CARS - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to Cars.com First Quarter 2020 Earnings Conference Call. Hosting the call this morning is Alex Vetter, Chief Executive Officer; and Jandy Tomy, Interim 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 May 20, 2020. A copy of the accompanying slides can be found on the cars.com IR website.

will question-and-answer there and with presentation, Jandy. today's be session a Alex Following

to over ahead, the Director now turn I'd like call Relations. you. of Thank to Please go sir. Investor Hamid, Kamal

Kamal Hamid

welcome to first my Cars Good morning, as everyone, our quarter call, call Investor XXXX of Director first new and conference Relations. and

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

We income, with financial can press release, EBITDA, measure the most will our earnings these measures today, appendix adjusted EBITDA the discussing certain included GAAP be non-GAAP cash be of including found margin, and Reconciliations to in presentation. comparable adjusted adjusted and this flow. in measures net the non-GAAP directly of tables free financial

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

At like the Alex. to over to would this call turn time, I

Alex Vetter

this Thank the welcome weather our this and have Jandy, morning's call discuss our I'll flow our and the impact strength and storm. who we them results have first board. our our support we us dealer through will you COVID-XX, the unprecedented discuss support cash insight manage you, On provide business financial for help to XXXX. have provided hand of into quarter through quarter the that first of of to conference over highlights, will call, period. morning, the everyone, I'll our liquidity It's the then actions deeper Kamal. call this to customers great Good to briefly business and our on taken to

environment, I proactive strong customers to when their would and I us didn't continue, work if we a our COVID-XX response be our shifted for support to to impressive how a maintain were needed at beat, employees proud and most. pandemic provide for we am as and time remote I remiss they able of without a Before missing the mention I productivity dealer

thank operating how are also who time for community, for are your those in and the a the I good of investment this work participating agility. of support wish our cognizant employees you of at of dedication, highest you I'm this difficult earnings you industry I and as continued I is our time together, today. health. call professionalism, Our overall, also through and levels appreciate in we all all

we in and serves momentum growth. to strategy the strong the adjusted performance as period all and we In EBITDA Operating consumers beyond, and in we crisis that is quarter from period beyond. have the the last expectations on have of customers that we'll our deliver put navigate in of that that pandemic to quarter, to had foremost of to quarter solid us continuation evidence and traffic led events, and term emerge This through benefits near to and double-digit the OEM QX Despite revenue, understand followed solutions going contributed several another our revenue over growth, revenue building the business pre-COVID-XX, quarter of deliver through adjusted first challenge that this blocks EBITDA on we when exceeded the address minds. order in and place second and this to recent website the momentum let's sustain advertising our in will quarters continue built double-digit a are first to increases dealer during and

unique were of was gained XX% two-thirds up approximately of up channels. ever, Total as and visits of consists while total traffic, in with of our year. prior our Mobile SEO, paid cornerstone traffic traffic, visitors in the the is we quarter monthly traffic high-quality XX.X visits which the even traffic, highest XX%. represented million. XX% month of and Delivering efficiencies strategy. a were Organic January traffic from year-over-year, total app, our traffic from direct, up represented XX%

record track and so car that a organic the building traffic dominant our Our is buying. sustaining to brand particularly editorial unmatched editorial reviews virtual result position and Unlike of are of content, critical to many help solely value strengthen position variable the marketing within strong build organic These advantages dependent of aren't on expenses peers, and our build we our competitive to traffic. a industry. continue

last almost on complete to quarter, the dealer success of year, delivered three fourth XX,XXX. new in cessation believe we dealer total the to count in that dealers the count continued positive of due we the March, last primary XXX sales weeks bringing of two trend our added quarter our count in first our is Building dealer an We despite growing factors. during

which delivers gross higher higher in dealers our vehicle. that times leads good ROI First, in appreciate profit the quality bad, organic from and result audience per

with professionals, they business in-market Second, our they strategy. a set of diverse the equip and our to differentiated on innovate quality competitive car saw the ability sales dealers shoppers our recognize also solutions and our face. enable firsthand who digital third, customers rapidly pressures to them In to understand solution March, platforms. and of needs dealers' better service And target

dealers tools Our teams their leverage with to help are grow to business. technology digital armed

able from service service. has deliver resulted customer year's increased identify dealer benefiting and are and improved lower sales and armed We opportunities in teams force dealer reorganization, churn and as This vastly sales. are to sales better strategically rates last new our

OEM believe the but quarter that our opportunity of the fourth evident position growing stabilization for increased and to OEMs. our in has strong became difficult XXXX, the we in through signs continued quarter. national, I the the National marketplace stabilize of in and advertising of environment advertising to car first months first Turning new a growth traffic nine XXXX, fastest as advertising experienced

