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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-36449
TRUECAR, INC.
(Exact name of registrant as specified in its charter)
Delaware04-3807511
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification Number)
120 Broadway, Suite 200
Santa Monica, California 90401
(800) 200-2000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareTRUEThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒     No  ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No ☒
As of November 2, 2021, 95,922,147 shares of the registrant’s common stock were outstanding.


TRUECAR, INC.
INDEX
  Page
  
 
     
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020
     
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020
 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020
 
  
 



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties.  Forward-looking statements generally relate to future events or our future financial or operating performance.  In some cases, you can identify forward-looking statements because they contain words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “likely,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our future financial performance and our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses and ability to maintain or grow revenue, scale our business, generate cash flow, fulfill our mission and achieve and maintain future profitability; 
•our ability to forecast our financial and operational performance;
•our relationship with key industry participants, including car dealers and automobile manufacturers;
•anticipated trends, demand rates and challenges in our business and in the markets in which we operate;
•our ability to successfully roll out our planned TrueCar+ offering, provide a compelling value proposition to consumers using that offering and integrate our current and future offerings into that experience;
•our ability to anticipate market needs and develop new and enhanced products and services to meet those needs and to successfully monetize those products and services;
•maintaining and expanding our customer base in key geographies, including our ability to maintain or increase the number of high-volume brand dealers in our network generally and in key geographies;
•the short- and long-term effects of the coronavirus pandemic on our business;
•our ability to mitigate the financial effect of the termination of our partnership with USAA Federal Savings Bank;
•our ability to maintain and grow our existing additional affinity partner relationships, and to attract new affinity partners to offer our services to their members;
•our reliance on our third-party service providers; 
•the impact of competition in our industry and innovation by our competitors; 
•our anticipated growth and growth strategies, including our ability to maintain or increase close rates and the rate at which site visitors prospect with a TrueCar certified dealer; 
•our ability to successfully maintain or increase dealer subscription rates and manage dealer churn;
•our ability to attract significant automobile manufacturers to participate, and remain participants, in our incentive programs;
•our ability to anticipate or adapt to future changes in our industry;  
•the impact on our business of seasonality, cyclical trends affecting the overall economy and actual or threatened severe weather events; 
•our ability to hire and retain necessary qualified employees; 
•our continuing ability to provide customers access to our products; 
•our ability to maintain and scale our technical infrastructure and leverage our technology platform to enhance our customer experience and launch new product offerings;
•the evolution of technology affecting our products, services and markets; 
•our ability to adequately protect our intellectual property; 
•the outcome, and effect on our business, of litigation to which we are a party, including our ability to settle any such litigation; 
•our ability to navigate changes in domestic or international economic, political or business conditions, including supply shortages, such as of automotive semiconductors, changes in interest rates, consumer demand and import tariffs and governmental responses to the coronavirus pandemic;
•our ability to stay abreast of, and in compliance with, new or modified laws and regulations that currently apply or become applicable to our business, including newly-enacted and rapidly-changing privacy, data protection and net neutrality laws and regulations and changes in applicable tax laws and regulations; 
•the continued expense and administrative workload associated with being a public company; 
•our ability to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud; 
•our liquidity and working capital requirements;
•the estimates and estimate methodologies used in preparing our consolidated financial statements;
1

•the future trading prices of our common stock and the impact of securities analysts’ reports on these prices;
•our plans to pursue acquisitions, divestitures, investments and other similar transactions;
•our ability to use the proceeds of the ALG divestiture in a manner that maximizes shareholder value;
•the extent to which we repurchase our common stock under our share repurchase plan and the effect of these repurchases on long-term stockholder value, the volatility and trading price of our common stock and our cash reserves;
•our ability to effectively and timely integrate our operations with those of any business we acquire and related factors, including the difficulties associated with such integration (such as the difficulties, challenges and costs associated with managing and integrating new facilities, assets and employees) and the achievement of the anticipated benefits of such integration;
•the preceding and other factors discussed in Part II, Item 1A, “Risk Factors,” and in other reports we may file with the Securities and Exchange Commission from time to time; and
•the factors set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.  Given these uncertainties, you should not place undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
2


