Q2 2025 TrueCar Inc Earnings Call
Speaker #1: Good day. And welcome to TrueCar second quarter 2025 financial results conference call. Please note this event is being recorded. I would now like to turn the conference over to Jantoon Reigersman, president and chief executive officer of TrueCar.
Speaker #1: Please go ahead.
Speaker #3: Thank you, operator. Hello, everyone, and welcome to TrueCar's second quarter 2025 earnings conference call. Joining me today is Oliver Foley, our chief financial officer.
Speaker #3: I hope you've had the opportunity to read our most recent stockholder letter, which was released yesterday after market close and is available on our investor relations website at ir dot TrueCar dot com.
Speaker #3: Before we get started, I need to read our usual safe harbor. I want to remind you that we will be making forward-looking statements on this call, including statements regarding our ability to operationalize certain aspects of the TrueCar Plus platform and our ectations with respect to future adjusted EBITDA profitability and free cash flow.
Speaker #3: 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.
Speaker #3: And are not and should not be relied on as guarantees of future performance or results. Actual results could differ materially from those contemplated by our ward-looking statements.
Speaker #3: We caution you to review the risk factor section of our annual report on Form 10K, our quarterly reports on Form 10Q, and our other reports and filings with the security and exchange commission.
Speaker #3: For a discussion of the factors that could cause our results to differ materially, the forward-looking statements we make on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law.
Speaker #3: In addition, we will also discuss certain gap and non-gap financial measures reconciliations of all non-gap measures to most directly comparable gap measures are set forth in the investor relations section of our website at ir dot TrueCar dot com.
Speaker #3: The non-gap financial measures are not intended to be considered in isolation or as a substitute for the results prepared in accordance with gap. Let us begin.
Speaker #3: I'm pleased to report the following operational highlights from the second quarter of 2025. Total revenue of 47 million grew by 5.2 million up 12.4% year over year, and marking our highest quarterly revenue since Q3 2021.
Speaker #3: Our net loss decreased to negative 7.6 million from negative 13.5 million in the same period last year. Adjusted EBITDA came in at negative 1.2 million.
Speaker #3: OEM revenue of 3.6 million grew by 0.6 million or 19.7% year over year. New unit sales volume grew 6.2% year over year as compared to the industry's 2.8% growth in new vehicle retail sales.
Speaker #3: Prospect close rate during the quarter reached the highest level since Q2 2021. And our restructured performance marketing campaigns yielded at nearly 30% year over year improvement in our average cost per sale for non-affinity partner units.
Speaker #3: As we articulated in our last stockholder letter, our approach to navigating the evolving tariff landscape involves a relentless focus on the factors we can control.
Speaker #3: And a resource allocation strategy that prioritizes initiatives likely to yield positive reserve positive results regardless of the prevailing market environment. In the second quarter, it is meant deferring certain sales and marketing investments and focusing on increased speed of product development to accelerate key product enhancement designed to strengthen our competitive advantage and deliver greater value to dealers and consumers through the TrueCar platform.
Speaker #3: This shift has yielded exciting outcomes as evidenced by the number of core product initiatives that we released, as we as new features during the last 90 days, and the continued progress we have made towards our goal of commercializing TrueCar Plus by year end.
Speaker #3: First, our core product enhancements. As we noted last quarter, dealers measure the value of a third-party lead platform primarily by the rate at which those leads turn into sales.
Speaker #3: That understanding has continued to guide our product roadmap in the second quarter. Leading to a number of enhancements to both the dealer and consumer experience that are designed to improve lead quality engagement and eventually close rates.
Speaker #3: Among the most significant advancements was the launch of actionable insights. A new feature available in the dealer portal that provides personalized data-driven recommendations to help dealers optimize performance on the TrueCar platform.
Speaker #3: By analyzing a broad set of dealer-specific and market-level data, this new feature surfaces opportunities for improvements as well as relevant context and recommended actions enabling our certified dealers to make faster, more effective decisions.
