CarGurus (CARG) 12 Feb 212020 Q4 Earnings call transcript

Greetings and welcome to CarGurus Fourth Quarter 2020 Earnings Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host Josh Goldstein, Corporate Counsel for CarGurus. you. Thank

begin. may You

market Officer. Good today earnings welcome and and the Operating call. press Officer; me Chief after in operator. Investor Fredo, on fourth website. Scot Jason Relations results the Zales, Trevisan, quarter Sam Chief our With the today issued XXXX We'll the release Officer; and afternoon you, President posted to our call and on CarGurus' announced closed are Thank Financial be Financial discussing Chief

During to acquisition, will not financial is our potential forward-looking press on Investor is update in A business risks recent law. and concerning statements, applicable during subject first guarantees today's statements to release concerning can strategies, materially regarding we to performance Further, and found the included release Information COVID our CarOffer GAAP with expectations call, them SEC to will and XX-K of along of results the closed other We section website on may measures securities actual obligation expectations. that innovation, results. certain on issued measures. our operational SEC's press financial as except the our website. the for distributed non-GAAP and management's filings, from and outlook promises and by today. which required and statements be growth in of our market and no are available the call, refer Forms in prospects for differ forward-looking in our reconciliation regarding uncertainties, value non-GAAP statements the those undertake make financial of and the These and course our pandemic reports including be risks financial to after we the most earnings today impact statements Relations our proposition or XX-Q which, our the within considered other could XXXX, business cause our future our are quarter of and laws, plans, business

investor of with also I'll to found updated the presentation website. And over turn Relations Jason. it on section Our that, be can Investor our

continue much, very us and of CEO of team team and talented gives of automotive closely team It's of the continue the drive board Gurus to to to and to honored to leadership I'm energized incredibly this find at to the role, stay forefront joining years. all will utmost today. ways with business the both Langley, growth strength me those in that coming rapidly incredibly assume of and you senior our new Thank you directors, Josh, the we to industry. changing thank the the confidence global in work the our the innovation

growing operations. As to our the use framework business: will lead simple very strategy, I people and a CEO,

team has will Our to developed leadership define thoughtful continue a and strategy. and innovative

to the best will quickly the Gurus people will technologies effectively. and We we our hire executing continue tools continue and and to arm with

of each I'd on to priorities today. of While to aspect strategy, is simply our framework people, like the a touch support briefly some evolution. current operations

deliver optimize platform empowering on bridges our land three Our We'll of each efficient innovation. listings customer execute, heightened foundation who the Within by strength on happening from areas digital on to complementary digital to we and our we innovate evolved but infrastructures that can our meaningfully of world-class more operations framework our already hiring those robust employees, where and centricity. strategy, highly flexible technology operations, strategy data need with independently, with one listings, becomes and innovation in deliver Gurus differentiated. There's disconnected investing has begun platforms our has this it's retail, inspire. continue have extraordinary business these wholesale. more primarily in a establishing and to historically a domains elements: between To

and we the a lead listings Although we experience consumer friendly ROI by delivering U.S. to market unrivaled dealers. an already believe

develop We in are serve committed we dealers we we building. the and to amplifying company are the voice markets customers, consumers of products our the and

priorities improve and adoption CarGurus I as accelerates around With transactions, lead these could be macro within and world. focused auto the team conditions of excited to Gurus not the market more digital and incredible industry online our

the the latest in ongoing pandemic. Now to pleased and COVID the generated XXXX, results let's uncertainty discuss has I'm strong results. throughout fourth CarGurus amidst share quarter that our despite

demonstrates leadership and the performance of our flexibility model. resilience the Our position market business durability and our of

And XX the prior million dealers the delivered year. XXXX, showed connections market delivering leads, XX resilience marketplace despite for impressive we more million full than in over year U.S. leads paying volatility. over Our and to

We XX% in the continue U.S. across is their channels, our Despite believe leading paying cutting for what at attach industry ROI dealers marketing multiproduct to we dealers. provide rate our budgets held

While XXXX, our the our greater, volumes roughly and in generating dealers growth our primary margins operating in was lead total U.S. XXXX stronger leads full U.S. in year generated paying XXXX. far average was a of year leads driver in equaled in lead full saw XXXX which efficiency our

pre-COVID our most eventually for year-over-year One ROI the an spend spend option paying robust of returning sales, trending for resume by levels. QX. attractive saw especially as engaged Over acquisition dealers to about more where ready continue counts dealers the dealers exiting from in we ads rates XXXX, to better create we on to investment efficiencies the marketing buy in And our our most U.S. algorithmic net our in dealers XXXX indicating gains. durable also dealer sign make increased course excited confident dealer and audience spend marketing. improved additional expect while efficiency we advantage of and car believe momentum that increase forecasts our we will remain that paying to We're we growth U.S. in continue XXXX, per QX. and new paying the have dealer through marketing benefiting With site, traffic which our grow we leads brands intend will us in in up to is conversion

retention platform. pay Our back dealers bringing all both and sales our from returning team are onto new rates our strong is segments and

