Q4 2024 CarGurus Inc Earnings Call
Elisa Palazzo, Elisa Palazzo San Ah
Uncle Frank and his wife were remotely involved in a respected van accident. American diplomat Bernadette Brown was phoning Edward Steinhardt vertices in Brooklyn. The hospital room said that two people had been killed in the incident.
Good day and welcome to the CarGurus Earnings Conference Call. Please note, this event is being recorded. I will now let go ahead.
Speaker Change: Thank you, Operator. Good afternoon. I'm delighted to welcome you to CarGurus fourth quarter and full year 2024 earnings call.
With me on the call today are Jason Trevisan, Chief Executive Officer, Sam Zales, President and Chief Operating Officer, and Elisa Palazzo, Chief Financial Officer.
Speaker Change: During the call, we will be making forward-looking statements which are based on our current expectations and beliefs.
Speaker Change: These statements are subject to risks and uncertainties which could cause our actual results to differ materially from those reflected in such statements.
Speaker Change: Information concerning those risks and uncertainties is discussed in our SEC filings which can be found on the SEC's website and in the investor relations section of our website.
Speaker Change: We undertake no obligation to update or revise forward-looking statements except as required by law.
Speaker Change: Further, during the course of our call today, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to comparable non-GAAP measures is included in our press release issued today, as well as in our updated investor presentation, which can be found on the investor relations section of our website.
Speaker Change: We believe that these non-GAAP financial measures and other business metrics provide useful information about our operating results.
Jason Trevisan: enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency as it relates to metrics used by our management in its financial and operational decision-making. With that, I'll now turn the call over to Jason.
Jason Trevisan: Thank you, Kirndeep, and thank you to all who have joined us today.
Speaker Change: As I shared at the beginning of last year, the theme of Intelligent Acceleration was our North Star for 2024, and I'm pleased to report that we achieved exceptional results in the past year.
Speaker Change: We delivered successfully on our business priorities, and our progress across the four drivers of value creation was fueled by outstanding execution, resulting in key wins across the business in 2024.
Speaker Change: Our full-year marketplace revenue was up 14% year-over-year and revenue growth accelerated progressively throughout the year.
Speaker Change: The sustained expansion of our business was fueled by key product innovation.
Speaker Change: The growing adoption of value-added products and services that deliver competitive intelligence and analytical insights, paired with a consultative approach, has deepened our partnership with dealers, which resulted in higher engagement, improved retention, and an increased rate of longer-term contracts.
Speaker Change: Our platform has been rated the best ROI by dealers in the industry, and this has allowed us to capture a larger share of dealer spend.
Speaker Change: Our international business also saw significant acceleration with annual revenue of 23% year-over-year and meaningful operating profit expansion.
Speaker Change: Strong operational and commercial execution, coupled with disciplined investment and growth, drove further margin expansion.
Speaker Change: We believe we will be able to replicate our domestic success and will continue to invest in these regions, introducing differentiated products such as Digital Deal and Dealer Data Insights.
Speaker Change: Last, our OEM advertising business also returned to double-digit year-over-year expansion after several years of contraction.
Speaker Change: This reflects the ongoing replenishment of new car supply and our large consumer audience, as well as our ability to monetize demand through better consumer targeting.
Speaker Change: As a result, we achieved strong OEM renewal rates, renewing all existing customers year over year, and winning business from new customers reentering the market after a multi-year hiatus.
Speaker Change: While 2024 was a year of growth and investment in new and existing products, our strong execution and disciplined approach to capital allocation enabled us to simultaneously achieve significant operating leverage and robust cash flow generation.
Speaker Change: Our annual Consolidated Adjusted EBITDA grew 26% year-over-year, or $51 million in the year, with margins expanding over 600 basis points year-over-year to nearly 28%.
Speaker Change: As previously highlighted, our Marketplace business delivered exceptional results, reporting an annual consolidated adjusted EBITDA of $266 million, up 35% year-over-year.
Speaker Change: In contrast, our digital wholesale segment ended the year with an $18 million adjusted EBITDA loss, reflecting declines in transaction volume.
Speaker Change: As noted in prior earnings calls, we are actively working to rebuild this segment, optimizing unit economics and driving operational efficiencies with the ultimate aim of returning the business to profitability.
Speaker Change: We believe our success and ongoing investment in growth and innovation position us strongly for 2025. Moving forward, we will focus on further enhancing our value proposition as we plan to continue to introduce new products and services and integrate our offering more seamlessly into dealers daily workflows.
Speaker Change: strengthening our market leadership and deepening our reach across the dealer ecosystem.
Speaker Change: Now, similar to prior quarters, I will highlight the progress we have made across our four drivers of value creation.
1. Provide more value to dealers.
Speaker Change: We are dedicated to enhancing the way our dealer partners operate. Our intelligence-driven platform empowers dealers to source, price, market, and sell vehicles more effectively, with the aim of maximizing profitability across their workflow.
Speaker Change: Our relentless focus on innovation and providing the highest ROI has led to greater dealer engagement and retention on our platform.
Speaker Change: In Q4, we concentrated our efforts on two key priorities. One, leveraging our industry-leading data assets and AI to integrate value-added, actionable insights throughout the dealer workflow, enabling more informed decision-making.
Speaker Change: and two, enhancing our account management function to help dealers extract even more value from our platform.
Speaker Change: These initiatives delivered significant value, resulting in continued migration to premium subscription tiers of 23% year-over-year in the fourth quarter.
Speaker Change: Our Dealer Data Insights reports achieved exceptional adoption. In just over a year, Next Best Deal rating expanded to over 14,000 dealers in the U.S., with over 1,000 more in the U.K. and Canada.
Speaker Change: Our suite of data driven predictive analytics and actionable insights presents a compelling value proposition for our dealers and we will continue to release new insights across the dealers workflow.
Speaker Change: As part of our commitment to deepening our partnership with dealers, we continue to invest in our account management function.
Speaker Change: Our in person dealership level training team has already demonstrated significant success and we plan to expand this nascent initiative further in 2025.
Speaker Change: This team works directly with dealers to implement best practices for lead handling improving appointment and close rates and enhancing overall spend ROI.
Earlier doctors have seen compelling results, including a 70% increase in digital deal close rate.
Speaker Change: So small our team plays a crucial role, especially with new product introduction like top dealer offers.
Speaker Change: As our business becomes further integrated into dealer workflows, we believe the benefit of closer support will continue to grow.
Speaker Change: The adoption of value added products has risen steadily across our growing dealer network, which has led to higher engagement and stronger retention.
Speaker Change: Long term contracts signed in Q4 accounted for over 40% of our new contract base.
Stronger durable partnerships with our dealers.
Speaker Change: To build a better consumer experience.
