TrueCar Inc at Needham Technology & Media Conference (Virtual) Transcript

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

Question: Chris Pierce - Needham & Company, LLC - Analyst : Cool. I thought we'd start out with the macro since it's kind of a pressing or interesting topic, I would say. I would actually call it interesting more versus pressing. And specifically, let's start with a couple ways of [getting]. TrueCar has historically been more levered to new cars. So how do you think about new-car production? Is that the firmest signal you think as far as affecting used-car prices? Or could something else affect used-car prices? Demand destruction, higher interest rates. How do you think about the environment, in general, for new cars and how it bleeds in to used cars?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Got you. So not putting -- forcing you to grab a crystal ball or anything like that, but in terms of how you are thinking about it, it's just hard for prices to come down meaningfully, given the lack of supply. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 2:15PM, TRUE.OQ - TrueCar Inc at Needham Technology & Media Conference (Virtual)

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And just as far as new-car production, the way new cars are allocated to dealers or the way consumers are buying new cars, is it possible that's kind of permanently changed in your mind? And how would that affect TrueCar since you guys have kind of been levered to new cars?

Question: Chris Pierce - Needham & Company, LLC - Analyst : And is that something that -- we hear headlines, I'm not really a car person, with the new Ford Bronco reservations. Is that something that can exist for a Honda Accord? Or is that something that's only more specialty vehicles or that's TBD?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Got you. And then you've talked about how your return or the leverage you guys have to new-car dealers and how that flows through your business model, there will be a lag between -- when new-car prices comes back versus when you guys see that growth come back. Is that because of the factors we've been talking about?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And what if there is a surprise and used-car prices come down ahead of new-car production because of the macro, because of rising interest rates? How would that affect your business?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. So it's kind of counterintuitive, but a slowing used-car environment would be a positive for your business since sensitive dealers would lean in more into marketing and would mean -- would rely on leads more?

Question: Chris Pierce - Needham & Company, LLC - Analyst : I got you. And do you think that the -- could there be a lag there given the possibility that dealers were able to show in 2021, given the higher prices and the demand we spoke about? Or should that -- because used cars is all about turn, that should snap back quicker?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Got you. As someone who has only been looking at the industry for a couple of years, does turn fluctuate? Kind of like could we see turn ramp up quickly? Or will we see kind of a slow burn? And I guess it will relate to what you think about prices. But other multiple scenarios that could play out where prices come down quickly? Or because dealers don't have inventory in the lot, it makes it harder? Again, we go back to the prices -- the macro and the price questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 2:15PM, TRUE.OQ - TrueCar Inc at Needham Technology & Media Conference (Virtual)

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. Sorry to turn you into a macroeconomist there (multiple speakers)

Question: Chris Pierce - Needham & Company, LLC - Analyst : We can move on. I think it's one of those TBD-type situations, no one really knows. And there's a lot of scenarios. And it's not hard to sketch out a scenario that's -- where it kind of favors you guys with new-car prices coming back and used-car prices going lower and dealers meeting that lead-based content.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay, great. Let's talk about TrueCar+ for a bit. I'll give you the floor for a minute or two. Why don't you just kind of talk us through how you're thinking about -- what it is and how you're thinking about it, how you think it can be like the future of TrueCar. Then I have a few questions around it.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay, yeah, sounds exciting. So let's kind of approach it from multiple angles here. What's the conversation like when you have your rep in the field? He calls up or he shows up with a dealer where you don't have a relationship with. Kind of how is he positioning it, what is he pitching, and what is the feedback like?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And then now let's say we've got the -- we'll call it the more forward-looking deal who you already have a relationship with. When you go talk to them, is it just a much simpler conversation? Or is it still -- because it's digital retailing, it's still a complex conversation, but it helps to have the prior relationship.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And these dealers that have their own digital solution or they're using a third-party provider to drop a landing page on their website as far as digital retailing, appraisals, things like that, is that -- they're spending marketing dollars on that. Is TrueCar+ something that can augment those marketing dollars or extend those marketing dollars? Or it's just free marketing because they're putting a car and you're saying, they only -- correct me if I'm wrong but you guys tend to get paid on a per transaction basis. So a TrueCar+ is a similar type of free look at 7 million to 9 million consumers, as you said.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Got you. And a couple other things or pieces of it that you hit on, the consumer can apply for financing. Who -- do you have third-party finance partners? Can the dealer use their own financing partners? Or how does it kind of flow through the system? Or how does the dealer maintain that revenue stream?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. So it's kind of an aggregator and a filter?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Perfect. And then who ships the vehicle? Is that -- do you use third-party? Or is it on the dealer to transport the car? Because then I can see the advantages to both third-party. You've got -- they only pay for it when you need it, but the dealer might want to ship the car to the end consumer to have the white glove experience in the driveway and to build a relationship with that customer. If they are a forward-thinking deal, I'm thinking about years down the road. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 2:15PM, TRUE.OQ - TrueCar Inc at Needham Technology & Media Conference (Virtual)

