AUTO - Earnings call transcript Q4 2020

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Operator

Good afternoon and thank you for participating in today's conference call to discuss AutoWeb's Financial Results for the Fourth Quarter and Full Year Ended December 31st, 2020.

Joining us today are AutoWeb's President and CEO, Jared Rowe; the company's CFO, Michael Sadowski; and the company's outside Investor Relations Adviser, Sean Mansouri with Gateway Investor Relations.

Following their remarks we will open the call for your questions. I would now like to turn the call over to Mr. Mansouri for some introductory comments.

Sean Mansouri

you. Thank

future Jared, session, that historical intent statements any statements introduce including today's facts or remind financial projections, question-and-answer future the that regarding belief I are I statements during you call including performance forward-looking Before or or of in events, are contained what results public implied and the filings or statements disclaimers SEC. covered is may release statements. press Actual the by today's are and differ with from materially and expressed Harbor outcomes forward-looking these Safe in the by not company's

the are release company's regarding condition investors to refer that Specifically, of by I'll over by non-GAAP adjusted most financial as made the was well XXst, the filed those reconciliation today's cause please materially measure measure why Jared. posted measure non-GAAP ended that website. which of filings that other could differ as disclosing turn will AutoWeb on financial provides the note also to that, for company with company's a operations factors Form to XXXX, forward-looking Please call as results year With the included XX-K and that is this information SEC EBITDA. company's to prior from EBITDA call this during management financial adjusted press management and reasons in SEC useful this the comparable the GAAP to be believes directly A to time-to-time. Regulation December defined the statement a from results filings These is disclosing statements. This identify G. call

Jared Rowe

good priorities the progress afternoon fourth and quarter. Well, everybody. you, excellent strategic we during on our Thank made Sean

despite resulted both XXXX. resulted highest and in acquisition material and COVID-XX quarter net gross which on operations continued for year-over-year drove adjusted and fourth positive Our And flow improvement headwinds in margin gross operational traffic EBITDA quarter continued since year our throughout cash EBITDA we calendar from in XXXX. the effective industry, our efficiencies profit and both levels adjusted focus loss for

delivered strong short, in really we quarter. So, another

sales with Full since OEM is supporting in point of lowest they for and our levels expected not condition improving, buying below recovery. our process. our our industry trends year inventory automotive has this their have are resilient really Now, atypical conditions still industry team XXXX in dealer prepare the and stabilization partners evolving been XXXX hitting as challenged XXXX, that the well impacted later these while they're and This atypical -- are levels. long-term until vehicle

capabilities the with managed state profitability. allows acquisition better traffic it match and have was them, our volume retailing consumers well-positioned align XXXX, our offerings in lead we needs to Since digital our demand seek retailing of intentionally QX the QX media manage for The the of closely dealers. consumer down to us benefits approach by with overall our of managed pandemic, to we're market. click we of this the digital more true their spend and as and expand down evolving optimize to further of dealers that XX%. onset believe quality XXXX help As the From lead is the changing buyers

than QX QX, our doubled. indicates that sales from to time rates close Now, data same same-store during period, more

improved for So, has which supports as you generated better further our clicks a can and leads our network, the see business positioning. for strategic better profile quality we've and margin

only today, on of tomorrow. growing as to the the to dealers that transactional offerings matchmaking equipped scale. buyers needs at reposition operations, technology, are AutoWeb to investments we have and an really of automotive helping We're that improve platform are our improve our and strategic also that's focused the not marketing but ensuring integrated our consumer Now, products our digital made improve address

the core improvements the at been as partnerships well them. established this of has key to Now, as our support we've operational goal

digital elevate proud strategic has and of tirelessly that to bolster we commenting financial operational greater going initiatives, have to than the GameWorks on about through two marketing discuss progress But, and and to of our decades industry strategic throughout extremely worked I'll of team to Mike made depth. Sadowski, financial to who's look automotive, foundation brings AutoWeb's XXXX. CFO, to like Our experience be stay and from Electric. companies operational have briefly the introduce plans XXXX digital capabilities like our car-buying I'm marketing momentum to performance evolving Automotive, and on our ahead Cox the analytics Mike performance and remainder continuing before but our in dynamics. today's and General forward further, new our shortly more of in I'd discuss more

