Q1 2024 CarGurus Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to CarGurus, Inc.'s first quarter 2024 earnings results conference. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up.

Good day, ladies and gentlemen, and welcome to <unk>, Inc. First quarter 2024 earnings results Conference.

Operator: At this time, all participants are in listen only mode.

Operator: A question and answer session will follow the formal presentation.

Operator: To keep everyone the opportunity to participate please limit yourself to one question and one follow up.

Operator: If you should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Kirndeep Singh, Vice President, Head of Investor Relations.

Operator: If you should require operator assistance during the conference. Please.

Kirndeep Singh: Please press star zero on your telephone keypad.

Kirndeep Singh: Please note this conference is being recorded.

Kirndeep Singh: I will now turn the country's attitude Kennedy senior Vice President head of Investor Relations.

Kirndeep Singh: Thank you, Operator. Good afternoon.

Kirndeep Singh: Thank you operator, good afternoon I'm delighted to welcome you to car grew its first quarter 'twenty 'twenty four earnings call with me on the call today are Jason Robinson, Chief Executive Officer, Sam Zales, President and Chief operating Officer, and I'll leave the Palazzo Chief Financial Officer during the call we will be making.

Kirndeep Singh: I'm delighted to welcome you to CarGurus' first quarter 2024 earnings call. With me on the call today are Jason Trevisan, Chief Executive Officer, Sam Zales, President and Chief Operating Officer, and Elisa Palazzo, Chief Financial Officer. During the call, we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those reflected in such statements.

Kirndeep Singh: We're looking statements, which are based on our current expectations and boots.

Kirndeep Singh: These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in such statements.

Kirndeep Singh: Information concerning those risks and uncertainties is discussed in our SEC filings, which can be found on our SEC's website and in the Investor Relations section of our website. We undertake no obligation to update or revise forward-looking statements, except as required by law. Furthermore, during the course of our call today, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to comparable non-GAAP measures is included in our press release issued today, as well as in our updated investor presentation, which can be found in the investor relations section of our website.

Kirndeep Singh: Information concerning those risks and uncertainties as discussed in our SEC filings, which can be found on the sec's website and in the Investor Relations section of our website.

Kirndeep Singh: We undertake no obligation to update or revise forward looking statements, except as required by law.

Kirndeep Singh: Further during the course of our call today, we will refer to certain non-GAAP financial measures a reconciliation of GAAP to comparable non-GAAP measures is included in our press release issued today as well as in our updated investor presentation, which can be found on the Investor Relations section of our website.

Kirndeep Singh: We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency as it relates to metrics used by our management in its financial and operational decision-making.

Kirndeep Singh: We believe that these non-GAAP financial measures provide useful information about our operating result, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency as it relates to metrics used by our management and its financial and operational decision, making with that I'll now turn over the call.

Kirndeep Singh: With that, I'll now turn over the call to Jason.

Kirndeep Singh: Jason.

Jason M. Trevisan: Thank you, Kirndeep, and thanks to all of you for joining us today. Each year, I share a theme that serves as our North Star. For 2024, our guiding principle is intelligent acceleration, as we leverage our industry-leading marketplace business, end-to-end transaction-enabled platforms, and integrated retail and wholesale data ecosystems with the aim of continuing to grow our business even more profitably. We'll begin the discussion today with a high-level review of our quarterly results.

Jason: Thank you Karen deep and thanks to all of you for joining us today.

Jason M. Trevisan: Each year I share a theme that serves as our north star.

Jason M. Trevisan: For 2024, our guiding principle as intelligent acceleration as we leverage our industry, leading marketplace business end to end transaction enabled platform.

Jason M. Trevisan: Integrated retail and wholesale data ecosystem with the aim of continuing to grow our business even more profitably.

Jason M. Trevisan: We will begin the discussion today with a high level review of our quarterly results then highlight the progress against our drivers of value creation.

Jason M. Trevisan: And take you through our exciting journey to innovate and transform the way dealers and consumers predict source market and sell used in new vehicles.

Jason M. Trevisan: Then, I will highlight the progress against our drivers of value creation and take you through our exciting journey to innovate and transform the way dealers and consumers predict, source, market, and sell used and new vehicles. Before we dive into the quarter, I want to take a moment to recognize Ismail El-Sharif, our new Chief Product Officer, as we continue to innovate new products and services to bolster our platform. Ish's extensive experience with subscription and transaction models and his rich appreciation of both enterprise and consumer needs will be invaluable in strengthening our partnership with dealers and deepening our connection with consumers.

Speaker Change: Before we dive into the quarter I want to take a moment to recognize Israel L Street, our new Chief product Officer.

Jason M. Trevisan: As we continue to innovate new products and services to bolster our platform.

Jason M. Trevisan: She has extensive experience with subscription and transaction models.

Jason M. Trevisan: And as rich appreciation of both enterprise and consumer needs will be invaluable in strengthening our partnership with dealers and deepening our connection with consumers.

Jason M. Trevisan: Turning to our results, I'm pleased to share that we ended the first quarter at the high end of our forecasted revenue and above our adjusted EBITDA guidance range. In the first quarter, non-GAAP consolidated adjusted EBITDA grew 24% year-over-year, achieving the highest first quarter adjusted EBITDA margin in the last three years, driven by continued growth in our subscription base.

Jason M. Trevisan: Turning to our results I'm pleased to share that we ended the first quarter at the high end of our forecasted revenue and above our adjusted EBITDA guidance range.

Jason M. Trevisan: In the first quarter non-GAAP consolidated adjusted EBITDA grew 24% year over year, achieving the highest first quarter EBITDA margin in the last three years driven by continued growth in our subscription base.

Jason M. Trevisan: In our marketplace business, revenue growth accelerated again in the first quarter to 12% year-over-year, and our quarterly net new bookings grew 28% year-over-year. We're also particularly pleased with the performance of our international business, which profitably grew revenue 24% year-over-year in the first quarter. Our strong marketplace results were driven by our ongoing focus on optimizing CARCID through the levers we've discussed in recent quarters. We are continuously enhancing the value of our listing tiers and are engaging with dealers more frequently to ensure they understand the full breadth of our platform's capabilities and are in the tier that best fits their strategy.

Jason M. Trevisan: In our marketplace business revenue growth accelerated again in the first quarter to 12% year over year, and our quarterly net new bookings grew 28% year over year.

Jason M. Trevisan: We're also particularly pleased with the performance of our international business, which profitably grew revenue 24% year over year in the first quarter.

Jason M. Trevisan: Our strong marketplace results were driven by our ongoing focus on optimizing car said through the levers we've discussed in recent quarters.

Jason M. Trevisan: We are continuously enhancing the value of our listings tiers and are engaging with dealers more frequently to ensure they understand the full breadth of our platforms capabilities and are in the tier that best fits their strategy.

Jason M. Trevisan: At the same time, our consumer connections continue to drive greater ROI, so we are working to ensure pricing is commensurate with the value we provide. During both renewals of existing customers and new business conversations, we remain dedicated to cultivating enduring relationships with our dealers, supported by a growing set of data, insights, and tools integrated into their workflow to help them grow their businesses faster and manage operations more effectively. More broadly, our impressive results reflect our ongoing efforts to advance against four drivers of value creation that represent our current business priorities. Provide more value to dealers. 2. Improve the consumer experience. 3. And finally, 4.

Jason M. Trevisan: At the same time, our consumer connections continue to drive greater ROI. So we are working to ensure pricing is commensurate with the value we provide.

Jason M. Trevisan: During both renewals of existing customers and new business conversations we remain dedicated to cultivating enduring relationships with our dealers supported by a growing set of data insights and tools integrated into their workflow to help them grow their businesses faster and manage operations more effectively.

Jason M. Trevisan: More broadly our impressive results reflect our ongoing efforts to advance against four drivers of value creation that represent our current business priorities.

Jason M. Trevisan: One provide more value to dealers to improve the consumer experience three enabled digital transactions and finally for rebuild and integrate digital wholesale.

Jason M. Trevisan: Providing more value to dealers.

Jason M. Trevisan: Rebuild and integrate digital wholesale, providing more value to dealers. As I just mentioned, our primary focus is providing more value to our dealer partners using our data, platform, tools, and audience to support their businesses and become increasingly integrated into their decision-making processes and transaction flow. As we continue to innovate our products and leverage exceptional data insights with the aim of enhancing dealers' operating results and ROI from our platform, the quantity and quality of our leads remain pivotal factors.

Jason M. Trevisan: I just mentioned our primary focus is providing more value to our dealer partners using our data platform tools and audience to support their businesses and become increasingly integrated into their decision, making processes and transaction flow.

Jason M. Trevisan: As we continue to innovate our products and leverage exceptional data insights with the aim of enhancing dealers operating results and ROI from our platform.

Jason M. Trevisan: Quantity and quality of our leads remain pivotal factors.

Jason M. Trevisan: In the first quarter, we delivered double-digit growth in leads, driven by an increase in unique visitors and sessions. In the first quarter, we had 25% more unique visitors and 57% more minutes per visit than our next closest marketplace competitor, underscoring our audience leadership. The robustness of our traffic metrics is fueled by sustained growth in organic and owned channels, including direct traffic and app usage, which continue to grow year over year, reflecting our investments in brand and user experience.

Jason M. Trevisan: In the first quarter, we delivered double digit growth in leads driven by an increase in unique visitors and sessions.

Jason M. Trevisan: In the first quarter, we had 25% more unique visitors and 57% more minutes per visit than our next closest marketplace competitor underscoring our audience leadership.

Jason M. Trevisan: The robustness of our traffic metrics is fueled by sustained growth in organic and own channels, including direct traffic and app usage, which continued to grow year over year, reflecting our investments in brand and user experience.

Jason M. Trevisan: We continue to enhance the value of our various listing tiers, and as part of that effort, we continue to offer an increasing amount of dealer data insights, or DDI, to our dealers, supporting their day-to-day decision-making processes. DDI leverages our end-to-end retail and wholesale data ecosystem and offers dealer-specific recommendations and insights to our dealers, which we believe helps them sell cars faster and at higher margins and will entrench us more deeply in their daily work.

