TrueCar Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 16:29
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 1 "Financial Statements" in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those discussed in the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q. See "Special Note Regarding Forward-Looking Statements."
Overview
TrueCar is a leading automotive digital marketplace that enables car buyers to connect to our network of Certified Dealers. We are building the industry's most personalized and efficient car buying experience as we seek to bring more of the purchasing process online.
We have established a diverse software ecosystem on a common technology infrastructure, powered by proprietary data and analytics. Our company-branded platform is available on our TrueCar website and mobile applications. In addition, we customize and operate our platform on a co-branded basis for our many affinity group marketing partners, including financial institutions such as Navy Federal and PenFed; membership-based organizations such as Consumer Reports, Sam's Club, and AAA; and employee buying programs for large enterprises such as IBM and Walmart. We enable users to obtain market-based pricing data on new and used cars, and to connect with our network of TrueCar Certified Dealers. We also allow automobile manufacturers, known in the industry as OEMs, to connect with TrueCar users during the purchase process and efficiently deliver targeted incentives to consumers.
We benefit consumers by providing information related to what others have paid for a make, model and trim of cars in their area and price offers on actual vehicle inventory, which we refer to as VIN-based offers, from our network of TrueCar Certified Dealers. VIN-based offers provide consumers with price offers for specific vehicles from specific dealers. We benefit our network of TrueCar Certified Dealers by enabling them to attract these informed, in-market consumers in a cost-effective, accountable manner, which we believe helps them to sell more cars profitably. We benefit OEMs by allowing them to more effectively target their incentive spending at deep-in-market consumers during their purchase process.
Our network of TrueCar Certified Dealers consists primarily of new car franchises, representing all major makes of cars, as well as independent dealers selling used vehicles. TrueCar Certified Dealers operate in all 50 states and the District of Columbia. Our subsidiary, TCDS, provides our Trade and Payments solutions. TCDS also supports our Sell Your Car product. Our Sell Your Car and Trade solutions give consumers information on the value of the vehicle they wish to sell or trade-in. Consumers using our Sell Your Car or TrueCar+ Trade products are provided with a conditional offer, which we refer to as a True Cash Offer, for their vehicle, all through our online platform. True Cash Offers are determined by TCWS, and, where applicable, are backed by a guarantee from TCWS to the dealer that the vehicle will be repurchased at the indicated price if the dealer does not wish to keep it. Our Payments solution helps consumers calculate accurate monthly payments to streamline the consumer's experience from shopping to showroom.
During the three months ended September 30, 2025, we generated revenues of $43.2 million and recorded income of $5.0 million. During the three months ended September 30, 2024, we generated revenues of $46.5 million and recorded a loss of $5.8 million. During the nine months ended September 30, 2025, we generated revenues of $135.0 million and recorded a loss of $12.8 million. During the nine months ended September 30, 2024, we generated revenues of $129.4 million and recorded a loss of $25.2 million.
Recent Developments
On October 14, 2025, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), with Fair Holdings, Inc. ("Parent"), and Rapid Merger Subsidiary, Inc., a wholly-owned subsidiary of Parent ("Merger Subsidiary"). Subject to the terms and conditions of the Merger Agreement, Parent agreed to acquire the Company for $2.55 per issued and outstanding share of the Company's common stock, par value $0.0001 per share, in an all-cash transaction. Upon the terms and conditions set forth in the Merger Agreement, Merger Subsidiary will merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly-owned subsidiary of Parent.
At the effective time of the Merger (the "Effective Time"), each issued and outstanding share of the Company's common stock (other than any Rollover Shares, any Dissenting Shares and shares of the Company's common stock held by the
Company, Parent or any of their respective subsidiaries) will be cancelled and converted into the right to receive $2.55 in cash without interest and subject to any applicable withholding taxes. The consummation of the Merger remains subject to customary closing conditions, including receipt of stockholder approval. If the closing occurs, the Company Stock will be delisted from Nasdaq and deregistered under the Exchange Act.
