Q1 2020 Earnings Call
Geez, and our subject risks and uncertainties, which could cause and different materials from our actual results.
Information concerning those risks is available in our earnings press release distributed after market closed today and in our most recent reports on forms 10, K. and 10, Q., which along with.
The other S.G. problem can be found on the website and then the Investor Relations section of our website.
We undertake no obligation to up.
Date forward looking statements, except as required by law.
For their during the course in today's call you refer to a certain <unk> financial pressures reconciliation of gap to non gap measures is included in our press release issued today are updated about your presentation can also be found on the Investor Relations I'd say.
And that's really confection of our website.
With that I'll turn it over the line.
Thank you Rodney.
Thanks for joining us today.
Our industry in our business have changed significantly in the months since we last phone.
Four I begin my prepared remarks on behalf of myself and everyone at cards I <unk> I went back although it's in the medical community coherent Boston around the world for all their work battling this pandemic doctors and nurses.
Treating patients.
Cove, it and other essential workers by the true here isn't this battle.
But then there are lots of risk to help others, a neat hard 'cause out for both families that have lost a loved one due to this pandemic fundamentally as an entrepreneur I'm an optimist have faith in the vast capabilities of our scientific community help if navigate safe passage out of the storm.
Kim human an economic <unk> of the Cove at 19 pandemic staggering yet even in the face of these current challenges I've seen incredible resolving collaborative spirit from our employees in art dealer customers, which I'm deeply grateful.
In the midst of this industry turmoil, we're proud that as the market leader, we've led with our actions. We were the first major online ottomana marketplace in the U.S. candidate and U.K. to extend feeling or leave to our customers.
Thing them, whether that's difficult curious.
Was led by continuing to deliver value over the last few weeks, we've seen a strong rebound in organic directed application traffic Testament to the brand value built over the last few years.
Lack with rapid innovation, our product teams launched a real time performance marketing Sweet in January and I've recently introduced contact with sales features and our marketing team separately timely consumer insights market analysis to help dealers and consumers and gate safely.
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Finally were also.
Proud of how we demonstrated our businesses fundamental resilience flexibility underlying profitability as we scaled back expenses in mid March to set us up well for future investment.
Oh briefly discuss our business performance to the first two months of the year before outlining the impact of code at 19 and our response.
So the end of February revenue, and operating from where trending above or plan.
Yeah supported by improving audience growth rates versus the back half choose to that in 19. The first two months of the year U.S. average monthly unique visitors session and total leads from our course I reached trend during towards Tai single.
Single digits, you every year for.
Leads contain deals were growing even faster up 12% your every year or the same terrier.
Dealer business, we began a targeted roll out of our RPM Sweet select few lives in the first quarter and we <unk> encouraging adoption trends at 93% R.M. customers.
Closed and chew on selecting a package included.
In our social Ass product. We also completed an hour test of our trading processing to one.
Oh wait knowledge, we still have room to improve the product execution and I go to market stretch dealers can cater expressed strong desire for inventory acquisition solution, particularly consumers source vehicles.
We're very encouraged by consumer engagement during the test or.
We are working towards the next interruption of supply will include a broader base a dealer participation.
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R.O.U.M. advertising business came in a head or expectation through February while laughing timber fancy platform saw record engagement in the first quarter.
In our international business, we continue to generate stronger adults anonymous establish markets, Canada in the United Kingdom.
<unk>, we it's across these two more minutes were up 40% you ever hear through the end of February we added 360, net new paying dealers over the same here in short car hers was in a position to have another strong year 2020.
However in late February we began to see covert 19 impact our business, that's outbreaks, Italy for us to defend cancellation in school clothes.
Just before a nationwide lock on it was implemented in early March. Shortly thereafter, we saw similar actions take place across each or markets. The United States. A number escape I've played some level of restriction out dealerships by excluding them from the list of essential physicists are closing the.
Agencies to process title transfer.
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What state are also restricting failed completely.
Other states are asking deals to work only by appointment or digital engagement.
You bet states for sales are still possible volume excel as much as 90% you're you're at some dealer at some dealers during certain periods in March and April.
<unk> U.S. traffic in mid March we moved quickly to adjust consumer marketing spend to align with consumer demand strategically cut back on discretionary spending a stay at home or from one place.
The result are U.S. traffic bottom across late March in early April.
Consumer marketing spend remain reduce and we expect us traffic to be lowering q. choosing cue that in Q1, you've seen astronomer covering in organic <unk> f. based traffic in recent weeks.
