Vehicle listings company TrueCar swung to a net profit in the fourth quarter on the sale of its ALG subsidiary to J.D. Power in November.
The Santa Monica, Calif., company on Wednesday reported net income of $88 million in the quarter that ended Dec. 31, compared with a net loss of $8.8 million in the same quarter a year ago.
Excluding the ALG unit, TrueCar reported a loss from continuing operations of $7.7 million in the quarter. That was an improvement from the $9.7 million loss from continuing operations in the year-earlier period.
Fourth-quarter revenue slid 25 percent to $64 million in the first earnings period since the end of a key revenue-sharing partnership with USAA Federal Savings Bank. But CEO Mike Darrow said Wednesday the quarterly results surpassed expectations.
“The turnaround story here at TrueCar continues to gain momentum,” Darrow told analysts on an earnings call, adding that a year ago, the company faced both the unexpected end of the USAA partnership and the start of the coronavirus pandemic in the U.S.
“Yet again, I believe today’s results speak to that very resilience and to the things you can achieve when a team of exceptionally bright and talented professionals band together in pursuit of a common goal,” Darrow said.
TrueCar’s stock price was up 15 percent to $5.80 in after-hours trading Wednesday.
For all of 2020, TrueCar narrowed its loss from continuing operations to $19.8 million from a loss of $58.3 million in 2019. Including the ALG discontinued operations, TrueCar reported net income for 2020 of $77.7 million, compared with a net loss of $54.9 million in 2019.
Revenue in 2020 fell 17 percent to $278.7 million.
As of Dec. 31, TrueCar reported 10,589 franchised dealership customers, down from 12,565 as of the fourth quarter of 2019 and 156 fewer than on Sept. 30, 2020, though Darrow told analysts that dealership turnover has stabilized. The company expects the number to grow in 2021, he added.
TrueCar in November completed the sale of its ALG unit to J.D. Power for $135 million. ALG, which provides residual value forecasting and other analytics services, had been part of TrueCar since the company bought it in 2011 from DealerTrack Holdings Inc.
The company moved ALG’s operating results through Nov. 30, along with gains from the sale, to discontinued operations when reporting quarterly earnings.
A car-buying partnership with USAA ended Sept. 30 after 13 years. It was a significant partnership for TrueCar, representing about 29 percent of the vehicles sold to buyers who connect through TrueCar’s network, the company said in February 2020 when announcing the end of the program. USAA has more than 13 million members.
Earlier this month, TrueCar said in a federal regulatory filing that it reached an agreement to operate a vehicle-buying program with Navy Federal Credit Union, which it said has more than 10 million members. The partnership is expected to launch in March.
Darrow told analysts that it’s “a major step forward” toward reaching an estimated 40 million members of a wider military audience. TrueCar rolled out a new car-buying program for a military audience, TrueCar Military, in May 2020.