Speaker Change: And 'twenty 'twenty four we focused on delivering a more personalized and seamless experience for our shoppers ensuring each interaction was tailored to their unique needs.
We also harnessed the power of AI to deliver smarter recommendation and more intuitive engagement transforming how consumers interact with our platform.
Speaker Change: In the second half of 'twenty 'twenty four we enabled consumers to revisit vehicles, they've previously explored and started providing tailored recommendations based on their search history.
Speaker Change: This personalization has resulted in a 10% increase in lead conversion recommendations during our testing phase highlighting the value of offering more relevant vehicle options.
With a 14% increase in direct traffic year over year, and 30% of our leads coming from our App, it's essential that we continuously improve the experience across our owned channels.
Speaker Change: To support this we introduced cross platform thinking, allowing consumer activity to seamlessly transition between desktop mobile web and the App.
Speaker Change: We believe this integration coupled with other improvements have boosted shopper satisfaction throughout their journey driving lead volume growth.
Speaker Change: Last leveraging AI, we've launched over 30000 personalized car comparison pages, facilitating consumers decision, making process based on individual needs.
Speaker Change: The impact has been significant with users who engage with the new comparison page being twice as likely to visit the vehicle description page versus the prior experience.
Speaker Change: This powerful tool has proven highly effective and we plan on refining and scaling it further.
Speaker Change: In summary, these changes have driven growth in direct traffic and boosted lead conversion widening the traffic and lead quality moat that has enabled us to deliver one of the largest most engaged audiences to our dealer partners.
Speaker Change: Great enabled digital transaction.
Speaker Change: The shift toward online car buying and selling continues to gain momentum as consumer preferences keep evolving.
Speaker Change: Our 'twenty 'twenty four consumer insights report revealed that 80% of consumers surveyed prefer to complete more of the vehicle purchasing process from home.
Speaker Change: However in person interactions remain essential aid.
Speaker Change: 88% of buyers surveyed saw the vehicle they purchased in person before buying.
Speaker Change: 69% preferred and in person test drive.
We believe this validates the market demand for digital deal, which seamlessly integrates online and offline engagement.
Speaker Change: Digital deal remains our fastest growing product in the U S.
Speaker Change: Its penetration further increased 13% quarter over quarter, and 105% year over year 9570 dealers.
Speaker Change: Digital deal with geographic expansion, which enables our dealers to extend their reach beyond local market grew 10% over quarter, nearly 30% year over year.
Speaker Change: We have recently launched a new pilot in the U S. Within digital deal that enables dealers to receive full shopper credit application directly in their finance management system.
Speaker Change: Providing full visibility into a shopper's financing eligibility and ability to activate hurtful financing.
Speaker Change: Furthermore, in November we rolled out digital deal in Canada, where early adoption has been strong with hundreds of dealers leveraging the platform to engage with higher quality leads driving faster and more efficient sales.
Speaker Change: Shifting to sourcing.
Speaker Change: Over a year ago, we launched top dealer offerings are subscription based product that enables dealers to source vehicles directly from consumers in their area.
Speaker Change: This is an important part of the dealer value chain and one of the largest drivers of unit economics.
Speaker Change: As we highlighted last quarter, our priority is to deliver an exceptional experience to both consumers and dealers to establish a solid foundation for scalable long term expansion.
Speaker Change: To support this we are onboarding dealers in a more strategic and intentional manner.
Speaker Change: Dr dealer offers continued to experience strong consumer engagement with approximately half a million visitors to our sell my car page each month.
Speaker Change: 40% of whom we're also actively looking to purchase a new car.
Speaker Change: As we enter 2025, our focus remains on product innovation and exceptional customer experience.
Speaker Change: We are committed to equipping our partners with the tools they need to transact seamlessly in a rapidly evolving digital landscape.
Speaker Change: For rebuild and integrate digital wholesale.
Speaker Change: And 'twenty 'twenty four we focused on three strategic pillars to rebuild our wholesale platform.
Speaker Change: Moving operations refining our product market fit and reigniting our commercial engine.
Speaker Change: Improving operations.
Speaker Change: In the fourth quarter, we saw improvement in dealer to dealer transportation margin, while upholding our high quality inspection process, resulting in smoother and more reliable operation.
Speaker Change: These advancements have ensured consistent vehicle quality as evidenced by an uptick in our NPS scores related to vehicle condition inspections and timeliness.
Speaker Change: Refining product market fit.
Speaker Change: We recognize the need in a volatile price and demand environment to offer dealers a higher degree of confidence to drive more predictable and profitable purchasing decision.
Speaker Change: With this in mind, we have prioritized updates that leverage real time market insights to drive better outcomes.
Speaker Change: In January we transitioned our insights driven functionality from a pilot phase to full availability for all dealers.
Speaker Change: And early adopters have been engaging in transacting at higher rate.
Speaker Change: Reenergizing our go to market motion.
Speaker Change: We leveraged AI and insights to simplify the customer onboarding process, reducing the time needed to update dealers parameters 60 minutes to just 10 minutes.
Speaker Change: Our 24 hour service, which enables dealers to view images and condition reports before purchasing vehicles has also undergone significant improvement offering dealers valuable data points through predictive analytics that increase their ability to transact constantly.
Speaker Change: While we've made substantial progress across all these dimensions. This segment continues to incur losses.
Speaker Change: We'll continue to work towards our goal of restoring profitability, which will involve continued cost optimization and a disciplined reinvestment in our product.
Speaker Change: To conclude in 2020 for our marketplace business delivered exceptional financial performance marked by strong growth and significant margin expansion.
We made notable progress on our four drivers of value creation.
Speaker Change: We enhanced our platform's products features and data insight, while leveraging synergies between our retail and wholesale operation.
Speaker Change: At the same time, we continued to grow both the quantity and quality of leads.
Speaker Change: Further expanding our market share.
Speaker Change: We're pleased with our 2024 achievements and look forward to building on this momentum in 2025.
Speaker Change: As we look ahead, we will remain focused on strategic investments in growth and innovation embedding our products deeper into the dealer workflow.
Speaker Change: Further solidifying our leadership position across the consumer and dealer ecosystem and setting the stage for durable growth in the coming years.
Speaker Change: Now, let me turn the call over to Lisa to discuss our financial results.
Lisa: Thank you, Jason and thank you all for joining us today.
Lisa: Similar to prior quarters, my commentary or color on detail overview of our fourth quarter performance, followed by our guidance for the first quarter.
Lisa: Fourth quarter consolidated revenue was 229.
Lisa: So first time year over year.
Lisa: Driven by double digit expansion in our market places.
Lisa: Pardon me offset by lower wholesale product line.
