CARS - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to the Cars.com's Third Quarter 2019 Earnings Conference Call. Hosting the call this morning is Alex Vetter, Chief Executive Officer; and Becky Sheehan, Chief Financial Officer. This call is being recorded, and a live webcast can be found at investor.cars.com. A replay of the webcast will be available at this website until November 20, 2019. A copy of the accompanying slides can be found on the Cars.com IR website.

will question-and-answer there and with presentation, Becky. the be session a Alex Following

to over the Vice now turn I'd like call Investor Please President Relations. to go ahead. of Tomy, Jandy

Jandy Tomy

Quarter and to everyone Conference morning, Good our Third Call. XXXX welcome Earnings

our to financial Before I'd draw be measures, forward-looking and which like our definition and in Alex, the I can to call description attention presentation. of to the statements turn over your our found non-GAAP

EBITDA margin, today We adjusted will including non-GAAP cash free measures discussing net be adjusted adjusted flow. certain financial and income, EBITDA,

Reconciliations comparable in of with found financial most the these non-GAAP and measures included appendix the to in GAAP the directly our tables release presentation. be measure press of earnings can the

those please For and refer assumes obligation reports. of quarterly to no more Cars.com filings, current dates. respective in as update or information, information including statements our any in their forward-looking to factors annual risk included the our SEC

now to turn this to the time, at over I'd call And like Alex.

Alex Vetter

everyone business welcome to our be will then morning's Thank financial who you, XXXX. our quarter and our this the call to hand for results. and Jandy. discuss quarter conference third the call, discussing In I'll Becky, of third performance morning, over Good call

with expectations our third results in few we like were Our call. to laid out I quarter on There that that line last highlights a are discuss today.

behind service effectively, sales now us and over our support directly our these control model complete entire increase to in our completed we gives is these With market final markets sales our our network. which First, and territories. dealers sales more able affiliate conversions affiliate customer in team us

strength our deliver validates product in our and over SEO, brand took as to one technical we the sophistication which reinforces content. strategy player the of Second, and high-quality our demonstrates number

which this set a more And over and we of with across website solutions. sell to a to new our quarter sell Motors, broader X,XXX opportunities the country. this solutions General creates to announced for opens door dealers us partnership Third, the products

lastly, tech efficiencies, generating milestones, achieved significant sales our and we transformations. these operational And while most notably

discussed dealer retention and earnings on we're As have further our call, we last cancellation which stabilized. rates, along with

product moving yield audience our believe for delivery we results will positive these Our are improving and forward. investments customers, investments in value and

now strong the with to entire XXX focused October control our nearly conversions growth dealer's affiliate markets. pleased that is behind across sales with us we Importantly, subscriptions. and team all a delivered report net on I'm new in

month In fact, it sales was years. second our in two gross high over

were dealer The stickier. Cancellation to QX in count under decline lead in partially product only makes declines affiliate customer growth and more offset nutrition sprint were than in due markets direct, during a initiatives takes in innovation, solutions the were customers. effectiveness our improvement and marathon quarter is ultimately but dealer SEO periods our time, despite emphasizing control. our turnaround traffic the a growth, of the both importance rates and like in declines with higher sales Our the experienced subscriptions of much and affiliate height not by third around the those in markets and the conversions than markets. was The direct early

and strategy. buy car which likely Cars.com go-to-market playbook same our serves retention technology, reversing Roxanne on attribution to between in of make experiencing continue investments in through we're consumers to more We have to that the engaged will using We're a record quality the was our growth are own dealers' now are and traffic and declines who today data, cohesive also initiatives support cross we The successful a website audience, several far the that our dealer. progress from quarters strategy. shopping dealer at

tenet experienced of affiliate solution through unlock in any position. over Gaining needs dedicated markets Cars.com put a value to and our strategy and address a in by tools and offer complete strategy our are key unlike of better fellows. competitors customers control analytics These of unique solutions has the our dealer been

million $XX successfully control say to XXXX drive our cars for time our direct not to in last that free have cash of in proud affiliate to the capabilities beginning the go-to-market incremental marked gives in also I'm uplift the us first was flow converted in it our but October affiliate control. the markets This complete in end dealers only over we history. and all of expected networks