Cars. for key also strengthened differentiator a Our editorial is content

our as Of Award, featured Ram Best to annual our proudly and XXXX, RAM recent enhance national award For national need the dealer-inspired their shoppers and Innovation like environment, teams in discuss in continue continued named Technology such later performance are continue this and we we campaign. drives. the strong advertising truck and provide as will year, our the this key to the in will car the content example, more our XXXX innovation differentiators, virtual advertising of test of pickup the solutions revenue, luxury and in call.

then drop in including in and decisive our sales, markets the our and shoppers dealerships. dealer COVID-XX, quarter as last defined engage earnings call. on adjusted for customers and dropped the to as the unprecedented changed, XX% to dealers significantly large traffic, the non-essential, well year our Michigan, half saying rate, year, up sum In environment. indicated on experiencing our prior foot we discussed were as EBITDA of and that Car robust shut the internal mid-March, to impact businesses the our COVID in we current across restrictions me our exit first in the help down our with way customers, company. an for OEM XX% with In second month We were on of took imposed that to in instance. Let sales actions focus and revenue expectations delivering were urban by data in all the strong of immediately growth country, and impacting auto pivoted March, the growth world were car many that mid-March,

shopping, continue to of cases, spoke very the and we by an in second set equipped financial designed environment, We of customers, to of them informed help to more a We time considering to significant sales importantly, thousands entirely We solutions dramatic with our put and users set even as time, to provide a spend driven solutions our are quarter program shift some them in promptly relevant virtually. marketplace dealers period provided but purchases dealers then relief to for more with a digitally adapt to short together not discounts of digital issuing that throughout our created subscriptions. car online. to relief a more the their only operate wider in-home

we they to after relief immediate of Dealers concerned understand many their clear in needs, were form First, our with the dealer discounts. in-depth it made financial conversations that and partners the the about for announced provided March, both month invoice quarter, May for of potential XX% and not June. and And April impact XX% of of accordingly, month credit the we across April. in just the second

Homeland governmental to we as automobile efforts. services. In of petitions effort auto needed permission X,XXX of initiated to federal successful the of also DHS Security, dealer hours, operate, from dealers nearly that and part and and dealers to the add knowing campaigns local quickly several we XX generated state essential less our list the Next, jurisdictions leasing Department lobbying and to sales advocacy to than persuade

or by our and test shoppers, our dealer enable rules, we out and changing cars home reach via worked the virtual dealers delivery, users to buying their as continue agility product to all as behavior. further help only, new leveraging by are such car under to to and Third, OEMs customers expertise sell clearly appointment digital drives,

range home added solutions, appointment our to including digital addition collection of batching. also we merchandising existing and offerings, In a value launched of virtual delivery, retail and

basis and and buyers them We leaning to on in-person available a engaging now dealer platforms absence streaming who in conversations also online market to that chat facilitate powered more target shopper ever. visits. our in also in FUEL content the AI allows our new online Dealers effectively trial exciting end more to video online platform in-market are cost are bot than with made of order more

our Program looked swift After providing digital establishing reduce tools, we our to taking internally, structure. Dealer Relief them cost with then and action decisive and

our of exit at result a impact. of a revenue operational to will in program of long group. took our are position and result, might last. bank significant cash XX% the of with the of brand, this of cash discount strategy, COVID-XX the offsetting liquidity and and the environment, environment, generating, with business Our a subscription recalibrated we of a revenue align of supportive goal we from surreal our actions least crisis because Despite the effectiveness we our strength and enable strength, and flow, to the us in decline to business, challenges We this of as number however the and substantial nature the have period

down the $XXX million credit We to our to flexibility. liquidity facility and decision prudent our draw revolving on increase made

be liquidity. and should given agreement covenants lenders the of we're today's flexibility on we've We about taken, impact also continued current expense Later of commenced our collaborative credit taking the provide uncertainty ensure and reductions with environment. additional the will financial actions call, modified, Jandy our the the whether color and on discussions to

essential as of are worked We through industry. part in the selling past to sales solutions we efforts the severe, is services, to to digital impact brought with for of partnership COVID-XX have get know initiate car the recent antidote classified and While platforms. we safely market digital that the dealers

dealers Dealer consumers car and our reason marketplaces business, rates, underlying advertising remains an leverage investments are shopping operating competitive power will to and dealer they inspired looking this at to cut make eliminate costs tools where should not their may turn buying. and websites are from differentiator and to grow for especially quickly cars. in-market for double-digit While untargeted programs, is marketing This and strong also a continue continue important are to essential. Dealers online unique virtual solutions away Cars.

