TrueCar (TRUE) Cuts FY Revenue Guidance, Q2 Prelim. Results Miss
TrueCar, Inc. (Nasdaq: TRUE), the negotiation-free car buying and selling platform, today announced preliminary results for the second quarter of 2015 and adjusted its guidance for the full year 2015.
Conference Call Information
Scott Painter, Founder and Chief Executive Officer, and Michael Guthrie, Chief Financial Officer, will host a conference call to discuss the preliminary second quarter results at 6:30 p.m. Eastern Time on July 23, 2015. In addition, a live webcast of the call will be accessible through the Investor Relations section of TrueCar's website at www.true.com. TrueCar will announce its final second quarter financial results and host a conference call on August 6, 2015. Details of the conference call will be announced.
| TrueCar Conference Call Details | |
| Date: | Thursday, July 23, 2015 |
| Time: | 6:30 p.m. Eastern Time (3:30 p.m. Pacific Time) |
| Dial-In: | 1-877-407-0789 (domestic) |
| 1-201-689-8562 (international) | |
| Conference ID: | 13615216 |
| Webcast: | Investor Relations section of the Company's website at www.true.com |
A telephonic replay of the call will also be available beginning that same day at 9:30 p.m. Eastern Time, until 11:59 p.m. Eastern Time, on Thursday August 6, 2015, by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the replay pin number: 13615216. A replay of the webcast will also be available for 90 days upon completion of the conference call, accessible through the Investor Relations section of TrueCar's website at www.true.com.
Preliminary Q2 Results and Adjusted 2015 Guidance
TrueCar's second quarter revenue is expected to be in the range of $65.0 million to $65.3 million, with net loss expected to be in the range of $15.0 million to $15.5 million. TrueCar's Adjusted EBITDA1 for the second quarter is expected to be in the range of ($0.20 million) to $0.30 million.
TrueCar is reducing its 2015 full year revenue guidance to a range of $252 million to $258 million. Through the second quarter of this year, TrueCar expects to have generated between $4.1 million and $4.6 million of Adjusted EBITDA. Given the reduction in full year revenue expectations coupled with the investment required to drive long-term growth, management expects Adjusted EBITDA to be breakeven for the balance of 2015.
(Street sees FY revenue of $283 million and Q2 revenue of $68.5)
1 Adjusted EBITDA is a Non-GAAP financial measure. Refer to its definition and accompanying reconciliation to preliminary GAAP Net Loss below.
The variance in quarterly performance from prior guidance was primarily attributable to a shortfall in unit volume. In general terms, unit volume is the by-product of consumer traffic, which we measure in monthly unique visitors, and the effectiveness of the TrueCar "experiences" (desktop, co-branded, mobile and at the dealership) with consumers. TrueCar measures the effectiveness of its experiences as Net Funnel Efficiency ("NFE").
Quarterly units came in below expectations as a result of lower than forecasted traffic growth, which is expected to be approximately 42% year over year. Traffic was lower than guidance in each channel.
In the TrueCar-branded channel, the company spent less on user acquisition than forecasted which led to slightly lower than expected traffic in this channel. However, the lower spend also resulted in a cost per sale of less than $220, which was well within expectations.
In the USAA Affinity channel, the positive reception to the co-branded marketing campaign led to a strong performance in traffic, NFE and units following the launch of the program on May 21 through the end of the quarter. However, that strength was not enough to offset softness in the USAA Affinity channel during the first half of the quarter. Based on the performance of the channel during the second half of the quarter, however, the channel carries strong momentum into the third quarter.
Finally, within the Other Affinity Partner channel, traffic declined sequentially in the second quarter, which caused the underperformance on units in that channel.
For the second quarter, each channel is expected to perform as follows:
| Year-Over-Year | Sequential | ||
| Channel | Units | Growth2 | Growth 3 |
| TrueCar Branded | 81,000 | 44% | 16% |
| USAA Affinity | 59,000 | 15% | 15% |
| Other Affinity Partners | 49,000 | 17% | 3% |
| 2 Second quarter 2015 as compared to second quarter 2014. | |||
| 3 Second quarter 2015 as compared to first quarter 2015. | |||
While the impact from units and, consequently, revenues was the most significant driver of the Adjusted EBITDA miss, certain expense items also affected Adjusted EBITDA, including marketing and recruiting.
"While we set new records for units, revenue and dealer count within the quarter, we experienced execution challenges in meeting our growth expectations," said Scott Painter, TrueCar's Founder and Chief Executive Officer. "Although our traffic growth was not as strong as anticipated, the six million consumers we talk to at the top of the funnel are enough for us to achieve our unit and revenue goals. In order to achieve those goals, we are re-focusing on the core experience all the way from the initial engagement of the consumer on the front end of the experience through to post-sale engagement for feedback. Additionally, we recognize that TrueCar Certified Dealers are a key element of that experience for our users, and we intend to highlight the benefits of working with our dealers in a more direct way throughout the experience. Finally, we will be narrowing our set of technology and deve