Question: Chris Pierce - Needham & Company, LLC - Analyst : So what piece of that relationship does the dealer have? The dealer knows who the consumer is, the dealer has the payer profile on the consumer and they know what car they bought. And they presumably know their email address and phone number so they can remarket to that consumer. But they actually, in theory, might never actually meet this consumer.

Question: Chris Pierce - Needham & Company, LLC - Analyst : That's interesting. Do you think most consumers want 100% digital experience? Or do they want, say, an 83% digital experience where they find the car they want, get their financing in place, make an appointment at the dealer, show up, test drive the car, and then they're off the lot within 45 minutes?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And that text messaging stuff where you talked about the communication platform that you guys built. Does the dealer have to -- is it just the salespeople on the floor of the dealership? How do you stress to the dealer that, hey, this is a live consumer and this might not be right in front of you? Or are they used to interacting digitally with dealers because of other platforms that are out there that kind of facilitate text communication or things like that? I guess how do you make sure that the dealer gives this lead the attention that it deserves, considering it's a car that might walk off the lot.

Question: Chris Pierce - Needham & Company, LLC - Analyst : And do you have an internal team or -- monitoring the two-way flow conversation or kind of monitoring as the consumer moves down the funnel to see, hey, we are seeing people stop at financing, or we are seeing people move forward, but we are not seeing the dealership react as quickly as we would like. And this person is an encounter -- something that's showing lower down the funnel kind of goes -- falls by the wayside, I guess.

Question: Chris Pierce - Needham & Company, LLC - Analyst : And what's the conversation like at the dealer level where you might have someone text the consumer four times and sell a car? Versus you might have someone have a person come into the dealership on three separate occasions and test drive five cars and end up buying a car? One of those takes a lot more time and effort versus one of those kind of you're on your phone, you answer a few questions. And then in theory, all the information is there and the steps for the consumer are laid out easily, the transaction just kind of happens.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And if I am the consumer and I am in Florida and I'm in one of your ZIP Codes or demos, when I go to the TrueCar site, I just see TrueCar+ in the corner or it's kind of -- how do I know that I can -- I guess there's two parts to the question. How does the consumer know if we can go into the site? And then how are you priming the consumers in that area with advertising and messaging so they know they can buy a car of TrueCar versus just going and looking at cars and thinking -- kind of window shopping before they head to the dealership?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Great. And how are you -- I mean, broadly you're measuring conversion by consumer goes to TrueCar+, consumer buys a car. But we are in such early stages. Are you measuring conversion by what steps they get to on the process? Or how do you think about what's working or clearly where you want to switch gears or call Omaha?

Question: Chris Pierce - Needham & Company, LLC - Analyst : And as they convert, how should investors think about pricing to the dealer in terms of this is -- you could throw out a number, out of -- 5X, 1X, 2X. But definitely, I would say more value in both. So how should we think about that?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. So if you put in theory, you could be invested around pricing to kind of drive adoption, but because the dealer has so much more margin in these sales, it's something kind of win-win is the way to look at it.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. And then I see on the top right, on the top left of your Zoom under there, why don't you -- can you kind of go into the background of -- and the relationship TrueCar has had with the US military? And then why don't you touch on maybe federal as well? I know that was something that you kind of have brought on as we move down the TrueCar+ funnel or we've heard more about it, not that maybe federal has -- getting less airtime, but that's something that I feel like was -- that was an exciting deal when it was launched, and I want to make sure we hit on that.

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. In the last 90 seconds or so, since we talked about Navy Federal, can you touch on some of the other affinity partners you have? And they've sort of -- the timing has a negative feedback looped around timing and COVID as well, but that's kind of a reverse. I guess, how are they thinking about TrueCar+ is kind of the bigger question?

Question: Chris Pierce - Needham & Company, LLC - Analyst : Okay. I appreciate that. Okay, it sounds like we're out of time. There's a few more things I'd love to get to, but it's a very interesting business, the macro and the things that you guided to doing. So I would say thanks for taking the time this morning. We appreciate having you and good luck on your meetings today.