Q2 2021 Cars.com Inc Earnings Call
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Good morning, and welcome to the <unk> second quarter 2021 earnings Conference call. This call is being recorded and a live webcast can be found at investor Dotcom Dotcom.
A replay of the webcast will be available until August 19th a copy of the accompanying slides can also be found on the company's investor Relations website I would now like to turn the call over to Robyn more Randolph director of Investor Relations.
Good morning, everyone and thank you for joining us.
It's my pleasure to welcome you to the <unk> second quarter 2021 conference call.
With me this morning are Alex Vetter, CEO and so on Eugene CFO.
Alex I'll start by discussing our highlights from the quarter.
We'll discuss our financial results in greater detail, along with our third quarter expectation.
On the call with Q&A.
Before I turn the call over to Alex I'd like to draw your attention to our forward looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation.
We will be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin and free cash flow.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure can be found in the financial tables included with our earnings press release and in the appendix of the presentation.
For more information please refer to the risk factors included in our SEC filings, including those in our annual quarterly and current report with.
As you are available on the new Investor section of our website, where you'll find updated content with a refreshed interface that's more engaging.
We assume no obligation to update any forward looking statements or information as of the respective state now I'll turn the call over to Atlas.
Thank you Robert and welcome to our second quarter 2021 earnings call.
Let me start by saying how pleased I am with continued momentum.
<unk> delivered another quarter of strong results and profitable growth through a focus on value delivering innovation and expansion of our digital solution.
Our steady execution resulted in strong year over year revenue growth underpinned by increased dealer customers.
Net of the ERP and double digit profit growth.
The results are a testament to the value, we bring to the industry and the dedication of our team.
These moves are increasingly investing in our digital solutions as consumers continue to embrace online car shopping.
This accelerated shift towards the digital purchase environment plays to our core strength and value driving digital solutions.
We grew dealer customers.
Second quarter.
18845 dealer customers as.
As expected our new sales cycle was slower.
However, even in the current inventory constrained environment dealers know that where cars still need to be solved.
First on time is the perfect platform from matching buyers and sellers and the proof is in our record retention rates, which are continuing into Q3.
Together growth in dealer count and AARP translated into yet another consecutive quarter from revenue growth.
Our focused execution resulted in revenue and adjusted EBITDA coming in ahead of our expectations.
Core to our success is the cars doctor on market leading brand.
We provide customers with reliable access to a highly qualified pure and market audience.
Importantly, the majority of our audience comes to us organically.
A quality audience that can't easily replicate.
Keith or acquired through paid marketing tactics.
And our traffic continues to scale towards market leadership.
The fastest growing marketplace in the category and drive high value traffic to thousands of dealers, including digital dealers, who rely on cars dot com for sourcing sales.
Just as on our marketplaces important to local and digital dealer. It is also vitally important to the consumer purchase journey.
Approximately 90% of car shoppers considered third party marketplaces to be the most beautiful site during their car search enabling them to shop across based models.
News and research 1 of life's biggest purchases debt.
On the automotive industry spends more than $5 billion on far less efficient paid search.
In fact, an independent study of exposing the inefficiencies of Google SCM was.
Recently published by Brian patch, a leading automotive industry marketing consulting and dealer Influencer.
On the automotive marketplace deliver a lower cost per sale compared to Google SCM.
Which cost 5 to 10 times more than just realized to generate sales.
Brian said, when comparing engagement from Carter's dot com referral traffic to Google SCM cars Dot com shoppers are 3 times more engaged and twice as likely to convert into a sale.
There is a massive opportunity for dealers on our industry shifts some of the inefficient at BMS debt.
Towards more information Rich third party marketplace.
Who offer an audience with higher purchase intent.
This is no surprise to us our unique ability to efficiently drive high quality end market traffic across both new and used car segments.
<unk> had strong year over year audience growth.
We generate traffic far more efficiently than our competitors.
Most of our traffic is owned and not rented.
Moving over 70% comes to us organically.
SCO traffic was particularly strong this quarter and was up 6% year over year on.
Organic strength is attributed to our strong brand.
Our number 1 rated mobile app.
Quality of our consumer experience and our industry, leading editorial content, which is an important differentiator for us.
Editorial content is also an efficient way to engage with consumers earlier in their car shopping journey.
A quarter consumers reach our website via our actuarial content immediately move deeper into our marketplace and begin their car search.