SUMMARY OF RISKS AFFECTING OUR BUSINESS
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” later in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:
•Low automobile inventory supply levels adversely impact our business, results of operations and prospects by increasing competition for dealers’ advertising expenditures and reducing automobile manufacturers’ incentive spending.
•If our lead quality or quantity declines, our unit volume could as well, and dealers could leave our network or insist on lower subscription rates, which could reduce our revenue and harm our business.
•If we are not successful in rolling out our planned TrueCar+ offering, providing a compelling value proposition to consumers using that offering, integrating our current and future offerings into that experience or monetizing it, our business and prospects could be adversely affected.
•The ongoing disruptions and uncertainties caused by the coronavirus pandemic have meaningfully disrupted our business and may continue to do so, including in new and unforeseen ways.
•The termination of our partnership with USAA has adversely affected our business and we may not be able to mitigate its negative financial effects.
•We may not be able to grow and optimize the geographic coverage of dealers in our network, and maintain or increase the representation of high-volume brands in that network or manage dealer churn and increase dealer subscription rates, which would limit our growth.
•We may not be able to provide a compelling car-buying experience to our users, which could cause the number of transactions between our users and dealers, and therefore our revenues, to decline.
•Our business is subject to risks related to the larger automotive ecosystem, including interest rates, consumer demand, global supply chain challenges (including relating to automotive semiconductors) and other macroeconomic issues.
•The failure to attract manufacturers to participate in our incentive programs, or to induce them to remain participants in those programs, could reduce our growth or adversely affect our operating results.
•The loss of a significant affinity partner or a significant reduction in units attributable to our affinity partners would reduce our revenue and harm our operating results.
•If car dealers or automobile manufacturers perceive us in a negative light or our relationships with them suffer harm, our ability to grow and our financial performance may be damaged.
•Our business could be adversely affected by executive turnover and other transitions in our senior management team. An inability to navigate these transitions and attract, retain and integrate new management and other personnel could harm our business.
•We rely on relationships with data providers and may experience interruptions in the data feeds they provide, which could adversely affect our current product offerings and limit our ability to provide our expected TrueCar+ offering to users and dealers as well as the timeliness of the information we provide, and which may impair our ability to attract or retain consumers and dealers and to timely invoice dealers.
•We rely on Internet search engines to drive traffic to our website, and if we fail to appear prominently in the search results, our traffic would decline and our business would be adversely affected.
•The success of our business relies heavily on our marketing and branding efforts and those of our affinity partners, and these efforts may not be successful.
•We are subject to a complex framework of regulations, many of which are unsettled, still developing and contradictory, which have in the past, and could in the future, subject us to claims, challenge our business model or otherwise harm our business.
•We collect, process, store, share, disclose and use personal information and other data, and our actual or perceived failure to protect this information and data could damage our reputation and brand and harm our business and operating results.
•We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
3

•We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
4



TRUECAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
(Unaudited)
 September 30, 2021December 31, 2020
Assets  
Current assets  
Cash and cash equivalents$250,665 $273,314 
Accounts receivable, net of allowances of $3,678 and $7,147 at September 30, 2021 and December 31, 2020, respectively
19,891 32,923 
Prepaid expenses
8,094 5,800 
Other current assets2,199 12,901 
Total current assets280,849 324,938 
Property and equipment, net19,255 21,421 
Operating lease right-of-use assets24,689 29,192 
Goodwill51,205 51,205 
Intangible assets, net5,362 6,600 
Equity method investment18,952 19,905 
Other assets4,386 4,800 
Total assets$404,698 $458,061 
Liabilities and Stockholders’ Equity  
Current liabilities  
Accounts payable (includes related party payables of $1,130 and $913 at September 30, 2021 and December 31, 2020, respectively)
$14,150 $13,198 
Accrued employee expenses
5,613 6,506 
Operating lease liabilities, current
5,096 4,771 
Accrued expenses and other current liabilities10,049 18,402 
Total current liabilities34,908 42,877 
Deferred tax liabilities88 40 
Operating lease liabilities, net of current portion27,772 31,974 
Other liabilities24 388 
Total liabilities62,792 75,279 
Commitments and contingencies (Note 8)
Stockholders’ Equity  
Preferred stock — $0.0001 par value; 20,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020
— — 
Common stock — $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2021 and December 31, 2020; 95,747,550 and 99,690,942 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
10 10 
Additional paid-in capital719,951 738,290 
Accumulated deficit(378,055)(355,518)
Total stockholders’ equity341,906 382,782 
Total liabilities and stockholders’ equity$404,698 $458,061 

See accompanying notes to condensed consolidated financial statements.
5

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands except per share data)
(Unaudited)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2021202020212020
Revenues$54,966 $77,247 $185,837 $214,718 
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization presented separately below)5,715 4,664 16,919 16,403 
Sales and marketing 31,239 36,254 108,814 115,366 
Technology and development
9,890 10,162 31,863 34,861 
General and administrative
11,121 11,315 37,652 36,252 
Depreciation and amortization
3,828 5,117 12,731 15,321 
Goodwill impairment
— — — 8,264 
Total costs and operating expenses61,793 67,512 207,979 226,467 
(Loss) income from operations(6,827)9,735 (22,142)(11,749)
Interest income12 13 40 452 
Other income— 450 667 450 
Loss from equity method investment(267)(571)(953)(1,460)
(Loss) income from continuing operations before income taxes(7,082)9,627 (22,388)(12,307)
(Benefit from) provision for income taxes(38)38 189 (132)
(Loss) income from continuing operations(7,044)9,589 (22,577)(12,175)
Income from discontinued operations, net of taxes208 2,000 40 1,853 
Net (loss) income$(6,836)$11,589 $(22,537)$(10,322)
(Loss) income per share, basic
Continuing operations$(0.07)$0.09 $(0.23)$(0.11)
Discontinued operations$0.00 $0.02 $0.00 $0.02 
(Loss) income per share, diluted
Continuing operations$(0.07)$0.09 $(0.23)$(0.11)
Discontinued operations$0.00 $0.02 $0.00 $0.02 
Weighted average common shares outstanding, basic96,037 107,693 97,800 107,418 
Weighted average common shares outstanding, diluted96,037 110,011 97,800 107,418 
Other comprehensive (loss) income:
  
Comprehensive (loss) income$(6,836)$11,589 $(22,537)$(10,322)

See accompanying notes to condensed consolidated financial statements.
6

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands except share data)
(Unaudited) 