The first week of April <unk>.
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Pay traffic in addition weekly unpaid leave she.
She just 20% your your throat X. thing April well totally is to paint <unk> ended pay for a flat modestly year over year signaling a strong under Carr U.S. consumer demand and a testament to our growing France right.
Impact aren't dealer business follows a similar trajectory.
Last several weeks, we've we have taken many steps to help art dealer customers through this period.
We're the first major online automotive marketplace.
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Killings relief and each of our operating markets, including a 50% reduction in the U.S., Canada, you pay for April and May service parrots.
We're extending a 20%.
Count on the U.S. in Canada, and 50% of the U.K. you believe it just kinda to help you know whether challenging financial conditions maintain exposure to our leading audience build a health.
Sales pipeline.
Well, we know he's discounts will not be enough for all our painkillers to maintain their pay program, where I mean, we are maintaining visibility for her paws feelings through our suspended offering.
We were play started existing free service for the news suspended offering.
<unk> engagement to our platform, we introduce contact with sales features and each of our operating Mar markets in April the lab.
I feel is to highlight so next week distance appointments contact us purchase free at home test drive and drop off were 5000 deal with that office in these teachers over the last several weeks, creating a safer shopping experience for both consumers and viewers.
And our dealer resource centre, we've we've launched.
Having different which provide us with tools and best practices for navigating challenging environment.
In Canada, and U.K., we had launched pilots right delivery product, allowing people to expand their geographic reach.
About what fast for cats chat interactions in the UK.
Finally, we continued to host Webinars and virtual dealer Council helped real estate connected tame best practices and strategize for the month ahead.
You each art dealer.
Just as a value partner and <unk> and.
Well and while our discounting program means less revenue for our business in the near term. We believe these steps are helping deal with weather the storm remain on our class from it.
Paying dealers.
We've seen an outpouring of positive responses from art dealers Clooney Coleman like owner of African price.
For Dodge cheap Ram.
Oh My notes quote if there was ever any validation that Carter is is an extraordinarily dominant.
Position robust aggressive early decision to change your subscription prices pasta widespread ripple effects of the rest of the vendor community cross not just digital marketing, but other services that are provides the dealers.
Set the pace.
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Ratchet like you for that was a wakeup call to a lot on your competitors great job unquote.
Recognize.
The dealers earn a challenging position and are facing difficult.
Oh spending decisions up their own well, we are confident are leading audience technology in return on investment would try more viewers like acting Chrysler Dodge cheap Graham the card original her time.
Yeah, I know you'll are facing efforts, we have enacted several as isn't enough to maintain that help or business. The long term. That's we shared in our April shareholder letter Beaver juice operating expense significantly lower.
Consumer and dealer marketing spend discretionary expenses.
Each are markets.
Variable nature of our our algorithmic traffic acquisitions fan.
Two a 50% reduction in their base salary through mid July and our board of directors also voluntarily reduced or you know cash compensation for 2020.
Finally, we made the difficult decision to reduce our workforce by 13% on April well <unk>.
So these decisions was challenging we believe you allow for greater flexibility of focus in the near and long term. So the conquers emerges from this pandemic.
That's an even stronger business.
In addition to our expense reduction measures, we reevaluated our resource distribution across very strategic initiatives. We believe our model is well suited to international expansion as our skin that was old technology and freemium consumer centric marketplace is competing primarily with Katie paid inclusion models, which we believe limits the consumer expand.
It's a dealer valid proposition.
Till each country. We have entered is that a different stage of development. That's part of this review, we have decided to cease operations in Germany, Italy, Spain, and it's halted expansion efforts and other international markets. These markets.
We're in their relative infancy, and if such we're far more reliant on pay traffic acquisition than the U.S., Canada or the U.K. the cost of restarting these marketplace plus code it would've been significant as we dynamically evaluate our capital allocation framer, we see larger more acceptable opportunity for the U.S., Canada in the U.K.
We believe it is is in the best interests of our business and our shareholders to focus our efforts on these more developed markets going for it we plant while we plan to reallocate resources from these markets <unk> saved roughly $5 million in 2020, ceasing operations in Germany, Italy and Spain.
As we look ahead it remains difficult to project or business, given the number of variables impacting the economy or industry and our company still we were seeing encouraged to sign from our consumer audience in April.
