CARS - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to the Cars First Quarter 2021 Earnings Conference Call. This call is being recorded, and a live webcast can be found at investor.cars.com. A replay of the webcast will be available until May 20. A copy of the accompanying slides can also be found on the company's investor relations website. I'd now like to turn the call over to Robin Moore Randolf, Director of Investor Relations.

Robin Randolf

thank joining and everyone, morning, you us. for Good you Car's my first my Relations. call pleasure XXXX the welcome to Investor of and It's quarter to conference Cars, Director as first call are me Alex With morning Vetter, and CFO. Sonia CEO; Jain, this our by for providing expectations from the Alex an discussing quarter on update will highlights start our XXXX. and along quarter expectations. second Sonia discuss financial our our will results with Then in greater detail, We'll finish the call with Q&A.

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

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

the filings, reports, our included please website. information, factors statements in obligation risk We more available assume are of which quarterly SEC our section annual, any as respective the no the on refer of For or forward-looking update investors date. our in those and to to including information current

call turn over I'll Alex. the Now to

Alex Vetter

everyone. have you Welcome, and toward with welcome you, Robin. on We're of pleased opportunity our market of we've and made us. the growing share large I'm ahead the call, very to this excited quarter path investment momentum team to to our Thank first share community strategy, join to our the our acceleration details the and leadership. performance quarter the our

dealers great These where adoption, Not are both achieving has only resulting meeting dealer when, solutions, they by expectations digital customer by want physical environments. embracing in the became all solutions. revenue how are COVID are and they to and comfortable to customer since highest We we in continues digital dealers terms COVID customers increased across also for but of when impacted efficiencies straight our more growth market-leading ARPD. delivered in of driven sequentially year-over-year lines are by and shop, were shoppers' and XXXX they quarter in now operating growth business. for company, increasingly embrace third growth. revenue they digital QX continues, product public momentum ongoing obviously and trends growth following encouraged of momentum a our our the driven continued Our quarter, the pandemic. driving growth Dealer the by solid

year revenue have customer the five adjusted our our EBITDA making now and growth. future we disciplined six expanded margins our and dealer in base over of grew We last to grown year, our We quarters. drive investments while

we quality dealers our and the value quality the of Our now on solely is physical dealers. and can't showroom, increasingly data has digital insights made look investments evident their dealers ever-increasing focused traffic for more to on realize delivery focus traffic. that they seeing and COVID are around

a are our continued competitors. seeing up visitors unique efficiently sign Our retention we continues rates value customers, that in growth the year to our and were delivering. and traffic strongest more attribution, increasingly year improved far this the on With focus driving quarter. Cars.com generate are dealer dealers appreciate traffic than over we quality X%

quality are Our our brand traffic. XX over and with developed last strength years, organic the product rewarded consistently

operate car incredibly continue of ROI to app, content our brand be breaking, our Increasing helping from from the to to innovation our a has the content us of high-quality highly creating traffic more first over the journey. dealerships virtuous we enables In platform our This sustainable, XX organic traffic and dealerrater, product cycle car and a solutions, popular organic high, customer continued unique to from is traffic reaching dealer shopping and experience. an by was competitive important has critical generate record strength, and industry efficiently. ROI more technology proven Powered organic cars.com direct of and product fact, our in quarter first company. This mobile reviews, by for investment all-time result and and focus in within review SEO generate driven as million are ratings editorial an a our our distinction strong the leading now reviews sources. majority most advantage set,

from fact, others make a considered a a a car. especially purchase reading for unbiased trust in they shoppers without three because large purchase like In won't like one review them, advice

consumers pandemic reviews environment the they more reporting COVID-XX. growth of Importantly, faster read spurred reviews, of because that XX% with our of

website who the of with local of likely directly ever cars the car visited more the CAR single reviews than short, In access number website. and shoppers a faster. shoppers our shoppers at than dealer a cars.com a are marked are XXXX the and to two website deeply vehicle in total Additionally, the dealer's rise. who about recent visited dealer a helps to highest These a pages dealers sell study, only buy leaving detail website. times shopper on to than high-quality more reviews consumers The OEMs more new to dealer cars.com look XXX,XXX more more vice engaged the ready represents audience dealer's reviews 'XX goes on and car March volume dealers cars.com shopped shoppers. audience is on month. In review who