Market Environment
The macroeconomic environment has caused and will likely continue to cause significant economic disruptions to the Company's business. While our revenues increased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, we may not sustain such increases or may experience negative effects on our results of operations, financial condition and cash flows in the future, given that numerous macroeconomic uncertainties remain. In recent years, OEMs were forced to cut production because of supply-chain disruption and the global automotive semiconductor chip shortage. The ensuing automobile inventory shortage resulted in significant unmet demand, with automotive dealers seeing some incoming new car shipments presold. At the same time, wider economic inflation led to the Federal Reserve raising interest rates. The expectation that interest rates will remain relatively high for the foreseeable future will likely continue to impact the U.S. economy. While the Federal Reserve cut interest rates in late 2024 and again in September 2025, and although the potential for additional cuts in the future remains, the timing and magnitude of these cuts as well as how much this will impact the broader economy and consumer sentiment is uncertain. Domestically, consumers remain concerned about inflation as well as increasing prices due to import tariffs, including as a result of tariffs announced on vehicles, component parts and raw materials announced by the United States in 2025. Despite strong employment, higher prices and concerns about the economy are negatively weighing on consumer sentiment and spending. Dealers may reduce inventory in response to prolonged high interest rates due to higher financing costs as well as the increasing costs of vehicles driven by import tariffs on automobiles. Lower inventory, along with pressure on consumer demand, may impact the decision of our current network of Certified Dealers and OEMs to cancel or pause our services and product offerings and could discourage new dealers and OEMs from joining our network. Refer to Part II, Item 1A, "Risk Factors," for additional disclosures of risks related to factors impacting the market environment for the Company.
Non-GAAP Financial Measures
Adjusted EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP. We define Adjusted EBITDA as net income (loss) adjusted to exclude interest income, depreciation and amortization, stock-based compensation, changes in the fair value of contingent consideration liability, lease exit gain or loss, impairment of right-of-use ("ROU") assets, transaction costs associated with potential merger and acquisition activity, interest accretion for terminated leases, restructuring charges, other income, and income taxes. We have provided below a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure. Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. In addition, our Adjusted EBITDA measure may not be comparable to similarly titled measures of other organizations as they may not calculate Adjusted EBITDA in the same manner as we calculate this measure.
We use Adjusted EBITDA as an operating performance measure as it is (i) an integral part of our reporting and planning processes; (ii) used by our management and board of directors to assess our operational performance, and together with operational objectives, as a measure in evaluating employee compensation and bonuses; and (iii) used by our management to make financial and strategic planning decisions regarding future operating investments. We believe that using Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis because it excludes variations primarily caused by changes in the excluded items noted above. In addition, we believe that Adjusted EBITDA and similar measures are widely used by investors, securities analysts, rating agencies and other parties in evaluating companies as measures of financial performance and debt service capabilities.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
•Adjusted EBITDA does not reflect the receipt of interest or the payment of income taxes;
•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or any other contractual commitments;
•Adjusted EBITDA does not reflect the restructuring charges associated with the reorganization of the Company's dealer sales and service organization or the realignment of the Company's leadership structure that began in the third quarter of 2023 and concluded in the second quarter of 2024;
•Adjusted EBITDA does not reflect severance charges associated with the departure of our former Chief Revenue Officer ("CRO");
•Adjusted EBITDA does not reflect changes in the fair value of our contingent consideration liability;
•Adjusted EBITDA does not reflect impairment charges on our ROU assets associated with subleasing;
•Adjusted EBITDA does not reflect interest accretion for the terminated office lease at 1401 Ocean Avenue, Santa Monica, California;
•Adjusted EBITDA does not consider the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation;
•Adjusted EBITDA does not reflect the legal, accounting, and other third-party fees and costs incurred by us in connection with the evaluation and negotiation of potential merger and acquisition transactions;
•Adjusted EBITDA does not reflect gain on legal settlements recorded within other income; and
•other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including our net income (loss), our other GAAP results, and various cash flow metrics. In addition, in evaluating Adjusted EBITDA you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving Adjusted EBITDA, and you should not infer from our presentation of Adjusted EBITDA that our future results will not be affected by these expenses or any unusual or non-recurring items.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods presented:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
|
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|
Net income (loss)
|
$ | 4,997 | $ | (5,831) | $ | (12,766) | $ | (25,199) | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Interest income | (950) | (1,560) | (2,973) | (4,876) | |||||||||||||||||||
| Depreciation and amortization | 2,569 | 4,408 | 9,883 | 13,677 | |||||||||||||||||||
| Stock-based compensation | 3,166 | 2,953 | 9,791 | 8,774 | |||||||||||||||||||
|
Restructuring charges (1)
|
369 | - | 972 | 1,474 | |||||||||||||||||||
| Change in fair value of contingent consideration liability | - | 102 | 36 | 281 | |||||||||||||||||||
|
Impairment of right-of-use ("ROU") assets (2)
|
- | - | - | 6,880 | |||||||||||||||||||
|
Interest accretion for terminated lease (3)
|
107 | 125 | 334 | 210 | |||||||||||||||||||
|
Transaction costs (4)
|
727 | 1 | 2,535 | 1 | |||||||||||||||||||
|
Other income (5)
|
(11,397) | - | (11,397) | - | |||||||||||||||||||
| Provision for income taxes | 2 | 3 | 11 | 13 | |||||||||||||||||||
| Adjusted EBITDA | $ | (410) | $ | 201 | $ | (3,574) | $ | 1,235 | |||||||||||||||
(1)The excluded amounts represent charges associated with the departure of our former CRO in the third quarter of 2025, the reorganization of the dealer sales and service organization in the second quarter of 2025, and the realignment of the Company's leadership structure which began in the third quarter of 2023 and concluded in the second quarter of 2024. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(2)The excluded amount represents impairment charges on our ROU assets associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(3)The excluded amount represents the accretion of interest on the lease liability associated with the terminated office lease at 1401 Ocean Avenue, Santa Monica, California. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(4)The excluded amount represents external legal, accounting, and other third-party fees and costs incurred in connection with negotiating the Merger. In the comparable prior periods we did not adjust for transaction costs due to the confidential nature of the Merger. We have made that change and adjusted the prior period and year-to-date amounts presented herein to maintain comparability between the periods.