Jason M. Trevisan: We continue to enhance the value of our various listings tears and as part of that effort. We continue to offer an increasing amount of dealer data insights or DDI to our dealers supporting their day to day decision making process.

Jason M. Trevisan: DDI Leverages, our end to end retail and wholesale data ecosystem and offers dealer specific recommendations and insights to our dealers, which we believe helps them sell cars faster and at higher margins and will entrench us more deeply in their daily workflow.

Jason M. Trevisan: For example, in under two quarters, we have had several thousand dealers enroll in Next Best Deal to inform their retail pricing decisions. Approximately 30% of enrolled dealers receive their reports daily, with the remaining 70% of dealers receiving them weekly.

Jason M. Trevisan: For example in under two quarters, we have had several thousand dealers enroll and next best deal rating to inform their retail pricing decisions.

Jason M. Trevisan: <unk>, 30% of enrolled dealers receive their reports daily with the remaining 70% of dealers receiving the weekly.

Jason M. Trevisan: In the first quarter, our dealers made over $300,000 in price changes driven by NextBest deal ratings to sell cars faster and improve their dealership performance. Additionally, as we continue to prioritize predictive analytics to support dealers' day-to-day decision-making, we are currently piloting our Inventory Acquisition Recommendations Tool, which is designed to inform dealers about what vehicles they should acquire to meet the demand of consumers in their market. This tool leverages both dealer inventory data and CarGurus website activity to improve the accuracy of turn time predictions and will be accessible exclusively to subscribers of our premium listing peers starting in Q2.

Jason M. Trevisan: In the first quarter, our dealers made over 300000 price changes driven by next best deal rating to sell cars faster and improve their dealership performance.

Jason M. Trevisan: Additionally, as we continue to prioritize predictive analytics to support dealers day to day decision, making we are currently piloting our inventory acquisition recommendation tool, which is designed to inform dealers about what vehicles. They should acquire to meet the demands of consumers in their markets.

Jason M. Trevisan: This tool leverages, both dealer inventory data and cargo as website activity to improve the accuracy of turn time predictions and will be accessible exclusively to subscribers of our premium listing peers starting in Q2.

Jason M. Trevisan: In pursuit of long-term partnerships with dealers, we've refined our account management approach to increase communication frequency, foster thought partnership, and leverage local expertise to enhance customer value. These conversations allow us to convey the value and ROI we provide, and over time, will allow us to capture greater dealer wallet share and maintain a long runway for cars to grow. Our renewed emphasis on life cycle activities is already yielding remarkable results.

Jason M. Trevisan: In pursuit of long term partnerships with dealers, we refined our account management approach to increase communication frequency Foster thought partnership and leverage local expertise to enhance customer value.

Jason M. Trevisan: These conversations allow us to convey the value and ROI, we provide and over time will allow us to capture greater dealer wallet share and maintain a long runway for cars to grow.

Jason M. Trevisan: Our renewed emphasis on lifecycle activities is already yielding remarkable results.

Jason M. Trevisan: In the first quarter, the number of dealers increased, and 31% of new contracts sold were annual contracts, more than twice as many as the prior year period. Better Consumer Experience. Along with providing increasing value to dealers, we strive to create a better consumer experience as we focus on simplifying the complexity of car shopping, whether that is financing, buying, or selling. As consumers increasingly look to complete more of the vehicle buying and selling journey online, we are providing them with the convenience and confidence they seek on our platform and are investing in a more seamless integration of the full range of transaction capabilities.

Jason M. Trevisan: In the first quarter the number of dealers increased 31% of new contracts all were annual contracts more than twice as many as the prior year period.

Jason M. Trevisan: Better consumer experience.

Jason M. Trevisan: Well I went to providing increasing value to dealers, we strive to create a better consumer experience as we focus on simplifying the complexity of car shopping whether that is financing buying or selling.

Jason M. Trevisan: As consumers increasingly look to complete more of the vehicle buying an Italian journey online, we are providing them with a convenient and confident they seek on our platform and are investing in a more seamless integration of the full range of transaction capabilities.

Jason M. Trevisan: We remain focused on enhancing the consumer experience across multiple platforms and have been investing in our market-leading mobile app to make it an invaluable tool for consumers at any stage of their car buying or selling journey. Our app continues to be the number one automotive app in terms of downloads across iOS and Android and one of our fastest growing channels. Our app generated more than a quarter of total leads, and app users averaged more than three sessions per week with strong engagement and loyalty. Approximately 70% of app users ultimately registered with us, allowing us to offer increasingly customized user experiences with recommendations tailored to their preferences and needs.

Jason M. Trevisan: We remain focused on enhancing the consumer experience across multiple platforms and have been investing in our market, leading mobile app to make it an invaluable tool for consumers at any stage of their car buying or selling journey.

Jason M. Trevisan: Our app continues to be the number one automotive app in terms of downloads across iOS, and Android and one of our fastest growing channels.

Jason M. Trevisan: Our app generated more than a quarter of total leads and app users averaged more than three sessions per week with strong engagement and loyalty.

Jason M. Trevisan: Approximately 70% of App users ultimately registered with us, allowing us to offer increasingly customized user experiences with recommendations tailored to their preferences and needs.

Jason M. Trevisan: We continue to offer our consumers the largest selection of used and new cars. In the first quarter, we grew our available inventory by 30% year over year, and we ended the quarter with approximately 20% more available inventory than our next closest automotive competitor. We ended the quarter as the most visited automotive marketplace, with 57% more total visits than our next closest competitor, and 48% of our monthly unique visitors did not visit our leading competitor's website. Our net promoter score remained extremely high, with 90% of buyers stating that they would recommend CarGurus to a friend. Transaction Enablement

Jason M. Trevisan: We continue to offer our consumers the largest selection of used and new cars in the first quarter. We grew our available lifting by 30% year over year, and we ended the quarter with approximately 20% more available inventory than our next closest automotive competitor.

Jason M. Trevisan: We ended the quarter as the most visited automotive marketplace with 57% more total visits than our next closest competitor and 48% of our monthly unique visitors did not visit our leading competitors websites.

Jason M. Trevisan: Our net promoter score remains extremely high with 90% of buyers, stating that they would recommend cargo routes to a friend.

Jason M. Trevisan: Transaction enablement.

Jason M. Trevisan: In the first quarter, we continued to execute against our vision of building an end-to-end transaction-enabled platform. During the quarter, we continued to experience tremendous adoption of digital deals, growing to 6,102 dealers as of the end of the first quarter, nearly tripling from the prior year. In providing these digital solutions, we enable transactions for our dealer partners, vastly expanding their reach to cater to the almost 60% of buyers open to complete their purchase online, encompassing nearly half a million digital deal enabled shoppers. Digital deal leads accounted for approximately one-fourth of a dealer's email leads, and we have seen reservation deposits increase by 185% year-over-year.

Jason M. Trevisan: In the first quarter, we continued to execute against our vision of building an end to end transaction enabled platform.

Jason M. Trevisan: During the quarter, we continued to experience tremendous adoption of digital deal.

Jason M. Trevisan: <unk> 6102 dealers as of the end of the first quarter nearly tripling from the prior year.

Jason M. Trevisan: In providing these digital solutions, we enable transactions for our dealer partners vastly expanding their reach to cater to the almost 60% of buyers open to complete their purchase online encompassing nearly half a million digital deal enabled vehicles.

Jason M. Trevisan: Digital deal leads accounted for approximately one fourth of a dealer's email leads and we have seen reservation deposits increased by 185% year over year.

Jason M. Trevisan: This is a remarkable achievement, as a growing number of consumers trust us with their credit card data, and we are delivering highly qualified leads to our dealers with higher closed-end transaction volumes. A key component to creating our end-to-end transaction-enabled marketplace is the ability for consumers to not only shop for a vehicle on our site but also trade in their existing vehicle. In 2023, we began piloting Top Dealer Offers, a high-mar Our pilot has been well received by both consumers and dealers, and we recently expanded this offering to major metropolitan areas, prioritizing our commercially savvy dealerships with the desire to aggressively acquire inventory.

Jason M. Trevisan: This is a remarkable achievement as a growing number of consumers trust us with their credit card data and we are delivering highly qualified leads to our dealers with higher close rate.

Jason M. Trevisan: A key component to creating our end to end transaction enabled marketplace is the ability for consumers to not only shop for a vehicle on our site, but to also trade in their existing vehicle.

Jason M. Trevisan: In 2023, we began piloting top dealer offers a high margin subscription service that facilitates matching a prospective car seller with the most suitable dealership.

Jason M. Trevisan: Our pilot has been well received by both consumers and dealers and we recently expanded this offering to major metropolitan areas prioritizing our commercially savvy dealerships with the desire to aggressively acquire inventory.

Jason M. Trevisan: Dealers in our Early Access Program have found exceptional value in top dealer offer leads, as we consider a number of factors such as price, dealership reputation, distance, and available trade and inventory to ensure an optimal match. The only marketplace player that offers both white glove, sell from home experience with instant max cash offer and drop off at dealer location services via our top dealer offer subscription. In the quarter, we also continued to pilot CG Buy Online, further validating the product market fit of our digitally native retail platform.

Jason M. Trevisan: Dealers in our early access program have found exceptional value and top dealer offer leads as we consider a number of factors such as price dealership reputation.

Jason M. Trevisan: Distance and available trading inventory to ensure optimal matches.

Jason M. Trevisan: We're the only marketplace player that offers both white glove sell from home experience with instant Max cash offer and drop off at dealer location services via our top dealer offer subscription.

Jason M. Trevisan: In the quarter. We also continued to pilot C. G by online further validating the product market fit of our digitally native retail platform.

Jason M. Trevisan: By the end of March, approximately 1,000 vehicles were enabled on this platform, with coverage across 10 states. We use the CarOffer platform to provide consumers with an estimated trade-in value during the CGBuyOnline transaction journey. And these trade-ins can either be purchased by a CGBuy Online partner dealer or sold through the car offer platform. Rebuild and Integrate Digital Holes

Jason M. Trevisan: By the end of March approximately 1000 vehicles were enabled on this platform with coverage across 10 states.

Jason M. Trevisan: We use the car off our platform to provide consumers with an estimated trade in value during the C. G by online transaction journey.