While I'm and and an at opportunity together Autotrader for work the he timing finance our Cox Automotive, for to led I'd and of our joined aligned variety for Dealer.com. and again, Mike for Kelley were thrilled a colleagues function Cox, operational time he together and at hope Blue Book, that I team. After

it during We our as Hannan that to contributions his to through year a innovation turn a transformation and are I'll through walk focus with and organization. board to made philosophy grateful CFO really Mike since for of continue years now full to shares approach Mike? very lean on excited he results. AutoWeb. our over Mike profitable QX two J.P. running XXXX on the growth product And our we're and high-performing

Michael Sadowski

afternoon, be on good to and the pleasure today, such a time. call It's Jared, a to and everyone. AutoWeb be at pivotal joining you, Thank

was down in the we highlighted expected was slightly some Let's from million Total revenue. $XX.X normal jump with Previously, seasonality, of the million retail leads importance both and $XX.X quarter, also results. our ago year growing last $XX.X we fourth and down as QX quarter. right to channel click the our from quarter revenue million, for

to talk related the Now, those to areas. like performance critical I'd about

by capacity X%. count by lead X%, Our approximately dealer in our grow retail almost sequentially helped turn in retail grew QX which

$X.X performance. retail by had overall of XX% supported normal advertising of million, product overall million our to quarter. was growth of challenges While COVID-XX-related our during led It this as from The sequential highlighted the lead remain revenues, retail of of was improved ago is the industry is our recovery. Digital as continued in turn and $X.X the typically that as a with year which click in part sequential seasonality sequential period. This predominantly related, margin to X% the seasonality expected million. the $XX.X growth capacity, channel mix helped down combined line growth experienced lead revenue year-over-year in declines throughout well

line, click our we manage this true to volumes a spend the to and marketing most continued levels the lead for to both products which with mixes, top demand. keep The are appropriate strategy also more and have is benefits gross lower line our optimize market aligned our in believe proxy value We of performance. reflected profit of

gross to instance, down in up QX, For QX million. our profit managing X% was year-over-year XX% $X.X revenue while

endemic continued in our last channel as In continue higher-margin sell increase efficiencies we is distribution quarter improvement product traffic on click to quarter focused advertisers. and clicks acquisition margin in our in gross to down and due year-over-year as as to recovery which addition, a more fourth from well down was The driven endemic seasonality, at XX.X% near significant from came XX.X%, but the XX.X% by year-over-year XXXX. XX -- QX

negative million adjusted cost $X.X was disciplined ago. as quarter during year-over-year fourth to from There was expenses million past to due and We loss quarter, a negative from net continued loss of a is per $X.XX million down loss on improvement in significant share performance these the the year million the share see a which of last down This a loss a as which EBITDA our of positive to expected or per EBITDA approach the gross of as on $X.X in the to seasonality to million, or efforts quarter. consistency negative XX% our $X.X profit. to compared indicator quarter last $X.XX of an up adjusted per year operating of quarters Adjusted net quarter $X.X ago of quarter. were EBITDA plan and We million $X.XX result our several in share or net $X.X $X.X a focused $X.X management. reduce million compared significantly fourth the was

are a quarters the typically due year the dynamics. holidays sell-down and QX slowest to in and reminder, our industry model QX As

into seasonality this remained for beginning of So and year. in the play this the XXXX end us of through

December Our million compared adjusted $XX.X XXXX. of XX, quarter equivalents anticipate as At remains we cash, EBITDA, XXXX, until place million at cash seasonally to stronger levels commentary at a stood last these September XX, cash in restricted QX $XX.X and operating QX. and near-breakeven reach periods of we around

our profit cash consistent is focus We that and cost gross control strong efforts. throughout of on balance have a the growth year seen and result

At CIT approximately million a balance outstanding an of had of we also December XXXX. XX, on XX, had we subsequently $XX $X.X credit to $XX.X December loan, credit. million of revolving obligation our January of As forgiven PPP in of our million Northbridge related current

into to And be our so to forward. you're as sheet forward to we comfortable the XXXX. sheet balance balance and remain our liquidity off our move liquidity and coming managing that and improving We see moving committed continue going we costs overall with

results. X% of were to last expenses run revenue full million million about the as well from year down from Lead of and last Again is $X.X our quickly revenue, XXXX. was year. XXXX $XX.X ago a operating COVID-XX as million down levels in strategy the which from $XX.X these success total during our which as compared down to as in improving for in the XXXX profit digital revenue revenue million a down to XXXX last our of million increased at to approach $XX.X year compared opposed year is year. gross gross impacts to about and let's $XX.X lower about result In -- profit million continued gross profit advertising resilience focus increasing $XX.X through year million $XX.X total $XX.X $X.X million million focused XXXX operating while demonstrating Now was margins was

