TrueCar, Inc.

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 Chantoon Raighisman, President and Chief Executive Officer of TrueCar. Please go ahead.

Thank you, operator. Hello everyone and welcome to TrueCar second quarter 2025 earnings conference call. Joining me today is Oliver Foley, our Chief Financial Officer. I hope you've all had the opportunity to read our most recent stockholder letter, which was released yesterday after market closed and is available on our investor relations website at .TrueCar.com. 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 expectations with respect to future adjusted EBITDA profitability and free cash flow. 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 defer materially from those contemplated by our forward looking statements. We caution you to review the risk factor section of our annual report on form 10 K, our quarterly report on form 10 Q and our other reports and filings with the security and exchange commission. For a discussion of the factors that could cause our results to defer materially. 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. In addition, we will also discuss certain gap and non-gap financial measures, reconciliations of all non-gap measures to the most directly comparable gap measures are set forth in the investor relations section of our website at .TrueCar.com. 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. 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 .4% year over year and marking our highest quarterly revenue since Q3 2021. 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. OEM revenue of 3.6 million grew by 0.6 million or .7% year over year. New unit sales volume grew .2% year over year as compared to the industry's .8% growth in new vehicle retail sales. 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. 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 and a resource allocation strategy that prioritizes initiatives likely to yield 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. This shift has yielded exciting outcomes as evidenced by the number of core product initiatives that we released 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. First, our core product enhancements. As we know the last quarter, dealers measured the value of a third-party lead platform primarily by the rate at which those leads turn into sales. 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. 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. 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. 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. Actionable Insights enables dealers to extract greater value from our platform. Complementing this feature is our newly launched Motivated Buyer Badging, which leverages a proprietary machine learning model to identify and highlight the highest in 10 shoppers based on more than 20 behavioral signals. 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. 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. 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. Similarly, we also completed a major redesign of our vehicle detail page, the VDP, to highlight the most relevant content and deliver most pertinent information to assist consumers in our decision-making process. 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, we believe, improve close rates as a result. 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 -the-door price, including applicable discounts, taxes, and fees. Combined with prominent goals to actions such as scheduled test drive or safe 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. 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, our -to-end digital retailing experience. As we shared last quarter, a critical milestone for TC Plus is completing integrations with key DMS providers, which enables the automation of deal documentation and replaces the time-consuming desking workflows currently performed by the dealer. 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. This streamlines the dealer experience and drives operational efficiency in a way that only a fully integrated -to-end platform can deliver. Moreover, we also released a major revamp of the TC Plus consumer checkout flow. 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. This guided checkout experience walks consumers -by-step through the purchasing process, strengthening consumers' trust by providing greater visibility and transparency at every stage of the transaction. The revamp flow also incorporates new features such as dynamic itemized deal receipts that updates as the deal progresses and dedicated pages for a range of available financing and insurance. This is also the case for the new TC Plus products, 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 Continua dealership option creates a seamless -to-offline handle. These changes are already producing encouraging results. Since the new TC Plus experience went live, we have observed a 115% increase in -to-card rates, a 40% lift in daily credit application submissions, and a 2x improvement in F&I attachment rates. 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 ourselves in the digital retail space. Looking forward for TC Plus, the team remains intently focused on a number of key priorities that will keep us on path to commercializing TC Plus by year end. Completing the backend 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. In addition, we are working to expand and streamline our integrations with financing partners to improve credit approval rates and help consumers get the most competitive financing offers. This includes a universal or a winless pre-qualification experience that allows consumers on TC Plus to exclusively shop for vehicles that they are pre-qualified for and expanding the credit application to include co-applicants, thus minimizing the number of rejected credit applications and continuing to improve conversion rates at a critical step in the buying process. 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. 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. Nevertheless, 97% 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. By leveraging our direct DMS integrations, TC Plus seeks to drive efficiencies for both consumers and dealers across every step of the buying process, regardless of whether the consumer finishes their deal online or in-store. And 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. It has been our long-standing belief that a modern marketplace that offers dealers and consumers 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. Moreover, we see momentum gaining for the shift in car buying, as evidenced by the June 2025 JPMorgan Chase Auto Annual Dealership survey that cites 71% of surveyed dealers viewing the shift to online vehicle sales as permanent, up from 53% in December 2024. And 30% of dealers anticipating a significant increase in online vehicle sales penetration, up from 24% in December 2024. Beyond TC Plus and the opportunity 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, including through expansion of our dealer network and growth in unit sales, as we work to bring new OEM incentives into our platform and deepen our partnership with the company. We are also working with our partners to help consumers find exclusive offers on our next vehicle purchase. And finally, despite the unpredictability of the current market environment, we believe that the steps we've taken to eliminate costs and maximize our financial flexibility position us to navigate a range of revenue growth scenarios and deliver adjustability with that profitability and positive free cash flow over the second half of 2025. Now, operator, let's open the call for questions from our

analysts.