TrueCar's Q2 net losses decrease thanks to higher dealer franchise revenue

TrueCar Inc.'s net losses continued to shrink in the second quarter even as it dealt with vehicle sales slowdowns among dealers impacted by the CDK Global cyberattacks.

The vehicle listings company posted a net loss of $13.5 million, an improvement over the $20.4 million net loss it recorded during the 2023 second quarter. It generated a net loss of $5.8 million in the first quarter.

Revenue was $41.8 million, up 6.4 percent from the previous year and 1.8 percent higher than the previous quarter. TrueCar said the increase stemmed in part from higher dealer franchise revenue and the expansion of its TrueCar Wholesale Solutions arm.

TrueCar is improving its financial situation as the market normalizes, CEO Jantoon Reigersman said during the company's second-quarter earnings call on Aug. 6.

"We expanded our franchise and independent dealer network thanks to strong growth in our new dealer activations. Moreover, we're now entering a market environment that is much different versus recent years," Reigersman said. "Our business model has been constrained by the lack of new-vehicle supply, but that is now changing. Vehicle supplies are returning at a time when demand is matching. This is a very positive backdrop for TrueCar."

TrueCar said it lost $350,000 in pay-per-sale revenue in June because of the cyberattacks June 19 on CDK, which was forced to shut down its dealership management system for its 15,000 customers across North America for two weeks. TrueCar also lost $400,000 in auto manufacturer incentive revenue during the quarter.

TrueCar launched its enhanced TrueCar+ pilot on July 17, which has been expanded in a bid for the company to become the first digital marketplace where consumers can buy a new or used car from home with or without a trade-in.

Net loss: $13.5 million, down from $20.4 million in the year-ago period.

Revenue: $41.8 million, up 6.4 percent from the same quarter a year earlier and 1.8 percent quarter over quarter.

Franchised dealership customers: 8,274 at the end of June. Franchised dealership count rose 1.5 percent from the second quarter a year ago.

Independent dealership customers: 3,200, down 8.3 percent from a year ago, because of industry consolidations or business shutdowns.

Adjusted EBITDA: $0.1 million, compared with a $5.3 million loss a year earlier.