Nine Months Ended September 30, 2021
 Common Stock Accumulated
Deficit		Stockholders’
Equity
 SharesAmountAPIC
Balance at December 31, 202099,690,942 $10 $738,290 $(355,518)$382,782 
Net loss— — — (8,418)(8,418)
Repurchase of common stock(1,683,692)— (7,829)— (7,829)
Stock-based compensation— — 6,732 — 6,732 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
660,311 — (1,075)— (1,075)
Balance at March 31, 202198,667,561 $10 $736,118 $(363,936)$372,192 
Net loss— — — (7,283)(7,283)
Repurchase of common stock(2,088,784)— (11,556)— (11,556)
Stock-based compensation— — 5,507 — 5,507 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
1,034,680 — (630)— (630)
Balance at June 30, 202197,613,457 $10 $729,439 $(371,219)$358,230 
Net loss— — — (6,836)(6,836)
Repurchase of common stock(2,365,258)— (13,044)— (13,044)
Stock-based compensation— — 4,768 — 4,768 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes499,351 — (1,212)— (1,212)
Balance at September 30, 202195,747,550 $10 $719,951 $(378,055)$341,906 


See accompanying notes to condensed consolidated financial statements.




7

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands except share data)
(Unaudited)
(Continued) 


Nine Months Ended September 30, 2020
 Common Stock Accumulated
Deficit		Stockholders’
Equity
 SharesAmountAPIC
Balance at December 31, 2019106,865,830 $11 $759,322 $(432,062)$327,271 
Net loss— — — (10,669)(10,669)
Stock-based compensation— — 6,559 — 6,559 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes317,803 — (724)— (724)
Balance at March 31, 2020107,183,633 $11 $765,157 $(442,731)$322,437 
Net loss— — — (11,242)(11,242)
Stock-based compensation— — 6,855 — 6,855 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes726,367 — (856)— (856)
Balance at June 30, 2020107,910,000 $11 $771,156 $(453,973)$317,194 
Net income— — — 11,589 11,589 
Repurchase of common stock(2,402,810)— (11,677)— (11,677)
Stock-based compensation— — 6,217 — 6,217 
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes565,617 — (1,420)— (1,420)
Balance at September 30, 2020106,072,807 $11 $764,276 $(442,384)$321,903 


See accompanying notes to condensed consolidated financial statements.
8

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Nine Months Ended
September 30,
 20212020
Cash flows from operating activities  
Net loss$(22,537)$(10,322)
Income from discontinued operations, net of taxes40 1,853 
Net loss from continuing operations(22,577)(12,175)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization12,731 15,321 
Goodwill impairment— 8,264 
Deferred income taxes48 (341)
Bad debt expense and other reserves286 2,805 
Stock-based compensation15,992 17,632 
Increase in the fair value of contingent consideration liability41 151 
Amortization of lease right-of-use assets3,211 4,312 
Loss from equity method investment953 1,460 
Impairment of right-of-use assets and write-off and loss on disposal of finite-lived assets1,666 39 
Other noncash expense313 — 
Changes in operating assets and liabilities:
Accounts receivable12,746 (5,289)
Prepaid expenses and other assets477 774 
Accounts payable993 (8,189)
Accrued employee expenses(1,099)(851)
Operating lease liabilities(3,877)(5,065)
Accrued expenses and other liabilities(5,363)(4,599)
Other liabilities(364)1,823 
Net cash provided by operating activities - continuing operations16,177 16,072 
Net cash (used in) provided by operating activities - discontinued operations(180)7,622 
Net cash provided by operating activities15,997 23,694 
Cash flows from investing activities  
Purchase of property and equipment(8,056)(8,020)
Net cash used in investing activities - continuing operations(8,056)(8,020)
Net cash provided by (used in) investing activities - discontinued operations6,484 (1,138)
Net cash used in investing activities(1,572)(9,158)
Cash flows from financing activities  
Payment of contingent consideration liability(2,214)(2,263)
Proceeds from exercise of common stock options1,369 84 
Taxes paid related to net share settlement of equity awards(4,286)(3,084)
Payments for the repurchase of common stock(31,943)(12,108)
Net cash used in financing activities(37,074)(17,371)
Net decrease in cash and cash equivalents(22,649)(2,835)
Cash and cash equivalents at beginning of period273,314 181,534 
Cash and cash equivalents at end of period$250,665 $178,699 

See accompanying notes to condensed consolidated financial statements.
9

TRUECAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
(Continued)
Nine Months Ended
September 30,
20212020
Supplemental disclosures of non-cash activities
Stock-based compensation capitalized for software development$1,015 $992 
Capitalized assets included in accounts payable, accrued employee expenses and other accrued expenses
1,101 392 
Capitalized asset retirement costs included in property and equipment
— 498 

