AUTO - Earnings call transcript Q3 2021

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Operator

Good afternoon everyone, and thank you for participating in today's conference call to discuss AutoWeb's Financial Results for the Third Quarter ended September 30, 2021.

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, Cody Cree, with Gateway Investor Relations.

Following their remarks, we'll open the call for your questions. I would now like to turn the call over to Mr. Cree for some introductory comments.

Cody Cree

Daniel. you, Thank

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

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

Jared Rowe

afternoon, Good Cody. everybody. Thanks,

demand diminish Despite our constraints vehicle progress remains inventory which did to typically some really intent in which robust trends third during So automotive during consumer and from levels, metrics supply throughout we continue headwinds significant the us, solid but our really demonstrate click business our we seasonal that car experienced buyers. industry, in new to some strength year-over-year the transformation tended the make offset production QX, to quarter. growth among

to swiftly this product acquisition will foothold or which scale and CarZeus that help used within address our establish acquisition continue Mike We amp the talk our business. new integrate more in to vehicle demand the about resale segment, is vehicle

that finish. our given Now we vehicle completed believe enhancements acquisition for transactions and the foundation vehicle efficiencies customer and growing business built a platform start acquisition used to we've from strong us have driving

mean lots cars will visibility several supply conditions, levels. -- dealership doesn't of fell dealership the and models evolution control performance inventory immediately quarter demand context before by chain greater used microchip and this challenged last vehicle Rebounding not Now additional of including that surge. the These we among level. our by OEMs and over ease, levels to this begin new vehicle semiconductor provide along buying number and continue vehicle at dynamics. supply dealers car depth, which a Retail periods. some Intelligence Even and widespread state transformation of and have in limited during the new be me still created do has levels Individual today's year's first likely constraints estimating and chain discuss Bloomberg supply let that shortages, to constricting for their specific for OEMs shoppers normalize the overall dealers are when car backlogs vehicle in-market shortage. ongoing new will With availability. pandemic-related disruptions production and third and

Conversely, replenish the to need market St. for chain Louis first So data customers vehicle once waitlist the have spurred by sales, put increased ramping the January the beginning used will to to September. demand a from normalizes, XX% from fully own their car used Reserve approximately before these Labor the Automotive, of total we're Cox as in dealers risen proportion year-over-year used of We've fill already transaction. prices of our growth who new signed-up hampered conditions vehicle car the about environment and market down that at of deposits Data. U.S. have latest and of Department used the in according orders used urgency supply XX% parallel according have that car of percent evolution car lot. But SAR that and In is been transactions of the and SAR, or Federal driving the this business. XX% within and complement truck evolving conditions approximately to our industry new has they

of past shared experience, have over platform we've improved focused cycle core layering innovation transactions. a offerings ready provide phases more ultimately tailored functionality, components on business. our finance by platform, enhanced in vehicle as our buying improving strategy more the cars the helping for of their meaningfully complete retail way initial them years, our we've used consumer-facing such service to accelerated three vehicle the consumers in a and we've As really and sophisticated experience our our transformation We've

to into buyers. well-positioned used, of groundwork vehicle acquisition for use directly used to with scaling business, to place, in-market our our Now, in fulfilling becoming network the integrating an matches we cars phase this aim and car automotive next our digital of retailing progress begin we're matchmaker. and Through advantages resale

consumers, in we Now, advantage are identifying and an from to directly have we we believe and cars consumers. that, have retaining that in-market there of who suite expanding while dedicated resources an others buy established

consumer that inventory. through we optimal this acquisition party transaction Our acquisition evaluating dealers a to wholesale us Having can directly and retail of of positions an efficiencies provide which advantageous current audience participant disposing car dynamics of the in in phase, a the more with first the that proposition. and allowing acquiring into and for the business, with our you're comprehensive helped next market foundation transforms us that efficiency used party periods. first proven third-party customer fulfill the entire us capability consumers a value to demand an us their new additional it's stronger several and new from is the This and hear emerge leverage an very vehicle lot car market and to transaction going and build is one. challenges in ramping process from both to over audience a with awful sources vehicle support have something important matched us about both audience a monetization current talk in-market that Furthermore point

always Media media traditional most will Now, stay companies Company.