will GM and confirmed end launched has year. be all of begin are of the rollout websites to over contracted the that point, June, scheduled as in that planned currently by XXX To the

as throughout call. the XXXX, a last As subscription build half second for result, will on earnings of revenue program discussed this our

much platform, a marketing to budgets more under We than [indiscernible] in places record now We in with in-market using buyers and focused XXXX gain of has sales have February, than traditional are pressure, advertising a shopper video category FUEL a new of wealth data ROI FUEL. engaging. also where dealers launch shoppers, continue to television. ever momentum. in-market are data, course our this and starting car cost-efficient We With by need target had higher

are solid relevant FUEL, and the We seeing pickup during COVID particularly crisis. in and it is interest

interest car many of give rest transactions, historically environment, their it and to [indiscernible] category price is are quantify the too and to year. Those what it's online, more with Currently, handling are and of buyers have completing our financing sharing ride uncertain and cars buyers great engaging homes. for new has environment car digitally the online, public that concerned who transportation. car negotiation those buyers delivered the services means this for customers with In impact a the solutions created there having COVID-XX and the directly shown car on sanitary of relied dealer buyers. these Cars evidence in early ability to COVID-XX

that this the dealers in York to how hear on difficult our operating end, directly to from the U.S. during is cars he want relying time. To I you most extraordinary to arguably New today, market one hear solutions of City, sell our in

Brian Benstock

super Manager Acura. dealerships look used not the launching, to perfect vehicles. are that this Alex they moving and and we he we that adding and to To eliminate at reach in Paragon cars, use and of all he Paragon Coronavirus, selling to line. platform digital could certified for and to product. sense, with important are Hi Acura Honda really to Honda Paragon that than that now, profit is have Brian FUEL actual have, It's program moving told Benstock, the we're being were I the assistance vendors to the about and reached me with President dollars. more are the and one some bottom without gross generate not video we're forward as a and facing right? is for in out net offering to transaction the General bottom makes the done line, forward And that profit where asked the that customers in, world. that Vice a was Paragon vendors And Cars.com. We vendor, number Cars, this dollars we an shows marketing looking the

to as but that a Cars.com So vendor, a strategic know have it's great we not partner. as

In are fact, an they essential business.

Alex Vetter

on visits some April the we the seeing were what prior year. X% you give for as start down Total me let quarter. to details second compared Now, more we're

and However, is the of total April few in of year-over-year. last traffic first the May, again, up week days growing

walk-in increase on deeper increased in dealerships, an funnel In addition and to at activity websites. positive Cars.com, include other behavior on traffic shopping signs dealer

second customers, set dealers cars be that their them stave in and hardships current help in digital believe will will and beyond. quarter these of However, currently with market quarter dealer condition. financial will coupled off our full strong have to face, a including solutions, put traffic, businesses rebuild discounts the significantly of pricing that trends the place broader and and enough for the the positive we We organic not the sell online impact package

and and XX survive conditions. have last backbone I resiliency one many have car have selling, that is sold who solutions are underestimate the April, operators. in leveraging heard who despite York, the we on dealers are the local firsthand surprise moving tenacity used is of digital including physical of a in cars Over thrive seen of no businesses over our have quickly New to many success having thing learned in It location. in to sell dealership Syracuse, never closed cars a economy, had virtually, years, economic from Local to and I XXX the tough dealers store

to year Therefore, organized recovery as ourselves react believe to on for time. have of We but counting situation the evolves aren't over we would it. like that the are half we second projections accurate, the

control, they and disciplined offerings service sheet on flow solutions focus strong on are highly our our expense to dealers, and things and cash We can controls, flexibility. customer continued are focusing we balance and the free

will continue with the get time together. We and customers work through industry our to to this

Now, financial I'd and and preparedness. results discuss turn call for cash like quarter future our first Jandy? to the to Jandy over implications flow the to

Jandy Tomy

in of prior to beginning million, quarter to first was year of with by driven outset upfront and Revenue the national year part in stabilization PD the compared Alex. a revenue prior OEMs XXXX Year-over-year, business, customers due relative advertising the of XXXX line than you, decrease million fewer this representing $XXX.X the year. commitments primarily at AR the of prior in the Thank lower dealer X%, being the for was year. This at $XXX.X declined period.

In Now, cash our a set and caused covenants on of tax impairment event financial goodwill restrictions. the that the pandemic operating of impairment into COVID-XX The our quarter. goodwill affect remains based intangible first recorded or XXXX, deductible a expenses benefit with triggering in does me the from purposes determination move forth for discussion not activities The million, was cash a compliance by flow operating primarily let the of our the charge charge quarter agreement. related credit from non-cash $XXX.X in intact. liquidity there the we and asset

from of Total in lower well as billion marketing reductions the expense, non-recurring of operating resulting $X.X due expenses the marketing spend and part amortization XXXX. charge, for costs or impairment year the demand first These to increase a to by were decrease increased $XXX.X lower XXXX as million of of efficiencies, ended were quarter and shopper in for revenue due restriction. due This excluding XX, was million, the primarily our the offset September to $XXX.X planned reduction, alignment related benefit liability, prior to the share expenses, compared lack which pandemic the COVID-XX with unfavorable affiliate contract from an period.

