NASDAQ:TRUE TrueCar Q4 2024 Earnings Report $1.56 +0.05 (+3.31%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$1.56 0.00 (0.00%) As of 05/2/2025 04:50 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast TrueCar EPS ResultsActual EPS-$0.07Consensus EPS -$0.06Beat/MissMissed by -$0.01One Year Ago EPSN/ATrueCar Revenue ResultsActual Revenue$46.21 millionExpected Revenue$47.30 millionBeat/MissMissed by -$1.09 millionYoY Revenue GrowthN/ATrueCar Announcement DetailsQuarterQ4 2024Date2/18/2025TimeAfter Market ClosesConference Call DateWednesday, February 19, 2025Conference Call Time9:00AM ETUpcoming EarningsTrueCar's Q1 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled on Tuesday, May 6, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by TrueCar Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 19, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good day, and welcome to the TrueCar Fourth Quarter twenty twenty four Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Toon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon ReigersmanPresident & CEO at TrueCar00:00:19Thank you, operator. Hello, everyone, and welcome to the TrueCar's fourth quarter twenty twenty four earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.trucar.com. Before we get started, I need to read our exciting safe harbor. Jantoon ReigersmanPresident & CEO at TrueCar00:00:46I want to remind you that we will be making forward looking statements on this call, including statements regarding our revenue growth, expected adjusted EBITDA and free cash flow, as well as aspirational goals regarding 2026 revenue and free cash flow margins. Forward looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward looking statements. We caution you to review the Risk Factors section of our annual report on Form 10 K, our quarterly reports on Form 10 Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward looking statements we make on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward looking statements except as required by law. Jantoon ReigersmanPresident & CEO at TrueCar00:01:55In addition, we will also discuss certain GAAP and non GAAP financial measures. Reconciliation of all non GAAP measures are the most directly comparable to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.trucar.com. The non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, let us begin. With 2024 behind us and a new year in full swing, it's important for us to pause and reflect on the exciting journey we're on. Jantoon ReigersmanPresident & CEO at TrueCar00:02:32A journey we embarked on in the summer of twenty twenty three when we started restructuring the company and committed to building a stronger and more resilient TrueCar. Taking stock of where we are relative to where we were and where we are expected to be allows us to evaluate what is working and not working and adjust course accordingly. To that end, let us start with a year over year comparison of our awesome 2024 financial performance and operational KPIs. Revenue of $175,600,000 grew by $16,900,000 or 10.6% year over year, the strongest annual revenue growth since 2017. Adjusted EBITDA of $1,600,000 grew by $15,300,000 year over year. Jantoon ReigersmanPresident & CEO at TrueCar00:03:23Cash flow from operations of $7,700,000 represents a year over year improvement of $30,100,000 Free cash flow of negative $200,000 represents a year over year improvement of $34,100,000 Total unit sales of $356,000 increased by $37,300 or 11.7% year over year. New vehicle unit sales of $204,000 increased by 27,500 or 15.6 year over year. Franchise dealer count grew by 119 dealers ending the year at 8,351, a 1.4% year over year increase. And with the by the launch of TC Plus, we became the first and only digital marketplace to enable the purchase of and sale of new used and certified pre owned vehicles throughout through an entirely online transaction. The rollout of TrueCar's twelve month dealer service program and we repurchased a total 6,100,000.0 shares of TrueCar stock. Jantoon ReigersmanPresident & CEO at TrueCar00:04:37Moreover, we finished the year with momentum and strength across many of the areas in the business as highlighted by several of the Q4 performance metrics. Revenue of $46,200,000 an increase of 11.9 year over year with positive adjusted EBITDA of $400,000 and cash flow from operations of $5,900,000 and free cash flow of $4,100,000 an increase of $12,200,000 year over year. Our ending rooftop count was three rooftops higher than prior year making the first year of rooftop growth since 2019. Total units of 93,000 increased by 22% year over year and new units of 58,000 increased by 27.8% year over year. In summary, we finished the year by delivering yet another quarter of double digit revenue growth and positive adjusted EBITDA and achieved our goal of generating positive free cash flow in Q4. Jantoon ReigersmanPresident & CEO at TrueCar00:05:39Moreover, the intense focus we placed during the year on efficiently growing new unit sales and capturing greater share of new car shoppers showed tremendous results in Q4 as we delivered 27.8% new unit growth in the quarter year over year, significantly higher than the industry's 9.6% growth. As such in Q4 twenty twenty four, the average franchise dealer on TrueCar sold new vehicle sales generated through our marketplace grow by 27.1% versus the same period last year, reaching the highest level since Q3 twenty twenty one. We also continued making progress on TC Plus during Q4. As we articulated last quarter, our Q4 focus for TC Plus was to one, expand the TC Plus purchasing experience to consumers shopping on select affinity partner sites two, integrate AI powered fraud prevention tools into the buying process to more effectively detect and mitigate the risk of consumer fraud and three, deepen our integration with select dealer management systems also called DMS providers in order to further automate and streamline the buying process for dealers. During Q4, we introduced TC Plus on several of our affinity partner sites and made further upper funnel optimizations that have contributed to a nearly 50% increase in the average number of consumers initiating the TC Plus purchase experience each month and a similar increase in transaction volume. Jantoon ReigersmanPresident & CEO at TrueCar00:07:16With the work to enhance fraud detection recently completed, we expect to enable TC Plus on additional partner sites in Q1, while maintaining a focus and controlled approach to expand consumer access to TC plus that allows us to test and iterate. Furthermore, we expect that expanding access to TC plus will be done in tandem with expanding the TC plus pilot to additional dealers, which we plan to prioritize upon the completion of the work we began in Q4 to deepen our DMS integrations. 2024 was a year of great progress for Trogar with nearly every measure of performance improving from the prior year and several long term growth initiatives being brought to market. We are proud of what the team has accomplished in the year and we're even more hungry to accelerate our progress in 2025. We firmly believe that the quality of our assets and the unique competitive strengths should yield sustainable annual revenue growth of 20% plus in a normalized new vehicle retail environment. Jantoon ReigersmanPresident & CEO at TrueCar00:08:19To unlock that growth opportunity, we must stay committed to the following building blocks we have previously outlined, while simultaneously strengthening our execution against them. One, continue activating new franchise dealers. Two, minimize dealer churn three, grow revenue per dealer and four, continue expanding our OEM business. The expansion and commercialization of TC plus continues to be a top priority for TrueCar in 2025. Following the completion of the work currently underway to deepen our integration with DMS providers and automate nearly every step of the selling process for dealers, we anticipate rapidly expanding the pilots to additional dealers and territories. Jantoon ReigersmanPresident & CEO at TrueCar00:09:03In conjunction with adding dealers and inventory to the program, we intend to make the GC Plus experience more broadly available to consumers shopping on our branded and affinity partner sites. Lastly, and as we discussed last quarter, we made significant investments during the second half of twenty twenty four to enhance our data platform to enable the rapid development and deployment of our new generative AI and machine learning models that enrich the consumer shopping experience and provide dealers with value enhancing features and insight. In partnership with AWS, TrueCar has established a real time ML platform through which we can quickly build and deploy modular, continuous and traceable AI ML models that leverage our first our rich first party data sets. In Q1 of twenty twenty five, we launched the first of these models, which classifies consumer leads based on their propensity to purchase with a high degree of accuracy. We foresee a number of ways this predictive model can be leveraged across a range of use cases, such as empowering such as powering marketing campaign optimizations providing dealers with enhanced consumer insights that further improve lead conversion rates. Jantoon ReigersmanPresident & CEO at TrueCar00:10:17With these enhanced capabilities, we expect to be able to retain more shoppers on the site and effectively retarget them through tailored email engagement that will ultimately allow us to capture greater share of car buyers and drive high quality leads to our dealer network. As such, leveraging these recent investments in our data platform and prioritizing high impact use cases like the ones described above is a top priority of ours in 2025 and we believe can unlock significant value that can further accelerate growth of our core business. Turning now to our outlook for 2025. Our expectations for the business this year are rooted in our belief that we are a much stronger organization today than at this point last year. Not only is the value we're delivering for our customers stronger than it has been in years, but we're even more focused and determined to execute against the building blocks that we believe will enable us to achieve our targets of 20% plus year over year revenue growth. Jantoon ReigersmanPresident & CEO at TrueCar00:11:21However, unlocking this growth potential not only requires strong execution, but a willingness to make key investment that will accelerate the growth of our dealer network, unit sales and OEM partnerships and deepen the penetration of our expanded product offering. The primary investment we're making in Q1 are the additional headcount on our dealer sales and service teams, which we expect will enable us to grow our dealer network by accelerating the pace at which we add new dealers and strengthening our ability to effectively retain them through our best in class service, as well as the expansion of some of our marketing efforts. With strong management and processes in place, we're confident that this investment will yield a strong ROI in 2025 and maximize our ability to deliver accelerated year over year revenue growth in the second half of the year, while also delivering fully adjusted EBITDA profitability and breakeven free cash flow. However, given the ramp time associated with these headcount additions, as Jantoon ReigersmanPresident & CEO at TrueCar00:12:24well as Jantoon ReigersmanPresident & CEO at TrueCar00:12:24the near term impact to OEM revenue associated with the transition incentives of American Express and also new affinity partners, we expect modest Q1 revenue growth in the high single digits and negative adjusted EBITDA of approximately $5,000,000 That said, our outlook for growing OEM incentive revenue in addition to core dealer revenue in Q2 to Q4 remains strong due in part to the recent enablement of Mercedes incentives to validated AAA members nationwide, a program we're optimistic about with early performance tracking in line with what we observed when we launched our former partnership with American Express. We're also actively working to expand this program by bringing additional OEM partners on board. Given the strength of these partnerships and the momentum we're building by investing in headcounts, we expect the reacceleration of revenue growth in Q2. We firmly believe that the opportunity before us warrants the near term investments and will enable us to deliver the strongest growth outcome for the business in 2025. Moreover, we maintain our ambitious targets to return the business to an annual revenue run rate of $300,000,000 and 10% free cash flow margin by the end of twenty twenty six. Jantoon ReigersmanPresident & CEO at TrueCar00:13:45Maintaining this target is rooted in our belief that our growth rate exiting 2025 can have us on the trajectory required to achieve these marks. Now operator, let's open the call up for questions from our analysts. Operator00:13:59Thank you. We will now begin the question and answer session. The first question comes from Rajat Gupta from JPMorgan. Please go ahead. Rajat GuptaAnalyst at JPMorgan Chase00:14:24Great. Thanks for taking the question. I had one question just on the first quarter guidance and the step up in expenses. Could you elaborate a bit more on what specific areas are you targeting? I know you mentioned it seems like it's more sales and marketing related, but is there also some technology related spending that's picking up? Rajat GuptaAnalyst at JPMorgan Chase00:14:47And what's giving you the confidence or maybe what are you seeing in terms of just line of sight that it's going to immediately help accelerate revenue growth in the second half of the year? And I have a quick follow-up. Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:15:03Yes, absolutely. Let me start and over you can add to that. So I think there are a couple of things. So predominantly it's boots on the ground. So we see the need the help the dealers need and our ability to have boots on the ground, knock on the doors, really provide them with the help we can provide them to sell more cars is something that we're very good at and that the sales team has proven to be very efficient at. Jantoon ReigersmanPresident & CEO at TrueCar00:15:35And so it's really a focus on making sure we can drive the sales on that side and that just requires more headcount, number one. Number two, on the marketing side, we've become much more efficient on the marketing side. We continue to become more efficient. We're more focused and so we also feel that it warrants further investments. Historically, we've probably taken a little bit too much oxygen out of the room and would like to start deploying more. Jantoon ReigersmanPresident & CEO at TrueCar00:16:03And we feel that the market is really having some element of a turning point where we can lean in more because we know that on the core dealer side, we have a really good market fit and we just want to keep pushing that. There are some modest technology advancements that we're making obviously on the Gen AI side and the corporations we're doing there as well, but those are smaller compared to obviously the headcount charge and the marketing side. Oliver, I don't know whether there's anything you want to add there. Oliver FoleyChief Financial Officer at TrueCar00:16:33Yes. The only thing I'd add is obviously Q1 is seasonally a quarter with higher specifically payroll related expenses. But when we think about those the increases driven by near term investments, it's almost entirely dealer sales and dealer service headcount. And the reason we feel confident investing in those two areas is because we restructured the sales and service team at the end of twenty twenty three, brought in new management, we created new processes and we really focused on how we can drive sales productivity. And over the course of the year, we really saw strong improvements in the dealer sales team's productivity across the board, really every measure. Oliver FoleyChief Financial Officer at TrueCar00:17:23And Q4 was a really strong quarter in that regard. And so we feel like we've got the team in place or the management in place, the processes are much stronger than they have been in the past. And right now it's just a matter of having the right regional coverage across all of our territories to make sure we're tapping into all the inactive dealers out there today. And then secondly, on the dealer service side, it was in Q2 we launched the twelve month service plan. And our hypothesis there was that if we can be highly consultative with our dealers and every month sort of work with them on driving or maximizing their performance on the platform, our hypothesis was that we would see significant decrease in churn. Oliver FoleyChief Financial Officer at TrueCar00:18:12And in the fourth quarter, we really started to see sort of the results of that. And so it validated that hypothesis in many ways. And so we believe that expanding the size of that team so that all dealers can get that consultation every month. Ultimately that's what's going to drive churn down to our long term target in 2025. So that's why we feel confident investing in both those sides of the business. Rajat GuptaAnalyst at JPMorgan Chase00:18:45Got it. Got it. That's helpful color. I mean, maybe just wanted to follow-up on the DMS integration with TrueCar Plus. Could you give us some more details on that in terms of what are the steps that are involved in that integration? Rajat GuptaAnalyst at JPMorgan Chase00:19:02What phase are you in in terms of integration? Is the DMS plus TrueCar Plus platform live already? Where we are in that process? And when do you expect it to really start to contribute more meaningfully, not just in terms of like additions, but just in terms of monetization as well? Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:19:24Yes. So the answer to that on the DMS side is relatively straightforward. So we're there are obviously several DMS providers in the country. One of them is obviously very large. And so we're integrating with them initially, which is CDK. Jantoon ReigersmanPresident & CEO at TrueCar00:19:42And so the idea is historically dealers have not been able to modify the paperwork as easily. And obviously in this online transaction, we want to be able to have a flow where the dealers really only need to just approve and don't need to do any further work on the documentation because everything has already been pre calculated and is already Fannie perfect. And so in order for that to happen, you need to be obviously on the roadmap. It takes some time, there are iterations, there are always certain bugs that are inside. And so as we continue that work, it's a matter of right having both organizations being aligned. Jantoon ReigersmanPresident & CEO at TrueCar00:20:24In the interim, we're also integrating with other DMS providers where these integrations are probably a little bit easier because these are built for a little bit more futuristic architecture as opposed to some of the longer term DMS providers who've obviously been and have historically been built effectively on a different type of ledger system. So all in all, it's really a matter of keep pushing this in terms of the roadmap of all the various third parties. And we're already fully transacting now. It's just really the difference is you sometimes if there's a if a consumer in the last minute wants to change something, etcetera, it requires the dealer to still go in manually at times to finalize some components of the paperwork and we want to make sure that that's fully automated. So there's really no burden on the dealer and that's obviously a really important requirement as we start scaling because the more and further we scale the fewer we wanted to be a manual task for the dealers. Jantoon ReigersmanPresident & CEO at TrueCar00:21:30So that was really the trade off we were making, which is we know we have a lot of dealers that would love to be on the program. We obviously want them to be on the program, but we want to make it as little manual as possible for them. And so and it's given we're so near to finalizing these different pieces, we really want to do that sequentially. And then in terms of financial contribution of TC Plus, remember that a lot of this will be part of obviously of the subscription services of the dealer. So as soon as we start ramping and having bigger volumes, then over time you can start seeing this. Jantoon ReigersmanPresident & CEO at TrueCar00:22:07I think this will become more meaningful obviously next year. This year it's really about proving units, unit volume, improving experience, becoming a larger size of the overall revenue of the individual dealers that are on and then expanding inventory and dealers on it. And it's really the monetization should then follow next year in terms of real contribution. Rajat GuptaAnalyst at JPMorgan Chase00:22:33Got it. Got it. That's helpful. Thanks for the color and good luck. Operator00:22:38The next question comes from Naved Khan from B. Riley Securities. Please go ahead. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:22:44Hi, great. Good morning. Thanks for taking the question. This is Ryan Powell on for Naved. So first, I wanted to ask about, so over the past two years, franchise dealers have been trending up whereas independent dealers have seen greater churn. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:23:01I was wondering if we should expect this trend to continue into 2025 And then also how the twelve month dealer service program should impact each group? And then also, just want some more color on the total opportunity for adding new affinity partners? Thank you. Jantoon ReigersmanPresident & CEO at TrueCar00:23:24Yes. So, let me I'll start and then Oliver can jump in. So the answer is, yes, obviously, we're we skew more new and we skew more franchise compared to many of our competitors. So that has been a focus of ours and will remain a focus of ours. Obviously, a driving new franchise activation is a really important business driver for us, right? Jantoon ReigersmanPresident & CEO at TrueCar00:23:52It's the first building block that I articulated earlier. And then on the churn side, similarly, franchises obviously is an important driver, but so are independents. But I think what's really important is to understand that not every independent is equal. So we have very large independent customers who are really valuable and important customers of ours, but we also have a very large long tail of much smaller independents. And smaller independents obviously struggle much more in a high interest rate environment and in an environment where used car prices are still very, very high. Jantoon ReigersmanPresident & CEO at TrueCar00:24:36And so it's hard for them to get inventory, it's hard for them to finance inventory, it's hard for them to get the right clients on their lots. And those are often smaller dealerships that don't even run like back end of year like ERP systems, etcetera. So the churn on the independent side, if you look at the broader numbers, it's always a little bit misleading because you sure like right like there's churn happening, but as long as it happens on the long tail, it's not as impactful and it's not as important. What we really are focused on is obviously our big clients across the board. And that same applies to our twelve month service cycle. Jantoon ReigersmanPresident & CEO at TrueCar00:25:17So what happens is we're obviously very focused on the franchises and the larger independents. We have created a separate program for small independents, where it's a little bit of a lighter touchpoint. We obviously there's an important consideration of ROI. It's one of the reasons why we're obviously investing also in frankly in sales and service people because it's really important when you do service to do it in person to spend the time to really work with your clients. And we've seen that has tremendous impact mitigating the churn, but also adding dealers on. Jantoon ReigersmanPresident & CEO at TrueCar00:25:56And so we feel that the opportunity is right for us to do further investments there. So over time, you should see the churn rates come down, even though on the independent side, probably as the current macro persists, they will probably stay