Lisa: Lots of places revenue was 210 million for the fourth quarter.
Lisa: It's 15%.
And in line with the midpoint of our guidance range.
Lisa: Uh-huh sustained acceleration of our marketplace.
Well, it's driven by ongoing strength in subscription de listings revenue, which grew 25 million.
Lisa: Uh huh.
Speaker Change: Thank you and existing dealers subscribing at market rate.
Lisa: Oh, great the higher subscription tier.
Lisa: And greater adoption of value added products and services.
Speaker Change: Our global paying dealer count grew to 32010 dealers Oh go ahead.
Speaker Change: 126, he lost sequentially as we have continued to gain market and wallet share both in the U S and international.
Speaker Change: The ongoing expansion of our active dealer base.
Speaker Change: Our customer centric approach.
Speaker Change: Which has resulted in higher engagement.
Speaker Change: Retention and Thats cultivated long time deeper relationships with our dealer partners.
Speaker Change: The impressive growth in our international business continued in the first quarter.
Speaker Change: With revenue up 26 firsthand.
Speaker Change: Uh huh.
Speaker Change: Driven by expansion of our dealer base and cost of credit.
Speaker Change: We're up about 11% year over year, and 17% year over year, respectively.
Speaker Change: We believe there is significant opportunity to expand in our international market.
Speaker Change: We plan to invest resources from 'twenty to 'twenty five.
Speaker Change: He will drive compelling returns across several years.
Speaker Change: Wholesale revenue was 10 million for the fourth quarter down 55% year over year and down 19% sequentially.
Speaker Change: And by a decline in dealer to dealer transaction volume.
Speaker Change: We have continued to prioritize unit economics.
Speaker Change: Lastly.
Speaker Change: Product revenue was 8 million for the fourth quarter down.
Speaker Change: Down 55% year over year and down 44% sequentially.
This is in line with the commentary, we provided last quarter and.
Speaker Change: And it reflects the fact that condition across our origination channel is there any to normal.
Speaker Change: I will now discuss our profitability and expenses on a non-GAAP basis.
Speaker Change: Fourth quarter non-GAAP consolidated gross profit was 199 million.
Speaker Change: Approximately 14% year over here.
non-GAAP gross margin was 87%.
Speaker Change: Approximately 850 basis points, you had over a year.
Speaker Change: About 400 basis point sequentially.
Speaker Change: The meaningful margin expansion in both comparisons here yet.
Speaker Change: This is primarily due to the online revenue mix shift.
Speaker Change: Our high margin market place.
Speaker Change: Marketplace non-GAAP gross profit was up 17% year over year.
Speaker Change: And non-GAAP gross margin expanded by about 120 basis points year over year to 93%.
Speaker Change: Driven by a favorable product mix.
And our digital wholesale business.
Speaker Change: Sequential non-GAAP gross margin improvement reflects lower amortization Paul.
Speaker Change: Primarily related to the discontinuation of the C. G by online pilot.
Speaker Change: Other fully amortized project.
Speaker Change: Consolidated adjusted EBITDA.
Speaker Change: It was $76 4, million% to 25% year over year.
Speaker Change: Consolidated adjusted EBITDA margin was 23%.
Speaker Change: Approximately 600 basis point year over year, and approximately 540 basis points sequentially.
Speaker Change: Reflecting primarily the favorable mix shift to high margin marketplace shopping.
Speaker Change: Marketplace adjusted EBITDA.
Speaker Change: 27%, we had already yeah.
Speaker Change: $79 3 million.
Speaker Change: With margin.
Speaker Change: Rocksmith me 360 basis point year over year, and approximately 330 basis points sequentially.
Speaker Change: The sequential uptick in margin was driven by seasonally lower media spend in the fourth quarter.
Speaker Change: Digital wholesale adjusted EBITDA loss was approximately $2 9 million.
Speaker Change: $2 4 million sequential improvement.
Speaker Change: The quarter on quarter improvement was at Cleveland by a reduction in operating expenses.
Speaker Change: I think the reallocation did you buy online related resources for marketplace.
Speaker Change: As well as car off for yearend expense accrual reversal.
Speaker Change: Excluding these items.
Speaker Change: He's just a wholesale adjusted EBITDA would have been approximately flat sequentially in dollar terms.
Speaker Change: Despite a photo of a reduction in transaction volume.
Speaker Change: Underscoring our focus on limiting losses and restoring profitability in this segment.
Speaker Change: Moving to Opex.
Speaker Change: Our fourth quarter consolidated non-GAAP operating expenses totaled 129 now.
Speaker Change: Oh about 8% year over year.
Speaker Change: Down about 2% sequentially.
Speaker Change: Primarily reflecting seasonally lower sales and marketing expenses I just mentioned.
Speaker Change: Consistent with our expectation.
Speaker Change: non-GAAP diluted earnings per share I'd say that the most of the time on shuttle bus was 55 cents for the fourth quarter.
Speaker Change: It's 1% or 50.
Speaker Change: 7% you had over a year.
Reflecting primarily the increase in consolidated adjusted EBITDA and lower diluted share counts.
We ended the fourth quarter with $304 million in cash and cash a lot.
Speaker Change: Clean.
Speaker Change: 7 million from the end of the third quarter.
Speaker Change: The higher cash balance was primarily driven by 76 million and consolidated adjusted EBITDA.
Speaker Change: Pardon me off my first 10 million Capex and capitalized website development costs.
Speaker Change: And $5 million and other net cash outflows.
Speaker Change: Throughout the year.
Speaker Change: We have purchased a total of 146 million worth of shares.
Speaker Change: As a reminder, we have $200 million 2025, a share repurchase program, we announced in November.
Speaker Change: It became effective in January.
Speaker Change: Last we are pleased to report that.
Speaker Change: As of December 31st the 'twenty 'twenty four we have renovated the material weakness that caught off.
Speaker Change: I will now close my prepared remarks, with our guidance and outlook for the first quarter of trying to quantify it.
Speaker Change: We expect our first quarter consolidated revenue to be in the range of 216 236 million.
Speaker Change: Flat to up.
Speaker Change: 9% year over year, respectively.
Speaker Change: We expect our first quarter marketplace revenue to be in the range of 209 to 214 million.
Speaker Change: Oh between 12% and 14% you got over here.
Speaker Change: We anticipate revenue to be slightly up sequentially at the midpoint.
Speaker Change: We expect strong bookings.
Speaker Change: Be affected by seasonal fluctuations in OEM advertising.
Speaker Change: Oh, yeah, typically ramp their AD spend in the fourth quarter and dial it down in Q1.
Speaker Change: And unfavorable currency impact quarter to date.
Speaker Change: Moving to digital wholesale.
Speaker Change: We expect first quarter volume decreased sequentially.