XXXX for year was in $XX.X share XX% or per to for of to quarter income of first XX% of $XX.X million GAAP the was of $X.XX prior or quarter performance continue per EBITDA or revenue compared XXXX $XX.X first the We OEM market-wide dealer share, quarter diluted quarter strong $XXX.X SEM the million share for environment, loss to the a per high-quality of to XXXX. and million, first customers, diluted revenue, Adjusted diluted greater $X.XX leads pricing $X or $XX.X traffic net the due marketing, XXXX. or for deliver to of and million efficiencies period. first first to per to in compared the XXXX of net and GAAP diluted of was compared quarter pullback. Adjusted net $X.XX or our million better loss a million in $XX.XX due share,

an unique in grew growth accounted year-over-year, traffic quarter, and brand visitors and grew XX, prior total Mobile XXXX, channels. our the digital year-over-year. solutions traffic grew due first in Dealer were and of traffic, growth half in a for customers, XX, to decrease as efficiencies investments XX% both and March awareness, paid by compared offset the XX,XXX average customers XXXX, by the compared increasing in total product innovation SEO, monthly rate was increase XX% supported XX% XX% For second primarily to of to of partially by year-over-year XX% This year. December of in the March. in X% XX,XXX sales as of of

the year-over-year, associated cash flow primarily of XXXX, XXXX quarter in discounts of was ARPD for in XXXX due periods of of by cancellations the of Free compared with period the payments was $XX compared as of XXXX. down flow in upsell of first to Cash million, and equivalents and cash the for prior was quarter the $XX.X XX, was cash second first year. half to the in the quarter Net $XX.X in XXXX, X% Cash first million, operating result March COVID-XX. debt and $XX.X million the $XXX.X activities provided by given early $X,XXX to last as March was impacted $XXX.X outstanding same was million year. affiliate markets. conversion both million million,

flexibility uncertainty increase period, the three-month and the million the of our paid pandemic. around facility credit financial to due to borrowed on $XX.X $XXX down liquidity million revolving COVID-XX we and During indebtedness,

cap Net by the agreement, $XXX our leverage our our X.X in X.X net Without cash XX, agreement. with XXXX, at credit imposed leverage times. times, March was accordance million credit was calculated

about our with And communicate discussions an collaborative having course. are in we be update whether we our agreement said, should Alex credit lenders due As will modified.

million from quarter. had end remains April, of Our hand, slightly cash first At end the $XXX up strong. we liquidity the in approximately on of the

highest strong a believe we set. our the profile, has which cash business competitive in Our flow is

neutral. a capital is working expenditures, and adjusted minimal business free in relatively are requires asset flow. capital high Our consistent This needs of EBITDA into conversion results light, cash

operated cost on efficiencies we COVID-XX focus into entered the flow as induced is maximizing continual cash Our and under discipline we crisis. this which

prompt resulting at losses offset aggressive targeting to related revenue reduce actions Alex the the expenses, to restriction. anticipated As we COVID-XX our least took from of XX% mentioned,

transformation, liquidity our cash across compensation to actions the We the members, team conditions board a spending, alignment the for this including non-critical management of realigned enhance in and took include to and demand. employees, variable technology market with our board implementation period. operational cessation an date reductions for in marketing and during The platform respond we all a of spend shopper the delay the

decision with need furlough These to strategy also on of employees, digital employees. We uncertain exited expenses, our the to our capabilities but also were emerge this preserving execute XXX the right industry These of decisions continue those of furloughed to XXX actions side crisis. and have the made and the ability and our subsequently solutions transform difficult difficult, ones, economic while substantially reflect reduce pandemic. this given now the our to other to impact duration to

on an current you I'd trends our like now in update we're business. to give the seeing

rates traffic April. started As negatively and in in April, cancellation have the had what half the than May, we traffic far to into second Dealer return in earlier, so and Alex impacted recently, first quarter. has And in March of higher in experienced QX mentioned the of been growth. the been to of stabilize month week and last

relief lower quarter imagine, enabled monthly than us you us given avoid of now hundreds as their average. our sales Our of have new notice. who are much first our the had Also, cancel dealers, might loss XX-day to efforts

let Now, me our turn to outlook.

