TrueCar Inc (NASDAQ: TRUE) stock plunged 24.80% on Feb 15th, 2019 (Source: Google finance) after the company missed the analysts’ estimate for the fourth quarter of FY 18. Despite achieving solid dealer network and OEM revenue growth, launching trade and hitting the most important goal for the year the completion on November 11th of Capsella, the technology rebuild, TRUE encountered some challenges which led the company to miss the midpoint of the revenue guidance by $5 million or 6% and the company’s adjusted EBITDA which came in at $2.4 million under the midpoint of the guidance range. Moreover, the Company has disclosed a decrease in net income of $2.2M, a 10% drop in average monthly unique visitors for the quarter, and weak first-quarter and full year guidance.
The challenges that the company faced this quarter for shortfall relative to guidance. First, the OEM revenues grew 36% year-over-year, instead of the expected 72% due to less than expected revenues from the existing OEM clients driven by operational issues during a peak seasonal period. In addition, the company had expected a modest contribution from new business during the back half of the quarter that did not materialize. Second, the core franchise and independent dealer revenue grew 5% instead of 9% as planned, primarily due to these factors; stronger than expected headwinds in organic traffic on the branded channels, several of the affinity partners did not migrate off the legacy system to the new technology stat until late in the fourth quarter and the company experienced operational challenges on the legacy systems before that transition. And finally, the company added fewer independent dealers during the quarter than the company had expected. The company expect the difficulties that are organic traffic and the volatility in the quarterly OEM revenues will continue to be challenging for efforts the company begin in 2019.
TRUE in the fourth quarter of FY 18 has reported the adjusted earnings per share of 3 cents, missing the analysts’ estimates for the adjusted earnings per share of 4 cents. The company had reported the adjusted revenue growth of 10 percent to $91.07 million in the fourth quarter of FY 18, missing the analysts’ estimates for revenue by 5.29%.
Meanwhile, Former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm of Kahn Swick & Foti, LLC (“KSF”), announces that KSF has commenced an investigation into TRUE.