typical to as convert he rep bundle a we DealerRater us recently and being to value explain hear proposition. I were were converted feel to a we we us business. products affiliate and or our be want me, our of The market sold dedicated I didn't to how quote And couldn't by and spoke now help my investment." with is franchise print going and can we Dealer pitched we're the the and feedback our of few "when what to of DealerRater rep I that calls said one with understand better honestly part to Inspire Cars.com of dealers newspaper to very customers after Cars.com direct. This about much the

of forward for is in Having positions a step and customer sales our direct relationships control big us going growth. of transformation our all

of we're audience ours levels continues such our In that quarter. Another reaching growth, visitors we consumer a had executing illustrates highest of as data preference acquisition. key past leader strategy success truly to in in which is our unique clearly and this the reflection marketplace consumer around audience a is accelerate

in and strength up in technology share in investments competitors to continue Furthermore, Our traffic. Combined visitors product in have including organic expense traffic QX the increase XX% our brand the a notable off gains and with XX% pay unique growth the continued market year. throughout acquired of superior Cars.com respectively. in year-over-year year-over-year at resulted with XX% SEO and audience

SEO the performance market-leading from our has leadership number persistent diligent highest SEO years. visits in our strategy category. I'm which and earned SEO has but pleased on that Steady us takes results, XX produced Achieving has in focus yielded of SEO leads now the market time, highest

achievements leads which customers, notable count dealer and the our of can objective. will Translating drive that traffic organic ROI we improve valuable ultimate is are in they their to our platform audience And quality this, leading getting to do only Because customers. for our market high from sources traffic get they Cars.com. these our have to are the very quality from

We are also our making investments that making are more marketing us strategic shifts efficient. in far

continue our generated majority the spend quarter, For through organic traffic example, of generate And media vast our our to third sources. traffic channels in grew the doubled paid nearly only we X%. from however,

the we face there as car in Now let's traffic which taking talk we're shortage about in demand in our current that headwinds we to no audience, innovate reach needs. the share. undecided however, business, and to which to bury of continues share to to OEMs evolving meet continue shoppers market solutions environment, national formats with gains, is advertising OEM in Combined talk

we member leader incredibly this in I'm channel, September welcome on Julie drive to forward, national our who focusing is growth solutions a and we in will media Julie business strategy new Scott welcome digital excited OEMs. Cars.com. experienced drive market advertising to team While an for driving

One nationwide. with with is new opportunity of dealers our developments most the this GM -- directly quarter exciting

with also Mitsubishi. We partnerships and excited new Hyundai about are our

portfolio, with online Our which OEM relationships differentiations our and an reinforces marketplace provider. strategy and grow solutions our our to across digital solution continue

Our portfolio of XX total now OEM includes a partnerships.

edge first dealers than only the XX enrollment sell in the our dealer program now with certified For providers and of in phase choice website four providers can time is for have GM are website X,XXX digital now of first the The in GOOD QX, GM leading to MORNING, we to services launch more a we years. XXXX. currently expected one

to be revenues come. us important subscription-based for We an driver for development expect years website to growth

Ultimately, halo with effect conversations like website. new relationships both cascading we create our and and solutions. a marketing data much than more believe These driven in is the this we're GM of traditional that building advertising emerging OEMs just longer-term

and substantial automotive seen have To impressive he to sellers as technology accomplished Evans, further industry auto as knowhow that sales growth. with can end, strategy that the driving that renting solution has more record addition Executive effective Dean industry morning be unprecedented. important President. leveraged help and Dean that leadership this expertise technology. auto to for leadership we're digital is an Dean's as track an With we sees is our for Cars be announced team you bigger joined innovator Vice may

to is to marketplace competitive traditional a advantage full-service and a a customers from business vision the for solutions create Our evolve provider. our technology and marketing further

now that fully confident XXXX. Before to reinforce behind I devote turn is process expected I'm me the strategic laser our call growth to over This to our attention -- team us, Becky, ability on the review full alternatives driving return in execution. to our in focused let just is

results financial Becky I'd go third to quarter of the over our now like to XXXX. to turn for the call through

Becky Sheehan

of lower quarter advertising market decline $XXX.X third by to year newly The Dealer million primarily converted was the in Alex. Thank growth incremental Inspire solutions compared national for offset the you, and business. by Revenue prior dealer fewer was million, in the affiliate driven and revenues part from customers in XXXX our period. revenue, $XXX.X

