Q2 2024 Cars.com Inc Earnings Call

August 8, 2024

twenty four conferencecall

At this time, all lines are in listed and only mode.

Speaker Change: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance,

Operator: If at any time during this call you require immediate assistance, please press star 0 for the operator. Please call it being recorded on Thursday, August 8th, 2024.

we pressed are a zero for the operator please call is being recorded on thursday august eight two thousand and twenty four and theynowll allowed to turn the conference overber to cathery and shen vice president of irr please go ahead

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Catherine Chen, Vice President of IR. Please go ahead.

Operator: I'd now like to turn the conference over to Katherine Chen, Vice President of IR. Please go ahead.

Katherine Chen: And now like to turn the conference over to Katherine Chen's Vice President of IR, please go ahead. Good morning everyone and thank you for joining us. It's my pleasure to welcome you to the Cars.com Inc. 2nd quarter, 2024 conference call. With me this morning, our Alex Federer, CEO, and Sonia Jain, CFO. Alex will start by discussing the business highlights from our 2nd quarter. Then Sonia will discuss our financial results in greater detail along with our outlook. We'll finish the call with Q&A.

Catherine Chen: Good morning everyone, and thank you for joining us. It's my pleasure to welcome you to the Cars.com, Inc. second quarter 2024 conference call. With me this morning are Alex Vetter, CEO, and Sonia Jain, CFO. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation. We assume no obligation to update any forward-looking statement. Now, I'll turn the call over to Alex.

Katherine Chen: Good morning everyone, and thank you for joining us. It's my pleasure to welcome you to the Cars.com, Inc. second quarter 2024 conference call. With me this morning are Alex Vetter, CEO, and Sonia Jain, CFO. Alex will start by discussing the business highlights from our second quarter. Then Sonia will discuss our financial results in greater detail, along with our outlook. We'll finish the call with Q&A.

Cathery Shen: Good morning, everyone, and thank you for joining us. It's my pleasure to welcome you to the Cars.com, Inc. second quarter 2024 conference call. With me this morning are Alex Fetter, CEO , and Sonia Jain, CFO .

Speaker Change: Alex will start by discussing the business highlights from our second quarter.

Speaker Change: Then Sonia will discuss our financial results in greater detail along with our outlook.

Katherine Chen: Before I turn the call over to Alex, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation. We'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.

We'll finish the call with Q&A.

Speaker Change: Before I turn the call over to Alex, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation.

Katherine Chen: Before I turn the call over to Alex, I'd like to draw your attention to our forward looking statements and the description and definition of non-gap financial measures, which can be found in our presentation. We'll be discussing certain non-gap financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted end income, and free cash flow. Reconciliation of these non-gap financial measures to the most directly comparable gap measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.

Sonia: We'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow.

Speaker Change: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.

Katherine Chen: Any forward-looking statements are subject to risk and uncertainty. For more information, please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statement. Now, I'll turn the call over to Alex.

Speaker Change: Any forward-looking statements are subject to risks and uncertainties.

Katherine Chen: Any forward looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filing, including those in our most recently filed 10K, which is available on the IR section of our website. We assume no obligations to update any forward looking statements.

Speaker Change: For more information, please refer to the risk factors included in our SEC filing, including those in our most recently filed 10-K, which is available on the IR section of our website.

Alex Vetter: Thanks, Catherine. And thanks, everyone, for joining us on today's call. We extended our track record of delivering both revenue growth and strong profitability with our second quarter performance. OEM and national performance was particularly robust, up 28% year over year. Unprofitability adjusted, even though it's solidly within our expectations of 10% year-over-year from strong operating levels.

Alex Vetter: Thanks, Katherine. And thanks, everyone, for joining us on today's call. We extended our track record of delivering both revenue growth and strong profitability with our second quarter performance. Q2 revenue was up 6% year-over-year, boosting us to record year-to-date revenue in the first half of 2024. OEM and national performance was particularly robust, up 28% year over year. Dealer revenue also contributed to growth as we expanded our dealer count while maintaining ARPD. Unprofitability adjusted even though it's solidly within our expectations of 10% year-over-year from strong operating levels. And free cash flow grew to $56 million for the first six months of 2024, which was the highest level in three years.

Alex Federer: Now, I'll turn the call over to Alex. Thanks, Catherine, and thanks everyone for joining us on today's call. We extended our track record of delivering both revenue growth and strong profitability with our 2nd quarter performance. Q2 revenue was about 6% year-over-year, boosting us to record year-to-date revenue in the first half of 2024. OEM and national performance was particularly robust of 28% year-over-year. Dealer revenue also contributed to growth as we expanded dealer count while maintaining ARPD.

Alex Vetter: We extended our track record of delivering both revenue growth and strong profitability with our second quarter performance Q2 revenue was up 6% year over year boosting us to record year to date revenue in the first half of 2024.

Alex Vetter: Oems National performance was particularly robust up 28% year over year.

Alex Vetter: <unk> revenue also contributed to growth as we expanded dealer count while maintaining ARPG.

Alex Vetter: On profitability adjusted EBITDA was solidly within our expectations of 10% year over year from strong operating leverage and free cash flow grew to $56 million for the first six months of 2024, which was the highest level in three years.

Alex Federer: On profitability, adjusted EBITDA was salary within our expectations of 10% year-over-year from strong operating leverage. And free cash flow grew to 56 million for the first six months of 2024, which was the highest level in three years.

Alex Vetter: Q2 was our 15th straight quarter of delivering year-over-year revenue growth, showcasing our ability to execute through challenging external conditions like the industry-wide CDK disruption that occurred in June and continued into the third quarter. Recall, we have a high concentration of franchise dealerships who rely on CDK. With dealership operations interrupted, many of our sales conversations and product launches were paused.

Alex Vetter: Q2 was our 15th straight quarter of delivering year over year revenue growth showcasing our ability to execute through challenging external conditions like the industry wide CDK disruption that occurred in June and continues into the third quarter.

Alex Federer: Q2 was our 15th straight quarter of delivering year-over-year revenue growth, showcasing our ability to execute through challenging external conditions, like the industry-wide CDK disruption that occurred in June and continues into the third quarter. Recall we have a high concentration of franchise dealerships who rely on CDK. With dealership operations interrupted, many of our sales conversations and product launches were paused. I'm proud of our team who creatively stepped up to support dealers whose systems were down, both in sending leads to dealers directly and updating inventory manual.

Alex Vetter: Recall, we have a high concentration of franchise dealerships who rely on CDK. While we make strong efforts to support our retail partners, we have also lost considerable sales momentum. We're transforming OEM relationships; we grew dealer customers and deepened product differentiation and strengthened our leading consumer marketplace. More than two-thirds of OEM customers increased their year-over-year spending on our products and services during Q2. They recognize we offer the best solutions to connect them to in-market, high-intent shoppers, especially as competition for consumer awareness rises in tandem with vehicle supply.

Alex Vetter: Recall, we have a high concentration of franchise dealerships, who rely on CDK.

With dealership operations interrupted many of our sales conversations and product launches where pause.

Alex Vetter: I'm proud of our team who creatively stepped up to support dealers whose systems were down, both in sending leads to dealers directly and updating inventory manually. However, while we made strong efforts to support our retail partners, we also lost considerable sales momentum. Our priority in Q3 is to re-ramp those engagements, particularly for products like AccuTrade, which require a longer sales cycle and hands-on dealership engagement. This was a frustrating event for the industry and for us, but we believe it's ultimately a temporary impact as we continue to grow the business in 2024 and beyond.

Speaker Change: I'm proud of our team, who creatively stepped up to support dealers, who systems were down both in sending leads to dealers directly and updating inventory manually.

While we made strong efforts to support our retail partners. We also lost considerable sales momentum.

Alex Federer: While we make strong efforts to support our retail partners, we also lost considerable sales momentum. Our priority in Q3 is to re-ramp those engagements, particularly for products like AccuTrade, which require a longer sales cycle and hands-on dealership engagement.

Alex Vetter: Our priority in Q3 is to re ramp those engagements, particularly for products like accu trade, which require a longer sales cycle and hands on dealership engagement.

Alex Vetter: This was a frustrating event for the industry and for us, but we believe it is ultimately a temporary impact as we continue to grow the business in 2024 and beyond.

Alex Federer: This was a frustrating event for the industry and for us, but we believe it's ultimately a temporary impact as we continue to grow the business in 2024 and beyond. More importantly, we delivered on our key growth drivers in the second quarter that advanced our platform strategy and laid a strong foundation for continued growth in the remainder of the year. We're transforming OEM relationships, we grew dealer customers and deepen product differentiation and strengthen our leading consumer marketplace.

Alex Vetter: More importantly, we delivered on our key growth drivers in the second quarter that advanced our platform strategy and laid a strong foundation for continued growth in the remainder of the year. We're transforming OEM relationships, growing dealer customers, deepening product differentiation, and strengthening our leading consumer marketplace. First, our OEM business accelerated, growing 28% year-over-year from increased demand from both new and existing partners. Additionally, more than two-thirds of our OEM customers increased their year-over-year spending on our products and services during Q2.

Alex Vetter: We're transforming OEM relationships, we grew dealer customers and deepened product differentiation and strengthen our leading consumer marketplace.

Alex Vetter: First our OEM business accelerated growing 28% year over year from increased demand from both new and existing partners.

Alex Federer: First, our OEM business accelerated growing 28% year-over-year from increased demand from both new and existing partners. More than two-thirds of OEM customers increase their year-over-year spending on our products and services during Q2. They recognize we offer the best solutions to connect them to in-market, high-intensity shoppers, especially as competition for consumer awareness rises in tandem with vehicle supply. Our strong value delivery led to multi-week sell-outs for the homepage take-over product and tripling of sponsorship revenue year-over-year among other positive results.

Alex Vetter: More than two thirds of OEM customers increase there year over year spending on our products and services during Q2.

Alex Vetter: They recognize we offer the best solutions to connect them to in-market, high-intent shoppers, especially as competition for consumer awareness rises in tandem with vehicle supply. Our strong value delivery led to multi-week sellouts for the homepage takeover product and tripling of sponsorship revenue year over year, among other positive results. Furthermore, our consumer scale and brand attracted new EV entrants in Eos and Rivian as new customers there in Q2.

Alex Vetter: They recognize we offer the best solutions to connect them to end market high intent shoppers, especially as competition for consumer awareness rises in tandem with vehicle supply.

Alex Vetter: Our strong value delivery led to multi-week sellouts for the homepage takeover product and a tripling of sponsorship revenue year over year, among other positive results. And we believe there are still huge opportunities ahead to capture OEM growth for our marketplace and media, as well as diversify our partnerships into products like AccuTrade. But more on that in just a minute.

Alex Vetter: Our strong value delivery led to multi week sellouts for the homepage takeover product and tripling of sponsorship revenue year over year among other positive results.

Alex Vetter: Furthermore, our consumer scale and brand attracted new EV entrants in iOS and <unk> as new customers during Q2.

Alex Federer: Furthermore, our consumer scale and brand attracted new EV entrants, INEOS and Rivian as new customers there in Q2. These wins and our past success with Tesla position as well as support EV tech leaders as they aggressively grow market share. And we believe they are still huge opportunities ahead to capture OEM growth for our marketplace and media as well as diversify our partnerships into products like Accutrade.

Alex Vetter: These wins and our past success with Tesla position us well in support of EV tech leaders as they aggressively grow market share. And we believe there are still huge opportunities ahead to capture OEM growth for our marketplace and media, as well as diversify our partnerships into products like AccuTrade. More on that in just a minute.

Alex Vetter: These wins and our past success with Tesla position as well as support EV Tech leaders as they aggressively grow market share.

Alex Vetter: And we believe there is still huge opportunities ahead to capture OEM growth for our marketplace and media as well as diversify our partnerships into products like accu trade more on that in just a minute.

Alex Vetter: We also achieved sequential dealer customer growth despite June sales interruptions from the CDK incident. It's important to note that we also maintained ARPD, which was up modestly year over year. Our marketplace had a strong quarter, with May being our best month for new franchise sales in the past year, and we continue to target more dealer customer growth and cross-selling our solution. While AccuTrace's subscriber growth in Q2 did not meet our expectations, we have made substantial progress on several initiatives that maintain our confidence for continued growth.

Alex Vetter: We also achieved sequential dealer customer growth. Despite June sales interruptions from the CDK incident.

Alex Federer: More on that in just a minute. We also achieved sequential dealer customer growth despite June sales interruptions from the CDK incident. It's important to note that we also maintained air PD which was out modestly year-over-year. Our marketplace had a strong quarter with may being our best month for new franchise sales in the past year. And we continue to target more dealer customer growth and cross-selling our solutions. While Accutrade's subscriber growth in Q2 did not meet our expectations, we have made substantial progress on several initiatives that maintain our confidence for continued growth.

Alex Vetter: It's important to note that we also maintained our PV, which was up modestly year over year.

Alex Vetter: Our marketplace had a strong quarter, with May being our best month for new franchise sales in the past year, and we continue to target more dealer customer growth and cross-selling our solution. And, in total, dealers generated over 639,000 appraisals through AccuTrade with higher average appraisals per dealer in the second quarter. We have also found that our AccuTrade users are our most engaged customers, with nearly half of them subscribing to three or more Cars Commerce product lines to leverage our platform synergy.

Alex Vetter: Our marketplace had a strong quarter with may being our best month for new franchise sales in the past year, and we continue to target more dealer customer growth and cross selling our solutions.

Alex Vetter: While accu trade subscriber growth in Q2 did not meet our expectations. We have made substantial progress on several initiatives that maintain our confidence for continued growth.

Alex Vetter: Strategic initiatives that are underway help lift engagement and appraisal volume, which we view as the number one predictor of customer satisfaction and ultimately retention. For the month of June, new AccuTrade users who started in April generated on average 31% more appraisals per dealer versus those who started in March. Due to enhancements in our onboarding process, and In total, dealers generated over 639,000 appraisals through AccuTrade with higher average appraisals per dealer in the second quarter. Though it's still early, it's also encouraging to see that our efforts have yielded close to 100% retention for users who enrolled in AccuTrain in April and May.

Alex Vetter: Strategic initiatives that are underway to help lift engagement and appraisal volume, which we view as the number one predictor of customer satisfaction and ultimately retention.

Alex Federer: Strategic initiatives that are underway helped lift engagement and increase the volume which review is the number one predictor of customer satisfaction and ultimately retention. For the month of June, new Accutrade users who started in April generated on average 31% more appraisals per dealer versus those who started in March due to enhancements in our onboarding process. And in total dealers generated over 639,000 appraisals through Accutrade with higher average appraisals per dealer in the second quarter.

Alex Vetter: For the month of June New Accu trade users, who started in April generated an average 31% more appraisals per dealer versus those who started in March due to enhancements in our onboarding process.

Alex Vetter: And in total dealers generated over 639000 appraisals through accu trade with higher average appraisals per dealer in the second quarter.

Alex Vetter: So it's still early it's also encouraging to see that our efforts have yielded close to 100% retention for users who enrolled in accu trade in April and May.

Alex Federer: So it's still early, it's also encouraging to see that our efforts have yielded close to 100% retention for users who enrolled in Accutrade in April and May. These trends plus positive feedback from new customers are strong signals that our Accutrade subscriber base should expand over time. What really underpins our confidence is the fact that AccuTrade continually outperforms competitors. Our data shows that AccuTrade appraisals are 34% more accurate than competitors, offering clear economic value for dealers and consumers.