(5)The excluded amount represents a gain on legal settlement resulting from the CDK Settlement Agreement.
Components of Operating Results
Revenues
Our revenues are comprised primarily of dealer revenue and OEM incentives revenue. We recognize transaction revenue for certain of our Auto Buying Program and OEM incentives arrangements at the time introductions and incentives are delivered based upon expected subsequent vehicle sales between the Auto Buying Program user and the dealer.
Costs and Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization). Cost of revenue includes expenses related to the fulfillment of our services, consisting primarily of data costs and licensing fees paid to third-party service providers and expenses related to operating our website and mobile applications, including those associated with hosting fees, data processing costs required to deliver introductions to our network of TrueCar Certified Dealers, employee costs related to certain dealer operations, wholesale vehicle acquisition costs, marketing spend on behalf of TrueCar Marketing Solutions ("TCMS") customers, and facilities costs. Cost of revenue excludes depreciation and amortization of software costs and other hosting and data infrastructure equipment used to operate our platforms, which are included in the depreciation and amortization line item on our condensed consolidated statements of comprehensive income (loss).
Sales and Marketing. Sales and marketing expenses consist primarily of digital customer acquisition and digital advertising; media production costs; affinity group partner marketing fees, which also include loan subvention costs where we pay certain affinity group marketing partners a portion of consumers' borrowing costs for car loan products offered by these affinity group marketing partners; and marketing sponsorship programs. In addition, sales and marketing expenses include employee-related expenses for sales, customer support, marketing and public relations employees, including salaries, bonuses, benefits, severance, and stock-based compensation expenses; third-party contractor fees; and facilities costs. Marketing and advertising costs promote our services and are expensed as incurred, except for media production costs, which are expensed the first time the advertisement is aired.
Technology and Development. Technology and development expenses consist primarily of employee-related expenses, including salaries, bonuses, benefits, severance, and stock-based compensation expenses; third-party contractor fees; facilities costs; software costs; and costs associated with our product development, product management, research and analytics, and internal IT functions.
General and Administrative. General and administrative expenses consist primarily of employee-related expenses, including salaries, bonuses, benefits, severance, and stock-based compensation expenses for executive, finance, accounting, legal, and human resources functions. General and administrative expenses also include legal, accounting, and other third-party professional service fees, bad debt, gain or loss from lease exit, impairment of right-of-use assets, and facilities costs.
Depreciation and Amortization. Depreciation consists primarily of depreciation expense recorded on property and equipment. Amortization expense consists primarily of amortization recorded on intangible assets, capitalized software costs, and leasehold improvements.
Interest Income. Interest income consists of interest earned on our cash and cash equivalents.
Other Income. Other income consists entirely of a gain from a legal settlement.
Provision for Income Taxes. We are subject to federal and state income taxes in the United States. We provided a full valuation allowance against our net deferred tax assets at September 30, 2025 and December 31, 2024, as it is more likely than not that some or all of our deferred tax assets will not be realized. As a result of the valuation allowance, our income tax expense is significantly less than the federal statutory rate of 21%. For the nine months ended September 30, 2025 and 2024, our provision for income taxes reflects state income tax expense.