$X.X compared million from $X.X the XX% solution million million up result was of of growth million $XX.X to conversions revenue revenue year-over-year, conversion sales. $XX.X by affiliate which revenue a affiliate the of declined $X.X the markets driven Direct prior of in from million year, markets. Wholesale the uplift Inspire our and was Dealer

affiliate down a wholesale $X.X in the by was Excluding affiliate dealer market revenue conversions, customers. million, driven decline

dealer the that we reminder took a market As of have place no conversion on wholesale longer Xst, the with a channel. October final

$X.X contact In has amortized ended. from now this addition, the the million fully is and amortization benefit liability unfavorable quarterly

XX% down million prior-year national to Our was or advertising the the quarter business $X.X third in period. compared

while improve solutions. number growth product mentioned Alex traffic to of also opportunity, advertising taking and increases current new offerings introduce steps As are our a our we

operating into expenses of the let a discussion Now move our quarter. me in

our the was by performed sustained normally caused decrease in primarily in price strategic the triggering of we quantitative Therefore, Although alternatives an there during performed event the process. a quarter. the company interim stock analysis fourth completion impairment quarter, third the determined test in third goodwill review a we after the quarter, impairment is

that covenants exceeded because agreement. or $XXX.X charge flows liquidity the non-cash estimated our credit effect impact value. the have and this recorded financial do As our charge operations, a test, non-cash book compliance cash result our any impairment a we on or asset We expect our goodwill to fair not assets under of with of impairment of value intangible million,

intact. and assets goodwill deductible the intangible from benefit remains for purposes cash cash The

Excluding the This due the primarily of prior total period. $XXX $XXX.X the headcount-related reduction lower impairment for third costs. operating XXXX million, expenses compared were to million to year charge, quarter was for

revenue share. Net $XX.X loss quarter diluted income per XXXX $X.XX $XXX.X diluted for the of Adjusted for share compared third to the $X.XX net of share Adjusted or for XXXX per XXXX of was in quarter third $XX.X million the or quarter or third quarter diluted was the to period. $X.XX million year per million XXXX. XX% $XX.X million was prior of $XX.X of EBITDA third the or compared million for

audience new affiliate markets. As Alex set from successful visits our traffic continue the and we conversion ARPD year-over-year. by XX% records mentioned, sequentially was growth driven growing unique of X% with growing up to quarter, our XX% last in

affiliate compared only June the in in Digital who include Last XXXX, year Dealer and ARPD by customers we declined was that quarter. solutions primarily decline primarily mix. XXXX. in X% dealer dealer grew customers did on This to and September XXth, ARPD customers converted or marketplace our by and were basis not the website revenue direct down from XXX XXth, decline dealers driven a driven products X%, canceled as XX,XXX markets.

nine-month $XX.X million the prior same XXXX cash provided the September cash last to in by $XX.X ending was compared nine-month million for flow million $XXX.X in $XXX.X period September the Free Net XXth, was the for ending compared year. year. activities XXth, to operating million period period XXXX

the Keep million higher in nine-month payment incurred we in revenue mind we that incurred prior affiliate period. is period, which than $X.X in associated year $XX.X cost with the share of million

and equivalents of was $XX.X debt $XXX.X was million million and September outstanding cash XXth, XXXX. as Cash

$XX.X credit in nine-month During our agreement. reduced indebtedness we XXXX was accordance calculated our the times net leverage XXth, by million period, with X.X at September

remaining ratio increased in net our leverage to that that to with step announced maturity In total X.X changes. ample flexibility on ratio our for leverage capacity we provides through and set to the agreement an May amendment times term maximum amendment an This market covenant increased XXst, of This respond credit amendment incremental financial we downs XXXX. the agreement. to October, existing total our

margins guidance between the quarter revenue year-over-year XX%. of communicated reiterating EBITDA with X% declines between and X% and We're adjusted we last XX%

the back I'd some this At Alex for to remarks. time, like closing to call turn

Alex Vetter

Thank you, Becky.

the this While year. we're building remain focused our as close out key we for blocks on future unchanged, four priorities

delivery. share our take overall and to continue value in will we improve First, traffic

affiliate the now complete our serving with customers we're channel on all Second, of directly. fully focused

of can growth as success. X,XXX opportunities. exclusive GM focused advantage dealers many finally, innovate we continue And new our Third, will the semi and to taking we of solutions customer drive as we're on to securing

up And to with questions. that, up I'd like Operator? the to open your call

Operator

Instructions] Thank our from you. D.A. And of comes line first Tom Davidson. from the [Operator question White

is open. Your line

Tom White

taking for my you questions. Thank morning Good everyone.

