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Share Name | Share Symbol | Market | Type |
---|---|---|---|
TrueCar Inc | NASDAQ:TRUE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.03 | -1.04% | 2.85 | 2.61 | 3.31 | 2.92 | 2.85 | 2.86 | 76,347 | 05:00:04 |
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Delaware
(State or other jurisdiction of
incorporation or organization)
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04-3807511
(I.R.S. Employer
Identification Number)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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•
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our future financial performance and our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses and ability to grow revenue, scale our business, generate cash flow, fulfill our mission and achieve and maintain future profitability;
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our relationship with key industry participants, including car dealers and automobile manufacturers;
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•
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anticipated trends, growth rates and challenges in our business and in the markets in which we operate;
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the effectiveness of investments in dealer relationships, consumer messaging and our technology platform and their effect on our revenue;
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our ability to anticipate market needs and develop new and enhanced products and services to meet those needs and our ability to successfully monetize those products and services;
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maintaining and expanding our customer base in key geographies, including our ability to increase the number of high-volume brand dealers in our network generally and in key geographies;
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our reliance on our third-party service providers;
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the impact of competition in our industry and innovation by our competitors;
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our anticipated growth and growth strategies, including our ability to increase close rates and the rate at which site visitors prospect with a TrueCar certified dealer;
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our ability to successfully increase dealer subscription rates, and manage dealer churn, as the number of dealers on subscription billing arrangements increases relative to those on a pay-per-sale billing model;
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our ability to attract significant automobile manufacturers to participate, and remain participants, in our incentive programs;
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our ability to successfully scale our automotive trade-in program to a nationwide offering;
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our ability to anticipate or adapt to future changes in our industry;
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the impact on our business of seasonality, cyclical trends affecting the overall economy and actual or threatened severe weather events;
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our ability to hire and retain necessary qualified employees, including anticipated additions to our dealer, product and technology teams;
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our ability to hire a permanent chief financial officer and integrate him or her and other recent and future additions to our management team;
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our continuing ability to provide customers access to our products;
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our ability to successfully complete our technology replatforming project in a timely manner and leverage that success to enhance our customer experience and launch new product offerings;
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the evolution of technology affecting our products, services and markets;
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our ability to adequately protect our intellectual property;
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the anticipated effect on our business of litigation to which we are a party;
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our ability to navigate changes in domestic or international economic, political or business conditions, including changes in interest rates, consumer demand and import tariffs;
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our ability to stay abreast of, and in compliance with, new or modified laws and regulations that currently apply or become applicable to our business, including newly-enacted and rapidly-changing data protection and net neutrality laws and regulations and changes in applicable tax laws and regulations;
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the continued expense and administrative workload associated with being a public company;
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failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud;
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our liquidity and working capital requirements;
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the estimates and estimate methodologies used in preparing our consolidated financial statements;
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the future trading prices of our common stock and the impact of securities analysts’ reports on these prices;
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our plans to invest in new businesses, products, services and technologies, systems and infrastructure, including potential investments and acquisitions;
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the preceding and other factors discussed in Part II, Item 1A, “Risk Factors,” and in other reports we may file with the Securities and Exchange Commission from time to time; and
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the factors set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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September 30, 2018
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December 31, 2017
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Assets
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Current assets
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Cash and cash equivalents
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$
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217,749
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$
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197,762
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Accounts receivable, net of allowances of $3,006 and $3,030 at September 30, 2018 and December 31, 2017, respectively (includes related party receivables of $361 and $169 at September 30, 2018 and December 31, 2017, respectively)
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47,425
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39,169
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Prepaid expenses
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9,291
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5,475
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Other current assets
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5,806
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1,145
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Total current assets
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280,271
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243,551
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Property and equipment, net
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69,174
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70,710
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Goodwill
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53,270
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53,270
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Intangible assets, net
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13,016
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15,912
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Other assets
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5,113
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1,391
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Total assets
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$
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420,844
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$
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384,834
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Liabilities and Stockholders’ Equity
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Current liabilities
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Accounts payable (includes related party payables of $5,659 and $3,200 at September 30, 2018 and December 31, 2017, respectively)
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$
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26,933
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$
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18,620
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Accrued employee expenses
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5,034
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6,568
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Accrued expenses and other current liabilities (includes related party accrued expenses of $230 and $52 at September 30, 2018 and December 31, 2017, respectively)
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17,561
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12,790