Alex Vetter: These trends, plus positive feedback from new customers, are strong signals that our AccuTrade subscriber base should expand over time. But what really underpins our confidence is the fact that AccuTrade continually outperforms competitors. Our data shows that AccuTrade appraisals are 34% more accurate than competitors, offering clear economic value for dealers and consumers.

Alex Vetter: These trends plus positive feedback from new customers, our strong signals that our accu trade subscriber base should expand over time.

Speaker Change: Well it really underpins our confidence is the fact that accu trade continually outperforms competitors. Our data shows that accu trade appraisals are 34% more accurate than competitors offering clear economic value for dealers and consumers recent.

Alex Vetter: Recent third-party research further bolstered the merits of our product. We have also found that our AccuTrade users are our most engaged customers, with nearly half of them subscribing to three or more Cars Commerce product lines to leverage our platform synergy. This combination of high product efficacy and enthusiastic adoption by our largest and most sophisticated users reinforces our competitive edge and provides us with actionable insights on how to drive broader AccuTrade adoption over time.

Alex Vetter: A recent third party research further bolstered the merits of our product.

Alex Federer: Recent third-party research further bolstered the merits of our product. We have also found that our AccuTrade users are our most engaged customers. We nearly have them subscribing to three or more cars commerce product lines to leverage our platform synergies.

Alex Vetter: We have also found that our accu trade users are our most engaged customers with nearly half of that is subscribing to three or more cars commerce product lines to leverage our platform synergies.

Alex Federer: This combination of high-product efficacy and enthusiastic adoption by our largest and most sophisticated users reinforces our competitive age and provides us with actionable insights on how to drive broader AccuTrade adoption over time.

Alex Vetter: This combination of high product efficacy enthusiastic adoption by our largest and most sophisticated users reinforces our competitive edge and provides us with actionable insights on how to drive broader accu trade adoption over time.

Alex Vetter: To that end, I'm pleased to announce that we have won several new OEM endorsements that we believe will be catalysts for future growth. Earlier this week, we announced that AccuTrade was certified by Stellantis Digital as a trade and appraisal solution for their U.S. retailers. Jaguar Land Rover has also selected AccuTrade as their exclusive trade and appraisal solution for their new digital retail experience on JLR.com and dealer websites. This makes the AccuTrade Trade-In website application automatically available to all JLR dealers starting in September.

Alex Vetter: To that end I'm pleased to announce that we have won several new OEM endorsements that we believe will be catalysts for future growth.

Alex Federer: To that end, I'm pleased to announce that we have won several new endorsements that we believe will be catalyst for future growth. Earlier this week, we announced that AccuTrade was certified by Stellantis Digital as a trade and appraisal solution for their US retailers. Jaguar Land Rover also selected AccuTrade as their exclusive trade and appraisal solution for their new digital retail experience on JLR.com and dealer websites. This makes the AccuTrade Traded website application automatically available to all JLR dealers starting in September.

Alex Vetter: Earlier this week, we announced that Accu trade was certified by the Lantus digital as a trade in appraisal solution further U S retailers.

Alex Vetter: Jaguar land Rover also selected accu trade as their exclusive trade an appraisal solution for their new digital retail experience in jail or dot com and dealer websites.

Alex Vetter: This makes the accu trade traded website application automatically available to all <unk> dealers starting in September.

Alex Vetter: As a reminder, this is part of our suite of native, modern retail applications that offer a seamless omni-channel experience for dealers and consumers. The AccuTrade Trade-In website application drives high-quality leads to dealers and was recently redesigned to increase trade-in lead volumes by 50%. We see potential for the trade-in website application, which grew 40% quarter-over-quarter, to be a new and attractive entry point for AccuTrade Adopt. Overall, these endorsements underscore the growing recognition that AccuTrade is a better model for sourcing vehicles than what is currently available via auctions, disjointed website solutions, or opaque trade-in methods. In digital website experiences, we grew to nearly 7,520 customers in the second quarter from strong performance across Cars Commerce website solutions. In Canada, D2C just became the number one dealer website provider in the country.

Alex Vetter: As a reminder, this is part of our suite of needed modern retail applications that offers a seamless omnichannel experience for dealers and consumers.

Alex Federer: As a reminder, this is part of our suite of native, modern retail applications that offers a seamless, oddly channel experience for dealers and consumers. The AccuTrade Traded website application drives high quality leads to dealers and was recently redesigned to increase trade and lead volumes by 50%. We see potential for the trade and website application, which grew 40% quarter by quarter to be a new and attractive entry point for AccuTrade adoption. Overall, these endorsements underscore the growing recognition that AccuTrade is a better model for sourcing vehicles than what is currently available via auctions, disjointed website solutions, or opaque trade and methods.

Alex Vetter: The accu trade trading website application drives high quality leads to dealers and was recently redesigned to increased trade in lead volumes by 50%.

Alex Vetter: We see potential for the trade and website application, which grew 40% quarter over quarter to be a new an attractive entry point for accu trade adoption.

Alex Vetter: Overall, these endorsements underscore the growing recognition that AccuTrade is a better model for sourcing vehicles than what is currently available via auctions, disjointed website solutions, or opaque trade-in methods. In digital website experiences, we grew to nearly 7,520 customers in the second quarter from strong performance across Cars Commerce website solutions. And we have line of sight to additional OEM certifications in the back half of the year, which should add to our sales pipeline in Canada.

Alex Vetter: Overall these endorsements underscore the growing recognition that accu trade is a better model for sourcing vehicles than what is currently available via auctions disjointed website solutions or opaque traded methods.

Alex Vetter: In digital website experiences we grew to nearly 7520 customers in the second quarter from strong performance across cars <unk> website solutions, Inc.

Alex Federer: In digital website experiences, we grew to nearly 7,520 customers in the second quarter from strong performance across CARS-Crimers website solutions. In Canada, D to C just became the number one dealer website provider in the country, and that lead extends even further when we include the DI website growth that we've driven since late last year. We are extremely pleased with the team's execution not only in delivering strong synergies across our platform, but also in leveraging OEM endorsement, which our key driver in growing our website customer base.

Alex Vetter: In Canada D to C. Just became the number one dealer website provider in the country and that lead extends even further when we include the DIY site growth that we've driven since late last year.

Alex Vetter: And that lead extends even further when we include the DI website growth that we've driven since late last year. We are extremely pleased with the team's execution, not only in delivering strong synergies across our platform but also in leveraging OEM endorsements, which are a key driver in growing our website customer base. And we have line of sight to additional OEM certifications in the back half of the year, which should add to our sales pipeline in Canada.

Alex Vetter: We're extremely pleased with the team's execution not only in delivering strong synergies across our platform, but also leveraging OEM endorsements, which are a key driver in growing our <unk> website customer base.

Alex Vetter: And we have line of sight to additional OEM certifications in the back half of the year, which should add to our sales pipeline in Canada.

Alex Federer: And we have line a site to additional OEM certification in the back half of the year, which should add to our sales pipeline in Canada. On the product side, we've also rolled out a new DI website redesign that is yielded double-digit gains in consumer traffic, engagement, and conversion for pilot sites. We expect this innovation will continue to drive our website differentiation, customer satisfaction, and subscriber growth. Finally, our industry leading marketplace continues to scale while winning high consumer engagement.

Sonia Jain: On the product side, we've also rolled out a new DI website redesign that has yielded double-digit gains in consumer traffic, engagement, and conversion for pilot sites. We expect this innovation will continue to drive our website differentiation, customer satisfaction, and subscriber growth. Finally, our industry-leading marketplace continues to scale while winning high consumer engagement. Q2 traffic was up year over year, and we maintained our lead on organic traffic at approximately 60% of our total mix.

Alex Vetter: On the product side, we've also rolled out a new <unk> website redesign that has yield yielded double digit gains in consumer traffic engagement and conversion for our pilot sites.

Alex Vetter: We expect this innovation will continue to drive our website differentiation customer satisfaction and subscriber growth.

Alex Vetter: Finally, our industry, leading marketplace continues to scale, while winning high consumer engagement Q2 traffic was up year over year, and we maintained our lead on organic traffic at approximately 60% of our total mix.

Alex Vetter: Q2 traffic was up year over year, and we maintained our lead on organic traffic at approximately 60% of our total mix. Summing it up, we grew our top line, bottom line, and cash flows, all while staying nimble to better position ourselves for continued growth. We're committed to advancing our platform strategy through vectors like improving product adoption, expanding OEM partnerships, and capturing other enterprise opportunities as we further transform and enable the automotive retail experience.

Alex Federer: Q2 traffic was up year over year and we maintained our lead on organic traffic at approximately 60% of our total mix. We're reaching the highest intent and most active shoppers who drove repeat visitation roughly 7% higher year over year as we exited the quarter. We also continue to invest in unique editorial content like our American made index that drives consumer interest and efficiently attracts new shoppers. As a result of continued product and content innovation leads improved meaningfully over the course of the second quarter, another proof point of improving value delivery for our dealers and OEMs.

Sonia Jain: We're reaching the highest intent and most active shoppers, who drove repeat visitation roughly 7% higher year over year as we exited the quarter. We also continue to invest in unique editorial content like our American-Made Index that drives consumer interest and efficiently attracts new shoppers. As a result of continued product and content innovation, LEEDs improved meaningfully over the course of the second quarter, another proof point of improving value delivery for our dealers and OEMs.

Alex Vetter: We're reaching the highest intent and most active shoppers who drove repeat visitation roughly 7% higher year over year as we exited the quarter.

Alex Vetter: We also continue to invest in unique editorial content like our American made index that drives consumer interest and efficiently attract new shoppers as.

Alex Vetter: As a result of continued product and content innovation leads improved meaningfully over the course of the second quarter, another proof point of improving value delivery for our dealers and Oems.

Alex Federer: Summing it up, we grew top line bottom line and cash flows all while staying nimble to better position ourselves for continued growth. We're committed to advancing our platform strategy through vectors like improving product adoption, expanding OEM partnerships and capturing other enterprise opportunities as we further transform and enable the automotive retail experience.

Sonia Jain: Summing it up, we grew top line, bottom line, and cash flows, all while staying nimble to better position ourselves for continued growth. We're committed to advancing our platform strategy through vectors like improving product adoption, expanding OEM partnerships, and capturing other enterprise opportunities as we further transform and enable the automotive retail experience. I'll now turn the call over to Sonia to lead the discussion of our second quarter financial results and outlook.

Alex Vetter: Summing it up we grew top line bottom line and cash flows all while staying nimble to better position ourselves for continued growth we're committed to advancing our platform strategy through vectors like improving product adoption, expanding OEM partnerships and capturing other enterprise opportunities as we further tree.

Alex Vetter: <unk> and enable the automotive retail experience.

Alex Vetter: I'll now turn the call over to Sonya to lead the discussion of our second quarter financial results and outlook Sonya.

Sonia Jain: I'll now turn the call over to Sonia to leave a discussion of our second quarter financial results and outlook. Sonia. Thank you, Alex. We delivered year over year revenue growth and margin expansion in the second quarter through discipline execution of our platform strategy. Despite being slightly below our expectations, revenue of $179 million was up 6% year over year reaching a new second quarter record. This concludes the roughly 1% unexpected impact from discrete items related to legacy solutions contracts, excluding that impact, revenue would have been roughly in line with the low end of our guidance range.

Sonia Jain: Thank you, Alex. We delivered year-over-year revenue growth and margin expansion in the second quarter through disciplined execution of our platform strategy. Despite being slightly below our expectations, revenue of $179 million was up 6% year-over-year, reaching a new second-quarter record. This includes the roughly 1% unexpected impact from discrete items related to legacy solutions contracts. Including that impact, revenue would have been roughly in line with the low end of our guidance rate

Sonia Jain: Thank you, Alex. We delivered year-over-year revenue growth and margin expansion in the second quarter through the disciplined execution of our platform strategy. Despite being slightly below our expectations, revenue of $179 million was up 6% year-over-year, reaching a new second quarter record. This includes the roughly 1% unexpected impact from discrete items related to legacy solutions. Adjusted EBITDA for the second quarter was $50 million, up $5 million, or 10% year-over-year, and the adjusted EBITDA margin of 28.2% was in line with our guidance rate. Now, on to key metrics.

Alex Vetter: Thank you Alex we delivered year over year revenue growth and margin expansion in the second quarter through disciplined execution of our platform strategy.

Sonia Jain: Despite being slightly below our expectations revenue of $179 million was up 6% year over year, reaching a new second quarter record. This includes the roughly 1% unexpected impact from discrete items related to legacy solutions contracts.

Sonia Jain: That impact revenue would have been roughly in line with the low end of our guidance range.

Sonia Jain: Dealer revenue grew 4% year-over-year to $160 million, driven by the contribution from our D2C acquisition and increased adoption of our trade-in appraisal and website. OEM and national revenue was $16 million, up 28% compared to the prior year. This acceleration in growth reflects continuing OEM investments in marketing and advertising to influence and drive consumer awareness of their products amidst rising vehicle inventory levels. For the second quarter, total operating expenses were $169 million, compared to $156 million a year ago.

Speaker Change: Revenue grew 4% year over year to $160 million driven by contribution from our D to C acquisition and increased adoption of our trade in appraisal and website products.

Sonia Jain: Dear revenue grew 4% year over year to $160 million driven by contribution from our D to C acquisition and increased adoption of our trade and appraisal and website products. OEM and national revenue with $16 million up 28% compared to the prior year. This acceleration and growth reflects continuing OEM investments into marketing and advertising to influence and drive consumer awareness of their product amidst rising vehicle inventory.

Speaker Change: OEM and national revenue was $16 million.

Sonia Jain: Up 28% compared to the prior year. This acceleration in growth reflects continuing OEM investment into marketing and advertising to influence and drive consumer awareness of their product amidst rising vehicle inventory levels.

Sonia Jain: In the second quarter total operating expenses were $169 million.

Sonia Jain: Levels for the second quarter total operating expenses for $169 million compared to $156 million a year ago, products and technology expenditure increased $3 million year over year as we added talent in support of our product roadmap up levels to technical role and invested in back end systems general and administrative expense was up size million dollars year over year, mostly due to the inclusion of D to C operating costs, including 2% per year. $17 million in D to C earn out expense this quarter.

Sonia Jain: Compared to $156 million, a year ago product and technology expenditure increased $3 million year over year as we added talent in support of our product roadmap up leveled key technical hole and invested in backend system.

Sonia Jain: Product and technology expenditure increased $3 million year over year as we added talent in support of our product roadmap, up-leveled key technical roles, and invested in back-end systems. General and administrative expense was up $5 million year over year, mostly due to the inclusion of D2C operating expenses, including $2.7 million in D2C earn-out expense this quarter. As a reminder, unlike the earn-outs associated with our other acquisitions, D2C earn-outs were deemed compensation expense under GAAP and therefore run through operating expenses. Second quarter adjusted operating expenses were $156 million, roughly 6% higher than the same period a year ago.

Speaker Change: General and administrative expense was upsized.

Speaker Change: Year over year, mostly due to the inclusion of DTC operating costs, including $2 7 million Indeed.

Speaker Change: Indeed at the earn out expense this quarter as a reminder, unlike the earn out associated with our other acquisition data fee earn outs <unk> compensation expense under GAAP, and therefore run through operating expenses.

Sonia Jain: As a reminder, unlike the earn out associated with our other acquisitions, D to C earn out were Dean's compensation expense under gap and therefore run through operating expenses. Second quarter adjusted operating expenses were $156 million roughly 6% higher than the same period a year ago, net income for the second quarter was $11 million or 17 cents per deluded share and adjusted net income for the second quarter was $26 million or 38 cents per deluded share compared to $23 million or 33 cents per deluded share a year ago.