Speaker Change: As we have introduced a number of changes in our offering.
Speaker Change: We're currently validating product market fit.
Speaker Change: We remain focused on cost efficiency and unit economics with the aim of returning the business to profitability.
Speaker Change: We expect our first quarter non-GAAP consolidated adjusted EBITDA.
Speaker Change: In the range of 60 million.
Speaker Change: No.
Speaker Change: In the market place segment, we expect margins to be up year over year, but down sequentially.
Speaker Change: As we ramp our media spend in the first quarter.
Speaker Change: The launch of our new brand campaign called Big deal.
Speaker Change: Guy for awards, we expect operating expenses increased modestly from the third quarter as.
Speaker Change: As we continue to invest in new products and innovation.
Speaker Change: And expand our international business.
Speaker Change: But the progressive decline as supposed temperature revenue throughout the year.
Well the digital wholesale we expect segment EBITDA losses will increase sequentially.
Speaker Change: As we expect lower transaction volume.
Speaker Change: In part offset by lower operating expenses.
Speaker Change: Finally, we expect first quarter non-GAAP earnings per share to be in the range of 41 to 47.
Speaker Change: And they had had weighted average common shares outstanding.
Speaker Change: Proximately 107.
Speaker Change:
Speaker Change: With that.
Let's open the call for Q&A.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: If you'd like to ask a question. Please press star and one on your telephone keypad.
Oh confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star and two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Speaker Change: The first question comes from the line of John calling 'twenty from Jefferies. Please go ahead.
John: Hey, Dan it's it's been thank Carter on for John today, Thanks for taking my questions.
John: One on digital deal, maybe just digging a bit deeper on on what the new financing functionality, you're piloting AD for dealers.
John: And any early observations on an uplift to lead conversion and how performance is compared to your expectations for the future. Thus far and then one on the macro just if you consider a scenario in which parents wind up putting a material headwind to the affordability of new cars for consumers.
John: Just help us think about the potential.
John: Secondary and tertiary impacts for the various components of your business. Please thank you.
John: Is it thanks, it's Sam Zales I'll take the first one and turn it to Jason on the second one thanks for asking about digital deal you saw in the prepared remarks couldn't be more proud of that adoption, our fastest product adoption close to 10000 customers on that platform not quite 10000, yes.
John: And that is a sign that our customers are finding a down funnel shopper those who are doing trade setting appointments moving further down the sales funnel to make a deposit but this new capability will be created and want to be clear. It's just in pilot right. Now is what we call direct credit App. If you will that's an inter.
John: Wave speaking to it which is allowing us to integrate into dealer financing system. So directly into the financial management system, and allowing a deal were to say if I ever set a financier is who are different than the ones that cargo was might work with on the softball financing here as a direct credit app process.
John: That's fun funnels, the consumers straight through that financial management system with a lender they might be using that dealer might be preference to or choose and so we've found that that is a really interesting pilot program. We still have our hartsville financing capability with our lenders that we allowed to the dealers.
John: To us, but this is now one extra step in the process of listening to our customers' needs and finding a better consumer experience and then importantly, creating more down funnel shopping that turns into the transaction you saw on our remarks, 80% of consumers want to do more online. This is just one more step that brings a ready to buy.
John: Purchase or into the hands of the dealers and we think that's going to continue to fuel. We hope they will continue to fuel better and better results in our digital deal product by offering more.
Jason Trevisan: Jason you want to take part to sure I mean on tariffs.
Jason Trevisan: So obviously a lot still to unfold and see how it impacts our midterm. We think there will certainly be a shift among new car brands based on 10% that is manufactured.
In the affected countries, but it's also about <unk> two and so it will probably have an effect on nearly every cars it's manufactured.
Jason Trevisan: And so there'll be a shift among new and we do think there will be a shift to used from new as well.
Jason Trevisan: So as the shift in demand goes to use the key question that is how quickly did those prices rise if the prices rise.
Jason Trevisan: Significantly enough among dealers such didn't turn times go down and I'm sorry. If this did turn times go up then that tends to help our bookings in our subscription business has its harder for dealers to move cars.
Jason Trevisan: If prices don't adjust quickly enough and the demand is there and turn times improve then we.
Jason Trevisan: We don't think we'll see that tailwind that we otherwise would.
Jason Trevisan: A lot of factors at play.
Jason Trevisan: And we are in a wait and see mode, but you know.
Jason Trevisan: We continue to serve dealers in good times and bad times with a very ROI focused sales model as you know.
John: John does that answer your questions.
John: Yes, I appreciate the answers thanks guys.
John: Thank you.
Speaker Change: Ladies ladies and gentlemen, please limit yourself to one question and one follow up question.
Speaker Change: We take the next question from the line of Ralph Shanghai from William Blair.
Speaker Change: Go ahead.
Speaker Change: Good evening, Thanks for taking my question.
Speaker Change: Strong quarter and a net dealer additions both in the U S and international maybe just give us a little bit more color sort of the drivers there and the.
Speaker Change: Quarter, and then just maybe more broadly.
Speaker Change: Do you think about in our marketplace revenue growth in 2025, you're facing tougher comps obviously the business is doing well, but maybe help us think about the drivers there and thoughts on sort of overall growth profile in 2025. Thank you.
Speaker Change: Thanks, Ralph it's Sam Zales, I'll take the first and turn it over to Lisa for the second we're really really proud of the results. We're attaining in both not just new customers our retention of our customers and the car seat growth that youre seeing in the business, which fuels all of that.
Speaker Change: Standard revenue growth for our marketplace business.
Speaker Change: I call. It on a couple of things, Jason just said it you start with the first which is where we're now now as the ROI provider in the market now you've seen it in our studies and I think that that delivery of that kind of ROI compels dealers to say in good times and bad in the fourth quarter was sort of surprisingly sort of strong market for them.
Speaker Change: Dealers selling used cars they wanted to be in the number one platform they want to be on the ROI delivering platform and importantly, I want to be on the premium tiers of that platform. So.
Speaker Change: We want those businesses, both businesses and retain them in that acquisition effort because of those things I think number two is we're providing insights that are completely different to dealers in the marketplace. So what Jason mentioned in the script on dealer data insights. These are actions that literally help our new.
Speaker Change: <unk> and existing customers recognize how to get more exposure on our site with next best deal ratings Youre seeing customers make price changes and fuel profits for them, but get them more V. P views, our visa visa vehicle detail page views more leads and quicker turn times when you have that kind of insight.
Speaker Change: That you can use for both existing and new dealers. It provides a differentiated customer experience and drives them onto our platform.