Speaker #3: Whether it's flagging a dealer's age inventory that is priced above market or recommending price adjustments that will yield a better price rating for particular listings.
Speaker #3: Actionable insights enable dealers to extract greater value from our platform. Complementing this feature is our newly launched motivated buyer badging, which leverages appropriate machine learning model to identify and highlight the highest intent shoppers based on more than 20 behavioral signals.
Speaker #3: These high-value leads are now automatically flagged in dealer portal and the dealer's customer relationship management system enabling faster and more targeted follow-up. On the consumer side, we also launched a broad set of updates aiming at making the TrueCar experience more intuitive, transparent, and trustworthy.
Speaker #3: Most notably, we recently completed a full redesign of our search results page, the SRP, introducing a modernized filter interface with smart toggles curated popular filters, and improved mobile usability.
Speaker #3: These changes aim to help consumers more easily find the vehicles that best meet their needs, which in turn leads to improved engagement metrics and increased lead volume for our dealers.
Speaker #3: Similarly, we also completed a major redesign of our vehicle detail page, the VDP, to highlight the most relevant content and deliver the most pertinent information to assist consumers in their decision-making process.
Speaker #3: With a cleaner layout, collapsible sections, and clearer organization of key vehicle details such as specs, features, and warranty information, consumers can now evaluate listings with greater confidence and more complete information, helping them match with the right dealer and and we believe improve close rates as a result.
Speaker #3: Finally, for shoppers that convert into leads, we have significantly strengthened the post-prospect experience through a redesigned post-prospect email that provides consumers with a clean, receipt-style breakdown of the out-the-door price, including applicable discounts, taxes, and fees.
Speaker #3: Combined with prominent calls to action such as scheduled test drive or save offer, these emails are designed to drive higher levels of engagement between prospects and dealers, thus driving more showroom visits and closed sales for our dealer partners.
Speaker #3: Now turning to our TC Plus advancements. While the enhancements to our core product experience are already driving stronger outcomes for both dealers and consumers, we are equally encouraged by the progress we've made towards commercializing TC Plus.
Speaker #3: Our end-to-end digital retailing experience. As we shared last quarter, a critical milestone for TC Plus is completing integrations with key MS providers. Which enables the automation of deal documentation and replaces the time-consuming desk work for desking workflows currently performed by the dealer.
Speaker #3: We are pleased to report that the engineering work related to the integration of CDK's DMS with TC Plus is now complete and in testing.
Speaker #3: This streamlines the dealer experience and drives operational efficiency in a way that only a fully integrated end-to-end platform can deliver. Moreover, we also released a major revamp of the TC Plus consumer checkout flow.
Speaker #3: This redesign introduces a more focused role for the VDP, centered solely on helping the consumer select their vehicle, while migrating all transactional steps into a newly reimagined checkout center.
Speaker #3: This guided checkout experience walks consumers step by step through the purchasing process, strengthening consumer trust by providing greater visibility and transparency at every stage of the transaction.
Speaker #3: The revamped flow also incorporates new features such as dynamic itemized deal receipts that update as the deal progresses, and dedicated pages for a range of available financing and insurance.
Speaker #3: So-called F&I. Products, such as gap coverage, and extended warranty offerings. And for consumers who prefer to complete their purchase in-store, our new continue-at-dealership option creates a seamless online to offline handle.
Speaker #3: These changes are already producing encouraging results. Since the new TC Plus experience went live, we have observed a 115 percent increase in add-to-cart rate, a 40 percent lift in daily credit application submissions, and a 2x improvement in F&I attachment rates.
Speaker #3: All key indicators of a superior consumer experience. As we continue refining the experience and expanding dealer adoption, we believe these improvements will play a critical role in helping TrueCar capture a greater share of online car buyers and future differentiate urselves in the digital retail space.
Speaker #3: Looking forward for TC Plus, the team remains intently focused on a of key priorities that will keep us on path to commercializing TC Plus by year end.
Speaker #3: Completing the back-end DMS integration work and closely monitoring the automation of all deal documentation is critically important and will allow us to begin measuring the significant sales efficiencies that TC Plus seeks to provide our dealers.