chosen. than market offerings. according is far which a offers platform traffic us to tailored our focusing media-only more evolve approach that's us transformation marketing flexibility The simply legacy business that to We believe the the than routes. that to can not our provide, contrast, and funnel $XX leads would our that business larger beyond By address by greater advertising players automotive we've allows billion addressable gives on about consumer our what for However, digital a acquiring to total path we larger market e-marketer. media

an In a business more levels efficiencies objectives Google integration on QX we've and estimated from the enter to work see, extremely The to our from same market Google traffic scaling the vehicle after quality within consumers service legacy vehicle leads fact, for as acquiring more runs progress Brian our Pasch's which accessing funded transformation platform $XXX we operational addressable active I'll you click dealer these commentary drives seeking to expanded directly shopper can market of business. execute than within Mike, value are business acquired tend growth generation total action our than vehicles to is, optimized that By substantially. provide scale, alone shoppers. drive intent car through in you. acquisition transforming and interactions leads a broader and research and September these that report to is of active have addressable SEM buyers matchmaker of capture to highly campaigns. SEM proud all But high audience performance. With best of leveraging marketing vehicle and our over transactional campaigns our relentless Mike business, financial greater approach, on our growing acquisition we is their found at have digital basic platform. for funded product and functions reason team's minded strategy targeted, administrative expansive practices I'm our as total we Pasch approximately concentrated and the leverage billion. Enterprises efficient our marketing detailed and the a our consumer infrastructure dealer

Michael Sadowski

afternoon, you, everyone. good Thank and Jared,

Before I to of new get I discuss wanted additions into our the some to financials. the financial presentation results,

the and in of enhance new out our Reporting", digital AutoWeb. resale. CarZeus segments add and under latest of the filing. digital operates our more is clarity in [ph] business involved out legacy following business we'll break heading the acquisition new used our previously brand. to leads and opportunities. automotive financial and business launched the vehicles detailed of acquisition to legacy to in under we expert a in segments. for and segment segment business revenue information how key and audience result resale are in certain and of reported the advertising, assets a "Segment our early our a QX, segment XX-Q entity provides this new XX-Q including consolidated in And legal our will Inc. CarZeus used a break acquisition This around our segment loaded two and two to we for but financial business vehicle set information similar information segment trading our in This the information new that streams information connect fully the also is of to manner These associated includes marketing, information of of of terms This business both We which results. As results,

the $XX.X the $XX.X quarter, of million automotive QX the quarter, primarily results. in due in industry. was third impact last supply from $XX.X million constraints revenues right to into Total jump across let's and Now in quarter million the down our year-ago

offset many supply kept these digital to QX. down And which manufacturers levels impacted these $XX.X in from $XX.X for our in vehicle million would benefits million we financial year-ago performance forced reduce quarter. million revenue, have totalled our typically for quarter QX and The challenges and seasonal see new primarily in automotive levels. in segment, effects Jared inventory production industry drastically As overriding mentioned, challenges the low $XX.X last marketing the

new first vehicle not offering as is historical and acquisition AutoWeb a QX, in for therefore, in this stream used and have this a the revenue Our in million which there quarter this segment comparable. we $X.X totalled revenue is resale

$XX.X QX digital down in segment the in and news $XX.X marketing our is which Within both quarter $XX.X million, the million automotive to lead last million totalled quarter. year-ago compared

to came basis, year-over-year QX down for which we our subscribing the overall down traffic in we also year-over-year maintain lead at on of in is our volume in retail Solution. Total value retail testament count were able sequentially both the down QX, believe the CNR from X,XXX While to quarter. and were and from X,XXX lead dealers capacity a X,XXX dealers, dealer slightly and year-ago

robust revenues moving million to in but third $X.X the advertising a representing year-ago to click growth our result we're digital traffic seeing compared clients quarter, all digital product the $X.X The that us. a drive on X% growing In their able the consumer Within expanding year-over-year advertising in Now showing revenue indicates targeted and demand million QX million benefit our within generating in with seeing in increase delivered And XX% marketing and we're our came consumer of that our digital of automotive audiences the growth and remaining are basis remains compared to a overall both clicks click XX% the of revenue, our QX click click among advertising they're sequential the to to quarter. us flat demand revenue. across The we're good million in in at that $X.X digital and active and shoppers. car with -- million segment. $X.X year-over-year positive year-ago respectively. $X.X volumes both metrics solutions, of quarter, from programs was and click

$X.X and year-ago profit our million, was profit gross $X.X which in last quarter. was both gross line, $X.X down the to third consolidated quarter million turning million from the quarter, Now

