Q4 2023 TrueCar Inc Earnings Call

Good day and welcome to the Truecar fourth quarter 'twenty to 'twenty three results financial call.

Operator: Good day and welcome to the TrueCar 4th quarter 2023 results. Please note this event is being recorded. Now, I turn the conference over to Jantoon Reigersman, President and Chief Executive Officer. Please go ahead.

Speaker Change: Please note. This event is being recorded Oh now I turn the conference over to John Henry Chrisman, President and Chief Executive Officer of Truecar. Please go ahead.

Speaker Change: Thank you operator, Hello, everyone and welcome to Truecar fourth quarter 2023 earnings Conference call. Joining me today is over Foley, our Chief Financial Officer I Hope you have all had the opportunity to read our stockholder letter, which was released yesterday after market close and is available on our <unk>.

Jantoon Reigersman: Thank you, operator. Hello, everyone, and welcome to TrueCar's fourth quarter 2023 earnings conference call. Joining me today is Oliver Foley, our chief financial officer. I hope you have all had the opportunity to read our stockholder letter, which was released yesterday after market close and is available on our investor relations website at ir.truecar.com. Before we get started, I need to read our safe harbor.

Speaker Change: Investor Relations website at IR adult Truecar told golf.

Speaker Change: Before we get started I need to read our safe Harbor I want to remind you that we will be making forward looking statements on this call. These forward looking statements can be identified by the use of words, such as believe expect plan target anticipate becomes seek will intend confident and similar expressions and are known and should not be.

Jantoon Reigersman: I want to remind you that we will be making forward-looking statements on this call. These 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 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 report 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.

Speaker Change: 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 over annual report on Form 10-K, our quarterly reports on Form 10-Q and our.

Speaker Change: 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.

Jantoon Reigersman: 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. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures is set forth in the investor relations section of our website at ir.truecar.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.

Speaker Change: The forward looking statements, we make on the score 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.

Speaker Change: In addition, we will also discuss certain GAAP and non-GAAP financial measures reconciliation of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at IR adult Truecar they'll call. The non-GAAP financial measures are not intended to be considered in isolation.

Speaker Change: Or as a substitute for results prepared in accordance with GAAP.

Jantoon Reigersman: With that, I'll provide a brief summary of the quarter. We continue to deliver as promised. In Q4, we achieved 13% year-over-year revenue growth and achieved adjusted EBITDA profitability of 2.1 million, a 12.1 million improvement year-over-year. Meanwhile, we saw encouraging signs of a potential bottoming in our total active dealer count, which was flat quarter-over-quarter with 11,500 active dealers at the end of Q4 versus 11,503 at the end of Q3, driven by the net addition of 135 franchise dealers offset by the This is consistent with our viewpoint that while independent dealers continue to be challenged by today's high interest rate environment, franchise dealers, in particular, are increasingly in need of TrueCar services to help them cope with growing new car inventories.

Speaker Change: With that I'll provide a brief summary of the quarter.

Speaker Change: We continue to deliver as promised in Q4, we achieved 13% year over year revenue growth and achieved adjusted EBITDA profitability of $2 1 million, a 12.1 million improvement year over year. Meanwhile, we saw encouraging signs of a potential bottoming in our total active dealer count which was flat quarter over quarter.

Speaker Change: Warner with 11500 active dealers at the end of Q4 versus 11503 at the end of Q3, driven by the net addition of 135 franchise dealers offset by the net loss of 138 independent dealers in Q4.

Speaker Change: This is consistent with our viewpoint that while independent dealers continued to be challenged by today's high interest rate environment franchise dealers in particular are increasingly in need for Truecar services to help them cope with growing new car inventories.

Jantoon Reigersman: Further highlighting this trend, new vehicle sales accounted for 59% of the total units sold on TrueCar in Q4, which is up from 50% of total units sold in Q4 2022 and up from 56% of total units sold in Q3 2023. We believe TrueCar's leverage towards franchise dealers, combined with our unique ability to offer targeted OEM incentives to our 250-plus affinity partner audiences, positions us to capitalize on the growing focus on new vehicle sales. Coinciding with our presence at the National Automobile Dealers Association, also called NADA, we launched a new suite of dealer products called TrueCar Marketing Solutions, also known as TCMS.

Speaker Change: Further highlighting this trend new vehicle sales compromised, 59% of the total units sold on Truecar in Q4, which is up from 50% of total units sold in Q4, 2022 and up from 56% of total units sold in Q3 2023.

Speaker Change: We believe truecar levered towards franchise dealers combined with our unique ability to offer targeted OEM incentives to our 250 plus affinity partner audiences positions us to capitalize on the growing focus on new vehicle sales.