Jason M. Trevisan: And these trade ins can either be purchased by a C. G by online partner dealer or sold through the car off our platform.

Jason M. Trevisan: Rebuild and integrate digital wholesale.

Jason M. Trevisan: I'll wrap up by sharing our progress on rebuilding and integrating digital holes. As I mentioned earlier, we're excited to bring Wholesale and Retail Insights together to assist our dealers in buying and selling inventory based on real-time retail pricing and market data. Since assuming control of CarOffer in December, we've been in the process of rebuilding our wholesale business and hiring new talent with the aim of creating a more efficient and scalable wholesale platform, and we are confident in the operational progress made so far. As we invigorate our go-to-market strategy to foster deeper, enduring partnerships with our dealer network, we have restructured CarOffer's sales organization and redefined its incentive structure.

Jason M. Trevisan: I'll wrap up by sharing our progress on rebuilding and integrating digital wholesale.

Jason M. Trevisan: As I mentioned earlier, we're excited to bring wholesale and retail insights together to assist our dealers and buying and selling inventory based on real time retail pricing and market data.

Jason M. Trevisan: Since assuming control of car offer in December we'd been in the process of rebuilding our wholesale business in hiring new talent with the aim of creating a more efficient and scalable wholesale platform and we are confident in the operational progress made so far.

Jason M. Trevisan: As we invigorate our go to market strategy to foster deeper enduring partnerships with our dealer network, we have restructured car off our sales organization and redefined this incentive structure.

Jason M. Trevisan: Our new sales model is based on a consultative approach, and we've begun selectively adding local consumer demand data and market day supply sourced from extensive data sets to our matrix recommendations. We are encouraged by early results, as we have seen new and returning dealers purchase five times as many vehicles per month, and retained dealers double their monthly purchases when leveraging our powerful insights. We are bolstering our product strategy and increasing our investment in engineering and product development.

Jason M. Trevisan: Our new sales model is based on a consultative approach and we've begun to selectively adding local consumer demand data and market days supply source from extensive datasets to our matrix recommendations.

Jason M. Trevisan: We are encouraged by early results as we have seen new and returning dealers purchased five times as many vehicles per month.

Jason M. Trevisan: And retains dealers doubled their monthly purchases when leveraging our powerful insights.

Jason M. Trevisan: We are bolstering our product strategy and increasing our investment in engineering and product development. Our teams are focused on improving matrix usability leveraging cargo is differentiated dataset to blend retail and wholesale data.

Jason M. Trevisan: Our teams are focused on improving matrix usability, leveraging CarGurus' differentiated data set to blend retail and wholesale data. We are incorporating consumer trends, competitive inventory analysis, and dealer turn times as we aim to optimize inventory acquisition strategies.

Jason M. Trevisan: We are incorporating consumer trends competitive inventory analysis and dealer turn times as we aim to optimize inventory acquisition strategy.

Jason M. Trevisan: Overall, we are proud of the progress and improvement the CarOper team continues to make as we believe these steps are crucial to return the business to profitable growth in the next few quarters. To summarize, I'm thrilled with our financial results and business performance. Every quarter, we've continued to add products, insights, and features that leverage our end-to-end capabilities and deliver increasingly more value to our customers. We're becoming increasingly embedded in the dealer's daily workflow, making our services stickier over a longer period of time.

Jason M. Trevisan: Overall, we are proud of the progress and improvement the car off her team continues to make as we believe these steps are crucial to returning the business to profitable growth in the next few quarters.

Jason M. Trevisan: To summarize I'm thrilled with our financial results and business performance.

Jason M. Trevisan: Every quarter, we have continued to add products insights and features that leverage our end to end capabilities and deliver increasingly more value to our customers.

Jason M. Trevisan: We're becoming increasingly embedded in the dealers daily workflow, making our services stickier over a longer period of time.

Jason M. Trevisan: We believe this will translate into continued earnings growth and a pipeline of products that we believe will deliver sustained expansion over time. With each step, we remain dedicated to sound financial management, operational excellence, and efficient capital deployment, which we believe are the foundation to continue to enhance profitability and create enduring value for shareholders. Now, I will turn it over to Elisa to discuss our financial results.

Jason M. Trevisan: We believe this will translate into continued earnings growth and a pipeline of products that we believe will deliver sustained expansion over time.

Elisa: With each step we remain dedicated to sound financial management operational excellence and efficient capital deployment, which we believe are the foundation to continue to enhance profitability and create enduring value for shareholders.

Elisa: Now, let me turn it over to Lisa to discuss our financial results.

Elisa Palazzo: Thank you, Jason, and thank you all for joining us today. My commentary will cover a detailed overview of our first quarter performance, followed by our guidance for the second quarter of 2024. First quarter consolidated revenue was $216 million, down 7% year-over-year, driven by lower wholesale and product volumes, partly offset by a healthy expansion of our monthly recurring revenue base. Marketplace revenue was $187 million for the first quarter, up 12% year-over-year, driven by continued strength in subscriptions, as Net New MRR grew 28% year-over-year, resulting in a $20 million increase in listings revenue.

Elisa: Thank you, Jason and thank you all for joining us today.

Elisa Palazzo: My commentary will cover a detailed overview of our first quarter performance.

Elisa Palazzo: Followed by our guidance for the second quarter of 'twenty 'twenty four.

Elisa Palazzo: First quarter consolidated revenue was $216 million.

Elisa Palazzo: Down 7% year over year, driven by lower wholesale and product volumes, partly offset by healthy expansion of our monthly recurring revenue base.

Elisa Palazzo: Marketplace revenue was 187 million for the first quarter up 12% year over year.

Elisa Palazzo: And by continued strength in subscription, there's nothing new and there are 28% year over year, resulting in its 20 million increase in listings Robyn.

Elisa Palazzo: Consolidated CAR CIDs grew approximately 14% year-over-year, driven primarily by the addition of new active dealers at current market rates and increasing adoption of add-on products such as top dealer offers. International CAR CIDs achieved the strongest year-over-year growth since the first quarter of 2022, reflecting positive momentum in renewal, both in the UK and in Canada.

Elisa Palazzo: Consolidated car said were approximately 14% year over year.

Elisa Palazzo: Then primarily by the addition of new active dealers at current market rates and increasing adoption of other products such as stock offers.

Elisa Palazzo: International Carson achieved the strongest year over year growth since the first quarter of 'twenty to 'twenty two.

Elisa Palazzo: So I think positive momentum and when you all both in the UK and in Canada.

Elisa Palazzo: Wholesale revenue was $16 million for the first quarter, down 36% year-over-year, driven by a decline in dealer-to-dealer transaction volume as we continue to focus on rebuilding our go-to-market engine and improving our product offering and customer service, which we believe will result in a higher degree of confidence and trust among our dealer customers. Lastly, product revenue was $12 million for the first quarter, down 69% year-over-year, reflecting As a growing number of consumers and dealers continue to opt-in for our highly profitable subscription-based consumer vehicle sourcing products, Shabbat shalom.

Elisa Palazzo: Wholesale revenue was $16 million for the first quarter down.

Elisa Palazzo: 36% year over a year.

Elisa Palazzo: And by a decline in dealer to dealer transaction volume as we continue to focus on rebuilding our go to market engine and improving our product offering and customer service, which.

Elisa Palazzo: Which we believe will result in a higher degree of confidence and trust.

Elisa Palazzo: Among our dealer customers.

Elisa Palazzo: Lastly product revenue was 12 million for the first quarter.

Elisa Palazzo: Down 69% year over year, reflecting infant Max cash offer and decline.

Elisa Palazzo: As a growing number of consumer and dealers continue to obtain from our highly profitable subscription base consumer vehicle sourcing product offers.

Elisa Palazzo: Despite a decline in Instant Max Cash Offer transactions, we've seen increasing demand for top dealer options, which drives high-margin subscription revenue to our marketplace. The combined impact of these two offerings is accretive at the consolidated gross profit level. I will now discuss our profitability and expenses on a non-GAAP basis. First quarter non-GAAP consolidated gross profit was $176 million, up 10% year-over-year. The Non-Gap Cost Margin was 82%, up from 69% in the prior year four.

Elisa Palazzo: Despite a decline in eastern Mexico chocolate transaction, you've seen increasing demand for stopping at off course, which drive high margin subscription revenue for our marketplace business.

Elisa Palazzo: The combined impact from these two offerings is it cleaning and the consolidated gross profit level.

Elisa Palazzo: I will now discuss our profitability and expenses on a non-GAAP basis.

Elisa Palazzo: First quarter non-GAAP consolidated gross profit was 176 now.

Elisa Palazzo: 10% year over year.

Elisa Palazzo: non-GAAP gross margin was 84%.

Elisa Palazzo: Up from 69% in the prior year quarter.

Elisa Palazzo: The meaningful year-over-year expansion in non-GAAP gross margin was primarily due to the shift in revenue mix toward our high-margin marketplace bids. Marketplace non-GAAP gross margin expanded 160 basis points year over year to 92%, given my favorable product name. Our digital wholesale no gap gross margin was down approximately 200 basis points year over year, and Scarab for lower transaction volume was not sufficient to cover a fixed cost base. Consolidated Adjusted Libida was 50.4 million, up 24% year over year.

Elisa Palazzo: The meaningful year over year expansion in non-GAAP gross margin was primarily due to the shift in revenue mix towards our high margin marketplace.

Elisa Palazzo: Marketplace non-GAAP gross margin expanded 160 basis points year over year to 92%.

Elisa Palazzo: Okay, then my favorable product mix.

Elisa Palazzo: Our digital wholesale non-GAAP gross margin was down approximately 200 basis points year over year.

Elisa Palazzo: I was cut off for a lower transaction volume was not sufficient to cover our fixed cost base.

Elisa Palazzo: Consolidated adjusted EBITDA was 54 million up 24% year over year.

Elisa Palazzo: Consolidated Adjusted EBITDA margin was 23%, approximately 580 basis points higher year over year. Marketplace Adjusted EBITDA grew 29% year over year to approximately $55 million. Digital wholesale adjusted EBITDA loss was $4.5 million in the first quarter.

Elisa Palazzo: Consolidated adjusted EBITDA margin was 23% approximately 580 basis points higher year over year.

