TrueCar, Inc. (NASDAQ:TRUE) Q3 2022 Earnings Call Transcript

TrueCar, Inc. (NASDAQ:TRUE) Q3 2022 Earnings Call Transcript November 9, 2022

Operator: Hello and welcome to the TrueCar Third Quarter 2022 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Zaineb Bokhari, Vice President, Investor Relations. Please go ahead.

Zaineb Bokhari: Thank you, operator. Hello and welcome to TrueCar’s third quarter 2022 earnings conference call. Joining me today are Mike Darrow, our President and Chief Executive Officer; and Jantoon Reigersman, our Chief Financial Officer and Chief Operating Officer. By now, I hope you’ve all had the opportunity to read our third quarter stockholder letter which was released yesterday after market close and is available on our Investor Relations website at ir.truecar.com. Before we get started, I want to remind you that we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, target, anticipate, become, seek, will, intend, confident and similar expressions and are not and should not be relied on as guarantees of future performance or results.

Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other reports and filings with the Securities and Exchange Commission for a discussion of the factors that could cause our results to differ materially. The forward-looking statements we make on this call are based on information available to us as of today’s date and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, we will also discuss certain GAAP and non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at ir.truecar.com.

The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. With that, I will turn the call over to TrueCar’s President and Chief Executive Officer, Mike Darrow, for some opening comments. Mike?

Mike Darrow: Thanks, Zaineb. Good morning, everyone and thanks for joining us. We issued our Q3 stockholder letter yesterday and highlighted some of the great progress we’ve made with TrueCar+ as we prepare to expand coverage outside of Florida. During Q3, we continued to sign and curate dealers for TrueCar+ and grow the available inventory of new, used and certified preowned vehicles to nearly 10,000 units while driving materially more traffic to the TrueCar+ marketplace. Approximately 27% of our Florida-based visitors were exposed to TrueCar+ during the third quarter and more than 7,000 of them went on to the deal engagement stage. We knew we had 2 fundamental questions to answer when we launch a TrueCar+ pilot. Number one, would consumers want to use it?

And two, would retailers want to participate in it? We believe the results indicate the answer to both of these questions is emphatically yes. Consumers want to use TrueCar+ and dealers want to participate in it. We will be expanding TrueCar+ into 5 additional Southeastern states in the coming weeks. Now, I’d like to take a moment to comment on some of the macro industry dynamics we are seeing and how we think about our business in this context. At this point in the Q3 earnings cycle, you’ve already heard from a number of the key players across the automotive industry. Used car sales rates in certain segments are slowing and this is exerting downward pressure on used vehicle prices. Overall, consumer demand is slowing in the face of high interest rates, significant inflation and the fear of a recession.

The combination of these factors may put pressure on the record profits retailers have been posting over the past several quarters. New car inventories are starting to build for several brands and reached approximately 1.5 million at the end of October. In our view, the supply-driven market we’ve been experiencing is beginning to shift to a more balanced supply-demand ratio. We believe that as inventory grows on the new side and becomes more affordable on the used side, retailers will again need to roll up their sleeves and compete for customers. TrueCar is well prepared to support retailers as the automotive industry slowly shifts from a supply-constrained environment to a more balanced demand-driven one. It’s challenging to predict the exact timing of this market transition and there will be some lags before the full impact of such improvements are seen across our business.

We are seeing signs of stabilization emerge in our core business as new vehicle inventories have risen across our dealer network. And while it has fluctuated over the past several quarters, our net dealer count in October was positive when compared to the end of Q3. Over the past several quarters, we’ve remained laser-focused on delivering the automotive industry’s first transactable digital marketplace with TrueCar+. We have also enhanced our core offering — TrueCar offerings with consumer-facing tools and an expanded used car product portfolio with capabilities like Sell Your Car and Distance Retailing that have helped us balance our mix of new and used units. In addition, at a time where affordability is a concern for consumers and loyalty to brand is low.