Speaker Change: Coinciding with our presence at the national.

Speaker Change: Automobile dealers Association also gold and 88, and we launched a new suite of dealer products called Truecar marketing solutions also known as Dcms, the development and launch of T. C. MFS was informed by and in response to feedback shared by many of our dealer partners related to or to their most Goldman <unk>.

Jantoon Reigersman: The development and launch of TCMS were informed by and in response to feedback shared by many of our dealer partners related to their most common challenges around, one, identifying and reaching targeted audiences of in-market consumers, two, standing out from the sea of competing dealers in a consumer environment lacking the brand loyalty of the past, and three, cost-effective ways to showcase and promote inventory not being surfaced by the Moore-Fullman search algorithm. The result is a new offering that is not only highly complementary and accretive to the core listings lead gen business for which dealers have come to know us, but also represents a new cost-effective alternative to the traditional digital marketing channels that presently capture a significant share of dealers' digital marketing budget. Therefore, we're confident that the rollout and adoption of our TCMS products will serve as a key building block for our near-term growth objectives by helping us attract and retain key dealer partners while growing revenue per dealer. Let us also briefly turn to TrueCar+.

Speaker Change: <unk> around one identifying and reaching targeted audiences of in market consumers to standing out from the sea of competing dealers in a consumer environment lacking the brand loyalty of the bass and three cost effective ways to showcase and promote inventory not being served.

Speaker Change: Yes.

Speaker Change: By the more Goldman search algorithms.

Speaker Change: The result is a new offering that is not only highly complementary and accretive to the core of listings lead Gen business for which dealers have come to know us, but also represents a new cost effective alternative to the traditional digital marketing channels that presently capture a significant share of dealers' digital marketing budgets. Therefore, we're confident that.

Speaker Change: The rollout and adoption of our T. C. M's products will serve as a key building block for our near term growth objectives objectives by helping us attract and retain key dealer partners, while growing revenue per dealer.

Speaker Change: Let us also briefed Ernie briefly turn to Truecar plus to be clear the launch of D. C. M. S's in no way deviation and strategy and our singular focus remains on our pursuit of what we believe to be the Holy Grill automotive retail the ability to buy a new certified pre owned or used car with.

Jantoon Reigersman: To be clear, the launch of TCMS is in no way a deviation in strategy, and our singular focus remains on our pursuit of what we believe to be the holy grail of automotive retail, the ability to buy a new, certified, pre-owned, or used car with or without a trade-in from the comfort of your couch through an entirely digital online transaction. For consumers, that means an experience built upon the trust and transparency we've always offered, where they can, number one, shop millions of listings nationwide to find the right deal for them. Two, select between a range of aftermarket products offered by the dealer. Three, receive offers and secure financing from a range of competitive lenders regardless of their credit score.

Speaker Change: Or without a trade in from the comfort of your couch through an entirely digital online transaction.

Speaker Change: For consumers that means an experienced buildup on the trust and transparency, we've always offered where they can number one show up millions of listings nationwide to find the right deal for them to select between a range of aftermarket products offered by the dealer three receive offers unsecured financing from a range of competitive.

Lenders, regardless of their credit score for receive a firm offer on the trade and it is directly incorporated into the value of the deal five build out a fully transparent deal that includes all taxes fees and rebates six and digitally execute our retail installment contracts and seven schedule pickup or delivery of their.

Jantoon Reigersman: Four, receive a firm offer on the trade-in that is directly incorporated into the value of the deal. Five, build out a fully transparent deal that includes all taxes, fees, and rebates. Six, digitally execute a retail installment contract. And seven, schedule pickup or delivery of their vehicle all from the comfort of their couch.

Speaker Change: So all from the comfort of their couch.

Jantoon Reigersman: For dealers, we want to offer, one, an expansion of their addressable market and the ability to compete for consumers nationwide. Two, superior attachment rates across the dealer's customizable F&I menu. Three, a significant improvement in sales volume and efficiency by delivering a completed transaction ready for fulfillment. And four, access to a risk-free trade-in. We believe this is what a true online buying experience looks like, and we are hopeful that TrueCar will enable the first true online purchase of a new car within the first half of this year. And we're partnering with several key external stakeholders to make this happen. This is not trivial work.

Speaker Change: For dealers, we want to offer one and expansion of their addressable market and the ability to compete for consumers' one nationwide to superior detriment rates across the dealer customizable F&I menu.

Speaker Change: Three a significant improvement in sales volume and efficiency by delivering a complete and complete the transaction ready for fulfillment and for access to a risk free trade and we believe this is what a true online buying experience looks like.

