TrueCar Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rajat Gupta - JPMorgan - Analyst : 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 is it just more industry trends that you're seeing in the broader marketplace industry? And then if you could like quantify in terms of what this means for the monthly revenue per dealer going forward? And I have a couple of quick follow-ups. Thanks.

Question: Rajat Gupta - JPMorgan - Analyst : Understood. Understood. That's helpful. And then just maybe like one 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 are 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 the third quarter overall? Thanks.

Question: Rajat Gupta - JPMorgan - Analyst : Got it. But any guidance framework for the financials for the company for third quarter?

Question: Rajat Gupta - JPMorgan - Analyst : Got it. Great. Thank you. I'll get back in the queue.

Question: Naved Khan - B. Riley Securities - Analyst : yeah. 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 it's performance, it might take time to 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.

Question: Naved Khan - B. Riley Securities - Analyst : Okay. And I'm just trying to be understanding of the growth that we had expected versus where you reported. And obviously, this CDK hack is part of that. But if I just 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 alluded to you could achieve. So just trying to unpack what the differential could be? Is it like a delayed spending on the incentive side or something else, just help us understand that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 1:00PM, TRUE.OQ - Q2 2024 TrueCar Inc Earnings Call

Question: Naved Khan - B. Riley Securities - Analyst : Okay. Maybe last question. Just for the full year, you said that you expect to be free cash flow breakeven. Is that exiting the year or for the full year as a whole, how should we understand that?

Question: Naved Khan - B. Riley Securities - Analyst : Got it. Thank you, guys.

Question: Christopher Pierce - Needham & Co LLC - Analyst : Hey. Good morning, guys. How are you doing? Can you just talk about the sequential decline in gross margins a little bit -- and how to think about the gross margin path for the rest of the year?

Question: Christopher Pierce - Needham & Co LLC - Analyst : Can you just go into the specifics, like is it holding inventory or certain dealers not wanting certain cars or the value starts decline or like how should we think about that going forward?

Question: Christopher Pierce - Needham & Co LLC - Analyst : Okay. Yeah. Yeah. 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 base? Or can you talk about the dealer base and how that's been shifting or geographically why it started in California?

Question: Christopher Pierce - Needham & Co LLC - Analyst : Okay. Thank you.

Question: Thomas White - D.A. Davidson & Co - Analyst : Great. Thanks. Jantoon, you touched on new car supply ramping up broadly across the industry and how that's an important new industry development that should benefit you guys, I guess, as long as demand -- consumer demand hangs in there. But did I hear you -- you also mentioned that 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 try and move that supply off their lots. I was hoping you could just provide a little bit more 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 will cut? And is something eventually building into? Thank you.

Question: Marvin Fong - BTIG LLC - Analyst : Hi. Good morning. Thanks for taking my questions. 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 go as planned? Did you hit any snags? And also, just as you've talked about starting to scale this in the fourth quarter of the year. Is that like a firm timeline? Or is that dependent on like how the transaction volumes within the pilot phase go? Any color there would be great. And then I have a follow-up.

Question: Marvin Fong - BTIG LLC - Analyst : Awesome. That's terrific color. And then just following up on Chris' questions about the new 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. Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 1:00PM, TRUE.OQ - Q2 2024 TrueCar Inc Earnings Call

Question: Marvin Fong - BTIG LLC - Analyst : Okay. Got it. Thanks so much, Jantoon.