We offer industry-leading tools and programs to help OEM partners effectively target incentives, promote their core brands and launch their EV platforms. Our balance sheet remains strong and we have maintained — we have managed our business prudently through a supply-constrained market. Based on our current plans for 2023, we expect to have well in excess of $125 million in cash by the time we return to breakeven or positive adjusted EBITDA which we expect to be no later than the fourth quarter of 2023. I’m very encouraged by our progress during Q3 and in the weeks that have followed. I want to thank the entire TrueCar crew for their hard work, dedication and commitment to our vision of bringing something new and unique to the market and doing it at a time of rapid change as we embrace what we expect will be an increasingly digital future for automotive retail.

Before we open up the call for live questions, we’re going to address some questions around key topics. Zaineb, what’s the first question?

Zaineb Bokhari: The first question is for Jantoon. Jantoon, can you provide a framework for thinking about our planned return to neutral or positive adjusted EBITDA by the end of 2023?

Jantoon Reigersman: Absolutely. Thanks, Zaineb. As Mike mentioned, we’re seeing signs of stabilization emerge in our core business as new vehicle supply slowly started to rebuild across our dealer network. Our dealer counts are also starting to show stability based on the recent trends for October as an example. We expect some lag before improving industry trends are fully reflected across our business and there will be likely some choppiness in the months ahead. We expect more balanced return to the market as 2023 progresses and expect our core business to benefit as this happens as well. Our balance sheet is strong. And over the last 18 months, we have launched and expanded our product portfolio, creating opportunities for ourselves including, on the used car side, Sell Your Car, Distance Retailing that Mike mentioned before.

These offerings are important building blocks for TrueCar+ and we expect our contributions to grow in ’23. We also intend to start monetizing TrueCar+ in early ’23 and its potential contribution will likely start small and build as we expand inventory and market coverage. On the expense side, we will continue to maintain tight control of run rate expense while investing to broaden coverage for TrueCar+ and other offerings that we have introduced. We have expanded our engineering staff over the past year, including through the acquisition of Digital Motors and are comfortable with the level of investment we have made across product and tax to date. The speed with which we have been able to bring out new offerings supports this view in our opinion.

We have a strong top-of-funnel plan to be efficient with our marketing. In light of the sustained strength that we have seen in our monthly uniques, we’re focusing on improving conversion across the traffic that we’re already driving to our sites. With this framework in mind, we’re expecting adjusted EBITDA of breakeven or positive no later than Q4 ’23.

Zaineb Bokhari: And as a follow-up, Jantoon, can you explain what this means for our cash balance? Finally, can you provide some details regarding the goodwill impairment taken during Q3?

Jantoon Reigersman: Yes. We have — absolutely. We have a strong balance sheet and expect plenty of cash in an uncertain environment as we look ahead to breakeven or positive adjusted EBITDA by Q4 of ’23. This will be achieved through ongoing expense management and prudent cash usage and investment in our strategic initiatives like TrueCar+. It is important to note that between free cash flow and adjusted EBITDA, there’s an adjustment for capitalized software which during the trailing 12 months was roughly $12 million. So adjusted EBITDA is not a good proxy for free cash flow. The other piece to remember is we still have a Board-approved buyback plan. We have earn-outs for Digital Motors and always want to remain some flexibility for small tuck-in M&A.

Your other part of the question was regarding goodwill impairment. I won’t spend a lot of time on this but I do want to say something very quickly. During Q3, we took a onetime noncash charge for goodwill of $59.8 million which is due mainly to the sharp decline in our share price and market capitalization, effectively measured as of September 30, since we last tested goodwill for impairment which was at the end of Q2. This is a required accounting assessment for Q3 after the broader markets and our own share price has corrected. As I mentioned, this is a noncash charge, so there’s no impact on our adjusted EBITDA nor our cash balance.