In June we strengthen our catalog of content with the release of our 2021 American made index, which highlights the most American made vehicles.
This content resonates with shoppers sellers and our OEM partners from frequently highlight in calendar placement in our index.
Our annual AMIA campaign is always what we see in this share. It again delivered more than 500 media stories that promote the cars dot com content and brands.
Our pure in market audience support sustainable dealer value and customer growth.
And for dealers, we are the most efficient solution.
Dealer customers advertise for specific inventory on their lots and we connect them with customers seeking an exact match.
All other advertising models drive traffic broadly, but don't match supply with demand.
And we now have grown our dealer customers for 4 consecutive quarters, reaching 18845 at quarter end.
This represents an increase of 812 dealers year over year, and a 22 dealer increase over Q1.
AARP also grew for the fourth consecutive quarter adjusting for last year's Covid related invoice credit growth in AARP was largely driven by fuel on our web site solutions.
Fuel allows dealers to reach our end market audience with a range of messages across streaming video platforms.
In fact during the quarter. Many dealers began to run vehicle acquisition campaigns to strengthen their ability to buy cars directly from the public.
Fuel revenue grew double digit sequentially and this revenue is generated by leveraging our existing audience, making it highly accretive to the bottom line.
Fuel continues to gain traction across our dealer network.
Realize the power of our pure in market audience.
Dealers are also adopting our innovative digital solutions to have more touch points with consumers along their car buying journey.
At quarter end.
Howard a total of 5000 dealer website.
From the leading provider of new entries in Gm's dealer choice program.
We expect continued growth in dealer inspire as we deliver on other business in the pipeline, which now includes the launch of <unk> direct website.
As we expected OEM and national performance for the quarter was muted by the continuing to supply chain disruptions and chip shortages.
But our results were better than initially expected.
Nevertheless, as long as production remains limited, we will maintain a conservative view for OEM and national advertising.
1 of the notable achievements of the quarter was the successful launch of the new cars Dot Com cloud based platform.
Migrating marketplace platform to cloud based technology reduces our reliance on physical data centers and minimize our environmental footprint.
This platform also has a fresh and modern design with page load times up to 80% faster enhancing our user experience and bolstering our leading SCO authority.
We've also optimized the speed at which we update dealer inventory.
But most importantly, the new platform unlocks our ability to innovate faster.
Driving efficiency across our brands and more quickly bring new industry, leading solutions to market.
Turning to broader industry trends retail sales for the first half of 2021, where the best on record in the past decade as vehicle demand continues to outpace supply.
Dealers are reporting record profit on fewer sales as they leverage marketplaces and digital solution to connect with shoppers more efficiently.
Strong consumer demand and continued dealer profitability ensure that cards is well positioned for the second half of the year now I'll turn the call over to Sonya to discuss in detail our financial results.
Thank you Alec.
Im pleased with our continued momentum.
Delivered solid financial results top line revenue and adjusted EBITDA growth were strong and both exceeded our expectation as well as guidance.
<unk> also yielded yet another quarter of robust cash flow.
Revenue for the second quarter totaled $156 million.
52% year over year and up 1.5% from the prior quarter.
The estimated $38.2 million invoice.
Hi provided to our dealer customers in the second quarter of last year revenue still grew.
Profit, 11% year over year.
Dealer revenue grew by 34% on $54 million year over year.
Driven by continued growth in customers and ERP day for both marketplace and dealer inspire increased product penetration and the lapping of last year's pandemic related invoices credit.
And dealer inspire revenue grew 49% year over year, driven by continued growth on that site lapping of last year's Covid impact as well as marked improvement in digital advertising after last year's Covid related pullback.
We have a national revenue for the second quarter was $16 million.
Up 2% year over year, the business was down sequentially, but did perform better than expected. Despite the continued disruption in the new car supply chain, which led to a pullback in OEM advertising.
Moving on to expenses, our operating expenses for the second quarter were $139.9 million compared to $119.2 million from the prior year period.
The second quarter last year reflects our material cost reduction in the face of an uncertain COVID-19 environment, we reduced expenses and investments across all lines of net.
Compared to the first quarter of 2021 operating expenses increased 2.3%. This is primarily due to investments in product and technology port crowd as well.
On the platform.
For the quarter, our marketing spend with lesson plans, we continually evaluate our marketing and.
And seek opportunities for efficiency and lean into the channel that provide the highest return.