XX.X%. the was both from down constraints quarter Third industry-wide at quarter came XX.X% supply from XX.X%, last leads the year-ago gross quarter. by which and our decreases in The also primarily impacting were used margin in offering XX.X% driven QX. segment margin I lower $X.X that contributed with sales automotive and of with marketing The adding business gross profit a exchange in the earlier, million margin mentioned in digital gross percentage mix vehicle

contributed million acquisition with used Our gross profit percentage in of gross vehicle and a resale $X.X X.X%. margin segment

had loss compared the in the Consolidated and of for percentage per of that In legacy our million an cars we gross million scaling $X.X and our segment to share, With operating expenses and the was $X.X negative million per the includes the the quarter will Credit. our only loss we net be and margin $X quarter used others when in that segment. a make of the cash, segment, $X.X the gross XXXX, inventory in a positive disciplined $X.X in marketing line. loss driven credit as our among in a of QX facility our vehicle In negative incremental third the quarters. both a initiatives. third on the to in our amendments of equivalents profit stood and segment, million XX, used to of Consolidated intent or of quarter. with compared vehicle growth and resale Adjusted credit year-ago quarter million overall lower This or quarter cash lower integration, management $X.XX of XXXX. related addition than of have $X.X of acquisition maintained cash compared balance [ph]. million Decrease year-ago September we per used business loss our share the progress compared automotive $X.X $XX.X on restricted $X.XX million and earlier. was last million million to rescale acquisition or approach a we digital facility prior million both we to share revolving QX, XX, net facility million marketing the up to auto $X.X to and cost operation came to had our expect our digital completed Northbridge at At third XXXX, acquire loss or to resale, outstanding year-ago enabled XX, $XX.X primarily negative I an September quarter. with at discussed credit by EBITDA levels $X.XX December last $X.X at million million, quarter, At CIT $XX.X $XX.X we utilization in

and As us of acquisition noted earlier gross not but this profit the resale growth we call, margin will it segment vehicle believe gross help our may maximize dollars. in used our percentages, our expand

we our operate. as in efficiency to a our and a customers past management, we've the automotive to the three through operational years, our Over turnaround navigated proven pandemic and strategic both challenge commitment we've diligent company cost continues industry and that

strategy, of Jared? and in used phase our both concludes acquisition As of resale we suite our Jared move business, resources and operational into remarks, the our to back this plan continue This to updates. next acquisition structure efficiently built our we have leveraging and vehicle build transformation growth cost it this I'll turn platform. over upon for and capabilities we already consumer our and to prepared into additional comprehensive grow my

Jared Rowe

Thanks Mike.

the we acquisition on early acquisition today's since, call, some CarZeus in vehicle scaling provide we like about progress detail conclude the before completed brand segment our while used the XX. under So I'd to our additional resale with July

and The an third end of the sold of we XXX those quarter, by with the the an per have average of vehicles XXX carried $XX,XXX sold XX, just consumers a So $X,XXX. quarter average vehicles under by purchased from of vehicles. unit we selling profit of gross end as the September price of

our gross gross that seeks Now generate approach end as profit here described, maximize Mike sales last range to just higher provided quarter. of margin the we is But we the our overall. vehicle on the to dollars

time. gross we gross scope percentage to layering to grow overall sales we the top-line the we optimizations and of initial first early revenue platform do expect began may our in the work car of dollars get in used as as While margin increase and profit focusing business August smaller cars After the acquisition set September, the volumes, transition business on in and scale over October. the some we geographic

So our of strategy. believe are I we across validates even just each noticeable these from metrics seeing improvements changes, we early the some which shared, that

up little we've business, really kind what completed to leads our a focused we quality the CarZeus So spend relevant on of main vehicle the legacy of to not quantity. with to tighten strongest base likelihood bit Texas, similar on San things the high Really most quality, transaction. a pinpoint marketing of done refocused Antonio, marketing leading with

represents Now, allowed business. from funnel business. up may leverage that in to really increase. basis tightened X% this of a this X.X% this efficiency, to we bit, We really in in more did that points us the is which October, our that purchase this XXX improved to what efficiency the And counterintuitive; operational think but conversion shows this rate exists bit really seem operating in was a this to drive spend lead marketing we and critical a some September

results to purchase on conversion October impact. means I stage, this preliminary share lead our want business and of what are for in financial while Now focus do at terms operational to that unaudited potential