shopping launched In the brand strength consumers now and campaign, connection of contributed our doubt focusing record has between are attribution. value There focused and campaign builds by a chemistry organic campaign quality traffic and been of no this cars.com. fourth proposition creating our throughout rates. strength on the car car for content car our NCAA which and consumers overall editorial on the platform on March on of launched the to attract our position dealers elevates art is tools, retention breadth our placements high-impact every granted. this March, rates cars their one pricing science digital in magical has cars, experience, metrics, the And don't which of the campaign marketplace. to that and made and more our take and highlights basketball and century. The highlighting organically nearly our lasting tournament. behind multimedia traffic, with record match IT reinforces intelligent This superior We we clarifies all inventory, our new our we As freshness retention reviews, for strength

value lead and We on continue delivery increasing than strong advertising simply generation our to support in investments brand high-value traffic. by rather

strong delivery we value our of than through strategic keep marketing strength to demonstrating drive the expense planned, quarter, were able to our this our results investments. flexibility lower With

is our dealer customer on investment and for as our that confident lead a retention are us ROI We emphasis branding high remain strong. additions rates generation and

pure and in our marketplace Our market and our dealer audience growth. powers underpins ARPD

our He digital solutions world rates success dealer strength ARPD of quarters, fuel, also is evidenced show the solutions and has products last cancellation driven Inspire digital marketplace. our supporting three of Our industry-leading sustainable The by record grown growth consecutive success the XXX XX,XXX, an since for the dealers are by and year. and network low XXXX. for highest cars.com over quarterly of growth products of our and increase increasingly customers dealer of QX of designed an to our

quarter presold at launched fourths Our reaching momentum approximately customers dealer X,XXX the our continues. website website three GM to To the team end. of grow, continue date, and has

the website with to in We Similar sell Direct, giving a us GM, to the Ford products program opportunity are proud our semi X,XXX is to partnership announce to dealerships U.S. exclusive. over similar this

Direct We approved in are Ford partners few one of a the program.

shortages customers, vehicles of Dancer, Another one because the Manley solidifying an the manage and California. current in trade-ins to to message enable General with set digital mix. dealers brand leveraging Manager video buyers, target a automotive and customer time, our their of in market a market viewers, to has not for fuel and fuel source industry. that Hana the few situation, months the market by time. across to fuel just I'm and JD Santa but and of here. position And soared of success fastest-growing message now offers, Rosa, JD propelled instant marketing advertising added starting are for further acquisition our products listeners of their us passive messaging continues says No.X important fuel fuel. No.X in I, local the I first for within and campaign or the tosca.com is to first inventory buyers fuel It's standard such the the fuel They One vehicle into as in part for able inventory video

as in market evidenced As seek auto. fuel connect influence car by to JD's targeted to our shopping deliver continues and testimonial, value dealers

on. Moving

Our OEM in national and better anticipated. than revenue came

disruptions, Not OEMs shortages that local magnitude will shortages, uncertainty ship these is conservative maintain supply as new national impact helping advertising. sales the to including car is global inventory for all around used pricing be a supply continue and And maximize dealers individual and at Given and new are more by Keep in mind impacted both vary. chain high. outlook car OEMs on same the the on profits will gross tight demand shortages. will we

wider virus auto auto purchase the the abbreviated increases believe will the in both vehicles. safety that new technology is durable environment for XXXX. we urban entering they're market buyers automotive and driving the used seeing strong at a an price and help a latest These in industry we features first-time for and and significant are trends, increase Demand enhanced Looking time trends entering retail are market, with line. ensure

pandemic at XXXX. best maximize helping which for QX expect accelerated Consumer leading rising strongest we vaccine April car and growing April over relief year to gross in sales on and strong XXXX to the million, round shortages, will And and sales year. continued the car and tightening of are for of new SAAR recorded our the year signal million, to and new breaking $XX.X with the we And in and hold trending beyond. XXXX production provided retail since firm COVID stimulus the momentum was ARPD. pronounced checks record fall XXXX are confident price New highest we auto versus inventories the this and a was near-term is SAAR XX% last to ago, ever is October in dealers and car higher. last in decade. outlook is the We declines for shortages even for used a in April up XXX% both growth is up also March consumer strength dealers rising, came of highest profit. because the cars further another remain rollout, although in from have assist by demand month since specifically confidence semiconductor even March and Retail be ongoing due a April. OEMs dealers more $XX.XX sales. supported an growth and QX This

