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What changed in TrueCar, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TrueCar, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+498 added−455 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in TrueCar, Inc.'s 2024 10-K

498 paragraphs added · 455 removed · 351 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

242 edited+122 added−68 removed421 unchanged
Biggest changeWe believe that the lead quality challenges that we have experienced since 2021 are substantially related to the contemporaneous industry-wide automobile inventory shortages, which we discuss in greater detail in the risk factor entitled “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues .” We cannot predict how further developments will affect our lead quantity and quality, and negative developments in these metrics, like many others in the total value proposition that we provide to our TrueCar Certified Dealers, have adversely affected our revenues, results of operations and business and may continue to do so in the future. 16 Table of Contents If we are not successful in rolling out new offerings, including our TrueCar+ offering, providing a compelling value proposition to consumers and dealers using those offerings, integrating our current and future offerings into such experiences or appropriately monetizing them, our business and prospects would be adversely affected.
Biggest changeWe believe that the lead quality and quantity challenges that we have experienced since 2021 are substantially related to the contemporaneous industry-wide automobile inventory shortages, which we discuss in greater detail in the risk factor entitled “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues ” and other macroeconomic factors that impact automobile purchases such as inflation and interest rates.
Manufacturers We enable manufacturers to target consumers based on membership in an affinity group and other criteria. Through our platform, manufacturers can create cash incentives targeted to specific consumers and provide the ability to generate a unique coupon code that can be redeemed and validated at any dealership across the country in connection with the purchase of a vehicle.
We enable manufacturers to target consumers based on membership in an affinity group and other criteria. Through our platform, manufacturers can create cash incentives targeted to specific consumers and provide the ability to generate a unique coupon code that can be redeemed and validated at any dealership across the country in connection with the purchase of a vehicle.
Affinity group marketing partners We currently power the auto buying programs for more than 250 affinity group marketing partners that include some of the nation’s largest brands and membership-based organizations. Our affinity group partner network is an important part of our business and enables TrueCar Certified Dealers to increase their exposure to car shoppers.
Affinity Partners We currently power the auto buying programs for more than 250 affinity group marketing partners that include some of the nation’s largest brands and membership-based organizations. Our affinity group partner network is an important part of our business and enables TrueCar Certified Dealers to increase their exposure to car shoppers.
The potential or actual loss of marketing support could cause those dealers to cease being members of our TrueCar Certified Dealer network, which would adversely affect our ability to maintain or grow the number and productivity of dealers in our network or the revenue derived from those dealers.
The potential or actual loss of marketing support could cause dealers to cease being members of our TrueCar Certified Dealer network, which would adversely affect our ability to maintain or grow the number and productivity of dealers in our network or the revenue derived from those dealers.
We have historically advertised and intend to continue advertising in the future through a combination of television marketing campaigns, digital and online media, sponsorship programs and other means, the goals of which are to increase the strength and recognition of, and trust in, the TrueCar brand and to drive more unique visitors to our website and mobile applications, and we expect to continue to advertise in support of our branding initiatives and future product launches.
We have historically advertised and intend to continue advertising in the future through a combination of digital and online media, sponsorship programs, television marketing campaigns and other means, the goals of which are to increase the strength and recognition of, and trust in, the TrueCar brand and to drive more unique visitors to our website and mobile applications, and we expect to continue to advertise in support of our branding initiatives and future product launches.
Further, we enter into arrangements with certain such partners from time to time pursuant to which we receive fees based in whole or in part on the volume of our users who choose to interact with those partners.
Further, we enter into arrangements with certain such partners from time to time pursuant to which we receive fees based in whole or in part on the volume of our users who choose to interact with those partners.
As a result, the application, interpretation and enforcement of these laws and regulations are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and inconsistently with our current practices and policies.
As a result, the application, interpretation and enforcement of these laws and regulations are often uncertain and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and inconsistently with our current practices and policies.
For example, we may seek to expand or complement our existing products and services through the acquisition of or investment in attractive businesses and technologies rather than through internal development, such as our acquisitions of DealerScience in 2018 and Digital Motors in 2022, our investment in Accu-Trade in 2019 and divestment thereof in 2022 and our divestiture of our ALG, Inc. subsidiary, or, ALG, in 2020.
For example, we may seek to expand or complement our existing products and services through the acquisition of or investment in attractive businesses and technologies rather than through internal development, such as our acquisitions of DealerScience in 2018 and Digital Motors in 2022, our investment in Accu-Trade in 2019 and divestment thereof in 2022 and our divestiture of our subsidiary, ALG, Inc., or, ALG, in 2020.
Pursuant to our certificate of incorporation, we have a total of 1,000,000,000 shares or our common stock authorized for issuance. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our stock could decline.
Pursuant to our certificate of incorporation, we have a total of 1,000,000,000 shares of our common stock authorized for issuance. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our stock could decline.
Higher interest rates combined with increased vehicle prices resulting from low inventory, as discussed in the risk factor entitled “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues, ” or other factors may also increase the amount of time that consumers wait between purchasing vehicles as the ability for a consumer to trade in or sell an existing vehicle to finance a new purchase may be diminished if the value of any loans associated with such existing vehicle are high relative to the value of the vehicle itself.
Higher interest rates combined with increased vehicle prices resulting from low inventory, as discussed in the risk factor entitled “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues, ” or other factors may also increase the amount of time that consumers wait between purchasing vehicles as the ability for a consumer to trade in or sell an existing vehicle to finance a new purchase may be diminished if the value of any loans associated with such existing vehicle are high relative to the underlying value of the vehicle itself.
We believe that our ability to provide a compelling car-buying experience is subject to a number of factors, including: • the actions taken by other participants in the car-buying process, including dealers and automobile manufacturers; • our ability to provide our TrueCar+ offering in a manner that is user-friendly, accepted by dealers and differentiated from the offerings of our competitors; • our ability to provide users personalized experiences tailored to differing consumer and dealer profiles; • our ability to launch other new products that are effective and have a high degree of consumer engagement; • our ability to constantly innovate and improve our existing products, including in response to changes in consumer and dealer behavior and preferences, whether in response to the macroeconomic environment, such as inflation or increased interest rates or otherwise; • the compliance of the dealers within our network of TrueCar Certified Dealers with applicable laws, regulations and the rules of our platform, including the requirement that they honor the prices they quote to our users; • our access to a sufficient amount of data to enable us to provide relevant vehicle and pricing information to consumers, including data provided by TrueCar Certified Dealers through our systems; and • our ability to constantly innovate and improve our mobile application and platform to enable us to provide products and services that users want to use on the devices they prefer.
We believe that our ability to provide a compelling car-buying experience is subject to a number of factors, including: • the actions taken by other participants in the car-buying process, including dealers and automobile manufacturers; • our ability to provide our TrueCar+ offering in a manner that is user-friendly, accepted by dealers and differentiated from the offerings of our competitors; • our ability to provide users personalized experiences tailored to differing consumer and dealer profiles; • our ability to launch other new products that are effective and have a high degree of consumer engagement; • our ability to constantly innovate and improve our existing products, including in response to changes in consumer and dealer behavior and preferences, whether in response to the macroeconomic environment, such as inflation or increased interest rates or otherwise; • the compliance of the dealers within our network of TrueCar Certified Dealers with applicable laws, regulations and the rules of our platform, including the requirement that they honor the prices they quote to our users; • our access to a sufficient amount of data to enable us to provide relevant vehicle and pricing information to consumers, including data provided by TrueCar Certified Dealers through our systems; and • our ability to constantly innovate and improve our website as well as our mobile application and platform to enable us to provide products and services that users want to use on the devices they prefer.
The risks we face in connection with transactions such as these include: • diversion of management time and focus from operating our business; • additional operating losses and expenses of other businesses; • integration of acquisitions, including coordination of technology, research and development and sales and marketing functions; • transition of the other business’s users to our website and mobile applications; • retention of employees from an acquired business, or separation of employees from a divested business; • cultural and other challenges associated with integrating employees from an acquired business into our organization; • integration of an acquired business’s accounting, management information, human resources, legal and other administrative systems, or extrication of such systems from a divested business; • the need to implement or improve controls, procedures and policies at a business that prior to the transaction may have lacked effective controls, procedures and policies; 37 Table of Contents • potential write-offs of intangibles or other assets acquired in acquisitions or similar transactions, or write-downs of investments, that may have an adverse effect our operating results in a given period; • the risks associated with the businesses, products or technologies in question, which may differ from or be more significant than the risks our business faces; • the risks associated with obtaining necessary regulatory approval for a transaction; • liability for the activities, products or services of the business, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • risk related to the payment of contingent consideration; and • litigation or other claims in connection with the business, product or technology in question, including claims from terminated employees, consumers, former stockholders or other third parties.
The risks we face in connection with transactions such as these include: • diversion of management time and focus from operating our business; • additional operating losses and expenses of other businesses; • integration of acquisitions, including coordination of technology, research and development and sales and marketing functions; • transition of the other business’s users to our website and mobile applications; • retention of employees from an acquired business, or separation of employees from a divested business; • cultural and other challenges associated with integrating employees from an acquired business into our organization; • integration of an acquired business’s accounting, management information, human resources, legal and other administrative systems, or extrication of such systems from a divested business; • the need to implement or improve controls, procedures and policies at a business that prior to the transaction may have lacked effective controls, procedures and policies; 38 Table of Contents • potential write-offs of intangibles or other assets acquired in acquisitions or similar transactions, or write-downs of investments, that may have an adverse effect on our operating results in a given period; • the risks associated with the businesses, products or technologies in question, which may differ from or be more significant than the risks our business faces; • the risks associated with obtaining necessary regulatory approval for a transaction; • liability for the activities, products or services of the business, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • risk related to the payment of contingent consideration; and • litigation or other claims in connection with the business, product or technology in question, including claims from terminated employees, consumers, former stockholders or other third parties.
We have recently experienced management turnover and could face additional management turnover in the future, which could divert our remaining management team’s attention from key business areas and negatively affect our business in other ways. Although we generally enter into employment agreements with our executives, the agreements have no specific duration and our executive officers are at-will employees.
We have experienced management turnover and could face additional management turnover in the future, which could divert our remaining management team’s attention from key business areas and negatively affect our business in other ways. Although we generally enter into employment agreements with our executives, the agreements have no specific duration, and our executive officers are at-will employees.
Our attempts to do so may place us in competitive and regulatory environments with which we are unfamiliar and involve various risks, including the need to invest significant resources and the possibility that returns on these investments are not achieved for several years, if at all.
Our attempts to do so may also place us in competitive and regulatory environments with which we are unfamiliar and involve various risks, including the need to invest significant resources and the possibility that returns on these investments are not achieved for several years, if at all.
In 2017, the parties entered into a binding settlement agreement to fully resolve the lawsuit, and the litigation was dismissed. • California Dealer Litigation : Also in 2015, we were named as a defendant in a lawsuit filed in the California Superior Court for the County of Los Angeles by numerous dealers participating on the TrueCar platform.
In 2017, the parties entered into a binding settlement agreement to fully resolve the lawsuit, and the litigation was dismissed. • California Dealer Litigation : In 2015, we were named as a defendant in a lawsuit filed in the California Superior Court for the County of Los Angeles by numerous dealers participating on the TrueCar platform.
In addition, our ability to grow our revenue is dependent on our ability to: • successfully develop and roll out our TrueCar+ offering and other new product offerings; • expand our dealer network in a geographically optimized manner, including increasing dealers in our network representing high-volume brands; • increase the number of transactions between our users and TrueCar Certified Dealers; • increase dealer subscription rates, and manage dealer churn; • grow the revenue we derive from car manufacturer incentive programs; • increase the number of dealers subscribing to our other products; • maintain and grow our affinity group marketing partner relationships and increase the productivity of our current affinity group marketing partners, and to replace the units generated by our former partnership with USAA; • increase the number of users of our products and services, and in particular the number of unique visitors to the TrueCar website and our TrueCar-branded mobile applications, including by improving our search-engine optimization; • enhance our consumer experience and increase the rate at which site visitors prospect with a TrueCar Certified Dealer and purchase from the prospected dealer; • improve the quality of our existing products and services, and introduce high-quality new products and services; • maintain our existing product offerings, including our Trade and Sell Your Car offerings following the termination of our commercial relationship with Accu-Trade; and • introduce third-party ancillary products and services, including by integrating acquired products and services into our business.