Speaker Change: We are hopeful that truecar will enable the first true online purchase of a new car within the first half of this year and we're partnering with several key stakeholder external stakeholders to make this happen. This is no trivial work on even though we have a clear product development roadmap, we noted significant level of effort and coordination.

Jantoon Reigersman: And even though we have a clear product development roadmap, we know the significant level of effort and coordination this takes, including some that are outside of our control. Once completed, the current TC Plus product, effectively still a Superlead, will be replaced by a complete online transaction. And at that point, only cars that are fully transactable online will be classified as TC Plus. TC Plus to date has been a vital learning platform for us to get to the product development and experiences we have today. Lastly, our outlook for this quarter and beyond. As a reminder, our goal is to return the business to 300 million in revenue with a 10% free cash flow margin by the end of 2026, implying a compound annual growth rate of 24% from 2023 to 2026. We believe we can achieve this goal by focusing on the following four building blocks. Number one, we can activate new dealers.

Speaker Change: Take the stakes, including some out of our control once completed the current T C plus product effectively still super lead will be replaced with a complete online transaction and at that point only gosh at our fully turns actable in line will be classified as D C plus <unk>.

Speaker Change: D C plus to date has been a vital learning platform for us to get to the product development and experiences we have today.

Lastly, our outlook for this quarter and beyond as a reminder, our goal is to return the business to 300 million in revenue with 10% free cash flow margin by the end of 2026, implying a compound annual growth rate of 24% from 2023 to 2026, we believe we can achieve this goal by focusing on the full.

Speaker Change: Flowing four building blocks at number one activate new dealers number to limit dealer churn number three grow average revenue per dealer through our expanded product offering and four continue to grow our OEM partnerships progress against each of these building blocks will take time, but should have a compounding effect over the course of the year.

Jantoon Reigersman: Number two, limit dealer churn, and number three, grow average revenue per dealer through our expanded product offering. And four, continue to grow our OEM partner. Progress against each of these building blocks will take time but should have a compound effect over the course of the year. We aim for 10% year-over-year revenue growth in Q1 and around break-even adjusted EBITDA. As a reminder, our first quarter of the year adjusted EBITDA flow-through is typically seasonally lower due to payroll-related and NADA expenses.

Speaker Change: We aim for 10% year over year growth in Q and revenue growth in Q1 and around breakeven adjusted EBITDA as a reminder, our first quarter of the year adjusted EBITDA flow through is typically seasonally lower due to payroll related and NDA expenses looking beyond Q1.

Jantoon Reigersman: Looking beyond Q1, we anticipate an acceleration of our revenue and EBITDA growth and are confident that we can achieve positive free cash flow in the second half of the year. Now Operator, let's open the call to questions from our analysts. Yes, thank you. We will now begin the question and answer session. For questions, you may press star then 1 on your telephone keypad. If you are using a speaker phone, please pick up your handset before...

Speaker Change: We anticipate an acceleration of our revenue and EBITDA growth and our confidence that we can achieve both of the free cash flow in the second half of the year.

Speaker Change: Now operator, let's open the goal for questions from our analysts.

Speaker Change: Yes. Thank you we will now begin the question and answer session.

Speaker Change: You May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the case if at any time your questions have been addressed and you would like to withdraw it and please press Star then two.

Operator: If at any time your question has been addressed and you would like to withdraw it, please press star 1. This time we'll pause momentarily. And today's first question comes from Naved Khan with B. Reilly. Hi, this is Ryan on behalf of Naved. Thank you for taking my question. Two, if I may.

Speaker Change: We will pause momentarily to assemble our roster.

Speaker Change: And today's first question comes from Navi Kang with B Riley Securities.

Speaker Change: Hi, This is Ryan on behalf of Ed. Thank you for taking my question two if I may.

Ryan James Pfingst: First, incentive revenue has grown pretty materially. How do you expect the growth trend to look in 2024? And then second, in the shareholder letter, you alluded to the opportunity to incorporate TrueCar marketing solutions in subscription packages. Can you talk about the timeline for that? Thank you. Absolutely. So this is Jantoon.

And kind of revenue has grown pretty material materially how do you expect the growth trying to look into 2024.

Navi Kang: And then second in the shareholder letter you alluded to the opportunity to incorporate truecar marketing solutions and subscription packages.

Ryan: Can you talk about the timeline for that thank you.

Ryan: Absolutely. So I think we said this is jen tune in terms of the revenue growth as we outlined we are obviously very focused on return to the 300 million revenue.