Sonia Jain: Second quarter, adjusted operating expenses were $156 million, roughly 6% higher than the same period a year ago.

Sonia Jain: Net income for the second quarter was $11 million, or $0.17 per diluted share, and adjusted net income for the second quarter was $26 million, or $0.38 per diluted share, compared to $23 million, or $0.33 per diluted share a year ago. Adjusted EBITDA for the second quarter was $50 million, up $5 million, or 10% year-over-year, and the adjusted EBITDA margin of 28.2% was in line with Operating leverage increased over 100 basis points year over year from a combination of revenue growth and mix, as well as disciplined investments in the business. Now, on to key metrics.

Sonia Jain: Net income for the second quarter was $11 million or <unk> 17 per diluted share and adjusted net income for the second quarter was $26 million or <unk> 38 per diluted share compared to $23 million or <unk> 33 per diluted share a year ago.

Sonia Jain: Adjusted EBITDA for the second quarter with $50 million up $5 million or 10% year over year and adjusted EBITDA margin of 28, 2% was in line with our guidance range operating leverage increased over 100 basis points year over year from a combination of revenue growth and mix as well as <unk>.

Sonia Jain: Adjusted EBITDA for the second quarter was $50 million, up $5 million, or 10% year-over-year, and Adjusted EBITDA margin of 28.2% was in line with our guidance range. Operating leverage increased over 100 basis points year-over-year, from a combination of revenue growth and mix, as well as disciplined investments in the business.

Sonia Jain: Disciplined investments in the business.

Sonia Jain: Now on to key metrics now.

Sonia Jain: Notwithstanding temporary disruptions to new sales and product launches from the CDK incident in June, we ended Q2 with 19,390 total customers, returning to sequential organic dealer customer growth. And notably, our marketplace customers also grew during the quarter. Our July dealer customer account was impacted by the CDK incident, but we believe this to be temporary in nature.

Sonia Jain: Notwithstanding temporary disruptions to new sales and product launches from the CDK incident in June we ended Q2 with 19390 total customers returning to sequential organic dealer customer growth and notably our marketplace customers also grew during the quarter.

Sonia Jain: Now, on to key metrics. Not outstanding temporary disruptions to new sales and product launches from the CDK incident in June. We ended Q2 with 19,390 total customers returning to sequential organic dealer customer growth. And notably, our marketplace customers also grew during the quarter. Our July dealer customer count was impacted by the CDK incident. However, we believe this to be temporary in nature. Our PD of $2,474 for the second quarter was up slightly year-over-year, driven by increased product penetration, partially offset by a four-mention discrete item, and higher than expected growth from D to C customers, who on average contribute lower revenue per dealer.

Speaker Change: July dealer customer count was impacted by the CDK incident, However, we believe that to be temporary in nature.

Sonia Jain: ARPD of $2,474 for the second quarter was up slightly year over year, driven by increased product penetration, partially offset by the aforementioned discrete items, and higher than expected growth from D2C customers, who, on average, contribute lower revenue per dealer. We're pleased to see growing uptake of our marketplace and digital experience products thanks to our cross-selling efforts. For AccuTrade, which experienced some churn during the quarter, we're working diligently to drive subscriber growth. On our last call in May, we committed to accelerating the AccuTrade Connected Learning Curve to more quickly embed the technology into dealer operations.

Speaker Change: AARP D. A 2000 and $474 for the second quarter was up slightly year over year, driven by increased product penetration, partially offset by the aforementioned discrete item and higher than expected growth from data fee customers, who on average contribute lower revenue per dealer.

Sonia Jain: We're pleased to see growing uptake of our marketplace and digital experience products, thanks to our cross selling efforts.

Sonia Jain: We're pleased to see growing uptake of our marketplace and digital experience products thanks to our cross-selling efforts. For Accutrade, which experienced some churn during the quarter, we're working diligently to drive subscriber growth. On our last call in May, we committed to accelerating the Accutrade-connected learning curve to more quickly embed the technology into dealer operations. Onwarding and account support changes we made in the first half have yielded meaningfully higher product utilization by new users.

Speaker Change: We're actually trade, which experienced some churn during the quarter. We are working diligently to drive subscriber growth on our last call in May we committed to accelerating the accu trade connected learning curve to more quickly embed the technology into dealer operation.

Sonia Jain: Onboarding and account support changes we made in the first half have yielded meaningfully higher product utilization by new users. While these types of operational changes require time and investment, we're optimistic that we can keep improving dealer satisfaction and retention. And the multiplier effect of our platform is real. We can see that in AccuTrade data. AccuTrade customers are far more likely to use multiple Cars Commerce products, with average revenue per dealer that's more than double that of non-AccuTrade customers.

Speaker Change: Onboarding and account support changes we made in the first half have yielded meaningfully higher product utilization by new users.

Sonia Jain: While these types of operational changes require time and investment, we're optimistic that we can keep improving dealer satisfaction and retention. Now, shifting to our balance sheet, cash provided by operating activities totaled $69 million year-to-date. Our total net leverage is now 2.1 times, down from 2.3 times last year, and comfortably within our target range of 2 to 2.5 times. With total liquidity of $304 million as of June 30, 2024, we have ample resources to execute our growth strategy and pursue the best return on capital.

Speaker Change: While these types of operational changes require time and investment we are optimistic that we can keep improving dealer satisfaction and retention.

Sonia Jain: While these types of operational changes require time and investment, we're optimistic that we can keep improving dealer satisfaction and retention. And the multiplier effect of our platform is real. We can see that in Accutrade data, Accutrade customers are far more likely to use multiple car's commerce products, with average revenue per dealer that's more than double that of non-accutrade customers. This data illustrates the power of cross-selling and of growing the Accutrade base as part of our platform strategy.

Speaker Change: And the multiplier effect of our platform is real we can see that in accurate data accu trade customers are far more likely to use multiple card commerce product with average revenue per dealer, that's more than double that of non <unk> customers.

Sonia Jain: This data illustrates the power of cross-selling and growing the AccuTrade base as part of our platform strategy. Now, shifting to our balance sheet, net cash provided by operating activities totaled $69 million year-to-date. Free cash flow was $56 million year to date, roughly $11 million higher year over year. Free cash flow is driven primarily by improved adjusted EBITDA and lower cash taxes, partially offset by higher cash interest and increased capital. During the second quarter, we made $20 million in earn-out payments, primarily related to AccuTrade. We also repurchased 300,000 shares for $4.9 million, bringing first-half repurchases to $14 million. In addition, we repaid $5 million of debt and reduced total debt outstanding to $475 million as of June 30, 2024.

Speaker Change: This data illustrates the power of cross selling and a growing the accu trade base as part of our platform strategy.

Sonia Jain: Now shifting to our balance sheet.

Sonia Jain: Net cash provided by operating activities totaled $69 million year to date free cash flow was $56 million year to date, roughly $11 million higher year over year.

Sonia Jain: That's just into our valid sheet. Next cash provided by operating activities totaled $69 million year-to-date. Free cash flow was $56 million year-to-date, roughly $11 million higher year-over-year. Free cash flow was driven primarily by improved adjustability data in lower cash taxes, partially offset by higher cash interest and increased catbacks. During the second quarter, we made $20 million in earnout payments, primarily related to Accutrade. We also repurchased $300,000 shares for $4.9 million, bringing in first half repurchases to $14 million.

Sonia Jain: Free cash flow was driven primarily by improved adjusted EBITDA and lower cash taxes, partially offset by higher cash interest and increased capex.

Sonia Jain: During the second quarter, we made $20 million in earn out payments primarily related to actually trade.

Sonia Jain: Also we purchased 300000 shares for $4 9 million.

Speaker Change: First sales and purchases to $14 million.

Sonia Jain: In addition, we retained $5 million of debt and reduced total debt outstanding to $475 million as of June 32024.

Sonia Jain: In addition, we were paid $5 million of debt and reduced total debt outstanding to $475 million as of June 30, 2024. Our total net leverage is now 2.1 times, down from 2.3 times last year and comfortably within our target range of two to two and a half times. With total liquidity of $304 million as of June 30, 2024, we have ample resources to execute our growth strategy and pursue the best return on capital.

Sonia Jain: Our total net leverage is now 2.1 times, down from 2.3 times last year, and comfortably within our target range of 2 to 2.5 times. With total liquidity of $304 million as of June 30, 2024, we have ample resources to execute our growth strategy and pursue the best return on capital. With $105 million remaining on our current share repurchase authorization and conviction around our growth strategy, we now intend to return approximately 50% of second half free cash flow to shareholders via share repurchases. Our strong free cash flow conversion enables us to deploy our capital in a manner that drives incremental shareholder value, whether through share buybacks, attractive acquisitions, or debt repayment. I'll now conclude with our advice.

Sonia Jain: Our total net leverage is now two one times down from two three times last year and comfortably within our target range of 2% to two five times.

Sonia Jain: With total liquidity of $304 million as of June 32024, we have ample resources to execute our growth strategy and pursue the best return on capital.

Sonia Jain: With $105 million remaining on our current share repurchase authorization and conviction around our growth strategy, we now intend to return approximately 50% of second half free cash flow to shareholders via share repurchases. In the third quarter of 2024, we expect to deliver revenue in the range of 178 to 181 million dollars, or year-over-year growth of 2 to 4%. Not only was our sales momentum at the end of June severely curtailed, but this continued into July and had an accruing effect on third-quarter revenues given the subscription nature of our business.

Sonia Jain: With $105 million.

Sonia Jain: On our current share repurchase authorization and conviction around our growth strategy. We now intend to return approximately 50% of second half free cash flow to shareholders via share repurchases.

Sonia Jain: With $105 million, remaining on our current sharing purchase authorization and conviction around our growth strategy, we now intend to return approximately 50% of second half free cash flow to shareholders by a Our strong free cash flow conversion enables us to deploy our capital in a manner that drives incremental shareholder value, whether to share buybacks, attractive acquisition, or debt repayment.

Sonia Jain: Our strong free cash flow conversion enabled us to deploy our capital in a manner that drive incremental shareholder value, whether it be share buybacks attractive acquisitions or debt repayment.

Sonia Jain: I'll now conclude with our guidance.

Sonia Jain: In the third quarter of 2024, we expect to deliver revenue in the range of 178 to 181 million dollars, or year-over-year growth of 2 to 4%. Guidance reflects growth in dealer revenue from increasing product adoption, including B2C. OEM and national revenue is also expected to grow year over year, though down slightly sequentially when compared to strong performance in the second quarter. Embedded in our guidance is also the impact of the CDK cyber incident, which widely disrupted our industry, our customers, and our business in June and July.

Speaker Change: In the third quarter of 2024, we expect to deliver revenue in the range of 178 $281 million.

Sonia Jain: I'll now conclude with our guidance. In the third quarter of 2024, we expect to deliver revenue in the range of 178 to 181 million dollars, or year over year grow of 2 to 4%. Guidance reflects growth and dealer revenue from increasing product adoption, including D to C.

Sonia Jain: Our year over year growth of 2% to 4%.

Sonia Jain: Guidance reflects growth in dealer revenue from increasing product adoption, including DTC.

Sonia Jain: National revenue is also expected to grow year over year, but down slightly sequentially when compared to strong performance in the second quarter.

Sonia Jain: OEM and national revenue is also expected to grow year over year, but down slightly sequentially when compared to strong performance in the second quarter. Embedded in our guidance is also the impact of the CDK cyber incident, which widely disrupted our industry, our customers and our business in June and July. Not only with our sales momentum at the end of June, severely curtailed, but this continued into July and has an accruing effect on third quarter revenues given the subscription nature of our business. We expect approximately 1 to 2% of CDK-related revenue impact to our business in the third quarter from a combination of loss sales and product launch delays.

Sonia Jain: Embedded in our guidance is also the impact of the CDK cyber incident, which widely disrupted our industry, our customers and our business in June and July.

Sonia Jain: Not only was our sales momentum at the end of June severely curtailed, but this continued into July and has an accruing effect on third-quarter revenues, given the subscription nature of our business. We expect approximately 1% to 2% of CDK-related revenue impact on our business in the third quarter from a combination of lost sales and product launch delays.

Sonia Jain: Not only with our sales momentum at the end of June severely curtailed, but this continued into July and has an accruing effect on third quarter revenue given the subscription nature of our business.

Sonia Jain: We expect approximately 1% to 2% of CDK related revenue impact to our business in the third quarter from a combination of lost sales and product launch delays.

Sonia Jain: In addition, we expect to deliver third-quarter adjusted EBITDA margins between 26.5 and 28.5 percent. Compared to 28.4% a year ago, this guidance reflects continued investments to support our growth initiatives and also takes into account our revenue outlook for the third quarter. In light of our year-to-date performance and considering current business trends, we now expect fiscal year 2024 revenue growth of 4.5% to 5.5%. This range reflects positive product growth and contribution from our D2C acquisitions.

Sonia Jain: In addition, we expect to deliver our third quarter adjusted EBITDA margin between 26, five and 28, 5% compared to 28, 4% a year ago. This guidance reflects continued investments to support our growth initiatives and also takes into account our revenue outlook for the third quarter.

Sonia Jain: In addition, we expect to deliver a third quarter at just the bizarre margin between 26.5 and 28.5%. Compared to 28.4%, a year ago. This guidance reflects continued investments to support our growth initiatives and also takes into account our revenue outlook for the third quarter.

Sonia Jain: Compared to 28.4% a year ago, this guidance reflects continued investments to support our growth initiative and also takes into account our revenue outlook for the 3rd quarter. In light of our year-to-date performance and considering current business trends, we now expect fiscal year 2024 revenue growth of 4.5% to 5.5%. This range reflects positive product growth and contribution from our D2C acquisitions.

Sonia Jain: In light of our year to date performance and considering current business trends. We now expect fiscal year 2020 for revenue growth of four five to five 5%.

Sonia Jain: In light of our year-to-date performance and considering current business trends, we now expect fiscal year 2024 revenue growth of 4.5 to 5.5%. This range reflects positive product growth and contribution from our D to C acquisition. Our revised assumptions also include a slower rate of adoption for AccuTrade and lost and delayed sales due to the CDK disruption, which have a compounding effect on full year subscription revenue.

Sonia Jain: This range reflects positive product growth and contribution from our <unk> acquisition.

Sonia Jain: Our revised assumptions also include a slower rate of adoption for accu trade and locked in delayed sales due to the CDK disruption, which have a compounding effect on full year subscription revenue.

Sonia Jain: And finally, we are reaffirming our outlook for full year adjusted EBITDA margin between 28% to 30% at the midpoint. This represents adjusted EBITDA growth of approximately 8% year over year, we are committed to driving cost discipline and operational efficiency and even with lower revenue growth expectations.

Sonia Jain: And finally, we are reaffirming our outlook for full year adjusted EBITDA margins between 28 to 30%. At the midpoint, this represents adjusted EBITDA growth of approximately 8% year over year. We are committed to driving cost discipline and operational efficiency and even with lower revenue growth expectations, believe there's sufficient leverage in our model to improve adjusted EBITDA and deliver margin expansion.

Speaker Change: I believe there is sufficient leverage in our model to improve adjusted EBITDA and deliver margin expansion.