In addition, our ability to grow our revenue is dependent on our ability to: • successfully develop and roll out our TrueCar+ offering and other new product offerings; • expand our dealer network in a geographically optimized manner, including increasing dealers in our network representing high-volume brands; • increase the number of transactions between our users and TrueCar Certified Dealers; • increase dealer subscription rates, and manage dealer churn; • grow the revenue we derive from car manufacturer incentive programs; • increase the number of dealers subscribing to our other products; • maintain and grow our affinity group marketing partner relationships and increase the productivity of our current affinity group marketing partners, and to replace the units generated by our former partnership with USAA; • increase the number of users of our products and services, and in particular the number of unique visitors to the TrueCar website and our TrueCar-branded mobile applications, including by improving our search-engine optimization; • enhance our consumer experience and increase the rate at which site visitors prospect with a TrueCar Certified Dealer and purchase from the prospected dealer; • improve the quality of our existing products and services, and introduce high-quality new products and services; 43 Table of Contents • maintain our existing product offerings, including our Trade and Sell Your Car offerings following the termination of our commercial relationship with Accu-Trade; and • introduce third-party ancillary products and services, including by integrating acquired products and services into our business.
Finally, as described in greater detail in the risk factor entitled “ If we are not successful in rolling out new offerings, including our TrueCar+ offering, providing a compelling value proposition to consumers and dealers using those offerings, integrating our current and future offerings into such experiences or appropriately monetizing them, our business and prospects would be adversely affected ,” we depend on certain third-party providers of data and other services in providing our Access package of Trade and Payments solutions, and our TrueCar+ offering as well as our TrueCar Deal Builder and our ability to provide users with certain information about others pay for the same make and model of a car, all rely on a number of other third-party providers.
Finally, as described in greater detail in the risk factor entitled “ If we are not successful in rolling out new offerings, including our TrueCar+ offering, providing a compelling value proposition to consumers and dealers using those offerings, integrating our current and future offerings into such experiences or appropriately monetizing them, our business and prospects would be adversely affected ,” we depend on certain third-party providers of data and other services in providing our Access package of Trade and Payments solutions, and our TrueCar+ offering and our ability to provide users with certain information about others pay for the same make and model of a car, all rely on a number of other third-party providers.
There are also emerging cases in which plaintiffs have asserted novel claims under existing privacy and data security laws in the United States, such as federal and state wiretapping laws, in ways which may impact our ability to offer certain products or employ widely used technologies that allow website and mobile app operators to understand how their users interact with their services.
There are also emerging cases in which plaintiffs have asserted novel claims under existing privacy and data security laws in the United States, such as federal and state wiretapping laws, in ways which may impact our ability to offer certain products or employ widely-used technologies that allow website and mobile application operators to understand how users interact with their services.
The scope of these laws is changing, they are subject to differing interpretations and they may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules. 38 Table of Contents Numerous jurisdictions in which we do business are currently considering, or have enacted, data protection legislation, most prominently, the California Consumer Privacy Act of 2018, which we refer to as the CCPA.
The scope of these laws is changing, they are subject to differing interpretations, and they may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules. 39 Table of Contents Numerous jurisdictions in which we do business are currently considering, or have enacted, data protection legislation, most prominently, the California Consumer Privacy Act of 2018, which we refer to as the CCPA.
To the extent regulators take the position that such laws require us to collect and remit sales taxes related to the sales of cars to consumers by TrueCar Certified Dealers or characterize any of our existing or future product offerings as taxable SaaS, downloadable software, information services, data processing services, lead generation services or as any other taxable product or service, our business could be adversely affected.
To the extent regulators take the position that such laws require us to collect and remit sales taxes related to the sales of cars to consumers by TrueCar Certified Dealers or characterize any of our existing or future product offerings as taxable SaaS, downloadable software, information services, data processing services, digital services, digital goods, lead generation services or as any other taxable product or service, our business could be adversely affected.
In addition, to the extent that repurchases are made, implementation of this program will diminish our cash reserves. 49 Table of Contents General Risk Factors We have incurred and will continue to incur substantial costs as a result of operating as a public company, and our management has been and will be required to continue to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
In addition, to the extent that repurchases are made, implementation of this program will diminish our cash reserves. 51 Table of Contents General Risk Factors We have incurred and will continue to incur substantial costs as a result of operating as a public company, and our management has been and will be required to continue to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
If any such matter is not ultimately resolved in our favor, losses 36 Table of Contents arising from the results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows. *** In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies, and as noted above, this type of lawsuit has been instituted against us in the form of the Milbeck Federal Securities Litigation and the Derivative Litigation, among others.
If any such matter is not ultimately resolved in our favor, losses arising from the results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows. *** In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies, and as noted above, this type of lawsuit has been instituted against us in the form of the Milbeck Federal Securities Litigation and the Derivative Litigation, among others.
We continue to monitor and evaluate the impact of potential and enacted changes in applicable federal and state tax law. 45 Table of Contents Risks Related to Ownership of Our Common Stock We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
We continue to monitor and evaluate the impact of potential and enacted changes in applicable federal and state tax law. 47 Table of Contents Risks Related to Ownership of Our Common Stock We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
For example, in the second quarter of 2015 and the fourth quarter of 2018, our business results varied significantly from guidance for the quarter and the price of our common stock declined.
For example, in the second quarter of 2015, the fourth quarter of 2018, and the second quarter of 2024, our business results varied significantly from guidance for the quarter and the price of our common stock declined.
As of December 31, 2023, our executive officers, directors and holders of 5% or more of our outstanding common stock (based upon the most recent filings on Schedule 13G with the SEC with respect to each such holder) beneficially owned, in the aggregate , approximately 54% of our outstanding shares of common stock (assuming exercise of all beneficially owned shares).
As of December 31, 2024, our executive officers, directors and holders of 5% or more of our outstanding common stock (based upon the most recent filings on Schedule 13G with the SEC with respect to each such holder) beneficially owned, in the aggregate , approximately 54% of our outstanding shares of common stock (assuming exercise of all beneficially owned shares).
Additional lawsuits of this type or similar types, if instituted against us or one or more of our officers or directors, whether arising from alleged facts the same as, similar to or different from those alleged in the Milbeck Federal Securities Litigation or the Derivative Litigation, could result in significant legal fees, settlements or damage awards, as well as the diversion of our management’s attention and resources, and thus could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Additional lawsuits of this type or similar types, if instituted against us or one or more of our officers or directors, whether arising from alleged facts the same as, similar to or different from those alleged in the Milbeck Federal Securities Litigation or the Derivative Litigation, 37 Table of Contents could result in significant legal fees, settlements or damage awards, as well as the diversion of our management’s attention and resources, and thus could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we are unsuccessful in rolling out the paid TrueCar+ offering, providing a compelling value proposition to consumers and dealers using it, integrating our current and future offerings into that experience or appropriately monetizing it, our business, revenue, operating results and prospects would be adversely affected.
If we are unsuccessful in rolling out a scalable TrueCar+ offering, providing a compelling value proposition to the consumers and dealers using it, integrating our current and future offerings into that experience or appropriately monetizing it, our business, revenue, operating results and prospects would be adversely affected.
The user experience on our TrueCar-branded website platform has evolved since its launch in 2010, but has not changed dramatically.
The primary user experience on our TrueCar-branded website platform has evolved since its launch in 2010, but has not changed dramatically.
After consumers have identified a vehicle in which they are interested and received a price offer from a dealer subscribed to one of our Access packages discussed further below, we allow them to further customize their “deal” through our TrueCar Unified VDP, including their vehicle trade-in and payment.
After consumers have identified a vehicle in which they are interested and received a price offer from a dealer subscribed to one of our Access packages discussed further below, we allow them to further customize their "deal" through our TrueCar Unified VDP, including their vehicle trade-in and payment.
The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding our company that we file electronically with the SEC. 13 Table of Contents Item 1A . Risk Factors Investing in our common stock involves a high degree of risk.
The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding our company that we file electronically with the SEC. 14 Table of Contents Item 1A . Risk Factors Investing in our common stock involves a high degree of risk.
For example, multiple states have enacted legislation intended to implement rules similar to the Federal Net Neutrality Regulations at the state level, which, in some instances, has led to legal challenges, including litigation over the preemptive effects of the FCC’s regulatory authority in this area of law.
Multiple states have enacted legislation intended to implement rules similar to the Federal Net Neutrality Regulations at the state level, which, in some instances, has led to legal challenges, including litigation over the preemptive effects of the FCC’s regulatory authority in this area of law.
We view the Unified VDP post prospect experience as an important component of our efforts to create a seamless car-buying experience. Trade and Sell Your Car . Our Sell Your Car and Trade solutions give consumers information on the value of the vehicle they wish to sell or trade-in.
We view the Unified VDP post prospect experience as an important component of our efforts to create a seamless car-buying experience. Exclusive Offers Trade and Sell Your Car . Our Sell Your Car and Trade solutions give consumers information on the value of the vehicle they wish to sell or trade-in.
Technology We have designed our technology platform, website and products to provide consumers, dealers and other parties with the information they need to effect a successful car purchase. Consumers access this platform through the TrueCar-branded website, affinity group marketing partner websites and TrueCar-branded and affinity group mobile applications.
Technology We have designed our technology platform, website and products to provide consumers, dealers and other parties with the information they need to affect a successful car purchase. Consumers access this platform through the TrueCar-branded website, affinity group marketing partner websites and TrueCar-branded and affinity group mobile applications.
We cannot guarantee that additional financial intuitions, including those at which we have deposited our cash and cash equivalents, will not enter into receivership or that the FDIC or any governmental authority will protect uninsured depositors if there are future bank failures.
We cannot guarantee that additional financial institutions, including those at which we have deposited our cash and cash equivalents, will not enter into receivership or that the FDIC or any governmental authority will protect uninsured depositors if there are future bank failures.
Our certificate of incorporation provides that, unless we otherwise agree, the Court of Chancery of the State of Delaware will be the exclusive forum for: • any derivative action or proceeding brought on our behalf; 48 Table of Contents • any action asserting a breach of fiduciary duty; • any action asserting a claim against us under the Delaware General Corporation Law, our certificate of incorporation or our bylaws; • any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Our certificate of incorporation provides that, unless we otherwise agree, the Court of Chancery of the State of Delaware will be the exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a breach of fiduciary duty; • any action asserting a claim against us under the Delaware General Corporation Law, our certificate of incorporation or our bylaws; • any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Purchases of new and used automobiles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy, including the rising costs of energy and gasoline, the availability and cost of credit, reductions in business and consumer confidence, inflation, stock market volatility, new tariffs or border adjustment taxes, increased unemployment and changes in environmental regulations and fuel economy standards.
Purchases of new and used automobiles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy, including the rising costs of energy and gasoline, the availability and cost of credit, reductions in business and consumer confidence, inflation, stock market volatility, new tariffs or border adjustment taxes, 20 Table of Contents increased unemployment and changes in environmental regulations and fuel economy standards.
Revenue growth may be dependent on a number of factors, including the success of our TrueCar+ offering or our ability to focus on increasing the number of transactions, subscriptions and other sources from which we derive revenue by growing our network of TrueCar Certified Dealers, including dealers representing high-volume brands, both on an overall basis and in important geographies, as well as growth in the revenue we derive from car manufacturer incentive 26 Table of Contents programs.
Revenue growth may be dependent on a number of factors, including the success of our TrueCar+ offering or our ability to focus on increasing the number of transactions, subscriptions and other sources from which we derive revenue by growing our network of TrueCar Certified Dealers, including dealers representing high-volume brands, both on an overall basis and in important geographies, as well as growth in the revenue we derive from car manufacturer incentive programs.
These claims may arise from a wide variety of business practices and initiatives, including product innovations, the content and functionality of the websites and mobile applications that we operate, our advertising practices and content, our use and storage of data, our use of intellectual property, M&A transactions and business transactions or other business relationships, such as those with our users, participating dealers, affinity partners, OEM partners, licensors, licensees landlords, tenants and employees.
These claims may arise from a wide variety of business practices and initiatives, including product innovations, the content and functionality of the websites and mobile applications that we operate, our advertising practices and content, our use and storage of data, our use of intellectual property, M&A transactions and business transactions or other business relationships, such as those with our users, participating dealers, affinity partners, OEM partners, 36 Table of Contents licensors, licensees, landlords, tenants and employees.
Further, following a decline in our stock price in the third quarter of 2022 and continued macroeconomic disruptions impacting our business, we performed an interim quantitative impairment test as of September 30, 2022, which concluded that the carrying value of our single reporting unit exceeded the fair value and, accordingly, we recognized a non-cash impairment charge of $59.8 million for the year ended December 31, 2022.
Further, following a decline in our stock price in the third quarter of 2022 and continued macroeconomic disruptions impacting our business, we performed an interim quantitative impairment test as of September 30, 2022, which concluded that the carrying value of our single 45 Table of Contents reporting unit exceeded the fair value and, accordingly, we recognized a non-cash impairment charge of $59.8 million for the year ended December 31, 2022.
