Q4 2023 Cars.com Inc Earnings Call
Unnamed Speaker: Operating Expenses, and Free Cash Flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.
And free cash flow reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.
Unnamed Speaker: Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statements.
Any forward looking statements are subject to risks and uncertainties.
For more information please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K.
It is available on the IR section of our website, we assume no obligation to update any forward looking statements now ill turn the call over to Alex.
Alex: Thank you Robin welcome to our fourth quarter and full year 2023 earnings call.
Alex: Thank you, Robin. Welcome to our fourth quarter and full year 2023 earnings call. 2023 was a strong year of growth as we executed on our strategy to enable our industry. We delivered another quarter of solid performance, exceeding our guidance. We grew revenues sequentially across marketplace, digital experience, trade and appraisal, and media solutions. For the year, ARPD grew 7%, resulting in $689 million in revenue, a 5% increase year-over-year
Alex: 2023 was a strong year of growth as we executed on our strategy to enable our industry. We delivered another quarter of solid performance exceeding our guidance.
Alex: We grew revenue sequentially across marketplace digital experience trading appraisal and media solutions.
Alex: For the year <unk> grew 7%, resulting in $689 million in revenue, a 5% increase year over year.
Unnamed Speaker: Our recurring revenue model supports our strong adjusted EBITDA, which was $195 million, representing a 28% margin. And we ended the year with more than 19,500 dealer customers and rebounding OEM interest in our retail media network. 2023 also marked a year of significant strategic progress. Our team executed on meaningful initiatives that advanced our platform strategy, and we continue to invest in innovation for both consumers and partners to drive further growth. For our partners, we have united our B2B brands under Cars Commerce, making it easier for them to do business with us and reinforcing our commitment to simplifying everything about buying and selling cars.
Alex: Our reoccurring revenue model supports our strong adjusted EBITDA, which was $195 million, representing a 28% margin.
Alex: And we ended the year with more than 19500 dealer customers and rebounding OEM interest in our retail media network.
Alex: 2023 also marked a year of significant strategic progress our team executed on meaningful initiatives that advanced our platform strategy and we continue to invest in innovation for both consumers and partners to drive further growth.
Alex: For our partners, we United or <unk> brands under cars commerce, making it easier for them to do business with us and reinforcing our commitment to simplifying everything about buying and selling cars.
Unnamed Speaker: This underscores our differentiated platform with a powerful combination of audience, technology, and data. During the fourth quarter, we also expanded the Cars.com geographic footprint into Canada with the acquisition of D2C Media, a leading automotive technology and digital solutions provider. The integration of technology and teams is well underway.
Alex: This underscores our differentiated platform with a powerful combination of audience technology and data.
Alex: During the fourth quarter, we also extended the cars dot com geographic footprint into Canada with the acquisition of D to C media, a leading automotive technology and digital solutions provider.
Alex: The integration of technology and teams is well underway.
Alex: And throughout 2023, we introduced new simplified marketplace subscription packages, enabling customers to seamlessly leverage our platform capabilities.
Unnamed Speaker: And throughout 2023, we introduced new simplified marketplace subscription packages, enabling customers to seamlessly leverage our platform capabilities. This resulted in nearly 70% of repackaged Marketplace customers opting for a higher-tier subscription package that will drive continued growth in both revenue and adjusted earnings. We're actively helping our customers drive commerce by consulting them on how to win the customer journey. Our dealer experience report helps dealers improve and differentiate their retail experience. For example, George Lawton, the Marketing Operations Manager of Chomp Automotive, a 12-store dealer group in the greater Denver area, has been actively monitored in the experience report each month to manage the reputation of his store. Since leveraging this report, Schantz dealerships are trending up in every experience category. Importantly, we had a record year for customer-submitted reviews, now totaling more than 13 million.
Alex: This resulted in nearly 70% of repackaged marketplace customers opting for higher tier subscription package that will drive continued growth in both revenue and adjusted EBITDA.
Alex: We are actively helping our customers drive commerce by consulting them on how to win the customer journey, our dealer experience report helps dealers improve and differentiate their retail experience for.
Alex: For example, Georgia Lawton marketing operations manager of shop automotive, a 12 store dealer group in the greater Denver area has been actively monitored and the experience report each month to manage the reputation of the stores.
Alex: Since leveraging this report shops dealerships are trending up and every experience category importantly.
Alex: Importantly, we had a record year for customers submitted reviews now totaling more than $13 million. We continue to have the largest number of reviews in the industry cementing our leadership position and reputation management.
Unnamed Speaker: We continue to have the largest number of reviews in the industry, cementing our leadership position and reputation. Moving on to enhancements we made to our consumer experience on Cars.com, we debuted a new feature called Your Garage, enabling consumers to track and trend the real-time trade-in value of their car with the Cars.com Instant Market Value. Initial results have been positive.
Alex: Moving on to enhancements, we made on our consumer experience on cars Dot Com, We debuted a new feature called your garage, enabling consumers to track and trend the real time trade in value of their car with a cars dot com instant market value.
Alex: <unk> results have been positive consumers leveraging your garage visit our marketplace, 70% more frequently reducing our reliance on paid media.
Unnamed Speaker: Consumers leveraging your garage visit our marketplace 70% more frequently, reducing our reliance on paid media. We also launched the all-new New Car Hub to help consumers and brands connect. With new car inventory up 36% in January, and with approximately 70 new model launches planned for 2024, including a record number of EVs, OEMs and dealers need to stay in front of undecided shoppers. A new car hub combines Cars.com's proprietary research with OEMs' branded content and why-buy messages directly into our marketplace. OEMs showcasing their vehicles on New Car Hub see increased consumer engagement in their make and models, with increases in share of search volume, traffic, and lead time. Helping OEMs and dealers work together to promote inventory and drive commerce is core to what we do, but we're also leveraging technology to make our industry more efficient. We continue to lead with innovation in our early adopters of AI.
Alex: We also launched the all new new car hub to help consumers and brands connect with new car inventory up 36% in January and was approximately 70, new model launches planned for 2024, including a record number of Evs Oems and dealers need to stay in front of undecided shoppers.
Alex: And new car hub combines cars dot coms proprietary research with Oems branded content and why buy messages directly into our marketplace.
Alex: Oems showcasing their vehicles on new car hub see increased consumer engagement and their make and models with increases in share of search volume traffic and leads.
Alex: Helping Oems and dealers work together to promote inventory and drive commerce is core to what we do but we're also leveraging technology to make our industry more efficient.
Alex: We continue to lead with innovation and are early adopters of AI. We've expanded the use of generative AI to support the user experience in our marketplace and we're also in market with several tools such as auto corrected, which identifies and highlights important features and seller notes and our conversations tool powered by antibiotics.
Unnamed Speaker: We've expanded the use of generative AI to support the user experience in our marketplace, and we're also in the market with several tools, such as AutoCorrected, which identifies and highlights important features in seller notes, and our Conversations tool, powered by Anabot, that helps our customers streamline and improve their operating efficiency and user experience. Our ongoing investment in AI technology reflects our commitment to innovation and the enhancement of our service. In addition to enhancing our consumer and customer experiences, we continue to innovate and promote our original content and number one marketplace brand, Cars.com. Recall that the majority of our traffic comes to us organically. Unlike others, we don't rent our traffic; we own it. This is a true differentiator amongst our competitive set.
Alex: That helps our customers streamline and improve their operating efficiency and user experience.
Alex: Our ongoing investment in AI technology reflects our commitment to innovation and the enhancement of our services.
Alex: In addition to enhancing our consumer and customer experiences, we continue to innovate and promote our original content and number one marketplace brand cars Dot com <unk>.
Alex: Call that the majority of our traffic comes to us organically.
Alex: Unlike others, we don't run our traffic we own it a true differentiator amongst our competitive set.
Alex: And to further our advantage cars dot com is the number one most downloaded auto marketplace, app, where organic traffic increased 10% year over year.
Unnamed Speaker: And to further our advantage, Cars.com has the number one most downloaded auto marketplace app, where organic traffic increased 10% year over year. Investing in our brand, generating great content, and leveraging our editorial expertise, I'm pleased to report that we set a new all-time company record for total traffic in 2023, reaching 615 million visits, a 5% increase from the prior year. Our platform offers a winning combination of demand generation and industry-leading tech solutions that deliver significant value. Our website business continues to grow, and at year end, we powered approximately 7,300 dealer websites, including D2C. With the expansion into Canada, our TAM is expanding as more dealers are interested in our website solutions that are supported by the Cars Commerce platform. Dealer use of AccuTrade, our trade and appraisal solution, also continues to climb. We ended the year with more than 880 AccuTrade Connected customers.
Alex: Investing in our brand generating great content and leveraging our editorial expertise I am pleased to report that we set a new all time company record for total traffic in 2023, reaching 615 million visits a 5% increase from the prior year.
Alex: Our platform offers a winning combination of demand generation and industry, leading tech solutions that deliver significant value.
Alex: Our website business continues to grow and at year end, we powered approximately 7300 dealer websites, including DTC.
Alex: With the expansion into Canada, our Tam expands as more dealers are interested in our website solutions that are supported by the cars commerce platform deals.
Alex: Dealer usage of Accu trade are trading appraisal solution also continues to decline.
Alex: We ended the year with more than 880 accu trade connected customers.
Unnamed Speaker: For the quarter, dealers conducted more than 590,000 appraisals, a 15% sequential increase. Our technology enables dealers to quickly and efficiently buy and sell inventory, while helping maximize profits and improving the customer experience. As used car inventory becomes more constrained and used car profits come under pressure, it's more important than ever for dealers to reduce their dependence on expensive auctions and source cars more cost effectively. AccuTrade enables dealers to save, on average, $1,300 per vehicle in costly auction and transportation fees by enabling them to buy cars directly from their customers.