So XX% during approximately October, increased purchased the number of vehicles month-over-month. we

our So we the at is We're and to price vehicles, last approximately has and business helps but vehicles margin revenue, work transform comprehensiveness already us sold the we've of just The for focused we're to of drive well we've bought those units it XX and is period, end resale our little X% we we dollar margin same sold approximately acquisition in us that a an to of resale overall like seek and reasonable more about, the line dollars. on on we're $XX,XXX platform. that gross more within of in provided on of to going focus generating These for higher vehicle vehicles think the drive ultimately, improved range provided importantly We the Again, or really continue our the really range generation. marketing a quarter. attractive gross volume which operations helps real you XX us margin really gross average previously talked top-line efficiency percentages. margin legacy But our with that profit product done XX%. going to of that. percentage, over

we're we're of segment. a building what as digital those them doing purchasing is developed deploying resale in marketer support resources leveraging strengths the we've the Now on and business that by and vehicle

we're In a adjacent its in San which Antonio, Antonio. to that's in our already San addition, beyond expand CarZeus already base as is to Austin, commenced market initial we've efforts active

the focus the supplement to Austin have we that location We're leveraging plan point. do by But our and high plan inspections we maintained support serve leads as acquire. Over additional local intent enter. existing for time, initial source our launch buyers we to to our the in Now we we customer cost other keeping vehicle inventory our that Austin presence within to to Austin, all-virtual. foothold database market markets on efficiency an in-person to establish we virtual replicate this approach with in across touch entry expect as vehicle the an

to facilitated Again, to need supply dealers and we that these offering remain the concentrated customer their to directly auctions, to a matches retail-ready the vehicle We point, Texas digital desired platform matchmakers. a offering car in important incredibly shoppers make intent with, regionally growing acquisition efficiencies, matches, needed between via inventory platform it this matters expect and can or but transitioning that expand marketplaces in nationwide. of wholesale marketing navigate suite expansion this we from business cars serves we're have to used also an retailers in-market demand high We're already being allows transition sellers platform of start audience today's commodity believe with realization the of evolving that used to trends, vehicles. us step car can fulfill definitely providing our buying from consumers whether matchmaker connecting that Well, to strategy. because buyers to in the as another

need of that there of that first-party that third-party believe they And one collection audience we marketplaces are make also We the of only the mapping with monetization. efficiency transition to out have attributes.

today. what early while vision, have I'm in days extremely proud So the this accomplished we're still of we of

actually that platforms. the that our interesting we improve in first-party the for vehicle and and because well-positioned going our returns, repositioned performance committed to and that think more allow going to scale us the we in and provide the inventory automotive to of advantage and back when the scale is normalizes marketing to levels. grown with normal we're Our And we our again, be have buying will will when as exciting But strengthen shareholders of be mature, and strengthen back to it -- to inventory the business. market, used just optimizing to team matchmaking grow but not with able resale the be we which the really a going as not just monetization believe way value we customers we is capabilities we core market associated we're to far the and we product the market outperform we take comes think think

ready with that, questions. for we're think some So Operator? I

Operator

Thank [Operator Instructions]. you, sir.

comes with Our Gulani first question B. Riley Securities. from Aman

Your line is now open.

Aman Gulani

taking question for Hey here. guys, thanks my

the what you been little in and seeing going as sequential constraint So do car mean a pricing year? ease cars, to next there's marketplace pricing used sort are in into clearly for of October. supply bit soften I in But you maybe improvement expect like trends the a

Jared Rowe

In faster don't. Actually the Thank we question first October, I pricing. by actually way. retail you grew than the pricing wholesale the see. of half for as

see car to said, there's on to car car of disconnect the continue with pricing, pricing inventory disconnect not first of been like because the strong expecting going next catch-up I of strong, needs couple any a there I market. to wholesale retail you're side. being, a for Also, used used pricing you're couple of periods the and used a And year, the a come think back now. retail to bit what in the not in is meaningful in the way wholesale between new So -- real car really seeing with periods

Aman Gulani

into then you other markets? growth about you about into thinking junction? Got already helpful. think Austin. And it. Are we other expanded at mean, That's plans markets how I should this

Jared Rowe

are. We

us of licensed car Listen are. Texas. in we're dealer State a We the

focus current Texas in of terms expansion. so is And our

we're of other of into are next us of ones. start in markets and a well. about start support opportunity real markets two which Dallas, the you Houston. with bigger larger couple see you thinking markets markets just will Texas; as But smaller throughout are thinking other move business kind There's smaller Those this about in would far year. You those

