Unidentified Analyst: Thank you.
Operator: The next question will come from Chris Pierce with Needham. Please go ahead.
Chris Pierce: Hey, just two. Can you help us think about some sort of upper bound on OEM incentive revenue. It had a nice sequential growth again this quarter. And I just kind of want to get a sense of should it be higher than it was pre-COVID because of where inventories are? Or like should it normalize at some sort of level? I just don’t know how to – and I know it’s going to be lumpy, but I just kind of get a sense of where this can go.
Jantoon Reigersman: Yes. I think – Chris, I think that’s a good question. I think it’s – like I’ll give you some – obviously, it’s tough to predict but I’ll give you some parameters, which is we obviously think that in the high interest rate world right? Some element of participation of OEMs and captives to support their consumers is important. There’s also with relatively low brand loyalty. There’s obviously also a great focus of OEMs to effectively somewhat like recapture customers they’ve lost over time. there is an interest, obviously, to help push their dealers with EV, etcetera. So long story short, I think there is a great emphasis of OEMs to support their relevant businesses. which is great. And obviously, there’s a huge opportunity there because of the triangulation, we can do between affinity partners between our dealer partners and then obviously, between the OEM so do we see this as an increasing opportunity?
The answer is yes. Do we see this as an opportunity that historically was attractive to us and historically have growth opportunity? The answer is also yes, right? So yes, we think that this is important to us. The other thing is also, you’re going to have the ability to help support OEMs really get in front of the right consumers in the right way. And so it’s not just that you think about programs associated to rebates, for example, but even like co-marketing programs, etcetera, are all things that are possible. And so yes, so the hard part is over the years to come. It’s a little bit hard to assess what really the upper bound is. The big issue of this is that these are often more lumpy programs that are a little bit harder to predict.
But do we know that there’s a real willingness and do we also understand that there’s a macro that effectively demands for a greater need of support by the OEMs? The answer is also yes. So do we see the broader opportunity? And do we think that we have a unique value proposition within the area? The answer is also yes. So it’s hard to quantify what the actual upper bound is.
Chris Pierce: Okay. And when you do one of these programs, do you also get dealer revenue because it leads to a transaction as well? Or is it just revenue on the marketing side from the OEM side of the world?
Jantoon Reigersman: It depends very much on the programs, but the answer is, in many cases, yes, both.
Chris Pierce: Okay. Okay. So in theory, it’s somewhat of a leading indicator on dealer revenue with a lumpy backdrop. So it’s hard to model. Okay. Perfect.
Jantoon Reigersman: Yes.
Chris Pierce: And then the letter talked about regaining lost dealers. Can you just kind of touch on the game plan there? Are you seeing outreach in these dealers as inventories pile up? Or is it about you going to dealers talking about, hey, we’re more moving to subscription? Hey, we have TC+? What’s the push and the pull on that side of the world?
Jantoon Reigersman: Yes. Good question. I think the short answer is always, we have a bias towards action as a firm. So, we will always engage and be aggressive and proactive. We do see a really healthy portion of our dealers coming back on our network, so that’s really good. And it’s really mostly us reaching out and just reengaging and properly engaging. And it’s also engaging in a different form. So, we haven’t really spoken about it in this letter, but we have two tremendous leaders, one on the sell side and one on the service side. So, we have also did a greater separation of the sales and service capacities and the service programs associated to that. We have obviously been doing research. And historically, we have done research where it clearly showed that NPS scores with dealers was very high, if you touch them within 30 days, obviously a negative, if you touch them in 90 days, and so there are a lot of opportunities for us to just engage much more in a consulting form and engage with providing insights and training as opposed to trying to be there as a salesperson.
And remember that one of the beauties of TrueCar is that we have a lot of data. We have a lot of insights. And we have insights not only on, obviously, the sales that happen at a respective dealership, but also loss sales or our capture rates or all these type of things are pretty much everything that happens within the DNA of that respective dealer. And so there is a lot of opportunity for us to just have a different form of a dialogue. And this all sounds really not super sophisticated and it doesn’t need to be sophisticated, it just means that you need to be engaging with the dealers the right way, which is exactly what we are doing now. And so yes, so the short answer is it’s very much proactive from us. And we do have dealers call back in, but it’s very much still proactive from us.
And it’s also much more focused on how do you actually do sales, how do you do service, how do you do handoff towards service, what does it actually mean to do service, how often do you touch dealers, what do you provide them, how are you the best partner you can be with the dealer partners in a world where they really need our help.
Chris Pierce: Okay. Thank you.
Operator: [Operator Instructions] Our next question will come from Marvin Fong with BTIG. Please go ahead.
Marvin Fong: Good morning. Thanks for taking my questions and congratulations, Oliver on the new role. So, first question, I would just like to revisit the long-term revenue and margin targets for 2026. Jantoon, you mentioned several of the building blocks. I mean is it fair to say that TC+ is the largest component of how you plan to grow revenue? And could you add some color on sort of the assumptions you have behind like adoption of TC+, like how many dealers won’t be part of that program, etcetera. Just maybe some more color would be very helpful? Thank you.
Jantoon Reigersman: Yes. So, Marvin, great question. So, the answer is interestingly enough, it’s hard to predict adoption of a product like TC+. I actually think and I am a firm believer, otherwise, I wouldn’t obviously be here, but like once TC+ is actually fully, fully operational with the consumer and dealer experience, we envision it is capable of. I think this will be a huge – there will be huge adoption of that product. Now, it’s hard to assess and it’s hard to predict when and how and what form. But I do and a firm believer of that, we see that consumers really want to do full transactions online. And we see that dealers really want to effectively expand their addressable markets and want to maintain or even increase their margins and do greater sales volumes.