Alex: For the quarter dealers conducted more than 590000 appraisals, a 15% sequential increase.
Alex: Our technology enables dealers to quickly and efficiently buy and sell inventory, while helping maximize profits and improving the customer experience.
Alex: As used car inventory becomes more constrained and used car profits come under pressure, it's more important than ever for dealers to reduce their dependence on expensive auctions and source cars more cost effectively.
Alex: Accu trade enables dealers to save on average $3500 per vehicle and costly auction and transportation fees by enabling them to buy cars directly from their customers.
Unnamed Speaker: Unlike other services that generate leads that don't close or run auctions without sufficient buyers or sellers, AccuTrade is a complete buying solution that enables dealers to source cars from their showroom, service lane, website, and the cars.com marketplace. AccuTrade also offers the most accurate pricing and value for vehicles because we leverage not only Cars.com's robust retail supply and demand data, but we also have in-house industry experts who make real So, while the rest of the industry relies on historical trends and broad category-based wholesale data for ranges, we accurately price every car. Our OBD scanner automatically syncs detailed mechanical findings from the customer's vehicle to inform the appraisal in real time.
Alex: Unlike other services that generate leads that don't close or run auctions without sufficient buyers or sellers.
Alex: Accu trade as a complete buying solution that enables dealers to source cars from their showroom service Lane website, and the cars dot com marketplace.
Alex: Accu trade also offers the most accurate pricing and value for vehicles, because we leverage not only cars dot coms robust retail supply and demand data, but we also have in house industry experts, who make real time market adjustments and so while the rest of the industry realize on historical trends and broad.
Alex: <unk> wholesale data for our ranges, we accurately price every car.
Alex: Our OLED scanner automatically syncs detailed mechanical findings from the customer's vehicle to inform the appraisal and real time <unk>.
Unnamed Speaker: AccuTrade doesn't just focus on the history of the vehicle; we focus on its health, uncovering needed repairs that save dealers on average $650 per vehicle, while also providing consumers with greater transparency of the data powering the cash offer, thereby reducing negotiation friction between the buyer and the seller. Additionally, dealers can now buy more cars from their own customers, which drives greater profitability as they can now avoid the costly auction altogether. We are proud that Ford Direct selected AccuTrade as their brand's preferred trade and appraisal solution for the shop, a newly launched preferred vendor selection program for their more than 3,000 Ford and Lincoln retailers. OEM endorsements help speed adoption, and we are excited about helping Ford and Lincoln dealers take advantage of our technology. Cars.com has deep data and analytical capability
Alex: <unk> doesn't just focus on the history of the vehicle, we focus on its health uncovering needed repairs that save dealers on average $650 per vehicle, while also providing consumers with greater transparency of the data powering the cash offer, thereby reducing negotiation friction between the buyer and the <unk>.
Alex: Seller.
Alex: Dealers can now buy more cars from their own customers, which drives greater profitability as they can now avoid the costly auction altogether.
Alex: We are proud that for direct selected accu trade as their brands preferred trading appraisal solution for the shop, our newly launched preferred vendor selection program for their more than 3000 Ford and Lincoln retailers.
Alex: OEM endorsements help speed adoption and we are excited about helping Ford and Lincoln dealers take advantage of our technology.
Alex: <unk> Commerce has deep data and analytical capabilities. We recently launched our new industry insights report, which analyzes supply demand pricing and consumer behavior data from across the cars commerce platform.
Unnamed Speaker: We recently launched our new Industry Insights Report, which analyzes supply, demand, pricing, and consumer behavior data from across the Cars Commerce platform. The January 2024 report revealed that the automotive industry is shifting to a buyer's market with more affordable new cars and increased new car inventory up 36% year over year. Used car scarcity is also increasing, with used vehicle listings down 4% compared to the prior year, indicating increased volatility in the used car market this year.
Alex: The January 2024 report revealed that the automotive industry is shifting to a buyers market with more affordable new cars and increased new car inventory up 36% year over year.
Alex: Used car scarcity is also increasing with used vehicle listings down 4% compared to the prior year, indicating increased volatility in the used car market. This year.
Unnamed Speaker: While many marketplaces are solely focused on used cars, our new car content and expert insights, coupled with improving new car inventory, best position us to help OEMs and dealers stimulate demand and move inventory. We recently gathered at the National Auto Dealers Association Conference, the largest annual gathering of U.S. dealers and industry leaders. The show provides an opportunity for us to consult with thousands of current and prospective customers, gather their feedback, and demonstrate our newest solutions. I want to thank those of you who were able to join us for our first ever NADA Investor Breakfast. It was great seeing many of you in person as we were able to provide a more hands-on experience with our Cars Commerce solutions like AccuTrade and VIN Performance Media, a new advertising solution that dynamically positions a retailer's VIN-specific inventory in front of the right shoppers across search, social, and display. The Single Solution approach saves time and money while maximizing ad performance and operational efficiency.
Alex: While many marketplaces are solely focused on used cars are new car content and expert insights coupled with improving new car inventory best position us to help Oems and dealers stimulate demand and move inventory.
Alex: We recently gathered at the National Auto Dealers Association conference the largest annual gathering of USD <unk> and industry leaders. The show provides an opportunity for us to consult with thousands of current and prospective customers gather their feedback and demonstrate our newest solutions.
Alex: I want to thank those of you who were able to join us for our first ever <unk> invest.
Alex: Investor Breakfast it was great. Many seeing many of you in person as we were able to provide a more hands on experience.
Alex: Of our cars Commerce solutions like Accu trade and Vin performance media, a new advertising solution that dynamically positioned or retailers Vin specific inventory in front of the right shoppers across search social and display.
Alex: The single solution approach saves time, and money, while maximizing AD performance and operational efficiency.
Alex: And clearly showed that our strategy is working and we remain focused on simplifying everything about buying and selling cars and creating exceptional value for consumers dealers and Oems.
Unnamed Speaker: NADA clearly shows that our strategy is working, and we remain focused on simplifying everything about buying and selling cars and creating exceptional value for consumers, dealers, and OEMs. Looking ahead, we remain squarely focused on five growth drivers. Grow and sustain engagement with our market-leading audience, row dealers, and cross-sell our solutions to generate more leverage for our customers, create tier list experiences for OEMs, and create more platform advantages. Our momentum is strong.
Alex: Looking ahead, we remain squarely focused on five growth drivers.
Alex: Growing sustained engagement with our market leading audience.
Alex: Grow dealers and cross sell our solutions to generate more leverage for our customers.
Alex: Great Tearless experiences for Oems and create more platform advantages.
Alex: Our momentum is strong we are growing demand for our connected platform and empowering our consumers and customers unlocking both top and Bottomline growth now.
Unnamed Speaker: We are growing demand for our connected platform and empowering our consumers and customers, unlocking both top and bottom line growth. Now, for more details on our solid results and 2024 outlook, I'll turn the call over to Sonya. Okay?
Sonya: Now for more details on our solid results in 2024 outlook I will turn the call over to Sonya Sonya.
Sonya Sonya: Thank you Alec we ended the year with robust Q4 revenue growth and adjusted EBITDA margins that exceeded our guidance revenue grew sequentially throughout the year, reaching $180 million for the quarter, a 7% increase over the prior year.
Sonya: Thank you, Alex. We ended the year with robust Q4 revenue growth and adjusted EBITDA margins that exceeded our guidance. Revenue grew sequentially throughout the year, reaching $180 million for the quarter, a 7% increase over the prior year. Including the two months of D2C media revenue, revenue increased 5% year-over-year, and we delivered our 12th consecutive quarter of year-over-year revenue. Our strong quarterly performance was driven by dealer revenue, which grew 8% year-over-year to $161 million. OEM and national revenue also increased to $15 million, up 8% compared to the prior year and up 6% sequentially. Notably, the OEM portion of OEM and National Revenue increased significantly, by 24% year-over-year, indicative of increased production, new model launches, and a year-end list as OEMs invested the balance of their advertising.
Sonya Sonya: Excluding the two months of D to C media revenue revenue increased 5% year over year, and we delivered our <unk> consecutive quarter of year over year revenue growth.
Sonya: Our strong quarterly performance was driven by dealer revenue, which grew 8% year over year to $161 million.
Sonya: OEM and National revenue also increased to $15 million up 8% compared to the prior year and up 6% sequentially, notably the OEM portion of OEM and national revenue increased significantly by 24% year over year indicative of increased production new model.
Sonya: Launch it in a year end list as Oems invested the balance of their advertising budgets.
Sonya: Other revenue was down approximately $2 million compared to the prior year due to the planned expiration of a non-cash active trade license agreement with another marketplace participant that expired in early 2020. Turning to expenses, for the quarter, total operating expenses were $165 million, compared to $148 million a year ago. It is worth noting that, unlike Credit IQ, an accu- The earn-out associated with D2C runs through operating.., primarily in GNA and is a partial driver of the year-over-year increase at $3 million. On an adjusted basis, operating expenses were $151 million.
Sonya: Revenue was down approximately $2 million compared to the prior year due to the planned exploration of a noncash accu trade license agreement with another marketplace participants that expired in early 2023.
Sonya: Turning to expenses for the quarter total operating expenses were $165 million.
Sonya: Compared to $148 million a year ago. It is worth noting that unlike credit. Thank you and accu trade the earn out associated with D to C ran through operating expenses, primarily in G&A and as a partial driver of the year over year increase at $3 million.
Sonya: On an adjusted basis operating expenses were $151 million $10 million higher than a year ago, primarily due to our continued investment in people at $3 million increase in depreciation and amortization and investments in marketing to support the launch of our <unk> brand card commerce.