See accompanying notes to condensed consolidated financial statements.
10

TRUECAR, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Organization and Nature of Business
TrueCar, Inc. is an Internet-based information, technology, and communication services company. Hereinafter, TrueCar, Inc. and its wholly owned subsidiaries TrueCar Dealer Solutions, Inc., DealerScience, LLC and ALG, Inc. (up to the disposition date of November 30, 2020) are collectively referred to as “TrueCar” or the “Company”; ALG, Inc. is referred to as “ALG,” TrueCar Dealer Solutions, Inc. is referred to as “TCDS” and DealerScience, LLC is referred to as “DealerScience.” TrueCar was incorporated in the state of Delaware in February 2005 and began business operations in April 2005. Its principal corporate offices are located in Santa Monica, California.
TrueCar is a digital automotive marketplace that (i) provides pricing transparency about what other people paid for their cars and enables consumers to engage with TrueCar Certified Dealers who are committed to providing a superior purchase experience; (ii) empowers Certified Dealers to attract these informed, in-market consumers in a cost-effective, accountable manner; and (iii) allows automobile manufacturers (“OEMs”) to more effectively target their incentive spending at deep-in-market consumers during their purchase process. TrueCar has established a diverse software ecosystem on a common technology infrastructure, powered by proprietary data and analytics. Consumers access TrueCar’s platform through the TrueCar.com website and TrueCar mobile applications or through the car buying websites and mobile applications that TrueCar operates for its affinity group marketing partners (“Auto Buying Programs”). An affinity group is comprised of a network of members or employees that provides discounts to its members.
Through its subsidiary TCDS, the Company provides its TrueCar Trade and Payments products. Our Trade solution gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership. This valuation is, in turn, backed by a third-party guarantee to dealers that the vehicles will be repurchased at the indicated price if the dealer does not want to keep them. The Company’s Payments solution leverages the digital retailing technology of its DealerScience subsidiary, acquired in December 2018, to help consumers calculate accurate monthly payments.

2.    Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and Article 10-1 of Regulation S-X. Accordingly, some information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2020, and include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented. As a result of the ALG divestiture as discussed in Note 3, the ALG business met the criteria to be reported as discontinued operations. Therefore, the Company is reporting the historical results of ALG, including the results of operations, cash flows, and related assets and liabilities, as discontinued operations for all periods presented herein through the date of disposition. Unless otherwise noted, the accompanying Notes to the Condensed Consolidated Financial Statements have all been revised to reflect continuing operations only.
The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC on March 5, 2021. 
11

Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of TrueCar and its wholly owned subsidiaries. Business acquisitions are included in the Company’s condensed consolidated financial statements from the date of the acquisition. The Company’s purchase accounting resulted in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. Equity investments through which the Company is able to exercise significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities are accounted for using the equity method. The Company’s share of the income or loss from equity method investments is recognized on a one-quarter lag due to the timing and availability of financial information. Divestitures are included in the Company’s consolidated statements through the date of disposition. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities that are subject to judgment and use of estimates include sales allowances and allowances for doubtful accounts, contract assets, the fair value of assets and liabilities assumed in business combinations, the fair value of equity method investments, the recoverability and related impairment of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, right-of-use assets and operating lease liabilities, contingencies, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engaged valuation specialists to assist with management’s determination of the fair values of its single reporting unit related to goodwill impairment, right-of-use assets and lease liabilities, assets and liabilities assumed in business combinations, assets and liabilities of its equity method investment and performance-based stock units.
Segments
The Company has one operating segment. From January 1, 2021 through January 26, 2021, the Company’s chief operating decision maker (“CODM”) was solely comprised of the President and Chief Executive Officer who managed the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources. Upon the hiring of the Company’s Chief Financial Officer on January 27, 2021 and through September 30, 2021, the CODM was comprised of both the President and Chief Executive Officer and the Chief Financial Officer, who jointly managed the Company’s operations based on consolidated financial information for purposes of evaluating financial performance and allocating resources.
The CODM reviews financial information on a consolidated basis, accompanied by information about dealer revenue, OEM incentive revenue, and other revenue (Note 13). All of the Company’s principal operations, decision-making functions and assets are located in the United States.
Allowance for Doubtful Accounts
The Company determines its allowance for doubtful accounts based on historical write-off experience and specific circumstances that make it likely that recovery will not occur. The Company reviews the allowance for doubtful accounts periodically and assesses the aging of account balances, with an emphasis on those that are past due over ninety days. Account balances are charged off against the allowance when the Company determines that it is probable the receivable will not be recovered.

The Company considers the need to adjust historical information to reflect the extent to which the Company expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated. The primary current and future economic indicators that the Company uses to develop its current estimate of expected credit losses include the current and forecast U.S. Gross Domestic Product (GDP).

The Company calculates the expected credit losses on a pool basis for those trade receivables that have similar risk characteristics. For those trade receivables that do not share similar risk characteristics, the allowance for doubtful accounts is
12

calculated on an individual basis. Risk characteristics relevant to the Company’s accounts receivable include revenue billing model and aging status.

The following table summarizes the changes in the allowance for doubtful accounts and sales allowances (in thousands):

Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Allowances, at beginning of period$5,789 $10,304 $7,147 $6,591 
Charged as a reduction of revenue923 1,581 3,489 6,939 
Charged to bad debt expense in general and administrative expenses(182)(680)286 2,805 
Write-offs, net of recoveries(2,852)(2,752)(7,244)(7,882)
Allowances, at end of period$3,678 $8,453 $3,678 $8,453 
The Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