Sonia Jain: Our revised assumptions also include a slower rate of adoption for AccuTrade and lost and delayed sales due to the CDK disruption, which have a compounding effect on full-year subscription revenue. And finally, we are reaffirming our outlook for full-year adjusted EBITDA margins between 28 to 30 percent. At the midpoint, this represents adjusted EBITDA growth of approximately 8 percent year-over-year. We are committed to driving cost discipline and operational efficiency, and even with lower revenue growth expectations, believe there's sufficient leverage in our model to improve adjusted EBITDA and deliver margin expansion. And with that, I'd like to open the call for Q&A. Operator?

Speaker Change: And with that I'd like to open the call for Q&A operator.

Operator: And with that, I'd like to open the call for Q&A operator. Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speaker phone, please leave the handset before pressing any keys. One moment, please, for your first question.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline the polling process, please press the star followed by the number two. If you are using a speakerphone, please leave the handset before pressing any key. One moment, please, for your first question. Your first question comes from the line of Naved Khan from BA Reilly Securities. Your line is now open.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your Touchtone you will hear a problem. Thank you your highness being raised JD leads to decline from the polling process. Please press the star followed.

Speaker Change: And number two if you are using a speaker phone. Please lift the handset before pressing any keys one moment. Please for your first question.

Sonia Jain: Your first question comes from the line of Naved Khan from B Riley Securities. Your line is now open.

Naved Khan: Your first question comes from the line of NAVE CAN from the RIOLE securities. Your line is now open. Thank you and good morning alls. A couple of things from me. One, maybe the Sonya for you. I think you mentioned 1% unexpected impact from.., from the from legacy solutions contract. Can you just maybe explain that more a little bit in terms of how that kind of goes through and how it affected you.

Unknown Analyst: Thank you and good morning all. A couple of things from me. One, maybe Sonia, for you, I think you mentioned 1% unexpected impact from the legacy solutions contract. Can you maybe explain that a little bit more in terms of how that kind of goes through and how it affects you? And the other question I have is on active trade.

Naved Khan: Great. Thank you, and good morning all.

Speaker Change: Okay. Thank you and good morning.

Unknown Analyst: A couple of things for me one maybe.

Speaker Change: Any out for you.

Speaker Change: I think you mentioned one person unexpected impact from.

Speaker Change: Well familiar from legacy solutions contract can you just maybe.

Sonia Jain: A couple of things from me. One, maybe Sonia, for you, you know, I think you mentioned 1% unexpected impact from the legacy solutions contract. Can you just maybe explain that a little bit more in terms of how that kind of goes through and how it affects you? And the other question I have is about active trade. So, you know, you did talk about improved satisfaction with the product feature rollout. But if I just look at the count, the count went down sequentially, and you kind of expect slower growth now. Because of, I guess, some losses. Maybe we could go through the dynamics of what might have led to the higher churn and what has changed going forward.

Unknown Analyst: Explain that more in Alberta in terms of how that kind of flows through.

Unknown Analyst: In August the <unk> and the other question I have is.

Speaker Change: And accurate trade.

Unknown Analyst: So, you did talk about improved satisfaction with the product feature rollout. But if I just look at the count, the count went down sequentially, and you kind of expect slower growth now because of, I guess, some losses. Maybe just go through the dynamics of what might have led to the higher churn and what has changed going forward.

Naved Khan: And the other question I have is an accurate. So, you did talk about improved satisfaction with the product feature rollout. But if I just look at the count, count when down sequentially and you kind of expect a flow of growth now, because if I get some loss, maybe just go through the dynamics of like what might have led to the higher chart and what has changed going forward. Thank you. Good morning, Marvin.

Unknown Analyst: So.

Speaker Change: You did talk about an improved through this auction.

Speaker Change: For the product feature rollout.

Speaker Change: If I just look at the Cowen Cowen.

Speaker Change: <unk> down sequentially and you kind of expect floor on growth now.

Unknown Analyst: Because I guess some <unk>, maybe just go through the dynamics look like what kind of led to that.

Speaker Change: Higher churn and what has changed going forward.

Speaker Change: Thank you.

Sonia Jain: Good morning, Naved. Thanks for your questions. I think your first one was on the discrete items that impacted us in Q2. That was really related to some legacy contracts associated with our website business. We can't get into the individual customer specifics, but we do believe they were one-time in nature. And, you know, it was just a timing thing. They impacted the top line.

Speaker Change: Good morning. Thanks for your question I think your first one was on the discrete items that impacted us in Q2 that was really related to some legacy contracts associated with our website business, we can't get into the individual customer specifics, but we do believe they are onetime in nature.

Naved Khan: Thanks for your questions. I think your first one was on the discrete items that impacted us in Q2. That was really related to some legacy contracts associated with our website business. We can't get into the individual customer specifics, but we do believe they were one time in nature. And you know, it was just a timing thing they impacted top line. Yeah, and on the acutrade front, I mean, you know, certainly I'm disappointed in our Q2 results there because we made a lot of positive changes with the product.

Sonia Jain: <unk>.

Sonia Jain: And it was just a timing thing they impacted topline.

Alex Vetter: Yeah, on the AccuTrade front, I mean, you know, certainly, I'm disappointed in our Q2 results there because we made a lot of positive changes to the product. In fact, our most avid users swear by the product; they love the product.

Sonia Jain: Yes on the Accu trade front.

Alex Vetter: Certainly I am disappointed in our Q2 results there because we've made a lot of positive changes with the product in fact, our most avid users whereby the product they love the product getting dealer adoption two to change their operational processes proved to be more difficult and when there is turnover a dealership.

Naved Khan: In fact, our most avid users swear by the product. They love the product getting dealer adoption to change their operational process has proved to be more difficult. And when there's turnover dealerships, you know, we lose that advocacy inside the stores. There is a shift that we're making on the product, which we signal on the call, which is to follow our proven DI formula of seeking these OEM endorsements to land and expand accounts through that model, which should bring in more dealers, you know, with manufacture backing into the platform.

Alex Vetter: Getting dealer adoption to change their operational process has proved to be more difficult. And when there's turnover at dealerships, you know, we lose that advocacy inside the stores. There is a shift that we're making on the product, which we signaled on the call, which is to follow our proven DI formula of seeking these OEM endorsements to land and expand accounts through that model, which should bring in more dealers. You know, with manufacturer backing into the platform, it means we're going to get in at a lower price point.

Alex Vetter: We lose that advocacy inside the stores there is a shift that we're making on the product, which we signal more of a call which is to follow our proven formula of seeking these OEM endorsements to land and expand accounts through that model, which should bring in more dealers.

Alex Vetter: With manufacturer backing into the platform. It means we're going to get in at a lower price point. So you may not see the same revenue lift that we were anticipating this year selling the connected full accu trade product, but we do think we can get solid dealer growth on website solutions and then moved up.

Alex Vetter: So you may not see the same revenue lift that we were anticipating this year selling the connected full AccuTrade product. But we do think we can get solid dealer growth on website solutions and then move to upsell them in the store full blown store solution over time. That's going to prolong the ramp here and move it more into 2025, but we still see solid product growth in the solution this year. It's just slower than I think we all would have liked.

Naved Khan: It means we're going to get in at a lower price point. So you may not see the same revenue lift that we were anticipating this year selling the connected full acutrade product, but we do think we can get solid dealer growth on website solutions and then moved up sell, moved up sell them in the store full blown store solution over time. That's going to prolong the ramp here and move it more into 2025, but we still see solid product growth in the solution this year.

Alex Vetter: So move to up sell them in the store full blown storage solution over time, that's going to prolong the ramp here and move it more into 2025, but we still see solid product growth and the solution. This year, it's just slower than I think we all would have liked.

Sonia Jain: Understood. And Sonia, I'm just going back to the legacy solutions contract. So, you know, you quantified it for the second quarter. Is it fair to assume there is an impact from the remainder of the year as well as just part of the guidance today? Or is that something separate from that and just going to be?

Naved Khan: It's just slower than I think we all would have liked. Understood. And Sonia just going back to the to the legacy solutions contract. So, you know, you quantified it for second quarter. Is it fair to assume there is impact on the remainder of the year as well, just part of the guidance today or is that is that something separate from that and you're just going to be. Arsadult for me. Thanks. Um, the discrete items are really range bound into the second quarter. They obviously influence our full year results, but the impact is really confined to the second quarter. Got it. Thank you guys. Thank you.

Speaker Change: Understood and sorry, I was just going back to the to the legacy citizens contracts. So you quantified it for second quarter is it fair to assume there is a.

Speaker Change: Impact from the remainder of the year I was wondering just part of the guidance guidance today or is that something.

Speaker Change: Separate from that can you just maybe.

unknown: arsenal,

Sonia Jain: Dr. Ken Jones. Um, the discreet one. I'd, I'd, I'd, I'd, I'd,

Alex Vetter: Thanks.

Sonia Jain: The discrete items are really range-bound into the second quarter. They obviously influence our full-year results, but the impact is really confined to the second quarter.

Speaker Change: But the discrete items are really range bound into the second quarter. They obviously influence our full year result, but.

unknown: The impact is really confined to the second quarter.

Speaker Change: Got it.

Speaker Change: Thank you guys.

Operator: Thank you. Your next question comes from the line of Gary Prestopino from Barrington Research. Your line is now open.

Gary <unk>: Thank you. Your next question comes from the line of Gary <unk> from Barrington Research. Your line is now open.

Gary Prestopino: Your next question comes from the line of Gary precipito from barrington research. Your line is now open. Hi, um, good morning, everyone. I know this question was asked. I'll explain it with with acutrade. Could you maybe just Again, go over what, besides the impact of the CDK disruption, which definitely impacted your product uptake. What was going on there? Is it a function of that? The dealers did not have the manpower to implement the product, or they didn't have any incentive to implement the product. I guess it's not a good deal for what happened in the quarter and what you've changed.

Gary Prestopino: Hi. Good morning, everyone. I know this question was asked to Alex, but with AccuTrade, could you maybe just... Again, go over what, besides the impact of the CDK disruption, which definitely impacted your product uptake. What was going on there? Is it a function of the dealers did not have the manpower to implement the product, or they didn't have any incentive to implement the product, I guess.

Gary Prestopino: Hi. Good morning, everyone. I know this question was asked, Alex, but with AccuTrade, could you maybe just kind of get a feel for what happened in the quarter and what you've changed?

Operator: Hi.

Gary Prestopino: Good morning, everyone. I know this question was asked Alex.

Gary Prestopino: With Accu trade could you maybe just.

Speaker Change: Again go over what the.

Speaker Change: Besides the impact of the CDK disruption, which definitely impacted your.

Alex Vetter: Product uptake.

Speaker Change: What was going on there is it a function of that the dealers did not have the manpower to implement the product or they didn't have any incentive to implement the product I guess.

Alex Vetter: Kind of get a feel for what happened during the quarter and what you've changed.

Gary Prestopino: I'm trying to get a feel for what happened in the quarter and what you're what you've changed.

Alex Vetter: Yeah, well, my first answer, Gary, is I want to connect those two. Because while the CD8K impact was unfortunate for our customer partners, it also had an indirect impact on our sales pipeline as well. Most of our AccuTrade success year to date has been with dealer groups, and so a huge percentage of our sales pipeline was expecting those dealer groups to further deploy the solution in all of their stores. And that concentration of CDK dealers just put those sales motions on hold, right?

Alex Vetter: Yes, well first answer Gary is I want to connect those two.

Alex Federer: Yeah, well, first answer, Gary, is I want to connect those two, because while the CDK impact was unfortunate for our customer partners, it also had an indirect impact on our sales pipeline as well. Most of our acutrade success year-to-date has been with dealer groups, and so a huge percentage of our sales pipeline was expecting those dealer groups to further deploy the solution to all of their stores, and that concentration of CDK, they just put those sales motions on hold.

Speaker Change: Because while the CDK impact was unfortunate for our for our customer partners. It also had an indirect impact on our sales pipeline as well most of our accu trade success year to date has been with dealer groups and so huge percentage of our sales pipeline was expecting those dealer.

Speaker Change: Groups to further deploy the solution to all of their stores.

Speaker Change: And that concentration of CD dealer. They just put those sales motions on hold right. We had major dealer group deals that we thought would close in the quarter and they got kicked out not only indefinitely, but we hope to reboot those in Q3.

Alex Vetter: We had major dealer group deals that we thought would close in the quarter, and they got kicked out not only, you know, indefinitely, but we hope to reboot those in Q3, you know, assuming dealership operations return to normalcy, which they are. And so we feel good about that. But where we sit today, we just don't have verbal commitment that they're ready to proceed with expanding AccuTrade deployment throughout the rest of their platforms. And so I do want to connect those two things.

Alex Federer: We had major dealer group deals that we thought would close in the quarter, and they got kicked out, not only indefinitely, but we hope to reboot those in Q3, assuming dealership operations return it to normalcy, which they are. We feel good about that, but where we sit today, we just don't have verbal commitment that they're ready to proceed with expanding acutrade deployment throughout the rest of their platforms. I do want to connect those two things.

Speaker Change: Assuming dealership operations return to normalcy, which they are and so we feel good about that but where we sit today. We just don't have verbal commitment that they are ready to proceed with expanding.

Speaker Change: Accu trade deployment throughout the rest of their platforms and so but I do want to connect those two things I do think as we've signaled in prior calls.

Alex Vetter: I do think, as we've signaled in prior calls, we've been really focused on dealer success and onboarding, and we had some big wins in the quarter. Like, if you look at the dealers that we sold in the prior three periods, their utilization of the product is up 30% over the original cohort we sold in the first quarter. And so we're getting better at onboarding, we're getting better at targeting, and we're getting better at dealer utilization.

Speaker Change: <unk> been really focused on dealer success in Onboarding, and we had some big wins in the quarter like if you look at the dealers that we sold in the prior three periods their utilization of the product is up 30% over the original cohort we sold in the first quarter and so we're getting better at on boarding we're getting better at <unk>.

Alex Federer: I do think, as we signal them in prior calls, we've been really focused on dealer success and onboarding, and we had some big wins in the quarter. If you look at the dealers that we sold in the prior three periods, their utilization of the product is up 30% over the original cohort we sold in the first quarter, and so we're getting better at onboarding, we're getting better at targeting, and we're getting better at dealer utilization.

Alex Vetter: Those are all going to be tailwinds for the product, but it's clear to us that we're going to go slower, get it right, and build allegiance to the platform in the dealer community so that they endorse the solution and get it expanded across their footprint of stores. It's really just a slowdown from where we were at the beginning of this year. We had assumed that this would scale much faster, and that's clearly not happening as we would have liked. But the fundamentals of the value prop are rock solid, and the dealer excitement about the solution when they're using it remains extremely strong.

Speaker Change: <unk> and we're getting better at dealer utilization those are all going to be tailwind for the product, but it's clear to us that we're going to go slower get it right and build allegiance to the platform in the dealer community. So that they endorsed the solution and get it expanded across their footprint of stores, it's really just a.

Alex Federer: Those are all going to be tailwinds for the product, but it's clear to us that we're going to go slower, get it right, and build allegiance to the platform in the dealer community so that they endorse the solution and get it expanded across their footprint of stores. It's really just a slowdown in the, where we were at the beginning this year, we had our assumption that this would scale much faster, and that's clearly not happening as we would have liked, but the fundamentals of the value prop are rock solid, and the dealer excitement about the solution when they're using it remains extremely strong.

Speaker Change: A slowdown in the where we were at the beginning of this year, we had an assumption that this would scale much faster and that's clearly not happening as we would've liked but the fundamentals of the value prop are rock solid and the dealer excitement about the solution when they're using it remains extremely strong.

