TRUE - TrueCar, Inc.

Operator: Good day, and welcome to TrueCar's Second Quarter 2025 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon E. Reigersman: Thank you, operator. Hello, everyone, and welcome to TrueCar's Second Quarter 2025 Earnings Conference Call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our usual safe harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding our ability to operationalize certain aspects of the TrueCar+ platform and our expectations with respect to future adjusted EBITDA profitability and free cash flow. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the results prepared in accordance with GAAP. Let us begin. I'm pleased to report the following operational highlights from the second quarter of 2025. Total revenue of $47 million grew by $5.2 million, up 12.4% year-over-year and marking our highest quarterly revenue since Q3 2021. Our net loss decreased to negative $7.6 million from negative $13.5 million in the same period last year. Adjusted EBITDA came in at negative $1.2 million. OEM revenue of $3.6 million grew by $0.6 million or 19.7% year-over-year. New unit sales volume grew 6.2% year-over-year as compared to the industry's 2.8% growth in new vehicle retail sales. Prospect close rate during the quarter reached the highest level since Q2 2021, and our restructured performance marketing campaigns yielded at nearly 30% year-over-year improvement in our average cost per sale for non-affinity partner units. As we articulated in our last stockholder letter, our approach to navigating the evolving tariff landscape involves a relentless focus on the factors we can control and a resource allocation strategy that prioritizes initiatives likely to yield positive results regardless of the prevailing market environment. In the second quarter, this meant deferring certain sales and marketing investments and focusing on increased speed of product development to accelerate key product enhancements designed to strengthen our competitive advantage and deliver greater value to dealers and consumers through the TrueCar platform. This shift has yielded exciting outcomes as evidenced by the number of core product initiatives that we released as new features during the last 90 days and the continued progress we have made towards our goal of commercializing TrueCar+ by year-end. First, our core product enhancements. As we noted last quarter, dealers measure the value of the third-party lead platform, primarily by the rate at which those leads turn into sales. That understanding has continued to guide our product road map in the second quarter, leading to a number of enhancements to both the dealer and consumer experience that are designed to improve lead quality, engagement and eventually close rates. Among the most significant advancements was the launch of Actionable Insights, a new feature available in the dealer portal that provides personalized data-driven recommendations to help dealers optimize performance on the TrueCar platform. By analyzing a broad set of dealer-specific and market level data, this new feature surfaces opportunities for improvements as well as relevant context and recommended actions, enabling our certified dealers to make faster, more effective decisions. Whether it's flagging a dealer's aged inventory that is priced above market or recommending price adjustments that will yield a better price rating for particular listings. Actionable Insights enables dealers to extract greater value from our platform. Complementing this feature is our newly launched motivated buyer badging, which leverages a proprietary machine learning model to identify and highlight the highest intent shoppers based on more than 20 behavioral signals. These high-value leads are now automatically flagged in dealer portal and the dealer's customer relationship management system, enabling faster and more targeted follow-up. On the consumer side, we also launched a broad set of updates aiming at making the TrueCar experience more intuitive, transparent and trustworthy. Most notably, we recently completed a full redesign of our search results page, the SRP, introducing a modernized filter interface with smart toggles, curated popular filters and improved mobile usability. These changes aim to help consumers more easily find the vehicles to best meet their needs, which in turn leads to improved engagement metrics and increased lead volume for our dealers. Similarly, we also completed a major redesign of our vehicle detail page, the VDP, to highlight the most relevant content and deliver most pertinent information to assist consumers in their decision-making process. With a cleaner layout, collapsible sections and clearer organization of key vehicle details such as specs, features and warranty information, consumers can now evaluate listings with greater confidence and more complete information, helping them match with the right dealer and we believe improve close rates as a result. Finally, for shoppers that convert into leads, we have significantly strengthened the post-prospect experience through a redesigned post-prospect e-mail that provides consumers with a clean receipt style breakdown of the out-the-door price, including applicable discounts, taxes and fees. Combined with prominent calls to action such as scheduled test drive or save offer, these e-mails are designed to drive higher levels of engagement between prospects and dealers, thus driving more showroom visits and closed sales for our dealer partners. Now turning to our TC+ advancements. While the enhancements to our core product experience are already driving stronger outcomes for both dealers and consumers, we are equally encouraged by the progress we've made towards commercializing TC+, our end-to- end digital retailing experience. As we shared last quarter, a critical milestone for TC+ is completing integrations with key DMS providers, which enables the automation of deal documentation and replaces the time-consuming desking workflows currently performed by the dealer. We are pleased to report that the engineering work related to the integration of CDK's DMS with TC+ is now complete and in testing. This streamlines the dealer experience and drives operational efficiency in a way that only a fully integrated end-to-end platform can deliver. Moreover, we also released a major revamp of the TC+ consumer checkout flow. This redesign introduces a more focused role for the VDP centered solely on helping the consumer select their vehicle while migrating all transactional steps into a newly reimagined checkout center. This guided checkout experience walks consumers step-by-step through the purchasing process, strengthening consumer trust by providing greater visibility and transparency at every stage of the transaction. The revamped flow also incorporates new features such as dynamic itemized deal receipt that updates as the deal progresses and dedicated pages for a range of available financing and insurance, so-called F&I, products such as gap coverage and extended warranty offerings. And for consumers who prefer to complete their purchase in store, our new continue at dealership option created a seamless online to offline handle. These changes are already producing encouraging results. Since the new TC+ experience went live, we have observed 115% increase in add to cart rate, a 40% lift in daily credit application submissions and a 2x improvement in F&I attachment rates, all key indicators of a superior consumer experience. As we continue refining the experience and expanding dealer adoption, we believe these improvements will play a critical role in helping TrueCar capture a greater share of online car buyers and future differentiate ourselves in the digital retail space. Looking forward for TC+, the team remains intently focused on a number of key priorities that will keep us on path to commercializing TC + by year-end. Completing the back-end DMS integration work and closely monitoring the automation of all deal documentation is critically important and will allow us to begin measuring the significant sales efficiencies that TC+ seeks to provide our dealers. In addition, we are working to expand and streamline our integrations with financing partners to improve credit approval rates and help consumers get the most competitive financing offers. This includes a universal or windless prequalification experience that allows consumers on TC+ to exclusively shop for vehicles that are prequalified -- that they are prequalified for and expanding the credit application to include co-applicants, thus minimizing the number of rejection, projected credit applications and continuing to improve conversion rates at a critical step in the buying process. In addition, we are continuing to build more seamless integrated off-ramps to consumers to finish the transaction at the dealership. This is an important component of the TC+ experience because we recognize that many consumers prefer to complete a substantial portion of the transaction online before completing the purchase in-store. Moreover, according to Cox Automotive Digitization of automotive retail study published in June 2025, time savings and efficiency was the primary motivation of surveyed buyers who completed a portion of the purchase online before finalizing at the dealership. Nevertheless, 97% of survey dealers reported that consumers repeated steps already completed online when they arrived at the dealership, thus highlighting a critical gap among existing digital retail solutions that fail to seamlessly connect to the online and in-store consumer experience. By leveraging our direct DMS integrations, TC+ seeks to drive efficiencies for both consumers and dealers across our -- across every step of the buying process regardless of whether the consumer finishes their deal online or in store. And now looking forward for the company as a whole. Despite the macroeconomic uncertainty that persists, our long-term growth ambitions have not wavered and our optimism around the future of TrueCar continues to grow as we make significant progress towards our goal of commercializing TC+ by year-end. It has been our long-standing belief that a modern marketplace that offers dealers and consumers the ability to seamlessly buy and sell vehicles entirely online will play a critical role in the future of automotive retail and the recent progress we've made in bringing TC+ to market has strengthened our conviction. Moreover, we see momentum gaining for the shift in car buying as evidenced by the June 2025 JPMorgan Chase Auto annual dealership survey that cites 71% of survey dealers viewing the shift to online vehicle sales as permanent, up from 53% in December 2024 and 30% of dealers anticipating a significant increase in online vehicle sales penetration, up from 24% in December 2024. Beyond TC+ and the opportunity it represents, we are excited by our expectation that the recent enhancement to our core product offering will begin to yield results in the second half of 2025 and beyond, including through expansion of our dealer network and growth in unit sales as we work to bring new OEM incentives into our platform and deepen our partnerships with key affinity partners to help consumers find exclusive offers on their next vehicle purchase. And finally, despite the unpredictability of the current market environment, we believe that the steps we've taken to eliminate costs and maximize our financial flexibility position us to navigate a range of revenue growth scenarios and deliver adjusted EBITDA profitability and positive free cash flow over the second half of 2025. Now operator, let's open the call for questions from our analysts. Operator: [Operator Instructions] First question comes from Tom White with D.A. Davidson. Wyatt J. Swanson: This is Wyatt on for Tom. Could you maybe provide an update on how TrueCar is looking to grow just some additional details around your used vehicle initiatives and how you think about that opportunity in light of auto tariffs? Jantoon E. Reigersman: Yes, absolutely. Wyatt, thanks for the question. So I think there are a couple of things. So for us, what's one of the things that's really important for a marketplace is that you make sure that the people can find the right car, whether that's new or used. And if people become more interested in used, then there's a natural shift towards that, and we need to just make sure we enable that from an experience perspective. It's hard to determine what the exact impacts are going to be long term by the tariffs. And so we are prepared by effectively enabling the consumers to find the cars that they are looking for and best suits their needs because people will keep looking for cars and keep acquiring cars at the end of the day. I think one of the pieces that I'll let Oliver talk a little bit more about is really engaging on the more of the wholesale side of the business, and that's something we've been looking into to help the dealers source more used vehicles is one answer to the question on the pickup of demand of used vehicles. But at the end of the day, do remember that, yes, tariffs are obviously affecting the new vehicle side, but so are the interest rates. And so if you assume a decrease in interest rates over time, you can imagine that there will also be probably a renewed emphasis on the new side as well given that the people that are buying on the new side are often leasing or financing these deals. So maybe, Oliver, you want to give a little highlight on the wholesale side and what we've been doing there as part of the used initiative. Oliver M. Foley: Yes, definitely. So I mean, let me just start by saying that our long-term view on our growth levers remains unchanged, right? It's really going to be driven by growing our dealer network, expanding our OEM partnerships bringing more incentive programs onto the platform and then ultimately beginning to commercialize and scale TrueCar+. So long term, those initiatives remain sort of at the core of our growth strategy. In the near term, where our growth comes from will certainly be those elements that I just mentioned, but we've certainly seen a shift towards in terms of what dealers are prioritizing right now, we've seen a shift towards vehicle sourcing initiatives. I think there is a recognition that in a world where new vehicle supply is constrained, it's critically important for franchise dealers, in particular, to have sufficient used supply. And so being able to build up that used supply by sourcing vehicles directly from consumers and reducing their reliance on traditional sort of brick-and-mortar auction platforms, that's something that we've seen shift pretty quickly over the last 4 or 5 months. And so the way that we support dealers with that is through our 2 products, which is Sell Your Car and the TrueCar Wholesale Exchange, both of which allow dealers to source vehicles wholesale directly from consumers that come to TrueCar. So it is just a way for us to, I think, augment our value proposition for dealers and allow them to lean into sourcing vehicles directly from consumers given the environment today. But long term, our ambition is not to grow the wholesale side of the business in a vacuum, but rather grow in conjunction with sort of our core marketplace business. And we just view it as being a sort of additional value prop for dealers that can keep them on the platform for longer and really help them in a different way. Wyatt J. Swanson: Got it. That's really helpful color. Just a follow-up. Could you give an update on your capital allocation priorities and some color as to whether you plan to ramp up your buyback again? Oliver M. Foley: Yes. I'll just say like I think we demonstrated last year that we're certainly open to repurchasing shares. And I think we're constantly evaluating that as part of our capital allocation strategy. We do believe that maintaining a sufficient cash balance in the near term is good for investors. It certainly provides a healthy amount of downside protection. But as we think about -- as we bring TrueCar + to market as we hit our goal of being free cash flow breakeven over the second half of the year, it certainly does place a focus on repurchasing shares. And so I can't say that exactly when we'll be in market repurchasing shares. But I think as we demonstrated last year, we are certainly open to it, and we'll continue to evaluate it. Operator: The next question comes from Naved Khan with B. Riley Securities. Ryan James Powell: This is Ryan Powell on for Naved. So we wanted to ask on the decline of franchise dealers. I think we saw 44 turnover in the quarter. Just wondering about trends to expect from here? And then secondly, on the highest prospect close rate since second quarter '21, what factors are contributing to this? Is this a function of higher lead quality? Curious about your thoughts. Jantoon E. Reigersman: Absolutely. It's a good question. So I think they are somewhat intertwined. So the dealer declines are not necessarily something that I'm too worried about in general. As I mentioned before, you have often obviously a standard distribution and often a long tail around these things. One of the things that we've been very focused on in the past quarter has been effectively what type of dealers we take on the network and what types of dealers are coming off. And we give them what we call a dealer network scoring, and we have an algorithm that is behind that. And so effectively, what we do is in our sales efforts, we're really focusing on the type of dealers that have a huge positive impact on our effectively broader network, and it obviously is directly correlated to what the people are kind of looking for and where we potentially have gaps. And so it's a combination of that together with the consumers and what the interest of the consumers are that then you effectively become, for lack of a better word, better in making sure that the consumer finds the vehicles at the dealers that they're looking for and that you can actually have the right inventory on as well as for the dealers that you find and provide the right consumers to convert. And so net-net, it's really become a focus on becoming more efficient, both across the dealer side and making sure we have the right dealers on, which is why you see a little bit of the shaking of the tree of some of these things. And so whether it's a little bit plus or a little bit minus really doesn't matter. Overall, we obviously have a huge coverage in the country, but we still feel we have certain gaps vis-a-vis that networking score. And so that's something we're very focused on. And obviously, on the other side, we've also become much more efficient in our marketing approach and approaching and engaging with the prospects that are high converting. And so the combination of these factors obviously create the prospect rate we're talking about. And I would argue on the networking side, that's really about becoming more and more efficient on having the right network in place. Ryan James Powell: Got it. That makes sense. And then also curious on dealer engagement with new actionable insights and motivated buyer features since the launch. Jantoon E. Reigersman: Yes, it's a good question. So this is -- and it's actually a great question because it's like the classic case of like it's an education process, right, at the end of the day. So that's really on us. Like 2 things that we always mention is that we are -- one of the values we provide to dealers is training and insights. And so this applies to both. So this gives insights. But in order to extract the insights and know the insights, you effectively need to have training in order to be able to do that. Some dealers are more naturally proficient and understanding in these things than others are. And so this will be something that will start growing over time and obviously make sure that the various dealers are engaging on it appropriately. We've seen really positive results. So it's a little bit hard to say because you kind of need to like train your network on it and see that. But overarching, yes, it skews very much whether the dealers are a little bit more digitally savvy or not as it stands right now, but that's also -- that really depends on our training and obviously fits well with the 12-month service cycle that we've laid out in some quarters ago to you guys where obviously, we touch every dealer, every quarter and so sit with them and engage with them. And so this is a really important part of that. Operator: The next question comes from Chris Pierce with Needham. Christopher Alan Pierce: Kind of a 2-part question. If I look at things on a sequential basis, you saw momentum in dealer revenue. But going back to the last question, is it -- dealer count matters less, but it's units and units per dealer and the modest uptick in units drove that momentum? Or did you take some pricing action or it's about having the right dealers and more units on the system? I just kind of want to understand the momentum in that business and how to think about it going forward? And then the second part is you drove this momentum by pulling back on internal investments. So I'm just kind of curious the right way to think about the internal investments you had messaged prior and maybe the level of spend going forward given the growth you're showing while pulling back on that spend. Jantoon E. Reigersman: Yes, I'll give you a short version answer and Oliver can take the next piece, which is -- Chris, it's going to be an unsatisfactory answer to you, which is it's a little bit all of the above at the same time, right? So you can -- you're working on both sides of the equation. You're working a more efficient network while you're also really starting to hone in and be more efficient on the top end. That includes also trying to figure out ways to really utilize our own data sets better and right, more precisely, reengage better, more precisely, reengage more personalized, all these type of things. And so it's really about utilizing all the information we already have internally and be a little bit less dependent on just the classic standard performance marketing and really focus on again. We actually know a lot about these consumers, and we know a lot about our inventory, and we know a lot about the behaviors that are happening and what can we do to really improve around that. So it's a little bit of both. It's not necessarily that one is prioritized over the other, but it's -- we're just happen to be tackling it at the same time. And then as we then become and find these greater efficiencies, then actually push behind it and push harder as we feel we're ready for that. I do think, though, that if you think of the network itself, that's really about basically making sure we add the right dealers to the platform and then really think about if there's somebody who wants to churn who is really value additive, obviously focus on retention. And if there's somebody who wants to churn who might be less additive to the network, maybe focus our efforts on the ones that really are effectively net positive. And so there's a little bit of a reshift that has happened as we realign that sales team and service team, but it happens at the same time. So there's not necessarily a particular prioritization amongst the 2. Oliver M. Foley: And so Chris, I'll just add a little bit, which is when you think about dealer revenue, there -- you can really split it into 2. One component is the auto buying program, right? So it's what we're getting paid to drive prospects and unit sales for our dealers. And so we want our unit growth to move in sync with the core auto buying program revenue that we earn from dealers. Separately, you've got the ancillary dealer revenue, which is really made up of the vehicle sourcing products such as Sell Your Car and the Wholesale Exchange and TrueCar Marketing Solutions. And so those revenue that's earned from those parts of dealer revenue really aren't unit sales growth, right? They're actually -- there's different KPIs that we measure for those. And so as we talked about, a significant lift in number of dealers who are subscribing to our Sell Your Car product. And TrueCar Marketing Solutions was pretty nascent this time last year. And so there's been growth from that part of the business as well. But looking forward, we certainly want that core auto buying program component of dealer revenue to grow and expand, and that's going to be through adding more of the right dealers to the network, right? And those right dealers that are truly accretive to our network, right, where they've got the right supply that matches our demand, they'll have a higher revenue per dealer. And so that's really, in our view, a much more effective way to grow the dealer network over time. And then as it relates to the investments that we've made, and you alluded to us pulling back on investments. Well, I would say that, yes, I think we've pulled back on certain investments around our field sales and service team and instead really sort of prioritize our energy on the investments into the dealer experience and consumer experience that are going to lift overall efficiencies in the platform, specifically close rate, right? So as we see close rates continue to go up, we can drive more unit sales with fewer marketing investments, right? And therefore, you can think about we can spend the same amount of marketing, drive significantly more unit sales and grow the dealer network in conjunction. And so it really was, to an extent, stepping back, really focusing on what are the things that are going to drive improvements in the consumer and dealer experience that lift close rates. And then that just gives us a lot more leverage to grow unit sales and the dealer network over the next several quarters. Christopher Alan Pierce: Got it. And then just lastly for me. I know in the past couple of years, we've talked about increasing OEM incentive revenues. And I know why dealers -- OEMs wouldn't feel the need to incentivize for the tariff pull forward. But if we talk about -- we're talking about prices going higher and where incentives are as a percentage of transaction price now, I'm just kind of curious why you're less bullish on OEM incentive revenue. Is it just lower supply? Is it directly correlated to lower revenues, lower OEM incentive revenues? Or it's -- like what's the correlation there? Because I'm thinking it's going to be harder for OEMs to sell higher-priced cars, but it seems like you guys are coming at it from a different perspective. Jantoon E. Reigersman: Yes. I don't -- I actually think the OEM revenue line is a huge opportunity for us and has always been and remains to be. I do think that in a higher tariff world, I think OEMs are trying to figure out how to adapt and adapt across their own effectively capital structure, for lack of a better word. And we're helping them adapt. So we're obviously engaging with them directly and see what we can do. But I agree with you, and I think there is a huge opportunity, and I think there is a big opportunity to keep people excited about new cars. And the OEM incentive business is one that is very unique to us, and I think we've proven to be very good at. So we remain very bullish on that. And I think as we've proven also in this quarter, we've performed well there. Operator: [Operator Instructions] The next question comes from Rajat Gupta with JPMorgan. Rajat Gupta: Just wanted to -- I don't know if you addressed this earlier. I am just hopping around different earnings calls. Any color you can provide us on the second half outlook as it relates to just the nondealer product side of things, just the franchise independent revenue cadence, customer count versus just average revenue per dealer. Any kind of framework you could provide us you might have visibility into in the second half? And I have a quick follow-up. Jantoon E. Reigersman: Go ahead, Oliver. Oliver M. Foley: Go ahead, Jantoon. Jantoon E. Reigersman: I mean I was going to give Rajat a very dissatisfactory answer, which is, look, I think the part that we control for is obviously the cost structure of the business and where we do our capital allocations. I think the revenue side is a little bit trickier. When it comes to the baseline, I think we know that very well. I think, obviously, it's still an evolving world. And I think every day, right, is different and more news. And so we're a little bit reluctant to really give any framework around it. It's the reason also why I think we were purposeful in the last sentence where we said, there might be different trajectories of lines vis-a-vis the revenue, depending a little bit of the external circumstances. But we're ready for that as a business because we're -- we've set ourselves up really well. I think more broadly, though, I mean, uncertainty drives a benefit for us in the way that dealers need us, right? As Chris alluded to before, I think OEMs need us. And so I think we're very positive and excited about what the future brings. It's just really hard to predict exactly what the trajectory of that line is. Sorry, Oliver, I cut you off. Oliver M. Foley: Yes. No, I'll just elaborate and say that dealer count is important to us, right? We want to maintain a strong network. We want to have as many active dealers on the platform as possible. But as we have talked about, there's a difference between the dealer that's truly accretive to the network, right? They're filling a supply-demand imbalance that exists. And then the dealers are nonaccretive to the network, right, where they're just providing more supply when there may not be sufficient demand. And so to an extent, they can cannibalize other dealers on the network. We've been really intentional about really focusing on how do we get more of those dealers that are truly accretive to the network on the platform. And when certain dealers churn, if we feel like they're -- they provide redundant supply, we should be okay with that. I think over time, that translates into a much healthier network where dealers are getting a greater share of unit sales. And I think that over time leads to lower churn as a result. Also, when you think about our franchise dealer network, it's comprised of nearly all of the large dealer groups across the country. And so we also see a tremendous amount of opportunity outside of growing dealer count, but really just saying, all right, how can we serve these strategic partners in a much deeper way? How can we support them beyond just sending them more new car or used car leads, but really expand the way we serve them to include some of our vehicle sourcing products, to include our TrueCar Marketing Solutions products as well and then really deepen the partnerships with them and drive a greater share of wallet. So all that to say, dealer count is certainly an important metric. And over time, we want that to expand. In the near term, we want to make sure that it's the healthiest dealer network possible that has the best supply-demand balance. And we're really investing in growing the partnerships that we have with some of our larger strategic dealer partners. Rajat Gupta: Got it. And just I had a broader like question zooming out on just Agentic AI. Obviously, that continues to evolve with tools that can autonomously search, compare, even transact on behalf of consumers. How do you see this affecting TrueCar's marketplace model? Are there plans to integrate or partner with such agents just to stay central in the car buying journey. Any thoughts on that would be helpful. Jantoon E. Reigersman: Yes. Well, first of all, I mean, I think it's a very relevant question. It's obviously something we think a lot about and we work on tremendously. First of all, obviously, the focus is on really making sure that our data is not a swamp, but a clear lake that we can utilize and structure and obviously deploy a lot of tools against. And I do think we have very unique data sets that are very unique to us. And so I think there's a lot of opportunity there, and we've done a lot of work to make sure that these are all very usable and now have started working on getting products out there for both consumers and dealers effectively utilizing that, right? So that's number one. Then more broadly on your question vis-a-vis how people are going to, in the future, buy cars. I think it's really important to remember that we have a very big affinity network, which I think is a very important component of trust and how people actually engage with car buying. And so emphasizing and working deeper and deeper with affinity partners will be a very important tool for us going forward and then enabling them to really get into a world where you possibly even get closer integration with the affinity partners where you can start buying and checking out cars much more easily is a topic that is obviously something that we discuss a lot internally. But overarching, it's something that, obviously, we think about a lot. It's also one of the reasons why we've kind of been rethinking about the marketing and the way we've been talking about generating more efficiency on the marketing side to make sure you're not too dependent on certain external platforms but really start integrating with the right ones where the actual consumer sits and flows towards. So yes, long story short, there are multiple aspects where this is touching us. There are multiple aspects where we are engaging. I think the affinity network will be an important component of that, but also the way we're designing the flows is something where we would obviously like to become the predominant platform where people are effectively buying or selling a car online, whether that's new certified preowned or used. And I think we have the inventory for it, the infrastructure for it, and that's really a matter of now getting and engaging on the front end and engaging with the right partners to get a foothold on that side. Operator: [Operator Instructions] Thank you. This concludes the question-and-answer session. And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar First Quarter 2025 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference back over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to TrueCar's first quarter 2025 earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our Safe Harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding the potential impact of newly implemented tariffs, including those impacting the automotive sector. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Let us begin. We're pleased to report continued strong performance for the first quarter of 2025, especially in light of the volatile macro environment. Highlights from the first quarter include total revenue of $44.8 million, grew by $3.8 million, or 9.2% year-over-year, with adjusted EBITDA of negative $3.8 million. New unit sales volumes saw a significant increase of 23% year-over-year, substantially outpacing the industry's 6.8% growth in new vehicle retail sales for the quarter. We expanded our affinity network with the addition of notable partners including DoorDash, GasBuddy, and GovX. The transition of certain OEM incentives from American Express to the AAA auto buying site progressed rapidly with AAA program revenue in March approaching previous levels seen with American Express. Our restructured performance marketing campaigns continue to enhance efficiency, achieving the lowest cost per sale since 2022 and effectively driving unit sales growth for our dealer partners. In addition to delivering solid performance in the first quarter, we're excited about the progress we continue to make with TC+, a product we believe can fundamentally change the car buying experience for consumers and dealers. The approach we have adopted in pursuit of this vision has been built around a highly focused pilot with a singular dealer group committed to collaborating with us on the co-creation of tools and solutions that will pave the way for a broader rollout of the product. These optimizations, combined with expanding the volume of consumers entering the TC+ purchase flow, have allowed us to steadily grow volumes while maintaining our disciplined and iterative approach to scaling the product. Since launch, roughly a third of the pilot dealer groups TrueCar enabled sales were driven by TC+ consumers that completed the entire transaction or a significant portion of the purchase process online before finalizing the transaction at the dealership. We not only allowed consumers to move to an online purchase, but also expanded the sales volumes to this dealer group. A super exciting case study and a clear validation of our hypothesis so far that TC+ not only enables a dealer to move completely online, but most certainly also expands their volumes and sales. As we seek to make TC+ broadly scalable by year end, the most critical work stream that remains in process is the backend integration with two dealer management systems, DMS, providers namely CDK and Tekion that will fully automate deal documentation and desking activities currently performed by the dealer. While completion of this work has been delayed by the prioritization of external resources outside our control, we aim to have both integrations substantially complete by the end of July. In spite of this, the rate at which we continue to advance the product and ready it for scale has not slowed. To this end, we're excited to have recently onboarded a second pilot dealer group with franchise stores in and around Sacramento markets, with a third expected to be onboarded later this month. The addition of these groups marks a key milestone in the growth of TC+ that will bring new franchise brands onto the platform, broaden the inventory eligible for purchase online, and allow us to expand consumer access to TC+ in another major market. Turning now to our views on the potential impacts from the automotive sector tariffs and how we are responding. The 25% tariffs applied to imported vehicles and component parts that were announced in March and which became effective April 3rd with respect to vehicles and May 3rd with respect to parts, has created a tremendous amount of uncertainty given that approximately 50% of new vehicles retailed in the United States are imported and among vehicles produced domestically, 40% to 50% of their component parts originate outside of the U.S. The tariffs as currently in effect are estimated to add up to approximately $4,500 of additional cost per new vehicle sold in the United States, equal to roughly 10% of the average pre-tariff new vehicle MSRP. While undeniably a headwind for the automotive retail ecosystem, the impact on dealers and consumers is difficult to predict without greater clarity around OEM's operational response, which will ultimately dictate changes in new vehicle supply and pricing, two of the most important factors that impact retail sales volumes. Nevertheless, in the near-term we do not expect to see a material impact to the strong and stable demand that drove year-over-year unit growth in both Q1 and April as dealers sell through pre-tariff inventory and OEMs reformulate their strategies in response to the tariffs. In the medium-term, we believe there is an increased probability that new vehicle supply tightens and prices go up. However, potentially mitigating the magnitude of these shifts is the fact that tariff-imposed costs will not be uniform across the markets and certain OEMs that are less impacted by the tariffs due to their supply chain footprint will emerge with a competitive pricing advantage. This dynamic, we believe, should support stable inventory levels and reduce the likelihood of broad-based consumer price increases because OEMs and dealers alike will seek to protect their market share by maintaining volumes and taking steps to keep average transaction prices stable. As such, we do not foresee new vehicle supply and retail sales volumes approaching the levels experienced during the chip shortage of 2021-2022 and believe both dealers and OEMs will continue to rely on TrueCar to support their customer acquisition and incentive strategies. Despite this view, we are nevertheless taking steps to mitigate the impact of a potential slowdown in growth and provide us with the greatest flexibility to manage the business to positive free cash flow in any scenario that prevails over the next several quarters. Finally, lacking a clear outlook on the near and midterm market dynamics that impact our business, we believe it is prudent not to provide financial guidance for the second quarter and beyond. Despite solid performance in April, which saw a strong year-over-year revenue growth driven by healthy consumer demand and OEM incentives, we cannot credibly extrapolate this performance throughout the remainder of the quarter until majority of pre-tariff inventory has been sold and we start to observe trends in vehicle supply and pricing, which can have near-term impacts on the revenue we earn from both the dealers and OEM incentives. Nevertheless, despite it being inherently difficult for us to collect and to credibly predict our performance in Q2 and beyond, we firmly believe that the value we are delivering to our dealers and OEM partners, combined with the flexibility we have in our cost structure, will help mitigate the impact of a potential slowdown in growth and allow us to effectively manage our cash flow in any scenario that prevails. Now operator, let's open the call for questions from our analysts. Operator: We now begin the question-and-answer session. [Operator Instructions] The first question comes from Naved Khan from B. Riley Securities. Please go ahead. Naved Khan: Thank you very much and appreciate your thoughts on the industry trends here, Jantoon, just a couple of clarifications. In your letter, you mentioned accelerating certain product announcements that can yield some comparative advantages for TrueCar. Can you give us a sense of what these enhancements can be? And then the second question I have is around the incentive ad spending by OEMs. As these OEMs look to stay competitive on price and keep their share, how should we be thinking about the changes to the incentive ad spending? Could some of that – some of those dollars will be used to bring down MSRP and maybe a net reduction in incentive? Thank you. Jantoon Reigersman: Yes, absolutely. Naved, thanks for the question. So number one, I think a good example is, for example, the utilization of gen AI that we've used for email campaigns as one sample of a driver, right. At the end of the day, what we try to do is really personalize the experience for consumers as they go through the flow. And so being able to retarget them in a personalized manner and in an automated manner actually is very effective. Remember, we have access to a lot of data, both historical purchasing data as well as data on the consumers themselves as they behave on the site. And so automating that and utilizing our AI tools more and more to really make this a much more personalized experience seems to be yielding very attractive results. So that's just one example of the many. At the end of the day, it's really about the consumer journey and the dealer journey. Those are the two pieces where all the product focus is – the product development is focused. Vis-a-vis your OEM question, yes, I think the hard part for us to determine and to predict is I think you could make a very good argument that OEMs will need to support effectively their vehicle sales more. And as a result, we could be well positioned to actually benefit from that. It's just really hard to say because at the end of the day, in a world of greater uncertainty, people are just reluctant to engage. But overarching in a world of higher tariffs and obviously trying to push consumers to make a purchasing decision on the car, I think there are a lot of tools that the OEMs have at their disposal, of which many could come through TrueCar. So it's a reason why we're so delicate also in our language, because obviously uncertainty is never good for the market, but we're very confident that we can actually be really helpful to both OEMs and dealers. Naved Khan: Great. Thank you, Jantoon. Operator: The next question comes from Ryan Meyers, Lake Street. Please go ahead. Ryan Meyers: Hi, good morning, guys. First question for me, without the kind of headcount investments now going forward, how should we think about the margins across the business and maybe what are the biggest levers that you can pull across the cost structure? Jantoon Reigersman: Yes, I mean – I think it would be – yes, I will go and take, remember her. Yes, there are three main buckets, and then Oliver can take it. But remember that there are three main buckets that I've mentioned many times on these calls, which is really it's headcount, it's marketing expense, and then it's like effectively our overhead charge. It includes a lot of, like, the data costs and effectively the infrastructural costs. So a headcount is always important because you obviously want to make sure that you're well balanced and efficient as an organization. There's obviously, on the marketing side, there are two main buckets: one is performance marketing, the other one is partner marketing. One emphasis we also did here is obviously the efficiencies we've been achieving through our marketing campaigns. And so that's obviously a very important lever where as we have greater efficiencies, there are obviously interesting things we can do there. And then obviously, we are continually looking at potentially right sizing the business at the right time in the right forms as the world navigates, right, this level of uncertainty. Oliver, go ahead. Oliver Foley: Yes, that's the only thing I'll add there, Ryan, is like, it's what's going to drive margins over the next couple quarters is sort of the revenue mix as well as sort of the flexibility we have in the cost structure. So the revenue mix, ultimately, OEM revenue tends to have the highest margin. And so, how much of our total revenue comes from OEMs certainly impacts margins. Conversely, TrueCar Marketing Solutions or some of our vehicle sourcing products around TrueCar Wholesale Solutions, those have lower margins. And so depending on the mix, ultimately that will impact margin. On the cost structure side, we're really focused right now on flexibility, right. Given the uncertainty, it's about how can we adapt under any scenario to manage cash flow effectively and ultimately be cash flow breakeven. And so we're pretty confident we've got a decent amount of flexibility across the cost structure. So across all three of those buckets, both headcount, marketing and sort of overhead. And so whether it's sort of outsourced services or it's continuing to lean into marketing campaigns that have a really – have the highest return, really quick payback, that's really where we're focused, so that we can manage in any scenario that prevails over the next couple of quarters. Ryan Meyers: Okay, got it. And then just one sort of clarification question. I think you guys had said this in your prepared remarks, but it sounds like with the loss of the American Express business that's now been filled and picked up by the business that you guys are working with AAA, is that the right way to understand that? Jantoon Reigersman: Yes, I mean, it's on its way. So I wouldn't say that it's 100% filled up, but it's obviously gives – and these programs takes time to ramp up, but it's getting very close to those levels. Ryan Meyers: Got it. Thanks for taking my question, guys. Operator: The next question comes from Tom White, D.A. Davidson. Please go ahead. Tom White: Great. Good morning. Thanks for taking my questions. Two, if I could. I guess just first on tariffs. Jantoon, in the letter you kind of touched on how not all OEMs will be kind of impacted the same. I was hoping you could just kind of update us on your franchise dealers, like sort of what is your kind of exposure to different OEMs? I think you guys skew a little bit more towards kind of the Asian OEMs, some of the Japanese brands. I'm just curious, like, is there a reason to think that your specific mix of certified dealers will be better or worse able to kind of navigate what's happening? That's my first one. And then second one is just on kind of uses of capital. Just curious if you're giving any more serious consideration about buying back stock here. Thanks. Jantoon Reigersman: Yes, so let me – on the first one, the comment was less about alluding to whether we're better or worse positioned. I think it's just hard to say at this stage. I think it was more intended to say like long-term probably not all OEMs are impacted equal. And so, what we do is obviously we're very focused on helping OEMs with their respective issues to help solve those through our programs. And so what we mean with that is, obviously, if somebody is more impacted or needs a specific type of help, and obviously we'll jump in and we feel that there are opportunities there. And so it really depends on the type of impact that each of these OEMs has. We indeed skewed a little bit more Asian makes more broadly, but this also shifts very much throughout the year. So that really depends. And at the end of the day, it also really depends on inventory mix and then eventually, obviously, the type of incentives the OEMs are willing to put on these cars. So, I think it's less about whether we're better or worse positioned, because I really think there is such a thing currently within the new space. However, I do think that the adaptability to really help the OEMs, where they would like to emphasize and where they would like to, like, effectively adjust some of their pain points is something that we are very capable of, and we've proven to be very capable. So we'll obviously have to navigate that somewhat smartly as we go through this. And on your second question on the capital allocation, the answer is always yes. I think this is, we've obviously been asked this a lot, and we have a significant cash balance in play. We very often review, almost continuously review our capital allocation strategies and do that the right way. And share buybacks are always one tool in that effectively, basket of tools that we have. And so that is something that we always consider and at the right time, will consider. Tom White: Okay, thank you. Operator: The next question comes from Chris Pierce, Needham. Please go ahead. Chris Pierce: Hey, good morning. On TC Plus and the dealer you cited, can you just – is there a way to know if the dealer units are additive to, like, units they wouldn't have sold or – and then can you remind me, or remind us, is there an increased economic benefit to TrueCar from these units given, I think, the dealer probably makes a higher margin, even less sales commission in these units, like, what's the push and pull there? Jantoon Reigersman: Yes, of course, absolutely. So on the first, the answer is yes. So, and this is what's really exciting about this. And at some point, I would love to actually provide you guys with a lot more detail on it and actually literally, like, present you guys with a case study on it. But long story short is yes. So there are two things that have really happened there in the case study, which is one is clearly a shift from people that historically were obviously just leads basically becoming fully online purchasers, number one; and then number two, also significantly increasing the volumes that we were bringing to that dealer. And so there are really two things happening. Both mix shift to online as well as increased volumes. And so I think as a case study that's a really good case study that we're really excited about. And obviously now we feel we should add a couple more dealers on to effectively run similar case studies, both because they're slightly different DMAs and see how that behaviors or whether the behavior is any different. And two, also adding more brands because obviously that also will then increase inventory. But also obviously we'll see the behavior and different behaviors that are happening online. And so these are – we're almost like, for lack of a better word. And as one of our board members often tells me, it's we're kind of going slow in order to go fast, which is really honing in on to understanding this in detail. And then as soon as the DMS providers are kind of up to date and ready for us to automate these things, then we can really start pushing the scaling much faster and much harder. But I think so far these results are effectively confirming all the hypotheses and the thesis we had in the past. And then Chris, what was your second question again on the oh, monetization. Chris Pierce: Monetization, yes. Jantoon Reigersman: Yes. Monetization, yes, so currently, currently we're not doing – like the monetization is just as if it's a lead. This is really because we're focused on like we're obviously asking a lot from these dealers at this stage because obviously there is close integration happening, we are learning a lot, there is a lot of things we're doing. So we were monetizing it as if it's a regular lead at this point. We're not yet monetizing it really at a TrueCar plus basis. And we only want to start doing that once we properly start scaling because we really want to – we don't want the monetization to be affecting any of the testing and trial and error we're doing today. Chris Pierce: Okay. And just lastly for me on the pause of the dealer sales headcount, is it – are you anticipating that there's going to be uncertainty from the dealers and the OEMs or are you actually hearing that from dealers right now and it's kind of affecting what you had thought was going to be your go-to-market or are you just sort of building it in because of the elevated uncertainty? Jantoon Reigersman: Yes, elevated uncertainty, we are just building it in. There is no reason to go like, let's feel out the market a little bit more, let's be a little bit more efficient first, you see kind of how this is going to play out, be there to be helpful for the dealers. That's really the main focus right now. So it's really in anticipation of, it's not necessarily because we're reacting to something specific. Chris Pierce: Okay, perfect. Thanks for the clarification. Thanks. Operator: The next question comes from Rajat Gupta, JPMorgan, please go. Jash Patwa: Hi, good morning. This is Jash Patwa on for Rajat Gupta. Thanks for taking our questions. I was just hoping to get some further color on your decision to not provide guidance for the second quarter despite the subscription nature of the business. And also since most manufacturers have held pricing stable on model year 2025 vehicles through early June, along the same line of thought, would you be able to share an update on the dealer revenue split between subscriptions and pay-per-sale? Thanks. And I have a follow-up. Jantoon Reigersman: Yes, I will take the first one. I'll have Oliver answer you the second one. So, the guidance really is very simple, is that if we were to provide some form of guidance and then there is some like crazy news that comes out in some shape or form, then suddenly you get into all those triggers where like, well, you've guided to something and then how does that affect, and then how do you then speak to the market about that? And it just makes life a lot more complicated. I think if there is nothing strange coming further in the next couple of months and quarters and I think things become relatively predictable in a way that we've always been able to relatively well predict. But the real reason to pull back on any form of guidance is really just because of the high level of uncertainty. So it's less about the business model. It's more that if tomorrow tariffs get doubled, then it’s really hard to assess exactly what the impact is at this stage. So, that level of uncertainty just makes it that it's easier to just refrain from providing any guidance. And then Oliver can take question number two. Oliver Foley: Yes, I'd say, if you just look at our dealer revenue, about 20% of it comes from pay-per-sale, with the remaining 80% being sort of recurring subscription based. But then I think OEM obviously is the other sort of variable revenue component, right. And that can move up or down quite significantly depending upon sort of how OEMs recalibrate their incentive strategies going forward. So I think when you've got a relatively small revenue base with, I think, a decent chunk of it, that's non subscription revenue, the volatility that we've seen makes it very difficult to predict those non subscription based revenue lines and they can have a material impact as a result. Jash Patwa: That's very helpful, thank you. As a follow-up there were a lot of great details in the prepared remarks and shareholder letter around the progress of the TrueCar Plus offering, which we really appreciate. And maybe just following-up to Chris's question, could you also discuss the potential cost savings realized at the pilot dealer group with a larger proportion of volumes now being transacted through the DC plus channel? Additionally, has there been any cultural pushback at the stores considering that transactions through end-to-end online channels might impact the store associates variable pay? Thank you. Oliver Foley: Yes, these are all good questions. I'm trying to think like how to answer them concisely. Yes, so there are a lot of savings are important. So number one you can start selling as a dealership 24x7 right. So, that's really important. So in other words, at night when people are sleeping, you arrive in the office the next morning, you effectively have sales happening throughout the night. So that's number one. Number two is obviously they are able to expand their almost their geographical footprint effectively. Number three is obviously people at leisure, at their home, looking at attaching products, feel more confident, feel more confident with peer reviews, et cetera. And so there is a different group of customers that effectively the dealer is able to address and serve that have different type of needs than the ones that really enjoy going into a dealership. So the answer is yes. So it's not just purely by volume, but it's also by the type of consumers they are obviously pursuing. Then you go into the back end side of things. So, really now suddenly you can be much more efficient with your sales team throughout the day and really serve the people that are in the store and have effectively your sales team pure on the phone per se chasing potential leads. And so as a result, I think, you can become much more efficient on that side. Over time, obviously depending on the type of dealerships they could even consider whether sales commissions should be even be part of the online sales. And then once you start moving to the next phase, you really start thinking about, you can even start are thinking about real estate cost and location costs effectively. It's like how much inventory do you actually need to have on a prime real estate location or can you actually use a secondary location, et cetera. I think the complexity that always comes from scaling a product like TrueCar Plus is that – and it's both the complexity as well as an opportunity as a dealership, when you run multiple stores, how are you going to actually deal with online sales from an operational perspective? So do you have a single person in all different stores being responsible for online sales? Do they then carry multiple brands? If somebody from an online sale comes and wants to pick up the car, do they pick it up on a centralized location or one of the brand dealerships? All these type of little nuances actually really matter and they matter a lot. And also like then the cost burden to the dealership, right. So it all comes down to either efficiencies or inefficiencies. And so the ability to start selling more with less friction, less logistical complexity is something that's super attractive. And more importantly also start selling in off hours or sell to people that otherwise would have been reluctant to walk into a store or would have walked in by necessity or would have taken a lot of time in the store, now suddenly you can run all the operations much more efficiently. So net-net, I think there are a lot of cost savings to be had for the dealerships and I think as we go through forward with every one of the dealerships, it's going to very depend on what they're very focused on themselves. But it's very obvious that for the dealerships this is a really interesting value proposition and obviously it will allow for the buy to effectively be split in a different form and for us to be able to monetize this in an attractive way. Jash Patwa: Great color. Thanks a lot Jantoon and Oliver. Good luck. Operator: [Operator Instructions] The next question comes from Martin Fong, BTIG, please go ahead. Martin Fong: Hi, good morning. Thanks for taking my question. So first you referenced you expect CDK and Tekion to come online, I think, somewhere around July. How confident are you on that timeline? And could you just maybe clue us in, I think, you mentioned that the delays are sort of outside of your concern, I mean, is it that they're working on something related to macro that's kind of tying their attention? Just maybe some insight there would be great. And I have a follow-up. Jantoon Reigersman: Yes. Yes, absolutely. So the one that we've been working with mostly has been CDK, Tekion we've just started engaging with. So they're like, we'll probably run through that timeline with them in relatively short order. For CDK, really the issue has been two-fold. So one is just resource allocation. And second of all, obviously CDK is also more complex, like architecturally more complex organization in the back end. As a result, for them to adapt accordingly is a little bit trickier. So as soon as we do something and we effectively then test it, often products are slightly buggy or have some issues and then kind of they need to pull the team back in and there's a little bit of an iteration that happens there. I think the good news is they are very focused on it. The tricky bit is that they also are looking to re-platform as an organization. So there is always some delay that comes with that and obviously a loss of focus. But I think we are confident to have the right product development roadmap now with them to be able to do that. And in parallel, obviously we're accelerating the integrations with Tekion as well, which probably will be an easier and faster integration in any case, because obviously they do not carry the same tech as CDK does. Martin Fong: Got it. Thanks for that. And my follow-up, I mean, I think we all acknowledge the uncertainty here and I respect you're not providing guidance. It's just a higher level question on what you are seeing in your dealership conversations and how they're behaving. I mean, should we just assume that there's this general paralysis in the sales channel or are there actually some signings going on? Just maybe a bit deeper insight on what's going on in the field would be great. Jantoon Reigersman: Yes, it's a good question. And the honest answer, Martin, is like, it's like so far so good, to be very honest. So there is just a lot of uncertainty. But I think that that's also what we try to relay in the letter, where we try to kind of walk the nuances, right. Where it's like Q1 was actually a pretty good quarter, April clearly held up accordingly as well. And so it's just hard to extrapolate because you just know what's coming from left field. But I think so far so good, the morale and just overarching the success of the relative dealers. And so now obviously don't forget that as has been the case already for a couple of years, I think, independence will suffer, right? And the smaller independents will continue to suffer until affordability becomes obviously there's some easing there, but I think from the perspective of the franchises and the new cars, I think, they are holding up so far they're holding up strong and obviously people are still buying. It's hard to say whether this is a nervous buying, free tariffs, or whether this is business as usual. We will see and we'll see how this flows through. But so far there's no red flag in the field itself. Martin Fong: Yes. Thanks so much, Jantoon. Appreciate it. Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Jantoon for closing remarks. Jantoon Reigersman: Right, I just would like to thank everybody for taking the time to participate in our call. And I want to thank the team. I know with all the macro volatility around us, it's amazing to see the team and firm keep steady, focused and do what we need to do. So thank you everyone. And thank you today for listening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.

