TrueCar's Losses Widen on Partner Challenges
Car-shopping website operator TrueCar (NASDAQ: TRUE) reported on Tuesday that it lost $9.5 million in the third quarter, or $0.10 per share, a worse result than it posted in Q3 2016, when it lost $7.4 million.
TrueCar also reduced its full-year 2017 sales and revenue guidance.
TrueCar earnings: The key numbers
What happened last quarter
In the first and second quarters of 2017, TrueCar had a good story to tell: Nearly all of its business metrics improved year-over-year each time.
But the story in the third quarter was a little different: While "units" (TrueCar's term for vehicles purchased via its service), the total number of new-car ("franchise") dealers using its service, and traffic to TrueCar's site all rose from a year ago, its average fee per sale and total revenue per franchise dealer both fell.
- TrueCar's website had an average 7.7 million unique visitors per month, up 1% from a year ago.
- Acquisition cost per sale was $151, down from $180 a year ago.
- Monetization (the average fee collected by TrueCar for a vehicle sold via its service) was $306, down from $319 in Q2 and $319 in Q3 2016.
- Average transaction revenue per franchise dealer was $5,319, down 5% from $5,600 in Q3 2016.
- The number of franchise dealer partners rose 14% year over year to 12,286.
What TrueCar's CEO had to say
CEO Chip Perry, who joined TrueCar late in 2015 after a management shakeup, spent last year revamping TrueCar's business and improving its often-difficult relationships with new-car dealers, including giant AutoNation (NYSE: AN).
In the earnings presentation, Perry explained that an important partner (USAA) had redesigned its website, introducing several new steps into its car-buying section. The result was a big drop in traffic, prospects, and units for TrueCar from that source in the quarter. But, Perry expects that situation will improve:
Looking ahead: TrueCar's guidance
TrueCar also released guidance for the fourth quarter and adjusted its full-year expectations -- and not all favorably.
For Q4 2017:
- Total units are expected to be in the range of 240,000 to 245,000, up 11% from the fourth quarter of 2016.
- Revenue in the range of $81 million to $83 million.
- Adjusted EBITDA between $6 million and $7 million.
For the full year:
- Total units between 953,000 and 958,000, versus 806,953 in 2016. (Prior guidance: between 975,000 and 985,000.)
- Revenue between $321 million and $323 million, versus $277.5 million in 2016. (Prior guidance: between $325 million and $329 million.)
- Adjusted EBITDA between $27.4 million and $28.4 million, versus $15 million in 2016. (Prior guidance: between $26 million and $28 million.)
Long story short: TrueCar scaled back its full-year guidance around units and revenue, but raised its adjusted-EBITDA expectations slightly.
10 stocks we like better than TrueCarWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and TrueCar wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 6, 2017
John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends TrueCar. The Motley Fool has a disclosure policy.