For more information on these inventory shortage, see the risk factor “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues. ” Our current and potential competitors may also have significantly more financial, marketing and other resources than we have and the ability to devote greater resources to the promotion and support of their products and services.
For more information on these inventory shortages, see the risk factor entitled “ Our business is subject to risks related to the larger automotive ecosystem, including inventory and global supply chain challenges, labor and other issues. ” Our current and potential competitors may also have significantly more financial, marketing and other resources than we have and the ability to devote greater resources to the promotion and support of their products and services.
Privacy Laws We are subject to a variety of laws and regulations that relate to privacy, data protection and personal information, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.
We are subject to a variety of federal and state laws and regulations that relate to privacy, data protection and personal information, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.
If any of these groups comes to believe that automobile dealerships should not do business with us, this belief could become quickly and widely shared by automobile dealerships, and we could lose a significant number of dealers in our network.
If any of these groups believe that automobile dealerships should not do business with us, this belief could become quickly and widely shared by automobile dealerships, and we could lose a significant number of dealers in our network.
If our products or services, including products or services that we may offer in the future, are determined to fall within the scope of those laws or regulations in a manner that would require us or our partners to implement additional measures to comply with these laws and regulations, we may be forced to incur additional compliance costs or be required to discontinue or limit the offering of certain products or services in affected jurisdictions.
If our products or services, including products or services that we may offer in the future, are determined to fall within the scope of those laws or regulations in a manner that would require us or our partners to implement additional measures to comply with these laws and regulations, we may be forced to incur additional 34 Table of Contents compliance costs or be required to discontinue or limit the offering of certain products or services in affected jurisdictions.
Additional factors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in the automotive industry in particular; • sales of shares of our common stock by us or our stockholders; • the failure of securities analysts to maintain coverage of us, changes in financial estimates or recommendations by any securities analysts who follow our company; • our failure to meet our publicly-announced guidance of future operating results or otherwise to meet the expectations of securities analysts or investors in this regard; • announcements by us or our competitors of new products or innovations to existing products; • the public’s reaction to our press releases, other public announcements and filings with the SEC, including the guidance regarding our future operating results or the absence of such guidance; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • our ability to control costs, including our operating expenses; 46 Table of Contents • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions, divestitures, investments or other similar transactions involving us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; • conditions in the automobile industry and broader macroeconomic trends; and • general macroeconomic conditions and the growth rate of our markets and the impact of the ongoing effects of the coronavirus pandemic on these conditions and markets.
Additional factors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in the automotive industry in particular; • sales of shares of our common stock by us or our stockholders; • the failure of securities analysts to maintain coverage of us, changes in financial estimates or recommendations by any securities analysts who follow our company; • our failure to meet our publicly-announced guidance of future operating results or otherwise to meet the expectations of securities analysts or investors in this regard; • announcements by us or our competitors of new products or innovations to existing products; • the public’s reaction to our press releases, other public announcements and filings with the SEC, including the guidance regarding our future operating results or the absence of such guidance; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; 48 Table of Contents • our ability to control costs, including our operating expenses; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions, divestitures, investments or other similar transactions involving us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; • conditions in the automobile industry and broader macroeconomic trends; and • general macroeconomic conditions and the growth rate of our markets.
If we continue to experience a protracted decline, or experience a similar decline in the future, it would have a material adverse effect on our business, growth, financial condition, results of operations and cash flows.
If we continue to experience a protracted decline in our dealer count, or experience a similar decline in the future, it would have a material adverse effect on our business, growth, financial condition, results of operations and cash flows.
Some providers may take measures that affect consumers’ ability to use our platform, such as degrading the quality of the connections through which we transmit data packets over their lines, giving those packets lower priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their customers more for using our platform.
Some providers may take measures that affect consumers’ ability to use our platform, such as degrading the quality of the connections through which we transmit data packets over their lines, giving those packets lower priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their 41 Table of Contents customers more for using our platform.
Moreover, these types of events could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally, which could adversely impact our operating results. 50 Table of Contents For example, as discussed in the risk factor entitled “ General economic and other conditions that impact consumer demand for automobiles, including interest rates, inflation, fuel prices and the impacts of public health events such as the coronavirus pandemic, may have a material adverse effect on our business, financial condition and results of operations ,” responses to the coronavirus pandemic negatively affected our business, growth, financial condition, results of operations and cash flows in a number of ways, and we cannot predict whether future outbreaks of the coronavirus, including its variants and subvariants, or of other infectious diseases will result in renewed governmental restrictions on consumer and dealer behavior, any of which could have negative financial and operational impacts on our business.
Moreover, these types of events could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally, which could adversely impact our operating results. 52 Table of Contents For example, as discussed in the risk factor entitled “ General economic and other conditions that impact consumer demand for automobiles, including interest rates, inflation, tariffs and fuel prices, may have a material adverse effect on our business, financial condition and results of operations ,” responses to the coronavirus pandemic negatively affected our business, growth, financial condition, results of operations and cash flows in a number of ways, and we cannot predict whether future outbreaks of the coronavirus, including its variants and subvariants, or of other infectious diseases will result in renewed governmental restrictions on consumer and dealer behavior, any of which could have negative financial and operational impacts on our business.
For example, in 2015, the California New Car Dealers Association, or CNCDA, filed a lawsuit alleging that we were operating in the State of California as an unlicensed automobile dealer and autobroker. Although this litigation was ultimately settled, we cannot assure you that similar litigation will not be brought against us in the future.
For example, in 2015, the California New Car Dealers Association, or CNCDA, filed a lawsuit alleging that we were operating in the State of California as an unlicensed automobile dealer and auto broker. Although this litigation was ultimately settled, we cannot assure you that similar litigation will not be brought against us in the future.
Home Delivery. The Home Delivery Management tool in the TrueCar Dealer Portal integrates a third-party delivery service, enabling vehicle dispatches for both in-store and TrueCar consumers. This tool facilitates trade-in pickups, calculates and collects delivery fees, and offers real-time logistics tracking, consolidating these services into a single, efficient platform for our Certified Dealers.
Home Delivery . The Home Delivery Management tool in the TrueCar Dealer Portal integrates a third-party delivery service, enabling vehicle dispatches for both in-store and TrueCar consumers. This tool facilitates trade-in pickups, calculates and collects delivery fees, and offers real-time logistics tracking, consolidating these services into a single, efficient platform for our Certified Dealers. OEMs Incentive Programs.
Ensuring that our products adhere to these requirements could divert our attention from key initiatives and require the investment of a significant 25 Table of Contents amount of resources and, if we are unsuccessful in implementing the standards, could negatively affect our reputation and contractual relationships, which could adversely affect our growth rate, revenue and financial and operating performance.
Ensuring that our products adhere to these requirements could divert our attention from key initiatives and require the investment of a significant amount of resources and, if we are unsuccessful in implementing these standards, could negatively affect our reputation and contractual relationships, which could adversely affect our growth rate, revenue and financial and operating performance.
Competition for qualified employees in our industry, particularly for software engineers, data scientists and other technical staff, is often intense, and we have historically faced significant competition in hiring and retaining them. To attract and retain executives and other key employees in this competitive marketplace, we must provide competitive compensation packages, including cash and stock-based compensation.
Competition for qualified employees in our industry, particularly for software engineers, data scientists and other technical staff, is often intense, and we have at times faced significant competition in hiring and retaining them. To attract and retain executives and other key employees in this competitive marketplace, we must provide competitive compensation packages, including cash and stock-based compensation.
For example, if consumer demand for cars is permanently decreased because remote working continues to be prevalent in the long term and the need for workers to commute is reduced or if consumers become accustomed to contactless purchases and we are not able to successfully roll out our TrueCar+ experience, our business may be harmed.
For example, if consumer demand for cars is permanently decreased because remote working continues to be prevalent in the long term and the need for commuting is reduced or if consumers become accustomed to contactless purchases and we are not able to successfully roll out our TrueCar+ experience, our business may be harmed.
Our primary source of revenue consists of fees paid by TrueCar Certified Dealers to us in connection with the opportunity to sell automobiles to our users. In addition, our value proposition to consumers depends on our ability to provide pricing information on automobiles from a sufficient number of automobile dealers by brand and in a given consumer’s geographic area.
Our primary source of revenue consists of fees paid by TrueCar Certified Dealers to us in connection with the opportunity to sell automobiles to our users. Our value proposition to such users depends on our ability to provide pricing information on automobiles from a sufficient number of automobile dealers by brand and in a given consumer’s geographic area.
Any or all of these adverse effects could result in substantial negative publicity, decreased revenues, increased expenses and decreased profitability. 33 Table of Contents Laws Relating to Financial Products The provision of financial products, including related to the purchase, financing or lease of automobiles, is highly regulated by the jurisdictions in which we do business.
Any or all of these adverse effects could result in substantial negative publicity, decreased revenues, increased expenses and decreased profitability. Laws Relating to Financial Products The provision of financial products, including related to the purchase, financing or lease of automobiles, is highly regulated by the jurisdictions in which we do business.
Shares held by affiliates may also be sold under Rule 144, subject to applicable restrictions, including volume and manner of sale limitations. In January 2017, we filed a shelf registration statement on Form S-3, which we refer to as the 2017 Registration Statement.
Shares held by affiliates may also be sold under Rule 144, subject to applicable restrictions, including volume and manner of sale limitations. 49 Table of Contents In January 2017, we filed a shelf registration statement on Form S-3, which we refer to as the 2017 Registration Statement.
The executive cash bonus program is based on company financial performance and the attainment of key strategic objectives under the annual plan approved by the Compensation and Workforce Committee of our Board of Directors. After the end of the fiscal year, that committee reviews performance against plan objectives and determines the actual payout of the bonus.
The executive cash bonus program is based on company financial performance and the attainment of key strategic objectives under the annual plan approved by the Compensation and Workforce Committee of our Board of Directors. After the end of the fiscal year, that committee reviews performance against plan objectives and 13 Table of Contents determines the actual payout of the bonus.
Any reduction in the number of users directed to our website through Internet search engines could harm our business and operating results. Our users may in some cases require dealers who wish to communicate with them other than by email to communicate by text message rather than by calling.
Any reduction in the number of users directed to our website through Internet search engines could harm our business and operating results. Our users may in some cases require dealers who wish to communicate with them other than by email to communicate by text message rather than by phone call.
If a critical mass of dealers nationally, or in any given geographic area, goes out of business, or cancels or suspends their participation in our network, we may be unable to provide comparable sales data, our used-car inventory count and certain key elements of our TrueCar Deal Builder experience to users in the affected areas, or the quality of the information or user experience could deteriorate in those areas.
If a critical mass of dealers nationally, or in any given geographic area, goes out of business, or cancels or suspends their participation in our network, we may be unable to provide comparable sales data, our used-car inventory count and certain key elements of our platform to users in the affected areas, or the quality of the information or user experience could deteriorate in those areas.
For example, in 2020, USAA terminated its affinity marketing partnership with us. USAA accounted for a substantial share of our units and revenues, for example, in 2019, 29% of all of our units during that year, were matched to users of the car-buying site we maintained for USAA.
For example, in 2020, USAA terminated its affinity marketing partnership with us. Prior to the termination of that relationship, USAA accounted for a substantial share of our units and revenues, for example, in 2019, 29% of all of our units during that year were matched to users of the car-buying site we maintained for USAA.
However, we cannot assure you that we will be able to successfully comply with current or future regulations to which our business may be subject. Human Capital Resources At December 31, 2023, we had 324 full-time employees and one part-time employee nationwide. We have a dynamic workforce policy, pursuant to which our employees work from home on a permanent basis.
However, we cannot assure you that we will be able to successfully comply with current or future regulations to which our business may be subject. Human Capital Resources At December 31, 2024, we had 348 full-time employees and one part-time employee nationwide. We have a dynamic workforce policy, pursuant to which our employees work from home on a permanent basis.
Additionally, if we discontinue our broad marketing campaigns or elect to reduce our sales and marketing costs to decrease our losses, as we did at the beginning of the coronavirus pandemic, our ability to acquire consumers and dealers and grow our revenues would be adversely affected.
Additionally, if we discontinue our broad marketing campaigns or elect to reduce our sales and marketing costs to decrease our losses, as we did at the beginning of the coronavirus pandemic, our ability to acquire consumers and dealers and grow our 29 Table of Contents revenues would be adversely affected.
We cannot guarantee when or if the repurchases authorized under the program will be made or that the program will enhance long-term stockholder value. For example, we made no repurchases of shares under our share repurchase program in the twelve months ended December 31, 2023.