3.    Discontinued Operations
On November 30, 2020, the Company completed the sale of its 100% interest (the “Divestiture”) in ALG to J.D. Power for $112.5 million in cash (subject to customary working capital and other adjustments) pursuant to the Membership Interest Purchase Agreement, dated as of July 31, 2020 (the “Purchase Agreement”). The Purchase Agreement provided for J.D. Power to pay the Company (i) a potential cash earnout of up to $7.5 million based upon ALG’s achievement of certain revenue metrics in 2020 and (ii) a potential cash earnout of up to $15 million based upon ALG’s achievement of certain revenue metrics in 2022. The Company received cash proceeds of $111.5 million, net of working capital adjustments, and incurred transaction costs of approximately $1.9 million. As part of the Divestiture, the Company also received a five-year data license from J.D. Power for use of certain ALG data in the Company’s products and services. The Company recorded the fair value of the data license in the amount of $1.9 million. The carrying value of the data license is included in other current assets and other assets in the accompanying condensed consolidated balance sheets. The data license is being treated as additional consideration received and is being amortized on a straight-line basis over five years. The Company accounts for the future earnouts as gain contingencies and recognizes the contingent consideration associated with the Divestiture when the consideration is determined to be realizable. The Divestiture resulted in a pre-tax gain of $92.5 million for the year ended December 31, 2020. At December 31, 2020, the Company recorded a receivable of $7.5 million associated with the achievement of the first earnout based on certain 2020 revenue metrics. During the first quarter of 2021, the Company received a cash payment of $7.5 million related to the first earnout and is reflected within investing activities of discontinued operations on the accompanying condensed consolidated statements of cash flows. During the three months ended September 30, 2021, the Company finalized its net working capital adjustments associated with the Divestiture. The resolution resulted in additional gain on sale of $0.2 million for the three and nine months ended September 30, 2021.
The Divestiture represented a strategic shift in the Company’s business and meets the criteria of discontinued operations. As a result, the operating results and cash flows from ALG have been reflected as discontinued operations in the condensed consolidated statements of comprehensive loss and consolidated statements of cash flows for all periods presented.
13

The following table presents the detail of “Income from discontinued operations, net of taxes” within the condensed consolidated statements of comprehensive loss (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Revenues $— $5,221 $— $13,961 
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization presented separately below)
— 1,379 — 3,720 
Sales and marketing
— 304 — 1,243 
Technology and development
— 373 — 993 
General and administrative
12 725 180 1,620 
Depreciation and amortization
— 418 — 2,910 
Goodwill impairment
— — — 1,923 
Total costs and operating expenses12 3,199 180 12,409 
(Loss) income from operations(12)2,022 (180)1,552 
Gain on sale220 — 220 — 
Interest income— 3 — 169 
Income from discontinued operations before income taxes208 2,025 40 1,721 
Provision (benefit) from income taxes— 25 — (132)
Income from discontinued operations, net of taxes$208 $2,000 $40 $1,853 

4.    Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Accounting standards describe a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:
•Level 1 — Quoted prices in active markets for identical assets, liabilities, or funds.
•Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses and other current liabilities approximate fair value because of the short maturity of these items.
14

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 by level within the fair value hierarchy. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):
 At September 30, 2021At December 31, 2020
  Total Fair Total Fair
Level 1Level 2Level 3ValueLevel 1Level 2Level 3Value
Assets:
Cash equivalents$239,992 $— $— $239,992 $262,309 $— $— $262,309 
Total assets$239,992 $— $— $239,992 $262,309 $— $— $262,309 
Liabilities:
Contingent consideration, current
$— $— $— $— $— $— $2,459 $2,459 
Total liabilities$— $— $— $— $— $— $2,459 $2,459 
Contingent Consideration Obligations
The following table summarizes the changes in the fair value of the contingent consideration obligation (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Fair value, beginning of period$— $2,398 $2,459 $4,777 
Cash payments— — (2,500)(2,500)
Additions and changes in fair value— 30 41 151 
Fair value, end of period$— $2,428 $— $2,428 

5.    Goodwill
The Company assesses recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable, such as a decline in stock price and market capitalization. Throughout the second half of 2019 and through the first quarter of 2020, the Company’s stock price experienced high volatility, causing a decline in its enterprise market capitalization. During the first quarter of 2020, as a result of the global economic disruption and uncertainty due to the COVID-19 pandemic, along with the Company’s announcement that it had entered into a short-term agreement to extend its partnership with USAA Federal Savings Bank to continue to power the USAA Car Buying Service through September 30, 2020, the Company concluded a triggering event had occurred. In light of these two factors, the Company performed an interim quantitative impairment test as of March 31, 2020, in which the Company estimated the fair value of its single reporting unit by utilizing an income approach which uses a discounted cash flow (“DCF”) analysis. The Company has previously used an implied market value approach. Given the high degree of market volatility and lack of reliable market data as of March 31, 2020, the Company determined that a discounted cash flow model (income approach) provided the best approximation of fair value. Determining fair value requires the exercise of significant assumptions and judgments, which are considered Level 3 inputs under the fair value hierarchy, including the amount and timing of expected future cash flows, long-term growth rates and the discount rate. Based on the results of the interim impairment test, the Company concluded that the carrying value of its reporting unit was greater than the fair value and, accordingly, recognized a non-cash impairment charge of $10.2 million during the three months ended March 31, 2020, of which $1.9 million was included in discontinued operations.

15

6.    Property and Equipment, net
Property and equipment consisted of the following at September 30, 2021 and December 31, 2020 (in thousands):
 September 30, 2021December 31, 2020
Computer equipment, software, and internally developed software$74,197 $66,198 
Furniture and fixtures3,798 4,610 
Leasehold improvements15,664 15,727 
 93,659 86,535 
Less: Accumulated depreciation(74,404)(65,114)
Total property and equipment, net$19,255 $21,421 
Included in the table above are property and equipment of $1.8 million and $0.9 million at September 30, 2021 and December 31, 2020, respectively, which are capitalizable but had not yet been placed in service. These balances were comprised primarily of capitalized software not ready for its intended use.
Total depreciation and amortization expense of property and equipment was $3.4 million and $4.5 million for the three months ended September 30, 2021 and 2020, respectively. Total depreciation and amortization expense of property and equipment was $11.5 million and $13.5 million for the nine months ended September 30, 2021 and 2020, respectively.
Amortization of internal use capitalized software development costs was $3.0 million and $3.2 million for the three months ended September 30, 2021 and 2020, respectively. Amortization of internal use capitalized software development costs was $9.3 million and $9.6 million for the nine months ended September 30, 2021 and 2020, respectively.