made to as control over several years While the at effort around a made around cost last COVID-XX already had AutoWeb. unrelated of controls XXXX cost here been substantial there efforts were is

our XXXX of the global generate in OpEx us middle efforts. These of in from those positive So a flow result what initiatives predominantly enabled improvements cash to Loss a were caution significantly. improved pandemic. XXXX are also multiyear

$X.XX to compared $XX.X of compared per or million $X.X adjusted a of or Adjusted share. XXXX. share loss EBITDA also negative million increased to positive a $X.X per for million XXXX loss net negative to EBITDA of an million $X.XX $X.X in loss So significantly

for have in year. the for tremendous quarter the We full profitability our year. has driving pandemic the challenges that Even fourth past made against posed both the improvements over progress and industry

our optimizing monitor Jared will our XXXX efficiency operational our further for our it on back we over and get in I'll to and operational conditions maintain advancing updates we and remarks ahead. continue financial and As to industry to strategic prepared additional my outlook. over our progress and This Jared? closely on organizational strong any intend -- focus color turn changes concludes

Jared Rowe

Mike. Thanks

as of line with we've challenges other The than restricted the difficulties So since harder opposed spend to advertising pandemic search-based has broader past over -- stated media the media demand. consumer and pandemic the have advertising year. onset COVID-XX-related search overall of the in hit automotive forms digital budgets

these had we've Now And recovery initiatives strategic business milestones we have to of some we our in overall. additional our I'm and of patterns the share the both pleased proactive to how throughout been and XXXX. value-oriented on responded

signing click improved of revenue So near-endemic retail for as dealer new a customers products our total result click and sequentially advertisers. we

non-endemic endemic We buyers. which to patterns in selling improvements our and plan also are These and also benefited focus for gross recovery to pricing maintain on margin. we buyers then near-endemic more clicks environment the experienced encouraging

talk when business. those somebody is course non-endemic affiliated the when groups our about product. reminder about about with say talking about I'm of talking three affiliated is not a with business. All automotive automotive business. of who's someone in who's endemic, what the I somebody I'm I'm I buy As endemic, of click When And about near the I'm who talking buyers talking automotive

is click of clicks dealers reflected attachment on done the that Now number purchase improve our of who rates further we've which clicks. also tracks the through our are work really lead product to our selling

of And was XXXX QX was QX And the attach XX%. Over In was rate QX XX%. it following the year X%. years, last improvements. of click three we've consistent of in it driven XXXX the XXXX

XX% leads bought in purchased QX, also XXXX So the of that dealers click.

very pleased progress. we're So with this

is there of to see As growth you there. can good bit still a go

demand well our I better during As demonstrates our as true in in align continue overall seeing our call, levels improvement mentioned for value the our beginning and capabilities retail traffic to as at the of fourth product are our to the spend mentioned I leads, further partners improvements the matchmaking dealer of quality. operate intentionally of strategy market. media of sequential at with count we our quarter the consumer acquisition lower the The that in as

Now shows that provide is which of how days, in XX OEM. really and affiliated we our reminder the fact, to our XX% of within ready and to happened data dealers buy value just AutoWeb's sales audience differentiated a is

their count likely retail choppy for the of we a really help times growth will funnel uncertainty. stability. higher characteristics remain as the Although recovery. -- toolkit Leads over for Leads retailer part great the term, long the validates us and do lower digital key and valuable near provide OEMs industry's that retail to term, long-term sales leads view dealer in offer believe them and preparation resource their these in that dealers the offer a margin as dealers of

advantages are across these capitalize we to on support that sales to continue partner our vehicle Now the base. can really growth

the we're capture ahead, to industry. focus our strong Looking best inherent on to the building opportunities that our are year continue the months optimization in we've over past will changes with that evolving the made we to progress and product the products shaping on

