Online car-shopping service TrueCar (TRUE 1.23%) reported on Feb. 14 that it lost $6.4 million in the fourth quarter of 2018, or $0.06 per share, an improvement over the $8.5 million it lost in the fourth quarter of 2017. Revenue of $91.1 million was up 10% from a year ago.
Adjusted for stock-option expenses and one-time items, TrueCar had a net profit of $2.7 million, or $0.03 per share. That fell short of the $4.9 million, or $0.05 per share, that it earned on the same basis in the year-ago period.
For the full year, TrueCar lost $28.3 million, or $0.28 per share, an improvement over the $32.8 million it lost in 2017.
TrueCar earnings: The raw numbers
| Metric | Q4 2018 | Change vs. Q4 2017 | Full-Year 2018 | Change vs. 2017 |
|---|---|---|---|---|
| Revenue | $91.1 million | 10% | $353.6 million | 9% |
| Vehicles purchased ("units") | 257,017 | 7% | 1,005,029 | 5.5% |
| Adjusted EBITDA | $8.1 million | 8% | $32.9 million | 14% |
| Net income (loss) | ($6.4 million) | $2.1 million improvement | ($28.3 million) | $4.5 million improvement |
| Adjusted net income | $2.7 million | (45%) | $11.1 million | 54% |
| Net income (loss) per share | ($0.06) | $0.02 improvement | ($0.28) | $0.07 improvement |
| Adjusted net income per share | $0.03 | $0.02 lower | $0.11 | $0.03 higher |
Data source: TrueCar. EBITDA = earnings before interest, tax, depreciation, and amortization. Non-GAAP "adjusted" figures exclude employee stock option expenses and nonrecurring costs. "Franchise dealers" = auto dealers that hold a "franchise" from an automaker, meaning that they sell new vehicles.
What happened at TrueCar in the fourth quarter of 2018
Simply put, the quarter fell well short of TrueCar's expectations, which in turn meant that full-year results also fell short of expectations. Its revenue, adjusted EBITDA, and units all fell short of the guidance it gave with its third-quarter 2018 results in November, for both the fourth quarter and the full year.
During TrueCar's earnings call, CEO Chip Perry attributed the shortfalls to lower-than-expected levels of new business as well as what he called "operational issues" related to the company's migration to a new technology platform. Those operational issues explain the 10% decline in unique monthly visitors to TrueCar's website, as well as the company's cautious guidance for 2019, he said.
Here are the other key metrics from TrueCar's fourth-quarter earnings report.
- TrueCar's website had an average of 6.5 million unique visitors per month, down 10% from 7.3 million per month in the fourth quarter of 2017.
- A total of 257,017 vehicles were purchased via TrueCar's service in the fourth quarter, up 7.3% from a year ago. As noted above, that total fell short of TrueCar's prior guidance.
- Monetization, or the average fee collected by TrueCar for each vehicle sold via its services, was $334 in the fourth quarter, up from $328 a year ago.
- Average monthly transaction revenue per franchise dealer was $1,780, up 1.7% from $1,751 in the fourth quarter of 2017.
- TrueCar's total number of franchise dealer partners rose 2.1% to 12,674 as of the end of 2018, up from 12,142 a year ago.
Check out the latest TrueCar earnings call transcript.
Looking ahead: TrueCar's guidance
As noted above, TrueCar released cautious guidance for the first quarter of 2019 and for the full year.
For the first quarter of 2019, TrueCar expects:
- Revenue between $84 million and $86 million (Q1 2018 result: $81.1 million)
- Adjusted EBITDA between $3 million and $5 million (Q1 2018 result: $6.0 million)
For the full year, the company expects:
- Revenue between $371 million and $378 million (2018 result: $353.6 million)
- Adjusted EBITDA between $35 million and $40 million (2018 result: $32.9 million)