Elisa Palazzo: Marketplace, adjusted EBITDA grew 29% year over year to approximately 55 million.

Elisa Palazzo: Did you sell wholesale adjusted EBITDA loss was $4 5 million in the first quarter.

Elisa Palazzo: First Quarter No Gap Operating Expenses increased by 6% year-over-year to $131 million, predominantly driven by higher sales and marketing spend, which was up 9% year over year, but modestly below our initial expectation. Non-GAAP diluted earnings per share attributable to common shareholders was 30% for the first quarter, up 23% year-over-year, reflecting the increase in consolidated adjusted dividend and lower share count. We ended the first quarter with $246 million in cash and cash equivalents.

Elisa Palazzo: First quarter non-GAAP operating expenses increased by 6% year over year to 171 million.

Elisa Palazzo: Predominantly driven by higher sales and marketing spend which was up 9% year over year.

Elisa Palazzo: But modestly below our initial expectations.

Elisa Palazzo: non-GAAP diluted earnings per share attributable to common shareholders was 30% for the first quarter.

Elisa Palazzo: A 23% year over year, reflecting the increase in consolidated adjusted EBITDA and lower share counts.

Elisa Palazzo: We ended the first quarter with 246 million in cash and cash equivalent.

Elisa Palazzo: A decrease of $66 million from the end of the fourth quarter. The lower cash balance was primarily driven by $81 million spent on share repurchases in the quarter and cash payments related to our new headquarters build-out.

Elisa Palazzo: And the clean.

Elisa Palazzo: 6 million.

Elisa Palazzo: The end of the fourth quarter.

Elisa Palazzo: The lower cash balance was primarily driven by 81 million spent on share repurchases in the quarter.

Elisa Palazzo: And cash payments related to our new headquarters build out.

Elisa Palazzo: I will now close my prepared remarks with our outlook for the second quarter. We expect our second quarter consolidated revenue to be in the range of $202 to $222 million. We expect the momentum in our marketplace business to continue in the second quarter, with quarterly revenue expected to be in the range of $189 to $194 million, up between 11% and 13% year over year. In the second quarter, we expect digital wholesale segment volumes to be down sequentially.

Speaker Change: I will now close my prepared remarks, with our outlook for the second quarter.

Elisa Palazzo: We expect our second quarter consolidated revenue to be in the range of 200 to 222 million.

Elisa Palazzo: We expect the momentum in our marketplace business to continue in the second quarter.

Elisa Palazzo: With quarterly revenue expected to be in the range of 189 to 194 million.

Elisa Palazzo: Between 11% and 13% year over year.

Elisa Palazzo: In the second quarter, we expect digital wholesale segment volumes to be down sequentially.

Elisa Palazzo: As we continue to rebuild our sales organization and optimize our unit economy, further compounded by expected strong market adoption for top killer apps. We expect our second quarter non-GAAP consolidated adjusted EBITDA to be in the range of $47 million to $55 million. Given our OPEX Health performance in the first quarter, we now expect no gas operating expenses as a percentage of revenue to remain flat in the second quarter and to decline progressively in the second half of the year. Finally, we expect non-GAAP earnings per share to be in the range of $0.29 to $0.34, and fully diluted outstanding shares to be approximately $105.5 million. With that, I would like to open the call for Q&A.

Elisa Palazzo: As we continue to rebuild our sales organization and optimize our unit economics.

Elisa Palazzo: Further compounded by extract expected strong market adoption for popular.

Elisa Palazzo: <unk>.

Elisa Palazzo: We expect our second quarter non-GAAP consolidated adjusted EBITDA to be in the range of 47 million to 55 million.

Elisa Palazzo: Given our Opex outperformance in the first quarter, we now expect non-GAAP operating expenses as a percentage of revenue to remain flat in the second quarter.

Elisa Palazzo: <unk> declined progressively in the second half of the year.

Elisa Palazzo: Yeah.

Elisa Palazzo: Finally, we expect non-GAAP earnings per share to be in the range of 29 cents.

Elisa Palazzo: 34 cents.

Elisa Palazzo: Fully diluted outstanding shares to be approximately $105 5 million.

Speaker Change: With that I would like to open the call for Q&A.

Elisa Palazzo: [laughter].

Speaker Change: Thank you ma'am ladies.

Operator: Ladies and gentlemen, we will now be conducting the question and answer session. If you would like our secretariat, please press star 1 on your telephone keypad. The confirmation tone will indicate that the line is in the question queue. You may press star 2 to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.

Operator: Excuse my answer Christian Please press star one on the telephone keypad.

Operator: A confirmation tone will indicate how many you've seen the question queue.

Operator: You May press star two to meet the question Kim.

Operator: Call participants, making use of speakers flippant.

Operator: May be necessary to pick up your handset before pressing this talkies.

Operator: To keep everyone the opportunity to participate please.

Operator: Please limit yourself to one question and one follow up.

Operator: If time allows you woke him to rejoin the question queue the questions.

Operator: To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. If time allows, you're welcome to rejoin the question queue for further questions. Our first question comes from Marvin Fong of BTIG. Please go ahead.

Operator: Okay. This question comes from Marvin Fong of P. T O G. Pease go ahead.

Marvin Milton Fong: Good evening. Thanks for taking my questions. Two questions, if I may. I was interested in your disclosure that net new bookings were up 28%. Correct me if I'm wrong, but, you know, I don't believe you've ever, like, given us a specific percentage number on this. I'm just curious, you know, how should we view this as a leading indicator of revenue growth? You know, what's the correlation and, you know, the phase-in of those bookings into revenue?

Marvin Milton Fong: Oh good evening, Thanks for taking my question.

Marvin Milton Fong: Two questions. If I may so oh was interested in your disclosure or the net new bookings was up 28% correct me if I'm wrong, but you know I don't believe you've ever like giving us out like a specific percentage number on this I'm. Just curious you know how should we view this as a as a leading indicator of <unk>.

Marvin Milton Fong: Revenue growth.

Marvin Milton Fong: What's sort of the correlation then.

Marvin Milton Fong: And you know the phase in of those bookings.

Marvin Milton Fong: The revenue and then my second question just on.

Marvin Milton Fong: And then my second question, just on Top Dealer, understand the excitement around that product. You know, how much of a driver of CARCID improvement was that in this last quarter? You know, was it material at all, considering, you know, how early stage the product is? Maybe you could just kind of help us understand the dynamics there. Thank you.

Marvin Milton Fong: Todd and dealer understand the excitement around that product how much of a driver of cars. The improvement was that in this last quarter.

Marvin Milton Fong: Was it material at all considering.

Marvin Milton Fong: You know how early stage. The product is maybe you can just kind of help us understand the dynamics there. Thanks.

Marvin Milton Fong: Yeah.

Elisa Palazzo: Thanks for your question. So in terms of marketplace revenue, I would point you out to the listings, which we're actually up 20 million this quarter versus 16 million last quarter year over year. And so we are seeing a continued acceleration of the top line growth at the market.

Speaker Change: Thanks for your question so in terms of marketplace revenue I recommend you.

Elisa Palazzo: Once you're out.

Elisa Palazzo: Things, which we are actually out 20 million this quarter versus six 8 million last quarter year over year and so we are seeing a continued acceleration.

Elisa Palazzo: This top line growth in the marketplace.

Jason M. Trevisan: And it's reflected in this Jason Hey Marvin, and it's reflected in the guidance to give you a sense of flow through.

Jason: And it's reflected in this is Jason Hey, Marvin and it's reflected in the guidance to give you a sense for flow through.

Jason M. Trevisan: Okay, so we should just kind of see it as that's revenue that's sort of recognized in the next quarter. Yeah, I mean, it's, I mean,

Speaker Change: Okay. So.

Jason M. Trevisan: We should just kind of see it as that's revenue that sort of recognized in the next quarter.

Jason M. Trevisan: Yeah, I mean, it's I mean, typically, when we bring on a new customer, that gets activated fairly quickly. I mean, sometimes they'll have an intro rate or something like that, but it can, it tends to materialize in pretty short order. Now, it does depend in terms of when it's booked in the quarter in terms of its impact in that quarter relative to the next quarter, but you know, their monthly and there may be an annual contract, as you've heard us say in the script, but they're building recognition.

Jason M. Trevisan: Yeah.

Jason M. Trevisan: Typically when we.

Jason M. Trevisan: Bring on a new customer.

Jason M. Trevisan: That gets activated fairly quickly I mean, sometimes they'll have an interest rate or something like that but again it tends to materialize.

Jason M. Trevisan: In pretty short order now it does depend.

Jason M. Trevisan: In terms of when it's booked in the quarter in terms of its impact in that corner quarter relative to the to the next quarter, but.

Jason M. Trevisan: Their monthly.

Jason M. Trevisan: And then maybe an annual contracts you've heard us say in the script, but there they are build and recognize.

Jason M. Trevisan: So the flow-through, you know, the best way for you to get a sense for that outside of those sort of intra-month comments and intro rate is through the guidance. In terms of top dealer offer impact on CARCID, you know, there are a number of drivers of CarSid, as you've heard us say, the primary ones are us bringing new customers on at more commensurate market rates. The other is, another big one, is upgrading dealers to higher package tiers, and a lot of that is driven by us continuing to add more and more tools, insights, features, even, you know, some products into the higher tiers that are packing more value into that, rather than charging a la carte. And then the third is, new products and so on.

Jason M. Trevisan: So the flow through it.

Jason M. Trevisan: Yes, the best way for you to get a sense for that outside of those sort of intra month and an internal rate is through guidance.

Jason M. Trevisan: In terms of top dealer offer impact on Carson you know there are.

Jason M. Trevisan: A number of drivers of car said as you've heard us say.

Jason M. Trevisan: The primary ones are bringing new customers on at more commensurate market rate. The other is another big one is upgrading dealers to higher package tears and a lot of that is driven by us continuing to add more and more.

Jason M. Trevisan: <unk> <unk> features even some some products into the higher tiers that are packing more value into that rather than charging Ala Carte and then the third is.

Jason M. Trevisan: New products and so in top dealer offer we would consider any product.

Marvin Milton Fong: Okay, understood. Thanks a lot. I appreciate it.