Operator: Good day, and welcome to the TrueCar, Inc. fourth quarter 2024 financial results conference call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar, Inc. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to the TrueCar, Inc.'s fourth quarter 2024 earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you have all had the opportunity to read our most recent stakeholder letter, which was released yesterday after market close and is available on our investor relations website at ir.truecar.com. Before we get started, I need to read our exciting safe harbor. I want to remind you we will be making forward-looking statements on this call, including statements regarding our revenue growth, expected adjusted EBITDA, and free cash flow, as well as aspirational goals regarding 2026 revenue and free cash flow margins. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, begun, seek, will, intent, confident, and similar expressions, and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the risk factor section of our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our other reports and filings with the Securities and Exchange Commission for a discussion of all the factors that could cause our results to differ materially. Jantoon Reigersman: The forward-looking statements we make on this call are based on the information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the investor relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, let us begin. With 2024 behind us and a new year in full swing, it is important for us to pause and reflect on the exciting journey we are on. A journey we embarked on in the summer of 2023 when we started to restart the company and committed to building a stronger and more resilient TrueCar, Inc. Taking stock of where we are relative to where we were and where we are expected to be allows us to evaluate what is working and not working and adjust course accordingly. To that end, let us start with a year-over-year comparison of our 2024 financial performance and operational KPIs. Revenue of $175.6 million grew by $16.9 million or 10.6% year-over-year, the strongest annual revenue growth since 2017. Adjusted EBITDA of $1.6 million grew by $15.43 million year-over-year. Cash flow from operations of $7.7 million represents a year-over-year improvement of $30.1 million. Free cash flow of negative $0.2 million represents a year-over-year improvement of $34.1 million. Total unit sales of 356,000 increased by 37,300 or 11.7% year-over-year. New vehicle unit sales of 204,000 increased by 27,500 or 15.6% year-over-year. Franchise dealer count grew by 119 dealers, ending the year at 8,351, a 1.4% year-over-year increase. With the launch of TC Plus, we began the first and only digital marketplace to enable the purchase and sale of new, used, and certified pre-owned vehicles through an entirely online transaction. The rollout of TrueCar, Inc.'s twelve-month dealer service program and we repurchased a total of 6.1 million shares of TrueCar, Inc. stock. Moreover, we finished the year with momentum and strength across many of the areas in the business as highlighted by several of the Q4 performance metrics. Revenue of $46.2 million, an increase of 11.9% year-over-year with positive adjusted EBITDA of $0.4 million and cash flow from operations of $5.9 million and free cash flow of $4.1 million, an increase of $12.2 million year-over-year. Our ending rooftop balance was three rooftops higher than the prior year, marking the first year of rooftop growth since 2019. Total units of 93,000 increased by 22% year-over-year, and new units of 58,000 increased by 27.8% year-over-year. In summary, we finished the year by delivering yet another quarter of double-digit revenue growth and positive adjusted EBITDA, achieving our goal of generating positive free cash flow in Q4. Moreover, the intense focus we placed during the year on efficiently growing new unit sales and capturing a greater share of new car shoppers showed tremendous results in Q4 as we delivered 27.8% new unit growth in the quarter year-over-year, significantly higher than the industry's 9.6% growth. As such, in Q4 2024, the average franchise dealer on TrueCar, Inc. sold new vehicle sales generated through our marketplace grew by 27.1% versus the same period last year, reaching the highest level since Q3 2021. We also continued making progress on TC Plus during Q4. As we articulated last quarter, our Q4 focus for TC Plus was to, one, expand the TC Plus purchasing experience to consumers shopping on select affinity partner sites, two, integrate AI-powered fraud protection prevention tools into the buying process to more effectively detect and mitigate the risk of consumer fraud, and three, deepen our integration with select dealer management systems, also called DMS, providers in order to further automate and streamline the buying process for dealers. During Q4, we introduced TC Plus on several of our affinity partner sites and made further upper funnel optimizations that have contributed to a nearly 50% increase in the average number of consumers initiating the TC Plus purchase experience each month, a similar increase in transaction volume. With the work to enhance fraud detection recently completed, we expect to enable TC Plus on additional partner sites in Q1 while maintaining a focused and controlled approach to expand consumer access to TC Plus that allows us to test and iterate. Furthermore, we expect that expanding access to TC Plus will be done in tandem with expanding the TC Plus pilot to additional dealers. We plan to prioritize upon the completion of the work we began in Q4 to deepen our DMS integrations. 2024 was a year of great progress for TrueCar, Inc. with nearly every measure of performance improving from the prior year and several long-term growth initiatives being brought to market. We are proud of what the team has accomplished in the year, and we are even more hungry to accelerate our progress in 2025. We firmly believe that the quality of our assets and the unique competitive strengths should yield sustainable annual revenue growth of 20% plus in a normalized new vehicle retail environment. To unlock that growth opportunity, we must stay committed to the following building blocks we have previously outlined, simultaneously strengthening our execution against them. One, continue activating new franchise dealers. Two, minimize dealer churn. Three, grow revenue per dealer. And four, continue expanding our OEM business. The expansion and commercialization of TC Plus continues to be a top priority for TrueCar, Inc. in 2025. Following the completion of the work currently underway to deepen our integration with the DMS providers and automate nearly every step of the selling process for dealers, we anticipate rapidly expanding the pilot to additional dealers and territories. In conjunction with adding dealers and inventory to the program, we intend to make the TC Plus experience more broadly available to consumers shopping on our branded and affinity partner sites. Lastly, and as we discussed last quarter, we made significant investments during the second half of 2024 to enhance our data platform to enable the rapid development and deployment of our new generative AI and machine learning models that enrich the consumer shopping experience and provide dealers with value-enhancing features and insights. In partnership with AWS, TrueCar, Inc. has established a real-time ML through which we can quickly build and deploy modular, continuous, and traceable AI ML models that leverage our rich first-party datasets. In Q1 of 2025, we launched the first of these models, which classifies consumer leads based on their propensity to purchase with a high degree of accuracy. We foresee a number of ways this predictive model can be leveraged across a range of uses, such as powering marketing campaign optimizations and providing dealers with enhanced consumer insights that further improve lead conversion rates. With these enhanced capabilities, we expect to be able to retain more shoppers on the site and effectively retarget them through tailored email engagement that will ultimately allow us to capture a greater share of car buyers and drive high-quality leads to our dealer network. As such, leveraging these recent investments in our data platform and prioritizing high-impact use cases like the ones described above is a top priority of ours in 2025, and we believe can unlock significant value that can further accelerate the growth of our core business. Turning now to our outlook for 2025. Our expectations for the business this year are rooted in our belief that we are a much stronger organization today than at this point last year. Not only is the value we are delivering for our customers stronger than it has been in years, but we are even more focused and determined to execute against the building blocks that we believe will enable us to achieve our targets of 20% plus year-over-year revenue growth. However, unlocking this growth potential not only requires strong execution but a willingness to make key investments that will accelerate the growth of our dealer network, unit sales, and OEM partnerships, and deepen the penetration of our expanded product offering. The primary investments we are making in Q1 are the additional headcount on our dealer sales and service teams, which we expect will enable us to grow our dealer network by accelerating the pace at which we add new dealers and strengthening our ability to effectively retain them through our best-in-class service, as well as the expansion of some of our marketing efforts. With strong management processes in place, we are confident that this investment will yield a strong ROI in 2025, maximizing our ability to deliver accelerated year-over-year revenue growth in the second half of the year while also delivering fully adjusted EBITDA profitability and breakeven free cash flow. However, given the ramp time associated with these headcount additions, as well as the near-term impact to OEM revenue associated with the transition in incentives of American Express and also new affinity partners, we expect modest Q1 revenue growth in the high single digits and negative adjusted EBITDA of approximately $5 million. That said, our outlook for growing OEM and incentive revenue in addition to core dealer revenue in Q2 to Q4 remains strong due in part to the recent enablement of Mercedes incentives to validate AAA members nationwide, a program we are optimistic about with early performance tracking in line with what we observed when we launched our former partnership with American Express. We are also actively working to expand this program by bringing additional OEM partners on board. Given the strength of these partnerships and the momentum we are building by investing in headcount, we expect to reaccelerate. We firmly believe that the opportunity before us warrants the near-term investments and will enable us to deliver the strongest growth outcome for the business in 2025. Moreover, we maintain our ambitious targets to return the business to an annual revenue run rate of $300 million and a 10% free cash flow margin by the end of 2026. Maintaining this target is rooted in our belief that our growth rate exiting 2025 can have us on the trajectory required to achieve these marks. Now, operator, let's open the call up for questions from our analysts. Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Rajat Gupta from JPMorgan. Please go ahead. Rajat Gupta: Great. Thanks for taking the question. I had one question just on the first quarter guidance and the step-up in expenses. Could you elaborate a bit more on what specific areas you are targeting? I know you mentioned it seems like it is more sales and marketing related, but is there also some technology-related spending that is picking up? And what is giving you the confidence or maybe what are you seeing in terms of just line of sight that is going to immediately help accelerate revenue growth in the second half of the year? And I have a quick follow-up. Thanks. Jantoon Reigersman: Yeah. Absolutely. Let me start, and Oliver, you can add to that. I think there are a couple of things. So predominantly, it is boots on the ground. So we see the need, the help the dealers need, and our ability to have boots on the ground, knock on the doors, really provide them with the help we can provide them to sell more cars is something that we are very good at and that the sales team has proven to be very efficient at. And so it is really a focus on making sure we can drive the sales on that side, and that just requires more headcount. Number one. Number two, on the marketing side, we have become much more efficient. On the marketing side, we continue to become more efficient. We are more focused, and so we also feel that it warrants further investments. Historically, we have probably taken a little bit too much oxygen out of the room and would like to start deploying more, and we feel that the market is really having some element of a turning point where we can lean in more because we know that on the core dealer side, we have a really good market fit. We just want to keep pushing that. There are some models and technology advancements that we are making, obviously, on the Gen AI side and the collaborations we are doing there as well. But those are smaller compared to the headcount charge and the marketing side. Oliver, I do not know whether there is anything you want to add there. Oliver Foley: Yeah, the only thing I would add is, you know, obviously, Q1 is seasonally a quarter with higher specifically payroll-related expenses. But when we think about those, you know, the increases driven by near-term investments, it is almost entirely at dealer sales and dealer service headcount. And the reason we feel confident investing in those two areas is because, you know, we restructured the sales and service team at the end of 2023. Brought in new management, we created new processes, and we really focused on how we can drive sales productivity. And over the course of the year, we really saw strong improvements in, you know, the dealer sales team's productivity across the board, really every measure. And Q4 was a really strong quarter in that regard, and so we feel like, you know, we have got the team in place or the management in place, the processes are much stronger than they have been in the past. And right now, it is just a matter of having the right regional coverage across all of our territories to make sure we are tapping into all the inactive dealers out there today. And then secondly, on the dealer service side, you know, it was in Q2, we launched the twelve-month service plan. And our hypothesis there was that we can be highly consultative with our dealers. And every month, sort of work with them on driving or maximizing their performance on the platform, the hypothesis was that we would see significant decrease in churn. And you know, in the fourth quarter, we really started to see the results of that, and so it validated that hypothesis in many ways, and so we believe that expanding the size of that team so that all dealers can get that consultation every month. Ultimately, that is what is going to drive churn down to our long-term target in 2025. So that is why we feel confident investing in both those sides of the business. Rajat Gupta: Got it. Got it. That is helpful color. I mean, maybe, just wanted to follow-up on the DMS integration with TrueCar Plus. Could you give us some more details on that? In terms of what are the steps that are involved in that integration? What phase are you in in terms of integration? Is the DMS plus TrueCar Plus platform live already? Where are we in that process and when do you expect it to really start to contribute more meaningfully not just in terms of additions, but just in terms of monetization as well? Jantoon Reigersman: Yeah. So the answer to that on the DMS side is relatively straightforward. There are obviously several DMS providers in the country. One of them is obviously very large. And so we are integrating with them initially, which is CDK. And so the idea is historically, dealers have not been able to modify the paperwork as easily. And obviously, in this online transaction, we want to be able to have a flow where the dealers really only need to just approve and do not need to do any further work on the documentation because everything has already been pre-calculated and is already in perfect. And so in order for that to happen, you need to be obviously on the roadmap. It takes some time. There are iterations. There are always certain bugs that are inside. And so as we continue that work, it is a matter of having both organizations being aligned. In the interim, we are also integrating with other DMS providers where these integrations are probably a little bit easier because these are built for a little bit more futuristic architecture as opposed to some of the longer-term DMS providers who have historically been built effectively on a different type of ledgers. So all in all, it is really a matter of keep pushing this in terms of the roadmap of all the various third parties. And we are already fully transacting now. It is just really the difference is you sometimes if there is a consumer in the last minute wants to change something, it requires the dealer to still go in manually at times to finalize some components of the paperwork, and we want to make sure that that is fully automated. So there is really no burden on the dealer, and that is obviously a really important requirement as we start scaling because the more and further we scale, the fewer we want it to be a manual task for the dealers. So that was really the trade-off we were making, which is we know we have a lot of dealers that would love to be on the program. We obviously want them to be on the program, but we want to make it as little manual as possible for them. And given we are so near to finalizing these different pieces, we really want to do that sequentially. And then in terms of financial contribution of TC Plus, remember that a lot of this will be part of, obviously, of the subscription services of the dealer. So as soon as we start ramping and having bigger volumes, then over time, you can start seeing this. I think this will become more meaningful obviously, next year. This year, it is really about improving units, unit volume, improving experience, becoming a larger size of the overall revenue of the individual dealers that are on and then expanding inventory and dealers on it. And it is really the monetization should then follow next year in terms of real contribution. Rajat Gupta: Got it. Got it. That is helpful. Thanks for the color, and good luck. Operator: The next question comes from Naved Khan from B. Riley Securities. Please go ahead. Ryan Pfingst: Hi. Great. Good morning. Thanks for taking my question. This is Ryan Pfingst on for Naved Khan. So first, I wanted to ask about over the past two years, franchise dealers have been trending up, whereas independent dealers have seen greater churn. Was wondering if we should expect this trend to continue into 2025. And then also how the twelve-month dealer service program should impact each group. And then also, just want some more color on the total opportunity for adding new affinity partners. Thank you. Jantoon Reigersman: Yeah. So let me start, and then Oliver can jump in. So the answer is, yeah, obviously, we skew more new and we skew more franchise compared to many of our competitors. So that has been a focus of ours and will remain a focus of ours. Obviously, driving franchise activation is a really important business driver for us. Right? It is the first building block that I articulated earlier. And then on the churn side, similarly, franchise is obviously an important driver, but so are independents. But I think what is really important is to understand that not every independent is equal. So we have very large independent customers who are really valuable and important customers of ours, but we also have a very large long tail of much smaller independents. And smaller independents obviously struggle much more in a high-interest rate environment and in an environment where used car prices are still very, very high, and so it is hard for them to get inventory. It is hard for them to finance inventory. It is hard for them to get the right clients on their lots, and those are often smaller dealerships that do not even run, like, back-end ERP systems, etcetera. So the churn on the independent side if you look at the broader numbers, it is always a little bit misleading because you sure, like right? Like, there is churn happening, but as long as it happens on the long tail, it is not as impactful and it is not as important. What we really are focused on is obviously our big clients across the board. And that same applies to our twelve-month service cycle. So what happens is we are obviously very focused on the franchises and the larger independents. We have created a separate program for small independents where it is a little bit of a lighter touchpoint. It obviously, there is an important consideration of ROI. One of the reasons why we are obviously investing also in, frankly, in sales and service people because it is really important when you do service to do it in person, to spend the time to really work with your clients. And we have seen that has tremendous impact mitigating the churn, but also adding dealers on. So we feel that the opportunity is ripe for us to do further investments there. So over time, you should see the churn rates come down even though on the independent side, probably as the current macro persists, they will probably stay somewhat elevated for the time being, but that is all in the long tail at the end of the day. And so what we really focus on is obviously the dealers are bringing the highest revenue per dealer. And then remind me what your last question was on the affinity side. Ryan Pfingst: Yeah. Just how you are sizing, you know, the entire kind of opportunity there with adding new partners. Jantoon Reigersman: Yeah. I think the affinity side is huge. Right? And we have proven a very efficient product market fit on that side of the business. And it is really the triangulation or I should actually say that, yeah, triangulation to four parties, which is the affinity parties, the OEMs, the dealers, and us. And so if you do that well, we always obviously run very efficient programs, and we are clearly one of the few that run that in the marketplace. Or at the very least, run it so effectively. We think that there are a lot of affinity partners that we can add further onto the platform. It is a really big priority of ours. But we also want to do that while obviously providing little return and attractive platform for the affinity partners that we have. But we think that this is a place where we can scale a lot and obviously, if you look at our units even, it is obviously also a really important source of our broader traffic, and those are often highly intent buyers in the flow. So not only from a core perspective, are they really important, but also long term from a TC Plus perspective, they are very attractive consumers for us. And then the other thing that also becomes very interesting in the TC Plus world in the future is the opportunity that you can really start adding more value-added services, especially to affinities that are membership-based, where you can start thinking about ownership of the car and long-term opportunities around that too, retargeting opportunities, etcetera. So affinity OEM side is an important driver for us across the board. In the core side and long term also on the TC Plus side. Ryan Pfingst: Thanks, Jantoon. Super helpful. Operator: The next question comes from Ryan Myers from Lake Capital Markets. Please go ahead. Ryan Myers: Hey, guys. Thanks for taking my question. Just wanted to get some more color on the EBITDA guide for Q1. So does that include any sort of an impact from the wholesale business that obviously has kind of weighed on the gross margin in the past couple of quarters? Or do you expect to see gross margins rebound in Q1 and most of that is just going to be coming on the headcount that you guys are adding? Oliver Foley: Yeah. We do not expect wholesale to have any significant impact on Q1. That is not really a growth driver of ours. And so when you think about gross margin, what has dragged it down in the last couple of quarters was in part wholesale, but I would say just as much it is TrueCar Marketing Solutions. TrueCar Marketing Solutions, the marketing dollars that we deploy for those campaigns get captured in cost of revenue. But when you think about operating contribution, it is actually fairly comparable to the core auto buying program. So as we think about the trend in gross margin, it is really going to be driven by the makeup of our total revenue. So as OEM revenue starts to accelerate, that benefits gross margin. If TCNS or TrueCar Marketing Solutions were to grow substantially over the next couple of quarters, that could in theory bring down our gross margin, but you would expect operating contribution to be materially the same as it would be if it was the core dealer business that was driving that growth. Looking in Q1, really, what is impacting that guide is really just it is the seasonal nature of payroll-related costs being higher in Q1. And then the incremental sales and service headcount, which it just takes time to ramp those hires up. But effective dealer salespeople have a pretty quick payback period. So that is why our expectation is that you start to see the reacceleration of revenue growth in Q2. Ryan Myers: Okay. Got it. And then, primarily, just the biggest thing that is in the first quarter revenue was just the loss of American Express. And then, obviously, with the hires in the remaining quarters, and then, you know, you called out the Mercedes business on AAA. We should reaccelerate. But, really, the biggest driver of the growth rate in the first quarter is just the loss of the American Express platform. Oliver Foley: That is correct. Yeah. It is like any other OEM program. When you introduce it to a new affinity partner, it takes time for that to ramp up. And it just requires marketing it to that membership audience, making them aware of it, and over time, it starts to build steam. And that is what we saw with American Express. It sort of had a pretty gradual build, but then accelerated fairly quickly after a few months. So Q1 is we are sort of bridging that gap with the loss of American Express. Ryan Myers: Okay. Got it. Thanks, guys. Operator: The next question comes from Tom White from DA Davidson. Please go ahead. Tom White: Great. Good morning. Thanks for taking my questions. Two if I could. I guess the first one is just sort of a high-level one on kind of your discussions with dealers. It seems like dealerships are all kind of dealing with this profit normalization kind of evolution, you know, after a few years of outsized profitability for dealerships. So it would seem that maybe, you know, some are looking to cut some tech and marketing budgets kind of in the face of that. But then on the other hand, you know, maybe they arguably need platforms like yours more so than ever, you know, to kind of get to incremental consumer demand. So just kind of curious, like, how your discussions with dealers are going kind of and how you, you know, kind of navigate those two sort of different forces. I mean, I have a follow-up. Thanks. Jantoon Reigersman: Yeah. Good question. And the answer is you are spot on. And I think there is an added nuance there that it really depends also on the size of the dealership and the level of sophistication of the dealerships. So, right, plenty of dealers right now think okay. Let us go back on any of the marketing services effectively and then, right, put more to Google. Very quickly, they learn that as they do that and deploy more in Google, that Google only shows like, their total two or three percent of their inventory and the other ninety-seven or ninety-eight percent does not get any views. And so very quickly, then they end up with aging inventory, and then they call back and say, oh, we have a problem. So it is also the reason why we have redesigned the service program to this twelve-month program that Oliver was referring to that we started in Q2. And that is really much more of a direct engagement where you like, every dealer has its own subset of issues because it depends on whether you are by coastal, depends on whether you are in the middle of the country, depends on whether you are in a larger city or smaller city. And so everybody has their own nuances. But also do not forget that there is another really important drive for the people under. So yes, the dealer has to kind of readjust to the margin compression as it were. But also, dealers often are struggling with the sales team that frankly, had a really good life over the last couple of years and now have to go back to actual, like, hard selling. And many of their sales team do not know or do not remember actually how to properly sell the way they had to and used to. And so helping the dealerships with training of their staff, of providing them insights with the tools and providing them insights with all the different tools that we have allows the dealers to be much more efficient. And that even goes as simple as right? We have dealers where they are not actually selling as much, and then we go and look into the system, and we have a person inside the dealership. And they actually look at how they are pricing. And if they were to price the car at fifty or a hundred bucks in a different direction, that actually immediately the amount of leads expands disproportionately. And so in some way, they are selling many more cars just because they are much more active and thoughtful in the way they are actually setting their prices and then engaging with those leads. So there is a lot of training associated with this, which is why we are doing more of the servicing as we in that program. That is really the tension that there is. And it is really on us to make sure that we show the value we provide to them. So becoming more sophisticated in a way we articulate that and show them the reports of how they can improve is a very important part of our servicing efforts. Tom White: Okay. That is interesting. Thank you. And then just one last one on kind of the OEM and revenue line. And I am just curious whether, you know, as you think about, like, the multiyear runway, is there any reason like, sort of structural reason why you would not be able to make kind of meaningful strides, kind of getting that revenue line back to kind of where it was pre-pandemic levels? Or, you know, is there any risk that, you know, in the years since you had a more meaningful revenue base there that, you know, there has been some kind of change in the way OEMs either approach the channel or, you know, they have shifted budgets elsewhere when it comes to kind of, you know, digital marketing in this way. I realize it is not exactly a digital marketing kind of type ad budget necessarily, but, you know, just curious, like, when you are thinking about that $300 million annualized, like, on a longer-term target, like, how realistic is it that, you know, this is going to be a big driver of it. Jantoon Reigersman: Yeah. I think it is. I think there is plenty of opportunity, and I think we should be able to grow beyond to what it used to be. I think we prove to the OEMs our effectiveness. I also agree with you that, obviously, because they historically have pulled back budgets from, frankly, every program, they kind of need to normalize to reallocate. And I think we did a good job in the letter trying to explain how to think about the OEM incentives. Right? We would really if you oversimplified a little bit, there are effectively two tools that the OEMs have which is financing or captive incentives. Right? So, like, what is the offer they give you from the effectively from the lending side to make the car more attractive. And then the other one is, like, the cash on the hood type incentives. And if you actually look at the captive financing side, which is the easiest lever for them to pull, is the one that has now pretty much normalized to how it was pre-pandemic. And so we are expecting that now the cash on the hood component is the next one to come, and this will be especially prevailing in a world where right? Like, lots will start getting fuller and fuller, and dealers need to obviously move their cars because otherwise, they have real floor plan financing issues. And so net-net is I think this will be a growing factor and will continue to grow. And in a macro where dealers will have a hard time selling cars, especially with affordability, these are programs that are very, very effective and do not impact the residual value of the cars, which obviously for the OEMs is really important. So I am very bullish on this area. Oliver Foley: And the only thing I would add there is, like, I think the relevance of our OEM incentive offering is going to be stronger than it has ever been for the reason Jantoon just mentioned, which is our ability to offer private targeted incentives protects the OEMs' residual value. And what we have seen over the past two years is that way more new car loans originated by the captive arms and way more new car sales were leased. And so the captives effectively have these loan books that are very susceptible to declining residual values. And so I think they are going to be very cautious when it comes to offering broad cash on the hood promotions or discounts because that could directly impact, you know, their loan to values. And so going forward, I think their ability to incentivize demand with discounts and cash rebates, but do it in a way that protects residual values is going to be more important over the next couple of years than I think it has ever been. And so I think that should favor the product that we offer them. Tom White: Great. Very interesting. Thank you. Operator: The next question comes from Marvin Fong from BTIG. Please go ahead. Marvin Fong: Great. Thanks for taking my questions. I know we have talked a lot about OEM here. I guess to be a little more clear here, you know, obviously, you highlighted Mercedes and there are other partners, you know, potentially could join that AAA program. So, you know, should we I know you also mentioned reacceleration in the second quarter, but, you know, by sometime this year, should we expect that you will fully recapture the lost American Express business? I just want to be clear on that. And then maybe a second question, just love to kind of hear about from the dealer side, you know, coming out of NADA, and whatnot, you know, just what is the pipeline in terms of dealers that you have for TC Plus? Are you pretty much, you know, have a pipeline of dealers ready to go once you do roll out into new regions? Maybe just kind of talk about that aspect of TC Plus. Thanks. Jantoon Reigersman: Yeah. So I think the first on the first, the answer is yes. And I think really Q1 is the only one where you have a little bit of shift. And I think in Q2, we should already start seeing that acceleration. So I think that is number one. On the TC Plus pieces, yes, we have dealers ready. We actually have dealers ready in many different states that would love to that they put their hands up and would love to participate. We obviously want to do this relatively focused, so we will first do more dealers in California, and then we will start expanding in other states. The two states that are highly likely to follow afterwards are going to be Florida and Texas purely because of the density of dealers that we have involved in both these states as well as obviously, the car buying audience that exists in both states. And so net-net is focused on California first. Yes, we have a pipeline ready, but we want to make sure that these experiences are really good. It also requires, obviously, a little bit of a different mindset at the dealerships themselves. It requires some level of training, etcetera. So we want to do this in a structured manner, but the answer is yes. We have plenty of dealers that are really excited. And then also, obviously, we continue to work with really important partners of ours that include, right, the dealer associations, the OEMs, etcetera. So as we scale this, we also want to make sure we take all our stakeholders along because we feel we have a very unique position in the market with TC Plus and the products we deliver. And so yeah, so we are very excited that as we make continuous progress on the product, we can start accelerating this and start accelerating this faster and faster and soon make it much more impactful because I know we have been talking about it a lot, but I think this is a huge opportunity for us. But we are now on the final legs of really improving those experiences. Marvin Fong: Great. Thanks so much, Jantoon. Operator: The next question comes from Chris Pierce from Needham. Please go ahead. Chris Pierce: Hey. Good morning. I just wanted to go back to the first question and the consultative approach. I guess I just want to understand you are sending a dealer a lead in like, where is sort of the ball being dropped, or why do you need to kind of help them massage that lead into a sale? I just I kind of always want to understand what kind of what is happening and what you are doing to kind of drive that conversion higher. Jantoon Reigersman: Oh, I mean, I should have my service team on the call because I would love to spend a couple of hours talking through this. Like, the short answer is a couple of things. One is it starts with the way you effectively position your own dealership on the marketplace. Right? So and but, like, the price curve is a great example. Right? Whether you have an excellent price or a good price or an average price of your car, making sure that you have active pricing on the platform, especially as prices change very quickly and swiftly in the marketplace, is one example of something that is very simple. Like, there are some dealers that do not really log in to the systems very often. Often as a result in a pricing changing world, their prices might become uncompetitive unknowingly to the dealer. And as a result, they might have pretty dramatic drops in their lead generation because, frankly, they are pricing themselves out of the market. Not because they do that intentionally, but because they had not logged into the system recently. As an example. So the active engagement with the tools is really important. And then also the other piece is then the way you nurture their lead. And you would be surprised to know that, like, if you are the head of sales or you are the GM of the dealership, you obviously have a lot of salespeople but you also have a lot of salespeople turnover. And so training these people and making sure that these people are really good at how they nurture these leads and what they do with them, etcetera, is something that not always happens the right way at many of the dealers. And so our trainers coming in to help their sales folks effectively get to know the best in class of how to nurture a lead, how to bring in, how to prioritize leads, like, what works and what does not work, is really important. So then added to that is, for example, those new tools that we were describing where we are even, like, now with the AI tools determining right, the propensity of a lead to close or not to close. And so now you can also start prioritizing that within the dealership and then who does what and how does that work. So there is a lot that comes to actually selling a car. And the more we help the dealers, the stickier we are and would be surprised that it is relatively low-hanging fruit for us to help them because very often, it is very simple things where if you do those things well, they have a dramatic impact on the close rates of these leads that we provide. Chris Pierce: Okay. Thanks for the detail there. Perfect. And then on TCMS, was revenue down sequentially, or is it too early to kind of gauge what is really going on there? I just kind of want to get a better understanding of, you know, that product as you roll it out. Oliver Foley: Yeah. You want to add, Oliver, do you want me to take that or you want to take it? Go ahead. Let me take a stab at it. So quarter over quarter, it was down slightly. And largely because we really focused Q4 on streamlining the offering. Right? So it is still sort of a suite of digital marketing products, but we really wanted to streamline the offering and simplify it in part because it is easier for dealers to understand and it is easier for the sales team to sort of communicate the benefits of TCMS. So we really brought in some leadership on the TrueCar Marketing Solutions side and started to sort of build out the right team on that side. So I think Q4 was really about do we strengthen our go-to-market muscle with TCMS. And let us create a stronger foundation going into Q1. And so yes, it was a sequential decline, but I think it was sort of strengthening the go-to-market muscle so that, you know, in 2025, it will be a big growth driver of ours. Chris Pierce: Okay. And is there a way to sort of quantify some sort of upper bound? Like, what are we talking about in terms of growth, whether in terms of absolute revenue or revenue growth? Like, what is the right way to think about the trajectory of this over the year, next couple of years, etcetera? Oliver Foley: On that end, I would say it is a little early to tell. We are incredibly optimistic about it just because, you know, the amount that franchise dealers spend on digital marketing off of the And, you know, is astronomical. Right? And so there is a huge addressable market there for us that allows us to capture parts of their budget that, you know, that are not going to third-party listing sites, but are going to, you know, Google or Meta. And so, you know, our belief is that it could be, you know, a very sizable component of our overall revenue. It is a little early for us to predict, you know, what percent that might be. So, hopefully, we will have a much better sense for that over the next couple of quarters. Chris Pierce: Okay. Great. I appreciate the time. Thanks. Operator: This concludes our question and answer session. I would like to turn the conference back over to Jantoon for closing remarks. Jantoon Reigersman: Great. I would like to thank everybody for taking the time to participate in our call today. I also want to thank the team for all their continued efforts. We are more focused and more disciplined than we have ever been, and so with gratitude, thank you. And look forward to the next call. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar Third Quarter 2024 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to the TrueCar's Third Quarter 2024 Earnings Conference Call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market closed and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our safe harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding our revenue growth and positive free cash flow as well as aspirational goals regarding 2026 revenue and free cash flow margin. Forward-looking statements can be identified using words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly report on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the risks that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A - Scott Tidey: However, for us to effectively innovate and carve out our role in the future of automotive retail, we must be willing to evolve the identity we have long embraced. This year along, we have launched a broad suite of digital marketing solutions for both dealers and OEMs. In this past quarter, we have become the first and only digital marketplace that enables consumers to buy a new certified preowned or used vehicle entirely online. Furthermore, we have taken steps to begin monetizing our rich proprietary data sets, recognizing the potential to unlock powerful insights for our partners and enable them increased level of personalization across the consumer buying journey. While these initiatives represent a natural extension of our unique competitive strength, they also represent the departure from the traditional role of just a third-party listing and lead gen provider. While our shareholder letter elaborates on TrueCar's unique advantages, which we are leveraging to drive near-term growth and position TrueCar for a much larger role in the future of automotive retail, I will use this call to highlight our third quarter results, which we believe demonstrate strong traction against those near-term and long-term goals. Turning now to a summary of Q3 financial and operational highlights. Total revenue in Q3 was $46.5 million, representing a 13.1% increase from the same period last year and an 11.4% increase from the prior quarter. Our Q3 net loss decreased to $5.8 million from $7.9 million in Q3 2023, and we achieved adjusted EBITDA profitability of $0.2 million. Our core franchise dealer business continued to strengthen in Q3 with franchise dealer revenue growing 12.7% year-over-year and 5.5% quarter-over-quarter. Most importantly, despite the industry's 1.3% year-over-year decline in new vehicle retail sales in Q3, TrueCar grew new sales by 16 -- new car sales by 16.3% year-over-year, driven in part by the incremental marketing investments we've made over the last 6 months. This equates to nearly 7 new unit sales per franchise dealer, which is the highest level since Q3 2021. As we have previously articulated, a key building block for achieving our long-term growth objective is to regain our share of franchise dealers through activating new dealers and minimizing churn. And in order to achieve that, we will demonstrate TrueCar's ability to capture share of total new vehicle sales by delivering strong new unit growth in excess of the overall industry growth. Another sign of the strengthening of our core franchise dealer business is the adoption of TrueCar Marketing Solution, also called TCMS., And in Q3, this relatively new product offering contributed $1 million of dealer revenue, even more encouraging with the performance being achieved by the suite of marketing products. By leveraging our first-party data to help dealers reach highly targeted audiences across a variety of channels, TrueCar is helping dealers achieve significant improvements in our marketing efficiency while growing their overall sales volume. Given that growing revenue per sales is another core building block for achieving our 2026 revenue target, PCMS is allowing us to capture a great share of wallet and drive real traction against this building block. In addition to the momentum of our franchise dealer business, our OEM business remains strong and positioned for near- and long-term growth. Despite being down 11.5% year-over-year, a decline attributed to 2 heavily marketed incentive programs during the same period last year. Q3 OEM revenue increased by 45% from the second quarter driven by strong performance over our long-standing incentive program with Stellantis that was reactivating in June with a number of our affinity partners and is now experiencing a 3-year high in terms of performance. We continue to increase the number of affinity partners and OEMs on these programs, including, for example, Detroit trading, a growing affinity partner and INEOS, an OEM with which we recently launched an incentive offering available to military members and our families through TrueCar Military, Navy Federal Credit Union and PenFed Credit Union. Remember, though, that these programs are often predefined customized and lumpy in nature with both partners and OEMs coming on and off the program at different points in time. For example, Amex is coming off the program in April after a very successful run in order to focus on their core business while we continue to enable and seek to expand similar offers to other of our prominent vicinity partners, including AAA, Navy Federal and others. Factors that impact the performance of incentive programs including -- include the incentive amounts being offered, the breadth of models, eligible for incentives and a number of type of affinity partners targeted through the program. Designing and executing these programs with our partners and OEMs is a successful, proven model and remains 1 of our core competencies and we are very excited about the continued growth prospects of the segment. Beyond OEM incentives, TrueCar signed up its first 2 OEM advertisers in Q3, marking the launch of a new advertising service to complement our incentive program capabilities and deepen our OEM partnerships. These deals were enabled by recent investments we've made to strengthen our market stack through an integrated ad server capable of running dynamic targeted advertisement across a variety of on-site placements. Priced on a fee-per-impression basis, these placements offer OEMs an effective way to drive awareness and consideration among the millions of in-market car shoppers and visit TrueCar each month. And do it in a way that is effectively integrated into the superior shopping experience that TrueCar is known for. Furthermore, the launch of ad sales represents a high-margin opportunity for TrueCar to incrementally monetize TrueCar's millions of unique visitors and opens us up to capture a share of the estimated $19 billion spent annually on digital marketing by OEMs. Now TC+. The launch of the TC+ pilot over the summer was an incredible milestone for the company. The excitement we felt that the launch was quickly eclipsed by the successful fulfillment of the first TC+ used vehicle order, followed soon by the fulfillment of the first new vehicle order. These orders were completed 100% aligned without any off-line interaction between the dealer and consumer. The significance of this cannot be overstated as it represents a new way of buying and selling a vehicle that simply puts, has not been done before. With these orders successfully fulfilled, the pilot's primary objective has been achieved, and each subsequent order has proven -- has proved new learnings and insights that are driving the refinement of both the consumer and dealer experiences. In total, approximately 30 consumers have completed the entire process online, each culminating with the digital execution of a retail installment contract. And more importantly, those orders came from consumers across 13 different states, providing strong early evidence that TC+ has been powered to significantly expand a dealer's addressable market beyond its backyard. Many more consumers have become so-called super leads. And while the total number of transactions might not seem significant at first, thus far, TrueCar+ has only been exposed to a subset of consumers within the specific flows on TrueCar of bone, but collectively account for a fraction of our audience and total monthly unit sales. In fact, over the past 30 days, TC+ accounted for roughly half of the volume that the dealer pilot traditionally generates through these flows. Suggested that when fully enabled, TC+ can account for a significant share of dealer's total revenue -- or revenue or total volume. This delivered and controlled approach to opening up to the consumer aperture and expanding the number of shoppers going through the TC+ flow has allowed the team to closely measure and monitor each step of the process for insights and opportunities that have already helped as refine and improve the product and remove friction from both the consumer and dealer experience. Now in the next phase of the pilot, we are preparing to introduce TC+ on certain affinity partner or the buying sides, which will significantly expand access to the TC+ flow and should allow TrueCar to observe key differences in consumer adoption across different diverse set of audiences. Beyond expanding consumer across these 2 TC+, our focus on objections for the pilot in Q4 include integrating AI-power tools that will strengthen our ability to detect and mitigate the risk of consumer fraud and continue to enhance our integration with our dealers back-end systems for further streamline the TC+ buying process on the dealer side. The aim for the end of the quarters for the dealer to only have to conduct 4 actions: one, update inventory and pricing; two, approve the completed deal; three, approve payments; and four, get the car ready for pickup. These first 90 days have been virtually rewarding for the validation and learnings they've offered us. As we look ahead, the team is incredibly excited and energized by the opportunity that TC+ presents. Finally, we're extremely grateful for the partnerships shown by the dealer group piloting our product and are looking forward to adding additional dealers throughout California and beyond over the next several months. Finally, and to summarize, we remain committed to the 3-year target that we set last year to grow revenue back to $300 million with a 10% free cash flow margin by the end of 2026. Achieving that goal requires strong execution against the 4 key building blocks we have discussed. And for us to continue pushing to build a better version of TrueCar that deserves to play a key role in the automotive retail ecosystem. To that end, in Q4, we aim to accelerate year-over-year revenue growth beyond this third quarter's growth, and we seek to deliver positive free cash flow in the quarter. Now operator, let's open the call for questions from our analysts. Operator: [Operator Instructions] The first question comes from Marvin Fong of BTIG. Marvin Fong: Great. Yes, just to start with on the guidance about revenue guidance. Could you give us a little more detail in terms of how you're thinking about the separate line items and how we should think about that for the fourth quarter? So specifically, I think you're now breaking out TCMS as well as wholesale and then OEM as well. Just how should we think about what that looks like in the fourth quarter? And then I have a follow-up. Jantoon Reigersman: Yes. I think I'll start. Marvin, this is Jantoon. I'll start, and then I'll have Oliver take on. I think what's most important to remember is, our main focus is obviously driving effectively our dealer revenue and especially focused obviously on the franchise side. And so as the main building block. I think on the wholesale side, I think that has been really important for us to continue to enable TC+ and oil the machine for obviously online trades to occur. But I don't think we'll grow the wholesale side significantly more from here on, and we'll probably keep that running as is until we prove much more traction on the TC+ side. And many of the other revenue lines, we see go up to the right, but we're probably unwilling to give a lot of guidance at this point in time in terms of each 1 of them specifically. It's really about the building blocks with the revenue overall and then obviously penetrating the revenue per dealer as we go back and deeper into the franchise dealer network. Oliver, I don't know whether you want to add anything. Oliver Foley: Yes. No, I think the only other thing I would add is we wanted to provide this quarter a little bit of color around what drove the increase in dealer revenue and specifically call out TCMS, which has shown some really exciting traction for us. I don't expect us to be breaking out the different components of dealer revenue more granularly than that. But I will say, I'll just reiterate what Jantoon said is wholesale is not considered a growth driver for us. It's more of an enablement component for the online transaction. TCMS, on the other hand, we do believe can be a really strong growth driver of our dealer revenue line. So that, in addition to our core franchise dealer revenue is sort of where we are really leaning into heavily to drive Q4 growth and beyond. Marvin Fong: Okay. Understood. That's all fair. And then my follow-up question, just on TC+, obviously, exciting things going on there. So you've been in 13 states. I guess can you give us an idea -- I mean, do you -- are you still working on aligning your systems with all 50 states? Or is that kind of completed? And do you feel like these are just happen to be the transactions that occurred? Just kind of maybe update us on where you feel TC+ stands in terms of being able to deal with all the paperwork on a national basis. And then just in terms of like how you're thinking about monetizing TC+, I know that's something you've kind of alluded to, but maybe you can provide us a little more detail now on how you think about what you might be able to realize in terms of monetization there? Jantoon Reigersman: Yes, absolutely. So let me spend a little bit of time on this just to make sure that I'm really clear. On the monetization side, we won't provide a lot of details now. I mean, over time, obviously, TC+ will be part of the overall subscription effectively to the dealership base, and it's one of the offerings that we want to make sure we enable for dealers in order for them to expand their radius, not only expand their radius, but also effectively cell cars when they sleep, right, sell cars and meeting the consumer to where the consumer wants to acquire cars. I, where it stands in the pilot right now, I think they just want to be super clear. So remember, we currently have one dealer group on the platform for TC+ residing in California. So that's the group in California itself. So it's a limited amount of inventory. That is in California, where we are effectively geofencing any new buyers to California. But as a used buyer, you can already buy from the rest of the country with the exception of Hawaii, Alaska, State of New York, State of Massachusetts. And so what we've already seen is that 13 of these transactions were from out of state. So those are all used cars from out of state where people were willing to ship their cars, buy them team from obviously and ship it to their own states. So that shows you clearly this notion of expanding the addressable market. The near-term focus of this quarter really is on 2 sides. One is making sure we have the full fraud detection applied within the actual online flow and it's something we're doing in short order. And that's really on the consumer journey side. So as you guys know, there's a lot of fraud that happens within the car buying market, obviously, online, that is a very big deal. And so we want to make sure we have all the latest technologies applied there that will allow us to shift through that very, very quickly and effectively limit any form of noise. And then on the dealer side, it's really important that the dealer doesn't have to do a lot of work, I, TC+. So there's no incremental work and really focus on those 4 actions that we described on the call earlier, which is around inventory and pricing update. It's around approving the final deal. And remember, the deal is still established based on the menu of the dealership. So the full profit margin effectively if the dealers are still included there. So the second one was the approval of the deal. Third one is making sure the payment that has happened or confirmation of payment that is a step that in the future will also digitize and then number 4 is get the car ready. So those are really big steps that we're making in this quarter. In the interim, we're going to add more dealers to the platform as well as expand the aperture on the top end. So, so far, we've had a fraction of the audience actually see this when you go through a particular flow, which internally we call the marketplace flow and we have not yet expanded it through our build flow in some of our other areas. And so we're doing that in parallel as well as add more inventory to the platform. So even though it face value, the number itself doesn't look very big. Actually from -- if you look at it from the way we've been conducting experiments in the way we're developing the product right now, this is a huge, huge deal and it's a real improvement, and we're actually now pushing the boundaries to opening up the different parts and also making sure that the product is in such a state. To your question on doing the paperwork, we're already being able to do the paperwork in all of those states that I mentioned before. So effectively, Continental U.S. minus State of New York, State of Massachusetts. And so we've already been doing that. So the infrastructure works, the deliveries work, all that was already in place. So this is really about the customer journey and the ability to do that well and then obviously, the tech enabling it for the dealer. So this is exciting stuff. Operator: The next question comes from Ryan Meyers of Lake Street. Ryan Meyers: First one for me. So it sounded like the wholesale business is necessarily a focus for the future of the business, but more so used here in the near term for increased dealer activation. So how should we think about maybe the impact on gross margins here over the next couple of quarters? Oliver Foley: Yes. I don't -- like we said, it's -- we don't expect wholesale as a percent of revenue to really grow in the near term beyond the level it hits in Q3. And again, the primary reason that it exists, it's less about activating dealers, but it's actually -- in order for TrueCar to enable the online transaction, we have to be able to do a few things on the wholesale front. We need to be able to digitally appraise a consumer's trade-in. We need to be able to inspect it, transport it, handle the title and registration and then ultimately, liquidate it. And so being able to really refine those capabilities in advance of scaling up TC+ is what we've been focused on over the past couple of quarters with wholesale. But I don't expect it to gross or beyond the level that it was in Q3. And so given that it has this impact on gross margins, I don't expect gross margins to continue to go down. I think the level that we hit in Q3 is sort of where I would expect it to be in Q4. Ryan Meyers: Okay. Got it. That's helpful. And then thinking about just dealer activations as a whole, it seems like that sort of year-over-year decline there is sort of starting to stabilize a little bit. It's basically flat with last year, kind of flat sequentially. So maybe what are you seeing here so far in Q4? And then how you guys are thinking about sort of the dealer activations in 2025? Oliver Foley: Yes. It's interesting. It's a very difficult metric for us to predict. And it's a little bit lumpy, right? And I would say that what we've seen is like really consistent, steady growth in franchise dealer count. But then each quarter, whether or not we're up on total dealers, it really comes down to how many indies we lose. And so we are focused on really stabilizing the indie dealer count making sure that we're supporting them with the right product and the right pricing. And so our hope is that we can really get that independent dealer count to stabilize. But where we are differentiated from other third-party listing sites is really on the way that we serve franchise dealers. And that's what we're really leaning into to drive our growth in Q4 and beyond. So that's where I would expect, I'd say, we're committed to continuing to grow steadily and hopefully see some sort of inflection in the growth of franchise dealer counts next year. And what gives us some hope that we'll see that kind of inflection is that, number one, we're driving more new unit sales per franchise dealer than we have since 2021, and that's a really important part of our strategy, which is let's capture share of the new vehicle market, let's drive more new units per franchise dealer. And in doing that will hopefully drive down churn. And then I do think that with new vehicle demand steadily increasing next year, hopefully, in part, catalyzed by better affordability either through new vehicle incentives coming from OEMs or lower interest rates. I think franchise dealers will no longer feel like they're treading water so much, but sort of get back into growth mode. And I think once that happens, we'll hopefully see this acceleration in our franchise dealer count next year. Operator: The next question comes from Rajat Gupta of JPMorgan. Rajat Gupta: Clearly, good acceleration in revenue growth in third quarter and also expecting in the fourth quarter. How should we think about the EBITDA drop-through from this acceleration in revenue? You would have expected a better drop through your -- in the third quarter. It looks like you're reiterating the free cash positive guide. So it looks like some of the incrementals likely to get better in the fourth quarter. But if you can help us think through like a framework on some of the drop-through from these initiatives would be helpful. And I have 1 quick follow-up. Oliver Foley: Yes, I think... Jantoon Reigersman: I'll take it, Oliver. So the -- I think the short answer to this is really simple is it's really important for us to continue to have positive adjusted EBITDA profitability. And also, obviously, in the near term to become positive on the free cash flow line. So -- and that's actually a personal thing. I think businesses should be free cash flow positive and there will be negative free cash flow for too long, purely for a reasonable existence of the business model itself. So adjusted EBITDA profitability is important to us. However, we also -- and I think we've mentioned this in the past, we also know that our business is very -- it can have a lot of positive impact if we deploy more on the marketing side. We have obviously been very constrained on the marketing side in the last couple of years. And we know that deploying more and we know that it has a good positive impact on the business overall. And so we're probably going to straddle somewhat the balance over the next couple of quarters where we're going to deploy more on the marketing side even if that means having slightly lower EBITDA margins, obviously, still positive. But obviously be willing to push the boundary of the business a little bit more, especially because the marketing deployments we're doing now have a broader halo effect, not just to drive units in the near term, but also really the ability to start repositioning TrueCar overall as a platform where people can also buy cars online. And so straddling that somewhat is important. We also understand that for the market, there has to be some more clarity, which is the reason why we gave the 2026 guidance of the 10% free cash flow margin because that really was for us was important to indicate, like, yes, it's a really important metric that we have our eyes on. But if you think over the next couple of quarters, adjusted EBITDA profitability is key. But most importantly, it's also just continue driving the business and effectively provide oxygen back into the business. Rajat Gupta: Got it. Got it. That's helpful color. And then just as a follow-up on the AI/ML and data monetization initiatives. Could you maybe give us a sense of the ramp curve here how quickly could we expect to see contribution from these initiatives? Any guardrails you could provide around revenue in the near term that would be helpful. Jantoon Reigersman: Yes, I think this is more a matter of like over the course of the next year, we can start seeing the contribution. This is not a matter of the next quarters. But if you think of, for example, there's being a building block within the plan towards the EUR 300 million in 2026. And this is obviously -- this is 1 of the building blocks. So we feel we have real opportunity. Now what's a little bit tricky is obviously, there are different forms of monetization and some are more obvious than others. One of them is, for example, is the OEM ad sales as one example. And it's also not just purely the monetization that becomes important here, but also utilization of these tools to create a much more personalized buying experience for the consumers or our ability, frankly, to identify the consumer and the type of consumer much earlier on in the journey which then not only allows us to personalize the buying -- the shopping journey effectively number one, but also number two, allow them to be much more targeted in approach. And this can be targeted from an OEM ad sales perspective, but it could also be targeted from becoming much more dynamic in the way you present incentives, for example, for the OEMs and things like that. And so I think the answer is if you start looking over the course of the next 4 quarters, then I think you'll start seeing real impact in growth there. But obviously, if you think over the next couple of quarters, it will be very limited. Operator: The next question comes from Chris Pierce of Needham. Chris Pierce: In the prepared remarks, did you say that -- did I hear you correctly that AmEx is cycling out as an affinity partner? Jantoon Reigersman: Yes. So indeed, so AmEx will come off in April. So they've had a hugely successful run. And they decided to really focus more on their core business, which is around travel, binding, entertainment those segments, which is obviously for us, it's always frustrating when partners come up. But remember, these are programs that are always predefined and we know are always with a finite amount of time effectively. So people cycle on and off. Yes, so they'll come off in April and the good news is that we're recently having dialogues with the right parties to actually take up some of that volume and being able to put that in different programs. So the answer is yes, unfortunate because it's a great partner, but we also fully understand given their focus. Chris Pierce: Is there a way to quantify just roughly how many extended affinity units they tend to drive a quarterly basis or on a yearly basis, the percentage of overall extended affinity units? Jantoon Reigersman: Sorry. Can you repeat the question? Chris Pierce: How should we think about what percentage of extended affinity units MX typically drives? Oliver Foley: Yes. So we -- so we provided a little bit of color in the queue, Chris, that you can find. But yes, over the last 12 months, it's been roughly about 5% of the partner units have guided and attributed to MX. Chris Pierce: So it's pretty fragmented in terms of -- there's not a lot of concentration within affinity partners or at least if the is AmEx is not overly concentrated. Okay, got it. Jantoon Reigersman: Yes. And also remember, it's a specific program, right? So we're -- like if you think about it, there's -- and then there's also what have tried to articulate in the previous remarks, which is these are programs that are relatively customized, but once they kind of click, we can deploy them in different affinity networks with different OEMs. So what's really important is the OEMs to be willing to provide incentives. And then obviously, we can deploy them across different affinity networks. And so that's really the key of it. So if one then goes away, it's not the end of the world for us because we can actually then effectively move that audience to other affinity partners. And so it's obviously an important partner for us, but the -- yes, they come and go and so for us to be able to shift it is something we can do in short order. Chris Pierce: Okay. And then just lastly, do you have any dealers that are taking only TCMS? Or like has that been a generator for you guys to get their lead gen product back into dealers that have maybe turned off during COVID? Or like how should we think about -- or is TCMS attracting different dealers? Like what's the kind of go to market for both of those products? Jantoon Reigersman: Yes. So this is -- the answer is known the first and yes on the latter. And so this is really the idea of the approach of not just being a lead generator, but really becoming a much more of a full service provider and really helping the dealers sell more cars, and that can be done in different forms. And one of the things we realized very quickly is that obviously, dealers come in many different shapes and sizes. And so there's no one glove that fits for all of them in terms of the issues they are facing and how we could potentially help them. So providing a suite of products that we can utilize is really important. But yes, in order for them to become -- to get on TCMS, they have to be on the core side as well. And that has been a good driver for us because it actually enabled much more strategic and senior conversations with a lot of these dealer groups. Operator: The next question comes from Naved Khan of B. Riley Securities. Ryan Pfingst: This is Ryan on for Naved. So first, I was wondering what you're prioritizing and doing differently to drive higher converting traffic. And then secondly, related to TrueCar channel units, what's causing the slowdown in growth? And then also like how we plan to see unit growth in the future. Jantoon Reigersman: So I'll take the first, and Oliver, you can take the second, which is -- so the traffic side really is about 2 things, right? So if you really simplify it overarching because obviously there are many things at play. But if you go back to the 30,000-foot level, it's about where do you take and grab audience from, right? And because it's very easy to pull in audience and start showing numbers or saying like, oh, I have x amount of millions of uniques every month, showing and growing uniques is not hard to do in this world. However, what is really important is to get good quality traffic already at the top funnel, and then start making product improvements that you can really convert on mid- and lower funnel. And so we've done two things. One is we've started really becoming much more sophisticated in the type of traffic we attract top of funnel and become more, yes, really think about in-market shoppers and more intent-driven, et cetera. And this is tricky because you live in an evolving world where, for example, right, Google VLA is an important piece, et cetera. And so you need to start adapting to how people are -- how you capture audience effectively as they also utilize different tools to find their cars and one is the right way of doing this for us. So that's number one. So it's really top of funnel. And then the continuous product improvements we're trying to make on the mid- and lower funnel side, vis-a-vis, conversion for people to understand where they are to understand and shift through quickly who is intent-driven and all, et cetera. And then lastly, obviously, also to then become really good at making sure that we provide leads to the dealers that they are -- now are actionable and people that are very serious and very high intent-driven. So that the dealers also don't waste time calling people or chasing people that actually have no real intent. And so working through that whole flow has been something that we do continuously. And I think these are the small signs of improvements that you'll start seeing off a lot of the product initiatives that we've been working on in the last many, many months as well as, obviously, the greater sophistication that we have on the top. Oliver Foley: And, Ryan, I'll just add. We get really excited when we see strong growth, strong unit growth from our affinity partners. And the reason is because that's unique to TrueCar, right? Those are audiences that are closed membership audiences that we're bringing to our dealers that they really don't get access to through other listings or lead gen providers. And so we're excited to see that growth. And then the only other thing I'd say is that there's actually a pretty strong correlation between marketing dollars that we spend on, call it, truecar.com and the unit growth that we see on partner, meaning if we're investing in sort of near top of funnel, more awareness-driven campaigns on the branded media side. We often see that, that correlates with a strong lift in partner units because people see the TrueCar advertising. They go to their member benefit site where they get access to exclusive discounts or incentives, and that's where they convert, and that's where the volume growth comes from. So it's not like we're spending money on marketing to truecar.com, and we're not seeing the unit growth. There is, in fact, correlation such that, that unit growth is accruing to the partner channel. Operator: Our next question comes Tom White of D.A. Davidson. Wyatt Swanson: This is Wyatt on for Tom. I'm sorry if I missed this, but with your expectation to drive accelerated top line growth in 4Q, could you maybe give some color as to your expectations for growth entering 2025? Jantoon Reigersman: Well, so the 2 March we've laid out is so accelerated growth for Q4 from obviously, where we are today. And obviously, the targets of 2026. As you've seen in the last couple of quarters and going forward, like you -- like obviously, in an ideal world, it would be perfectly linear and steady up to the right. But our business never is perfectly linear. So it's hard to make perfectly predict what our growth obviously is in the subsequent quarters, but we feel we can accelerate this business. I think we've deployed and laid the groundwork for those building blocks that we've been articulating. And so over time, accelerated growth will be a theme that I think should come back in order for us to hit our 2026 target that we've laid out. Wyatt Swanson: Okay. Got it. That make sense. And then given the election this week, we'd be curious to hear your views on how you think a Trump administration and the current balance of power in Congress might impact the automotive retail sector relative to some of the policies of the last administration. Is there anything that we should be keeping an eye on there? Jantoon Reigersman: I mean we are head down in our business. We work like tirelessly to help our dealer network and for them to sell more cars and for consumers have a really kick-off experience, both walking into the dealership as well as online. And so it's hard to predict what any change in administration has as an impact on the industry overall. What we do know is that obviously, for the automotive at the moment, like 1 of the constraints there is, is the affordability notion. And so right, affordability adjustments will be beneficial. But overarching, I think it's really hard for us to comment nor is it our players. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Jantoon for closing remarks. Jantoon Reigersman: Thank you. I would like to thank everybody for taking the time to participate in our call today. With gratitude, thank you. And I think it's important to note that our dealers need us. We have strong OEM and TCMS programs in place. We're sitting on a trove of undermonetized data and we have proven to be able to ship successful new products, including being the first and only marketplace to buy new CPO and used cars online. So we're excited about the future. We've regained our momentum and we're moving steadily and consistently up to the right. So we'll close with the words that I love to say, to infinity and beyond. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day and welcome to the TrueCar Second Quarter 2024 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to the TrueCar’s second quarter 2024 earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you have all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our investor relations website at ir.truecar.com. Before we get started, I need to read our usual safe harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding our revenue growth, expected free cash flow margin, as well as our aspirational goals for the year 2026. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident, and similar expressions, and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the risk factor section of our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our other reports and filings with the Security and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today’s date, and we disclaim any obligation to update any further forward-looking statements except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the investor relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. So now to the fun [ph] part. With that, I’ll provide a summary of the quarter as highlighted in our shareholder letter. Given the broader market developments, I’m assuming not everybody has read the letter yet, so I will repeat some paragraphs below, as well as add some more color and exciting statistics on our TC+ initiatives before opening for questions. As we review the results of our second quarter performance, we have taken the opportunity to reflect on our existing – exciting long-term goals for TrueCar and the progress we are making towards our targets. We have established ambitious goals for our organization, and we remain steadfast in our commitment to achieving them. This does not happen overnight, and we will encounter inevitable operational challenges on our journey, but we believe we are making the right progress and forming the right habits while pursuing the right priorities to achieve our strategic and financial goals. This is a super exciting time for the company. In Q2, total revenue was $41.8 million, which represents growth of 6.4% year-over-year and 1.8% quarter-over-quarter. We achieved adjusted EBITDA profitability of $0.1 million, a $5.4 million improvement year-over-year. We estimate that the CDK Global malware attack contributed to approximately 750,000 of lost revenue during the quarter, details of which can be found in the shareholder letter. First, we want to acknowledge some super important progress that was made during the quarter and to date in Q3. On July 17, we proudly announced the launch of our TrueCar+ pilot, which now empowers consumers for the first time to purchase from over 3,000 new, used, and certified pre-owned vehicles from start to finish completely online. Launching TC+ is a big deal and a huge accomplishment by the team. Furthermore, we are not only strengthening our core business by regaining important dealers on our platform but we are working to commercialize new value drivers including, but not limited to, our unique data set and predictive AI capabilities, our newly designed marketing tech stack and, of course, TC+. In doing so, we are becoming a better version of TrueCar that more effectively addresses the evolving needs of consumers, dealers and OEMs alike, positioning the business for what we believe will be a sustained period of growth and market share gains. There were a number of factors that temporarily limited growth in Q2, one of which was the broad impact of the CDK Global malware attack. We are laser focused on our own execution in order to grow the business at our long-term revenue growth target of 20% plus. As discussed in the past, there are four key building blocks we must successfully execute against in order to achieve our desired long-term growth. One, activate new dealers with a focus on regaining many of the franchise dealers a churn while new vehicle supply was constrained. Two, reduce dealer churn by doubling down on our commitment to help them drive incremental sales and by providing them with unmatched support and service. Three, continue to grow average revenue per dealer through our TrueCar Marketing Solutions product offering and eventually through TC+. And four, grow revenue from our OEM business by expanding our OEM partnerships and continuing to invest in highly effective incentive programs across our network of affinity partners. The building blocks we have set forth to meet our targets remain unchanged, as do our long-term goals and we are not wavering on our goal to return to $300 million in revenue by 2026. During Q2, we expanded our franchise and independent dealer network thanks to strong growth in new dealer activations. Moreover, we are now entering a market environment that is much different versus recent years. Our business model has been constrained by the lack of new vehicle supply, but that is now changing. Vehicle supply is returning at a time when demand is patchy. This is a very positive backdrop for TrueCar. To be clear, there may still be some choppiness in the short term as some dealers look for cost savings measures, however, it is imperative for every dealer that they continue to drive sales. In a more challenging sales environment, TrueCar becomes much more valuable as a superior demand generation partner that can drive incremental sales. TrueCar is counter-cycle in this way and therefore it is time for us to lean in. We started to do this in Q2, growing marketing spend by $3.2 million or 24% quarter-over-quarter, which contributed to 19.5% quarter-over-quarter growth in new vehicle sales versus 8.9% industry wide and 9% growth versus the same quarter last year compared to flat industry wide. We believe we have a unique ability to power targeted OEM incentive programs across our affinity network, and we are poised to capitalize on this ability. The rise in new vehicle inventory levels, combined with the growing price sensitivity of consumers has created a challenge for many OEMs that TrueCar is uniquely positioned to solve through the delivery of private targeted offers across our network of 300 plus Affinity Partners. Nevertheless, our Q2 OEM incentive revenue declined 14% year-over-year and 37% sequentially due to the timing of activation of new OEM programs and the slowdown in new vehicle sales, volumes among dealers impacted by the CDK global outage. We see this as a timing issue only. We have a strong pipeline of opportunities and the revenue trajectory will predominantly be driven by the timing of activity activations. We remain confident in the growth profile of this part of our business, particularly given the fact that although incentives have grown substantially versus last year as a percentage of manufacturer’s suggested retail price, the average incentive amount per vehicle remains more than 30% below pre pandemic levels and we are uniquely positioned with a proven product market fit. During Q2, we also achieved some of our highest levels of revenue activation and upgrades, largely driven by strong growth in the on-boarding of new franchise dealers and reactivation of dealers that had previously left our network. Despite this growth being partially offset by dealer cancellations, we saw strong improvement across our sales effectiveness metrics during Q, which we attribute to the sales team reorganization/realignment that began in the second half of 2023, as well as our commitments to the focused repetition of daily sales activities that we expect will allow us to grow our dealer counts over the next few years. Another bright spot in our Q2 performance was the rate of adoption we saw of our suite of TCMS products. Recall that during Q1, we introduced eight unique products that leverage TrueCars proprietary data and hyper targeted audiences to help dealers more effectively reach and win in-market car [indiscernible]. For most of Q2, these products were available for dealers as add-ons to their existing subscriptions, and during that time, we have quickly grown revenue from these products from zero to a 1 million quarterly run rate, with a tremendous amount of opportunity to grow further. Moreover, during June, we incorporated certain TCMS products into our enhanced subscription offering, and over the subsequent weeks, we have observed a significant lift in the adoption rate of the enhanced bundle among new dealers, as well as the number of existing dealers choosing to upgrade their subscription. Looking beyond Q2 and turning now to TC+. Despite being delayed by the disruption caused by the CDK cyberattacks, we proudly announced the TC+ by the launch on July 17th. The launch represents a key milestone in our pursuit to become the first digital marketplace where consumers can buy a new certified, pre-owned or used car with or without a trade from the comfort of their couch through an entirely digital online transaction. By partnering with the right dealer group, whose vision for the future of automotive retail is closely aligned with our own, we developed an online car buying experience that is integrated with the dealers back end systems to overcome the historical obstacles to an entirely online transaction. Initially spanning 10 new car brands with over 3000 new certified ground and used vehicles in stock, consumers seeking the convenience and flexibility of shopping from home can search for the right car that is competitively priced, secure, and loan from a range of lenders, receive a binding value for their trade in that gets applied to their new purchase, choose from an extension – extensive selection of compatible accessories, warranties, maintenance packages, and production products, and schedule the delivery of their new vehicle all on TrueCar's website. While used vehicles are currently available for delivery anywhere throughout the continuous United States, excluding Massachusetts and New York, delivery of new vehicles will initially only be available to consumers in California for the foreseeable future. Over the next several months, the pilot will enable us to validate and refine the technical solutions we have developed to address each stage of the consumer purchasing process, test and develop additional ways to eliminate friction from the consumer experience and identify and solve any dealer pain points that might emerge. Moreover, we aim to demonstrate strong consumer adoption of the online capabilities on TC+ eligible vehicles and the value we can deliver to dealers through sales efficiencies and expanding their addressable market. Even though we've gradually turned the service on since July 17th, the new car service has only been available since last Thursday, August 1 in the entirety of California. Within this brief period, we have already seen some cool statistics, including first new car order placed within 48 hours of launching the product, conversion from vehicle detail page, adding to cart to credit application submission of over 40%. 12 orders placed with orders placed in this [indiscernible] TC+ being defined as a consumer selecting a vehicle and a price, accepting a 350 credit card hold or lender offer and uploading all the necessary documents. This is a big deal and we have yet to open the proper top of funnel aperture for marketing, which we plan to do over the next several weeks. And yes, the COVID page of the shareholder letter is an actual picture of a billboard between Silicon Valley and San Francisco. I put here a smiley face, which you guys cannot see, but it has like big white teeth, it's really cool. Finally, we remain committed to the three-year target that we previously set to grow revenue back to $300 million with a 10% free cash flow margin by the end of 2026. Achieving that goal requires strong execution against the four key building blocks we have articulated and for us to continue pushing to build a better version of TrueCar that deserves to play a key role in the automotive retail ecosystem. While the path to 300 million will not be linear and will be subject to risks outside of our control, we are confident that the ultimate outcome will be achieved. Meanwhile, our balance sheet remains strong with no debt and approximately $180 million of cash in equivalent at the end of Q two. We repurchased 425,000 shares for $1.2 million during Q2 and have subsequently repurchased an additional 1.26 million shares for $4.5 million between July 1 and last Friday. Despite the broader market turbulence, this is an exciting time at the company and we are pressing full steam ahead. Now operator, let's open the call for questions from our analysts. Operator: The line-up for Rajat Gupta, JPMorgan. Please go ahead. Please, go ahead. Rajat Gupta: Great. Thanks for taking the question. You mentioned you had the highest level of revenue activations and upgrades in the second quarter. Could you elaborate a little bit more on the drivers here? Is it more company specific adoption that you saw or just more industry trends that you see in the broader marketplace industry? And then if you could quantify in terms of what this means for the monthly revenue per dealer going forward? And have a couple quick follow ups. Thanks. Jantoon Reigersman: Yes. I'll start and then Oliver can talk about the monthly dealer – monthly revenue per dealer. So the short version is, I think, as we tried to highlight also in both the letter and the script is the idea that macro is generally changing. And so it's changing because inventory is building up, it's changing because there is a lot of pent up demand. But affordability is a real issue. And so, therefore, really focusing on unit sales is really important. And you focus on unit sales and help your dealers, not only by actually helping them sell cars, but also the ancillary products that effectively enable them to sell even more cars, whether they're in market shoppers or conquesting customers, et cetera. So it's really about the package that I think is working in a world where our dealers are getting more and more under pressure. And number one, so there's a macro component, and then number two is also, I think, our sales team and our field team are doing a tremendous job after our restructuring to also present themselves slightly different and articulate the value of TrueCar, also slightly different. So it's a combination of those two factors that under the leadership of Lisa are doing a tremendous job. And then, Oliver, I don't know whether you want to say something about the revenue. Oliver Foley: I would just add that it's amazing to see since we launched the TrueCar Marketing Solutions product suite, that's given us and the field sales team the opportunity to get in front of dealers who've known TrueCar for a long time, but they knew the call it the older version of TrueCar, that was purely a lead gen provider, right. And so now that we have a much more expansive product offering, and we can address sort of today's dealer challenges, not just the ones of the past, we've been able to get in front of even more sort of large enterprise and strategic accounts and really present to them this new product offering that we have. And so I think it's a combination of the sales team really sort of hitting their stride and be much more effective sort of in developing a strong pipeline and closing those opportunities. But I also want to sort of say that the TrueCar Marketing Solutions products have really sort of opened the door for us to get in front of more dealers and get them excited about what we're doing. Rajat Gupta: Understood. Understood. That's helpful. And then just maybe like more near-term, obviously, the OEM incentives revenue, it's going to be lumpy. You mentioned some optimism that it's going to pick up in the second half. I was curious like, we were like a few weeks into the third quarter. Could you update us on like what you've seen so far in the third quarter? And then coming out of the CDK hack, is there any boundaries that you can give us around revenue or EBITDA as well for third quarter overall? Thanks. Jantoon Reigersman: No. Yes. So I think the first on the OEM side, I think the OEMs, if you look the pressure on the OEMs is increasing every quarter and the dealers are asking them for help initially, starting a little bit more cautious. They might not make the incentive stackable or they might provide certain limitations and then realize that actually they should take away these restrictions. And so there's both a combination of activations as well as the design and the type of programs. And the short answer to your question is yes, we're both from what we've already seen in Q3, we've seen that obviously there is activation, there's engagement, et cetera. So we're positive and bullish on that segment overall. And then, sorry. And then your question on CDK was I think that the risk of CDK for us has really been limited to the last part of Q2. At end of the day, we don't think everything is back online. And so the reality is like sales matching happens accordingly again. And so there's really no risk that deals have been done pen and paper without any form of sales matching going forward. There's always like never be surprised about some of the unexpected, but overarching, I think the risk is fairly limited in Q3 and it's really limited to the boundary of Q2, as we've outlined in the letter. So, I think there's no – we should not expect any further issues with that. Rajat Gupta: Any kind of like guidance framework for the financials, for the company for third quarter? Jantoon Reigersman: Yes. I mean, yes, absolutely. I mean, thank you for the question. And you're the question come in some shape or form? I mean, look, as you can imagine, like I'm always a little bit reluctant to guide because of the way the business runs and we write great examples, a little bit of this lumpiness of OEM. We're super excited about the opportunity. We're doing all the right things. Activations will happen, you'll start seeing that and in the long-term, you'll see tremendous growth there. In terms of guidance, I would say we've indicated in the past that we're aiming to achieve free cash flow breakeven by the end of the year, right. There might be some give and take there, but it's still an aim we have. Okay, so just want to. Now, if we miss a little bit here, it's not the end of the world, but it's really the focus of. I want to make sure that everybody knows that this company is really self sustainable. And I feel that free cash flow is the right measure vis-à-vis adjusted EBITDA. And then obviously, for us to hit our three year plan, we need to start accelerating our revenue growth, okay. And this really starts with consistently achieving double digit year-over-year growth and then obviously accelerating to beyond our long-term target of 20-plus. And so if you work backwards from the 2026, we feel we can actually make that happen. It obviously does mean that we need to start accelerating. Double digit is a focus, then obviously go beyond that. We're confident in the building blocks, we see the fruit of the labor come through, and there's still plenty of room of improvement in the various areas that we have. But overall market conditions for both consumer demand and dealer sentiment are in our favor and turning more and more in our favor every day. So we're very bullish. Rajat Gupta: Got it. Great. Thank you. I'll get back in queue. Operator: Next question comes from the line of Naved Khan, B. Riley Securities. Please go ahead. Naved Khan: Yes. Hi. Thanks a lot. Just a couple of questions from me. So maybe just on, the direct channel you did increase the advertising spend, but we didn't see that reflected in terms of unit growth in the direct channel. And I assume there's a lag effect, right, because you spend on marketing doesn't maybe, unless its performance, it might take time to kind of show up. So maybe just, talk about how should we think about the direct channel in the back half at least. How are you thinking about it? And also maybe advertising spend in the back half, if that should go up year-on-year or sequentially how should we think about that? And then I have a follow up. Thanks. Oliver Foley: Yes. Jantoon Reigersman: Go ahead, Oliver, go first. I'll go after. Oliver Foley: Okay. Yes. So I would say that as we've articulated, we think probably the number one lever for us to drive down dealer cancellations and really sort of strengthen the health of our dealer network is bye driving incremental sales. And so what we're focused on doing is sort of capturing share of consumer demand each quarter. And I think we achieved that in Q2. We did spend more money on both sort of branded media spend to the truecar.com channel, but also we spent more marketing dollars across the partner network, where we historically we've had greater efficiency on that spend. But it is important that we are focused on both the direct channel truecar.com and the partner network. And I would argue that we saw some pretty encouraging signs even with the spend that we put towards truecar.com. I would say that the CDK impact in the last 12 days of the quarter certainly didn't help our unit count. And I think absent – like we would have seen a higher TCDC [ph] unit count and a lower cost per sale. There's also some of that spend that's more longer term, isn't necessarily bottom of funnel going to convert into unit sales immediately. But if you look at the big picture, we increased marketing spend and we accomplished our objective, which was to grow unit sales. And so we managed to grow new unit sales sort of well above sort of the average year-over-year volume growth across public franchise dealers. And so that's what we set out to do. And I think what we'll continue to spend fairly aggressively on consumer acquisition because ultimately that's going to be what helps us keep dealers on the platform, what attracts new dealers to our platform. But we'll always look to do that as efficiently as possible. Naved Khan: Okay. And I'm just trying to sort of understand the growth that we had kind of expected versus where you reported. And obviously this CDK hack is kind of part of that. But if I just kind of look at the numbers, right, so maybe that had like a 200 basis point effect on your top line versus maybe like a 13%, I think kind of alluded to you could achieve. So just trying to sort of unpack what the differential could be. Is it like a delayed spending on the incentive side or something else? Just help us understand that. Jantoon Reigersman: Yes. I think the biggest impact is just the delay in activations on the OEM side, right. So it's a little bit hard to really predict the timeline. And these are obviously number one, often higher high impact dollars. So these are high amounts as well as high flow through dollars. And so it's really just a timing issue more than anything else. Naved Khan: Okay, maybe last question just for the full year [Technical Difficulty] Jantoon Reigersman: …Q4. Naved Khan: Okay, thank you guys. Operator: Next question comes from the line if Chris Pierce, Needham. Please go ahead. Chris Pierce: Hey, good morning guys. How are you doing? Can you just talk about the sequential decline in gross margins a little bit kind of, and how to think about that gross margin path for the rest of the year? Oliver Foley: Yes. The sequential decline in gross margins is really attributed to the expanded TrueCar wholesale solutions product offering. So historically, we've always had this sell your car lead model where we would connect our dealer partners with consumers looking to sell their car. That is a much higher flow through versus the sort of profile offer model that we've launched earlier this year, whereby we are sort of acquiring vehicles directly from consumers on behalf of our dealers and ultimately selling those vehicles to our dealers. So lower margin profile. And what we saw in Q2 is that the expenses associated with acquiring those vehicles from consumers is what pulled down the gross margin sequentially. Jantoon Reigersman: I want to add one thing that I think is really important, and you'll hear me reiterate this probably multiple times over the next couple of quarters, which is really the wholesale side is an enabler to TrueCar+ and I think that should not be overlooked. So in a world where the TrueCar+ flow is an online flow, where you obviously want to provide a committed value on the trade as well, and you want to enable the trade to flow fluidly through not only the consumer experience, but also through the dealer experience, because not every dealer will want to have that trade, right. So you want to be able to offset that trade immediately out back into the market. It's really about enabling TrueCar+ scalability. And so the wholesale side is really drive – the major driver of that is that, and obviously that's already proving its worth. So I just want to make sure that people are fully aware that that's an important part of component on that. Chris Pierce: Can you kind of just go into the specifics, like, is it holding inventory or certain dealers not wanting certain cars and the value, or how should we think about that going forward? Jantoon Reigersman: Yes. So if you think about it, so there are two pieces, right? And one will just take more time, and the other one is more near-term. So you want to have, so the near-term is you want to have a solution that if somebody trades their car as part of TrueCar+ you can actually give a real value. It gets baked into the deal. The dealer who sells the car grounds the car, but then has the option to keep the car or not, right. It's not up to the dealer. They don’t – shouldn’t have to take the car, especially not if the trade happens across the country or right, it’s not within their desired vehicles, et cetera. So we want to decouple the trade from the actual selling of the initial car. And so by decoupling that, you want to effectively then create a marketplace. Now, there’s an added component to that, which obviously, as we were working through that flow, is that it turns out that a lot of our dealers would love to have access to use inventory. So now you have a win-win, which is obviously great. We can solve the flow on TrueCar+, and then over time, as these volumes start increasing, also start having dealers effectively participate in the ability to get access to those inventories, as the grounding dealer doesn’t want to have the car. And so – which is also, because if we can do that over time, then obviously you effectively enable a very attractive wholesale side of the business. But the reason why you won’t see like dramatic growth on the wholesale side overnight, and we want to make sure we do this in a very structured manner, is really initially to support the TrueCar+ growth trajectory. And then over time, we can expand that as we have more and more dealers on the wholesale network effectively. Does that make sense? Chris Pierce: Okay. Yes. Yes. And then just one on TrueCar+, when you guys initially rolled out, was it, do I have it correctly it was based in the southeast, but now it’s California dealer based? Or can you talk about the dealer base and kind of how that’s been shifting or kind of geographically why you decided to start in California? Jantoon Reigersman: Yes. So if you go back, so, like, if you think of TrueCar+ 1.0, right, it was never really a full online transaction. It was always a form of super lead. And if you think about the broader market, that’s effectively what most solutions are, that people are claiming to be an online transaction. That’s really not the case. I don’t want to be harsh on the industry, but unfortunately, I think there’s a lot of snake oil. In the – so in order to actually enable a transaction online to take place where everything happens online and you sign a rick [ph] online and you do the fulfillment, et cetera, you want to narrow it effectively to, okay, what’s the market you can focus on initially, where you have the in-market consumers that are attractive to online shopping, as well as the dealers that are progressive and willing and able to work with us on creating this flow. So although we originally launched the first version in Florida because there was a high demand there. We learned a lot from that, but that was really effectively a form of a super lead. This is the actual transaction forum. We launched it in California, really because we have a fantastic dealer group who we’re working with in California, but also because we want to, in the new case, you want to kind of be state specific initially in order to avoid any conflicts around DMAs, and be respectful to other dealers to the franchise laws to be respectful to the OEMs, et cetera. And so this is really about proving it out, showing that this is worth. What’s fun and exciting is that you have all the different stakeholders looking at this saying, well, this is cool. But right like let’s make sure we don’t rattle the system too much and really focus on the DMAs, be within the DMA in the states that the dealers are in for new. We can do this obviously more broadly for used. And then as we go and skill this, we can obviously start scaling more inventory within the state and then start adding other states as well. This also allows for an easier product development cycle because it allows for a more confined problem set to solve. So at the moment, new, you can buy within California, the whole of California used, you can obviously buy within the United States, minus Hawaii, Alaska, Massachusetts, New York. Chris Pierce: Okay, thank you. Operator: Next question comes from the line of Tom White, D.A. Davidson. Please go ahead. Tom White: Great. Thanks. Jantoon, you touched on new car supply kind of ramping up broadly across the industry and how that’s an important new kind of industry development that should benefit you guys, I guess, as long as demand – consumer demand hangs in there. But did I hear you right? You also sort of mentioned that kind of in the face of that, some dealers might, I guess, look to like trim operating expenses are overhead first before maybe leaning into new demand channels to kind of try and move that supply off their lots. I was hoping you could just kind of provide a little bit more kind of detail on that. Just curious, like, are you hearing that broadly from dealers? Like where are they cutting? And I guess what gives you confidence that marketing expense isn’t something they’ll cut and is something eventually they’ll lean into? Thank you. Jantoon Reigersman: Yes. Great question. So the short answer is yes, so obviously, inventory is building up. And so as you can imagine, floor financing right and expenses for dealers is high. And so sales efficiency is really important for them. And obviously in nervousness that if rates like, if affordability stays where it is, then yes, there’s a lot of pent-up demand. But pent-up demand doesn’t really help the dealer because they obviously need to be selling cars. And so if you look forward, I think more broadly, the dealers are somewhat nervous right because at the end of the day, they’re realizing that prices will probably come down, right, like it will effectively almost start resetting a little bit similar to what it was pre pandemic. So they’re going to get margin squeeze right if the prices and when prices come down. They have issues around demand and affordability, and then right, they have high floor financing costs, et cetera. So altogether, obviously, they’re very mindful of the P&L, especially of the P&L, that they’ve obviously been able to have very efficient P&Ls in the recent times. And that now obviously starts getting under pressure. And so there’s a lot of consideration around, again, how to be efficient as a dealership. But this is exactly where I actually think we play really well. And this is also what I try to allude to earlier when I made the comment about the field team is that the engagement we are doing with dealers is very different in the past, right. This is not about walking into a dealership saying, hey, I’m going to send you more leads. This is really about understanding the problem sets that different dealers cope with. And so – and a dealer in Wyoming has a different – very different dealer, the problem set than the dealer in LA versus New York. And so this is really about how can we help the dealers, not only by servicing them well, but providing the right insights and certain, and training, et cetera, but also having a much more broader product suite that actually allows us to custom those programs much more to these dealers. So in many ways, a little bit of a harsher environment for our dealers, and I hate to say it, because obviously they’re our customers, is not – is actually to our benefit, because it then means that, yes, they’re going to have a greater scrutiny. But I think under scrutiny, we actually perform better because we obviously have good results. And so – but yes, overarching, I think if you were to pull the testament of dealers, there’s a level of nervousness over the future if affordability doesn’t come down relatively quickly or if OEMs are not stepping in and helping support close that gap of affordability. Tom White: Got it. Thank you. That’s very interesting. Appreciate it. Operator: Next question comes from the line of Marvin Fong, BTIG. Please go ahead. Marvin Fong: Good morning. Thanks for taking my questions. So maybe a multi part one on the launch of TC+, but I know it sounds like it’s only been live for less than a week here. But for the 12 orders you referenced, did everything kind of go as plan? Did you hit any snags? And also, just as you talked about, starting to scale this in the fourth quarter of the year, is that sort of like a firm timeline, or is that kind of dependent on, like, how the transaction volumes in the pilot phase go? Any color there would be great. And then I have a follow-up. Jantoon Reigersman: Yes. Awesome. So I always need to be careful how I answer that question, given, like the – like if you ask the product folks, nothing goes as planned. If you ask me, everything goes as planned. So I think the answer is no, it’s – I think we’re learning a ton. I think we’re getting a lot of feedback, which is really good. I think you that the real thing is that fundamentally the flow is a really good flow. I think what’s really interesting is once you actually open it up and have some real consumers go through that are not like friends and family and like people that are somewhat adjacent, right, which is really what we’ve been doing, you immediately start seeing the little things where you might have a bias or you might not have thought about it or something is unclear. What we do know is, look, we knew we could have further improved the product, and you can effectively, eternally improve the product, but we knew we wanted to be out there. We know we can shorten the steps dramatically in the flow. And we also know that language is really key in terms of understanding right, car buying is not something that most people do every day. So, yes, we’re learning a lot. And then you’re also learning a lot of nuances, right. Somebody who wants like – wants to have a financing and has three jobs, and so suddenly you need to upload pay stubs. But we only had one opportunity to upload your pay stub [ph] not three right or three simultaneously. Then how do you like put that together or right, even the interactions with lenders, et cetera. So net-net is yes, we’re learning a tremendous amount. And the teams have been picking this up really, really well. We have daily hobbles together. We turn like immediate problems that evening. So yes – so I think this is exactly where we wanted to be. I would love to start scaling this, right. We initially had this open at a limited distance from the dealers. We then gradually opened it further. As of last Thursday, we were open in California for new. You also start seeing very different behaviors amongst the different credit profiles, right. Remember that historically we were talking and at some point you will start hearing me talk about that again around these cohorts, right. So the convenience cohort and like EV cohort, et cetera. So each of those have very different behaviors as they go online. We are observing very similar behaviors to the past as well. And so, yes, so there’s just a tremendous learning that will come from it. We’re obviously looking to scale this. We’re initially focused on the new side really on California. The first thing we need to do is obviously start adding more inventory to that. Well, I should rephrase that. We should first need to make sure that the product is fluid and that right, like all the tiny hiccups and kinks are worked out so that it’s as automated as can be also for the dealer as well as for the consumer. Once we have that more on the control, start adding inventory to that, because obviously the matching of demand and supply is a key component around that. And then we can start thinking about doing this also in other states. And so really, they are in these different segments. Remember though, I'll just remind everybody that we don't charge for TC+, so don't expect any like revenue from that within this year. It's really about proving it, and it's proving it not only to the dealers, it's really proving into the wider stakeholders. It's proving into lenders, proving it to OEMs, it's proving into dealers. A lot of people are looking at what we're doing and how we're doing it. So this is really exciting. And clearly, people are resonating well with the product. So yes, scale it initially, product focused, then California focused, then outside of California, other states. Marvin Fong: Awesomeness. That's terrific color. And then just following up on Chris' questions about the new kind of wholesale profile. So can you just confirm, I mean, is there any holding period risk? I mean, wholesale prices or vehicle prices would have moved very sharply, yes… Jantoon Reigersman: Yes, very good question. The answer is – I mean, minimal is the short answer. And so really, the idea is – we – it's not us wanting to become like a wholesaler or it's not us wanting to arbitrage the market or things like that. That's not what we're good at. This is really focused on initially enabling – having the infrastructure in place to enable TC+ growth from a trade-in perspective. And then as a positive side effect of that is we have a lot of customers asking for inventory. So great. So then all the inventory that flows out of the TC+ trade-ins, then obviously, we can obviously offset to these customers, and then it's a win-win for everybody. But the idea really is no, we don't want to take any inventory risk. We don't want to hold any inventory. That's not our business, and it's not really enough. You have to in terms of paper holding because you technically are holding inventory for a very short period of time as you transit the paperwork because there's no other way, but it's really to just enable TC+ flow. And obviously, it helps our dealer network to have access to inventory. But so yes, so I would not assume any inventory risk from our side, and we're not arbitraging any of these prices. So we're pretty much dealing at one price that we already have pretty much fixed on the back end. Marvin Fong: Okay. Got it. Thanks so much, Jantoon. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Jantoon for closing remarks. Jantoon Reigersman: Great. Awesome. I would like to thank everybody for taking the time to participate on our call today. I also want to thank the team for all their herculean efforts. We have many exciting initiatives in the works, and the evolving team culture is a testament to all the right changes we have made. We keep making progress with gratitude to the team. Thank you. And as I like to close off a lot of our letters to infinity and beyond. Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar First Quarter 2024 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to TrueCar's First Quarter 2024 Earnings Conference Call. Joining me today is the awesome Oliver Foley, our Chief Financial Officer. I hope you have all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our safe harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding our revenue growth, expected adjusted EBITDA, as well as our aspirational goals regarding our 3-year plan. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions, and are not, and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q, and other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any further forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, we get to the exciting part. I will provide a summary of the quarter as highlighted in our shareholder letter. In Q1, we continued to deliver. We delivered double-digit revenue growth year-over-year and achieved positive adjusted EBITDA. Q1 revenue grew 11% year-over-year, driven by growth in our core dealer business and the continued strength of OEM incentive revenue. We achieved adjusted EBITDA profitability of $0.9 million, a $12.3 million improvement year-over-year. Moreover, the supportive macro trends that we highlighted in the previous quarter, namely the normalization of new vehicle inventory and average day supply have continued their upward trajectory in Q1, reinforcing that franchise dealers increasingly need access to TrueCar's robust audience of new car shoppers. In Q1, those shoppers drove strong new car sales across two car franchise dealers who collectively saw a 7.3% year-over-year increase in new vehicle units, outperforming the industry's 4.9% year-over-year growth in new vehicle sales. During Q1, we announced the expansion of our dealer product offering with the launch of TrueCar Market Solutions, TCMS. TCMS is a suite of eight distinct products that leverage TrueCar's extensive proprietary data and hyper-targeted audience to help dealers more effectively reach and win in-market shoppers. During the 2 months since launching TCMS, we have been encouraged by the over 350 dealers that have added one or more TCMS products to their existing subscriptions, and even more encouraged by the early indicators of the incremental value those products are delivering to them. We are actively working to bundle many of these TCMS products into our subscription offerings to accelerate adoption and drive additional value to our dealers while growing average revenue per dealer. As we expressed in our last letter, we remain steadfast in our pursuit to become the first digital marketplace where consumers can buy a new certified preowned or used car, with or without a trade in, from the comfort of their couch through an entirely digital online transaction. Moreover, we stated our goal of completing the first end-to-end digital transaction for the purchase of a new car in the first half of this year and have been hard at working at work, solving the myriad of complexities that historically could only be solved through human intervention, at one or more steps of the transaction. Thankfully, through productive collaboration with a forward-thinking dealer group, rich engagement with key stakeholders, including OEMs, and DMS providers and the learnings gained over the last 2 years. We plan to launch a TC+ pilot later this quarter that finally offers TrueCar shoppers the ability to transact entirely online. We expect that the pilot will launch with hundreds of used vehicles available to be purchased online by consumers nationwide, and thousands of new vehicles across various brands available to be purchased online by consumers residing in California. In addition, only vehicle trade-ins will be -- sorry, online vehicle trade-ins will be supported at launch, and consumers will have the option to secure financing from most lenders inclusive of most OEMs captive financing arms. We anticipate running the pilot through the end of Q3, in order to incorporate and test key learnings, while in parallel, we complete the development of certain key components that would enable us to quickly expand the scope of dealers and geographies throughout Q4. The objective of the pilot is to validate and refine. One, the technical solutions we have developed to eliminate the need for human interaction across the consumer purchasing process, from selecting the right vehicle to executing the binding retail installment contract. Two, the extent to which a true digital transaction effectively integrated into a dealer's back-end system can unlock significant sales efficiencies for the dealer. Three, the mechanism we have developed in the consumer flow to maximize the attachment rate on the dealer's F&I products. And four, the process we have developed to digitally establish a competitive and accurate binding value for consumers trade in, that gets incorporated into the deal while mitigating the dealer's risk through backstop to the value. Achievement of these objectives will mark a critical milestone on our path to product market fit for TC+ and allow us to initiate the steps required to begin scaling TC+ more broadly in Q4 2024. To that end, as we've articulated before, our objective is not only to directly monetize TC+ in 2024, but to instead demonstrate the value it can drive for the ecosystem broadly. For dealers, we intend to demonstrate how TC+ expands their addressable market, allowing them to win consumers they would otherwise never reach while driving sales efficiencies that grows their bottom line. For consumers, we seek to demonstrate that car buying can, in fact, be done from their couche, whether new, certified, preowned or used. For OEMs, we aim to demonstrate that brand loyalty grows and consumers are no longer constrained by shopping inventory in their backyard, but can instead shop for the best deals on a car they want regardless of where it is. In sum, we believe that by demonstrating these core value propositions, we can create a powerful flywheel that will fuel the growth of TC+ in 2025 and beyond and unlock new and powerful monetization opportunities for TrueCar. Back to our core business and our outlook for the near terms. We believe that the strength of our core business will help to maximize the success of TC+. And as such, we're intently continue to focus on the following four building blocks to drive near-term growth. One, continue to activate new dealers with a focus on regaining many of the franchise dealers that left the platform when new vehicle inventory was constrained. Two, reduce dealer churn by doubling down on our commitment to help them drive incremental sales and providing them with unmatched support and service. Three, continue to grow average revenue per dealer through TCMS product offering; and four, grow OEM revenue by expanding our OEM partnerships and continue to invest in highly effective incentive programs across our network of affinity partners. Execution against these four building blocks provides us with the path to achieving our goal of returning the business to $300 million in revenue and a 10% free cash flow margin by the end of 2026. To that end, we aim to grow Q2 revenue by 13% year-over-year, while maintaining an adjusted EBITDA target of breakeven. The primary reason for the lower revenue flow-through quarter-over-quarter is our belief that the continued rise in new vehicle inventory day supply and OEM incentives represents an opportunity to profitably increase marketing spend in the quarter and capture a greater share of new vehicle shoppers for our franchise dealer network. Given our operating leverage, we believe that by spending a greater share of revenue on paid marketing in Q2, while conditions are favorable, we can further accelerate our revenue growth in the second half of the year and put us on a path to achieving positive free cash flow in Q4. Finally, I would like to acknowledge that the TrueCar team and their commitment to the future TrueCar we're building -- in pursuit of the best online experience for dealers and consumers, the team is making huge strides overcoming structural roadblocks, that in the past have impeded innovation in the automotive retail. I also would like to thank Trucar board member, Erin Lantz, for 7-plus years of dedicated service to the organization. We wish Erin the best and are excited that the Board has nominated Diego Rodriguez to fill her seat. If elected, Diego's decades of experience integrating business design and technology at the very highest levels of industry will be invaluable to the next phase of TrueCar's life cycle, having most recently served as Inuit's Chief Product and Design Officer and prior to that, as a senior partner at IDO, Diego will be a tremendous asset for TrueCar and our mission to deliver the first ever car buying digital marketplace. Now operator, let's open the call for questions from our analysts. Operator: We will now begin the question and answer session [Operator Instructions] The first question comes from Rajat Gupta of JPMorgan. Rajat Gupta: Great. Firstly, just on the second quarter comments. You highlighted the lower incremental drop through, from some of the planned marketing investments and [indiscernible] growth in the forward quarters. If you look at typical seasonality on the top line, it seems like you would be on track for mid- to high-teens year-over-year revenue growth. In the second half given where the base is for revenue in the first quarter. I'm wondering if you could share how these incremental investments could change that cadence going forward? And how should we think about the incremental EBITDA on that incremental revenue in the second half as well? And I have a follow-up. Oliver Foley: [indiscernible] Go ahead, do you want to take that one? Jantoon Reigersman: Yes, go ahead. Go on... Oliver Foley: I would say, as we articulated in the first quarter, we do anticipate to see an acceleration in our revenue growth over the course of the year. And so the 13% that we're projecting in Q2, with an incremental investment in marketing spend will hopefully get us towards the high teens, in the back half of the year. Now in terms of flow-through and sort of what the EBITDA looks like in the back half of the year, I think what we've demonstrated over the past 2 quarters is sort of the operating leverage that we have. And so I think what we'd love to see in Q2 is the extent to which we can grow marketing spend, drive more incremental units to our dealer partners, continue to see growth in RPD through the expansion of our expanded product offering. And I'd like to believe that the ideal range of marketing spend as a percent of revenue is sort of between the 34% and 36%, whereas in Q1, you were closer to 31%. So if we can get closer to that 35%, I think in the second half of the year, we should see a pretty strong flow-through, through the expanded RPD. Rajat Gupta: Got it. Got it. That's helpful. And then as a follow-up, just on the franchise dealer count, that was down slightly sequentially. What drove that decline? Was it like some dealer churn because of like the newer pricing and some of the new bundles, so what drove that? And how should we think about that dealer count going forward? Maybe any quarter-to-date -- quarter-to-date trends in April that you can provide us to help inform that. Jantoon Reigersman: Yes, absolutely. So the answer is, and I think we already mentioned that in the past, where it's like we feel like it's a little bit of a given date, right, in the vast number of the number of dealers talking about, these are fairly small deltas. But long story short, I think with resetting the markets as they are, it's still somewhat unequal throughout the country. I think if we do a little bit of self-reflection, I think we probably have not been serving good enough in some areas of the country, and provide sufficient effectively leads to those dealers in certain areas, and probably over-providing in other areas. And so you'll see that there are certain places where some of the dealers have churned in the past, because they feel like even though they're kind of in need of the service. They've not been served as well as we could have. And so I think there are some areas where that has occurred. And I think we know exactly what we need to do to help that, which is also one of the reasons why we're focusing on one of the building blocks that I argued, which is a much better form of service effectively when you think about as one of the four building blocks. So that's number one. And then number two is, I think there is -- for the franchise dealers and obviously, the new growth rate and the new car sales and inventory buildup, I think there's a huge opportunity for them to -- for us to prove ourselves effectively to them. So overarching, I don't look at the rooftop numbers very often in the sense that they will always go and fluctuate a little bit. What I do know is that we're now effectively through the worst of all of that, and we're ready to really recapture a lot of the market share that we've lost over the last couple of years. The one that obviously is much harder to control the [indiscernible] side and the [indiscernible], it will stay fluctuating because obviously, a lot of players on the [indiscernible] side that turn off, either go out of business or a part of consolidation, et cetera. So obviously, in a fast-moving macro environment, that is a little bit harder to predict. But overarching, I think we have a really good shot at growing back our franchise revenue side... Oliver Foley: The other... Jantoon Reigersman: I wanted to add one more thing on the previous question, we just remember that in the flow-throughs -- there's marketing people and effectively back office G&A as the three buckets of costs that we have in the business. And so we have been relatively constrained in terms of marketing deployment over the last couple of years because really, what would -- where it didn't really make a lot of sense to push on the top of funnel too much, in a world where there was not a lot of inventory to go against. And now that inventory is coming back, I think we're seeing a much better ability to deploy marketing dollars really efficiently. And so as a result, I think if you think about those buckets, yes, utilizing that now, also sets us back up for the future. Especially in a world where obviously unaided branded awareness for us has decreased over time and we want to start recapturing that somewhat as well. So across the board, I think, starting to redeploy along the marketing lines is going to be an important piece for us, and we obviously want to do that very efficiently. Sorry, Oliver, I cut you off. Operator: The next question comes from Tom White of D.A. Davidson. Unknown Analyst: This is [indiscernible] on for Tom. I just have a quick one on TrueCar Marketing Solutions. I think you mentioned that over 350 dealers have added a TCMS product to their existing subscription. Could you just give us some color on your expectations for adoption over the course of 2024 and maybe the impact financials as more dealers adopt the product? Oliver Foley: Sure. Yes. So we have had roughly 350 dealers, adopt one or more of our TCMS products. And we're certainly encouraged by that, like we articulated in the letter, we haven't yet incorporated these into our bundles. So they are available as add-on to subscriptions. But ultimately, we want these products to be part of our bundled offering, because at that point, you have greater adoption. I think our outlook for the rest of the year is that, we would love to see a majority of our dealers leveraging these products. Because, frankly, we think that they do truly help them either gain additional visibility on the platform, or strengthen the quality of the leads that they get from the platform. And so we truly believe that these will help dealers sort of get a stronger ROI. And ultimately, that will lead to a stickier product, better retention. But I think the way that we monetize it is through higher RPD. And so my expectation over the course of the year is that, each quarter we'll see sort of sequential gains in RPD, primarily driven by adoption of the TCMS product. Operator: The next question is from Naved Khan of B. Riley Securities. Naved Khan: A couple of questions from me. Maybe just on the increase in marketing spend in the second quarter. Can you talk about if this is going to be more a performance base marketing versus branding, and the potential payback period on that? And then maybe just on the incentive revenue. So you're kind of approaching the range that we had for incentive revenue pre-pandemic. How should we think about growth from these levels? What kind of visibility do you have in terms of driving this further up from here? Oliver Foley: Sure. I take the first one. -- and as it relates to marketing, in terms of sort of a specific payback period or the channels through which we'll be deploying these dollars, I think what we need to do is sort of strike a balance between sort of the lower funnel performance marketing that drives an efficient cost per sale and really strong ROI for TrueCar, and what's best for our dealer partners. And what I mean by that is if we're constantly optimizing our performance marketing spend on a cost per basis, right, trying to get the lowest cost per click, driving the lowest cost per sale. I think you ultimately see some optimizations that aren't necessarily good for the overall dealer network. And an example of that is Google can be driving the lowest cost per sale in a particular DMA and certain subsets of our franchise and dealers are getting a ton of leads and a ton of sales. But by doing that, we're effectively not living up to our promise or not fulfilling our value proposition to other dealers in the network. And so what we need to, I think, do a better job at. And what ultimately will really, I think, improve dealer churns is thinking more holistically about how do we ensure performance is strong across the network. And so yes, we're going to continue to invest in those lower funnel campaigns to really drive incremental units through the platform. But we want to make sure that we're also supporting dealers across the country, across different DMAs across brands. And in doing that, we think that will really improve churn. And then the second question was on OEM, right? Jan, do you want to take that? Jantoon Reigersman: Yes. Naved, can you repeat the question? Just want to make sure I answer it correctly. Naved Khan: Yes. So the OEM incentive revenue has been pretty strong for you guys. You kind of mentioned where the average incentive used to be prepared. I mean you're kind of approaching the lower end of that band. Just wondering where you think it can go from these levels? And what kind of visibility do you have for TrueCar in terms of driving this revenue line up from here? Jantoon Reigersman: Yes. So a very good question. So look, we're obviously very bullish on the OEM line in general in the long term. We feel that there is a lot of opportunity, obviously, for OEMs to help support their dealer networks. Especially, obviously, with high interest rate environment, consumers need all the help they can get vis-a-vis acquirre [indiscernible] buying cars. What's hard to predict is like all at the near to midterm, you -- we have a running -- we always have a really running strong pipeline in general, but OEM revenue comes in, call it, like a little bit of bulky programs and programs are often finite in time. And so they come, they go, they fluctuate a little bit. It's less around regular sales that you effectively build up and building blocks and -- like build up on your MRR effectively. And so there's always a fluctuation in terms of the revenue lines. It's hard to predict those. You know what you have in the pipeline and the pipeline is strong. The question then is just when do they kick in? When do OEMs decide to actually participate in certain programs? Some programs are more effective than others. Some we try certain things and might not actually work in some overachieve. And so it's a little bit more bulky in nature. And so we do less of an effort to really try to predict this short term, but we're very confident in this long term. So don't be surprised, right? Like historically, where sometimes quarter-over-quarter, there are some fluctuations in terms of OEM revenue, but it doesn't take away that we feel that in the long run, OEM revenue should supersede effectively what we used to be doing pre-pandemic. Naved Khan: Okay. Got it. That's helpful. And then maybe just a clarification on the on the marketing spend. And I'm assuming that the increase in -- most of the increase in the marketing would be going towards the direct channel versus partner, but correct me if I'm wrong. And then maybe just talk about the conversions on the website, how are they versus where they've been historically? Have they improved? Or are they below those levels? Jantoon Reigersman: Yes. I'll take it over. So the short answer is it will mostly be direct. I think there are certain programs we're running with the partners, but those are fairly steady going. So this is really about more engaging on the direct side. Overarching for us, conversions have been improving and continue to improve. And it's obviously something we're also very, very focused on. And we feel that now that the market is -- market in general and the macro is more normalizing. It also allows us to start utilizing more of the tools we have at our disposal around consumer experience, like in driving really end-to-end funnel efficiencies. And so this is something we're now really going to deploy a little bit more towards, especially in a world where obviously -- the Googles of this world have been changing a little bit of the performance of marketing landscapes. And so the marketing that worked 2, 3 years ago is not per se working the same way now. And so -- and we're also obviously getting much more sophisticated around that. But it's mostly direct. And we think we have a huge opportunity given also the way we capture consumers, the way the consumers behave on the site, and our level of intelligence we have, and data we have around that. So we think we can do a better job marketing than we have done historically. Operator: The next question comes from Chris Pierce of with Needham & Co. Christopher Pierce: Going back to the first question and franchise dealers. Can you kind of talk about what you're doing in those geographies where maybe the franchise dealer [indiscernible] higher churn? Like what are some things that you can do to kind of reintroduce the newer product to those dealers? And is TrueCar+ sort of part of that playbook? Or is that sort of not related? Jantoon Reigersman: No. TrueCar+ is not related. So TrueCar+ really think of it as a really separate business line effectively for now. And in some ways, I feel a little bit of schizophrenic, and I think I've mentioned it to you in the past. Which is like I feel schizophrenic as there are days where I feel like MS Series D venture product CEO, as opposed to a public company CEO when it comes to TrueCar+, and then obviously, we have the core business. So TrueCar+ I think will be applicable, obviously, to -- especially, initially to some of the larger dealer groups probably, initially. So when we're talking about the franchise dealers really think of it as -- and this is the block we were mentioning, right, where we've had -- we obviously have a large amount of dealers on our platform. We've been running a series of these dealers a little bit on autopilot. Some of these groups, especially the ones that are not necessarily in high-growth markets effectively, have probably been somewhat neglected. And so now that the market is coming back, and inventory is coming back, et cetera, we effectively have to be more on top of them, and really help them and help them in training and help them in insights and all these type of things. And I think we've done -- it was probably 6 months ago or so, we've made a big shift internally where we really emphasize both the sales and service side. We've had a very strong service leader come in. We have a very strong service team now, and they're constantly thinking about, okay, how often do we touch our dealers? What do we provide and what form do we provide? What is the service we provide, et cetera? So the whole notion of the way we are servicing our book has dramatically changed over the last 6 months. And that is obviously having really good fruit in the form of dealers being very excited about what we're doing, but it also means that you're realizing that, there are some dealers we probably have not serviced as well as we could have. And obviously, in some of those areas, we're going to do a much better job. Christopher Pierce: Okay. Perfect. And then we see OEMs turning on marketing with the 3-year income statement and to increased incentive spending. And now we see you guys turning on marketing to kind of drive more units to deal. Is there any sort of magic bullet or like why have dealers been slow to turn on marketing? I'm just kind of curious, the disconnect given what we see in the industry and what we see as far as inventory is. Jantoon Reigersman: The honest answer to that. I think it's just that like OEMs are just very thoughtful, long-term thoughtful and obviously have achieved interesting P&Ls over the last couple of years where, right, like they've become very, very efficient because they didn't really have to support. And it's very hard to start -- have to start supporting again right back to what normalized was in a world where the last couple of years, a lot of these OEMs have been saying that this was the new normal. And so I think just like redeploying capital for them is just a little bit harder. And so there's a little bit of a lagging effect. But we clearly are seeing it because once you walk into those doors with the appropriate data and obviously, we have a lot of data across the different brands. You start seeing also just which OEMs are a little bit more responsive to the macro environment, which ones are more eager to really maintain, like longevity of relationship with our customers, right? So if you are a 3x same car buyer and you're walking in for the fourth time, are you going to be sophisticated about that? Or do you not really care as an OEM. And so there are these balancing act, and each OEM has a very different identity, and a very different view, and a very different strategy around that. And so -- and we have these as open dialogues, and we try to culminate each of those and one with data. We provide arguments on why we think certain programs make sense, depending on their characters and views. And then the other thing is also, we obviously try to make them match also potentially with some of our affinity partners as well. There are certain programs there. So -- but these things take a little bit of time, but the main reason is just lagging or realizing what's happening around, a slight unwillingness to over-deploy too soon and kind of wait and see mode. And I agree with you that I would have expected that to come a little bit faster in general as a macro thing, although I think we are doing a really good job capturing share. Operator: The next question comes from Marvin Fong with BTIG. Marvin Fong: I'd like to just start on the independent channel. So I think in the shareholder letter, you wrote that you were seeing signs of that channel bottoming. And yet in the earlier comments, Jantoon, I think you were saying that still a little bit unpredictable with bankruptcies and consolidation. So maybe just kind of square those two lines of thought. I mean is there actual positive inflection in the independent dealer count that you're seeing? Or just to expand on that a little bit. Jantoon Reigersman: Yes, it is. It's just that the -- I think the remark is more towards like the fluctuations. It's never really a perfect line, and it depends a little bit on the months. And it's -- so it's just harder to predict given the sizing of the type of dealer. So right, the dealer count -- a dealer is a dealer and even despite the sizing or effectively revenue or monetary value it brings to us. So the comment was much more around the fluctuation and just the heart that it's hard to predict it, even though more broadly, it seems that the world is stabilizing around that. Doesn't mean that like on a month-per-month basis, it's hard to predict. So it's really doing more about the volatility than it is about the overarching trend. Marvin Fong: Got you. Okay. And a question just on TCMS. And I think, Oliver, you were mentioning that it should be an RPD driver. I realize it's early and you don't want to be too specific, but could you maybe just kind of frame the RPD lift opportunity? Like how much lift would you get from a dealer who only subscribing to like 1 or 2 products versus one that might be doing 4 or 5, just maybe dimensionalize that for us, that would be helpful. Oliver Foley: Sure. So as you can imagine, it is hard to predict not only because it's early, but because the products are all very different, right? And so there are some products that are really good candidates for large dealer groups. Let's just take TrueCar preferred military partner, right? It's a much higher ticket product, and it works really well for larger dealer groups, where they can sort of gain access to the military community in the locations that they are. Whereas, auto intro, for instance, or prime path are much more programmatic. They are good for really any dealer that's looking to enhance the quality of leads that they get from the platform. So they're really -- they're all priced very differently. And so it's not only sort of the total adoption of TCMS products, but really which ones gain the most traction. So it's hard to say what the RPD impact would be over the course of the year. But I think, we should -- we should expect through a combination of selling some of these, call it, larger ticket TCMS products like TrueCar Military, and then also incorporating some of the other products into our bundled offering. We should see, sort of each quarter as adoption grows, that RPD will go up. How much? I'm not quite willing to say how much that will be. Operator: The next question is from Rajat Gupta of JPMorgan. Rajat Gupta: You just had like a follow-up on TrueCar+. Could we get a little more color around like the partnerships that you're working on, both on like the dealer and the [indiscernible] relationship? And maybe like any more color you can give on like the OEMs that you're engaging with, as you build this product out. Even on the dealer side, are these like larger groups? Or are they like a part of a larger group? Or these are really like small stores? I'm just curious if you could give us any more color around how that's evolving. Jantoon Reigersman: Yes, absolutely, Rajat. So for the pilot itself, we're working with a specific dealer group who have historically been very, very progressive. I mentioned that, obviously, on the new side, we'll focus on California initially. That's really because we want to make sure we are somewhat constrained from a geography perspective. Obviously, the California consumer is probably also more interested and more likely to transact online. It's obviously close to Silicon Valley and associated regions. And also, it helps us then be within the DMAs, [indiscernible] OEMs. So like everybody is engaged and excited, without necessarily making sure that we intervene with the business of other dealer groups effectively, or start getting into their DMA, not necessarily at the start as we prove this out. So the good thing is that all these stakeholders are really excited, they're curious. I think everybody agrees that this is the way to go. I also think, and I think it's really important to emphasize this, there are still some reluctance in the industry at times, whether this comes at the expense of dealer groups, and I'm not sure that I agree with that. I think really, this is helping dealer groups expand their footprints and their ability to actually drive margins. And for the consumer, it's something that the consumer has been asking for a for a long time. And obviously both in our TrueCar+ product, but even in the way people are purchasing online today. So it's really DMS providers, elements providers. It's obviously logistical companies, it's captives, lenders, et cetera, all coming together, initially launching it with one group really to further refine. Because what you need to do, is you need to merge, demerge documents, make sure that the documents are all correct, rebates are correct, calculated correctly, right, obviously, that the logistical delivery is done correctly, et cetera. So there's a lot that comes together, especially on the new side. And new side is a very, very different complexity than on the used side. And so we will be nationwide on the used side, albeit that the inventory will be slightly small. On the new side, we'll focus on California. And to your question on scaling it, I think we will end up doing at the end of the year and obviously into the next year, as the scaling will probably happen with like midsized to larger dealer groups in general. Right thing, 25 stores, 30 stores, 50 stores type groups, most often because they are just very, very progressive when it comes to their tech, but also very progressive when it comes to their adoption to product flows and organizational really workflows for that matter. And so being almost too large, it's a little bit of an embedment that you need to really rethink your overarching infrastructure, but those seem to be the sweet spot. And so those -- that will be the sweet spot where we're going to focus on initially as we start scaling this. But before we do, we want to just prove this out in terms of just technical deployment and workout the bugs that might occur, or right where people get stuck in some shape or form of random scenarios you might not have thought of in the past. And so we're going to do that over the course of the next quarter and then obviously scale from there. But midsize group, midsize to large size group is what is important. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Jantoon for closing remarks. Jantoon Reigersman: So thank you, everybody, for taking the time to participate in our call. In particular, I want to thank the team, it's incredible to see the continued effort and hard work with other people, none of these results are possible ever. And so with gratitude, thank you for everyone, and thank you for being part of our journey. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day and welcome to the TrueCar Fourth Quarter 2023 Results Financial Call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone and welcome to TrueCar’s fourth quarter 2023 earnings conference call. Joining me today is Oliver Foley, our new Chief Financial Officer. I hope you have all had the opportunity to read our stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our Safe Harbor. I want to remind you that we will be making forward-looking looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other report and filings with Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward-looking statements except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures, reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I'll provide a brief summary of the quarter. We continue to deliver as promised. In Q4, we achieved 13% year-over-year revenue growth and achieved adjusted EBITDA profitability of $2.1 million, a $12.1 million improvement year-over-year. Meanwhile, we saw encouraging signs of a potential bottoming in our total active dealer count, which was flat quarter-over-quarter with 11,500 active dealers at the end of Q4 versus 11,503 at the end of Q3, driven by the net addition of 135 franchise dealers offset by the net loss of 138 independent dealers in Q4. This is consistent with our viewpoint that while independent dealers continue to be challenged by today's high interest rate environment, franchise dealers in particular are increasingly in need for TrueCar services to help them cope with growing new car inventories. Further highlighting this trend, new vehicle sales compromised 59% of the total units sold on TrueCar in Q4, which is up from 50% of total units sold in Q4 2022 and up from 56% of total units sold in Q3 2023. We believe TrueCar's leverage towards franchise dealers combined with our unique ability to offer targeted OEM incentives to our 250-plus affinity partner audiences positions us to capitalize on the growing focus on new vehicle sales. Coinciding with our presence at the National Automobile Dealers Association, also called NADA, we launched a new suite of dealer products called TrueCar Marketing Solutions, also known as TCMS. The development and launch of TCMS was informed by and in response to feedback shared by many of our dealer partners related to their most common challenges around one, identifying and reaching targeted audiences of in-market consumers; two, standing out from the sea of competing dealers in a consumer environment lacking the brand loyalty of the past and three; cost effective ways to showcase and promote inventory not being surfaced by the more common search algorithms. The result is a new offering that is not only highly complimentary and accretive to the core listings lead gen business for which dealers have come to know us, but also represents a new cost effective alternative to the traditional digital marketing channels that presently capture a significant share of dealers' digital marketing budgets. Therefore, we're confident that the rollout and adoption of our TCMS products will serve as a key building block for our near term growth objectives by helping us attract and retain key dealer partners while growing revenue per dealer. Let us also briefly turn to TrueCar+. To be clear, the launch of TCMS is in no way a deviation in strategy and our singular focus remains on our pursuit of what we believe to be the holy grail of automotive retail, the ability to buy a new certified pre-owned or used car with or without a trade in from the comfort of your couch through an entirely digital online transaction. For consumers, that means an experience build upon the trust and transparency we've always offered where they can; number one, shop millions of listings nationwide to find the right deal for them. Two, select between a range of aftermarket products offered by the dealer; three, receive offers and secure financing from a range of competitive lenders, regardless of their credit score; four, receive a firm offer on the trade in that is directly incorporated into the value of the deal; five, build out a fully transparent deal that includes all taxes, fees, and rebates; six, digitally execute a retail instalment contract, and seven, schedule pickup or delivery of their vehicle all from the comfort of their couch. For dealers who want to offer, one, an expansion of their addressable market and the ability to compete for consumers nationwide; two, superior attachment rates across the dealer's customizable F&I menu; three, a significant improvement in sales volume and efficiency by delivering a completed transaction ready for fulfilment; and four, access to a risk-free trade-in. We believe this is what a true online buying experience looks like. We are hopeful that TrueCar will enable the first true online purchase of a new car within the first half of this year and we're partnering with several key external stakeholders to make this happen. This is not trivial work, and even though we have a clear product development roadmap, we know the significant level of effort and coordination this takes, including some out of our control. Once completed, the current TC+ product, effectively still a super lead, will be replaced with a complete online transaction and at that point, only cars that are fully transactable online will be classified as TC+. TC+ to date has been a vital learning platform for us to get to the product development and experiences we have today. Lastly, our outlook for this quarter and beyond; as a reminder, our goal is to return the business to $300 million in revenue with 10% free cash flow margin by the end of 2026, implying a compound annual growth rate of 24% from 2023 to 2026. We believe we can achieve this goal by focusing on the following four building blocks. Number one, activate new dealers. Number two, limit dealer churn. Number three, grow average revenue per dealer through our expanded product offering. And four, continue to grow our OEM partnerships. Progress against each of these building blocks will take time, but should have a compound effect over the course of the year. We aim for 10% year-over-year revenue growth in Q1 and around breakeven adjusted EBITDA. As a reminder, our first quarter of the year adjusted EBITDA flow through is typically seasonally lower due to payroll related and NADA expenses. Looking beyond Q1, we anticipate an acceleration of our revenue and EBITDA growth and are confident that we can achieve positive free cash flow in the second half of the year. Now operator, let's open the call for questions from our analysts. Operator: [Operator instructions] And today's first question comes from Naved Khan with B Riley Securities. UnidentifiedAnalyst: Hi, this is Ryan on behalf of Naved. Thank you for taking my question. Two if I may. First, incentive revenue has grown pretty materially. How do you expect the growth trend to look in 2024? And then second, in the shareholder letter you alluded to the opportunity to incorporate TrueCar marketing solutions in subscription packages. Can you talk about the timeline for that? Thank you. Jantoon Reigersman: Absolutely, so I think we so this is Jantoon, in terms of the revenue growth, as we outlined, we are obviously very focused to return to the $300 million revenue target set by the end of 2026. So that's a compound annual growth rate of roughly 24%. So remember in Q3 we had single digit growth. Q4 now we've had double digit growth. Obviously growth is up to the right, never is perfectly linear and we are confident that we're building up the building blocks required to get to this effectively compound growth rate that we're seeking over the course of the next three years. So I think we know what we need to do and we have the building blocks, but also remember we're just coming out of the trough of the first time that we were actually growing again in Q3 and we'll be accelerating and building that up over the course of this year. Vis-à-vis TCMS, so we have launched this at NADA, which was a couple of weeks ago and some of these products are currently being launched, others are being finalized, but I would argue that the real impact should be seen over the course of Q2 and going forward, although there will be some marginal ability for dealers to already effectively sign up in Q1 and some revenue will flow in Q1, but you'll see or you should be seeing an increase in revenue per dealer over the course of this year as these products will roll out more widely. Oliver Foley: Ryan, this is Oliver. I'll just chime in on that second question. If you look at the description that we provided on each of the TCMS products, you'll see that some of them are I think very programmatic and they're really good candidates to be incorporated into our existing subscription bundles. Others are more bespoke where we're effectively running targeted campaigns on the dealer's behalf, right, and really trying to capture some of their digital marketing spend that would go to more traditional channels. And so our hope is that by the very beginning of Q2, our subscription tiers will reflect some of these more programmatic TCMS products, the ones that really are designed to provide incremental on-site awareness for dealers, branding opportunities, and additional -- being an additional traffic driver for them. Operator: And the next question comes from Tom White with DA Davidson. UnidentifiedAnalyst: Hey, this is Wyatt on for Tom. Thanks for taking our questions. Could you talk a little bit about what your outlook assumptions are around TrueCar+ for 2024? Is there an explicit monetization benefit from TrueCar+ this year and if not, when do you think it could impact TrueCar's revenues in a more meaningful way? Thank you. Jantoon Reigersman: Yeah, good question and I think it's a similar question that was asked in the past and I'll repeat what we said then too. I think for 2024, the focus really is around the four building blocks that we mentioned. So it's getting dealers back on to the platform, limit churn, increase revenue per dealer by expanding the product offering, and really focus on the OEM opportunity. We're not assuming a significant contribution of TrueCar+ throughout 2024. Obviously, that is a high focus for us from a product development perspective, but we're also well aware that as we roll that out, there are always going to be some learnings that you'll do as you commercialize that more fully and as you expand that and put more dealers on that program. So for this year, assume that there's no real or limited financial contributions and that should kick in obviously in 2025 and beyond. Oliver Foley: I'll just chime in quickly and say that in my view, the number one way that TrueCar+ will be monetized in 2024 is by helping us attract new dealers and retain existing dealers. The reason I say that is because I do believe that once we do transact that first entirely digital online new car purchase, we have a very differentiated marketplace that provides a very unique value proposition to dealers and we sort of outline some of those key value props for the dealer, whether it's expanding their addressable market, it's improving their ability to drive F&I sales. And so once we do prove that we can execute that, hopefully in the first half of this year, I do think we have a marketplace that's truly differentiated from all the others out there, and that'll help us sort of regain our share of dealers and hopefully retain our existing dealers. UnidentifiedAnalyst: And then just one follow-up; could you update us on your capital allocation priorities for 2024? Oliver Foley: I'll jump in quickly there. I think we've long said that once we get to free cash flow break-even, we will be sort of actively engaged in the capital allocation strategy. Right now, we still maintain over $135 million on our balance sheet and we're very keen to sort of come up with a deliberate strategy for the second half of this year, given that we do expect to be free cash flow positive in the second half of this year. So, as we've said before, everything is on the table, whether it be strategic acquisitions, it be share repurchases, it be supercharging the growth of TC+ with a more robust marketing budget. All those things are on the table for the second half of this year. Operator: And the next question comes from Chris Pierce with Needham. Chris Pierce: Hey, good morning. On revenues specifically, can you talk about OEM incentive revenues? Is there any seasonality there? Or is there a pipeline that you can speak to there? I just want to get a sense of how to think about that, because there's revenue lying into 2024. Jantoon Reigersman: Yeah, Chris, so, I don't think there's any seasonality per se. It's much more -- these are effectively more to more project-based, and as a result, are a little bit more lumpy in nature and so, it's less about consistent revenues, it's more to do with project like, different programs that we're effectively running with the different OEMs. We have multitude of conversations at any point in time. There are different forms of programs we're often suggesting, and depending a little bit on the priorities of the OEM, some programs are more relevant at different points in time than others. And so, it's a little bit hard to predict very well the future components of, okay, how is that revenue line growing exactly quarter-to-quarter, and it's always a little bit fluctuating. But overarching, we see a huge opportunity in the OEM side in general and so, we do feel that there's a large, like, if you look at it on a yearly basis, for example, that there's a large opportunity for us to obviously grow that revenue line and obviously, we as part of the longer-term trajectory that we've outlined, we obviously feel that we should get back to historical OEM numbers and beyond as we start looking in the outer years. But the short version is, yeah, we have active dialogues. We have different programs that are very interesting to pursue for the OEMs, but it's hard to perfectly predict that or outline that forecast. Oliver Foley: And, Chris, I'll just add that I think that the seasonality in the OEM business is really just tied to new vehicle sales, right? So, because it is still very much a pay-for-performance type model, meaning these are rebates, they're based on the volume of new car purchases and so, generally speaking, in Q4, you see seasonally higher volume because that's generally when you see a ton of new car sales. Q1, it always seems to come down slightly and so, I would say that's really sort of the seasonality behind the OEM side of the business. It's really just tied to new vehicle sales. Chris Pierce: Okay, perfect. And then on expenses, talking about building out TrueCar+ and the learnings from it, is this a good run rate for tech and development expenses or does there need to be further investment there? I just want to know the right way to think about that going forward because it's come down pretty dramatically the past couple quarters. Oliver Foley: Yeah, so I'd say when you look at Q4, one thing to call out is that there were just over $1 million of sort of accrual reversals. So, we had sort of a one-time benefit in Q4 around certain headcount accruals that were reversed in the quarter. So, I would say the tech and dev expense in Q4 is slightly below what the run rate should be. I think something closer, maybe slightly above $7 million is sort of the run rate that I would expect, whereas we came in, I believe, at $6.4 million in Q4. So, that definitely does reflect sort of that non-recurring benefit that we had in Q4. Operator: And the next question comes from Marvin Fong with BTIG. Marvin Fong: Hi, good morning. Thanks for taking my questions. So, first question, apologies, I popped on a little late if this is already asked, but you just kind of speak to your expectations for the independent dealer channel? There was an uptick in the churn in the fourth quarter, and I understand that. I think the fourth quarter typically is seasonally a little bit higher, but do you expect independent dealer churn to continue throughout 2024, or how do you view that? And then on TC+, I know its super early days, but what sort of is the thought process behind your plans to roll that out? Do you plan to just keep that on the marketplace, or could it simultaneously roll out as a white-label solution for dealer websites or even OEM? Maybe you could expand a little bit more on your thinking there. Thanks. Jantoon Reigersman: Absolutely. Hey, Marvin. So, on the independence, yeah, think of the independence, obviously, as almost -- there are obviously many, many groups within that, but think about it as if you oversimplify it, you have smaller independents that obviously are going through a rough time with financing, high financing costs, and therefore, right, limited affordability for consumers and so, for them, it's hard to acquire inventory as well as sell inventory and so, a lot of them are either going out of business, they're being acquired and rolled up into effectively roll-ups, etcetera. So, there's a lot of moving and shifting on the smaller independence space. We're obviously very focused still on the larger independents, and we see good traction there, but they obviously run a very different business. So, yes, we see a continued decline of smaller independents throughout the year, but obviously, a good traction with larger independents and good traction with franchises. So, I think that's the answer. Any questions on that specifically before I go over on TC+? Marvin Fong: No, that was a great answer. I got it. Jantoon Reigersman: On TC+, yeah, I think there are two different parts to your question. One is how do you think about the rollout? Number one is I think TC+, we're not going to have every single dealer partner on TC+ in the future. It's really about making sure we have the right dealers on and then obviously really focused on supply demand. And so, there's going to be a pre-qualification that's going to happen around the dealers that can be on because obviously we want to make sure that that experience is a really good experience for both consumer and dealer, and that we're really making sure we're very thoughtful about consumers being able to find the right inventory and where the right inventory is available. And so, at the end of the day, it's really about scaling that by identifying the right dealers and then making sure that they're on and then doing it also in a very consistent manner. So, it's also not something that you're going to flip a switch and have thousands of dealers on. You're really thinking about tens of larger dealers on initially, having the right amount of inventory, and then start pushing from there. Vis-à-vis your question on white labelling, those are things that are absolutely very interesting opportunities for us. In particular, if you start thinking about our affinity network as an example. So, if you think about the online transaction space and you think about the entry point that every consumer has, then there are very interesting opportunities for us to already capture people at the earlier stage and think of, hey, you're a lender and you have a very committed consumer who wants to lend with you and through you, but wants to find their car and already be effectively pre-qualified on your own side. Then all those things should be possible and you should be able to navigate them then through almost like a different type of TrueCar+ experience, where they see very specific inventory for their lending as an example. So, the answer is yes, there's a lot of opportunity to that. We obviously are in the near term very focused on getting the marketplace and the transaction enabled the way we've always envisioned it. And we finally broke the back of that candle in order to actually make that happen vis-à-vis paperwork, but opportunities like white labelling are big opportunities for us going forward. Operator: And this concludes the question-and-answer session. I would like to turn the floor back over to TrueCar-'s President and CEO, Jantoon Reigersman for closing remarks. Jantoon Reigersman: Awesome. So, I would like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their continued dedication and perseverance. We have a huge opportunity ahead of us and the team is doing tremendous work. So, I'm really proud of them and want to thank them for all the contribution they're making. Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day and welcome to the TrueCar Third Quarter 2023 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead, sir. Jantoon Reigersman: Thank you, operator. Hello, everyone and welcome to the TrueCar’s third quarter 2023 earnings conference call. Joining me today is Oliver Foley, our new Chief Financial Officer. I hope you all have had the opportunity to read our third quarter stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I need to read our Safe Harbor. I want to remind you that we will be making forward-looking looking statements on this call, including statements regarding our revenue growth, expected adjusted EBITDA as well as aspirational goals regarding our 3-year plan. Forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our reports and filings with the Securities and Exchange Commission for a discussion of factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today’s date and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will provide a summary of the quarter, as highlighted in our shareholder letter. This is an exciting quarter, okay. We have surpassed our guidance. We are back to year-over-year revenue growth for the first time in nine quarters and achieved positive adjusted EBITDA a quarter earlier than originally indicated in our previous guidance. We have a clear vision and we are working hard to realize it. The macroeconomic environment is showing signs of improving and both consumers and dealers are in increasingly greater need of TrueCar’s offerings. U.S. monthly inventory exceeded $2 million for the first time since March 2021, a year-over-year increase of 50.3%. The percentage of new car sales over MSRP decreased to 39%, a decline of 37% year-over-year. And in September, average new car incentives climbed 129% year-over-year to $2,367. We still have a ways to go before the macroeconomic environment returns to historical norms, but it appears the tide has started to turn in our favor. We believe our focus on enabling transactions for both consumer and dealers through a more comprehensive journey rather than selling page views, impressions or ads will set us apart from our competition in new ways, enabling the right consumer to find the right car with the right financing at the right dealer is essential to this experience, but actual online transaction enablement that includes the execution of key deal documents requires more than these components. Specifically, it requires an experience that integrates seamlessly with the processes and software relied upon by dealers, lenders and other third-parties. Building out these third-party integrations is a complex challenge that requires time, but we are laser focused on meeting this challenge. We continue to make good progress on our product flow, having launched what we call our unified flow. This flow is designed to resemble traditional online commerce checkout flow, whereby consumers are provided with relevant transaction details, landed cost and next steps to complete the purchase of the product they are buying. We have also successfully launched our economic cohort and our convenience cohort flows and we are well on the way to launch our EV flow in December. We continue to refine each of these three cohort flows as we reduce friction, eliminate unnecessary steps and learn from product-focused groups and consumer behaviors. We truly have shifted the organization to a product testing mindset and talent base and the build-out of these cohort flows is emblematic of that shift. Beyond these three cohort flows, we see revenue opportunities stemming from the possibility of regaining dealers we have lost over the past several years, expanding value-added services to enhance dealer operations and further strengthening our OEM and affinity business. As we look forward, we believe we have tremendous growth opportunities, but we also know such growth cannot come overnight. We are building a company that can endure and sustain and it can help shape the automotive industry over time. This happens from the ground up, while making sure we have the right people in the right seats with the right focus and core values, all aimed towards pursuing both growth and profitability. For the fourth quarter of 2023, we reiterate our expectation of returning to double-digit year-over-year revenue growth and breakeven or positive adjusted EBITDA. In the longer term, we are focused on the importance of sustained revenue growth and positive free cash flow. We are in pursuit of both. We understand the importance of the Rule of 40 as an indicator of healthy growing companies with good profitability metrics. We believe that what we need to do to – we believe that we need to do to drive long-term shareholder value for all of you is to simply execute and prove ourselves consistently. In light of this, we have established 3-year aspirational goals. By the end of 2026, we’re pursuing in excess of $300 million annual revenue and greater than 10% free cash flow. We realized these are ambitious goals. But if we meet them, we would have combined revenue growth and free cash flow margin of at least 40% by the end of 2026, which we believe would emphasize our financial health under the Rule of 40 as well as the value accretion opportunity we believe we have ahead of us. We believe that we have the opportunity, the platform and the talent to execute our strategy and now the macro is turning in our favor, join us in this journey as we reshape the car-buying experience. Now operator, let’s open the call for questions from our analysts. Operator: Thank you. [Operator Instructions] And the first question will come from Rajat Gupta with JPMorgan. Please go ahead. Rajat Gupta: Great. Thanks for taking the question and congrats on the execution in 3Q. Maybe just on the $326 million target, I mean you have a target out there now? And – but it’s still – you are still calling it aspirational or ambitious. Maybe if you could give us some sense or like a bridge from how we get there from today? Is it going to be 100% organic? Is it M&A and organic combined? And then how should we just think about the operating leverage from that revenue growth going forward as well? Maybe not to the $300 million, but like just going forward as well, how should we think about operating leverage with as revenue comes back in ’24, ‘25 and beyond? And I have a follow-up. Jantoon Reigersman: Absolutely. So Rajat, thanks so much for the question. So our goal – on the first part, the answer is organic. If you think of the overarching building blocks, right, it’s obviously like – which is normal to an e-commerce play is mitigate churn – in no particular order, but mitigate churn get new dealers onboard, expand the offering of dealers, obviously, interesting opportunities in the OEM and affinity space and then obviously roll out the digital transaction effectively, right, TC+ through that over time and the ability to then increase monetization so those are the rough building blocks you’re looking at overarching. Your question is whether this is organic or includes M&A, this is pure organic, the way we’re thinking about it and the opportunity we see ahead of us. And then the other part is operating leverage. I think we’ve always had very strong as an organization. And I think we’ve alluded to that in some of our last conference calls as well which is the cost base of this organization is relatively flat. Remember, it’s really 3 buckets. It’s people, it’s marketing, and it’s effectively the fixed overhead charge. If you think of marketing roughly it’s 50 – as it stands today, it’s 50% partner marketing, 50% effectively discretionary performance marketing from our end. So would we, over time, like to deploy more in the marketing space? Obviously, as we launch – fully launch a nationwide launch more of the digital experience, the answer is yes. So that’s one bucket. And over time, if you think about adding people, really where you would add over time is more on the sales and service side more than anywhere else. And so I think you could assume that the cost structure is relatively stable obviously somewhat growing in proportion to obviously the size of revenue growing, but overarching operating leverage should be really healthy and really strong as we also feel that we have a lot of monetization opportunities. Does that answer your question? Rajat Gupta: Understood. No, that’s helpful color. And then maybe just as a follow-up on capital allocation. You obviously have a significant amount of cash on the balance sheet I mean based on the EBITDA cadence here in the fourth quarter and into 2024, it looks like you will be generating positive free cash flow very soon. How should we think about – and you also mentioned that there’s 100% organic opportunity here to those targets. So is it reasonable to assume that you would take a more serious consideration towards buyback here in the near-term, just in the context of the targets itself and the fact that you’re already positive? Thanks. Jantoon Reigersman: Yes, it’s a great question. The answer is we review all opportunities of capital allocation, obviously, buybacks is one opportunity of several that we have. I do think that the impact of buybacks are disproportionately greater once you have a positive EPS and so there is a consideration there also around when – if you do buybacks, when do you do buybacks and then what form do you do by back? But is a buyback something that is on our menu of options and something that we continue to consider seriously, and we always consider seriously. The answer is absolutely yes. We do also know that look, we’ve gone through now – we’ve done nine quarters of decline. This is the first quarter of positive. We know we want to prove ourselves, obviously, over the next couple of quarters. It’s still a little bit of give and take in the broader macro. At the right time, will we address the broader cash balances, etcetera, in a more broad way? The answer is absolutely yes. But buybacks are always a consideration for us at any point in time. Rajat Gupta: Got it. Thanks for the color. I will jump back in queue. Jantoon Reigersman: Thank you. Operator: The next question will come from Naved Khan with B. Riley Securities. Please go ahead. Unidentified Analyst: Hi, this is Ryan asking a question on behalf of Naved Khan. Could you talk about – can you talk about conversions in United Flow compared to the traditional TrueCar experience? And then could you also talk about conversions between the convenience cohort and the economic cohort, please? Jantoon Reigersman: Yes. So we’ve disclosed – so first of all, so the United flow we’ve all launched this in the last couple of weeks. So it’s hard to give like definite answers across the board. I mean, we gave some indication obviously in the latter where, for example, in the economic flow, right, we exposed it to like 50,000 people, which 9,000 effectively immediately, we started actually going through the proper flow and submit their information and properly engage. So these are attractive numbers. What we are seeing also is that because these flows are much more personalized, people are actually engaging. We also obviously see that we still have, in certain areas, too many steps or there are certain things that are unclear or right, like things that for us seem to be very obvious are not necessarily obvious for the consumers. And so we’re clearing all that up. But in all honesty, there, it’s a little bit too early to provide real like conversion metrics that are comparable at this stage because we have only been doing this effectively for a couple of weeks. So this is something that we would love to be able to talk about in some more detail, obviously, on the next call. But these are good questions. What we have seen, though, is that the engagement is very, very high and that the engagement in each of the cohorts of like given it’s a personalized flow is high. And so that obviously also shows that the demand is there and that the willingness to go to these flows is very high. But the actual conversion metrics is probably too early to talk about. Unidentified Analyst: Thank you. And then a follow-up is when would you expect for United flow to go out to all regions, please? Jantoon Reigersman: Yes. The United flow will be live across in short order. What is most important though is remember that the United flow – the unified flow, what happens is it’s not yet – it doesn’t include the final pieces of paperwork. So that’s the piece that is still the last – effectively the last hiccup to get the full transaction online. And so we’re working through that. And that – obviously, that product development road map does not solidly depend on us. But once we have done that, that at least the experience for the consumer is already fully baked in a full commerce effectively flow, but it will be online for pretty much everybody in short order. Yes. So it’s going to be a new experience for people to go through the TrueCar flow, the piece that we have to finalize as the piece of paperwork. Unidentified Analyst: Thank you. Operator: The next question will come from Chris Pierce with Needham. Please go ahead. Chris Pierce: Hey, just two. Can you help us think about some sort of upper bound on OEM incentive revenue. It had a nice sequential growth again this quarter. And I just kind of want to get a sense of should it be higher than it was pre-COVID because of where inventories are? Or like should it normalize at some sort of level? I just don’t know how to – and I know it’s going to be lumpy, but I just kind of get a sense of where this can go. Jantoon Reigersman: Yes. I think – Chris, I think that’s a good question. I think it’s – like I’ll give you some – obviously, it’s tough to predict but I’ll give you some parameters, which is we obviously think that in the high interest rate world right? Some element of participation of OEMs and captives to support their consumers is important. There’s also with relatively low brand loyalty. There’s obviously also a great focus of OEMs to effectively somewhat like recapture customers they’ve lost over time. there is an interest, obviously, to help push their dealers with EV, etcetera. So long story short, I think there is a great emphasis of OEMs to support their relevant businesses. which is great. And obviously, there’s a huge opportunity there because of the triangulation, we can do between affinity partners between our dealer partners and then obviously, between the OEM so do we see this as an increasing opportunity? The answer is yes. Do we see this as an opportunity that historically was attractive to us and historically have growth opportunity? The answer is also yes, right? So yes, we think that this is important to us. The other thing is also, you’re going to have the ability to help support OEMs really get in front of the right consumers in the right way. And so it’s not just that you think about programs associated to rebates, for example, but even like co-marketing programs, etcetera, are all things that are possible. And so yes, so the hard part is over the years to come. It’s a little bit hard to assess what really the upper bound is. The big issue of this is that these are often more lumpy programs that are a little bit harder to predict. But do we know that there’s a real willingness and do we also understand that there’s a macro that effectively demands for a greater need of support by the OEMs? The answer is also yes. So do we see the broader opportunity? And do we think that we have a unique value proposition within the area? The answer is also yes. So it’s hard to quantify what the actual upper bound is. Chris Pierce: Okay. And when you do one of these programs, do you also get dealer revenue because it leads to a transaction as well? Or is it just revenue on the marketing side from the OEM side of the world? Jantoon Reigersman: It depends very much on the programs, but the answer is, in many cases, yes, both. Chris Pierce: Okay. Okay. So in theory, it’s somewhat of a leading indicator on dealer revenue with a lumpy backdrop. So it’s hard to model. Okay. Perfect. Jantoon Reigersman: Yes. Chris Pierce: And then the letter talked about regaining lost dealers. Can you just kind of touch on the game plan there? Are you seeing outreach in these dealers as inventories pile up? Or is it about you going to dealers talking about, hey, we’re more moving to subscription? Hey, we have TC+? What’s the push and the pull on that side of the world? Jantoon Reigersman: Yes. Good question. I think the short answer is always, we have a bias towards action as a firm. So, we will always engage and be aggressive and proactive. We do see a really healthy portion of our dealers coming back on our network, so that’s really good. And it’s really mostly us reaching out and just reengaging and properly engaging. And it’s also engaging in a different form. So, we haven’t really spoken about it in this letter, but we have two tremendous leaders, one on the sell side and one on the service side. So, we have also did a greater separation of the sales and service capacities and the service programs associated to that. We have obviously been doing research. And historically, we have done research where it clearly showed that NPS scores with dealers was very high, if you touch them within 30 days, obviously a negative, if you touch them in 90 days, and so there are a lot of opportunities for us to just engage much more in a consulting form and engage with providing insights and training as opposed to trying to be there as a salesperson. And remember that one of the beauties of TrueCar is that we have a lot of data. We have a lot of insights. And we have insights not only on, obviously, the sales that happen at a respective dealership, but also loss sales or our capture rates or all these type of things are pretty much everything that happens within the DNA of that respective dealer. And so there is a lot of opportunity for us to just have a different form of a dialogue. And this all sounds really not super sophisticated and it doesn’t need to be sophisticated, it just means that you need to be engaging with the dealers the right way, which is exactly what we are doing now. And so yes, so the short answer is it’s very much proactive from us. And we do have dealers call back in, but it’s very much still proactive from us. And it’s also much more focused on how do you actually do sales, how do you do service, how do you do handoff towards service, what does it actually mean to do service, how often do you touch dealers, what do you provide them, how are you the best partner you can be with the dealer partners in a world where they really need our help. Chris Pierce: Okay. Thank you. Operator: [Operator Instructions] Our next question will come from Marvin Fong with BTIG. Please go ahead. Marvin Fong: Good morning. Thanks for taking my questions and congratulations, Oliver on the new role. So, first question, I would just like to revisit the long-term revenue and margin targets for 2026. Jantoon, you mentioned several of the building blocks. I mean is it fair to say that TC+ is the largest component of how you plan to grow revenue? And could you add some color on sort of the assumptions you have behind like adoption of TC+, like how many dealers won’t be part of that program, etcetera. Just maybe some more color would be very helpful? Thank you. Jantoon Reigersman: Yes. So, Marvin, great question. So, the answer is interestingly enough, it’s hard to predict adoption of a product like TC+. I actually think and I am a firm believer, otherwise, I wouldn’t obviously be here, but like once TC+ is actually fully, fully operational with the consumer and dealer experience, we envision it is capable of. I think this will be a huge – there will be huge adoption of that product. Now, it’s hard to assess and it’s hard to predict when and how and what form. But I do and a firm believer of that, we see that consumers really want to do full transactions online. And we see that dealers really want to effectively expand their addressable markets and want to maintain or even increase their margins and do greater sales volumes. And so we think that there is a real value here to provide. As part of the planning, to answer your question, I actually think that there is a really big opportunity for a lot of the historical TrueCar revenue lines to come back to growth, right. So, whether this is just providing the current suite of products, and we provide better right focus on the EV side of things, focus on the OEM side of things, etcetera. So, interestingly enough, and this – the growth that we are looking into this aspirational model is not actually overly dependent on the TC+ side, because it’s so hard to predict. So, in many ways, there is a segment to TC+ and the piece of TC+, really, if you think about it holistically, and you go back to the 30,000-foot view, one of the metrics you will start hearing us talk about more and more over time will be revenue per dealer. That is currently still a little bit of a murky number because obviously, you have a lot of dealers inside and there is a long deal to the dealer. So, at some point, we will become a little bit more clear on that. But revenue per dealer is a metric that I have started talking about more and more internally as well as the concept of proper, like two side a marketplace where you match supply and demand. And so the revenue per dealer will be – obviously, we are seeking to move up pretty dramatically over the next couple of years and one of the ways to move that up is not only to sell better and more services to dealers, but also over time is to obviously add new product lines in there, and one of those product lines will be TC+. Do I think that TC+ has huge opportunity, the answer is yes. Is this predominantly based on actually the more historical TrueCar, the answer is also yes. So, it’s actually less dependent on TC+. Marvin Fong: Got it. Okay. That’s great. And I guess a follow-up just on dealer count. So, I think the franchise dealer count declined for the first half after several quarters of positive growth, could you just speak to what might have changed this quarter to kind of cause that number to reverse to the prospect of the strike, which I think, turned out to be less bad than most people thought. Did that play any role? Just any color you could add would be terrific. Jantoon Reigersman: Yes, it’s – yes. And absolutely, it’s a little bit of a wash and just marquee right now. So, we transited to this more service and sales organization part. And so we are working through that right now. There is a little bit of like shaking out of like also like historical dealers that are maybe a little bit less quality oriented towards consumers. There is just a little bit of give or take happening as we are now prioritizing really our dealer customers and consumers. And so net-net, as you will see this wash happen a little bit. It might take a quarter or two quarters, but it’s a little bit murky in terms of shifting up and down. It’s really about focusing on the standard distribution of the dealers. We really want to focus on our bread and butter and it really provides the right experiences and are the right forward-leaning dealers. And so you will see that’s always a little bit fluctuate although I think that we have obviously hit the trough and this should start going up over time. There is a little bit of give and take, if you look at any given month in terms of types of dealers coming on and coming off. What I really care about, obviously, is the type of dealers coming on and the type of dealers going off. And that’s the piece we really are on like a hawk. So, I am less concerned about some of the dealers coming off as long as there are the dealers, we are not necessarily looking to seek to service in the long-term anyway. Marvin Fong: Got it. Okay. That’s great. Thanks so much. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Reigersman for any closing remarks. Please go ahead, sir. Jantoon Reigersman: Great. So, thank you everyone. I would like to thank everybody for taking the time to participate today. I also would like to thank the team for all their continued dedication and hard work without our people none of these results are possible, so I really appreciate it, and we ask a lot of them. So, with gratitude, thank you all and appreciate you everybody waking up early. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar Second Quarter 2023 Financial Results Conference Call. Please note this event is being recorded today. I would now like to turn the conference over to Jantoon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon Reigersman: Thank you, operator. Hello, everyone and welcome to TrueCar's second quarter 2022 earnings conference call. Joining me today is Teresa Luong, our Chief Financial Officer. I hope you all had the opportunity to read our second quarter stockholder letter, which was released yesterday after market closed and is available on our investor relations website at ir.truecar.com. Before we get started, I need to read our Safe Harbor. I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the risk factor section of our Annual Report on Form 10-K. Our quarterly reports on Form 10-Q and our reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call based on information available to us as of today's date, and we disclaim any obligation to update any forward looking statements except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures, reconciliations of all non-GAAP measures to be to the most direct comparable GAAP measures are set forth in the investor relations section of our website at ir.trucar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. That was fun. Now with that, I will provide a summary of the quarter so, now we get into the real stuff. It is an exciting time at TrueCar. Okay, it's time of change in the time of focus. We've turned a ship and are laser focused on growing the business. In Q2, we achieved quarter-over-quarter revenue growth, significantly improve their bottom line and we're targeting Q3 year-over-year revenue growth followed by double digit revenue growth and adjusted EBITDA profitability in Q4. In mid-June, we streamlined organization and eliminated 102 positions or 24% of our headcount, all those -- these are always difficult decisions, it was an important step to be nimbler as a company and a more focused company. We have so many diamonds in the rough that are ready to shine, we're excited to pull those together over the many quarters to come and transform this business for long-term success. As an example, did you know that more than 50% of the nationwide supply of electric vehicles excluding Tesla is available in TrueCar? We have a unique opportunity to disrupt our markets and redefine our value propositions to both our consumers and dealers throughout various cohorts. We're excited to bring you along on this journey with us. And we'll elaborate more on this in the coming quarters as we launch our cohorts. Now, operator, let's open the call for questions from our analysts. Operator: [Operator Instructions] And our first question here will come from Rajat Gupta with J.P. Morgan. Rajat Gupta: Great. Good morning. Thanks for taking the question and the quick prepared remarks. I have a question on the OEM incentive revenue, obviously pretty solid in the second quarter, big pickup sequentially. And like a big driver of the EBITDA as well. And could you help us understand how the activations work here? And how should we be thinking about the sustainability of these levels going forward, did you even send the programs continue to the third quarter and do you anticipate to see for the contribution, and just how to think about the cadence here the recurring versus nonrecurring aspect of this. And I have a follow up. Thanks. Jantoon Reigersman: Absolutely. Hi, Rajat. Thanks so much for your question. So yes, we're excited on the OEM revenue, obviously, we're excited for two reasons. One is it's great to see OEM incentives coming back. It has obviously been an important part of our business in the past. And this dried out over the last couple of years. And so it's exciting to see that this is coming back. Not only is the OEM incentive piece being really interesting, it's also the combination of doing this together with our affinity partners. So it also articulates the strength of the platform we have as TrueCar, which is really combining the various stakeholders together and provide value to all of those involved. And so in this case, the combination of doing things with Sam's Club American Express and Mercedes is something that is incredibly valuable for all parties involved. And we hope to do more of these types of programs, we hope to grow this type of business over time, and it will always go a little bit with ebbs and flows still in the near term as obviously the macros resetting, but we do believe and expect this to be a longer term growth business for us. Rajat Gupta: Got it. NBA, USA program in the second quarter, is that, does that go on for a few quarters? Like do we -- would it be resold by other manufacturers? I mean, just curious, like, what --? Jantoon Reigersman: Yes, it's a question. So yes, these are like almost individual programs. So it's always hard to predict the way works as they, we establish a program they run well, we then determined to continue the program or slow down the program, and we obviously have to do similar type of programs with other players as well. So it's a little bit of give and take. And so it's always it's hard to say, hey, this is the steady growth because these are all always programmatic basis. This is not necessarily like an ongoing revenue flow, always. But this program, obviously has been very effective. It's something we're continuing at the moment. And then will that be replaced with other programs over time? The answer is yes. That's obviously what the teams are working on very much. And so over time, can you expect that we will do more and more on the OEM revenue side and we have greater tractions with a variety of these type of programs? The answer is yes. Will that be a perfect straight line? The answer is probably no. Rajat Gupta: Understood. That's very helpful. And then just a question on the OpEx. The cost action was executed, I would say is this, latter part of the second quarter, your guidance for the third quarter OpEx is flattish sequentially, I would have thought it would go lower with the full effect of the actions. And I'm curious, like what the OpEx are. You talked about some additions needed in the sales organization, but curious if you could add any more color on that and how should we think about the cadence of the OpEx through to the remainder of the year. Thanks. Teresa Luong: Yes, Rajat. Thanks for that question. I'll provide some clarification in around that piece. So in regards to the headcount, we did receive some benefit in Q2. So in regards to Q3, and Q4, we do expect some benefits and not to the full extent that leads us close in regards to the $20 million annualized savings, but we do expect some benefit. So when you think about our cost structure there's headcount, marketing, and other expenses. And as we said, marketing, we expect that to be fairly flat, quarter-over-quarter, but we're continuously monitoring the efficiency and effectiveness of those marketing spend. So we're able to adjust in real time as needed based on the trends that we're seeing, and there were other pieces, and we do expect that to stay flat. So overall, in total, I would say that we expect some benefit in Q3 and Q4 from the savings from the workforce reduction. Operator: Our next question will come from Naved Khan of B Riley Securities. Naved Khan: Great. Thank you. It's nice to see sequential growth in the unit. And I'm just curious if the increase was driven mostly by a more favorable macro. So more of a general improvement? Or how much of this is really driven by TrueCar Plus versus the improvement in general? Jantoon Reigersman: Yes, so a very good question. So it's actually, it's, I think it's two things, but TrueCar plus. So TrueCar Plus yes, to date is still in material compared to the bigger numbers. And so that's not the big driver. However, we continuously improve the platform, close rates, focus on conversions on the site, et cetera. And so it's a combination of obviously macro resetting as well as a continued improvements that the teams are doing in terms of the type of leads, they provide, the conversion rates on the site itself. So there are two drivers for that. And TrueCar Plus is having good traction, obviously now with the cohorts, we're going to go into a much more narrow field there. And so we're going to report out accordingly as well going forward. And that's really focused on the transaction side, obviously, going forward. But right now the number of TrueCar plus units in there is effectively immaterial. Naved Khan: Got it. And then you had previously talked about rolling it out nationwide. Is that still on track? How do you kind of view that by yearend? Jantoon Reigersman: Yes. Naved, it's a very good question. So the new ones we're doing is if you think about the lessons, we've learned of TrueCar Plus, to date it was very much effectively a person finding their own way into product flow. And that's obviously never a really good experience, because every person has a very different buying expectation and a very different engagement with the product. And so what we realized is we had to personalize those flows much more and take out constraints that appear, as you go along. I'll give examples. If you are lower credit profile, then obviously, lending will become a big issue. And then lending will become a big issue not only for the consumer, because they need to find the right lender that can lend against the right rates, but also for the dealer, because depending on the type of lenders, it might actually affect the margins of the dealers a lot. And so at the end of the day, we realize that we need to have a much more personalized journey, which is why we landed on the three cohorts to start with over time, obviously, we'll do more cohorts. But if you look at the cohorts in more detail, you realize that each of them will have a very unique flow. And therefore we're solving a lot of the friction points inside the product immediately by having that more personalized flow. And the idea there is obviously the ability to be nationwide, also much quicker. Remember that you can be nationwide with used without any issue. It's harder to be nationwide with new because there are restrictions either by OEMs are or others or certain states. And so as a result, with the cohorts and launching two cohorts that actually will facilitate us to be nationwide faster and sooner. And we'll anticipate to do that, obviously, depending on the type of cohorts and the type of cars but as an example, in the form of the economic cohort, we're seeking to be pretty much nationwide depends on certain states, given the financing requirements, but pretty much nationwide, almost from the outset. So net-net is it depends a little bit on the type of product and it depends on the type of cohort, but the answer is yes. We'll seek to be nationwide by the end of the year. Naved Khan: Got it. And then last question on the monetization, that went down sequentially, is it just a reflection of the mix between new versus the used, how should I think about that? Teresa Luong: Yes, I think that's correct. I mean, I think if you look at our new used mix, or used mix dropped down to I think about 44% were, in the last few quarters it was closer to 48% and 49%. So definitely that did have a factor in that mix there. Operator: Our next question will come from Tom White with DA Davidson. Tom White: Great. Thanks for taking my question. Just one for me. I guess it's been a couple quarters now you guys are talking about kind of these three kinds of buyer cohorts? And I guess I'm thinking about your commentary around sales and marketing probably being flat sequentially. Can you just talk a little bit about whether this kind of change in the way you're viewing the audience or you're segmenting the audience is requiring you guys to acquire traffic or acquire would be car buyers in different ways or you use different channels. Any just kind of differences or changes to kind of your marketing mix or marketing spend that go along with this. Thanks. Jantoon Reigersman: Yes, Tom, very good question, then the answer is absolutely, yes. So I think one of the beauties of doing the cohort is that the value proposition for each cohort consumer is slightly different. The value proposition even for the dealers is slightly different. Even though as a dealer you could obviously serve multiple cohorts. But the answer is absolutely yes, it allows us to not only capture people within that value froth at certain places and have a more targeted approach. It also, and so effectively, we're allowing people to find a journey, either by the way, retarget on the marketing side, or as they obviously arrive on the site, they're going to be different entry points in which they can take certain cohort paths. Remember, also don't misunderstand that the three cohorts are just the start of many more cohorts. But the three cohorts given the focus that we have as a company, obviously, those three create real opportunity for us. Remember, the economic cohort is one that is in very large unserved markets. And to date, if you look at TC Plus engagements, a significant part of the people that are seeking TC Plus transactions are actually within this cohort already. And so it was one of the triggers, whether we actually have the current product flow set up the right way, then if you think about the convenience cohort, that's much more of the historical bread and butter of TrueCar, but also allows us to really then focus in the line a little bit better with the different affinity partners and even lenders. So you start segmenting cohorts that actually facilitates everything, so does not only facilitate the targeting of the marketing, which absolutely is true, and it's something we're now embarking on. But it's also targeting effectively with partner so we have on the affinity side, as well as the different lenders that are more specialized in each of these cohorts. So the answer is yes, in terms of overarching dollars on the marketing side, that's not expected to increase per se, but it's much more the allocation of dollars and being smart about that, which we're now working on. Operator: [Operator Instructions] Our next here will come from Chris Pierce with Needham. Chris Pierce : Hey, good morning. I just had a question on the macro. And then a follow up, kind of looking at new car shortage, it seems like fleet is kind of driving some of the recovery. Do you think we haven't really seen a consumer recovery yet? And that sort of -- there's further growth to come from the business where you guys kind of are more levered to, is that kind of would you agree with that? Is that the right way to think about it? Jantoon Reigersman: Yes, Chris, I think the answer is absolutely, yes. So I think you're in a world where prices still held fairly high over time, agree that the fleet obviously was an important driver. But also remember that there's a lot of pent-up demand in the markets. And I think you can see that even from right like the used cars still holding fairly steady. Even though obviously new cars prices are coming down. There is a lot of demand. And you can see that even across all of the different platforms is that demand and in the UVs are very high, because people are looking for cars. And so the answer is yes, I think that there's a healthy mix has come back. I also think that now the days in inventory has started increasing. And so all-in-all, I think the macro is turning very much into our favor, which is a good thing for us, obviously. And we can be more and more helpful for our dealer partners, which is also always a good thing for us. It is still a little bit sporadic. So it still depends a little bit on the brands and the makes et cetera. But we expect this to iron out over the course of the next several quarters. Chris Pierce : Okay, it looks like you guys added franchised dealers or it looks like franchise dealers might have bottomed in quarter of 2022. Can you just kind of walk me through what's kind of resonating with those dealers? Is it because prices are still high, they're relying on needs more? Is it because of the changes you guys have made? Is it because a TrueCar Plus is just kind of to get a sense of what's driving the franchise dealer account back to possible --? Jantoon Reigersman: Yes, it's a great question. It's a combination of all. So I think there's an element of dealers obviously, now having more inventory than they had previously and have a greater need of help. Obviously, as the markets are coming back, we also have something that's called lost sales, right? So you walk into a dealership and you can show that they have actually lost sales in certain ways in their own area. And you can show like, hey, if you actually were to do ABC, it's actually much more beneficial to you. And so it's all very data driven because obviously now the markets are turning and we have all the data available. It's also because we're proving on the product flows and starting to offering for interesting new opportunities. I'll give you an example. We're launching, sponsored listing, for example, for new cars. So we only used to have that for use cars. And so there are opportunities there also to play for dealers. And then the other thing is also, just overarching the opportunity to especially as you start segmenting into cohorts, obviously that's resonating really well for the dealers, because many dealers have some form of specialization in some shape, or form. And so segmenting and cohorts actually allows them to really do what they do best. And so for us having that type of traction is important. The other thing also that I think is important to underline is that historically, our salesforces were often driven by rooftop count, or those type of metric that has all shifted to really focusing on effectively net revenue generation. And so you'll, it's normal that you see a natural shift happening of some dealers coming off that are very low MR and often very small, independent players, and we're really focusing on often a little bit more valuable revenue generating larger independents or franchise dealers, which is obviously the historical core and the bread and butter of the firm as well. So yes, so these are normal, natural shifts to happen for us. But there's a value proposition that is good. I think one thing to highlight as well as we're also focusing now that we've started segmenting on the cohorts, we've also gotten much more in tune with the value proposition that we have for both consumers and dealers. And so this is an effort that we'll continue conducting over the next couple of months where we're really refining on what are the biggest strengths that we have and articulate that differentiation much better than we have in the past. I think overarching, even for the financial community, if you actually look right, it's hard to assess what makes the different companies actually different. And so it's a concerted effort we're conducting right now where we are articulating this much better. And also will come forward much cleaner and clearer with our articulation on what makes TrueCar actually so much different from many of the other players in the market. Operator: [Operator Instructions] Our next question here will come from Martin Fong with BTIG. Martin Fong: Hi, good morning. Thanks for taking my questions. One question on conversion rates, units were up, although traffic was down quarter-over-quarter, just wondering if you could maybe break that down a little bit more. Are you attributing that to improvements on the website? Or are you noticing any changes in consumer behavior? And then I have a follow up. Jantoon Reigersman: Yes, I think, Marvin, I think it's both. So we're continuously making improvements. And we're always getting smarter on the product side. And also, thanks to TC Plus, we're learning a lot on like, where people draw up and what happens and what makes people tick effectively. That's number one. But it's also don't forget that at the end of the day, a large part of conversion is also driven by car prices and car availability. So if you look into in the like a couple of quarters ago, when the conversions are relatively low, two of the big drivers were obviously, lack of availability of the cars or when they were available, the pricing was disproportionate in the eyes of the consumer. And so now that becomes more, and they're almost a possibility for the consumers themselves. I think that's a big driver. But in addition to that, we're obviously making the right continuous improvements on the site itself. And then we think that that's obviously only going to improve over time as we become more focused on these cohorts. Martin Fong: Got it. And my follow up is, I understand everything you were saying a question ago about a lot of the lower value. Dealers are going to be turning off as you focus on net revenue, but just because you talk about the independent dealer count, like what's your visibility there? Should we continue to expect that to decline or do you think that might be stabilizing? Thanks. Jantoon Reigersman: Yes, there are, like the ones that are turning are often gone out of business or merging or so those are often smaller players. I think that just needs to kind of wash through the system. I anticipate this to happen for some time, given on the independent side, given that there are those we have quite a little smaller player still making the longtail effectively so on the rooftop number counts, there are still some left. And the question is a little bit depending on how the markets normalize or how they are able to adapt their business lines, it's hard to say whether they will be able to make that or not. But for the time being, like while the interest rates are relatively high, and obviously used car prices are where they are, and some of them will probably struggle. And that will stay like that. So I would anticipate us to keep going for a little bit and then at some point that will level out. Operator: And this concludes the question-and-answer session. I'd like to turn the call back over to TrueCar’s President and CEO, Jantoon Reigersman for any closing remarks. Jantoon Reigersman: I would like to thank everybody for taking the time to participate on our call today. I also wanted to thank the entire TrueCar team. So the team is working tremendously well coming together. It's a smaller team. It's a nimble team. And the team continues to work super hard. So it's an exciting time for the company. And we look forward to sharing more about our continued progress with all of you on our next couple of calls. Thank you. Operator: The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.