Zaineb Bokhari: Thank you, Jantoon. Mike, I’ll direct the next one to you. What can you tell us about progress for TrueCar+ in Florida and plans for expansion outside of Florida?

Mike Darrow: Yes. Thanks, Zaineb. We’ve made strong progress with TrueCar+ in Florida. And by the end of the third quarter, our marketplace had nearly 10,000 new, used and certified preowned units. This progress is particularly strong since we began our Florida pilot for TrueCar+ just last September and is a testament to our asset-light model. To put this in context, we benchmarked our progress to that of other successful marketplaces in industries such as automotive, mobility and travel. We reached our current inventory level scale for TrueCar+ in a little more than 12 months since our initial pilot, while the time to scale for other marketplaces we reviewed was 4 to 5 years on average. In our view, this is a testament to our unique offering and the desirability of what we’re building.

As I mentioned earlier, we’ve been driving more and more of our Florida-based consumer traffic to TrueCar+ in the third quarter and in subsequent weeks. We have also seen strong shopper based outside the Florida market. We found the TrueCar+ site while performing — while shopping for a vehicle shows strong deal engagement levels which is encouraging as we expand market coverage for TrueCar+. We recently announced the launch of TrueCar+ in 5 additional states, Alabama, Georgia, North Carolina, South Carolina and Tennessee and already have dealers in these states who want to be part of TrueCar+. We expect to continue to roll out TrueCar+ over the next year for both new and used vehicles. Our future efforts will be informed by the learnings and the product enhancements that we make following this rollout.

What’s the next question, Zaineb?

Zaineb Bokhari: Thank you, Mike. Here’s a question for Jantoon. Jantoon, you mentioned signs of stabilization are emerging across our core business. What does this mean for Q4?

Jantoon Reigersman: Absolutely. Trends are emerging as indicated market shift in a more favorable direction than what we have seen in the past 18 to 24 months. However, it will be some time before the market returns to a balanced state and the impact is fully reflected across our business. We are encouraged by what we’re seeing now. And if this trend continues, we expect them to have more of an impact in 2023. As Mike mentioned, we are expanding market coverage for TrueCar+ to 5 additional states. We also expect to begin to monetize TrueCar+ next year which obviously will be more evident as 2023 progresses. In Q3, close rates in our core business remained under some pressure due to the elevated pricing and affordability issues. Some of this will likely continue in the near term and our business trends may be uneven given the economic backdrop.

Zaineb Bokhari: Thank you, Jantoon. Mike, the next question is for you. How do you expect the business to perform as economic growth slows or if we end up in a recession?

Mike Darrow: Thanks, Zaineb. We’ve been in an incredibly supply-constrained environment over the past 1.5 years to 2 years. The lack of supply has impacted rooftops and high vehicle prices have put pressure on our close rates. Consumer demand is starting to soften and months of limited supply has driven brand loyalty lower. We’ve started to see the supply of new vehicles improving, although they are still far from a balanced market. Just as supply is starting to rebuild, demand is starting to weaken. As this pendulum swings from supply constraints to more focus — to more of a demand focus, TrueCar will be a valuable partner to dealers since they look for solutions to increased demand for their vehicle inventory. OEMs, too, can benefit from our solutions to help them offer tailored incentives and promote their brand value to our in-market traffic of 7.6 million monthly uniques.

We’ve introduced capabilities to increase our presence on the used car side and identify new ways to create value for our retail partners and customers. We’re also investing for the digital future of the automotive retail with TrueCar+. We expect TrueCar+ to open up increased monetization and growth opportunities for us once it is fully transactional and we expand its market coverage. Back to you, Zaineb.

Zaineb Bokhari: Thank you, Mike and Jantoon. Now operator, let’s open up the call for questions from the audience.

Q&A Session

Operator: Our first question comes from Rajat Gupta with JPMorgan.