Alex Vetter: So you ended up with about 1,000 dealer customers on AccuTrade in Q1. Is it safe to assume that that number did increase a little bit in Q2? I mean, was there any deconversion?

Speaker Change: So you ended up with about 1000 dealer customers on Accu trade in Q1 is it safe to assume that that number did increase a little bit in Q2 was there was there any de conversions.

Alex Federer: So, you ended up with about a thousand dealer customers on active trading Q1, as it's safe to assume that that number did increase a little bit in Q2, and was there any deconversions? It didn't grow in Q2, and that's the disappointment that we thought we would see better growth in that. Again, a lot of the deals that we had in our sales pipeline for Q2 were CDK dealers, and so those went from like 90% likely to zero in our sales forecasting waiting virtually overnight, and then that really put a damper on Q3 momentum, which obviously impacts full year.

unknown: It didn't grow in Q2, and that's a disappointment because we thought we would see better growth in that. Again, a lot of the deals that we had in our sales pipeline for Q2 didn't materialize.

Alex Vetter: It didn't grow in Q2, and that's the disappointment that we thought we would see better growth in that. Again, a lot of the deals that we had in our sales pipeline for Q2 were CDK dealers, and so those went from like 90% likely to zero in our sales forecasting waiting virtually overnight. And then that really put a damper on, you know, Q3 momentum, which obviously impacts full year.

Speaker Change: It didn't it didn't grow in Q2.

unknown: The disappointment that we thought we would see better growth in that again, a lot of the deals that we had in our sales pipeline for Q2.

Speaker Change: Worst CDK dealers and so those those went from like 90% likely to zero and our sales forecasting waiting virtually overnight and then that really put a damper on on.

unknown: Q3 momentum.

unknown: Which obviously impacts full year.

Alex Vetter: Okay, so you've changed the strategy, and you're going after, you're trying to get OEM endorsements. With those OEM endorsements, which it's nice to see, you've got Stellantis and Jaguar Land Rover. With those endorsements, are the OEMs giving the dealers co-op support in terms of some kind of monetary figures given to them to adopt AccuTrade?

Speaker Change: Okay. So so you've changed the strategy and Youre going after youre trying to get OEM endorsements.

Gary Prestopino: Okay, so you've changed the strategy and you're going after you're trying to get OEM endorsed. [inaudible] Okay. And then I said, I just one more question. I'll get it off. Is it fairly safe to assume that if we didn't have this issue with CDK, there would have been no step down in the revenue guidance for the back after the year? It's a good question, Gary. I mean, as Alex indicated, you know, acutrade was a little softer than we expected it to be in Q2.

Speaker Change: With those OEM endorsements, which it's nice to see you go to the Atlantis.

Speaker Change: In Jaguar land Rover.

Speaker Change: With those endorsements of the deal or the Oems.

Speaker Change: Giving the dealers or co op co op support in terms of some kind of monetary.

Speaker Change: Figures given to them to adopt <unk>.

Alex Vetter: So a couple of things, Gary. First of all, I wouldn't say we're totally changing the strategy because our AccuTrade sales are still solid, and we're still getting dealers to adopt the full solution. I would classify this as saying we're showing agility with the strategy to pursue growth in new ways. And so the website solutions is something that we signaled last year that all OEMs are realizing that they need trade-in solutions to facilitate new car sales.

Alex Vetter: So a couple of things first of all I wouldn't say, we're totally changing the strategy because our accu trade sales are still.

Alex Vetter: Solid and we're still getting dealers to adopt the full solution I would classify this as saying, we're showing agility with our strategy to pursue growth in new ways.

Alex Vetter: So the website solutions is something that we signaled last year that all Oems are realizing that they need trading solutions to facilitate new car sales if you can't get a consumer out of their existing.

Alex Vetter: If you can't get a consumer out of their existing vehicle, it's hard to sell them a new car. And so all the OEMs started talking to us about using AccuTrade technology, not only on their Tier 1 website to talk to consumers directly, but deploying it across their dealer websites. And so, yes, we got a couple of huge wins that we shifted to in the quarter to land some OEM endorsements that do include co-op dollars for the platform.

Alex Vetter: If you can't get a consumer out of their existing vehicle, it's hard to sell them a new car. And so all the OEMs started talking to us about using AccuTrade technology, not only on their Tier 1 website to talk to consumers directly, but deploying it across their dealer websites. And so yes, we got a couple of huge wins that we shifted to in the quarter to land some OEM endorsements that do include co-op dollars for the platform.

Alex Vetter: Vehicle, it's hard to sell them, a new car and so all Oems started talking to us about using accu trade technology not only on their tier one website.

Alex Vetter: To talk to consumers directly but deploying it across our dealer websites and so yes, we got a couple of huge wins.

Alex Vetter: That we shifted to in the quarter to land. Some OEM endorsements that do include co op.

Alex Vetter: And in some cases, they're paying for the dealer to have this widget on their website. For the JLR deal, we're the exclusive trade-in provider for all JLR websites. And so we're going to begin that rollout in Q3, where we'll be replacing any legacy trade-in technology on dealer websites with AccuTrade. We know that through that experience, the dealers are going to be impressed with what they see in the product. And we think that will open up upsell conversations to deploy the full AccuTrade technology in their physical stores and off our marketplace as well.

Alex Vetter: <unk> dollars for the platform and in some cases.

Alex Vetter: They are paying for the dealer to have this widget on their website.

Alex Vetter: The <unk> deal, we're the exclusive trade and provider for all <unk> websites and so we're going to begin that rollout in Q3, where we will be replacing any legacy trading technology on dealer websites and inserting accu trade, we know that through that experienced the dealers are going to be impressed with what they see.

Alex Vetter: In the product and we think that will open up upsell conversations to deploy the full accu trade technology in their physical stores and and off our marketplace as well.

Alex Vetter: Okay, and just one more question on that with the certification. Pazicchia mentioned Jaguar Land Rover, you're going to be rolling that out, but dealers aren't required. Take AccuTrade.

Speaker Change: Okay, and just one more question on that with the.

Alex Vetter: Certification.

Speaker Change: Particularly I mentioned Jaguar land Rover, youre going to be rolling that out the dealers arent required.

Alex Vetter: Again, it's up to the individual dealers to decide, but the OEM can be very coercive in that regard. Is that right? Is that a correct assumption?

Alex Vetter: Hey, Jack you trade again, it's up to the individual deal has to decide.

Speaker Change: The OEM can be very cohorts within that regard is that right.

Alex Vetter: <unk> assumptions.

Alex Vetter: I'll let JLR speak to how hard they're going to enforce it, but they've announced this as the exclusive technology that they want to see deployed across all JLR websites, whether we've built them or not. And so we are providing this technology that will be private-labeled on the dealer websites. JLR is beginning its rollout to their dealer network, and they're looking to create a consistent digital retail experience, which we are going to power, not only for the corporate website but, again, exclusively across all JLR websites.

Alex Vetter: I'll, let Jill I'll have to speak to how hard theyre going to enforce it but but they've announced as the exclusive technology that they want to see it deployed across all <unk> websites, whether we build them or not and so we are providing this technology that will be private labeled on the dealer websites J L.

Alex Vetter: <unk> is beginning their rollout to their dealer network and Theyre looking to create a consistent digital retail experience, which we are going to power not only for the corporate web site, but again exclusively across all <unk> websites. So we do think it will produce meaningful up sell opportunities. It certainly will mean lower revenue.

Alex Vetter: So we do think it'll produce meaningful upsell opportunities. It certainly will mean lower revenue initially, but like we showed with dealer website adoption, when we landed these OEM endorsements, it led to faster overall sales growth for not just websites, but for media, and for the marketplace to those dealers because of the OEM backing.

Alex Vetter: Initially, but like we showed with dealer website adoption. When we landed these OEM endorsements did lead to faster overall sales growth for not just websites, but for media and for marketplace to those dealers because of the OEM backing.

Alex Vetter: Okay, and then I said, I just have one more question. I'll get off. Is it fairly safe to assume that if we didn't have this issue with CDK, there would have been no step down in the revenue guidance for the back half of the year?

Unknown Analyst: Okay, and then I said, I just have one more question. I'll get off. Is it fairly safe to assume that if we didn't have this issue with CDK, there would have been no step down in the revenue guidance for the back half of the year?

Speaker Change: Okay and then.

Speaker Change: Just one more question and I'll get a look at it fairly safe to assume that if we didn't have this issue with CDK there would've been no step down in the revenue guidance for the back half of the year.

Sonia Jain: It's a good question, Gary. I mean, as Alex indicated, AccuTrade was a little softer than we expected it to be in Q2. We're really pleased with the OEM endorsements we have in that land and expand strategy that we're going to run with our website application to Connected. And we're also pleased with the promotions we put into the market to drive dealer engagement. They just take time. So, you know, that was certainly an additional component factored into the guide in addition to the disruption from CDK.

Gary Prestopino: It's a good question, Gary I mean, as Alex indicated accu trade was a little softer than we expected it to be in Q2, we're very pleased with the OEM endorsements, we have in that land and expand strategy that we're going to run with our website application to connected and we're also pleased.

Gary Prestopino: We're really pleased with the OEM endorsements we have in that land and expand strategy. We, that we're going to run with our website application to connect it. And we're also pleased with the promotions we put into market to drive dealer engagement. They just take time. So, you know, that was certainly an additional components factored into the guide in addition to the disruption from CDK. Okay.

Unknown Executive: Thank you.

Speaker Change: With the promotions, we put into market to drive dealer engagement. They just take time.

Unknown Analyst: So that.

Speaker Change: That was certainly an additional component factored into the guide in addition to the disruption from CDK.

Speaker Change: Thank you.

Speaker Change: Thank you Steve.

Operator: Thank you. Your next question comes from the line of Rajat Gupta from J.P. Morgan. Your line is now open.

Operator: Thank you. Your next question comes from the line of Rajat Gupta from J.P. Morgan. Your line is now open. Good morning.

Speaker Change: Thank you. Your next question comes from the line of Rajat Gupta from Jpmorgan. Your line is now open.

Roger Gupta: Your next question comes from the line of Roger Gupta from JP Morgan. Your line is now open. Good morning. Thanks for taking the questions. Just heard a question on the second half guidance. You know, appreciate all the color on the torch water. You know, the impact from CDK and you know, the acutrade impact. But but if I, you know, if I look at the fourth quarter guidance, implied fourth quarter guidance. The midpoint implies, you know, around 3% revenue growth.

Rajat Gupta: Good morning. Thanks for taking the time to answer the question. Just had a question on the second half guidance. You know, I appreciate all the color on the third quarter, the impact from CDK, and, you know, the active trade impact. But if I, you know, if I look at the fourth-quarter guidance, implied fourth-quarter guidance, the midpoint implies, you know, around 3% revenue growth. I mean, That would be slower than the third quarter if I excluded the CDJ impact.

Rajat Gupta: Hey, good morning, Thanks for taking the questions just had a question on the.

Rajat Gupta: Second half guidance I appreciate all the color on the third quarter.

Operator: <unk>.

Rajat Gupta: From CDK and the IC trade it back.

Rajat Gupta: If I look at the fourth quarter guidance implied fourth quarter guidance.

Speaker Change: The midpoint implies around 3% revenue growth.

Rajat Gupta: That would be slower than the third quarter if I excluded the CDJ impact, or is it really AccuTrade driven? And just related, I was just curious, you know, how much was the AccuTrade contribution?

Speaker Change: That would be slower than the third quarter, if I excluded the CDK impact.

Roger Gupta: I mean, that would be slower than the third quarter. If I excluded the CDK impact. So I'm curious like what's what's driving that deceleration? Why isn't there like offsets, you know, from the other areas of the core business? Or is it like really acutrade driven? And just relatedly, I was just curious, you know, if how much was the acutrade contribution supposed to be in the initial 2024 guidance that you provided out here in the year. If you decide those two would be helpful and have a good follow-up.

Rajat Gupta: So I'm curious, like, what's driving that deceleration? Why aren't there, like, offsets, you know, from the other areas of the core business? or is it really AccuTrade driven? And just relatedly, I was just curious, you know, how much was the AccuTrade contribution? Supposed to be in the initial 2024 guidance that you provided earlier in the year. If you could just tie those two together, it would be helpful and have a quick follow-up.

Speaker Change: So I am curious like what's driving that deceleration why isn't there.

Speaker Change: Offsets from the other areas of the core business.

Speaker Change: Or is it like really accurate trade driven.

Rajat Gupta: And just Relatedly I was just curious.

Speaker Change: How much was the <unk> contribution.

Speaker Change: Supposed to be in the initial 2024 guidance that you provided earlier if you could just tie those two would be helpful and I've got a quick follow up thanks.

Sonia Jain: Thanks for the questions, Rajat. I am not 100% sure I'm getting to quite the same conclusion as you are for slowing growth in Q4. We do expect to see some strong trajectory as we move through the balance of the second half. From some of our comments earlier, as you've probably gathered, we had strong aspirations for the AccuTrade ramp-up over the course of this year. Last year, we were largely devoted to pricing and packaging efforts in our marketplace.

Sonia Jain: Thanks for the question, Roger. I am not 100% sure I'm getting to quite the same math as you are for flowing growth in Q4. We do expect to see some strong trajectory as we move through the balance of the second half. You know, from some of our comments earlier as you've probably gathered, we had, you know, we had strong aspirations for the acutrade ramp up over the course of this year. You know, last year we were largely devoted to pricing and packaging efforts on our marketplace.

Speaker Change: Thanks for the thanks for the thanks for the question Richard.

Rajat Gupta: Hi.

Speaker Change: Not 100% sure I'm getting to quite the same math as you are for <unk>.

Speaker Change: <unk> growth in Q4, when do you expect to see some strong trajectory as we move through the balance of <unk>.

Speaker Change: The second half.

Speaker Change: Some of our comments earlier as you've probably gathered we had we had strong aspiration for the <unk> ramp up over the course of this fair.

Speaker Change: Last year, we were largely devoted to pricing and packaging efforts on our marketplace and so.

Speaker Change: There's been some challenges CDK certainly interrupted some of that effort. We have put in place in Q2 to try to drive dealer engagement and that is a reason for the revision in part to our guidance range.

Sonia Jain: There have been some challenges. CDK certainly interrupted some of the efforts we had put in place in Q2 to try to drive dealer engagement. That is a reason for the revision, in part, to our guidance rate.

Sonia Jain: And so, you know, there have been some challenges, CDK certainly interrupted some of the efforts we had put in place in Q2 to try to drive dealer engagement. And that is a reason for the revision in part to our guidance range. Understood. Okay, that's clear. We can check offline on the fourth quarter of math. And just with the buyback, you know, comments on the second half, again, like, you know, my math would imply, you know, something like 30, 30, between 30 to 40 million. A potential share report is in the second half. Is that in the ballpark in terms of the assumptions we should be making? That is in the ballpark. We agree on that now. Great.

Sonia Jain: understood. Okay, that's great.

Rajat Gupta: Understood.

Speaker Change: Okay. That's clear we can get there.

Speaker Change: We can take offline on the fourth quarter Matt.

Speaker Change: And just with the buyback.

Speaker Change: Comment on the second half.

Rajat Gupta: We can check offline on the fourth quarter, Matt. And just the buyback, you know, comment on the second half. Again, my math would imply, you know, something like 30, 30, between 30 to 40 million of potential share repurchases in the second half. Is that in the ballpark in terms of the assumptions you should be making?

Speaker Change: Again like.

Speaker Change: My math would imply.

Speaker Change: Something like 30, 30 between $30 million to $40 million.

