TrueCar Inc at Needham Growth Conference (Virtual) Transcript

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

Question: Chris Pierce - Needham & Company - Analyst : Okay. So we'll start kind of with the base business that you kind of touched on a little bit is one thing I kind of wanted to make sure we got to is from the genesis, TrueCar was levered more towards new cars when the technology was kind of built, when the site was kind of thought out and mapped out. So that's why that leverage towards new cars has always been kind of ever present on the site. Is that the right way to think about it?

Question: Chris Pierce - Needham & Company - Analyst : Okay. And then you had also talked about lower in the funnel. And that's because -- the way I'm thinking about it is consumers put more information into the TrueCar platform because they're a little more -- they have a more general idea of what they're looking for -- more specific idea, I should say. And as they put in more information, and they're willing to put more information in, that, in turn, allows the dealer to kind of think of that as a warmer lead versus someone that just puts in an email or something like that. Is that why you guys, TrueCar, is more levered to close transactions? Because the likelihood of a TrueCar lead is more likely to close versus others or versus used car lead gen sites. Is that why you guys are more levered to that, versus the subscription model or a per-lead model?

Question: Chris Pierce - Needham & Company - Analyst : Just to confirm, you get that data from franchise dealers. But do you also get it from independent dealers, with the used cars they sold on a monthly basis, or is the used market a little different? Like, do you know what 2018 Ford Explorers sold for in a 50-mile radius of my zip code?

Question: Chris Pierce - Needham & Company - Analyst : Okay. And those prices you quoted, the $299 and the $399, are those -- I guess you certainly don't know what other lead gen sites charge on a per-lead basis, but should we think of that -- those numbers you quoted as a premium, because you're delivering a transaction to them versus just a lead that they, in fact, have to close? Or how do -- I guess, well, they're all leads they need to close in theory. But how does that shake out?

Question: Chris Pierce - Needham & Company - Analyst : Makes sense. Okay. Just to back up a little bit, we talked about new cars at the beginning, and 2021 was not a great year for new car production. 2022 -- no, nobody has a crystal ball. But broadly, talking with investors, it seems like there was a pretty sizable headwind to someone levered to a new car transaction such as yourselves. And that headwind might not happen in March. It might not happen in May. But at some point, there's going to be a tailwind to new car transactions. And is that something that -- can I think of it that simply, I guess, if I kind of take timing out of the equation?

Question: Chris Pierce - Needham & Company - Analyst : Appreciate the detail. Right over your right shoulder there, it's TrueCar Military. We kind of touched on the affinity partner -- the partnerships that you have. USAA was a big partner. Now you've got Navy Federal Credit Union kind of they're similar-ish membership numbers. I guess I would ask REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 11, 2022 / 7:45PM, TRUE.OQ - TrueCar Inc at Needham Growth Conference (Virtual) where does that partnership kind of stand, or what inning do you think we are in as far as kind of getting that kind of up and running through, not necessarily to USAA levels, but how should investors think about that ramping?

Question: Chris Pierce - Needham & Company - Analyst : Okay. Great. I appreciate the framing. The last question on kind of the base business or the market dynamics in that business, as someone who peripherally watches headlines around Asbury or Lithia or [out this] -- the publicly traded dealers, it seems like once a month, you see an acquisition headline of them buying a dealership at a geography where they didn't have a location or them increasing density in the geography. What do these headlines mean for TrueCar, like lead generation or customer acquisition? Is it positive, negative, indifferent? How should I think about those?

Question: Chris Pierce - Needham & Company - Analyst : (technical difficulty) kind of open the door there. Walk us through the build versus buy approach that you guys kind of went through. What have you learned along the way? Kind of software pieces you've kind of tried to put in place. Start from the beginning all the way up to AutoFi. Just take us through the journey.