7.    Credit Facility
February 2018 Amended Credit Facility
The Company is party to a third amended and restated loan and security agreement (as amended from time to time, the “Third Amended Credit Facility”) with a financial institution that provides for advances under a $35.0 million revolving line of credit. In February 2018, the Company entered into a first amendment to the Third Amended Credit Facility that, among other things, extended the expiration from February 18, 2018 to February 18, 2021. In December 2018, the Company entered into a second amendment to the Third Amended Credit Facility to make certain other revisions that did not alter the borrowing amounts, interest rates, or required ratios. In February 2021, the Company entered into a third amendment to the Third Amended Credit Facility to extend the expiration date to April 19, 2021 that did not alter the borrowing amounts, interest rates, or required ratios. The Third Amended Credit Facility provided a $10.0 million subfacility for the issuance of letters of credit and contained an increase option permitting the Company, subject to the lender’s consent, to increase the revolving credit facility by up to $15.0 million, to an aggregate maximum of $50.0 million.
April 2021 Amendment to Credit Facility
In April 2021, the Company entered into a fourth amendment to the Third Amended Credit Facility (the “Credit Facility”). The Credit Facility extends the maturity date to April 12, 2024. Similar to the third amended and restated loan and security agreement, the Credit Facility provides for advances under a $35.0 million revolving line of credit. The Credit Facility also provides for a $10.0 million subfacility for the issuance of letters of credit and contains an increase option permitting the Company, subject to the lender’s consent, to increase the revolving credit facility by up to $15.0 million to an aggregate maximum of $50.0 million.
The Credit Facility bears interest, at the Company’s option, at either (i) the prime rate published by The Wall Street Journal, plus a spread of -0.25% to 0.25%, or (ii) a LIBOR rate determined in accordance with the terms of the Credit Facility, plus a spread of 1.75% to 2.25%. In each case, the spread is based on the Company’s adjusted quick ratio, which is a ratio of the Company’s cash and cash equivalents plus net billed accounts receivable to current liabilities, excluding operating lease obligations, plus all obligations and liabilities to the financial institution including issued and outstanding letters of credit.
16

Interest is due and payable quarterly in arrears for prime rate loans and on the earlier of the last day of each quarter or the end of an interest period for LIBOR rate loans. The Company is also obligated to pay an unused revolving line facility fee of 0.00% to 0.15% per annum based on the Company’s adjusted quick ratio.
The Credit Facility requires the Company to maintain an adjusted quick ratio of at least 1.25 to 1.00 on the last day of each quarter. The Credit Facility also limits the Company’s ability to pay dividends.
The Company’s future material domestic subsidiaries are required, upon the lender’s request, to become co-borrowers under the Credit Facility. Additionally, the Credit Facility contains acceleration clauses that accelerate any borrowings in the event of default. The Company’s obligations and those of its future material domestic subsidiaries are collateralized by substantially all of their respective assets, subject to certain exceptions and limitations.
At September 30, 2021, the Company had no outstanding amounts under the Credit Facility and the amount available was $32.2 million, reduced for the letters of credit issued and outstanding under the subfacility of $2.8 million.