impacts flow. prior a EBITDA The the to the were COVID-XX half negatively As year adjusted are growth. that continue have year to with position the robust to the operations COVID-XX, of and to we believed cash revenue of and of and Alex in effects and deliver a impact of second mentioned, we exit pandemic results to expected

profile consequences. to accordingly, importantly, March economic as our our concentration XXXX flow duration value, cash well storm. brands, of However, of most of positions restrictions Nevertheless, and our and the guidance. on And on solutions, vary, impact our we strong suspended severity the weather XX, organic extent the will differentiated depending the strong our the and high and the liquidity,

back me to that, the With call Alex. let turn

Alex Vetter

Thank you, Jandy.

monitoring time we to surreal what that are digital developed work swiftly we we trends our state can to actively together, Cars over will react this can of last through have by industry. state I market control, Because the several are of strengths months, As so evident confident the transformation the am that changes. lead and we continue we controlling all are

relationships validated our emerge ensure increasingly a the solution solid this audience, will Our customers sustainable with we side on stronger deep strategy, the other and position. and of in competitive

With to to call Operator? open that, I'd like your the questions.

Operator

[Operator line Instructions] first D.A. Tom White the Your question from comes of of Davidson.

open. is line Your

Tom White

guys, can is early Great. and Thanks cancellation like side on over there. the comments. have it on sort the maybe are the a bit. my and out things healthy course for of know give improved like outlook parts lot It uncertainty either there's taking guys staying Any May? over those into of little I Or states second I hope of of the evolved seems - maybe of questions, April follow quick trends just insight you everyone into a But the on have dealer and up how sane. here your cancellations Maybe cancellation up kind opening just - parts traffic of sounds of might into the us quarter. trend. sort things, some how a

benefiting some in. got who those might money from also stimulus and dealers checks be You've coming

quick I And have kind just curious of how on thinking a of So just cancellations. up then digital retailing. sort about follow you're

Alex Vetter

the on saw cancellation cancellation difficult well, we for I first am in on pleased April, Thank you, what rate relatively quarter Tom. took expense I assumed of a more we side - sure. and actions persisted. rate think ahead our that The all, the

we sales. challenges I the think saw slowdown in new dealer where is

dealers operate and plays into strengths. think really more I this to as our trying and figure I increasingly, was to digitally, think how And that pronounced. virtually are exactly more out more

we're so, cautious very taking And though, I think. a outlook,

know, you have us to notice. give dealers As days' XX

that is a batting our your the May. to our we've last and make engage essential helping strength elevated really and with to volumes, got our in you dealers for we realize vital would able them show dealers So value delivery, think good and terms as we've of shown lead cut average are certainly we're this want of this organic the But I and cancellations business. in and pretty traffic,

Jandy Tomy

right. go just would follow add submitted had really cancel on reiterate to their thing those only out save us after I and put That's that the we program them. Alex XX-day said what The relief helped dealers notice is that and

than it really April we like we the said, what much program feared, working. Alex better was experienced relief So QX, just in although higher is underscore certainly had helping the were cancellation than that rates fact

Tom White

alter be from retailing kind stuff having kind hear the Could you other Perfect. it solutions to out then, But, of about how dealers? That's digital solutions And dealers how you. and guys you adoption adjust like it these there your trajectory to who for this interest retailing, how more some catalyst the and to a know, helpful. Thank might broader lot from virus of of of cars. the way retailing differentiate away a digital of I'm sell are curious this seems on dealers It digital like in by you getting think just are just sort Alex, tools now. guys of to you kind of of you interest to sounds kind business. new some giving for right

Alex Vetter

tools I know, and with that our You how of open this they level are enough, of now linings, industry. Tom, just engaging digital think many silver are evolution speeding the look hard which we're one And is you the not if these leaning there into how are and operators store can work discussions digital marketing owner understanding the at leaders, to digital remotely. the now sell but the is

retail their tools then also our growth. And grows. chat strengthen yes, overall marketplace dealer we our when digital see not strong tools, in does evidence And see for inspire appreciation this that these trials our so, are for we use but Because you tools. it dealers and only certainly our business, offering their digital

And we help crisis, only value. think so we understanding will dealers during anything can their our digitally improve this of more that do to transact

video are and much pleased the we're And learn owners, ever rate And who one than of think calls I'm number I we're the at taking. better measures certainly is wanting to webinars faster so, both this really a with with that having before. of

Tom White

Good nice guys, and quarter really thanks.