Sonya: 10 million higher than a year ago. A $3 million increase in depreciation and amortization, and investments in marketing to support the launch of our B2B brand, Cars Commerce. Net income for the quarter totaled $8 million, or $0.12 per diluted share, compared to $10 million or $0.15 per diluted share in the prior year.
Sonya: Net income for the quarter totaled $8 million or 12 cents per diluted share compared to $10 million or <unk> 15 per diluted share in the prior year.
Sonya: The change in net income is primarily attributable to changes in the fair value contingent consideration associated with our prior acquisitions, specifically Credit IQ and AccuQuality. Adjusted EBITDA for the quarter was $55 million, or 31% of revenue, exceeding our guidance. Eventually, our margin expanded by approximately 250 basis points, and year over year, our adjusted EBITDA increased 12%, or $6 million. Now, moving to our full year 2023 performance, revenue totaled $689 million, up 5% year over year. Dealer revenue increased 7% to $622 million, driven by growth in websites, AccuTrade, our 2023 Marketplace Repackaging Initiative, and media. OEM and national revenue was $56 million, or 5% lower compared to the prior year. The strength in our OEM revenue was offset by continued softness in national revenue, largely related to a significant pullback from our insurance customers due to macro and environmental factors. Additionally, other revenue was down approximately $4.5 million, primarily related to the aforementioned non-cash accu-trade. Turning to expenses, full year total operating expenses were $635 million compared to $588 million in the prior year. On an adjusted basis, operating expenses were $38 million higher compared to the previous year.
Sonya: The change in net income is primarily attributable to changes in the fair value contingent consideration associated with our prior acquisitions, specifically credit IQ and accurate.
Sonya: Adjusted EBITDA for the quarter with $55 million or 31% of revenue exceeding our guidance.
Sonya: Essentially our margin expanded approximately 250 basis points and year over year, our adjusted EBITDA increased 12% or $6 million.
Sonya: Now moving to our full year 2023 performance.
Sonya: Revenue totaled $689 million.
Sonya: Up 5% year over year dealer revenue increased 7% to $622 million driven by growth in website Accu trade, our 2023 marketplace Repackaging initiative and media fails.
Sonya: OEM and national revenue was $56 million or 5% lower compared to the prior year. This strength in our OEM revenue was offset by continued softness in national revenue largely related to a significant pullback from our insurance customers due to macro and environmental factors.
Sonya: Additionally, other revenue was down approximately $4 5 million.
Sonya: Primarily related to the aforementioned noncash accu trade agreement.
Sonya: Turning to expenses full year total operating expenses were $635 million.
Sonya: Compared to $588 million in the prior year.
Sonya: On an adjusted basis operating expenses were $38 million higher compared to last year. This is largely driven by increased compensation and employee related expenses, particularly in marketing and sales and product and technology. In addition, as we've accelerated product development and technology investments depreciation and amortization expense was also up.
Sonya: Thank you. Thank you. This is largely driven by increased compensation and employee-related expenses, particularly in marketing and sales and product and technology. In addition, as we've accelerated product development and technology investments, depreciation and amortization expense were also up year over year. In addition to compensation, marketing expenses were also slightly higher year over year as we invested in both our consumer and B2B brands with our Cars.com possibilities campaign and the launch of the Cars Commerce Go-To-Market brand. Thus, revenue for the year totaled $118 million, or $1.74 per diluted share, compared to $17 million, or $0.25 per diluted share, in the prior year.
Sonya: Year over year.
Sonya: In addition to compensation marketing expenses were also slightly higher year over year as we invested in both our consumer and BW brand with our cars dot com possibility of campaign and the launch of the card Commerce go to market brand.
Sonya: Net income for the year totaled $118 million.
Sonya: Our $1 74 per diluted share compared to $17 million or 25 per diluted share in the prior year.
Sonya: Current year net income was primarily related to the release of a significant portion of the company's valuation allowance for deferred tax assets that was recorded in 2020. Adjusted EBITDA for the full year was $195 million, or 28.3% of revenue, compared to $187 million, or 28.6% of revenue in the prior year. Now turning to our key metrics. While we experienced some variance in our dealer customer accounts related to the impacts of our 2023 Marketplace Repackaging Initiative and the sunset of digital dealers, we added 950 new dealer customers through the acquisition of D2C Media and ended the quarter with 19,504 dealer customers compared to 18,715 dealer customers for the third quarter of 2020. As you can see, our platform strategy is working. ARPD grew 7%, or $162, to $2,523, driven by the strategic decision to include more of our platform offering in higher tiers of our marketplace packages and increased dealer adoption of digital solutions.
Sonya: Alright year net income was primarily related to the release of a significant portion of the companys valuation allowance for deferred tax assets that was recorded in 2020.
Sonya: Adjusted EBITDA for the full year was $195 million or 28, 3% of revenue compared to $187 million or 28, 6% of revenue in the prior year.
Sonya: Now turning to our key metrics.
Sonya: While we experienced some variance in our dealer customer account related to the impacts of our 2023 market placement packaging initiative and the Sunset of digital dealers. We added 950, new dealer customers through the acquisition of D to C media and ended the quarter with 19500, <unk> dealer customers compared to 18.
Sonya: 715 dealer customers for the third quarter of 2023.
Sonya: As you can see our platform strategy is working.
Sonya: PD grew 7% or $162 to $2523 driven by the strategic decision to include more of our platform offering and higher tiers of our marketplace packages and increase dealer adoption of digital solutions.
Sonya: Our platform strategy ultimately drives higher customer lifetime value by improving both ARPD and retention through our enhanced value delivery. As an audience-driven tech company, our ability to deliver a large and engaged audience to our customers is critical to the value we provide them. For the quarter, we delivered 143 million visits, a 2% increase compared to the prior year, and average monthly unique visitors were 24 million for the quarter. Our asset-light business model consistently generates attractive free cash flow conversions. Net cash provided by operating activities totaled $137 million for the year.
Sonya: Our platform strategy, ultimately drives higher customer lifetime value by improving both AARP D and retention through our enhanced value delivery.
Sonya: It's an audience from a tech company, our ability to deliver a large and engaged audience to our customers is critical to the value we provide them.
Sonya: For the quarter, we delivered 143 million visits a 2% increase compared to the prior year and average monthly unique visitors were $24 million for the quarter.
Sonya: Our asset light business model consistently and generate attractive free cash flow conversion.
Sonya: Net cash provided by operating activities totaled $137 million for the year.
Sonya: Free cash flow was $116 million, $7 million higher compared to the prior year, driven primarily by an $8 million increase in adjusted EBITDA and favorable changes to working capital, partially offset by an increase in cash taxes of $17 million. Our strong financial profile enables us to execute a balanced capital allocation strategy, which includes value-creative investments in the business, a thoughtful acquisition strategy, and return of capital to shareholders. All while maintaining a modest level.
Sonya: Free cash flow was $116 million 7 million higher compared to the prior year, driven primarily by an $8 million increase in adjusted EBITDA and favorable changes to working capital, partially offset by an increase in cash taxes of $17 million.
Sonya: Our strong financial profile enables us to execute a balanced capital allocation strategy, which includes value accretive investments in the business a thoughtful acquisition strategy and return of capital to shareholders, all while maintaining modest leverage in 2023, we repurchased one 7 million shares or nearly 3% of total share.
Sonya: In 2023, we repurchased 1.7 million shares, or nearly 3% of total shares outstanding at the start of the year. As of December 31, 2023, we have $120 million remaining on our share repurchase authorization. Total debt outstanding at year-end was $490 million, and our net leverage of 2.3 times remains squarely in the middle of our target range of 2 to 2.5.
Sonya: Outstanding at the start of the year as of December 31, 2023, we have $120 million remaining on our share repurchase authorization.
Sonya: Total debt outstanding at year end was $490 million and our net leverage of two three times remains squarely in the middle of our target range of two to two five times.
Sonya: We have ample liquidity at $234 million, which includes $39 million of cash-in-cash equivalents and $195 million of revolver capacity. Now, turning to our guidance. We expect to deliver another year of strong growth because market conditions for our in-market solutions are improving. With increased OEM production, new model launches, and rising dealer inventory coupled with a still cautious consumer, our in-market solutions are more valuable than ever. With that as a backdrop, we expect to deliver first quarter revenue of $179 to $181 million, or year-over-year revenue growth of $7 to $8 billion, which reflects continued growth in dealer revenue driven by ongoing adoption of our suite of products, the D2C acquisition, and the full period impact of the 20 OEM and national advertising revenue is also expected to be up year-over-year, but historically, it has experienced some seasonality from the fourth quarter to the first quarter.
Sonya: We have ample liquidity at $234 million.
Sonya: Which includes $39 million of cash and cash equivalents and $195 million of revolver capacity.
Speaker Change: Now turning to our guidance.
Speaker Change: Expect to deliver another year of strong growth market conditions for our end market solutions are improving with increased OEM production, new model launches and rising dealer inventory, coupled with a still cautious consumer or end market solutions are more valuable than ever.
Speaker Change: With that as a backdrop, we expect to deliver first quarter revenue of $179 million to $181 million.
Sonya: Our year over year revenue growth of 7% to 8%, which reflects continued growth in dealer revenue driven by ongoing adoption of our suite of products. The <unk> acquisition and the full period impact of the 2023 market placement packaging initiative.
Sonya: OEM and National advertising revenue is also expected to be up year over year, but historically it has experienced some seasonality from the fourth quarter to the first quarter.
Sonya: For the full year, we anticipate continued dealer and OEM adoption of our platform, which is reflected in our revenue growth guidance of 6% to 8%.
Sonya: For the full year, we anticipate continued dealer and OEM adoption of our platform, which is reflected in our revenue growth guidance of 6 to 8 percent. As we continue to make strategic investments that support our growth, we anticipate adjusted EBITDA margins for the first quarter to be between 27% and 29%.