I consumer inside scheme conducted a survey of over 700 car shoppers, which shows 73% tend to purchase a vehicle in 2020.
Well I'm only 8%, we're planning to buy a car before the pandemic, except delays are plants and definitely so shoppers purchased from 10 for me Hi. Furthermore, openness to digital channels has increased prior to the pandemic, 32% of car bars open to buying online.
Whereas today, 61% are now open with digital transaction.
David such there's still healthy consumer demand and the U.S., though with less timing certainty, but it also underscores changing consumer preferences.
Well, we cannot predict when lockdown will be lifted when when the economy will begin to rebound or what normal may look like we're mindful several possible outcomes.
For the longer Lockdowns remain in place the greatest the likelihood that recovering consumer demand, we Bermuda curse further into the future, particularly as the holiday shopping season draws near when car buying activity typically wings.
Second we know our discounting program will not enough preserve paints that the tank south of all I do and and our news suspended status offering isn't attractive alternative for deal with facing economic hardship effectively alignment to pause there subscription.
Oh U.S. paying deal it fell by 1107 on the first core and arcane dealer Count has continued moving lower sense.
Either cancellation rates, which we believe peak and late March in early April stabilized and while it's well it's an early Tran we're seeing some <unk> previously cancel deal is returned to paying status.
I have duration ever discounting tend to pace of paying dealer, you'll ever turn those habits significant impact on our financial beltsville, their main or 2000, and try and the latter place and meaningful role and our 2020 exit rate and our business trajectory into 2021.
You have it or unmatched audience down the U.S., what we believe it's asking fast return on investment. We think we are best listened to attract net new paying dealers who emerged from a covert 19 crisis.
And then means on our technology team is delivering innovation.
We can do you need to focus on improving consumer attention and our roll roll out of a Google one tap log in has increased or email accounts for eight by nearly 40%.
The health crisis highlights the need for.
For more robust digital retaliate solutions for dealers.
We had already prioritize digital retail at strategic initiative entering 2020, we planted developed these two even more aggressively going forward.
Element of digital retailing is financing.
We are pursuing additional lending partners or platform to enhance consumer credit spectrum and dealer coverage.
What they're gonna exploring paths to offer and celery products and other features the transaction processing or marketplace. So these efforts remain in early stage.
Oh. These are challenging found in Toronto employees are dealers in our business. We're doing everything we can to emerge from the coven 19 crisis with even stronger company.
We have over $150 million catching investments on our balance sheet with note that and a flexible business model, which we believe positions the theft in our industry to invest prudently yet aggressively and audio screw it to attract mood give us business.
A U.S. audience size is unmatched and we believe we provide you with with the highest R.Y. most efficient consumer act as if you channels across her marketplace in other digital marketing tools.
We will continue to fill out our product portfolio across both dealer park, new growth areas, such and such as the trade in consumer finance and other digital retailing tools.
I believe a more focused effort will ultimately ultimately allow us to extend our leadership position in the U.S. capture greater market share in Canada. The U.K., what's that I'll turn the call over to Jason.
Thank you lately.
Provide a detailed overview or first quarter performance Bella bison directional comments on our outlook for the second quarter full year 2020.
The little first quarter revenue was 157.7 million up 17% year over year and roughly in line with the midpoint or prior guides.
Marketplace subscription revenue for 17% versus a year ago period 141.9.
An advertising and other revenue.
10 per cent your every year to 15.8 million.
Focusing on performance by geography, U.S. business accounted for 94% total revenue in the first quarter.
Revenue group 15 per cent. Your every year 148 million Oh International revenue, 41% gear every year to 9.7.
Langley reference.
Operations in Germany, Italy, and Spain, and quality teacher International expansion efforts.
Expected to have little impact on or international revenue going forward.
Italy contributed only a few hundred thousand dollars at first quarter revenue.
Neither Germany, nor Spain generated any revenue.
Turning to paying dealer account ended Q1 with 35317 total pain dealers decline of 798, and the 2000 Nike.
In the U.S.B. finished first quarter 27883, paying dealers, representing a decline 1107 30019.
Decline in or U.S. Angel account has continued to keep too many dealers had chosen to revert to our suspended status product, while they were made under state and local restrictions.
So we're seeing stabilization in cancellation rates and inability to win back some cancelled accounts.
Pain dealer account ended April roughly 6% below our first quarter total.
No International business, we added 309, net new pain dealers in the first quarter 250, which came from our market places in Canada in the U.K.