it dealer strong Just count to Alex the a sounds been like on quarter. start October's

said you dealers that be you going are to you extrapolate XXX the are for again adds. grow behind think to are Can net very the quarter you, I able affiliate full now given that conversions strong. nearly net traffic trends dealers guys

lead looks And traffic Any impressive. growth like what the on then looking the give of growth sense like very in quarter? just us can or downstream obviously you volume is

bit just some of your broader could product a there portfolio. I hope discussion and solution then how Dean strategy that into digital And which lastly just you there's hiring announcement, there video, in about elaborate kind fits around the Evans'

Alex Vetter

Tom thanks. have not on lost certainly Well, where the full control dealer hit we network, me our full of first stride. focus we've complete dealer no growth October look after month the to we the Sure reassured conversions having and affiliate month that are on the it's first had in

is And short-term to bottom-line. to I'm that industry auto typically make what decisions meet in say also the to a dealers as is tough try season going QX

right QX, dealer traffic we second So, all to want your victory don't certainly ways. growth the are yet to moving declare in on in the trends point, but

value, does our And satisfaction. translates are up your dealer that to advertisers' how is think growing the point traffic for leads translate Obviously, quarter. to I

with pleased surveys well satisfaction. pull as we're seeing our what we're in terms their of dealer So, overall in

you helping and Dean client. using the that saw that his approached everyone is media Dean Dean lit strategy and to eyes for was the data XXXX that buying think superpower with think that key not here. and other for in advertising, one and reasons question we And remind our final been on them Your Dean's about I this do industry been a their the of dealers. side from only and has opportunity television just bigger Dean up desk I'll but -- as as of about OEMs, I solution the in a is

seen FUEL. a that will advertising the video. the and we programmatic of you I've and technology accountable a effective solutions towards been linear these in massive business ads digital bought Dealer fashion. platform is advertising that Tom, years gems budgets there more Inspire, more and become past migrate in us scale dealers that in a of allows that programmatic recall to one advent the was digital run hidden And called we And channels. efficient traditional when inside And help think to TV opportunity at

help us vision. so And here to realize Dean's that

Becky Sheehan

Becky. it's Tom, And

for growth that dealer to count guidance question. not in Just achieve we've necessary one certainly add although QX It's we first to us that what have is to for you to provided. more important said the dealer to comment Alex an metric that your remind ourselves. I'll grow

Tom White

you Thank it. much. Got very

Operator

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

is Your open. line

Gary Prestopino

morning Becky. Hi, Good everyone. Alex,

how -- or the ability websites these contracts that year With renew well the years grabs out? DMS those that? something or every to these the the for a from like is like does Are it five after lot go they they in shake up dealerships, current

Alex Vetter

Gary. you, Thank

GM Hyundai overhead. also And without opportunity, some be to And from to dealers provider and free in and agreements to website specifically Subaru tend another you're all uniqueness, but think I got one quarter. Lexus. they all, but additions point we've just the much and contractual with that have of now move also both First that were new Mitsubishi to

is sign-up to opportunity there's a a multiple that role, phases four dealerships. partners GM where bit from. to road show little for choose for slower available dealers doing the on because they're GM's them The them are educating

And the New so what with showing we in the all GM we're out them and actively for Year. meeting dealers do can them

to slow are know that But gains count because in the one XXXX, requested the number dealer hit the sign-up vendor just initially the and so seen we're it's in in the rolling bunch. pleasing. most semi going really until as won't And be revenue there again, position we've exclusive we're phase. We

Gary Prestopino

then you around annual recurring the quarter? basis? solutions What in wrap that? can have a pure with on the Do you handy? revenues metrics of for technology just some Okay. us generating And was was selling metrics And what kind in growth that those

Alex Vetter

continue have solutions you have numbers, was as increased to don't closer the XX%, give a pacing know but The Gary. see over we Becky Becky that we will point ramp if estimate. growth business. to I you

Becky Sheehan

Yes.