Speaker Change: Okay understood. Thanks, a lot appreciate it.

Marvin Milton Fong: Yes.

Marvin Milton Fong: Yeah.

Operator: The next question comes from Jed Kelly of Oppenheimer & Co. Please go ahead. Hey, great. Thanks for taking my question.

Jed Kelly: The next question comes from Jed Kelly of Oppenheimer & Co. Please go ahead. Hey, great. Thanks for taking my question.

Marvin Milton Fong: The next question comes from Chad the kidney of clubs and company. Please go ahead.

Jed Kelly: Hey, great. Thanks for taking my question I'm.

Jed Kelly: Just just looking at your the margins in the marketplace looks like they were they were pretty strong.

Jed Kelly: Kind of tell us like is that the right basis to look at and then can you kind of give us a sense on.

Jed Kelly: Granted you gave us to give guidance, but can you give us a sense on how you're sort of thinking about the marketing cadence are.

Jed Kelly: Going for the for the balance of the year. Thank you.

Jed Kelly: Yeah, so the marketplace business continues to experience strong growth on the top line and also to demonstrate operating leverage, and you should expect that also going forward.

Jed Kelly: Yeah. So the marketplace business continues to experience strong growth in the top line and also to demonstrate operating leverage and you should expect that's also going forward in terms of the marketing cadence. So I'll remind you what we said about opex as a percentage of revenue we expect it to be.

Elisa Palazzo: In terms of the marketing cadence, I'll remind you what we said about OPEX. As a percentage of revenue, we expect it to be flat in the second quarter and then to decline sequentially in the second half of the year. In terms of marketing spend cadence, what we anticipate is Q1 to be the largest quarter as we front-load our branding expense related to our new advertising campaign, Your Car, Your Way, and then Q4 to be the smallest quarter in terms of marketing spend as we typically dial down our media spend around the holiday season.

Elisa Palazzo: Flat in the second quarter, and then to decline sequentially in the second half of the year.

Elisa Palazzo: In terms of in terms of marketing and the cadence of what we anticipate these Q1 could be the largest quarter as we front loaded our branding expenses related to our new advertising campaign. Your car your way and then Q4 to be the smallest.

Elisa Palazzo: For her in terms of marketing spend as you typically dialed down our media spend in the holiday season.

Speaker Change: Thank you.

Elisa Palazzo: Yeah.

Operator: Our next question comes from Rajat Gupta of J.P. Morgan. Please go ahead.

Speaker Change: Our next question comes from Roche Act Gupta of Jpmorgan. Please go ahead.

Rajat Gupta: Great. Thanks for taking the time to answer the question. Maybe like just to clarify, you know, the second quarter commentary. [inaudible] How much of that sequential pickup, or maybe you want to talk about year-to-year, is coming from, you know, car seat improvement versus paying dealers? And maybe relatedly, you know, if you could touch upon the outlook for the international business a bit more over the next few quarters. Any initiatives in the pipeline that could potentially catalyze the segment further? I mean, clearly, a strong uptick here in like the CARCID, you know, and also like dealers down there, so we're curious, like, what's going on there and, you know, and we follow up.

Rajat Gupta: Oh, great well thanks for taking my question, maybe like just to clarify are you know the second quarter commentary.

Rajat Gupta: You know the complexion of the market news revenue can you give us a sense of.

Rajat Gupta: How much of that sequential pick up or maybe you are talking about year over year is coming from no cause it improvement versus dealers.

Rajat Gupta: And maybe Relatedly, if you could touch.

Rajat Gupta: Based upon the outlook for the international business a bit more over.

Rajat Gupta: Over the next few quarters.

Rajat Gupta: And initiative in the pipeline.

Rajat Gupta: That could potentially capitalize this segment further.

Rajat Gupta: Clearly strong uptick in like the Carson.

Rajat Gupta: And also like do they come back because if you were just like what's going on there and you know and.

Rajat Gupta: Any color commentary would be helpful. Thanks.

Rajat Gupta: Yes.

Elisa Palazzo: So in terms of CAR CID, it was up 14% year-over-year and was primarily driven by dealers migrating to higher subscription tiers, as well as new dealers joining at market rates, and the number of vehicles. Yeah, and the number will be in the second quarter. Sorry, the number of viewers is also absent in the fourth quarter, as we registered the highest number of new dealers joining our platform since the first quarter of 2021. Additionally, we had 30% of the contracts for new dealers being longer than one year, which suggests that over time, our retention will go up.

Rajat Gupta: So in terms of car said it was up 14% year over year and was primarily driven by our dealers.

Elisa Palazzo: Dealer migrating to higher subscription tiers, as well as new dealers joining as markedly.

Elisa Palazzo: Okay.

Elisa Palazzo: The number of meters.

Elisa Palazzo: Yeah.

Elisa Palazzo: And then I'm gonna be second quarter.

Elisa Palazzo: Alright, and the number of people who is also.

Elisa Palazzo:

Elisa Palazzo: From the fourth quarter as we registered the highest number of new dealers joining our platform since the first quarter of 2021.

Elisa Palazzo: And also we had 30% of our carton contracts for new dealers being longer than one year, which suggests that overtime our retention will go up.

Rajat Gupta: And the second quarter guidance on Marketplace, does that mean continued improvement on both the cost and the dealer count, or is one dominating the other? um, you know, as you think about, you know, the remainder of the year?

Elisa Palazzo: Our second quarter guidance, you know Oh on marketplace does that you know continued improvement on both the Cogs and the dealer Cowboys like one dominating the other.

Rajat Gupta: You know as you think about you know the remainder of the year.

Elisa Palazzo: Yeah, we don't guide on these two specific drivers, but what I can tell you is that our guidance implies adding more revenue year over year, both at the low end and the high end, to add more revenue than we did in the last two quarters. So we are seeing continued momentum in the marketplace.

Speaker Change: Yeah, well, we don't guide on these two specific drivers. However, what I can tell you is that our guidance implies two and you Gotta Maria more revenue.

Elisa Palazzo: Low end and the high end to add more revenue that can be seen in the last two quarters. So we are seeing continued momentum in the marketplace.

Elisa Palazzo: Okay.

Rajat Gupta: Got it. And just on the international side, you know, any thoughts there, you know, on, you know, any new initiatives during the pipeline to catalyze that segment further?

Speaker Change: Got it and just on the international side, you know any ideas or thoughts there no. There are no any new.

Rajat Gupta: Initiatives are during the pipeline to capitalize that segment Butler.

Samuel Zales: I'm happy to take it, Rajat. Thank you for noticing. Our business is booming in the marketplace across the globe, so I'm really proud to say that it's not just one market that's doing it. You know that we got to profitability in those markets, and we're really excited about where they're going. We're fueling fast growth there. I think we described 24% growth in the international markets.

Speaker Change: I'm happy to take it rajat. Thank you for noticing I are our business is cranking in the marketplace across the globe. So I'm really proud to say that it's not just one market. That's doing it you know that we got to profitability in those markets and we're really excited about where they're going.

Samuel Zales: So we're really excited about where this is going. It opens up huge opportunities for us. We're catching the market leaders. It leaves us opportunities to launch some new products that we've launched here in the U.S., and that means more CAR-SID growth and more ability to add dealers, as we have in the international markets. But it also opens up partnerships to look at other ways to continue to add new product capability beyond what we build organically.

Samuel Zales: We're fueling fast growth there I think we described the 24% growth in the international markets. So we're really excited about where those are going to open up opens up huge opportunities for us we're catching the market leaders. It leaves us opportunities to launch some new products that we've launched here in the U S and that means more car said growth in Ma.

Samuel Zales: Our ability to add dealers as we have in the international markets, but it also opens up partnerships to look at other ways to continue to add on new product capability beyond what we build organically and will probably follow the path that we're doing here with you've seen. The addition of new products that have helped consumers moved further down the.

Samuel Zales: And we'll probably follow the path we're doing here. You've seen the addition of new products that have helped consumers move further down the transaction cycle. And so both of those give us a huge opportunity to continue catching the big market leaders there. And I think we're really astounded by the growth and profitability in those businesses and are excited to keep that going.

Samuel Zales: <unk> cycle and so both of those give us huge opportunity to continue catching the big market leaders, there and I think we're really astounded by the growth and profitability in those businesses and are excited to keep that going.

Rajat Gupta: Great. Thanks for the call. I'll get back to you.

Speaker Change: Oh, great. Thanks, Thanks for the color I'll get back in queue.

Rajat Gupta: Yeah.

Operator: The next question comes from John Colantuoni of Jeffreys; please go ahead.

Rajat Gupta: The next question comes from Chung, calling Tony of Jefferies. Please go ahead.

Operator: Yeah.

John Robert Colantuoni: Hi everyone. Thanks for taking my question. I wanted to zoom in on CarOffer. A few years ago, there was a flurry of investments in product and marketing to expand awareness and build tech capabilities behind the offering. After having already gone through that initial investment phase, are there any learnings that could help make you more efficient next time around once you're ready to relaunch the wholesale offering, so there might be a more tempered increase in expenses?

John Robert Colantuoni: Oh, hi, everyone. Thanks for taking my question I wanted to zoom in on car off for a few years ago. There was a ramp up investments in product and marketing to expand awareness and build tech capabilities behind the offering you know after having already gone through that initial investment phase are there any.

John Robert Colantuoni: The learnings that could help making more efficient next time around once you're ready to relaunch the wholesale offering so there might be a more tempered increase in expenses. Thanks.

Samuel Zales: Hey, John, thanks for the question. Sam Zales here.

John Robert Colantuoni: Hey, John Thanks for the question Sam Zales here.

Samuel Zales: I don't know that I'd characterize the investment a couple years ago as a major investment in product and marketing. Quite honestly, as we look at this business, we couldn't be more excited about the combination of wholesale and retail coming together. We're still the only instant trade platform in the market, and we know that putting wholesale and retail together, as you heard in the prepared remarks, we are now seeing some really interesting growth in transactions from those dealers who are using the CarGurus information on consumer demand tied to their inventory strategies and making more investments in that way. So we were still building and running a startup there that was running and incented on daily profits.

