TrueCar's Fourth-Quarter Loss Narrowed, but Results Fell Short of Guidance
Online car-shopping service TrueCar (NASDAQ: TRUE) reported on Feb. 14 that it lost $6.4 million in the fourth quarter of 2018, or $0.06 per share, an improvement over the $8.5 million it lost in the fourth quarter of 2017. Revenue of $91.1 million was up 10% from a year ago.
Adjusted for stock-option expenses and one-time items, TrueCar had a net profit of $2.7 million, or $0.03 per share. That fell short of the $4.9 million, or $0.05 per share, that it earned on the same basis in the year-ago period.
For the full year, TrueCar lost $28.3 million, or $0.28 per share, an improvement over the $32.8 million it lost in 2017.
TrueCar earnings: The raw numbers
Metric | Q4 2018 | Change vs. Q4 2017 | Full-Year 2018 | Change vs. 2017 |
|---|---|---|---|---|
Revenue | $91.1 million | 10% | $353.6 million | 9% |
Vehicles purchased ("units") | 257,017 | 7% | 1,005,029 | 5.5% |
Adjusted EBITDA | $8.1 million | 8% | $32.9 million | 14% |
Net income (loss) | ($6.4 million) | $2.1 million improvement | ($28.3 million) | $4.5 million improvement |
Adjusted net income | $2.7 million | (45%) | $11.1 million | 54% |
Net income (loss) per share | ($0.06) | $0.02 improvement | ($0.28) | $0.07 improvement |
Adjusted net income per share | $0.03 | $0.02 lower | $0.11 | $0.03 higher |
Data source: TrueCar. EBITDA = earnings before interest, tax, depreciation, and amortization. Non-GAAP "adjusted" figures exclude employee stock option expenses and nonrecurring costs. "Franchise dealers" = auto dealers that hold a "franchise" from an automaker, meaning that they sell new vehicles.
Image source: TrueCar.
What happened at TrueCar in the fourth quarter of 2018
Simply put, the quarter fell well short of TrueCar's expectations, which in turn meant that full-year results also fell short of expectations. Its revenue, adjusted EBITDA, and units all fell short of the guidance it gave with its third-quarter 2018 results in November, for both the fourth quarter and the full year.
During TrueCar's earnings call, CEO Chip Perry attributed the shortfalls to lower-than-expected levels of new business as well as what he called "operational issues" related to the company's migration to a new technology platform. Those operational issues explain the 10% decline in unique monthly visitors to TrueCar's website, as well as the company's cautious guidance for 2019, he said.
Here are the other key metrics from TrueCar's fourth-quarter earnings report.
TrueCar's website had an average of 6.5 million unique visitors per month, down 10% from 7.3 million per month in the fourth quarter of 2017.
A total of 257,017 vehicles were purchased via TrueCar's service in the fourth quarter, up 7.3% from a year ago. As noted above, that total fell short of TrueCar's prior guidance.
Monetization, or the average fee collected by TrueCar for each vehicle sold via its services, was $334 in the fourth quarter, up from $328 a year ago.
Average monthly transaction revenue per franchise dealer was $1,780, up 1.7% from $1,751 in the fourth quarter of 2017.
TrueCar's total number of franchise dealer partners rose 2.1% to 12,674 as of the end of 2018, up from 12,142 a year ago.
Looking ahead: TrueCar's guidance
As noted above, TrueCar released cautious guidance for the first quarter of 2019 and for the full year.
For the first quarter of 2019, TrueCar expects:
Revenue between $84 million and $86 million (Q1 2018 result: $81.1 million)
Adjusted EBITDA between $3 million and $5 million (Q1 2018 result: $6.0 million)
For the full year, the company expects:
Revenue between $371 million and $378 million (2018 result: $353.6 million)
Adjusted EBITDA between $35 million and $40 million (2018 result: $32.9 million)
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John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends TrueCar. The Motley Fool has a disclosure policy.