Speaker Change: A potential share repurchases in the second half.

Speaker Change: Is that is that in the ballpark in terms of the assumptions, we should be making.

Sonia Jain: That is in the ballpark. We agree on that math. Okay.

Speaker Change: That is in the ballpark we agree on that now.

Rajat Gupta: Okay, great. And just last question, just in the competitive landscape, you know, what's the latest that you're seeing from some of your public or private peers in terms of pricing or sales competitiveness? And what would you call out to be the main advantages, you know, in the current landscape for car commerce? Thanks.

Speaker Change: Okay great.

Speaker Change: Great and then just last question just on the competitive landscape.

Speaker Change: What's the latest that you're seeing from from some of your public or private spheres.

Alex Federer: And this last question, just on the competitive landscape, you know, what's the latest that you're seeing from some of your public or private peers in terms of pricing or sales competitiveness? And what would you call out to be the main advantages, you know, in the current landscape for cars commerce? Thanks. Yeah, I mean, look, it's I'm following some of the public reporting that's coming out this week and trying to track the various puts and takes from various players.

Speaker Change: In terms of pricing or sales competitiveness.

Speaker Change: And what would you call out to be the main advantages.

Speaker Change: The current landscape for cars commerce. Thanks.

Alex Vetter: Yeah, I mean, look, I'm following some of the public reporting that's coming out this week and trying to track the various Puts and takes from various players. I think the high-level benefits that we offer that our competitors do not, Rajat, you know that the majority of our traffic is coming to us organically or directly. And so when customers invest with us, they're getting true incremental lift to their sales performance. Most of our peers rely on search engine marketing arbitrage, which directly competes with the dealer's other marketing budgets. That's number one.

Speaker Change: Yes, I mean look its im following some of the public reporting that's coming out this week and trying to track the various.

Speaker Change: Puts and takes from various players I think the high level of benefits that we offer that our competitors do not or is it you know that the majority of our traffic is coming to us organically or directly and so when customers invest with us theyre getting true incremental lift to their sales performance most of our peers rely on search.

Alex Federer: I think the high level benefits that we offer that our competitors do not. Rajat, you know that the majority of our traffic is coming to us organically or directly. And so when customers invest with us, they're getting true incremental lift to their sales performance. Most of our peers rely on search engine marketing arbitrage, which directly competes with the dealer's other marketing budgets. That's number one. I think on the technology solution side, I don't think we have a real peer because our website solutions are best in class, both domestically in the US and in now in Canada, where we achieve number one status.

Speaker Change: The engine marketing arbitrage, which directly competes with the dealers other marketing budgets. That's number one I think on the technology solutions side I don't think we have a real peer because our.

Sonia Jain: On the technology solution side, I don't think we have a real peer because our website solutions are best in class, both domestically in the US and now in Canada, where we have achieved number one status. And our AccuTrade technology, while growing slower than we would like, is still contributing nicely to both our growth and our platform efficacy, which has strong flow through to the bottom line. And so as we get dealers to adopt our technology, you know, it's adding meaningful layers of ARPD that create a meaningful profit picture for the business that's going to generate a lot of free cash flow.

Speaker Change: Website solutions are best in class both domestically in the U S and now in Canada, where we achieved number one status and our accu trade technology, while growing slower than we would like is still contributing nicely to both our growth and our platform efficacy, which has strong flow through to the bottom line and so.

Alex Federer: Then our acutrade technology while growing slower than we would like is still contributing nicely to both our growth and our platform efficacy, which has strong flow through to the bottom line. And so as we get dealers to adopt our technology, you know, it's adding meaningful layers of ARPD that create a meaningful profit picture for the business that's going to generate a lot of free cash flow. So I think we're really well positioned.

Speaker Change: So as we get dealers to adopt our technology.

Speaker Change: It's adding meaningful out layers of <unk> that create a meaningful profit.

Speaker Change: Picture for the business that is going to generate a lot of free cash flow. So I think we're really well positioned we've got strong growth in both revenue and EBITDA. This year in the second half, while it's a little bit lower than we would like I think the fundamentals are strong here and we continue to execute.

Sonia Jain: So I think we're really well positioned. We've got strong growth in both revenue and EBITDA this year in the second half. While it's a little bit lower than we would like, I think the fundamentals are strong here, and we continue to execute. Sonja Jari, Winnipeg Co., Inc.

Alex Federer: We've got strong growth in both revenue and even to this year and the second half. Well, it's a little bit lower than we would like. I think the fundamentals are strong here and we continue to execute.

Rajat Gupta: understood. Great. Thanks for the color and good luck.

Speaker Change: Understood great. Thanks for the color and good luck.

Roger Gupta: Thank you. Thanks for the color and good luck.

Operator: Thank you. Next question from the line of Marvin Fong from BTIG. Your line is now open.

Speaker Change: Thank you. Our next question from the line of Morningstar from <unk>. Your line is now open.

Marvin Fong: Thank your next question from the line of Marvin from VTIG. Your line is now open. But I guess just to put a finer point.

unknown: but I guess just to put a finer point on it, so with AccuTrade,

Marvin Fong: I guess just to put a finer point, with AccuTrade, do you have visibility on how many actual transactions are occurring there and should we view that as appraisals being a good proxy for that? And then part B of that question is, you obviously won those two great endorsements in the quarter with Stellantis and Jaguar. You know, what's the pipeline for more wins there? You know, you had four straight a couple of quarters ago. Is there an active – is there activity around, you know, other major names? And then I have a follow-up.

Speaker Change: But I guess just to.

unknown: To put a finer point.

unknown: So with Accu trade.

Speaker Change: Do you have the visibility on how many actual transactions are occurring there. It should we should we view that as a.

Alex Federer: So with acutrade, you know, do you have the visibility on how many actual transactions are occurring there? And should we to review that as appraisals being a good proxy for that? And then part of the other question is, you know, you obviously won those two great endorsements in the quarter with the lenses and Jaguar. You know, what's the pipeline for more wins there? You know, you had four direct couple of quarters ago.

Speaker Change: Appraisals being a good proxy for that and then part of that question is.

Speaker Change: Obviously, one of those two great endorsements in the quarter was the Lantus and Jaguar.

Speaker Change: What's the pipeline for more wins.

Speaker Change: For direct couple of quarters ago.

Speaker Change: Is there an active.

Speaker Change: As our activity around.

Speaker Change: Other major nameplate.

Alex Federer: Is there is there an active? Is there activity around, you know, other major name plate? And then I will follow up. Great questions, Marvin. So first and foremost, we do see vehicle acquisitions on dealerships because we can see which cars are appraised. And then we see them appear in their dealer inventory listed on our marketplace. And so we are starting to match that technology. And what we saw, you know, year to date is that dealerships are requiring about 17 cars on average in June, which was down slightly from May, which was 18, which you think about that that if you were to apply auction fees against 17 or 18 cars, you know, dealers are spending $2 to $3,000 to acquire a car via auction for one vehicle where with acutrade, our software solutions, they can acquire 17 or 18, you know, for that same dollar amount.

Speaker Change: And then I have a follow up.

Alex Vetter: So, great questions, Marvin. First and foremost, we do see vehicle acquisitions by dealerships because we can see which cars are appraised, and then we see them appear in their dealer inventory listed on our marketplace. And so, we are starting to match that technology, and what we saw year to date is that dealerships are acquiring about 17 cars on average in June, which was down slightly from May, which was 18. So, think about that.

Speaker Change: So great questions Marvin So first and foremost we do see.

Speaker Change: <unk> acquisitions.

Speaker Change: <unk> shifts because we can see which cars are appraised and then we see them appear in their dealer inventory listed on our marketplace and so we are starting to match that technology in and what we saw year to date is that dealerships are requiring about 17 cars on average in June.

Speaker Change: Which was down slightly from May which was <unk> 18, which think about that if you were to apply auction fees against 17, or 18 cars or dealers are spending two to $3000 to acquire a car via auction for one vehicle, where with accu trade our software solutions, they can acquire 17 or <unk>.

Alex Vetter: If you were to apply auction fees against 17 or 18 cars, dealers are spending $2,000 to $3,000 to acquire a car via auction for one vehicle, where with AccuTrade, our software solutions, they can acquire 17 or 18 for that same dollar amount. And so, we know that the delta between sourcing inventory from your customer base versus the physical auction is a macro trend that you can absolutely bet on. This is the winning approach, and dealerships that are doing this successfully are reporting record profits. And so we know that we're on the right track.

unknown: <unk>.

Speaker Change: For that same dollar amount and so we know that the delta between sourcing inventory from your customer base versus the physical auction is a macro trend that you can absolute bet. On this is the winning approach in dealerships that are doing this successfully are reporting record profits.

Alex Federer: And so we know that the delta between sourcing inventory from your customer base versus the physical auction is a macro trend that you can absolute bet on. This is the winning approach and dealerships that are doing this successfully are reporting record prop. And so we know that we're on the right macro attack point in terms of the legacy model of wholesale versus the new way to retail. I think the second part of your question was really about, I think the OEM endorsements and you'll see even on our social posts announcing the Stellantis deal.

unknown: And so we know that we're on the right macro.

Speaker Change: And so we know that we're on the right macro.

Alex Vetter: At&ck Point in terms of the legacy model of wholesale versus the new way to retail. I think the second part of your question was really about, I think the OEM endorsements. And you'll see even on our social posts announcing PhilanthroSteel, there are more dealer comments on these posts than anything we've ever talked about. There's general excitement coming from the dealer community that finally, their car companies are backing dealer digital offerings. Historically, OEMs have forced dealerships to update their physical showrooms and build modern coffee bars and physical structures.

Speaker Change: Attack point in terms of the legacy model of wholesale versus the new way to retail I think the second part of your question was really about I think the OEM endorsements and Youll see even on our social posts announcing the Atlantis feel theres more dealer comments on these.

Speaker Change: Post than anything we've ever talked about there's general excitement coming from the dealer community that finally, the car companies are backing dealer digital offerings, historically Oems have forced dealerships to update their physical showrooms and build modern coffee bars, and physical structures I think youre going to see continued capital.

Alex Federer: There's more dealer comments on these posts than anything we've ever talked about. There's general excitement coming from the dealer community. That finally their car companies are backing dealer digital offerings. Historically, OEMs have forced dealerships to update their physical showrooms and build modern coffee bars and fiscal structures. I think you're going to see continued capital allocation shifts by OEMs to help dealers do digital more and we've built that infrastructure to both support tier one and tier three far more effectively than any of our peers.

Alex Vetter: I think you're going to see continued capital allocation shifts by OEMs to help dealers do digital more. And we've built that infrastructure to both support Tier 1 and Tier 3 far more effectively than any of our peers.

Speaker Change: Allocation shifts by Oems to help dealers do digital more and we've built that infrastructure to both support tier one and tier three far more effectively than any of our peers.

Alex Vetter: Gotcha. And obviously, we talked a lot about the guidance.

unknown: Gotcha. And obviously, we talked a lot about the guidance.

unknown: Gotcha.

Speaker Change: And obviously, we talked a little about the guidance I actually would just like to kind of take a look at the second quarter numbers in terms of both dealer count and <unk>. So.

Alex Federer: That's it. And obviously, we talked a lot about the guidance. I actually would just like to kind of take a look at the second quarter numbers in terms of both dealer count and ARPD. So, you know, the CDK impact the numbers at all. I mean, you mentioned the loss sales and rent and closing the quarter as well as just the fact that it was like packet trade at a bit more churn.

Speaker Change: The CDK impact global numbers at all I mean, you mentioned the loss sales alone term closing quarter.

Speaker Change: As well as just the fact that it looks like packaged trade a bit more churn so.

Marvin Fong: I actually would just like to kind of take a look at the second quarter numbers, you know, in terms of both dealer count and ARPD. So, you know, did the CDK impact those numbers at all? I mean, you mentioned the lost sales momentum closing the quarter, as well as just the fact that it looks like packet trade had a bit more churn. So, you know, the fact that – or what looks like ARPD, you know, was a bit lower than at least I was modeling, you know, how much of that was kind of due to CDK, how much was due to other items, and then how much was due to just the Ac

Speaker Change: It looks like that.

unknown: It looks like <unk>.

Sonia Jain: So, you know, the fact that or what looks like ARPD, you know, was a bit lower than at least I was modeling, you know, how much of that was kind of due to CDK, how much was due to other items. And then how much was due to just the acutrade shortfall, if you could maybe just help us understand how the second quarter evolved because it did really come in below the low end of your guidance on the revenue line, just some help there would be, it would be great.

Unknown Analyst: I actually would just like to kind of take a look at the second quarter numbers, you know, in terms of both dealer count and ARPD. So, you know, did CBK impact those numbers at all? I mean, you mentioned the lost sales momentum closing the quarter, as well as just the fact that it looks like AccuTrade had a bit more churn. So, you know, the fact that, or what looks like ARPD, you know, was a bit lower than I was modeling, you know, how much of that was kind of due to CBK, how much was due to other things, and then how much was due to just the AccuTrade shortfall.

Speaker Change: A bit lower than that at least I was modeling how much of that was kind of due to CDK.

Unknown Analyst: How much was due to other items and then how much was due to just the accu trade shortfall. If you could maybe just help us understand how.

Speaker Change: The second quarter evolved because I believe come in below the low end of your guidance on the revenue line just some help there would be that would be great.

Unknown Analyst: If you could maybe just help us understand how the second quarter evolved because it did, I believe, come in below the low end of your guidance on the revenue line, just some help there would be great.

Marvin Fong: If you could maybe just help us understand how the second quarter evolved because it did, I believe, come in below the low end of your guidance on the revenue line, just some help there would be great. Thank you.

Speaker Change: Yes ill start and then maybe Sonya you could add some more detail, but first of all we were really pleased to grow dealer count in the quarter right. We would have certainly liked it to be higher but the fundamental trend line starting to shift and we started seeing higher new sales.

Alex Vetter: Yeah, I'll start and then maybe Sonia, you could add some more detail, but first of all, we were really pleased to grow the dealer count in the quarter, right? We would certainly like it to be higher, but the fundamental trend line started to shift, and we started seeing higher new sales. We announced on the call that, you know, we've got strong traffic trends, our lead and value delivery is also accelerating, and I'm so very pleased that our dealer count grew in the quarter, and I think that can bode well.

Alex Vetter: Yeah, I'll start and then maybe Sonia, you could add some more detail, but first of all, we were really pleased to grow dealer count in the quarter, right? We would certainly liked it to be higher, but the fundamental trend line started to shift, and we started seeing higher new sales. We announced on the call that, you know, we've got strong traffic trends, and our lead and value delivery is also accelerating.

Sonia Jain: Yeah, I'll start then maybe so you could add some more detail, but first of all, we were really pleased to grow dealer count in the quarter, right. We would have certainly liked it to be higher, but the fundamental trend line started to shift and we started seeing higher new sales. We announced on the call that, you know, we've got strong traffic trends, our lead and value delivery is also accelerating. And so, very pleased that our dealer count grew in the quarter.

Sonia Jain: We announced on the call that we've got strong traffic trends, our lead and value delivery is also accelerating and so very pleased that our dealer count grew in the quarter.

Alex Vetter: And so, I'm very pleased that our dealer count grew in the quarter, and I think that bodes well. And by the way, the fact that we did that without seeing any depreciation ARPD shows that that is solid dealer growth, right? That we're getting both customer growth and we're holding, if not slightly growing, our average revenue per dealer is a very healthy metric. It did impact it negatively in that we anticipated more sales coming in through AccuTrade in Q2. And in Q3, we just thought we'd have more momentum by now.