Key Metrics
We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Average Monthly Unique Visitors | 5,555,943 | 6,862,059 | 5,619,740 | 7,436,985 | |||||||||||||||||||
| Units (1) | 87,460 | 94,619 | 262,719 | 262,426 | |||||||||||||||||||
| Monetization | $ | 491 | $ | 490 | $ | 512 | $ | 491 | |||||||||||||||
| Franchise Dealer Count | 8,225 | 8,303 | 8,225 | 8,303 | |||||||||||||||||||
| Independent Dealer Count | 2,794 | 3,106 | 2,794 | 3,106 | |||||||||||||||||||
(1)We issued full credits of the amount originally invoiced with respect to 785 and 920 units during the three months ended September 30, 2025 and 2024, respectively. We issued full credits of the amount originally invoiced with respect to 2,629 and 2,759 units during the nine months ended September 30, 2025 and 2024, respectively. The number of units has not been adjusted downwards related to units credited as discussed in the description of the unit metric below.
Average Monthly Unique Visitors
We define a monthly unique visitor as an individual who has visited our website, our landing page on our affinity group marketing partner sites, or our mobile applications within a calendar month. We identify unique visitors through cookies for browser-based visits on either a desktop computer or mobile device and through device IDs for mobile application visits. In addition, if a TrueCar.com user logs in, we supplement their identification with their log-in credentials to attempt to avoid double counting on TrueCar.com across devices, browsers and mobile applications. If an individual accesses our service using different devices or different browsers on the same device within a given month, the first access through each such device or browser is counted as a separate monthly unique visitor, except where adjusted based upon TrueCar.com log-in information. We calculate average monthly unique visitors as the sum of the monthly unique visitors in a given period, divided by the number of months in the period. We view our average monthly unique visitors as a key indicator of the growth in our business and audience reach, the strength of our brand, and the visibility of car-buying services to the member base of our affinity group marketing partners.
The number of average monthly unique visitors decreased 19.0% to approximately 5.6 million in the three months ended September 30, 2025 from approximately 6.9 million in the same period of 2024. The number of average monthly unique visitors decreased 24.4% to approximately 5.6 million in the nine months ended September 30, 2025 from approximately 7.4 million in the same period of 2024. The year-over-year decreases were primarily due to the Company's restructured performance marketing strategy, which shifted focus toward higher-intent sales channels that generate stronger close rates for dealers.
Units
We define units as the number of automobiles purchased from TrueCar Certified Dealers that are matched to users of TrueCar.com, our TrueCar-branded mobile applications or the car-buying sites and mobile applications we maintain for our affinity group marketing partners. A unit is counted after we have matched the sale to a TrueCar user with a TrueCar Certified Dealer. We view units as a key indicator of the health of our business, the effectiveness of our product and the size and geographic coverage of our network of TrueCar Certified Dealers.
On occasion, we issue credits to our TrueCar Certified Dealers with respect to units sold. However, we do not adjust our unit metric for these credits as we believe that in most cases a vehicle has in fact been purchased through our platform given the high degree of accuracy of our sales matching process. Credits are most frequently issued to a dealer that claims that it had a pre-existing relationship with a purchaser of a vehicle, and we determine whether we will issue a credit based on a number of factors, including the facts and circumstances related to the dealer claim and the level of claim activity at the dealership. In most cases, we issue credits in order to maintain strong business relations with the dealer and not because we have made an erroneous sales match or billing error.
The number of units decreased by 7.6% to 87,460 units in the three months ended September 30, 2025 from 94,619 units in the three months ended September 30, 2024. The number of units remained consistent on a year-to-date basis with 262,719 units in the nine months ended September 30, 2025 compared to 262,426 units in the nine months ended September 30,
2024. The unit movement was driven by a decrease in TrueCar.com units, offset by an increase in units attributable to our affinity partners.
Monetization
We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue (dealer revenue and OEM incentives revenue) in a given period by the number of units in that period. Our monetization increased slightly by 0.2% to $491 for the three months ended September 30, 2025 as compared to $490 for the three months ended September 30, 2024. Our monetization increased by 4.3% to $512 for the nine months ended September 30, 2025 as compared to $491 for the nine months ended September 30, 2024. The changes in monetization are primarily due to an increase in TCWS revenue, one of our vehicle sourcing products which began to ramp up in the latter half of 2024.