Speaker Change: As we talked about our account management process I think we're becoming renowned us as not just the ROI provider, but a dealer who is providing differentiated experience to help dealers grow their business. They increase their profitability as a business and as I've heard from every customer in the marketplace. Those who gives me unique insights I will give my bigger.
Speaker Change: Share of wallet too and I think that's what's driving those results overall I'm really proud that we're not just selling the best product in the market and I'll share. One last point last week, we had our sales and service kickoff and had a series of dealers come in they set of dealers come in to speak to us about things, we could do differently and better and things. They really appreciate from us the comment.
Speaker Change: I'll just share with you that was most rightful for me is that those dealers in unison said. This is a culture of an organization that continuously thinks how can I help dealers create better results for their business and that compels me to think about working with your long term those are all the reasons, we're seeing those net acquisition results.
Speaker Change: Really expand both in the U S and our U K and Canada businesses at least you want to take part to yes. Thanks, Sam and thanks for the question. So we are continuing to experience sustained and positive momentum in our marketplace business and we anticipate growth to continue to be strong in 2025.
Speaker Change: For the first quarter, we guided for growth to be between 12, and 14% year over year and that is a sustained pace of expansion against a much tougher comp.
Speaker Change: For the rest of the year, we expect growth to taper down modestly as com comps get increasingly more demanding but you could see in the back half of year.
Dan: Great. Thanks, Dan Thanks, Lisa.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Rajat Gupta from Jpmorgan. Please go ahead.
Speaker Change: Oh, great. Thanks for taking the question Oh, you said I think I noticed in your press release that you had a common stack.
Speaker Change: Dealers are consolidating spend towards you know high yielding.
Speaker Change: Marketplaces.
Speaker Change: I was curious if you could share any stats around that you know.
Person dangers with dealers today have like two marketplaces versus maybe three before anything you can share on that front that you know.
Speaker Change: If you could help us understand like how this has evolved over the last few years and.
Speaker Change: You know how your value propositions or with those specific dealers and I have a quick follow up.
Speaker Change: Sure. Thanks Roger.
Speaker Change: So I don't have data on it.
Speaker Change: I would say there's a couple of things happening one is there's there's two levels of consolidation. One is theres just consolidation continued consolidation among dealers and so.
Speaker Change: Just youre based in Boston there's.
Speaker Change: Recent news of a large regional acquisitions by Asbury.
Speaker Change: And that's just one example of many right now it isn't.
Speaker Change: Pretty active M&A market in dealer land right now and we view that as a positive because the more sophisticated and dealer group the better they can understand how to get the most out of our platform and the better they typically tend to understand ROI and we shine we think it's all of those dimensions.
Speaker Change: That consolidation and then at any given dealer group.
Speaker Change: From a spend and channel perspective, I think there's just a theme and this is related to sophistication, but there's a been focusing as you said on the high yield areas and on simplification again, you'll you'll hear dealers to a person to talk about the hundreds of opportunities that they.
Speaker Change: Our pinched on from a software and marketing perspective, and it's just overwhelming and I think coming out of Covid a lot of them have said, we want to consolidate to a smaller set of channels a smaller set of partners and service.
Speaker Change: Riders and invest more deeply in them and so as the market leader from an audience perspective, and then as Dan mentioned, we're adding more and more tools, we're getting dealers to use our products and our insights on a daily basis. Instead of just you know accepting the leads into their CRM and are in there.
Understanding and appreciating your wife vendors. So I would say anecdotally were hearing and were seeing dealers say in U S and increasingly in Canada, and we're starting to hear in the UK too.
Speaker Change: For the first time, you know look we can go.
Speaker Change: And comfortable that we can drop by their partners and focus exclusively with your gardeners.
Speaker Change: Got it got it that's helpful and maybe just a follow up you know on diesel deal you brought with Asbury and hang out.
Speaker Change: It came to my mind, you know like Asbury for example.
Speaker Change: So there are switching their DNS you know two to a new partner or you might know I'm curious like you know with some of these changes are happening you know in the industry.
Speaker Change: Is there any thought around you know you integrating cargoes as platform, including digital deal are more closely with like you know the Dms systems and also maybe like some of these new and upcoming DNS providers is that a value added solution.
Speaker Change: That you could provide over time to just just to make.
Speaker Change: The product more.
Speaker Change: It just seems like just more bad debt more into the dealer network. Thanks.
Sure I can take that as well.
Speaker Change: So you've heard us I'm sure talk about the fact that we are becoming a broader product portfolio to dealers.
Speaker Change: You've also heard us talk about how we're orienting around the dealer workflow and so you know this.
Speaker Change: The key stages or steps that werent flower dealers need to source cars priced them manage the inventory market them and sell cars and so as we think about that.
Speaker Change: That workflow, we are now providing at a minimum insight to them on each of those steps and at a maximum.
Speaker Change: Functionality in each of those steps in some cases and so.
Speaker Change: Incumbent on doing that is integrating with other systems that they have that might be another pricing tool or an inventory management system is certainly a CRM San gave the example in digital deal in their financing platform occasionally it is the DNS as well.
Speaker Change: And and so integration as we expand our product portfolio integration is a growing component of what we're doing.
Speaker Change:
Speaker Change: We know that dealerships are unique in how they operate and but they're reliant on a core set of CRM.
Speaker Change: CRM and IMS and DNS and in order to be part of their daily workflow, which were now becoming which we used to not be a we do need to be integrated into those.
Speaker Change: Got it got it.
Speaker Change: Alright, great. Thanks, actually my questions and good luck.
Speaker Change: Thank you.
Marvin Fong: The next question comes from the line of Marvin Fong from BP I Jay. Please go ahead.
Marvin Fong: Great good afternoon, or good evening. Thanks for taking my questions. You know just sort of a build on the earlier question about you know the macro it just like the.
Marvin Fong: Focus on on the dealer side of that you know are your are you.
Marvin Fong: Had a great quarter in terms of dealer adds but as we sort of moved into into January and February our dealers.
You know at all.
Marvin Fong: Pausing or are being hesitant in terms of the volatility in the headlines I know Jason you just mentioned that this could actually turn out to cargo who's has benefit but just curious if it's a you know making any of the sales discussions are changing the changing that dynamic at all and then second question just on car offer I know the turnaround effort continue.
Marvin Fong: And you're continuing to build that out I guess, just maybe in very simple terms Oh, you know what inning would you say we are in terms of the time or bringing that platform to the point, where you feel ready that you can sort of unleash that.
Full bodied way thanks, a lot.
Marvin Fong: Thanks, Marvin and I'll take the first and then let.
Sandy: Sandy second so.
Sandy: France or what so in Q4.
Sandy: Would say you know we had changes in Q4, we did hear a little bit of hesitation among dealers relating to the election.
Sandy: And then that came and went in Q in Q4, we won't.