was our business, almost importantly, there year-over-year year-over-year. a Dealer revenue solutions the is million up on that's Inspire within quarter XX% $XX which XX% website business up And So our basis. for of is

So we continue growth. strong to see very

performance, the to the help between we during we're more as local them website difference is growth earlier this simply ins our period certainly total growth business marketing that had particular to any that of but continuing we this bring growth and well. and outs has The that solutions the that also see time, drive year to their dealers strong

Gary Prestopino

quarter Okay. give And for how public? were somebody question, then you you're -- prior this a this much leads up did lastly asked making a the on that number

Alex Vetter

strong are as And We quarter. they're a well. upward in didn't but it, following both disclose the leads QX

up as So QX are and QX leads per leads. our dealer are total

Gary Prestopino

Okay. Thank you.

Becky Sheehan

Thanks, Gary.

Operator

FBR. next Krowl Our Lee from from comes of B. question the Riley line

line Your open. is

Lee Krowl

the I for provided guys guys. trending in you of for kind to remarks. wasn't question. Last of taking kind XXXX. noticed, are it my the quarter Hey, good trends And prepared some of Thanks see up. guidance some

growth you expect to EBITDA there the Just XXXX to call the return changes any curious to is from double-digit revenue to and as in last is growth? commentary

Alex Vetter

regular on guidance we're were we typical now and and XXXX give then time. XXXX at for our I going to affirming our think our cycle obviously be

Lee Krowl

then but conversions. Okay. churn had anticipated conversions the of handicap the And see to Certainly enough to trend, off on some or way a -- of maybe a is good the to there October just affiliates. quantify you've exciting affiliate maybe point be may anticipated to churn this

churn there's of attrition, How it but all to a fully trends about seems out some next natural like as these Obviously, the of get how is couple there that think guys onboarded. you quarters? way of over kind kind

Alex Vetter

Sure.

for one, I from a be of were markets conversions the is I a more the solid lot in to affiliate quarter the we have important media experience that think pointed tend end we card. to being do final is that also think which ARPD realize lower on investors our rate to

Our skews investor size by dealer affiliate in spending models and is should of pricing to that and ruler going forward and market I conversions dealer with smaller solutions the what dealers both about well. excited and smaller emphasize markets size our growing will strategy think But were be lots. as increased final most ARPD

continue have competitors it's will and So churn, some pretty to as well. we durable we know in business our been

And but the so manageable really focused think rate growth as volume. this now year more achievement the I we're we cut down biggest that's brought And sales. -- probably much a into cancellation we've cancellations been really on total

We although that candidly. do muscle victory work haven't there better at, we yet, we're to certainly new some points getting but still more much have declared a October to

Lee Krowl

just of perhaps continued to plays this kind how laws the from exciting you as mobile developments and kind privacy on how then the strategy And Got me. data as that last maybe with talk just it. of Roxanne well? And is future-proof that to are Can shift guys perhaps that? that you Roxanne also into then of kind highlighted Pretty coming around Roxanne. question from

Alex Vetter

of standpoint, using a to about a that performance. dealer data to on is largely data see to originate at are website four we're the data times sources very combined. users go what's is of in our non-TII their Sure. level vividly that But that dealer's we Well rate key from the privacy other traffic metrics Cars.com validate Roxanne converting all

that their traffic perhaps website date that have is needed dealers the money their validate migrating environment is this in. to from so best to Cars And

question missed. privacy beyond the may second I have Your though concerns.

it one run if time. passively could you more just So

Lee Krowl

the with shift mobile? continued Just the traffic your context Roxanne strategy in in of to the

Alex Vetter

provides there environments. think visibility mobile. in degradation I Actually, any Yes. it all in visibility the same And isn't our with

Lee Krowl

Thanks it. taking question guys. for my Got

Alex Vetter

Thanks.

Becky Sheehan

you. Thank

Operator

line from comes Powell question Goldman of Daniel next from the Our Sachs.

is line Your open.