somewhat elevated for the time being, but that's all in the long tail at the end of the day. And so what we really focus on is obviously the dealers are bringing the highest revenue per dealer. And then remind me what your last question was on the affinity side? Ryan PowellSenior Equity Research Associate at B.Riley Securities00:26:28Yes. Just how you're sizing the entire kind of opportunity there with adding new partners? Jantoon ReigersmanPresident & CEO at TrueCar00:26:36Yes. I think the affinity side is huge, right. And we're like we've proven a very efficient product market fit on that side of the business. And it's really the triangulation or I should actually say that, yes, the triangulation between four parties, which is the affinity parties, the OEMs, the dealers and us. And so if you do that well, we obviously run very efficient programs and we're clearly one of the few that run that in the marketplace or at the very least run it so effectively. Jantoon ReigersmanPresident & CEO at TrueCar00:27:11We think that there are a lot of affinity partners that we can add further onto the platform. It's a really big priority of ours. But we also want to do that while obviously providing will return an attractive platform for the Affinity partners that we have. But we think that this is a place where we can scale a lot and obviously if you look at our units even it's obviously also a really important source of our broader traffic and those are often highly intense buyers in the flow. So not only from a core perspective are they really important, but also long term from a TC Plus perspective, they're very attractive consumers for ours. Jantoon ReigersmanPresident & CEO at TrueCar00:27:56And then the other thing that also becomes very interesting in the TC Plus world in the future is the opportunity that you can really start adding more value added services, especially to affinities that are membership base, where you can start thinking about ownership of the car and long term opportunities around that too, retargeting opportunities, etcetera. So the Affiniti OEM side is an important driver for us across the board, both in the core side and long term also on the TC Plus side. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:28:28Thanks, Gentoo. Super helpful. Operator00:28:31The next question comes from Ryan Myers from Lake Street Capital Markets. Please go ahead. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:28:36Hey, guys. Thanks for taking my question. Just wanted to get some more color on the EBITDA guide for Q1. So does that include any sort of an impact from the wholesale business that obviously has kind of weighed on the gross margin in the past couple of quarters? Or do you expect to see gross margins rebounded in Q1 and most of that is just going to be coming on the headcount that you guys are adding? Oliver FoleyChief Financial Officer at TrueCar00:29:01Yes. We don't expect wholesale to have any significant impact on Q1. That's not really a growth driver of ours. And so when you think about gross margin, what's dragged it down in the last couple of quarters was in part wholesale, but I'd say just as much it's TrueCar Marketing Solutions. TrueCar Marketing Solutions, the marketing dollars that we deploy for those campaigns get captured in cost of revenue. Oliver FoleyChief Financial Officer at TrueCar00:29:35But when you think about operating contribution, it's actually fairly comparable to the core auto buying program. And so as we think about the trends in gross margin, it's really going to be driven by the makeup of our total revenue. So as OEM revenue starts to accelerate that benefits gross margin. If TCMS or TrueGuard Marketing Solutions were to grow substantially over the next couple of quarters, that could in theory bring down our gross margin, but you would expect operating contribution to be materially the same as it would be if it was the core dealer business that was driving that growth. So looking in Q1, really what's impacting that guide is really just it's the seasonal nature of payroll related costs being higher in Q1 and then the incremental sales and service headcount, which it just it takes time to ramp those hires up. Oliver FoleyChief Financial Officer at TrueCar00:30:45But effective dealer sales people have a pretty quick payback period. So that's why we've our expectation is Oliver FoleyChief Financial Officer at TrueCar00:30:55that you start to see Oliver FoleyChief Financial Officer at TrueCar00:30:56the reacceleration of revenue growth in Q2. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:31:01Okay, got it. And then primarily just the biggest thing that's impacting the first quarter revenue was just the loss of American Express and then obviously with the hires in the remaining quarters and then you called out the Mercedes business on AAA growth should accelerate. But really the biggest driver of the growth rate in the first quarter is just the loss of the American Express platform. Oliver FoleyChief Financial Officer at TrueCar00:31:23That's correct. Yes, it's like any other OEM program. When you introduce it to a new affinity partner, it takes time for that to ramp up. And it just requires marketing it to that membership audience, making them aware of it. And over time, it starts to build steam. Oliver FoleyChief Financial Officer at TrueCar00:31:42And that's what we saw with American Express. It sort of had a pretty gradual build, but then accelerated fairly quickly after a few months. So Q1 is we're sort of bridging that gap with the loss of American Express. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:31:57Okay, got it. Thanks guys. Operator00:32:01The next question comes from Tom White from D. A. Davidson. Please go ahead. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:32:06Great. Good morning. Thanks for taking my questions. Two, if I could. I guess, first one is just sort of a high level one on kind of your discussions with dealers. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:32:16It seems like dealerships are all kind of dealing with this profit normalization kind of evolution after a few kind of years of outsized profitability for dealerships. So it would seem that maybe some are looking to like cut some tech and marketing budgets kind of in the face of that. But then on the other hand, maybe they arguably need platforms like yours more so than ever to kind of get to incremental consumer demand. So just kind of curious like how your discussions with dealers are going kind of and how you kind of navigate those two sort of different forces? And then I have a follow-up. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:33:00Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:33:03Yes. Good Jantoon ReigersmanPresident & CEO at TrueCar00:33:03question. And the answer is you're spot on. And I think that the I think there's an added nuance there that it really that depends also on the size of dealership and the level of sophistication of the dealerships. So, right, plenty of dealers right now think, okay, let's go back on any of the marketing services effectively and then put more to Google. Very quickly they learn that as they do that and deploy more on Google, that Google only shows like their top 2% or 3% of their inventory and the other 97% or 98% does not get any views. Jantoon ReigersmanPresident & CEO at TrueCar00:33:41And so very quickly, then they end up with aging inventory. And then they call back and say, oh, we have a problem. So it's also the reason why we have redesigned the service program to this twelve month program that Oliver was referring to that we started in Q2. And that's really much more of a direct engagement where you like every dealer has its own subset of issues because it depends on whether you're by coastal, depends on whether you're in the middle of the country, depends on whether you are in a larger city or smaller city and so everybody has their own nuances. But also don't forget that there's another really important driver that people underestimate that the service team does a really good job of, which is training the dealers. Jantoon ReigersmanPresident & CEO at TrueCar00:34:29So yes, the dealer has to kind of readjust to the margin compression as it were. But also dealers often are struggling with the sales team that frankly had a really good life over the last couple of years and now have to go back to actual like hard selling. And many of their sales team don't know or don't remember actually how to properly sell the way they had to and used to. And so helping the dealerships with training of their staff, of providing them insights with the tools and providing them insights with all the different tools that we have allows the dealers to be much more efficient. And that even goes as simple as, right, we have dealers where they're not actually selling as much and then we go and look into the system and we have a person inside the dealership and they actually look at how they're pricing and if they were to price the car at 50 or $100 in a different direction that actually immediately the amount of leads expands disproportionately and so suddenly they're selling many more cars just because they're much more active and thoughtful in the way they're actually setting their prices and then engaging with those leads. Jantoon ReigersmanPresident & CEO at TrueCar00:35:47So there's a lot of training associated with this, which is why we're doing more of the servicing in that program. But that's really the tension that there is. And so and it's really on us to make sure that we show the value we can provide to them. So becoming more sophisticated in a way we articulate that and show them the reports of how they can improve is a very important part of our servicing efforts. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:36:15Okay. That's interesting. Thank you. And then just one last one on kind of the OEM incentive revenue line. And I'm just curious whether as you think about like the multi year runway there, is there any reason like sort of structural reason why you wouldn't be able to make kind of meaningful strides kind of getting that revenue line back to kind of where it was pre pandemic levels? Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:36:47Or is there any risk that in the years since you had a more meaningful revenue base there that there's been some kind of change in the way OEMs either approach the channel or they've shifted budgets elsewhere when it comes to kind of digital marketing in this way. I realize it's not exactly a digital marketing kind of type ad budget necessarily, but just curious like when you're thinking about that $300,000,000 annualized like kind of longer term target like how realistic is it that this is going to be a big, big driver of it? Jantoon ReigersmanPresident & CEO at TrueCar00:37:28Yes, I think it is. I think there's plenty of opportunity and I think we should be able to grow beyond to what it used to be. I think we prove to the OEMs our effectiveness. I also agree with you that obviously because they historically have pulled back budgets from frankly every program, they kind of need to normalize to reallocate. And I think we did a good job in the letter trying to explain how to think about the OEM incentives, right. Jantoon ReigersmanPresident & CEO at TrueCar00:38:02We would really, if you oversimplified a little bit, there are effectively two tools that the OEMs have, which is financing or captive incentives, right. So what is the offer they give you from the effectively from the lending side to make the car more attractive? And then the other one is like the cash on the hood type incentive. And if you actually look at the captive financing side, which is the easiest lever for them to pull is the one that has now pretty much normalized to how it was pre pandemic. And so we're expecting that now the cash on the hood component is the next one to come. Jantoon ReigersmanPresident & CEO at TrueCar00:38:40And this will be especially prevailing in a world where, right, like lots will start getting fuller and fuller and dealers need to obviously move their cars because otherwise they have real floor plan financing issues. And so net net is I think this will be a growing factor and will continue to grow. And in a macro where dealers will have a hard time selling cars, especially with affordability, these are programs that are very, very effective and don't impact the residual value of the cars, which obviously for the OEMs is really important. So I'm very bullish in this area. Oliver FoleyChief Financial Officer at TrueCar00:39:21And Bill, the only thing I would add there is like I think the relevance of our OEM incentive offering is going to be stronger than it's ever been for the reason Jantung just mentioned, which is our ability to offer private targeted incentives protects the OEMs residual value. And what we've seen over the past two years is that way more new car loans were originated by the captive arms and way more new car sales were leased. And so the captives effectively have these loan books that are very susceptible to declining residual values. And so I think they're going to be very cautious when it comes to offering broad cash on the hood promotions or discounts because that could directly impact their loan to values. And so going forward, I think their ability to incentivize demand with discounts and cash rebates, but do it in a way that protects residual values Oliver FoleyChief Financial Officer at TrueCar00:40:32is going to Oliver FoleyChief Financial Officer at TrueCar00:40:32be more important over the next couple of years than I think it's ever been. And so I think that should favor the product that we offer them. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:40:42Great. Very interesting. Thank you. Operator00:40:46The next question comes from Marvin Fong from BTIG. Please go ahead. Marvin FongDirector at BTIG00:40:52Great. Thanks for taking my questions. I know we've talked a lot about OEM here. I guess just to be a little more clear here, obviously you highlighted Mercedes and there are other partners potentially could join that AAA program. So should we I know you also mentioned reacceleration in the second quarter, but by sometime this year, should we expect that you have fully recaptured the lost America Express business? Marvin FongDirector at BTIG00:41:29I just want to be clear on that. And then maybe a second question, just love to kind of hear about from the dealer side coming out of NADA and whatnot, just what's the pipeline in terms of dealers that you have for TC Plus? Are you pretty much have a pipeline of dealers ready to go once you do roll out into new regions? Maybe just kind of talk about that aspect of TC Plus? Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:41:59Yes. So I think the first on the first, the answer is yes. And I think really Q1 is the only one where you have a little bit of a shift. And I think in Q2, we should already start seeing that acceleration. So I think that's number one. Jantoon ReigersmanPresident & CEO at TrueCar00:42:19On the TC plus pieces, yes, we have dealers ready. We actually have dealers ready in many different states that would love to that have put their hands up and would love to participate. We obviously want to do this relatively focused. So we'll first do more dealers in California and then we'll start expanding in other states. The two states that are highly likely to follow afterwards are going to be Florida and Texas purely because of the density of dealers that we have in both these states as well as obviously the car buying audience that exists in both states. Jantoon ReigersmanPresident & CEO at TrueCar00:43:00And so net net is focused on California first. Yes, we have a pipeline ready, but we want to make sure that these experiences are really good. It also requires obviously a little bit of a different mindset at the dealerships themselves that require some level of training, etcetera. So we want to do this in a structured manner, but the answer is yes, we have plenty of dealers that are really excited. And then also obviously we continue to work with really important partners of ours that include right the dealer associations, the OEMs etcetera. Jantoon ReigersmanPresident & CEO at TrueCar00:43:29So as we scale this, we also want to make sure we take all our stakeholders along because we feel we have a very unique position in the market with DC plus and the products we deliver. And so yes, so we're very excited that as we make continuous progress on the product, we can start accelerating this and start accelerating this faster and faster and soon make it much more impactful because I know we've been talking about it a lot, but I think this is a huge opportunity for us. But we're now in the final legs of really improving those experiences. Marvin FongDirector at BTIG00:44:06Great. Thanks so much, Jonty. Operator00:44:09The next question comes from Chris Pierce from Needham. Please go ahead. Chris PierceSenior Analyst at Needham & Company00:44:14Hey, good morning. I just wanted to go back to the first question and the consultative approach. I guess I just want to understand, you're sending a dealer a lead and like where is sort of the ball being dropped or why do you need to kind of help them massage that lead into a sale? I just I kind of always want to understand what kind of what's happening and what you're doing to kind of drive that conversion higher? Jantoon ReigersmanPresident & CEO at TrueCar00:44:39I mean, like, I should have my service team on the call because I would love to spend a couple of hours talking through this. Like the short answer is a couple of things. One is, it starts with the way you effectively position your own dealership on the marketplace, right? So, right, like the price curve is a great example, right? Whether you have an excellent price or a good price or an average price of your car, making sure that you have active pricing on the platform, especially as prices change very quickly and swiftly in the marketplace is one example of something that's very simple. Jantoon ReigersmanPresident & CEO at TrueCar00:45:17Like there are some dealers that don't really log into the systems very often as a result in a pricing changing world. Their prices might become uncompetitive unknowingly to the dealer and as a result they might have pretty dramatic drops in their lead generation because frankly they're pricing themselves out of the market. Not because they do that intentionally, but because they hadn't looked into the system recently as an example. So the active engagement with the tools is really important. And then also the other piece is then the way you nurture the lead. Jantoon ReigersmanPresident & CEO at TrueCar00:45:54And you would be surprised to know that like if you're the Head of Sales or you're the GM of a dealership, you obviously have a lot of salespeople, but you also have a lot of salespeople turnover. And so training these people and making sure that these people are really good at how they nurture these leads and what they do with them, etcetera, is something that not always happens the right way at many of the dealers. And so our trainers coming in to help their sales folks effectively get to know the best in class of how to nurture lead, how to bring in, how to prioritize leads, like what works and what doesn't work is really important. And then added to that is, for example, those new tools that we were describing where we're even like now with the AI tools determining right the propensity of a lead to close or not to close. And so now you can also start prioritizing that within the dealership and then who does what and how does that work. Jantoon ReigersmanPresident & CEO at TrueCar00:46:51So there's a lot that comes to actually selling a car and the more we help the dealers to stick here we are and you would be surprised that it's relatively low hanging fruit for us to help them because very often it's very simple things where if you do those things well, they have dramatic impact on the close rates of these leads that we provide. Chris PierceSenior Analyst at Needham & Company00:47:20Okay. Thanks for the detail there. Perfect. And then on TCMS, was revenue down sequentially or is it too early to kind of gauge what's really going on there? I just kind of want to get a better understanding of that product as you roll it out. Jantoon ReigersmanPresident & CEO at TrueCar00:47:36Yes. You want to add, Oliver, Jantoon ReigersmanPresident & CEO at TrueCar00:47:37do you want me Jantoon ReigersmanPresident & CEO at TrueCar00:47:38to take that or you want to take it? Go ahead. Oliver FoleyChief Financial Officer at TrueCar00:47:40Let me take a stab at it. Oliver FoleyChief Financial Officer at TrueCar00:47:41So quarter over quarter, it was down slightly and largely because we really focused Q4 on streamlining the offering, right. So it's still sort of a suite of digital marketing products, but we really wanted to streamline the offering and simplify it in part because it's easier for dealers to understand and it's easier for the sales team to sort of communicate the benefits of TCMS. So we really brought in some leadership on the TrueCar Marketing Solutions side and started to sort of build out the right team on that side. So I think Q4 was really about how do we strengthen our go to market muscle with TCMS and let's create a stronger foundation going into Q1. And so yes, it was a sequential decline, but I think it was sort of strengthening the go to market muscle so that in 2025 it'll be a big growth driver of ours. Chris PierceSenior Analyst at Needham & Company00:48:46Okay. And is there a way to sort of quantify some sort of upper bound? Like what are we talking about as far as growth driver, whether in terms of absolute revenue or revenue growth? Like what's the right way to think about the trajectory of this over the year, next couple of years, etcetera? Oliver FoleyChief Financial Officer at TrueCar00:48:59On that end, I'd say it's a little early to tell. We're incredibly optimistic about it just because the amount that franchise dealers spend on digital marketing off of the TrueCar platform is astronomical, right? And so there was a huge addressable market there for us that allows us to capture parts of their budget that aren't going to third party listing sites, but are going to Google or Meta. And so our belief is that it could be a very sizable component of our overall revenue, but it's a little early for us to predict what percent that might be. So hopefully we'll have much better sense for that over the next couple of quarters. Chris PierceSenior Analyst at Needham & Company00:49:49Okay. Great, sir. Appreciate the time. Thanks. Operator00:49:54This concludes our question and answer session. I would like to turn the conference back over to Jantoon for closing remarks. Jantoon ReigersmanPresident & CEO at TrueCar00:50:03Great. I would like to thank everybody for taking the time to participate in our call today. I also want to thank the team for all their continued efforts. We're more focused and more disciplined than we've ever been. And so with gratitude, thank you and look forward to the next call. Operator00:50:23The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJantoon ReigersmanPresident & CEOOliver FoleyChief Financial OfficerAnalystsRajat GuptaAnalyst at JPMorgan ChaseRyan PowellSenior Equity Research Associate at B.Riley SecuritiesRyan MeyersSenior Research Analyst at Lake Street Capital Markets, LLCTom whiteManaging Director, Senior Equity Analyst at D.A. Davidson CompaniesMarvin FongDirector at BTIGChris PierceSenior Analyst at Needham & CompanyPowered by Conference Call Audio Live Call not available Earnings Conference CallTrueCar Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) TrueCar Earnings HeadlinesTrueCar (TRUE) to Release Earnings on MondayMay 3 at 2:22 AM | americanbankingnews.comTrueCar, Inc. Q1 2025 Earnings PreviewMay 2 at 7:08 PM | seekingalpha.comThe Man I Turn to In Times Like ThisA storm is brewing in the markets: new tariffs, recession warnings, and panic in the headlines. That’s when publisher Brett Aitken turns to Whitney Tilson—a man CNBC once dubbed “The Prophet.” Tilson just released a new prediction that runs counter to what mainstream finance is telling you.May 3, 2025 | Stansberry Research (Ad)TrueCar (TRUE) Just Flashed a Possible Pivot for Aggressive SpeculatorsApril 29, 2025 | msn.comTrueCar to Announce First Quarter 2025 Financial Results in Stockholder Letter on May 5April 22, 2025 | prnewswire.comThe Most Discounted New Cars And SUVs You Can Buy In April 2025, According To Consumer ReportsApril 17, 2025 | msn.comSee More TrueCar Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TrueCar? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TrueCar and other key companies, straight to your email. Email Address About TrueCarTrueCar (NASDAQ:TRUE) operates as an internet-based information, technology, and communication services company in the United States. It operates its platform on the TrueCar website and mobile applications. Its platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. The company also offers forecast and consulting services regarding determination of the residual value of an automobile at given future points in time, which are used to underwrite automotive loans and leases, and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. In addition, it provides TrueCar Trade, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership; and DealerScience that provides dealers with advanced digital retailing software tools. The company was formerly known as Zag.com Inc. 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PresentationSkip to Participants Operator00:00:00Good day, and welcome to the TrueCar Fourth Quarter twenty twenty four Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Toon Reigersman, President and Chief Executive Officer of TrueCar. Please go ahead. Jantoon ReigersmanPresident & CEO at TrueCar00:00:19Thank you, operator. Hello, everyone, and welcome to the TrueCar's fourth quarter twenty twenty four earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our Investor Relations website at ir.trucar.com. Before we get started, I need to read our exciting safe harbor. Jantoon ReigersmanPresident & CEO at TrueCar00:00:46I want to remind you that we will be making forward looking statements on this call, including statements regarding our revenue growth, expected adjusted EBITDA and free cash flow, as well as aspirational goals regarding 2026 revenue and free cash flow margins. Forward looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our forward looking statements. We caution you to review the Risk Factors section of our annual report on Form 10 K, our quarterly reports on Form 10 Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward looking statements we make on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward looking statements except as required by law. Jantoon ReigersmanPresident & CEO at TrueCar00:01:55In addition, we will also discuss certain GAAP and non GAAP financial measures. Reconciliation of all non GAAP measures are the most directly comparable to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.trucar.com. The non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, let us begin. With 2024 behind us and a new year in full swing, it's important for us to pause and reflect on the exciting journey we're on. Jantoon ReigersmanPresident & CEO at TrueCar00:02:32A journey we embarked on in the summer of twenty twenty three when we started restructuring the company and committed to building a stronger and more resilient TrueCar. Taking stock of where we are relative to where we were and where we are expected to be allows us to evaluate what is working and not working and adjust course accordingly. To that end, let us start with a year over year comparison of our awesome 2024 financial performance and operational KPIs. Revenue of $175,600,000 grew by $16,900,000 or 10.6% year over year, the strongest annual revenue growth since 2017. Adjusted EBITDA of $1,600,000 grew by $15,300,000 year over year. Jantoon ReigersmanPresident & CEO at TrueCar00:03:23Cash flow from operations of $7,700,000 represents a year over year improvement of $30,100,000 Free cash flow of negative $200,000 represents a year over year improvement of $34,100,000 Total unit sales of $356,000 increased by $37,300 or 11.7% year over year. New vehicle unit sales of $204,000 increased by 27,500 or 15.6 year over year. Franchise dealer count grew by 119 dealers ending the year at 8,351, a 1.4% year over year increase. And with the by the launch of TC Plus, we became the first and only digital marketplace to enable the purchase of and sale of new used and certified pre owned vehicles throughout through an entirely online transaction. The rollout of TrueCar's twelve month dealer service program and we repurchased a total 6,100,000.0 shares of TrueCar stock. Jantoon ReigersmanPresident & CEO at TrueCar00:04:37Moreover, we finished the year with momentum and strength across many of the areas in the business as highlighted by several of the Q4 performance metrics. Revenue of $46,200,000 an increase of 11.9 year over year with positive adjusted EBITDA of $400,000 and cash flow from operations of $5,900,000 and free cash flow of $4,100,000 an increase of $12,200,000 year over year. Our ending rooftop count was three rooftops higher than prior year making the first year of rooftop growth since 2019. Total units of 93,000 increased by 22% year over year and new units of 58,000 increased by 27.8% year over year. In summary, we finished the year by delivering yet another quarter of double digit revenue growth and positive adjusted EBITDA and achieved our goal of generating positive free cash flow in Q4. Jantoon ReigersmanPresident & CEO at TrueCar00:05:39Moreover, the intense focus we placed during the year on efficiently growing new unit sales and capturing greater share of new car shoppers showed tremendous results in Q4 as we delivered 27.8% new unit growth in the quarter year over year, significantly higher than the industry's 9.6% growth. As such in Q4 twenty twenty four, the average franchise dealer on TrueCar sold new vehicle sales generated through our marketplace grow by 27.1% versus the same period last year, reaching the highest level since Q3 twenty twenty one. We also continued making progress on TC Plus during Q4. As we articulated last quarter, our Q4 focus for TC Plus was to one, expand the TC Plus purchasing experience to consumers shopping on select affinity partner sites two, integrate AI powered fraud prevention tools into the buying process to more effectively detect and mitigate the risk of consumer fraud and three, deepen our integration with select dealer management systems also called DMS providers in order to further automate and streamline the buying process for dealers. During Q4, we introduced TC Plus on several of our affinity partner sites and made further upper funnel optimizations that have contributed to a nearly 50% increase in the average number of consumers initiating the TC Plus purchase experience each month and a similar increase in transaction volume. Jantoon ReigersmanPresident & CEO at TrueCar00:07:16With the work to enhance fraud detection recently completed, we expect to enable TC Plus on additional partner sites in Q1, while maintaining a focus and controlled approach to expand consumer access to TC plus that allows us to test and iterate. Furthermore, we expect that expanding access to TC plus will be done in tandem with expanding the TC plus pilot to additional dealers, which we plan to prioritize upon the completion of the work we began in Q4 to deepen our DMS integrations. 2024 was a year of great progress for Trogar with nearly every measure of performance improving from the prior year and several long term growth initiatives being brought to market. We are proud of what the team has accomplished in the year and we're even more hungry to accelerate our progress in 2025. We firmly believe that the quality of our assets and the unique competitive strengths should yield sustainable annual revenue growth of 20% plus in a normalized new vehicle retail environment. Jantoon ReigersmanPresident & CEO at TrueCar00:08:19To unlock that growth opportunity, we must stay committed to the following building blocks we have previously outlined, while simultaneously strengthening our execution against them. One, continue activating new franchise dealers. Two, minimize dealer churn three, grow revenue per dealer and four, continue expanding our OEM business. The expansion and commercialization of TC plus continues to be a top priority for TrueCar in 2025. Following the completion of the work currently underway to deepen our integration with DMS providers and automate nearly every step of the selling process for dealers, we anticipate rapidly expanding the pilots to additional dealers and territories. Jantoon ReigersmanPresident & CEO at TrueCar00:09:03In conjunction with adding dealers and inventory to the program, we intend to make the GC Plus experience more broadly available to consumers shopping on our branded and affinity partner sites. Lastly, and as we discussed last quarter, we made significant investments during the second half of twenty twenty four to enhance our data platform to enable the rapid development and deployment of our new generative AI and machine learning models that enrich the consumer shopping experience and provide dealers with value enhancing features and insight. In partnership with AWS, TrueCar has established a real time ML platform through which we can quickly build and deploy modular, continuous and traceable AI ML models that leverage our first our rich first party data sets. In Q1 of twenty twenty five, we launched the first of these models, which classifies consumer leads based on their propensity to purchase with a high degree of accuracy. We foresee a number of ways this predictive model can be leveraged across a range of use cases, such as empowering such as powering marketing campaign optimizations providing dealers with enhanced consumer insights that further improve lead conversion rates. Jantoon ReigersmanPresident & CEO at TrueCar00:10:17With these enhanced capabilities, we expect to be able to retain more shoppers on the site and effectively retarget them through tailored email engagement that will ultimately allow us to capture greater share of car buyers and drive high quality leads to our dealer network. As such, leveraging these recent investments in our data platform and prioritizing high impact use cases like the ones described above is a top priority of ours in 2025 and we believe can unlock significant value that can further accelerate growth of our core business. Turning now to our outlook for 2025. Our expectations for the business this year are rooted in our belief that we are a much stronger organization today than at this point last year. Not only is the value we're delivering for our customers stronger than it has been in years, but we're even more focused and determined to execute against the building blocks that we believe will enable us to achieve our targets of 20% plus year over year revenue growth. Jantoon ReigersmanPresident & CEO at TrueCar00:11:21However, unlocking this growth potential not only requires strong execution, but a willingness to make key investment that will accelerate the growth of our dealer network, unit sales and OEM partnerships and deepen the penetration of our expanded product offering. The primary investment we're making in Q1 are the additional headcount on our dealer sales and service teams, which we expect will enable us to grow our dealer network by accelerating the pace at which we add new dealers and strengthening our ability to effectively retain them through our best in class service, as well as the expansion of some of our marketing efforts. With strong management and processes in place, we're confident that this investment will yield a strong ROI in 2025 and maximize our ability to deliver accelerated year over year revenue growth in the second half of the year, while also delivering fully adjusted EBITDA profitability and breakeven free cash flow. However, given the ramp time associated with these headcount additions, as Jantoon ReigersmanPresident & CEO at TrueCar00:12:24well as Jantoon ReigersmanPresident & CEO at TrueCar00:12:24the near term impact to OEM revenue associated with the transition incentives of