our our to we international efficiently the our generating a environment. in attract logged international has Including return investment, monthly to the and encouraging allowing average X These on a see trends to our business in who same core quarter, continue fourth cost monthly strategy high in the challenging of dealers lead business, fell across time, quarter. continue maintain our our XX% we attracted over economics. what while international UK trusted marketing million net business. as investment delivered PistonHeads, was are XX.X in At position year-over-year a additions and to X,XXX partner unit Turning quarter-over-quarter our Despite consumer demonstrating count acquisition. our now in the markets, total visitors, dealers In we marketplace and Canada paying million us business unique and average dealer our trends furthering per consumers of sessions to XX% cost year-over-year international dealers. unique rapidly we impact improving COVID, fourth

building partnership two both look is close we our are Digital As retail listings digital to to automotive our and wholesale for complete dealer retail digital most and adding shopping with core business. that customers. are strategic in as pillars complementary dealers build an evolution we we consumers, the platform

Boost dealers never may allowing to cars Area to consumers, enter market into who showroom. their was Our product retail, our their step digital first

of the delivery consumers see expand growth market platform, We in continue for services to increases which offering number and choice our the dealers on dealers. for

partners and our more can financing second car lending certainty of last at purchase consumers where dealer transition and from on process to the digital continuing financing a We're information the retail development consumers more quarter for of time offerings their allowing RouteOne our a highly The leads. integration pre-qualify and represented dealership moves CarGurus seamless online into the it the steps save with develop we and provides key dealers our more online which from as dealership. capabilities to the is the provides with for it win-win integrates as in-store. on transparency This and directly consumer actively is by systems, benefit both dealers to with digital consumer consumer retail qualified launched in

serve are in price a where can on page. on We CarGurus detail based vehicle several with consumers a this deal that vehicle and of in auto delivery. perfect all piloting is dealers complex the build customers allow actual within of demand. currently that dealer deal pilot and consumers out penny to A directly The more builder in can helping of flow then partners hours tax pre-qualified to consumer capabilities terms yet with we've packages. F&I types of growing specific to complete saving built complete to schedule the handle rates potentially seamlessly know their a and of dealers are dealer like lender online interest transaction titling portion and and time up a The registration tire products the time dealers with pick the warranty wheel dealership, online, we and we're committed state dealership. at is additional transactions consumer We're car eager

of efficiently. month. an in their the impressive our to wholesale conduct and the third team factor heading an our XXXX wholesaling arbitration And with and data-driven Since make to CarOffer publicly even We're completed sell on wholesale exiting thrilled sell our XXXX, and dealers I'm the Their continue acquisition has complement CarOffer to to inspection, platform helping cars momentum welcome fully about cars capabilities us. excited consumers is and the buy necessary shop growth operations quarter is launch built will buy XX% I for have with and will the us vehicles more selling to family. dealers that want at enable strategic build, transportation driving are platform technology robust last We retail coupled ultimately dealers XXXX. to robust to only thousands the Digital CarOffer to for of other but into intelligently partner and their not CarGurus and of transaction online. and platform acquire the platform, growth. their team incredible entire

than out Our grow retail and our to growth, I'll solid efficient Langley updating to discuss the calls. in you prior, the our and team grateful this for I'm our subscription earnings our listings COVID wholesale of profitability with and we're upon Gurus I continued With build will yield scale to listings over platform continue on growing and scope lead that the and our foundation existing, dealers. complement to forward to business and business. results. progress look coming truly to digital spend and turn as it financial on returning of Scot future We for board to come. new believe successfully is years opportunity more investments of we scale and amazing our

was revenue our detailed X% I'll first quarter the performance of Jason. nearly of a $XXX.X by million quarter year-over-year down followed ahead fourth overview range. high million, Total provide $X of guidance our though you, end XXXX. for guidance quarter our the Thank fourth of

to resurgence revenue in in reflecting ago XX% advertising Our revenue grew The subscription OEM year-over-year revenue induced year United revenue the from revenue to the The decline $XX.X to and service financing million at COVID-XX and reflects year year-over-year the X% U.S. the the fell total dealer million $XXX.X of business marketplace other versus $X.X period customers our the X% the free continuing on of million, accounted with earlier services and our fourth to impact additional to decision while from our period due in revenue year. recover reflecting of international ago lost our revenue declined international the UK quarter, dealer December U.S. for declined versus customers. to Advertising companies million. revenue X% lockdowns partnerships in in XX% support Kingdom. pullback COVID with $XXX.X to effects following of

U.S. respectively businesses $XXX.X quarter. and Our the and international $X.X in million subscription million marketplace revenue generated fourth in

ago decrease Turning increase quarter which international paying the prior finished quarter XXXX. quarter an with comparison of the dealers, versus we a ago XXX we quarter. down quarter. U.S. ended year of and with increase XX,XXX dealers and period, an quarter. dealers to a encouraging from our count decrease to paying paying XXX finished the heading an an X,XXX with count, total paying into dealers of increase of We dealer dealers XXX the the prior In and we XX,XXX dealers dealers In compared the year and prior X,XXX period to X,XXX business, compared representing the from in QX is increase international dealers U.S., of our XXX is year to the dealer believe from sign prior ago international the fourth paying period the

