Autobytel Inc., an Internet automotive marketing services company, on Oct. 23 announced financial results for the third quarter ended Sept. 30, 2003.

Highlights for the quarter include:

• Net income of $1.7 million, or $0.04 per share, on a GAAP basis, meeting consensus estimates

  
  

  
  

• Revenues of $23.0 million, representing the highest reported quarterly revenues in the company’s history -- a 19 percent growth year over year and a 6 percent growth sequentially

  
  

  
  

• Cash generation of $7.2 million, of which $3.3 million was net cash provided by operations

  
  

  
  

• Cash balance of $58.9 million at the end of Q3 versus $51.7 million at the end of Q2

  
  

  
  

• Positive turnaround in the number of program dealer relationships; churn rate lowers sequentially by 40 percent, from 13 percent to 8 percent.

  
  

  
  

  "We are very pleased with this quarter’s results," said Jeffrey Schwartz, president and CEO of Autobytel Inc. "This is our fourth consecutive quarter of delivering increased net income, revenues are at a record high, and we have generated cash for the fifth consecutive quarter. In addition, this quarter has brought us to the crossover point in our core business, marking the first time in two years that we have added program dealers on a net basis."

  
  

  Autobytel reported net income for the third quarter ended Sept. 30, 2003 of $1.7 million, or $0.04 per share. This compares to a net loss for the quarter ended Sept. 30, 2002 of $(2.1) million, or $(0.07) per share.

  
  

  Third quarter net income represents a 48 percent increase over net income of $1.1 million, or $0.03 per share, reported for the second

  quarter ended June 30, 2003.

  
  

  For the third quarter of 2003, EBITDA was $2.3 million, or $0.06 per share. This compares to an EBITDA loss for the quarter ended Sept. 30, 2002 of $(1.3) million, or $(0.04) per share. Third quarter EBITDA represents a 34 percent increase over EBITDA of $1.7 million, or $0.05 per share,

  reported for the second quarter ended June 30, 2003.

  
  

  Revenues for the third quarter ended Sept. 30, 2003 totaled $23.0 million, a 19 percent increase over revenues of $19.3 million for the quarter ended Sept. 30, 2002, and a 6 percent sequential increase over revenues of $21.7 million for the

  second quarter ended June 30, 2003.

  
  

  The company generated $7.2 million in cash during the third quarter of 2003, of which $3.3 million was generated from operations. In addition, $2.3 million was generated from the exercise of stock options and $2.2 million resulted from a partial return of capital of the company’s investment in

  Autobytel Europe.

  
  

  The company’s cash balance as of Sept. 30, 2003 was $58.9 million versus $51.7 million in the

  quarter ended June 30, 2003.

  
  

  Highlights for the Third Quarter

  
  

  Third quarter revenues were $23.0 million, of

  which $14.4 million were related to program fees; $4.1 million were related to enterprise sales; $2.8 million were related to advertising, and $1.7 million were related to other products and services.

  
  

  Total operating expenses, including depreciation and amortization, in the third quarter were

  $21.5 million. Sales and marketing expenses totaled $13.3 million, including traffic acquisition costs. Product development and technology costs totaled $5.4 million. General and administrative costs totaled $2.8 million.

  
  

  Autobytel's four Web sites -- Autobytel.com, Autoweb.com, Carsmart.com and AutoSite.com -- ranked as the most visited new-car buying and research network for the quarter, with 6.4 million average monthly unique visitors in the third quarter of 2003 as reported by comScore Media Metrix.

  
  

  The company delivered approximately 763,000 purchase requests during the third quarter compared to 791,000 purchase requests delivered in the second quarter of 2003. The company attributes this slight decline to the seasonality associated with the model year changeover.

  
  

  The company reported approximately 25,800 dealer relationships in the third quarter. Included in this number are about 20,800 relationships in the lead referral category and about 5,000 relationships in the CRM tools and services category.

  
  

  Of the 20,800 dealer relationships in the lead referral category, 5,100 were program dealer relationships, including 89 dealer relationships added during the quarter, marking the first net increase in program dealer relationships in

  two years. The remaining 15,700 were enterprise sales relationships.

  
  

  Of the approximately 5,000 dealer relationships in the CRM tools and services category, 3,200 were dealers using AVV products and services, 1,500 were dealers using the iManager lead management tool, and 337 were dealers using RPM(SM), Autobytel’s customer loyalty and retention program.

  
  

  Revenues from online advertising were $2.8 million for the third quarter, a 38 percent increase over revenues of $2.0 million for the quarter ended Sept. 30, 2002. Revenues declined (8) percent sequentially from revenues of $3.0 million for the second quarter ended June 30, 2003.

  
  

  Advertising revenues were impacted by the slight decline in purchase requests during the quarter, which resulted from seasonality associated with model year changeover and advertisers’ marketing and promotional schedules.

  
  

  Autobytel’s customer loyalty and retention program, RPM, added approximately 57 dealers during the third quarter, and average revenues per dealer subscribing to RPM continues to be in the $1,200 per month range. The company continues to forecast sustained growth for this program

  throughout the rest of the year.

  
  

  As of Sept. 30, 2003, the company had 334

  employees, including an additional 26 sales people added during the quarter. This compares to 317 employees at the end of the second quarter.

  
  

  Closing ratios for Autobytel's program dealers remained strong at 17.5 percent as the company continued to ramp up its Quality Verification System(SM) with the addition of a live call center and an additional layer of consumer

  purchase intent validation. In addition, Autobytel's new field force of account managers, charged with providing monthly in-dealership performance consultations, contributed to the sustained high closing ratios and increased

  satisfaction of Autobytel’s program dealers, according to the company.

  
  

  "Recent studies show that the impact of the Internet on consumers’ dealer and vehicle choices is now outpacing the impact of television and newspaper ads," Schwartz said. "With online automotive usage predicted to increase even further as younger, more Web-savvy buyers replace older buyers, the outlook for the future of the

  automotive Internet continues to be bullish."

  
  

  Business Outlook

  
  

  The company reiterated and updated its previous guidance and expectations as follows:

  
  

  (a) exit fiscal year 2003 at a $95 million revenue run rate;

  
  

  (b) second half net income is expected to increase over 75 percent versus the first half, which is an increase from prior guidance; and

  
  

  (c) net cash provided by operations is expected to increase in the second half of the year compared to the first half.

  
  

  Non-GAAP Measures

  
  

  In addition to furnishing its consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Autobytel discloses certain non-GAAP financial measures, including EBITDA and EBITDA per share, which are derived from results based on GAAP.

  Autobytel believes these non-GAAP measures assist users in understanding its results of operations, cash generated, and resources available for strategic opportunities, including reinvestment in the business and acquisitions.

  
  

  According to the company, the non-GAAP measures are provided to enhance the user’s overall understanding of Autobytel’s current financial

  performance and its prospects for the future. "As such, these measures should be considered in addition to results prepared in accordance with GAAP and should not be considered a substitute for or superior to GAAP results," the company said in a prepared statement.

  
  

  About Autobytel Inc.

  
  

  Autobytel Inc., an Internet automotive marketing services company, says it helps retailers sell cars and manufacturers build brands through marketing, advertising and CRM (customer relationship management) tools and programs.

  
  

  The company owns and operates the automotive

  Web sites Autobytel.com, Autoweb.com, Carsmart.com and AutoSite.com, as well as AIC (Automotive Information Center), a provider of automotive marketing data and technology.

  
  

  Autobytel specializes in dealership lead management and CRM solutions and owns and operates AVV, Inc., a provider of dealership CRM and data extraction services. Autobytel says it generates more than a billion dollars a month in car sales for dealers through its services.