momentum the We To our the our investments XXX detail our She a a enter as line provide that leading continue addition to of industry. Janelle nation's fuel Ross auto our on leadership second we more our dealer also the of expectations second-generation board favorable we product will insight recently was top recently operator. Sonia North innovation a women brings valuable female board to experience of directors. financial as is will customer-centric named marketing auto in XX success. African-American our strong and owner Ganella, end, to A years board the only News continued the announced the and shortly. in American trends through to in anticipate and half to important that year. deal of automotive

our thrilled While to we're an of dealer disrupt model, dealer In have to other and and seeking the I'm call over to our are financial want strong team am on are and I going the results delivered. reiterate success, to momentum the the companies enabler how Sonia. summary, Janel I local that now we board. to continued with But pleased turn operating technology

Sonia Jain

Thank you, Alex.

like into I customer Before we attention fact our to to our the revenue results, categories remained align have better our your to dive with I'd that call type.

the reclassifications last longer prior revenue XXXX, the contracts of This retail will part in our comparison. distinction ended and that affiliate OEM period since a have national categories. our is direct wholesale revenue what revenue. our recall renamed No relevant no made dealer simply no we is and change. our may between revenue be Beginning were wholesale of You advertising QX, revenue with to and national name longer to was revenue

Now results. moving to on our

and quarter performance. this our quarters we flow again over million, year year increased continued and for doubled nearly year. cash EBITDA last results $XXX momentum from free and sales adjusted Topline strong delivered underpinned up driven ARPD financial the were We year, growth by from by revenue first several Revenue the over digital operating strong, solid solutions quarter. and X% was

revenue Inspire strong And year-over-year, with dealer sequential continues growth momentum customers. XX%. grew dealer Our in

While dealers the are benefiting million $X.X over quarter not OEM revenue down is in $XX X% was or year been necessarily first and for inventories, it from million, tighter national same the year. OEMS,

showed have Although revenue two quarters, OEM spend. stabilization and resulted supply past of reduced national in over recent the signs advertising chain disruptions

are provide marketing the advertising term. our new OEMs and sales may to in end class constrain access the best audience, with grow car buying While to market near pure disruptions OEMs products our chain in in ability car to and advertising supply a continued

Now expenses. let review

and the end quarter affiliate were due of to first Our operating by Expenses expenses impairment compared second a for share in intangible amortization. of with million, to and depreciation billion asset primarily triggered quarter the for the $XXX.X goodwill charge prior excluding the million $XXX.X the were COVID-XX coupled of down expense period pandemics. XXXX, or our $X.X year million in revenue reduction a non-cash $XXX.X

we addition, investments EBITDA reductions the from implemented which XXXX, us growth. targeted cost in benefit and adjusted still and generate opportunity continue made make provide to identified In to strong efficiencies and

brand organic traffic this of greatest concentration Our strength. is our high a our XX% our a of and and brand traffic driver this drives through one strength. channels quarter, generated key organic of organic is We of

invested high-value In to we mentioned, for maintain our well of Recognition our audience we first increasingly improvement dealer as planned brand shift, record we of able value traffic able continued dealers. rely year-over-year expense. the high-value to total, customer sentiment in our Despite strategic as were on less on evident to had marketing we dealer quarter this support this quarter As retention continued advertising strong the this in than is and in ROI Alex flat rates, of growth spent and we proposition marketing what for. delivery strength to SEO were in as channel.

I'll our our of based opportunistically marketing XX% compared We per with balancing for channel monitoring adjusted spend was first quarter overall XX% $XX.X total and and operating allocating quarterly are an income of $XX.X in of continued $X.X million the prior the was dealer XX,XXX had or move compared be coupled solid with $X.XX level prudent or to XXXX. million will but our customers value Net retention continue on of for now sales. revenue to the of while is investments to on primarily customers million investments, year quarter We end, increase to metrics, foundation as This year-end XX,XXX results. key strength X.X% at revenue delivery. share, solid new diluted or XXXX of rates, period. to dealer these of increase EBITDA due

grow, represents As X,XXX of end customers public a customers in continued four Alex company to dealer mentioned, ago. since stand-alone this Website quarter. becoming the highest reaching the the also years at growth

fourths website. We And sites continue the sold to out GM three GM roll approximately live. today, of are previously the

grew Growth over We traffic down in the SEO year, our our website partnership to our with technology award-winning visitors and to visitors We the up level monthly further quarter, to with recently in just are giving unique consumer dealers due In announced the million of average Ford record first and visits. visitors X,XXX was while we year in the ding opportunity XX excited visits. pipeline recent very and confidence shopper to Ford was had strengthen subscribe million our part with unique XXX.X X%. rebound Direct, audience X% platform.