Operator: Good day, and welcome to the TrueCar First Quarter 2023 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, operator. Hello, and welcome to TrueCar's First Quarter 2023 Earnings Conference Call. Joining me today are Mike Darrow, our President and Chief Executive Officer; Jantoon Reigersman, our Chief Operating Officer; and Teresa Luong, our Chief Financial Officer. By now, I hope you've all had the opportunity to read our first quarter stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believes, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I'll turn the call over to TrueCar's President and Chief Executive Officer, Mike Darrow for some opening comments. Mike? Michael Darrow: Thanks, Zaineb. Good morning, everyone, and thanks for joining us. We highlighted some of the great progress made across our company in our stockholder letter for the first quarter of 2023. The entire TrueCar organization is focused on executing our four key business priorities in 2023. They are: one, to rebuild our core business; two, expand the market footprint for TrueCar+; three, lean into the used market; and four, focus our marketing on converting our healthy top of funnel traffic into sales for our dealers. I'll start with traffic. In Q1, we had nearly 8.7 million monthly unique visitors across all our sites. This represented more than 19% year-over-year growth and exceeded our internal plan. While we were measured with our marketing acquisition spend, we were also focused with targeted SEO improvements and continuous improvements to our approach. We believe this has put us in a solid position with our upper funnel traffic performance. Our focus is now shifting to customized experience flows and on the conversion of these millions of unique visitors into sales for our dealers. We are developing personalized shopping journeys for three initial consumer cohorts that we've identified: economic buyers, convenience buyers and EV buyers. By building personalized journeys for these cohorts, we believe we'll be able to help consumers in these cohorts identify the right vehicle for their needs and expect this to help us drive higher conversion for our healthy upper funnel traffic. To complement our demand side performance, we've started being more deliberate and proactive in our approach to the supply side of our platform. This will position TrueCar to deliver a better e-commerce matchmaking experience for the consumer cohorts that we plan to focus on. We grew our net franchise dealer count by 37 dealers in Q1 and focused on adding brands and inventory where we have active shopping interest. As new car inventory continues to recover slowly up a historically low base, we plan to continue to add dealers in inventory that match our consumer demand patterns. On the used car side, our dealer count declined in Q1, impacted by consolidation and current market challenges, particularly for smaller independent dealers. We'll continue to focus on adding larger independent dealers that will align well with our very active shopping cohort of economic buyers that has emerged in our used car channel. On the product front, we redesigned our TrueCar+ checkout flow to deliver a better e-commerce experience for consumers through a transparent, intuitive and streamlined flow. We also launched a new order confirmation step that allows a consumer who has built a deal within TrueCar+ to confirm their desire to complete the transaction. Additionally, to support our TrueCar+ retail partners, we made specific enhancements in dealer portal that will make it easy for dealers to respond to TrueCar+ orders. We believe these enhancements will make the TrueCar+ experience more efficient, accurate and transparent to both dealers and consumers. We'll continue to expand the geographic footprint for TrueCar+ beyond the six initial southeast states where it was offered. Over the next few months, we're preparing to more than double TrueCar+ market coverage, starting with key metro areas across an additional 10 states. We have already started adding dealers in Virginia, Ohio, Maryland and Texas. Finally, as we lean into the used car market, we launched TrueCar+ Wholesale Solutions, a wholly owned subsidiary that will provide market-based vehicle valuations that are established using a proprietary algorithm and by leveraging multiple market inputs, including values that reflect the current dealer demand. We implemented a broad rollout of TrueCar+ Wholesale Solution valuations across the contiguous United States at the end of April. The sourcing of used vehicle consistently remains a top demand for our dealers, and we believe this program will be a relevant solution for them. There are many other areas where we are making strong progress. For example, in mid-April, we expanded our OEM program with Stellantis and extended our Mercedes-Benz program, both of which will provide targeted offers to select affinity programs. As new vehicle supply continues to rebuild, we continue to work with leading brands to offer benefits to the members of our exclusive affinity partners. Our balance sheet remains healthy, allowing us to invest in our priorities for 2023. We continue to anticipate breakeven or positive adjusted EBITDA in the fourth quarter as well as double-digit revenue growth compared to the fourth quarter of 2022. As always, I want to take this opportunity to thank the entire TrueCar crew for their hard work, dedication and commitment to our vision of bringing something new and innovative to the market at a time of rapid change. We'll continue to embrace what we expect will be an increasingly digital future for automotive retail. Michael Darrow: Before we open the call up for live questions, we're going to address some questions around key topics. Zaineb, what's the first question? Zaineb Bokhari : Thank you, Mike. The first question is for Jantoon. Jantoon, what factors drove the behavior of independent dealers in Q1? And how are you factoring this into the go-forward plan for rebuilding the core business? Jantoon Reigersman: Absolutely. So the used market has been experiencing headwinds in recent months. Higher interest rates have hurt many independent dealers as their floor plan financing costs have risen. The price and supply dynamics are less favorable and affordability issues remain a challenge for consumers. The combination of these and other factors have put pressure on dealers' gross profit per unit, especially for smaller independent dealers. Our net independent dealer count was lower by 277 in Q1. However, there are a couple of points to make. The vast maturity of these dealers were smaller independents and feelers where we understood the reason of their departure, over 40% are either acquired or went out of business. In one case, a single group actually had 95 rooftops on our platform that was acquired. Although, obviously, the rooftop count was lower, it had very minimal impact on the MRR. As we rebuild our core business in 2023, it is our intention to add the right dealers with the right inventory to our network that matches the demand from our shoppers. This will be particularly important as we focus on converting our traffic and on developing personalized shopping journeys for the three initial consumer cohorts that Mike mentioned. Further, we see some of the major franchise and independent dealers centralizing their efforts for online transaction, which actually is clearly to our favor. This will represent a single connection point for TrueCar by dealer, but with significantly more inventory behind that single connection point and the dealers with greater ability to deliver a better consumer experience. So we see overarching a bunch of changes happening, which are effectively turning into our favor, which is good. Zaineb Bokhari: Thank you, Jantoon. The next question is for Mike. Mike, can you explain why we are launching TCWS valuations? And how this is different either from what was used previously or other existing sources of used vehicle valuations. Michael Darrow: Thanks, Zaineb. At the end of April, we launched TrueCar Wholesale Solutions valuations to provide truecar.com and our extended affinity partner sites with real-time vehicle valuations and a backstop on trade-ins through TrueCar+. TCWS valuations will also support consumer-to-dealer sales through our cellular car program. These vehicle valuations are established using a proprietary algorithm leveraging multiple market inputs, including values that reflect current dealer demand, which is relevant for consumers who want a current assessment of what their used car or trade-in is worth and for dealers who continue to tell us that used vehicle acquisition is a major priority for them. We believe TrueCar Wholesale Solutions will be more relevant to consumers and dealers than valuations based solely on backward-looking algorithms that did not incorporate current market inputs. As we lean into the used market, we expect to open up additional opportunities for TrueCar and our retail partners in this market and offering real-time valuations is just one of the efforts underway at TrueCar. Let’s have another question, Zaineb. Zaineb Bokhari: Thank you, Mike. The next question is for Jantoon. Jantoon, can you tell us more about the three consumer cohorts we've identified? And explain how we plan to use the new experience flows to drive higher conversion. Jantoon Reigersman: Absolutely. So we continue to make big strides in TrueCar+, improvements like unified [BDP] (ph) and streamlined checkout flow, as highlighted in our letter. I also urge everybody to look at the visuals because again, I think you clearly see that it's a much more efficient flow. While we have spent time building the various features for an online transaction, we've also started to hone in on developing a more defined experience flow to help match consumers with vehicles in our dealers' inventory that suit their wants and needs in order to drive higher conversion across our strong top of funnel traffic. Matchmaking higher up in the funnel will therefore become increasingly more important for us. We have identified three initial consumer cohorts to focus on: economic buyers, convenience buyers and EV buyers. Each have different wants, desires and budgets, motivations for shopping for vehicle. Economic buyer has a lower credit score and will have the ability to search for inventory qualified for their buying power. The convenience buyer has a higher credit score, focused on comparability, is most likely new or certified pre-owned, probably interested in leasing. The EV buyers seek different information, not only on range or battery life but also considerations around buying a used EV, for example, or even a comparison against an internal combustion engine. Both the convenience and EV buyers are also very attractive profiles for OEMs as they look to reengage their incentive programs and figure out how to penetrate deeper into these markets. This is especially prevailing and important in a rising interest rate world where OEMs would like to subsidize for their consumers. The cohort identification also allows us to target our top of funnel more efficiently and allows us for more targeted and curated dealer engagement too. So overarching, it just creates a greater focus for the company. Zaineb Bokhari: Thank you, Jantoon. Our final question before we open up the line is for Teresa. Teresa, market conditions remain mixed. What are the drivers of the double-digit year-over-year growth and breakeven or positive adjusted EBITDA by the fourth quarter of 2023 that we're expecting? Teresa Luong: Thanks, Zaineb. Regarding the drivers, this goes back to our focus on our four key priorities for 2023, which we believe will help us achieve the double-digit year-over-year top line growth we expect in Q4. It's encouraging to see new vehicle inventories continue to rebuild while more progress is needed. We are adding franchise dealers to help them generate demand for their inventories. There are still definitely some headwinds that we are watching closely, including what is going on in the used market and with independent dealers that could make our progress a little uneven, especially in this first half. As we are rebuilding our core business, our main focus there is to recapture dealers and grow inventory. We are being intentional as we focus on franchise dealers and larger independent dealers to our platform who have the brands and inventories that our consumers are shopping for. We expect this focus on adding the right dealers to our network and on developing the personalized shopping journeys that Jantoon spoke about to enable us to match dealer supply with consumer demand and drive conversion higher, which will help us grow sales for our dealers, leading to more efficiency in our acquisition spend. As inventories continue to rebuild and we make progress with recapturing these dealers and executing the priorities we have set for 2023, we expect the second half will be better than the first half of this year. Back to you, Zaineb. Zaineb Bokhari: Thank you, and thank you, Mike, Jantoon and Teresa. Now operator, let's open up the call for questions from the audience. Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Rajat Gupta of JPMorgan. Please go ahead. Rajat Gupta: Grear. Good morning. And thanks for taking the question. Just wanted to follow up on Teresa's comments at the end. How should we get comfortable with the bridge from the $11 million EBITDA loss to a positive -- breakeven to positive EBITDA in the fourth quarter. I know you mentioned like the revenue drivers, but just from a profitability perspective, like how should we get comfortable with that bridge as it seems like a pretty big hill. But if you could give us some more color there would be helpful. And then maybe if you could comment anything around just the linearity within the first quarter -- like did the profitability improve through the course of the quarter and into April? Any color on that also would be really helpful, and I have a follow-up. Teresa Luong: Thanks, Rajat. I think as it comes to expenses, we've been very disciplined in how we invest into the company and where to spend wisely into the different types of strategic objectives that we have. When we look at the first quarter, especially, I think normally, we have slightly higher expenses in the first half of the year. We're always looking for efficiencies throughout the year. So this is something that we'll continue to do, and we'll keep a tighter focus on that. The other big bucket that we always look at is really on the marketing side. As we've mentioned, that our focus this year, one of our core priorities is to focus on the higher conversion. We have a pretty healthy top funnel and without really adding [indiscernible] spend there. So I think being able to keep that marketing spend down, while keeping the top funnel healthy and then really focusing on converting those unique visitors into sales will really help us drive that home. But in regards to expenses, it is something that we're watching closely, and we'll always look for efficiencies where we can. Jantoon Reigersman: Yes, I think I'll also -- Rajat, thanks for the question. I'll also articulate a little bit on the top end. So remember that we effectively realigned our field team at the end of Q4 of last year. It basically means getting their stride. It was a separation of two roles that we implemented, provided the teams with their books of accounts and targets throughout the early parts of Q1. So to your question around the curve, it's very obvious that already in March, April, in particular, in May, obviously, we've gone through the worst of that and the trajectory has gotten a lot more positive. So I think we're comfortable in reiterating the top line end of what we're looking at. So it's pretty much on plan for us. In terms of the first quarter, it was pretty much on plan, and the broad plan we originally had. So this is -- it's still work in progress, but we've gone through the worst for us as a business. Rajat Gupta: That's helpful color. And then maybe just on the independent dealer comment. You gave us some color around the 40% number. Were digital dealers also a part of that? I don't know how much exposure you have to digital used car dealers, but were they a part of that sequential decline as well? Was there any churn because of some of the pricing actions that you might have taken with TrueCar+? Just wondering if -- any more detail you could give us -- and have you seen these trends continue into 2Q as well? Thanks. Jantoon Reigersman: Yes, those are all -- so, a good question. So first of all, I think last time we articulated -- so number one, digital dealers. So if you think of players like Carvana, for example, they are only on our platform with one single rooftop. And so the rooftop numbers themselves are not super big. The other thing is also -- it's always a little bit tricky because, on the one hand, a concept of rooftop is important because it shows you effectively a number of clients you have. But one of the things we've started shifting towards, and we've been really focused on is much more revenue and revenue contribution by our customers. So it really depends on the type of dealers that are turning off. Overarching, smaller dealers here are [indiscernible] rising interest rate world, similar to the past. So if you look at historical numbers 10 years ago, very similar profiles were happening. A lot of Moms-and-Pops stores that don't necessarily have very strong financing. We'll start suffering as well as, obviously, a greater M&A activity around especially midsized dealers that are looking to acquire some of the smaller ones. So that will continue to happen. If you look at other reasons for people to come off, it's often for themselves, gross margin, nervousness, et cetera. So it really depends. Some still don't have a lot of inventory or have difficulties accessing inventory. As Mike mentioned, a lot of our dealers are seeking to get access to used inventory. So if you're a smaller dealer with less footprint, it's going to be harder to get access to inventory. So there are multiple reasons effectively for us. I think overarching though, if you look at our team, they've been really good at walking into our dealerships, making sure there is an active engagement with our network. And I think that's already bearing a lot of the fruits, if you look at our numbers. So overarching, I think we're in a really good spot. In terms of Carvana specifically, which I think was your digital dealer question. Obviously, and I think this was mentioned last time as well, there was a moment where some of the larger digital retailers effectively turned off any external support. Those are things -- we're obviously in active dialogue with all of our clients at all times and various clients will try new things or different things in this environment that is constantly changing, but we feel very confident about the customer base that we have across the board. We're very much revenue focused as opposed to purely rooftop count focused. Operator: [Operator Instructions] The next question comes from Tom White of D.A. Davidson. Please go ahead. Thomas White: Great. Thanks for taking my questions. Good morning. I guess, first off, thanks for the color and some of the background behind thinking about the new customer cohorts and the personalized e-commerce flows that you guys are kind of developing or focusing on. I guess, when I think about how that might change your kind of customer acquisition or your audience acquisition, I'm just curious, I guess, how much of a change does it require you guys to -- this new kind of approach, how much of a change does it require you to make on the traffic acquisition or customer acquisition side of things? Does it mean new marketing channels or new tactics, and how confident are you that you can acquire kind of audiences that specifically are tailored to these new profiles, if you will, in an efficient way? And then just secondarily on OEM spend, and I guess this is tied to your commentary on new inventories, but it's still -- that revenue line is still pretty depressed. Just curious if there's any change to how you're thinking about the trajectory of that revenue line this year. Thanks. Michael Darrow: Thanks, Tom, this is Mike, and great questions. Let me start with the first one you put out there. We're seeing so much more and understanding so much more about our shoppers with the evolution of the TrueCar+ flow that we're able to identify these cohorts in a much more specific way. The three that we mentioned became very evident early on, these are initial cohorts that we'll be able to pursue. As we see folks progress through deal-making, requiring trade-in values, doing soft pulls, applying for full credit online, we get so much data that it's really helping us understand our customer traffic at a much deeper level. That then could be spun around, as you mentioned, into leveraging that in buying the type of traffic that fits the supply of vehicles we had. So we're working both sides of that equation. We're out there looking for dealers who can provide the type of inventory that our shoppers seem to be predisposed to. And then on the acquisition side of marketing, we can get more aggressive in marketing specifically, the vehicles we have on our site and leaning into those cohorts as they work on the flow. So we're getting and seeing much more information about both sides of that, and we're utilizing it and being more effective. We made some changes in the marketing side of our organization. I'll let Jantoon provide a little more color on that. But this is an area where we'll continue to get better and better. We'll learn more about our shopping patterns, of our traffic, and then be able to lean into more efficient acquisition spend. Jantoon Reigersman: So I'll go -- like there are obviously a lot of nuances here. But number one, we already have in our audience quite some of these identified cohorts. Number one. Number two, we're also shifting a little bit the length of how we think about the journey of the buyers. So where historically, we were very focused on the seven days prior to purchase, we're actually now moving to a 98-day cycle prior to purchase where people can really start thinking about discovery and finding the right cars for them. So there are a lot of things we're moving. The good thing is that we are very -- we have been very efficient. I think we've also continued showing marketing efficiency. So these are cohorts that we already have, but also, we feel are good and easy for us to attract and some of them are highly under-served. So it's an attractive opportunity for us. It's also cohorted -- we've been identifying, already engaging very actively with TC+. So we feel that each of these journeys effectively can have a much more experienced flow. So in other words, really thinking about an economic buyer start to finish, will engage very differently with our product than a convenience buyer. As a result, really let's actually create that as frictionless as possible because for one, for example, registration, which would be much more important than for another word, for example, prefinancing would be really important. So as opposed to having a generic person arrive on the site and have to do self-discovery, we're going to make more predetermined funnels, which then enables us to actually have greater amount of conversion. Michael Darrow: Then I think, Tom, the second part of your question was around the OEM business. We're seeing probably the same signals you have in the marketplace. The big issue that everybody in the vertical is trying to address is affordability. The OEM's first steps in that seem to have been buying down APRs through their captive [indiscernible] leases and those sort of things to address affordability for consumers. But we are very active in our discussions with the OEMs more active than we've been in the past as they seem to be more receptive to those discussions. I think as Jantoon mentioned, as we get more specific about these cohorts, the convenience shopper is going to be a very attractive cohort for our OEM partners as well as the EV shopper. So they'll have the opportunity to come in and actually insert themselves in key stages of that cohort buying process and try to influence those outcomes. So the discussions and the pace of discussions are picking up on the OEM side. We've had some success, as I mentioned, with expanding the Stellantis program and then extending the program. We've been running with Mercedes-Benz on to additional affinity partner sites. So we expect that OEM business to continue to get more active throughout the year. Thomas White: Great. Thank you. Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the call back over to TrueCar's President and CEO, Mike Darrow for closing remarks. Michael Darrow: Yes, I want to thank everybody for taking the time to participate and I also want to thank the entire team at TrueCar for all the hard work over the last few months as we work to execute on our clear priorities for 2023. It's an exciting time for our company, and we look forward to sharing more about our progress with all of you on our next call. Thanks for joining. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar Fourth Quarter 2022 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over, Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, Nick. Hello, and welcome to TrueCar's Fourth Quarter 2022 Earnings Conference Call. Joining me today are Mike Darrow, our President and Chief Executive Officer; Jantoon Reigersman, our Chief Financial Officer; and Teresa Luong, our Chief Financial Officer. By now, I hope you've all had the opportunity to read our fourth quarter stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar's President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike? Mike Darrow: Thanks, Zaineb. Good morning, everyone, and thanks for joining us. We highlighted some of the great progress we've made across our company in our fourth quarter stockholder letter. We also shared some of the exciting personnel enhancements we made to align around our key business priorities in 2023. We continue to refine our product experience and align our resources around delivering the automotive industry's first True modern day marketplace for new certified pre-owned and used vehicles. As we look ahead, we have four key priorities for 2023 to rebuild our core business, expand the market footprint for TrueCar+, lean into the used vehicle market and focus our marketing on converting our healthy top-of-funnel traffic into sales for our dealers. These priorities are strategic for us and are informed by what we're seeing in the market today and what we heard from our dealer partners at NADA. We're confident that our efforts throughout 2022 have provided a solid foundation to execute towards these priorities in the coming year. To embrace the opportunities we identified for 2023, we organized our senior leader -- we reorganized our senior leadership team and added essential new hires to ensure the successful execution against these key priorities in 2023. Two of those leaders are here with me today, so I'll address them first. Jantoon, who previously held the role of both Chief Financial Officer and Chief Operating Officer, has become our COO in a dedicated role that initially will focus on rebuilding our core business and on the rollout and adoption of TrueCar+. In addition to our market planning -- our marketing plan to aggressively pursue conversion of our robust top-of-funnel traffic. We've also developed plans to add additional operating departments under Jantoon beginning in Q2. Jantoon has demonstrated that he is an effective leader and his influence over the operating functions will help ensure that our entire company remains focused on innovation that will be quickly scaled to deliver value to dealers and consumers. I'm excited to announce that we promoted Teresa Luong to Chief Financial Officer from SVP of Financing, recognizing her extensive knowledge of our company and her leadership in the many critical roles she had played since joining TrueCar in 2014, which include helping to take the company public, overseeing financial reporting, technical accounting, tax, forecasting and business planning. Congratulations, Teresa. In December, we hired Jay Nieman to lead our field sales team as our Head of Sales. Jay has a proven track record in managing field sales and operations team and has quickly become a hands-on leader for the sales organization. Jay will report to Jantoon and will lead our efforts to rebuild our core dealer network and expand our TrueCar+ footprint. We also recently hired Jay Ku as our first Chief Commerce Officer, created role to achieve will bring his extensive experience in full funnel marketing and conversion. In this capacity, Jay will be responsible for scaling the TrueCar brand across multiple channels and helping us convert the millions of monthly unique visitors into sales for our dealers. Jay will report to Jantoon. At this point, I'd like to turn it over to Jantoon for an operating update. Jantoon Reigersman: Thanks, Mike. During Q4, we continue to see the supply of new vehicles rise across the industry. This is an encouraging start. But since this recovery is from a very low base, much more progress is needed in the quarters ahead. Vehicle affordability is still a concern for many consumers who are struggling to manage their monthly payments while interest rates continue to tick higher. This has continued to pressure our close rates, and we believe it will be several months before we return to a more balanced environment across our industry. That dealer counts for our core leads based business increased during Q4, driven by growth in franchise dealers. During Q4, dealers had left our platform when new vehicle inventories were in decline started to return. We saw some attrition amongst independent dealers in Q4 and in light of softening demand and other dynamics impacting the used side of the market. We expect some churn in independent dealers in the coming quarters. Despite these near-term issues, we remain firmly committed to the used side of the market. Wherever we travel across the country, dealers tell us that they need more and more used cars. It is clear to us that the limited availability of new vehicles over the past few years is creating some scarcity, particularly for one to three-year-old vehicles, and we intend to step-up efforts to help our dealers source used vehicles. During the fourth quarter, we continued to enhance our TrueCar+ marketplace. We upgraded our TC+ credit offering and expanded our coverage of auto lenders from fewer than 15, sorry, fewer than 50 to more than 1,500 lenders nationwide by replacing a third-party provider with our own credit engine. This is a huge feed by the team. As a result of this upgrade, TC+ dealers can easily find and configure their preferred lenders, which makes on boarding new dealers much simpler and may potentially support higher approval rates for consumers with a broader group of preferred lenders available for each dealer. Additionally, we more than doubled the size of our accessories catalog in TC+, which let dealers offer a broad-based, broad set of accessories throughout our marketplace and also help simplify the dealer on boarding process. In addition to the great dealer consumer factory upgrades, we modernized our entire cloud infrastructure, an upgrade that will allow us to reduce costs while increasing our development speed and flexibility to respond to change. We also launched our AI recommendation engine, which will be used to power some of the exciting new features planned in the near-term, product road map for both TC+ and our core business. After establishing a solid foundation in Florida, we announced the expansion of TC+ into five additional Southeastern states throughout Q4 and have either signed up dealers or are in the on boarding process with them in each of these states. It is important to note that as we expand our footprint for TC+, we intend to focus on adding digitally forward dealers to our marketplace and help them broaden their market reach and impact to drive higher sales. The dealer network for TC+ will therefore be much more curated than our leads business and will be mostly focused on inventory. We're also launching -- we've also launched a new subscription packages for 2023 that are aligned to the value that our products can deliver to our dealers. Over the course of '23, we plan to move away from the legacy pay-per-sale model and focus on growing monthly recurring revenue. We're also committed as ever to helping our dealers grow their unit volumes, especially as the market starts to shift from a purely supply-driven market to one where demand generation and a robust digital presence will increasingly be important. I'll give -- I'll turn it back to our CEO, Mike. Mike Darrow: Thanks, Jantoon. There are many other areas where we're making strong progress that we'll continue to share with you over the coming year. I'll touch on a couple of significant examples that demonstrate the resurgence of the TrueCar brand in the affinity and OEM space. We launched a new partnership agreement with NerdWallet, a leader in the personal finance space with approximately 20 million monthly unique users of their sites for education, insights and information about life's financial decisions. We believe this program will help bolster brand awareness for TrueCar and TrueCar+ is set to be active on the partner site at launch. We also expect to significantly expand our OEM program with Mercedes-Benz on March 1. This program and expansion will provide targeted Mercedes-Benz offers to some of our most robust affinity platforms. We're excited to combine the power of a world-class automotive brand like Mercedes-Benz, with the membership and purchasing power of our exclusive affinity network. Our balance sheet remains healthy, and we believe our cost structure is in a good place. We're encouraged by the signs that new vehicle inventories are starting to rebuild. We will not be providing detailed guidance on this call. However, based on our current plan, we expect to achieve double-digit year-over-year revenue growth and return to breakeven or positive EBITDA by the fourth quarter of 2023. I'm very encouraged by our progress during the fourth quarter and in the weeks that have followed. I wanted to thank the entire TrueCar crew for their hard work, dedication and commitment to our vision of bringing something new and unique to the market and doing at a time of rapid change as we embrace what we expect to be increasingly digital future for automotive retail. Before we open the call -- before we open the call for live questions, we're going to address some questions around key topics. Zaineb, what's the first question? Zaineb Bokhari: Thanks, Mike. The first question is for you. We've highlighted several updates to TrueCar+ in the stockholder letter, including an updated credit experience and an expanded accessories catalog. Can you explain why these are important within the overall product flow for TrueCar+ and what is next? Mike Darrow: Thanks, Zaineb. We greatly improved the dealer and consumer experience at TrueCar+ during the fourth quarter in a number of ways. First, we expanded the number of lenders that dealers can access within our marketplace from just under 50 lenders to more than 1,500. This is an important upgrade for several reasons. First, dealers will be able to provide vehicle shoppers access to a broader set of their preferred lenders. Second, consumers applying for credit will now have more options and more of them may be able to get financing now that the selection of auto lenders is much wider, some in a matter of a few minutes. Third, as we expand TrueCar+ into additional markets and bring dealers onto our platform, on boarding these dealers becomes easier since we'll have integration with many, if not all, of their preferred lenders. Strategically, we shifted a key capability from a third-party to our own in-house credit engine. This gives us a lot of flexibility to continue to customize the offerings and also opens up our marketplace to lender partners. We've done something similar with accessories and protection products, an important and lucrative revenue stream for dealers, more than doubling the catalog of approximately 28,000 multi-brand parts and accessories and protection products across all major OEMs from when we launched in October. This means that dealers can find and bring the accessories that they want to sell on TrueCar+ quickly and consumers can customize their desired vehicles. With these updates, the flow within TrueCar+ now allows vehicle shoppers to find their car, get full credit approval from a dealer's preferred lending partners and customize their desired vehicle by adding accessories and some products offered by the dealer. In the first quarter of 2023, we plan to enable an order confirmation that will effectively represent the fully baked deal on the dealership's terms, using financing from a dealership preferred lenders and the accessories and protections plans they want to sell, after which the deal will be ready for review and fulfillment. Zaineb, back to you. Zaineb Bokhari: Thank you, Mike. I'll direct the next question to Jantoon. Jantoon, how do the new subscription packages compared to our past ones? And how are dealers reacting to this change? Jantoon Reigersman: Yes. Thanks, Zaineb. As Mike mentioned, we've made significant investments in product and technology over the past year to develop and launch exciting new offerings for both new and used vehicles. As a result of this, we started 2023 with an expanded set of products to take to our dealers. We've demonstrated that our TC+ marketplace attracts high-intent profitable shoppers. TrueCar+ dealers have seen 2x to 3x improvements in close rates and a 65% reduction in days to close. In 2022, approximately 1,290 consumers applied for credit and received lender approval through the TC+ platform. Additionally, during the fourth quarter, TC+ shoppers with the dealer-approved reservation who added at least one protection plan or accessory to their vehicle added on average 4,700 worth of optional plans or accessories. These are measures that we believe dealers will be very excited about to hear. At the start of the year, we launched three new subscription-based packages that we believe are aligned to the value our solutions offer dealers. The new plans include three tiers that encompasses our lead-based business, auto buying solution, a regional plan and TrueCar+. In addition to this, dealers have the ability to customize their chosen packages with add-on services and to select their desired levels of market exposure and reach. We believe the new structure offers the flexibility for dealers to choose the package that best serves their needs. We are as committed as ever to helping dealers grow their unit volumes, but we shift towards a subscription model across our overall business, where we will focus on growing our monthly recurring revenue across our dealers. During the course of this year, we'll be moving away from the legacy pay-per-sale model. Many of our dealers are already on our subscription model, so we don't anticipate much disruption from the new packages. We have begun signing up dealers at the higher MRR. However, it is early days and as dealers adjust to the new subscription pricing, we may see some migration in our turnover. And what we've seen thus far has been within our expectations. What's that the next question? Zaineb Bokhari: Thank you. The next question is for Teresa, our Chief Financial Officer who I want to congratulate and welcome to the call. Teresa, can you explain what drivers will help TrueCar achieve double-digit revenue growth and return to breakeven or positive adjusted EBITDA by the fourth quarter of 2023. And secondly, what could the revenue cadence look like? Teresa Luong: Thanks, Zaineb, for the warm welcome. It's great to be here. So, when we think about drivers, I'll point back to what Mike highlighted earlier in his remarks. Our priorities for 2023, which are, to rebuild a core business, expand our market footprint for TrueCar+, lean into the used vehicle market and to increase traffic conversion. These priorities are the operational roadmap that we think will help drive growth for our business and opportunities for monetization in the coming year as new vehicle inventory start to rebuild. So for our core business, we plan to rebuild our core dealer network throughout this year as new vehicle inventories start to recover. There are still headwinds as we noted with independent and affordability concerns for our consumers, but this is a definite priority for us. In regards to TrueCar+, we've also started monetizing at the beginning of the year and introduce new subscription packages for our other solutions as well. We'll look to broaden our footprint for TrueCar+ with digital for dealers who are looking for innovation and committed to the digital channel. As we expand the number of markets that we are in, we expect to expand and monetization opportunities available to us and grow revenue contribution from TrueCar+. Now in regards to the used vehicle market, we've talked about how dealers consistently tell us that they want to buy more used cars. Despite the near-term issue in the used car market, the longer-term repercussions from supply changes for new cars will lead to scarcity and used cars, particularly in a desirable one to three year old vehicle category. For this reason, we are leaning into used cars with a focus on helping dealers source these vehicles. We plan to shift to a new offering for trade-in and vehicle sourcing that we expect to broaden our monetization opportunities once it is launched. On the fourth point of traffic, we have continued to see sustained strength in our monthly unique visitors and are focusing on improving conversion across the traffic that we are already driving to our site to both raise consumer awareness of TrueCar+ and convert our existing healthy top-of-funnel into unit volumes for our dealers. As Mike had noted earlier, we have realigned our senior team and added key hires to ensure that we execute on these priorities this year. And finally, with respect to revenue cadence. Recoveries are really linear and there are enough crop front still present that could make this choppy in the near term. Assuming macro trends continue to recover steadily and we don't end up in an economic downturn, we expect the second half to be better than the first half since we expect new vehicle supply improvement to broaden and also expect to have a broader market footprint at TrueCar+. What's the next question, Zaineb? Zaineb Bokhari: Thank you, Teresa. Our final question before we open up the line is for both Mike and Jantoon. First, Mike, you mentioned that bringing dealers back to the TrueCar platform is a priority for 2023. But given our expectations for some churn with independent dealers, what do you expect for TrueCar dealer counts? And secondly, for Jantoon. If TrueCar+ dealer group is more curated, what should we be looking to gauge our progress there? Mike Darrow: Thanks, Zaineb. I'll go first on this one. New vehicle inventories are rebuilding, but the gains are still somewhat concentrated by OEM and brand and well below typical inventory levels for the industry, so we're not out of the woods yet. Traditionally, new vehicles have been our area of strength for TrueCar. So our teams are out in the field, reaching out to both new franchise dealers and new dealers who turned us off when inventories were low and going to the market with a portfolio of great solutions for both new and used vehicles. Our franchise dealer count rebounded in Q4. On the used vehicle side, we expect unfavorable market conditions to create some pressure on dealers' gross margins per unit. As a result, we saw some attrition for independent dealers in Q4 and expect some additional churn in months ahead for independent dealers who only focus on used vehicles. We operate a full marketplace that includes small, privately owned independent dealers, large public dealerships, and vertically integrated digital operators that focus on the used vehicle market, like Carvana. Some smaller independent dealers may go out of business, while others will be acquired by larger dealers. Many will employ expense-saving measures to conserve cash until conditions stabilize. We're already starting to see some of this take place. However, we remain committed to the used vehicle market and see many opportunities ahead to help dealer's source vehicles and grow their sales volume. Bringing the dealers back to our truecar.com to our core truecar.com offering is one of our priorities in 2023, but we are early in the recovery for new vehicle inventory. And given the economic backdrop, we think there may be some choppiness in the months ahead. We are providing targets or expectations for dealer counts across our core truecar.com business. However, we have more balance to return to the market as 2023 progresses further and the recovery broadens. We expect our core business to benefit as that happens. Jantoon, why don't you take -- why don't you cover the TrueCar+ part? Jantoon Reigersman: Absolutely, and I'll keep it short. We expect our TrueCar+ dealers to be more of a curated group. Remember, TrueCar+ is best suited for digitally forward dealers. We're committed to the digital channel to increase their sales and expand our market reach. For the core business and our lead business model, dealer density and [indiscernible] are an important factor. While for TrueCar+, it's much more about having the right inventory for national coverage. So our new subscription plans encompasses both our core TruCar [ph] offering and TrueCar+, so signing up dealers to our elite package is one indicator for TrueCar+, it is important. Growing sales volumes for dealers and driving MRR higher will be some of the indicators of our progress. Zaineb? Zaineb Bokhari: Thank you, Mike, Jantoon, and Teresa. Now operator, let's open up the call for questions from the audience. Operator: Thank you. We'll now begin the question-and-answer session. [Operator Instructions]. First question will be from Rajat Gupta, JPMorgan. Please go ahead. Rajat Gupta: Great. Thanks for taking the question. I just wanted to follow-up on some of the commentary around the dealer churn that you're seeing after launching the subscription packages. Are you able to put some numbers around that on what you're already seeing since these packages have been launched, including like what the monetization has been for those packages? If you could just help us with that. What's governing your 2023 guidance in terms of dealer count and just like monthly dealer revenue or how we want to look at it in terms of metrics going forward? Thanks. Mike Darrow: Thanks, Rajat. So there's little guidance to give so far. Remember, we've started the new packages as of January 1. So we're now effectively what six or seven weeks in. The -- what has been very positive is that there is an understanding by the dealer base of the broader value we provide. There obviously is some churn related to that, especially with some smaller dealers that are saying, hey, let's see whether they can do this ourselves or if you're an independent smaller use player, now you're struggling a little bit more on your P&L side. There's also obviously a lot of movements happening in the marketplace. There's consolidation happening. A good example of a player that came off our platform was tread, right, acquired by COGs. And so as a result, it will not participate in our program anymore. So those are -- there's a little bit of give and take. Overarching though, we've been successful in getting the revenue up. Really, if you remember, we've not increased our prices in any shape or form for a long period of time. And so really moving from a pay-per-sale model to a much more value-based selling approach is key. This is not about just giving a single lead. This is about giving the opportunity to really to be a subscriber to a large value set that we provide. One example of that is, for example, the delivery aspect, right? So we now provide dealers to actually have deliver even on non-TrueCar deals that we can provide for them. The other one is obviously, right, so the offerings that we said around the accessories, the prioritization on TC+ around the accessories, their captive lenders, et cetera, et cetera. So there's a lot of value that we can subscribe to the dealers. It's too early to really give big indications. But overarching, I think we're trending nicely, and we're happy with where the numbers are so far. Rajat Gupta: Got it. And so as this churn occurs or started to occur, is the monthly revenue per dealer already starting to pick up with those packages? Or is that something you would expect to blend over time? I'm just curious like what's the new algorithm to look for in terms of growth? Mike Darrow: Absolutely. It will be the latter. It will be -- it will -- because this is a transition we'll do over the course of the year. So this is not something that you'll see immediately pick up over the course of the next quarter or two. This is much more something that we'll do gradually over the course of the year, especially as we're focusing initially mostly on the pay-per-sale side and then start moving into the subscription states. And then obviously, any new dealer coming on to the platform will be on the new package, but we're slowly but surely transiting legacy dealers onto the new system. And so this will take some time. So don't expect any immediate upticks, but obviously, over the course of the year, this will start having a greater impact. Rajat Gupta: Got it. So the unit guidance, the revenue guidance is more driven by like just traffic more than like just the monetization piece. Is that fair in 2023…? Mike Darrow: Yes. It's fair. It's obviously an expectation that inventory will start building up and conversion rates will start improving. It's obviously opportunities around other revenue sources as well, but it's also overarching monetization improving vis-a-vis the end of the year. So -- but overarching, yes, it's units driven as well as other revenue sources. Rajat Gupta: Got it. And lastly, I might have missed this on the call, but you're reiterating the $125 million -- greater than $125 million cash guidance for the end of the year? Mike Darrow: Yes, and -- the answer is yes. But obviously, I'll caveat that all day long with saying that, right, if there are opportunities to do attractive buybacks, et cetera. So yes, 125 absolutely in the ordinary course of business. But if there are attractive M&A opportunities or buyback opportunities, there are those type of things and definitely we'll execute upon those. So -- but the -- I think what's important for people to realize that we have a strong balance sheet, we'll continue to keep a strong balance sheet. So the $125 million is a good marker to have, but it's not written in stone. Rajat Gupta: Got it. Great. Thanks for all the color. I'll jump back in the queue. Operator: Thank you. Next question will be from Chris Pierce of Needham. Please go ahead. Chris Pierce: Hey, good morning everybody. I just wanted to get a sense. You kind of talked about building out the teams and kind of some hires as you launched TrueCar+. I wonder you guys see how we should think about on the path of OpEx in 2023 as you reiterate exiting the year positive or breakeven adjusted EBITDA? Thanks. Mike Darrow: Yes. I'll take that for now, and then I'll have the anticipation of -- and then Teresa can take them going forward. But the -- so remember that we've said last time as well is OpEx is fairly stable for us. We're very focused on making sure that we keep OpEx under control. Remember, there are three large buckets on the operating side, it's human capital, right, it's marketing expense and then it's effectively our overhead charge. If you think of marketing expense, it's two buckets, partner and then it's effectively performance marketing. So the variable that we can play with very easily is obviously performance marketing. We've articulated clearly last time that we want to focus on conversion as a key theme for '23. We have a lot of unique coming to our site. So conversion is key. Adding another unique is not necessarily as valuable. And so conversion is key, which is obviously one of the great things of having Jay Ku come onboard. But so overarching the OpEx side, I think you can assume to be relatively flat, slightly increasing in the sense that we're looking at opportunities around dealer sourcing used vehicles, and we're doing some really interesting initiatives there, which will have some initial start-up costs associated with that. But I would argue, and yes, you could probably anticipate a slightly increased headcount costs. But overarching, OpEx is something that we want to keep reasonably flat for the course of the year. And so just keep that in the back of your mind, which I think makes also the molding a little bit easier. Chris Pierce: Thank you very much. Operator: Next question from Steve Dyer, Craig-Hallum Capital Group. Please go ahead. Unidentified Analyst: Good morning. Ryan on for Steve. Just one for us. Curious following AutoNation's investment in November. Have there been any changes in the operational partnership there? Mike Darrow: Ryan, thanks for the question. We continue to pay close attention to AutoNation. They're one of our biggest partners. We have ongoing dialogues with them. And I think we'll continue to work to make sure that their investment emphasizes where we believe we sit in the leadership position on digital retailing, and we'll continue to work with them to advance those opportunities. They have many of the same needs, all dealers have an acquiring used vehicles. So we're working with them to stay coordinated on all of our initiatives for 2023, and that partnership will continue to grow. Unidentified Analyst: Maybe just a follow-up. Are they one of the TrueCar+ customers? Mike Darrow: They are not yet, and that is really about timing because you want to make sure you get the right people on. So if you think about AutoNation over time, -- there are really several pillars upon which we can have really interesting collaborations, which we're working on with them. And so they're not yet on the platform, and that is by design, frankly, because we're looking at forward-leaning dealers now that are much more in the trenches with the product development. As we mentioned before, we've now changed from the credit piece, we've changed on the accessory piece. So now is the time that we actually have a product that can be rolled out across dealers. So this is something that is now a much closer -- focus for much more of the near-term. Unidentified Analyst: Great. Thanks guys. Good luck. Mike Darrow: Thank you. Operator: Thank you. This concludes our question-and-answer session. I like to turn the call back over to TrueCar President and CEO, Mike Darrow, for closing remarks. Mike Darrow: Thanks, operator. I'd like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their hard work over the past year and as we work to execute our priorities for 2023. This is an exciting time for our company, look forward to sharing more about our progress with all of you on the next call. Thanks for joining. Operator: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Hello and welcome to the TrueCar Third Quarter 2022 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, operator. Hello and welcome to TrueCar's third quarter 2022 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer and Chief Operating Officer. By now, I hope you've all had the opportunity to read our third quarter stockholder letter which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar's President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike? Mike Darrow: Thanks, Zaineb. Good morning, everyone and thanks for joining us. We issued our Q3 stockholder letter yesterday and highlighted some of the great progress we've made with TrueCar+ as we prepare to expand coverage outside of Florida. During Q3, we continued to sign and curate dealers for TrueCar+ and grow the available inventory of new, used and certified preowned vehicles to nearly 10,000 units while driving materially more traffic to the TrueCar+ marketplace. Approximately 27% of our Florida-based visitors were exposed to TrueCar+ during the third quarter and more than 7,000 of them went on to the deal engagement stage. We knew we had 2 fundamental questions to answer when we launch a TrueCar+ pilot. Number one, would consumers want to use it? And two, would retailers want to participate in it? We believe the results indicate the answer to both of these questions is emphatically yes. Consumers want to use TrueCar+ and dealers want to participate in it. We will be expanding TrueCar+ into 5 additional Southeastern states in the coming weeks. Now, I'd like to take a moment to comment on some of the macro industry dynamics we are seeing and how we think about our business in this context. At this point in the Q3 earnings cycle, you've already heard from a number of the key players across the automotive industry. Used car sales rates in certain segments are slowing and this is exerting downward pressure on used vehicle prices. Overall, consumer demand is slowing in the face of high interest rates, significant inflation and the fear of a recession. The combination of these factors may put pressure on the record profits retailers have been posting over the past several quarters. New car inventories are starting to build for several brands and reached approximately 1.5 million at the end of October. In our view, the supply-driven market we've been experiencing is beginning to shift to a more balanced supply-demand ratio. We believe that as inventory grows on the new side and becomes more affordable on the used side, retailers will again need to roll up their sleeves and compete for customers. TrueCar is well prepared to support retailers as the automotive industry slowly shifts from a supply-constrained environment to a more balanced demand-driven one. It's challenging to predict the exact timing of this market transition and there will be some lags before the full impact of such improvements are seen across our business. We are seeing signs of stabilization emerge in our core business as new vehicle inventories have risen across our dealer network. And while it has fluctuated over the past several quarters, our net dealer count in October was positive when compared to the end of Q3. Over the past several quarters, we've remained laser-focused on delivering the automotive industry's first transactable digital marketplace with TrueCar+. We have also enhanced our core offering -- TrueCar offerings with consumer-facing tools and an expanded used car product portfolio with capabilities like Sell Your Car and Distance Retailing that have helped us balance our mix of new and used units. In addition, at a time where affordability is a concern for consumers and loyalty to brand is low. We offer industry-leading tools and programs to help OEM partners effectively target incentives, promote their core brands and launch their EV platforms. Our balance sheet remains strong and we have maintained -- we have managed our business prudently through a supply-constrained market. Based on our current plans for 2023, we expect to have well in excess of $125 million in cash by the time we return to breakeven or positive adjusted EBITDA which we expect to be no later than the fourth quarter of 2023. I'm very encouraged by our progress during Q3 and in the weeks that have followed. I want to thank the entire TrueCar crew for their hard work, dedication and commitment to our vision of bringing something new and unique to the market and doing it at a time of rapid change as we embrace what we expect will be an increasingly digital future for automotive retail. Before we open up the call for live questions, we're going to address some questions around key topics. Zaineb, what's the first question? Zaineb Bokhari: The first question is for Jantoon. Jantoon, can you provide a framework for thinking about our planned return to neutral or positive adjusted EBITDA by the end of 2023? Jantoon Reigersman: Absolutely. Thanks, Zaineb. As Mike mentioned, we're seeing signs of stabilization emerge in our core business as new vehicle supply slowly started to rebuild across our dealer network. Our dealer counts are also starting to show stability based on the recent trends for October as an example. We expect some lag before improving industry trends are fully reflected across our business and there will be likely some choppiness in the months ahead. We expect more balanced return to the market as 2023 progresses and expect our core business to benefit as this happens as well. Our balance sheet is strong. And over the last 18 months, we have launched and expanded our product portfolio, creating opportunities for ourselves including, on the used car side, Sell Your Car, Distance Retailing that Mike mentioned before. These offerings are important building blocks for TrueCar+ and we expect our contributions to grow in '23. We also intend to start monetizing TrueCar+ in early '23 and its potential contribution will likely start small and build as we expand inventory and market coverage. On the expense side, we will continue to maintain tight control of run rate expense while investing to broaden coverage for TrueCar+ and other offerings that we have introduced. We have expanded our engineering staff over the past year, including through the acquisition of Digital Motors and are comfortable with the level of investment we have made across product and tax to date. The speed with which we have been able to bring out new offerings supports this view in our opinion. We have a strong top-of-funnel plan to be efficient with our marketing. In light of the sustained strength that we have seen in our monthly uniques, we're focusing on improving conversion across the traffic that we're already driving to our sites. With this framework in mind, we're expecting adjusted EBITDA of breakeven or positive no later than Q4 '23. Zaineb Bokhari: And as a follow-up, Jantoon, can you explain what this means for our cash balance? Finally, can you provide some details regarding the goodwill impairment taken during Q3? Jantoon Reigersman: Yes. We have -- absolutely. We have a strong balance sheet and expect plenty of cash in an uncertain environment as we look ahead to breakeven or positive adjusted EBITDA by Q4 of '23. This will be achieved through ongoing expense management and prudent cash usage and investment in our strategic initiatives like TrueCar+. It is important to note that between free cash flow and adjusted EBITDA, there's an adjustment for capitalized software which during the trailing 12 months was roughly $12 million. So adjusted EBITDA is not a good proxy for free cash flow. The other piece to remember is we still have a Board-approved buyback plan. We have earn-outs for Digital Motors and always want to remain some flexibility for small tuck-in M&A. Your other part of the question was regarding goodwill impairment. I won't spend a lot of time on this but I do want to say something very quickly. During Q3, we took a onetime noncash charge for goodwill of $59.8 million which is due mainly to the sharp decline in our share price and market capitalization, effectively measured as of September 30, since we last tested goodwill for impairment which was at the end of Q2. This is a required accounting assessment for Q3 after the broader markets and our own share price has corrected. As I mentioned, this is a noncash charge, so there's no impact on our adjusted EBITDA nor our cash balance. Zaineb Bokhari: Thank you, Jantoon. Mike, I'll direct the next one to you. What can you tell us about progress for TrueCar+ in Florida and plans for expansion outside of Florida? Mike Darrow: Yes. Thanks, Zaineb. We've made strong progress with TrueCar+ in Florida. And by the end of the third quarter, our marketplace had nearly 10,000 new, used and certified preowned units. This progress is particularly strong since we began our Florida pilot for TrueCar+ just last September and