Jantoon Reigersman: In terms of revenue growth, as we outlined, we are obviously very focused on returning to the 300 million revenue target set by the end of 2026. So that's a compound annual growth rate of roughly 24%. So remember, in Q3, we had single-digit growth. In Q4, now, we've had double-digit growth. Obviously, growth is up to the right; it's never perfectly linear.

Ryan: And target set by the end of 2026, a compound annual growth rate of roughly 24%. So and remember in Q3, we had single digit growth Q4, now we've had double digit growth obviously growth is up to the right never is perfectly linear.

Jantoon Reigersman: And we are confident that we're building up the building blocks required to get to this effectively compound growth rate that we're seeking over the course of the next three years. So I think we know what we need to do, and we have the building blocks, but also remember we're just coming out of the trough of the first time that we were actually growing again in Q3, and we'll be accelerating and building that up over the course of this year, vis-a-vis TCMS. So we launched this at NADA, which was a couple of weeks ago, and some of these products are currently being launched. Others are being finalized, but I would argue that the real impact should be seen over the course of Q2 and going forward, although there will be some marginal ability for dealers to already effectively sign up in Q1, and some revenue will flow in Q1, but you'll see where you should be seeing an increase in revenue per dealer over the course of this year as these products roll out more widely. Ryan, this is Oliver.

Ryan: And we are confident we're building up the building blocks required to get to this effectively gone bond growth rates that we're seeking over the course of the next three years.

Ryan: So I think we'll where we know what we need to do and we have the building blocks, but also remember we're we're just coming out of the troll off the first time that we were actually growing again in Q3.

Ryan: And we will be accelerating and building that up over the course of this year.

Ryan: And this V at Dcms. So we've launched this at N D. A which was a couple of weeks ago and some of these products are.

Ryan: Currently being launched Aldars are being finalized, but I would argue that.

Ryan: The real impact should be seen over the course of Q2 and going forward, although there will be some marginal.

Ryan: The ability for dealers to already and start a waste of effectively sign up in Q1, and some revenue will flow in Q1, but you'll see where you should be seeing a increase in revenue per dealer over the course of this year as these products will roll out more widely.

Ryan: And Ryan. This is this is Oliver I'll just chime in on that.

Oliver Foley: I'll just chime in on that second question. You know, if you look at the description that we provided for each of the TCMS products, you'll see that some of them are, I think, very programmatic, and they're really good candidates to be incorporated into our existing subscription bundles. Others are more bespoke, where we're effectively running targeted campaigns on the dealer's behalf, right, where they sort of try to capture some of their digital marketing spend that would go to sort of more traditional channels. And so our hope is that by the very beginning of Q2, our subscription tiers will reflect some of these more programmatic TCMS products, the ones that really are designed to sort of provide incremental on-site awareness for dealers, grant opportunities, and sort Thank you. Thank you. And the next question comes from Tom White with D.A. Davis. Hey, this is Wyatt on behalf of Tom.

Ryan: Question.

Oliver: If you look at the description that we provided on an agent that Tcs products, you'll see that some of them are I think very programmatic and theyre really good candidates to be incorporated into our existing subscription bundles.

Oliver: Others are more bespoke, where we're effectively running targeted campaigns on the dealer's behalf right and really started trying to capture some of their their digital marketing spend that would go to sort of more traditional channels.

Oliver: And so our hope is that by.

Oliver: The very beginning of Q2, our subscription tiers.

Oliver: We will reflect some of these more programmatic tcs products.

Oliver: Isn't that really are designed to.

Oliver: Provide incremental onsite awareness for dealers branding opportunities.

Oliver: And sort of additional and it being an additional traffic driver for them.

Speaker Change: Thank you.

Speaker Change: Thank you and the next question comes from Tom White with D. A Davidson.

Tom White: Hey, this is why entre Tom Thanks for taking our questions.

Wyatt J. Swanson: Thanks for taking our question. Could you talk a little bit about what your outlook assumptions are for TrueCar Plus for 2024? Is there an explicit monetization benefit from TrueCar Plus this year? And if not, when do you think it could impact TrueCar's revenues in a more meaningful way? Thank you.

Tom White: Could you talk a little bit about what your outlook assumptions are around Truecar plus for 'twenty 'twenty. Four is there an explicit monetization benefit from Truecar plus this year and if not when do you think it could impact truecar its revenues in a more meaningful way. Thank you.

Tom White: Yeah. Good question and I think it's a similar question that was asked in the past and I'll repeat what we said then too I think for 'twenty 'twenty four the focus really is around the four building blocks that we mentioned so it's getting dealers back onto the platform limit churn and increase revenue per dealer bikes.

