CDK - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the CDK Third Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Julie Schlueter, CDK Global, Inc.'s Director of Investor Relations. Thank you. Please go ahead ma'am.

Julie Schlueter

afternoon. good and you Thank I'd like XXXX third fiscal to welcome call. you earnings CDK's quarter to

Joining today's remotely Joe me on Tautges. and Brian CFO, Krzanich call are CEO,

which discussing on Throughout provide which business, more Joe recent and third as the continuing will presented call, classified the include completion be details was for today's operations digital about we during only, of will held do quarter marketing as not the operations. our amounts sale discontinued are non-GAAP all the press references in in to Reconciliations of Relations available the adjusted adjusted this the are sale. Unless of section amounts basis. our otherwise noted, most financial directly are afternoon's a amounts to website. Investor and comparable release GAAP included

SEC, remind forth filings forward-looking which call that this set ongoing statements available everyone statements. These impact those could during the made results as will pandemic tomorrow. finally, risks COVID-XX materially forward-looking XX-Q detailed to from and including conference involve actual remarks cause we will in our of I'd anticipate in be uncertainties our Form the contain like with that to the And statements. differ the

our remarks. circumstances, during but website investors like occasionally investor any not are at this IR that everyone that engage referencing outreach remind to we be our earnings time, current planning on by an the we Given presentation to we continue I'd will will face-to-face with phone. provided we've

With turn Brian. that, call it my is pleasure to to the over

Brian Krzanich

Julie. Thank you,

during of this Joe call to but quarterly unprecedented dealers, I'd and support like I'd the results, and to whom help efforts many really leave of crisis. are healthy colleagues to customers small update that safe things you, quarter do the of all proud like businesses. I extremely that to CDK's and your disruption. my during and start our on right our up are are COVID-XX our our financial with skip for doing hope begin to and families this and our this medium-sized normally the I'm expressing by to We part situation. right stepped of time

provided time. Not support in COVID Force we've to only of March for distancing the navigate have regularly sell of free them DMS, provide to employees bays. who social to week launched but and products we've to our to help the in offered our and Task the meeting been connect remotely software, more we action customers immediately our of best dealers to We our discounted vehicles, to virtually assist safety to and this during course ensure service their and first

each As software our dealers year, safe our up continuously the is keenly it of our important a duty effective balancing are in with to the our play. $XXX critical you our operations the is believe responsibility during system and keeping transportation stakeholders. needs safely through of commerce our automotive we our customers aware I while CDK of billion support role and of role and manner flowing and their this know, system running about we integral world's in crisis. to a play operations Because

and as thinking COVID-XX about unknown, with actions. decisions to long is to what make but our triggers CDK about I'd continue in and share use How turn as be downturn what I'm impact the future you we'll will and customers to transparent like and economic and possible data to

to to our what's impacts get had will market the real-time affect insights into happening COVID-XX understand internal the business, how our those to a auto To and at impacts lot into of really our looking spent I that dig time on customers. closely has U.S. data

reminder, roughly to equal the is X% commerce of CDK GDP. through a automotive As flowing transactions

base. sets and group services developed data our data installed aggregated on across Our has analysis trends

not does auto the repair including sales it this and service daily trends CDK certain department market, represent orders. like important with updates provides entire around insights While

are I at sales trends first earnings will in in was of When that our mid-March are and per pandemic in I today Posted think quite drop-off we two on presentation the apparent. insightful charts seeing. dealer, chart as sales the really to look you significant find COVID-XX there a understand the interesting threat became

bottoming hopeful We then we first are April. saw week or the what that a is out of two in

a see start recovery. As weeks, there path a to which reversal, has past the few you on in can been modest the maybe

The shared repair number orders is per department. the we second of data chart service around

the As a during most remained and reminder, these have open get services essential as shutdown. treated shops

have quite repairs. While they still dealers declines, faced to complete service been able have a few

a and I'm see these closely decision as useful very out modest very and making. you similar following finding bottoming trends story my We're Again, data in the reversal.

you As I to customers these leverage of forward CDK we that our the the more broadly, look have wealth in pivot future. publishing industry the with help we data and and sharing of to insights more to

them see as difficult to we this crisis and proactive through to are our industry with We to want trends the period. dealers these support help through partnering we evolve being committed the by

the past of worked dealers stakeholders. I of facing the balancing challenges the months, course employees the have action while to few to Over our are determine best needs our and my tirelessly address executive team and

for included discount America, April, those may layered DMS. not this time this the several offers for all March, our opportunities with to CDK along products. on of North to we yet including focus helping the during dealers, In month that XX% our free applications We of off customers. of see be all In announced

some assist period. believe during this these discounts extended difficult will in dealers burden our We and all offers financial to easing of their and actions

of in forego for received been cash available of all I and is dealers my As the letter our can to Also my commitment $X was from customers have this we sent tremendous. year. responses salary to but our the bonus letter A on website. imagine, you copy this