Sandy: Speak much to Q1 at all really.
Sandy: And but I would say anecdotally, we and others have seen that dealers are not very reactionary right now to potential tariffs I think you.
You know most of them.
Sandy: Most of that part of the industry is simply in a wait and see mode and as you wait and see just go above your sort of normal operations.
Sandy: But then embedded in that are the themes that I just shared in terms of consolidation to the largest and most sophisticated platforms.
Sandy: And so.
Sandy: But I do think that.
Sandy: There are other.
Sandy: Trends created by some of the macro factors that do affect dealers and so for instance in Q4 retail sales were up really nicely above 10% roughly year over year, new inventory was up really big year over year and days on market as a result went up.
Sandy: Significantly and so I think those are more of the.
Sandy: Day to day factors that dealers are dealing with.
Sandy: And there.
Sandy: Trying to run a hectic and an active business in the moment and what it's going to be much more pressing to them as if they have cars piling up in their lives not and if there might be future terrorists.
Marvin Fong: Marvin I'll I'll take part two and gosh. It's a good question I Love sports, So I wish I could give you an inning.
Marvin Fong: <unk> for car off I'd, probably say early innings still and why do I say that is that we are re imagining the platform, let's step back to a bigger premise here, which is <unk>.
Marvin Fong: We believe that sourcing vehicles as part of what Jason just said source price market itself is an exceptionally important in probably the number one pain point for 100% of the dealers that are out there today, how do I acquire inventory acquired late model inventory and how do we make it profitable for my desk. So I can turn times.
Marvin Fong: And move them quickly on the.
Marvin Fong: Because we have unique sets of data we've got the consumer demanding that we're matching to pricing data, where we see both retail and wholesale and the ability to tie that into a transaction capability. We believe car offer hunt them, if they are unique and and unparalleled opportunity to make a success in the.
Marvin Fong: A market place long term, what we're doing right now is focused on those areas that we've mentioned in previous calls first as we're managing our opex, we've got to be smart and thoughtful about what the operating expenses aren't that business given that we have a slow transaction volume right. Now number two is we're improving the operating the operation.
Marvin Fong: Margins of our business by improving our transportation times still improve their inspections that we're really proud of is the operating margin of the of that operations capability.
Marvin Fong: And did they inspection and condition of vehicles is a positive it's growing more positive for our customers and our NPS scores. Most importantly is we're working on our product market fit and that would be something that you've known for years looking at our business. The incident train platform works great in some environments and for some segments of the market. It works.
Better and other times when the market pricing is going down for other sets of the market. What we think we found there was something truly unique we talked about at its very early stage I don't want to get ahead of ourselves, but the insights capability, we're providing to dealers, we're showing them and recommending based on their particular.
Marvin Fong: Vehicle history, and turn times in their market the consumer demand in that local market. So think of us being the player in the market showed them what vehicles are selling more in that market or in highest demand, making recommendation then for the sourcing or disbursement of vehicles depending on.
Marvin Fong: On what is that market demand and helping them improve their turn times and profitability. We're seeing in the early stages of launching this new insights capability to a small set of our customers are.
Marvin Fong: That they are finding this to be a better path to engagement on the platform.
Marvin Fong: Better retention of them buying regularly and we think that holds promise for us for future product development and go to market needs. When we take that to our new customers and I say that to you that knowing that many of our car gurus customers who've never been on that cargo car off our platform to give it to the idea of larger customers.
Marvin Fong: Let them see this capability and the insights and the unique data that we're providing for them and making recommendations on which purchases to make.
Marvin Fong: We're finding that those customers are saying I've never seen anything like this before in the market.
Marvin Fong: Love to take a look and try so this gives us promise it's been several quarters, we're continuing to work on that and it will take us several quarters going forward to continue to improve this process. We believe we'll run a profitable business longer term, but we've got that early innings to get us to where we want to go.
Speaker Change: That's great color guys, Thanks, Jason and I appreciate it.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of <unk> Khan from B Riley Securities. Please go ahead.
Speaker Change: Hi, This is Ryan on for Nevada. Thank you for taking my questions.
Speaker Change: We wanted to ask on OEM ads, so obviously in the letter.
Speaker Change: Talk about being up double digits year over year, just for wondering about trends through quarter to date and also like what you guys are thinking about for 'twenty.
Speaker Change: 2025, thank you.
Speaker Change: Thanks, Ryan, it's Sam Zales, and I'm not going to talk about quarter to date I, just say that we're really really proud of the advertising business.
Speaker Change: For a number of reasons one is when you look at the growth in our visitor base.
Speaker Change: And the position that we're in the market of continuing that growth like that pace in the market that it's very hard for an OEM not to recognize this is the largest consumer audience that they have an opportunity to market to number two is we've continued to refine our advertising operations to provide better targeting you'll know that we are not like our <unk>.
Speaker Change: <unk> and that they're not a significant number of ads on a page so they're not competing with other places on the site that are pulling eyeballs away. So they look at that as a preference and then most importantly, our team we've got an incredible team of client managers that it's worked with these Oems through hard times and.
Speaker Change: The last several years you know if there's not a lot of inventory there, they're not going to be advertising, but in as Jason said the run up of more new inventory available incentives become more important than they want consumers to take a look at their new vehicles and I'm really really proud to say we retained as we said in our remarks retained all.
Speaker Change: Our customers and brought back new ones, who had stepped outside of the advertising Arena and said, we're not doing is doing anything for a couple of years and brought them back that says we're very confident we're really proud of what we're doing and I hope that gives you a sense of without telling you numbers in the first quarter, where we stand we're optimistic and hopeful that that will continue.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Nick Jones from citizens JMP. Please go ahead.
Speaker Change: Great. Thanks for taking the questions.
Speaker Change: If you think about I guess industry normalization and and you know you guys are driving leverage in the model Hum how should we be thinking about kind of your your sales and marketing plans or advertising plans or there are certain channels that are becoming more appealing.
Speaker Change: We've heard a lot of folks kind of leaning into social and C. T V away from maybe search and linear if there's any any insights.
Speaker Change: Are you thinking about marketing kind of from here and then I have a separate question around AI.
Jason Trevisan: Sure. Thanks, Nick it's Jason.
Speaker Change: We are.
Jason Trevisan: You've heard us talk a lot about our direct.
Jason Trevisan: He is in our direct traffic to our site and the growth in our App.
Jason Trevisan: From both an audience and customers.
Jason Trevisan: Customer satisfaction and a lead generation perspective.
Jason Trevisan: And a lot of that is it's a function of both product and marketing, but from a marketing perspective.
Jason Trevisan: Largely driven by us doing a better job communicating our brand that is more memorable and differentiated to our consumers and that type of marketing execution is largely done in channels like TV like online video and <unk>.