Jantoon Reigersman: And I'll repeat what we said then too. I think for 2024, the focus really is around the four building blocks that we mentioned. So it's getting dealers back onto the platform, limit churn, increase revenue per dealer by expanding the product offering, and really focus on the OEM opportunity. We're not assuming a significant contribution from TrueCar Plus throughout 2024.

Tom White: Spanning the product offering and really focus on the OEM opportunity.

Tom White: We're not assuming a significant contribution of Truecar plus throughout 2024, obviously that is of high focus for us from a product development perspective, but we're also well aware that as we rolled it out there are always going to be some learnings that you'll do as you commercialize that more fully in <unk>.

Jantoon Reigersman: Obviously, that is a high focus for us from a product development perspective, but we're also well aware that as we roll that out, there are always going to be some learnings that you'll do as you commercialize that more fully and as you expand that and put more dealers on that program. So for this year, assume that there are no real or limited financial contributions, and that should kick in obviously in 2025 and beyond.

Tom White: As you expand that and put more dealers on that program.

Tom White: <unk> for the for this year assume that Theres, no real or limited financial contributions and that should kick in obviously into 2025 and beyond.

Speaker Change: Got it and why.

Oliver Foley: And Wyatt, I'll just chime in quickly and say that, in my view, the number one way that TrueCar Plus will be monetized in 2024 is by helping us attract new dealers and retain existing dealers. The reason I say that is because I do believe that once we do transact that first entirely digital online new car purchase, we have a very differentiated marketplace that provides a very unique value proposition to dealers. And we've sort of outlined some of those key value props for the dealer, whether it's expanding their addressable market, or improving their ability to drive F&I sales. And so once we do prove that we can do that, hopefully, in the first half of this year, I do think we have a marketplace that's truly differentiated from all the others out there, and that'll help us sort of regain our share of dealers and hopefully retain our existing dealerships. Okay, great, thank you. And then just one follow-up question, could you update us on your capital allocation priorities for 2024? I'll jump in quickly there.

Speaker Change: I'll just I'll chime in quickly.

Speaker Change: In my view the number one way that that.

Speaker Change: Truecar, possibly monetize in 'twenty 'twenty four is bye.

Speaker Change: You know, helping us attract new dealers and retain existing dealers.

Speaker Change: When I say that is because I do believe that once we do transact that first entirely digital online new car purchase.

Speaker Change: We have a very differentiated marketplace that.

Speaker Change: <unk> provides a very unique value proposition to dealers and we sort of outlined some of those some of those.

Speaker Change: Key value props for the dealer, what whether it's expanding their addressable market.

Speaker Change: Improving their ability to drive F&I itself.

Speaker Change: And so once we do prove.

Speaker Change: That we can execute that.

Speaker Change: Hopefully in the first half of this year I do think we have a marketplace. It truly differentiated from all the others out there that will help us regain our share of the alerts and hopefully retain our existing dealers.

Speaker Change: Okay, great. Thank you and then just one follow up could you update us on your capital allocation priorities for 2024.

Speaker Change: Yeah I'll jump in quickly there.

Speaker Change: I think we've long said that once we get to free cash flow breakeven.

Oliver Foley: I think we've long said that once we get to free cash flow break-even, we will be actively engaged in a capital allocation strategy. Right now, we still maintain over $135 million on our balance sheet, and we're very keen to sort of come up with a deliberate strategy for the second half of this year, given that we do expect to be free cash flow positive in the second half of this year. So, as we've said before, everything is on the table, whether it be strategic acquisitions, share repurchases, it be... [inaudible] Got it. Thank you both. Thank you. And the next question comes from Chris Pierce. Hey, good morning.

Speaker Change: We will be there.

Speaker Change: Actively.

Speaker Change: Engaged in your capital allocation strategy right now we still maintain.

Speaker Change: Over $135 million on our balance sheet.

Speaker Change: And.

You know where we are.

Speaker Change: You know.

Speaker Change: Very keen to sort of come up with a deliver.

Speaker Change: Deliberate strategy for the second half of this year given that we do expect to be free cash flow positive in the second half of this year. So you know as we've said before everything is on the table, whether it be strategic acquisitions it would be.

Speaker Change: Share repurchases.

Supercharging the growth.

P C plus with a more robust marketing budget all of those things are on the on the table for the second half of this year.

Speaker Change: Got it thank you both.

Speaker Change: Thank you and the next question comes from Chris Parish with Needham.

Hey, good morning, I'm grabbing news.