Now our through transaction-oriented as platform a the matching. use towards reminder, algorithmic highly of we're specialized facilitating gearing matchmaking

during these see we this vehicle needs I'm effectiveness, of we has With value we've we This the specific network. price considerably excited have this over to the continued us to and about made of buyers sellers operating last the product of are begun help and product looking take detailed and level improved to we not a very latter's XXXX possible comfortable final Sellers this liquidity lies From increasingly leverages receive. well consumers to optimal best strong As a preferences. with to of But growth. data former work value and unique commitment then from foundation organization, experiences key beginning and tailored proposition and and come direction. and capacity our to months, we the to nearly proud transformation. see we move months. partnerships to ads made the we're from process lean, an efficient, these digital a support of to beyond they as at who prospective the already of accomplished getting team digital understanding responding value last endeavors here equipped can business, first including meantime, XX Over time, strategically our and experiences they continue exceptionally geography automotive expand stopping I'm likelihood satisfy and investments and have that vehicle overall which easy in what XX essentially shopping rapidly profiles In our retail position customized strategic we increasing intelligent the progress When months, in even more with wish both progress satisfying experience preference-driven to where to parties' financially the formed buyers and enhance the are have we're shoppers inorganic we further the look but provide we partner positioned technological end provide their we'll these you ahead. can provide into consumers shopping expect have creates future not we and are we really world. last their to thereby best may long-term Across funnel. our more more embed over to and the evolutions, retail-ready profitable every conversion our product take from end, believe our just over on and today those specific matches components updates believe more equipped highly enhancements organic or purchase. long-term a steps for marketing, it's what the needs date. to vertical between and the list effective a our The the current mutually to XX meet

open So take with call it questions. going that can please over? now we're Operator, to for you the up

Operator

Gary first Our Instructions] [Operator go comes ahead. question with you. Research. Barrington Thank from Prestopino Please

Gary Prestopino

are Hey guys, doing? how you

Jared Rowe

How Yeah. We're well. you are doing? doing

Gary Prestopino

questions get you in take to the Mike A advertising call, of fine. up queue don't QX of more. the and a revenue for Just have here the lot want do couple other And on time I'll to jump but I advertising revenue click and display handy?

Michael Sadowski

I do.

Gary Prestopino

here you on this -- Could Okay. to us that you make public can call?

Michael Sadowski

we put out revenue. K we the that click do in as split normally what Well

So that is revenue that in disaggregate footnote.

Gary Prestopino

Okay.

Michael Sadowski

the XXXX that you digital here or I be are the It's hour less, that -- posted you tell inside advertising. an then looking -- can And in of million. about $XX.X but should clicks for

Gary Prestopino

advertising million revenue? click $XX.X of

Michael Sadowski

$XX.X Inside of Yes. million. that digital advertising

Gary Prestopino

Okay. just I'll check...

Michael Sadowski

total XXXX. for that's year And

Gary Prestopino

And you put fourth you didn't revenue of Okay. then quarter the quarter have in the you handy? – that did in click matrix your per Do numbers. that

Michael Sadowski

that to not have can get do I you but Gary. handy that we

Gary Prestopino

Okay. then And jump a let further somebody said, then as like just I'll questions. other I here. couple in things I some – And have

a good doing the managing You're business. job of

Jared margin has gross Your really improved.

forward that QX growth, QX in we we able and even to there? revenue next the year, are going hopefully go margin start XX%-plus I be QX, and getting some that level? to at mean As you keep of as

Jared Rowe

be had expect that able we're able little manage to very to volumes continue the to do that patterns going what Gary. historically we finding search bit We're going is we've done be to than we're do ways. One that our efficient. be to we're couple volume to in lower a a we going Yes, do new applied, – because it to of

that bit we that little Gary, to right? we perspective, the retail a mix So about down. of we On a us. year talked We've does intend a lead think right? capacity, that's expect this cost count and change the while. to overall, we manage growth margin clicks that we overall the for mix, per represents to a the dealer us of of continue Adding more for terms can in as that of percentage deal this some growth, to retail the from that top revenue escalate sequentially gross big terms in had of helps but That

heads characteristic the we're because that margin for different the of is And so retail retail lead characteristic side that an to than the out of build down as or just OEM us. know, you a wholesale business margin of fundamentally lead on

about good that do. feel we we So

Michael Sadowski

I million misquoted number. and about a on on here clicks clicks Gary, I click $X Jared, And total apologize $X.XX million The Okay. the quarter. it's was revenue $XX.X for that per for

that me $X.X the in So million $X Excuse Yes advertising $X.X should you. digital clicks. of million of is million help clicks.