Franchise Dealer Count
We define franchise dealer count as the number of franchise dealers in the network of TrueCar Certified Dealers at the end of a given period. This number is calculated by counting the number of brands of new cars sold at each individual location, or rooftop, regardless of the size of the dealership that owns the rooftop. The network is comprised of dealers with a range of unit sales volume per dealer, with dealers representing certain brands consistently achieving higher than average unit sales volume. We view our ability to increase our franchise dealer count, particularly dealers representing high volume brands, as an indicator of our market penetration and the likelihood of converting users of our platform into unit sales. Our TrueCar Certified Dealer network includes independent non-franchised dealers that primarily sell used cars and are not included in franchise dealer count.
Our franchise dealer count was 8,225 at September 30, 2025, a decrease from 8,303 at September 30, 2024, and a decrease from 8,351 at December 31, 2024.
Independent Dealer Count
We define independent dealer count as the number of dealers in the network of TrueCar Certified Dealers at the end of a given period that exclusively sell used vehicles. This number is calculated by counting each location, or rooftop, individually, regardless of the size of the dealership that owns the rooftop. Our independent dealer count was 2,794 at September 30, 2025, a decrease from 3,106 at September 30, 2024, and a decrease from 3,054 at December 31, 2024. The decrease in independent dealer count reflects the Company's prioritization of franchise activations during the latter half of 2024 and into 2025, as well as continued industry consolidations, resulting in many independent dealers being acquired.
Results of Operations
The following table sets forth our selected consolidated statements of operations data for each of the periods indicated.
|
Three Months Ended September 30, |
Nine Months Ended September 30, 2025 |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Consolidated Statements of Operations Data: | |||||||||||||||||||||||
| Revenues | $ | 43,207 | $ | 46,544 | $ | 135,015 | $ | 129,391 | |||||||||||||||
| Costs and operating expenses: | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization presented separately below) | 8,804 | 7,736 | 28,843 | 17,481 | |||||||||||||||||||
| Sales and marketing | 23,059 | 25,049 | 73,181 | 71,076 | |||||||||||||||||||
| Technology and development | 6,969 | 7,179 | 22,183 | 22,735 | |||||||||||||||||||
| General and administrative | 9,154 | 9,560 | 28,050 | 34,484 | |||||||||||||||||||
| Depreciation and amortization | 2,569 | 4,408 | 9,883 | 13,677 | |||||||||||||||||||
| Total costs and operating expenses | 50,555 | 53,932 | 162,140 | 159,453 | |||||||||||||||||||
| Loss from operations | (7,348) | (7,388) | (27,125) | (30,062) | |||||||||||||||||||
| Interest income | 950 | 1,560 | 2,973 | 4,876 | |||||||||||||||||||
|
Other income
|
11,397 | - | 11,397 | - | |||||||||||||||||||
| Income (loss) before income taxes | 4,999 | (5,828) | (12,755) | (25,186) | |||||||||||||||||||
| Provision for income taxes | 2 | 3 | 11 | 13 | |||||||||||||||||||
| Net income (loss) | $ | 4,997 | $ | (5,831) | $ | (12,766) | $ | (25,199) | |||||||||||||||
| Other Non-GAAP Financial Information: | |||||||||||||||||||||||
| Adjusted EBITDA | $ | (410) | $ | 201 | $ | (3,574) | $ | 1,235 | |||||||||||||||
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Revenues
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Dealer revenue | $ | 40,393 | $ | 41,957 | $ | 124,456 | $ | 116,559 | |||||||||||||||
| OEM incentives revenue | 2,558 | 4,376 | 9,932 | 12,248 | |||||||||||||||||||
| Other revenue | 256 | 211 | 627 | 584 | |||||||||||||||||||
| Total revenues | $ | 43,207 | $ | 46,544 | $ | 135,015 | $ | 129,391 | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. The decrease in our total revenues of $3.3 million, or 7.2%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was mainly due to a $1.8 million decrease in OEM incentives revenue (primarily driven by a monthly cap that was applied to one of our large OEMs as well as the termination of a larger OEM affinity partner program), a $1.5 million decrease in franchise dealer revenue, and a $0.7 million decrease in independent dealer revenue. This was partially offset by a $0.9 million increase in our vehicle sourcing products, which includes Sell Your Car and TCWS, driven by an increase in dealers subscribing to these products as well as an increase in the number of vehicles transacted through our wholesale exchange. Since some of our OEM arrangements target our affinity group marketing partners, we expect that OEM revenue may continue to fluctuate in future quarters as we enter into new, or terminate existing agreements with our affinity group marketing partners (refer to Part II, Item 1A, "Risk Factors"). Dealer revenue, OEM incentives revenue, and Other revenue represented 93.5%, 5.9%, and 0.6%, respectively, of revenues for the three months ended September 30, 2025 as compared to 90.1%, 9.4%, and 0.5%, respectively, for the same period in 2024.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024.The increase in our total revenues of $5.6 million, or 4.3%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was mainly due to an $8.9 million increase in our vehicle sourcing products, which includes Sell Your Car and TCWS (refer to drivers in paragraph above), a $0.7 million increase related to the introduction of TCMS products, and a $0.6 million increase in franchise dealer revenues. These increases were partially offset by a $2.3 million decrease in OEM incentives revenue (refer to drivers in paragraph above), and a $2.3 million decrease in independent dealer revenue driven by dealer churn as discussed in the Key Metrics section above. Since some of our OEM arrangements target our affinity group marketing partners, we expect that OEM revenue may continue to fluctuate in future quarters as we enter into new, or terminate existing agreements with our affinity group marketing partners (refer to Part II, Item 1A, "Risk Factors"). Dealer revenue, OEM incentives revenue, and Other revenue represented 92.1%, 7.4%, and 0.5%, respectively, of revenues for the nine months ended September 30, 2025 as compared to 90.1%, 9.5%, and 0.4%, respectively, for the same period in 2024.