has are accretive consumer increased to year to the strength those Fuel, to growth pent-up rollout XX% indicated their stimulus from remain demand a have In consumer A planning trip, a this just the also trend of vehicle for The the Alex purchases. year, by of ago, take ownership. addition, year ARPD. continued up destination. survey the for April is numbers over progress of XX% consumer demand to digital in ARPD accelerated believe that in expect launched significant drive will new we car ownership demand mentioned and evident and highly pre-pandemic car recent opting levels, X% driven strong. We solutions. continue. with checks Americans which amount our of to in cars.com for been vaccine Of interest earlier,

our will the customers, even of are Therefore, continued increase with our also solutions. driving growth our website at increasingly customers is which these revenue and ARPD and top continue to grow of cross-selling We strong overlapping see marketplace our profitability we penetration as solution, list ARPD are grow in base. dealer digital priority opportunities we our higher. as

strong, significant us and financial drives balance Our flow business cash generation sheet and gives in remain by our which revenue recurring model, our the to flexibility the and thoughtfully brand. invest liquidity supported free

cash for year innovation the the in was prior. $XX.X impacted in EBITDA was revenue up quarterly payments $XX.X to in continue million of be $X cash in business our million, interest prior first Net million provided bonds, and in flow cash tax was XX% and on $XX.X penetration, Keep Free cash to and drive received quarter by our period. activities a $XX.X which quarter will free mind, to flow XX% flows the X. million first This significant by improvement invest the quarter. growth driven up due adjusted November We $XX.X year is refund growth. in the from by million, semiannual in X May the will operating compared the product in million

million Our cash during enabled strong quarter, in prepayments. generation debt free in us voluntary $XX flow pay including $XX.X the to down million

our debt end X.X times, of the to outstanding leverage X.X leverage As of a reduced from net at bringing $XXX just XXXX. total million to total as result, was our down XX, down March net times

our to Now turning outlook.

and We in confident pleased for and with XXXX. current our growth our momentum remain are performance outlook

million, business. to in in revenue and be our between strength business core reflects expect of marketplace quarter second and we $XXX $XXX momentum Solutions our the continued For which XXXX, million

specifically risks also ongoing reflects supply to potential range control, related outside our Our of chain some disruption. guidance

to margins growth strong expect EBITDA for in We EBITDA second the adjusted between XX% with see adjusted year-over-year XX%. and quarter,

our ROI much margins of support of increasing solutions support marketing with and acquisition. delivery to to quality growing traffic accelerate pull execution and our brand continued is our suite growth investments in did focus the planned product spend, on our past and value innovation on competitive In coupled including this will deliver to continue We we performance high our adoption to expect market-leading to drive and further investments digital marketing the quarter. strengthen our When position. we as summary, financial these while strong will back investments, business, strong,

in are like to that, We beyond. well-positioned Alex. to the for And growth I'd back XXXX and call with turn

Alex Vetter

you, Thank Sonia.

Our well outlook begin us our the and to bright. industry beyond. throughout solution continued remains consumer the and to dealer growth differentiated we're for Strong demand, now driving continue Q&A. position ready strategy health XXXX Operator,

Operator

instructions] with Marvin BTIG. Your the first question. from with of Please today question proceed [Operator line Fong your comes

Marvin Fong

Thanks for taking question. my

First Direct congratulations one, Ford just on the on that. win,

could help you Just us understand that. dynamics the wondering if on

You're the dealer prior? be in idea potentially one would to have follow-up. And of just up with give us Inspire, work then, opting of How you what I that GM can also, line a with of How be dealers an many cadence five. And rollout could incumbents precedent? when does start the this they then, that were if will great.

