TrueCar drama: Impatient board wanted faster results, replaced CEO, analysts say
A TrueCar spokesperson said the company would not comment “at the moment” beyond its press release and regulatory filing last week. Darrow, who had led the company since 2019, had not returned a message seeking comment as of press time.
TrueCar said it will incur $7 million in charges, excluding stock-based compensation, in the second and third quarters.
The company said the job cuts and a leadership structure realignment will slash employment expenses by more than $20 million annually, excluding stock-based compensation.
At the end of May, TrueCar had cash and equivalents of $146.5 million. It expects its aggregate cash balance could drop below $125 million.
But TrueCar expects breakeven or positive adjusted earnings before interest, taxes, depreciation and amortization in the fourth quarter, for which it also predicts double-digit percentage year-over-year revenue growth.
The company has suffered financial losses, and this year has been no different. Its first-quarter net loss widened to $19.6 million from $12.4 million in the year-earlier period and an $18.1 million loss in the fourth quarter.
During the company’s May 9 first-quarter earnings call, Darrow highlighted some of the actions the company had taken that he said would reverse TrueCar’s sagging finances. Those included the April launch of TrueCar Wholesale Solutions, a subsidiary focused on providing market-based valuation for used cars, an ongoing expansion of the TrueCar+ digital platform and efforts to convert more traffic into dealership sales.
Restructuring will create a “leaner, meaner” TrueCar, Marvin Fong, e-commerce analyst at BTIG, said in a note to investors.