Daniel Powell

the we to in the called for growth and the Thank your back ARPD this get go the Great. you being pressure into One next quarter. a of year-over-year year, questions. year the wanted view into of Two Appreciate part reason the you. time. out cadence mix kind on on of just as of as some

force. As that at you sort of impacts from out you continue you in to further negative the of go sales see tale with mix? add expecting point time? reorg guys Are to Are can this dealers your you down

from question up this second it spend looks reading of nice based the you X% then last on in but strength. your about a up some quarter numbers And if the quarter, about was to saw I acceleration XX% correctly, went like traffic SEO

that if quarter lead up it quarter up from your curious, -- like did or last last Just from it did? X% decelerate spend did, the X% the or your Thanks. traffic accelerate number did like

Alex Vetter

Sure, different Well year-end. you. in dealerships the give and mix, type. our we growth not a as now of product on We'll redo better and solutions we for lay all we're in XXXX first that outlook thank by projecting ARPD between that on

will projecting growth we on QX. in XXXX our be And aren't data give that a so you outlook. we'll that ARPD But

we think to the every a new where I the experienced seasonal that volume, which year. see sequential volume used, reflects did car is the stronger drop quarter think drop we we saw I new as of traffic reflective which in lead than I more cycle car think

strategy spend marketing player marketing our And in of competing of exciting to traffic in the I valuable as the think which the into were actually they're SEO an new noted, drop And been the quarter. drop quarter opposed that a arbitrage most And trend delivery, value able and they're QX because a then incremental it most they search. down sales to spend acquire, know our that has considerably, back comes kind bidding in source probably We stronger for but dealers right? you first tapping search. in our tends of not the up who to traffic is can is scaling

Daniel Powell

Thanks. Great.

Operator

And question line Fong the BTIG. from our from next Marvin of

line Your is open.

Marvin Fong

my for you taking Thank Great. questions.

guess used were about profits on products kind last Can And gross I a side environment upsell one, the you us respect little some revisiting something car of just like quarter your First little macro what down. with thinking because are talked how ad the we just getting dealers of of tough. the skittish, and they're about to their looks dealers on update with spend? Thanks. ancillary

Alex Vetter

Sure.

I think thanks. -- Marvin

I by theme the the is and their think to dealer as advertising. which be dealers to alternatives up way primary industry profitability think traditional to the that continues headline great us focus, in travel with sets introduce I the meet I new country

still have opportunity to video not still turned I year more one two healthy as profitable Our also new out thought way car sales, has are a catastrophic the that very XXXX. can car that dipping growing find really market sales months think recognizing is be in and healthy also I probably are to used And think would a dealers there grow help That said, level. as at ago. while that's they

improved XXXX. on has differently to mood we the into and think what dealers focus I can started have So do more heading

Marvin Fong

think those remind when update had you just like opportunity tried you Could thinking perhaps the me quarter? up of coming on get And before, on two aggressive that other you've year? this are listings kind and fronts. of said in Advertising upfronts us which Thanks. the that And quick timing how I you're have question's the the capitalizing -- was then about what Becky, Thanks. more just on this, follow-ups. Great. to National Alex. you

Becky Sheehan

Yes, sure.

have on we listings marketplace. front listings our million the on So X.X

very the and a the as with Advertising, And calendar strong upfront proposals So relates in we're year to National OEM. of number. the it midst discussions

year-end get the We'll literally closer that happens then insights course, progressing where the into we that's more to the OEMs and as And to first year-end. as how to quarter. So closer of we happening that's speak. fiscal timeframe as have

Marvin Fong

you. Okay, Thank you, Becky. great. Thank Thank Alex. you,

Becky Sheehan

Thank you.

Alex Vetter

Thanks.

Operator

question next the of line Our Jones from Nick Citi. from comes

open. is line Your

Nick Jones

Hi, thanks for taking my questions.

at net secondly, you increase of can and then continues as the update traffic strategy, Have as the back. internally all? important of your They're in tools leads on some platform traffics on addition And starts capital dealers less I becoming the given more are more nicely your kind the growing. for conversation ramp allocation grow the new Cars.com's with one, an First attribution's to changed ratio? to looking give guess leverage or to products. in

Alex Vetter

with turn start for capital second on the I'll our it Becky and question strategy.

