TrueCar Inc Q4 2024 Earnings Call Transcript

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

Question: Rajat Gupta - J.P. Morgan - Analyst : Great. Thank, thanks for taking the question. I had one question just on, the first quarter guidance and the, and the step up and expenses. Could you elaborate a bit more on, what specific areas are you targeting? I know you mentioned it seems like it's more sales and marketing related, but is there also some technology related spending that's picking up and what's What giving you the confidence or maybe what are you seeing in terms of this line of sight? That it's going to immediately help accelerate revenue growth, in the second half of the year and have a quick follow up. Thanks.

Question: Rajat Gupta - J.P. Morgan - Analyst : Got it. Got it. That's helpful colour. 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 we are in that process and when do you expect it to like really start to contribute more meaningfully, not just in terms of like additions, but just in terms of monetization, as well. Thanks.

Question: Rajat Gupta - J.P. Morgan - Analyst : Got it. That's helpful. Thanks for the colour and good luck.

Question: Ryan Powell - B. Riley Securities - Analyst : Hi. Great. Good morning. Thanks for taking my question. This is Ryan Powell on for Nevad. So, first, I wanted to ask about, so over the past two years, franchise dealers have been trending up whereas independent dealers have seen greater churn. I was wondering if we should expect this trend to continue into 2025, and then also how the 12-month dealer service program should impact each group, and then also, I just want some more colour on the total opportunity for adding new affinity partners. Thank you.

Question: Ryan Powell - B. Riley Securities - Analyst : Yeah, just how you're sizing, the entire kind of opportunity there with adding new partners.

Question: Ryan Powell - B. Riley Securities - Analyst : Thanks, Jantoon. Super 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. FEBRUARY 19, 2025 / 2:00PM, TRUE.OQ - Q4 2024 TrueCar Inc Earnings Call

Question: Ryan Meyers - Lake Street Capital Markets - Analyst : Hey, thanks for taking my question. Just wanted to get, some more colour 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 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.

Question: Ryan Meyers - Lake Street Capital Markets - Analyst : Okay, got it, and then primarily just the biggest thing that impacting the first quarter revenue is just the loss of American Express and then obviously with the hires and the remaining quarters and then, he called out the Mercedes business on AAA growth should reaccelerate, but really the biggest driver of the growth rate in the first quarter is just the loss of the American Express platform.

Question: Ryan Meyers - Lake Street Capital Markets - Analyst : Okay, got it. Thanks guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 2:00PM, TRUE.OQ - Q4 2024 TrueCar Inc Earnings Call

Question: Tom White - D.A. Davidson - Analyst : Great, good morning. Thanks for taking my questions too, 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, after a few. Kind of years of outsized profitability for dealerships. So it would seem that maybe you know some are looking to like cut some tech and marketing budgets. Kind of in the face of that, but then on the other hand, maybe they arguably need platforms like yours more so than ever, 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, kind of navigate those two sort of different forces, and then I have a follow up next.

Question: Tom White - D.A. Davidson - Analyst : Okay, that's interesting, thank you. And then just, one last one on kind of the OEM incentive revenue line and I'm just curious whether, as you think about like the multi-year runway there, is there any reason, sort of structural reason why, you wouldn't 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 is there any risk that that in the years since, you had a more meaningful revenue base there that, there's been some kind of change in the way OEMs either approach the channel or, they, they've shifted budgets. Elsewhere, when it comes to kind of, digital marketing in this way, I realize it's not exactly a digital marketing kind of type, ad budget necessarily, But, just curious like when you, when you're thinking about that $300 million annualized like kind of longer-term target, like how realistic is it that, this is going to be a, yeah, a big driver of.

Question: Tom White - D.A. Davidson - Analyst : Very interesting. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 2:00PM, TRUE.OQ - Q4 2024 TrueCar Inc Earnings Call

Question: Marvin Fong - BTIG - Analyst : Great. Thanks for taking my questions. I know we've talked a lot about OEM here. I guess just to be a little more clear here, obviously you highlighted Mercedes and there are other partners, potentially to join that AAA program. So, should we, and I know you also mentioned reacceleration in the second quarter, but by, sometime this year, should we expect that you have fully recaptured, 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, coming out of Nada, and whatnot, just what's the pipeline in terms of dealers that you have for TC plus, are you pretty much, 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.

Question: Marvin Fong - BTIG - Analyst : Great. Thank you so much, Jantoon.

Question: Chris Pierce - Needham & Company, LLC - Analyst : 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're sending a dealer a lead and 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 want to understand what kind of what's happening and what you're doing to kind of drive that conversion higher.

Question: Chris Pierce - Needham & Company, LLC - Analyst : 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's really going on there? I just kind of want to get a better understanding of, that as you roll it out.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And is there a way to sort of quantify some sort of upper bound? Like what are we talking about as far as growth driver whether in terms of absolute revenue or revenue growth, like what's the right way to think about the trajectory of this over the year, next couple of years etc.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay, very fair, appreciate the time. Thanks.