We cannot guarantee when or if the repurchases authorized under the program will be made or that the program will enhance long-term stockholder value. For example, although we did repurchase shares in the twelve months ended December 31, 2024, we made no repurchases of shares under our share repurchase program in the twelve months ended December 31, 2023.
Additional changes like these to our relationships with our affinity group marketing partners could happen for a number of reasons both within and outside of our control.
Additional changes similar to these to our relationships with our affinity group marketing partners could happen for a number of reasons both within and outside of our control.
We had federal net operating loss carryforwards that begin to expire in the year ending December 31, 2034 and state net operating losses that began to expire in the year ended December 31, 2022.
We have federal net operating loss carryforwards that begin to expire in the year ending December 31, 2034 and state net operating losses that began to expire in the year ended December 31, 2022.
Our senior management’s knowledge of our business and industry would be difficult to replace, and any further turnover could negatively affect our business, growth, financial conditions, results of operations and cash flows. We experienced significant changes in our management team in 2023.
Our senior management’s knowledge of our business and industry would be difficult to replace, and any further turnover could negatively affect our business, growth, financial conditions, results of operations and cash flows. Recently, we have experienced significant changes in our management team.
In the future, we may permit or require certain employees to return to our offices, which could create a transition period in which business is disrupted or employee attrition, morale and productivity is negatively affected. We may fail to respond adequately to changes in technology and consumer demands that could lead to decreased demand for automobiles on our platform.
In the future, if we require certain employees to return to our offices, it could create a transition period during which business is disrupted or employee attrition, morale and productivity is negatively affected. We may fail to respond adequately to changes in technology and consumer demands that could lead to decreased demand for automobiles on our platform.
Although this allowed us to further diversify the financial institutions in which we deposit our cash and cash equivalents, our business operations necessitate maintaining a certain amount of cash in deposit accounts, and, as of December 31, 2023, approximately 11.5% of our cash and cash equivalents was held in deposit accounts in excess of the FDIC insurance limits and remain subject to the risk of bank failure.
Although this allowed us to further diversify the financial institutions in which we deposit our cash and cash equivalents, our business operations necessitate maintaining a certain amount of cash in deposit accounts, and, as of December 31, 2024, approximately 11.7% of our cash and cash equivalents was held in deposit accounts in excess of the FDIC insurance limits and remain subject to the risk of bank failure.
We receive data that is important for our business, such as automobile purchase data, from many third-party data providers, including our network of TrueCar Certified Dealers; dealer management system, or DMS, data feed providers; data aggregators and integrators; survey companies; purveyors of registration data; our affinity group marketing partners; and other companies with which we partner from time to time.
We receive data that is important for our business, such as automobile purchase data, from many third-party data providers, including our network of TrueCar Certified Dealers; DMS, data feed providers; data aggregators and integrators; survey companies; purveyors of registration data; our affinity group marketing partners; and other companies with which we partner from time to time.
The complaint, as subsequently amended, sought declaratory and injunctive relief based on allegations that we were engaging in unfairly competitive practices and were operating as an unlicensed automobile dealer and autobroker in contravention of various state laws.
The complaint, as subsequently amended, sought declaratory and injunctive relief based on allegations that we were engaging in unfairly competitive practices and were operating as an unlicensed automobile dealer and autobroker in contravention of various state 33 Table of Contents laws.
Similarly, a change in gasoline prices, such as the increases in gasoline prices following Russia’s invasion of Ukraine in February 2022 and the implementation of sanctions against Russia by Western and other governments, governmental policy or other macroeconomic factors could increase the relative demand for electric vehicles, many of which are currently sold directly to consumers by manufacturers such as Tesla without the involvement of franchised dealers such as the TrueCar Certified Dealers on our network, and which is a transaction structure we are not currently able to monetize.
Similarly, a change in gasoline prices, such as the increases in gasoline prices in the aftermath of Russia’s invasion of Ukraine in February 2022 and the resulting sanctions against Russia, governmental policy or other macroeconomic factors could increase the relative demand for electric vehicles, many of which are currently sold directly to consumers by manufacturers such as Tesla without the involvement of franchised dealers such as the TrueCar Certified Dealers on our network, and which is a transaction structure we are not currently able to monetize.
We had federal research and development credit carryforwards that begin to expire in the year ending December 31, 2040 and state research and development credit carryforwards that can be carried forward indefinitely. Sections 382 and 383 of the U.S.
We also have federal research and development credit carryforwards that begin to expire in the year ending December 31, 2040 and state research and development credit carryforwards that can be carried forward indefinitely. Sections 382 and 383 of the U.S.
In the past, manufacturers have taken the position that prices submitted by TrueCar Certified Dealers were in violation of their MAAP guidelines and discouraged franchise dealers from remaining in or joining the network, and any similar discord in the future with specific car manufacturers could impede our ability to grow our dealer network.
In the past, manufacturers have taken the position that prices submitted by TrueCar Certified Dealers were in violation of their MAAP guidelines and discouraged franchise dealers from participating in our network, and any similar discord in the future with specific car manufacturers could impede our ability to grow our dealer network.
In 2015, 279 franchise dealers became inactive as the result of a contractual dispute with a large dealer group, and our franchise dealer count decreased from 9,300 at June 30, 2015 to 8,702 at September 30, 2015. At December 31, 2023, our franchise dealer cou nt was 8,232.
In 2015, 279 franchise dealers became inactive as the result of a contractual dispute with a large dealer group, and our franchise dealer count decreased from 9,300 at June 30, 2015 to 8,702 at September 30, 2015. At December 31, 2024, our franchise dealer cou nt was 8,351.
Additionally, we are not currently able to monetize transactions in which a manufacturer sells a new automobile directly to a consumer without the involvement of a TrueCar Certified Dealer, as Tesla and some other electric car manufacturers do in certain states, for example.
Additionally, we are not currently able to monetize transactions in which a manufacturer sells a new automobile directly to a consumer without the involvement of a TrueCar Certified Dealer, as Tesla, Rivian and Polestar and some other electric car manufacturers do in certain states.
While a number of key aspects of this infrastructure, such as our unified checkout flow, which allows consumers to view relevant transaction details, landed costs and next steps to complete the purchase of a vehicle, have been developed, additional components that we envision for TrueCar+, such as the ability to complete transaction documents online, will require additional technological development.
While a number of key aspects of this infrastructure, such as our unified checkout flow, which allows consumers to view relevant transaction details, landed costs and next steps to complete the purchase of a vehicle, have been developed, additional components that we envision to scale TrueCar+, will require additional technological development.
If our publicly-announced guidance of future operating results fails to meet the expectations of securities analysts, investors or other interested parties, the price of our common stock could decline.
If our publicly-announced guidance of future operating results fails to meet the expectations of securities analysts, investors or other interested parties, or if our actual results fail to meet our publicly-announced guidance or the expectations of such parties, the price of our common stock could decline.
Further, in August 2022, Congress enacted a 1% excise tax on certain corporate stock repurchases as part of the Inflation Reduction Act of 2022, which went into effect on January 1, 2023 and will increase the costs of repurchasing shares of our common stock in the future.
Further, in August 2022, Congress enacted a 1% excise tax on certain corporate stock repurchases as part of the Inflation Reduction Act of 2022, which went into effect on January 1, 2023 and increased the costs of repurchasing shares of our common stock.
Our ability to execute our business strategies may be adversely affected by the uncertainty associated with any such transition, and the time and attention from the board and management needed to fill any vacant roles and train any new hires could disrupt our business.
Our ability to execute our business 24 Table of Contents strategies may be adversely affected by the uncertainty associated with any such transition, and the time and attention from the board and management needed to fill any vacant roles and train any new hires could disrupt our business.
In addition, computer malware, viruses, social engineering (such as spear phishing attacks) and general hacking have become more prevalent in our industry, have occurred on our systems in the past and are likely to occur on our systems in the future.
In addition, computer malware, viruses, social engineering (such as spear phishing attacks) and general hacking have become more prevalent in our industry, have occurred on our 40 Table of Contents systems in the past and are likely to occur on our systems in the future.
Corporate Information We completed our initial public offering in May 2014 and our common stock is listed on the Nasdaq Global Select Market under the symbol “TRUE.” 12 Table of Contents Available Information Our Internet address is www.truecar.com. Our investor relations website is located at https://ir.truecar.com.
Corporate Information We completed our initial public offering in May 2014 and our common stock is listed on the Nasdaq Global Select Market under the symbol “TRUE.” Available Information Our Internet address is www.truecar.com. Our investor relations website is located at ir.truecar.com.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Board members also engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. 52 Table of Contents Our cybersecurity risk management and strategy processes are overseen by leaders from our Software and Infrastructure Engineering, Compliance and Legal teams.
Biggest changeOur Board members also engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. 54 Table of Contents Our cybersecurity risk management and strategy processes are overseen by leaders from our Software and Infrastructure Engineering, Compliance and Legal teams, including our Director of Cybersecurity and Compliance.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 53 Table of Content s PART II
Biggest changeMine Safety Disclosures Not applicable. 55 Table of Contents PART II
Item 3. Legal Proceedings Please refer to the disclosure under the heading “Legal Proceedings” in Note 10 “Commitments and Contingencies” to our annual consolidated financial statements included in Part II, Item 8 of this report for a description of our material pending legal proceedings, which disclosure is incorporated by reference into this Item 3 of Part I. Item 4.
Item 3. Legal Proceedings Please refer to the disclosure under the heading “Legal Proceedings” in Note 9 “Commitments and Contingencies” to our annual consolidated financial statements included in Part II, Item 8 of this report for a description of our material pending legal proceedings, which disclosure is incorporated by reference into this Item 3 of Part I. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn February 2024, the Board further extended the term of the repurchase program until December 31, 2026 and increased the amount authorized to repurchase shares by approximately $54.2 million. Following this increase and expenditures under the program to date, $100 million of authorization currently remains for future share repurchases.
Biggest changeIn February 2024, the Board increased the authorization of the Program by an additional $54.2 million, bringing the remaining authorization to $100 million, and extended the expiration of the Program until December 31, 2026. The Company’s share repurchase program does not obligate the Company to repurchase any dollar amount of its shares.
Sales of Unregistered Securities None. 54 Table of Content s Stock Performance Graph The following shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Exchange Act or the Securities Act of 1933, as amended, except to the extent we specifically incorporate it by reference into such filing.
Sales of Unregistered Securities None. 56 Table of Contents Stock Performance Graph The following shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Exchange Act or the Securities Act of 1933, as amended, except to the extent we specifically incorporate it by reference into such filing.
The graph assumes that $100 was invested at the market close on December 31, 2018 in our common stock, the Nasdaq Composite and the RDG Internet Composite, and the data for the Nasdaq Composite and the RDG Internet Composite assumes reinvestment of dividends.
The graph assumes that $100 was invested at the market close on December 31, 2019 in our common stock, the Nasdaq Composite and the RDG Internet Composite, and the data for the Nasdaq Composite and the RDG Internet Composite assumes reinvestment of all dividends.
The following graph shows a comparison from December 31, 2018 through December 31, 2023 of the cumulative total return for our common stock, the Nasdaq Composite Index (Nasdaq Composite) and the RDG Internet Composite.
The following graph shows a comparison from December 31, 2019 through December 31, 2024 of the cumulative total return for our common stock, the Nasdaq Composite Index (Nasdaq Composite) and the RDG Internet Composite Index.
As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. The stock price performance of the following graph is not necessarily indicative of future stock price performance. 55 Table of Content s Item 6. Reserved 56 Table of Content s
As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. The stock price performance of the following graph is not necessarily indicative of future stock price performance. 57 Table of Contents Item 6. Reserved 58 Table of Contents
In May 2021, the Board increased the authorization of the share repurchase program by an additional $75 million, bringing the total authorization to $150 million. In July 2022, the Board extended the term of the share repurchase program until September 30, 2024.
In May 2021, the Board increased the authorization of the share repurchase program by an additional $75 million, bringing the total authorization to $150 million. In July 2022, the Board extended the expiration of the repurchase program to September 30, 2024 without increasing the total dollar amount authorized for repurchases.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on the Nasdaq Global Select Market under the symbol “TRUE” since May 16, 2014. Our initial public offering was priced at $9.00 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on the Nasdaq Global Select Market under the symbol “TRUE” since May 16, 2014. Before that date, there was no public trading market for our common stock.