This quarter, we reap the benefits of our strong brand consumer demand and traffic to more efficiently deliver high quality audience, an ROI to our dealer customers.
Net income for the second quarter was $6 million or <unk> <unk> per diluted share adjusted EBITDA was $48.5 million or 31% of revenue compared to $23.2 million or.
Our 23 percentage of revenue for the prior year period.
We continue to look for ways to drive efficiencies on the business to improve adjusted EBITDA and adjusted EBITDA margin.
Now turning to our key operating metrics that are the foundation of the solid quarterly result.
Our brand consistently drive a high concentration of organic traffic and is 1 of our greatest strength.
As Alex mentioned, we generated over 70% of our traffic through organic channel this quarter.
Consumer interest income remained strong and they are using our marketplace to find the right vehicle at the right dealer shack in the second quarter, we had $26.4 million average monthly unique visitors and $158.4 million visits.
This represents 16% and 10% year over year growth in our audience metrics respectively.
Notably, we attract the highest volume of audience to intend to purchase a car.
Mark.
We ended the quarter with 18845 day, where customers an increase of 22 dealer customer on a sequential basis and an increase of 812 dealer customers year over year as anticipated new customer additions for the quarter largely as a result of inventory shortages. However.
Our customer retention rate remained at record level and the trend is continuing into the third quarter.
Lastly customers grew to 5000.
It has been on <unk>.
Hearing OEM program acceptance and delivering great solutions for dealers and their customers we have.
Been extremely successful in achieving these goals and growth in dealer inspire since we bought it over 3 years about.
While the comps get harder every quarter. We expect continued growth we will launch the remaining GM website built on our 4 direct relationship deliver on other OEM business in the pipeline and continue to cross sell to our marketplace customers and we also intend to capitalize on the opportunity to grow arpus longer term through <unk>.
Sales and new products.
For the quarter, even after adjusting for pandemic related endpoints credit AARP D sales increased 10% year over year. This increase was driven by increased penetration of our products across our customer base.
Typically with regard to fuel and website solution.
Our balance sheet and liquidity remains strong our cash balance at quarter end was $52 million and combined with our 230 million Undrawn revolver resulted in total liquidity of $282 million.
Net cash provided by operating activities for the first 6 months of the year with $79.6 million on.
38% compared to $57.6 million in the prior year period free cash flow for the 6 months period, ending June 32021 was $66.5 million.
36% from $48.9 million in the year prior to put this on contact our LTM free cash flow yield was 17%.
Our strong and consistent cash generation has also allowed us to continue to Delever. The business net leverage is down to 2.4 times from 4.1 times just a year ago. Our total debt at quarter end was $522.5 million, reflecting 75 million.
And debt Paydowns in the first half of the year of which $70 million for voluntary prepayments and in July we made an additional $15 million voluntary prepayments.
Overall, we have the financial flexibility to strategically invest from the business and brand to drive product penetration innovation and growth.
Now turning to our outlook, we expect third quarter revenue to be between 155, and $157 million, which represents 7% to 9% year over year growth.
As mentioned, we are taking a conservative stance on OEM and national revenue based on our expectation at the current trend of supply chain disruption will continue into the third quarter.
Linked quarter, OEM and national revenue performed better than expected, but was down sequentially and we expect this trend will continue in Q3.
That said dealer revenue continues to grow.
Fighting lengthening of a new sales cycle, our dealer customers have responded to our strong value delivery with continued record high retention rate and we're seeing momentum in our web site pollution and fuel products that are furthering our growth expectation.
We expect third quarter adjusted EBITA margin between 27, and a half and 29, 5% as mentioned our margin guidance includes reduced expectation around OEM and national revenue 1 of our highest margin product lines.
As volume increased investment in the business, particularly around marketing and technology to drive growth.
In summary, we remain committed to delivering value to our customers and driving innovation through solid execution. We have clearly demonstrated we are in a strong operational and financial position, enabling us to strategically invest inorganic innovation paid on debt and pursue bolt on acquisitions.
And with that I'd like to turn the call back to Alex.
Thank you Sonya I am proud of our consistent and continued execution. In addition to driving measurable results for the business. It's also on our G&A support local businesses and communities across the country.
Interest in cars Dot com celebrated our 20 <unk> anniversary.
Coming together to cleanup underrepresented neighborhoods on our hometown of Chicago.
