Truecar 2025 Q1 Earnings Net Loss Widens by 73.3%

Truecar (TRUE) reported its fiscal 2025 Q1 earnings on May 06th, 2025. TrueCar's first-quarter results presented a contrast between revenue growth and widening losses. Revenue increased by 9.2% to $44.81 million compared to the previous year, surpassing expectations. However, the company's net loss widened significantly to $-10.14 million. The absence of second-quarter guidance due to market uncertainties, including tariffs, adds to the challenge of navigating future earnings expectations.

Revenue
TrueCar's revenue for the first quarter of 2025 reached $44.81 million, marking a 9.2% increase from the previous year. Dealer revenue was the predominant contributor, generating $40.84 million. OEM incentives revenue followed with $3.77 million, while other revenue accounted for $198,000. This overall revenue growth highlights TrueCar's ability to enhance its financial performance despite underlying challenges.

Earnings/Net Income
TrueCar's losses deepened to $0.12 per share in 2025 Q1 from a loss of $0.06 per share in 2024 Q1, reflecting a 100% wider loss. The net loss expanded to $-10.14 million, representing a 73.3% increase from the previous year's $-5.85 million loss. The company continues to face significant financial challenges.

Price Action
TrueCar's stock price experienced a significant decline, dropping 6.90% during the latest trading day, plummeting 15.09% over the past week, and tumbling 10.60% month-to-date. This downward trend reflects investor concerns about the company's financial health and market uncertainties.

Post Earnings Price Action Review
The strategy of purchasing TrueCar shares after a revenue decline and holding them for 30 days yielded a 42% total shareholder return over the past year. However, over a five-year period, the share price fell by 50%, and revenue contracted by 19% annually, highlighting the risk associated with this approach. Despite potential short-term gains, the long-term trajectory remains uncertain due to decreasing revenue, making TrueCar a risky investment for many shareholders. Investors typically shy away from companies with declining revenue, underscoring the unpredictability of this stock.

CEO Commentary
In the first quarter of 2025, Total Revenue grew to $44.8 million, reflecting a 9.2% year-over-year increase. However, the Net Loss widened to -$10.1 million compared to -$5.8 million last year, and Adjusted EBITDA decreased to -$3.8 million from $0.9 million. New unit sales surged 23%, outpacing the industry's 6.8% growth. The CEO emphasized the importance of TrueCar+ in transforming the car buying experience, highlighting significant enhancements in conversion rates and the onboarding of new dealer groups, which aligns with their strategy to drive market share.

Guidance
Looking ahead, the company aims for TrueCar+ to be broadly scalable by year-end. The CEO noted that critical back-end integrations with dealer management system providers CDK and Tekion are expected to be substantially complete by the end of July. Despite delays, progress continues, with the onboarding of additional pilot dealer groups, enhancing consumer access and expanding eligible inventory. The CEO remains optimistic about navigating potential challenges from recent automotive sector tariffs while awaiting clarity on OEM responses that will shape future operational adjustments.

Additional News
In recent developments, TrueCar has expanded its affinity network by partnering with DoorDash, GasBuddy, and GovX, enhancing its market reach and consumer engagement. The company also achieved the lowest cost per sale since 2022 through revamped performance marketing campaigns, improving efficiency and driving unit sales growth. Moreover, TrueCar continues to explore strategic opportunities, including potential stock buybacks, as part of its capital allocation strategy, despite facing challenges from new tariffs impacting imported vehicles and parts.