TrueCar, Inc.

momentarily. We appreciate your patience and ask that you please continue to hold. Good day, ladies and gentlemen, and welcome to your TrueCar first quarter 2021 financial results call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator. At this time, it is my pleasure to turn the floor over to Scott Watkinson. Sir, the floor is yours.

Thank you, operator. Hello and welcome to Truecar's first quarter 2021 earnings conference call. Joining me today are Mike Garrow, our President and Chief Executive Officer, and Jantune Riegersman, our Chief Financial Officer. As a reminder, 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, anticipate, becoming, toward, will, intend, confident, and similar expressions and are not and should not be relied on as a guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the risk factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q, and other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at true.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.

Now I'll turn the call over to Mike. Thank you, Scott, and good afternoon, everyone. I'll start my remarks today with a brief review of Q1. I'll then remind everyone of where we're headed as an organization with a specific emphasis on where we play in the ongoing digital transformation of the automotive vertical. And finally, I'll close with some industry observations. I'm pleased to report that through the unwavering and tireless efforts of the entire Trucar team, Q1 is another strong quarter for Trucar. Overall, we ended Q1 above both guidance and consensus forecast with revenue of $65.1 million and adjusted EBITDA of a positive $2.1 million. Quarter over quarter, revenue increased by 2%. Unit growth, driven by a 26% increase from Trucar.com, and an 8% increase in affinity partner units was up 17% year over year, excluding USAA. Throughout the first quarter, we continued to see slightly better than forecasted dealer churn in spite of the recent macroeconomic headwinds from chip shortages, which I'll come back to at the end of my section. And finally, due to the focused efforts of our field sales team, we saw quarter-over-quarter revenue growth generated through additional dealer products of 15% in Q1. I would now like to highlight three of our key initiatives, starting with our deal-building capabilities. As I mentioned in our last call, in November 2020, we launched the ability for consumers to build their ideal deal online from the comfort of their homes, which we refer to as DealBuilder. TrueCar DealBuilder is a flexible experience that guides the consumer through the process of configuring an accurate car deal. personalized to them based on their trade and valuation, preferred lease or loan terms, down payment preferences, credit profile, and all taxes and dealer-reported fees and accessories associated with the transaction. DealBuilder solves for the most challenging part of online retailing, namely the creation of accurate deals across millions of cars and thousands of dealers and a transparent, guaranteed cash offer for a trade-in. In March, we saw 20% of Truecar.com new prospects. In other words, consumers that have created a connection with a dealer and a vehicle engaged with Truecar Deal Builder, representing an increase of 74% since Q4. Since the November launch, 78% of our franchise network has adopted our solution, further underscoring the value dealers see in the Truecar approach and helping each of them address the current consumer desire. Equally important, this now means that our consumers have access to over 523,000 new vehicles when they build their deal. It's important to note that we're building a two-sided marketplace, and efficient penetration and healthy growth in both sides of the market, dealers as well as consumers, is critical. While we do have 78% and growing adoption by dealer partners, our continued focus will be to grow prospects' engagement with deal builders. In addition to increased adoption of the tool from our dealer partners and our progress in rolling out DealBuilder to our partner network, in Q1, we also launched this capability to our used car experience, starting with certified pre-owned. This launch brings TrueCar DealBuilder capabilities to roughly 10% of our used inventory. As we continue to expand our deal building capabilities to use vehicles, by the end of Q2, we expect to have more vehicles than anyone in automotive with respect to enabling accurate monthly payments. Our second initiative I would like to address is our checkout flow. While providing online deal building capabilities supports a more stress-free process for consumers and efficiencies for dealers, we know that once a deal feels right, consumers are going to want to proceed to a purchase. This remains an area where there are still a few more pieces to address, specifically the final checkout purchase process. We refer to these final steps as the checkout flow, which includes aspects such as credit applications, finalization of aftermarket products, e-contracting, in-vehicle delivery or pickup. It's important to note that we believe there are two ways for a flexible approach to solve for the checkout flow. a checkout flow by integration with other SaaS platforms, and a native checkout flow process. Let me address the checkout flow by a retailer