Cars.com(US:CARS)2021-11-06 01:39Financial Data and Key Metrics Changes - Revenue for Q3 2021 totaled $156.6 million, up 8% year-over-year, with dealer revenue growing by 12% [25][14] - Adjusted EBITDA totaled $45.8 million, or 29% of revenue, compared to $49 million, or 34% of revenue for the prior year [28] - Operating expenses for Q3 were $144.5 million, an increase of 13% year-over-year [27] Business Line Data and Key Metrics Changes - Dealer Inspire revenue grew 27% year-over-year [64] - ARPD increased 7% year-over-year to $2,332, driven by increased penetration of FUEL and digital solutions [32][19] - The number of dealer customers reached 19,029, an increase of 899 compared to the prior year [29] Market Data and Key Metrics Changes - OEM and national revenue for the quarter was $15.3 million, down 14% year-over-year due to the chip shortage [26] - Certified pre-owned market sales were robust, with strong OEM interest in CTO products [26][15] - Average monthly unique visitors and visits were down 4% and 10% year-over-year, respectively, but up 5% compared to Q3 2019 [31][16] Company Strategy and Development Direction - The acquisition of CreditIQ aims to enhance the automotive technology platform and create a new revenue stream from lenders [6][12] - The company is focusing on empowering dealers with innovative digital solutions and transitioning from a legacy model to a platform strategy [22][21] - The strategy includes enhancing financing capabilities to engage consumers and benefit dealers [22][12] Management's Comments on Operating Environment and Future Outlook - Management expects continued strength in dealer business and a rebound in OEM revenue as supply chain disruptions ease [14] - The company anticipates fourth quarter revenue to be between $157.5 million and $159.5 million, representing 3% to 4% year-over-year growth [38] - Management remains cautious about OEM advertising due to ongoing supply constraints but sees potential growth in certified pre-owned programs [81][80] Other Important Information - The company ended the quarter with a cash balance of $51.5 million and total liquidity of $281.5 million [33] - Free cash flow for the nine-month period was $98.3 million, up 17% from the previous year [36] - The acquisition of CreditIQ is valued at $30 million at closing, with potential performance-based payouts of up to $50 million over three years [34] Q&A Session Summary Question: Could you talk about the fintech acquisition and its economic impact? - Management highlighted the significant opportunity in the fintech market, with 40 million vehicles financed annually, and emphasized the benefits for dealers in terms of efficiency and profitability [41][42] Question: Is the fintech product subscription-based or transaction-based? - The fintech product will primarily be transaction-based, focusing on funded loans, with a lending-as-a-service component also available [49][50] Question: How is the dealer mix evolving with the current supply constraints? - Management noted strong dealer growth, with independent dealers recognizing the efficiency of location-based marketplaces [44] Question: What is the timeline for the Ford rollout? - The Ford rollout will occur on a rolling basis, with strong interest from Ford dealerships [62] Question: What is the expected EBITDA impact from CreditIQ in Q4 and next year? - There is no material EBITDA impact expected in Q4, but investments will be made in 2022 to scale the product [76][75]