Rajat Gupta: I might have missed this a little earlier but on the fourth quarter EBITDA positive goal, could you share some color on what assumptions are around, just volumes or monetization or even TrueCar+, to get to that level? That’s the first one. And then I have a couple of follow-ups.

Jantoon Reigersman: Absolutely. So I think you’re — as you’ve seen the way we’ve been managing our expense rates, our expenses are fairly predictable at this point in time with obviously the only caveat that we’ve increased somewhat on the tech and product side as we’ve also fully integrated Digital Motors. And so really, it’s an anticipation on the top end that the markets will return in our favor in terms of revenue side. And obviously, you’ll see an increasing monetization happen across the board over the course of next year. Those are your 2 biggest drivers. Now remember that current pure unit monetization is somewhat inflated because, obviously, in a subscription world, in a low close rate, you’re effectively somewhat overmonetizing in the near term. But in the long term, that is expected to stabilize more. But then we’re also expecting, obviously, that over the course of 2023, our close rates will improve.

Rajat Gupta: Got it. And is third quarter like the peak EBITDA loss quarter? Is that fair to assume? Or it could get worse before it gets better?

Jantoon Reigersman: Say it again?

Rajat Gupta: Is the third quarter EBITDA loss number like the peak in terms of losses? Or could it get worse in the near term before it gets better — to get back to the positive EBITDA in 4Q ’23?

Jantoon Reigersman: Yes, it’s a good question. I think the answer is we’ll keep our flexibility around this because there are opportunities for us to obviously somewhat push, especially as we roll out commercially. And this is why we’ve set the 2 indications of the adjusted EBITDA profitability as well as the minimum cash balance to just give some assurances to the market that we’re not — that we are very cash prudent. At the same time, we also want to make sure we give TrueCar+ ample opportunity to really roll out. And we also realize that the broader macro is now, slowly but truly, turning from a headwind to a wind in the back which will mean that we’ll probably utilize some of our resources to actually push the business further. And so it’s hard to say at this point.

Rajat Gupta: Got it. And just the $125 million end of next year cash goal, does that assume any buyback as well from now until then?

Jantoon Reigersman: Yes. So what I mentioned earlier is indeed — so by the way, I just want to make sure that we’re crystal clear, it’s not a $125 million goal. It’s having the cash balance well in excess of $125 million. And so, yes, remember that our business runs effectively adjusted EBITDA, we have capitalized software. We still have our buyback plan in place. So we want to have room for that. There’s obviously room required for Digital Motors’ earn-outs. There’s room required for tuck-in M&A, etcetera. So really, the aim is not for you guys to anchor on $125 million per se but much more to say that there’s ample cash in this business and we will end the year well in excess of the $125 million.

Operator: The next question comes from Marvin Fong with BTIG.

Marvin Fong: Two questions. I’ll just start with — so the great — if you see the data — the initial data on TrueCar+, so the 7,000 customers in Florida that went to deal engagement stage out of the 27% of visitors who are exposed to TrueCar+, could you just kind of help us how does that sort of conversion rate to the deal engagement stage kind of compare to your non-TrueCar+ population? And then I have another question.

Mike Darrow: Yes, Marvin, let me take a first pass at that, that’s a great question and then I’ll let Jantoon jump in and provide more color. In our core traditional business, we track 3 metrics really. It was unique visitors, conversion to prospect and then ultimately match sales. And it was a pretty simple calculation to understand how that business was flowing. What we’re learning with TrueCar+ is there’s a number of stages in the process where we get signals from consumers and we’re trying to monitor all of those in an interesting way. So the 7,000 number is the number of folks who were on a VIN and started to build a deal, either through setting up their payment schedule for a lease or a loan. They’ve got a value for their trade.