Dividend Policy We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not anticipate paying any dividends on our common stock in the foreseeable future.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not anticipate paying any dividends on our common stock in the foreseeable future.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Holders of Record As of February 12, 2025, there were 108 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Removed
Before that date, there was no public trading market for our common stock. Holders of Record As of February 14, 2024, there were 117 holders of record of our common stock.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended December 31, 2024 was as follows: Period Total Number of Shares Purchased Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 — October 31, 2024 1,583,315 $3.59 1,583,315 $80,660,467 November 1, 2024 — November 30, 2024 167,777 $3.94 167,777 $80,000,003 December 1, 2024 — December 31, 2024 — $— — $80,000,003 Total 1,751,092 $3.62 1,751,092 $80,000,003 (1) On August 6, 2020, the Company issued a press release announcing that its Board of Directors (the “Board”) had authorized a share repurchase program of up to $75 million to allow for the repurchase of the Company’s common stock, with such authorization effective until September 30, 2022.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers There was no share repurchase activity during the three months ended December 31, 2023.
Added
(2) Average price paid per share for open market transactions excludes commission.
Removed
On August 6, 2020, we issued a press release announcing that our Board of Directors (the “Board”) had authorized a share repurchase program of up to $75 million to allow for the repurchase of the our common stock through September 30, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn addition, in evaluating Adjusted EBITDA you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving Adjusted EBITDA, and you should not infer from our presentation of Adjusted EBITDA that our future results will not be affected by these expenses or any unusual or non-recurring items. 60 Table of Content s The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented: Year Ended December 31, 2023 2022 2021 (in thousands) Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (49,766) $ (118,685) $ (38,329) Income from discontinued operations, net of taxes — — (40) Loss from continuing operations (49,766) (118,685) (38,369) Non-GAAP adjustments: Interest income (6,718) (2,565) (52) Depreciation and amortization 17,699 16,520 16,279 Stock-based compensation 14,299 17,681 20,395 (Gain) loss from equity method investment (1) — (1,845) 5,404 Change in fair value of contingent consideration liability 931 359 41 (Gain) loss from lease exit (2) (1,477) 214 — Impairment of right-of-use assets (3) 2,376 — 1,652 Transaction costs (4) — 1,200 — Restructuring charges (5) 8,947 — — Goodwill impairment (6) — 59,775 — Other income — (40) (667) Provision for (benefit from) income taxes 17 (2,560) 206 Adjusted EBITDA $ (13,692) $ (29,946) $ 4,889 (1) The excluded amounts include a $1.8 million gain from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade during the first quarter of 2022, and a $4.1 million impairment charge on our equity method investment in Accu-Trade in the fourth quarter of 2021.
Biggest changeIn addition, in evaluating Adjusted EBITDA you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving Adjusted EBITDA, and you should not infer from our presentation of Adjusted EBITDA that our future results will not be affected by these expenses or any unusual or non-recurring items. 62 Table of Contents The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented: Year Ended December 31, 2024 2023 2022 (in thousands) Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (31,048) $ (49,766) $ (118,685) Non-GAAP adjustments: Interest income (6,147) (6,718) (2,565) Depreciation and amortization 18,035 17,699 16,520 Stock-based compensation 11,730 14,299 17,681 Gain from equity method investment (1) — — (1,845) Change in fair value of contingent consideration liability 372 931 359 (Gain) loss from lease exit (2) — (1,477) 214 Impairment of right-of-use assets (3) 6,880 2,376 — Transaction costs (4) — — 1,200 Restructuring charges (5) 1,474 8,947 — Goodwill impairment (6) — — 59,775 Interest accretion for terminated lease (7) 330 — — Other income — — (40) Provision for (benefit from) income taxes 15 17 (2,560) Adjusted EBITDA $ 1,641 $ (13,692) $ (29,946) (1) The excluded amount includes a $1.8 million gain from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade during the first quarter of 2022.
However, our future capital requirements will depend on many factors, including our revenue levels, the timing and extent of our spending to support our technology and development efforts, costs related to potential acquisitions to further expand our business and product offerings, collection of accounts receivable, macroeconomic activity, and the length and severity of business disruptions resulting from inventory constraints caused by the global automobile semiconductor chip shortage.
However, our future capital requirements will depend on many factors, including our revenue levels, the timing and extent of our spending to support our technology and development efforts, costs related to potential acquisitions to further expand our business and product offerings, collection of accounts receivable, macroeconomic activity, and the length and severity of business disruptions resulting from the inventory constraints caused by the global automobile semiconductor chip shortage.
This was primarily due to a loss from continuing operations of $49.8 million, adjusted for non-cash items, including stock-based compensation expense of $14.3 million, depreciation and amortization expense of $17.7 million, amortization of lease right-of-use assets of $3.0 million, an increase in the fair value of contingent consideration liabilities of $0.9 million, impairments and write offs of assets of $2.4 million, and bad debt expense of $0.7 million, partially offset by a gain on lease exit of $1.6 million.
This was primarily due to a loss from operations of $49.8 million, adjusted for non-cash items, including stock-based compensation expense of $14.3 million, depreciation and amortization expense of $17.7 million, amortization of lease right-of-use assets of $3.0 million, an increase in the fair value of contingent consideration liabilities of $0.9 million, impairments and write offs of assets of $2.4 million, and bad debt expense of $0.7 million, partially offset by a gain on lease exit of $1.6 million.
This was primarily due to a loss from continuing operations of $118.7 million, adjusted for non-cash items, including a goodwill impairment charge of $59.8 million, stock-based compensation expense of $17.7 million, depreciation and amortization expense of $16.5 million, gain from equity method investment of $1.8 million , amortization of lease right-of-use assets of $3.9 million, and bad debt expense of $0.7 million.
This was primarily due to a loss from operations of $118.7 million, adjusted for non-cash items, including a goodwill impairment charge of $59.8 million, stock-based compensation expense of $17.7 million, depreciation and amortization expense of $16.5 million, gain from equity method investment of $1.8 million, amortization of lease right-of-use assets of $3.9 million, and bad debt expense of $0.7 million.
Refer to Part I, Item 1A, Risk Factors, for additional disclosures of risks related to the macroeconomic climate, the lingering effects of the coronavirus pandemic, the global automotive semiconductor chip shortage, and interest rates.
Refer to Part I, Item 1A, Risk Factors, for additional disclosures of risks related to the macroeconomic climate, the lingering effects of the coronavirus pandemic, the global automotive semiconductor chip shortage, inflation, and interest rates.
See Note 10 “Commitments and Contingencies” to our consolidated financial statements for more information. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
See Note 9 “Commitments and Contingencies” to our consolidated financial statements for more information. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
We benefit consumers by providing information related to what others have paid for a make, model and trim of car in their area and price offers on actual vehicle inventory, which we refer to as VIN-based offers, from our network of TrueCar Certified Dealers. VIN-based offers provide consumers with price offers for specific vehicles from specific dealers.
We benefit consumers by providing information related to what others have paid for a make, model and trim of cars in their area and price offers on actual vehicle inventory, which we refer to as VIN-based offers, from our network of TrueCar Certified Dealers. VIN-based offers provide consumers with price offers for specific vehicles from specific dealers.
Financing Activities of Continuing Operations Cash used in financing activities of $4.3 million during 2023 primarily represents taxes paid of $3.1 million for the net share settlement of certain equity awards and a $1.9 million payment for the first tranche of contingent cash consideration associated with our acquisition of Digital Motors.
Cash used in financing activities of $4.3 million during 2023 primarily represents taxes paid of $3.1 million for the net share settlement of certain equity awards and a $1.9 million payment for the first tranche of contingent cash consideration associated with our acquisition of Digital Motors.
We calculate average monthly unique visitors as the sum of the monthly unique visitors in a given period, divided by the number of months in that period.
We calculate average monthly unique visitors as the sum of the monthly unique visitors in a given period, divided by the number of months in the period.
Net cash used in operating activities also reflected a decrease of $5.5 million from changes in operating assets and liabilities, which primarily reflected a decrease in operating lease liabilities of $5.2 million, a decrease in accounts payable of $2.8 million, a decrease in accrued expenses and other current liabilities of $1.4 million, which was primarily due to a decrease in marketing fees payable to our affinity group partners and advertisers, an increase in prepaid expenses and other assets of $0.2 million, and offset by a decrease in accounts receivable of $2.2 million, which was primarily due to a reduction in revenue and an increase in accrued employee expenses of $1.9 million Cash provided by operating activities in 2021 was $14.4 million.
Net cash used in operating activities also reflected a decrease of $5.5 million from changes in operating assets and liabilities, which primarily reflected a decrease in operating lease liabilities of $5.2 million, a decrease in accounts payable of $2.8 million, a decrease in accrued expenses and other current liabilities of $1.4 million, which was primarily due to a decrease in marketing fees payable to our affinity group partners and advertisers, an increase in prepaid expenses and other assets of $0.2 million, and offset by a decrease in accounts receivable of $2.2 million, which was primarily due to a reduction in revenue and an increase in accrued employee expenses of $1.9 million.
During the second quarter of 2023 the Company amended the purchase agreement in connection with its Restructuring Plan (Note 10 “Commitments and Contingencies” of our consolidated financial statements included herein) such that the future targets were considered 100% achieved.
During the second quarter of 2023 the Company amended the purchase agreement in connection with its Restructuring Plan (Note 9 “Commitments and Contingencies” of our consolidated financial statements included herein) such that the future targets were considered 100% achieved.
Inventory shortages along with pressure on consumer demand may impact the decision of our current network of Certified Dealers and OEMs to cancel or pause our services and product offerings and could discourage new dealers and OEMs from joining our network.
Lower inventory, along with pressure on consumer demand, may impact the decision of our current network of Certified Dealers and OEMs to cancel or pause our services and product offerings and could discourage new dealers and OEMs from joining our network.
We estimated future cash flows using internal estimates and incorporated the impacts of broader market factors such as rising interest rates, limited new vehicle inventories, rising vehicle costs, and the automotive chip shortage. The long-term growth rate was estimated based on judgments about the long term performance of the reporting unit as well as industry specific factors.
We estimated future cash flows using internal estimates and incorporated the impacts of broader market factors such as rising interest rates, limited new vehicle inventories, rising vehicle costs, and the automotive chip shortage. The long-term growth rate was estimated based on judgments about the long-term performance of the reporting unit as 74 Table of Contents well as industry specific factors.
In addition, we customize and operate our platform on a co-branded basis for our many affinity group marketing partners, including financial institutions such as Navy Federal, PenFed and American Express; membership-based organizations such as Consumer Reports, AARP, Sam’s Club, and AAA; and employee buying programs for large enterprises such as IBM and Walmart.
In addition, we customize and operate our platform on a co-branded basis for our many affinity group marketing partners, including financial institutions such as Navy Federal and PenFed; membership-based organizations such as Consumer Reports, Sam’s Club, and AAA; and employee buying programs for large enterprises such as IBM and Walmart.
Some of these limitations are: • Adjusted EBITDA does not reflect the receipt of interest or the payment of income taxes; • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or any other contractual commitments; • Adjusted EBITDA does not reflect lease exit gain or loss or impairment charges on our ROU assets associated with subleasing; • Adjusted EBITDA does not reflect goodwill impairment charges; • Adjusted EBITDA does not reflect changes in the fair value of our contingent consideration liability; • Adjusted EBITDA does not reflect the legal, accounting, consulting and other third-party fees and costs incurred by us in connection with the evaluation and negotiation of potential merger and acquisition transactions; • Adjusted EBITDA does not reflect the charges associated with the Restructuring Plan initiated and completed in the second quarter of 2023 to improve efficiency and reduce expenses or a realignment of the Company’s leadership structure initiated in the third quarter of 2023; • Adjusted EBITDA does not consider the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation; and • other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Some of these limitations are: • Adjusted EBITDA does not reflect the receipt of interest or the payment of income taxes; • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or any other contractual commitments; • Adjusted EBITDA does not reflect lease exit gain or loss or impairment charges on our ROU assets associated with subleasing; • Adjusted EBITDA does not reflect goodwill impairment charges; • Adjusted EBITDA does not reflect changes in the fair value of our contingent consideration liability; • Adjusted EBITDA does not reflect the legal, accounting, consulting and other third-party fees and costs incurred by us in connection with the evaluation and negotiation of potential merger and acquisition transactions; • Adjusted EBITDA does not reflect the charges associated with the Restructuring Plan initiated and completed in the second quarter of 2023 to improve efficiency and reduce expenses or a realignment of the Company’s leadership structure initiated in the third quarter of 2023; • Adjusted EBITDA does not reflect interest accretion for the terminated office lease at 1401 Ocean Avenue, Santa Monica, California; • Adjusted EBITDA does not consider the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation; and • other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
(4) The excluded amounts represent external legal, accounting, consulting and other third-party fees and costs we incurred in connection with the Digital Motors acquisition, and $0.25 million associated with acceleration of unvested options to purchase shares of Digital Motors stock held by Digital Motors employees at the time of the acquisition that are accounted for as post-combination compensation expense.