We we to focused Texas with to intend So we the opportunity there right regionally be lot absolutely, now. stay side on But intend business. of this within growth-oriented the is of Texas. state just a think of

Aman Gulani

Got you about it. That's CreditIQ customer and helpful. have you you for fully Last have your question terms Then seen sort of last here. CreditIQ, me that maybe with takes into your integrated quarter, point puts then, talked engagement and platform what of platform? at in into this

Jared Rowe

our pay Yes, dealers, energy bit running. put have little where platform as dividends to so it have advantage integrated a We've really the Candidly, behind an been returns. car it's it with is of really more, little of a up is inventory we good. metrics traffic centric, got some we've overlap sit more platform I both do engagement reason that to integrated a bit bulk car and finance we right a though, and retail one, well our opportunities finance again, and that for that opportunity And do to now. of functioning, lot used it's which new it's of was as we the ability with running, Again, that. for up with way that But as talked more do returning, the we've growth right it we will expand the take transactions. our think inventory and it out. integrated, is there But investment specific inhibits there. CreditIQ we that the as like But also new to made on has there's support some got to for,

a reasons cars audience we not side. the that the participate on can the market, the can actively bit us of new benefit buying CarZeus used in one why on used it's in side, on you'll market buy and focus we again, really but the So car to leverage the because of sales more side, hear in car vehicle

Operator

you. Thank

Barrington Prestopino comes next Gary with from Our question Research.

open. now line Your is

Gary Prestopino

entity? as couple questions does by a pending I is have Yes. here. lead-generation acquisition with course Jared, relationship acquisition, tamper I of service of what of Cars.com the a Cars.com mean, this your basically will CreditIQ well?

Jared Rowe

Yes.

Gary about they're and perspective. you more they're about audience engagement from an talked and about, I audience So more

because So we audience be saw used says dealers is I to were around Number and partner I reach used couple we use good don't different bad think agreed. things. first and to can this says a car think a that I it technology on them it it think point your that that in-market one we actually that thing. good was a it's in ways. picked actually one

a they is far time CreditIQ. significant our have to I car understanding acquisition centric be it'll a of of and because have that strategic have thing they over ultimately, good audience more do used others, think we a new car partner a more and centric they with the Cars.com, that we're than relationships to initial audience intend continue support the

Gary Prestopino

here, across point they lack now board the that Okay. is because nothing Are are you turning off two in the or to to then just to the count. decline dealerships you it product ones see can the And you jumping one just just -- a dealers dealers really are continue right the specific that are point inventory, basically with to? dealer

Jared Rowe

Gary, [ph] we lowest with the Yes, October down, it's I've appetite across my lifetime. car XX-day the board, new units, XX, in leads what million jumped seen ever supply, X a basically in the for just

offsetting at to to if lower is, doesn't Listen; overall is gross volumes, seeing harvest dealer to are profitability, past because continue margin for years, ASPs of the there inventory come doing that. struggle to you're which really the couple they're to we talked continued increased line. least back, what them so outperform about, those the what we're allowing past just And is few periods, on going right do as

spend seeing on just So we're up in seeing what less advertising. your caught we're that. board, we're across to the And point, is dealers

digital just media Now, we network. the from we've our tough have It's to selling attrition for good we've we're environment in not because everything when dealers, feel most right that fact position they're MSRP of mass North about they pretty hit sell now a instances. this seeing in capacity to held; perspective a

Gary Prestopino

entity, selling understand from cars with consumers. that. And Are I Right, CarZeus the them the explain. you're dealers? I this you to in selling just understand then, could channel purchasing you or wholesale you cars the

Jared Rowe

both. do We

on is the traffic full point, some with of as to our flow them information. control do spent. with report, our existing provide they We a set with taken of team bring We from I the well condition We what in. we to team, marketing Once your get them then either sell individual peel some our provide with us to that We the it has place So we meaning it do it a we of channel, based marketing we send things to them. give buy traffic off cars the media or as auction, then buy marketing digital two an the based one range wholesaler consumers on they're valuation We it. that do with place apologize a it we appointment. dealer. us. in We car, wholesale the that directly we a or we

opportunity to placement. auction the we basically scale by the it, being the But do opportunity both on directly we as do to focused vehicles there more to We to We are place is there we think as time. auction sell these enhanced that the margin over So directly just is today, think majority than or of on time Gary. we direct them the that cars through selling the vast opposed more dealers, over wholesalers margin channel.

a little both. of we So do

Gary Prestopino

a thing But concerned where the channel there about? be consumers. cars is not I that's to be I another conflict guess directly you're would going to selling

Jared Rowe

No, No, no. not as today, we're we sit direct-to-consumer.