Samuel Zales: I I don't know that I'd characterize the investment a couple of years ago as major investment in product and marketing quite honestly is we're looking at this business and we couldn't be more excited about the combination of wholesale and retail our retail coming together, we're still the only instance trade AR platform in the market.

Samuel Zales: And we know that putting wholesale and retail together as you heard in the prepared remarks that we are now seeing some really interesting growth and transactions from those dealers who are using the car gurus information on consumer demand tied to their inventory strategies and making more investments in that.

Samuel Zales: Way, So we were still building and running a startup there and that was running and incentive on daily profits that business focus was how do we get the most out of each day to maximize our incentive and the acquisition of the business. We are now running the business like we run the cargo cruise business our focus in this <unk>.

Samuel Zales: That business focus was how do we get the most out of each day to maximize our incentive in the acquisition of the business. We are now running the business like we run the CarGurus business. Our focus in this investment is on the product first. Let's make sure that the product capabilities and the analyzers that we've built into Matrix are going to optimize customer results. And quite honestly, we're rebuilding customer demand with a product capability that we didn't have in the days that we didn't fully acquire the business.

Samuel Zales: Investment is product first let's make sure that the product capabilities and the analyzers that we built into the matrix are going to optimize customer results and quite honestly, we're rebuilding customer demand from a product capability that we didn't that we didn't have in the days that we didn't fully.

Samuel Zales: So the focus on product now, the focus on tooling our operations to make sure those are optimized so we make money at a low volume as a business when we get to that point, and now recrafting our go-to-market team and our sales and service teams to focus on consulting and putting this data analytics and the AI we're creating to look at CarGurus data on consumer demand matched to inventory strategies and inventory profits for our dealers is showing its So I wouldn't say that...

Samuel Zales: Buyer of the business. So the focus on product now the focus on tooling our operations to make sure. Those are optimized so we make money at a low volume as a business when we get to that point and now re crafting our go to market team and our sales and service teams to focus on consulting and putting this data analytics.

Samuel Zales: The AI, we're creating to look at car gurus data on consumer demand match to inventory strategies and inventory profits for our dealers is showing its first sign of of growth in this two to five times increase in transaction activity. So I wouldn't say that.

Samuel Zales: Unlike anytime in the past, there was real investment for the long term on product and marketing at CarOffer today. We're making those investments now so we can retool and build back the business demand that we've had from our customers in the past and go go for growth as we go.

Samuel Zales: The anytime in the past there was real investment for the long term on product and marketing at car offered today, we're making those investments now so we can retool and build back the business demand that we've had from our customers in the past and Gulf go for growth as we go forward.

Samuel Zales: Yeah.

Speaker Change: Thank you.

Operator: The next question comes from Naved Khan of P. Raleigh. Please go ahead.

Samuel Zales: The next question comes from David Kang of B Riley. Please go ahead.

Operator: Yeah.

Naved Ahmad Khan: Yeah, thanks a lot. So, it's great to see the traction you're seeing with the dealer count and new dealer growth. Maybe can you just share with us the monthly trend, if you saw strength kind of building throughout the quarter, how does the effort look? And the other kind of related question is on the, you know, you shared the percentage of annual contracts. What, in terms of pricing, is there an annual kind of, of the same, monthly times 12? Or is it that the dealers get a discount? How should we think about that? Thank you. Sure, I can take a try.

Naved Ahmad Khan: Yeah. Thanks, Mark So it's great to see the traction you're seeing with the dealer count and new unit growth.

Speaker Change: Maybe can you just share with us the monthly trends you saw and kind of building throughout the quarter.

Speaker Change: How do they look like in.

Speaker Change: And the other kind of related question is on the you know you send that person would be the annual contract.

Naved Ahmad Khan: What.

Speaker Change: Terms of pricing.

Speaker Change: Does it mean and what is kind of.

Speaker Change: Look the same.

Speaker Change: The monthly thanks trial or is it that the dealers get a discount how should we think about that.

Naved Ahmad Khan:

Speaker Change: Thank you.

Jason M. Trevisan: Sure, I can take a crack at that. Thanks for the question. So I mean, monthly trends building towards the quarter we don't talk about the current quarter. So, you know, in our scripted comments, you can see and hear a number of trends that we talked about that resulted in the first quarter.

Speaker Change: Sure I can take I can tell you attractive Ed thanks for the question.

Jason M. Trevisan: So I mean monthly trends building towards the quarter, we don't talk about.

Jason M. Trevisan: Current quarter so you.

Jason M. Trevisan: And in our scripted comments you can see and hear a number of trends that we talked about that resulted in the first quarter.

Jason M. Trevisan: In terms of contracts, I mean, there's a number of, if I understood the extent of that question, so correct me if I'm wrong or clarify. The annual contract, I think, is helpful in a number of ways. I think it sets a different expectation for customers and their relationship with us. I think it's actually a function of us building closer, better, and more consultative relationships with our customers. I don't think they would be willing to sign an annual contract, frankly, if they didn't think that we were going to be a longer-term partners.

Jason M. Trevisan: In terms of contract I mean, theres a number of if I understood. The extent of that question. So correct me, if I'm wrong or clarify.

Jason M. Trevisan: Right.

Jason M. Trevisan: The and annual contract I think is helpful. In a number of ways I think it sets up a different expectation for customers.

Jason M. Trevisan: Their relationship with us.

Jason M. Trevisan: It's actually a function of us building closer and better and more consultative relationships with our customers I don't think.

Jason M. Trevisan: In the past, we weren't necessarily always earning the right to be a long-term partner to them. But now, as we're delivering more insights and more tools and, as Sam just referenced, ways in which we're helping them source smarter and price smarter, they realize that we're adding a lot more value beyond just leads. We haven't ever commented on pricing implications for annual contracts versus monthly, but I think you can think of them as very similar, although a lot of software companies for longer-term contracts may initiate a slight discount, not anything big. I mean, they think of our pricing in a very similar way, whether it's signing a monthly or an annual contract.

Jason M. Trevisan: They would be willing to sign an annual contract frankly, if they didn't think that we were gonna be a longer term partner and.

Jason M. Trevisan: And in the past, we werent necessarily always earning the right to be a long term partner to them, but now as we're delivering more insight and more tools and as Sam just referenced you know ways in which we are helping them source smarter and price smarter.

Jason M. Trevisan: They realize that we're adding a lot more value beyond just leaves them.

Jason M. Trevisan: We haven't ever commented on pricing implications for annual contracts versus monthly, but I think you can think of them as is.

Jason M. Trevisan: Very very similar although a lot of software companies for longer term contracts may.

Jason M. Trevisan: Initiate a slight discount, but it's it's not anything big I mean, they they think of our pricing in a very similar way, whether it's signing them up there.

Speaker Change: Okay. Thank you.

Jason M. Trevisan: The next question comes from Tom White of D.A. Davidson. Please go ahead.

Jason M. Trevisan: The next question comes from Tom White of D. A Davidson. Please go ahead.

Operator: Great. Thanks for taking my question. Jason, your comments about the DDIs and also kind of the more consultative approach you're taking with car offer. I don't know. It seems to me like you guys are – maybe you have been talking about this, but it seems like you're increasing your focus on leveraging all of your data in more creative ways and kind of circling it back to your customers. Can you just talk a little bit about the high-level kind of monetization opportunity of that strategy?

Thomas Cauthorn White: Oh, great. Thanks for taking my question just in your comments about the D. D eyes, and also kind of the the more consultative approach, you're taking with car offer I don't know it seems to me like you guys are maybe you had been talking about this but it seems like youre, increasing your focus on leveraging all of your data and more.

Speaker Change: Right of ways and kind of circling back to your customers, but could you just talk a little bit about the high level kind of monetization opportunity of that strategy and then I've got a follow up.

Thomas Cauthorn White: Sure. Hey, Tom.

Operator: Sure.

Operator: So.

Jason: Youre right that we were talking about it more because we are delivering more I would think of it on maybe a couple of different dimensions. The first dimension is.

Jason M. Trevisan: So you're right that we're talking about it more because we are delivering more. I would think of it in maybe a couple different dimensions. The first dimension is how we're using our insights to just help them sell cars better, smarter, faster with higher margins in our listings business. And so you've heard us talk about over time as we have, you know, had a pretty steady introduction of these.

Jason: How we're using our insights to just help them sell cars better smarter faster with higher margin in our listings business and so.

Jason M. Trevisan: You've heard us talk about over time as we have.

Jason M. Trevisan: We're giving our dealer customers information on their market share of leads in the market relative to their market share of units of inventory. We're giving them information on how quickly they are dropping prices and the magnitude of their price drops. We're giving them information on what demand trends in the market relative to supply data. More recently, we've talked about the next best deal rating, which helps them reduce how much they drop the price of a car to maintain margin but generate a lot more interest in the car by increasing the rating of that car and getting more activity on our site.

Jason M. Trevisan: It had a pretty steady introduction of these we're giving our dealer customers information on their market share of leads in the market relative to their market share of units of inventory, we're giving them information on how quickly they are dropping prices.

Jason M. Trevisan: The magnitude of their price drops, we're giving them information on what are the demand trends in the market relative to supply data.

Jason M. Trevisan: More recently, we've talked about next best deal rating, which helps them.

Jason M. Trevisan: Reduced how much they dropped the price of a car to maintain margin, but generate a lot more interest on the car by increasing their rating of that car and getting more activity on our site you heard us talk about in inventory acquisition recommendation tool.

Jason M. Trevisan: You heard us talk about an inventory acquisition recommendation tool that uses, again, supply and demand data to inform cars they should be stocking on their lots. And so we are really starting to take our, and the next level is with car offers, and I'll get to that in a second.

Jason M. Trevisan: That uses again supply and demand data.

Jason M. Trevisan: To inform part as they should be stocking on their lots and so as we were really starting to take off in the next level is with car offer and I'll get to that in a second we're really starting to.

Jason M. Trevisan: We're really starting to reorient our thinking as we've been building a lot of these capabilities, products, insights, and taking more of a customer lens through our dealers to say, we can tie all of the steps that you need to do as a dealer together through our data. So you need to source inventory and predict how that inventory is going to do. You need to price it.