Sonya: As we continue to make strategic investments that support our growth, we anticipate adjusted EBITDA margins for the first quarter to be between 27 and 29%.
Sonya: Recall, we usually make seasonally higher investments in marketing and sales in the first quarter due to the timing of in-person industry events, and 2024 is no different. We expect margins to improve over the course of the year and anticipate delivering full-year adjusted EBITDA margins between 28 and 32. Capital expenditures for the year are expected to range between $23 and $25 million. Cash taxes are expected to increase slightly to approximately $20 million.
Sonya: Recall, we usually make seasonally higher investments in marketing and sales in the first quarter due to the timing of in person industry event in 2024 is no different.
Sonya: We expect margins to improve over the course of the year and anticipate delivering full year adjusted EBITDA margin between 28 and 30%.
Sonya: Capital expenditures for the year are expected to range between 23% and $25 million cash taxes are expected to increase slightly to approximately $20 million.
Sonya: And overall, we anticipate delivering another year of free cash flow growth.
Sonya: And overall, we anticipate delivering another year of free cash flow growth. In summary, we delivered strong results for 2023, driven by our focus on execution. And looking ahead, we are well-positioned to deliver sustained value for consumers, customers, and our shareholders. Operator?
Sonya: In summary, we delivered strong results for 2023, driven by our focused execution and looking ahead, we are well positioned to deliver sustained value for consumer customers and our shareholders and with that I'd like to open the call for Q&A operator.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press the star followed by the 2. If you are using a speakerphone, please leave the handset before pressing any keys.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your telephone keypad, you will hear a comp that you had that's been raised and should you wish to cancel your request. Please press the star followed later too.
Speaker Change: Youre using a speakerphone. Please keep the handset before pressing any keys one moment. Please for your first question.
Rajat Gupta: One moment, please, for your first question. Your first question comes from Rajat Gupta from J.P. Morgan. Please go ahead. Great. Good morning.
Speaker Change: Your first question comes from the line of Rajat Gupta from Jpmorgan. Please go ahead.
Rajat Gupta: Great. Good morning, Thanks for taking the questions.
Unnamed Speaker: Thanks for taking the questions. Congratulations on a good quarter as well. I had a first question just on, you know, the 2024 guidance, the 6% to 8% revenue guidance. Could you give us a little more granularity on what's the breakup of that? You know, how much is RPD versus, you know, just like for like price increases versus, you know, just product mix? You don't know how much dealer count, OEM revenue, etc. Any more granularity would be helpful.
Rajat Gupta: Congrats on the good.
Rajat Gupta: <unk> as well.
Rajat Gupta: First question just on the 2020 forward guidance.
Rajat Gupta: The 6% to 8% revenue guidance.
Rajat Gupta: Can you give us a little more granularity on what's the breakup of that.
Rajat Gupta: How much is RPT versus.
Rajat Gupta: Just like for like price increases versus just product mix.
Rajat Gupta: How much of the dealer count OEM revenue et cetera, any more granularity would be helpful. A follow up thanks.
Sonya: I'll have a follow-up. Yeah, thanks for the question, Rajesh. It's Sonia.
Rajat Gupta: Yeah. Thanks for the question Roger It's Sonya, maybe I can I'll start by giving a little more color on let's see if it if it helps a little bit you know one of the things Thats factored into our full year guidance is the acquisition of D to C. So if you recall, we bought that business in November and captured two months of revenue in 2023, and we'll get the full <unk>.
Sonya: Maybe I can, I'll start by giving you a little more color and let's see if it helps a little bit. You know, one of the things that's factored into our full-year guidance is the acquisition of data. So, if you recall, we bought that business in November and captured two months of revenue in 2023, and we'll get the full benefit of that acquisition in 2024, along with sort of our efforts to continue to integrate that business, which means more sales of AccuTrade in Canada, leveraging kind of the combined OEM endorsements that exist between our two partners. We're also positive on OEM and national revenue. We saw some positive performance in that business in Q And while there may be a little bit of lumpiness from Q4 to Q1, just in terms of how OEMs spend their budgets, we expect a good year with inventory levels rising, new model launches, and EV releases that require consumer education. And then, you know, lastly, on dealer revenue, that's been just a really strong portion of our business. Over the last several quarters, and I don't think anything has changed, our focus has really been on trying to grow ARPD there on an organic basis.
Sonya Sonya: And instead of that acquisition in 2024, along with sort of our effort to continue to integrate that business, which means more sales of accu trade in Canada, leveraging kind of the combined OEM endorsements that exists between our two companies to go faster in terms of Canadian expansion.
Sonya Sonya: We're also positive on OEM and National revenue, we saw some positive performance in that business in Q4 that we're really excited about and while there may be a little bit of Lumpiness from Q4 to Q1, just in terms of how in terms of how Oems spend their budget, we expect a good year with inventory levels rising new model launch.
Sonya Sonya: Its E V releases that require consumer education, and then you know lastly on dealer revenue. That's been just a really strong portion of our business over the last several quarters and I don't think anything has changed our focus is really on trying to grow AARP D. There on an organic basis, and we think we have the ability to do that.
Sonya: And we think we have the ability to do that, just given the suite of products that we have and the continued penetration. You know, at NADA, we saw a lot of really positive interest in our new media product, as Alex was just talking about, then performance media. In addition, we saw a lot of really strong interest in AccuTrade. You may have noticed we got an endorsement from Ford.
Sonya Sonya: Just given the suite of products that we have and the continued penetration.
Sonya Sonya: On a D. A we found a lot of really positive interest in our new media product as Alex was just talking about then performance media. In addition, we saw a lot of really strong interest in Accu trade you may have noticed we got at an endorsement from Ford we have a lot of other Oems that are excited to partner with us, particularly given some of the used car pricing.
Unnamed Speaker: We have a lot of other OEMs that are excited to partner with us, particularly given some of the used car pricing volatility that's out there. So we generally see and are optimistic about the growth trajectory for 2024 across all of our lines. Okay. Okay. That's a helpful color.
Sonya Sonya: <unk> that's out there. So we generally see our and are optimistic about the growth trajectory for 2024 across all of our lines of business.
Speaker Change: Got it got it okay. That's helpful color.
Sonya Sonya: And then just on the dealer count I noticed that.
Unnamed Speaker: And then just on the dealer count, you know, I noticed that, excluding DTC media, it was down sequentially, maybe a little more than we would have expected. One of your peers talked about some continued pressure on the independent used car dealer side of things. Curious, how should we think about that for 2024 in terms of implications?
Sonya Sonya: Excluding D to C media.
Sonya Sonya: It was down sequentially, maybe a little more than what we would've expected.
Sonya Sonya: One of your peers talked about some continued pressure on.
Sonya Sonya: The independent used car dealer side of things curious how should we.
Sonya Sonya: Think about that for 'twenty 'twenty four in terms of implications whats kind of like embedded in your guidance.
Unnamed Speaker: What's kind of embedded in your guidance in terms of behavior from those customers? You also mentioned in the presentation that you essentially have no digital dealers on the platform anymore. I'm curious, are you seeing... Are you expecting any of that to change just on the digital side as well in 2024? Thanks. Roger, great question.
Sonya Sonya: In terms of behavior from those customers.
Sonya Sonya: And you talked you also mentioned in the presentation that you've.
Sonya Sonya: We essentially have no digital dealers on the platform anymore.
Sonya Sonya: I'm curious like are you seeing.
Sonya Sonya: Are you expecting any of that to change just on the digital side as well.
Sonya Sonya: Thanks.
Speaker Change: Sure. It's a great question well first of all I've seen this cycle a number of times in my tenure in the space and what I will tell you is that.
Unnamed Speaker: Well, first of all, I've seen this cycle a number of times in my tenure in the space, and what I will tell you is that Q4 tends to be a softer period in terms of dealer net ads, and then we're seeing that spill over into Q1, and I think it's largely attributable to the macro environment where profitability, concerns regarding the price of used cars, and lower inventory levels available in the market. New cars are not selling as fast, and dealers take a general reactive stance where they cut expenses dramatically in the short term and then reconsider whether or not they should bring them back.
Sonya Sonya: Q4 tends to be a softer period in terms of dealer net adds and then we're seeing that spill over into Q1, and I think it's largely attributable to the macro environment where profitability.
Sonya Sonya: Concerns regarding the price of used cars.
Sonya Sonya: Lower inventory levels available in the market.
Sonya Sonya: Talk new cars, not selling as fast as <unk>.
Sonya Sonya: Dealers take a general reactive stance, where they cut expenses dramatically in the short term and then revisit whether or not they should bring them back and we see that too in our business.
Unnamed Speaker: And we see that too in our business. I wish it wasn't the behavior of our industry, but it happens. The good news is that with our strong traffic trends, our traffic concentration on organic traffic, we've proven that we win a lot of these dealers back even when they do blink because of the current trends. I think broader forecasts for this year are healthy and strong, so we feel very good about the full-year view, but I know we're feeling some choppiness right now because dealers are panicked about the current environment, www.inc.com.au The good news is that when you look at the bulk of where our growth is coming from, it's on technology solutions that actually directly help the profitability concerns that dealers are feeling. And so, yes, it's a slower sales cycle to sell our solutions, but once we get those solutions sold, it has a halo effect and a stickiness effect for the whole platform. And so those would be the big headlines.
Sonya Sonya: I wish it wasn't our behave the behavior of our industry, but it happens the good news with our strong traffic trends are organic concentration or traffic concentration of organic traffic. We've proven that we win a lot of these dealers back even when they do blink.
Sonya Sonya: Because of the current trends I think broader forecast for this year are healthy and strong. So we feel very good about the full year view, but I know, we're feeling some choppiness right now because dealers are parents about the current environment.