The end of the quarter with 7434 total pain dealers up 44%.
Year ago period.
Similar to I.U.S. business, you saw a net dealer declines in our Canadian can U.K. marketplaces in the month March and we experience further neck pain dealer decline in April.
Oh and forward remove Italian pain dealers smart count, which totaled 510 dealers at the end of the first quarter.
I mean into 2020, we anticipated connection and lead volume would be the leading driver of U.S.R. sit gross for the full year.
The first quarter, you say start toughest volume growth concept year January and February.
Active coded 19 resulted in both the decline in consumer activity and dealer count.
Isolating per January and February unit pricing was the leading dry they're contributing roughly 40% of U.S.R.C. growth in the period.
And actually and lead volume contributed nearly one third of ours it better than that period, while the remainder came from new products.
But incorporating March results effectively all of US arts to grow would've been driven by unit pricing new products due to the decline in both consumer activity in pain dealer counts.
In total U.S.R.C., 19.2%, you every year $18393.
Represents 60 basis point acceleration queue for 2019 due in part to decline in U.S. paying your account.
International ours, it proves seven per cent year over year to $5222.
First quarter International ours. It included the impact the Pistons heads for the first time, which we will continue to include into calculation going forward.
Similar to previous borders excluded the impact of bar Italian marketplace Miss metric.
Going forward International are said to be calculated based on combined trailing 12 month marketplace subscription revenue an average pain deal accounts from our core Canadian U.K. marketplace who's been pissed image.
Oh discuss our expenses to profitability noncat basis, which backs out or stopped eight compensation expense interpretation of acquired intangible assets and acquisition related expenses.
First quarter non gap gross margin was 92.7%.
Roughly 165 basis points from the year ago quarter.
Similar to the prior keep quarters two factors contributed to the year over year contraction and gross margin percentage.
Urged recognized media costs associated with our Offsite display products and our cost of revenue.
These products scale, it will create a modest headwind too gross margins.
Second technology investments in our data center compiled posting expenses also contributed to the year over year contraction.
However, these factors do not change our stated long term operating income or adjusted he departed marching targets outlined in our investor deck posted on our investor rate Relations website.
<unk> first quarter non gap operating expenses or 121.1 million eight per cent year over year.
Non got sales and marketing expense for two per cent. Your every year to 90.8 million in the first quarter and represented 57.6 per cent of rabbit down from 65.8% a year ago quarter.
Improvement in sales and marketing.
It's a result of consumer marketing expense reduction in March in addition to our Grand investments driving more direct and owned channel traffic.
During the first two months or the quarter Nongaap sales and marketing expense and the per cent of revenue was 61.8% down roughly 410 basis points from the comparable a year ago period.
Our first order non gap product technology development expense <unk> 38 per cent your rear to 17.2 million representing 11.2% rabbit.
Increase in product technology in development expense is driven primarily by the acquisition of bottle. It continued investment in our product in engineering organization.
Generated non gap operating income of 25.1 million and the first quarter roughly 13 million ahead of the high end of our prior guidance rage.
While the bulk of our operating from Oh performance was driven by consumer marketing expense reduction March is important to know non gap operating time through the first two months or the corridor, which trendy ahead of our operating.
Non gap alluded earnings per share or 19 cents for the first quarter roughly 11 cents ahead of the high end of our prior guidance rage.
And I got basis generated first quarter gross margin of 92.6% and total operating expenses of 134.1 million.
11.6% versus the year ago period.
Increase in operating expenses was primarily driven by the acquisition of auto list continued investment in our product technology development teams.
First quarter operations that much $12 million I'm, 62% your rear.
First quarter gap net income attributable to common shareholders told 13 million.
Geographically first quarter U.S. gap operating income was 20.3 million up 17% year over year.
We had a gap operating loss of 8.2 million or international business compared to a 9.9 million.
A year ago quarter.
We ended the first border with 155.7 million in cash and investments decrease that 15.9 million from the end of the fourth quarter.
Reduction in our cash balance was driven primarily by or acquisition of bottle It which closed in January with total acquisition costs 21 million.
Generate at 8.3 million and non gap free cash flow, which includes capital expenditures capitalized website development costs at 1.9 million.
During the first border withheld and then niche 3.4 million withholding payments from R.S., you share settlements stemming from our equity compensation plan.
In April our board of Directors approved an expense reduction plan, which included a 13% reduction in our workforce.
