TrueCar, Inc.

Good day and welcome to the TrueCar first quarter 2023 financial results conference call. Please note this event is being recorded. I would now like to turn the conference over to Zainab Bakari, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Hello and welcome to TrueCar's first quarter 2023 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer, Jantune Rigersman, our Chief Operating Officer, and Teresa Luong, our Chief Financial Officer. By now, I hope you've all had the opportunity to read our first quarter stockholder 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 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 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'll 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 highlighted some of the great progress made across our company in our stockholder letter for the first quarter of 2023. The entire Trucar organization is focused on executing our four key business priorities in 2023. They are, one, to rebuild our core business, two, expand the market footprint for Trucar Plus, three, lean into the user market, and four, focus on market or focus our marketing on converting our healthy top of funnel traffic into sales for our dealers. I'll start with traffic. In Q1, we had nearly 8.7 million monthly unique visitors across all our sites. This represented more than 19% year-over-year growth and exceeded our internal plan. While we were measured with our marketing acquisition spend, we were also focused with targeted SEO improvements and continuous improvements to our approach. We believe this has put us in a solid position with our upper funnel traffic performance. Our focus is now shifting to customized experience flows and on a conversion of these millions of unique visitors into sales for our dealers. We are developing personalized shopping journeys for three initial consumer cohorts that we've identified. Economic buyers, convenience buyers, and EV buyers. By building personalized journeys for these cohorts, we believe we'll be able to help consumers in these cohorts identify the right vehicle for their needs and expect this to help us drive higher conversion for our healthy upper funnel traffic. To complement our demand-side performance, we've started being more deliberate and proactive in our approach to the supply side of our platform. This will position TrueCard to deliver a better e-commerce matchmaking experience for the consumer cohorts that we plan to focus on. We grew our net franchise dealer count by 37 dealers in Q1 and focused on adding brands and inventory where we have active shopping interest. As new car inventory continues to recover slowly off a historically low base, we plan to continue to add dealers and inventory that match our consumer demand patterns. On the used car side, our dealer count declined in Q1. impacted by consolidation and current market challenges, particularly for smaller independent dealers. We'll continue to focus on adding larger independent dealers that will align well with our very active shopping cohort of economic buyers that has emerged in our used car channel. On the product front, we redesigned our Trucar Plus checkout flow to deliver a better e-commerce experience for consumers through a transparent, intuitive, and streamlined flow. We also launched a new order confirmation step that allows a consumer who has built a deal within Truecar Plus to confirm their desire to complete the transaction. Additionally, to support our Truecar Plus retail partners, we made specific enhancements in dealer portal that will make it easy for dealers to respond to Truecar Plus orders. We believe these enhancements will make the Truecar Plus experience more efficient, accurate, and transparent to both dealers and consumers. We'll continue to expand the geographic footprint for Trucar Plus beyond the six in the Southeast states where it was offered. Over the next few months, we're preparing to more than double Trucar Plus market coverage, starting with key metro areas across an additional 10 states. We have already started adding dealers in Virginia, Ohio, Maryland, and Texas. Finally, as we lean into the used car market, we launched Trucar Plus Wholesale Solutions, a wholly owned subsidiary that will provide market-based vehicle valuations that are established using a proprietary algorithm and by leveraging multiple market inputs, including values that reflect the current dealer demand. We implemented a broad rollout of TrueCar Plus wholesale solution valuations across the contiguous United States at the end of April. The sourcing of used vehicle consistently remains a top demand for our dealers, and we believe this program will be a relevant solution for them. There are many other areas where we are making strong progress. For example, in mid-April, we expanded our OEM program with Stellantis and extended our Mercedes-Benz program, both of which will provide targeted offers to select affinity programs. As New Vehicle Supply continues to rebuild, we continue to work with leading brands to offer benefits to the members of our exclusive affinity partners. Our balance sheet remains healthy, allowing us to invest in our priorities for 2023. We continue to anticipate breakeven or positive adjusted EBITDA in the fourth quarter, as well as double-digit revenue growth compared to the fourth quarter of 2022. As always, I want to take this opportunity to thank the entire Trucar crew for their hard work, dedication, and commitment to our vision of bringing something new and innovative to the market at a time of rapid change. We'll continue to embrace what we expect will be an increasingly digital future for automotive retail. Before we open the call up for live questions, we're going to address some questions around key topics. Zeynep, what's the first question?