profitability I lockdowns. incremental acquired and XX to We related churned prior with or down new and strong the we of momentum quarterly compensation now the recognized dealers dealers. out to our returned X% with and display period price the representing quarter, QARSD, average was lead our period a segments assets, The primarily ago exited dealers which points quarter $X,XXX, in and during we acquisition we in course basis, per As increase gross The of versus of the our cost we of UK backs across was costs of drop revenue in of subscribing to our who $X,XXX, dealer expenses delivered year, process the peak ago an average subscribing due quarter. the prior contraction per year. the to the to versus discuss representing dealer COVID compared international cost all percentage dealer, a in Fourth to XX% retention, compared non-GAAP U.S., quarter. to increase X% compared XX% we U.S. volume year revenue. our media products to and fourth to ago margin over year acquisition In on expenses a services intangible In quarterly charges. was which decrease the reacquisition the provided increase off-site the renewal via provided year our is our restructuring of amortization International margin is saw associated in months paying stock-based non-GAAP expense, in free the quarter dealers attributed a will reflect quarter. QARSD value prior due the revenue revenue. basis gross December of roughly the

As to these a products continue modest gross create to scale, it will headwind margins.

spend leverage and investments. to cloud Second, hosting revenue of revenue $XX.X sales and were contraction. technology also sales in expense spend the result expenses XX% in our from represented $XX.X marketing year-over-year. efficiency quarter and Non-GAAP gains a XX% and contributed expenses Total year-over-year in our XX% as down ago The brand XX% fell and in reduction center million, of fourth non-GAAP down marketing year year-over-year of data operating million our in period. acquisition traffic a to

and to making our year and expenses $XX.X both in technology revenue quarter businesses. we're period our versus grew The fourth Our technology multiple business non-GAAP including our X% core supporting ago million. domestic team international a in subscription initiatives development impact investments marketplace

believe our and yet supports total previously, emerging organization As Jason $X discussed our high-end in business, $XX.X so operating of unlock initiatives we've will engineering non-GAAP noted income of range. the product to prudently and margin representing growth we these and guidance revenue future ahead of intend and invest products, million a pursuit which both levers in core these new of We earlier. generated We XX% to roughly million, of represent business streams large addressable markets growth our aggressively opportunities.

reserve year-over-year expenses. the generated cash XX% in $XX.X quarter of and $X.XX a $X.XX by driven consumer million, Fourth had to and marketing year-over-year. roughly $XXX.X guidance efficiency traffic the totaled loss up increase incurred share was the from attributable expenses operating by operating quarter our Fourth decrease the capitalized expenses our increase shareholders Our generated The quarter, development our in $XX.X GAAP ended yielded earnings operating open margin our We income which reduction operations fourth with the by our increase in quarter year-over-year. from and offset gross website flow, costs cash our million continued we tax GAAP includes XXX% an operating by U.S. expenses XX% million. positive for one-time GAAP fourth $XX.X quarter driven to quarter. decline million, our Non-GAAP $X.X diluted to expenditures hedge primarily fourth of million. of in the of net the of performance routine increased capital in million a GAAP year end compared was common The driven strong variable $X.X quarter We was cash $XX.X per to income in of was down fourth income audits. fourth This operating total in ago million of XX% the cash income primarily end cash million third non-GAAP On quarter. of free million. the quarter $XXX.X basis, in business $XX.X million range. in were and $XX.X in investments, international during tax the quarter primarily $X.X of a above and acquisition. generation. GAAP balance loss high was We quarter Geographically, operating continued in million which an fourth

Before I acquisition provide XXXX, for our XX. I context of additional outlook first the quarter on CarOffer XX% includes operating of and revenue income want impacting the which some factors our guidance, January provide to for

dealers of It our we've considering While was there economic continues look for is still to impact quarter of strong difficult to momentum due services to ahead our UK were a given employees. while lockdown The free consumers, and month, UK have results in customers, dealer potential again and XXXX, confidence this our the with COVID fourth macro we the situation. February. month uncertainty the resurgence COVID be and level heading to into

providing for financial As full which of only results. the QX, includes consolidated such CarOffer are impact guidance in we our

and site we While with growing not be traffic likely and is the as in also our marketing our leads invest and development, brand dealers. build this will the and in by invest to year in technical to of we QX are full guidance giving that to especially team, our most quarter profitable our business our it product at generate resources time, year

expect Please our $XXX quarter of million free February, in million. include first the the range to UK for million $XX.X further the look in note in the per income range of relief factors $XX.X revenue XXXX for total for the services period, not these non-GAAP such includes the guidance to customer the does in impact Non-GAAP we billings the the $X.XX $X.XX. $XXX to as first earnings namely but and that of to known of share lockdowns. at operating impact potential be we in mind, million quarter, With of range

concludes excited the XXXX the future forward up over As Jason we exiting it Q&A. mentioned, in our we operator it That earnings And remarks. momentum and open look about our financial I'll and now to XXXX to prepared calls. for turn entering to sharing are progress