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Total current liabilities
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49,528
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37,978
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Deferred tax liabilities
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605
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812
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Lease financing obligations, net of current portion
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22,959
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29,129
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Other liabilities
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3,910
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3,797
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Total liabilities
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77,002
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71,716
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Commitments and contingencies (Note 7)
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Stockholders’ Equity
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Preferred stock — $0.0001 par value; 20,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; no shares issued and outstanding at September 30, 2018 and December 31, 2017
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—
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—
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Common stock — $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2018 and December 31, 2017; 103,819,348 and 100,428,656 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
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10
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10
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Additional paid-in capital
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710,921
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664,192
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Accumulated deficit
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(367,089
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)
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(351,084
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)
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Total stockholders’ equity
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343,842
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313,118
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Total liabilities and stockholders’ equity
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$
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420,844
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$
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384,834
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Three Months Ended
September 30, |
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Nine Months Ended September 30,
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2018
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2017
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2018
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2017
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Revenues
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$
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93,586
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$
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82,440
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$
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262,497
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$
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240,016
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Costs and operating expenses:
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Cost of revenue (exclusive of depreciation and amortization presented separately below)
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7,737
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7,088
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22,941
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20,610
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Sales and marketing (includes related party expenses of $6,514 and $4,207 for the three months ended September 30, 2018 and 2017, and $16,332 and $12,750 for the nine months ended September 30, 2018 and 2017, respectively)
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57,031
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48,383
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157,463
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137,498
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Technology and development
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15,345
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15,357
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46,633
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43,117
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General and administrative
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14,030
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14,993
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41,005
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44,034
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Depreciation and amortization
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5,992
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5,765
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16,808
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17,517
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Total costs and operating expenses
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100,135
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91,586
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284,850
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262,776
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Loss from operations
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(6,549
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)
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(9,146
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)
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(22,353
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)
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(22,760
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)
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Interest income
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888
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|
402
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2,242
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|
784
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Interest expense
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(662
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)
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(654
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)
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(1,985
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)
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(1,955
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)
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Loss before income taxes
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(6,323
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)
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(9,398
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)
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(22,096
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)
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(23,931
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)
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||||
(Benefit from) / provision for income taxes
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(72
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)
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121
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(168
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)
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443
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Net loss
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$
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(6,251
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)
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$
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(9,519
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)
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$
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(21,928
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)
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$
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(24,374
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)
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||||||||
Net loss per share, basic and diluted
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$
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(0.06
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)
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$
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(0.10
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)
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$
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(0.22
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)
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$
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(0.26
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)