Alex Vetter

an size the choice. Number deal some the But opportunity, website opening are and Sure, and exclusive our with GM think up question. company one Ford GM recall prior The than network fundamental was I Marvin. there differences. provided more four. always Thanks has GM are in one; about provider it dealers for X,XXX of in has got to that similar Ford approximate

base provider. that's an So, not customer all going against we're one with consolidated entrenched

that from up five providers went GM three. they've where one Ford's to got opened So, now to

in differences there providers. so existing fundamental on based And the opportunity are some

excitement their within began when providers. the was announcement far and it our obviously, us goes, existing timing As vis-a-vis Inspire contacting made, dealer within as Ford about and dealers the solutions

a slightly opportunity, few So, but has just yet ago. smaller our begun pipeline weeks

Marvin Fong

have It follow-up. looks then, three back target my your like And on leverage you hit believe leverage guys Terrific. was a times. basis. net I

anything maybe about forward? and you're in how acquisitions, doing recent the debt flow guys of while. plan cash Will down thinking well leveraging just our curious going M&A? use You be haven't done pay growth And Curious free now your some priority? in the done general, on with you a inorganic thoughts to have continue how cash? to Just deploy

Sonia Jain

we're our leverage bring level. being really we remain Yes. be changed. allocation I We don't as to driving we could in That as business, think both focused we able excited us, priorities think times to the organically strategic about pay which said, the on have far growth say, the think would to down gives that and were growth below continuing in capital as debt, just more driving materially I also down of us flexibility inorganic opportunities interest future. well three

Marvin Fong

That's great.

Sonia. the And quarter. Alex, congratulations great on

Alex Vetter

Thank you, Marvin.

Operator

today Kurnos, line The with Your comes Company. question Benchmark Dan next from the of

Dan Kurnos

the was thanks. with pretty dealer the website in Great, in add we Good customer Alex, kind and QX, number what morning. of line DI on a strong thought customers.

here, inventory So, dedup. parse the traction. forward, thoughts pretty always of but you have But I know of well massive organic pull don't DI with out to we demand especially of the stimulus forward the in having we seem think we're market, you obviously, still tough consumer if good be that's if maybe amount on help constraints. very go versus aware about and kind all to can underlying as us just

dealer about talked retention. You

dealer guidance really growth or guess think So, marketplace sort imply going that do should count I size about anyway. the of how similar don't forward you know underlying step-up. expecting your core just that be the marketplace we given I But legacy would dynamics? of

Alex Vetter

again We're sales that The really record Dan. QX and momentum. look, the the COVID. count continues in QX. our QX dealer Well And way, well year grew Thanks, by pleased in of it before strong. started in growing we're 'XX we had

QX. right were COVID. in before changed in but growth again, year, agenda on whole sales trajectory experienced growth QX Certainly, record a So, back world the last we and that on we're of

the said, that I persistent retention think QX. we record are front. really not to we're expecting strong But on finding work set in another

and revenue strong solutions is accentuated that's and mix. sticky by Our dealer our base

physical with us shortages, quite showroom opportunities shifting growth digital time that of for is some on the our a to I invest to which a has tools, digital we're fewer Even their And rate. technologies are to in part side. our vector strong at and strategy are continues we to think ARPD strategy. inventory for there be COVID see dealerships and visits though grow solution more where differentiated continues been pleased

I some think on the believe February across muted pulled know traffic a some we led forward definitely by side, traffic. the to which of the in I we U.S., consumer bit was softening of the to a to us or QX demand. lead believe retail trends. for 'XX. that, But we snowstorms We robust persistent are market seeing XXXX is going that much

maybe of or a That's because whether sales people suburban car COVID lot point. consumers seeing some it's We're the it's great Francisco, sales brought ownership. markets shifts we're increased nervous markets. of mass in I market the purchase highly to and retail really options those growth that terms New San moving seeing for think a not they're rates has areas also to also of think adding car, urban in car ownership, cities to a an attractiveness driving great of like York, that in into from a about I are volumes in of used think new transit worth of

Dan Kurnos

the you fuel. talk strength helpful. A And great always about you're point. Got with that's seeing Alex, it,

a think, contributor. Just kind your of of comments as would off pretty about to I good Obviously, to ARPD go go growth.

scaling want kind helpful. uptake where I break offered, You is terms to but You how think there, us it being it's rapidly that of don't be out, can in tax give to of very would probably rate?