(4) The excluded amount represents external legal, accounting, consulting and other third-party fees and costs we incurred in connection with the Digital Motors acquisition, and $0.25 million associated with acceleration of unvested options to purchase shares of Digital Motors stock held by Digital Motors employees at the time of the acquisition that are accounted for as post-combination compensation expense.
We define Adjusted EBITDA as net loss adjusted to exclude interest income, depreciation and amortization, stock-based compensation, gain or loss from equity method investment, changes in the fair value of contingent consideration liability, lease exit gain or loss, impairment of right-of-use (“ROU”) assets, transaction costs, restructuring charges, goodwill impairment, other income, and income taxes.
We define Adjusted EBITDA as net loss adjusted to exclude interest income, depreciation and amortization, stock-based compensation, gain or loss from equity method investment, changes in the fair value of contingent consideration liability, lease exit gain or loss, impairment of right-of-use (“ROU”) assets, transaction costs, interest accretion for terminated leases, restructuring charges, goodwill impairment, other income, and income taxes.
These decreases were offset by an increase in accrued expenses and other current liabilities of $2.0 million, which was primarily due to an increase in marketing fees payable to our affinity group partners and advertisers and a decrease in prepaid expenses and other assets of $1.3 million. 71 Table of Content s Cash used in operating activities in 2022 was $29.1 million.
These decreases were offset by an increase in accrued expenses and other current liabilities of $2.0 million, which was primarily due to an increase in marketing fees payable to our affinity group partners and advertisers and a decrease in prepaid expenses and other assets of $1.3 million. Cash used in operating activities in 2022 was $29.1 million.
Depreciation and amortization expenses increased $0.2 million, or 1.5%, for 2022 as compared to 2021. Goodwill Impairme nt For the year ended December 31, 2022, we recognized a non-cash goodwill impairment charge of $59.8 million, which represents the amount that the carrying value of our single reporting unit was in excess of its estimated fair value at September 30, 2022.
Depreciation and amortization expenses increased $1.2 million, or 7.1%, for 2023 as compared to 2022. Goodwill Impairme nt For the year ended December 31, 2022, we recognized a non-cash goodwill impairment charge of $59.8 million, which represents the amount that the carrying value of our single reporting unit was in excess of its estimated fair value at September 30, 2022.
(2) The excluded amount represents lease exit gains and losses associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(2) The excluded amounts represent lease exit gains and losses associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(3) The excluded amount represents impairment charges on our ROU assets associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(3) The excluded amounts represent impairment charges on our ROU assets associated with certain of our existing office locations. We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
(5) The excluded amounts represent charges associated with the Restructuring Plan undertaken in the second quarter of 2023 to improve efficiency and reduce expenses and charges associated with the realignment of the Company’s leadership structure in the third quarter of 2023.
(5) The excluded amounts represent charges associated with the realignment of the Company’s leadership structure beginning in the third quarter of 2023 as well as charges associated with the Restructuring Plan undertaken in the second quarter of 2023 to improve efficiency and reduce expenses.
Cash used in investing activities of $8.0 million during 2022 consisted primarily of $12.1 million paid for our acquisition of Digital Motors and $11.7 million investments in software and computer hardware, offset by $15.7 million received from the sale of our equity method investment in Accu-Trade.
Cash used in investing activities of $11.8 million during 2023 consists primarily of investments in software and computer hardware. 73 Table of Contents Cash used in investing activities of $8.0 million during 2022 consisted primarily of $12.1 million paid for our acquisition of Digital Motors and $11.7 million investments in software and computer hardware, offset by $15.7 million received from the sale of our equity method investment in Accu-Trade.
In the first quarter of 2024, the Board further extended the term of the repurchase program until December 31, 2026 and increased the amount authorized to repurchase shares by approximately $54.2 million. Following this increase, the Company currently has $100 million of remaining authorization for future share repurchases.
In the first quarter of 2024, the Program had a remaining authorization of $45.8 million and the Board further extended the term of the repurchase program until December 31, 2026 and increased the amount authorized to repurchase shares by approximately $54.2 million. Following this increase, the Company had $100 million of remaining authorization for future share repurchases.
Depreciation and amortization expenses increased $1.2 million, or 7.1%, for 2023 as compared to 2022. We expect our depreciation and amortization expenses to continue to be affected by the amount of capitalized internally developed software costs and the timing of placing projects in service. Year ended December 31, 2022 compared to year ended December 31, 2021.
Depreciation and amortization expenses increased $0.3 million, or 1.9%, for 2024 as compared to 2023. We expect our depreciation and amortization expenses to continue to be affected by the amount of capitalized internally developed software costs and the timing of placing projects in service. Year ended December 31, 2023 compared to year ended December 31, 2022.
As discussed in the description of the units metric below, we have not adjusted the number of units downward to reflect these credited units. Average Monthly Unique Visitors We define a monthly unique visitor as an individual who has visited our website, our landing page on our affinity group marketing partner sites, or our mobile applications within a calendar month.
The number of units has not been adjusted downwards related to units credited as discussed in the description of the unit metric below. Average Monthly Unique Visitors We define a monthly unique visitor as an individual who has visited our website, our landing page on our affinity group marketing partner sites, or our mobile applications within a calendar month.
Components of Operating Results Revenues Our revenues are comprised primarily of dealer revenue and OEM incentives revenue. We recognize transaction revenue for certain of our Auto Buying Program and OEM incentives arrangements at the time introductions and incentives are delivered based upon expected subsequent vehicle sales between the Auto Buying Program user and the dealer. Dealer Revenue .
We recognize transaction revenue for certain of our Auto Buying Program and OEM incentives arrangements at the time introductions and incentives are delivered based upon expected subsequent vehicle sales between the Auto Buying Program user and the dealer. Dealer Revenue .
For the year ended December 31, 2023, our provision for income taxes of less than $0.1 million reflects state income tax expense.
For the years ended December 31, 2024 and December 31, 2023, our provision for income taxes of less than $0.1 million reflects state income tax expense.
(Gain) loss from Equity Method Investment Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) (Gain) loss from equity method investment $ — $ (1,845) $ 5,404 (100.0) % (134.1) % For the year ended December 31, 2022 we recognized a gain of $1.8 million from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade.
(Gain) loss from Equity Method Investment Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) (Gain) loss from equity method investment $ — $ — $ (1,845) — % (100.0) % 71 Table of Contents For the year ended December 31, 2022 we recognized a gain of $1.8 million from changes in fair value of a derivative asset recognized from the sale of our equity method investment in Accu-Trade.
Purchase obligations The Company has long-term agreements to purchase data information, software related licenses and support services, and other obligations that are enforceable and legally binding. As of December 31, 2023, the Company had purchase obligations of $13.6 million, with $7.7 million payable within 12 months. Purchase obligations exclude agreements that are cancellable without penalty.
Purchase obligations The Company has long-term agreements to purchase data information, software related licenses and support services, and other obligations that are enforceable and legally binding. As of December 31, 2024, the Company had purchase obligations of $10.1 million, with $8.1 million payable within 12 months. Purchase obligations exclude agreements that are cancellable without penalty.
The Program may be suspended or discontinued at any time and does not obligate us to purchase any minimum number of shares. For the year ended December 31, 2023, 2022, and 2021 the Company repurchased and retired a total of zero, 9.8 million, and 6.1 million shares under the program for zero, $29.7 million, and $32.3 million respectively.
The Program may be suspended or discontinued at any time and does not obligate us to purchase any minimum number of shares. During the years ended December 31, 2024, 2023, and 2022 the Company repurchased and retired a total of 6.1 million, zero, and 9.8 million shares under the program for $20.0 million, zero, and $29.7 million respectively.
As of December 31, 2023, the Company had fixed lease payment obligations of $16.6 million, with $4.0 million payable within 12 months that have not been reduced by minimum non-cancellable sublease rentals aggregating $4.7 million. See Note 4 “Leases” to our consolidated financial statements for more information.
As of December 31, 2024, the Company had fixed lease payment obligations of $12.9 million, with $3.6 million payable within 12 months that have not been reduced by minimum non-cancellable sublease rentals aggregating $2.5 million. See Note 4 “Leases” to our consolidated financial statements for more information.
Cost of revenue includes expenses related to the fulfillment of our services, consisting primarily of data costs and licensing fees paid to third-party service providers and expenses related to operating our website and mobile applications, including those associated with hosting fees; data processing costs required to deliver introductions to our network of TrueCar Certified Dealers; employee costs related to certain dealer operations; and facilities costs.
Cost of revenue includes expenses related to the fulfillment of our services, consisting primarily of data costs and licensing fees paid to third-party service providers and expenses related to operating our website and mobile applications, including those associated with hosting fees, data processing costs required to deliver introductions to our network of TrueCar Certified Dealers, employee costs related to certain dealer operations, wholesale vehicle acquisition costs, marketing spend on behalf of TrueCar Marketing Solutions (“TCMS”) customers, and facilities costs.
Year Ended December 31, 2023 2022 2021 Revenues 100 % 100 % 100 % Costs and operating expenses: Cost of revenue (exclusive of depreciation and amortization presented separately below) 10 10 10 Sales and marketing 62 65 59 Technology and development 27 29 18 General and administrative 25 27 21 Depreciation and amortization 11 10 7 Goodwill impairment — 37 — Loss from operations (36) (78) (14) Interest income 4 2 * Other income — * * Gain (loss) from equity method investment — 1 (2) Loss from continuing operations before income taxes (31) (75) (16) Provision for (benefit from) income taxes * (2) * Loss from continuing operations (31) (73) (17) Income from discontinued operations, net of taxes — — * Net loss (31) % (73) % (17) % * Less than 0.5% of revenues Comparison of Years Ended December 31, 2023, 2022 and 2021 Revenues Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) Revenues Dealer revenue $ 143,239 $ 156,485 $ 222,000 (8.5) % (29.5) % OEM incentives revenue 14,958 4,390 8,676 240.7 % (49.4) % Other revenue 509 649 1,022 (21.6) % (36.5) % Total revenues $ 158,706 $ 161,524 $ 231,698 (1.7) % (30.3) % Year ended December 31, 2023 c ompared to year ended December 31, 2022 .
Year Ended December 31, 2024 2023 2022 Revenues 100 % 100 % 100 % Costs and operating expenses: Cost of revenue (exclusive of depreciation and amortization presented separately below) 15 10 10 Sales and marketing 54 62 65 Technology and development 17 27 29 General and administrative 25 25 27 Depreciation and amortization 10 11 10 Goodwill impairment — — 37 Loss from operations (21) (36) (78) Interest income 4 4 2 Other income — — * Gain from equity method investment — — 1 Loss before income taxes (18) (31) (75) Provision for (benefit from) income taxes * * (2) Net loss (18) % (31) % (73) % * Less than 0.5% of revenues Comparison of Years Ended December 31, 2024, 2023 and 2022 Revenues Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) Revenues Dealer revenue $ 157,930 $ 143,239 $ 156,485 10.3 % (8.5) % OEM incentives revenue 16,896 14,958 4,390 13.0 % 240.7 % Other revenue 772 509 649 51.7 % (21.6) % Total revenues $ 175,598 $ 158,706 $ 161,524 10.6 % (1.7) % Year ended December 31, 2024 c ompared to year ended December 31, 2023 .
Liquidity and Capital Resources At December 31, 2023, our principal sources of liquidity were cash, cash equivalents and restricted cash totaling $137.0 million. We have incurred cumulative losses of $562.3 million from our operations through December 31, 2023, and expect to incur additional losses in the future.
Liquidity and Capital Resources At December 31, 2024, our principal sources of liquidity were cash, cash equivalents and restricted cash totaling $111.8 million. We have incurred cumulative losses of $593.3 million from our operations through December 31, 2024, and expect to incur additional losses in the future.
Monetization We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue (dealer revenue and OEM incentives revenue) in a given period by the number of units in that period.
The unit increase is primarily related to affinity partners. Monetization We define monetization as the average transaction revenue per unit, which we calculate by dividing all of our transaction revenue (dealer revenue and OEM incentives revenue) in a given period by the number of units in that period.
See Note 13 of our consolidated financial statements included herein for more information about our provision for income taxes. 64 Table of Content s Results of Operations The following table sets forth our selected consolidated statements of operations data for each of the periods indicated.
See Note 12 of our consolidated financial statements included herein for more information about our provision for income taxes. 66 Table of Contents Results of Operations The following table sets forth our selected consolidated statements of operations data for each of the periods indicated.
The decrease was partially offset by a $1.0 million increase in employee-related expenses, including $0.2 million in charges associated with the June 2023 Restructuring Plan, and an increase in other overhead expenses of $0.4 million. Year ended December 31, 2022 compared to year ended December 31, 2021.
