eastern Time on Wednesday, March 3, 2021 by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and entering replay PIN 10151984. 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 statements regarding our future revenue growth potential and opportunities and our outlook for the first quarter and full year 2021, 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, 2019, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020 filed with the Securities and Exchange Commission, or SEC, and our Annual Report on Form 10-K for the year ended December 31, 2020 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, Adjusted EBITDA margin, Non-GAAP net (loss) income and Non-GAAP net (loss) income per share. We define Adjusted EBITDA as net 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 define Non-GAAP net (loss) income as net loss adjusted to exclude 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 related income tax impact of these adjustments. We have provided below a reconciliation of each of Adjusted EBITDA and Non-GAAP net (loss) income to net loss, the most directly comparable GAAP financial measure. Neither Adjusted EBITDA nor Non-GAAP net (loss) income should 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 and Non-GAAP net (loss) income as operating performance measures because each 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 and Non-GAAP net (loss) income facilitates operating performance comparisons on a period-to-period basis because these measures exclude variations primarily caused by changes in the excluded items noted above. In addition, we believe that Adjusted EBITDA, Non-GAAP net (loss) income 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 each of Adjusted EBITDA and Non-GAAP net (loss) income 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 (loss) income 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 (loss) income reflects
severance charges associated with the departures of certain of our
former executives in the second quarter of 2019;
-- neither Adjusted EBITDA nor Non-GAAP net (loss) income reflects charges
associated with a restructuring plan initiated and completed in the
second quarter of 2020 and first quarter of 2019 to improve efficiency
and reduce expenses;
-- neither Adjusted EBITDA nor Non-GAAP net (loss) income reflects 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;
-- neither Adjusted EBITDA nor Non-GAAP net (loss) income reflects the
costs to advance our claims in certain litigation or the costs to defend
ourselves in various complaints filed against us;
-- neither Adjusted EBITDA nor Non-GAAP net (loss) income considers 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 (loss) income differently than we do,
limiting their usefulness as comparative measures.
Because of these limitations, you should consider Adjusted EBITDA and Non-GAAP net (loss) income alongside other financial performance measures, including our net loss, our other GAAP results and various cash flow metrics. In addition, in evaluating Adjusted EBITDA and Non-GAAP net (loss) income, 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 (loss) income and you should not infer from our presentation of Adjusted EBITDA and Non-GAAP net (loss) income 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 offices in Austin, Texas and Boston, Massachusetts.
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
Investor Relations Contact:
Danny Vivier
Vice President, Investor Relations and Strategic Finance
424-258-8017
dvivier@truecar.com
Public Relations & Media Contact
Shadee Malekafzali
Senior Director, Public Relations
424-258-8694
shadee@truecar.com
TRUECAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
---
Revenues $
63,960 $
84,884 $
278,678 $
335,046
Costs and operating expenses:
Cost of revenue 5,146 6,270 21,549 27,828
Sales and marketing 36,549 55,855 151,915 226,977
Technology and development 10,069 12,215 44,930 56,114
General and administrative 13,737 15,380 49,989 64,318
Depreciation and amortization 5,226 5,042 20,547 20,665
Goodwill impairment - 8,264
Total costs and operating expenses 70,727 94,762 297,194 395,902
Loss from operations (6,767) (9,878) (18,516) (60,856)
Interest income 10 477 462 2,480
Other (expense) income (252) 198
Loss from equity method investment (529) (543) (1,989) (1,280)
Loss from continuing operations before income taxes (7,538) (9,944) (19,845) (59,656)
Provision for (benefit from) income taxes 126 (241) (6) (1,321)
Loss from continuing operations $
(7,664) $
(9,703) $
(19,839) $
(58,335)
Income from discontinued operations, net of taxes 95,680 890 97,533 3,445
Net income (loss) $
88,016 $
(8,813) $
77,694 $
(54,890)
Income (loss) per share, basic and diluted
Continuing operations $
(0.07) $
(0.09) $
(0.19) $
(0.55)
Discontinued operations $
0.93 $
