TrueCar Is Restructuring and Changing Management as Losses Continue

TrueCar, the online vehicle listing platform, is set to undergo a strategic restructuring aimed at rationalizing its organization and improving efficiency amid broader downshifts in the sector.

In an announcement Wednesday (June 14), TrueCar described “a strategic restructuring to streamline the organization, including a workforce reduction impacting approximately 102 positions, or 24% of the Company’s headcount.”

Changes also impact corporate leadership. Chief Operating Officer Jantoon Reigersman moves up to president and chief executive officer, while current CEO Michael Darrow is departing TrueCar and vacating his position on the board.

The move is part of the company’s efforts to achieve its strategic priorities and create long-term shareholder value. Incoming board chair Barbara Carbone said, “The restructuring announced today better aligns our cost structure with our revenue base and is designed to make TrueCar a nimbler, more efficient company. We made this difficult decision after an extensive review and believe that it is necessary to enable TrueCar to achieve its strategic priorities and create long-term shareholder value.”

TrueCar has been struggling financially, with net losses growing to $19.6 million in the first quarter of 2023. The restructuring is expected to result in nonrecurring cash payments of approximately $7 million, primarily in the second and third quarters of 2023, and an annualized reduction in expenses exclusive of stock-based compensation of over $20 million.

That’s consistent with the online auto sector’s overall fortunes in recent quarters. As PYMNTS reported in May, “CarGurus’ earnings show revenues down 46% year over year to $232 million; digital wholesale revenues slipped 76%. The company’s total transactions in the latest quarter came to roughly 17,500, where that tally had been 68,754 in the year-ago period,” adding that “In its own results, Carvana said that retail units sold totaled 79,240, a decrease of 25%, while it continues to shrink inventory.”

The TrueCar restructuring is meant to better align the company’s cost structure with its revenue base, according to Carbone. The company said it had cash and cash equivalents of about $146.5 million as of May 31, and management expects that in the near term, this aggregate cash balance could drop below $125 million.

However, TrueCar said it anticipates break-even or positive adjusted EBITDA and double-digit year-over-year revenue growth in the fourth quarter of 2023. Shares of TrueCar were up 7.69% in late trading on Wednesday following the announcement.