Gary Prestopino

Okay. Thank you.

Michael Sadowski

Yes, you’ve got it.

Jared Rowe

about we target. that's low we – That's thinking mid-XXs. what But we're margin, are Gary when think to the our in the

Michael Sadowski

Yes.

Gary Prestopino

Perfect. Okay.

Operator

you. Thank

Our next come B. question from go Josh will ahead. Please with Nichols Riley.

Josh Nichols

out the What's as first look of If or try about think manage year? to type that kind the And see are cadence may for spend on the to fourth question the the largely Thanks I Great. during seasonally million XQ to volumes, potential and Lead since year-over-year and didn't I to seeing and for seasonally I want you here. the quarter. trajectory taking that the then for what's cadence profit quarter? continuing $X.X that how basis. play and typically for gross quarter you're through XQ my ask, of know stronger and periods? grow good though already the a first we're expectations slow. the

Jared Rowe

Yes.

Okay. me question. Well you. you follow for the to can then good start let Thank talking Mike and and

the is quarter, at there look we QX signaling like of in year. expense thing kind the expect only going last lot we're load of no is to that which a the So beginning the in said same QX

to QX essentially. everything already of on going about to a going it QX, you from done. the seasonally if then think savings economy. to to well. definitely on, QX number into you That's optimistic. QX, $X.X as and is on got trillion been when call than that's We've guiding still the we're flow we're the and QX stronger want QX QX, So quarter And that breakeven that top based that's pretty

done there matrix we in focused this So you'll volume, going up. because spend a see again, quality, the us at. really of period little same-store we're on and that of margin drive in to But something of is the of a really terms that quality have a media of lead. our lot work not to proud And be the proud the sniffed bit over is be quarter margin sales right, lean fourth we've the rate, we're doubling

how focused a this not into run just many to on we're to number. really do going as stacking gaudy the revenue gross just we top just not we're everything drive that as how business and going in thoughtful continue is know up So the back possible, volume chasing line business going be forward. to margin dollars That's humanly we

Josh Nichols

Thanks the I And I've color, you ask assumed. mention to then Yes. obviously did for going was there.

softening right terms You'd Middle car probably uptick that an of as also levels? from in are used Any well? have business your or America with on new the start what to go out you impact firming see seeing can an as prices and to expected far Also of soon. dealer stimulus that's as type inventory

Jared Rowe

that things Yes. We're of going on. bubble -- seeing a couple of

with used they in haven't now a from lot historical. inventory right capacity and pricing. they continue this to shutdown for relatively week stepped for And while sitting also about you've leaned incentive model level, with in make had new they certain got they that they're little the combinations. how levels several is hard QX the in of last to going car industry I bit don't to you're than lower is than because carry a to with to it a GM in it you're announced least it continued OEMs an the be of it So better how car really bit at because used what they and have got car have just haven't And and microchip. continuing was compared strengthening And talked issues microchip. because in was tight think seeing seeing of with expects Because inventory still tighter QX sales on to it's months. XXXX, of

expect strengthen. So out see talk it's is. new do car expect used car we be gets we also but pricing when later all about to to speculation, We worth see we to to think cars see that used but you what continue supply very And strong, in then the it do expect continue take it's to sorted the year. for

vaccination got As of increase, think put $X.X market savings $X.X that that's in you've it you've somewhat aside the be rates what got but plus trillion going trillion call been little $X.X trillion, this frothy We incremental to second could over we half, a inventory the are top. constrained. be

Some that there year demand because meet look thinking going won't enough enough folks the last SAAR new be of but production. taking below be for because supply it $XX the year won't midyear, at you've projecting there not again car who million be are to because are there, shutdowns got of the a we're simply out to

top that time means folks is going with a used income used and buy to have to fleet issue the vehicles. companies car, tightening wanting and some coming And think a listen same you've you're are right? to essentially not be have the about and of anytime going strengthening you disposable chip overall the one think pricing you apologize at got in answer I car in a I'll last that the last car of year, tend supply sales, just with say of soon, reason got the bit car. you the issues for used they're and You've month earthquake. And two if which Japan used then meandering other strongest the five it's thing going de-fleeted and about when that Again, to to re-fleet year rental the April May car because the they're new is

the hits going So through feel to how financial about depending how their people it's be to on industry. how see security, it interesting and that money ripples

was So hopefully that helpful.