Christopher Alan Pierce: On revenues, specifically, can you talk about OEM incentive revenues? Is there any seasonality there or, you know, is there a pipeline that you can speak to there? I just want to get a sense of how to think about that, because there's a revenue line into 24. Yeah, Chris, so I don't think there's any seasonality per se.

Chris Parish: Specifically can you talk about OEM incentive revenue is there any seasonality there.

Chris Parish: Is there a pipeline that you can speak to there I just want to get a sense of how to think about that revenue line into 'twenty four.

Chris Parish: Yeah, Chris it's Adam So I don't think there's any seasonality per se it's much more.

Jantoon Reigersman: It's much more, these are effectively more to more project-based, and as a result, are a little bit more lumpy in nature. And so it's less about consistent revenues, more that there are projects, like different programs that are effectively running with the different OEMs. We have a multitude of conversations at any point in time.

Adam: These are effectively more to more project based and as a result are a little bit more lumpy in nature and.

Adam: So it's less about consistent revenue, it's more of a derisk project like different programs that we're effectively running with the different Oems.

Adam: We have multitude of conversations at any point in time, there are different forms of programs were often suggesting in the depending a little bit on the priorities of the OEM. Some programs are more relevant to different points in time than others, and so it's a little bit hard to predict very well the few.

Oliver Foley: There are different forms of programs we often suggest, and depending a little bit on the priorities of the OEM, some programs are more relevant at different points in time than others. And so it's a little bit hard to predict very well the future components of, okay, how is that revenue line growing exactly quarter to quarter, and it's always a little bit fluctuating. But overarching, we see a huge opportunity on the OEM side in general, and so we do feel that there's a large, like if you look at it on a yearly basis, for example, that there's a large opportunity for us to obviously grow that revenue line. And obviously, as part of the longer-term trajectory that we've outlined, we obviously feel that we should get back to historical OEM numbers and beyond as we start looking in the outer years.

Adam: Sure components of Okay. How is that like revenue line growing exactly quarter to quarter, and it's always a little bit fluctuating.

Adam: But overarching we see a huge opportunity in the OEM side.

Adam: In general and so we do feel that there's a large like if you look at it on a yearly basis for example that there's a large opportunity for us to to to obviously grow that revenue line.

Adam: And obviously, we as part of the longer term trajectory that we've outlined we obviously feel that we should get back to historical OEM numbers and beyond as we started looking in the outer years, but the short version is yes, we have active dialogues we have different programs.

Oliver Foley: But the short version is, yeah, we have active dialogues, we have different programs that are very interesting to pursue for the OEMs, but it's hard to perfectly predict that or outline that forecast. And Chris, I'll just add that, you know, I think that the seasonality in the OEM business is really just tied to new vehicle sales, right? So, because it is still very much a pay-per-performance type model, meaning, you know, these are rebates; they're based on the volume of new car purchases. And so, generally speaking, in Q4, you see seasonally higher volume because that's generally when you see a ton of new car sales. Q1: It always seems to come down slightly.

Adam: That are very interesting to pursue for the Oems.

Adam: But its hard to perfectly predict that or outline nuts forecast us.

Adam: Chris.

Chris Parish: I'll just I'll, just add that I think that.

Chris Parish: Seasonality in the OEM business is really just tied to that.

Chris Parish: New vehicle sales right. So because it is still very much a pay for performance type of model.

Chris Parish: Yeah. These are rebates there based on the volume of.

Chris Parish: New car purchases.

Chris Parish: And so you know generally speaking in Q4, you see you can see seasonally higher volume because that's generally when you see kind of a.

Chris Parish: New car new car sales.

Chris Parish: One it always seems to come down slightly and so I would say that that's really sort of the seasonality behind the OEM side of the business. It's really just tied to new vehicle sales.

Oliver Foley: And so I would say that's really sort of the seasonality behind the OEM side of the business. It's really just tied to new vehicle sales. Okay, perfect. And then on expenses, talking about building out TrueCar Plus and the learning extremity, is this a good run rate for tech and development expenses, or does there need to be further investment there? I just want to know the right way to think about that going forward because it's come down pretty dramatically in the past couple quarters.

Speaker Change: Okay, perfect and then on expenses I'm talking about building out to acquire plus and the learnings from that is this a good run rate for tech and development expenses or does there need to be further investment there I just don't know the right way to think about that going forward, it's come down pretty dramatically the past couple of quarters.

Speaker Change: Yeah, So I'd say when you look at Q4.

Speaker Change: One thing to call out there were just over $1 million of.