during CDK customers. as our Several I'd of our the this operations our some critical DMS operations service support you remotely. remote things about We also to like like quickly instrumental such to needed accounting been to dealers, to payroll access. the or make and we're products so time for that other pivoted very tell have our DMS dealers sure customer of could doing access do employees that product to

recently to enables first mobile from directly We've create and software enhancements that and Store quote their to dealers own from work customers devices. announced pencil our anywhere deals Connected allows to their

service and side, On pickup the allow the customer's to for vehicle CDK we've to Haler option added delivery home. a touchless

retain apply dealers assistance Protection use guided teams Program, support which the the SBA's Payroll software customer CDK monthly to operation, help our to just required help of are the some products of dealers many time. supporting and employees. our are running this vehicles services needed that small These Plus selling the their in employees payroll we their for service and Paycheck notes with financial to during online, critical provides gather businesses offering Also, to

our with we which XXX program customer classes. comprehensive and virtual CDK training including online training support, features To our now more than instructor-led training refreshed dealers provide University, free online courses

on from center mobilized working-from-home over are XX% times, to service call teams of with fact XX% service operation entire no move quickly to the delivering in Our response levels support in January. up and call disruption in

at it our customer effort highest did to our easy that, XX%, score date. is score, to which problem make solved, addition to CDK is asks get your In which

chain sufficient with requirements. our telephony capacity to supply meet Our networking for secure equipment, printers, is and

and our products, layered on received implemented the and of of positive for meet have the procedures innovative DMS to and many We've basis we've our our applications dealers safety installs fully of installation remote needs dealers our on a customers our experience. employees. from application several To ensure feedback the DMS done and

later of the dealers of needs. the are not and some them conduct installations in or we've and ready to the to date about meet to sensitive the dealers at We're not. being asked installation putting each at whether this all very back push been a cases, needs site dealer to on decision to Understandably, work time heart a

continue quarter to year-over-year we In see sites a growth up current by situation. overall However, fifth QX, XX in America our on even basis, given sites row. the a were in North auto site

with Automotive, across renewal enterprise account XX an QX, dealerships Berkshire announced states. During a we long-term Hathaway with

addition, In Inspect of our Cloud site and CDK key which with includes win XX earning gaining during competitive the sales customers quarter applications. new our Document Cloud, and additions continued in Connect success an back plus

April, CRM to ELEAD XX scheduled dealer leave site plus a our up to sites. of back in signed for added their had who us all We months and XX over

of We a our also accomplished. over true XX proud plus who more on with after worked year of a We've months several had we've site returned partner product. a I'm ELEAD become what to past very and dealers the customer hard different

steps have like COVID-XX Looking on talk to forward, that address some the we're impacts I near our of future the them. about may business in taking the to and

if significant produce a could could While in protracted. activity shutdown the a dealers, is see rebound recovery economy risk we also for the rapid quick in downside

sincerely our the severity actions to help they determine period, support, shutdown ultimately the can the but I this many of we will that difficult bridge hope some government face. including those that others know and provide length needed of the dealers relief

I'll that Joe allocation we some the the unknowns, and the I'd lowered We're doing provide Joe let team is in of you about penny have looking taken more provide receipts but our these The we spending being our this are like Given great discretionary our more job and through have walk our liquidity. ways prudently spend. will of and right CDK spending. capital to we of a cash at guidance tracking curve ahead our guidance. his of to annual but steps stay thoughtful time. every to very during is managing details daily reduced improve remarks, our details, have

the strategic looked these also my about and on in talked I've I'd thoughts spending. their provide our like past importance. We've to investment at investments

us. and to better I'd some elephant a being room sensitive to on surround we achieve continue this cannot our prudent shareholders the the disruption and still of to and strategic promised business the focus tragedies sight I quick is and to that dealers, improvements it's expect believe employees, lose the important key COVID-XX to at in the While the in update position like goals to moment, a provide of invest we've while our areas. emerge the in we from

CDK our long-term invoices for system, As our includes and complex several make to a ERP delivering to practices work process business a with. you know, less modernization new project implementing is standardizing easier customers, which

restricted at these working busy of been remotely and of very with time initiatives. this continuing many travel, even During accelerating we've

planned available to Our customers. new roll to now invoices are our half out continue simplified as over and

Flex, more our the Drive invest on to we to continued ever the in and DMS, have of is now several Delivering enhancements. new promise modern than industry important

installations around date. As total OEMs with QX, over a XXX two dozen and five of we of certified sales to have

completed and through Flex our first our I'm been happy team migration improving mid-April. validation, report in and we've and working-from-home, installation but has live our While went efficiency developed virtual to that fully increased install that automation