8.    Commitments and Contingencies
Reorganization
In May 2020, the Company committed to a restructuring plan (the “Restructuring Plan”) in furtherance of its efforts to enhance productivity and efficiency, preserve profitability and streamline its organizational structure to better align operations with its long-term commitment to providing an enhanced consumer experience. The majority of the restructuring costs liability was paid during the year ended December 31, 2020 with the remaining accrual reversed in 2021 upon the expiration of the unexercised health benefits. The Company does not expect to incur additional charges in future periods related to the Restructuring Plan.
The following table presents a roll forward of the restructuring costs liability for the nine months ended September 30, 2021 (in thousands):
Restructuring Costs Liability
Accrual at December 31, 2020$381 
Reversal of accrual(381)
Accrual at September 30, 2021$— 
Legal Proceedings
From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. The Company is not currently a party to any material legal proceedings, other than as described below.
Stockholder Litigation
Milbeck Federal Securities Litigation
In March 2018, Leon Milbeck filed a putative securities class action complaint against the Company in the U.S. District Court for the Central District of California (the “Milbeck Federal Securities Litigation”). On June 27, 2018, the court appointed the Oklahoma Police Pension and Retirement Fund as lead plaintiff, who filed an amended complaint on August 24, 2018. The amended complaint sought an award of unspecified damages, interest, attorney’s fees and equitable relief based on allegations that the defendants made false or misleading statements about our business, operations, prospects and performance during a purported class period of February 16, 2017 through November 6, 2017 in violation of Sections 10(b) and 20(a) of the
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Exchange Act and Rule 10b-5 promulgated thereunder, and that the defendants made actionable misstatements in violation of Section 11 of the Securities Act in connection with the Company’s secondary offering that occurred during the class period. The amended complaint named the Company, certain of its then-current and former officers and directors and the underwriters for its secondary offering as defendants. On October 31, 2018, the lead plaintiff dismissed the underwriters from the litigation “without prejudice,” meaning that they could be reinstated as defendants at a later time. On August 2, 2019, the parties entered into an agreement to settle the Milbeck Federal Securities Litigation on a class-wide basis for $28.25 million, all of which was paid by the Company’s directors’ and officers’ liability insurance, pursuant to which the court dismissed the case on May 26, 2020. As a result, the Milbeck Federal Securities Litigation is currently resolved.
Delaware Consolidated Derivative Litigation
In August 2019, three purported stockholder derivative actions were filed in Delaware alleging a variety of claims nominally on the Company’s behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation. The complaints named the Company, certain of its then-current and former directors and officers, USAA and, in one of the actions, certain entities affiliated with USAA and certain of our current and former directors as defendants. On October 7, 2019, the Delaware Court of Chancery consolidated the cases into a single action in that court bearing the caption In re TrueCar, Inc. Stockholder Derivative Litigation (the “Delaware Consolidated Derivative Litigation”). On November 6, 2019, the plaintiffs filed a consolidated complaint against all of the defendants named in the prior actions, asserting claims for breach of fiduciary duty, unjust enrichment, contribution and indemnification against the Company’s current and former officers and directors, and claims for aiding and abetting breaches of fiduciary duty against the entities affiliated with USAA and with certain of the Company’s current and former directors. The plaintiffs sought an award of damages against the defendants on behalf of the Company and various alleged corporate governance reforms. On December 19, 2019, the defendants filed motions to dismiss for failure to make a pre-suit demand. On September 30, 2020, the court dismissed the Delaware Consolidated Derivative Litigation with prejudice for failure to make a pre-suit demand and failure to state a claim and the plaintiffs did not appeal the ruling. As a result, the Delaware Consolidated Derivative Litigation is resolved. Following the court’s decision, the plaintiffs sent a letter to the Company demanding that it pursue claims against certain current and former officers for various alleged breaches of their fiduciary duties, based substantially on the same factual allegations as the Milbeck Federal Securities Litigation. On November 18, 2020, the Company’s Board of Directors (the “Board”) established a special committee of the Board (the “Special Committee”) to investigate the claims contained in the Delaware Consolidated Derivative Litigation, the Lee Derivative Litigation and other related stockholder demands. In October 2021, following the aforementioned investigation, the Board adopted the Special Committee’s recommendation that the Board refuse the demands in their entirety and conclude that no further action is necessary. The Company has not recorded an accrual related to this matter as of September 30, 2021 as the Company does not believe a loss is probable or reasonably estimable.
Lee Derivative Litigation
In December 2019, Sulgi Lee, a purported stockholder, filed a derivative action in the Delaware Court of Chancery (the “Lee Derivative Litigation”) alleging a variety of claims nominally on the Company’s behalf arising out of alleged breaches of fiduciary duty under Delaware law based upon substantially the same factual allegations as the Milbeck Federal Securities Litigation. The complaint named the Company, certain of its then-current and former directors and officers and USAA as defendants. The plaintiff seeks an award of damages against the defendants on the Company’s behalf and various alleged corporate governance reforms. On May 5, 2020, the court entered the parties’ stipulation to stay this litigation pending the outcome of the motions to dismiss in the Delaware Consolidated Derivative Litigation. Following the dismissal of the Delaware Consolidated Derivative Litigation, on December 22, 2020, the court entered the parties’ further stipulation to stay the Lee Derivative Litigation pending the outcome of the Special Committee’s investigation. Following the Board’s action on the Special Committee’s recommendation, which is described in greater detail above, the stay on the Lee Derivative Litigation was lifted, and we expect to move to dismiss the case if the plaintiff does not agree to do so voluntarily. The Company believes that the complaint is without merit, and should the litigation proceed, the Company intends to vigorously defend itself in this matter. The Company has not recorded an accrual related to this matter as of September 30, 2021 as the Company does not believe a loss is probable or reasonably estimable.
Trademark Litigation
On April 9, 2020, the Company was named as a defendant in a lawsuit filed by Six Star, Inc. (“Six Star”) in the U.S. District Court for the Middle District of Florida (the “Trademark Litigation”). The complaint in the Trademark Litigation alleged that the Company’s new “BUY SMARTER DRIVE HAPPIER” tagline infringed and diluted Six Star’s “BUY SMART BE HAPPY” trademark and included claims of false advertising and deceptive and unfair trade practices. The complaint sought injunctive relief in addition to certain monetary awards. On June 25, 2021, the parties entered into a settlement agreement
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pursuant to which the parties agreed to dismiss the Trademark Litigation in exchange for the Company agreeing not to use Six Star’s “BUY SMART BE HAPPY” trademark and to only use its own trademark in conjunction with the word “TrueCar.” The settlement agreement did not provide for either party to pay the other any amounts. On June 28, 2021, the court dismissed the Trademark Litigation pursuant to the settlement agreement. As a result, the Trademark Litigation is currently resolved.
Employment Contracts
The Company has entered into employment contracts with certain executives of the Company. Employment under these contracts is at-will employment. However, under the provisions of the contracts, the Company would incur severance obligations of up to twelve months of the executive’s annual base salary for certain events such as involuntary terminations.
Indemnifications
In the ordinary course of business, the Company may provide indemnities of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or intellectual property infringement claims made by third parties. While the Company’s future obligations under certain of these agreements may contain limitations on liability for indemnification, other agreements do not contain such limitations and under such agreements it is not possible to predict the maximum potential amount of future payments due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under such indemnities have not had a material effect on the Company’s business, financial condition, results of operations or cash flows. Additionally, the Company does not believe that any amounts that it may be required to pay under these indemnities in the future will be material to the Company’s business, financial position, results of operations, or cash flows. 