Sonia Jain: And I think that can bode well, unfortunately and by the way. The fact that we did that without seeing any depreciation ARPG shows that that is solid dealer growth rate that we're getting both customer growth and were holding if not slightly growing our average revenue per dealer, it's a very healthy metric it did impacted negatively in that.

Alex Vetter: And by the way, the fact that we did that without seeing any depreciation ARPD shows that that is solid dealer growth, right? That we're getting both customer growth and we're holding, if not slightly growing, our average revenue per dealer. It's a very healthy metric. It did impact it negatively in that we anticipated more sales coming in through AccuTrade in Q2, and in Q3, we just thought we'd have more momentum by now, and I think we've talked about that enough here that I don't have to go into those details, but it would have actually grown ARPD better had we had seen that sales lift. Looking ahead, obviously, D2C has a lower price point than domestically where we sell our services. So even though we may get continued dealer growth,

Sonia Jain: And I think that can both well, unfortunately, and by the way, the fact that we did that without seeing any depreciation ARPD shows that that is solid dealer growth, right. That we're getting both customer grows and we're holding it's not slightly growing our average revenue per dealer. It's a very healthy metric. It did impact it negatively and that we anticipated more sales coming in, honestly, through AccuTrade in Q2. And in Q3, we thought just thought we'd have more momentum by now.

Alex Vetter: The anticipated more sales coming in honestly through accu trade in Q2 and.

Alex Vetter: And in Q3, we just thought we'd have more momentum by now.

Alex Vetter: I think we've talked about that enough here that I don't have to go into those details, but it would have actually grown ARPD better had we had seen that sales lift. Looking ahead, obviously, D2C has a lower price point than domestically where we sell our services. So even though we may get continued dealer growth, that inorganically depresses ARPD a bit, and our solution strategy to sell dealer website solutions comes in at a lower starting point as well.

Alex Vetter: And I think we've talked about that enough here that I won't go into those details, but it would have actually grown ARPG better had we would have seen that sales lift.

Sonia Jain: And I think we've talked about that enough here that I don't go into those details, but it would have actually grown ARPD better had we would have seen that sales lift. Looking ahead, obviously, D to C has a lower price point than domestically what we sell our services. So even though we may get continued dealer growth, that that that inorganically depresses ARPD a bit. And our solution strategy to sell dealer website solutions comes in at a lower starting point as well.

Alex Vetter: Looking ahead.

Alex Vetter: Obviously, <unk> has a lower price point than domestically, what we sell our services. So even though we may get continued dealer growth.

Alex Vetter: That inorganically depresses her PD, a bit and our solution strategy to sell dealer website solutions comes in at a lower starting point as well and so <unk> grow as fast, but it's still very strong.

Alex Vetter: And so ARPD may not grow as fast, but it's still very strong, growing steadily. And if we can get dealer growth and ARPD growth, you know, that creates a really powerful financial picture. I don't know, Sonia, what else you'd add in terms of detail.

Sonia Jain: And so ARPD may not grow as fast, but it's still very strong growing steadily. And if we can get dealer growth in ARPD growth, you know, that creates a really powerful financial picture. I don't know so knew what else you had in terms of detail. Yeah, need to just fill in a couple a little bit more color. I think related to ARPD, Marvin, one of the one of the impacts in Q2 is in fact the discrete items that I was mentioning earlier, those do run through ARPD since they were in our dealer revenue number and we're trying to be, you know, fairly consistent with our use of these kinds of metrics.

Sonya: Growing steadily and if we can get dealer growth and <unk> growth that creates a really powerful financial picture I don't know Sonya what else you'd add in terms of detail maybe to just fill in.

Sonia Jain: Yeah, maybe to just fill in a couple, a little bit more color. I think related to ARPD, Marvin, one of the impacts in Q2 is, in fact, the discrete items that I was mentioning earlier. Those do run through ARPD since they were in our dealer revenue number, and we're trying to be fairly consistent with our use of these kinds of metrics. So that's probably the single biggest reason that the ARPD came in a little bit lower than you modeled it.

Sonia Jain: A little bit more color I think related to AAR PDE Marvin one of the one of the impacts in Q2 is in fact, the discrete item that I was mentioning earlier those do run through.

Sonia Jain: <unk> and our dealer revenue number and we're trying to be fairly consistent with our use of these kinds of metrics. So thats, probably the single biggest reason.

Sonia Jain: So that's probably the single biggest reason the ARPD came in a little bit lower than you you modeled it. So just to be clear, in your guidance when you provided it a couple of months ago, did the discrete items was not contemplated? Those were not contemplated. No, those weren't those were not expected. Nor were they expected in the full year. You know, the other thing I'll mention too, which may be hopeful, you know, I'll see the CDT disruption certainly had an impact on our business for Q2 in particular.

Sonia Jain: The.

Sonia Jain: <unk> came in a little bit lower than you modeled angle.

Unknown Analyst: So just to be clear, in your guidance, when you provided it a couple months ago, the discrete items were not contemplated.

Marvin Fong: So just to be clear, in your guidance, when you provided it a couple months ago, the discrete items were not contemplated.

Marvin: So just to be clear in your guidance when you provided it.

Marvin: Couple of months ago, the discreet items was not contemplated.

Sonia Jain: Those were not contemplated. No, those were not expected.

Speaker Change: Those are not contemplated now those workloads are not expected.

Sonia Jain: Nor were they expected for the full year.

Marvin: Nor were they expected in the full year.

Sonia Jain: You know, the other thing I'll mention, too, which may be helpful, is that while the CDK disruption certainly had an impact on our business, for Q2 in particular, it was less of a financial impact. You see it more in the operating metrics of the business, given the disruption to the sales cycle. So it interferes with, like, your Q2 exit rate going into Q3, but the financial impact is going to be weighted to the following quarter. So that's why we've been talking about it in the context of Q3 full-year guidance, if that.

Unknown Analyst: The other thing I'll mention to which may be helpful.

Marvin Fong: Oh yeah, that makes total sense. I thought maybe more on the dealer accounts, like a June 30 cut-off that had more of a CDK reflection. Yeah, so that's where he saw it. Right. Okay, I'll take the rest of my questions offline. Thank you.

Sonia Jain: It was less of a financial impact. You see it more in the operating metrics of the business, given the disruption to the sales cycle. So it interferes with like your Q2 exit rate going into Q3. But the financial impact is going to be weighted to the following quarter. So that's why that's why we've been talking about it in the context of Q3 full year guidance. If that's helpful. Oh, yeah, that takes total sense. I thought maybe more on the dealer account with like a June 30 cutoff with that head. More on the CDT. Yeah, so that's where you thought. Right. Okay, I'll take the rest of my questions off.

Speaker Change: If people didn't pay disruption certainly had an impact on our business for Q2 in particular it was less of a financial impact you see it more in the operating metrics of the business given the disruption to the sales cycle.

Unknown Executive: Thank you.

Speaker Change: Interferes with like your Q2 exit rate going into Q3.

Speaker Change: The financial impact is going to be weighted to the following quarter. So that's why that's why we've been talking about it in the context Q3 full year guidance. If that's helpful.

Unknown Analyst: Oh yeah, that makes total sense. I thought maybe more on the dealer accounts, like a June 30 cut-off that had more of a CDK reflection. Yeah, so that's where he saw it.

Marvin: Oh, yes that makes total sense I thought maybe more on the dealer Council stuff like a June 30, cutoff, but that had more of a CD.

Unknown Analyst: Hi.

Unknown Analyst: Right.

Speaker Change: I'll take the rest of my questions.

Speaker Change: Thank you.

Operator: Next question comes from the line of Tom White from VA Davidson. Your line is now open.

Unknown Analyst: Next question is from the line of Tom White from D. A Davidson your line is now open.

Tom White: Next question from the line of Tom White from V.A. David, then your line is now open. Great. Thanks. A couple if I could. I guess just first done the national OEM line. So maybe you could just parse out a little bit for us. Kind of have a different like cohorts of advertisers in their performance. I guess I'm sort of grouping it. Maybe like legacy kind of auto OEMs. You know, non auto national advertisers.

Thomas White: Great, thanks. A couple if I could.

Tom White: Great, thanks. A couple if I could.

Tom White: Great. Thanks, a couple if I could I guess, just first on the National OEM line.

Tom White: And then maybe some new auto OEMs like the EV guys. Just curious like how you know sort of spend is trending for for those groups. And can you confirm? Did you say that the line will be down quarter over quarter in the third quarter. And then I got to follow up for Alex. I'll just start on them on the mix. Most of our growth with OEMs, Tom has come through the smaller upstart and or mid mid here OEMs.

Unknown Analyst: I guess just first on the national OEM line. Sonia, maybe you could just parse out a little bit, for us, kind of have different cohorts of non-auto national advertisers, and then maybe some new auto OEMs like the EV guys. Spend is trending for those groups, and can you confirm? Did you say that the line would be down quarter over quarter?

Tom White: So maybe you could just parse a little bit for us.

Thomas White: I guess just first on the national OEM line, Sonia, maybe you could just parse out a little bit, for us, kind of how different cohorts of Advertisers in there performed, I guess I'm sort of grouping them, maybe like legacy kind of auto OEMs, non-auto national advertisers, and then maybe some new auto OEMs like the EV guys. Just curious, like, how, you know, sort of.

Unknown Analyst: Kind of how the different cohorts of advertisers and their performed I guess im sort of grouping it maybe like legacy kind of auto Oems.

Unknown Analyst: Non auto National advertisers and then maybe some new auto Oems like the <unk> guys.

Unknown Analyst: Just curious like how sort of spend is trending for for those groups and can you confirm did you say that the line will be down quarter over quarter.

Thomas White: Spend is trending for those groups, and can you confirm? Did you say that the line would be down quarter over quarter in the third quarter? And then I've got a follow-up for Alex.

Speaker Change: In the third quarter, and then I've got a follow up for Alex.

Alex Vetter: I'll just start on the mix. Most of our growth with OEMs, Thomas, has come through the smaller upstart and or mid-tier OEMs. We still have the largest OEMs have largely sat on the sidelines. The reason we're not baking those into our second half guide is that, you know, Hunting those giants is hard to predict, right? If one of those giants were to step back in, it would change the game for us profoundly, but we just don't feel confident baking that into our full-year guide.

Speaker Change: I'll just start on the on the mix most of our growth with Oems Thomas have come through the smaller upstart <unk> mid mid tier Oems, we still have the largest Oems have largely sat on the sidelines.

Tom White: We still have the largest OEMs have largely sat on the sidelines. The reason we're not baking those into our second half guide is that, you know. Hunting those giants is hard to predict, right? If one of those giants were to step back in. It would change the game for us, you know, profoundly, but we just don't feel confident baking that into our, our full year guide. So a lot of our OEM success year to date and as we look ahead is coming from more of the disrupted EV players trying to take market share.

Speaker Change: The reason, we're not baking those into our second half guide is that.

unknown: Hunting those giants is hard to predict, right? If one of those giants were to step back in, it would change the game for us profoundly, but we just don't feel confident baking that into our full year guide. So a lot of our OEM success year to date, and as we look ahead, is coming from more of the disruptive EV players trying to take market share, and more of your

Unknown Analyst: Yeah.

Speaker Change: Hunting those giants is hard to predict right. If one of those giants were to step back in it would change the game for us.

unknown: Profoundly, but we just don't feel confident baking that into our full year guide. So a lot of our OEM success year to date and as we look ahead is coming for more of the disruptive EV players trying to take market share and more of your.

Alex Vetter: So a lot of our OEM success year to date, and as we look ahead, is coming from more of the disruptive EV players trying to take market share, and more of your foreign and import automakers who are also trying to grow market share in the US. We don't have much growth from the large domestic OEMs that have the biggest budgets yet.

unknown: <unk>.

Tom White: And more of your foreign and import automakers who are also trying to grow market share in the US. We don't have much growth from the large domestic OEMs that have the biggest budgets yet. And then and then really specifically to your question on the quenchal growth in OEM from Q2 to Q3. We do expect it to be down lightly, but I wouldn't consider it to be like a hugely material down to it. It's still growing year over year. It's going to be somewhat consistent with what you saw us deliver and kind of the key one timeframe.

unknown: Foreign and import automakers, who are also trying to grow market share in the U S. We don't have much growth from the the large domestic Oems that have the biggest budgets yet.

Sonia Jain: And then, and then really specifically to your question on sequential growth in OEM from Q2 to Q3, we do expect it to be down slightly, but I wouldn't consider it to be a hugely material downtick. It's still growing year over year. It's going to be somewhat consistent with what you saw us deliver in kind of the Q1 timeframe. Thank you.

unknown: And then very specifically to your question on sequential growth in OEM from Q2 to Q3.

unknown: We do expect it to be down slightly.

Speaker Change: I wouldn't consider it to be like a hugely material downtick, it's still growing year over year, it's going to be somewhat consistent with what you saw.

unknown: US delivering kind of the Q1 timeframe.

Alex Vetter: Okay, that's helpful. Thanks. And then, not to beat a dead horse on AccuTrade, but I guess I just want to make sure I understand, Alex, when you refer to this sort of this website, I think it's called a website solutions, is so basically what's happening is that for whatever reason, some dealers, maybe it's turnover at the dealership, or just it's tough for dealers to kind of like, really change the way they maybe handle trade-ins actually at the store.

Speaker Change: Okay. That's helpful. Thanks, and then not to beat a dead horse on Accu trade, but I guess I just wanted to make sure I understand.

Alex Federer: Okay, that's helpful. Thanks. And then that to beat a dead horse on acutely, but I guess I just want to make sure I understand Alex when you refer to this sort of this website, I think it's called a website solutions. So basically what's happening is that for whatever reason, some dealers, maybe it's turnover at the dealership or just it's tough for dealers to kind of like really change the way they maybe handle trade-ins actually at the store so that instead of like you guys selling in, you know, the sort of a handheld unit that plugs into the diagnostics and all that stuff, sort of now you're sort of aiming more to actually just put some of the technology on the dealership websites to value trade-ins and that's kind of the way to land the customer and then hopefully over time you think you can kind of get more of the on-premise for lack of a better word.

Alex Vetter: Alex when you refer to this sort of this website called.

Speaker Change: Called out website solutions is so basically what's.

unknown: Happening as that.

Speaker Change: For whatever reason some dealers maybe its turnover at the dealership or just.

unknown: It's tough for dealers to kind of like really change.

unknown: They maybe handle the.

Alex Vetter: So that instead of like you guys selling in, you know, the sort of a handheld unit that plugs into the diagnostics and all that stuff, sort of now you're sort of aiming more to actually just put some of the technology on the dealership websites to Value trade-ins, and that's kind of the way to land the customer, and then hopefully over time you think you can kind of get more of the on-premise, for lack of a better word, kind of technology going.

Speaker Change: Trade ins actually at the store so that instead of like you guys selling in.

Speaker Change: The sort of a handheld unit that plugs into the diagnostics and all of that stuff sort of now you're sort of aiming more to actually just put some of the technology on the dealership websites.

unknown: Value trade ins and that's kind of the.

Speaker Change: The way to land the customer and then hopefully over time, you think you can kind of get more of the on premise.

unknown: For lack of a better word.

unknown: Yeah.

unknown: Kind of technology going.

Alex Vetter: Yeah, I think, let me try to explain it this way to try to connect the dots. Our most successful AccuTrade dealerships use AccuTrade throughout their physical stores. They're appraising every vehicle that comes in for service. And they're offering this as, you know, something they can do for customers in a matter of minutes. And they're acquiring, in some cases, hundreds of cars per month purely from their service lane. And they love the product.