Our commitment extends far beyond our hometown. It's every day, we're working on local communities, giving back to the cities. We serve I'm proud that we continue to take action.
In closing as we entered the second half of the year on top of assets will continue to innovate execute and drive profitable growth Walgreens sustainable value to our company industry communities and the environment on.
Operator, we're ready to begin Q&A.
At this time to ask a question you will need to press star 1 on your telephone to withdraw your question press the pound.
Please standby, while we compile the Q&A roster.
Your first question comes from the line of Tom White with D. A Davidson.
Great. Good morning, guys. Thanks for taking my question and congrats on a nice quarter.
1 on on.
Dealer count.
I was hoping maybe you could give us a sense of maybe what the cadence.
Sure.
Dealer retention and I guess, particularly new sales kind of looked like over the course of the quarter and maybe entering.
The third quarter here, just curious whether there's any reason to think that maybe the new sales.
It might be perking up a bit.
If shortages are starting to.
Yes, it'd be reduced at all and then could you just clarify did I hear you correctly that dealer count was up for both core marketplace.
And for for dealer inspire and then I've got a follow up on fuel.
Yeah, So I'll start it off thanks for the question.
So when you think about.
Dealer count 1 of the massive benefits. We saw in Q2 was a continuation of the really strong retention rates that we've been talking about over the last several quarters.
That certainly makes our job easier when it comes to growing growing dealer count and we see that trend frankly, continuing into Q3 with the visibility that we do have I think a new sales cycle understandably was a little bit slower this quarter.
So.
I think as we look at Q3.
With inventory shortages expected to continue we are expecting to see some improvements from dealer count, but more along the lines of what we saw in Q2.
Alex if you want to.
A follow on question was marketplace did grow as the dealer inspire so we are seeing growth across our portfolio of solutions.
Okay, great. Thanks for that and then just a follow up on fuel obviously, it seems like that product is catching fire here can.
Can you maybe talk a little bit about.
On the driver of that it sounds like.
<unk>.
Doing kind of more like a proactive inventory acquisition type messaging.
The factor.
Also I was hoping maybe you could comment on on kind.
On the pricing power there I think it was like a minimum 5 gram per month to qualify for that product for what direction do you think kind of pricing can go here over the next 12 to 18 months.
Well look I think fuel really represents.
Industry's awareness that they should capitalize on an end market audience.
Only a small percentage of the population is actively entering the auto cycle and I think progressive dealers are realizing that that's the time to strike, regardless of which side of the market youre attacking which is by a new we'll buy your car and so dealers are saying I can I can run a number of messages to people entering the on.
On the cycle and that was a big pickup we saw in Q2 Im really proud of the team because we're educating the industry being first to market on how to leverage these disruptive video platforms and migrate dollars out of traditional TV into digital video.
But we're getting the job done there I think on on the spending level. Obviously, you have to be on the marketplace to enroll for fuel so.
The anchor product is still our marketplace fuels. In addition on top of that I think our average revenue per dealer for the geographic exclusivity is hovering north of $8000.
Per month, so it's a substantial premium to the marketplace, but then again it gives dealers unlimited.
Opportunities to communicate the Wi Fi or wide work with me message yes.
I think maybe just to add a little bit more there to your question on on pricing.
Uh huh.
The product is is a premium product in terms of where it fits within our portfolio if multiples on the average AARP D and I think our focus right now is really on helping dealers understand continue to understand the value. We bring in terms of the end market audience targeted OTT.
Platform that we are distributing on and really driving unit on adoption and then pricing is always a lever we can come back to get into the exclusivity of the product and the value of our audience.
Great guys. Thank you.
Thanks, Tom.
Your next question comes from the line of Matt Wagner with Craig Hallum Capital.
Hey, guys. This is Matt Wagner on for Steve Dyer.
Taking my questions just.
Just a couple from me 1 of on the fuel.
Do you have an update on where your penetration rate is up on that I think in Q3, you had mentioned that was around 200, and just wondering where that's at today.
Yes, I mean, we look at this more on a geographic penetration and we are still only sold through at about 10% a little bit higher of our ZIP codes nationally and so you can have a dealer by far bigger swaths of geography or you can have the opposite so so we're looking at it on a percentage.
Sure.
The country's sell through rate and again, we're in early innings of fuel I think when I look at the potential audience.
I think this platform can be around 2000 to 3000 dealer subscription volume at those premium price points I think it will just take some time for dealers to realize that there is a much more profitable way to sell cars. As you know dealers are reporting record profit. So there is a little bit of a hesitancy to invest.