Speaker #3: In addition, we are working to expand and streamline our ations with financing partners to improve credit approval rates and help consumers get the most competitive financing offers.
Speaker #3: This includes a universal or a VIN-less pre-qualification experience that allows consumers on TC Plus to exclusively shop for vehicles that are pre-qualified that they are pre-qualified for and expanding the credit application to include co-applicants, thus minimizing the number of rejections projected credit applications and continued to and continuing to improve conversion rates at a critical step in the buying process.
Speaker #3: In addition, we are continuing to build more seamless integrated off-ramps to consumers to finish the transaction at the dealership. This is an important component of the TC Plus experience because we recognize that many consumers prefer to complete a substantial portion of the transaction online before completing the purchase in-store.
Speaker #3: Moreover, according to Cox Automotive Digitization of Automotive Retail Study, published in June 2025, time savings and efficiency was the primary motivation of surveyed buyers who completed a portion of the purchase online before finalizing at the dealership.
Speaker #3: Nevertheless, 97 percent of surveyed dealers reported that consumers repeated steps already completed online when they arrived at the dealership, thus highlighting a critical gap among existing digital retail solutions that fail to seamlessly connect to the online and in-store consumer experience.
Speaker #3: By leveraging our direct DMS integrations, TC Plus seeks to drive efficiencies for both consumers and dealers across our across every step of the buying process, regardless of whether the consumer finishes their deal online or in-store.
Speaker #3: And now looking forward for the now looking forward for the company as a whole. Despite the macroeconomic uncertainty that persists, our long-term growth ambitions have not wavered and our optimism around the future of TrueCar continues to grow as we make significant progress towards our goal of commercializing TC Plus by year end.
Speaker #3: It has been our long-standing belief that a modern marketplace that offers dealers and umers the ability to seamlessly buy and sell vehicles entirely online will play a critical role in the future of automotive retail, and the recent progress we've made in bringing TC Plus to market has strengthened our conviction.
Speaker #3: Moreover, we see momentum gaining for this shift in car buying as evidenced by the June 2025 JPMorgan Chase Auto annual dealership survey that cites 71 percent of surveyed dealers viewing the shift to online vehicle sales as permanent.
Speaker #3: Up from 53 percent in December 2024. And 30 percent of dealers anticipating a significant increase in online vehicle sales penetration up from 24 percent in December 2024.
Speaker #3: Beyond TC Plus and the portunity it represents, we are excited by our expectation that the recent enhancement to our core product offering will begin to yield results in the second half of 2025 and beyond.
Speaker #3: Including through expansion of our aler network and growth in unit sales, as we work to bring new OEM incentives into our platform and deepen our partnerships with key affinity partners to help consumers find exclusive offers on our next vehicle purchase.
Speaker #3: And finally, despite the unpredictability of the current market environment, we believe that the steps we've taken to eliminate cost and maximize our financial flexibility position us to navigate a range of revenue growth scenarios and deliver adjusted EBITDA profitability and positive free cash flow over the second half of 2025.
Speaker #3: Now, operator, let's open the call for questions from our analysts.
Speaker #2: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one, on your touchstone phone.
Speaker #2: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your estion has been addressed and you would like to withdraw your estion, please press star, then two.
Speaker #2: At this time, we will pause momentarily to assemble our Oshta. The first question comes from Tom White, with DA Davidson. Please go head.
Speaker #4: Hey. Thanks for taking the estion. This is Wyatt on for Tom. could ou maybe provide an update on how TrueCar is looking to grow, just some additional details around your used vehicle initiatives?
Speaker #4: And how do you think about that opportunity in light of auto tariffs?
Speaker #3: Yeah. Absolutely. So, hey, Wyatt. Thanks for, for the question. So, I, I think there a couple of things. So, for us, what's one of the things that's ally important for a marketplace is that you make sure that the the people can find the right car, whether that's new or used.