Other CDK million key the been date. and vehicle working and progress payroll new the with features transactions continuing our Flex and on XX X with make also ELEAD Fortellis improvements CRM, technician costing. developments we've to We're usability, include on integration to of of APIs for enhanced

in the that shutdown, transactions ramp of roll the and the quarter share Order Not I'd the of you. slowed during the the are works currently but exciting API things with we during Repair that has to have in surprisingly, like COVID number our we new accomplished somewhat third and out new many

Fortellis APIs into partnership with integrations build Microsoft connect making on with are and leveraging automotive Power apps focused Apps Fortellis and our developer These easier integrate to it Microsoft's community. on announced Microsoft's industry-leading to utilities. GitHub We by and to

Council and that on Fortellis. made all OEMs, announced grow formation on agnostic reps, also and technology, and up of helping Advisory representatives automotive open of focused us from association usually dealer capabilities our industry's our We the dealers

quarter, OEMs. the API two and with to In continued we examples deployment major with development drive notable

CDK's major customer provide the are Fortellis greater service experience. information using for service, We dealers incorporating connected a through car OEM's insights improving to

their provide We near contracted develop with OEM inventories OEM major into to needs. API the a and allows see with inventory inventory insights dealer real-time them also changes to have an to dealer in that to

and our of I'd entire of by going would We've management hard like the and all for their through our the been of operations just efforts employees. time. the end and team I have work success has about our difficult worldwide keep them closed working and CDK extremely offices Board, proud all and to the remotely achieved to team I'm thank to like contribution. on talking behalf about this

being solutions of to ever, Now allowed with our I'm our work partner more than glad has with strategy CDK. that dealers for determine and to easier the to them us best

in crisis this more we solid The has strong place ever. have engagements dealers foundation with a during to emerge have and grown than our we even greater

move dealers, situation and nimble in crisis and our employees continue committed our our the We staying this markets to as supporting monitor we to in partners, our shareholders, are together. through

to And like with call that, Joe. the I'd over to turn

Joe Tautges

joining Good Brian. and afternoon so you thank everyone us Thanks much for today.

these know times challenging and we that ongoing truly appreciate interest We support. and very are your

We the very been our are this difficult being quarter and employees pleased our on liquidity. structure customers in focused amidst our with and supporting managing global results crisis. for We've our diligent health very while cost

X% headwinds fiscal saw March, we first back momentum building of building the a in total of currency Despite a QX. on of COVID-XX into in in QX, growth the year continued constant Much growth reported which million of half revenue X% $XXX we basis and was generated the basis. on half the the

can. their resiliency perform they seen we've rally While the been teams of as industry our to auto COVID-XX, dealers best by they the impacted very the

Our perform and essential center service the cars interactions our on fielded supporting perspective, help to be dealerships keeping CDK in our critical put as dealers call April new it running. vehicles. their of is our in road the their than from dealers keep XX,XXX to software XX, of they into more we week To successful selling

take the we some in I provide on environment, Before of areas. to light current few and a the quarter, details the step into of perspective back want get a

the larger our of base to discuss is North base customer customer revenues, nature and always From our CDK's more than our revenue let's has streams. America First, which the standpoint, over-indexed dealers. of a XX%

sites than streams. XX,XXX more relationships of long-term in form of our plus all XX% third quarter, with having count site have As of three of revenue dealers dealers base. our Also, customer our represented we of end the nearly multi-year the recurring global

at subscription-based result, business in annual about our when our recurring look business. As XX% revenue a mix, you of is

We or impact larger dealers lower significant we which to we from revenue cash due immune and one-time lower fiscal discounts flow. meaningful customers our in subscription to our guidance revenues, value of towards free nature section. of our transaction with to our relationships volumes to some products are sales in the do profitability, cover international is environment long-term business, our stability the dealers, in of not provides with us While this our in have why the lower auto weighting I level and are my place we these impact in our providing our QX, discounts will on

we Second, COVID-XX to early quick, liquidity are I labor-related profitability, given costs CDK March as flow, wanted in preserve and developing. to our the cover our the the saw The actions team environment. taking current Roughly two-thirds cash leadership expenses. took of situation in decisive we are action

reduced to to We filled. roles hiring that need the have few all largely be critical

reducing and without We services outside are other cutting our contractor to service where also possible spending customers.

deferred get all on until look we we the reopening. As capital to we've non-essential economy expenditures, better spending clarity

borrowing manage agreements for through under team us us additional capacity All-in-all, ensuring a risen challenge on bank than allow a on, to this as to We We have our revolving we from renegotiated lot recently also credit focused strong the we have and this liquidity have CDK to to enough credit more but crisis. in going the keep has position. better facility. we emerge a

with driven that consolidated let Despite impacts me $XXX to our revenues results by able We X% solid in COVID-XX, ended X%, With highlights in by for third third million, backdrop, X% as North the a America of drop deliver a we up International. to turn quarter of QX. quarter. were our offset of of year-over-year the growth

increased X% quarter, year-over-year. For subscription revenue the

was revenue subscription international by nearly X% North up was Looking revenue America deeper region, up into X%. while

to conversions a by it for ongoing Partner XX America ELEAD subscription to row CDK. This Doc North work them to site driven year. site the the CRM performance by year-over-year gains reflective QX and up offset America last was growth easier by North of dealers from upgrades products represents legacy in transition. our segment, from declines make expected QX Program with and and Cloud over quarter is the from In with put efforts fifth our first were auto

up driven North the per Partner gains declines offset applications transition. per year-over-year revenue like revenue the service ELEAD to in CRM, expected was by by Turning Program Cloud, auto Doc site and X% America site, key from