American Express and also new affinity partners, we expect modest Q1 revenue growth in the high single digits and negative adjusted EBITDA of approximately $5,000,000 That said, our outlook for growing OEM incentive revenue in addition to core dealer revenue in Q2 to Q4 remains strong due in part to the recent enablement of Mercedes incentives to validated AAA members nationwide, a program we're optimistic about with early performance tracking in line with what we observed when we launched our former partnership with American Express. We're also actively working to expand this program by bringing additional OEM partners on board. Given the strength of these partnerships and the momentum we're building by investing in headcounts, we expect the reacceleration of revenue growth in Q2. We firmly believe that the opportunity before us warrants the near term investments and will enable us to deliver the strongest growth outcome for the business in 2025. Moreover, we maintain our ambitious targets to return the business to an annual revenue run rate of $300,000,000 and 10% free cash flow margin by the end of twenty twenty six. Jantoon ReigersmanPresident & CEO at TrueCar00:13:45Maintaining this target is rooted in our belief that our growth rate exiting 2025 can have us on the trajectory required to achieve these marks. Now operator, let's open the call up for questions from our analysts. Operator00:13:59Thank you. We will now begin the question and answer session. The first question comes from Rajat Gupta from JPMorgan. Please go ahead. Rajat GuptaAnalyst at JPMorgan Chase00:14:24Great. Thanks for taking the question. I had one question just on the first quarter guidance and the step up in expenses. Could you elaborate a bit more on what specific areas are you targeting? I know you mentioned it seems like it's more sales and marketing related, but is there also some technology related spending that's picking up? Rajat GuptaAnalyst at JPMorgan Chase00:14:47And what's giving you the confidence or maybe what are you seeing in terms of just line of sight that it's going to immediately help accelerate revenue growth in the second half of the year? And I have a quick follow-up. Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:15:03Yes, absolutely. Let me start and over you can add to that. So I think there are a couple of things. So predominantly it's boots on the ground. So we see the need the help the dealers need and our ability to have boots on the ground, knock on the doors, really provide them with the help we can provide them to sell more cars is something that we're very good at and that the sales team has proven to be very efficient at. Jantoon ReigersmanPresident & CEO at TrueCar00:15:35And so it's really a focus on making sure we can drive the sales on that side and that just requires more headcount, number one. Number two, on the marketing side, we've become much more efficient on the marketing side. We continue to become more efficient. We're more focused and so we also feel that it warrants further investments. Historically, we've probably taken a little bit too much oxygen out of the room and would like to start deploying more. Jantoon ReigersmanPresident & CEO at TrueCar00:16:03And we feel that the market is really having some element of a turning point where we can lean in more because we know that on the core dealer side, we have a really good market fit and we just want to keep pushing that. There are some modest technology advancements that we're making obviously on the Gen AI side and the corporations we're doing there as well, but those are smaller compared to obviously the headcount charge and the marketing side. Oliver, I don't know whether there's anything you want to add there. Oliver FoleyChief Financial Officer at TrueCar00:16:33Yes. The only thing I'd add is obviously Q1 is seasonally a quarter with higher specifically payroll related expenses. But when we think about those the increases driven by near term investments, it's almost entirely dealer sales and dealer service headcount. And the reason we feel confident investing in those two areas is because we restructured the sales and service team at the end of twenty twenty three, brought in new management, we created new processes and we really focused on how we can drive sales productivity. And over the course of the year, we really saw strong improvements in the dealer sales team's productivity across the board, really every measure. Oliver FoleyChief Financial Officer at TrueCar00:17:23And Q4 was a really strong quarter in that regard. And so we feel like we've got the team in place or the management in place, the processes are much stronger than they have been in the past. And right now it's just a matter of having the right regional coverage across all of our territories to make sure we're tapping into all the inactive dealers out there today. And then secondly, on the dealer service side, it was in Q2 we launched the twelve month service plan. And our hypothesis there was that if we can be highly consultative with our dealers and every month sort of work with them on driving or maximizing their performance on the platform, our hypothesis was that we would see significant decrease in churn. Oliver FoleyChief Financial Officer at TrueCar00:18:12And in the fourth quarter, we really started to see sort of the results of that. And so it validated that hypothesis in many ways. And so we believe that expanding the size of that team so that all dealers can get that consultation every month. Ultimately that's what's going to drive churn down to our long term target in 2025. So that's why we feel confident investing in both those sides of the business. Rajat GuptaAnalyst at JPMorgan Chase00:18:45Got it. Got it. That's helpful color. I mean, maybe just wanted to follow-up on the DMS integration with TrueCar Plus. Could you give us some more details on that in terms of what are the steps that are involved in that integration? Rajat GuptaAnalyst at JPMorgan Chase00:19:02What phase are you in in terms of integration? Is the DMS plus TrueCar Plus platform live already? Where we are in that process? And when do you expect it to really start to contribute more meaningfully, not just in terms of like additions, but just in terms of monetization as well? Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:19:24Yes. So the answer to that on the DMS side is relatively straightforward. So we're there are obviously several DMS providers in the country. One of them is obviously very large. And so we're integrating with them initially, which is CDK. Jantoon ReigersmanPresident & CEO at TrueCar00:19:42And so the idea is historically dealers have not been able to modify the paperwork as easily. And obviously in this online transaction, we want to be able to have a flow where the dealers really only need to just approve and don't need to do any further work on the documentation because everything has already been pre calculated and is already Fannie perfect. And so in order for that to happen, you need to be obviously on the roadmap. It takes some time, there are iterations, there are always certain bugs that are inside. And so as we continue that work, it's a matter of right having both organizations being aligned. Jantoon ReigersmanPresident & CEO at TrueCar00:20:24In the interim, we're also integrating with other DMS providers where these integrations are probably a little bit easier because these are built for a little bit more futuristic architecture as opposed to some of the longer term DMS providers who've obviously been and have historically been built effectively on a different type of ledger system. So all in all, it's really a matter of keep pushing this in terms of the roadmap of all the various third parties. And we're already fully transacting now. It's just really the difference is you sometimes if there's a if a consumer in the last minute wants to change something, etcetera, it requires the dealer to still go in manually at times to finalize some components of the paperwork and we want to make sure that that's fully automated. So there's really no burden on the dealer and that's obviously a really important requirement as we start scaling because the more and further we scale the fewer we wanted to be a manual task for the dealers. Jantoon ReigersmanPresident & CEO at TrueCar00:21:30So that was really the trade off we were making, which is we know we have a lot of dealers that would love to be on the program. We obviously want them to be on the program, but we want to make it as little manual as possible for them. And so and it's given we're so near to finalizing these different pieces, we really want to do that sequentially. And then in terms of financial contribution of TC Plus, remember that a lot of this will be part of obviously of the subscription services of the dealer. So as soon as we start ramping and having bigger volumes, then over time you can start seeing this. Jantoon ReigersmanPresident & CEO at TrueCar00:22:07I think this will become more meaningful obviously next year. This year it's really about proving units, unit volume, improving experience, becoming a larger size of the overall revenue of the individual dealers that are on and then expanding inventory and dealers on it. And it's really the monetization should then follow next year in terms of real contribution. Rajat GuptaAnalyst at JPMorgan Chase00:22:33Got it. Got it. That's helpful. Thanks for the color and good luck. Operator00:22:38The next question comes from Naved Khan from B. Riley Securities. Please go ahead. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:22:44Hi, great. Good morning. Thanks for taking the question. This is Ryan Powell on for Naved. So first, I wanted to ask about, so over the past two years, franchise dealers have been trending up whereas independent dealers have seen greater churn. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:23:01I was wondering if we should expect this trend to continue into 2025 And then also how the twelve month dealer service program should impact each group? And then also, just want some more color on the total opportunity for adding new affinity partners? Thank you. Jantoon ReigersmanPresident & CEO at TrueCar00:23:24Yes. So, let me I'll start and then Oliver can jump in. So the answer is, yes, obviously, we're we skew more new and we skew more franchise compared to many of our competitors. So that has been a focus of ours and will remain a focus of ours. Obviously, a driving new franchise activation is a really important business driver for us, right? Jantoon ReigersmanPresident & CEO at TrueCar00:23:52It's the first building block that I articulated earlier. And then on the churn side, similarly, franchises obviously is an important driver, but so are independents. But I think what's really important is to understand that not every independent is equal. So we have very large independent customers who are really valuable and important customers of ours, but we also have a very large long tail of much smaller independents. And smaller independents obviously struggle much more in a high interest rate environment and in an environment where used car prices are still very, very high. Jantoon ReigersmanPresident & CEO at TrueCar00:24:36And so it's hard for them to get inventory, it's hard for them to finance inventory, it's hard for them to get the right clients on their lots. And those are often smaller dealerships that don't even run like back end of year like ERP systems, etcetera. So the churn on the independent side, if you look at the broader numbers, it's always a little bit misleading because you sure like right like there's churn happening, but as long as it happens on the long tail, it's not as impactful and it's not as important. What we really are focused on is obviously our big clients across the board. And that same applies to our twelve month service cycle. Jantoon ReigersmanPresident & CEO at TrueCar00:25:17So what happens is we're obviously very focused on the franchises and the larger independents. We have created a separate program for small independents, where it's a little bit of a lighter touchpoint. We obviously there's an important consideration