Sonya Sonya:
Sonya Sonya: So we're all working with dealers on this stuff. The good news is that when you look at the bulk of where our growth is coming from it's on technology solutions that actually directly help the profitability concerns that dealers are feeling.
Sonya Sonya: So yes, its a slower sales cycle to sell in our solutions, but once we get those solutions sold it has a halo effect.
Sonya Sonya: Stickiness effect for the whole platform.
Sonya Sonya: And so those would be the big headlines I think finally I would just also echo with Sonya said, we look at the new car side of the business.
Unnamed Speaker: I think, finally, I just also echo what Sonya said, like look at the new car side of the business. The bulk of our business is the franchise dealer community. We don't index heavily in the independent dealer community like some of our peers, and so they are also looking at us for media solutions that can help them move those new cars as well. And I think that gives us some strong footing heading into the, Got it.
Sonya Sonya: The bulk of our business is the franchise dealer community, we don't index heavily in the independent dealer community like some of our peers.
Sonya Sonya: So they are also looking at us for media solutions that can help them move those new cars as well and I think that gives us some some strong footing heading into this year.
Speaker Change: Got it got it and on the digital.
Unnamed Speaker: And on the digital independent side, anything that's changed, or you expect it to change? I know there are not many digitally used dealers left, but... We're not expecting that to be a growth driver in the business. And as you noted, we have none of those dealers in our current count. So we don't have any downside exposure. www.cars.com.au Got it. Got it. Great. Thanks for the call.
Speaker Change: Independent side anything Thats changed or you expect to change.
Speaker Change: Many digital use dealers left but we're not we're.
Speaker Change: We're not expecting that to be a growth driver in the business and as you noted we have none of those dealers in our current accounts so.
Speaker Change: So we don't have any downside exposure to those.
Speaker Change: Those operations and there are certainly there should be upside I mean, I generally believe that anybody that's trying to sell or buy or sell cars in the auto industry needs to be with with our platform, but we're not meeting those segments to come back in order to deliver our guidance.
Speaker Change: Got it got it great. Thanks for the color.
Speaker Change: Thank you and your next question comes from the line of Thomas White from D. A Davidson. Please proceed.
Unnamed Speaker: Thank you. And your next question comes from Thomas White from BA Davidson. Please proceed.
Thomas White: Great. Thanks for taking my questions I guess first off on OEM I guess, the OEM component of the OEM and national lines that you set up 24% in the quarter.
Thomas White: Great. Thanks for taking my questions. I guess, first off, on OEM, I guess the OEM component of the OEM and national line, I think you said it was up 24% in the quarter. So, Alex, can you remind us when, like, the insurance advertisers that kind of cut spending, when do we fully lap that? And, you know, how can we think about OEM kind of continuing on that trajectory for kind of the balance of 2024? And then, I guess, maybe a slightly bigger picture one.
Thomas White: Alex can you remind us like the insurance.
Thomas White: Advertisers that kind of cut spending when does when do we fully lap that and.
Thomas White: Hum.
Thomas White: And we think about OEM kind of continuing on that trajectory for the balance of 2024, and then I guess, maybe a slightly bigger picture. One I think you should be good traffic, 5% last year revenues also grew 5% can you just talk a little bit about your ability to kind of grow the business.
Unnamed Speaker: I think you said you grew traffic 5% last year, and revenues also grew 5%. Can you just talk a little bit about your ability to kind of grow the business in excess of traffic growth in 24 and the years beyond as you kind of build up some of these products that are less dependent on traffic? Thanks. Maybe I'll thank you for the questions, Tom. Maybe I'll take the first one on sort of that insurance component. I think that really sort of spiked as an issue at the beginning of 2020.
Thomas White: Excess of traffic growth in 'twenty, four and the years beyond as you can.
Thomas White: Build up some of these.
Speaker Change: Products that are that are less dependent on traffic.
Speaker Change: Maybe I'll. Thank you for the questions Tom maybe I'll take the first one on sort of that insurance component I think that really sort of spike doesn't issue at the beginning of 2023, so to large extent, we should be lapping some of those challenges as you look to 2024.
Unnamed Speaker: So, to a large extent, we should be lapping some of those challenges as you look to 2024. I do think the Q4 year-over-year growth that we saw in OEM, I wouldn't necessarily use that as the run rate going forward. We do see more investment sometimes come in to Q4 just based on the timing of releases, timing and phasing of their spend, and investment in advertising.
Thomas White: I think the Q4 year over year growth that we saw in OEM I wouldn't necessarily use that as like the run rate going forward, we do see a more investment sometimes come into Q4, just based on the timing of releases timing and phasing of their spend.
Unnamed Speaker: In investment in advertising, but we think we think 2024 has a really promising outlook when it comes to to the OEM and national side of the type of the business.
Unnamed Speaker: But, you know, we think 2024 has a really promising outlook when it comes to the OEM and national sides. And I'd echo that if you look at the past 12 quarters, we've been steadily growing dealer revenue and total revenue for the business despite OEM headwinds. So, you know, the correlation between traffic and revenue, I think, is more coincidental.
Unnamed Speaker: Yeah, I'd Echo that if you look at the past 12 quarters, we have been steadily growing the dealer revenue and the total revenue for the business Despite OEM headwinds.
Unnamed Speaker: So.
Unnamed Speaker: The correlation between traffic and revenue I think is more coincidental because such a bulk of our revenue growth has come in through non traffic.
Unnamed Speaker: The bulk of our revenue growth has come in through non-traffic solutions like AccuTrade or our dealer-inspired websites. These don't have a, And so we've been outrunning the declines in national for a few years now with strong dealer growth and ARPD growth. Now that the OEM new car production levels have returned, we're seeing increased interest in our solutions. Like, there's generally a healthy picture forming here, Tom.
Unnamed Speaker: Appendant solutions like Accu trade or our dealer inspire websites. These don't have a.
Unnamed Speaker: Traffic dependence and so we've been out running the declines in national for a few years now with strong dealer growth and <unk> growth.
Unnamed Speaker: Now that the OEM new car production levels have returned we're seeing.
Unnamed Speaker: Seeing in.
Unnamed Speaker: Increased interest in our solutions like there's generally a healthy picture forming here, Tom I think the.
Unnamed Speaker: I think the opportunity for us to sustain our traffic levels, you know, we believe it's there because we've got the brand, we've got the content, and we can sustain healthy traffic levels. We're not expecting big traffic gains in 2024. In fact, our goal is more to get credit for all the value that we're delivering through things like showing up better in dealer CRM and capturing the value of the traffic that we're delivering directly to the dealer website. The amount of phone calls that are ringing in to the stores; we just need to tighten up the conversion funnel and the dealers, www.cars.com.au. Okay, great. Maybe just one last one if I could flip it in.
Unnamed Speaker: Opportunity for us to sustain our traffic levels. We believe it's there because we've got the brand. We've got the content, we can sustain healthy traffic levels were not expecting big traffic gains in 2000.
Unnamed Speaker: 24 in fact, our goals more getting credit for all the value that we're delivering through things like showing up better in dealer CRM.
Unnamed Speaker: Capturing the value of the traffic that we're delivering directly to dealer websites. The amount of phone calls that arena. The stores like we just need to tighten up the conversion funnel and the dealers performance, which is why we highlighted the dealer experience report on the call because.
Unnamed Speaker: Because of the values there it's just.
Unnamed Speaker: Retailers don't always connect the dots as clearly as we'd like.
Speaker Change: Okay, Great maybe just one last one if I could slip it in.
Unnamed Speaker: Alex, when you're talking about the five growth pillars, I think you mentioned unlocking more platform advantages. Could you just elaborate a bit on kind of what you meant there? Thanks. Sure. I mean, I think there are two things.
Unnamed Speaker: Alex when Youre talking about the five growth pillars.
Alex: Unlocking more platform advantages could you just elaborate a bit on kind of whats your thoughts there. Thanks.
Alex: Sure I mean, I think there's two things one we're trying to create more leverage for our dealer partners and so theyre looking for fewer point solutions and more connected tech. So that clearly is a thread when we when we said we weren't platform efficiencies, we want to be able to deliver more product and solutions to dealers at lower cost.
Unnamed Speaker: One, we're trying to create more leverage for our dealer partners, and so they're looking for fewer point solutions and more connected tech. So that clearly is a thread. When we say we want platform efficiencies, we want to be able to deliver more products and solutions to dealers at lower costs because we're leveraging a common backbone or the infrastructure of Cars.com and giving that power to our dealers. But specifically, when we lay it out. On the slide that you're referring to, it's really about driving those internal operating efficiencies here as well. As you know, last year we started really in earnest beginning to cross-sell our solutions and integrating our sales teams from our various platforms. That was part of the rebranding towards Cars Commerce, getting our sales teams to be able to sell all of our capabilities as opposed to one or another.
Unnamed Speaker: Because we're leveraging a common backbone or the infrastructure of cars, dotcom and giving that power to our dealers, but specifically when we lay it out.
Unnamed Speaker: On the slide that you're referring to it's really about driving those internal operating efficiencies here as well.
Unnamed Speaker: As you know last year, we started really in earnest beginning to cross sell our solutions and integrating our sales teams from our various platforms that was part of the rebrand towards cars commerce is getting our sales teams to be able to sell all of our capabilities as opposed to one or another and then finally tightening up backend operations.
Unnamed Speaker: Then finally, tightening up back-end operations, consolidating our support teams so that we can deliver faster turnaround times for our customers. Consolidating Point Vendors and Negotiating Preferred Agreements for Enterprise-Wide Use Cases for Various Things like Slack or Consolidating AWS Accounts for D2C with the Cars Commerce Platform. There are dozens of opportunities inside the company where we can find synergy and create leverage for investors in the business. Great, thank you.