Josh Nichols

torch Thanks No. in the that. pass queue back here. I'll on for then or question the then And the last me for hop color

it's like the looks up. it seems -- on click revenue to and seen $X.XX analysis $X.XX like be You've per It click $X.XX. now to was going

trending If on about you as that could piece how think little the XXXX talk drivers you of the about and a see business? bit that we

Jared Rowe

Yes. Yes.

So start too. let there me

almost So digital things is, XX% overall, of ad spend look So XXXX from US ad search if all interesting right? one XX%. the are spend you at auto went these total eMarketer to about figures, XXXX, down

come Now digital expecting spending to eMarketer total XX%. back ad is automotive

basically of get XXXX. back that. Search the is levels inside XXXX is you So of expected reason because interesting end I is recover by tell to The not what's completely. to that spend

So is back are restructured. they're in flowing getting the happening what's dollars

dollars display dollars those more to go going seeing You're of video, into more mobile into sorts things.

to cost Now business. the again it good a lead end us, us bad and we're is helps per that's the mentioned arbitrage reason for basis that that's day, on I usher good right? On side because the at the of

So that. a like tailwind. That's we

dampening or search-like our is search characteristics. the is spend search-like with though products ad some doing It's product. and a a it's search thing click in other of really The display

not get seeing So product for the negatively the ones inside pull what saw for endemics. impact so back did with pullback we it the near-endemics. you're for search non-endemics and what you that's you for saw midyear was other pricing of But dealers, our that our Not pricing. click and

happening what's as and is non-endemic campaigns, Now are money some those near-endemic pricing. in that into back coming the seeing strengthening those online back in more strengthening we're of flowing the is dollars and

some see to strengthening there. expect we So more

which who our talk as less mentioned from the near-endemic Mike, too And many going about past a way because pricing the want calls manage of non-endemics how better we buy you sell be pricing I in to do click We to clicks. thinking tend on in. real a perspective our all volatile strengthening also selling impact at that buyers expect that forward? was and about to adds volatility is mix we're to they again by clicks non-endemic, endemic really because that our to pricing

Michael Sadowski

business Yeah. and right talked the I driving that last us like click that mean, come to that opportunity and from There couple consistent I maintain we're and retail really the would quarters holistically level clicks XXXX. together that is looking there that and about drive of aiding Jared near-endemics perspective. a per say throughout and holding that that is revenue

goal is quarters QX, several the is that what generate the we've of So part to next been since to able maintain QX.

Josh Nichols

crack else let I’ll someone guys. the ask Thanks question. and the take

Operator

you. Thank

Jacob question go Lake ahead. Steven next will Please [ph] come Our Street from with Capital.

Unidentified Analyst

behalf I'm here of Eric Martinuzzi. on

color up can on go wanted said know competitive you we in seeing Just on this that give you're but cost environment per your some color year, more guys lead. more that? to get the I some better you

Jared Rowe

of to the -- we're a expecting year, but durable. had it little we've the expecting gained And A bit our a -- is, report happy lead we cost is conversion want the of lead last periods several over We're have of that is of the through we per efficiency what really we've of our of On it one is good which per periods to the deployed durable. last rate Yeah. that say over portion that traffic questions campaign cost mobile some back changes mobile. I'm durable lot I manage us believe is to it because much of top improvement we lead new right? improved cost a of actually how by give per some made, helped ago big which deal is that because management down. XX% approaches, of is couple XX%, we to a of Remember our that

just mid-single it of at well-below to year, were back, do we expect while stay call year digits expect it where ago. throughout we the So a we to some it give

know something to of QX we that I can you than And year. of throughout of tell QX If of apologize mean, projecting remainder we we back. be give to -- for the you. I provide specific XXXX, higher to so go this QX But the you I back cost not of were year, considerably QX, publicly, most I with being what per more isn't is expect don't lead and we're that

to some in cost it margin the back and low better manage of really to the continuing volume expect improve of job mid-XXs. to then to business We a up-sell do in that hold and effectively characteristics that add cross-sell,

largest spend, right -- search get business. big our spend around in As we one think, to our this you that two know, all that cost is items of I

people and search got you've You've got spend.

and is effectively compared good for years to two where about a we managing we're where that we ago. lever just were feel really critical So us at

Unidentified Analyst

Great. Thanks.

feel Where So on? quarter. your terms there kind of something like else seasonality, do in is you is way, that might come of that strongest typically still or -- QX