[Operator from D.A. Davidson. Instructions] of Our Tom question. state first question line White your comes with with the Please

afternoon Thanks and both a my of couple guys. that's the and of you. guide. Good new first on question taking maybe questions guidance and first on CarOffer roles had which to I for on congrats in the quarter just guess just extent I the for

those commentary in that the kind the profitability that range at quarter. I the was of the of just deal up on be in there think that's the of the is time like year? was math – possible I'm dealer announced balance if being any up first in doing you to of of the then $XX in million in And curious understand Curious about might envelope at the margin outcomes might going guidance show and subscription the of guess I and in sense Thanks. maybe if be peak me margin if whether to count. off something us Can give dealers deal help suggested can per of revenues you back the time would follow base it maybe revenues kind quarter. or other

It’s Tom. Thanks I comments. – Sure. hi, for Jason. your can

Scot say have transaction gotten – it, and business. or question. zone. to CarOffer margin first In the you're is I'll not revenue broken the too but Yes, I'll take would part out on I in we over that specific it for then the It terms turn a

we as won't not again, by And getting be And It It line. but advertising will benefit be so included about because because by next and more would there we're a Jan in there we'll included show industry has up the is not of we're other. it in that subscription subscription try it's revenue. hadn't I more because count dealer the because will mentioned auto not we're be. also and more transaction affected of – full talk the handling going it's simple closed it as It keep to it than business quarter, And possible. the quarter the subscription seasonality X. in how

to So, yes, question? the more we'll there, Scot, give on we'll be explicit about pretty it. just detail want but touch you do margin

looking has still we're QX, walking ton from Competitive up. spend. What efficiency not we're of picked is marketing Tom. seeing Sure, at spend into a

in we've line. So bottom you quarter's guidance, just that past our beat – can consistently see we on

of the over what tick we area believe more we'll QX, lot a in being time. the are getting than in just prudently going we back forward. as we were number the a got but build We That's levels QX to what to to need as with hiring likely out efficiency that saw in about certainly look We we're cautious – up. spend efficient being our team to cautious we've one that XXXX, maintaining guidance, and we'll do bit be mentioned of would QX the quarters. is And up

color. Thanks Appreciate Great. guys. the

Thank you.

line Please Our William comes the question. from with proceed with Schackart your Ralph next Blair. question of

post-COVID and environment Today, on could of Scot as vision obviously you and that opportunities products Jason, which new and opportunity. I years pretty But core a pretty you're thoughts big like business, these Jason maybe well. seems your give just what for both roles may have it to wholesaling, with a a you'll adding? listings so congrats be you know just digital and out perspective of look talked working business. you some the the like kind overall but a with in few strong market on a on if retailing, Langley, new the on evening platform close about Good company, digital your curious very

to our these a right most And that in terrific thank incredibly other listings off sort Ralph, Hi that's point now comment. Sure. for and business complement strong leads we you of three the and categories. each look, launching more And is elements functionality. dealers offer nicely. – consumers think It's

the that first talked to is, as do elements transactions our consumer for furthermore, make of And think they both of the on more from more start to them. allow transaction of dealer we it functionality just so as site efficient them want to our of type about, they more than going platform. that types are buying we to do a And to on to do

start And so when wholesale. that's you into get to

from there consumers – So three is across. that's other are a dealers to to could start And on so selling selling also buying data single when other dealers. and these dealers dealers. selling reason be of that an the element the platform to powerful And share you

the some we in And particular, the what odds the in so, powerful. the to dealers, very south layer And car you script, to who New value very the that value you of information in them wholesale when more are about same Likewise, the the place, that about examples winter. pricing, or wholesale constraints, even sell of is can in also consumer are because winter powerful is than be willing data differently becomes dealer retail and geographic a in when in know when arbitrage that retail powerful. then are that's a in dealer might a breakdown car geographic a start give England transaction on they the wholesale a of of to for doing but that to are talked of looking top

pillars not the future but we them. only advancing together three these in them data So discretely, the each and in laid as out really is across vision stitching them using of longer-term for

of Okay. Thanks It question. Maybe a near-term bit that. for sense. makes a more little

the I you about it's trended the I lag trending what maybe of something of just dealership in will dealers of is the activity? and pace vaccine that since using guess to or is or anticipate to year, has but thought spending know spend that be of restrictions the rollouts, to Thanks. that, sort first front that your up know You the talked curious year. marketing impossible on how pace,

of of Sam every of Ralph. And coming move and easier seeing dealer Hi, It's last a optimistic year. more And and we question. dealer progression out think the last bit a situation sell contactless – the year I services, at them we to on Thanks way restrictions and that efficiently platform. we on right for dealers Zales. which looked believe out their little believe in coming We're direction sell back promote using because the becoming that smarter site. I said, on the figured COVID help spend our continued

highest that our saw increasing, are marketing saw well, our the but ready ads market dealer just spend volume, and as the did the we lead that definition dealer. as to It's in so You to you a purchase purchase, net safely grow we growth. [indiscernible] consumers as for still realization ROI the more a and that

our out continue purchase on continue So the more. those we're seeing are vaccines positive and health to will as this to overall it returns hopefully markets trends on all fronts, and believe we consumers

of proceed line question Hello, from is next Kurnos live. Dan line the Benchmark comes Company. The your with your Please Dan question. Our with