Unnamed Speaker: Consolidating our support team so that we can deliver faster turnaround times for our customers.
Unnamed Speaker: Consolidating point vendors and negotiating preferred agreements for enterprise wide use cases for various things like slack or consolidating AWS accounts for DTC.
Unnamed Speaker: With the cars Commerce platform, there are dozens of opportunities inside the company, where we can.
Unnamed Speaker: Uh huh.
Unnamed Speaker: Find synergy and create leverage for investors in the business.
Speaker Change: Great. Thank you.
Speaker Change: Thank you and your next question comes from the line of <unk> <unk> from B Riley Securities. Please proceed.
Unnamed Speaker: Thank you. And your next question comes from the line of Naved Khan from Bee Valley Securities. Please proceed. Yeah, thank you.
Naved Khan: Yeah, Hi, Thank you a couple of questions from me.
Naved Khan: A couple of questions from me, maybe just on. As I think about your 2024 ad spending on marketing activities, what should I be thinking about? And the second question I have is just on the wind performance media. So the demo at the NADA show was pretty impressive.
Naved Khan: Maybe just on.
Naved Khan: So as I think about your 2024.
Naved Khan: <unk> spending.
Naved Khan: Sure.
Naved Khan: Our marketing activities or should I be thinking about.
Naved Khan: That's been a bit through 2020.
Naved Khan: Fee.
Naved Khan: Most of that growth.
Speaker Change: Got it.
Naved Khan: And the second question I have is just on the <unk>.
Unnamed Speaker: What are you baking in in terms of contribution from this in your annual guidance? So I think in terms of marketing. We expect to see some modest increases in marketing expense on a year-over-year basis, but I don't think anything particularly dramatic. We continue to be focused on trying to deliver that engaged consumer audience to our dealer and OEM partners, and then also continue to be focused on how to think about elevating and continuing to elevate our brand in both the minds of the dealer as well as the OEM. I think your second question was about thin performance media, and just, you know, We really just launched it at NADA. We did a very small pilot kind of prior to that.
Unnamed Speaker: On the wind performance, maybe ASO demo.
Unnamed Speaker: And then in India show was pretty impressive what are you baking in in terms of contribution from this in your annual guidance.
Unnamed Speaker: Well I think in terms of marketing expense, which I think you were asking about you know we expect to see some modest increases in marketing expense on a year over year basis, but I don't think anything, particularly dramatic you know we continue to be focused on.
Unnamed Speaker: China deliver that engaged consumer audience to our dealer and OEM partners and then also you know continue to be focused on how to think about elevating and continuing to elevate our brand in both the minds of the dealer as well as the consumer.
Unnamed Speaker: In terms I think your second question was on than performance media.
Unnamed Speaker: That's right now our guidance got it.
Unnamed Speaker: We have.
Unnamed Speaker: I guess for lack of a better word it's baked into the guidance that we've provided we really just launched it and we've done a very small pilot kind of prior to that so the benefit of that is going to roll in throughout the year and you should think about it in some ways, there's a little bit of an extension to the existing media buy.
Unnamed Speaker: So the benefit of that is going to roll in throughout the year, and you should think of it in some ways as a little bit of an extension to the existing media buy that dealers are already making with us. So it'll be a benefit to our numbers. It's baked into our guidance.
Unnamed Speaker: That that dealers are already already making with us they would all have it'll be a benefit to our numbers, it's baked into our guide.
Speaker Change: Got it and so on.
Naved Khan: And so, Sonia, just clarify the, you know, your answer to the first question on that spending. So, as a percentage of revenue, it shouldn't really change on 24. March 6, 23, or how should I think about that?
Part of the answer on that first question on the AD spending so as is.
As a percentage of revenue.
Shouldnt really change in 'twenty four.
Most disappointing to you or how should I think about that.
Unnamed Speaker: Yeah, it's pretty, you know, I think we've been pretty consistent on a percentage of revenue basis now. And so it'll stay in that same ballpark. Understandable. Thank you. Thank you. And your next question comes from the line of Kunal Madhukar from UBS. Please go ahead. Hi, thank you for taking my questions. A couple from me.
Yeah, It's pretty you know I think we've been pretty consistent on a percentage of revenue.
Basis, now and so it'll stay in that same ballpark.
Understood.
Kunal Madhukar: Thank you.
Kunal Madhukar: Thank you.
Kunal Madhukar: Thank you and your next question comes from the line of Matt <unk> from UBS. Please go ahead.
Hi, Thank you for taking my questions.
Couple from.
Kunal Madhukar: For me one on the.
Kunal Madhukar: One, on the cookie-less world that we may be going into, don't know how quickly that gets rolled out, but at the investor breakfast at NADA, you talked about how a significant proportion of your traffic comes directly and is organic, which you don't need to pay for. So, can you help us understand how you intend to capitalize? on the brand and the loyalty of consumers that you've kind of built on. And the second question on the AccuTrade side.
Kunal Madhukar: The calculus that we may be going into don't know how quickly that gets rolled out but.
At the Investor day, Investor breakfast at not.
Talked about how a significant proportion of your traffic comps did act and there is organic that you don't need to pay for.
Can you help us understand how you intend to capitalize.
Kunal Madhukar: On the on the brand.
And the the loyalty of consumers that youll kind of bolt on.
And the second question on the acute side, so one of the things.
Unnamed Speaker: So, one of the things that, you know, that was apparent from the NARA show was everybody seems to have a similar kind of offering to help dealers with used cars or getting used cars into their dealerships. So, why should a dealer use you and use AccuTrade versus some other service? And what stops them from using multiple services?
That was evident from the Nada show was everybody seems to have a similar kind of been offering to help dealers with used cars are getting used cars on the dealerships. So.
Unnamed Speaker: Why should a dealer used U.
Accu trade versus some other service and what stops them from using multiple services. Thank you Greg.
Unnamed Speaker: Great questions, Kunal. Thank you. First of all, the demise of the cookie has been talked about for years, and I think it's proving to move a lot slower than a lot of the early projections in terms of when it would actually crumble. But we do see it as a tailwind for us.
Speaker Change: Great Great questions can all thank you first of all.
The demise of the cookies been talked about for years and I think it's proving to move a lot slower than a lot of the early projections in terms of when it would actually crumble, but we do see it as a tailwind for us.
The absence of cookie tracking technology being more prevalent is that brands have got to spend more money in first party audiences of which we have the largest original.
Unnamed Speaker: The absence of cookie-tracking technology being more prevalent means that brands have got to spend more money on first-party audiences, of which we have the largest original, retail media network of any of our peer group that's heavily, you know, that's solely in the market car shop. 90% of our audience is undecided, and nearly all of them are in the market right now. And so the opportunity for brands who use third-party technology companies or inferred audiences, those conversion rates, and those programs are going to weaken with the collapse of the cookie and in favor of those brands having to spend more with first-party marketplaces.
Our retail media network of any of our peer group that is heavily.
Thats solely in market car shoppers, 90% of our audience is undecided and nearly all of them are in market right now and so the opportunity for brands, who use third party technology companies or inferred audiences.
Those conversion rates and those programs are going to weaken with the collapse of the cookie.
In favor of those brands, having to spend more with first party marketplaces to your point like what do we do to generate loyalty well the average consumer in the U S is only in the market. Once every several years and so having a brand that's synonymous with car shopping naturally is one of our wildfires because we generate a lot of our traffic is used.
Unnamed Speaker: To your point, like what do we do to generate loyalty? Well, the average consumer in the U.S. is only in the market once every several years, and so having a brand that's synonymous with car shopping naturally is one of our wow factors because we generate a lot of our traffic, as you said, organically or directly, coming directly to Cars.com. But you also noted in the call that we rolled out things like Your Garage, which allows consumers now to register their car long before they're in March. And then we send them real-time updates on what their car is worth, and then we can recommend trade-in solutions to them. I'm always developing that organic relationship with our platform and our brand. So I think we've got a number of ways to keep our audience healthy and strong.
Organically are directly coming direct to cars dotcom.
But you also noted in the call that we rolled out things like your garage, which allows consumers now to registered their car long before they're in market.
And then we send them real time updates on what their cars worth and then can recommend trading solutions to them.
Always developing that organic relationship with our platform and our brand.
So I think we've got a number of ways that we keep our audience healthy and strong Testament that after 25 years, we still are setting records for traffic growth and so I think we've demonstrated that we have a great formula for value capture and delivery.
Unnamed Speaker: It's a testament that after 25 years, we're still setting records for traffic growth. And so I think we've demonstrated that we have a great formula for value capture and delivery. Your second question was about AccuTrade and the notion that everybody has a... similar solution, and I would challenge that, http://TheBusinessProfessor.com, a different dealer to dealer trading platform. Many of them have, some have tons of sellers, but no
Your second question was about accu trade in the notion that everybody has a.
<unk> solution and I would challenge that.
Assertion because yes, there are no less than.
Well different dealer to dealer trading platforms.
Many of them have some have tons of sellers no buyers others have tons of buyers no inventory and so you've got all these digital wholesale platforms that tend not to have a true network effect.
Unnamed Speaker: Others have tons of buyers but no inventory. And so you've got all these digital wholesale platforms that tend not to have a true network effect. And then on the Instant Cash Offer side, you've got a lot of marketplaces selling leads to dealers about buying cars. That is not what AccuTrade is. If you look at AccuTrade, we are giving dealers the ability and the power to buy cars directly from their own customers when those customers walk in the store, are considering a trade-in in their service lane on their website. And yes, you can also source private seller opportunities from the cars.com marketplace. But the power of our technology is that we don't give generic ranges.
And then on the <unk>.
Instant cash offer side, you've got a lot of marketplaces selling leads to dealers about buying cars that is not what accu trade is if you look at accu trade, we're giving dealers the ability and the power to buy cars directly from their own customers when those customers walk in the store.
