Editor's note: TrueCar had 6.6 million unique visitors per month to its website during the quarter. The time frame for that web volume was misstated in an earlier version of this story.
TrueCar Inc., the car-shopping website that is undergoing a leadership transition, reported higher third-quarter revenue and a record number of vehicle sales through its digital channels, but still suffered an $11.1 million net loss.
The loss narrowed from $14.7 million a year earlier for the Santa Monica, Calif., company.
“This was a productive quarter for TrueCar,” Mike Guthrie, TrueCar’s CFO and interim COO, said during a conference call with analysts. “Following a disappointing Q2, we needed to execute better and we did. While the quarter was not without its challenges, overall I’m pleased with our financial performance.”
In the wake of worse-than-expected second-quarter results, TrueCar executives were upbeat about the company's performance in the third quarter.
TrueCar said total revenue rose 28 percent in the quarter, to $72.4 million, and its transaction revenue climbed 30 percent to $67.4 million, the highest level ever.
Consumers also purchased 208,034 vehicles from TrueCar Certified Dealers, up 21 percent from a year earlier and also a record.
Traffic to TrueCar’s three online channels -- its own, USAA and other partners -- was 6.6 million unique visitors a month during the quarter, a record. Yet the company acknowledged it needed to get better at helping dealers turn that traffic into vehicle sales.
“We now need to be a little more intelligent on that,” Guthrie told Automotive News after the company’s conference call. TrueCar plans to roll out a suite of mobile tools this quarter that it hopes will help dealers with the issue.
TrueCar also hopes to lure more dealer partners into the fold for the final quarter of 2015. The goal follows a highly public spat with AutoNation Inc., the country’s largest dealership chain, and its CEO, Mike Jackson.
AutoNation pulled its 279 stores out of TrueCar’s network beginning in July, and another 303 dealers pulled out in the third quarter. In all, TrueCar’s network shrank by 6.4 percent for the quarter.
“When you make that much noise in the industry, it tends to have a ripple effect,” Guthrie said. “July was certainly a time that caused a lot of angst in the industry overall and we’re happy to see that that has calmed down.”
Guthrie pointed out that despite losing 600 dealers in the quarter, the number of vehicles sold through TrueCar's certified dealers was at a record high. TrueCar expects recoup at least a portion of those lost dealers going forward.
“I think it’s fair to say there are probably some dealers sitting around saying ‘I wonder who the next TrueCar CEO will be and what will that signal,’” Johnny Stephenson , TrueCar 's chief risk officer, told Automotive News after the earnings call.
Guthrie is running the company as directors seek a successor to Scott Painter, the founder and CEO who resigned in August.
TrueCar is still in the middle of the search process for Painter’s replacement, and declined to give an update until a new CEO is announced. It has identified potential candidates from within the automotive industry on both the retail and manufacturer side, as well as other tech sectors.
Partnerships continue to be vital to TrueCar’s business model.
USAA -- the U.S. military financial services giant -- owns about 18 percent of TrueCar and accounted for about 31 percent of its sales in the third quarter.
In September, TrueCar signed a deal with Walmart Corp.’s warehouse division, Sam’s Club, to create a car-buying program for Sam’s Club members. TrueCar is awaiting the impact of the partnership in the fourth quarter and into 2016.
Despite TrueCar’s ongoing search for more partners like Sam’s Club -- and affiliations with banks like Nationwide Bank and M&T Bank, the company made it clear it has no plans to get into the F&I side of retail.
“We are not getting into F&I business, absolutely not,” Stephenson said. “Those partnerships are designed to aid our dealers to close more transactions where they get the fees, not us. It’s about bringing the F&I systems forward so users can engage with dealers more directly.”
For the fourth quarter, TrueCar forecasted revenue in the range of $64 million to $65.5 million, with adjusted earnings before income taxes, depreciation and amortization between $500,000 and $1 million.
For the full year, the company expects revenue of $260.2 million to $261.7 million, and adjusted EBITDA of $8 million to $8.5 million.