In addition, we will cease operations in Germany, Italy, and Spain and help other international expansion efforts.
Conjunction with this plan, we expect to incur a total estimated pre tax restructuring charge.
The $4.3 million in the second quarter.
75 per cent of which is associated with employee separates benefit cost.
The remainder stems from lung lived asset write offs from our international market places.
Approximately 2.6 million of these charges.
Caches predators.
Well, we woke up the call for Q. and a one off the commentary on or outlook for the remainder of the year.
Oh, we're not in a position to offer the same form of financial guidance as we have historically I want to give some directional color on how we are approaching cash management liquidity wrote.
Stability.
Already with cash management, you've demonstrated our businesses expense flexibility over the last several weeks.
55% or 2019 catch expenses were tied to advertising, which the bulk of spent on consumer marketing.
Our consumer marketing expenses are highly variable.
Spend the majority of these dollars to digital marketing channels, such a search social media Retargeting can display advertising.
We were able to reduce the expenses quickly insignificantly mid March when consumer demand.
So we are continuing to spend to meet meaningful amounts traffic acquisition <unk>.
Well, we expect these expenses will remain below historical levels for the foreseeable future. We're actively monitoring consumer economic activity at the national State and Metropolitan levels, and we will scale, our traffic acquisition spend up and down accordingly.
Based on that comprehensive expense reduction plan, we announced in April we believe these measures will yield over 100 million.
Cost savings compared to our prior operating plan.
A little crudity crime, you believe wearing a strong position to whether an extended downturn.
Q too with 156 million and catching investments on our balance sheet no debt, we believe it sufficient to manage our business to this crisis.
We do expect to use more cash in the near term as we deal with challenges related to cope with 19.
Even or clean balance sheet. We also believe that we have multiple avenues to garner additional capital should we need it.
Burning to revenue Unprofitability, we expect you to revenue to be down significantly year every year as you recognize discounted billing months reduced early and spent.
Given there's still many unknowns to this crisis in both the near long term intractable, having the economy and our business. The are evaluating a number of scenarios as it pertains to revenue for the remainder gear.
In light of the buildings discounts, we have applied April may and June and a softer <unk> advertising you'd mark Mitch produced consumer demand.
Expect total revenue roughly 85 million and the second quarter.
We expect to generate positive non gap operating margin in the second quarter, a testament to the speed of our response to the crisis in the flexibility of our business model.
And accounting for 4.3 million restructuring charge may incur a gap operating losses in the court.
But the full year forecasting on business for me difficult and depends largely on the duration of Lockdowns piece of recovery the possible reintroduction of lock down to to second wave virus occur.
Even in or upside scenario, which assumes no further discounting steady pace of pay dealer be acquisition productions insurance inconsistent acceleration expansion activity for the remainder of the year.
We would expect fourth quarter revenue to see below our first quarter revenue 157.7 million.
Guarding margins are downside 2020 scenario seems the possibility of health crisis, persisting or second wave lockdowns occurring.
Some dealers going out of business extending billings discount into the future.
More needed economic recovery.
Even the flexibility we have in our expense page through our variable consumer marketing spend even in or downsides scenario. We believe the business could achieve 10 per cent plots non gap operating margins sort of full year 2020.
All our dealers are facing unprecedented challenges you feel confident in the leadership you provided in our industry.
Bleep, it our industry, leading audience, but seems tools digital marketing products provide the highest are lie and strongest value proposition can or industry.
We're investing in digital tools to help dealers and consumers alike operate safely and efficiently through this period.
Continued to attract large audience engaged down funnel shoppers to our market place.
We believe we are in solid financial position to both preserve our own businesses help and invest proactively the economy recovers <unk>.
We believe we will emerge from the situation, we didn't even stronger meeting position in the U.S.
Continued market share games or international businesses.
With that open to call up for culinary.
Thank you and ladies and gentlemen, if you'd like to ask a question at this time. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your me function is turned off to let your signal to reach our equipment again that is star one to signal for question.
We'll take them first question from Dan criminals with the benchmark company he's glad Sir.
Great. Thank so good afternoon. Good color guys sits around sort of higher thinking about marketing spend you know obviously in the marketplace that they're doing pretty attractive rates out. There you know tpms are are way down and so you guys have all these they've been pretty aggressive on the dealer side and.
Terms of trying to.
Take some mind share their just curious you know it'd be neat then you know even sort of pre recovery to get a little bit more aggressive <unk> incremental market share gains that extremely I.R.Y. customer acquisition costs here.