Speaker #3: And if people become more interested in used and there's a natural shift towards that, and we need to just make sure we enable that, from an experience perspective.
Speaker #3: it's hard to determine what the exact impacts are gonna be long term, by the tariffs. And so we are prepared by effectively enabling the consumers to find the cars that they're oking for and best suit their needs.
Speaker #3: Because, people will keep looking for cars and keep acquiring cars at the end of the day. I think one of the pieces that I'll, I'll let Oliver talk a little bit more about is, really engaging on the more of the wholesale side of the business.
Speaker #3: And that's ething we've been looking into to help the dealers source more used vehicles. is one answer to the question on the pickup of demand of used vehicles.
Speaker #3: But at the end of the day, do remember that, yes, tariffs are effect obviously affecting the new vehicle side, but so are the interest rates.
Speaker #3: And so if you you assume a decrease in interest rates over time, you can imagine that there will also be probably a renewed emphasis on the new side as well than given that the people that are buying on the new side are often leasing or financing these deals.
Speaker #3: So maybe, Oliver, you na give a little bit , highlight on the wholesale side and what we've been doing there as part of the use initiative?
Speaker #5: Yeah. Definitely. So, I mean, let me just start by saying that our long-term view on our growth levers remains unchanged, right? It's ally gonna be driven by growing our our dealer network, expanding our OEM partnerships, bringing more incentive programs, to the platform.
Speaker #5: and then ultimately, beginning to to commercialize and scale TrueCar Plus. So long-term, those initiatives remain sort of at the core of our our growth growth strategy.
Speaker #5: You know, in the near term, where our growth comes from will certainly be be those elements that I just mentioned. But we certainly see a shift towards in terms of what dealers are prioritizing right now.
Speaker #5: We've seen a shift towards vehicle sourcing initiative. I think there is a recognition that that in a world where new vehicle supply is constrained, it's critically important for, franchise dealers in particular to have sufficient used supply.
Speaker #5: and so being able to, you know, build up that used supply by sourcing vehicles directly from consumers and and reducing their reliance on traditional sort of brick-and-mortar, auction, platforms, that's that's something that we've seen shift pretty quickly over the last four or five months.
Speaker #5: And so the way that we support dealers with that is through our two products, which is Sell Your Car and the TrueCar Wholesale Exchange.
Speaker #5: You know, both of which allow dealers to source vehicles wholesale directly from consumers that come to TrueCar. So it is just a way for us to, I think, augment our value proposition for dealers and allow them to lean into sourcing vehicles directly from consumers, given the environment today.
Speaker #5: But, you know, long-term, our ambition is not to grow, you ow, the wholesale side of business, in a vacuum, but rather, you know, grow it in conjunction with sort of our core marketplace business.
Speaker #5: and we just view it as being a sort of additional value prop for for dealers that can keep them on the platform for longer and and really help them in a way.
Speaker #5: Got it. That's that's really helpful, color. Thanks. Both of you. just a follow-up. Could ou give an update on our capital allocation priorities? Maybe some color as to whether you plan to ramp up your buyback again?
Speaker #3: Yeah. I'll I'll just say, like, I think, you know, we demonstrated last year that that we are, you know, we're we're tainly open to to repurchasing shares.
Speaker #3: And, you know, I ink we're we're constantly evaluating that as as part of our capital allocation strategy. You know, we do believe that, you know, maintaining a a sufficient cash balance in the near term is is is good for investors.
Speaker #3: It's certainly provides a a healthy amount of downside protection. But, you know, as we think as we bring TrueCar Plus, to market, and as we as we as we hit our goal of being free cash flow, break-even, over the second half of the year, it's certainly, does place a focus on, repurchasing shares.
Speaker #3: And so, you know, I I can't say that, you know, exactly when we'll be in market repurchasing shares, but think as we demonstrated last year, you know, we are certainly open to it.
Speaker #3: And, we'll we'll continue to evaluate it.
Speaker #5: Got it. Thank ou.
Speaker #2: The next question comes from Nawid Khan, with B Riley Securities. Please go head.