Speaker Change: Yes, I think let me try to explain it this way to try to connect the dots.

Alex Federer: Kind of technology going? Yeah, I think let me try to explain it this way to try to connect the dots are most successful acutely dealerships use acutely trade throughout their physical stores, they're praising every vehicle that comes in for service, they're offering this as, you know, something they can do for customers in a matter of minutes, and they're acquiring in some case, there's hundreds of cars per month, purely from their service lane, and they love the product, and there's even opportunity for us to take pricing up that they use it, you know, so passionately.

Speaker Change: Our most successful accu trade dealerships use accu trade throughout their physical stores. They are appraising every vehicle that comes in for service. They are offering this as well.

Speaker Change: Something they can do for customers in a matter of minutes and they are acquiring in some cases hundreds of cars per month purely from their service Lane and they love the product and there's even opportunity for us to take pricing up they use it.

Alex Vetter: And there's even an opportunity for us to take pricing up so that they use it, you know, so passionately. I think the downside of that is it takes a lot of time for dealerships to embrace that physical change of us both deploying people and resources into the dealership to conduct that on-premise training. And so it's a slower sales ramp. It takes more time.

unknown: So passionately.

Speaker Change: The downside of that is it takes a lot of time to get dealerships to embrace that physical change of us both deploying people and resources into the dealership to conduct that on premise training and so it's slower sales ramp. It takes more time it has a higher cost in our go to market.

Alex Federer: I think the downside of that is it takes a lot of time to get dealerships to embrace that physical change of us both deploying people and resources into the dealership to conduct that on-premise training, and so it's slower sales ramp, it takes more time, it has a higher cost in our go-to-market. What we're finding in terms of what OEMs and dealers are willing to do is embrace online first as a way to get them started using our technology, and then move towards upselling them towards the full physical store rollout.

Alex Vetter: It has a higher cost in our go-to-market, but what we're finding in terms of what OEMs and dealers are willing to do is embrace online first as a way to get them started using our technology and then move towards upselling them towards the full physical store rollout. I wouldn't recommend this strategy if all we had was to convince dealers to sell AccuTrade on their websites. But when you have the OEM setting up regional meetings with their dealer bodies and announcing their financial commitments to helping dealers do this more effectively, we think it can really boost our sales effort because they're now bringing the dealers to us, and then we're focused more on just installing the technology and training them on how to use it on their own

Speaker Change: What we're finding in terms of what Oems and dealers are willing to do is embrace online first as a way to get them started using our technology and then move towards upselling them towards the full physical store rollout.

unknown: I wouldn't recommend this strategy if all we had was to go convince dealers to sell accu trade on their website, but when you have the OEM setting up regional meetings with their dealer bodies and announcing their financial commitments to helping dealers do this more effectively we think it can really boost our sales effort because they are now.

Alex Federer: I wouldn't recommend this strategy if all we had was to go convince dealers to sell acutely trade on their website, but when you have the OEM, setting up regional meetings with their dealer bodies, and announcing their financial commitments to helping dealers do this more effectively, we think it can really boost our sales effort because they're now bringing the dealers to us, and then we're focused more on just installing the technology and training them on how to use it on their own website. Those that find the success in doing that, we think we'll naturally gravitate to saying how do we get more volume, can we start sourcing from the CARS.COM marketplace, can we start to promote, we'll buy any CAR media with you, and can we source CARS in our service lane, when you train us how to do that. We think this will be a better sales prospecting strategy, and again slower revenue on the front end, but we think it'll create a lot bigger customer base. Using the technology in our tools.

Speaker Change: Now, bringing the dealers to US and then we're focused more on just installing the technology and training them on how to use it on their own website those that.

Alex Vetter: Those that find success in doing that, we think will naturally gravitate to saying, "How do we get more volume? Can we start sourcing from the Cars.com marketplace?" Can we start to promote? We'll buy any car media with you? And can we source cars in our service lane? Will you train us how to do that? We think this will be a better sales prospecting strategy and, again, slower revenue on the front end, but we think it'll create a much bigger customer base. Using technology and our tools.

Speaker Change: Find the success in doing that we think will naturally gravitate to saying how do we get more volume can we start sourcing from the Carter's dot com marketplace can we start to promote will buy any car media with you and can we source cars in our service Lane, where you train them how to do that we think this will be a better sales prospecting.

Alex Federer: Great, thanks for the description. Thanks for the question.

unknown: Strategy and again slower revenue on the front end, but we think it'll it'll create a lot bigger customer base using the technology and our tools.

Joe Spak: Thank you.

Alex Vetter: Great. Thanks for the description.

Speaker Change: Great. Thanks for the description.

Speaker Change: Thanks for the question.

Operator: Thank you. Next question from the line of Joe Spak from UBS. Your line is now open.

Speaker Change: Thank you next question is from the line of Joe Spak from UBS. Your line is now open.

Joe Spak: Next question from the line of Joe Spak from UBS. Your line is now open. Thanks.

Joseph Spak: Thanks. Good morning.

Speaker Change: Thanks, Good morning.

Speaker Change: And just just to the CDK outage again.

Sonia Jain: Good morning. Just to the CDK outage. Again, I mean, as you just started to describe it, this is really somewhat of a temporary impact from delayed adoption. I just want to confirm like there's you're not really sort of seeing any any or maybe there was some cancellation in light of maybe some some lower near term profits or any reconsideration going on. And then, you know, my understanding of CDK is mostly DMS and infrastructure back off is financing, but they do have, you know, other products.

Speaker Change: Could you just sort of describe it this is really somewhat of a temporary impact from delayed adoption I just want to confirm like Theres youre not really seeing any any or maybe there was some cancellation in light of maybe some some lower near term profits or any reconsideration going on.

unknown: Then.

Speaker Change: My understanding of CDK is mostly Dms infrastructure back office financing, but they do have.

Speaker Change: Other products I think they've got some digital retail trade valuation offering. So I'm wondering if you see any overlap there and there is actually maybe an opportunity here from some.

Sonia Jain: I think they've got some digital retail trade valuation offering. So I'm wondering if you see any overlap there and there's actually maybe, you know, an opportunity here from some potential sort of dissatisfaction with that vendor. So the first part of your question, we do believe this has been more of a one time impact in a subscription model like ours, when you lose, you know, 30 or 60 selling days of new customer acquisition, it can have a prolonged impact on the cumulative effect of your subscription revenue number, which is I think what you see in our in our full year or second half guide.

unknown: Potential sort of dissatisfaction with that vendor.

Alex Vetter: And just to the CDK outage again, I mean, as you just sort of describe it, this is really somewhat of a temporary impact from delayed adoption. I just want to confirm that there's, you're not really sort of seeing any, or maybe there was some cancellation in light of maybe some lower near-term profits or any reconsideration going on. And then, you know, my understanding is CDK is mostly DMS and infrastructure back office financing.

Speaker Change: So the first part of your question. We do believe this has been more of a one time impact in a subscription model like ours when you lose.

Speaker Change: 30, or 60, selling days of new customer acquisition. It can have a prolonged impact on the cumulative effect of your subscription revenue number which is I think what you see in our in our full year or second half guide. So the impact is one time, but again the subscription nature has a more prolonged.

Sonia Jain: So the impact is one time, but again, the subscription nature has a more prolonged impact, if you will. I think you're right that this has been a real challenge, not just on CDK's DMS, but their digital retail solutions, CRM, their inventory management. And so we do think there's opportunities for us to pick up market share where, you know, our cloud based technology, we know we can we can provide a degree of enterprise level support and dealerships are looking to find more modern tools and technology that run their stores.

unknown: Impact if you will I think youre right that this is Ben.

Speaker Change: Our real challenge not just on CDK Dms, but their digital retail solutions.

Alex Vetter: But they do have, you know, other products. I think they've got some sort of digital retail trade valuation offering. So I'm wondering if you see any overlap there, and there's actually maybe, you know, an opportunity here from some potential sort of dissatisfaction with that.

unknown: Crem their inventory management and so we do think there's opportunities for us to pick up market share.

Alex Vetter: So the first part of your question, we do believe this has been more of a one-time impact. In a subscription model like ours, when you lose, you know, 30 or 60 selling days of new customer acquisition, it can have a prolonged impact on the cumulative effect of your subscription revenue number, which is, I think, what you see in our full-year second half guide. So the impact is one time, but again, the subscription nature has a more prolonged impact, if you will.

Alex Vetter: I think you're right that this has been a real challenge, not just for CDK's DMS, but their digital retail solutions, CRM, their inventory management. And so we do think there's opportunities for us to pick up market share where, you know, our cloud-based technology, we know we can provide a degree of enterprise-level support, and dealerships are looking to find more modern tools and technology to run their stores. So I do think it has more upside potential on a go-forward basis, but the one-time impact certainly muted some of our success in Q2 and Q3.

Speaker Change: There are cloud based technology. We know we can we can provide a degree of enterprise level support and dealerships. We're looking to find more modern tools and technology that run their stores. So I do think it has more upside potential on a go forward basis, but the onetime impacts certainly muted.

Sonia Jain: So I do think it has more upside potential on a go forward basis, but the one time impact certainly muted some of our success in Q2 and Q3 as well. Thank you. And just as a second question on, you know, the comment about, you know, 50% of second half free cash for the buybacks, I mean, like rough math that seems like a little bit over maybe 2% of the current market cap and, you know, especially after the reaction this morning, clearly, you know, you want to sort of send a strong signal and confidence of the business, but can you just, you know, tell us a little bit more about sort of how you think about, you know, the use of cash.

unknown: Some of our success in Q2 and Q3 as well.

Sonia Jain: Thank you. And just as a second question on, you know, the comment about, you know, 50% of So I can have free cash on the buybacks. I mean, like rough math, that seems like a little bit over maybe 2% of the current market cap. And, you know, especially after the reaction this morning, clearly, you know, you want to sort of send a strong signal and confidence in the business. But can you just, you know, tell us a little bit more about sort of how you think about, you know, the use of cash for that versus maybe, you know, repaying more debt, which I think also would be fairly attractive.

Speaker Change: Okay. Thank you.

Speaker Change: And just as a second question on the comment about 50% of.

Speaker Change: Second half free cash flow to buybacks I mean like rough math, it seems like a little bit over maybe 2% of the current market cap and.

Speaker Change: Especially after the reaction. This morning, clearly you want to sort of send a strong signal and comprehensive.

unknown: The business, but.

unknown: Can you just.

Speaker Change: Tell us a little bit more about sort of how you think about the use of cash.

Speaker Change: For that versus maybe repaying more day, which I think also it would be fairly accretive or or maybe even M&A.

Sonia Jain: For that versus maybe, you know, repaying more day, which I think also would be fairly accretive or, or maybe even, you know, M&A and maybe, you know, just to follow up on the last question, there's even an opportunity to, you know, to acquire some, some assets that might help you, you know, more compete with, with an opening versus, versus you can. Yeah, no, thanks for the question. I mean, one of one of the great strengths of our business is that we do generate a lot of a lot of free cash flow.

Sonia Jain: Or maybe even, you know, M&A, and maybe, you know, just to follow up on the last question, there's even an opportunity to, you know, acquire some assets that might help you more compete with an opening versus CDK.

Speaker Change: And maybe just to follow up on the last question there is even an opportunity.

Speaker Change: To acquire some some assets that might help you more compete with with an opening versus <unk>.

Sonia Jain: Yeah, no, thanks for the question. I mean, one of the great strengths of our business is that we do generate a lot of free cash flow. Even after deploying 50% of free cash flow in the 2nd half towards share purchases, we still believe that we have ample flexibility to continue with other portions of our strategy when it comes to capital allocation, mainly debt pay-down. Yes, we agree with you in today's interest rate environment.

Speaker Change: Yes, no. Thanks for the question I mean, one of the great strengths of our business is that we do generate a lot of a lot of free cash flow.

Speaker Change: After deploying 50% of free cash flow in the second half toward share repurchases. We still believe that we have ample flexibility to continue with other portions of our strategy. When it comes to capital allocation the mainly debt Paydown, yes, we agree with you in today's interest rate environment.

Sonia Jain: Even after deploying 50% of free cash flow in the second half towards Sherry purchases, we still believe that we have ample flexibility to continue with other portions of our strategy when it comes to capital allocations. So mainly that pay down, yes, we agree with you in today's interest rate environment, that pay down is generally speaking an accretive thing. And even even that aside, we have the flexibility for M&A. So I don't view it as a limiting thing.

unknown: <unk>.

Speaker Change: Debt Paydown is generally speaking an accretive thing and even even that aside we have the flexibility for M&A.

Sonia Jain: Debt paydown is generally speaking an accretive thing. And even that aside, we have the flexibility for M&A. So I don't view it as a limiting thing. We have been balanced. We think it's prudent for us to lean in a little bit more here on the share repurchase front this quarter.

unknown: I don't view it as a limiting thing.

unknown: Have been.

Speaker Change: We have been balanced when you think it's prudent for us to lean in a little bit more here on the share repurchase plan this quarter.

Sonia Jain: We have been, we have been balanced. We think it's prudent for us to lean in a little bit more here on the Sherry purchase from this quarter. Thank you. Next question from the line of dog Arthur from Uber Research, your lines now open. Yeah, I'll take the questions offline. Thanks. Okay, Doug. All right. I think that for here. Yep. Yes, there'll be no question. Please go ahead for a center. Thank you.

Speaker Change: Thank you.

unknown: Okay.

Operator: Next question from the line of dog Arthur from Uber Research. Your line is now open. Yeah, I'll take the questions off.

Speaker Change: Next question from the line of Doug Arthur from Huber Research. Your line is now open.

Douglas Arthur: Yeah, I'll take the questions offline.

unknown: Yeah, I'll take the questions offline.

Speaker Change: Yes, I'll take the questions offline. Thanks.

Doug: Okay Doug.

Operator: All right. I think operator. Yep. Yes, there will be no question. Please go ahead, Bruce Hedder.

Speaker Change: Alright, I think operator.

Speaker Change: Yes, there will be no question.

unknown: Please go ahead, Chris Senner.

Unknown Executive: Thank you. I want to thank everyone for tuning in today, and I hope that people realize that, as we've demonstrated time and time again, including this quarter, we're consistently growing our revenue and our profitability, which is a real winning combination for long-term value creation. We've got a lot of powerful opportunities, and our team is head down executing on our platform strategy, growing revenue, and focusing on innovation. So we want to thank you for your time today, and we look forward to talking to more of you again shortly.

Speaker Change: Thank you I want to thank everyone for tuning in today and I hope that people realize that as we've demonstrated time and time again, including this quarter, we're growing consistently our revenue and our profitability, which is a real winning combo combination for long term value creation.

Alex Federer: I want to thank everyone for tuning in today. And I hope that people realize that as we've demonstrated time and time again, including this quarter, we're growing consistently our revenue and our profitability, which is a real winning combination for long term value creation. We've got a lot of powerful opportunities and our team is head down, executing on our platform strategy, growing the revenue and focusing on innovation. So we want to thank you for your time today. And we look forward to talking to more of you again shortly. Ladies and gentlemen, this is a conference call. Thank you for participation. You may now disconnect.

Speaker Change: Got a lot of powerful opportunities and our team is heads down executing on our platform strategy growing the revenue and focusing on innovation. So we want to thank you for your time today, and we look forward to talking to more of you again shortly.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Good bye.

Operator: Goodbye.

Operator: Okay.

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