I franchise definitely think the conversation turned with dealers. has

I franchise absolutely the independent the costs can hold dealerships look next into heading and/or line think year. run solutions continue their level, more independent dealers cost at looking just automate for efficiency eliminate to vendor but to dealers efficiently and technology are for solutions that for

a in terms that our our feel moved more to other And conversation. And foot the that say like the than of welcome higher-quality our I would definitely I delivery, attribution sales have we source value that also providers. just more on broadly data of and front in a R evidence sales shift been around front, team we're we've has

Becky Sheehan

that, near capital And focus some down prudent our more debt. allocation, we the is pay of think to term, the then it's on in

do The did quarter. repurchase encouraged prioritize deleveraging, You'll active we've talked been is the that see We in what And credit still to we has doing. a environment we bit program. as an third with we're some have also of which tightened. investors, have share

proven down that's the near-term debt. public on the taking our in a is have to of but I as focus some company, think a tool

Nick Jones

questions. my taking for you Thank Great.

Operator

Steve comes line And our from of the from Craig-Hallum. next question Dyer

open. is line Your

Steve Dyer

Thanks. been Most have mine Good answered. morning. of

you been. in how October of Just you that noted quarter? October. in trended improvement give the one more throughout swung in kind and quarter And than And of no? of kind linear throughout other of cadence you did positive on words churn, Can down the better X% much, in see or Alex, the much that positive then us it's sort the quarter,

Alex Vetter

Yes.

had I did improve. to that at improvement, month to think sales And and on fairly see improving. the trend mostly, rate been looking consistent and think, cancellation we on QX The now, cancellation if gross overall has one continued sequentially we the improve, in front, dramatically much particularly quarter improving has stabilize QX. going at been trend, QX has to data look right more gross rate but the one sales you the and volume the the didn't steadily I

Steve Dyer

the to amount And of conversions $XX okay. detail you little what bit generate you a flow are expected that up? of incremental talked Can that more cash release free in in on deconstruct it million affiliate makes sort about Got an provide XXXX. then

Becky Sheehan

Yeah. That's components. two

component with complete. is conversions the first realized the So the we to wholesale uplift that retail revenue

get the retail built dollar wholesale which the actual instead collecting So, revenue. the being that is revenue dealers for on we that's $X.XX of

first component. the that's So

second is making of the partners payments The that conversion. we're the end to the to former achieve affiliate component early have the

that So extra to of incurring part agreement markets convert our former you'll been early. partners to as the payments affiliate recall those we've

next particularly to be So will in year, significant still there'll some of we happens. year the that next midpoint the the of payments affiliates recently most half those first those converted uplift And but have more obviously, by of payments once end.

Steve Dyer

you. Thank

Operator

from the Arthur question Doug line Research. of from And Huber next our comes

Your line is open.

Doug Arthur

wondering, quarter. in revenues I'm you of sort Thanks. Yeah. can the if Becky, direct just aggregate

million. the And $XX.X XX%. said, incremental impact said You affiliate was you up was I I of Inspire Dealer the believe think conversions

impact So ago incremental was Can you I that to what over a QX from starters? that's year speak sequentially assume. for

Becky Sheehan

uplift $XX.X have it portion basis. first – call the right QX to on I'll retail comes of part course large line QX But the me. don't for of in wholesale have out of of in front year-over-year you is apologies, the increment a which the revenue, that's an the were So, million a I'll that's look I

basis year-over-year The Dealer million. Inspire growth approximately XX% to a is that $X equates on

to million that grew revenue lower which a from subscription business direct Advertising to line, year is dealers offset excluding we that less the did And would so today be get National $X.X on notion it of that the the the the achieved course ago. than has we

we provide So apologies Certainly, is have Advertising front get changes for components. those quarter and National key the down were year-over-year are in what those can of that the as don't me in QX. XX%. I that well.

a a decline basis. that's So $X.X million on year-over-year

elements revenue. key of So I those think are the the

Doug Arthur

third affiliate million. last I direct all the baseline conversions, very year mean obviously quarter Inspire that figure excluding Dealer the was was excluding the in and growth I So, using impressive $XX for

So not in sort of number the that the of was or double-digits fair? I the impact of I is sort the the that's using don't know underlying was that quarter high number. – assume that's right Excluding direct then I whether down but conversions? That

Becky Sheehan

Yes.

Doug Arthur

Terrific. very you Thank Okay. much.\

Operator

to We Vetter have no for turn call I'll questions Alex back further in remarks. queue. closing the

Alex Vetter

I We'll simply soon. say today. you joining for talk want thanks to to

Operator

call. this concludes conference Thank for gentlemen, and you participating. Ladies today's

may You disconnect. now

Cars.com (CARS) 6 Nov 192019 Q3 Earnings call transcript