Related Party Transactions

9 Months Ended

Sep. 30, 2014

Related Party Transactions

Related Party Transactions

12.Related Party Transactions

Transactions with Stockholders

In October 2011, as part of the acquisition of ALG, the Company entered into various data licensing and transition services agreements with Dealertrack, a former significant stockholder of the Company. In the first quarter of 2014, Dealertrack divested its holdings in the Company and was no longer a related party. Costs under these agreements included in cost of revenue for the three months ended September 30, 2013 was $0.5 million. Costs under these agreements included in cost of revenue for the nine months ended September 30, 2014 and 2013 were $0.4 million and $1.7 million, respectively. Costs under these agreements included in sales and marketing expense for the three and nine months ended September 30, 2013 were $0.1 million and $0.3 million, respectively. No amounts were due to Dealertrack at December 31, 2013.

Notes Receivable from Related Parties

From 2007 to 2011, the Company issued notes to executives of the Company totaling $4.1 million of which $2.9 million were exchanged for cash and $1.2 million were in consideration for the purchase of common stock. The notes bore interest at rates between 1.2% and 6.0%. Principal and interest payments were due at maturity. The loans had maturity dates ranging from 2011 to 2016, and were primarily repaid in full by February 2014, with the exception of $0.3 million which has been partially reserved for by the Company, and the Company is pursuing collection. 

In June 2014, the Company advanced $60,000 to an employee. The note is due on December 31, 2014 at an interest rate of 3.5%. At September 30, 2014, the principal note receivable of $60,000 remained outstanding.

Service Provider

Beginning in October 2013, the Company hired an employee who also serves as an officer of a firm that was providing and continues to provide marketing services to the Company. For the three and nine months ended September 30, 2014, the Company recorded sales and marketing expense of $1.0 million and $2.6 million, respectively. At September 30, 2014, the Company recorded $1.4 million in prepaid expenses related to this marketing firm. There was no prepaid expense relating to this marketing firm at December 31, 2013. Additionally, the Company had amounts due to this marketing firm at December 31, 2013 of $0.3 million. No amounts were due to this marketing firm at September 30, 2014.

Transactions with USAA

USAA is the Company’s largest stockholder and most significant affinity marketing partner. The Company has entered into arrangements with USAA to operate their Auto Buying Program. The Company has amounts due from USAA at September 30, 2014 and December 31, 2013 of $0.8 million and $0.4 million, respectively. In addition, the Company has amounts due to USAA at September 30, 2014 and December 31, 2013 of $0.4 million and $1.2 million, respectively. The Company recorded sales and marketing expense of $5.7 million and $2.2million for the three months ended September 30, 2014 and 2013, respectively, related to service arrangements entered into with USAA, including non-cash expense associated with warrants to purchase shares of common stock (Note 8). For the nine months ended September 30, 2014 and 2013, the Company recorded sales and marketing expense of $11.9 million and $5.4 million, respectively.