Speaker #5: Great. Hi. Thanks for taking our questions. This is Ryan Powell on for Nived. So we wanted ask on the decline of franchise dealers I think we saw 44 turnover in the quarter.
Speaker #5: just wondering about trends, to expect from here. And then secondly, on the highest prospect close rate since, second quarter '21, what factors are contributing to this?
Speaker #5: Is this a function higher lead quality? I'm curious about your thoughts. Thanks.
Speaker #4: Yeah. absolutely. It's a od question. So I ink they they are somewhat intertwined. So, the the dealer the clients are not necessarily something that I'm too worried about in general.
Speaker #4: as I mentioned before, you have often, hey, viously, a standard distribution and often a long tail around these things. One of the things that we've been very focused on in the past quarter has been effectively what type of dealers we take on the network and what types of dealers are coming off.
Speaker #4: And, we give them what we call a dealer network scoring. And we have an algorithm that sits behind that. And so effectively, what we is in our sales efforts, we're really focusing on the type of dealers that have a huge positive impact on our effectively broader network.
Speaker #4: And it obviously is directly correlated to what the people are kind of looking for and where we potentially have gaps. And so it's a combination of that together with the consumers and what the interest of the consumers are, that then you effectively become, for lack of a better word, right, better in making sure that the consumer finds the vehicles at the dealers that they're looking for and that you can actually have the right inventory on as well as for the dealers that you find and and provide the right consumers to convert.
Speaker #4: And so net net is it's a ally become a focus on becoming more efficient, both across the dealer side and making sure we have the right dealers on, which is why you see little bit of the shaking the tree of some of these things.
Speaker #4: And so whether they're it's a little bit plus or little bit minus really doesn't matter overall. We obviously have a huge coverage in the country, but we still feel we have certain gaps vis-à-vis that networking score.
Speaker #4: And so that's something we're very focused on. and obviously, on the other side, we've also become much more efficient in our marketing approach and approaching and engaging with the prospects that are high converting.
Speaker #4: And so the combination of these factors obviously create the prospect rate we're talking about. and I I would argue on on the networking side, that's really about becoming more and more efficient on having the right network in place.
Speaker #5: Got it. That makes sense. Thank you. And then also curious on dealer engagement with new actionable insights and motivated buyer features since the launch.
Speaker #4: Yeah. It's it's a good question. So this is and it's it's it's actually a great question because it's like it's like the classic case of like it's a it's an education process, right, at the end of the day.
Speaker #4: So that's really on us. Like, two things that, we always mention is that we are one of the values we provide to dealers is training and insights.
Speaker #4: And, and so this applies to both. So this gives insights, but in order to extract the insights and know the insights, you effectively need to have training in order to be able to do that.
Speaker #4: Some dealers are more naturally proficient and and understanding in these things than others are. And so this will be something that will start growing over time.
Speaker #4: And obviously, make sure that the various dealers are engaging on an appropriately. we've seen really positive results. So it's a little bit hard to say because you kind of need like train your network on it and and see that.
Speaker #4: But overarching, yeah, it skews very much whether the the dealers are a little bit more digitally savvy or not. as it stands right now.
Speaker #4: But that that's also that really, depends on our training and obviously fits well with the 12-month service cycle that we've laid out in some quarters ago to you ys where obviously we touch every dealer, every quarter, and and so sit sit with them and engage with them.
Speaker #4: And so, this is a really important part of that.
Speaker #5: Got it. Thank ou.
Speaker #2: The next question comes from Chris Pierce, with Needham. Please go head.
Speaker #6: Hey. kind a two-part question. Good morning. if I look at things in our sequential basis, do you saw momentum in dealer revenue, but going to the last question, is it, you know, dealer count matters less, it's units and units per dealer in the modest uptick in units drove that momentum?
Speaker #6: Or did you take some pricing action or it's about having the right dealers and more units on the system? I just kind of wanna understand the momentum in that business and how to think about it going forward.