The decrease was partially offset by a $1.0 million increase in employee-related expenses, including $0.2 million in charges associated with the June 2023 Restructuring Plan, and an increase in other overhead expenses of $0.4 million.
For further details, see Note 7 to our consolidated financial statements included herein. Interest Income Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) Interest income $ 6,718 $ 2,565 $ 52 161.9 % 4,832.7 % Year ended December 31, 2023 compared to year ended December 31, 2022 .
For further details, see Note 6 to our consolidated financial statements included herein. Interest Income Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) Interest income $ 6,147 $ 6,718 $ 2,565 (8.5) % 161.9 % Year ended December 31, 2024 compared to year ended December 31, 2023 .
General and Administrative Expenses Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) General and administrative expenses $ 40,321 $ 44,087 $ 48,747 (8.5) % (9.6) % General and administrative expenses as a percentage of revenues 25.4 % 27.3 % 21.0 % Year ended December 31, 2023 compared to year ended December 31, 2022 .
General and Administrative Expenses Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) General and administrative expenses $ 43,127 $ 40,321 $ 44,087 7.0 % (8.5) % General and administrative expenses as a percentage of revenues 24.6 % 25.4 % 27.3 % Year ended December 31, 2024 compared to year ended December 31, 2023 .
Our net loss has been significantly greater than cash used in operating activities due to the inclusion of non-cash expenses and charges. Cash used in operating activities in 2023 was $22.4 million.
Our net loss has been significantly greater than cash used in operating activities due to the inclusion of non-cash expenses and charges. Cash provided by operating activities in 2024 was $7.7 million.
The number of average monthly unique visitors increased 8.7% to approximately 8.0 million for the year ended December 31, 2023 from approximately 7.4 million for the year ended December 31, 2022.
The number of average monthly unique visitors decreased 12.8% to approximately 7.0 million for the year ended December 31, 2024 from approximately 8.0 million for the year ended December 31, 2023.
To the extent that existing cash, cash equivalents and restricted cash, and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing.
To the extent that existing cash, cash equivalents and restricted cash, and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.
Our franchise dealer count increased to 8,232 at December 31, 2023 from 7,924 at December 31, 2022. The increase in franchise dealer count from 2022 is primarily due to the increase in new vehicle inventory, resulting in franchise dealers beginning to increase their spending on marketing.
Our franchise dealer count increased to 8,351 at December 31, 2024 from 8,232 at December 31, 2023. The increase in franchise dealer count year over year is primarily due to the increase in new vehicle inventory, resulting in franchise dealers increasing their spending on marketing.
Capitalized software costs decreased $0.4 million for 2023 as compared to 2022 primarily due to a decrease in third-party software costs of $0.5 million as we reduced our use of consultants, offset by an increase in internally developed software of $0.1 million We expect technology and development expenses to continue to be affected by variations in headcount in technology and product development.
Capitalized software costs decreased $0.4 million for 2023 as compared to 2022 primarily due to a decrease in third-party software costs of $0.5 million as we reduced our use of consultants, offset by an increase in internally developed software of $0.1 million.
Dealer revenue is comprised of Auto Buying Program revenue as well as revenue from TrueCar Trade and, prior to its dissolution, DealerScience. Auto Buying Program revenue consists of fees paid by dealers participating in our network of TrueCar Certified Dealers.
Dealer revenue is comprised of Auto Buying Program revenue as well as revenue from TrueCar Trade and Sell Your Car. Auto Buying Program revenue consists of fees paid by dealers participating in our network of TrueCar Certified Dealers.
Sales and Marketing Expenses Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) Sales and marketing expenses $ 99,050 $ 104,534 $ 136,479 (5.2) % (23.4) % Sales and marketing expenses as a percentage of revenues 62.4 % 64.7 % 58.9 % Year ended December 31, 2023 compared to year ended December 31, 2022 .
Sales and Marketing Expenses Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) Sales and marketing expenses $ 95,585 $ 99,050 $ 104,534 (3.5) % (5.2) % Sales and marketing expenses as a percentage of revenues 54.4 % 62.4 % 64.7 % Year ended December 31, 2024 compared to year ended December 31, 2023 .
These OEMs pay us a per-vehicle fee for promotion of the incentive. For a description of our revenue accounting policies, see Note 2 "Summary of Significant Accounting Policies" to the consolidated financial statements. Costs and Operating Expenses Cost of Revenue (exclusive of depreciation and amortization) .
For a description of our revenue accounting policies, see Note 2 "Summary of Significant Accounting Policies" to the consolidated financial statements. Costs and Operating Expenses Cost of Revenue (exclusive of depreciation and amortization) .
Year Ended December 31, 2023 2022 2021 Average Monthly Unique Visitors 8,014,703 7,371,898 8,636,501 Units (1) 318,578 340,940 607,667 Monetization $ 497 $ 472 $ 380 Franchise Dealer Count 8,232 7,924 8,482 Independent Dealer Count 3,268 4,148 4,013 (1) We issued full credits of the amount originally invoiced with respect to 4,476, 7,736, and 14,912 units during the years ended December 31, 2023, 2022, and 2021, respectively.
Year Ended December 31, 2024 2023 2022 Average Monthly Unique Visitors 6,992,640 8,014,703 7,371,898 Units (1) 355,900 318,578 340,940 Monetization $ 491 $ 497 $ 472 Franchise Dealer Count 8,351 8,232 7,924 Independent Dealer Count 3,054 3,268 4,148 (1) We issued full credits of the amount originally invoiced with respect to 3,626, 4,476, and 7,736 units during the years ended December 31, 2024, 2023, and 2022, respectively.
Our independent dealer count decreased to 3,268 at December 31, 2023 from 4,148 at December 31, 2022.
Our independent dealer count decreased to 3,054 at December 31, 2024 from 3,268 at December 31, 2023.
Depreciation consists primarily of depreciation expense recorded on property and equipment. Amortization expense consists primarily of amortization recorded on intangible assets, capitalized software costs, and leasehold improvements. Interest Income . Interest income consists of interest earned on our cash, cash equivalents and restricted cash. 63 Table of Content s Other Income .
Depreciation consists primarily of depreciation expense recorded on property and equipment. Amortization expense consists primarily of amortization recorded on intangible assets, capitalized software costs, and leasehold improvements. Interest Income . Interest income consists of interest earned on our cash, cash equivalents and restricted cash. Other Income . Other income consists of a gain from the sale of a domain name.
Year Ended December 31, 2023 2022 2021 (in thousands) Consolidated Statements of Operations Data: Revenues $ 158,706 $ 161,524 $ 231,698 Costs and operating expenses: Cost of revenue (exclusive of depreciation and amortization presented separately below) 15,856 16,213 22,239 Sales and marketing 99,050 104,534 136,479 Technology and development 42,247 46,090 41,432 General and administrative 40,321 44,087 48,747 Depreciation and amortization 17,699 16,520 16,279 Goodwill impairment — 59,775 — Total costs and operating expenses 215,173 287,219 265,176 Loss from operations (56,467) (125,695) (33,478) Interest income 6,718 2,565 52 Other income — 40 667 Gain (loss) from equity method investment — 1,845 (5,404) Loss from continuing operations before income taxes (49,749) (121,245) (38,163) Provision for (benefit from) income taxes 17 (2,560) 206 Loss from continuing operations (49,766) (118,685) (38,369) Income from discontinued operations, net of taxes — — 40 Net loss $ (49,766) $ (118,685) $ (38,329) Other Non-GAAP Financial Information Adjusted EBITDA $ (13,692) $ (29,946) $ 4,889 65 Table of Content s The following table sets forth our selected consolidated statements of operations data as a percentage of revenues for each of the periods indicated.
Year Ended December 31, 2024 2023 2022 (in thousands) Consolidated Statements of Operations Data: Revenues $ 175,598 $ 158,706 $ 161,524 Costs and operating expenses: Cost of revenue (exclusive of depreciation and amortization presented separately below) 26,388 15,856 16,213 Sales and marketing 95,585 99,050 104,534 Technology and development 29,643 42,247 46,090 General and administrative 43,127 40,321 44,087 Depreciation and amortization 18,035 17,699 16,520 Goodwill impairment — — 59,775 Total costs and operating expenses 212,778 215,173 287,219 Loss from operations (37,180) (56,467) (125,695) Interest income 6,147 6,718 2,565 Other income — — 40 Gain from equity method investment — — 1,845 Loss before income taxes (31,033) (49,749) (121,245) Provision for (benefit from) income taxes 15 17 (2,560) Net loss $ (31,048) $ (49,766) $ (118,685) Other Non-GAAP Financial Information Adjusted EBITDA $ 1,641 $ (13,692) $ (29,946) 67 Table of Contents The following table sets forth our selected consolidated statements of operations data as a percentage of revenues for each of the periods indicated.
Our benefit from income taxes for the year ended December 31, 2022 primarily reflects the release of valuation allowance resulting from net deferred tax liabilities recorded in Digital Motors acquisition accounting providing a source of income in assessing realization of consolidated net deferred tax assets.
Our benefit from income taxes for the year ended December 31, 2022 primarily reflects the release of valuation allowance resulting from net deferred tax liabilities recorded in Digital Motors acquisition accounting providing a source of income in assessing realization of consolidated net deferred tax assets. 65 Table of Contents We had federal net operating loss carryforwards of approximately $346.6 million and state net operating loss carryforwards of approximately $276.9 million at December 31, 2024.
Investing Activities of Continuing Operations Cash used in investing activities of $11.8 million during 2023 consists primarily of investments in software and computer hardware.
Investing Activities Cash used in investing activities of $7.9 million during 2024 consists primarily of investments in software and computer hardware.
We provided a full valuation allowance against our net deferred tax assets at December 31, 2023 and 2022, as it is more likely than not that some or all of our deferred tax assets will not be realized. As a result of the valuation allowance, our income tax expense (benefit) is significantly less than the federal statutory rate of 21%.
Provision for (Benefit from) Income Taxes . We are subject to federal and state income taxes in the United States. We provided a full valuation allowance against our net deferred tax assets at December 31, 2024 and 2023, as it is more likely than not that some or all of our deferred tax assets will not be realized.
Additional funds may not be available on terms favorable to us or at all. 70 Table of Content s Share Repurchase Program In the third quarter of 2020, our board of directors authorized an open market stock repurchase program (the “Program”) of up to $75 million to allow for the repurchase of shares of our common stock through September 30, 2022.
Share Repurchase Program In the third quarter of 2020, our board of directors authorized an open market stock repurchase program (the “Program”) of up to $75 million to allow for the repurchase of shares of our common stock through September 30, 2022.
Interest income increased $4.2 million, or 161.9%, for 2023 as compared to 2022 primarily due to higher interest rates. Year ended December 31, 2022 compared to year ended December 31, 2021. Interest income increased $2.5 million, or 4,832.7%, for 2022 as compared to 2021 primarily due to higher interest rates.
Interest income decreased $0.6 million, or 8.5%, for 2024 as compared to 2023 primarily due to lower cash balances in interest-bearing accounts. Year ended December 31, 2023 compared to year ended December 31, 2022. Interest income increased $4.2 million, or 161.9%, for 2023 as compared to 2022 primarily due to higher interest rates.
Cash Flows The following table summarizes net cash derived from operating, investing, and financing activities from continuing operations, as well as net cash from discontinued operations: Year Ended December 31, 2023 2022 2021 (in thousands) Consolidated Cash Flow Data: Net cash (used in) provided by operating activities $ (22,414) $ (29,137) $ 14,374 Net cash used in investing activities (11,809) (8,028) (10,689) Net cash used in financing activities (4,331) (32,534) (38,086) Net cash used in continuing operations $ (38,554) $ (69,699) $ (34,401) Net cash provided by discontinued operations $ — $ — $ 6,304 Net decrease in cash, cash equivalents and restricted cash $ (38,554) $ (69,699) $ (28,097) Operating Activities of Continuing Operations Our net loss and cash flows used in operating activities are significantly influenced by our investments in headcount and infrastructure to support our growth and marketing and advertising expenses.
As of December 31, 2024, the Company had a remaining authorization of $80.0 million for future share repurchases. 72 Table of Contents Cash Flows The following table summarizes net cash derived from operating, investing, and financing activities from operations: Year Ended December 31, 2024 2023 2022 (in thousands) Consolidated Cash Flow Data: Net cash provided by (used in) operating activities $ 7,701 $ (22,414) $ (29,137) Net cash used in investing activities (7,860) (11,809) (8,028) Net cash used in financing activities (24,970) (4,331) (32,534) Net decrease in cash, cash equivalents and restricted cash $ (25,129) $ (38,554) $ (69,699) Operating Activities Our net loss and cash flows provided by or used in operating activities are significantly influenced by our investments in headcount and infrastructure to support our growth and marketing and advertising expenses.