of ROI. It's one of the reasons why we're obviously investing also in frankly in sales and service people because it's really important when you do service to do it in person to spend the time to really work with your clients. And we've seen that has tremendous impact mitigating the churn, but also adding dealers on. Jantoon ReigersmanPresident & CEO at TrueCar00:25:56And so we feel that the opportunity is right for us to do further investments there. So over time, you should see the churn rates come down, even though on the independent side, probably as the current macro persists, they will probably stay somewhat elevated for the time being, but that's all in the long tail at the end of the day. And so what we really focus on is obviously the dealers are bringing the highest revenue per dealer. And then remind me what your last question was on the affinity side? Ryan PowellSenior Equity Research Associate at B.Riley Securities00:26:28Yes. Just how you're sizing the entire kind of opportunity there with adding new partners? Jantoon ReigersmanPresident & CEO at TrueCar00:26:36Yes. I think the affinity side is huge, right. And we're like we've proven a very efficient product market fit on that side of the business. And it's really the triangulation or I should actually say that, yes, the triangulation between four parties, which is the affinity parties, the OEMs, the dealers and us. And so if you do that well, we obviously run very efficient programs and we're clearly one of the few that run that in the marketplace or at the very least run it so effectively. Jantoon ReigersmanPresident & CEO at TrueCar00:27:11We think that there are a lot of affinity partners that we can add further onto the platform. It's a really big priority of ours. But we also want to do that while obviously providing will return an attractive platform for the Affinity partners that we have. But we think that this is a place where we can scale a lot and obviously if you look at our units even it's obviously also a really important source of our broader traffic and those are often highly intense buyers in the flow. So not only from a core perspective are they really important, but also long term from a TC Plus perspective, they're very attractive consumers for ours. Jantoon ReigersmanPresident & CEO at TrueCar00:27:56And then the other thing that also becomes very interesting in the TC Plus world in the future is the opportunity that you can really start adding more value added services, especially to affinities that are membership base, where you can start thinking about ownership of the car and long term opportunities around that too, retargeting opportunities, etcetera. So the Affiniti OEM side is an important driver for us across the board, both in the core side and long term also on the TC Plus side. Ryan PowellSenior Equity Research Associate at B.Riley Securities00:28:28Thanks, Gentoo. Super helpful. Operator00:28:31The next question comes from Ryan Myers from Lake Street Capital Markets. Please go ahead. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:28:36Hey, guys. Thanks for taking my question. Just wanted to get some more color on the EBITDA guide for Q1. So does that include any sort of an impact from the wholesale business that obviously has kind of weighed on the gross margin in the past couple of quarters? Or do you expect to see gross margins rebounded in Q1 and most of that is just going to be coming on the headcount that you guys are adding? Oliver FoleyChief Financial Officer at TrueCar00:29:01Yes. We don't expect wholesale to have any significant impact on Q1. That's not really a growth driver of ours. And so when you think about gross margin, what's dragged it down in the last couple of quarters was in part wholesale, but I'd say just as much it's TrueCar Marketing Solutions. TrueCar Marketing Solutions, the marketing dollars that we deploy for those campaigns get captured in cost of revenue. Oliver FoleyChief Financial Officer at TrueCar00:29:35But when you think about operating contribution, it's actually fairly comparable to the core auto buying program. And so as we think about the trends in gross margin, it's really going to be driven by the makeup of our total revenue. So as OEM revenue starts to accelerate that benefits gross margin. If TCMS or TrueGuard Marketing Solutions were to grow substantially over the next couple of quarters, that could in theory bring down our gross margin, but you would expect operating contribution to be materially the same as it would be if it was the core dealer business that was driving that growth. So looking in Q1, really what's impacting that guide is really just it's the seasonal nature of payroll related costs being higher in Q1 and then the incremental sales and service headcount, which it just it takes time to ramp those hires up. Oliver FoleyChief Financial Officer at TrueCar00:30:45But effective dealer sales people have a pretty quick payback period. So that's why we've our expectation is Oliver FoleyChief Financial Officer at TrueCar00:30:55that you start to see Oliver FoleyChief Financial Officer at TrueCar00:30:56the reacceleration of revenue growth in Q2. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:31:01Okay, got it. And then primarily just the biggest thing that's impacting the first quarter revenue was just the loss of American Express and then obviously with the hires in the remaining quarters and then you called out the Mercedes business on AAA growth should accelerate. But really the biggest driver of the growth rate in the first quarter is just the loss of the American Express platform. Oliver FoleyChief Financial Officer at TrueCar00:31:23That's correct. Yes, it's like any other OEM program. When you introduce it to a new affinity partner, it takes time for that to ramp up. And it just requires marketing it to that membership audience, making them aware of it. And over time, it starts to build steam. Oliver FoleyChief Financial Officer at TrueCar00:31:42And that's what we saw with American Express. It sort of had a pretty gradual build, but then accelerated fairly quickly after a few months. So Q1 is we're sort of bridging that gap with the loss of American Express. Ryan MeyersSenior Research Analyst at Lake Street Capital Markets, LLC00:31:57Okay, got it. Thanks guys. Operator00:32:01The next question comes from Tom White from D. A. Davidson. Please go ahead. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:32:06Great. Good morning. Thanks for taking my questions. Two, if I could. I guess, first one is just sort of a high level one on kind of your discussions with dealers. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:32:16It seems like dealerships are all kind of dealing with this profit normalization kind of evolution after a few kind of years of outsized profitability for dealerships. So it would seem that maybe some are looking to like cut some tech and marketing budgets kind of in the face of that. But then on the other hand, maybe they arguably need platforms like yours more so than ever to kind of get to incremental consumer demand. So just kind of curious like how your discussions with dealers are going kind of and how you kind of navigate those two sort of different forces? And then I have a follow-up. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:33:00Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:33:03Yes. Good Jantoon ReigersmanPresident & CEO at TrueCar00:33:03question. And the answer is you're spot on. And I think that the I think there's an added nuance there that it really that depends also on the size of dealership and the level of sophistication of the dealerships. So, right, plenty of dealers right now think, okay, let's go back on any of the marketing services effectively and then put more to Google. Very quickly they learn that as they do that and deploy more on Google, that Google only shows like their top 2% or 3% of their inventory and the other 97% or 98% does not get any views. Jantoon ReigersmanPresident & CEO at TrueCar00:33:41And so very quickly, then they end up with aging inventory. And then they call back and say, oh, we have a problem. So it's also the reason why we have redesigned the service program to this twelve month program that Oliver was referring to that we started in Q2. And that's really much more of a direct engagement where you like every dealer has its own subset of issues because it depends on whether you're by coastal, depends on whether you're in the middle of the country, depends on whether you are in a larger city or smaller city and so everybody has their own nuances. But also don't forget that there's another really important driver that people underestimate that the service team does a really good job of, which is training the dealers. Jantoon ReigersmanPresident & CEO at TrueCar00:34:29So yes, the dealer has to kind of readjust to the margin compression as it were. But also dealers often are struggling with the sales team that frankly had a really good life over the last couple of years and now have to go back to actual like hard selling. And many of their sales team don't know or don't remember actually how to properly sell the way they had to and used to. And so helping the dealerships with training of their staff, of providing them insights with the tools and providing them insights with all the different tools that we have allows the dealers to be much more efficient. And that even goes as simple as, right, we have dealers where they're not actually selling as much and then we go and look into the system and we have a person inside the dealership and they actually look at how they're pricing and if they were to price the car at 50 or $100 in a different direction that actually immediately the amount of leads expands disproportionately and so suddenly they're selling many more cars just because they're much more active and thoughtful in the way they're actually setting their prices and then engaging with those leads. Jantoon ReigersmanPresident & CEO at TrueCar00:35:47So there's a lot of training associated with this, which is why we're doing more of the servicing in that program. But that's really the tension that there is. And so and it's really on us to make sure that we show the value we can provide to them. So becoming more sophisticated in a way we articulate that and show them the reports of how they can improve is a very important part of our servicing efforts. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:36:15Okay. That's interesting. Thank you. And then just one last one on kind of the OEM incentive revenue line. And I'm just curious whether as you think about like the multi year runway there, is there any reason like sort of structural reason why you wouldn't be able to make kind of meaningful strides kind of getting that revenue line back to kind of where it was pre pandemic levels? Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:36:47Or is there any risk that in the years since you had a more meaningful revenue base there that there's been some kind of change in the way OEMs either approach the channel or they've shifted budgets elsewhere when it comes to kind of digital marketing in this way. I realize it's not exactly a digital marketing kind of type ad budget necessarily, but just curious like when you're thinking about that $300,000,000 annualized like kind of longer term target like how realistic is it that this is going to be a big, big driver of it? Jantoon ReigersmanPresident & CEO at TrueCar00:37:28Yes, I think it is. I think there's plenty of opportunity and I think we should be able to grow beyond to what it used to be. I think we prove to the OEMs our effectiveness. I also agree with you that obviously because they historically have pulled back budgets from frankly every program, they kind of need to normalize to reallocate. And I think we did a good job in the letter trying to explain how to think about the OEM incentives, right. Jantoon ReigersmanPresident & CEO at TrueCar00:38:02We would really, if you oversimplified a little bit, there are effectively two tools that the OEMs have, which is financing or captive incentives, right. So what is the offer they give you from the effectively from the lending side to make the car more attractive? And then the other one is like the cash on the hood type incentive. And if you actually look at the captive financing side, which is the easiest lever for them to pull is the one that has now pretty much normalized to how it was pre pandemic. And so we're expecting that now the cash on the hood component is the next one to come. Jantoon ReigersmanPresident & CEO at TrueCar00:38:40And this will be especially prevailing in a world where, right, like lots will start getting fuller and fuller and dealers need to obviously move their cars because otherwise they have real floor plan financing issues. And so net net is I think this will be a growing factor and will continue to grow. And in a macro where dealers will have a hard time selling cars, especially with affordability, these are programs that are very, very effective and don't impact the residual value of the cars, which obviously for the OEMs is really important. So I'm very bullish in this area. Oliver FoleyChief Financial Officer at TrueCar00:39:21And Bill, the only thing I would add there is like I think the relevance of our OEM incentive offering is going to be stronger than it's ever been for the reason Jantung just mentioned, which is our ability to offer private targeted incentives protects the OEMs residual value. And what we've seen over the past two years is that way more new car loans were originated by the captive arms and way more new car sales were leased. And so the captives effectively have these loan books that are very susceptible to declining residual values. And so I think they're going to be very cautious when it comes to offering broad cash on the hood promotions or discounts because that could directly impact their loan to values. And so going forward, I think their ability to incentivize demand with discounts and cash rebates, but do it in a way that protects residual values Oliver FoleyChief Financial Officer at TrueCar00:40:32is going to Oliver FoleyChief Financial Officer at TrueCar00:40:32be more important over the next couple of years than I think it's ever been. And so I think that should favor the product that we offer them. Tom whiteManaging Director, Senior Equity Analyst at D.A. Davidson Companies00:40:42Great. Very interesting. Thank you. Operator00:40:46The next question comes from Marvin Fong from BTIG. Please go ahead. Marvin FongDirector at BTIG00:40:52Great. Thanks for taking my questions. I know we've talked a lot about OEM here. I guess just to be a little more clear here, obviously you highlighted Mercedes and there are other partners potentially could join that AAA program. So should we I know you also mentioned reacceleration in the second quarter, but by sometime this year, should we expect that you have fully recaptured the lost America Express business? Marvin FongDirector at BTIG00:41:29I just want to be clear on that. And then maybe a second question, just love to kind of hear about from the dealer side coming out of NADA and whatnot, just what's the pipeline in terms of dealers that you have for TC Plus? Are you pretty much have a pipeline of dealers ready to go once you do roll out into new regions? Maybe just kind of talk about that aspect of TC Plus? Thanks. Jantoon ReigersmanPresident & CEO at TrueCar00:41:59Yes. So I think the first on the first, the answer is yes. And I think really Q1 is the only one where you have a little bit of a shift. And I think in Q2, we should already start seeing that acceleration. So I think that's number one. Jantoon ReigersmanPresident & CEO at TrueCar00:42:19On the TC plus pieces, yes, we have dealers ready. We actually have dealers ready in many different states that would love to that have put their hands up and would love to participate. We obviously want to do this relatively focused. So we'll first do more dealers in California and then we'll start expanding in other states. The two states that are highly likely to follow afterwards are going to be Florida and Texas purely because of the density of dealers that we have in both these states as well as obviously the car buying audience that exists in both states. Jantoon ReigersmanPresident & CEO at TrueCar00:43:00And so net net is focused on California first. Yes, we have a pipeline ready, but we want to make sure that these experiences are really good. It also requires obviously a little bit of a different mindset at the dealerships themselves that require some level of training, etcetera. So we want to do this in a structured manner, but the answer is yes, we have plenty of dealers that are really excited. And then also obviously we continue to work with really important partners of ours that include right the dealer associations, the OEMs etcetera. Jantoon ReigersmanPresident & CEO at TrueCar00:43:29So as we scale this, we also want to make sure we take all our stakeholders along because we feel we have a very unique position in the market with DC plus and the products we deliver. And so yes, so we're very excited that as we make continuous progress on the product, we can start accelerating this and start accelerating this faster and faster and soon make it much more impactful because I know we've been talking about it a lot, but I think this is a huge opportunity for us. But we're now in the final legs of really improving those experiences. Marvin FongDirector at BTIG00:44:06Great. Thanks so much, Jonty. Operator00:44:09The next question comes from Chris Pierce from Needham. Please go ahead. Chris PierceSenior Analyst at Needham & Company00:44:14Hey, good morning. I just wanted to go back to the first question and the consultative approach. I guess I just want to understand, you're sending a dealer a lead and like where is sort of the ball being dropped or why do you need to kind of help them massage that lead into a sale? I just I kind of always want to understand what kind of what's happening and what you're doing to kind of drive that conversion higher? Jantoon ReigersmanPresident & CEO at TrueCar00:44:39I mean, like, I should have my service team on the call because I would love to spend a couple of hours talking through this. Like the short answer is a couple of things. One is, it starts with the way you effectively position your own dealership on the marketplace, right? So, right, like the price curve is a great example, right? Whether you have an excellent price or a good price or an average price of your car, making sure that you have active pricing on the platform, especially as prices change very quickly and swiftly in the marketplace is one example of something that's very simple. Jantoon ReigersmanPresident & CEO at TrueCar00:45:17Like there are some dealers that don't really log into the systems very often as a result in a pricing changing world. Their prices might become uncompetitive unknowingly to the dealer and as a result they might have pretty dramatic drops in their lead generation because frankly they're pricing themselves out of the market. Not because they do that intentionally, but because they hadn't looked into the system recently as an example. So the active engagement with the tools is really important. And then also the other piece is then the way you nurture the lead. Jantoon ReigersmanPresident & CEO at TrueCar00:45:54And you would be surprised to know that like if you're the Head of Sales or you're the GM of a dealership, you obviously have a lot of salespeople, but you also have a lot of salespeople turnover. And so training these people and making sure that these people are really good at how they nurture these leads and what they do with them, etcetera, is something that not always happens the right way at many of the dealers. And so our trainers coming in to help their sales folks effectively get to know the best in class of how to nurture lead, how to bring in, how to prioritize leads, like what works and what doesn't work is really important. And then added to that is, for example, those new tools that we were describing where we're even like now with the AI tools determining right the propensity of a lead to close or not to close. And so now you can also start prioritizing that within the dealership and then who does what and how does that work. Jantoon ReigersmanPresident & CEO at TrueCar00:46:51So there's a lot that comes to actually selling a car and the more we help the dealers to stick here we are and you would be surprised that it's relatively low hanging fruit for us to help them because very often it's very simple things where if you do those things well, they have dramatic impact on the close rates of these leads that we provide. Chris PierceSenior Analyst at Needham & Company00:47:20Okay. Thanks for the detail there. Perfect. And then on TCMS, was revenue down sequentially or is it too early to kind of gauge what's really going on there? I just kind of want to get a better understanding of that product as you roll it out. Jantoon ReigersmanPresident & CEO at TrueCar00:47:36Yes. You want to add, Oliver, Jantoon ReigersmanPresident & CEO at TrueCar00:47:37do you want me Jantoon ReigersmanPresident & CEO at TrueCar00:47:38to take that or you want to take it? Go ahead. Oliver FoleyChief Financial Officer at TrueCar00:47:40Let me take a stab at it. Oliver FoleyChief Financial Officer at TrueCar00:47:41So quarter over quarter, it was down slightly and largely because we really focused Q4 on streamlining the offering, right. So it's still sort of a suite of digital marketing products, but we really wanted to streamline the offering and simplify it in part because it's easier for dealers to understand and it's easier for the sales team to sort of communicate the benefits of TCMS. So we really brought in some leadership on the TrueCar Marketing Solutions side and started to sort of build out the right team on that side. So I think Q4 was really about how do we strengthen our go to market muscle with TCMS and let's create a stronger foundation going into Q1. And so yes, it was a sequential decline, but I think it was sort of strengthening the go to market muscle so that in 2025 it'll be a big growth driver of ours. Chris PierceSenior Analyst at Needham & Company00:48:46Okay. And is there a way to sort of quantify some sort of upper bound? Like what are we talking about as far as growth driver, whether in terms of absolute revenue or revenue growth? Like what's the right way to think about the trajectory of this over the year, next couple of years, etcetera? Oliver FoleyChief Financial Officer at TrueCar00:48:59On that end, I'd say it's a little early to tell. We're incredibly optimistic about it just because the amount that franchise dealers spend on digital marketing off of the TrueCar platform is astronomical, right? And so there was a huge addressable market there for us that allows us to capture parts of their budget that aren't going to third party listing sites, but are going to Google or Meta. And so our belief is that it could be a very sizable component of our overall revenue, but it's a little early for us to predict what percent that might be. So hopefully we'll have much better sense for that over the next couple of quarters. Chris PierceSenior Analyst at Needham & Company00:49:49Okay. Great, sir. Appreciate the time. Thanks. Operator00:49:54This concludes our question and answer session. I would like to turn the conference back over to Jantoon for closing remarks. Jantoon ReigersmanPresident & CEO at TrueCar00:50:03Great. I would like to thank everybody for taking the time to participate in our call today. I also want to thank the team for all their continued efforts. We're more focused and more disciplined than we've ever been. And so with gratitude, thank you and look forward to the next call. Operator00:50:23The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJantoon ReigersmanPresident & CEOOliver FoleyChief Financial OfficerAnalystsRajat GuptaAnalyst at JPMorgan ChaseRyan PowellSenior Equity Research Associate at B.Riley SecuritiesRyan MeyersSenior Research Analyst at Lake Street Capital Markets, LLCTom whiteManaging Director, Senior Equity Analyst at D.A. Davidson CompaniesMarvin FongDirector at BTIGChris PierceSenior Analyst at Needham & CompanyPowered by