TrueCar, a platform where people can research new and used car prices and find local dealer savings, is laying off 24% of staff due to a restructure, the company said Wednesday. About 102 people will be impacted by the layoff.
President and CEO Michael Darrow is stepping aside both from his executive roles — to be replaced by Jantoon Reigersman — and his position on the board. Reigersman previously served as TrueCar’s chief operating officer and chief financial officer.
TrueCar’s stock jumped nearly 13% in after-hours trading on the news.
“The restructuring announced today better aligns our cost structure with our revenue base and is designed to make TrueCar a nimbler, more efficient company,” said Barbara Carbone, incoming chair of the board, in a statement. “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 says the restructure should result in nonrecurring cash payments of about $7 million, which will show up in the second and third quarters of 2023, and an annualized reduction in expensive exclusive of stock-based compensation of over $20 million.
As of May 31, 2023, TrueCar had cash and cash equivalents of $146.5 million. The company expects that number to drop below $125 million in the near term, but says it continues to anticipate break-even or positive adjusted EBITDA and double digit year-over-year revenue growth in the fourth quarter of 2023.
TrueCar’s first-quarter earnings also show a dip in revenue and increase in cost. The company closed Q1 with nearly $37 million, down from $43.5 million in the same period last year. Net loss hit $19.5 million, up from $12.4 in Q1 2022.
TrueCar was founded in 2005 with a goal of revolutionizing the car-buying process by making it more transparent and efficient. The company officially launched at TechCrunch50 back in 2008, a now-ended pitch competition during which judges found TrueCar’s commitment to providing users with the actual price paid for specific vehicles in a given area compelling. TrueCar ran up against challenges in 2012 as dealerships were threatened by the company’s model, even facing legal issues in states like California due to allegations of operating as a dealer without a license.
The company continued to expand regardless, acquiring new businesses along the way, and went public in 2014 under the ticker TRUE.
TrueCar was also sued by the California New Car Dealers Association in 2015 for allegedly violating California law with its billing model. TrueCar settled in 2017 and agreed to modify its billing model in the state.