As the and in won be continued new Brian strong products. Doc key mentioned, sales during with gains to quarter Cloud DMS

from dealer level within group Drilling digits. International mid-single size for revenue two year-over-year increases site. down we up for down Subscription one with quarter up revenue per group, the one recurring revenue the of more to by group to plus three segment site site saw low-single digits recurring year-over-year in our X% driven revenue was the

the down to next by and quarter installs be were expect and site DMS China. quarters, revenue in strong existing number International year-over-year this X% solutions the additional pressured for incremental reductions of through dealers We to up revenues. few primarily per X% further sites with year-over-year site we ended higher

Turning transactions, now vehicle activity category consist revenue. offered to are services. for that they are in our contains The of primarily most about only sales categories tied registrations at products North revenue as of changes of check to the other vehicle other. on-site, segment our transactions X% credit America directly three and QX These are and and fees

mid-March a year-over-year. COVID-XX caused X% would our you began revenues expect, with decline the a decrease that As shutdown transaction in in

as primarily from the are within primarily revenues represented onsite of category products lower The on decreased business. and year-over-year volume. XX% dealers installed our due and hosted come quarter International common on-site in Revenues X% the opposed services for DMS total premises are that category license our to to the more

business. due dealers in to Generally, quarter is third revenue tax marketing filing other, this additional products hardware there needed forms which and service, by for category a consulting, purposes. is as in a center final as mix our is seasonality of some such category call The our forms,

for from by and Other quarter under vehicle revenue directly tied ASC from due XXX lower While XX% up marketing revenues a during offset change primarily hardware Other of periods the XX% accounting impacted center. sales, the service products within for were to volumes some category not partially in revenue represented economic maybe of as the total stress. benefits to in call the

XX.X%. earnings Now by our essentially revenue a were to margin program down the level, partner of due same from with quarter margin down points At XX.X%, earnings, North transition. a X% and America turning was $XXX million pre-tax of from a basis year-over-year of XXX principally offset investments growth third the headwinds were flat to segment EBITDA reasons. Earnings with

International, XX.X%, XX% of effort a mainly For pre-tax for April business. generate in expenses labor a were appropriate and down plan margin earnings points international of with because and improve to XXX down basis In lower approved our revenues. returns, we higher margins late restructuring an

approximately We expect and reduce program will in expected fiscal to fiscal costs our $XX XXXX. be improve segment our related successfully CDKI expenses an to measures adjustment this to million. guidance. margins as within XXXX and in to considered These The been this non-GAAP have year our beginning restructuring be included expenses are financial

tax was XX% primarily year-over-year. EPS shares the average some position. driven the year The various Diluted per were same I'd due planning to benefit period outstanding discussing the increase $X.X to in like total up XX%, to effective time lower our lower spend $X.XX, last liquidity tax rate. and tax was For items by a weighted diluted year our share versus X% from in related of last down in earnings company, of rate implemented quarter. million execution tax

accessible foreign liquid XX, Our cash of making globally them meet to for we available given removed $XXX was the United of of as outside States. XXXX March Most repatriation. XX that held reinvested March million are on assertion $XXX which earnings needs and the million, was foreign is funding that cash the balance indefinitely of

our against with banks, to second a to our quarter term cash We which $XXX $XXX through access leverage is liquidity. also loans COVID-XX. credit protect maximum of million and revolving to recently of maintained facility the allowable fiscal provide the capacity XXXX facility which amended ratio additional the revolving provide to million borrowing ample impacts of credit increase drawn our balance with together We

to end QX. Our but to remains adjusted X.X range of X.X sheet EBITDA balance of at the is remains This our times above debt of X.X times. with strong net times down target X times from

debt As a next our XXXX. in maturity reminder, is fiscal

year-over-year dividends quarter, quarters. to was $XXX litigation was in we primarily million During payments cash prior to flow $XX.X due shareholders. million, paid settlement the cash Year-to-date out in free which lower

current pause like here talk I'd and given the situation pandemic. about the to COVID-XX

it to was As Brian within outcomes. guidance the our this wider prudent possible range due decided mentioned, to lower for significant uncertainty to a environment, provide annual of we

new $X.XXX annual now to is billion. $X.XXX guidance revenue Our billion

EBITDA EPS expect and of $XXX $XXX million of $X.XX We $X.XX. million to to

think insight the like the our We I'd guidance. the into about monitoring about and business are actively share The factors in COVID that we determining the are took buckets. three to way situation some following closely consideration impacts this on I

two or in the discount XXX. $XX that discounts next result total result half First ASC customer offered QX recognized to the years lower about revenue of will offer of a the during with we million, the QX over impact represents of as which remaining will $XX million