Jandy Tomy

Sam. Thanks,

Operator

question Marvin BTIG. Fong the from comes next Your line from of

Your open. line is

Marvin Fong

for couple questions had and the just thanks glad taking case. that and and morning Good that marketing hope of on my spend. stays everyone's to a hear I questions safe

realize, among that pretty you're leads traffic the efficiencies the healthy to is But pretty sounds no have that more macro to that? curious just online are to to considering kind still strong, fact of well pressure, to I going kind speaking. that and we remains balance activity there time, it just balance know, the strong, but marketplaces, also be do fact you relatively of quite how how know, was that on You quite, is going that you same like doing you're do at the need efficient the offset

Alex Vetter

question beyond we've And the that on virtual pre-COVID. think a the organically that a pleased with on generating shopping the puts restrictions of it's been generated. I in this rise efficiencies is face were then, we were the very we of terms in efficiencies smile that my consumer already because

a able is And been bright to the of one that on so, base. that's value spots generate efficient more well much we're significant as

OEMs new we of and strong as And side our consumer I to continue concentration offers, to car stimulate of that really most the continuing zero And And that more seeing remind think a have and than look Marvin, our also manufacturers to traffic accelerate. to lift incentives and than the introducing set. as of competitive that traffic engagement we're you demand. higher leads are in business, the likely are car new is car percent new

Marvin Fong

are, those dealer up should the discount, follow what just whatnot, on thanks, Right, excluding QX? grasp about think we color Alex. a on ARPD pressure trends top the just we upsell to pressured in have versus good with on of think but account us continue cancellations trends, ARPD, gave should paid a just how on the saw be to expect underlying on I since Thanks. and ARPD we great we you And the

Jandy Tomy

cut there's a At lot just cash, be lower. relief Yes, Marvin. right, that the dealers and QX, money with will stage, mean, we to looking Hi, far program have definitely- it's a and save of there in ARPD out save obviously, costs. discount program clearly place, I this

focused hard to the continued but pressure a helping year. short it's year. from the to the But very expect storm out dealers the know, guess plays dealer half So I throughout that and answer in we're little you our of keeping there the base I predict the on of exactly is, dealers, the rest supporting weather the second how downgrades, be bit into the would them

Marvin Fong

thanks, Great. the Alex. Thanks, and Jandy, Appreciate color.

Alex Vetter

Mark. Thank you,

Jandy Tomy

Thanks, Mark.

Operator

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

Your line open. is

Lee Krowl

my a solid there's on Quick on you? taking my safe. thoughts have on for Congrats very in discounts include that you echo do wide Hey fact guys, an you, everyone front of implemented the and question in extension very discounts beyond place, thanks those appreciating of set a scenarios quarter any question. guys staying that of the of scenarios those

Jandy Tomy

one at this quarter point, let's week, much a at one of time. month, it's very So take kind it one take a

hopeful. all are We

dealers into our listening way knows our pandemic. pass of whole everyone working wasn't probably nobody committed the supporting out think this of the QX obviously And through right? the call understanding as answer, are this We're that quickly. quickly immediately though, to to I going we

to all we of it's months. way looks geographies they exactly kind they too at change some hard last the our more are think realize But this and to continue I continue to up operate and certainly dealers sell continuing seeing that open the this stage, to hopeful that like. been successes that and operate. through more, that They've So what a couple to these virtually can world say as start of

Alex Vetter

discounts Yes, know both value, and and advocacy think we're provided our we've efforts, way. tools, step financial even them solutions, our add that's in up beyond big in that, I the are think of through product would to where one the dealers a stepping this, up that part I side formula, only just on I obviously we're with

distance through. know I that at well-timed And physical the are up. this our think, are the communication social we and backed have you recognizing up, dealers trends I crisis not got consumer there with get them but be is know, for we are to we've all between to them off distance us

Lee Krowl

kind the kind business, a today kind and of of of the date appreciating the update guys traffic provide Got a And fully kind of helpful offers? on could Perhaps and quarter trends on update initiatives [ph] it. you national you interaction. OEM quarter with you consumer to provided outlined incentive then, on

Alex Vetter

had of going is I that here So their weeks three crisis But live things towards. by past. as the in seen we They typically in emerged reallocation think done events, outlook on crisis as without XX% to had the national input. which the into saying, the much let manufacturers me with cessation or more earmark difficult the start assumed of a that, much budgets the their sports them four we've of first because one their and of of what

went really they having cut so, this crisis made. into already the And

And really have the pleased where gone only digital manufacturers with compete, that. been so, we've now being to with way with

think cautious our with a and this took helped certainly assuming appropriate and but traffic much well. as has only still weather remaining case, and some that, really we're think the I shown has more action, pleased, the extremely outlook, continued I dire stable- we're well trends stabilization, again, national which business

Lee Krowl

Got it. guys. my for Thanks taking questions,

Jandy Tomy

Thanks, Lee.

Operator

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

open. is line Your

Gary Prestopino

- average inspire? Good with was all. you revenue inspire Jandy, per average the I'm dealer in with reported the morning, that dealer is Or right, revenue sorry, what it? has dealer dealer -

Jandy Tomy

That's right.