Jared Rowe

No. No. way. We still feel the same

expect looking quarter lot we in XXXX, more in thing QX have So think to because and QX post-COVID for that, QX of QX when because drive the a margin seasonal now volumes years comp in what's because deployed and we're a of you've back, at year-over-year got to do to out able And after to market, year to think through we of scale were to a not because in bounce seen they not past the us going back to be it's volume this is that to excited give we that's the put we've characteristics a dollars been tough hold we a bounce roll that or gross we more but last of we're going going can had. all the tactics the prior able we're this be new of operational on that and pre-COVID because approach, like we in you've we that confidence have can margin the just going hold nice There to the right? is margin. But dollars we've world. we And because revenue where that quite too. frankly we're don't how want over-the-top it nice put to to years. in we've past as seasonal seen QX year, and QX in And it, QX some quarter expect a us of

excited we're So about pretty XXXX.

Unidentified Analyst

hear. to Good. That's good

You guys touched the on bit. stimulus a little

Just going wondering, to mean kind have of internal done if analysis guys there? what that's you for you guys on any

Jared Rowe

No. No.

on just an stimulus get smarter a in few but then they haven't And us are pretty a past what to positive the those And of done into when weeks, year. going about and just to who to folks say of they this the released portion not also I'm out. the over talking a It's to that good pretty is stuff dollars savings and pockets done all internal been next automotive analysis. going people's are expect lot We be dollars that. talking flow little than are incremental seem bit more I that's that, about

of You've trillion concerns due vaccination they people to that COVID some the past $X.X released created get have. disposable some of that estimates been into got that's we by income expect to economy the once get

some Automotive going going how ever the hard bit demand, million. prices projecting, there folks think to remind -- to said $XX over it's for who be going not I a but they I'll a to because there -- to new here meet mean Again, want simply I you, believe it's think up they're it's I out to talks be demand. I can't one because transaction thing are enough Cox just going earlier the $XX.X to we remember, tell be million. tailwind believe supply. Again of reminder, you last that -- we supply it's Again, going be one about $XX,XXX have is be but of for below a So cars. I prepped isn't there to the isn't you, us. just number, counterpoint And give I

the for you so, may not purchase hold start And a may is small isn't of spending a is supply lot until they if that mix that people and because right of wait kind mix supply when folks. right, the money,

Unidentified Analyst

in Great. Thanks. good I’ll hop back point. It’s line here. a

Jared Rowe

you. Thank

Operator

Thank you.

Woo from next Please go with Our question Ed Ascendiant. come will ahead.

Ed Woo

Congratulations. Yes.

used attempt the in going to car car refocus on Given car or used strength are the products? used guys you to business,

Jared Rowe

it We're opportunistic Ed. when Hey, to comes Yes. that.

talked I so, we've in calls. it And past think, about

it seen and of other a we've retailers, and nice I selling things car some will right, the to that One And the click reason growth consumers some of used used. mix will the folks. or and this new crush up, inside of say they you on go the is they lot franchise because, is traffic click see right, be whether

And so, endemic revenue some buyers. for buying it endemic line of those the price buyers strengthening used that buying for you're seeing And they're aren't car inside it click new traffic. traffic; car of just through is the

consumers with in pricing past from actually of lead, is ROI they submit one product done who like and readily but found characteristics found through evolved that our of we is, it. go this we've things And our we where that lead about VIN-specific a cars. that. engage that click of calls, to And talked traffic or real we those they buy present what we've we've the can the think partners real process, us, advertising, with maybe don't pictures who submit a pretty I

do So traffic We used but business, got as them a we product really think our needs wholesale natural they're to conversion we intend and nice, talked meet it's more through the needs say by not presenting and of car to but and about our into retailers options of pivot new funnel. both our is with leverage it, click intend really lead there. focus. as we natural What click it's our to pivot about, car consumers coming as used a not leads. it's big car used don't We've

Ed Woo

for color that Thanks luck. Great. good and

Jared Rowe

Thanks, Ed.

Operator

ahead. Please do have Prestopino Research. go Thank from question Gary a follow-up with you. And we Barrington

Gary Prestopino

Yes. A questions follow-up Jared. here, of more couple

growth the a little in mentioned about percentage your what said you was, didn't same-store you quite get in that Just, the your if nailed I that there. was percentage And that up narrative you quarter. bit? had Can leads talk even you just

Jared Rowe

yes. Yes,

have one franchise growth, things: right, did two So is overall. we

grew to clients X% So Okay. honest, believe keep quarter-over-quarter, was but we me it the number X% Michael X%, had right? -- of I

Michael Sadowski

Right.

