TrueCar Inc. founder and chief executive Scott Painter will step
down at the end of the year, the company said Thursday, in a move
that comes as the online car-buying firm faces a wave of new legal
and financial troubles.
Mr. Painter, who established the company in 2005 and took it
public last year, has been a vocal critic of the way traditional
auto retailers sell cars, marketing TrueCar as a more transparent
and hassle-free way to shop for vehicles over the Internet. He has
repeatedly clashed with dealers over the years as TrueCar has
nudged its way into the auto-retailing space with the growth in
online shopping.
His departure was announced as the company reported
second-quarter earnings Thursday. Speaking to analysts, Mr. Painter
cited his "strained" relationship with dealers and the firm's weak
quarterly earnings as reasons for stepping down.
"I've come to a conclusion reached by many founders and
entrepreneurs in my position: it's time for a change," Mr. Painter
said.
Through its website, TrueCar offers car buyers the ability to
shop prices based on what others have paid for similar models and
against invoice prices. The Santa Monica, Calif.-based company
reported a $14.7 million loss in the second quarter, or 18 cents a
share, compared with a $15 million loss, or 22 cents a share, a
year earlier.
TrueCar, which has a market value of about $500 million, earns
the bulk of its revenue by charging dealers for customer
referrals.
Revenue grew 29%, to $65.3 million, in the second quarter. The
number of dealers using TrueCar rose 21% to a record 9,300, the
company said.
The results were better than the warning the company issued last
month, forecasting quarterly losses could widen to as much as $15.5
million. Still, TrueCar expects full-year adjusted earnings of
about $5 million off revenues between $252 million to $258
million.
"It was a tough quarter in relation to our initial guidance,"
said Mike Guthrie, TrueCar's Chief Financial Officer.
"Notwithstanding that, we achieved notable success."
TrueCar has had a bumpy ride this year. Last month, the company
lost one of its biggest clients, AutoNation, Inc., after the two
clashed over sharing consumer data. The No. 1 U.S. auto retailer by
sales, AutoNation accounted for about 3% of TrueCar's revenue.
The online firm is also facing multiple lawsuits brought by
dealer groups, claiming its business practices are deceitful and
violate state consumer protection laws.
TrueCar has said the claims are baseless and will fight them in
court. But the legal challenges have only flair long-simmering
tensions between the company and its dealer clients.
The company's stock tumbled in July after it announced that it
was reducing its full-year forecast as fewer customers used the
site to make purchase. Thursday the stock closed down 6%, at
$5.54.
Write to Christina Rogers at christina.rogers@wsj.com
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