The decrease in the number of full credits issued during the year is primarily due to a shift toward subscription-based billing, which resulted in a decrease in dealers billed on a pay-per-sale model, as well as the overall decrease in units year over year.
The decrease in the number of full credits issued during the period is primarily due to a shift toward subscription-based billing, which resulted in a decrease in dealers billed on a pay-per-sale model. The number of units increased 11.7% to 355,900 for the year ended December 31, 2024 from 318,578 for the year ended December 31, 2023.
The increase is a result of continuing to optimize the efficiency of our acquisition spend. 58 Table of Content s Units We define units as the number of automobiles purchased from TrueCar Certified Dealers that are matched to users of TrueCar.com, our TrueCar-branded mobile applications or the car-buying sites and mobile applications we maintain for our affinity group marketing partners.
The decrease is primarily due to focusing on affinity partners with efficient sales channels and by using a more targeted approach to customer-acquisition spend. 60 Table of Contents Units We define units as the number of automobiles purchased from TrueCar Certified Dealers that are matched to users of TrueCar.com, our TrueCar-branded mobile applications or the car-buying sites and mobile applications we maintain for our affinity group marketing partners.
Our chief operating decision maker regularly reviews revenue for each of our dealer, OEM incentives and other offerings in order to gain more depth and understanding of the factors driving our business. We are reporting the historical results of our divested ALG subsidiary, including the results of operations and cash flows as discontinued operations for all periods presented herein.
Our chief operating decision maker regularly reviews revenue for each of our dealer, OEM incentives and other offerings in order to gain more depth and understanding of the factors driving our business. Components of Operating Results Revenues Our revenues are comprised primarily of dealer revenue and OEM incentives revenue.
For guaranteed-sales and guaranteed-introductions subscription arrangements, fees are charged based on the lesser of (i) the actual number of sales generated or introductions delivered through our platform during the subscription period multiplied by the contracted price per sale/introduction or (ii) the guaranteed number of sales or introductions multiplied by the contracted price per sale/introduction. 62 Table of Content s We offer additional add-on products to eligible dealers as part of the Auto Buying Program to increase traffic and retarget in-market consumers.
For guaranteed-sales and guaranteed-introductions subscription arrangements, fees are charged based on the lesser of (i) the actual number of sales generated or introductions delivered through our platform during the subscription period multiplied by the contracted price per sale/introduction or (ii) the guaranteed number of sales or introductions multiplied by the contracted price per sale/introduction.
Costs and Operating Expenses Cost of Revenue (exclusive of depreciation and amortization) Years Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (dollars in thousands) Cost of revenue (exclusive of depreciation and amortization) $ 15,856 $ 16,213 $ 22,239 (2.2) % (27.1) % Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues 10.0 % 10.0 % 9.6 % Year ended December 31, 2023 compared to year ended December 31, 2022 .
Dealer revenue, OEM incentives revenue, and other revenue comprised 90.3%, 9.4%, and 0.3%, respectively, of revenues for 2023 as compared to 96.9%, 2.7%, and 0.4%, respectively, for 2022. 68 Table of Contents Costs and Operating Expenses Cost of Revenue (exclusive of depreciation and amortization) Years Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in thousands) Cost of revenue (exclusive of depreciation and amortization) $ 26,388 $ 15,856 $ 16,213 66.4 % (2.2) % Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues 15.0 % 10.0 % 10.0 % Year ended December 31, 2024 compared to year ended December 31, 2023 .
Dealer revenue, OEM incentives revenue, and other revenue comprised 90.3%, 9.4%, and 0.3%, respectively, of revenues for 2023 as compared to 96.9%, 2.7%, and 0.4%, respectively, for 2022. 66 Table of Content s Year ended December 31, 2022 compared to year ended December 31, 2021.
These increases were partially offset by a decrease of $2.7 million in independent dealer revenue. Dealer revenue, OEM incentives revenue, and other revenue comprised 90.0%, 9.6%, and 0.4%, respectively, of revenues for 2024 as compared to 90.3%, 9.4%, and 0.3%, respectively, for 2023. Year ended December 31, 2023 compared to year ended December 31, 2022.
We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
We consider these charges to be unrelated to our underlying results of operations and believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons. (6) The excluded amount represents a non-cash impairment charge we recognized on our goodwill during the third quarter of 2022.
During the year ended December 31, 2023, we generated revenues of $158.7 million and recorded a net loss of $49.8 million. 57 Table of Content s Market Environment The larger macroeconomic environment has resulted and will continue to result in significant economic disruptions to the Company’s business.
During the year ended December 31, 2024, we generated revenues of $175.6 million and recorded a net loss of $31.0 million. 59 Table of Contents Market Environment The macroeconomic environment has caused and will likely continue to cause significant economic disruptions to the Company’s business.
Cash used in financing activities of $38.1 million during 2021 primarily represents payments of $31.9 million for the repurchase of our common stock, taxes paid of $5.3 million for the net share settlement of certain equity awards, and a $2.2 million payment related to the fair value portion of a contingent consideration related to our 2018 acquisition of DealerScience.
Financing Activities Cash used in financing activities of $25.0 million during 2024 primarily represents payments of 20.1 million for the repurchase of our common stock, taxes paid of $3.3 million for the net share settlement of certain equity awards, and a $1.6 million payment for the second tranche of contingent cash consideration associated with our acquisition of Digital Motors.
We initially estimated the useful life of acquired technology as four years at the time of acquisition, but a change in estimate during the third quarter of 2023 based on a change in our planned usage resulted in revision of the useful life to three years. 73 Table of Content s The fair value of contingent liabilities were estimated at acquisition, and at least quarterly thereafter, using a scenario based method, which uses probability-weighted possible outcomes to estimate the timing of expected future cash flows and discount rates to calculate the present value.
The fair value of contingent liabilities were estimated at acquisition, and at least quarterly thereafter, using a scenario-based method, which uses probability-weighted possible outcomes to estimate the timing of expected future cash flows and discount rates to calculate the present value.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes to those statements included herein.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 15 “Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K.
The decrease in independent dealer count is primarily due to certain of our independent dealers being acquired in recent industry consolidations or going out of business as higher interest rates on dealer floor plans have put pressure on dealers along with price volatility. 59 Table of Content s Non-GAAP Financial Measures Adjusted EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP.
The decrease in independent dealer count is primarily due to ongoing industry consolidations, with some of our independent dealers being acquired, along with prioritizing franchise activations during the latter half of 2024. 61 Table of Contents Non-GAAP Financial Measures Adjusted EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP.
At the same time, wider economic inflation has led to the Federal Reserve raising interest rates, which along with the expectation that interest rates will remain high for the foreseeable future, will continue to impact the U.S. economy.
The ensuing automobile inventory shortage resulted in significant unmet demand, with automotive dealers seeing some incoming new car shipments presold. At the same time, wider economic inflation led to the Federal Reserve raising interest rates. The expectation that interest rates will remain relatively high for the foreseeable future will likely continue to impact the U.S. economy.
This was primarily due to a loss from continuing operations of $38.4 million, adjusted for non-cash items, including stock-based compensation expense of $20.4 million, depreciation and amortization expense of $16.3 million, loss from equity method investment of $5.4 million of which $4.1 million was related to an impairment charge, amortization of lease right-of-use assets of $4.3 million, an impairment charge associated with certain of our existing office locations of $1.7 million, and bad debt expense of $0.5 million.
This was primarily due to a loss from operations of $31.0 million, adjusted for non-cash items, including depreciation and amortization expense of $18.0 million, stock-based compensation expense of $11.7 million, impairment of right-of-use assets of $6.9 million, other non-cash expenses of $1.0 million, amortization of lease right-of-use assets of $1.0 million, and bad debt expense of $0.6 million.
Net cash provided by operating activities also reflected an increase of $3.6 million from changes in operating assets and liabilities, which primarily reflected a decrease of $15.7 million in accounts receivable primarily due to a reduction in revenue and a decrease of $2.7 million in prepaid expenses and other assets, offset by a decrease in accrued expenses and other current liabilities of $5.6 million primarily due to a decrease in marketing fees payable to our affinity group partners and advertisers, a decrease in operating lease liabilities of $5.2 million, a decrease in accounts payable of $1.8 million, and a decrease in accrued employee expenses of $1.8 million.
Net cash used in operating activities also reflected a decrease of $0.8 million from changes in operating assets and liabilities, which primarily reflected a decrease in operating lease liabilities of $3.5 million, a decrease in accrued employee expenses of $1.9 million, and an increase in prepaid expenses and other assets of $0.8 million.
Revenue share that we pay to our affinity marketing partners is tied to revenue and units and will fluctuate along with those results. Year ended December 31, 2022 compared to year ended December 31, 2021. Sales and marketing expenses decreased $31.9 million, or 23.4%, for 2022 as compared to 2021.
We expect to incur incremental branded media expenses to support further rollout of TrueCar+ and other initiatives. Revenue share that we pay to our affinity marketing partners is tied to revenue and units and will fluctuate along with those results. Year ended December 31, 2023 compared to year ended December 31, 2022.
This number is calculated by counting the number of brands of new cars sold at each individual location, or rooftop, regardless of the size of the dealership that owns the rooftop. The network is comprised of dealers with a range of unit sales volume per dealer, with dealers representing certain brands consistently achieving higher than average unit sales volume.
The network is comprised of dealers with a range of unit sales volume per dealer, with dealers representing certain brands consistently achieving higher than average unit sales volume.
The increase was partially offset by a $0.9 million decrease in facilities costs. Capitalized software costs increased $0.4 million for 2022 as compared to 2021 primarily due to an increase in internally-developed software of $0.2 million in addition to an increase in third-party software costs of $0.2 million.
Capitalized software costs decreased $3.8 million for 2024 as compared to 2023 primarily due to a decrease in internally developed software of $2.9 million, a decrease in third-party software costs of $0.7 million, and an increase in write-offs of $0.2 million.
In 2022 we phased out the selling of TrueCar Trade subscription packages and transitioned dealers to Sell Your Car, for which we charge fees under a per-introduction or guaranteed-introductions model. DealerScience revenue consists of monthly subscription fees paid by dealers for access to DealerScience’s products and services.
Depending on their subscription terms, some dealers pay additional transaction fees for each vehicle purchased from a consumer that was introduced via TrueCar Trade. In 2022 we phased out the selling of TrueCar Trade subscription packages and transitioned dealers to Sell Your Car, for which we charge fees under a per-introduction or guaranteed-introductions model. OEM Incentives Revenue .
Fees are charged based on a monthly subscription rate for the right to sponsor up to a set number of vehicles at any time throughout the month under Sponsored Listings. Fees for our Reach product are also charged on a flat monthly rate regardless of the number of emails delivered.
TrueCar Sponsored Listings enables a dealer to place qualifying vehicles at more prominent positions within the car search results page, and fees are charged based on a monthly subscription rate for the right to sponsor up to a set number of vehicles at any time throughout the month.
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere herein.
Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations and Known Future Cash Requirements The Company’s material cash requirements include the following contractual and other obligations. 72 Table of Content s Leases The Company has various leases for office space.
These decreases were offset by proceeds received of $0.2 million from the exercise of employee stock options. Contractual Obligations and Known Future Cash Requirements The Company’s material cash requirements include the following contractual and other obligations. Leases The Company has various leases for office space.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Biggest changeWe believe that we do not have a material exposure to changes in fair value as a result of changes in interest rates. 75 Table of Contents Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
A hypothetical 25 basis points decrease in interest rates earned on our cash and cash equivalents balance as of December 31, 2023 would result in a decrease in annual interest income of approximately $0.3 million.
A hypothetical 25 basis points decrease in interest rates earned on our cash and cash equivalents balance as of December 31, 2024 would result in a decrease in annual interest income of approximately $0.3 million.
Financial Statements and Supplementary Data The information required by this Item 8 appears in a separate section of this annual report on Form 10-K beginning on page F-1 and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 74 Table of Contents
Financial Statements and Supplementary Data The information required by this Item 8 appears in a separate section of this annual report on Form 10-K beginning on page F-1 and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Interest Rate Risk We had cash, cash equivalents, and restricted cash of $137.0 million at December 31, 2023, which consist entirely of bank deposits and short-term money market funds. Such interest-earning instruments carry a degree of interest rate risk.
Interest Rate Risk We had cash, cash equivalents, and restricted cash of $111.8 million at December 31, 2024, which consist entirely of bank deposits and short-term money market funds. Such interest-earning instruments carry a degree of interest rate risk.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We believe that we do not have a material exposure to changes in fair value as a result of changes in interest rates.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Other TRUE 10-K year-over-year comparisons