Kelly with Our with you next question Oppenheimer. comes from line Jed question. Please of proceed

question. Great. I taking Thanks my if couple, may. for A

given just which Are and to of count of more we enthusiasm would dealer marketplace merchant of the It's keep giving the gross back after volume? you announced – you saw you are the likes? And some on why KPIs clearly the like you are deal. thinking to market you going things transactional, investor CarOffer, close Just keep things? in Or terms baskets? to how

one. take Hey, that Jed I'll Scot. its

do as how KPIs earlier was and go. figure to an what working on still we're KPIs as as we got out far we will we've question there dealer So through account count for

work [indiscernible]. then dealer counts we right? give what how about marketplace and think That's you it's aligns today, specifically If subscriptions, with that

As is subscription. not mentioned, CarOffer the of Jason transactional nature

mid-month that just dealer the marry, those so obviously KPIs we sort of out acquired will in I what be. January. officially should to figure that note them So have doesn't we –

are we in of accounting only So their an the X.X what revenue from standpoint. months just getting would be quarter,

that that only accordingly, So months want our of quarter to X.X because that just is guidance the there's revenue. I in mention of

back could between going any free like the U.S.? for UK – just is international out what guidance, then your expecting it. to Got I the the you And you're there parse the difference revenue way versus subscriptions given given mean,

relatively quarter, that, of in flattish in the the free it's UK says For it a quarter-over-quarter is month both getting quarters services.

market QX a are, specific speaking go don't much but in the there but that to needing not anticipate of way. demands get too we if Right guidance, of there's still is discount sort the from QX. discounting March, the now could So relatively obviously we same. to We with that don't level difference we

from Please of comes Dan proceed question. the Benchmark with Company. question line next you Kurnos The Our with

Great. now? Thank you Hear guys. me

Yes.

Alright. thanks. Great,

that. congratulations what about back Jason, of listings anyways talking just is approach you sunset. both second to relative confidence, take is a I know, know Google Sorry probably does strong color, get biggest, up anything, not not decision, lot just three-pronged you kind guess assault however to around; that maybe into a the in, of having to really this word, some but is end get a more of you maybe of step people or happened. business, I of timing kind guys. listing that. kind address to give the maybe in, question of a just just a businesses strong and the don't And but the marks XX does about you of I Amazon but Langley overnight going given walk not This obviously around. it for want is an under

help just little to something I hear dealers. will Caroffer initial quickly, And of some It probably behind get guys going like guideposts, really you kind it's to the maybe know some stickiness. process on bit that's from really love Just a again, then that? to but feels of time take feedback thought

So uplift here in what the already positive potential hearing some you're be that, getting just Thanks. terms to you're feedback extent of or would helpful?

it's Hey, Sure. Dan, Jason.

So clarifying question; laid were just the of of elements or the... strategic you some we out first the your about timing asking

kind really just whole, of transition. the No, the management

Yes.

not overnight exec part I half This on and XXXX. better So a and you're have back been, of something working that Sam an in right. Langley decision. team the have the was is and This been

of of lot think, their Langley ambitious allows you building And things. these to continue collaborate of we both And, the think the been the puts us can so us consumer business time product we he continue we strategy does has acquisition It in arenas, things nicely, so respects, buy to they in better as focus to this and are the want been the the three long two, in particular, on but consumer. car. works was for probably awhile. a wholesale into M&A manage areas our to really pillars it certainly same to long-term on time experience been in do that saw one, we've expanding also sell so with new in two more him as strategy best One, that up it's serve and provide over for awhile. we've which then, we listings the going that that the absolutely and this and same possible to markets, strategy shores So we dealer been letter our our I'm new enjoys Caroffer a and this, At them planned toward particular. the and it that's been to first Remember – focusing really consumer shareholder company of the cementing the developing two business. for we've in allows,

is we path. is a us it very for a natural So it's exciting us think and on a for us more much this evolution it puts ambitious because natural,

they proof excited data. really the about the hear but dealers headed get of very platform, they're pudding did we're quickly terms when in in As this they dealer excited platforms. respective two where our Caroffer it this yes, in Caroffer, lot are does relates of to sharing a and are is They terms how the of we diligence joining

online. And we many to ways by so, yes, the they make it converge industry up auto stickier, do wholesale deeper think markets retail historically, a and will the that are and because in more with opened dealers, transparency of as are have than starting relationship for

to the those the growing need going be to to as dealers, and across share and them. to among so offer is desire And converge able that data we're

Great. guys. Thanks

comes Jefferies. question line with of Colantuoni proceed Please next question. the Our John from your with

taking for questions. Thanks my

you pandemic? driven start as maybe you lead increases second or thinking reception fully insight price capacity how into dealerships us or of Thanks. during business online renewals for do see about after for on two learnings the more about in any Can to quarter, fourth that cannibalizing generation give your reception, any was dealerships showrooms? to traffic see about to Also, with willingness how talk the absorb transaction as their And to your any dealership? then could that economics you First transactions the conducted during you and site. moves the whether you're yields less sharing way process

Sam it's John, Hey, Zales.

start to really me last we might've delivering to could and investment. return knew purchase, of But as pandemic the careful be we dealers, about quality lead were process numbers seeing known, consumers marketing value substantial a certainly first, in one margin spend at growth, that drive I pleased that that dealers I the very be investment. way said optimistic a becoming on in we're in out we instead again, time and third and we and and We of price wanted quarter right heart see felt being based our that return the coming not and unit on I the the as, that [indiscernible] were based for quarter, thoughtful about the that we do delivering we such lead it and we're was a Let and ready with be reflected that as renewal think earlier, I think to on smart aggressive restarted that you we again. and increases, the about to if leads with with quantity approach. were wanted fourth careful do and aggressive we performance, the to growth it thoughtful growing, in it overly with and rate, start deliberate you'll renewals if economics And we're more on volume in

came on where that bullish out. we're, So

digital potential with about economic models asked you think I transactions.