Jason Trevisan: Around what would traditionally be known as a performance marketing. It's also frankly, driven by better execution and relationships and consumer lifecycle marketing once we have attracted a consumer.
Jason Trevisan: Initially to the site.
Jason Trevisan: You've heard us talk about doing more personalization.
Jason Trevisan: Our saint experiences across platforms and all of that feeds into a more engaged customer that stays with us longer and then is more.
Jason Trevisan: But we would then put into the bucket of direct traffic so.
Jason Trevisan: So the channel shift that is.
Jason Trevisan: Underpinning that is one.
Jason Trevisan: That is an intentional one that is more towards things like.
Jason Trevisan: Online video endorsement opportunities television rather than traditional performance marketing.
Jason Trevisan: Got it.
Jason Trevisan: AI.
Jason Trevisan: Yeah.
Speaker Change: There's a lot of focus on <unk> AI, a bed and open as the operator, just curious you know the the focus as long as I've been I think on the travel industry and maybe booking reservations, but it would seem kind of a friction point for folks trying to buy cars as scheduling appointments. Some people may not know.
Jason Trevisan: The car they want at the gate.
Jason Trevisan: I didn't know they wanted to see me, but I don't know, which one I mean, how do you see a place for Egencia AI.
Jason Trevisan: In the auto industry, how do you how do you feel kind of cargo with the physician to kind of kind of be a top player there.
Yeah. So.
Jason Trevisan: We think it's a it's a huge opportunity frankly.
Speaker Change: You've heard us talk about.
Speaker Change: Thinking about AI applications in three ways, one is improving existing products. The other is creating entirely new products and the third is improving the productivity of.
Speaker Change: Our own team.
Speaker Change: And so you've also heard us talk about how we built our own gateway and are really our engineering and product teams in particular.
Speaker Change: Our.
Adopting a lot of.
Speaker Change: Companion technologies in order to things getting more engendering way I would say the most direct application based on what you're describing is a.
Pilot that we've talked about is a it's like a virtual assistant is like an engine and it allows.
Speaker Change: A user to engage with our own data.
Speaker Change: And in a conversational way too not just find the car that is best for them. Once they already know the make and model, which is typically and traditionally how consumers are using our site, but instead it helps them when they're in an upper funnel mode to identify what type of car what type of meat model. They would one and then point them.
Speaker Change: I'm too and to the right actual car and defense car for them. There are two benefits to that one it helps us capture users when they're earlier in their shopping journey and two it allows us to gather collect a lot more information self supplied information from that consumer to give them better personal.
Speaker Change: Sure, but then also to appropriately share that with the dealers because when you're giving the dealer much more information on that thought process into consumer they're going to be able to.
Speaker Change: Could serve that lead to better and convert that lead.
Speaker Change: So we're.
Speaker Change: We're seeing it is early for us.
Speaker Change: And when users are given the opportunity to engage with an agent.
Speaker Change: They are engaging really deeply and then there are much more qualified lead by the time they get to a dealer let alone the benefits that we're able to give them in terms of personalizing assortments searched so are.
Speaker Change: We are firm believers of it we're seeing the traction in some of our early work and I don't know how to compare it necessarily to travel, but I think youre right to say, we think about the fact that there are a lot of airlines.
Speaker Change: Got it thanks, a lot Jason.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Chris P. S from Needham and company. Please go ahead.
Speaker Change: Hey, good afternoon, everyone.
Speaker Change: I'm on slide four the better consumer experience I think you had a product called featured listing the personalized comparison pages are the personalized search recommendations is that something you're monetizing that where it could monetize through dealer listings or right now it just.
Speaker Change: To drive a better consumer experience.
Speaker Change: So let me let me try to clarify Chris So from what I could hear you talked about comparison pages.
Speaker Change: Personalized search results is there a way and then also featured.
Speaker Change: Yeah is there a way to take these personalized recommendations and show specific cars to have dealers sort of be part of this program and then monetize that or right now it's just about the consumer side of the world.
Speaker Change: Oh I understand okay.
Speaker Change: So I would think about the debt.
Speaker Change: The dealer side sort of product level monetization of it and still largely if not exclusively in our featured and featured priority model the personalized and AI.
Speaker Change: AI enhanced search results in short order you can think of that in the you know call. It organic listings, but wanted what it's doing is resulting in more engagement from consumers and then then being more likely to.
Speaker Change: Be a lead to a dealer and then most importantly is also improving the quality of our leads to dealers because consumers are submitting themselves leaves on a more likely unit and so we're tracking this all the way through it's not just conversion of all of our site. It's also about conversion all the way to the dealer so when we're talking about lead.
Speaker Change: Quantity and lead quality and striking that balance personalized.
Speaker Change: Assort and search results are feeding and helping improve both of those.
Speaker Change: Okay. Thank you and then just lastly, you shared some stats, 69% or 65% of the vehicles you can recommend to dealers they are buying and they transact in a certain amount of time. That's positive like are you recommending vehicles that youre seeing on other wholesale platforms because of the retail and wholesale did you have I just wanted to make sure I understand.
Speaker Change: Recommendations are you able to make.
Speaker Change: Sure. Thanks, Chris, saying, no we're not recommending a specific vehicle for them to buy we're giving them a make and model they should buy to drive their profitability. We're seeing tremendous adoption of this acquisition insights report in terms of how it creates and instead.
Speaker Change: Just to say I want to grow my profits my biggest problem right now with sourcing inventory here of the vehicles you should be looking to purchase because they will be successful in your local market and we're able to track those veins and watch them through the process and seeing that then sell and resell them and looking at the turn times for.
Speaker Change: And the profits and saying Wow, our dealers are reaching out to US saying. This is a tool I havent seen before it's a premium product that we're offering it with our premium capabilities, but we're seeing that kind of engagement that once you give me the recommendations I'm going to go out and purchase you're going to see it in my inventory feed and then they were able to turn those vehicles more effect.
Speaker Change: This is all of this.
Speaker Change: Concept of putting data together with sourcing marketing and selling and if we're providing that kind of insight to dealers. We think that's a really sticky initiative for them.
Speaker Change: Okay. Thanks, a lot.
Speaker Change: Just to finish out at that point, you can imagine and Chris and as part of the divisions didn't just referenced that we then point them to act on their.
Speaker Change: Cars.
Speaker Change: I figured you'd put that in there I appreciate it thank you.
Yes.
Marvin Fong: Thank you. The next question comes from the line of Doug Arthur from Huber Research Partners. Please go ahead.
Speaker Change: Yeah I'll save my question for the follow up thanks.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Tom White from D. A Davidson. Please go ahead.