Jared Rowe

a capacity XXX call from buy, our with is that, and Gary, they'll it on right, we've And product, that. we top the rate lead lead in lead we then dealer sell there capacity, essentially associated On bill leads. a get past about this to talked of quarters, grew a right? when them budget up

So really capacity and capacity saw because can sell capacity important, as that represents growth well. leads the quarter-over-quarter we total potential is we

we So point that's that another make.

to The was of we rate. close sell is, what them a can same the a store I you to what right, third sales. lead point doubled that tell we And we QX into What is, QX made dealer, turns from means percentage that. that

driven of. grow It of which And to channel the retail it a reward actually our improved and market So for over channel for proud us need XX continue that, understand we quality our then, our retail quality really we're that to absorb is build grow considerably or you right? months, critical. we we As lot. the and while just that but didn't takes capacity it product doubled Gary, of kind process, it consistently, our close And the product rate. keywords make incredibly it, last to fact search by happen is be all that a by we that what clear. just certain buy, to important is either, proud same-store That to the them, our filter the improved stuff really who to, we we close approach we're to that them optimize rate how send and

Gary Prestopino

Right. that. there a and dealers, kind And in is then, you have were at pulling the right? when I guess And the sequential – is would you increase all of back still you question, said, I look

are that better, dealers? the to what close Was rates the attribute you that point are increase or… So fact specific that the things in that you getting it can can to

Jared Rowe

it. of part That's

retail And periods, this we've I the in too of activities about day, retail I'm I'm a is several Gary, retail it's believer – happy stops have. some last that a more couple periods much volatility talked more management. a our of are efforts. a seen our the our to to our – disciplined and calls, are other had years, about talked rebuild selling we've much And selling and in market approach. of much outcome had sales We those past at this how seen be – is sales in We've retail right? that, really The motion. there. delivering predictable bit piece over several for our think, and starts last the the better of incorporated sales really the approach, a go it, which little the is outcomes. around past from And to What though less and we've in process end we've occurring are that the much listen, approach terms past about we've go-to-market consistent our discipline motion about report big over and

So to on keep grinding We're there. we're to chopping keep that. going going wood

in ground, side We the outcomes, terms of and there well a And is selling mix. that but just you the and thing is between on it's something, activities, the that not seeing the that rate our as I Gary, wrestled retail top of just will sales of haven't gross connection we're our what churn side, it. completely to tell as it's

because they're motion deploy looking also you as has It's the too, the It's onboard client. product. rate a that times client, up. think you our selling how with So at we're to going the how product. about price It's and how you present do it's we this, manage attach That once you how the many on-boarded. product you present the It's product. how

green that, not All really wanted of the been deliver others there of are been the tell business helping ground we're three we're servicing frankly seeing some periods, that where us on that this is shoots think – as we've for ahead I trying to you we've again over few to area wanted motion wrapped be. years. up far selling and as to that's wrestle last and quite And I've I – the open that in an is that not We're it. what we behind. I would you is been But real where with

Gary Prestopino

much. so That you Thank right. do should me. All Okay. it for

Jared Rowe

Gary. Thanks,

Operator

would turn Thank closing And this Jared to over any showing I'm Rowe the the Mr. like at further questions remarks. now back I in queue you. call speakers, time. no for to

Jared Rowe

has is Well, the Getting this positive trying of team. member global small done. start adjusted and EBITDA no to thank has by a team thanking this for I'm businesses, of be bit This you, in pandemic a middle team, flow everybody. feat. but cash a a proud the to positive, that AutoWeb of incredibly I'm proud going work of to been most the incredibly year back

work. quite be will you who's else, call, everybody the to to to their also, results. great speaking the next on QX for you We And all thank earnings thank team we these report you this love which call. So and AutoWeb frankly, joined forward conversations, with and look of

you. then, we'll until be all take and care Thank you soon. talk safe So to

Operator

concludes and today's this Ladies teleconference. gentlemen,

You your participation. may disconnect your lines at this time. for you Thank

AutoWeb (AUTO) 12 Mar 212020 Q4 Earnings call transcript