Costs and Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization)
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | $ | 8,804 | $ | 7,736 | $ | 28,843 | $ | 17,481 | |||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues | 20.4 | % | 16.6 | % | 21.4 | % | 13.5 | % | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. Cost of revenue increased $1.1 million, or 13.8%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase was primarily due to an increase in the number of vehicles acquired and sold through the wholesale exchange as well as an increase in dealer management system ("DMS") feed costs. We expect cost of revenue to increase along with the growth of the TCWS product.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. Cost of revenue increased $11.4 million, or 65.0%, for the nine months ended September 30, 2025 as compared to the nine months ended
September 30, 2024. The increase was primarily due to an increase in the number of vehicles acquired and sold through the wholesale exchange, in addition to increases in marketing costs associated with the expansion of TCMS products, recurring employee-related expenses, outsourced consulting and professional fees, and DMS feed costs. We expect cost of revenue to increase along with the growth of TCWS and TCMS products.
Sales and Marketing Expenses
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Sales and marketing expenses | $ | 23,059 | $ | 25,049 | $ | 73,181 | $ | 71,076 | |||||||||||||||
| Sales and marketing expenses as a percentage of revenues | 53.4 | % | 53.8 | % | 54.2 | % | 54.9 | % | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. Sales and marketing expenses decreased $2.0 million, or 7.9%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease was primarily driven by a $1.4 million decrease in costs related to branded media spend, a $0.8 million decrease in recurring employee-related expenses, a $0.2 million decrease in other marketing costs, and a $0.2 million decrease in spend associated with outsourced consulting and professional fees. These decreases were partially offset by a $0.4 million increase in severance costs associated with the departure of our former CRO. We expect branded media spend to continue to fluctuate as changes in the overall market environment impact conversion rates and the efficiency of branded media spend. In addition, we expect to incur incremental branded media expenses to support further rollout of TrueCar+ and other initiatives.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. Sales and marketing expenses increased $2.1 million, or 3.0%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase was primarily driven by a $2.5 million increase in recurring employee-related expenses, a $2.6 million increase in affinity partner marketing, a $0.7 million increase in severance costs associated with the dealer sales and service team reorganization in addition to the departure of our former CRO, a $0.6 million increase in employee travel costs, and a $0.2 million increase in outsourced consulting and professional fees. Revenue share that we pay to our affinity marketing partners is tied to revenue and units and will fluctuate along with those results. These increases were partially offset by a $4.5 million decrease in costs related to branded media spend. We expect branded media spend to continue to fluctuate as changes in the overall market environment impact conversion rates and the efficiency of branded media spend. In addition, we expect to incur incremental branded media expenses to support further rollout of TrueCar+ and other initiatives.
Technology and Development Expenses
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Technology and development expenses | $ | 6,969 | $ | 7,179 | $ | 22,183 | $ | 22,735 | |||||||||||||||
| Technology and development expenses as a percentage of revenues | 16.1 | % | 15.4 | % | 16.4 | % | 17.6 | % | |||||||||||||||
| Capitalized software costs | $ | 1,942 | $ | 2,084 | $ | 6,363 | $ | 6,268 | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. Technology and development expenses decreased $0.2 million, or 2.9% for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease was driven primarily by a decrease in recurring employee-related expenses.