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Weighted average common shares outstanding, basic and diluted
|
102,765
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98,665
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101,503
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93,108
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Other comprehensive loss
:
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Comprehensive loss
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$
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(6,251
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)
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$
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(9,519
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)
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$
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(21,928
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)
|
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$
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(24,374
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)
|
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Common Stock
|
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Accumulated
Deficit
|
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Stockholders’
Equity
|
|||||||||||
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Shares
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Amount
|
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APIC
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Balance at December 31, 2017
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100,428,656
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|
$
|
10
|
|
|
$
|
664,192
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|
|
$
|
(351,084
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)
|
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$
|
313,118
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|
Cumulative-effect of accounting change adopted as of January 1, 2018
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5,923
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|
|
5,923
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|||||||
Net loss
|
—
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|
|
—
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|
|
—
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|
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(21,928
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)
|
|
(21,928
|
)
|
||||
Stock-based compensation
|
—
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|
—
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|
29,674
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|
—
|
|
|
29,674
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|
||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
3,390,692
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|
|
—
|
|
|
17,055
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|
|
—
|
|
|
17,055
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|
||||
Balance at September 30, 2018
|
103,819,348
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|
|
$
|
10
|
|
|
$
|
710,921
|
|
|
$
|
(367,089
|
)
|
|
$
|
343,842
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(21,928
|
)
|
|
$
|
(24,374
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
16,808
|
|
|
17,481
|
|
||
Deferred income taxes
|
(207
|
)
|
|
399
|
|
||
Bad debt expense and other reserves
|
1,240
|
|
|
1,062
|
|
||
Stock-based compensation
|
28,316
|
|
|
22,661
|
|
||
Non-cash interest expense on lease financing obligation
|
278
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|
|
312
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|
||
Write-off and loss on disposal of fixed assets
|
294
|
|
|
148
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(9,496
|
)
|
|
(3,782
|
)
|
||
Prepaid expenses
|
(3,816
|
)
|
|
(1,070
|
)
|
||
Other current assets
|
(915
|
)
|
|
(167
|
)
|
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Other assets
|
(760
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)
|
|
(36
|
)
|
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Accounts payable
|
8,109
|
|
|
7,400
|
|
||
Accrued employee expenses
|
(1,545
|
)
|
|
(2,835
|
)
|
||
Accrued expenses and other liabilities
|
(508
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)
|
|
(1,081
|
)
|
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Other liabilities
|
113
|
|
|
795
|
|
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Net cash provided by operating activities
|
15,983
|
|
|
16,913
|
|
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Cash flows from investing activities
|
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|
||||
Purchase of property and equipment
|
(13,088
|
)
|
|
(15,194
|
)
|
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Net cash used in investing activities
|
(13,088
|
)
|
|
(15,194
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
|
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Proceeds from public offering, net of underwriting discounts and offering costs
|
—
|
|
|
17,398
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|
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Proceeds from exercise of common stock options
|
19,385
|
|
|
71,868
|
|
||
Taxes paid related to net share settlement of equity awards
|
(2,293
|
)
|
|
(2,304
|
)
|
||
Net cash provided by financing activities
|
17,092
|
|
|
86,962
|
|
||
Net increase in cash and cash equivalents
|
19,987
|
|
|
88,681
|
|
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Cash and cash equivalents at beginning of period
|
197,762
|
|
|
107,721
|
|
||
Cash and cash equivalents at end of period
|
$
|
217,749
|
|
|
$
|
196,402
|
|
Supplemental disclosures of non-cash activities
|
|
|
|
|
|
||
Stock-based compensation capitalized for software development
|
1,358
|
|
|
993
|
|
||
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses
|
624
|
|
|
909
|
|
||
Proceeds receivable from disposal of capitalized facility lease, included in other current assets
|
700
|
|
|
—
|
|
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Proceeds receivable from exercise of stock options included in other current assets
|
8
|
|
|
530
|
|
||
Taxes payable related to net share settlement of equity awards included in accrued employee expenses
|
39
|
|
|
220
|
|
1.
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Organization and Nature of Business
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2.
|
Summary of Significant Accounting Policies
|
•
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Identification of the contract, or contracts, with a customer;
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•
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Identification of the performance obligations in the contract;
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•
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Determination of the transaction price;
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•
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Allocation of the transaction price to the performance obligations in the contract; and
|
•
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Recognition of revenue when, or as, the performance obligation or obligations are satisfied.
|
3.
|
Revenue Information and Deferred Sales Commissions
|
|
December 31, 2017
|
|
Adjustments Due to Adoption of New Revenue Standard
|
|
January 1, 2018
|
||||||
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
1,145
|
|
|
$
|
3,324
|
|
|
$
|
4,469
|
|
Other assets
|
1,391
|
|
|
2,962
|
|
|
4,353
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
18,620
|
|
|
$
|
256
|
|
|
$
|
18,876
|
|
Accrued expenses and other liabilities
|
12,790
|
|
|
107
|
|
|
12,897
|
|
|||
|
|
|
|
|
|
||||||
Stockholders
’
Equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(351,084
|
)
|
|
$
|
5,923
|
|
|
$
|
(345,161
|
)
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of New Revenue Standard
|
|
Effect of Change
Increase/(Decrease)
|
||||||
|
|
|
|
|
|
||||||
Revenues
|
$
|
93,586
|
|
|
$
|
93,638
|
|
|
$
|
(52
|
)
|
Sales and marketing
|
57,031
|
|
|
56,990
|
|
|
41
|
|
|||
Net loss
|
(6,251
|
)
|
|
(6,158
|
)
|
|
93
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of New Revenue Standard
|
|
Effect of Change
Increase/(Decrease)
|
||||||
|
|
|
|
|
|
||||||
Revenues
|
$
|
262,497
|
|
|
$
|
261,808
|
|
|
$
|
689
|
|
Sales and marketing
|
157,463
|
|
|
157,372
|
|
|
91
|
|
|||
Net loss
|
(21,928
|
)
|
|
(22,526
|
)
|
|
(598
|
)
|
|
September 30, 2018
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of New Revenue Standard
|
|
Effect of Change
Increase/(Decrease)
|
||||||
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
5,806
|
|
|
$
|
1,670
|
|
|
$
|
4,136
|
|
Other assets
|
5,113
|
|
|
1,946
|
|
|
3,167
|
|
|||
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
26,933
|
|
|
$
|
26,381
|
|
|
$
|
552
|
|
Accrued expenses and other liabilities
|
17,561
|
|
|
17,331
|
|
|
230
|
|
|||
|
|
|
|
|
|
||||||
Stockholders
’
Equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(367,089
|
)
|
|
$
|
(373,610
|
)
|
|
$
|
6,521
|
|
|
Three Months Ended
September 30, |
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017(1)
|
2018
|
|
2017(1)
|
||||||||
|
|
|
|
|
|
|
||||||||
Auto Buying Program revenue
|
$
|
79,250
|
|
|
$
|
73,402
|
|
$
|
226,858
|
|
|
$
|
207,922
|
|
OEM incentives revenue
|
9,456
|
|
|
4,124
|
|
21,804
|
|
|
17,239
|
|
||||
Forecasts, consulting and other revenue
|
4,880
|
|
|
4,914
|
|
13,835
|
|
|
14,855
|
|
||||
Total revenues
|
$
|
93,586
|
|
|
$
|
82,440
|
|
$
|
262,497
|
|
|
$
|
240,016
|
|
|
(1)
|
Prior period amounts have not been adjusted under the modified retrospective method.