Operator

you. Thank

with Woo Our Ed comes question from Ascendiant. next

now is open. Your line

Ed Woo

for of question. to digital industry. your the compare this flipping who real through major competitors business, know even outside competitors into But cars? buying taking get you thanks mitigate money? Yes, risk estate or not decided burn it's fair do of to a to house just How you a just of the bunch week, my I company flipping

Jared Rowe

our can keep difference me last I turn bought right, our then is looked quickly. them, sale week. here, cars the so Yes, Ed. and one south Hi, the believe is, we Zillow, this. The sold they numbers at honest of I Mike was they them. time but a these Biden refurbish they Number in houses, market

selling buying we're and we're them So immediately. the almost cars

also We refurbish the vehicles. don't

we're sorry, in then is I'm wholesale from on buying selling market. buying directly doing wholesale them we're them what the So consumers, just and them the market,

So that and are month the car not What predicting really a we of then money of turn for as the want the business and in right. as business turning each value. future we is predicting we're Ideally, cars, of value, one two three Ed, current possible. to in the times fast

to difference in value, want value. don't hold car, harvesting the not that's don't We're not between is predicting as channel. and the refurbishing possible we just a in Zillow on we car. current fundamental the And We're as future predicting to then the humanly in us business. sit want what value So that wholesale doing. We're and fast

Ed Woo

a definitely That's good Great. explanation. very

So these to a cars flip you tend days? within of couple

Jared Rowe

we Mike. do? Yes, do What currently

Michael Sadowski

we're And buy average, between the than and -- collecting in less in Yes, weeks. sell. two it's the several weeks on

a turn multiple times that in us So reuse of very to cash Jared's well. allows turn collection yes, point cash a period. as on To that the that's fast

Ed Woo

And it big calculation a is actual the calls? their of judgment it make or just people who is prices box,

Jared Rowe

down San calls team a put we it. So Antonio judgment on makes that in

experience vehicle as can pricing. lot development well. team algorithmic you that's in imagine, as And also has this approaches We a of in to

range, Think certain right. Toyota range. it's vehicles, interaction. have commodity trade a like approach, vehicles, a tight to is which human get why these broader when tend that. you Altima, think And we so those a very in you always in about fairly have trade, always Think, Those things human a range that and within types Corolla, and blended vehicles which into because they trucks there of Nissan tight algorithmic they processes, are trade

So time. it is from very good in of approach a bit past scale. lives, again has a these enhance that this over team much a we of intend to running experience kinds at businesses And blended

Ed Woo

I on going cruise I don't -- robot control, thoughts good. think That's to it you have

Jared Rowe

no. no, no, No, No, no.

Ed Woo

question. Thank you luck. my I for you wish guys answering And good

Jared Rowe

Thanks, Ed.

Ed Woo

you. Thank

Michael Sadowski

you. Thank

Operator

Thank you.

Goldfarb Capital. Bruce with question comes next Lake Our from Street

is open. line now Your

Bruce Goldfarb

you you Hi challenges call. for sellers? Question are -- with CarZeus. the used there audience thank in car gaining my guys, about any taking Are

Jared Rowe

we've no, is Bruce gives think we could that you, in got that's us think with chat No, this audience, to what market right. no, right win the you the

meaning So those them month. in an we actually to of the industry consumer offer other consumers that of we've in out got, you alternative of XX% of we're from us very do a on, the unbundle taught leads for an something the period we do And the Over and have very, coming pride lot to car getting still method are a Number things couple generating some an consumers we several get we to we what are in by A way. is of that's in based, your vehicle time. A a friendly And vehicle opportunity XXX,XXX those appointment that ourselves being of overall. differentiates convenience inspected. will trade. and new They're is looking one transaction. the competitors. unbundle allotted it transaction

with you lot can there. check different the than competitors The out a that's second walk is thing out we do a that of day,

money. to have may wait You for your

is check. time, So we that we are my me in, being world in on centric, we to their it the specific needs, help leverage out is process this consumer am the with like going answer get very understand leave keys to for going the what when car without a We to the And our a And of like. and in position fact purpose. reasonable being And like me markets, that which can get focused very we this me meeting audience like look yes. our I leave have. amount in I