Capitalized software costs decreased by $0.1 million, primarily due to a $0.1 million decrease in third-party software costs.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. Technology and development decreased by $0.6 million, or 2.4% for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decrease was primarily driven by a $0.9 million decrease in charges associated with a realignment of the Company's leadership structure in the prior year, a $0.3 million decrease in outsourced consulting and
professional fees, and a $0.2 million decrease in facilities-related charges. These decreases were partially offset by a $0.5 million increase in hosting and software expenses and a $0.5 million increase in recurring employee-related expenses.
Capitalized software costs increased by $0.1 million, primarily due to a $0.1 million increase in third-party software costs.
General and Administrative Expenses
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| General and administrative expenses | $ | 9,154 | $ | 9,560 | $ | 28,050 | $ | 34,484 | |||||||||||||||
| General and administrative expenses as a percentage of revenues | 21.2 | % | 20.5 | % | 20.8 | % | 26.7 | % | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. General and administrative expenses decreased $0.4 million, or 4.2%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease was primarily driven by a $0.9 million decrease in general outsourced consulting and professional fees, partially offset by a $0.7 million increase in outsourced legal, accounting, and other third-party fees incurred in connection with negotiating the Merger.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. General and administrative expenses decreased $6.4 million, or 18.7%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decrease was primarily driven by a $7.1 million decrease in facilities-related costs related to a one-time impairment charge on an office lease in the prior year, a $1.5 million decrease in general outsourced consulting and professional fees, a $0.3 million decrease in recurring employee-related expenses, and a $0.3 million decrease in charges associated with a realignment of the Company's leadership structure in the prior year. These decreases were partially offset by a $2.5 million increase in outsourced legal, accounting, and other third-party fees incurred in connection with negotiating the Merger.
Depreciation and Amortization Expenses
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Depreciation and amortization expenses | $ | 2,569 | $ | 4,408 | $ | 9,883 | $ | 13,677 | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. Depreciation and amortization expenses decreased $1.8 million, or 41.7%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. We expect our depreciation and amortization expenses to continue to be affected by the amount of capitalized internally developed software costs and the timing of placing projects in service.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. Depreciation and amortization expenses decreased $3.8 million, or 27.7%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. We expect our depreciation and amortization expenses to continue to be affected by the amount of capitalized internally developed software costs and the timing of placing projects in service.
Other Income
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
|
Other income
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$ | 11,397 | $ | - | $ | 11,397 | $ | - | |||||||||||||||
Three months ended September 30, 2025 compared to three months ended September 30, 2024. Other income for the three months ended September 30, 2025 was solely comprised of the gain on legal settlement resulting from the CDK Settlement Agreement as described in Note 5.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024. Other income for the nine months ended September 30, 2025 was solely comprised of the gain on legal settlement resulting from the CDK Settlement Agreement as described in Note 5.
Provision for Income Taxes
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Provision for income taxes | $ | 2 | $ | 3 | $ | 11 | $ | 13 | |||||||||||||||
For the three and nine months ended September 30, 2025 and 2024, our provision for income taxes reflects state income tax expense.
Liquidity and Capital Resources
At September 30, 2025, our principal sources of liquidity were cash and cash equivalents totaling $103.2 million.
We have incurred cumulative losses of $606.1 million from our operations through September 30, 2025, and expect to incur additional losses in the future. We generate cash inflows from operations primarily from selling services to dealers participating in our network of TrueCar Certified Dealers, and cash outflows to enable our business operations, develop new services and core technologies that further enhance our online automotive marketplace, and fund repurchases of our common stock based on our evaluation of market conditions and other factors. We believe that our existing sources of liquidity and cash expected to be generated from operations will be sufficient to fund our operations for at least the next 12 months. However, our future capital requirements will depend on many factors, including our revenue levels, the timing and extent of our spending to support our technology and development efforts, costs related to the Merger, costs related to potential acquisitions to further expand our business and product offerings, collection of accounts receivable, macroeconomic activity, and the length and severity of business disruptions resulting from the inventory constraints caused by the global automobile semiconductor chip shortage. To the extent that existing cash and cash equivalents and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.
Share Repurchase Program
In the third quarter of 2020, our board of directors originally authorized an open market stock repurchase program (the "Program"). In February 2024, our board of directors increased the remaining authorization of the Program to $100.0 million and extended the expiration date of the Program to December 31, 2026. The timing and amount of any repurchases under the Program is determined by us based on our evaluation of market conditions and other factors. Repurchases of our common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when we might otherwise be precluded from doing so under insider trading laws, open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws. The Program may be suspended or discontinued at any time and does not obligate us to purchase any minimum number of shares. The Company had no share repurchases during the nine months ended September 30, 2025. In June 2024 through December 2024, the Company repurchased and retired a total of 6.1 million shares under the Program for $20.0 million, which excludes excise tax imposed under the Inflation Reduction Act of $0.1 million. As of September 30, 2025, the Company had a remaining authorization of $80.0 million for future share repurchases.