Yeah, So data Flannelly I think you're going to find has to be as we have in the past me analytical and careful about making sure we map are.
Expand what the demand function as we talked about in our Mar we'd been frankly positively encouraged by some of the early trends on.
Those consumer traffic and lead flow in many markets.
I was the only thing I would say in addition to out is that we're going to be careful about looking at it kind of market by market because what we have seen is while there are a lot of.
<unk> signals in some markets there are a few and increasingly minority of the market Thankfully that are you know still in a pretty hard lock down so.
We're going to be careful probably on a geographic phases to the.
To make sure we're we're mapping teach regional market.
And then just maybe on the product side, you know obviously, you've got dealers talking about you know, maybe 25% plus permanent reduction staff everybody going to digital solution you give a lot of color about on the Qual. Obviously you had you know you launch R.P. and you know you had other stuff in the works you know Alpha test traded.
And he wanted to this is the environment create a change in the way that you are developing a product road map, obviously, you build up to new tools. The D. you may be focused on those are are grow them deeper before you get back to what you're doing before or is it still this kind of status clone you had the right do you plan.
Dan.
Thanks for the question I think it.
Continuing to do what we've done Wow <unk> in a date with ancillary products that <unk>.
You talked about all the P.M., we won't do very good start we believe.
Dealings continue and continue to look.
The I want to make sure you can you give me I just thought about that want to make sure you can hear me <unk> and deal if they're continuing to look at not just their lifting package, but also the $12 billion are spending and digital marketing that we got a product yeah, but we think in second and on the market.
We put our large audience up again targeting data that we know on their shopping experience to sell that dealers to pretend. It's you know and offering in the marketplace. We've launched contact was selling I can't be helping consumers n. dealings find me better match for their process of buying today.
And the consumer finance product that we launched about a year ago. It was showing great. We're going to continue invents there and the feedback from our dealer Council, which we just held up a couple of weeks ago, No 30, plus leading dealers in the country.
You know when you look at digital retail there are many solutions out there in the marketplace. One that will work in a completely and and start up the search process to complete digital transaction. It reads an opportunity to any player to come in and build a solution.
Shopping finance ancillary products tied together that coal and and digital transactions, we're going to continue invest their as our new would set of investments.
Flying you made at the beginning a call. These existing products are really off the ground and exciting pool on digital retails. The next day, because we see an open market opportunity to do something nobody else's down there.
Got it too for helpful. Thanks, guys.
Thank you are next question will come from Ron Josie with G.N.P. Security go ahead.
[noise] hi, guys. Thanks for taking questions just as speech start to open up so I'm thinking specifically about Georgia and it's like that are you guys seen dealers come back to the platform faster or higher traffic.
Yes, just taking a bigger picture kind of look into question, some really asking as the country opens up how correlated isn't that kind of two trafficking <unk> that's.
Iran Tamp down thanks for the class and we certainly are not happen.
But they do you look at.
Transportation on beans were shot for a period of time, we are seen states opened up blindly sad state by state, Yes, overall, just seeing lead volume growth snake bites.
Backs are very different now don't have very little impact in a consumer and and therefore dealing with more opportunities and makes sales and moved in Brooklyn, New York, New Jersey, Pennsylvania awkward situation. There <unk> prepared remarks that you know it's <unk>.
Porn or certainly in markets, where we're seeing new good comedy.
It's in the markets that are open.
Yeah.
The board challenging environments, where dealers are sports did make they know either online fashion or any man servant lines, you're seeing our lead volume well, let's say helds and more interesting.
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And.
[laughter] consumer lead one to deal with <unk>.
Well, it's still interested in purchasing.
Delayed in their profits because.
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Let me turn up on on me.
Right.
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Stick the obvious.
You know, obviously, you're where I'd be predominantly almost you know I want to feel like 95% a used car platform as opposed to new car and these kind of challenging economic times I think yours are going to fall back on used cars their profit engine, because I think new cars.
Wanted to be very challenged Ah So you know.
Thinking that as a fact and secondly, <unk>, our our share scale at this point.
As a platform is really makes us kind of a must have it's not really I would argue not really optional to have as being your platform.
So I think that's kind of evidence by the fact that we are seeing I'm pretty encouraging turn in in in you know do you like you know the original be like cancellations just weeks off peak and kind of late March or seeing a pretty good trend of people coming back on because they realize a. that they need to be on and be that they're seeing.