They may have progressed into a finance application and engaged in insurance products. All of those things are part of this new flow and we’re tracking all of that. So what we’ve been really paying attention to is, will consumers, once they become aware of this product and we’re pushing harder and harder. You mentioned the 27%. That number was below 10% in Q2 and we’ve seen it grow from the 27% since the end of Q3. So we’ll continue to put more traffic into it. We’ll measure probably some additional metrics in the midst of the flow as we begin to expand that appear to be meaningful but it’s just — the most important part right now is to understand what kind of engagement we’re getting with the key features inside of TrueCar+ and are people moving to the next stage and completing the process?

So with that, I’ll turn it over to Jantoon. He can give you some more color.

Jantoon Reigersman: Yes. Marvin, it’s a great question. I think the answer is, we see a very good engagement across the board, especially in a world where we’ve only effectively exposed Florida traffic to TC+ by 27%, right? And so what that means is, one is we’ve been testing and putting people more and more in a somewhat controlled manner through the funnel and really — because you don’t want to burn any bridges while you’re also testing the product. There is also another piece that is important to note that will, obviously, transpire over the next couple of quarters which is historically, there was a very clearly defined core flow and then there’s a very clearly defined TC+ flow. And what you’ll start seeing is that merge and converge over the next couple of quarters where it becomes much more as, hey, I’m going to get to TrueCar as a consumer and I’m going to find and match my car.

And then what happens is depending on the consumer, you might become a lead to the dealer or you might actually do the full transaction. And the same for the dealerships. You’ll see us slowly but surely start moving away from the core versus TC+ language and much more focused on the more broad offering because people will engage in a different form. What we have seen, though, is people engage very differently online than you would at a dealership as they have more time to actually do their deals, build their deals, reflect, do research, understand what type of attachment products they want to have, etcetera, etcetera. So there’s a lot of really interesting statistics and data that we’re getting out of this with having only exposed TC+ to actually a very small segment of our total population.

And so we’re going to increase that much more dramatically. We’re going to expose much more within Florida itself and then also really start rolling out in the additional states.

Marvin Fong: Terrific. And then my last question, just it’s great to see the deal count has already started to show signs of recovering. I guess just to kind of validate the point that it should improve as supply — I mean what — are there any commonalities you’re seeing with the dealers who are coming? Are they — I’m assuming they’re reactivations but you could clarify that. But are these dealers kind of across the board? Or are they coming from nameplates where supply is higher and days in inventory are higher? Any commentary about what you’re feeling — and I know it’s very early but any commentary about what you’re feeling with this little bounce back in dealer count would be great.

Mike Darrow: Yes. Thanks, Marvin. The majority of the growth we saw in October was on the franchise side of the business. And I think it’s an indication of what’s happening with inventory. As I mentioned, new car inventory is up to almost 1.5 million from numbers below 1 million 12 months ago. So it’s interesting because we track it by brand. The inventory growth is not consistent across the entire industry. So there are certain brands that are growing more quickly and we’re certainly staying focused to make sure we’re addressing the brands out there that are being able to grow their inventory the quickest. And that number is beginning to increase. So a number of the domestic brands have been able to grow their inventory quite a bit.

We’ve seen Mazda, Subaru, some of the other brands also begin to show signs of growth. Hyundai is another one. So we’ll stay targeted. Our people are out in the field, passing dealerships all the time and watching inventory begin to grow. And I think we’ll be targeted and make sure we — when we see an opportunity for that build in new car, to reactivate those dealers and get them back on the platform.

Jantoon Reigersman: Yes, I think there are a couple of additional points that are important. And 2 of them are anecdotal. So one is, we’ve obviously, throughout the month of October, already seen a significant increase of actually inbound requests from dealerships much more than we’ve actually seen effectively throughout the last about 18 months. So that’s number one. So there’s a clear shift that has been happening. The other one, also, anecdotally, is inventory is starting to age more on the lots which also means that, therefore, the entire perception of, hey, what do we actually need to do? And as used car prices will come under pressure, the aging inventory becomes an even greater issue because suddenly, there’s a lot of working capital locked into those lots.