Cash Flows
The following table summarizes net cash from operating, investing, and financing activities:
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Consolidated Cash Flow Data: | (in thousands) | ||||||||||
|
Net cash provided by operating activities
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$ | 2,000 | $ | 1,846 | |||||||
|
Net cash used in investing activities
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(6,165) | (6,151) | |||||||||
| Net cash used in financing activities | (4,484) | (18,150) | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | $ | (8,649) | $ | (22,455) | |||||||
Operating Activities
Our net income (loss) and cash flows from operating activities are significantly influenced by our investments in headcount and infrastructure to support our growth and marketing and advertising expenses. Our net income (loss) has been significantly different than cash flows from operating activities due to the inclusion of non-cash expenses and charges.
Cash provided by operating activities for the nine months ended September 30, 2025 was $2.0 million. This was primarily comprised of our net loss of $12.8 million, adjusted for non-cash items such as, depreciation and amortization expense of $9.9 million, stock-based compensation expense of $9.8 million, noncash gain on legal settlement of $3.3 million, amortization of lease right-of-use assets of $1.0 million, other non-cash expenses of $0.7 million, and bad debt expense of $0.5 million. Net cash provided by operations also reflected a decrease of $3.8 million from changes in operating assets and liabilities, which primarily reflected a decrease in accrued expenses and other current liabilities of $3.2 million, a decrease in operating lease liabilities of $1.7 million, an increase in prepaid expenses and other assets of $1.2 million, and a decrease in accrued employee expenses of $0.7 million. These were offset by a decrease in accounts receivable of $1.8 million and an increase in accounts payable of $1.3 million.
Cash provided by operating activities for the nine months ended September 30, 2024 was $1.9 million. This was primarily due to our net loss of $25.2 million, adjusted for non-cash items such as depreciation and amortization expense of $13.7 million, stock-based compensation expense of $8.8 million, impairment of right-of-use assets of $6.9 million, other noncash expenses of $0.8 million, amortization of lease right-of-use assets of $0.6 million, and bad debt expense of $0.5 million. Net cash provided by operations also reflected a decrease of $4.5 million from changes in operating assets and liabilities, which primarily reflected a decrease in operating lease liabilities of $3.1 million, an increase in prepaid expenses and other assets of $2.2 million, and a decrease in accrued employee expenses of $1.6 million. These decreases were offset by a decrease in accounts receivable of $1.2 million, an increase in accounts payable of $0.8 million, and an increase in accrued expenses of $0.3 million.
Investing Activities
Cash used in investing activities of $6.2 million for the nine months ended September 30, 2025 consisted primarily of investments in software and computer hardware.
Cash used in investing activities of $6.2 million for the nine months ended September 30, 2024 consisted primarily of investments in software and computer hardware.
Financing Activities
Cash used in financing activities of $4.5 million for the nine months ended September 30, 2025 consisted primarily of a payment for the acquisition date fair value of $2.8 million for the third and final tranche of contingent cash consideration associated with our acquisition of Digital Motors, taxes paid of $1.6 million for the net share settlement of certain equity awards, and taxes paid of $0.1 million for the repurchase of shares of our common stock under our open market stock repurchase program.
Cash used in financing activities of $18.2 million for the nine months ended September 30, 2024 represented payments of $14.0 million for the repurchase of shares of our common stock under our open market stock repurchase program, taxes paid of $2.6 million for the net share settlement of certain equity awards, and a payment of $1.6 million for the second tranche of contingent cash consideration associated with our acquisition of Digital Motors. These decreases were offset by proceeds received of $0.1 million from the exercise of employee stock options.
Contractual Obligations and Known Future Cash Requirements
Information related to the Company's contractual obligations, commercial commitments and expected cash requirements can be found in Note 4 and Note 9 in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes in our contractual obligations and known future cash requirements since December 31, 2024.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in accordance with GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Note 2 and Management's Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended December 31, 2024 describes the critical accounting policies and estimates used in the preparation of the condensed consolidated financial statements. Since December 31, 2024, there have been no material changes in our accounting policies that are impacted by judgments, assumptions and estimates.
Recent Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for new accounting pronouncements not yet effective as of the date of this Quarterly Report on Form 10-Q.
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