ARPD way of a ARPD. going we period, last included the we'll year as in comparable forward be in disclosing that products all the our Now have that that's

Gary Prestopino

Okay.

comparison right? apples-to-apples we're an it's is what So here, seeing

Jandy Tomy

right. exactly That's Exactly.

Gary Prestopino

And saw on to given weren't dealers from of within XXXX/XXXX of similarly trying but new public, you've that, incentives but canceling did know, I is right. these a of would them. you dealers react this what That's bunch you of some guess ask idea - with Alex, I during then, the great, dealers All the whole Okay. that saved cancel? crisis, aggressively you the coming dramatically thing -because where same kind sales in you dealer pretty of the happening down at and the were base, have did terms they you, were your sales time car

Alex Vetter

memories Gary, world back in degree we I a that X% the to you're movie recessionary said, there. grew that and effort led before sales in then. the period, I've time, the back different revenue our that actually was bringing through XX/XX some seen it actually

than I digital think batten more by think that big I the that bring is which the as worst. reaction today the engaged jerk they down there same, We're on difference there dealers is was that knee front. the phones them or much cut industry certainly furloughed for an feels then. are is And to this sophistication with very everything. But now the now aggressively right green dealerships hatches, back watching shoots I'm people on the happening. try prepared much

their on As physically of still shut I digitally. XXX% mentioned crew, to store a in dealer but the call, sell over used cars we them a who's entire XXX had skeleton managed

consumer So our is was that I on well. dealer That cash crisis, -immediately. certainly those reaction, in success be that's and aid are the in program. for federal as out we certainly that but back roared confidence boost the during and soon I it XX/XX conversations that to part felt think the Interesting business certainly and could an that to of today really know call confidence happening too clunkers additional

Gary Prestopino

the some just Or coming larger Were or dealerships Okay, were or was two-point dealerships? board? attempted from you less it across they your cancellations? all of the seeing

Jandy Tomy

It the was board. across

Gary Prestopino

of product? then, seeing And in of NADA, - Okay. kind fuel, lastly us what give uptake seeing idea you're of some since you're you with that interest can or level

Alex Vetter

help not of was the financials television. in And particularly per Dealers, buy for are be and advantage fuel felt extremely are going sophistication to the power one to and It's are QX - to We're yet that the right didn't but by economic so them thanks dealerships people actually that the we a back well a get Yes, now our timed later. the of market to using digital increased sale. try really NADA That was larger have is directly very do chance into market because that expensive engagement in to now. Gary. roar cost I to seeing brightest dealers, of asking think understand the to fuel. the spots video

a And I as spot days increased. during rate you, the last that's been adoption the so tell bright would of fuel has XX

Gary Prestopino

thanks. Okay,

Operator

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

open. is line Your

Nick Jones

thank you. Great, of broader just too It's kind questions.

try what you cars going are These First, other out hearing? your where see of are the that distancing And far dealers this levels as conversations do There's there varying to? as are then social early do? measures anything Thanks. sophistication. to in that dealers and in does looking is of SMBs. to my fewer Are what you and side what what to the Are wallet with we second dealers, are share question on seeing exposed loosening. Georgia, to you're engagement are like regions learning

Alex Vetter

engagement great on basis. a I how that's exactly question. success. is think think and There we're signals I of rules are operating Look, a vastly geographic That's different of

with pickup the so those trends dealer And dates basis, the we're tracking signs more geographic are than we restrictions. seeing in loosening traffic and of a trends on in visible sales now ever

you I more side, two that are me decline dealers not in and online significant and have who tale or read well as there dealer there have it's think forums, technology very it's a they marketplaces the think in not to on clear specifically as experiencing volumes. I similarly of their a the the are cities dealer that embraced blogs embraced

well. I those these in marketplace conversely using And are all-in that and then, digital know are weathering in our are the quite that tools storm

infrastructure going that pandemic I much this pandemic. those of find be I they're operate their what think more they this ones you side they they see a that pandemic. the you're dealers of on this and will cost and find technologies, can a side and side the more the this to reduced business leverage on digital going will other base bright marketplaces fewer these on through haven't other strategy, think experience first to that that the adopted those dealerships is can But sales if acquire the realize will ultimately who cost-effectively, that of

Nick Jones

Great. Thank you.