Second, our some installation some delays work experiencing as one-time we well in our International customization lower as and schedules segment. are

the the to impact expect approximately million. million $XX to be in QX We $XX delays of

vehicle revenues impacted I by sales changes of volumes. mentioned as are the in our majority Lastly, earlier, transaction

QX a We and $XX million as lower $XX million. expect in to sales result lower of vehicle revenues approximately

immediate offset our mentioned installations. of benefits expenses reduce earlier, installation we took of be as capitalization The a reductions lower to of teams fourth we by revenue the materializing. saw quarter lower As expense decline partially result as I action will

continue to payments, share but suspended buybacks QX. expect We dividend for quarterly our have normal

stable will navigate the us this and we our period for time of well-positioned situation should on believe focused prudent is Planning ensure an and through near-term crisis revenue discipline of potential to extended to of are approach model critical the and employees, continue needs headwinds and exercising recurring ongoing capital last our a customers, and we meet that financial with investment thoughtful our intend to to part and these decisions foundation. allocation we shareholders. expense for remain to provide We strong

on completed questions, taking the XXst. with a brief to sale Before comment I'd like April Digital Marketing business, was your our on of which end

value factors market reevaluated COVID-XX, QX. in of current and of $XX allowance we Digital Business share the Marketing Given including the recorded the an of impacts million

we focus software get on for done to the core timeline We We of are Digital hard this could transaction can did, of this through that happy Marketing business. our so in we work we dedication thank their wish to that the continue employees the Business that and transition. all

back turn we'll now operator happy to take be the and questions. I'll your it to

Operator

[Operator Instructions] Our first question comes from the line of Ian Zaffino from Oppenheimer.

Your open. line now is

Ian Zaffino

you are customers paying you expect sites. reopen maybe of you just drop it full things back can will not as to migrate as the and them Maybe deals to help maybe some dealership us sorry other us to off the, path apps that Thanks. given that all could as given, and and understand be maybe here the help maybe free understand that taking how - the easy you or been far recovery free becoming that just as the far have been attrition

Brian Krzanich

we've time. start Ian, them I and know solution and add Brian. all They this to help them customer Joe was troubled is can many It through was This to a the letter can this it. of some that talked temporary in color.

and these international think many these for industry us I to business US of as during it's in we our for can times. sites, us, as For dealers functional important and the keep the

best which as as states forecasted, and forecasted all and and assuming and I different of could, certain Joe we pricing that rate So, don't know a that's and the number back will see we just open normal at happen. the we opening of states all when an issue why, converting you to

are far we part will your of was, so and I haven't. number in decline seeing And then the you of second question I think a the we tell dealerships

think service stage standpoint early, see cash from it's from that through fairly the the well the in conserving going system. they're appointment doing I of are that a data most and you

business like in flow out dealerships going haven't that. and number so we the anything is number or in change of there So or seen still cash dramatic any coming the of

Operator

question Matt next William from of line comes Blair. Our from the Pfau

Your now line is open.

Matt Pfau

detail Wanted are there on there give maybe I is ask by guess and you the has just the the cross-sell is, I'm a terms on what in in to new more customers that can of difference pipeline existing base and impacted then been how pipeline of in and that COVID-XX wondering within impact into customers? in some

Brian Krzanich

is two color if future and can had they from on that Brian we as again, start out opportunities then Sure, and near any doing the add he you kicked to were transition. I'd to you, avoid and in and really tell soon a this heard come with prepared going pandemic in said leave things: dealer the focused I can one, to wants. this whole them Joe or remarks and as who left talking back stay us offer went

doing So we've been that.

You've seen we've been reasonably successful.

installations want like us At we the their would. we into same to do cases normally to come some shops time, moved because in dealers didn't

products installation implemented we've virtual on of now. all capability So almost our

eLeads Flex So the able implementation. everything is virtual like now do to even DMS, from a applications through Drive you layered saw

to selling, the heard is about selling though conversion pipeline, of a a you see, there we sales that so ability do it is what have a We discussion sit and bit are well, we're still dealers actually and get the normally decrease would and in lower front down and but pretty healthy we than look, operations quarter business great the but just any there on because other QX, dealer fixed is are saying cash I need focus and a these opening. and can lot do flow we're great let's and a after for keeping my I these to talk ideas, my so, forecast of opportunities. encouraged like are in

the the future. pretty out So pipeline we into good in a have Q

Joe Tautges

into ones and only maybe are there positivity the we so think bit think all, teams is and certainly and in the where but build that thing more side, opportunities partnering have doing opportunities I can. I dealers out focus the integration the DMS our some size certainly with well for just that Brian there best looked is at there well it come a customers add summarized have I some to on Yes, delay some all look is would there pipeline of is, as meaningful of

