TrueCar Inc Q3 2024 Earnings Call Transcript

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

Question: Marvin Fong - BTIG - Analyst : 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.

Question: Marvin Fong - BTIG - Analyst : 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 2:00PM, TRUE.OQ - Q3 2024 TrueCar Inc Earnings Call 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?

Question: Ryan Meyers - Lake Street Capital Markets - Analyst : 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?

Question: Ryan Meyers - Lake Street Capital Markets - Analyst : 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?

Question: Rajat Gupta - JPMorgan - Analyst : 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 one quick follow-up.

Question: Rajat Gupta - JPMorgan - Analyst : 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 2:00PM, TRUE.OQ - Q3 2024 TrueCar Inc Earnings Call

Question: Chris Pierce - Needham & Company Inc. - Analyst : In the prepared remarks, did you say that -- did I hear you correctly that AmEx is cycling out as an affinity partner?

Question: Chris Pierce - Needham & Company Inc. - Analyst : 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?

Question: Chris Pierce - Needham & Company Inc. - Analyst : How should we think about what percentage of extended affinity units MX typically drives?

Question: Chris Pierce - Needham & Company Inc. - Analyst : 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.

Question: Chris Pierce - Needham & Company Inc. - Analyst : 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?

Question: Ryan Pfingst - B. Riley Securities - Analyst : 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.

Question: Wyatt Swanson - D.A. Davidson & Company - Analyst : 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?

Question: Wyatt Swanson - D.A. Davidson & Company - Analyst : 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?