Jason M. Trevisan: Reorient, our thinking as we've been building a lot of these capabilities product insights and taking more of a customer lens through our through our dealers to say, we can tie all of the steps that you need to do with the dealer together through our data. So you need to source inventory and predict how that inventory is gonna do you need to.

Jason M. Trevisan: You need to market it in a number of different ways. You need to merchandise it in a number of different ways. And you need to ultimately sell it.

Jason M. Trevisan: Price it you need to market it in a number of different ways you need to merchandise at a number of different ways you'd ultimately sell it you need to retain your customer and so when we take the dealer lens and realize all the data we have we can help and most of those steps. When you then layer in car offer that gives us access to.

Jason M. Trevisan: You need to retain your customer. And so when we take the dealer lens and realize all the data we have, we can help in most of those steps. When you then layer in the car offer, that gives us access to the whole sort of backend, if you will, of that value chain into the wholesale market to do things that really just honestly help them predict more. It's what kind of car should I acquire based on how I predict that car will sell in four weeks when I have it ready for sale. And that becomes a really virtuous cycle.

Jason M. Trevisan: The whole sort of back end, if you will of that value chain into the wholesale market to do things that are really just honestly help them predict more what kind of car should I acquire based on how I predict that horrible salaries of four weeks when I have it ready for sale and.

Jason M. Trevisan: And that becomes a really virtuous cycle. So we think our data is more end to end than others in the market.

Jason M. Trevisan: So we think our data is more end-to-end than others in the market. We have the chops and are investing in the resources to turn that data into insights. The way we're bringing that to market today, We have done some à la carte pricing in the past. One example is Lead AI, which is another great example.

Jason M. Trevisan: We have the chops and are investing their resources to turn that data into insights the way, we're bringing that to market today.

Jason M. Trevisan: Actually, we're giving dealers more information on the shoppers that are coming to their dealerships to have a better ability to close those sales. But really, right now, we've found that in order to gain adoption of them, it's better for us to bundle them into packages and tiers of listing products. And when we do that, we get a couple benefits.

Jason M. Trevisan: We have done.

Jason M. Trevisan: Ala Carte pricing in the past. One example, as lead AI, where that's another Great example, actually we're giving dealers more information on the shoppers that are coming to their dealerships they have a better ability to close those sales.

Jason M. Trevisan: And but really right now we've found that.

Jason M. Trevisan: In order to gain adoption of them, it's better for us to bundle them into packages in tiers of listings products.

Jason M. Trevisan: One, they're upselling into higher tiers because some of these we only offer to higher tiers. And two, they are stickier customers, and we're seeing better retention because they're more reliant on our data. And the next best deal rating example is a great one. In a very short period of time, we have many thousands of dealers using it, and 30% of them are getting that information daily. Their general managers are using it daily.

Jason M. Trevisan: And when we do that we get a couple of benefits one they're upselling into higher tiers, because some of these we only offered to higher tiers.

Jason M. Trevisan: And two they are stickier customers and we're seeing better retention because they are more reliant.

Jason M. Trevisan: On our data and the next best deal rating examples of Great. One are you now in a very short period of time, we have many thousands of dealers using at 30% of them are getting that information.

Jason M. Trevisan: And that's just a whole different ballgame from where we were in the past, when they may or may not have opened our dashboard. So yes, data is a theme that is growing in volume, and yes, it's the thread that's holding it all together.

Jason M. Trevisan: Like the general managers are using it daily and.

Jason M. Trevisan: It's just a whole different ballgame from where we were in the past when they may or may not open our dashboard. So yes data is a theme that is growing in volume and yes. It's a trade that's holding together then Ted.

Thomas Cauthorn White: That's great. That's super interesting. Thank you. Maybe just a quick follow-up. You know, CARCID growth obviously continues to be super strong, and it looks like the guidance. By my math, it looks like another double-digit growth quarter for CARSA. How should we think about the sustainability of this level of growth?

Speaker Change: That's great that's Super interesting. Thank you maybe just a quick follow up.

Thomas Cauthorn White: Carson growth, obviously continues to be Super strong and it looks like the guidance by my math kind of it looks like another like double digit kind of growth quarter for Carson.

Thomas Cauthorn White: Should we think about the sustainability of this level of Carson growth kind of over the next several quarters.

Jason M. Trevisan: I'll keep going. I'm on a roll.

Speaker Change: I I I'll keep going I'm on a roll.

Jason M. Trevisan: It is quite sustainable I mean, we've talked about many levers that drive it.

Jason M. Trevisan: It is quite sustainable. I mean, we've talked about many levers that drive it. Most of those levers exist, you know, for a long time. And the example I just gave is a perfect reflection of that, that as we add more value to dealers, even if we do it through bundling a listing product, it's actually adding a ton of value to their dealership. And so, you know, I think we think their mindset is shifting from I'm not, you know, just paying for leads; I'm paying for the ability to elevate the sophistication of my dealership.

Jason M. Trevisan: Most of those levers exists.

Jason M. Trevisan: You know for a long time and the example, I just gave us.

Jason M. Trevisan: As a as a perfect reflection of that that as we add more value to dealers.

Jason M. Trevisan: Even if we do it through bundling of our listings product, it's actually adding it on a value to their dealership.

Jason M. Trevisan: And so you know I think we think their mindset is shifting from I'm not you know just hang or leave I'm paying for.

Jason M. Trevisan: And it just so happens that it's coming from CarGurus, who is also providing me leads. So package upsells, I think, you know, have continued upside if we continue to execute on introducing these value-added features and insights, bringing dealers to market rates as we bring on new dealers. We have a lot of dealers that have been on for a long time and are still well below market. We think our competitors are raising unit prices as well, and so the unit pricing ceiling continues to rise, and we still think we're getting very strong ROI because we think, on balance, we're still less expensive.

Jason M. Trevisan: The ability to elevate the sophistication of my dealership and it just so happens it is coming from Carter Roos, who is also providing me Lee so.

Jason M. Trevisan: Package ourselves I think.

Jason M. Trevisan: <unk> has continued upside if we continue to execute on introducing these value added features and.

Jason M. Trevisan: And insights.

Jason M. Trevisan: Bringing dealers to market rate.

Jason M. Trevisan: As we bring on new dealers.

Jason M. Trevisan: And we have a lot of dealers that have been on for a long time and there's still a level of market. We think our competitors are raising unit prices as well and so the the unit pricing ceiling continues to rise and we still think were worse very strong ROI because we think on balance we're we're still less expensive.

Jason M. Trevisan: And then other products, you know; top dealer offers a good example of that. We have a lot of new ideas. And you heard me introduce Ish very briefly in the talking script, rather. And he's bringing just a really terrific lens through the dealer, customer-centric lens. And so, between what he's bringing and the more unified activity with the car offer, we think there are new opportunities for new products that didn't. Got it. Thanks for watching.

Jason M. Trevisan: And then other products you know top dealer offers is a good example of that.

Jason M. Trevisan: A lot of new ideas and you heard me introduce ish very briefly in the and they're talking to.

Jason M. Trevisan: Script, rather and and he's bringing just a really terrific land through the dealer.

Jason M. Trevisan: Customer centric lens and so.

Jason M. Trevisan: Between his.

Jason M. Trevisan: What he is bringing and the more unified activity with car offer we think there's new opportunities for new products continuing.

Douglas Middleton Arthur: Got it. Thanks so much, Jason. Our next question comes from Doug Arthur of Hopeless Research. Please go ahead. Yeah, thanks. Elisa, on...

Speaker Change: Got it thanks, so much Jason.

Douglas Middleton Arthur: Our next question comes from Doug Arthur of Hopeless Research. Please go ahead. Yeah, thanks. Elisa, on the operating expenses, did it seem GAAP or not?

Douglas Middleton Arthur: Our next question comes from Doug Okay.

Douglas Middleton Arthur: Research piece because they need.

Douglas Middleton Arthur: Yeah. Thanks, Lisa on the on the operating expenses it seemed GAAP or non-GAAP.

Douglas Middleton Arthur: Sales and marketing was elevated product check.

Douglas Middleton Arthur: Product development was down.

Douglas Middleton Arthur: G&A was elevated can you.

Douglas Middleton Arthur: Is there anything to read into a trend there or is that more just on the sales and marketing side opportunistic.

Elisa Palazzo: Yeah, thanks for the question. It's primarily marketing that was elevated in the first quarter, as we said, because we increased our branding spend related to our advertising campaign. But as we said, we should, you know, decline into the fourth quarter and throughout the year, and our OPEX in the second half of the year as a percentage of revenue should also continue to decline.

Douglas Middleton Arthur: Yeah. Thanks for the question, it's primarily the marketing that was elevated.

Elisa Palazzo: I had a meeting in the first quarter as we said because we don't need our branding spend related to get our advertising campaign, but as we said you should.

Elisa Palazzo: Decline into the fourth quarter and throughout the year.

Elisa Palazzo: And our Opex in the second half of the year as a percentage of revenue should also continue.

Elisa Palazzo: Yeah.

Speaker Change: Okay, all right Yeah, I know I know you mentioned that okay. Great. Thank you that's fine.

Elisa Palazzo: Yeah.

Operator: The next question comes from Ron Josey of Citigroup. Please go ahead.

Elisa Palazzo: The next question comes from Ron Josey of Citigroup. Please go ahead.

James Michael: Hi, this is James Michael on behalf of Ron. Can you help us impact the 30% inventory lift you saw in the quarter? What trends are you seeing in the new and used autos macro, and what controllables are you executing against here to expand inventory? And then any more color on the potential you see from the new inventory acquisition recommendations tool would be helpful as well. And if you think this is a driver of parts,

Operator: Hi, This is James Michael on for Rob can.

James Michael: Can you help us impact with 30% of inventory look you saw in the quarter. What trends are you seeing in the new and used auto as macro and what's controllable are you executing against you and expand inventory.

James Michael: And then any more color on the potential you see inventory acquisition recommendations tool would be helpful. As well and if you think this is a driver in parts of it.

Jason M. Trevisan: Sure, I can have you repeat the second part of that because that was fast. I mean, on the inventory expansion, there are two functions to that, paying dealers and how we treat our premium dealers and bring them on board, and there was not a lot of change in terms of our treatment of premium dealers. We grew paying dealers modestly, so that will help it a little bit, but at the stage that we're at now, it's largely just market macro increases and decreases, and what you've seen recently is an increase in new cars for the most part. I think used cars will continue to tick up a little bit. They're still not a pre-pandemic threat.