Matt Pfau

it. A foresee cars last perhaps here sell positively to sticks for scrambled dealers impact business negatively? have the Got or of pandemic. sort more post it assume we Any me. one that sort on and try some that if lot of online there your of And you to of

Brian Krzanich

Yes, not us, them, access are you the so stick of many and remote remote but think I across and our we cleanliness look some you agree all also know behaviors, I things right some actually with Matt as personal of industries, to of work the industry, behavior. around that all going that and occurring automotive with are just and

state full in there a online, that I will digital full of signatures the be capability, really to or combine yes, perfect free All delivered and on depending person. thing So do you which it have do will think, penny eLead, Actually, be we its it you by for retail signatures stick. that online. purchase gives with few be the announcing your full news, it our are the when you law that today you car you we remote offering lets house is two to have on might the good do pricing some would deals, to

to we we saw can be so or to also have pick to off. apps drop had appointments Haler was You life for Haler originally adopted scheduled schedule people able our people

there that a but to stick going full we to off really we're it is the your free and believe that come up will our the and deliver dealer it's your go to that car, show be to fact application, leader car we digital pick the market the for are Now going want retail dealers them. drop we dealer

and asset it an to think result goes as for a them free, this think remain semi do normal. after it by pandemic I that back becomes will So really really providing we

Operator

line Our Wells next question Nabhan from comes from the Fargo. Charles of

Your line is now open.

Charles Nabhan

hoping any well could was as SAAR year you fluctuations transaction to color terms I in as market assumptions give vehicle revenue sensitivity some as in as well. your economic underlying around used as us as for of movements of SAAR underlying the in the the well well

Joe Tautges

quarter of this X% a add and and into at talked we're to it see about, really not of out the Brian Brian and April the more posture looking it's our that in. the revenue, as had we've at earnings as you taken we've good trying data revenue we've more. view our to drug start and in is we published I'll not that presentation of can can look pretty transaction transaction line about and some When add

at that did April that, our carry if so June, in really contemplated more I'm prediction, May, June. looking but a sort range and Just been into into of not and continues that forward what we what's is May, that SAAR see to guidance

Charles Nabhan

wanted I little around International follow-up. as a alluded restructuring out a as get some China. pressure color specifically you of the activities to and as had business to coming Okay, some well

those color or positives exposure China markets your any what specifically two could So your across negatives if areas provide internationally? on to any you seeing you're and

Joe Tautges

and Sure, maybe then I'll start in. Brian add can

and my percent today subscription business So, really very think from we can a time Brian base, when building we saw into type the estimates. remarks spent really with action that taken at in and margin team return deep good booked XX% we has margin have we've opportunity the a pre-COVID me to realize business. is opportunity perform strong you we business international the really profile and what's looked It's some what and that the leadership the the the in heard months I at into profile, over a and diving but several last

through be As far certainly at be pressure world just will as more thought China sites where prudent counts and the it the site as there given will well you is a look more we counts as that international going goes, all attributed as China we Brian, and we would user bit go gone and have around next that the bit of anything add? those several to reduction that China. has business a over quarters we visibility forward,

Brian Krzanich

taken read towards. place aligning - working aligning COVID would and I mentioned, I well the the as we of margins have Yeah, but margin in has targeted to really have us do actions we where get in we how and you've with improvement to the placed to leader to group, were seeing is that that and we and quickly that know realizing that business to it what that's this the us that align prior good we and can margin think want so you make what is fairly really just that really investments that be always us you're where and

Operator

the from comes Stanley. question Baer next Josh of line Morgan from Our

Your is line now open.

Josh Baer

quarter success quarter last the March the the more in retention high, then and couple nine-quarter had a trending. end been comment months about you if into of and I retention, Recently first and April. of recently customer could talked you retention On think of just wondering on how maybe has

Brian Krzanich

Joe were actions we've come in. as Brian. actually We we've Sure, is the you mentioned well jump COVID and and the as of were dealer talked can whole large retention the discounts I into dealers year plan leave leave. the we've to - I'd dealerships can actually prepared seen a pandemic. had the going planned start able the to the gone in In pandemic, remarks, this to strengthened we dealers the side. we of of both pull as tell and beginning into who has DMS doing even This and CRM took giving talking we about back, we couple and to on them

we're to to add? anything Joe a from So retention standpoint. continuing improve

Joe Tautges

see our we very but to from continue then when look three-plus and to right some strong you really sites the are perspective. we the particularly segment time now nothing losses to think think retention well rates one I quite No, all-in-all, timing retention did at and from segment, I January, in the be performing of December add, two