|
4.
|
Fair Value Measurements
|
•
|
Level 1 — Quoted prices in active markets for identical assets, liabilities, or funds.
|
•
|
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
At September 30, 2018
|
|
At December 31, 2017
|
||||||||||||
|
Level 1
|
|
Total Fair
Value |
|
Level 1
|
|
Total Fair
Value |
||||||||
Cash equivalents
|
$
|
217,748
|
|
|
$
|
217,748
|
|
|
$
|
195,584
|
|
|
$
|
195,584
|
|
Total Assets
|
$
|
217,748
|
|
|
$
|
217,748
|
|
|
$
|
195,584
|
|
|
$
|
195,584
|
|
5.
|
Property and Equipment, net
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
|
||||||
Computer equipment, software, and internally developed software
|
$
|
95,182
|
|
|
$
|
83,568
|
|
Furniture and fixtures
|
5,284
|
|
|
4,779
|
|
||
Leasehold improvements
|
8,572
|
|
|
8,342
|
|
||
Capitalized facility leases
|
38,351
|
|
|
39,302
|
|
||
|
147,389
|
|
|
135,991
|
|
||
Less: Accumulated depreciation
|
(78,215
|
)
|
|
(65,281
|
)
|
||
Total property and equipment, net
|
$
|
69,174
|
|
|
$
|
70,710
|
|
6.
|
Credit Facility
|
7.
|
Commitments and Contingencies
|
|
Lease Exit Costs
|
||
Accrual at December 31, 2017
|
$
|
1,354
|
|
Cash Payments
|
(419
|
)
|
|
Accrual at September 30, 2018
|
$
|
935
|
|
8.
|
Stock-based Awards
|
|
Number of
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average
Remaining
Contractual Life
|
|||
|
|
|
|
|
(in years)
|
|||
Outstanding at December 31, 2017
|
16,714,216
|
|
|
$
|
12.46
|
|
|
7.7
|
Granted
|
1,492,481
|
|
|
9.69
|
|
|
|
|
Exercised
|
(2,126,522
|
)
|
|
9.12
|
|
|
|
|
Canceled/forfeited
|
(1,516,635
|
)
|
|
14.45
|
|
|
|
|
Outstanding at September 30, 2018
|
14,563,540
|
|
|
$
|
12.46
|
|
|
7.4
|
|
Number of
Shares
|
|
Weighted- Average Grant Date Fair Value
|
|||
Non-vested — December 31, 2017
|
4,284,438
|
|
|
$
|
11.99
|
|
Granted
|
3,376,074
|
|
|
10.00
|
|
|
Vested
|
(1,470,214
|
)
|
|
10.97
|
|
|
Canceled/forfeited
|
(759,197
|
)
|
|
11.04
|
|
|
Non-vested — September 30, 2018
|
5,431,101
|
|
|
$
|
11.16
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
469
|
|
|
$
|
339
|
|
|
$
|
1,210
|
|
|
$
|
775
|
|
Sales and marketing
|
3,852
|
|
|
3,358
|
|
|
10,522
|
|
|
7,263
|
|
||||
Technology and development
|
2,829
|
|
|
2,598
|
|
|
7,880
|
|
|
5,496
|
|
||||
General and administrative
|
3,097
|
|
|
3,613
|
|
|
8,704
|
|
|
9,127
|
|
||||
Total stock-based compensation expense
|
10,247
|
|
|
9,908
|
|
|
28,316
|
|
|
22,661
|
|
||||
Amount capitalized to internal software use
|
551
|
|
|
443
|
|
|
1,358
|
|
|
993
|
|
||||
Total stock-based compensation cost
|
$
|
10,798
|
|
|
$
|
10,351
|
|
|
$
|
29,674
|
|
|
$
|
23,654
|
|
9.