9.    Stock-based Awards
Stock Options
A summary of the Company’s stock option activity for the nine months ended September 30, 2021 is as follows:
 Number of
Options		Weighted-Average Exercise PriceWeighted-Average
Remaining
Contractual Life
   (in years)
Outstanding at December 31, 202010,009,282 $9.58 5.1
Granted768,354 5.04  
Exercised(396,522)3.45  
Forfeited/expired(4,310,941)9.47  
Outstanding at September 30, 20216,070,173 $9.48 6.2
At September 30, 2021, total remaining stock-based compensation expense for unvested stock option awards was $4.7 million, which is expected to be recognized over a weighted-average period of 2.7 years. For the three months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense for stock option awards of $0.5 million and $1.3 million, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense for stock option awards of $3.1 million and $4.3 million, respectively.
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Restricted Stock Units
Activity in connection with restricted stock units is as follows for the nine months ended September 30, 2021:
 Number of
Shares		Weighted- Average Grant Date Fair Value
Non-vested — December 31, 20206,918,474 $4.63 
Granted5,446,058 4.76 
Vested(2,677,959)4.75 
Forfeited(1,865,570)4.56 
Non-vested — September 30, 20217,821,003 $4.69 
At September 30, 2021, total remaining stock-based compensation expense for non-vested restricted stock units was $32.6 million, which is expected to be recognized over a weighted-average period of 2.7 years. For the three months ended September 30, 2021 and 2020, the Company recorded $3.9 million and $4.3 million in stock-based compensation expense for restricted stock units, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense for restricted stock units of $12.9 million and $13.4 million, respectively.
Stock-based Compensation Cost
The Company recorded stock-based compensation cost relating to stock options and restricted stock units in the following categories on the accompanying condensed consolidated statements of comprehensive loss (in thousands):
 Three Months Ended
September 30,		Nine Months Ended September 30,
 2021202020212020
Cost of revenue$44 $108 $181 $463 
Sales and marketing1,271 1,816 5,742 6,256 
Technology and development1,098 1,185 3,445 3,730 
General and administrative2,037 2,498 6,624 7,183 
Total stock-based compensation expense4,450 5,607 15,992 17,632 
Amount capitalized to internal software use318 292 1,015 992 
Total stock-based compensation cost$4,768 $5,899 $17,007 $18,624 

10.    Income Taxes
In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss. The Company’s annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, tax amortization of goodwill and changes in the Company’s valuation allowance.

The Company recorded income tax benefit of less than $0.1 million and income tax expense of less than $0.1 million for the three months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded income tax expense of $0.2 million and income tax benefit of $0.1 million, respectively.

    There were no material changes to the Company’s unrecognized tax benefits in the nine months ended September 30, 2021, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. Due to the presence of net operating loss (“NOL”) carryforwards, all income tax years remain open for examination by the IRS and various state taxing authorities.

The Internal Revenue Code of 1986, as amended (the “IRC”), imposes substantial restrictions on the utilization of net operating losses and other tax attributes in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use pre-change net operating losses and research tax credits may be limited as prescribed under IRC Sections 382 and
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383. Events that may cause a limitation in the amount of net operating losses and credits that the Company uses in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The Company experienced a cumulative ownership change as of December 31, 2019. The Company estimates that up to $15.2 million and $0.5 million of federal and state net operating loss carryforwards, respectively, may expire unused. Accordingly, the Company recorded a reduction of deferred tax assets as of December 31, 2020 for the Section 382 limitation of $3.2 million which was fully offset by a corresponding decrease in its valuation allowance, with no net tax provision impact. Additionally, pending finalization of the 2011-2020 research and development tax credits study, the Company anticipates that certain federal research and development credit carryforwards may expire unused. Any write-off of these tax attributes would be fully offset by a corresponding decrease in the Company’s valuation allowance, with no net tax provision impact.


11.    Net (Loss) Income Per Share
The following table sets forth the computation of basic and diluted (loss) income per share (in thousands, except per share data):.
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2021202020212020
Net (loss) income$(6,836)$11,589 $(22,537)$(10,322)
(Loss) income from continuing operations$(7,044)$9,589 $(22,577)$(12,175)
Income from discontinued operations, net of taxes$208 $2,000 $40 $1,853 
Weighted average common shares outstanding, basic96,037 107,693 97,800 107,418 
Weighted average common shares outstanding, diluted96,037 110,011 97,800 107,418 
(Loss) income per share, basic
Continuing operations$(0.07)$0.09 $(0.23)$(0.11)
Discontinued operations$0.00 $0.02 $0.00 $0.02 
(Loss) income per share, diluted
Continuing operations$(0.07)$0.09 $(0.23)$(0.11)
Discontinued operations$0.00 $0.02 $0.00 $0.02 

The following table presents the number of anti-dilutive shares excluded from the calculation of diluted (loss) income per share at September 30, 2021 and 2020 (in thousands):
 September 30,
 20212020
Options to purchase common stock6,070 9,219 
Common stock warrants— 1,459 
Non-vested restricted stock unit awards7,821 3,234 
Total shares excluded from net loss per share