Alex Vetter

to in And has than penetrated Well, exciting I the XX% platform Dan, the you're of less is of gains that it's seeing yet product strong think what's fuel, ARPD. about U.S. only some leading that

we've by got fuel to adoption strong penetrate fully digitally the the long U.S. the way most go across but initial to So, a dealers we've seen across progressive country,

narrow early is your efficiency the in of lot the So, and shoppers our feel casting the we're why understand we're dealerships helping more is than like which message spending that I the still education a market still only innings very today. mass to dealers efficient fuel, marketing introduction of far being of mode, of in end still on

Sonia Jain

on growth, particularly sort really year beneficial look been think build as look we of year. BI us I the ARPD to But to has grow, has we've continued And increasingly, over to fuel our of as growth at the and opportunities set cross customers more products, marketplace deeply penetrate then our seeing solutions base in customers we're nice that. also our from selling we ARPD with as really between our certainly

Dan Kurnos

Got The trying that to sense, the call it. there color makes additional in not short sell. sell

understand to the to and big RealREIT thanks start for year. nice all trying Just But the driver. a anyway, the

Alex Vetter

Thanks, Dan.

Operator

comes of from proceed Our next line question. question with the Jones Nick Citi. Please your with

Nick Jones

Great. taking Thanks me. my Two for for question.

then, kind strong I this investments. question. you throughout second a helped year? of reduce of First, the SCO you this it mentioned about sustainability talk planned marketing And strength? growing the have to competition? Is the Can versus the persist Do you expect

Alex Vetter

sure, Nick. I'm

the than persistent Our of repeatedly quarter platform growing to years. strength been share no cars. past There's SCO organic has quarter certainly traffic been over consistently more three and its

producer that expert we're of of strategy, to that dealer our is original unique that's harvest that review cars. reviews generating be whether while certainly platform, largest authority. And so we think is differentiated key rewarding the other content our listings, And just we're programming, Google can marketplaces, only tons or found our content on

consistent. durable we and do proven think yes, very to so it's be been And

but They less As driven our we're because sales. marketing, in you SEO on spend more yet growing are we are group, we than peer but strength. spend on know, faster, by consistently more they generating traffic outsized yet spend than marketing

Nick Jones

it, then, Great, And just auto I'll that's tech. the helpful. maybe, maybe looking landscape, in at call opportunities

one or out as Do in dealer I get there maybe Inspire, type the into auction of have you competitors as gen environment. lead more they're fuel, kind there think have your zeroing more get? see as more creatively of to big transactional You web or dealers got opportunities opposed presence on other that aggressively? finding areas Are involved inventory services? maybe you more

Alex Vetter

and a really lot with solutions, we before, with Well the We're much mentioned We look, still even still X,XXX websites bigger to solutions website fuel, right? our dealer existing innings. on still of I and go runway to focus haven't early universe. under independent got segment begun on Sure. early, as organic a dealers

and we've lot have upside a got growth on of to solutions. So, our existing

base distribution marketplace I with And has by is of through And these the in distribution. a driven network investment all about our is market. past exciting to in large XX,XXX on dealers, that technologies can really Autotech bring a sales that that's consumer robust solutions need think over installed or we what's whether there to more year, platform COVID. been established our lot

a And contacted distribution. the technology really of frequently great who've need got by so but lot innovations in we are category the

we will for those consumer so cost better. at points or problems active continue from or to if opportunities. industry the to to We're market process pain we that deploy market, the out dealer make technology the there either can in in look there's And drive solving looking

Nick Jones

Thanks.

Operator

with [Operator instructions] question. next question of your the comes from Dyer. Our proceed Steve Please line

Unidentified Analyst

versus Good on growth? reactivation of and the dealers of How on up morning. dealer was much Ryan for suspended customer Steve. new there. Curious dealer pick the that growth

Alex Vetter

everybody the look, lost Ryan. pandemic, a Well during dealers lot of

levels. we're so almost And back to pre-COVID our

saw particular the of that good back. is So, dealers franchise unnoted in percentage strength in a platform. dealers We healthy engaging coming

our almost And back we dealer pre-COVID. so were pre-COVID account, growing to again, we're levels. And right

the during we exact a lot have sales dealers, don't pandemic. lost the I accounts back we're So, but new that former the bringing of definitely of that percentage were

Sonia Jain

call COVID lot a folks the who we're the It's bringing And mix great and of between roughly XX-XX it's, think But back of are. during suspended the I buckets. new two accounts. is period. it, a new We actually thing

Unidentified Analyst

to decision of much a accounts haven't to then, drop reactivate pipeline a is kind whether or suspended How And follow-up just necessarily on of yet? made that. in the that left