We are considering a trade in and their service lane off their website and yes. You can also source private seller opportunities from the cars dot com marketplace.
But the power of our technology is that we don't give generic ranges, we give precise valuation tied to the health of the vehicle. This is saving dealers tons of money, it's speeding appraisals from.
Unnamed Speaker: We give precise valuation tied to the health of the vehicle. This is saving dealers tons of money. It's speeding appraisals from..., you know, hours to minutes, and it's also so much more cost advantageous than buying cars at auction, and with used car scarcity being a predominant theme this year, we know that auction prices are going to go up. We know fees, both auction fees and transportation fees, are hefty, to the tune of $1,500 per vehicle sold, contrasted to AccuTrade, which is $1,500 a month, and you can buy hundreds of cars directly from customers in your own backyard.
Hours to minutes and it's also so much more cost advantageous and buying cars at the auction and with used car scarcity of being a predominant theme. This year, we know that auction prices are going to go up.
No fees, both auction fees and transportation fees are hefty to the tune of $1500.
Third vehicle sold contrasted the accu trade, which is 500, a month and you can buy one hundreds of cars directly from customers in your own backyard. So we think the differentiator vacuum trade is vast from what we see out in the industry and the dealers that have adopted accu trade have said, it's an absolute.
Unnamed Speaker: So we think the differentiating factor of AccuTrade is vast from what we see out in the industry, and the dealers that have adopted AccuTrade have said it's an absolute game-changer for both their top and bottom. Thank you. Thank you. Once again, should you have a question, please press the star, followed by the 1 on your telephone keypad.
Game changer to both their top and bottom line.
Thank you.
Thank you.
Thank you once again should you have a question. Please press the star followed by the one on your telephone keypad and your next question comes from the line of Doug Arthur from Huber Research. Please proceed.
Unnamed Speaker: And your next question comes from Doug Arthur from Uber Research. Please proceed. Yeah, good morning, Sonya.
Douglas Middleton Arthur: Did you mention anything about dealer inspire in terms of growth in the quarter and number of dealers in the system? I didn't, I don't think I gave the growth, you know, we have another year of double-digit, year-over-year revenue growth associated with that portion of the business, but I'll tell you that, like, increasingly on a go-forward basis, as we continue to integrate products across the platform, being really precise on that number becomes a little bit more challenging as we continue to focus on cross-selling. So, in terms of total website customers, as Alex may have mentioned, we ended the year with about 7,300, and that includes, to be clear, customers acquired over the last year.
Yes, good morning Sonya.
Did you mention anything about dealer inspire in terms of the growth in the quarter and number of dealers in the system.
Yeah.
I did it I don't think I gave the growth.
We had another another year of double digit year over year revenue growth associated with that portion of the of the business, but I will tell you that like increasingly on a go forward basis as we continue to integrate products across the platform being really precise on that number becomes a little bit a little bit more challenging as we continue to focus.
Sonya: Right, so that's $950 in the fourth quarter. Okay, because I think the number you've given out on Q3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 40, 41, 42, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 56, 57, 57, 58, 58, 59, 59, 60, 60, 60, 61, 62, 63, 63, 62, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, 63, website management, it was 6,300. 6350, sorry.
On cross selling in terms of total website customer they think Alex may have mentioned.
We ended the year with about 7300 and that includes to be clear include customers acquired through <unk>.
Alright, so thats 950 in the fourth quarter, Okay. Because I think you I think the number you had given out on Q3 or four.
Our website management was 6300 or so.
$53 50, sorry, okay. So so did I I don't mean to harp on this did the growth slow a little bit as the comps get tougher in the fourth quarter or.
It continued on a very strong trajectory.
Dealer inspire.
So there's kind of like this one time bump from the addition, like bringing D to C onto our platform and then we also saw continued growth at both D. I M D to C. In the fourth quarter in terms of in terms of new web site launches, we've talked a little about it you know, particularly maybe a couple of quarters ago that.
Douglas Middleton Arthur: Okay. So did the – I don't mean to harp on this. Did the growth slow a little bit as the comps got tougher in the fourth quarter, or did it continue on a very strong trajectory? At Dealer Inspired. Yeah, so, you know, there's kind of like this one-time bump from the addition, and like.., www.cdc.gov.au Subs by www.zeoranger.co.uk We've talked a little about it, you know, particularly maybe a couple quarters ago that we're going to continue to add websites as part of the, you know, dealer-inspired business, but we've largely secured And I guess, actually, on ARPD, I mean, obviously up 7%, very solid, although sequentially it looked a little lower. Is that the D to C impact? Got it. Yes, we would have been. We would have been basically at sort of nine.
We're going to continue to add websites as part of the dealer inspire business.
Largely secured all of the endorsement that are out there. So the pace of which is the website is getting added is that the cadence is going to change a little bit because it's not as though you suddenly when you know a big piece of business with 800 customers that you can go after.
Whereas we're adding customers. We're also very focused on cross selling upselling moving moving folks up the dealer inspire package level to get them more features and options that help them drive their business and that would show up in <unk>.
Okay.
And I guess actually on <unk>, I mean, obviously up 7% very solid although sequentially. It looked a little lower is that the D to C impact.
Got it yes. It would have been we would have been basically at sort of 9%.
Sonya: Thank you, and with a slightly lower score. Great. Okay. Thank you, www.globalonenessproject.org. Thank you. And your next question comes from the line of Gary Prestopino from Barrington Research. Please go ahead. Hey, good morning, everyone.
If you adjusted out D to C. They just come in with a slightly lower ERP.
Okay. Thank you.
Thank you and your next question comes from the line of Gary <unk> from Barrington Research. Please go ahead.
Hey, good morning, everyone.
Gary Frank Prestopino: A couple of questions, Alex or Sonia, what amount of credit IQ, how many dealers have now signed up for credit IQ by year end? We have to get back to you with an exact number. As you know, we folded the Credit IQ solutions into our top-tier packages, so I would say north of, over 11,000. 11,000. I was going to say north of 10,000, but north of 11,000.
Couple of questions Alex <unk>.
Amount of credit by Q, well, how many dealers have now signed up for credit IQ by year end.
Yeah.
We have to get back to you with an exact number as you know we folded the credit IQ solutions into our top tier packages. So I would say north of over 11000, 11000, I was going say it north of 10, but north of 11000, Okay. That's fine and then in terms of this marketplace Repackaging you said about <unk>.
Unnamed Speaker: Okay, that's fine. And then, in terms of this marketplace repackaging, you said about 76% of dealers had opted for a higher tier at this point? Yeah, over 70%.
76% of dealers that opted for a higher tier at this point.
Yeah over 70%.
Okay.
Is that about the peak of where you think youre going to get it at this point or you still think there's room to move that needle higher.
Unnamed Speaker: Is that about the peak of where you think you're going to get it at this point, or do you still think there's room to move that needle higher in terms of the dealers on premium packages or, yeah, that are opting up for higher tier packages? Yeah. Yeah, I mean, it's, it's very clear to us that the inventory turn rate of dealers in our premium tiers is significantly faster than dealers that participate at the basic tiers. So, yes, I see a path for us to continue to demonstrate to dealers that when they spend more with us, their business is better. And so I do.
In terms of the dealers on premium packages or that are opting for higher tier packages yet.
Yes, I mean I think it's.
It's very clear to us that the inventory turn rate of dealers in our premium tiers is significantly faster than dealers that participate at the basic tiers. So yes, I see a path for us to continue to demonstrate the dealers that when they spend more with us.
Our business has improved and so I do at the same time, we are rolling out additional new solutions like <unk> performance media that I think that premium tier will continue to buy which will.
Unnamed Speaker: At the same time, we are rolling out additional new solutions like VIN Performance Media that I think that the premium tier will continue to buy, which will further create a top tier dealer group who's all in versus maybe dealers that run with just more; our marketplace is their only. And so there's growth for both, Gary, I guess would be the point. And so we might always still have 20% of the dealers that are in the lowest cohort of spending, but it doesn't mean that they can't grow too. Okay, that's great. And then Alex, maybe, and I know it's a very different company than it was years ago, but what was the dealer behavior and the OEM behavior at that point?
Further.
Great.
Top tier dealer group, whose all in versus maybe dealers that run with just more our marketplaces, they're only.
And so there's there's growth for both Gary I guess, it would be the point and so we might always still have a 20% of the dealers that are in the lowest cohort of spending but it doesn't mean that they can grow to.
Okay, that's great and then Alex maybe and I know, it's a very different company than it was.
Years ago, but what.
In the period of 22009, 2010, where we were coming off a real big trough in auto sales.
But.
Going into 11, 12, 13, where sales were up pretty nicely.
The dealer behaviour in the OEM behavior at that point was it to kind of mask go for more services.
Unnamed Speaker: Was it to kind of en masse go for more services that the company offered, or is it basically a slow ramp that moves with the increase in car sales over time? Boy, it's hard to compare the past with the present because so much has changed, Gary. In particular, I would say the level of digital sophistication by the industry is significantly higher, and so we were doing far more education in those earlier periods than we are today.
Let the company offered.
Sure.
Or is it basically a slow ramp.
That moves with the increase in car sales over time.
Boy, it's hard to compare the past with the president because so much has changed Gary, particularly I would say the level of digital sophistication by that the industry is significantly higher and so we were doing far more education in those earlier periods than we are today I think what is exciting to me.