Speaker #6: And then the second part is you drove this momentum by pulling back on internal investments. So I'm just kind of curious the right way to think the internal investments you had messaged prior and maybe the level of spend going forward given the growth you're showing while pulling back on that spend.
Speaker #4: Yeah. I'll I'll give you a short version. answer in an overtic the next piece. Which is, Chris, that and it's gonna be an unsatisfactory answer to you, which is it's a little bit all of the above at the same time, right?
Speaker #4: So you can you're working on both sides of the equation; you're working a more efficient network while you're also really starting to hone in and be more efficient on the top end.
Speaker #4: That includes also trying to figure out ways to really utilize our own data sets better and write more precisely, re-engage better, more precisely, and re-engage more personalized— all these types of things.
Speaker #4: And so it's it's really about utilizing all the information we already have internally and be a little bit less dependent on the just the the classic standard performance marketing and really focus on, ay, we actually know a lot about these these consumers, and we know a lot about our inventory, and we know a lot about the behaviors that are happening.
Speaker #4: And what can we do to really improve around that? So it's a little bit of both. It's not necessarily that one is prioritized over the other, but it's we're just happen to be tackling it at the same time.
Speaker #4: And then as we then become and find these greater efficiencies, then actually push behind it and push harder as we feel we're ready for that.
Speaker #4: I do think, though, that if you if you think of the network itself, that's really about basically making sure we add the right dealers to the platform and then really think about if there's somebody who wants to churn, who is really value-additive, obviously focus on retention.
Speaker #4: And if there's if there's somebody who wants to churn, who might be less additive to the network, maybe focus our our our efforts on the the ones that really are effectively net positive.
Speaker #4: And so there's a little bit of a reshift that has happened as we realign that that that sales team and and service team. but it happens at the same time.
Speaker #4: So there's not necessarily a particular prioritization amongst the two.
Speaker #5: Yeah. And so Chris, I'll I'll just add a little it, which is, you know, when you think dealer revenue, there's there's you can really split it into two.
Speaker #5: You know, one component is the auto buying program, right? So it's it's what we're etting paid to drive prospects and unit sales for our dealers.
Speaker #5: And so you know we want our our unit growth to move in sync with with the the core auto buying program revenue that we earn from dealers.
Speaker #5: separately, you've the ancillary dealer revenue, which has really made up of the the vehicle sourcing products, such as Sell Your Car and the the wholesale exchange.
Speaker #5: And TrueCar Marketing Solutions. And so those you ow revenue that's earned from from from those parts of dealer revenue really aren't tied to unit sales growth.
Speaker #5: right? They're ally there's there's different KPIs that we measure we for those. and so you know as we talked about, we did see you know a ant lift in the number of dealers who are subscribing to our Sell Your Car product.
Speaker #5: you know, and and and TrueCar Marketing Solutions you know was pretty nascent. this time last year. And so so there's been growth growth from that part of the business as well.
Speaker #5: but looking forward, you know, we certainly want that core auto buying program component of dealer revenue to to to grow and expand. And that's gonna be through adding more of the right dealers to the network, right?
Speaker #5: And those right dealers that are truly accretive to our network, right, where they've got the right supply that matches our demand, you know, they'll have a a higher revenue per dealer.
Speaker #5: And so that's a really in our view, a much more effective way to grow the dealer network over time. and then as it relates to the investments that we've we've made and you ow, you've alluded to us pulling back on investments, well, as I would say that, yeah, I ink we've we've pulled back on certain investments around our our field sales and service.
Speaker #5: and instead really sort of prioritized our energy on the investments into the the dealer experience and consumer experience that are gonna lift overall efficiencies in the platform and specifically close rate, right?
Speaker #5: So as we see close rate continue go up, we can drive more unit sales with fewer marketing investments, right? And and and you know, therefore, you know, you can think we can spend the same amount of marketing, drive significantly more unit sales, and grow the the dealer network in conjunction.