is a testament to our asset-light model. To put this in context, we benchmarked our progress to that of other successful marketplaces in industries such as automotive, mobility and travel. We reached our current inventory level scale for TrueCar+ in a little more than 12 months since our initial pilot, while the time to scale for other marketplaces we reviewed was 4 to 5 years on average. In our view, this is a testament to our unique offering and the desirability of what we're building. As I mentioned earlier, we've been driving more and more of our Florida-based consumer traffic to TrueCar+ in the third quarter and in subsequent weeks. We have also seen strong shopper based outside the Florida market. We found the TrueCar+ site while performing -- while shopping for a vehicle shows strong deal engagement levels which is encouraging as we expand market coverage for TrueCar+. We recently announced the launch of TrueCar+ in 5 additional states, Alabama, Georgia, North Carolina, South Carolina and Tennessee and already have dealers in these states who want to be part of TrueCar+. We expect to continue to roll out TrueCar+ over the next year for both new and used vehicles. Our future efforts will be informed by the learnings and the product enhancements that we make following this rollout. What's the next question, Zaineb? Zaineb Bokhari: Thank you, Mike. Here's a question for Jantoon. Jantoon, you mentioned signs of stabilization are emerging across our core business. What does this mean for Q4? Jantoon Reigersman: Absolutely. Trends are emerging as indicated market shift in a more favorable direction than what we have seen in the past 18 to 24 months. However, it will be some time before the market returns to a balanced state and the impact is fully reflected across our business. We are encouraged by what we're seeing now. And if this trend continues, we expect them to have more of an impact in 2023. As Mike mentioned, we are expanding market coverage for TrueCar+ to 5 additional states. We also expect to begin to monetize TrueCar+ next year which obviously will be more evident as 2023 progresses. In Q3, close rates in our core business remained under some pressure due to the elevated pricing and affordability issues. Some of this will likely continue in the near term and our business trends may be uneven given the economic backdrop. Zaineb Bokhari: Thank you, Jantoon. Mike, the next question is for you. How do you expect the business to perform as economic growth slows or if we end up in a recession? Mike Darrow: Thanks, Zaineb. We've been in an incredibly supply-constrained environment over the past 1.5 years to 2 years. The lack of supply has impacted rooftops and high vehicle prices have put pressure on our close rates. Consumer demand is starting to soften and months of limited supply has driven brand loyalty lower. We've started to see the supply of new vehicles improving, although they are still far from a balanced market. Just as supply is starting to rebuild, demand is starting to weaken. As this pendulum swings from supply constraints to more focus -- to more of a demand focus, TrueCar will be a valuable partner to dealers since they look for solutions to increased demand for their vehicle inventory. OEMs, too, can benefit from our solutions to help them offer tailored incentives and promote their brand value to our in-market traffic of 7.6 million monthly uniques. We've introduced capabilities to increase our presence on the used car side and identify new ways to create value for our retail partners and customers. We're also investing for the digital future of the automotive retail with TrueCar+. We expect TrueCar+ to open up increased monetization and growth opportunities for us once it is fully transactional and we expand its market coverage. Back to you, Zaineb. Zaineb Bokhari: Thank you, Mike and Jantoon. Now operator, let's open up the call for questions from the audience. Operator: [Operator Instructions] Our first question comes from Rajat Gupta with JPMorgan. Rajat Gupta: I might have missed this a little earlier but on the fourth quarter EBITDA positive goal, could you share some color on what assumptions are around, just volumes or monetization or even TrueCar+, to get to that level? That's the first one. And then I have a couple of follow-ups. Jantoon Reigersman: Absolutely. So I think you're -- as you've seen the way we've been managing our expense rates, our expenses are fairly predictable at this point in time with obviously the only caveat that we've increased somewhat on the tech and product side as we've also fully integrated Digital Motors. And so really, it's an anticipation on the top end that the markets will return in our favor in terms of revenue side. And obviously, you'll see an increasing monetization happen across the board over the course of next year. Those are your 2 biggest drivers. Now remember that current pure unit monetization is somewhat inflated because, obviously, in a subscription world, in a low close rate, you're effectively somewhat overmonetizing in the near term. But in the long term, that is expected to stabilize more. But then we're also expecting, obviously, that over the course of 2023, our close rates will improve. Rajat Gupta: Got it. And is third quarter like the peak EBITDA loss quarter? Is that fair to assume? Or it could get worse before it gets better? Jantoon Reigersman: Say it again? Rajat Gupta: Is the third quarter EBITDA loss number like the peak in terms of losses? Or could it get worse in the near term before it gets better -- to get back to the positive EBITDA in 4Q '23? Jantoon Reigersman: Yes, it's a good question. I think the answer is we'll keep our flexibility around this because there are opportunities for us to obviously somewhat push, especially as we roll out commercially. And this is why we've set the 2 indications of the adjusted EBITDA profitability as well as the minimum cash balance to just give some assurances to the market that we're not -- that we are very cash prudent. At the same time, we also want to make sure we give TrueCar+ ample opportunity to really roll out. And we also realize that the broader macro is now, slowly but truly, turning from a headwind to a wind in the back which will mean that we'll probably utilize some of our resources to actually push the business further. And so it's hard to say at this point. Rajat Gupta: Got it. And just the $125 million end of next year cash goal, does that assume any buyback as well from now until then? Jantoon Reigersman: Yes. So what I mentioned earlier is indeed -- so by the way, I just want to make sure that we're crystal clear, it's not a $125 million goal. It's having the cash balance well in excess of $125 million. And so, yes, remember that our business runs effectively adjusted EBITDA, we have capitalized software. We still have our buyback plan in place. So we want to have room for that. There's obviously room required for Digital Motors' earn-outs. There's room required for tuck-in M&A, etcetera. So really, the aim is not for you guys to anchor on $125 million per se but much more to say that there's ample cash in this business and we will end the year well in excess of the $125 million. Operator: The next question comes from Marvin Fong with BTIG. Marvin Fong: Two questions. I'll just start with -- so the great -- if you see the data -- the initial data on TrueCar+, so the 7,000 customers in Florida that went to deal engagement stage out of the 27% of visitors who are exposed to TrueCar+, could you just kind of help us how does that sort of conversion rate to the deal engagement stage kind of compare to your non-TrueCar+ population? And then I have another question. Mike Darrow: Yes, Marvin, let me take a first pass at that, that's a great question and then I'll let Jantoon jump in and provide more color. In our core traditional business, we track 3 metrics really. It was unique visitors, conversion to prospect and then ultimately match sales. And it was a pretty simple calculation to understand how that business was flowing. What we're learning with TrueCar+ is there's a number of stages in the process where we get signals from consumers and we're trying to monitor all of those in an interesting way. So the 7,000 number is the number of folks who were on a VIN and started to build a deal, either through setting up their payment schedule for a lease or a loan. They've got a value for their trade. They may have progressed into a finance application and engaged in insurance products. All of those things are part of this new flow and we're tracking all of that. So what we've been really paying attention to is, will consumers, once they become aware of this product and we're pushing harder and harder. You mentioned the 27%. That number was below 10% in Q2 and we've seen it grow from the 27% since the end of Q3. So we'll continue to put more traffic into it. We'll measure probably some additional metrics in the midst of the flow as we begin to expand that appear to be meaningful but it's just -- the most important part right now is to understand what kind of engagement we're getting with the key features inside of TrueCar+ and are people moving to the next stage and completing the process? So with that, I'll turn it over to Jantoon. He can give you some more color. Jantoon Reigersman: Yes. Marvin, it's a great question. I think the answer is, we see a very good engagement across the board, especially in a world where we've only effectively exposed Florida traffic to TC+ by 27%, right? And so what that means is, one is we've been testing and putting people more and more in a somewhat controlled manner through the funnel and really -- because you don't want to burn any bridges while you're also testing the product. There is also another piece that is important to note that will, obviously, transpire over the next couple of quarters which is historically, there was a very clearly defined core flow and then there's a very clearly defined TC+ flow. And what you'll start seeing is that merge and converge over the next couple of quarters where it becomes much more as, hey, I'm going to get to TrueCar as a consumer and I'm going to find and match my car. And then what happens is depending on the consumer, you might become a lead to the dealer or you might actually do the full transaction. And the same for the dealerships. You'll see us slowly but surely start moving away from the core versus TC+ language and much more focused on the more broad offering because people will engage in a different form. What we have seen, though, is people engage very differently online than you would at a dealership as they have more time to actually do their deals, build their deals, reflect, do research, understand what type of attachment products they want to have, etcetera, etcetera. So there's a lot of really interesting statistics and data that we're getting out of this with having only exposed TC+ to actually a very small segment of our total population. And so we're going to increase that much more dramatically. We're going to expose much more within Florida itself and then also really start rolling out in the additional states. Marvin Fong: Terrific. And then my last question, just it's great to see the deal count has already started to show signs of recovering. I guess just to kind of validate the point that it should improve as supply -- I mean what -- are there any commonalities you're seeing with the dealers who are coming? Are they -- I'm assuming they're reactivations but you could clarify that. But are these dealers kind of across the board? Or are they coming from nameplates where supply is higher and days in inventory are higher? Any commentary about what you're feeling -- and I know it's very early but any commentary about what you're feeling with this little bounce back in dealer count would be great. Mike Darrow: Yes. Thanks, Marvin. The majority of the growth we saw in October was on the franchise side of the business. And I think it's an indication of what's happening with inventory. As I mentioned, new car inventory is up to almost 1.5 million from numbers below 1 million 12 months ago. So it's interesting because we track it by brand. The inventory growth is not consistent across the entire industry. So there are certain brands that are growing more quickly and we're certainly staying focused to make sure we're addressing the brands out there that are being able to grow their inventory the quickest. And that number is beginning to increase. So a number of the domestic brands have been able to grow their inventory quite a bit. We've seen Mazda, Subaru, some of the other brands also begin to show signs of growth. Hyundai is another one. So we'll stay targeted. Our people are out in the field, passing dealerships all the time and watching inventory begin to grow. And I think we'll be targeted and make sure we -- when we see an opportunity for that build in new car, to reactivate those dealers and get them back on the platform. Jantoon Reigersman: Yes, I think there are a couple of additional points that are important. And 2 of them are anecdotal. So one is, we've obviously, throughout the month of October, already seen a significant increase of actually inbound requests from dealerships much more than we've actually seen effectively throughout the last about 18 months. So that's number one. So there's a clear shift that has been happening. The other one, also, anecdotally, is inventory is starting to age more on the lots which also means that, therefore, the entire perception of, hey, what do we actually need to do? And as used car prices will come under pressure, the aging inventory becomes an even greater issue because suddenly, there's a lot of working capital locked into those lots. And so then having to push through cars is becoming a bigger issue for our dealer partners. And so we do think we're really well positioned throughout for this now and obviously going into the future. One thing to remember, though and I just want to damper that because we are obviously very excited about the opportunity and the product we offer. But one thing to remember, seasonality does come to play. So historically, Q4 has always been somewhat of a slow dealer addition quarter. But we're very, very hopeful of the turn in the winds that are currently happening and we're seeing really clear signs of industry recovery that will be benefiting us and create a much more balanced approach to supply/demand. Operator: The next question comes from Chris Pierce with Needham. Chris Pierce: I'm just curious about TrueCar+, what you're seeing or what you could share as far as new dealers versus used dealers, how consumers are interacting, if they're showing a preference for new or used. And then how are you going about testing with your extended affinity partners as well? Jantoon Reigersman: Absolutely. So I'll take the affinity partners first quickly because, otherwise, I'm going to forget that you added that in the end. So the affinity, we have launched TrueCar+ on a very small segment of our affinity partners to date, in Florida specifically. So we have not yet opened it up to the broader affinity partner network. As you can imagine, many of our affinity partners are more nationally focused. And so it's harder to slice and dice very locally. We will do that as we roll out. It's one of the -- also one of the reasons why we're very interested in rolling out because, obviously, the faster and the sooner we roll out, the more we can utilize the affinity partner as well. Your question on the utilization of TC+, so it's very different -- it varies very much across. Ironically, if you think, we historically had identified 6 very distinct consumer profiles for TC+. We've actually expanded that to 8 very distinct profiles as we've seen the behaviors online, number one. Number two is also you need to create a nuance for Florida. It's obviously a very particular consumer segment vis-à-vis the rest of the country. So there are also very interesting nuances that are coming forward from that, that we see very different from other states as an example. And then right now, what happens still is some of that is still driven by certain segments of our top of funnel which then pulls in certain subsets of the population that are interested in certain cars or certain brands or certain -- new or used, what are the best, because if you start slicing and dicing this very much, think of it as -- so roughly 8 consumer profiles that go very much across the different brands. Now remember, historically, in our core business, we've always skewed somewhat more towards the Asian brands. But it seems that the TC+ profiles are not necessarily identical to the way we've been doing that on core which is very promising. Overarching, though, remember, one of the things that we're very sensitive to and you also see us start shifting somewhat is we're less sensitive to rooftop counts. And in TC+, we are rolling much more towards type of inventory and extend the breadth of inventory effectively. And so net-net, yes, we're learning a lot. Yes, we're even expanding our consumer profile. Yes, we're actually developing the product to match more of the requirements of these different profiles. And we're excited to start testing TC+ effectively in the additional states because we already know that there will be a lot more learnings that will come from that. Mike Darrow: I think the other thing, Chris, that's important is, during much of the testing in Florida, we were in a restricted new car supply environment and a heavier used car opportunity. So the macro was certainly driving a number of used car users through the system. And we think as new car inventory builds, that will begin to shift. As Jantoon mentioned, it's going to be important. We're excited about the chance to expand to other states, collect more data and really begin to hone in on which consumer profiles that we've been tracking closely are going to be the ones that thrive with this product. But a lot of factors affecting it during the pilot and we'll get more learnings as we get rolled out in these other 5 states starting in December. Chris Pierce: Okay. So it's far too early to say if it might be easier for consumer -- consumers might be more willing to buy a new car online versus buying a used car online. That's kind of the takeaway? Mike Darrow: I'm sorry, I missed that. I didn't hear the question. Chris Pierce: I just wanted to confirm. So it's too early to tell if the consumer might be more willing to buy a new car online versus buying a used car online? Mike Darrow: Yes. We haven't, I don't think, seen any data that would tell us that the new car buyer is going to be more accepting of this type of product. We think there will be new car buyers who will get excited about it and use it once inventory returns and once pricing stabilizes a bit. But what we've been excited about is the number of used car buyers who have been willing to dive into the product and work their way through the whole process on a used vehicle. So those numbers could shift as new car inventory comes back and we get into some additional states. And our core unit volumes are balanced right now between new and used. It's been that way for the past couple of quarters. And we could expect, I think, something like that similar for TrueCar+ just based on the traffic and the type of folks we have coming to the site. Jantoon Reigersman: And also remember, we have -- one of the things that's interesting is certified preowned which often is forgotten, because the historical business -- like historically, the industry talks new and used but certified preowned actually, in a world of online transacting, is very important because it provides the comfort for people that may be a little bit wary from a warranty perspective. And so -- and the interesting thing is, yes, we see engagement across all 3, very much depending on the persona that is buying. And if you think about the 10,000 inventory right now, we are roughly 1/3, 2/3 new versus used in terms of inventory on TC+. And so there's also -- there are some movements there. But across the board, I would say, there's an equal interest across all 3 of those categories of cars. And then obviously, it depends on the type of buyers who is interested in one versus another car. Operator: The next question comes from Naved Khan with Truist Securities. Vincent Sengelmann: This is Vince on for Naved. So I think you indicated that you kind of expect to lean into brand spend and marketing -- or brand awareness marketing to promote TC+. So just curious if you could provide some color around, I guess, level of OpEx spend we should expect to be aimed for breakeven EBITDA by fourth quarter '23 and how that should progress as you expand TC+ outside of Florida? Jantoon Reigersman: Yes. So I'll go back to what we said earlier which is we're actually -- I think we've been very prudent on any of the marketing spend to date. We do see some of the headwinds turning to tailwinds which means that we're probably going to push some more forward over time. We want to keep that flexibility as we go along. However, we also mentioned that we obviously have a lot of uniques currently visiting our site at the top of funnel and that we want to really focus on conversion before you start focusing per se on expansion on that side. There is a good moment for us and good opportunity, obviously, in the next couple of quarters to engage with the dealer networks and remind them, obviously, of the value proposition that we have and not only remind them of the value proposition of core which is obviously important for them in a more -- in a world where they have aging inventory but also most certainly that TrueCar+ exists and the online platform that, that provides. But overarching, I don't think there will be a lot of brand spend. So -- but we will keep that flexible. As we see opportunities, we will deploy. But we're mostly focused on the conversion of the uniques that we have and we'll then underneath support the business as we see that go. And I think over the last couple of quarters, we've proven to you how we are very prudent around that. Mike Darrow: Yes. And I think you'll see us continue to capitalize on the opportunity to convert the 7 million to 9 million monthly uniques we have. We have a pretty clean platform because we don't do any advertising on our platform. So we're going to use that opportunity to make sure that the 7.6 million that came in on an average in Q3 are being exposed to TrueCar+, they understand that it's either available in their market or it's coming soon to a market near them and we'll continue to drive that message and begin to see what sort of messages resonate with consumers. With all the noise out there about buying online and the different capabilities, we think we can get real focused on what type of attributes do -- does a consumer want to hear about in order to gauge in a digital transaction. And a lot of that can be done on our site and we've got marketing and product working hand-in-hand and doing that work. Operator: This concludes the question-and-answer session. I would like to turn the call back over to TrueCar's President and CEO, Mike Darrow, for closing remarks. Mike Darrow: Thank you. I'd like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their hard work as we work to deliver on our near-term road map for TrueCar+ and expand market coverage into additional states. This is an exciting time for our company and we look forward to sharing more about our progress with all of you on our next call. Thanks, everyone. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar Second Quarter 2022 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Ms. Zaineb Bokhari, Vice President and Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, operator. Hello, and welcome to TrueCar's second quarter 2022 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer and Chief Operating Officer. By now, I hope you've all had the opportunity to read our second quarter stockholder letter, which was released on Tuesday, August 2, after market closed and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be defined by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied upon as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission. For a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar's President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike? Mike Darrow: Thanks, Zaineb. Good morning, everyone. And thanks for joining us. We issued our Q2 stockholder letter yesterday and highlighted some of the strong progress we've made with the rollout of TrueCar+ in Florida, and on the product front, for both TrueCar+ and our core used vehicle offering. During Q2 we continue to sign and curate dealers for TrueCar+, and grow the available inventory of new used in certified pre-owned vehicles available and continued to see positive momentum in subsequent weeks. While only a small portion of our Florida visitors had been exposed to TrueCar+ to-date early insight from the mid-funnel engagement metric shows promising trends in June. We'll continue the transactional product buildup for TrueCar+ and increase the exposure for TrueCar+ across more and more of our Florida consumers. The next steps in our near term roadmap are clear as we plan to enable the delivery of required documents and other capabilities that are necessary to enable dealers and consumers to complete a vehicle transaction through our marketplace. With the recently completed acquisition of digital motors, we gain new capabilities and deep expertise in FinTech and automotive e commerce that we believe will help accelerate our roadmap for TrueCar+. Acceleration and completion of key product features will be laying the foundation for the expansion of TrueCar+ beyond Florida which remains on track. In addition to these developments, we continue to enhance our core used vehicle offering with the expansion of distance retailing to TrueCar certified dealers across the continental United States. Giving dealers to enroll the ability to expand their market reach for their used inventory and offer the convenience of a reliable and professional home delivery to consumers. We also launched the sell your car experience from partners with strong upper funnel and intent metrics as our legacy -- better than our legacy trade experience. Dealer inventories particularly for new cars remain near historic lows during Q2 while pricing remained elevated. Our recovery in the global supply chain is likely still multiple quarters away in our view, and uncertainty remains high due to geopolitical events and headwinds like a slowing U.S. economy and rising interest rates. Our recent analysis of industry trends led us to estimate July earnings of approximately 13 million. Near levels seen in June with industry sales in units estimated decline both on a year-over-year and sequential basis. Industry wide headwinds continue to put pressure on our close rates, reported units and other key metrics in Q2, and we continue to expect some volatility in our key metrics throughout 2022. In this environment, we're continuing to manage our business and our resources efficiently. I am very encouraged by our progress during Q2, which was made possible through the hard work and dedication of the entire TrueCar crew. So I want to thank them for their commitment to our vision. We are striving to bring something new and unique to the market and doing it at a time of rapid change and enormous macro headwinds. As a company we remain focused on positioning ourselves for the long term. And what we expect will be an increasingly digital future for automotive retail. Before we open up the call for live questions, we're going to address some questions around key topics. Zaineb, what's the first question? Zaineb Bokhari: Thanks, Mike. I'll start with a question that has a couple of parts. Can you provide an update on TrueCar+? What are our plans to expand TrueCar+ beyond the Florida market? And finally, how is what we're planning to deliver with TrueCar+ different from peers who say that consumers can already buy a car online through their marketplaces? Mike Darrow: Thanks, Zaineb. I'll provide an update on TrueCar+, and then Jantoon can add some context around our expansion plans. During the second quarter, we focused on growing inventory across the state of Florida for new certified pre-owned and used vehicles and started to drive traffic and shoppers through the flow in TrueCar+. We had 80 dealers and more than 7,000 new used and certified pre-owned units and inventory in TrueCar+ at the end of Q2, and we continue to add to this. Consumers exposed to TrueCar+ still account for less than 10% of our total Florida traffic. So we will continue to increase that exposure in Florida. While still early, we shared some insights into the mid-funnel part of the consumer journey to give an indication of the level of participation from consumers and dealers in our TrueCar+ marketplace. During June, consumers placed an average of 260 orders per week, and nearly 3300 orders on a cumulative basis through the end of June. Each of these orders represents a consumer using the TrueCar+ experience that has selected a vehicle and completed the deal building process. This process includes a trade valuation if they have one, and a monthly payment calculation when considering a loan or lease. The consumer then either starts a credit application in conjunction with a credit purchase, or enters their credit card information in connection with a cash purchase. In light of the work that remains to be done in completing the TrueCar+ product roadmap to become fully functional, we are still defining the appropriate methodology to better understand which orders placed by TrueCar+ users have converted into sales that are participating dealers. However, we find these early mid-funnel trends to be very encouraging and believe that TrueCar+ is resonating with consumers. As we highlighted in our letter during the second half, we will focus on delivering with prior paperwork through TrueCar+. This will be a key step as we prepare to make TrueCar+ a truly transactional marketplace and start to expand beyond Florida. As we work to complete the transactional aspects of TrueCar+, we will continue to major performance down the funnel and expect to share those insights in the future. Jantoon, why don't you elaborate on our plans for expansion. Jantoon Reigersman: Thanks, Mike. I'll build on what Mike has said before. After we enable paperwork on TrueCar+ which is a key step, we're seeking expansion out of Florida really across two different paths or tracks, one for new and one for used cars. As you can imagine new cars are harder to transact across state lines. And so we focus new very much through geotagging and through eventual delivery address to ensure that people are within the state to acquire new vehicles. So for the new vehicles, our expansion will be state-by-state. And we plan to roll out in additional three to five states by the end of this year. On the new side, the U.S. inventory we will make available nationwide. So we'll continue to push that nationwide rollout for used with TrueCar+ by the end of 2022. We also recently began making distance retailing available for TrueCar+ or TrueCar certified dealers across the U.S. and that's really a forefront or at least the start of enabling TrueCar+ to happen afterwards. So as we enroll dealers in the program, we're laying the groundwork for vetting and enrolling dealers for the broader expansion, and most importantly, to really see and make sure that they're able to do distance retailing in the back end flow of their dealerships. I just want to add that the rooftop balance will not be a primary metric for TrueCar+, instead, we will grow and curate a network of dealers that we have, and a depth of inventory, and who are committed to delivering a world class marketplace experience to consumers will be prioritized as dealers. And we also know that obviously, the inventories to a certain level is important or at least rooftops are to a certain level of important, scarcity is much more important. So the curation will be something we'll be very focused on. Mike, back to you. Mike Darrow: Thanks, Jantoon. I'll address how TrueCar+ compares to what our peers are doing. Our focus with TrueCar+ is to deliver a transactional marketplace through which a consumer will be able to find a new certified pre-owned or used vehicle that suits their needs in the inventory of one of our dealer partners. Through the product roadmap we shared for TrueCar+, we plan to deliver a marketplace through which consumers will be able to arrange for financing, sell or trade their existing vehicle, get an accurate price, purchase protection products, sign required documents and arrange for delivery with the dealer. The third party marketplace peers that were most often compared to do not offer a transactional marketplace that makes these steps possible. Given that we're planning to deliver -- given what we're planning to deliver with TrueCar+, we just don't see these peers on the same journey. Vertically integrated players are focused on used cars and other market participants that have added a transactional digital channel to their brick-and-mortar presence are limited to their own inventory and brands. Once we enable paperwork within TrueCar+ and continue to add scale, we will have a unique opportunity to offer a true asset light marketplace for new used and certified pre-owned vehicles across multiple brands. Let's have the next question, Zaineb. Zaineb Bokhari: Thank you, Mike. Jantoon, the next one's for you. Last quarter, you provided a framework for thinking about revenue and expenses for 2022. Can you provide an update to that framework? Jantoon Reigersman: Most definitely. Thanks. I think the main caveats to the framework we provided on our last call was that the macro environment and close rates have remain stable. That didn't over really hold in Q2 or throughout Q2. The supply side did not improve and in some cases, maybe even became more constrained. Across the industry dealer inventories remained low or prices remained above normal. Beyond this, there's also variation across the different brands. With the Asian brands that our consumers prefer still experiencing above average constraints and available inventory at 14 days versus 26 for the industry overall. For us, this means that vehicle scarcity remained a significant issue during Q2. In addition to this, the Fed has been raising rates aggressively and the government economy has started to slow rapidly as a result. Vehicle pricing continues to be a factor and as measured by the CPI both new and used vehicles hit new peaks in June. Affordability remains a concern for consumers due to both high prices and rising interest rates. The combination of these factors continue to put pressure on our second quarter close rates. During the second quarter, vehicle saw a peak in April and then dipped in May and June to about 13 million, where it still remains by our analysis in July. Additionally, we estimate the unit sales across the industry will decline 10% year-over-year and 2% sequentially in July, which signals to us that the industry sales during the second half will remain muted. In this environment, we plan to continue to manage our fixed expenses tightly. However we plan to invest in brand awareness and marketing to support TrueCar+ and on adding new capabilities as we lay the groundwork to expand TrueCar+ beyond Florida. Due to these factors, we expect non-GAAP expenses to be both the base or 50 million per quarter run rates. We therefore still expect adjusted EBITDA to be negative for 2022 but the second half of the year will show a greater impact from these planned investments. We're managing our business and deploying our cash very, very carefully. And we've proven to do so in the second quarter as well. Our balance sheet was nearly 200 million in cash and zero in debts that can support this step up investment very well. Further next question, Zaineb. Zaineb Bokhari: Thank you, Jantoon. Mike, back to you for the next question. Can you speak to the rationale for the acquisition of digital motors and maybe share the terms of the purchase? Mike Darrow: Thanks, Zaineb. Absolutely. We're really excited about the acquisition of digital motors and welcome the DM team to the TrueCar. Through this acquisition, we've gained a great team of technology talent with deep transactional experience focused on the automotive space. This includes Andy Hinrichs, who leads the digital motors team and is an expert on automotive FinTech solutions. This expertise will be critical as we continue to shift to an ecommerce focus with TrueCar+. Our combined product and technology teams are working closely together to accelerate our product roadmap, and have already delivered products to the TrueCar+ flow, including the protection products capabilities, and the loan payoff integration that we mentioned in our Q1 letter. The initial cash outlay for the acquisition was $12 million. And there's about $8 million of earnouts that will be paid out over the next three years, as certain milestones are hit. Zaineb, back to you. Zaineb Bokhari: Thanks, Mike. And before we open it up for Q&A, we have a question from our retail investors. What are your plans to increase sales when the economy is taking an overall hit? Mike, do you want to take that one? Mike Darrow: Sure, Zaineb. This is an interesting question. We shared for a few quarters now, the macro and market trends that continue to have an impact on close rates particularly for new vehicles given low production levels and dealer inventory. We've introduced capabilities to increase our presence on the used car side and identify new ways to create value for our retail partners and consumers through offerings like sell your car and distance retailing that have allowed us to become a strong resource to our dealers for used cars. We're also investing for the digital future with our TrueCar+ marketplace since we think auto retailing will continue to shift to the digital channel. We expect TrueCar+ to open up increasing monetization and growth opportunities for us once it's fully transactional, and we expand its footprint over time. We think TrueCar+ also represents an opportunity for us value -- to add value for our dealers if the economy weakens since dealers will be looking for solutions and ways to increase demand for their vehicle inventories. Zaineb? Zaineb Bokhari: Thank you, Mike and Jantoon. Now operator, let's open up the call for questions from the audience. Operator: Thank you. Our first question will come from Rajat Gupta with JPMorgan. Please go ahead. Rajat Gupta: Great. Thanks for taking the questions. I just have a few quick ones here. Jantoon, just to clarify on the EBITDA path for the rest of the year. Is it safe to assume that just given the expenses are going up and inventory still remains tight that the EBITDA loss run rate in the second half should be higher than what you had in the second quarter, if you could clarify that? And I have a couple of follow-ups. Thanks. Jantoon Reigersman: Yes. So the short answer is yes, given the additional investment we're planning to make for TC+ going forward. Yes. So that's also what I mentioned earlier in the Q&A Yes, absolutely. Rajat Gupta: Great. Thanks. And maybe just on the new vehicle side. You highlighted your differentiation there. There are a lot of domestic brands who are moving to online bookings for the newer electric vehicle models. I'm curious what conversations you're having with them on how they are perceiving TrueCar+? I mean how do you integrate that solution with those kind of purchases? Thanks. Michael Darrow: Thanks, Rajat. I'll take that one. We're in our very initial conversations with our OEM partners around TrueCar+. What we're trying to explain to them is regardless of how they go to market from their platforms, we have a steady flow of 7 million to 9 million consumers who like to do a portion of their shopping in an open marketplace like ours. So what we'll continue to encourage them is to do what development work they're going to do around how they're going to go to market with their vehicles. Some of them have asked us if we can play a role in that, and we're exploring some of those conversations. But what we try to continue to tell them is we want to take our dealers' inventory, their dealers' inventory as well and make it fully transactional on our marketplace. And that message is resonating with them. They're beginning to understand and various ones are looking for ways to support how we want to bring that to market. Rajat Gupta: Got it. Then just one last one, following up on some of your initial comments on the TrueCar+ progress. Can you give us some insights on to the expanded distance retailing features as well? What kind of traffic or conversion rates are you seeing? And curious like if you're having to make any incremental investments via incentives or discounts to ramp up that offering, how competitive would the rate be in comparison to a Carvana, for example, that has a similar model to be delivered from Florida to another region in the country? How do you make sure like your offering is competitive enough in terms of those rates? Thanks. Jantoon Reigersman: Yes, it's a great question. I think I would actually think about this in two ways. So one is, we're actually providing very interesting opportunities for dealers to expand outside of their home markets, and we do this very efficiently together with our partner, Acertus. So this is for many of them the first time that they're actually able to go out in a much more expanded geographical area. We have not disclosed any specific information around this, but the pilots that we were doing were very beneficial and to such an extent that we're now rolling it out nationwide. And so there is a real appetite for this, and it is working really well. However, having said that, this is really a prelude to obviously, the adoption of TrueCar+ in the long term. So the idea here is not necessarily that this is a stand-alone business model. This is a very interesting opportunity for us to have really good conversations with our dealers and really start working with them on how to conduct sales in a remote flow environment. In other words, remote sales do not happen in an unusual flow of our usual CRM flow as it were at a dealership that are more used to have people walk-in to the door. And so it's a great opportunity for us to engage with them. It's a great opportunity for us to also work and train them and how to work through remote flows, et cetera, et cetera. So the distance retailing element besides the fact that stand-alone is an interesting program that works. It's really a prelude to who is interested in TC+ and how can we then also already train them prior to rolling out TC+ and are actually adopting to these like retail, remote retail flows effectively. So that's really where the crux is. This is really to build further on the overarching TrueCar+ experience in the future. Operator: The next question will come from Naved Khan with SunTrust. Please go ahead. Robert Zeller: Thanks. This is Robert Zeller on for Naved from Truist now. It's good to see the company planning to continue investing in brand, given you guys still have a relatively good cash position versus peers. But I'm curious on which OpEx line items do you think you can achieve the most leveraging and why? And then your comment on taking fixed cost out of the model just out of the business. I'm just curious on where we would see that in the model? Thanks. Jantoon Reigersman: So on taking out the cost we have been doing that. So I think it's a statement to the last couple of quarters. I think you're effectively looking at a, call it, a run rate on the cost side of things, except for additional investments as we push into TrueCar+, right? So one of the things you've seen is obviously, we've been pulling back pretty aggressively on the marketing side. That's for two reasons. One is because we look at the efficiency of our marketing spend. And so we're wise around that. But also we've been holding off on deploying too much of the broader branding marketing side because as we do that, we want to make sure we also start educating the market around the TrueCar+ offering. And so as we start expanding outside of Florida, you can expect that also we're going to push harder on having made people aware that TrueCar is not a lead generator stand-alone anymore, but actually is a full digital marketplace where people can now effectively transacted by a new used or certain car. And so we're finalizing those elements with the paperwork that we've articulated. So there's still some work on the product development side to be done before we scale outside of Florida. But as soon as we do, we will deploy further on that branding and marketing side. Also, remember that as we pulled back on the branding side, it's a great testament to the company that actually our monthly units have not come down, that margin have been very stable. However, unaided brand awareness, obviously, has come down over time, and it's something we obviously need to be mindful of. And so at some point, we'll lean further in. But overarching your first question on the operating business model, I think we're pretty much at where we want to be, and it's really hard for us to find further cost savings. Operator: The next question will come from Chris Pierce with Needham. Please go ahead. ChrisPierce: Good morning. I know you guys talked about still kind of working through conversion methodology, but how should investors think about monetization methodology on these TrueCar+ complex units, you did, I think, $467 per car in the current method of paper sale and some lean base, so I'm kind of thinking about how should we think about monetization as the TrueCar+ move forward on a premium basis? Jantoon Reigersman: Yes, Chris, very good question. And I know it's a question that many of you have been asking for, for quite some time. At some point, we'll obviously go into more detail on future monetization opportunities for TrueCar+. We have a lot of thoughts around that, and we've already been doing a lot of tests and market tests around that. For the purpose of currently, any lead effectively or whether it's through TrueCar+ or through our original platform is effectively charged at $299, $399. So we're not anticipating any effectively any revenue assigned to TrueCar+ for this year, so for the calendar year of 2022. However, we obviously assume for '23 we will start monetizing and we will articulate this in more detail to you guys in one of our later calls. But for now, it's really for on finalizing the product flow. And so the dealers that are currently on our platform we effectively are working with them on their working processes on the back end on the dealerships, et cetera. And so we want to avoid this concept of always as a TrueCar+ lead or is it a core lead or how does that work? It's really about making sure we get consumers on that will, and we need to finalize that rules all the way to paperwork, which we haven't done yet. And so whoever we bring to those dealers, we're -- we continue to charge the $299, $399. So for this specific year, there is no assumption made on additional revenues effectively and we will elaborate on this in much more detail in the future as we articulate how we're actually going to monetize TrueCar+ for which there are various opportunities for us. Mike Darrow: And Chris, I would just add to that, that I think we're still optimistic that by the time we get to 2023, while I've identified additional monetization opportunities around these units. We just haven't seen enough flow yet in order to get our hands around that, but we're very optimistic and you want to look at more of these units coming through. So we've really taken the pressure off of the product for 2022. We want to get the product right for consumers, for our retail partners, and then we'll put together a plan that we're still very bullish on around how we'll monetize these units before we get into 2023. Chris Pierce: Okay. And then just lastly, on the 3,300 orders you spoke about in your investor letter. Is there any way to kind of -- how should we think about as some of this new versus used? Is some of that buy versus lease? Just kind of there are some things that are gaps that I think digitally if you're helping deal with lease new cars, that's something that's kind of would be unique to you guys versus used the few other players out there, I'm just curious how to think about the breakdown of those units? Jantoon Reigersman: Yes. We didn't provide any of that breakdown in this call, Chris. As we get more and more volume through there, we'll start to look at that. But just off the top of my head, I would say it's a combination of new and used, probably predominantly a little heavier used right now because of the inventory situation around new but it is cash. There's some cash deals going through that we're getting a chance to look at. So there's some cash and there are certainly lease and finance deals going through as well. So we'll get more and more info on that and begin to break that out as we have additional numbers there. But we're encouraged. It appears like there are all types of buyers who are engaging with TrueCar+ and finding a way to work through the process, find a car, build the deal they want, apply for credit if they're a finance or lease person and then continue to move forward. So we're excited by these mid-funnel metrics we put out there. They continue to advance from where they were in June. So we're excited about that part. We'll add more dealers, more inventory, we'll expose more consumers to it. And I think as the data grows, we'll be able to get more specific as to your question as to what specific type of buyers are we seeing come through. But right now, we're getting the full spectrum. We're getting a chance to see new, used, lease, loan, the whole deal. Operator: [Operator Instructions] Our next question will come from Zachary Schechtman with BTIG. Please go ahead. Zachary Schechtman: Good morning, guys. Thanks for taking my question. This is Zack Schechtman from BTIG on for Marvin Fong. Our first question is really just on the franchise dealer count, how it behaved within the quarter. Was it churn pretty linear throughout the quarter? Was it more weighted to either the beginning or the end? If you could provide any insight into how dealer term behaves in July, that would also be great? Jantoon Reigersman: Yes. Thanks, Zack. We don't provide any of this color usually. I think what is just important to remember is we're still in a constrained strange world. And so -- and we have very good relationships with a lot of these dealers, including some of the dealers that churn off. And so it's always a delicate balance on how hard do you want to holding tied to their obligations vis-à-vis how do you actually want to keep the relationship for when the pendulum swings back. We don't necessarily give the colors around how exactly it evolves over the quarter. But the long story short is we feel very confident about the overall rooftop base that we have. And we are also very, very confident about the opportunity and the possibilities of the TrueCar+ cars adoption as we roll out in a much more curated form as you roll out amongst our dealer base. Zachary Schechtman: Got it. Thank you. And then I guess my only other question would be on the acquisition of Digital Motors. Could you elaborate a little bit on what part of the technology in particular appeal to you? And additionally, if there are any other elements of TrueCar+ that you might consider accelerating through acquisitions? Mike Darrow: Yes. I think, Zack, and thanks for the question. Digital Motors had built out a fully functioning e-commerce platform for a number of dealers they had been working with previous to our acquisition of them. So they have expertise across the entire flow. The ones that we were able to bring to bear the quickest where the VIN-based insurance products through some API work with them. We're going to be adding VIN-based accessories as another element of that. And what we really like, and I mentioned it in my comments, is that Andy Hinrichs and that group is very advanced in the FinTech side of the business. And we know to be really good as a transactional marketplace. You have to offer different paths for consumers as they want to go on that car buying journey. So prequalification, shop by payments, things like that are things that we have on our road map, and they have quite a bit of expertise in, and we will be tapping into that expertise to bring the market to bring those products to bear. So we were -- we had a chance because they're an Orange County company, to do a lot of due diligence. We had a chance to look at their tech and their capabilities, and they're pretty well versed across the full spectrum. So we're -- we've got the teams integrated. We've got them pulling together and finding solutions. And we had a couple of very quick immediate wins. And then we have a pretty well-defined a three-year plan with these folks as to what we want to bring to market with them. And I think you'll see the next focus will be in that area of financing and how do we make sure we get the consumer on the right car, get them through the system. So when they get to the credit app, they're shopping an appropriate vehicle. So we're really excited about that acquisition, and they're going to help us in a lot of ways. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mike Darrow for any closing remarks. Please go ahead. Mike Darrow: Thanks, operator. I'd like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their hard work as we work to deliver on our near-term road map for TrueCar+ and lay the groundwork for expansion beyond Florida. This is an exciting time for our company, and we look forward to sharing more about our progress with you all on our next call. Thanks for spending time with us this morning. Operator: The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar First Quarter 2022 Financial Results Conference Call. Please note that today's event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, operator. Hello, and welcome to TrueCar's first quarter 2022 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer and Chief Operating Officer. By now, I hope you've all had the opportunity to read our first quarter stockholder letter, which was released on Monday, May 9, after market closed and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be defined by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission. For a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar's President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike? Mike Darrow: Thanks, Zaineb. Good morning, everyone, and thanks for joining us this morning. We issued our Q1 stockholder letter yesterday and highlighted some of the really impressive progress our company has made on the product front during the first quarter in a difficult macro environment. We launched a commercial version of TrueCar+ at the end of April, and now it's full speed ahead as we ramp up the inventory available in our marketplace. None of this would have been possible without the hard work of the entire TrueCar crew, so I want to thank them for their dedication to bringing our plans to fruition. We're striving to bring something new and unique to the market and doing it at a time of rapid change and enormous macro headwinds. During the first quarter, dealer inventories, particularly for new cars, remain near historic lows, while pricing remained elevated. A recovery in the global supply chain is likely several quarters away, in our view, and recent geopolitical events in Eastern Europe have created new uncertainty for OEMs to navigate. These industry-wide headwinds continue to put pressure on our close rates, reported units and other key metrics. We expect some volatility in our key metrics throughout 2022, but are managing our business efficiently in this environment. We're investing in our product road map with TrueCar+ and core used car offerings. As we shared in our letter, we added the ability for dealers to offer VIN-based protection products and for consumers to add their trade payoff quote directly from their lender, giving consumers confidence in their deal numbers. Our certified dealers can now show consumers a transactable price in TrueCar+, and we've added distance retailing. We've also launched a new cellular car experience that has exceeded our plan since its launch in March. With the commercial launch of TrueCar+ now behind us, our dealer teams have started to ramp up the rollout of TrueCar+ out across Florida. We continue to target broad market coverage for new and used cars across Florida by the first half of 2022. In upcoming months, we plan to expand TrueCar+ into additional states. This is an exciting time for our company, and we plan to continue investing to ensure a successful rollout for TrueCar+ in the months ahead. Before we open up the call for live questions, we're going to address some questions around key topics. Zaineb, what's the first question? Zaineb Bokhari: Thanks, Mike. I'll start with a question that has 2 parts. First, can you provide more details about the capabilities that have been added to TrueCar+ and why these are noteworthy? And secondly, you mentioned the commercial launch of TrueCar+. Can you provide more details around what that means? Mike Darrow: Thanks, Zaineb. I'll take the first part of that question, then I'll turn it over to Jantoon to provide more details about what's happening on the ground in Florida. In Q1, we were working through the pilot launch of TrueCar+. We were managing dealer participation and traffic flow into TrueCar+ very closely and learning about consumer behavior and dealer support in fulfillment. We captured a great deal of important learnings through mid-March and decided a final product push to achieve a more fully commercial product, adding features like automated trade payoff and VIN-level dealer protection products, along with continued focus on accurate pricing that included taxes, title and other add-ons resulted in a comprehensive product that we feel we can now roll out more aggressively in Florida. Additionally, we added distance retailing and delivery to TrueCar+ to provide greater market exposure and shipping support to dealers in our TrueCar+ program in Florida, integrating the learnings from our pilot in Texas. Now I'll hand it over to Jantoon to provide more details about our market approach in Florida. Jantoon Reigersman: Thanks, Mike. So as Mike mentioned, now that we can really commercialize TrueCar+, we're focused on growing inventory across the state of Florida for new, used and certified pre-owned vehicles. And we build up this - as we build up this inventory, we plan to start driving more and more traffic and get shoppers through the flow into TrueCar+. At the end of April, we had dealers representing 19 different brands already participating in our marketplace in Florida, and we're adding higher volumes and dealers onto the platform as we look to expand in both the market and brand coverage across Florida in the next couple of weeks and months. We'll remain focused on Florida for at least the remainder of Q2 and starting in Q3, we'll look to transition into a state-by-state rollout for new and a nationwide rollout for used cars. What's the next question, Zaineb? Zaineb Bokhari: Thank you, both. Mike, the next question is for you. You've added many great features and capabilities into TrueCar+. What do you still need for your product road map? And how are you thinking about build versus buy to advance this road map? Mike Darrow: Thanks, Zaineb. M&A has always been part of the consideration set as far as our capital allocation priorities. We continue to survey the landscape very closely for potential opportunities. For us, it's about smart tuck-in opportunities with innovative technology and talented know-how and capabilities that accelerate the product road map for TrueCar+ as we look to bring world-class digital e-commerce capabilities to our dealers and consumers and bring more and more of car buying and selling experience online. Let's have the next question, Zaineb. Zaineb Bokhari: Thanks, Mike. Jantoon, the next question is for you. You're not expecting much improvement for new vehicle production and dealer inventories in 2022. While you're not providing guidance, how should we be thinking about your business and the expected investments for TrueCar+ in this backdrop? Jantoon Reigersman: Thanks, Zaineb. And we're obviously not providing guidance in the uncertainty of this market. But I think a high-level framework may be helpful. Bear with me for a second because this might be a little bit more detailed. But it actually, I think, would be helpful for people as they think about the remainder of the year. First, let me start with the macro backdrop. The reason we discussed this in more detail on our stockholder letters is because we see the correlation between high vehicle prices, low inventory and our close rates, with high vehicle prices probably as being the main driver of what we're seeing with respect to these close rates. Until these factors start to improve, we expect continued pressure on our close rates in our core business, which we think will lag improvements in industry trends. In addition to this, we don't think the market has fully factored in the effect of rising interest rates on consumer demand for cars. So there will be another macro factor that we would need to consider as we go in future state. With that in mind, from a top line perspective, if nothing changes in the macro environment and close rates remain stable, annualized Q1 revenue possibly baking in some seasonality is probably a reasonable framework for this year, given where prices and inventories are. The big caveat here is that in reality, things have been very unpredictable when you consider a war breaking out in Ukraine, COVID shutdowns in Asia, inflation, the Fed raising rates, et cetera. So the truth is no one knows for certain, which is why we're not providing guidance. On expenses, we have a relatively simple cost structure that we can control very well. On top of that, we're planning to lean in and invest in TrueCar+ now that we've launched commercially. In Q1, total non-GAAP expenses were approximately $50 million and doing some back of the envelope math, about 20 of the 50 is employee and head count related, many of which have been allocated to TrueCar+ in product, technology and other support areas. The remaining expenses consist of fixed expenses and marketing costs. We've been reducing and refining our fixed expenses over time. What we've done, as an example, what we've done on the real estate is a good example of this, and we'll continue to further reduce this as we go along. Obviously, as we go further, this becomes harder and harder, but it's something we've always been very focused on. That leaves marketing. A big portion of the marketing budget is partner-based and this fluctuates with partner demand. The remainder is brand and performance marketing that we have dialed back in recent environments and with the lower close rates. As we lean into TrueCar+, we will skill the second category quite a bit higher. So you can assume that our spend - our recent spend is somewhat of a baseline, but we will obviously invest further as we go through the balance of the year and start rolling this out more commercially. So hopefully, this provides some clarity of how we're thinking about this. I do want to point out one part on the marketing spend. So despite having reduced the marketing spend quite a bit in recent times, we still track more than 7 million unique every month. This is a testament to our brand, although we know that unaided brand awareness has gone down. So we do know we also have to invest further, and we also know that we have to educate the markets on the ability and capabilities of TrueCar+. So and overall, though, I also think it's worth noting, given the macro and what we've seen around us, that we have an asset-light approach with our marketplace model and our balance sheet is very, very strong, and we can support this, the step-up investments very well