TrueCar, Inc.

Hello and welcome to the Truecar Third Quarter 2022 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Zainab Bokhari, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Hello and welcome to Truecar's Third Quarter 2022 Earnings Conference Call. Joining me today are Mike Darrow, our President and Chief Executive Officer. and Jantun Ragerson, our Chief Financial Officer and Chief Operating Officer. By now, I hope you've all had the opportunity to read our third quarter stopholder letter, which was released yesterday after market closed and is available on our investor relations website at ir.trucar.com. Before we get started, 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 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 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 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. 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 it's 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 ir.trucar.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. With that, I will turn the call over to Trucar's President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike?

Thanks, Zainab. Good morning, everyone, and thanks for joining us. We issued our Q3 stockholder letter yesterday and highlighted some of the great progress we've made with Trucar Plus as we prepare to expand coverage outside of Florida. During Q3, we continued to sign and curate dealers for Trucar Plus and grow the available inventory of new, used, and certified pre-owned vehicles to nearly 10,000 units, while driving materially more traffic to the Trucar Plus marketplace. Approximately 27% of our Florida-based visitors were exposed to Trucar Plus during the third quarter, and more than 7,000 of them went on to the deal engagement stage. We knew we had two fundamental questions to answer when we launched the Trucar Plus pilot. Number one, would consumers want to use it? And two, would retailers want to participate in it? We believe the results indicate the answer to both of these questions is emphatically yes. Consumers want to use Trucar Plus and dealers want to participate in it. We will be expanding Trucar Plus into five additional southeastern states in the coming weeks. And I'd like to take a moment to comment on some of the macro industry dynamics we are seeing and how we think about our business in this context. At this point in the Q3 earnings cycle, you've already heard from a number of the key players across the automotive industry. Used car sales rates in certain segments are slowing, and this is exerting downward pressure on used vehicle prices. Overall, consumer demand is slowing in the face of high interest rates, significant inflation, and the fear of a recession. The combination of these factors may put pressure on the record profits retailers have been posting over the past several quarters. New car inventories are starting to build for several brands and reached approximately 1.5 million at the end of October. In our view, the supply-driven market we've been experiencing is beginning to shift to a more balanced supply-demand ratio. We believe that as inventory grows on the new side and becomes more affordable on the used side, retailers will again need to roll up their sleeves and compete for customers. Trucar is well prepared to support retailers as the automotive industry slowly shifts from a supply-constrained environment to a more balanced, demand-driven one. It's challenging to predict the exact timing of this market transition, and there will be some lags before the full impact such improvements are seen across our business. We are seeing signs of stabilization emerge in our core business as new vehicle inventories have risen across our dealer network. And while it has fluctuated over the past several quarters, our net dealer count in October was positive when compared to the end of Q3. Over the past several quarters, we've remained laser focused on delivering the automotive industry's first transactable digital marketplace with Trucar Plus. We have also enhanced our core offering, Trucar offerings with consumer facing tools and an expanded used car product portfolio with capabilities like sell your car and distance retailing that have helped us balance our mix of new and used units. In addition, at a time where affordability is a concern for consumers, and loyalty to brand is low, we offer industry-leading tools and programs to help OEM partners effectively target incentives, promote their core brands, and launch their EV platforms. Our balance sheet remains strong, and we have managed our business prudently through a supply-constrained market. Based on our current plans for 2023, we expect to have well in excess of $125 million in cash by the time we return to break even or positive adjusted EBITDA, which we expect to be no later than the fourth quarter of 2023. I'm very encouraged by our progress during Q3 and in the weeks that have followed. I want to thank the entire Trucar crew for their hard work, dedication, and commitment to our vision of bringing something new and unique to the market and doing it at a time of rapid change as we embrace what we expect will be an increasingly digital future for automotive retail. Before we open up the call for live questions, we're going to address some questions around key topics. Zeynep, what's the first question?