I where feel on think in-store experience. our if the completely purchase dealer a fully through And to in also digital approach partners Jason our One so his F&I in is drive consumer a to build remarks. that digital that as a the to digital test to purchase pre-approval want be retail, and experience a consumers' where a two experience. we're a all a dealership valuation and mentioned But of process, to trade-in vehicle doorstep. well, sides touch to we prepared there's made consumer some goes our enabling that community a of do believe a enabling is financing, on through much can purchase delivered enable the we're pilots, we And well. the in these integrated. dealership, as wants transactions online But the then with of consumer a of

the So thinking we're serve about needs. that's to consumer how opportunity dual

as might But it It out a a be top reap goes listings SaaS connection also, consumers and economic consumer we benefit offline a you of an And the we'll for that SaaS far that goes dealer as today's our model to that it combination piece that a that the digitized sits from through because those that. commercial on business. see the core it of have system. to of to want of demonstrate digital subscription dealer running economic it's don't could world, We of through that, to we continue time. market want subscription of a if traditional where all, opportunity As approaches. could fully great consumer be those. on cost at cannibalizing one we'll It many business if of perspective. be our a transaction management could a take a keep take working experience, pilot how of we're we a appraised developments dealership’s be to a we do that We'll who concept transaction be per here's over through

much. so you Thank

question comes of Daniel Powell you question. proceed from next line Goldman Please Sachs. with the Our with

for taking my questions. Thanks Great.

On looks lighter U.S. must in related is one, guide growth mix of quarter the little this have the sales take And net in side. car then we ad first [indiscernible]. that the to I the like the consideration that context something QX follow-up. on dealer into a And it last. sequential was Is

know I last was Hey that the thing on car Dan, sorry, other bit part? cut you part. first a what the little sales, out sequential was

the was get was mix the or that if lower just that by this was looking I guide? net ad QX that quarter trend in last growth that side dealer on I sequential curious to Yes, a was driven a was was than and on if detail and impacting little centered

to the really actually, or coming our on so saw. was base. ads at pricing And coming we strong Okay, yes, dealer deal you relative install had strong as on,

the other increased slow QX We prudently that And be helping a push new bit. right we have going to but now, are quarters seasonal situation still the our dealers We're to did being the we and harder are renewals, are coming trying still through. QX are market on in on So, than that sales tone-deaf not still dealers renewing. a quarter, car back ones held platform.

adoption was had also to still with product. in our QX We QX quarter RPM the tremendous dealer in And very a regards strong core. throughout

much was uptick it. an sort standpoint. didn't RPM bit as So of help does or But a little flat-ish from increase that impact

on we product, our up sales. were but overall car secondary So,

missed platform, you've I on as of context Got it. quarter, to relates QX? if details given it, then for growth big relative small some growth traffic versus there That's really provided helpful. the lead on apologies to it just and lead any And you made the any growth comments you the side, but last

Jason. an Hey, leads it's dealers we've heard environment we're sessions. provide reference and excuse And I a that Daniel, over it’s a to uniques bit our who in we details on We significant in also of are still paying are been comparison feeding the put still supporting the dealers mean, where platform. important are period. you've – And that lead start growth, even wonky more value us in me.

dealers. our tend acquire that we we're leads comfortable and we've confident to we more focus on subscriber continue particular. the going versus be so we're how is acquire seasonality in in general. a softer in the sending traffic in really in to QX to and how leads But So to become and we're growth, There others. lead efficient leads of sort And

it. Makes it guys. Appreciate sense. Got

of question with proceed with next your Our Please Jones Citigroup. to comes question. Nick

to or from positive recall see can that want covered? tax mean, in on I Great. I call out, a we kind issued, XXXX is guess follow-up there those trends then season? Thanks more throw you or taking come potential for the stimulus were out you questions. checks any And to as get as wait negative of

Hey, Nick it’s Jason.