Speaker #5: and so it really was to an extent stepping back, really focusing on what are the things that are gonna drive improvements in the consumer and dealer experience that lift close rates, and then that just gives us a lot more leverage to grow unit sales and the dealer network, you know, over the next several quarters.
Speaker #5: Got it. And and then just lastly for me, I know in the past couple of years we've ked about increasing OEM incentive revenues. And I and know why dealers OEMs wouldn't feel the need to incentivize for the tariff forward.
Speaker #5: But if we talk about prices going higher and where incentives are as a percentage of transaction price now, I'm just kind of curious why you're less bullish on OEM incentive revenue.
Speaker #5: Is it just lower supply? Is directly correlated to lower revenues or lower OEM incentive revenues, or it's like what's the correlation there? Because I'm I'm inking it's gonna be harder for OEMs to sell higher-priced s, but it seems like you guys are coming at it from a different perspective.
Speaker #4: Yeah. I I I don't I actually think the OEM revenue line is a huge opportunity for us. And and and has always been and remains to be.
Speaker #4: I I do think that in a a, higher tariff world, I think OEMs are trying to figure out how to adapt, and, right? And and adapt across their own effectively capital structure for lack of a better word.
Speaker #4: and and we're helping them adapt, right? So we're we're obviously engaging with them directly and see what we can do. But I I I agree with you.
Speaker #4: And I think there is a huge opportunity. I think there is a big opportunity to keep people excited about new cars, and the OEM incentive business is one that is very unique to us.
Speaker #4: And I think we've proven to be very good at. So we remain very bullish on that. And I think as we've proven also in this quarter, we've we've performed well there.
Speaker #2: Okay. Yeah. Thanks, Oliver. Thank you. To ask a question, you may press star, then one on your touchstone phone. The next estion comes from Rajad Gupta with JPMorgan.
Speaker #2: Please go ahead.
Speaker #7: thank ou, for taking the estion. just wanted I don't know if you addressed this earlier or just hopping around different earnings calls. a-a-any any color, you can provide us on the second half, outlook as it relates to, you know, just the non, dealer product side of things, you know, just the franchise independent revenue cadence.
Speaker #7: you know, customer count versus, you know, just average revenue per dealer, ou know, a-any kind of framework you could ide us, you might have visibility, into in the in second half and have a quick follow-up.
Speaker #4: Yeah.
Speaker #7: Yeah. So that's thanks. Go ahead, Oliver.
Speaker #5: Go head, JJ.
Speaker #7: No, please. No, no.
Speaker #4: I an, I I was gonna give Rajad a very dis the, a dissatisfactory answer, which is, look, it's like, I think the part that we control for is obviously the the cost structure of the business and where we do our capital allocations.
Speaker #4: I think the revenue side is a little bit trickier. when it comes to the baseline, I think we we know that very well. I think obviously it's still an evolving world.
Speaker #4: and I think every day, right, is is different and and and more news. And so we're a little bit reluctant to really give any framework around it.
Speaker #4: It's the reason also why I think we were purposeful in the last sentence where we said, right, there there might be different trajectories of lines vis-à-vis the revenue depending a little of the external circumstances.
Speaker #4: But we're ready for that as a business because we're we've we've set ourselves up really well. I ink more broadly, though, I an, uncertainty drives the benefit for us in the way that dealers need us.
Speaker #4: Right? As Chris alluded to before, I think OEMs need us. And so I think we're very positive and excited about what the future brings.
Speaker #4: It's just really hard to predict exactly what the trajectory of that line is. Sorry, Oliver. I I cut you off.
Speaker #5: Yeah. No. I I-I'll just elaborate and say that, you know, g dealer count is is important to us, right? We want we want to maintain you ow, you know, a strong network.
Speaker #5: We wanna have as many active dealers on the platform as possible. but as we have talked about, you know, there there's a difference between a dealer that's truly accretive to the network, right?
Speaker #5: They're they're filling a supply-demand imbalance that exists. And then there are dealers that are that are non-accretive to the network, right, where they're providing more supply.