Bruce Goldfarb

right. what with new about? purchase, decoupling talking you're car And you're Great. about That's a it talking

Jared Rowe

a school the decouple they Carvana about more dealers, the a been if Yes, vehicle vehicle There's overall, years; a CarMax, it will for of leverage yes, consumer right. Vroom thought yes, components of transaction, from have in transaction right? the sales uncouple

don't don't acquired of directly used of sub XX% car Some fairly as dealers this been their inventory, their Dealer on they there -- still have most get inventory well. focused have out from consumers.

unbundling consumer And out, our leave are and check, which the now. with worn actually with different transaction very them getting that focused is them interaction. is just and so a appropriately, this tailing in a whole We little kind well again having of and on along expectations very competitors. Setting wind, of than concept of some the

Bruce Goldfarb

there's sounds you people And have this. gotten have It But you any any? pushback also other like gotten doing from dealers?

Jared Rowe

of No, alternate them. because we're No, because source an not. inventory for we're

direct put these the these them from wholesale means still from used channels to from wholesale channels, trade-ins, day into consumers market We auctions. and and in are of buy bulk the the in car comes for inventory terms of dealer's this we vehicles, which we the comes vehicles comes not consumer selling sales, from and

is otherwise doing providing that opportunities inventory we're get an what with to access not they to So see. this may them

Bruce Goldfarb

my inventory I barriers It's now see sounds and last then it But I as so quickly. normalize? guess do ramp, like you probably anticipate. ramp do And mean, turning this you is, challenges a financing as as not a question any you're you the things factor. business you

Jared Rowe

about as we'll I all quick And Bruce. you we've over as do, money models, a well listen, we've and the to risk fast. turn very and how controlled we low risk, extend continue frankly, capabilities. But the the model, got turn to money. quite time, No, a have got our It's financing risk

that no. don't that'll we impediment think an growth. don't be no, So We to

Bruce Goldfarb

Great.

Jared Rowe

breakage are doing of this. acquisition Bruce them which with keep they I What lot as happened to because that it too pretty markets. money [ph] at that secret from back, what makes but We've coming I effectively, and apologize. had audience those That's do. portfolio, we're for we always one our sauce. of a already the risk feeling folks have long difficult enter model which say as would right perspective, Again good is showing is is, more breaking new we're turning your can you're a keep folks other to But in breakage there fast, the cost a got that and we going managing that

access think to not challenge. capital to is we to Now going be -- going be

Bruce Goldfarb

it like things And as you and love really And this can this? move can looks, through and states this I you is scale Great. other Texas. bring sounds -- in this it

Jared Rowe

largest Yes, Texas is car country. in second the the market

You've got California, and Texas Florida.

inside also of that, the that excited we remarks, to sits excited we've because scaled got right. build We've about the national need into mentioned necessary we we're offering, So components Austin, in need Texas. San my about we're believe, we're two do support one, But as audience Austin. is opportunity outside to have we Antonio, we're prepared of in what We're a the we in what yes, could because got to operational do we extending now, underneath I it.

any feet we're also here. to under this move -- let not our to we're intend on going grow So We not aggressively side. moss fairly

Bruce Goldfarb

on unfolds. Congrats to Great, look you. forward this the I seeing thank how And Thank you. progress.

Jared Rowe

you. Thank

Operator

now At Rowe you. like time, this Mr. this the our back Thank I turn call over concludes session. remarks. to question-and-answer for would closing to

Jared Rowe

We forward Well, right. I will you with to you soon. everybody. couple say call. of all We to just like again to joining All the right. a speaking just things, I thank reiterate look you appreciate

headwinds industry some So out there for are there businesses like ours.

audience believe that business. third-party And thank great core we that the that the than managing also just a efficiency the business transform the I doing job in But for to is of And monetization, to able think doing want They're the a their looking doing works. business. job. I being team marketplaces. very first-party this team is core again, participate great monetization, strongly managing future to with of more

we've we the be grow And to next be over I and looking pieces this couldn't business the periods. so excited to that more continuing brought together really several together forward bringing to

I'm your support. time. thank just going your Appreciate that, to Appreciate you. say all with So

will again We talk soon.

Operator

teleconference. and does Ladies this gentlemen, today's conclude

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

AutoWeb (AUTO) 6 Nov 212021 Q3 Earnings call transcript