Speaker Change: Sure I can but I'm gonna have to.

Jason M. Trevisan: Have you repeat the second part of that because that was fast I mean on the inventory expansion.

Jason M. Trevisan: It's largely there's there's two functions to that and dealers and how we treat our freemium dealers and bringing them on at.

Jason M. Trevisan: And and there was not a lot of change in terms of our treatment of freemium dealers.

Jason M. Trevisan: We grew paying dealers modestly so that will help it a little bit.

Jason M. Trevisan: But at the stage that we're at now it's largely just market macro increases and decreases and what you've seen recently is an increase in new cars for the most part I think you used cars.

Jason M. Trevisan: The new is still nowhere near pre-pandemic, but the biggest changes most recently were new car inventory. The Inventory Acquisition Tool is, you asked, I think, how that affects retention. First of all, it's our most recent one, so it's in pilot, and it still has small numbers of dealers. You know, we think all of these tools are going to have a positive impact on retention. I mean, one thing to keep in mind is that there are different segments of dealers.

Jason M. Trevisan: To tick up a little bit they are still not a pre pandemic new is still nowhere near pre pandemic.

Jason M. Trevisan: The biggest changes most recently with new.

Jason M. Trevisan: The new car inventory.

Jason M. Trevisan: Inventory acquisition tool is you asked I think how that affects retention.

Jason M. Trevisan: It is first of all it's our most recent ones within pilot and it's.

Jason M. Trevisan: It's still a small numbers of dealers.

Jason M. Trevisan: We think all of these tools.

Jason M. Trevisan: We are going to have a positive impact on retention I mean, one thing to keep in mind is that.

Jason M. Trevisan: And if you think about it really simplistically, there are franchises, large and small, independent, large and small, and then there are varying levels of sophistication and capability within each of those segments. And so, to some dealers, an inventory acquisition recommendation tool is going to be something that, perhaps, like the next best deal rating they use every day; others may have other tools or may not be as reliant on it. But we think each of these will, or the segments that they apply the most, will help with retention.

Jason M. Trevisan: Different segments of dealers and if you think about it really simplistically theres franchise, large and small independent large and small.

Jason M. Trevisan: And then there's varying levels of sophistication and capability within each of those segments and.

Jason M. Trevisan: So to some dealers inventory acquisition recommendation tool is going to be something that perhaps like the excess steel rating. They use every day others may have other tools or may not be as reliant on it.

Jason M. Trevisan: But we think each of these will for the segments that they are by the most will help with retention to be honest, that's hard to isolate that as a test and measure how much of an improvement. It will have any one tool will have on retention, but our philosophy and I think what you will see from US is we're going to continue to introduce a lot of these <unk>.

Jason M. Trevisan: To be honest, it's hard to isolate that as a test and measure how much of an improvement it will have on retention. But our philosophy, and I think what you will see from us, is we're going to continue to introduce a lot of these insights. You know, we're kind of just getting started, especially as we bring car offers together with us that we think, in aggregate, will have a very positive impact.

Jason M. Trevisan: Right.

Jason M. Trevisan: You know, we're kind of just getting started especially as we bring our offer together with us that we think in aggregate will have a very positive impact.

Speaker Change: I did not catch the last part of your question.

Jason M. Trevisan: Yeah.

James Michael: Yeah, I think you addressed the question on the Inventory Accommodation Toolset. That's helpful. My second question is about the app itself.

Speaker Change: Yeah, I think you addressed the other question on easy leasing.

Speaker Change: That's helpful. My second question is just around the App.

James Michael: Obviously, some success in kind of downloads engagement to 25% lead contribution can you talk about the investments you're making in either marketing or the core app infrastructure to drive some of those games.

Jason M. Trevisan: A lot of that's in products and tech. It's not, you know, there's a little bit more marketing that is geared toward apps. But a lot of it is that we're improving it from a product perspective. You know, in hindsight, we were probably a little bit behind the curve. From an industry perspective, in terms of investing in our app, because we were so successful in mobile web, and I think now, as we start to invest more resources in the product, we're seeing really fantastic results.

James Michael: A lot of that has been product and tech.

Jason M. Trevisan: You know, there's a little bit more marketing that is it is geared toward app, but a lot of it is that we're improving it from a product perspective.

Jason M. Trevisan: And in hindsight, we were.

Jason M. Trevisan: We're probably a little bit behind the curve.

Jason M. Trevisan: From an industry perspective in terms of investing in our App because we we're being so successful in mobile web and I think now as we start to.

Jason M. Trevisan: Invest more resources in the product we're seeing.

Jason M. Trevisan: Really a fantastic result in fact, we started to see improvement in results before we started putting resources on it as we put more resources on it.

Jason M. Trevisan: In fact, we started to see improvement in results before we started putting resources on it. As we put more resources on it, and when I say on it, I mean things like engagement and features that are unique to an app usage environment that's distinct from a web usage environment, or mobile web environment, we're just seeing tremendous uptake.

Jason M. Trevisan: And what I'd say on it I mean things like engagement and.

Jason M. Trevisan: Features that are unique to in app usage environment that distinct from a web usage and via mobile web environment.

Jason M. Trevisan: We're just seeing tremendous uptake we're seeing it.

Jason M. Trevisan: And engagement and growth in the App.

Jason M. Trevisan: Like registration and things like frequency of use engagement with dealers time spend our ability to message and communicate with them.

Jason M. Trevisan: So we're really excited about the App and we're proud of how it is getting recognized relative to others in our sector.

James Michael: Hey James, I'm just going to add something. It's Sam Zales here.

Jason M. Trevisan: Hey, Hey, James I'm, just going to add something it's Sam Zales here. Thanks for the question on both because adjacent hit at all but just a couple of pieces of color from the market. One is when you add things like top deal or offer to your App and you say, we sell my car. We're the only player in the market that offers either the white glove pick up the.

Samuel Zales: Call It your home or drop it off at the dealership and make a little bit more money. It is a truly unique offering in the market. It's one of the reasons, 70% of the App users are registering and saying I want to think about this at some point in my future I'm going to be in the long term transaction model of auto ownership. It it creates that incredible number one.

Samuel Zales: Thanks for the question on both, because Jason hit on it all, but just a couple of pieces of color from the market. One is when you add things like top dealer offers to your app, and you say, with Sell My Car, we're the only player in the market that offers either the white glove, pick up the vehicle at your home, or drop it off at the dealership and make a little bit more money. It is a truly unique offering in the market. It's one of the reasons 70% of the app users are registering and saying, "I want to think about this at some point in my future."

Samuel Zales: I'm going to be in the long-term transaction model of auto ownership. It creates that incredible number one position in the app space for automotive marketplaces. Number two is the inventory acquisition report, as another example, as Jason was talking about analytics.

Samuel Zales: Position in the App space for automotive marketplaces number two is on the inventory acquisition report as another example, as Jason was talking about analytics or dealer typically says to us.

Samuel Zales: A dealer typically says to us, "Quantity and quality of leads is the price of entry into this business." You can see from our Car Sid growth, our marketplace growth, the lead growth we talked about year over year at DoubleDigit, the lead we have on our competitors for visitors and visits, and the lead we have on our competitors from an inventory perspective. That all fuels the lead volume and lead growth and lead quality that we have that we believe drives the highest ROI in the business and leads to that growth in our marketplace business.

Samuel Zales: Entity and quality of leads is the price of entry into this business and you can see from our car seat growth our marketplace growth. The lead growth, we talked about year over year of double digit the lead we have on our competitors for visitors and visits are the lead we have in our competitors from an inventory purse.

Samuel Zales: Active.

Samuel Zales: That all fuels that lead volume and lead growth.

Samuel Zales: And lead quality that we have that we believe drives a higher Star award in the ROI in the business and leads to that growth in our marketplace business. The second part of that though is can you teach me how to run my dealership more profitably. So all of those analytics reports that Jason's talking about including this new inventory acquisition report no.

Samuel Zales: The second part of that, though, is can you teach me how to run my dealership more profitably? So all of those analytics reports that Jason's talking about, including this new inventory acquisition report, nobody in the market can take consumer demand with the largest audience in the marketplace and match that against inventory turns in a local market and help that dealer say, here's your best option to meet the market demand in your market, acquire that inventory, and turn your inventory more quickly, which is both a car offer and CarGurus value proposition in the synergy of our businesses that we think is truly different.

Samuel Zales: Body in the market can take consumer demand with the largest audience in the marketplace and match that against inventory turns in a local market and help that dealers say here's your best option to meet the market demand in your market acquire that inventory in turn your inventory more quickly, which is both a car offering car gurus.

Samuel Zales: Value proposition and the synergy of our businesses that we think is truly differentiated.

James Michael: Got it. Thank you both for the college materials.

Speaker Change: Got it. Thank you both for the color was very helpful.

Jason M. Trevisan: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I will now hand over to Jason Trevisan for closing remarks.

James Michael: Thank you ladies and gentlemen, we have reached the end of the question and answer session I will now hand over to chase and transcend pool closing remarks.

Jason M. Trevisan: Thank you very much. I just wanted to give a special thanks, as we always do to all of our employees. We're extremely proud of all the innovation and growth that we're experiencing as a company. I'd also like to thank everyone today who joined us for their interest and support. We look forward to seeing many of you at upcoming conferences.

Jason M. Trevisan: Thank you very much.

Jason M. Trevisan: Just wanted to.

Jason M. Trevisan: It gives a special thanks as we always do to all of our employees are at.

Jason M. Trevisan: We're extremely proud of all of the innovation.

Jason M. Trevisan: Growth that we're experiencing as a company would also like to thank everyone today enjoying for your interest and support of US and we look forward to seeing many of you at upcoming conferences.

Jason M. Trevisan: Anyway.

Operator: Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your lines.

Speaker Change: Thank you ladies and gentlemen that concludes today's event. Thank you for attending and you may now disconnect your line.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Yeah.

Operator: Yeah.

Operator: Yeah.

Operator: [music].