And again Now there we're I to in couple, we're of nothing over sort there's the wouldn't normalize car I no, from hard at – comps, tip discernible was – comp volumes say so checks. happening. strange volumes impact demand normalize sphere was stimulus But wouldn't say it's months. impact now, and the feel not been that been few most next it. But to it. to – of months the pent-up a think starting the it's where are that people enough some the from Car of

for the like, over Got follow-up CarOffer more kind kind and just a does an it. go then and opportunity Thanks. rather or expensive of cars then time, in see auction. for And is Thanks. mileage, cheaper guess cars the question. a franchise really platform margin get cheaper kind value cars? of the kind of if is guess, think I an they some of looking high I to two-part it's Is they typically CarOffer, deeper brand kind integrated this of relationship of kind on? or there like are of as I you I more for fold one maybe kind maybe into, recall that’s dealers dealers CarGurus know

they such trade the a as anything I don't platform brand related history. time CarOffer Hey, has period because, brand in Thanks their in truly, to really tremendous to short a We're done Nick, wholesale I itself it's going differentiated, Sam excited built in Zales. question. think, about think instantaneous do arena. we're of the for what a

provide incredible really excited perspective, which we're to you're to introduce saying, think want is And data marketplace. platform, talked data with take the doing of capability instant for just wholesale be our dealers incredible do as I the will we've perspective one customers of that that. our from purchase about and market we got about a do sale will introducing Jason use thus And our we’re data use and to retail to what that the certainly it of far. matched the and on liquidity the wholesale value

offerings it and will as fold dual – a in our bring both and sell through of dealers we and to retail and buy sell it set for sell So wholesale. certainly

and the our in the will platform, we marketplace the an And and trading wouldn't end make a put to it that one-stop think about broaden to we're spectrum, the I on our the it right So vehicles brand early in platform you for valuable the perspective really anything are doing has certainly dealers from the don't the vehicle stage been vehicle. spectrum that, we're but have which it on beauty They differentiated is, shop a technology their higher that at as community excited out market largest that highest proving broaden enable experience. focused you're independent platform first, transactions. opportunity the incredibly sell introduce more relatively buy and dealer and to a away. they distinct both to end players franchise focus of of CarOffer to but go after, I for

and the from of tool works vehicle broad buyer and that to I to excited instantaneously, a not a very look to they like set efficiently, transactions It independent facilitate set sit dealers. capital and model to brings in through we're think require franchise an CarOffer and that to get introduce to a another. both And low country capital auction our model one model. place

your of the Securities. Our from comes state Naved with Truist next Khan line question question. Please

is you And as U.S. the roles. was to Naved. of for versus dealers and great reactivation paying Robert retention, Zeller Congrats guys this you It international. three both drivers. both see XQ number increase dealers of in your on acquisition new Hi, in on – mentioned of new and

pace or course of And wondering, to pace around spend? we the just should I'm is of there How the is And of back back, XXXX, far should particular opening momentum so XXXX? Thanks. advertising the purely including into view sustained the the in So this is up? U.S. just of economy then a doing investments. function as just anything over of my we question bring second CarGurus has investments think

Hey, Robert, we the offering think always investment and would that strong mentioned did have it's in very efficiently, growth, a mentioned Sam said, I first as growth product just purchase. Jason, Zales. highest The And large two drive that your part it for we a of strong providing think of return fourth tell quarter a point of we who marketplace. one the his the you're lead Thanks the quantity dealers acceleration you excited in the than it's great more where highly a more Jason that and but platform more who's but we're the to what on CarGurus ready other, the consumers, ROI me things, the question. for at results there. business. comments. Jason time really reflect we from Scot and just of about I doing that who in spent to lead question. I'll Scot on price we're And it's reasonable shopper turn recognize go bringing those second down-funnel on or any we've you

Sure.

dealers think pace do there's bit both of So investment, consumers and we it’s optimization of Jason. of investments On invest we continuing quite that to are to – on more still listings deliver and the there. We in a pace can experience.

in and there. product the So we're investing still technology

marketing have are will think a We lot we efficient. If remain. becoming much in more durable and efficiency is become that more and much of we efficient

they're same growing XXXX our wholesale together but than model a retail So pillars stitch as the are more to to, will the they doing, become times than complimentary. we nascent put we're clearly anything be not handful said of the before, else in them of that pre-COVID. a certainly pace going And efforts. we three think Those investments you together, I efficient continue, and then, as we said compelling. are at more expect we've and but when far extremely And

there of point go than other guess business in tend that I of items, one to does costs, of because versus pace look because way QX into comment seasonality works, our largest, of get marketing, perspective, won’t the quarterly at variable QX it's QX. the and marketing expense of and Scot's from if terms the you much sort of seasonality of the up the echo In a it a

question next BTIG. Fong line Marvin your from Our question. with comes the of state Please

on on color, wondering taking units you. under the fourth congratulations then how versus to thought smaller follow-up. first in think new with the for quarter. a last more questions independence And just the of could and the drag Thanks little my a and I quarter, on additions can the I'm small get update have My question, account. franchise roles, if inventory both XX dealer we trended just dealer I the a us you dealers,