with the current balance sheet that we have, and we have runway for many, many years. So let's have the next question, Zaineb. Zaineb Bokhari: Thank you, Jantoon. I have one more question for you, Mike, before we open up the lines to the audience. How is TrueCar thinking about the EV space? And does the shift to electric vehicles pose a risk to TrueCar? Mike Darrow: Thanks, Zaineb. EV represents a great opportunity for TrueCar and we've already established a strong position in growing this vehicle category. We shared our Q1 stockholder letter that based on TrueCar leads that can be attributed to sales at our dealers, consumers using TrueCar have purchased more than 170,000 EVs to date through mid-April, including battery electric vehicles and plug-in hybrid vehicles. Consumer interest remains high given that the recent rise in gas prices and that looks like that's going to continue. We think that consumers are still confused about which cars to buy, and our ability to help them find the best car for their needs regardless of the powertrain is where our focus lies. We have strong relationships with OEMs and dealers and are here to help them market new and used cars to consumers, and this includes new and used EVs. Given the uniqueness of our profile, we have the ability to provide a great experience for consumers, dealers and OEMs with our TrueCar+ and two-sided marketplace. Zaineb? Zaineb Bokhari: Thanks, Mike and Jantoon. Now operator, let's open up the call for questions from the audience. Operator: We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Tom White with D.A. Davidson. Please proceed. Tom White: Great, good morning. Thanks for taking my questions. Maybe just two clarifying ones on TrueCar+ and then one on the outlook commentary, Jantoon. I guess on the timetable for the rollout of Plus by year-end, like what's your best guess on sort of where you guys are? Like how many states can you have the new offering rolled out in? And can you - is it possible that you could be nationwide for the used offering by the end of this year. And then there's a comment in the letter about inventory levels in the TrueCar+ marketplace. Just curious, do participating dealers put all of their inventory in the marketplace or just sort of select inventory? And maybe just touch on the extent to which participating dealers, what's the integration process like? Like how difficult is it for dealers to onboard? Jantoon Reigersman: Absolutely. So this is Jantoon, thanks for the questions. The first - let me start with the first piece. So we obviously have a huge opportunity nationwide, as well as in the different states. So it's really about how deep do you go, how fast? So yeah, used will go by the end of this year, we aim to be nationwide. Obviously, that means that you can still then go deeper and deeper because obviously, you have - you'll spend the coverage of x amount of dealers per salesperson. And so there's a lot of runway for us to add dealers as we go over, frankly, in the next many, many quarters. But yeah, so we want to make sure that for both consumers and dealers alike, there's a nationwide offering available. Before the end of the year, and we'll go new state by state. I think it's fair to say that like –should we be able to add like two, three, four states before the end of the year on the new side, absolutely, that sound something that's definitely in the plans and essentially in the works. It's really about how deep do you go at that point in time. So we're going to - we're still refining in Florida and just running further tests, running this through and as we go and are ready with our prioritization in the different states, then we'll start rolling out in the second half of this year. So we're very bullish. And by the end of this year, we'll have very good traction with this product overall. Your second question is on the dealers in Florida, yes, they put their inventory on. This is something that obviously is interesting for them to have. It's an extended sales funnel effectively. It means that, one, you go from a much more localized TAM for the average dealer to effectively, in this case, a state-wide TAM, number one. Number two, it's obviously an additional funnel. Number three, it means that they don't need to do any marketing expenses. They don't need to actually have any infrastructure, et cetera, et cetera. So this is a very interesting value proposition. Onboarding has been refined and will continue to be refined as we go. And so this is something that we effectively sign up the dealer. We have a team go out to the onboarding process with the dealers, we train them accordingly. Is there always room for improvement? The answer is yes. But so far, this has gone very, very efficiently, and we'll continue to make this easier and easier as we go along and over time, even potentially seek to automate this in efficient ways. Tom White: Okay. That's great. Thanks. And then just a quick follow-up on the outlook commentary. Just trying to kind of get a sense of how to think about like the cadence of quarterly EBITDA here for the balance of the year. Jantoon, I think you said maybe adjusting for seasonality and presuming no kind of material deterioration in the macro that kind of annualizing the first quarter revenue number wasn't a horrible place to kind of start our models. Does that imply that kind of the magnitude of the absolute EBITDA dollar loss kind of gets a little bit worse relative to the first quarter levels, presumably as you kind of continue to ramp investments around TrueCar+? Jantoon Reigersman: Yeah, I think those are very fair assumptions. That's exactly where we're - what is probably the right frame is like this is somewhat of a baseline. And we'll obviously, as you can see, even in the detailed financials is we've only leaned into DC+ to a limited extent, and we see a lot more room for that. So yes, we will continue to lean in and increase the way we lean in. And then on the core side, we'll pretty much remain our cost basis flat or marginally improve that, but that will obviously be offset by how much we lean on the DC+ side. Tom White: Okay, great. Appreciate the color. Thank you. Operator: Our next question comes from Marvin Fong with BTIG. Please proceed. Marvin Fong: Hi, great. Good morning. Thanks for taking my questions. One was already covered, but I just wanted to ask about the pilot and TrueCar+. I appreciate that it's early days. I think some others in the space that have been experimenting with a digital retailing solution I've seen their conversion rates go up. And just wondering what you - if anything, you've seen in your pilot in terms of close rates attributable to TrueCar+? Thanks. And I have a follow-up. Jantoon Reigersman: Yeah. Thanks, Marvin. I think it's hard to say at this stage still. So at the end of the day, if you think of where we have not yet been to place long enough where we've laid all the pipes to actually make it fully online from finding a car all the way to the buyers order. And so that's something that we've now recently connected. So we have a lot of data on the different parts and where people have been interacting with the different elements of that flow. But we've only recently connected everything altogether. And so we don't have enough data to really make any like statistical significant statements on that. What we do have seen is that the behaviors online are obviously slightly different than you're used to in the real world. And there are a lot of preconceived notions that people have around how people behave car buying process actually do not necessarily seem to apply online to the benefit of actually the experience. Consumers seek clarity. They don't want to haggle. They like the transparency. So there's a lot of really interesting elements that are going forward. But in terms of close rates, et cetera, it's still too early to tell, but we hope that in the next call, we have more data around this to provide. Marvin Fong: That's great. Thanks, Jantoon. And I just wanted to drill down a little deeper, I guess, and you're thinking about the macro environment. I guess, an optimistic, say, despite all the headwinds that you highlighted, and I think we all appreciate that because of the supply shortage that we're already basically at recession levels and that if we get any improvement in terms of inventory and car availability, maybe we can see improvement there. I think you're alluding that interest rates have not been fully factored in. But just wanted to get your thoughts on sort of that line of thinking and just wanted to see if you could expand a little bit more on your thoughts on the macro? Thanks. Jantoon Reigersman: Yeah. I think what we're seeing, Martin, is that the pricing has gotten to a point where it's begun to slow down the turn rate. And that's going to be one of the things that we look at going forward is affordability for many consumers is becoming a real issue. And even though we may get a slight increase in inventory until prices start to adjust. And until we can get the sold orders out of the system, we don't see a big response to the pricing situation that's going on out there. And it's really squeezed many of the discretionary buyers, we think out of the marketplace. So there's a chance we'll see an uptick, but it's going to take a while to get enough inventory out there to begin to affect pricing and affordability. Finance rates are starting to extend on things like that, that we haven't seen for a while. So we're watching all of those factors and are hopeful that in the second half of this year, we'll begin to see some positive signs in that area. Marvin Fong: Perfect. Thanks for the commentary. Appreciate it. Operator: Our next question comes from Rajat Gupta with JPMorgan. Please proceed. Rajat Gupta: Great. Thanks for the question. I hop on a little late. So curious if you touched upon capital allocation at all. Just given the balance sheet flexibility, you mentioned tuck-in acquisitions in the past to help accelerate the road map or the product road map. Could you give us a sense of what's your latest thinking around capital allocation literally in the context of the current macro? We would love to hear that and have a follow-up. Mike Darrow: Thanks for the question, Rajat. I'll start the answer, and then I'll let, excuse me, I'll let Jantoon jump in as he sees fit here. But we love our cash position. We're looking hard at a number of opportunities to really accelerate what we're doing on TrueCar+. We think coming out of NADA just recently, there's some interesting tuck-in type opportunities that we're taking a look at, all aligned to help us accelerate getting to market accelerate some of the knowledge and know-how around a commerce-driven site. So we'll continue to look at those things. We'll continue to manage our expenses. We've been working on reducing our fixed expenses and trying to manage our way through that. So we think there's some opportunities there. We are out in the market actively looking, and it will all be focused around accelerating TrueCar+ with our own capabilities and then some of the things we've seen in the marketplace. Jantoon? Jantoon Reigersman: Yeah. And so I think what Mike was saying is absolutely correct tuck-in investments is something that we're looking at very actively. And also it seems that prices have come down of some of these type of acquisitions. So those has also become more reasonable. That was harder effectively a year ago, number one. Number two is we obviously are ready to really start leaning in on the TC+ side on the marketing side as well. Now that the pipes have laid effectively. We can really push people through. We want to do this in a strategically effective way. We haven't necessarily done that to date because we knew we were pushing people through only through phases of the flow and not yet for the entire flow. So we're now ready to actually start doing that. So there's - and then the other thing is obviously macro in general and obviously, the concept of credit working this will become important overall. So having a little bit of a war chest and a strong balance sheet is probably a good thing for a company like ours going into the next several quarters, especially in a world where creditworthiness is something that will become more prevailing as interest rates are going to rise. And so we want also be somewhat prudent there as we navigate these waters. Rajat Gupta: Got it. Got it. Great. Maybe just a follow-up on that. What - any color on the exact kind of capability you might be looking at? For example, cars deals with the car offer deal like Cars.com, did the Accu-Trade one recently, like those kind of capabilities, is that something you're looking at? Or is that something you're already building in-house with regard for us and [indiscernible] Just curious as to what kind of capabilities are you targeting? Jantoon Reigersman: Well, I think Rajat to speak specifically about some of the things you mentioned. We have an Accu-Trade deal in place for a guaranteed cash value on our site. So we've had that offering available for quite a while, and it's built into TrueCar+ as part of the flow. We also made an investment in DealerScience a few years back in that desking tool. I want to clarify at this point, there's a big difference between some of our competitors launching various digital products and what we're trying to build, which is a fully comprehensive digital marketplace end-to-end. So there's pieces of it. The interesting piece we announced just recently was the automated trade payoffs. So on a lot of sites, you can go out and get a value for your trade, but then the dealer or the consumer has to make a call to the bank, find out if there's still any money owed on that loan has to get worked into the deal, we've automated that process. You aren't hear many of our competitors talking about that. They leave that up to the dealer to do. So we're working at great lengths to bring a digital solution to the entire purchase process versus the introduction of RandomTools. And we think we're there. There's always ways to accelerate the work we did around VIN-based protection products was very important to us. Many of the offerings in the market are very generic around the vehicle. We now have protection products, individual dealer protection products at the VIN level with VIN level pricing. So those are the type of things we're working on and it will further perpetuate our ability to get to that full penny-perfect end-to-end transaction at the end of the day versus a series of random kind of tools that are being introduced to help consumers shop, right? We're trying to create an environment where they can come to our platform, shop new, used and certified pre-owned vehicles and actually go fully end-to-end with fulfillment happening either at the dealership. And now we're going to be delivering vehicles to consumers with our shipping program. So we're excited about what we've built. There are folks out there who have built interesting things that we can use to accelerate even further and get better at what we do. So we'll continue to look at those things. Rajat Gupta: Got it. Great. Thanks for the color. Operator: [Operator Instructions] The next question comes from Chris Pierce with Needham. Please proceed. Chris Pierce: Just curious on the Florida deals you guys are signing up for TrueCar+, are these new dealer relationships for you guys, dealers you had previously ship with kind of just kind of curious what's going on out there as far as dealer feedback and potentially growing the dealer network? Mike Darrow: Absolutely. And good question. And the answer is both. And so what we've - we've also - similar to our product, we're also trying different forms of actually approaching this. So you can think of, do you approach your current dealer network that you have already have existing relationships with. Obviously, those are often good relationships that we have. But also what we do is will take a hub or take a city, and then you go and actually, this is a really interesting offering to approach dealers that are not necessarily on the network and start those dialogues. One thing you obviously see is, for example, a focus also on independent dealers. So we've been having where our TrueCar+ could be really interesting proposal to them as well. But also in a world where, obviously, as you see the mix shift happen from new to used overall. So with our somewhat greater focus on use in the current macro environment. But the short answer to your question is absolutely both, and we seem to get good traction with both. So yeah, we feel that overarching with the core offering, the cellular car, distance retailing and then over time, the TC+ as you go nationwide, and we feel we have a very good offering for the dealers and really to become their big partner in enabling a multitude of sales channels, both locally as well as regionally as well as nationally. Chris Pierce: And you kind of touch on it there. I sell your car, who buys the car? Is the dealer much more likely to buy the car if that consumer is also looking to buy a car in TrueCar+? Or can you consume - consumer just wants to sell a car, I just want to kind of price check what's out there? Who would be the buyer of that car? Mike Darrow: Yeah. The buyers are - our network of dealers are looking for acquisition opportunities all the time. So they get - they're getting pretty excited about consumers who either are reducing a family fleet or want to maybe sell a car now and come back into the market later. So we've had dealers very quickly rally to be part of our cellular car program and consumers are beginning to dispose of vehicles through that process and dealers love to have them and are excited about the opportunity to bring those cars into their used car inventory. Chris Pierce: Does the dealer have TrueCar+ to buy - to be part of that car buying program from retail? Mike Darrow: Well, currently, no, that's separate. Chris Pierce: Okay, okay. Thank you. Operator: This concludes the question-and-answer session. I would now like to turn the call back over to TrueCar's President and CEO, Mike Darrow, for closing remarks. Mike Darrow: I'd like to thank everybody for taking the time to participate in the call today. I also want to thank the entire team here at TrueCar for all the hard work to help us take the commercial version of TrueCar+ to dealers across the state of Florida. It's an exciting time for our company, and we look forward to sharing our progress with you on our next call. So thanks, everyone, for participating. Operator: The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.

Operator: Good day, and welcome to the TrueCar Fourth Quarter 2021 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, Operator. Hello, and welcome to TrueCar's fourth quarter 2021 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer. By now, I hope you've all had the opportunity to read our fourth quarter stockholder letter, which was released on Tuesday, February '22, after market close, is available on our Investor Relations Web site at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, anticipate, become, seek, will, intend, confident, and similar expressions, and are not and should not be relied on as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Question, and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our Web site, at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I'll turn the call over to TrueCar's President and Chief Executive Officer; Mike Darrow, for some opening comments. Mike? Mike Darrow: Thanks, Zaineb. Good morning, everyone, and thanks for joining us. We issued our Q4 stockholder letter yesterday, and highlighted some of the great progress our company has made during the quarter even as the macro environment remains very challenging. First, I can thank the TrueCar team members enough for their tireless efforts to strengthen our consumer and dealer product offerings in the face of these unprecedented macro challenges. During the fourth quarter, we saw only slight improvements in new vehicle inventories, and continue to see elevated pricing for both new and used vehicles, a combination that put pressure on our close rates, reported units, and other key metrics. We managed our business prudently through these headwinds, while strengthening our core business, particularly on the used car side. We also made strong progress with our TrueCar+ pilot, and important initiative that we believe will help us benefit as more of the car buying and selling process moves online. TrueCar+ has garnered strong interest from dealers, leading us to extend the brands and dealers in the pilot, and we're in talks to onboard additional groups. We're also on track for the commercial launch of TrueCar+ by the end of Q1. We're targeting full market and brand coverage for new cars across Florida, as well as a robust statewide rollout for used cars by the end of the second quarter. This is exciting time for our company, and we plan to continue investing to ensure a successful rollout for TrueCar+ in subsequent quarters. This morning, we also announced that TrueCar's Chief Financial Officer, Jantoon Reigersman, has been appointed Chief Operating Officer, effective March 1. Jantoon will continue to serve as our CFO in addition to his new role. As CFO, Jantoon played an important role in developing the strategic plan for TrueCar+. As COO, he will now also focus on making that rollout of TrueCar+ happen in an optimal way. This appointment underscores our commitment to the success of TrueCar+ and our strong belief in the tremendous opportunity before us. Before we open the call up for live questions, we're going to address some questions around various topics. Zaineb, what's the first question? A - Zaineb Bokhari: Thanks, Mike. I'll start with the first question for you. What can you tell us about the rollout for TrueCar+? Mike Darrow: After the commercial launch of the TrueCar+ pilot, which we expect by the end of Q1, we plan to have full market and brand coverage across Florida for new, and a robust statewide rollout for used and certified pre-owned cars by the end of Q2. It'll take time to scale TrueCar+ to build volumes, so in the near to medium-term, we do not expect there to be a material impact on revenue. We expect that for the used side, including certified pre-owned units, we will go across multiple states sooner and with a rapid rollout and nationwide inventory planned. On the new side, we plan to go state-by-state with our rollout to cover all 50 states at a measured yet opportunistic pace. We have already laid the groundwork for a large-scale rollout leveraging the 7,000 TrueCar dealers that have deal-building and payment configurations already in the core experience. During the second-half of 2022, we expect to have enough information to build and articulate a growth plan based on insights gained as we drive volume across new and used vehicles. We will seek the present the largest used inventory and the only marketplace for new vehicle purchases online. We believe this will be an unmatched competitive advantage. So, stay tuned, it's going to get exciting. Zaineb Bokhari: Thanks, Mike. The next question is also for you. TrueCar is known mainly for its new car business. What are you doing on the used car side? Mike Darrow: Thanks, Zaineb. One of the clear silver linings to the macro headwinds seen during 2021 is that it forced us to take a fresh look at our used car business and identify new ways to create value for retail partners and consumers that didn't exist before at TrueCar. This helped us become a strong used car resource for dealers and consumers in light of the inventory constraints for new cars. In Q4, used units accounted for approximately 45% of total units, as compared to 36% in the fourth quarter a year ago, and approximately 19% of our used units came from dealer sales to consumers who also searched for a new vehicle on TrueCar. We made solid progress in strengthening our used car offering during Q4, and have several product launches planned in upcoming quarters that we expect to give us a comprehensive set of both new and used car offerings to market to our dealers. Zaineb Bokhari: Thanks, Mike. Jantoon, the next question is for you. You're indicating a negative adjusted EBITDA expected in 2022. Can you please provide more color? Jantoon Reigersman: Absolutely. As mentioned on our calls before, and similar to the investments we began in Q4, we see a significant opportunity ahead for TrueCar+, and plan to maintain its flexibility to support its broader rollout with sales and marketing, product and tech support; so various investments in various areas. We've already been investing on the product and tech side. And I think our recent hire of Rich DiStefano as our Head of Product is a great example of this. We'll be leaning into broader brand building as well, as well as other sales and marketing efforts as we start scaling in Florida, initially, and then afterwards expand in other states. Our strong balance sheet gives us the flexibility to make these investments, and we're planning to support any and all of these important initiatives. We've managed our business prudently over the past quarters, and I think we've proven that to the market, and will continue to do so despite the headwinds. But we also feel that there is a huge opportunity ahead of us that we want to absolutely support. Zaineb Bokhari: Jantoon, here is one more question for you before we open the line up to the audience. Can you tell us how the recent announcement about Accu-Trade affects TrueCar? Jantoon Reigersman: Yes, absolutely. And there are, obviously, more details in the 10-K that we'll be releasing. But long story short is TrueCar received an attractive offer for its minority interest in Accu-Trade. While our initial investment allowed us to learn a lot, we determined that this minority interest was not required for TrueCar to continue to provide its best-in-class consumer experience with trade-in offers. So, we're building a transaction-focused marketplace model. So, as a result, our focus will be on adding value for our dealers in each transaction, rather than focus on driving software sales. So, for us, to exit this investment made most sense at this strategic place. Zaineb Bokhari: Thanks, Mike and Jantoon. Now, Operator, let's open up the call for questions from the audience. Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Rajat Gupta from JP Morgan. Please go ahead. Rajat Gupta: Great. Thanks for taking the questions. You mentioned the ramped up investments for TrueCar+. Could you help us quantify some of the magnitude of the investments, you know, marketing, technology, product, I mean to what degree are those investments try to direct to TrueCar+ specifically? And then I have a follow-up. Thanks. Jantoon Reigersman: Sure. So, we haven't disclosed any of the magnitudes, and especially you know that we obviously will be dialing a lot of the investments as we scale. But you can imagine that a significant portion of the company's focus on TC+ if you start thinking about the marketing side, if you start thinking about the product and engineering side as examples. And our field teams obviously are mostly focused on our core business currently. But over time we'll gradually also get more and more engaged on the TC+ side. So, it will just move in gravitas for the organization. Rajat Gupta: Understood. Mike Darrow: Hey, Rajat. This is Mike. [Multiple Speakers] I just want to add to Jantoon's answer. One of the key investments we made in TrueCar+ -- and he mentioned it in his earlier answer was the hiring of Rich DiStefano as our head of product. Rich comes to us with a lot of two sided market experience outside of the auto industry. And he will be a key role in helping up really bring light to this product and help us transition out of the pilot phase into a commercial product as we will hear in Q1 and Q2. Rajat Gupta: Got it. Got it. Great. That's helpful. And then maybe a question just on monetization, in 2022, how should we expect monetization to progress sequentially through the year? You mentioned that TrueCar obviously is going to be immaterial from a contribution perspective this year. But, given the mix of independent dealers increasing, do you see any structural change in that monetization going forward particularly as TrueCar+ also starts to come into the picture? Thanks. Mike Darrow: Yes. So, we obviously have high hopes to monetize TrueCar+ significantly higher in the longer term. In the near-term, we do not expect this to add anything on the revenue side as we adopt the marketplace. If you think of the monetization of core, you can imagine that hopefully at some point as the market resets, there will be obviously some lag in first inventory resetting. Then, obviously inventory at the dealers replenishing. And then pricing obviously coming down which then improves our close rates. And as our close rates improve, obviously also mostly which is obviously more sensitive to close rate improve our pay-per-sale revenue, and this will obviously then lower somewhat the monetization that we currently have which is driven mostly by the subscription side of things. And so, it will basically reset itself somewhat to historical levels of monetization. Rajat Gupta: Understood. [Multiple Speakers]… Jantoon Reigersman: I just want to underscore that the TC+ opportunity in the long term has significant greater monetization opportunities for us. Rajat Gupta: Understood. Great. That's really helpful. Thanks a lot. Good luck. And I'll get back in queue. Operator: The question comes from Marvin Fong with BTIG. Please go ahead. Marvin Fong: Good morning. Thanks for taking my questions. Congratulations Jantoon on the new role. Couple of questions from me, maybe we could just start with the discussion on the units. Just compared to industry-wide SAAR on both new and used, in that you guys had a lot more pressure, and I know you alluded to that. But you could just drill down a little deeper on what exactly is happening conversion rate? Your traffic looked like it was not down as much as the unit. And then, maybe you could particularly comment on TCDC -- like the units there were down more than affinity. And then my second question just on TrueCar+, I think you mentioned that you are working with a variety of OEMs and nameplates. Maybe you can just kind of help us understand how many OEMs you are working with right now that have signed onboard maybe as a percentage of the total market? And how does services like GM's CarBravo kind of fit into the picture? How would you guys coexist? Thanks so much. Jantoon Reigersman: Okay, So, there a lot of different questions in one. So, let's start with the units. So, obviously, yes, our traffic is still very healthy despite actually a pretty dramatic pullback on the marketing side. So, this shows you the robustness of our platform. But, this is something that you obviously don't want to do for extended periods of time. So, [indiscernible] interest to start investing so more on the marketing side over the course of 2022. The units have indeed come down, but that is pretty much driven by your close rates. So, remember, although our mix shift has become more used, we are still like focused on new. And obviously many of our franchise dealers are also focused on new. And with the lack of inventory, it's hard to drive the units through. A lot of the dealers have very little inventory. And so, as we mentioned before, there will be some lagging effect between stabilization, replenishment at the local level, and then obviously the pricing resetting. And it's very different to some of our competitors that are obviously much more impression based. So, if we were to be measuring ourselves on impression base, then those metrics would look very differently and much more favorable to us. But, we obviously are much more focused on attribution and get paid that way. And the -- I can't remember what your second question was. Marvin Fong: It was about working with the OEMs to get TrueCar+ activated in Florida. How many are you working with, any additional color there? Mike Darrow: Yes. Marvin, that's a great question. We have been out talking all of our OEM partners about our plans with TrueCar+. There is a number of the OEMs who have entered into the digital space. Nissan launched their Nissan@Home program. You mentioned CarBravo from GM. We view these things as validation of where we are taking our business. The industry is moving online in a transaction way. What we feel good about is we think there is way for these things to exist. And we want to be the first real multi-brand marketplace where a consumer can go and shop across new, used, and certified pre-owned vehicles in a way that it won't happen on CarBravo. Doesn't exist on Nissan@Home, and we're excited about that, but all of these things will play a role in the industry's continued movement to provide more services to purchase vehicles online. Marvin Fong: Perfect. Thanks, Mike and Jantoon. Operator: The next question comes from Chris Pierce with Needham. Please go ahead. Chris Pierce: Hey, good morning. As you guys get closer to the used side of the business, can I get your thoughts on tax refunds [needs] [Ph] and how your dealer partners and how you yourself are thinking about that now versus three or six months ago? The reason I ask is kind of your third party data was weak into year. You kind of started out the year soft there. Do you think it's just high price is holding consumers back, or is there something more to it? Jantoon Reigersman: I think, Chris, on the second part of your question, it's definitely pricing that have consumers pausing. We strong believe that a lot of the discretionary demand in the marketplace has kind of been squeezed out. The folks who are buying a car now new or used are the ones who absolutely need to. Folks who are discretionary buyers that come in and out of the market on a regular basis have been driven to the sidelines not only due to selection but also due to the pricing that's out there for the vehicle. So, we think there was pent up demand coming out of COVID in 2020. And that showed itself early in 2021 with the sales numbers that we saw in March, April, and May. And then the inventory -- the chip shortage had such an impact on new car availability, driving pricing up which then drives used car pricing up. And then that's when I think you saw the discretionary demand starting to move out of the marketplace in the second-half. Chris Pierce: If I can, just as a follow-up, do you think that you hear about record high profits [at these dealers] [Ph], some pricing over 2021, is that's what keeping prices high, dealership kind of trying to hold the line or are they just waiting for new cars or does it all kind of go together? Jantoon Reigersman: I think it's all coming together, right. So, as long as the local inventory is very, very low then there is, obviously, supply-demand where they can charge, because there is somebody who needs a car. And when the inventory will reset pricing will reset automatically shortly thereafter as well. Now, just note that this is, obviously, not a great consumer experience. And so, over time, this will probably be resetting sooner rather than later. Chris Pierce: Perfect, thank you. Operator: The next question comes from Naved Khan with Truist Securities. Please go ahead. Naved Khan: Yes, thanks. And thanks a lot. A couple of questions, so, it sounds like the dealer churn might be [cropping] [Ph]. Can you provide any color on how the trends have looked like into January, and maybe even February versus where they were in the back-half of last year? And then on TrueCar+, in those markets where you plan to go live, can you give us a sense of the amount of traffic that you would be testing on TrueCar+ versus your normal channel? Thank you. Jantoon Reigersman: Yes, absolutely. So, I think we also spoke about this in the letter, so we feel that Q4 has effectively stabilized from a rooftop perspective and so -- and it's a trend we have seen continue in January. So, I think we're confident there. Now, remember, there's a lot of macro at play, so there's some give and take, and it'll probably continue to be so, but overall, we feel that this has bottomed out as it stands right now, to the best ability that we can see. To answer your question on the TC+ side, so, remember two things, so one is there is a storefront, effectively, that will open on the TC+ side that is specifically to Florida as we do the initial state rollout, so that people inside Florida who can then see the full inventory of new and used cars that are available within that state. Over time, obviously, we'll go on the new side; we'll go state-by-state so there's much audience specific within the states in order for new. But used, we will obviously rollout nationwide. And so, soon, you'll be able to actually look at all the used inventory, even if you're outside of Florida, and be able to transact online through the marketplace. And so, that, obviously, would be our full audience, effectively. Mike Darrow: Hey, Naved, it's Mike. On the dealer churn thing as well, we've mentioned before, in Q4, dealer churn was actually at low levels compared to what we saw pre-COVID. So, what's happening is as dealers, even at a reduced rate, churn off the site, the difficult challenge is adding new car franchise dealers to the program with no inventory out there. So, that's why you're seeing the net decline. The small net decline that you saw wasn't really due to churn; churn was actually at a fairly low rate in Q. It's just dealers don't have a lot of new cars out there, so it's tough to drum up new business -- new dealers on the new car side of the business. And Jantoon did a great job of answering on the traffic. We're looking at a single-storefront approach to our business. As we go forward, we'll begin to expose more and more traffic to the TrueCar+ offering as we rollout and we have more new car brands represented and more used car vehicles available for consumers to choose from. So, we'll regulate the exposure of that as we build out the inventory and the market coverage. Naved Khan: That's great. Thank you, and congrats on the expanded role, Jantoon. Jantoon Reigersman: Thank you. Operator: [Operator Instructions] The next question comes from Tom White from D.A. Davidson. Please go ahead. Unidentified Analyst: Hi, thanks so much for taking our questions. This is [Travis] [Ph] on for Tom. First I have on the Uber partnership, I'm wondering is this primarily about helping drivers get into newer used cars? And then also, how big of an opportunity is this relative to the rest of the business? And maybe -- I know this is another question in there, maybe update us a bit on the status of your partnership with [HyreCar] [Ph], and how this Uber deal fits into that? And then I have a follow-up question after this. Mike Darrow: Yes, we're excited about the Uber partnership. And you nailed it with the purpose of that. We want to make sure that the Uber drivers have an opportunity to search a large inventory of new and used cars as they're replacing their vehicles, which become the main way for them to generate revenue. It's early on in the partnership, and we try not to put too much pressure on early partnerships as they're developing, but we think based on the number of drivers out there, we think it could be a big opportunity for us. And we look to be able to grow that partnership steadily as we go forward. And in conjunction with the HyreCar offering, these pieces all kind of fit together. This is a growing -- certainly a growing community, and we want to be a part of it, we want to provide a service to these folks. And we think it'll be a -- continue to grow for us, and be an opportunity to grow our partner business. Along with some of the other new adds we've added there, it wasn't that long ago that we added Navy Federal Credit Union, the largest credit union in the world. And we're looking to grow that business. So, we're excited about where the partner business is, and the new partners we've been able to add. Our role in the driver community is one where we think we can grow our business, so we're excited about that. Unidentified Analyst: Great, thanks so much. And then my second question is on dealer count. You made a reference to uncertainty about it in the shareholder letter. So, I was curious if you could provide any color or anything specific you've seen thus far into the first quarter, and what type of lag you envision it would create as new car pricing -- when inventories start to rebuild? Jantoon Reigersman: Yes, so what we mentioned earlier, so we've seen -- we seem to have seen the bottom of it in Q4, and so -- and into the New Year the balance have stabilized. It's hard to say exactly when inventory resets. It seems that industry inventory has stabilized, maybe even slightly grown in the end of last year, but this obviously has a lagging effect for the replenishment of the local inventories. And only when that happens do you have pricing go down. And so, and in those moments, that's obviously when the dealers will then start focusing on actually expanding their reach, et cetera. And so, there is some element of a lag, and it's hard to predict exactly when that exactly will go into effect in each of the stages, but we're confident it will. The question is just what the exact timing will be. Mike Darrow: And in our conversations with our OEM partners, they're working aggressively to build plans to ramp up production as chips become available. It's just there is a sequencing to the timing there. As more vehicles are built there's dealers out there, retailers right now who are sitting on pre-sold orders and waiting for inventory to come in. So, even as production increases, we don't think you'll see an immediate build to inventory particularly coming into a spring selling season. So, there will be a lag as we capture some of that demand that's been sitting out there. Then you'll begin to see inventory build. Then we'll begin to see pricing coming down, and we think you'll be able to see a noticeable change in that, we hope, in the first-half. But it'll probably be second-half of this year before inventories significantly return to the type of levels we've seen in the past. Unidentified Analyst: Great. Thanks so much for taking my question. Operator: This concludes our question-and-answer session. I would like to turn the call back over to TrueCar's President and CEO, Mike Darrow, for any closing remarks. Mike Darrow: Thanks, everyone. I really appreciate you taking the time to join us this morning. And I want to also thank the TrueCar team who has done an amazing job of staying focused during this difficult macro time, and has worked hard to improve, not only our core product offering, but to get us a good start on our TrueCar+ pilot and where that can take us in the future. So, we're very excited about what's ahead of us, and thanks for spending the time this morning together. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the TrueCar Third Quarter 2021 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead. Zaineb Bokhari: Thank you, operator. Hello, and welcome to TrueCar's Third Quarter 2021 Earnings Conference Call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer. Our third quarter stockholder letter, which was issued on Wednesday, November 3 after market close, is available on our Investor Relations website at ir.truecar.com. We also issued a press release across PR Newswire with a link to the letter. Before we get started, I want to remind you that we will be making forward-looking statements on this call, including statements regarding TrueCar+ and our prequalification, home delivery and cellular car experience solutions, our partnering arrangements, including those with Navy Federal Credit Union and OEMs. And our dealer marketing spend and the macro environment, including automobile inventory levels. These forward-looking statements can be identified by the use of words such as, believe, expect, plan, anticipate, become, seek, will, intend, confident and similar expressions, and are not and should not be relied on as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar's President and Chief Executive Officer; Mike Darrow, for some opening comments. Mike? Mike Darrow : Thanks, Zaineb. Good morning, everyone, and thanks for joining us. By now, I hope you've all had the opportunity to read our first stockholder letter that we issued yesterday after the market closed. I hope you all appreciate our new process, and I invite all of you to read about the vision we've shared for TrueCar+, our modern automotive marketplace that connects consumers with dealers to complete a vehicle purchase entirely online. We believe TrueCar+ is unique because it will offer a true end-to-end car buying experience. In our marketplace, ready-to-buy consumers will be able to access a broad selection of hundreds of thousands, if not millions of vehicles from dealer inventory as we scale TrueCar+. Once they identify a vehicle, consumers will be able to complete each key step of their car buying and selling journey within the TrueCar+ environment. This means they'll be able to build a personalized deal that includes a trade-in, arrange for financing, complete their purchase and take delivery all from the convenience of their home. We're in pilot with TrueCar+ in one market with a select group of dealer partners and have learned a great deal through continuous testing. We are using these learnings to improve the flow and connection point between consumers and dealers ahead of our planned formal launch of TrueCar+ in the first quarter of 2022. While the macro environment remained challenging during Q3, we managed our business prudently. At the same time, we are investing in the future with TrueCar+ and positioning ourselves to benefit as more and more of car buying and selling process moves online. I'd like to thank the amazing TrueCar teams whose commitment and dedication has enabled us to make strong progress towards delivering TrueCar+, a modern automotive marketplace for new and used vehicles that will provide a true end-to-end digital retail experience. Before we open up the call for questions, we're going to address some questions that have been on the minds of some investors. Zaineb, what's the first question? A - Zaineb Bokhari: Thanks, Mike. I have 2 for you and 1 for Jantoon. The first question is, your vision for TrueCar+ is interesting, but don't car buying marketplaces already exist? How is TrueCar+ different from what is already available? Mike Darrow : Thanks, Zaineb. Many companies use the term marketplace to describe what they do. At TrueCar, we don't use the term as a buzzword. We use it as a guide for our investments and partnerships like DealerScience, Accu-Trade and AutoFi to deliver a true modern day shopping experience. In the case of TrueCar+, we're planning to deliver a 2-sided marketplace that enables consumers to connect with dealers to provide a true end-to-end car buying and selling experience for new and used vehicles, set in a native TrueCar+ environment. A true end-to-end experience being the entire journey will be available online. That includes vehicle discovery across a selection of potentially hundreds of thousands of vehicles, transactable vehicle pricing, personalized deal building that includes a trade-in value, financing and protection products, completed purchase and in-store or at home delivery. Consumers will be able to carry out each step from the convenience of their home without ever having to set foot in a dealership unless they choose to. Other innovative companies have proven the model for digital sales of used vehicles. However, they're constrained by limited inventory. Additionally, there's not been as much progress on the new side because of the complexity. We've been laying the foundation for true digital end-to-end purchases for the past 3 years through acquisition and product development. We think the marketplace approach that we've taken with TrueCar+ will allow us to provide a unique offering for new and used vehicles that will have benefits for both consumers and dealers. Zaineb Bokhari: Thanks, Mike. The next question is for Jantoon. Can you speak to the financials at a high level and give us a sense of how the third quarter played out? Additionally, you're not providing guidance, but what can you comment on? Jantoon Reigersman: Absolutely. Thanks for the questions, Zaineb. So 3 parts to the question, and I'll answer all 3. So one, regarding the Q3 financials. So our third quarter revenue was $55 million, which is down 28.8% year-over-year and 16.4% sequentially. And this is primarily due to limited new vehicle inventories across all our dealers, right? This was really driven by the macro, ongoing semiconductor shortage and overall supply chain issues. So it's very much out of our control at this stage. We continued our prudent cost management. So we achieved an adjusted EBITDA of $1.5 million as compared to $20.5 million last year and $4.7 million in the second quarter of this year. But I think it was really important for us to just keep on being very prudent, especially as we start thinking about the ramp-up of TrueCar+ going forward. Our balance sheet remains strong with $251 million in cash and 0 debt on the balance. So it's also something really important to note in these more challenging macro environments. If you think about year-to-date, 2021 has really been a tale of 2 halves. During the first half of the year, the industry saw SAAR numbers effectively raising through April and super strong retail demand. Since the peak, SAAR has declined, inventory levels have gone progressively worse, and this has effectively continued through the third quarter. And we don't expect this necessarily to return before the end of the year, at least. So if you think back of what happened during the 2020 overall over the year is that there was a recovery after COVID. If you look back of last year, COVID really seemed to have been hit only in a single quarter. Whereas this seems to be much more pronounced, and will also take longer to resolve and probably will extend into next year. And so it's something we're just preparing for and ready for. Obviously, at these inventory levels, what happens in our business models, that there is a strong correlation between the level of inventory and our close rates and therefore, directly affects our financials, in particular, our pay per sale. The close rates are impacted not only by purely inventory levels, but obviously at lower inventory levels, also market pricing adjustments happen on a per vehicle basis at the dealerships. So -- which makes obviously our business model slightly more susceptible at the pay per sale level. Regarding your question on guidance. So given the continued uncertainty in the market, we're not providing any guidance for the fourth quarter. Although we believe these headwinds are temporary, we expect little change in the macro for the balance of 2021 and possibly into 2022 until at least the inventory start rebuilding. And many of the metrics throughout our product flow are holding up really well. It's really isolated towards the close rate at the end of the day of people walking into the dealership and then effectively buying the car or not. And so we'll continue managing our business super prudently like the way we have and we've proven over the last couple of quarters. And one really good example is how we've obviously scaled back our performance marketing spend as we saw the inventories decrease pretty dramatically. And so we were very responsive towards the business overall. Over the long term, however, we expect conditions and inventories to improve and the pendulum of the inventory will swing back. And so to prepare for that, we continue to lean in. We invest in both our core business as well as the TrueCar+ business, and we see huge potential for the business long term. And obviously, TrueCar+ gives us a really nice opportunity to focus on the car buying and car buying and selling experience really as it shifts more online. So we will continue to manage our business prudently, invest in strategic initiatives that will position us for growth and increase monetization once we see a more meaningful recovery in inventories overall. So thank you for your question. Zaineb Bokhari: Thanks, Jantoon. Mike, the next question is for you. It seems that inventory shortages have been more prevalent on the new side versus the used vehicle side. How has the used side of your business been trending? Mike Darrow: Great question, Zaineb. We're pleased with the progress we've been making on the used car side of the business. I think many investors think of TrueCar is mainly focused on new. So we're happy to highlight the used vehicle side of our business. During Q3, used vehicles as a percent of total units accounted for 45%, up from 38% in Q2 and 41% a year ago. Our independent dealer count also increased year-over-year when compared to Q2. We are strengthening our used car business by fast-tracking solutions. In our stockholder letter, we discussed the Q3 launch of our prequalification experience. In Q4, we expect to launch our home delivery pilot, which we believe will help level the playing field for traditional dealers competing with digital dealers. And finally, we expect to launch a new cellular car experience in Q4 to help dealers source vehicles directly from consumers. Zaineb Bokhari: Thanks, Mike. Now operator, let's open up the call for questions from the audience. Operator: [Operator Instructions] The first question comes from Rajat Gupta from JPMorgan. Rajat Gupta: Just had a couple here. So on TrueCar+, can you give us a sense just the cost to dealers on a per transaction basis, what's the margin trade-off for the dealer by using the TrueCar+ platform? And how have you seen the traction in the Florida group, given like the tight inventory environment in terms of adoption of that platform? And I have a couple of follow-ups. Jantoon Reigersman: So Rajat, thank you for the question. So we have not disclosed anything around the economics yet. We will do so at the right time. But we'll -- at the moment, we have not -- we've not done anything around that. This is really focused on the pilot program. So this is really making sure we do all the right testing, really product focus, et cetera. We have really good traction on the top end of the funnel. We have really good visibility on the flow-through of the funnels, et cetera. So we're learning a lot, and we're adjusting a lot, and those are really interesting pilots for us to run in anticipation of the bigger launch, obviously, in Q1. So things are going really, really well. We identified a series of tests, and we're all on track of doing these tests. And so overall, we're in a really good place. What we really wanted to do with the purpose of this letter was lean forward and articulate to the market all the things we're working on. At the right time, we'll come forward with much more clarity around unit economics potentials and scalability around TrueCar+ over the course of 2022. Rajat Gupta: Understood. Is there an opportunity for higher monetization here just anecdotally? Jantoon Reigersman: Absolutely. And I would say -- I would argue significantly higher monetizations is probably the right word to use. Yes. Rajat Gupta: Is that coming from like maybe getting more share of the F&I? Or is there any other part of the transaction that allows you to get that apart from just overall experience? Just curious as to where -- what buckets you should be thinking of... Jantoon Reigersman : Yes, I think you allow through online -- by helping dealers lean into your online sales, I think you're allowing them to think through the reshaping of the buy in its entirety. And we want to help them really be able to compete with a lot of the other online platforms out there that do obviously -- do direct sales. And so as a result, I think there's a lot of opportunity for all of us to reshape some of those economics, which obviously would be beneficial to us as well. Rajat Gupta: Understood. And you mentioned that TrueCar+ expands the dealers' reach beyond like a certain ZIP code, and providing more national audience. How do you tackle that for new vehicles? Are you seeing removing of restrictions there in terms of supplying new vehicles to different ZIP codes, different states? Or how do you manage that just as TrueCar+ gains more traction? Jantoon Reigersman : Sure. So this will be very much ZIP code based at the end of the day. This is obviously, as you start thinking about it for the longer-term rollout. So we will obviously be in compliance that goes without saying. And at the end of the day, the great thing that we have currently is obviously a very vast network of dealers that are across the country. So we can then really think through both national and localized offering and depending on the different states and the different locations and ZIP codes, there are more or less restrictions. But we are able to adapt to that accordingly, given the vast amount of dealers we obviously have on our network as well as obviously the large amount of inventory we would have available on the side. Mike Darrow: Rajat, this is Mike. I’d just add to Jantoon’s comments that we’re really focusing in Q4 on getting the consumer product dialed in and really lined up the right way. We believe the winner in this space will be the ones who deliver the best consumer experience. And we’re working closely with our dealers in the market to make sure we’re achieving that. We think the rest of these things will all fall in place as we show that we can deliver a really high-quality consumer experience and something that the dealers are excited to lean into. So we’ll have more information on the aspects of what we’ll be able to charge for this and what the value exchange will be as we learn more. But we’re really dialed in now on making sure we get the product right. Operator: The next question comes from Nick Jones from Citi. Nick Jones: I guess just a couple just on kind of traffic trends. In the shareholder letter, some of the channel partners are seeing kind of more, I guess, prospects, they're growing faster than the actual traffic volumes. Can you speak to that? I mean is there enhancements to the partner channels where they're kind of highlighting the TrueCar offering a little bit more? Are there things you're doing that are kind of driving prospect growth faster than traffic growth? Mike Darrow: I think -- thanks for the question, Nick. And I think what we're seeing there is there's a lot of interest for folks to try to find the vehicles that are out there. So our upper funnel metrics around the business are extremely strong. Our traffic numbers are great. Our conversion to prospects are good. The challenges are coming in the close rate. So our partner networks always are leaning into our buying channels, and we're continuing to see that happen and we expect it to continue. There's really strong signals from the demand side of the business across all of our aspects of our business. Our partner business, our TCDC+ channel, it's just with the limited supply out there, we're facing some challenges with closing rate. Nick Jones: Got it. And then when I look at kind of overall traffic, I think on like Page 2, traffic was down kind of sequentially. What do you think is underpinning that? Is it just a strained environment and consumers are struggling to kind of find cars and they're discouraged and not kind of as engaged? Is it an upper funnel content challenge that you're kind of continuously working on? Any color on just how you're thinking about the top level traffic to kind of true car level... Jantoon Reigersman : So I think you can – so Nick, I think you can look at it at 2 different drivers. One is we’ve obviously pulled back on performance marketing as well. So that has one driver, obviously, on the marketing side, which is pretty much a direct consequence of our own pullback. The other one is also one of the things we see is that discretionary buyers are effectively more and more out of the market. And so you’ll have – so then also, you’re going to deploy less marketing dollars at the end. It’s a little bit of a vicious circle, just to be mindful. But those are the 2 main drivers for the traffic. Operator: The next question comes from Marvin Fong of BTIG. Marvin Fong: A couple of follow-ups on TrueCar+. Any additional color you could provide just sort of how many of your 13,000 dealers do you think TrueCar could be applicable to? Should we think about it as equally put -- equal potential between your franchise and independent dealers? Or is this mainly a independent offering? And then I have some more questions. Jantoon Reigersman : So I think long term, it should be very attractive to everybody, right? So near term, you can imagine that obviously used independents are very interested because it allows them to do something fast and obviously used is probably easier to transact with, less legal complexities. But like franchises equally are super interested to lean in, where these are all conversations we're having live, right? We're now piloting, as Mike said before, we're really focused on the product, so the consumer side of the product development. And so we've also obviously reconfirmed that the launch of it fully commercially by Q1 of the coming year. And so these are conversations we're having, but the short version is it's very -- it's broadly applicable for everybody. And it also really allows dealers to have an opportunity to really lean in on this shift to online car buying without having to make a lot of infrastructure expenses. So it's a very attractive proposition to them. Mike Darrow: Marvin, this is Mike. I would just add to that. We’re – it’s very important in the early phases of this product rollout that we get the right dealers working with us. There are some service level agreements that we ask the dealers to commit to in order to deliver the type of product that we want. So I think early on, you’ll see a selective process as we find the right dealers in the marketplace to support a high-level consumer experience like we’re working towards. And then as we see success with that, I think you’ll see a lot of dealers wanting to jump on board. And as Jantoon mentioned, it really gives them an opportunity to participate in a digital marketplace without having to make that huge investment on their own. So we’ll see separation probably of used and new. A lot of independents, a lot of franchise dealers looking to get their used cars out there in a digital kind of national sales basis. And then new cars, we’re making sure we get the right dealers who will line up with the type of service we want to provide to the consumers as they enter into this product with us. Operator: The next question comes from Chris Pierce of Needham. Chris Pierce: When I think about TrueCar+, do you guys have the technology pieces in place to get this off the ground? Or should we be looking at thinking about this cash balance being used for some sort of add-on M&A spend as you kind of build it out? And then on that same vein, do you think you have, I guess, the dealer network, if I look at the dealer network over 1 year or 2 years, are there enough dealers out there that -- I guess at some point, if you have -- you said -- mentioned hundreds of thousands of cars, is that enough for consumers? Like do you need 200,000, 300,000 cars? Like what's -- like what do you think about historic inventory? Like 100,000 seems like plenty to me to get this thing started. So I'm just curious what you're thinking about dealer count going forward. Jantoon Reigersman : So let me start with the first question first. So the answer is yes. So I think we mentioned also on the previous couple of calls. And Mike has reiterated this many times that building out the ability to do this well requires a lot of work and has been effectively ongoing for the last several years. And so – and there are several components that are really critical as you build out such a marketplace. One of them is obviously the deal building experience. So how does a consumer actually find the right car within a vast inventory of cars available. And how do you really make sure that you match the car that is present at the dealer with that the consumer requires. That in itself is a lot of complexity. And we’ve solved that already some time ago, and it took some time to do and the other ones are also as an example, elements like checkout flows, et cetera. So that has all been built and all the pieces were built. So that was really tying out the last end-to-end pieces as it were in this process, and then we’re now just testing those final flows. But things like DealerScience and the AutoFi partnerships, the DealerScience acquisition, the Accu-Trade partnerships, et cetera, are all pieces to this wider puzzle that help us enable this. On your second question, no, I mean I think the short answer is there’s going to be a ramp-up associated to this product, and we will articulate that more in the future. But over time, of course, we – one of the things that I think is amazing on the TrueCar network is that we obviously have a very, very vast inventory level of both new and used. Remember that currently, we’re working in a constrained macro environment that also makes it a little bit of an anomaly. But once that pendulum swings, also the ability for a consumer to go in and effectively look at both new and used offerings and to be able to acquire the car that they really want from the comfort of their home is something that’s very unique, rare. And we feel we have both the technology, the brand, the top funnel and the inventory through our dealers available to make that happen. So we’re very excited looking forward to 2022. Operator: The next question comes from Naved Khan from Truist. Naved Khan: Maybe a quick question on the dealer count and the decline you saw in Q3. Can you just maybe talk about the monthly trends, how you exited the quarter? Is that something that's continuing into Q4? Or how should we be thinking about that? Jantoon Reigersman : Yes. So the monthly trends for Q3 were very much, like as I mentioned earlier, the year was effectively [till to till]. So until, call it, the end of June or call it mid-June the market is very much on the rise. And then call it mid-June, it started turning. So the monthly trends have been effectively downwards. If you look into what has like the couple of weeks now into October, call it, 5 weeks into Q4. And some of these elements seem to be stabilizing across the board, if you look at some of the macro days coming out there, right? So you look at announcements of Toyota, GM, et cetera. And then you'll see some light signs of improvement, but it's really hard to say. And it's really -- like overall, inventory is obviously very, very fickle at the moment. And also consumer behaviors are shifting a little bit in anticipation of this market. The other thing also to remember is that even if you hit a pure bottom, which hopefully will hit soon, there's still some time -- it will take some time before inventory rebuilds. So there is going to be somewhat of a lagging effect, which is why we don't anticipate any improvements really before the end of the year from a macro perspective. Mike Darrow: Naved, this is Mike, too. I would add that we’ve shifted our sales focus a bit. And you saw that we’ve actually added to our independent dealer count in Q3. That’s where the opportunity seem to be as the new car inventories remain challenged and the used car business remains extremely strong. So we’ve changed our focus. Our churn is actually below pre-COVID levels. The challenge you face is adding new dealers to the program, particularly on the franchise side. So we changed that focus. We’re not looking to add independent dealers. We’re working with our franchise dealer partners to accentuate their used car products and help them there. So there’s been a bit of a shift in our focus that we saw a good result from on the used car side of the business in Q3. Operator: The next question comes from Tom White of D.A. Davidson. Tom White: I got one on the balance sheet and one on dealer count. So the balance sheet is obviously in strong shape. I think it's like over 50% of your market cap in cash, no debt, you're managing to kind of EBITDA breakeven. Can you maybe just share updated thoughts on how you're kind of weighing maybe using that cash in a more aggressive way maybe and when? And I guess, specifically, I'm curious about your view on maybe raising the buyback or M&A. Or maybe just like having kind of the big cash balance there given the uncertain kind of inventory backdrop. And then I have a follow-up. Jantoon Reigersman : Yes, absolutely. So we’re thinking strategically through the cash balance on an ongoing basis. So we are opportunistic when it comes to M&A. We have healthy deal flows of M&A, and we particularly look at where we could potentially accelerate some of our strategic initiatives that we have in the pipeline. And so we continuously monitor that. One of the issues to date around M&A has just been overpricing – overpriced assets at the end of the day. And so we’re prudent acquirers. And so we’re mindful of that, but it’s something that we definitely continuously to monitor opportunistically. We have done some buyback throughout Q3. It’s something that we also identified in the letter and you’ll see in our cash flow statement. So we utilize that somewhat around the edges. But overall, I think it’s also important that we’ve now articulated in some more clarity, and we’ll continue to do so, the opportunity that exists around TrueCar+. And obviously, making sure that we really start leaning in into that product as the world is shifting more online, and that obviously will require investments over time as we start scaling that business or that side of the business. And so there will be investments that we’ll be making in that area as well. Operator: This concludes our question-and-answer session. I would like to turn the call back over to Mike Darrow for closing remarks. Mike Darrow: Thank you, operator. And I want to thank everybody for taking time to participate in our call today. And once again, thanks to the entire team at TrueCar for all their hard work as we continue to optimize our core business while making strong progress on delivering TrueCar+, which we believe will be a true automotive marketplace that will make the car buying and selling journey available to consumers in a digital environment. Thanks again for your time. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the Truecar Second Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Scott Watkinson. Please go ahead. Scott Watkinson: Thank you, operator. Hello and welcome to TrueCar's second-quarter 2021 earnings conference call. Joining me today are Mike Darrow, our president and chief executive officer; and Jantoon Reigersman, our chief financial officer. As a reminder, we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at true.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Now I'll turn the call over to Mike. Mike Darrow: Thank you, Scott, and good afternoon, everyone. This quarter is going to be a bit of a departure from our previous calls. I'll start my remarks today with a brief review of our impressive Q2 results. I'll then discuss our view of the current market conditions and the opportunities and challenges we see coming out of Q2. Lastly, I'll remind everyone of where we're headed as an organization, with a specific emphasis on where we plan to play in the ongoing digital transformation of the automotive vertical. I'm pleased to report that Q2 was another strong quarter for TrueCar. Overall, we ended Q2 above both guidance and consensus forecast with revenue of $65.8 million and adjusted EBITDA of positive $4.7 million. Year-over-year revenue increased by 12%, and quarter-over-quarter revenue increased by 1% while being constrained by retailer inventory availability throughout June. Additionally, Q2 was a record traffic quarter. Consumer traffic hit historic high of 9.6 million monthly unique visitors. This was partially driven by sourcing TrueCar's unique research content covering nearly 100 new vehicles since the beginning of the year. Prospect conversion was 7% for the quarter, up from 6.2% and 6.3% in the previous quarter in Q2 2020, excluding USAA, respectively. Unit growth driven by truecar.com and affinity partner growth increased 39% year over year. Furthermore, we added three OEM programs to our newest affinity partner platform, Navy Federal Credit Union. Overall, our affinity partner channel showed 39% year-over-year unit growth and 26% year-over-year visitor growth, while over 22 partners set new monthly unit records throughout the quarter. Strong retail demand for new and used vehicles was a key driver for Q2 retail automotive sales performance. Early in the quarter, the overall recovery in economy was strong and consumer demand reached near record highs with April SAAR being the highest since 2005. This is despite a 45% year-over-year increase in gas prices from $2.17 in June of 2020 to $3.16 in June of 2021, coupled with a six-year low in OEM incentives. Additionally, new vehicle stock was 1.3 million units less in June of 2021 than in June 2020 and 2.6 million less than in June of 2019. This combination of high demand and low supply caused OEMs to reduce their marketing and incentive spend dramatically while they search for creative ways to adapt to the shortages. OEMs are continuing to make strategic decisions on chip allocation to high-margin or popular vehicles and are experimenting with creative ways to build vehicles that can be completed when more chips are available. Even with these solutions, new vehicle inventory decreased significantly during Q2, and we believe it's unlikely inventory will rebound to pre-pandemic levels before the end of the year. Regarding the pre-owned market, vehicle acquisition was a key focus for many retailers. The scarcity of used vehicles led to extreme competition between retailers and acquiring cars directly from consumers. The new and used vehicle inventory scarcity and pent-up demand allowed dealers to increase prices and decrease their SG&A expense to further strengthen their net returns. In the face of uncertainty regarding new vehicle production, we believe retailers will continue to focus their efforts on pre-owned vehicles, and Jantoon will address our plans to support our retailers in that area in his comments. Digital retailing initiatives grew as dealers continue to build or partner for an end-to-end offering. This demand led to major consolidation in the digital retailing space between industry vendors, especially the large all-in-one providers that offer both DMS and CRM integration capabilities. We believe this consolidation underlines the importance of a more broadly applicable solution for dealers and consumers alike to have the best digital retailing experience. One, we, at TrueCar can uniquely provide given our consumer trust and our strong dealer network for both new and used vehicles. This is a good moment to provide an update on our current products, as well as our end-to-end solutions. As I mentioned in our last call, in the first half of the year, one initiative we focused our efforts on was expanding our deal building capabilities across our new and used car inventory, and thus providing the ability to our consumers to configure monthly loan payments, including all taxes and fees for pre-owned vehicles. This obviously is a fundamental part of building an end-to-end solution. Throughout Q2, we've been rolling out our deal-building experience across the used car marketplace. And thus far, we are happy to report that we enabled more than 60% of pre-owned vehicles or approximately 500,000 vehicles with accurate payments, helping our consumers purchase vehicles with complete price transparency and precise payments based on actual data from lenders. In addition, in the last quarter, we continued expanding our deal-building capabilities across our partner network, reaching approximately 50% of partner traffic, and we intend to continue rolling out this experience across the rest of the partner network by the end of the year. Overall, the number of consumers building deals on our platform continues to gain momentum, with 25% of TrueCar.com new car prospects and 6% of TrueCar.com used car prospects actively engaging and are building deals. In addition to increased consumer engagement with the tool, we also see a very healthy increase in customer satisfaction with this experience and a two times increase in the Net Promoter Score on TrueCar.com, which further underscores our shoppers' desire for price transparency, convenience, and a stress-free buying experience. We also observed 26% and 31% increases in close rate for prospects that build deals for new and used cars, respectively. Additionally, in April, we launched our first pilot program of a digital retailing integration partnership with Roadster. Our two companies have more than 500 mutual dealer partners configured to support consumers with a desire to complete various purchase steps digitally. Initial data from the pilot indicates that approximately 20% of consumers who build deals want to finalize their deal online and are handed over to Roadster's checkout process. This is a very encouraging metric as we progress further in our vision to bring more of the purchase process online natively to TrueCar.com. We are also seeing that 33% of those consumers transferred from TrueCar.com to Roadster checkout experience, complete and submit a credit application. As a reminder, we have designed an open API spec for API-based integrations to standardize the transfer of data from our auto buying platform to dealers' digital retailing tools. That way, we can extend the digital buying experience for our consumers from deal building to deal finalization at the dealer, while at the same time, we ensure active dealer participation in our marketplace by integrating their digital retailing tools. While providing extensive consumer flexibility, this approach still remains a hybrid digital solution with opportunity for improvement from a fully contained solution. In parallel, we are actively working on a TrueCar native solution, an end-to-end car buying experience entirely online, including all aspects of purchase finalization, such as credit application, aftermarket products, e-contracting, and nationwide vehicle delivery. In fact, as it relates to the credit application and aftermarket product component, I am very excited to announce that we have partnered with AutoFi, the leading commerce platform for end-to-end digital automotive sales and financing to provide consumers with an easy and seamless process to explore auto financing directly from the TrueCar marketplace. TrueCar consumers will be able to see the offers from a variety of lenders, compare them and decide what's right for their needs. In addition, once they've selected their financing options, they'll be able to choose protection products and thus, complete the essential steps of purchase finalization digitally on our platform. I have alluded to this in the past, but I want to take the opportunity here to provide some additional clarifying details. Our goal is to build an auto buying platform in the form of a two-sided online marketplace that gives consumers the ability and the convenience of purchasing a car, new or used, from the comfort of their couch, while at the same time, providing our participating dealer partners the ability to efficiently market and sell units at scale. In order for this to succeed, we intend to combine the strength and trust of the consumer-facing TrueCar brand with the strength of our extensive dealer network to create a true two-sided marketplace that enables dealers to transact their sales online within the comfort and convenience of the trusted TrueCar platform. This ultimately will provide consumers with a streamlined and enjoyable purchasing experience and allow our dealers to facilitate a complete online car-buying experience, thus enabling them to scale while being more efficient and highly profitable. During the second half of the year, as we seek to finalize the build-out of our native end-to-end car-buying platform, we plan to launch multiple milestone-based tests of our end-to-end experience with a targeted set of dealers. Here, we can test, learn, and iteratively improve our platform by working closely with our dealer partners to reshape the future of the online car buying experience. Our goal is to have full end-to-end transactions flowing through our platform with our initial set of dealers in Q1 of 2022 and to scale up from there with additional dealers who share the vision of making this experience available to consumers who want it. Before turning the call over to Jantoon, I'd like to thank all the amazing TrueCar members, who, through their unwavering focus and commitment, have enabled us to deliver impressive quarterly results in our core traditional business, while, in parallel, continuing our integration work with dealer digital retailing efforts and most importantly, put us in a position to become the first automotive marketplace with a true end-to-end digital retail experience for both new and used cars within the first quarter of 2022. And with that, I'll hand the call over to Jantoon. Jantoon Reigersman: Thank you, Mike. These are super exciting times at the company, and I'm proud to see the strides the team is making in our transformation. Before I touch on our second-quarter performance, I would like to reiterate the message Mike just underlined. Despite the macro challenges, we delivered another strong quarter with units up 39% year over year, excluding USAA, the closest proxy for our performance. Looking ahead to the second half of the year, we do expect continued inventory constraints, while experts predict the SAAR will continue to decline from original 2021 projections. The volume brands, such as Toyota, Honda, Kia, and the American OEMs, will continue to lag behind the average dealer day supply for the balance of the year. Even though temporary in nature, we do anticipate continued pressure on our dealer count throughout the remainder of the year. In the near term, we will seek to partially mitigate this by fast-tracking additional product offerings, especially used vehicle acquisitions. We also plan to expand our singles in multi-market offering or distance retailing as some may call it, for pre-owned cars. So traditional dealers can compete equally with the online retailers. In the longer term, we are confident that the combination of our current business model with the beforementioned end-to-end solution will make us a winning platform in the industry for dealers and consumers alike. In other words, we have a fundamentally strong business with ample room for further growth in its current form, in addition to tremendous value-creation opportunities in our new product road map. So despite the macro challenges, these are very exciting times at the company. I'll now review the strong financial and operating results for the second quarter of 2021. Revenue in the second quarter came in at $65.8 million, up 12% year over year. The year-over-year increase was driven by a strong 39% growth in units year over year, excluding USAA and bolstered by COVID-19 concessions we provided to certain subscription arrangements in Q2 2020. Franchise revenue ended the quarter at $48 million, up 14% year over year and flat quarter over quarter. Independent revenue ended the period at $11 million, up 87% year over year and up 6% quarter over quarter. New dealer product revenue came in at $3.7 million, up 80% year over year but down 2% quarter over quarter. OEM revenue and other revenue ended the period at $2.8 million and $0.3 million, respectively, with OEM revenue down 42% year over year yet flat quarter over quarter. We ended Q2 with 13,159 dealers, down 7% from the end of Q1. The primary cause was limited new dealer activations, a consequence of the constrained macro environment as dealers fill out their inventory. Total units for the second quarter ended well above 194,000. Year over year, TrueCar.com and extended affinity units were both up 39%. Monetization for Q2 came in at $336, up 16% compared to the same period last year. The year-over-year increase was driven by a combination of strong growth in units year over year, excluding USAA, and bolstered by COVID-19 concessions we provided to certain subscription arrangements in Q2 of last year. Now turning to expenses and margins for the second quarter of 2021, where all of the following metrics are for continuing operations and reported on a non-GAAP basis unless otherwise stated. The business generated $60.1 million of gross profit in Q2, a gross margin of 91% and in line with prior quarters. Technology and development spend of $9.6 million was down from the first quarter due to seasonally expected lower headcount cost and down year over year, driven by a lower headcount, in general. General and administrative spend was $9.8 million in the second quarter, in line year over year and down from Q1 due to lower headcount costs and professional fees incurred. Sales and marketing spend, our largest expense category, ended at $36.0 million, up 42% year over year. As a percentage of revenue, sales and marketing improved 200 basis points to 55% as compared to Q1 but is up 11% from Q2 2020 due to our decision to dial back on marketing during pandemic-related lockdowns in the prior year. Within sales and marketing, TrueCar.com acquisition spend was up 145% year over year and down 4% quarter over quarter, ending the quarter at $13.5 million. TrueCar.com units were up year over year 39%, resulting in a cost per sale of $130, 16% below the prior quarter and 76% above the prior year. The difference in the year-over-year PPS performance reflects the macro environment we faced last year in which we pulled back on acquisition spend and therefore had a deflated cost per sale. Partner marketing spend was $11.6 million in the second quarter, up 14% and 68% quarter over quarter and year over year, respectively. Sales, headcount, and other, the final category within sales and marketing, ended the second quarter at $10.8 million, down 17% year over year, primarily driven by the reduction in headcount that went into effect in Q2 of 2020. In summary, significant efficiencies across all categories of our sales and marketing spend drove a 3% reduction in non-GAAP expenses quarter over quarter, resulting in an adjusted EBITDA of $4.7 million up 126% quarter over quarter. GAAP net loss from continuing operations for the second quarter of 2021 was $7.1 million or $0.07 per share, compared to a loss of $11.4 million or $0.11 per share in Q2 of 2020. I'd now like to provide commentary on our expectations for the rest of 2021. Despite an improving retail environment in the first half of 2021, there remains a heightened level of uncertainty, especially around the industry implications due to the inventory shortages. While our core business fundamentals remain strong, increased pricing and further constrained availability of new car vehicles as we began to experience in June, we'll create an uncertain environment for new unit retail volume until inventory improves. As such, we will not be providing formal Q3 or full-year guidance at this time. We will continue to manage the business responsibly and expect above breakeven adjusted EBITDA for Q3. And with that, let's go to questions. Operator: We will now begin the question-and-answer session. [Operator instructions] Our first question comes from Steve Dyer with Craig-Hallum. Please go ahead. Steve Dyer: Well, thanks. Good afternoon, guys. I may have missed this. I know you sort of touched on the dealer comp quarter-over-quarter down fairly significantly, but I don't know that I heard a reason or sort of what you're seeing real time as to why that was and why you expect that pressure to continue? Mike Darrow: Hey, Steve, this is Mike. Thanks for the question. We did see some downward pressure in Q2, particularly the second half of Q2, with dealer count. A very, very high percentage of that was based on the limited inventory availability that was out there in the marketplace. And we've begun to take some efforts, as you saw in some of Jantoon's comments around shifting some focus to the used car side of the business. But we feel we've got the dealer count under control. Even with the decline we had in Q2, we were able to hit above the top-line revenue number. The big impact that we're seeing around the decreased inventory and then the resulting retail pricing that's going on in the new car space is that it's creating some uncertainty around new car close rate. And about 30% of our business, as you know, is pay-per-sale. And with the inability to really get our arms around a close rate based on data that came in, and Q2 was a quarter of two different stories, April was a great month, record SAAR looking back to like 2005. And then we saw inventory begin to change the story through May and then into June. So we feel confident we've got the dealer count issue under control. Our core dealer network remains very strong and intact. And our biggest gap, I guess, in what we're looking at is what will happen to new car close rate as we go into Q3. Steve Dyer: Got it. Okay. And I guess looking ahead, I know you're not giving specific guidance, but just given the fluctuation of dealers and things like that, Q3 has typically been up modestly from Q2. Would you expect that relationship to hold this year? Or is the lower dealer number going to weigh on that? Mike Darrow: Yes. I think what we'll see coming out of Q2 is we will face some pressure on that sequential quarter growth in Q3, not necessarily like I said, because of the dealer count. But on the uncertainty around pay-per-sale units, that will flow through the system in Q3. And listen, we're very proud of the business coming out of a very strong first half and what we were able to accomplish. We're bullish on where the business is going to go, both for our core business and the things that we've been able to put in place to advance our end-to-end digital retailing platform that we provided some details on, and we're excited about the impact that's going to have on our business. So this inventory situation is a very temporary situation. We know we'll quickly work our way out of it, and we're confident that as inventory starts to build, we will see close rates come back up. Pricing will normalize again on the new car side. And it will give us a better line of sight on our top-line number for Q3 as that happens. Steve Dyer: And I guess I'm not entirely sure. Maybe could you explain the close rate, the pay-per-sale close rate piece of it? I mean, I generally understand that's about 30% of your business. But how is that right now being impacted? Mike Darrow: Yes. So as we talked about on the call, the key metrics, the fundamental metrics to our business are extremely strong. So in Q2, we set all-time traffic records and prospect records for what the traffic coming through our platform. So those are two of the three fundamental metrics we look at to calculate and to forecast our business, and those are at record levels. What's happening is as we send people into the marketplace at retail, they're finding a very, very limited selection. And on what vehicles they can find, they're seeing pricing that's kind of unprecedented to the time. So that's impacting the close rate, which, as you know, on our pay-per-sale units, drives that business. So hopefully, that explains it. Like I said, the core fundamentals are strong. Top-of-funnel is very good. Conversion rate is good. It's just without inventory in the marketplace and with the pricing on the vehicles that are available, our shoppers aren't finding a solution to their buying needs at the rate we normally see. Steve Dyer: And so then maybe the deviation, I guess it sounds like between your results and outlook versus a competitor who reported this morning is largely you're much more tied to new, which is a hard place to be and probably will be for a little bit yet? Mike Darrow: Well, we're not only more tied to new, but we're also more tied to the transaction, right? We've always talked about being very accountable and running a system of attribution that ties us to the success at the dealership with sales. The other reports you're going to hear about marketing numbers and software sales products and things like that, we're running more of a pure marketplace. And we're affected more in times like this when inventory gets so low, and dealers react by raising prices the way they have. So that's a big piece of the puzzle. Now what that allows us to do, and you and I've had this conversation, it sets us up to be successful in moving this end-to-end process truly into place. So we're excited about the progress we're making there. We've seen good results with the products we've launched around moving consumers further along the process digitally. And we'll be ready in Q1 to start -- Q1 of 2022 to start flowing end-to-end car-buying solutions for both new and used through the system. So yes, our report is different in that we actually tie our success to the dealer sales. Steve Dyer: Got it. Helpful. Thanks, Mike. Operator: Our next question comes from Marvin Fong with BTIG. Please go ahead. Marvin Fong: Great. Thank you for taking my questions. Yes, just to revisit dealer count, actually, perhaps more of a forward-looking question. But when inventories do return to normal, how would you expect the dealer count to behave? Should we expect a pretty sharp snapback? I appreciate the difference between dealer count and the unit sales that you just spoke about, Mike, but just in terms of the actual dealer count, how would you expect that to come back once the inventory is normalized? Mike Darrow: Yes. I think we'll see it come back, Marvin. How quickly it comes back, will probably vary by franchise. Will vary by how quickly the brands get caught up on their inventory and how that happens. We track reason codes very, very closely through our system when a dealer leaves our platform. And like I mentioned, a very, very, very high percentage of the folks leaving our platform are stating that the reason is limited inventory to no inventory to sell. So we expect that to respond very, very quickly. Once the units start to build back up, we feel strongly that we're viewed as a very efficient investment for dealers when they're selling cars and bringing consumers in on those units. So we think it will come back quickly. The challenge we're having, and I think everybody is probably facing the same thing, is the information seems to be inconsistent about when inventory will come back. It varies by brand. It varies by model. A lot of different discussions going on as to how that's going to come back. So we're keeping a close eye on it. We're managing our dealer count. We're managing our business through Q3, and we'll look forward to good results. But we just didn't have enough data around close rates to put a forecast or a guidance out there, but we expect this to be very short-term, and we think it will snap back to your question. Marvin Fong: Gotcha. And a couple of follow-ups maybe for Jantoon. On monetization, if I back out sort of OEM incentives and new dealer products, it looked like it came down pretty significantly, maybe closer to where it's been in prior quarters. Could you just kind of talk about the puts and takes for monetization in the quarter? And how we should model that going forward the next couple of quarters? And then if you could just touch on marketing spend and your ability to kind of move that to protect your margins, you obviously have in mind that you can take EBITDA breakeven, that would be great. Thanks. Jantoon Reigersman: Sure. So I think a couple of things. So on the monetization side, remember, as Mike mentioned, so 70% of our business is effectively subscription, 30% pay-per-sale. As a result, your monetization will somewhat fluctuate because obviously, your pay-per-sale, on a relative basis, will have an influence on your average monetization. Currently, the one uncertainty is very effectively your close rates around the pay-per-sale element. And so as a result, that's the reason really the simple -- only and simple reason why we wouldn't be guiding because it's just a fluctuation that we have that's a fairly finite risk that we're managing, and we've already addressed some of the pieces on how we go about that in the coming quarter. But long story short, I think we've mentioned also in the past, monetization will somewhat like decrease over the remainder of the year because of that mix between subscription and pay-per-sale. Your question on the marketing side. So there are a couple of elements associated to this. So one is obviously everybody currently in the industry is focusing on the same keywords, right? Everybody is focusing on used. And so there's some element of our cost of marketing overall, though, remember that the event -- one of the advantages that I think we have as a business model is pretty much 50% of our cost structure is flexible and variable. And so a large part of that is marketing. The marketing team that we have is a very good team, and we're very adequate in moving according to the channels and see the right opportunities, as we've been doing. And as you've seen over the last couple of quarters, we've gotten very, very efficient in our marketing spend and our cost of acquisition. This obviously is a little bit of an interesting time as all the different players are effectively focusing on kind of the same channels. But overall, we feel we have a lot of room, not only on the performance marketing side, but also on like more of the overall brand marketing, etc. I mean, I think Mike, in his remarks, already alluded to, effectively, we've now written articles on 100 vehicles that have received a lot of unique visits, etc. So there's a lot more room for us to also create more visitors accordingly. The other thing I want to mention is, look, fundamentally, the business is strong. We have unique -- we have good visitors numbers, right? People are going through, we have good conversion rates, etc., it's really the element of the close rate and particular around the PPS element. That is just hard to predict as we go through this period of inventory constraints. Does that answer your question? Marvin Fong: Yes, totally. Thank you, Jantoon. Thank you, Mike. Appreciate it. Operator: Our next question comes from Rajat Gupta with JPMorgan. Please go ahead. Rajat Gupta: Great. Thanks. Thanks for taking my question. Just had an initial question on just any learnings from the pilot program with Roadster. How does this relationship change Roadster integrate with CDK? Could this potentially help improve their integration and eventually help serve a larger dealer base? Just trying to see like how you were connected to that acquisition and how that change comes for you. And I have a follow-up. Mike Darrow: Yes. Great question. And I think we've seen some real positive results from our initial pilot and the work we're doing with Roadster. We have over 500 dealers who are mutual dealers to both of our platforms, and we are beginning to flow folks through that system. We launched that program in May, and it takes about 90 days for us to get real data, particularly around the maturation of sales units and that. But we have seen some real interesting things. And the first thing I mentioned in the pre-read was that 20% of people who get to the stage of, do you want to finish the deal online or clicking, that they do. I think that's a number higher than what you hear from the marketplace. Oftentimes, when you talk to a retailer, they'll say less than 10% of my volume is fully digital or people who want to do the deal fully online. We're getting indications that the number is much more significant in that through our Roadster test. We're seeing good NPS customer satisfaction numbers for the folks flowing through it. So there's a lot of good data that we'll be able to talk about more as we gather more of it regarding sales and close and things like that. As far as the relationship with Roadster is very strong. I talked to Andy after the company was acquired. He was excited about it. It creates a bigger footprint for them in the marketplace in their relationship with CDK and a bigger footprint for Roadster, therefore, provides a bigger opportunity for us to expand that business with them. So we've gotten a real positive reaction from particularly our big dealer partners on our approach to leaning into the digital systems that the dealers are investing in. Roadster was the first one of those, and we're real happy with it. We hope to see that one grow, and we have plans to add more of those digital retailers to the system as we go. Jantoon Reigersman: I just want to add one thing. I want to add one thing that I think is important is like the Roadster integration is interesting for us because it really is a further qualification of the leads for the dealers. But at the end of the day, it still is a, in some ways, only a partial digital integration. What's really where we are focused and where I think the emphasis has been also in the preamble has been around us building out a much more native solution of a true end-to-end which is effectively one step further. So even though the Roadster integration is a very interesting part, and it's really our responsiveness to our dealer network to enable a variety of options to integrate with our system in some shape or form is really the native piece that will enable a true transaction happening online. Rajat Gupta: Got it. Got it. That's helpful. And I don't know if this came up for you on the call, but one of your peers rolled out this instant online appraisal tool helping dealers source inventory from retail customers, a trend which has amplified over the last few quarters. I'm just curious if you could share your thoughts on this dynamic and if you're looking to venture into any such avenue going forward as well, maybe that can tie into the capital allocation as well. Mike Darrow: Yes. We're looking at certainly leaning into our dealer partners acquisition of used vehicles. One of the ways we've done that is through our deal builder product. The best way -- and still, 50% of the people who are transacting on a new vehicle have a used car attached to that. We put a guaranteed value on those trades for our retail partners, and they're getting interesting volume through that. We've always got our eyes open as to things we could be doing to help dealers in the used car acquisition space. We have a sell my car feature on our site right now that we get activity on and pass that dealer on to our retailers. So we're paying attention to that space. There's certainly a lot of focus around it right now as new car inventory is short and dealers change their focus to used cars and we'll continue to lean into that. And continue to try to help our retailers with that piece of it. Rajat Gupta: Got it. Got it. Great. Thanks. Thanks, Mike for the color and good luck. Mike Darrow: Thanks, Rajat. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Mike Darrow for closing remarks. Mike Darrow: Okay. I'd just like to thank everybody for taking the time to participate in our call today. And I'd also like to thank, again, all the hard workers here at TrueCar who are enabling us to publish a strong second quarter and also make progress on our integration work with the digital retail partners and also our journey to be the first two-sided marketplace, which sells -- making new and used cars available in a digital way. So I appreciate your time, and thank you for participating. Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, ladies and gentlemen, and welcome to your TrueCar First Quarter 2021 Financial Results Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to Scott Watkinson. Sir the floor is yours. Scott Watkinson : Thank you operator. Hello and welcome to TrueCar's first quarter 2021 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer. As a reminder, we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, anticipate becoming, toward, will, intend, confident and similar expressions, and are not and should not be relied upon as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the risk factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at true.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Now I'll turn the call over to Mike. Mike Darrow: Thank you, Scott, and good afternoon, everyone. I'll start my remarks today with a brief review of Q1. I'll then remind everyone of where we're headed as an organization with a specific emphasis on where we play in the ongoing digital transformation of the automotive vertical. And finally, I'll close with some industry observations. I'm pleased to report that through the unwavering and tireless efforts of the entire TrueCar team, Q1 is another strong quarter for TrueCar. Overall, we ended Q1 above both guidance and consensus forecast with revenue of $65.1 million and adjusted EBITDA of a positive $2.1 million, quarter-over-quarter revenue increased by 2%. Unit growth driven by a 26% increase from truecar.com and an 8% increase in affinity partner units was up 17% year-over-year excluding USAA. Throughout the first quarter, we continued to see slightly better-than-forecasted dealer churn in spite of the recent macroeconomic headwinds from chip shortages, which I'll come back to at the end of my section. And finally, due to the focused efforts of our field sales team, we saw quarter-over-quarter revenue growth generated through additional dealer products of 15% in Q1. I would now like to highlight three of our key initiatives starting with our deal-building capabilities. As I mentioned in our last call in November 2020, we launched the ability for consumers to build their ideal deal online from the comfort of their homes, which we refer to as Deal Builder. TrueCar Deal Builder is a flexible experience that guides a consumer through the process of configuring an accurate car deal, personalized to them based on their trade-in valuation, preferred lease or loan terms, down payment preferences, credit profile and all taxes and dealer-reported fees and accessories associated with the transaction. Deal Builder solves for the most challenging part of online retailing, namely the creation of accurate deals across millions of cars and thousands of dealers and a transparent guaranteed cash offer for trade-in. In March, we saw 20% of truecar.com new process [ph] in other words consumers that have created connection with a dealer and a vehicle engaged with TrueCar Deal Builder representing an increase of 74% since Q4. Since the November launch, 78% of our franchise network has adopted our solution, further underscoring the value dealers see in the TrueCar approach in helping each of them address the current consumer desire. Equally important this now means that our consumers have access to over 523,000 new vehicles when they build their deal. It's important to note that we're building a two-sided marketplace and efficient penetration and healthy growth in both sides of the market, dealers as well as consumers is critical. While we do have 78% in growing adoption by dealer partners, our continued focus will be to grow prospects engagement with Deal Builder. In addition to increased adoption of the tool from our dealer partners and our progress in rolling out Deal Builder to our partner network, in Q1 we also launched this capability to our used-car experience, starting with certified pre-owned. This launch brings TrueCar Deal Builder capabilities to roughly 10% of our used inventory. As we continue to expand our deal-building capabilities to used vehicles by the end of Q2, we expect to have more vehicles than anyone in automotive with respect to enabling accurate monthly payments. Our second initiative I would like to address is our checkout flow. While providing online deal-building capabilities supports a more stress-free process for consumers and efficiencies for dealers, we know that once a deal feels right consumers are going to want to proceed to a purchase. This remains an area where there are still a few more pieces to address, specifically the final checkout purchase process. We refer to these final steps as the checkout flow, which includes aspects such as credit applications, finalization of aftermarket products, e-contracting in-vehicle delivery or pickup. It's important to note that we believe there are two ways for a flexible approach to solve for the checkout flow; a checkout flow by integration with other SaaS platforms and a native checkout flow process. Let me address the checkout flow by our retailer platforms integration first. A significant portion of franchise dealers lean on SaaS partners to provide their digital retailing experience including the checkout functionality. The numerous high quality solutions being adopted by OEMs and retailers means that flexibility is key. For that reason, we've designed an open API spec for API-based integrations to standardize the transfer of data from our auto-buying platforms to dealers' digital retailing tools. That way we can provide a fully digital experience to our consumers, enabling a seamless transition from deal building to deal finalization while at the same time, we ensure active dealer participation in our marketplace. As part of this, we started a dialogue with various digital retailing vendors in order to support transitioning the consumer into the dealer's preferred checkout flow. Those conversations have progressed well. And in April we launched our first pilot program in partnership with Roadster. Our two companies share more than 500 mutual dealer partners who can begin supporting consumers' designed to complete numerous purchase aspects digitally. Once a consumer completes all aspects of building their deal on our site, they are offered the ability to transfer this deal into dealers' Roadster checkout process, which seamlessly integrates all deal details and allows the consumer to continue with the deal as built on our site. We're excited about this innovative pilot initiative and look forward to seeing how it progresses. While partner integrations are important, we certainly also see real value in keeping our consumers within the TrueCar ecosystem by providing a native checkout flow solution. We are assembling our own native checkout solution in order to support any dealer, who doesn't currently have a digital retailing vendor solution, and to support consumers, who wish to use our experience. This can be especially important for our smaller franchise and independent dealers, who perhaps don't have the resources to invest in a more comprehensive digital retailing infrastructure. Ultimately, we believe checkout flow in combination with our existing deal-building and shopping capabilities will transform our platform into a leading automotive marketplace that enables complete online car buying at the scale of millions of vehicles. The third initiative, I would like to discuss is our TrueCar Military and affinity partner network. Our Q1 performance was driven in large part by strong performance in our affinity channel, with multiple partners breaking monthly prospect volume records in March. Sam's Club, PerkSpot and over a dozen other partners across all of our various affinity segments at all-time highs. In addition to these record-breaking performances, the launch of the Navy Federal car-buying service has exceeded all of our expectations. The teams are working together on an exciting campaign, which is expected to start in June and run through the summer. While it is still very early in the program's history, we're very excited about the potential and the initial performance of this partnership. With partnerships with GovX, First Command and Military AutoSource are also expected to launch campaigns in Q2 and continue to expand the reach of our TrueCar Military platform. Between TrueCar Military and our new partnership programs we are very pleased with the progress we are making in reaching and servicing the auto-buying needs of the more than 40 million people that make up the military community, and we'll continue to expand upon our efforts as we progress throughout the year. Lastly as I mentioned earlier, I want to touch on the issue of the chip and inventory shortages. As we've discussed on numerous occasions previously, as a two-sided marketplace, we sit squarely between demand and supply. While our fundamental demand-side metrics show clear signs of strength with sequential traffic and prospect growth of 16.5% and 14.7% respectively, supply-side restrictions continue to mount. Since last year, beginning with disruptions caused by the pandemic, the auto industry has experienced a decline in inventory supply. The inventory constraints have continued into the current year with the global chip shortage. The limited supply of new and used vehicles in some brands has resulted in significant unmet consumer demand, and led to an increase in prices that dealers charge consumers. The reduced new-car inventory levels paired with strong natural consumer demand has retailers closely monitoring demand-generating sales and marketing expenses, which we believe will put pressure on our dealer count. We are also seeing supply-side shortages impact our OEM revenue, as certain OEMs have opted to pause their current incentive programs, due to limited inventory. We share the widely held view that the chip and inventory shortages will be temporary. In the meantime, we remain focused on opportunities to help introduce the right car to the right consumer and nurture them with rich content to help them get to a buying decision. I'd like to end by thanking our employees as they continue to push and focus on our end-to-end consumer experience in transforming our business to a true digital marketplace despite the continuing global pandemic in various other adverse circumstances. And with that, I'll hand the call over to Jantoon. Jantoon Reigersman: Thank you, Mike. Let me start by underlining how impressed I am with the team continuing to operate so effectively in an ever-changing market environment. The TrueCar team continues to push forward and focus on our transformation as we keep gaining momentum. Before we touch on our first quarter performance, I would like to take a step back and remind everyone of the significant addressable market opportunity in front of us. By 2025 the total addressable market of car sales is expected to reach 57 million units and according to industry reports, 40% of which is anticipated to be purchased – by 2025 the total addressable market of car sales is expected to reach 57 million units. And according to industry reports, 40% of which is anticipated to be purchased digitally, a total of 22 million. This represents roughly six million new and 17 million used cars. We are well underway towards offering a full end-to-end experience for our customers to address this need in both markets. We have a highly respected consumer-facing brand and a strong dealer network making us uniquely suited to enable this two-sided marketplace and provide consumers and dealers alike an awesome digital car-buying experience. I'll now review the strong financial and operating results for the first quarter of 2021. Revenue in the first quarter came in at $65.1 million, down 18% year-over-year, but up 2% quarter-over-quarter. The year-over-year decline was expected with the largest driver being the loss of USAA unit volumes, following the end of the partnership in September of last year. As Mike mentioned, unit growth excluding USAA is a good proxy for our performance and we delivered a strong 17% growth year-over-year by that metric. Franchise revenue ended the quarter at $47.9 million flat quarter-over-quarter. Independent and new dealer products came in at $10.4 million and $3.8 million respectively, with quarter-over-quarter growth at 5% and 15% respectively. OEM revenues ended the period at $2.8 million, up 3% quarter-over-quarter. We ended Q1 with 14,148 dealer customers, down just 2% from the end of Q4. Total units for the first quarter ended well above 165,000. Year-over-year TrueCar.com units were up 26% and extended affinity units were up 8%. As mentioned before, total Q1 units excluding USAA were up 17% year-over-year. Monetization for Q1 came in at $391 flat compared to the same period last year, demonstrating our continued ability to preserve revenue in spite of the lingering impact that COVID-19 has had on units. As mentioned in our last call, we expect gradual downward pressure on monetization over the course of the year, as we anticipate unit growth to outpace rate capture. Rate capture will always lag behind unit performance, because of our subscription billing models as rates can only be altered when a dealer is eligible or a service renewal. Now turning to expenses and margins for the first quarter of 2021, where all of the following metrics are for continuing operations and reported on a non-GAAP basis unless otherwise stated. The business generated $59.7 million of gross profit in Q1, with gross margin of 92% and in line with prior quarters. Technology and development spend of $10 million was up from the fourth quarter due to seasonal expected higher headcount costs associated with payroll taxes, but down year-over-year driven by the strategic restructuring effective June 1, 2020. General and administrative spend was $10.5 million for the first quarter, up from Q4 due to higher payroll taxes in Q1, but down year-over-year driven by lower bad debt in 2021 resulting from improved collection efforts and forecast assumptions. Sales and marketing spend our largest expense category ended up at $37.1 million, down 15% year-over-year driven by lower creative and brand experience spend. As a percentage of revenue, sales and marketing remained about the same as Q1 of 2020 at 57%. Within sales and marketing, TrueCar.com acquisition spend was up 12% year-over-year ending the quarter at $14.1 million. TrueCar.com units were up year-over-year 26%, resulting in a cost per sale of $155, 11% below the prior year. The difference in year-over-year performance between acquisition spend and units reflect the macro environment we faced last March in which we saw a large decrease in sales at the onset of COVID, and therefore had an inflated cost per sale. Part of our marketing spend was $10.2 million in the first quarter down 14% year-over-year. Sales headcount and other the final category within sales and marketing ended the first quarter at $12.8 million, down 34% primarily driven by the reductions in headcount that went into effect in Q2 of 2020. In summary, significant efficiencies across all categories of our sales and marketing spend drove a 15% reduction in non-GAAP expenses, resulting in adjusted EBITDA of $2.1 million, or 3.2% of revenue. GAAP net loss for the first quarter was $8.4 million or $0.09 per share, compared to a loss of $10.4 million or $0.10 per share in Q1 of 2020. I'd now like to provide commentary on our expectations for the rest of 2021. Despite an improving retail environment, there remains a heightened level of uncertainty, especially around the industry implications due to the inventory shortages. As such, we will not be providing formal full year guidance at this time. The year-over-year comparisons for the first three quarters of 2021 will be further complicated by the USAA transition and the impact of the pandemic, specifically the significant drop in unit volumes beginning in March of 2020 and the broad-based subscription discounts provided throughout the second quarter. We will only be providing a range of our expected revenue performance for the second quarter of 2021 of $65 million to $66 million. As it relates to adjusted EBITDA, we expect adjusted EBITDA to be above breakeven for the quarter. We are keenly aware of the marginal unit economics for both TrueCar.com and extended affinity channels and anticipate deploying ad spend more aggressively to take advantage of improvements to on-site conversion monetization or customer acquisition costs, when new inventory levels return back to normalized levels. And with that, let's go to questions. Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] We'll take our first question from Steve Dyer with Craig-Hallum. Please go ahead, sir. Steve Dyer: Thanks. Good afternoon guys. Just a question on dealer count. You talked about some of the challenges around inventory and so forth. But with that said, we've seen maybe a couple of your other competitors, I guess, modestly add dealers nothing enormous. But I'm wondering if there was some residual maybe dealer falloff from USAA that you feel like maybe is contributing to the dealer softness? Mike Darrow: Yes, Steve thanks for the question. And what we said in the call and I think what we saw in Q1 was clearly we did see a small dropoff in dealer count, but it was actually slightly better than we had forecasted anticipating that there might be some residual fallout still from the USAA transition. So, we actually came in a little bit above where we had projected our dealer count to be which was virtually flat for Q1. There are some additional headwinds that everybody is mentioning in their calls around new-car inventory and some of the things that are starting there to be discussed, but we see our dealer count as fairly stable and we're working on it on a day-to-day basis to make sure we're delivering value to our network as we see it. Steve Dyer: Got it. Okay. And then just a question on Roadster. Is the idea with that from a monetization perspective that that's a separate -- almost a SaaS solution or a separate, I guess, subscription versus the monetization you get from actually selling a vehicle, or how do some of these extras get monetized? Mike Darrow: We haven't completely finalized all the monetization thoughts around that pilot program. The key was to get it out there and test the consumer experience and give our consumers a chance to fully build the deal out on our site and then smoothly transition them into the Roadster checkout process and let them finish the deal there. So we think there'll be a number of different ways to monetize that one. You mentioned potentially as an additional product. The other would be we're hoping to see a better -- because of the better consumer experience, we're hoping to see a higher close rate. So we think there'll be a lot of good outcomes that come out of this test. We do have consumers flowing through the process already. Not really enough data yet to talk about but we're excited with what we've seen so far. And we truly believe this is another big step for us in bringing more and more digital capabilities onto our platform and being the first real digital marketplace modern-day marketplace in the automotive vertical. Steve Dyer: Got it. Makes sense. Last one from me, I guess, generally as you look around the industry you're seeing more I guess vertical e-commerce solutions whether that's from some of the big dealer groups themselves or some of your competitors and things like that. I mean as you go to market in what's a -- become a very, very kind of crowded marketplace and end-to-end is obviously the buzzword, how do you sort of intend to differentiate going forward? Thanks. Mike Darrow: Yes. I think we probably -- we talked about two solutions that we have to address that. Number one is, we want to build a very flexible format on our side and an open API, so that we can work with the folks out there hard in developing their own solutions. So the large dealer groups or even the fully integrated used-car players who are out there now are members of our platform. So we'll come at it from two approaches. We'll make sure we have a flexible process that feeds into the software and solutions that the large dealer groups and the verticals are building. And then we'll have our own native solution that we'll continue to pursue to give consumers a chance to go end-to-end fully on the TrueCar platform. And a lot of dealers out there are still figuring out what their digital retailing solution is going to be and we'll provide a solution for those dealers. So we're going to go at it from two different ways. We think this Roadster test is a big step in the first direction of integration into some of the effective platforms that are out there and then we'll continue to work on our own flow adding on to Deal Builder with a checkout process as we move through 2021. Steve Dyer: All right. Thanks, guys. Operator: [Operator Instructions] We'll take our next question from Nick Jones with Citi. Please go ahead, sir. Nick Jones: Great. Thanks for taking my questions. I guess looking kind of throughout the rest of the year here, how should we be thinking about your kind of sales and marketing efforts both on driving more traffic and winning dealers if inventory is expected to be constrained. I think at least in the next quarter and probably throughout the rest of the year due to chip shortage and then the pressures that it puts on used cars, so dealers kind of have lower inventory? How does -- how are those conversations going and trying to regain dealers? Mike Darrow: Yes. Thanks for the question, Nick. And I'll start with the traffic side of the business. We're seeing good traffic growth both organic and efficiency on paid on our -- both our TrueCar.com platform and our affinity partner platform. We've added some new partners to the network. We've talked about Navy Federal Credit Union being added and some real record months from some of our affinity partners. So we really look at the demand side of our marketplace as being extremely strong right now. Traffic in the upper funnel is good and growing. Conversion to prospect is good. We've also due to our investment in the used-car space over the past quarters seen growth in our used-car business. So all the signals on both the demand side for new and our used car business are very, very strong. We'll continue to monitor the inventory situation and make sure that we're delivering value to our dealers and we're staying in line with what we're able to deliver to them. But we see the supply side issue being short term. Hard to guess what short term really is now. I've heard forecasts that we could begin to see improvements beginning as early as June. Other forecasts say that may be an issue that we're dealing with through Q3. So we'll continue to focus on the demand side. All those indicators are strong and good and we'll continue to drive value to our dealers. And if we have more of a shift to use during this low supply side on the new-car side we're prepared to deal with that. Nick Jones: Great. And maybe one more if I can. There's some reports that Google is testing maybe getting more involved in kind of classified listings of local autos. Any thoughts on how that could potentially challenge organic traffic, or is this something they've tried before and failed? Just any thoughts on those reports? Thanks. Mike Darrow: Yes. Any time you hear rumors of Google getting involved in something, it's something certainly worth paying attention to. We think what differentiates our site is not just the listings, but the comprehensive market data that we can provide around the vehicle listing and provide to consumers as they enter into the buying phase of the shopping experience. So we think our transparency around pricing and educating consumers around not only what vehicles are available, but what a fair price is for that vehicle? What vehicles similar to that are selling for in their marketplace will continue to differentiate us. And like I said all of our demand-side metrics are strong right now. So we're looking forward to the spring and summer selling season and we hope this supply-side pressure is short lived and that we find a correction for that. Nick Jones: Great. Thank you. Operator: [Operator Instructions] Mr. Darrow, there appear to be no further questions at this time. Mike Darrow: Thank you, operator and thanks to everyone who took the time to join us today. I'd also like to thank -- again thank our TrueCar employees for their unwavering commitment and dedication to the transformation of the TrueCar to the first truly digital modern-day marketplace. So thanks for your time today and look forward to chatting to you again. Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you again for your participation. You may disconnect your lines at this time and have a great day.