Jantoon Reigersman: Yeah, so when you look at Q4, one thing to call out is that there was just over $1 million of sort of, "inaudible." Something closer, maybe slightly above $7 million is sort of the run rate that I would expect, whereas we came in, I believe, at 6.4 million in Q4. So that definitely does reflect sort of that non-recurring benefit that we had in Q4. Okay, perfect. Thank you. Thank you. And the next question comes from Marvin Fong with VTI. Good morning.

Speaker Change: Accrual.

Speaker Change: Accrual reversals, so we had sort of a onetime benefit in Q4 around certain head count accruals.

Speaker Change: That will reverse in the quarter, So I would say that the tech and Dev.

Speaker Change: <unk> expense in Q4 is.

Speaker Change: Slightly below what the run rate should be I think no.

Speaker Change: Something closer maybe slightly above $7 million is sort of the run rate that I would expect whereas we came in I believe its $6 4 million in Q4, so that definitely doesn't reflect the.

Speaker Change: Sort of that nonrecurring benefit that we had in Q4.

Marvin Milton Fong: Thanks for taking my questions. So first question, apologies, I jumped on a little late if this is already asked, but you just kind of speak to your expectations for the independent dealer channel. You know, there was an uptick in the churn in the fourth quarter, and I understand that. But I think the fourth quarter typically is seasonally a little bit higher.

Speaker Change: Okay perfect. Thank you.

Speaker Change: Thank you and the next question comes from Marvin Fong with B T I G.

Marvin Fong: Hi, good morning, Thanks for taking my questions. So first question I.

Marvin Fong: I apologize I hopped on a little late if you've addressed this already but you just kind of speak to your expectations for the independent dealer channel.

Marvin Fong: You know there was an uptick in the churn in the fourth quarter and I understand that I think the fourth quarter typically is seasonally a little bit higher but do you expect independent dealer churn to continue throughout 2024, or how do you view that and then.

Jantoon Reigersman: But, you know, do you expect independent dealer churn to continue throughout 2024? Or, you know, how do you view that? And then on TC+, just, I know it's super early days, but what sort of thought process is behind your plans to roll that out? You know, plan to just keep that on the marketplace, or could it simultaneously roll out as a white label solution for dealer websites, or even OEM? Maybe you could expand a little bit more on your thinking there. Absolutely. Hey, Marvin.

Marvin Fong: On T C plus I'm just I.

Marvin Fong: I know, it's super early days, but what sort of your thought process declining behind your behind your plans to roll that out.

Marvin Fong:

Marvin Fong: You plan to just keep that on on on the on the marketplace or put it simultaneously role as a white label solution for dealer websites or even OEM, maybe you could expand a little bit more on what you're thinking there. Thanks.

Speaker Change: Absolutely Hey, Marvin so.

Speaker Change: On on the independence, yes, they're there they're think of the independents, obviously is almost I mean nervously. Many many groups within that but think about it is if you oversimplify. It you have smaller independents that obviously are going through a rough time with financing.

Jantoon Reigersman: So on independence, yeah, think of independence obviously as almost, I mean, there are obviously many, many groups within that. But think about it this way, you have smaller independents that obviously are going through a rough time with financing, high financing costs, and therefore right limited affordability for consumers, and so for them, it's hard to acquire inventory as well as sell inventory, and so a lot of them are either going out of business, they're being acquired and rolled up into effectively roll-ups, etc. So there's a lot of moving and shifting in the smaller independent space.

Speaker Change: Hi financing costs.

Speaker Change: And therefore, right limited affordability for consumers and so for them, it's hard to acquire inventory as well as sell inventory and so a lot of them are either going out of business, they're being acquired and rolled up into effectively roll ups et cetera. So there's a lot of moving and shift.

On the smaller independent space, where we're obviously very focused still on the larger independents and we see we see good traction there, but they obviously run a very different business. So yes, we see a continued decline.

Jantoon Reigersman: We're obviously very focused still on the larger independents, and we see good traction there, but they obviously run a very different business. So yes, we see a continued decline in smaller independents throughout the year but obviously good traction with larger independents and good traction with franchising. So I think that's the end. Any questions on that specifically before I go over on TC Plus? No, I thought that was a great answer. I guess I should have said yes.

Speaker Change: Decline of smaller independence throughout the year, but obviously.

Speaker Change: A good traction with larger independence and good traction with franchisees. So that's I think that's the answer any questions on that specifically before I go over on D C plus.

Speaker Change: Oh, no I thought that was a great answer.

Speaker Change: On T C plus yeah, I think look there I think there are two two different parts to your question. One is how do you think about the rollout.