|
Income Taxes
|
10.
|
Net Loss Per Share
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(6,251
|
)
|
|
$
|
(9,519
|
)
|
|
$
|
(21,928
|
)
|
|
$
|
(24,374
|
)
|
Weighted-average common shares outstanding
|
102,765
|
|
|
98,665
|
|
|
101,503
|
|
|
93,108
|
|
||||
Net loss per share - basic and diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.26
|
)
|
11.
|
Related Party Transactions
|
(i)
|
continued collaboration with USAA;
|
(ii)
|
continued focus on dealer pricing and monetization;
|
(iii)
|
growth in OEM incentives revenue;
|
(iv)
|
nationwide roll-out of our trade-in product; and
|
(v)
|
the completion of our technology replatforming project.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Average Monthly Unique Visitors
|
8,005,041
|
|
|
7,702,254
|
|
|
7,857,787
|
|
|
7,420,807
|
|
||||
Units(1)
|
268,026
|
|
|
253,527
|
|
|
748,012
|
|
|
713,313
|
|
||||
Monetization
|
$
|
331
|
|
|
$
|
306
|
|
|
$
|
332
|
|
|
$
|
316
|
|
Franchise Dealer Count
|
12,549
|
|
|
12,286
|
|
|
12,549
|
|
|
12,286
|
|
||||
Independent Dealer Count
|
3,482
|
|
|
2,938
|
|
|
3,482
|
|
|
2,938
|
|
|
(1)
|
We issued full credits of the amount originally invoiced with respect to 4,981 and 5,048 units during the
three months ended September 30, 2018
and
2017
, respectively. We issued full credits of the amount originally invoiced with respect to 15,486 and 16,324 units during the
nine months ended September 30, 2018
and
2017
, respectively. The number of units has not been adjusted downwards related to units credited as discussed in the description of the unit metric below.
|
•
|
Adjusted EBITDA does not reflect the payment or receipt of interest or the payment of income taxes;
|
•
|
neither Adjusted EBITDA nor Non-GAAP net income reflects changes in, or cash requirements for, our working capital needs;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or any other contractual commitments;
|
•
|
neither Adjusted EBITDA nor Non-GAAP net income reflects the costs to advance our claims in certain litigation or the costs to defend ourselves in various complaints filed against us, which we expect to continue to be significant;
|
•
|
neither Adjusted EBITDA nor Non-GAAP net income reflects the lease exit costs associated with consolidation of the Company’s office locations in Santa Monica, California in December 2015;
|
•
|
neither Adjusted EBITDA nor Non-GAAP net income considers the potentially dilutive impact of shares issued or to be issued in connection with stock-based compensation; and
|
•
|
other companies, including companies in our own industry, may calculate Adjusted EBITDA and Non-GAAP net income differently than we do, limiting their usefulness as a comparative measure.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Net Loss to Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(6,251
|
)
|
|
$
|
(9,519
|
)
|
|
$
|
(21,928
|
)
|
|
$
|
(24,374
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
(888
|
)
|
|
(402
|
)
|
|
(2,242
|
)
|
|
(784
|
)
|
||||
Interest expense
|
662
|
|
|
654
|
|
|
1,985
|
|
|
1,955
|
|
||||
Depreciation and amortization
|
5,992
|
|
|
5,765
|
|
|
16,808
|
|
|
17,517
|
|
||||
Stock-based compensation
|
10,247
|
|
|
9,908
|
|
|
28,316
|
|
|
22,661
|
|
||||
Certain litigation costs (1)
|
335
|
|
|
1,491
|
|
|
1,996
|
|
|
4,140
|
|
||||
Lease exit costs (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(133
|
)
|
||||
(Benefit from) / provision for income taxes
|
(72
|
)
|
|
121
|
|
|
(168
|
)
|
|
443
|
|
||||
Adjusted EBITDA
|
$
|
10,025
|
|
|
$
|
8,018
|
|
|
$
|
24,767
|
|
|
$
|
21,425
|
|
|
|
|
|
|
(1)
|
The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers and the California New Car Dealers Association against TrueCar and consumer class action lawsuits. We believe the exclusion of these costs is appropriate to facilitate comparisons of our core operating performance on a period-to-period basis. Based on the nature of the specific claims underlying the excluded litigation matters, once these matters are resolved, we do not believe our operations are likely to entail defending against the types of claims raised by these matters. We expect the cost of defending these claims to continue to be significant pending that resolution.