0.01 $
0.92 $
0.03
Weighted average common shares outstanding, basic and diluted 103,029 106,681 106,315 105,805
TRUECAR, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31,
2020 2019
Assets
Current assets
Cash and cash equivalents $
273,314 $
181,534
Accounts receivable, net 32,923 38,239
Prepaid expenses 5,800 7,158
Other current assets 12,901 6,033
Current assets of discontinued
operations 6,777
Total current assets 324,938 239,741
Property and equipment, net 21,421 27,781
Operating lease right-of-use
assets 29,192 36,064
Goodwill 51,205 59,469
Intangible assets, net 6,600 9,000
Equity method investment 19,905 21,894
Other assets 4,800 3,620
Noncurrent assets of discontinued
operations 24,118
Total assets $
458,061 $
421,687
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $
13,198 $
21,319
Accrued employee expenses 6,506 5,969
Operating lease liabilities, current 4,771 5,875
Accrued expenses and other current
liabilities 17,252 20,252
Current liabilities of discontinued
operations 755
Total current liabilities 41,727 54,170
Deferred tax liabilities 40 783
Operating lease liabilities, net of
current portion 31,974 37,127
Other liabilities 388 2,336
Total liabilities 74,129 94,416
Stockholders' Equity
Common stock 10 11
Additional paid-in capital 738,290 759,322
Accumulated deficit (354,368) (432,062)
Total stockholders' equity 383,932 327,271
Total liabilities and stockholders'
equity $
458,061 $
421,687
TRUECAR, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
---
Net income (loss) $
88,016 $
(8,813) $
77,694 $
(54,890)
Income from discontinued operations, net of taxes (95,680) (890) (97,533) (3,445)
Loss from continuing operations (7,664) (9,703) (19,839) (58,335)
Non-GAAP adjustments:
Interest income (10) (477) (462) (2,480)
Depreciation and amortization 5,226 5,042 20,547 20,665
Stock-based compensation (1) 5,445 6,202 23,077 36,462
Share of net loss of equity method investment 529 543 1,989 1,280
Certain litigation costs (2) - 139 (1,939) 1,575
Executive departure costs (3) - 138 5,089
Restructuring charges (4) - 8,346 3,015
Transaction costs (5) - 1,926
Change in fair value of contingent consideration 31 75 182 300
Goodwill impairment (6) - 8,264
Other expense (income) 252 (198)
Impairment of right-of-use ("ROU") assets (7) 2,136 2,136
Provision for (benefit from) income taxes 126 (241) (6) (1,321)
Adjusted EBITDA $
6,071 $
1,718 $
42,097 $
8,176
(1) The excluded amount includes stock-
based compensation of $7.2 million
incurred in the second quarter of
2019 associated with the
acceleration of certain equity
awards and the extension of the
exercise period for certain vested
stock options related to the
departures of certain executives,
including our former chief
executive officer.
(2) The excluded amounts relate to
legal costs incurred in connection
with complaints filed by non-
TrueCar dealers against TrueCar
and consumer class action
lawsuits. For the year ended
December 31, 2020, the excluded
amount also includes a $2.0
million payment received from one
of our insurance carriers in
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. 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.
(3) The excluded amounts include $4.6
million in executive severance
costs, as well as related
recruiting fees of $0.5 million,
associated with the separation of
our former chief executive officer
and the termination of executive-
level employees in connection with
the change in chief executive
officer in the second quarter of
2019. We believe excluding the
impact of these terminations and
the associated chief executive
officer recruiting fees is
consistent with our use of these
non-GAAP measures as we do not
believe they are a useful
indicator of our ongoing operating
results.
(4) The excluded amounts represent
charges associated with the
restructuring plans undertaken in
the second quarter of 2020 and
first quarter of 2019 to improve
efficiency and reduce expenses. We
believe excluding the impact of
these charges is consistent with
our use of these non-GAAP
measures as we do not believe they
are a useful indicator of our
ongoing operating results.
(5) The excluded amounts represent
external legal, accounting,
consulting and other third-party
fees and costs we incurred in
connection with the evaluation and
negotiation of potential merger
and acquisition transactions.
These expenses are included in
general and administrative
expenses in our consolidated
statements of operations. We
consider these fees and costs,
which are associated with
potential merger and acquisition
transactions outside the normal
course of our operations, to be
unrelated to our underlying
results of operations and believe
that their exclusion provides
investors with a more complete
understanding of the factors and
trends affecting our business
operations.