platform's integration first. A significant portion of franchise dealers lean on SaaS partners to provide their digital retailing experience, including the checkout functionality. The numerous high-quality solutions being adopted by OEMs and retailers means that flexibility is key. For that reason, we've designed an open API spec for API-based integrations to standardize the transfer of data from our auto buying platforms to dealers' digital retailing tools. That way, we can provide a fully digital experience to our consumers, enabling a seamless transition from deal building to deal finalization, while at the same time, we ensure active dealer participation in our marketplace. As part of this, we've started a dialogue with various digital retailing vendors in order to support transitioning the consumer into the dealer's preferred checkout flow. Those conversations have progressed well, and in April, we launched our first pilot program in partnership with Roadster. Our two companies share more than 500 mutual dealer partners who can begin supporting consumers desiring to complete numerous purchase aspects digitally. Once a consumer completes all aspects of building their deal on our site, they are offered the ability to transfer this deal in the dealer's roadster checkout process, which seamlessly integrates all deal details and allows the consumer to continue with the deal as built on our site. We're excited about this innovative pilot initiative and look forward to seeing how it progresses. While partner integrations are important, we certainly also see real value in keeping our consumers within the Trucar ecosystem by providing a native checkout flow solution. We are assembling our own native checkout solution in order to support any dealer who doesn't currently have a digital retailing vendor solution and to support consumers who wish to use our experience. This can be especially important for our smaller franchise and independent dealers who perhaps don't have the resources to invest in a more comprehensive digital retailing infrastructure. Ultimately, we believe checkout flow, in combination with our existing deal building and shopping capabilities, will transform our platform into a leading automotive marketplace that enables complete online car buying at the scale of millions of vehicles. The third initiative I would like to discuss is our TrueCar Military and Affinity Partner Network. Our Q1 performance was driven in a large part by strong performance in our affinity channel, with multiple partners breaking monthly prospect volume records in March. Sam's Club, PerkSpot, and over a dozen other partners across all of our various affinity segments had all-time highs. In addition to these record-breaking performances, the launch of the Navy Federal Car Buying Service has exceeded all of our expectations. The teams are working together on an exciting campaign, which is expected to start in June and run through the summer. While it is still very early in the program's history, we're very excited about the potential and the initial performance of this partnership. With partnerships with GovX, First Command, and Military Auto Source are also expected to launch campaigns in Q2 and continue to expand the reach of our TrueCar military platform. Between Trucar Military and our new partnership programs, we are very pleased with the progress we are making in reaching and servicing the auto buying needs of the more than 40 million people that make up the military community and will continue to expand upon our efforts as we progress throughout the year. Lastly, as I mentioned earlier, I want to touch on the issue of the chip and inventory shortages. As we've discussed on numerous occasions previously, as a two-sided marketplace, we sit squarely between demand and supply. While our fundamental demand side metrics show clear signs of strength with sequential traffic and prospect growth of 16.5 and 14.7% respectively, supply side restrictions continue to mount. Since last year, beginning with disruptions caused by the pandemic, the auto industry has experienced a decline in inventory supply. The inventory constraints have continued into the current year with the global chip shortage. The limited supply of new and used vehicles in some brands has resulted in significant unmet consumer demand and led to an increase in prices that dealers charge consumers. The reduced new car inventory levels paired with strong natural consumer demand has retailers closely monitoring demand-generating sales and marketing expenses, which we believe will put pressure on our dealer count. We are also seeing supply-side shortages impact our OEM revenue as certain OEMs have opted to pause their current incentive programs due to limited inventory. We share the widely held view that the chip and inventory shortages will be temporary. In the meantime, we remain focused on opportunities to help introduce the right car to the right consumer and nurture them with rich content to help them get to a buying decision. I'd like to end by thanking our employees as they continue to push and focus on our end-to-end consumer experience and transforming our business to a true digital marketplace, despite the continuing global pandemic and various other adverse circumstances. And with that, I'll hand the call over to Jan Toon.