State restrictions being left it didn't really have to build their pipeline to get ready for one thing to open up and God willing kind of June most of the state. So I think those are the trends that we're seeing which are positive.
Infrastructures. He did you have any further questions.
[noise] I'm, sorry, I haven't heard on <unk> no. Thank you so much thanks for talking to them spent.
Thank you and ladies and gentlemen, as a reminder to signal for questions that star one on your telephone keypad, what makes good to Marvin phone with etiology. Please go ahead.
Thanks for taking my question.
A safe.
I'm doing well question on on some of your own advertising dripping products I'm thinking like.
That's one point in time.
No. There's all kind of <unk> nine with home, it's <unk> will colored Amanda going down.
Are they going up a little better and could you could provide.
Particular.
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I Hope you can hear me I'm told that my audio natural tickets C.N.B.L.C. yeah.
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Okay.
Sorry about that.
The R.P.M. products I think are taking off in the sense that dealers are looking to sell their pipelines.
Just mention that state by state depending on Lockdown are hoping it's too.
So now it's the opportunity I don't need to extend beyond our lead bro.
Believed that we don't know listings activity, but also to build the pipeline for their brain dead. They open up again.
$12 billion, it's been today on online digital marketing activities. So we're just taking advantage of having the largest audience using our data that looks at.
Being experience for those consumers are we targeting and saying that that consumer back to a dealers website. It's a unique value proposition the thing I'm not I'm not seeing that consumer only looking at my inventory something added benefit building completely branded experience to drive the consumer.
Into the dealer website I've been ancillary need additional way to go blind during the downturn, we said in our consumer research that consumers are still playing to make purchases. They may have just expanded their deadline for making those for the perfect way to take advantage of pipeline.
Great thing pretty sleep like color and then Oh, well the no I think you <unk>, but so so.
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But I.
I do more than I think Langley characterized very well you know use card markets typically before much better in downturn didn't cycled the new cars. When you think about new car inventory sitting on the alerts long.
The feedback <unk> well it is that <unk> thinking not that I got to cancel all my marketing forever. It's my Mike delay my spin until you know later years. So as we mentioned are opening remarks.
Some of that hit up in in the end of March into early April I think most mentally and most of them are sticking with their advertising, but some of the aliens are saying I'm going I'm going to push out my and two when I follow the demand curve isn't it may be closer to say third quarter. When it's done it would start wonder what he's been up.
Advertising to push people to think about new car <unk> hopefully it would probably come then the economy.
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Thank you and we'll take our next question from Jed Kelly with Oppenheimer go ahead.
Great. Thanks for taking my question can you hear me okay.
Yep.
Yeah, Okay, just as as as we we we we started the recovery and use cars become more popular with consumer kind of implies your your evaluation that your evaluation technology is more important is there a way for you to sort of.
<unk> accelerate your market share with dealers against the other market places, where you can actually be calm you know the old me one day, you instead of dealers using multiple marketplaces.
Thanks very much for the question. This this is Jason Jed Yeah. So you know we believe it you know we have long said that there's an opportunity for on the consumer side a winner take most.
Opportunity. If if you are able to offer the most selection give the most information on it sorted in the most intuitive way and in particular in an environment, where car values are likely to be more volatile then you should be the destination that users <unk> consumers can.
News and solve most of their needs and we believe it I think the data supports that we check all those boxes from a dealer perspectives.
There is you could argue in in <unk>, you know recessionary times as wallets or tighter that there will be a flight to quality and the two typical sort of directions that we think dealers will go is they'll go to weather scale and where there's our ally.
And we believe that were in the unique and and you know pretty attractive spot to have both the largest scale or from an aggregate standpoint for most were dealers as well as a terrific are alive, we are continuing to invest time and energy.
In demonstrating that to dealers so that weekend with more proof positive provide more of a closed loop attributes in perspective bid shows them that you are the best R.Y. admitted they advertise on our platform given the size of our audience and given the virtual its nature of the.
Marketplace.
That they you know may not need to advertise on you know two or three other marketplaces, because we would bring them the bulk of devalue and then when you add on to that some of these other products and you've talked about like R.P.M.. We then help them tap even further into that audience our audience.
Helping them connect with them when they're not on our platform.
And they had this langley I I, probably out a little bit more color I've I've had some discussions with a number of national.
Franchise dealer groups, some publicly traded who have as much as that you know and these tough times, they're going to consolidate budgets and.