(6) The excluded amount represents a
non-cash impairment charge we
recognized on our goodwill during
the first quarter of 2020.
(7) The excluded amount represents an
impairment charge on our ROU
assets associated with certain of
our existing office locations. We
consider these charges to be
unrelated to our underlying
results of operations and believe
that their exclusion is
appropriate to facilitate period-
to-period operating performance
comparisons.
TRUECAR, INC.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP NET (LOSS) INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
---
Net income (loss) $
88,016 $
(8,813) $
77,694 $
(54,890)
Income from discontinued operations, net of taxes (95,680) (890) (97,533) (3,445)
Loss from continuing operations (7,664) (9,703) (19,839) (58,335)
Non-GAAP adjustments:
Stock-based compensation (1) 5,445 6,202 23,077 36,462
Loss from equity method investment 529 543 1,989 1,280
Certain litigation costs (2) - 139 (1,939) 1,575
Executive departure costs (3) - 138 5,089
Restructuring charges (4) - 8,346 3,015
Transaction costs (5) - 1,926
Changes in the fair value of contingent consideration 31 75 182 300
Goodwill impairment (6) - 8,264
Other expense (income) 252 (198)
Impairment of right-of-use ("ROU") assets (7) 2,136 2,136
Tax effect of above adjustments (1,845) (1,845)
Non-GAAP net (loss) income (8) $
(1,116) $
(2,606) $
20,173 $
(8,688)
Non-GAAP (loss) income per share:
Basic $
(0.01) $
(0.02) $
0.19 $
(0.08)
Diluted $
(0.01) $
(0.02) $
0.19 $
(0.08)
Weighted average common shares outstanding:
Basic 103,029 106,681 106,315 105,805
Diluted 103,029 106,681 107,581 105,805
(1) The excluded amount includes stock-
based compensation of $7.2 million
incurred in the second quarter of
2019 associated with the
acceleration of certain equity
awards and the extension of the
exercise period for certain vested
stock options related to the
departures of certain executives,
including our former chief
executive officer.
(2) The excluded amounts relate to
legal costs incurred in connection
with complaints filed by non-
TrueCar dealers against TrueCar
and consumer class action
lawsuits. For the year ended
December 31, 2020, the excluded
amount also includes a $2.0
million payment received from one
of our insurance carriers in
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. 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.
(3) The excluded amounts include $4.6
million in executive severance
costs, as well as related
recruiting fees of $0.5 million,
associated with the separation of
our former chief executive officer
and the termination of executive-
level employees in connection with
the change in chief executive
officer in the second quarter of
2019. We believe excluding the
impact of these terminations and
the associated chief executive
officer recruiting fees is
consistent with our use of these
non-GAAP measures as we do not
believe they are a useful
indicator of our ongoing operating
results.
(4) The excluded amounts represent
charges associated with the
restructuring plans undertaken in
the second quarter of 2020 and
first quarter of 2019 to improve
efficiency and reduce expenses. We
believe excluding the impact of
these charges is consistent with
our use of these non-GAAP
measures as we do not believe they
are a useful indicator of our
ongoing operating results.
(5) The excluded amounts represent
external legal, accounting,
consulting and other third-party
fees and costs we incurred in
connection with the evaluation and
negotiation of potential merger
and acquisition transactions.
These expenses are included in
general and administrative
expenses in our consolidated
statements of operations. We
consider these fees and costs,
which are associated with
potential merger and acquisition
transactions outside the normal
course of our operations, to be
unrelated to our underlying
results of operations and believe
that their exclusion provides
investors with a more complete
understanding of the factors and
trends affecting our business
operations.
(6) The excluded amount represents a
non-cash impairment charge we
recognized on our goodwill during
the first quarter of 2020.
(7) The excluded amount represents an
impairment charge on our ROU
assets associated with certain of
our existing office locations. We
consider these charges to be
unrelated to our underlying
results of operations and believe
that their exclusion is
appropriate to facilitate period-
to-period operating performance
comparisons.
(8) For the three months and year ended
December 31, 2019, there was no
income tax impact related to the
adjustments made to calculate Non-
GAAP net (loss) income because of
our available net operating loss
carryforwards and the full
valuation allowance recorded
against our net deferred tax
assets for all periods shown.
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SOURCE TrueCar, Inc.