|
(2)
|
The excluded amounts represent updates to the initial estimate of lease termination costs associated with the consolidation of our office locations in Santa Monica, California in December 2015. We believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Net Loss to Non-GAAP net income:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(6,251
|
)
|
|
$
|
(9,519
|
)
|
|
$
|
(21,928
|
)
|
|
$
|
(24,374
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
10,247
|
|
|
9,908
|
|
|
28,316
|
|
|
22,661
|
|
||||
Certain litigation costs (1)
|
335
|
|
|
1,491
|
|
|
1,996
|
|
|
4,140
|
|
||||
Lease exit costs (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(133
|
)
|
||||
Non-GAAP net income (3)
|
$
|
4,331
|
|
|
$
|
1,880
|
|
|
$
|
8,384
|
|
|
$
|
2,294
|
|
|
|
|
|
|
(1)
|
The excluded amounts relate to legal costs incurred in connection with complaints filed by non-TrueCar dealers and the California New Car Dealers Association against TrueCar and consumer class action lawsuits. We believe the exclusion of these costs is appropriate to facilitate comparisons of our core operating performance on a period-to-period basis. Based on the nature of the specific claims underlying the excluded litigation matters, once these matters are resolved, we do not believe our operations are likely to entail defending against the types of claims raised by these matters. We expect the cost of defending these claims to continue to be significant pending that resolution.
|
(2)
|
The excluded amounts represent updates to the initial estimate of lease termination costs associated with the consolidation of our office locations in Santa Monica, California in December 2015. We believe that their exclusion is appropriate to facilitate period-to-period operating performance comparisons.
|
(3)
|
There is no income tax impact related to the adjustments made to calculate Non-GAAP net income because of our available net operating loss carryforwards and the full valuation allowance recorded against our net deferred tax assets at
September 30, 2018
and
September 30, 2017
.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
93,586
|
|
|
$
|
82,440
|
|
|
$
|
262,497
|
|
|
$
|
240,016
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue (exclusive of depreciation and amortization presented separately below)
|
7,737
|
|
|
7,088
|
|
|
22,941
|
|
|
20,610
|
|
||||
Sales and marketing
|
57,031
|
|
|
48,383
|
|
|
157,463
|
|
|
137,498
|
|
||||
Technology and development
|
15,345
|
|
|
15,357
|
|
|
46,633
|
|
|
43,117
|
|
||||
General and administrative
|
14,030
|
|
|
14,993
|
|
|
41,005
|
|
|
44,034
|
|
||||
Depreciation and amortization
|
5,992
|
|
|
5,765
|
|
|
16,808
|
|
|
17,517
|
|
||||
Total costs and operating expenses
|
100,135
|
|
|
91,586
|
|
|
284,850
|
|
|
262,776
|
|
||||
Loss from operations
|
(6,549
|
)
|
|
(9,146
|
)
|
|
(22,353
|
)
|
|
(22,760
|
)
|
||||
Interest income
|
888
|
|
|
402
|
|
|
2,242
|
|
|
784
|
|
||||
Interest expense
|
(662
|
)
|
|
(654
|
)
|
|
(1,985
|
)
|
|
(1,955
|
)
|
||||
Loss before income taxes
|
(6,323
|
)
|
|
(9,398
|
)
|
|
(22,096
|
)
|
|
(23,931
|
)
|
||||
(Benefit from) / provision for income taxes
|
(72
|
)
|
|
121
|
|
|
(168
|
)
|
|
443
|
|
||||
Net loss
|
$
|
(6,251
|
)
|
|
$
|
(9,519
|
)
|
|
$
|
(21,928
|
)
|
|
$
|
(24,374
|
)
|
Other Non-GAAP Financial Information:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA
|
$
|
10,025
|
|
|
$
|
8,018
|
|
|
$
|
24,767
|
|
|
$
|
21,425
|
|
Non-GAAP net income
|
$
|
4,331
|
|
|
$
|
1,880
|
|
|
$
|
8,384
|
|
|
$
|
2,294
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Auto Buying Program revenue
|
$
|
79,250
|
|
|
$
|
73,402
|
|
|
$
|
226,858
|
|
|
$
|
207,922
|
|
OEM incentives revenue
|
9,456
|
|
|
4,124
|
|
|
21,804
|
|
|
17,239
|
|
||||
Forecasts, consulting and other revenue
|
4,880
|
|
|
4,914
|
|
|
13,835
|
|
|
14,855
|
|
||||
Revenues
|
$
|
93,586
|
|
|
$
|
82,440
|
|
|
$
|
262,497
|
|
|
$
|
240,016
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Cost of revenue (exclusive of depreciation and amortization)