Tom White: Great. Thanks for slipping me in here just a question on the account management enhancements that you discussed sounds interesting and maybe like a kind of a logical evolution for a marketplace like yours I mean do you envision I guess I'm just trying to think about how this evolves over the next couple of years like do you envision having to hire more folks if this expands and are we.
Speaker Change: Moving towards the day when you know the dealers that opt in for this enhanced account management and start handling the leads to the best optimum modest way that you guys kind of point them to etcetera are they going to get kind of a <unk>.
Speaker Change: Significantly larger share of overall platform leads kind of sent their way.
Speaker Change: It'll have a better consumer experience just kind of trying to understand the you know sort of how this evolves.
Sam Zales: Hey, Tom It's Sam Zales, I'll turn it to my colleagues for more color if needed.
Sam Zales: I think we're looking to make every customer more successful and more.
Sam Zales: More profits out of our lead management program. So I think it's it's it may help some dealers who adopt some best practices get more share and grow and continue to put more investment to make to find a bigger share but our hope is this works universally and at some point is product ties to allow all customers to take these best practice.
Sam Zales: There's and make their lead management process as effectively as possible on cargoes. We're doing three things. The first is just the general account management net fortnight I'd love to call out since they have a minute just to say how effective our account management organization has been at retaining and growing our customer performance with us.
Sam Zales: As an example, we have we changed our onboarding process to look at the retention of customers in their first 90 days on the platform for many customers. It's a process management change to take our leads and and do something different with them when they might not do with any other partner in the marketplace and we weren't officially and aggressively after that.
Sam Zales: Such tremendous results in our retention of that early stage of our customer base to do that.
Sam Zales: The second is we're enhancing using the DDI processes the dealer data insights. So there's four reports we talked about next that's deal rating Max margin merchandise health and acquisition insights reporting taking those and using that as a natural part of our consultative selling process and we wanted to make sure that change.
Sam Zales: Is the way those partners of ours in the dealer community look at us as a consultant not just a provider of leads going forward and the final is that new account organization. We started at very small scale, a really incredible group of people who've worked in retail and they are now going out to eat.
Sam Zales: Broad set of our customers and taking best practices from across our dealer base and providing one on one consultation with those customers not only in the new products. We've offered like digital deal and top dealer offers but in general how do you optimize your lead management system Youre asking a good question, we think that can grow.
Sam Zales: We're looking at we believe internationally that could be really helpful as well longer term, but more importantly, it is something we want a product types and not to say, we're going to hire an army of people will take this process, we've learned template times, it and give it to as many customers as possible long term. So hope that gives you some sense of how proud we are of the account management.
Sam Zales: Process.
Thank you.
Sam Zales: Thank you.
Speaker Change: The next question comes from the line of Ron Josey from Citi. Please go ahead.
Speaker Change: Hi. This is <unk>. This is James Michael on for Ron Just a quick one for me in the prepared remarks, you alluded to investing more in 2025 to drive international growth would form of those investments.
Speaker Change: Let's take how should we think about the long term payback or impacts to marketplace margins.
Speaker Change: Thanks, James So we see a very compelling opportunity to continue to invest and gain market share in international geographies. We're focused primarily on two areas and go to market and marketing in order to continue to better serve our customer.
It provides more value to them and we believe that that is an investment that will pay off and is very very compelling not only financially, but also in terms of future growth and truly market leadership.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Yours stake from UBS. Please go ahead.
Hi, its socket wall Joshua on for Joe Spak today, a two for me first just around capital allocation and our free cash flow margin progression from Persian all seem quite strong and I think growing past few quarters like how should investors think about the application of surprised that there were no share repurchases in the quarter or you know is the team maybe looking to expand.
Speaker Change: Or how does the same thing about expanding even organically and my second question is just around you know from how long is a few months ago, but you know Amazon entering the automotive dealer space with Honda now granted only one OEM.
Speaker Change: And it's more yet to be seen but how do you think like the card group platform is positioned for maybe potential Amazon entering thank you.
Speaker Change: Thank you in fact for the question. So you asked about margins and copies out on location. So first on margins, we anticipate margins to be sustainable in 2025 on an annual basis, Despite a significant level of investment in growth and innovation.
Speaker Change: We just I know there was a very thorough planning process and we have identified three areas of investment. The first one is product innovation. The second one I just spoke about it is expansion in our international markets, it's extremely compelling and the third one Jason spoke to this as a friend's virality, which over time should also.
Speaker Change: To drive our efficiency in our marketing spend and.
Speaker Change: Coupled with that planning process also comes together capital allocation and so we constantly evaluate all of the investment opportunities in trade buckets organic internal organic sterno and then returning capital.
Speaker Change: We currently have a repurchase program for 2025, you're still hungry Melanie on them and so that will remain active for the next 12 months and we will buy back shares as we see fit in the next few months, but again it gets constantly.
Speaker Change: Considering the more compelling opportunity and currently we are investing in our business because we're seeing very very compelling return here for the long term as well.
Jason Trevisan: And on Amazon This is Jason.
So yeah as you pointed out their new car focused it's with one OEM only.
Jason Trevisan: And their flow, which I'm sure you've probably gone through the consumers still goes to the dealer.
Jason Trevisan: Used is used cars versus new cars or just a different.
Jason Trevisan: Beast.
Speaker Change: For a lot of reasons the consumer shopping habits are very different but I would say the bigger difference is on the dealer side.
Speaker Change: Need to integrate with dealers not Oems and so rather than you know 10, 12 Oems that matter, you've got 40000 dealers you need to integrate with them appropriately and that's hundreds of integrations and it's just a very fragmented.
Speaker Change: Audience, where you need.
Speaker Change: Their trust in order to believe that the leisure sending them today and you're giving US is accurate so look I would never ever discount or underestimate Amazon as a formidable competitor.
Speaker Change: We think it's understandable and sensible that they're focused on new to start that's and cleaner market and value chain and we think used is quite different and we think our leadership position in used and in two sided marketplace.
Speaker Change: It's a really good starting point of strength to build up.
Speaker Change: Great. Thank you so much guys.
Speaker Change: Thank you.
As I don't know if other questions I would now hand, the conference over to Jason <unk> for his closing comments.
Speaker Change: Thanks, very much so would just like to thank everyone for joining as always thank you very much to our shareholders and customers as well and most importantly, thanks to our employees for their hard work dedication and passion that are.
Speaker Change: That is allowing us to achieve such outstanding results.
Speaker Change: Everyone.
Speaker Change: Thank you, ladies and gentlemen, the conference of car Gurus has now concluded. Thank you for your participation you may now disconnect your lines.
Speaker Change: Goodbye.
Speaker Change: Hum.
Speaker Change: [music].
Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.