Online car-shopping service TrueCar (TRUE +0.00%) reported on Feb. 15 that it lost $8.5 million in the fourth quarter of 2017, slightly more than it lost in the year-ago period.
For the full year, TrueCar lost $32.8 million, an improvement over the $41.7 million it lost in 2016.
The raw numbers
| Metric | Q4 2017 | Change vs. Q4 2016 | Full-Year 2017 | Change vs. 2016 |
|---|---|---|---|---|
| Revenue | $83.1 million | 12% | $323.1 million | 16% |
| Vehicles purchased ("units") | 239,521 | 9.5% | 952,834 | 18.1% |
| Adjusted EBITDA | $7.5 million | 29.3% | $28.9 million | 92.7% |
| Franchise dealers as of December 31 | 12,142 | 9% | -- | -- |
| Net income (loss) | ($8.5 million) | $0.5 million worse | ($32.8 million) | $8.9 million better |
| Net income (loss) per share | ($0.08) | $0.01 better | ($0.35) | $0.14 better |
| Adjusted net income (loss) per share | $0.05 | $0.06 better | $0.08 | $0.21 better |
Data source: TrueCar. EBITDA = earnings before interest, tax, depreciation, and amortization. Non-GAAP "adjusted" figures exclude employee stock option expenses and non-recurring costs. "Franchise dealers" = auto dealers that hold a "franchise" from an automaker, meaning that they sell new vehicles.
Image source: TrueCar.
What happened last quarter
TrueCar had a good story to tell in the first and second quarters of 2017, with nearly all of its business metrics improving year over year each time. It hit a speed bump in the third quarter, when its average fee per sale and revenue per franchise dealer both fell. Part of the problem in the third quarter: An important partner, USAA, had redesigned its website, complicating its car-buying section.
Investors were looking for a return to first-half form in the fourth quarter, and in that sense, TrueCar didn't disappoint. Aside from a slight year-over-year increase in its net loss, all of the company's key performance metrics were up year over year.
- TrueCar's website had an average 7.3 million unique visitors per month, up from 7.0 million a year ago.
- A total of 239,521 vehicles were purchased via TrueCar's service in the fourth quarter, up 9.5% from the year-ago period.
- Acquisition cost per sale was $145, down 15% from $171 a year ago.
- Monetization, or the average fee collected by TrueCar for a vehicle sold via its service, was $328, up from $320 a year ago.
- Average monthly transaction revenue per franchise dealer was $1,751, up from $1,743 a year ago.
- TrueCar's total number of franchise dealer partners rose 9% from the end of 2016, to 12,142.
What TrueCar's CEO had to say
During a conference call for investors, CEO Chip Perry said that the issues with USAA's website that had hurt TrueCar's third-quarter results are being resolved.
One of our primary areas of focus coming out of Q3 2017 was the level of business with our largest affinity partner, USAA. I'm pleased to report that, as we expected, USAA business started to show improvement at the end of the fourth quarter. The changes USAA made enabled members to move more equally into the car buying service, and as a result, units in USAA channel came in better than expected. More importantly, through our detailed planning sessions with USAA, we have developed an agreed-upon business plan that we believe will return this channel to high single-digit unit growth in fiscal 2018.
Looking ahead: TrueCar's guidance
TrueCar also released guidance for the first quarter and full year.
For Q1 2018:
- Total units are expected to be in the range of 230,000 to 235,000 (Q1 2017: 217,656).
- Revenue in the range of $80 million and $82 million (Q1 2017: $75.8 million).
- Adjusted EBITDA between $6 million and $7 million (Q1 2017: $6.1 million).
For all of 2018:
- Total units are expected to be between 1,030,000 and 1,050,000 (FY 2017: 952,834).
- Revenue in the range of $360 million to $365 million (FY 2017: $323.1 million).
- Adjusted EBITDA between $36 million and $40 million (FY 2017: $28.9 million).