And so then having to push through cars is becoming a bigger issue for our dealer partners. And so we do think we’re really well positioned throughout for this now and obviously going into the future. One thing to remember, though and I just want to damper that because we are obviously very excited about the opportunity and the product we offer. But one thing to remember, seasonality does come to play. So historically, Q4 has always been somewhat of a slow dealer addition quarter. But we’re very, very hopeful of the turn in the winds that are currently happening and we’re seeing really clear signs of industry recovery that will be benefiting us and create a much more balanced approach to supply/demand.

Operator: The next question comes from Chris Pierce with Needham.

Chris Pierce: I’m just curious about TrueCar+, what you’re seeing or what you could share as far as new dealers versus used dealers, how consumers are interacting, if they’re showing a preference for new or used. And then how are you going about testing with your extended affinity partners as well?

Jantoon Reigersman: Absolutely. So I’ll take the affinity partners first quickly because, otherwise, I’m going to forget that you added that in the end. So the affinity, we have launched TrueCar+ on a very small segment of our affinity partners to date, in Florida specifically. So we have not yet opened it up to the broader affinity partner network. As you can imagine, many of our affinity partners are more nationally focused. And so it’s harder to slice and dice very locally. We will do that as we roll out. It’s one of the — also one of the reasons why we’re very interested in rolling out because, obviously, the faster and the sooner we roll out, the more we can utilize the affinity partner as well. Your question on the utilization of TC+, so it’s very different — it varies very much across.

Ironically, if you think, we historically had identified 6 very distinct consumer profiles for TC+. We’ve actually expanded that to 8 very distinct profiles as we’ve seen the behaviors online, number one. Number two is also you need to create a nuance for Florida. It’s obviously a very particular consumer segment vis-à-vis the rest of the country. So there are also very interesting nuances that are coming forward from that, that we see very different from other states as an example. And then right now, what happens still is some of that is still driven by certain segments of our top of funnel which then pulls in certain subsets of the population that are interested in certain cars or certain brands or certain — new or used, what are the best, because if you start slicing and dicing this very much, think of it as — so roughly 8 consumer profiles that go very much across the different brands.

Now remember, historically, in our core business, we’ve always skewed somewhat more towards the Asian brands. But it seems that the TC+ profiles are not necessarily identical to the way we’ve been doing that on core which is very promising. Overarching, though, remember, one of the things that we’re very sensitive to and you also see us start shifting somewhat is we’re less sensitive to rooftop counts. And in TC+, we are rolling much more towards type of inventory and extend the breadth of inventory effectively. And so net-net, yes, we’re learning a lot. Yes, we’re even expanding our consumer profile. Yes, we’re actually developing the product to match more of the requirements of these different profiles. And we’re excited to start testing TC+ effectively in the additional states because we already know that there will be a lot more learnings that will come from that.

Mike Darrow: I think the other thing, Chris, that’s important is, during much of the testing in Florida, we were in a restricted new car supply environment and a heavier used car opportunity. So the macro was certainly driving a number of used car users through the system. And we think as new car inventory builds, that will begin to shift. As Jantoon mentioned, it’s going to be important. We’re excited about the chance to expand to other states, collect more data and really begin to hone in on which consumer profiles that we’ve been tracking closely are going to be the ones that thrive with this product. But a lot of factors affecting it during the pilot and we’ll get more learnings as we get rolled out in these other 5 states starting in December.

Chris Pierce: Okay. So it’s far too early to say if it might be easier for consumer — consumers might be more willing to buy a new car online versus buying a used car online. That’s kind of the takeaway?

Mike Darrow: I’m sorry, I missed that. I didn’t hear the question.

Chris Pierce: I just wanted to confirm. So it’s too early to tell if the consumer might be more willing to buy a new car online versus buying a used car online?