Jantoon Reigersman: On TC+, yeah, I think, look, I think there are two different parts to your question. One is, how do you think about the rollout? Number one is, I think we're TC+. We're not going to have every single dealer partner on TC+ in the future. It's really about making sure we have the right dealers on, and then obviously really focus on supply and demand. And so there's going to be a pre-qualification process that's going to happen around the dealers that can be on because, obviously, we want to make sure that that experience is a really good experience for both the consumer and the dealer. And that we're really making sure we're very thoughtful about consumers being able to find the right inventory and where the right inventory is available. And so at the end of the day, it's really about scaling that by identifying the right dealers and then making sure that they're on, and then doing it also in a very consistent way. So it's also not something that you're going to flip a switch and have thousands of dealers on.

Speaker Change: One is I think were D. C plus we're not gonna have every single dealer partner OTC Blas in the future it's really about.

Speaker Change: Making sure we have the right dealers on and then obviously really focus on supply demand and so theres going to be a prequalification thats going to happen around the dealership can be on.

Speaker Change: Because obviously, we want to make sure that.

Speaker Change: Experience is a really good experience for both consumer and dealer.

Speaker Change: And we're really making sure.

Speaker Change: We're very thoughtful about consumers being able to find the right inventory and where the right inventory is available.

Speaker Change: And so I think at the end of the day, it's really about scaling that by identifying the right the right dealers and making sure that they're on and then doing that also in a very consistent matter. So it's also not something that youre going to flip a switch and have thousands of dealers on you're really thinking about denzel larger dealers on initially.

Jantoon Reigersman: You're really thinking about tens of larger dealers initially, having the right amount of inventory, and then start pushing from there. So vis-a-vis your question on white labeling, those are things that are absolutely very interesting opportunities for us. In particular, if you start thinking about our affinity network as an example, right?

Speaker Change: Having the right amount of inventory and then start pushing from there.

Speaker Change: Vis vis your question on White labeling those are things that are absolutely.

Speaker Change: Very interesting opportunities for us in particular, if you start thinking about our.

Speaker Change: Our affinity network as an example, right. So if you think about the online transaction space and you think about the entry points that every consumer has then they are very interesting opportunities for us to already capture people of the earlier stage and think golf, Hey, you're a lender and you have a very key.

Jantoon Reigersman: So if you think about the online transaction space and you think about the entry point that every consumer has, then there are very interesting opportunities for us to already capture people at the earlier stage and think of, hey, you're a lender, and you have a very committed consumer who wants to lend with you and through you, but wants to find their car and already be effectively pre-qualified on your own side. Then all those things should be possible, and you should be able to navigate them through almost like a different type of TrueCar Plus experience, where they see very specific inventory for their lending, as an example. So the answer is yes, there's a lot of opportunity for that. We obviously are very focused in the near term on getting the marketplace and the transaction enabled the way we've always envisioned it. And we finally broke the back of that camel in order to actually make it happen, vis-a-vis the paperwork. But opportunities like white labeling are big opportunities for us going forward.

Speaker Change: <unk>.

Speaker Change: Consumer who wants to lend with you and through you, but wants to find their car and already be effectively prequalified on your own side and all those things should be possible and he should be able to navigate them then through through almost like a different type of truecar plus experience, where they see very specific inventory for for Dennis for their lending.

Speaker Change: As an example, so the answer's, yes, theres a lot of opportunity to do that we obviously are in the near term very focused on getting the marketplace and the transaction enables.

Speaker Change: The way, we've always envisioned it and we finally broke tobacco that gamble in order to actually make that happen vis vis the paperwork.

Speaker Change: But opportunities like white labeling our big opportunities for us going forward.

Speaker Change: That's great John Thanks, Thanks, so much.

Jantoon Reigersman: That's great, Jantoon. Thanks. Thank you, and this concludes the question and answer session. I would like to turn the floor back over to TrueCar's President and CEO, Jantoon Reigersman, for closing remarks.

Speaker Change: Thank you and this concludes our question and answer session I would like to turn floor back over to <unk>, President and CEO, John Henry Grishman for closing remarks.

Speaker Change: Awesome, So I would like to thank everybody for taking the time to participate and participate in our call. Today I also want to thank the entire team of Truecar for all their continued dedication and perseverance, we have a huge opportunity ahead of us and the team is doing tremendous work. So I'm really proud of them and want to thank them for.

Jantoon Reigersman: So, I would like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their continued dedication and perseverance. We have a huge opportunity ahead of us, and the team is doing tremendous work. So I'm really proud of them and want to thank them for all the contribution they're making. The conference is now over. Thank you for attending today's presentation made out of The Ultimate Parody Site!

Speaker Change: For all the contribution they're making.

Speaker Change: Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.