Josh Baer

all know focus software putting if from customer the this your how of do attraction discounts, actions may and don't from pieces you in like the not And I competitive the on how, COVID your you've Force current together or think like these comment around you how you may emerge Task free response can from this. differ then kind crisis the the your taken or a standpoint. through peers

Brian Krzanich

to going partly, mean not I'm there's don't on know about work much going observe I my I that - I'm talk completely peers Yes, too probably not too on side. their

go fair from going out the important that emerge been one we spending mentioned in notification a discounts believe solution time, conserving digital the think So I job the in as we've but in the cash we've in one in free software to really his wouldn't as dealers the done we industry, is free and which the in which I great full for today me think and will and the we've CRM our to then our stopped at that's solutions think that of help haven't Joe retail DMS both is and of side, there the will time look we'll remarks, best-in-class solution, this we during at same be do be it a given, technology. we and this part of equally the stronger investing

So Base CRM, more and the solution doing we improvements in the our more service even digital road the the have Flex, products, capability. in application we're we're Drive and include capability F&I improvements doing map our to our retailing Drive for website

All those both producing. the we're of believe things from products we technically

standpoint, Joe of actually reductions customer to with better some then customers of they're and are I our things are going mentioned, will think so with to will are better going think emerge our I a larger more as this and them the emerge majority with spending, efficient us think are be well the merge we to them. and doing It and well going stick will some dealerships these of I the from we Operationally, stay. from and

well more we're or do. to our probably think as you just have competitors. relative insight as and much positioned It's I I guys

Operator

the comes of Rayna next from ISI. Our from Evercore Kumar question line

Your is open. line now

Rayna Kumar

happen Can end to bit of the your XXXX more versus you guidance little get low-end guidance. to updated your as go into high detail what to needs to a your of

look, be FY would 'XX helpful. have you If any very early thoughts that would how on

Joe Tautges

say I'll when you end. Sure. Thanks. out, high start

lower call performance. let's the high-end, So

describe it So if you really have to the in in not see and sell to were EBITDA and April guidance, service vehicles see and way of early being that guidance similar continue revenue would get shutdown improvement as of perspective, very it lower-end much last to would was you you to lower-end at to of to transaction vehicles. have to May the terms performance and all able throughout dealerships to in being able and June

I deliver and think improvement we comfortable quarter. within as as within economies the midpoint on and the feel dealers continue long continued fourth we guidance to range can see the the reopening we opening to

uncertainties too just now, relates As to factors. can't can you XXXX comment as it many next moving appreciate right

the quarter. we good fourth What tell I would we're managing is you really feel about how

COVID of momentum we're right pre-COVID of a a into a have lot the I in we've lot think good in done coming We the pipeline now last we'll stronger the backlog, actions and with momentum the to the from time emerge Brian said our dealer front, doing this question, along things partner on with on like cost our the right partners. confident and with customers

Rayna Kumar

much this you prioritizing investment help into mean, better detail go separately, this do then is bit during understand on can a if cost And if us out. little versus on I your And structure. how take environment. What investment can you your more cost strategy plan fixed time you variable in please? versus

Brian Krzanich

to I then goes if ERP our Joe our are to billing, We really was simplified of complexity talk the our that we is with our billing, you our to now of our on which you about our a accuracy that billing of investment, are the up investments area the system. billing, customers refer and focused system, billing committed to who detail. of receiving customers, really the areas. So an and all can of I rest the wasn't talked new and then the our clarity One their of fix. number par tell start modernization billing on to of maybe that back couple

us for been actually able fee that's continue less and to been to that we're but do a going lowered very invest for while actually a in with we've said, is and program on gotten partners so great to feedback positive still as had so work and to better that and space. a going We've the continue to go we've Joe

during The to continue is this other we're invest going place the time technology. to in

So our we really technology. out down people, the of we the continue build slowed some but hiring new road for to map of have absolutely

to transactions $X X from growth Fortellis the saw million we've million. now gone in You

the is of clip a goal transactions Our Fortellis. high at very through exit to going year

You XX APIs. the saw

Flex, data in artificial capable, investing So build those capability. we're eLead product, products in structures, fortelliis, to in in more we're we're intelligence investing that we're Drive investing least at in our beginning build in of drive CRM make the investing at better

and how going investments other invested and the doing let I'll area But Joe HR other we're that's and of cost talk to in overall that to structure. system then about reductions our the at really that's spending we're like it our fits So some all. internally most and continue with things