Speaker #5: when there may not be sufficient demand. And so it to an extent, they can cannibalize other dealers on the network. We we've been really intentional about really focusing on, you ow, how do we get more of those dealers that are truly accretive to the network on the platform?
Speaker #5: And when certain dealers churn, if we feel like they're, you ow, they're they provide redundant supply, then we should be okay with that. I think over time, that translates into a much healthier network where dealers are getting you know, a greater share of unit sales.
Speaker #5: and and I think that over time leads to lower churn, as a result. Also, you know, when you ink about our our franchise dealer network, you know, we're it's comprised of nearly all of the large you know, dealer groups across the country.
Speaker #5: and so we also see a tremendous amount of opportunity outside of growing dealer count, but really just saying, all right, how can we serve these strategic partners in a much deeper way?
Speaker #5: How can we you know, support them beyond just sending them more new car or used car leads, but really expand the way we serve them to include some of our vehicle sourcing products, to include our our TrueCar Marketing Solutions products as well?
Speaker #5: And and then, you ow, really deepen the partnerships with them and drive a greater share of wallet. So all that to say, dealer count is certainly an important metric.
Speaker #5: And over time, we want that to expand. In the near term, we wanna make sure that it's it's the healthiest dealer network possible that has the best supply-demand balance and we're really investing in you know, growing the the partnerships that we have with some of our larger strategic dealer partners.
Speaker #7: Got it. Got it. Thanks for detail, color. and and just you know, I had a broader like question zooming out, you know, on just agentic AI.
Speaker #7: you know, obviously that continues to evolve evolve. you ow, with tools that can you know, onomously search, compare, you ow, even you know, transact.
Speaker #7: And we have the consumers like, how do you see this affecting you know, TrueCar's marketplace model? You know, are there plans to integrate or partner which you know, with such agents, you know, just to say str just to stay central, you know, in the car buying journey?
Speaker #7: any any any thoughts on that would be helpful. Thank ou.
Speaker #4: Yeah. Well, first all, I mean, I think it's a very relevant question. it's obviously something we think a about and we work on tremendously.
Speaker #4: First of all, obviously, the focus is on really making sure that our data is not a swamp but a clear lake that we can utilize and structure and and obviously deploy a lot of tools against.
Speaker #4: And I do think we have very unique datasets that are very unique to us. So, I think there's a lot of opportunity there.
Speaker #4: And we've done a lot work to make sure that these are all very usable. And now have started working on getting products out there for both consumers and dealers effectively utilizing that, right?
Speaker #4: So that's that's number one. Then more broadly, on your question vis-à-vis how people are gonna in the future buy cars, I think it's ally important to remember that we have a very big affinity network.
Speaker #4: which I think is a very important component of trust and how people actually engage with car buying. And so emphasizing and working deeper and deeper with affinity partners will be a very important tool for us going forward.
Speaker #4: And then in enabling them to really get into a world where you possibly even get closer integration with the affinity partners where you can start buying and checking out cars much more easily.
Speaker #4: is is a is a topic that is obviously something that we discuss a lot internally. but overarching, it's something that obviously we think about a lot.
Speaker #4: It's also one of the reasons why we've been rethinking our marketing and the way we've been talking about generating more efficiency on the marketing side to ensure we're not too dependent on certain external platforms.
Speaker #4: So we're really start integrating with the right ones where the actual consumer sits and flows towards. so yeah, long story short, there are multiple aspects where this is touching us.
Speaker #4: There are multiple aspects where we are engaging. I think the affinity network will be an important component of that, but also the way we're designing the flows is something where we would obviously like to become the predominant platform where people are effectively buying selling a car online, whether that's new certified pre-owned or used.
Speaker #4: And I think we have the inventory for it, the infrastructure for it, and that's really a matter of now getting and engaging on the front end and engaging with the right partners to to get a foothold on that side.
Speaker #7: Got it. Got it. No, that that that's a great color. and thanks taking the questions in the back.
Speaker #2: Thank ou. To ask a question, you may press star and one. Thank you. This concludes the question and answer session. And the conference has now concluded.