Question: Chris Pierce - Needham & Company - Analyst : I guess, why did you start in Florida? Is it kind of a friendly dealer community down there? Are the dealers you have [prior] relationships with? There are more cars. I'm kind of curious around 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. JANUARY 11, 2022 / 7:45PM, TRUE.OQ - TrueCar Inc at Needham Growth Conference (Virtual) And then when you do approach these dealers in Florida or as you expand to other states, how does the conversation go? Like, someone -- like, there's these websites, like, iSeeCars, all these other kind of random websites. Do dealers just put their cars kind of anywhere? And it's just kind of a big fishing expedition wherever the leads were, things come in, and then they pay, like you said, the $299? Or is there a point where dealers are like, oh, I've got my cars on 50 different sites; I know the answer is not 50. But are they willing to just be like, yes, why not? It cost me zero. Why wouldn't I put it out there? Or I guess, what's the dealer appetite to move towards this model?

Question: Chris Pierce - Needham & Company - Analyst : That's kind of where your 8.3 million monthly uniques can play a role at the larger dealer level because why not? And at the smaller dealer level, where they're -- they don't have their own storefront at all on the Internet, that type of place. Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 11, 2022 / 7:45PM, TRUE.OQ - TrueCar Inc at Needham Growth Conference (Virtual)

Question: Chris Pierce - Needham & Company - Analyst : And then are you demoing just used cars or new cars or both? And new cars -- it's not hard to find someone selling used cars online right now. You kind of walked through this in Q3 a little bit how you might -- the new car platform or new cars online -- the 100% digital new cars. What are the specific challenges around new cars? And are dealers as open to this as they are with used cars?

Question: Chris Pierce - Needham & Company - Analyst : Okay. And then one thing that kind of stands out when we look at your balance sheet is the amount of cash on the balance sheet versus market cap. How should investors think about that use of cash? Is it going to be sales and marketing to get the word out as you expand True+ for new and used? Or is marketing spend going to look differently? We've heard competitors of yours talk about, hey, gee, we used to spend a lot of money, and we did it because we drove uniques to our site. But we stopped spending money, and we're getting similar results. So kind of just not sure where TrueCar's specific spend might go and how that spend might look different versus in the past.

Question: Chris Pierce - Needham & Company - Analyst : Just to interrupt, but do you think that habit is kind of sticky? It seems like it would be in my mind. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 11, 2022 / 7:45PM, TRUE.OQ - TrueCar Inc at Needham Growth Conference (Virtual)

Question: Chris Pierce - Needham & Company - Analyst : On consumers, you kind of -- just two more. You talked about the experiences consumers are having so far in the demo in Florida. I guess what's coming back as far as positive feedback, and what's coming back as far as things you can kind of iterate on?

Question: Chris Pierce - Needham & Company - Analyst : Is there a way to leverage the affinity partners to kind of get the word out about this product through their channels, where you necessarily aren't spending the dollars that you kind of -- I guess it might be discounted dollars or lower CAC [as I think about it]. Are they behind this push as well? Can you get them on these pushed incentives? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 11, 2022 / 7:45PM, TRUE.OQ - TrueCar Inc at Needham Growth Conference (Virtual)

Question: Chris Pierce - Needham & Company - Analyst : Finally, there's been third party data the past couple of run throughs, talking about used car seasonality maybe coming back in late December. And I'm just curious if you're hearing that from your constituents out there on the franchise or on the independent side of things, where 2020 maybe wasn't a year for seasonality in used cars. And 2021 -- maybe there were thoughts it wouldn't be as much, but into late December, it seemed like things kind of slowed down a little bit. Just kind of curious what you're hearing from your dealer community.

Question: Chris Pierce - Needham & Company - Analyst : So potentially, outside of seasonal lull, but enthusiasm and momentum into tax refund season is kind of a good way to think about it.

Question: Chris Pierce - Needham & Company - Analyst : Okay. All right. Well, why don't we leave it there? I appreciate the time. Happy New Year to everybody over at TrueCar. I appreciate you spending the time with us this morning.