Joe Tautges

Brian. Thanks,

so daily. listen, talked had things us when Brian we monitoring Rayna, look, And about

into of cash So on done our we receipts has job fantastic very The cash spending. disbursements balance daily team managing staying instrumented on and really the a dashboards and of have sheet our liquidity. strength

and So, be to. to Brian, adjust course that closely if prepared always watched needed I've we

to programs with the is I new how employee it's two-thirds just to we've we backlog or continue furloughed the team and questions everything and work do continue fixed, described cleanup important much cost been our out really reduced of we're customer this our outstanding very shared on around and rally employees appreciative we you we at we employees just CDK to of think Brian and asked can structure. you to and labor still come the us stronger. when has it's of look cost pivoting also, or haven't as is any the as really

new is And us gives deal what is pleased the really bank non-labor with is we're so, comfort negotiated. two-thirds and labor, really one-third we

a successfully strong very we have and think We this. liquidity navigate can position

Brian Krzanich

what will The We little commented to what even only thing to earlier I give COVID. add a would said, you just bit Joe after stick more.

think our our we're being I efficient will all and at that ways of the at different I money daily looking stick. more receipts looking spending and think this spending

a as better company We a will result of this. be

of our going the committed the the to in we've to okay, The a commitment of layoffs through has to got partly is at get other just team and no way try work then think we're been or through and done. the been team end very partly, with this, they interesting least teams furloughs, thing work I saying, May lot that's the

even and perhaps efficiency seeing from are actually the productivity even of home. though We majority team more is out the team working the of

above culture interesting and and come in standpoint. this the quite has been really we're So its doing risen quite well that pandemic that

Operator

comes of next Gary from from Research. the Our Prestopino line question Barrington

is open. line Your now

Gary Prestopino

you April your have some two to through that data XXst gave see on April. you the the what thoughts of that XXst just I'd these after XXst, from trends charts interested for system. April your are data, the Brian, on is latest be weeks the

Brian Krzanich

We We pretty day. a data regularly. actually get feed get data every

the system OEM, our is into gets go to third depending data go it that has way the some through has the the of through of So other on parties. source, to data some some

bit we took a bit through. you lumpy, So to little had that get it it in it because can data, two-week-old actually flowed tends so see of knew a most data data we that

we've happened see rate. about look weeks, in upward If trend at that same the two the last to you a take what's at continued

curve, to getting you the So things continuing better, orders spike in it's service And exponential better appointments. up we're see or which but is is better. see not a both it the get repair it's

know actual I and Repair many the store. appointments sales in open that's that you car as the start to allow up. now not through the orders, states is states system can which service see sales and the

You have like to and do limit that. it and of out the things in lot number the people

time bad car see OEM really the to that, plus there, you starting a it's in a that So to we're are are the out deals market. that if not buy

Gary Prestopino

going have Is the just that now five you correct? talked Drive through some you about And certified of OEM things Sure. Flex for then right?

Brian Krzanich

Yes, sir.

Gary Prestopino

you said, conversions is or you that said And quarter, correct? sales in I the also XXX had think then you

Brian Krzanich

in sales have We XXX backlog.

sitting So install. there waiting they're for

took better installs of lowered make improvements. some remember we last some time do the and it on installation quarter, wanted you to both If cost that wanted some some more efficient, to and we from We support integration. the off things to the make the get

plus on through working year and the something to we installations of - still plan and are we're those order try a XX month. the at exit the So

Gary Prestopino

and that base? announced. discount retailing, you there announced some Are I is you're then and you you month you then the contemplating else public discounts nothing your that last have out Okay the guess beyond for currently there programs further digital guys dealer talking of about

Brian Krzanich

and services into future. no every additional dealers what a contract do new widespread. in the of work we a and is we additional there's grow do discounts I on always it's we're with a that negotiation time we're sometimes certain Nothing go that, to mean on really things we there's like widespread or the into, instead to a deal, ones but focusing try or level doing and out win how

important. That's really done, to are to digital of and things that's one This stick, this right. more do retailing think one and your let you it's quoted we penny ELEADs financing, through People is deal CRM, to done. this you is especially want the going so the going accurate very online and is why the everything very for do perfect do and you if get everything can

Gary Prestopino

I right? you to the Yes, I with advertising doing capabilities there that your and ask and data in there's correct just because sold conjunction in about websites website because a mean wanted anymore don't some lot any have dealers market funneling of you're you you players business, that working when this. capabilities

Brian Krzanich

to us is partnership. Everyone of Yes the eLeads have really it have the advantage. of going person DMS as one pieces so it and together. pulling advantage to through gives of have the CRM to that's is one a No the put to going and all

partnerships have to have we with multiple right, right. you're So websites,

some websites, websites. of of OEM them websites, third party Some them of dealer some them

partners, of have really variety but of their you lined we're one You have things have that those to partners on solely have is on F&I to to nobody the up those and able focused own. do growing going to a partners, yes, the be all of that's of number is

have to have You partnership. a

Operator

there Thank you like participation. to disconnect. your concludes for you. This and questions. thank may now are you our And would call I no more

CDK Global (CDK) 6 May 202020 Q1 Earnings call transcript