Sonia Jain

if What we're way us out look to at I solutions, necessarily dealer marketplace BI to not for right? is there don't base that's suite the fuel. in just go it, create know products, right our but interested includes and and trying which of a is entire our do like that healthy

to suspended So, we're opportunity the evaluating dealers. opposed as that way specifically

Alex Vetter

Right.

we'll cancel to the you need in We have of that ended grandfathering or said, or are last no either We year, dealers that had outright. where basically in anybody. QX do we we resign

got year. in we've So, suspended dealers a from no status last

Sonia Jain

new I OEM guess, like then, revenue challenging doing It fire. sounds the I DI and is from side, supply And the QX sounds like on just well. on But the down etc. fuel vehicle, it is just get

stuff I than of GM's it able channel really talked ramping. with things relative to that of about like it's feels the But more to QX. the that new OEM those guess, this challenged, offsetting that the all have business, good all you You guess, for should be is that I offset.

Alex Vetter

the cautious day. chip a factor shortage are we by the look, Well because evolving macro that's being is

front, a side more uncertainty a end all picture. So, of we the subscription partially and a because cautious on demand with basis, the the QX year, be throughout low that, the there. by guidance the really definitely of uncertainty and we going had trends only provide robust I side, around say OEM our I like range are the there's success lot seeing on which in to is to strong accelerates so the think on so QX just It would we're But much uncertainty driven great contribute growth. of did dealer much but there. outlook continues the

Unidentified Analyst

think growth are guess do Or you environment? I dealer I that of churn an dealer because this is and primarily guess, ARPD, headwind? So, can you continue, assuming potentially

Alex Vetter

has headwind. Yes. well. strong It's dealer and as not And an been count been solid ARPD That's growing.

count we dealer In April. grew fact, in

growth we're So, dealer continue. the trends seeing on

but bucket? I uncertainty ARPD, rather know, our which, think you we've is some impact national and there, conservatism just outlook as where revenue on national applied the doesn't

Sonia Jain

No, that's Yes. right.

see strong I revenue, between year momentum XX% do we right? And of rates. business at And grew base DI really franchise solutions think in strength there in see just look lot the to year business, is sort of of we over our marketplace, dealer in the terms when the an retention a in we there we of orientation continue toward. that QX. dealers have

OEM out not have side. more and the is business the that on what has uncertainty volatile range line dealer been been So, OEM revenue guidance always always chain. of the our just a given control. inventory national the forward bit the front And we traditional on you level we've has revenue thought supply put because we conservatism, in It's that a which revenue slightly around little was subscription see it's some revenue prudent of

Unidentified Analyst

Yes, makes sense.

of customers with shopper, toward subscriptions any online there's cannibalization push the more doing guess solutions Have I or dealers. a about you of talked marketplace for seen that You your with lot online are end-to-end DI?

Alex Vetter

the It's No. opposite. just

increasingly, DI as their traffic at And they the user dealers now. marketplace. digital right the platform are seeing In embracing users retail, times comes all are fact, website combined. two this from a rate dealer's wanting connected we're from is sources with If through to what other of we're dealers through cars.com, website the to hearing augment volume our converting their

exciting and that And been qualitative these audience. digital with finer of COVID that's seeing dealers tooth the one studying aspects come metrics with a are the our so of on things showrooms empty, much is

And have it that to they more higher. now for because wanting dealers audiences we demand so in inbound market converts source see

Sonia Jain

using over grown dealer build that's Alex's on over we say, our year Inspire Yes. substantially And who as shared just well It's comment, the as look both to XX%. year. at are actually to marketplace, want up, customers as I products

are seeing opposed uptake we left. to two So, as more

Unidentified Analyst

Great. the And Good back hop in I'll luck, queue. guys.

Operator

you, questions Alex turn queue the in Vetter. further There I at are back to Ryan. time. no call Thank this

Alex Vetter

thank to everybody for interest your cars Well, in I today. want

on website. Sony the and that section our to conference much. of very the communications Thank technology, May going on be media you I of and concludes at presenting are there'll JPMorgan call. and XX, posted the our IR event details on This information be

Operator

your you And today’s participation. for conference this concludes call. Thank

disconnect. may now You

Cars.com (CARS) 8 May 212021 Q1 Earnings call transcript