You know thankfully you were in that list because of the reasons I think chase and talked about of instantly scale, an R.Y. It would get the biggest audience. We are delivering the best value to the alerts from an airline sampling. So I do think there's gonna be a consolidation I'm I I get into who might lose out on that but I do think we'll bath.
Huh.
Thank you.
Thank you all next school to Derek <unk> consumer edge Research go ahead.
[noise], there's hope you're all well and things for taking the questions just to start can you Peel back the layers on how your dealer mixed speech impacting our C.N.N. dealers you may be in better shape financially I'm, a probably also the one staying on in generating at higher are sitting won't blows lower aren't should dealers maybe the ones.
Spending.
That there's a trip she can just help us understand kind of what impact had in the quarter and and what do you expect going forward.
Sure. Thanks This is Jason.
You know, we we've shared in the past that in in normal times are smaller dealers tend to be less sticky for a number of reasons and and admits environment that you.
<unk> you know I think that general rules still applies but I think in this environment. What's difference is what we mentioned earlier, which is the geographic nature of it and so a stronger indicator dealers you know willingness to to stay in business and and maintains sort of full throttle on marketing.
Is.
Whether they can have consumers come into the dealership or not so I would say geography, and the sort of societal locked down elements of that geography, or a bigger contributor, but you still have the the general nature that larger dealers tend to be stickier and run more like businesses versus.
You know a smaller line large business rather than a smaller run shop. So the <unk> I would not suggests that <unk>.
Mix has been material contributor to our Sid instead, it's been a driver's we've talked about it.
Through February which is probably more accurate timeframe news pricing wise, it's 40% the others were about a third each and then frankly ours had gets a little.
Sorta wonky when the deal account goes down and so in that case, it's you know it's a different mixes contributors.
Got it that's helpful. And then you know it might have some of the recent accidents and smear international markets I'm wondering how you're evaluating your presence and commitment to you can can particularly given the wide range of possible economic outcomes from Cove. It and he's mentioned just wanted to get your song.
On that.
[noise] sure things are exceeding again, yeah, we are.
<unk> you know it was difficult decision because we had teams that and put a lot of work into launching those markets and we believe we had you know very strong products and in Italy as as an example, we had gotten really strong positive reception from the D.
Community.
<unk> at the end of the day as you said in her shareholder letter, it's about focus and it's about resource allocation and for US, It's both capital and human resource allocation. So what you know I find most.
Telling I guess about.
The focus on Canada, New K. is that we now have our international teams focused on executing into markets versus more than two markets and I have already seen to be honest, a an ability to move faster.
Being able to focus.
And by being able to adapt in this environment. You know we led the decision for discounting in those markets just as we did in U.S. and we have had you know really promising support from dealers that we also just held or or you pay dealer Council, who had said to us that we.
We changed the game in the industry by doing that and they're grateful for it. They're also seeing that we're having you know very strong on a relative base is very strong lead growth rebounding from the loads of Iraq and in some cases, you know dealers are getting more needs. Today, then you were.
A year ago and by coupling.
Contact lists solutions.
By introducing delivery and those two markets.
And by introducing what's out in the U.K.
We've had.
Really impressive innovation in the last couple of months that I think it'd been output of being able to focus and it's helping dealers. During during this strange time. So I'm more excited about 10 in the U.K. than than I was simply because we have we have more guns and more ammunition pointed in those markets.
Great. Thank you.
Thank you at least in German once again that installed one to signal for questioning and star one on your telephone keypad.
Oh ponds for just a moment for additional questions.
Thank you and it does if you we have no further questions in the queue at this time.
For dialing in this evening to talk about in our remarks. These are certainly challenging times.
We feel yeah, we're really extremely well positioned to help I deal with partners within Siemens shopping to hate is continues to bill coming months.
I wound up conclude or sites are marked by saying gambler Ah fill out to those around the world that are affected by this 10 done not going again give us sincere thanks to the medical community adult here in Boston around the world for all those people are.
If I'm on everyday trying to battle with.
<unk>.
I play violence give a special bank for employees for their both their hard work and they're flexibility. If we all work from home. It's time as many of our employees about small kids can attack working from home when you've got.
Kids running around it's not always easy, but anyway I want to thank her one for for their hard work hopefully we can all get back in the out soon.
Well, that's that's close it off and thinking I to everyone.
Thank you and again that does conclude today's call. We do thank you for your participation you may not just connect.
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