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Acquisitions Drive 46% Revenue Increase for Dealertrack

Dealertrack officials reported this week that average monthly subscription revenues from dealers were up 30% in the first quarter, thanks in part to the company’s recent acquisition of Dealer.com. Company officials also revealed plans to combine Dealer.com’s CRM capabilities with Dealertrack's own offering to produce a single solution.

Acquisitions Drive 46% Revenue Increase for Dealertrack

 

3 min to read


LAKE SUCCESS, N.Y. — Dealertrack reported strong financial results in the opening quarter of 2014, a period in which the tech company completed its purchase of Dealer.com.

The purchase of the digital marketing solutions provider was completed on March 1. Dealertrack officials told investors that the firm is now posed to accelerate its growth in the digital retailing space, with the company’s chief executive Mark O’Neil noting that dealers “are increasingly engaging with us in dialogue regarding the purchase of our full suite of solutions instead of individual point products,” according to a transcript of the call on seekingalpha.com.

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Although the quarter only included one month of Dealer.com revenue, Dealertrack reported an increase in average monthly subscription revenue — up 30% from the year-ago period to $956 per month — per dealer.

“For comparison purposes, in March of this year, the first full month that included Dealer.com's results, we averaged $1,191 per subscribing dealer for that month alone,” O’Neil said. “We added 5,160 subscribing dealers in the quarter, including dealers acquired through Dealer.com who are not already in Dealertrack's subscription dealer count to reach a total of over 23,000 subscribing dealers as of the end of the first quarter.”

The acquisition also brought added CRM capabilities, which Dealertrack plans to combine with its other CRM offerings to create a single solution. “We are very excited about the longer-term opportunity to enhance our CRM solution by providing dealers with predictive data analytics from our online and in-store solutions to enhance the vehicle sales and customer interaction process,” O’Neil said.

“In March, we had over 60 million visitors to the combined websites we manage, putting us in a unique and strong position to leverage this data to materially improve the auto shopping and purchase process,” he added. “With Dealer.com's websites, we're also seeing increased interest in our digital retailing solutions, due in part to these solutions providing an optimized link between our online and in-store solutions.”

In the opening quarter of 2014, Dealertrack recorded revenue of $158.8 million, a 46% increase from a year ago. Acquisitions dating back to the first quarter 2013, includes the Dealer.com purchase, contributed approximately $35 million to the total.

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Eric D. Jacobs, Dealertrack’s CFO and executive vice president, noted that GAAP net loss was $12 million or a net loss per diluted share of a negative $0.25, due in part to the Dealer.com acquisition.

“… we are combining our existing CRM solution with Dealer.com's CRM solution. This, along with the overlap of ClickMotive and Dealer.com's website solutions, resulted in the impairment of certain assets in the first quarter, an amount of $7.5 million, net of taxes, or a loss of $0.16 per share,” Jacobs said.

For all of 2014, Dealertrack officials said they expect revenue to be between $814 million and $826 million. “… with an excellent start to 2014 and the completion of the acquisition of Dealer.com, we are excited about our achievements in the quarter and believe we are well positioned to deliver strong results through 2014,” Jacobs concluded.

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