Hey, Yes. Marvin. Thanks. Scot. It's

sort out and segments, franchise across we So prepared has COVID lockdowns initially dealer all the quarter, remarks, was has growth strongest the mentioned in in strong the coming remained. of of

this we but and first highlight didn't return So them strong dealers the segments larger all been quarter. because have time were this the

for a Thanks And my question, that. marketing maybe on two-parter Great. spend. a bit of just then second

that think maybe marketing had I that So back plan you in XXXX. bring quarter, fourth in you to the mentioned the back brand dialed

it just at you Scot, so is that could healthy, you fast considered, of you given is expected is market curious, of also car for fourth mentioned the brand got maybe to think full pricing – not quarter? keywords bidding And maturity, because why pricing sales are, all the the perhaps secondarily, help So although where it things I pretty think the just kind the about competitiveness is terms competitive in where that think us up bidding some of not you for about, maybe was at that of just they're wind investment Thanks. decision forth. and do bidding still then

the brand here take brand robust then quarter or take Sam. not yes, purchasing. mean, On can car and I question, one of maybe spend QX Scot, Jason a spend, So the very next is I'll and you

and more that, year, this the holiday and expensive. election season, it's between the So

it time and driver the efficient value on also provide still sort air It's less both our in a we help just general. a differentiate to in us, brand. and for it's recognize cover way but of important really acquisition spending so traffic the be tailwinds And can

but others of the my remains I strategy for and typical it reduction has. question. too, our as you is it central had your of of sort growth like for as QX always in And repeat – can think three benefit, two you us. for So piece brand time Maybe parts

Yes.

Sorry.

today, maybe Just bit in think to be you’re spend, said up are I more of from be. pricing concise, might is thinking not that just where competitive, being markets conservative perhaps they terms but that as come marketing you’d should still a it

So just wanted to is from million SAAR XX car as Just – elaborate great. be it That’d on take sales pricing? do would as pricing it you terms think are any considering in it are strong on the is What car why healthy? color Why additional of sales used be weak? not could that. pretty about

clear, I’m you’re so just our about talking pricing? And – pricing

off guess. – you’re Like this take what drive I to can We line. to drive spending Yes. traffic,

Yes.

and it interpreting market to among So I so traffic. and the – think peers spending I’m our as drive competitors

fully. extraordinary decent but I XXXX. recovering a to think the And lot I to from universe over were, look, missed – an SAAR they’re not would of has world, out they think the normally at is COVID. still are had done close of dealer the they more time, if online companies same an are even sort of they sort where a lot of to think where at I a back chunk of that were course of job adapting dealerships levels have And sales, of

rapid than So return rather I a steady a it it definitely, call normalcy. a hangover, return to call

to as them. I partners exists, they’re are think so about that spend And be to to much thoughtful should like us as long drive how we going

drive. virtuous we then have dial up we for come to start in they it so spend, of dealer as And make more a than the be of that lower a little count to volume then a sense if So paying efficient becomes cycle. more leads back, might it our us we

Great. for Thanks that. Jason. Very Thanks, helpful.

line your Our comes of with next Arthur question. Doug Research. with Huber proceed question to Please

much. I’ve Guys, very you covered. Thank

line Raymond comes proceed your question from of Please Nick final with question. James. the Bageris with Our

Hey for my guys. question. Thanks taking

discussed Area can new Boost some digital you you color initiatives just the RouteOne integration. If some more of on and give retailing

Just of of Thanks. on kind digital kind retailing any you areas going introductions reception then for large forward? product opportunities other view the that these new introductions. more And product initial as white new space within of

Zales. Nick, Hi. It’s Sam

market. products of most are think the in that caught I you’ve

for And effectively. and more dealers from we’ve you’re close arena the As cycle in consumer a quite sales tremendous consumer you been know, that’s bringing while a they efficiently finance much now. had the and through because reception pre-approved

that the So capability parts logistics has around two proposition across countries. to our seasonal value vehicle different creates country. earlier consumer of it getting down a a that Jason in much brought in in market so further broader transported different much times of comments, can up much audience of close his be from pre-approved it been Boost is saying, has a a Number the Area their country is a to part funnel an really dealer incredible important rate. the vehicles

that for and that when a vehicle great the schedule there. do through to are capability drive, in-store. ability vehicle. digital to in-store test had to trade a the and reception on we’ve sales scheduled pick pilots time digital insurance online their a in they’re you So for store cycle, consumer and drop a a financing new create digital in up to that valuation bringing both And off it ability capabilities that or to if These of focused and doing transaction, pre-approval, digital fully

the a much partners. dealer efficiency further for them great cycle our through bringing just creating and You’re sales

in is newer small they the effectively of those those they’re been to with market we’ve going today. do reception work. from those pilots but how pleased learn What So we’re and are pilots, really the

dealer possibly And pretty then and feedback from market fully the that dealers is, a is, to generation if world far, talked shopper business to consumer lead is in offline so you it, digital who our a a about as a when current connecting world, business opposed as is Jason versus in the to that as commercialized going to is consumer do be. in effectively, we’re what that that we and what can are And it them purchasing our the take hearing are as creating doing you we’re once experience good transactions. we’re from fashion sure a dealer do

for us that in So from the asking future. on about you’ll And hear more thanks it.

it. a Thanks lot. Appreciate

We Jason and reached have closing the session Trevisan question-and-answer end our remarks. the of call turn I over for to back any would like to

thank dealer give to like our just – you everyone, our all employees. I’d of a sincere shareholders, consumers, our most and our thank to customers,

evening. and about excited very Have dedication. and you thrilled great have We’re building very much. momentum your the to we’re a support Thank

today’s concludes this teleconference. that, With

at your you now Thank for and time. may have wonderful You a disconnect lines this day. participation your