<unk> more but the progressive dealers are the ones that are disproportionately growing their sales rates faster and so it'll take us some time, but there is a lot of room headroom to go on fuel.
Got you on makes sense.
And then just looking at kind of Arpus on.
Maybe year over year basis, when excluding the concessions in Q2.
I guess the marketplace <unk> growth.
<unk>.
Both as kind of being fueled by fuel and the web site.
So we actually saw improvements across all of the business, but I think most notable drivers of the year over year ERP D growth. After you adjust for those invoice credits are going to be fuel continued continued growth at <unk>, where we're seeing more of our <unk> customers are also on marketplace, which is high.
Accretive to AARP D and then from improvements in over the core marketplace ARPG product so benefits across all of the product.
Got it very helpful. That's all from me guys. Thanks.
Thank you.
Your next question comes from the line of Nick Jones with Citi.
Great. Thanks for taking my questions I guess I guess first.
On record profit.
Can you touch on how much of that is kind of using tools like <unk> dot com and driving efficiency in marketing and other users being on line versus.
The cars are costing more I think it's only recently that we've seen kind of used car prices start to come back down to Earth.
And then the second question on.
On the cloud based web platform that was launched in April.
This renovation on how.
Should we think about that in terms of the velocity at which new products will come out and how that might contribute to top line growth. Thanks.
Sure Nick well look there are many contributing factors to record dealer profitability, but we see very vividly those dealers that are digital first and embracing digital platforms are outperforming their peers.
And.
I continue to believe that.
Long view that the cars dot com audience is undervalued. If you look at even just our lead Gen business in a standalone form.
We see vividly that almost 50% of the people contacting dealers have a trade in debt.
Most dealer CIS.
Systems don't attribute any value to the inventory turn debt or debt.
On a car to a cars dot com shopper represents in acquiring a new car or.
Frankly, the finance or.
Are the F&I revenues that are associated with that sale.
On the dealers tracking of our value is very rudimentary and.
Progressive dealers actually see.
Front end back end and secondary opportunities.
Convert and buy more vehicles through our audience. So I think we're on on adoption cycle here, that's accelerating because of Covid I think the more dealer 20 groups are talking about how they are using technology to acquire inventory and to sell inventory at a fraction of the cost of.
Even some of the other digital platforms like we talked about on the call with SCM and in many cases those marketing tactics are trying to interrupt users. While they are doing other tasks versus our audience is actively engaged in raising their hand. So I think we're on the right side of history here and we will continue to win dealer adoption.
On to our model being far more profitable than the aggressive tactics of the past.
Your second question was really about.
The the beta platform and I'll tell you what I'm most pleased about not only the way our teams are working together, but the pace of improvements that have come post the flip to the cloud based platform. There is daily updates now we're in our legacy systems. It took weeks if not months to make changes.
<unk>, we're seeing daily product improvements responding nimbly to user feedback and we're doing that with a much smaller staff and so I think.
If you talk to our technologists from our product people here, it's like we've given them.
Power tools, where before there.
There arent, many 20 year old Dot coms, and we had on infrastructure that was complicated and data and so now I think we feel far more competitive in our ability to bring new solutions to market and the pace of innovation is data to show that we're well on our way.
Great. Thank you.
Okay.
As a reminder to ask a question. Please press Star 1. Your next question comes from the line of Marvin Fong with BP hygiene.
Great. Thank you for taking my questions congratulations on the quarter.
<unk>.
I thought I would lead with.
On a conceptual question high level question about digital retailing you guys are obviously doing an excellent job.
With dealer retention we've seen.
From digital retailing solutions rollout from from other platforms and I know you guys are working on that diligently just curious what's your view on how these products might enhance dealer retention are you come.
In your conversations with dealers are clamoring for these solutions because it is clear that they are very happy with what you guys are providing.
In terms of the retention rate. So maybe you could just.
Give us some insight there.
Sure Marvin will try to answer that number 1 I couldnt be happier for the progress that we're making with digital retail through dealer inspire and enabling dealer websites to be best in class you see this with Gm's recognition and our.
Participation through that program now for direct dealers and dealers are realizing that they've got to invest more in their digital.
Storefront as opposed to the what's gotten most of the investment over the last 2 decades, which is their physical store.
And.