Mike Darrow: Yes. We haven’t, I don’t think, seen any data that would tell us that the new car buyer is going to be more accepting of this type of product. We think there will be new car buyers who will get excited about it and use it once inventory returns and once pricing stabilizes a bit. But what we’ve been excited about is the number of used car buyers who have been willing to dive into the product and work their way through the whole process on a used vehicle. So those numbers could shift as new car inventory comes back and we get into some additional states. And our core unit volumes are balanced right now between new and used. It’s been that way for the past couple of quarters. And we could expect, I think, something like that similar for TrueCar+ just based on the traffic and the type of folks we have coming to the site.

Jantoon Reigersman: And also remember, we have — one of the things that’s interesting is certified preowned which often is forgotten, because the historical business — like historically, the industry talks new and used but certified preowned actually, in a world of online transacting, is very important because it provides the comfort for people that may be a little bit wary from a warranty perspective. And so — and the interesting thing is, yes, we see engagement across all 3, very much depending on the persona that is buying. And if you think about the 10,000 inventory right now, we are roughly 1/3, 2/3 new versus used in terms of inventory on TC+. And so there’s also — there are some movements there. But across the board, I would say, there’s an equal interest across all 3 of those categories of cars. And then obviously, it depends on the type of buyers who is interested in one versus another car.

Operator: The next question comes from Naved Khan with Truist Securities.

Vincent Sengelmann: This is Vince on for Naved. So I think you indicated that you kind of expect to lean into brand spend and marketing — or brand awareness marketing to promote TC+. So just curious if you could provide some color around, I guess, level of OpEx spend we should expect to be aimed for breakeven EBITDA by fourth quarter ’23 and how that should progress as you expand TC+ outside of Florida?

Jantoon Reigersman: Yes. So I’ll go back to what we said earlier which is we’re actually — I think we’ve been very prudent on any of the marketing spend to date. We do see some of the headwinds turning to tailwinds which means that we’re probably going to push some more forward over time. We want to keep that flexibility as we go along. However, we also mentioned that we obviously have a lot of uniques currently visiting our site at the top of funnel and that we want to really focus on conversion before you start focusing per se on expansion on that side. There is a good moment for us and good opportunity, obviously, in the next couple of quarters to engage with the dealer networks and remind them, obviously, of the value proposition that we have and not only remind them of the value proposition of core which is obviously important for them in a more — in a world where they have aging inventory but also most certainly that TrueCar+ exists and the online platform that, that provides.

But overarching, I don’t think there will be a lot of brand spend. So — but we will keep that flexible. As we see opportunities, we will deploy. But we’re mostly focused on the conversion of the uniques that we have and we’ll then underneath support the business as we see that go. And I think over the last couple of quarters, we’ve proven to you how we are very prudent around that.

Mike Darrow: Yes. And I think you’ll see us continue to capitalize on the opportunity to convert the 7 million to 9 million monthly uniques we have. We have a pretty clean platform because we don’t do any advertising on our platform. So we’re going to use that opportunity to make sure that the 7.6 million that came in on an average in Q3 are being exposed to TrueCar+, they understand that it’s either available in their market or it’s coming soon to a market near them and we’ll continue to drive that message and begin to see what sort of messages resonate with consumers. With all the noise out there about buying online and the different capabilities, we think we can get real focused on what type of attributes do — does a consumer want to hear about in order to gauge in a digital transaction. And a lot of that can be done on our site and we’ve got marketing and product working hand-in-hand and doing that work.

Operator: This concludes the question-and-answer session. I would like to turn the call back over to TrueCar’s President and CEO, Mike Darrow, for closing remarks.

Mike Darrow: Thank you. I’d like to thank everybody for taking the time to participate in our call today. I also want to thank the entire team at TrueCar for all their hard work as we work to deliver on our near-term road map for TrueCar+ and expand market coverage into additional states. This is an exciting time for our company and we look forward to sharing more about our progress with all of you on our next call. Thanks, everyone.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.