|
$
|
7,737
|
|
|
$
|
7,088
|
|
|
$
|
22,941
|
|
|
$
|
20,610
|
|
Cost of revenue (exclusive of depreciation and amortization) as a percentage of revenues
|
8.3
|
%
|
|
8.6
|
%
|
|
8.7
|
%
|
|
8.6
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Sales and marketing expenses
|
$
|
57,031
|
|
|
$
|
48,383
|
|
|
$
|
157,463
|
|
|
$
|
137,498
|
|
Sales and marketing expenses as a percentage of revenues
|
60.9
|
%
|
|
58.7
|
%
|
|
60.0
|
%
|
|
57.3
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Technology and development expenses
|
$
|
15,345
|
|
|
$
|
15,357
|
|
|
$
|
46,633
|
|
|
$
|
43,117
|
|
Technology and development expenses as a percentage of revenues
|
16.4
|
%
|
|
18.6
|
%
|
|
17.8
|
%
|
|
18.0
|
%
|
||||
Capitalized software costs
|
$
|
3,781
|
|
|
$
|
4,302
|
|
|
$
|
11,329
|
|
|
$
|
11,577
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
General and administrative expenses
|
$
|
14,030
|
|
|
$
|
14,993
|
|
|
$
|
41,005
|
|
|
$
|
44,034
|
|
General and administrative expenses as a percentage of revenues
|
15.0
|
%
|
|
18.2
|
%
|
|
15.6
|
%
|
|
18.3
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
(Benefit from) / provision for income taxes
|
$
|
(72
|
)
|
|
$
|
121
|
|
|
$
|
(168
|
)
|
|
$
|
443
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Consolidated Cash Flow Data:
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
15,983
|
|
|
$
|
16,913
|
|
Net cash used in investing activities
|
(13,088
|
)
|
|
(15,194
|
)
|
||
Net cash provided by financing activities
|
17,092
|
|
|
86,962
|
|
||
Net increase in cash and cash equivalents
|
$
|
19,987
|
|
|
$
|
88,681
|
|
•
|
our ability to launch new products that are effective and have a high degree of consumer engagement;
|
•
|
our ability to constantly innovate and improve our existing products;
|
•
|
compliance of the dealers within our network of TrueCar Certified Dealers with applicable laws, regulations and the rules of our platform, including honoring the TrueCar certificates submitted by our users; and
|
•
|
our access to a sufficient amount of data to enable us to provide relevant pricing information to consumers.
|
•
|
expand our dealer network in a geographically optimized manner, including increasing dealers in our network representing high volume brands;
|
•
|
increase the number of transactions between our users and TrueCar Certified Dealers;
|
•
|
increase dealer subscription rates, and manage dealer churn, as the number of dealers on subscription billing arrangements increases relative to those on a pay-per-sale billing model and, as a result, our revenue and revenue growth potential become more subscription-based;
|
•
|
grow the revenue we derive from car manufacturer incentive programs;
|
•
|
transition and scale our automotive trade-in program from a pilot to a nationwide offering;
|
•
|
complete our technology replatforming project, which we believe will enable us to launch new products and offerings in the future;
|
•
|
maintain and grow our affinity group marketing partner relationships and increase the productivity of our current affinity group marketing partners;
|
•
|
increase the number of users of our products and services, and in particular the number of unique visitors to the TrueCar website and our TrueCar branded mobile applications;
|
•
|
further improve the quality of our existing products and services, and introduce high quality new products and services; and
|
•
|
introduce third party ancillary products and services.
|
•
|
marketing and advertising;
|
•
|
dealer outreach and training, including the hiring of additional personnel in our dealer team;
|
•
|
technology and product development, including the hiring of additional personnel in our product development and technical teams, harmonization of our software infrastructure and the development of new products and new features for existing products; and
|
•
|
general administration, including legal, accounting and other compliance expenses related to being a public company.
