Please ensure Javascript is enabled for purposes of website accessibility

TrueCar Posted a Wider Loss in Q3, but Raised Guidance

By John Rosevear - Updated Nov 8, 2019 at 7:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Are things finally turning around?

Online car-shopping service TrueCar (TRUE -2.52%) reported on Nov. 7 that it lost $7.7 million in the third quarter of 2019, versus a $6.3 million loss in the third quarter of 2018.

Adjusted for stock option expenses and one-time items, TrueCar had a net profit of $500,000, or less than $0.01 per share. That compares with income on the same basis of $4.3 million, or $0.04 per share, in the year-ago period.

TrueCar's revenue and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) both exceeded the high ends of the guidance ranges the company provided in August. Shares rose sharply in after-hours trading after the results were released.

The raw numbers

Metric Q3 2019 Change vs. Q3 2018
Revenue $90.6 million (3.2%)
Vehicles purchased (units) 267,821 (0.1%)
Adjusted EBITDA $5.9 million (41%)
Net income (loss) ($7.7 million) Decline of $1.4 million
Adjusted net income $500,000 (88%)
Net income (loss) per share ($0.07) Decline of $0.04
Adjusted net income per share $0.00 Decline of $0.04

Data source: TrueCar. Non-GAAP (adjusted) figures exclude employee stock option expenses and nonrecurring costs.

What happened at TrueCar in the third quarter?

  • Non-GAAP (adjusted) expenses, or expenses other than employee stock option costs, were $84.7 million, up sightly from $83.6 million a year ago.
  • TrueCar's website had an average of 7.7 million unique visitors per month, down 4% from 8 million per month in the third quarter of 2018.
  • A total of 267,821 vehicles were purchased via TrueCar's service, down slightly from a year ago.
  • Monetization, or the average fee collected by TrueCar from dealers for each vehicle sold via its service, was $320 versus $331 a year ago.
  • Average monthly transaction revenue per franchise dealer was $1,786, down 5% from $1,878 in the third quarter of 2018.
  • TrueCar had 12,711 franchise dealer partners as of the end of the third quarter, up slightly from 12,549 a year ago.
The glass doors to TrueCar's offices in Santa Monica, California.

Image source: TrueCar.

What TrueCar's CEO had to say

Mike Darrow became the company's interim CEO after the abrupt retirement of predecessor Chip Perry in June. Darrow said the company is on track to launch its overhauled site and reintroduce its brand to consumers.

"We are laser-focused on our near-term business goals, and energized by our upcoming rebrand and the rapid product innovation that is enabling the launch of a new and evolved consumer experience," Darrow said. "I can truly sense a change in the momentum here within the walls of TrueCar."

Looking ahead: TrueCar raised its guidance

TrueCar cut its full-year guidance in August. But Chief Financial Officer Noel Watson raised the company's end-of-year guidance ranges slightly, saying that TrueCar is "getting on the right track" after hitting the upper ends of its third-quarter guidance ranges.

Here's what investors should now expect for 2019:

  • Revenue between $351 million and $353 million (prior guidance: between $345 million and $350 million; 2018 result: $353.6 million).
  • Adjusted EBITDA between $15 million and $17 million (prior guidance: between $10 million and $14 million; 2018 result: $32.9 million).

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TrueCar, Inc. Stock Quote
TrueCar, Inc.
TRUE
$3.09 (-2.52%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.