Operator

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

open is line Your

Daniel Powell

for questions. taking Thanks Great. the

upsell there's Around Just any our more ones the mix dealer me. - two be I in seeing dealers cancellations. smaller can of dealers that? and just and might cancellations you curious longer cancellations, higher you guess your than would be upsell from cancellations assumption you're a provide larger tail rate probably from cancellations of around the or quick detail outright seeing if the

there's new growing car helpful. the side. marketplace, talked you would and details mix in So car that new playing be second incentives on question, then any if obviously, around fastest kind of the about on being And things

Thanks. from used curious you vehicle what consumers you're down seeing on seeing But those a Are any of traffic dynamic more Are spectrum? you just landing trade sort in seeing perspective. pages?

Jandy Tomy

cancellation downgrades, mix. question rate, bit From guess the little it's I a and of a

dealers the have hand, So upgrades. larger more on one the

So to save if them they're looking in for room to save downgrading. doing costs by some there's costs, there

and more for have spending some up On some factors as dealers examples. just have that don't fuel storm the go exact but signing the other an the you, hand, more those of some or just for in the weathering into I flexibility perhaps larger breakout it. are

Daniel Powell

and part of on shifted. the our on think impact, second the I certainly have the discounts the [indiscernible], trends COVID but part, And the

rebounded car has in traffic New lead. much and both faster

last the were pacing almost just up leads XX% car new our days. fact, in In [ph] seven

about side used the car car is a now velocity card It's back. now seeing roaring fast lag there happen car seeing some is is depreciation the obviously behind new back and what new the in we're But tell is aggressively. that but this side, used rolling car dips day used you, we're but volume seven So values. it on traffic and will I on

We've seen dip, now but again. accelerating is volume prices

cars of can well you rebound right are that are back up used to clearly but geographic markets opening trace that the as think the I some on now.

Jandy Tomy

I'll quick, the current into relief put dealers thing place is at add was to their of keep level. just real other the Daniel, that package The program we idea

off downgrades by half that and had but provide them some expense and of cash them we offset canceling, So from off save and giving in April and their in to combat keep also prevent XX% relief that at those simply been know you not May in then them current them seeing. in June only packages them and

Daniel Powell

it, Got sense. Stay helpful. healthy. okay. That's Make

Jandy Tomy

Thank you.

You too.

Operator

comes from your line open. Research, question of line Huber is from next Your a Doug Arthur

Doug Arthur

now? what the was? and of furlough is headcount XXX right just goal remind you reductions, people XXX thanks. with I can permanent me of - your Or The Yes, guess, total

Jandy Tomy

it Yes, of end was March. the just under at people X,XXX

Doug Arthur

before the this That's end? or after? At

Jandy Tomy

Before. That's right. That's before.

Doug Arthur

with the of despite Inspire, GM bit? like in it then pretty that all a Dealer's, you little as fill much at unfolding And in the Okay. you sort expected. Can are contract of Alex, terms dislocation Dealer can things looks

Alex Vetter

It good news Sure. to behind hear on make stay schedule was fall and it. that they to don't their arguably to sure desire confirmed they that

was a reassuring that us of COVID. in and digitally-driven validation being So result great much a of as more industry

have been So up. already teams our ramped

build to be had take down those If in accelerate Doug, launched. this year you we able recall, to websites all hiring, of to first our EBITDA and to the half those get

already than going we've all deploy produce the of happen didn't base schedule that's worse the our in then built and to half revenue the the this in second EBITDA websites two half. and as cost recognized tale the billing these revenue So that and we first the to on the based year second in revenue volume release picture looked up but of the we and recognition into the had why a half year, built this halves

them about big building a to and those nice in is contracted dealer a and that's so So the to Again, them that's and win. sold, websites already deploying have pickup second be business it half. really XXX been the going

Doug Arthur

of sort correct? to of And the windows And is window more dealers? opportunity they opportunity, is GM? into get these with next when At least have of

Alex Vetter

a actual Well, is date been interesting but the the it, yes, I wave. been they think to and there do plan open second what's released, hasn't about

the think social set DealerRater, our do Dealer pandemic, you got for of different We've from many where deploying dealer I I us platform I think this have more lot started no can Inspire lean into peer result fears with 'What And more first sites then we've feeling our else FUEL. commensurate tools, we've got and this the GM I a we're that and that successful that to come and our want standards of just and beyond of of a and about. advertising them as we're XXX these have media groupings groups. of confident marketing?' that's our to think manufacturers of digitally - which also deployment will saying, got

more peer are we're for and than strategy here. confident do their there things So group and that our position dealer a is good most that can we're why manufacturers just of our of think in diversification bodies we I

Doug Arthur

thank you. Great,

Operator

at There comments. back are no questions time. Vetter the I'd further turn to closing this Alex call for

Alex Vetter

of thank appreciate you. And and right safety everybody that time and wishes in back We terms extend the you of well for to here we today. your sentiment the

Operator

call. That concludes today's conference

now may disconnect. You

Cars.com (CARS) 6 May 202020 Q1 Earnings call transcript