|
•
|
affinity group marketing partners might terminate their relationship with us or make the relationship non-exclusive, resulting in a reduction in the number of transactions between users of our platform and TrueCar Certified Dealers;
|
•
|
affinity group marketing partners might de-emphasize the automobile buying programs within their offerings or alter the user experience for members in a way that results in a decrease in the number of transactions between their members and our TrueCar Certified Dealers; or
|
•
|
the economic structure of our agreements with affinity group marketing partners might change, resulting in a decrease in our operating margins on transactions by their members.
|
•
|
Internet search engines and online automotive sites such as Google, Amazon Vehicles, Autotrader.com, eBay Motors, AutoWeb.com (formerly Autobytel.com), Edmunds.com, KBB.com, CarSaver.com, CarGurus.com and Cars.com;
|
•
|
sites operated by automobile manufacturers such as General Motors and Ford;
|
•
|
providers of offline, membership-based car-buying services such as the Costco Auto Program; and
|
•
|
offline automotive classified listings, such as trade periodicals and local newspapers.
|
•
|
diversion of management time and focus from operating our business to addressing acquisition integration or investment management challenges;
|
•
|
additional operating losses and expenses of the company we acquired or in which we invested;
|
•
|
coordination of technology, research and development and sales and marketing functions;
|
•
|
transition of the acquired company’s users to our website and mobile applications;
|
•
|
retention of employees from the acquired company;
|
•
|
cultural challenges associated with integrating employees from the acquired company into our organization;
|
•
|
integration of the acquired company’s accounting, management information, human resources, legal and other administrative systems;
|
•
|
the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;
|
•
|
potential write-offs of intangibles or other assets acquired in future acquisitions or similar transactions that may have an adverse effect our operating results in a given period;
|
•
|
the risks associated with the company we acquired or invested in, which may differ from or be more significant than the risks our business faces;
|
•
|
liability for the activities, products or services of the company we acquired or invested in, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and
|
•
|
litigation or other claims in connection with the company we acquired or invested in, including claims from terminated employees, consumers, former stockholders or other third parties.
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
volatility in the market prices and trading volumes of high technology stocks;
|
•
|
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
|
•
|
sales of shares of our common stock by us or our stockholders;
|
•
|
failure of securities analysts to maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
|
•
|
announcements by us or our competitors of new products;
|
•
|
the public’s reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
actual or anticipated changes in our operating results or fluctuations in our operating results;
|
•
|
actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
|
•
|
our ability to control costs, including our operating expenses;
|
•
|
litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
|
•
|
developments or disputes concerning our intellectual property or other proprietary rights;
|
•
|
announced or completed acquisitions of or investments in businesses or technologies by us or our competitors;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
changes in accounting standards, policies, guidelines, interpretations or principles;
|
•
|
any significant change in our management;
|
•
|
conditions in the automobile industry; and
|
•
|
general economic conditions and slow or negative growth of our markets.
|
•
|
creating a classified board of directors whose members serve staggered three-year terms;
|
•
|
authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;
|
•
|
limiting the liability of, and providing indemnification to, our directors and officers;
|
•
|
limiting the ability of our stockholders to call and bring business before special meetings;
|
•
|
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
|
•
|
controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and
|
•
|
providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.
|
(a)
|
Sales of Unregistered Securities
|
(b)
|
Use of Proceeds from Public Offerings of Common Stock
|
Exhibit
Number
|
|
Description
|
|
Incorporated by
Reference From Form
|
|
Incorporated
by Reference
from Exhibit
Number
|
|
Date Filed
|
|
|
|
3.2
|
|
5/5/2014
|
|||
|
|
|
3.4
|
|
5/5/2014
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
(1)
|
This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRUECAR, INC.
|
|
|
|
|
|
|
|
Date:
|
|
November 8, 2018
|
|
By:
|
|
/s/ Chip Perry
|
|
|
|
|
|
|
Chip Perry
|
|
|
|
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
Date:
|
|
November 8, 2018
|
|
By:
|
|
/s/ John Pierantoni
|
|
|
|
|
|
|
John Pierantoni
|
|
|
|
|
|
|
Interim Chief Financial Officer & Chief Accounting Officer
|
|
|
|
|
|
|
(Principal Financial Officer & Principal Accounting Officer)
|
|
|
|
|
|
|
|
1 Year TrueCar Chart |
1 Month TrueCar Chart |
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