So I am very pleased that dealers are investing more to be digital first in our online shopper platforms are best in class.
However, even if a dealers.
Using a different tool I think what we're seeing and makes me excited is that the desire to get more people through the funnel and that's where our cars dot com marketplace relevancy.
Net we're generating 2 times more volume of users into the dealers website and we are generating email leads which is our legacy monetization model. So as the industry shifts more towards digital retail.
There is an inherent desire to get as many people through that funnel and that's why even companies. The biggest digital dealerships in the world still subscribed to cars com is they see very vividly. This is what's converting in their own digital retail system and so I.
I think it bolsters our marketplace opportunity, we're only at 18000 dealerships in a much larger universe.
Closer to 40000 dealers that are going to want more users to come through their digital retail tool, but at the same time, we're very bullish on our solution strategy as more dealers willing to invest to move towards a more digital first format.
Terrific and a follow up if I may on <unk>.
On advertising.
I think on my.
Math is right on it was only down a few percentage year over year, yet new car inventories are down.
60% or more.
Just thought I'd ask if you could give us a framework how to think about how your revenue.
Well to generate compares to sort of the state of inventory you're obviously.
Doing much better than on the excellent number of cars on the lot.
And maybe you could just kind of update us on how conversations are going.
On the Oems right now thanks.
Look I think I'm glad you noted its a relatively small revenue bucket vis vis our dealer revenue, but you captured I think what we hoped others did which is the balance we saw in national on OEM I mean, it was frankly.
A much better quarter than we had expected and I think part and parcel of that is similar to what we just talked about with dealers.
There is a heavy push to get more in market shoppers through other people's stores and Oems are starting to rethink their strategy about being interrupted.
And trying to get people to click on a on old School banner ad.
Versus reaching people while they are in the active actually shopping and we're seeing a notable shift by Oems understanding but in market audiences or the end of the day the only audiences they really need to convert Theres only 5 million vehicle sales every month and we've got over 20 million people actively shopping so I think that was a notable shift in.
In OEM thinking I think is now Oems are talking about both EV and opportunities to grow their share of sales with the supply coming back we're having much deeper conversations about.
Native on.
<unk> within the cars that kind of experience that complement the dealership offering as opposed to try to compete on which site. They go to and so you'll have to stay tuned there, but I'm really excited about the shift in conversations with the Oems are leading.
Yes.
Terrific. Thanks, so much.
Your next question comes from the line of Doug Arthur with Huber Research.
Yes. Thanks.
EBITDA margin guidance for the third quarter.
Certainly on the conservative side and you're talking about.
Investment in technology and marketing.
What are some of the puts and takes there obviously the marketing spend in Q2.
It is not as high as you anticipated.
Wondering if you're being really conservative here.
No. Thanks for the question. So on the adjusted EBITA margin Guide I think it's I think it's really 2 things. So 1 of the components driving it is going to be our expectation for OEM and national for Q3, which is really driven by the continued production challenges that Oems are seeing.
So.
We are we are expecting to see a sequential decline there really solely due to the production challenges we're facing as Alex mentioned, we're having great dialogue with them and they appreciate the value of our audience on products.
The faster towards the back when it comes to their production and the reason I mentioned that is that is a very high margin components of our business.
As Doug had EBITDA flow through impact when you just think about our overall revenue mix and then yes.
<unk> see incrementally more investment in marketing this quarter, we did have the benefit last quarter.
Really really good strength in from <unk>.
Our organic channel, it's allowing us to pull back a little bit, but as I mentioned in 1 of our early on.
1 of the things we are trying to do this year is going back a little bit more into our brand and that's 1 of the thing that's going to be coming in Q3.
So sequentially marketing spend which was down in Q2, you would expect to be kind of up in Q3 at a fairly decent.
Based on.
Yes, we are expecting to see it.
The increase in marketing spend on a sequential basis from Q2 to Q3.
Not quite where it was in Q1, but certainly higher than Q2.
Okay.
Okay.
Alright, thank you.
Thank you.
I can ask a question please press star 1.
Currently there are no further questions I will now turn the call over to Alex Vetter for any closing remarks.
Look I wanted to thank everyone for their interest in cars I just call out that C&I will present at the J P. Morgan Automotive Conference next week August 11th information on how to listen to the presentation along with other events, we posted on the new IR section of our website and that concludes our call. Thank you very much.
This concludes today's conference call. Thank you for participating you may now disconnect.
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