Related Party Transactions

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Transactions with USAA

USAA is a large stockholder in the Company and the Company’s most significant affinity marketing partner. The Company has entered into arrangements with USAA to operate its Auto Buying Program. At the time that the Company entered into these arrangements, USAA met the definition of a related party. In February 2020, the Company entered into a short-term agreement to extend its partnership with USAA Federal Savings Bank (“USAA FSB”) to continue to power the USAA Car Buying Service through September 30, 2020. USAA FSB will pay the Company a $20 million transition services fee that will be earned over the term of the agreement. Revenue share from USAA FSB to the Company will remain the same as it was under the previous agreement except that amounts earned after March 1, 2020 will be settled net of the transaction service fee.

The Company had amounts due from USAA included in accounts receivable at September 30, 2020 and December 31, 2019 of $10.0 million and $0.2 million, respectively. At December 31, 2019, the Company had an amount due to USAA of $7.3 million, of which $6.0 million was included in accounts payable and $1.3 million was included in accrued expenses and other current liabilities. For the three and nine months ended September 30, 2020, the Company recognized revenue of $3.5 million and $9.1 million, respectively. Additionally, for the nine months ended September 30, 2020, the Company recorded sales and marketing expense of $2.0 million. For the three and nine months ended September 30, 2019, the Company recorded sales and marketing expense of $6.3 million and $17.5 million, respectively.

Transactions with Accu-Trade

During the first quarter of 2019, the Company became a 20% owner of Accu-Trade and accounts for the investment using the equity method, as the Company has significant influence over the investee. The Company had amounts due to Accu-Trade included in accounts payable at both September 30, 2020 and December 31, 2019 of $0.4 million. The Company recognized contra-revenue of $0.3 million and cost of revenue of $0.3 million for both the three months ended September 30, 2020 and 2019, related to a software and data licensing agreement entered into with Accu-Trade. The Company recognized contra-revenue of $0.9 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, and cost of revenue of $0.7 million for both the nine months ended September 30, 2020 and 2019.