Unnamed Speaker: I think what's exciting to me now is that not only were the OEM upfronts much more engaging for the car companies, but now the interest from EV automakers and the level of inbound interest to, hey, my vehicles aren't selling as quickly as they used to, what can you do for me? is much more inbound today than it has been. We've always had to go out and educate, and now I feel that shift is happening. I also will tell you that word of mouth in some of our digital solutions is also gaining steam, and I think that is a tailwind, particularly for AccuTrade, because the dealers that have moved fully to buying cars from the public as opposed to the auction are the ones that are acquiring other stores and consolidating dealerships, and so they're doing something that gives Those are the big differences, I would say, from the periods that you talked about to what I see today.
Now is that not only where the OEM upfronts.
Much more engaging by the car companies, but now the interest from EV automakers and.
Dealers that previously were on the sideline with us the level of inbound interest to Hey, Mike My vehicles arent selling as quickly as they used to what can you do for me.
You know as much more inbound today than it has been in prior years, we've always had to go out and educate and now I feel that shift is happening I also will tell you that.
Word of mouth and some of our digital solutions is also gaining steam and I think that is a tailwind, particularly for accu trade because the dealers that have move fully to buying cars from the public as opposed to the auction are the ones that are acquiring other stores and consolidating dealerships and so they're doing some.
That gives them a lot more confidence in their ability to generate leverage or synergies from acquisitions and as you know our bread and butter are those large dealer groups and regional chains.
Okay, and then just lastly up trends I'd say those are the big differences I would say from the periods that you talked about what I see today.
Okay, and then just lastly, with this endorsement by Ford.
Unnamed Speaker: Okay, and then, just lastly, with this endorsement by Ford for AccuTrade. What do you have to do? Do you have to do anything?
Four.
We trade.
What do you have to do do you have to do anything to prepare to sell more into Ford with accu trade or.
Unnamed Speaker: to prepare to sell more into Ford with AccuTrade, or does that endorsement just really help with the deal or uptake of the product? Well, it really helps dealers who say, I can't spend any more in this environment because I'm trying to cut back. It allows us to point to the co-op funds that are available for the dealer to use from Ford. And I think that it removes the price.
Does that endorsement just really help with deal or uptake of the product.
Well it really helps dealers, who say I can't spend anymore in this environment, because I'm trying to cut back it allows us to point to that.
Co op funds that are available for the dealer to use from forward and I think so that it removes price I think Gary as an objection, it's not going to change.
Unnamed Speaker: I think, Gary, as an objection, it's not going to change the rate of sales in the sense that we're not going to have huge volumes coming at us, but I do think it gives us a lot of reason to go to Ford dealers above all else because price as an objection is off the table. So when Ford gives this co-op incentive, what percentage of AccuTrade do they end up paying for? Can you make that public, or is that not something you can share? No, we don't. We don't disclose Ford's allocations to their dealers, but this is nominal. Not really, I mean.
The rate of sell sales and in the sense that we're not gonna have huge volumes coming at us, but I do think it gives us a lot of reason to go to four dealers above all else because.
You take prices of objection off the table.
So what gives this co op.
Incentives what percentage of Accu trade do they end up paying for it can you make that public or is that not something you can share no. We don't we don't disclose fords allocations to their dealers. This is nominal <unk> I mean.
Gary Frank Prestopino: Nominal. Okay, thank you. Thank you, Gary. Thank you. Once again, should you have a question, please press the star followed by the 1 on your telephone keypad, and your next question comes from the line of Marvin Fong from BTIG. Please proceed. Good morning.
Nominal.
Okay. Thank you.
Thank you Jeremy.
Thank you once again should you have a question. Please press the star followed by the one on your telephone keypad and your next question comes from the line of Marvin Fong from <unk>. Please proceed.
Good morning, Thanks for squeezing me in here so.
Marvin Fong: Thanks for squeezing me in here. So, apologies, I missed the prepared remarks, but I did have a follow-up on the Ford Direct endorsement, and just curious, you know, how should we think about, you know, that adoption curve now that you're part of, you know, the SHOP platform? Do you think we should think about it as sort of a, you know, a burst of adoption in the next quarter or two, or should it be more of a gradual build in addition to your normal client wins? And then, second question, just noting the four-year guide, calling for 20, 28 to 30% adjusted even down margin. So, I guess, you know, that's a similar margin that we've seen in the past few years, and it's a very, you know, very strong margin, but just curious, do you guys ever foresee breaking above 30%, or do you sort of think that this is the margin that's appropriate for the firm or driving continued top-line growth? Thanks.
So apologies I missed the.
Yeah.
Repaired remarks, but.
I did have a follow up on the or direct indoor.
Endorsement.
Just curious how should we think about the adoption curve.
Now that you are part of the shop platform do you should we think about it as sort of.
Burst of adoption in the next quarter or two or should it be more of a gradual build in addition to your normal client wins and then second question just.
Lowering the full year guide, calling for <unk>, 28% to 30% adjusted EBITDA margin. So I guess that's it.
Similar margin that we've seen in the past few years.
Very very strong margin, but just curious.
Do you guys ever foresee.
Breaking above 30%.
Do you sort of think that this is the margin thats appropriate for the firm in order to drive continued top line growth. Thanks.
Unnamed Speaker: A couple comments there and thanks for the questions. I think you should look at the forward direct selection of AccuTrade as more confirmation of a product that's in its nascent stages of market entry, right? I think a lot of people have not fully understood the power of AccuTrade, and the Ford team did tons of due diligence and homework on the various offerings and selected us. I think it's first and foremost just validation of what they believe will help their dealers the most. And I also think that.
So a couple of comments there and thanks for the questions I think you should look at the four direct.
Selection of Accu trade is more affirmation too.
Product that's in its nascent stages of of market entry rate I think a lot of people have not fully understood. The power of accu trade in the Ford team did tons of due diligence and homework to the various offerings and selected us and so I think it's first and foremost just validation of what they believe will help their dealers.
The most and I also think that.
Sure.
Unnamed Speaker: This shouldn't be the last OEM endorsement that we achieve because many more OEMs are now being asked to help their dealers do more digitally. And as you've seen with our dealer-inspired business, we were able to secure endorsements from all the major OEMs. And that does help dealers narrow the field of vendors that they would be willing to consider. And so I do think it is mostly about affirmation. Yes, I hope it will accelerate sales rates for Ford dealers in the summer months of this year as we get the word out there because we still have to educate dealers as to what this is and why it will benefit them. But I'd look at it more as confirmation. Then they had a windfall of customers.
This shouldn't be the last OEM endorsement.
We achieved because many more Oems are now being asked to help their dealers do more digitally and as you've seen with our dealer inspire business, we were able to secure endorsements from all Oems.
That does help dealers narrow the field of vendors that they would be willing to consider and so I do think it's mostly it's about affirmation, yes, I hope it will accelerate sales rates for Ford dealers in the summer months of this year as we get the education out there because we still have to educate dealers as to what this is.
And why why it will benefit them, but I'd look at it more as affirmation.
Then a windfall of customers I think the second thing on the guide.
Unnamed Speaker: I think the second thing on the guide... You know, I certainly know that we have tons of opportunity to invest and grow. I mean, I think our hardest job as stewards of capital is picking the right things that will generate the most growth. www.larryweaver.com. I don't know, Sonia, if you had anything. I mean, the only thing I would add is I think we are seeing progress on margins if you look at the guide that full year, or honestly, even the guide. 1, unadjusted EBITDA margins relative to what we delivered last year.
I, certainly know that we have tons of opportunity to invest and grow.
I think our hardest job as stewards of capital is picking the right things that will generate the most growth, but there is a.
The amount of opportunity to invest in areas that we currently don't have that would add to our platform and add to our value and so could the business get over 30% sure.
But we always want to keep positioning the business for sustained growth over the mid to long term and so it's a balance between harvest or continuing to set the business up for sustained growth I.
Sonya: You're starting to see that progress. I think we do want to ultimately continue to grow this business in a profitable way. So there is the question around how you think about making incremental investments to drive long-term growth in the business, long-term profitable growth in the business, and short-term margins. But I think you are starting to see that improvement come through.
I don't know if you'd add anything to that.
The only thing I would add is I think we are seeing progress on margins. If you look at the guide that we've given for the full year or honestly, even the guide we gave for Q1 on adjusted EBITA margin relative to what we delivered last year, you're starting to see that progress I think we do want to ultimately continue to grow this business.
In a profitable way. So there is the question around how you think about making incremental investments to drive long term growth in the business long term profitable growth in the business and short term margin, but I think you are starting to see that improvement come through in the numbers.
Unnamed Speaker: Okay, that's terrific. Thanks, guys. There are no further questions at this time. I will now turn the call over to Mr. Alex Vetter, CEO. I just wanted to thank everybody for their interest in Cars Commerce. We're going to continue to share our story and look forward to seeing many of you as part of our upcoming investor relations engagements. Quick notes, on February 26th, we're going to be at the J.P. Morgan High Yield Conference in Miami, and on February 28th, we're going to host investor meetings in Minneapolis with Barrington Research. Details about these events, as well as a recording of our investor breakfast at NADA, are available on the events section of our IR website. You can also download our industry insights report, which we've posted there as well.
Okay. That's perfect. Thanks, guys.
Yes.
Thank you.
No further question at this time I will now turn the call over to Mr. Alex Vetter CEO. Please go ahead.
I just wanted to thank everybody for their interest in cars Commerce, we're going to continue to share our story and look forward to seeing many of you as part of our upcoming IR.
Our engagements are quick.
Quick notes on February 26, we're going to be at the Jpmorgan High yield conference in Miami and on February 28th we're going to host investor meetings in Minneapolis with Barrington Research.
Retailers about these events as well as the recording of our Investor breakfast at any da is.
On the events section of our IR website.
You can also download our industry insights report, which we've posted there as well. This concludes our call for today and thank you and have a great day.
Alex: This concludes our call for today, and thank you, and have a great day. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect at this time.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you all for participating you may all disconnect.
Operator: For more information, visit www.casagrandeaz.gov
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